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VISA: The Future of Digital Payment Security Demarketing: The Return Of Old Demon In Banking Sector

RUSSIA 2018: The $10bn World Cup Tournament

Emefiele: THE WAR AGAINST FOREX VOLATILITY 44th AIO Conference Kampala, Uganda

Mohammed Kari NAICOM Tope Smart NEM INSURANCE Oye Hassan-Odukale LEADWAY INSURANCE Kola Adedeji NIGER INSURANCE Funmi Omo AFRICAN ALLIANCE INSURANCE

REGISTER NOW www.commercialriskonline.com/events/l

UPCOMING EVENTS 2017 RISK FRONTIERS AFRICA Understanding the new normal

This year’s series of African events will focus on the recent major shifts in the global political landscape, and its impact on Africa, as well as the continuing threats to African businesses. As always, these dynamic events will include workshops hosted by industry experts.

TO P I C S TO I N C LU D E :

S U P P O R T E D B Y:

Cyber risk

College of Insurance – Kenya

Political risk

Riman (Risk Managers Association of Nigeria)

Elections and political violence

AERMP (Association of Nigerian Enterprise Risk

Reputation

Management Professionals)

Regulation

Rimson (Risk Managers Society of Nigeria)

Currency risk

Nigerian Brokers Association

Supply chain risk

East African Brokers Association

Renewable energy

Kenyan Association of Brokers

Parametric insurance

Association of Kenya Insurers

Resilience

IISA (Institute of Insurance Southern Africa) IRMSA (Institute of Risk Management South Africa)

RISK FRONTIERS SOUTHERN AFRICA

RISK FRONTIERS WEST AFRICA

RISK FRONTIERS EAST AFRICA

6 July 2017 Gaborone, Botswana

18 October 2017 Lagos, Nigeria

3 November 2017 Nairobi, Kenya

Contents

PAGE

32 35 AVIATION

06 NAICOM: Regulat-

ing Insurance Sector for Strategic Growth

10 Enhancing

Insurance Contribution to Financial Inclusion

16 VISA: The Future

of Digital Payment Security

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

4

How African Airlines Achieved 33.5% Freight Rise in March FASHION &STYLE

Fashionomics Africa: Outlook for 2017

38

Lagos Bureau Abraham Adewole

PH Bureau Amaechi Okonkwo

Digital Consultant Bamidele Owotoke.

Abuja Bureau Solomon Nwachukwu

Aba Bureau Larry Akunne

Designs Kelechi Okoro

Kaduna Bureau Haruna Mohammed

Head of Marketing/Advert Elvis Ebigwu

Logistics Consultant Godspower Cookey

Business Journal May 2017

23 IEA: Global Oil

Discoveries, New Projects Lag in 2016

PAGE

12

28 COUNTRY REPORT

18 BANKING

The Return of Old Demon in Banking Sector

26 MEDIA, PR, ADVERT The Africa PR Industry in 2017 Secretary/Admin Latifat Adedayo

Ademola Akinbola Muideen Ibrahim

Body of Analysts Haniel Ukpaukure Chris Okeke Ola Gam-Ikon

Board of Editorial Advisers Dr. Justus Uranta Engr. Titi Omo-Ettu Mr. Chike Mokwunye Mr. Chris Uwaje Mr. Gbolahan Olutayo

Business Journal May 2017

5

Conference

The 44th African Insurance Organisation (AIO) Conference & General Assembly Kampala, Republic of Uganda May 21-24, 2017 THEME: Furthering The Financial Inclusion Agenda of African Nations Through Insurance Yoweri Museveni, President of Uganda

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Business Journal May 2017

Prisca Soares

Secretary-General African Insurance Organisation (AIO)

The conference and General Assembly of the African Insurance Organisation (AIO) is an annual event which brings together insurance professionals from all the continents to discuss issues on which insurers need to focus. This is in line with one of the objectives of the AIO – to develop a healthy insur-

ance sector in Africa. An average of 850 participants attended the last three conferences.

This year’s conference is holding from 21st to 24th May in Kampala, Uganda – the Pearl of Africa (in the words of Sir Winston Churchill). It has been 18 years since the country hosted the AIO conference and I believe that many would want to find out how the local insurance industry has grown since then.

The theme of the conference is “Furthering the Financial Inclusion Agenda of African Nations through Insurance.” With the exception of

South Africa, followed by Namibia and Mauritius, the insurance penetration in Africa is extremely low, hence the aptness of the theme.

Experts drawn from different countries will examine several topics in the light of this theme.

As usual the conference presents an excellent opportunity for networking and for the various professional associations to meet and discuss matters of mutual interest.

Outside the conference hall, the adventurous participant is given a chance to discover the breathtaking beauty of Uganda.

Message from Chairman, Local Organising Committee Alhaji Kaddunabi Ibrahim Lubega

Chief Executive Officer Insurance Regulatory Authority Of Uganda

On behalf of the Uganda Insurance fraternity, the Government of Uganda and the people of this beautiful country, I welcome you to the Pearl of Africa at the occasion of the 44th AIO Conference and General Assembly hosted at the Common

Wealth Speke Resort Munyonyo from 21 -24, May 2017.

The theme of this year’s conference is “Furthering the Financial Inclusion Agenda of African Nations through Insurance”.

Financial inclusion, as you are all aware is a concern to all of us and the conference will give us an opportune time to reflect on what we need to do to advance to this

desired end.

I also, in equal measure, invite you to come and enjoy Uganda’s stunning scenery, abundant wildlife, birds, and a refreshing climate.

Come and get a feel of excellent service from the world’s greatest hospitable people and unique culture.

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ProďŹ le

NAICOM: Regulating Insurance Sector for Strategic Growth bout National Insurance Commission (NAICOM) The National Insurance Commission is a statutory agency of the Federal Government of Nigeria established by law to regulate and supervise the Nigerian insurance sector.

The Commission derives its regulatory powers from the National Insurance Commission Act 1997 and the Insurance Act 2003.

The principal object of the Commission is to ensure effective administration, supervision, regulation and control of insurance business in Nigeria.

Accordingly, insurance/reinsurance companies, Insurance Brokers, Loss Adjusters and Agents fall within the regulatory purview of the Commission.

A

VISION To be among the leading regulators of the insurance sector in the emerging markets

MISSION To conduct effective supervi-

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Business Journal May 2017

Mohammed Kari Commissioner for Insurance, Federal Republic of Nigeria sion of the Nigerian Insurance industry for the attainment of a

high ethical standard needed to position the industry as a leading

market in the global economy.

CORE VALUES Transparency, Integrity and Efficiency (TIE)

Functions and Powers of the Commission The principal object of the Commission is to ensure the effective administration, supervision, regulation and control of insurance business in Nigeria.

HISTORY The first major step at regulating the activities of Insurance business in Nigeria was the report of J.C. Obande Commission of 1961, which resulted in the establishment of Department of Insurance in the Federal Ministry of Trade and which was later transferred to the Ministry of Finance.

The report also led to the enactment of Insurance Companies Act 1961, which came into effect on 4th May 1967.

The 1961 Act focused mainly on the activities of direct Insurers, made provisions for Registration and Record keeping. In 1968, Insurance Companies regulations was put in place to facilitate the implementation of Act No 58 of 1961 which then classified Insurance business into different classes for registration purpose and relevant forms for record keeping.

The Insurance Decree No 59 of 1976 was enacted putting together the provisions of the various laws. The 1976 Decree among others made the following provision; Condition for authorisation of Insurers, Mode of operation, Amalgamation and Transfer, Administration and

Enforcement, Penalties.

The Insurance Decree No 59 of 1976 constituted the first All-embracing Law for the regulation and Supervision of Insurance business in Nigeria.

In 1968, concern was given to life Insurance business and it led to the enactment of Decree 40 of 1988 which made provisions among others for Assignment of Life Insurance Policy, named beneficiary on Life insurance policy document.

The Federal Government of Nigeria promulgated the Insurance Special Supervisory Fund (ISSF) decree 20 of 1989 to strengthen the manpower need of the Insurance Supervisory Board. That decree mandated all insurance companies to contribute 1% of their gross earning to the Fund.

Decree No 58 of 1991 was enacted improving provisions of Decree No 58 of 1979 and No 40 of 1988.

The major highlights of 1991 Decree include; increased paidup share capital of insurers and Re-insurers in respect of non-life business and life business respectively, compulsory membership of trade associations; management of security fund by NIA; Practice of no-premium, no-cover.

In 1992, the Insurance Special Supervision Fund decree No 62 was enacted, establishing a body known as National Insurance Supervisory Board, bringing out Insurance supervision outside core civil service, changing designation of Chief Executive from Director of Insurance to Commissioner for Insurance and setting up the Board of Directors to oversee the affairs of the established Body.

All this provisions were made to attract high level manpower.

