BusinessDay 03 Mar 2021 by BusinessDay

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news you can trust ** wednesday 03 march 2021 I vol. 19, no 769

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25 prospective airlines N mull operations in Nigeria

ifeoma okeke

igeria’s aviation industry is experiencing a flurry of activities with new airlines coming up, as 25 prospective operators are in the process of marking their Continues on page 31

Here’s how Nigeria plans to roll out vaccines in coming days Temitayo Ayetoto

total of 3,924,000 doses of Oxford/AstraZeneca vaccines arrived in Nigeria on Tuesday from the global initiative for equitable vaccine Continues on page 31

Arole Oodua, Ooni of Ife, His Imperial Majesty Oba Adeyeye Enitan Ogunwusi (m) at the official unveiling of Covid-19’s first and only made in Nigeria Herbal remedy duly certified and approved by NAFDAC. He is flanked by chairman/CEO, YEMKEM International Limited, Prince Dr. Akintunde Ayeni; Managing Director, Organic Remedies, Yemkem International, Akinyemi Ayeni; Company Lawyer, Derin Fagbore; Human Resources Director, Adejumoke Thompson; Executive Director, Quality Assurance, Prof. Olapeju Esimai; Executive Director Marketing, Yemkem International, Ayeni Rita; R&D Director, Yemkem International, Adewumi James, and other staff of Yemkem International Limited, at the Oodua Palace, Ile-Ife, Osun State, recently.

Inside What to expect in Apapa property market as gridlock ends

P. 30

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Page Financials Becomes One of 76 ACCA-approved Employers In Nigeria

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n line with her commitment to drive human capital development, Page International Financial Services Limited, one of Nigeria’s foremost retail financial Institutions has become an approved employer of the Association of Certified Chartered Accountants (ACCA) in the Professional Development and Trainee Development, Gold category. Page Financials becomes one of only 76 organisations in Nigeria who have received this status recognition.

and development for their ACCA members.

T h e A C C A A p p rove d Employer status is awarded to leading organizations that offer outstanding continuing professional development opportunities to their finance professionals and that demonstrate superior p r o fe s s i o n a l va l u e s , ethics and governance at the workplace. The programme recognizes employers’ high standards of staff training, accountancy resources

Speaking at the event in Lagos last week, the CEO of Page Financials, Mr. Segun Akintemi while receiving the membership certificates, said “As a leading Financial Institution in Nigeria, Human Capital Development is a key component of our corporate growth strategy. With hundreds of hours of learning and development d e l i ve re d ye a r l y, t h i s certification recognizes

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The assigned status indicates that professionals from financial departments get supported during their professional development and training. ACCA accreditation proves the effectiveness of the company ’s investment in human capital and characterizes Page as a responsible employer with a strong HR brand. Now Page employees can follow a simplified procedure to confirm their membership in the association.

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Page Financials’ efforts in investing in people development and growth t h a t t ra n s l a t e s i n t o company’s development and growth.” Responding, Mr Thomas Isibor – Head, ACCA Nigeria said “Staying relevant to the market is very important in an economy like Nigeria. ACCA believes in continuous development and it would support Page’s capacity building of its employees and developing the human resource skills needed for flexible learning experience.” The Programme will create collaboration opportunities between Page and the ACCA to foster growth and development opportunities for the Institution’s employees, including access to certification courses to further up-skill employees and advance their financial careers.

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Oil demand to reach 100m bpd in 4 years - McKinsey ISAAC ANYAOGU

il demand is expected to take two to four years to return to 2019 levels, depending on the duration of lockdowns and the pace of GDP recovery, forecasts by McKinsey and Company, a leading management consultancy firm, shows. “Based on our Global Energy Perspective referencecase demand insights, current OPEC+ intervention will be sufficient to help balance the market in 2021, with prices remaining at a sustained level of $50 to $55/bbl through to 2025,” analysts said in a report. According to the Energy Information Administration (EIA), total oil production averaged more than 100.61 million barrels per day (bpd) in 2019. OPEC said it expected global oil demand in 2021 to increase by 5.9 million bar-

rels per day year over year to average 95.9 million barrels per day. The report said that if GDP growth recovers faster than expected, the world may see a near-term price increase at more than $55/bbl. However, if demand recovers slower than expected or if OPEC+ stops cutting output, prices could be depressed or highly volatile for the next three to four years. Crude oil demand has partially recovered since April 2020 but still ended the year approximately 9 million barrels per day (MMb/d) below the 2019 level, with continued COVID-19-related lockdown measures in January 2021 keeping it around 6 MMb/d lower than January 2019. Supply remained robust until April 2020 and then dropped by 13 to 14 MMb/d in May, driven by OPEC+1 cuts and shut-ins (that have mostly returned to the market), thus showing the willingness of OPEC+ to continue

interventions. The market saw an oversupply of approximately 20 MMb/d in April 2020, pushing Brent prices to $18 per barrel of oil (bbl) for the month, before recovering to $50/bbl by the end of the year. OECD commercial inventories remain at high levels and, although we have seen draws over the past months, they are still 150,000 barrels above pre-COVID-19 levels. The consultants found that long-term equilibrium oil prices have decreased by $10 to $15/bbl compared with pre-COVID-19 outlooks, as driven by a flattening cost curve and lower demand. Under an OPEC-control scenario, in which OPEC maintains its market share, we see a $50 to $60/bbl equilibrium price range in the long term, fueling 10 to 11 MMb/d US shale oil and 11 to 13 MMb/d deepwater production from pre-financialinvestment-decision (FID) projects,” the analysts said.

L-R: Joshua Yau, managing vice president for OPay Nigeria; Iniabasi Akpan, country manager; Oladipo Omogbenigun, vice president, payments solutions and corporate partnerships, and Dotun Adekunle, vice president, product and engineering, at the Opay press briefing in Lagos.

Risks facing Africa require urgent IMF special fund – Afreximbank report HOPE MOSES-ASHIKE

he risks facing Africa and the rest of the world make the issuance of additional International Monetary Fund (IMF)’s Special Drawing Rights (SDRs) more urgent, according to a report released on Tuesday by Afreximbank. Special drawing rights are supplementary foreign exchange reserve assets defined and maintained by the Washington based IMF. SDRs are the IMF’s reserve asset, and are exchangeable for dollars, euros, sterling, yen and Chinese yuan or renminbi. The IMF has so far allocated SDR 204.2 billion, equivalent to roughly $285 billion. Deploying additional SDRs will bolster investor confi-

dence and strengthen Africa’s economic recovery, besides preventing liquidity crises from morphing into solvency crises, the report says. The risks facing Africa’s growth outlook include weaker-than-expected recovery among the continent’s key trading partners; abrupt tightening of financing conditions; a premature return to fiscal consolidation; climate change and extreme weather events that could cause food prices to spike; and longer-lasting COVID-19 infection rates. Most of these are contingent on the pandemic’s evolution, which could undermine the recovery process and weaken governments’ capacity to respond effectively to prolonged hardship. Another risk facing Africa’s growth is if vaccine deploywww.businessday.ng

ment is hindered by supply bottlenecks or some citizens’ reluctance to be vaccinated – as has been the case in parts of Europe – new waves of infection could rage. Slow growth in Africa’s main trading partners could inhibit the region’s resurgence through lower export demand and reduced investment. According to the report, the development impact of such a move will also be broad-based and longer-lasting. It will benefit low-income Debt Service Suspension Initiative (DSSI) eligible African countries as well as those larger nations, like Nigeria and Kenya, that opted out of the G20 initiative to preserve access to international capital markets and will play a key role in the region’s recovery as major drivers of intra-African trade.

NEWS

Commentary

Business owners recount tales one year after COVID-19 Obinna Nwachukwu, Abuja

hisom Marvelous Elekwa is a young graduate of Public Health from one of the private universities in Nigeria. After two years without a job and not ready to watch her 50-year old mother struggle with her siblings school fees, Chisom in November 2019 went into the rice business, buying from producers and selling to consumers. She invested her life savings into the business which became instant success as she had huge patronage. But that joy was short-lived as the coronavirus disease which index case in Nigeria was detected in February 2020, took away her means of livelihood. Fortunately, she applied and got N1millon loan from the Federal Government to cushion the effects of the pandemic. Today, Chisom is back to her rice business owing to the lifeline. But while Chisom is grateful and happy, Jummai Abdullahi, another small scale entrepreneur is sad and distraught. She told BusinessDay that the N5 million MSME loan she took from the Central Bank of Nigeria (CBN) last year which she invested in cassava and poultry farming has become a source of sorrow. Her 10 hectare farmland located in the outskirts of Kuje in Abuja, was last year destroyed by cattle herders whom she alleged invaded her farm at a time the crops were about to be harvested. “My brother I am in tears. All the money I took from the CBN and the ones I borrowed from my bank went down the drain due to no fault of mine. I went to my farm on November 10, 2020 to discover that the cattle ate up all the crops. How and where do I start from paying back the loans?’’ she said with tears. The above two cases illustrate the joy and sadness associated with small scale entrepreneurs who were pushed to the world by the ravaging effects of COVID-19 which was first recorded in Nigeria on February 27, 2020. In one year, the COVID-19 pandemic has had a far-reaching impact on the country’s already fragile oil and importdependent economy. The pandemic affected the livelihood of 85.2 million people living in poverty, who mostly sustain themselves on daily labour, and 41.5 million small and medium enterprises (SMEs), which account for 76 percent of the labour force and contribute half of the gross domestic product (GDP) but are mostly informal. The World Bank Group predicts that the long-term fallout of the pandemic led to food shortages, massive unemployment, and large-scale business failure while the recession that followed may increase the number of people living in poverty to 95.7 million by 2022, and

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reduce Nigeria’s economic and development outcomes. The government has taken decisive actions to mitigate the humanitarian and economic impact of the pandemic and the oil price shock but the outcome is still uncertain. Government efforts have been enhanced by a US$3.4 billion loan from the International Monetary Fund (IMF) and have been augmented by massive support from the private sector and development organisations. In the wake of the pandemic, the Federal Government provided access to funds for households and businesses affected by the pandemic, including cash payments for the most vulnerable as well as an Economic Sustainability Plan (ESP) - a one-year programme estimated at N2.3 trillion, focusing on achieving mass employment and mass domestic production and on expanding pro-poor spending to protect the vulnerable. There was also a fiscal stimulus for micro, small and medium enterprises (MSMES) which include N50 billion loan SMEs, extension of revenue remittance deadlines for key non-oil tax payments (VAT, corporate taxes) and 50 percent rebate on corporate taxes for employers who do not make staff cuts between March 1 and December 31, 2020. Others were: three-month repayment moratorium for all TraderMoni, MarketMoni, and FarmerMoni loans and to all Federal Government funded loans issued by the Bank of Industry, Bank of Agriculture, and the Nigeria Export-Import Bank Central Bank measures. COVID 19: Impact on businesses The COVID-19 pandemic presented new challenges to businesses, disproportionately affecting smaller and less-efficient firms across all industries. Businesses had to move quickly to remote operations while ensuring business continuity under the lockdown. They had to change their operating models to safeguard workers and customers, manage disruptions in supply chains and cash flow, and respond to changing demand. Increased working capital requirements coupled with liquidity constraints, reduced access to forex for imports, logistics disruptions at ports and in interstate transport, and rising insecurity in the north have strained business operations. Right now, experts say many businesses are being forced to downsize operations, retrench workers, and reduce compensation to avoid failure. Indeed, the pandemic severely affected MSMEs on the demand and supply sides. Both micro-enterprises, which are estimated at 37 million, and the approximately 28,000 SMEs are experiencing these impacts. A survey by the Lagos Chamber of Commerce and Industry @Businessdayng

(LCCI) on the impact of the COVID-19 crisis on the Lagos business community revealed that 81 percent of SMEs were “severely” affected by the pandemic. On the supply side, MSMEs have limited capacity and digitisation to adopt their business model to the new operating environment and changing consumer behaviour. Many reduced labour capacity because employees have to tend to children while schools are closed or operate remotely. They have struggled to create a safe work environment, to observe new health protocols, and to move to cashless transactions to protect their workforce and customers; only a few are able to work remotely. To minimise the long-term costs of losing viable businesses and jobs, experts say liquidity must urgently be injected into affected sectors to meet mounting working capital needs. COVID-19-induced business opportunities Despite its negative side, some business owners and managers said COVID 19 made them think inwards. The closure of international borders by the Federal Government made entrepreneurs resort to backward integration as well as open new market outlets to sell their products. Areas that hitherto were ignored became market centres as producers explored new areas of business and marketing became competitive. Edmund Ohiwerei, and Johnson Obinadi, joint owners of a garri processing factory in Keffi, Nassarawa State, told BusinessDay that the pandemic forced them to visit some remote villages and communities in search of buyers of their products. The result, they said, was rather than fold up, they now have a larger market than before the pandemic. At the same time, their turn over doubled. In the same vein, yam, rice and other food crops and noodle producers had thriving businesses as governments and individuals bought large consignments for distribution to as palliatives to the less privileged. Analysing the situation, Samuel Ajoku, a professor of development economies said the pandemic presented opportunities that transformed some sectors and drove recovery. “Agile companies that can adapt their business models to changing consumer behaviour, reduce dependence on imports, secure supply chains through greater value-chain integration, and increased competitiveness in regional markets became stronger during the crisis”, he said. Another economist, Tunde Lawal said interventions arising from COVID-19 encouraged firms to take advantage of the opportunities to diversify their business interests and markets.

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National insolvency - Long may it continue!

DAVID HUNDEYIN

n April 2013, I stepped out of my airport taxi at the National Youth Service Corps headquarters at Tigris Crescent, Abuja. I was there to officially register in person for the NYSC program as foreign graduates were required to do for some reason. First came the security guard at the gate who needed to emphasize how powerful he was - a few barked instructions about signing in. Something about a pen, followed by a song and dance about directing me to the relevant office. Then came the registration office drama, featuring a distinctly bored-looking Hajiya slouched in the chair. “Where is the passport with your UK student visa in it?” she wanted to know. Said passport had gone missing years before when a bag of mine was stolen in Bradford, and I informed her accordingly. Apparently, I had to get an affidavit from the Federal High Court across the road before I could be allowed to register, she said. “You can’t register today.” Bearing in mind that my Arik Air return flight was for 7PM

that evening, this was clearly not an option, so I set off on an epic odyssey across Abuja tr ying to obtain this elusive piece of paper. “You have to get a “Police Extract,” I was informed at the court. I brought out the document I received from the West Yorkshire Police when I reported the theft of the bag with my old passport in it. “Oh no, you need a Nigerian Police Extract,” the grinning face informed me. If I didn’t know better, I’d have sworn he was almost enjoying watching me become increasingly flustered. Why on earth did I need a Nigerian Police Extract for an item which went missing on another continent, I wanted to know. “That’s just how it is here,” he said. That’s just how it is here When the news emerged last week that 12 systemically important Nigerian federal highways are finally being opened to private investment and management via a concession program by the Federal Ministry of Works, there were no doubt thousands of fists pumping the air from Lagos through Ore down to Port Harcourt. Finally the top heavy, inefficient and historically incompetent Nigerian government was shuffling itself out of the way of trade and economic growth along some of the country’s most important trade corridors. The part of the story that perhaps did not make the headlines as much as it should have, was the fact that the long-overdue concession did not happen voluntarily. The Nigerian government did not finally sit down and take a long, critical look at its performance vis-

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The Nigerian government is so broke that it has finally been left with no choice but to let go of the state monopolies it so desperately wants to maintain and control

a-vis what the country’s economic performance needs to be, and then decided to do the right thing. If that was the case, this decision would have been made at least 2 decades ago. Instead, as is always the case with the Nigerian government, the inefficient and unworkable status quo was allowed to deteriorate until the situation became completely untenable and then righted itself via hard reset. Like the last time Nigeria emb a rke d o n a s e r i e s o f p r i vat e sector-driven reforms, this decision and the attendant decision to finally privatise the transmission part of the power sector value chain were made by budget cuts. To put it simply, as I have said repeatedly in this column over the past 2 years, the Nigerian government is so broke that it has finally been left with no choice but to let go of the state monopolies it so desperately wants to maintain and control. When it happened in the late 1980s under Ibrahim Babangida, an oil price crunch and a debt crisis necessitated the structural adjustment, which brought a second wind into Nigeria’s beached economy. It is happening now b e caus e of an unpre ce dente d public debt crisis amid shrinking revenues and investment that is running for the hills. That’s just how it is here. More public finance cris es please! What struck me about my sojourn through Abuja that day in 2013 was just how many people were employed in the public sector to do as little work as possible in as much time as possible. There was

How smaller non-profits can manage their fund raising

onprofits are borne out of the need to impact society, which like any other venture requires a well-established system of consistent funding. However, for smaller ones despite the promise of genuine impact, they face a plethora of challenges ranging from lack of structure, inexperience, and financial mismanagement. Here are some ways small nonprofit leaders can improve their funding efforts. Define Core Objectives: We are living in an unprecedented time, so why should anyone want to give to your organization? An important thing to do before soliciting external help is to do an honest appraisal by examining the objectives and needs of your organization. Why are you pursuing this cause? Who will benefit from it? What is your budget? What are your needs? When do you need resources? Having answers to these questions helps you put things in perspective. You will know who your potential supporters are and be able to start the conversations that will create an emotional connection. While on this, be sure to pay attention to their needs and how your organization can help meet them. Understand their priorities. Communicate your good works and never forget to express gratitude. Your sponsors should know how their help has

allowed your organization to accomplish its mission. Set up a team: Smaller Nonprofits do not have the luxury of recruiting professionals to manage fundraising efforts, but they can capitalize on the shared passion of like-minded volunteers who have some experience and will donate their skills and time. By forming teams within this group, not only will they will multiply efforts through ideas, knowledge sharing and network exchange; commitment, accountability, leadership and the much-needed support for cloudy days are examples of what teamwork can yield. Delegate and assign leaders who would be responsible for key activities including planning and budgeting, donor and sponsor engagement, operations and logistics management, and other tasks that will place the organization in face of the right audience through marketing. As much as possible, nonprofit leaders should engage with volunteers. While some may not have fundraising experience, they can donate other complementary skills. For instance, you would need them to put the word out there or help with event set up or even sell tickets. And even in uncertain times, studies have shown that volunteers who cannot offer their time and skill are more willing to help financially. Leverage on social media : Social

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David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. He tweets @DavidHundeyin.

OSAYI ALILE

media makes it easier for grassroots organizations to access a wider audience interested in community-based projects from all parts of the world, but effective and consistent communication, publicity, and using the right tools make this happen. There are legitimate crowdfunding websites that allow many people to contribute to causes or projects that appeal to them. A popular example is GoFundMe. There’s Global Giving and Causes by Facebook. These websites can collect secure donations efficiently by collaborating with prominent payment companies. Now that transaction processing has been taken care of, small nonprofits should focus on driving the right messaging. It is also important not only for them to have an online presence, using suitable social media channels to enhance visibility while pushing appropriate content will produce user reaction from even potential donors. Partner and collaborate with private brands and other nonprofits: Smaller Nonprofits should consider partnerships to meet their funding needs. While there are challenges to maintaining mutually beneficial partnerships, peer-topeer partnerships where each partner complements one another’s strengths or weaknesses is a good way to minimize friction. These organizations can seek funding from potential sponsors as a

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the distinctly uninterested Hajiya and the chorus of “Ina kwana” surrounding her fellow underemployed bureaucrats doing slight amounts of busywork. There was the adventure to the police station in Mpape that cost me N11,000 to get through 4 different uniformed pen pushers on my way to obtaining a document that was apparently “free.” It was the dozens of people at the court whose jobs were not especially discernable, but who were nevertheless very conspicuously employed on a government payroll. It was the security guard at the gate of the NYSC HQ and the tiny army of underemployed minions flitting around him, also on Joe Public’s tab. I realised that day that something really has to give in the way Nigeria’s public finances are administered. The country was simply not wealthy enough to be that unreasonable and wasteful. After managing to get the required documents and complete my registration in the nick of time, I got onto my flight to Lagos wondering what it would take for that status quo to end. 8 years later, I think I have my answer now.

group, and in this case, they are more likely to succeed than when they put in individual applications. The reason for this is that donors are aware of the impact that’s possible when resources in form of talents, experience, expertise, networks are combined to achieve a common purpose. On the other hand is the partnership between them and private organizations. These days, most established organizations are looking to partner with grass root organizations because studies have shown that they make more genuine and transformational impact. Also, small and medium-sized companies looking to incorporate corporate social responsibility activities into their operations will benefit from the credibility and reach of these organizations, hence collaboration will always be a welcome idea. Leaders in this category will encounter some missteps trying to figure out a working system, however, with patience and persistence they will find balance.

