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news you can trust ** tuesday 02 march 2021 I vol. 19, no 768
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MTN Nigeria plc CP
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he Federal Government of Nigeria is ramping up financing for critical gas projects to encourage more use of the commodity locally, and this is opening up investment opportunities in pipeline construction, new industrial gas corridors, and power projects. The reality of a world pushing for energy transition to cleaner fuels amid rising output from Continues on page 31
Dangote Cement plc
Axxela Nsp-spv Funding 1 (Natural Gas) PowerCorp plc plc
409.20
0.00
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-0.15
0.28
0.45
-0.13
379.00
2.02
3.13
10.62
10.11
10.34
12.61
3m 2m 28-Apr-21 26-May-21 420.58 422.08
6m 12m 25-Aug-21 23-Feb-22 426.58
435.58
60m 36m 28-Feb-24 25- Feb-26 511.54
605.76
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Nigeria’s local gas focus opens investment opportunities ISAAC ANYAOGU
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Spot ($/N) 26-Aug-21 5-Mar-21 23-Jul-30 30-Apr-25 20-May-27 27-Feb-34
$-N 470.00 480.00 1m £-N 660.00 669.00 Currency Futures 31-Mar-21 419.08 €-N 574.00 580.00 ($/N)
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Benchmark Sovereign & Corporate Bonds
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Electronic call-up scuttles Apapa ports’ racket Temitayo Ayetoto & Desmond Okon
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esidents and businesses in Apapa are celebrating and thanking God for the return of sanity to their environment following the introduction of an electronic call-up system for trucks, which so far has been a success story. However, there is a flip side to the great feat. Continues on page 31
Inside
Four things to expect as 4m vaccine doses arrive P. 30 Nigeria today
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Tuesday 02 March 2021
BUSINESS DAY
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NEWS
Dangote Sugar increases production by 13.7%
COVID-19: One year after
How Nigerian manufacturers adapted to survive COVID-19 GBEMI FAMINU
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he confirmation of Nigeria’s first Coronavirus (COVID-19) case in February 2020, and the sequential unprecedented outbreak of the pandemic which placed immense pressure on the health, economic, social and political structures of the country, caused Nigeria’s manufacturing sector to undergo some monumental adjustments in its production and commercial operations. One year later, COVID-19 cases in Nigeria has grown to over 153 thousand with over a thousand deaths confirmed according to the Nigeria Centre for Disease Control (NCDC), breeding the possibility of many more adjustments going forward in order to suit the new normal. While official numbers are not out yet, business and economic experts affirm that not less than 50 Micro, Small and Medium Scale Enterprises (MSME) shut down operations indefinitely due to
the pandemic. Furthermore, many businesses are still reeling from the adverse impact of the lockdown measures and the cut in supply chain and are being forced to embark on extreme cost cutting measures affecting productivity. In its economic review for the first half of 2020, Manufacturers Association of Nigeria (MAN) affirmed that the pandemic championed the sector’s unimpressive performance, adding that the measures taken by leaders globally and locally to curb the spread of the virus like the lockdown was also detrimental to the sector. This was evident in the quarterly Manufacturers CEOs Confidence Index (MCCI), which hovered between 40.2 points and 44.2 points, remaining stagnant below the benchmark of 50 points all through the year. Similarly, the unimpressive performance also reflected in the sector’s growth as it declined to -2.75 percent in 2020 from 0.8 percent in 2019, according to the National Bureau of Statistics
(NBS). Emanating from China, the world’s manufacturing powerhouse and Nigeria’s largest trading partner, especially for manufacturing inputs, the COVID-19 pandemic caused an abrupt stop in the supply of raw materials, goods, tools and machinery for manufacturing companies which forced many of them to suspend business operations. Furthermore, Brent crude oil which serves as the major provider of the country‘s FX experienced an historic fall during this period, reaching a two-decade low in April at $15.98 a barrel. This drop triggered the prevailing FX shortage and also caused the naira to be further devalued thereby impeding procurement operations of local manufacturers. Upon resumption, more manufacturers adopted the backward integration model leading to a marginal increase in the local sourcing of rawmaterials, as such local input sourcing grew to 58.4 percent from 57.0 percent recorded in the corresponding half of 2019.
Producers of non-essential items like the brewers are still finding it tough to adjust as the pandemic forced consumer’s preference to tilt more towards essential items like food and drugs, the impact of which is evident in their sales volume and income. Consequently, some manufacturing outfits have been forced to reduce production quantity due to a decline in sales volume. The pandemic caused some manufacturers to revise their business models to suit the new normal occasioned by the pandemic. A good example are the garment makers in the Aba industrial cluster, who took to producing personal protective equipment (PPE) items like medical aprons, coveralls, gloves, masks, etc. This period also saw a rise in producers of soaps, disinfectants, sanitizers, etc. Due to the global lockdown, influx of imported goods reduced to the barest minimum, paving way for increased demand of locally produced items forcing local producers of essential items to ramp up production.
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angote Sugar Refinery has recorded an increase in production volume which rose by 13.7 percent to 743,858 tons in the financial year ended December 31, 2020, compared to 654,071 tons in 2019. The sugar group also posted increase in sales volume which rose by 6.9 percent, from 684,487 tonnes to 731,701 tons. According to the audited result released on the floor of the Nigerian Stock Exchange, the improvements were attributable to operations optimisation strategy despite the impact of COVID-19 and other disruptions, including the civil unrest in last quarter of the 2020. The Group continued to benefit from the sustained efforts to drive customer base expansion and several trade initiatives and investments. A breakdown of the results indicated that the Group revenue increased by 33 percent to N214.30 billion in contrast to N161.09 billion in 2019. Gross profit increased by 40.4 percent to N53.75 billion, compared to N38.29 billion in 2019 while profit after taxation for the year increased by 33.2 percent
to N26.70 billion as against N22.36 billion in 2019, reflecting management’s unrelenting goal to deliver consistent shareholder value. Ravindra Singhvi, group managing director/CEO of Dangote Sugar Refinery Plc, speaking on the results said that despite the socio-economic uncertainties occasioned by COVID-19 pandemic during the year under review, the sugar group continued on the growth path with commitments to improve o performance and generate value for all stakeholders. This was reflected in the sales volume delivery of 731,701 tons, and production of 743,858 tons being 6.9 percent and 13.7 percent increase in volumes over the comparative year 2019. According to him, “our focus on the implementation of our key strategies in the face of the several challenges posed by the COVID Pandemic, the peculiarities of the Apapa traffic situation amongst others we achieved a topline growth in revenue of N214.30 billion, a 33.0 percent increase over 2019; a 53 percent year-onyear increase in profit before tax, and 33.2 percent increase in profit after tax.
MTN earns N1.346trn in FY’20 amid rise in voice, data revenue …proposes final dividend of N5.90k Iheanyi Nwachukwu
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TN Nigeria Communications Plc has proposed final dividend of N5.90kobo per 2 kobo ordinary share, payable to shareholders whose names appear in the Register of member as at close of business on May 4, 2021. The final dividend which will be paid on May 26 brings the Telco’s total dividend N9.40kobo for the financial year ended December 31, 2020. The Board of Directors had on 28 July 2020 approved interim dividends of N71.2 billion. MTN Nigeria Communications Plc audited consolidated and separate financial
statements for the year ended December 31, 2020 show revenue of N1.346trillion from N1.169trillion in 2019 financial year, up 15.1percent. Voice revenue grew to N766.389billion in 2020, from N725.449billion in 2019; while Data revenue rose to N332.371billion in 2020, from N219.398billion in 2019. SMS revenue was down to N12.330billion from N13.505billion in 2019. Operating profit of N426.713billion in 2020 against N393.225billion in 2019, represents 8.5percent increase. The 8.5percent growth in operating profit was impacted largely by increase in finance costs due to increased borrowings (December 2020: N521 billion,
December 2019: N413 billion) leading to decline in growth of profit before tax to 2.6percent. Profit before tax (PBT) of N298.874billion in 2020 against N291.277billion in 2019, represents an increase of 2.6percent. Profit for the year 2020 went up by 0.9percent, to N205.214billion from N203.283billion in 2019. The company’s share price closed at N174 on Monday March 1. MTN Nigeria Communications Plc was listed by introduction on the Premium Board of the Nigerian Stock Exchange on May 16, 2019. As at December 31, 2020, MTN International (Mauritius) Limited with total interest of 76.08 percent held more than 5percent of the issued share capital of MTN Nigeria.
Heathrow passengers to pay more …as mgt raises charges to cushion effects of COVID-19 IFEOMA OKEKE
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ondon’s Heathrow airport will charge departing passengers an extra 8.90 pounds ($12.40) in an effort to recover costs, as the coronavirus crisis continues to impact air travel. The tariff is permitted by the U.K’s aviation regulator under a protocol that allows the hub to cover costs for utilities, baggage and checkin services. Heathrow makes “zero profit” from such activities, with the fees covering
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operating and maintenance expenses, it said in a statement Sunday. London’s Heathrow airport recorded a net annual loss of £2 billion in 2020, as a result of the huge impact of the coronavirus pandemic on the aviation sector. The 2020 which has been identified as one of Heathrow’s most challenging years, recorded low passengers’ level not seen since the 1970s. The new per-passenger levy, or airport cost recovery charge, is due to be imposed @Businessdayng
for the rest of this year and was agreed with airlines as the preferred way for Heathrow to recover its costs, according to a general notice dated February 4, detailing the price increases. Heathrow, controlled by interests including Spanish builder Ferrovial SA, the Qatar Investment Authority, private-equity firm Alinda Capital Partners and China Investment Corp., will also charge a 4.44-pound tariff for each item of passenger luggage.
Tuesday 02 March 2021
BUSINESS DAY
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Tuesday 02 March 2021
BUSINESS DAY
NEWS
COVID-19: One year after
Nigeria’s food prices at 13-year high JOSEPHINE OKOJIE
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ne year after Nigeria recorded its first outbreak of COVID-19 disease, prices of food items in the country have risen to the highest levels in 13 years. The upward trend in food prices was fuelled by the pandemic, which obstructed the country’s already fragmented farming supply chain and the lingering FX restrictions on importation of certain food items. Food inflation in Africa’s most populous country climbed to 20.57percent in January, 2021 – highest level since July 2008, according to data from the National Bureau of Statistics (NBS). “Since the virus outbreak last year, nothing has changed in the agricultural sector except the escalating food prices,” said AfricanFarmer Mogaji, head, agribusiness and agro allied group, Lagos Chamber of Commerce and Industry (LCCI). “Food prices have been surging and there is no sign it is going to slow down. Government needs to address this issue,” Mogaji said. The country’s lockdown
restrictions to contain the virus during the outbreak obstructed the already fragmented food supply chain, thus causing scarcity of food items as only a few commodities found their ways to the markets and leading to spike in prices. The interstate lockdown further compounded the problem, as traders spent longer time in transit of fresh produce from the north where the crops are grown to the south where the majority of the consumers are located. “Last year lockdown obstructed farming activities and we couldn’t grow enough grains for this year. This is why there is scarcity and prices are surging,” said Abiodun Olorundenro, manager, Aquashoots Limited. Olorundenro stated that the government has been trying to support the sector but much more will be required now, saying that inputs must be made available to farmers at affordable prices. Nigeria has failed to grow more food for its fast-rising population who must be fed with staples ranging from rice, beans, tomatoes, and maize among others. This is because the incessant attacks on farmers and
farmlands have prevented farmers from operating at optimal capacity, causing shortages of some agricultural produce, experts noted. “There is evidence that there will be a food crisis this year. Food prices are skyrocketing and it will further surge,” said Ibrahim Kabiru, national president, All Farmers Association of Nigeria. “But we must address the issue of insecurity and banditry to avert this impending food crisis in 2021,” Kabiru said. “Farmers should be able to carry out their farming activities without any form of fear and harvest without having to pay bandits. These are crucial in preventing a food crisis,” he added. BusinessDay surveys at some markets in Lagos, Abuja and Port Harcourt and Onitsha showed food prices since the first outbreak have surged by almost 100 percent for key staples. “No matter how much you take to the market, you still cannot buy anything because prices have kept escalating,” Ronke Ademola, a teacher and a mother of two, said. “The government is not even doing anything to address the issue of food price hikes,” she said.
Excess liquidity seen in financial market …as CBN issues N4.1trn special bills Hope Moses-Ashike
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igeria’s financial market would be awash with liquidity this week as the Central Bank of Nigeria (CBN) is expected to rollover N4.1 trillion special bills. Special bills are new liquidity management tools introduced by the CBN on December 2, 2020 to boost financial markets liquidity and support economic recovery. It is about converting cash deposits of banks with the CBN above the 27.5 percent
reserve requirements into tradable 90 day securities. Also, maturing Open Market Operation (OMO) worth of N130.5 billion is expected to hit the market this week. Inter-bank system liquidity closed at N565.8 billion last week. Consequently, investors are expected to position for a higher yield. “We expect continued cherry picking of papers with higher yields across the curve, hinged on a robust interbank system, following expected inflows of N130.5bn from maturing OMO-bill and a NGN4.1trillion worth of
special-bill, which could be rolled over at the discretion of the CBN,” analysts at Greenwich Merchant Bank said. The Fixed Income Market persisted on a bullish trend, following continued cherry picking across the market. The traction in the market lingered as investors sought to obtain higher yielding papers into their folds. Resultantly, average yield in the fixed income market eased by 16bps to settle at 5.6 percent, from 5.8 percent the prior week, according to a report by Greenwich Merchant Bank.
Sterling bank launches rotational savings scheme Gbemi Faminu
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n its drive to improve financial inclusion in Nigeria, Sterling Bank Plc has incorporated into its service, the rotation savings and peer-to-peer lending feature on OneBank, its digital banking platform. The new feature is the digital construct of Ajo, Esusu and Adashe, the oldest informal means of collecting and saving money through a savings club or partnership for big-ticket transactions such as a downpayment on a house, cars, business venture or luxuries. The Ajo scheme will allow members that are OneBank users to make an agreed monthly contribution with funds ac-
cessed on an agreed rotating basis. Oladipo Alabede, group head, digital banking of Sterling Bank, explained that the Ajo scheme could be initiated by an interested customer who will invite family and friends to join the scheme. However, all participants must be registered users on OneBank and must accept the invitation request. “There is also an allowance for participants to switch collection positions after being accepted to be part of the scheme, monthly disbursements would occur on the 28th day of every month after all contributions for that month had come in,” he explained. He stated, however, there were terms and conditions attached to the scheme that www.businessday.ng
members must accept before participating. “Once the Ajo scheme starts; it cannot be dissolved until its cycle is completed. Also, disputes relating to unfunded accounts will not be handled by the bank, participants will have to sort that themselves as the bank will not guarantee payments” he said. Oladipo said that debiting participants’ accounts and remittance to beneficiaries is automated, adding that the process runs daily and will debit participants on the day he/she has selected. According to him, someone can be added without his/her knowledge with the use of a valid email address, but the participant has to accept the invitation. https://www.facebook.com/businessdayng
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7
NEWS
COVID-19: One year after
Cargo clearance at 65% digital as Nigerian Customs’ transition falters AMAKA ANAGOR-EWUZIE
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ne year since the first reported case of COVID-19 in Nigeria, the way business is conducted has had to evolve. It is visible also, in the nation’s seaports, where it is no longer business as usual, as transactions are now done online even though the Nigeria Customs Service (NCS) still struggles to fully digitalise cargo clearance. Instead of adopting automated scanning of containers, which is more efficient and less dangerous, the Customs still does 100 percent physical examination of cargo, which mandates government agencies to be physically present before opening the containers to examine the content, and this causes delays. However, the outbreak of COVID-19 reiterated the need for 100 percent digital transition in port operations, which according to analysts, would lessen the exposure of port users to the spread of the virus through constant face-to-face human interaction. At present, Nigerian ports
are operating at an estimated 65 percent digital rate, because there are certain transactions such as cargo examination, bill of lading and invoicing that are not generated online. Today, Nigeria Customs uses NICIS 11, an electronic clearance process that supports risk management and accounting, cargo declaration and online payment of duties with the sole aim of enhancing government revenue and reducing fraud. “Presently, people must visit the port physically to do Customs documentation and cargo examination before they can take delivery of their consignments. This is not safe at this time and it is also inefficient. Customs needs to install functional scanners at the port to reduce the rate of physical examination of cargoes, and to reduce human contacts,” said Vicky Haastrup, chairman, Seaport Terminal Operators Association of Nigeria (STOAN). Manual examination of cargoes, according to her, is not efficient and does not promote social distancing. Hassan Bello, executive secretary of the Nigerian Shippers’ Council (NSC), the port economic regulator that has
been championing digital transition in cargo clearance, said the outbreak of COVID-19 has shown that it is very dangerous for people to gather at the port terminals. “We are meeting with every operator including the banks to harmonise and integrate cargo clearing processes at ports. We must digitalise because it also reduces corruption and ensure efficiency. This is why we believe that an importer can stay in the comfort of his or her office to exit his cargo without having to be physically present at the port,” he added. Interestingly, some terminal operators and shipping companies had started online transaction even before the outbreak of COVID-19 while those of them that had not, were forced to commence online billing and invoicing. This is why Shippers’ Council puts the digital operations of these service providers at 85 percent. At Ports and Terminal Multiservices Ltd (PTML), for instance, port users are now encouraged to use the company’s electronic platforms in all business transactions, and customers only come to the terminal for physical collection of cargo.
Ascanio Russo, managing director of PTML, confirmed that consignees can now obtain and pay for provisional invoices at any quick teller enabled ATM machines. The electronic payment options developed by the company enhances prompt service delivery and ensures social distancing in line with safety measures introduced by the government to curb the spread of the coronavirus. Also, shipping liners such as Maersk Nigeria has made significant investment in its digital platforms such as Mobile App, website for Cargo Release and Export clearance document submission via Maersk.com, Maersk App, MyFinance, Myeasyrelease.com, Myexportdoc. com among others. The company’s electronic invoicing solution named Myfinance, enables customers to view all their invoices online without having to manually request for an invoice via email or physically at Maersk counter areas. On shipping liners’ websites, consignees can now track their shipments and also obtain up-to-date list of import manifest rotation numbers that facilitate Customs clearing process.
Concern grows over stoppage of food supply to southern Nigeria Iniobong Iwok
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ondemnation has continued to trail the decision of some cattle dealers from the North to cut food supply the Southern part of the country. The Amalgamated Union of Foodstuff and Cattle Dealers of Nigeria (AUFCDN), announced last Thursday the commencement of a strike action over government refusal to meet its demands, which include compensation for alleged killing of their members and cattle in the south, citing the recent clash in Shasha Market in Ibadan, Oyo, where they claimed to have lost billions of naira. Consequently, many trailers transporting cows, tomatoes, onions, pepper, grains and other commodities were prevented from leaving a border town in Niger State to the southern part of the country from Thursday. Kabiru Salisu, financial secretary of the AUFCDN, told reporters over the weekend, that the task force set up by the union was enforcing the strike in Niger State and other areas. He said the government had not reached out to the union on its demands, hence the strike, which he said was indefinite. “There is a task force that we set up to enforce the directive by the union that there would be no transportation of cattle and foodstuffs to the South with effect from Thursday. So, the union set
up the task force to prevent sabotage,” Salisu said. Similar groups in the Middle Belt over the weekend dissociated themselves from the strike, while condemning the group action. On Sunday, the Middle Belt Forum (MBF), in a statement by its national president, Bitrus Pogu, had called on the Federal Government and the relevant security agencies to flush out hooligans involved in illegal blocking of movement of food items to the south. However, some concerned Nigerians who spoke in separate interviews with BusinessDay, on Monday, said such action by the union would further polarise the country, urging the Federal Government to take drastic action to normalise the situation. They wondered why a responsive government would allow some people to hold the country to ransom by making unnecessary demands. “Such action is bad at this period, especially when tension is high across Nigeria. But you would have expected the government to take action to stop these people. But I have not heard anything or have you? I think it shows where we are,” public affair analyst, Biodun Omolegan said. Also, former national publicity secretary of the Action Democratic Party (ADP) Adelaja Adeoye equally expressed concern, stressing that the group action was perhaps a wake up for the people in the south to take agriculture more seriously.
Opportunity opens for first-time buyers as developer launches small budget homes CHUKA UROKO
F L-R: Femi Ogundeji, executive director, technical, Enterprise Life Assurance Nigeria Limited; Funmi Omo, MD/CEO, and Ben-Birch Mensah, general manager, distribution, at the unveiling of Enterprise Life Assurance Nigeria Limited, in Lagos, yesterday. Pic by Olawale Amoo
C’River to deploy drones in supply of healthcare materials MIKE ABANG, Calabar
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he Cross River Health Insurance Agency plans to use drones to deliver health materials to rural areas, Godwin Iyala, the director-general of the agency said on Monday. The scheme, according to Iyala, will kick off on March 9 from Calabar and move to other parts of the state. “Governor Ben Ayade has
also approved March 9 as the flag-off date of the Basic Healthcare Provision Fund (BHCPF) enrolment into the Health Insurance Scheme. “Our international partners will provide drones that will make for effective delivery of medical materials to the rural areas, given the state’s unique, but difficult terrain,’’ he said. Iyala added that packages to be delivered by the drones would include items for the www.businessday.ng
treatment of basic ailments, for caesarean sections for expectant mothers, and tuberculosis, leprosy and cancer drugs and medicaments. He said that those who enrol in the BHCPF would be expected to pay N1,000 monthly amounting to N12, 000 per annum. The DG outlined the benefits of the scheme to include “the pooling of resources for cross-subsidisation of health
costs where those in the highincome bracket subsidise those in the low-income bracket’’. He noted that with plans already put in place, the state was on the path of achieving universal health coverage for its citizens just as he urged all residents of the state to enrol in the scheme. The flag-off of the scheme, earlier scheduled for April 7, 2020, was postponed because of the COVID-19 pandemic.
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or young families and investors with patient capital, opportunity has just opened as Novarick Homes, a property development company, has entered the housing market with what it says is small budget, pocket-friendly homes. On offer are what the firm calls Ruby Apartments with the serenity of Nova Gardens and culture-styled WAZOBIA Courts, located right in the heart of Lekki, the fastest developing area in Lagos, Nigeria. The apartments are a mixture of luxury and affordability, specially designed to merge class with urban development. The moderate estate is a collection of one and twobedroom apartments with a blend of smart and ecofriendly finishing. These are good for Diaspora Nigerians and African irrespective of their nationality. The prime location of the estate gives residents access to facilities like schools, supermarkets, hospitals, corporate institutions and movie centres. “Our team of investment @Businessdayng
experts has helped local and international clients purchase owned, fully managed property to earn monthly rental income,” said Noah Ibrahim, CEO, Novarick Homes and Properties. “There is a variety of ways to invest in real estate and a virtual tour of our different projects will provide a detailed breakdown,” Ibrahim assured. He noted that east or west, home is the best, adding that it was the reason for introducing both Option A (Direct Investment) and Option B (Off Plan Investment), which is supported by an advanced building maintenance and management system. The estate enjoys closeness other major developments like Lekki International Airport, Dangote Refinery, Lekki Free Trade Zone, Epe Resorts, Lekki Golf Course, Alaro City, Eleko Beach and the Pan-Atlantic University. Nova Gardens is a haven for tranquillity with a blend of relaxation, comfort and scenic environment. The gated estate offers a mix of modern workspaces and exquisite centres with stunning views and engaging landscape.