The provision of Decree No 62 of 1992 and 58 of 1991 were re-

viewed for effective supervision and efficient Insurance market, bringing into enactment Decree Numbers 1 & 2 of 1997, National Insurance Commission and Insurance Decree respectively.

The following provisions were made in reviewing decree No 62 of 1992, decree No 1 of 1997; change of name from National Insurance Supervisory Board to National Insurance Commission, Establishment of Governing Board, Staffing, Source and application of funds, control and management of failed and failing Insurance companies, supervisory functions and powers.

Decree No 58 of 1991 was improved on with decree No 2 of 1997 in the following areas; by raising the paid up share capital for different categories of Insurance companies, qualification of Chief Executive, Insurance of Government properties and so on.

FUTURE PROSPECT As the financial sector in Nigeria took a turn towards dynamism via a recapitalisation process, first in the banks, the insurance industry under the direction of the National Insurance Commission underwent a holistic recapitalisation process that ended with a more robust insurance industry characterised by players grouped into key categories according to level of capitalisation.

As a result, the Nigeria insurance industry has been categorised into four tiers which are as listed: • Insurers & Reinsurers • Brokers • Loss Adjusters • Agents

Business Journal May 2017

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Profile

NEM Insurance Plc History NEM INSURANCE PLC started insurance business in Nigeria in 1948 through the agency of Edward Turner & Co. It became a Nigerian branch of NEM General Insurance Association Limited of London in 1965.

Incorporated in 1970 as a Nigerian company in compliance with the Companies Decree of 1968, the company became quoted on the Nigerian Stock Exchange in 1989 following the privatisation by the Federal Government of Nigeria.

The company, which has contributed immensely towards the growth of Insurance Industry in Nigeria, was into Life and NonLife business.

Following the recapitalisation exercise in 2007, the company merged with Vigilant Insurance Company Limited to transact all classes of General Insurance.

The company has expanded its operations into the West African Sub region, with the successful registration and commencement of business of its former subsidiary, NEM INSURANCE (GHANA)

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Business Journal May 2017

LIMITED in May, 2009.

The subsidiary is now merged with Regency Alliance to form Regency Nem Insurance Ghana Limited in September 2016 due to recapitalisation requirement.

A new member, NEM ASSET MANAGEMENT LIMITED was also added to the Brand earlier in March, 2016.

MISSION STATEMENT • To build a customer satisfying insurance institution that is passionate about adding value to the interests of all stakeholders.

CORPORATE CORE VALUES • • • • • •

HUMILITY INTEGRITY DISCIPLINE EMPATHY EXCELLENCE COURAGE

CLASSES OF INSURANCE AVAILABLE NEM Insurance Plc. was licensed to transact all classes of General Insurance viz.: • MOTOR VEHICLE INSURANCE

Tope Smart Managing Director, NEM Insurance PLC.

• BURGLARY AND HOUSEBREAKING INSURANCE • FIRE & SPECIAL PERILS INSURANCE • CONSEQUENTIAL LOSS • MARINE INSURANCE • ENGINEERING/ CONTRACTORS ALL RISKS/ ERECTION ALL RISKS • EMPLOYER’S LIABILITY INSURANCE

• GROUP PERSONAL ACCIDENT • HOUSEHOLDERS/ HOUSEOWNERS INSURANCE • COMPUTER/ELECTRONICS INSURANCE • MONEY INSURANCE • GOODS-IN-TRANSIT INSURANCE • GUARANTEE POLICIES/BONDS • OIL & GAS INSURANCE • TRAVEL INSURANCE • RENT ASSURANCE

REINSURANCE TREATIES The Company has Treaty Reinsurance arrangements with Africa Reinsurance Corporation, Continental

Reinsurance Company & WAICA Reinsurance Pool and Swiss - Reinsurance Pool.

OFFICE LOCATIONS The Principal Office of the company is 199, Ikorodu Road, Obanikoro, Lagos.

We have branches in Garki Abuja, Wuse – Abuja, Akure, Apapa, Calabar, Ibadan, Jos, Kaduna, Kano, Lagos Mainland, Onitsha, Osogbo, Port Harcourt, Warri, and Agency Offices in Benin City, Enugu, Lagos, Owerri and Zaria.

NEM Insurance Plc also has an interest in Accra, Ghana, while a related one, NEM Asset Management Limited has been added in Lagos, Nigeria.

SHARE CAPITAL AS AT 31st DECEMBER, 2015 Authorised share capital: Paid-Up Capital Shareholders’ Fund

N 4.2 billion N 2.6 billion N 6.2 billion

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Cover

Emefiele: The War Against Forex Volatility he Central Bank of Nigeria (CBN) has a big headache: volatility of the forex market.

As oil price began to slide in the international market, the value of the Nigerian currency, Naira, followed suit, defying all life-saving measures by the regulator.

And as the outcry rose beyond a normal threshold, the bank was finally forced into the trenches to rescue the Naira from the fangs of major international currencies to save the economy from collapse.

For Mr. Godwin Emefiele, Governor, Central Bank of Nigeria, his grey hairs began to multiply geometrically from the middle of 2016 when the Nigerian government formally announced that Nigeria had indeed descended into economic recession.

That announcement by Finance Minister, Mrs. Kemi Adeosun, was not really a surprise to market watchers but its sentiment fed into an already volatile oil price market with attendant consequences on foreign exchange earnings and value of the Naira.

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Business Journal May 2017

The Naira Free-fall And from official rate of N150 to a dollar, the Naira suffered a string of exchange-rate losses, free-falling to N517 to a dollar at a point at the parallel market, creating wide-ranging distortions for operators in the Nigerian dollarised economy.

The Pains Several sectors in Nigeria have encountered serious operational issues due to the forex crisis.

Operators in the manufacturing sector said the situation led to shutting down of 272 firms as well achieving less than 20 percent capacity utilisation in 2016 And in a report, the CBN stated that Purchasing Managers Index (PMI) of below 50 percent was achieved in the productive sector between the months of January to November 2016, which indicates industrial decline.

Indeed, Mr. Frank Jacob, President, Manufacturers Association of Nigeria (MAN) lamented that the plight of operators in the manufacturing sector was made worse by the situation,

leading to a loss of over N500 billion in 2016.

In addition, Mr. Hamma Kwajaffa, Director-General, Nigerian Textile Manufacturers Association also expressed worry that his members were moving head-long into extinction as they were unable to gain access to the estimated $660 million set aside for them at the official interbank market.

To support the position of Kwajaffa, Mr. Shehu Mikail, President, Constance Shareholders Association of Nigeria: “The CBN should harmonise exchange rate like what obtains in

Cover

advanced countries. This is imperative because a single exchange rate structure allows influx of Foreign Direct Investments (FDIs), as investors will be encouraged to put money in various sectors of the economy. There is nowhere in the world you will find different exchange rates. It is always a single rate. It is only in Nigeria that you see oil marketers, manufacturers, importers and even travellers getting forex at different rates.”

The forex challenge also affected the ICT sector as the official PC shipments to Nigeria fell 57.1% year on year in 2016 to total 156,511

units, according to the latest figures compiled by International Data Corporation (IDC).

"Nigeria's currency – the Naira – has been losing considerable value against the U.S. dollar for a number of years now," says Babatunde Afolayan, a Senior Research Analyst at IDC West Africa.

"To make matters worse, the government excluded IT products from accessing foreign currencies at the interbank rate, pushing channel partners to obtain foreign currencies from the unofficial market, where rates are typically 40–50% higher."

The country's poor economic performance goes hand in hand with the tumbling value of the Naira, with low crude oil prices and on-going militant and terrorist activities further compounding the issue. Afolayan says such factors have significantly weakened the purchasing power of end users, resulting in low demand for PC products.

"Such efforts are expected to drive a recovery of sorts in Nigeria's PC market," says Afolayan. "We anticipate a leveling off in 2017 as foreign exchange rates stabilise and IT decision makers begin to renew spending as most of their products will have passed the end of their life-spans. IDC forecasts that this relatively flat growth in 2017 will be followed by a much stronger year-on-year increase of 59.9% in 2018."

The Rescue War As the forex crisis intensified, the public pressure on CBN also increased, forcing the regulator into a rescue mission comparable to warfare.

The CBN embarked on periodic dollar deployment in tranches of $180 million, $230 million etc to

The CBN should harmonise exchange rate like what obtains in advanced countries.

Business Journal May 2017

13

"We anticipate a leveling off in 2017 as foreign exchange rates stabilise and IT decision makers begin to renew spending as most of their products will have passed the end of their life-spans.

ensure dollar availability in the market, ease the pressure on the Naira and shore its exchange rate to a level of stability.

At the last count, the regulator says it plans to inject over $4.6 billion to support the Naira exchange rate in relation to major international currencies.

