Markt Digest Nigeria Dec 2017 by market digest nigeria

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M A R K E TD IG E S T

FINANCE & LIFESTYLE

NIGERIA

VOL 2 No 4

www.marketdigestng.com RANKINGS Top Cross-Border African Banks In 2017 BEHAVIORALFINANCE Why Do Women Bully Each Other at Work?

THE 2018 BUDGET

Buhari probably has the wrong answer to Nigeria’s unbalanced economy

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EDITOR’S NOTE Dear Reader, Hello and welcome to this issue! As usual, in this issue we have plenty in store for you from the world’s financial and corporate newsrooms. The New Year starts with a much weaker Naira and equity markets setting new records. Meanwhile, expectations of a strong stimulus and active fiscal policy through the implementation of the 2018 budget are high. We are not going to differ from the consensus forecast in these matters. As for the Oil industry currently, the latest report from the US Energy Information Administration has revealed that for the first time in more than four years, the United States’ monthly import of Nigerian crude oil rose to 12.29 million barrels. Also, after OPEC’s decision to extend oil production cuts, Libya and Nigeria, are signaling their intent to raise output in 2018. Despite Nigeria’s push for diversification, this year alone, Nigeria has imported 450,000 tons of palm oil to the tune of N116.3billion, is as grim a reality as it is worrisome. This issue has two related stories on banking which reflects our take, that technological advances define the present moment. Technology develops at its own pace, and the timing of its deployment is only partially affected by the macro picture. We looked at the top performing cross border African banks as well as top global banks branches designed to appeal to millennials. Over the past administrations, the central bank of Nigeria has tried and failed to reduce inflation through monetary policy. It now appears that the president will employ Keynesian fiscal policy, through protectionist policies and big increases in infrastructure and defense spending, to jump-start an economy experiencing the weakest recovery since independence. After earthquakes occur, everyone has to wait and see how the aftershocks ripple through the region. So it will be in the era of President Muhammadu Buhari. We look forward to work with all stakeholders as we continue to make the magazine a success and we welcome your submissions, as well as feedback as authors, readers, and reviewers. We hope you enjoy this issue and We look forward to bringing you more news and insight! In the meantime, please visit our website www.marketdigestng.com go to stay up-to-date on industry news as it happens. We hope you find this edition a rewarding read. With warmest thanks

Esele Walter Odion EXECUTIVE EDITOR

EXECUTIVE EDITOR Esele Walter Odion MANAGING EDITOR Ailsa Callum FINANCE MANAGER Muhammad Asoloko CREATIVE DIRECTOR MDN Graphics ADVERTISING MANAGER Ade Kayode BUSINESS DEVELOPMENT Amanda Akah DISTRIBUTION Tunde Balogun For advertising opportunities Please contact +234(0) 705 957 0580 Market Digest Nigeria magazine is published four times yearly. Unauthorized reproduction is strictlyforbidden. Printed by Market Digest Nigeria Publishing. www.marketdigestng.com Market Digest Nigeria 7

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CONTENT REGULARS

Editor’s Letter 7 Business News 12 Events 26 Opinion International 40

LUXURY LIVING

South Bank Tower’s, James Bond-style Penthouses 30 $13 million Yacht-inspired Million, Rolls-Royce Sweptail 50 FASHION Gifts for him 34

FEATURES

6 User Experience Tests to Do When Redesigning Your Website 44 How AI Can Help Africa Get Universal Health Care 47 5 Virtual Stock Market Games That Help You Learn How to Invest 54 What Do Millennials Expect from a Retail Banking Environment? 57 4 Branches Designed To ‘‘Wow’’ Millennials 60

FINANCE

Investors Aren’t Yet Calling an End to Nigeria’s Naira Problem 24 THE 2018 BUDGET Buhari probably has the wrong answer to Nigeria’s unbalanced economy 64 Top Cross-Border African Banks in 2017 72 Charging Late Payment Fees, The African Time Problem 84 Why Do Women Bully Each Other at Work? What You Need to Know When Your Boss Is a Woman 86

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NEWS

BUSINESS NEWS Two African Companies Make 2017 Top 50 Digital Banks List

inancial IT Magazine released their 2017 Financial IT Top 50 Digital Banks list. Making it onto the list were two African companies, which included Nigerian Fintech company, Kudimoney, and South African company Bettr Finance. Financial IT Magazine, a voice in global FinTech, AI, Digital Banking and Blockchain, every year recognizes the top 50 global pioneers at the intersection of technology and digital banking services by publishing the report, and highlighting the role players in the global digital banking industry. Babs Ogundeyi is the founder and CEO of Kudimoney. Describing Kudimoney to Financial IT Magazine, Ogundeyi said: “Kudimoney is building a Pan-African Digital Bank. A bank without boundaries, a bank that allows you access to your money (and our money) whenever you need it. We recently launched our first product, which is an online lending platform that allows you to access finance from the comfort of anywhere you happen to be. Our vision for lending is to make finance more accessible, our desire is to over time lower the cost and barriers to consumer lending.” com parent Vodafone in March. In many of these markets there isn’t sufficient fixed line Internet that would be needed for mobile banking or even other banking options, he said.

MTN takes on Vodacom for title of Africa’s biggest digital bank MTN is seeking to challenge rival Vodacom as Africa’s biggest digital bank by tripling its customer numbers within three years. Already the continent’s biggest mobile-phone company by subscribers, MTN is adding about 500 000 active banking customers a month, MTN CEO Rob Shuter said about 20 million people use MTN’s mobile banking now. MTN, Vodacom and other competitors are using more affordable and faster Internet to offer banking to people in countries where traditional financial services are scarce. Mobile-money accounts allow users to deposit and withdraw funds via their phones and pay for everything from groceries to haircuts. “We really are at that early adoption stage of mobile internet” in Africa, said Shuter, who joined MTN from Voda-

Vodacom owns about 35% of Nairobi-based Safaricom, whose fast-growing M-Pesa banking service has made it Kenya’s biggest company. Together they have about 32 million banking customers in Africa. Chief executive officer Shameel Joosub said last week that Vodacom was the “biggest bank in Africa,” having moved about $100bn through M-Pesa in the last year. Orange and Bharti Airtel also provide the service on the continent. Globally, $269bn was moved through mobile money transactions in 2016, up from $1.2bn in 2006, according to GSMA.

photos: (top)-kudimoney.com. (Bottom)-moneynew.ng

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Moody’s maintains negative outlook for SA banks

nternational ratings agency Moody’s has maintained its negative outlook for the South African banking system, saying that projected sluggish GDP growth and an “unpredictable domestic political context” would weaken banks’ loan quality and profitability. Moody’s released a new 22-page report - “Banking System Outlook - South Africa” – earlier this month. It said weak operating conditions were driving its negative outlook. Moody’s analyst and co-author of the report Nondas Nicolaides said in a statement that SA GDP growth was expected to remain low for the remainder of 2017. He said Moody’s expects subdued GDP growth and rising competition to curb banks’ pricing power this year, particularly in the corporate segment, driving down revenue growth. Despite the announcement by Statistics South Africa in November that

SA GDP had shown 2.5% growth for the second quarter of 2017, Moody’s has forecast real GDP growth of only 0.5% for South Africa in 2017, rising to just 1.2% in 2018. It noted that this was “still significantly lower than the government’s 5.4% target” set out in the National Development Plan 2030. In addition to low GDP growth, Moody’s noted that SA banks were operating in an “unpredictable domestic political context”, with unfavorable commodity prices, weak consumer demand and still-rising unemployment. “Over the next 12 to 18 months, Moody’s expects South Africa’s weak economy to pose a challenge to the performance of bank loans,” it said.

Don’t Forget Japanese Stocks When Investing in Developed Markets The Nikkei 225 has outperformed major U.S. and European stock markets over the past 12 months and year to date With all the attention being paid to U.S. and European stocks, which have been setting record highs or approaching them, Nigerian advisors and investors may not have noticed that Japanese stock prices are also surging. The Nikkei 225, a price-weighted index containing the top 225 blue-chip companies trading on the Tokyo Stock Exchange, just reached a 21-year high. It gained more than 28% over the past year more than the S&P 500 (23.5%) and is almost even with the S&P 500 index year to date, gaining 15.14% versus 15.3%. The Nikkei has also outperformed the EuroStoxx 50 and FTSE 100 over the past year and to date. Feeding the rally is an economy that’s experiencing its longest expansion since 2006, though second-quarter GDP growth was revised downward to 2.5% from 4% initially; a very accommodative central bank; a prime minister who’s intent on growing the economy; and a weaker yen. Just days after his party’s big win in a recent national elections, Prime Minister Shinzo Abe called for 3% wage hikes in next spring’s negotiations between management and labor unions to help boost the economy and increase inflation. photos: (top)-SABanks.co.za. (Bottom)-Bloomberg. Market Digest Nigeria 13

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NEWS

Nigeria’s improved doing business ranking

he news that Nigeria has moved up 24 places to 145th in the World Bank’s ‘Doing Business’ report published last month, which also indicated that for the first time the country is recognized as one of the top 10 most improved economies in the world is a good reason to cheer. Established in 2002, the ease of doing business ranking has become a benchmark against which reforms are measured and the clearest indicator yet of a country that is open for business. It is a standard report format that allows for comparison of various economies globally on clearly defined parameters. To arrive at the ease of doing business rankings, several assumptions are made to get an equilibrium point between economies. More often than not, they indicate how much red tape is involved in getting a business off the ground. Therefore, to a large extent, governments interested in reforms achieve good result improving ease of doing business in their countries. Countries spend huge resources courting foreign investments hence the index provides considerations by which investors judge the seriousness of a country. For too long, Nigeria has failed to take pragmatic steps at reforms. Public institutions are weak and administrators are pliable. Processes are painfully tedious and systems are a minefield of corruption. The situation is worsened by epileptic power supply. This improved ranking is the clearest indication yet that Africa’s biggest economy is turning the corner. Prof. Yemi Osinbajo, Nigeria’s vice president, who is leading the charge to improve doing business ranking, said he is elated that the country is now one of the top ten reforming economies in the world in 2017. “After a decade-long decline in Nigeria’s rankings, last year the Government recorded a modest increase. This year, the President set us an ambitious target of moving up twenty places in the rankings – I am delighted that we have exceeded his goal. Improving the business environment is at the heart of the Buhari Administration’s reform agenda. We are reinforcing our economic turnaround by a vigorous and active implementation of the Economic Recovery and Growth Plan (ERGP) so businesses operating in Nigeria can thrive and be competitive globally,” said Osinbajo. The World

Bank highlighted five reforms making it easier to do business in Kano and Lagos, the two cities covered by the report in Nigeria over the course of last year. These are starting a business, dealing with construction permits, registering property, getting credit, and paying taxes. In the area of company registration, the Corporate Affairs Commission has moved to offer online registration and introduced new features such as electronic stamping of registration documents. Thus, entrepreneurs have been able to register their businesses much faster, within 24-48 hours, thereby saving cost and time. This is important because a simple, fast, and transparent business registration processes enables investors, both local and foreign, to register as quickly as possible. A registered company benefits from access to credit, is able to hire full time employees in accordance with the country’s laws, has more leverage when negotiating with suppliers, and shows clients and consumers that it is a legitimate business according to the Investment Climate Facility ICF a body facilitating investments in Africa.

photos: (top)-G7summit.com (Bottom)-TodaysNews.ng

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According to the ICF, the sooner a company can start operating, the sooner it can start earning money. A delay in the business registration process therefore, not only consumes valuable time but also increases costs, which some businesses cannot afford. Once registered, a business becomes a legal entity, which opens up avenues for growth and expansion.

It is also important to acknowledge that only two cities, Lagos and Kano were reviewed to arrive at the latest ranking. Admittedly, they represent the economic livewire of the country but they are not the only states where reforms in ease of doing business are required. Not much progress was achieved in electricity and this should be the next target in the quest to improve the ease of doing business in Nigeria.

The Role of PEBEC

PEBEC’s reforms have included relaxing visa entry rules for foreigners. The immigration service has opened additional offices across the country to enable foreigners obtain residence permits more easily. There Getting access to credit is now eas- have been reforms at local ports to ease bureaucracy bottlenecks and ier and Nigeria is placed 6th in the boost transparency. The council has also tackled difficulties associated world on this indicator. This indi- with starting and registering businesses locally: Nigerians can now regcates that the construction sector ister businesses online without engaging middlemen (typically lawyers) may see a boom. The Government at a lower cost than a year ago. recorded a significant success by collaborating with the National Assembly to pass two new Acts, the Secured Transactions in Movable Assets Act 2017 and the Credit Reporting Act 2017, thereby strengthening the legal framework for access to credit for SMEs across the country – an important requirement for the success of SMEs. Finally, it has become easier to pay taxes in Nigeria because taxpayers can file tax returns at the nearest Federal Inland Revenue Service (FIRS) office, and electronic payment and filing are gradually gaining acceptance. This will increase tax compliance and improved government earnings helping to pay off Nigeria’s debt. But it is not yet all clear for Nigeria, the distraction of the 2019 But is it really any easier? general elections and the political But despite the rise in the rankings, there’s still much to do. Even the campaigns expected to start in full data suggests so: Nigeria still ranks in the bottom quarter globally earnest next year, the president’s and is the 24th ranked African country in the report. Access to credstate of health, volatility of oil it, especially through banks, remains difficult. Businesses still face the prices and the specter of militanrisk of being buried under the weight of multiple taxes and levies from cy hangs about this achievement. rent-seeking local and state government agencies. Back in March, the The critical imperative for Nigeria association of hotel owners in Abuja, Nigeria’s capital complained of therefore is to mainstream these multiple taxes and levies which “could force them out of business.” A reforms persuaded the legislature way to improve the ease of doing business is simply for government to to include those yet to be included do a much better job at providing and maintaining amenities. Accordas part of the country’s laws. A ing to an article on Quartz, the reforms must “move beyond the burevision of the company code and reaucracy of doing business, and push on infrastructure, human capital, other relevant business registrasecurity, and other institutional improvements which are also key for tion laws are now required. competitiveness.” Market Digest Nigeria 15

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NEWS

Africa to get state-of-art HIV drugs for $75 a year Health ministries and other public sector purchasers will be able to buy TLD from next year at the capped price. The agreement could potentially save them more than $1 billion in drug bills over the next six years, the partners estimate. As well as improving treatment, the drug combination should also reduce the need for more expensive second- and third-line drugs.

Treatment and resistance

Around 37 million people around the world are infected with HIV, according to the United Nations AIDS agency UNAIDS. Just over half of them about 19.5 million patients get antiretroviral therapy medicines to keep their disease in check. That akers of generic AIDS drugs will start churning out mil- represents remarkable progress in the past lions of pills for Africa containing a state-of-the-art med- 20 years, driven by the availability of a first icine widely used in rich countries, after securing a multi-mil- wave of cheap generic drugs from Indian lion dollar guarantee that caps prices at just $75 per patient a companies. But rising levels of drug resisyear. Global health experts hope the deal will help address two tance are now a growing concern, while low looming problems in the HIV epidemic, the rising threat of prices have cut the incentive for investment resistance developing to standard AIDS drugs, and the need for in generic drug-making capacity. In six out more investment in manufacturing capacity. Bill Gates’ chariof 11 countries surveyed recently in Africa, table foundation will guarantee minimum sales volumes of the Asia and Latin America, researchers found new combination pills using dolutegravir, a so-called integrase that more than 10 percent of HIV patients inhibitor that avoids the drug resistance that often develops starting antiretroviral drugs had a strain with older treatments. of HIV resistant to the most widely-used medicines. Once the 10 percent threshold is In return the drugmakers, India-based Mylan Laboratories and reached, best practice calls for switching to Aurobindo Pharma, will agree the maximum price of about different drug regimens. $75 per patient for a year’s supply less than the list price for one day’s supply of a dolutegravir combination in the United States. Dolutegravir is already being used on a The agreement, which will make the treatment available to 92 limited basis as a single drug in Kenya, Nipoor countries, starting in Africa, will be formally announced geria, and Uganda. The drug was originally during the United Nations General Assembly in New York this developed by ViiV Healthcare, the HIV month. “We need to make that guarantee because (of) the fixed business majority-owned by GlaxoSmithcosts of everybody gearing up to make high volume,” Gates Kline. ViiV has offered licensing deals to told Reuters in a telephone interview. “That just wasn’t going generic companies to sell low-cost versions to happen unless we put forward a very substantial volume of the medicine in poor countries. Clinical guarantee.” The Bill & Melinda Gates Foundation’s pledge is a trials have shown that treatment regimens central plank of a new partnership – the largest of its kind in including dolutegravir work faster, have global health – that also includes the governments of South fewer side effects and demonstrate greater Africa and Kenya, the Clinton Health Access Initiative, and potency against drug resistance than stanAmerican, British and U.N. agencies. Under the deal, Mylan dard HIV drugs used in Africa and other and Aurobindo will ramp up availability of a new fixed-dose poor countries. combination of tenofovir disoproxil fumarate, lamivudine and photos: (top)-HealthPlus.co.za. dolutegravir (TLD).

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Nigeria is the second most expensive place to buy food in the world

n some parts of the world, a single plate of food can eat up more than an entire day’s earnings. That’s according to a new joint study by the United Nations’ World Food Programme and credit card company Mastercard, which lays bare the real cost of feeding yourself around the world. In some countries, buying a meal can cost the local equivalent of hundreds of U.S. dollars, the research says. In some countries, buying a meal can cost the local equivalent of hundreds of U.S. dollars, the research says. In the state of New York, for example, a simple serving of food like rice over beans costs $1.20 an estimated 0.6% of the average daily income there. Compare that with the situation in South Sudan, where the same dish would set someone back 1½ days of income. That’s the equivalent of a New Yorker having to shell out $322. For rice and beans.

Here are the world’s five most expensive places to buy a meal, based on people’s average daily incomes, according to the study: 1. South Sudan: $321.70, relative to New York pur-

chasing power (155% of South Sudan’s average daily income) 2. Nigeria: $200.32, in New York terms (121% of Nigeria’s average daily income) 3. Deir Ezzor, Syria: $190.11, in New York terms (115% of Syria’s average daily income) 4. Malawi: $94.43, in New York terms (45% of Malawi’s average daily income) 5. Democratic Republic of Congo: $82.10, in New York terms (40% of the Congo’s average daily income) Researchers said they wanted to “highlight some of the real reasons countries often end up in a vicious cycle of poverty, such as conflict and insecurity.”

Dangote withdraws tie-up deal with PPC

igeria’s Dangote Cement has withdrawn its interest to tie-up with the South African firm, sending its shares more than 13% lower. Africa’s richest person Aliko Dangote joined the race to buy South Africa’s biggest cement producer in September. PPC is already the subject of an all-share merger bid by local rival AfriSam that values it at $700 million. “Shareholders are advised that, on October 5 2017, the board received from Dangote a formal withdrawal of its interest in respect of the Proposed Combination,” PPC said in a statement. PPC gave no reason for the move. However, shares in PPC fell 13.64% after the announcement, before recovering some ground to trade 4.34% lower at R6.17. The price was still above AfriSam’s R5.75 offer price. The interest from Dangote Cement, with a market capitalization of $12 billion, had raised hopes of a bidding war and pushed PPC’s share price above AfriSam’s offer price. “The general feeling was that Dangote would provide some sort of stability as well as capital going forward,” Dangote Cement, the Nigerian company, had earlier written to PPC offering South Africa’s biggest cement

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maker cash and shares as part of a takeover deal that fueled a bidding war and PPC’s shares rose. The approach by Lagos-based Dangote follows a joint offer from Toronto-based Fairfax Financial Holdings and PPC’s domestic rival AfriSam Group. While PPC had said it would consider all bids, the Public Investment Corporation, its largest shareholder, supports a tie up with AfriSam and Fairfax, people familiar with the matter said. LafargeHolcim, the world’s biggest cement maker, is also monitoring photos: PPC’s situation, the people said.

(top)-9jaFoodie.com (Bottom)-TodaysNews.ng Market Digest Nigeria 17

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NEWS

The 2017 Collins Word of the Year Is… “Fake News”

ollins Dictionary has named its Word of the Year for 2017 as “Fake News”. Literally. Even though it’s technically two words. Donald Trump’s favorite saying beat out competition from the likes of “Fidget Spinner”, “Gig Economy”, and “Echo Chamber” to cement its place in the English lexicon. Collins defines “Fake News” as “false, often sensational, information disseminated under the guise of news reporting”. It has seen a usage increase of 365 percent since 2016. And while Donald Trump didn’t invent the term, he certainly popularized it during and after the 2016 U.S. elections.

Walk the streets of Lagos and you will see shoddily published cheap magazines with sensational headlines, most of which, by merely looking at the absurdity of the front-page headlines, you will know are full of fake news stories. But these magazines sell as fast as soft, warm bread in the morning because they feed people’s love for gossip and controversy. Fake news, also called hoax news, is content that’s deliberately misleading in order to accomplish two things: drive web traffic and push propaganda.

Why Fake News Is So Much Worse for Investors

WOLE SOYINKA

“The internet has seen a rise in reactionary and often distorted news,” he says. “On the other hand, it has also given a voice to the voiceless when in the right hands and addressed to the appropriate audience.”. The chaos the Internet has brought is both a source of creative expression and political oppression, he says. At 83, Africa’s first Nobel laureate for literature has seen just how information can be distorted by political power. He’s fled between continents for decades now, and his newest home will be Johannesburg, where he moved after president Donald Trump came to power. As he relocated yet again, Soyinka says he already knew the “horror” that would come with Trump. “Fake news is a permanent weaponry of power,” he said in an interview after delivering a lecture on humanities and technology Liberty Vuka Knowledge Summit on Nov. 1. “The agenda behind inserting fake news is to confuse society.” If you have been around long enough, then you’ll know that fake news is not a recent phenomenon. It is, in fact, the foundation on which many tabloids and blogging careers are built–peddling rumors and outright lies.