Omagbitse Barrow is the Director of the Abuja-based #LetsGetInvolved Program @GetInvolvedNaija

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SMALL BUSINESS HANDBOOK

EMEKA OSUJI

ntrepreneurs are a special breed of people, whether they are born or made. They are driven as much by the desire to make a living as to make a life; probably more by the later desire to make a life – to add purpose to living for themselves and society, and if possible to leave a legacy. Every successful entrepreneur began as a one-man business, often in the bedroom or garage. Some started in a lounge, as many did or in disused cars on the street corners. It doesn’t matter much. Just be sure to have clearly visualized the end from the beginning. Again, be sure you have a man or woman with a yearning for a sense of purpose in life. There is no need to worry about how or where the story begins for you. Just go ahead with your dream. This might look like a difficult time to dream dreams in Nigeria but those born with the entrepreneurial spirit do not listen to much of the noise around them. The quest for adding purpose

to life is mostly behind some of the seemingly bizarre decisions that people make, which others find very hard to understand. It is an important element of entrepreneurship to be courageous and strong. One of such bizarre acts is Dangote’s massive investments in Nigeria, at a time it is fighting a losing war against domestic and foreign terrorism. Many would think he is too optimistic. Others have other explanations for his action at a time the country is most divided, most unstable and most dangerous to live in. Those who visited the Dangote complex last week were dumbfounded. Those in government must have wondered how unproductive they have been to those they claim represent, seeing what an individual was doing with private funds. Entrepreneurs have courage and foresight. Perhaps, there is something Dangote knows and sees which many of us do not see. Mere mortals who went to the refinery were literally frozen. Entrepreneurs are often crazy to the ordinary man. How, for instance would 5000 sane people apply to join Ernest Shackleton and Edward Wilson in December 1902, on an expedition called Endurance, to the South Pole, with doubtful chance of survival. The South Pole is the southernmost point on the surface of the earth. It lies on the freezing Antarctica; on the opposite side of this planet, from the North Pole.

Whatever their reason, that same line of thought must have been behind the decision of the over 200,000 people who applied to join a Dutch company, Mars One, on its planned trip to Mars where it hopes to create a human settlement by 2023.Two men and two women were to be sent first and four more every two years. Adventurers and entrepreneurs are kindred spirits. The same motivation drives all these enthusiasts to embark on these adventures – the quest for a purpose in life and the good of humanity. Was it possible for any of the enthusiasts that applied to partake in these adventures to determine whether they will survive? There is no formula for success. So it is also impossible to say who would succeed or fail as an entrepreneur. At best we can look back at some of the key qualities of successful entrepreneurs. They are all people of big dreams and their dreams are not hazy. These people are driven by a clear vision of where they want to go. They think success all the time, which presupposes that they are positive thinkers. Pessimists have little room in this place. Pessimists look too much at the weather and often fail to plant. Dangote continues to plant, even during drought. His faith in the country dwarfs those of the rest of us, including probably our government. Successful entrepreneurs are men and women of faith. The solu-

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Pessimists look too much at the weather and often fail to plant. Dangote continues to plant, even during drought. His faith in the country dwarfs those of the rest of us, including probably our government

Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emekaosujii

Our wakeup call

“Wake up call” is a commonly used term and one definition I found for it is that it is “an event that alerts people to a danger or difficulty”. Perhaps better still is this definition, which says it is, “a thing that alerts people to an unsatisfactory situation and prompts them to remedy it”. If I may add to this, I would also call it an awakening. It has been widely documented since that eventful day, September 11, 2001, how the catastrophe had the effect of impelling a significant number of Americans to take stock of their lives. The daily rat race they were so used to running in autopilot, paused abruptly, as the calamity literally stopped all in their tracks. As a result of this horrific tragedy and the subsequent trauma, many found themselves seeking more meaning to life. What was life really all about? It was a wild wakeup call that “life was too short” for one to spend all his time doing things which didn’t bring fulfillment. But do you know the interesting thing? It wasn’t only those in New York or in America who experienced this rude awakening. Modern technology meant the frightful sight of the two commandeered aeroplanes, plowing into the twin towers of the famous World Trade Centre, was broadcast simultaneously across the globe. It was as if the whole world stood still. And for a moment, it did. Truth is, this awakening happens to all of us at one time or the other during the course of our lives. Let me correct that. It happens repeatedly and at different stages throughout our lifetime. At times it could be triggered by an event as

dramatic as 09/11, such as miraculously surviving what should have been a fatal gunshot or by tragically losing a loved one. Other times, it could be a pivotal but joyous occasion such as becoming a parent but sometimes it could be something as relatively mundane as reaching a landmark age; turning 40 or 50. This too is often enough to force one to reappraise his or her priorities. As human beings, we will all encounter moments in life when it would only be natural for us to pause, take stock of where our past decisions have taken us to in life and juxtapose our accomplishments or lack of them, with our dreams. Are we living our ideal life? We may ask ourselves. Whatever it is that makes us take a step back, the important thing is that we’re sufficiently self-aware to “listen” to our emotions; alert enough to pick up on the signals. Most of us know what it’s like to desperately need a job and then the relief of finally getting one. You find yourself doing everything to fit in and adapt to the organization’s ways of doing things. But have you ever felt you may have adapted to the culture and values of your work place so much that it felt like you were losing yourself? You can hardly recognize yourself anymore as you’ve become accustomed to doing things at work that used to be incompatible with who you were. If you feel a restlessness or an uneasiness coming over you and you just feel like you’re not enjoying it anymore, no matter how good the emoluments and perks are, then that’s a clear signal. A signal that you need to pause and reassess things. Failure to notice these

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signals, maybe because they build up so gradually over time; or failure to make a conscious decision to free yourself when you feel trapped - usually because one is unable to let go of the financial security the job offers you - makes you a perfect candidate for a stress related illness. Heart attacks and strokes are the most common of these and the most grievous. There’s no need to say too much about this as I’m sure we can all recall instances, even if we weren’t actually present, when a friend, relative, colleague or a member of our staff slept and just didn’t wake up. Or slumped at his desk and that was it. Or as was the case with someone I knew, the driver just noticed his Oga had stopped responding mid conversation as he drove him. He was gone. I compare this to having a drink of water when you’re really parched. As is so typical of us human beings in life generally, we will often pour more water than we actually need and so we fill the big glass to the brim. So, there you are, happily swigging down your glass of water. At first it feels heavenly; like you can drink a whole river dry and so you gulp it down as if there was no tomorrow. It’s ever so refreshing and satisfying but in an instance and without the slightest warning, the feeling turns a corner. All of a sudden, it’s no longer enjoyable. Your thirst, which just a second before seemed insatiable is not just thoroughly quenched but drinking further now feels more like a punishment than anything else. That’s precisely the same way we punish ourselves. And that’s why those who refuse to take heed of the warning

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tion to things that appear to have no solution is faith in the almighty. To invest in Nigeria today requires faith; not of the clergy; not even of the Pope, but the faith of our father Abraham. Those who have no faith in the supernatural end their search for answers at the feet of canal men and matter. People of faith leave room for more – they go to the one that made heaven and earth. Faith according to Vusi Thembekwayo, is the ability to see the invisible; believe in the impossible and trust in the unknown. The Dangote complex in Ibeju Lekki is a demonstration of faith beyond faith. In the Christian theology, faith is even more powerfully defined as the substance of things hoped for and the evidence of things not seen. Actually, it is often the case that those who visualize themselves signing autographs for a crowd are the ones that actually get to do so. Seeing what is happening at Ibeju Lekki, at a time of serious, but downplayed civil war in Nigeria; where one man is threatening to become the only hope of the nation in the provision of everything, including the only product which the country produces, petroleum, then one begins to think that faith may be the most important element in successful entrepreneurship.

CHARACTER MATTERS WITH DAPS

DAPO AKANDE signals end up just shutting down. This is an instinctive psycho-physiological reaction to protect the mind and body from “overload” as a result of chronic or acute prolonged stress. Worse still happens to those who continue to push even after hitting this proverbial brick wall. So what am I saying? No matter how brilliant, diligent or resilient you think you are, if you haven’t learned to recognize, listen to and manage your emotions, you could be done for. Barring a cataclysmic occurrence like one naira exchanging for one dollar (which I believe we were once promised during someone’s presidential campaign not too long ago) within the next one week, our series on Emotional Intelligence will continue next week. Changing the nation...one mind at a time.

Akande is a Surrey University graduate with a Masters in Professional Ethics. An alumnus of the Institute for National Transformation and author of two books; The Last Flight and Shifting Anchors. He can be reached via dapsakande25@gmail.com. Follow him on Twitter via @Dapo_MINDS

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Wednesday 03 March 2021

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CBN & cryptocurrency ban: The need for a payment system regulator (II)

FRANKLIN NGWU

ontributing to the ongoing debate on the ban of cryptocurrency, Nigeria’s Vice President Professor Yemi Osinbajo counseled the CBN to consider more effective and proactive regulation than outright ban. This is in line with the above topic, which we started last week, and concluding this week. In the advocated objective-based approach, regulation is carried out based on the objectives that the regulator is tasked to achieve. A regulatory structure based on objectives will have one or more regulators, each tasked with a specific objective such as prudential regulation, consumer protection or payment regulation. It will often be asked to do this on a cross-sectoral basis, which is, without regard to the type or function of institutions being regulated. The strength of this approach is that it allows a stronger link between two of the elements of regulation discussed above – the objectives of the regulation and the institutional structure. Where appropriate, aligning these two elements in this way can contribute significantly to the success of the regulatory regime. There are currently two types of objectives-based approaches: Single, integrated regulator and Twin Peaks. An objectives-based approach could, alternatively, have more than one regulator, each tasked with different objectives. Twin Peaks is an institutional structure where there are two

regulators each of which is tasked with securing one of the two major objectives of regulation –prudential regulation and consumer protection. Twin Peaks has been described as ‘the sound’ institutional model for financial market supervision. The financial crisis serves as empirical evidence that prudential regulation and conduct of business regulation are not necessarily closely aligned, with the implication of this being that a single regulator is not necessarily able to manage these two objectives and therefore there is a stronger case for an objectives oriented approach along the lines of Twin-peaks. Twin- Peaks would also appear to be cheaper than having multiple regulators. It would lead to economies of scale as compared with having multiple regulators. Moreover, Twin Peaks allows for a clearer focus on different regulatory objectives. Where Twin Peaks assigns the central bank with the responsibility for prudential supervision, this usefully eliminates inter-agency fault lines in the flow of macro- and microeconomic information and locates all that information within the institutional group that will have to make critical lender of last resort judgment calls. On this basis, we argue that the CBN is not an effective regulator of consumer protection. It is simply too much to ask of a regulator in this day and age to carry out this multitude of functions, and for this reason we advocate the transfer of consumer protection of banks’ customers to a new consumer protection regulator (Financial Conduct Authority of Nigeria) that will work closely with the new Payment System Regulator also being advocated. Goodhart et al (1998) have argued that ‘the ultimate criterion for devising a structure of regulatory agencies should be the effectiveness and efficiency of regulation in meeting its ba-

sic objectives’. Regulators are arguably most effective and efficient when they have clearly defined and precisely delineated objectives with clear and precise mandates. A clear and internal management focus is more likely to be created when the objectives of the regulator are clear and precise and this can be best achieved through an objectives-based regulatory regime, based on the Twin Peaks model. As systemic (macro-prudential) regulation is different from prudential (micro-prudential) regulation, there is a question whether both should be carried out by the same regulator. With a better understanding of the regulatory lapses that contributed to the recent 2008 financial crisis, it is appropriate for the same regulator to be responsible for both macro and micro prudential regulations. As Twin Peaks allows this, it is therefore a desirable institutional structure for financial regulation. The objectives-based system using Twin-Peaks equips the regulators to respond to changes and developments in the financial markets. Systemic risk no longer arises with banks alone and can come from either Insurance or securities firms or both. Twin Peaks provides the opportunity to recognize (and address the fact) that systemic risk no longer arises with banks alone. Integrating both micro and macro-prudential regulation of banks, insurance and securities firms into one regulator gives that regulator the authority to supervise all firms posing either micro or macro-prudential risks. In effect, structuring the regulator based on objectives rather than institutions addresses the issue of systemic risk posed by both banks and non-banks. With the assumption that the banking supervision of the banks, particularly the capital adequacy issues, is retained with the central bank, it is further argued that all aspects of

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The CBN is not an effective regulator of consumer protection. It is simply too much to ask of a regulator in this day and age to carry out this multitude of functions

Dr. Ngwu, is an Economist/Associate Professor of Strategy, Risk Management & Corporate Governance, Lagos Business School and a Member, Expert Network, World Economic Forum. Email- fngwu@lbs.edu.ng,

This is the Lagos of my dream

et me start by saying how truly honoured and privileged I am to have just been decorated as the Grand Patron of the Christian Association of Nigeria (CAN), Lagos State branch. But it is a bigger honour to have been asked to felicitate with you at another yearly thanksgiving of our Interdenominational Divine Service, which is called IDDS 2021, with the theme: “A new beginning, a new dawn and a new glory”. A year ago when we were at the Shepherd Hill Baptist Church where our CAN President, Dr. Samson Supo Ayokunle, admonished us and challenged us, the first index case of COVID-19 had not happened in Nigeria. A year ago, we hadn’t seen the unprecedented security challenges facing our dear country. A year ago, we hadn’t seen the huge destruction that came out of the peaceful EndSARS protests that we witnessed in Lagos. A year ago, we hadn’t seen the recession that has culminated in the economic crises in our country and the world. And so, everyone of us here today has every reason to thank the Almighty God that has kept us because it has been a difficult year. Lagos also witnessed an unprecedented protest that started peacefully. Our youths, the leaders of today, voiced their grievances to all of us in government and this led to the destruction that we have never seen before in this part of the world. We were asking ourselves, “How did we get here?” We have also seen that within that one year, Nigeria’s economy had been hit by recession.

We have seen high numbers of unemployment. We have seen huge security challenges that have shaken the foundation of our country. We have seen all of the economic challenges that have not only hit Nigeria but have hit the bigger parts of the entire world. It is a time that the topic we have taken here today, “A new beginning, a new dawn and a new glory”, cannot be better imagined and cannot be better put forward. Is it the security situation in our country? It calls for prayers now more than ever before. It calls for our intercession. It calls for all of us to come together, stronger, bigger and better. We have all witnessed the challenges of our country. We don’t have any other place that we can call home. We need to be very careful not to turn the security issues in our land into an ethnic, religious or tribal war. We need to be careful to ensure that we bring out and we isolate criminally-minded people in our communities. Let’s avoid tribalising it, giving it an ethnic coloration or turning it into a religious issue. We are the largest country in Africa; where will we go to? Who will take us? We have no other land than here and that is why I said that, indeed, Nigeria needs a new beginning. We are fighting not only health and medical wars because, like I told us, COVID is still around; all of us are masked up; we cannot even identify ourselves. We can’t hug ourselves. We can’t greet ourselves and we can’t even shake ourselves. So, we have a health issue that is bothering all of us.

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prudential regulation of the non-core banking insurance, securities and other firms should also be transferred to the prudential unit of the central bank (Prudential Regulatory Authority of Nigeria). This will help in the comprehensive understanding and monitoring of the capital requirements of both the banking and non-banking activities of the financial groups or holding company which is in line with the merits of combining both micro and macro prudential regulation to ensure systemic stability. In the same vein, all consumer protection issues in both banking and non-banking activities should be transferred to a consumer protection agency (Financial Conduct Authority of Nigeria) that should be created for this purpose. Moreover, as the central bank currently supervises the banks, what is therefore required is the strengthening of its regulatory capacity through the merging of the relevant units of the other regulatory agencies with that of the central bank (Prudential Regulatory Authority of Nigeria). This will ensure not only the application of economies of scale and scope in availability and utilization of skills but also effective regulation of the financial institutions through the sharing of ideas from their previous agencies and the enhanced tacit knowledge that will evolve. Even the financial institutions will prefer this approach due to the reduced bureaucratic and regulatory engagements that will emerge in addition to the lower regulatory fees that they will pay.

BABAJIDE SANWO-OLU We have an economic issue that is challenging us. The country is just coming out of a recession - let us hope that it really comes out of it- when people find it difficult to earn a living, when people find it difficult to eat three decent meals a day. We are confronted with security challenges. We cannot afford to add political instability to it. Today, more than ever before, we need to come together as a nation. We need to come together as the body of Christ. Our leadership in the Christian faith needs to come stronger together, irrespective of your individual differences, and let us hold the beacon and the light of the nation together and pray to the Almighty that during our time, greater and better things will happen. Not under your watch, will we see a crumbling nation or crumbling state. It will never happen and it will never happen in your time. For my government and me, we will continue with all our strength to serve you and serve you well. We will continue to use every breath that God has given to us. Transparently and truthfully, we will continue to push all the economic pillars that we have set for ourselves. For Traffic Management and Transportation, I will come here some day and say to you that our railways have started working. I will come here some day and I will declare to you that we have opened up 16 brand new jetty terminals that you can use for water transportation. I will come here one day and I will declare to you that we have built the biggest children hospital in West Africa. I will come here one day and I will tell you that we have built an

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Infectious Disease Research Centre, the biggest in Africa, so that when another pandemic comes, we can begin to produce vaccines in Nigeria, in Lagos. We do not need to wait for anybody in America or India for them to produce vaccines for us. These are commitments that we are putting together. Because of the strong youth population that we have, I will come here one day to say that our entertainment and tourism industry is second to none in the whole of Africa. Because, indeed, we would have galvanized and we would have encouraged those youths to be real entrepreneurs, the people who can carry our culture and our tourism outside the shores of our country. Finally, I will come here one day to talk boldly about Security and Good Governance and I will be able to tell you that, indeed, we all can sleep with our two eyes closed because by that time we believe that what we be have been asking for under the State Police would have come to reality and we can put our money where our mouth is and I can fully protect each and every one of you. This is the Lagos of my dream. This is the Lagos that I see. This is the Lagos that we are promising you. And this is the Lagos that we believe is possible for each and every one of us. Excerpts of Lagos State Governor Sanwo-Olu’s speech at the Interdenominational Divine Service organized by the Christian Association of Nigeria (CAN) at the Apostolic Church, Ketu on February 20.

Wednesday 03 March 2021

BUSINESS DAY

EDITORIAL

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Frank Aigbogun EDITOR Tayo Fagbule

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Nigeria’s scary security situation

ntil recently, the word ‘insurgence’ was alien to the Nigerian society. But the activities of the jihadist terrorist group popularly called “Boko Haram” opened this new chapter of militancy in Nigeria. Shootings, bombings, kidnappings, arson in various parts of the country became ubiquitous, especially in the North. These activities have heightened the spate of insecurity in the nation. For us to make progress as a nation, the spate of wanton killings must be stopped. No nation can make meaningful progress in this situation. Apart from igniting fear; insecurity has become the common word on the lips of every Nigerian and a discussion topic where two or three persons gather. The presence of several illegal armed groups, ethnic militia groups, religious fundamentalists and fanatics does not augur well for us as a nation. These have given birth to series of violent crimes and injustices that we hear every day. It is clear that these happenings are negatively affecting Nigeria politically, economically and culturally. Even the international community is losing confidence in the ability of Nigeria to contain

the situation. However, the worst of all is the kidnapping of young innocent schoolchildren especially those in boarding schools in northern states. Kidnapping of school children started seven years ago in a little known community called Chibok, in Borno state on April 14, 2014 when Boko Haram terrorists abducted hundreds of schoolgirls from their dormitories at a time the students were writing their final year exams. About 57 of the girls managed to escape at different times while on transit with their abductors. This Chibok incident was followed on 18th February 2018 by the abduction of another 110 schoolgirls by Boko Haram in Dapchi town of Yobe State. On 11th December 2020, gunmen attacked Government Boys Science Secondary School in Kankara Local Government Area of Katsina State and took away over 300 students. Incidentally, it happened while President Buhari was in his Daura hometown of Katsina State. Again, on 17th February 2021 another set of bandits abducted 27 students and 15 others at Government Science School, Kagara in Niger State. The last and most recent was the abduction of 317 female students on February 26, 2021 by bandits at Government Girls Secondary School Jangebe,

Zamfara State in an early morning raid on their school. Many of these students (from Chibok and Dapchi) are yet to be rescued and reunited with their families several years after they were kidnapped. Suffice it to say that these kidnapping cases as well as destruction of farm lands and other heinous crimes all over the country paint a picture of a deteriorating security situation in the country and a growing assertiveness of terrorist groups. We reject government’s ineffective response to the deepening insecurity in the country and failure to protect civilians from the insurgency as well as criminal violence. That the gunmen were able to move hundreds of boys and girls through the roads without challenge shows security in the areas are inadequate. Successful negotiation resulting in the release of kidnap victims is one thing that is fueling the spate of kidnappings across the country, making it a lucrative business with huge returns. Many armed groups operate in the forests therefore reaching an agreement of good conduct with one of them does not guarantee that others would not embark on a similar venture in the future especially when certain concessions are made.