Future Fate of Naira Even as the CBN intervenes to protect the Naira, the lingering question is the future fate of the Nigerian currency in a market forces (demand-supply) scenario without CBN dollar injections.

For while the Bretton Wood institutions (World Bank & IMF) insist on devaluation to get the true market value of the Naira, the Buhari administration says capital ‘NO’ to devaluation.

And then another question: for how long will the CBN continue to defend the Naira in the forex market?

The Rescue Mission As the forex crisis intensified, the public pressure on CBN also increased, forcing the regulator into

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Business Journal May 2017

a rescue mission comparable to warfare.

The CBN embarked on periodic dollar deployment in tranches of $180 million, $230 million etc to ensure dollar availability in the market, ease the pressure on the Naira and shore its exchange rate to a level of stability.

At the last count, the regulator says it plans to inject over $4.6 billion to support the Naira exchange rate in relation to major international currencies.

For Emefiele, the commendation from President Muhammadu Buhari on the stability in the foreign exchange market as a result of CBN’s strategic intervention remains a clear Vote of Confidence on the measures taken so far by the apex bank to stem uncertainty in the forex system.

And the CBN chief was quick to bask in the presidential approval: “Basically, as expected, what we normally do is from time to time, to brief the president on activities at the Central Bank of Nigeria, particularly this time as it relates to the efforts that the central bank is making to stabilise the FX market.

And we briefed him regarding the activities so far and he was very delighted to hear that the market is stabilising at the level that it is right now at between N380 and N385 on the parallel market.”

Emefiele painted a picture of forex stability and access: “Our responsibility as the central bank is to do what we are doing at this time. Nigerians or importers who need FX to do business need to have access to it and given the fact that we are able to increase our FX revenue, the natural thing to do is to make it available to those who need it to import or to carry out eligible transactions.”

Our Products And Excellent Services Will Meet Your Needs Family Insurance Policyholders

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Registered Head Office: 112, Broad Street, P.O.Box 2276 Lagos.

Tel: 08066309476, 08066325672, 07032294082, 0700AFRICALLIANCE e-mail: info@africanallianceplc.com, website: www.africanallianceplc.com CORPORATE HEAD OFFICE: 61, MARINA LAGOS “Authorised and Regulated by the National Insurance Commission {RIC - 003 (L)}” ABA 62, Aba/Owerri Road, Aba Tel: 08066985111

ABAKALIKI 26, Water Works Road, Nwagu Plaza, Abakaliki Tel: 09083373309

ABUJA 79, Adetokunbo Ademola Crescent, Wuse II Abuja Tel: 09-7805807 08036049269

ASABA 455, Nnebisi Road, City Complex Plaza Asaba Tel: 08060173648 08101050626

ASPAMDA Block 14, Aspamda Trade Fair Complex, Lagos Tel: 01- 4543634

AWKA Block C, Millenium Plaza, Beside Anambra State University Teaching Hospital, Awka Tel: 08183744930 07037211932

BENIN 140, New Lagos Road, Benin City Tel: 052-290598 08025376625

CALABAR Plot 38, MCC Anasa Road, Calabar Tel: 087-291121 08026208433

ENUGU 4, Ridge Way/Station Road State Secretariat, GRA Enugu Tel: 042-293787 080321801920

IBADAN 1, Adekunle Fajuyi Rd, Dugbe Federal Mortgage Bank Building, Ibadan Tel: 08052233313 02-2914330

IKEJA 107, Allen Avenue Ikeja, Lagos Tel: 01- 4540592

ILUPEJU/TAKAFUL 34, Association Avenue Ilupeju, Lagos Tel: 01-4545362 09097984100

JOS 22, Ahmadu Bello Way, Opp. AP Filling Station Jos Tel: 07032697411

KADUNA 1st Floor, 5D Kanta Rd, EK House Kaduna Tel: 062-887047 08065724410

KANO 13A, Umma Dantala House, Muritala Mohammed Way, Kano Tel: 064-431993 08065496784

ONITSHA 109, Upper New Market Road by D.M.G.S, Roundabout, Onitsha Tel: 046-283776-7 08039366367

PORT HARCOURT 245, Aba Road, Opp. First Bank By 1st Artillery Junction, Port-Harcourt Tel: 084-302140 07039558890

UYO 6, Aka Itiam Street, Off Oron Road, Uyo Tel: 08169158047

Business Journal May 2017

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TOVOT NIG. PRESS: info@tovotpress.com.ng

Opinion

Ekerete Ola Gam-Ikon 08025850344 olagamola@gmail.com

Enhancing Insurance Contribution to Financial Inclusion t was during the summer of 2008 and the city of Lagos welcomed an assemblage of financial leaders to discuss a very important economic subject – global financial crisis, and the communiqué at the end of the conference, amongst other resolutions stated “that the economies of African countries were insulated from the global financial crisis and indeed, many were set to grow at a rate far above the average rate of growth.”

Assuredly, many leaders in politics, business and social settings continued with their lives, but almost ten years later, we are overtly agitated and concerned about the state of even the largest economies in Africa.

What is the difference? We speak, and deliberately so, about our challenges with the expectation that someone somewhere will address them, not us!

The African insurance industry must lead the change to ensure the migration of our brothers and sisters from the informal experience where we still keep money at homes and forests to the formal system where a card holds more than can be kept in those places.

The insurance industry must consider that our agents can visit policyholders with POS devices to ease

I

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Business Journal May 2017

payments and move away from the age-long twin challenges of cash collection and receipt issuance while the appropriate bank accounts do not get credited.

How is the new agency banking model working with electronic and mobile money wallets that the insurance industry could not have adopted for its agency system? What is the difference? The industry has been doing well and still excels at reaching out to greater number of people who need insurance and financial services but insurance companies are not committed to using modern technologies and new solutions.

Modernisation is what Financial Inclusion brings to the Insurance Industry To be financially inclusive, the rural dweller in Africa who is the target of the financial inclusion agenda needs to have a bank account, a payment card, a mobile phone and access to an online transactional platform.

The sheer number of insurance agents and those that they reach daily provides the strength the insurance industry needs to engage in the financial inclusion agenda dominating Africa, the second most populous continent and world leader in mobile money accounts (Global Findex 2014).

Making financial services available, accessible and affordable to all is the essence of financial inclusion, thus the most arduous challenge remains the touch points with customers.

Quite easily today, financial services providers rely on websites, mobile application, call centres, representative offices, loan centres, deposit centres, agents and personal relationships yet a random check of the African insurance market reveals that customers cannot readily find insurance companies when they need to.

In Nigeria, the touch points with customers are limited in relation to the population! It is my view that if Bancassurance had taken root in Nigeria, financial inclusion in terms of access, usage and quality would have been significantly successful.

Kenya, a clear global leader in mobile money, is achieving heightened growth in its financial inclusion agenda (and insurance penetration) by deliberating addressing the challenges of low income earners, gender inequality and low level of financial literacy, also prevalent across Africa.

Mobile money transactions increased from 5.5 million in 2007 to more than 700 million in 2013, thanks to the rapid adoption of M-Pesa by more than 75% of Kenya’s adult

Opinion population (IMF 2014)

Crossing the Hurdles towards Financial Inclusion The greatest challenge that follows the insurance industry into the continuing effort on financial inclusion is the poor access to information that customers need, to embrace, accept and promote the ethos and values of insurance.

On its own, the insurance industry will experience even greater challenges from IT security solutions which are helping individuals and businesses to secure their activities thus avoiding risk crystallisation that would put them in front of insurance companies.

Customers’ preferences readily comes through as another great challenge even more than stricter regulatory actions being experienced across virtually all markets in Africa.

With increased mobile telephone usage (85%, 2016) and adoption of internet though slower (15%, 2016), customers that can pay for insurance are enjoying conveniences from other financial service providers, which only a handful of insurers across Africa can deliver.

Next, the quality of executives interfacing with the customers can impede the efforts of insurance companies to enhance its contribution to the financial inclusion agenda. The desire to get the customers into the formal financial structure should be more important than collecting their monies.

Executives still find it increasingly difficult to respond well to the questions of customers especially when claims occur.

Connecting with the expanding youth population in Africa is another high hurdle the insurance industry must scale, because it does seem the emerging young African entre-

preneurs are leaning more on technology solutions to manage risks in their businesses, largely impact investments with less physical infrastructure.

Even more challenging is the insurers’ inadequate knowledge of new business models and value chain to enable them develop relevant product offerings, provide appropriate covers and administer claims in innovative ways

Bringing the Benefits Home African Insurance regulators and operators must agree and deliberately support the financial inclusion agenda in their respective markets and be seen to be advocating for it.

Financial Inclusion Desks should be set up separately to drive the agenda home.

When financial inclusion grows by percentile, insurance penetration shall most likely deepen by more than its average rate in the last 5 years.

IT policy from a regulatory standpoint and increased IT investment by insurance companies especially customer relationship management, data analytics and business process management will certainly put the insurance industry in a better position to collaborate (not compete).

