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Summer 2014 - New quarterly edition

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Featur

Guide to Africa NIGERIA’S FISHERIES SECTOR INTERVIEW WITH MRS. FOLUKE O. AREOLA, ACTING DIRECTOR, FEDERAL DEPT OF FISHERIES

and

Offshore Guide SERVING ASIA ELISE DONOVAN, DIRECTOR, BVI HOUSE ASIA, ON THE BVI’S NEW HONG KONG OFFICE

also

THE GROWING IMPORTANCE OF THE UK FINANCIAL SERVICES SECTOR OUTSIDE LONDON 1


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Illustration by VLADGRIN Summer 2014 - New quarterly edition

In our ongoing Guide to Africa we focus on Nigeria’s fisheries sector and the widescale reforms taking place. These are set to transform the sector and ensure it takes full sustainable advantage of its abundant natural resources and so fulfil its potential to meet the nutritional needs of its growing population. Mrs. Foluke O. Areola, Acting Director of the Federal Dept of Fisheries outlines the blueprint for change in accordance with Nigeria’s Agricultural Transformation Agenda and the country’s Vision 20:2020, in the process pointing to prime investment opportunities in this, our lead interview piece. In our Offshore Guide, Elise Donovan, Director, BVI House Asia, describes how the British Virgin Islands’ eminent IFC status has been further cemented by the opening of an office in Hong Kong, from which to better serve the increasingly important Asia Pacific market. We also look at how the Cayman Islands has consolidated its position in the captive insurance sector. In addition, we draw the spotlight on to the UK’s financial services credentials beyond London, in the form of Glasgow and Bristol, both of which constitute established hotspots for the sector in their own right.

Editor: Richard Smith Business Development: Dominic Hale, James Wilson Designer: Wallace Wainhouse Production Manager: Claire Turner Production Assistants: Charlotte Lewis, Kendall Barnes All enquiries: info@businessannual.net

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Disclaimer::The information contained in this publication has been obtained from sources the proprietors believe to be correct. However, the publishers cannot be held responsible for any errors or omissions. In no way does any of the content constitute legal advice and the publishers and staff accept no responsibility nor legal liability for any loss or damage caused by or arising from reliance on it. Persons are reminded that independent professional advice should be sought before any investment decisions are made. Copyright: No part of this publication may be reproduced without the prior consent of the publisher. © Business Annual. Unless otherwise stated photographic content is licensed under the Creative Commons (cc) attribution license. To view a copy of this license visit http:// creativecommons.org/licenses/by/3.0/

3 Photo by Florence McGinn


Contents 19 Interview with Mr. Jibril Aku, MD, Ecobank Nigeria A discussion about what this PanAfrican bank offers over international banking institutions or other potential local partners in Nigeria for the foreign investor seeking the right source of financing.

Guide to Africa 6

Sustainable Development across the African Fisheries Sector A look at developments in three countries; Nigeria, Mauritius and Seychelles by way of painting a picture of the current state of affairs of the fisheries sector across Africa.

Offshore Guide 22 The BVI Goes from Strength to Strength The BVI has been described as the “plumbing” in the global financial system, facilitating international trade and development, creating jobs and stimulating growth.

28 Summary of the Global Financial Centre Index (GFCI) 15 New York, London, Hong Kong and Singapore remain the top four global financial centres.

29 The OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan The BEPS Action Plan provides for 15 actions scheduled to be finalised in three phases.

24 The BVI Asia Connection Elise Donovan, Director, BVI House Asia, on serving the Asian market

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The Nigerian Fisheries Sector Interview with Mrs. Foluke O. Areola, Acting Director of the Federal Department of Fisheries, Nigeria.

13 Fisheries Reform in Africa “Transforming Africa’s Fisheries & Aquaculture for Food & Nutritional Security, Improved Livelihoods and Wealth”, by the Partnership for African Fisheries.

14 Re-Positioning the Fisheries Sector A Speech Delivered By The Honourable Minister of Agriculture and Rural Development for Nigeria, Dr Akinwumi Adesina, 25 February 2014.

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25 Cayman Captive Insurance How the Cayman Islands has continued to consolidate its status as the ‘go to’ captive insurance domicile.

30 Driving Economic Growth, Creating Sustainable Jobs How Financial and Related Professional Services Serve the UK, by TheCityUK. 31 Onwards and Upwards for Glasgow’s IFSD The International Financial Services District (IFSD) in Glasgow is a highly attractive inward investment location for leading international financial services companies.

26 Moody’s Affirms the Cayman Islands’ Aa3 Sovereign Rating, Maintains Stable Outlook How this affirmation and the maintenance of the stable outlook reflects the combination of a number of credit drivers for the Cayman Islands. 27 Summary of Global Shell Games: Testing Money Launderers’ and Terrorist Financiers’ Access to Shell Companies. Jason Sharman, Michael Findley and Daniel Nielson discover that against the conventional policy wisdom, those selling shell companies from tax havens are significantly more likely to comply with the rules than providers in OECD countries like the US and the UK.

32 Invest Bristol & Bath Attracts 30 New Businesses and 530 Jobs in First Year A wide range of new international and national companies from a mix of industries have been attracted to this UK region. 34 The Victor By C.W. Longenecker


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Sustainable Development across the African Fisheries Sector The fisheries sector across Africa is experiencing an unparalleled period of informed and sustainable revitalisation, delivering in the process economic, social and environmental benefits to its people. Here we look at developments in three countries; Nigeria, Mauritius and Seychelles by way of painting a picture of the current state of affairs. While there has been undoubted progress in respect of: the integrated management of oceans, capacity building, the need to maintain and accelerate monitoring of fish stocks and enforcement of quotas, much more needs to be done. A key part of the long-term solution involves improving the institutional framework so as to better deliver on commitments. This means investing in institutions to monitor and assess fish stocks, along with enforcement so that quotas and other catch and effort limits can be confidently set, thereby helping to ensure stocks are well managed, and financially viable. Meanwhile, a more integrated management of oceans and fisheries management agencies, as well as other agencies like environment and transport involves such bodies collaborating and discussing the trade-offs needed to ensure that marine ecosystems can contribute to sustainable development in the long-term. The Nigerian Agricultural Transformation Agenda (ATA) is an example of a blueprint for change which incorporates strategies for diversification, the combating of corruption and the realisation of a state of affairs where Nigeria is free from fish imports.

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Given Nigeria’s abundant natural resources, and status as the continent’s brightest economic prospect for global investors looking to forge and consolidate partnerships and successfully conduct and grow business in the region, it rather defies logic it should not be able to attend to its own food and nutrition security requirements from within its borders. Fortunately, this has not been lost on those within the higher echelons of Government who are committed to enhancing the value chain. This is also manifested in the sustainable development of the aquaculture sector in Nigeria, via The National Aquaculture Strategy Plan, as well as focuses upon integrated management, the promotion of agri-business, the development of institutional capacity, investment opportunities and infrastructural development.

Across much of Africa, there are moves to transfer more resources from capture to culture, by way of growing the aquaculture sector. Elsewhere in Africa, there is much to be excited about too. In Mauritius, for example, where the objective is to transform the nation into an ‘Ocean Economy’ the Ministry of Fisheries takes a central role in advancing investment opportunities and developing the sector to its fullest potential extent, whilst safeguarding the resource over the long term for future generations. To this end, there are

noteworthy investment opportunities and incentives in the fishing, transshipment, light processing, storage and warehousing sectors. Chinese investors are particularly drawn to Mauritius’ fisheries and seafood processing operations. Moreover, Mauritius can point to its Fisheries Training and Extension Centre and the Albion Fisheries Research Centre as evidence of the public and private sector proactively and strategically working together to create the perfect investment environment. As across much of Africa, there are also moves to transfer more resources from capture to culture, by way of growing the aquaculture sector, whilst Mauritius is also contributing to efforts to create a viable tuna bycatch industry in the region. Meanwhile, in Seychelles, another Indian Ocean country re-positioning itself to a ‘blue economy’, Minister for Investment, Natural Resources and Industry, Peter Sinon recently asserted that “2014 would be the year for realising a number of proposed investments in the artisanal, semi industrial and industrial sectors of the fishing industry”. The most recent pertinent developments here that are set to help realise this state of affairs include the Seychelles fisheries enforcement operation, involving the combined resources of the Seychelles Fishing Authority, Coast Guard, and National Drug Enforcement Agency, which recently intercepted three Iranian flagged tuna vessels for illegal fishing activity in the Seychelles Exclusive Economic Zone (EEZ). In addition, Seychelles became the first country in the region to ratify FAO Port State Measures in support of combating Illegal, Unreported and Unregulated Fishing (IUU). Other noteworthy developments include ongoing transitional efforts to make Port Victoria the Indian Ocean’s most important fishing port, as well as the prioritisation of value addition in the form of the construction of new fish processing plants.


The Nigerian Fisheries Sector

increased and sustainable production of over one million metric tons of aquaculture fish and to generate five hundred thousand jobs in five years under a four-year work plan (20112015). All States and the Federal Capital Territory (FCT) will be involved in achieving this goal.

and fishing boats. The Artisanal Fisheries GES Scheme is being implemented across the value chain – from inputs to production, to processing and marketing in accordance with Global Best Practices and the Code of Conduct for Responsible Fisheries (CCRF). The artisanal fisherfolks nationwide are being sensitised to the CCRF with increased stakeholder collaboration.

The expected outputs are:

Interview with Mrs. Foluke O. Areola, Acting Director of the Federal Department of Fisheries (FDF), Nigeria. Q: With the Federal Government advocating a gradual phasing out of fish imports, given the abundance of natural and renewable resources in this area in Nigeria, what is the strategy to ensure the shortfall can be met from domestic sources? A:

Nigeria is not phasing out and cannot phase out fish imports. What the country is currently doing is a deliberate and bold attempt to ensure that the quantity of imports is reduced to a manageable level because of the huge foreign exchange expended on financing the imports on a yearly basis and the need to maximise the huge natural resources of the country for fish production. The strategy is to also increase local fish production through aquaculture and sustain the farmers in business.

Nigeria has huge potential for Aquaculture development and Government is currently developing this subsector through the Agricultural Transformation Agenda (ATA) of the present Administration under Mr. President Dr. Goodluck Ebele Jonathan GCFR. The strategies being put in place to ensure the shortfall can be met from domestic sources include: (i) The establishment of the Aquaculture Value Chain and the Artisanal Fisheries Value Chain: The goal of the Aquaculture Value Chain is to create an enabling environment for

Production of 1.25 billion fish seeds per annum;

Production of 400,000 metric tons of fish feeds per year;

Production of additional 250,000 metric tons of table fish per year;

Production of additional 100,000 metric tons of value added fish and fisheries products per year; and

Creation of 100,000 jobs per annum for the next five years which will include at least 20,000 youths and women.

The strategies being employed for achieving the set targets are: •

Developing a fish farmer data base;

Developing Fish Broodstock Banks;

Fish Farmers mobilisation and cluster formation of producer groups within the Aquaculture Value Chain in each State of the country, with a target of at least 10 clusters of fish farmers;

Capacity development in the Aquaculture Value Chain, targeted principally at youths, women and unemployed graduates;

Fish feed and fish meal development;

Fisheries product and market development;

Fish marketing, transportation and distribution; and

Fish seed and fingerling production.