Nigerians should learn to hold those in government accountable. The federal government should be disgusted with what is currently happening. It is ironic that while government is willing to part with millions of Naira to placate the criminals, Nigerian soldiers have lost morale, defending the nation with no proper care, facilities and equipment. The soldiers also contend with vast, ungoverned territories that they do not know, but which are familiar ground to the criminal gangs and insurgents living there. In 2019 alone, more than 800 soldiers and policemen were killed; one of the deadliest years since Boko Haram’s violence started 12 years ago. On the whole over 16,000 persons have lost their lives in the last 12 years when Boko Haram insurgency started. As a way out, government must review the existing security architecture in the country, motivate the soldiers and stop payments for ransom. Anybody caught involved in kidnapping and banditry should be made to face the law. In this regard, the military should be made to face its primarily duty of defending the territorial integrity of Nigeria while the Nigerian Police Force should be re-organized to handle internal security; properly equipped and motivated.

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Wednesday 03 March 2021

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COMPANIES&MARKETS After rout in February, will March bring any relief for Nigerian stocks? MICHAEL ANI

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 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 earning 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 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 a response to BusinessDay.

Last year, Nigerian equities benefitted from the lowinterest-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 non-bank local investors from investing in OMO bills; a move that resulted in excess liquidity in fixed income space. Yields 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 outflux of portfolio investors who exited the market due to Nigeria’s poor management of dollar liquidity. But it’s barely two months away into the new year, and the free fall in interest rates are reversing upwards, hurting

equities. Interest on one-year treasury bills climbed 100 basis points to 5 percent at the last auction, February 24, as investors 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. The performance of the market 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,” he said. “The market is gradually correcting, and even those stocks that are expected to weather the storm, may shed points,” Olusi said.

espite the prevailing traffic congestion around the Lagos ports with its attendant consequences for businesses, the inland container depots owned by SIFAX Group recorded a total of 49,835 Twenty-foot Equivalent Units (TEUs) for the 2020 business year. This, however, represents a slight drop in performance compared to 2019 when the off docks grossed 50,452 TEUs. SIFAX off dock operations comprise terminals at Trinity, Mid-Maritime, Okota 1 & 2, all based in Lagos. Of the total container volumes achieved, SIFAX Off

MODESTUS ANAESORONYE

he Pension Fund Operators Association of Nigeria (PENOP) said the recent invitation of some of its members by the House Representative Committee on Pensions was normal and part of its regulatory oversight functions. PENOP said the interactive meeting was to discuss the non-remittance of pensions by employers, the delay or non-payment of pension entitlements by pension fund operators, and general compliance with the provisions of the Pension Reform Act 2014. The Pension operator’s body in a statement signed by Oguche Agudah, its CEO, said the attention of PENOP has been drawn to the recent media reports concerning the House of Representative Committee’s invitation to some Pension Funds Administrators (PFAs). “We wish to state that the report is misleading as it failed to convey the meeting’s true essence, which was for a routine interaction session with Honourable members in furtherance of their oversight functions.” Agudah said that “the House Committee on Pensions had invited some Pension Fund Operators for an

interactive meeting to discuss the non-remittance of pensions by employers, the delay or non-payment of pension entitlements by pension fund operators, and general compliance with the provisions of the Pension Reform Act 2014. The Committee also asked for some information to aid in their investigative hearing, which the pension operators duly provided.” “We wish to state that we welcome interactions and inquiries by the Honourable members and, as always, provide our full cooperation, especially regarding proffering solutions to some of the challenges facing the smooth implementation in conformity with the Pension Reform Act 2014. We will continue to engage the honourable members and collaborate with them in the area of strict compliance with the Contributory Pension Scheme, Oguche said. “We value the House members and their contributions towards improving the welfare of the Nigerian workers who contribute to their Retirement Savings Account monthly and we, the pension operators, are fully committed to ensuring that these individuals receive inflationadjusted returns during their retirement, Agudah said.

Nigerian German Chamber of Commerce announces new president

L-R: Lawrence Nazare, group executive director, operations, Continental Reinsurance; Paul Kokoricha, non-executive director; Chief Ajibola Ogunshola, chairman; Olufemi Oyetunji, GMD/ CEO; Steve Iwenjora, non-executive director, and Abayomi Oluremi-Judah, group chief risk officer, at the official opening of Continental Reinsurance’s new headquarter in Lagos.

SIFAX Off Dock terminals record 49,835 TEU volumes in 2020 AMAKA ANAGOR-EWUZIE

House Committee on Pensions invitation for members’ part of regulatory oversight – PENOP

Dock Trinity had 13,109 TEUs for containers gated-in and 12,468 TEUs for containers gated-out as against 19,014 gated in and 20,369 gated-out in 2019. SIFAX-Mid Maritime Terminal witnessed an increase in its 2020 TEU volume. It recorded 6,062 TEUs and 6,517 TEUs for containers gated in and out respectively as against 2,609 TEUs and 1,727 TEUs recorded in 2019. SIFAX Off Dock, Okota Terminal 1, recorded 2,195 and 2,147 TEUs for gated in and gated out containers in 2020 as against 3,096 and 3,137 TEUs recorded in 2019 while SIFAX Off Dock- Okota Terminal 2’s 2020 performance shows an increase of 3,596 and 3,351

for containers gated in and out in comparison to its 2019 performance of 364 TEUs gated in and 136 TEUs gated out in 2019. In order to grow the profitability of the terminal in 2021, Ibraheem Olugbade, executive director, SIFAX Off Dock, confirmed that strategies have been put in place by the terminals to consolidate their prime positions. “In order to mitigate the effect of the road construction on SIFAX Mid-Maritime, we have begun dredging the waterside of the terminal and erecting exit security gate in preparation for berthing of barges at the terminal. In addition, the off docks at Okota, Lagos are also receiving box-

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es at the terminals through transfer by barges. Parts of the terminal floor have been renovated and strengthened to cope with more volumes. There have been several market drives with several shipping lines to take advantage of the new initiative and proximity to the major express road, and to also use as holding bays for their empties in line with NPA call-up system regime,” he said. According to him, “SBT Trinity terminal is temporarily closed due to the ongoing road construction along the Mile 2-Apapa Expressway, which we expect to be fully operational on completion of the road in the next couple of weeks”

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iger ian G er man Chamber of Commerce has announced the appointment of new president. This was announced at the 146th board meeting of the chamber. In her handing over speech, the former president, Tifase Onyeche said “It’s been an absolute pleasure serving as the President of the Nigerian German Chamber of Commerce (NGCC). We’ve just ended our 146th Board Meeting and I’m privileged to have had the opportunity to preside over the Chamber for the last couple of years. I’m pleased to be handing over to a capable successor, Igbuan Okaisabor”. Okaisabor who is the new president is a professional engineer and entrepreneur. He is the founder and chief executive officer of Construction Kaiser Limited (CKL), a 28-year-old building and civil engineering construction company operating in Nigeria. CKL started as a 5-man company working mostly on small renovation projects but has grown to handle large scale and complex building and infrastructure projects as the main contractor. Today, with a staff strength of over 200 with thousands of site operatives, CKL @Businessdayng

has become a leading indigenous construction company in Nigeria. Okaisabor is passionate about Nigeria and promotes a shared-value strategy where businesses seek economic success while creating social impact. He is currently a member of the Leadership Council, Initiative for Global Development (IGD), a US-based NGO that drives poverty reduction by catalysing business growth and investment in the developing world. Former Secretaries of State Madeleine K. Albright and General Colin L. Powell are founding co-chairs of IGD’s Leadership Council. In 2017, he was selected to serve as a member of the Governing Council Committee on the Lagos State Employability Support Project (LSETF).

Wednesday 03 March 2021

BUSINESS DAY

COMPANIES&MARKETS

Business Event

SEPLAT drives sustainability with fast-growing gas business, CEO says ...wins NGA award for gas industry support IHEANYI NWACHUKWU

eplat Petroleum Development Company Plc, leading indigenous energy company, has identified its fast-growing gas business as a strong catalyst for sustainable development in Nigeria. Roger Brown, Chief Executive Officer, SEPLAT, described this drive as a revolution, indicating that the direction is laudable and highly rewarding to the Nigerian people and the economy at large. Brown said this at the Nigerian Gas Association (NGA) Industry Multilogues 2, its 12th biennial International Conference themed “Powering Forward: Enabling Nigeria’s Industrialisation Via Gas” held virtually. Speaking on the company’s contributions to the Nigerian Gas industry, Brown said: “Our new Sapele Gas Plant processing capacity (PC) is 75MMscfd, increasing PC in the West to 540MMscfd (Oben and Sapele). “SEPLAT currently contributes about 30 per cent of gas to power generation in Nigeria. Its ANOH Project is to add 300MMscfd capacity and unlock over 1,200MW of gas constrained power generation capacity.” He, however, stressed the need to build institutional capacity to drive and sustain the transition, which is critical to attaining value and wealth advancement. The SEPLAT CEO also called for the need to drive investments through liquidity pools such as the capital markets, bonds and PFAs as well as exploring a myriad of financing options to provide funding for gas infrastructure projects. Brown, during his panel session dubbed “Nigeria’s Decade of Gas: The Industry Leadership Outlook”, said SEPLAT is strategically positioned to access Nigeria’s main demand centers, with its current well stock delivering 300 - 350MMscfd (Gross). With respect to the compa-

ny’s industry strides, it was, at the event, also honoured with the NGA Special Recognition Award for SEPLAT’s strong and outstanding support in its service to the Nigerian Gas Industry and the Nigerian Gas Association. Commenting on some of the challenges bedeviling the gas-to-power drive, the SEPLAT CEO said capital intensity; under-investment; delayed delivery of planned gas infrastructure; poor pipeline network; lack of cost reflective tariffs and huge debts in the power sector; lack of clear gas fiscal terms for PSCs and delay in passage of the Petroleum Industry Bill (PIB), amongst others, were issues to be addressed. Commending SEPLAT and other players for their dedication to the growth of the sector, Audrey Joe-Ezigbo, President, NGA, said there is the need to continuously project and leverage the potentials of gas towards enabling and reinvigorating Nigeria’s industrial sector. “Riding on the declaration by the Honourable Minister of state, Petroleum Resources, Timipre Sylva, to dedicate the new decade to the promotion and adoption of Natural Gas as the fuel of choice for national growth, it has become imperative for us to reinforce this paradigm, leveraging its benefits across diverse key sectors in Nigeria and across Africa.” The Nigerian National Petroleum Corporation’s Group Managing Director, Mallam Mele Kyari, in his address, said the Corporation was committed to fulfilling President Muhammadu Buhari’s directive to boost domestic gas supply. Represented by the Chief Operating Officer, Gas and Power, Yusuf Usman, Kyari stated that progress was being made on several of the projects, including the NLNG Train 7, with a foreign direct investment of between $3 billion and $5 billion; and the ANOH gas project, with a fully completed financing arrangement. He listed others as the

AKK, which he described as one the largest and most aggressive gas infrastructure that has ever been embarked upon in Nigeria, stretching 614 km from Ajaokuta, Abuja, Kaduna and Kano, and Lot B of the OB3 gas project, which is already producing 125 mmscfd of gas. In his address also, the Lagos State Governor, Babajide Sanwo-Olu, harped on the need to have a cleaner, more liveable environment, noting that he is planning well for the state’s huge population, guaranteeing green jobs, reducing carbon emissions and working towards a healthy environment. Sanwo-Olu maintained that there was the need to boost domestic utilisation of gas, adding that Lagos set up the Ibile Oil and Gas, privately driven, to transition the state to a low carbon economy by taking out firewood, kerosene and all the dirty fuels. Seplat has numerous opportunities to scale up and diversify, some at relatively low cost. The company has a significant opportunity to lead Nigeria’s strategic dash to gas, replacing inefficient diesel and petrol generation, benefiting the economy with multiplier effects on gas demand. According to Brown, gas offers higher profitability and cash drop-through than oil owing to lower royalties, taxes and costs; of which gas revenues are independent of oil price volatility, with 10+ year contracts offering long-term visibility. He explained: “ANOH could increase gas production by 300MMscfd, with potential for further expansion. There is the potential to increase production at existing Oben and Sapele plants; and to service industrial gas needs at prices higher than fixed-price Domestic Supply Obligation. “The potential to end flaring and monetise gas byproducts and develop LPG products for the local market to replace biomass as cooking fuel abounds.”

L-R: Jerry Sawyerr, business director; Yomi Badejo-Okusanya, group managing director, and Sunkanmi Ogunniyi, lead, business innovation and strategy, all of CMC Connect Burson Cohn & Wolfe (BCW) at the media briefing to announce the launch of the Crisis Action Plan recently in Lagos

L-R: Joshua Oluranti, Public Relations and CSR Specialist, 9mobile; Ayodeji Anthony Falana receiving an award as most outstanding health worker in the fight against COVID-19, and Chineze Amanfo, Corporate Communications Lead, 9mobile, during an event by 9mobile to recognize health workers at the frontline of the current COVID-19 pandemic.

L-R: Taiwo Agboola, chief executive officer; Yemisi Ode, brand team lead; Precious Adeyemi, copywriter, and Adebisi Ajayi, head of finance, all of 7Interactive Lagos as the award-winning marketing communications agency marked its 6th year anniversary at its office, Opebi, Ikeja, Lagos on.

Trader cash out N10ml jackpot in Easy Win Lotto

trader in Bauchi state, Rabiu Ibrahim has become the winner of the first-ever N10 million EasyWin lotto jackpot. At the presentation of the cheque to the jackpot winner in Lagos Sheraton Hotel, Ibrahim declared that EasyWin Lotto is indeed a life-changing experience because fortune has smiled on him more than imagined and faster than expected. The winning will help to

enhance his phone accessories business and investment in other areas. The 31year old Ibrahim could not hold back tears of joy when he was informed of his winning ticket. The excitement attracted people in his locality of Katagum. Ibrahim holds a diploma from Abubakar Ali Tatari Polytechnic,Bauchi. According the Easywin Lotto City Manager, AdewaleAloyinlapa, EasyWin will www.businessday.ng

continue to lead in the lottery business because most people see us as reliable and their winnings are redeemable without issues. Adewale also stated that EasyWin lotto could be played by anyone above the age of 18 in different ways. EasyWin works in partnership with Opay Nigeria. Customers can go into any Opay store to buy their Easywin Lottery to play or buy their ticket online via Easywin’s official website www.easywin.ng.

L-R: Abel Oshevire, assistant manager, digital marketing & public relations, CHI Limited; Ruben Amara, manager, Heritage Homes, and Chinyem Austin, assistant activation manager, CHI Limited, during a visit by Hollandia Nurture A Child Initiative to provide dairy nourishment to the Children in the Heritage Homes Orphanage

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Wednesday 03 March 2021

BUSINESS DAY

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Wednesday 03 March 2021

BUSINESS DAY

tax issues Tax Implications of IFRS 16 Olaoluwa Ogunniyi, Victor Ebhotemhen & Sarah Adelaja

will also be affected, as operating lease payments under IAS 17 were presented as operating cash flows; whereas under IFRS 16 model, lease payments will be split into the principal and interest portion, which will be presented as financing and operating cash flows respectively. In contrast to lessee accounting, IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17, and continues to require a lessor to classify a lease either as an operating lease or a finance lease. However, extensive disclosures are required to be made. Tax Implication Treatment under IAS 17 In analyzing the tax implications of IFRS 16, it is important to understand the key changes and their impact on financial statements. The Companies Income Tax Act (CITA) is the legal framework for administration of companies’ income tax in Nigeria. The Federal Inland Revenue Service (FIRS) had in a Circular 2010/01 provided the basis for the tax treatment for leases, clearly distinguishing an operating lease from a finance lease (a distinction no longer noticeable in the books of the lessee with the adoption of IFRS 16). For operating leases, the Circular provides that rental expenses shall be allowed as a deduction for corporate tax purposes. The Circular also provided that for operating leases, the lessee is not entitled to claim capital allowances, leaving the lessor to claim the allowances in respect of the leased asset. FIRS Position on Leases The FIRS Circular titled “Tax Implications of the Adoption of the IFRS”, reflected the tax treatment in line with the various sub-division of leases, relying www.businessday.ng

on IAS 17. While capital allowances (both initial and annual allowances) could be claimed by the lessee under finance lease transactions, the same was not allowed with respect to operating leases for lessees rather, the rent expense incurred was to be treated as a deductible expense. The sub-divisions dichotomy is no longer noticeable with the adoption of IFRS 16. However, the principles of claiming capital allowance remains in line with the provisions of the law. Possible treatments under IFRS 16 Although IFRS 16 allows operating leases to be capitalized as a right-of-use and depreciated accordingly over the useful

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We believe that with pressure from stakeholders, the tax body may subsequently issue a Circular to provide clarity on the treatment of leases under the new accounting standard Alternatively, we expect the next amendment to the law to address the subject, which was omitted in the 2019 Finance Act

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he International Accounting Standards Board (IASB) issued International Financial Reporting Standards (IFRS) 16 on leases, which became operational in January 2019. The Standard (IFRS 16) was issued in January 2016 to effectively replace International Accounting Standards (IAS) 17 on leases. IFRS 16 introduces a comprehensive model for the identification of lease arrangements and the accounting treatments for both lessors and lessees. As part of its objectives, IFRS 16 has the responsibility to correctly report lease transactions and provide the basis for preparers of financial statements to assess the amount, timing and uncertainty of cash flow resulting from leases. IFRS 16 clarifies that a contract contains a lease if it conveys the right to control the use of an identified asset for a period of time, in exchange for consideration. In essence, IFRS 16 provides that a lessee should recognize assets and liabilities arising from a lease. IFRS 16 VS IAS 17 One of the notable differences between IAS 17 and IFRS 16 is that in IAS 17, operating leases are treated as off-balance sheet items, but under IFRS 16, operating leases are recognized as capitalized assets (right- of – use) and recorded on the balance sheet. The Right-of-Use is depreciated over the useful life of the lease. The treatment of operating leases as off balance sheet items under IAS 17 makes comparison difficult between companies that purchased assets and the ones that leased the assets. This is a limitation, and as such financial statements prepared under IAS 17 may not have showed users accurate financial position of the related financial statements. Under IFRS 16, operating leases are capitalized and given the same accounting treatment as a finance lease. This is based on the ‘right of use’ (ROU), as it is expected that the lessee is going to deploy the asset to generate future revenue for the business. The focus is on ‘right of use…’, as opposed to the emphasis on risks and rewards in the IAS 17. The right-of-use asset is initially measured at cost, but subsequently measured at cost (subject to certain exceptions) less accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is measured at the present value of the lease payment, considering the impact of the lease modifications, amongst others. Furthermore, the classification of cash flows

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life, such transaction cannot be termed capital expenditure from the standpoint of the CITA. This is premised on the fact that ownership of an asset is one of the critical conditions for claiming a capital allowance on the asset under the CITA, and since the new standard did not confer ownership status on the lessee, it may be unjustifiable / impracticable to claim allowances on related assets. Furthermore, Paragraph 18 of the Second schedule to the CITA contains provisions that guide the tax treatment of leased assets. The paragraph provides that the lessor of an operating lease should claim capital allowances at the prescribed rate on the leased asset, while the lessee would claim capital allowances on assets categorized as finance leases. The Act (CITA) does not define the terms ‘finance lease’ or ‘operating lease’. It only states that these terms would have the same meaning ascribed to them in the relevant accounting standards. Thus, since ownership of the asset under reference rests with the lessor and there is no technical intention to transfer the ownership at the end of the lease period, the lessee of an operating lease (now right-of-use asset) may not, in my opinion, be eligible to claim capital allowances under the lease. On the other hand, the new standard permits depreciation of the asset based on right of use, and depreciation according to CITA is a disallowable expense. Hence, in this scenario, the depreciation charge and the interest portion charged to profit or loss is disallowable, while the periodic lease payment for the operating leases should be treated as tax deductible. This will align with the FIRS Circular 2010/01 and FIRS Circular on adoption of IFRS - March 2013, which clearly provides that: “The lease rental payments to be recognized for tax purposes each year shall be the amount incurred/ @Businessdayng

realized”. In line with the FIRS circular, the following were clearly stated for operating leases; • Investment (for Qualifying Plant Expenditure), Initial and Annual allowances are claimable by the lessor on the cost of the asset: For the lessor, this position is unchanged both for accounting compliance and tax compliance. • Annual allowance is claimable by the lessor on tax written down value (TWDV) of the capital portion of the lease instalments paid. The tax written down value of an asset is the original value of the asset less any capital allowances you’ve claimed on that asset. For assets reclassified to operating lease, the FIRS had earlier provided for the below;. • paragraph 18(1) of Schedule Two of CITA which relates to Rights to Claim Capital Allowances on operating leases shall apply. • The lease rental payments to be recognized for tax purposes each year shall be the amount incurred / realized. The tax implications for lessors remain unchanged as the lessor is entitled to claim capital allowances and recognize lease rental income, which is a taxable income. Conclusion It is therefore necessary for taxpayers to reassess and align all existing lease contracts in line with IFRS 16 with respect to accounting and tax treatments. Taxpayers that opt to treat depreciation on ROU as an allowable item should expect strong pushback from the tax authority since this does not align with the CITA guidance. However, those that opt to treat it as a disallowance and treat the periodic lease payments as tax deductible would have a basis to do so in law, since lessees are not permitted to claim capital allowance on the leased asset. As a takeaway from the above, we suggest that payment for leases be expensed, while the depreciation remains disallowable in line with the provision of CITA. The interest charge which reflects the time value of money is also disallowable. Nevertheless, we believe that with pressure from stakeholders, the tax body may subsequently issue a Circular to provide clarity on the treatment of leases under the new accounting standard. Alternatively, we expect the next amendment to the law to address the subject, which was omitted in the 2019 Finance Act. Ogunniyi, Ebhotemhen & Adelaja write from Ernst and Young, Lagos, Nigeria. Note: The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

Wednesday 03 March 2021

BUSINESS DAY

BANKING

Share your experience at banks with us via: hope.ashike@businessdayonline.com

Weekly diaspora remittances to Nigeria rise by over 100% after CBN’s policy directive … Emefiele asks banks to increase credit exposure to Agric to 10% Stories by HOPE MOSES-ASHIKE

emittances flow into Nigeria has improved from a weekly average of about $5 million before policy directives by the Central Bank of Nigeria (CBN) to over $30 million per week, Godwin Emefiele, governor of CBN said on Friday. This could mean that the monies that were usually sent to Nigeria via informal channels are now being sent through formal means, thanks to the CBN policy that allows recipients to withdraw the proceeds in foreign currency. In December 2020, the CBN instructed all international money transfer operators (IMTOs) to provide remitters with the option of sending foreign exchange to beneficiaries in Nigeria. “This new measure has helped to reduce the diversion of FX by some International Money Transfer Operator (IMTOs), who had thrived from FX arbitrage arrangements, rather than on improving transactions volumes to Nigeria,” Emefiele said at the Vanguard Economic Summit Friday.

