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PwC Report: Real Estate Contribution to GDP Target N2.7tr by 2016

ricewaterCoopers (PwC) has projected the contribution of real estate to the country’s Gross Domestic Product (GDP) to grow by almost N3 trillion in 2016. The accounting firm how-

ever said this is dependent on the right environment, which include adherence to global best practices in the sector, transparency and timely delivery on project execution, among others. The sector currently contributes about N1.8

trillion to the GDP. “Going by PWC revelation and the quest to meet the vision 2020 target, a lot needs to be done towards improved public infrastructure to drive the required positive change in the real estate and facilities

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NIA Projects Positive Outlook for Insurance Sector

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6 Challenges Facing Global Manufacturing Sector in 2015

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Monday June 29 - July 05, 2015

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'Banks Have Low Expertise in Oil & Gas Business’

igerian banks have limited knowledge and understanding of oil and gas business, thus making it difficult for financial institutions in the country to tailor the right financing model for operators in that sector of the economy. That was a crucial point from the Nigeria Oil & Gas (NOG) 2015 communiqué issued over the weekend According to the communiqué, the restricted lending capacity of indigenous banks

and rate disadvantage cannot compare to various money lenders elsewhere while poor credit rating also affect money lenders’ ability to support indigenous companies operating in oil and gas business. Other pertinent issues raised in the communiqué include: • Short term contracts appear to be a constraint to accessing sustainable financing • Industry operators to revise their funding mechanisms for projects to match the current situation. • Nigeria remains a country of opportunities and potential with a lot of successes to be

achieved but requires co-operation, collaboration and hardwork. • Independents to focus on building reliable governance structures in order to attract appropriate funding and ratings. • Strategic switch towards capital discipline, cash conservation, appropriate hedging and cash flow based project funding required under challenging market conditions. • Indigenous companies need to explore equity funding and mezzanine financing options. To achieve this, owners and shareholders of indige-

nous oil companies must show more willingness to relinquish control. Banks have called on independents to hedge production in order to ensure stability. • Local banks to support local companies for organic growth in the industry • CBN needs to revisit project financing obstacle for viable Nigerian Content. • There is need for a co-ordinated effort at national level to protect oil and gas assets and address the issue of corruption. • The burning question remains, how can Nigeria use

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its oil and gas resources more efficiently and equitably? The management of the revenue that comes from these resources requires discipline and prudence. • Low oil prices present an opportunity to look inward and change many things quickly. Nigeria, like other oil exporting nations, now targets Asian countries in search of new markets for its crude oil. The current over supply of crude oil resulting in low oil prices has negatively affected revenue.

Independents to Account for 25% Oil Production by 2020

NSE Unveils Composition of New Market Indices July 1

Aliko Dangote & Arsenal FC: The 30-Year Love Affair!

2015

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best practices in the execution of projects,” Femi Akintunde, Managing Director, Alpha Mead Facilities and Management Services Limited, said in response to the projection.

management industry, in addition to improving the living condition of the average Nigerian. For the facilities management and real estate sectors to contribute meaningfully to the economy, practitioners must embrace global standards and

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ndependents are projected to account for about 500kbpd by the year 2020, representing 25% of crude oil production in Nigeria, from the current level of 10%. The development is seen as a reflection of the changing landscape of the oil and gas industry in Nigeria.

L-R: Executive Director, Ivory Banking, Heritage Banking Company Limited, Mrs. Mary Akpobome; Director, Community Development Service and Special Project, National Youth Service Corps, Mrs. Victoria Bose Okakwu; Managing Director, Heritage Banking Company Limited, Mr. Ifie Sekibo and Director-General, National Youth Service Corps, Brigadier General Johnson Olawunmi, during a courtesy visit by the NYSC Management team to the bank’s head-office in Lagos.

Key Recommendations: • Integration of the upstream to other parts of the value chain may eventually be driven by the independents. • Challenges such as security, especially for independents

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Business Journal June 29 - July 05, 2015

News

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PwC Report: Real Estate Contribution

'Banks Have Low...'

Continued from PAGE1 Former Attorney-General and Commissioner for Justice in Lagos State, Supo Shasore, said the facilities management industry was positioned for growth. He described as regrettable, the country’s 134th ranking out of 144 economies by the World Economic Forum Global Competitiveness Report 2014-15. “The country’s core infrastructure stock is estimated at only 35-40% of GDP, in contrast to international benchmarks of 70% of GDP. This low value has been driven by historically low public and private spending on infrastructure,” Shasore said.

Continued from PAGE1 • The country needs to diversify its economy and gas domestication is one option. A strategy for export markets must also be put in place to make sure we optimise our share of the market. • To further unlock the industry’s potential, the Gas Master Plan must be fully implemented. The policy is designed to connect the entire gas value chain and consequently encourage the exploration for new gas resources to increase reserves. • There is a high domestic demand for gas in Nigeria, therefore domestication of gas should be pursued and policy development must be thorough. The indigenous companies dominating the service sector must act as the main engine of the industry in order to drive this transformation if the best impact outcomes are to be achieved. • There is a need for regulation which will encourage the service sector to localise technologies within Nigeria. This will ensure an increase in indigenous technology capacity so as to be able to drive down cost. Technology resident in service is not exclusive to oil and gas hence the need for backward integration. • Nigeria must move from policy formulation to implementation actions and all policies adopted must ensure that there is a fair amount of profit for operating companies and rent for Government i.e. a balance between incentives and Government tax. • Energy switching and development of fuel efficient products is on the rise and this has reduced the cost of energy as well as lowered demand. Nigeria, as an energy supplier, needs to increase its flexibility by diversifying its market to be able to insulate itself from undesirable market forces.

Independents... Continued from PAGE1

R-L: The Managing Director of Rack Centre Ltd, Mr. Ayotunde Coker; The Chief Executive Officer of The Nigerian Stock Exchange, Mr. Oscar N. Onyema, OON and The Group Executive Chairman of Jagal, Mr. Anwar Jarmakani during Rack Centre’s CEO Briefing forum held in partnership with The Nigerian Stock Exchange

Manufacturers Spend N3.5trn Yearly on Alternative Power

anufacturers of goods and services in the country spend as much as N3.5 trillion annually to generate alternative power for their production operations due to the collapse of public electricity supply, the Nigeria Labour Congress (NLC) has lamented. The President of NLC, Ayuba Wabba, said providing alternative power for their operations has made the cost of produc-

tion in Nigeria the highest in the whole world. Wabba was speaking at the business luncheon for Managing Directors/ Chief Executive Officers of public and private companies hosted by the Ikeja branch of Manufacturers Association of Nigeria (MAN) in Lagos. “If the country must survive, as we desire, government must confront this sector with all seriousness,” he said. “The entire system must be overhauled and rejuvenated in the interest of the economy and

the people. It is scandalous that in a country of over 160 million people, less than 3, 000 megawatts (MW) of electricity is supplied to the public.” The country, the labour leader stated, was facing enormous challenges as a result of the collapse of basic infrastructures such as electricity, roads and high cost of petroleum products, which collectively constitute the necessary factors in production. The deficit of these factors,

he pointed out, has made manufacturing activity in the country a difficult business, culminating in mass closure of industries, while others had to relocate to other countries with better operational environment. The energy sector, Mr. Wabba noted, was critical to manufacturing, adding that any government that was serious about reviving the country’s economy must ensure that the revival of the manufacturing sector was a priority.

operating in shallow waters. Local companies reiterated that security and community challenges have greatly altered their cost of production which cannot be fully ascertained. When coupled with Government take and interest from loans the cost per barrel increases. • Government is to ensure that an enabling environment is created - independents need to be able to deliver on capacity growth and funding. The major challenge now is that banks do not want to fund potential exploration and this is hampering growth plans of independents. • There is a great need to increase reserves if sustainability is to be ensured within the current low oil price regime. Another issue bleeding income from the independents is pipeline loss charged by operators. Independents called for government to look into the possible divestment of pipelines to help reduce cost. • Independent companies were urged to collaborate and see how they can address existing security and community challenges as well as participate in intelligence gathering and aid security agencies.

XLR8 Wins Guinness Nigeria Brand Account

XLR8 Limited has been appointed by Guinness Nigeria to manage its corporate brand. The appointment follows an extensive selection process that included an open pitch for presentations followed by panel discussions. According to Mr. Sesan Sobowale, the Corporate Relations Director of Guinness

, "throughout the selection process, we were impressed by XLR8's industry and market knowledge and we feel confident that the organisation possesses the wherewithal to add value and provide support as we partner to achieve our business objectives." Mr. Calixthus Okoruwa, Chief Executive Officer of XLR8, enthused that XLR8 is

both delighted and honoured to have Guinness Nigeria join its impressive roster of bluechip brands. "Any organisation that has been able to build a brand and sustain its iconic status for more than 250 years deserves all the respect and adulation it gets," said Okoruwa. "We are indeed, humbled by this opportunity to be of

service to this formidable organisation and will continue to seek to justify the confidence which it has reposed in XLR8." With a solid track-record of market performance, Guinness Nigeria has been in Nigeria since 1960 and is a member of the Diageo Plc, the world's foremost premium alcoholic drinks company. Its robust portfolio of products in-

cludes a wide range of premium alcoholic and non-alcoholic beverages including Guinness, Foreign Extra Stout, Harp, Malta Guinness and Orijin. XLR8 has since its founding in 2004, consulted for some of the world's best-known and most respected brands across different industry sectors that include technology, banking and financial services, broad-

cast and entertainment, fast moving consumer goods, among others. "Guinness Nigeria is the latest addition to the very distinguished clientele for which we are eminently proud to be of service, and as always, we shall strive to ensure that our work speaks for us in the value that we deliver," said Okoruwa.

Business Journal June 29 - July 05, 2015

Business Events www.businessjournalng.com www.businessjournal.com.ng

L-r: Former Secretary General of the Commonwealth, Chief Emeka Anyaoku; former Head of Interim National Government, Chief Ernest Shonekan; Founder, Center for Values in Leadership (CVL), Prof. Pat Utomi; and President, South-East, South-South Professionals, Mr Emeka Ugwu-oju, during the 24th CVL Leadership Tribute Colloquium in honour of Chief Shonekan at 79 in Lagos.

L-r: Permanent Secretary, Ministry of Petroleum, Mr. Taiye Haruna; Permanent Secretary, Ministry of Finance, Mrs. Anastasia Mabi Daniel -Nwaobia ; and Vice President Yemi Osinbajo, during a special meeting on revenue generating agencies at the Presidential Villa in Abuja

L-r: Senior Trade Development Manager, UK Trade and Investment (UKTI), Mr. Idowu Babalola; Director, UKTI, Mr. Chris Maskell; Managing Director, Shell Petroleum Development Company and Country Chair, Shell Companies in Nigeria, Mr. Osagie Okunbor, and SPDC's General Manager, Production, Mr. David Martin, during a visit to SPDC Lagos office by the UKTI team.

L-r: Retail Directorate, Diamond Bank Plc, Aisha Ahmad; Divisional Head, Corporate Communications, Diamond Bank Plc, Ayona Trimnell, and Founder/Artistic Director, Tiffany Amber, Folake Coker, at the Diamond Bank Women of Vision press briefing in Lagos.

L-r: Director-General, Standards Organisation of Nigeria, Dr Joseph Odumodu; Deputy Managing Director, Standards and Quality Agency of Cameroon, Chantal Andely, and Secretary-General, African Organisation for Standardisation (ARSO), Dr Hermogene Nsenggimana, at the opening of ARSO President's forum in Abuja.

L-r: General Manager, Regional Operations, MTN, Obinna Nweje; Senior Manager, National Lottery Regulatory Commission, Betty Obioha, one of the winners of houses in the ongoing MTN Trutalk Best 11 Promo, Bulus Bala; Senior Manager, Customer Relations, MTN, Asamine Anueyiagu, during the prize presentation held in Port Harcourt, Rivers State.

L-r: International Gender Consultant, Women and Cross Border Trade, Eniola Sheri Dada; CEO, Livewell Initiative (LWI), Bisi Bright; Head, Corporate Affairs, BATN, Seyi Ashade; General Manager, British American Tobacco Nigeria Foundation (BATNF), Abimbola Okoya, and Founder, Transformation and Development Centre, Elizabeth Bernard-Sowho, at the 2015 Businessday CSI Conference themed Poverty Reduction and Youth Empowerment.

L-R: Mr. O.S. Thomas, Director-General; Mr. Godwin Wiggle, Chairman and Mrs. Idowu, Director, all of the Nigerian Insurers Association (NIA) at a media event in Lagos.

Business Journal June 29 - July 05, 2015

Editorial www.businessjournalng.com

The National Assembly: Time for Caution & Stability

he advent of the 8th National Assembly should naturally be a thing of joy to millions of Nigerians who are desirous of deepening democracy in Nigeria. This is especially true at a time the whole world applauded the people of Nigeria for peaceful elections and handover after the March 28, 2015 presidential elections. Unfortunately, recent events in the hallowed chambers of

the National Assembly seem to give discerning members of the public serious concerns in two areas: One-are the legislators ready to work for the people of Nigeria? Or are they not willing to work? The fracas arising from the election or selection of principal officers of the Senate and House of Representatives is now history. But the ripples emanating from that arrangement has expectedly refused to die down

Business Journal Newspaper is published weekly by Egelon Communication Company. Suite B2, Glory Shopping Complex, 229, Ikotun-Idimu Road, Council Bus-Stop, Idimu, Lagos. Phone: 08023088874, 07058919138. Email: business.journal@yahoo.com. Publisher/Editor-in-Chief: PRINCE COOKEY.

or be swept away. Today, members of the National Assembly are dancing naked in the public domain, raising in the process, serious questions about their commitment to their legislative duties. While we agree that it is normal for people to disagree on issues, what is evidently playing out in Abuja is much worse than that. The federal legislators are either fighting for plum positions in the interest of their selfish

desires or they are rioting over money: these are very shameful scenarios that ought not be seen on public television or reported in the print media for members of the public to see. It is time to call the rancorous elements at the National Assembly to order, before we collectively descend into a state of anarchy as a nation. The major political parties whose members are the principal actors in the fracas should as a matter of urgency, insist

Publisher/Editor-in-Chief Prince Cookey 08023088874 07058919138 prince.cookey@yahoo.com

PH Bureau Darlington Igbokwe

Lagos Bureau Abraham Adewole

Head of Marketing/Advert Elvis Ebigwu

Snr. Correspondent Blessing Ikeme

Digital Consultant Bamidele Owotoke.

Abuja Bureau Chris Onwuka

Design Consultant Kelechi Okoro

Kaduna Bureau Haruna Mohammed

Logistics Consultant Godspower Cookey

Aba Bureau Larry Akunne

that their members in the Senate and House of Representatives conduct themselves in accordance with the high level of decorum expected of federal lawmakers. Finally, we urge members of the National Assembly to show good examples to their state colleagues and save our hard earned democracy from mockery. Enough of the instability and chaos.

Secretary/Admin Latifat Adedayo Body of Analysts Haniel Ukpaukure Chris Okeke Ola Gam-Ikon Ademola Akinbola Muideen Ibrahim Ayo Adekunle Board of Editorial Advisers Dr. Justus Uranta Engr. Titi Omo-Ettu Mr. Chike Mokwunye Mr. Chris Uwaje Mr. Gbolahan Olutayo

Business Journal June 29 - July 05, 2015

Banking www.businessjournalng.com

African Development Bank: 50 Years of Empowering Africa

fDB is the continent’s largest development finance institution Fifty years ago, on 4 November 1964, Ministers from 23 then independent African States convened in Lagos, Nigeria, for the inaugural meeting of the Board of Governors of the African Development Bank. The young Institution was assigned a dual mandate: the social and economic transformation of Africa, and the economic integration of the Continent. That mission is as relevant today as it was then. What started as a continental partnership among a handful of African countries has emerged as one of Africa's most effective global partnerships, with universal African membership. Along the way 26 non-African members have joined the ranks, and two of them in the last two years. We salute the pioneers and the founders of the Bank for their vision. We pay homage to all those who, over the years in serving the Bank at different levels, have made this endeavour possible. We remember those who are no longer with us. We also thank the partners of the Bank across the world for their support and friendship. Mirroring Africa’s journey, it has been an eventful 50 year journey for the Bank. There have been exhilarating moments, but also challenging ones. From the modest beginnings with just ten staff members and an authorized capital of US$ 370 million, the Bank has risen to become a world class institution, with robust financial strength and a solid operational record. In meeting its mandate, the Bank has committed around US$ 110 billion, and leveraged much more in co-financing. Today, thanks to the support of its shareholders, its franchise value, and its strong foundations, the Bank is AAA-rated, with an authorised capital of US$ 100 billion.

2040 it will be close to 2 billion people. Our task is that much more challenging: promoting economic growth that is strong, shared and sustainable; investing in people; and remaining focused on our core mission: the economic integration of Africa. In the battle for prosperity for the people of our great continent, the African Development Bank can look back with pride, and to the future with new energy and determination. At a moment like this one, we remember Madiba’s words: "after climbing a great hill, one only finds that there are many more hills to climb". I thank everyone inside and outside the Bank. Together we shall prevail.

Donald Kaberuka - President The Institution attracts committed and first-class minds, and now boasts of nearly 2,000 staff members, operating across all 54 African countries. At a moment of great changes in Africa, the golden anniversary provides an opportunity for a rededication to the dreams of the founders, and the aspirations of the people of Africa. There are new challenges and there are old ones: from finding innovative ways of funding infrastructure, to building human capital, to combating climate change and epidemics. In a world that has changed so dramatically – not least over the last three decades – we will have to innovate. It will not be enough to do more of the same. When the Bank was established in 1964, the population of Africa was no more than 300 million people. That number has since tripled. By

Donald Kaberuka - President The African Development Bank is a model of how Africa and the developed world can work together for mutual benefit and with mutual respect What is the AfDB? AfDB's prime objective is to mobilize financial resources to support sustainable economic and social development in Africa. To do this, the Bank raises funds from inside and outside the continent to finance development projects such as roads, hospitals and schools, agricultural projects and electricity.

Business Journal June 29 - July 05, 2015

Banking

Business Journal June 29 - July 05, 2015

Brands Marketing Advertising

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FEMONOMICS & WENOMOMICS:

Why Women are Driving Rethinking of the Sales Model (2)

When you recognise that women are not just the majority but actually the vast majority of consumers, and that their power is only going to increase, it completely changes the commercial urgency of getting to grips with women buyers.’

n a day and age when everyone can buy almost anything from anywhere, the “feelgood” factor at every customer touchpoint has never been more important.

Youth is Not What it Appears to Be While many marketers still seem obsessed with talking to Gen X and Y consumers, and still think of them as the longest term market worth tapping, the most powerful women financially are often past their youth. Baby boomers are the largest generational demographic in the world, and, amongst this group, women outnumber men and often financially outmuscle them. That makes them an extraordinary marketing opportunity – and not just for age-defying beauty products. While Dove has done a market-leading job of targeting these women, using a combination of cause (natural beauty) and products that unabashedly target those who are secure in their life stage and identity, it’s easy to forget that this same group account for more than half of the total US consumer electronics spend. That’s around $55 - 60 billion a year! Yet many of these women buyers still feel unacknowledged in terms of product design, advertising and

customer support. A study of women shoppers in the UK showed 35 percent of female internet users polled said they would increase their spending on consumer electronics if marketers and retailers thought harder about how they approach them and offered more guidance in stores and on e-commerce sites. The same study showed one in two women walk out of shops and leave websites without buying anything because they’re unable to find what they want. One third of women do not feel confident enough to ask questions in technology stores. Almost one in three women do not consider technology advertising relevant to them. These figures represent an extraordinarily large and valuable group of disenfranchised buyers, and therefore potentially swing buyers, who believe their needs are not being recognised, never mind met. Securing just a tiny fraction more of that market would be a coup worth millions and millions of dollars in a sector renowned for its competitiveness. The Implications for Interaction, Both Online and Offline, are Obvious Women baby boomers are a group who, trendspotters say, will continue to travel more, who are highly motived to continue

working and therefore earning after retirement, that are amongst the highest proportion of internet users, and who are likely to be in charge of unprecedented wealth. All of this makes them a substantial force to be reckoned with, and an audience that marketers need to be talking to with enthusiasm and intelligence. It’s time marketers woke up to the fact that “older” women’s wallets are a huge influence in almost every sector, and that many of these buyers have been marketed to for long enough periods of time to have seen, and grown tired of, the tricks that used to work. New times and new dynamics require fresh approaches. These are not “old ladies”. They are young-at-heart market drivers looking to get more out of every ounce of life. This is also a group with strong community motivations and a much more ethical take on what they will purchase. Corporate social responsibility continues to assert more and more influence, as consumers become increasingly aware and politicised around their spending dollar and look to spend money with brands that express points of view that they concur with. Marketers need to recognise that more and more they are dealing with morally motivated

consumers who want the world to be a safer, fairer, cleaner, more stable place, and want to see that vision reflected in the products and services they buy and the opinions articulated by the companies they buy from. Cause is an increasingly powerful motivation because it appeals to women’s inspiring sense of fairness and social justice – something Anita Roddick recognised literally decades ahead of most. In more recent times, it’s been fascinating to witness more and more people – women, general-

ly – in my workshops saying that products are about more than just what they get. Just as brands say something about who they are as a buyer in terms of personality, so choice of product is coming more and more to be a statement about a person’s wider awareness. Consumers are increasingly asking new questions – ethical questions, source questions, environmental questions – and manufacturers will have little choice in coming times but to address these, not as a compliance requirement but as a competitive opportunity.