Collaboration with other stakeholders of financial inclusion especially Co-operatives and MSMEs, where the greater number of those migrating to the formal environment exist, will more certainly get insurance companies more benefits.

Importantly, there is need for insurance companies across Africa to deliberately participate in the development of the Continent’s social infrastructure and a regulatory action may not be out of place to ensure 10% of profits are committed to sponsorship of programs that will deepen insurance education and penetra-

tion.

Lastly, the time has come for insurance agents to be transformed into insurance entrepreneurs who would be trained to drive financial inclusion as their business. The cost of agency management by insurance companies can be reduced by building the capacities of the agents to run like small business owners or apprentices.

Time to Change The African Insurance Organisation (AIO) is not alone in choosing Financial Inclusion as its theme for this year’s annual conference; the International Labour Organisation has also chosen “Inclusion” as the theme for UN International Day of Cooperatives 2017 leaving no one in doubt about the global relevance of this subject.

It is my measured expectation that respective country members of AIO will return from the 2017 Annual Conference with clear strategic actions that will boost insurance contribution to the financial inclusion agenda across Africa.

Insurance companies certainly love insurance but must love the markets too!

Executives still find it increasingly difficult to respond well to the questions of customers especially when claims occur.

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Banking

De-Marketing:

The Return of Old Demon in Banking Sector Part 1 18

Business Journal May 2017

Banking fied the scourge and promptly issued a strongly-worded circular [BSD/O8/2OO6] titled: ‘The Unethical and Unprofessional Practice of Demarketing Colleagues/ Other Banks in the Industry by Spreading False Rumours’ on April 12, 2006.

In the circular, the CBN stated: “Banks are advised to caution their staff on this practice as henceforth, any staff of a bank found to be involved in such an act will be summarily dismissed and blacklisted.”

And two years later, the apex bank was also forced to issue yet another circular on the same issue: ‘BSD/DIR/CIR/07/VOL.2/016 October 21, 2008 CIRCULAR TO ALL BANKS DE-MARKETING OF BANKS BY OTHER BANKS.’ The circular signed by Mr. Ignatius Imala, the then Director, Banking Supervision of the CBN, read in part:

“It will be recalled that the CBN had earlier issued a circular reference BSD/08/2006 on the above subject titled “The Unethical and Unprofessional Practice of De-Marketing Colleagues/Other Banks in the Industry by Spreading False Rumours”, dated April 12, 2006.

The CBN has again noted with serious concern the recent practice whereby some officers of deposit money banks engage in the de-marketing of other banks through disparaging comments and the use of negative text messages.

This development, which constitutes a threat to the safety and soundness of the banking system, is unprofessional, unethical and unacceptable. Banks and their staff are by this circular reminded that the responsibility for ensuring the safety and soundness of

Overview The old demon known as de-marketing has made an inglorious return to the banking sector after few years of resting behind the scene.

De-marketing manifests in some banks spreading false and malicious rumours to undermine other banks in the market.

As far back as 2006, the Central Bank of Nigeria [CBN] identi-

The Unethical and Unprofessional Practice of De-Marketing Colleagues/Other Banks in the Industry by Spreading False Rumours

Ifie Sekibo MD/CEO, Heritage Bank

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Banking

the banking system is a collective one for all stakeholders.

Banks are therefore advised to caution their staff on this practice as henceforth, any staff of a bank found to be involved in such an act will be summarily dismissed and blacklisted. Also, if another staff of the same bank is involved in such a practice, the institution will face severe sanctions including but not limited to a monetary fine of N10 million (Ten Million Naira only).

Appropriate channel will be opened by the CBN for the report of such unwholesome practice by banks’ customers and the general public. Furthermore, in the overall interest of the banking system, all banks are advised to enthrone an appropriate corporate culture that would guide against such practices in the future.”

It is pertinent to remember that in late 2008, there were rumours and Short Message Service [SMS]

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messages alleging that the then Intercontinental Bank Plc was facing critical liquidity challenges and was on the verge of collapse.

The SMS message asked customers of the bank to immediately withdraw their deposits from Intercontinental Bank Plc and place same in healthy banks.

The de-marketing SMS message was eventually traced to a first generation bank in the country.

Later in 2009, the management of Intercontinental Bank Plc and few others were sacked by the CBN under Mallam Sanusi Lamido Sanusi on the ground of insolvency as a result of huge non-performing loans, especially to operators in the downstream sector of the oil industry.

Market analysts believe that the unprofessional practice of de-marketing is fueled by the cut-throat competition in the banking sector as operators struggle to win and

retain the patronage of high networth individuals and blue-chip multinationals.

The situation is made even worse today in the face of prevailing economic recession which has resulted in dwindling deposits from individual and corporate customers.

The New Challenge Market watchers however attribute the current resurgent of de-marketing to two recent decisions of the CBN: sack of the Board and Management of Skye Bank Plc and suspension of nine banks from the forex market for allegedly flouting the Treasury Single Account [TSA] policy of the Federal Government in respect of N2 trillion belonging to the Nigerian National Petroleum Corporation [NNPC].

Continues NEXT EDITION

Maritime

NPA, Japan Partnership Model for Development he Management of the Nigerian Ports Authority (NPA) has stated that it would collaborate in all ramifications with the Government of Japan, especially in the areas of technical and manpower support even as both agencies aspire to institute a regime of operational efficiency at the nation’s seaports.

This assurance was given by the Managing Director, Hadiza Bala Usman who was represented by Professor Idris Abubakar, the Executive Director, Engineering and Technical Services at a business meeting held in Lagos with the visiting First Secretary, Embassy of Japan in Nigeria of the Economic/ Development Co-operation, Mr. Gaku Sato.

The MD told stakeholders that the Management was aware of the smooth relationship and technical collaboration hitherto existing between the Government of Japan and the NPA over the years, especially in the area of training. She added that the “NPA management was desirous of nurturing this dispensation to maturity.”

According to her, “we look forward to more training especially in the area of Information Communication Technology (ICT) and human capital development useful to our staff in view of the changing trends in the sector”. This according to her has impacted positively in the productivity of the organisation’s operations across board.

She called for a more robust synergy between both nations with the view to promoting the goals of the present management concerning trade facilitation within sub-Sahara Africa and beyond.

Usman assured the visiting Secretary of the Japanese Corporation that the management of NPA was upholding the Federal Government’s 25 year Port Master Plan which serves as a guide towards the implementation of the various policies and development in the

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Representative of the Managing Director, Nigerian Ports Authority (NPA), Prof. Idris Abubakar (3rd left); First Secretary, Economic/ Development Corporation, Japanese Embassy in Nigeria, Gaku Sato (2nd left); GM, Western Port, Arc. Abiodun Gbadamosi; (1st left); GM, Physical Planning, Engr. Rufai Mohammed (2nd right) and GM, Maintenance, Engr. Adams Jatto (1st right) when Sato paid a courtesy visit to NPA Headquarters in Marina, Lagos. sector aimed at making our ports a hub in sub-Sahara Africa.

Earlier in his address, the Japanese representative in Nigeria on Economic/Development and Co-operation, Mr. Gaku Sato informed the NPA management that Japan was exploring trade and investment opportunities in Nigeria through a most efficient infrastructure and manpower development, especially in the port environment, noting that the sector plays a vital role in the life of any nation through windows and corridors of trade facilitation.

Sato further reiterated that at present, over 30 companies of Japanese origin are presently doing business in Lagos in the area of manufacturing, car/motor bike assembling and entertainment aside other trading establishment.

He wished this would grow with the renewed and reinvigorated synergy amongst the two countries – Nigeria and Japan.

He solicited for management’s assistance through the provision of its blueprint and platform to aid other teams expected in the country soon to access the readiness of NPA in the area of future collaboration and development in the port sector thereby stimulating the economy.

He enthused that the Japanese Government through the Japanese International Corporation Agency (JICA) was willing to undertake the refurbishment of the Apapa Power sub-station in order to contribute towards a seamless Port operations having carried out similar projects in Jebba and Abuja.

On the NPA team to the meeting were General Managers, Western Ports, Arch. Abiodun Gbadamosi, Physical Planning and Development, Engr. A.R. Mohammed, Maintenance, Engr. A.A. Jatto amongst others.

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Energy

Offshore discoveries and new starts have been particularly hard hit by the industry’s slowdown (Photograph: GettyImages.)

IEA: Global Oil Discoveries, New Projects Lag in 2016

G

lobal oil discoveries fell to a record low in 2016 as companies continued to cut spending and conventional oil projects sanctioned were at the lowest level in more than 70 years, according to the International Energy Agency, which warned that both trends could continue this year.

Oil discoveries declined to 2.4

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Business Journal May 2017

billion barrels in 2016, compared with an average of 9 billion barrels per year over the past 15 years.