To improve the foreign exchange inflows, the CBN intends to support measures that will improve the non-oil export earnings significantly. Consequently, the banking sector regulator plans to aggressively implement its N500 billion facility aimed at supporting the growth of the country’s non-oil exports, which will help to improve non-oil export earnings. “Exporters will be fur-

ther encouraged to repatriate their export proceeds as stipulated under our extant laws. The CBN will continue to ensure that exporters have unfettered access to their export proceeds,” he said. He urged the stakeholders in the banking and financial system to take proactive steps in supporting the growth of sectors such as Agriculture, ICT and Infrastructure, which he said would strengthen the ability

to deal with the challenges that have been brought by COVID-19, and stimulate the growth of Africa’s largest economy. Specifically, he encouraged banks to increase their credit exposure to agriculture sector to 10 percent from 4%. He also encouraged the deposit money banks to increase lending to ITC, which contributed 14.7 percent to GDP in the fourth quarter of 2020.

Emefiele was delighted that President Muhammadu Buhari has continued to give all the necessary approvals and support to establish the Infrastructure Corporation of Nigeria Limited. InfraCorp will be co-owned by the CBN, the African Finance Corporation and the Nigerian Sovereign Investment Authority and would become fully operational by the second quarter of 2021, he said. “This vehicle would enable the use of private and public capital to support infrastructure investment that will have a multiplier effect on growth across critical sectors,” the CBN governor said. In his keynote address delivered virtually at a one-day economic summit organized by the Central Bank of Nigeria, the Banker’s Committee, and the Vanguard Newspaper, themed “Bankers’ Initiative for Economic Growth”, Vice President Yemi Osinbajo, Chairman of the National Economic Council, called for cryptocurrency regulation. “We must act with knowledge, not fear”, Osinbajo tells CBN, bankers, and other stakeholders who gathered

at the event. Speaking at the event, Zainab Ahmed, minister of finance, budget and national planning, said, bankers play a crucial role in economic development. However, the impact of the banking system on the rest of the economy depends on how it mobilizes savings, allocates the savings, monitors the use of the funds by firms and individuals, pools and diversifies risk, including liquidity risk, and eases the exchange of goods and services. “When the banking system performs well, it tends to promote growth and expand economic opportunities. Economic growth is about enhancing the productive capacity of an economy by using available resources to reduce risks, remove impediments which otherwise could increase costs of doing business and hinder investment,” she said. Bismarck Rewane, managing director/CEO, Finance Derivatives limited, noted that tier one and tier two banks are more exposed to oil and gas sector, and that something has to be done to ensure that growth is not only sustainable but may be an impetus.

Access Bank presents brand new car to customer

s part of efforts to enhance financial inclusion through its digital platform, Access Bank Plc recently introduced a transaction promo scheme, known as ‘Transact and Win’, with a brand new car as the grand prize for a winning customer. Consequently, after conducting the promo draw in Lagos, Tolulope Agabaje, a NYSC corper, serving in Niger State emerged the grandprize winner of a brand new Hyundai Accent car. At the official presentation of the car in Lagos, Victor Etuokwu, executive director, Access Bank, said the bank is targeting the unbanked and the underbanked and looking at increasing the rate of transactions through its mobile and digital platforms. He noted that the transact

and win scheme was designed to play a significant role in the lives of the bank customers. “We want to continue to play a big role in the lives of our customers and as for Tolulope, we have asked him what he graduated with, he said he is a first class holder and with this, we are looking at a possibility of him working with Access Bank,” Etuokwu said. Tolulope the winner was shocked when informed of his win. He felt that the calls from the bank were scam calls but when it became incessant, he reached out to the bank via its twitter handle and was told he had actually won a car. “I am still in shock as I was not expecting it. I cannot even remember the amount of transactions I did but I know it was too much. The car was www.businessday.ng

not something I was looking at owning in a year or even three years but Access Bank has fast-tracked my dream of owning a car and so I would keep spreading the word to friends and family that this is indeed real”, Tolulope said.

He encouraged customers and friends to open accounts with Access Bank. Osakwe Edwards, lead manager, mobile and internet banking, believed that the campaign will boost the bank’s digital products.

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“Digital is the future and this mobile banking is what we want to get a lot of people into and you know that as a bank, we make revenue from our digital channels and we use it to boost our customer acquisition. These days, peo-

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ple do not need to get to the bank to open an account with us or perform transactio0ns, they can do that through our mobile banking platforms or USSD”, Edwards said. Commenting on the winner, he said, “Tolulope performed 10 transactions which is the criteria to win the car via the USSD or the mobile app. We did a draw and out of the million people that met the criteria, Tolulope emerged tops. For now, this is the third car that has been given. One person won in Abuja, the other won in January and so we are hoping to commence another prize presentation by the second quarter (Q2) of 2021. When we start by Q2, it will be on quarterly campaigns/draws and by the end of Q2, We will have another winner by the end of Q3 and Q4”.

Wednesday 03 March 2021

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

20 well capitalised, skilled insurance companies will transform the industry in Nigeria - Oyetunji After 40 years in the practice of insurance and actuarial science, Femi Oyetunji, the GMD of Continental Reinsurance is set to retire, with the wish that insurance companies in Nigeria be reduced to 20. In this interview with Modestus Anaesoronye shares his experience, passion, vision for the industry and his company. Excerpt: You have spent about 10 years now in Continental Re as the GMD, could you tell us how the journey has been and how you were able to surmount the challenges to reposition the Company for greatness? es, on the 3rd of January 2011, when I first got into Continental Re office at St Nicholas House, Lagos, i knew i was going to face some challenges because we had only two existing reinsurance companies in Nigeria after the last recapitalization exercise. At that time, the Deputy Managing Director was a Nigerian, The CFO was Ivorian and the ED Operation still with us now is from Zimbabwe, and myself Nigerian. In Lagos, we had people from different parts of Africa; our shareholders were Americans, South Africans, and Nigerians, so it was not just Nigerians. At the time I took over in 2011, we had a branch in Duala and a branch in Nairobi. Even in terms of location, we were multinational. I got in there and I saw a multinational company but the people saw a small Nigerian Company. My initial challenge was to have a paradigm shift in philosophy and mentality, to see us not just as a small Nigerian brand but a multinational brand. Things were as bad as on Fridays, in Duala, Nairobi people will wear Ankara tops to the office. I didn’t think that was what Continental Re was all about, even from the name, the founders knew what they wanted. We will start work at 8 am Lagos time, it was 10 am in Nairobi. People in Nairobi couldn’t start work until 10am their time because everything was centralized here in Lagos and not thinking about the Pan-African nature of our businesses in the way we run our offices. So, it was a great challenge to get people’s mind away from narrow focus to a broader picture. So, as a leader, the first thing was to envision. Therefore, I came up with the vision of being the Premier and African reinsurer. We had everything in place, but we were not thinking Pan- African and International. Of course, the most difficult situation is to change people’s mindset from where they have been. This was very challenging, but after 10 years, not only have we succeeded in becoming a truly Pan-African well respected brand, we have internalized the philosophy of being Pan- African in all we do as an organisation. Ten years is such a short time for that kind of transformation. The achievements is not just by our own assessment, but last year we commissioned a global perception company to see what people think about us and how we are perceived. The international standard score is 73, but we achieved far way 79. So, there is documentary evidence that

Femi Oyetunj, outgoing GMD/CEO

we really transformed from being a small Nigerian reinsurance entity to a well-respected Pan-African brand. You recently completed a befitting head office building here in Nigeria, apart from this, what other achievements can be traced to your 10 years as GMD of this company? In 2012, I attended a meeting of an insurance summit in Brazil, and the United Nations made a presentation in terms of Principles of Sustainable Insurance (PSI) and Global Warming. And one of the things I find most disheartening in Africa is that there is disaster, huge economic losses but very little insured losses because of low penetration of insurance. So, for me, let’s prevent those natural disasters which are not so natural as it were but being consequences of what we do. So, i signed Continental Re up to the United Nations PSI in 2012 and we showed so much commitment and to the extent that one of our colleagues was elected to the board in Geneva, to really demonstrate our interest on climate change because if climate goes, and disaster starts happening, of course it will end up a problem for the insurance industry. Therefore, it will be self-indicting, if we see danger and do nothing to prevent it. So we became the first African reinsurer outside of South Africa to sign up to United Nations PSI. Again, in 2012 we opened a branch in Abidjan, 2013 we opened in Tunis, in 2014 we opened a subsidiary in Botswana, and along the line we converted a branch in Nairobi to a www.businessday.ng

subsidiary. It was a strategic plan. We sectioned Africa into homogeneous groups because one of the key propositions is customized experience because we realized that your customer can not have that experience unless you are close the customer. So, being who we are, we see our self as thought leader and pace setters, so we moved away from the traditional pattern of a Reinsurance Company, of creating braches all over the place to creating subsidiaries. So we had a rapid expansion that happened in the first 5 years, which were deliberate actions because we believed, that was the way to go. Here in Continental Re, we believe that we must keep African Premiums within Africa. We do not believe that anyone else will develop our continent for us. We have to develop our continent, so we must put things in place to ensure we solve our problems by ourselves. We are closer to the problem and we are in better position to solve them. So, we created a platform whereby stakeholders can sit together, discuss common problems and proffer solution. We started the platform in 2014 in Mombasa Kenya which brought leaders in industry from across the continent. It provided opportunity to find solution to African related issues. It has become a taught leadership platform where great minds and leaders in insurance industry as a continent look forward to every year. Driving the pan African agenda is something to be proud of and that is what Continental Re has been able to establish.

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In Continental Re, we are not yet A-rated but we must operate as an A-rated company. The reason why we are not A-rated is the sovereign risk of the countries in Africa. As an insurance company, we look for scales, support. I believe we have the best Analytical team on the continent; we have the best Engineering team here on the continent, the best Underwriting procedures and skills. So, even though we are not A-rated as per the size of our balance sheet, we have the competence that people are looking for and because we are close to the risk, we are able to assist them in getting solution for their clients. We behave like an A- rated and have the skills that the giants have in addition to proximity to risks. In terms of providing solution to our clients, in terms of the brand survey and perception we are number one. Again in balance sheet size, four reinsurance companies are ahead of us, in terms of rating, there are three other companies that have higher rating than we have. In Continental Re, our watch word is every genuine claim must be paid and must be paid promptly. In Continental Re, we have this special arrangement, were we attract Africans in diaspora back to Africa, and that is one of the reasons we went from branches to subsidiary network. We made sure we have the platforms all over the Continent, were we are able to attract people from Europe, US to come back to Africa, bringing their skills. We must as an industry attract new skills which involves a lot of money, and that is why adequate capitalization is key in growing our industry. Now, let’s look at numbers in terms of your achievements while leading the Pan African institution? When I joined Continental Re in 2011, almost 70 percent of our premium income was from Nigeria not even from West Africa, the other 30 percent were from Duala and Nairobi. When you look at the various economies not necessarily about insurance, like investment and properties everything is about diversification. Having so much concentration in Nigeria was not sustainable, so we set ourselves a target to turn it around and have 40 percent from Nigeria and 60 percent from outside Nigeria. We have grown rapidly in Nigeria and over the past 10 years we have been able to achieve what we set out to do, and that is from the rapid expansion we had between 2012 and 2015. In 2011, we wrote N11.6b premium and we had a profit of N1.6b, over the 10years we grew the premium income five folds and the profit in three folds. We created employment, we almost doubled our numbers. In 2011 we were 51 in the three offices @Businessdayng

we had then, right now we have 94 people in all the offices on the continent, while we are still growing, we have more than doubled productivity in premium income per employee. It’s been good run. We achieved these through hard work and the expertise we have been able to bring into the business. You have watched the market grow over the last 10 years, with a lot of transformation, which of these reforms excites you? There have been great transformations in our industry over the last 10 years, not because am an Actuary but because it was an anomaly that we didn’t have actuaries operating in this industry and we have many of our offices writing Annuity Business. We have a lot of actuarial involvement, which means we have been more scientific, more analytical in our approach to risk management and risk taking. We have come a long way of ‘if I know you and you know me, we do business.’ In terms of insurance penetration, the life and the non- life, development in health care products, and the digitalization, I can say a lot have taken place. And it was time for me to retire. This is the best time to work in this country particularly at Continental Re, the opportunities are immense. If we proceed along the current trajectory, we see a lot of new products, new approach of doing things. We are at a very exciting time where we marry experience with technology, and I believe the insurance industry in this country is set to take over. You have seen it all, what would you like to see happen in the nation’s insurance industry? I am going to say the same thing I said in 2005 and I was called a prophet of doom. If we don’t reduce the number of insurance companies in this market, we are not going anywhere. My personal believe is that 15 to 20 well capitalized, skilled insurance companies will transform the industry. What I will like to see is insurance companies talking to each other, looking for synergy, and saying, let us come together. The biggest threat at the moment is that global players with big capital and all that it takes to drive growth are here and taking position, and at the end of the day they will take away the expected benefits. We can clearly see the danger, having seen the trend. Why we have not seen many of them at the moment is because of the economic situation, and once the situation improves the big players from America and Europe will come in and dominate, and that is where the benefits will go. If the global players are based in the US, UK, or Germany, they will take the benefits to those places.

Wednesday 03 March 2021

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

IWD2021: Africa’s billionaires are not women

t’s the year 2021 and women’s access to education, wealth and positions of authority have not seen significant progress in Africa. In Nigeria, the continent’s biggest economy, the existence of economic and gender inequality is now so intertwined that the life of the average Nigerian woman is profoundly affected by a wide range of discriminatory sociocultural practices. The Global Wealth Report of 2018 observed that “women’s share in wealth rose considerably over the 20th century and held about 40% of global wealth”, but how much of that represents women’s share of wealth in Africa? What is the value of the economic future of the average African woman? In 2017, only two women made it on the Forbes magazine Africa’s Billionaires list. This year, the list is even more male-dominated; no woman made the list despite the evident progress in other regions around the world where increased access to education, and career and family life balance have unlocked greater financial independence and economic wealth for women. This year’s International Women’s Day theme - #ChooseToChallenge is a uniquely powerful message that endears me to challenge the unfair status quo of women’s share of wealth in Africa. The path to sustainable income and financial independence is still largely uncharted for African women who are still denied education, employment, upward mobility in the workplace, trade opportunities, the right to own or inherit property, and are largely underrepresented in governance. Thankfully, we now have a younger generation of women, that, despite these adverse circumstances that may delay their pace of wealth generation, are eager to be the HNIs of tomorrow. In the RBC Wealth Management report titled ‘The new face of wealth and legacy: How women are redefining wealth, giving and legacy planning’, it was reported that not only are women generating and managing an increasing amount of wealth, they are also directing the economy itself—heading up major corporations and pivotal economic

Tosin Alabi

players like the International Monetary Fund. While this trend seems progressive, research has shown that women are still lagging men in financial independence and wealth accumulation globally. An alarmingly high number of African women often feel less financially secure and optimistic about their economic futures. In an infographic with data attributed to Stears Business, it was reported that women have lower financial access than men in Nigeria with about 23% debit card ownership for women and 40% for men. The report also exhibited that 4% of women have mobile money accounts in comparison to 7% of men. These are staggering figures that must be

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addressed. If women still do not have access to basic opportunities as those stated above, which translate to financial exclusion, how then can we build and sustain women’s share of wealth? In light of the above, and as the Assistant Vice President at one of Nigeria’s topmost investment firms, DLM Capital Group, I am compelled to ask that wealth managers pay a lot more attention to women, their investment needs, attitudes and portfolios. Financial services need to adapt to better cater to female priorities as men and women have different investment styles and attitudes. The BCG 2019 Global Wealth Report disclosed that “women remain largely underserved by the wealth

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management community as too many financial institutions rely on broad assumptions about what women are looking for, resulting in products, services, and messaging that can feel superficial at best and condescending at worst.” I believe that wealth managers have a responsibility to recognize that ‘women’s financial and investment avenues’ is a huge business opportunity – and tailor offerings that meet the specific needs and priorities of individual women regardless of class, income, exposure, or marital status. Today, African millennial women are taking charge of their wealth and earning a greater share of wealth than the young women of past generations. This sort of mindset must be continuously empowered. We cannot continue to refer to women as afterthoughts in the wealth management industry and men as the primary financial decision-makers; there is, therefore, an urgent need to design products and services that do not ridicule women, look superficial or reflect outdated assumptions about the gender’s role in driving wealth. Wealth managers operating in Africa must understand, that for women, wealth is a means to many ends, not an end in itself. Women are susceptible to certain inflection points in their lives and the financial impacts that come from them – and so tend to fund specific goals that address these crossroads. At DLM Capital Group, we pay great attention to women’s specific needs and preferences and tailor our services accordingly - this has earned us a large share of this important and growing market. As we celebrate this year’s International Women’s Day, I challenge all wealth managers to address the industry’s deep-seated biases, combined with an inadequate understanding of women’s actual behaviours and preferences. A culture of conscious inclusion and a focus on the individual is needed more than ever to get us, the African billionaires of the next decade. Tosin Alabi, Assistant Vice President, DLM Capital Group

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Mastercard partners MTN to empower millions of African consumers through digital financial inclusion ENDURANCE OKAFOR

hrough a Mastercard virtual payment solution linked to MTN MoMo (Mobile Money) wallets, consumers and merchants can engage with brands and businesses abroad through digital commerce, extending their reach to an international marketplace and unlocking a host of opportunities. Across Sub-Saharan Africa, mobile devices are the primary channel used to connect to the internet. According to GSMA, by 2025, it is estimated that there will be 300 million more people using their devices to access internet services. In light of this significant growth, mobile financial services have become the dominant form of digital payments, with twice as many mobile money accounts as bank accounts in the region. As a result, consumers increasingly expect to have access to a broader range of digital financial services. - Advertisement. However, consumers and merchants are mostly restricted to a local base of online and offline businesses, therefore curtailing customers’ ability to engage in global. Through this strategic partnership, MTN customers with a Mastercard virtual payment solution linked to their MoMo wallets can make payments to global online merchants through a seamless and secure digital payment experience on websites and mobile applications. The service is available regardless of whether or not the customer has a bank account. The solution will enable consumers to explore and shop at wellknown global e-commerce brands and pay quickly and securely for leisure shopping, travel, accommodation, entertainment, streaming services and more. It will also allow small business owners to purchase from suppliers abroad and pay with the virtual payment solution.

Wednesday 03 March 2021

BUSINESS DAY

MARITIMEBUSINESS SHIPPING

LOGISTICS

MARITIME e-COMMERCE

NPA seeks sanction for agencies violating Executive Order, 24-hour port operations AMAKA ANAGOR-EWUZIE

he Nigerian Ports Authority (NPA), has called for sanction against government agencies violating the provisions of the Executive Order on Ease of Doing Business, signed by Acting President Yemi Osinbajo in 2017. Hadiza Bala Usman, managing director of the NPA, who made this call in Lagos recently, said some Federal Government agencies operating at the nation’s seaports have failed to comply with the directive and Executive Order on 24-hour port operations including that of collaboration among such agencies.

