Business journal newspaper by BusinessJournalNG

Business Journal Named ‘Best Financial Newspaper in Nigeria’

usiness Journal has won international recognition as ‘Best Financial Newspaper in Nigeria’ in the 2015 International Fi-

nance Awards by Wealth & Finance International Magazine of the United Kingdom (UK). In the award letter to Business Journal, Jonathan

Hicks, the Editor of Wealth & Finance International said: “Business Journal: You Are a Winner in the 2015 Finance Awards! Congratulations regard-

ing the success of Business Journal in the Wealth & Finance INTL’s 2015 Finance Awards. You have been awarded: Best Financial Newspaper - Nigeria

After months of voting, research and hard choices, we have finally decided on the worthy winners of this year’s awards, celebrating the service, skill and ded-

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How Stanbic IBTCWas Caught in Annual Accounts Fraud The Case Against Stanbic IBTC The abridged case against Stanbic IBTC Bank Plc by FRC is reproduced below: REGULATORY DECISION

IN THE MATTER OF FINANCIAL STATEMENTS OF STANBIC IBTC HOLDINGS PLC FOR YEARS ENDED 31ST DECEMBER 2013 AND 2014 1.Pursuant to Provisions of the Financial Reporting Council of Nigeria Act No. 6, 2011 (“FRC Act”) and Regulation 3 of the Financial Reporting Council of Nigeria Material irregularities of the said entities were also brought to the attention of the Council by some minority shareholders

of Stanbic IBTC relating to the Financial Statements of the said entity for years ended 31st December 2011, 2012, 2013 and 2014. SALE, PURCHASE AND ASSIGNMENT AGREEMENT On 6th July, 2012, Stanbic

IBTC issued a final signature version of a Sale, Purchase and Assignment Agreement between Standard Bank of South Africa Limited and Stanbic IBTC Bank Plc on a banking Application Software. The said Application Software was developed by Stanbic IBTC Bank Plc, Nigeria. The Source Code

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TSA: CBN Sanctions UBA -pg2 N2.9bn, First Bank N1.8bn

N1tr Fine: NCC Issues November 16 Deadline to MTN

was disclosed without a NonDisclosure Agreement signed by both parties. It should be noted that Standard Bank of South Africa operates in 17 (seventeen) countries in Africa and claim that they engage in shared use of banking software wherein the developer gets an-

L-R: Group Managing Director/ CE, Union Bank of Nigeria Plc, Emeka Emuwa; Non- Executive Directors Engr. Mansur Ahmed; Chief (Mrs.) Nike Akande, and Chairman, Senator Udoma Udo Udoma, during the unveiling of the bank’s new brand identity in Lagos

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he whitestained gloves went off. And the pretence of Best Corporate G over nance was publicly muddled as Stanbic IBTC Bank Plc was caught red-handed by the Financial Reporting Council (FRC) for allegedly falsifying and manipulating its annual accounts in 2013 and 2014 to deceive regulators, tax

authorities, shareholders and the general public on the true state of its financial results in the two years under review. The sanctions against the bank included immediate suspension of Mr. Atedo Peterside, Chairman and Mrs. Sola David-Borha, CEO.

IDC TechScape Offers Manufacturers Roadmap to Future Factory

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Benjamin Adewole

Business Journal November 2-8, 2015

2 Stanbic IBTC Continued from Page 1

nual fee from the others in the group as long as the banking application software is in use. Instead, on 3rd July, 2013 (one year after) Stanbic IBTC submitted the said Sale, Purchase and Assignment Agreement between Stanbic Bank Plc and Standard Bank of South Africa Limited to NOTAP requesting NOTAP to approve and register that the application Software is sold to Standard Bank of South Africa for a fee of ZAR 151,586,277 and that the Nigeria bank has ceded all its rights to the software to the purchaser and now have the Nigeria bank become one of those in the seventeen countries paying annual license fees for the use of the software. NOTAP declined the application and advised that Stanbic IBTC license the application software in Nigeria instead. 3.This was not adhered to by Stanbic IBTC but went ahead with their plan anyway and neither reported the sale of the said software nor showed any annual fee income relating to it in their Statement of Profit or Loss and Other Comprehensive Income nor carry the intangible asset in their Statement of financial Positon in the financial statements for years ended 31st December 2013 and 2014. CONCEALMENT OF INFORMATION Professional Fees – 2014: N6,083,000,000; 2013: N4,467,000,000; – 2012: N6,057,000,000; 2011: N4,041,000,000. The schedule submitted to our Council by Stanbic IBTC revealed that professional fees which was simply a line in the financial statements contained several expenses that are unrelated to professional fees and which required separate disclosures on their own to give users of the financial statements good understand on the transactions and events of the bank. These include: Franchise Fee – Included in professional fees for 2014 and 2013 were franchise fees of N2.3 billion and N1.9 billion respectively which were provisions made for franchise fee to be paid

Business Journal

Continued from Page 1 single-office firms to international juggernauts- we celebrate them all. To be named a Finance award winner is no mean feat: it is not only a “stamp” of professional excellence, it is also a badge of merit, integrity and leadership, and these awards have brought together professionals from across the financial world. Once again, congratulations on your win and I look forward to working with you over the coming weeks! Commenting on the development, Prince Cookey, Publisher/ Editor-in-Chief of Business Journal said: “This award is a testament on the editorial expertise and market excellence of Business Journal newspaper in the Nigeri-

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to Standard Bank of South Africa. See section below for more discussion of this matter. Tax advisory fee and provision for tax liability assessment – Also Included in the 2014 professional fees figure was N711million for “tax advisory fee and provision for tax liability assessment”. The Council was concerned that provisions for tax liability were included in professional fee. Provision for litigation –In 2014, the sum of N752 million which the schedule revealed included “provision for litigations” was also included in professional fees when there is a financial reporting standard which requires separate disclosures of issues relating to litigations. Another major line item under “Other Operating Expenses” was provision for contingent and other known losses of N972m. Included in this amount was another N340.8 million also described as “provision for litigation”. The Council is concerned that the group did not seem to have a systematic method of recognizing and classifying its expenses as similar and related items were found under several expense categories. “Others” in Other Operating Expenses of Stanbic IBTC were as follows: 2014: N1,907,951,000; 2013: N2,477,201,000; 2012: N1,632,000,000; (whereas N1,946,000,000 was disclosed in the 2013 financial statements as 2012 comparative) 2011: N2,685,000,000. Donations – Several donations were concealed in “Others”. The group disclosed its donations in the annual report in compliance with the requirement of CAMA CAP C20 LFN. However, just one line item of donations in “Others”, N275,000,000, far exceeded the aggregate donations disclosed in the annual report (N162,468,098). They also could not confirm the entity that this amount was donated to when questioned further at the meeting of 16th October 2015. ü Directors’ fees and expenses – Also concealed within “OTHERS” was directors’ fees and expenses of N223,000,000 (2013: N218,000,000). This is aside the directors’ fees and

an media industry despite its lean and meager resources. It reflects the current and future aspiration of the newspaper as a key player in the economic renaissance of the nation and its desire to become a credible reference point in the market. Our promise is secure: we shall continue to deliver value to our readers, advertisers and other stakeholders going forward. I heartily dedicate this award to our management and staff, and also individuals and corporate organisations that have stood in support of Business Journal over the years.” In the recent past, Business Journal had been nominated twice for the ‘First Bank Business Publication of the Year’ award by the Nigerian Media Merit Award (NMMA). It came second on both occasions.

emoluments disclosed in a separate note in the financial statements. ü Several expenses with their individual and separate classifications in the financial statements were also found within “OTHERS” •Pension administration expenses – 2013: N227,000,000 •Penalties and fines – 2014: 34,000,000; 2103: 29,000,000 •Pension commission paid to agents & sales executives– 2014: N99,000,000; 2013: N514,000,000. •VAT- 2014: N308,000,000; 2013: N148,000,000 •Loss on disposal of fixed assets – 2014: N42,000,000; 2013: The Council’s Concerns are as follows: The Group makes yearly provisions and remittances to Standard Bank South Africa as Management/Franchise fees. This is despite the fact that Stanbic IBTC could not secure relevant registration from NOTAP. Stanbic IBTC could not prove to the Council how and where the “branding” benefit lies for the Nigerian group that trades under a different name and in another jurisdiction such as would warrant making provisions and payments of huge franchise fees annually to the parent company. Two different submissions were made at two different times. One signed by a Finance staff of Stanbic IBTC and another signed jointly by the same finance staff and Stanbic IBTC Holding’s Chief Executive Officer. The Council was however alarmed to discover that there were material discrepancies in the two submissions made by them. Regulatory Breaches The Council observed that Stanbic IBTC regularly flouts CBN regulations. In 2014 for instance, a total penalty of N28,000,000 was imposed on the group. Among the contraventions was improper disclosure of public sector deposits in 2014. Stanbic IBTC seems to have a penchant for poor disclosures which further corroborates the findings in this report. 1.REGULATORY DECISION OF THE PANEL

2.a) The Directors of Stanbic IBTC are hereby directed to withdraw the Financial Statements of Stanbic IBTC Holdings Plc for years ended 31st December 2013 and 2014 and restate them in accordance with the provisions of Section 64 (2) of the Financial Reporting Council of Nigeria Act No. 6, 2011 and Regulation 21 of the Financial Reporting Council of Nigeria – Guidelines/ Regulations for Inspection and Monitoring of Entities, 2014. The FRC number of the following persons(Atedo Peterside-Chairman and Sola David-Borha-CEO) who attested to the misleading Statements of Financial Position of Stanbic IBTC Holdings Plc for years ended 31st December 2013 and 2014 are hereby suspended until the investigation as to the extent of their negligence in the concealment, accounting irregularities and poor disclosures in the said financial statements is completed in accordance with Section 62 of the Financial Reporting Council of Nigeria Act No. 6, 2011. Accordingly, they are not allowed to vouch the integrity of any financial statements issued in Nigeria. The Stanbic IBTC Defence As expected, Stanbic IBTC fired back at the FRC, insisting that the regulatory body erred in punishing the bank for the alleged infractions. In an advertorial signed by suspended Mrs. Sola David-Borha, CEO and Mr. Chidi Okezie, Company Secretary, the bank stated: “FRC’s allegations are inaccurate and unfortunate, and the manner in which it has been chosen to make them is procedurally defective. FRC has ignored laid down process in preference for self-help and media publicity. The matters that FRC alleges to be wrong are not wrong in any material respect and many are in any event not matters of financial reporting at all, but matters of business decision and judgement for Stanbic IBTC and its Board of Directors. For example, the decision whether to enter into a sale and lease back, whether in relation to intellectual property or any other asset, is a business decision and entirely a matter for the Board of Directors of Stanbic IBTC and certainly not a matter for FRC. In the same vein, NOTAP’s refusal to register a franchise

agreement does not render the agreement null or void, or indeed relieve Stanbic IBTC of its liability.” The bank also claimed that the matter between it and FRC was in court. FRC Demands Immediate Apology from Stanbic IBTC Reacting swiftly to the Stanbic IBTC advertorial, the FRC insisted that its actions against the bank was justified, just as it debunked the bank’s assertion that the matter was in court. The FRC stated: “The Council wishes to advise the management of Stanbic IBTC to withdraw the advertorial and immediately tender a written apology to the Council for the following reasons: First, the FRC is not aware of any court processes served on the Council with regard to the Regulatory Decision issued on Stanbic IBTC on Monday, October 26, 2015.” The FRC insisted that the “bank must obey the regulatory decision of the Council and reverse the wrong eaccrued amounts to retained earnings. Finally, we like to restate here that the FRC registration of the named directors of Stanbic IBTC (Atedo Peterside & Sola David-Borha) remains suspended. Accordingly, they are not allowed to vouch the integrity of any financial statements issued in Nigeria.” Going Forward Regardless of whether Stanbic IBTC was 100% guilty as declared by the FRC or 100% innocent as claimed by Stanbic IBTC, the White Knight reputation of the bank has been breached and dented. It also implies that in the Nigerian banking sector, all have sinned and come short of earning the White Flag of all regulators. For Stanbic IBTC Bank Plc, it is time to clean and wipe its stable of all rotten elements (natural and man-made) and embark on the Second Missionary Journey of rebuilding its brand image on the tenets of Good Corporate Governance in all its operations. It is the wrong time to engage a regulator in media war via newspaper advertorials and rented shareholders groups. As the wise saying goes: nobody wins against a regulator! NB: Benjamin N. O. Adewole is an Editorial Consultant to Business Journal

TSA: CBN Sanctions UBA N2.9bn, First Bank N1.8bn

hese are bad times for United Bank for Africa (UBA) Plc and First Bank Limited as both were sanctioned by the Central Bank of Nigeria (CBN) to the tune of N2.9 billion and N1.8 billion respectively for allegedly violating the Treasury Single Account (TSA) policy of the Federal Government. For First Bank, its shares nosedived to 10-year low as a result of the N1.88 billion sanction by the CBN. The bank’s shares fell by 3.9% to N5 in trading at the Nigerian Stock Exchange (NSE), its lowest fall since April 2005. President Muhammadu Buhari had given banks a deadline of September 15, 2015 to comply with the TSA policy, which was mooted to

stem fraudulent trading on government revenue by banks in the country. In a swift reaction to the N1.88 billion fine, Mr. Tijjani Borodo, Secretary of FBN Holdings Plc issued a statement thus: “The management of First Bank is still engaging in conversations with

the Central Bank of Nigeria on this regulatory decision.” Market analysts say the inability of the bank to challenge or argue the N1.88 billion sanction against it by the CBN simply means that First Bank was guilty as charged. The N1.88 billion fine against First Bank came just days after the bank reported 9.7% decline in third-quarter 2015 profit, while its index crashed by 38% in 2015 as against Nigeria’s main index of 16% and 14% drop in the banking industry index.

Business Journal November 2-8, 2015

Business Events www.businessjournalng.com

•L-R: Representative of the Chairman, FMDQ OTC Securities Exchange, Mr Jubril Aku; Country Manager, International Finance Corporation in Nigeria, Mrs Eme Essien Lore; representative of the Director-General, Security and Exchange Commission, Mr Zakawamu Garuba, and Managing Director, FMDQ OTC Plc, Mr Bola Onodele Koko, at the FMDQ Nigeria Debt Capital Markets workshop in Lagos.

•L-R: Public Relations Manager, MultiChoice Nigeria, Caroline Oghuma; Financial Manager, PEP, Kofo Awonuga; Channel Relationship Manager, MultiChoice Nigeria, Aderoju Ope-Ajayi; Logistic Manager, PEP, Abdul Azeez Iposu, and Public Relations Manager, GOtv, Efe Obiomah, during the Media Briefing for MultiChoice/PEP Partnership announcement in Lagos

•L-R: Executive Director, Business Development, Nigeria Inter-Bank Settlement System (NIBSS), Mrs. Christabel Onyejekwe; Managing Director/CEO, Mr. Ade Shonubi; Managing Director/CEO, Vas2nets, Mr. Ayo Stuffman, and Executive Director, Tech and Operations, NIBSS, Mr. Niyi Ajao, during a press conference to announce the availability of BVN Validation on USSD/Internet Portal for Bureau De Change (BDC) in Lagos.

• L-R: Hip-hop artiste, Kingsley Chinweike Okonkwo, a.k.a. K-Cee; Chairman/CEO, Air Peace Ltd, Barr Allen Onyema; his wife &Vice-Chairman, Alice; Group MD/CEO, Fidelity Bank Plc, Nnamdi Okonkwo and the COO, Air Peace, Oluwatoyin Olajide, cutting the cake to celebrate Air Peace first year anniversary in Lagos.

• L-R: Executive Director, Heritage Bank Limited and Chairman Organising Committee of Association of Professional Women Banker – APWB, Mrs. Mary Akpobome; Managing Director, Bank of Industry, Keynote Speaker at the Occasion, Mr. Rasheed Adejare Olaoluwa, , President/Chairman in Council of Chattered Institute of Bankers of Nigeria – CIBN, Otunba (Mrs.) Debola Osibogun and Chairman, APWB, Mrs. Mercy Oluwatoyin Ojo, at the Corporate Forum/Dinner of the association in Lagos.

•L-R: Corporate Relations Director, Sesan Sobowale; Sales Director, Paul Costigan, (both of Guinness Nigeria); Managing Director, Edinho Nig. Ltd, Chief Edmond Okafor; Supply Chain Director, Cephas Afebuameh and Managing Director/ Chief Executive Officer, Guinness Nigeria, Peter Ndegwa, at the Guinness Nigeria’s Distributors Conference, tagged ‘Partners for Growth’ in Lagos

•L-R: Deputy Governor, Osun State, Mrs. Titi Laoye-Tomori(left);, Governor Ogbeni Rauf Aregbesola of Osun State, and Corporate Services Executive, MTN Nigeria, Mr. Akinwale Goodluck at the MTN Foundation security support project phase 3 in Osun State.

• L-R: Glo subscribers, Yemisi Atandare and Mrs Olusola Apampa, Glo Brand Ambassadors MI and Odunlade Adekola and other subscribers, Yetunde Fadare and Barakat Oladeji at the Slide and Bounce Concert organised by Globacom at the OK Centre, Abeokuta, Ogun State.

Business Journal November 2-8, 2015

Editorial www.businessjournalng.com

The Federal Cabinet: Time for Effective Governance

he 2015 Presidential Election ended on Saturday, March 28, 2015. It now belongs to the history books. Regardless of the pros and cons of the polls, it came and

went. And in a commendable act worth eulogising, the then incumbent president, Goodluck Jonathan conceded defeat and congratulated the declared winner, Muhammadu Buhari, a development that earned widespread local and international applause for Nigeria as a nation. On May 29, 2015, Jonathan handed the reins of power to Buhari, effectively handing to Nigerians a new administration at the centre formed by another political party, other than the PDP that been in office since 1999. As days and weeks passed, agitations began to emerge on the composition of a new Federal Cabinet to assist the president to run the affairs of the nation. As expected, political pundits and other Nigerians became restless and were raising concerns over the perceived delay in constituting the Federal Executive Council (FEC) and the attendant impact on policy direction, formulation and governance. When the agitations grew louder, Buhari came out in defence of his cautious stride and promised to unveil members of his cabinet by the end of September. Indeed, not everyone was pleased by the promise, let alone critics. But for others, it was a waiting game towards September. Accordingly, the news that Buhari has finally submitted list of his cabinet ministers to the Senate is a welcome development on many counts. First, it would calm frayed nerves in the polity. It would also ease the air of uncertainty surrounding the issue of governance in the country. Added to these is also the positive market sentiment it has sent to the financial and economic sectors in the country. On our part, we welcome the development as concrete evidence that Nigeria is now set for effective governance. As expected, Nigerians are eager to see the nominees appears before the Senate for screening, eventual confirmation and alloca-

President Buhari tion of ministerial portfolios. Our belief is that the president has made choice of people he desires to work with to actualize his dream for the country. It is also our belief that he looked beyond party membership and affiliation in nominating such persons for ministerial appointments into the Cabinet. We believe that appointing professional politicians into core technical positions where they lack the requisite competence

would be a great disservice, both to the government and Nigeria as a nation. There should be specific positions for politicians in the Cabinet, at least as compensation for working for the victory of the party at the polls. However, such positions should be anchored on the core competence areas of such politicians considered for nomination. We believe that every politician is a professional in one area of activity and should be duly

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considered within that sector. We advise that tested technocrats should be given the opportunity to handle core technical areas, to bring the needed expertise and innovation to governance for the betterment of the people. The technocrats need not be card carrying members of the ruling party. All they need to justify their inclusion in the Cabinet is professional capacity to perform. In terms of expenditure, we strongly advocate trimming down the size of the Cabinet and the number of Special Assistants and Advisers which drain the public purse unduly. With dwindling revenue from falling price of oil in the international market, the country cannot afford a large Federal Cabinet and the attendant State Cabinets across the country that raises the level of recurrent expenditure to a frightening level. Indeed, austere times demand austere financial decisions for rational management of resources. Our nation today does not have the resources for a bloated Federal Cabinet. We need a manageable size of Cabinet that can run the country efficiently on available lean resources, without compromising competence. Given the general optimism and expectations expressed by Nigerians towards the Buhari administration, the government must endeavour not to disappoint Nigerians, first, by nominating the wrong persons to the Cabinet, and secondly, failing to make reasonable positive impact within a given period of time in office. The government cannot decree all the problems in the country to vanish overnight. However, it could initiate and implement policies that could lead to better days for the citizens through the appointment of the right caliber of persons into the Federal Executive Council. As we await the screening, confirmation and allocation of portfolios to the ministerial nominees, we must quickly remind the nominees that being chosen out of a population of 170 million is indeed a special honour they must cherish and appreciate by living up to expectations. Goodluck to the New Ministers!

Business Journal November 2-8, 2015

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Experts Brainstorm on Reinventing Nigeria’s Economy at 2015 FBNQuest Investor Conference

he need for Nigeria to revisit her economic policies especially in the wake of low oil price and rising threats from declining revenue, got a boost recently at the 2015 Annual FBNQuest Investor Conference, held in Lagos. Themed “Re-inventing the Nigerian Economy: Beyond the Rhetoric”, the conference had in attendance notable stakeholders from the financial and economic sector as well as the oil and gas industry as guest speakers and panelists. In his welcome address, Kayode Akinkugbe, MD/CEO of FBN Quest stated that the theme of the conference could is quite topical at this time, particularly with the wind of change currently sweeping the country. “We want to explore what initiatives and policies are necessary to unlock the inherent potential in the Nigerian market. How we do more with less and boost revenue whilst instilling fiscal discipline; where we have examples of successful reforms; and how we unlock private sector funding sources.” Delivering a presentation on the topic “When Reforms Work: Lessons from Emerging and Frontier Markets”, Daniel Altman, Adjunct Associate Professor, New York University, Stern highlighted some impediments stall-

ing economic growth in the country to include gender inequality, inadequate health coverage, over dependence on oil, obsolete taxing system etc. He proposed immediate policies that the country could adopt in the next three years to achieve economic independence. “There is need to expand the health coverage, give land titles to the poor, enact a modern competition law, Negotiate a trade agreement with a major economy, create an autonomous anti-corruption authority, implement a quota for women in the National assembly as well as install a flat tax for simplicity and transparency during the economic transition,” he said. Positive that the nation can still boost its revenue despite the current decline in growth, Dr Temitope Oshikoya, CEO, Nextnomics and Dr. Ayo Teriba, CEO, Economic Associates, both panelists at the first session spoke on how the Federal Government can boost its revenue while instilling fiscal discipline. According to Oshikoya, while it focuses on blocking bottleneck leakages, there is also need for the FG to show how much the transition to blocking leakages is impacting on the GDP. He called for the removal of subsidy, stating that instead, it should be diverted towards social welfare programme.

Police AIG Applauds Olashore Value System

Olashore

he Nigeria Police has commended Olashore International School for blending world-class education with a strong sense of values, discipline and history. At a special visit and meeting with the school, the Assistant Inspector-General of Police in-charge of Zone 11, Oshogbo, AIG Kalafite Adeyemi, also recognised that Olashore School was providing a safe and secure learning environment for its staff and students. The visit was to further strengthen the partnership between the school, the community and the Police to ensure adequate security within and around the school at all times. Her visit coincided with the termly OIS Goes Traditional; a day both staff and

students clad native wears to showcase the rich culture of Nigeria. Adeyemi and her entourage were received by Prince Abimbola Olashore, Chairman, Board of Governors, Mr. D. K. Smith, the Principal/ CEO, directors and management staff of the school. She first visited the iPad Room, interacted with some students in the classes and then moved to the Vocational Department. The iPad Room is unique because that is where students blend technology with learning. After stopping at the Vocational Building, she headed to the science laboratories. She also visited the Red House Junior Hostel and the Senior Girls Hostel by the Head Girl. Speaking later, the AIG said she embarked on the visit “with a view of extending my hand of friendship to the students and the school authority and in order to establish a synergy between you and the police.” She admonished the students to be law abiding and discipline. She left some security tips for the students and advised them to be law abiding, describing them as “Stakeholders in the business of security.” Olashore restated the strategic importance of education as a catalyst for sustainable long term economic growth and overall improvement in the quality of life.

Highlighting the state of the Petroleum industry, Victor Eromosele, CEO, ME Consulting who spoke on the topic “Reinventing and adequately financing the Nigerian Petroleum industry” stated that persistent oil prices compel a more efficient industry; both

public and private. “The good news is that even under a low oil price regime, opportunities exist and those opportunities deserve financing despite the flight to safety and quality.” He noted that the NNPC needs

profit centres and not cost-centres to globally compete, adding that, existing joint ventures would need revamping to perform and existing PSCs reforms, despite understandable IOC-resistance.

