BusinessDay 04 Nov 2019

news you can trust I **MONDAY 04 NOVEMBER 2019 I vol. 19, no 427

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L-R: Tokini Peterside, founder of Art X; Vice President Yemi Osinbajo, and Atedo Peterside admiring an artwork, at the opening of Art X in Lagos weekend

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L-R: Ijeoma D. Ozulumba, chief financial officer, Development Bank of Nigeria (DBN); Tony Okpanachi, managing director/CEO, DBN; Olumide Bolumole , head, listings business division, Nigerian Stock Exchange, and Bonaventure Okhaimoat, chief operating officer, DBN, at the closing bell ringing ceremony at the Nigerian Stock Exchange in Lagos. Pic by Pius Okeosisi

BD INVESTIGATIVE SERIES

Bigi assault: How a little-known photographer took on Coca-Cola, Pepsi CBN’s Q3 economic report: The good, Foreign Reserve - $40.5bn Cross Rates - GBP-$:1.29 YUANY-N 51.58 Commodities

and disrupted the carbonated soft drink market

OLUFIKAYO OWOEYE

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he battle for market leadership in the Carbonated Soft Drink (CSD) segment is getting more intense. In the past, the jostle for market share was between two heavyweights –

Coca-Cola and Pepsi.

Interestingly, this rivalr y dominate d the C SD market space for years. However, happenings in recent times have shown that the frenzy around t h e s e t w o h e av y w e i g h t s i s about to dissipate.

In the past, efforts had been made by several small players

to win the hearts of consumers and market share. Sadly, these attempts were only an effort in futility as the firms were soon sent back to play on the fringes of the market.

Big Cola bottled by AJEast Nigeria Limited in Agbara area of Ogun State, backed by AJE Group, a Peru-based bever-

age multinational company, made sparing efforts at sharing the market space with the established brands. However, this initial impression could not be sustained due to the domineering influence of the established brands in the CSD

Continues on page 47

Cocoa

Gold

US$2,501.00

$1,513.46 $61.52

bad and ugly Inside

Crude Oil

See story on P. 47

Nigerian ports ease of business worsens P. 46

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news

FG plans to flood market with 50m LPG cylinders over 5 years Olusola Bello

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he Federal Government is planning to flood the market with 50 million Liquefied Petroleum Gas cylinders in the next few years, a senior official has disclosed.

This is one of the options for promoting usage o f L i q u e f i e d Pe t ro l e u m Gas otherwise called cooking gas, and also achieving affordable household cooking appliances.

Dayo Adesina, senior s p e c i a l s s s i s t a nt t o t h e Vi c e P re s i d e nt o n L P G, while speaking at the OTL African Downstream Expose recently in Lagos said there are plans by the Federal Government to ensure that the consumption level of LPG in the country hits between 900,000 metric tons to 1,000 000 million metric tons by the end of this year, two million metric tons in 2023 and five million metric tons by the year 2028.

He said the most important item in the LPG value chain is the cylinder, stating further that henceforth the ownership of c ylinders would shift from individual consumers to companies as it is

the practiced all over the world.

According to him, the government had approved that 20 million cylinders should the injected to the rural areas in the nearest future. This will however start with around 2 to 10 million cylinders/stoves.

Other options being put in place include lowering a n d re m o v a l o f i m p o r t duty and tariffs of LPG appliances, removal of Value Added Tax (VAT) on LPG and its equipment.

But the modalities for funding the cylinder s c h e m e a re s t i l l i n t h e works.

The cur re nt nat i o nal consumption of 780,000 m e t r i c t o n s p e r a n nu m constitutes a fraction of the annual potential which has been projected at between 3million – 5million metric tons per annum.

The market is a $10 billion economy.

The address the immediate needs of consumer, he said the Federal Government was planning to ensure that about two million cylinders get into the market.

Also commenting, Nuhu Yakubu, president of Nigeria Liquefied Pewww.businessday.ng

How delay threatens plan to revert to January-December budget cycle SOLOMON AYADO, Abuja

troleum Gas Association (NLP GA) and managing d i re c t o r o f B a n n e r E n ergy Limited, urged the Federal, States, and Local Government Authori t y U r b a n a n d re g i o n a l planning and approving authorities, to introduce LPG into building codes, in addition to electricity, and water piping in order to ensure safety and proper alignment of its usage domestically.

He said it was heartwarming that banks now have better a perspective of the business as they now accept LPG assets as collateral for funding the business.

Nigeria has one of the fastest growing LPG sectors in the world. Around 4 0 p e rc e nt o f d o m e s t i c LPG supply relies on imports through the coastal facilities in Lagos, Calabar, Oghara and Warri, as well as from the neighbouring Niger Republic.

LPG is produced in Niger ia mainly by Niger ia LNG limited while the NNPC refineries and some gas processing facilities have become moribund.

LPG constitutes about 5 percent of household energy mix in Nigeria.

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espite the avowed commitment of the National Assembly to ensure passage of the 2020 budget before the end of the year, the Senate recently tinkered with the budget defence timetable to allow ministries, department and agencies (MDAs) that are yet to defend their budgets to do so.

This may mar the government’s plan to revert to the JanuaryDecember budget cycle.

This is albeit the rush by the National Assembly committees to meet the target many have perceived to be inappropriate in addressing the inadequacies in the budgets of MDAs. Before now, the National Assembly had adjourned for two weeks to pave the way for the budget defence by MDAs. It later resumed October 29.

Chairman of National Assembly and president of the Senate, Ahmad Lawan, had explained that the adjournment was to hasten the passage of the 2020 budget and to revert to the January-December budget cycle.

According to the timetable, Lawan announced that budget defence by all MDAs, which began on Wednesday, October 16, was to last till October 30, while harmonisation of reports by the committees and other legislative works will take November and eventual passage in December before lawmakers would embark on Christmas break.

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“We have earmarked the month of October to be the sole window for all Budget defence activities in this year, by all MDAs. “In this regard, our committees will be expected to conclude their work on Budget defense within October, this year. The subsequent necessary legislative work will be carried out in November and December, leading to eventual passage before the end of this year,” Lawan had stated.

As part of measures to hasten the budget process, both the Senate and House of Representatives’ committees had earlier, in a new method, resolved to work jointly to fast track the budget defence, against the usual tradition. Still, the committee could not meet up with deadline.

This was largely due to some hitches the committees faced. While some heads of MDAs could not show up for the budget defence, others graced the exercise but were unable to avail the committees the needed data. Because of this, the Senate extended time for continuation of the process.

Particularly, when the Senate resumed on October 29, it was immediately compelled to again adjourn plenary for another seven days to enable the committees to continue with the budget defence by ministries, departments and agencies (MDAs). It fixed Tuesday, 5th November as new date to resume sitting. @Businessdayng

Lawan had while ruling on the motion of the adjournment moved by Senate Leader Yahaya Abdullahi, said “today will be the last day for budget defence but we will adjourn plenary to enable the committees to continue.

“The Senate will adjourn and suspend plenary till 5th November to enable committees that have not concluded work on the budget to finish it,” Lawan announced.

By the recent adjustment, it was established that Senate could not round up the process as it earlier intended except it altered the budget passage timetable. It has only a month for other necessary legislative work on the budget to be concluded before the lawmakers would proceed on the mandatory Christmas break. It is possible that further hitches may definitely be encountered.

By budget processes, after the defence by MDAs, the committee reports are reviewed according to harmonisation by the Appropriation Committees of both Houses.

Final recommendations are then put forward by each House, where they exchange views on the reports before setting to pass the Appropriation Bill. If there are differences in their final figures of the expenditure votes, the Senate and the House of Reps would meet and iron out their differences. Once they are matched, the final Bill is passed and delivered to Mr. President for assent.

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news

FCTA evolves new security strategies as Abuja inches towards megacity James Kwen, Abuja

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s Abuja, Nigeria’s Federal Capital Territory (FCT), moves towards meeting the United Nations status of a megacity with increasing security challenges ranging from theft, hooliganism, cultism, vehicular borne crime (one chance) to kidnapping, the FCT Administration is evolving security strategies to contain this ugly development.

According to the United Nations, a megacity has a

population of 10 million or more people and currently, there are 37 megacities in the world, including Tokyo, New York, Paris, Berlin, and Bangkok, among others.

Abuja currently has an estimated population size of about 7 million, thus moving towards the benchmark of 10 million to become a megacity, especially with the recent influx of people into the city in search of greener pastures and protection for those running away from states with serious security threats.

Director, FCTA Security

Services Department, Adamu Gwary, in a document obtained by BusinessDay enumerates strategies being put in place for security management in Abuja as a megacity to include, establishing a special Anti-Crime Unit to be domiciled under the current Command and Control Centre of FCTA and a Security Trust Fund for FCT to cater for funding of security agencies.

Others are, having a functional and robust CCTV, the use of Community Policing, involvement of Traditional Rulers, more

supervision and monitoring of developments in consonance with a master plan and use of human security.

Also as part of the strategies, the Abuja Environment Protection Board must be proactive in abating street trading and hawking, and transportation policy and effective traffic management would be defined.

Gwary says these strategies are in addition to the efforts of the FCT Administration to curb security challenges in Abuja, which are constant logistics support to the security agencies cre-

ation of the Command and Control Centre, constant raid of black spots as well as the use of show of force.

He states that these strategies are in view of the emerging security issues in Abuja such as kidnapping, vehicular borne crime (one chance), rape and indecent assault, cultism, house breaking, public nuisance and drug peddling.

“Influx of commercial Motorcycles, influx of Tricycles, influx of unregistered vehicles for commercial use, illegal Motor Parks, proliferation of small

PCAA Foundation, O’oni of Ife’s medical outreach partner to launch maternal health initiative GBEMI FAMINU

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n furtherance of its commitment to improve and promote good health care in Ogun State, Princess Christiana Adeyosola Abeke Foundation (PCAAF) launched its first maternal health initiative, an initiativetofosterthetransformation ofIperuRemo’shealthcaresystem.

Thelaunch,heldattheAlaperu’s Palace, Iperu-Remo, Ogun State, recently,wasorganisedinpartnership withRoyalAfricanMedicalOutreach (RAMO) of His Imperial Majesty, OoniofIle-Ife. The Foundation, pioneered by Princess Adeyosola Basibo-Odoru, focuses on maternal health, child health and family planning, ensured free medical check-up and medications were administered to every woman and mother present at the launch while the Foundation also enlightened the people about the importance of good health for women and children, as it leads to amorefulfilledandmeaningfullife.

Speaking during the event, Basibo-Odoru, founder of PCAAF, emphasisedontheessenceofeducating mothers and women about maternal wellness and family planning in Nigeria and helping them with the provision of proper medical needs toincreasematernalimmortality.

“Wearesuperexcitedaboutthis initiative, we are focused on building a solid platform that will lead conversations on maternal health, child health, family planning, help women and mothers in Ogun State as it is evident that the increase in mortality rate is caused by lack to access proper medical services. The effect of poor health care for nursing mothersinNigeriaisnumerousand these increase child mortality. This outreach will help people to be consciousthatthereareeffectivewaysof preventinganddealingwithvarious maternalhealthconditions,”shesaid.

Representing RAMO of His Imperial Majesty, Ooni of Ile-Ife for the initiative, Seni Farinu, said, “This is our first time working with Princess Christiana Adeyosola Abeke Foundation and we are happy to say that this collaboration has made a big impact in Iperu-Remo, maternal healthisoneofmostseriousmedical issuesthatneedurgentattentionand this partnership has demonstrated a way forward in the Ogun State health care scene, we are delighted topartofthis.” www.businessday.ng

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arms and light weapons and commercial sex workers traffic congestion and slums,” he lists.

The FCTA Director of Security Services, identifies causes of the security challenges in Abuja and its environs as rural – urban migration rise in Internally Displaced Persons (IDPs), proliferation of shanties and unauthorised development within the City center as well as proliferation of unauthorised Motor and Taxi parks, emergence of uncompleted and abandoned structures.

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Why should we care – Substandard private schools everywhere

Bashorun J.K Randle

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he “Nigerian Tribune” newspaper has entered the fray with its front-page editorial on October 2, 2019.

Headline: “Substandard private schools everywhere!”

“Since the progressive rot in the education sector in the country commenced, particularly following the military interregnum in politics and governance in this country, there hasn’t been any let or hindrance to private intervention in the sector. It progressed steadily from the primary school level and now quite expectedly, it has reached its peak at the tertiary level. The intervention of private investment in the education sector in any liberal democracy is a welcome development, especially from diverse interest groups like religious and secular sectors of the society. But the development also places a burden on the same society to ensure proper control and standardisation.

A recent survey by a national daily revealed that these schools, especially the private ones at the level of primary and secondary education, are at different stages of deterioration, existing merely to buoy the income

of their proprietors. The inspectorate section of the various ministries of education are virtually on perpetual leave, with officials looking elsewhere after receiving some form of gratification. Many of the schools in the country’s 36 states are housed in substandard buildings in various stages of disrepair, endangering the lives of pupils. A lot of these schools’ lack recreational facilities which are expected to improve the learning process and environment. Aside from the facilities and environment, these schools also lack qualified teachers and teaching aids.

The report even claims that in Enugu State, there is a private school in every 10 houses, with the sole purpose of profiting from deliberate defaults in the society. The teachers are not trained professionals, so their salaries are poor and this compromises the quality of tuition being delivered in the schools. The state governments being the highest employers of professional teachers at that level have since a long time ago stopped employment and the private schools have only employed teachers that are barely literate in order to minimise costs and overheads. The results of these weak foundations are reflected in the abysmally poor quality of the pupils that eventually enrol for secondary education.

Invariably, these same conditions persist in the secondary level of education and the tertiary institutions are eventually constrained to recruit their respective undergraduate students from these detective

pools of weak students with severely compromised foundations. Little wonder then that former President Olusegun Obasanjo once quipped that Nigerian graduates were unemployable. Unfortunately, the deterioration of the education sector has been at the instance of successive leaderships in the country, of which the former president is an integral part. State-owned institutions having been serially starved of funds to pursue qualitative research, it became apparent that investment in that sector would yield returns, and many of the country’s political leaders quickly cashed in on the situation.

At the end of the day, the quality of human capital in the country suffers from the compromise occasioned by the extremely weak foundations in the schools. The report also pointed to the proliferation of these schools, almost to the total obliteration of the government public schools. It has got to the point that an emergency should be declared on primary education in the country. If this very absurd situation is not addressed comprehensively, the country will be in very serious danger of producing future generations of illiterates who are ill prepared to confront the challenges of modernity.

There must be a deliberate attempt to improve the performance of the inspectorate division of the various ministries of education in this country so that sanity can return to the schools, both private and public. There should be more to establishing a school than the

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It has got to the point that an emergency should be declared on primary education in the country. If this very absurd situation is not addressed comprehensively, the country will be in very serious danger of producing future generations of illiterates who are ill prepared to confront the challenges of modernity

profit motive and the various state governments must ascertain quality control.

At Harvard Business School, graduating students are regularly divided into two groups – the Observers (who just flow with the rest) and the Initiators who are driven by the urge to venture into unchartered territories. They are the ones who have changed the course of history and thereby made America great in various spheres of human endeavour – business, technology, science, engineering, agriculture etc.

Even more intriguing is the division between those who do not know much (but insist that they know it all) and those who really do know but prefer to pretend that they know nothing and have learnt nothing.

As parents, the least we can do is to share the wisdom of Professor Robert Collier of Oxford University (who has delivered several lectures in Lagos and Abuja) with our children: “Success is the sum of small efforts, repeated day in and day out.”

Perhaps, for good measure we should borrow a leaf from the great (perhaps the greatest) heavyweight boxing champion, Muhammad Ali who declared in his CNN interview: “The best way to make your dreams come true is to wake-up.”

Alas, we must all (whether young or old) wake up as matters have reached frightening proportions and dimensions. Our country is in a mess.

Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

The Nigerian code of corporate governance: Principle 24 – Business conduct and ethics he establishment of professional the real and fundamental issues that inspire ducting business with integrity and in line “ business and ethical standards ethical behaviour. with agreed rules defined by the organisa-

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underscores the values for the protection and enhancement of the reputation of the company while promoting good conduct and investor confidence.”

Corporate governance is an encompassing concept that defines the way a company or organisation is managed and controlled.

It prescribes a set of rules which help companies imbibe and work towards transparency, accountability, honesty and openness.

Good corporate governance provides proper incentives for the board and Management to pursue objectives that best serve the interest of the company and its stakeholders whilst also facilitating effective monitoring. It is now established that the adoption of good governance best practices largely determines the sustainability of corporations.

Analysing the importance of ethical compliance mechanisms, Surendra Arjoon, (a Professor of Business and Professional Ethics at the University of West Indies) made a distinction between the use of legal compliance and ethical mechanisms as tools for ensuring good governance. According to him, when legal mechanisms are introduced for the purpose of discipline, it can only promote a freedom of indifference to the letter of the law and may not necessarily inspire or instil excellence. Conversely, ethical compliance mechanisms promote a freedom for excellence which corresponds to the spirit of the law. Legal compliance mechanisms may not necessarily address

Infusing good corporate governance practices into business operations entails establishing processes and policies that will ensure that the expectations of all stakeholders are met in a sustainable manner. Principle 24 of the Nigerian Code of Corporate Governance (NCCG, 2018) sets out certain standards and best practices on business conduct and ethics. The code suggests content for a standard Code of Business & Ethical Conduct (COBEC).

Typically, a COBEC seeks to promote a culture of ethics and compliance within the organisation and defines the way and manner in which the company conducts its business guided by its core values.

Whereas “engaging in business” speaks to activity, “business conduct” refers to the method by which such business should be conducted, and “ethics” refer to the principles and standards that guide the organisation’s business practices. Whilst providing Management with the flexibility to take on various business opportunities, defining professional business and ethical standards builds and safeguards corporate reputation and instils investor confidence.

The board of directors is expected to ensure compliance with the COBEC and that breaches are effectively sanctioned.

This responsibility may be delegated to the nominations and governance committee.

A code of business and ethical conduct may be defined as a set of principles designed to guide stakeholders towards conwww.businessday.ng

tion’s leadership. Investopedia notes that whilst many laws exist to set basic ethical standards within the business community, it is largely dependent upon a business’ leadership to develop a code of ethics for the organisation.

The NCCG code recommends that the COBEC should assert the importance of directors and senior management acting in good faith and in the best interest of the company within legal and defined ethical boundaries. The COBEC is expected to remind directors that whilst acting in their official capacity and exercising the powers attached to their office, they owe a fiduciary duty to the company and as such must conduct diligent analysis of all proposals before the board.

Directors are also expected to be guided in the appropriate use of confidential information and not take advantage of their position for personal gain or competition with the company. The COBEC must highlight the importance of reporting unlawful and unethical behaviour and the protection of those who report violations in good faith.

The COBEC should also be sufficiently detailed to provide clarity for its users and must be formally communicated to all internal and external stakeholders. To be effective and relevant, the COBEC should be reviewed regularly to incorporate new principles and fade out obsolete ones.

Companies are the most significant nucleus of modern economic activity. Whilst

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Bisi Adeyemi the ultimate objective is sustainable growth – reflected by profitability, these entities have a responsibility to ensure that they pursue and achieve this objective in an ethical manner. This responsibility requires a moral commitment driven by the board of directors which has the responsibility for the ethics and integrity standards that underpins how the company conducts its business.

The determination of what is right or wrong is universal and not subject to cultural and individual relativism and thus the test cannot be a subjective one. It has been argued that what is considered ethical is a product of an individual’s moral perspective. However, the collapse of organisations in recent times indicate that, irrespective of our relative perception of morality and ethics, failure to adopt appropriate business ethics in undertaking economic activities will not serve the interest of all stakeholders.

Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & board Evaluation, board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, company Secretarial services

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Postcards from Abuja Investing and Capital Markets Conference

Patrick Atuanya

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lying into Abuja, always leaves a bittersweet taste in my mouth.

It is an impressive city that can hold its own among the best in the world from D.C to Canberra, however, Abuja often seems distant from the pains of the rest of Nigeria.

Similar to a latter day Rome, that seems to suck the life out of the rest of the country with its unending bureaucracy, but I digress!

I was in town for the well-attended BusinessDay investing and capital markets conference, with the theme ‘Market recovery, innovation and regulation in Nigeria.’

Key Highlights Solid showing from the Finance Minister Capital market operators and investors were very keen to hear from the regulators, especially the Minister of Finance, budget and National planning who graced the occasion, about any potential catalysts that would turn around the negative sentiment which currently permeates equity markets.

They were not disappointed.

Some of the loudest applauses the Finance Minister Zainab Ahmed got during her Keynote Address at the conference was when she spoke about the 5 priority areas for her Ministry which include reforms of tax laws, following the reconstitution of the National Tax Policy Implementation Committee (NTPIC) to review various tax laws and produce a single draft Finance Bill 2019 to support FGN’s 2020 budget.

The Draft Finance Bill, which accompanied the 2020 Executive Budget Proposal submitted by President Muhammadu Buhari to the National Assembly on October 8, 2019 included five (5) strategic objectives aimed at achieving incremental but necessary changes to the country’s tax and fiscal laws.

Amongst these strategic objectives is the introduction of tax incentives for investments in infrastructure and capital markets, and specifically the introduction of Tax Rules to complement existing SEC Regulations for Securities Lending Transactions on The Nigerian Stock Exchange.

According to the Minister this particular strategic objective recognizes the crucial relationship between fiscal policy, the regulatory environment and strong capital markets.

Tough questions for NSE CEO, Onyema The CEO of the Nigerian Stock Exchange (NSE), Oscar Onyema, was on the hot seat answering lots of tough questions from a range of investors, some of whom lost their investments following the takeover of hitherto listed Skye Bank, and others

who are just sceptical of investing in stocks at all.

For the most part the NSE CEO, managed to navigate the questions and providing clear and thoughtful answers.

He noted that the NSE is not just an equity only exchange, but one that also trades bonds, exchange traded funds and REITs, and as such prospective investors should be well diversified across the various asset classes.

On the matter of equity shareholders of the defunct Skye Bank, who have been left holding the bag, Onyema explained that the process that led up to the takeover of the bank was a very complex one that involved multiple agencies, including the Central Bank of Nigeria (CBN), Nigerian Deposit Insurance Corporation (NDIC), Securities and Exchange Commission (SEC) Nigeria, among others.

Shareholders of the failed Alpha Merchant Bank are currently being compensated by the NDIC, and it was Onyema’s hope that it could be extended to Skye Bank investors.

PFAs as the whipping boys There was almost a unanimous opinion that Pension Fund Administrators (PFAs) could be doing more to not only underpin equity markets but secure the long term capital gains for pension contributors.

With Nigerian stocks trading at the lowest valuation among emerging and frontier market peers including South Africa, Egypt and Kenya, PFAs are still largely underweight equities.

The most recent data from the

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Amongst these strategic objectives is the introduction of tax incentives for investments in infrastructure and capital markets, and specifically the introduction of Tax Rules to complement existing SEC Regulations for Securities Lending Transactions on The Nigerian Stock Exchange

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countries have found that even though they would like to have slower population growth, going around sterilising people against their will is not an option. People have the right to procreate. Many countries would like to improve labour productivity, but it is unacceptable to lock workers up in warehouses and have them whipped to work harder. Workers are human beings and have the right to fair treatment.

The rights-based approach is not something that is done to make people feel good about themselves by the way. Very frequently it results in better policy and better outcomes. Partly because society is so complex and still not perfectly understood that respecting people’s rights and allowing people do what they want to do is typically better than trying to herd people into choices that they ordinarily would not have made. Take the global battle against poverty for instance. One of the reasons why the latest Nobel laurates in economics won their prize was because they were able to demonstrate that poor people know more about the reality of living in poverty than the non-poor. So, if a policymaker wants to really alleviate poverty you probably must accept that the poor know more about that reality than you do.

Here in Nigeria the abuse of people’s rights supposedly to attain some national goal is becoming very common. To parawww.businessday.ng

ECONOMIST

phrase a certain top government official recently; “When it comes to security, all laws take back a seat. We want to protect our nation; we want to make sure that our people are protected. You must be alive and well for you to begin to ask for your rights. Your rights come when you are well and alive”. Said while trying to justify the border closure policy. Our constitution of course guarantees the right to freedom of movement “and no citizen of Nigeria shall be expelled from Nigeria or refused entry thereby or exit therefrom.”

The rights of people to interact with their neighbours has been unilaterally appropriated and no one asked the people who are supposed to be the benefactors of this policy. If policy makers had asked in advance, they may have been told that even though the security concerns are important and there are issues with illegal smuggling, the borders are so fundamental to the everyday lives of many people that closing it is not really a good option.

Or what about the economic rights abuses in the financial sector. The constitution guarantees every individual the right to moveable property. To paraphrase, “No moveable property…. shall be taken possession of compulsorily and no right over or interest in any such property shall be acquired compulsorily.” Does foreign exchange count as moveable property from a

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A call for co-operation Titi Odunfa Adeoye, CEO of boutique investment firm Sankore Investors, called for co-operation among all market operators to help solve the numerous problems facing Nigeria’s capital markets, from financial illiteracy to unclaimed dividends.

The Acting DG of SEC Nigeria Mary Uduk, also harped on the collaborative nature of the institution and how its functions and regulations cuts across numerous entities.

In all it was a lively, focused and educative set of discussions which showed a hunger for leadership and innovative actions to propel the Nigerian Capital Markets higher.

Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Do we need a rights-based approach to development?

olicy makers can be arrogant sometimes. They sit in their offices and analyse society and people’s choices. When they do not match to their expected reality, they conclude that people do not know what they are doing or that people do not know what is good for them. They then go on to craft policies assuming that they know what the people want and how the people should be behaving. Of course, when people do not respond to policies the way they expect the policy makers frequently move to trying to force people to fall in line.

“If only the people did what we wanted them to do then everything will be fine, and we will be on our way to development”. This is, of course, a massive generalisation and not always true but only by a little. Especially when it comes to policies regarding the poor. Too often the rights and agency of the people policy is supposedly being made for is trampled upon under the guise of some higher societal objective. My question for today is, should we start to put the rights of people first? Before any so-called policy objective?