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BUSINESS DAY
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Driving Etiquette: Politeness and Good Road Manners Cost Nothing By Sharon-Anne Adaigbe
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any drivers spend a greater part of their day on the road, going to and from the office, taking the children or wards to school, running errands, and so on. Anyone that drives in Lagos and other urban areas probably has a long list of things that other motorists or road users do that annoy them. If we look through the list, we would be sure to find more than a few that everyone would agree on. Good road manners not only make your journey more pleasant but also help promote road safety. Here are some things you can do to promote good road manners: Say thank you. A friendly wave to a driver that gives way to you when they did not have to is always appreciated. This includes situations when someone lets you out of an intersection in busy traffic or if you are on a narrow road and another driver coming towards you stops and waves you through first. Leave gaps for traffic to enter and exit a road. If you block side roads, you will make it difficult for drivers trying to enter the main road, thereby leading to more traffic. Even if there are no signs, leave a gap for oncoming vehicles to merge into the road easily. Get in the correct lane early. If you know you are going to be turning right soon, you have no business driving on the left lane. A lot of drivers are guilty of this especially if they feel the left lane is moving faster and then they switch lanes at the last minute when they have almost gotten to their turn. This has a ripple effect back through traffic. If you know where you are going, move across to the correct lane in ample time. Use your indicators. Drivers that use their indicator just when they are about to turn are very annoying, but even worse are those that do not use it at all. The whole point of installing an indicator in the vehicle is to alert the driver behind you that you would be making a turn soon so they can regulate their speed. Don not dawdle. When you stop at a traffic light and it turns green, check that the road is clear and move on. You should be focused on the light instead of pressing your phone and keeping other motorists waiting when the light changes. A few seconds delay means fewer cars would have time to get through the light. Speed up. If you are driving slower than everybody, speed up or make it easy for them to overtake. The same goes for if you are driving faster than
Image sources - Google everyone else- slow down. Since there are no fixed speed limits per road, you have to use your discretion and be observant. Traffic flows better when everyone is moving at the same speed.
tried to change lanes when the roads are busy, you will know how unflinching people can be, so next time you are in a queue that someone needs to join, let your fellow driver in.
Fix your vehicle. Make sure your vehicle is not emitting fumes as this can make other road users uncomfortable in traffic. Do not subject other motorists to inhale fumes from your vehicle. Be considerate with your music, and do not play it too loud while in traffic especially when your windows are down; nobody needs to listen to your playlist.
Do not litter. It is so annoying to see drivers throw waste out of their cars onto the road. Throwing trash onto the road is not only unappealing but it is also distracting to other motorists and can cause a minor accident or even a major one. Find trash cans to dispose of your trash properly at the end of your trip or consider putting a small trash can in your car.
Park inside the lines. When in a parking lot, park properly so that other cars can park easily. Parking on the lines is inconsiderate. In parallel parking, leave enough space for the car in front of yours to be able to move out. This helps to reduce damage to both vehicles while attempting to manoeuvre their way out of the parking lot. Let people in. Everyone in traffic always seems to be in a hurry. We are all rushing to run as many errands as we can fit into the day or just go home after a long day at work to rest. The stress makes people forget their simple manners. If you have ever
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you are driving an ambulance or in a police car on a chase, please stick to your lane. Trying to force your way into the queue at the last minute annoys everyone and ends up causing more traffic. Stop with the horn. Your horn is an important part of your vehicle, but it should only be used when necessary. Unless you are trying to alert others of potential safety risks, there is no need to keep hooting, no matter how frustrated you may be. You can honk briefly to alert a driver at the traffic in some instances like when the light has turned green.
Allow pedestrians to cross. While in the vehicle, you are in a stronger position when compared to the pedestrian, hence be caring, considerate, and polite to them and obey the yield signs at zebra crossings where you see them. Do not forget that as soon as you step out of your car, you are also a pedestrian!
Keep your car papers in order It is important to have all your vehicle particulars up-to-date and present in your vehicle compartment. Even more important are your car insurance papers which will definitely be useful in the unfortunate event of a collision or accident while on the road.
It is rude to jump the queue. This has got to be one of the most frequently seen and most annoying bad road practices on our roads. Everyone has somewhere they are going, so your time is not more valuable than that of the next person on the road. So, unless
Remember, #IfYouLoveItInsureIt. Go to www. motorthirdpartyonline.com for more. Being a good driver goes beyond following the traffic rules. Having good etiquette plays a major role in getting to your destination safely and without incident.
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Tuesday 02 March 2021
BUSINESS DAY
COMMENT
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Capitalism: East or West? (5)
RAFIQ RAJI
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Chart your course ny form of capitalism can be dimensioned along three lines: politics, production, and profits. The politics determines the rules and ownership of production. How the surplus from production is shared determines the incentives for either efficient or innovative production or both. Efficiency could almost certainly be assured in a totalitarian state. Innovation, however, thrives better in free societies where risks are appropriately rewarded and the gains not expropriated by the state. Thus, what is ideal is to have an efficient and innovative production sphere. And as our expo-
sition shows thus far, the eastern and western variants of capitalism have their pros and cons. The key then is not to be entrenched with either. Instead, an aspiring African country should look to take the pros from each type and do its utmost to avoid the cons. Many African countries desire to follow in China’s footsteps. Unfortunately, they would only be able to do so to a limited extent. And as the increasing success of “copycat” Asian countries like Vietnam, Philippines and Bangladesh shows, even such small feats can still be transformational. However, even those countries may be approaching a premature climax. This is because the expectation that as labour costs rise in China, global supply chains would migrate to lower cost jurisdictions, may not materialise as much as hoped. The “mastery of a new generation of automated production processes may enable China to retain its low-cost advantage (Orlik, 2020).” Still, “China’s technological gains won’t end the migration of labor-intensive employment to Southeast Asia. But it could significantly reduce
its scope (Orlik, 2020).” More importantly, and certainly more relevant for African policymakers, is how the Chinese have approached development. In other words, what they have done is not really as important as how they have gone about doing it. Chinese policymakers’ success with bringing their 201516 financial market troubles under control did not happen by chance. According to Orlik (2020), an elite team from the central bank and think-tanks “delved into the history of the Great Depression of the 1930s and the great financial crisis of 2008, aiming to discover the underlying patterns at work (Orlik, 2020).” And even as they drew lessons from these experiences, they still charted an independent and clearly informed middle way that continues to be vindicated. For instance, when faced with the risk-reward tradeoff of opening its capital account, “China’s policymakers found a middle path – opening the capital account to long-term, patient investors while keeping it closed to the destabilizing influence of
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Many African countries desire to follow in China’s footsteps. Unfortunately, they would only be able to do so to a limited extent
“Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”
Nano, micro, small, and medium-sized businesses in Lagos State -Way Forward
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icro, Small and Mediumsized Enterprises (MSMEs) are generally regarded as the engine of economic growth in any developing economies. Similarly, a large concentration of SMEs including Micro and Nano businesses are easily noticeable in Lagos State the economic hub of Nigeria. The State enjoys a high presence of SMEs, Micro and Nano businesses more than any State in Nigeria. Why is that? The simple metric to this is that Lagos State has a population size of about 15million according to United Nations (UN) projections and it appears like a country within a country considering the strength of economic activity and populace. In fact, without a doubt, Lagos State has a population estimate that is higher than some West African countries such as Guinea (13,132,795), Benin (12,123,200),and Togo (8,278,724), Sierra Leone (7,976,983). The population of Lagos is even higher than that of some developed countries such as Finland (5,540,720), Belgium (11,589,623), Sweden(10,099,265), Denmark (5,792,202), and Ireland (4,937,786). However, the painful reality is that over 60% of the residents of LagosState are poor and live in various high density and informal settlements scattered across the State. These residents lack proper sanitation, power, and other basic services, and most of them heck a living from small businesses which includes Nano and Micro businesses most importantly. A visible reference usually includes the operators of kiosks, commercial tricycles, motorcycles and many other informal business operations in the State. The estimated figure of micro-businesses in Lagos State is 3,224,324 and to add to this, over 11, 663 SME operates in the State, according to a recent statement
from the Lagos Ministry for Commerce, Industry, and Cooperatives. In my opinion, this data is underreported and does not reflect the large informal economy that exists in the State particularly the nano businesses. From reliable data the informal economy employs about 5.5 million people in Lagos State if not more. So, a reliable data base is necessary for adequate planning in the State. The small business economic activities in Lagos State can contribute largely to the growth of non-oil sector, employment generation, and the creation of sustainable entrepreneurship. These can largely be driven by businesses in the formal and informal sector in the State. Arguably small business represents over 90 percent of private businesses in the State and contribute to more than 50 percent of employment in the State. Yet the State government has not duly recognized the significance of this sector in the economic development of the State. For instance, the popular computer village in Ikeja, Ladipo spare part market in Oshodi and Balogun market in Lagos Island all consist of clusters of mostly micro-businesses with huge economic engagements but the government of Lagos state is yet to facilitate their formality and capacity buildingwith the required policy and incentive considerations. The novel Coronavirus (COVID19) and the harsh economic climate currently with us, has made many of these businesses struggle and some have shut down due to these challenges which includes the perennial issues. That is, from infrastructure deficits (power, road, technology, and so on) to inconsistent government policies, security problems, multiple taxations, regulatory burdens, stiff competition from large companies, entrepreneurial attitude of operators, huge financial and funding problems,
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lack of meaningful structure, longevity and succession plan among others.SME operators and entrepreneurs strive with different strategies and tactics to absolve many of these challenges and shocks to make any meaningful balance with little or no external support. However, the government needs to realize and recognize that small businesses are crucial to job creation, economic diversification, innovation, poverty reduction, wealth creation, and income redistribution in their policy-making activities. If this sector is well harnessed in Lagos State it can be a huge catalyst in transforming the State economically. The vivid truth is that a well-functioning SME sector would add more value to the economic fortunes of the State, sustain livelihoods, reduce poverty by creating more job opportunities in the economy than any other sector. Therefore, proper monitoring and evaluation of this sector are crucial for the economic development of Lagos State. When businesses survive, there will be a reduction in market failures and the more businesses are without survival threats the government can equally benefit from their growth and development. It can increase tax receipts and accelerate the growth of industrialization in the State. Therefore, the Lagos State government should focus more on policies and programs to widen the SMEs’ involvement in the formal sector particularly the Micro and Nano businesses. The State government through the appropriate Ministry can implement policies that will enhance ease of doing business in the State to attract operators from the huge unregulated informal sector to the formal sector. The informal sector in Nigeria refers to economic activities in all sectors of the economy that are operated outside the purview of government regulation.
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short-term speculators (Orlik, 2020).” Quite frankly, China was not expected to make the transition from an investment-driven economy to a consumption-based one easily. “Ghost towns of empty property, local government debt, and shadow banking were all identified as triggers for a system-shaking crisis (Orlik, 2020).” Well, the pessimists have been proven wrong thus far. This is not entirely surprising. “China – for all its dysfunctions – can, when it needs to, move with unity of purpose (Orlik, 2020).” That is not something easily achievable in the West. In carte blanche competitive Western economies, “cooperative outcomes [are] harder to achieve (Orlik, 2020).”
STRATEGY & POLICY
TIMI OLUBIYI, PH.D. Therefore, policies to attract business formality should be considered and formulated, and also the capacity and sustainability of these SMEs, Micro and Nano businesses should be enhanced. Because if all these are set in place it will encourage the development of the formal sector of the SME sector in the State. In conclusion, the Lagos State government should get more involved in the growth, development, and sustainability of SMEs within the State. More so, the State government needs to ensure the development and patronage of locally produced goods and content while putting in place adequate infrastructures. Besides corroboration with experts and consultants in the provision of external advice to government and these teeming small businesses on a range of topics such as strategy, having a business and organizational structure for business continuity, financial literacy, technology, and role of innovation to increase their output is equally significant. Concisely, going forward policies and programs of government in the State should be rooted in deep rule of law, accountability, creation of database on small business and uphold strict fiscal discipline. Good luck!
Dr. Olubiyi, is an Entrepreneurship & Business Management expert with a Ph.D. in Business Administration from Babcock University Nigeria. He can be reached on the Twitter handle @drtimiolubiyi and via email: drtimiolubiyi@ gmail.com, for any questions, reactions, and comments.
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Tuesday 02 March 2021
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Remembering Lateef Jakande for his service to the people STRATEGY & POLICY
MA JOHNSON
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nce upon a time, there was a distinguished gentleman, patriot, elder statesman and nonagenarian who chose to be of service to the people. He was a journalist who I never met in his lifetime but whose editorials, according to reports, were factual and forthright, and were treated by colonial powers with respect. He began a career in journalism first with the Daily Service and later joined the Nigerian Tribune where he was appointed Editor–in–Chief. The distinguished personality was the “Action Governor” of Lagos State, Chief Lateef Kayode Jakande (LKJ). It was Peter Drucker in his wisdom who theorized, “Effective leadership is not about making speeches or being liked; leadership is defined by results not attributes.” LKJ, a seasoned administrator was defined by positive results when he was the governor of Lagos State. But before stating his attributes and accomplishments, you may want to know what it means to be of service to others? Being of service to others – person, a group, a community, a cause or a belief – means that you have chosen to engage without expecting anything in return. Simply put, there is no
bribe or inducement in return for contracts awarded. Those scholars who say human beings are both the means and the end to development are correct. The welfare of people, seen in its totality, was of special interest to LKJ when he was the governor of Lagos State. Pa Lateef Kayode Jakande’s works as former Lagos State Governor speaks for itself. Though Pa Lateef Kayode Jakande (LKJ) is resting from his labours, his good works do follow him. The former governor of Lagos State meant different things to different people because of his immense contributions to the nation and humanity. His footprints were all over the sand of time; in education, housing, health and transportation among others. To buttress LKJ’s sterling leadership qualities, one can only draw inspiration from former U.S President Harry S. Truman’s philosophy that “Men make history and not the other way round. In periods where there is no leadership, society stands still. Progress occurs when courageous, skilful leaders seize the opportunity to change things for the better.” Pa Jakande as a governor made history and provided leadership. He was the governor of Lagos state at the right time. And going by all developmental projects that he conceptualized and executed in office in a period of 4 years, I can confidently say that he seized the opportunity to change things for the better in Lagos State. He governed Lagos, Nigeria’s Center of Excellence from October 1979 to December 31, 1983. He laid the foundation of what is now referred to as Africa’s largest mega city. Today, Lagos is the fifth largest economy in Africa, if it was a country with a population of over
15 million people. LKJ had a vision and he worked assiduously to achieve his goals for Lagos State. Many observers and admirers of the late governor said he wanted Lagos to be modelled after what his mentor; Chief Obafemi Awolowo did in the defunct Western Region from 1952 to 1959. Education was one of his key areas of focus. By building more schools, Jakande was able to achieve his goals in the education sector. Archival records show that he was able to increase the number of public primary schools to 812 with 533,001 pupils in four years against 605 schools with 434,545 pupils when he became governor in 1979. By the time he was leaving office in 1983, the number of public secondary schools increased to 233 with 167,629 students against 105 schools and 107, 835 students in 1979. His programmes targeted the poor in the society as he intensified housing programs. During his tenure as the governor, reports show that he constructed as many as 30, 000 housing units in various parts of Lagos. What about the health sector? He built general hospitals at Gbagada and Ikorodu and 20 health centres in Lagos State. Pa Lateef Jakande of blessed memory started the metro line project to facilitate mass transit within Lagos State. The project was halted by the military when his tenure came to an end on 31 Dec 1983. Some economists and public intellectuals believed that if the project was completed, it would have revolutionized public transportation within Lagos State. In a bid to provide portable water for the people of Lagos State, LKJ constructed water works at Badagry, Apapa, Shomolu, Sha-
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Men make history and not the other way round. In periods where there is no leadership, society stands still. Progress occurs when courageous, skilful leaders seize the opportunity to change things for the better
sha, and Agege among others. He built the Lagos Secretariat, Alausa, Ikeja and equally set up the Lagos State Television (LTV) which was regarded as the first state-owned TV station in Nigeria. He built the Lagos Radio and the Lagos State University (LASU). LASU has now been renamed Lagos State Jakande University (LAJU) in honour of the late former governor. A worthy way of immortalizing the “Action Governor.” A few of his close associates confirmed that LKJ as a governor worked round the clock in his bid to fast-track development in Lagos State. Such was his dedication to duty and passion for hard work. There was only one “Action Governor” in the Second Republic and that was Alhaji Lateef Kayode Jakande. It is hoped that more political leaders, particularly at the state level, will provide leadership, emulate Jakande’s patriotic zeal and commitment to serve the people. Many of his programs and policies particularly in the housing, public transportation, and education sectors still endear him to some people. When asked at one of his birthday ceremonies what he would like to be remembered for, he simply responded: “Service to the People!” LKJ will be remembered for his lasting legacy in politics and governance by the people of Lagos State in particular and Nigerians in general. May the gentle soul of Alhaji Lateef Kayode Jakande rest in peace, Amen. Thank you.
Johnson is an author and a retired naval engineer who has passion for African development and good governance
AfCFTA: Handling the challenge of capacity
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his edition of my series of Articles on AfCFTA implementation strategies will focus on capacity building. The importance of capacity building has been demonstrated by the fact that hundreds of new businesses get registered with the Nigerian Export Promotion Council (NEPC) to get export certificates that make them eligible to export every year, yet, the number of exporters that shipped goods out of Nigeria every year has remained below one thousand in the last ten years. The question then is, why is the number exporters and the volume of export not growing? It is due to the lack of capacity of the registered exporters to do the business. A number of FTAs around the world have failed to achieve objectives in some of the countries involved because of the deficiencies in export business management skills among the business people especially the SMEs. One of the pivotal goals of the AfCFTA is to create jobs among the member states. This is achieved via the increased market demands, which leads to increased volume of production and consequently leading to the need for increased manpower. The impact of AfCFTA can only be felt by an average Nigerian on the street if the businesses are supported to develop the capacity to overcome the 5Ps of export business challenges and these are Products, Purchaser, Pricing, Paperwork and Payment.
First, there is need for capacity building in the area of products that can be exported to African countries and this should be based on what they currently import from other parts of the world. This should include quality specifications and requirements of the different countries, and what makes the products eligible for shipment within Africa under the AfCFTA. Our preliminary research at 3T Impex Consulting Limited revealed that there are currently about 90 products that Nigeria can export to other countries in Africa based on what these countries currently import from other parts of the world. The second area of capacity building for manufacturers is the skills to get purchasers. It is one thing to have potential buyers all over the African continent; it is another thing to be able to get the buyer to buy from you. Capacity building areas with respect to getting purchasers should include but not limited to the following areas: international marketing, market entry strategies, product packaging, and contract negotiations. It is a general belief among many exporters that the main challenge of exportation is getting buyers and this assertion was based on the fact that more than 70% of the enquires we get daily regarding exportation is on how to get buyers. Even though a manufacturer has a good product with huge demand on the African continents and contacts of buyers in differ-
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ent countries, he might still be unable to get buyers if he does not know how to effectively and efficiently price the products to be exported. The product manufacturers needs to know about different pricing strategies, different pricing objectives, product costing and pricing, cost elements in a typical export project. Incoterms and how it affects costing, logistics options and cost implications is also highly imperative. International trade is largely a business of logistics and documentation. The need for capacity building in the area of paperwork is very important because, if the documentation is faulty, it has the tendency to make the transaction fail and lead to losses. Shipment of goods to destination can last up to two months and the buyer might have to pay sometimes before seeing the goods especially in a letter of credit transaction. The exporters need to know about pre-Export documentation and post-export documentation. The last but definitely not the least area that requires capacity building is the issue of payment. This basically involves sourcing from funds to pay local suppliers and getting payment from the buyer after shipment. The manufacturers and/or exporters will require capacity building in the areas of pre and post export financing and payment methods like Letter of Credit, bill for collection, Open Account and Advance Payment. Consider-
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BAMIDELE AYEMIBO ing the fact that more than 80% of trade in the world are done on Open Account (Cash Against Document), which leaves the exporters exposed to the risk of either delayed payment or payment defaults, it is therefore necessary to train exporters on measures to put in place in order to mitigate this risk. Finally, I will like to state that inadequate capacity on the part of manufacturers is a major challenge that has bedevilled the implementation of FTAs in several developing countries around the world. No matter the plans and strategies put in place by the government, if the actors are not equipped with skill and competence to take advantage of the AfCFTA, then the anticipated benefits remain as a mirage and at the level of potentials.
Ayemibo is Lead Consultant at 3T Impex Consulting Ltd. He is the first Certified Specialist in Demand Guarantee in Nigeria and among the first ten in Africa.