L-R: Guest Speaker/Regional Director, Nigeria and Central Africa, Alcatel One Touch, Nick Imudia; Moderator, Top 50 Brands Nigeria Forum/Chief Executive Officer, V+O Communications, Josephine Aligwekwe; Chairman of Zinox Technologies Limited, Leo Stan Ekeh and Chairman, Nigerian Institute of Public Relations (NIPR) Lagos, Joseph Okonma, at the Brands Nigeria Leadership forum (Top 50 Brands Nigeria) held in Lagos recently

Medtronic, Renescor Sign Deal for Cardiac Services in Nigeria

edtronic, the world’s largest medical technology, services, and solutions company, and Renescor, Limited Liability Partnership, have signed a partnership deal to bring high quality cardiac care and healthcare managed services to the purpose-built Gbagada Cardiac and Renal Centre (CRC) in Lagos. Renescor was recently awarded a five-year concession agreement with the Lagos State Government to activate and bring high quality services to the purpose-built Gbagada Cardiac and Renal Centre (CRC). Renescor is partnering with Medtronic to help manage CRC’s Cath-Lab, Operating Room (OR) and ICU. Chairman of Renescor, Dr Ladi Awosika, explained: “Nigeria is in desperate need for efficient CathLabs and operating rooms (OR) to treat more patients locally. Lagos currently has only two operational Cath-Labs to serve a population of 16 million and is in critical need of more.” Awosika added “We decided on Medtronic because it is the largest medical technology manufacturer

globally with over 65 years of experience and positive track record of delivering value to their customers and partners. Our collaboration will ensure the hospital is run to the highest global standards of care quality, efficiency, patient safety, and optimised capacity to help more patients be treated.” The agreement, which runs for a term of four years, will see Medtronic Integrated Health Solutions Department partnering with Renescor to help finance, manage, and optimise services in Cath-Labs, OR and ICU. The partnership consists of end-to-end management of these units, which includes operational support, staffing and material management, deployment of the latest Cardiovascular Information System, operational excellence Lean/Six sigma consulting services, continuous performance assessment and benchmarking services, advising on and implementation of growth programs, as well as training and education services for cardiovascular therapies. The aim is to transform CRC into a leading regional centre that achieves global stand-

ards of care in line with international leading institutions. Khodor Mekkaoui, Head of Medtronic Integrated Health Solutions for Middle East, Africa, Central Asia and Turkey commented: “Our involvement at CRC is a distinctive example of Medtronic’s Integrated Health Solution offerings. We are moving beyond the supply of devices, to deliver healthcare services that would ensure more access to patients in areas where it is currently not readily available. The Integrated Health Solution model helps optimise healthcare delivery and drives greater economic value.” This is the first undertaking of its kind by Medtronic IHS Department in Africa, and underscores its vision to address universal healthcare needs. Mekkaoui added: “This important contract presents a unique opportunity for Medtronic to showcase its skills and expand its footprint in Africa, where there is also a great need for investment in healthcare sector, in countries facing a lack of funding and shortage of resources.”

Business Journal November 2-8, 2015

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World Bank Report: $588bn in Global Remittances in 2015, Up 1.3%

--$435bn to Developing Countries in 2015, Up 2%

Jim Yong Kim World Bank President

eak economies in Europe, especially Russia, are slowing the growth of remittance flows in 2015. Weaker currencies vis-à-vis the US dollar, and lower oil prices are further restricting the ability of many migrants to send money back to fami-

ly and friends, according to the World Bank’s latest Migration and Development Brief. Remittances to developing countries are expected to reach $435 billion in 2015, registering a modest growth rate of 2 percent from last year. This represents a significant slowing in the growth of remittances from the rise of 3.3 percent in 2014 and of

7.1 percent per year from 2010 -13. Global remittances, sent home from some 250 million migrants, are projected to grow by 1.3 percent to $588 billion. Slowing remittances this year will affect most developing regions, in particular Europe and Central Asia where flows are expected to decline by 18.3 percent in 2015. A weakening of the Ruble against the US Dollar is the main cause of that decline. Looking to 2016, the report says remittances to developing countries are expected to rise by about 4 percent, reaching an estimated $453 billion, buoyed by the continuing recovery in the United States and a modest acceleration of economic activity in Europe. Global flows of remittances are expected to recover in 2016 to reach $610 billion, and then rising to $635 billion in 2017. The global average cost of sending $200 remained at about 7.7 percent in the second quarter of 2015. Remittance costs varied significantly by region, and within region by corridor. A major risk to the downward trajectory of remittance costs arises from the closure of accounts of money transfer operators by correspondent banks, due to concerns related to regulatory compliance.

In a major global policy shift, the recently-adopted Sustainable Development Goals (SDGs) and the Addis Ababa Action Agenda on Financing for Development endorsed improvements in migration policies, efforts to end human trafficking and promote decent labor conditions for migrant workers, reductions in the costs of remittances and recruitment, and the collection of statistics disaggregated according to migratory status.

“One out of seven people in the world is a migrant, and a quarter of them, international migrants. Migration is intimately linked to the development process,” said Dilip Ratha, Head of KNOMAD and an author of the MD Brief. “The inclusion of migration and remittances in the SDGs is a welcome step forward.” The report also provides details on remittance flows classified by region and income-levels as below.

AFC Completes Corporate Africa Finance & Investment Forum 2015 to Host Public-Private Dialogue on Restructuring, Appoints Gupta as ED Impact Investment

Private Public Dialogue on Impact Investment, overseen by the United Nations Development Programme (UNDP) will take place during this year’s Africa Finance & Investment Forum 2015 (AFIF 2015), held in Cape Town, South Africa from 24-26 November. “Africa’s impact investment sector is still nascent, with approximately only US$9 billion worth of impact investments deployed in the continent. The time is ripe, therefore, for African policy makers, investors and other key sector players to devise practical solutions that will help to improve impact investment practice in Africa and stimulate the sector to grow to its true potential,” explains Tomas Sales, Special Adviser Private Sector AFIM Unit UNDP RSCA, in the run-up to AFIF 2015. This inaugural PPD provides a platform through which the public and private sector in Africa can discuss, agree and follow up on concrete interventions to catalyse the impact investment sector and contribute towards the achievement of the African Union’s Agenda 2063 and the recent-

ly ratified Sustainable Development Goals. “The PPD will facilitate the exchange of information and collaboration between key public and private sector players, and will feature plenary keynote addresses and a technical working & negotiation session to map the next steps in growing the sector,” adds Sales. This will culminate in the development and endorsement of a

Cape Town Outcome Declaration, advancing an “Impact Investment in Africa” Action Plan & Roadmap. The impact investment theme, a first for AFIF, is a component within the forum’s general theme “Access to Finance & Entrepreneurship”, which will also focus on innovative financial solutions to assist Africa’s businesses, showcasing the financial challenges and opportunities in agriculture, health, infrastructure and energy. Held for the first time in Africa, AFIF 2015 is organized by EMRC in collaboration with the EIB, UNDP, DEG, Old Mutual Investments Group, Agri Academy, Pfizer, Rabobank, BlueCloud, ICD and IFC. An expected 300 delegates from all over Africa, Europe, America and Middle East. This year AFIF will include a pre-conference Training on “Entrepreneurship” (23Nov), pre-arranged B2B meetings and informal networking activities. AFIF will also incorporate the “AFIF Entrepreneurship Award 2015.”

n January, 2015 AFC implemented a new organisational structure. The purpose of this re-organisation was to increase the Corporation’s client responsiveness by creating sector clusters, that would each be responsible for delivering all of AFC’s products to clients within those sectors, simplifying the Corporation’s structure and increasing responsiveness. In achieving these objectives, a number of changes have already been made at the executive level. Dr. Adesegun Akin-Olugbade was appointed Executive Director and Chief Operating Officer of AFC from his previous role as Executive Director, Corporate Services, taking on additional responsibilities for IT and the newly-established, Investor and Country Relations functions. He also remains as the Corporation’s General Counsel and Head of Legal Department. He was previously General Counsel and Director of the African Development Bank and pioneer Chief Legal Officer and Head of Legal Services Department of the African Export-Import Bank. He is an alumnus of several Executive Management programmes (including IMD). Mr. Oliver Tunde Andrews was appointed AFC’s Executive Director and Chief Investment Officer in Sep-

tember, 2014. A pioneer executive, he was previously the Corporation’s Director and Chief Coverage Officer, responsible for the Origination and Coverage Division, prior to that he was the CEO of Africa Infrastructure. These executive level appointments are completed by Mr. Sanjeev Gupta’s appointment as Executive Director, Financial Services. In this role, he will have responsibility for Treasury, Financial Advisory and the newly created Financial Institutions Division. Mr. Andrew Alli, Chief Executive Officer of AFC, said: “AFC was formed to provide financing solutions to infrastructure projects in Africa. So far we have made considerable progress over the last 8 years of operations. Nonetheless, we are at a point where we need to reinvent ourselves and sustain the momentum. We believe that the new organisation structure will put the AFC on the right path. The inclusion of Sanjeev as a member of AFC’s executive management team is an excellent addition that, with his experience and the complementary skill set that he possesses, will further enhance the Corporation’s ability to deliver on its mandate. My other colleagues and I wish Sanjeev a warm welcome and are excited to have him join the organization.”

Business Journal November 2-8, 2015

Banking

Union Bank Unveils New Brand Identity

nion Bank of Nigeria Plc (Union Bank) unveiled a new brand identity at a spectacular launch event in Lagos. The refreshed brand is in line with Union Bank’s strategic ambition to become a highly respected provider of quality financial services in Nigeria. Speaking at the unveiling of the new identity, the Chief Executive Officer and Managing Director of Union Bank, Mr. Emeka Emuwa, said: “We believe that critical milestones we have achieved in the past three years have laid a solid foundation for us as a bank. The launch of this refreshed identity signals a new phase in Union Bank’s transformation as we set our sights on attracting a new base of customers while remaining focused on providing simple and smart banking solutions to all our customers.” Union Bank has been a trusted name for Nigerians for nearly a century and we will continue to leverage our heritage as we embrace a rapidly

Mr. Emeka Emuwa MD/CEO Union Bank Plc changing world, Emuwa continued. Also speaking at the event, Chairman of Union Bank, Senator Udoma Udo Udoma, said: “I am very proud of the strides the bank has made during my time as Chairman and I

IDC: Battle of BIG IDEAS in Financial Services Sectors by 2016

nternational Data Corporations (IDC) Financial Insights hosted its inaugural Financial Services Summit 2015 in Kuala Lumpur recently. Themed ‘Delivering on BIG Ideas’, IDC Financial Insights believes 2016 will see a battle of big ideas in the financial services sectors of the ASEAN region. Financial institutions aiming to make gains in the Malaysian market will have to quickly act on disparate and occasionally conflicting priorities, especially in: •Succeeding in the two-speed market for financial services: maintaining growth amid slowing market for traditional deposit-taking and lending, but gaining first-mover advantage in new lines of business •Balancing the risks of pursuing innovation and generating new revenue sources •Fighting back against market disruptors, while being disruptors themselves •Ensuring current infrastructure will integrate with new channels and channel types •Preparing channels and payments offerings, for the emergence of channels that have not even been conceived in 2016 •Decoding customer preferences before the customers know what exactly they want IDC Financial Insights also predicted that the continued disruption in the channel space

will breed new challenges for the Malaysian bank to mature its market propositions. “Fulfilling the omni-channel mandate lies in ensuring the same level of service quality and product sophistication can be successfully conveyed over all channels within the bank. In Malaysia, we expect this to be represented by banks playing a larger role in their cross-industry partnerships,” explained Ho Sui-Jon, Market Analyst for IDC Financial Insights. Ho added that this will prove to be a particularly significant shift in business posture, as banks begin to co-develop value propositions with key verticals, notably telecommunication service providers and retailers. Earlier this year, IDC Financial Insights stated that the payments revenues from traditional business lines within the bank will shrink by 15% leading up to 2020. This principal conversation was pointed out in the Malaysian Financial Services Summit affirming this stance to a large extent, as financial services industry renew their resolution to champion offerings going beyond simple fund intermediation. This event gathered the industry leaders and practitioners from financial sector who shared their best practices and provided insights on the disruption of financial services in Malaysia.

commend the Board, Management and Staff on their hard work over the years and I am sure the Bank continue succeed as it embarks on a new phase with a refreshed brand identity.” The highlight of the brand launch event was the unveiling of a massive replica of Union Bank’s iconic white stallion in its new form and Union Bank’s new logo. Speaking about the new identity, Head, Corporate Affairs & Corporate Communications, Ogochukwu Ekezie-Ekaidem said: “Union Bank is one of the longest standing financial institutions in Nigeria and our new identity pays homage to our past and carries with it our proposition for the future. In developing the new identity, remaining true to our brand proposition of

simplicity was foremost in our minds. Our iconic white stallion, which represents strength and passion, is now in motion, cantering forward with energy and dynamism. We have introduced a modern typeface and updated our colour to a fresher and more vibrant blue. Finally, we have included patterns to infuse a contemporary feel to the overall identity,” she concluded. Since 2012, under the leadership of Emuwa, Union Bank began rebuilding its banking business by redefining its business model, rebuilding its technology and physical infrastructure and reengineering its work force. During this time, Union Bank has rolled out a new banking platform, Oracle FlexcubeUBS 12.0, and launched Smarter Banking Centres targeted at the technology savvy customers looking for convenient banking service. The bank has also built a state of the art data centre and a new Central Processing Centre to streamline its branch operations and enhance customer service.

About Union Bank Plc

Established in 1917 and listed on the Nigerian Stock Exchange in 1971, Union Bank of Nigeria Plc is a household name and one of Nigeria’s long-standing and most respected financial institutions. The Bank is a trusted and recognizable brand, with an extensive network of over 300 branches across Nigeria. In late 2012, a new Board of Directors and Executive Management team were appointed to Union Bank and in 2014 the Bank began executing a Transformation Programme to re-establish it as a highly respected provider of quality financial services. The Bank currently offers a variety of banking services to both Individual and Corporate clients including Current, Savings and Deposit Account services, Funds Transfer, Foreign Currency Domiciliation, Loans, Overdrafts, Equipment Leasing and Trade Finance. The Bank also offers its customers convenient electronic banking channels and products including Online Banking, Mobile Banking, Bank Cards, ATMs and POS Systems. With the launch of a new identity, Union Bank is now focused on delivering on its promise to make banking simpler so its customers can focus on the things that matter most to them.

MoneyGram Unveils Mobile Money Partnership with Econet Wireless

oneyGram, a global provider of innovative money transfer services, and Econet Wireless, the leading mobile operator in Zimbabwe, have announced the launch of a new service that enables customers from more than 200 countries and territories worldwide to transfer funds via EcoCash, Zimbabwe’s leading mobile money transfer solution. The new offering means that more than 4.9 million EcoCash subscribers and MoneyGram customers can receive funds across the EcoCash network at any time, day or night, and from any place. What’s more, consumers can access MoneyGram’s services at more than 20,000 EcoCash locations across Zimbabwe, or at any one of MoneyGram’s agent locations worldwide.

The launch was celebrated in Zimbabwe, and was attended by Herve Chomel, MoneyGram’s Vice President for Africa and Anton Luttig, MoneyGram’s Regional Director of Southern and Eastern Africa. “Our activation with EcoCash, a leader in Zimbabwe’s mobile money realm, furthers MoneyGram’s vision of expanding our self-service offerings to ensure an unparalleled customer experience,” Chomel says. “With the service, we are offering millions of consumers, many in remote areas of the country, access to a fast, reliable and secure method of transferring money, much of which is used to purchase life essentials and daily expenses.” EcoCash is the second fastest growing mobile money solution in Africa. “We have a strong presence in Zimbabwe’s digital environment and we

are excited to link up with MoneyGram to utilize the company’s global footprint and bring more options to our consumers,” says Douglas Mboweni, CEO of Econet Wireless. “In-wallet remittances are becoming more topical, not only in driving access to international remittances for the previously unbanked but also driving further financial inclusion as we link the diaspora and home. By working with MoneyGram, we will help reach more consumers who rely on our domestic and international remittance services to handle their daily financial needs.” Consumers have access to MoneyGram in more than 50 African countries, and the company is working to support economic development across the continent through expanded alternative channels like the EcoCash service.

Business Journal November 2-8, 2015

Banking

Ecobank Reports 5% Drop in First 9 Months 2015 Indices

he Pan African banking group, Ecobank Transnational Incorporated end the first nine months of the year 2015 with positive net income of $305.66 million, a figure which however registers a decrease of 5% compared to the performance of this indicator, achieved during the same period in 2014 ($324.45 million) “The operating environment in sub-Saharan Africa has been difficult during the period. However, in spite of the impact of different factors on our financial performance, the strength of our model of diversified Pan African business has allowed us to have a positive result.” commented Ade Ayeyemi, the CEO of the Group, thus putting this under-performance in perspective. Therefore, in spite of an increase of 3% in the net interest margin to $837.8 million, the net banking income of the Pan African group decreased by 3% to $1.59 billion, strained by a fall of 12% in fees and commissions which represent an important part of the group’s revenues,

Ade Ayeyemi Group CEO Ecobank Group at $433.4 million. Moreover, ETI, during the period, faced an increase of 22% in provisions for financial assets. While recognising the effect of operational losses and the appearance of provisions in the third quarter, Ayeyemi attributes this fall in per-

formance to the effects of loss in exchange rates in the different countries of operation, and the macroeconomic situation in the region. “We continue to foresee the strong constraints of the current economic downturn and we anticipate 2015 results well below projections, but relatively stable

Standard Bank Consolidates East African Presence with Ethiopian Office

tandard Bank Group has expanded its already extensive East African footprint with the official opening of a representative office in Ethiopia. This means that Standard Bank, which is Africa’s largest bank by assets, has a continent-wide footprint in 20 African countries. The representative office, which is based in Addis Ababa, was opened by Standard Bank Chief Executive, Ben Kruger. It will act as an entry point for clients seeking to invest in Ethiopia and will be administered by Standard Bank’s head office in South Africa The growth potential for the East African region continues to attract significant investment. With an established presence across four of the key markets in the region, namely Kenya, South Sudan, Tanzania and Uganda, the opening of the Ethiopian representative office is indicative of the group’s commitment to the region. “As a bank rooted in Africa, our vision is to build a leading financial institution that delivers superior

products and services for all our customers. We are able to leverage our strong position on the continent, our strategic partnership with the Industrial and Commercial Bank of China (ICBC), and our sector expertise in natural resources, to facilitate capital investment in support of growth and to connect African markets to each other,” says Mr. Kruger. Ethiopia’s remarkable growth has been underpinned by high public investment and a growing consumer base. The country boasts the second largest population on the continent, behind Nigeria, at around 90 million. GDP growth has averaged about 10.0% over the past 5 years. Heavy public investment in agriculture, energy and transport are likely to continue to support growth in the medium term as the government ramps up its productive sectors. The energy sector is also set to boom with power projects at various stages of development, and with Ethiopia emerging as a major power hub in the region, energy exports will likely become a major foreign

exchange earner in the near future. Industry and manufacturing, a top priority for Ethiopia, are likely to start making a more significant contribution in the country’s GDP going forward which will largely be facilitated by the increase electricity supply. “As such, establishing a presence in Ethiopia is in recognition of the increasing interest by investors and our clients, in the country’s economic growth. Standard Bank will be well-positioned to take advantage of the cross-sectorial investment opportunities both in Ethiopia and the region as a whole. Our experience in East African markets will benefit all our clients by providing them with insights into how best to capitalise on their investments in the region,” said Mr Kruger. “We believe that we are uniquely positioned to support the government’s plans in attracting more investments into the country through our client base on the continent and facilitating the financing on their behalf,” said Ms Taitu Wondwosen, Head of Coverage Ethiopia.

About Standard Bank Group: Standard Bank Group is the largest African bank by assets with a unique footprint across 20 African countries. Headquartered in Johannesburg, South Africa, we are listed on the Johannesburg Stock Exchange. Standard Bank has a 153-year history in South Africa and started building a franchise outside southern Africa in the early 1990s. Our strategic position, which enables us to connect Africa to other select emerging markets as well as pools of capital in developed markets, and our balanced portfolio of businesses provide significant opportunities for growth. The group has nearly 49 000 employees and over 1 200 branches, which enable it to deliver a complete range of services across personal and business banking, corporate and investment banking and wealth management. Standard Bank’s Corporate & Investment Banking division offers its clients banking, trading, investment, risk management and advisory services to connect selected emerging markets to Africa and to each other. It has strong offerings in mining and metals; oil, gas and renewables; power and infrastructure; agribusiness; telecommunications and media; and financial institutions.

at constant dollar exchange rate”, he declared. Behind this mixed picture, appears more positive news. If the results valued in US dollars are in decline, it is not so for the same indicators expressed in the currencies of the two principal countries where the group is listed on the stock exchange, namely the BRVM in Abidjan and the Nigerian financial market. The results expressed in Naira or CFA francs, bring to light rather positive performance, with an increase of GDP at 25% in naira and 17% in CFA francs. By the same logic, the net income in these two cases show an increase of 15% and the net earn-

ings per share remain virtually unchanged. The effect of this positive change in the results appear as a handicap when referring to the exposure of the group to contingent liabilities concerning bank-issued letters of guarantee, endorsements and sureties, letters of credit and commitments to extend unfunded credits. In US dollars, these show a fall to $4.9 billion as at 30 September against $5.1 billion at the same period in 2014. In FCFA or naira, these figures are up sharply. On the Nigerian Stock Exchange, the share price has stabilised these past 7 days to around 18 nairas but is having difficulty reaching the level of 19 nairas of the beginning of the month of October. On the BRVM, ETI remains a very attractive share and its value lost 1.82% at the end of the closing session of 27 October 2015. In Johannesburg where its principal shareholder Nedbank is listed, the share value of the latter posted a loss of 1.19% at the opening of the market this 28 October 2015. It is however difficult to establish a direct connection with the interim results of ETI.

AfDB Marks World Statistics Day – ‘Better Data. Better Lives’

he African Development Bank (AfDB), one of the leading institutions driving statistical development progress in Africa, joined the world in celebrating World Statistics Day on Wednesday, October 20, 2015. The theme for this year’s event was “Better Data. Better Lives.” Each year since 2010, World Statistics Day provides a platform for the global statistical community – producers, suppliers, users and all relevant stakeholders – to showcase their achievements and ongoing statistical work. This year’s celebrations follow a significant decision by world leaders to adopt the Sustainable Development Goals (SDGs). “The SDG agenda provides the political impetus and will help to shape the course of statistical capacity development in the years to come,” said Oliver Chinganya, Manager of AfDB’s Statistical Capacity Building Division. As part of the celebrations, the AfDB Statistics Department held a series of seminars from October 19-23, 2015 with the aim of showcasing statistical activities already underway within Bank’s Statistical Capacity Building (SCB) programme. Also highlighted were future programs planned in response to the current demands of the Data Revolution and the post2015 development agenda. The Bank’s SCB programme is

expected to gather momentum in response to the UN’s clarion call to harness the Data Revolution in order to enhance sustainable development. This will entail more data communities coming together and collaborating in a sustainable manner in the context of a data ecosystem. Reliable and timely statistics are crucial for formulating policies that can positively impact the lives of millions of people. Without the numbers, development impacts cannot be measured. “Improved data sources, sound statistical methods, new technologies, and strengthened statistical systems continue to be actively promoted and financially supported through the AfDB’s Statistical Capacity Building Program,” observed Chinganya. He underlined the importance of accurate and timely statistics being freely available to all stakeholders when they are most needed. Through its ground-breaking Africa Information Highway (AIH) initiative, the AfDB provides free and open access to all stakeholders including the public, the Bank’s regional member countries, civil society organisations, academic and research institutions, UN agencies, and the media. The inaugural World Statistics Day was declared by the United Nations (UN) General Assembly in 2010 to recognise the importance of statistics in improving lives.

Business Journal November 2-8, 2015

Banking

Vincent Bolloré Plans IPO on West African Railroad Project

rench Group, Bolloré has retained banks to work on an initial public offering for its West African railroad loop project, Reuters agency reported on 27 October, citing sources close to the project. At least four banks, Goldman Sachs, BNP Paribas, Société Générale and Crédit Agricole have been recruited to work on a possible IPO, the same source added. The IPO should take place in Paris during the first half of 2016 in order to raise capitals to finance the project, which requires from €2 billion to €2.5 billion in investments. “We have always said that we would review all possibilities to find the best financing. Up until now, we had made progress using our own funds”, Eric Melet, President of Bolloré Africa Railways, a subsidiary of the Bolloré group, declared. “In all cases, we want to stay

in control and we will bring a significant share of the financing, as the group has always proceeded”, he added, indicating however that a project financing structure or continuing to use the company’s own funds are also part of the available options. Known as Blueline, the West African railroad loop project will cross five countries: Côte d’Ivoire, Burkina Faso, Niger, Benin and Togo. Started in 2013, this project is meant to reach completion within eight years. As part of this project, the Bolloré group is considering renovating existing rail lines and building new ones, especially for example between Niger and Burkina Faso and between Niger and Benin. This railroad should also benefit from synergies with the container terminals of the Bolloré group in ports in Côte d’Ivoire, Benin and Togo.