This is of course not a particularly novel idea. Many countries and international development agencies follow this rightbased approach to development. For some human rights come first before any kind of policy objective. For instance, some

regulator National Pensions Commission or PENCOM shows that PFAs exposure to domestic equities stood at 4.93 percent at the end of August 2019.

This compares with 40 percent for South Africa.

Haruna Jalo-Waziri MD/CEO of the Central Securities Clearing System Plc, argued that if Pension contributors are able to move from one PFA to another based on relative performance, it would help to engender competition in the space and get more PFAs to actively manage their portfolios rather than all of them being concentrated in Federal Government securities.

A presentation made by the NSE also showcased the importance of portfolio diversification across various asset classes and the fact that markets move in cycles, according to research.

NONSO OBIKILI

legal perspective? I am not a lawyer and do not want to stray into legal territory. But if foreign exchange is property then the CBN shouldn’t be able to tell people who to sell their foreign exchange to and at what rate.

Our laws allow for regulators with regulatory powers but do those power supersede fundamental rights?

Anyway, it seems like everywhere you look some policy maker is appropriating peoples’ rights under the auspices of achieving one policy objective or the other.

To be clear I am not arguing for some wild west type libertarian adventure. But before people rights get taken away certainly, they should be asked. Even if it is via their representatives. Of course, as we have learned from others experience, if people are not ready to defend their rights then no one will do it for them.

Dr. Obikili is chief economist at Business Day

@Businessdayng

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BUSINESS DAY

Monday 04 November 2019

EDITORIAL Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITOR John Osadolor, Abuja NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

Planning against the floods in Lagos

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ain visite d Lagos in 2019 with a greater intensity which resulted to damaged roads and flooding across the state.

Not that the rains came unannounced as meteorologists had warned months ahead that the rains of 2019 would be heavier, not just in Lagos but across the country. Climate change has set into these parts.

Except for 1973, flooding in the months between May and September is a regular feature of Lagos. It worsened in recent years because of higher volumes but also negative practises that block drains and expose residents to higher flooding risks. It is insufficient succour to note that flooding hit most parts of the country this year.

High-water levels in rivers Niger and Benue as well as heavy rainfall resulted in flooding in Cross River, Kogi, Niger and Taraba States from 21 to 27 September.

Adamawa experienced even

worse floods in October.

The International Committee of the Red Cross and Nigeria’s Meteorological Agency report that the flood in 54 communities affected some 18, 640 people (3, 104 households) while a further 4, 485 people are currently displaced due to flood waters.

The report notes further, “To note, since June 2019, torrential rainfalls and flash floods have hit 124 Local Government Areas within 36 states and Federal Capital Territory – Abuja (FCT) in Nigeria. This has affected a total number of 210,117 people with 171 casualties recorded in hospital and 130,610 people reported to be displaced. Flash floods are due to the high intensity of the rainfalls at the peak of the flood season which is experienced in places that are flood prone. The floods have been widespread with the worst impacting some states within the six geo-political zones in Nigeria; North West (5 states), North Central (7 states), North East (5 states), South East (5 states), South-South (5 states)

in South West (4 states) totalling 32 states severely affected (out of 36 states of Nigeria and FCT)”.

“The Niger Basin Authority in the Niger Republic have informed NIHSA that the Niger river levels are now in the ‘red alert zone’. This zone is defined by water levels reaching (or above) 6.20 m. This is illustrated in the Comparative Hydrograph of River Niger at Lokoja at 26th September the water levels are at 10.50 m. It is anticipated that water from the Niger Republic will arrive in Nigeria through Kebbi state and reach Anambra, Bayelsa, Edo, Kogi and Kwara states.”

In August, the Lagos State Emergency Management Agency embarked on an awareness campaign to sensitize citizens on preventive actions against the floods. It was either too little or too late because when the rains came, most parts of Lagos lay prostrate.

Each time it rains in Lagos, citizens lose cars, houses, various other properties and, occasionally, lives. Gaping craters lie beneath pools of water

and vehicles enter at their own risk. Citizen Frank Donga in a tongue-in-cheek tweet lately paid homage to potholes: contractors feed fat from fixing them, mechanics are guaranteed a steady supply of cars to repair, politicians have an electoral promise to make every four years, and potholes are an ally of touts and robbers.

Lagos State must adopt a more holistic approach working with communities and citizen’s groups to tackle the menace of flooding beginning this November. We must improve drainage systems, relocate people from areas that are now below the water levels, and manage waste better. Ongoing road rehabilitation must take cognisance of the water levels reached during the height of the rainy season and work to ensure the roads and drainages are built better to avoid repeat scenarios.

Other states and the federal government must follow suit.

We can and must work to ensure an end to the tales of woe arising from rainfall every year in Lagos and the rest of Nigeria.

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan

EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi

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Border closure: Nigeria is trampling upon the world legal order global Perspectives

OLU FASAN

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igeria has a reputation for blatant violation of international rule of law, for acting with impunity in breach of its international legal commitments. For instance, although a long-standing contracting party to the World Trade Organisation, WTO, and the Economic Community of West African States, ECOWAS, Nigeria is widely seen in these institutions of international economic governance as an unreliable adherent to the treaty rules.

Recently, Nigeria reluctantly signed the agreement creating the African Continental Free Trade Area, AfCFTA, but other African countries are beginning to worry that it has no credible commitment to faithfully adhere to its rules. Indeed, the Central Bank governor, Godwin Emefiele, a man determined to turn Nigeria into a communist economy, recently vowed that “AfCFTA won’t stop us from adding more items to the forex restriction list”, and the finance minister, Zainab Ahmed, warned that “the AfCFTA could create a nightmare situation for Nigeria”. The recent closure of Nigeria’s land borders was a policy response to such “nightmare situation”.

Indeed, although the border closure was presented as a move to stop the smuggling, it was a continuation of policies designed to protect local industries. For instance, since 2015, the Central Bank has maintained a list of items, originally 41, now 43, which those importing them are denied access to foreign exchange through the official window. Recently, President Buhari ordered the CBN to extend the forex ban to all food imports. The government also

stopped the issuance of Form M to importers bringing in goods through the seaports. So, it’s not just goods coming in through land that the government wants to stop, but also goods imported through the seaports.

Of course, this is all in pursuance of President Buhari’s import-substitution and self-sufficiency agenda, and his government is determined to do anything, including closing every trade route, to achieve the objectives. Thus, the Central Bank governor, who is gung-ho on the self-sufficiency agenda, recently said: “We must sustain the border closure because it’s critical to boosting local production.”

Sadly, there is no consideration of the economic and social impacts of such a drastic measure. Unsurprisingly, those import-competing producers, particularly farmers, who would benefit from the border closure are supportive of it. For instance, the president of the Rice Farmers Association of Nigeria (RIFAN), Aminu Goronyo, was quoted as saying that the border closure “is to encourage patriotism”, adding that, “It’s time for our country to be independent on food rather than enriching people from other countries”.

But what the border closure will do is to enrich farmers, while making ordinary Nigerians poorer as the prices of locally produced food items skyrocket.

All indications are that, since the border closure, the prices of common food items have risen sharply, some by 65 percent. According to one rice dealer, the price of a bag of rice before the border closure was about N16,000, “but it has shot up between N24,000 and N30,000 since the closure”. So, while farmers become richer, ordinary Nigerians become poorer!

What’s more, perversely for a government that talks a lot about increasing non-oil exports, the border closure will also hurt exports. According to one analysis, over 90% of Nigeria’s trade with the West African subregion is by road, with Nigeria exporting several finished products to the subregion.

Surely, closing the land borders will hurt the export trade, not to mention the possibility that other West African

countries may retaliate against Nigeria, as the angry reactions in some of those countries against the border closure have indicated.

So, while the border closure will enrich local producers, without increasing their productivity and competitiveness, it would also harm the interests of Nigerian exporters and consumers. Elsewhere, such a drastic measure would not be introduced with an impact assessment. Interestingly, it’s not clear what members of President Buhari’s Economic Advisory Council, who were tasked with devising “homegrown solutions” to Nigeria’s economic problems think about the border closure. Surely, cost-benefit analysis would show that the economic and social costs of the decision are higher than benefits to protected local industries.

But apart from the negative economic, social and diplomatic consequences of the border closure, there is also the international rule of law dimension.

This is because the border closure is a blatant violation of Nigeria’s commitments under the WTO and ECOWAS treaties. As the WTO Agreement is the benchmark against which other trade agreements should be measured, let’s briefly consider Nigeria’s obligations under WTO law.

Article XI of the General Agreement on Trade and Tariffs (GATT) 1947, incorporated into the WTO Agreement, prohibits any restriction on imports other than through tariffs and other charges. Article XXII then goes on to forbid any member from “nullifying” or “impairing” the benefits accruing to other members under the agreement, either by failing to carry out its obligations or by introducing “any measure” that might harm other members’ interests.

Surely, by closing its land borders to stop cross-border movement of goods, Nigeria is, firstly, prohibiting or restricting imports other than through duties, taxes or other charges, and, secondly, nullifying and impairing the benefits accruing to other WTO members, especially those in West Africa, whose legitimate exports to Nigeria are being restricted, in violation of WTO law. But the border closure and import bans

‘

Sadly, there is no consideration of the economic and social impacts of such a drastic measure.

Unsurprisingly, those importcompeting producers, particularly farmers, who would benefit from the border closure are supportive of it

are not the only ways Nigeria is illegally restricting trade in breach of its WTO commitments.

Recently, the national president of the Association of Nigerian Licensed Customs Agent (ANLCA), Tony Nwabunike, complained that because the government has given the Nigerian Customs Service a revenue target, customs officials are manipulating the customs valuation system to extract illegal duties from importers. The Automobile Association said the same thing in a recent advertorial, accusing the customs service of imposing “arbitrary customs duties” by maintaining a “contrived” duties system. According to the advertorial, signed by the association’s secretary, Ademola Moshood, the freight-onboard (FOB) system being used by customs officials to calculate duties “is outrageously high, more than 100 percent higher than normal FOB”. So, the government is using the valuation system to collect illegal duties to meet its revenue target, in violation of the WTO Customs Valuation Agreement.

Of course, at the heart of all this is Nigeria’s determination to pursue its own development agenda without international constraints. But the truth is that it could do this without breaching international rules by legally using any of the several safeguard and escape provisions in WTO law. For instance, Nigeria could invoke Article VXIII that allows “governmental assistance to economic development”, including supporting infant industries, or the emergency safeguards provisions under Article XIX if it felt too much imports were damaging its domestic industries. Nigeria could invoke these provisions provided it negotiates with other WTO members with a substantial trade interest and offers acceptable concessions to them.

Note: the rest of this article continues in the online edition of Business Day @ https://businessday.ng Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Protecting consumer rights: Highlights of provisions in FCCPA

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here have been quite a number of articles and expositions on the Federal Competition and Consumer Protection Act, 2018 (FCCPA) with emphasis on the Competition aspect of the Act. However, there are quite a number of provisions in the FCCPA with regards to the protection of consumer rights and duties of manufacturers, importers, distributors, suppliers which are noteworthy. This article will attempt to highlight these provisions and where applicable compare them with what was obtainable under the repealed Consumer Protection Council Act, 1992 (CPA).

It is important to identify who a consumer is. The FCCPA defines a consumer as “including any person who purchases or offers to purchase goods otherwise than for the purpose of resale but does not include a person who purchases any goods for the purpose of using them in the production or manufacture of any other goods or articles for sale or to whom a service is rendered.”

This definition also includes a person who makes an offer to purchase goods but doesn’t end up making the purchase. Furthermore, the definition excludes anyone who buys goods for the purpose of reselling them and a person who buys goods for the purpose of using them for production or manufacture of other goods.

The definition of a consumer under the

FCCPA departs from the one in the CPA which defined a consumer as an individual, who purchases, uses, maintains or disposes of product or services. The CPA did not recognise one who makes an offer as a consumer and it recognised one who disposes of products or services (retailers and wholesalers) as consumers.

The FCCPA established a number of consumer rights in its Chapter XV. Some of the rights are as follows; Right to information in plain and understandable language – Section 114: This refers to the right of the consumer to receive notices or documents or visual representations which he or she is required to receive. Such information should be in the prescribed form and in plain language.

Plain language is one which an ordinary consumer of the class of persons for whom the notice was made with average literacy skills and minimal experience of the products could be expected to understand.

Right to select suppliers- Section 119: This refers to the right of a consumer to freely choose a supplier of goods or services.

It prohibits a supplier of goods or services from offering or supplying goods or services on conditions such as purchasing of any other particular goods or services from that supplier. The only condition under which this would be permissible is if the supplier www.businessday.ng

can demonstrate that the convenience for bundling the goods or services outweighs the limitations to the consumer’s right to choice or that the bundling results in economic benefits to the consumer.

Right to cancel advance reservation, booking or order – Section 120: This gives the consumer the right to cancel reservations, bookings or orders made in advance.

This right is subject to the payment of reasonable fees. A cancellation fee would be seen as unreasonable if it exceeds a fair amount in the circumstances having regard to the nature of the goods, length of notice of cancellation, potential of finding an alternative consumer and the general practice of the relevant industry. A cancellation fee will not apply where failure to honour the booking, order or reservation was as a result of the death or hospitalisation of the person for whom the booking, order or reservation was made.

Right to choose or examine goods – Section 121: A consumer has the right to select or reject goods displayed in or sold from open stock. A consumer will also not be held responsible for any loss or damage to any goods displayed by a supplier, unless the loss or damage was as a result of gross negligence or recklessness, malicious behaviour or criminal conduct. This also implies that if customer damages goods in circumstances

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ULOAKU EKWEGH that are not as a result of gross negligence or recklessness, malicious behaviour or criminal conduct, such a customer will not be liable to pay for the damaged goods.

Right to return goods – Section 122: This refers to the right of the consumer to return defective or unsafe goods, goods that are not suitable for a particular purpose and goods that the consumer did not have an opportunity to examine before delivery which did not correspond with description, sample, type and quality contemplated. In the event of a return, the consumer shall be entitled to receive a full refund of what was paid for the goods.

Ekwegh is a private legal practitioner with over 15 years legal experience in law firms and as in-house counsel. She is also a fellow of the institution of management consultants.

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Monday 04 November 2019

BUSINESS DAY

In Association With

Can the centre hold?

Ethnic violence threatens to tear Ethiopia apart Prime Minister Abiy faces protests from the activists who put him in power

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VERY WINDOW of the factory on the outskirts of Adama is smashed. On the side of the road are the scorched remains of a bus and lorries torched by angry young men last week. This scene of mob violence, just 75km from Addis Ababa, the capital, is one that is becoming wearily familiar to many Ethiopians.

The democratic revolution kick-started by Abiy Ahmed, the prime minister, last year has long been bittersweet. The government released tens of thousands of political prisoners, welcomed back exiled opponents and promised free and fair elections in 2020. Last month Abiy won a Nobel peace prize, for helping end a decades-long conflict with neighbouring Eritrea. But his efforts to put his own country on a more liberal path have been marred by rising violence and ethnic tensions.

The latest killings suggest it is the transition’s darker side that is ascendant.

The violence started on October 23rd after hundreds of young men gathered outside the residence of Jawar Mohammed, a controversial activist who returned to Ethiopia last year at Abiy’s invitation. Both men are Oromos, Ethiopia’s largest ethnic group, and are popular in the region. But Jawar’s supporters, a youth group known as the “Qeerroo”, took to the streets of Addis Ababa and other towns after their leader said he faced a state-orchestrated attempt on his life. In a post shared with his 1.75m Facebook followers he said police had tried to remove his government security detail in the dead of night. They had resisted.

What followed was reminis-

A Balkan betrayal Lexington

Take me out of this ball game Donald Trump’s embarrassing reception at the World Series was a defining moment of his presidency

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cent of protests in Oromia that helped to propel Abiy to power.

Groups of Qeerroo burned tyres and blocked roads into the capital. They marched, carrying sticks and chanting in support of Jawar.

Shops and businesses shut. Copies of Abiy’s new book, which preaches national unity, were set alight.

It soon took a nastier turn. In Adama, groups of mostly Amhara men (the second largest ethnicity) confronted the Qeerroo. Clashes broke out. Vehicles, shops and businesses were burned. At least 16 people died. Most were stoned to death. Near Addis Ababa nonOromo were killed in unprovoked attacks.

Spreading violence may now have claimed as many as 80 lives, says Ethiopia’s human rights commissioner. Some died in attacks on churches and mosques, in a worrying sign that ethnic conflicts risk turning into religious ones, too.

Underlying the unrest are two trends. The first is an intra-Oromo power struggle embodied in the

rivalry between Jawar and Abiy.

Jawar, who says he may run in next year’s election, has loudly criticised the prime minister’s plan to form a national party to replace Ethiopia’s ruling multiethnic coalition. On October 22nd Abiy implicitly threatened his younger rival, saying he would “take measures” against media owners with foreign passports (Jawar is an American citizen) if they fan instability. Many Oromos are also angry that Abiy has not met their demands, which include making Afan Oromo an official language of the federal government. “The government hasn’t done anything for the Qeerroo,” complains a young man in Adama.

The second cause is competition between Oromos and Amharas. Since 1995, when the current constitution established nine ethnically based regions, politics has been a battleground between rival nationalisms. For much of the past three decades the Tigrayans, who are about 6% of the population, ran the show.

Now Oromos are in charge, which has triggered a backlash among Amharic-speakers and some minorities who fear that the Oromo nationalism espoused

by Jawar and his followers could lead to marginalisation. Towns in Oromia with large Amharicspeaking populations including Adama and Addis Ababa are especially volatile. Even officials there use dog-whistle terms such as neftegna (“gun-carrier”) when talking about Amharic-speakers.

In Adama both sides say that they are arming themselves in self-defence.

For several days Abiy was silent in the face of chaos. Since then he has promised to “weed out” perpetrators. Ending impunity for killers is essential. But so, too, are talks to defuse tensions, both within Oromo politics and between the ethnic regions. Jawar says he has asked Abiy to organise a “national convention” to forge a compromise. With elections fast approaching it is a request the prime minister would be wise to answer.

S A RULE of thumb, the more an American president is loved, the more baseball stories there are about him. Many are even true. George Washington was recorded playing wicket—a rival game—at Valley Forge. Dwight Eisenhower claimed to have played semi-pro under a fake name. When commentating on the Chicago Cubs for a radio station in Iowa, Ronald Reagan invented foul balls to fill the gaps when his live feed failed.

But Abraham Lincoln did not, as alleged, whisper on his deathbed to Abner Doubleday, “Keep baseball going; the country needs it.” Lincoln never regained consciousness after being shot. And Doubleday—who was not baseball’s inventor, contrary to another myth—was not with him.

The profusion of such stories illustrates the national pastime’s place in the culture. Baseball is an institution as American as the presidency itself. It also reflects politicians’ inability to keep away from a popular game. Even Theodore Roosevelt, who despised baseball, felt unable to say so publicly. And every subsequent president bar one

has marked the start of the baseball season or its epic denouement, the World Series, by throwing a ceremonial “first pitch”—starting with William Howard Taft, a huge fan in every sense. (Though he did not, as many claim, invent the “seventhinning stretch” by unfurling his cramped limbs while watching the Washington Senators.) The sole exception is Donald Trump.

He had not been to watch the Washington Nationals (the Senators’ successors) before this week.

And though he was persuaded to go because the “Nats” were appearing in their first World Series, he was not Continues on page 19

Monday 04 November 2019

BUSINESS DAY

19

In Association With

Easy now

America’s economy is resisting the pull of recession A healthy jobs market keeps Americans spending, helping to make up for a dip in business investment

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HIS WAS not the way it was supposed to go. “Four, five and maybe even six percent” growth was what President Donald Trump promised in December 2017.

Even within the relatively sober pages of the budget proposal released by the administration in March this year, Mr Trump’s team forecast economic growth rates of 3% or more right through to 2024—which would be the last full year of a second Trump term, were one to occur. Instead, the American economy, which just missed the 3% growth target in 2018 despite the boost from the president’s budget-busting tax bill, continues to lose steam. In the third quarter of this year GDP, adjusted for inflation, rose at an annualised rate of 1.9%, down from 2% in the previous three months. The question hanging over Mr Trump, and millions of American workers, is just how far the slowdown will run and how deep it will go.

The first signs of trouble for America’s economy appeared in late 2018. Housing construction slumped as higher mortgage rates (pushed upward by Federal Reserve interest-rate hikes) combined with rising home prices to drive buyers from the market. At the same time, a global slowdown in manufacturing and trade weighed on American producers. New manufacturing orders dropped fairly steadily from September 2018 until May this year, and parts of America’s manufacturing heartland experienced declines in factory employment.

Economy-watchers have waited anxiously in the months since to see whether weakness in industry and construction would bleed into the service sector, where most Americans work.

Mounting anxiety eventually roused the Fed to action. The central bank spent most of 2018 raising its benchmark interest rates in order to keep inflation in check, despite some withering criticism emanating from the president’s Twitter account. As the world economy sputtered, the Fed slowly changed course: first halting its cycle of increasing rates, then cutting them by 0.25% in both July and September this year. Jerome Powell, the Fed’s chairman, insisted that the moves represented a “mid-cycle adjustment”, lest markets read the cuts as a sign that the end of

America’s longest expansion on record was nigh.

The cuts appear to have helped. Mortgage rates have retreated; the average rate on 30year loans, which rose to nearly 5% a year ago, has dropped back to 3.75%. That has put a bit of wind back in the sails of the residential construction industry, which began work on about 20,000 more homes in September than in the same month last year. Residential investment contributed positively to GDP growth in the third quarter, the first time it had done so in nearly two years.

Rate cuts also seem to have switched off the bright, blinking recession-warning light which is the “yield curve”. “Inversions” of the yield curve, which occur when rates on long-term government bonds fall below those on short-term government debt, frequently appear a year or so before the onset of recession. The curve inverted over the summer, fuelling recession worries, but has since flipped back. Stock prices, which looked sickly in May, have roared back to touch record highs, buoyed by better-than-expected earnings reports as well as the prospect of a trade truce between America and China.

On October 30th the Fed reduced its benchmark rate once more, by another 0.25%.

But in doing so it very nearly declared victory in the battle to ward off a downturn. Markets now expect the Fed to hold its ground for at least the next six months. Mr Powell, while emphasising that the Fed will be watching the data closely, said, “We see the current stance of

monetary policy as likely to remain appropriate...We believe monetary policy is in a good place.” A majority of members of the rate-setting committee reckon the Fed should resume rate increases in 2020.

The Fed’s confidence, if understandable, may be premature. The conditions weighing on the economy earlier in the year have eased a little, but the growth scare did its damage.

Consumers have been the ones driving the economy forward.

They continue to spend, but with less gusto than before. Personal consumption spending grew at a 2.9% annual pace in the third quarter: not bad, but down from 4.6% in the second. Retail sales in September dropped by 0.3%, suggesting that the quarter ended on a weak note. Measures of consumer confidence—a guide to how spending may evolve in future—have slipped.

Firms, too, are behaving cautiously. Measures of business confidence have been softening. Anxiety among bosses is affecting investment: the boost to third-quarter GDP from investment in housing was more than offset by a hefty drop in investment in non-residential building and equipment. Weak investment figures are particularly irksome to economists in the Trump administration, who argued that the president’s tax reform would encourage a boom in business spending. Business enthusiasm could recover a bit in the months to come, if indeed a trade-war ceasefire is declared. But the trade war is only partly responsible for firms’ woes. More important is the worldwide slowdown. Both

Europe and Japan have slipped close to the brink of recession, and the deceleration in Chinese growth shows few signs of abating. A turnaround in American economic fortunes, if it occurs, will begin with homegrown optimism.

Hopes for that hinge in turn on the health of the labour market. The jobs picture has been the most enduring source of encouragement to those looking on the bright side. The pace of hiring has slowed; payrolls have risen by 1.4% over the past 12 months, down from 1.8% over the year before that. But that is not an unexpected development this deep into an economic expansion, when fewer jobless workers remain to be hired. The unemployment rate, at 3.5%, remains extraordinarily low. So long as firms continue to hire and wages to grow, consumers are likely to keep spending at rates sufficient to steer the economy clear of a downturn.

Given the uncertainty surrounding the path of the economy, the Fed might have been expected to signal its readiness to keep cutting rates, if necessary, more clearly. Confidence is easier to maintain than to restore, and the risks of a surge in inflation have fallen in recent months. The price index for personal consumption expenditures, the Fed’s preferred inflation measure, rose at a 1.5% annual pace in the third quarter, below the Fed’s 2% target and down from 2.4% in the second.

Instead, the central bank seems content to wait and see how conditions develop—and to allow a president facing threats from all sides to twist in the wind.

Take me out of this...

Continued from page 18

invited to throw the first pitch. On what he might have expected to be his best day as commander-in-chief (he revealed the killing of Abu Bakr al-Baghdadi hours earlier), he was hidden away in an executive suite.

The Lerner family that owns the Nats did not want him sitting with them. And the one time he flashed up on the big screen the jeering of the crowd was thunderous. A chant of “Lock him up!” rippled round the stadium long after Mr Trump’s image was replaced by footage of smiling servicemen. “Veterans for impeachment” read a banner behind home plate.

Mr Trump’s Republican defenders dismissed this indignity as mere swamp gurgling. “You can either be loved in DC and hated in America.

Or you can be loved in America and hated in DC,” tweeted Congressman Jody Hice. But it signified much worse for the president and his party than a few thousand hostile bureaucrats.

Mr Trump might face a similar reception in any of the 30 major-league stadiums. All are in big cities, with well-educated, go-getting, diverse populations, where he is loathed.

Even Houston, home of the Nationals’ opponents and the biggest city in a state synonymous with conservatism, is now largely Democratic.

And Washington is a more typical metropolis than Mr Hice (who also considers abortion “much worse than Hitler’s 6m Jews”) would care to recognise. Its victorious baseball team illustrates this.