Consumers of political news are subject to the same sorts of biases and cognitive errors that affect investors. However, there is a significant difference between these two types of news consumers: Traders have a fast and measurable feedback loop investment returns that penalizes those who believe things that are not true. Partisans suffer no tangible losses when they indulge their biases, enduring nothing more than the occasional shock of being proven wrong. The specific cost of fake news to the individual is de minimus. Savvy Nigerians should only follow trusted sources that have a track record. Understand your own biases. Be skeptical. Force yourself to understand opposing views by reading widely. Reduce the amount of buzz and noise in your consumption. Don’t read to confirm your own views; find things that challenge your positions.

Photo credit:(Janine Greenleaf Walker/JAG Communications)

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26-year-old founder wants to change payments in Africa By Sara Ashley O’Brien @saraashleyo

boyeji is the cofounder of Flutterwave, a payments API that makes it easier for banks and businesses to process payments across Africa. The service allows consumers to pay for things in their local currency; Flutterwave takes care of integrating banks and payment-service providers into its platform so businesses don’t have to take on the expense and burden. U.S. investors just poured $10 million of fresh funding into it. This sizable round comes one year after Mark Zuckerberg and Priscilla Chan led a $24 million funding round into another

Africa-focused startup, Andela. Andela, also cofounded by Aboyeji, trains and connects African developers to global companies for work. “It is critical that Africans are able to participate in the digital economy,” Aboyeji told CNN Tech. More than half of global population growth over the next 30 years is expected to occur in Africa, according to a report from the United Nations. By 2035, the number of Africans joining the working age population is expected to exceed those entering it worldwide, the International Monetary Fund projects. There’s no universal payment method in Africa, and only 3% of Africans reportedly own a credit card. Other forms of payments include bank transfers and digital wallets. It means that African businesses have a hard time accepting payments from visitors. It also makes it difficult for companies like Google (GOOG), Netflix (NFLX, Tech30), Amazon (AMZN, Tech30) and Facebook (FB, Tech30) to accept local payments from African customers. It hinders the ease with which Africans connect with some of tech’s most beloved services. These are factors that Aboyeji says Silicon Valley needs to start preparing for now. “The reality is that it’s not about flying to the moon and moonshots

missions,” he said. “It’s about whether the majority of people in 30 years can lead good lives because of technology.” Aboyeji attributes this to why he decided to leave Andela. Aboyeji, the only African of Andela’s four cofounders, announced in August he’d left to start Flutterwave with a team of African ex-bankers, engineers and entrepreneurs. “We’re peering 15-20 years into the future and saying, ‘What do we have to do to save the world?’” he said. “When you have a situation where a majority of people who live in the world are excluded from the new prosperity of software, that’s not good for the future of the world.” Aboyeji, who spent much of last year traveling between the company’s headquarters in San Francisco and its Nigeria office, is doing his part to make a dent. (Flutterwave also has offices in Kenya, and South Africa.) To date, the company is processing more than $1.2 billion in payments across 10 million transactions. It accepts 350 currencies across 30 African countries, charging merchants a small service charge, which it shares with banks. Investor Ian Sigalow a partner and cofounder at Greycroft Partners, which co-led the new round in Flutterwave with Green Visor Capital said his firm has invested in two Africa-focused startups over the past year. “We spent the first 10 years at Greycroft, from 2006 to 2016, looking for investments in Africa because we’ve always believed in the potential of the market,” Sigalow said.

photos: AfricaPlus.com Market Digest Nigeria 19

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NEWS

General Electric Living the Nigerian Dream Recent investment spree in Nigeria looks to have been justified. The industrial conglomerate has been awarded about $2 billion to upgrade the country’s dilapidated rail network, without facing any competition. Fola Fagbule, vice president at Africa Finance Corporation, the multilateral development finance institution established in 2007 to bridge Africa’s infrastructure investment gap, confirmed that General Electric was the only bidder on the project. Together with its partners, South African company Transnet, Dutch-based APM Terminals and China’s Sinohydro Consortium, the company will now be tasked with upgrading roughly 3,500 kilometers (2,175 miles) of existing lines serving major cities such as Lagos and Kano. In November, this potentially lucrative contract was shrouded in uncertainty after Nigeria’s upper house of parliament launched an inquiry into General Electric’s dealings with the country’s government. The investigation centered on determining whether Nigeria’s government had violated rules by opening talks with the U.S. engineer without consulting parliament or other state bodies. Last year, General Electric announced plans to invest about $150 million in Nigeria, as part of its bid to support the development of infrastructure technologies, services and solutions in the country. The company, which has been operating in Nigeria for over 40 years, provides expertise in a number of sectors, including aviation, rail transportation, energy, healthcare, power and water. photos: (top)-247News.com (Bottom)-DiamondBank.com

Diamond Bank to sell West Africa units to focus on Nigeria

iamond Bank is quitting other West African markets to focus efforts at home and deploy its resources on personal banking business in Africa’s biggest economy. The move by Diamond Bank (DIAMONB.LG) ends the mid-tier lender’s 18-year push abroad. Several Nigerian banks expanded abroad than a decade ago, encouraged by rising commodity prices and seeking to capitalize on a growing middle class in the region. But prospects have dimmed with a sharp fall in commodity prices since mid-2014 that triggered currency crises in some markets and turned loans sour. “After 18 years of building the Diamond Bank franchise in other markets in West Africa, the time has come to fully apply our resources to Nigeria,” Diamond Bank Chief Executive Uzoma Dozie said in a statement. It said it wanted to apply its resource to Nigeria to develop a profitable technology-driven retail banking business. The bank said on Friday it had agreed to sell its operations in Benin, Togo, Cote d’Ivoire and Senegal to a Cote d’Ivoire-based financial services company Manzi Finances S.A. for 61 million euros. It expects the deal to close this year. Diamond Bank posted a 71.5 percent rise in nine-month pretax profit to 6.67 billion naira in September. Several Nigerian lenders have adapted their business models after low crude prices put pressure on the once lucrative oil and gas loan book. Nigeria exited recession in the second quarter but growth is fragile. 20 Market Digest Nigeria

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Oil Spills In Nigeria Could Kill 16,000 Babies A Year In a report by CONOR GAFFEY Nigeria, one of the world’s most oil-rich countries has a history of catastrophic oil spills that have wreaked havoc on the environment and local communities. But a new study says that oil spills may have also claimed the lives of thousands of babies born to mothers who live in areas contaminated by such incidents.

he study, published as a working paper by the CESifo group, found that if an oil spill occurred within 10 kilometers (6.2 miles) of the residence of a mother before she fell pregnant, the mother’s baby would be twice as likely to die. Oil spills that occurred while the mother was actually pregnant did not have an impact on child or neonatal mortality, according to the study. Researchers found that even if the oil spill occurred five years before the mother conceived,

it still resulted in the neonatal mortality rate doubling from 38 deaths per year to 76 deaths per year for every 1,000 live births. Given that there were almost 5.3 million live births in Nigeria in 2012 and that around 8.05 percent of these births took place within 10 kilometers of an oil spill, the authors estimated that oil spills could have killed around 16,000 infants within their first month of life in 2012. Roland Hodler, the study’s lead author, told the Guardian that the results constituted a “tragedy.” “Even four to five years prior to conception, an oil spill still matters. I think this should be seen as a firstworld problem for something to be done,” said Hodler. Oil spills are a fairly common occurrence in the Niger Delta region, a huge area of swamplands in southern Nigeria. The Nigerian Oil Spill Monitor has recorded more than 11,500 since 2006 when a government agency was set up to detect and investigate oil spills though a few hundred of these were mistaken reports. The spills have led to accusations from Nigerians that international oil companies are exploiting the

country’s natural resources. Royal Dutch Shell paid out £55 million ($83.5 million) to some 15,600 farmers and fishermen from the Bodo community in 2015 after two massives oil spills in 2008. Spills have also been a factor in periods of militancy in the region, most recently led by the Niger Delta Avengers. The CESifo study, which was published as a working paper, looked at the effect of oil spills on mortality rates for infants born in the nine oil-producing states of the Niger Delta—Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and Rivers—to infants born elsewhere. It paired data from the Nigerian Oil Spill Monitor with results from a 2013 national demographic and health survey and, overall, included data of around 5,000 children born to 2,700 mothers in 130 clusters that were all located within 10 kilometers of an oil spill. The study compared mortality rates and health of siblings born before and after nearby oil spills. It found that the closer a child was born to the site of an oil spill, the higher the rate of neonatal mortality, and that oil spills prior to conception also resulted in increased wasting i.e. low weight or stunted growth among children. .In 2016, the Nigerian government launched a $1 billion cleanup operation in Ogoniland, an area of the Niger Delta that has been stricken by widespread oil pollution in recent years. Shell only began a cleanup operation following the 2008 and 2009 spills in the Bodo community earlier in 2017.

photos: Conor Gaffey Report. Market Digest Nigeria 21

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NEWS

Nigeria does not see devaluation risk in midterm -finance minister In a report by Felix Onuah, Nigeria’s government expects the naira currency to strengthen and does not see a significant risk of devaluation in the medium term, Finance Minister Kemi Adeosun said in November. The naira has been stable across its multiple exchange rates, while the central bank continues to intervene with dollar sales on the official market since lifting currency controls for investors. Adeosun also defended the government’s plan to borrow more in dollars to refinance a portfolio of treasury bills and help plugholes in its 2018 budget. Nigeria expects a shortfall of $7.5 billion for its 2018 budget, which it plans to raise in foreign loans from the World Bank etary Fund has voiced concerns about rising debt and from offshore markets. service risk. Adeosun said its debt strategy would reduce Nigeria’s debt burden, boost foreign reserves It intends to issue a $2.5 billion Eurobond before and create savings in debt costs. the end of the year and is also considering offshore loans of $3 billion to repay part of a local treasury Adeosun said the treasury bill refinancing would save bill holding worth 2.7 trillion naira” The govern91.65 billion naira per annum in debt servicing costs ment does not see a significant devaluation risk as while the Eurobond issue would save 76.37 billion the implementation of reforms, over the medium naira annually when compared to the cost of borrowterm, is such that the naira is expected to strengthen,” ing at home. photos: Kunle Ojo Photos Adeosun said in a statement. The International Mon(Bottom)-NigerStateHouse

Nigeria Plans $1 Billion Processing Zone to Boost Exports Nigeria plans to establish a $1 billion crop-processing park with Turkish investors in the country’s north as part of efforts to improve value and boost agricultural exports, according to the country’s investment-promotion agency. The Badeggi Crop Processing Zone in Niger state is expected to start in June next year, with an initial investment of $250 million by a Turkish investor, deputy director at Abuja-based Nigerian Investment Promotion Council, Aminu Takuma, said in an interview. Additional funds of $800 million will follow and the investor will operate emerges from its worst economic slump in 25 years the park on completion, he said without identifying the Turkish partner, citing confidentiality obligations. caused by a drop in the output and price of crude, which accounts for more than 90 percent of foreign income. The government’s economic growth plan The facility will process more than 750,000 metric seeks to increase the contribution of agriculture to tons of crops including rice, maize, yam, cassava, gross domestic product to more than 8 percent by groundnuts and peas every year, according to the 2020, from about 4 percent this year. Goods will be agency. The government plans to set up 15 similar transported from the crop-processing zone through crop zones across the country of more than 180 million people, including one in Lagos, the country’s the nearby Baro inland port on the Niger River, taking them down to the coast for shipment abroad, commercial capital. President Muhammadu Buhari Takuma said. is trying to end the country’s dependence on oil as it 22 Market Digest Nigeria

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Can Nigeria Achieve Its Zero Oil Agenda? By Williams Ekanem

igerian’s reliance on crude oil revenue to stabilize is so apparent that a recent executive summary of the World Bank stated that, “Nigeria depends on exports of crude oil for approximately 70 percent of government revenue and 90 percent of foreign exchange earnings.” “The United States was winning markets in Europe last year, including the Netherlands, UK, and Italy, which are also export destinations for Nigerian crude,” said oil policy analyst Tsvetana Paraskova. Additionally, “Japan did not buy Nigerian crude oil in 2016, and China did not receive shipment from Nigeria after April 2016.” Although the situation was reversed slightly since early 2017 with the start of OPEC cuts, which gave the reprieve, Nigeria now competes with Angola to ship crude to Asia, the largest buyers of African crude, according to Paraskova. With the lost market share and stiff competition from Angola to export oil, a savvy articulation of policy decisions to maximize the nation’s resources would have been the focal objective by the managers, but the attendant skirmishes and maneuverings now transcends from policy to politicking. This is made manifest by the ongoing media coverage of NNPC, revolving around leaked memo of the Petroleum Resources Minister of State, Dr. Ibe Kachikwu. Internal workings of the NNPC now make banner headlines in the local media, a situation that not only creates confusion, but also sends wrong signals about the stability or otherwise of the cash

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cow corporation. This can result in reputation loss, and hinder NNPC’s prospects in the new markets being sourced. To the NNPC stakeholders scattered across the globe, a report of missing $25 billion definitely won’t be taken with a grain of salt it’s a huge amount. Hopefully the immediate response by the presidency that “there was no $25 billion NNPC contract anywhere,” will be enough to clear such negative perception. Senior Special Assistant to the Vice President on media, Laolu Akande, said that the transactions mentioned in the leaked memo, “are simply a shortlisting process, in which suppliers of petroleum are selected under agreed terms, and in accordance with due process.” According to Akande, “it is therefore wrong and misleading to refer to them as though they are contracts involving the expenditure of NNPC funds.” The leaked memo and its attendant consequences at a time of supposed policy enunciations to stay competitive can spread confusion and is capable of derailing even the best thoughtout policy. This can affect investment confidence, thereby robbing the nation of the much-needed revenue from investments to re-

vive the struggling economy. Gone are the days when NNPC had the equivalent of a captive market and an almost monopolistic command on crude oil in Africa. Angola has since emerged as a strong competitor. Governments of Equatorial Guinea and Cameroon just signed an MOU for gas exploration and Congolese crude oil all targeted towards the shrinking market in East Asia, Europe and the United States. According to S&P Global, total African crude oil exports are typically around 4.5 million barrels per day, of which exports from Angola and Nigeria account for a total of nearly 4.0 million barrels per day.

Bottom line

The crude oil market is getting tougher with more players, and the days of complacency are definitely over. Therefore, the NNPC should be at optimal performance and not stuck between policy and politics. photos: TheGuradian.com

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NEWS

Investors Aren’t Yet Calling an End to Nigeria’s Naira Problem By Paul Wallace

igerian officials are increasingly confident the naira’s troubles are over for good. Some investors disagree. Portfolio inflows have risen in the past three months with crude prices increasing above $60 a barrel and money managers taking heart from a new foreign-exchange trading window, in which the naira has converged with the black-market rate. That prompted central bank Governor Godwin Emefiele and Patience Oniha, the head of the Nigeria’s Debt Management Office, to tell investors in London on Oct. 27 that the currency was set to strengthen. Finance Minister Kemi Adeosun concurred; saying Nov. 2 the government sees no significant exchange-rate risk as it prepares to raise $5.5 billion of Eurobonds. But Nigeria’s system of capital controls, multiple exchange rates and the trading window known as Nafex would struggle to survive a drop in oil revenue or sentiment turning against emerging markets, which may come as the U.S. Federal Reserve raises interest rates, according to investors including Ashmore Group Plc and Standard Life Aberdeen Plc. “At the moment, it’s easy for them to manage the current system and muddle through,” said Brett Rowley, a managing director at TCW Group Inc. in Los Angeles, which oversees $200 billion and recently started buying naira debt again after pulling out during the 2014 oil crash. “That could change if we got a significant drop in crude production or prices. It’s not clear how Nigerian officials would react. That would be a key test to reassure investors they can get their

money out even in times of stress.” Yield-starved global investors have piled billions of dollars back into Nigeria in the second half of this year, attracted by the naira’s devaluation after the Nafex window opened in April and yields on one-year Treasury bills of above 21 percent for most of the year.

Oil Production

Foreign holdings of Nigerian government debt may have more than doubled from around 5% a year ago, according to Standard Chartered Plc. That’s helped the naira to appreciate 2% since August to 360.25 per dollar, trimming its loss in 2017 to 12%. The yield on oneyear T-bills has dropped around 400 basis points in two months to 18.2 percent, still among the highest in major emerging markets tracked by Bloomberg. For now, Nigeria’s benefiting from a bullish oil market and rampant demand for developing-nation assets. Crude prices have increased 39% since June as OPEC members including Saudi Arabia push for output cuts to continue in 2018. And production in Nigeria, which is exempt from the curbs, has risen 15% this year to 1.7 million barrels a day as militants ceased bombing export terminals and

pipelines. Foreign reserves are up to $34 billion, the highest in almost three years. But a drop in Brent crude to around $50 a barrel would probably be enough to push Nigeria’s current account back into deficit, according to Bank of America Corp., which sees the naira falling to 432 per dollar by the end of 2018.

‘Looking Rosy’

“It’s all looking rosy at the moment for Nigeria,” said Kevin Daly, a fund manager in London at Standard Life Aberdeen, which started buying T-bills soon after the Nafex window opened. “But that could easily change. Will the authorities be comfortable letting the naira drop to 380? That’s not been tested.” In the longer run, he says, Nigeria will struggle to sustain tight monetary policy, which is key to attracting foreign investors, and import restrictions if it wants the economy to pick up. Nigeria will be vulnerable to foreign-exchange shortages as long as it maintains a complicated currency regime and refuses, unlike other oil exporters such as Kazakhstan and Russia, to allow its currency to float freely, says

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Women will wait 217 years for pay gap to close, WEF says The World Economic Forum, best known for its annual gathering in the Swiss resort of Davos, said it would take 217 years for disparities in the pay and employment opportunities of men and women to end. This is significantly longer than the 170 years its researchers calculated a year ago. Taking other indicators such as access to healthcare and education and participation in politics in account, the overall gender gap will take 100 years to close also longer than the 83 years the WEF researchers predicted last year. It is the first time since the WEF began publishing its gender gap report in 2006 that “slow but steady progress” towards parity between men and women has halted. Saadia Zahidi, the WEF’s head of education, gender and work, said: “In 2017 we should not be seeing progress towards gender parity

shift into reverse. Gender equality is both a moral and economic imperative. Some countries understand this and they are now seeing dividends from the proactive measures they have taken to address their gender gaps.” The research ranks 144 countries on the gap between women and men based on economic, health, education and political indicators. Iceland ranked No 1 in the world on the table with Norway (2), Finland (3) and Rwanda surprising ranking 4th ahead of Sweden (5) France (11), Germany (12), UK (15), US (50) and Nigeria ranking 122 on the list. The report cites research from the accountancy firm Iceland is top of the index after closing 88% of its gap, and has been the world’s most gender-equal country for nine years, according to the WEF. It has

pulled away from the competition as Norway and Finland, in second and third positions, experienced a widening in their equality ratings.

20 Top African Start-Ups Enter World Bank Group Digital Acceleration Program Selected from a pool of over 900 applicants, these start-ups specialize in digital solutions for the African market, including fin-tech, transportation, health care, education, human resources, and B2B. Twenty of the most promising African digital start-ups will take part in the XL Africa (XL-Africa.com) residency, the flagship initiative of the business accelerator launched last April by the World Bank Group’s infoDev program With support from African investment groups, XL Africa will help the start-ups attract early stage capital between US$250,000 and US$1.5 million. The selected start-ups participating in the event from Nigeria are: Asoko Insight (Data, Kenya, Ethiopia, Ghana, United Kingdom, and Nigeria), Electronic Settlement Limited (FinTech, Nigeria), MAX (Transport, Nigeria), ogaVenue (Venue Platform, Nigeria), Prepclass (EdTech, Nigeria), Printivo (Printing, Nigeria), Rasello Company Ltd. (SME Services, Tanzania), Rensource (Energy, Nigeria),TalentBase

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(HR, Nigeria) and Tizeti Network Ltd. (Connectivity, Nigeria) XL Africa is funded by the governments of Finland, Norway, and Sweden, and administered by the World Bank Group with implementation support from IMC Worldwide, VC4A, and Koltai & Co. photos: (Top)-Gine Jesus\WEF (Bottom)-WorldBankGroup Market Digest Nigeria 25

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Nigeria, Economic Community of West African States, Major World Economies Adopt

Abuja Statement T

he Statement reaffirmed that trade and investment are inseparable and remain indispensable “twin engines” for economic growth, modernization and development of Africa. The Economic Community of West African States (ECOWAS), World Trade Organisation (WTO), Friends of Investment Facilitation for Development (FIFD) and participants at the High Level Policy and Private Sector Trade and Investment Facilitation Partnership Forum in November adopted a declaration titled “The Abuja Statement” at the close of the two-day event, which saw the participation of over 30 African countries as well as major world economies. The Forum was opened on the 2nd of November by Vice-President, Prof. Yemi Osinbajo with the support of the Minister of Industry, Trade and Investment Dr. Okechukwu Enelamah.

could contribute to facilitating the required investment as well as trade by developing multilateral approaches to improving transparent, cutting red tape, streamlining procedures and strengthening international cooperation with the aim of expanding sustainable pro-development investment.” In his reaction, Minister Enelamah said: “The new narrative of Nigeria out there: that the country is positive, pro-development, pro-business and pro-enabling environment for business.” On his part, the Director General/Chief Negotiator of the Nigerian Office for Trade Negotiations (NOTN) Ambassador Chiedu Osakwe stated that “This High Level Forum on Trade and Investment Facilitation held in Abuja, was an acknowledgment of Nigeria’s economic and trade policy leadership in West Africa, Africa and the global economy.”