Business Journal June 29 - July 05, 2015

Brands Marketing Advertising

9 marketing is a blunted tool, and the audience turn-off rates reflect that. Women, quite rightly, feel they have earned the right to be represented in ways that show the extraordinary economic gains they are making. More importantly, the aspiration and loyalty opportunity for smart marketers is huge. Showing women of all ages and sizes in their advertising, showing women in leadership roles, showing women as entrepreneurs, women of different races, even different religions – these are all examples of how smart marketers can not only celebrate and endorse their biggest market, but also telegraph empathy, commitment and confidence.

people to discover connections with others. This concept of working with consumers as communities represents not just a change in the dynamics of the relationship but potentially new ways for brands to collaborate with buyers. It’s moot as to whether social media generated this shift in power or facilitated a change already put in play by the increasing influence of women in the economy. However it happened, it’s important.

It’s easy, in the light of various debacles, to see these only as purity concerns. Food miles and country of origin labelling are two examples of how buyers are demanding to know more about what they buy for themselves and those they love, and to satisfy themselves that in doing so, they are not condoning child labour or slavery. You can be sure though that what may be happening now in the supermarket will soon spread to the wider high street as women use the power of the purse to push for issues that matter to them, like

fairer trade. But I think it actually goes further than that. In an insightful post on HBR, Nilofer Merchant makes the point that purpose also pulls people into communities, and that these communities, powered by social media, are also shifting the relationship between organisations and individuals. Perhaps they are right-sizing it – in the sense that consumers have now found a simple and immediate way to galvinise, achieving a critical mass that noticeably increases their influence. As Merchant points out,

“The social era will reward those organisations that understand they can create more value with communities than they can on their own.” She goes on to identify five types of community: communities of proximity, where participants share a geographic location; communities of passion, brought together by common interest; communities of purpose, who want to build or change something together; communities of practice, where people share a career or participate in the same type of business; and communities of providence that allow

Beyond Cliches No-one’s suggesting for one moment that things are perfect. Far from it. Women are still paid less for the same or more work, and a robust, fair, working mother business model is still just a dream for many women even in supposedly advanced economies. But the sheer numbers of women in or returning to the workplace, and the influence they have over the wider economy, gives me confidence that tipping point dynamics will prevail over the medium term. In their advertising, marketers should be applauding and celebrating the versatility, flexibility, organisational skills, productivity and multi-tasking abilities of women – not looking backwards to convenient clichés. Why, for example, do so many of them believe that the only way to talk to women in the home is to fill their ads with women in “traditional” roles, and why do they assume that the woman who is home looking after her sick child this morning won’t be in a boardroom, or on the phone this afternoon making decisions worth thousands, perhaps millions, of dollars? They continue to cram their marketing messages with images that are increasingly at odds with reality in the mistaken belief that by doing this, they’re being safe and uncontroversial. In point of fact though, formulaic, predictable, glib

Time for a Rethink Many brands remain curiously out of step. Banks, insurance companies, credit card companies and financial planners should be targetting women far better and far more specifically than they currently do. Power companies and phone companies aren’t even across the idea for the most part (and yet women are the very people paying their bills). There should be many more women in the building industry. The computing industry is still a mainly-male business. The list goes on … There can be little doubt that as women become even more aware of their financial influence and economic strength that the ‘push’ dynamics of a few will become the ‘pull’ dynamics of the many, as women demand more respect, attention and business done their way. Organisations will have no choice but to re-gear their cultures and adjust their decision making when pressure turns to shove on the bottom line. That means not just new attitudes to female customers, but new service models and ways of selling that gel with the way women like to buy. Fara Warner again – “A lot of companies have paid lip service and said the right things about what they were going to do for women. But they never really followed through with what had to be done in terms of corporate culture to get the company to really re-think the way it sees women. Not just how one or two people inside the company see women, but how the whole company focuses differently on this market.” Gunelius’ comment about how to appeal better to women online seems to me to have a wider application that all marketers should be listening to. “Building brand trust is critical to brand success, and social media gives companies the ability to do exactly that. It’s an opportunity that can also drive sales that still has room to grow. Brand managers should focus on creating diverse content that’s useful, trustworthy, transparent, and visual …” The influence of women on almost all aspects of branding is there for those that care to look. There’s nothing to suggest it won’t continue at a pace. That’s why organisations in my view need to address the economic power of women astutely and smartly, and respond to femonomics with even more enthusiasm and resource commitment than they have thrown at globalisation. That’s about a whole lot more than adding a new range of pretty colours to the product lines. Source: www.markdisomma

Business Journal June 29 - July 05, 2015

Insurance Pension www.businessjournalng.com

UN Tasks Insurance Industry to play strong role in shaping more sustainable future

s a major source of longterm investment, the insurance industry can and must play a strong role in shaping a more sustainable future, UN Secretary-General, Ban Ki-moon has said, urging the industry to show strong leadership and voice support for a host of upcoming United Nations-led initiatives aimed at ensuring a more sustainable world for all. “This is a critical year for action,” Mr. Ban said in remarks to the International Insurance Society Global Insurance Forum in New York, spotlighting major UN events – the Third International Conference on Financing for Development in Addis Ababa, in July; a special summit in New York In September where Member States will meet on sustainable development; and a meeting of parties to the UN climate change convention this December in Paris. “With these events, the world has an historic opportunity to adopt a new set of sustainable development goals and to put the world on track for long-term, low-carbon, climate-resilient growth,” he said, explaining that, with climate change impacts accelerating and weather-related disasters becoming more frequent and intense, people and organisations all

Secretary-General Ban Ki-moon (centre on dais) addresses the UN Insurance Sector Summit. over the world are demanding leadership and action. Both public and private sector support is needed, underscored the UN chief, adding that the insurance industry can play an important role, es-

pecially in helping to ease the financial burden associated with disasters and to protect the vulnerable. “The insurance sector is wellplaced to be a leader in risk sensitive investments,” he said, noting that

NIA Laments Loss of N60bn Premium to Touts, Tasks Govt on Enforcement Blessing Ikeme

or a vibrant and sustainable insurance sector, the Nigerian Insurers Association (NIA), has again called on governments at all levels to ensure that insurance laws are enforced. Mr. Godwin Wiggle, Chairman of NIA, made the call at a media event to mark his one year in office. He lamented what he called the neglect of the sector by various governments in the country, through failure to enforce the extant insurance laws and policies. He said such neglect has continued to haunt the industry, as it has emboldened touts who continues to undermine insurance business. This has led to huge losses for insurers in premium payment, governments in lost taxes and other stakeholders. The chairman said the industry will continue to struggle as long as this unfortunate situation persists. “We have agencies of government that are responsible for maintenance of law and order. We the insurance operators cannot enforce; we are providers. Until governments and their agencies see enforcement of insurance laws as part of their responsibility, we would continue to lose

valuable income,” Wiggle said. The NIA boss said even governments are culpable of breaking these laws, which is why it has been difficult to enforce. According to him, the regulation is that all public buildings must be insured but the reality is that governments have largely not complied. “You can imagine how many government and high-rise buildings that are uninsured. The markets we see getting burnt everyday are not insured. Also, statutorily, Customs should not clear any consignment coming into this country without insurance. That is hardly enforced.” Citing the instance of motor insurance, Wiggle said there are roughly 15 million vehicles in the country, according to data from the Federal Road Safety Commission, but only 3 million vehicles have genuine insurance cover as captured in the industry’s database, the Nigerian Insurance Industry Database (NIID). “Where are the other 12 million vehicles? The industry is losing at least N60 billion to fakes in unpaid premium in motor insurance, if we calculate using the statutory third party cover at N5,000 base premium. If there is enforcement, the premium insurance companies underwrite will be different from what you are seeing today.

There will be a significant growth in motor insurance,” he added. Wiggle identified other challenges stunting insurance growth to include cultural practices and beliefs, poverty and ignorance. “Many people see insurance as a want rather than as a need. Until that perception is changed, the insurance business will not experience the required growth,” he said. Despite these challenges, the NIA boss enumerated some of his achievements in one year in office to include extension of NIID to curb fraud or fake marine certificates, resuscitation of the Energy and Allied Insurance Pool of Nigeria, with 21 registered companies and robust engagement with the Federal Inland Revenue Service to chart the way forward on review of taxation of the industry. Wiggle then enjoined governments at all levels to take serious the enforcement of insurance regulations to curb the activities of fakes and ensure minimal loss. He also appealed to the public not to patronise road-side vendors who sell invalid insurance covers while he implored the media to educate the public more on the dangers of patronising unregistered insurance companies or agents.

disaster risk reduction is a frontline defence against the impact of climate change and it is a smart, cost-effective and life-saving investment. Moreover, it is time for global action on resilience and risk reduc-

tion that not only anticipates and absorbs climate risks, but also reshapes them into an opportunity for safer, sustainable development. “The insurance industry rose to the challenge in last year’s Climate Summit by announcing a commitment to double its climate-smart investment by the end of 2015. We must ensure that commitments made at the Summit are now implemented,” the Secretary-General declared, urging the industry to think more strategically about how climate risks can be reduced, and to adjust their investments accordingly, as well as to work with governments, especially in developing countries, to help bring about these changes. “You have seen the tragic human toll rise from extreme weather events. You know the staggering economic price tag. I call on you to show even stronger leadership. Voice your support for an ambitious agreement in Paris, said Ban, urging the participants to heed the example of industry leaders, including Axa, which recently pledged to decarbonise its assets. “Increase investments in resilient, low-carbon infrastructure. And create the innovative financial tools that will make markets work for a safer climate.”

IICC Decries Industry Disharmony, Plans Mega Conference

he Insurance Industry Consultative Council (IICC) has concluded plans to host the maiden edition of its annual mega conference in Abuja next month. Mr. Bola Temowo, the Chairman of IICC, who lamented the lack of cohesion among industry operators, said the conference became necessary to help address some industry challenges, which continues to affect the growth of insurance business in the country. “Many reasons have been adduced for the impeded growth in the insurance industry among which is the seeming lack of cohesion among all the industry operators. No tangible development can be achieved when all the operators row in different direction. The IICC is concerned and has been working to put paid to this and project the industry cohesively,” Temowo said. The IICC was established to act as the unifying voice of the insurance industry. It is expected to represent the industry on national issues affecting insurance business and most importantly oversee the resolution of intra and inter sectoral conflicts. The IICC chairman said the mega conference is a follow up to the maiden insurance industry media retreat, which held in September 2014. He said he was particularly pleased with the progress so far made to host the

conference as the industry had tried in the past to organise such conference without success. Some of the issues to be addressed at the forthcoming mega conference will include how to ensure the industry projects a common agenda, which will help it achieve required growth. “The Mega Conference represents a platform for all stakeholders to discuss topical issues affecting the insurance industry, the financial services sector and the national economy,” Temowo said. The three-day conference, tagged ‘Developing Insurance Business for National Growth’, is expected to attract stakeholders in the insurance business: brokers, underwriters, adjusters, policy makers, financial services experts and other stakeholders. “The IICC has set an agenda to improve the presence of the insurance industry as a holistic entity for the purpose of strategic policy engagement of relevant stakeholders.” He expressed the hope that the conference will mark a first important step towards unifying the industry so that it “will be able to follow up matters of collective interest with renewed vigour.” He was also optimistic that the media will continue to be a developmental partner as the IICC strives to improve the perception of insurance business in Nigeria.

Business Journal June 29 - July 05, 2015

Insurance

Pension

NIA Projects Positive Outlook for Insurance Sector Blessing Ikeme

he Nigerian Insurers Association (NIA) has projected a positive outlook for insurance business in the country in 2015 and beyond. This optimism was expressed at the Association’s 44th Annual General Meeting (AGM) in Lagos. Mr. Godwin Wiggle, the Chairman of NIA, hinged this expectation on the impressive performance recorded by the industry over the past four years,

and particularly in the 2014/2015 reporting year. The industry scorecard presented by NIA showed that insurance companies settled claims in excess of N326 billion between 2011 and 2014. A breakdown of this figure showed that N70.71 billion was paid in 2011; N72.20 billion in 2012; N92.95 billion in 2013 and N90.39 in 2014. The AGM also witnessed the election of new members into the Association’s governing council in an effort to strengthen the body’s efforts

at promoting and upholding sound business principles and professional integrity in the industry. Wiggle said the value of business underwritten by insurers in 2014 was N319 billion, a 12% growth from the N285 billion achieved in the corresponding period of 2013. Enumerating some of the key growth drivers in 2014, the NIA chairman listed them to include the strict enforcement of the No Premium No Cover policy by insurers, a robust corporate governance structure, uncom-

promising adherence to the anti-money laundering guidelines, adoption of the International Financial Reporting Standard, and a firmer supervisory oversight. He, however, identified the challenges faced by the industry, without which, he believed, the financial performance could even have been better. “It should be noted that this performance did not come easy as the Nigerian insurance landscape was plagued by several challenges. As we know, the insurance sector cannot

SA Insurance Pays N566m Consolidated Claims in Q1 2015

tandard Alliance Insurance Plc, whose new management team is led by Mr. Bode Akinboye, says it paid out a consolidated claims totaling N566.65 million to its affected policyholders during the first quarter of its operations this year, just as it has engaged Mr. Olukolajo Ezekiel, a longstanding insurance professional, to drive its underwriting and claims administration to clients’ all time expectations. A breakdown of the above consolidated sum shows that Standard Alliance Insurance Plc paid N278.64m while its life subsidiary, Standard Alliance Life Assurance Limited, was responsible for N288.01m balance. The claims were paid out to affected policyholders spread across fire, marine, Motor, oil and gas, general accident and engineering classes of general insurance as well as the group and individual life policies. Mr. Bode Akinboye, Group Managing Director, Standard Alliance Insurance Plc , who gave these details explained further that a total consolidated sum of N719.56 million was paid out by the company and its subsidiary as claims to affected general and life policyholders during the corresponding period in 2014. Akinboye underscored the importance the company attaches to prompt claims settlement, noting that “we recognise the fact that the survival or acceptance, progress and reputation of any underwriting company are a function of its consistent ability to respond to claims issues promptly and that is why we give any claims reported all the prompt at-

Mr. Bode Akinboye, Group Managing Director, Standard Alliance Insurance Plc , tention to the satisfaction of our affected policyholders.” He explained that the company’s ability to settle claims to the tune of N566.65 million at a time the insurance business patronages were not impressive owing to the nation’s focus on the general electioneering activities “clearly demonstrates the organisation’s financial strength to manage any size of risk brought to it by the insuring public at any time.” Some of the major beneficiaries of the claims

settlement, according to him, included Karina International Limited, Compact Manifold & Energy Services, Eagle Haulage Nig. Limited, St. Paul’s Church, Hydrochina Huadong Engineering and DSC International, among others. According to Akinboye, these were part of outstanding claims prior to the assumption of office by the new management in January this year, noting that “this claims response underscores the passionate commitment of the company’s new man-

agement team to aggressively pay down all claims that were hitherto unattended to.” Meanwhile, as part of the company’s renewed focus to render improved underwriting and claims services to its teeming clients, SA Insurance Plc has engaged Mr. Olukolajo Ezekiel who, until March, was Head, Technical & Reinsurance Group (General Insurance) at Old Mutual Nigeria to head its Technical Division. Olukolajo who has a consistent and vast experience in insurance, cutting across general insurance underwriting and risk management, re-insurance, claims administration and insurance broking, has worked with Law Union & Rock Insurance of Nigeria Plc, Royal Exchange Assurance (Nig.) Plc, Guardian Express Assurance Limited and UBA Group where he functioned in the group’s insurance subsidiaries at various capacities, including Chief Operations Officer (COO) of UBA Insurance Brokers Limited, before joining Old Mutual Nigeria General Insurance as Head of Technical. Olukolajo, an Associate of the Chartered Insurance Institute of Nigeria, also holds a Higher National Diploma in Insurance from The Polytechnic, Ibadan and Post-Graduate Diploma in Education Administration and Management from the Lagos State University, Ojo, Lagos. He has attended several courses and training, both within and outside Nigeria, in general business underwriting, engineering, energy and special risks including the prestigious ‘Siyafunda’ training on Commercial Risks Underwriting & Reinsurance promoted by Swiss Re.

be separated from the vagaries and vicissitudes of the national economy. Therefore, the challenges of poor power supply; weak infrastructure and the continuing insurgency in the North East contributed to slow down the pace of growth of the industry,” Wiggle said. He was quick to say though that the industry’s resilience, improved service delivery, introduction of innovative products and strategic business models will continue to project the insurance business and ensure growth.

Sovereign Trust Insurance Promotes 22 Staff Nationwide

total number of twenty-two (22) members of staff of Sovereign Trust Insurance Plc were recently elevated by the management following the outcome of the company’s 2014 performance appraisal exercise. The newly promoted members of staff cut across the length and breadth of the organisation nationwide. Top on the list of the elevated staff is the Eastern Area Manager, Angela Onochie, who now becomes an Assistant General Manager from her hitherto Senior Manager Position. Ebinyu Faloughi, who was before now a Deputy Manager becomes a full Manager. Two members of staff were promoted to the position of Deputy Manager. A total number of 10 staff got elevated to the position of Officer 1 and officer 2 respectively while another two moved to the status of officer 3. Making the list also are some of the company’s chauffeurs who moved up the ladder at different administrative grade levels within their promotion cadre. Angela Onochie joined the company at inception as a Graduate Trainee having studied Zoology from the University of Calabar. She has virtually traversed all the major Divisions in the organisation, namely, Technical, Human Resources, Administration and Marketing. She currently oversees the operations of the Eastern Area Offices for the underwriting firm. The Acting Head of Human

Resources of Sovereign Trust Insurance Plc, Adeola Onichabor explained that, asides those that got promoted, the company also rewarded other members of staff with varying salary increment notches for their outstanding performances during the period under review. She equally reiterated Management’s commitment to rewarding every member of staff who at one point or the other has been able to distinguish themselves in the course of carrying out their duties. She said Management is particularly interested and ready to support any member of staff that is willing to professionally develop himself or herself for the advancement and growth of the organisation and the individual involved. According to her, “management has identified that Professionalism is the springboard for the advancement and development of Insurance business in Nigeria; hence, the workforce in Sovereign Trust Insurance Plc is being encouraged to embrace continuing education both professionally and academic wise.” Sovereign Trust Insurance Plc recruits and retains the services of young, educated and talented professionals, with a total of 33 Chartered Insurers (ACIIN), 1 ACIIN Fellow, 2 ACCA Fellows, 13 Chartered Accountants (ACA), 8 ACIPM with 42 MBA holders and other professionals from varied disciplines, the company is ranked amongst the topmost employers of highly skilled manpower in the insurance industry in Nigeria till date.