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Tuesday 02 March 2021
BUSINESS DAY
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On Buratai’s statements CHETA NWANZE
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here are a few things that the now retired General Tukur Buratai would say that I would agree with. One of these came last week when during his ambassadorial confirmation hearing, he said it may take 20 years to end the Boko Haram insurgency. Buratai was right when he acknowledged the problem large territories of ungoverned spaces pose in contributing to the terror dynamics, as well as its impediment on counter terror operations. He forgot to mention, though, that the net is a lot wider than he presents it. The scope of Buratai’s 20 years of terror goes beyond just the high-level insurgency in North Eastern Nigeria. His focus on the north east may have largely been borne out of the fact that his failure to bring the Boko Haram nightmare to a close having been the country’s longest serving army chief, got him the ire of many Nigerians, including those who voted to confirm him in his new position. The problem of Nigeria’s home-grown terrorism is that Boko Haram’s success has provided inspiration for similar armed groups making headway
into the North West and the Middle Belt. Nigeria is currently fighting insurgencies in its three northern geopolitical zones. In the South, the South-South experienced its own insurgency that stretched from the mid 1990s to 2009 when the Yar’adua government offered the Niger Delta militants amnesty. The implementation of that strategy leaves much to be desired, especially if you consider the uneasy peace, propped up by a mutual interest in oil theft. Burata’s position is backed by research. About ten years ago, one of America’s foremost think tanks, the Rand Corporation published a report about insurgencies, in which they studied 89 different insurgencies. In the study, they concluded that the typical insurgency has a 10-year shelf life unless of course certain conditions were not met. The first condition stated that pseudo democracies (Nigeria is one) had the least chance of beating an insurgency. Secondly, frequent policy changes helped insurgencies last longer. The study also found that the more splinter groups there are in an insurgency, the longer it was likely to last. We have seen this case with Boko Haram in 2016 when they split into three factions (JAS, ISWAP and Ansaru). It is also important to add that it said that there are no shortcuts to counterintelligence operations. There’s one country that has
met all these conditions for a long-lasting insurgency, and that is Colombia. As with the Niger Delta insurgency, the Revolutionary Armed Forces of Colombia (FARC) and other guerrilla movements such as the Popular Liberation Army and National Liberation Army claim to be fighting for the rights of the poor in Colombia to protect them from government violence and to provide social justice through communism. The Colombian government claims to be fighting for order and stability, and to protect the rights and interests of its citizens. The paramilitary groups claim to be reacting to perceived threats by guerrilla movements. This is quite like the casus belli of the Niger Delta since the mid 1990s, which have turned Rivers and other states in the region to a mad house of competing gang interests in the name of economic (oil) self determination. It is important to note how much guerrilla and armed militias morphed into Colombia’s shadow economy as the conflict de-escalated into a low intensity conflict. FARC rejected any involvement in the emerging phenomenon of drug growing and trafficking, but during the 1980s, the group gradually came to accept it as it became a burgeoning business. Taxes on drug producers and traffickers were introduced as a source of fund-
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The problem of Nigeria’s home-grown terrorism is that Boko Haram’s success has provided inspiration for similar armed groups making headway into the North West and the Middle Belt
Nwanze is a partner at SBM Intelligence
Will Northern Nigeria ever find peace?
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he insecurity in Northern Nigeria today is not accidental. It is the product of a deliberate social decadence systemically incubated over time and became a way of life for the society. The political leadership, the oligarchy and the proletariats accept the talakawa and almajiri’s poverty concept as God’s will. This has been the way of life for the North. No nation in the world neglects its youth and expect to be at peace. The Almajiri system being practiced in the entire Northern enclave was a nuclear bomb waiting to explode and is now exploding. I predicted the present insecurity in the North 25 years ago when i was doing my national youth service (NYSC) in Borno State. I have traversed the North East, North West, North Central, and have witnessed the Almajiri phenomenon. My personal encounter with them remains scary till today. I remember telling people around me and even wrote an article about it in a national newspaper in 1998, warning that if the federal and northern state governments failed to find a quick fix to the Amajiri issue, the future would be bleak for the North and the nation at large. We are now in that future today. In our N YS C Camp in Potiskum, Yobe State, the almajiris were allowed to invade the camp at will. The Military manning the gate were instructed to always open the gate for them especially
in the afternoon when lunch was being served. Most afternoon, the authorities ensured we are served a local diet that majority of the corps members (majorly from Southern part of Nigeria) did not like (Brabiscu). The young boys, dirty, unkempt, trooped in with their plates in their hundreds. We had no choice than to give them the brabiscu as soon as we are served at the kitchen. We were always wondering about where they came from. When I couldn’t eat brabiscu, I would go to a restaurant in the Mammy Market in the camp to buy and eat better meal. There was a day I was in the restaurant eating. As I looked back to request for water, my plate of food was gone. I couldn’t believe my eyes when I peeped outside and saw 4 young almajiris eating my food hungrily without scruples. The restaurant owner quickly went on her knees begging me to leave them, warning that if I beat them, the consequence might be bloody. She had to serve me another plate of rice free. On another day, I had a near conflict encounter with a fellow corps member in same platoon over the almajiris that invaded the camp. He wanted to fight me because I shouted on some of the boys who were putting their mouth directly in the tap to drink water; same source of water for all the corps members in the camp. I reproached them to get a cup to fetch the water instead of putting mouth in the tap. But alas,
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ADETOLA ODUSOTE
my fellow corps member went wild telling me that we southerners always think we are better than them. He said President Muhammadu Buhari was once an almajiri before he was picked up and sponsored into the army; that he himself was an almajiri before he was picked up on the street and sponsored to school. He was so vexed in his spirit that he brought out knife from his jackboot, to the shock of everybody and I had to beat it. How will you manage a situation where millions of children as young as 4 years are left by their insensible parents to go and sur vive by themselves on the streets where they are at the mercy of Islamic teachers who are ready to indoctrinate them with religious extremism? Unfortunately, this Islamic teachers become the only guardian they have; mould their faith by their own beliefs; provide food and sometimes shelter them under a tree in harsh weather. When there is nothing to feed them, they are sent to beg on the streets. In other cases, the moment their polygamous father realises they are old enough to beg, he gives them plates and send them out to cater for themselves. They leave home at that early age, and become wild on the street. The children lack parental care and never know any family values. From the streets, they form groups and move gregariously and menacingly
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ing in the form of the compulsory so-called “gramaje” tax on growers and through the enforcement of other regulations affecting different stages of the production process. This is one of the very key things that have sustained the insurgencies in both Northern Nigeria. In Shiroro LGA of Niger state a few weeks back, terrorists killed at least 25 villagers for not turning up to agree for a new formula which would allow them to be extorted in order to access their farms. The same thing plays out in the North East, given how much the refilling of Lake Chad has led to the resumption of the dying fish trade which both some rogue elements of the Nigerian army and the Islamic State West Africa Province (ISWAP) have sought to control. The reality is that we are not just in a mad house with terrorism on multiple fronts enough to last us another 20 years. Given that the Maitatsine riots of the 1980s was the forerunner of jihadism in modern Nigeria, it leaves us the burning question: if things get on like this, would our internalisation of terrorism be elastic enough to accommodate the rise of more violent, organised nonstate actors, enough to keep us together for another 20 years?
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about towns and cities. Some of them are groomed by radical Islamic scholars who radicalise them. Majority grow up and become enemies of the state; and social renegades to the society. Former Emir of Kano Sanusi Lamido Sanusi at various fora condemned this regional societal menace that breeds criminality. Unfortunately, with Nigeria’s return to democracy in 1999, unscrupulous politicians found them as valuable human resource for political thuggery to rig elections and terrorize oppositions; they are cooked for criminality, armed with guns and machetes to kill, maim and destroy. If northern leaders fail to find solution to the almajiri system, they will continue to breed banditry, kidnapping and all kinds of criminal acts and the region may never know peace. They must begin to invest in their people, s t a r t o r i e nt at i o n ca mp a ig n s ab ou t responsible parenting, family values, and come together as a region to reinvigorate the almajiri and nomadic education program started by former President Goodluck Jonathan.
Adetola Odusote is Director, Re-Ignite Public Affairs Limited, a strategy driven research- based solution provider in the Public Affairs space for businesses and governments in Nigeria.
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Tuesday 02 March 2021
BUSINESS DAY
EDITORIAL PUBLISHER/EDITOR-IN-CHIEF
Frank Aigbogun EDITOR Tayo Fagbule
DEPUTY EDITORS Lolade Akinmurele John Osadolor, Abuja NEWS EDITOR Osa Victor Obayagbona NEWS EDITOR (Online) Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha GM ADVERT Ijeoma Ude GM CONFERENCES Obiora Onyeaso GM BUSINESS DEVELOPMENT (North) Bashir Ibrahim Hassan GM BUSINESS DEVELOPMENT (South) Ignatius Chukwu GM DIGITAL SUBSCRIPTION SALES Rerhe Idonije BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL ADVERT SALES MANAGER Linda Ochugbua
FG, crude oil theft, pipeline sabotage is getting out of hand
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nternational Oil Companies are finding it increasingly difficult to explore crude oil in onshore fields in the Niger Delta, a situation that does not bode for Nigeria’s economic stability. We urge President Buhari to task his new service chiefs to protect both personnel and assets in the troubled region. The sector is reeling from poor regulator y and fiscal frameworks designed by government officials, persistent incidences of pipeline sabotage, crude theft, and an increasingly hostile host communities. In our hurry to milk the golden goose, we might just kill it. Shell Nigeria is reconsidering its business operation in onshore fields in the Niger Delta, there’s no telling when it will abandon everything. This is due to unchecked pipeline sabotage and crude theft. The company pioneered oil exploration in Nigeria and accounts for nearly 40 percent of Nigeria’s total oil output. It is central to the economy employing nearly 3,000 people alongside a partnership with more than 11,000 contractors. While some host community’s experience with the
company’s operations has been unsavoury, it is still an important contributor to Nigeria’s economy. As of 2020, Shell joint venture asset’s in Nigeria includes, 340 producing oil wells; 56 producing gas wells; a network of approximately 4,000 kilometres of oil and gas pipelines and flow lines; 10 gas plants; two major oil export terminals; one power plant, and one shallow-water Floating Production Storage and Offloading (FPSO). In 2019, Shell and its subsidiaries paid the Federal Government of Nigeria over $5.6billion dollars which at the exchange rate of N307/$1 at the time, adds to N1.7trillion. Worse still, other big oil companies are reeling too. The oil sector is troubled enough, we do not need to add to their woes. ExxonMobil is struggling to keep its host community in Eket stable and Chevron and others record huge costs to provide security for their assets. Some are now diverting investment dollars to smaller African producers in a vote of no confidence in the country that holds the biggest reserves in Africa. The Nigerian National Petroleum Corporation (NNPC) in its most recent operations as contained in the financial report said
it spent about N50billion in ten months on sabotaged pipelines in 10 months. While these figures have not been independently verified considering NNPC’s history of opacity and corruption, they point to a serious problem with the security of oil assets. Perhaps, some Nigerians are under the illusion that if we ride out the big oil companies, our fortunes will improve. To understand what kind of future awaits these assets, consider what is currently happening to the assets they divested to some local operators. With the exception of a few, many of these assets are rotting away. The local operators are challenged by the inability to source financing to develop these fields. Oil and gas operations require huge capital outlay. This is why Nigerian banks with huge exposure to the oil sector, run for the hills when local oil companies come to talk about loans. Many oil sector professionals also lack the requisite technical capacity to develop some of these fields. We understand the genuine agitation of oil-producing communities whose flora and fauna have been impacted by oil exploration. But we must make the distinction between rightful agitations for better environmental
practices by oil companies and brigandage by thieves. More often than not, what occurs in some areas in the Niger Delta is crime dressed the garb of dissent. The new service chiefs should therefore make the protection of these assets and the personnel who operate them a top priority. Nigeria’s waterways are insecure and risks of the kidnap of professionals abound. They should improve intelligence gathering and move deftly against trouble makers. Apart from increased security in the protection of oil and gas assets, the Nigerian government needs to improve fiscal and regulatory regimes for the sector. The world is moving away from oil and nations are racing to make the most of their resources while there is time. The current Petroleum Industry Bill has provisions, which this paper has identified that will hamstring new investments. Our fiscals are too focused on maximising government take at the expense of attracting investments and some regulations only raise costs and bureaucratic meddlesomeness. The National Assembly must look at the laws of other countries, take the input of operators and come up with a law that can help the country now before oil becomes a relic.
HEAD, HUMAN RESOURCES Adeola Obisesan
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Tuesday 02 March 2021
BUSINESS DAY
COMPANIES&MARKETS Covid-19 headwinds heighten integrity challenges for emerging markets-EY
Coca-Cola partners NGO to launch novel ‘Waste In The City’ initiative SEYI JOHN SALAU
MICHAEL ANI
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s organisations transition from managing the COVID-19 crisis toward building economic resilience, many are struggling to maintain integrity standards, according to the latest Ernst & Young Global Integrity Report which surveyed more than 1,700 respondents from 21 emerging markets including Nigeria. Excerpts from the report reveal that 63 percent of respondents believe businesses operating in emerging markets are more likely to be adversely impacted by the current COVID-19 disruption. 32 percent of respondents in emerging markets believe that bribery and corrupt practices present the greatest risk to the long-term success of their businesses, compared to 42 percent for Nigeria, 35 percent for South Africa and 38 percent for Kenya, the African respondents. 30 percent of respondents believe that the risk of a cyber and ransomware attack is a significant threat, compared to 40 percent for Nigeria, 37 percent for South Africa and 56 percent for Kenya. “Interestingly, all three African countries surveyed say that standards of integrity in their organisation have generally improved in the last two
years,” Sharon Rooyen, EY Africa Forensic & Integrity Services Leader noted. According to the report, Kenya and South Africa raising the alarm about misconduct is still a significant issue in comparison to other emerging markets surveyed. Worryingly, in Nigeria, 29 percent of respondents were uneasy to report such concerns due to fear of the impact of their future careers compared with 45 percent in Kenya and 33 percent in South Africa. This suggests that organisations need to revisit their whistleblowing programs to ensure employees feel that they can safely report misconduct without reprisal, the report said. “Whistleblowing programs form a key pillar of the organisation’s corporate governance framework and management and board oversight will be crucial for its success,” EY said in the report. African respondents did not think that the complex regulatory environment posed a very high risk perhaps because of the perception that the regulatory environment in the three African countries is less complex than some of the more mature markets. The report highlights four key areas for organisations to consider in better managing the risk of corporate misconduct: Corporate integrity
should be top priority in management’s playbook Business leaders are always in a crucial position when it comes to making difficult decisions. The report highlights that 55 percent of respondents in emerging markets say their management frequently communicates the importance of operating with integrity, compared with only 39 percent in developed markets. This proportion varies significantly by country from just 25 percent in UAE, rising to 53 percent in Malaysia and 67 percent in Kenya, 60 percent in Nigeria and 57 percent in South Africa. Vo i c i n g m i s c o n d u c t through whistleblowing channels. 37 percent of respondents in emerging markets say they have not reported concerns about integrity due to apprehensions about their career progression. Further, in Nigeria, 29 percent of respondents say they have not reported concerns due to fear for personal safety, compared with 50 percent in Kenya and 49 percent in South Africa 49 percent. Embracing disruptive technologies while protecting data Emerging markets are embracing disruptive technologies and adapting to digital life. While there has been an overwhelming shift to using new technologies and increased
use of the internet with work from home, the risk exposure for organisations has amplified. The report highlights that emerging markets are leading the way in mitigating growing risks, with 55 percent offering training to employees on how they can prevent data security breaches, compared with 45 percent in developed markets. Organisational preparedness is also robust in emerging markets with 42 percent of respondents having an incident response plan in the event of a data security breach. Tackling third party integrity risks Remote working, restricted operations and limited mobility in many locations have also made it riskier to manage third-party relationships. Only 35 percent of businesses in emerging markets are very confident that their third-party partners operate with integrity, compared with 47 percent of Kenya respondents, 46 percent of South African respondents and 33 percent of Nigerian respondents. Conducting adequate due diligence before onboarding a third-party vendor is critical to mitigate long-term risks and comply with enforcement standards. Technology solutions such as automated dashboards and data analytics can be enablers to bring efficiency into the third-party due diligence process.
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s part of its sustained strategy of fostering a “World Without Waste”, The Coca-Cola Foundation, in partnership with Statewide Waste and Environmental Education Foundation (SWEEP) to start its ‘Waste In The City’ initiative across target communities in Lagos. The initiative, which was unveiled across communities in Surulere LGA, Coker-Aguda and Itire-Ikate LCDAs, is a community-focused project funded by The Coca-Cola Foundation and aimed at unclogging blocked drainages and canals by extracting PET bottles, cans and other plastic waste, recycling them through accredited off-takers by providing economic empowerment for community youth and women. A total of 100 recycling receptacles and 10 tricycles will be deployed across these communities to ensure effective collection of the PET bottles and evacuation in real-time to aggregation centres for recycling. “We want to make recycling more accessible to achieve 100% collection and recycling by 2030. Our
Samsung builds innovation hub to enhance CMC Connect BCW launches crisis capacity development among youths management service for businesses AMAKA ANAGOR-EWUZIE
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etermined to enhance capacity development among young Nigerians, Samsung Electronics has built and donated an innovation hub to Yaba College of Education. Dae Hee Kim, managing director, Samsung Nigeria said at the unveiling of the centre that Samsung recognises the role technology plays in nationbuilding and has created an innovation hub to support the dreams of Nigerian students. Kim noted that Samsung believes in strong collaborations between the government and private sector, and is committed to playing a sustained role in community development as well as nationbuilding. According to him, in the last few weeks, we have worked collaboratively with the institution in transforming the former computer lab into an innovation hub by equipping it with 50 monitors, desktops, Samsung E boards, flip boards,
cooling units and more convenient set of furniture. The centre for Information Technology and management of the institute led by Adigun Oyeranmi, has developed a series of programmes, to power the innovation hub and made it a learning hub for as many students studying within the Faculty of Computer Science as well as students with interest in technology. While receiving the centre on behalf of the institution, Obafemi Omokugbe, rector of the college said is a welcome development, adding that it is evident that Samsung has become a part of nationbuilding. Omokugbe said the lab is going to be used as a digital and e-learning centre as learning activities will soon commence in the innovation hub as soon as possible. He assured that all donation made by private organisations to the college are well managed and improved even as he also encouraged more investment from corporate organisations.
DANIEL OBI
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he unprecedented global health crisis has thrown up the need for businesses to have a crisis management plan as revealed in research by leading public relations firm, CMC Connect BCW, a member of the CMC Connect Group and an affiliate of Burson Cohn & Wolfe global communications agency. The research reported that between Q2 & Q3 2020, 27% of businesses in Nigeria suffered a major impact from the coronavirus pandemic, with only 9.9% of the respondents having a crisis management plan in place while 59% never had a crisis management plan before the COVID-19 pandemic. The research was conducted to measure the Relevance of Crisis Communication on Businesses in Nigeria during the COVID-19 Health Crisis by the communications company and to announce its new service offering: Crisis & Issues Management Specialized Service. According to CMC Connect
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BCW, the research was carried out on over 200 business owners and employees and further revealed that 78% of respondents agreed that the existence of a crisis management plan was important in inspiring confidence in organizational leadership. The insights gathered from this research confirmed the gap in strategic crisis management for businesses which the company hopes to fill with its specialized service. The Crisis and Issues Management service is a specialized portfolio that provides a strategic roadmap for the crisis, employing a 3-step approach - Prepare, Manage, Recover to guarantees business sustainability and continuity despite a crisis. The Group Managing Director, CMC Connect (Perception Managers), Yomi-BadejoOkusanya said “When a crisis occurs, there is a breakdown of trust between the organization and its stakeholders. Trust is a currency on which stakeholders trade, and it defines their loyalty and goodwill. Once this is disrupted, the organization is on its way down.”
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goal is to help collect and recycle a bottle or can for every one we sell globally. To achieve this, we will continue to make our packaging 100% recyclable and work with varied stakeholders to ensure the bottles are collected and recycled,” said Alfred Olajide, the managing director, Coca-Cola Nigeria Limited, reiterated the company’s commitment to ensuring a waste-free world. According to him, the initiative will help communities identify and better understand how a collection of waste can lead to empowerment and means of livelihood, and where to recycle collected PET bottles. “It will also help improve the existing collection and recycling systems. A litterfree world is possible and we at The Coca-Cola Company are leading the way to achieve this,” Olajide said. Ibijoke Sanwo-Olu, wife of the Lagos State governor, said the initiative is a threepart project encompassing mass mobilization and community advocacy, deployment of waste collection receptacles and provision of sustainable livelihood for community youth within selected areas.
Tuesday 02 March 2021
BUSINESS DAY
COMPANIES&MARKETS
Business Event
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Diversification key to survival in catering industry amid COVID – CEO Henriemaccakes Mark Henrietta Ogochukwu is the creative director of Henriemaccakes and a cake blogger, popularly known as ‘Cakeitwithhenrietta’ and also a host for Bake&Earn(An online cake seminar program). In this interview with IFEOMA OKEKE, she speaks on how bakers can diversify amid the economic downturn and the impact of COVID.
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ow has the baking experience been for you since you started? It has been an amazing experience with mistakes made and lessons learnt. When I started baking eight years ago, I was focused entirely on the passion aspect of it instead of building a brand out of it.it resulted in years of toiling with no gain. I saw baking as a passion instead of a business. I believe passion should be earning you money as well. It is not about knowing how to bake or being in the business for years but it’s about being at the top of what you do with the money in your account. I made a lot of mistakes when I started but those mistakes have helped me become a better person today. What were some of the mistakes you made when you started and how will you advise young bakers in the business? There was no accountability. I was just selling but I was not making money. I was making different kinds of cakes for the same prices. As a cake baker, you should have a book/receipt for expenses and orders taken. Expenses should be written down. If you are taking money out and there is no accountability, then you are not running a business. The second mistake I made was a lack of the professional aspect of baking. People should learn to set boundaries when it comes to doing business. Stop giving clients excuses. They need their jobs done at the time you promised. Be professional. Many people are government-induced bakers. I studied Industrial Chemistry. Baking was the least of the things I wanted to do with my life but when I stumbled on baking, it grew as a passion. I made mistakes but I ended up going back to baking because it is something I do with passion. As you bake, you need to know your area of specialisation. Create a niche for yourself. Attend upgrade cakes and business classes. What sets your brand apart from others? I believe the needs of clients have to come first. What I do is to first of all understand my clients. I always aim at what I can do to be better than I was yesterday and no comparison with other baker’s journeys. I also upgrade my skills daily, you stop growing when you stop learning. When I see those who are doing well in the business, I approach them and ask them to teach me. Who are your target markets?