The order was aimed at removing attendant delays in cargo clearance in order to promote timely delivery of cargo to consignees’ warehouses. Usman, disclosed this during a recent interview on Channels Television’s Sunrise Daily, which was monitored by BusinessDay, said the Executive Order on the promotion of transparency and efficiency in the business environment, also banned touting by officials or unofficial persons at ports. Apart from the NPA, she said, other Federal Government agencies had refused to obey the Executive Order and no sanction has been handed down to them. “If you recall there is

an Executive Order that directed all agencies of government to conduct inspection of containers in one location. Certain agencies of government have not complied and one of the things we have said is that there is need for sanctioning for non-compliance to the Executive Order, and this cannot be done by the Nigerian Ports Authority,” she said. According to her, if an agency of government violates an executive order, the Vice President and indeed the Presidency should sanction that agency for noncompliance but that has not happened. Us ma n sa i d s h e ha d re p o r t e d t h e matt e r t o

the Presidential Council on Ease of Doing Business chaired by Vice President but no sanction had been given to the errant agencies. She further said that port operations would not run smoothly if it is only the NPA that is meeting its obligation. “There have been several explanations and justifications for non-compliance by these agencies. We must be held accountable for not complying with a directive. For example, we have 24hour port operation that has been directed. All agencies of government are required to deploy personnel to have 24-hour port operation. We deployed our personnel but others did not,” she added.

NIMASA assures shipping firms of safe, secure navigation on Nigerian waters AMAKA ANAGOR-EWUZIE

he Nigerian Maritime Administrat i o n a n d Sa f e t y A g e n c y ( N I M ASA) has assured shipping companies that it has in partnership with Nigerian Navy, intensified efforts to protect, and deter threats against vessels anchored in the Secure Anchorage Area (SAA), off the coast of Lagos. Bashir Jamoh, director general of NIMASA , who disclosed this in Lagos during a courtesy visit by the Shipping Association of Nigeria (SAN), said the new security effort was captured in the deployment of assets under the Integrated National Security and Waterways Protection Infrastructure, also known as Deep Blue Project. Deep Blue project is aimed at providing security in both Nigerian waters and the Gulf of Guinea in order to tackle the security challenges encumbering shipping business in the region. “We are deploying hightech assets under the Deep Blue Project to not only deal with piracy and armed robbery on our territorial waters, but to also respond to the increasing sophistication of these maritime crimes. We are tying up all loose ends and very soon everything would become clear to stakeholders and operators,” Jamoh stated. Ja m o h, w h o wa s re sponding to the security concerns raised by SAN following the cancellation of the SAA contract by Presi-

dent Muhammadu Buhari and transfer of the responsibility to NIMASA and the Nigerian Navy, said there was no security vacuum on Nigerian waters. According to Jamoh, the Secure Anchorage Area is more protected than ever before as Nigerian Navy recently deployed 14 warships to enhance security including Special Mission Vessels, interceptor boats, and Special Mission Aircraft, also being deployed under the Deep Blue Project. “The menace of maritime insecurity is an agelong challenge in the industry, and government is doing its best within the available resources to address the issue. NIMASA is also working with international bodies, such as INTERTANKO and INTERCARGO, to ensure security in the Gulf of Guinea, with the Yaoundé-based International Coordination Centre (ICC) also playing a central role,” he added. Earlier, Andrew Lynch, managing director of Mediterranean Shipping Company, who doubled as spokesperson of SAN, urged NIMASA management to intensify measures that would maintain security in the SAA. Also in attendance were representatives of major shipping lines operating in Nigeria, including Ascanio Russo, managing director of Grimaldi Nigeria, Haul Odeyer, managing director of CUA- shipping, as well as representatives of Maersk Nigeria and GAC.

Inaction of international bodies breed pirate attacks in Gulf of Guinea – Dryad AMAKA ANAGOR-EWUZIE

he international bodies, together with coastal West Africa states, have largely failed to implement frameworks that have the potential to significantly reduce maritime crime and piracy in the Gulf of Guinea region, Dryad Global has said. According to the report, the international community is on the spot for slow action against the rising menace of piracy in the Gulf of Guinea, which has become the most dangerous environment for commercial maritime operations in the world.

In its 2021 annual report, Dryad Global, a British security intelligence firm suggests that large international organisations such as the United Nations, North Atlantic Treaty Organisation (NATO) and the European Union have been conspicuously absent in offering tangible solutions to piracy in West Africa. It further stated that only the EU has demonstrated lukewarm action after developing a ‘Gulf of Guinea action plan’ in 2014, but it only committed to a pilot case of its ‘coordinated maritime presence’ security concept at the beginning of 2021, seven years later. “The international comwww.businessday.ng

munity needs to provide the requisite leadership and assistance to the Gulf of Guinea states and to respond with programmes of support that pay attention to the onshore crises that underpin piracy as well as the offshore piracy problem,” said Shannon McSkimming, Dryad Global analyst. In the report, Dryad also contends that coastal West African nations have remained passive in tackling the problem by failing to implement frameworks like the Yaoundé Code of Conduct, the Lomé Charter and the ECOWAS Integrated Maritime Strategy. These frameworks were developed with the aim

of promoting information sharing and reporting, interdicting suspicious vessels, ensuring apprehension and prosecution, harmonising national legislation, guaranteeing resources to maritime security and safety, and state responsibility to patrol the anchorage areas, among others. “While the Gulf of Guinea remains the most dangerous environment for commercial maritime operations, it remains vital that implementation of these supranational measures be held to account,” said Dryad. The Dryad report shows that pirate operations in the Gulf of Guinea continue to

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present a serious and persistent threat to the safety and security of crews and vessels, with 136 seafarers abducted in 27 incidents in 2020. Most worrisome is that attacks are becoming increasingly violent, with the use of guns reported in over 80 percent of kidnapping incidents recorded last year. Overall, 132 incidents that included robbery, kidnapping, violent armed boarding and hijack were reported in 2020. “International intervention is largely called for to support the fledgling efforts of regional states, particularly in the areas of offshore enforcement, @Businessdayng

capacity building and onshore development,” said the report. While West Africa remains a hotbed of piracy, only 36 incidents occurred in the entire Indian Ocean, of which none were tangibly linked to issues of piracy. In the Indian Ocean, the maritime risk profile has shifted from one underpinned by acts of piracy to one more influenced by geopolitical uncertainty and conflict overspill. Since 2017, a total of 427 incidents have been reported in West Africa, but only 70 have occurred along the Indian Ocean. In Southeast Asia, 172 incidents have occurred over the same period.

Managing

Wednesday 03 March 2021

BUSINESS DAY

GOVERNMENT

BUSINESS Over 30 bilateral agreements between South Africa a Interview with Public Sector Leaders

South Africa and Nigeria are the largest economies on the African continent, and both are expected to play leading roles in the African Continental Free Trade Area (AfCFTA) that took off in January. While South Africa buys more from Nigeria as current trade data show, DARKEY AFRICA, South Africa’s Consul General in Lagos, in this interview with CALEB OJEWALE, speaks about areas of opportunities to expand trade. He expressed hope that the Joint Ministerial Advisory Council on Industry, Trade and Investment will be instrumental in investment led initiatives between the two countries as well as addressing trade impediments that are currently affecting both exports and investments opportunities between the two countries. Excerpts:

here was a lot of hope on AfCFTA being a game changer for trade across the continent, what are early reports indicating on its trajectory since taking off in January? Indeed, the African Continental Free Trade Area (AfCFTA) is a big game-changer for the continent. It is going to ensure that Africa develops at its own pace and it uses whatever resources it has for the benefit of the continent. We have said so many times that Africa’s time has come. We must also realize that, unfortunately, at the time that the AfCFTA ought to be implemented, we had COVID for the whole year. That affected some of the preparations, but what is important is that it has started. Most of the countries, 54 countries except Eritrea, have embraced it and that is a good sign. It is the beginning of a new development trajectory for the African continent. However, a few things need to happen first. One of them is that it must be legally implementable and technically sound. Also, there has to be reciprocal tariff schedule and concessions from member states that have ratified the agreement. Furthermore, the tariff lines must go in accordance with the agreed rules of origin. There must also be provisions for key customs documentation, and this requires both the declaration of certificate of origin, and domestic legislation to administer imports in every country. However, these have taken off very slowly because of the challenges that we had, especially the Covid-19, but the entire continent is ready. As an envoy based in Nigeria’s economic capital, from your knowledge, what things do you think need to be done if Nigeria would take full advantage of AfCFTA? Like I said, these four requirements earlier referred to, each country must be ready. Remember, all the countries that are signatories to the agreement have uneven economic development and certain challenges of infrastructure, which is very critical. The mobility of goods and persons across the continent, the liberalization of trade would require that countries have necessary infrastructure. Therefore, it is expected that every signatory to the agreement is getting ready to do that. The key things would be to do some of these soft issues. Remember there is an agreement that about 81 percent of goods are going to be traded across the continent without tariffs. All the countries will have to make sure that at a minimum, they meet these four requirements. As you may know, all these agreements are not easy to implement. Even the EU has had its own challenges, so we are not anticipating that it will not be without hurdles. We think there is commitment to ensure that all these conditions are met and Africa is ready to trade.

South Africa and Nigeria are the two largest economies in Africa. What would you say South Africa expects from Nigeria in achieving better business relations? Let me say that agreements are mutual. We have the bilateral relations. Since the state visit by His Excellency, President Muhammadu Buhari to South Africa last year, and the meeting between the two presidents, there has been a lot of progress in many other areas. For instance, there was agreement on how the issue of immigration would be dealt with in a totally different way. There was also an agreement around issues relating to aviation. As you may be aware, the Airpeace is travelling now to Johannesburg and Lagos and this was a consequence of those discussions. There is going to be a joint ministerial council committee that is going to be dealing with issues arising from those discussions. It is my belief that, in those meetings, some of the issues on how to liberalize and open up trade between the two countries would be discussed. Quite a number of structures have been established to deal with the challenges that we identified at the time. The prospects for better and greater engagement and trade between Nigeria and South Africa are quite positive. Can you give us an insight into the volume of trade between Nigeria and South Africa? There has been a slight decline in the volume of trade between the two countries from 2016 till date. You may be aware that between Nigeria and South Africa, 90 percent of our trade relies on oil. In a sense, we are purchasing more from Nigeria than it does from South Africa. Nigeria gets car parts from South Africa and all of that, but we get more oil from here. The volume of trade between the two countries has been going down between 2016 and now, and this is a matter that has to be addressed in the committee that has been established between the two countries. The prospects are quite positive, so there is a need to now make sure that the structures that are established between the two countries are working, as well as fixing the challenges to trade between the two countries. They must be addressed quite openly to make sure that there is better engagement. The free trade agreement, having been implemented, means there would have to be greater attention on these issues. Is it possible to highlight what you think is responsible for this decline and what your thoughts are on how we can boost the trade volume? We have a lot of companies operating from Nigeria. The most popular brand from here is Dangote in South Africa. There is a need to open up these areas of trade so that we can have more investments from here into the economy of South Africa. We have had www.businessday.ng

discussions with the Tony Elumelu Foundation on once the free trade agreement is implemented. South Africa and Nigeria will have to open up so that we’ll have Nigerian financial institutions also operating in South Africa as much as those that are in South Africa operating in Nigeria. This way, the free flow of goods can be facilitated through easy access to financial services by virtue of these institutions operating in these areas.

the other main drivers of trade between these two countries? In 2014, the total volume of trade between Nigeria and South Africa was 66 billion rand. It went down in 2015 and by 2018 was 56 billion rand. The top five export products of South Africa to Nigeria are plastics and articles, machineries and mechanical appliances, base metals, prepared foodstuff, product chemicals for industries and others. What we get from Nigeria is predominantly oil.

Apart from oil, which South Africa gets from Nigeria and vehicle parts, which Nigeria gets from South Africa, what are

What untapped areas of business opportunities exist between both countries? They are quite many. We can improve on what we are doing, but one of the things that we have been exploring is the creative and cultural industries. South Africa has a very strong television sector, and the infrastructure in that regard is quite good. Nigeria has a very strong nollywood sector. We have not explored the issues around fashion, culture, and the creative industry in general. Remember the creative industries in Nigeria contributed for changing the GDP here when it was rebased. We think this is an area that has not been explored sufficiently between the two countries. Also, we must begin to industrialize significantly. The manufacturing sector must be strong in both countries so that issues can be identified and we can be able to trade between the two countries. We have more than 30 bilateral agreements between South Africa and Nigeria, stretching from almost every sector. The key is-

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The volume of trade between the two countries has been going down between 2016 and now, and this is a matter that has to be addressed

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Wednesday 03 March 2021

BUSINESS DAY

the Executive Governor of the Nigeria’s eastern State of Taraba

DARKEY AFRICA

South Africa’s Consul General in Lagos

and Nigeria, little implementation – Consul General sue is implementation. If we can implement the bilateral agreements that we have, it will boost the volume of trade between the two countries and it will also open other areas of trade between the two countries. How have South African businesses in Nigeria fared over the last five years and what major challenges stand in their way in doing better? Sometimes, the issue of taxation and repatriation of money to South Africa is a problem. Also, Customs delays to get their goods here. These are issues that have been addressed and we believe that with the free trade agreement, most of these problems will go away. It has taught us a lot of things that we must avoid to make sure that the free trade agreement is implemented successfully, and to the mutual benefit of all the countries, in particular, South Africa and Nigeria. On the flipside, when we talk about Nigerians in South Africa, one thing people will be keen to hear of when they read this interview is the xenophobic attacks. Can we conclusively say that this is a thing of the past? Sometimes, we make the mistake of generalizing isolated activities and make them big. I can tell you that there is no such thing in South Africa. There has never been. In the 1960s, people from Malawi and Mozambique started staying in South African townships. There has never been any incident against these people, and they come from other parts of Africa. There is no culture of anti-African tendencies or campaigns like that. The kind of system that we have set up between the two countries is aimed at addressing any possible problem that may arise. The notion of xenophobia in South Africa is essentially misplaced. You mentioned in one of our emails that you completed an MA from the University of London, in diplomacy, where you focused on the relations between Nigeria and South Africa. Can you give some insights on what your research focused on? I focused on how diplomatic, political, trade and immigration issues evolved between Nigeria

and South Africa, to be able to understand the dynamics around these issues. Since 1994 when South Africa entered into formal trade relations with Nigeria, there have been engagements between the two countries to try and address issues to enhance of relations. One of the things I found out was that we have over 30 agreements between the two countries, and we have re-confirmed them in the state visit when His Excellency, President Buhari came to South Africa. In a nutshell, we have much that we have done and we have left all that we have done to misinterpretation because we are not communicating. The structures that we have established need to work even better. We must make sure that we engage with the media to communicate the positive narratives between the two countries. If we do that, it will change perceptions and we will also show people that something is happening between the two countries. The other issue deals with immigration challenges. We need to address the issues openly, so that we can minimize what happens as a result of these between the two countries. Have you tried to make recommendations to policymakers based on your findings in order for them to implement and effect change? In our engagements with the NigeriaSouth Africa Chamber of Commerce, we refer to some of these issues on how we can change the narrative. How do we make sure that we talk to the media about issues? Most people do not know over 90 percent of issues we are engaged in. As I said, the issue is implementation. Agreements that are not implemented will not yield results. The prospects are positive. For instance, when companies invest here, people are employed. MTN employs

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If we can implement the bilateral agreements that we have, it will boost the volume of trade between the two countries and it will also open other areas of trade a lot of people, Shoprite also employs a lot of people, making key contributions to the Nigerian economy. If we create conditions where these businesses can thrive, both here and in South Africa, then it means that the local economies will benefit from the agreements between these two countries. In your experience, what can be done to strengthen diplomatic ties between South Africa and Nigeria? The experiences that we have gained over time and the challenges we may www.businessday.ng

have experienced will probably have to be harnessed to ensure that trade under the AfCFTA does not have a lot of hurdles. I’m quite hopeful that things will be better. The key thing is that we will have to agree and do the right things. We must create a new architecture for free trade in the continent. If we do that, some of the issues we may have been going through will no longer be there. Nigeria has been talking a lot about developing agriculture but the results have not been so impressive despite the potentials. South Africa, on the other hand, has done well. How can both countries collaborate to strengthen the Agric sector in Nigeria based on the success in South Africa? The agricultural sectors in many countries, including South Africa, have been facing their own challenges. We need to harness the experiences we have. It is not that South Africa can say to Nigeria, this is how you must do it, or Nigeria can say to South Africa, this is how you must do it. Both countries can learn. One of the agreements currently existing is on agriculture. Had we sat down and implemented it, we would have exchanged ideas. We need to make sure that all the agreements we have are implemented and the exchanges can be made. There are many Nigerians who are farmers in South Africa and there are some South African farmers who are here assisting. There is a bigger picture, making sure that we share experiences so that both countries can mutually benefit from the agreements that we have on agriculture. If we can take practical steps on agriculture, what needs to be done? Who needs to take actions? Countries make agreements and they become responsibility of the relevant departments. The ministry of agriculture would be the relevant department in both countries and they would have to interact through established committees to make sure there are benefits. For example, Sasol in the past, took a number of young people from Delta

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MTN employs a lot of people, Shoprite also employs a lot of people, making key contributions to the Nigerian economy. If we create conditions where these businesses can thrive, both here and in South Africa, then it means that the local economies will benefit from the agreement between these two countries state to go and train them in South Africa. When I visited Delta State sometime back, we spoke about the need to revive these kinds of exchanges, and we can do that with agriculture. The youth are the most important motive force for change in Africa. They must not say agriculture is not for them because we need it to thrive so as to achieve food security. The recovery plan in Nigeria recognises agriculture as central, the national development in South Africa also identifies agriculture as very key but we are not interacting to share experiences and explore the potentials of both countries. What does South Africa expect from Nigeria if AfCFTA is to be successful? When one country enters into an agreement with the other, they expect greater mutual understanding and greater solidarity. Once these things are there, there would be more openness to deal with issues that are confronting or impacting on the relationship in any way; negative or positive.

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Wednesday 03 March 2021

BUSINESS DAY

AGRIBUSINESS

In association with

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Nigeria’s drag on US fish export ban questions FG’s diversification plan JOSEPHINE OKOJIE

i g e r i a ’ s continuous failure to provide the United States with its Self Reporting Tool ( SRT ) re q uirem ent fo r smoked catfish (silurifomes) in three years questions the Federal Government’s diversification plan. Since 2017 Niger ian government’s tardiness in providing the STR document forced the US to place a ban on catfish export from Nigeria in March 2018. Over three years, the ban has shrunk market access for fish farmers, slowed investments into the industry, and threatened the government export drive targets at a time the country is in crucial need of FX, BusinessDay learnt. “Ou r d i ve r s i f i cat i o n focus is just talk and no action. Farmers cannot export smoked catfish to the US and Canada since 2018 because of government failure and yet nothing has been done to address the issue,” said Rotimi Oloye, president, Catfish and Allied Fish Farmers Association of Nigeria (CAFFAN) said from his Ibadan farm in a telephone resp ons e to BusinessDay questions.

Rauda Musa Umar, human resources Executive/ wheat development programme manager, Crown Flour Mill; Damilola Adeniyi, corporate affairs Manager, Olam Nigeria; Sabo Nanono, Minister of Agriculture; Moshood Quadri, head - human resources, Crown Flour Mill; Bola Adeniji, general manager/ head marketing (business to customer), Crown Flour Mill, during a courtesy visit by Crown Flour management to the Agriculture Minister recently in Abuja.

“The ban is killing Nig er ia’s fish industr y and reducing our non-oil earnings especially at a time the country is in crucial need of FX,” Oloye said. He blamed the government for not taking prompt action in addressing the issue and ensuring that the ban is lifted within the shortest possible time. He added that lots of farmers who have taken loans and invested in processing to tap opportunities in the export market are now finding it extremely difficult to meet up with their loan obligations owing to the ban.

From time, the agricultural sector has been touted as the most viable contingency plan for economic diversification from oil; however, the sector has failed to achieve that feat. Diversifying Afr ica’s l a r g e s t e c o n o m y aw a y from oil would require paying more attention to establishing agriculture, which constitutes the bulk of the country’s nonoil exports, and valueaddition, experts say. “The structures to drive growth and diversify the economy through agriculture are lacking. If we are truly serious about our non-oil,

the government will ensure that every encumbrance to international trade is resolved quickly,” said Kola Adebayo, professor at the Federal University of Agriculture, Abeokuta. “The fisheries subsector in Nigeria has been undersupported in the government food agenda. The saving grace for the industry has been the large local market that exists,” Adebayo said. In 2017, The UN Food and Agricultural Organisation (FAO) put the value of the Nigerian aquaculture industry at $848million (N398.6billion).