Business Journal June 29 - July 05, 2015

Technology www.businessjournalng.com

Middle East, Africa Tablet Market Declines 6% in Q1 2015

fter years of posting successive gains, the Middle East and Africa (MEA) tablet market recorded its first ever year-on-year decline in Q1 2015, with shipments to

the

declining 5.8% to 3.83 million units. That's according to the latest market insights announced recently by the International Data Corporation (IDC), which blamed the poor performance on a sharp decline in the region's biggest tablet market, Turkey, where shipments almost halved when

region

compared to the corresponding

Etisalat Extends Deadline for Entries for 2015 Easybusiness Millionaire Hunt

igeria’s fastest growing and most innovative telecommunications company, Etisalat, has extended the deadline for the entries of the 2015 Easybusiness Millionaire Hunt by one month. According to the telecommunications company, the extension which was from Friday, June 12 to Sunday, July 12, 2015, is due to high demand and positive responses from its customers nationwide. Speaking on the latest development, Director, Enterprise Segment, Etisalat Nigeria, Lucas Dada said the call for extension by the company’s customers nationwide was a testimony to the success of the initiative. Dada said: “Due to the positive responses we received from our customers, right from the first day we announced the second edition of this competition, we at Etisalat Nigeria decided to shift the deadline for the

entries in order to accommodate as many participants as possible.’’ To participate, he said, interested Easybusiness customers must recharge their Easybusiness line with N3,000, pay 3 months subscription upfront by dialing *345*3#, then text YES to 5885 to receive a unique code and URL to submit their business idea. Etisalat Easybusiness Millionaire Hunt is aimed at empowering Small and Medium Enterprises in Nigeria with grants, training, office equipment and expertise support to actualise their business ideas. The 2015 edition will see 50 entrepreneurs with brilliant business ideas rewarded with training and office equipment, while the top 10 entries will be rewarded with N2 million each at the end of the programme. Germany Reaps $5.75bn from Spectrum Auction Germany's three mobile net-

works collectively paid EUR 5 billion (USD5.75 billion) for additional radio spectrum in the just completed auction. The price paid was at the upper end of expectations, which had been lowered following consolidation in the market which had seen it shrink from four to three networks. Bidding went through 181 rounds, spread over 16 days. According to a statement from the telecoms regulator, Vodafone paid EUR 2.1 billion, followed by Deutsche Telekom with EUR1.8 billion and Telefonica Deutschland with EUR1.2 billion. "All parties are satisfied with the results, as are the politicians," said regulator Jochen Homann just before signing the official documents at a ceremony which had been delayed by nearly two hours because delivery of the paperwork was caught up in road traffic.

quarter of 2014. "The major reason behind the decline of the Turkish market was the discontinuation of deliveries for the massive FATIH Education Project, which had a huge impact on commercial demand for tablets in the country during Q1," says Fouad Charakla, Research Manager for Personal Computing, Systems, and Infrastructure Solutions at IDC. "Currency fluctuations in Turkey, high inventory levels carried over from Q4 2014, and some saturation in the tablet market also had a negative impact on shipments targeted at the consumer segment." It should be noted that these latter three factors were responsible for slowing the market's performance in other key parts of the region as well. Meanwhile, the devaluation of certain major international currencies, such as the euro and ruble, has also negatively impacted tablet demand in MEA as a result of reduced international trade and tourism from the affected regions. Samsung continued to lead the MEA tablet market in terms of shipments, despite suffering a decline of 5.5% year on year to total 920,000 units. Lenovo overtook Apple into second place for the first time, growing almost 96.4% year on year after

shipping 520,000 units. Third-placed Apple continued to suffer, posting a sharp decline of 43.0% to total 430,000 units. In fourth place, Huawei was the fastest growing major vendor in MEA, shipping 240,000 units for a 280.3% year-on-year growth rate. Turkish vendor Casper posted substantial growth of 131.2% to rank fifth overall with 150,000 units. The year 2015 as a whole will see positive growth, with shipments increasing 5.8% year on year to total 17.66 million units. However, this represents a stark slowdown from the overall growth of 41.6% seen in 2014. "The reduction in global oil prices has caused a slowdown in government-driven initiatives in some of the region's oil-producing countries, negatively impacting demand for tablet devices," says Charakla. "The decline in government spending has also had a ripple effect on other sectors across the region, and has also impacted demand from the consumer segment." In the longer run, the tablet market is expected to continue growing at a healthy pace over the coming years, cannibalising some of the demand that currently exists for personal computers. However, with IDC expecting shipments to increase 7.0% and 7.9%, respectively, in 2016 and 2017, the market's growth will be greatly reduced from the stellar rates experienced in the recent past. It should also be noted that the decline that has been seen in the tablet market's average selling price in recent times will slowdown significantly over the coming years.

Business Journal June 29 - July 05, 2015

Technology

Eight EU Nations Urge Caution on Internet Regulation

Julia Fioretti ight European Union nations including Britain, Ireland and Poland has urged caution with regulating the Internet, as Brussels prepares a sweeping review of the behaviour of web giants that could see them subjected to new rules. In a letter to European Council President Donald Tusk, who chaired a meeting of the EU's 28 heads of state, the leaders of Britain, Ireland, Sweden, Estonia, Poland, Finland, Czech Republic and the Netherlands, said the EU should only regulate "where there is clear evidence to do so." In May the bloc's executive, the European Commission, unveiled its Digital Single Market Strategy, a broad range of policy proposals aimed at dismantling barriers to cross-border online shopping, updating copyright rules and ending blocks on watching online videos abroad. Central to European Commission President Jean-Claude Juncker's strategy to create jobs in the EU, the plan also includes a review of the business

practices of online platforms - such as Google, Amazon and Facebook which could lead to regulation. France and Germany have been among those pushing strongly for platform regulation to enable smaller European upstarts to compete with American tech giants, prompting U.S.

President Barack Obama earlier this year to accuse Europe of taking a protectionist turn. But in the letter, the eight leaders called for a prudent approach to regulation while urging strong political endorsement of the digital single market strategy.

"There is no greater opportunity at our disposal to make a real difference for investment, growth and jobs, and deliver a vital boost to Europe’s future global competitiveness," the heads of state wrote in the letter. "This also means getting the regulatory balance right...It is very clear that a successful Digital Single Market will not be one that stifles innovation, investment and entrepreneurship." European Commission Vice-President Andrus Ansip, a former prime minister of Estonia, has strenuously

denied an anti-American bias in his strategy, particularly in the area of online platforms. A senior Google executive said that regulating the Internet would hurt web companies and telecom operators alike. "If Europe goes down the route of regulating the Internet more, that would make them (investors) less likely to invest more in European ISPs (Internet service providers)," said Theo Bertram, Public Policy Manager at Google, at a conference in Brussels.

India Projects 1.4bn Mobile GOtv Extends Transmission Subscriptions by 2020

ricsson has for the first time released the India appendix of the Ericsson Mobility Report, which shows key trends and forecasts on mobile traffic, subscriptions, consumer behavior and technology uptake specific to India. As per the report, t he total number of mobile subscriptions in India is expected to increase to approximately 1.4 billion by 2020, resulting in a population penetration of 100 percent. This growth will primarily be driven by the increasing affordability of devices and services. The appendix reveals that the GSM/EDGE subscriber base is expected to peak in 2015 and expected to decline thereafter as subscribers migrate to 3G services. The WCDMA/HSPA subscriptions are expected to grow from over 120 million in 2014 to around 620 million by 2020, with the proportion of WCDMA/HSPA subscriptions in the total subscription base touching 45 percent by that time. LTE subscriptions are likely to reach more than 230 million, forming around 17 percent of the total subscription base by 2020. GSM/EDGE technology currently has the widest reach in India, with 95 percent population coverage. WCDMA/HSPA covered more than

35 percent of the Indian population at the end of 2014, and is expected to cover approximately 90 percent by the end of 2020. Additionally, around 40 percent of the population will be covered by LTE networks by 2020. In terms of demographics, the proportion of people aged over 50 who use smartphones quadrupled between 2013 and 2015, albeit from a small base. In the same period, there was a three-fold growth in the proportion of 31-40 year old mobile data users. On average, Indian smartphone users spend over three hours a day on their smartphones and 25 percent of them check their phones over 100 times a day. Around one third of the time spent on smartphones is used for apps, primarily chat, social media, and gaming. 65 per cent of mobile broadband smartphone users in India prefer video streaming to downloading videos on handsets. Affordability of smartphones will drive the overall affordability of mobile broadband in India. The number of smartphone subscriptions is expected to reach over 750 million by 2020, up from 130 million in 2014. The continued growth in smartphone subscriptions will lead to an accelerated growth in data usage; monthly mobile data consumption

is expected to increase 18-fold by the year 2020 over current levels. Chris Houghton, Head of Region India, Ericsson says: "Maintaining and improving quality of the user experience is likely to be at the top of Indian operators' agenda over the coming years. A network with a mix of macro sites, micro sites and small cells will need to be established to manage coverage, capacity and network performance for the best user experience and to meet the growing demand for data services." Video streaming accounts for the most used mobile data service amongst Indians, followed by social networking. 70 percent of mobile broadband smartphone users regularly stream videos on their smartphones, and 61 percent use social networks. Indian smartphone users are also seeing great potential in mobile broadband when it comes to facilitating the way they handle their money and personal finances. The global Ericsson Mobility Report released earlier this month stated that India grew the most in terms of mobile subscribers, with 26 million net additions in first quarter this year, followed by China (+8 million), Myanmar (+5 million), Indonesia (+4 million), and Japan (+4 million).

Signal to Epe, Ijebu-Ode

Otv coverage in Lagos and Ogun states received a boost on the 19th of June when its signals went live in Epe and Ijebu-Ode. This move signifies that more Nigerian households can now access quality entertainment at an affordable price. New subscribers can get a GOtv decoder including one month subscription to GOtv Plus bouquet for N2,900 only. To receive optimal signals, GOtv subscribers are advised to make use of the outdoor antenna (GOtenna) which is sold for a stand alone price of N1,600. GOtv offers two bouquets: GOtv Plus for a monthly subscription of N1,800 and GOtv Value for N1,200 monthly. With the addition of ONTV Max on 11 June, GOtv Plus subscribers now have access to 42 international and local channels while GOtv Value provides a total of 28 channels. GOtv’s channel line-up includes:

AfricaMagic Family, AfricaMagic Yoruba, M-Net Movies Zone, Telemundo, Zee World, Discovery World, SuperSport Select, Al Jazeera, CNN, MTV Base, Soundcity, Disney Junior, Nickelodeon, JimJam, Islam Channel, Faith Channel, and more which gives families a great selection. “The extension of GOtv services to Epe and Ijebu-Ode means that more residents of Lagos and Ogun states can now have unforgettable television viewing experiences with crystal clear pictures and quality sound,” said GOtv Public Relations Manager, Efe Obiomah. Until the recent roll-out in Epe and Ijebu-Ode, GOtv was accessible in Ibadan, Port Harcourt, Lagos, Enugu, Ado-Ekiti, Benin, Benue, Aba, Owerri, Kano, Kaduna, Onitsha, Asaba, Uyo, Abuja, Calabar, Osogbo, Ife, Ogbomoso, Akure, Oyo, Jos, Minna, Abeokuta, Sagamu, Ilesha, Ede, Iseyin and Ilorin.

Business Journal June 29 - July 05, 2015

Manufacturing www.businessjournalng.com

6 Challenges Facing Global Manufacturing Sector in 2015 The manufacturing sector is an ever changing beast and each year the industry faces new challenges. With 2015 fast approaching, Manufacturing Global takes a look at the key concerns manufacturers will have to overcome in the year ahead. Abigail Phillips • Regulation and Traceability The manufacturing sector, like so many sectors, is facing increasing regulation and compliance measures. Everything from health and safety to waste management is surrounded in red tape. While it is undeniable some regulations are essential, other can be a massive burden to manufacturing companies – particularly when they vary from country to country. Now more than ever, manufacturers must ensure they have complete visibility throughout their supply chain for their own compliance and that of their suppliers. Regulations often require the ability to track items and materials used during the manufacturing process. Companies in highly regulated industries, such as medical devices, are facing new regulations including UDI (Universal Device Identification) and ePedigree requirements, while chemical and electronics manufacturers deal with REAC (Registration, Evaluation, Authorisation, and Restrictions of Chemicals) and similar laws. Keeping abreast of regulations and managing compliance reporting is an on-going challenge faced by the sector, and more and more companies are choosing to dedicate whole teams to stay ahead of new rules. • Product Development and Innovation We live in a consumer driven world and as such product development and innovation moving at a lightning pace – to stay relevant, manufacturers need to be able to keep up with the pace. As companies vie to be first to market with a new concept, the temptation to compromise on quality can be huge, however manufacturers need to be stringent and avoid cutting corners. Fast times to market mean that companies need to become more structured in their approach to managing innovation – great product ideas cannot be left to chance. Implementing procedures that keep

a steady stream of new product ideas and innovations in the pipeline is essential to manufacturing success. • The Manufacturing Skills Gap The baby boomer generation is reaching retirement age and leaving a considerable skills gap in the workforce. While manufacturing firms are doing what they can to inspire a new generation of manufacturing employees and experts, there is still a considerable void when it comes to skills and experience. Manufacturers need to work with schools and universities in their communities to ensure that manufacturing focused subjects are being well promoted and taught. In addition, manufacturers need to bridge

the gap by encouraging their older employees to gradually slow down to retirement, passing on valuable skills to younger employees during a transition phase. • Healthcare Costs The manufacturing sector is certainly not the only one to be hit, but rising healthcare costs for workers is putting a considerable strain on already fragile manufacturing cost structures. Manufacturers in the U.S. in particular face the burden of providing healthcare while their competitors in other countries are not required to. Manufacturers need to be aware of this rising cost, and managed budgets accordingly, to ensure healthcare doesn’t push up the price

of products beyond commercial viability – it can be a balancing act. • Environmental Concerns and Considerations While it is undeniably good news for the local environment and employee wellbeing, sustainability and environmental regulations can be expensive for manufacturing firms. Manufacturers need to be aware of these costs when outlining their quarterly budgets. • Balancing Maintenance with Throughput Keeping equipment functioning is an essential part of running a manufacturing facility. Regular preventive maintenance can help increase throughput and ensure

customer satisfaction with delivery lead times. Sometimes manufacturers are tempted to postpone or delay preventive maintenance or they replace factory components with lower-quality items. This practice may create unsafe conditions in harsh manufacturing environments if these lesser components can’t stand up to operating conditions. Poor maintenance can cause health and safety issues, as well as cause unplanned or excessive downtime. Manufacturers need to perform preventive maintenance on recommended schedules to keep operating costs low and throughput high while helping to ensure worker safety.

Why We Prohibited Certain Items from Accessing Forex - CBN

he Central Bank of Nigeria (CBN) says the need to conserve forex reserves, facilitate the resuscitation of domestic industries and improve employment generation necessitated the recent forex ban it placed on 40 imported items. The apex bank had on Tuesday stopped the sale of dollars for the importation of 40 items in a move many believe was to stem the pressure on the Naira and preserve the country’s external reserves. It, however, clarified that the forex

ban does not mean those items cannot be imported only that importers of such items cannot source forex from the country’s financial services industry for those imports. “These items are not banned. Importers desirous of importing these items shall do so using their own funds without any recourse to the Nigerian forex market,” the CBN, Mr. Godwin Emefiele, said. These banned items include oil products/vegetable oil, vegetable and processed vegetable products, wire mesh, wood particles boards and

panels, rice, cement, margarine, palm kernel/palm, meat and processed meat products, enamelware, plastic and rubber products, eggs, turkey – private airplanes/jet, tinned fish in sauce – Geisha/Sardines, cold rolled steel sheet and galvanised steel sheets. Others are roofing sheets, wheel barrows, head pans, metal boxes and containers, , steel drums, steel pipes, wires, rods, poultry-chicken, steel nails, security and razor wire, Indian Incense, wood fiber board and panels, plywood boards and wooden

doors. In addition, sourcing of forex for the importation of toothpicks, glass and glassware, kitchen utensils, tables, textiles, woven fabrics, clothes, , soap and cosmetic, tomatoes/ tomato paste and Eurobond/foreign currency bond/share purchase. “In the continuing effort to sustain the stability of the forex market and ensure the efficient utilisation of forex and the derivation of optimum benefits from goods and service imported into the country, it has become imperative to exclude import-

ers of some goods and services from accessing foreign exchange at the Nigerian foreign exchange market to encourage local production. The implementation of the policy will help conserve forex reserves as well as facilitate the resuscitation of domestic industries and improve employment generation,” the CBN circular signed by its Director, Trade and Exchange Department, Mr. Olakanmi Gbadamosi, had said. The country’s external reserves has declined to $29 billion.

Business Journal June 29 - July 05, 2015

Manufacturing

Diversify the Economy Now, LCCI Urges Economy Managers

he Lagos Chamber of Commerce and Industry (LCCI) has called on managers of the Nigerian economy to harness the nation’s human resources with modern technology, to add value to non-oil export that will result in improved earnings for the country. The President, LCCI, Alhaji Remi Bello, said that the nation is currently witnessing daunting economic challenges as a result of the fall in the

global price of crude oil, adding that for a country like Nigeria that had over the years depended almost entirely on oil to fund its economy, a fall in crude oil price, poses dire and frightening implications to her economic development. Bello, during the public presentation of the prospectus of the 2015 Lagos International Trade Fair scheduled to hold from Friday November 6 to Sunday November 15, 2015, tagged: “Enhancing value

‘Nigeria Could Create 1m Jobs if Poultry Smuggling is Stopped’

he National President, Poultry Association of Nigeria (PAN), Dr. Ayoola Oduntan, has said the industry has the potential to create jobs for millions of unemployed Nigerians if the activities of smugglers are regulated by policymakers. He observed that reducing smuggling just by 30% will result in the creation of 1 million jobs in 12 months. Oduntan gave this assessment at a workshop in Abuja tagged: “The Economic and Health implications of Smuggled Poultry Products.” He said that activities of smugglers were impacting negatively on locally produced poultry products. “Given all necessary and strategic support, the industry will make significant contribution to the national Gross Domestic Product (GDP), creating thousands of jobs and stabilising the food and nutrition needs of the populace while also boosting rural economies as most poultry operations are rural based,” Oduntan said. He revealed that Nigeria spent N660 billion to import 1.2 million metric tons (MT) of frozen chickens into the country in 2014 despite existing ban. This, he said, was four times greater than what was produced local-

ly and exceeded the current industry capacity of 650, 000 metric tons (MT). “As at 2014, locally produced chicken production estimated at 300, 000 metric tons, a capacity utilization of 46 per cent in an industry that currently boasts of 650, 000MT installed capacity. In the same year, 1.2 million metric tons of frozen chicken, valued at N660 billion (equivalent to $2.75 billion) was imported. This was four times greater than what was produced locally and exceeding the current industry capacity. A clear point here is that local poultry industry is reaching its growth elastic limit,” he said. “At the primary production level, the poultry industry currently consumes 2 million MT of maize and 750 MT of soya beans, thus providing massive employment for thousands of Nigerians. To fully utilize the balance of the industry’s installed capacity of additional 350,000 MT will translate to significant benefits through more job creation in form of 350, 000 new jobs in maize production; 100, 000 new jobs in soya production, 75, 000 new jobs in processing and 500,000 new jobs in ancillary raw materials, products.”

addition in the non-oil economy”, stressed the need for not only identifying the alternatives to crude oil, but also giving exposure to the opportunities that abound in value addition to enhance earning and profitability. He said the public presentation of the prospectus is also coming on the heels of the chamber’s introduction of two trade venues to facilitate corporate exhibitions, business to business meetings and

boost the rapidly growing Nigeria’s creative industry. He stated that with this move, the chamber has opened new vista of opportunities, especially in the non-oil sector of the economy for indigenous and foreign investors to tap the inherent huge benefits. ”Our investment forum, which is planned to hold at the Muson Centre during the fair, on the theme of the fair, will also provide additional resources for discerning business peo-

ple, as the forum will serve as a master class and intellectual power house for all that is needed in exploiting the non-oil investment opportunities in Nigeria,” he added . “Many States of the federation are currently having challenges meeting their basic financial obligations. It is therefore imperative that if the Nigerian economy is to survive, achieve economic independence, industrialisation, there is an urgent need to diversify our sources of income.”

BAT Foundation Aids Ebonyi Farmers through Rice Project

he British American Tobacco Nigeria Foundation (BATNF), in collaboration with the Ebonyi State Fadama Co-ordinating Office, has launched the second phase of the Rice Enterprise Value-Chain Development Project. The event, which held recently at Ojiegbe Community in Izzi Local Government Council of the state, was in continuation of BATNF’s efforts geared towards poverty reduction and wealth creation through agricultural enterprise value-chain development. Speaking at the event, former Commissioner for Agriculture and Natural

Resources, Dr. Emmanuel Echiegu, on behalf of the Ojiegbe-Igbeagu Community and the state, thanked BATNF for coming to the aid of the poor rice farmers in the community. He also commended the Foundation for the early commencement of the project, and reiterated the importance of the agricultural project intervention to the state. “The feedback received by the Ministry indicated that the three-year intervention has made a very positive impact on the beneficiaries, their families and the community,” he said. The Ebonyi State Fadama Project

Co-ordinator, Dr. Cletus Nwakpu, said the Foundation’s intervention in the state in the last eight years has been very impactful in empowering the beneficiaries through provision of grants, trainings and other incentives, which have been instrumental to members dealing with the challenges of poverty. “The intervention of the Foundation has addressed the farmers’ problems, thus increasing rice yield, milled quality rice and returns on investment, which has greatly reduced poverty among the benefiting farmers in the state,” he said.

US Manufacturing May be Stabilising, says US Commerce Dept

gauge of US business investment spending plans rose in May, a tentative sign that the manufacturing sector was stabilising after hitting a soft patch in recent months. But the lingering effects of lower oil prices and a strong dollar will continue to constrain factory activity for a while, economists say. Other data showed new home sales increased to a more than seven-year high in May. Manufacturing is lagging an overall rebound in the economy after output shrank at the start of the year. Despite the weakness in factory activity, the Federal Reserve is expected to raise interest rates this year. The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.4 percent last month. These so-called core capital

goods orders slipped 0.3 percent in April. "We are still far from calling the allclear for the manufacturing sector's recent soft patch. That said, today's increase in core orders offers some modest encouragement," said Sarah House, an economist at Wells Fargo Securities in Charlotte, North Carolina. Fed Governor Jerome Powell said the economy was likely to strengthen in the second half of the year and could be ready for a rate hike in September and a second increase in December. The dollar rallied against a basket of currencies on Powell's comments, while stocks on Wall Street were little changed. Prices for US government debt fell also as safe-haven bids faded on hopes of a deal that could prevent Greece from defaulting on its debt. Manufacturing, which accounts for about 12 percent of the US economy,

has been hurt by the strong dollar and investment spending cuts in the energy sector in the aftermath of a more than 60 percent plunge in crude oil prices last year. The number of US oil drilling rigs has dropped to near five-year lows, prompting oilfield companies like Schlumberger and Halliburton to slash their capital expenditure budgets for this year. However, the pace of the decline in oil rig counts has slowed in recent weeks as crude prices edged higher. The dollar has gained about 12 percent against the currencies of the United States' main trading partners since June 2014, taking a bite out of the profits of multinational corporations. Factories also have been hampered by businesses placing fewer orders while working through a stockpile of goods accumulated last year.