Vincent Bollore

Bamboo Finance, Louis Dreyfus Holding Export Development Launch Impact Investment Fund in Sub- Canada Targets $10bn African Business by 2020 Saharan Africa

amboo Finance, a private equity firm specializing in investing in business models that benefit low-income communities in developing economies and Louis Dreyfus Holding, which owns a controlling stake in leading global agribusiness Louis Dreyfus Commodities has announced a partnership to launch and jointly manage NISABA, a US$50 million impact investment fund project with a focus on smalland medium-sized agribusiness enterprises (SMEs) in Sub-Saharan Africa. As project sponsor, Louis Dreyfus Holding will invest US$10 million to seed NISABA.

About Bamboo Finance

Bamboo Finance is a private equity firm specializing in investing in business models that benefit low-income communities in emerging markets with offices in Luxembourg, Geneva, Bogota, Nairobi and Singapore. Bamboo Finance uses a market-oriented approach to deliver social and environmental value and provide attractive financial returns to investors. Bamboo Finance manages 280 MUSD; representing three global funds and a portfolio of investments operating in 30 emerging market countries. Bamboo has a track record of demonstrated commercial returns, and a portfolio of investments that have provided 16 million clients with access to services and created more than 20,000 jobs.

“We are excited to apply an integrated investment approach with a vast network of local expertise for the benefit of smallholder farmers and their communities, while demonstrating the value of impact investing,” said Bamboo Finance CEO, Jean-Philippe de Schrevel. “This is a pioneer partnership that will merge multinational sector expertise with access to finance and impact investment know-how, in order to actively co-manage investments from pipeline to exit. This type of active collaboration represents an important milestone in the field of impact investing”. “Agribusiness development is at the crossroads of major challenges for Africa. With an estimated population of 2 billion by 2050, and 330 million young Africans expected to enter the labor market by 2025, global agricultural production is not keeping pace with population growth. We believe that through appropriate financing tools like impact investing, the private sector must take an active role in addressing such challenges,” said Margarita Louis-Dreyfus, Chairperson of Louis Dreyfus Holding. NISABA will target a balanced portfolio of countries, activities and commodities, and will invest in financing gaps across the agribusiness value chain in growth markets. The focus will be on SMEs that combine social, environmental and financial returns by improving efficiency through access to data, finance and risk mitigation, training and technology innovation; strengthening market access by linking producers to end-consumers; and building local capacity through

post-harvest handling and storage, value-addition or processing solutions, among others. Through its controlling stake in Louis Dreyfus Commodities, Louis Dreyfus Holding has a 164-year-old global presence in the agribusiness sector, with expertise in a wide range of commodities, participation in various diversified businesses and a strong presence in Africa.

About Louis Dreyfus Group

The Louis Dreyfus Group was founded in 1851 and has been instrumental in the development of grain trading throughout the world. The Group has since expanded its expertise to a wide variety of commodities and participates in various diversified businesses, including global agribusiness leader Louis Dreyfus Commodities. Louis Dreyfus Commodities is a global merchandiser of commodities and processor of agricultural goods, operating a significant network of assets around the world. Its activities span the entire value chain from farm to fork, across a broad range of business lines (platforms). Over time, the company’s portfolio has grown to include Oilseeds, Grains, Rice, Freight, Finance, Coffee, Cotton, Sugar, Juice, Dairy, Fertilizers & Inputs and Metals. It operates 10 business lines in the Middle East and Africa, with its main hubs in Dubai, Nairobi, Johannesburg and Accra.

xport Development Canada (EDC), Canada’s official trade finance agency, today emphasised its commitment to facilitating business in sub-Saharan Africa by opening a permanent representation in Johannesburg. As one of the largest and most progressive export credit agencies in the world, EDC has helped facilitate more than $7.4 billion in business between African and Canadian companies over the past five years. EDC’s financing is available to sub-Saharan corporations and project owners that have, or are open to considering, business with Canadian companies, or their affiliates in the region. EDC will be looking to provide commercial financing for sub-Saharan corporates and project owners where Canadian suppliers are involved, or where there is potential for Canadian involvement. In addition, EDC will actively pursue opportunities to partner with South African and European banks within their syndicated financing facilities for select sub-Saharan corporates that have, or are open to, Canadian interests. “With 70 years of international financing experience and annual business volumes nearing USD 100 billion, EDC has the capital and experience necessary to undertake transactions of any size for sub-Saharan companies. EDC is investing in sub-Saharan Africa for the long term, where we intend to become growth partners for the banks and companies with whom we develop relationships,” says Jean-Bernard Ruggieri, EDC’s first Chief Representative, sub-Saharan Africa. “This is what sets EDC apart from other financiers, because we meas-

ure our success by the success of our customers. In addition to offering innovative and reliable financing, EDC can also serve as a supply-chain talent scout.” Key sectors of interest for EDC as it expands into the broader African market include commodities, infrastructure, ICT, clean technology, transportation and agriculture. Light manufacturing and healthcare/life sciences are emerging sectors for EDC in the midterm. “Canadian companies have strong capabilities in all of these areas and can provide Africa with the goods, services, and expertise that are needed in developing these critical sectors” says Ruggieri. EDC follows a very flexible model which allows it to deliver maximum value to partners and customers. “We can offer clients in both developed and developing markets access to financial capital that suits their unique circumstances” says Ruggieri “and we are well-equipped to meet the financial needs of sub-Saharan companies wanting to trade with Canada, whether they require single contract financing or funds for capital expenditure. And if African companies do not as yet have Canadian relationships, EDC can assist with sourcing suitable Canadian supply chain partners.” EDC also prides itself on its multi-stakeholder partnership approach. “We work closely with a range of financial institutions such as South African and international banks, in addition to our efforts with the Canadian Trade Commissioner Service across Africa, and our model often includes syndication structures with various financial services participants” says Ruggieri.

Business Journal November 2-8, 2015

Capital Market www.businessjournalng.com

Equity vs Debt: How Should Entrepreneurs Fund their Ventures?

his is according to Gerrie van Biljon, Executive Director at Business Partners, a risk financier for SMEs in South Africa, who says that entrepreneurs should be cautious of the amount of finance they apply for, as the wrong amount could jeopardise their business’ success. He explains that while applying for too little funding may not satisfy the financial needs of the business, securing funding in excess of what is required will put additional pressure on the cash flow of the business. “This debt needs to be repaid to the lender, and the more debt the business is in, the higher the repayment will be.” There is also the risk of the business owner being tempted to utilise the additional funds for private use, says van Biljon. “Obtaining too much money could lead to the improper use of the additional funds suddenly becoming available to the business owner. This money is also very likely to be spent on unnecessary items that will not necessarily improve the position of the business.” Van Biljon adds that asking for too much funding can also hinder an entrepreneur’s approval rate for finance. “Should an entrepreneur apply for an amount that the financier believes is unjustified, the possibility exists that the application will be rejected. This could be for a few reasons, such as the financier not being confident that the entrepreneur is familiar with his/ her financial position and the needs of the business, or that the applicant is not fully transparent on the proposed application of funds.” The financial needs of a business stem from either its current position,

During the process of securing funding, entrepreneurs and business owners are not always aware of the pros and cons associated with asking for too much or too little finance for their business, or whether they should consider debt or equity to fund their business. or the proposed plans for the business, such as expansion, increasing capacity, acquisitions or capital to develop a new product range. “When applying for finance, an entrepreneur should be very clear on the position and strategy of the business as this will determine what type of funding is appropriate for the business. For example – is short or long-term finance more suitable or should the finance be in the form of debt or equity,” says van Biljon. Bringing an investor into the business usually implies that equity will be introduced and that the investor will obtain a shareholding in the business. Van Biljon says that although this format of funding has the advantage of no fixed repayment terms, in the process the entrepreneur parts with a portion of ownership of their business. “When opting to go with this finance option, selecting an investor should be done with caution, and both parties should agree on what their expectations are.” He cautions businesses with high growth potential regarding taking more funding that what is required. “Investors may offer the entrepreneur more funding than what is required, which will result in the investor obtaining a larger shareholding in the business. Introducing this equity may be a very expensive exercise should the entrepreneur decide to buy the investors’ shares at a later stage, as this figure could be inflated due to the growth that the company has experienced.”

Oscar Onyema CEO Nigerian Stock Exchange He warns that although entrepreneurs may be tempted to spend any additional funds available, they need to understand the potentially dangerous long-term effects of utilising these funds, and instead carefully allocate

funding to items that will grow the business. “During the process of establishing what type of funding is appropriate, professional advice is recommended as not all entrepreneurs are financially

orientated or familiar with the financial principles. Sound, professional advice will guide and steer the entrepreneur to the most suited solution for their particular needs,” concludes Bijon.

Angola Enters International Capital Market with $1.5bn Debt Bond

Luanda, Capital of Angola

ngola announced the launch of sovereign debt bonds in the international market in the form of Eurobonds, amounting to $1.5 billion, under the Executive public finance management policy, in accordance with the long-term economic and financial development programme. Among the main benefits that this

sovereign issuance may lead to are: 1. Diversification of sources of external financing – a bond issuance in the international market offers diversification of funding sources; 2. Establishment of long-term funding sources – in the process of sovereign issuance, the country has the opportunity to lay the foundation for establishing long-term relationships with international investors in all ma-

jor financial centres worldwide; 3. Positive impact in terms of evaluation of Credit Rating Agencies – access to global bond markets could be a positive boost and increase confidence in the rating of bonds; 4. Construction of a yield curve – start of the process of creating the international yield curve, which enables sovereign nations to access capital markets easily and more often. 5. Possible increase in international reserves – an international bond issuance can help increase the inflow of foreign capital and soon lead to the increase of international reserves. It is noteworthy that the sovereign issuance now taking place on the London Stock Exchange culminates the efforts begun in 2011, when, given that recourse to traditional sources of funding (bilateral, commercial and credit facilities) was then quite concentrated, which from the point of view of risk management and the associated costs is not recommended as it increases the country’s exposure to a particular funder, the Executive considered the need to seek alternative

funding sources. Thus the first steps were taken in the preparation of studies that could prove able to support a first sovereign issuance by Angola in the international capital markets. With this goal, the Angolan Executive, in addition to obtaining technical and legal advice from financial institutions of international renown, such as Goldman Sachs, JP Morgan, the World Bank and the International Monetary Fund, began to undergo regular assessments by the major international credit rating agencies. From the subsequent discussions it emerged that a sovereign issuance could potentially contribute significantly to enhancing the country’s image abroad, especially with regard to concerns relating to transparency in the management of public finances and the costs associated with the process of funding the general budget of the state, as these are essential in determining the solvency indicators of a country to honour its debt commitments in domestic and foreign currency.

From this broad consultation process it became apparent that Angola could benefit greatly from sovereign issuance in international markets, not only because it could benefit from diversification of external sources of funding, but also because it was found that following the considerable social, political and economic progress that the country had achieved since the end of armed conflict, European and American investors would be greatly attracted to investing in the bonds that the Angolan state was to issue. After a long and painstaking process of study and consultation on the feasibility, convenience, acceptability and resultant cost of a sovereign issuance on international markets, the President has granted a Letter of Mandate which authorises the international financial institutions (i) Goldman Sachs International, (ii) Deutsche Bank and (iii) the Industrial and Commercial Bank of China (ICBC) to act as agent banks on behalf of the Republic of Angola for the sovereign issuances that the country is now carrying out.

Business Journal November 2-8, 2015

For The Record

Africapitalism, Social Capitalism & Impact Investing:

Options And Strategies For Africa

am greatly honoured to give the keynote speech at the 19th Annual Stockbrokers Conference. Let me start by expressing my sincere gratitude to the Chartered Institute of Stockbrokers and the members of the Annual Workshop Planning sub-committee for providing me with the opportunity to address this constituency with whom the Exchange shares a common vision for the growth and development of the Nigerian capital market and Africa at large. Over the last decade, the main driver of economic growth across the African continent has been growth supported by private sector activities. However, many African countries are struggling with poverty, homelessness, crime, unemployment and non-inclusive growth. This increase in the levels of social inequality and environmental degradation has accentuated the importance of a more inclusive model of progress. With the growing understanding that these societal problems cannot be solved or prevented only by the Government or development organisations, some businesses, business leaders and talented individuals have tried to transform capitalism, to use the market to solve social problems. The business community has come to realise that, rather than being burden, social responsibility needs to be embraced and driven by an intrinsic incentive rather than an external compulsion. This shift has materialised in what the Chairman, UBA Group, Mr. Tony Elumelu, CON, called Africapitalism. Africapitalism argues that all economic activity should be value-adding and have a social impact that creates wealth. Through long-term investment and the creation of social wealth, the private sector can solve Africa’s development challenges more effectively and with greater sustainability than either the philanthropic or public sector. As homegrown businesses meet social and economic needs by creating goods and services with an innate understanding of the local environment, they can bring private capital to vital infrastructure like road transport and power generation. And they can create jobs for Africans, which will in turn create an African middle class—a new generation of African consumers. The Nigerian Stock Exchange recognises its crucial role in supporting economic growth by providing an efficient and sustainable capital market. This responsibility drives everything we do. Internal-

Oscar Onyema ly, we have put in place a strong corporate governance regime that guides management and employees toward promoting a fair, equitable and just market. We are championing responsible financial and investment services, sustainable business practices, engaged and talented people, community contributions and environmental stewardship. Leveraging our unique position as the biggest Exchange in West Africa, we are championing sustainability along four key impact areas of Marketplace, our platform for promoting market-based approach to Environmental, Social and Governance (ESG) imperatives; Community, where we make contributions to positively impact lives; Workplace, through which we facilitate diversity, wellbeing and harness the talent and skills of our people; and the Environment as we focus on reducing its environmental impact. Over the past year, we signed on to the United Nations’ Sustainable Stock Exchanges (SSE) Initiative in 2013 to promote responsible investment leveraging global best practices. This membership has

placed on us increased requirement for disclosure as well as guiding our listed companies to embrace sustainability reporting. We produced our maiden sustainability report for 2014 and plan to organise a conference to develop sustainability disclosure guidelines for listed companies by November this year. We have also launched the Corporate Governance Rating System where we rate listed companies on the level of their corporate integrity, corporate compliance with governance rules; understanding of fiduciary responsibilities by directors and corporate reputation. This rating system was a major requirement for companies that were recently migrated to our Premium Board. The SME sector is crucial to Africa’s growth, contributing more than 45% to employment and 33% to GDP. SMEs continue to face significant challenges. Studies indicate that more than 70% of SMEs lack access to medium-/longer-term finance, creating an SME funding gap of more than US $140 billion in Africa alone. In recognition of these factors, we launched the Alternative Secu-

rities Market (ASeM), a specialist board for the listing of SMEs. We remain committed in our vision of promoting and supporting SMEs and are confident that someday, we shall see some of them become globally recognised corporations. In recognition of our game changing initiatives to promote the development of the Nigerian economy through the capital market, we continue to receive awards and commendation. Last year, we received an award for “Best Initiative in support of SMEs & the Millennium Development Goals” by Africa Investor Investment & Business Leader Awards. This year, we have been honoured with the African Regulator of the Year Award at the 6th African Business Award, the Lagos Chamber of Commerce and Industry also presented us the award for promoting best practice reporting and corporate disclosure. The Oil & gas Year Nigerian awarded us the financial Institution of the year award in recognition of our dual efforts that saw Seplat, a Nigerian company raised $500 million on the London

Stock Exchange. Only recently, we received the award for best Corporate Social Responsibility company from the African Business Magazine. The NSE was presented the “Best Corporate Social Responsibility Award by African Business Magazine and was awarded as a responsible organisation and leveraging our unique platform, we see a future where funding to address social issues such as health care, education amongst others can be raised from the market. As we look out at the challenges facing Africa and the limits of the current resources addressing them, we see Africapitalism playing a central role in bringing forward real solutions. We believe Africapitalism can create social good at scale and begin to address some of Africa’s most pressing problems where commercial markets and donor-based programs have not. Africans, must promote Africa through sustainable investment. Thank you for your attention and wish you all a great conference. Being a paper presented at the 19th Conference of the Chartered Institute of Stockbrokers (CIS)

Business Journal November 2-8, 2015

Technology

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African Telecom Union, Huawei Partner on Broadband Connectivity

he African Telecommunications Union (ATU) signed an agreement with the Chinese Telecommunications Company, Huawei that aims to boost Broadband connectivity in African countries, especially in the most remote areas, according Soumaila Abdoulkarim Secretary General of ATU based in Nairobi, Kenya. “We want to create and strengthen the capabilities of a network of African journalists specialized in ICT, well equipped to inform the public about the progress and benefits of the use of ICT,” he said. He added that the journalists should be able to explain how ICT has contributed in the development of the continent. The Secretary General of ATU was speaking during the opening of a five-day training workshop involving twenty journalists drawn from five East African countries Rwanda, Kenya, Tanzania, Uganda, Ethiopia and southern Sudan. He stressed that the African countries should open up their ICT sector to allow the Private Sector Telecommunications operators invest in the development of infrastructure with broadband. This is the goal that the countries of

the East African Community (EAC) has set for themselves to achieve the internet at high speed by 2020. “All countries must take resources specialised in ICT private companies installed at home 2% of their turnover to develop Broadband the most remote rural areas. This money is a universal access fund the high-speed Internet “, said the Secretary General of ATU. The CEO of Huawei Company based in Mr. Dean Yu, said Huawei is a leading company specialising in ICT and business in the world. It is present in 170 countries and regions. It has more than 170,000 employees. “Huawei specialises in the manufacture of tablets, mobile phones, and portals. It uses the ICT to promote health, education, productivity and income improvement at work, all in order to transform positively and improve people’s lives “, stressed Soumaila Abdoulkarim. During the training provided by Huawei ICT expert, Ian Ellis, it was noted that by 2020, massive data growth will be available. New behaviors have brought opportunities and challenges. One will need the computer speaker. He said in five years, we will need internet with 4.5 G. The training workshop was organ-

ised and held in Nairobi at the African Advanced Level Telecommunications

Magnus Nmonwu Regional Director Sage West Africa er and employee behaviour will lose ground to their competitors.” According to Nmonwu, companies that want to stay ahead of the trend towards online business need to put modern business solutions in place that are ready for the mobility, the Internet of Things, analytics, and other digital technologies that are transforming the business environment. Nmonwu adds that with the rapid growth of the mobile web, e-commerce and social media in West Africa, leading employers are thinking about how they can use technology to engage with their workforce. For example, progressive enterprises are

ative (AMI) from 21-25 September, 2015.

The CEO of Huawei Technologies, Nairobi Office, Mr. Dean Yu (left) and Abdoulkarim Soumaila, Secretary General of ATU.

Nigerian,West African Firms Face Challenges of Digital Economy

est African enterprises that want to keep pace with a changing consumer, employee and business landscape need to invest in the right business management solutions that will enable them to digitise their business processes. That’s the word from Magnus Nmonwu , Regional Director for Sage West Africa, who warns that companies in Nigeria and the rest of the region who do not embrace the digital world will be at a serious disadvantage to their competitors. Nmonwu’s comments follow the recent Connect Commerce Conference where Netplus Advisory claimed that e-commerce and online businesses in Nigeria attracted investments worth US$200 million over the past three years. “With more than 93 million Internet users in Nigeria alone (Nigerian Communications Commission statistics), the region’s people form a formidable digital marketplace. In Nigeria, Facebook has more than 15 million monthly active users,” says Nmonwu. “These Internet users want the speed, simplicity and convenience of buying goods and services right from their mobile phones. As employees, they want mobile and Web tools to help them do their jobs – from anywhere at any time. Businesses that don’t keep up with changing consum-

Institute (AFRALTI), in partnership with ATU and African Media Initi-

implementing employee self-service to automate business processes while making life more convenient for employees. An HR package that includes employee self-service functionality enables employees to apply for leave, file business travel expenses, access payslips and update their personal information from their computers, smartphones or tablets. This saves employees, managers and the HR department a great deal of time and paperwork, while also integrat-

ing all these activities into the financial functions of the company. “With the move to an online world, businesses need to think about how they will adapt,” Nmonwu concludes. “This means that they need to become more agile, access data for improved decision-making and interact with stakeholders in a more personalised manner. In addition to thinking about how they will prepare for mobile customers, West African organisations also need to be ready for digital employees. Those that do the necessary groundwork will be in a strong position to attract, retain, and develop the best talent.”

Huawei Plans $1bn Funding for Developers in 5 Years

uawei has used its first Huawei Developers Congress (HDC) to announce its open ICT developer ecosystem strategy and a Development Enabler Plan which will make up to USD1 billion available to support developers. “Huawei has focused on ICT infrastructure, opened up its innovative and leading ICT solutions to developers, and built an open environment and enablement platform for the carrier and enterprise markets,” said Ryan Ding, Huawei’s Executive Director and President of Products & Solutions. “The aim is to help developers create innovative services and rapidly respond to customers’ business needs. Over the next five years, Huawei will invest USD1 billion to implement its Developer Enablement Plan, build a developer enablement platform, and jointly innovate with developers.” Ding also noted that Huawei has opened up to its developers, technologies such as cloud computing, Big Data, IoT, mobile broadband, SDN, and BYOD. In addition to technical cooperation and talent cultivation, Huawei will forge business partnerships with its developers. Huawei announced that the company will build a developer-centric platform called eSDK based on the LEADS concept. This platform will help developers ac-

celerate technological innovation and increase their efficiency in developing differentiated solutions. LEADS is the acronym for Lab as a Service, End-toend, Agile, Dedicated, and Social. “Huawei will provide Lab as a Service based on cloud, end-to-end development resources, agile development processes and tools, dedicated experts who offer online support 24/7, and a Developer Zone that supports social engagement among partners,” said Evan Xiao, President of Huawei P&S Strategy and Business Development. Xiao also provided details on the five initiatives which are part of the company’s Developer Enablement Plan: •Innovation fund: Huawei will offer equipment, funds, and expertise for partners to develop innovative joint solutions. •Development support: Huawei will build an open platform and remote labs to enable developers to focus on their business and develop solutions efficiently. •Huawei certification: Huawei will certify the development capabilities and solutions of developers. •Talent training: Huawei will offer training to equip developers with capabilities in R&D, sales, and delivery. •Developer Marketing Fund: Huawei will offer funds to support solution ecosystem building, innovative solution marketing, and sales incentives of developers.

Business Journal November 2-8, 2015

Technology

Ericsson Applies 5G Concept for 50% Higher Speed on LTE Smartphones

hile standards for 5G are yet to be established, it is clear that the technology will employ ultra lean design improving the signaling schemes both to save energy and to enable the dense builds required by the expected new 5G spectrum. Ericsson says that its proprietary Lean Carrier innovation is first to address intercell signaling interference, introducing lean design concepts to 4G LTE to improve data speed and app coverage for users while on the road to 5G. Ericsson Lean Carrier is running live in thousands of cells in SK Telecom’s (SKT) network where Ericsson and SK Telecom have now deployed Ericsson Lean Carrier in urban, suburban and rural areas. In a large-scale deployment, users can enjoy up to a 50 percent increase in downlink data speed with a network average increase of about 10 percent. Park Jin-hyo, Senior Vice President and Head of Network R&D Center, SK Telecom, says: “Through this technol-

ogy commercialisation on LTE base stations, we can expect to enhance the performance at cell edge area and user experience. In the future, SK Telecom

will continue to adapt new technologies on LTE to support network evolution.” By reducing interference, Ericsson

Lean Carrier enables new 256 QAM higher order modulation to be utilised over a broader area, extending the higher data speed advantage to the outdoor macro environment. Leveraging the flexibility and power of the Ericsson LTE baseband hardware combined with Ericsson’s intelligent software scheduling algorithms, the Ericsson Lean Carrier innovation applies the design concepts being developed for future 5G systems to today’s 4G LTE networks. Ericsson Lean Carrier reduces, or makes lean, the level of reference signaling needed for good network performance. This leads to a corresponding improvement of the downlink data speed which applies to all parts of the 4G LTE network, with the highest performance gains occurring in the areas with most cell overlap. Per Narvinger, Head of LTE, Ericsson, says: “When LTE was created in 2008, it was straightforward, powerful technology, but now we have added significantly more intelligence. Running signaling full-blast limits performance by creating unnecessary intercell interference. Drawing on our experience from high-performance

Vodafone Survey: 43% of Teens Think Cyberbullying a Bigger Problem than Drug Abuse

networks and projecting forward to what will be possible with 5G, we were able to innovate a solution that optimises the signaling in today’s 4G LTE network. Operators are beginning to adopt more advanced encoding schemes to efficiently handle demands for improved user experience; however, use of the new 256 QAM higher order modulations require clean radio signals in order to increase the downlink data speed. By reducing interference Ericsson Lean Carrier increases the amount of time during which 64 QAM and 256 QAM encoding schemes can be utilised by the LTE system. Ericsson Lean Carrier can be implemented within Ericsson’s LTE networks today, and the solution is compatible with all LTE devices. 5G will encompass an evolution of today’s LTE technology and the addition of new radio access technologies, often in higher frequencies. These higher frequencies will drive smaller cell sizes, making it increasingly important to minimise unnecessary transmissions. This is the basic principle of 5G ultra-lean design.

