46 BUSINESS DAY NEWS With election over, here comes the hard... Continued from page 1 had a go at decades-old problems
in Nigeria, from poor infrastructure to a scarcity of jobs and endemic poverty. Buhari’s supporters say his intentions are good while critics contend that his statist economic policies are stumbling blocks and are doing the economy, and the same poor he is desperatetoprotect,moreharmthangood. Critics are quick to point out the 76-year-old’s perceived disdain for private capital and are worried his good intentions may lead nowhere, unless there is a change of economic
ideology where private capital is allowed to unlock wealth and create jobs, thereby reducing poverty. Buhari is convinced that his socialist programmes are enough, but the critics say the government’s limited resources lack the capacity to make a dent. Now faced with a second fouryear term, he could either sink deeper into his errors or borrow a leaf from Ethiopia’s 42-year-old prime minster, Abiy Ahmed. In a recent interview with the Financial Times, Ahmed said his model to awaken Ethiopia, described by investors as Africa’s sleeping giant,
C002D5556
was capitalism. Ahmed will achieve this by bringing down age-long barriers to private capital. Ethiopia aims to complete a multibillion-dollar privatisation of its telecoms sector by the end of this year, followed by a sell-off of stakes in state energy, shipping and sugar companies. Buhari’s track record implies a lack of belief in privatisation. Since inception, the Bureau for Public Enterprises, the agency that handles the sale of state assets, has privatised some 142 enterprises, but not much privatisation has happened since 2015 when Buhari came to power, a period that coincides with acute revenue shortfalls.
In two years, 2016 and 2017, the FG only managed to raise N5 billion (USD$16 million) in privatisation proceeds, according to the Central Bank of Nigeria, 14 times less than it raised from the single sale of Eleme Petrochemicals as far back as 2006. Sources say Buhari’s lack of trust in private investors is responsible for his reluctance to embark on any meaningful privatisation. Also, some Nigerians hold the view that past privatisation efforts have been dogged by corruption. For Ahmed, he would proceed cautiously on privatisation in order to avoid any hint of corruption. “We do telecom, we learn something, we evaluate seriously, we continue,” he said. Ahmed’s policies mark a break with the previous administration, which emphasised controlling the economy’s “commanding heights” and reinvesting profits in infrastructure, health and education. Opportunities abound in Nigeria to raise equity capital, whether it’s relocating idle government assets like the Federal Secretariat in Ikoyi or Dodan Barracks, both in Lagos, from the prime locations they are situated before leasing the land out to private investors to generate substantial rental income like Hong-Kong does, or selling some stake in state-owned Nigerian National Petroleum Corporation
Monday 04 March 2019
(NNPC) like Saudi Arabia plans to do by selling 5 percent of Saudi Aramco. Other public assets that can be privatised include the Nigerian Postal Service (NIPOST), Nigerian Commodities Exchange, the national stadium, and the Nigerian Security and Minting Company. This move will not only yield revenue for government and lighten its debt burden, but will also ensure that some of the public assets which are under-utilised are fully utilised, analysts say. Experts cite examples of countries, especially Hong Kong and China, where a significant portion of government budget comes from rents on public assets. They advise that a special purpose vehicle (SPV) should be created to handle the relocation of public assets on prime land on which luxury apartment blocks could be developed and given out for rents. These are hardly new counsels, but they fell on deaf ears during Buhari’s first term. Many will hope he has a change of heart and learn from the mosttalked-about African president today, Ahmed. In the face of intense competition for private capital, Nigeria risks another four years lost if nothing happens to change Buhari’s belief on privatisation.
Lagos yet to find investors for Lekki Int’l... Continued from page 2
L-R: Ugochukwu Eze, P.T.A chairman, West Mills British School; Atinuke Aluko, head of school; Tokunboh Aluko, vice chairman; Yoanna Chikezie (guest speaker), CEO, The Assembly; Maroun Dib, student; Mfon Etim, principal, and Olaoluwa Makinde, HR/administrative office manager, at the West Mills Festival of Arts and Culture (WESTAC 2019) in Lagos, weekend. Pic by David Apara
UBA sets foothold in €280bn Europe-Africa... Continued from page 1
London at the weekend, including
Aliko Dangote, president, Dangote Group, expressed optimism that the move is coming at a good time when Africa needs to strengthen trade relations with the rest of the world. For Dangote, Africa’s richest man, who was a guest at the launch, opening the London bank portrays UBA as dynamic and committed to facilitating trade between Africa and the rest of the world. Tony Elumelu, chairman, UBA Group, described the new UK bank as a global financial movement supporting businesses, both big and small, to carry out seamless transactions. “Our intent is to follow our customers, to continue to support our customers and Africans,” Elumelu said. “We have been in New York for quite some years. We want to help our customers. We want to be around our customers, and we need to help support our customers,” he said. As the only bank of Nigerian origin operating in 20 other African countries, UBA says it wants to consolidate its pan-African status by making businesses in Africa transact directly with contemporaries across the world, without the cumbersome involvement of third parties. Patrick Gutmann, CEO of UBA UK, explained that while the bank has been present in the UK for many years, this is the first time it is present as a full bank. “This is a key part of UBA’s ambitions to be Africa’s global bank,” said Gutmann. “If you want to be Africa’s global bank, you need to have presence in key financial hubs, and London is one of such.” This, according to him, gives UBA the opportunity to service not only