Goodyear to Close UK Plant, Putting 330 Jobs at Risk

he tyre company, Goodyear has announced plans to close its only UK manufacturing plant with the loss of hundreds of

jobs. The US-owned company plans to transfer operations elsewhere and said the move would strengthen its competitiveness in a “challenging” business environment. Goodyear said in a statement: “These proposals are subject to consultation with relevant employee representative bodies.” Goodyear Dunlop Tyres UK

said it was determined to find responsible and fair solutions for all affected employees. The firm said the closure would enable it to align production capacity with market demand, simplify operations, improve efficiency and reduce the structural costs of manufacturing. It said: “Under these proposals, Wolverhampton’s compound mixing activities and production of commercial retreaded tyres would be transferred to existing production plants across the EMEA [Europe, the Middle East and Africa] region.”

Erich Fric, the managing director of Goodyear Dunlop Tyres UK, said: “We understand the impact the closure of Wolverhampton would have. We will honour our responsibilities and will do everything we can to support all employees who are affected. “In the face of ever increasing competition, we carefully considered several options. However, we believe these proposals are needed to strengthen our competitiveness and ensure we have a sustainable business.”

Business Journal June 29 - July 05, 2015

Energy

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2015 Could Be The Year Of Peak Oil

Ron Patterson he EIA has finally updated their International Energy Statistics with data through February 2015. All data in the charts below are Crude + Condensate and is in thousand barrels per day with the last data point February 2015. World C+C dropped 477,000 bpd in January and another 65,000 bpd in February for a total decline of 542,000 bpd. World C+C stood at 79,160,000 barrels per day in February. Non OPEC C+C declined 244,000 bpd in January and another 100,000 bpd in February for a total decline of 344,000 since December. Non-OPEC C+C production stood at 46,656,000 bpd in February. OPEC C+C, in February 2015 stood at 32,504,000 bpd, down 1,451,000 bpd from its peak in April 2012. However, according to the OPEC MOMR their crude only is up 1,000,000 bpd from February to May. According to the EIA’s International Energy Statistics US C+C production, in February, stood at 9,238,000 bpd. It was down 14,000 bpd in January but up 24,000 bpd in February for an increase of 10,000 over those two months. An interesting point here is while US C+C was up 10,000 bpd from December to February, US total liquids were down 297,000 bpd. That was because over that two month period they have NGLs down 20,000 bpd, refinery process gain down 150,000 bpd and other liquids down 136,000 bpd. Inspite of the huge rig count

decline in Canada the EIA says they were up 99,000 bpd in January and up another 22,000 bpd in February. Canada’s C+C production stood at 3,901,000 bpd in February. China, after reaching a new high in December fell 83,000 bpd in January and another 14,000 bpd in February. China’s C+C production, in February, stood at 4,218,000 bpd. Russia’s C+C reached 10,220,000 bpd in January, barely topping the 10,209,000 bpd of November 2013. Their C+C production however dropped 70,000 bpd in February and stood, at that point, at 10,150,000 bpd. There has been a lot of discussion on this blog lately as to whether US crude production, in the last few months has been up or down. The EIA’s Weekly Petroleum Status Report

has U.S production soaring in 2015, reaching new highs almost every week. However the EIA’s ownDrilling Productivity Report has shale oil, the source of almost all US production gains, peaking in April with an increasing decline in May, June and July. And reports from individual states seem to indicate that the decline started even earlier. Platts mentions Eagle Ford was down 8,000 bpd in April and down another 6,000 bpd in May. And we know from the NDIC Stats that North Dakota production in April was down almost 22,000 bpd in April and down almost 60,000 bpd since peaking in December. Platts however says Bakken production was basically flat in May, up a mere 650 bpd. Accurate to 10 bpd? I

seriously doubt that. I am betting that when the June data finally comes in that it will show crude oil production in the US has seriously declined since December 2014. And it is likely Canada has done likewise. This chart shows OPEC crude only production through May. They have increased production by 1,000,000 bpd since February but they are all pumping flat out to achieve that. I am now more convinced than ever that 2015 will see the peak in world crude oil production. I have very closely studied the charts of every producing nation and my prognosis is based on that study. I see many nations in steep decline and most every other nation peaking now, or in the last couple of years, or very near their peak today. These include the world’s

three largest producers, Russia, Saudi Arabia and the USA. Many other nations are at or have reached their peak in the last few years. These include other producing giants such as Kuwait, the UAE, Brazil and China. Other non-giants are peaking or have recently peaked include Colombia, Oman, and India. Only Canada, and Kazakhstan have any real upside potential and I am not too sure about Kazakhstan. I know many will point to Venezuela but that is just not going to happen. Venezuela does have vast potential but also has vast political problems and a history of confiscating foreign assets and paying them pennies on the dollar. So don’t expect anything but a slow decline from Venezuela for the next decade or so.

Sustainable Energy Crucial for Inclusive Development, Climate Change

ustainable energy is the golden thread that connects both inclusive development and efforts to combat climate change, said participants at the Vienna Energy Forum (VEF) that opened in the capital of Austria. The three-day major international event brought together over 1,000 participants, including high-ranking government officials and experts in the field. It precedes the Sustainable Development Goals (SGDs) Summit in New York and the UNFCCC Conference of the Parties (COP 21) in Paris. By emphasising the multiple ben-

efits of both the post-2015 development and the climate agendas and showcasing best practices and actions on the ground, the VEF 2015 aims to contribute to both the SDGs Summit and COP21. Speaking at the opening of the Forum, LI Yong, the Director General of the United Nations Industrial Development Organisation (UNIDO), said: “Energy systems can be overhauled to support a sustainable future; they need to be affordable, reliable and environmentally sound. To make economic growth and development more inclusive and sustainable, we must rapidly reform our industrial processes towards sustainability. We must promote energy efficien-

cy and renewable sources of energy more effectively, and reduce our carbon foot-prints. We need to also work on the constructive inclusion of women and youth – through their economic empowerment and entrepreneurship development in order to firstly address inequalities and secondly to unlock the full potential of the countries and society to innovate and motivate for solutions. We must use our scarce resources more efficiently and effectively. And lastly, we must also advance our cleaner production abilities.” Referring to energy as the “central nervous system of the world economy”, Michael Linhart, Secretary General of the Austrian Federal Ministry of Europe, Integration and Foreign

Affairs (BMEIA), added: “The programme of this year’s Vienna Energy Forum reflects the manifold ways in which energy comes into play: as a nexus with other sustainable development goals, as a driver for urban development and as part of mutual linkages with gender equality and the empowerment of women. Developing successful business models and smart policies will be key in making sure that sustainable energy can make a major impact on inclusive development. Austria has a long tradition of know-how and expertise in renewable energy and energy efficiency which it is willing to share.” Nebojsa Nakicenovic, Deputy Director General of the International

Institute for Applied Systems Analysis (IIASA), speaking at the opening session on behalf of Director General Pavel Kabat said: “This year’s Forum comes at a key moment in the lead-up to agreements later this year on climate and sustainable development. It is impossible to ignore the fact that energy is at the heart of sustainable development, and inextricably linked to climate change. IIASA

Business Journal June 29 - July 05, 2015

Energy

Natural Gas Production in North America not Likely to Slow Down

ith the North American natural gas market seeing growing supply, increased competition and falling prices, the National Energy Board believes natural gas delivery and exports will remain oversupplied, according to a statement from the organisation. With Canadian producers disregarding the oversupplied market, many natural gas companies will continue to drill on proven reserves for liquid natural gas export terminals, the agency said. Connor McDonald, lead author of the National Energy Board's MidRange Forecast, explained western Canadian gas producers will continue to work through the oversupply period, but some companies have seen benefits to the decline in oil prices in the last year, the Calgary Herald reported. "We still have a lot of competition

research is providing unique insight into t h e s e prob-

from the U.S. - that's something that really can't be understated - and we are still in an oversupplied market," said McDonald. "In those respects, there are definitely some difficulties for Canadian producers." Natural Gas Delivery Still Rampant The National Energy Board report added even with the falling prices of natural gas and LNG, the market is still witnessing a high amount of deliverability. Peter Argiris, a forecast analyst for oil and gas advisory firm Woods Mackenzie, said Canadian production is only expected to grow within the next decade, the Calgary Herald stated. "On the natural gas side, we see volumes increasing … from 12 Bcf (billion cubic feet) to over 19 Bcf per day," said Argiris. "The lion's share of that growth is coming from Montney and Duvernay,

lems by exploring the inter-linkages between them and the potential pathways to achieving a just and sustainable future for all the people on our planet.” Kandeh Yumkella, Special Representative of the UN Secretary-General and Chief Executive Officer of the Sustainable Energy for All initiative, said: "We need to transform the world’s energy systems by taking a fresh, joined-up approach that can fuel development and at the same time combat climate change. We can change the game by mobilising multiple players – public sector, private sector and civil society – to work together in new partnerships and leverage the necessary large-scale investment." Martin Ledolter, Managing Director, Austrian Development Agency (ADA), said: “For the past ten years, ADA has been assisting people in developing and emerging countries to gain access to sustainable and ecologically sound energy services. So far, we have

effectively as associated gas production. They're drilling for liquids but the gas is coming." In the Montney shale basin, production is expected to increase by 94,000 barrels of oil equivalent per day from 2015 to 2025. Additionally, the Duvernay shale is estimated to grow from 27,000 boe/d to 320,000 boe/d in the same time frame. Even though oil production is still remarkably high, much of the western Canadian producers still need to supply plenty of natural gas and LNG supplies for the gas export industry. However, there are still no sanctioned LNG projects. According to the source, roughly 98 percent of the nation's gas production comes from the western region. At the same time, wells continue to search for oil and other liquids while producing natural gas as a byproduct.

financed projects in the amount of 48 million Euros for all those so far without access to modern energy. We are particularly proud to have initiated the establishment of a Center for Renewable Energies and Energy Efficiency for Western Africa in Cape Verde, which we supported in partnership with UNIDO. This center is responsible for the creation of a coherent energy policy framework for the 15 member states of ECOWAS. Similar additional centers are now being planned for the East and Southern African Communities and the Caribbean. Getting the business community on board to get behind sustainable energy agendas in development is another success we are very happy about. Our support for such business partnerships has created direct benefits for 133 companies and around 255,000 people since 2012.” In addition to the main organisers, the Vienna Energy Forum 2015 key partners include the Government of Germany, the Government of the Republic of Poland, the OPEC Fund for International Development (OFID), the Global Environment Facility (GEF), and the Renewable Energy and Energy Efficiency Partnership (REEEP).

EIA: U.S. Crude Oil Production Growth Reduce Gulf Coast Imports

n recent years, higher domestic production of light, tight crude oil has led to a reduction in crude oil imports. Certain types of crude oil have been affected more than others; for example, the increased economic availability of domestic light, tight crude oil has virtually eliminated Gulf Coast imports of light crude oil. In the past year, Gulf Coast imports of medium crude oil have also fallen because of increased production from the Eagle Ford, Bakken, and Permian regions. One of the key characteristics of crude oil is its density, measured by API gravity as established by the American Petroleum Institute. Less-dense liquids have higher API gravities. Crude oils with API gravities of 35 or above are considered light; 27 to 34 are medium; less than 27 are heavy. From the first quarter of 2014 to the first quarter of 2015, medi-

um-grade crude oil imports to Gulf Coast refineries decreased 45%, from 1.5 million barrels per day (b/d) to 0.8 million b/d. On the other hand, over that same period there was a 0.4 million b/d (22%) increase in imports to Gulf Coast refineries of heavy crude oil. Improved refining margins from processing additional volumes of heavy crude have resulted in a 3% increase in gross atmospheric distillation unit (ADU) throughput in the Gulf Coast region over this period, from 8.0 million b/d to 8.2 million b/d. Almost all medium-grade crude oil imports are from Middle Eastern countries. Gulf Coast imports of medium crude oil from Saudi Arabia decreased by 52% from the first quarter of 2014 to the first quarter of 2015, from 0.9 million b/d to 0.4 million b/d. Similarly, Gulf Coast imports of medium crude oil from Kuwait decreased by 46% over this period, from 0.4 million b/d to 0.2 million b/d.

Business Journal June 29 - July 05, 2015

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IATA Advocates Framework for African Aviation Connectivity

he International Air Transport Association (IATA) called for governments, safety regulators and industry to take action to drive aviation connectivity and infrastructure development in Africa for the economic and social development of the continent. “Africa is set to be one of the fastest-growing aviation regions over the next 20 years, with annual expansion averaging nearly 5%. This opens up incredible economic opportunities for Africa. But aviation faces considerable challenges, and for its potential to be realised, correct policies must be developed. Smarter regulation, and a focus on delivering the safety and connectivity commitments of the African Union, will be crucial to establishing Africa as a global aviation powerhouse,” said Tony Tyler, IATA’s Director-General and CEO. Tyler made his remarks at the IATA Africa and Middle East Aviation Day in Nairobi, Kenya. The event is bringing together key stakeholders under the theme ‘Connecting Africa’ focusing on the development of frameworks to promote connectivity in regulations, commerce, and operations. In his speech, Tyler identified key challenges needing to be addressed: • Safety – “Safety must always be our first priority. Africa experienced zero jet hull losses in 2014, an excellent result. The all-aircraft accident rate, however, remains considerably higher than the global average. The Abuja Declaration commitments by African governments must be followed up with action to

increase compliance with ICAO standards.” IATA is moving forward with assistance for airlines that are eligible for the IATA Operational Safety Audit (IOSA). For airlines ineligible for IOSA, a new IATA Standard Safety Assessment (ISSA) has been developed. • Smarter Regulation – “African nations have an opportunity to enact smarter regulation to enable better aviation connectivity. Implementation of the Yamoussoukro Decision will open up air routes within the continent and provide opportunities for more than 5 million additional passengers a year. Those

African governments yet to ratify the Montreal Convention 99 and Montreal Protocol 14 treaties, on global standard airline liability and the treatment of unruly passengers respectively, should do so without delay.” • Infrastructure –The provision of appropriate infrastructure, offering the right capacity at the right price, is essential for the growth of sustainable air services across Africa. “The International Civil Aviation Organisation (ICAO) has very clear guidelines on infrastructure funding—and Africa has

an opportunity to be a leader in this field by developing its infrastructure in close consultation with the industry.” • Environment – “The industry is committed to meeting its carbon emissions targets. In particular, our goal of carbon-neutral growth from 2020 is of utmost priority. The negotiations for a global market-based measure to tackle carbon emissions from aircraft are entering a crucial phase ahead of the 2016 ICAO Assembly. It is vital that African governments support a workable solution, in order for a measure to

be in place in time for the industry’s 2020 goal of carbon-neutral growth.” The opening session of the Aviation Day featured participation from senior government and industry leaders including John Kipngetich Mosonik, Kenya’s Permanent Secretary for Infrastructure & Transport; Dzifa Attivor, the Minister of Transport for Ghana; Barry Kashambo, Regional Director Eastern and Southern Africa, ICAO; Elijah Chingosho, Secretary General of AFRAA; and Gilbert Kibe, Director General of the Kenya Civil Aviation Authority.

The Future: Airplanes That Fix Them Milena Veselinovic

t may sound like a line from a scifi novel, but scientists believe that in the near future airplane wings will be able to fix themselves on the go. A team from Bristol University in England has developed technology that could repair cracks on an aircraft in a similar way that human skin heals. Their research has focused on carbon fiber reinforced composite materials, which are commonly used to make sports equipment and, increasingly, the modern generation of aircraft. They have created tiny micro-spheres -- hollow capsules so small that several could fit across the width of the human hair -- which are filled with a healing agent and then planted into the composite

material. On impact these spheres crack, and when the liquid comes into contact with a catalyst, which is also planted into the material, it causes it to harden and literally glue the crack together. If you cut your finger, eventually it will heal... can we apply that sort of idea to these man-made structures? Professor Duncan Wass, Bristol University "Our approach here is to take the inspiration from the human body in that if we get damaged, we have the mechanisms to repair that damage," says Professor Duncan Wass, the lead researcher on the project alongside Professor Ian Bond and Dr. Richard Trask. "If you cut your finger, eventually it will heal, so we thought, can we apply that sort of idea to these man-made structures? So that's what we've done," he adds. At the moment, the technology can only

help to fix very small cracks, rather than any significant structural damage. However it's precisely those tiny rifts that can often lead to bigger problems, which can endanger an aircraft if undetected. And rather than coat the entire airplane in micro-spheres, scientists say they could use existing knowledge about aircraft structure to target areas deemed to be of higher risk. Self-healing technology is not entirely new. For instance, car paint that can self-repair fine scratches already exists. However, professor Wass warns that in the context of airplanes, it takes a lot more than just restoring the way a surface looks. "We're talking about structural materials here, it's not enough for it just to look the same, it's got to be strong," he says. Scientists also have to find a way to make the technology work equally well across different environments. "The problem we have is that if an air-

plane is flying, it's very cold when you're at high altitude, or it might be on runway in Dubai and it's 40 degrees, and actually getting it to heal the same across those temperatures is the technical challenge that we have," says professor Watts. Ironing out all the technical problems isn't the only requirement for self-fixing planes to enter the market, as it also depends on the airline industry's interest and willingness to bring them on board. Boeing says the company has spent a number of years researching self-healing coating and other related technologies. "However, it is too early to speculate how research in this area may be incorporated into any product or service," says a spokesman. Professor Wass agrees that we won't be jumping on any self-fixing jets just yet. The technology, which is funded by the Engineering and Physical Sciences Research Council and UK Catalysis Hub, is still five

Business Journal June 29 - July 05, 2015

10 Ways to Avoid Tourist Trouble in Japan

eeping abreast of customs -- and avoiding faux pas -- can be a minefield for visitors to Japan, as U.S. model and restaurateur, Patrick Schwarzenegger is finding out. It's mostly regular tourist stuff, like visiting Tokyo's Meiji Shrine and eating sushi. But he attracted disapproval online and in Japan when he posted a video -- since removed from his Instagram account -- of him "pranking" an apparently unsuspecting visitor to a temple in Kyoto by tickling her neck with a twig. In response, Schwarzenegger posted a defense on Twitter, telling his critics that he knew the woman, and that she had laughed along with him. But for anyone planning on visiting Japan -- and a lot of people do, with a 43% rise in April this year over the same period in 2014 and numbers only set to increase given a weak yen and the 2020 Olympics on the distant horizon -- our team in Tokyo has helped pull together a handy list of don'ts to stay on the right side of Japanese customs. • No Jaywalking -- Always Use the Crosswalk Many Japanese drivers are sticklers for the rules, and will honk disapprovingly -- even from a considerable distance -- if they see someone crossing the road at any point other than a designated crosswalk. • Smokers Can Be Fined for Lighting up Outside While there are no laws against smoking in bars and restaurants, or any privately owned business, perversely it's the great outdoors that can present problems. Smokers shouldn't even think about lighting up on the street, as many Japanese cities -- including Tokyo and Osaka -- have ordinances prohibiting lighting up outdoors, except in designated "tobacco corners."

mselves? to 10 years away from being developed enough to be implemented. "We had the concept early on but the devil is in the detail in getting it to work," he says. "For aerospace applications where safety is absolutely critical we're probably a long way off," says Wass. However, other uses could come in the near future, such as in offshore wind turbine blades. "They're out in the sea, very high and difficult to reach, we can imagine applying there sooner," says professor Wass. "Many more consumer items -- sports equipment, bicycle frames, you can imagine in much nearer terms, maybe two years before we can start to see these things happening," he says. What seems certain, however, is that the dawn of the self-healing airplane is upon us.

• Always Take Shoes Off at the Door When Visiting Someone's Home Clean, matching socks without holes should be worn -- which kind of goes without saying if you're over the age of 12. Japanese people usually say "O-jama shimasu!" ("sorry for disturbing you") when coming into someone's home, and most often will bring a small present, called o-miyage, for their hosts.

Defying this ban is punishable by fines up to 50,000 yen (about $400). • Don't Litter -- The Streets Here are Immaculate While many other countries would turn a blind eye to a plastic carrier bag or cigarette butt adorning their streets, a zero-tolerance stance on street trash is taken in Japan. Expect disapproving stares and/or aghast looks if that candy wrapper is disposed of in a less-than-proper fashion. There isn't really any excuse, anyway, as public trashcans are liberally spread throughout Japan's major cities. • Make Sure Litter is Thrown in the Correct Trashcan And anyone disposing of refuse in a designated receptacle should make sure to do this properly, too. At the very least trash is separated

into 'burnable' and 'non-burnable' bins, as Japan deals with much of its waste by incinerating it. Even fast-food outlets insist garbage is broken into plastics, papers and so on. • Don't Point Fingers at People Again, this is fairly universal, but it's considered rude to point directly at someone, be it with a finger, chopstick or foot. If it's necessary to indicate someone, this should be done with a hand gesture, while keeping that outstretched finger under control. • It's Also Very Rude to Cut in Line From trains to escalators in Japan, masses of people can be seen lining up in an orderly fashion. Barging in is a strict no-no especially

on trains where embarking passengers stand to the side to let disembarking passengers alight before piling in. Major city subways and commuter trains can get seriously busy, particularly during morning rush hour, but manners still hold. Conversely, however, it isn't customary to hold doors open for anyone who may be following. • When on the Train Set Ringers to Silent and Avoid Talking on Cell Phones Conversations are quiet -- most people don't talk at all. Doing makeup, sleeping, text-messaging and (quietly) playing cellphone games are all acceptable onboard activities, but silence is golden on Japan's extensive rail network. Oh, and don't ever eat or drink on the train.