Bharti Airtel Offloads 8, 300 Towers in Africa for $1.7bn

B •One of the largest global surveys of its kind, spanning 11 countries and almost 5,000 teens, reveals one in five teens cyberbullied, a fifth of whom felt suicidal •#BeStrong anti-cyberbullying emoji initiative launched by Vodafone in response •Anti-bullying Ambassador, Monica Lewinsky, Psychologist Adviser for ‘Inside Out’ film Dacher Keitner and anti-bullying NGOs involved in developing emojis to convey support More than half of teenagers think cyberbullying is worse than faceto-face bullying and 43 per cent believe it to be a bigger problem for young people than drug abuse, a global online survey of around 5,000 teenagers across 11 countries* has revealed. The Vodafone survey, commissioned from YouGov, found that an average of around one in five

(18%) teens across the countries surveyed had been cyberbullied and, as a result: •41 per cent said cyberbullying made them feel depressed or helpless (also 41%); •26 per cent felt ‘completely alone’ and 18 per cent experienced suicidal thoughts; •21 per cent had ‘not gone to school’ and 25 per cent closed down their social media accounts; •38 per cent said they did not tell their parents or guardians, as they felt ashamed (32%), scared their parents would get involved (40%), or worried what their parents might do (36%). Forty-three per cent of those surveyed would find it hard to support a friend who had been bullied on social media, as they ‘could not find the right words’ to show support. Seventy-two per cent of teens said

they would be likely to use an emoji to express compassion or support for friends being cyberbullied. In response to the findings, Vodafone announces the #BeStrong anti-cyberbullying emoji initiative, which involved the creation of a suite of ‘support emojis’ to raise awareness of the importance of conveying compassion, sympathy and support when friends are being bullied online. The emojis were chosen by the 4,720 teens surveyed from a wide selection designed by Vodafone and its anti-bullying panel as their favourite symbols for compassion and support. The favourite two sets of emojis can be seen below. Commenting, Professor Keltner explains the importance of teens being able to offer support and show sympathy to their peers being cyberbullied. He said: “A lot of emojis can

be limited for communicating emotions. The bystander needs better tools. Specific emojis that they can send their friends to show that they are there for them.” Vodafone Foundation Director Andrew Dunnett, said: “The results of the global survey – which we believe to be one of the largest of its kind among teenagers in so many countries – will be a serious concern for any parent. The new generation that was born digital thrives in a world of constant connectivity, but there are clear risks for young people as well as benefits - and it is striking that cyber-bullying troubles many young people more than drug abuse. Our research showed many teenagers find it difficult to help their friends when cyber-bullying is happening, and the #BeStrong campaign has been created to help them convey emotional support”.

harti Airtel has announced that it has sold around 8,300 towers in Africa for $1.7 billion, which is to be used to pay down the company’s debt. “As on date we have completed the sale transactions in seven countries for approximately 8,300 towers representing close to 60 percent of the total tower base,” Airtel said in a statement. Bharti Airtel has around 14,000 mobile towers in Africa. “The total value of proceeds from all the concluded transactions in these seven countries is over $1.7 billion and is being utilised for reducing the debt of the company,” the statement said. Agreements to sell towers have lapsed in four countries while the process is on in two countries, it added.

Business Journal November 2-8, 2015

Technology

MTN Cameroon Reports 58.7% Increase in Data Revenue as at Sept. 2015

outh African telecom group MTN International just released its results for Q3 2015. These show somehow mitigated performances for its Cameroonian subsidiary. Indeed, at the end of September 2015, despite the 6.2% increase in user revenue (against 2.7% in Q1 2015), MTN Cameroon’s number of subscribers fell by 4% bringing it from 10.4 million in first semester to 9.9 million at the end of Q3 2015. This means that around 500,000 subscribers were crossed off from MTN Cameroon’s registry between the beginning of July and the end of September 2015. The mobile operator explains that this was due to the deactivation of some low-cost subscribers and the clean-up of the registry following the recent identification campaign which was initiated by Cameroon’s

government. In spite of all these, MTN Cameroon has recorded a significant boost in data revenue which soared 58.7% in Q3 2015 as compared to 45% in the first semester. As a result of this increase, data revenue now represents 13.7% of MTN Cameroon’s global revenue against 11.7% at the end of June. The telecom group thus continues gaining from its investment in 3G, for which by the way 27 new sites were established during Q3. According to MTN International, its Cameroonian subsidiary still faces a rude competition as communication rate per minute plunged 15.5% on annual-basis. On the bright side, the South African telecom group has had its number of mobile money users surge to 1.9 million which represents an 8% increase compared to the first semester.

Vodafone Expands Partnership with MTS, Launch Brand in Ukraine

odafone and MTS have agreed to extend their strategic partner market agreement and expand the scope of it in Ukraine, signifying a deeper relationship between the two companies in the country. Under the new, non-equity partnership, the companies will roll out 3G and develop a number of new services in the market using the Vodafone brand in Ukraine. Both companies have been working together since the original partner market agreement was signed in 2008. Under this agreement, MTS has gained exclusive access to a range of products, services and devices from Vodafone for both consumer and corporate markets. It has also helped MTS leverage Vodafone’s expertise in marketing and deployment of new technologies. The

new agreement builds on and develops this long-standing partnership. Headquartered in Kyiv, MTS Ukraine has more than 20 million customers and 3,800 employees. The launch of 3G services under the Vodafone brand in Ukraine will commence in the coming months and will include the transition of MTS’s retail outlets and the majority of its dealerships. The Vodafone brand will not be used in territories currently not under the direct control of the Ukrainian government. Under this new strategic partnership, Vodafone will introduce a number of its services to the Ukrainian market which have proved extremely popular in Europe, including bundled offers, competitive long-distance international calls and worry-free roaming when abroad. Ukrainian customers will also benefit from Vodafone’s extensive

3G experience when it launches the new technology in the coming months. Vodafone, which has already rolled out 3G in 26 countries, will advise on network operation, network optimisation and the introduction of high quality 3G services, including music and games applications for consumers. Vodafone’s global 3G expertise will help expand access to the internet for Ukrainian consumers and businesses alike, giving a boost to the internet economy and helping to drive the next stage in the development of Ukraine’s telecommunications market. Vodafone Partner Markets Chief Executive Stefano Gastaut said: “The new, enhanced agreement with MTS enables us to bring the best of Vodafone’s products and services to the people of Ukraine. MTS Ukraine is building a high quality 3G net-

work, which means Vodafone will launch in a strong position in the market. Our deeper co-operation in the business – signified by the introduction of the Vodafone brand – will bring additional benefits to consumers and businesses as we focus on a successful launch of 3G data services and greater adoption of the mobile internet.” MTS Ukraine General Director, Oleg Prozhyvalsky said: “Undoubtedly, the launch of the Vodafone brand in Ukraine is the most significant event in the market over recent years. Ukrainian customers will be able to get access to a wide range of 3G services already available in Europe and other Vodafone countries. The implementation of the company’s unique global technological and marketing expertise in Ukraine will have a positive impact for consumers, enterprises and the economy.”

Ericsson to Boost Rural Coverage in Benin Republic

ricsson has signed its first Managed Rural Coverage deal with MTN, bringing mobile coverage as a service to parts of central and northern Benin where there was none previously. Managed Rural Coverage is a cost-competitive solution whereby Ericsson enables operators to provide mobile coverage for a set period according to service level agreements and defined key performance indicators. In this case, Ericsson and MTN

Benin have signed an agreement for five years. Under the terms of this contract, access will be provided via low-power consumption Ericsson radio base stations running on solar energy to avoid the high costs and emissions associated with diesel generators. Transmission will be provided via satellite to avoid the high costs and civil works associated with building a microwave backhaul network in remote villages. In this way, it was possible to create a business model to provide

mobile coverage to parts of Benin where people have to survive on less than 2 dollars a day. MTN Benin has been an Ericsson customer since 1999, with Ericsson serving as the sole supplier of core, packet core, radio, transmission and charging system nodes. In January, Ericsson and MTN Benin announced a partnership to retrieve and safely dispose of electronic equipment that has reached end of life.

Orange Reports Highest Growth at Qtr3 2015 in Africa

hough more modest than that of France (€14.27 billion), the combined turnover for Africa and the Middle East (€3.5 billion) of the French telecommunication group Orange is the one with the highest increase (+6.5%) on a basis consistent with that of 2014, at the end of the third quarter 2015. On the third quarter, the turnover for this region was of €1.3 billion, representing an increase of 6.8% on the performance made on the same period in 2014. “In Africa and the Middle East, mobile services have increased by +8.2% during the 3rd quarter after +6.7% during the 2nd quarter, from Côte d’Ivoire, Egypt, Mali, the Democratic Republic of Congo and Guinea”, the group explains in a communiqué published on 22nd October 2015. Orange is linking this performance to an increase in its client base on the mobile segment which rose to 111.2 million at 30th September 2015, an increase of +9.8% over a year on comparable basis representing +10.0 million additional clients. “The main countries contributing to the growth of the mobile client base are: Côte d’Ivoire, the Democratic Republic of Congo, Morocco, Mali, Cameroun and Guinea”, it added. A region of high growth, the Africa and Middle East area also benefitted from some investments, thanks particularly to a decrease in general expenses. In concrete terms, this means an improvement in mobile services, with 3G now rolled out in all countries and 4G present in four countries (Mauritius, Botswana, Jordan and Morocco).

Business Journal November 2-8, 2015

Technology

N1tr Fine: NCC Issues November 16 Deadline to MTN

he Nigerian Communications Commission (NCC) says it has issued a November 16, 2015 deadline to MTN Nigeria to pay the N1 trillion penalty it imposed on the mobile operator for failing to disconnect 5.2 million unregistered SIM cards on its network. Mr. Tony Ojobo, Director, Public Affairs of NCC told the AFP: “The deadline set for the payment of the fine is November 16.” “The key issue is if MTN breached the law or not. Certainly, there was a breach. And if there is a breach, we will apply the law.” Ojobo confirmed however that talks were on-going between the NCC, MTN Nigeria and government officials in Abuja on the issue. On the issue of likely sanctions on MTN, Ojobo said the powers of the NCC under the law include “granting or revoking of permits for connection of customer equipment” and “determination of services and new undertakings eligible for licensing from time

to time.” And on MTN failing to meet the November 16 payment deadline, he said: “When we get to the bridge, we will know how to cross it. The deadline set for the payment of the fine is November 16.” “If the situation will change in any way, then the government at the top will have to so direct. But for now, the mood is to apply the law.” The NCC had issued a directive in August to mobile operators to deactivate all unregistered SIM cards within a period of seven days or face severe penalties. According to the NCC, MTN Nigeria could not deactivate an estimated 5.2 million unregistered SIM cards on its network within the stipulated seven day deadline. It therefore imposed the N1trillion sanction on the operator to the tune of N200, 000 per each unregistered SIM card. The fine caused rapid crash of MTN’s shares on the Johannesburg Stock Exchange and raised speculations on the renewal of its GSM licence in 2016 if it fails to pay the fine.

Umaru Danbatta Executive Vice-Chairman NCC

ITU Radiocommunication Assembly Sets Future Plan for Wireless Communications •New communication technologies to enhance connectivity and accessibility worldwide

cations while also agreeing on changes to streamline the working methods of the ITU Radiocommunication Sector (ITU-R).

Houlin Zhao Secretary-General of ITU

he ITU Radiocommunication Assembly concluded today after deliberating this past week on new directions in radiocommunications. Held every three to four years, the Radiocommunication Assembly deliberated the future direction of radiocommunications and reached significant decisions that will influence the future development of radiocommunications worldwide in an increasingly wireless environment. The Radiocommunication Assembly (RA-15) was chaired by Mr. Akira Hashimoto (Japan). Around 460 participants from 97 countries attended the Assembly. “The ITU Radiocommunication Sector plays a central role in the technological progress of telecommunications and information and com-

munication technologies,” said ITU Secretary-General Houlin Zhao, noting that issues facing the ICT sector have become increasingly diverse and complex. “At a time when technical solutions require greater innovation and skill, this Radiocommunication Assembly addressed the rapid changes underway in the global telecommunications environment in a manner commensurate with its future needs,” said François Rancy, Director of the ITU Radiocommunication Bureau. RA-15 set future work programmes on many technical issues in the field of radiocommunications and approved worldwide radiocommunication standards (ITU-R Recommendations). Resolutions were approved to focus future studies and new radiocommunication techniques and appli-

IMT-2020 Resolution Approved, Paving Way for 5G mobile Systems RA-15 established the principles and processes for the development of IMT-2020 – the next-generation 5G mobile system – as an extension of ITU’s existing family of global standards for International Mobile Telecommunication systems (IMT-2000 and IMT-Advanced), which serve as the basis for all of today’s 3G and 4G mobile systems. The World Radiocommunication Conference (WRC-15), in session 2-27 November, will address the requirements for additional spectrum to support IMT mobile Broadband. The 5G systems, set to become available in 2020, will usher in new paradigms in connectivity in mobile Broadband wireless systems to support, for example, extremely high definition video services, real time low latency applications and the expanding realm of the Internet of Things. Internet of Things (IoT) International standards for the Internet of Things (IoT) technologies and its applications, including machine-to-machine (M2M) networks, smart cities and Ubiquitous Sensor Networks (USN) have been under development in the ITU Standardisation Sector (ITU-T) and other standards bodies. RA-15 recognised that the globally connected world of IoT builds on the connectivity and functionality made

possible by radio communication networks and that the growing number of IoT applications may require enhanced transmission speed, device connectivity, and energy efficiency to accommodate the significant amounts of data among a plethora of devices. RA-15 resolved to conduct studies on the technical and operational aspects of radio networks and systems for IoT in collaboration with ITU-T and relevant standards development organisations. Small Satellites RA-15 examined the issues related to the growing number of small satellites (with a mass less than 100 kg), including nanosatellites (typically 1 to 10 kg in mass) and picosatellites (typically 0.1 to 1 kg in mass), which provide an affordable means to access orbital resources for new entrants in space, including new space-faring nations. RA-15 resolved to develop material, such as Recommendations (standards), Reports, and a Handbook on small satellites, to enhance knowledge of the procedures for submitting filings of satellite networks to ITU. RA-15 also requested the ITU Secretary-General to bring this Resolution to the attention of the United Nations Committee On Peaceful Use of Outer Space. Accessibility RA-15 recognised the ongoing work in the Radiocommunication Sector (ITU R) to support and protect the needs of persons with disabilities and persons with specific needs. It asked ITU-R to continue studies and research related to accessibility in the development of devices and applications while promoting compatibility of new technologies. ITU-R will conduct these studies in collaboration with ITU’s Telecommunication Standardisation and Development sectors and in consultation with persons with disabilities and specific needs.

Nokia Networks Strikes $1bn TDLTE Deal with China Mobile

okia Networks struck a $1 billion deal with China Mobile covering the supply of TD-LTE infrastructure as part of the operator’s plan to build the world’s largest network based on the technology. In a deal signed by senior executives, Nokia Networks will provide China Mobile with its TD-based LTE Advanced (LTE-A) core network equipment, which covers the full spectrum of cellular technologies from 2G through to 4G. The kit will be VoLTE capable, and Nokia Networks will also provide software and professional services including network planning, implementation and maintenance. The infrastructure company stated that the deal will see it support China Mobile as it seeks to build the world’s largest TD-LTE network by the end of 2015 by deploying 1 million compatible base stations. Mike Wang, president of Greater China at Nokia Networks, said the agreement was a “milestone” in a relationship with China Mobile that spans two decades. He noted that the agreement also covers leveraging Nokia Networks’ infrastructure and technical expertise to boost China Mobile’s Internet of Things (IoT) plans “for areas as diverse as healthcare and connected cars.” Nokia Networks also signed an MoU with the China Mobile Research Institute covering the development of 5G technology. That agreement was announced as Nokia Networks separately revealed it had achieved a transmission speed of 19.1 Gbps during a joint trial of 5G technology with South Korean operator SK Telecom.

Business Journal November 2-8, 2015

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10 Ways to Finance Africa’s Energy Opportunity Caroline Kende-Robb

an we stave off catastrophic climate change while building the energy systems needed to power growth, create jobs and lift millions of people out of poverty? That’s a crucial question for Africa. No region has done less to contribute to the climate crisis, but no region will pay a higher price for failure to tackle it. Meanwhile, over half of Africa’s population lacks access to modern energy. Africa’s leaders have no choice but to bridge the energy gap, urgently. They do have a choice, though, about how to bridge the gap. Africa can leapfrog over the damaging energy practices that have brought the world to the brink of catastrophe – and show the world the way to a low-carbon future. To achieve that vision, however, national and global financing arrangements must be reformed and boosted. The Third International Conference on Financing for Development in Addis Ababa offered a rare opportunity for global leaders to join forces and commit to the necessary changes. The new Addis Ababa Action Agenda, the comprehensive agreement reached at the end of the Conference, now provides a foundation for innovative, scaled up financing of the global sustainable development agenda, including the energy sector. Africa stands to gain from developing low-carbon energy, and the world stands to gain from Africa avoiding the high-carbon pathway followed by today’s rich world and emerging markets. Unlocking this “win-win” will not be easy. It will require decisive action on the part of Africa’s leaders. Tackling Africa’s interlocking climate and energy problems also requires strengthened international co-operation. Africa’s energy challenges are immense. Power shortages diminish the region’s growth by 2-4% a year, holding back efforts to create jobs and reduce poverty. Despite a decade of growth, the power generation gap between Africa and other regions is widening. Energy-sector investment in sub-Saharan Africa is inadequate, at only US$8 billion a year or 0.4% of gross domestic product. A 10-fold increase in power generation is needed to achieve the United Nations sustainable development goal of universal access to energy by 2030; if current trends continue, the goal won’t be reached until 2080. Africa’s energy financing gap – the extra investment it needs to bring modern energy to all – stands at $55 billion per year until 2030. That

Africa’s energy challenges are immense. Power shortages diminish the region’s growth by 2-4% a year, holding back efforts to create jobs and reduce poverty. GDP ratio by 1% of GDP. 2. Cut Pro-rich Subsidies African governments need to phase out the $21billion in energy subsidies geared towards the rich. Subsidising connections for the poor is more efficient and equitable than subsidising energy consumption by the rich and subsidising kerosene is of limited value as a tool for achieving universal access.

Caroline Kende-Robb Executive Secretary Africa Progress Panel sounds like a large sum, but it would deliver high social and economic returns. The Africa Progress Panel, chaired by Kofi Annan, spells out in its latest report the bold action required from African leaders, their international partners and the private sector. The report, Power, People, Planet: Seizing Africa’s Energy and Climate Opportunities, outlines 10 ways to fi-

nance Africa’s energy future: 1. Increase Tax Revenues One of the greatest barriers to the transformation of the power sector is the low level of tax collection and the failure of some African governments to build credible tax systems. Almost half of the gap could be covered by increasing sub-Saharan Africa’s tax-to-

ent regulation is another. But private investors require an energy buyer such as a utility or dedicated power-purchasing agency and it is hard to build a convincing business case when the main buyer is a highly-indebted, corrupt and inefficient utility.

3. Remove Tax Concessions Many countries provide foreign investors with excessively generous tax breaks in the form of tax holidays, capital-gains tax allowances and royalty exemptions.

5. Seize the Low Carbon Opportunity Governments should strengthen the market for low-carbon energy through predictable off-take arrangements, utility purchase arrangements, feed-in tariffs and auctions. Recognising that the initial capital costs of renewable energy investment can be prohibitive, governments and regulators should seek to reduce risks and support the development of the market through appropriately subsidised loans.

4. Reform Energy Utilities Long-term national interest must override short term political gain. Energy-sector governance and financial transparency will help bring light in the darkness. Energy entrepreneurs can join the reformed utilities in investing revenues and energy funds in sustainable power. Sustained regulatory reform is critical for investment. Unbundling power generation, transmission and distribution is one step towards creating more efficient and stable energy markets. Independ-

6. Boost Aid Aid can play a supportive, catalytic role. Aid donors should commit to the longstanding target of devoting 0.7% of Gross National Income (GNI) to aid. African governments should mobilise around $10bn to expand on-grid and off-grid energy access. The international community should match this effort through $10 billion in aid and concessional finance aimed at supporting investments that deliver energy access to populations that are being left behind. President Barack Obama’s Power Africa initia-

Business Journal November 2-8, 2015

Energy

ExxonMobil Slams Negative Stories on Firm’s Climate Research

xxon Mobil Corporation says that media and environmental activists’ allegations about the company’s climate research are inaccurate and deliberately misleading. “For nearly 40 years, we have supported development of climate science in partnership with governments and academic institutions, and did and continue to do that work in an open and transparent way,” said Ken Cohen, Vice President of Public and Government Affairs. “Activists deliberately cherry-picked statements attributed to various company employees to wrongly suggest definitive conclusions were reached decades ago by company researchers. These activists took those statements out of context and ignored other readily available statements demonstrating that our researchers recognised the developing nature of climate science at the time which, in fact, mirrored global understanding.” The allegations were contained in reports distributed by InsideClimate News, an anti-oil and gas activist organisation, and the Los Angeles Times, and have prompted political attacks by Senators Bernie Sanders and Sheldon

Whitehouse and Representatives Ted Lieu and Mark DeSaulnier. Both InsideClimate News and the Los Angeles Times ignored evidence provided by the company of continu-

ous and publicly available climate research that refutes their claims. “The facts are that we identified the potential risks of climate change and have taken the issue very seriously,”

said Cohen. “We embarked on decades of research in collaboration with many parties, including the Department of Energy, leading academic institutions such as the Massachusetts Institute of Technology, Stanford University and others to advance climate science.” E xxonMobil scientists continue to research and publish findings to improve understanding of climate system science as a basis for society’s response to climate change and have produced more than 50 peer-reviewed publications on topics including the global carbon cycle, detection and at-

tribution of climate change, low carbon technologies and analysis of future scenarios for energy and climate. ExxonMobil scientists have been selected by the Intergovernmental Panel on Climate Change, the United Nations’ most authoritative body on the subject, as authors of their past four major assessment reports, and have contributed to National Research Council boards and committees on climate change. “We recognise that our past participation in broad coalitions that opposed ineffective climate policies subjects us to criticism by climate activist groups,” said Cohen. “We will continue to advocate for policies that reduce emissions while enabling economic growth.” Since 2009, the company has supported a revenue-neutral carbon tax as the preferred policy approach for emission reduction because it ensures a uniform and predictable cost of carbon, allows market prices to drive solutions, maximises transparency to stakeholders, reduces administrative complexity, promotes global participation, and is easily adjusted to future developments in climate science and policy impacts.

Energy Projects: 3 Ways African Govts Can Attract Private Capital •Sector needs $55bn Investment in next 15 years Kate Douglas

o say the continent’s energy deficit is ‘a problem’ is an understatement. Two out of three people in sub-Saharan Africa live without electricity. The Africa Progress Panel estimates that power shortages diminish the continent’s growth by 2-4% a year. And in order to bring modern energy to all, the sector will require annual financing of around US$55 billion for the next 15 years. While the deficit may seem overwhelming, it has drawn international attention – particularly in the last decade. Global forums are increasingly providing space for world leaders to discuss possible solutions, and initiatives such as President Barack Obama’s Power Africa are bringing together governments and the private sector to help close the gap. Furthermore, many African governments are beginning to realise the benefits of private sector involvement – both in financing and project management. Nigeria, for example, has undergone some critical reforms, with the government privatising the bulk of its power sector assets in 2013. According to Akinwole Omoboriowo II, Chairman and CEO of Genesis Electricity, private sector involvement is crucial in addressing Africa’s power challenge. The energy solutions firm – with investment partners such as General Electric (GE) and Cummins Co-Gen – has experience working with both

public and private partners in a variety of countries across the continent. In an interview, Omoboriowo highlighted three policies that African governments should pursue to better attract private sector capital to their energy projects. 1. Developing a Reputation for Contract Enforcement “One of the biggest challenges that we have seen in our journey so far, would be political or country risk. And a subset of that would be the strict

enforcement of terms of contracts, and some governments not meeting their obligations falling due.” While many governments are eager to attract private sector investment, the perception (whether real or not) that some do not take contractual obligations seriously, is a major deterrent for investors. Omoboriowo noted his firm has had an experience where a government hasn’t stuck to its side of the deal. “Sometimes a government just runs out of money, or a change of govern-

ment implies change of policy, and contracts are terminated without due care or cause.” For this reason, countries should put in place laws and regulations that enforce these contracts, so that irrespective of changes in government, qualifying investments are secured. An example is Nigeria’s Public Procurement Act – signed into law in 2007 – which protects investors from contracts being either violated or terminated without cause. “It is going to take time for us to get

into first class contract administration like you have in the First World,” continued Omoboriowo. “But I think, with time, these sorts of regulations, and their actual enforcement, would instil more confidence for foreign direct investors.” 2. Introducing Competitive Fiscal Incentives Governments should offer competitive fiscal incentives – such as granting extended periods of tax holidays – to investors of substantial projects, particularly renewable energy ventures. While there is a five-year tax holiday offered in Nigeria, Omoboriowo noted many of these projects are only viable over a longer period. “So it may be useful in Nigeria, for example, if the government extended the tax break for a longer period to match internationally acceptable financing terms, like 10 or 20 years or so.” 3. Combining CSR and Project Development Another suggestion would be for governments to incentivise multinational companies to invest part of their corporate social responsibility (CSR) funds in supporting power projects – either directly or indirectly. “The private sector has many roles it can play in partnership with the governments, and making it part of CSR for large local and foreign companies could provide very good sources of working capital and/or the minimum equity required to attract needed debt capital to finance qualifying power projects.”