“First in war, first in peace, and last in the American League,” went the old joke about baseball in the capital. Washington’s black population was long considered too poor and its white one, dominated by federal-government workers, too transient to support a major-league team. Before the Nationals arrived in 2005 the city had not had one for 33 years. But a booming, increasingly diversified economy has since transformed the capital. Its population, in decline for half a century, has grown rapidly. Its row houses have been taken over by yuppies; its cultural and nightlife scenes are thriving. And the Nats, who draw over 2m spectators a year, illustrated that change even before their stunning triumph in the World Series this week made them emblematic of it.

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Monday 04 November 2019

BUSINESS DAY

In Association With

Breaking Bissau

Africa’s most famous narco-state goes to the polls But drug-money still seems deeply enmeshed in politics

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EAR THE port of Bissau, the capital of GuineaBissau, one of Africa’s smallest states, is a neglected monument to past rebellion. A giant fist of black steel commemorates striking dockers gunned down by Portuguese soldiers in 1959. The strike—and subsequent massacre—helped start a war for independence led by the African Party for the Independence of Guinea and Cape Verde (PAIGC), a Soviet-sponsored guerrilla movement. It took power in 1974 when Portugal’s dictatorship fell.

For much of the nearly 50 years since, the main problem in GuineaBissau has been the PAIGC. Presidential elections are due on November 24th. On October 29th the president, José Mário Vaz, sacked his government and appointed a new prime minister, though the dismissed one, Aristides Gomes, refused to leave office. If he does, it will bring to eight the number of prime ministers since Mr Vaz won the presidential election in 2014. Despite huge amounts of support, including a sizeable UN mission, Guinea-Bissau, a country of 1.8m people dependent mostly on the export of cashew nuts for foreign

exchange, cannot seem to produce even a vaguely capable government.

It is a lesson in the difficulty of changing deep-rooted systems of corrupt politics in weak states.

PAIGC resembles less a political

party than an extended family fighting over a shrinking inheritance. In the past coups were incredibly common— the country has had at least a dozen attempts, with the latest successful one in 2012. Another one seems less

likely now, thanks to the presence of peacekeepers from other West African countries. But political strife continues nonetheless. For the past four years Mr Vaz, a member of PAIGC, has refused to accept the prime minister appointed

by PAIGC members in parliament, instead preferring to rule on his own.

In the presidential election Mr Vaz will face off against Domingos Simões Pereira, one of the thwarted prime ministers, as well as against another former PAIGC prime minister, Carlos Domingos Gomes Júnior, and nine other independent candidates.

The PAIGC’s infighting has been compounded by a reliance on corruption to fund politics. Most prominently that has involved state complicity in cocaine trafficking from South America through to Europe.

More than a decade ago GuineaBissau was named a “narco state” by UN officials because of how deeply drugs traffickers had penetrated its government. João Bernardo “Nino” Vieira, the longest serving president, was assassinated in 2009 in a feud seemingly linked to drugs trafficking.

In September almost two tonnes of cocaine were seized by the judiciary police. That followed a seizure of around 800kg in March, just before legislative elections. It is all but certain that the shipments were being protected by a local political faction.

It is also plausible that the traffickers were betrayed by a rival one.

Downing Street calling

A Labour government would radically transform Britain How Jeremy Corbyn’s party is trying to woo British voters

S

HORTLY BEFORE the financial crisis of 2008, a little-known Labour MP published a 64page pamphlet. In “Another World is Possible: A Manifesto for 21st Century Socialism”, John McDonnell laid out an economic vision which clashed with the slick, pro-business mantra of Tony Blair’s New Labour.

It praised participatory democracy in Venezuela and hailed co-ops in the Basque country, while calling for the sweeping nationalisation of industry.

The booklet was an attempt by Mr McDonnell, then on the backbenches, to scupper the coronation of Gordon Brown as leader of the Labour Party and prime minister in 2007. Mr McDonnell attracted the support of just 29 MPs. A little over a decade later, Mr Brown is long gone from politics.

New Labour is history. Mr McDonnell is shadow chancellor and Jeremy Corbyn, his friend and socialist ally, is leader. Labour will campaign in Britain’s general election, to be held on December 12th, on the most left-wing platform in a generation.

The goal, according to Mr McDonnell, is an “irreversible shift in wealth and power in favour of working people”. If the party were to be elected, even as a minority government, it could fundamentally reshape the British economy, to a degree not seen since Margaret Thatcher in the 1980s.

Now war is declared For a start, the party pledges to end the Conservatives’ programme of fiscal austerity. Reversing cuts to day-

to-day department spending since 2010 would cost some £50bn ($64bn, or 2.4% of GDP). At least £25bn a year would be put towards infrastructure investment, in part through the creation of a “national investment bank”.Water and energy firms would be brought into public ownership. The Bank of England would be given a new mandate. The state would forcibly transfer 10% of the equity of large companies to their workers and compel pharmaceutical firms to supply drugs cheaply.

Private schools would be abolished.

Britain’s working week could fall from five days to four.

The prospect of a majority Labour government worries most economists.

It is not clear that Britain’s public finances are strong enough to allow for a borrowing binge, especially in the face of an ageing population. A credible commitment from the central bank to keep inflation under control,

and from the government to respect private-property rights, are the building blocks of a sustainable economy.

Britain is almost uniquely vulnerable to a radical shift in policy. The country runs a current-account deficit of5%ofGDP,largebyrich-countrystandards, meaning that it is highly reliant on inflows of foreign capital. Foreigners own a quarter of the outstanding stock of British government bonds. Investors’ trust in the British government and the country’sinstitutions,whichroseduring the1990s(seechart1),hasalreadybeen testedbythefinancialcrisis,theScottish independence referendum of 2014 and Brexit. A loss of faith would send the pound plunging, increase the cost of government borrowing and imperil financial stability.

In 2017 a partner at Goldman Sachs remarked, echoing the French President Emmanuel Macron’s quip over his predecessor’s 2012 cam-

paign pledge to set a top income-tax rate of 75%, that Britain under Mr Corbyn would be like “Cuba without the sun.” Mr Corbyn then had a public battle with Morgan Stanley, after the investment bank warned of the dangers of a Labour government. Yet some in the financial establishment have started to look more favourably on the prospect, for two reasons.

The first is Brexit. The Conservatives have negotiated the hardest of hard-Brexit deals, which the best estimates suggest will cut incomes by 6% in the long run. That is not much less of an impact than leaving the EU with no deal at all. Labour, by contrast, promises to hold a second referendum on Brexit, with a freshly negotiated deal put against staying in the EU altogether.

Second, the polls suggest that Labour has little chance of forming a majority government (see chart 2).

Most probably it would have to rely on the Scottish National Party (SNP) or the Liberal Democrats, which are likely to become the third- and fourth- biggest parties, respectively.

In the company of more moderate parties, the argument goes that Labour would have little chance of getting its most radical plans through Parliament. That parliamentary arithmetic, plus the checks and balances on any British government, would thus curb the instincts of a Corbyn government.

And battle come down At a recent briefing from a big investment firm in London, managers

insisted that British assets were now cheap, on the grounds that too many investors did not realise just how constrained Mr Corbyn would be in practice. In September Citi, a bank, suggested that a Corbyn government would be “the more market-friendly election outcome” relative to no-deal under the Conservatives, provided that Labour was in an alliance with the SNP and Liberal Democrats.

Deutsche Bank has argued that while “any market-unfriendly policies instigated during a Labour government are temporary”,a no-deal Brexit would be a “permanent shock”.

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BUSINESS DAY

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BUSINESS DAY

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BUSINESS DAY

COMPANIES & MARKETS

23

COMPANY NEWS ANALYSIS INSIGHT

Market

Corporate taxes record surprise jump in Q3 LOLADE AKINMURELE

A

t a time of increasing pressure on company profits, tax receipts are curiously rising.

The Federal Government earned N358 billion in Corporate Income Tax (CIT) in the third quarter of 2019, the highest this year and more than twice the average of N169.5 billion per quarter in the first half of the year, according to the Central Bank of Nigeria’s economic report published Friday.

The amount recorded in the third quarter is also double the prorate 2019 budget estimate of N169.45 billion per quarter.

It means that the Federal government has collected N707 billion in CIT so far in 2019 and is only now N106 billion away from meeting its full-year revenue ambition of

N813 billion.

Given the negative impact of Nigeria’s macro-economic headwinds on corporate bottom lines, the driver of the significant uptick in CIT is down to a wider tax net rather than increasing company profitability.

This means more companies are increasingly paying taxes.

Babatunde Fowler, the country’s chief tax collector said in October that the taxpayers’ net widened 11 percent to 20 million in 2018 from 18 million the prior year.

Fowler, who is executive chairman of the tax agency, Federal Inland Revenue Service (FIRS), said N5.32 trillion ($17.39 billion) was collected in taxes in 2018 and his office was targeting N8.9 trillion this year. The target refers to gross federally collectible revenues, which is shared among the federal, state and local governments.

Again, Fowler alluded to an increase in the tax net rather than improving company profits as the basis for the expected surge in taxes, from CIT to Value Added Tax (VAT), by year-end.

He said the increase was possible because the number of taxpayers was expected to jump over two-fold to around 45 million this year from 20 million in 2018. That was largely due to the inclusion of people identified in a tax amnesty that ended this year.

For a country struggling with weak revenues, the uptick in corporate taxes comes as a big boost for the cashstrapped government.

The government of Africa’s largest oil producer has turned its attention to the taxman to prop up underperforming revenues since the collapse in crude oil revenue in 2016.

A low tax to GDP ratio of 6 percent, which for instance

compares to South Africa’s 20 percent, always leaves room for growth in tax receipts.

A raft of schemes targeted at boosting taxes has since been unveiled by the government but with subdued impact.

The Voluntary Assets and Income Declaration Scheme (VAIDS) is one of such schemes aimed at capturing more taxpayers. The scheme was billed to fetch some N360 billion but has only raised less than 10 percent- N30 billion, since its 2017 launch.

Company profits in the doldrums Over the last six months, Nigeria’s real economic growth though remaining positive has decelerated for 2 consecutive quarters, posting GDP growth of 2.1 percent in the first quarter (Q1) of 2019, a decline from 2.38 percent recorded in the fourth quarter (Q4) 2018 and growth of 1.9 percent in the second

quarter (Q2) 2019, which marked another decline from Q1 levels.

The Nigerian Stock Exchange, which gives some representation of the performance of the economy as it houses some of the biggest companies in the country, offers a glance into the weakening economic fundamentals in the country.

Seven (7) of the nine (9) major sectors represented on the Exchange recorded declines in their profit margins over the last 6 months, enabling economists to trace the potential source of weakening macroeconomic fundamentals.

Healthcare and Consumer Goods sectors on the local bourse felt the greatest hit to their net profit margins. The average net profit margin of companies in the Health sector dipped to 2.88 percent in the first half of 2019 from 5.38 percent at the end of 2018.

The healthcare sector contributes slightly over 6 tenths of a percent to the GDP of the country, so the decline in corporate margins in that sector is not as alarming as what was recorded in the consumer goods sector.

Consumer goods companies are represented by the manufacturing sector in terms of GDP contribution and the Manufacturing sector is the fourth largest contributor to the Nigerian economy.

Profit margins of companies in the fast-moving consumer goods space are thinning as costs increase and revenues fail to grow as fast.

The net profit margin in the FMCG sector on the NSE declined to 3.51 percent in the first six months of 2019 from 5.80 percent at the end of 2018.

The average net profit

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BUSINESS DAY

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Monday 04 November 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

CONSUMER GOODS

Dangote Sugar sees improved revenue in Q3 2019 on border closure OLUWASEGUN OLAKOYENIKAN

L

eading sugar manufacturing company, Dangote Sugar Refinery plc, posted increased revenue for the first time this year as recent government pronouncement regarding the country’s land borders with neighbouring countries paid off for the sugar manufacturer.

Revenue of Dangote Sugar rose by 13.4 percent on a year-on-year basis in the third quarter of 2019 to N37.06 billion, according to its nine-month financial results. The third-quarter results, which pushed the company’s cumulative revenue up by 0.6 percent in the first nine months of the year, came after the company recorded declines in sales volumes in the previous two quarters.

The improved result, which is in line with the company’s expectation, “suggests the possibility that the company may be feeling the positive impact of the border closure which has a limited entry of smuggled sugar,” according to analysts at CSL Stockbrokers.

Dangote Sugar and other sugar refinery companies in Nigeria faced a hard time before the government closed Nigeria’s border with the Benin Republic in August to curb smuggling activities across the corridor. The company had attributed previous declines in sales volumes to the continued presence of lower quality, unlicensed sugar being smuggled into

the country and sold in key markets at lower prices.

But besides the border closure, the company gained more leeway in route-to-market distribution due to the federal government’s recent efforts at decongesting Apapa road network, a situation which led to higher turnover in the third quarter of 2019, according to analysts at Lagos-based Chapel Hill Denham.

A breakdown of the Dangote Sugar’s results revealed that the third quarter 2019 performance was largely driven by higher sales volume across its major business segments. Revenue from the sale of wholesale 50kg bag of sugar jumped 0.86 percent to N111.2 billion in the nine-month period, while revenue from the sale of retail sugar rose by 2.65 percent to N3.29 billion.

However, revenues from retail molasses and freight services declined by 26.8 percent and 7.3 percent to N465.9 million and N2.45 billion, respectively.

While Lagos remained the biggest contributor to the company’s top line, sales from the East grew the most across its four regions of operations. Revenue from the East was up by 11 percent to N6.97 billion and contributed 5.9 percent to turnover, revenue from the North region increase by seven percent to N44.49 billion and contributed 37.9 percent to turnover, while revenue from Lagos rose 0.26 percent to N54.95 billion and accounted for 46.8 percent of the company’s

revenue.

On the other hand, sales realised from its West region, which excludes Lagos, slumped 22 percent to N11 billion, thereby accounting for only 9.3 percent share of the accrued revenue of the company in the first nine months of 2019.

Cost of sales rose by 10.8 percent to N29.16 billion in the third quarter and 1.5 percent to N88.41 billion between January and September 2019. This was largely driven by increase in the cost of raw materials which the management said was due to the increase in the import duty on raw sugar to 10 percent as against 5 percent charged previously.

Similarly, operating expenses jumped 9.2 percent in the nine-month period on the back of a 56.9 percent growth in operating expenses in the third quarter, leading to a decline in operating profit to N22.9 billion as against N24.28 billion recorded a year earlier.

All these weighed on earnings, causing the company to record a 12 percent dip in after-tax profit to N14.7 billion in the first nine months of the year. This compares with N16.7 billion achieved in the same period last year.

Meanwhile, analysts at Chapel Hill Denham and CSL Stockbrokers maintained a “HOLD” rating on Dangote Sugar with a 12-month target price of N9.23 and N14.50, respectively. Also, shares of the sugar manufacturing company closed unchanged on Friday at N10.35 on the Nigerian Stock Exchange.

InsuResilience Investment Fund completes acquisition in Royal Exchange General Insurance

I

nsuResilience Investment Fund (IIF) has completed the acquisition of 39.25 percent equity stake in Royal Exchange General Insurance Company Limited, a subsidiary of Royal Exchange Plc and one of the largest non-life insurance companies in Nigeria.

The parent company, which announced the completion of the deal in a recent notice filed on the Nigerian Stock Exchange (NSE), said the purpose of

the investment was to spur growth in the company by increasing its underwriting capacity in the agriculture insurance space.

“We assure our esteemed shareholders and the investing public that the company is strategically positioned to capture the opportunity presented by over 30 million under-insured small scale farmers in Nigeria by leveraging on technology to increase the resilience of small scale farmers to

climate change,” Royal Exchange Plc said.

Royal Exchange Plc reiterated its commitment to continue to develop innovative products and services to meet the insurance needs of the general public.

InsuResilience Investment Fund was set up on behalf of the German government by KfW and managed by Swiss based Impact Investment Manager, BlueOrchard Finance Ltd (BlueOrchard).

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L-R: Wasiu Adedamola Akewusola, permanent secretary, ministry of housing; Toke BensonAwoyinka, special adviser to the Lagos State governor on housing; Babajide Olusola Sanwo-Olu, governor, Lagos State, and Moruf Akinderu-Fatai, commissioner for ministry of housing, during a Stakeholders’ Engagement on Real Estate/Agency Business held in Victoria Island, Lagos.

L-R: Wole Adeniyi, Executive Director, Personal and Business Banking, Stanbic IBTC Bank Plc; Aisha Olatiwon, Assistant Director, Payment Systems Management, Central Bank of Nigeria; Dr Demola Sogunle, Chief Executive, Stanbic IBTC Bank PLC; Christabel Onyejekwe, Executive Director, Nigeria Inter-Bank Settle System, Uche Uzoebo; Head of Distribution, Shared Agent Network Expansion Facility (SANEF) and Inwang Akpan, Head, Transactional Products and Services, Stanbic IBTC Bank; at the launch of @ease wallet, in Lagos.

Pic by Pius Okeosisi

L-R: Olumide Orojimi, head, corporate communications, Nigerian Stock Exchange; Ndidi Nnoli-Edozien, group chief sustainability and governance, Dangote Industries Limited; Omobolanle Victor-Laniyan, head, sustainability, Access Bank; Cima Sholotan, CSR senior manager, IHS Nigeria Limited, and Bernard Orji, partner and consumer industry leader, Deloitte West Africa, during the Deloitte Sustainability Reporting Breakfast Session in Lagos.

L-R: Wale Olaleye, head of information technology, Carbon; Chike Ikeorah, engineering manager, Max.ng; Timothy Tavarez, consultant, Microsoft; Jide Jimoh, cloud solution architect, Microsoft, and Victor Ichofu, technical program manager, Terragon Group, at the local host meet up in Terragon in Lagos.

Pic by Olawale Amoo

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Monday 04 November 2019

BUSINESS DAY

COMPANIES&MARKETS TECHNOLOGY

iStore unveils new range of iPhones in Nigeria …highlights measures to identity fake products

ENDURANCE OKAFOR

i

Store, Apple authorised vendor in Nigeria, has unveiled the new iPhone11, iPhone11 Pro, and iPhone 11 Pro Max in Lagos, and promised better customers’ experience with trade-in service among others.

According to the store, customers get access to iStore’s full range of exclusive benefits and services, such as free tech support, free training and access to financing the device.

One of the most talkedabout features of the new range of iPhone 11 is the number of cameras. The phones have more than one camera which includes; the wide camera and ultra-wide.

On the importance of the feature, iStore explained that the cameras enable the user to conveniently capture different angles of any image without haven to climb mountains to find a preferred position.

“One thing that always stands out about the iPhone

is the camera, on the iPhone X we have one camera but on the iPhone 11, we now have two cameras. The two cameras in the new iPhone solve the problem of not being able to capture a large number of people in one photo,” Agunloye Omokolapo - Store Manager, iStore said.

According to the Nigeriabased iPhone dealer, the new range of the products have batteries that can last up to 8 hours, an hour higher than its previously produced range.

At the unveiling of the new iPhones, iStore explained

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that the new range has facial recognition, a feature that enables the user to unlock the phone with their face.

According to the vendor, this helps the user to secure their information as it requires the user’s eyes to be fully opened for the phone to recognise it and unlock. Meanwhile, the products before the new range of iPhone 11 could only be granted access through the use of fingerprint.

“Before now, people could only use their fingerprint to

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Monday 04 November 2019

BUSINESS DAY

COMPANIES&MARKETS COMPANY RELEASE

Lifemate Group announces electronic appliance brand, Vimate

L

ifemate Group, a Pan-African company which specializes in the production and supply of furniture products, is set to introduce a new brand, Vimate, to her collection.

Vimate was set up in the world’s second-largest economy, China, in 2018 and registered in Nigeria early 2019, thereby starting the process of officially entering the electrical appliance chain industry.

Vimate is a new merchandising enterprise that incorporates electrical products display, operations and customer service. The business model is the first of its kind in Africa. Following the business philosophy of “small profits but quick turnover and service first” and also trusting accurate marketplace positioning and innovative business strategies, Vimate will lead the consumer trend of household appliances and

provide consumers with personalized and diversified one-stop service.

Vimate is set to launch in a couple of weeks, with November 2019 being the target set by the company, and her first outfit to be located in the Nigeria’s capital Abuja, creating a one-stop shopping mall where anything and everything about a home can be purchased, all in one place.

Vimate boasts in her workforce, certified professionals vast in production, maintenance and management of electrical appliances and all it entails. The company is also looking to improve her workforce with recruitment of more professionals and maintain the energy with which operations have begun.

Relying on the strong capability of the Lifemate Group, Vimate has clearly set out in the first fouryear strategic plan to be the focus of the industry in terms of chain, man-

ENERGY

OVH Energy delights customers after promo conclusion SEYI JOHN SALAU

O

agement level, business performance, corporate culture construction, and more. It is Vimate’s constant goal to become the number one brand in the African home appliances retail industry.

In April 2019, Lifemate officially entered the home appliance chain industry and established Vimate Nigeria. In August 2019, Vimate signed strategic cooperation agreements with 34 nationally renowned brands such as Samsung, Sony and Apple.

Lifemate assures that customers would be able to get all electrical appliances from the Vimate one-stop shopping mall.

Appliances such as: mobile phones, digital products, laptops and computer systems, printers and scanners, small home appliances, water heaters, hoods and stoves, Air Conditioners, washing machines and refrigerators, TVs and sound systems, generators and inverters.

VH Energy Marketing Ltd, licensee of the Oando retail brand and Nigeria’s leading provider of trusted petroleum products and services has concluded its promotional campaign with a grand finale.

The campaign tagged ‘Oando Oleum Awoof!’ was launched in May as part of the company’s efforts to reward its loyal lubricant customers.

The grand finale which took place at the Oando Service Station, Marina, Lagos had over 1,000 lubricant customers in attendance, including the chairmen of the Nigerian Automobile Technicians Association (NATA) and the Motor Mechanics and Technicians Association of Nigeria (MOMTAN) respectively.

The grand finale featured five raffle draws and presented an opportunity for customers to win amazing prizes such as toolboxes, generators, televisions, motorcycles, tricycles, many consolation prizes and a brand new Toyota Yaris as the grand prize. In addition to the raffle draws, customers present benefited from educational talks in choosing the right oils for their vehicle

is having a ripple effect across West Africa, with factories and traders struggling to import key raw materials and having to use alternative routes for their exports.

“Declining profit margins are a reflection of the struggling economy, costs are rising and consumer spending is weak and that is bound to affect economic growth and cause another recession,” Yusuf said.

“The government’s nationalistic policies have not helped matters and unless there is a change of direction, the situation

can only get worse,” Yusuf added.

The Federal government missed its target for CIT in 2018, after raising N637 billion, 20 percent below the N794 billion budget, according to data by the Budget Office.

The government has not provided details of CIT expectations for 2020 but expects to raise N1.7 trillion from non-oil revenue sources. CIT traditionally accounts for the largest chunk of non-oil revenues, followed by receipts from customs and Value Added Tax (VAT).

check for it, this is because a fake iPhone cannot have an iCloud or accept the signing of an already existing account.”

According to Statcounter, a global statistics platform, iPhone (ios) has a 6 percent market share of the country’s mobile operating system.

This is higher than the share of Series and Windows phone which has 2.6 percent and 0.44 percent respectively. The android phone, however, had the most of the Nigerian market at 78 percent at the end of September 2019.

BusinessDay estimates revealed that the value of five androids phones is equal to that of one iPhone 11, implying that the 6 percent market share by iPhone could be higher than the monetary value of android’s 78 percent.

However, there are also expensive androids that are almost the same price as an iPhone. iStore Nigeria, the home of everything Apple, is an Apple Authorised Reseller, iStore is the country’s premier destination of choice for genuine Apple products and accessories.

types. The event also had in attendances graduates of the Oleum Academy who are now experts skilled in car diagnosis and repairs.

Speaking at the event on the initiative, Huub Stokman, Chief Executive Officer, OVH Energy reiterated that the campaign was not just to create awareness about Oleum Lubricants, but more importantly to reward loyal customers: “We launched this promotional campaign to appreciate our customers for making Oando Oleum Lubricants an essential part of their automobile maintenance in the country. We are indeed excited that this grand finale coincides with the 2019 customer service week themed “The Magic of Service”. Our grand finale promo surely elicits the desired magical experiences for our customers and we are indeed proud of this initiative.

Mrs. Lillian Ikokwu, Acting Chief Marketing Officer, OVH Energy, in her response said that “Since the commencement of the promo in May, we have held 10 raffle draws in Lagos, Ibadan, Abuja, Port Harcourt, Aba, Ilorin, Kaduna, Kano at select Oando retail stations and have rewarded over 50,000 customers with gifts such as generators, tele-

Corporate taxes record surprise...

Continued from page 23 margin of Industrial goods firms dipped by 137 basis points in the space of six months to close at 13.74 percent, while Construction and Real Estate firms lost 98 basis points from last year’s margins.

The expectation for future profit margins is not benign either.

CFOs interviewed in a BusinessDay survey hold little optimism for next year, as they analysed the implication of high inflation, the government’s plan to increase taxes and lower

infrastructure spending in 2020.

These factors including the sustained pressure on consumer spending and the indefinite border closure by the President since August 30, will only heap more pressure on company profits, according to Muda Yusuf, the director-general of the Lagos Chamber of Commerce and Industry (LCCI), a private sector advocacy group that draws membership across various sectors of the economy and works with some 2,000 local companies.

T h e b o rd e r c l o s u re

iStore unveils new range of iPhones...

Continued from page 27 unlock the iPhone but now their new phones have face ID,” the store stated.

“I don’t know if anyone has gone to buy an Apple device and later realises it is not the original device,” Omokolapo asked during a presentation at the iPhone 11 unveiling in Ikeja Mall.

The manager, therefore, highlighted the precaution to be taken in ascertaining the original iPhone products.

“There was a customer that came into our shop

some time ago, she had an iPhone 10X and when we put in on, the first thing that appeared on the screen was ‘come into use’. Apple cannot have such. We eventually discovered that the phone was an android,” Omokolapo sighted.