Nigeria has huge potential for Aquaculture development and Government is currently developing this subsector through the Agricultural Transformation Agenda (ATA). Under the Growth Enhancement Support Scheme and through the Aquaculture Value Chain, a total number of 10 States in the country which are Osun, Ogun, Ondo, Kwara, Ekiti, Lagos, Plateau, Kaduna, Oyo and the Federal Capital Territory (FCT) have benefited so far from inputs supplied. 840 fish farmers per State were supplied with 500 free fish juveniles per fish farmer and five bags of fish feed at 50% cost price/fish farmer. Under the Artisanal GES, fishermen are being supplied with fishing nets, sinkers, twines and insulated ice boxes (for fish preservation to arrest post harvest losses)

(ii) Registration of Artisanal Fishing Craft and Gears: In order to ensure that the Artisanal Sector (which has over the years contributed 8085% of the total fish production in the country), is well organised and duly recognised, the Ministry, in collaboration with the Nigeria Maritime Administration and Safety Agency (NIMASA), is developing the process of registering all fishing crafts and boats, especially along the coastal States of the country. The national registration exercise of artisanal crafts and gears, which is happening for the very first time in the history of the country, is intended primarily to give an estimate of the fishing efforts in our waters, and the effective management and security of the fishing environment. It is also to give the operators an identity beyond the shores of Nigeria, especially when fishing in coastal waters shared with neighbouring countries, accord them due recognition and ensure the fishing canoes of artisanal fishermen in the country are not used for sea armed robbery or piracy. This effort is to ensure maximum utilisation of the resources of that sector, while adequately taking care of the operators through the provision of modern landing sites under the Fisheries Resources Monitoring Control and Surveillance Programme, in partnership with donors and development partners. (iii) Commercialisation of Tilapia production and other Fish Species: The Ministry is taking bold steps at diversifying the fisheries subsector from a mainly mono species culture of Catfish to that of other fish species and to significantly improve upon the value chain with a view to ensuring that producers and processors have significant value for their efforts. Other value chains being developed by the Ministry include the Tilapia Value Chain, Carp Value Chain, Lates niloticus Value Chain (within its natural environment) and the Shrimp Value Chain. The Ministry is in advanced stages of negotiations with core investors for the establishment of Large Scale Tilapia Farms in different locations of the country. The Federal Ministry of Agriculture and Rural Development (FMARD) has signed an MoU with the Federal Ministry of Water Resources which has released some dams across the Nation to the Ministry’s Federal Department of Fisheries for fisheries development. It is estimated that an

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additional 200-400MT would be added to the domestic fish production through cage culture and other fisheries initiatives, such as the restocking of dams and integrated fish farming production from ponds around the dams. (iv) The Aquaculture Fish Farm Estate Development Programme: This was embarked upon as a Public Private Partnership (PPP) programme to encourage private developers, cooperative societies, and interested individuals to invest in fish farming on a large and medium scale and to largely contribute to the national fish production. At the inception of the programme some of the laudable objectives include - to increase domestic production by at least 80,000 metric tons annually, to generate employment for 35,000 Nigerians through fish farming annually and to reduce the gap between fish demand and supply by making farmed fish available to Nigerians for local consumption at affordable cost and for export. The entire concept of the Fish Farm Estates is being reviewed to achieve the desired goal. (v) The Fish Seed Development Programme: Under a Public Private Partnership (PPP) this is to encourage local production of quality fish seeds to address shortage of fingerling supply in the country. The Ministry has constructed fingerling production centres in 36 States of the Federation. Full operation has started in most of the hatcheries across the Nation. Farmers would have easy access to fast growing fingerlings and at affordable prices to increase fish production. (vi) Staple Crop Processing Zone: The Ministry is promoting the

commercialisation of fish production under the Staple Crop Processing Zone (SCPZ). Four of the 14 SCPZs being developed in the country have fisheries as one of the anchor commodities. The SCPZs are to address the constraints of the agro-processing industry, drive social and economic impact and offer a superior operating environment for downstream players, while creating a new platform for private sector investment in agriculture. It will also take an integrated value chain approach to address sector constraints, including market linkages, coordinated support and create a structured mechanism for engaging rural youth. (vii) Under the Marine Industrial Sector, the Ministry is embarking on the Marine Stewardship Council registration of her shrimp resources and some Marine and Fresh Water Fish Species. This is to ensure the optimal market prices for fish products. The Ministry is also opening up the Deep Sea/Exclusive Economic Zone (EEZ) for exploitation of the fisheries resources such as tuna and tuna-like species by issuing Letters of Assurance to companies to bring in deep sea vessels into Nigeria. (viii) The Ministry is also collaborating with the security agencies - particularly the Nigeria Navy - for effective policing of the Marine Waters to stem the menace of sea armed robbers and to enhance effective exploitation of the fisheries resources of inshore waters. Nigeria is also partnering with some international Fisheries Management Organisations e.g Marine Management Organisation and Interpol, to check IUU fishing in the country’s EEZ. The Ministry is in advanced stages of

negotiations with core investors for the establishment of Large Scale Tilapia Farms in different locations of the country.

Q: How is the Federal Dept of Fisheries (FDF) being restructured to ensure successful delivery of government programmes? A:

The Ministry under the current Agricultural Transformation Agenda (ATA) has been restructured to have ATA offices in the 36 States of the Federation and Federal Capital Territory (FCT) of the country, as well as a regional office in each of the six geopolitical zones of the Federation. Under this arrangement there are fisheries professionals as State Directors in five States of the country, Fisheries Subject Master Specialists in all the Regional and State Offices, as well as Field Officers who had hitherto been heading the Federal Department of Fisheries Field Offices in all the States of the Federation.

The Fisheries and Aquaculture Value Chain Development Programmes under the Agricultural Transformation Agenda is also designed to provide a clear road map to address the critical challenges of Fisheries and Aquaculture Extension and advisory services, transforming fisheries extension into a participatory, demandresponse, market-oriented and value-driven service that will provide for the needs of the sector along the targeted fisheries commodities value chains. The objectives of the arrangement are to get information to fishermen and fish farmers as quickly as possible, provide on-hand assistance to

Increased efforts are being made on the sustainable front to protect the likes of sea turtles from commercial fishing.

Photo CC by Eric Danley

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Photo CC by World Bank

the farmers, ease of inputs distribution to farmers, information dissemination and formation of cluster groups (cooperatives) for ease of access to finance and improve localised manpower development.

Q: How important is the commercialisation and diversification of tilapia to fisheries strategy in Nigeria and what form will these developments take? A:

Tilapia is one fish species that is a prolific breeder and has been worked on by several scientists to provide improved strains of this species. This includes the Red Tilapia that is commercially cultured in many parts of Africa, including Nigeria. The importance of Tilapia development is that it lends itself to: Diversification of production system from a mono species culture based system to a poly species culture;

Provision of alternative species to consumers while improving and expanding choice, taste and consumer preferences;

Increase in protein intakes;

Provision of employment, while creating wealth;

Reduction in over-dependence on catfish, which has currently dominated the aquaculture industry in Nigeria;

Elimination of imported farmed fish species into the country; and

The subsidiary Legislations to this act include:

The overall development is majorly through investments in large scale production of tilapia, adoption of research breakthrough in tilapia production and the adoption of the GES strategy in popularising the production of tilapia.

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Sea Fisheries (Licensing) Regulations

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Sea Fisheries (Fishing) Regulations

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Sea Fisheries (Fish Inspection and Quality Assurance) Regulations -

The development will take the following forms;

- which have regulations re:

Being a very good alternative of white flesh fish to other imported scale fish.

Use of Cage Culture system under Public Private Partnership (PPP) arrangement in selected suitable water bodies;

Stocking of Dams and Reservoirs;

Capacity Development, such as Exchange Programmes and Study Tours;

Nationwide training with stakeholders, modification of schemes and curricula of College of Fisheries and Research Institutes; and Distribution of Tilapia juveniles and fish seeds under the Growth Enhancement Scheme (GES).

Q: How is Nigeria working to ensure the effective monitoring of fish stocks and the enforcement of quotas within its waters? A: The effective monitoring of fish stock is presently being carried out under the Sea Fisheries Acts Cap S4 (No. 71 of 1992). The Act provides for control, regulation and protection of Sea Fisheries in the Territorial Waters of Nigeria.

Fishing areas of operations and sizes of operating crafts/vessels;

Mesh size;

Implementation of Vessel Monitoring Systems and installation of transponders;

Rendition of catch data; and

Regular patrol with the Nigeria Navy, amongst others.

Government is making efforts to ensure that FDF, fisheries stakeholders, particularly those involved in the exploitation of the marine fisheries resources and all the Agencies described as “Authorised Persons” in the Sea Fisheries Act, are empowered to perform efficiently their role in fisheries protection, thereby ensuring the sustainability of the resource. No quota is presently allocated to any one person or Company for exploitation in Nigeria’s marine waters, but there is rationalisation of fishing effort for shrimping, especially through the Shrimp Management Plan, that has been developed for implementation under the FAO EAF Nansen Project for the rational exploitation of our shrimp resources as shared resources with other countries. The Nigeria Institute of Oceanography and Marine Research has just acquired a research vessel for stock

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assessment and Oceanographic survey of our coastal waters. It is after this assessment and research findings that the issue of quotas may be considered.

Q: What recent investment success stories can you point to where the government and private sector have proactively and strategically worked together to bring investment to fruition? A: (i)

Growth Enhancement Support Scheme, whereby Government is distributing fisheries inputs, which has encouraged several people into investing in aquaculture.

(ii) Product development and access to international market for fish and fish products from the country by entrepreneurs, leading to many success stories. (iii) Under the NAGROPRENEURS Programme, many youth are being empowered and have thriving fish businesses today.

been successful fish producers from this today. • Q: How is the FDF’s commitment to an integrated management of oceans best evidenced? A:

The FDF commitment to an integral management of the Ocean is being endorsed in the following ways;

Implementation of Ecosystem Approach to Marine Fisheries Management under the Gulf Current Large Marine Ecosystem (GCLME) and FAO, EAFNANSEN programme;

Implementation of Ecosystem approach to Fisheries Management;

Adoption and implementation of the Global Environment Facility (GEF); Programme on Shrimp Management, Turtle Excluder Devices (TED) and other By-catch Reduction Devices (BRD’s);

(iv) Some operators within the Fish Farm Estate Development Programme. •

Collaboration with Nigeria Maritime Administration and Safety Agency (NIMASA), Nigeria Ports Authority (NPA), Marine Police and the Nigeria Navy; The move towards certification of Nigeria’s shrimp fishery by the Marine Stewardship Council (MSC); Review and update of the Sea Fisheries

Development of a shrimp management plan for the countrys shrimp resources which has been approved for implementation.

Q: What are the stand-out investment opportunities and incentives at present in Nigeria’s fisheries sector e.g. in processing, exporting, aquaculture, port and berthing facilities, fleet upgrading etc? A: The stand-out investment opportunities available in the fisheries and aquaculture sub-sector include: (i)

Establishment of fish feed mills.

(ii) Production of ornamental fish for export. (iii) Investment in integrated and Water Re-circulatory fish culture Systems (WRS). (iv) Fish Seed Production. (v) Shrimp farming. (vi) Fish brood stock production. (vii) Investment in fish cage and pen culture.

Photo CC by Taro Taylor

(v) Partnership training with the Gender and Youth Division of the Ministry for Women and Youth. There are outstanding stories of women who have

Act of Nigeria under the Act Fish II Programme;

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Photo CC by Pulkit Sinha

(viii) Exploitation of tuna and pelagic fish resources estimated to have a maximum sustainable yield of about 15,000 metric tons per annum. (ix) Establishment of canneries for crabs, lobsters, tuna, sardines and Bonga fish.