Business Journal November 2-8, 2015

Energy

Renewables to Lead World Power Market Growth to 2020

enewable energy will represent the largest single source of electricity growth over the next five years, driven by falling costs and aggressive expansion in emerging economies, the IEA said in an annual market report. Pointing to the great promise renewables hold for affordably mitigating climate change and enhancing energy security, the report warns governments to reduce policy uncertainties that are acting as brakes on greater deployment. “Renewables are poised to seize the crucial top spot in global power supply growth, but this is hardly time for complacency,” said IEA Executive Director, Fatih Birol as he released the IEA’s Medium-Term Renewable Energy Market Report 2015 (MTRMR) at the G20 Energy Ministers Meeting. “Governments must remove the question marks over renewables if these technologies are to achieve their full potential, and put our energy system on a more secure, sustainable path.” Renewable electricity additions over the next five years will top 700 gigawatts (GW) – more than twice Japan’s current installed power capacity. They will account for almost two-thirds of net additions to global power capacity – that is, the amount of new capacity that is added, minus scheduled retirements of existing power plants. Non-hydro sources such as wind and solar photovoltaic panels (solar PV) will represent nearly half of the total global power capacity increase. The report sees the share of renewable energy in global power generation rising to over 26% by 2020 from 22% in 2013 – a remarkable shift in a very limited period of time. By 2020, the amount of global electricity generation coming from renewable energy will be higher than today’s combined electricity demand of China, India and Brazil. The report says the geography of deployment will increasingly

shift to emerging economies and developing countries, which will make up two-thirds of the renewable electricity expansion to 2020. China alone will account for nearly 40% of total renewable power capacity growth and requires almost one-third of new investment to 2020. Declining Costs Drive Growth Renewable generation costs have declined in many parts of the world due to sustained technology progress, improved financing conditions and expansion of deployment to newer markets with better resources. Announced prices for long-term generation contracts at reduced

levels are emerging in areas as diverse as Brazil, India, the Middle East, South Africa and the United States. As such, some countries and regions now have the potential to leapfrog to a development paradigm mainly based on increasingly affordable renewable power. This is especially true in Sub-Saharan Africa. “Affordable renewables are set to dominate the emerging power systems of the world,” Birol said. “With excellent hydro, solar and wind resources, improving cost-effectiveness and policy momentum, renewables can play a critical role in supporting economic growth and energy access in sub-Saharan Africa, meeting almost two-thirds of the region’s new demand needs

over the next five years.” Still, the MTRMR highlights risks. Financing remains key to achieving sustained investment. Regulatory barriers, grid constraints, and macroeconomic conditions pose challenges in many emerging economies. In industrialised countries, the rapid deployment of renewables requires scaling down fossil-fired power plants, putting incumbent utilities under pressure. Wavering policy commitments to decarbonisation and diversification in response to such effects can undermine investor confidence and retroactive changes can destroy it. Consequently, global growth in the report’s main case forecast is not as fast as it could be – and annual installations level off, falling short of what’s needed to put renewables on track to meet longer-term climate change objectives. The report includes an accelerated case that assesses the impacts of enhanced policy frameworks in key countries, finding that this could boost global cumulative renewable power growth by 25% above the main case, with rising annual installations. An improving picture for renewables can have positive ramifications for global climate change negotiations. At the same time, a clear, supportive outcome from the COP21 climate negotiations in Paris in December could create a virtuous cycle for renewable deployment by increasing long-term policy vision and predictability. But the accelerated case requires more coherent and committed policy action. “To be sure, system and grid integration will be crucial for enabling high levels of wind and solar PV. The IEA remains at the forefront of addressing these issues, including possible impacts on electricity security,” concluded Birol. “But while variability of renewables is a challenge that energy systems can learn to adapt to, variability of policies poses a far greater risk.”

Shell to Install Nationwide Network of Hydrogen Pumps in Germany

hell will install a nationwide network of hydrogen fuelling pumps at retail sites in Germany from 2016, in an effort to accelerate the growth in Europe of this low-carbon alternative transport fuel. Shell, which opened its first hydrogen fuel station in Germany in 2011, has signed a declaration of intent with its H2 Mobility Germany joint venture partners and Germany’s federal transport minister, Alexander Dobrindt. It will lead to hydrogen fuelling pumps being available at around 400 locations across the country by 2023. “Hydrogen-fuelled electric vehicles could play a key part in a low-carbon, low-emission, future,” said Oliver Bishop, General Manager of Hydrogen at Shell. “It will take technical innovation and bold policies to transform the global energy system into a progressively cleaner, less carbon-intensive one. H2 Mobility Germany shows what we can achieve through close collaboration between governments and business. The next step is for consumers to embrace this opportunity and consider buying hydrogen vehicles as they become available.” Shell currently operates three hydrogen stations in Germany, including one in Berlin and two in Hamburg. Shell anticipates the first four new fuelling points will be installed at existing retail sites in Frankfurt, Wuppertal, Geisingen and Wendingen. The pumps at these sites will refuel hydrogen fuel cell electric vehicles (FCEV) in a few minutes. The cost of charging a hydrogen fuel cell vehicle is comparable to filling a car with gasoline or diesel and they can travel similar distances to vehicles with conventional combustion engines. Shell has another two demonstration hydrogen filling stations in Los Angeles that allow the company to evaluate a range of technologies, drive down costs and better understand consumer behaviour.

10 Ways to Finance Africa’s Energy Opportunity tive, which promises $7 billion over five years, has acted as a focal point for a range of US agencies and the private sector. Energy cooperation between the European Union and Africa is deepening. The game-changer, though, is the emergence of China as a source of integrated project finance for large-scale energy projects. 7. Phase Out Fossil Fuel Subsidies in G20 Countries Governments in the major emitting countries should place a stringent price on emissions of greenhouse gases by taxing them, instead of continuing effectively to subsidise them, for example by spending billions on subsidies for fossil-fuel exploration. The three 2015 summits should aim at a comprehensive phase-out of

all fossil fuel subsidies by 2025, with appropriate support for low-income countries. Eliminating subsidies for fossil-fuel exploration and production – especially coal – should be a priority. 8. Redouble Efforts to Combat Illicit Financial Flows, Including Tax Evasion In 2012, Africa lost $69 billion from illicit financial flows. G8 and G20 countries must act on past commitments to strengthen tax-disclosure requirements, prevent the creation of shell companies and counteract money laundering. Implementation of the G20/OECD’s planned actions on base erosion and profit shifting should be accelerated; and the international community should support African efforts to

strengthen tax and customs administration and reduce illicit financial outflows, especially via trade misinvoicing. Other priority actions to mitigate illicit financial flows include public registries of beneficial ownership of companies and, with the assistance of the IMF, agreeing on how to define, measure and track such flows. A more efficient and equitable global tax system would decrease multinational companies’ ability to dodge their tax obligations.

mentation. The separate multilateral agencies offering facilities to support adaptation should be merged into a single facility, perhaps under the auspices of the Green Climate Fund. Rich countries should set a clear timetable for delivering by 2020 the outstanding $70 billion per annum in climate finance, which they committed to in Copenhagen, with greater transparency on financial commitments, the identification of new sources of finance and delivery mechanisms.

9. Overhaul the Climate Finance Architecture Climate finance has failed Africa. Detailed analysis of financial transfers points to two structural weaknesses in the climate-finance architecture: chronic under-financing and frag-

10. Unlock Private Finance Development finance could play a more catalytic role in attracting investment. Risk-guarantee provisions should be increased and coordination strengthened between international

financial institutions, development finance agencies and bilateral donors. The World Bank and the African Development Bank should lead an international effort to unbundle risk, structure guarantees and align Africa’s risk premium with market realities. Once strong global development goals are in place, backed by smart financing and a fair climate deal, African countries will be in a better position to rethink their energy policies and transform their economies. If financed correctly, Africa can both grow and show the way, by embracing a dynamic energy mix in which renewable sources will gradually replace fossil fuels. And the continent’s energy potential will transform lives. •Caroline Kende-Robb is the Executive Director, Africa Progress Panel.

Business Journal November 2-8, 2015

Energy

Chevron Completes Subsea Engineering Feat in Africa

hevron recently achieved a technological feat in the depths of one of the world’s largest underwater canyons. With vital right-of-way permits approved by the governments of the Democratic Republic of the Congo and Angola, Chevron has completed the drilling of a well intersection conduit beneath the Congo River submarine canyon, part of the Congo River Canyon Crossing pipeline project. The Congo River Canyon Crossing pipeline project involved crossing beneath the Congo River’s submarine canyon by simultaneously drilling two wells from platforms more than 3 miles apart. To create the intersection, two wellbores were drilled simultaneously from shallow water platforms located on each side of the canyon. One of the platforms is located in the Democratic Republic of the Congo while the other platform is located in Angola. The wellbores transitioned from vertical to horizontal, and then intersected almost midway beneath the canyon, approximately 2,000 feet (610 m) beneath the seabed, where the water depth is one-half mile (0.8 km).

“The Congo River well intersection is a major engineering feat,” said Ali Moshiri, President of Chevron Africa and Latin America Exploration and Production Company. “And with the drilling platforms and subsea structures having been fabricated in-country, this project

is another prime example of Chevron’s commitment to helping fuel Angola’s economic development.” The Congo River crossing is Chevron’s largest-ever well intersection and it is the most technically challenging aspect of the pipeline project. The well intersection provided the most secure

Total Launches HIV/AIDS, Tuberculosis, Malaria Project in Abuja

he Total group in Nigeria in collaboration with Nigerian Business Coalition Against AIDS (NIBUCAA), its technical partners on HIV/AIDS, launched the 2015 HIV/AIDS Tuberculosis and Malaria Preventive Education Project. The 2015 campaign was taken to the Bwari Local council develop-

ment area of the Federal Capital Territory, Abuja where preliminary survey narrowed the need for this action. The event was launched at the Total Service Station, Kubwa in Bwari Local government area of the Federal capital territory (FCT). The joint keynote address presented by the Total group at the event was read by the GM CSR/SD, Dr.

Ngeribara of Total Upstream. Part of the activities culminating in the launch was a 4-day peer educators training for 25 customer attendants and their station dealers. These trained peer educators would in turn take the campaign to customers in their various service stations, during the course of their forecourt duties; as well as to their peers. Instructional and educational materials like posters, handbills and of course condoms were given to the peer educators as tools to carry on the campaign. Free HIV/AIDS counseling and testing formed a major part of the campaign. This aspect was simultaneously implemented at various locations around Bwari and its environs for a period of two weeks. Three testing points were functional at the launch venue to cater for the audience who took advantage of the free testing to know their status. 1640 people were tested out of which 1175 were male and 465 were female. Positive cases were attached to identified support groups and referred for further management to the supported primary health center.

method of crossing the canyon and connecting to the pipeline at the platforms located on each side of the canyon. “This was the most unique well intersection project of its kind ever undertaken by Chevron—and the very first in the industry performed offshore,” said Ben Leonard, Pro-

ject Drilling Manager for Chevron’s Southern Africa strategic business unit. “Other intersection projects have involved drilling under highways or riverbeds, but this one is more than 10 times the length of a routine crossing.” Several innovative technologies and processes were employed during the drilling of the well intersection. For example, an active magnet ranging technology was used to direct the drilling assembly so that the wellbores merged precisely on a target roughly the size of a basketball. This involved a magnetic sensor in the drill string on one side and a powerful magnet, located behind the drill bit, on the other side. An additional challenge for the project team was to install the two offshore platforms in an area close to the mouth of the Congo River where there are strong currents. The pipeline will transport natural gas from Angola’s offshore Blocks 0 and 14 to the Angola Liquefied Natural Gas (LNG) Plant, the country’s first LNG project. When completed, the pipeline will be approximately 87 miles (140 km) in length and initially transport up to 250 million cubic feet of natural gas per day.

Climate Pledges for COP21 Slow Energy Sector Emissions Growth

he International Energy Agency (IEA) recently released a World Energy Outlook (WEO) special briefing that outlines the energy sector implications of national climate pledges submitted for the upcoming climate summit in Paris (COP21). The briefing finds that if all countries meet goals outlined in their submitted pledges, known as Intended Nationally Determined Contributions (INDC), growth in energy-related emissions-which account for two-thirds of total greenhouse gas emissions --will slow to a relative crawl by 2030. “The fact that over 150 countries – representing 90% of global economic activity and nearly 90% of global energy-related greenhouse gas (GHG) emissions – have submitted pledges to reduce emissions is, in itself, remarkable,” said IEA Executive Director, Fatih Birol. “These pledges, together with the increasing engagement of the energy industry, are helping to build the necessary political momentum around the globe to seal a successful climate agreement in Paris” The WEO special briefing finds that all of the INDC submissions take into account energy sector emissions and many include specific targets or actions to address them. If these pledges are met, then countries currently accounting for more than half of global economic activity will see

their energy-related greenhouse gas emissions either plateau or be in decline by 2030. Global energy intensity, a measure of energy use per unit of economic output, would improve to 2030 at a rate almost three times faster than the rate seen since 2000. In the power sector, 70% of additional electricity generation to 2030 would be low-carbon. Significantly, the power sector – the world’s largest source of energy-related carbon-dioxide (CO2) emissions – sees emissions plateau at close to today’s levels, effectively breaking the link between rising electricity demand and rising related CO2 emissions. The full implementation of these pledges will require the energy sector to invest $13.5 trillion in energy efficiency and low-carbon technologies from 2015 to 2030, an annual average of $840 billion. However, despite these efforts, the pledges still fall short of the major course correction necessary to achieve the globally agreed climate goal of limiting average global temperature rise to 2 degrees Celsius, relative to pre-industrial levels. “The energy industry needs a strong and clear signal from the Paris climate summit. Failing to send this signal will push energy investments in the wrong direction, locking-in unsustainable energy infrastructure for decades,” emphasised Birol.

Business Journal November 2-8, 2015

Insurance Pension www.businessjournalng.com

Global Capital Standards Finalised For AIG, 8 Big Insurers

he world’s nine biggest insurance companies will have to hold more capital under new rules just finalised by global regulators that aim to prevent taxpayer bailouts of the industry in a crisis. Regulators decided to look at the multi-trillion dollar insurance industry following the massive public rescue of insurer AIG in the United States during the 2007-2009 financial crisis. At the request of the Group of 20 economies (G20), the International Association of Insurance Supervisors (IAIS) has completed a two-part capital requirement for the nine companies, whose collapse could wreak havoc in global markets. They include AIG and MetLife from the United States, Britain’s Aviva, Ping An Insurance of China, Italy’s Generali, and Axa of France. The insurers will not have to make public their extra capital buffer until 2019 but, as with new banking capital rules, investors are likely to want to know if a company is strong enough to comply early without having to raise fresh capital. The IAIS said the first capital

cushion, known as the basic capital requirement, will effectively be what each of the nine insurers are already required to hold under national law. A consultation had initially proposed that the basic capital requirement, to be phased in over three years from 2016, should be at least 75 percent of the national requirement. The second capital buffer, known as higher loss absorbency, will be on average 10 percent of the basic requirement, depending on the riskiness of a company’s operations, the IAIS said in a statement. This has been scaled back from an original proposal for a higher loss absorbency buffer that was on average 12-13 percent of the basic one. All nine must meet their combined capital requirements from 2019 under the finalized rules which G20 leaders are due to formally endorse next month at a summit in Turkey. The G20’s regulatory task force, the Financial Stability Board, is due next month to update its list of insurance companies deemed to be systemically important, but it is not expected to include any big re-insurers, an omission that has raised

eyebrows of some regulators. Some U.S. insurance supervisors have questioned the need for global

capital rules at all. Met Life has taken the U.S. government to court to challenge a U.S.

Sovereign Trust Elevates Soyinka, Odoemelam as Board Members

oremost underwriting Firm, Sovereign Trust Insurance Plc has announced the elevation of two of its erstwhile General Managers to the position of Executive Directors respectively. The duo who by their recent elevation will automatically become Board Members of the company are Mr. Olaotan Soyinka and Mrs. Ugochi Odemelam. Soyinka before now was the General Manager/Divisional Head, Technical while Ugochi took charge of Marketing/Business Development for the organisation in the capacity of a General Manager/Divisional Head. The two appointments were recently ratified by the Board of Directors and both have assumed their new roles since September 14, 2015. Mr. Segun Bankole, the Chief Spokesperson of Sovereign Trust Insurance Plc, said the Board and Management of the company have so much confidence in the two newly elevated Directors and it is expected that they will bring to bear their consummate wealth of experience in galvanizing the organisation to the next level of its growth stage. Members of Management and Staff

Olaotan Soyinka have been enjoined to give all the needed support to the new Directors in achieving the overall objective of the company as a leading Brand in the Insurance Industry and a profitable one at that. The Managing Director/CEO of Sovereign Trust Insurance Plc, Mr. Wale Onaolapo, in his congratulatory

Ugochi Odoemelam message to the two Directors emphasised Management’s commitment to succession plan in the organisation and also stressed that “the elevation is expected to further strengthen the Board and empower Top Management Team of the company in ensuring that the medium and long term strategic goals of the company are accomplished.”

He equally thanked both of them for their immense contributions to the development and growth of the company in time past and charged them to do more than ever before as the organisation forges ahead in the years to come. Mr. Olaotan Soyinka is an erudite and well-grounded underwriter with over 20 years cognate experience.

regulatory panel’s decision to deem the firm “systemically” risky and therefore subject to tighter scrutiny. He is an Associate of the Chartered Insurance Institute of Nigeria. He is a Graduate of Insurance from University of Lagos and also holds a Master of Science degree in Marketing from the same university. He joined Sovereign Trust Insurance Plc in March 1998. Soyinka is an alumnus of the Lagos Business School having successfully completed the Senior Management Programme of the Institution. Ugochi Odemelam on the other hand, graduated from the Federal Polytechnic, Nassarawa. She holds an MBA from ESUT Business School. She is also a member of the Nigerian Institute of Management (NIM), a registered member of the Chartered Insurance Institute of Nigeria (CIIN) and Chartered Insurance Institute of London (CII London). She is an Alumnus of the Lagos Business School having successfully completed the Senior Management Programme (SMP), and the Advanced Management Programme (AMP), of the Institution respectively. She has also attended series of management and development programmes both at local and international levels. She is an Alumnus of the Kellogg School of Management, Chicago, USA. She joined Sovereign Trust Insurance Plc in 1995. Her cognate 20 years working experience in Sovereign Trust cut across the three main Divisions of Finance and Administration, Technical and Marketing.

Business Journal November 2-8, 2015

Insurance • Pension

Lloyds, China’s Taiping Insurance Partner on Global Growth Plans

loyd’s signed a memorandum of understanding with China Taiping Insurance Group intended to boost cooperation between “the world’s only specialist insurance and reinsurance market and one of China’s leading insurance companies.” Lloyd’s Chairman John Nelson and Wang Bin, Chairman of China Taiping, inked their deal on October 21, during Wang’s visit to Lloyd’s, an agreement designed to coincide with President Xi Jinping’s State visit to the United Kingdom. “The memorandum signifies a commitment from both sides to establish a broader and closer relationship, including deepening mu-

tual collaboration and support for Chinese enterprises internationally and comes at a time of increasing bilateral trade relations between Britain and China,” Lloyd’s explained in an announcement about the agreement. Lloyd’s said it and China Taiping will “commit to achieve complementary and collaborative development of local and global markets.” Specifically, Lloyd’s will help back Taiping Reinsurance Company’s initiative to become a member of Lloyd’s and establish a Lloyd’s syndicate, as well as Taiping Reinsurance Brokers Ltd’s initiative to become a Lloyd’s registered broker. The goal here is to assist in China Taiping’s

goal of expanding its global network. In turn, China Taiping will help Lloyd’s develop and grow its business with Chinese interests. The two sides will also share knowledge and expertise and cooperate on training and talent development. Wang stressed in prepared remarks that the “global business characteristics are the essential part of the top priorities of China Taiping.” He described the company as a “comprehensive insurance group with the longest history in overseas operations and the richest experience in internationalization among the state-owned insurance enterprises.” The announcement notes that the

cooperative relationship with Lloyd’s reflects a major effort by China Taiping to elevate its internalisation and build its industrial chain, strengthen its reinsurance business capability, and expand overseas business network. “Through the cooperation with Lloyd’s, China Taiping will further integrate its resources in both domestic and overseas markets, in both direct business and reinsurance, in both renminbi and foreign exchanges, in both P&C and life insurances,” the announcement noted. Nelson described the agreement as a way to build a future relationship and also make inroads into the crucial China market.

“China is an important part of Lloyd’s future strategy and this memorandum of understanding will enable us to deepen our understanding of the market and improve the support we are able to provide, as well as having the mutual benefit of sharing respective knowledge and expertise,” Nelson said in prepared remarks. Lloyd’s said the cooperative arrangement will help support risk management of Chinese companies pursuing international expansion, and also help Chinese insurers/reinsurers to tap into global markets with access to expertise from different locations.

Berkshire Hathaway Specialty Now in Australia with Marine Office

erkshire Hathaway Specialty Insurance Company is now underwriting Marine, Transport & Logistics Liability Insurance in Australia and New Zealand. Barton Phillips, the head of the group, and Laetitia Roney, manage are based in BHSI’s new office in Brisbane. BHSI is focusing its new marine, transport & logistics liability capabilities on key segments, including: port/terminal operators, transport/ logistics operators, rail operators, cargo handling facilities, charterer’s liability, stevedoring operators,

warehouseman’s liability, marina operators and ship repairers. BHSI recently introduced marine cargo (ocean and inland), cargo stock throughput (STP), carrier goods in transit, carriers liability and marine project cargo coverages in Australia and New Zealand. The company also provides property, casualty, executive & professional and healthcare lines in Australia, and property, casualty and financial lines in New Zealand. Phillips comes to BHSI with more than two decades of experience in the insurance industry, most recently serving as National Manager,

Marine & Transport Liability Insurance, at Zurich Australia (formerly as Associated Marine). Before that, he was Managing Director of Thomas Miller Australasia, the manager of the TT Club in Australia & New Zealand. He is a Solicitor of the Supreme Court of Queensland, and a Member of the Maritime Law Association of Australia and New Zealand. Roney, with 22 years in the marine insurance industry, also comes to BHSI from Zurich Australia, where she most recently served as underwriting manage.

Aon’s Q3 2015 Net Income Down 5%; 15% for 1st 9 Months

on plc’s third quarter and 1st 9 months 2015 Earnings report shows an overall decline in revenue and profits, compared to the same periods in 2014. Net income attributable to Aon shareholders was $295 million, or $1.04 per share, compared to $309 million, or $1.04 per share, for the prior year quarter, a 5 percent drop Net income attributable to Aon shareholders for the first 9 months was $801 million, compared to $938 million for the same period in 2014, a 15 percent decrease. The earnings report attributed a good portion of the decreases to “foreign currency translation,” which it said had an “unfavorable impact on adjusted net income.” President and CEO Greg Case commented: “In our seasonally weakest quarter, our results reflect organic revenue growth and operating margin expansion across both segments,

effective capital management and significant free cash flow generation, despite the impact of unfavorable foreign currency translation and macroeconomic challenges. “Driven by our industry-leading portfolio and investments across data and analytics, we expect a strong fourth quarter and finish to the year across each of our key metrics, further positioning the firm for free cash flow generation and shareholder value creation,” he continued.” The report gave the following summary for Aon’s operations in the third quarter of 2015: — Total revenue decreased 5 percent to $2.7 billion compared to the prior year quarter driven primarily by a 7 percent unfavorable impact from foreign currency translation, partially offset by 2 percent organic revenue growth. — Total operating expenses for the third quarter decreased 5 percent to $2.3 billion compared to the prior year quarter due primarily to a

$162 million favorable impact from foreign currency translation and a $12 million decrease in intangible asset amortisation, partially offset by an increase in expense to support 2 percent organic revenue growth. — Depreciation expense decreased 8 percent, or $5 million, to $56 million compared to the prior year period. — Intangible asset amortization expense decreased 13 percent, or $12 million, to $78 million compared to the prior year quarter, consisting of a $10 million decrease in HR Solutions and a $2 million decrease in Risk Solutions. — Foreign currency exchange rates in the third quarter had a $0.09 per share, or $30 million pretax, unfavorable impact (-$25 million in Risk Solutions and -$5 million in HR Solutions) on adjusted net income from continuing operations, if the Company were to translate prior year quarter results at current quarter foreign exchange rates.