In his remarks, he stated that the International Mobile Equipment Identity (IMEI) which can be checked by dialling *#06# is not enough certification to distinguish a fake iPhone from the original instead, the “successfully signing in into an iCloud account is the best way to

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visions, tricycles, motorcycles and much more. We always want our customers to understand that beyond sales, we care about them, the condition of their automobiles and their overall safety”.

“We sincerely appreciate the support, guidance, and direction of the National Lottery Regulatory Commission, the Consumer Protection Council and the Lagos State Lottery Board in achieving a very transparent raffle event, she further added.

Winner of the grand prize, Mr. Onyedikachi Ezeani, a 33 year old trader said “when I received the call that I had won a brand new Toyota Yaris, I didn’t believe the caller. Even after they told me the details of how and when to receive my gift, I still didn’t believe it. I rushed to the Oando station where I bought the lubricant to meet with the dealer who confirmed to me again it was true that I won. I am still in shock.

I don’t even know how to respond to this. But I am really grateful to God and to OVH Energy for making this happen, for rewarding me with this brand new Toyota Yaris.”

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BUSINESS DAY

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Access Bank Rateswatch Market Analysis and Outlook: November 1- November 8, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

1.94

Q2 2019 — lower by 0.16% compared to 2.10% in Q1 2019

Broad Money Supply (N’ trillion)

35.03

Decreased by 0.53% in Sep’ 2019 from N35.22 trillion in Aug’ 2019

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

25.47 2.01

Increased by 2.61% in Sep’ 2019 from N24.82 trillion in Aug’ 2019 Decreased by 0.66% in Sep’ 2019 from N2.02 trillion in Aug’ 2019

Inflation rate (%) (y-o-y)

11.24

Increased to 11.24% in September 2019 from 11.02% in August 2019

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

13.5

Adjusted to 13.5% in March 2019 from 14%

External Reserves (US$ million) Oil Price (US$/Barrel)

13.5 (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5% 40.5 October 30, 2019 figure — a decrease of 3.03% from October start 59.46 October 31, 2019 figure— a decrease of 2.27% from the previous wk

Oil Production mbpd (OPEC)

1.86

September 2019 figure — a decrease of 0.85% from August 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Friday

1/11/19

25/10/19

NSE ASI Market Cap(N’tr)

26,293.30 12.80

26,348.73 12.83

Volume (bn)

0.25

0.37

Value (N’bn)

3.75

2.52

MONEY MARKET NIBOR Tenor

Friday Rate (%)

Friday Rate (%)

Change(%)

Indicators

1/11/19

Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture (31.98) Cocoa ($/MT) Coffee ($/lb.)

48.85 Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Change Silver ($/t oz.)

Copper ($/lb.)

(Basis Point) (0.21) (0.21)

1-week Change

YTD Change

59.46 2.61

(%) (2.27) 13.48

(%) (7.76) (14.59)

2,437.00 101.85 64.53 12.46 509.00

(1.89) 4.41 (0.78) 1.55 (1.59)

25.88 (21.77) (16.74) (18.72) 17.42

1,512.11 18.09 263.75

(0.00) (0.82) (1.36)

14.77 5.24 (19.54)

1/11/19

25/10/19

OBB

3.0000

6.0000

(300)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

4.0700 3.7500 12.0912

6.8600 6.6250 12.5492

(279) (288) (46)

Tenor

90 Days

12.5131

12.7927

(28)

1 Mnth 3 Mnths 6 Mnths

11.48 11.72 11.90

11.90 12.03 12.60

(42) (31) (70)

9 Mnths 12 Mnths

12.14 14.72

13.09 14.32

(96) 41

FOREIGN EXCHANGE MARKET Market

Friday (N/$)

Friday (N/$)

1 Month Rate (N/$)

1/11/19

25/10/19

1/10/19

Official (N) Inter-Bank (N)

307.00 362.22

306.95 361.79

307.00 362.55

BDC (N) Parallel (N)

0.00 360.00

0.00 360.00

0.00 360.00

Friday

25/10/19

Indicators

Friday

Friday

(%)

(%)

Friday (%)

(Basis Point)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

AVERAGE YIELDS Friday

Change

(%)

1/11/19

BOND MARKET Tenor

Friday

(%)

Change (Basis Point)

1/11/19

25/10/19

3-Year 5-Year

0.00 12.81

0.00 13.98

0 (117)

7-Year 10-Year 20-Year

12.77 13.18 13.38

14.11 14.09 14.17

(134) (91) (78)

30-Year

13.91

14.30

(39)

Disclaimer This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

(%)

Change (Basis Point)

1/11/19

25/10/19

Index

3,078.21

3,007.82

2.34

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr)

9.62 6.23

9.24 5.87

4.09 6.18

YTD return (%) YTD return (%)(US $)

25.31 -30.53

22.45 -33.37

2.86 2.84

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

91 Day

28,018.96

Date

10.8

30-Oct-2019

182 Day

10,615.40

11

30-Oct-2019

364 Day

93,915.15

12.94

30-Oct-2019

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

Global Economy In the US, the Federal reserve slashed its interest rate to 1.5-1.75% during its October meeting, to keep the longest running period of growth in the country's history continuing into the crucial election year of 2020. It is the third rate cut so far this year, amid muted inflation pressures and concerns about the economic outlook. The central bank signaled it may be done trimming rates, at least in the short term, modifying its previous vow to “act as appropriate to sustain the expansion.” In a separate development, Brazil's trade surplus contracted to $2.25 billion in September 2019 from $5.07 billion in the corresponding month of the prior year. Exports declined 11.6% yearon-year to $18.74 billion in September, mostly due to lower sales of primary goods (-14.5%); and industrial (-6.8%) while imports increased 5.7% to $16.49 billion, boosted by higher purchases of capital goods (95.1%) according to the Ministry of Development, Industry and Foreign Trade (MDIC). Among major trading partners, imports advanced from China (5%), Canada (21.6%) and Japan (1.2%), but fell from Argentina (-24.6%), the EU (-6.8%) and the US (-7.6%). Elsewhere, India's unemployment rate in October jumped to 8.5%, the highest since August 2016, and up from 7.2% in September, according to data released by the Centre for Monitoring Indian Economy (CMIE), reflecting the impact of a slowdown in the economy. While the government has been announcing a pool of measures to increase demand, the slowdown in jobs is being viewed as the impact of slowdown on the country's economic growth.

Domestic Economy The Nigeria Bureau of Statistics revealed that Nigerian States and Federal Debt Stock data as at 30th June 2019 stood at N25.7 trillion (trn). Further disaggregation of Nigeria's total public debt showed that N8.32trn or 32.38% of the debt was external while N17.38trn or 67.62% of the debt was domestic. Lagos state accounted for the bulk of domestic debt at 12.08% whilst Yobe State had the least debt stock in this category with a contribution of 0.68%. In a separate development, the manufacturing sector continued to expand – it registered an improvement for the thirty-first consecutive month. The Central Bank of Nigeria's Manufacturing Purchasing Managers' Index (PMI) stood at 58.2 index points in October 2019. The index grew at a faster pace when compared to the previous month (57.7 points). A PMI above 50 points indicates that the manufacturing sector is generally expanding, while a reading below 50 points indicates a contraction. Thirteen of the subsectors surveyed recorded growth during the month, while the paper products subsector recorded decline in the period under review.

Stock Market The bears retained their stronghold on the Nigerian stock market as it closed the week “in the red” – like previous week. Losses were majorly observed in the stocks of players in the telecommunications, consumer goods and financial services sectors. The Nigerian Stock Exchange All Share Index (NSE ASI) tapered 0.21% to 26,293.30 points from 26,348.73 points the preceding week. Similarly, market capitalization dipped 0.21% to N12.80 trillion from N12.83 trillion. This week, we expect the losing momentum to diminish, as the market reacts positively to more quarterly earnings reports, especially as the NSE's new lows offer investors opportunities to position for short and medium-to-long-term opportunities.

Money Market Relatively high market liquidity witnessed during the week resulted in lower money

market rates as inflow from Open Market Operation (OMO) maturity flooded the system. The market had a net inflow of N151 billion. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates dropped to 3% and 4.07% from 6% and 6.86% respectively the previous week. The 30-day and 90-day Nigeria Interbank (NIBOR) rate also decreased marginally to 12.09% and 12.51% from 12.55% and 12.79% the prior week. This week, we envisage that rates might trade higher due to expected Retail Secondary Market Intervention Sales (SMIS) Foreign Exchange Market The local unit depreciated against the dollar across most market segments as the nations' foreign reserves continue to decline. The exchange rate in the Nigerian Autonomous Foreign Exchange (NAFEX) window, saw a depreciation of 43 kobo to close at N362.22/$.

While, the rate at the official window weakened by 5 kobo to settle at N307/$. The parallel market remained unchanged at N360/$. The market continues to be supported by the Central Bank intervention. This week, we expect rates to continue to trade within a tight band as the CBN sustains its intervention program.

Bond Market Bond yields declined further for the week ended November 1, 2019 as the market traded with bullish sentiments. The most traded instrument were the Feb 2028 and Apr 2049 bonds. Yields on the five-, seven-, ten- twenty-year, and thirty-year debt papers closed lower at 12.81%, 12.77%, 13.18%, 13.38% and 13.91% from 13.98%, 14.11%, 14.09%, 14.17% and 14.30%, respectively the previous week The Access Bank Bond index increased by 70.38 points to finish at 3,078.21 points from 3,007.82 points the preceding week. Our expectation this week is that the buying interest will likely be sustained as the market continues to adjust to the CBN circular of barring individual and local corporates from accessing the OMO auction window.

Commodities The price of oil dipped last week after weak Chinese industrial data and renewed pessimism about the U.S.-China trade talks added to a rise in U.S. oil inventories. U.S. Energy Information Administration (EIA) reported a crude oil inventory build of 5.7 million barrels. Bonny light, Nigeria's benchmark oil crude, declined $1.38, or 2.27%, to $59.46 a barrel. In the same light, precious metal prices declined marginally after the US Federal Reserve slashed interest rates for the third time this year, but signalled further cuts would be data-dependent which dampened investor sentiment. Gold dropped to $1,512.11 an ounce, down 0.01% from the prior week's price, while the silver closed lower at $18.09 per ounce, compared to the preceding week's close of $18.24 per ounce.

This week, we anticipate that oil prices might trend downwards as analysts pessimistic outlook on the pace of global economic growth weighs in on oil demand growth. For precious metals, prices are expected to be pressured by anticipated upbeat U.S. labour news.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Nov’19

Dec’19

363

362

363

Inflation Rate (%)

11.3

11.3

11.4

Crude Oil Price (US$/Barrel)

65

66

67

For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

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Jan’20

Exchange Rate (NAFEX) (N/$)

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30

Monday 04 November 2019

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

NAICOM sees geometric growth in insurance on back of low penetration Modestus Anaesoronye

I

nsurance regulator, the National Insurance Commission (NAICOM) is positive that insurance business in Africa’s most populace nation, Nigeria have the potential to grow at a geometric progression given the low level of insurance penetration in the country, which according to the commission is still less than one percent.

According to the Commission, there must be improved market conduct, service delivery, value creation as well as prompt and fair claims settlement, among others for this potential to be explored.

It therefore noted that the implementation of its strategic initiatives is not only expected to increase gross premium income (GPI) but transform insurance into a significant contributor to Nigeria’s GDP. Sunday Thomas, acting commissioner for Insurance/ CEO of NAICOM who made the remark during the 2019 Insurance Consultative

Sunday Thomas, acting commissioner for Insurance/CEO National Insurance Commission (NAICOM) (middle) during the 2019 Insurance Consultative Forum of the Lagos Chamber of Commerce & Industry held in Lagos with other elders of the insurance industry present

Forum of the Lagos Chamber of Commerce & Industry held in Lagos said the Commission’s strategy and initiative focuses on realization of the desired future of insurance in Nigeria.

Thomas said these include a Safe, Sound & Stable Insurance Industry; Developed and Innovative Insurance Market (Techni-

cal Capacity); Disciplined and Customer Centric Market (Protection of Policyholders); Dependable and Trusted Insurance Market; Integrity and Claims Management; Technology-driven Industry – (FinTech, InsurTech, SupTech, RegTech) as well as Effective Legal & Regulatory Framework for the industry.

According to Thomas, NAICOM’s expectation is that there will be availability of innovative products, appropriate pricing or underwriting; efficient processes/ low management expenses; technology driven Prompt and fair claims settlement process, as well as competitive returns on capital.

Nigerian insurance industry is considered as one that is yearning for reckoning and relevance owing to how its manageable challenges hold opportunity for the sector.

The effort by the Nigeria government to ensure the country has an insurance industry that will rank among the twenty largest markets in the world by the year 2020 (though Nigeria is currently ranked 60 in the world) is one that give hope to the industry.

The Government has however undertaken some certain steps and measures towards actualizing this objective, particularly the strengthening of the National Insurance Commission (NAICOM) which derives its regulatory powers from the National Insurance Commission Act, 1997 and the Insurance Act of 2003.

Section 86 of the Insurance Act empowers NAICOM amongst other numerous powers to be responsible for the administration and enforcement of the provisions of the Act, as well as

empowering it to register insurance companies and to increase the amount of minimum share capital requirement as circumstances may demand.

This is coupled with the growth potential of the industry and the collective effort of the 59 insurance firms underwriting non-life and life businesses in Nigeria.

A 2018 survey by the Chartered Insurance Institute of Nigeria (CIIN) revealed that out of the about 100 million adult population in Nigeria, about 86.6 million of them do not have any form of insurance cover. This is considered a market opportunity for the insurance companies The penetration ratio of Nigeria insurance industry stands at 0.4 percent in 2018, one of the lowest in Africa compared with countries like South Africa (17 percent), Kenya (2.8 percent) and Ghana (1.1 percent).

According to industry sources, the low penetration ratio presents huge opportunity for growth and as such the sector is tagged as one in a growth phase.

Operator wants regulator see beyond recapitalisation and support market growth Modestus Anaesoronye

A

kin Ogunbiyi, group chairman, Mutual Benefits Assurance Plc has again queried the ongoing recapitalisation in the industry, stating that it is not the only way to develop the market.

Ogunbiyi said is a misnomer that the National Insurance Commission (NAICOM) believes that the only way to develop the insurance sector is through capital increase.

Ogunbiyi whose com-

pany is expected to increase its capital to N18 billion said while he is confident that his company will pull through, lamented that the Commission as a Federal Government agency has given no support to the industry despite the enabling environment that the government has created to help businesses thrive.

He said it is hard to operate insurance business with N18 billion when banks that would not labour hard like them operate with only N25 billion.

He said: “I must still say that it is a misnomer that

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NAICOM thinks that the only way to develop the sector is just by increasing capital year in, year out.”

“Currently we are not able to return profit on the amount of capital we are working with. Insurance is totally undeveloped; I don’t know where the market is.

The capital market is almost gone on his knees. Insurance is the least priority of cooperate world in Nigeria. Less than 1 per cent of Nigeria populations carry one form of insurance or the other.”

“Nigeria banks operate with N25 billion. Even if gov-

ernment passes N10 trillion budget, all the money goes through the bank. I cannot see any economic sense in asking us to recapitalize to the tune of N18 billion. Why would I put N18 billion in an insurance industry that is crawling and undeveloped when I can put N18 billion without lifting a pin and get 14 per cent return from government bond. I don’t know why the regulator will only be thinking that it is only capital that is needed to develop the industry.

They have not followed up or given any support to the

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industry with the entire enabling environment that the government has created to support us.”

“For instance, the gover nment took pension from us and gave it to another medium. Today, we are talking of over N6 trillion pension funds. If NAICOM follow through on compulsory insurance of vehicles, fire insurance, construction insurance, marine insurance among others, the sector would have been better.” “ We expect them to work with the National as-

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sembly and various agencies of government to make these insurances compulsory and ensure that the business is available for us just like the banks are doing. Whether the banks or pension operator lift a pin or not, they will make money. This is what the commission should be thinking and working on. “ The recapitalization a total disruption to the operation of insurance in Nigeria, I know Mutual Benefits will pull through but unfortunately it is a negative signal, he noted.

Monday 04 November 2019

BUSINESS DAY

insurance today

31

In association with

E-mail: insurancetoday@businessdayonline.com

NAICOM to ring-fence recapitalisation fund to protect investors Modestus Anaesoronye

I

nvestors in the ongoing recapitalisation exercise in the insurance industry have been assured that their investment would be protected to ensure that companies use them for what it was meant.

Industry regulator, the National Insurance Commission (NAICOM) gave the assurance during an interactive session with shareholder groups on the ongoing recapitalization in the insurance industry.

Sunday Thomas, acting commissioner for Insurance/CEO NAICOM who dropped the hint during question and answer section noted that beyond directing the insurers to deposit any capital injected in the course of this recapitalisation into an Escrow Account with the Central Bank of Nigeria (CBN) until when it will be approved for use, it will also ring-fence the funds thereafter to monitor what it will be used for.

Pius Agbola, director, Policy and Regulation Directorate in NAICOM who represented Thomas said this is in view of it experience with the past recapitalisation exercises, where funds where directed to wrong uses.

We are prepared to protect investors who put their money in insurance business, Thomas said.

According to him NAICOM had given options on how insurance companies can raise the money, saying “Insurance companies can raise the money through

Management of NSIA Insurance Company Limited led by Ebelechukwu Nwachukwu, the managing director/CEO of the company after an interactive session with the Media at its corporate head office in Lagos.

Initial Public Offering (IPO), right issues, capitalisation of retained earnings and other means such as private placement, merger or acquisition.”

He however condemned borrowing adding that, “If any company wants to go for merger and acquisition or IPO, it must give date because all options have time frame.”

According to him, NAICOM has approved the recapitalization plans of 44 companies, rejected that of six insurance companies of which they have been directed to make amendments, two

Linkage Assurance grows PAT by over 600% in Q3 Modestus Anaesoronye

U

nderwriting firm, Linkage Assurance Plc at the end of third quarter ended 30th September 2019 recorded a significant growth in Profit After Tax (PAT) by 601.5 percent, growing from N84.385 in the same period in 2018 to N591.914 million. The Profit Before Tax (PBT) grew by N387.115 million in 2018 to N866.86 million in the review period in 2019.

In the unaudited financial statement submitted to the Nigerian Stock Exchange (NSE), the general business insurer also saw a remarkable growth in top line, recording a 17.89 percent increase year-on-year in gross written premium, moving from N4.540 billion to N5.352 billion.

Linkage Assurance Plc also during the period exhibited high level risk management, as its underwriting profit moved from a negative position of N689,586 million in 2018 to N295.117 million.

Committed to meeting its obligations as they fall due and providing best in class insurance solutions, the Company paid out to its customers that suffered one form of loss or the other during the period with total

claims pay out amounting to N2.227 billion, a 110,17 percent increase from N1,107 billion the previous year.

Investors in the company remain upbeat, as earnings per share stood at 7.4 kobo as against 1.1kobo in 2018, showing a 572.75 percent growth.

Total assets of the company remained strong, moving from N23.146 billion in 2018 to N24.630 billion at the end of third quarter 2019.

Daniel Braie, managing director/CEO Linkage Assurance Plc said key measurement fundamentals of the company remain strong despite the tough operating environment.

He attributed the growth during the review period to hard work and commitment of the board and management in the quest to grow and make the company a competitive brand in the market.

Braie also said that the significant growth in bottom line was largely due to cost optimization efforts, quality underwriting and increased consumer confidence.

According to him, the company is certain to sustain the performance all through the year, promising that shareholders will have increased value from their investment at the close of business in 2019. www.businessday.ng

companies are under review, while two companies have not submitted any plans at all to the Commission.

With an estimated N200 billion expected into the Nigerian insurance industry after the ongoing recapitalisation by underwriters, the sector is hopeful to emerge stronger, contribute reasonably to the economy and also able to offer good returns to investors.

Industry experts believe that the sector post consolidation will have enough resources to attract quality manpower, acquire necessary skills to underwrite big

ticket risks, increase retention in the local market, and be able to take advantage of untapped potentials to create shareholder value.

The National Insurance Commission (NAICOM) had in a circular issued on Monday May 20, 2019 announced increase in the paid-up share capital of life companies from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion; and Reinsurance companies from N10 billion to N20 billion, with 30th June 2020 as deadline.

CHI renews Group Accident Insurance cover for Journalists

C

onsolidated Hallmark Insurance Plc has again renewed its Group Personal Accident Insurance cover worth N24 million for insurance journalists in the country.

This, according to the company, was part of its Corporate Social Responsibility (CSR) project, to ensure that journalists who are mostly exposed to danger and hazard in the discharge of their civic duties are adequately protected.

The Group Personal Accident Insurance covers death, permanent disability and medical expenses.

The policy has been running for more than five years now, precisely since 2012, and is renewed annually by the company at each expiratory period on behalf of the concerned journalists.

The cover, which was recently renewed by the insurer in October, 2019 is due to expire in September, 2020. The company has promised to continue to renew the coverage for the journalists every year.

Managing Director of the company, Eddie Efekoha assured of the company’s

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support for the media.

He stated that journalism profession both within and outside the country is exposed to different kinds of risks He stressed that this calls for the need for insurance to mitigate the risks in the event of this nature.

He disclosed that in the case of the death of any of the concerned journalists, the family of the deceased is entitled to N1 million death benefits, while the same claim of N1 million applies to a journalist who suffers permanent disability in the discharge of his duties.

He added that the insurance scheme, as well, covers for medical expenses to the tune of N200, 000 per journalist in the case of an accident.

It would be recalled that in 2013, Bimbo Oyetunde, a staff of Radio Nigeria received medical bill compensation from CHI. She was involved in a ghastly motor accident alongside others members of the Nigerian Union of Journalists (NUJ) on their return from Abuja after an official assignment where three people died.

@Businessdayng

32

Monday 04 November 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

The marriage is more important than the wedding day groom. It may leave you less popular though, but focus on what truly matters. The key is to prioritize. If you were not invited to a wedding, don’t bear a grudge; you will face the same dilemma in time.

Communication is key In Nigeria, a couple’s marriage is like a merger of two families and the last thing you need is for relationships to be marred from the start over money matters; indeed for some families, this can be the start of frayed relationships. It is just not worth any angst. Communicate early and as often as required with your son or daughter and their fiancé as well as your in-laws to manage expectations. With a good sense of what the couple wants, and what funding is available, you can be clear about how much you are willing and able to contribute.

Who pays for what?

How you decide to split the costs of your son’s or daughter’s wedding depends largely on cultural nuances and preferences, the financial standing of each family, and on the bride and groom themselves. Early discussions are a good way to determine who pays for what.

Tradition was not financially kind to the bride’s family expected to pay the lion’s share of wedding costs, which can be a huge strain for the father of the bride.

Nowadays, circumstances and common sense, not tradition should dictate who pays for what. The groom’s family may wish to pick some specific significant costs, such as catering for a significant number of guests, the venue or drinks at the reception. Don’t feel bad if you are the parent of the bride

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‘

Weddings can be overwhelming and expensive; starting out with millions of naira in debt is great stress for a newly married couple that need suitable housing, as they plan for a family. What really matters is to start with a firm and solid foundation and build a future together and can’t afford to pay for the entire wedding. Very few people expect that anymore.

Don’t let your ego or pride come into play; if you can’t afford it, don’t pretend that you can.

The best way to decide who will pay for what is for both families and the couple to sit down together and have a frank discussion about what each party can afford to contribute. Financial conversations can be uncomfortable so do handle this with sensitivity. Separate meetings are sometimes necessary, but it’s best if you can get everyone together at one time to brainstorm and share information and finalize arrangements. If family A insists on inviting 1,250 guests and Family B is only able to fund 250, let Family A pay for the 1,000 guests.

Don’t jeopardize your retirement for your child’s wedding.

Naturally, parents want to give their children, especially daughters, dream weddings.

It is nice to always put your children first, but be mindful of becoming overwhelmed by societal pressure so close to retirement and dipping into your retirement savings to fund a wedding that you

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‘

W

eddings are so romantic, beautiful, emotional, and meaningful. Friends and family travel thousands of miles to spend a few hours to witness the union of two people dedicating the rest of their lives together. With all the attention, pomp and pageantry and spending that a Nigerian wedding can entail, if you are not careful, it is so easy to focus solely on two days of festivity and little else.

It’s not about the wedding day, it’s about the marriage.

Here are some things to consider as you plan a wedding: Can you afford a royal wedding?

Your dream might be to have a royal wedding but can you afford it? A good first step, as you figure out how to afford the wedding, is to determine the extent of your financial responsibility.

Start with a budget. Budgeting is simply balancing your expenses with your income.

Creating this spending plan helps you to determine in advance whether you will have enough money to do all the things you need to do or would like to do. This is the time to differentiate between wants and needs.

Make a list of everything you will need for the traditional ceremonies as well as for the formal religious ceremonies and the receptions that accompany them. There can be so much involved but not all are necessary; from the cost of the reception venue, a wardrobe for both the traditional and church ceremonies including the wedding dress and grooms suit, jewelry, shoes, bags, food, drinks, rentals, flowers, photography, videographer, choir, organists, band, décor, party favors, rings, make up artists, hairdressers, stylist, gele tiers, a wedding planner, and several other costs that pop up. Estimate what each item will cost. Refine your budget as you get price quotes, and identify the things that are most important.

The costs can be overwhelming so be sure to prioritize. Small compromises can lead to huge savings; focus on what really matters and will make a difference on the occasion and always keep your budget at the back of your mind. One of the most significant factors that influence your costs is likely to be your choice of the reception venue. The rental of the venue can be far more than the newly weds will need to rent their first home for a few years.

The mammoth Nigerian wedding guest list The guest list has become a significant challenge in Nigeria as families try to manage societal expectations against their finances. Are you obliged to invite literally everyone that you know?

Does your guest list have to include all your colleagues that you have ever worked with, all your business associates, directors of all the boards that you have ever served on, everyone in your church or mosque, every member of your staff, your extensive 1,000-strong extended family and their relatives too?