Meanwhile, the volume of conventional resources sanctioned for development last year fell to 4.7 billion barrels, 30% lower than the previous year as the number of projects that received a ďŹ nal investment decision dropped to the lowest level since

the 1940s.

This sharp slowdown in activity in the conventional oil sector was the result of reduced investment spending driven by low oil prices. It brings an additional cause of concern for global energy security at a time of heightened geopolitical risks in some major producer countries, such as Venezuela.

The slump in the convention-

Energy

al oil sector contrasts with the resilience of the US shale industry. There, investment rebounded sharply and output rose, on the back of production costs being reduced by 50% since 2014. This growth in US shale production has become a fundamental factor in balancing low activity in the conventional oil industry.

Conventional oil production of 69 mb/d represents by far the largest share of global oil output of 85 mb/d. In addition, 6.5 mb/d come from liquids production from the US shale plays, and the rest is made up of other natural gas liquids and unconventional oil sources such as oil sands and heavy oil.

tended period of sharply lower oil investment could lead to a tightening in supplies. Exploration spending is expected to fall again in 2017 for the third year in a row to less than half 2014 levels, resulting in another year of low discoveries. The level of new sanctioned projects so far in 2017 remains depressed.

“Every new piece of evidence points to a two-speed oil market, with new activity at a historic low on the conventional side contrasted by remarkable growth in US shale production,” said Dr Fatih Birol, the IEA’s executive director. “The key question for the future of the oil market is for how long can a surge in US shale supplies make up for the slow pace of growth elsewhere in the oil sector.”

The US shale industry has lowered its costs to such an extent that in many cases it is now more competitive than conventional projects. The average break-even price in the Perm-

ian basin in Texas, for example, is now at USD 40-45/bbl. Liquids production from US shale plays is expected to expand by 2.3 mb/d by 2022 at current prices, and expand even more if prices rise further.

The offshore sector, which accounts for almost a third of crude oil production and is a crucial component of future global supplies, has been particularly hard hit by the industry’s slowdown. In 2016, only 13% of all conventional resources sanctioned were offshore, compared with more than 40% on average between 2000 and 2015.

In the North Sea, for instance, oil investments fell to less than USD 25 billion in 2016, about half the level of 2014. Coincidentally, this is now approaching the level of spending in offshore wind projects in the North Sea, which has doubled to about USD 20 billion in the same period.

With global demand expected to grow by 1.2 mb/d a year in the next five years, the IEA has repeatedly warned that an ex-

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23

Technology

VISA: The Future of Digital Payment Security igital commerce is the fastest growing area of payments, as more connected devices become payment devices. Consumers have more ways to pay than ever before, whether through a browser, mobile app, or connected device.

Today’s six billion connected devices will exceed 20 billion in the next three years. But, when a consumer is making a digital purchase not in a traditional store, verifying the transaction and the identity of the consumer becomes increasingly important and challenging. Industry research estimates that half of digital commerce transactions declined due to suspected fraud are actually legitimate.

For this reason, it’s more critical than ever that the industry continue to invest in new approaches to preventing fraud, while maintaining the speed and convenience customers love about online shopping. Helping issuers and merchants distin-

D

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guish good transactions from bad will mitigate fraud, while allowing transactions to continue to happen at lightning speed.

3-D Secure 2.0 is an important advancement in this effort that will help prevent fraud and accelerate digital commerce with fast, secure authentication.

How does 3-D Secure 2.0 work?

Better, stronger fraud-detection intelligence, to put it simply.

3-D Secure has been around for years and creates an authentication data connection between digital merchants, payment networks and financial institutions to be able to analyze and share more intelligence about transactions.

The new 2.0 version of the technology enables a real-time, secure, information-sharing pipeline that merchants can use to send an unprecedented number of transaction attributes that the issuer can use to authenticate customers more accurately without asking for a static password or slowing down commerce.

To ensure issuers and merchants have time to test, pilot, refine and fully roll out solutions, current Visa rules for merchant-attempted 3-D Secure transactions will extend to 3-D Secure 2.0 beginning April 2019. Merchants and issuers are already working on their implementations and Visa expects early adoption to begin in the latter half of 2017.

Visa will continue to work with clients and partners globally to support 3-D Secure 2.0 solutions, with a focus on continuing to improve payments security and increasing authorisations to ensure seamless digital payment experiences.

Technology

Worldwide Tablet Shipments Decline 8.5% in 1st Qtr 2017 he worldwide tablet market once again contracted in the first quarter of 2017 (1Q17) with total shipments of 36.2 million, a year-over-year decline of 8.5%, according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker.

The first quarter contraction marks the tenth straight quarter that tablets have experienced a decline over the same quarter a year earlier, with the previous five quarters recording double-digit drops.

"As far as most are aware, the tablet market was created in 2010 with the launch of the original iPad, despite unsuccessful product attempts p by y other OEMs in the years leading up to this," said Ryan an Reith, program vice president nt with IDC's Worldwide Quarterly Mobile Device ce Trackers.

"The rate at which the tablet markett grew o 2013 from 2010 to was unlike many mother consumer-oriented device ve markets we've seen before.

However, it appears for ns many reasons ecame less consumers became eager to refresh these devices, or in some instances purchase

T

them at all. We continue to believe the leading driver for this was the increased dependency on smartphones, along with rather minimal technology and form factor progression."

At the same time that this roller coaster of tablet growth, peak, and decline was taking place, the personal computer market was experiencing one the worst

declines the market's histo-

ry. Fast forward to 1Q17 and traditional PCs have returned to growth, albeit relatively flat growth, for the first time since 1Q12.

"A long-term threat to the overall PC market lies in how the market ultimately settles on the detachable versus convertdeba " said Linn Huang, ible debate, research director, Devices & Dis Displays at IDC. "To date, det detachable shipments hav dwarfed those of have conv convertibles, but growth of the former has slowed a bit. In IDC's 2017 U.S. Consumer PCD Survey, fielded over the previous two months, detachab owners held slightly detachable fav more favorable attitudes toth detachables than wards their convertib owners did for their convertible convertib convertibles.

However, owners w of both were far more likely to reco re c mme a convertible over a recommend deta de tachab h detachable. " IDC's outlook is that detach-

Business Journal May 2017

25

Technology ables will continue to far outpace convertibles in shipments, but the market pendulum seems to be swinging back in favor of convertibles if ever so slightly.

Still, the detachable market has proven it will move with major product launches and Microsoft and Apple have yet to launch their 2017 salvos.

Tablet Company Highlights Apple experienced its 13th consecutive quarter of year-overyear shipment decline despite being the market leader in 1Q17.

Apple's results show that it is not immune to the changing dynamics of industry and consumer demand, part of which is due to the ongoing success of its other product lines. 2016 was Apple's first full year of iPad Pro shipments, which included the launch of the smaller screen lower-cost 9.7 inch version. This product line quickly elevated Apple to the top of the growing detachable tablet market segment, and IDC believes Apple is in a good spot to remain competitive at the top of this segment despite using a 'mobile OS' while many of its competitors are entering the space with Windows-based devices.

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Samsung remained the number 2 tablet provider despite seeing shipments decline 1.1% year over year in 1Q17. Much like Apple, Samsung continues to migrate its tablet portfolio to the detachable segment and to support this the company launched three new products at this year's Mobile World Congress event in Barcelona in February. After supposedly leaving the PC business in 2014, Samsung now finds itself approaching the market again with a handful of Windows 10 detachable tablet models. The move isn't surprising as the entire industry seems keen on taking advantage of this market opportunity.

Huawei was the only company among the top 5 to experience positive growth in 1Q17 with shipments of 2.7 million, which was up 31.7% from the 2.0 million shipped in the first quarter a year ago. Like Samsung, Huawei has also slowly migrated its tablet portfolio from an Android slate tablet lineup to now include a mix of Windows-based detachable devices. It is somewhat unclear how serious Huawei is about going down the Windows

device route, but given this quarter's growth while others decline it seems the mix strategy and tablet play is working for the company.

Amazon.com continues to fluctuate in and out of the top rankings with its low-cost Kindle Fire devices. In 1Q17 the company shipped 2.2 million devices, all of which continue to be aimed at a very aggressive price point with a strategy to drive content and product sales via the device. Regardless of the changing industry dynamics mentioned in this release, Amazon seems poised to remain a competitor given its market strategy.

Lenovo rounded out the top 5 with 2.1 million tablets shipped in the quarter. Of all the companies in the top 5, Lenovo is likely best positioned in terms of channel strategy to grow its tablet business and IDC expects to see more of its successful notebook PC lineup migrate into the detachable tablet category. Lenovo captured 5.7% market share in 1Q17, which was down just slightly from the 5.5% market share it had at this time last year.