The Abuja Statement on “Deepening Africa’s Integration in the Global Economy through Trade and Investment Facilitation for Development” was unanimously adopted after two days of intensive deliberations between policy makers and the business community from around the world. The Statement said: “One of the central objectives of the High Level Forum was to examine how the WTO

The High Level Forum was co-hosted by the Ministry of Industry, Trade and Investment, ECOWAS in partnership with FIFD. Members of FIFD coalition are Nigeria, Argentina, China, Australia, Brazil, Chile, Colombia, Hong Kong China, Japan, Korea, Mexico, Pakistan, Russia, Singapore, Switzerland, Canada, the European Union and Qatar.

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photos: Ministry of Industry, Trade & Investment

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Opening ceremony of the High Level Policy and Private Sector Trade and Investment Facilitation Partnership

The Minister of Industry, Trade and Investment Dr. Okechukwu Enelamah and Director General of the WTO

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Reasons Nigeria’s Emefiele won

Forbes 2017

Best of Africa Innovative Banking Award T

he Central Bank of Nigeria, CBN, governor, Godwin Emefiele, emerged the 2017 Forbes magazine Best of Africa Innovative Banking Award. The award was presented to Mr. Emefiele at a dinner in Washington on the sidelines of the annual meetings of the World Bank and the International Monetary Fund, IMF, in November. President of Forbes Customs Emerging Markets, Mark Furlong, said the award was in recognition of Mr. Emefiele’s courage and determination in using monetary policy to ensure financial stability in Nigeria. Mr. Furlong said the CBN under Mr. Emefiele had also shown transparency, which had helped to stabilize the economy through interventions in the real sector of the economy. He cited the CBN’s Anchor Borrowers’ Program, ABP as a major boost to the development of the agricultural sector in Nigeria. Before receiving the award, the CBN governor highlighted efforts since 2014 to stabilize the financial system and maintain the international value of the Naira. He attributed the award to the efforts of the CBN management and staff, the cooperation of government to check the negative impact of global shocks on the Nigeria economy between 2014 and 2016. The mon-

etary authorities, he noted were glad that its policies contributed in forcing inflation down from about 18 to 16 per cent, adding he was optimistic inflation would further be lowered with other policies in place. On CBN policy to restrict access to foreign exchange from the Nigerian foreign exchange market to some 41 items, Mr. Emefiele said the decision was to stop the country’s foreign reserves due to huge import bills, among other things. He listed the Anchor Borrowers’ Program as one of the Bank’s achievements, saying it helped increase the yields of farmers, create wealth and provided jobs for thousands of Nigerians. He said President Muhammadu Buhari had asked the Federal Ministries of Agriculture and Rural Development and Employment, Labor and Productivity, as well as other interest groups, including state governors to work towards creating more jobs through agriculture. On the management of the country’s foreign exchange, Mr. Emefiele said apart from the adjustments to the Naira value, an investors’ window created in the inter-bank market has attracted over $10 billion capital inflow into the country between May and October 2017.

CBN Governor Godwin Em Forbes Business Solutions, M

photos: Per Second News

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DG DMO AND THE CBN GOVERNOR

Godwin Emefiele and President Solutions, Mr Mark Furlong

Central Bank Governor of Nigeria, Mr Godwin Emefiele

Per Second News publisher and host of the event, Mr Femi Soneye,Former U.S Ambassador to Nigeria, Dr Renee Robin Sanders and publisher The Whistler Mr James Ume

Journalists from Nigeria Market Digest Nigeria 29

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South Bank Tower’s James Bond-style penthouses– £90 million Abiodun Ade

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LUXURY LIVING

ur next stop on the way to the world’s most expensive penthouses is in London. The growth in high-rise London living has transformed the word penthouse from a possible glimpse of the sky to master of all you survey, with top-of-the-town apartments now being kitted out in true James Bond style. South Bank Tower penthouse is one of the most expensive London penthouses. At £90 million it offers unparalleled views of the London Eye. Completed just last year the penthouse sits on the 41st floor of the South Bank Tower. Open layout, sculptured staircases and glass bathroom walls is what makes this penthouse so truly incredible. Fancy dinner at night in The Shard but don’t want to wait for a table? Hugo will sort it for you. Need London’s best sushi chef, tennis coach or – a recent request, just ask Hugo. Hugo Peña, formerly of the Savoy and Four Seasons, is the head of Consort24, the bespoke concierge brand that has been set up solely for the residents at South Bank Tower.

“... buyers who spend millions on a flat won’t wait. What they want, they want now,” The 30-strong team speaks 12 languages between them (they could still do with a Chinese-speaker, if anyone’s interested). They understand that buyers who spend millions on a flat “won’t wait. What they want, they want now,” says Peña. “We want to offer something different to any other residential development, something better and with more man-power than any five star hotel. This is their home. We want it to be their haven in a concrete jungle.” There’s the cool 20-metre pool and gym with full-time trainers on hand in the basement, and on the 10th floor there’s the residents’ lounge with panoramic views and a private cinema that’s intimately sized for a screening with a few friends.

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FASHION

GIFTS FOR HIM

Time is money: How to invest in luxury watches

Warren Buffett, the world’s greatest moneymaker, once said: “Never invest in a business you don’t understand.” Sounds like sensible advice one should follow. After all, paying up to $11m for a watch (the amount fetched for a Patek Philippe’s 1933 ‘The Henry Graves Supercomplication’ model at Sotheby’s in 1999; the highest price ever paid for a timepiece at auction) sounds like a major investment and it is a little hard to comprehend why. I am not sure Buffet would approve of it but again he is one to favor a more frugal lifestyle. Luxury goods, and especially vintage watches, have certainly attracted a lot of interest and attention over the past 15 years and have proven to be a smart investment.

atch prices have been booming since the turn of the millennium. Coupled with ever more astronomical auction results for landmark pieces, the second-hand watches market is creeping steadily upwards. Compared to your comatose savings, which are losing value especially with the constant fall in the value of Naira compared with world currencies like the dollar and pounds, putting your cash into a luxury timepiece isn’t the decadent splurge it might appear. Of course, there are no guarantees. Watches are what economists call an “illiquid commodity”. Which translates as unshiftable should times go bad. But watches do have one advantage over other investments: if you buy carefully, even if the market collapses, you’ll still own something beautiful, well made and useful. Not something you can say of your stock portfolio There’s a tendency for people to refer to expensive purchases as investments. “I’m going to invest in a new TV,” someone might say. Televisions are not investments. Neither is a phone or a car, unless it’s a rare vintage one that will be kept in a garage and never 34 Market Digest Nigeria

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touched. Clearly, pretty much anything with a technological expiration date is a bad financial investment. This is why many skeptics have voiced concerns about the priciest Apple Watches–because it makes little sense to drop thousands of dollars on a gadget-fashion piece that will be outdated

gold, and real estate, people sometimes do refer to watches as “investments” without completely misusing the word. And yet it would be silly for a typical Nigerian to view a watch, or a collection of watches, as a core component of an investment portfolio.

“Don’t think about them as financial investments,” says Ariel Adams, the founder of ABlogtoWatch.com, a prominent horology website. “Buying low and selling high doesn’t typically work so well in the watch world.” A large part of the reason, Adams says, is the fickle and emotional nature of the watch market. A single collector alone has the power to influence the tastes, trends, and values of the entire market. Pop culture plays a role too: There’s no doubt that James Bond propelled Rolex even higher when it debuted on Sean Conand lose value as time passes. But nery’s wrist in Dr. No. Essentially, what about mechanical watches? it’s really hard to predict where the You know, the ones that don’t use electricity and are technologically market will go, even where triedstatic, immune from cutting-edge and-true marques are concerned, which makes watches troublesome developments? People don’t buy as investment fodder. “Vintage mechanical watches for hi-tech collecting has always been big, features, so they’re not at risk of becoming obsolete. Like wine, art, but in the last five years, it’s exor other hard assets like diamonds, ploded,” says Paul Altieri, a watch expert and CEO of leading pre-

“Watches are what economists call an “illiquid commodity”. Which translates as unshiftable should times go bad.”

1/10/2018 5:51:22 AM

owned and vintage Rolex dealer Bob’s Watches. Elbow-deep in that market every day for years, he’s noted bubble-like growth (20% in the past two years; 50% in the past four), but he attributes it to the Internet and social media, which has jumpstarted global interest in watches. To him, that boom was just the world catching up.

So what watches best hold their value?

Certain relatively attainable ($4,000-$9000) watches are known to hold their value extremely well even appreciating in some cases. Interestingly, they’re almost all made by Rolex. “I hate to say it, but in this price range, vintage Rolex and now vintage Tudor, ‘the working man’s Rolex’ are the best game in town if you’re looking for an investment-grade piece that doesn’t have to sit in the safe,” says Adam Craniotes, a watch writer, collector, and founder of Red Bar, a group of watch aficionados. Everybody seems to agree on this. “Along with Patek Philippe [a brand typically outside of this price range], it’s the only brand that is able to maintain the high resale value with the majority of its products,” says Adams. “Rolex has spent decades creating the marketing image that a Rolex watch is a sign of success it also happens to be a good watch.”

Not all Rolexes mature equally, however.

“In general the watches that have done the best over time have been the sport watches: The GMT, the Submariner, and the Daytona,” says Altieri, who chalks this up to the more casual nature of a watch designed for a job or use, not a formal occasion. One of the reasons for Rolex’s success in value retention, according to Adams, is that it has kept the product line

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small, enabling many of these watches to become household names. Omega, in comparison, does okay on the second-hand market, but has hurt itself by peppering the field with so many different models over the years.

How to at least break even on a watch as an investment

While you shouldn’t count on a watch to produce a solid ROI, you can do a few things besides just getting a Rolex to give yourself the best chance at making a profit in 10 or 20 years. One option is going vintage. So when does a watch become vintage and not

“the working man’s Rolex’ re the best game in town if you’re looking for an investment-grade piece that doesn’t have to sit in the safe,”

of those left and every year more and more die off.”

The real reason you should buy a luxury watch

While the world of watches is unapologetically aware of value, money, and prestige, almost everyone in the industry and everyone interviewed by Money agreed on one thing: Buying one should be about your enjoyment of the watch itself, not the possibility of getting a return on your investment. Above all, it’s piece of jewelry you wear, something emotional and personal, not something soulless like an index fund or cache of bullion. “I always tell people to buy something they like, not something for an investment,” says Altieri. “It’s not a bar of gold, you get to enjoy and wear it.” “People should buy watches they want to wear,” agrees Adams. “Don’t ever get a watch that’s just going to sit somewhere.” Whether you’re shopping for your partner, son, father, or indeed any of the chaps in your life, these unique men’s Christmas gifts are just the ticket. So enjoy having a browse through our selection of watches below.

merely “pre-owned”? According to Altieri, the line is a little blurry: “After 20 or 30 years it starts to appreciate gradually in value that’s what’s happened to almost all Rolex watches. So we’re starting to see the 16800 become collectible. That’s the last Submariner made before the current one now.” As for why vintage models are most likely to keep going up in value, well, the limited supply is key. “They’re not making any more old watches,” says Altieri. “They’ve only made so many 5512s, one of the first Submariners with a crown guard, and there’s a finite amount Market Digest Nigeria 35

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FASHION

The Best Watches To Invest In Right Now Today’s timepieces that will become tomorrow’s vintage classics Rolex Explorer 2016

The Explorer has a lot in the way of pedigree, and this year’s model is one of the best to be released in a long time. The Explorer retails for $6,000, but it should hold much of that value in the future.

Omega Seamaster 300

The Omega Seamaster 300 is one of the best-looking dive watches you can buy right now, If you’re after a solid purchase that’ll set you apart from the crowd, the Seamaster 300 is great choice. It looks every cent of its $6,600 price tag

Rolex Submariner

The Rolex Submariner is one of the most recognized watches of all time for those who have upwards of $7,000 to spare. If you want a Submariner that stands out from the crowd, go for a Sea Dweller or No Date, which varies from the standard model.

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Speedmaster Moonwatch Professional, upwards of $5,250

Known as the Man on the Moon watch, the Omega Speedmaster was one of the first watches in space, and the only watch approved by NASA to be used on the Moon.

Rolex Daytona, $12,500. Introduced in 1963, the Daytona has always been known as Rolex’s racing or motorsport watch, mainly because of its bold chronograph.

Audemars Piguet Royal Oak Extra-Thin, £44,500

The Royal Oak’s classic silhouette here has all the girth of a wafer-thin mint due to a self-winding movement measuring an extraordinary 3.05mm.

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FASHION

Cartier Santos 100 Carbon Watch, $7,600

Square watches are back and no other one got us more excited about the shape this year than Cartierâ&#x20AC;&#x2122;s rugged take on one of their most iconic and refined timepieces.

Jaeger Lecoultre Grande Reverso Ultra Thin 1931, $17,200 This update to the acclaimed Grande Reverso model is just plain cool, with its chocolate brown matte dial and cordovan leather strap.

IWC Portugieser Chronograph, $16,600 IWC strikes a sweet cord between attention grabbing and refined with their latest Portugieser effort.

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OPINION: INTERNATIONAL

Brexit is stupidest thing any country has done besides Trump

Michael Bloomberg

n an exclusive by Graham Ruddick for the Guardian: Michael Bloomberg, the billionaire media mogul and former mayor of New York, has said Brexit is the “single stupidest thing any country has ever done” apart from the election of Donald Trump as US president. Bloomberg argued that “it is really hard to understand why a country that was doing so well wanted to ruin it” with the Brexit vote, in a series of outspoken remarks made at a technology conference in Boston. At that event, Bloomberg, 75, also warned that some workers at the financial media company that bears his name were asking to leave the UK and US because they think the two countries no longer like immigrants and are no longer welcoming. The CEO was in London in November to open a new European headquarters for Bloomberg in the City, covering 1.3 hectares (3.2 acres). But his

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it.” Bloomberg employs 4,000 staff in the UK and 20,000 worldwide, and the New York-based firm has long made the country its headquarters in Europe. But he said some staff were becoming unhap“We are opening a brand new py about London as a key location. European headquarters in Lon“One of the things that is hurting don two big, expensive buildings. us both in the United States and in Would I have done it if I knew the UK is that we have employees, they were going to drop out? I’ve not a lot but some, who are starthad some thoughts that maybe I wouldn’t have, but we are there, we ing to say: ‘I don’t want to work here can we transfer to some place are going to be very happy. “My former wife was a Brit, my daugh- else? This country doesn’t like immigrants,’” Bloomberg said. “All ters have British passports, so we love England it’s the father of our this talk in Washington – words have consequences. Whether we country, I suppose. But what they change the immigration laws or are doing is not good and there is not, there is general feeling around no easy way to get out of it bethe world that America is no cause if they don’t pay a penalty, longer an open, welcoming place everyone else would drop out. So and a lot of people don’t want to they can’t get as good of a deal as they had before.” He added: “I did go there, and the same thing is say that I thought it was the single happening in the UK because of stupidest thing any country has Brexit.” ever done but then we Trumped remarks, unearthed the same day, suggested he had regrets about making the investment decision because of the Brexit vote.

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Bloomberg first made the comments about Brexit at the little-reported HUBweek conference in Boston at the beginning of November and then repeated his quip about Brexit and Trump at an event in France. “It is really hard to understand why a country that was doing so well wanted to ruin it,” Bloomberg said of Brexit. “It was not a smart thing to do and getting out of it is going to be very difficult and is going to be very painful. It will hurt industries. People are already taking space in other cities over there [Europe], us included.” On his visit to London, Bloomberg was more circumspect. Giving a speech next to Sadiq Khan, the mayor of London, Bloomberg insisted his company was “strongly committed to London”. He added: “Whatever London and the UK’s relationship to the EU proves to be, London’s language, timezone, talent, infrastructure and culture all position it to grow as a global capital for years to come. We are very optimistic about London’s future and we are really excited to be a part of it.” Bloomberg said London was the Centre of Europe but warned

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that was “not going to be as true any more” due to Brexit. Bloomberg is worth an estimated $47.5bn according on Forbes and was given an honorary knighthood in 2015. He was a Republican mayor of New York between 2002 and 2013 before he reassumed his position as chief executive of Bloomberg. 2016 when he confirmed his decision not to stand.

“It was not a smart thing to do and getting out of it is going to be very difficult and is going to be very painful. It will hurt industries.’’

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Why Trumponomics cannot make America great again Nouriel Roubini

ow that US President Donald Trump has been in office for one year, we can more confidently assess the prospects for the US economy and economic policymaking under his administration. And, like Trumpâ&#x20AC;&#x2122;s presidency more generally, paradoxes abound. The main puzzle is the disconnect between the performance of financial markets and the real. While stock markets continue to reach new highs, the US economy grew at an average

rate of just 2% in the first half of 2017 slower growth than under President Barack Obama and is not expected to perform much better for the rest of the year. Stock market investors continue to hold out hope that Trump can push through policies to stimulate growth and increase corporate profits. Moreover, sluggish wage growth implies that inflation is not reaching the US Federal Reserveâ&#x20AC;&#x2122;s target rate, which means that the Fed will have to normalize interest

rates more slowly than expected. Lower long-term interest rates and a weaker dollar are good news for US stock markets, and Trumpâ&#x20AC;&#x2122;s pro-business agenda is still good for individual stocks in principle, even if the air has been let out of the so-called Trump reflation trade. And there is now less reason to worry that a massive fiscal-stimulus program will push up the dollar and force the Fed to raise rates. In view of the Trump

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OPINION: INTERNATIONAL administration’s political ineffectiveness, it is safe to assume that if there is any stimulus at all, it will be smaller than expected. The administration’s inability to execute on the economic-policy front is unlikely to change. Congressional Republicans’ attempts to replace the Affordable Care Act (Obamacare) have failed, not least because moderate Republicans refused to vote for a bill that would deprive 20 million Americans of their health insurance. The Trump administration is now moving on to tax reform, which will be just as hard, if not harder, to enact. Earlier tax reform proposals had anticipated savings from the repeal of Obamacare, and from a proposed “border adjustment tax” that has since been abandoned. That leaves congressional Republicans with little room for maneuvers. Because the US Senate’s budget-reconciliation rules require all tax cuts to be revenue-neutral after 10 years, Republicans will either have to cut tax rates by far less than they had originally intended, or settle for temporary and limited tax cuts that aren’t paid for. To benefit American workers and spur economic growth, tax reforms need to increase the burden on the rich, and provide relief to workers and the middle class. But Trump’s proposals would do the opposite: depending on which plan you look at, 80-90% of the benefits would go to the top 10% of the income distribution. More to the point, US corporations aren’t hoarding trillions of dollars in cash and refusing to make capital investments because the tax rate is too high, as Trump and congressional Republicans claim. Rather, firms are less inclined to invest because slow wage growth is depressing consumption, and thus overall economic growth.

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Beyond tax reform, Trump’s plan to stimulate short-term growth through $1tn in infrastructure spending is still not on the horizon. And, instead of direct government investment of that amount, the administration wants to provide modest tax incentives for the private sector to spearhead various projects. Unfortunately, it will take more than tax breaks to bring large infrastructure projects from start to finish, and “shovel-ready” projects are few and far between. On trade, there is good news and bad news. The good news is that the administration has not pursued radically protectionist policies, such as branding countries as currency manipulators, introducing across-the-board tariffs, or pushing for the border adjustment tax. The bad news is that Trump is sticking to his “buy American, hire American” credo, and his protectionist gestures will hurt growth more than they save jobs. He has already abandoned the Trans-Pacific Partnership and negotiations for the Transatlantic Trade and Investment Partnership with the European Union. He is renegotiating the North American Free Trade Agreement, and he may try to renegotiate other free-trade agreements, such as the bilateral deal with South Korea. And he could still start a trade war with China by introducing tariffs on steel and other products – especially now that China has been uncooperative in responding to North Korea’s escalating nuclear threat. Trump could also limit the US’s growth potential by restricting immigration. In addition to barring visitors from six predominantly Muslim countries, the administration is intent on restricting migration for highskill workers, and is ramping up deportations of undocumented

immigrants. This, along with the much-ballyhooed border wall, will cut future labor supply, and thus economic growth, especially as the American population continues to age and drop out of the labor force. Lastly, Trump’s deregulation agenda will not boost economic growth, and may actually weaken it over time. If financial regulations are loosened too much, the result could be another asset and credit bubble, and even another financial crisis and recession. Meanwhile, Trump’s decision to withdraw from the Paris climate agreement, combined with a rollback of environmental regulations, will lead to ecological degradation and slower growth in green-economy industries such as solar power. And weaker labor protections will further reduce workers’ bargaining power, thus holding down wage growth and overall consumption. It is little wonder that actual and potential growth is stuck at about 2%. Yes, inflation is low, and corporate profits and stock markets are soaring. But the gap between Wall Street and Main Street is widening. High market valuations that are fuelled by liquidity and irrational exuberance do not reflect fundamental economic realities. An eventual market correction is inevitable. The only question is whom Trump will blame when it happens.

photos: LydiaRice

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6 User Experience Tests to Do When Amber Callan Redesigning Your Website

usiness websites design and redesign in Nigeria is usually 100% outsourced. However, most websites designers use generic templates, which might not perfectly fit the needs of your target market

or create the best user experience. Businesses must recognize that in order to succeed in a competitive market you need to have the best brand experience for your customers. To ensure the process goes smoothly and that your end product is the best it can be, business need to fully test their websites during the design process before itâ&#x20AC;&#x2122;s fully launched. In order to be sure that you get the most out of your new website, here are six user experience tests to do during the process of a website redesign. Competitive Analysis

Most businesses are aware that they can compare themselves to competitors in order to see what they are expected to do or what they can do better. This should be no different when redesigning your website! Start with five of your direct competitors, looking at their websites. Youâ&#x20AC;&#x2122;ll want to create a spreadsheet, like the one below, so you can see the results of your analysis clearly.