• No Need to Tip When Eating Out or Taking Taxis Service providers here won't accept it. Service is almost universally included, and stories abound of diligent restaurant employees chasing foreign patrons down the street to return their "forgotten" change. Similarly, taxi drivers -- the majority of whom wear impeccable uniforms, hats and white gloves -- give back exact change and refuse any gratuity. One other thing about taxis to note -- they are equipped with automatic doors controlled by the driver, and shouldn't be manually opened or closed. • No Swimsuits in Onsens -- Go Naked Instead One thing Patrick Schwarzenegger got right was stripping off to visit a Japanese hot spring, or onsen. Many Japanese consider it downright weird to see someone wear swim trunks or a bikini in a hot spring. Bathers should remember to scrub up and rinse off before getting in the water, either in a public bath or at someone's home. Japanese are used to sharing hot water so the actual cleaning part happens before jumping in the tub. But while less clothing is the general rule when bathing, tattoos should be covered when at onsen, or public gyms, for that matter -- they're often associated with the Yakuza -- the Japanese mafia.

Business Journal June 29 - July 05, 2015

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An Overview of the National Broadband Plan Commonwealth Broadband Forum June 2015

Business Journal June 29 - July 05, 2015

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Online Transactions: Building Interoperable Legal Frameworks To Support Value-Added Services And Innovation Commonwealth Broadband Forum 2015 Abuja, Nigeria 16-17 June 2015

Ngozi Onodugo Consultant, UNCTAD

Business Journal June 29 - July 05, 2015

For the Record

Official Communiqué of Nigeria Oil & Gas (NOG) Conference 2015 (1) Text of the NNPC 2015Communiqué on the Nigerian Oil and Gas Conference held at Transcorp Hilton, Nicon Luxury and the International Conference Centre in Abuja from 16th – 19th March, 2015 under the auspices of the Ministry of Petroleum Resources, NNPC and organised by the CWC Group Limited. OVERVIEW The Nigerian Oil and Gas Conference and International Exhibition (NOG) was held in Abuja, between 16th and 19th March, 2015. The NOG 2015 Conference was themed “The Journey Towards Transformation” – very apt in view of the price shock being experienced globally and as the country strives to secure its future position. The Conference was well attended with hundreds of participants from Federal and State Ministries, departments and agencies, the public service sector, representatives of the IOCs, oil and gas private sector and other stakeholders across the Nigerian oil industry. The NOG Conference was established fifteen years ago as a meeting place for oil and gas industry players in Nigeria to discover best practice and discuss practical solutions, geared towards enabling the country’s growth, development and transformation. Key presentations and panel discussions were made by industry leaders. As usual, the four day programme commenced with the Oil and Gas Finance Seminar held on day one, followed by a two day Strategic Conference and concluded with the Nigerian Content Seminar held on the last day. Key themes include the following: • The Changing Face of the Oil and Gas Industry • A New Era for Gas and Power • Effective Solutions Driving Industry Change • The Rise of Nigerian Independent Producers • Security Challenges Faced by the Nigerian Oil and Gas Industry • The Journey to Transformation • Accessing Financing • Nigerian Content THE OIL & GAS FINANCE SEMINAR Financial Implication of Current Market Conditions The bearish trend in the global oil and gas market had an adverse effect on the amount of capital flowing into the industry. Falling oil prices coupled with the challenge of shrinking markets has generated uncertainty in the nation’s oil and gas industry. CHALLENGES CONFRONTING THE INDIGENOUS OIL AND GAS INDUSTRY IN ATTRACTING CAPITAL AND INVESTMENT INFLOW: • Regulatory and fiscal uncertainties: − Constant delays and lease period mismatch (debt tenor vs lease period of OMLs). • Short term contracts appear to be a constraint to accessing sustainable financing. • Indigenous companies’ poor corporate governance and poor project management due to capability gaps. • Local banks’ limited understanding of oil and gas businesses. • Restricted lending capacity of in-

grids and via 132KV lines. • Implement cost reflective tariff for the various distribution companies. • Facilitate development of National Renewable Energy Action Plan (NREAP) and National Energy Efficiency Action Plan (NEEAP) in collaboration with the Federal Ministry of Power and other stakeholders. • Facilitate an implementation framework for sustainable off-grid renewable energy schemes as part of the strategy and plan of the Rural Electrification Agency.

digenous banks and rate disadvantage compared to various money lenders etc. • The Environmental Impact Assessment (EIA) compliance level of producers is not attractive enough from the perspective of the financial institutions. • Poor credit rating affecting money lenders’ ability to support indigenous companies. • Delayed litigations inhibiting mergers and acquisitions e.g. ongoing litigation between Chevron, Seplat & Brittania U on sales of OMLs 52, 53 & 55 with attendant/escalating contingent liabilities in light of the fact that the sale of OML 53 has already been concluded with Seplat. Key Recommendations: Regulatory • Significantly improve regulatory and fiscal stability and predictability to reduce risks, promote capital investments and ease bankability. • Favorable interest and exchange rates policy urgently required to encourage investments. • Corporate Affairs Commission (CAC) to consider opening a domiciliary account for payment of relevant fees to mitigate prevailing transactional risk associated with foreign exchange movements. • Department of Petroleum Resources to develop clear guidelines on the conditions for qualification of exact percentage to be charged as fees against the subjective range of 1-5% currently being applied. • Compressed contracting cycle and effective contract sequencing (back-toback) is required to sustain players and ensure job creation and retention. • Clarity and effective communication on all regulatory guidelines. • Speedy and unprejudiced resolution of court cases. Industry • Independents to focus on building reliable governance structures in order to attract appropriate funding and ratings. • Strategic switch towards capital discipline, cash conservation, appropriate hedging and cash flow based project funding required under challenging market conditions. • Indigenous companies need to explore equity funding and mezzanine financing options. To achieve this, owners and shareholders of indigenous oil companies must show more willing-

ness to relinquish control. • Indigenous oil companies to focus on improving technical and operational capacity, project development skills and credit ratings. • Focus on EIA compliance improvements to attract money lenders and development finance options. THE CHANGING FACE OF THE OIL AND GAS INDUSTRY: NIGERIA’S FUTURE STRATEGY IN A GLOBAL CONTEXT The state of the oil industry was adequately captured, the oil and gas industry in Nigeria must maintain a prudent and appropriate fiscal environment that will drive down the existing high cost of production currently experienced. Recommendation: Government • Speedy passage of the Petroleum Industry Bill remains critical in ensuring clear and transparent fiscal rules of general application with appropriate incentives to the investor and commensurate economic return to the State. • With falling oil price and rising industry costs, there is a need to review the fiscal environment in order to maintain an attractive investment climate for all industry stakeholders. • Renewal of production leases as they are due is of utmost strategic importance and benefit to all stakeholders. • Develop bilateral relationships with the countries that are inclined to taking Nigerian crude. • Government should put efficient security measures in place to prevent illegal bunkering and oil theft as well as the political will to punish the perpetrators. • Need for the rehabilitation of all four refineries to minimise import of petroleum products and save foreign exchange. • Government to facilitate reforms aimed at gas commercialisation which should include appropriate gas pricing and world class contractual frameworks for supply, transmission and access. • Government should develop key policies for the business environment funding model etc. so as to urgently explore and aggressively find and develop the 600Tcf of unproven gas reserves. • Expand on ‘gas to power’ initia-

tives to grow the allied industries (petrochemicals, etc.) in an integrated manner similar to that of Qatar. Industry • Industry operators to revise their funding mechanisms for projects to match the current situation. • Independents and marginal field operators to work together in the area of Crude Handling Agreements (CHA) and terminal operation to minimise crude allocation and custody transfer challenges. • Nigeria remains a country of opportunities and potential with a lot of successes to be achieved but requires cooperation, collaboration and hardwork. A NEW ERA FOR GAS & POWER: IS NIGERIA ON COURSE TO MAXIMISE ITS POTENTIAL? Power generation assets have experienced relative improvement in availability post-privatisation, resulting in an overall increase in available generation. Challenges include but are not limited to: • Pipeline security - a serious threat to both current and future investments and to the entire power sector reform process. • Increasing debt profile. • Inability to fully evacuate existing power from power plants will result in excessive capacity payments from Nigeria Bulk Electricity Trading to the generators. • Inability to fully meet connected customer load demand will result in excessive, objectionable load shedding with liabilities being accrued to the producer. • The non-cost reflective tariff still persists. Key Recommendations: Regulators • Renewed push for coal and large hydro systems through public-private partnerships. • Conclude framework and policy for off-grid power and renewable power generation. • Engage the communities and youths on protection of oil, gas and power infrastructure. • Engage stakeholders such as distribution companies, Nigeria Electricity Regulatory Council, Transmission Company of Nigeria and Ministry of Power, on the development of embedded generation through mini-

Investors • Companies should emulate gas producers like Seplat which has commenced the practice of “willing buyer willing seller” in the gas supply business following attainment of its Domestic Supply Obligation (DSO). The Seplat practice is the intended standard in the gas market. • An injection of funds to Transmission Company of Nigeria is required to evacuate generated power to ensure stability and expansion of the grid. COMMUNITY CONTENT: HOW HAS COMMUNITY EMPOWERMENT & INTEGRATION BEEN ACHIEVED SUCCESSFULLY? Some of the identified underlying causes of the crude oil theft scourge in the Nigerian oil and gas industry include; poverty, community-industry expectation mismatch, corruption, unemployment, ineffective law enforcement and poor governance. Key Recommendations: • Where the pipeline and asset surveillance contracts subsist, members of the communities where the pipelines traverse should primarily be employed to aid effective policing. • A co-ordinated multi-stakeholder approach to curb the menace of pipeline vandalism should be adopted. • Proper motivation of the security agencies involved in tackling crude oil theft and effective prosecution of thieves will help curb the menace. • The need to create incentives such as employment opportunities for youths, greater community participation in their developments and improved community-industry relationships are needed to achieve security of vital assets. EFFECTIVE SOLUTIONS DRIVING INDUSTRY CHANGE: COST, LEAD TIMES, PROJECTS & PLANS. This section focused on concepts that will drive the Nigerian oil and gas industry in this environment of depressed oil prices, high cost, high risk and regulatory uncertainty, challenges posed by bureaucracy as well as how to manage and establish a cost reduction culture. The questions remain: can Nigerian Content play a role in cost reduction and arrive at a prompt solution? How can the industry adapt to the changing market environment? Key Recommendations: • There is need for companies to remain optimistic but seek ways to adapt to current industry challenges being faced. IOCs should do their best to preserve the current work plans but must also optimise projects in order to survive current realities. Continues next week

Business Journal June 29 - July 05, 2015

Shelter www.businessjournalng.com

FMBN Unveils Home Renovation Loan Scheme

he Federal Mortgage Bank of Nigeria (FMBN) has launched the FMBN Home Renovation Loan (FHRL) initiative. FHRL would provide loans to landlords who wish to renovate or upgrade their homes. However, the facility, which would not exceed N1 million, is open to only contributors to the National Housing Fund. “An applicant must be a contributor to the NHF while the maximum loan amount shall be N1 million subject to the income limit of the beneficiary as well as the ultimate cost of renovation. It’s accessible to every individual whether civil servant at the federal, state or workers in the private sectors,” Managing Director, FMBN, Alhaji Gimba Ya’u Kumo, said at the launch of the initiative. Kumo was represented by the bank’s Head, Corporate Affairs unit, Mr. Lawal Isa. The loan, which comes at 8% interest, has a maximum tenor of four years or an employee’s remaining years of service, whichever is less. For individuals who take the facility, pay-

ment will be through monthly deductions within the maximum stipulated period by the Federal Government Staff Hou ing Loans Board and the re-

Bank Debts: ‘CBN’s Name and Shame ’ll Show Construction Industry in Bad Light Blessing Ikeme

he Federation of Construction Industry (FOCI) has labelled as “grossly unfair” the recent directive by the Central Bank of Nigeria to commercial banks to name and shame their chronic debtors. The Federation lamented that the directive may inadvertently be directed at them and will portray them as irresponsible and insensitive. The banking sector is burdened by a huge non-performing loan portfolio and the apex bank is worried that if not urgently addressed may lead to a repeat of 2008/2009 when banks and the financial services sector had to be rescued from imminent collapse by the government through the Assets Management Company of Nigeria (AMCON). A breakdown of the NPL portfolio shows that the oil and gas, power, and construction industries are the major culprits. However, the construction industry argues that the N600 billion owed them by federal, state and local governments has made it impossible to offset their loans and it would be unfair to publish their names as chronic debtors because many people may not understand the circumstances that made it so. President of FOCI, Solomon Ogun-

busola, said in Abuja recently that if the CBN must publish the debtors’ names, it should publish alongside the amount of money being owed each of the debtors by the government, because what the government owed them is more than what they owe the banks. Ogunbusola explained that if the government could pay them 30 percent of what it owes them, they should be able to meet their debt obligations and carry on with their businesses. “We have never had it so bad like in the last two years because the payments were not coming forth and because we don’t know what to do, we have to just cry aloud. I can mention three companies that the government alone owes over N200 billion: Julius Berger N70 billion; MCC over N70 billion; Setraco over N60 billion. Those are the ones l am sure of the exact figures. Even S&M, which is a growing company, is being owed over N800 million,” Ogunbusola said. He added that the industry have had to engage in massive job cuts to stay afloat, a situation that makes the 126 registered members of FOCI to be operating below 50% of their capacity. The Federation said it fully appreciates the position the banks have found themselves but however urged the CBN to thread with caution so as not to send the wrong signals to Nigerians as well as foreign investors.

spective Heads of Service or account office of the states. Under the loans guidelines, if a beneficiary is unable to repay either through

death or disengagement from service, the Loans Board would be responsible for liquidation of the outstanding loan balance through the beneficiary’s ter-

minal benefits. “Applicants will take out a Reducing Term Assurance policy which guarantees the outstanding loan and covers death, incapacitation and loss of job,” FMBN said. Private sector employees would require a “letter of undertaking from the chief executive of the employing organisation to deduct monthly repayment of the loan from the employee’s monthly salary and remit directly to FMBN. In the event of resignation, death or disengagement from service, the organisation shall be responsible for repayment of outstanding loan balance through the beneficiary terminal benefits,” Kumo noted. However, the facility precludes beneficiaries of NHF housing loans. “The facility shall not be available to any contributor who has enjoyed NHF loan to buy or build a house. It could be taken jointly by a couple, subject to the income assessment of both parties while the loan can only be taken once in five years. Beneficiaries may however be eligible to apply for NHF loans for home purchase after fully liquidating a home renovation loan earlier taken.”

Angola, Nigeria Top Real Estate Market in Africa

survey by Venture Africa has listed Nigeria among the topmost countries on the continent with vast investment opportunities in real estate, just behind Angola. As Africa’s sixth fastest growing economy (according to IMF projections 2015-2019), Nigeria is likely the most attractive market for retail property. Nigeria is the 3rd and 4th expensive market for retail space at $85 per square metre and $72 per square metre per month in Lagos and Abuja respectively. An executive house with 4 bedrooms goes for $8,000 and $8,500 per month, while in Angola, the same property costs about $25,000. Angola, which is Africa’s fifth largest economy with Luanda and Huambo as its major cities, has the highest prices for office space. An office space goes for as high as $150 per square metre per month in Luanda (the 2nd highest in Africa is comparatively $65 per square metre less). The retail market, although in its infancy, also provides a high return on investment with prices at $120 per square metre per month and a rapidly expanding middle class in Luanda. Surveys reveals that the majority of the near 300,000 square meters of office space brought to the market during 2014 – 2015 was already

pre-leased or sold before officially opening. Egypt is Africa’s third largest economy with Cairo, Alexandria and Giza as its major cities. Egypt is not Africa’s fastest growing economy – not even breaking the top 20 in Africa for the next five years. But its retail market is booming and looks to stay so

in the near future. The drop in the retail sector during the Arab Spring hurt the growing sector back in 2013 through 2014. Cairo retail space is renting for $100 per square metre per month. Office space rents for $35 per square metre per month in Cairo, making it one of top 15 expensive cities.

Stock Market

Business Journal June 29 - July 05, 2015

Stock Market

Business Journal June 29 - July 05, 2015

Capital Market

NSE Unveils Composition of New Market Indices July 1

he Nigerian Stock Exchange (NSE) has announced the results of the bi-annual review for The NSE 30 and the five sectoral indices of The Exchange - The NSE Banking, The NSE Consumer Goods, The NSE Oil & Gas, The NSE Industrial and The NSE Insurance. The composition of these indices after the review will be effective on Wednesday July 1, 2015. The Nigerian bourse began publishing The NSE 30 Index in February 2009

with index values available from January 1, 2007. On July 1, 2008, the NSE developed four sectoral indices with a base value of 1,000 points, designed to provide investable benchmarks to capture the performance of specific sectors. The sectoral indices comprise of the top 10 most capitalised and liquid companies in the Banking, Insurance and Food/Beverage & Tobacco (now Consumer Goods) sectors and the top five most capitalised and liquid companies in the Oil & Gas (Petroleum Marketing) sector. The indices, which were developed

using the market capitalisation methodology, are rebalanced on a biannual basis -on the first business day in January and in July. The Stocks are selected based on their market capitalisation from the most liquid sectors. The liquidity is based on the number of times the stock is traded during the preceding two quarters. To be included, the stock must be traded for at least 70 percent of the number of times the market opened for business. The Exchange was not oblivious of the fact that the number of the stocks included in some of the indices may

be inappropriate for optimal portfolio diversification; however, the numbers would be reviewed as sector conditions change. The Nigerian bourse began publishing the NSE 30 Index in February 2009 with index values available from January 1, 2007. On July 1, 2008, The NSE developed four sectoral indices and one index in 2013, with a base value of 1,000 points, designed to provide investable benchmarks to capture the performance of specific sectors. The sectoral indices comprise the top

fifteen most capitalised and liquid companies in the Insurance and Consumer Goods sectors, top ten most capitalised and liquid companies in the Banking and Industrial Goods sector and the top seven most capitalised and liquid companies in the Oil & Gas sector. The compiler of the indices maintains the right to modify the circulated selection above in connection with any mergers, takeovers, suspension or resumption of trading or any other company structure changes during the period before the effective date of the annual review.

L – R : Executive Director, Business Development, The Nigerian Stock Exchange (NSE), Haruna Jalo-Waziri; Senior Oil Industry Analyst, Bloomberg Intelligence, Phillipp Chladek; Group Executive Director, Oando Plc, Mobolaji Osunsanya; Chief Executive Officer, NSE, Oscar N. Onyema, OON; Head of Market Structure Strategy, MEA, Bloomberg L.P., Shelloua Chakri; Chief Executive Officer, Seplat Petroleum Development Plc, Austin Ojunekwu Avuru and Managing Director,Mobil Oil Plc, Adetunji A. Oyebanji at the NSE-Bloomberg CEOs Roundtable for Banking & Oil Industries at the Exchange in Lagos.

L – R: Head of Market Structure Strategy, MEA, Bloomberg L.P., Shelloua Chakri; Group Managing Director/CEO, First Bank of Nigeria Limited, Stephen Olabisi Onasanya; Chief Executive Officer, The Nigerian Stock Exchange (NSE), Mr. Oscar N. Onyema, OON; Group Managing Director/CEO, Zenith Bank Plc, Peter Amangbo and Emerging Markets Reporter, Bloomberg L.P., Paul Wallace at the NSE-Bloomberg CEOs Roundtable for Banking & Oil Industries at the Exchange in Lagos.