Q: The aquaculture sector and inland waters show significant potential for development in Nigeria. What safeguards are in place to ensure it develops in a sustainable fashion? A:

The issue of sustainability and profitability of aquaculture is of upmost importance in this regard and the many safeguards include;

Continuous training in best available practices on production and product development to ensure continuity and ease of market access;

The development of good quality fish feed from local raw materials to reduce cost and fish meal from the exploitation of clupeids from the national water bodies;

(x) Investment in the proposed Lags Fishery Harbour meant for vessels up to 3000 GRT. (xi) Manufacture of fishing gears, canoes and various By-Catch Reduction Devices (BRDs). (xii) Assembly/manufacture of outboard motors/engines. (xiii) Outboard motors/engines repair facilities. (xiv) Manufacture of fish preservation and storage equipment.

The conscious effort at introducing clupeids to other water bodies to increase production;

Procurement of a vessel for lantern fish exploitation for local fish meal production;

Certification of Aquaculture through collaboration with the United Nations Development Programme (UNDP) underway;

(xv) Production of ice for fish storage and preservation. (xvi) Investment in fish seed and fish transportation facilities. (xvii) Investment in fish cold storage and fish transport vehicles. In addition, incentives include access to Export Expansion Grant and low import tariff on importation of agricultural inputs including fisheries.

The country already has an approved and functional National Aquaculture Strategy in place;

A 5-year National Aquaculture Development Plan (NADP) is already under implementation;

Government has initiated several programmes such as the FFEDP, establishment of Fingerling centres in all the states of the Federation, and privatisation of Government owned farms to private investors to accelerate fish production etc;

Lake enhancement and stocking of dams and reservoirs with hybrid fish and fingerlings;

Promotion of commercial cage culture and mariculture;

Elaboration of more value chains to widen the preference of consumers,

Addressing the major constraints militating against fish farming e.g. high cost of feeds, good extension services, training etc; and

Provision of fishing inputs to artisanal fishermen.

Q: What form will collaboration with other D8 states take in the development of Nigeria’s aquaculture? A: The expectation of Nigeria in collaboration with other D8 countries

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on aquaculture has been expressed in the following areas: •

Commercial production of Tilapia;

Mariculture development;

Cage culture development;

Fish feed production;

Standardisations and certification of aquaculture facilities and products, with member countries having supported the introduction of new projects on:

Intra-trade;

Mutual arrangement/harmonisation on Quality Assurance;

• •

Monitoring and performance tracking committee; Product/technology development, research & exhibition.

Q: To what extent does piracy threaten the fisheries sector in Nigeria and what efforts are being made to combat this challenge? A:

The threat of piracy to the Fisheries Sector in Nigeria is real in terms of:

Loss of life and property;

Gradual reduction in local fish

production in the Marine Fisheries Sector; •

Reduction in number of fishing trawlers and diversion of fishing trawler to oil bunkering vessels;

Reduction in employment opportunities;

Decrease in number of foreign investors;

Negative effect on the maritime image of Nigeria; and

Restriction in areas of fishing as operators avoid dark spots.

However, Nigeria is collaborating with local and foreign partners, such as the Nigerian Navy and Interpol to tackle these challenges. The Navy and other relevant agencies have been playing collaborating roles with the Federal Department of Fisheries to achieve the objectives of the various fisheries laws, especially as it relates to the enforcement of the Sea Fisheries (Decree) Act and combating of Sea Piracy in Nigeria Maritime Waters. Nigeria also has the Interagency Maritime Operations Coordination Centre that handles all issues relating to the Maritime environment

Q: How are artisanal fishermen being supported e.g. in terms of financial assistance to purchase boats and equipment and in the provision of training? A: •

Through the Growth Enhancement Support Scheme of the ATA, artisanal fishermen were given nets, floats, sinkers, twine, insulated boxes and boats. The GES programme in 2014 is planned to include outboard engine and processing equipments as part of the inputs to be distributed;

Registration of artisanal fishermen and linkage with credit institutions;

Delineation and establishment of landing sites;

Supply of flood relief to flood victims;

Implementation of ECOWAS – Fund Accelerated Fisheries Development Project (EFAFDP II) in collaboration with Bank of Agriculture (BOA) and the States Revolving Credit facility, covering the entire country;

Fabrication of 200 modern smoking kilns in collaboration with National Centre for Agricultural Mechanisation (NCAM) for distribution to small scale fisheries folks and fish farmers to curb post harvest losses; and

Stakeholder’s workshops and trainings.

Nigeria is collaborating with local and foreign partners, such as the Nigerian Navy and Interpol.

For more information, please contact Mrs. Areola: areolaf@yahoo.com

Photo CC by Jeff Attaway

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Fisheries Reform in Africa

Photo CC by dhell

African Ministers in charge of Fisheries and Aquaculture gathered late April/early May 2014 at the African Union Commission offices for the second edition of the Conference of African Ministers of Fisheries and Aquaculture (CAMFA) themed “Transforming Africa’s Fisheries & Aquaculture for Food & Nutritional Security, Improved Livelihoods and Wealth”. The conference’s main objective was to present and adopt the first ever continental Policy Framework and Reform Strategy for Fisheries and Aquaculture in Africa. The Framework provides structured guidance to Africa’s fisheries management agencies and other stakeholders to facilitate reforms towards coherent national and regional policies. This will ensure wealth-generating potential, sustainable social, environmental and profitable outcomes for Africa and its people. “Over the past five years we have succeeded in prioritising fisheries and aquaculture on development agenda at national, regional, continental and global levels”, said the NEPAD Director of Programmes, Mrs Etherine Lisinge-Fotabong, speaking on behalf of the NEPAD Agency CEO. She emphasised NEPAD’s appreciation of donor support. “The last four years has seen unprecedented support to the NEPAD’s PAF Programme. We would like to thank all our partners, particularly the United Kingdom’s Department for International Development (DFID), which provided us with funding for the Partnership for African Fisheries (PAF)”, she said. In his presentation during the Ministerial Dialogue on Fisheries and Aquaculture, NEPAD Head of Fisheries, Dr Sloans Chimatiro said that the key message

conveyed in the framework is that opportunities exist for fisheries to generate more wealth for our continent, but if and only if - Africa increases awareness amongst policy makers on the value of the fish resources. “We also need to create an enabling environment that provides countries (and fishers) with incentives and confidence to invest in and manage the fish resources. Africa needs to realise the socioeconomic potential of fish resources”, he said.

The Framework provides structured guidance to Africa’s fisheries management agencies and other stakeholders to facilitate reforms towards coherent national and regional policies. The Director of African Union InterAfrican Bureau for Animal Resources (AU-IBAR), Professor Ahmed Elsawalhy, echoed his sentiments and said that the framework presents a unique opportunity for Africa’s sustainable development and utilisation of the fisheries and aquaculture resources for the wellbeing of citizens. The document elaborates and makes explicit essential guiding principles for good governance of African fisheries. The need for an increase of the “African Voice” in international dialogue particularly with regard to the “Blue Economy” and the high seas was also raised.

Fisheries experts, representatives from the EU , FAO, AfDB, World Bank, the Private Sector, and Civil Society Organisations all agreed that the profile of Fisheries and Aquaculture in the Comprehensive African Agricultural Development Programme (CAADP) has to be enhanced. They also recommended the establishment of National CAADP subcommittees on Fisheries and Aquaculture. Finally, the Joint Conference of Ministers of Agriculture, Rural Development, Fisheries and Aquaculture endorsed the Policy Framework and Reform Strategy for Fisheries and Aquaculture. On the margins of this landmark event, AUC and European Union launched a new Project on Fisheries Governance that will build on the work done by the Partnership for African Fisheries and Aquaculture and other continental fisheries interventions, The 11 million euros Project will be conducted within all Members States of the African Union. “The success of this Project will depend on Africa’s leaders. Your dedication and effort in ensuring that the project is implemented will determine its positive impact on the continent”, said Mrs Lowri Evans, Director General of Fisheries and Maritime at the European Union. African leadership’s full commitment is imperative to allow this pivotal sector to deploy and flourish, because fisheries are renewable cross-sectoral resources that can last forever, if - and only if - they are sustainably managed. © Partnership for African Fisheries

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Re-Positioning the Fisheries Sector

Photo CC by Jeremy Weate

A Speech Delivered By The Honourable Minister of Agriculture and Rural Development for Nigeria, Dr Akinwumi Adesina, 25 February 2014. Good morning. I welcome you all to this crucial meeting with the stakeholders in the fisheries sector. Let me especially welcome the Chairmen and Presidents of the various Fisheries Associations, Nigeria Trawlers Owners Association (NITOA), Association of Fish Suppliers of Nigeria (AFISUN), Fish Farm Estate Developers Association (FFEDA), National Union of Seafoods Dealers (NUFAS), Catfish Farmers Association of Nigeria (CAFAN) and the fisherfolks and fish-farmers of this country. I also welcome notable stakeholders from the Nigerian Customs, Nigeria Ports Authority (NPA), Nigeria Maritime Administration and Safety Agency (NIMASA), the Financial Institutions, Nigeria Export Promotion Council, Nigeria Agricultural Quarantine Service (NAQS) among others. You have heard me speak a lot about crops and livestock. Today, you will hear me on fish. You all know that Mr. President Dr. Goodluck Jonathan is a marine biologist and comes from a fishing population. Mr. President launched the Agricultural Transformation Agenda in 2011, with a very clear goal: to add 20 million MT of food to our domestic food supply. We are succeeding in this goal. We cleaned up decades of corruption in the fertiliser sector and launched the electronic wallet scheme to deliver farm inputs to farmers directly via electronic vouchers on their mobile phones. Nigeria is the first country in Africa to

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develop such a system. Within two years, the e-wallet system reached 6.4 million farmers and helped to improve the food security of 30 million persons. Food production expanded by an additional 15 million MT within two years. But food is not complete without fish. The fisheries sector is important, as it contributes 4% of the GDP. The total demand for fish in the country is 2.7 million MT and we are producing locally about 800,000 MT. The deficit of 1.9 million MT is met by imports. Our goal is to be self sufficient in fish production. We will achieve this by promoting greater investments in aquaculture, improving artisanal, inland and marine fisheries. Our four-year target is to increase the production of fish fingerlings by 1.25 billion per year, the production of fish feed by 400,000 metric tons per year; and increase table size fish production by an additional 250,000 metric tons per year.