Ameriprise Financial to Exit Travel Insurance Market After Loss

meriprise Financial Inc., which is celebrating the 10th anniversary of its spinoff from American Express Co., is abandoning an unprofitable push into travel insurance. “We had a loss associated with the travel-accident programme, a small programme we piloted,” Chief Financial Officer, Walter Berman said in a third-quarter earnings call. “Therefore, we are in the process of exiting this business.” Travel insurance can reimburse clients for trip interruption or lost baggage. Warren Buffett’s Berkshire Hathaway Inc. has expanded in the business in recent years, helped by John Noel, an industry pioneer who

sold an earlier venture to American International Group Inc. Ameriprise relies more on businesses like wealth management and providing financial advice. The Minneapolis-based company said that the travel operation hurt results at a subsidiary that also sells auto and home insurance. That unit incurred $1.08 in claims and expenses for every premium dollar in the third quarter. Travel insurance “did not meet our profitability targets,” Berman said in the call. Ameriprise’s third-quarter net income fell 5.5 percent to $397 million as volatile markets and currency fluctuations pressured results at the asset-management unit.

Business Journal November 2-8, 2015

Insurance • Pension

Insurance Sector: Knowledge Gaps, Market Convergence

Susanne Sclafane nsurers covered $500 billion in catastrophe losses in the last 10 years. That huge number appears in Swiss Re’s recent sigma report, “Underinsurance of Property Risks: Closing the Gap.” It’s hardly the biggest number in the report. There’s a $1.3 trillion figure for total economic losses from natural disasters that were not insured. Only 30 percent of nat-cat losses were insured over that time frame. The report goes on to forecast the future. Using modeling techniques for cat perils, Swiss Re estimates uninsured losses of $153 billion per year going forward just for earthquake, flood and wind—excluding hail, drought, tornadoes and volcanoes. And using a benchmarking approach for non-catastrophe property (bringing countries with low insurance penetration up to best-practice levels) adds another $68 billion. The tally: $221 billion of expected underinsured property losses annually, or $2.2 trillion for 10 years. There’s some semantic detail in the report about whether this is correctly called a protection gap or underinsurance. Putting that aside, these are big numbers, and there is clearly an opportunity for insurers and reinsurers to provide coverage. But beyond that, there is an obligation for the insurance industry to teach what we

know about risk. Listing reasons for underinsurance, the report discusses issues like affordability and reliance on government post-disaster relief. Leading off the list, however, are factors like risk perception and lack of knowledge about insurance. Insurers are now collaborating to figure out how to deliver low-cost micro-insurance—and education— to some of the poorest citizens on the planet. Blue Marble Micro-insurance CEO Joan Lamm-Tennant describes this in the cover story of the fourth-quarter edition of Carrier

Jubilee Insurance Opens Door in DR Congo, Targets Ethiopia, Madagascar

enyan Group, Jubilee Insurance announce recently that having started operations in the Democratic Republic of Congo as part of

Patrick Tumbo Managing Director/CEO Jubilee Insurance Group

an expansion programme in sub-Saharan Africa which also includes having a presence in Ethiopia and Madagascar prior to the end of the current year. Commenting during the signing of a partnership agreement with automobile distributor CMC Motors, Patrick Tumbo, Managing Director of the insurance company listed on the Nairobi Securities Exchange, clarified that “negotiations for the acquisition of two companies in Ethiopia and Madagascar are in the final stages”. Tumbo also revealed that negotiations on a third company have started, without giving more details on this operation. Jubilee Insurance is a subsidiary of Jubilee Holdings Limited, a holding specialised in insurance, based in Nairobi and owning subsidiaries in Burundi, Mauritius, Tanzania, Uganda and Pakistan.

Management magazine. But underinsurance is not confined to emerging markets. Swiss Re expects annual uninsured property losses of $60 billion in the U.S. and Japan. In addition, Robert Hartwig, President of the Insurance Information Institute, offered these facts about U.S. buying behavior during a Swiss Re webinar: •Take-up rates for cyber and terror insurance—52 percent and 62 percent—exceed a take-up rate of 40 percent for renters insurance, 10 percent for California earthquake and 14 percent for national flood. •In areas most vulnerable to

flood—the South and the Northeast—homeowners are least likely to understand that homeowners policies do not cover hurricane flooding. While risk awareness for manmade perils is increasing, Hartwig stressed the need to combat misinformation in other areas. He also suggested that price hikes have caused flood insurance purchases to plummet 10 percent since 2009. Separately, during a recent interview, TransRe CEO Michael Sapnar explained how convergence of traditional reinsurers and alternative capital may help drive down costs and lessen the role of government in the

insurance business. With convergence may come more opportunity for insurers to educate. At least, that’s my takeaway from remarks delivered by “Black Swan” author Nassim Nicholas Taleb at KPMG’s recent insurance conference. Discussing the difference between tail risks and well-behaved risks (for which the portfolio effect works), he said: “You guys know which is which. People in finance, they don’t know,” adding that insurers learned how to lose money from financial types during the financial crisis.

Insurance Execs May Also Face U.K.‘Duty of Responsibility’ Bank Rules

xecutives at UK insurers, mortgage brokers and payday-loan companies will be covered by the same “duty of responsibility” as those in banks under legislation introduced in Parliament last Thursday. The Bank of England and Financial Services Bill, which will be introduced to the House of Lords, will extend the Senior Managers and Certification Regime across the entire financial-services industry. All will have a new responsibility to take steps to prevent rules being broken. “A key part of the government’s long-term plan is to restore trust in Britain’s financial-services sector so that it works better for customers and businesses,” the Treasury said. “Ensuring that these firms are properly run is vital for the health of our economy.” The bill is designed to implement Bank of England Governor, Mark Carney’s expanded remit. Carney is leading a push to clean up an in-

Bank of England Gov dustry tarnished by scandals such as benchmark rigging that also damaged the reputation of the central bank. The new regime is due to come into effect in March 2016 and banks are in the midst of mapping out who is responsible for which areas and personnel to present to the regulator. “Extending the Senior Managers

and Certification Regime is an important step in embedding a culture of personal responsibility through the financial services industry,” Tracey McDermott, Acting Chief Executive Officer of the Financial Conduct Authority, said in a statement. “The new Senior Managers and Certification Regime is stronger than the Approved Persons Regime that has been in operation since before the financial crisis,” Andrew Bailey, the BOE’s Deputy Governor and CEO of the Prudential Regulation Authority, said in a separate statement. “We strongly support this strengthening.” Separately, the PRA, part of the BOE, will publish a consultation paper on plans to ring fence banks, another step in regulators’ efforts to prevent a repeat of the financial crisis. That move is aimed at ensuring that crucial financial services such as retail deposits and payments will be protected if riskier units incur losses and have to be shut down.

Business Journal November 2-8, 2015

Insurance • Pension

British Insurance Premium Tax Hike Worsens Situation for General Insurers

tax hike on British motor and home insurance policies effective from Sunday is set to hit consumers and could trigger a fresh round of margin-squeezing price competition among general insurers. The jump in the insurance premium tax (IPT), to 9.5 percent from 6 percent, was a surprise announcement in the July budget and could be a particular blow to motor insurers like Admiral and Direct Line, already struggling to compete on price, analysts said. While motor premiums have risen recently as a result of higher claims, this follows years in which insurers have faced stagnant prices and been forced to release reserves set aside for past-year claims in an effort to bolster profitability. “These (tax) increases will not translate into margin expansion and may even make it difficult for insurers to push further … rate rises through,” analysts at Morgan Stanley said in a note to clients. FTSE 100 firms Admiral and Direct Line released reserves to boost first-half profitability – a strategy which analysts and regulators don’t see as sustainable.

Mid-cap firm esure Group saw a drop in first-half pretax profits “in challenging market conditions.” With higher prices likely to encourage motorists to shop around for their policies, causing churn in the sector, the key will be keeping hold of customers. “The concern is what happens to retention,” said Andy Hughes, insurance analyst at Macquarie. Motorists are likely to feel particularly price-conscious given quarterly comprehensive car insurance premiums clocked the biggest rise since 2010, a recent report using data from price comparison website confused. com showed. That was fueled in large part by a slide in oil prices that in turn has encouraged more activity on the roads, leading to more accidents and claims, analysts said. Direct Line estimates that younger drivers in particular could feel the pinch of the tax rise. The average premium in the first half for a driver aged between 18 and 20 would have risen 35 pounds ($53.54) under the new tax rules. Despite the competition for business, insurers are expected to pass most of the tax hike onto drivers. “Looking at the underlying profitability of the motor insurance industry, I do not think there is space for

the industry to take that (tax cost) on,” said one senior insurance executive. The British motor insurance market last made a profit in 1994 and made an underwriting loss of 31 million pounds ($47.42 million) in 2014, data from the Association of British Insurers showed. Motor insurers can take some solace from the fact insurance is mandatory in order to drive a vehicle on British roads, said Eamonn Flanagan, Analyst at Shore Capital, but household insurance demand could see a dip. However, Esure Group, which offers motor and home insurance products through its Esure and Sheilas’ Wheels brands, said it did not expect a fall in home insurance customers as most people with a mortgage will still be required to have house insurance. Of the 26.7 million households in the UK in 2013, 20.4 million had household contents insurance and 17 million had buildings insurance, ABI data showed. The falling cost of home insurance may also mitigate the impact of the tax rise. AA data showed the average quoted premiums for buildings, contents and combined policies all fell in the third quarter, continuing a near-three year trend.

Swiss Re’s Estimates $250m Claims on Tianjin Explosion

Tianjin Explosion

wiss Re said that the Tianjin explosion in China will leave it with an approximately $250 million claims burden, but news of the claims hit didn’t mar an otherwise solid 2015 third

quarter. The August catastrophe is substantial in that it is “likely to constitute one of the largest manmade loss events in Asia to date,” according to the reinsurer. Swiss Re cautioned that the contin-

ued assessment of damage could change the final number. PartnerRe, by contrast, said its Tianjin-related losses will hit between $50 million and $70 million pre-tax. Validus Holdings Limited estimated just under $44 million

in losses from Tianjin, though Zurich Insurance Company Limited. said it lost $275 million from the same event. The insurer tallies come in the months after Guy Carpenter estimated that insurance losses from

the Tianjin explosion could hit $3.3 billion overall. Swiss Re said its 2015 third quarter property casualty reinsurance income reached $1 billion, up from $842 million in the 2014 third quarter. The good results stemmed from the lack of large natural catastrophe losses, reserve releases and strong investment results. The division booked $4.1 billion in net earned premiums, a downtick from $4.3 billion over the same period last year. Swiss Re said the results reflect foreign exchange impacts, and that premiums earned would have grown $1.4 percent at constant foreign exchange rates thanks to U.S. casualty growth. Swiss Re’s property/casualty reinsurance combined ratio came in at 78 for the quarter, versus 76.7 in the 2014 third quarter. With all divisions combined, Swiss Re booked $1.4 billion in net income, or $4 per share in earnings. That’s compared to more than $1.2 billion, or $3.59 per share, in the 2014 third quarter. Swiss Re’s life/health reinsurance arm saw dips in premiums earned and free income during the quarter, but a healthy gain in net income.

Business Journal November 2-8, 2015

Travel Tourism www.businessjournalng.com

Emirates: Focus on Africa – The Underserved Air Transport Market tween Asia and Africa, added Frach. “Because there is a lot of corporate business within [a number of] markets, for us Africa is also a good premium business continent,” he said during a media roundtable in Dubai last week. “Many of these African markets are underserved… This is why we believe it is a very interesting market, and we see developing traffic flows between almost every African market and Asia in particular.”

operating within existing agreements. There might be a situation or a market where we would like to do more because we see more demand. But for given reasons, because a traffic agreement is in place and it stipulates what is allowed, we do what we can.” Generally, African national carriers are characterised by government bailouts and bankruptcy. For example, Nigeria Airways was forced to cease operations in 2003 after falling into considerable debt, while Zambian Airlines suspended its service in 2009 citing rising costs. More recently, South African Airways has fallen into financial trouble, struggling to compete with low-cost carriers nationally and foreign operators with larger networks internationally. In 2013, Ed Winter, CEO of an African low-cost carrier, Fastjet, told How we made it in Africa that he underesti-

mated the extent that African governments are willing to block competitors to protect their own flag carriers. “The level of protectionism that one sees has astounded me,” said Winter. “If you go around all the [African] countries, there are loss-making state airlines, and the protectionism being exhibited by virtually all of these governments is doing nothing other than to reduce the level of air transport, kill competition and create a situation where they are going to continue subsidising their own state airline.” However, state protectionism of airlines is not just a phenomenon on the continent. For instance, in Germany, a traffic agreement limits Emirates flights to only four airports – Frankfurt, Munich, Hamburg and Düsseldorf. “Yes, certainly, when an agreement is restrictive for us we would always love to do more; if we see the business potential, we would always like to add more choice to the consumer. But it is a matter of negotiations between governments,” Frach continued. Another limiting factor for growth of foreign airline operations on the continent is infrastructure. At the Africa Global Business Forum held in Dubai last year, Tim Clarke, President of Emirates, noted aviation on the continent is being limited by inadequate airport infrastructure. For example, many African airports cannot accommodate the Airbus A380, the world’s largest passenger liner, of which Emirates has 67 in its fleet, the largest globally.

Fatima Beyina-Moussa: Taking Stock Almost One Year as Head of AFRAA

African countries insufficient, but they don’t have enough round trips, either, so passengers can’t get where they want in Africa. This is the battle AFRAA has to fight!” states Fatima Beyina-Moussa. ECAir, which has already carried more than a million passengers, will welcome over 400 experts from African airlines from November 8-10th in Brazzaville.

Kate Douglas

frica accounts for roughly 10% of Emirates’ global passenger numbers and revenue, according to Hugh Frach, the airline’s Divisional Senior Vice President of Commercial Operations for Europe, Africa and the Americas. Emirates – a national carrier of the United Arab Emirates (UAE) which operates over 1,800 flights per week from its hub at Dubai International Airport – has become one of the largest airlines operating in Africa. It already serves 27 destinations on the

continent, and added Mali’s capital Bamako to its list just last week. Africa also accounts for roughly 10% of Emirates’ global passenger numbers and revenue, according to Hugh Frach, the airline’s Divisional Senior Vice President of Commercial Operations for Europe, Africa and the Americas. In its last financial year ending 31 March 2015, Emirates transported over five million passengers to and from the continent, operating over 21,000 flights. The airline is also benefiting from demand for business class seats for its African flights, a result of increased commercial activity particularly be-

Fatima Beyina-Moussa

atima Beyina-Moussa, CEO of ECAir, Equatorial Congo Airlines, the national airline of the Republic of the Congo, and President of AFRAA, the African Airlines Association, since November 2014 is coming to the end of her term in office. One week before AFRAA’s 47th general assembly, which will be held November 8-10th at the sports complex of Kintele in Brazzaville (Republic of the Congo), and will address the theme “Open skies: Growth through competition and collaboration”, Fatima Beyina-Moussa took stock of her time at the head of the association. “It has been my great honour to be the spokesperson of my peers, directors of African airlines. I have been able to meet the leading figures in African and international aviation, such as Tony Tyler, Director-General and CEO of the International Air Transport Association (IATA), and political decision-makers, like Nkosazana Dlamini-Zuma, Chairperson of the African Union (AU), and to speak of

the importance of co-operation and the liberalisation of African skies. I feel that things are moving forwards, that we are being heard. AFRAA does a lot for the development of the air sector

Protectionism of African skies While Africa is Emirates’ second largest region (after Europe) in terms of number of flight destinations, Frach hinted the airline could be doing more in the region, with protectionism by some governments limiting growth in these markets. “I can only really tell you that we are

in Africa. The Secretary-General of AFRAA, Dr Elijah Chingoshoet, and his team do remarkable work and it’s been a pleasure to be at their side and make my own contribution.” The aviation market in Africa is on its way to becoming one of the most important in the world with over a billion inhabitants, a third of whom belong to the middle-class, the class that travels. Air traffic in Africa is growing by 5.2 % per year while the weakest growth was recorded in North America (2.3%) and Europe (3.8%). The International Air Transport Association (IATA), which brings together 250 carriers accounting for 84% of traffic worldwide, is in line with AFRAA. In Nairobi, on IATA Aviation Day last June, the director, Tony Tyler, urged people to implement the Yamoussoukro decision, a declaration of common intent by African countries in favour of the liberalisation of the skies adopted 15 years ago. “To get from one African country to another, it’s sometimes easier to fly out of the continent and take a connection in Dubai or Paris, and then come back into Africa. This is something we want to avoid at all costs. Making travel

within Africa easier can only be beneficial for airlines, and above all for passengers. Passengers will enjoy a much better journey than they can do today. Not only are connections between

IATA September 2015 Airlines Financial Monitor Key Points: • Airline share prices were up 2% in September compared to August, supported by low jet fuel prices. Airline shares outperformed the broader market which fell 4% over the month; • The financial performance of the airline industry has been mostly solid up to the middle of the year, with Q2 results showing large profit improvements in the US and Asia Pacific, but down in Latin America; • Crude oil prices stayed below $50/bbl in September, kept down by expectations of supply increases from Iran and the US as well as a softer demand outlook; • Passenger yields in the US continue to fall and although the US$ appreciation has exaggerated declines in global fares, currency adjusted levels are also down, by 6% on a year ago; • Weakness in yields and fares reflects downward pressure from declines in fuel costs and stronger growth in capacity relative to demand in some regions; • RPK growth was strong in August and the trend for 2015 remains robust. FTKs were stable, but the industry was 2% smaller in August compared to 2014 year-end; • Growth in seats accelerated in August with net storage activity falling, but remained in line with growth in demand; Passenger loads reached a record high in August (80.6%, seasonally adjusted) as demand out stripped capacity expansion, but air freight load factors fell further to levels not seen since mid-2009

Business Journal November 2-8, 2015

Travel • Tourism

China to Purchase 130 Airbus Jets Worth $17bn

hina Aviation Supplies Holding Company (CAS) has signed a General Terms Agreement (GTA) with Airbus for the acquisition of 30 A330 Family aircraft and 100 A320 Family aircraft. The 30 A330s are the firm up of the commitment signed in June 2015. The GTA was signed in Beijing by Li Hai, President and CEO of CAS, and Fabrice Brégier, President and CEO of Airbus, in the presence of Chinese Premier Li Keqiang and visiting German Chancellor Angela Merkel. “We are grateful to CAS, one of our longest standing customers, for its continued confidence in Airbus and in the versatile A330 Family as well as the best-selling A320 Family,” said Fabrice Bregier, President and CEO of Airbus. “With these 30 A330 options now firmed up, CAS’ total number of orders for the popular Airbus widebody is this year 75 aircraft. This strong demand in China for the A330 has been the key driver behind our decision to set up an A330 Completion and Delivery Centre in Tianjin, China next to the A320 Family final assembly line and delivery centre in Tianjin, which has assembled and delivered more than 240 Airbus single aisle aircraft. This will enable us to be even closer to our customers and to take our

long-standing mutual beneficial partnership with China to a new height.” The first agreements on setting up an A330 C&DC in Tianjin, China were signed by Airbus and Chinese partners in March 2014 and witnessed by French President Francois Hollande and visiting Chinese President Xi Jinping. This was followed in October 2014, when Airbus, the Tianjin Free Trade Zone (TJFTZ) and the Aviation Industry Corporation of China (AVIC) signed a Letter of Intent (LoI)

in Berlin, Germany, in the presence of the German Chancellor Angela Merkel and Chinese Premier Li Keqiang, A framework agreement was signed in July 2015 in Toulouse. According to the Airbus global market forecast, China is leading the world in passenger growth. China’s domestic air traffic will become the world’s largest within the next 10 years, and traffic volumes will quadruple in the next 20 years. In the next 20 years, Airbus forecasts a demand in China for some

5,400 new passenger and freighter aircraft including 1,700 wide-body aircraft like the A330, A350 and A380. At present, the in-service Airbus fleet with Chinese operators comprises over 1,200 aircraft (over 1,000 A320 Family aircraft, over 160 A330 Family aircraft and five A380s as well as Airbus freighters and corporate jets). The A330 is one of the most popular wide-body aircraft ever and has to date won over 1,500 orders, with over 1,200 flying with more than 100 operators worldwide. Airbus is investing hundreds of millions of Euros per year in the A330 Family to maintain the aircraft at the leading edge of innovations. The A330 Family is part of the world’s most modern and comprehensive widebody product line, which also includes the larger A350 XWB and double deck A380 The A330 family seats between 250 and 440 passengers and is one of the most efficient aircraft in the world, with the lowest operating costs in its category. Thanks to the continuous introduction of a large number of innovations, the A330 remains the most profitable and best performing aircraft in its class, boasting an average operational reliability of 99.4 percent. Worldwide an A330 Family aircraft takes off or lands every 20 seconds.

Emirates Gets Benfica Fans on their Feet

mirates got Benfica fans cheering this week with a tongue in cheek activation at Estádio da Luz in Portugal that gave Benfica supporters a few pointers on how to share their passion for the club, the Emirates way. Moments before the huge derby match against rivals Sporting Lisbon, eight Emirates Cabin Crew made their way to the centre circle of the pitch and proceeded to give a very special Benfica supporter demonstration. Taking their cues from the traditional airline safety demonstration, the eight crew stood facing Lisbon football fans and gave an impassioned, witty and entertaining demonstration on how to support the club, including the placement of a scarf over the shoulders in a sign of “benfiquism”. Boutros Boutros, Emirates’ Divisional Senior Vice President, Corporate Communications, Marketing and Brand said this of the activity. “This activation is a perfect example of the way we like to connect with our customers through sponsorship. It was light-hearted, fun and combined our passion for football with Benfica supporters’ passion for their club. We wanted to take the opportunity to do something that the fans in the stadium would remember and we think this worked. We may even try an adaption of this on one of our flights and see how the passengers react.”

A First Flight View

Fazle Ghani Mian aptain Fazle Ghani Mian, the pilot at the controls of flight EK600 on 25th October 1985 shares his memories of that historic inaugural Emirates service to Karachi, and the subsequent growth of the airline in a short video message here. Emirates’ first aircraft - an Airbus A300 B4 and a Boeing 737 - arrived in Dubai on October 20th on wet lease from Pakistan International Airlines, and Captain Mian was amongst that pioneering team involved in the successful launch of Emirates’ inaugural services. He said: “I came to Dubai on the 1st of October 1985 and met with HH Sheikh Ahmed bin Saeed Al Maktoum and then Emirates Airline Managing Director Maurice Flanagan and their teams. We dis-

cussed the tasks ahead and how we wanted to proceed. On the 18th of October a group of 100 pilots, flight and aircraft engineers, maintenance staff, among others all came to Dubai to initiate the planning stages, and we began test flights from then on to ensure everything would operate to plan. I was also tasked to train UAE National pilots. They were trained in Dubai and got their commercial licenses from the Civil Aviation Authority in Pakistan. We had some great memories from the first flight. Some of the flight caps were oversized for some of our pilots and they looked quite funny with them on their heads. However, that was a minor detail. We pushed back and took off on time, and this signaled a great achievement for the airline in such a short period of time.” In the 30 year period since those early days recounted by Captain Mian, Emirates has grown to become the world’s largest international airline, with a reputation for innovation and service excellence. Emirates currently serve 147 cities on six continents. Its truly international workforce represents the diverse talents of passionate men and women from 160 countries, united in a common goal to deliver the best possible customer experience in every aspect of the business.

El Al Israel Airlines Orders 9 787 Dreamliners for $2.2bn

oeing and EL AL Israel Airlines agreed on an order for up to nine 787 Dreamliners, valued at more than $2.2 billion at current list prices. Three of the orders will be added to Boeing’s Orders & Deliveries website on November 5 and the remainder will be posted as further contractual requirements are finalised. EL AL will also lease six additional 787s from independent leasing companies as the Israeli-flag carrier looks to replace and grow its existing long-haul fleet, increasing capacity and providing greater route flexibility to and from its hub at Ben Gurion Airport, Tel Aviv. “I am proud to unveil today the largest aircraft acquisition program in the

history of EL AL. Our agreement to purchase 787 Dreamliners is a significant step forward in the optimization of our route network, enhancing passenger service and the overall flight experience,” said David Maimon, President and Chief Executive Officer, EL AL. “These aircraft are the latest and most advanced in the world and are efficient and economical. I am convinced that this move is a great opportunity to meet the high standard expected of us and continue the momentum in EL AL’s focus to provide our customer with maximum comfort, the newest and best technology and deliver a high standard of service on-board.”