L – R: Chief Executive Officer, London Stock Exchange (LSE), Mr. Xavier Rolet; Director General, National Pension Commission, Mrs. Chinelo Anohu-Amazu; Executive Director, Business Development, The Nigerian Stock Exchange (NSE), Mr. Haruna Jalo-Waziri; Chief Executive Officer, Central Securities Clearing System (CSCS) Plc, Mr. Kyari Bukar; Chief Executive Officer, NSE, Mr. Oscar N. Onyema OON; Chairman, Seplat Petroleum Plc, Dr. ABC Orjiako at the London Stock Exchange

Business Journal June 29 - July 05, 2015

ThePovertyGap

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World Bank Unveils New Commission on Global Poverty

he World Bank has announced the launch of a new Commission on Global Poverty to report on the best ways to measure and monitor poverty around the world and help the World Bank Group achieve its twin goals and also track other forms of poverty and deprivation. The new Commission, made up of 24 leading international economists, will be chaired by Sir Anthony Atkinson, a leading authority on the measurement of poverty and inequality, the Centennial Professor at London School of Economics, and a Fellow of Nuffield College, Oxford University. Announcing the new advisory body, the World Bank’s Chief Economist, Kaushik Basu, said he expects the Commission to also provide advice on how to adjust the measurement of extreme poverty as and when new Purchasing Power Parity (PPP) and other price and exchange rate data become available. PPP calculations allow economists to compare different global exchange rates to assess household consumption and real income in US dollars, since nominal exchange rates do not accurately capture differences in costs of living across countries. “We want to hold the yardstick constant for measuring extreme poverty till 2030, our target year for bringing extreme and chronic poverty to an

end, “ says Basu who will travel to Europe this week for the Commission’s inaugural meeting. “Furthermore, poverty has many other dimensions and it is unacceptable in today’s prosperous world that so many people suffer such deprivations. The Global Commission will advise us on other dimensions of poverty that the Bank should collect data on, track, analyze and make available

to policymakers for evidence-based decisions.” In 2014, World Bank Group President Jim Yong Kim announced the Bank’s commitment to two goals that would direct its development work worldwide. The first was the eradication of chronic extreme poverty, defined as those extremely poor people living on less than $1.25 PPP-adjusted dollars a day, to less than 3% of the

world population by 2030. The second is the boosting of shared prosperity, defined as promoting the growth of per capita real income of the poorest 40% of the population in each country. This year, UN member nations are expected to agree in New York to a set of post-2015 Sustainable Development Goals (SDGs), the first and foremost of which is the eradication

FDI: Important Source of External Development Financing for Poorest Economies

ver the past decade, foreign direct investment (FDI), in terms of stock, tripled in least developed countries (LDCs) and small island developing States (SIDS), and quadrupled in landlocked developing countries (LLDCs), the Special Financing for Development Issue of UNCTAD's Global Investment Trend Monitor says. Since the first Conference on Financing for Development, which produced the Monterrey Consensus of 2002, particular concern has focused on mobilising financing and investment for LDCs, LLDCs and SIDS, in order to ensure robust, resilient growth and sustainable development. In the context of the post-2015 development agenda, financing for those economies is even more to the fore. With a concerted effort by the international community, a quadrupling of FDI stock in these economies by 2030 from today¡¦s level is achievable, and consistent with past and recent growth in FDI inflows. Beyond international initiatives per se, today a wider range of investors than ever before are potential sources of financing

for investment. They include commercial banks, State-owned banks, pension funds, insurance companies, multinational enterprises (MNEs), sovereign wealth funds, foundations, endowments, family offices and venture capital funds. The challenge is to mobilise and channel them into the sustainable development goals (SDGs) sectors and make positive contributions to sustainable development and inclusive growth. FDI is a critical source of finance for developing countries, but policymakers need to pay due regard to minimising risks. For host countries, FDI can contribute to employment generation, technology diffusion, economic growth and sustainable development. However, potential risks should be minimised through: good governance and capable institutions, high absorptive capacity and an effective regulatory framework. The UNCTAD Investment Policy Framework for Sustainable Development and its Action Plan for Investing in the SDGs are designed to guide investment policy making and implementation focusing on productive capacity building, inclusive growth and sustainable development.

of extreme poverty everywhere, in all its forms. The final report will be ready by end April 2016. “We expect the Commission report to be influential not only for our own work on poverty but also in shaping global research and policymaking on this most important challenge of our times,” said Chief Economist Basu.

Strengthening Private Sector to Boost Trade, Integration in Africa

frica needs a dynamic and vibrant private sector to seize existing opportunities in the trading system, says UNCTAD Policy Brief. The document identifies some key elements of a credible policy package to promote private sector development and boost intra-African trade. Regional trade has the potential to contribute to sustained growth, poverty reduction and inclusive development. It has played this role effectively in several countries in Asia and Latin America. But in Africa, the expected results have been slow to come to the fore. Of the many factors that account for this situation, the weakness of the African private sector is paramount and needs to be understood and effectively addressed. Key points • African Governments should create more space for the private sector to play an active role in the regional integration and development process. • Making regional integration work for Africa requires improving infrastructure, enhancing access to credit, facilitating cross-border trade, developing workforce skills, strengthening mechanisms for consultation with the private sector, and maintaining peace and security.

Business Journal June 29 - July 05, 2015

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Africa’s Infrastructure Drive Needs Health Sustainability

s African countries undertake significant infrastructure development to transform their economies, it is critical that they take into account the impact of these capital projects on the health of workers and nearby communities, and on women and girls in particular, to ensure inclusive and sustainable growth. “Large capital projects are a key driver of employment and growth, and for development to be achieved, we must minimise environmental and social damage,” said Geraldine Fraser-Moleketi, Vice-President and Special Envoy on Gender at the African Development Bank (AfDB). Fraser-Moleketi was speaking at the opening of the two-day Second Technical Meeting on Health, Gender Equality and Capital Projects, that brought together more than 18

African country representatives from health, environment, mining, transport, infrastructure and civil society, as well from regional economic communities. The meeting, co-hosted by the AfDB and the United Nations Development Programme (UNDP), together with the African Union, provided a forum to share country experiences, discuss emerging issues in this areas related to tuberculosis (TB), malaria, non-communicable diseases, occupational health and safety, and explore how environmental assessments could be used to mobilise resources for health in Africa. Capital projects such as roads and mines draw huge numbers of workers, particularly men, to sites away from their homes for long periods of time. Their working and living conditions, usually in close quarters, are seen as potential drivers of infectious diseases such as tuberculosis.

A study by South Africa’s National Institute for Communicable Diseases finds that the disease is the leading cause of death among mine workers, with prevalence about three times higher than in the general population. At the same time, mobile workers’ disposable income is usually spent on commodities such as alcohol and sex in nearby communities, increasing the risks of HIV infection, especially for women and girls. Risks have also been identified related to increased incidences of malaria. Bad water management and workers’ limited access to good health care due to prohibitive costs, can drive up cases of malaria where large capital projects are being developed. African countries have made significant investments in infrastructure in recent years, however a USD 96 billion annual infrastructure deficit remains, according to the AfDB. Closing this gap is necessary if the

continent is to reach its full development potential and achieve meaningful employment creation and poverty alleviation, in line with the African Union’s Agenda 2063. As all Sub-Saharan Africa countries require environmental assessments prior to launching significant infrastructure projects UNDP and the AfDB are working with countries to advocate for and strengthen capacity to make these assessments more robust to help mitigate health and gender-related risks that come with mobile workers with money. While some countries have made progress in mainstreaming health and gender into their impact assessments, participants identified areas for improvement. Among the recommendations, participants highlighted the need for harmonised legal frameworks at the regional level to ensure better integration of social issues particularly health (communicable and non-communicable),

occupational health and safety included in impact assessments, and increased capacity and financial resources to conduct evidence-informed assessments and ensure monitoring and compliance. They also recommended more advocacy and emphasis be placed on strategic environmental assessments given the nature of capital projects planned across the continent. The Guidelines for Integrating HIV and Gender-Related Issues into Environmental Assessment in Eastern and Southern Africa, prepared in 2013, form the basis of action for participants, and called on governments to take the necessary steps to mitigate health and gender-related risks in the development of infrastructure and execution of large capital projects. Following this meeting, the guidelines will be revised to include broader health issues such as TB, malaria, occupational health and safety, as well as workplace rights

A Global Commitment to Improve Health Data

or several years now, leaders from United Nations agencies and global health partnerships have been making increasingly loud calls for more and better health data. They have been right to do so. Accurate and complete data is essential for good decision making on health spending, for responding to countries' specific health needs and measuring progress and impact of health programmes. International partners and donors, as well as domestic ministries of finance, are demanding stronger evidence that investments in health are producing results. Health is a central component in the new set of global Sustainable Development Goals that will be finalised later this year. More than ever, this ambitious agenda will require countries to be able to show where and how they are making progress in health. This means that every country needs to have robust and reliable health information systems. They need to be able to generate their own data to monitor health programmes and report on progress. Right now, the world is not yet ready to do this. Here are some of the problems: • "More than two-thirds of the world's population lives in countries that do not produce reliable statistics on mortality by age, sex and cause of death." • Virtually all of the 80 low- and lower-middle income countries have major gaps in skills, tools and resources to build quality health information systems. • More than two-thirds of the

Dr Ties Boerma Director, Department of Health Statistics and Information Systems, World Health Organisation (WHO) world's population lives in countries that do not produce reliable statistics on mortality by age, sex and cause of death – one of the most important health indicators for understanding a country's health priorities. • Low-quality data is being used to inform decisions on allocation of limited health resources – undermining the quality of those decisions. • There is a lack of a coordinated global approach between countries and development partners on what information countries should collect to measure progress in health. Currently there are at least 600 health indicators that countries could

be required to report upon through various global agreements, resolutions and programmes under United Nations agencies, partners and donors. Donor programmes often collect data only for specific diseases and systems are fragmented and duplicative. Countries and development partners have not invested wisely to build sustainable information systems that gather and make real-time health data available to all who need it. With the recent huge growth in digital technology, there are major opportunities to radically improve health information. A turning point for health information systems But that can all change. The Measurement and Accountability for Results in Health Summit, 9-11 June, heralds a new approach. WHO’s Director-General, who has been championing information and accountability among global health leaders, will set the stage and call for better information and accountability. WHO, together with the World Bank and USAID, is leading an international collaboration to improve measurement and accountability for global public health over the next 15 years. Our goal is to support countries to have strong health information systems. Global health leaders will endorse a Roadmap for Health Measurement and Accountability as well as a 5-point Call to Action. The Roadmap outlines a shared approach that countries and development partners can use to improve local capacity to plan, manage and measure their health programmes. The Call to Action proposes priority actions on investments, capacity strengthening,

data sources, digital revolution and accountability, and presents measurable targets to guide this work. Targets include countries having electronic systems in at least 80% of health facilities for real-time reporting of health statistics by 2025. They should also be able to collect and use comprehensive disaggregated quality data to review progress against national plans and report on progress against health-related goals. By 2030, all births worldwide should be recorded in a civil registration system, and all hospitals should use the WHO standard ICD (International Classification of Disease) to report the cause of every death in their facility. After the Summit, major global partners and country leaders will continue to work on establishing a global collaborative for measurement and accountability. The partnership aims to facilitate alignment, and accelerate country systems strengthening and monitoring of progress towards the targets. Data Revolution is Key to Improving Health Information Recent rapid growth in digital technology in low- and middle-income countries provides major opportunities for improving data on health, but many of these remain untapped without the resources, skills and political will to set up sustainable systems. The global agreements made this week place a strong emphasis on supporting countries to maximize the use of information technology, based on open standards, to improve information systems and empower decision-makers at all levels with real-time access to information.

100 core health indicators Last week, to coincide with the Summit, WHO launched the Global Reference List of 100 Core Health Indicators. "This set of 100 core indicators... provides concise information on the health situation and trends at the national and global level." Developed by a multi-agency working group chaired by WHO's Director-General over the past 2 years, this list is an example of work already underway to align and improve health information and measurement across development partners. This set of 100 core indicators agreed by the global community provides concise information on the health situation and trends at the national and global level. It covers the full spectrum of health priorities including maternal and child health, infectious diseases and emerging priorities such as non-communicable diseases and universal health coverage. All indicators were selected because they are scientifically robust and have a track record of being used for measurement in countries. The list will be a living document to be updated periodically as new priorities emerge and interventions change. The aim of the Global Reference List is to reduce excessive and duplicative reporting requirements that currently burden countries and improve harmonisation. It will serve as a global standard for health data collection in countries and align global health partners – exactly what is needed to enhance efficiency and availability of data and thereby improve transparency and accountability.

Business Journal June 29 - July 05, 2015

Entrepreneur

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Energy Entrepreneur: It is Tough to Build a Business Dinfin Mulupi

ive years ago, Kenyan entrepreneur, Edward Kinyanjui quit his well-paying job as chief operations officer at an international organisation to start his own renewable energy business. He had worked for 12 years, climbed the ladder and become accustomed to a good lifestyle. But Kinyanjui wanted more than “a good salary”, so he pumped his US$100,000 savings into Plexus Energy, a Nairobi-based company that provides clean power from solar and wind. Its clients include organisations such as banks, hospitals and telco operators which need continuity during electricity outages, as well as homes and schools that require solar water heating and solar lighting. Plexus Energy analyses the energy needs of its clients and designs solutions which are manufactured abroad and imported into Kenya. ‘No Exit Strategy’ Although his is an established and sustainable business today, Kinyanjui says he wasn’t prepared for what life

as an entrepreneur entailed. Those early years as a start-up came with many difficulties. Kinyanjui transitioned from having “a big salary” and savings to sometimes having an “empty” bank account. “It was a real sacrifice,” says Kinyanjui. “I always say, I went into the plane without a parachute. I didn’t have an exit strategy. It just had to work because I had taken all my life savings and threw it into the business. At one point it was very tough, to the extent I was considering going to look for a job.” “The first three years I actually lost a lot of money. I didn’t make any,” he recalls. “We didn’t have expertise, so we would sell a product, which would then fail to work and then we would have to buy another product to replace it. We made bad decisions also [and] sold to people who didn’t pay. So we had to do a number of writeoffs. We had a lot of learnings.” “The start-up process is very tough. I remember in my first year I used to wonder whether my email was working because nothing would come through a whole day, even a whole week. [But now] I am having

ing.”

Edward Kinyanjui problems keeping up to date with my emails. I have so many emails coming in and I am recruiting people every other month,” he says. Within two years the $100,000 capital ran out. So Kinyanjui secured a small loan from a bank and leveraged the relationship he built with suppliers to get credit. He soldiered on through difficult times, motivated by the “thrill to

win” and the unwavering support of his employees who stuck with him even when the company struggled. “Things started to work out, we started getting orders and people were paying. I realised we just needed to be patient and consistent,” he says. “But it has been a great experience and I don’t regret the decision to go into business. [Entrepreneurship] is very fulfill-

Looking to the Future Having survived the difficult years of being a start-up, Kinyanjui says Plexus Energy is now focused on tapping the increasing opportunities for renewable energy in the region. He believes opportunities are opening up in the industry. Numerous businesses are setting up to offer wind and solar energy solutions to the millions of households in Kenya that lack access to electricity. Government policy too is working in favour of renewable energy solution providers. Plexus Energy, for instance, is working with some county governments to light up streets using solar in off-grid areas. “I can see… money is coming,” says Kinyanjui. “The government has made it mandatory for new residential buildings to have solar water heating. There is a big real estate boom in the country so that is good business for us. Also government has exempted solar products from duty and VAT to promote the industry. There is genuine growth.”

How a Kenyan Couple Built a Promising Food Business Dinfin Mulupi

such as milk. “We would milk the cows at 3am only to get to the dairy and find out that they won’t buy that day because there is a glut. Sometimes we’d be told to take the milk back home, yet that was an income the family needed. It occurred to me there was a need to liberate the milk industry. So the dream was installed by that pain of having to look for alternative markets to sell our milk,” says Kariuki.

he Classic Foods Product Range Eight years ago, Kenyan accountant, Wachira Kariuki quit his career to basically buy and sell milk. But he became frustrated with being a “middle man” so in 2009 took a loan, leased an old facility and started processing milk. Kariuki was later able to secure financing to outright buy the facility, located 50km from the capital Nairobi. Today Kariuki’s company, Classic Foods, is involved in processing a wide range of products, including pasteurised milk, yogurt, maize flour, honey, tomato sauce, juices and animal feeds. Over the next decade, he hopes to build a US$100 million business. And the only things that could stop his ambition are laziness and lack of focus, says the Classic Foods CEO. “The potential in the food industry is unlimited. People will never stop eating,” he says. “If I stay focused the way I am, I don’t see why it shouldn’t be a $100 million business in a few

years.” Husband and Wife Duo Starting the business was a big risk for Kariuki and his wife Stella Kimemia, who is the managing director. They put up their family home as collateral for credit. “Of course you can’t sleep when you do that. We were so determined not to fail. When you know that you will lose your house if you don’t repay a debt, it makes you responsible. We had to prioritise [paying back] that debt,” says Kariuki. The couple have thrived by

combining their strengths. Kariuki focuses on strategic decisions and engineering, while Stella handles daily operations. “She is very good at counting every coin. I might ignore chasing after a Ksh.1,000 payment and focus on Ksh.10,000, for example, but she will multitask and chase both,” he says. “So we have done well in collecting payments which is a key reason businesses fail. Quite often the entrepreneur becomes excited that they have sold a product, then become careless and don’t follow up on payments.”

Although traditionally dominated by multinationals, a growing number of smaller, home-grown manufacturers like Classic Foods are breaking into Africa’s lucrative food processing industry. According to a World Bank report, Africa’s farmers and agribusinesses could create a trillion-dollar food market by 2030 if challenges in the industry are solved. In fact some of these challenges motivated Kariuki to venture into the food business. He grew up in central Kenya and his family sold produce

Developing its Supply Chain Classic Foods products are available across Kenya from supermarkets to remote mom and pop stores. The firm has expanded organically in its pursuit to solve challenges in the food supply chain. For example, it started milling animal feeds for sale to farmers from which it buys milk. This helped Classic Foods ensure a steady supply of high-quality milk. But then maize is a raw material in processing animal feeds, so it began milling maize flour for human consumption. When it encountered shortages in maize supply, it started a non-profit arm called Enhance Business Solutions. It has already trained over 20,000 farm-

ers in the cultivation of various crops, including fruits which are used by Classic Foods to make juices. And it plans to train 100,000 more over the next five years to ensure constant supply of the raw materials needed for its expansion. Tiresome Journey Despite the accomplishments, Kariuki says it has often been a “painful” and “very tiresome” journey. “You struggle in the early stages. You make errors in judgment. You think that you’ll make a 100% profit, [then] you realise that you are making a 100% loss.” These days the challenges the business faces include financing, keeping up with changing legislation on food safety, and fighting counterfeits. But Kariuki is undeterred by the rising competition in the food industry. “Today you can find a burger for US$1 in one outlet, and one for $10 at a different outlet. Why are people spending nine times more on the same food? People are willing to pay if you produce quality. So we will continue investing, and enhancing our quality.”

Business Journal June 29 - July 05, 2015

Insurance For the www.businessjournalng.com

Record

Issues in the Nigerian Insurance Industry Industry to achieve the required Insurance penetration for higher percentage of financial inclusion in the Country. The focus of the Conference will therefore be on the vital steps the Insurance Industry must take in the development of the business of Insurance with the objective of having a major impact in the growth of the Nation’s Economy. The keynote address at the Conference will be delivered by the Commissioner for Insurance, Mr. Fola Daniel while the theme paper will be presented by Mr. Frank O’Neill, Managing Director, Swiss Re, ME& A. The sub-themes and other Guest Speakers are, Ven O.O. Ladipo-Ajayi Managing Director, LASACO Assurance Plc Regulation and Enforcement for Insurance Growth – An Assessment Mr. Bismarck Rewane Managing Director, Financial Derivatives Ltd. Growth Options for Insurance Business in Nigeria Sir. Benjamin Aladekomo Director, Chams Group Information Technology as a Strategy for Market Penetration and Expansion The Conference will have four Sessions to be chaired by notable insurance practitioners which include, Mr. O. S. Thomas Director-General, Nigerian Insurers Association Alhaji Mohammed Kari Deputy Commissioner (Technical), National Insurance Commission Mr. Oye Hassan-Odukale Managing Director, Leadway Assurance Company Ltd. Mr. E.K. Okunoren Deputy President, Nigerian Council of Registered Insurance Brokers Sir. M.O. Oyegunle Managing Director, LAKEG Nigeria Ltd.