Currently, Nigeria exports about 100 metric tons of catfish yearly to the US, Canada, and Europe out of its 316,727MT annual aquaculture production,” the Nigeria Catfish Association says. The ass o ciation estimates the annual loss of $5million to the industry since the ban. “It has been really difficult for us catfish farmers since the ban. Our profit margins have slowed because we generate most from export,” said Tijani Yusuf, a catfish farmer in Ibadan. “Now we just focus on the local market as we can no longer export to the US and Canada,” Yusuf said. He urged the government to provide adequate information on the SRT document quickly to ensure the ban is lifted by the US, Canada, and others. According to the United St ate s D e pa r t m e nt f o r Agriculture (USDA), the SRT is a prerequisite for trade and it is the process of determining whether a country’s food safety inspection system is equivalent to that applied domestically in the US. Nigeria is yet to fully provide these answers after submitting the SRT document for the second time, the US Food Safety and Inspection Service (FSIS) says. “Nigeria did not fully address information requested in

the Self Reporting Tool. The SRT is a questionnaire that FSIS uses to help assess whether a country’s food safety inspection system is equivalent,” said Veronika Pfaeffle, public affairs specialist, FSIS said in an email response to questions. “However, in December 2020, the Nigerian government indicated that they would like to continue to pursue equivalence to be able to export Siluriformes fish and fish products to the U.S. and submitted additional information requested in the SRT for FSIS review,” Pfaeffle said. She noted that the FSIS will continue to work with Nigeria to equivalence for dried catfish products, saying until the equivalence is granted, the country will not be eligible to export the product to the US. “FSIS continues to work with Nigeria to pursue equivalence for Siluriformes products. Until equivalence is granted, Nigeria will not be eligible to export these products to the U.S,” she said. Growth in the fishing sub-sector shrunk from 3 . 3 p e rc e n t i n 2 0 1 9 t o 0.26percent in 2020. On a quarter-on-quarter basis, it also shrunk from -2.07 percent in the third quarter of 2020 to -3.6percent in the fourth quarter of 2020, data from NBS shows.

Agri Capital calls for agro-industrialisation, list crops to bridge industry gaps JOSEPHINE OKOJIE

armers in Nigeria have been urged to grow crops and other produce based on guided industrial demands to reduce gluts, marketing challenges, gross importation and capital flight, as well as to build resilient agriculture. Nigeria is deficient in production of most crops, and manufacturers do capitailise on this to import virtually all industrial crop. This has discouraged most farmers, and puts the country in a difficult agro-economic position causing too much pressure on the exchange rate and fueling inflation, unemployment and rising poverty level amid industrial failure. Dayo Olunowo, managing d i r e c t o r, A g r i C a p i t a l Limited expressed that his organisation is ready to help farmers to overcome the

challenge, which, in turn, would enrich them in the 2021 farm season. Speaking at the company’s launch of its 2021 farm season programme tagged, ‘ISP 2021,’ he mentioned that the focus of Agri Capital was in three dimensions.

The first, he said, is import substitution - which ensures that Nigerian farmers cultivate the crops that dominate Nigeria export, and these include spices like thyme, turmeric, coriander and white onions. The second aspect is closing the gap between

Dayo Olunowo www.businessday.ng

farmers and multinationals through training of farmers in Good Agricultural Practices (GAP) to meet the produce standards of such organisations. “As a qualified professional that understands the standard procedures, we will ensure that farmers are empowered to operate and adhere to the standards,” said Olunowo, who is a farm assurer with Global Gap. Agri Capital, he added, is already working with FA10 Group and some state governments to interpret the Global Gap Operational Procedure documents into three Nigerian languages. Asked on what crops the multinationals were requesting from farmers, he explained that Orange Fleshed Sweet Potato (OFSP), cassava, thyme, turmeric, garlic, ginger, and vegetables, among others, were in demand. According to the Food

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and Agriculture Services (FAS) of the US Department of Agriculture, Nigeria is deficient in maize, rice, wheat and oil palm production, among others. However, there are areas of strength, such as cocoa, cashew, ginger, turmeric, garlic, cassava, yam and beans, moringa seeds and leaves, among others, which the country produces in excess. Manufacturers spend billions of dollars yearly importing agricultural commodities that Nigeria can cultivate, ranging from oil palm to beverages. Experts say jobs and incomes are being exported when Nigeria imports those agro commodities, and cost of production is escalated in the process. Smallholder farmers in Africa most populous country have failed to explore available opportunities from several multinationals companies, which rely solely on imports inputs. Meanwhile, Dr. Akin @Businessdayng

Oloniruha, former provost of the Federal College of Agriculture, Kabba, an affiliate of the Ahmadu Bello University (ABU), Zaria, corroborated the position of Olunowo, saying benefits of producing for exports and industrial import substitution include job opportunities for farmers, aggregators, i n v e s t o r s, y o u t h s a n d exporters. Producing for specific purposes also guarantees steady market and stable prices on which farmers and investors could make expansion and business projections he said. Professor Lateef Sanni, a root and tuber crop specialist in IITA , said deepening industrialisation of any produce in Nigeria has multiplier positive effects on gross domestic product (GDP), poverty alleviation, wealth generation and employment opportunities for youths.

Wednesday 03 March 2021

BUSINESS DAY

news

CHANGE OF NAME

One year after ‘ending’ subsidy, FG eats its words …as petrol scarcity spreads across nation DIPO OLADEHINDE

eeping the price of petrol unchanged at N162 despite increasing international crude cost is a clear indication that subsidy is back, a development completely different from what the Federal Government initially promised about a year ago. By March 19 this year, the Nigerian downstream oil industry would be marking its first anniversary of a supposed liberalised sector and exit from payment of subsidy, which in essence meant that the forces of demand and supply would thenceforth determine the prices at which Nigerians buy petrol. One big part of that announcement was that since the market had been essentially opened up, a horde of players will naturally come into the petrol and other associated products importation business, raising competition and eventually leading to lower prices. However, close to one year after the announcement, indifference attitude towards deregulation, uncertainties,

intrigues and a face-off between the Federal Government and organised labour unions have worsened situations for a sector in desperate need of private investments. What exactly the government said then Like every government before it, the Federal Government through the ministry of petroleum and other government agencies such as Nigeria National Petroleum Corporation (NNPC), gave several reasons why deregulation was the way to go. It stated that it was to ensure economic growth and development of the country, stop the subsidy regime because it was benefiting the rich, rather than the poor and ordinary Nigerians. “Deregulation means that the government will no longer continue to be the main supplier of petroleum products, but will encourage the private sector to take over the role of supplying petroleum products,” minister of petroleum, Timipre Sylva, said while defending the policy in March last year. He pointed out that in line with global best practices, the price of petroleum products would be determined by

market forces, stressing that henceforth, the government’s regulatory function would be similar to that played by the Central Bank of Nigeria (CBN) in the banking sector. “We need to free up that investment space so that what happened in the banking sector, the aviation sector and other sectors can happen in the midstream and downstream oil sector,” he said He disclosed that the deregulation policy would attract more investments into the oil sector, create more jobs and opportunities and free up trillions of naira to develop infrastructure instead of enriching a few Nigerians. Sylva said Nigeria plans to save as much as one trillion naira ($2.4 billion) a year after abolishing the support that the state has provided since the 1980s. In April 2020, NNPC’s GMD Mele Kyari, in a television programme monitored by BusinessDay, said the corporation would just be another player in the downstream sector. “As at today, subsidy/ under-recovery is zero; going forward, there will be no resort to either subsidy or under-recovery of any nature.

NNPC will just be another player in the market space,” Kyari said. Current realities Close to a year after the government initially proposed deregulation, the policy is yet to kick-off as the federal government through NNPC remains the sole importer of these products and still calling the shots in the industry as to who should import or how much marketers should sell the products they manage to get. Also, labour unions, especially the Nigerian Labour Union (NLC) and the Trade Union Congress, which could not stand the speed at which the pump price was heading as crude oil price rebalances at the international market had held government by the throat after succeeding in reducing the price from N167 to N162 per litre.

CORRECTION OF NAME

Same person bears Sera Egbeola Ajoke and Egbeola Sera Ayoke. Henceforth, I want to be addressed as Egbeola Sera Ayoke. All former documents remain valid. Banks and general public should take note.

I, formerly known and addressed as Miss Adebayo Temitayo Catherine, now wish to be known and addressed as Mrs Olatunji Temitayo Catherine, all former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Uzoma Chinenyenwa Jennifer, now wish to be known and addressed as Mrs Unomah Chinenyenwa Jennifer, all former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Yakubu Isiaka Alade, now wish to be known and addressed as Yakubu Isiaka Kolade, all former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Oluwatobi Jolayemi, now wish to be known and addressed as Tobi Eseoghene Emore., all former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Ahine Terhumba Terry, now wish to be known and addressed as Ahine Terhemba Peter, all former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss. Yakubu Memunat, now wish to be known and addressed as Mrs. Yunusa Memunat, all former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Glory Ezeala to Miss Gloria Ezeh, now wish to be known and addressed as Mrs Gloria Stephen - Adeloye, all former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as LAWAL, Mutihat Ayobami, now wish to be known and addressed as Mrs. TIJANI Mutihat Ayobami Adekilekun, all former documents remain valid. General public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss. Oluwatumininu Yetunde Ayodabo, now wish to be known and addressed as Mrs. Oluwatumininu Yetunde Olowude., all former documents remain valid.

CHANGE OF NAME

I, formerly known and addressed as Okika Nkiruka Georgina, now wish to be known and addressed as Atu Nkiruka Georgina, all former documents remain valid. General public please take note.

APAPA: Too early to celebrate? Trucks making their way to Lilypond Park, one of the seven designated parks to manage Apapa gridlock in Lagos, yesterday.

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26 BUSINESS DAY

Wednesday 03 March 2021

NEWS

Tech founders suggest 6 policies to regulate Nigeria’s crypto market FRANK ELEANYA

takeholders in the Nigerian technology ecosystem have proffered six policies they hope will put an end to the impasse between the Central Bank of Nigeria (CBN) and the cryptocurrency market. In a communiqué BusinessDay received on Monday, the stakeholders under the aegis of Young Nigerian Industry Leaders, said while the position of the CBN had some merit, the prohibition placed on the cryptocurrency market could deny Nigeria an opportunity to become a global leader in financial services. The six-policy directions suggested include a) Formalise KYC, AML, and CFT processes for cryptocurrency providers; b) Monitor transactions on cryptocurrency providers; c) Ensure entities dealing with cryptocurrencies can be known and licensed accordingly; d) Regulate cryptocurrencies as digital commodities and implement a Capital Gains Tax (CGT); e) A six-month suspension of the CBN’s latest cryptocurrency exchange restriction, and f) Create an offshore International Finance

Centre to ensure consistency with Nigeria’s diversification and exchange rate policy. “In furtherance of its compliance, representatives of the ecosystem wish to directly engage with the CBN on the concerns of operators, local ecosystem stakeholders, and foreign investors regarding its regulatory stance on cryptocurrency transactions. “The submission of this document as attached is intended to succinctly present the position of these representatives, as well as make recommendations, based on global best practices, on how the CBN can achieve its regulatory objectives while continuing to champion the financial technology ecosystem that it has enabled over the past decade,” the stakeholders said. Below are the details of the policies Formalise KYC, AML, and CFT processes for cryptocurrency providers The CBN, the stakeholders said, can work with cryptocurrency providers to formalise their Know Your Customer (KYC), combating the financing of terrorism (CFT), and Anti-Money Laundering (AML) processes. This can include the use of Bank Verification Numbers (BVN) and National Identity Numbers

(NIN). In a letter explaining its directive, the CBN had said cryptocurrencies aid the growth of terrorism financing and anti-money laundering. However, cryptocurrency providers that have spoken with BusinessDay since the CBN order came into effect said they already implement these controls on their platforms. Hence, it would be easier for the CBN or any regulator to formalise these processes. Monitor transactions on cryptocurrency providers The stakeholders also suggested the CBN can mandate cryptocurrency providers to keep records of transactions for regulators like the CBN, Nigeria Financial Intelligence Unit (NFIU) or the Economic and Financial Crimes Commission (EFCC). The CBN can have access to domestic transactions and information on foreign inflows. This suggestion can also be easily dealt with by the exchanges as many have a system in place that ensures record keeping. Exchanges in Nigeria conduct 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 fulfil 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 ongoing basis and are frequently reviewed and audited (including external audits). Ensure entities dealing with cryptocurrencies can be known and licensed accordingly. Here, the stakeholders want the CBN and other regulatory bodies like Securities and Exchange Commission (SEC) and Federal Inland Revenue Service (FIRS), among others to regulate cryptocurrency exchanges with existing laws and licences. The CBN can add legal certifications for exchanges - for example, registration under the Special Control Unit on Money Laundering (SCUML).

Oti Ikomi, executive vice-chairman, Proton Energy, with Ovie Omo-Agege, deputy Senate president on a visit to update on the planned construction of a 150MW power plant in Sapele

Ogun creating more industrial clusters for investors - Abiodun Iniobong Iwok

overnor of Ogun State, Dapo Abiodun, says his adm i n i s t rat i o n i s creating different industrial clusters across the state to provide conducive business environment for investors. Abiodun, who stated this when he received the management of Mikano International Limited, on a courtesy

visit to his office in Abeokuta, expressed the optimism that the state would soon be open for industrial revolution. He said that aside the Agbara industrial cluster, others would be sited along the EpeIjebu-Ode axis, Magboro and the Interchange axis. “We are creating different industrial clusters around the state. Before, we had the Agbara industrial clusters and now we have the new interchange. We have identiwww.businessday.ng

fied different other clusters; we have what we call Ijebu Cluster, which will be along the Epe-Ijebu-Ode road. We also have Remo cluster somewhere around the agro airport that is coming up. We have the Magboro cluster which is around MFM,” he said. The governor said that his administration also embarked on road infrastructure and also created an Energy and Electricity Board to identify locations where gas pipe-

lines could be extended to. “This administration is investor-friendly. As a matter of fact, our vision is very specific and targeted towards bringing investors and creating an enabling environment for investors in the state.” Mofid Karameh, chairman and chief executive officer, Mikano International Limited, acknowledged the state’s deliberate attempt at making the business environment conducive for investors.

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Why bandits target schools - experts BUNMI BAILEY

n less than three months, armed bandits have attacked three boarding schools in Nigeria’s northern region, and in the process, abducted over 600 students. In December, it was Government Science Secondary School Kankara, Katsina State, where over 300 students were kidnapped. On February 17, it was Government Science Secondary School Kagara, Niger State, where 27 students were abducted alongside some staff and their family members, and on Friday, February 26, over 300 students were kidnapped from Government Girls’ Secondary School Jangebe, Zamfara State. These are not isolated cases as kidnapping has been on the rise in Nigeria in recent years. Security experts say this is part of the general anarchy that seems to have descended on the country. To buttress this point, cost of violence in Nigeria, calculated as security expenditure to manage violence as well as its economic impact, has risen every year since 2007, almost doubling from $69.3 billion to $132.6 billion in 2019, according to data from the 2021 Economic Value of Peace report by the Institute for Economics & Peace (IEP). Between June 2011 and the end of March 2020, at least $18.3 million has been paid to kidnappers as ransom, according to a report by SBM Intelligence. Now armed bandits, who hitherto focused on attacking remote communities, appear to have turned their attention on school children, leaving a trail of sorrow, tears and blood. BusinessDay asked security experts what could be responsible for bandits suddenly turning their gaze on schools. Here’s what they say. Children are easy and soft targets Terrorist groups often choose to strike soft targets. A “soft target” is a person, thing, or location that is easily accessible to the general public and relatively unprotected, making it vulnerable to military or terrorist attack as opposed to a hard target who is heavily defended or not accessible to the general public. For instance, an Institute for Security Studies April 2018 publication titled ‘Refugees are Boko Haram’s latest soft target’ said that after Nigerian President Muhammadu Buhari declared Boko Haram ‘technically defeated’ in December 2015, the terrorist group’s attacks became more indiscriminate and it was responsible for most attacks on internally displaced people or refugees. The report said “attacks have included explosive devices left in refugee camps, and suicide bombings of markets, schools and transport”. “Children are the most defenceless and vulnerable people you would ever meet. They @Businessdayng

are powerless when they are attacked,” said Achike Chude, a public affairs analyst. Poor security Security experts say kidnappers often go to ungoverned spaces far away from government presence. Such locations give them the opportunity to carry out large-scale mass abductions with minimal resistance. Onyekachi Adekoya, a fellow of Nigeria Institute of Industrial Security, said that most schools that the bandits have attacked and carted away their students are located in communities that are poorly protected. In order to prevent another attack, Adekoya advised that the government needs to go back to the communities. “Governors must take responsibilities to organise their people and local communities. And the state and federal governments must begin to hold the local government chairmen responsible for incidents of insecurity in their areas. Most local government chairmen do not stay in their areas of responsibility, making them sometimes unable to provide local leadership,” he said. Quick returns Experts say kidnappers usually get quick ransom in exchange for the rescue of children. No parent wants to see their child go through torture in the hands of terrorists. This emotional attachment of parents to children is what the bandits exploit. The government has also shown itself to be responsive when it comes to rescuing abducted school children. Even though the details are not known, reports suggest that the government pays ransom to secure the release of kidnapped school children. For instance, “in the case of Kankara, the state (not federal) government secured the release of the victims, likely by paying ransom,” John Campbell, a CFR expert, wrote in the December 2020 article “What’s Behind the Recent Student Abductions in Nigeria?” published on the website of Council for Foreign Relations. So, the bandits see abducting school children as an easy way to raise funds. “These large-scale abductions are fund-raising activities for them so that they can reinforce themselves and buy more weapons,” Confidence MacHarry, resident security expert at SBM Intelligence, told BusinessDay. Lack of deterrence Because the government has not shown the capacity or willingness to go after, arrest and prosecute kidnappers, the crime has continued to fester, according to security experts. Davidson Akhimien, a Lagos-based security expert, told BusinessDay that the way to go “is for the government to condemn in clear language the actions of the perpetrators, act justifiably by going after them and bringing them to book”.

Wednesday 03 March 2021

BUSINESS DAY

news

Ponzi schemes threat to investors - SEC Iheanyi Nwachukwu

e cur ities and E xchange Commission (SEC) has described Ponzi schemes as a threat to investors, orderly financial market and the overall economy. Lamido Yuguda, the director-general of SEC, stated at the opening of a two-day webinar organised by the Attorney General Alliance-Africa in collaboration with the commission, on Tuesday. Yuguda said the devastating impact of COVID-19 on the economy, the low-interest rate environment, coupled with the increased use of online services to interact and transact have encouraged the proliferation of Ponzi schemes. He said Ponzi schemes operators have capitalised on the harsh economic climate to offer unrealistic returns on investment to unsuspecting investors. These illegal schemes

have also been able to solicit new investors and expand their operations through the increased use of online services. Yuguda, however, stated that SEC has a statutory duty to promote investor education and train persons in the capital market, adding that the programme was organised in furtherance of that statutory mandate. According to him, “This capacity building programme will afford participants the opportunity to learn contemporary and innovative ways of combating and curbing the menace of Ponzi schemes in Nigeria. “I believe the knowledge gathered from this programme will provide participants new ways of approaching, assessing and tackling the growing problem of Ponzi Schemes”. He described the focus of the programme as apt, and its organisation timely, in view of the contemporary challenges confronting the Nigerian financial sector and its regulators, by the activities of Ponzi schemes.

Buhari directs security chiefs to recapture areas occupied by criminals

resident Muhammadu Buhari has directed the nation’s security chiefs to recover all areas being occupied by insurgents, bandits and kidnappers across the country. Babagana Monguno, the national security adviser (NSA), told State House correspondents that the president gave the order during the just concluded meeting of the National Security Council. The meeting was presided by Buhari at the Council Chamber of the Presidential Villa, Abuja, on Tuesday. According to him, no sovereign nation will allow a group of non-state actors to bring it down to its knees and render the state in state of panic, apprehension, mistrust and disorder. “Therefore, both the defence and intelligence organisations have been charged that while we look forward to having a peaceful, non-kinetic

resolution, we will not allow this country to drift into state failure. “And with effect from today (yesterday) the new service chiefs have been given directives by the president conveyed by the minister of defence, to reclaim all areas that have been dominated by bandits, by kidnappers and other scoundrels of scallywags. “In doing so, I’ve also asked all the intelligence agencies to collapse all their efforts onto one platform, so that with the convergence of efforts, we will be able to give the required intelligence to the operational elements of government. “Now, I need to stress also that there are individuals in this country who have assumed a status that is beyond what they should be. The intelligence from our own sources, the intelligence at my disposal and the disposal of the other intelligence hence, reveals that we have certain entities,

certain individuals who are making capital out of insecurity, especially kidnapping. “This is a situation that has to be brought to an end and I’m sending a warning to anybody who is hiding beneath a veneer of some status, whether official, in terms of an official capacity or traditional or religious, to stoke the flames of disorder will have himself to blame. “The government is very serious about this. Like I said, we’re drifting into a situation that we can no longer afford to lose lives. “We are not going to be blackmailed, we’re going to use whatever is at our disposal, while operating within the confines of legitimacy, within the confines of legality, but the government has a responsibility to assert its will, using the instruments at its disposal to keep the state moving, alive, happy in prosperity, this will not be compromised,’’ he warned.