Profile

African Alliance Insurance Plc Corporate Profile African Alliance Insurance Plc was incorporated as a Private Limited Liability Company on May 6, 1960 and was the first Indigenous Insurance to carry out the business of Life Assurance in Nigeria.

The Company was originally set up in partnership with Munich Reinsurance Company of Germany, the largest Reinsurance Company in the world. Munich – Re still provides technical support to the Company on a need basis.

In 2005, African Alliance became the first licensed Takaful (Islamic Insurance) Operator in Nigeria – a concept borne of the desire to satisfy the needs of the Muslim Ummah in Nigeria through a robust selection of Sharia – compliant insurance and investment products based on the concepts of “Al-Mudarabah” and “Al-Tabarru.”

Also in 2005 African Alliance Insurance (then still a Limited Liability Company) in a Joint Venture with First Securities Discount House Limited (“FSDH”) set up Pensions Alliance Limited (“PAL”), a licensed Pension Fund Administrator.

In 2009, African Alliance was listed on the Nigerian Stock Exchange; thus becoming known as African Alliance Insurance Plc. Following its’ successful recapitalisation in 2007, African Alliance currently has a Shareholders’ Fund of about N 5.27 billion, while the Company’s Gross Premium Income and Asset Base currently stands at about N 10.07 billion and N 23.12 billion respectively (figures as at December 2014 – unaudited).

African Alliance has 100% equity in Axiom Air Limited, a Cargo Airline Company, Frenchies Foods (Nigeria) Limited, a Restaurant and Catering Services Company and 96% equity in Ghana Life Insurance Company Limited.

Our marketing efforts are co-ordinated through a network of 16 Branch Offices manned by experienced managers and highly motivated sales personnel for effective field coverage of the entire Country.

The core competencies of the Company are a creative combination of Protection (Term Assurance and Group Life), Savings and Investment Products and over the years, African Alliance has established a solid reputation for excellent customer service and prompt claims settlement.

Mrs. Funmi Omo

Biodata Mrs. Funmi Omo

Managing Director/CEO - B. Sc., ACII (Chartered Insurer), AMNIM, Fiapm Mrs. ‘Funmilayo Omo is a graduate of the University of Lagos and was awarded a B.Sc. Degree in 1990.

She was trained as a Life Insurance Underwriter by Munich Re in South Africa and has over 25 years’ experience in Life and Pension Business.

She joined African Alliance Insurance Plc (then a Limited Liability Company) as an Assistant Superintendent in 1991 and then rose to the position of Controller (Technical

Operations) in charge of Individual Business in 2004. In 2006, she became an Assistant General Manager and later on advanced to become the Executive Director and Head of Life operations.

With a proven track record for success, ‘Funmi, is currently the Managing Director/CEO of African Alliance Insurance Plc. She is an Associate Member of the prestigious Chartered Institute of Insurance, London, an Associate Member of the Nigerian Institute of Management and an Associate of the Certified Pension Institute of Nigeria. She is also an alumnus of the Lagos Business School.

Business Journal May 2017

27

Automobile

Range Rover Sport:

Drive Your Dream!

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Business Journal May 2017

he Range Rover Sport was designed and engineered for maximum comfort and performance, on-andoff the road.

A technological marvel, it exudes rare combination of sleek

T

dynamism inside and sculpted exterior in muscular shape.

From its strong body lines to its floating roof and fast raked windscreen angle, everything about Range Rover Sport has been designed to another level.

Range Rover Sport delivers

transformational on-road dynamics, twinned with Land Rover’s all-terrain performance.

Settle back into the driver’s seat of Range Rover Sport and one thing is immediately apparent: it demands to be driven.

Drive your dream!

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MEDIA

PR

ADVERTISING

The Africa PR Industry ooking to 2017 and beyond, Africa’s prospects are positive.

According to a 2016 World Bank report, “Economic growth is showing signs of resilience…to continue to make progress on its development goals and achieve structural transformation, Africa must capitalise on the significant growth opportunities.”

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Shrewd investors and companies that are already well established in the region should do just that – capitalise.

We accept that Africa needs companies in the PR industry who take the time to invest in the region because PR services will play an integral role in promoting economic diversification, economic growth and job creation.

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Nations right across sub-Saharan Africa are pushing ahead with reforms and initiatives that support the case for investment and business expansion. These reforms include anti-money laundering regulations, streamlined tax regimes and direct investment in start-ups and innovators.

Countries that have developmental needs are pushing ahead with much-needed, major infrastructure projects and showcasing fast-growing industries.

For those of us in the communications sector, we have a significant role to play in supporting these priorities.

For 2017, these are our predictions:

Stronger Demand for Reputation Management Reputation management will

be one of the most highly sought after services – especially important in Africa because of cautious investor sentiment. Investors seek reassurance that issues of corruption, political instability and weak capital markets are all being addressed.

Therefore, communications firms will increasingly offer reputation management services as a leading capability in 2017.

Boots on the Ground – Not Affiliates Having boots on the ground in local markets is arguably the most important and highly valued commodities available to an African-based communications firm. In sub-Saharan Africa, this is especially true because it is such a fragmented region with hundreds of languages and cultures.

may fail: keeping the senior talent in South Africa or Europe makes it difficult to train up local teams. For this reason, training is also going to be a major focus for pan-regional communications firms in 2017.

More Innovative Social and Digital Campaigns

y in 2017 Coinciding with the importance of local expertise, delivered by nationals who speak the mother-tongue and instinctively know how to navigate their own cultures, is the need for the provision of world-class communications skills.

Affiliate networks do add breadth to an organisation that has limited local resources in new territories, but culture matters – and we expect to see affiliate networks reach for that all-important asset: authenticity. Authenticity is best built over time, organically through team development and training – affiliates have their work cut out for them in this respect.

Governments and major organisations will almost certainly place increasing value on teams of individuals who are local and have been trained by international experts.

This is where affiliate networks

We have seen great success in the use of social and digital media across the continent. Many countries have a very high level of Internet penetration; especially on mobile phones. It’s also an extremely young population that is unafraid of new technologies.

Studies, reports and research papers can reach millions through smart use of Twitter, Instagram and others.

Whilst print media continues to reach business leaders; it is social media that has the capacity to reach millions – which is why communications campaigns in 2017 are likely to see a greater appetite for and understanding of social media from

clients.

Increased Focus on CSR Finally, social responsibility has come to the fore in a strong way over the past year.

Governments, particularly, are extremely keen to be proactively dealing with social issues – such as access to basic services or job creation.

Foreign firms also know that they need to leave a lasting legacy so here we can see a major opportunity to sell meaningful social responsibility platforms to clients. With issues, such as global warming, skills development and poverty; all companies in Africa have a responsibility to do the right thing for Africa.

Mitchell Prather is the Managing Director of Djembe Communications.

Mitchell Prather

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CountryReport

Akufo Addo

History Ghana gained political independence on March 6, 1957, becoming the ďŹ rst African black nation to achieve independence from colonial rule.

Its achievement spurred other nations in Africa to seek freedom from their colonial masters across the continent.

The former British colony, known as Gold Coast before changing to Ghana, is located off the Gulf of Guinea. It is bordered by Burkina Faso in the north, Togo to the east, Atlantic Ocean by the south and Cote d’Ivoire to the west.

The Politics Over the years, Ghana has made

Kwame Nkrumah Monument

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COUNTRY AT A GLANCE

tremendous progress since return to multi-party system of democracy after a period of military rule.

And on December 7, 2016, Nana Dankwa Akufo-Addo of the New Patriotic Party was elected President of Ghana after receiving 53.72% of the vote to former President Mahama’s 44.53%.

Akufo-Addo and Dr. Mahumdu Bawumia were sworn-in as president and vice president on January 7, 2017.

Economic Outlook According to the World Bank Group, the economy of Ghana grew by 4.9% during the first quarter of 2016 and higher than 4.1% during the same period in 2015 supported

Population GDP

27.41 million 2015 $37.54 billion 2015

GDP growth

3.9% 2015

Inflation

17.1% 2015

by the strong services sector performance.

The report says however, that the country’s overall gross domestic product (GDP) growth for 2016 could be below the 3.9% growth in 2015 due to production problems in the oil sector. After lingering above 18%, the inflation rate fell to 16.7% in July 2016—the lowest since March of 2015, reflecting the stable cedi and the maintenance of the tight monetary policy stance.

But the GDP growth rate is projected to reach 7.5% by 2018, assuming that the fiscal consolidation program remains on track and technical problems in the oil and gas sector are resolved.

On September 9, 2016, Ghana issued its fifth Eurobond for $750 million with a coupon rate of 9.25%. The bond which was more than five times oversubscribed with total orders of $4.5 billion has a weighted average tenor of five years.

The World Bank also listed nearterm challenges for Ghana to include continued high domestic financing

cost, currently above 20% and only likely to ease slightly if the inflation rate continues to fall, debt and technical problems in the oil sector, continued weak commodity prices and capital flows.