With a massive crowd, no matter how much cash is available, the experience can be ruined for everyone. With what can be endless costs, knocking a few hundred people off your guest list will literally save you hundreds of thousands, even millions of naira and create a much more pleasant experience that the couple, the parents and their guests can actually enjoy. Consider inviting your closest family and friends, particularly those that have a personal relationship with the bride and

cannot afford; you must always be able to take care of your own needs.

Your retirement planning, your emergency fund, medical insurance are goals that must be priority. Don’t jeopardize years of saving and investing for your later years trying to impress “everyone” over just a few days.

What your children need most is support beyond the wedding day.

The Indian community because they have extravagant expensive weddings, plan several years in advance and make a wedding fund part of their financial plan particularly where daughters are concerned. Apart from education and retirement planning, it is worth considering planning several years in advance for your children’s weddings so that you can give them a wedding of choice without considerable strain.

Avoid going into debt to fund a wedding Some couples, or their families, decide they simply must pull out all the stops for a wedding. They want nothing but the best, even when they can’t afford to pay for it; they take out wedding loans or sell property and stock from which they earn critical rental and dividend income to meet the expenses.

Avoid going into debt for the wedding dress, the wedding or the honeymoon. But for parents who are up against time constraints, borrowing sometimes makes more sense than selling assets. If you must borrow, ideally, it should be because there is an imminent inflow to offset the loan. You don’t want to be paying interest to offset wedding costs; that money should be put to far better use deployed in other investments or in a retirement account or to support the new couple in this early stage.

If it is the couple footing the wedding bill, avoid going into debt for it. Scale down the size of the wedding and have a bigger celebra@Businessdayng

tion when you can afford it if need be. It is never wise to begin a marriage carrying significant debt.

The Rings Although the rings are important, don’t spend more money on them than you can afford. A ring is a symbol of marriage; focus on this and not the monetary value.

Avoid spending millions on a diamond ring to dazzle if you don’t have money for more important things such as renting a home. For a significant anniversary, you can consider upgrading the ring if it is that important.

Weddings can be overwhelming and expensive; starting out with millions of naira in debt is great stress for a newly married couple that need suitable housing, as they plan for a family. What really matters is to start with a firm and solid foundation and build a future together.

We all dream about that fairytale wedding. But remember that after the excitement and fan fare of the wedding ceremonies, it will be time to face a financial future together; it is not just about the wedding, it is about real life, and the marriage that follows all the ceremony.

Remember, you can have a beautiful wedding day without breaking the bank.

Coming Soon!

“Money Matters from the Mother of the Bride” by Nimi Akinkugbe.

Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

Monday 04 November 2019

BUSINESS DAY

Start-Up Digest

33

In association with

Abideen Opeyemi: Providing cleaner energy for Nigerians Josephine Okojie

T

he devastating effects of climate c h a n g e h av e prompted the need to find innovative solutions to reduce green gas emission from the ecosystem.

This has spurred a lot of conversation about the need to support a generation of global ecopreneurs who are successfully linking sustainable businesses to environmental consciousness for societal wellbeing.

Among these eco-warriors building sustainable businesses and helping to save the planet at the same time is the 25-year-old Nigeria’s Abideen Opeyemi, founder of Opab Gas Station.

Abideen is a tri-sector business leader with investment in oil and gas, consulting, catering and social enterprise, with over seven years’ experience.

Abideen, through his Opab Gas business, is providing digitally scaled gas to the door steps of Nigeri-

ans while assisting them to maintained safety, trust and ease of refilling.

Abideen’s passion to solve environmental problems within his community and his contribution to the realisation of the United Nations sustainable development goals inspired the establishment of Opab Gas in 2017.

The chemist-turned-entrepreneur says he started the business with N200,000, an amount he got through personal savings and from family and friends.

Since starting, the business has scaled from a single gas station to six within two years of operation.

The business currently has 35 full- and part-time employees. “We have 35 employees cutting across main, remote, part-time and student ambassadors,” he says.

Speaking on the business expansion plans, Abideen says Opab Gas plans to expand its customer base by providing smart metering system which monitors gas levels in cylinders and

Abideen Opeyemi

predicts when the gas is going to run out across the country.

In evaluating the gas sector in the country, the young entrepreneur says the sector has a huge investment opportunity and potential to significantly reduce green gas emission from the ecosystem.

He urges the Federal Government to be at the forefront of canvassing for the transition to cleaner energy especially in rural communities.

“The government still needs to do a whole lot on to encourage people to swift to cleaner energy,” he says.

“Gas presents an oppor-

tunity to move away from the conventional, risky and environmentally unfriendly way of cooking with firewood,” Abideen explains.

“Investors are showing even more interest in gas production in Nigeria because of its high economic potential and higher efficiency when compared with other fuels,” he adds.

On major hurdle confronting the business, according to the University of Ilorin graduate, is double taxation.

“The problem of double taxation is a major challenge. We are paying to both the federal and state agencies” he says.

“The government can do well to ensure that a single agency collects taxes,” Abideen suggests.

He adds that convincing people to adopt cleaner form of energy in remote communities, where the business is situated, is also a major challenge.

He notes that with the business GoGreen campaign strategy, a lot of people in the communities are

now transitioning into the use of clean energy.

Also, the inability of the business to initially find trustworthy employees is another challenge that impacted the Opab Gas. “A whole lot of young Nigerians are not trustworthy.

They misuse opportunities and manage funds,” he says.

Abideen is a recipient of several international grants and awards such as the One Young World Ambassador.

He is a global leader with Restless Development UK and an alumnus of the Africa Presidential Leadership Programme.

He was recently listed among 100 most influential young Africans in 2018 by Africa Youth Awards.

He is also a member of the 10 steering committee working with CIVICUS, and Bill and Melinda Gates Foundation.

On his advice to other entrepreneurs, Abideen says, “Business is profitable but not for the faint hearted.

Ensure you conduct a market survey before delving into it.”

process,” she says.

She is a mentee of the Lagos Chamber of Commerce Mentoring Programme and says it has changed her way of thinking and life.

“I have learnt a lot from that,” she says.

“From accounting to book-keeping, I have learned to manage my business better,” she admits.

With power outages crippling production, the entrepreneur wants to acquire a bigger generator that can power bigger machines.

She looks forward to getting grants to expand her business.

As a 21st century entrepreneur, she is gaining traction on the social media, using it to reach potential remote customers.

“When I started, I was doing one-on-one. I would drop my kids to schools and would move round. I later discovered that I could use the power of the social media to reach more people.

That has been the game changer for me in terms of reaching customers. I use Facebook, Instagram platforms to reach customers.

We get referrals from people using our products. So the awareness is better than before,” she further says.

She is reaching new partners to ensure that her products are in every nook and cranny of the country, including at retail shops around the country.

She is also open to potential investors.

“There is potential in the business. The natural skin care business is worth billions of dollars. So, it is an avenue for investors to make money. The return on investment is over 50 percent. So, if we can get the right investment, we will go places,” she notes.

Her piece of advice to younger entrepreneurs is to not give up.

“Once you have a clear understanding of what you have for yourself, irrespective of the challenges or environment, stick to it. Over time, you will make headway. When I started, I did not know I would get to this present level. I was not sure, but I knew the future was bright. So they should just keep working hard.”

Akande: Leveraging opportunity in skin care industry ODINAKA ANUDU

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argaret Kehinde Akande, chief executive of Awele Bath and Body Works, is tapping into the thriving skin care industry. She started this business five years ago and has since moved from making natural skin care products at home to having a mini factory in Lagos.

She specialises in making natural skin care products from locally sourced ingredients.

Her black soap and lotions are highly coveted in the market, not only because of their quality but as a result of affordability.

“The products that had been around before we entered into the market were very expensive. So, my intention was to make skin care products effective and affordable,” she tells StartUp Digest.

“We put measures in place to make sure that the running cost was low so that people could afford our products. Our soaps today

are just N1,500, unlike many 400 or 500 grams that go for N4,000 or N5,000. We sell for N1,500 to adults and N1,000 to children, and they have high quality,” she explains.

The entrepreneur producesher natural skin care products from shea butter, coconut and almond oil, among others.

In the last five years, a lot has changed in her business.

When Akande started, she had just N50,000. But this amount has increased many times today.

She would then go to the market to get raw materials, do production and packaging all by herself. However, things have changed as she now has two staff members.

She began by processing shea butter and coconut oil.

But along the line, customers started making demands for soaps.

“I started to do some research,” she says.

“I needed to know how to make black soap in a paste form, such that people could use their hands to scoop and bath with it. From what I made from the business, I started re-investing it,” she www.businessday.ng

adds.

She has customers in Lagos, Oyo (Ibadan) and Edo states.

But she is not satisfied with that, as she looks forward to having a standard factory where she can roll out more products.

“With the present business plan I have now, I am looking at getting N10 million,” she says.

“With the money, I will be able to start a standard factory, with up-to-date equip-

ment for the production of soaps and lotions. We need vans for logistics. We need money for buying standard equipment that will be able to make volume production.

The mixer I use at the moment is a 200-litre capacity, but I am looking at getting one that will make 1,000 litres at once. The filling machine that we use in making the bottled lotion is a manual one. I am looking forward to getting automatic ones that can speed up the production

Margaret Kehinde Akande https://www.facebook.com/businessdayng

@Businessdayng

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Monday 04 November 2019

BUSINESS DAY

Start-Up Digest

How Oluyemisi makes money from promoting healthy eating Gbemi Faminu

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here is no gainsaying that healthy eating is a major determinant of healthy living. With rising number of diseases, Nigerians are now more conscious of what they eat.

Armed with that understanding, Akeju Oluyemisi is making money from giving Nigerians the right kind of food.

She is an advocate of healthy eating and healthy living. A graduate of Business Administration from the University of Lagos, she is the chief executive officer of Fawree Foods and producer of the franchised Tom Brown cereal.

She started Fawree Foods on 16 July, 2015, after leaving her regular 9-5 jobs.

Akeju says the drive for healthy eating inspired her to establish the company.

“I am a health conscious person and I always have loved any diet that would be of optimal benefits to humans. So I decided to embark on creating a type of meal that is healthy and non-restrictive,” she says.

“The business is about

healthy living and eradicating malnutrition. We decided to delve into the business to make people enjoy the benefit of preparing simple meals as well as take a balanced diet in one meal,” she explains.

The entrepreneur says she uses multigrain cereal blend, grains and nuts in making her products and ensures a thorough hygienic process.

“We ensure that the meal is okay for babies, pregnant women, nursing mothers, children, adults and people with illness,” she says.

“It can be prepared in different ways for your convenience. It can be in the form of pudding (pap-like), staple (swallow), and can be used to make cakes, cookies, and pancakes. It is a healthy alternative to flour,” she further explains.

Evaluating her business growth, Akeju says since she started four years ago, she has had different challenges and successes, but these have helped to make her business better.

She started the business with N50,000 from her savings and a contribution from her husband. Initially she was producing from home and supplying to customers

Akeju Oluyemisi

herself, but now the business is worth much more and runs on a larger scale. She now has employees whom she pays monthly.

Although she is not a certified nutritionist, she engages with other experts and dieticians and is work-

ing on becoming certified before the end of the year.

She also engages in self and business development activities which include trainings, webinars and workshops within and outside her field.

Akeju says that she is

World Export Development Forum provides opportunity for SMEs ODINAKA ANUDU

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xport-oriented entrepreneurs and SMEs can leverage the opportunity in the upcoming World Export Development Forum, which will bring together more than 1,000 business leaders, policymakers and trade development officials with a view to discussing international business competitiveness issues.

The event will take place at the African Union headquarters between 18 and 22 November, 2019.

It is co-hosted by the International Trade Centre and the Ministry of Trade and Industry of Ethiopia.

According to the ITC, the event will happen during Africa Industrialisation Week, with sessions designed to help businesses understand the imminent African Continental Free Trade Agreement.

Topics will include investing in value addition, addressing the skills mismatch, and sustainable packaging will be discussed.

The World Export Development Forum is organised annually by the ITC.

“Trade and investment opportunities abound in Africa, from agriculture to technology. Its agricultural market is set to reach $1 trillion by 2030. Already more than half of the world’s mobile money accounts are in the continent,” ITC said in a separate document on its website.

“Africa is also home to the world’s fastest-growing youth population. The recently launched African Continental Free Trade Area (AfCFTA) opens new opportunities for deeper integration through trade and investment,” it further said.

Topics to be discussed

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include: Trade and investment in the AfCFTA; women in trade; focus on young entrepreneurs; e-commerce and digital trade, as well as sustainable trade opportunities. Others include: skills development, mentoring, vocational training and business matchmaking, especially in agribusiness.

It will also feature SheTrades Global—an innovative solutions for women’s empowerment through trade.

Under this, there will be focus on the African Continental Free Trade Area.

It will likewise feature YES Forum.

“This youth entrepreneur-

ship event explores policies, skills, networks and finance,” ITC said.

“Part of the Global Initiative on Decent Jobs for Youth, it is organised with the International Labour Organisation, the United Nations Capital Development Fund, the United Nations Conference on Trade and Development, and the United Nations Industrial Development Organisation,” it said, adding that agribusiness companies of all sizes from across the globe will focus on fruits, vegetables, meat, cereals, dairy, tea, coffee, spices, agroprocessing technologies and packaging solutions.

The ITC says business matchmaking will focus on agricultural products (fruits, vegetables, meat, cereals, dairy, tea, coffee, spices, and others), as well as agriprocessing technologies and packaging solutions.

“You can also join our Meet the Expert ‘speed workshops’, allowing you to learn more about business development, ranging from marketing through social media, advice from agribusiness entrepreneurs and technology solutions.”

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able to remain distinct from other bakers by using only the best ingredients, establishing a friendly relationship with her clients and maintaining a conscious continuous effort of selfdevelopment. All of them have proved to work well.

Speaking on her business expansion plans, Akeju says, “I just collaborated with a financial team and we are ready to enlarge the business coast. We intend to also incorporate services of a healthy meal coach.”

She adds that part of her expansion plans is to boost her clientele and network.

She is working towards achieving this, having been recently inducted into the Lagos Chamber of Commerce and Industry (LCCI).

So far, the entrepreneur has two certificates of entrepreneurship and an award for the unique cereal.

She gets her ingredients locally in large quantities from major markets in and outside Lagos, but she is working on having a personal plantation so as to improve raw material sourcing and reduce cost of production.

Despite her passion for the business, she is sometimes discouraged with

what she terms ‘challenges’ which include: poor power supply, high cost of raw materials, bad road network, and inaccessible capital for business expansion.

She believes that getting the approval of regulatory agencies is also a challenges, pointing fingers at the Corporate Affairs Commission (CAC) and the National Agency for Food and Drug Administration and Control (NAFDAC).

She urges the government to improve power supply, accessibility to loans and grants, and also ensure a seamless process for business registration.

Combining the roles of a wife, mother and business owner, she says, “It’s not easy juggling the roles of being a mother, wife and an entrepreneur, but you have to do what you have to do to be a success, and every morning, I know that a new day has begun, and there are wars to wage, battles to fight and goals to be met and I prepare for it.”

Advising entrepreneurs, she says, “Entrepreneurship is not for the faint-hearted.

It blows hot and cold. It takes the grace of God, your passion, zeal and die-hard spirit to succeed.”

SME.NG graduates 15 women entrepreneurs BUNMI BAILEY

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ME.NG has graduated 15 women entrepreneurs from its All Women’s Accelerator known as ‘She Works Here’.

SME.NG is an impact investment platform that invests in the Nigerian micro, small and medium scale enterprises and enables them to realise environmental, social and financial returns.

The graduation took place on Saturday, 26 October 2019.

It coincided with an Investor Pitching event, where the women entrepreneurs pitched their businesses before angel and private equity investors.

“SME.NG has changed the landscape for gender-lens investing in Nigeria by creating a one-stop platform for women to strengthen their businesses and access different types of financing to meet their needs,” Thelma Ekiyor, managing director of SME. NG, said.

The platform’s approach to small and medium enterprises financing is through a ‘blended financing’ model, which will leverage private capital, public sector invest@Businessdayng

ments and philanthropic giving.

The SME.NG’s platform comprises the ‘Ebi Fund’— a Bottom of the Pyramid Fund for Women; the Women’s Investment Fund, a fund dedicated to large womenowned businesses; the Youth Innovation Fund, which invests in youth start-ups, and She Works Here, an all-women’s accelerator and funding space.

According to a research report by the Central bank of Nigeria, SMEs are critical to the development of any economy as they possess great potentials for employment generation, improvement of local technology, output diversification, development of indigenous entrepreneurship and forward integration with large-scale industries.

In Nigeria, there has been gross under performance of the SMEs sub-sector and this has undermined its contribution to economic growth and development. The key issues affecting the SMEs in the country can be grouped into four namely: unfriendly business environment, poor funding, low managerial skills and lack of access to modern technology.

Monday 04 November 2019

BUSINESS DAY

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real sector watch

Buhari calls for increased patronage of made-in-Nigeria products …LCCI wants increased FDIs into Nigeria ODINAKA ANUDU

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resident Muhammadu Buhari has called for increased patronage of locallymade products, saying that this is the only way the new Nigeria can be realised.

Speaking at the opening ceremony of the Lagos International Trade Fair, which is ongoing in Lagos, Buhari said Nigeria must be a nation that produces what it consumes and consumes what it produces.

Represented by Maryam Katagum, minister of state for industry, trade and investment, Buhari said the vast majority of developed countries rely mainly on small and medium enterprises that are ready to take risks and engender growth.

“The increasing number of unemployed youths has made entrepreneurship a viable platform,” he said.

He said his government is committed to supporting MSMEs to ensure that their products reach the rest of the world.

He further said the government has expanded the Export Expansion Grant (EEG) scheme to boost exports and earn more foreign exchange for the economy.

He saluted the resilience of SMEs participating in the fair, saying the Lagos trade fair would enhance business confidence and could lead to more foreign direct investments (FDIs) into the country.

On his part, Babajide Sanwo-Olu, Lagos State governor, said the state government would continue to support the private sector and be its partner in progress.

“We shall leave no stone unturned to ensure that Lagos State becomes a 21st century economy,” Sanwo-Olu, who was represent by Obafemi Hamzat, deputy governor of the state, said.

He said government’s objective is to make the state Africa’s model mega city and a destination for FDIs. He explained that the state understands that 85 percent

Gbemi Faminu

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xperts in the manufacturing sector are calling for increased value addition and the inclusion of the private sector for Nigeria to fully benefit from the African Continental Free Trade Area (AfCFTA).

Speaking at the third edition of the Nigeria Chamber of Commerce, Industries, Mines and Agriculture (NACCIMA) -Deloitte African Continental Free Trade Area (AfCFTA) Dialogue series held in Lagos, themed ‘Trade in Goods’, Segun Ajayi-Kadir, director-general of the Manufacturers Association of Nigeria (MAN), said the trade agreement has a vision and an objective to integrate Africa and create a unified continental market, but it will require the partnership of the private sector and a good business environment to thrive.

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that supports the growth of micro, small and medium enterprises, so they can impact substantially on the economy in terms of growth, job creation and value generation,” he stated.

Gabriel Idahosa, chairman, Trade Promotion Board, LCCI, said the 2019 trade fair is a veritable platform to promote a robust business interaction to generate wealth and create value for the African region and deepen the relationship with the rest of world.

Victor Osadolor, group deputy managing director of the United Bank for Africa (UBA), the headline partner of the fair, said the bank has been supporting entrepreneurs, especially through Tony Elumelu Foundation.

Osadolor said more than 7,000 entrepreneurs have accessed seed capital through UBA, adding that the bank has keyed into government intervention funds to expand credit access for entrepreneurs.

“We remain committed to developing more businesses across Africa,” he said.

“At UBA, we are committed to being a role model.

We have, over the years, supported different industries from loans to advisory support and to infrastructure,” he said.

Cadbury Nigeria’s revenue rises 7.2% in 9 months

Experts canvass value addition to leverage opportunity in AfCFTA Ajayi-Kadir, who was represented by Oluwasegun Osidipe, director of statistics in MAN said, “Resources are abundant in Nigeria, which provides numerous opportunities especially in trade for the country but with the present condition of businesses and constrictive policies, it cannot be fully utilised.”

He said there is need to boost local production of goods as no nation can be tagged developed until it produces what it consumes.

He added that the trade agreement can only be utilised if the traded goods are produced locally.

The MAN DG also said while the country has comparative advantage in natural resources, it lacks the inclusion of value addition.

Hajiya Saratu Aliyu, NACCIMA president, said in her address of welcome that the discussions focused on negotiated terms in the Trade in Goods protocol

of the economy rests in the private sector, saying that the government takes it very seriously and understands it must make it easier for businesses to thrive.

Babatunde Paul Ruwase, president of the Lagos Chamber of Commerce and Industry (LCCI), organiser of the trade fair, said the generic theme of the trade fair ‘Connecting Businesses, Creating Value’

underscores the importance of a robust business interactions to generate wealth and create value for the advancement of the Nigerian economy and the welfare of the citizens.

“This year’s trade fair is different from previous ones and one of the latest initiatives is the creation of a special hall for exhibitors from other African nations tagged ‘Africa Hall’,” he said.

“Creating a platform to promote trade and bilateral relations is of utmost importance to the Lagos Chamber of Commerce and Industry.

We are committed to ensure the business environment is enabling for all investors,” he further said.

He added that the chamber’s programmes and activities are geared towards facilitating the realisation of the economic and social objectives of the government and making Nigeria an attractive destination for investment.

He said the country’s economic and investment policies must be friendly to make it a major investment hub in Africa.

“We need the right policies as well as strong commitment to infrastructural development to revive investors’ confidence in our economy.

Our policies must be one

ODINAKA ANUDU

and how they affect the real sector of Nigeria’s economy, with a view of clearing the misconceptions surrounding the AfCFTA, She said a consensus should be formed on the private sector’s approach to defensive and offensive trade strategies in taking full advantage of the opportunities provided by the AfCFTA’s Trade in Goods protocol, stressing that it is necessary to establish implementation plans for the private sector for the benefit and growth of the Nigerian economy.

Opeyemi Alaran, NACCIMA head of research and policy development, said during his presentation that the objective of the dialogue was to understand the details of the trade agreement such as the Rules of Origin, Protocol of Trade in Goods and Dervices, and dispute resolution, among others, to aid the decision-making process of businesses.

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adbur y Nigeria Plc has announced revenue of N28.912billion for the nine months ended September 30, 2019. This represents an increase of 7.2 percent over the N26.959billion revenue realised within the same period in 2018.

A statement from the

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beverage maker over the weekend said the company recorded gross profit of N5.857billion, representing an increase of 10.4 percent over the N5.306billion that was reported for the same period in 2018.

Cadbury Nigeria’s profit for the period stood at N648million, which translates to 276.8 percent growth, when compared to N173million realised

@Businessdayng

in the same period of last year. The statement said the result reflects a sustained positive trend in its performance, adding that profit before tax within the review period, grew by 267.4 percent to N926million, from N253million in 2018.

Cadbury Nigeria is a publicly quoted company and a pioneer cocoa beverage manufacturer offering some of the most loved brands in the country. Cadbury Nigeria is a 74.99 percent-owned subsidiary of Mondelez International, a global snacking powerhouse with an unrivalled portfolio of brands. The remaining 25.01 percent of shares are held by a diverse group of indigenous, individual and institutional investors. A front-runner in beverages, confectionery and gum, Cadbury Nigeria’s quality products--Bournvita, Hot Chocolate 3 in 1, TomTom, Buttermint, Trident and Clorets--are market leaders in their respective consumer segments.

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Monday 04 November 2019

BUSINESS DAY

INTERVIEW

‘Every Apartment is not the same: 15 fundamental facts that set In this interview with BusinessDay’s ENDURANCE OKAFOR, the SIJIBOMI OGUNDELE, CEO of Sujimoto talks about what distinguishes his landmark Lucrezia luxury apartment building in Lagos.

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ell us a bit about Sujimoto and what makes you stand out.

Integrity and Quality, these are the fundamental pillars that hold us as a company. From the beginning when we founded Sujimoto, we had no rich Uncles or powerful Aunties, but we knew that to win in today’s world, we needed to imbibe two fundamental principles as a company - INTERGRITY AND QUALITY. From the Integrity of our structures to the integrity of the people, every inch, everything we do must speak and uphold honesty. It’s by this same integrity that when we paused our Lorenzo project, we refunded almost N400M. Since integrity also goes to association, to fairness and to Quality, at Sujimoto, we can never compromise when it comes to anything, especially the quality of the luxury we promised.

No one goes to our projects and do not fill wowed or impressed by the quality of design and most importantly quality of material and fittings.

Tell us about the Lucrezia, what makes it standout?

From Porcelanosa’s Zaha Hadid Sanitaries which won the best bathroom collection at the World Built Awards 2018, to the latest 2.0 Crestron standard Automation - the best of its kind not only in Africa, but also in the world.

For the first time in Nigeria, every residence will have an Imax cinema effect where a Hollywood standard cinema will be available for all residence to watch and enjoy in the company of family and friends, Interactive lobby like what you find in 5 star hotels, standard and convenient crèche, 4 Metre floor to ceiling height that gives a royal effect in each room, Olympic size pool, gym with the most latest equipment by Technogym and a GRC Façade – first of its kind in Nigeria.

When we say we are building the best condominium, we are not bragging! We have done our research and looked through all tall buildings of Bourdillon and Ikoyi, no building shall compete with the Lucrezia.

What does the Lucrezia Penthouse look like?

For the first time in Nigeria, and probably the first in Africa, we are building a Penthouse with a Private Golf Garden, Private Elevator, Private Pool (on the 12th floor) and Private Gym. Sujimoto through Lucrezia has decided to research all the best penthouses in Africa, and decided to build the future - the best penthouse in Africa.

Located in Africas richest neigh-

The Lucrezia comes with a payment plan and very flexible payment structure that allows investor spread their payment for the next 18th months, and this is also attached to milestones.

What Facilities and Services are available?

The LucreziaBySujimoto comes with concierge services, a swimming pool, world-class gym, roof top lounge, crèche for kids, Interactive lobby, Full home automation, 24-hour stable power supply, Private cinema for the residents and their guests, facility management services and top-notch security.