Monguno revealed that the meeting also deliberated on issues of freedom of citizens to reside wherever they wish to reside as stipulated in the Constitution of the Federal Republic of Nigeria. “While at the same time, the government endorses that anybody who is a criminal, who acts on his own outside the law, should be brought to book wherever he is, but the issue here is that when we continue to pitch ourselves against each other, then this problem will only continue to be magnified. “Therefore, Mr President has charged each and every one to be mindful of this situation because once we start to profile ourselves along ethnic or religious lines, then there’ll be no end to it. “We’ve seen what has happened in so many countries around the globe, and we do not want Nigeria to fall into that type of situation,” Monguno said.

Pre-NIPS summit to focus on Nigeria’s ‘Decade of Gas’

ey senior executives across the oil and gas industry will converge at the Transcorp Hilton, Abuja, March 29, 2021, under the auspices of Nigeria’s Ministry of Petroleum Resources’ Nigeria International Petroleum Summit (N.I.P.S) for a hybrid conference and high-level networking session. The event, which is a presummit conference of the 2021 NIPS, with Nigeria LNG Limited (NLNG) as sponsor, is in furtherance of the Federal Government’s declaration of January 1, 2021 to December 31, 2030, as “the Decade of Gas Development for Nigeria”. “ The Decade of Gas” conference with the theme, “Towards a Gas-powered Economy by 2030” will feature President Muhammadu Buhari, as special guest of honour. Confirmed keynote speakers include Timipre Sylva, minister of state for

petroleum resources; Bitrus Bako Nabasu, permanent secretary, Federal Ministry of Petroleum Resources; Mele Kolo Kyari, group managing director, Nigerian National Petroleum Corporation (NNPC); Mohammad Sanusi Barkindo, secretary general, Organisation of Petroleum Exporting Countries (OPEC); Tony Attah, CEO of NLNG, Hadiza Bala Usman, managing director, Nigerian Ports Authority, among other speakers. Commenting on the Decade of Gas Initiative, Timipre Sylva said, “Nigeria should take the leading role in Africa as gas becomes the dominant fuel for generating power in the continent,” adding that it is the reason the Federal Government, under the leadership of President Muhammadu Buhari, is implementing carefully conceived initiatives to foster productivity and attract investments in the gas value chain.

First Electric commits to quality energy services

irst Electric, an emerging Nigerian sustainable energy company has stated commitment to providing quality renewable energy products and services to meet the growing demand for residential solar home systems (SHS) in Nigeria. Founded in May 2019, First Electric has consistently advocated for renewable energy transition, especially for residential homes to ensure reliable power supply without the drawbacks of hydrocarbon based generating sets. Shadrach Olarewaju, general manager, sales & marketing, First Electric, who pledged the commitment, said the vision was to drive wide adoption of sustainable energy and water solutions across SubSaharan Africa (SSA).

The company since inception has reduced financial barriers to adoption of solar solutions by providing customers with flexible product financing, Olarewaju said, adding that the company has invested heavily in training and professional development to ensure its customers benefit from quality sales and aftersales services. According to him, First Electric’s hybrid inverters are suitable for both rural and urban homes in Nigeria. In areas with unreliable or unavailable electricity coverage, these systems are able to harness energy from the sun and power various appliances while simultaneously charging its backup batteries for use during hours of little or no sunlight. www.businessday.ng

L-R: Vice President Yemi Osinbajo; Lucky Irabo, chief of defence staff; Ibrahim Attahiru, chief of army staff, and Isiaka Amao, chief of air staff, after the National Security Council meeting at the Presidential Villa in Abuja, yesterday. NAN

Nourishing Africa partners MasterCard, USADF to empower 20,000 agripreneurs Gbemi Faminu

ourishing Partners Africa in collaboration with the MasterCard Foundation, and the United States African Development Foundation (USADF), has launched an initiative tagged Entrepreneur Support Programme (ESP). The programme is designed to train and provide technical support and catalytic financing to Micro, Small and Medium Scale enterprises (MSMEs) across Nigeria’s agricultural sector and food value chain. The ESP scheme, which formally commenced in February 2021, will train 20,000 young agripreneurs, selected

from over 30,000 applicants across 11 states in Nigeria. The states are Abia, Anambra, Delta, Edo, FCT, Kaduna, Kano, Lagos, Ogun, Osun, and Oyo states. It will also provide grants of up to N3.5 million to 125 MSMEs out of the 20,000 selected. In addition the programme will provide participants with easy credit access, business resilience diagnostic tools and an agribusiness entrepreneur development seminar will be made available to all the beneficiaries. Ify Umunna, programme lead at Nourishing Africa, said the ESP targets micro and small-scale enterprises run by young people between the ages of 20 and 40 engaged in the livestock, food

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and cash crops value chains, from the provision of inputs and primary production to processing, logistics, storage and distribution in order to reform and strengthen their businesses. “Our aim is to empower and equip these agripreneurs with the tools, resources and opportunities necessary to achieving our goal of national food security and also create impact in the agri-food industry, not just in Nigeria, but across Africa.” “The Nourishing Africa Entrepreneur Support Programme will build capacities of the agripreneurs, improve their businesses’ profitability and sustainability, and help them build resilience that can withstand future shocks. Through this, we anticipate @Businessdayng

the growth of talented young agripreneurs who will be equipped to lead the industry for years to come,” she explained. On his part, C.D. Glin, USADF president/CEO, said the partnership was in line with USADF’s goal to support African enterprises through grants, opportunities and capacity building. Chidinma Lawanson, country head - Nigeria, Mastercard Foundation said the lack of visibility often impairs MSMEs access to market, training, capacity building, and funding opportunities, adding that these issues needed to be addressed in order to realise the potential of the food and agriculture sector in Nigeria, which is driven by underserved MSMEs

Wednesday 03 March 2021

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Tuesday 02 March 2021

Top Gainers/Losers as at Tuesday 02 March 2021 LOSERS

GAINERS Company

Company

Closing

Change

N0.4

N0.36

-0.04

N18.05

N16.25

-1.8

CHAMPION

N2.27

N2.05

-0.22

VOLUME (Numbers)

0.02

INITSPLC

N0.52

N0.47

-0.05

VALUE (N billion)

0.02

STERLNBANK

N1.6

N1.46

-0.14

Closing

Change

N0.41

N0.45

0.04

MBENEFIT

N4.8

N5.25

0.45

ARDOVA

BETAGLAS

N50

N54

ROYALEX

N0.25

N0.27

REGALINS

N0.26

N0.28

ACADEMY

ASI (Points)

Opening

39,697.62

DEALS (Numbers)

4,470.00 222,573,570.00

MARKET CAP (N Trn)

5.390 20.769

Equities market fails to sustain gain Iheanyi Nwachukwu

on the Nigerian Bourse was led by remarkable decline in the shares of Mutual Benefit, Ardova, Champion Breweries and Sterling Bank. The market has furthered i t s y e a r- t o - d a t e ( Yt D ) movement into the red zone with return of -1.42percent. The Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation decreased from day open

high of 39,931.63 points and N20.892trillion respectively to 39,697.62 points and N20.769trillion. In 4,470 deals, investors exchanged 222,573,570 units valued at N5.390billion. Zenith Bank, United Capital, Mutual Benefit, Japaul Gold and AXA Mansard were actively traded stocks on the Bourse. The share price of Mutual

Benefit decreased most, from 40kobo to 36kobo, after losing 4kobo or 10percent. Ardova followed, dipping from N18.05 to N16.25, down by N1.8 or 9.97percent. Champion Breweries Plc was also down, from N2.27 to N2.05, shedding 22kobo or 9.69percent, while Sterling Bank decreased from N1.6 to N1.46, losing 14kobo or 8.75percent.

we are delighted to host him on his first day on the job. At the NSE, we continue to provide a platform to support our clients in meeting their strategic business objectives and we are pleased to see listed companies take full advantage of the NSE’s products and services. I, therefore, use this opportunity to invite MTN Nigeria Plc and other stakeholders to partner with The Exchange across the various themes of capital formation, capacity building, sustainability and many others.” O n his par t, To r io la commented thus: “I would like to thank the NSE in its entirety for offering me this distinguished honour of

ringing the closing bell on the first day of my tenure as CEO of MTN Nigeria. I must also thank the Board, shareholders and staff of MTN Nigeria even as I reflect on the responsibility on my shoulder to lead what is the largest corporate by revenue outside the oil industry and the second largest corporate listed on the NSE as at today. I am committed to leading MTN Nigeria to deliver on our responsibility to the over 70 million Nigerian customers that use our services to ensure they stay connected and can access increasing value and better services through our network; our role as a corporate citizen in the recovery and growth of the

Nigerian economy; and our need to deliver value and drive share price for the good of our shareholders.” The NSE has continued to remain resilient leveraging various digital platforms and innovative technology to ensure business continuity and uninterrupted dissemination of information to the market. The investments made by The Exchange in this regard have indeed proven to be worthwhile given the extraordinary times we now live and work. In April last year, NSE launched the digital Closing Gong Ceremony and since then, it has hosted several webinars, virtual events and interactive sessions with esteemed stakeholder groups

The World Federation of Exchanges publishes women leaders list for 2021

he World Federation of Exchanges (WFE), the global industry group for exchanges and Central Counterparty Clearing Houses (CCPs), on Monday March 1 published its inaugural annual Women Leaders List. Notable among the selected women leaders is the Executive Director, Regulation, the Nigerian Stock

Nikkei 225 29,408.17JPY255.33-0.86%

S&P 500 INDEX 3,879.75USD -22.07-0.57%

Deutsche Boerse AG German Stock Index DAX 14,039.87EUR +27.05+0.19%

Generic 1st ‘DM’ Future 31,381.00USD -128.00-0.41%

Shanghai Stock Exchange Composite Index 3,508.59CNY -42.81-1.21%

Enterprise Life Assurance Company commences operation in Nigeria

MTN Nigeria introduces new CEO to capital market community TN Nigeria Communications Plc leveraged the Nigerian Stock Exchange’s (NSE) Closing Gong Ceremony on Monday March 1 to introduce its new Chief Executive Officer (CEO), Karl Toriola to the capital market community. Speaking at the event, the CEO, NSE, Oscar N. Onyema, stated, “On behalf of the National Council and Management of the NSE, I congratulate Mr. Karl Toriola on his appointment as the CEO of MTN Nigeria. Mr. Toriola is a versatile leader who comes with vast knowledge and relevant experience spanning over 25 years, and

FTSE 100 Index 6,623.80GBP +35.27+0.54%

Modestus Anaesoronye

igeria’s stock market on Tuesday March 2 reversed previous day’s gains as sell-side pressure on consumer goods stocks rerouted the market which lost N123billion. All sectoral indices closed in red, except NSE Insurance Index which rose by 0.21percent. NSE Consumer Goods Index was down by 3.86percent, NSE Banking (-0.12percent), NSE Industrial Index (-0.41percent), NSE Oil & Gas (-0.88percent) and NSE Pension (-1.07percent). In the absence of major positive news that could sway investors’ sentiment, the bearish pattern will continue in Wednesday’s session. The record 0.59 percent dip at the close of remote trading session

Global market indicators

Exchange (NSE), Tinuade Awe. T h e W F E ’s W o m e n Leaders initiative aims to shine the spotlight on some of the talented and gifted women in our industry. The industry initiative drew almost 60 nominations from every corner of the world as the WFE’s global membership put forward their talented existing, and future, leaders. www.businessday.ng

F ro m t h e t o t a l p o o l o f nominations, 21 women were awarded a place on the list in a very competitive process run by 9 distinguished judges. Nandini Sukumar, Chief Executive Officer of the WFE said: “This year, the list reads as the stories of many of our leaders who are on the frontline of the market infrastructure’s response to the pandemic.

The challenges of the past year have been extraordinary, but their determination to keep the system robust and resilient, while ensuring the safety of their staff should make us all believe again in the power and potential of regulated, public markets as we collectively seek to form the world that will emerge from the lessons of this crisis.”

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nterprise Life Assurance Company Limited, a subsidiary of Enterprise Group PLC, the biggest life insurance company in Ghana has opened operations in Nigeria with a promise of a new life for Nigerians. Though Enterprise Life Assurance Company, simply known as Enterprise Life, is new in Nigeria, the company is not new in the Life Insurance business. Enterprise Life has, in key West African markets, built decades of experience and expertise in delivering innovative life insurance solutions that support customers’ quest for a fulfilled and quality life across Key West African markets. Enterprise Life understands that Nigerians are resourceful and ingenious people who need to be supported with the appropriate platforms, products and services that will enable them face the future with confidence. Thus, its business model focuses on the needs of the customer and delivering exceptional value that gives them advantage in the pursuit and fulfillment of their aspirations. Speaking during the company’s formal unveil in Lagos, the Funmi Omo, managing director, stated that the company intends to reframe the way Nigerians see Life Insurance by making it an appealing proposition that is easy to accept, embrace and adopt as part of life’s necessities. Enterprise Life is

about people and its products and are carefully designed to help people plan their lives and fulfil their dreams. “We will put the customer’s needs at the heart of all our operations by delivering life insurance solutions in an unconventional manner. We have a team of trained field officers called Life Planners who just graduated from our Life Planner’s Academy after months of intense training. These Life Planners will sit with customers, take time to understand and distil their needs, and then work together with each customer to develop bespoke solutions that suits their individual needs, lifestyle and aspirations.” she noted Enterprise Life, a member of Enterprise Group Plc with headquarters in Ghana, with roots dating back to 1924, Enterprise Group Plc is a publicly listed, blue-chip, financial services company whose subsidiaries are each market leaders in their fields of Life Insurance, General Insurance, Pensions, Funeral Services and Real Estate. After several decades as an industry leader in the Ghanaian market, Enterprise Life expanded into The Gambia where it has equally built a solid reputation for its innovative solutions and excellent customer relationships. Building on its footprints and vast experience, Enterprise Life has entered into the Nigerian market with a mission to deliver customer focused and needs-based Life Insurance services to give Nigerians superior advantage over life’s situations.

NSE Launches e-Filing Portal, X-Filing, to Enhance Securities Listing

he Nigerian Stock Exchange (NSE) has launched its e-Filing Portal, X-Filing. X-Filing, which comes on the back of the recent upgrade to the NSE Issuers’ Portal, X-Issuer, is a fully integrated, secure web interface designed to enable the submission and processing of securities listing applications online. The Portal provides Dealing Member Firms (DMFs) and other accredited sponsors with a simple, efficient and convenient way to submit securities listing applications @Businessdayng

on behalf of issuers as well as enable The Exchange to process the applications online, saving time and resources. Accessible via, https:// efiling.nse.com.ng, the Portal is equipped with features that allow the submission, review and approval of securities listing applications; generation of listing and application reports; and easy tracking of application status. Users of the Portal will also be able to check estimated listing and application fees and make payment online.

Wednesday 03 March 2021

BUSINESS DAY

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Wednesday 03 March 2021

BUSINESS DAY

news What to expect in Apapa property market as gridlock ends CHUKA UROKO

he return of sanity in Apapa in the wake of an electronic call-up system that has, in a magical fashion, taken away truck from its roads and bridges, has raised expectations in the port city’s property market. It is expected that as people can now drive freely from either the Lagos Island or other areas on the Mainland to do business in Apapa,companies,especially banks, may return and reopen for business. That means increase in business activities and in the number of people. When there are more people and businesses operating at full capacity, demand for property will rise. People will need office space or shops and would like to live close to their offices and business premises. That means landlords will start receiving alerts from their banks once again. Yes, some of us invested in property here with the hope that income from rents will keep us going as retirees. But most of our houses are empty. Now that the roads are free and people can drive into Apapa, we are hoping that the houses will be occupied again and rents are paid,” Ayo Vaughan, a resident, said. It is hoped that the property market here may start seeing fresh investment interests. Investors will see opportunities in A-grade warehousing to accommodate the expected increase in the volume of business activities spilling over from the ports. Again, investors will see opportunity in neighbourhood shopping malls and eateries that can provide quick and flexible services as opposed to the formalised services offered by big outlets like Shoprite in Apapa Mall. Apart from property value appreciation, the high vacancy rate will come down considerably. That means all abandoned properties will start yielding reasonable income for their owners as opposed to the present situation that has made the properties dead capital. Apapa in the last 10 years of traffic gridlock has been under siege. Its property market has been quiet and dormant. Transaction has been a matter of convenience while demand andsupplyhavebeenprettylow. Retirees who invested their life savings in residential property have been sulking for loss of rental income. It is estimated that 40 percent of residential buildings in the port city are unoccupied while rental income loss is in the region of N200 million per annum. “House rent in Apapa has been static at N2.5 million per annum for a 3-bedroom apartment, down from N4.5 million, within the GRA. No reasonable landlord is talking about rent increases, knowing that no new tenant is out there in search of a

house to rent,” Uche Chiejina, an estate manager, said. Now that the gridlock, which literally made Apapa a dreaded destination for living and business, is gone and sanity has returned, it is expected that the property market will pick up again. Residents and businesses that have fled to saner environments may consider coming back to their homes and business premises, respectively, meaning that many of the unoccupied buildings will come alive again with an uptick in business activities. Though Chiejina reasoned that it might take a while before residents and businesses that left would start coming back, Joseph Akhigbe, an estate surveyor and valuer, differs, saying as a major business hub with port activities going on, it will not be long before businesses, especially banks, start coming back. Akhigbe recalled that people used to come from all over Lagos to do business in Apapa due to the opportunities it offered, but that stopped because of gridlock caused mainly by bad roads and corruption. Wharf Road and Commercial Road used to be the ‘Central Business Districts’ of this port city, where big firms and banks had their offices and branches. A walk through these ‘districts’ shows that most of the banks have either relocated or have the number of their branches reduced. On Wharf Road alone, more than 10 banks and two eateries have shut down their branches due to the pain and difficulty in accessing these branches, leading to loss of a good number of customers. Unity Bank, for instance, which used to have four branches, now has two, Ecobank with eight branches has reduced them to four and Access Bank with seven branches also cut down to four. Eateries like Tetrazini has shut down, Tantalizer with three outlets has reduced to one and the only Mr Biggs eatery in Apapa on Creek Road is now out of the market. Film House Cinema inside Apapa Mall has also shut down. Even the famous Apapa Amusement Park has been shut down due to low patronage. After several failed attempts, including a Presidential Task Team (PTT) on Apapa Gridlock headed by Vice President Yemi Osinbajo, to crack the Apapa traffic riddle, the Nigeria Ports Authority (NPA), working in collaboration with the Lagos State government introduced an electronic call-up system to control truck movement. The call-up system introduced last week Saturday, February 27, has succeeded in keeping the trucks off the roads for the fourth day running. Residents, businesses and other stakeholders in Apapa have hailed this initiative, hoping it will be sustained. www.businessday.ng

Food prices spike over blockage of trucks Josephine Okojie

ood prices are spiking again in Southern Nigeria as trucks conveying food items from the North are prevented from coming South, causing concern for another wave of food inflation. Prices of tomatoes, pepper, onions and other vegetables have doubled since Friday last week, as fewer trucks of food items made entries into markets across the Southern region. The situation has put another squeeze on consumers hurting from the pandemicinduced economic fallout that has weakened their purchasing power. “We normally have nothing less than 200 trucks of

tomatoes, pepper and onions off loaded daily in Mile 12 Market, but since Friday we have had less than 100 trucks that have entered into the market,” Idris Abubakar, a trader at the perishable segment at Mile 12 Market, disclosed. “This is because of the blockage of trucks coming from the North to the South. It has made prices of tomatoes, onions, and other vegetables brought mainly from the North to double,” Abubaker said. Since the start of the year, terrorism, banditry and herdsmen attacks have intensified, forcing the Amalgamated Union of Foodstuff and Cattle Dealers of Nigeria (AUFCDN) to embark on an indefinite strike action to demand the protection of its members. The strike has caused the

closing of all major routes taken by trucks transporting livestock and food items from the North, where they are majorly grown, to the South, where the markets are, after the expiration of a seven-day ultimatum given to the government to address the association’s concern. “I have been at the market since 7am and now it is 1pm, I am yet to purchase anything because of the surge in prices,” said Adebisi Oyebola, a retailer at Ketu Market. BusinessDay’s survey at major markets in Lagos, Nigeria’s commercial centre, shows that a big basket of tomatoes sold N5,000 last week now sells for N15,000 while a small basket sold N2,500 now sells for N10,000 in Mile 12 Market. This shows about 200

to 300 percent rise in prices. A bag of pepper sold between N4,500 and N5,000 last week, now sells between N19,000 and N20,000, indicating a 300-percent increase in price. Similarly, the price of a bag of onions that was sold for N10,000 last Thursday at Mile 12 Market now sells for N25,000, indicating a 150-percent increase. Inflation in Africa’s largest economy accelerated to 16.47 percent in January 2021, basically driven by food inflation that climbed to 20.57 percent in January – the highest level since July 2008. “We are going to see rampaging inflation in the country coupled with the recent