L-R: Femi Adesina, special adviser to the president on media and publicity; Zainab Ahmed, minister of finance, budget and national planning, Ahmed Aliyu, permanent secretary, federal ministry of finance, budget and national planning, during a World news conference on Nigeria Economic Growth at the Presidential Villa in Abuja on Thursday (25/2/2021). 00782/25/2/2021/Callistus Ewelike/BJO/NAN
Mark Henrietta Ogochukwu
I bake cakes for everyone who wants to get value for their money. I bake for women, for men and for organisations. Like I mentioned earlier, I am a baker and also a cake blogger which comes with influencing for companies relating to the job.. I recently partnered with Canon company on cake printers for bakers. I am also partnering with Nutrichem and I work with some travel agents as an influencer. We plan to have the bakers rest trip soon. Catering business is one of the businesses impacted by COVID as events are no longer held as usual. How have you been able to survive this period? This is how Bake and Earn was introduced. As a result of covid-19, we had to go digital because everything is moving online. It is not a time when we host physical events. During the Bake and Earn seminar, which will be held on March 19th -21st 2021, we will have different bakers teach people virtually. What bakers just need is their phones and a good internet connection to learn from the comfort of their homes. Covid is making us diversify into other things. We have to move with the system. Everyone is trying to stay safe. You can’t do a physical event where you have 100 bakers turn up. We have to be alive to make cakes. A lot of bakers are baking but are not earning money. During the seminar, speakers will speak on cake recipes, tutorials and the cake business itself. For the first edition, we had 19 Cake instructors from Nigeria, Kenya and Ghana and registered students from Tanzania, the USA, Australia, Ghana, Morocco, Botswana and Austria. This year, we hope to have www.businessday.ng
bakers from more countries. I advise bakers to try to make things easier for clients. As COVID and economic downturn bites, we had to diversify to making foil cakes and cupcakes that are budget-friendly. We also started doing more deliveries. You have to stay in business by considering the rich, the average and even the poor. We make cakes for everyone no matter how low your budget may seem. People should also consider doing online courses because a lot of bakers want to learn. How do you balance making quality cakes with a low budget? Good cakes are not cheap, so we have to find a way to explain to our clients the situation of things. Flour and sugar are very expensive. I cannot reduce the quality, so we include the costs we incur in the prices of products. Apart from COVID, what other challengers are bakers faced with? The major challenge we have in Nigeria is electricity. We make cream cakes every day and we have to put them in the fridge. So, all my profits go into buying diesel and fuel. If we solve the problem of electricity in this country, the cost of cakes will go down significantly. The government needs to empower upcoming bakers by providing flour and sugar as palliatives. This business can reduce unemployment if the government can invest in catering and also Cake relating items company to invest on Cake bloggers for their product influencing, after all, we bakers are the main users of their products and can share passionately or rather convey the message clearly to their target audience
L-R: Abayomi Obadare, group head, internal control, SIFAX Group; Joshua Idiong, winner, Season 7, The Next Titan; Ezekiel Ajewole, executive director/senior special assistant to the GEVC, SIFAX Group, and Mide Kunle-Akinlaja, executive producer, The Next Titan, at The Next Titan appreciation visit to SIFAX Group head office, at Apapa, Lagos.
L-R: Ifeanyi Chudimoma, Bamidele Salami, members House of Representatives Committee on Pension and Kabir Alhassan Rurum, Chairman of the committe during a meeting with Aiico Pension and Fidelity Pension management, at the National Assembly in Abuja. Pic by Tunde Adeniyi
L-R: Innocent Oseghe, managing partner, Human Capital Partners; Hakeem Muri-Okunola, head of civil service, Lagos State; Babajide Sanwo-Olu, governor, Lagos State; Adetutu Songonuga, partner, Human Capital Partners, and Sam Egube, commissioner for budget and economic planning, Lagos State, during the Opening of the Body of Permanent Secretaries Retreat in Lagos.
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Tuesday 02 March 2021
BUSINESS DAY
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Eloho Omame steps down as Endeavor CEO after 3 years
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Nigerians now use 80,000 terabytes of internet monthly, above SSA average FRANK ELEANYA
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igerians now consume 8 0 , 0 0 0 terabytes of internet data every month says Umar Garba Danbatta, executive vice-chairman of the Nigerian Communications Commission (NCC). The 80,000 terabytes (TB) amount to 800,000,000 Gigabytes (GB) which if shared with Nigeria’s 108.27 million unique internet users comes to 7.3GB per user on a monthly basis. The average in sub-Saharan Africa is 6.8GB according to data from Statista. Nigeria’s 7.3 GB per user however is below that of South Africa where average us er co n sump t io n has risen to 17.6 GB per month since 2014. The region with the highest monthly consumption is North Africa at 50GB per user. Terabyte is one of the classifications used to measure data storage capacity or computer memory. A terabyte is 10
to the power of 12 bytes represented in a binary. A byte is a unit most computers use to represent a character such as a letter, number, or typographic symbol. A byte consists of 8 adjacent binary digits (bits), each of which consists of a 0 or 1. The string of bits making up a byte is processed as a unit by a computer; bytes are the smallest operable units of storage in computer technology. T h e p re f i x e s “ k i l o,” “mega,” “giga,” and “tera” are metric prefixes that relate to multiples of one thousand each, but computer system memory is organized into a binary structure based on powers of 2. Within a computer system, a different set of prefixes refers to 1,024 of the preceding unit, instead of one thousand, but commercial-level production has normalized the use of metric measurements for these units, meaning that a “megabyte” may refer either to 1,000 or 1024 kilobytes, and a kilobyte may refer to 1,000 or 1,024 bytes. The most popular plans
offered by mobile phone companies are 1GB, 2GB, or 5GB of mobile data allowance. But deals can start as low as 100MB depending on the users’ needs. And for those data-hungry phone users, they even get an unlimited data plan. 1GB (or 1000MB) is about the minimum data allowance users are likely to want, as with that they could browse the web, use social networks, and check email for up to around 40 minutes per day. Internet usage has been growing over the years. A study by Ofcom Communication released in September 2020, found that the average person used 2.9GB of mobile data per month in early 2019, which is an increase of 34 percent on the previous year. By the end of 2019, Ofcom’s interactive data shows mobile data use averaging 3.6GB per month – a further increase of 22 percent. In Nigeria, the number of internet users has surged in recent times as smartphone prices dropped. However, the economic crisis in the country has ensured that
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growth is not evenly spread. While smartphone owners account for 33 percent of total mobile phone ownership, they are mostly confirmed to the population in the urban areas. The urban areas also take a major share of all internet infrastructure investments, leaving millions of people in rural areas with sparsely distributed internet services and smartphone ownership is limited. Nigeria’s fixed broadband technologies which are required to drive the 4th Industrial Revolution applications including smart city, IoT, artificial intelligence, autonomous vehicles, and other advanced technologies, are currently available only in high net worth urban areas. Access to fibre networks within 5 kilometres of the population currently stands at an average of approximately 39 percent reach, with a high of 85 percent in Lagos State and a low of 12 percent in Jigawa State. It is therefore most likely that the 80,000 terabytes usage per month is mostly contributed by urban internet users.
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loho Omame, the founding managing director of Endeavor Nigeria a platform that s e l e c t s, m e n t o r s, a n d accelerates high-impact entrepreneurs, has on Friday stepped down after three years in the position. Omame is handing over to Tosin Faniro-Dada, who until recently, was director of Programmes and Coordination at the Lagos State Employment Trust Fund (LSETF). She, however, will transition to the Endeavor Mentor program. Ap p o i n t e d i n 2 0 1 8 , Omame kicked off a journey that will see Endeavor Nigeria, a sister company to Endeavor, the global organisation founded by Linda Rottenberg nearly 25 years ago, be involved in the entrepreneurial journey of 16 founders. The company started with four entrepreneurs in 2018 including Tayo Oviosu, Jay Alabraba, Etop Ikpe, and Elizabeth Rossiello. That year the company also set up the Endeavor HighImpact Entrepreneurship Limited. “ E n d e a v o r ’ s commitment to highi m p a c t e n t re p re n e u r s is the simple reason why Endeavor Nigeria is
differentiated in a sea of local entrepreneur-support organizations that might seem to do similar work,” Omame wrote in a post. E n d e a v o r N i g e r i a’s network of entrepreneurs has grown to include 16 Endeavor Entrepreneurs scaling companies in and beyond Nigeria, who are part of a global community of over 2,000 Endeavor Entrepreneurs worldwide. The mentor network now includes 30 business leaders including Yinka Edu (Partner, Udo Udoma & Belo Osagie), Stephane Timpano (Managing Partner, Bain & Company), Sean Hsu (Group President & CEO, Netcom), Yinka Sanni (CEO, StanbicIBTC Holdings), Yemi Osindero (Managing Partner, Uhuru Investment Partners), Ini Eb o n g a n d A k i nt u n d e Oyebode (Commissioner of Finance & Economic Development at Ekiti State Government). “ We ra n a r i g o ro u s search process and Tosin was the over whelming favorite. As CEO, Tosin will also take over my board seat as an executive director while I transition to the Endeavor Mentor program. She starts her new role on March 1, 2021, and I wish her every success,” Omame said.
Eloho Omame and Tosin Faniro-Dada
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Tuesday 02 March 2021
BUSINESS DAY
OFF-GRID ENERGY BUSINESS
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How FG is derisking lending to off-grid energy sector ISAAC ANYAOGU
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he Federal Government of Nigeria is derisking lending to the off-grid energy sector through pragmatic policies including slashing import duties, offering cheap credit to operators and galvaning commercial banks to consider lending the sector. In a bid to fix Nigeria’s energy supply challenge, it has designed a 5 million homes solar installation plan under the Economic Sustainability Plan (ESP) which is driven by the Rural Electrification Agency (REA) along with private companies, drawing funding from a low-cost loan facility from the Central Bank of Nigeria. Under the Solar Home System of the ESP, the Federal Government is connecting 5 million households to solar systems and servicing 25 million Nigerians who are not connected to the national grid. The scheme offers an option of outright ownership by beneficiaries possibly at a rough estimate of N4, 000 per month for a period of 3 years. Nigeria’s Federal Government said this will provide value addition to the economy in the area of job creation for at least 250, 000 persons and the ramping up of local content in solar equipment manufacturing sys-
tems installation and maintenance. “Our Solar Home System was designed to be a game-changer in the renewable energy space, in other words, it is not just a programme to provide off-grid power alone, but one that creates opportunities for the development of the local capacities in the assembly, manufacture and even maintenance of equipment,” said Yemi Osinbajo, Nigeria’s vice president, at a recent virtual engagement with stakeholders. Osinbajo further said, “We have seen quite a bit of interest already from international and local players across the off-grid solar value chain, there is indeed a lot of interest that we are seeing.” The Solar Connection Intervention Facility will complement the Federal
government’s effort of providing affordable electricity to underserved rural communities through the provision of long term low interest credit facilities to the Nigeria Electrification Project (NEP) pre-qualified home solar value chain players that include manufacturers and assemblers of solar components and off-grid energy retailers in the country, said the REA. “The banks that are keyed into this have already shown a great deal of interest and leadership in this particular area and we commend them for what they have done so far. We hope that we will be able to work closely with them as we go ahead. And same with all of the assemblers, manufacturers of off-grid systems,” Osinbajo said. Commercial banks in Nigeria have very little appetite for lending to the
off-grid energy operators and many cite a lack of a clear path to cashflow, difficulty in scaling operations and uncertaintity about profits as major impediments. Only a handful of Nigeria’s commercial banks have Renewable Energy Desks. While calling on commercial banks to support the Federal Government’s drive to develop the local capacity for the entire solar energy sector, the Vice President commended Sterling Bank for its stand financing off-grid power projects in the country. “I like to highlight Sterling Bank’s continued support for the Off-grid space in partnership with the CBN’s development finance group. We have seen a couple of these huge transactions and we are hoping that we will be able to see more of these kinds of transactions and we are hoping that all our friends and partners will be able to collaborate with us. “This programme, of course, can’t work without the commercial banks, and I will like to thank the UBA, Sterling Bank, First Bank, and Fidelity Bank for being at the forefront of off-grid financing and I will like to encourage you to be our anchor banks to drive the transactions at an accelerated but structured manner. “As you know, the CBN is committed to this, and we hope that this partnership will be one that we will be able to leverage to achieve great things in the coming months. Please
leverage on the funding opportunities that have been offered and all of our internal people are willing to work to ensure that you succeed,” the vice President said. Industry operators are also excited that this could change and are suggesting ways the programme can be retooled to benefit the sector. Sustainable Energy for All in a report said that to successfully deliver on the objectives of the Solar Power Naija Programme and increase local participation in the upstream value chain, it proposed four actions that should be taken. The report canvassed for renewed focus on sharpening key enablers in existing policies to strenghten ease of doing business and industry attractiveness. These include waivers to solar system components, access to finance, subsidies and grants and monitoring reporting of local content. The report recommended access to data (energy audits and geospatial data) to enhance deployment execution, improve operator portfolio performance and reduce development costs. It also called for access to financing, subsidies and grants to scale the indsutry and to galvanise the private sector to make its counterpart invesemnts especially in PV and battery assemblyto reduce product costs and create jobs
METKA delivers off-grid hybrid power project to second Nigerian university DIPO OLADEHINDE
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s part of the Federal Government’s energising education programme, METKA Power West Africa, a firm that specialises in the construction of large-scale energy projects has delivered its second project, a 1.35MW hybrid power project for the Federal University of Petroleum Resources Effurun (FUPRE), Delta State. The FUPRE power plant is the second project METKA is delivering, following the commissioning of the 7.1MW power plant in Bayero University Kano in September 2019, another project under the Energising Education Programme. Concerning the FUPRE power
plant, Evangelos Kamaris, managing director of METKA, said the benefits of the project include “access to uninterrupted 24-hour power supply for over 4,000 students and teachers, and the decommissioning of several small generators, an achievement worthy of commendation to the Federal Ministry of Power and the leadership of the Rural Electrification Agency (REA).” “The project will, no doubt, improve effectiveness in research, teaching and learning with a remarkable impact on the quality of graduates from the university,” Kamaris said in a press statement. Goddy Agba, minister of state for Power, commended METKA for its strategic partnership and the
excellent execution of the project while stressing the government’s commitment to enabling the development of the educational sector. He said the ministry’s power policy specifically targets education to ensure that all federal universities have access to reliable electricity, given the importance in catalysing economic productivity. METKA was awarded the Engineering, Procurement & Construction (EPC) contract to deliver hybrid solar plants to four Nigerian Universities, namely Bayero University, Kano; Nnamdi Azikiwe University, Awka; Federal University of Petroleum Resources Effurun; and Usmanu Danfodiyo University, Sokoto in February 2018.
METKA will provide full EPC services for power generation plants, street lighting and training centres, as well as operation and maintenance services, for four universities. All four universities will be powered by hybrid power plants utilising renewable energy sources integrated with energy storage and diesel generation as backup, enabling reliable power supply for the universities totally autonomously from the grid. In total, 7.5MW of off-grid hybrid power will be installed, incorporating the EXERON technology and the latest developments in mini-grid design, the company said in a statement.
EXERON provides intelligent utilisation of alternative power sources (solar PV, diesel generating sets, grid connection) and advanced battery management to ensure the optimal use of available resources. The initiative will be implemented by the REA, aiming to provide uninterrupted power to a number of federal universities and university teaching hospitals across Nigeria. “The Energising Education Programme is being implemented in three phases, funded by the Federal Government of Nigeria, the World Bank and the African Development Bank respectively,” said Ahmad Salihijo, MD of REA.
EDITOR: Isaac Anyaogu / Analysts Stephen Onyekwelu, Dipo Oladehinde / Feedback: 07037817378, / email: isaac.anyaogu@businessday.ng,
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Tuesday 02 March 2021
BUSINESS DAY
ENERGY INTELLIGENCE OIL
GAS
PETROCHEMICALS
POWER
Nigeria must develop own energy transition process - operators ISAAC ANYAOGU
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il and gas industry operators say Nigeria should not be stampeded into adopting Western countries’ energy transition plans that could hurt its development, but to transit to clean energy at its own pace, using its most available resource- gas. On account of economic shutdowns to halt the pelting march of a pathogen, the world recorded about 8 percent drop in global emissions on the back of reduced demand for oil. Now, western nations are preparing rules to further blunt the rapid rise of crude. The European Union is proposing a carbon border charge, which will impose the levy on
non-EU competitors unless they commit to lowering their emissions. While this is essentially to ensure the survival of its own industries, it demonstrates how oil dependent nations who try to jettison oil quickly can be hurt, operators say. Roger Brown, CEO of Seplat
Petroleum Development Company, in a presenation at the Nigerian Gas Association (NGA) Multilogues, last week, said that Western Nations still power their grid with hydrocarbons, urging the Nigerian government to prioritise its interest. “We should not be distracted
by talks about where investments are being directed but we need too set our own transition agenda,” Brown said. Brown said that Nigeria’s grid requires a baseload that may not be fully met by renewables and it should prioritised meeting is energy needs with gas now and renewables in the future. Nigeria’s developmental needs require it must create affordable energy to get healthcare, food security, education and energy access where it needs to be and gas is the route for that, Brown said. Osagie Okunbor, managing director SPDC & Country Chair, Shell Companies in Nigeria (SCiN) cautioned that Nigeria should not be so fixated with energy transition to renawables at the expenses of its most viable
Will electric cars displace oil? STEPHEN ONYEKWELU
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redictions about peak oil, aggressive energy transition programmes among countries and international oil companies are widespread and electricity offers an alternative energy source to power vehicles with the possibility of displacing oil. Global sales of electric cars accelerated fast in 2020, rising by 43 percent to more than 3 million, despite overall car sales slumping by a fifth during the coronavirus pandemic. Tesla was the brand selling the most electric cars, delivering almost 500,000, followed by Volkswagen. However, light bulbs were also thought to displace oil when they provided an alternative source of lighting in the 19th Century. But other uses were soon found for oil with the invention of cars. Some of the earliest civilisations relied on oil. Already in 3, 000 BC oil that had bubbled to the surface was used by the ancient people of the Middle East. The Babylonians, that is, modern-day Iraqis – used oil to waterproof their boats and as mortar in building construction. The Egyptians also used oil in the preparation of
mummies to help preserve corpses. However, it would be a long time before the full potential of this mysterious black substance would be understood, or exploited. In the mid - 1800s the modern oil industry began with the discovery of the world’s first commercially viable oil well in the USA. One product, kerosene, became popular as a cheap, clean fuel for lighting homes. A few years later, America’s first commercial oil well was created at Titusville, Pennsylvania when a new technique was pioneered using a pipeline to line the boreholes to allow deeper drilling. The success of the well, plus a demand for kerosene, triggered an oil rush and began a major new industry. “Oil has suffered near death several times. It is natural of human systems to be born, peak and die. Many thought the invention of the light bulbs would displace oil but then came internal combustion engines and the aviation industry,” a petroleum engineer and energy consultant at the Centre for Petroleum, Energy Economics and Law at the University of Ibadan said in a phone interview. In the race to a net-zero carbon future, clean elec-
tricity is emerging as the ultimate fuel of the future, with biofuels to fly planes, and hydrogen for energy storage. The Hague-based Maarten Wetselaar, integrated gas and new energies director at Shell Global said at the Great Energy Debate 2020 that the fuel of the future is clean electricity. “That is going to be the one that will dominate the energy systems for energy consumers. Alongside that there will be biofuels to fly planes, there will be hydrogen to store energy, but the energy that customers will use will be clean electricity. We need to phase out oil and gas but it will not happen tomorrow.” Six years ago, the Paris Agreement sought to strengthen the global response to the threat of climate change by keeping temperature rise this century well below 2 degrees Celsius, and above pre-industry levels and pursue efforts to limit the temperature even further to 1.50 degrees Celsius. Renewable energy and electric cars provide quick paths to a low carbon emission future. Nevertheless, “oil is difficult to displace and remains cheaper than renewables. Additionally, petroleum derivatives
would continue to drive demand for oil. Rising demand for petrochemicals such as plastics, raisins and fertilizers will keep oil relevant for a long time,” Akinkpelu said. Last year some executives resigned at Royal Dutch Shell in protest against what they described as the company’s slow adoption of renewables despite significant investments in greener fuels in preparation for a net-zero emission future. According to a Financial Times report, the upsurge of resignations came just weeks before Shell was set to announce its strategy for the energy transition. While some executives have pushed for a more aggressive shift from oil, top management was more inclined to stick closer to the company’s current path, according to four people familiar with the matter. Ben van Beurden, chief executive officer of Shell has said investment into lower-carbon businesses such as biofuels and solar power “needs to accelerate”. However, he has also said that oil will continue to be a huge cash generator and the company will expand its gas division. “There is going to be a place for our upstream business for many decades to come,” he recently told a conference.
resources, gas. Okunbor said that the country’s regulatory approach to gas should not be too focused on extracting rent as it did oil, but to create a fiscal and regulatory environment that will spur investments into gas projects because they have a salutary effect on the economy. The industry experts warn that time is running out and Nigeria must quicken action on developing its gas resources. “The higher level of resilience seen in gas producing nations signals that Nigeria needs to deepen its domestic gas industry as quickly as possible to dampen the debilitating fiscal impact of overdependence on crude oil,” said Joe Audrey Ezigbo, outgoing president of the Nigerian Gas Association.
Why India is rekindling appetite for Nigeria’s crude DIPO OLADEHINDE
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ith domestic demand for oil products starting to rise back to pre-COVID-19 levels, India, one of Nigeria’s largest crude oil buyers is buy more oil due to resurgent demand for gasoil, gasoline, LPG and naphtha. According to global oil and gas consultancy FGE, India’s state-run refiners such as Hindustan Petroleum Corp. and Indian Oil Corp. have been on a buying spree, issuing a number of tenders for January and February -loading crude. “It has been especially good to exporters like Nigeria and the U.S. whose crude produces more gasoline that’s in high demand as the pandemic pushes people to private cars instead of public transport,” FGE said in a note. The report noted that spot crude imports into the world’s third-largest oil market will rise by 10 per cent to 15 per cent this year from 2020. “The pullback from traditional term suppliers came when refiners maximized throughput to align with the robust domestic demand recovery,” said Senthil Kumaran, FGE’s head of South Asia oil. “They were forced to scramble for spot supplies to bridge the shortfall.” India has been one of the fastest-growing economies in the world, with industrialization widening its appetite
for crude but, the impact of COVID-19 halted economic activities last year, however, a recent increase in gasoline demand reflects how gradually the economy is rebounding. “Gasoline demand growth is expected to sustain because once you are used to private commuting, it’s difficult to shift back to public transport,” Hindustan Petroleum Chairman Mukesh Kumar Surana said. “Refineries will explore all possibilities to increase gasoline production.” Bharat Petroleum Corp., India’s second-biggest stateowned refiner, has increased the proportion of spot crude purchases to about 45 percent from about 30 per cent normally, according to a statement from the firm’s Finance Director N. Vijayagopal. The company plans to keep about 40 percent of supply in at least the medium term. West African crude exports to India -- the world’s third-biggest energy consumer -- averaged around 430,000 bpd in the first 10 months of 2020 compared with 600,000 bpd in 2019, according to commodity data company Kpler. India is the largest buyer of Nigerian oil and its renewed buying has supported values at a time when Nigeria’s core European market has seen supply coming back online from Libya and a fall in demand as a result of fresh COVID-19 lockdowns.