“The fisheries sector is important, as it contributes 4% of the GDP.” In addition, we will produce 100,000 metric tons of value added fish and fisheries products, annually. We expect that within four years, we will add an additional 1 million MT of fish to our domestic production and reach 67% self sufficiency. Nigeria spends an estimated N125.38 billion importing fish every year. This is totally

unacceptable. Fish does not grow on sand, it grows in water, and Nigeria has abundant water resources and marine ecosystems to produce high quality fish. This is why, for the first time ever, Federal Government has started a fish production support programme for fishermen and fishing communities. Our Growth Enhancement Scheme (GES) now includes subsidies for producers of fish. In 2013, a total of 3.6 million juveniles, 36,000 bags of 15 kg of feed and 200 water testing kits were provided to fishermen in ten states, at a total cost of 1.5 billion Naira. We reached an additional 18,500 fishermen in 14 states, during the flood recovery program, with provision of juveniles, fish feed, fish meal, nets, floats, sinkers and ropes. This is only the beginning, as we will significantly ramp up fish production interventions this year. But the fisheries sector faces enormous challenges. There is too much fishy business in the fish sector. The Nigerian marine waters are plagued with almost daily attacks by armed robbers on our shrimp trawling vessels, leading to killings and maiming of crew members, abduction of key officers and demand for huge ransom for their release, seizure of vessels for days leading to loss of fishing days, and the removal of fishing/communication equipment and catches. These attacks have become an embarrassment to security agencies; and if unchecked, it may lead to the complete collapse of the fishing industry. A total of 271 reported cases of attacks on vessels operating in the Nigerian Territorial Waters occurred between February 2009


and September, 2013. The socio-economic impact is huge, as it has led to a drastic reduction in the number of fishing fleet from about 230 vessels to only 119 vessels, with only ten companies in operation in recent years. We are determined to curb the incidences of piracy and armed robbery through the provision of the necessary platforms. We have ordered for six passenger/patrol boats to improve surveillance. We are also pursuing greater inter-agency collaboration with security agencies especially the Navy, the Nigerian Maritime Administration and Safety Agency (NIMASA), the Nigeria Custom Service (NCS), Nigeria Port Authority (NPA) and Inspection Agencies. We have proposed a joint action plan with the Navy under which a joint Secretariat will be established in the Federal Department of Fisheries, to oversee all issues of illegal, unreported and unregulated Fishing in Nigeria’s Territorial Waters. We are seriously pursuing the revamping of all the Fishing Terminals in the country, with a view to providing common services. The poor state of the fishing terminals in the country is appalling, and was caused by corruption and collusion between private operators and public officials in the Fisheries Department over the years. The fisheries terminal assets of the country were simply stripped off. It is inconceivable that the Ebughu Fishing Terminal was leased out for only N500,000 per annum until 2005, before being abandoned and left to be vandalised. The Igbokoda Fishing Terminal was leased out for only N300,000 per year, until 2005 when the Nigeria Navy took it over; and no lease payment has been

paid ever since. The Borokiri Terminal was leased out at a meagre N300,000.00 per annum up until 2007 when the River State Government took it over, as it had been converted for use for petroleum haulages and other services.

“There is too much fishy business in the fish sector.” Let me be very clear: the days of the fishy business of stripping away the fishing terminal assets are now over. Pursuant to this, the Federal Ministry of Agriculture and Rural Development will immediately repossess and secure the existing fishing terminals at Igbokoda – Ondo State, Ebughu – Akwa Ibom State and Borokiri in Rivers State. Fishing terminals are not for oil companies or private jetties. They were set up, under Presidential directive, for fishing. The Federal Ministry of Agriculture and Rural Development intends to build a dedicated Fishing Terminal in Lagos State, on the sites previously approved and earmarked for the project in Kirikiri Lighter Terminal I and II. The issue of licensing for fish imports is bedevilled with corruption, as importers corrupt public officials to give licenses away above their available cold room warehouse capacities. The figures given by the Nigerian Customs for fish imports to Nigeria is several times above the declared volumes by fish importers. Another fishy business. For example, between 2010-2012, fish importers declared that they imported 1.78 million MT of fish or annual import of 593,000

MT. The records in the Federal Department of Fisheries shows 1.9 million MT of fish imports in the period or annual import of 635,000 MT. However, the Nigerian Customs figures shows that actual total fish import by the importers during the period was 16.8 million MT or annual import of 5.9 million MT. It is very clear: fish importers are cheating and are not paying the amounts due to government for licenses. Even more worrisome is that there is no cold storage capacity in the country to keep 5.9 million MT of fish. So what is being imported and declared as fish? Allegations are rife of dubiousness among some importers who declare fish for imports, but are actually importing other things, including cars. Fishy business. Nigerians are daily being misinformed by well orchestrated media by these fishy business perpetrators. Recently, I read an advertorial by the Association of Fish Suppliers of Nigeria alleging that the Federal Ministry of Agriculture and Rural Development is giving licenses via rationing and has reduced import quotas of importers by 80 percent, instead of the 25% as per the new fisheries policy. Let me state loud and clear that this is an egregious misinformation of the public. It is the classic case of the thief accusing the police. The fact is that fish importers have over the years substantially under reported the volume of fish being imported and avoided paying license fees due to the government. The import allocation made by the Federal Department of Fisheries was based on fish importers’ declared and revealed volume of imports, not their subterranean and hidden volume of imports. The discrepancies show

Photo CC by Jeremy Weate

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deep seated fraudulent malpractices by fish importers, while deceiving Nigerians. The manipulations of fish import figures by the importers is used to avoid paying penalties for importing fish without fishing licenses. It is important to make it clear that the government has not banned the import of fish, as is being misrepresented by unscrupulous fish importers. There is no reason why the price of fish would increase in the market, except due to speculative purposes by fish importers to make supernormal profits and undermine the policy of government to make Nigeria selfsufficient in fish production. Fish importers are holding Nigerians to ransom to protect their supernormal profits. The Federal Government had at no time placed a whole-scale ban on the importation of frozen fish into the country. The only fish being strictly regulated, and put under prohibition from being imported without control, is farmed fish. Our policy on this is in line with similar best practices all over the world. No nation can allow the kind of unbridled sharp market practices where importers rip off the economy, rip of consumers and cry wolf. The fish importers are fishing in murky corrupt waters. My Ministry embarked on a process of reducing the volume of fish imported into the country by 25% annually. Those importing fish have to invest in local fish farming and production. But some of the members of AFISUN continue illegally importing fish into the county without import licenses and obtaining fake Letters

of Clearance and stamped acknowledgment letters to discharge fish indiscriminately. This is fraudulent.

“It is important to make it clear that the government has not banned the import of fish.” The Ministry will not allow such illegality to continue, and therefore we have sealed off a few cold rooms. We will continue to close down cold rooms that bring in fish illegally and their operators will be subjected to stiff penalties. Repeat offenders will have their import licenses totally revoked. The new policy on import quota is directed at sanitising a terribly corrupt fish import licensing and import quota system. It will prevent the current practice where some large corporate importers simply stockpile fish and distort the market at will, driving small Nigerian fish retailers out of business. Stockpiling also leads to keeping fish way beyond acceptable sell-by dates, leading to sale of rancid fish to consumers. Rancidity is a major cause of cancers, especially liver and kidney cancers. Government will strongly protect consumers and the public. Nigeria will not allow any foreign owned company to create poverty in the country. We will ensure a level playing field for all importers. There will be no preferential treatments and there will be no waivers for anyone. The days of waivers

in the fish sector are gone. We will end the sleaze and corruption in the fish sector. We will end the practice where large importers overstock and habitually declare losses due to spoilage simply to avoid paying taxes to government, a practice that has been going on for many years. Let me announce it loud and clear: the days of tax evasions in the fish sector are over. I​ n line with the powers conferred on me as the Minister by Section 15 of the Sea Fisheries Act, I have issued new regulations to clean up the abuse in using Nigeria as a dumping ground for unwholesome frozen fish, in addition to serious trade malpractices associated with frozen fish importation into the country. The control of importation of fish into the country will regulate the industry, put in place a transparent process of granting appropriate fishing licenses, ensure judicious utilisation of foreign exchange earnings, and reduce the huge fish import bill of Nigeria. To further effectively regulate the importation of frozen fish into the country, the Ministry will regulate and monitor the quantity and species that each fish importer will be allocated to import. This will ensure that Nigeria is not used as a dumping ground. Government will develop a full inventory of all cold rooms in the country and monitor the movements of consignments and unwholesomeness of the fish products in all cold rooms. As per the Fisheries Act, I have directed that henceforth, all illegally imported fish will be confiscated and destroyed. Contravening

Photo CC by Jeremy Keith Improvements in cold storage facilities are key to the Government’s strategy.

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Photo by Netfalls - Remy Musser

companies will lose their licensees and their cold rooms will be sealed. Government will no longer allow injurious fish into the market. We will protect consumers. I am aware of the several antics by specific importers against the present policy of import substitution in making Nigeria self sufficient in fish production. These include cheap blackmail and attempts to incite other nations against Nigeria and the use of media to distort facts. Security reports show that some importers have gone to the extent of inciting their casual labourers to disrupt public peace. I will not be deterred in my resolve to clean up the mess in fisheries sector. We will also also clean up the incipient corrupt practices by several members of the Fish Farm Estate Association. The objective of the fish farm estate programme is to increase domestic fish production by 800,000 metric tons within four years, provide affordable farmed fish at affordable prices to consumers and to assist and empower prospective and practicing fish farmers in Nigeria through Public Private Partnership arrangement. Despite the claims of N 725 million by the participants of the Fish Farm Estates, there is no fish to show for it. The programme, with connivance of civil servants in the Federal Department of Fisheries, was simply turned into an ATM cashing machine for receiving grants from government, while not delivering on agreed targets for fish production or abiding by the terms of agreement. This was why when I became Minister, I stopped all further payments.

The Chairman of the Fish Farm Estates Association has been using paid media hackers to misinform the public that the Minister has refused to release more grants to their members. He is correct. The days of stealing government money is gone. I will not approve any fund releases to the programme until you all can show Nigerians the fish you produced and whether you met all the conditions precedent on the agreement signed with the Ministry. I have been threatened with a court case on this. I am very happy. I will meet you all in the courts.

“The days of waivers in the fish sector are gone.” The Ministry is taking bold steps at diversifying the fisheries sub sector from a mainly mono-culture of Catfish to include other fish species. Other value chains being developed by the Ministry include the Tilapia Value Chain, Lates Niloticus Value Chain and the Shrimp Value Chain. We are in advanced stages of negotiation with core investors for the establishment of Large Scale Tilapia Farms in different locations in the country. We are aggressively pursuing the Fish Seed Development Programme, under a Public Private Partnership, to encourage local production of quality fish seeds, in order to address the shortage of fish fingerlings’ supply in the country.  The Ministry of Agriculture and Rural Development has constructed fingerling production centres in 36 States of the country and is collaborating with the West African Agricultural

Productivity Programme (WAAPP) in establishing Centers of Excellency for Fish fingerlings and Broodstock production. Identified hatchery operators have been trained under this World Bank Assisted Programme. We are promoting the commercialisation of fish production under the Staple Crop Processing Zone (SCPZ), in which 4 of the 14 SCPZs have fisheries as one of the anchor investments. The SCPZs are to address the constraints of the agro-processing industry and drive social and economic impacts, offer a superior operating environment for downstream players, while creating a new platform for private sector investment in agriculture. They will also take an integrated value chain approach to address sector constraints, including market linkages, coordinated support, and a create a structured mechanism for engaging rural youth. While foreign trawlers operate in our deep sea waters, Nigeria does not have vessels to do the same. I am very pleased to inform you that we have changed this situation. The Federal Government has acquired a deep sea vessel, RV Bayagbona, for the Nigerian Institute of Marine and Oceanographic Research (NIOMR) - named after the first Director of NIOMR. The vessel was procured for the exploitation of Lantern fish and Drift fish (Ariomma species – Ariomma bondi and Ariomma melanum), which will be used to make fish meal. This will significantly reduce the import of fish feed into the country and drive down the cost of fish feed used in aquaculture.