Moving ahead in 2017, the Bank of Ghana (BOG) slashed the monetary policy rate by 200 basis points from 25.5% to 23.5% on March 24, said to be the largest single cut in 10 years.

A report by FocusEconomics says the Bank pledged to continue monitoring economic developments in order to ensure the inflation target is met, and forecasts inflation drifting down towards its 6.0%-10.0% target band by 2018, which is broadly in line with FocusEconomics panelists’ predictions.

FocusEconomics Consensus Forecast panelists expect the monetary policy rate to end 2017 at 21.4%. For 2018, panelists project that the monetary policy rate will end the year at 17.3%.

The Cocoa Land Ghana is reputed as the second larg-

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33

Independence Arch est producer of cocoa in the world behind Cote d’Ivoire.

Cocoa is also the major agricultural export of Ghana and its main cash crop.

According to the Ghana Cocoa Board, cocoa plays an important role in the economy of Ghana.

The cocoa industry employs approximately 800,000 farm families spread over six of the ten regions of Ghana.

The crop generates about $2 billion in foreign exchange annually and is a major contributor to Government Revenue and GDP. The coca beans were first introduced to Ghana by the Dutch missionaries at the beginning of the 19thcentury.

Its widespread cultivation is however attributed to Tetteh Quarshie, a Ghanaian blacksmith of Osu in Accra. He lived and worked in Fernando Po (now Equatorial Guinea) for several years and on his return to Ghana in 1879, brought with him the Amelonado Cocoa pods.

He established a farm at Akwa-

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pim Mampong in the Eastern Region which turned into a nursery for all pioneering Cocoa farmers in Ghana. His legacy is the Cocoa bean that has become the backbone of the Ghana economy.

m3) of petroleum in reserves, which is the sixth largest in Africa and the 25th largest proven reserves in the world and Ghana has up to six trillion cubic feet of natural gas in reserves.

Oil & Gas

The Slave Trade

According to Wikipedia, commercial quantities of offshore oil reserves in Ghana were discovered in the 1970s but it was not until 1983 that the government established the 100% stateowned state oil company, Ghana National Petroleum Corporation (GNPC) to promote hydrocarbon exploration and production of Ghana's entire petroleum and natural gas reserves.

The GNPC is also targeting average production of 30 MMSCF/D (Million standard Cubic Feet of Gas per day) over the next five years and 100 MMSCF/D by 2032.

Ghana is believed to have up to five billion barrels (790,000,000 m3) to seven billion barrels (1.1×109

The Tracing Center says that Ghana was for almost 150 years, the center of the British slave trade on the west coast as western traders came in ships loaded with manufactured goods to barter or trade for slaves.

It estimates that over 10 million enslaved people were transported in the transatlantic slave trade, at rates of up to 100,000 persons per year.

The remnants of the trade in Ghana are still visible today — in dozens of forts and castles built by Europeans between 1482 and 1786.

American traders did business at trading posts run by the British, French, Dutch, Germans, Spanish, Portuguese, and others, including Cape Coast Castle and Elmina Castle.

The Lantern T PRINCE COOKEY P 0802 308 8874 0 p prince.cookey@yahoo.com.

TRUMP: The Triumph of Tenacity!

First- they ignore you.

Then -they mock you.

Then- they fight you.

Then -you win.

As the Trump Train rolls over its 100th day in office, some skeptics across America and around the world still believe it’s all a Bad Dream, not reality that Donald Trump is indeed sitting in the Oval Office as the 45th President of the United States of America.

Indeed, what began as a gamble by a political neophyte with no experience or history of political activism or public office became a laughing joke, widespread mockery by the political establishment, all-out damnation by mainstream media and then unpredicted victory that defied the polls.

When Trump uttered the above words on the campaign trail straight from the lips of a longdead legend, Mahatma Ghandi of India, not many knew the import of those lines.

Why?-because the political pundits dismissed him as a reality showman seeking cheap publicity.

The mainstream media mocked him as a con man looking for public salvation from his bankruptcies.

His fellow Republican primary competitors denounced him as a latter-day demagogue trying to muddle the party’s nomination process.

They gave him no chance. He had no chance!

But like a rolling stone, he kept rolling back into contention from

Trump in the Oval Office one controversy to another.

Then came November 8, 2016!

Americans went to the polls to elect the 45th President and Trump emerged the winner-against all odds!

The Tenacity The Trump victory is a worthy tribute to tenacity—the ability and capacity to defy challenges and sprint to the finish line.

In the race of life, the opinion of others matter and does not matter.

It matters only when you don’t need it. It does not matter when you need it.

Everyday, dreams rise and fall.

And everyday, dreams fall and

rise.

Without tenacity, it is practically difficult to achieve any goal—for most goals are intertwined with thorns—you must navigate the thorns to pluck the opportunities embedded in the soul of the thorns.

For those labouring to achieve their goals in the midst of roadblocks and bumps, the Trump victory points to a valuable lesson: remain active in the game until the Final Whistle!

As we celebrate 100 days of President Donald Trump in office, we must imbibe one value that changed the course of the 2016 campaign: Tenacity!

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SportsBusiness

RUSSIA 2018: The $10bn World Cup Tournament 36

Business Journal May 2017

SportsBusiness

The Russia 2018 FIFA World Cup tournament will run from June 14 to July 15, 2018 in… cities ( in Russia.

According to FIFA, Luzhniki Stadium in Moscow will be the main venue and the heart of the 2018 FIFA World Cup tournament: Opening Match, a Semi-final and the Final.

Luzhniki Stadium is located at the centre of Moscow’s 145-hectare Olympic complex, one of the largest sports complexes in the world.

The City of Moscow Founded in: 1147 Population: 12.3 million Business Journal May 2017

37

SportsBusiness Founded in the 12th century, Moscow is the capital of the Russian Federation and one of the most renowned and fascinating cities in the world.

It is a dynamic 21st century metropolis showcasing some of the world’s best shopping, nightlife, restaurants and culture. Moscow welcomes over four million tour-

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ists each year.

According to FIFA, Moscow is home to over 130 nationalities and 12.3 million residents and is served by three international airports and the world’s second busiest underground system.

The city is blessed with beautiful architecture and such renowned cultural landmarks as the Bolshoi

Theatre, the Kremlin, the Pushkin Fine Arts Museum and the Tretyakov Gallery.

Moscow is also home to three UNESCO World Heritage sites, including the Kremlin and Red Square.

The colourful St Basil’s Cathedral on Red Square is the symbol of both Moscow and Russia.

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Aviation

How African Airlines Achieved 33.5% Freight Rise in March he International Air Transport Association (IATA) released March 2017 demand growth results for global air freight markets showing a 14% expansion measured in freight tonne kilometers (FTKs) compared to the same period last year. This was the fastest pace of growth recorded since October 2010. Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 4.2% year-on-year in March 2017.

African carriers posted the largest

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year-on-year increase in demand of all regions in March 2017 with freight volumes growing 33.5%.

Capacity increased by 6.3% over the same time. Demand has been boosted by very strong growth on the trade lanes to and from Asia following an increase in direct services between the continents.

The increase in demand has helped the region’s load factor rise by 6 percentage points compared to March 2016.

March performance contributed to very strong ďŹ rst quarter (Q1)

Business Journal May 2017

growth in freight volumes. After adjusting for the impact of the leap year in 2016, freight demand in Q1 2017 increased by nearly 11%. Capacity increased by 3.7% over the same period (leap year adjusted).

The strengthening of air freight demand in March is consistent with an uptick in world trade and a six-year high in new export orders. An increase in the shipment of silicon materials typically used in high-value consumer electronics shipped by air, is also likely underpinning a portion of the strong

Aviation

March 2017 (% year -on-year)

World share¹ FTK

AFTK

FLF (% -pt)²

FLF (level)³

Total Market Africa Asia Pacific Europe Latin America Middle East

100.0% 1.6% 37.5% 23.5% 2.8% 13.9%

14.0% 33.5% 13.6% 18.2% -4.2% 16.3%

4.2% 6.3% 4.8% 6.7% -1.9% 2.7%

4.1% 5.9% 4.4% 4.9% -0.8% 5.6%

47.4% 28.9% 57.0% 50.8% 31.9% 47.6%

North America

20.7%

9.5%

2.8%

2.3%

36.9%

% of industry FTKs in 2016 ²Year-on-year change in load factor ³Load factor level

performance.

"March capped a robust first quarter with the strongest yearon-year air freight growth in six-and-a-half years. Optimism is returning to the industry as the business stabilises after many years in the doldrums. There is, however, still much lost ground to recover while facing the dual headwinds of rising fuel and labor costs. It remains critical to use the improvement in the industry’s fortunes as an opportunity to enhance the value offering by implementing modern customer-centric initiatives that streamline processes and reduce costs," said Alexandre de Juniac, IATA’s Director General and CEO. All regions, with the exception of Latin America, reported yearon-year increases in demand in March 2017. Airlines in Europe and Asia-Pacific posted the strongest growth accounting for two-thirds of the industry-wide increase in demand. The remaining growth was split between North American and Middle Eastern carriers, with African airlines making a modest contribution.