For important pages, look at the most frequently visited pages. Since your visitors are looking at these pages regularly, you have to be sure that their user experience is great and that they can easily accomplish the tasks they want to do. 44 Market Digest Nigeria

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Task Analysis and Task Prioritization

Continuing the discussion on helping visitors accomplish their goals, think about websites you visit often. Why do you visit them? What do you hope to accomplish while on their website? With hundreds or thousands of people visiting your website, they probably have all sorts of different goals in mind and you should make sure they can accomplish all of these goals with ease. That’s where Task Analysis comes into play; it gets you to the bottom of what the visitor will want to do and the simplest, most effective way of doing that.

point A to point B seamlessly without confusion. When looking to redesign your navigation, I recommend doing a few card sorting experiments where you’ll put your different website pages on notecards and have participants sort them into categories. You can do an open sort or a close sort: Open Sort - When you don’t provide categories for the card sorting and you let the participant decide how to categorize your website pages. Closed Sort - When you provide categories that the

What Goals Do They Want To Accomplish?

First, think about the visitor and think of all the tasks they will be looking to complete on your website. Do they want to purchase an item? Do they want to contact support? Do they want to see delivery details? Do they want to request a quote? Write down every task you can think of and once you can’t think of any more, take your list and start to prioritize the tasks by how critical they are to a successful conversion and how often they are being performed.

How Do They Accomplish Their Goals?

Once you’ve prioritized your tasks, start on the homepage of your website and track the steps that a user will take to complete that goal by counting the number of clicks and by timing how long it takes to complete a task. Once you have this data on task paths, look for the following issues: • Too many clicks for critical goals - If it takes 10 clicks to ask your business a question, that’s too many steps. • Too much time for critical goals - If it takes 2 clicks to ask your business a question, but those two clicks take 5 minutes to locate, that’s a visibility problem. Using your analytics analysis in combination with task analysis may reveal your navigation needs to be reworked or that you need to include easier paths for frequent goals.

A sample card sort for a marketing agency participant must sort the cards into (example: services, products, about us, contact us). I recommend starting out with a few open sorts until you start to recognize patterns that appear in the categories. If every participant puts the same three web pages into the “Products” category and the same three web pages into the “About Us” category, then your navigation should probably reflect their navigation expectations.

Card Sorting

Now that we’ve identified problems that your current website has, how do we rebuild a better one? Let’s start with the most essential redesign element: your website’s navigation. Having an intuitive navigation allows a visitor to get from

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BUSINESS

Rapid Prototyping or Wireframe Design

Before you jump into HTML and CSS, use wireframing and rapid prototyping to layout your website elements. A wireframe is a website in its most basic form without the images, branding or even content. Rapid prototyping refers to creating a basic website and quickly making new versions with improvements while testing. Having a simple website idea, like a wireframe, forces everyone to look objectively at a website’s ease of use, conversion paths, naming of links, navigation placement and feature placement. Wireframes can point out flaws in your site architecture or how a specific feature may work. This allows clients to provide feedback earlier in the process. Skipping wireframes delays this feedback and increases the costs of making changes because full design mock-ups must be reworked, not just simplified wireframes.

You don’t want to lead the participant to confirm your beliefs. Ask them questions like “How easy or difficult was it for you to complete this task?” not “Do you think that was difficult? Really?” • Answer questions with questions and let the participant lead - Naturally we want to ask questions when we’re performing tasks, but giving participants answers doesn’t help us understand what they’re thinking or struggling with. If they ask “should this go here?” respond “do you think it should go there?” instead of answering yes or no. This way you know they’re confused and how they think the problem should be solved. Once you’re done running through all the tasks, make sure you have no more follow-up questions then thank

If participants in your designed website testing struggle to perform the same tasks that were flawlessly completed with the wireframe, you’ll know that your website has a design flaw, not a layout flaw.

User Testing

Now that you have a wireframe or a designed website, it’s time to test it out! With a screen capture tool and a microphone, you have everything you need to test your website with real users. Next, get a set of tasks together that you would like to watch a stranger perform. Then have the participant perform these tasks and observe carefully! What are they trying to click on? How quickly are they performing these tasks? Do they look confused? Here are some of my best tips for User Testing: • Let the participant know details about your user testing before you start • Collect demographic information on your participant - This way you’ll have an idea of how closely they fit in with your buyer persona. • Encourage the participant to speak out loud while doing the tasks - This will hopefully give you some insight into what they’re thinking and what they’re confused by. • Record the session - Even if you’re testing in-person, record the user testing session. You might have questions or want to show examples to developers in order to back up your requested website changes. • Ask follow-up questions but stay neutral -

Image: Basic Wireframe C the participant for doing a great job. Write down all your notes. The data and observations you make during user testing can help you make better choices when deciding what to change about your website.

Next Steps

Now that you’ve identified flaws, tested along the website development process and built an improved website, enjoy the benefits that will come via improved conversion rate, better user experience & less website adjustments needed in the future!

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How AI Can Help Africa Get Universal Health Care BY ADEBAYO ALONGE

hile American politicians quarrel over the Affordable Care Act, the United States one of the few industrialized countries without universal health care still spends twice as much per person per year on health expenses as the U.K. and Canada. For all the debates over Obamacare, however, America boasts 38 MRI machines per one million people: Nigeria, a country of 180 million people, has only four. Across Africa, the ratio of doctors to patients is painfully low. The continent accounts for 25 percent of global disease cases, but has only 2-3 percent of the doctors in the world. With 80 percent of doctors in countries like Nigeria seeking work abroad and limited access to clinics in remote and rural areas, the service gap across sub-Saharan Africa is wide. Almost one in two Africans lack access to modern health services a figure expected to rise as the regionâ&#x20AC;&#x2122;s population doubles by 2050. Africa is a continent in need of

universal health care. Efforts to increase coverage are underway: From Rwanda to South Africa, telemedicine and artificial intelligence have enabled health tech platforms to emerge, and allowed doctors to treat patients in under-resourced areas remotely, efficiently, and cheaply via mobile devices. Given increasing mobile penetration, low digitization costs, and few policy barriers, African markets are poised to use AI to leapfrog traditional health care infrastructure and achieve economically viable universal health coverage. Despite a population of 1.2 billion spread across 54 countries, Africa is getting more and more interconnected. With prices falling to as little as $100, smartphone penetration more than doubled between 2014 and 2016. By 2020, smartphone adoption on the continent is expected to pass 50 percent just shy of the global average.

With the technology in so many hands, health tech companies have won half the battle. In Uganda, for example, tens of thousands of government health workers use MTRAC an SMS-based technology connecting hospitals to the national drug chain to report on local medicine stocks using their mobile phones. LifeBank uses digital supply chain technology to deliver blood when and where it is needed in Lagos, Nigeriaâ&#x20AC;&#x2122;s biggest city with a population of over 20 million. These tools are helping countries across sub-Saharan Africa circumvent the World Health Organizationâ&#x20AC;&#x2122;s standard of one doctor per 5,000 citizens. Digital solutions make it easier to roll out new approaches to health care rapidly and at scale. Private companies and health care providers are seeing the business potential in health as disease patterns change and incomes rise. Pharmaceutical manufacturer Novartis partnered with Vodacom South Africa to connect community health work-

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BUSINESS ers to doctors through mobile technology. In Nigeria, General Electric has distributed cheap flip phone ultrasound scanners to diagnose more pregnant women. Opportunity is boundless in Africa as mobile-fueled tech adoption flourishes. Mobile and digital is set do for health care what it has helped achieve for finance in Africa overcome a lack of physical infrastructure. Digitizing health records is essential to analyzing mass public health information. In 2014, the inability to capture and share data prolonged the Ebola outbreak in West Africa but new platforms are emerging to address this. AMPIS in Nigeria, for example, turns hard copies of medical data into electronic health records for improved communication among stakeholders. Digitized patient health records have been piloted in Ghana, Tanzania, Zambia, and elsewhere. Leveraging machine learning will help health care providers make more informed decisions about treatment and even prevent disease through data mining. Companies such as Ubenwa in Nigeria use machine learning to diagnose birth asphyxia by analyzing a babyâ&#x20AC;&#x2122;s cry.

A nurse takes the temperature of a participant in the Ebola vaccine trials, which were launched at

The applications for technologies such as blockchain and encryption are manifold in mobile health in terms of owning, securing, and sharing patient histories through smartphones. Moreover, because labor costs across the region are low and the process requires limited training, digitization of medical records presents an inexpensive way to enable machine learning and deliver fast, life-saving diagnoses. But despite the integral role data science must play in achieving the U.N.â&#x20AC;&#x2122;s Sustainable Development Goals, there is a dearth of

The current lack of health care policy on the continent is a boon to the health tech industry. With fewer barriers around patient data privacy, government interference in many African health care markets is lower than in other regions. Instead of acting as a roadblock, governments keen to garner public support are more likely to act as partners. To turn the policy deficit into a developmental opportunity, health tech companies must educate government champions as well as users of the public health care system.

Redemption Hospital, formerly an Ebola holding center, on February 2, 2015 in Monrovia, Liberia. JOHN MOORE/GETTY

data scientists and AI experts on the continent. Organizations such as the Pulse Lab Kampala in Ugandaâ&#x20AC;&#x2122;s capital are addressing underinvestment in data science by training the next generation of analysts through annual workshops. If more private sector firms and universities take the lead in education on data science, African health tech can overcome this human capital shortfall to achieve better, faster diagnoses.

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A technician scans the eye of a woman with a smartphone application as she takes part in an ophthalmological study and examination in Kianjokoma village, near Kenya’s lakeside town of Naivasha, on August 28, 2013. TONY KARUMBA/AFP/GETTY

The success of digital health solutions in Africa is contingent upon better engagement of the public sector. Health tech companies should build partnerships across the public sector and leverage the facilities and existing health care infrastructure where possible. As long as the regulatory environment across the continent remains welcoming to the technologies that can bring sweeping improvements to citizen health, the case for AI as a service delivery solution is strong. AI and machine learning are the keys to addressing health care inadequacies in African countries. These technologies help predict and control disease, expand and augment service delivery, and address several lingering social inequities. Ubiquitous health tech is by no means an inevitability: Successful rollout will entail an immense amount of concerted

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effort, capital, labor, and partnership. The infighting over health care in the United States only makes Africa’s strides more impressive. Markets constrained by finance and infrastructure are innovating to democratize health care for all.

“These technologies help predict and control disease, expand and augment service delivery, and address several lingering social inequities.’’

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LIFESTYLE

$13 million Yacht-inspired Million

Rolls-Royce Sweptail

‘Probably the most expensive car... ever’

John Omeha

The Sweptail gets the largest ever aluminium grille in a Rolls Royce, hand-polished to the mirror finish. The signature ornament ‘Spirit of Ecstasy’ is also the largest ever. Under the hood, the Sweptail gets a giant 6.6-litre V12 engine, and despite being a two-seater coupe, spans to over 6 metres.

he world of luxury motoring and racing yachts has collided, thanks to Rolls-Royce. This one-off, coach built car is called the Sweptail, which is not only inspired by racing yachts but of the grand ‘20s and ‘30s cars built by the über-luxurious brand. It’s Rolls’s latest flex of its luxury muscle, after it showed off the crazy-looking 103EX concept in 2016. The Sweptail was built after one of Rolls-Royce’s ‘most valued customers’ came knocking with a very specific request to build the one-off car. It looks very much like a modern Roller from the front: the bluff front end, thin LED lights and massive chrome grille see to that. But it’s the rear half where the most significant changes lie; the silhouette of the car from the side slopes down to a point and the Sweptail comes with

a rather hefty rear overhang – let’s hope parking sensors are standard. While most people will focus on the $13 million figure, that’s almost irrelevant when it comes to the Rolls-Royce Sweptail, a coachbuilt Phantom Coupé with a two-digit British license plate milled from ingots of aluminum and then hand polished for a mirror finish. At this level, $13 million is like $3 or $33 million. A number only your accountants need to pay attention to. The team responsible for your wellbeing will also make sure to compliment the way you decided to send off the biggest and now discontinued Rolls-Royce two-door. The Sweptail is memorable from any angle.

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The slender rear end is apparently the ‘ultimate homage to the world of racing yachts that inspired the client.’ There aren’t any visible panel lines, which Rolls-Royce is, again, keen to stress is like the hull of a luxury ship. Despite being about as long as an aircraft carrier, there’s only space for two passengers inside. Those lucky/ wealthy enough to take a trip in the Sweptail will bathe in plenty of natural light – thanks to the enormous panoramic sunroof – and will sit in a cabin finished in swathes of Moccasin and Dark Spice leather upholstery, plus ebony and paldao wood veneers. Rolls-Royce claims that the interior is its ‘cleanest dashboard to date’ and includes a wood veneer so thin that light can shine through in places like the clock face. The rear space comprises a ‘Passarelle’ (‘bridge’ in French), finished in Madagascar Ebony veneer. Choice details include the name Sweptail embossed into the centre line and a Riva Aquarama-esque deck for, er… hats. There are also discreet storage spaces for the client’s laptop and a bespoke luggage set.

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photos: JohnCarpenter/ROLLS-ROYCE

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5 Virtual Stock Market Games That Help You Learn How to Invest Megan Ellis & Chubuike Emmanuel

The Nigerian Stock Exchange (NSE) operates a fair, orderly and transparent market that brings together the best of African enterprises and investors from around the global. To become an investor, an individual (or institution) must select a stockbroker and open an account with the Central Securities Clearing System Plc. (CSCS). A stockbroker is an appointed agent who is authorized to execute, buy or sell instructions on an investorâ&#x20AC;&#x2122;s account, while CSCS issues central securities identification numbers to investors required for the clearing, delivery and settlement of transactions. A stockbroker, in this sense, does not refer to an individual, but to a broker-dealer firm that is (I) a dealing member of The Nigerian Stock Exchange (NSE), and (ii) is registered with the Securities and Exchange Commission (SEC). In selecting a suitable broker to represent your interests as an investor, you should confirm the brokerâ&#x20AC;&#x2122;s status with both The NSE and SEC.

f you are interested in dealing in stocks, dipping your toe in stock markets for the first time is intimidating, even for those who consider themselves financially savvy. But other than paying a financial specialist for advice, what other options are available? Luckily, there are a variety of stock market games and simulators available for users to get a feel of the industry. And best of all, most of them are free. Games are often used to educate children but there are also games that can teach adults a lesson or two.

market. This can give you the confidence to begin some hands-on trading. You might even have some fun along the way, thanks to friendly competition without risking real cash. From simulators that feel incredibly realistic to user-friendly games, here are four stock market games that will prepare you for the real thing.

Even for people who donâ&#x20AC;&#x2122;t have an affinity for numbers and statistics, these various simulators and games offer an accessible way for you to learn about the stock 54 Market Digest Nigeria

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Wall Street Survivor With the creators dubbing it “the web’s best stock market simulator,” Wall Street Survivor uses fake cash and real stock price tracking to teach players how to invest. Since it’s a browser game, you won’t need to download any app or software to play. You only need to sign up for an account and jump right in. Rather than only providing a simulator, Wall Street Survivor‘s site also provides tips, glossaries, and courses to help you understand stock markets. When you want to play the game, you can choose to join a league or create your own. There’s a practice league for newbies, so you’re not thrown into the deep end and forced to compete against experienced players. You start off with a balance of $100 000, which you can invest as you choose. Since it’s a practice league, you don’t have to worry about all your in-game money. All these features add up to an experience that is perfect for those who are serious about learning the ins and outs of the stock market. And best of all, you use your ingame currency to purchase perks. These include actual learning courses which means you don’t have to doll out your actual money to enroll.

Best Brokers: Stock Simulator Best Brokers: Stock Simulator gives the widest range of stock markets to invest in. A welcome feature of the investment app is that it has a whole separate tab for cryptocurrencies like Bitcoin and Ethereum hot assets on the markets. The app’s versatility also shows through its other features, including a newsreader, friends list, and messaging functionality. In terms of learning, Best Brokers offers a series of videos for you to watch. The app’s FAQ is also handy it outlines trading hours, order functionality, and other useful information. When ordering outside of trading hours, the app lets you know how long until the specific market opens. This is extremely useful if you’re not familiar with stock market opening hours. Thanks to its user-friendly interface, sleek appearance, and variety of investment options, Best Brokers is a great option for beginners who might feel overwhelmed by other stock exchange apps and games. It has a casual feel that won’t deter those who might be put off by a wall of text and statistics. Market Digest Nigeria 55

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FINANCE

Investopedia Stock Simulator The financial site Investopedia has its own comprehensive stock simulator. This lets you log into an advanced online suite that includes stock research, stock analysis, advanced portfolio summaries, and more. Investopdeia’s offering is one of the most user-friendly, yet realistic, stock simulators on this list. The way that real stock news and insights integrate into the simulator makes you feel like you’re in an official trading app. Despite so much depth in the simulator, there is also a great competitive and gamified aspect to it.

You can join quarterly competitions, which rank you according to the growth on your stock investments. This adds some personal validation for users even if you are only in 109th place. Meanwhile, the fact that you can earn awards adds extra motivation. These awards are achievements that you can unlock, with each having a certain number of points allocated to your overall “Street Cred”.

Stock Trainer: Virtual Trading While Stock Trainer: Virtual Trading isn’t the most attractive app, it has all the functionality and features that those who want to learn about stocks need. Unlike other stock trading games, this app doesn’t default to the New York Stock Exchange (NYSE). Rather, users can choose from a variety of regions making it much more likely that you can access the stock market relevant to you. While the user interface (UI) of the app isn’t the most aesthetically pleasing, the app is simple to figure out and provides a great deal of information. Another helpful feature is the news articles that appear right below the trading options for a company. This means you can see the latest news relevant to those specific stocks. The only real downside of the app is that it is only available on Android.

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Millennials Expect from a Retail Banking

What Do

Environment?

Jim Marous

he roughly 90 million Millennials in Nigeria surpassed Generation X as the largest demographic cohort in 2016. Even as mobile banking applications continue to replace daily transactions and inquiries, 88% of Nigerians feel they still need a physical branch location to go to for banking needs, according to research from ORC A recent report by Synchrony Financial, entitled The Future of Retail included a list of four retail insights that typify the attitudes shaping the new paradigm. They are: Show Me, Entertain Me, Teach Me and Help Me. These are the values and expectations of a generation that has grown up online,

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with virtual reality video games, DVR, and smartphones that enable them to

‘‘Show Me, Entertain Me, Teach Me and Help Me. These are the values and expectations of a generation that has grown up online’’

Gen X’ers and Baby Boomers aren’t as acclimated as Millennials to a culture that indulges their every whim in real time, and retail branch design historically reflected this. But things have changed, and will continue to change over the next decade, with the retail experience across all industries becoming increasingly personalized and data-driven.

“Show Me/Entertain Me/ Teach Me/Help Me” reflects several Millennial shopping habits which are markedly different from those of previconnect to or research any ous generations. “Show Me” thing on the planet instantais the most pragmatic of the neously. They are comfortable four insights, and refers to with being pampered and the brand’s ability to do what catered to the Nth degree. it says it can. This may mean

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FINANCE

a firm having the ability to special-produce custom services in real time, while using the means of production as a main selling point. Baby Boomers and Gen X’ers may recall these type of demonstrations performed in an informal and spontaneous way by office staff, but certainly not offered as a major piece of a brand’s value proposition like it is today. “Entertain Me” comes in the form of digital interactive technology, complimentary food or beverages, a live band, or some other engaging and somewhat unorthodox activity that catches the attention of customers. “Teach Me” might refer to a demonstration of how a product works (e.g. an Apple Genius bar type scenario) which admittedly also happened decades ago, but not in the structured customer-friendly manner in which it does today. “Help Me” can either be taken literally, i.e., offering assistance at a time of need or emergency, or else providing time and effort saving benefits via technology, such as apps that enable customers to order ahead of time, check availability of a good, or, in the case of a bank or credit union, make an appointment to meet with a wealth management adviser, money related servives or a loan calculator.

But Don’t Millennials Prefer to Shop and Bank Online? Surprisingly, the answer is no. In the Accenture study it was found that 86% of millennials plan to be using a bank branch in the near future, and in Salesforce’s 2016 Study on Customer Experience for Banks, it was discovered that 81% of younger Millennials (aged 18 to 25) and 71% of older Millennials (aged 25-35) also used branches. It’s one thing to know that Millennials like visiting branches, but

of our workplaces will change dramatically over the next decade. The time to start building the foundations of your retail banking future is now. Millennials have an uncanny nose for authenticity, and organizations cannot simply hold on until the last minute before declaring themselves relevant and current. The proof of the pudding is in long-term credibility, and brands need to start appealing to Millennials ASAP.

Millennial Life, Loyalty and Authenticity

Millennials collectively believe the adage, “follow your bliss” and it’s important for them to live a meaningful life. They are the first generation to grasp these concept on a mainstream level and apply it to everything, from their shopping habits, their jobs, and the causes that they make their own (which are often also their shopping habits and their jobs). Some commentators have stated that Millennials aren’t particularly loyal to brands, but according to Millennial Loyalty Statistics: The Ultimate Collection, 80% of Millennials participate in retail loyalty programs, and “fun” is an more important to know how to important loyalty driver with 60% meet their expectations. Millenni- of Millennials. This ties directly als will make up 60% of the work- back to the importance of modforce in the next five years and ern branch design, convenience, 75% in the next decade (Business. and the new wave of compelling Com; How Companies are Chang- graphics and retail communicaing Their Culture to Attract (And tions that are “must-haves” for Retain) Millennials), which means today’s banks. From a financial there’s a tipping point approaching perspective, Millennials are enthat will see virtually all branches tering their peak earning years. designed around Millennial tastes, They are at the point of making including their insatiable demand long-term life plans, of becoming for technology, convenience and homeowners and parents, and personalization. In addition, the financial institutions have to be people staffing these branches, and ready to cater to this, and beyond. especially those in leadership poIndustry pressures are coming sitions, will be attracted to compa- from two directions; from the nies that are known to have moved larger retail world and its innovawith the times. The demographics tive new formats, and competitors

‘‘Millennials have an uncanny nose for authenticity, and organizations cannot simply hold on until the last minute before declaring themselves relevant and current.’’