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NIOMR has also completed the installation of a new floating fish feed extruder, with a capacity to produce 1500kg of feed per hour. New advances have been made in the development of fish feed using local raw materials. Today, NIOMR has pioneered the use of cassava chips in the formulation of fish feed, with up to 40% inclusion. The new floating feed fish feed extruder can produce different sizes of floating feeds for juveniles, fingerlings and table size-Catfish and Tilapia. To improve the marine industrial sector, the Ministry of Agriculture and Rural Development is implementing a new Shrimp Management Plan to ensure sustainability of the shrimp resources and protect investments in the sector. We are conducting, through the Marine Stewardship Council, the registration of Nigeria’s shrimp resources and marine and fresh water species. This will improve market opportunities for these products. The Ministry is also opening up the Deep Sea/Exclusive Economic Zone (EEZ) for exploitation, by issuing Letters of Assurance to companies to bring in Deep Sea Vessels into Nigeria. I am delighted to inform you that Nigeria has just been re-certified to export shrimps caught in the the wild to the United States of America. As part of a larger effort for the development of a comprehensive Nigerian Fisheries Information System, the Federal Department of Fisheries has embarked on a major effort to revive our artisanal fishing industry,

which accounts for 80-85% of the total fish production in the country. For the first time in the history of Nigeria, a national registration of artisanal fishermen is being conducted, including the registration of all fishing canoes. This will give the operators an identity beyond the shores of Nigeria, especially when fishing in coastal waters shared with neighbouring countries. This will also ensure that the fishing canoes of artisanal fishermen in the country are not used for sea robbery or piracy. To improve the processing of fish, the Ministry has ordered smoking kilns, manufactured by the Nigerian Centre for Agricultural Mechanisation, for distribution to fishermen and women fish traders.

“The Ministry is taking bold steps at diversifying the fisheries sub sector from a mainly monoculture of Catfish to include other fish species.” Ladies and gentlemen, let me strongly reiterate the resolve of President Jonathan to revamp the fisheries sector and to bring to an end the decades of corruption that have paralysed the sector. For those ready to work, genuinely and transparently, to help in our efforts to revamp the fish sector, we will work with you. But for those determined

to undermine government policy, continue their corrupt and fraudulent fishy business, you can be sure that you will face the full weight of the law. Let me also sound a note of serious warning to staff within the Federal Department of Fisheries. Any civil servant found to be colluding with fish importers to defraud government will be held accountable and face the full weight of the law. We must work very hard to turn around the fortunes of our fisheries sector. I will need the full cooperation of all the stakeholders. For the poverty and waste we see today in the sector must give way to wealth that touches the lives of millions of our fishing communities. The days of taking Nigeria’s territorial waters for granted, through marine piracy, unbridled imports of fish, sleaze and corruption in the issuing of import licenses, the dumping of fish and the over exploitation of our marine resources are now over. We will fully protect the interest of Nigeria, as we strive to revive our fisheries sector. Therefore, we all must work to ensure that we achieve a blue revolution in our fisheries sector. Nigeria must be free from fish imports. Thank you and God bless you all. Dr. Akinwumi Ayodeji Adesina, CON Honourable Minister of Agriculture & Rural Development.

Photo CC by Sarahemcc

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Interview with Mr. Jibril Aku, MD, Ecobank Nigeria

A: Ecobank as an institution with strong heritage and deep PanAfrican experience offers the unique opportunity of deep understanding of the continent and its economies/ markets. This is very important as investors seek security of capital as they enter into the African terrain.

Photo by Netfalls - JONG KIAM SOON

Q: What would you say Ecobank uniquely offers over international banking institutions or other potential local partners in Nigeria for the foreign investor seeking the right source of financing?

“Ecobank strives to maintain full compliance levels with all regulatory policies and guidelines.” Q: Nigeria’s securities regulator had raised concerns regarding an effective vision and strategy at Ecobank. How can you reassure foreign investors that the bank is putting its house in order with its corporate governance action plan? A: Ecobank Group has been in existence for over 25 years and has continued to prove its commitment to Africa in areas of financial integration and

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Photo by Oleksiy Mark

economic development. With a number of strategic acquisitions and country expansions, the Group has evolved into what it is today. Our overall strategy and vision remain consistent and is collectively shared by every member of the Ecobank team. Ecobank also strives to maintain full compliance levels with all regulatory policies and guidelines guiding our operations in all the countries we have presence in. The corporate governance issues highlighted by the Securities and Exchange Commission (SEC) of Nigeria are being addressed by the group. The group recently held an Extraordinary General Meeting (EGM) wherein the shareholders approved the implementation of the recommendations made by SEC in its report. The group has also mandated the Institute of Management Development (IMD) based in Switzerland to review the corporate governance structure and make recommendations thereon and the IMD has submitted its final report in this respect. The implementation of IMD and SEC recommendations would further strengthen the corporate governance structure/practices in the group. However, it is important to note also that the issues highlighted at the Group level have not in any way affected the governance at the 35 bank affiliate levels and thus gives comfort to investors on the security of their investments. We will continue to protect our investors’ interest and ensure continuous value creation at all times.

Q: What qualities does the Nigerian market possess by way of recommending it to foreign investors? A: The Nigerian financial market is currently going through a period of growth and we still see more investment as we continue to implement strong monetary policies which are geared towards developing the real sector and reducing reliance on the oil sector. The depth of financial markets in the country - both money and capital markets - has continued to improve over the years and there are tremendous opportunities for further growth.

“Ecobank has always supported all the national initiatives through capital or skills transfer in various capacities.” The market fundamentals are strong and resilient coupled with the tight regulatory oversight, which boosts investor confidence beyond returns on capital investment.

Q: What is the thinking behind Ecobank Nigeria’s strategy of prioritising funding to the agricultural sector in Nigeria? A: Agriculture remains the mainstay of the Nigerian economy, providing the

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largest source of employment to the populace. Ecobank seeks to support the Government’s policy thrust of strong development for the real and manufacturing sectors of the economy. There is a deliberate shift from the oil dependence/resource dependence towards the fundamentals that will drive sustainable economic growth. We therefore remain committed to supporting the Government in the Agricultural sector and thus the bank has committed approximately 5% of our loan book to this area. We believe that this sector has tremendous potential for economic growth, development and youth empowerment.

Q: Which other sectors does Ecobank Nigeria plan to channel funds into by way of growing its loan book - and why? A: The major target markets for the growth of the bank’s loan book are high priority sectors as highlighted in the National budget and other emerging growth sectors of the economy. Notable amongst them are: the Energy sectors – given the successful unbundling and privatisation of the DISCOs and GENCOs; the Telecoms sectors – given increased telephone usage, advent of mobile banking etc; and Manufacturing – given renewed interest in import substitution as a means to boost economic activities in the country. We intend to deepen our banking relationship with players in these sectors.


Q: Ecobank Nigeria’s increase in scale has been predominantly driven by an acquisition-led strategy. How are you acting to ensure that this is consolidated by organic growth? A: Sequel to the various acquisitions we have carried out to become a top tier, scale player in the Nigerian market, with Oceanic being the latest and largest we do not plan to acquire further banks in the foreseeable future. However, we will continue to leverage on the bank’s scale and huge distribution capacity to improve efficiency, productivity and overall financial performance. Our target is to become one of the top three banks in Nigeria in the medium term.

Q: To what do you attribute strong growth in respect of year-on-year revenues and earnings per share? A: This has been due to enhanced integration synergies, improved efficiency/productivity and better technology platform/channels to service our enlarged customer base.

Q: How is Ecobank Nigeria helping the country to overcome challenges in respect of infrastructural shortcomings and skills shortages that many would argue are preventing Nigeria from fulfilling its growth potential? A: Ecobank has always supported all the national initiatives through capital or skills transfer in various capacities. We have also continued to provide shadow support and advisory services to policy makers in various areas to ensure we get the best policies churned out to drive our economic growth.

“We strongly believe that the growth of the Nigerian economy will be driven mainly by resolving the infrastructure challenge.” We strongly believe that the growth of the Nigerian economy will be driven mainly by resolving the infrastructure challenge, and this would be largely anchored by the organised private sector. Ecobank Nigeria will continue to partner with other private sector players to finance infrastructural projects, thereby developing the Nigerian economy. Furthermore, the bank has been involved in building capacity of Nigerians through its corporate social responsibility programmes.

Q: From a Pan-African perspective how is Ecobank’s contribution to the economic development and financial integration of Africa best evidenced? And, where next for Ecobank, given almost complete penetration in middle African markets? A: Ecobank as an institution is present in 35 countries and has 4 representative offices across other continents. We are top tier in at least 20 countries we operate in and thus this provides evidence that our platform/services support various national economic growth plans in various ways beyond pure financial services. We also continue to deepen our intraregional African trade which shows support for Africa by our bank as we ensure that cross-border transactions are encouraged in our daily business operations. Over the last few years, the group was engaged in an expansion programme through acquisitions and organic growth. However, having effectively covered the countries in middle Africa, we do not intend to embark on any expansion strategy, but rather we will consolidate on the existing network and deliver superior returns to our various stakeholders.

Ecobank remains committed to supporting the Government in the Agricultural sector.

Photo by Mojca Odar

These areas are also highly capital intensive and thus will stretch the capital of banks in Nigeria.

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The BVI Goes from Strength to Strength

As ever, the BVI excels itself on the compliance front in pursuit of maximum integrity and transparency. Recent Memorandums of Understanding (MoUs) between the BVI and respectively; the City of Shenzhen and Qianhai Authority in China, reflect the importance of the BVI as a source of foreign capital for China, as well as its status as a global platform for Chinese capital, with such capital flows borne out of legitimate efforts to reduce governance and measurement transaction costs. In addition, the passing of the new Arbitration Act in December 2013 brings

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legislation up to date, particularly in its incorporation of the UNCITRAL model law on international commercial arbitration into BVI domestic law. This is internationally regarded as the accepted framework in respect of standards, principles and practices to govern the arbitration of disputes and is expected to see the BVI become an increasingly sought after venue for international commercial arbitration. As well as widening the definition of a valid arbitration agreement and aiming for fair and speedy resolution of disputes without unnecessary delay or expense, other noteworthy aspects of the new Arbitration Act include the facilitation of access to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the provision for the establishment of the BVI International Arbitration Centre (IAC). The IAC is designed to promote and facilitate arbitration in the BVI, while the issuing of guidelines in respect of proceedings and the keeping of a register of approved arbitrators is also part of its brief. As ever, the BVI excels itself on the compliance front in pursuit of maximum integrity and transparency. This is reflected in the BVI having been ranked by the FSB as a top tier jurisdiction in December 2013 and in the same month becoming a joint signatory of an early commitment to adopt the Common Reporting Standard being developed by the OECD. Moreover, the BVI Government has also recently concluded landmark negotiations with the United States on a Model 1 Intergovernmental Agreement (IGA) in relation to the US Foreign Account Tax Compliance Act (FATCA), due to come

into force on 1 July 2014. In practice, this requires BVI Reporting Financial Institutions to identify US accounts and report certain information about them to the BVI authorities who will subsequently pass it on to the IRS on an automatic basis. The significance of the IGA is in its bestowing upon BVI financial institutions such as banks, trusts, investment funds, trust companies, administrators, managers, advisers, custodians, nominees etc the status of being compliant with the requirements of FATCA and therefore not subject to the withholding tax that would otherwise be applied. Other noteworthy developments in respect of tax information exchange include the TIEA with Canada, which came into force on

The BVI Commercial Court

The British Virgin Islands continues to lead the way in respect of international financial services with the opening of BVI House Asia in Hong Kong just the latest testament to its proactivity in addressing the needs of international businesses and HNWIs. Its status as the pre-eminent corporate domicile and its world-leading role with regard to asset protection, trust and estate planning, fund establishment, administration and management, special purpose vehicles, individual tax planning, investment holdings for corporations, captive insurance and ship registration are in no doubt. Moreover, its willingness to diversify into new markets and to embrace innovative new lines of business ensures it is better placed to withstand any future global shocks that come along than most.