the UBA Group, but all of the clients that work with UBA across all the 20 African markets. The UK was the 7th highest European exporter of goods to Africa in 2017, with a value of EUR9.77 billion, and was the 5th European importer of goods from Africa with EUR14.68 billion, having a trade deficit of EUR4.9 billion with the continent, according to data from the European Commission. The British Office for National Statistics (ONS), in its 2016 report on trade and investment relationship with Africa, also noted that UK’s trade balance with Africa returned to deficit in 2012 following an increase in imports. Trade between Africa and the UK has been growing over time, and remains economically significant. Brexit, of course, remains topical, particularly when considered from the economic perspective of potential transactionsbetweenEuropeandAfrica. “Whether Brexit happens or not, the impact is minimal, and the reason is because we are not a bank that deals across European borders as such,” Gutmann said. “We are a bank that deals with the emerging markets and in our case, the African continent, and those flows are not necessarily going to be interrupted by either of Brexit or no-Brexit,” he said. But then, the value of European trade with Africa is quite significant and could still be a viable market to be explored by UBA. The European Commission reported in 2017 that EU imports of goods from Africa (which is mostly driven by primary goods) stood at EUR131 billion, although they had been as high as EUR187 billion in 2012. On the other hand, European exports to Africa as at 2017 stood at EUR149 billion, with 72 percent of
these goods exported from the EU to Africa being manufactured goods. “Regardless of Brexit or no-Brexit, businesses will always be linked between Africa and Europe. And, of course, we have a rep office in France, so whichever direction they go, UBA is ready for them,” Gutmann said. With the type of licence the bank previously had, African businesses transacting with a partner in England had to deal with another bank, but the UBAnow aspires to service that market. “UBA is interconnecting businesses in Africa with not just United Kingdom but across the world because we have a big franchise in the US which is about 35 years old,” said Kennedy Uzoka, group managing director/CEO, UBA. Uzoka said what has been done is to create a UBA one-stop shop such that whether a client is in Ghana, Nairobi or any part of Africa, by talking to any UBA in an African country, their transactions across the globe will be consummated without going through any third parties. “We are taking away that barrier that used to exist for Africans, to make their business easy,” said Uzoka. In an interview on the sidelines of the launch, Dangote expressed optimism in the Nigerian economy, particularly with the presidential election now concluded. “The thinking from the business community is that things will continue to grow in terms of trajectory. We were not really bothered about election period or not as we continued to invest heavily in Nigeria, which we will continue to do. I think we will have better days,” Dangote said. Gutmann also said in an interview that since “the Nigerian election has come and gone, we see that as an impetus for more flows and investments coming into Nigeria”.
was proposed to cater for the Airbus A380, making it a Code F compliant airport with capacity for 2 million passengers per annum for a start. Investors banked on to get the project off the ground resented and pulled out of discussions four years ago. Since then, the Lagos State government had been unable to talk new investors into the project. The airport was proposed to serve the fast-growing residential cum industrial Lekki hub where several multi-billion-dollar investments are springing up, including the LFTZ, Lekki Deep Seaport, Dangote 650,000bpd refinery, among others. Four rated firms had worked with Lagos State as consultants on the airport project. They include Arup, a firm of consultant engineers, designers, planners and technical specialists; Norton Rose Fulbright, a global legal firm with 54 offices worldwide; Stanbic IBTC Capital, a member of Standard Bank Group, which was appointed sole financial adviser, and Banwo & Ighodalo, a Nigeria-based law firm. Effort to bring the airport into a reality under Babatunde Fashola, immediate past governor of Lagos, suf-
fered a setback because investors who initially expressed interest withdrew from the deal, forcing the government to return to the drawing board. It was gathered that the investors pulled out from the project citing inclement political and social environment, thus forcing the state government and its consultants to launch a fresh search for another set of investors. In 2011, as part of the competitive tender process for the construction of the airport, the Lagos State government, through its consultants, advertised a Request for Pre-Qualification (RFPQ) and 33 Nigerian and international firms indicated interest to participate in the ambitious project. The companies had earlier submitted Expression of Interest (EOI), bidding for the project under a PPP arrangement following a public notice advertised by the state government to that effect. Of the 33 firms, 20 were Nigeriabased. They were to compete against 13 foreign companies, including Munich Airport Germany, Hyundai Engineering and Construction Co Limited, Canadian Commercial Corporation, among others.
•Continues online at www.businessday.ng
Depleting excess crude account leaves... Continued from page 2
last tranche of the Paris Club loan refund to states. He further said N812.762 billion was distributed between the federal, state and local governments for November 2018. With only a paltry $637 million left in the ECA, Nigeria will pray for stabile oil price within the next few months. But this is hardly within its control. The oil market has become so volatile that a tweet from Donald Trump could easily send prices reeling, as would a crisis in Latin America. “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!” Trump tweeted on February 25. Soon after, oil prices tumbled more than 3 percent. International benchmark Brent crude futures fell $2.36, or 3.5 percent, at $64.76 a barrel. However, Nigeria may not need
Trump’s tweet to bring economic Armageddon closer to home. It can do it all by itself. The stock market lost about N85 billion after the Independent National Electoral Commission announced that President Muhammadu Buhari has been re-elected. Unguarded utterances from government functionaries could further endanger the economy. “This is the time to tighten the belt and avoid reckless expenses,” Nwani said. However, a depleting ECA only complicates the situation with the controversial funds. Withdrawal from the account is subject to the approval of the three tiers of government and the Federal Executive Council (FEC), but this was not obtained prior to the disbursements.
•Continues online at www.businessday.ng