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within the financial industry itself who have already transformed their branches to meet new client expectations and are succeeding with the change.

So What Do Millennials Want in a Bank Branch?

Online banking is going to continue to make gains upon branch banking in terms of transactions. This will create a demand for quick and easy transactions in branches to match those performed on PCs or other devices. Branch locations, and branch models designed around those locations’ chief delivery channels, will become the priority formula for success, along with (in most cases) reduced footprints and impactful brand merchandising. Smaller, highly visible branches in well-trafficked niche locations, that use the latest technology and are staffed by universal bankers, are what will attract Millennials.

Banks are on the brink of a consumer shift that will see branch visitor demographics change dramatically. Whatever the branch type, it would have to be seamlessly connected to the online platform, and should be an omnichannel experience where customers can bank online at home, or walk into a branch while making a purchase of a banking product on their phone, transfer mid-process to a universal banker’s tablet, and possibly on to a private office on another device without the customer’s journey along the conversion funnel being interrupted. Millennials expect the world to come to them via their Web-connected devices, and to come to them fast. When they’re forced to wait for service or information they quickly become impatient. It pays to design the branch interior with this in mind, with a certain

amount of digital signage, large flat screen TVs, and other sharper branding elements integrated into both the interior and exterior of the branch space. Having the right branch in the right place at this time, with fully modernized delivery channels and retail communications, is crucial to attracting what will be a large wave of potential new customers over the next five to ten years. Below are digital bank branches positioned to suit the needs of millennials sadly no African bank made the list

‘‘Millennials expect the world to come to them via their Web-connected devices, and to come to them fast’’

Jim Marous is co-publisher of The Financial Brand and publisher of the Digital Banking Report, a subscription-based publication that provides deep insights into the digitization of banking, with over 150 reports in the digital archive available to subscribers. You can follow Jim on Twitter and LinkedIn, or visit his professional website. Market Digest Nigeria 59

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MARKETING

4 Branches Designed To ‘‘Wow’’ Millennials OdeaBank Flagship Combines Form & Function

With its transparent exterior and curved lines, I-AM created a design for Odeabank that is both welcoming and attention grabbing. The inspiring design of the flagship branch has already become an iconic structure within Istanbul. A feature of the branches is to use the latest technology throughout the banking process in order to provide the most efficient and rewarding customer experience. A range of digital tools – touch-tables, tablets, iPhones and interactive screens – are routinely available in waiting lounges and entrance halls to welcome customers and facilitate engagement with the bank’s products and services.

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Emirates NBD – Future Banking Lab This innovative design incorporates three zones. The “Digital Banking Zone” provides self-service banking options like interactive teller machines and video conferencing stations. The “Future Banking Zone” showcases digital innovations developed with technology partners such as the Visa “Connected Car,” MasterCard’s Virtual Shopping Experience, and SAP’s augmented reality real estate solution. In the “Advisory/Relationship Zone,” provides a relaxed environment for customers to meet one-to-one with a financial advisor to discuss the banks products and services.

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MARKETING

Piraeus Bank – E-Branch

Piraeus has 700 branches in Greece. They recently developed three new prototypes, one hub, one spoke, and one independent model for testing before rolling out any changes across its wider network. Shown below is the spoke concept “E-Branch”. The intent was to design a space that married both digital and physical to create “a warm internal environment inspired by home, a connection between high-tech and humanity,” as they put it. For instance, the video teller machine (VTM) is housed in a table intended to evoke a more personal and casual experience.

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mBank – Light Branch Rather than trying to reconfigure existing branches which were generally oversized this much smaller “Light Branch” concept is being relocated to higher consumer traffic hubs, such as shopping malls. The focus of these branches will be on acquisition, communication, experience and simple services. mBank says over 40 light branches will be operating throughout Poland (where they are based) by 2018.

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FINANCE

THE2018BUDGET

BUHARI PROBABLY HAS THE

WRONG ANSWER TO NIGERIA’S

UNBALANCED ECONOMY

Esele Odion Nigeria, Africa’s biggest oil producer is rebounding after the economy contracted by 1.6 percent in 2016, the first such performance since 1991. Today’s new deficit estimates marks billion of dollars upward adjustment to those faced in Nigeria’s pre-recession period. Within this expanded fiscal box, President Buhari has moved to implement many of the promises outlined during his election campaign. We find that today’s blueprint strikes a good balance between providing nearterm support to economic growth, generating some longer-term benefits to Nigeria’s economy and maintaining a credible longer-term fiscal path. While the persistence of deficits remains a longer-term challenge facing the government, as a share of GDP, they remain quite manageable, and are not expected to materially worsen the government’s financial and credit rating including its ability to borrow more money to service the country’s foreign debt.

his article analyses President Buhari’s 2018 Appropriation Bill. Described as the budget of consolidation. We take a look at the grey areas and the potential effect the budget might have on the Nigerian economy, especially the non-oil sector. The point of departure is the acknowledgment that up to date President Buhari has not clearly articulated any impressive macroeconomic policy to reposition the economy

from its over reliance on oil, also as evidenced in the 2018 Budget of consolidation. Even after the formal launch of the Economic Growth and Recovery Plan (EGRP) In April this year, which is meant to cover a period of three years, (2017 to 2020). The EGRP contains 60 critical initiatives expected to help get Nigeria out of reces-

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sion and reposition it on the path of sustained growth. Speaking at the brief ceremony that preceded the meeting of the Federal Executive Council, FEC, President Buhari said his government was determined to turn Nigeria from a consumer nation to a producing one.

trillion, down from N2.36 trillion stated in 2017 budget. At a total expenditure estimate of N8.612 trillion, the deficit amounted to 1.77% of GDP, a 17.3 percentage point drop from 2.14% deficit to GDP stated in 2017 budget. Of the N8.612 trillion proposed for 2018,

day, including condensates, as against that of 2017, which was of $42.50 per barrel, and output was put at 2.2 million barrels per day. The Exchange rate of N305/US$ was set for 2018, while Real Gross Domestic Product, GDP growth of 3.5 per cent was projected and

In the absence of such policies, the discussion focuses on Buhari’s economic growth rhetoric and seeks to make a link to the potential policies. In the discussion, the notion of the planning fallacy, the 2018 budget assumptions and potential pitfalls of such assumptions and the need for a more detailed plan to restructure the economy, with emphasis on agriculture are examined.

Breakdown of 2018 Budget

President Buhari on Tuesday 7 November 2017 presented the 2018 Appropriation Bill to a joint session of the National Assembly. It was described as a budget of consolidation to: Reinforce and build on recent accomplishments, Sustain reflationary policies, Ensure diversified, sustainable and inclusive economy. He proposed N8.6trn for the 2018 financial year. The President said during the presentation that the capital projects that were not implemented in 2017 would be carried over into 2018. 30.8% of the 2018 Budget will be for Capital Expenditure. The breakdown of 2018 budget presented by the President shows that the Proposed Recurrent Expenditure will take N6.18trn; Proposed Capital Expenditure will take N2.42trn, bringing the total proposed budget size to N8.6trn. The budget indicated a 15% scale back on total deficit at N2.005

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President Buhari said: “Our aim simply put, is to optimize local content and empower local businesses. We seek not just to take the Nigerian economy out of recession but also to place it on a path of sustained, inclusive and diversified growth. We are determined to change Nigeria from an import dependent country to a producing nation. We must become a nation where we grow what we eat and consume what we produce. We must strive to have a strong Naira and productive economy.” 30.8% (or 2.652 trillion Naira) of aggregate expenditure (inclusive of capital in Statutory Transfers) has been allocated to the capital budget. This indicates that the government is optimistic of stronger revenue inflow against borrowings to fund the budget, much in line with the government’s plans under the Economic Recovery and Growth Plan, ERGP, aimed at progressively reducing deficit and borrowings. The 2018 budget is based on a crude oil benchmark price of US $45 per barrel, with an output of Oil production estimate of 2.3 million barrels per

The Breakdown

Breakdown of the proposed N8.612 trillion of 2018 Aggregate Expenditure comprises a Recurrent Cost of N3.494 trillion; Debt Service of N2.014 trillion; Statutory Transfers of about N456 billion; Sinking Fund of N220 billion (to retire maturing bond to Local Contractors) and Capital Expenditure of N2.428 trillion (excluding the capital component of Statutory Transfers). Power, Works and Housing has a hefty allocation of N555.88 billion; Transportation has an allocation Market Digest Nigeria 65

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FINANCE of N263.10 billion; while Special Intervention Programs will gulp N150.00 billion in the budget proposal. Others are Defense with N145.00 billion; Agriculture and Rural Development with N118.98 billion allocation; Water Resources has N95.11 billion; Industry, Trade and Investment was allocated N82.92 billion; Interior has N63.26 billion allocation while; Education N61.73 billion. Universal Basic Education Commission is allocated N109.06 billion; Health, N71.11 billion; Federal Capital Territory has N40.30 billion allocation; North East Intervention Fund has N45.00 billion; Niger Delta Ministry was allocated N53.89 billion; and Niger Delta Development Commission: N71.20 billion. A substantial part of the recurrent cost proposal for 2018 has been set aside for the payment of salaries and overheads in key Ministries providing critical public services such as N510.87 billion for Interior; N435.01 billion for Education; N422.43 billion for Defense; and N269.34 billion for Health, adding that “the allocation to these Ministries represent significant increases over votes in previous budgets. “The government plans to finance the deficit partly by new borrowings estimated at N1.699 trillion while 50% of the borrowing would be sourced externally, adding that the balance would be sourced from domestic financial market. According to him, the balance of the deficit of N306 billion is to be financed from proceeds of privatization of some non-oil assets by the Bureau of Public Enterprises (BPE)

The top projects

The Federal Government proposed N737.05 billion for the execution of 71 top projects in seven ministries. In the power ministry, the Federal Government wants to execute six top projects, including N9.8bn for the Mambilla Hydro Power Project; N12bn counterpart funding earmarked for transmission lines and substations; N10.15bn for rural electrification access program in federal universities; N2.8bn for the construction of 215MW LPFO/Gas Power Sta-

roads nationwide. These include the Lagos-Shagamu-Ibadan Dual Carriageway; Ilorin-Jebba-Mokwa-Bokani Road; Abuja-Abaji Road; Kano-Maiduguri Road; and Enugu-PortHarcourt Dual Carriageway. In housing, government earmarked N35.41bn for the Federal Government National Housing Program. Under health, seven top projects are to be executed amounting to N21.6bn. The budget proposed N6bn for Strategic Joint Venture Investments in selected Tertiary Health institu-

Nigeria’s President, Muhammadu Buhari presents 2018 budget to the National Assembly. Photo: John Koba. JKDUIDI

tion, Kaduna; N4bn for Kashimbilla Transmission; and N2.56bn for Fast Power Programme Accelerated Gas and Solar Power Generation.Under transportation, the Federal Government wants to execute seven top rail line projects, including N162.28bn as counterpart funding for railway projects such as Lagos-Kano (ongoing), Calabar-Lagos, Ajaokuta-Itakpe-Aladja (Warri), and Port Harcourt-Maiduguri. Under Works, government is targeting 32 key projects, with N10bn for the Second Niger Bridge and about N295bn for the construction and rehabilitation of 31 major

tions with the Nigerian Sovereign Investment Authority (NSIA) getting N8.9bn for procurement of RI vaccines and devices; N3.5bn for counterpart funding; including global fund, health and GAVI; N1bn for Health Emergencies and contagious diseases outbreaks (e.g. Meningitis, measles, yellow fever, monkey pox, etc). N1bn is earmarked for Midwives Service Scheme and N1.2bn for Polio Eradication Initiative. Under water resources, government intends to spend N56.6bn on four major projects; viz N3.5bn for Zobe Water Supply Project-Phase I & II; N2bn for Partnership for Expanded Water, Sanitation and

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Hygiene (PEWASH); N1bn for Special Intervention for North East and IDPs-Potable Water and over N50bn for water supply, rehabilitation of dams and irrigation projects nationwide. In agriculture and rural development, government plans to spend N51.58bn on eight key projects such as N6.75bn for Rural Roads and Water Sanitation; N25.1bn for Promotion and Development of value chains across 30 different commodities; N5.30bn for National Grazing Reserve Development; N4bn for Agribusiness and Market Development; and N4.08bn for Food and Strategic Reserves. Other projects under Agriculture and Rural Development are N2bn for supply, installation and commissioning of water rigs nationwide; N1.13bn for FGN support for youths in agribusiness; and N3.22bn for Livelihood Improvement Family Enterprise (LIFE) programme. Under education, the Federal Government wants to executive five key projects with N15.05bn. These are N5bn provisioned as take-off grant for Maritime University, Delta State; N1.8bn for payment of Federal Teachers Scheme allowance; N566.9m for construction of National Library of Nigeria; and N7.65bn for various scholarship allowances. In the Niger Delta, government intends to execute two key projects with N38bn: N17.42bn for various sections of the East West Road and N2.58bn for Section III, from Port-Harcourt Eleme Junction to Onne Port junction.

The Assumptions

The figure of N8.6 trillion is 15.7% higher than the budgeted figure for last year. The rate of inflation this year is 15.9 percent. So, in real terms, there has been zero growth in expenditure. Given that the budget didn’t deviate much from the Medium Term Expenditure Framework (MTEF 2018-2020), the impact on financial markets has been neutral. The assumptions made, particularly on projected revenues, remain ambitious and as such we see expenditure execution

‘‘The figure of N8.6 trillion is 15.7% higher than the budgeted figure for last year. The rate of inflation this year is 15.9%. So, in real terms, there has been zero growth in expenditure.’’

risks in 2018. The proposed 2018 budget deficit remains broadly unchanged at around NGN2.1tr (1.6% of GDP) with around NGN306bn being privatization proceeds. The production estimate of 2.3 million barrels per day is a bit optimistic but if you add our condensates to the picture of what we are actually producing, it is a fair value. The budget assumption of $45 per barrel is very realistic because today, oil is trading at $64 per barrel, which is 40% higher; there is 40% headroom. However, it would not be surprising if the National Assembly were to increase the benchmark rate given current global oil price realities.

There is also the exchange rate assumption. President Buhari said an exchange rate of N305/ per dollar was used in drafting the budget, an assumption that contrasts with the realities of the foreign exchange market. The effective exchange rate by the IE Window (Investors and Exporters Foreign Exchange Window) today is N360 (per dollar). Also, multiple exchange rates in the economy were not addressed in the budget, noting that the prevalence of such rates would continue to distort the market. However, the government’s ambitious revenue target is a need for concern. While the authorities have outlined some planned revenue boosting reforms, including implementing the Voluntary Assets and Income Declaration reform as well as increasing VAT on ‘luxury’ goods, it is still impossible that these would suffice to produce the 40% y/y jump between what is anticipated to be the actual non-oil revenue collected in 2017 and the target for 2018. NGN2.4tr is budgeted for oil revenues, while NGN4.2tr is expected to come from the nonoil sector. “The budget deficit will probably be higher than forecasted

‘‘President Buhari said an exchange rate of N305/per dollar was used in drafting the budget, an assumption that contrasts with the realities of the foreign exchange market’’

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FINANCE because non-oil revenue may not be as high as projected,” John Ashbourne, an economist at Capital Economics Ltd. in London, said. “We expect a budget deficit of 2.5 percent of gross domestic product compared to the forecast 1.77 percent.” It is fair to conclude that the projection for non-oil revenue is not realistic and the deficit gap may widen after all. Government is silent on subsidy on power, petroleum products, and minimum wage. Moody’s Investors Service cut Nigeria’s sovereign issuer rating from B1 to B2, after Buhari’s budget presentation. “The authorities’ efforts to address the key structural weakness exposed by the oil price shock by broadening the non-oil revenue base have so far proven largely unsuccessful,” the agency said in an emailed statement. The country’s outlook remains stable, it said, as it forecast general government revenue to average only 6.4% of GDP over the period 2017-2019.

Past Mistakes To Present Mistakes

First, the 2018 budget is an ambitious and very optimistic budget judging from the fact that the 2016 Budget promised GDP growth of 4.5 per cent and ended up with a recession and -2.5% GDP growth. The current year started with optimism for 2.6 per cent GDP growth. Second, in both 2016 and 2017 actual revenue had lagged behind the budget estimates. Thus each year, the actual capital ex-

get. Unfortunately illness and the death of Yar’Adua played havoc on the 2010 Budget which former President Jonathan had to execute from April of that year. It ended up as another mess for which nobody claimed credit nor accepted blame. Since then, Nigeria had experienced one failed budget after another. The last three years 2015 to 2017 have been particularly traumatic. The FG under Buhari inherited a seriously damaged economy in

President Mohammadu Buhari with Minister of Budget and National Planning, Udoma Udo Udoma, Minister of Finance, Kemi Adeosun, Chief of Staff, Abba Kyari, and Central Bank of Nigeria (CBN) governor, Godwin Emefiele, August 28, 2017. Photo: Johannxs

“The authorities’ efforts to address the key structural weakness exposed by the oil price shock by broadening the non-oil revenue base have so far proven largely unsuccessful,”

penditure had been less than the amounts projected in the budget. Third Exchange rate had been higher than the benchmark each year. It is on record that no single budget since Obasanjo’s 2000 Budget has ever been successfully implemented by any government. Almost invariably, the revenue estimates have been estimated and the expenditure estimates were frequently understated. In 2009, late President Yar’Adua did something unprecedented in the history of Nigeria since the military intervention in 1966. He actually admitted that the 2009 Budget was badly executed and promised to do better with the 2010 Bud-

May 2015 but the fundamental causes of our present predicaments appear to be daunting. Granted, the All Progressives Congress, APC, led by President Buhari, inherited a 2015 Budget which could not be implemented as it was, the new government was slow to identify the causes of the country’s economic calamities and to introduce sound macro-economic policies which could have reduced the devastating impacts of the 2016 recession – which virtually all analysts knew was inevitable. The 2018 budget hasn’t deviated from the mistakes of the past judging from the obviously false benchmarks highlighted above,

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The president’s economic teams are making decisions based on delusional optimism rather than on a rational weighting of gains, losses, and probabilities. They overestimate benefits and underestimate costs. They spin scenarios of success while overlooking the potential for mistakes and miscalculations. As a result, they pursue initiatives that are unlikely to come in on budget or on time or to deliver the expected returns or even to be completed. The Budget for 2018 is confusing and full of illusion to make Nigerians to travel in litter of hopes. But there are some positives. There has been the late passage of previous budgets including the 2017 budget, which significantly constrained budget implementation, the 2018 budget has been presented early enough, if the budget can be passed early, it will mean that the benefits of the budget for 2018 can accrue to the nation for the entire year instead of for only half of the year was experienced in 2017 with disastrous results. That alone will be a landmark achievement, breaking with the past and bringing with it the promises of a better future starting next year. Incidentally, 2018 will mark the last full year in the

‘‘ if the budget can be passed early, it will mean that the benefits of the budget for 2018 can accrue to the nation for the entire year instead of for only half of the year’’

Buhari administration’s four year’s in office. Buhari said. He urged the National Assembly to approve the spending plans by Jan. 1 “in our efforts to return to a more predictable budget cycle that runs from January to December.” Also, there are new elements in Economic Recovery and Growth Program, ERGP, which signpost a radical departure from the past and which provide the basis for cautious optimism. Privatization is one. Several critics of former and the current administration have pointed to the government’s retention of ownership of businesses, which are best left to the

The Deficit and the level Debt Each year the deficit adds to a country’s sovereign debt. As the debt grows, it increases the deficit in two ways. First, the interest on the debt must be paid each year. This increases spending while not providing any benefits. If the interest payments get high enough, it creates a drag on economic growth, as those funds could have been used to stimulate the economy. Second, higher debt levels can make it more difficult for the government to raise funds. As the debt to GDP ratio is 70 percent or

The Federal Executive Council (FEC) meeting chaired by President Muhammadu Buhari, approved the 2018 Budget proposal. By: Augustine Ehikioya

private sector – refineries for example, and airports for another. Public funds which are now allocated to those enterprises can best be diverted to providing the other services which the private sector will not touch while leaving it to handle the sectors it knows best how to operate. The ERGP for the second time is making another bold attempt to engage the private sector more constructively and to make it the engine of growth of the Nigerian economy. Then, there is oil. For the first time in five years crude oil prices might be heading upwards. And, what a relief that will bring.

higher, creditors become concerned about a country’s ability to repay its debt. When this happens, they demand higher interest rates rise to provide a greater return on this higher risk. That increases the deficit each year. It becomes a self-defeating loop, as countries go deeper into debt to repay their debt. At some tipping point, interest rates on new debt can skyrocket as it becomes ever more expensive for countries to roll over debt. If it continues, long enough, a country may default. In the 2018 budget a high proportion of the proposed spending would be used in servicing debts. 26% (N2.2 trillion) of the 2018 budget

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FINANCE is allocated for this purpose. This amount is 2 percent less allocation to capital expenditure in the year. This, therefore, confirms the development-cost impacts of huge debts profile of the country. The raw level of debt in and of itself is not terribly important, and some level of government debt is generally considered useful for the functioning of financial markets. What’s of important is the ratio of debt-to-GDP overtime. While upward movement in the ratio is not necessarily concerning, persistent growth often indicates structural problems with the government finances. Nigeria’s debt has risen as a share of GDP in the near-term and appears likely to remain high through time, except the price of oil remains stable or increases, as oil is still the major revenue basket for Nigeria. But given the present sizeable prudence built into the government’s GDP figures, even when benchmarked against our fairly conservative growth outlook the debt/GDP ratio rises only modestly helped in part by the positive near-term economic momentum that has been incorporated into the 2018 forecast. Unless Nigeria’s growth is continuously weaker than our already conservative forecast, the debt