11 March 2014, one of 25 such agreements, which also sees the BVI become a designated treaty country in the eyes of the Canadian tax authorities, a state of affairs even more beneficial to the BVI, given the prevailing zero tax environment. The BVI is also at the vanguard of efforts around counter terrorism and proliferation financing, as well as anti-money laundering, with the Anti-Money Laundering and Terrorist Financing Code of Conduct from 2008 strengthened and revised as recently as 2012 to keep pace with industry best practices.

The BVI has been described as the “plumbing” in the global financial system, facilitating international trade and development, creating jobs and stimulating growth.

Contrary to misguided conjecture from some quarters, which claims IFCs facilitate harmful tax practices, the BVI has been described as the “plumbing” in the global financial system, facilitating international trade and development, creating jobs and stimulating growth, as well as providing alternative sources of liquidity, this being evidenced by it having become the second largest source of FDI into China, second only to Hong Kong. Moreover, the BVI exercises a role as an intermediary and congregation point for international assets, thereby affording the opportunity for the funding of investments back into developing markets, by way of the BVI BC’s expert capacity to raise finance in multiple jurisdictions.

economic stability on account of its British Overseas Territory status and legal system based on English law. In addition, the BVI Commercial Court allows commercial litigation matters pertaining to the jurisdiction to be dealt with expeditiously and on a prioritised basis, thereby helping the BVI to maintain its competitive international profile. Meanwhile, the BVI further recommends itself by way of an extensive skilled labour pool of qualified professionals, innovative and business-enabling legislation and the public and private sectors working in close concert to ensure that the BVI continues to constitute the go-to IFC.

What’s more, the BVI can point to a long standing pedigree of political, legal and BVI Financial Services Commission

Yet, it is in the extent of its portfolio of products and services where the real story behind the jurisdiction’s pre-eminent status is to be found. It can boast impeccable credentials in relation to everything from Corporations for international joint ventures to collective investment funds to maximise returns on pensions, as well as strength in depth on the captive insurance and hedge fund front, while it enjoys the status as the leading intermediary for investment capital to developing countries such as China.

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The BVI Asia Connection Photo CC by Jim Trodel

The British Virgin Islands (BVI) has had a long and mutually beneficial relationship with Asia. Ask most successful Asian businesses or individual investors what lies behind this relationship and they will say the BVI Business Company. BVI companies are used for a wide variety of business and financial matters that have contributed to the growth and development of both jurisdictions. The use of BVI companies has become so popular with investors that they are frequently the most significant contributors to foreign direct investment (FDI) in Asian countries. In 2010 for example, BVI companies were responsible for approximately US$10 billion of FDI into China – 10 per cent of the total. The BVI is also used as a hub for outbound investment from Asia into other parts of the world, most recently seen in investment flows into emerging markets such as Africa. The BVI Advantage Behind this success is the BVI Advantage – a safe, secure and stable environment from which companies and individuals can manage their worldwide financial concerns. The BVI offers Asian clients tax neutrality, political stability and a legal system that is at once familiar to much of the developed world but also uniquely pragmatic and practical, and all backed by an efficient and respected court structure based on English law. The benefits of using a BVI company are: • Efficiency – BVI companies can be set up within a matter of days and are cost effective. BVI’s state of the art technology – VIRRGIN – allows for electronic incorporation for increased efficiency; • Legislation – The BVI has a wide range of innovative legislation including the Business Companies Act and the Virgin Islands Special Trust Act 2003 (VISTA), both considered to be market leaders; • Legal certainty – the BVI is a common law jurisdiction, which means it can be

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easily understood and relied upon. The BVI has a dedicated Commercial Court with a resident judge and the ultimate court of appeal in the UK’s Privy Council, giving commercial certainty; • Stability – as a British Overseas Territory, the BVI offers a politically stable environment. The BVI is also a leader on international standards for regulation and anti-money laundering; • Tax – BVI companies are tax neutral, meaning that no third layer of tax is applied for cross border/international investment planning. There is no stamp duty, income taxes, inheritance taxes, corporation or capital gains tax;

In 2013, the BVI opened an office in Hong Kong as a hub for mainland China and the Asia-Pacific. • Expertise – the BVI has a pool of highly qualified and experienced professionals, which has allowed Asian countries access to professional services and institutional support that have historically been unavailable. Today, BVI companies have become as popular for small, targeted investments as they are for cross border deals involving billions of dollars. Wealth planning, specifically the securing of wealth for future generations, has become a particular growth area, mirroring the surge in the numbers of Asian entrepreneurs and successful business owners. BVI House Asia In 2013, the BVI opened an office in Hong Kong as a hub for mainland China and the Asia-Pacific. A physical presence in the region is allowing the BVI to deepen its footprint in

Asia and will enable the BVI to be even more responsive to the needs of clients in these markets, particularly when it comes to new products and services. The new office will also provide local time access for certain information and services to users of BVI Business Companies; and work towards deepening the relationship with mainland China, not only in financial areas, but in educational and cultural areas as well. The BVI is focusing much of its efforts on educating local audiences, not only on the benefits of BVI companies, but also on other products and services the BVI offers, including: investment funds; trust and estate planning; captive insurance; shipping and aircraft registration. In addition, BVI House Asia will help strengthen ties with regional Government authorities and serve as a point of contact for the financial and business industry. With a regional office now up and running, the BVI will continue to offer Asia the BVI Advantage for generations to come.

For more information contact: Elise Donovan, Director, BVI House Asia Suite 5106, 51/F., Central Plaza, 18 Harbour Road, Wanchai, Hong Kong. Tel: (852) 3468 8533 Email: elise.donovan@bvihouseasia.com.hk   Elise Donovan, Director, BVI House Asia.


Cayman Captive Insurance 2013 saw a buoyant captive insurance market with the Cayman Islands’ share amounting to some USD 69.2bn. Moreover, the jurisdiction itself received a positive assessment from the Financial Stability Board (FSB) in December 2013 when it bestowed official confirmation of its strong adherence to international regulatory and supervisory standards in respect of banking, securities and insurance supervision. Since then, Cayman has continued to consolidate its status as the ‘go to’ captive insurance domicile. Over a year in, the ‘New Insurance Law’ has increased transparency and streamlined processes by regulating the different areas of insurance and reinsurance on the uniqueness of their structures and on their own individual risk profiles, in the process successfully meeting the requirements of clients and advisors. Other noteworthy Cayman legislative developments related to Portfolio Insurance Companies (PICs) now means that segregated portfolio companies (SPCs) can incorporate a single cell as a PIC, thereby allowing for new alternative risk management structures to domicile in the jurisdiction. This development, which also allows for straightforward transition to a stand-alone captive, is informed by a prevailing international culture of heightened corporate governance and allows for enhanced certainty in respect of tax considerations.

Cayman is held in increasingly high regard on the regulatory front and can point to an extensive pool of skilled service providers and progressive, businessenabling legislation, whilst there is much evidence of the public and private sectors being successfully unified in pursuit of a common goal. Moreover, it’s fair to say that, contrary to ill-informed voices from some quarters, the likes of Cayman actually act to facilitate international trade, economic growth and onshore jobs.

Cayman has continued to consolidate its status as the ‘go to’ captive insurance domicile. In Cayman’s case it has adopted a distinctly proactive stance on the compliance front, evidenced by its adoption of some 33 Tax Information Exchange Agreements (TIEAs) to date. In addition, Cayman has signed a Model 1 intergovernmental agreement (IGA) with the US in support of its new Foreign Accounts Tax Compliance Act (FATCA). The significance of this is that it will see the streamlining of reporting obligations for reporting Foreign Financial Institutions (“FFIs”) with regard to accounts and to non-participating financial entities that

are substantially owned by US citizens and residents. An equivalent agreement with the UK has also been signed. The OECD’s assessment of Cayman’s legal and regulatory regime is “robust and transparent”, whilst its integrity and proactive stance re compliance is evidenced by its membership of IOSCO, full ‘regulatorto-regulator’ disclosure with all IOSCO regulators and its representation on the IAIS board. Furthermore, there is an unparalleled skill set on tap in relation to captive insurance in Cayman, in addition to the jurisdiction having access to reinsurance markets in major insurance centres and a willingness to embrace innovative solutions and new lines of business. Cayman’s pedigree and reputation in respect of captive insurance is principally linked to its efforts in the medical malpractice liability, workers compensation, property, general liability and professional liability areas. US healthcare reform is set to impact healthcare captives in terms of ownership, structure and financing with Cayman captives increasingly converting to SPCs as a result. This would be driven by a likely increase in the use of captives through newly employed physicians becoming insured by the hospital system’s own captive, such that the SPC would afford the ability to ring-fence pools of assets and liabilities.

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(1 May 2014) Moody’s Investors Service has affirmed the Aa3 government bond rating of the Cayman Islands. The rating outlook remains stable. Both the affirmation and the maintenance of the stable outlook - reflects the combination of the following credit drivers for the Cayman Islands: 1. A comparatively low debt burden despite the recent increase in the main debt metrics. 2. A very high per-capita income, the result of prudent macroeconomic management and a well-functioning legal system. 3. A small, narrow economy susceptible to weather-related shocks. 4. A strong institutional framework, including policy consensus on basic macroeconomic policy and institutional oversight from the UK. Rating Rationale The Cayman Islands’ Aa3 rating balances a very high per capita GDP, one of the highest among rated sovereigns, and a comparatively low debt burden with a small economy highly dependent on two industries and the recent deterioration of the fiscal accounts. At $53,253 in 2011, Cayman’s per capita GDP is the eleventh highest among all rated sovereigns and a key ratings support. Higher economic development gives Cayman the ability to deal with regular natural disasters. But its economy is the third smallest among countries we rate and tourism and financial services represent over 70% of GDP, a sign of limited diversification. Debt to GDP of 24.9% is low but has risen from 8% in 2007. The country’s strong institutions further support the rating. A long history of policy

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consensus and a sensible macroeconomic approach explains its high economic development and still low debt burden. Cayman scores highly in such measures as the World Bank’s governance indicators; higher, in fact, than most of its peers. The United Kingdom provides further institutional support through fiscal oversight and ultimate judicial review.