EL AL has been an all-Boeing carrier since taking delivery of its first Boeing airplane in 1961 and currently operates a fleet of 22 737s, seven 747s, seven 767s and six 777s. “Boeing is proud of our long-standing relationship dating back to the delivery of the airline’s first 707 in 1961 and we are pleased to now count EL AL as the newest 787 customer,” said Boeing Commercial Airplanes President and CEO Ray Conner. “The Dreamliner is a perfect fit for EL AL’s medium to long haul routes. The addition of 787s to the EL AL fleet will enable it to grow its route structure, while providing more range and capacity with exceptional passenger comfort.”

Business Journal November 2-8, 2015

28 The World Bank End-Poverty Tool:

Surveys in Poorest Countries •Working with countries and partners, plan will ensure household surveys every three years in 78 countries

ddressing huge gaps in the collection of poverty data, the World Bank Group pledged today to work with developing countries and international partners to ensure that the 78 poorest nations have household-level surveys every three years, with the first round to be completed by 2020. Poverty-fighting efforts have long been constrained by a lack of data in many countries. The World Bank has identified 29 countries that had no poverty data from 2002 to 2011. Another 28 had just one survey that collected poverty data during that time. These gaps prevented analysts from identifying trends in how countries were making progress toward their goals, and posed a barrier to improving the lives of poor people. The announcement by World Bank Group President Jim Yong Kim offers key support to the organisation’s mission to end extreme poverty by 2030 and boost shared prosperity for the bottom 40 percent of people in developing countries. “We will not be able to reach our goal unless we have data to show whether or not people are actually lifting themselves out of poverty,” Kim said. “Collecting good data is one of the most powerful tools to end extreme poverty. We pledge, working alongside our partners in countries and international organizations, to do something that makes common sense and is long overdue: to conduct surveys in all countries that will assess whether people’s lives are improving.” As the world works to end extreme poverty in the next 15 years, it will be ever more important to have a solid foundation of data and evidence so that policies and programs reach people who have not benefited from strong growth since 2000. In a slowing global economy, governments must

Jim Yong Kim World Bank President invest in quality education, health, sanitation and electricity for all, alongside effective social insurance policies that protect the vulnerable—not as an afterthought, but as a core part of their growth strategies. Ghana Finance Minister Seth E. Terkper welcomed the announcement. “Our success in halving poverty over the last 20 years is built upon a solid foundation of quality, transparent household-level data through the Ghana Living Standards surveys,” Terkpersaid. “We welcome the World Bank’s efforts to ensure that every country has the same opportunities that we have had to gather the crucial information they need to improve the

lives of their citizens.” Kaushik Basu, Chief Economist and Senior Vice President of the World Bank Group added: “Data gives representation to people who may otherwise be marginalized and forgotten, hence our decision to greatly step up efforts to collect more and better quality data in developing countries.” The World Bank estimates the total cost of the initiative to be $300 million every three years, in addition to what countries are already spending on core data collection. These costs would be expected to be borne by a mix of countries’ own resources, donor funding and World Bank financing. The major expansion of household-level data collection will be discussed and coordinated with countries and partners in the months ahead. “The World Bank is committed to supporting countries in making this happen,” said Jan Walliser, Vice President for Equitable Growth, Finance, and Institutions at the World Bank Group. “We will work with our country partners to build capacity and ownership of this agenda, convene agencies and governments to

learn from one another, help set international standards that ensure high quality in every country, and mobilize financing so that no country has to choose between investing in its people

and collecting essential data.” Paving Way for Innovation Household surveys gather data not only on people’s income and consumption levels, but a host of other critical information that can help tailor outreach to those who need it most. Surveys are the most effective way to set a broad-based foundation of data on living standards, in key areas such as education, health, hunger, risk, sanitation, infrastructure, and others. Good price data are also essential to the measurement of living standards and poverty. From this strong foundation, it is possible to develop innovative ways of collecting data, including complementary approaches using mobile phones, satellite imagery, mapping, and sensors. With more tools, data analysts can get a fuller picture of roadblocks faced by people in poverty, and find ways to give them a chance at more prosperous futures. Recent work in Somalia and in South Sudan, where years of conflict and insecurity have hampered statistical efforts, and in Sierra Leone and Liberia where during the Ebola crisis, traditional face-to-face interviews were rendered impossible, are just a few examples where the World Bank worked with countries and partners to build on traditional data collection methods. These efforts and many others have enabled countries to better understand and tackle the most pressing issues facing their citizens.

Business Journal November 2-8, 2015

Maritime www.businessjournalng.com

VESSELS EXPECTED AT LAGOS PILOTAGE DISTRICT

Business Journal November 2-8, 2015

Entrepreneur www.businessjournalng.com

Start-up Snapshot: Ordering Meals Online in Abuja, Nigeria Launched in 2014, Food-i-like aims to provide a simple platform to order food from restaurants online in Abuja, Nigeria. The start-up was one of 10 selected to compete in the Nigerian arm of the Seedstars World competition this year. While many tech start-ups are operating from Nigeria’s business centre Lagos, this company is specifically addressing needs in Abuja. Biebele Somiari, Food-i-like’s co-founder, talks about launching and running the business. Kate Douglas

How did you finance your startup? e basically started out with funds from co-founders, family and friends. We have not raised any rounds yet, though we are hoping to raise a seed round soon. But from the investment enquiries we’ve gotten so far, it’s really impressive to see a rise of successful African tech entrepreneurs who are looking to invest in tech start-ups in Africa. The immense value they bring to the table is priceless. It’s always comforting to find angel investors in entrepreneurs who have walked the path before you, and speak your language from valuation to marketing channels. I think that’s the dream. If you were given US$1m to invest in your company now, where would it go? Marketing will be a priority of course, exploring both offline and online channels. Considering that only 2% of the Nigerian middle class shop online at least once a month, the need to continually invest in customer education, awareness engagement and customer acquisition is vital for Foodi-like.com, as much as it is for every other start-up in the space. Of course we will also invest in the team by hiring the right talent, and we all know talent doesn’t come cheap.

Thirdly we will invest in product development, including making our platform more user-friendly, increasing our fleet and deploying technology to manage the fleet to improve food ordering and the delivery experience for our customers. What risks does your business face? Phew! Yes, we face risk like any other start-up, and we constantly look out for them. For example risks around reaching the next milestone, be it product development, customer acquisition, raising next round, and so on. There is

also the risk of running out of money, whether we can scale quickly enough, and what to do about logistics. Mitigating these risks for us is firstly about acknowledging and owning them. We know our lives depend on living to fight another day as a startup, so we don’t ignore risks. We openly discuss them as a team, and use those discussions to fuel our motivation to succeed. The only way to find answers to these questions [around reducing risks] is by testing our ideas/hypotheses. We still go by the ‘release/deploy-observe-improve-repeat’ method.

So far, what has proven to be the most successful form of marketing? For a start-up with little or no marketing budget, this has been interesting. I can’t yet say there is one “most successful form of marketing” for us. But, considering more people are still offline rather than online, what has worked for us has been a hybrid strategy using social media, very basic brand advertisement, direct marketing and, of course, word-of-mouth from satisfied customers. We are still exploring other channels. Our partnership with restaurants

Ex-Kalahari.com CEO Discusses His Health e-Commerce Venture Justin Probyn

What was the inspiration for starting Juniva? s users of many of these vitamin, supplement and sports nutrition products we felt there was a shortage of quality unbiased information in the market available to us. The logical next step from there was to look at the best vehicle to provide these informed choices, and thus Juniva.com came into being.

What need is this platform addressing? Why would people purchase through Juniva instead of bricks and mortar stores? Walking into a store sometimes leads to walking out of the store with products that you don’t need or even worse, products that won’t provide the solution you are looking for – all because the sales rep was incentivised to move a particular product, or was not informed enough to provide the best

Juniva is a South African based e-commerce platform, founded by Gary Novitzkas, former CEO of the now defunct online retailer, Kalahari.com that was merged with Takealot.com. Juniva sells health and wellness items such as vitamins and supplements, as well as sports nutrition and weight management products. Launched in 2014, Juniva says it is different because it helps buyers make informed decisions when purchasing products that may differ in efficacy according to an individual’s physiological traits and exercise regimes. can be backed up. In addition, we understand that the products we sell ultimately run out and are inconvenient to replace – and therefore offer our “repeat and save” option where our customer’s products can be delivered every month to their home or office. Gary Novitzkas solution. Our customers know if the product is available through Juniva it is a trusted product, has been reviewed for efficacy and taste profile, and in some cases tested to ensure the label science is accurate and the claims that it makes

Who is your competition in the market? To some extent we compete with traditional retailers who also sell online. We compete because we use data to better understand our customers’ current needs and future requirements, and thus provide a more tailored solution to them. We also provide conven-

ience, education and very competitive price points. How are you driving traffic to Juniva? We generate traffic through the traditional digital channels like SEO (search engine optimisation), SEM (search engine marketing), display [advertising], affiliates, retargeting, social and mail, etc. Is the company profitable? The business takes two years to become profitable due to the upfront infrastructure requirements of an online retailer. How would you describe the

has been very successful as a channel. They are proud to be on our platform and are making money, so they gladly encourage their customers to use us. Describe your most exciting entrepreneurial moment The whole journey has actually been exciting. One moment I can’t forget was when we first started out. It was an experiment to see if this will work, if anyone wants our service enough to click on our blog site and call to place an order. While orders came in the beginning, they were few and far between. But every time someone placed an order there were high-fives in the room. In fact we had a dance to celebrate every order. Things have changed since then. Now it’s about how to deal with the volumes of orders and logistical challenges. But those early stages were really exciting times. Tell us about the biggest mistake you’ve made in your startup, and what you’ve learnt from it? We’ve made loads of mistakes, though I think that is allowed. One that comes to mind was in the beginning stage when we felt it would be nice to hire people with experience in areas like marketing and delivery logistics to help us. Well, let’s just say that we overpaid for grossly unmet expectations. Of course now we know better. So we learnt not to outsource what you should do as founders, especially when it has to do with interacting with users, at least in the early stages. Secondly, when it comes to hiring for a start-up, traditional experience has nothing on the sheer willingness to learn and execute. fitness supplement and sports nutrition market in South Africa? The South African vitamins, dietary supplements and sports nutrition market is estimated at R7bn (US$527m) and is predicted to grow at 6% CAGR (compound annual growth rate) – which is slightly ahead of international growth rates, although obviously off a much smaller base. Do you plan to expand into other African countries? Not at the moment. What are some of the major challenges you have faced as an entrepreneur? The biggest challenges tend to be around the market opportunity, and does it exist the way you think it does? I have found that the best way to do this is to find someone not related to you to part with his or her cash based on your prototype. Get customer feedback and use it to build your solution from there. The second challenge is to watch every cent you spend, especially on customer acquisition and understanding how that number relates to the life time value of that same customer. This will help you understand if you have a financial model that can turn into a business.

Business Journal November 2-8, 2015

Manufacturing

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IDC TechScape Offers Manufacturers Roadmap to Future Factory

he venerable factory is an important competitive weapon in the digital economy. Smart manufacturing programmes can deliver financial benefits that are tangible and auditable. More importantly, it transitions the production function from one that is capacity centric to one that is capability centric and able to serve global markets and discerning customers. A new IDC Manufacturing Insights report: IDC TechScape: Worldwide Smart Manufacturing Technologies, 2015, focuses on technology adoption within the industry for smart manufacturing and assesses key technologies that are driving evolution beyond the current industry technology best practices of today. IDC Manufacturing Insights groups the technologies involved in smart manufacturing into four main categories: 1. Data acquisition: Data acquisition involves the capture of information on the factory floor. This might include human-based recording via devices or unattended capture via sensors. 2. Connectivity: Relates to the data networking that moves data from the acquisition device to systems that process the information. The connectivity is bidirectional as data is also moved to the edge of the network. Connectivity includes both wired and wireless networks. 3. Analytics: Acquiring and moving data is an important foundation for the smart factory, but the most immediate value will be delivered in terms of how companies use that data. Technologies that help manufacturing firms understand what happened (retrospective), what is happening (perspective), and what might happen (predictive) will translate to a factory network that is

more responsive to market needs. 4. Actuation: Once the data is acquired, communicated, and analyzed, companies would like to initiate action without human intervention. If analytics represents the best opportunity for immediate value, this autonomic operational potential represents the greatest long-term value proposition. It will separate those that view factories as competitive weapons to deliver a better customer experience from those that see production facilities as a necessary operational burden. According to Robert Parker, Group Vice President and General Manager of IDC Retail, Energy, and Manufac-

turing Insights, “Whatever you call the vision — smart manufacturing, Industry 4.0, or the future factory — achieving the next generation of cyber-physical production requires a number of technologies to come together. In this IDC TechScape, we identify the key technologies, categorise their relative impact, and provide insight into how they should be deployed. Clients can use this report to build a more effective road map to the future factory.” The IDC TechScape model is designed specifically to capture progress in the adoption of emerging disruptive technologies, mainstream technology buyer alignment with current industry

best practices, and support technologies that promise to deliver operational advantages to organisations that choose to adopt them. IDC expects that manufacturing executives will use the IDC TechScape model to do the following: •Assess the progress of their own technology adoption efforts in comparison to the industry overall •Identify new technologies that should be added to their technology road map Add new insights to increase the robustness of their own technology decision framework

ACP, EU Partner to Support Investments in Africa, Caribbean, Pacific Regions

acilitating trade and market access for agricultural products, investing in value added agrofood chains and financing to facilitate agribusiness investments in countries of the African, Caribbean and Pacific (ACP) group were among the topics discussed at a conference organised during the Milan Expo 2015. The two-day event was attended by over 100 participants representing farmers’ organizations, development partners, financial institutions and the civil society. Philippe Scholtès, Managing Director of the United Nations Industrial Development Organisation (UNIDO), presented the organisation’s work in helping developing countries add value to their products and develop agribusinesses and agro-industries. “Through better organization and improvement of products, small farmers can reach new markets and more jobs can be created for young people,” he said. Chukwuma Ikechukwu Ezedinma from the UNIDO Office in Nigeria presented a UNIDO project that will help build staple crop processing zones in the country, which, he said, “can become a model for leveraging technical assistance and investments with development banks”. Phil Hogan, European Commissioner for Agriculture and Rural Development; Neven Mimica, Commissioner International Development and Cooperation; and Rhoda Peace Tumusiime, African Union Commissioner (AUC) for Rural Economy and Agriculture, voiced their support for the development of the agribusiness sector, especially driven by small farmers, in the ACP countries. The event was organised by the Directorate-General for Agriculture and Rural Development of the European Commission, in partnership with the AUC, the ACP Secretariat, UNIDO, the Pan African Farmers’ Organisation, the European Investment Bank and others.

Why US Manufacturing Sector is Facing Recession Sasha Orman

ll industries progress through boom and bust cycles, and the manufacturing industry in the United States is currently shifting downward. According to new regional index reports last week, manufacturing is down across the board in the US—all seven regional manufacturing purchasing manager’s indexes reported contraction. In other words, the industry is in a recession. This can be attributed to three key factors: a weakened energy sector, a decrease in investments from the mining sector, and a decreased demand from China that has lessened revenue from international trade. This decrease in demand in part has led to manufacturing outpacing sales. The report consults with expert an-

alysts who note that this contraction is not a fluke and is likely to continue in the near future: [Pantheon Macroeconomics’ Ian] Shepherdson thinks these conditions will persist, writing on Thursday that, “No one should be surprised from soft numbers in the industrial economy, regional or national. Just as the downshift in capex in the oil sector began to ease, the strong dollar and the slowdown in China’s industrial economy have bitten, hard, and likely will inflict more pain over the next few months.” But due to the industry’s cyclical nature, while the recession may be drawn out it will not last forever. Renaissance Macro analyst Neil Dutta said the industry will strengthen once again with time and with the upswing of trade: “Trade is an important driver of manufacturing activity since trade is dominated by manufactured goods.

Part of the weakness in trade is cyclical, given the slump in the global

economy. Monetary policy has eased globally in response to soft growth

and with a lag, this should boost activity.”

Business Journal November 2-8, 2015

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Trends Shaping Pharma Industry in Africa

his is according to Andrew Mitchell: President EMEA (Europe, Middle East and Africa) Life Sciences & Healthcare at DHL Customer Solutions & Innovation, who was speaking at the 5th annual DHL Regional Life Sciences & Healthcare conference held in Johannesburg, South Africa. He says this trend calls for global industry players to adopt smarter strategies in order to operate successfully across the continent. According to the Africa: A continent of opportunity for pharma patients1 report by McKinsey & Company, the value of Africa’s pharmaceutical industry jumped to $20.8 billion in 2013 from just $4.7 billion a decade earlier, and will be worth $40 billion to $65 billion by 2020. It also reports that between 2013 and 2020 prescription drugs are forecast to grow at a compound annual growth rate of 6% in Africa, generics at 9%, over-the-counter medicines at 6%, and medical devices at 11%. Mitchell says that when it comes to transporting medicines across Africa, there are many common challenges that the industry experiences, such as ensuring temperature-controlled en-

-Africa highlighted as a market with high potential for life sciences & healthcare companies -As growth in developed markets stagnates, companies in the life sciences and healthcare market are increasingly looking for growth in Africa. vironments in accordance to Good Distribution Practice regulations, cost efficiency, trade compliance and regulations, and innovation for continuous improvement – of which all are key to success. “We wanted to address changes affecting our industry at the conference,

and discuss how the industry can adopt the best supply chain strategies to capitalise on Africa’s growth potential and achieve regulatory compliance,” says Mitchell. The conference hosted representatives from leading pharmaceutical and healthcare companies to discuss the

latest trends, innovations and solutions impacting the Life Sciences supply chain, with a specific focus on Africa as a region with high growth potential. Hennie Heymans, Managing Director of DHL Express Sub-Saharan Africa, says that logistics has long been considered a key supporting function within the life sciences sector, but that its importance is rapidly growing in Africa due to the increasing relevance of pharmaceuticals in emerging markets. He says that there are various trends that are shaping the sector, one of which is urbanisation. “DHL anticipates pharmaceutical and medical device manufacturers to expand their capabilities into major African cities, eventually to emerging cities and even rural areas, and with this, there will be various approaches to distribution and logistics.” Heymans adds that e-commerce is also fundamentally transforming the supply chains for business-to-consumer (B2C)/ over the counter (OTC) life sciences markets, such as cosmetics, vitamins, contact lenses and nutrition, as well as business-to-business (B2B) markets, such as diagnostics and lab supplies. “It is believed that life science manufacturers will build up more direct-distribution channels to the end consum-

World Polio Day: UNICEF Cites Nigeria’s Achievement in War Against Polio

ever before in the history of polio have so few children in so few countries contracted the crippling virus – but we cannot rest until the number of cases is zero, UNICEF said on the eve of World Polio Day. “Progress to end polio is real and dramatic, with now just two countries in the world where the wild poliovirus has never been interrupted: Afghanistan and Pakistan,” said Peter Crowley, Head of the Polio Unit at UNICEF. “But – and it’s a big but – until all children everywhere are consistently and routinely immunised against polio, the threat remains. We cannot let down our guard; we have to keep going until there is not a single child anywhere who remains unvaccinated.” Just three years ago, Nigeria was the reservoir of more than half of all polio cases in the world. This year, for the first time in history, Nigeria has succeeded in interrupting transmission of wild poliovirus, and last month it was removed from the list of polio endemic countries. Nigeria’s remarkable achievement has brought the country and the African region closer than ever to being certified polio-free. In India, where thousands of children once suffered from polio-induced paralysis each year, there have been no cases in four years. Globally, there have been just 51 cases of wild polio virus since the be-

ginning of 2015, compared with 242 wild polio cases for 2014. These successes are a result of political will and government leadership in affected countries; the strong mobilisation and engagement of communities; the courage and commitment of front-line workers; and the combined,

co-ordinated efforts of the partners of the Global Polio Eradication Initiative – the Centers for Disease Control and Prevention, the World Health Organisation, Rotary International, the Bill and Melinda Gates Foundation and UNICEF. As part of its contribution to this In-

itiative, UNICEF delivered 1.7 billion doses of vaccine in 2014 and supported the training of tens of thousands of front-line workers in communities from Karachi in Pakistan to Kano state in Nigeria, helping to build trust in the vaccine among parents and communities. Other success factors

er, and will either develop their own e-commerce operations or distribute their products via third-party platforms.” Heymans says that the changes within the market and decentralised supply chains will lead to new transportation routes. “In certain parts of Africa, supply and distribution chain mechanisms still pose challenges, which range from inadequate or undeveloped infrastructures to a country’s specific regulations. Due to more complex supply chains, policy makers worldwide are enforcing stricter regulations for manufacturing and logistics, and customs clearance times and potential regulatory delays can influence a product’s ability to reach a laboratory or customer.” For pharmaceutical and medical device manufactures to gain a competitive advantage in Africa they need to have the ability to innovate and adapt to new regulatory standards and the distribution requirements of products, says Heymans. “Providers wanting to capitalise on the continent’s growth in this market should seek to partner with local providers who are able to successfully implement and manage complex supply chains while navigating the continent’s complex markets and challenges.”

About UNICEF UNICEF promotes the rights and wellbeing of every child, in everything we do. Together with our partners, we work in 190 countries and territories to translate that commitment into practical action, focusing special effort on reaching the most vulnerable and excluded children, to the benefit of all children, everywhere. have been the integration of additional life-saving interventions for children such as routine immunisation, nutrition, hand-washing with soap, and breastfeeding, into polio campaigns, particularly in the most under-served and high-risk areas. Despite this progress, recent vaccine-derived poliovirus outbreaks in countries like Lao-PDR, Ukraine, Guinea and Madagascar have underscored the risks that many countries continue to face due to low routine immunisation coverage. These outbreaks serve as a reminder of the vital need for intensified efforts to strengthen routine immunisation systems and address disparities in children’s access to basic health services. In Ukraine, for example, fewer than 14 per cent of children are immunised against polio. “We aim to bring a global halt to polio transmission by this time next year, but the only way to do this is for countries with low vaccination dates to re-double their efforts to reach every child, wherever they are and no matter how hard this may be,” said Peter Crowley.

Business Journal November 2-8, 2015

Economy

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‘Weaker Growth in Sub-Saharan Africa Amid Deteriorating Global Conditions’ Marco Pani IMF African Department

Economic activity has weakened markedly in sub-Saharan Africa, and the strong growth momentum of recent years has dissipated in quite a few countries, the IMF said in its regional outlook.

hile the business and macroeconomic environment has improved considerably over the past decade or so, other factors that underpinned strong growth— particularly high commodity prices and accommodative financing conditions—have become less supportive. The prices of many commodities exported by the region have fallen by around 40-60 percent in the past two years, and borrowing costs have risen amid a reassessment of global risk in anticipation of a U.S. interest rate hike. In addition, larger external and fiscal deficits weigh on some countries. As a result, while growth in sub-Saharan Africa is still stronger than many other regions, the IMF’s latest Regional Economic Outlook for Sub-Saharan Africa puts growth at 3¾ percent this year, even lower than in 2009 in the aftermath of the global financial crisis. The forecast for 2016 is slightly higher at 4¼ percent. Variation Across Region But despite the difficult overall picture, the report finds that there is considerable variation across the region (see charts below). In most low-income countries, growth is generally holding up, supported by infrastructure investment and private consumption.

shortages.

Countries such as Cote d’Ivoire, Ethiopia, and Tanzania are expected to grow at 7 percent or more this year and next. Other low-income countries, however are feeling the pinch from commodity prices, even though cheaper oil has eased their energy import bill. Hardest hit are the region’s oil exporters as falling oil prices have drastically reduced export revenue and forced a sharp fiscal adjustment. The oil producers account for about half of the region’s GDP and include the largest producers, Nigeria and Angola. Several middle-income countries, including Ghana, South Africa, and Zambia, are also facing unfavorable conditions, ranging from weak commodity prices to difficult financing conditions and electricity

Limited Scope to Counter Drag on Growth Savings have been modest during the recent period of rapid growth, leaving limited room to counter the drag on activity in the region or smooth the adjustment to the recent shocks. Many countries now have weaker fiscal and external balances than at the onset of the global financial crisis in 2008. And while in many cases this situation reflects countries’ efforts to address large infrastructure needs, it leaves them with fewer resources to contain the effects of the current downturn. For oil exporters in particular, fiscal adjustment is unavoidable in the face of a sharp and seemingly durable decline in oil prices. Fiscal policy in most other countries needs to balance development needs and debt sustainability, which will become increasingly difficult as higher interest rates and lower growth, adds to debt burdens.