PRESS CONFERENCE BY MR BOLA TEMOWO, CHAIRMAN, INSURANCE INDUSTRY CONSULTATIVE COUNCIL (IICC) ON WEDNESDAY 24 JUNE, 2015 IN THE COUNCIL CHAMBERS OF THE CHARTERED INSURANCE INSTITUTE OF NIGERIA, 27 LAGOS STREET EBUTE METTA. PROTOCOLS I am delighted to welcome you to this event and by the opportunity given to address you on the activities of the Insurance Industry Consultative Council (IICC). This event is mainly to avail you of the major highlights of the activities of the body particularly the maiden Insurance Industry Mega Conference. Permit me to acknowledge with appreciation, the support of the media in the projection of the Nigerian Insurance Industry. This support has contributed immensely to our collective drive to properly position our industry in the mind of Nigerians. Although we have not achieved the desired results, there are positive signs that we are on course. The focus of this Press Conference is to address you on the two major events which make up the report of the IICC. These events are, 1. The activities of the IICC in the last twelve months 2. The Insurance Industry Mega Conference opening on Sunday 26th July, 2015 at 7.00pm with welcome cocktails and proceeding through Monday July 27, 2015 to Tuesday, July 28, 2015. The Insurance Industry Consultative Council (IICC) was established to act as the unifying voice of the insurance industry, representing the industry on national issues affecting the Insurance Industry; to be a clearing house for information about the insurance industry; act as an interfacing body between the industry and other parties as well as overseeing the resolution of intra and inter sectorial conflicts. The IICC for the purpose of emphasis is chaired by the President of the Institute and has members from all sectors of the industry namely, 1. Chartered Insurance Institute of Nigeria (CIIN) 2. Nigerian Insurers Association (NIA) 3. Nigerian Council of Registered Insurance Brokers (NCRIB) 4. Institute of Loss Adjusters of Nigeria (ILAN) We are all cognisant of the fact that the Insurance Industry should be the catalyst for economic growth as obtainable in other climes. Regrettably, this has not been the case in the country, even though we are on the part to progress. Many reasons have been adduced for this impeded growth, among which is the seeming lack of cohesion amongst all the industry operators. We have realised that no tangible development can be achieved when all the operators row in different directions. The IICC is concerned and has been working to put paid to this and project the industry cohesively. The IICC has therefore set an agenda to improve the presence of the Insurance Industry as a holistic entity for the purpose of strategic policy engagement of relevant stakeholders. With this level of advocacy, it is hoped that the industry will be able to follow up matters of collective interest with renewed vigour. Permit me to utilise this medium to advocate that Insurance should be made the cornerstone of the nation’s economic vision of the present administration, bearing in mind that risk management and mitigation is the fulcrum of endur-

Bola Temowo CIIN President ing economic growth. Gentlemen of the press, even though we are yet to attain our desired position, the efforts of the IICC represent a bold step in that direction. MAIDEN INSURANCE INDUSTRY MEDIA RETREAT The Arms of the Insurance Industry, comprising the Chartered Insurance Institute of Nigeria, the Nigerian Insurers Association, the Nigerian Council of Registered Insurance Brokers and the Institute of Loss Adjusters of Nigeria, decided in 2014 to commence the joint hosting of the Media Retreat. The maiden edition of the Joint Media Retreat which was held from Tuesday9th to Thursday 11th September, 2014 at Continental Suites, Abeokuta, Ogun State had as its theme; “The Media and the Promotion of Insurance Culture in Nigeria”. The theme of the Retreat was borne out of the need to identify and nurture the important role the media plays in the entrenchment and sustenance of an Insurance culture in any society. The Retreat featured paper presentations by notable personalities including Mr. O.S Thomas, Mr. Sunny Adeda and Mr. Solanke Ogunlana. It is my utmost belief that this initiative will not only guarantee greater unity of purpose but also forestall the dissipation of energies indifferent directions on what should be a formidable industry to create a platform to foster a better relationship with the media considering the new direction of the Insurance Industry. THE INSURANCE INDUSTRY MEGA

CONFERENCE The Insurance Industry had endeavoured to organise a common Insurance Industry Conference in the past without success. However, the IICC at its meeting on Wednesday November 19, 2014 resolved to hold an Annual Mega Conference of the Industry. This position was taken as the first step towards bringing the entire industry together to act together and speak with one voice. The maiden edition of the Annual Mega Conference is scheduled to hold from Sunday, 26th July, 2015 to Tuesday, 28th July, 2015 at the Congress Hall of Transcorp Hilton, Abuja. The theme of the Conference “DEVELOPING INSURANCE BUSINESS FOR NATIONAL GROWTH” was informed by the need to upscale the capacity of the Insurance Industry for effective performance and improved contribution to the growth of the Nigerian Gross Domestic Product, which is receiving the coordinated attention of the industry. The emergence of new ideas to improve the relevance of the industry in all facets of the nation’s economy is a focal point of the Conference. It also represents a platform for all stakeholders to discuss topical issues affecting the Insurance Industry, the Financial Services Sector and the National Economy. The Mega Conference represents a platform for all stakeholders to discuss topical issues affecting the Insurance Industry, the Financial Services Sector and the National Economy. The Nigerian Insurance Industry being critical stakeholder in the achievement of financial inclusion for all within our economy; considers it necessary to bring together all arms of the

The highpoint of the Conference is the Grand Ball which will hold on Tuesday, July 28, 2015 in the congress hall at Transcorp Hotel. The Grand Ball will be attended by the cream of the industry. We will take the opportunity of the event to honour the Commissioner for Insurance, Mr. Fola Daniel. It will mark an occasion to recognise and celebrate the achievements of the Commissioner for Insurance and other industry leaders who have done so much for the industry. We have done everything through the Organising Committee to make the Mega Conference a wonderful and memorable experience. The Committee under the Chairmanship of Mrs. Funmi Babington-Ashaye is aware of the Industry’s high expectations and has promised to surpass those expectations. I want to thank all the members Bodies of IICC for their wonderful support. The industry has since the inception of IICC been able to resolve many intra sectoral issues without washing our dirty linen in public. This has strengthened our belief that the problems facing the industry are not insurmountable if we all have the collective will to act as one body. CONCLUSION I thank you for honouring this invitation and request your support, individually and collectively in improving the perception of Insurance in Nigeria. BOLA TEMOWO FCII, FIIN Chairman, Insurance Industry Consultative Council

Business Journal June 29 - July 05, 2015

Maritime

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Business Journal June 29 - July 05, 2015

Obituary Celebration of Corporate Death

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Reasons for the Failure of British Caledonian Airways

n December 1987, following substantial losses, the private, British independent airline British Caledonian (BCal) was taken over by newly privatised British Airways (BA). The prime causes for the failure of the "Second Force" concept and BCal's demise were: • The unwieldy route structure it had inherited from British United Airways (BUA). • The Government's reluctance to live up to the spirit of the "Second Force" aviation policy through concrete deeds. • The Government's conflict of interest as the sole owner of British Airways as well as the regulator for all British airlines. • The 1976 "spheres of influence" policy that left both major British scheduled airlines with fragmented networks, thereby putting them at a competitive disadvantage vis-à-vis their main international rivals. • The political consensus at the time that was suspicious of private enterprise generally and hostile to the idea of whollyprivately owned airlines providing scheduled services in competition with wholly or majority government-owned flag carriers, especially on the high-profile trunk routes. • Highly restrictive bilateral air services agreements with little or no scope for dual designation. • The cumbersome process to gain a licence to operate a scheduled service during the 1970s and early 1980s. • The fact that on identical routes with the same fare structure load factors, revenues and yields[nb 2] are significantly lower at Gatwick than at Heathrow. • Gatwick's location and its smaller catchment area compared with Heathrow. • The Government's failure to fully accept the recommendations of the Civil Aviation Authority's 1984 airline competitionWhite Paper that would have strengthened BCal's position at Gatwick by considerably increasing the scale and scope of its operation to enable it to withstand the competitive onslaught from a privatised BA. The route structure BCal had inherited from BUA at the time of its inception was the result of unplanned

A British Caledonian Boeing 707-320C.

and unsystematic growth since the early 1960s.[1] At the time, Sir Freddie Laker had begun building up BUA's scheduled route network in his capacity as that airline's managing director. In those days very limited opportunities existed for wholly privately owned, independent airlines to provide fully fledged scheduled air services on major domestic and international trunk routes. This resulted in a poor fit of many routes in BUA's network of scheduled services, thereby making it difficult to offer sensible connections that could be marketed to the travelling public. It also represented the best network structure Sir Freddie was able to put in place under the then prevailing regulatory regime. The resulting network of domestic, European and intercontinental longhaul scheduled services from Gatwick was a motley collection of routes. This made it difficult to develop profitable streams of transfer traffic using Gatwick as a hub. Therefore, it was a challenge to persuade people to fly to Gatwick from relatively minor places like Genoa or Jersey in order to make an onward connection at the airport to secondary places in Africa or South America, and an even greater challenge to do this profitably.[1] At the height of its commercial success in the late 1970s and early 1980s, BCal focussed on those routes

that carried a very high proportion of profitable, oil-related, premium business traffic. It even managed to become the preferred airline for high-ranking oil industry executives based in Texas, by providing convenient, hassle-free connections between Houston/Dallas, Lagos and Tripoli via the airline's Gatwick base. However, this initially successful strategy made the company dependent for most of its profits on a small number of markets whose fortunes were tied to the commodity price cycle, in unstable parts of the world, . Although this worked in BCal's favour when the price of a barrel of crude oil was high during the late 1970s/early 1980s, it worked against it when the oil price collapsed in the mid-1980s. It also further compounded the firm's growing financial problems at the time, culminating in the financial crisis that led to its takeover by BA. Despite BCal being awarded several licences to commence scheduled services on a number of high-profile long-haul routes with a good mix of business and leisure traffic, the Government made little or no attempt to assist the airline in obtaining reciprocal traffic rights from overseas governments that would have enabled it to use all of these licences. For instance, the Civil Aviation Authority (CAA) had awarded BCal licences to launch fully fledged scheduled

services from London Gatwick to New York's John F. Kennedy Airport (JFK), Los Angeles, Boston, Houston, Atlanta, Toronto and Singapore during the 1972 "Cannonball" hearings. However, it took the UK Government four years to negotiate a new air services agreement with the US government that actually enabled BCal to make use of its Houston and Atlanta licences. Renegotiation of the then very restrictive UK—Canadian air treaty that could have permitted BCal to operate a scheduled service to Toronto took even longer. British Overseas Airways Corporation's resistance to opening the lucrative Far Eastern route to Singapore to home-grown competition by another British scheduled airline was so strong that BCal eventually only managed to obtain a renewable, three-months exempt charter permit, which entitled the airline to operate a small number of seat-only charter flights between Gatwick, Bahrain and Singapore. In addition, the UK Government itself began to undermine the "Second Force" concept from the moment it decided to re-allocate BCal's unused Gatwick—JFK and Gatwick—Los Angeles International licences to rival independent airline Laker Airways, following Sir Freddie's high-profile, public campaign to get his proposed Skytrain off the ground. The "Second Force" concept was furthermore undermined when the Government overturned the CAA's refusal to grant British Midland a licence to begin domestic scheduled services on the two main trunk routes between London and Scotland from Heathrow, without giving BCal reciprocal access to that airport. The "Second Force" policy was finally killed off when the Government decided to go ahead with BA's privatisation. Moreover, the CAA undermined the Government's "Second Force" policy as well by awarding Air Europe licences to launch scheduled services on several routes from Gatwick to Continental Europe in

direct competition with existing BCal services. These measures significantly weakened BCal. They also had a detrimental effect on the airline's ability to establish itself as an effective competitor to the major scheduled airlines that were operating from Heathrow. The conflict of interest that arose out of the UK Government's dual role as the sole owner of BA, at the time by far the largest British scheduled airline accounting for between three quarters and four fifths of the total output of Britain's entire scheduled air transport industry, as well as the regulator for all UK airlines meant that the interests of the "Second Force" were not always at the top of the Government's list of priorities. This conflict of interest put the Government in a dilemma when it was preparing BA for privatisation during the mid-1980s, knowing full well that this was likely to pose a major threat to BCal without substantial route transfers from the former to the latter, which would have enabled BCal to become big enough to compete with BA and other large scheduled airlines on a level playing field. At the same time, the Government was well aware that it risked undermining BA's successful flotation on London's stock exchange if it agreed to the transfer of several of BA's most lucrative long-haul routes to BCal, as well as the removal of all capacity restrictions on short-haul routes where both airlines were already competing with each other, as recommended by the CAA and requested by BCal itself. The "spheres of influence" policy, which the Government had imposed on both of Britain's major scheduled carriers as a result of an aviation policy review conducted in the mid-1970s against a backdrop of huge losses the airline industry had faced in the aftermath of the early-'70s oil crisis and which had effectively eliminated long-haul competition between BA and BCal, had fragmented both airlines' networks. This had weakened them inter-

Business Journal June 29 - July 05, 2015

nationally in comparison with their main overseas rivals. The resulting weakening of BA's and BCal's international competitive strength was of far greater concern to the latter as it was much smaller than either BA or most of its foreign-based competitors and had a less comprehensive network offering fewer connections than most rival airlines. At the time of BCal's inception, politicians on the left of the UK's political spectrum — in particular, Labour left wingers and most of the unions — opposed wholly private, independent airlines providing scheduled services in competition with thestate-owned corporations. These critics' world view had been shaped by their World War II and early post-War experiences. They therefore regarded any form of competition as a waste of scarce resources. Some of them were also ideologically driven in their opposition to private enterprise playing a prominent role in the UK's air transport industry. Restrictive bilateral air services agreements that had little or no scope for dual designation meant that BCal was effectively kept out of many markets for which it had already obtained licences from the CAA. Even where the bilateral air services agreement between the UK and a foreign country enabled BCal to be designated as the second UK flag carrier, the airline was still facing numerous restrictions, in terms of the number of flights it could operate and/or the number of seats it could sell as well as the lowest fares it could offer. For example, the Anglo-French air treaty did not limit the number of airlines the UK Government could designate on the London—Paris route. However, it stipulated that all British airlines' combined share of the total capacity on that route could not exceed the combined capacity share of all French airlines, and that all capacity increases needed to be mutually agreed by both sides.

As Air France was the only airline the French government had designated to serve this route, this effectively meant that BA and BCal were compelled to share between themselves the 50% of the total capacity between London and Paris that had been allocated to the UK. It also gave Air France an effective veto over any capacity increase, thereby allowing that airline to dictate the pace at which additional capacity could be added. It took BCal 15 years to attain a 20% share of the London—Paris market's total capacity since it commenced scheduled operations on that route. BCal tried to work around these restrictions by using larger One-Eleven 500s in a low-density configuration featuring a first class section on week days and smaller, single-class One-Eleven 200s on week-ends. This enabled it to offer a higher frequency on week days, resulting in a more competitive schedule for business travellers while keeping within its allocated capacity share. BCal faced similar capacity restrictions on the London—Amsterdam and London—Brussels routes, while other European governments refused requests from their UK counterpart to have BCal designated as a second UK flag carrier, arguing that there was no equivalent of a "Second Force" in their countries that could have matched the additional capacity BCal would have offered, that there simply were no spare capacities to do so, that this would violate the letter and spirit of the relevant bilateral air treaties/pool agreements, or that total British market share already exceeded that of the relevant overseas flag carriers when charter traffic was included as well. BCal continued operating BUA's former regional routes from Gatwick to Le Touquet and Rotterdam for several years to provide additional capacity to/from alternative airports that were relatively close to the main airports where its operations were subject to capacity restrictions.

Some countries imposed capacity restrictions on BCal's operations even on regional routes that did not compete with any trunk routes and therefore could not have caused a diversion of traffic from these routes. BCal's London—Genoa route was a case in point. The only way the Italian authorities agreed to BCal's request to add an additional Saturday frequency on that route was to compel the airline to enter into a pool agreement with Alitalia. Under that agreement BCal was forced to share its revenues on that route with Italy's flag carrier, even after that airline had withdrawn its own Heathrow—Genoa service it had originally operated in competition with the Gatwick—Genoa service provided by BUA/BCal. Such anti-competitive practices were not confined to BCal's European operations. The bilateral agreements governing most of BCal's long-haul routes obliged the airline to enter into a pool agreement with the designated foreign flag carrier[s]. These agreements stipulated that all revenues were to be equally shared by all carriers serving the same route. This usually meant that revenues were shared on a 50:50 basis, regardless of each carrier's actual market share. The only exceptions to this rule were the US as well as the Asian countries to which BCal flew. As far as the US was concerned, no US airline was allowed to enter into a pool agreement with any other airline — especially, a wholly/majority government-owned, foreign carrier — as this constituted a violation of that country's antitrust laws. With regard to the Asian countries that received scheduled services from BCal, the UK already had fully liberalised or fairly liberal bilateral air services agreements with these countries. These bilateral restrictions seriously impeded BCal's efforts to successfully build a network of short-haul, European feeder services that was essential to provide sufficient transfer

traffic for its long-haul routes from Gatwick. Furthermore, these restrictions made it difficult to offer its passengers a more frequent service on certain long-haul routes that could have attracted more high-yield business traffic. It also left the airline with an incomplete network, which resulted in a weak route structure. This, in turn, constituted a major competitive disadvantage. As a general rule, a full-service scheduled operation at Gatwick with a fare structure that is identical to a similar operation at Heathrow produces a 10% lower load factor. For example, BCal's scheduled load factors at Gatwick rarely exceeded 60% whereas comparable BA load factors at Heathrow were usually above 70%. BCal tried to compensate for this difference in load factors between Gatwick and Heathrow by being a more cargo-oriented carrier than BA. Compared with BA, cargo accounted for a greater share of BCal's total revenues and profits. Similarly, a scheduled service at Gatwick generates a 20% lower revenue and results in a 15% lower yield than a comparable service at Heathrow. Heathrow's and Gatwick's respective geographic location as well as the number of people living within each airport's catchment area accounts for this difference in load factors, revenues and yields. The former has a bigger catchment area than the latter because more people live north of the Thames than south of it. Heathrow's catchment area includes about three-quarters of London's population and roughly two-thirds of the population in Southeast England. London is where most of the demand for air travel in the Southeast originates. In addition, for most Londoners, Gatwick was a far less accessible airport than Heathrow in the days prior to the M25, as a result of its greater distance from most parts of London. In those days it took almost two hours to drive there from central London despite the low level of vehicular traffic. The only advantage Gatwick enjoyed over Heathrow in terms of ease and speed of access was its direct rail link to London Victoria. The size of an airport's catchment area and its accessibility are of particular significance for the premium travel market. Back then, Heathrow's relative ease of access meant that it could attract a far greater number of travellers who were living or working in London than Gatwick. Moreover, Heathrow's larger catchment area meant that it was able to offer more frequent flights to a greater number of destinations with more conveniently timed connections. This, in turn, helped attract a greater number of business travellers who were the airlines' most profitable customers. It also meant that there were at least four to five business travellers in Heathrow's catchment area for every business traveller in Gatwick's catchment area. This constituted a major competitive disadvantage BCal faced at Gatwick compared with other airlines that were based at Heathrow.] It was further compounded by the fact that Gatwick had few connecting flights during the 1970s and early 1980s, as a result of the regulatory regime as well as the bilateral air services agreements the UK Government had negotiated with its overseas counterparts. (The former necessitated going through a costly and time-consuming process to gain a licence to operate a scheduled service. This involved lengthy hearings the CAA conducted for each route application where BA and other

independent airlines, which felt the Government's policy of making BCal its "chosen instrument" of the private sector discriminated against them, objected to BCal's application and — in cases where there were several rival applications — against each other as well. The latter often had no scope for designating a second British scheduled airline in addition to the incumbent carrier. This meant that even in those cases where BCal had succeeded in securing licences to operate scheduled services on routes of its choice, it was prevented from using these licences if it involved an international service where there was no scope in the relevant bilateral agreement for the UK Government to designate it as the second UK flag carrier.) At the same time, Heathrow was the most important point in the world for interline traffic with more passengers changing flights there than at any other airport. Whatever connections there were at Gatwick were mostly provided by BCal itself, at great cost to the airline. Since the early-1970s oil crisis, only the four short-haul BCal routes from Gatwick to Paris, Brussels, Jersey and Genoa had made a positive contribution, with Paris, Jersey and Genoa being the only routes that were genuinely profitable in their own right. However, given the fact that 40% of the airline's scheduled passengers were changing from one of its flights to another at Gatwick, BCal's dependency on providing this limited number of feeder services was such that withdrawing any of these services or significantly reducing frequencies — even those of loss-making services — had an immediate, negative impact on the loads of the profitable long-haul services and, therefore, on the company's overall profitability as well. It was with this in mind that BCal's senior management had always justified keeping its UK mainland domestic trunk routes despite these losing £2 million each year ever since BA had introduced its high-frequency Shuttle service on these routes from Heathrow. This had led to a reduction in frequency of the competing BCal services from Gatwick as the airport's smaller catchment area did not allow BCal to generate the minimum traffic flows that would have made a competing, high-frequency service from Gatwick viable. BCal's senior management estimated that its short-haul domestic feeder flights generated additional yearly long-haul revenues of £5 million and that the European feeder services added £20 million to the company's long-haul revenues. The Government's decision to permit a limited transfer of routes from BA to BCal, rather than the major route transfer as well as the removal of capacity restrictions on all short-haul feeder routes proposed by BCal itself and advocated by the CAA's review of airline competition policy ahead of BA's privatisation, did not make BCal big enough in terms of economies of scale and scope to develop an efficient hub-and-spoke operation at Gatwick. This would have enabled BCal to compete with a much bigger, privatised BA as well as the giant US carriers on a level playing field. Instead, the limited route transfer still left BCal in an operationally and financially much weaker position than its far bigger and stronger rivals. This increased the airline's vulnerability to external shocks, thereby seriously undermining its financial strength to withstand such crises. Source: Wikipedia

Business Journal June 29 - July 05, 2015

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DHL: Collaboration Crucial to Boosting Trade in Africa

usiness leaders from around the world gathered in Cape Town, South Africa recently at the World Economic Forum (WEF) on Africa under the theme, Then and Now: Reimagining Africa’s Future. According to Charles Brewer, Managing Director of DHL Express Sub-Saharan Africa, the forum’s theme could not be more fitting given the rise of Africa over the last few decades. Whilst participating in various panel discussions at the conference, Brewer said that despite Africa being one of the last frontiers for economic growth and development, leaders need to urgently determine the best approach for the continent going forward and work hard to implement it. To ensure that Africa is equipped to maintain and exceed its current growth trajectory, business leaders, government and the community need to work together towards making Africa easier to do business with. He says that a strong growth engine for the continent is the rise in small and medium enterprises (SMEs). “The region offers plenty of untapped opportunities, which pave the way for SMEs to fill the gaps not presently being catered for by larger corporations. Manufacturing, on a large scale, is still somewhat embryonic in Africa and as such, there is a definite opportunity for SMEs that operate in the manufacturing industry.” Having set up in Africa in 1978, DHL is today present in every African country and territory and the company is very familiar with the continent’s unique challenges and characteristics. Brewer says that the biggest game changer for Africa going forward will be its ability to boost connectivity and intra-Africa trade. He points to the most recent DHL Global Connectedness Index, which revealed that Africa is the world’s least connected continent, when considering the ease of moving people, trade, information and finance. “All African countries should therefore be focused on developing connectedness on the continent and building trade relationships,” says Brewer. According to a panel discussion on the Future of Trade which took place at the WEF on Africa forum, the participants highlighted the fact that just 12% of African countries’ total trade is with each other, and the continent only accounts for 3% of value addition in global trade. “Africa needs to remove the obstacles which hinder the ease of doing business and continually investigate new trade agreements in the region, as these have the potential to boost

and for the business environment to flourish. Attending a forum such as WEF definitely enriches your knowledge, but what I find most valuable, is that a lot of the discussions challenge your beliefs and value sets. As an example, the sessions about gender equality in the workplace, digitisation across Africa and being a socially responsible organisation that delivers shared and inclusive value have really reignited my focus areas. These have always been a top priority for DHL, but it is always great to hear how other organisations are managing these issues and to learn from them,” concludes Brewer.

the level of trade significantly. Africa has already benefited from several trade partnerships such as the East Africa Community (EAC) and ECOWAS and the imminent launch of the Tripartite Free Trade Area. These are significant developments for Africa – and it is crucial that these collaborative relationships continue and more importantly, that they be implemented consistently. “Government and the private sector therefore need to work together to create a sustainable and inclusive environment, and work on solutions to make it easier to conduct business

Africa has already benefited from several trade partnerships such as the East Africa Community (EAC) and ECOWAS and the imminent launch of the Tripartite Free Trade Area.