‘‘The raw level of debt in and of itself is not terribly important, and some level of government debt is generally considered useful for the functioning of financial markets.’’

path appears sustainable under the 2018 budget assumptions. Perhaps more important than the changes in debt is how the proceeds are used. The impact on economic growth of government spending varies depending on the state of the economy, the type of spending, and other factors. The larger concern for the government is likely to be the fall in the Naira. The speed with which the Naira has fallen over the past couple of years and more recently has ham-

The Budget and Diversification

The 2018 budget has failed to adequately cater for Nigeria’s diversification agenda, with Agriculture as the core of this strategy as clearly stated by Buhari in the launch of the EGRP plan stated above. There is no better time to diversify the economy than now that it is increasing becoming likely that global oil price may not attain the height of boom it attained in recent years as well as the shift of

Africa’s economic future depends on its farmers. Phto: Ogunjimi Kayode

pered Nigerian export earnings and has overvalued the cost of imports in such fashion as to set the wheels in motion for a sharp continuous widening of the trade deficit. It doesn’t happen right away as such effects take time to work their way through slow-moving trade channels given recognition lags, contract lags, and the costs to diverting trade. But the forces already in motion may make for a fascinating set of headlines into the next Presidential election in 2019. If this happens then Buhari might risk voter backlash and/or an even more protectionist turn by Buhari’s administration as the mandate wears on.

developed economies from petrol engines to electric engines. The danger of over dependence on a single source of revenue became obvious last year when the United States of America suspended importation of crude oil from Nigeria due to the impact of the shale revolution. The Director, China Cultural Centre, Abuja, Charles Onunaiju recently stated that Nigeria could diversify its economy by using what he called the China model which involves growth of local industries and increasing their productivity. Onunaiju explained that the Nigerian economy is hurting because economic experts who served under various

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governments failed to diversify the economy. The infrastructure spending proposals in the budget is not a fundamental game changer for Nigeria. They are unlikely to hit until at least 2021 and probably later yet. There are big question marks over how such spending will be financed and how private money may respond to incentives. And the growth effects are likely to be transitory. The effects on growth due to increased allocation for infrastructure in the budget will last for a year or two, after which simply maintaining infrastructure spending will preserve levels of activity but not add to growth. Nigeria’s seemingly failed plan to diversify its economy no doubt carries many risks. But, if Buhari can get it right, it creates an important opportunity: the possibility of building a safer, more efficient, and more innovative farming sector. Moreover, unlike foreign political planers and negotiators, who always place agriculture at the top of their agenda, Nigeria’s planers do not protect domestic farmers. The budget seems to represent a services-driven economy, in which agriculture is not a major engine of growth. Given

‘‘The effects on growth due to increased allocation for infrastructure in the budget will last for a year or two, after which simply maintaining infrastructure spending will preserve levels of activity but not add to growth.’’

the current state of Nigeria’s agriculture, it will be very difficult for Nigerian farmers to compete with foreign imports. Many farmers are suffering a longstanding crisis in farm incomes. Young people are fleeing the rural areas; the average age of a Nigerian farmer is now 49. And the average Nigeria farm is less than one hectare, compared with 50-hectare of most international farmers. If agriculture is to be transformed into a safer, fairer element of Nigeria’s post-recession economy, Nigerian policymak-

high-value-added opportunities and investments in research and technology. Agriculture-focused institutions and universities should be created to aid the development and deployment of efficiency-enhancing sensors, crop yield monitors, satellite imagery, and smart farming hardware and software systems.

President Muhammadu Buhari with Vice President Prof. Yemi Osinbajo; President of the Senate, Dr Bukola Saraki; Speaker Rt Hon Yakubu Dogara; Minister of Budget and National Planning, Senator Udoma Udo Udoma during the formal launch of the Nigerian Economic Recovery and Growth Plan (ERGP) at the State House, Council Chamber in Abuja. 5th April 2017. PHOTO: NOVO ISIORO

ers must change their approach radically. Nigerian policymakers must also move beyond ad hoc responses to natural and man-made agricultural disasters, by building more effective and reliable protection systems. For example, they could facilitate the provision of affordable insurance for farmers or create some type of mutual-assistance scheme. Implementing (and funding) such initiatives will require sustained political will. Buhari must also ensure that its agricultural sector can take advantage of new technologies. Nigeria’s budget should make provision for a proactive strategy focused on bringing together the public and private sectors to identify Market Digest Nigeria 71

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Top Cross-Border African Banks In 2017 A cross-border bank is a bank with a commercial presence outside its home country, by way of at least one branch or subsidiary. Currently there are 104 cross-border banks with at least one branch or subsidiary outside their home country are active in Africa, one third of which are cross-border banks of non- African origin The majority of these institutions (71) have only a limited footprint in one to four African jurisdictions. The remaining 33 institutions are represented through their home country operations and through branches or subsidiaries in five or more African countries

aving some of the most developed sectors on the continent and being home to some major African cross-border banks, Morocco, Nigeria, South Africa and Kenya demonstrate a comparatively low share of foreign ownership in their banking systems, in the range of 20 to 35 percent. Part of the variation of foreign bank presence can be explained by historical and country-specific circumstances. In Nigeria, Morocco and Kenya, for example, financial sector reforms at

independence resulted in the (partial) nationalization of foreign banks, establishment of state-owned banks, and the growth of local banks due to low entry requirements also worth noting that two countries in Africa, Mauritius and the Seychelles, have established themselves as offshore financial centers. Below is our List of Major African Cross-Border Banks that have excelled this year

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Standard Bank Group

South Africa’s Standard Bank Group’s (SBG or the group) results for the period ended 30 September 2017 were robust, total earnings increased from 12,075,925,233 to 12.791,664,742 compared to the same period last year. Underpinned by its universal client offering, geographic diversity and increasingly digital capabilities. Headline earnings per share grew by 11% to 756 cents supporting an interim dividend per share of 400 cents, up 18% period on period. Group credit impairments and operating costs were well managed, resulting in an overall decline in the credit loss ratio from 105bps to 96bps and positive

SimTshabalala, Chief Executive of Standard Bank

jaws of 1.0%. Group ROE improved from 14.4% to 16.1%. As at 30 September 2017, the group’s capital position remained strong with a common equity tier 1 (CET1) ratio of 13.7% (1H16: 13.2%). Currency movements adversely impacted the group’s reported results, reducing group headline earnings by 7% period on period. On a constant currency (CCY) basis, group headline earnings grew by 19%, supported by Africa Regions, which grew by 46%. Despite the dilution impact from ZAR strength, Africa Regions still increased its contribution to banking headline earnings to 29% and contributed positively to group HEPS growth and ROE. Despite entering a technical recession in 1Q17 and being downgraded by three rating agencies during the period, SA funding costs remained broadly flat and the ZAR strengthened on average against the major currencies period on period. The ZAR also appreciated relative to all our key African Regions’ currencies over the same period; most notably the NGN, GHS and MZN. The challenges facing South Africa, namely low growth, high unemployment and high levels of inequality, were well ventilated. During the period, despite business confidence

levels remaining low overall, certain parts of the economy did grow. The moderate recovery in commodity prices provided some support to miners. As the drought abated in certain parts of the country, it provided much needed respite to parts of the agricultural sector. Consumers had an opportunity to catch their breath as rates remained flat and inflation trended downwards. Inflation re-entered the SARB’s 3% - 6% target range in April and remained in the range for the rest of the period. Underlying credit growth remained lacklustre, supported by low single digit real corporate growth whilst household credit continued to contract, albeit at a slower rate. Across the 19 African countries in which they operate outside of South Africa, the dynamics continue to be diverse. In the oil-export reliant countries on the west coast, such as Nigeria and Angola, prospects improved as oil recovered from lows in 1H16. In contrast, foreign currency liquidity constraints continued for most of the period, depressing market activity. East Africa suffered the effects of a drought. In Kenya specifically, the combination of the drought, the effects of the regulatory caps and floors introduced in September 2016 and pre- election anxiety resulted in a slowdown in credit growth. Mozambique’s currency, although weaker than in 1H16, stabilised in 1H17. The combination of higher rates, higher cash balances on the back of foreign currency liquidity constraints, flight to quality and improved macros provided support for the Africa Regions’ performance. The top five contributors to Africa Regions’ headline earnings were Angola, Ghana, Mozambique, Nigeria and Uganda, which together represent c.60% of the Africa Regions’ headline earnings. Against a backdrop of adverse macro-economic developments, policy uncertainty and rating agency downgrades The Standard Bank of South Africa’s (SBSA) asset and income growth were constrained. Despite these headwinds, SBSA demonstrated its resilience and grew its headline earnings 18% on the back of good cost management and muted credit impairment charges. In neighboring Namibia, Standard Bank Namibia (SBN). Although 2017 has proven to be a challenging year for Namibia, SBN Holdings has grown its profit after tax by 10.8% off the back of moderate loans and advances growth to customers of 7.9% and a 24.6% reduction in credit impairment charges. Its Total income grew by 3.7% whereas expenses grew by 3.0%. Credit loss ration declined from 0.7% to 0.5% from 0.7%. Its return on equity saw a slight Market Digest Nigeria 73

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FINANCE decline from 20.3% to 19.9%. This was largely attributable to a lower dividend payment, diluting its returns. Standard Bank Botswana, Owing to challenges in the mining sector, there has been a decline in the diamond sales in 2016 that led to the cutting of production in some local companies. This has also led to the closure of mining companies and while mining giants, BCL and Tati Nickel Mine companies, were put under provisional liquidation due to viability challenges. “Without a well functioning financial services sector, we will not see any development in any economy,” Leina Gabaraane, Stanbic Bank Botswana chief executive officer (CEO) said. The unlisted Stanbic bank has been operating in Botswana for the past 25 years and Gabaraane says they were impressed with the role they are playing in the country’s financial service sector. The cumulative cuts of 150 basis points in the bank rate in February and August significantly reduced interest income. The response by the Central Bank to inject some much needed liquidity into the banking sector in March by reducing the cash reserving requirement ratio from 10 percent to 5 percent was leveraged by the bank to bring the unsustainable levels of cost of funds under control. The effects of the slowdown in the mining sector, business closures, retrenchments, personal over-indebtedness, drought, and challenges in electricity and water supply culminated in constraining growth in the loan book. Notwithstanding these challenges, the Bank posted profit after tax of P132 million with a 44 percent year-onyear growth.

Eco bank’s pan-African platform

Incorporated in Lomé, Togo, Ecobank Transnational Incorporated (ETI) is the parent company of the leading independent pan-African banking Group, Ecobank, present in 36 African countries. It is the largest pan-African bank by footprint; it won seven (7) “Bank of The Year 2016” country awards in Burkina Faso, Burundi, Guinea, Guinea-Bissau, Mali, Sierra Leone and Zimbabwe at the annual Bankers Award in London. At the end of the third quarter The Group delivered a return on tangible equity of 15.6% on profit before tax of $227 million, reflecting solid pre-impairment income growth; Revenue of $1.4 billion, increased 4% in constant currency highlighting the successful rebalancing of the Group’s revenue streams its Costto-income ratio improved to 61.7% (9M16: 65.5%). One-off restructuring costs of $9.3 million in Central,

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Eastern and Southern Africa increased digitization to enhance the customer experience; expanding customer base to 13 million with 1.2 million downloads of its pan-African mobile App in 12 months There was strong deposit generation in all regions except for Nigeria where the operating landscape is challenging Francophone West Africa and Anglophone West Africa delivered strong ROEs of 23.6%

Ade Ayeyemi, Group CEO Ecobank

and 24.4%, respectively, and accounted for ~44% of revenues Successful IPO of Ecobank Côte d’Ivoire raising XOF45 billion ($80 million) at 2.8x book value on offers of XOF108 billion. On the 27 of October 2017 Ecobank Transnational Incorporated, (“ETI”), the Lomé-based parent company of the Ecobank Group, announced the successful placement of USD 400 million convertible debt. Ade Ayeyemi, Group CEO said, “Our results reflected the benefits of diversification and the progress made in executing our strategy to positioning the company for long-term growth. Actions we took around reducing costs have shown positive results and were evident in improvements to the costto-income ratio for the Group, and particularly for Nigeria. We expect further efficiency gains to come from ongoing right sizing of our Central, Eastern, and Southern Africa region and subsequently the rest of our West Africa regions. Ecobank Burundi was grossly affected by Political instability, rising inflation, a foreign currency liquidity crunch and deteriorating business confidence all negatively impacted Burundi’s banking sector in 2015. With gross domestic product growth contracting by 2.5% for the year, most banks looked to alternative revenue streams and cautious lending strategies to navigate these difficulties. The bank surpassed this challenges with its commitment to digital innovation, excellent risk management strategies and strong financial perfor-

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mance. Ecobank Guinea posted a slow recovery from the twin shocks of collapsing commodity prices and the Ebola virus outbreak of 2014 and 2015, respectively. Gross domestic product growth, which effectively stalled in 2015, is expected to begin a quick recovery in the coming years as bauxite and gold production normalizes and the agricultural sector continues its positive trajectory. Ecobank Uganda is in favorable waters Uganda’s economy is seen expanding by 5 percent in the 2017/18 fiscal year, up from 4 percent in the previous period, lifted by favorable weather, The East African economy is Africa’s biggest coffee exporter followed by Ethiopia and also cultivates a range of other agricultural commodities including tea, cocoa and tobacco. Ecobank Cameroon is the 4th largest bank in Cameroon, with profits before tax of CFA13.8 billion and a return on equity of 50 percent” Already in 2016, the banking group highlighted, the digital transformation enabled the company to consolidate its growth “Ecobank has decided to embark on the international movement of abandoning traditional banking-which is now out-of-date-- to go digital on the international markets,” Gwendoline Abunaw Managing Director, Ecobank Cameroon said. Ecobank Nigeria On Dec. 31, 2016, Ecobank Nigeria accounted for approximately 30% of total assets and loans and 46% of total adjusted capital (TAC) of the group. Furthermore, a large percentage of the group’s asset quality issues emanated from Nigeria because of its legacy problem loans and its concentrated lending in U.S. dollars to the oil and gas sector. At the end of 2016, the group created a special-purpose vehicle named Ecobank Specialized Finance Co., which bought nonperforming legacy assets from ENG for U.S.$200 million in cash and the transfer of ownership of some property valued $66 million. This solution simultaneously helped the Nigerian subsidiary to clean its loan book, improve capitalization, and provided much-needed FX in cash to help with the tight liquidity caused by the U.S. dollar shortage in Nigeria

Attijariwafa Bank Morocco Attijariwafa is the seventh largest bank in Africa, present in more than 25 countries, and employs more than 17,000 people. Attijariwafa Bank is controlled by the holding company SNI, a conglomerate in which the Moroccan royal family is a key shareholder (48%). The Bank is the largest provider of microfinance in Morocco. The cross-border African operations of Attijariwafa Bank contribute about one quarter of the group’s profits. The Company’s subsidiaries include Wafa Immobilier, Wafa Assurance, Wafasalaf, Wafabail, Wafacash,

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Wafa LLD and Attijari Finances Corp. The Company is active in over 20 countries through a network of its branches. It controls such banks as Attijari Bank in Tunisia, CBAO in Senegal, SIB in Ivory Coast, CBAO in Burkina Faso, BIM in Mali, among others. The bank’s earnings have increased by 5.7% so far this year, and its assets increased by 4.3%. Its nonperforming loan ratio held steady at 7.1%. Attijariwafa Bank is the leading bank in Morocco, Last

Ismail Douiri, co-CEO of Attijariwafa Bank. Photo: Courtesy of Attijariwafa Bank

year; Attijariwafa Bank purchased the Egyptian operations of Barclays (comprising 56 branches) and a 76% stake in Cogebanque Rwanda. Morocco’s three largest banks; Attijariwafa, BCP and BMCE all follow similar universal banking strategies and have expanded into sub-Saharan Africa to bolster growth. The expansion into Africa was led by Attijariwafa it has the highest proportions of loans sourced from the region on its books at 23% Attijariwafa had the lowest ratio of non-performing loans to gross loans among the three top banks at 7% as of December 2016, compared with 7.7% for BCP and 8.3% for BMCE. Attijariwafa and BCP are best positioned to weather any additional stress on their asset portfolios, with problem loans representing respectively 36% and 39% of the banks’ shareholders’ equity and loan loss reserves, compared with 54% for BMCE. Attijariwafa has a solid domestic franchise as the largest bank in Morocco and a regional financial power-player known for it’s successful acquisitions, primarily across Francophone Africa with total assets of MAD429 billion ($44 billion) as of October 2017 with a diversified and established franchise (Banque Commerciale du Maroc and Wafabank which merged in 2004 to form Attijariwafa were respectively founded in 1911 and 1904) that benefits the bank’s profitability profile. The banking group also developed a leading franchise through

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FINANCE specialized subsidiaries in insurance, leasing, consumer finance or factoring among others and developed gradually its pan-African foot print since 2005 with now a presence in 15 countries in North, West and Central Africa that represented 22% of the group’s balance-sheet in October 2017 but 29% of the group’s net profits. The bank’s pre-provision income at 3.1% of risk-weighted assets is supported primarily by an accelerated credit growth observed in Morocco since 2016 (Morocco banking system credit increased by 3.9% in 2017 versus 2.5% in 2016); stable operating costs at around 46% and increased contributions from the international activities, notably with the acquisition of Barclays Egypt in 2017. Although Attijariwafa’s cost of provisions reduced in 2016 to 17% of pre-provision income, the bank’s net profits (1.3% of tangible assets in 2016) is expected to remain constrained by increased provisioning requirements, particularly in Morocco with the expected implementation of IFRS 9 standards.

The National Bank of Egypt (NBE)

It is the oldest and largest bank in Egypt. It has 338 branches within the country, assets of EGP 366,6 bn., total deposits of EGP 312,7 bn., and total loans and advances of EGP 114,7 bn. As of 2007, the National Bank of Egypt accounted for 23% of the Egyptian banking system’s total assets, 25% of total deposits and 25% of total loans and advances. NBE also financed about 24% of Egypt’s foreign trade during the year. NBE also accounts for 74% of the credit card market and 40% of the debit cards in Egypt. NBE has a subsidiary in London, National Bank of Egypt (UK), branches in New York and Shanghai, and representative offices in Johannesburg and Dubai. The bank’s financial position jumped to EGP 1.365tr by the end of June 2017, a growth of 94% over June 2016, with

Hesham Okasha, chairperson NBE

a market share of 31% The Asian Banker granted the National Bank of Egypt (NBE) the “Strongest Bank” award in Egypt and Africa of 2017, according to the AB500 Index issued annually by the institution. NBE also received the EMEA Project Finance Awards for the best telecoms and social development deals in Africa as the syndicate agent. According to Hesham Okasha, chairperson of the board of directors of the NBE, “the Strongest Bank award given to a bank in Egypt and Africa for 2017 is based on the strength of the budget of the public bank, stressing that this achievement is a direct result of the banking reform policies adopted by the Central Bank of Egypt (CBE) since 2004”. In the fiscal year that ended 30 June 2016, the bank achieved 88% growth in net profits before taxes to reach EGP 19.5bn. The bank posted the highest net profit in the history of the bank to EGP 12.5bn, an increase of 145% over the previous fiscal year. The bank’s results for the first half of the fiscal year ended December showed a 17% growth in net pretax profits to EGP 10.5bn and a 4% growth in net profit after taxes to EGP 6bn. According to Okasha, the results of the bank for the fiscal year that ended 30 September 2017, which are expected to be adopted, have achieved significant growth. The bank’s total financial position reached EGP 13.65bn, a growth of 94% over the previous year and a market share of 31%. The total portfolio of deposits stood at EGP 861.6bn at the end of September 2017. The total loan portfolio stood at EGP 400.6bn at the end of June 2013. In early 2017, the bank’s authorized capital increased from EGP 30bn to EGP 50bn, an increase of 66.7%. The paid-up capital increased from EGP 15bn to EGP 28.65bn, an increase of 91%. Its financial viability and its market competitiveness revealed that the bank’s accumulated reserves and retained earnings were used to increase capital, which led to an increase in equity to reach more than EGP 86bn on 30 June 2017, a growth rate of 123% compared to the end of the previous fiscal year. The outlook for Egypt’s banking system is stable, as economic growth picks up, loan performance remains broadly resilient and banks benefit from a stable deposit base. Egypt’s Economic growth is driven by its resilient domestic consumption and the gradual recovery of the tourism industry. Moody’s forecasts that growth will pick up to 4.5% for the fiscal year ending September 2018, from

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4.0% in 2017, before accelerating to 5.0% in 2019.