Sijibomi Ogundele

bourhood – Banana Island, the building will come wrapped in a rare façade system known as Glass Reinforced Concrete (GRC), first-ofits-kind in Nigeria! It is not bragging, when we say that no other penthouse will beat the Lucrezia when it comes to quality, price and luxury.

Many apartments are empty in Ikoyi, VI, Is this the best time to invest, and why are your projects sold out?

Coming onboard early with us will give you a strong pricing competitive advantage; you will be saving about 40% above market value. I am sure you are aware that the median space is filled with thousands of empty apartments in Ikoyi and Banana Island, but we are sold out for 2 reasons.

1) We realized that many developers put immediate gratification above value creation so we made it a philosophy to put QUALITY at the foundation of who we are, so clients could see great quality, not only on finishing but the way we go the extra mile in delivering luxury.

2) Value: It is essential for us to have a great pricing point; we put customer satisfaction first and gave early investors a strong competitive pricing point.

Today those who bought for N320M are refusing to sell at N450M after less than 18 Months.

What do I get when I refer a Client to buy?

We gave out over 120 Million naira in commission to people who referred customers to us in our just concluded and SOLD-OUT Giuliano project. Refer a client to buy the www.businessday.ng

LucreziaBySujimoto, and you are guaranteed up to 20 million naira in commission and if you are lucky, we can even fly you to your favourite destination, DUBAI, or a holiday to any country of your chosen. All our referral agents can testify to the joy Sujimoto deposited in their bank account after each deal was closed.

What is the Current Construction Status of Lucrezia?

The LucreziaBySujimoto is currently in the Piling stage which is about 80% completed. This recordbreaking structure will sit on approximately 94 piles with each at 900 diameter, going 45mm deep (Taller than Ocean Parade), costing Sujimoto hundreds of Millions of naira. This structural stage is the most important of all and the structural integrity of this project is something we give our 110% priority. We will not only do the pilling but we shall make sure all piles go through an SIT (Structural Integrity Test). Structural Integrity is what will make us sleep at night because for the next 1,000yrs, you are guaranteed that the Lucrezia shall still remain standing.

How Many Units do you have left?

Only 1 Unit is left. This is from the first batch of 6 Units we released.

Immediately we sell this off, we shall close sales and start selling again when the building stands and this should be around April 2020, and of course, the prices should have gone up 30%.

Is there a payment plan for Lucrezia?

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Can Sujimoto help me build my property?

Yes, we just launched a department that allows us help people to build their dream homes. We realise that not everyone wants a bespoke condominium, some people have their land and want to build, what we can do is help design, receive approval and build it better, faster and cheaper, with high-quality fittings and finishing than anyone else. From Private Villas to Office Spaces, to renovations, anything that’s got to do with construction, Sujimoto can do!

We will help you craft your dream home, exceeding all expectations.

Our quality is unrivaled, our price is unmatched and our turnaround time is astounding. Just DREAM it and SUJIMOTO will build it!

Sujimoto claims to give a 5-year warranty. What does that mean?

Sujimoto actually means ‘Excellence’ in Japanese; and this is what our brand exhumes. Therefore, for the first 5 years, if any of the fittings or amenities in your apartment becomes faulty, we will not repair them but replace, we are confident about the materials and fittings that we are using and that’s why we can boast of this. No other real estate company in Nigeria currently does this. It is in our DNA to go the extramile to satisfy our clients.

What is the guarantee for my ROI? Our recently sold-out project, the GiulianoBySujimoto in Banana Island, which initially sold at N320 Million naira as off plan, is now worth about N600 Million naira!

Early investors made over 90% Returns on their Investment with a guaranteed rental value of about 30 million naira per annum. Another opportunity is here and the Lucrezia’s ROI will even be massive considering the features, facilities and amenities we are bringing into it. Buy OFF-PLAN NOW and save @Businessdayng

up to 40%.

How Many Parking spaces will I be allotted?

Each unit will be allotted 4 parking spaces, so residents will have ample parking and guaranteed security for their treasured vehicles.

How Many BQ’s in LucreziaBySujimoto?

The LucreziaBySujimoto apartment comes with 2 maid rooms to enable our clients avoid unnecessary problems with the helps, like the driver getting the cook pregnant, etc.

What is your track record?

What are your past projects?

Sujimoto is the brain behind the award winning MediciBySujimoto terraces in Milverton, Ikoyi. The Medici won the prestigious International Property Award 2017/2018 for the Best Residential Development in Nigeria.

We are the developer behind the world acclaimed GiulianoBySujimoto Property in the most exclusive and expensive square metre in Nigeria, Banana Island. A game changer development that is redefining the way people live, with every square meter, from foundation to finishing, reflecting opulence, comfort, and elegance. From exclusive Porcelanosa by Zaha Hadid Sanitary Wares, which won the best bathroom collection at the World Built Awards 2018, to full home automation and private elevators in each unit, the GiulianoBySujimoto supersedes every investment in terms of ROI. Sujimoto is also the brain behind Lorenzo, the smartest, most luxurious high-rise building in Africa’s history. Even though this project is currently on hold, it is set to take the world by storm very soon.

Sujimoto also does numerous private projects for it clients in Banana Island, Ajah, Ikoyi and Victoria Island.

From 2020, there are 3 major projects in the pipeline including- The Leonardo, will be another the tallest residential building on Banana Island. The second is a luxury hotel brand called The S - an African-inspired luxury hotel that borrows from the unique design and experience offered by the Four Seasons franchise. And the Sujimoto center, a 6-in-1 commercial space, first of its kind in Nigeria and in Ikoyi, where we shall have a boutique mini-mall, a 4,000 sitting event center, detachable to 1,000 or 500 as you see fit, approximately 20,000 m2 of office spaces, 60 suites of hotel rooms, international standard gym, rooftop pool and lounge. With about 1,000 car parks, The Sujimoto place will be the best amongst others.

Monday 04 November 2019

BUSINESS DAY

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Monday 04 November 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

What small businesses know about corporate responsibility ROBERT CRESANTI

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n increasing number of large firms are taking action on big issues, from education to climate change, and even impeachment. This follows, in part, consumers’ growing desire to shop with and support companies that reflect their own values and beliefs. But small businesses do this, too, and have for a long time.

So how are they so successfully navigating these waters? Here are three takeaways from my time spent with small business owners through the International Franchise Association.

— FOCUS ON NEEDS CLOSE TO HOME: Small businesses’ clear advantage is that owners see the issues that matter to their communities every day.

Consider Jimmy Jamshed, the owner of a Dallas-area group of restaurants. After encountering several individuals desperately rummaging through trash cans in search of food, Jamshed began a casual effort to donate some of

his restaurant’s food to impoverished areas of his community. Community members and customers joined in, transforming Jamshed’s efforts into a full-fledged charitable program. He remains deeply involved, paying for meals out-of-pocket and visiting a local park almost daily to deliver

meals and clothing.

— LOCAL LEADERSHIP IS AUTHENTIC: Local business owners understand that listening to people’s needs before acting is essential. For example, Norm Robertson, the owner of Express Employment in Indiana, was a veteran who had heard regularly from other vets

using his company’s services that they needed a better way to move from public service into the private sector. Robertson became an advocate for the Veteran Entrepreneurs Act, which aims to lower costs and create tax credits for veterans hoping to open local businesses.

These kinds of initiatives

show consumers that the welfare of your community is part of your business’ value proposition.

— PUTTING PEOPLE AHEAD OF POLITICS: While it’s important for businesses to exercise their influence in the community, the best strategy for most brands is to stay out of politics.

Raising awareness on the issues that matter to their communities — which is where the rubber meets the road — is what customers appreciate.

(Robert Cresanti is president and CEO of the International Franchise Association.)

We need artificial intelligence that is explainable, auditable and transparent GREG SATELL AND JOSH SUTTON

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lgorithms can determine what college we attend, whether we get hired, whether we qualify for a loan and even who goes to prison and for how long. Unlike human decisions, these mathematical models are rarely questioned. They just show up on somebody’s computer screen. In some cases, the errors of algorithms are obvious. What’s far more insidious and pervasive are the more subtle glitches that go unnoticed but have very real effects on people’s lives.

Once you get on the wrong side of an algorithm, your life becomes more difficult. Those facts get fed into new algorithms and your situation can degrade further.

Each step in your descent is documented, measured

and evaluated. It is imperative that we begin to take the problem of AI bias seriously and take steps to mitigate its effects.

Bias in AI systems has

two major sources: the data sets on which models are trained, and the design of the decisionmaking models themselves. With so many di-

verse sources of bias, we do not think it is realistic to believe we can eliminate it entirely, or even substantially. We suggest three practical steps lead-

ers can take to mitigate the effects of bias.

First, AI systems must be subjected to vigorous human review. Second, just as banks are required

by law to “know their customer,” engineers who build systems need to know their algorithms.

And third, AI systems, and the data sources used to train them, need to be transparent and available for auditing. We wouldn’t find it acceptable for humans to be making decisions without any oversight, so there’s no reason we should just accept it when machines make decisions.

Perhaps most of all, we need to shift from a culture of automation to augmentation. Artificial intelligence works best not as some sort of magic box you use to replace humans and cut costs, but as a force multiplier that you use to create new value.

(Greg Satell is an international keynote speaker, adviser and author. Josh Sutton is the CEO of Agorai.)

Monday 04 November 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

39

In association with

What the lean startup method gets right and wrong ETHAN MOLLICK

W

hen someone learns I am an entrepreneurship professor, they tend to either ask me to listen to their startup pitch, or look at me quizzically and say: “But I thought entrepreneurship was all about improvisation.

How can you teach entrepreneurship?” What can we teach founders to make their startups more successful? The last decade has given me a lot of valuable lessons I can share, and these lessons come from two different sources.

The first was the rise of the lean startup method, which proposed that the key to success was to be biased toward action. Founders turn the key questions they have about their business into testable hypotheses, then build fast and cheap “minimal viable products” to test these hypotheses.

If the tests show they are correct, great. If not, they should change direction, modifying the product they are selling, or

the market they are approaching, based on the feedback.

Lean startups were not the only big change in startup strategy in the past decade.

Another, quieter revolution was taking place. Academics, with access to better data, more sophisticated analysis techniques and new approaches, have begun to crack

the code of startup success.

Evidence strongly suggests that startups should engage in experimentation along the lines pioneered by the lean startup method. Rigorous experimentation is clearly important. But other work has shown there are aspects of the method that may actually be harmful.

Lean startups push you to talk to customers as quickly as possible. The focus on getting fast feedback on minimal viable products leads startups to aim for incremental improvements, focusing on what customers want today, rather than trying to see into their future. Additionally, a lot of research shows that novelty is

often initially disliked by customers. Seeking external validation from early customers can thus be harder if you have a breakthrough idea rather than an incremental, but easily explained, product.

So, how do we keep the good aspects of the lean startup approach without holding onto the bad? Recent research on corporate strategy suggests a new, more effective approach to experimentation that starts with a strategy — a theory about why your company is going to succeed — and, based on the choices founders themselves make, suggests the experiments to conduct.

By returning power to founders, rather than customers, to develop key breakthrough insights, this approach has the potential to be the next step in the evolution of lean.

(Ethan Mollick is an associate professor of management at the Wharton School of the University of Pennsylvania.)

3 myths about china’s intellectual property regime infringement remains a significant problem in China and the country’s IP protection regime still has shortcomings.

DAN PRUD’HOMME

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s China’s intellectual property regime really all that bad? It has become generally accepted that the ongoing U.S.-China trade war is at least partially in response to China’s practice of forcing technology transfers and its extremely poor protection of IP. Three myths about China’s IP regime hold back executives considering investments in the country, and the ability to see through these can offer much-needed nuance when strategizing for the Chinese market.

The first myth is that statesponsored “forced” technology transfer in China is ubiquitous.

In fact, while interviewing and surveying multinational executives in China, I found that the most egregious Chinese policies coercing technology transfer have not usually been faced by foreign firms in recent years.

Further, the rest of China’s controversial technology transfer policies, while problematic in terms of transaction costs, typically do not result in unmanageable losses of the value cap-

(Dan Prud’homme is a professor at the EMLV Business School in Paris.) tured by foreign firms.

The second myth is that China’s IP regime is categorically weaker and therefore less business-friendly than those of rich nations such as the United States. In fact, though there are a number of shortcomings in the IP institutions in China, those institutions are, generally speaking, capable of reasonably protecting IP rights.

The third myth is that be-

cause China is not a Westernstyle liberal democracy, its governing institutions will never seriously respect intellectual property. Politics certainly matter to economic governance in any country. But there are several reasons why a liberal democracy is probably not necessary to adequately protect IP. What’s more, having a liberal democratic political system does not actually ensure state

compliance with the rule of international economic law, despite its clearer ability to safeguard sociocultural rights. In fact, some liberal democracies frequently violate international legal norms by discriminating against foreign businesses.

China’s IP regime may be much less risky than Western executives have often assumed. At the same time, no mistake should be made: IP

Brought to you courtesy of First Bank Nigeria

40

Monday 04 November 2019

BUSINESS DAY

MARKETS INTELLIGENCE Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Earnings growth can’t tame rampaging Bears on NSE BALA AUGIE

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igerian largest banks have seen impairment charges for loans to the oil and gas and other sectors fall to a five-year low as they have resolved to strengthen their balance sheet.

The cumulative impairment charge on financial asset fell by 14.64 percent to N124.06 billion in September 2019 from N145.41

N259.92bn

However, gains were wiped off by the higher excise duty expense compared to last year, leading to flat net revenue growth of 0.1 percent year-on-year in the period. Excise duty expense ballooned to N24.24bn for nine months as compared to N16.93bn in the same period 2018. market, and hike in Value added Tax (VAT) has further damped consumer spending,” said Tinuoye.

Over the last six months, Nigeria’s real economic growth though remaining positive has decelerated for 2 consecutive quarters, positing GDP of 2.10 percent in the first quarter (Q1) of 2019, a decline from 2.38 percent recorded in the fourth quarter (Q4) 2018 and growth of 1.90 percent in the second quarter (Q2) 2019, which marked another decline from Q1 levels.

Earlier in the year, The International Monetary Fund (IMF) had lowered the country’s growth outlook to 2 percent, from 3 percent projected in 2018.

The Fund also downgraded global growth, citing trade war between the United States and China, uncertainty surrounding Brexit, and economic slowdown in the Euro area economy.

Based on GDP per capita, Nigeria ranks 147th position, its population has a low level of affluence compared to the 196 countries whose GDP were published by Trade and Investment Organization.

The country’s foreign reserves fell by $1.26 billion from $41.76 billion in October to $40.5 billion as of the end of October 30, according to figures from the Central Bank of Nigeria (CBN) on Thursday.

“We expect investor interest in Nigerian equities to remain subdued until the government and economic policymakers begin to implement assertive and bold policies to drive accelerated economic growth in bid to fufill Nigeria’s enormous economic potential as an economic powerhouse in Africa,” said analysts at CSL Stock Brokers Limited.

Earnings report by companies showed Banks were star performers as the cumulative net income of 11 largest lenders increased by 12 percent to N627.27 billion in the first nine months to September 2019.

A stringent Central Bank of Nigeria (CBN) combined with a low yield environment could however cast a pall on future earnings.

Cement makers have continued to show resilience even amid slow construction activities and border closure as the combined net in-

come of the largest producers of the building materials (Dangote Cement Plc, Cement Company of Northern Nigeria, and Lafarge Africa Plc) rose by 23.87 percent to N183.24 billion.

Seplat Petroleum Development Plc Corporation and Oando Nigeria Plc, the two largest upstream oil and gas firms saw cumulative net profit spike by 80.0 percent to N39.068 percent, thanks to tax credit.

The telecoms giants Airtel Africa Plc and MTN Nigeria have continued to leverage on their 4G to spur growth while taking advantage of a burgeoning population that crave for consumption as combined net income increased by 17.95 percent to N376.32 billion as at September 2019.

However, not all the companies on the exchange have been posting impressive earnings growth.

Earnings of Fast Moving Consumer Goods Firms (FMCGs) have lagged, owing to poor demand from an increasingly shrinking consumer wallet as over 50 percent of a population of 200 million live on less than $1.98 a day.

Bank’s impairment charge falls to five year low on improved risk management BALA AUGIE

SHORT TAKES Nigeria’s largest Beer maker, Nigerian Breweries (NB) saw revenue grow 2.7 percent to N259.92bn for in three quarters to 30th September 2019 as against N254.99bn recorded the same period last year.

I

mpressive results by bellwether firms particularly in the banking sector haven’t been enough to whet investors’ appetite for cheap stocks as protracted macroeconomic uncertainties have left the local bourse in a lull.

Federal Government has failed to formulate policies that will help propel economic growth after the country exited its first recession in 25 years.

Additionally, inconsistencies in policy making, uncertainties on implementation of structural reforms and unfulfilled economic potential have increased investors apathy towards Nigeria equities.

Nigeria’s stock market dipped by 0.25 percent to 26,293.3 points Friday with year to date returns now -16.34 percent.

Following close of Friday’s trading session, the Nigerian equities market traded at a P/E ratio of 7.18x, according to data from gathered from Bloomberg.

That’s a steep discount to African peers such as South Africa (14.74x, YTD; +6.1 percent), Egypt (12.26x, YTD; +9.7 percent) and Morrocco (19.77 percent, YTD; +1.3 percent), as there exists an increasing divergence between earnings growth and stock market returns.

Analysts at CSL research Ltd said that over the past one year listed companies in the All Share Index have posted a 15.3 percent 1-year growth in Earnings while the ASI has plunged 20.5 percent within the same period.

“As long as the macroeconomic outlook is not impressive, investors will not invest their money no matter how cheap stocks are,” said Kayode Tinuoye, head of portfolio management at United Capital Ltd. “Government is yet to carry out reform that will help jump start the

P.E

billion recorded in 2018.

A cursory examination of the books of lenders showed charges were at an all-time high of N254.81 billion in 2016, when a sharp drop in crude oil price paralyzed economic activities, and valued customers were unable to pay interest on loans borrowed from financial intuitions.

However, the introduction of a new foreign exchange policy in 2017 by the Central Bank of Nigeria (CBN) that eased the flow

of foreign exchange in the system and a rebound in oil price helped the country exit recession that year.

That gave companies the leeway to pay back interest on money borrowed, and banks have strengthened their risk management strategies as they slowed down on credit extension to the oil and gas sector.

The negative outlook brought about by the oil and gas exposure is out of the way, while a lot of them have written back some of the provision in the period under review,”

according to Kayode Tinuoye, head of porfolio management at United Capital Research Ltd “We haven’t seen serious downtrend in oil and gas, and l think we may see more improvement in bad loans,” said Tinuoye.

First Bank Holdings Plc’s impairment charges dipped by 62.64 percent to N28.46 billion as at September 2019, while Non-Performing Loans (NPLs) ratio fell to

8MT Analysts at Lagos-based Chapel Hill Denham estimate that plans by Cement Company of Northern Nigeria Plc (CCNN) to merge with Obu Cement Company Plc (Obu) will create Nigeria’s third largest cement manufacturer with a total capacity of 8 million tonnes.

The consolidation of the two entities, which are owned by BUA, will see CCNN’s 2MT combine with Obu’s 6MT thus, creating Nigeria’s third largest cement manufacturer by capacity, behind Dangote’s 29.3MT and Lafarge Africa’s 10.5MT capacity.

??

Nigeria’s gross foreign reserve has declined by $4.545bn as the Central Bank of Nigeria continues to support the naira which has remained relatively stable year-long. The reserve is now at its lowest in 2019 after peaking at $45.175bn in June. On a year-to-date basis the reserve has declined about 6 percent.

The CBN which has been intervening in the foreign exchange market blamed softer oil prices in the global market. Oil is Nigeria’s biggest foreign exchange earner.

Continues on page 41

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: FIFEN FAMOUS)

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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Monday 04 November 2019

BUSINESS DAY

MARKETS INTELLIGENCE

41

Nigeria crude exports could drop 12.4% on weaker crude oil prices IFEANYI JOHN

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igeria may be struggling to raise crude oil production to its budget target of 2.3 million barrels per day, but analysis shows that production shortfalls this year is not to blame for the weaker crude oil exports forecasted this year.

So far this year, average crude oil production has been around 2.02 mbpd according to data compiled from National Bureau of Statistics (NBS) which puts this current year production slightly above last year’s average daily production of 1.99 mbpd. However, with crude oil production remaining relatively flat in both years, crude exports is expected to fall about 12 percent this year due to weaker crude oil prices in 2019.

According to data obtained from Central Bank of Nigeria (CBN), average crude oil price in 2018 was $72 per barrel compared with this year’s average price of $65 between January and October. This means that

Nigeria may be set to lose as much as $1.6billion in crude oil exports due to the 10 percent drop in average crude oil prices this year. Based on current projections, analysts expect Nigeria’s crude oil exports to drop from $54.5

billion to $47.7 billion, representing a drop of around 12 percent.

Already the Federal Government is feeling the pinch of lower crude oil prices as the government budget performance report shows

that oil revenue in the first half of the year was only N900 billion compared to the budget target of around N1.84 billion.

“A drop in crude oil prices can be very catastrophic to the Nigerian economy and

the government’s finances,” said Maju Eldad, Lecturer in Economics Department at Federal University Kashere, Gombe. “Oil represents its biggest exports and highest contributor to the foreign external reserves. Lower crude oil prices means that Nigeria will be forced to deplete its foreign reserves in order to protect the value of the currency from any sudden attacks or depreciation,” Eldad added.

Brent crude oil prices closed the week lower, falling from $62 at the start of the week to $59.4 as at Friday afternoon. Crude oil price is now once again below the crude oil price benchmark at the same time that daily production remains around 350,000 barrels below the country’s budget target, putting the public finances under tremendous strain.

Access, UBA post strong earnings growth in Q3 as Tier 1 Banks earnings jump by N66b IFEANYI JOHN

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t may not be a good year for banks in the stock market, but they are finding much luck elsewhere, in their P & L statement. In the first 9 months of the year, Tier 1 banks earned about N521.7 billion, about N66 billion more than they achieved in the same period last year.

Zenith and GTBank remained the industry leader in terms of profit generated.

The two banks earned a combined profit of N297.6 billion during the first 9 months of the year, accounting for up to 57 percent of the profit generated by the 5 Tier 1 banks.

Access and UBA however led the industry by earnings growth over the past year. The two banks contributed about 72 percent of the earnings growth seen in the Tier 1 banks space this year, as Access reported earnings growth of N27.8 billion while UBA grew earnings by N20 billion so far this year.

First Bank showed much improvement this year, growing earning by 15 percent while its nonperforming loans continued its downward trend, rounding up what was a brilliant

trimester for Nigeria’s largest banks.

Access Bank grew its gross earnings increased by 36.89 percent from N375.230 billion recorded in Q3 2018 to N513.656 billion in Q3 2019. Its profit before tax grew by 46.73 percent from N70.268 billion in Q3 2018 to a record of N103.104 billion in Q3 2019. Also profit after tax, rose by 44.23 percent from N62.911 billion recorded in Q3 2018 to a record of N90.740 billion in Q3 2019.

UBA had its gross earnings increase of 14.23 percent from N375.335 billion in Q3 2018 to a record of N428.742 billion in Q3 2019.

Profit before tax increased by 24.17 percent from N79.111 billion in Q3 2018 to a record of N98.233 billion in Q3 2019. Also, profit after tax rose by 32.30 percent from N61.698 billion in Q3 2018 to a record of N81.628 billion in Q3 2019.

First Bank is next in line with gross earnings decrease of 1.05 percent from N430.759 billion in Q3 2018 to a record of N426.268 billion in Q3 2019. Its profit before tax increased by 16.9 percent from N51.340 billion in Q3 2018 to a record of N60.029 billion in Q3 2019. Also, profit after tax increased by 15.33 percent from N44.947 billion in Q3 www.businessday.ng

2018 to a record of N51.836 billion in Q3 2019.

GTBank follows whose gross earnings decreased by 3.17 percent from N334.762 billion in Q3 2018 to a record of N324billion in Q3 2019.

Profit before Tax grew by 3.90 percent from N164.246 billion recorded in Q3 2018 to N170.652 billion recorded in Q3 2019. Also, profit after tax rose by 3.35 percent from N142.224 billion recorded in Q3 2018 to a record of N146.990 billion record of N146.990 billion in Q3 2019.

Zenith Bank remained Nigeria’s most profitable bank, capping a fine performance in as at Q3 this year.

The bank’s gross earnings increased by 4 percent from N474.607 billion recorded in Q3 2018 to N491.268 billion in Q3 2019. Profit Before Tax (PBT) grew by 5 percent from N167.307 billion in Q3 2018 to a record N176.183 billion in Q3 2019. Also, profit after tax rose by 5 percent from N144.179 billion in Q3 2018 to N150.723 billion in Q3 2019.

Analysts expect that the banks will post earnings of around N695 billion by year end 2014. The NSE banking index has declined by around 24.5 percent in the past year, despite banks posting stronger financial performance.

Bank’s impairment charge falls to five year...

Continued from Page 40 12.60 percent in September 2019 from 25.90 percent as at December 2018.

The oldest financial institution in the country attributes the improvement in asset quality to its risk management practice, as it resolves to significantly close challenged legacy exposures.

Zenith Bank’s robust risk management framework has ensured that NPL ratio declined from to 4.95 percent in September 2019 from 4.98 percent as at September 2018.

The largest lender by profit saw a 27.34 percent drop in impairment charge in financial assets by 27.34 percent to N18.25 billion in the period under review from N14.33 billion the previous year.

However, Access Bank’s increased by 27.02 percent to N10.61 billion as at September 2019, on account of lender’s business combination with Diamond Bank.

It acquired Diamond bank in 2018 to emerge as the larg-

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est lender by total assets, but Diamond had a pile of debt on its books before it was acquired.

Access Bank’s NPL ratio fell to 6.30 percent in September 2019, as net loans and advances was up 38 percent to N2.94 trillion, reflecting the impact of merger.

Going forward, Banks NPLs could rise as CBN is forcing them to extend credit to the real sector under the current weak current macroeconomic environment.