A positive outlook could be considered in the event of a significant reduction of overall projected debt levels and a policy framework that makes it unlikely to return. Factors that limit upward movement in the rating include vulnerability to hurricanes, limited fiscal flexibility given a narrow revenue base that excludes direct income taxation, and dependence on exogenous sources of growth. Significant negative structural changes in the Cayman Islands’ main sources of growth coupled with a steady erosion of public finances could lead to negative rating actions. Outlook Cayman’s stable outlook balances the very high levels of economic development and still low debt metrics with the potential risk of recently rising debt burdens. While debt, at less than 25% of GDP, remains low by international standards, the debt rose rapidly between 2007 and 2011. Since then, the government has stabilised the debt

Photo by Brian A Jackson

Moody’s Affirms the Cayman Islands’ Aa3 Sovereign Rating, Maintains Stable Outlook

burden and the projection of small deficits going forward support the current outlook. What Could Change the Rating Up A positive outlook could be considered in the event of a significant reduction of overall projected debt levels and a policy framework that makes it unlikely to return. Alternatively, greater growth that pushed per capita GDP even higher, relative to peers, could lead to an upgrade. What Could Change the Rating Down A negative outlook could result if the government’s efforts to limit the increase in the debt ratios fail, either due to policy reasons, a slower economic recovery or both. While Moody’s does not have a specific numerical target that would trigger a change in outlook, given that long term growth prospects for Cayman are modest and the economy has little diversification, we see the current levels of debt, measured as percentage of GDP and percentage of revenues, as relatively high for the country. Foreign and Local Currency Ceilings Moody’s has today adjusted the Cayman Islands’ long-term foreign-currency bond ceiling to Aa2 from Aaa, and the long-term local-currency bond and deposit ceilings to Aa2 from Aaa and Aa1 respectively, to better capture the country’s external vulnerability risk and the default correlation between the government and private-sector borrowers. The long-term foreign currency bank deposit ceiling was affirmed at Aa3. For more information visit www.imac.ky (The Insurance Managers Association of Cayman).


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Global Shell Games: Testing Money Launderers’ and Terrorist Financiers’ Access to Shell Companies

Michael Findley, University of Texas, Austin. Daniel Nielson, Brigham Young University. Jason Sharman, Griffith University. For criminals moving large sums of dirty money internationally, there is no better device than an untraceable shell company. An experiment soliciting offers for these prohibited anonymous shell corporations had our research team impersonate a variety of low- and high-risk customers, including would-be money launderers, corrupt officials, and terrorist financiers when requesting the anonymous companies. Evidence is drawn from more than 7,400 email solicitations to more than 3,700 Corporate Service Providers that make and sell shell companies in 182 countries. The experiment allows us to test whether international rules are actually effective when they mandate that those selling shell companies must collect identity documents from their customers. Shell companies that cannot be traced back to their real owners are one of the most common means for laundering money, giving and receiving bribes, busting sanctions, evading taxes and financing terrorism. The results provide the most complete and robust test of the effectiveness of international rules banning untraceable, anonymous shell companies. Furthermore, because the exercise took the form of a randomised experiment, it also provides unique insight into what causes those who sell shell companies to either comply with or violate international rules requiring them to collect identity documents from customers. Just as the random assignment to control (placebo) and treatment groups in drug trials

isolates the effect of a new drug, so too the random assignment of low-risk “placebo” emails and different high-risk “treatment” emails isolated the effects of different kinds of risk on the likelihood of (a) being offered a shell company, and (b) being required to provide proof of identity. Key findings include:

Against the conventional policy wisdom, those selling shell companies from tax havens were significantly more likely to comply with the rules than providers in OECD countries like the United States and Britain. 1. Overall, international rules that those forming shell companies must collect proof of customers’ identity are ineffective. Nearly half (48 percent) of all replies received did not ask for proper identification, and 22 percent did not ask for any identity documents at all to form a shell company. 2. Against the conventional policy wisdom, those selling shell companies from tax havens were significantly more likely to comply with the rules than providers in OECD countries like the United States

and Britain. Another surprise was that providers in poorer, developing countries were also more compliant with global standards than those in rich, developed nations. 3. Defying the international guidelines of a “risk-based approach,” shell company providers were often remarkably insensitive to even obvious criminal risks. Thus, although providers were less likely to reply to clear corruption risks, those that did respond were also less likely than in the placebo condition to demand certified identity documents of potential customers from high-corruption countries who claim to work in government procurement. 4. Corporate service providers were significantly less likely to reply to potential terrorists and were also significantly less likely to offer anonymous shell companies to customers who are possibly linked to terror. However, compared to the placebo a significantly decreased share of firms replying to the terrorist profile also failed to ask for identity documentation or refused service. 5. Informing providers of the rules they should be following made them no more likely to do so, even when penalties for non-compliance were mentioned. In contrast, when customers offered to pay providers a premium to flout international rules, the rate of demand for certified identity documentation fell precipitously compared to the placebo.

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Photo by XYZ

Summary of the Global Financial Centre Index (GFCI) 15

The Global Financial Centre Index (GFCI) provides profiles, ratings and rankings for 83 financial centres, drawing on two separate sources of data – instrumental factors and responses to an online survey. Instrumental factors: previous research indicates that many factors combine to make a financial centre competitive. We group these factors into five broad ‘areas of competitiveness’: Business Environment, Financial Sector Development, Infrastructure, Human Capital and Reputational and General Factors. Evidence of a centre’s performance in these areas is drawn from a range of external measures. For example, evidence about the telecommunications infrastructure competitiveness of a financial centre is drawn from a global digital economy ranking (supplied by the Economist Intelligence Unit), a telecommunication infrastructure index (by the United Nations) and an IT industry competitiveness survey (by the World Economic Forum). 103 factors have been used in GFCI 15. The main headlines of GFCI 15 are: New York, London, Hong Kong and Singapore remain the top four global financial centres. New York is now the leading centre, although its lead over London is statistically insignificant – two points on a scale of 1,000. London’s reputation has suffered due to uncertainty over European Union membership, uncertainty over Scottish independence, regulatory creep and conservatism as well as expense, regulatory failures on Payment Protection Insurance or RBS’s Global Restructuring

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Group or rate swap scandals or the London Whale, perceived ‘insider’ markets in LIBOR and foreign exchange, uncertainty over taxation, and the UK appearing unwelcoming to foreign workers and visitors. London exhibited the biggest fall in the top 50 centres. Whilst financial services employment is increasing in London, there is some evidence that jobs growth is in regulatory and compliance, including IT compliance jobs. There may be a looming tussle among the top four centres for Renminbi (RMB) business at the traditional end of foreign exchange, or alternative currencies at the innovative end. The ‘big four’ global financial centres are being chased. It is easy to focus on New York, London, Hong Kong and Singapore but others are catching up to the leaders. Three years ago (in GFCI 9) the difference between first and tenth was 117 points. The top ten centres are now within 75 points of each other.

The leading Asian Centres pull away from the weaker. The leading Asian Centres pull away from the weaker. There is a ‘shakeout’ in Asia with the leading centres – such as Hong Kong, Singapore, Tokyo, Seoul and Shenzhen – doing significantly better than the weaker centres (e.g. Kuala Lumpur, Manila, Jakarta and Mumbai).

Middle East centres continue to rise in the index. Qatar remains the leading Middle Eastern Centre just ahead of Dubai. Riyadh is up 16 places, Bahrain is up 12 places and Abu Dhabi is up 10 places. Financial centres in Europe are still in turmoil. 23 of the 27 European centres in the GFCI declined by rank. Significant falls include Copenhagen, Edinburgh, Dublin, Madrid, Lisbon, and Rome. Athens in last place (83rd) is now 82 points adrift of Reykjavik, second to last. Offshore centres struggle with reputation and regulation. All except Gibraltar and the British Virgin Islands decline in the ranks. 2013 saw significantly more volatile assessments. Average assessments rose, but so did the volatility of assessments. This volatility started in 2012 and persisted throughout 2013. 2013 ratings were on average lower than the levels seen in 2012. In GFCI 15, 29 financial centres climbed in the ranks, 47 centres declined, four centres experienced no change, and three centres (Almaty, Busan and Casablanca) entered the GFCI for the first time. Buenos Aires saw the biggest climb, 21 places to 25th in GFCI 15. Rome saw the biggest fall, down 19 places to 54th. 67 centres experienced a rise in their ratings and only nine saw a decline; four centres’ ratings were unchanged. The biggest rate rise was Gibraltar (67 points) while the biggest decline was Athens (down by 46).


Photo CC by Kevin Dooley

The OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan About BEPS

Deliverables

In an increasingly interconnected world, national tax laws have not kept pace with global corporations, fluid capital, and the digital economy, leaving gaps that can be exploited by companies who avoid taxation in their home countries by pushing activities abroad to low or no tax jurisdictions. This undermines the fairness and integrity of tax systems. The project, quickly known as BEPS (Base Erosion and Profit Shifting) looks at whether or not the current rules allow for the allocation of taxable profits to locations different from those where the actual business activity takes place, and what could be done to change this if they do.

The BEPS Action Plan provides for 15 actions scheduled to be finalised in three phases: September 2014, September 2015 and December 2015. Deliverables are expected:

Following the Declaration on BEPS adopted at the 2013 Ministerial Council Meeting and at the request of G20 Finance Ministers, in July 2013 the OECD launched an Action Plan on Base Erosion and Profit Shifting (BEPS), identifying 15 specific actions needed in order to equip governments with the domestic and international instruments to address this challenge. The plan recognises the importance of addressing the borderless digital economy, and will develop a new set of standards to prevent double non-taxation. This will require closer international cooperation, greater transparency, data and reporting requirements. To ensure that the actions can be implemented quickly, a multilateral instrument to amend bilateral tax treaties will be developed. This Action Plan was fully endorsed by the G20 Finance Ministers and Central Bank Governors at their July 2013 meeting in Moscow as well as by the G20 Heads of State at their meeting in Saint-Petersburg in September 2013. The actions outlined in the plan are aimed to be delivered within the coming 18 to 24 months. For the first time ever in tax matters, non-OECD/G20 countries are involved on an equal footing.

September 2014

• An in-depth report identifying tax challenges raised by the digital economy and the necessary actions to address them (Action 1);

• Recommendations regarding the design of domestic and tax treaty measures to neutralise the effects of hybrid mismatch arrangements, both from a domestic and treaty law perspective (Action 2);

To ensure that the actions can be implemented quickly, a multilateral instrument to amend bilateral tax treaties will be developed. • Finalise the review of member country

September 2015

• Recommendations regarding the design of domestic rules to strengthen Controlled Foreign Companies (CFC) Rules (Action 3);

• Recommendations regarding the design of domestic rules to limit base erosion via interest deductions and other financial payments (Action 4);

• Strategy to expand participation to nonOECD members to counter harmful tax practices more effectively (Action 5);

• Tax treaty measures to prevent the artificial avoidance of permanent establishment status (Action 7);

• Changes to the transfer pricing rules in relation to risks and capital, and other high-risk transactions (Actions 9 and 10);

• Recommendations regarding data on BEPS to be collected and methodologies to analyse them (Action 11);

• Recommendations regarding the design of domestic rules to require taxpayers to disclose their aggressive tax planning arrangements (Action 12);

• Tax treaty measures to make dispute

regimes in order to counter harmful tax practices more effectively (Action 5);

resolution mechanisms more effective (Action 14); and for December 2015 in the following areas:

• Recommendations regarding the design

• Changes to the transfer pricing rules to

of domestic and tax treaty measures to prevent abuse of tax treaties (Action 6);

• Changes to the transfer pricing rules in relation to intangibles (Action 8);

• Changes to the transfer pricing rules in relation to documentation requirements (Action 13); and

• A report on the development of a multilateral instrument to implement the measures developed in the course of the work on BEPS (Action 15).

limit base erosion via interest deductions and other financial payments (Action 4);

• Revision of existing criteria to counter harmful tax practices more effectively (Action 5); and

• The development of a multilateral instrument (Action 15). © OECD. For more information visit www.oecd.org

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Photo by QQ7

Driving Economic Growth, Creating Sustainable Jobs

How Financial and Related Professional Services Serve the UK By TheCityUK, April 2014 Key Findings • Over 2 million people work in financial and related professional services across the UK, representing 7% of the working population. This is roughly twice the population of Liverpool and Manchester combined. • Around two-thirds of people employed by the industry work outside London. Major centres with over 30,000 employees in financial and related professional services include Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester. These are followed by Belfast, Cardiff, Liverpool and Sheffield with between 17,000 and 20,000 employees. Other centres with over 12,000 employees include Brighton, Milton Keynes, Newcastle, Norwich and Reading. Overall, 22 towns and cities in the UK each have over 10,000 people employed in the sector. • Financial and related professional services on average employ a younger workforce than other sectors. Just over 50% of industry workers are under 40 years old, compared to 46% in other sectors. Around 37% of those employed are between 40 and 54 years old (36% for other sectors), and 12% are over 54 (18% for other sectors). The industry therefore has a positive effect in helping to offset the higher jobless rate amongst the younger population in the UK. • The average economic output per worker in financial and related professional

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services is over £83,000 per year, compared to the £46,000 UK average for other sectors. No region has industry GVA per worker below £57,000, indicating that high value jobs are spread by the industry throughout the UK. • The financial and related professional services trade surplus, estimated to be £55bn in 2013, is larger than the combined surplus of all other net exporting industries in the UK. This is enough to fund the construction of around 100 new hospitals.