EDITOR: Isaac Anyaogu / Analysts Stephen Onyekwelu, Dipo Oladehinde / Feedback: 07037817378, / email: isaac.anyaogu@businessday.ng,
Tuesday 02 March 2021
BUSINESS DAY
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property&lifestyle Here’s how FMBN leverages good financial accounts for business growth CHUKA UROKO
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mong many agencies of government, good financial accounts are known to be necessary, but hardly employed or leveraged for the growth of the business side of such agencies. Some agencies, however, stand out and among these is the federal mortgage bank of Nigeria (FMBN), the country’s apex mortgage bank, which oversees the operations of the National Housing Fund (NHF). The management team of the bank acknowledges the business imperative of having up to date financial statements, which explains why they moved with speed to correct the past and has now succeeded in re-setting standards for the bank’s financial accounting going forward. In the business world, financial statements are important because they provide a snapshot of an institution’s status at a particular point in time, giving insight into its performance, the status of the business, debt position, result of its operations, cash flow, and overall conditions.
This explains why the ‘new’ management of the bank under Ahmed Dangiwa as the MD/CEO has elected to keep good, audited financial accounts or statement. However, like many other public institutions, FMBN has had its fair share of periods when it failed to comply with financial regulations. As of April 2017, when the current management team came on board, the bank’s financial statements for the period 2013 to 2016 were outstanding. Those who ran the bank during this period failed in their statutory duty of rendering annual audited accounts to the regulatory authorities as required by law. “What has set FMBN apart from other public institutions with similar history of inherited unaudited accounts rests on the prompt and positive action that it took to fix the problem,” John Ikyaave, an Abuja-based housing policy analyst, explained to BusinessDay. “In what can be termed a good contrast, the new FMBN management recognized the importance of complying with the financial regulations and set in motion an institutional
Ahmed Dangiwa, MD/CEO, FMBN
machinery towards clearing the backlog not long after it came on board. This was the right thing to do,” Ikyaave added. Essentially, shareholders need information to make informed decisions about their equity investments. This also applies to the FMBN as a publicly owned housing development finance institution. The bank’s shareholders include the Federal Government of Nigeria (FGN), which holds a 50
percent shareholding valued at N2.5 billionn; the Central Bank of Nigeria (CBN), which holds a 30 percent shareholding valued at N1.5 billion and the Nigeria Social Insurance Trust Fund (NSITF) with a 20 percent shareholding stake valued at N1 billion need to be kept abreast of facts regarding the bank’s operations. Nowhere is this information more critical than the drive by the FMBN management for the N500 billion for
its recapitalization. Housing industry stakeholders including FMBN owners agree that its current N5billion capital base is grossly insufficient for an apex mortgage institution. According to Ikyaave, this gives the bank little financial roots to leverage funding to drive its affordable housing delivery mandate, pointing out that the financial books are a critical foundation for acting. It is promising that the FMBN management understands the necessity to tidy up its finances as a prerequisite for doubling the pressure on government to act. As a development finance institution with the mandate to seek for funds from the capital markets – local and abroad – potential FMBN partners and investors also require this information as a baseline for their decision to invest or not to engage. In pursuit of its business growth strategy, the Dangiwaled management team has cleared the 4-year backlog of unaudited accounts for the period 2013 – 2016, signaling a sharp break from the past. The team has also demonstrated a willingness for financial accountability by
preparing and submitting its financial accounts for 2017 and 2018 to regulatory authorities, while that for 2019 is already approved and awaiting sign off. With work already started on the 2020 financial, FMBN now appears set to have up-to-date financial statements within this year. It is, perhaps, on the back of this confidence that the bank was quick to issue a public rebuttal to some news reports that misconstrued what transpired when its CEO made a presentation to the House Committee on Public Accounts. Some of the news stories inaccurately reported that FMBN had five-years of unaudited accounts and wrongly claimed that the House Committee “chided” FMBN over the unaudited accounts. In the rebuttal, FMBN said the reports were wrong and inaccurate, explaining that the management had upon resumption of office in 2017 set up a Financial Accounts Taskforce with the mandate to clear the four-year backlog, which it inherited, to ensure that the bank’s financials are brought up to date as part of its strategic turnaround plan.
Expectations as top brand influencers become Periwinkle’s ambassadors Roads infrastructure: FG demolishes
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ecently, Periwinkle Residences Limited, a real estate investment and development firm, unveiled Nigeria’s Reality TV show stars and ‘BBN Lockdown edition duo’, Ozoemena Joseph Chukwu and Nengi Rebecca Hampson, as its newest ambassadors, raising expectations among market watchers. The slowdown in the economy and the need for investors/developers to remain in business, has given rise to innovation and creativity in real estate business, especially in the area of branding and marketing of products. Adoption of celebrities as brand ambassadors is gaining traction as marketing gimmick. Ozo and Nengi are muchloved housemates of the just concluded BBN Lockdown edition, who were known for
their affection towards each other. Both are Lagos based celebrities, models and top brand influencers with over a million followers on their social media platforms. The duo have exciting and vivacious personalities which, in addition to their large social media following, are expected to help drive the Periwinkle brand higher and reposition its investment profile. Ozo and Nengi are not new to the Periwinkle brand having invested in one of the developer’s most iconic projects, Oxygen Apartments, which is arguably the most luxurious residential apartment in Lekki Phase 1. “Signing two brand ambassadors was expedient and a strategic move to increase our brand awareness and also reposition our luxury products and services in line with
fresh challenges in Nigeria’s real estate sector,” Chiedu Nweke, CEO of the company, noted at the unveiling event. The brand ambassadors expressed joy and delight in their remarks, describing the agreement signing as another milestone in their career path and stated that it was a pleasure Periwinkle Residences names BBN duo new Ambassadors teaming up with a company that was genuinely committed to redefining the way investment in real estate is perceived and delivering exclusive lifestyle to the industry. “We are honoured to be held in such high esteem by one of Nigeria’s most professional and dynamic property developers and look forward to promoting Periwinkle Residences in the country and beyond,” s Ozo said.
L-R: Ozoemena Joseph Chukwu; Chiedu Nweke; CEO of Periwinkle Residences Limited, and Nengi Rebecca Hampson, when the ‘BBN Lockdown edition duo’ were signed Ambassadors of the company in Lagos recently www.businessday.ng
Both noted that the location of the estate, its serene environment, the Waterview, the value and expected return on investment associated with properties at the estate are firstof-its-kind and thanked the management for conceptualising and delivering such iconic project, particularly for making them part of their history. The duo noted that Periwinkle lifestyle was an investment haven for real estate investors specifically because of its location at Lagoon District, Lekki Phase 1, Lagos which is one of the most sought-after. The estate presents unique residences and prides itself on the tenets of innovation, quality and exclusiveness. Each apartment in the estate is designed by top interior designers with an enviable blend of foreign and timeless trends that merges into contemporary themes. The estate incorporates first-class amenities and luxury materials in delivering exceptional services and firstclass luxury living experience, giving buyers a perfect blend of live, work and play environment. Nweke said he was confident that, with partners like Ozo, Nengi and other stars who would be appointed as Brand Ambassadors, the company’s efforts at redefining luxury lifestyle, creating wealth and rebranding real estate in the country would become flexible through their influence.
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shanties on Apapa-Oshodi Expressway RoW
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he federal ministry of works and housing, on Sunday, demolished illegal structures and shanties on the Apapa-Oshodi Expressway right of way (RoW) to enable the contractor handling the reconstruction of the expressway to commence work on the service lane. To this end, Lagos State Special Taskforce was invited to demolish and clear shanties at Ladipo market, Toyota and Charity bus stop, to allow work on the expressway inward the Oshodi corridor and return sanity to the highway. “The minister of works visited the place on January 14 this year to address the traders, mechanics and car dealers and told them to move away from our right of way because we want to work on this service lane and do beautification of the right of way,” Olukayode Popoola, the federal controller of works, Lagos, explained. According to the controller, after the minister’s address, the ministry gave the traders two weeks and served notices to that effect, which expired on 29 January 2021. Popoola also stated that before the expiration of the notice, he had called a meeting of all the unions in the Ladipo market soliciting their support and, “they all agreed that they will move away.” He said that after the expi@Businessdayng
ration of the notices given by the ministry and his personal intervention on the issue, the taskforce equally gave the traders notices which expired on February 7,2021. “Till today, they remain adamant and have refused to remove their vehicles and others, hence the taskforce was invited to clear all the shanties so that we will be able to do our work on the service lane, as well as beautify the right of way. “ We are reclaiming all the right of way along Lagos-Apapa-Oworosoki expressway all the way to Ojota. If they move out on their own, there will be no enforcement; however, if they do not move, we shall enforce. Going forward, if they want to use our right of way, they will apply to the federal ministry of works for approval and only the minister has the power to grant such approval,” the controller said, adding that it would only be for beautification of the right of way and not for mechanics or other business interests. Some of the traders at the Ladipo market who spoke to BusinessDay said notices were served long before the demolition exercise on Sunday morning. According to the traders, trucks were parked on the road due to the nature of the road and not that they are adamant of moving away or wanted to test government’s resolve.
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Tuesday 02 March 2021
BUSINESS DAY
BDTECH
In association with
How Crypto exchanges in Nigeria regulate users FRANK ELEANYA
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he decentralised nature of the cryptocurrency market has different interpretations for different actors. For consumers, it means freedom from third parties like the Central Bank of Nigeria (CBN) and banks, faster transactions, and more convenience. For regulators like the CBN, it means unchartered territory, opacity, and “thin-air” transactions. But for cryptocurrency exchanges it is a challenge to stay ahead of the game, to ensure criminals who may also have open access to the blockchain don’t take advantage of unsuspecting users and their platforms are constantly secure. Cryptocurrency related-crimes reached a peak in 2019 according to a report from Chainalysis. But the market has seen a significant drop in 2020 because operators started to tighten up controls that made it unattractive for many criminals to venture into space during the period. Interestingly, the Nigerian crypto market is considered one of the safest despite being one of the largest trading countries in the world. Experts alluded to varying degrees of factors as being responsible. First, many cryptocurrency exchanges in Nigeria follow a risk-based approach to customer acquisition in line with international best practices and based on the Financial Action Task Force (FATF) Recom-
mendations and Guidance for Virtual Assets. Onboarding customers This is the first step to becoming a user of exchange and if done wrong could lead to not only an unsatisfied customer but also an unsafe exchange. Some criminals mask as new users to gain entry. Hence, exchanges carry out specified levels of due diligence for new customers. These may include customers providing Bank Verification Number (BVN) or National Identification Number (NIN) which are verified and compared with data as well as email and phone number confirmations. Some exchanges also use third-party verification tools to verify government-issued identity documents such as international passports, driver’s licence, voters card, and National ID. These documents can also be compared against the BVN or NIN and a self-
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portrait photo. In some cases, exchanges have to carry screening against persons that are politically exposed. There is also comprehensive and ongoing customer risk profiling with higher-risk customers being subject to enhanced due diligence which includes confirmation of source of funds. A source in one of the exchanges also said that some exchanges rely on Chainalysis, a blockchain monitoring technology services provider, to identify the direct and indirect origin of transactions for all identified addresses and monitor in real-time the exposure of all Nigerian customers on the blockchain. The company is trusted by organisations such as the United Nations Officer on Drugs and Crime (UNODC), Europol, and Barclays Bank, to provide similar services. Risk identification and management Exchanges also con-
duct periodic anti-money laundering (AML) and counter-terrorist financing (CTF) assessments to facilitate the management of risk and this goes into a risk register as is best practice. It is used to identify potential risks in a project or an organisation, sometimes to fulfill regulatory compliance but mostly to stay on top of potential issues that can derail intended outcomes. The risk register is regularly assessed to help ensure that policies remain up-to-date (meet regulatory requirements) and that procedures are operated as prescribed including regular reviews of information technology (IT) security measures and risk management procedures to ensure efficacy and compliance. These are monitored on an on-going basis and are frequently reviewed and audited (including external audits). Fraud controls The controls are applied in a tiered system. Exchanges such as
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Quidax, Binance, Buycoins, Chiji14exchange, Luno, and Naijacrypto run this tiered system that is similar to the guidelines from the CBN to banking and non-banking financial institutions which ensures transactions limits based on the level of KYC (Know-Your-Customer). Customer conduct or behaviour controls Exchanges are obliged to report on and remove customers that are strongly suspected or confirmed to have engaged in fraudulent activity. They do this by using state-ofthe-art fraud detection capabilities that take into consideration aspects such as account and device behaviour, deposit, and transfer velocity, and sending or receiving exposure. Also, Luno and Quidax proactively prevent transactions from being processed to cryptocurrency wallet addresses identified by Chainalysis as being associated with illicit activity.
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The exchanges and fintech are also planning a local Blacklist of fraudsters as a collaborative effort. Third-Party controls An exchange like Luno prohibits third-party deposits and international deposits on accounts. The exchange requires debit and credit card transactions to follow 3D secure authentication. 3D Secure requires customers to complete an additional verification step with the card issuer when paying. Typically, customers are directed to an authentication page on their page’s website, and they enter a password associated with the card or a code sent to their phone. Investigation and reporting Under Nigeria’s AML and CFT regulatory framework, some exchanges go as far as registering as reporting entities and comply with the obligations. Exchanges also work closely with law enforcement, financial and regulatory bodies globally to investigate and prosecute criminal conduct in the industry. It might be early days but the cryptocurrency market is far from the rowdiness that regulators assume is second nature to it. As Yemi Osinbajo, Vice President of Nigeria, noted on Friday, the regulation of cryptocurrency transactions puts the country in a better position to reap the benefits of the innovations in the market, and businesses in the market may have laid a foundation that could be built upon should the CBN decide it is ready to walk the regulatory rope.
Tuesday 02 March 2021
BUSINESS DAY
21
Media business Brands must own customer data to survive, says Terragon CEO, Elo Umeh Daniel Obi
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EO of Tarragon, Elo Umeh has explained the critical role ownership of Customers First-Party data plays to brands and the exponential value it adds to Online Advertising. According to him, “First Party Customer data is the most valuable data businesses own and it is the starting point for any form of customer engagement. Now more than ever, the need for businesses to own and manage first-party data could be the difference between staying in business and going under.” “Customer behaviour is dynamic and ever-changing as well as the landscape within which they operate. The first step towards understanding and responding to customer needs is through data – to prevent churn and increase lifetime value”, he said in a statement. First-party data refers to information brands collects directly from their customers or audiences, from various touchpoints such as Customer Relationship Management (CRM) software, actions or interests demonstrated across websites or apps, customer feedback, completed customer surveys, forms, etc. First-party data is usually consented to and so privacy concerns surrounding it is minimal. Speaking on how some forward-thinking brands are
Elo Umeh
taking advantage of first-party data, the Terragon Chief Executive Officer said, “Our Customer Data Platform (CDP) was used by a top global FMCG brand in Nigeria to surpass its target of building a verified database of its customers with 1 million first-party data. Owing to the success of the previous target, the brand is currently in discussion with us to grow that database to 4 million this year.” He added, “A number of top tier banks have also been using our CDP to enrich their first-party database for various levels of customer engagement including cross-selling and upselling their products and they have reported an improvement in returns on their Ad spend.” Over the years customer journey has become a multiplatform and multi-device, such that their footprint goes across various touchpoints including desktops, mobile phones, TVs, apps, watches
and lots more – thereby creating the need for Advertisers to have a unified view of each customer. With the help of a number of tracking methods – including the use of third-party cookies, advertisers have been able to collect data and follow customer journeys and tailor ads to suit their preference and interests. However, with customers’ increased attention to data privacy, stricter regulations to enforce compliance and phasing out third-party cookies especially by Google Chrome which tracks over 60% of internet users, the ability to track customers and serve personalized Ads this same way is significantly threatened. While a few solutions are being developed to solve this, the importance of First-Party Data remains a common consensus; giving rise to the importance and need for a software to aggregate and manage data in a privacy-compliant manner – a Customer Data Platform (CDP), Umeh said. A CDP is designed to pull data from multiple sources and touchpoints and create a 360-degree view of each customer. This allows for personalised and contextual advertising. For instance, to market a specific brand of beer to male customers in the East during a premier league football match, as against a female in the North; or promote travel insurance to a bank customer who just made a payment for a flight ticket. This sort of segmentation and personalised marketing capability is made possible on
the Terragon CDP. Uniquely equipped with over 108 million profiles to enable enrichment of first-party data using strict data privacy compliance methods, advertisers are able to create audience buckets based on various criteria including demography, location, behaviour and interest; and target them via available multichannel options – offline (mobile) and online (web). Speaking on the uniqueness of the Terragon CDP, Umeh said:“No one knows Africans like we do. We are the only Africa-founded Customer Data Platform (CDP) Company in the market today and the only Africa-founded CDP partner for the Facebook Conversions API. Our unique Telco integrations give us access to over 108 million consumer profiles, driving our enhanced market relevance and reach by offering seamless offline (mobile) and online (web) channel access and continuous data ingestion. With these very strong Unique Selling Propositions, some of the largest digital platforms from Google, Facebook, Telcos such as MTN, and several others have given a nod to our platform”, he said in the statement. The Terragon CDP utilises Artificial Intelligence (AI) and well modelled Machine Learning (ML) to allow Advertisers use First-Party Data as a base for creating lookalike audiences that mirror their best customers, thereby expanding their reach (beyond their existing customers) and giving a higher chance of conversion.
Facebook partners JA, empowers young people with digital marketing skills
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A Nigeria, according to a statement has announced a partnership with Facebook in line with the vision of raising a generation of digitally-inclined young business leaders, This new partnership will result in the incorporation of a Digital Marketing module into JA’s flagship Company Program to empower young people with Digital Marketing skills. With the growing need for digital literacy among young people, it was pressing to expose students to digital tools in order to help them bring their business online and market their brands through JA Company Program. JA Company Program teaches secondary
school students how to start and run their own business, develop a product or service, form a company, choose a business name and elect company officers to oversee the operation of the company. The program aims to help students move a business idea from concept stage to reality and help them succeed in a global economy. The Digital Marketing module incorporation was however intended to enable students to build their online presence, connect to a larger audience and grow their businesses. In addition to this, the COVID-19 pandemic amplified the need for these digital strategies.
Mothers underscore importance of consuming healthy beverages
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others have underscored the importance of consuming healthy beverages for the overall health and long-term development of their children. Being a mom is a lot like being a custodian. Everyone is looking up to you to figure out everything from what to drink, to where to go, and what to do every day. Mothers desire what is best for their kids to grow and evolve by guiding them along the way, findings have shown. A statement said for instance, Capri-Sun has endeared itself to mothers over the years by creating a variety of fruit drinks made with ‘Clean Recipe’. A ‘Clean Recipe’ essentially means foods or beverages made from natural ingredients with no artificial colours, no artificial sweeten-
ers, no artificial flavors and no added preservatives. Against the background of a plethora of unwholesome kiddies’ fruit drinks that have saturated the market, mothers have become more observant about the nutritional value of beverages to ensure that only healthy fruit drinks with a ‘Clean Recipe’ like Capri-Sun make it to the snack boxes and meal tables for their children. Josephine Edet, a mother of three children, according a statement, says she takes special interest in what her children consume, because of many unwholesome fruit drinks in the market that cannot pass the tests of quality and safety. “As a mom, growing up, I enjoyed Capri-Sun. Because of its consistent taste and quality over the years, it is a brand I trust.
PICHA Stock unveils Afrofemme collection in celebration of African women
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n celebration of International Women’s Day, the Afrocentric stock photography company, PICHA Stock has partnered with the lifestyle, entertainment, and fashion website, Bella Naija to launch the Afrofemme collection, according to a statement . Women around the world have in various capacities shown leadership with extraordinary contributions to our communities. Afrofemme relates to characteristic of modern women of African descent based anywhere in the world. The Afrofemme collection celebrates the beauty, intelligence, resilience, and creativity of the Afro woman. The role of Black women throughout history is hard to ignore and this collection of licensable images is here to honor them. Be it bottom-up from the home where the foundations of society are shaped, to top-down from government and policy that affect masses, or lateral throughout industries and sectors, women have played key and influential roles
that cannot be underplayed. History gives us names like Jamaica’s Queen Nanny of the Windward Maroons, Ghana’s YaaAsantewaa and Nigeria’s Funmilayo Ransome-Kuti who were influential in political leadership, military strategies and were front liners in ending the colonial rulership. South Africa’s Miriam Makeba through the power of her sound in music reignited her people’s flame against apartheid and Kenya’s Wangari Maathai who used environmental sustainability as a tool for economic empower-
Josiane Faubert, founder, PICHA Stock www.businessday.ng
ment. In the present day, we have seen young women like Allyson Felix running in the stead of Wilma Rudolph, history’s fastest woman in the world. We are seeing younger ladies like Amanda Gorman speaking on the poetical stages set by Phillis Wheatley and Maya Angelou, a billion more obtaining their college education through the wide vision lenses of Mary Jane Patterson. Today, more black female nurses are following the steps of Mary Eliza Mahoney. NASA, Engineering, and Astronomy give us names like Mae Jemison, who was the first black woman in space, and Lucy Quist in global telecommunications. We have also encountered more women like Abena Osei- Poku in the stead of Maggie Lena Walker leading global banks, Oprah Winfrey spearheading women in wealth and wielding financial power, Ngozi Okonjo-Iweala, leading the fronts of global trade and treasury systems, and the millions of women entrepreneurs
running their own worlds in every way possible. We are rest assured of the ones who will soon follow Kamala Harris. The list is inexhaustible. “Because our minds are wired visually, it was very important to put this collection together, highlight the Afrofemme, and ‘kill the stereotypes typically associated with Black women,” says Josiane Faubert, founder of PICHA Stock. Black women deserve to be highlighted in a nonbinary way, in their true diversity as we know that stereotypes and prejudice only perpetuate other people’s biases leading to discrimination.” The Afrofemme collection aims to uplift and inspire while shifting perceptions and helping to change the visual narrative of the Afrofemme. Representing women from all walks of life internationally, the goal of the collection is to empower marketing, advertising, and communications professionals to include more images of Black women of African descent in their campaigns.
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Cadbury Nigeria rewards Bourn Factor Season 2 winners
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adbury Nigeria, a part of Mondelēz International, and producers of the iconic Bournvita, a cocoa beverage drink, has rewarded the top three winning schools in the second edition of the Bourn Factor School Talent Hunt Competition, which took place nationwide last year. The winners were unveiled recently at the Company’s head office in Lagos. Divine Promotion Nursery and Primary School in Ile-Ife, Osun State, won the grand prize of N3 Million. Success Foundation Academy in Abeokuta, Ogun State, which came second, won N2 Million, while Potter and Clay @Businessdayng
Schools in Ilesha, Osun State, in the third position, won N1 million. During the prize presentation, Oyeyimika Adeboye, Managing Director, Cadbury Nigeria, said one of the Company’s values is to “love our consumers and our brands,” adding that the organisation has continued to seek numerous ways to demonstrate this. “The BournFactor initiative was launched in 2019 to enable children from different primary schools across the country showcase their talents, compete, and win prizes for their schools, while raising money towards a social cause,” she said.