Asia-Pacific airlines’ freight volumes expanded 13.6% in March

2017 compared to the same period a year earlier and capacity increased by 4.8%. The increase in volumes reflects the strength of the order books reported by exporters across the region.

Seasonally-adjusted volumes increased in March and are now back to levels reached in 2010 during the post-global financial crisis bounce-back. Demand has strengthened considerably on all key routes to and from Asia over the last six months with the exception of Pacific routes (Asia to North America).

North American carriers posted an increase in freight volumes of 9.5% in March 2017, and a capacity increase of 2.8%. International freight volumes increased 14.2% over the same period – the fastest pace since the boost to air freight from the consequences of congestion at US West Coast seaports in 2015. Seasonally-adjusted volumes have slowed to a near standstill alongside a weakening in demand in Pacific routes. The further strengthening of the US dollar continues to boost the inbound freight market but is keeping the export market under pressure.

European airlines posted an 18.2% increase in freight vol-

umes in March 2017 and a capacity increase of 6.7%. International freight volumes grew by 18.1% year-on-year, the fastest pace in six years. Seasonally-adjusted freight volumes continue to trend upwards. The ongoing weakness of the Euro persists in boosting the performance of the European freight market which has benefitted from strong export orders over the last few months.

Middle Eastern carriers’ yearon-year freight volumes increased 16.3% in March 2017 and capacity increased 2.7%. International freight volumes increased 16.4% year-on-year in March – the fastest pace since June 2015.

Seasonally-adjusted freight volumes maintained their upward trend. The year-on-year growth rate has recovered after having moderated in late-2015 and is now back in line with the longrun average. Demand remains strong between the Middle East and Europe but traffic to Asia has weakened.

Latin American airlines experienced a contraction in demand of 4.2% in March 2017 compared to the same period in 2016.

Capacity decreased by 1.9% over the same period. Freight volumes have now been in contractionary territory in 26 out of the last 28 months. Recovery in seasonally-adjusted volumes also stalled with demand in March reaching its lowest level since October 2010. Demand is now 18% lower than at the peak in 2014. The region’s carriers have managed to adjust capacity, which has limited the negative impact on the load factor.

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Fashion&Style

African Development Bank Report:

Fashionomics Africa: Outlook for 2017 42

Business Journal May 2017

Fashion&Style The Challenge: Youth Employment Africa has 480 million youth today and that figure is projected to grow to 850 million youth by 2050. Despite the 10 to 13 million youth that enter the workforce each year, only 3 million formal jobs are created annually (in the public and private sector).

Diversifying African economies and furthering regional integration are essential parts of the African Development Bank’s ambition.

With a view to building a prosperous Africa based on inclusive growth and sustainable development, drawing on the ‘High 5 Agenda’, the Bank is investing in high-growth sectors that have the potential to promote women’s economic empowerment and create 25 million jobs over the next decade.

A Solution: Investing Jobs in the Textile/Fashion Industry The African fashion is a case in point. From South Africa to Egypt, from Senegal to Nigeria and Kenya, across the continent, hundreds of thousands of tailors and designers, most of them operating in the informal sector, are producing unique clothes, ties, shoes and accessories with a visible “made in Africa” brand for a growing middle-class. .

How? In 2015, the AfDB launched the Fashionomics Africa initiative.

Fashionomics (the economics of fashion) is a pan-African program to support the development of the textile and fashion industry with a focus on micro, small and medium-sized businesses (MSMEs), attractive to large number of young people – skilled and unskilled.

It is envisioned that the Fashionomics program will support AfDB’s “High 5” priorities, in par-

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Fashion&Style structure to the industry and connect all the players of the value chain.

The Bank is exploring different ways by partnering with private and public sector to recreate the enabling environment needed for the industry to develop (cross-cutting all the High 5 priority areas) by looking at increasing production capacity, access to finance, access to markets and skills development.

The message is clear: Africa should be seen as a centre of creation‚ of innovation, not just a source of labour.

Courtesy:

ticular, the Jobs for Youth in Africa and Industrialisation programs.

The goal is to enable African designers and fashion entrepreneurs to create and grow their businesses.

What’s Next?

In 2016, the Bank launched the Fashionomics initiative in five African countries (Côte d’Ivoire, Kenya, Ethiopia, Nigeria and South Africa), to promote the concept, develop the platform’s database, forge strategic partnerships and discuss its proposed engagement with a wide range of stakeholders.

The Bank is in the process of operationalising the full-scale Fashionomics platform to connect the different stakeholders in the industry (suppliers, buyers, retailers, designers/fashion entrepreneurs, financiers, donors, etc.), along with the financial community and end-users (consumers or people interested in the sector).

To further develop an impactful program in all five pilot coun-

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tries, the key next steps are to: increase access to markets; increase access to finance by connecting designers/ fashion entrepreneurs with commercial banks and established investors, but also by tapping into alternative financing channels, such as crowd-funding mechanisms, and linking them to angel and impact investors; improve the skills of the target group, enhancing productivity (shared-production facilities/incubators), mentorship, tutorials, skills development (through boot camps/trainings on produce high-quality garment, but also business acumen on how to prepare business plan, etc.), and develop market intelligence surveys that will assist them to prosper and sustain their businesses; and provide networking opportunities.

Get Involved The initiative goes beyond the online platform – it aims to give

African Development Bank

Pension

Connecting Pension Funds with Emerging Market Infrastructure Joaquim Levy t might sound improbable to hear a Chief Financial Officer (CFO) say this, but I consider one of my roles since joining the World Bank Group to be that of matchmaker.

Let me explain.

As I have noted in other blogs over recent months, the world’s emerging market and developing economies—EMDEs for short—face an enormous gap in infrastructure investment. Certainly it is not the only big financing challenge that countries face as they work to reduce poverty and extend prosperity to more of their citizens.

But infrastructure underpins many aspects of economic growth, getting people to jobs and schools, connecting goods to markets, reducing the isolation of the poorest areas in many countries. And by some estimates, the sector’s funding gap is as high as a trillion dollars.

But understanding the scope of this need is just the first step to finding solutions. And I’m happy to say that there is a major paradigm shift underway.

At the 2015 Addis Ababa conference on Financing for Development, many of the world’s countries, bilateral aid agencies, and multilateral development banks embraced the need to attract private capital flows and put them to work if we are to meet the challenges of development.

I

This shift is already changing the largest development institution for low-income countries, the International Development Association—IDA, part of the World Bank Group. For the first time, IDA will raise funds in the market, increasing its capacity in the next three years by 50 percent.

With a strong rating from credit agencies, IDA will soon be issuing low-risk bonds. It will also work more closely with our private sector arms, IFC and MIGA, helping reduce the risk facing private sector investors in poorer countries, through a special funding window. These efforts will help create

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Pension

markets, with the private sector contributing to development even in challenging, fragile countries.

The new approach opens a wide range of opportunities in EMDEs, from Latin America and India, to Africa and Southeast Asia—supported, when necessary, by public mechanisms to make the opportunities compatible with the risk capacity of the private sector, notably long-term investors. Involvement from the World Bank Group will also help keep the focus on

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resilience to pressing challenges, such as climate change, pandemics, and migration.

But while we are matchmaking between private capital and development needs in a general sense, I also have a more specific idea about infrastructure investments in EMDEs. It turns out that these may be a perfect match for many advanced economies that are wrestling with the long-term sustainability of their pension systems.

These countries are seeing their populations age (and in some cases shrink), but the returns of their pension funds remain persistently low, reflecting low returns in their capital markets overall and creating a troubling pension gap. Recent studies suggest that funds need investment returns of around 5 percent to close this gap, well above the average rate of return they have seen in recent years.

And while many pension funds need new, better sources of returns, infrastructure could be a natural fit, as a large, long-term asset yielding predictable and robust cash flows, with low correlation to other assets. For their part, pension funds represent a vast potential source of infrastructure funding, as the second-largest group of institutional investors, with global assets under management of about $26 trillion.

And as I noted in a recent blog, there has been progress in mapping the landscape for investing, with a pipeline across EMDEs worth several hundred billion dollars of investment opportunities having been identified and in various stages of detailing and risk evaluation.

As with any good match, EMDEs and advanced economies have a lot to offer each other. But first they need to get to know each other better, with patience and an open mind. The World Bank Group and other multilateral development banks see the potential in bringing them together.

We are committed to helping this happen, and we are ready to engage with member countries and use our knowledge and balance sheet in innovative ways.

NB: Levy is World Bank Group Chief Financial Officer

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