London’s international appeal attracts foreign direct investment that creates jobs across the UK. • Foreign companies invested nearly £100bn into UK financial companies since the start of 2007, more than in any other sector. This is roughly twice the cost of HS2. • London’s international appeal attracts foreign direct investment that creates jobs across the UK. Major firms expand their operations across the UK, creating a deeper talent pool of skilled workers for the benefit of local and national firms. • Financial and related professional services contributed £174bn to the UK economy in 2012, accounting for 12.6% of the total. This was nearly twice their contribution to employment, indicating that the sector is highly productive – 70% above the UK average.

• UK financial services contributed £65bn in tax revenue in 2012/13, accounting for 12% of total UK tax receipts. This is enough to cover three-quarters of the projected public sector deficit for 2014/15. • The UK economy increased 43% in nominal terms during the past decade, compared to the 76% rise in financial and related professional services. The sector’s contribution to GVA increased from 10.3% to 12.6% during this period. This is the highest increase of any sector apart from real estate. • Assuming positive economic conditions and balanced regulation, the industry can add 0.2% to GDP growth for each of the next six years, creating nearly 50,000 new jobs in the sector. There would also be spillover effects to the wider economy, raising UK GDP by 2-3% by 2020 and creating 265,000 jobs across all industries. Taking related professional services into account, these projections could double. • The UK is the leading European centre for investment and private banking, hedge funds, private equity, exchange traded derivatives and sovereign wealth funds. • The UK is a world-leader in financial and related professional services, with the fourth largest banking sector, the third largest insurance sector, the second largest fund management industry and the second largest legal services sector © Copyright April 2014, TheCityUK. For further info, visit www.thecityuk.com.


Substantial investment in the public realm has created an attractive riverside environment in the IFSD.

The distinctive Tradeston Bridge offers easy access for pedestrians and cyclists from the south bank of the River Clyde directly into the heart of Glasgow’s IFSD.

Onwards and Upwards for Glasgow’s IFSD The International Financial Services District (IFSD) in Glasgow is a highly attractive inward investment location for leading international financial services companies. Since its launch in 2001, the IFSD has harnessed over one billion pounds of investment, which, in turn, has brought more than 15,000 jobs into the area. Among the impressive list of major financial institutions now in the IFSD are Barclays, Santander, esure, Morgan Stanley, Tesco Bank, NFU Mutual, HSBC, JP Morgan, RBS, Lloyds Banking Group, BNP Paribas, Aon, Clydesdale Bank, AXA and Royal and Sun Alliance. The achievements of Glasgow’s IFSD continue to attract attention around the UK and internationally. Last year, KPMG established a new Tax Centre of Excellence in Glasgow’s IFSD. The new centre, at 123 St. Vincent Street, will bring around 200 jobs to the city, handling tax compliance work from the firm’s 22 other UK offices. Growth Potential: Glasgow is also emerging as a top location for business process outsourcing and legal process outsourcing (LPO). New Galexy set up Scotland’s first LPO centre in the IFSD and another new legal and business support services office was opened in Glasgow last year by Ashurst, the international law firm. Top Quality Offices: Such is the confidence in Glasgow’s economic future,

the city currently has three large scale Grade A office developments under construction on a speculative basis. A £60 million development by Mountgrange Real Estate Opportunity Fund and M&G Real Estate at 1 West Regent Street will deliver approximately 143,000 sq ft of Grade A office and retail space over ten levels.

Such is the confidence in Glasgow’s economic future, the city currently has three large scale Grade A office developments under construction on a speculative basis. St Vincent Plaza by Abstract (Glasgow) Ltd. will comprise 170,000 sq. ft. of office space, on St. Vincent Street with rents from £23 per sq ft. In addition, there’s going to be a new £70m office building at 110 Queen Street, developed by BAM. This eight storey building will offer 143,000 sq ft of Grade A offices and 20,000 sq ft of retail space. All three speculative developments are scheduled to complete in the first half of 2015. They will be joined by another world class office development in the city when Scottish Power’s new global HQ at St Vincent St. is completed.

Planning the Future: In partnership with Scottish Enterprise, Glasgow City Council is working to deliver an updated masterplan for the IFSD which will map out the future physical development of the IFSD, including more large floorplate, mixed use development. Skilled Workforce: First class offices and great infrastructure are vital for employers, as is access to a highly skilled, well qualified workforce. Glasgow’s excellent public transport links mean there are 1.5 million potential employees in its travel to work area. Furthermore, the city’s four universities and extensive network of colleges, in close liaison with employers, ensure the right talent pipeline is flowing.

The IFSD is developed by a partnership comprising Scottish Enterprise, Glasgow City Council, Scottish Development International, Skills Development Scotland, Glasgow Chamber of Commerce and a range of financial institutions, academic providers and property interests. For more information visit: www.ifsdglasgow.co.uk


Photo CC by nick

Invest Bristol & Bath Attracts 30 New Businesses and 530 Jobs in First Year

Bristol

Invest Bristol & Bath is celebrating a highly successful first year of operation, having helped 30 new companies locate or expand in the West of England area with the potential to deliver more than 530 new jobs in the next three years. Part of the West of England Local Enterprise Partnership, Invest Bristol & Bath promotes inward investment into Bristol, Bath & North East Somerset, North Somerset and South Gloucestershire. The team is based in the Engine Shed, Bristol’s new business centre in the heart of the Temple Quarter Enterprise Zone. These strong figures for the financial year just ended (April 2013 to March 2014) reveal how Invest Bristol & Bath has attracted a wide range of new international and national companies from a mix of industries including creative, low carbon, high tech, and advanced engineering and aerospace. Companies supported by Invest Bristol & Bath to set up or expand in the region in the last year include:

• Kainos, the specialist independent

software company from Belfast, which has just opened an office in Bristol city centre and has ambitious expansion plans that will create up to 80 new jobs;

• SITA UK, the international recycling and resource management company which

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has begun work on the Severnside energy recovery centre, delivering 53 new full time jobs and a further 200 jobs during the construction phase;

• Sanoh, the international automotive

industry manufacturer originating from Asia, which has opened a new site in Bristol bringing 40 new jobs in its first six months.

Invest Bristol & Bath has attracted a wide range of new international and national companies from a mix of industries. The news follows a series of recent announcements that showcase the region’s emergence as a national centre for technology and its high quality of life. These include Bristol-born SecondSync joining Twitter, Somerset-based Ascenta, a solar-powered drone maker, being acquired by Facebook and the recent high level of interest from investors in a tech start-up event organised in partnership with the university-business incubator SETsquared. In March, The Sunday Times crowned Bristol the UK’s best city to live in, while earlier

this month Management Today put Bristol at number two in the UK’s seven best tech hubs outside London. Invest Bristol & Bath, which is funded by BIS (Department for Business Innovation and Skills) for three years, is continuing to work on a strong pipeline of active leads and projects with the potential to deliver up to 4,500 new jobs. Professor Joe McGeehan, Chair of Invest Bristol & Bath and senior general advisor at Toshiba Corporation and Founding MD at Toshiba Research Europe Ltd: Telecommunications Research Laboratory, said: “These figures show just what an impact Invest Bristol & Bath is having on the regional economy. We’re very proud to have helped bring in exciting new companies to the West of England area, delivering new skilled jobs and helping to cement our reputation as an innovative and expanding tech cluster.” David Maher-Roberts, digital & creative sector champion at Invest Bristol & Bath, added: “Bristol & Bath has burst onto the world stage as a rapidly growing technology cluster and the region is gaining serious momentum. Building on its heritage in microelectronics and media, it has become the natural home


to brilliant people building products and businesses at the intersection of high tech and creativity. “Invest Bristol & Bath has played a crucial role in bringing innovative new business into the region and we’re looking forward to building on that success with an even stronger second year.” Brian Gannon, director of corporate development for digital solutions company Kainos, which opened a new Bristol office last month, said: “Invest Bristol & Bath gave us invaluable support in setting up our Bristol operation. Extremely well connected, they have been key in helping us open doors in the region, and introducing us to the business and academic communities, which has been critical for recruitment.” Michael Boyd, managing director of Investment Group at UKTI – the trade and investment arm of BIS, which funds Invest Bristol & Bath, said:

“Encouraging inward investment is key to the Government’s long term economic plan as it creates economic growth and jobs. It is through the hard work and commitment of

“Bristol & Bath has burst onto the world stage as a rapidly growing technology cluster.” - David Maher-Roberts, digital & creative sector champion, Invest Bristol & Bath. organisations like Invest Bristol and Bath that the UK remains the nation to beat for Europe-bound investment and consistently ranks as the top location of choice for global investors. “There have been some exciting inward investment wins in the West of England and UKTI advisors are busy, at home and

overseas, showcasing the area’s strengths in high tech, creative, low carbon, aerospace and advanced manufacturing to prospective foreign investors.” Other highlights from Invest Bristol & Bath’s first year include being named one of Europe’s highest performing regions for FDI (Foreign Direct Investment) in an annual survey carried out by fDi Intelligence, part of the Financial Times. Invest Bristol & Bath also led a successful delegation to MIPIM, the international property event in Cannes, in March. Showcasing the region’s substantial development opportunities and with an innovative stand modelled on Bristol’s new Engine Shed, the team held over 50 meetings with potential investors and developers and attracted around 500 visitors to the stand. For more information, visit Invest Bristol and Bath at www.bristolandbath.co.uk and the West of England Local Enterprise Partnership at www.westofenglandlep.co.uk.

Photo CC by seier + seier

Bath

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The Victor By: C. W. Longenecker

If you think you are beaten, you are. If you think you dare not, you don’t. If you like to win but think you can’t,  It’s almost a cinch you won’t.  If you think you’ll lose, you’re lost.  For out in the world we find Success begins with a fellow’s will.  It’s all in the state of mind.  If you think you are out classed, you are.  You’ve got to think high to rise.  You’ve got to be sure of your-self before You can ever win the prize.  Life’s battles don’t always go To the stronger or faster man.  But sooner or later, the man who wins Is the man who thinks he can.

Photo CC by Daniel M. Nagy

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Business Annual Summer 2014  

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