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Tuesday 02 March 2021
BUSINESS DAY
INTERVIEW
We are changing perceptions of Nigerians on Ajisegiri Benson is a water engineer who has, since 2015, been the Director of Water Supply, Federal Ministry of Water Resources, having started as a water engineer in 1981 and risen through the ranks. In this interview with a BusinessDay team, the graduate of civil engineering from the Obafemi Awolowo University and fellow of the Nigerian Society of Engineers highlights the challenges of making clean water accessible to Nigerians, especially in the rural areas. He also highlights the ministry’s policies and programmes to ensure that all Nigerians have access to clean, safe and affordable water supply by 2030, as well as tackle the menace of open defecation. He also speaks about the Water Resources Bill and how it will drive private sector participation in the sector.
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ow important is your department, what does it do? The department of water supply in the federal ministry of water resources is a very important department that examines policies, programmes, and projects of the federal government to bring water supply to the homes of Nigerians. Also, through advocacy, encourage and motivate state governments to contribute their quota into ensuring that water supply is brought to the homes of Nigerians. You will agree with me that water is life. No one survives without water. The department is so central, that is why it is called water supply, and it’s the central department in the federal ministry of water resources. The Minister has been taken up severally on the issue of water supply. National access to water supply in general, both from municipal water supply and from household water supply is about 71 percent, meaning that 29 percent of Nigerians are still without access to wholesome water. They get their water from streams and other sources that are not hygienic for human consumption and this is why many Nigerians are unhealthy. If you go through the statistics of health issues in Nigeria, you will discover that up to 70 percent are water-related. If you get water that is wholesome, it improves your health and when you have health, you become more productive and that surely impacts on the economy. As one of the key departments in the ministry, what projects have been initiated and implemented under you as director? When I assumed duty as the director of water supply in 2015, the first thing I had to do was to look at the policy driving water supply in Nigeria as well as the water resources policy in general. We are so lucky also that we have a minister that was appointed about the same time who is also an expert in water resources development and passionate on water supply services to Nigerians. On resumption, I saw that we have to look at water based on the settlements of the people and this is enshrined in the policy; that
means we have to look at urban people, the rural people, then those who are in between, which are the small towns, because the services to these three socio-economic groups are different. For the rural water supply, we initiated what we call Nationwide Rural Water Supply Programme and because of the peculiar situation that the country was finding itself at that time. In some parts of the country, many people have escaped to temporary camps, what we call IDPs, where they do not have access to basic amenities. Then, we said we must have a programme that will address the water supply needs of such people. We have Nationwide Rural Water Supply and Water Supply to IDPs. We have done quite a lot for IDPs nationwide. We also addressed the needs of voluntarily settled populations, such as the National Youth Service Corps, the Immigration, Customs and Civil Defence officers Service personnel in the borders and some other formations, etc. across the country that do not have access to water. You have a plan in the rural areas, what about the urban areas? In the urban areas, there is a whole set up of an agency, established by State Governments that are expected to run water schemes sustainably to provide services to the people. In most cases we arrange development funds for them through International Agencies like World Bank, African Development Bank etc. They are the ones that will get the loan/credit and use them to upgrade their water supply schemes, give capacity to
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With more people healthy in this areas that we have intervened, I am very proud that more people are going to contribute to national development
their staff and generally reform their services so that they can run their scheme sustainably. What we are advocating to the state governments is to give them autonomy. Let them not depend on government, because that is where we have major challenge. The state governments are still treating their water agencies like regular civil service, which they are not. We are advocating that since they have been established by law to be an autonomous entity, and state governments should allow them run like that and that means to allow them to generate their own revenue, hire and fire their staff, motivate their staff and take procurement decisions. All state governments will do is set targets for them, monitor what they are doing, and if they don’t perform,
fire whoever is the CEO, bring another person that will run the place sustainably, like a professional organisation. So those are the sustainability issues that we use to drive the urban water supply programme. Also, we have the small towns water supply programme. In our own policies, small towns refer to communities that are between 5,000 and 20,000 people and we have a model that we are also using to serve them. Since this administration came in, we have done quite a lot. Small towns could be an institution, so we are also using this model to provide services to them and we have used the World Bank approach to strengthen capacity by setting up project development protocols and it is working. This is because we carry
people along under the programme, they plan their projects themselves, they tell us what they want to do and at times they design, bring it up, we support them with funds. They contribute a little fund into it; they take ownership, run and maintain the schemes themselves. These are the approaches that we are using to serve the different social groupings that we have in the country, Rural, Small Towns and Urban, with that, we have finished quite a lot of projects across the length and breadth of this country What would you say you are proud of achieving as a director in this department? I am very proud that we are focused and that has enabled us to bring water supply, which is an essential commodity, to the homes of Nigerians. These are
Tuesday 02 March 2021
BUSINESS DAY
23
INTERVIEW
being forgotten by government – Benson happening by reason of the initiatives that we have brought to bear. We have initiatives for Rural, Urban and Small Towns as previously mentioned, and they are working. We see that states and communities are now coming up for collaboration with us by reason of good performances they are seeing. We have received several letters of appreciation from communities. In some of them, you will even see their tears of joy on the letters. They say ‘something like this has never happened to them’. Some of them said they thought they have been forgotten and government does not know they are existing and now they have water. Some of them will even send photographs of where they used to get their water. So, I am proud that we have, at least, been able to positively change the perception of Nigerians that they are not forgotten by federal government. I am proud because we are contributing to the health of Nigerians and invariably the productivity of Nigerians and to the economic development of Nigeria in general. Because if you’re a farmer and you are sick you can’t go to the farm, if you are even in the city and you drink water that is not wholesome, you are bound to be sick and then you can’t go to work. What does that mean? You are not contributing to the national economy. But now, with more people healthy in this areas that we have intervened, I am very proud that more people are going to contribute to national development. Thirdly, we have been able to generate a lot of employment; welders, builders, suppliers, many of them who hitherto have packed up, today, they are doing very well because of the initiatives and contribution coming from the ministry. Especially pump sellers, many of them are doing very well, many welders are doing very well, even GP tanks, more are being sold today and that means more employment to those that are manufacturing them. As a highly experienced water resources engineer, what will you say about the water resources bill. Without it, you have achieved a lot, what more can be achieved if it is passed into law? We currently have Water Resources Act that is guiding the sector and the Ministry’s operations, we have River Basin Development Act that is guiding River Basin operations. We also have the National Water Resources Institute Act, all these are what the Water Resources Bill brings together, so that we have a composite law. Such that when you are talking about the water law in Nigeria, it will cover everything. Nigerians don’t know that all these laws are already existing. If you look at the Water Resources Act that we have now, it has given a lot of power to the Minister. For our Hon-
ourable Minister to be pushing this law, Nigerians do not know that he is doing them a lot of good because the minister can sit in his office and sign off on any water development project under the current Act. If you say you want to build a dam there, he can sign it, without recourse to
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The Water Resources Act that we have now, it has given a lot of power to the Minister. For our Honourable Minister to be pushing this law, Nigerians do not know that he is doing them a lot of good that environment. But, the Water Resources Bill has watered down his power, so that power derives from the people. The people of that area will have to sit first to sign off, before it goes to the region, before the minister will sign, and that goes a long way with the sustainability plan because they will take ownership of it and it is a development that will benefit everybody. For example, you know river flows from up to down, if somebody dams the river up there, those down will not have access to water. Only the min-
ister has that power to say go ahead with that dam, he does not need to refer to the state government or to the people in that area and that is what the existing law says. Now, with this water bill, it has to start from the project area, they have to agree and all those discussions will have to be brought to the minister before the minister can say, go ahead. So, it’s a people-oriented bill which is far different from the highly centralized Act that we have now. So, it’s for the people and people don’t know that, we need to make them know that. Secondly, we have the private sector that cannot contribute to the development of Water Resources in Nigeria, because the existing law does not protect them, this water bill has opened it up for them. If you are interested in the water resources development of the country, you can come and contribute your expertise, you can contribute your fund, you can own asset. So, it’s for the betterment of the country, to develop the water resources faster than we currently have. Government cannot do everything, you need the private sector, you need the philanthropists, you need other people to cooperate with government to do this, that is one aspect that this bill has addressed. The third leg has been the National WASH Fund. In November 8, 2018, Mr. President launched the Water Supply and Sanitation Action plan. The President was shown the statistics of those that don’t have access to water, sanitation and
number of people defecating in the open, which is about 25 percent of our population, that is why you go in the suburbs and everywhere is smelling, that is where people are having all sorts of health challenges. The president was concerned and said we have to declare a state of emergency, which he did at that time and launched this Water Supply and Sanitation Action plan. At the centre of the action plan is what we call the WASH fund, because we know that we are not putting enough resources into providing these services to the people. It was proposed that we have a national fund that federal government, state government, philanthropists, development partners can contribute and aggregate them. We have a target and that will be the driving force for pulling funds from different areas. So, the bill supports that, because you need an enabling law to support that, so that people will now know that when they contribute their money it will not be wasted because there is a guiding principle that is in the law that will help to ensure that these funds are well utilized. So, this is one area this bill is also addressing. The bill is also supporting licensing operators in the sector. Now borehole is being drilled indiscriminately, nobody licence the drillers, nobody licence the borehole themselves. Licensing boreholes does not mean you have to pay it means that you have to register it. In Niger Republic, you can’t cut a tree unless you are licensed to do that and that is what the bill is supporting, so that we can control the rate at which we are punching our aquifers. If you punch an aquifer, which is the ground water bearing formation, it is susceptible to pollution, government has to know about it, if you pollute it, it’s not only affecting your family, it’s affecting everybody because the ground water is like the surface water flowing underground, when you pollute it at one point, it flows to other areas. So, this bill supports licensing the boreholes and the borehole drillers so that government will know where the boreholes are. If you want to trace source of pollution, for example, you know which areas to map so that you can trace the source of pollution. These are some of the issues, apart from the very robust monitoring and evaluation entrenched in the bill, and streamlining of the responsibilities and duties of the sector agencies, which before were duplicated in the different laws.
These are the benefits and that is why the minister is so passionate about the bill to be passed into law. Nigerians need to know the benefits of this bill so that they will embrace it. From your understanding of water resources, and with this bill passed into law and implemented, how many years do you think it will take Nigeria to have clean, safe water supply that is accessible and affordable in the country? If we continue at the rate at which we are going now, our target is 2030. All our programmes are targeted towards 2030 and I see that we are gaining momentum. If you take statistics today, you will see that close to 60 percent of people living in the rural areas now have access to water, which used to be 25 percent some years back. We are making good progress and with all these investments we are targeting from the world bank, and other development banks, you will discover that urban areas will begin to change because the real issue is municipal water supply, where you will do large scale scheme and do distribution network and pass water to people’s homes. Our target still remains 2030, in tandem with SDGs and I see that if we continue to put our actions where we are putting our mouth, I believe that it is achievable. And going by what the minister is doing by creating this awareness, motivating the states, putting money into it, I see that by 2030, we will have achieved our goal substantially. What legacy would you be leaving behind in this department? I am leaving behind a well-focused department, a department where staff have to work to earn recognition, a department where our partners, contractors, consultants believe in. They believe that when you have a contract with this department, you have to do your bit otherwise you won’t be paid and when you do your bit you get paid. Before now, some people do not take government contracts, but now, the public is rushing to it, because they know that this is a department, where once you do your job, you will be paid and you will be recognized. Also, I am leaving a workforce that is well trained. I am leaving behind, a department that is well positioned to continue to contribute to the water resources development and by extension to the economic development of the country.
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Tuesday 02 March 2021
BUSINESS DAY
Harvard Business Review
MANAGEMENTDIGEST
Should you reward your CEO with stock options? MICHAEL GREINER & SCOTT JULIAN
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hen Boeing Co. CEO Dennis Muilenburg was ousted from the company in 2019 for his mismanagement of the 737 Max crisis, he left with stock options worth at least a net $18.5 million. At the same time, Boeing’s shareholders took a beating, with the stock losing 25% of its value. Muilenburg, in other words, left with a big payout of options even though his former firm’s performance was cratering. Such discrepancies between firm performance and CEO compensation are unfortunately all too common, and is largely the result of the indiscriminate awarding of stock options and other incentive compensation. Stock options are supposed to ensure that CEOs deliver high returns to shareholders, but they often fail to do so. And yet firms continue to engage in the practice. In 2019, the last year for which we have figures, average CEO compensation, including the value of stock options granted (whether exercised or not), grew by 14% to $21.3 million, continuing an ongoing pattern. Given this spotty record, we wondered: Should firms issue stock options at all? Relying on prior research and using financial data from 2010 to 2015, we analyzed 7,750 observations from 1,815 publicly traded companies in 341 industries representing the bulk of the American economy. We sought to test our hypothesis that stock options and other interventions help a firm’s performance only when its managers might otherwise misuse firm resources — activities known as opportunism. Such opportunism is defined as “self-interest seeking with guile” and involves managers deploying firm resources for their own benefit, rather than to help shareholders achieve a higher return on investment. If such a risk exists, then stock options should reduce the misallocation of funds. If such a risk does not exist, then stock options are an expensive waste of money.
To test this proposition, we included both external and internal factors widely used in business research that indicate which firms have a higher potential for top manager opportunism and which firms have a lower such likelihood. First, for firm performance, we calculated Tobin’s Q, a measure of firm long-term growth. Second, we measured potential opportunism by assessing the level of discretion available to managers to allocate firm resources and the amount of such resources available to direct for their own purposes. We did this in three ways: (1) a combination of absorbed slack multiplied by managerial discretion; (2) a combination of absorbed slack multiplied by whether the CEO serves on the board; and (3) the firm’s debt ratio. The first data point we looked at was a firm’s absorbed slack, which is a measure of its excess costs that are available to management. Managers are aware of where the resources are, of course, but outside shareholders (although they know the firm could in theory operate more efficiently) are not able to put their fingers on where those resources are located. As a result, absorbed slack represents a pool of money
that CEOs can arbitrarily allocate relatively free from shareholder inspection. In environments where CEOs have greater discretion (the second data point), they can abuse these resources, spending them on activities that benefit themselves personally rather than the shareholders. Thus, where absorbed slack and managerial discretion are high, shareholders should be legitimately concerned about opportunism. The third data point was whether CEOs were also directors of their firms. Research has shown that CEOs who are also directors are more powerful. Directors are more likely to criticize a CEO who is simply their employee than one who is sitting in the room with them as a fellow board member. In addition, since the board formally supervises the CEO, CEO board membership is likely to further reduce oversight. Just as with managerial discretion, a more powerful CEO with more absorbed slack available has the ability to behave opportunistically. However, if the CEO is less powerful — in other words, not serving on the board — or if the firm does not have resources available for the CEO to misuse, opportunism is less of a concern.
The final data point that we considered was the debt load a firm carries. High debt restricts a CEO’s potential for opportunism in three ways. First, it reduces available resources since some must now be allocated for interest and debt repayment. Second, borrowed funds often come with loan covenants that restrict CEO leeway of action. Third, high debt also invites higher lender scrutiny of CEO decisions and behaviors. We found that where firms had a higher potential for opportunism on any of the three measures, stock options were indeed associated with higher returns for shareholders. But where managers had little potential to behave opportunistically, such options actually hurt performance. Using our data, we can identify firms from our sample listed on the Fortune 500 that revealed either a high potential for opportunism or a low one. For example, UnitedHealth Group Inc., Kroger, Citigroup Inc., Comcast Corp. and, yes, Boeing all had a low potential for opportunism, and should therefore have refrained from issuing stock options. On the other hand, Alphabet Inc. (Google), Facebook, Proctor & Gamble Co. and Nike all demonstrated a high potential for op-
portunism, and so should have included stock options as a large part of the CEO’s compensation package. The bottom line is that stock options can be an effective tool if used when needed, but they should not be issued under all circumstances. Our results suggest that directors do the following things when deciding whether or not to issue stock options: — Ask if there is a substantial risk of opportunism. Such a risk is higher at firms with high managerial discretion combined with high absorbed slack; the CEO serving on the board of directors in combination with high absorbed slack; or a low debt ratio. — Issue stock options only if there is high absorbed slack combined with either high managerial discretion or the CEO serving on the board of directors. — Don’t issue stock options if there is a low debt ratio. — Don’t avoid stock options just because they are expensive. (They might be well worth it.) — Don’t issue stock options just because they are popular. (They might be an expensive and harmful waste of money.) — Regularly check to see if opportunism risk has shifted since the last stock options decision. (Slack, discretion, debt and board membership can all change.) Our research demonstrates that this form of CEO compensation is not a panacea, and there exist situations where issuing them is damaging. But where the potential for CEO opportunism is high, stock options can be a useful tool to align top managers’ interests with those of their bosses: the firm’s shareholders. Thus, rather than being “good for what ails you,” CEO stock options, our study suggests, should be “taken only when needed.”
Michael Greiner is an assistant professor of management for legal and ethical studies at Oakland University. Scott Julian is an associate professor of management at the Mike Ilitch School of Business at Wayne State University.
Consistency is key to Weightloss – CEO
A
mdalat Busayo Suleiman, the founder and CEO of Spedy Weightloss, a fast-rising lifestyle and weight management company is no stranger to the battle against unwanted and excess weight. Speaking recently, the budding CEO remarked that she herself also struggled for sev-
eral months to shed her excess weight. She stated that she weighed over 90kg and was at a loss at how to lose the weight. After trying several products and diet plans with little to no result, she stumbled upon a product that had tremendous results, losing 7kg within a week. Her first convert, was her taiwww.businessday.ng
lor, who was astonished by her weightloss, as she contracted her to adjust her NYSC uniform at the time, and within 5 days of her tailor using the product, she had shed a lot of weight and had other positive changes to report. This was the start of Spedy Weightloss as a business, as her tailor made several refer-
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rals and her client base began to grow. Noting that the journey to weight loss can at times be long and ardous, Amdalat explains that consistency is a major key to achieving your weight loss goals. In her words, “one thing about losing weight is the fact that you shouldn’t give up, I @Businessdayng
mean look at me then, if I had stopped trying, just because I used a product and it didn’t work, spedy_weightloss brand wouldn’t be in existence. To lose weight is not a day job and that’s why spedy weightloss is here to help you in a speedy way. It has zero side effects as it is 100% herbal.”
Tuesday 02 March 2021
BUSINESS DAY
25
Branding When International Breweries is acknowledged for infrastructure development in Nigeria Daniel Obi
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he tail end of 2020 was a remarkable year for International Breweries as the iconic brewer was recognised on many fronts for its CSR interventions across Nigeria. One of such was the Sustainability, Entrepreneurship, and Responsibility (SERAS) CSR Awards– an annual business award organised to recognise and reward corporate social responsibility and sustainability on the African continent. The Company clinched the award for Best Company in Infrastructure Development in recognition of its commitment to development through the provision of infrastructural facilities for its host communities. During the year under review and despite the challenges and restrictions imposed by the COVID-19 pandemic, International Breweries successfully built, furnished, and equipped a Primary Health Care Centre in Oginigba, Port Harcourt, Rivers State in a swift response to the medical needs of the community and as a demonstration of its commitment to supporting government and communities in healthcare and infrastructure delivery. The project which was done with the support of Rivers State government, commenced in 2019 with the foundation laying and was completed and commissioned in the 1st quarter of 2020. With up to 36,000 direct and indirect beneficiaries, the N44 millionnaira project is a state-of-the-art health facility equipped with infant incubators and warmers, nebulizer, anaesthesia machine, suction machine, delivery beds, X-ray new box, oxygen concentrator, facilities for the resident doctor, and an autoclave machine amongst others. The SERAS awards was also in recognition of other infrastructural projects such as the refurbishing and equipping of the Science laboratory at Esa-Odo High School which caters to over 1,000 direct and indirect beneficiaries. The brewing company also inaugurated a rural electrification
Iyanda Akande Taofiq, assistant Corps Commander, Unit Commander, Sagamu ,F.R.S.C. and management staff of International Breweries Plc. during the plaque presentation to IBPlc as an “Outstanding Stakeholder” in recognition of its dedication and commitment to ensuring safety on highways
project comprising a 300KVA ONAN oil-immersed step-down transformer and 415 V overhead distribution line to address the power supply challenge of more than 1,000 inhabitants of households in and around Bara Community in Obafemi Owode Local Government Area of Ogun State. Over the years, IBPlc has also implemented other CSR initiatives such as the renovation and donation of vital equipment to the Primary Health Care Centre in Esa Odo, Osun State, a fiveroom toilet and water facilities in OmiAsoro Primary School, Osun State as well as 12 solar-powered boreholesone in Ilashe Community, Osun State ; two in Logbara community and Primary Health Care Centre in Owode, Ogun state; two in Ogabru, one in Obosi, one in Oba, three in Onitsha, one in Abatete, all in Anambra state ; and one in Asaba, Delta State Legal & Corporate Affairs Director, International Breweries Plc, Temitope Oguntokun who received the award on behalf of the company alongside Company Secretary & General Counsel, Muyiwa Ayojimi, expressed gratitude for the recognition, stressing that International Breweries is committed to seeing that it continues to impact its host communities positively. “Our dream of a better world drives
our vision to support communities in Nigeria through our five CSR pillars of Entrepreneurship, Education, Health, Infrastructural support, and Responsible drinking, and with this recognition, we are even more inspired to continue to contribute to the United Nations Sustainable Development Goals (SDGs),” she said. Ending the statement on a high note, Oguntokun stated that “with a cumulative number of over 70,000, direct and indirect beneficiaries on our infrastructural projects, we remain dedicated towards improving lives of our host communities through our CSR interventions.” In the same vein, International Breweries also received the debut “ADVAN Community Heroes Award” at the 2020 Advertising Association of Nigeria Awards for Excellence (ADVAN) Awards, following its key role in the distribution of COVID-19 relief palliatives such as medical consumables, hand sanitizers, nonalcoholic beverages and food across the country. The intervention catered to over 800,000 beneficiaries across Abia, Anambra, Bayelsa, Delta, Imo, Lagos, Ogun, Osun, Oyo and Rivers states respectively. Speaking on the award received, Marketing Director, International Breweries Plc, Tolulope Adedeji said
JIK seals endorsement deal with National Association of Nigeria Nurses and Midwives
N
igeria’s foremost hygiene and household disinfectant brand, JIK has announced a strategic endorsement with the National Association of Nigeria Nurses and Midwives (NANNM) to promote hygiene practices in Nigeria. This partnership is in line with JIK’s long-term vison to realise a world where families are safe from illness-causing germs & viruses. NANNM is a professional-cum trade union organization of all professional nurses and midwives who are trained, registered, and licensed to practice the nursing profession at all the levels of the healthcare delivery system. According to the brand, the stra-
tegic endorsement deal will enable Reckitt Benckiser (RB Nigeria), through its brand JIK, to further encourage good hygiene practices in communities and the public through several far-reaching bouquet of programmes. It will also help to create and release public awareness messages, campaigns, and sponsorship on public health and personal hygiene to promote and increase
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awareness of health and hygiene matters among the public. Speaking on the Endorsement, Country Manager, RB Hygiene West Africa, Asif Hashimi in a statement stated “Our Endorsement by the NANNM is a perfect fit since we both share a common objective to promote good hygiene practices. Nurses are most times the first point of call when individuals get ill, with this endorsement, we can collaborate to drive high standards in hygiene practices. With JIK, our fight is to empower individuals to keep their families safe from illness-causing germs & viruses’’. In his remarks, General Secretary of NANNM, Comrade Thomas Shettima, said the association was proud to identify with JIK.