Societe Generale African banking operation

Société Générale S.A. is a French multinational banking and financial services company headquartered in Paris. The company is a universal bank and has divisions supporting French Networks, Global Transaction Banking, International Retail Banking, Financial services, Corporate and Investment Banking, Private Banking, Asset Management and Securities Services. Société Générale is France’s third largest bank by total assets, sixth largest in Europe or seventeenth by market capitalization Africa is also a major area of interest for the bank, with the 2002 purchase of Eqdom in Morocco (the market leader in consumer lending) and Union Internationale de Banques in Tunisia. In addition, 51 percent of SSB Bank in Ghana in 2003

Frédéric Oudéa, SocGen’s CEO

Ahead of the release of its strategic 2018 plan, Société Générale saw net income miss estimates in the third quarter as the French bank increased the amount it had put aside to meet ongoing legal disputes. The lender reported a 15 per cent fall in net income to €932m in the third quarter, below analyst expectations of €1bn according to Reuters data. The bank also saw net banking income fall 0.9 per cent to €5.96bn, compared to expectations of €6bn. Operating expenses fell slightly by 0.4 per cent. The bank suffered along with its peers from a low volatility environment that pushed down trading revenues. Revenue from its fixed income, currencies and commodities division fell 27 per cent versus the same quarter a year before to €496m with the bank blaming “a lacklustre market, characterized by a low volatility environment and reduced investor activity.” Other European banks suffered similar, if not deeper, falls. French peer BNP Paribas, which reported third quarter numbers last week, saw

its FICC revenue drop 26 per cent. Revenue from the bank’s equities and prime services division was also down 19.3 per cent compared to the year before. Revenue from equities fell 25 per cent over the period to €359m. Frédéric Oudéa, SocGen’s CEO said: Despite an unfavourable financial environment, Societe Generale generated resilient quarter three results… The group continued to improve its risk profile and pursued its investments, in order to meet the needs of its customers and respond to changes in the methods of using banking services. Société Générale said that its provision for disputes had been increased by €300m in the third quarter to €2.2bn. The bank added that it is “currently in discussions with the US authorities in order to resolve two litigations, [Libyan Investment Authority] and IBOR, and has decided to increase the provision for disputes.” Société Générale’s shares have traded up 1.9 per cent this year, to €47.65. The French Cac 40 index is up 13 per cent during the same period. Societe Generale also has a pan-African banking operation, with a presence in 18 countries. The French bank’s international retail banking and financial services operations posted a 50% increase in earnings last year, helped by improving results at its banking Societe Generale launched YUP, a new alternative to the traditional banking model in Africa earlier this year in Ivory Coast and Senegal with Launch planned by the end of 2017 in Ghana and in Cameroon, Burkina Faso, Togo and Guinea in 2018 YUP is a mobile money solution for accessing a full range of transactional and financial services even without a bank account. The Target is to open one million wallets in the next three years, to double Societe Generale’s individual customer base in sub-Saharan Africa and create a network of 8000 agents to serve their users networks in Africa. Despite Algeria’s stagnant economy, Societe Generale Algeria has continued to expand. The bank opened its 87th branch last year and strengthened its position as Algeria’s leading private bank. Eric Wormser, chairman of the management board, says, “This award clearly demonstrates the strength of our strategy, the high quality standards on products and services, and our willingness to keep investing in Algeria to the benefit of our clients.” Societe Generale Cameroun is the first Bank in Cameroon as far as bank financing is concerned with nearly 23% market share on loans given out. It won Best Bank in Cameroon in 2011, 2012 and 2014; it is the 1st bank in Cameroon and 7th bank in sub-Saharan Market Digest Nigeria 77

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FINANCE Africa considering net income in 2016.And it is the Best Investment Bank in Cameroon according to the Finance EMEA magazine in December 2016. According to Frédéric Oudéa – Chief Executive Officer “Despite an unfavorable financial environment, Societe Generale generated resilient Q3 results, driven in particular by International Retail Banking & Financial Services. “ Societe Generale de Banques en Côte d’Ivoire (SGBCI) has a leading banking-market share in one of Africa’s best-performing economies. The real GDP of this West African nation has grown by 9% in each of the past four years. SGBCI has an extensive presence in the country, with a network of 68 branches and a return on equity of 18.3%. “Beyond the figures, we aimed to reaffirm our identity as a professional, useful and customer-centric bank,” says Hubert de Saint Jean, CEO of SGBCI. “We have made it a point of honor to build and improve customer satisfaction.” Societe Generale de Banques en Guinee won due to its strong support for business—including the mining industry, which contributes 95% of Guinea’s export earnings. Based in the capital, Conakry, SG has 21 branches. Marc Leguevaques, CEO, says, “This distinction confirms the achievement of one of our strategic objectives: to be the reference bank for business in Guinea.” Societe Generale de Banques au Senegal won Best Bank in that country in recognition of its promotion of financial inclusion and its wide involvement in the local economy. “This distinction is a testimony to our commitment to serve and delight our customers continuously,” says Georges Wega, CEO. Last July, the Societe Generale group acquired a stake in TagPay, a French fintech specialized in mobile digital banking. The solution works on basic mobile phones widely used in emerging markets. Societe Generale Kenya opened a new Representative Office in Kenya last month after approval from the Central Bank of Kenya. The Bank also announced the appointment of George Mutua as Chief Representative Officer in Kenya. Based in Nairobi, George Mutua will be in charge of further developing Societe Generale’s franchise in Kenya and in Eastern Africa, a fast-growing region.

First Bank of Nigeria Limited (FirstBank)

First Bank of Nigeria Limited (FirstBank) is Nigeria’s premier and most valuable banking brand, and largest financial services institution by total assets and gross earnings. Sir Alfred Jones, a shipping magnate from Liverpool, England, founded the Bank. With its head office originally in Liverpool, the Bank commenced

business on a modest scale in Lagos, Nigeria under the name, Bank of British West Africa (BBWA). Today it has more than 12 million customer accounts; FirstBank has over 750 branches providing a comprehensive range of retail and corporate financial services. The Bank has international presence through its subsidiaries, FBN Bank (UK) Limited in London and Paris, FBNBank in the Republic of Congo, Ghana, The Gambia, Guinea, Sierra-Leone and Senegal, as well as its Representative Office in Beijing.With total assets of N3.3 trillion, customer deposits of N2.6 trillion and a strong capital adequacy ratio of 18.9%, well above the CBN mandated minimum of 10% FirstBank is amongst the largest corporate and retail financial institutions in sub-Saharan Africa (excluding South Africa). In 2012, the FirstBank Group adopted a holding company structure – FBN Holdings Plc – in recognition of the need to retain the diversity of the Bank’s businesses, Other entities under FirstBank include FBN Bank (UK) Ltd – a fully licensed bank in the UK with offices in London and Paris; FBN Bank DRC – a leading tier 2 bank headquartered in the Democratic Republic of Congo (DRC), acquired in 2011, the FBN Bank in The Gambia, Ghana, Guinea, Sierra Leone acquired in 2013, and Senegal acquired in 2014.

Dr. Adesola Kazeem, CEO, FirstBank

FirstBank has been named “Most Valuable Bank Brand in Nigeria” six times in a row: 2011, 2012, 2013, 2014, 2015, and 2016 by the globally renowned “The Banker Magazine” of the Financial Times Group; and “Most Innovative Bank in Africa” in the EMEA Finance African Banking Awards 2014. Recently, for the sixth consecutive time, the Bank clinched the “Best Retail Bank in Nigeria” award by The Asian Banker. Over the years, the Bank has led the financing of private investment in

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infrastructure development in the Nigerian economy by playing key roles in the Federal Government’s privatization and commercialization schemes. The Bank also supported acquisition of stakes in Oil Mining Leases (OMLs), The Bank provided over $1 billion to part-finance acquisition of interests, as well as working capital for production to a number of OMLs; and an aggregate of about $500 million for construction and completion of Gas pipelines to Marginal Fields and Cement Plants.FirstBank is at the forefront in financing power projects and has provided over $220 million to part-finance the acquisition of both Generating Companies and Distribution Companies under the privatization of the Power Sector by the Federal Government. In its Q3’17 results its earning generating capacity remained very strong with 5.2% YoY growth recorded in gross earnings, increasing to N439.2bn in 9M 2017 from N417.4bn in 9M 2016 while its impairment charge for credit losses stood at N97.6bn in 9M 2017 as against N114.7bn in 9M 2016. The bank’s cost to income ratio closed at 53.4% in 9M 2017 from 48.4% in 9M 2016 while its adjusted FX revaluation cost to income ratio closed at 53.5% in 9M 2017 as against 58.9% in 9M 2016. The bank made steady progress and achieved an NPL ratio of 20.1% in Q3 2017 which is in line with the less than or equals to 20% FY 2017 guidance set by the bank. Although FirstBank’s net-interest income of N294.3bn stood above its peers, its bottom-line earnings were considerably weakened, due to high loan impairment charges. The Bank’s exposure to foreign currency risk remains a concern. As about 51% of gross loans were denominated in foreign currency (“FCY”), the bulk of which remains within the troubled oil and gas sector. Asset quality remains a key rating concern, with the Bank’s gross nonperforming loan (“NPL”) ratio escalating to 25%. While management efforts towards revamping the risk management framework and architecture are noted, additional impairment pressure is expected, as the exposure within the oil and gas sector remains substantial (constituting 38.6% of gross loans at 1H FY17), with the likelihood of offsetting the full impact of recovery efforts at FY17. Based on the unaudited results for 1H FY17, gross NPLs stood at 21.8% of total gross loans. Nigeria’s macroeconomic fundamentals remained unstable throughout 2016 and the till the end of 2017, owing to the weak global price of crude oil, which improved to currently $65 has severely affected the country’s foreign reserve levels and fiscal planning capacity. This, in turn led to the significant fall in the

value of the Naira against the US dollar, which further heightened economic uncertainty. The banking sector’s aggregate gross NPL ratio rose to 14.0% at end-December 2016 (2015: 5.3%) and to 15.2% by April 2017, exceeding the prudential tolerable limit of 5.0% and signaling a significant weakening in asset quality across the industry (though largely driven by outliers). While CBN allowed banks to write-off fully provisioned NPLs since July 2016, GCR expects the industry NPL ratio to remain high and above the regulatory limit in 2017 The industry average CAR reduced to 12.8% at April 2017, from 13.9% at end-December 2016 (2015: 16.1%), and some players began to fall below the minimum threshold required by regulation. Downward pressure on banks’ capitalization levels has, for the most part, resulted from the devaluation of the Naira, as well as (oftentimes related) asset quality concerns. Naira devaluation has increased pressure on banks’ already moderating capital buffers; given the expansionary effect it has on forex denominated loans, and consequently on banks’ risk- weighted asset balances. Challenges for Nigerian banks and other financial institutions persist till the end of 2017, given ongoing macroeconomic uncertainties.

Capitec South Africa

Capitec is a midsize, retail-focused bank operating in the second tier of South Africa’s banking sector, with total assets of about South African rand (ZAR) 81.1 billion (approximately USD$6 billion) as of Aug. 31, 2017. Capitec Bank is South Africa’s preferred and most-used primary bank according to consumer research group Nielsen. Capitec has more clients than both FNB and Nedbank, and is now the third largest retail bank in the country. Capitec Bank, established in 2001, has significantly increased its lead as South Africa’s most popular bank. Extracts from the summarized unaudited financial results for the 9 months ended 31 September 2017 showed that headline earnings per share is up 17% to 1 769 cents, Headline earnings grew by 17% to R2.0 billion Interim dividend per share is also up 17% to 525 cents with a 26% Return on equity The bank, which recently made its maiden venture into international markets, acquiring a 40% stake in Cream Finance, an online lending platform, for $22 million (R282 million). Cream Finance provides online loans in several European countries including Poland, Latvia, Georgia, the Czech Republic, Mexico and Denmark. Capitec

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FINANCE Bank Holdings has been rated the very best in the world for a second time, beating other local and global leaders such as HSBC, Goldman Sachs and JPMorgan Chase. The Lafferty Group 2017 Global Bank Quality Benchmarking study awarded Capitec a 5-star rating, Absa achieved four stars, and FirstRand, Standard and Nedbank were given three stars.

Capitec CEO Gerrie Fourie

Net lending and investment income increased with 10% despite introducing its improved credit solution and applying a stricter granting strategy. Arrears and rescheduled loans decreased with 14% while the net loan impairment expense increased with 8%. Net transaction fee income increased by 29% and operating expenses increased 20% from the prior year period in support of our growth initiatives. It retained a capital adequacy ratio of 34.6% at the end of September 2017. The bank’s approach to liquidity risk remains conservative and to reduce the risk, call deposits are only utilized for the loan book to a limited extent. It complies with the Basel 3 liquidity coverage ratio (LCR) and net stable funding ratio (NSFR). Its LCR is 1 187% (September 2016: 991%) and our NSFR is 199% (September 2016: 152%). Capitec has increased its share of the transactional retail client base to approximately 25% in 2017 from 8% in 2012. At August 2017 the bank had 9.1 million active clients and 4.1 million primary bank clients. Capitec has also emerged as the market leader in unsecured lending with a 19% market share in 2015. At the same time, it continues to expand its commercial network gradually, investing in new branches, staff, ATMs, and alternative channels, including mobile, Internet, and retail partnerships. Capitec CEO Gerrie Fourie at80 Market Digest Nigeria

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tributed the growth to the bank’s sustained strategy of keeping its banking model simple and providing services at an affordable price. “This resonates with most South Africans and is what sets us apart, especially in the current tough economic climate, giving clients a sense of value and allowing them to feel in control of their money,” he said. However, slow economic growth, weak state-owned enterprises, and political instability are constraining South Africa’s creditworthiness. A downgrade of South Africa would cause a similar action on Capitec, Capitec’s monoline focus translates into a lack of business diversity compared with traditional top-tier South African banks, which exposes the bank to cyclicality, adds additional regulatory risks (due to the unsecured lending asset class focus), and limits revenue diversification. Nevertheless, the bank has performed well throughout the instability in the unsecured lending space over the past few years. Revenue stability has been underpinned by a good mix of net interest income and fee income (approximately a 70%/30% percent split), good operating efficiency with a cost-to-income ratio of 36% in 2016, and return on equity of 25%, which compares well with domestic banking sector peers.

Zenith Bank

Zenith Bank Plc (the “Bank”) was incorporated in Nigeria under the Companies and Allied Matters Act as a private limited liability company on May 30, 1990. The Bank’s expansion is not limited to Nigeria as Zenith became the first Nigerian bank in 25 years to be licensed by the Financial Services Authority (FSA) in the UK for the commencement of banking operations by Zenith Bank (UK) Limited in April, 2007. This is in addition to its presence in Ghana, Zenith Bank (Ghana) Limited, Sierra Leone, Zenith Bank (Sierra Leone) Limited, Gambia, Zenith Bank (Gambia) Limited and a representative office in Johannesburg, South Africa and Beijing, China. With total assets of Nigerian naira (NGN) 4.9 trillion (approximately US$15.7 billion) on June 30, 2017, Zenith is the largest bank in Nigeria. The bank has the strongest corporate franchise in the country and benefits from stable funding. Zenith recorded a stable funding ratio of 123% on the back of a healthy proportion of deposit funding at mid-2017. Net broad liquid assets covered 74% of short-term deposits and 15x short-term wholesale funding at

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Chief Executive Officer of Zenith Bank, Mr. Peter Amangbo

the same date. However, given the short-dated nature of the bank’s deposit profile, which is a feature it shares with its domestic peers, Zenith’s deposit base is confidence sensitive. Zenith’s asset quality metrics deteriorated slightly in the first half of 2017, with the nonperforming loan (NPL) ratio reaching 4.3% at June 30, 2017, from 3.0% at end-2016. Similarly, cost of risk increased to 3.6% at June 30, 2017, versus 1.5% at end-2016. As a result, NPL coverage by provision ratio increased to 113% at mid-2017. The Group’s cost-to-income ratio declined from 53.8% in the first three quarters of 2016 to 52.9% in 2017 driven by operational efficiencies and cost optimization efforts. The Group delivered an increase in Profit before Tax (PBT) from N116.6 billion in September 2016 to N152.6 billion in September 2017 reflecting a growth of 30.8% due to improvement in both interest income and non-interest income. In line with the Group’s conservative stance, it closed the period with a liquidity ratio of 61.1% firmly above the 30% minimum statutory requirement. The Group’s loan to deposit ratio was 62.1% while the Capital Adequacy Ratio (CAR) stood at 22.2%, which is above the 15% regulatory limit. Zenith’s strength in these prudential ratios reflects its capacity to take advantage of emerging opportunities across various sectors of the economy. Good and consistent dividend payout to its investors. The Bank paid a dividend of 160 kobo per share for FY2012, 175 kobo per share for both FY2013 and FY2014, and 180 kobo per share for FY2015 A total dividend amount of 202 kobo per share (25 kobo interim and 177 kobo final) was paid for FY2016 and 25 kobo per share interim dividend also paid in H1 2017.

At end-March 2017, 40% of the bank’s consolidated assets and liabilities were denominated in FC, primarily the US dollar and exposure to exchange-rate risk is therefore significant. The CBN limits open FC banking book positions to 10% of equity and trading book limits are also set by the CBN at 0.5% long and 10% short of shareholders’ funds. Internal trading limits applied by Zenith are slightly more conservative, limited to a maximum of 90% of the prudential limits. Interest-rate fluctuations can be frequent in Nigeria. Zenith’s loan book is extended at floating rates and the bulk of deposits are also remunerated at floating rates. However, following a USD500 million-bond issuance in 1H17, about 15% of the bank’s funding is remunerated at fixed rates. Rising interest rates would therefore boost the bank’s profits. The stable outlook on Zenith reflects that on Nigeria, and our expectation that the bank’s earnings and asset quality metrics will remain broadly stable over the next 12-18 months. The Group Managing Director/Chief Executive Officer of Zenith Bank, Mr. Peter Amangbo said as an institution of well-primed people, the bank relied on its pool of exceptional staff to make sound and timely decision and addressed issues in a manner that anticipated developments and demonstrated excellent understanding of the dynamics of the market and economy.

United Bank for Africa

United Bank for Africa (UBA) Plc is one of Africa’s largest financial institutions with operations in 19 African countries and 3 global financial centers; New York, London and Paris. UBA has more than eight million customers and 700 business offices globally. United Bank for Africa (UBA) Plc earlier this year said it had invested more than $5billion to support infrastructure development in Africa in the last seven years. UBA was the first Nigerian bank to make an Initial Public Offering, following its listing on the NSE in1970. It was also the first Nigerian bank to issue Global Depository Receipts. Mr Oliver Alawuba, the Chief Executive Officer, Anglophone UBA Group, stated this at the 2017 Tony Elumelu Foundation (TEF) 3rd annual entrepreneurship forum in Lagos. He said the investment in the last five to seven years, which cut across African countries where the bank exists, were in electricity, power generation, road construction and rehabilitation and that the funds were invested in Senegal, Cote d’Ivoire, DR Congo, Benin Republic and Nigeria. Alawuba said that over $500 million had been invested in the power sector to touch the lives of the citizens. Market Digest Nigeria 81

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FINANCE in 2016, while interest expenses stood at N85.79 billion from N70.92 billion in 2016. Similarly, total assets increased to N3.77 trillion from N3.50 trillion in 2016, while total liabilities rose to N3.26 trillion from N3.06 trillion in comparative period of 2016. Loans and advances to customers grew to N1.08 trillion from N970.39 billion reported in the preceding period.

CEO, UBA, Kennedy Uzoka

“Most African countries are at different stages of development and evolution; we need infrastructure. Our economies will be helped by more inter African trade,” Alawuba said. Mr Emeke Iweriebor, the Chief Executive Officer, Francophone UBA Group, said that the company was interested in African development. Our passion in UBA is how we can develop Africa in line with our chairman’s vision using Africa capitalism,” Iweriebor said. He said that the bank supported oil and gas industry with $1billion in Ghana, noting that oil and gas was key to Ghana. Iweriebor added that the company had invested the sum of $200 million in cocoa production in Ghana, adding that Ghana and Cote D’Ivoire produce over 50 per cent of cocoa in Africa. The audited 2017 Q31 results showed improved growth across major performance indicators. United Bank for Africa (UBA) Plc announced gross earnings of N333.91 billion for the third quarter ended Sept. 30, 2017. The report showed that the gross earnings represented a growth of 25.75 per cent when compared to N265.53 billion posted in the comparative period of 2016. Also, the company’s profit before tax during the period under review increased by 33.2 per cent or N19.53 billion to N78.33 billion as against N58.79 billion in the corresponding period. The result showed that profit for the year closed higher at N60.92 billion from N49.51 billion, representing an increase of N11.41 billion or 23 per cent. Further analysis showed that net interest income stood at N152.29 billion from N112.07 billion achieved in the preceding period of 2016. Its interest income declined to N238.09 billion compared to N265.53 billion 82 Market Digest Nigeria

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Commenting on the performance, the Group Managing Director/CEO, UBA, Kennedy Uzoka, said: “These extremely positive third quarter results are an attestation of our ability to sustainably grow earnings and market share, notwithstanding the challenging operating environment. They are a tribute to our enhanced customer engagement and focus on continuous improvement in service quality.” He said, “Our Africa operations (ex-Nigeria) again grew strongly in the period, contributing a third of top-line and approximately 40% of earnings.” He further noted that the bank’s nine-month top-line grew by 26.3%, to an unprecedented N334 billion, driven particularly by the strong performance of its recurring core revenue lines. The slow, but steady, recovery in economic activities in Nigeria is presenting new opportunities for growth, particularly as improving foreign currency liquidity and the multiplier effect of rising public sector spending are stimulating economic activities.