Analysts say that without complementary fiscal policy that will create the enabling environment for businesses @Businessdayng

to thrive, it will be difficult for financial institutions to record double digit growth in earnings.

The Nigeria economy has been growing sluggishly as GDP expanded by 1.94 percent in the second quarter of 2019, this compares with 2.10 expansions in the first quarter, according to data from the Statistics body.

“It is already affecting the outlook of the banking industry because it reduces the ability to earn income, and that money will not earn interest,” said Ayodeji Ebo, managing director/CEO of Afrinvest Securities Ltd.

42 BUSINESS DAY

Monday 04 November 2019

news

‘Funding, power, political commitment obstacles to academic research in higher institutions’ SEYI JOHN SALAU

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s the back and forth posture between the Academic Staff Union of Universities (ASUU) and the Federal Government on the right modalities for funding tertiary institutions in Nigeria continue unabated, the vice chancellor, Ladoke Akintola University of Technology (LAUTECH), Ogbomoso, Michael Ologunde, has stated that the university community in Nigeria needs proper funding to produce quality academic research materials. “…many challenges, including funding, power and political commitment are expected surmountable obstacles along the path of breaking into the world of miniaturization,” said Ologunde. He stated this at the recently concluded 3rd edition of the annual workshop and conference organised by LAUTECH Nanotechnology Research Group (NANO+), themed “Nanotechnology in Africa: Opportunities and Constraints”.

Ologunde posited that nanotechnology presents opportunities to solve the continent’s myriads of problems ranging from food production and storage, to disease control and environmental remediation.

“I have strong belief that the crop of scientists behind the promotion of nanotechnology as a frontier of knowledge has the wherewithal to take the University, our dear nation and indeed the African Continent to greater heights in knowledge dissemination and advancement of humanity,” said Ologunde.

However, he assured that the University would continue to invest in the provision of an enabling environment and equipment that would spur cutting-edge and translational research for the benefit of humanity.

Ogbonnaya Onu, minister of science and technology, represented by Kelechi Ebisike, head, Research and Development, Engineering Materials Development Institute (EMDI), Akure, noted that “local content drives a nation, and build a strong GDP base for any nation.”

According to the minister, President Muhammadu Buhari is interested in local content of any technology, same way the ministry of Science and Technology is interested in promoting local content. The minister however urged researchers in the country to come up with findings that will proffer meaningful and measurable solutions to problems, “the ministry of Science and Technology is open to research that would bring about developmental growth of our great nation,

Nigeria to shut land borders till January 31, 2020 Onyinye Nwachukwu & ENDURANCE OKAFOR

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igeria will continue to shut its borders to Benin Republ i c t i l l Ja nu ary 31, 2020, to enable it achieve the full objectives of the exercise, customs authorities said on Sunday, as calls heighten to reverse the decision.

Already, the government authorities, particularly the

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Central Bank of Nigeria, have been celebrating what the y call over whelming success of the operation, particularly the security and economic benefits.

President Muhammadu Buhari ordered the border closure on Augusta 21, to curb massive smuggling of illicit goods through that c o r r i d o r i n a n e xe rc i s e code-named ‘Operation

Exercise Swift Response,’ which saw joint border operations by a combined team of security agencies.

There were, however, reports of ongoing talks to open the border as the country’s neighbours lament huge losses.

But in a presidential directive conveyed in a recent memo circulated on Sunday, the Nigeria Customs Service noted that the goals set out by the operation were yet to be achieved and

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necessitated the extension.

“I am directed to inform you that it is observed that despite the overwhelming success of the operation, particularly the security and economic benefits to the nation, a few strategic objectives are yet to be achieved.

“A g a i n s t t h i s b a c kground, Mr President has approved the extension of the exercise to January 31, 2020,” Victor Dimka, deputy comptroller of Customs in

@Businessdayng

charge of Enforcement, Investigation and Inspectorate, noted in a memo to the sector coordinators.

“Consequently, you are requested to convey the development to all personnel for their awareness and guidance. Meanwhile, allowance for personnel sustenance and fuelling of vehicles for the period of extension will be paid as soon as possible. This is for your information and necessary action, please,” he stated.

Monday 04 November 2019

BUSINESS DAY

New PSC laws pose conundrum for future of Nigeria’s oil arrangements, shave off more than $50 billion in investments while five years periodic review is expected to create more uncertainty in the sector.

Industry watchers are concerned that both introducing an additional price-based royalty and increasing water depth-based royalties on revenues already burdened with a plethora of other taxes, fees, levies and other tariffs would worsen Nigeria’s competitiveness. Analysts believe that $48 billion of currently planned oil and gas investments would no longer be economically viable, resulting in significant decline in production and government revenues by 2023.

Operators believe that the Bill, which seeks to extract more revenue for the Federal Government of Nigeria through additional royalties in a high oil price regime, did not factor the cor-

responding increase in capital expenses, operating expenses and associated service costs.

Furthermore, the bill does not consider its potential negative impact on long-term deepwater investment and development.

While other stakeholders believe that there are another $43 billion of future deepwater investments that will also not likely occur due to the lack of competitiveness Nigeria’s fiscal policies. This will mean that the Nigerian contractors will not have work and the thousands of jobs that would have been created from the projects will not materialize for Nigeria.

Oil Producers Trade Section (OPTS), a coalition of oil producers which represents oil companies that produce 90percent of Nigeria’s oil and gas said this proposed law change and the regulatory uncertainty it

will create could significantly undermine profitability for the projects, including behemoth fields such as Shell-operated Bonga and Total’s Egina.

In a statement sent to Nigeria’s lawmakers, OPTS said the changes in the law is expected to slash future offshore production by 27percent to 2023, cut $55.5 billion from investment over the lifetime of deepwater projects and remove some $10.4 billion in potential government revenue by 2030.

It noted that the changes would be “almost equivalent to no new (deepwater) projects being viable.”

OPTS said potential changes to terms in the middle of contracts makes it incredibly difficult, if not impossible, to assess profitability and make investment decisions, advocating for stable terms for the life of each project.

rian investor, said it is important that Dangote Refinery gets every support as this could also encourage other investors to come to the country.

He said the government would be ready to support it by providing crude oil and gas as feedstocks for both the refinery and the fertilizer companies, and urged the president of Dangote Group, Aliko Dangote, to put his requests forward for consideration by the government.

Speaking further on the proj-

ects, Alike Dangote said the driving force behind the establishment of the companies was that he believed in Nigeria, saying, “There is need to satisfy the Nigerian market. If we don’t do it nobody would do that for us.”

He stated further that the growingpopulation ofthecountry was one of the reasons for putting uptheprojects,as“ourpopulation grows at about 3 percent annually and there is need to meet the supply needs of this population.”

Apartfromthis,hesaidNigeria

issupposedtofeedtheentireWest andCentralAfricanmarketsasnet exporter of petroleum product.

In his reaction, Mele Kyari, group managing director, Nigerian National Petroleum Corporation (NNPC), said the NNPC would complement Dangote Refinery to make Nigeria net exporter of petroleum products to the West African market. This, he said,cannotbeachievedunlessall thestakeholdersinboththepublic and private sector complement each other.

… LDR 18.9 point lower than 80% maximum prescription in August … Currency in circulation rise to N2.02trn deposit and maximum lending rates

House Committee on Works, Lands, Housing and Urban Development.

DIPO OLADEHINDE

I

nvestors and industry players will be keeping an eagle eye on what seems to be a conundrum on the future of Nigeria’s oil industry as recently passed Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Bill 2019 brings short time benefits and long-time uncertainties.

Nigeria’s deepwater output has grown from nothing at the beginning of the century to 780,000bpd in 2019, a significant chunk of Nigeria’s roughly 2 million bpd of total production.

While the amendment Deep Offshore and Inland Basin Production Sharing Contract Bill (DOIBPSC) is expected to increase government oil revenue, however it is also likely expected to increase cost of oil and gas companies operating under PSC

FG pledge to support Dangote Refinery with crude oil, gas OLUSOLA BELLO

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heFederalGovernmentsays it will support the Dangote Refinery and PetroChemical Company with feedstocks when the project is completed.

Timipre Sylva, minister of state for petroleum resources, made this pledgewhenhevisitedtherefinery at Ibeju, Lekki, Lagos, on Sunday.

The minister, who described the project as the most impressive ever embarked upon by a Nige-

Banks’ deposits at CBN decline by 18.4% in Q3 HOPE MOSES-ASHIKE

D

eposits of banks declined by 18.4 percent, leading to a decline of 12.1 percent of total deposits at the Central Bank of Nigeria (CBN), which amounted to N14.08 trillion at the end of August 2019.

The regulator had for the second time this year increased deposit money banks’ portion of minimum loanable deposits to 65 percent in October.

Banks’ loans-to-deposit ratio stood at 61.1 percent in August, which was 3.5 percentage points higher than the level at the end of June 2019, but 18.9 percentage points lower than the prescribed maximum of 80.0 percent.

The Federal Government and the private sector’s deposit also declined by 9.3 percent and 5.8 percent, respectively, at the end of August, according to the economic report for the third quarter of 2019 released weekend by the CBN. The share of the Federal Government from the total deposits at the CBN (N14.08trn) was 44.3 percent, while the shares of banks and the private sector were 35.2 percent and 20.5 percent, respectively.

According to the report, reserve money fell by 13.7 percent to N6.97 trillion at the end of August 2019, in contrast to the increase of 11.6 per cent at the end of June 2018. The development reflected the fall in banks’ deposits with the CBN. Currency-in-circulation (CIC) at the end of August 2019, rose by 0.1 per cent to N2.02 trillion, in contrast to the decline of 7.3 percent at the end of June 2019. The development, relative to the preceding quarter, reflected, mainly, the increase in its currency outside banks and demand deposit components.

Banks’ credit to the domestic economy stood at N21.81 trillion at the end of August 2019, which represented an increase of 3.5 per cent,

compared with the level at end-June 2019. The development reflected, largely, the 3.7 percent and 3.4 percent rise in claims on the Federal Government and the private sector, respectively, in the review period.

Total assets and liabilities of commercial banks stood at N39.58 trillion at the end of August 2019, representing a 0.1 percent fall below the level at end-June 2019.

Funds were sourced, largely, from increased foreign liabilities, realisation of foreign assets and reduction of claims on the CBN. The funds were used, mainly, to reduce unclassified liabilities, settlement of time savings and foreign currency deposits and increased claims on the private sector.

Total specified liquid assets of the commercial banks was N13.78 trillion at the end of August 2019, representing 59.4 percent of the total current liabilities. At that level, the liquidity ratio was 5.5 percentage points and 29.4 percentage points above the level at the end of June 2019 and the stipulated minimum ratio of 30.0 percent, respectively.

The report noted that developments in banks’ deposit and lending rates were mixed in the review quarter. With the exception of the 6-month deposit rate, which rose by 0.04 percentage point to 10.26 per cent, all other deposit rates of various maturities fell from a range of 3.68 – 10.37 per cent in the preceding quarter to 3.18 – 10.12 per cent in the third quarter of 2019.

The average term deposit rate fell by 0.28 percentage point to 8.45 percent in the third quarter of 2019, compared with 8.73 per cent in the second quarter of 2019, while the average savings deposit rate rose by 0.92 percentage point to 5.27 per cent at end-September 2019. The average maximum lending rate was 31.05 per cent, while the average prime lending rate stood at 15.55 per cent at end-September 2019.

Consequently, the spread between the weighted average term www.businessday.ng

news

Oando management members receive recognitions

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n addition to recording a profit in its Q3 financials in October, Oando’s management has received recognition from various reputable institutions in Nigeria.

Among these are the chairman, Oando plc, Oba Michael Adedotun Aremu Gbadebo, Alake of Egba land; Ayotola Jagun, the company’s chief compliance and company secretary, and Anthony Sawyer, general manager, operations, Oando Energy Resources.

These recognitions are proof that Oando is being managed by reputable professionals with years of industry experience.

Oba Gbadebo received an investiture as a Fellow of the Nigerian Institute of Directors (IoD) at the institute’s 2019 Fellows Investiture Night. He sits on the board of notable organisations, including Oando plc, Global Haulage Resources Limited, Dolphin Travels, among others.

He was appointed as a nonExecutive Director of Oando since April 2006, and has led the company through major milestones including the company’s acquisition of five drilling rigs between 2007 to 2009; the construction of major pipeline projects through its midstream subsidiary; the completion of a reverse takeover of Exile Resources to become Oando Energy Resources in 2012; the landmark acquisition of ConocoPhillips Nigeria and the divestment of its downstream and midstream naira earning businesses.

IoD Nigeria is an affiliate of the IoD UK, which was founded in London in 1903 and granted a Royal Charter by King Edward VII in 1906. Some Nigerian members of the IoD UK formed IoD Nigeria in Lagos in 1983. In 1997, the

widened by 0.29 percentage point to 22.60 percentage points at the end of September 2019. Similarly, the margin between the average savings deposit and maximum lending rates widened by 0.01 percentage point to 27.12 percentage points in the review quarter.

The Nigerian Institute of Chartered Arbitrators (NICArb) meets with the Governor, Enugu State, Ifeanyi Ugwuanyi The Nigerian Institute of Chartered Arbitrators (NICArb) representatives led by one of its Vice President, and Governing Council member, Dr. Michael Ajogwu SAN, FCArb, in company of the Registrar, and Chief Executive Officer, Mrs. Shola OshodiJohn FCArb, and an executive delegation from NICArb, Enugu Branch had a meeting with the Governor, Ifeanyi Ugwuanyi to discuss the development of Arbitration (and Alternative Dispute Resolution [ADR]) as a sustainable medium for Dispute Resolution in Enugu State and across the Eastern region.

The Registrar addressed the Governor’s commitment to promoting Alternative Dispute Resolution (ADR) and peaceful co-existence in the State. The Governor supported the establishment of the Multi-Door Court House in Enugu State, and has been instrumental in ensuring the resolution of age-long disputes, including the Oruku and Umuode crises, which came to a halt with the intervention of the Governor. The Governor is reputed for being the chief promoter of peace in the State and across Nigeria.

The Governor, who hosted the NICArb delegation, spoke about the fatherly role Dr. Michael Ajogwu, SAN, FCArb, plays in Enugu state, and further explained his further commitment to dispute resolution and peaceful co-existence and governance in the state. The Governor was accompanied by the Secretary to the State Government, Professor Simon Ortuanya and Honorable (Barr.) Chima Obieze, Chairman, https://www.facebook.com/businessdayng

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@Businessdayng

Council of the Institute, then a branch, sought autonomy and was granted affiliate status. Its Membership is drawn from Directors and Business Leaders in the public and private sectors and from a diversity of enterprises in commerce, industry, services, professions, bureaucracy, etc.

Jagun was inducted into a blue-ribbon council, in an advisory capacity to Executive Members of the Nigerian Bar Association Women’s forum and also served as a keynote speaker at the recently concluded Institute of Chartered Secretaries Lagos 2019 Conference where she holds the prestigious title of a Fellow.

When asked how she felt about being a council member of theNBA,shesaid,“Iamhumbled and honoured by opportunity to serve women at the Bar and Bench by advocating on causes that impact on their position, well-being and progress in their chosen profession. I believe that Women in the legal profession are best positioned to address the issues of injustice, sexual violence against women and children and gender inequality in the wider society and to accelerate the change that the United Nations in SDG 5: Gender Equality, recognises as a key global goal in addressing the waste of the world’s human potential . This can only happen when female lawyers and judges are empowered within the legal profession and government institutions and are given the opportunity to occupy influential positions at the bar and bench that enable them to make changes to discriminatory laws and practices.”

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news

Prioritising HIV, mental health in workplace solutions advocated by experts ANTHONIA OBOKOH

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xperts have suggested that prioritising Human Immunodeficiency Virus (HIV) and mental health in the workplace is obtainable for employers as way of dealing with the rising burden of cases in Nigeria.

They suggest Employee Assistance Programme (EAP) as an intervention in delivering emotional wellness service to employers in corporate organisation.

Nigeria population is estimated at over 200 million people. According to the Nigeria’s HIV/AIDs indicator and impact survey (NAIIS) reports published in March 2019, about 1.9 million of the country’s population now live with HIV. The statistics mean Nigeria has dropped to fourth position on the global HIV prevalence ranking.

“HIV/AIDS is a very dangerous situation, but we have been able to control the level today, but we need to sustain that advantage,” said Musa Shaibu, chairman executive committee, Nigerian Business Coalition Against AIDS (NiBUCAA) at annual NiBUCAA roundtable meeting in partnership with Medbury Medical Service held recently

in Lagos.

According to Shaibu, this round table meeting is a platform for stakeholders and health experts to take actionable steps towards achieving good health and wellbeing, especially as regard the workplace and their host communities.

“This year’s theme which is prioritising HIV, mental health in the workplace is geared towards psycho social support and the importance Employee Assistance Programme as regards employees with these health issues and what is obtainable for employers in the workplace as regard HIV and AIDs,” he said.

Mental health is an area that is not frequently discussed and people are shy of discussing it, people run away from it and we know that for productivity we must target the work place, Shaibu further said.

However, according to the World Health Organisation (WHO), mental health is a state of wellbeing in which the individual realises his or her abilities, can cope with the normal stresses of life, can work productively and fruitfully, and can make a contribution to his or her community.

Promosalons Nigeria leads country’s business delegation to construction trade show in France SEGUN ADAMS

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romosalons Nigeria, the exclusive official representative of Promosalons France in Nigeria, is organising a local business delegation including the Nigerian Institute of Architects Lagos chapter, to participate in the 2019 Le mondial du batiment, a construction industry trade show in Paris.

The two-yearly event holds from November 4 – 8, and is the leading international trade show and conference for the architecture, building and construction sectors.

“For the construction industry, Le mondial du bâtiment is the ideal place to meet, do business and understand trends,” said Akin Akinbola, managing director/ CEO, Promosalons Nigeria.

The building, housing and urban planning are evolving rapidly and play an essential role in the well-being of residents and in supporting new lifestyles and consumption modes through ever-greater flexibility, accessibility, adaptability, Akinbola said.

As a result, the trade show will be a great opportunity to meet foreign companies looking for partners in Nigeria, he said.

Le mondial du bâtiment comprises of three shows – Batimat, the leading show for innovations in construction and architecture, and Idéobain, a specialist bathroom materials and equipment trade show, showcasing the latest trends in style and design from across the sector.

The third, Interclima, is a specialist show for technical

equipment to create more comfortable and cost-efficient buildings.

Le mondial du batiment trade show is split into six clearly defined trades to facilitate participants visit and help them find exhibitors.

The parts are materials and solutions, Indoor fittings, outdoor fittings, joinery and closures, worksite equipment and tools, structures and envelope.

However, Construction Tech and Offsite will be two new sectors in this year’s event, according to Promosalons Nigeria.

Batimat, Ideobain, and interclimat will be presenting 140 innovation entries at this year 2019 innovation awards that construction industry professionals will be able to discover and use to their advantage.

Umah Fitzgerald, chairman, Nigerian Institute of Architects Lagos chapter, is also expected to give a presentation at the event, speaking on the theme: Architecture and construction in a growing economy-case study of Nigeria.

Nigerian businesses at the event will include Nigeria Fembosco Engineering, Contemporary Architecture, Interstate Architects, Elalan Construction Co., Consol Associates, Hefsiba Venture International, Ak Construction, Mega Home Nigeria, Silk Plaster Nigeria, Accord Engineering, Hilti Nigeria, Archcon Nigeria, Urban Shelter Properties, Big Joe Interior Design and Brickhouse Construction Co. www.businessday.ng

L-R: Akinkunmi Akinwunmi, lead partner, Paragon Advisors; Sucex Bright Ibeh, founder, Ayles Africa; Simeon Oyakhilome Okoduwa, partner, Alliance Law Firm; Shola Oshodi-John, registrar/CEO, Nigerian Institute of Chartered Arbitrators (NICArb); Michael Olugbenga Sile, head, intel and communications, Taxaide, and Senator Ihenyen, lead partner, Infusion Lawyers, at the BusinessDay-NICArb breakfast roundtable on The African Continental Free-Trade Agreement in Lagos.

Pic by Olawale Amoo

We’ve stopped fuel tankers from moving above 33,000 litres by road - DPR Olusola Bello & Oladehinde Dipo

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epartment of Petroleum Resources (DPR) has stopped the distribution of over 33,000 litres of petroleum products by road, in a move to prevent the continuation of fatal accidents involving fuel tankers that have been witnessed recently in parts of Nigeria.

According to DPR’s Lagos Zonal Operations Controller Wole Akinyosoye, the regulator would make sure that the maximum limit of 33,000 litres is enforced, while also noting that petroleum products were transported via road due to the inadequacy of pipelines built for the purpose of conveying fuel.

“Many of the roads were constructed to have a maximum carrying capacity of 30 tonnes (about 33,000 litres).

The Nigerian law only allows for 33,000 litres to be loaded out of the depots. Today, we have 60,000 litres, 45,000 litres and sometimes 90,000 litres loaded out of the depots,” Akinyosoye said at the zone’s 2019 Annual General Meeting in Lagos.

In Nigeria, tanker accident is a perennial problem, with approximately 95percent of Nigeria’s petroleum product being distributed by road. Losses from tanker crashes in the country have been estimated at about N7billion annually, besides the loss of human lives.

Akinyosoye admitted that DPR is culpable in these circumstances, but noted that

“the department has taken a decision because of what has been happening in the last two to three months that we have to enforce the maximum limit, which is 33,000 litres, on our roads.”

Within January to October this year, about 42 cases of road traffic crashes involving tankers have been recorded along the Lagos - Ogun axis. One of such incidents that took place in Onitsha, Anambra State last month led to the loss of lives, including a woman and her children who were burnt beyond recognition.

DPR incident investigation reports on road transport accidents often identified human factor as the root cause, or as remote, immediate or contributory causes of accidents.

Ahmed Shakur, the acting Director of the DPR added that the agency would ensure that safety returned to the roads again and petroleum products adequately distributed.

“We are liaising with relevant government agencies including the FRSC, federal and state fire service departments and relevant associations on solutions, including scheduling of tanker truck movement, provision of fast and efficient towing services,” Shakur said.

The statistics of tanker crashes in Lagos alone is worrisome with the Lagos Sector Commander, Federal Road Safety Commission (FRSC), Hyginus Omeje, disclosing that Lagos had already surpassed the 302 figure of tanker crashes recorded in 2018.

Mindshift Advocacy reinstates commitment World Savings Day: Polaris Bank charge pupils on savings culture to recreate Nigerian narrative Modestus Anaesoronye

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indshift Advocacy for Development Initiative, a movement established to persuade Nigerians and indeed Africans to foster a new mindset to engender rapid development, has restated its commitment to stay the cause. The Advocacy Group, presented to the public recently by the promoters, unveiled a new blueprint to get Nigerians to think differently, believe differently and act differently, so as to generate a mindset geared towards development.

Joko Okupe, founder and board of trustee member, said, “The bane of Nigeria and by extension Africa’s problems is the mindset of Africans as individuals, communities and nations, about themselves and the mindset of the rest of the world about Africa. The wrong mindset of Nigerians and Africans in general which influences the way we do things, has created problems such as lack of visionary and purposeful leadership, bad governance standards, erosion

and loss of good value systems, corruption, poor understanding of global issues and how it impacts their lives; unprecedented never-ending poverty, heavy debt burdens, over dependence on international aids, endless conflicts, inadequate education etc.”

According to Okupe, the Initiative was incorporated on November 28, 2016 as a nonpartisan, non-governmental organization aimed at re-directing citizens’ mindsets from negative mindsets in private lives, societies and nations to positive mindsets that foster meaningful holistic personal, social and national development. The initiative also seeks to activate a radical and positive change in the mindset of the Nigerian youth – and by extension, African youth.

The Mindshift Advocacy is actually focused on shifting mindsets from negative to positive.

“The movement is focused on redirecting the mindset of Nigerians from negative, unproductive and unprogressive mindsets to positive, productive and progressive mindsets.”

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olaris Bank last Thursday joined the rest of the world to celebrate the World Savings Day with students of Government Secondary School, HeiRayfield in Jos, Plateau State, and 30 other schools across Nigeria.

The World Savings Day was first celebrated on October 31, 1924, and since then, the global community has devoted October 31 of every year to the promotion of savings culture all over the World.

Tokunbo Abiru, managing director/CEO of Polaris Bank, as part of activities of the bank to mark the occasion, stressed the need for Nigerian students to cultivate the habit of growing their finances through regular savings.

According to Abiru, this can be achieved by carefully and constantly monitoring discretionary spending habits and building a realistic budget that distinguishes between needs and wants.

He said, “Money is never enough, that is the truth. You must deliberately decide to save money which means that saving is intentional. You must learn @Businessdayng

how to save 10 percent of your pocket money and save towards a specific purpose.

“Money saved should be placed in a financial institution for safekeeping and earn interest on your money. This reduces the risk of spending, theft and gives your money the chance to grow.”

The managing director, who was represented by the bank’s group head, North Central, Olayinka Obikanye, listed some of the ways through which the students can realize financial independence; making use of their skills, being an entrepreneur, creating their own budget, forming a savings club in their school; as well as opening their own bank accounts.

Commenting further while fielding questions after the lecture on why the Bank decided to organise the financial literacy lecture for the students, the Managing Director added: “Every school is actually worth going to but at the end of the day, you still have to focus on a particular location.

And that is why this Government Secondary School, Hei- Rayfield was chosen.

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news More uncertainties stare at Nigeria as biggest global economies contract STEPHEN ONYEKWELU

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L-R: John Gbassa, CEO/MD, WAO Global Trading Ltd; Koji Shirotani, divisional manager, sub-Saharan Africa Business Development Division; Afolasade Alonge, divisional head, corporate and specialised banking, Heritage Bank plc; Masafumi Tanimoto, general manager, Accra Liason Office; Tsuyoshi Ueda, assistant managing director; Jude Monye, executive director, Heritage Bank; Olugbenga Awe, divisional head, Agric Finance and Export, and Takuya Yamamoto, general manager, Middle East & Africa, Sumitomo Corporation, during discussion between Heritage Bank and Sumitomo Corporation on mechanisation & agric business held at bank’s head office.