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First batch of Oxford/ AstraZeneca COVID-19 vaccine arrived Abuja Airport yesterday. Picture by Tunde Adeniyi

SMEs report rise in demand as Nigeria PMI back to positive Gbemi Faminu

igeria’s manufacturing Purchasing Managers’ Index (PMI), a gauge for manufacturing sentiments, moved back into positive territory in February 2021 after recovering from 44.5 points in January to 53.0 points, according to data by FBN Quest and NOI. The recovery was driven primarily by the activities of the mediumandsmallscaleenterprises and increased demand. These businesses were propelled by the easing of COVID-19 restrictions and prompt resumption of activities on their part. “Among their positive responses, we note an improvement in demand; a full month’s production (whereas many firms resumed late in January after the holidays); and an easing of COVID-related restrictions. As the restrictions have been eased, so the indicators have risen off the floor,” analysts at FBN Quest noted. The index had declined sharply from 55.0 points in

December 2020 to 44.5 in January 2021. While in May 2020, the index hit its lowest ever at 43.3 points at the heat of the pandemic. The slight improvement in the performance of the index also depicts the resilience of players in the sector dominated by the fast moving consumer goods(FMCG)companies,who emergedwinnersamidthepandemic as respondents’ answers project further expansion going forward, although minimal. Manufacturers in Nigeria, especially suppliers of essential items and services, are beginning to see increased demand for their goods, as the economy gradually turns the corner on a brutal pandemic last year. In the Manufacturers CEOs Confidence Index (MCCI) for Q4 2020 compiled by the Manufacturers Association of Nigeria (MAN), 26 percent of respondents said the inventory of unsold manufactured products in the country reduced over the last three months, while 11 percent claimed that COVID-19 had increasing ef-

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fect on their sales volume. Furthermore, with the implementation of the African Continental Free Trade Area (AfCFTA) and the partial reopening of the countries land borders, manufacturers are assured of increased demand. The report also revealed that the reading for unemployment fell marginally to 48 percent, showing that business has generally been reluctant to hire additional workers despite embarking on layoff exercise to cut cost. The Lagos Chamber of Commerce and Industry (LCCI) stated in its economic outlook for 2021 that unemployment would increase in the country due to sluggish economic growth. “We expect businesses to maintain their cost-cutting strategies in year 2021 to save costs. Thus, it is unlikely that businesses would expand their staff strength even as consumer demand remains weak, “The sluggish pace of economic growth and the resurgence of COVID-19 pandemic @Businessdayng

will propel most businesses to reduce their staff strength in a bid to cut costs” it stated. PMIs, which are forwardlooking indicators, have a strong correlation with GDP numbers such that when there is an improvement in PMI, there is also an improvement in GDP, vice versa. Consequently, experts are hopeful for an improved economic performance, especially as the economy exited recession in the fourth quarter of 2020 with 0.11 percent after two quarters of successive declines, beating projections from the International Monetary Fund (IMF) and the World Bank. The PMI index is based on manufacturers’ responses to set questions on core variables in their businesses. Respondents, which were large, mediumsized and small companies across the country, were asked whether output, employment, new orders, suppliers’ delivery times and stocks of purchases have improved on the previous month, are unchanged or have declined.

Wednesday 03 March 2021

BUSINESS DAY

news

Here’s how Nigeria plans to roll out... Continued from page 1

distribution, COVAX, following weeks of anticipation that it would arrive by February end. The consignment welcomed by top health officials at the Nnamdi Azikiwe International Airport, Abuja makes Nigeria the third African country to take delivery of COVAX free jabs, after Ghana and Ivory Coast. Ahead of the vaccine rollout, the National Primary Health Care Development Agency (NPHCDA) has mapped out regulatory and standard monitoring activities. It has also come up with a draft of who gets what in specific ages of the population and when they get it. But the amount going to states is yet to be revealed. According to a statement released on Tuesday by Faisal Shuaib, NPHCDA executive director/CEO, here is a sequence of how things will unfold. NAFDAC analysis of vaccines, March 3-4 Over these two days, a few bottles of the vaccines will be analysed by the National Agency for Food and Drug Administration and Control (NAFDAC) for clearance. This comes as a fast track of a process that would usually have taken months. Some of the groundwork for this had been set earlier in February, when the agency approved use of AstraZeneca vaccines in Nigeria, following the World Health Organisation authorisation of emergency use. The agency used the vaccine

data received to evaluate safety and efficacy. Vaccination kicks off Friday, March 5 Following NAFDAC’s due diligence, the first jabs in the arms of frontline health workers and support staff will commence at the National Hospital, Abuja, where the first vaccination site will be set up. “These staff would also be electronically registered in the Covid-19 vaccine database and would receive their COVID-19 vaccination card which has a QR code that can be verified worldwide,” Shuaib said. Additional sites in Abuja by March 8 More vaccination sites would have been set up at designated locations such as the National Assembly Clinic, State House Clinic and Federal Medical Centre, Jabi, where political leaders, from the Secretary to the Government of the Federation to Senate president, Speaker of the House of Representatives, Attorney General of the Federation, Inspector General of Police, ministers, senators, House of Representatives members, traditional leaders, and religious leaders would be vaccinated. Roll-out to states follow, but no dates indicated Vaccine distribution to the states for the first phase of vaccination will follow after March 8, although the exact date is not specified. The phase will involve the vaccination of all frontline health workers, their supporting staff, and strategic leaders. Deployment of vaccines to the states would be based on

25 prospective airlines mull operations... Continued from page 1

presence in the sky. The wave of activities, BusinessDay learns, is driven by operators leveraging opportunity of buying discounted airplanes, low cost of hiring staff and tax waivers on aircraft and spare parts, among others. BusinessDay’s checks show that 25 investors are at different stages of acquiring Air Operating Certificates (AOC) for local flight operations from the Nigeria Civil Aviation Authority (NCAA). According to Sam Adurogboye, general manager, corporate communications, NCAA, who confirms this to BusinessDay, these investors are at various phases of acquiring AOC, which includes ex-

pression of interest phase, issuance of guidelines to the applicants, taking concrete steps to demonstrate capacity to operate safe operations and staging of demo flight before issuance of AOC on fulfilment of all requirements. United Airlines, a few weeks ago, commenced operations using Enugu Airport as its operational base, while NG Eagle and Green Africa are at the final stage of getting their AOCs. Stakeholders in the aviation sector describe these new entrants and prospective airlines as being propelled to invest in airline business as a result of the viability of Nigeria’s aviation sector, discounted aircraft parked in other countries as a result of the COVID-19 pandemic,

Food prices spike over blockage of... Continued from page 30

adjustment of the official rate of naira to N410/dollar,” said Bongo Adi, senior lecturer, Lagos Business School. “Consumer price index will increase significantly and it will impact liveability adversely,” Adi said, noting the North cannot afford to hold

long as most of the products are perishable and need to be taken quickly to where the markets are. He urged the government to act quickly to avoid reciprocity fromtheSouth,sayingthecountry’s economy cannot afford any civil disorder at this time. The Nigerian economy has been in shambles and GDP www.businessday.ng

the assessment of their level of preparedness. Some of the parameters that would be used for the assessment include adequate maintenance of their cold chain storage facilities, adequate preparation for logistic transportation to health facilities, and adequate security during transportation and at vaccination sites.

They also must have completed training of health workers, have efficient mobilisation structures in place, and adherence to the protocol for vaccine deployment. CACOVID to offer airlift Plans are in motion with the Coalition Against COVID-19 (CACOVID) to provide cargo planes for airlifting the vac-

cines to the states. States without a functional airport will have their vaccines transported by road from the nearest airport using vans with fitted cold cabins. The vaccines will be stored at the state cold storages, from where they will be transferred by road to cold stores in local government areas.

Strict monitoring Once activities have commenced in the states, there would be strict monitoring by the Presidential Task Force on COVID-19, Federal Ministry of Health, NPHCDA and independent bodies such as the Economic and Financial Crimes Commission (EFCC), Directorate of State Security (DSS), Independent Corrupt Practices Commission (ICPC) and civil society organisations. States, health facilities and health workers that are identified to be defaulting from the standard protocol and guidelines for this phase of vaccination would be sanctioned. Roadmap for phase 2 of vaccination The next phase of the vaccination, which involves giving jabs to the elderly from 50 years upward, will begin once the next batch of vaccines arrives. Those in the age bracket of 60 and more will get vaccinated before those between 50 and 59 in all states. Those eligible for vaccination but not registered online would be assisted at the designated health facility and vaccinated. Phase 3 This phase brings vaccination to those from 18 -49 years old, who are with co-morbidities such as hypertension, diabetes, lung diseases, heart diseases, liver or renal issues. Phase 4 Here, the rest of the eligible population between the ages 18 to 49 will be catered to. Pregnant women will be evaluated by their health providers to weigh the benefits and risks to them before a decision is taken to vaccinate.

low cost of hiring staff who are currently out of jobs since COVID and tax waivers on aircraft spare parts by the Federal Government. Seyi Adewale, CEO, Mainstream Cargo Limited, told BusinessDay that there were many factors responsible for airlines springing up at this time, and it could be strategic and opportunistic. “COVID-19 forced economic downturns around the world. It has now empowered potential aircraft buyers to buy on better terms than before the pandemic. There are many aircrafts parked and available during this period and this could explain the potential long leasehold opportunities,” Adewale said. He explained that new airlines had taken decisions to enter into the Nigerian airspace based on the viability of the market even before the economic downturn, as Nigeria remains a viable economy with over 200 million people,

largest African Gross Domestic Product (GDP). Furthermore, the Central Bank of Nigeria’s (CBN) support to the sector with forex for aircraft purchases has encouraged more investors, and the now signed into law Financial Act enabling airlines to pay zero percent duty on aircraft and its spares is encouraging as these are major costs to airline operations. “Massive investments in airport infrastructure in Lagos, Abuja, Port Harcourt and state governments providing either incentives to attract airlines to their state or going a step further to construct new airports are also encouraging investors,” he said. According to Olumide Ohunayo, an aviation analyst, airlines are not only springing up in Nigeria but all over the world, from UAE to Columbia, USA, UK, Italy, Vietnam, South Africa and New Zealand, because most airlines are taking advantage of low

cost of hiring and low cost of aircraft. Ohunayo recalled that Vietnam stopped processing applications for new airlines, asking them to wait until 2022 in a bid to stop possible glut; a position Nigeria may be gradually approaching. “Suppliers and the aircraft lessors are giving good discounts because of this. Investors are propelled to go and get aircraft and their spares, engines and other components. Prices for aircraft leasing have dropped and this has encouraged people to put forward their plans. “Again, a lot of manufacturers, airlines, training schools have downsized, so the cost of hiring professionals have dropped compared to what was paid in the past, and this cutting down has helped because the cost of starting a new operation is much lower than it was two years ago,” he said. United Airlines acquired three aircraft to commence

operations; NG Eagle has acquired two aircraft while Green Africa plans to acquire several low-cost carriers to feed local and regional routes. The new airlines and even old airlines are now buying smaller aircraft and shifting their base of operations from major cities to smaller cities, thereby developing routes that were not traditionally profitable, Ohunayo noted. “United Nigeria is now using Enugu as its base. In the past, every airline used Lagos as an operational base. What is also common is that they are all marketing low fares. They are coming at a time when the in-flight services have almost vanished and that is a big chunk from cost of operations. “Apps are now being introduced to enable people book flights directly with their phones and negotiate for fares. Little interface between staff and airlines has reduced cost of hiring,” Ohunayo added.

per capita has been declining every year since 2016, a sign that the economy is unable to provide sufficient opportunities for its rapidly growing population. Despite the Nigerian economy just eased out of its second recession in five years, the challenging economic climate still largely remains. “It is going to be something temporary but it will

hurt the economy with very weak wallets, fragile growth, and poverty,” said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI). The LCCI has asked the Federal Government to address the insecurity issues in the country and engage traditional leaders and security operatives to address the political tension in the country.

“The government needs to quickly address the issue because it has ethnic coloration and the tension can easily snowball into other problems,” Yusuf advised. Meanwhile, traders in the North have started feeling the impact of the blockage as their perishable items cannot withstand our traditional preservation methods. “The South is our main

markets and the development is affecting farmers seriously. Lots of tomatoes are lying in the farm,” said Abdulrahsid Magazi, chairman, Vegetable Producers and Marketers of Nigeria, Kano State chapter. “Farmers are now drying their tomatoes to preserve it while some are taking their tomatoes to neighbouring markets across West Africa,” Magazi said.

Covid-19 Vaccine Rollout in Nigeria MARCH 2

MARCH 3-4

MARCH 5

Arrival of the Covid-19 vaccine

Analysis of vaccines by NAFDAC.

First vaccination site set-up at National Hospital, Abuja / vaccination of frontline health workers and support staff.

MARCH 8

Vaccination of the SGF, Senate president, Speaker of the House of Reps, Attorney General of the Federation, Inspector General of Police, ministers, senators, Reps, traditional leaders and religious leaders at the National Assembly Clinic, State House Clinic and Federal Medical Centre, Abuja

Vaccine distribution to the States

PHASE 1

PHASE 2

PHASE 3

PHASE 4

Vaccination of frontline health workers, supporting staff and strategic leaders

Vaccination of the elderly from 50 years and above (60 & above, the 50-59 with priority for people with co-morbidities)

Vaccination of those between 18 - 49 years with co-morbidities

Vaccination of the rest of the eligible population (i.e. 18 49years without co-morbidities

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Company IN FOCUS

BUSINESS DAY Wednesday 03 March 2021 www.businessday.ng

Twelve things we learnt from Seplat’s 2020 financial report DIPO OLADEHINDE & MERCY AYODELE

igures from Nigerian independent oil and gas company, Seplat’s 2020 audited results show how the firm performed in the year of the pandemic. Despite the impact of COVID 19 on its financial performance last year, Seplat reported strong cash position of $259 million for 2020 after $58 million dividends paid in the year, and $150 million worth of capex. How OPEC cut affect Oil business Seplat admitted its operations were constrained by approximately 410,000 bbls on a gross basis as a result of the Organisation of Petroleum Exporting Countries (OPEC+) production cuts implemented in the third quarter of 2020. The Group’s oil operations continued despite the COVID-19 crisis and produced an average 33,714 bopd on a working interest basis during 2020, up 40.9percent on 2019. This increase reflects a maiden contribution of 8,855bopd from the OML 40 and Ubima assets, as well as higher production from OML 53 compared to 2019. Also, production output increased as a result of wells drilled earlier in the year, which has necessitated discussions with the Department of Petroleum Resources and Nigerian National Petroleum Corporation for increased quotas to reflect this uptick. In 2020, six oil wells were drilled/ completed (Sapele-35, Ovhor-6ST, Ovhor-20, Ohaji South-5, Ohaji South-6 and Gbetiokun-5), while the Extended Well Test for Ubima continued with production up to 1,200 bopd. Gas business performance As one of Nigeria’s major suppliers to the domestic market, Seplat’s working-interest production for 2020 stood at 101 MMscfd at an average selling price of $2.87/Mscf (2019: 131 MMscfd, $2.84/Mscf). Gas contributed $112.5 million of Group revenues, or 21.2percent, which was lower than planned as a result of the indirect impact of COVID-19 on Nigerian businesses

for most of the year, which affected bulk offtake from Oben gas well. Delays in production from Oben-50 gas well further exacerbated the effect, following a restoration in demand in the later part of the year. An electricity tariff increase, that saw prices to consumers rise by an average of 75percent, became effective in November 2020. “This cost-reflective tariff has improved the collection system recently implemented by the Government and is expected to improve cash flow to the power sector and therefore future invoice settlements,” Seplat said. Cash flows from operating activities Net cash flows from operating activities, after movements in working capital stood at $308.7 million compared to $337.8 million the previous year. An income tax payment of $10.4 million was made in the period compared to $3.5 million in 2019. The Group received $188.1 million from the major Joint Venture towards the settlement of outstanding dollar-denominated cash calls and $154.2 million (Naira equivalent) to offset Naira cash calls totalling $342.3 million received in 2020. This compares favourably to $179million received in 2019. The major JV receivable balance now stands at $107.0 million, down from

$222.3 million at the end of 2019. Cash flows from financing activities In 2020, net cash outflows from financing activities stood at $217.4 million compared to $145.2million the previous year. This reflects a further $10 million drawn from the Westport Reserve Based Lending facility, interest of $64.8 million paid on loans and dividend payments to shareholders of $58.3 million. In August 2020, the Company repaid $100 million of the revolver. Liquidity Seplat ended the year with gross debt of $698.4 million with most maturities in 2023, and cash at bank of $258.7 million, which includes restricted cash of $33.6 million, leaving net debt at $439.7 million. “Refinancing all or a portion of our debt during 2021 remains a priority,” Seplat said. Seplat admitted that the firm will continuously review its funding and maturity profile and monitor the fixed-income market to ensure that it is well positioned for any refinancing opportunities for the current debt facilities, including potentially the $350 million 9.25% 144A/Reg S bond maturing in 2023. Denies link to a loan facility issued by Access Bank Seplat denied any link to a loan facility issued by Access Bank to

Cardinal drilling that went bad. “Seplat is not a party to the loan agreement and did not guarantee the loan agreement,” Seplat Chief Executive Officer, Roger Brown said during a conference call monitored by BusinessDay. Brown said Seplat had secured the release of its office complex in downtown Lagos, which had been sealed in relation to the loan dispute. Revenue hit three-year low The oil firm’s revenue slumped 10.7 percent to N191 billion in 2020 from N214.1 billion in 2019, the lowest in three years. According to Seplat, the decline in the revenue from crude oil was majorly due to the global Covid19-induced lockdowns, which resulted in a reduction in oil demand. The Brent oil price averaged $43.21/bbl over 2020 compared to $64.04/bbl in 2019. Brent also remained volatile throughout the year, following the twin shocks of the Saudi Arabia – Russia price war trading and the pandemic Seplat see its first loss since 2016 Seplat recorded a loss of N30.7 billion in 2020 from a profit of N85 billion in 2019. This is its first loss since 2016 when crude oil prices crashed and Nigerian economy was in a recession. Similarly, the company made a loss before tax of N28.8 billion compared to a profit before tax of N89.9 billion made in 2019. Impairment loss rose by 197percent Seplat recorded an impairment loss of N41.1 billion in 2020, a 197 percent increase compared to 2019 when impairment loss stood at N14.9 billion. “The impairment is primarily as a result of re-assessment of future cash flows from the Group’s oil and gas properties due to significant fall in oil prices,” Seplat explained. Gross profit plunged by 63percent The oil and gas firm’s gross profit plunged 63 percent to N44.8 billion in 2020 compared to N121.4 billion in 2019. Seplat noted that the decline was as a result of lower oil prices

and higher non-production costs primarily consisting of royalties and DD&A (Depletion, Depreciation and Amortisation) which stood at N25.8 billion compared to N29.7 billion in 2019. Dividend Seplat recommended a final dividend of $0.05 per share bringing the total dividend to $0.10 per share in2020 same as 2019. Also, Earnings per share fell to a negative value of N45.72 compared to a positive N146.1 recorded last year. Reserves Seplat’s portfolio comprises direct interests in seven oil and gas blocks and a revenue interest in one other block. This portfolio provides the Company with a robust platform of oil and gas reserves and production capacity, together with material upside opportunities through future development. CEO’s comment Roger Brown, Chief Executive Officer said 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,” Brown said. He noted that Seplat is leading Nigeria’s transition away from spending scarce foreign currency on imported, expensive, highemission diesel-generated electricity and “we believe this will provide the necessary base load for a functioning electricity grid that will allow renewable energy to take its place, as we see in the developed world.” Outlook for 2021 For 2021, Seplat expects to produce an average of 48,000 – 55,000 boepd, taking into account the impact of OPEC+ quotas. “We continue to hedge against oil price volatility and expect a higher proportion of revenues to come from long-term gas contracts at stable prices. We have significant cash resources and will continue to manage our finances prudently in 2021, expecting to invest $150 million of capital expenditure across the full year,” Seplat said. Seplat remains confident that its ongoing cost-cutting initiatives and prudent management of cash will enable further reductions in debt, whilst supporting dividend payments and investment for growth. “Although we expect some COVID-19 related delays to push completion into early 2022, following a cost optimisation programme we now expect the project to cost no more than $650 million, substantially below the $700 million budget previously stated at Final Investment Decision (FID),” Seplat concluded.

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