On the monetary policy front, wherever the terms of trade have worsened sharply and the currency is not pegged, the study recommends that exchange rate should be allowed to depreciate to absorb part of the shock. Exchange rates have also come under pressure in countries where commodity exports do not play such a large role. Given the strong global forces behind these pressures, intervening here, too, would risk depleting scarce foreign exchange reserves. Accordingly, central bank intervention should focus on containing disorderly exchange rate movements. Monetary policy should respond only to second-round effects of exchange rate depreciations on prices and to other upward shocks to inflation. Improving Competitiveness, Reducing Inequality Spurs Growth Beyond these more immediate challenges, the Regional Economic Outlook also discusses, in two background studies, how longer-term

growth in the region can be supported by efforts to improve competitiveness and reduce inequality. The first study suggests that the region’s recent period of high growth and substantial trade integration, has also been accompanied by a widening of trade imbalances and a weakening of competitiveness, especially among commodity exporters. With some of the past sources of growth dissipating, the region needs to nurture new sources by increasing the sophistication of its exports and integrating into global value chains, which will only happen with greater competitiveness. The policy actions to achieve this objective depend on specific country circumstances, but progress can be facilitated by pursuing sound macro-economic policies, investing in infrastructure while keeping debt on a sustainable path, continuing to eliminate trade barriers, and improving the business climate. The second study considers the implications for sub-Saharan Africa of persistently high income and gender inequality. The region has among the highest levels of inequality in the world. With growing international evidence suggesting that persistent inequality can impede macroeconomic stability, the study finds that policies aimed at reducing inequalities to levels seen in some fast growing emerging Asian countries (for example by expanding access to education and health care) could potentially increase growth by one percentage point annually in sub-Saharan Africa. Carefully designed fiscal and financial sector policies and the removal of gender-based legal restrictions could also reduce inequality and improve long-term growth in the region, the study says.

Why India is Strengthening Economic Links with Africa Catherine Grant Makokera

his is a clear sign that India is stepping up its economic diplomacy with the continent under the new leadership and administration of Prime Minister Modi. The long-awaited meeting provides an opportunity to build on linkages that in some cases span centuries, and which are seeing a recent resurgence following the slowdown in the Chinese economy. To date, the India-Africa Forum has focused on areas such as trade, investment, food security and good governance. There will be no shortage of issues to be tackled this year, as India is becoming an increasingly important economic partner for most African countries. This relationship, unlike those with many Western countries, is based on South-South cooperation, people-to-people linkages and common development challenges. India also seeks to establish links based on co-operation for mutual benefit and principles such as state sovereignty,

non-interference and equality. The summit activities will include engagements between Indian and African business people and researchers on the margins of the official discussions. A recent paper published by the Institute for Security Studies (ISS) found that involvement from private stakeholders is critical if India and its African partners are to achieve the full potential of trade and investment linkages. Indian-organised business structures, such as the Confederation of Indian Industries, are already playing an important role in encouraging business-to-business connections with Africa. This includes high-level forums, such as the policy advocacy activities of the India-South Africa CEOs Forum, which identify opportunities as well as the barriers to Indo-African trade and investment. On the African side, most countries have an acknowledged apex business organisation at the national level to engage with the government on trade and investment, but which has limited interactions with partners such as

India. Significant resources and capacity constraints hinder the effective operation of these organisations, and the challenges to successful public-private dialogue are magnified at the regional level. There have been efforts to produce business platforms through African regional economic communities (RECs), such as the East African Business Council and the Economic Community Of West African States (ECOWAS) Business Council, but these remain in their infancy. The AU is establishing a business council that will interact on continental matters, in addition to a number of existing and new pan-African business initiatives. However, the increasing number of relatively weak organisations presents a challenge for effective engagement with partners such as India, as they suffer from legitimacy in terms of representation and mandate, as well as a lack of policy advocacy capacity and resources. Even South Africa, one of the most developed countries on the continent, suffers from challenges in encouraging

greater cooperation between the public and private sector. This includes the promotion of trade and investment links. A separate paper by the ISS examines ways to enhance these private sector interactions. It finds that initiatives such as the India-South Africa CEOs Forum mentioned above can potentially identify and assist in removing bottlenecks to trade and investment between the two countries. They can also provide a useful model for interactions at the continental level and could feed into the India-Africa Business Council, which will meet on the margins of the India Africa Forum Summit in New Delhi. While it is always difficult to generalise continental activities that largely take place at a bilateral level, there are some common objectives in India’s approach to Africa. The three notable areas discussed in the recent ISS paper are India’s search for new markets, for resource security, and for allies in multilateral negotiations – including at the International Monetary Fund (IMF), World Bank, World Trade Organisation and United Nations.

These are being pursued via trade and investment activities as well as the provision of grants, technical assistance and lines of credit. The roles of people-to-people linkages and civil society have been acknowledged as crucial for a successful partnership. It can be expected that India will announce some new initiatives in pursuit of these objectives at the upcoming summit. These will largely be stateto-state outcomes, but some space is also opening up for broader participation. Given the high profile of the summit, it could provide a useful focus for both Indian and African stakeholders with an interest in pursuing a people-centred perspective on issues of global governance. Civil society should also be included to represent its interests and ensure issues of sustainable development, transparency and good governance are taken up by Indian and African policy-makers. The ISS research papers on India-Africa and India-South Africa relations provide recommendations for enhancing the interactions between these partners.

Business Journal November 2-8, 2015

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Business Journal November 2-8, 2015

Stock Market

Business Journal November 2-8, 2015

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Digest

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Agricultural Transformation: Africa Begins Race for Market Growth

Dr. Akinwumi Adesina President African Development Bank

gricultural transformation is taking shape in some African countries, which have launched initiatives to boost the provision of essential services linked to the agriculture sector. This was the message shared during the opening day of a high-level agricultural summit dedicated to discussions about the sector’s transformation. The Democratic Republic of Congo (DRC), Rwanda and Senegal have launched initiatives similar to a fresh proposal by the African Development Bank (AfDB) for the development of “agricultural corridors” that would spur economic growth and development in Africa by creating seamless agricultural markets. AfDB President Akinwumi Adesina proposed the creation of the agricultural corridors to attract investments into the rural areas of Africa, currently under-served by essential services, roads, irrigation and finance, when he addressed the opening session of the “Feeding Africa” conference in Dakar

recently. More than 500 delegates, including top government officials, Central Bank Governors, Ministers of Finance and researchers involved in agriculture are attending the October 21-23 meeting on African agricultural transformation to plan how to re-direct useful resources to revitalise agriculture. “Industries will help to create economic zones in Africa,” the Bank President emphasised. “We must invest in quality rural infrastructure and create the agricultural corridors that would attract investors into the rural areas.” To attract new agricultural investments into rural areas, Senegalese President Macky Sall announced tax breaks and special status for private companies willing to invest in projects to improve agriculture in rural areas. “We need individual and collective action to modernize agriculture. We must avoid treating agriculture as a default activity or a by-chance investment,” President Sall said during the opening session of the joint conference organised by the AfDB and hosted by the Senegalese Government.

In his keynote address, Sall called for renewed international effort to modernise agriculture in Africa. He urged Finance Ministers and commercial banks to support efforts to modernise crop production. “African states have to make agriculture a priority. They have to allocate budgets because agriculture generates economic growth. Abundant harvests drive growth in other sectors and lead to record growth of exports. We need to have dialogue between leaders and bankers to support the processing of these goods,” Sall said. Augustin Matata Ponyo Mapon, Prime Minister of the Democratic Republic of Congo, said his country was investing in US $40 million in an industrial park aiming to improve the production of cereals for export.

The Government is also investing funds to build feeder roads to meet the

… African Finance Ministers Affirm Commercial Borrowing to Fund Transformation

eanwhile, African countries could borrow money internationally to invest in commercial agriculture to spread the range of manufactured products available within their economies and lead to an agricultural transformation, Ministers of Finance at Feeding Africa Conference in Dakar affirmed. Zambia’s Deputy Minister of Finance, Christopher Mvunga, said money borrowed commercially from the international financial markets could be spent on modernising agricultural infrastructure. Mvunga said Zambia was spending US $250 million out of the US $1.5 billion it has raised internationally from the issuance of sovereign bonds to fi-

nance the spread and diversification of agriculture. Zambia has been dependent on maize production to meet local demands, but experts warn over-dependence on the production of staple foods was hurting Africa’s agricultural transformation. “We are embarking on a process to transform our agriculture and move our economy away from its dependence on staple food production and the copper,” Mvunga told a high-level panel debate on addressing challenges facing African countries in modernizing agriculture. Zambia’s national agriculture policy emphasizes the need for policy changes to address weaknesses such as farmers’ low production capacity, research and development of new agriculture technologies and financial investments to

improve soil fertility, credit to farmers and irrigation infrastructure. The President of the African Development Bank, Akinwumi Adesina, said access to agricultural finance was possible from international development banks, such as the Arab Bank for Economic Development in Africa, but new measures were required, to ensure money spent on agriculture benefited farmers. Africa spends $35 billion annually on food imports – importing what it can produce – and yet posts $30 billion worth of foreign currency bonds to finance its development, Adesina noted. “By simply turning Africa into a food self-sufficient continent, this sort of money can be spent on domestic development without recourse to expensive international capital markets,”

he added. Adesina said commercial borrowing to finance agriculture through treasury bills and other instruments is possible, but warned that the impact of the commercial borrowing would not be felt unless countries sorted out the inefficiencies affecting the farmer’s access to subsidized farm equipment. Discussions at the Feeding Africa Conference, taking place from October 21-23 on the outskirts of Dakar, the Senegalese capital, are focused on attracting investments into the agriculture sector. The conference has successfully leveraged the policy shift amongst Finance Ministers and Central Bank Governors attending the event, to discuss how to effectively create financial instruments for agriculture.

demand for an industrialised agriculture sector.

“Africa is now ready to make agriculture a commercial activity and to promote the diversification of the African economies,” the Bank President emphasised in his opening speech at the conference. “Nothing is more important than access to food in quality and quantity.” The conference is positioning Africa to address its lack of potential in agriculture by addressing the obvious failures in the marketing of agricultural produce, creating efficient routes for food marketing and moving to meet the domestic food requirements before creating extra food for exports. With the decline in global commodity prices, African countries that rely on export of primary commodities, such as copper, face rising current account deficits and domestic financial imbalances. Adesina said with currencies devaluing, the cost of importing food is rising, which will drive up demand for nominal wage increases and put even greater pressure on public finances.

Business Journal November 2-8, 2015

Diplomatic Zone www.businessjournalng.com

India Dilemma: Arrest Sudan’s Bashir and irk Africa, or Ignore ICC? India is caught between interests in Africa – including a $1.4 billion deal with Sudan – and its desires for a seat on the UN Security Council.

Paula Rogo udanese President, Omar alBashir landed in India and was already causing a stir. The controversial leader, indicted for genocide and war crimes by the International Criminal Court (ICC) attended the India-Africa Summit in New Delhi last week where more than 40 African leaders gathered. But the ICC says that India is obliged to arrest and hand over President Bashir. India is not a signatory to the ICC but the court is citing a UN Security Council resolution to restrict Mr. Bashir’s travel. So the case appears to pit India’s ambitious goals in Africa against its aspirations to be a larger global player. “Although Indians and Africans comprise nearly 2.5 billion people, our nations continue to be excluded from appropriate representation in the institutions of global governance,” said India’s External Affairs Minister, Sushma Swaraj. For more than six years, Bashir has dodged the ICC’s warrants for his arrest – most recently in South Africa – and remains an embarrassing example of the court’s failure to compel African

states to comply with its laws. India says officially that it will be “fully compliant with its international legal obligations” when asked about the arrest of Bashir. But the ICC’s demand also puts India in a peculiar position since it both risks $1.4 billion in trade and investment with Sudan and broader displeasure from many African states who view the ICC negatively for its role on the continent. Since the ICC began pursuing cases in 2002, it has opened nine cases in eight countries – all of them in Africa – causing some African leaders to argue there is a bias, The Christian Science Monitor reports. “There are people who have the power to use international justice or international law to judge others and it does not apply to them,” said Rwandan President Paul Kagame in 2013. In 2013, the AU passed a resolution that no sitting African head of state should be tried before the ICC — a direct jab at the court’s warrants for the arrest of Kenya’s president Uhuru Kenyatta and his deputy William Ruto on charges of instigating violence in aftermath of the country’s 2007 election. The following year, the ICC officially withdrew its charges against Mr.

Omar Al-Bashir President of Sudan Kenyatta. A large blow to the ICC came in June when, during a visit to South Africa by Bashir for an African Union (AU) conference, South African authorities defied a local court that barred him from leaving. South Africa, unlike India, is an ICC signatory. The failure to arrest Bashir has created a domestic legal quandary, forcing the ICC to consider if South

Africa is in violation of the Rome Statute and deserving of censure by the UN Security Council. It is doubtful that India, which seeks a Security Council seat, wants a similar problem. India and Sudan, in fact, have had a long history. India was one of the first Asian countries to recognise Sudan and establish diplomatic relations with it. India is also the second largest exporter to Sudan after China, and some

Indian oil, gas, and construction firms operate in Sudan. The Sudanese leader is wanted on charges that include crimes against humanity in the country’s Darfur region. He has eluded the warrants since the first one was issued in 2009. ICC Prosecutor, Fatou Bensouda says that India has an obligation to hand the leader over. “By arresting and surrendering ICC suspects, India can contribute to the important goal of ending impunity for the world’s worst crimes,” she told reporters. India’s interests in Africa are prominently displayed at the conference last week: A growing need for more energy and commodities has forced India to ramp up trade with Africa, which has grown 20 times since 2000, and doubled in the last five years to reach nearly $72 billion in 2014, making India a top-five Africa investor. Summits like the one last week are not uncommon among countries that have interests in Africa. The United States for example hosted African leaders for the first time in 2014. And China, the Asian giant in Africa, will host its Sixth China-Africa Co-operation Forum in a few months. India sees this summit – its third and largest – as an opportunity to increase trade and economic links that will put it in direct competition with China’s billions.

…India Pledges $600m to Help Africa Welcoming them, Mr Modi described India and Africa as the “two bright spots of hope in the global economy”. “The hearts of 1.25 billion Indians and 1.25 billion Africans are in rhythm. We are united by youth two thirds of India and Africa are below 35. And, if the future belongs to the youth, then this century is ours to shape and build,” Mr Modi said.

Narendra Modi Indian Prime Minister

odi described India and Africa as the ‘two bright spots of hope in the global economy’ Indian Prime Minister Narendra Modi has announced $600m in assistance for development projects in Africa at a major summit in Delhi. More than 50 African leaders are attending the India-Africa Forum Summit, unprecedented in scale, in the Indian capital. Although India’s trade with Africa has more than doubled to $72 billion since 2007, it is still comparatively small.

The meeting is being seen as an attempt by India to improve ties with Africa. A record number of African leaders, including South Africa’s Jacob Zuma, Zimbabwe’s Robert Mugabe, President Sisi of Egypt and Sudan’s Omar al-Bashir are attending the summit - part of India’s big push to increase its presence in Africa. Reports say the summit represents the highest number of foreign dignitaries to descend on India since 1983 and is thought to be the biggest ever overseas gathering of African leaders.

The BBC’s Sanjoy Majumder in Delhi says India is using its historic ties with the continent, where a large number of Indians migrated during colonial times, to strengthen its economic links. India is interested in Africa’s natural resource while African countries want to benefit from Indian expertise in high-tech sectors such as IT and mobile phones. Much of central Delhi has been

shut down as the African leaders are being ferried across town in limousines and on Wednesday night, they turned out wearing colourful Indian turbans and jackets at an official dinner. The first ladies, in the meantime, are being taken sightseeing and given Indian cooking lessons as India pulls out the stops to make the summit a grand success, our correspondent says.

Business Journal November 2-8, 2015

Automobile

www.businessjournalng.com

VW Suspends Key Exec in Emissions Rigging Scandal

olkswagen has suspended its Head of Powertrain Electronics, Hanno Jelden, on suspicion of playing a key role in rigging software to cheat emissions tests, reports said. Jelden is the latest executive among more than 10 senior managers, including several top engineers, suspended as part of an internal investigation, Reuters reported, citing two people close to the matter. German weekly Bild am Sonntag said Jelden was under investigation by German prosecutors on suspicion of fraud. The paper cited VW sources. Jelden is a 22-year VW veteran with expertise in engine and transmission electronics as well as hardware and software control systems. He is suspected of reprogramming software to fool pollution tests in 2007 when the diesel engine at the heart of the emissions scandal was under development, Bild said in itsreport. Jelden was regarded as a brilliant engineer, Bild said. He has so far declined to tell company investigators

whether any VW Board Members knew of the manipulation, the paper said. Volkswagen declined to comment on the matter, and Jelden did not respond to emails seeking comment. Winterkorn cleared Former VW CEO Martin Winterkorn has been cleared by internal investigators of knowing about the emissions rigging, Bild said. Winterkorn first learned about the deception a few days before the U.S. Environmental Protection Agency (EPA) went public on Sept. 18, according to the paper. Winterkorn told investigators that he was made aware there was a “massive” problem with the EPA but he did not know it involved illegal software, Bild said. VW’s long-serving CEO resigned in September, saying he was stunned by the scale of the deception and that he was not aware of any wrongdoing on his part. German business magazine Manager Magazin reported that VW Group plans to record most of the costs of the scandal, which it sees exceeding 30 billion euros ($33.1 billion), at the VW brand, sparing its

Audi and Porsche divisions. VW said last month that manipulated software in its EA 189 diesel engine could be in up to 11 million models sold worldwide by its VW, Audi, Skoda, Seat and VW light commercial vehicles brands. The automaker plans to recall and refit 8.5

million vehicles in the European Union.

Daimler Benz Q3 Profit Surges on Opel Denies Violating EU Robust Demand in Europe, China Emissions Standards

aimler’s third-quarter operating profit jumped by almost a third as strong demand in Europe and China coupled with new product launches spurred its vehicle sales to a record. Adjusted earnings before interest and tax (EBIT) increased to 3.66 billion euros ($4.15 billion), Daimler said in a statement. Daimler stuck to its guidance for a significant gain in deliveries, revenue and EBIT, benefiting from new models such as the redesigned Mercedes A-class compact as well as the GLC and GLE SUVs, which all launched in September.. Mercedes is poised to overtake

Audi this year as the world’s second-biggest luxury-car maker and aims to close the gap to segment leader BMW by the end of the decade. Mercedes eclipsed Audi by 28,474 in nine-month vehicle sales. Daimler’s third-quarter return on sales from ongoing business at Mercedes-Benz Cars division rose to 10.5 percent from 8.5 percent a year earlier, exceeding its goal. The company said third-quarter sales at Mercedes-Benz Cars increased by 18 percent to 508,400, the best quarterly result to date. Western Europe, where sales grew 19 percent, was the main growth driver, with volume also increasing by 5 percent in the U.S. and 39 percent in China.

Daimler is “on a really good path,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler. “Looking ahead into next year, the cars division will continue to perform strongly, with the new E class starting sales.” China Boost Mercedes’s sales momentum in China continued to outshine both BMW and Audi, with Mercedes deliveries soaring 31 percent this year through September despite a stock market rout and cooling economic growth that combined to leave Chinese customers wary of buying new cars. Mercedes’s boom in China, where it has lagged competitors in the past, compares with a 2 percent gain for BMW and nearly level sales for Audi. Daimler did moderate its expectations for the global auto market because of China, however, saying it now expects demand there to rise only slightly. Higher industry wide sales in North America and Europe will help keep worldwide car-buying at about the same level as last year, the company said. At the Daimler Trucks Division, hurt by a slowdown in Brazil, the company said it expects sales to rise only slightly this year after previously guiding for a significant gain.

eneral Motors’ Opel Division denied violating European pollution standards after green activists claimed the automaker’s Zafira minivan had excessive NOx emissions. A Zafira with a 1.6-liter diesel engine had NOx emissions up to 17 times higher than the Euro-6 limit, Germany’s environmental lobby group DUH said, citing tests carried out by the University of Applied Sciences in Bern, Switzerland. The Zafira met a Euro-6 limit of 80 mg/km of NOx when its emissions were measured on a test bench with two wheels running. But with the rear wheels also turning along with the front wheels the car exceeded the NOx limit by a factor of 2 to 4, DUH

said. DUH said it did not have “a technically plausible explanation” for the huge emissions difference. It said it has handed over the testing results to the German motor transport authority (KBA) with an urgent request to re-test the vehicle. Opel said the results were “false and unfounded.” It said its engineers have retested a Zafira with a 1.6-liter Euro 6 diesel engine on a two-roller and a four-roller test bench and it complied with the legal limits in tests with twowheel and four-wheel setups. This was “the only result to be expected” because whether or not the rear wheels are in motion has no influence on the emission systems, Opel said in a statement.

November 2-8, 2015

“The good news (for Nigeria) is that even under a low oil price regime, opportunities exist and those opportunities deserve financing despite the flight to safety and quality.” Victor Eromosele CEO ME Consulting

Entrepreneurship:

The Lonely Road to Sustainable Financial Future (2)

I have a confession!

honestly did not plan to pen Part 2 of this article (above) l did last week. But the response from our readers was overwhelming and many requested a follow-up. The message is very clear: Many Nigerians are eager to leave paid employment behind and plot their own destiny on their own terms. Even with all the bumps and spikes in the Nigerian business environment staked against entrepreneurs and small business owners, many still consider the Entrepreneur Route as the best route to their financial stability and future. A job is a job. A business is a business! It would be pertinent at this stage to look at key factors that would be of profound interest to existing and potential entrepreneurs. •Dangerous Loan Do not take a loan from a Nigerian bank to start a business. It is dangerous to your personal health and financial health of your business or enterprise. Such enterprise would be dead on arrival-even before you open shop!

Nigerian banks are not small business-friendly or entrepreneur-friendly. Our banks prefer to package loans for oil companies, multinational firms and importers of containers from China because they are in business to make quick money or earth-shaking returns which small businesses or entrepreneurs cannot generate for them in the short-term. The naked truth is that our banks are not structured to support a startup from Conception, Birth, Infancy to Adulthood. They prefer doing business with ready-made businesses that can generate huge interests on investment as quickly as possible! That partly explains why the Indians are making it big in Nigeria--they source credit from their home or international financial institutions at between 2.5 and 3 percent interest rate whereas Nigerian enterprises sweat on a benchmark of 22 percent, not counting Management Fees, Processing Fees and other sundry hidden charges that would ultimately Kill & Bury a new enterprise from Day One! It clearly becomes a non-level playing field for local enterprises, leaving the Indians as Kings of the Mar-

ket-right here in Nigeria. Looking for money for your startup? I would suggest three tested options: your personal savings, support from family and support from friends. The only factor at stake here is your credibility and honour to do well in your chosen line of business and pay back-Without Interest! •The Line of Business This factor ought to come first in the entrepreneurial hierarchy, but l deliberately chose to sound the money alarm first-lest somebody commit suicide even before starting out. The basic rule is to do what you love, where you have market experience or core competence. The reason is simple-doing that will enable the enterprise to take off easily without formal training or incubation. On the other hand, jumping into a business you do not love doing or do not have any form of experience or expertise means you are in it solely for the money. The success rate of such businesses is very small. The success rule is simple: stick to what you know-it brightens your prospect of market success or breaking even.

•Human Factor Naturally, nobody runs an enterprise alone. You need people to work with to realise the goal of the business. A major challenge of human capital in Nigeria is the quality of manpower available, especially for a start-up. A start-up in the sense of having the capacity to attract, pay and retain the right caliber of quality people, who in most cases, are in competition with other employers. In a typical demand and supply scenario, the few quality people are also wanted by other firms, maybe with a better working condition. The best rule is to engage those you can pay regularly without sweat and their number must be commensurate with your labour budget. Secondly, multi-task-to reduce the number of employees at the start-up stage. For instance, one employee can handle two or three related tasks instead of engaging three persons for the three functions. It is a smart way of reducing overhead and maximising value from the available hands. •The Competition If your business or enterprise is a monopoly--goodluck to you.You can set the terms and parameters of the

business and market right from your bedroom without losing sleep. Reason-the market has no choice but patronise your product or service as the only or sole provider. But if there are other providers of the same product or service, then you have competition and the game changes dramatically. Competition is both a challenge and opportunity. It is a challenge because you must contend with other providers of the same product or service. But it becomes an opportunity because it will bring out the best in you in terms of innovation, creativity and customer service. The rule is very clear: you either beat the competition and remain in business or the competition will beat you to death! And the corporate graveyard is filled with tombstones of businesses that failed the rule. So-what is the solution? Provide the same product or service in a different way, with added value at a cheaper price through better customer service. Folks-- it seems l have run out of space. Well, the conversation continues next time on another burning (without fire) issue.