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““building on our long-standing commitment to our vision of Bringing People Together for a Better World, we are always looking for ways to support our local communities, customers and the country as well. We are proud to have lent our voice at such an intense movement in global history and are humbled that our gesture didn’t go unnoticed. We remain committed to ensuring the eradication of this virus as we continuously explore with our stakeholders on areas of further potential collaboration and support.” International Breweries was also recognised as an “Outstanding Stakeholder”, by the Federal Road Safety Commission (FRSC), Sagamu Unit Command in recognition of its dedication and commitment to ensuring safety on the highways. At the award presentation in Sagamu, Unit Commander, Sagamu, Iyanda Taofiq Akande commended International Breweries for its constant support especially during the “2020 Ember month sensitisation campaign’’. “IBPLC and FRSC have enjoyed a symbiotic relationship since the establishment of Gateway plant. The Company has demonstrated unwavering commitment in promoting responsible drinking among Nigerians with special emphasis on
road users through the “Don’t Drink and Drive” campaign. Continuing, Iyanda stated that “we are proud to work together with International Breweries on an initiative such as this and look forward to future collaborations with greater impact in 2021’’ Gateway Plant Manager, Manoj Choudbury, who received the award on behalf of the company commended the FRSC officials for living up to the task of ensuring road safety in Nigeria. He pledged the Company’s continuous support to the commission, reiterating its dedication to safety on the roads. “We strongly believe that every experience with our beers should be a positive one and are fully committed to promoting smart drinking initiatives in order to achieve this goal”. He went on further to add that “while we have made some progress, collaborations such as the one with FRSC provides us with the platform for a larger audience. Our purpose is to ensure that we bring people together for a better world for the next 100+ years and beyond.”. Within the same year and in furtherance of its commitment to responsible drinking, the Company embarked on a series of smart drinking initiatives. Themed, “Let’s Champion Smart Drinking Together at a Distance” some of such initiatives included a roadshow in partnership with Federal Road Safety Commission and the National Union of Road Transport Workers to sensitize hundreds of commercial drivers and other motorists in designated motor parks across the nation on the ills of drunk driving. To reach a mass audience with responsible drinking messages, Radio Time checks slots were acquired in top 20 radio stations across 6 states with a cumulative reach of over 21 million listeners to remind consumers of the importance of drinking responsibly. With over 10 million direct and indirect beneficiaries and millions of naira in memorabilia- face shields, t-shirts, pledge cards, handbills/fliers etc, International Breweries raised the bar in pushing their Smart Drinking agenda of responsible consumption of alcohol to the public.
Coca Cola Nigeria appoints Abiodun Ajiborode and Ayo Click Awosika as Franchise Operations Directors
C
oca-Cola Nigeria has announced the appointment of Abiodun Ajiborode as the Franchise Operations Director, Lagos, and West region and Ayo Click Awosika as the Franchise Operations Director for East, Central and the Northern region. The appointments according to a statement take effect March 1, 2021. Until his appointment, Abiodun was the Acting Marketing Director for Coca-Cola Nigeria, where he led the marketing function in developing and implementing marketing and growth strategies for the business. Abiodun Ajiborode who holds an MBA from the Lagos Business School and a Chartered Postgraduate Diploma in Marketing from the Chartered Institute of Marketing (CIM), United Kingdom brings almost two decades of commercial experience into his new role with competencies @Businessdayng
spanning across Business and Marketing Leadership, Revenue Growth Management, Sale Management and Strategic Business Planning. In his new leadership role, Abiodun Ajiborode will be responsible for accelerating the Coca-Cola franchise volume and value growth, system profitability and sales operations in Nigeria. Prior to Ayo Click’s appointment, he was the Franchise Manager for East & Central regions of the Nigeria Franchise. Ayo holds an MBA from Babcock University, a Chartered Postgraduate Certificate in Mastering Metrics from the Chartered Institute of Marketing (CIM) United Kingdom brings over a decade of Sales and Commercial leadership experience in Route to Market, Distributor Management, Sales Strategy having worked on CHI transition, various Sales & Commercial roles with P&G.
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Tuesday 02 March 2021
BUSINESS DAY
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Tuesday 02 March 2021
BUSINESS DAY
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Live @ The STOCK Exchanges Prices for Securities Traded as of Monday 01 March 2021 Company
Market cap(nm)
Price (N)
Change
Trades
Volume
Company
Market cap(nm)
Price (N)
PRICES FOR MAIN BOARD SECURITIES (Equities)
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Change
Trades
Volume
28
Tuesday 02 March 2021
BUSINESS DAY
Live @ The Exchanges Market Statistics as at Monday 01 March 2021
Top Gainers/Losers as at Monday 01 March 2021 LOSERS
GAINERS Company
Opening
Closing
Change
UACN
N7.5
N8
0.5
AIICO
Company NASCON
N1.15
N1.21
0.06
CHAMPION
VERITASKAP
N0.2
N0.21
0.01
PZ
BUACEMENT
N72
N74.75
2.75
LASACO
N1.83
N1.88
0.05
SOVRENINS
NEIMETH
Opening
Closing
Change
N16.05
N14.45
-1.6
N2.52
N2.27
-0.25
N5.3
N4.8
-0.5
N1.23
N1.12
-0.11
N0.27
N0.25
-0.02
ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)
39,931.63 4,673.00 543,986,690.00 1.888 20.892
Stock market opens March on a positive note
…UACN, BUA Cement, others drive N69bn gain Iheanyi Nwachukwu
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igeria’s equities market opened t h e m o nt h o f March on a positive note, rising by 0.33 percent or N69billion at the close of trading session on Monday –the first trading day into the new month. Thanks to UACN which led the advancers after its share price moved from N7.5 to N8, gaining 50kobo or 6.67percent. The Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation increased from day open low of 39,799.89 points and N20.823 trillion respectively to 39,931.63 points and N20.892trillion. Monday’s positive close reduced the negative return seen year-to-
date (YtD) to 0.84percent. Other stocks that aided the positive close include AIICO which increased from N1.15 to N1.21, adding 6kobo or
5.22percent, Veritas Kapital Assurance which increased from 20kobo to 21kobo, adding 1kobo or 5percent. Also, BUA Cement advanced
from N72 to N74.75, up by N2.75 or 3.82percent, while Neimeth moved from N1.83 to N1.88, up by 5kobo or 2.73percent. “Although the local bourse closed the day in the green, market sentiment remained tepid, evidenced by the declining turnover rate in recent times coupled with the negative market breadth”, according to Vetiva analysts in their March 1 note. The analysts noted that except for any major significant upward movement in any large cap stock on Tuesday (as seen in BUA Cement on Monday), they expect the market to return south. In 4,673 deals, investors exchanged 543,986,690 units valued at N1.888billion. Wema Bank, Zenith Bank, Transcorp, UBA and United Capital were actively traded stocks.
SEPLAT to pay total dividend of 10 Cents per share for FY’20 ... despite challenging year
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eplat Petroleum Development Company Plc (Seplat), a leading Nigerian independent energy company listed on both the Nigerian Stock Exchange and the London Stock Exchange on Monday March 1 announced its audited results for the financial year ended 31 December 2020. Operational highlights Working-interest production within guidance at 51,183 boepd, despite demand fall and OPEC+ quotas; Liquids production of 33,714 bopd, gas production of 101 MMscfd; Eland OML40/Ubima assets produced 8,855 bopd, 26.3% of Group liquid volumes ; Low unit cost of production at $8.90/ boe, with cost-cutting initiatives ongoing, particularly at OML40/ Ubima; Drilled/completed nine wells and brought eight onstream in 2020; and ANOH project now budgeted under original $700 million FID estimate, but COVID-19 related delays to H1 2022. Financial highlights Final dividend of $0.05 per share recommended ($0.10/share for full year); Earnings before interest, taxes, depreciation and amortization (EBITDA) of $265.8 million, operating profit of $121 million (before non-cash impairments
and unrealised fair value losses); Strong cash position of $259 million after $100 million RCF repayment, $58 million dividends paid in the year, and $150 million capex; net debt at $440 million with most maturities after 2021; and IAS 36 COVID-19 impact assessment and IFRS 9 noncash impairment provision of $144.3 million, majority booked in Q2 2020. Worthy to note that SEPLATs volume production is about 40percent ahead of 2019 but the benefit was offfset by lower crude prices in 2020. In compliance with prudent accounting standards on the treatment of COVID-19 pandemic impact on Oil and Gas businesses, Seplat had to revalue downwards its oil and gas assets by $114.4million to reflect the lower crude oil prices of 2020 and this reversed the operating profit of US$82.7million to a loss for the year of US$85.3million. When crude oil prices improve, these same oil and gas assets will be revalued upwards. Corporate updates Creation of New Energy unit to manage gas processing and future low carbon to zero carbon initiatives; AGPC financing signed in February 2021, $260 million raised, with www.businessday.ng
commitments for $450 million; Advanced stage to extend maturities for existing Eland RBL, raise additional funding via offtaker financing for Elcrest capex; $5million funding of share purchase programme, by Trustee, for Seplat LTIP, starting immediately; and Board directive to eliminate Related-Party Transactions by end of 2021. Outlook for 2021 Full-year production guidance of 48-55 kboepd, subject to market conditions; and Full-year capex expected to be around $150 million with a focus on gas projects and an exploration well to meet reserves replacement targets. Roger Brown, Chief Executive Officer, said: “2020 was a challenging year for the
Roger Brown, SEPLAT, chief executive officer
Company but Seplat has once again shown its resilience and ability to overcome challenges and deliver production in line with guidance, operating with minimal incidences of COVID-19 cases. From the $330 million of cash generated from operations, we have increased our capital investment, invested in ANOH and voluntarily paid down $100 million of debt, further deleveraging the balance sheet. Despite seeing the lowest oil prices in our 10year history, we have continued to honour our commitment to shareholders of a regular income stream on their investment, by maintaining a total dividend of $0.10 per share for the year.” “Gas is the lower-carbon feedstock for affordable electr icity for Niger ia’s young and rapidly-growing population. Seplat is leading Nigeria’s transition away from spending scarce foreign c u r re n c y o n i m p o r t e d , expensive, high-emission diesel-generated electricity and we believe this will provide the necessary baseload for a functioning electricity grid that will allow renewable energy to take its place, as we see in the developed world, which in large parts is still fuelled by coal.
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Global market indicators FTSE 100 Index 6,588.53GBP +105.10+1.62%
Nikkei 225 29,663.50JPY +697.49+2.41%
S&P 500 INDEX 3,901.70USD +90.55+2.38%
Deutsche Boerse AG German Stock Index DAX 14,012.82EUR +226.53+1.64%
Generic 1st ‘DM’ Future 31,568.00USD +656.00+2.12%
Shanghai Stock Exchange Composite Index 3,551.40CNY +42.32+1.21%
Fidelity Pension Managers debunks probe report at House of Reps Modestus Anaesoronye
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idelity Pension Managers Limited has debunked the media reports that it is being probed by the House of Representatives Committee on Pensions and that the Managing Director/ Chief Executive Officer was summoned to the probe panel. A statement by Fidelity Pension’s company secretary and group head, Legal and Corporate Communications, Noel Orji, stated that the information in the report was false, adding that Fidelity Pension Managers was invited for a routine investigative hearing by the House of Representatives Committee on Pensions as part of their oversight function. Amaka Andy-Azike, managing director/Chief Executive Officer said when Fidelity Pension Managers appeared before the
Committee, the requested documents were duly submitted and the Company Secretary together with the Group Head, Operations presented themselves for the meeting, stressing that they were however informed that the Committee was interested in meeting with the Managing Director and the meeting was rescheduled. “We wish to reassure the general public that Fidelity Pension Managers Ltd is a law-abiding organisation, built on integrity and transparency. We shall always manage our customers’ pension assets safely and profitably to ensure they have a happy retirement,” she said. Fidelity Pension Managers has over 300,000 clients and manages over N130 billion in pension assets. The Company has been in operation since 2007 and has consistently rewarded its customers with significant investment returns.
Local investors account for 79.56% of Nigeria’s equities trade in January
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igeria’s domestic investors traded stocks worth N184.94billion in the month of January, which represents 79.56 percent of N232.46billion worth of equities traded in the review month. Domestic retail investors traded stock worth N67.44billion while institutional investors exchanged N117.50billion worth of equities in the review month. Meanwhile, foreign investors traded stocks worth N47.52billion, representing 20.44percent of the total equities traded. Foreign inflow into Nigeria’s equities market was just N16.73billion, while foreign outflows were valued at N30.79billion. A further analysis of the total transactions executed between the current and prior month (December 2020) revealed that total domestic transactions
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decreased by 7.21percent f ro m N 1 9 9 . 3 2 b i l l i o n i n December to N184.94billion in January 2021. Additionally, total foreign transactions decreased by 32.04percent from N69.92billion (about $178.44million) to N47.52billion (about $120.78million) between December 2020 and January 2021. Institutional investors outperformed retail investors by 28percent. A comparison of domestic transactions in the current and prior month (December 2020) revealed that retail transactions increased by 10.16percent from N61.22billion in December 2020 to N67.44billion in January 2021. Mo nth- on-mo nth institutional composition of the domestic market also decreased by 14.91percent from N138.09billion in December 2020 to N117.50billion in January 2021.
Tuesday 02 March 2021
BUSINESS DAY
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No fuel price hike in March - NNPC Chika Otuchikere, Abuja
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he Nigerian National Petroleum Corporation (NNPC) has assured Nigerians that there will be no increment in the ex-depot price of petrol in March, 2021. The corporation gave the assurance against the backdrop of speculations of imminent increase in the price of Premium Motor Spirit (petrol) in the country. Ke n n i e O b at e r u , t h e NNPC group general manager, group public affairs division, in a statement on Monday, stated that the corporation was not contemplating any raise in the price of petrol in March in order not to jeopardise ongoing engage-
ments with organized labour and other stakeholders on an acceptable framework that will not expose the ordinary Nigerian to any hardship. Obateru also cautioned petroleum products marketers not to engage in arbitrary price increase or hoarding of petrol in order not to create artificial scarcity and unnecessary hardship for Nigerians. He assured that the corporation has enough stock to keep the nation well supplied for over 40 days and urged motorists to avoid panic buying. Obateru urged relevant regulatory authorities to step up monitoring of the activities of marketers with a view to sanctioning those involved in products hoarding or arbitrary increase of pump price.
Insecurity: Yobe orders closure of boarding schools
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mid increasing attacks on schools, especially in northern part of Nigeria, the government in Yobe has ordered the closure of all boarding schools across the state. Muhammed Idris, the state commissioner for basic and secondary education, who announced this to journalists on Monday, said it was a proactive measure to safeguard the lives of the students. Idris said: “The Ministry of Basic and Secondary Education has ordered the immediate closure of all boarding schools in the state. Students from JSS I to SSS II should vacate their schools immediately.
“The closure of the boarding schools is informed by the security concern and the urgent need for government to be proactive in safeguarding the lives of the children. “All day schools are to continue with the normal academic activities,” the commissioner said, adding that further statement would be made concerning the reopening of the schools as soon as possible. He noted the ministry was strategising on how to take learning home to the students, as it was done at the peak of COVID 19 pandemic. “This is because the state government, led by Mai Mala Buni, is very serious about lives of the students,” Idris added.
COVID-19: One year after
How COVID-19 shaped Nigeria’s 2nd biggest sector BUNMI BAILEY
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t has been one year since Nigeria recorded its first case of COVID-19. So far, the mitigation measures aimed at slowing the spread of the virus has challenged the wholesale and retail sector with macroeconomic volatility, rapid naira’s depreciation, weak purchasing power and household incomes. Here are some of the events that have happened in the sector since the pandemic started on February 27 2020. Avoidance of malls by shoppers At the outbreak of the disease, the government announced restrictions to curb its spread. For example, malls were expected to maintain a 60 percent occupancy rate in line with the physical distanc-
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mar Garba Danbatta, executive v i c e c ha i r ma n / chief executive officer, Nigerian Communications Commission (NCC), will deliver the 2021 edition of The Bullion Lecture; a statement issued in Lagos by Ray Echebiri, founder/chief executive officer of CFJ Nigeria, has said. The Bullion Lecture, a platform conceptualised by Centre for Financial Journalism (CFJ) Nigeria for lively discourse on national and international issues, is always delivered by first-rate academics and professionals. The lecture scheduled for March 11, 2021, will hold at The Civic Centre, Ozumba Mbadiwe Avenue, Victoria Island, Lagos. Danbatta, a professor, an engineer, and astute administrator, would be speaking on telecoms, digital banking and Nigeria’s economic development. He holds BEng and MSc de-
ceded to certain percentage reduction in rental payment. “Additionally, some landlords have been aggressive with reduction granted, while others are yet to offer concessions against the backdrop of debt servicing requirements on facilities obtained from banks.” A rent concession can be defined as a price reduction or some other form of benefit offered by landlords to induce a prospective tenant to move into their property. Loss of jobs in retail stores The adverse impact of COVID-19 on household incomes led to low patronage, which made retail stores suffer job losses and pay cuts. Tunde Akinwunmi, an official at Spar, noted that the atmosphere at the store was not encouraging as the firm was barely making profit, saying that it “survives by the grace of God”. “The poor patronage and
sales caused by COVID-19 reduced staff numbers from 75 to 50. And despite the fact that our prices are cheaper than other stores, customers are still complaining that they are expensive,” Akinwunmi said. High exchange rate hinders stocking for festive period Apart from weak demand, retailers could not afford to stock up their stores in preparation for the festive period as the foreign exchange made it expensive for them to clear their goods, thereby still dealing with old stock. “Usually it takes 40 days to get my new stock of female shoes. But since August, my goods have been trapped at the port because it is too expensive for me to clear them. And also, these shoes that have been with me since last year have not been bought,” Chinedu Igwe, a shoe retailer, said.
L-R: Vianney Rubagumya, second counselor, Rwanda High Commission, Abuja; Stanislas Kamanzi, high commissioner, Rwanda High Commission; Toki Mabogunje, president, Lagos Chamber of Commerce and Industry (LCCI), and Muda Yusuf, director-general, LCCI, during a courtesy visit of the Rwandan high commissioner to LCCI, in Lagos.
Ex-NCC boss to speak on digital banking at The Bullion Lecture Ifeoma Okeke
ing rules, with hand sanitizers, washbasins, and temperature checks as compulsory requirements at entry points. This led to a drop in the number of people entering shopping malls in a given time, as shoppers preferred stores in their neighbourhoods to get groceries as against the bigger malls. Landlords offer rental concessions to retailers The lockdown in April battered retailers, and consequently constrained them from meeting rent obligations. This made landlords to offer concessions or rental reductions so as not to lose their retailers from the malls while avoiding running into debt. According to a report by Broll, African-focused commercial property firm, rent concessions were granted to retailers in some malls, while some property owners ac-
grees from the Technical University of Wroclaw in Poland, and PhD from the University of Manchester Institute of Science and Technology, United Kingdom. Until his appointment as EVC/CEO of NCC, Professor Danbatta was a lecturer in the Department of Electrical Engineering, Faculty of Technology, Bayero University, Kano, for 32 years, where he taught courses in telecommunications engineering and electronics and held academic positions of Dean of the Faculty and Head of Department at different times. According to the statement, “The lecture will be chaired by Segun Aina, president, Africa FinTech Network and former president/chairman of Council, The Chartered Institute of Bankers of Nigeria.” Chizor Malize, managing director/chief executive officer, Financial Institutions Training Centre, and AdeRemi Atanda, executive director, SystemSpecs Limited, have been selected as panelists. www.businessday.ng
COVID-19 vaccination: FG to bear cost of adverse reactions - minister ...health workers, police to get priority Godsgift Onyedinefu, Abuja
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igeria’s minister of health, Osagie Ehanire, has said the Federal Government will bear any cost in the treatment and management of any adverse reactions that may occur during vaccination against COVID-19. Nigeria is expected to receive a total of 3.92 million doses of the Oxford/AstraZeneca vaccines from COVAX facility at the Nnamdi Azikiwe International Airport, Abuja on March 2, 2021. Ehanire, speaking at the unveiling of the ‘TEACH strategy’ for COVID-19 vaccine introduction in Nigeria and Electronic Management of Immunisation Data (EMID), on Monday, said the government has signed an ‘indemnification’ which means that the producer of the vaccines
will not be held responsible for whatever side effects experienced. He, however, pointed out that chances of such adverse reactions are rare, even though wide vaccinations of these new vaccines have barely begun in this region. “We are dealing with a new vaccine, whose properties are not properly known. We are studying closely what the effects are. Government will cover the cost of handling any adverse or side effects that may arise during the vaccination until the affected person is nursed to good health. The minister, who formally launched the TEACH strategies said more vaccines would be coming in before the 3.92 million doses are distributed. He also warned that vaccines not approved by NAFDAC would be determined as dangerous and seized by the
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Customs Services and NAFDAC, who are on high alert for illegal vaccine importation, as “fake vaccines already abound in the market.” The minister also informed that the government has received requests from foreign embassies and international organisations, for vaccination which will all be professionally addressed. Faisal Shuaib, the executive director, National Primary Health Care Development Agency (NPHCDA), speaking at the unveiling, explained that under the TEACH strategy, the vaccines will be rolled out in four phases. He said the target priority group in the first phase will include; Health care workers, frontline workers, workers at ports of entry, military, COVID-19 Rapid Response Team, laboratory network, policemen, petrol station workers and strategic leaders. @Businessdayng
In the second phase, he said older adults aged 50 years and above, those with co-morbidities aged 18-49 years of age would be prioritised while in the third phase, those in states and local governments with high disease burden that missed the first phase. In the fourth phase, the ED said other eligible populations would be vaccinated as the vaccines become available. He noted that this phase would kick off in 2022, while the other three phases in 2021. Shuaib further explained that the Acronym TEACH means: T: Traditional Vaccination Campaign Approach; E: Electronic Self- Registration by Eligible Nigerians; A: Assisted Electronic Registration of Eligible Nigerians; C: Concomitant Vaccination alongside Electronic Registration and H: House-to-House Electronic Registration.