Barclays Africa Group Limited

Barclays Africa Group Limited is 23.4% owned by Barclays Bank PLC and is listed on the JSE Limited. The group was formed through combining Absa Group Limited and Barclays’ African operations on 31 July 2013. Registered head offices are in South Africa and the group has majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa, Tanzania (Barclays Bank Tanzania and National Bank of Commerce), Uganda and Zambia. The group has representative offices in Namibia and Nigeria, and Bancassurance operations in Botswana, Mozambique, South Africa and Zambia. UK-based Barclays PLC announced on 1 March 2016 that it intends to sell the majority of its shareholding in Barclays Africa over a period of two to three years. Earlier this year it reached an agreement with its African subsidiary about the details

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Retail Banking fell 10% to R3 092m, while Business Banking decreased 5% to R1 113m. CIB grew 76%, given 81% lower credit impairments. Corporate rose 35% to R558m and Investment Banking increased 105% to R1 206m. Rest of Africa Banking headline earnings grew 19%, or 50% in constant currency. RBB Rest of Africa declined 18% to R336m as a result of the strong rand, while CIB Rest of Africa rose 30%, reflecting positive operating JAWS and lower credit impairments. WIMI’s headline earnings decreased 8% to R574m, largely due to higher claims on two natural disasters. Economic performance in the Group’s presence markets in the rest of Africa was mixed, with generally improving outcomes in countries Ghana, Mozambique and Uganda and somewhat weaker trends in countries like Kenya, Zambia and Botswana. For the rest of Africa Headline earnings grew 19%, or 50% in constant currency, to R1 512m, due to positive Maria Ramos, Chief Executive, Barclays Africa operating JAWS and 31% lower credit impairments. of their divorce, a key step before the British bank Pre- provision profit increased 1%, or 20% in constant can sell more shares in its Johannesburg-listed currency, to R3 391m. offshoot. Barclays is expected to pay a fee to its AfSouth Africa’s economy shrank 0.7% on an annualrican subsidiary, in which its stake is worth R68bn ized basis in the first quarter, pulling the economy (£4.16bn). “It is a good outcome that enables us to into recession. Credit rating agencies downgraded complete the separation, and to provide continuity South Africa’s sovereign ratings in response to this and improved service for our customers,” said Maria economic slowdown, concerns over governance and Ramos, Chief Executive, Barclays Africa financial performance in state- owned enterprises, On a normalized basis, BAGL’s headline earnings and greater uncertainty in economic policy. Though grew 7% to R7 770m from R7 252m and diluted there is evidence of agriculture recovering in many HEPS rose 7% to 917,7 cents from 856,7 cents. The parts of the country from the drought conditions that Group’s normalized RoE increased to 16,8% from persisted in late 2015 and much of 2016, other sectors 16,1% and it’s return on assets increased to 1,40% of the economy are taking strain. Household incomes from 1,29%. Net interest income and non-interest are under pressure, with a poor job market and weak income both declined 1%. The Group’s net interest consumer confidence contributing to weak underlying margin (on average interest-bearing assets) redemand. Business sector surveys continue to point to duced to 4,93% from 5,01%. Loans and advances very weak confidence and a concern over the lack of to customers grew 2% to R729bn, while deposits clarity on economic policy. The prime rate was flat in due to customers increased 3% to R696bn. With the first half, as the Reserve Bank balanced a better operating expenses increasing 3%, the normalized inflation outlook with concern of the potential that the cost to income ratio increased to 55,6% from 53,4%, downgrade of the country’s credit ratings could trigger and pre-provision profit decreased 6% to R16,0bn. higher inflation. Rand strength reduced the Group’s revenue by 3% and headline earnings by 4%. In constant currency, pre-provision profit declined 3%. Credit impairments fell 27% to R3,8bn, resulting in a 0,96% credit loss ratio from 1,29%. The ratio of NPLs to gross loans and advances improved to 3,7% from 3,8%, and portfolio provisions increased to 76 basis points (bps) of performing loans from 72 bps. The Group’s NAV per share increased 4% to 11 261 cents on a normalized basis. South African Banking headline earnings increased 6% to R5 969m. Within this, RBB SA headline earnings fell 9% due to negative operating JAWS.

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Amanda Akah

Charging Late Payment Fees The African Time

ate payment is a common problem for businesses in Nigeria. It is commonplace for weeks, and even months, for an executed contract or a delivery both in the government ministries and private establishment to remain unpaid, part of this behavior permeates from the African Time mentality. Late payment can become a headache, especially when you have bills to pay. Not only does it become a financial burden, but an emotional one too. All that energy that goes into chasing payment can be downright draining.

It’s impossible to do business in Nigeria and not be a victim (and culprit) of lateness or as Nigerians would call it ‘African Time’. African time is described as the ‘perceived cultural tendency, in most parts of Africa, toward a more relaxed attitude to time’. All events begin late: our business meetings, naming ceremonies, church services etc. Heck, brides and grooms arrive at their own weddings late! Lateness is widespread and when asked why, we Nigerians will nonchalantly declare that ‘African time’. This appearance of a simple lack of punctuality or a lax attitude about time in Africa, has tran84 Market Digest Nigeria

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scended into a different approach and method in managing simple business tasks like settlement of invoices and related payments, scheduling and going for business meetings on time as well as business interactions. African cultures are often described as “polychron-

as quickly or as precisely as you may be accustomed to”, Nigerians do not generally have the sense of time pressure that is part of Western culture, and this has been a serious problem for businesses especially with regards to payment of invoices.

‘‘African time’. This appearance of a simple lack of punctuality or a lax attitude about time in Africa’’

Should You Charge Late Payment Fees on Invoices?

A common solution to deal with late payment is to charge a late payment fee. It’s the obvious solution, right? You give the client a push to pay you now, or they incur more costs further along the line. But is it that simple? Are there not situations where it’s a bad idea? And once you’ve decided to charge a late payment fee, how much do ic”, which means people tend to you charge? There, is, in fact, a manage more than one thing at a lot to consider. In this article we’ll time rather than in a strict seexplore it all: Why charging a late quence. Personal interactions and payment fee is a good idea, Guiderelationships are also managed in lines for charging these fees (and this way, such that it is not uncomwhen it may be a bad idea) and mon to have more than one simulHow much to charge. taneous conversation. An African “emotional time consciousness” Why Charging Late Payment has been suggested which conFees is a Good Idea trasts with Western “mechanical Besides encouraging clients to pay, time consciousness”. In Nigeria, “...things just won’t always happen an overdue payment fee is a good idea for several other reasons: It

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establishes you as a serious professional who has a business to run. If you don’t include a late fee policy, the perception may be that a client who doesn’t pay on time can repeat this behavior. Another reason is that you get paid before other contractors do. The chances are that if that client isn’t paying you on time, he’s doing the same to other contractors. But if you have stricter payment policies and kick up a fuss, they’ll move your payment to the top of the pile and finally, there are also several other indirect benefits. You also improve the cash flow of your business. That’s not to mention it reduces the financial and emotional burden associated with late payment. While in principal, late payment fees work, there are instances when they’re not a good idea.

Guidelines for Charging Late Payment Fees

Ask yourself: did the work fulfill the estimate? Clients are

different. Some won’t pay you because, well, they’re bad clients. Others, still, won’t pay because they don’t have the money. But then there are those who aren’t happy with your service. But, instead of kicking up a fuss, they vent their anger by not paying you on time. They’re passive-aggressive. Including a late payment fee in an invoice only aggravates the problem. That’s why it’s important you check that the work fulfilled the estimate before you invoice. If it did, the client is most likely satisfied. You can now send your invoice and include payment terms so that there are no surprise late payment fees.

Ask yourself: are clients aware

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of the fee? Nothing burns bridg-

es faster than surprise charges. Don’t include late payment fees if clients aren’t expecting any. Rather, first establish expectations by: Specifying the fee early on in the relationship, in writing, ideally through a contract. Specifying the fee on all invoices you send. Make sure it’s visible; don’t hide it in the fine print. In the same way, you get frustrated when you encounter surprise fees, buried deep in the terms and conditions, so do your clients. Where you have not specified the above, you can still include late payment fees. Just inform the client in advance; stating that next month you will have a late payment policy. This way they can’t act ignorant to the fact and can expect all future invoices that are unpaid – after a certain amount of time – to increase in value. And if the client responds, asking for justification, you can say that it is, in fact, a policy you enforce (or will be enforcing) with all new clients.

Know when forgiveness and a softer touch is the better choice Just because you have a

late fee policy doesn’t mean you have to enforce it on every occasion. For example, when dealing with the Nigeria government establishments and Nigerian global brands especially the banks, oil and gas firms or FMCG it’s a different matter, they usually work on a budget and require different levels of approval for settlement of invoices, in fact getting into the payments sheets is usually a struggle, for the government establishments it’s a personal challenge, so it’s advisable you calculate all costs including adjustments for late payments in the quotation and invoice. Late payment is part of doing business and should indeed be anticipated.

In other cases, there may be unforeseen circumstances where a lucrative and usually reliable client can’t pay you on time. Evaluate each situation and don’t impose the same policy on everyone. By highlighting that you’re empathetic with their circumstances and waiving the fee, you can strengthen your relationship with them. This will only contribute toward business success in the long run. Besides good business practice, it pays to be human.

How Much Should You Charge?

Let’s assume you’re considering charging a late fee, the next questions you probably have is: How much do I charge? How do I calculate the interest fee? Is there an upper limit? What’s acceptable and what isn’t? Before we move on to answering these questions, it’s important to reinforce that the purpose of the late fee is to motivate timely payment and NOT to create an extra revenue stream. So, make the fee sufficient enough for people to act, and not too exorbitant that the client feels you’re hauling them over the coals (especially if the payment is only a day or two late). If anything it’ll only sour the relationship and you’ll lose their business. The first step is to establish an acceptable level of interest to charge. A step-by-step guide to late fees:

Start by specifying a late fee in your contracts and on your invoices. The amount doesn’t

have to be large – A late fee is normally assessed as a monthly finance charge. Figuring out what to charge is a two-step process. First, divide the annual interest rate

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FINANCE ..you want to charge as a late fee by 12 to determine your monthly interest rate. Next, multiply this monthly rate by the amount due to determine the amount of the monthly late fee. For example, if the annual interest rate is 12%, the monthly interest rate is 1%. If a client owed you 10,000 Naira, you’d multiply this amount by 1% to figure out how much the client owes you every month as a late charge. One percent of 10,000 Naira is 100 Naira, so the client would owe you an extra 100Naira for every month his payment was late.

Secondly, Make sure your invoice clearly states when their payment is due, all of

your invoices should include the phrase, for example: “Accounts not paid within 15 days of the date of the invoice are subject to a __% monthly finance charge.” The invoice should also include the present date (for tracking lateness) and all of the information your client needs to pay promptly, such as your full contact information, instructions for sending payment, your tax ID number, and an itemization of services.

Thirdly, As soon as the job is

done, send an invoice promptly. Make sure they receive both a paper and electronic copy. Then, if you don’t get paid, send another invoice that reflects your late-payment charges. Include a note on the invoice such as “Second notice – 30 days past due.” Keep following up until you’ve established a payment plan or received your money. If you’ve done everything you can and a client still isn’t paying, you may want to take the issue to the next level, by hiring a lawyer (first to send letter or make a call).

Kehinde Iffy

Why Do Women Bully Each Other at Work? What You Need to Know When Your Boss Is a Woman The significant increase in female bosses in many parts of the world has given life to the debate on which of them is preferable to workers: female or male bosses. Of the 36 Ministers chosen by President Buhari in November 2015, 6 were females, now reduced to 5 with the appointment of Amina Mohammed as United Nations Deputy Secretary-General earlier in the year. Cape Verde has the highest number of women in ministerial positions on the continent, with nine out of 17 ministers which represented 53 percent, in South Africa, 15 out of its 36 ministers are women or 41.7 percent, Rwanda, has 11 out of 31, or 35.5 percent, are women, and Burundi, where 8 out of 23, or 34.8 percent of the total are women.

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The Finance Minister, Kemi Adeosun, has regularly been in the eye of the storm, sharing the blistering fury of critics of the economy with Mr Godwin Emefiele, the Governor of Nigeria’s Central Bank. Another one of Buhari’s female Ministers, Aisha Alhassan, made headlines in September when her allegiance to Atiku Abubakar, who is expected to challenge Buhari for the Presidency come 2019, became public. Buhari declined to fire her, perhaps for the merit of her rehabilitation programme with the returned Chibok girls. The most recent testament are the praises being directed the way of Dr Jumoke Oduwole, the President’s Senior Special Assistant on Industry, Trade and Investment, on Nigeria’s improved rankings on the World Bank’s Doing Business report for 2018. Ms Oduwole’s role in leading the Enabling Business Environment Secretariat has reportedly created a more favourable environment for business. During the President Goodluck Jonathan administration, there was a surge in the number of female bosses in sensitive Ministries, Departments and Agencies. In a BBC story, the former Petroleum Resources Minister Alison-Madueke was reported as saying, “The fact that two of the biggest cabinet positions in Nigeria, petroleum and finance, are held by women, show how far we have come…We are there not because we are women. We are there because of our competence as managers.” In the same story, Catherine Uju Ifejika, chairman and chief executive of the Britannia U Group, a group of oil and gas companies, her business bought a stake in a major oil and gas field, Ajapa. The reserves, according to Britannia, are worth $4.3bn. joked, “You

men, you don’t even know how to boil water or where the children’s school uniforms are.” “We are able to hold your homes together, and we are beginning to translate that into boardroom jobs, and then owning companies. In six years I have formed seven companies.”So you don’t say anymore that “the female bosses are coming”. In the Nigeria, about 4.2 percent of the country’s largest public corporations are now led by women, who also make up 11 percent of top officers in corporate Nigeria and 16 percent of board seats. Interestingly, delivery is not the key issue in this raging debate that started some 20 years ago, but the relationship of female bosses and their staff members – down to the cleaner. Although there cannot be a justifiable generalization, the pedigree and competence of some female bosses cannot be in doubt. For years, bosses have been known to be men. Even today when you talk about a boss without mentioning names the presumption is that he is a male boss. The significant increase in female bosses in many parts of the world has given life to the debate on which of them is preferable to workers: female or male bosses. At the outset let’s get one thing clear: top women managers are hard done by. There is no sisterhood of women in the corporate workplace -those at the top generally won’t stand for someone younger, smarter or better qualified inching upwards. Add to that insecurity the fact that every successful top female manager would have had to work twice as hard and sacrifice far more than a male colleague to prove herself worthy of her position. Top this with copious amounts of guilt and self-loathing over missed PTA meetings and kids who love the nanny more. Oh, and let’s not

forget the pressure of always being judged by her appearance - it takes a person of extraordinary mental calibre to keep up with the nail and hair appointments while the dark clouds of recession hover over the business. The hormonal shifts don’t help either. Why should it be a surprise then that the vast majority of women at the top can be neurotic, manipulative or prima donnas, loathed equally by both genders?

Personal Accounts

Yewande got a job in an elite law firm in lagos, she had a female boss called Kemi. Kemi insisted that she should be addressed only as “ma”, she insisted that has first name should never be mentioned if Yewade wants to thrive in the firm. Yewande graduated in the mid-2000s from the University of Pennsylvania Law School before returning to Nigeria. she had hoped her outgoing personality would win over bosses and potential mentors, but this wasnt the case. She once spotted Kemi screaming at the employees at a taxi stand because the cars weren’t coming fast enough. Another would praise Yewande to her face, then dispatch a Market Digest Nigeria 87

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FINANCE senior associate to tell her she was working too slowly. One time, Yewande emailed a female partner— one of the passive-aggressive variety—saying, “Attached is a revised list of issues and documents we need from the client. Let me know of anything I may have left off.” “Here’s another example” of you not being confident, the partner responded, according to Yewande. “The ‘I may have left off ’ language is not as much being solicitous of my ideas as it is suggesting a lack of confidence in the completeness of your list.” Yewande admits that she can be a little sensitive, but she wasn’t the only one who noticed. “Almost every girl cried at some point,” she says. Some of the male partners could be curt, she said, but others were nice. Almost all of the female partners, on the other hand, were very tough. Senior women in the firm were slavishly devoted to their jobs, regularly working until nine at night. Making partner meant hiring both day and nighttime nannies to care for the children. “There’s hostility among the women who have made it,” she said. “It’s like, ‘I gave this up. You’re going to have to give it up too.’ ” After 16 months, Yewande decided she’d had enough. She left for a firm with gentler hours, and later took time off to be with her young children. She now says

‘‘Some of the male partners could be curt, she said, but others were nice. Almost all of the female partners, on the other hand, were very tough.’’ 88 Market Digest Nigeria

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that if she were to return to a big firm, she’d be wary of working for a woman. A woman would judge her for stepping back from the workforce, she thinks: “Women seem to cut down women.” Her screed against the female partners surprised me, since people don’t usually rail against historically marginalized groups on the record. When I reached out to other Nigerian women to ask whether they’d had similar experiences, some were appalled by the question, as though I living In another planet. But then they would say things like “Well, there was this one time …” and tales of female sabotage would spill forth. As I went about my dozens of interviews, I began to feel like a priest to whom women were confessing their sins against feminism. Other women I interviewed, meanwhile, admitted that they had been tempted to snatch the chair out from under a female colleague. At a women’s networking happy hour, I met Abigail, a young financial controller at a consulting company who once caught herself resenting a co-worker for taking six weeks of maternity leave. “I consider myself very pro-woman and feminist,” Abigail said. Nevertheless, she confessed, “if I wasn’t so mindful of my reaction, I could have been like, ‘Maybe we should try to find

a way to fire her.’ ” Their stories formed a pattern of wanton meanness. Chioma, a banker, told me about the time she went home to Anambra after rightfully granted permission to see her ailing father and returned to find that a female co-worker had told their boss “that my performance had been lackluster and that I was not focused.” In no time, her boss’s tone grew witheringly harsh. “This is a perfect example of how you run forward thoughtlessly, with no regard to anything I am saying,” the woman said in one email, before exploding at Chioma in all caps. Many women told me that men had undermined them as well, but it somehow felt different—worse— when it happened at the hands of a woman, a supposed ally. While compiling this report I requested to meet a group of female bankers at a restaurant in Victoria Island, for a brief interview over lunch. I wasn’t looking for bitchy behavior when I walked in to meet them, it found me. Several of the women grimaced when I introduced myself as a journalist, so when I approached a cluster of them, I opened by saying that they didn’t have to be interviewed if they didn’t want to be. At that, a

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middle-aged woman said, “When you go to your pastor for counselling, do you say, ‘Nobody likes me! Nobody wants to talk to me’?” I blinked in disbelief, then asked her whether she had ever gotten pushback for her communication style. The woman, Yemisi, said her brusqueness is actually an advantage at the Bank where she works as a marketing manager, as she described it. “I have a different way of communicating that’s more like a guy,” she said. “I expect us to knock around a bit and still be friends at the end of the game. Guys like me.” The biggest issue some of the women had is what’s known as “competitive threat,” which is when a woman fears that a female newcomer will outshine her. She might try to undermine her rival preemptively—as happened to one of the Bankers I interviewed, whose work friend spread rumors that she was promiscuous and sleeping with her clients to meet her target. Or she might slam her rival with demeaning comments, as has happened to seven in 6 of the respondents. “I had two female colleagues who suggested I try to look ‘less pretty’ to be taken more seriously,” a respondent wrote. Another wrote “I had a

‘‘There’s a finite amount of space that these women get,” she said. “They’re in their little prison and they’re all eating each other up.”

female boss who would publicly rip me apart for the minutest detail while incessantly showering male employees with praise”. “These displays were so frequent and apparent that they made all staff uncomfortable—even the males when they were receiving the glowing recognition”. The fratty environment doesn’t seem that great for other women in her office, though. Most of the Directors and senior managers at her Bank are men, but most of the assistants are women a situation Yemisi called “a hotbed of bad-

she told me. I also heard positive stories about female co-workers, including from prominent women in fields like foreign policy and journalism who described how other women had mentored them or acted as unofficial support groups. Generally, women in public offices in Nigeria tend to be much nicer than those in private practice, (I’ve been fortunate to have both of those experiences myself.) What’s more, research suggests that women actually make better managers than men, by certain measures. Yet, fairly or not, many women seem to share Yewande’s fear that members of their gender tend to cut one another down.

ness.” “There’s a finite amount of space that these women get,” she said. “They’re in their little prison and they’re all eating each other up.” Even a woman who had given my own career a boost joined the chorus. Susannah Kayode, a writer now based in abuja, yanked me out of obscurity years ago by promoting my work on her blog. So I was a bit stunned when, for this story, she told me that she divides her past female managers into “Dragon Ladies” and “Softies Who Nice Their Way Upwards.” She’d rather work for men because, she says, they’re more forthright. “With women, I’m partly being judged on my abilities and partly being judged on whether or not I’m ‘a friend,’ or ‘nice,’ or ‘fun,’ ”

photos: ElijaCole/SportsDirect

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FINANCE

How To Keep A Female Boss Happy Your boss is king

The first rule you should never try messing up with is never to think that you are smarter than your boss. If she is above you, there are reasons for it. However, what you can do is not give her reasons to think you are any less good! Just play up to her and get into her good books so that there is no clash of egos (at least from your side!) Again, don’t look to outsmart her, ‘because unlike a male boss over whom you could get lucky to use your charm over, remember she is a woman just like you and is better at sniffing out a rat! Use the female bonding to your advantage and be as honest as possible with her, and this could work in favor for you. Try to get to know your boss – where her inclinations lie, what puts her off and what her pet peeves are. If you could attune yourself to your boss’s liking, it could be the greatest advantage for you. Respect her for being the boss. Admire her credentials at the level she has reached, considering it is not a man in her place. You are a woman too so be proud of the position she is in, some day you could be there too. Let her know of her inspiring presence so that she may be encouraged to prod on her female employees. Be simple and open in your communication. Don’t expect her to read your mind and feel your feelings, being a woman. This is where professionalism comes in, and at the work place there’s no place for intuition. Tell her your needs and expectations; let her know your requirements and the results will be much simpler for you as well. While woman is woman’s best friend, and can be her greatest enemy; it would be wise for you not to make the latter out of your female boss! and remember to maintain the business relationship and not really cross it. She is still your boss at the end of the day; not your buddy!

Play to your boss’s weakness

If she is vain, pile on the compliments, if she’s egoistic, make your ideas sound like hers, if she needs to be needed, pull on the puppy face and ask for advice on relationship issues.

Show her you can juggle those balls

It’s a given that at any point a woman manager will have several balls in the air. Hence she naturally sympathizes with, and will even like, someone in the same predicament. Tell her you cook, clean and babysit and you’ll have earned several points.

Be communicative

The No 1 gripe that widens the distance between Mars and Venus is peoples refusal to talk about their feelings. Choose an appropriate time, rehearse what you want to say, then say it - you will find women bosses care far more about their subordinates’ emotional well-being than male bosses.

Compliment her kids

Describing them as the sweetest kids you ever saw isn’t insincere hyperbole; it’s called investing in your career. However smart a woman may be, she will actually believe you.

Be detail-oriented

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