Business Journal June 29 - July 05, 2015

DiplomaticZone

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UN Seeks More Support for Global Peace-Keeping

he international community must boost material and financial support for peace-building initiatives in order to better help countries emerging from conflict build a sustainable and peaceful future, United Nations Deputy Secretary-General Jan Eliasson said. Addressing the opening of the Second Annual Session of the Peacebuilding Commission at UN Headquarters in New York, the Deputy Secretary-General emphasised the role of peace-building at “the core of UN activities in conflict-affected countries” but warned that financing efforts for peace-building still remained woefully insufficient. “We do not know exactly how large the financing gap for peace-building is, since there are no global estimates of peace-building needs. But there are clear indications that allocations to peace-building and to institution-building – which is closely related – in conflict-affected countries are grossly inadequate,” Mr. Eliasson confirmed. The UN Deputy Head told those gathered that in a group of 31 conflict-affected countries, critical institution-building in the political, security and justice areas received less than 10 per cent of official development assistance (ODA) during the period 2002-2013. For the six countries on the agenda of the Peacebuilding Commission Burundi (Sierra Leone, Guinea, Guinea-Bissau, Liberia and Central African Republic), only 7 per cent of ODA was allocated to these areas. “This shortfall affects our ability to build and consolidate peace with

Opening of the Second Annual Session of the Peace Building Commission at UN Headquarters in New York. short term and targeted support to national processes and plans,” he continued. In addition to the funding shortfalls, Mr. Eliasson pointed out that existing funding mechanisms among donors remained “fragmented” as development, security, human rights and humanitarian activities are often funded from different budgets with separate decision-making processes. On the recipient side, the funding mechanisms remain equally scattered across separate funds and “a

multitude of plans and strategies on the part of governments, the UN system and other actors on the ground” which, he added, “do not contribute to coherence and a clear focus.” One option to countering such a piece-meal approach would be to enhance the UN Peace-building Fund, Mr. Eliasson said, citing the global pooled fund which had already played “a positive role in breaking down the silos” among UN missions and country teams in areas such as the Central African Republic.

However, compounding the problem related to fragmentation, the Deputy Secretary-General also noted the lack of robust tax and rule of law institutions in many countries emerging from conflict, cautioning that this only added to the burden facing an effective mobilisation of domestic resources. He suggested that this alone made the need for early and sustained investment in capacity building by the international community “even more critical.”

“We need to make sure that the Peacebuilding Fund is placed on a solid footing,” Mr. Eliasson concluded. “The Fund has a valuable role to play as a global pooled fund that brings together the political, security and development aspects of peacebuilding.” For the President of the General Assembly, Sam K. Kutesa, the Peace-building Fund also remains an important component for supporting peace-building activities, which directly contribute to post-conflict stabilization and strengthening the capacity of governments and institutions at national level. Reflecting on the theme of predictable financing from the point of view of the policy-making role of the General Assembly, he reminded the Commission that the international community is working toward the formulation of an “ambitious and transformative post-2015 development agenda.” “The proposed Sustainable Development Goals (SDGs), whose core objective is to eradicate poverty and achieve sustainable development in its social, economic and environmental dimensions, holds great promise for addressing the challenges faced by countries in post-conflict situations,” he added. It is therefore critical to ensure that adequate resources are mobilised for implementation of the new development agenda, M. Kutesa stressed. “These major engagements will not only seek to address some of the most pressing challenges facing humanity, but will also contribute to finding solutions for the silos and the fragmentation we see in the field of peace-building.”

BRICS: Destination Africa-a Promise of New Funding?

n Wednesday, May 27, 2015, Day 3 of the African Development Bank’s 50th Annual Meetings, a panel session was dedicated to a discussion on the BRICS (Brazil, Russia, India, China and South Africa) countries. Among other issues addressed by participants, was the New Development Bank (NDB), the African Regional Centre (ARC) and the Contingent Reserve Arrangement. Contributions were made to this roundtable by South African Finance Minister Nhlanhla Nene; Deputy Governor of the Central Bank of Uganda, Louis Kasekende; Chair of the Board of the Tanzania Investment Bank (TIB), William Lyakurwa; and the Chief Executive Officer (CEO) and founder of fund management company Advanced Finance & Investment Group (AFIG), Papa Madiaw Ndiaye, from Senegal. The panel was completed by renowned banker Mizinga Melu,

currently CEO of Africa Regional Management at Barclays. South African Finance Minister Nhlanhla Nene was the first to speak, emphasizing the plural dimension embodied by the economic group of the BRICS states, composed of Brazil, Russia, India, China and South Africa. Nhlanhla Nene recalled that when South Africa hosted the BRICS Conference in 2013, the South Africa Head of State had invited his counterparts from the continent to the event. "Our participation in the BRICS enabled us to make significant progress, including the creation of the NDB," said Nhlanhla Nene. He went on to add that this panel was the place to share what had been done so far, to take inspiration from it to the benefit of the African continent. South Africa, the Minister revealed, will be the location of the headquarters of the ARC. As for the New Development Bank, identification of its future location is in progress. Priority will be given to

such projects as road infrastructure, because Africa has a real need for this. This new bank, according to Nhlanhla Nene, will have a capital of US $100 billion, including $41 billion provided by China and $5 billion from South Africa. Other African countries are invited to invest in it. Louis Kasekende, Deputy Governor of the Central Bank of Uganda, expressed his wholehearted agreement, deploring the large infrastructure gap on the continent. Kasekende added that the BRICS bank will play a complementary role to that of other development partners. "We want to have access to credit as quickly as possible and at the lowest rates," he said. Louis Kasekende expressed the opinion that there was a need to go much further than trade with China in consumer goods, targeting other areas such as construction and public works, major projects, etc. He added that from the perspective of the BRICS, it was necessary to

further expand trade. Papa Madiaw Ndiaye, representing the Senegalese private sector, said that Africa needed concrete trade initiatives, before going on to ask South Africa to facilitate the participation of African banks in this new bank, a "breakthrough bank", according to Papa Madiaw Ndiaye. He then went on to call on the private sector, the engine of growth, to feel more affected. William Lyakurwa, Chair of the Board of Directors of the Tanzania Investment Bank, said that the BRICS states were not satisfied with existing international financial institutions. Just as Asia had created its own bank, the creation of the NDB marked a positive step. William Lyakurwa concluded on the need, in his view, for Africa to present bankable projects to develop its infrastructure, to promote the better circulation of people and goods, etc. Returning to the subject of the BRICS states' New Development

Bank, Mizinga Melu made the point that it would bring together partners from Brazil, a country renowned for mining, from Russia, which has good experience in oil, and from China, a specialist in construction and public works. With 62 per cent of its population being young people, Africa needs the support of the NDB, concluded the CEO of Barclays' Africa Regional Management. What will the future bank's priorities be? How can the maintenance of infrastructure be ensured when some of it is proving to have a short lifespan while loans are repayable over 50 years? What support needs to be offered to local authorities in the context of a decentralization policy? There were many questions raised during the panel session. The South African Finance Minister pleaded for an alternative bank to support already existing financial institutions.

Business Journal June 29 - July 05, 2015

Sports www.businessjournalng.com

Aliko Dangote & Arsenal FC: The 30-Year Love Affair!

liko Dangote, Africa's richest man, and President/CEO of the Dangote Group in passionately in Love! It is a love affair that spans over 30 years and is looking set to transform from mere relationship to something much more serious-marriage. Recent media reports have it on good authority that Dangote is set to bid for Arsenal FC, a club he has ardently supported and loved passionately for over 30 years. Listed by Forbes magazine as the 67th richest person in the world with net worth of over $17 billion, Dangoteâ&#x20AC;&#x2122;s business interest spans from cement to

various household products. The coming bid was officially confirmed by Mr. Anthony ny Chiejina, Spokesman for Dangote thus: "He is showing interest in making an offer. At the right time and at the right price, he will make an offer," Chiejina said. He also confirmed that Dangote has been a fan of Arsenal FC for over 30 years. As we await the impending Dangote-Arsenal al Union with bated breath,, we hope the duo will find finally nally tie the knot for the Love of the Game!

Aliko Dangote

Arsenal FC celebrating FA Cup Victory

FIFA Hall of Shame Key Players in the FIFA Scandal

Business Journal June 29 - July 05, 2015

Automobile

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US Senator Seeks Compensation Fund for Takata Airbag Victims

n influential U.S. senator has called for troubled airbag supplier Takata Corporation to establish a fund to compensate victims injured or killed by its ruptured

airbags. U.S. Senator Richard Blumenthal pressed Kevin Kennedy, Executive Vice-President for Takata’s North American affiliate, to establish a fund similar to that created by General Motors in the wake of its ignition switch crisis. Kennedy said he was unable to commit to the fund without first consulting his superiors, but he said he would give the senator an answer in two weeks. Eight people have died and more than 100 have been injured after their Takata airbag exploded following a crash. After GM initially linked 13 deaths to its defective ignition switches, GM’s death count has since ballooned to at least 117 after it established its fund to compensate crash victims overseen by compensation attorney Kenneth Feinberg. “My view is that Takata is every bit as responsible for the eight deaths found so far as GM is for the 117 deaths and counting,” Blumenthal said, adding he expected the number of confirmed deaths tied to Takata’s exploding airbags to grow should a fund be created. Kennedy also agreed that the eight confirmed deaths would likely grow larger should a fund be created “as many of these parts are still in the field." A day before the hearing, committee Democrats released a report saying the Japanese company may have put profits over safety by halting global safety audits for financial reasons. "This is deadly serious business," said U.S. Senator Bill Nelson, as he held up a piece of shrapnel from a Takata airbag that injured a Florida woman whose bloody, gauze-wrapped face was displayed in a photograph at the hearing. "For years, it's obvious that Takata did not put safety first." During the hearing, senators from both parties also blasted the National Highway Traffic Safety Administration after the U.S. Department of Transportation’s Office of Inspector General released a scathing audit of NHTSA that found the agency to be hobbled by a series of systemic problems. “This audit report is one of the worst I’ve ever seen in terms of a government agency -- this is about blatant, incompetent mismanagement," Senator Claire McCaskill, D-Mo., told NHTSA Administrator Mark Rosekind during the hearing, noting she was "shocked when she read the inspector general’s report." McCaskill and other senators said additional funding for NHTSA, which its officials have repeatedly asked for, is not an option until they see evidence that major reforms have taken hold. Sen. Gary Peters, D-Mich., says securing additional funding will be tough as long as members of Congress lack confidence that NHTSA’s resources will be used effectively. “Right now, the burden is on the administrator,” said Calvin Scovel III, Inspector General of the Transportation Department. TRW Takes Over

32 million Takata inflators that regulators currently estimate are in U.S. vehicles under recall by 11 automakers.

U.S. Sen. Richard Blumenthal, D-Conn., holds the remnants of a defective Takata airbag inflator during Senate committee hearing

Meanwhile, Fiat Chrysler has pushed Takata to the sidelines to tap rival TRW Automotive as the automaker’s sole supplier of driver-side airbag inflators used to replace Takata-made inflators in more than 4 million FCA vehicles currently under recall. The automaker has used an “alternative and permanent design” of TRWmade driver-side replacement inflators exclusively since June 8, FCA U.S. safety and regulatory compliance head Scott Kunselman said in written testimony prepared for today's hearing on the Takata recalls before the U.S. Senate Commerce, Science and Transportation Committee. Takata-made driver-side inflators at FCA dealers are being “quarantined” and returned to Takata, Kunselman said. FCA’s move is the clearest sign yet of an automaker distancing itself from a troubled part made by the embattled supplier. It also highlights difficult choices facing automakers as they wrestle with the Takata recalls: continue with Takata as a supplier of replacement parts that may need to be recalled again, or secure replacements from competitors that are racing to install additional manufacturing capacity to supply the recalls.

FCA is doing both. Kunselman said in his written testimony that FCA will continue to use Takata-made passenger-side replacement inflators in recall repairs. FCA is working with the supplier on an updated inflator design with “an improved igniter material” and a desiccant to prevent the ammonium nitrate explosive propellant inside the inflator canister from absorbing moisture. Years of exposure to moisture has been named as a leading factor behind the violent airbag deployments at the heart of the Takata recalls. The improved inflators will start flowing to dealers in November following validation testing in August, Kunselman said. It’s unknown how many Takata inflators supplied as replacements will ultimately need to be replaced themselves. Indeed, some 50,000 FCA customers who already received a Takata driver’s-side replacement inflator must return to dealerships for a TRW-made inflator, Kunselman said in his prepared remarks. TRW inflators “will require no further action,” Kunselman said. TRW was recently acquired by Germany's ZF Friedrichshafen. About 4.8 million Takata inflators in 4.5 million FCA vehicles are under recall, Kunselman said, part of the nearly

Honda Apologises Despite investigations that began last year, neither Takata, automakers nor NHTSA have pinpointed the root cause of defective Takata airbags that can deploy with too much force in a crash and cause the metal inflator canister to rupture and spray vehicle occupants with metal shards. Takata inflator ruptures have been linked to at least eight deaths -- including two more fatalities confirmed in the last two weeks -- and more than 100 injuries. The deaths have all involved driver-side airbag inflator ruptures in Honda vehicles. In remarks prepared for the Senate

panel, Rick Schostek, Executive Vice President of Honda North America, acknowledged the two additional deaths recently confirmed by Honda -- a Louisiana woman, Kylan Langlinais, whose 2005 Honda Civic was in an April 5 crash, and Jewel Brangman, who died following a Sept. 7, 2014 crash in the 2001 Honda Civic she was driving in Los Angeles. “This is heartbreaking, and a painful reminder to us of the reason we continue to urgently accelerate our actions to repair the affected vehicles. But of course the real pain is experienced by the families of the victims. We sincerely apologise to them and extend our deepest and heartfelt sympathies,” Schostek said in prepared remarks. Schostek said Honda has accelerated Takata repair efforts to “a level unprecedented in the history of our company.” The company is repairing more than 50,000 recalled vehicles in an average week, sending out English- and Spanish-language recall notices, using digital media tools such as targeted ads on Facebook to alert customers to the recalls, and other outreach steps. Takata's Kennedy reiterated in his prepared remarks for the panel that Takata would stop producing the driv-

er-side inflator design implicated in all eight deaths and most of the injuries. The inflators in question use “batwing shaped” propellant wafers and are of an older design, Kennedy said, noting Takata supports the recall of all batwing driver-side inflators from the start to end of production in all vehicles registered anywhere in the U.S. Kennedy said about 70 of these inflators have ruptured in vehicles in the U.S. fleet, which he said equates to roughly nine ruptures out of every 100,000 deployments. Profits over Safety? The hearing comes after a report released by the Democratic minority members of the Senate Commerce Committee said that Takata “may have prioritised profit over safety by halting global safety audits for financial reasons.” The charge stems from a 2011 email chain included in the 90,000 pages of documents provided by Takata that were reviewed by committee Democratic staffers. In the email chain, according to the report, a Takata senior vice president in charge of inflators at TK Holdings was discussing plans for an upcoming audit of the operations at Takata’s plants in Monclova, Mexico, and Moses Lake, Wash. The executive, whose name was redacted, pleaded with a TK Holdings global director of inflator and propellant safety for “support” with the audit, saying, “We need your help.” The senior vice president, in the last email of the chain released by the committee, also wrote, “Global safety audits had stopped for financial reasons for last two years. Good to start at least locally.” In a statement in response, Takata said the report had “a number of inaccuracies based largely on old media articles that Takata has previously refuted” and that the emails referenced were taken out of context and characterised in ways that created a false impression. “The global audits referenced in the emails relate to the safe handling by employees of pyrotechnic materials -- they were not, as the report implies, related to product quality or safety,” Takata said in a statement. “Takata conducts regular reviews of product quality and safety at Moses Lake and Monclova, and at no time were those halted.” Ammonium Nitrate Kennedy was grilled in his last Capitol Hill appearance earlier this month over Takata’s continued use of ammonium nitrate as the principal propellant in its airbag inflators, a compound experts have said is a risky choice for airbags because it can degrade when exposed to moisture and temperature, which in turn makes it prone to violent explosions. In his remarks at the hearing, Kennedy said Takata has “full confidence in the safety” of its inflators that use phase-stabilised ammonium nitrate. He said replacing recalled inflators with units using the compound is “absolutely the right response to the public safety concerns raised by the inflator ruptures.”

June 29 - July 05, 2015

TheLantern PRINCE COOKEY 0802 308 8874 prince.cookey@yahoo.com.

“

People talk about M-pesa. It took the operators three years to break even; get volumes. It was only towards the end of 2012 that mobile money licences were given in Nigeria; we are coming to our three years. To us, it is like a reflection point.” Ms. Modupe Ladipo CEO, EFina

YES-Let’s Talk About Shelter! W ay back in my college days, we were taught that every man needs three basic things for normal living: Food, Clothing and Shelter. For me and my folks then, the teacher was only teaching us to pass our exams and move on to the next class. Why should we really bother about the teacher’s sermon of Food, Clothing and Shelter as three basic needs of man when our Daddy and Mummy were there for us 24/7, providing all the food we need, the clothing to cover our bodies and shelter to sleep in overnight. Indeed, that was the headache of Daddy and Mummy-not our problem. But as I grew up, l began to see the sense in the Three-Basic-Needs-of-Man sermon of our long forgotten teacher. As adulthood came, so came responsibilities and the need for Food, Clothing and Shelter. In Nigeria today, the often quoted housing deficit is put at 17 million units while the UN Habitat reported that 30% of the world’s population reside in slums unfit for human habitation. It would be pertinent to consider this report on shelter by Mckinsey Consulting:

Decent, affordable housing is fundamental to the health and well-being of people and to the smooth functioning of economies. Yet around the world, in developing and advanced economies alike, cities are struggling to meet that need. If current trends in urbanisation and income growth persist, by 2025 the number of urban households that live in substandard housing—or are so financially stretched by housing costs that they forego other essentials, such as healthcare—could grow to 440 million, from 330 million. This could mean that the global affordable housing gap would affect one in three urban dwellers, about 1.6 billion people. It finds that the affordable housing gap now stands at $650 billion a year and that the problem will only grow as urban populations expand: current trends suggest that there could be 106 million more low-income urban households by 2025, for example. To replace today’s inadequate housing and build the additional units needed by 2025 would require $9 trillion to $11 trillion in construction spending alone. With land, the total cost could be $16 trillion. Of this, we estimate that $1 trillion to $3 trillion may have to come from public funding.

Source: Find Nigeria Property Back here in Nigeria, quite a number of measures and efforts have been made by the government (federal and states) and the private sector to effec-

Source: Sterling Homes Limited tively address the challenge of cheap and affordable shelter. Unfortunately, the result has been mixed-one step forward and two steps backwards.

It is therefore my intention to present the grim Facts & Figures on Shelter with the objective of spurring our leaders and other stakeholders to rise

up to the realities of providing good shelter for the people of Nigeria at an affordable rate.

Business Journal Newspaper is published weekly by Egelon Communication Company. Suite B2, Glory Shopping Complex, 229, Ikotun-Idimu Road, Council Bus-Stop, Idimu, Lagos. Abuja Bureau 08035977833 PH Bureau: 08099573476 Phone: 08023088874, 07058919138. Email: business.journal@yahoo.com. Publisher/Editor-in-Chief: PRINCE COOKEY.