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Tuesday 02 March 2021
BUSINESS DAY
news Four things to expect as 4m vaccine doses arrive Nigeria today Temitayo Ayetoto
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s Nigeria takes delivery today of 4 million doses of Oxford/AstraZeneca vaccine from COVAX, a global initiative to distribute vaccines, another phase to end the pandemic will unfold. Nigeria’s quest to suppress the virus will finally begin with the first phase of vaccination targeted at healthcare and frontline workers. Exact dates of the rollout have not been set, but the doses coming either through the Murtala Muhammed International Airport, Lagos, or Nnamdi Azikwe International Airport, Abuja, is expected to pave the way to achieving herd immunity. Below are four things to expect: Confidence among frontline workers The vaccination of healthcare workers will no doubt boost their confidence as they go about discharging their duties in the frontline. Hundreds of them across the country have died from the virus due to a spike in community transmission. A system of registration has been launched by the National Primary Health Care Development Agency (NPHCDA) to prioritise eligible people for vaccination. Doctors in isolation centres, accident and emergency units, intensive care units, general out-patient departments, internal medical department at secondary and tertiary healthcare facilities are in the eligible bracket, according to NPHCDA. Also included are laboratory staff members such as lab scientists, lab technicians, including those working at the Nigeria Centre for Disease Control, cleaners, porters, health assistants, and ambulance drivers. Allocation to states will be clearer The issue of who gets what and how much will clearer than earlier predictions of how doses will be distributed among states. The agency has debunked a sharing formula released in January that had states receiving doses of vaccines that did not match the scale of COVID-19 prevalence or the size of the healthcare workforce confronting the pandemic. According to the breakdown, Kano was allocated 3,557 doses; Lagos, 3,131;
Katsina, 2,361; Kaduna, 2,074; Bauchi, 1,900; Oyo, 1,848; Rivers, 1,766; Jigawa, 1,712; Niger, 1,558; Ogun, 1,473; Sokoto, 1,468; Benue, 1,423; Borno, 1,416; Anambra, 1,379; Kebbi, 1,361; Zamfara, 1,336; Rivers, 1,306; Imo, 1,267; Ondo, 1,228; Akwa and Ibom, 1,161. However, analysis by BusinessDay published January 15 showed that the allocation was out of touch with the reality of COVID-19 infection rates in various states. Kano for instance got the highest allocation of 3,557 doses but had one of the least number of confirmed cases compared to others. The state was ninth behind Lagos, FCT, Plateau, Kaduna, Oyo, Rivers, Edo and Ogun in terms of confirmed cases and number of those currently on admission as of mid-January. Eligibility for vaccine passport Nigerians lucky to be vaccinated early could join the train of people eligible for the new world of ‘vaccine passport,’ the new currency for international travel. Efforts to curb the pandemic in advance economies have begun to tilt towards adopting proof of vaccination as a condition for entry. Sooner or later, people might have to present their evidence of vaccination, just like yellow fever proof before their passport is stamped before boarding a plane. It is not clear if Nigeria will take a cue to demand vaccination from inbound travellers. But citizens of countries with the largest vaccine rollout and accessibility will certainly gain the most from the trend, boosting economic recovery among other things. For instance, Israel’s effort to put its $8 billion tourism industry back on track has started with negotiation with countries that have made progress in their rollout of vaccines to create what is known as a travel bubble. Restrictions relaxed Should vaccination rollout succeed in the most affected states in the country and reduce the rate of infection, state governments might start to consider easing restrictions that have affected businesses. People and businesses might launch back to normalcy and recoup the losses of 2020. www.businessday.ng
Small businesses groan under rising diesel cost DIPO OLADEHINDE
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wo diesel-powered bread ovens are at the heart of Chinedu Martins’ bakery outfit in Ogba, a Lagos suburb. Last year, COVID-19 outbreak shook the business to the extent that he barely survived, and now the rising retail cost of diesel threatens to ruin it completely. “The rising cost of diesel cost is killing me,” Martins told BusinessDay. The retail cost of diesel at various filling stations jumped by 40 percent to N250 per litre in February from N185 in December 2020. From haulage to consumer goods to retail outlets, small businesses are taking a beating. “We have been buying diesel at N250 since last week and this has affected the cost of haulage by 6.7
…marketers expect higher price percent, while some others as much as 15 percent in south-south and south-east,” Jahman Bosude, a businessman noted on Twitter. More than 70 percent of Nigerian firms rely heavily on diesel-powered generators. The machines guzzle cash and spew pollution, but they are reliable in a nation where nearly 85 million people - some 40 percent of the population - have no access to grid power. While many Nigerian households and small business generators are powered by price-capped petrol, the big generators for larger firms, apartment complexes and more substantial homes can run on diesel. Government data show some Nigerians pay as high as N268, while a BusinessDay correspondent who monitored the situation on
Monday discovered most major oil marketers in Apapa, Fadeyi, Festac, Onipanu, Surulere, Ebute Metta and Yaba areas of Lagos were selling within the range of N238 and N250. The National Bureau of Statistics (NBS) said the average price paid by consumers for diesel increased by 0.22 percent to N224.86 per litre in January 2021, and N224.37 in December 2020. It said states with the highest average price of diesel were Adamawa (N268.33), Zamfara (N262.78), and Kebbi (N257.50). “States with the lowest average price of diesel were Osun (N194.60), Anambra (N195.83), and Enugu (N198.24),” the NBS noted. While businesses are feeling the pinch, observers say the government is helpless considering the diesel arm
of the downstream sector is deregulated. “Unlike petrol, diesel is deregulated, which means the increase in the international price of crude oil is responsible for what we see across Nigerian filling stations,” Mike Osatuyi, national operations controller of Independent Petroleum Marketers Association of Nigeria (IPMAN), said. Crude oil price accounts for a large chunk of the final cost of petroleum products such as diesel, kerosene and such associated products. Removal of subsidy on kerosene and diesel by former President Olusegun Obasanjo means that the pump prices of the products will reflect changes in the international oil market. On Monday, Brent crude, the benchmark for Nigeria’s Continues on page 31
Ngozi Okonjo-Iweala, directorgeneral, World Trade Organisation (WTO), arrived the WTO headquarter, during her assumption of office in Geneva, Switzerland, yesterday.
After rout in February, will March bring any relief for Nigerian stocks? MICHAEL ANI
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rom being the world’s best performer in 2020, Nigerian equities had a terrible outing in February, after a sooner than expected upward reversal in yields is making investors rebalance their portfolios more into fixed income instruments. The market suffered its longest bearish run in one year, in February, and all of the 10 analysts polled in a BusinessDay survey see no respite for stocks in the new month. As long as yields keep going up, the equities market will continue to take a hit, according to Gloria Fadipe, head of research at CSL Stockbrokers. “However, we expect dividend payouts and good corporate earnings to support some stocks if the
yields are good,” Fadipe said. Of the 20 trading days in February, the market lost on 16 days, gaining only on four days, as investors overlooked impressive full-year numbers of listed companies as well as the positive news of Nigeria’s exit from its worst recession since the 80s, in the fourth quarter of 2020. The All-Share Index, which serves as a gauge of overall market activities, closed the month, falling below 40,000 points, bringing year-to-date returns to -1.17 percent. As such, investors lost N1.24 trillion of their wealth, causing the market capitalisation of listed stocks to close the month lower at N20.82 trillion from N22.059 trillion recorded at the end of trading in January. Although the drivers for
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equities in the coming months are still well positive driven by the continued recovery of the economy, rising oil prices and better-than-expected corporate earnings performance, according to Abiodun Keripe, managing director, research and consulting, Afrivest. “However, the downside risk is the recovery in yields, which are fast climbing higher,” he said “This may mean that investors will further take out their money from equities and look more into fixed income space,” Keripe told BusinessDay. “The equities market will likely exhibit a zig-zag pattern due to the opposing forces of yield elevation in the fixed income market and dividend announcements by corporates,” said Gbolanhan Ologunro, an economist and researcher @Businessdayng
at Cordros Capital Limited. “However, the pendulum is likely to swing to the bears given that investors will become increasingly reluctant to leave gains in their portfolio due to expectations for a wide market correction after the earnings season,” Ologunro said in response to BusinessDay Last year, Nigerian equities benefitted from the low-interest-rate environment, particularly in fixed income instruments that made investors in search of higher returns, rotate their portfolios into stocks. The initial trigger was a CBN directive restricting nonbank local investors from investing in OMO bills, a move that resulted in excess liquidity in fixed income space. Yields
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Tuesday 02 March 2021
BUSINESS DAY
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Electronic call-up scuttles Apapa ports... Continued from page 1
Logistics operators are facing what they say is an unexpected round of losses in the wake of the shift in the call-up system at the Nigerian Ports Authority (NPA) terminals in Apapa to a digital platform aimed at increasing transparency and easing traffic flow. When BusinessDay monitored the implementation of the new system at the weekend, it was discovered that the exercise caught some of the operators unprepared as security agents dismissed all container-laden trucks queuing on entry routes for onward pass into the main terminal. Some importers face a double whammy in which off-the-record payments made earlier to security officers for a pass have been lost and terminal charges, demurrages and evaluation charges pile up daily. “About three of my trucks were turned back yesterday, despite reaching Eleganza Plaza. That is over N300,000 lost already on trying to get to that point. Yet, my goods are in the ports and I have to continue to pay charges. It is affecting us badly. It is painful,” Nnamdi Okafor, a containerladen truck owner told BusinessDay during a visit. As of Saturday morning, early gains of the implementation were clear in the free flow of traffic inbound Apapa, from Ijora to Marine Beach Bridge on to Wharf Road. This continued on Sunday, and by Monday it was a lot better as the whole stretch of Ijora Bridge down to Wharf Road was free of trucks. There was heavy security presence at the main roundaboutsofWharfRoadandWarehouse Road with traffic wardens coordinating the movements in and out of port routes. O nyekachukwu Emechebe, chairman, Maritime Container Haulage Association, noted that the system was expected to favour members and cut off the overbearing extortion from security officers. Before now, members of the association expend between N100,000 and N400,000 to move goods, he said.
Despite the system’s success storysofar,concernsanddoubts remainoverefficientimplementation and sustainability. “Before you introduce a thing, all stakeholders should come together. But with what they are trying to do it seems the lesser evil will be out of the way while the mighty ones hijack it,” Emechebe said. “It will restore sanity if they will comply with it. Something like this has been introduced before but was not upheld. There was a time all trucks were led to Lilypond Transit Truck Park before heading to the main port. But while others queue at Lilypond for weeks, you will see officials flying trucks directly to the port. That the discouraged people,” he said. On Tuesday last week, the Lagos State government and the NPA announced a new solution to the menace of gridlock in Apapa, stating that the seaports would now be organised through a transparent electronic call-up system that would be based on a firstcome-first-serve basis. With the new system, no container-laden truck is expected to go on the Apapa corridor without clearance from the call-up platform. Any truck that flouts the electronic roster and park along the Apapa corridor will be impounded by the taskforce already set up by the state government. The state governor expressed optimism on the transparent e-call-up system, saying the move was the beginning of the end of Apapa gridlock. He said the call-up platform would be complemented with virtual dashboards that would be placed in strategic locations around the seaports, where all stakeholders would monitor the scheduling of container movement. “This electronic system has a limited interface with security operatives and unions, which usually cause the gridlock problem. It will be a simple case of possessing electronic clearance. If you don’t have it, you don’t have any reason to be around the seaports,” the governor said.
After rout in February, will March bring... Continued from page 30
on long-term debt instruments traded at one of their lowest on records, last year, while interest on T Bills was almost zero. Nigerian equities returned 50.03 percent last year with both domestic institutional investors as well as retail investors, increasing exposure into the market, and covering up the out-flux of portfolio investors who exited the market due to Nigeria’s poor management of dollar liquidity. But it is barely two months away into the New Year, and the freefallininterestratesarereversing upwards, hurting equities. Interest on one-year treasury bills climbed 100 basis points to 5 percent at the last auction, February 24, as inves-
tors pointed at rising inflation to bid rates higher. Similarly, yields on benchmark Federal Government of Nigeria (FGN) bonds rose to the highest levels in eight months, hitting double digits. Theperformanceofthemarket will remain mixed, meaning it will be neither here nor there, according to Wale Olusi, head of research, United Capital. “In the first week of the market, we expect earnings and dividend announcements should lift the market. However, the reversal in yields is expected to continue, and when that happens, there will be renewed bearish sentiments for equities. “The market is gradually correcting, and even those stocks that are expected to weather the storm, may shed points,” Olusi said. www.businessday.ng
A petrol hawker approaches a crowded fuel station with his empty jerry cans at Dutse Junction in Abuja, yesterday. NAN
Nigeria’s local gas focus opens... Continued from page 1
natural gas producers in a
mostly bearish global market is making it imperative for Nigeria to unlock its gas potential for domestic use. Only 9 percent of natural gas produced is used in Nigeria. “I believe a revolution of our energy system is needed,” Timipre Sylva, minister of state for petroleum resources, said in a speech at the Nigerian Gas Association (NGA) multilogues organised virtually on February 25 and 26. “And in that context, a key decision and renewed impact we can make right now is to persist in expanding the role and opportunities of natural gas towards economic recovery,” Sylva said. According to Sylva, the government’s recognition that gas will continue to play a critical role in economic development has led to the creation of programmes to “grow our gas economies through the development of industrial and transport gas markets, in juxtaposition with gas-to-power initiatives.” Consequently, the government has mandated the Nigerian National Petroleum Corporation (NNPC) to ramp up domestic gas use from around 3 Billion Cubic Feet (BCF) to 4.5BCF, and has identified some projects that would drive this outcome. Mele Kyari, NNPC’s group
managing director, in a presentation at the event, said through a representative that key projects that would unlock the 4.5BCF of gas for local use were the OB-3 pipeline, AKK pipeline, and Assa North, Brass Petrochemicals, ELP, among others. The $3.2 billion 40-inch x 614km Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline project, a section of the Trans-Nigeria Gas Pipeline (TNGP), upon completion can move 2.2 billion cubic feet of gas per day from Kogi and traverse Abuja, Niger, Kaduna, and terminate at Kano. Though they are few and far between, industries along this corridor will have sufficient gas to power growth. However, there is a growing risk of insecurity for the pipeline as it traverses wide ungoverned areas in Nigeria’s insecure Northern region. Obiafu-Obrikom-Oben Gas Pipeline also called the OB3 Pipeline or the EastWest Pipeline is a natural gas pipeline, running from the Obiafu-Obrikom gas plant in Delta State to the Oben node in Edo State. The 48-inch, 127-kilometre gas pipeline has challenges, the most recent being the original construction contractor, Nestoil’s being technically unable to run the pipeline across the River Niger. A Chinese firm, China Petroleum Pipeline Engineering
Small businesses groan under rising... Continued from page 30
crude oil rose back above $65 a barrel, after plunging below $20 last year when demand plummeted due to the coronavirus crisis. “Most of our members are currently selling old stocks, which they got when the oil price was relatively low,” Osatuyi said, saying, “Nigerians should brace up for higher diesel prices.” Higher costs for operating generators that power the machinery, computer servers and mobile phone
towers that run Nigeria’s economy could impair growth in gross domestic product, already limping along at 0.11 percent at a time inflation is at 16.47 percent. “Businesses may struggle to survive, or in the bestcase scenario, would at least downsize,” said Charles Akinbobola, an analyst at Lagos-based Sofidam Capital. Diesel is the second or third biggest cost for many Nigerian firms, he said. Reviewing challenges
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Corporation, is handling it and a first-quarter completion date is envisaged. It is planned to feed the Asa North-Ohaji South, ANOH, gas project, one of the largest greenfield gas condensate development projects billed to produce 600 million standard cubic feet of gas per day, an equivalent of approximately 2.4 gigawatts of electricity for the country. If the project succeeds, it will provide alternative links to the Nigerian Southwest whenever the crucial Escravos Lagos Pipeline system fails. The Brass Fertilizer and Petrochemical Company Limited (BFPCL) is also another high-priority project. It will have two trains producing 5,000 tons per day (MTPD) of methanol and includes a 500-million standard cubic feet per day (MMscf/d) gas processing plant to extract condensate from the natural gas, prior to feeding the balance lean gas to the methanol plant. It will also include gas manifolds and pipelines to connect the gas processing plant to the gas fields and an export facility. “We are looking to establish two gas hubs, one at Oben and the other one at Brass,” said the NNPC boss. The gas hubs, the NNPC said, “Will create a situation where announcements on gas prices will happen and industry will begin to references in Nigeria for gas pric-
ing,” the NNPC boss stated further. Other projects like the Assa North driven by Shell and Assa North Gas processing company, which signed off $650 million financing is another critical project. “All projections show that 60-70 percent of the gas that forms the basis of 4.5BCF will come from power, so there is need to fix broken transmission lines and improve the collections downstream to be able to make money from the investments made in gas,” the NNPC said. To this end, the state oil company said it was looking to establishing 5,000mw of additional power into the network, and now engaging with stakeholders to resolve the issues so that investments made could be realised. However, operators say gas pricing is still a contentious issue. “We have seen unaffordable gas prices for our investments, we need prices that work,” said Roger Brown, CEO of the indigenous oil firm, Seplat. Osagie Okunbor, managing director, SPDC and country chair, Shell Companies in Nigeria (SCiN), cautioned that Nigeria’s regulatory approach to gas should not be too focused on extracting rent as it did oil, but to create a fiscal and regulatory environment that would spur investments into gas projects because they have a salutary effect on the economy.
faced by manufacturers at a luncheon held in Lagos, Mansur Ahmed, president of Manufacturers Association of Nigeria (MAN), said high costs of energy, funds and logistics were key issues hurting the growth of manufacturing companies in the country. “The implication of these challenges highlighted is that it impedes the growth and development of the manufacturing sector, thereby affecting the attainment of the sector’s full potential of massive job and wealth creation,” Ahmed told jour-
nalists at the event. There are also indications Nigerians may soon pay more for petrol as the landing cost of the product rose from N151 to N180 per litre, due mainly to the rising price of crude oil in the international market. Although, the NNPC says it has no plan to increase the ex-depot price in March. Nigeria, Africa’s largest oil producer, relies largely on importation for petrol and other refined products as its refineries have remained in a state of disrepair for many years.
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BUSINESS DAY Tuesday 02 March 2021 www.businessday.ng
How COVID-19 impacted policy measures in Nigeria TOCHUKWU OKAFOR
N
igeria was still grappling with recovery from 2016’s oil-induced economic recession when the pandemic struck. In the spirit of economic recovery and growth sustainability, the Nigerian Federal budget for 2020 fiscal year was prepared with significant revenue expectations even though over ambitious. The emergence of COVID-19 and its increasing incident in Nigeria however led to drastic reviews and changes in the preCOVID 19 revenue expectations and fiscal projections. When consumer spending and business activity slowed as a result of the coronavirus pandemic, Nigeria’s government, like others across the world, deployed policies to provide a more stable economic environment. They hiked spending and provided tax relief to boost economic output (fiscal policy). In Nigeria’s case, the government offered a 50% tax refund to companies that did not retrench staff until the end of the year. The monetary authorities also increased available loans and reduced the cost of borrowing to make funds easier for individuals and businesses to access (monetary policy). As always, there were moves made on the exchange rate as well (exchange rate and balance of payments policy). Asides implementing this, the CBN also reduced interest rates by 100 bps in May from 13.5% to 12.5% and again in September from 12.5% to 11.5% in an attempt to stimulate the economy. The apex bank also extended the payment of its intervention loans by one year and reduced the interest rate on these loans from 9% to 5%. Most people in the country had taken a hit. With two-thirds of Nigerians experiencing a
drop in their income, there was a sharp decline in the demand for non-essential commodities. This implied that many businesses particularly SMEs (not producing “essential” commodities) had to pack up before December. At that point, even the government’s 50% tax relief plan became irrelevant. At the end of June 2020, the Federal Government (FG) had approved a N2.3 trillion stimulus plan to boost significant sectors of the economy. It was less than 2 percent of GDP but was a welcome move. The scheme included many key infrastructure projects. It provided support to the three groups that bore most of the brunt from the crisis - healthcare industry, small and mediumscale businesses (SMEs), and the vulnerable. But, the size of the stimulus package paled in comparison to countries of similar size. While Nigeria’s stimulus package was 1.6% of its GDP, Morocco, Namibia, and Senegal deployed packages valued at 2.7%, 4.3%, and 7% of their GDP
respectively. The Federal Government also put out a lock-down order for several weeks, closed the border, banned overseas travel for moths. Revised its budget to reflect the new oil price, arranged for COVID testing kits and safety gears from China and are currently arranging for vaccines. The overall aim was to ensure that economic output was eventually restored to the prepandemic levels. On a micro level, the goal was to protect individuals and businesses from the effect of the pandemic. Despite scepticism from the general public on these policies, these strategies however worked, as Nigeria saw a swift exit from the economic recession in Q4 2020. SO, WHAT POLICY MEASURES CHANGED? Considering the significant adverse consequences of the pandemic as well as the unprecedented disruptions in global supply chains, the CBN in furtherance of its financial
stability mandate announced the adjustment of the following policy measures: EXTENSION OF MORATORIUM: All CBN intervention facilities were granted further moratorium of one year on all principal repayments, effective March 1, 2020. INTEREST RATE REDUCTION: Interest rates on all applicable CBN intervention facilities were reduced from 9 to 5 percent per annum for 1-year effective March 1, 2020. CREDIT SUPPORT FOR HEALTHCARE, AGRICULTURAL AND MANUFACTURING INDUSTRY: The CBN put in place intervention facilities to meet the potential increase in demand for healthcare services and products to healthcare practitioners who intended to expand/build the health facilities to first class standards. This was also in addition to the growing size of existing interventions to agricultural and the manufactur-
ing sectors. REGULATORY FOREBEARANCE: The CBN granted all Deposit Money Banks leave to consider temporary and timelimited restructuring of the tenor and loan terms for businesses, households and sectors most affected by the outbreak particularly Oil & Gas, Agriculture and Manufacturing. STRENGHTENING THE CBN LDR (LOAN-TO-DEPOSIT RATIO) POLICY: Deposit Money banks were encouraged to continue to build capital buffers in order to improve resilience of the sector. CREATION OF N50 BILLION TARGETED CREDIT FACILITY: The CBN established a facility through NIRSAL Microfinance bank for households and small and medium sized enterprises (SMEs) that were hit hard by the pandemic, including but not limited to hoteliers, airline service providers, healthcare merchants etc.
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