Saudi’s $2bn deal offers FDI lessons for Nigeria ISAAC ANYAOGU

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audi Arabia has signed deals worth over $2 billion from the Future of Investment Initiative (FII) summit in Riyadh, offering Nigeria, attending the event to seek foreign capital, useful lessons in the kinds of reforms that attract investment dollars.

Investors are flocking to the Arab country almost twice Nigeria’s economy though with less than a quarter of Nigeria’s population, for several reasons key among which is its market size, state capacity and a willingness to undertake necessary reforms, analysts say.

After the FII summit, Saudi Aramco, the kingdom’s national oil company, signed a $1 billion deal with Tubacex Group to invest in CRA pipe threading and weld overlay and cladding manufacturing facilities in the kingdom,

according to a government statement.

It also reached an agreement worth $230 million with Baker Hughes on investment and development of artificial intelligence and digital transformation, an MoU for a joint venture with APQ valued at $600 million and a $200 million deal with Dassault Systems aimed at collaborating on data analytics, project management and smart cities.

Foreign direct investment into Saudi Arabia has been almost steady at around $4 billion annually over the last two years. This is significantly lower than countries with similar population like Morocco (around eight times the figure) and Malaysia (around 10 times the figure), yet far better than Nigeria’s $2.2 billion last year.

A World Bank study found that political stability, security and regulatory environment are leading factors for

decisions to invest in developing countries. Equally important is the size of a market which can help spread upfront overhead costs such as gathering information about the host country and making the right legal arrangements thus allowing investors to exploit economies of scale.

With a huge market of $700 billion against Nigeria’s $400 billion, the scales are tipped in Saudi Arabia’s favour. However, the Arabian country offers investors lower taxes (20 percent corporate income tax). Even with vast oil wealth, it is keen to diversify its economy and has kept government efficient by cutting subsidies.

Saudi Arabia has Islam’s holy sites and the Umrah and Hajj visas are free but these pilgrimages bring in around $12 billion in revenues. With over 1.7 million expected yearly, hotel, transportation and other costs for travellers help drive a religious tourism

sector boosting the country’s total GDP by 7 percent.

Apart from electricity and fuel subsidies, Saudi Arabia had 50 percent subsidy applied to port services, passport fees, car driving licence fees, car transfer fees, traffic fines and renewal of residence permits for domestic workers. The country began phasing out these subsidies in 2016 after oil prices crashed to less than $30 a barrel and these reforms have made government processes efficient.

But Nigeria further undermines its ability to compete by subsidising petrol to the tune of over $3.9 billion yearly. It has kept electricity tariff at a rate that does not guarantee commercial returns and has had to pay out over $5 billion as bailouts since 2014, according to BusinessDay calculations.

•Continues online at www.businessday.ng

Nigerian ports ease of business worsens …as 5,000TEUs of abandoned containers pile up …80% owned by government as congestion delays ship turnaround AMAKA ANAGOR-EWUZIE

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ver 5,000 twenty-foot equivalent units (TEUs) of overtime and abandoned containers are piled up in Apapa, Tin-Can Island and Onne Ports, jeopardising the expected gains of the Federal Government’s Ease of Doing Business policy.

Also, another 1,179 used vehicles including scraps and movable vehicles are currently trapped at the port terminals located in Lagos.

Overtime cargoes are containers, vehicles and

other kinds of imports that have spent up to 90 days (three months) and more in the port without the owners claiming them. Nigerian ports today harbour many containers and vehicles that have spent between 90 and 4,000 days.

Given the development, vessels with laden containers, which ordinarily should seamlessly discharge their consignments without delay, are beginning to wait for days to gain access into the ports to berth.

Apart from slowing ship turnaround time, the situa-

tion has also succeeded in stalling the 48-hour cargo clearance policy of the Federal Government and has also impacted negatively on the volume of cargoes that can be handled in Onne and Apapa Ports.

BusinessDay findings show that over 80 percent of overtime cargoes at the nation’s ports are owned by government agencies involved in various kinds of projects, like independent power and infrastructure projects, across the country.

In Onne Container Terminal, Nigeria’s third-busi-

est seaport after Apapa and Tin-Can Island Ports, ships now stay more than 10 days before they can have access into Onne port to discharge laden containers due to lack of space to discharge vessels.

Funmilayo Olotu, port manager of Lagos Port Complex (LPC), said at a recent stakeholders’ meeting in Apapa that the piling up of overtime cargoes has been one of the major challenges facing users of port services.

•Continues online at www.businessday.ng

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igeria’s darkening economic fortunes, due to policies that are impairing the growth of free markets, may be worsened as a result of the weakness of international trade, persistent global uncertainties and slowing demand for crude oil.

Gross domestic product (GDP) in China, the world’s biggest importer of crude oil, expanded by 6 percent in the third quarter, the weakest growth rate in roughly three decades. A slower economic growth rate in China means demand for oil will also decrease, dragging oil prices down with it. A scenario that means Nigeria, Africa’s biggest exporter of crude oil, may experience a sharp drop in its foreign exchange earnings and will consequently have limited capacity to continue defending the naira.

Signs of slowing economic growth are also showing up in Germany, Europe’s biggest economy, and in the United States of America, the world’s largest economy. In Germany, the manufacturing sector seems to be stuck

in negative territory. The IHS Markit/BME Germany Manufacturing purchasing managers index (PMI) showed a slight uptick in October to 41.9, up from 41.7 in September, but below market expectations of 42. Anything below 50 is considered a contraction in activity. The number for September was the worst reading since the financial crisis.

“Hopes of a return to growth in Germany in the final quarter have been somewhat dashed,” Phil Smith, an economist at IHS Markit, which produced the PMI data, told Bloomberg.

In the US, business equipment declined for a second consecutive month in September. Caterpillar made news recently when it reported disappointing thirdquarter figures and cut its full-year profit forecast. The equipment manufacturer is viewed as somewhat of a proxy for industrial activity. Caterpillar said that its earnings would take a hit as major companies hold off on equipment purchases due to concerns about the health of the global economy.

•Continues online at www.businessday.ng

CBN’s rules yield fruit as banks’ loans hit 5-year high BALA AUGIE

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he Central Bank of Nigeria’s directive aimed at accelerating growth in Africa’s largest economy is yielding fruit as the largest listed banks have started turning on the tap on lending to the economy as loans to customers have hit five-year high.

The CBN had in July asked banks to lend a minimum of 60 percent of their customer deposits in its bid to boost lending to the real sector of the Nigerian economy, and further raised the minimum Loan-Deposit Ratio for banks to 65 percent for a December deadline.

Analysts say the LDR policy of the CBN has continued to increase banks’ credit to the private sector.

The 11 largest banks in Nigeria reported N15.01 trillion of loans and advances to customers in the first nine months, which is 16.06 percent higher than the N12.93 trillion recorded in the corresponding period of last year.

A cursory examination of their books shows that in 2018/17, cumulative loans increased by 3.81 percent to N12.93 trillion, but fell by 3.81 percent to N12.07 trillion in 2017/16 when they took packed money in government securities that offered attractive yields.

@Businessdayng

Furthermore, loans increased by 14.84 percent to N11.94 trillion in 2016/2015, a year after the banks had made money from foreign exchange gains, thanks to the devaluation of the currency by the regulatory authority.

The new rules have helped buoy the nominal interest credit to the economy and lenders will continue to extend credit to the real sector, said Ayodele Akinwunmi, equity research analyst at FSDH Merchant Bank Ltd. “But you need to adjust for inflation to know whether they have increased from a year ago. Is it growing in real terms? Of course, the amount of money in the financial system is increasing, and we have to take into cognisance credit to GDP,” said Akinwumi.

Banking sector’s credit to private sector rose by 2.61 percent to N25.47 trillion in September, from N24.82 trillion in August, setting a new record for the year, according to The Money and Credit Statistics by the CBN. The statistics also revealed that the banking sector’s credit to the private sector was N22.9 trillion in January. It increased to N24.2 trillion in February.

The figure dropped marginally to N23.99 trillion in March and increased by 3.72 percent to N24.88 trillion in April.

•Continues online at www.businessday.ng

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news CBN’s Q3 economic report: The good, bad and ugly LOLADE AKINMURELE & MICHAEL ANI

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he Central Bank of Nigeria (CBN) on Friday published its economic report for the third quarter of 2019 and we have highlighted key economic developments in that period.

Nigeria’s non-oil revenue outperforms oil for the first time since 2016.

For the first time since the economic recession in 2016, Nigeria generated more revenue from non-oil sources than it did from oil.

The CBN’s economic report showed that revenue generated from non-oil sources not only jumped by 28 percent to N1.36 trillion in the third quarter of 2019 from N1.06 trillion generated in the previous quarter, but edged the N1.34 trillion got from the sales of crude oil in the same period.

The last time non-oil revenue outpaced oil revenue was in 2016, when lower crude oil prices and militant attacks that crimped output saw petrodollars fall behind non-oil revenue from corporate tax to Value Added Tax (VAT) and Customs and Excise duties.

At the time, oil prices traded as low as $28 per barrel at some point but would go on to average $38 per barrel for the year, while production touched a record-low of 1.2 million barrels daily.

So when non-oil revenue topped its oil counterpart in the fourth quarter of 2016, it owed more to the decline in oil revenue than the stellar performance of non-oil revenue.

This time, however, is different. Oil prices averaged $65 per barrel in the third quarter, according to the CBN’s estimate, while daily production averaged 1.9 million barrels.

Yet, non-oil revenue was the star performer thanks to a strong surge in corporate taxes which must have come as a relief to the Federal Inland Revenue Service (FIRS), the body charged with tax collection.

Corporate Income Tax outperforms budget According to CBN data, the Federal Government earned N358 billion in Corporate Income Tax (CIT) in the third quarter of 2019, the highest for the year and almost double the average CIT (N169.5 billion) collected in the first and second quarters.

Given the harsh economic realities currently, analysts assume that the driver of the significant uptick in CIT is a wider tax net which means there are more companies paying tax.

Babatunde Fowler, the country’s chief tax collector, said in October that the taxpayers’ net widened 11 percent to 20 million in 2018 from 18 million the prior year.

Fowler said N5.32 trillion ($17.39 billion) was collected in taxes in 2018 and his office was targeting N8.9 trillion this year.

He said the increase was possible because the number of taxpayers was expected to jump to around 45 million this year from 20 million in 2018. That was largely due to the inclusion of people identified in a tax amnesty that ended this year. For a country struggling with weak revenues, the uptick in corporate taxes comes as a big boost for the cash-strapped government.

The government has turned its attention to the taxman to prop up underperforming revenues.

A low tax-to-GDP ratio of 6 percent always leaves room for growth in tax receipts.

A raft of schemes targeted at boosting taxes has since been unveiled by the government but with subdued impact. The Voluntary Assets and Income Declaration Scheme (VAIDS) is one of such schemes aimed at capturing more taxpayers.

The scheme was billed to fetch some N360 billion but has only raised less than 10 percent – N30 billion – since its 2017 launch.

FG’s retained revenue hits 2019 high but stuck below budget The Federal Government’s revenue hit a new high in the third quarter.

CBN data showed the Federal Government’s retained revenue for the third quarter of 2019 amounted to N1.03 trillion, an increase of 8.7 percent from the preceding quarter but a decline of 0.8 percent compared to the third quarter of 2018.

The FG’s retained revenue was, however, below the quarterly budget by 51.5 percent.

The trend of lower-thanbudgeted revenue is becoming a mainstay of the Nigerian government for some time now.

Despite failing to meet the target in each of the past four attempts, the Federal Government has continued to raise revenue targets to the bewilderment of some analysts.

In 2019, for example, the government expected to earn N7 trillion in revenues, but in the first half of the year has only managed N2.9 trillion which is 30 percent less than the prorate estimate for the period.

•Continues online at www.businessday.ng www.businessday.ng

L-R: Tosin Adefeko, member, conference planning group, WIMBIZ; Ijeoma Taylaur, member, executive council, WIMBIZ; Olubunmi Aboderin-Talabi, chairperson, executive council, WIMBIZ; Adebisi Adeyemi, member, executive council, WIMBIZ, and Audrey Joe-Ezigbo, member, executive council, WIMBIZ, at the press conference to announce the forthcoming 18th annual conference

by Women in Management, Business and Public Service (WIMBIZ) scheduled to hold November 7 - 8, 2019, in Lagos.

Bigi assault: How a little-known photographer ...

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market.

Rite Foods, makers of Bigi Cola, made entry into the Nigerian market in 2016, at a time when the country was battling with economic recession which left most consumers cashstrapped.

Leveraging more volume at a lower price, Rite Foods introduced six flavours of Bigi drinks – Cola, Orange, Tropical, Apple, Bitter Lemon & Lemon, and Lime – into the market. In 2017, it made an entry into the energy drink s egment w ith Fearless Classic and Fearless Redberry.

It also has a world-class factory located at Osasa Ijebu in Ogun State.

From photography to drinks Rite Foods Limited was founded by billionaire businessman, Adebola Adegunwa, of the popular Adebola House on Opebi, Ikeja. It is a subsidiary of Ess-Ay Holdings Limited, the parent company coordinating and consolidating all the companies in the Group, namely, Fototek Industries Limited; Photo Palace Limited, a photo lab that offers for sale photographic equipment and materials providing services from 33 branches across the country; Prints Specialty Ltd, a printing company that utilises sophisticated printing technology in the printing industry, and Top Communications Ltd. Adegunwa is also a former chairman of Sterling Bank plc.

From a humble beginning at Bola-Oguns Photo in Ebute-Meta, Lagos, he stepped up his game and became a big player in the photography business.

However, following the digital revolution in pho-

tography, Adegunwa decided to diversify into the Fast Moving Consumer Goods sector, which led to the birth of Rite Foods Limited.

The value pricing strategy To cover for the scarcity of forex during the economic recession in 2016, the two big players in the CSD market increased prices of their 50cl bottles to N150.

This did not go down well with millions of consumers who were battling with shrinking wallet.

After series of backlash from consumers, Pepsi introduced its much-publicised “Things I Long Throat For ” campaign with the introduction of a 60cl Pepsi bottle. The new product was 20 percent more than the previous Pepsi bottle and priced at just N100, giving consumers more value for their money.

The “long-throat” campaign also saw the signing of A-list artistes such as Wizkid and Tiwa Savage to help drive sales and gain significant traction on social media. This also saw the hashtag “long throat” trending on social media platforms like Twitter for weeks.

Having lost significant market share with sales plummeting, Coca-Cola responded with the release of its own 60cl pet bottle.

The company also unveiled the ‘Solo or Bigger Boy’ campaign, offering its customers a choice between the 60cl bottle at N150 and the 35cl bottle at N100. With massive advertising and publicity, Coke appeared to regain some ground.

Still basking in the euphoria of regained market share, Pepsi came up with a price reduction campaign tagged “No Shaking, Carry Go”, offering customers the 50cl Pepsi bottle at N100.

With no plans to slow down, Pepsi aggressively promoted this new offering across a

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few key markets.

This campaign received a lot of radio airtime as well as massive promotional activities across its key locations.

Coca-Cola launched its “Mama di Mama” campaign, unveiling the “Mama” 1-litre bottle at the retail price of N200.

A check on informal retail points, particularly hawkers in the energy-draining Lagos traffic and street kiosks, suggests stronger carriage of Bigi drinks than any other brand.

As one of the ‘4Ps’ of marketing (along with product, promotion, and place), pricing is a key tool in a marketer’s arsenal, despite arguably being the most effective lever for driving profits.

Brands often shy away from increasing prices within a competitive market so that customers don’t defect to cheaper brands and they lose volume sales and therefore market share.

In just three years, Bigi has built a reputation that threatens its competitors, forcing them to give more value (for less) than initially offered.

The Bigi drinks which come in different variants have garnered patronage from consumers, owing to the fact that the product comes in a bigger 600ml (60cl) PET plastic bottle and costs N100, forcing other competitors to also adjust their price range.

Mike Ikechukwu, a Lagos-based consumer analyst, said the look, feel and taste of Bigi drinks rival any mass-market competitors produced anywhere in the world.

“They are that good. In fact, one can argue Bigi drinks taste more like real juice as opposed to ‘flavoured carbonated water’ taste of its rivals,” Ikechukwu said.

He said the distribution strength of Rite Foods is also worthy of note.

“They held the West African distribution franchise for Agfa products, where @Businessdayng

they honed their pan-Nigeria distribution acumen.

Their foray into food sausage rolls first, and now beverages, is leveraging heavily on the pre-existing distribution infrastructure built decades before,” he said.

Also advantageous, it appears, is the fact that being owned and run by Nigerians, the managers of Bigi know how to “find their way” in the rugged Nigerian market better than their expatriate-led competitors.

Bigi also has the colour of the Nigerian flag printed on its bottles, thus appealing to the emotions of Nigerians as a made-in-Nigeria drink.

Not yet ‘uhuru’ for Bigi No doubt, the battle is not yet won as Coca-Cola is focusing its strategic energy on every other ready-to-drink beverage market asides soda.

These include fruit and vegetable juices, value-added dairy, flavoured waters, iced teas, ready-to-drink coffee and, maybe, even alcoholic cocktails.

Recent moves by the soft drink giant point to the fact that it is still in the race.

First is its acquisition of Chi Limited, the company with a near-monopoly in the package d juice and value-added dairy markets in Nigeria.

The other is its $600-million planned investment in Nigeria from 2017 through 2020 targeted at expanding its ex-soda businesses.

G o ing by it s histo r y, Coca-Cola is poised to win every foreseeable war in the near to mid-term future.

But if against all odds Big i p e rsi st s a s a “ h i n drance”, Coca-Cola has one strategic plan, a plan it has been forced to play on several occasions, which is to buy the Bigi drinks business off Rite Foods and incorporate Bigi into its drinks portfolio, thereby killing off the brand completely and strengthening its grip on the market.

How this would play out, only time would tell.

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abujacitybusiness Comprehensive coverage of Nation’s capital

FG launches national policy on culture, tourism soon

L-R, Otis Anyaeji, celebrant, Markus Dye, chairman, NSE Maitama Branch and Peter Ewesor, MD/CEO Nigerian Electricity Management Services Agency (NEMSA) during the 5th Nigerian Society of Engineers Maitama Branch Otis Anyaeji annual distinguished let held in Abuja.

Picture by Tunde Adeniyi.

Godsgift Onyedinefu, Abuja

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Human Trafficking: FCT Minister Co-opts NAPTIP into Security Committee James Kwen, Abuja

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s part of efforts to check human trafficking and allied crimes in the Federal Capital Territory (FCT), Minister in charge of the Territory, Muhammad Bello has co-opted the National Agency for the Prohibition of Trafficking in Persons (NAPTIP) into the FCT Security Committee.

Bello who announced this decision when NAPTIP Director-General, Julie Okah-Donli led a delegation of officials from the Agency on a courtesy visit to the FCT Administration, said this became necessary in view of the security challenge traf-

ficking in humans poses for the Territory.

He stressed that human trafficking involved criminal gangs which go hand in hand with drug pushers and other such crimes, hence the need to involve the institution in the FCT security architecture.

According to him, “once you see human traffickers, you see drug pushers and then you see commercial sex workers, you find out that it’s a clique that is intertwined and eventually it also transcend into criminality in form of pick pocketing, one chance and so on. All these are interrelated and that is why I feel that your organization can be coopted to serve in the FCT Security Committee”.

While commending NAPTIP for its fight against human trafficking, Bello assured officials of the Agency that there were many possible areas of cooperation between FCTA and NAPTIP and urged the Agency to work very closely with the Social Development Secretariat of the FCT. On the request by the NAPTIP to revoke the titles of buildings used for human trafficking, the Minister said “we will revoke titles. As a matter of fact, we will equally demolish properties because for every property there is a specific land use and I have checked and there is no place where it is written that a property should be used for trafficking”.

Also speaking, the FCT Minister of State, Ramatu Tijjani-Aliyu said that FCTA’s collaboration with NAPTIP will be fundamental in bringing about the needed sanity to the city and ridding the FCT of traffickers and their cohorts.

Earlier, the NAP TIP Boss called for a stronger partnership with the FCT Administration to push the campaign against human trafficking to all nooks and crannies of the FCT. She solicited for the assistance of the FCTA in the enforcement of the VAPP (Violence Against Persons Prohibition) Act 2015 which she disclosed is domiciled with NAPTIP but applicable only in the FCT.

he Minister of Information and Culture, Lai Mohammed said the Federal Government is set to launch the national policies on culture and tourism, in to put in place the necessary legal framework for the sectors.

Mohammed who stated this while speaking in Abuja on the proposed agenda for the culture and tourism sector for the next four years, said the Ministry will finalise work on the Motion Picture Council of Nigeria (MOPICON) Bill and submit it to the Federal Executive Council.

The plan, according to him is to create a proper regulatory environment for the sub-sector that has put Nigeria’s name on the global map and to attract the muchneeded investment to the

sector.

The Minister added that an endowment fund for the arts will be established for the financing of the sector while the Ministry will complete work on the establishment of Tourism Statistics and Tourism Satellite Account (TSA).

He highlighted some of the achievements in his last tenure as working to improve access to long-term, low-cost, financing for entrepreneurs and investors in the creative industry and the Information Technology Sectors.

“Under this initiative, you can get a loan ranging from 3 million Naira to 500 million Naira for movie production, movie distribution, fashion, music, etc. Pioneer status was also granted to the Creative Industry Sector by the Federal Government to boost investment in the sector”, Mohammed said.

FG, States, LGAs to clamp down on substandard schools James Kwen, Abuja

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he Minster of State for Educat i o n , C hu kw u e m e k a Nwaj i u b a said the Federal Government would work closely with the states and local government areas to close down substandard secondary schools in the country.

N w a j i u b a w h o s t a ted this in an interactive session with journalists in Abuja disclosed that the National Secondary Education Commission (NSEC), which is billed to take- off soon, is part of steps and institutional preparations towards the

clamp down on mushroom schools.

Ben Goong, Deputy Director of Press & Public Relations Unit in a statement on behalf of the Minister, said, the National Secondary Education Commission would work closely with relevant stakeholders to tighten the noose on operators of mushroom secondary schools.

He noted that as much as government is doing everything humanly possible to bring every child of school age on board, quality and standard must not be sacrificed on the platter of greed of operators of mushroom schools.

Armed Forces Day: Bello pledges support for Nigerian Legion James Kwen, Abuja

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he Federal Capital Territory (FCT) Minister, Muhammad Bello has pledged the continuous support of the FCT Administration to the Nigerian Legion.

Bello made this pledge when members of the Legion paid a courtesy visit to the FCTA and also to decorate him and other principal officers of the Administration with the year 2020 Armed Forces Remembrance Day emblem.

The Minister also commended members of the Nigerian military for their

contribution towards nation building including the creation of the FCT whose founding fathers were made up mostly of members of the Armed Forces.

He promised to work with members of the Nigerian Legion to support the families of members of the military who had paid the supreme price in the line of duty.

Bello expressed delight that members of the Legion posted to the FCTA are very hard working and often go beyond the call of duty in the discharge of their assignments.

He assured members of the Legion that FCTA’s donation for the Armed Forces www.businessday.ng

Remembrance Day will be paid promptly while all staff will be encouraged to wear the emblem at all times as a mark of respect for the nation’s fallen heroes.

Speaking earlier, the leader of the delegation and National Chairman of the Nigerian Legion, Brig.

Jones Akpa, a retired Brigadier General said the Legion was empowered by law to oversee the management of all welfare issues of veterans who have disengaged honourably from the Nigerian Armed Forces.

Akpa commended President Muhammadu Buhari for ensuring a predictable 30-day cycle of payment of pension to veterans thereby

removing a major impediment to their welfare and expressed the Legion’s appreciation to the FCTA for all the support rendered to it over the years.

FCT Minister of State calls for improved legislation to address urbanization The Federal Capital Territory ( FCT)), Minister of State, Ramatu Tijjani-Aliyu has called for improved legislation to address the challenges of urbanization, even as she noted that a very large proportion of the urban population in Africa and Asia lived in slums and squatter settlements without basic necessities of life.

Aliyu who made the call in Abuja during the com-

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memoration of the 2019 World Habitat Day and World Cities Day organised by the Federal Ministry of Works and Housing, also expressed concern over the alarming rate of urbanisation in Africa and Asia The Minister who was represented by the Director Housing, Satellite Towns Development Department (STDD), Usman Isyaku Bala commended the Federal Ministr y of Works and Housing for creating awareness to issues surrounding urbanization in Nigeria.

Aliyu maintained that the event was in accordance with the United Nations Human Settlements @Businessdayng

Programme (UN-Habitat), resolution to raise awareness, promote participation, generate knowledge and engage the internat i o na l c o m mu n i t y a n d other stakeholders on the issues sur rounding urbanization and sustainable urban development.

She noted that many urban towns in Nigeria need regeneration because urbanisation is taking place at different speeds in different continents globally, stressing that in Africa, the proportion of city dwellers is rising at an alarming proportion and it is predicted that the rate will likely reach 50 percent by 2025.

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news

Japan ups game at Lagos Trade Fair, seeks greater collaboration with Nigerian firms SEGUN ADAMS

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L-R: Ajayi Oladele, special adviser to Lagos State governor on commerce, industry, and cooperatives; Obafemi Hamzat, deputy governor, Lagos State; Mariam Katagum, minister of state for industry, trade and investment; Victor Osadolor, chief executive officer, UBA Africa, and Paul Ruwase, president, Lagos Chamber of Commerce and

Industry, at the opening ceremony of 2019 Lagos International Trade Fair at TBS in Lagos, at the weekend.

Pic by Olawale Amoo

Senate invites Emefiele over N163.8bn PIDF projects Solomon Ayado, Abuja

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overnor of Central Bank of Nigeria (CBN), Godwin Emefiele, is being invited by the Senate Committee on Finance to proffer valid explanations on the exchange rates the bank used for three key projects under the Presidential Infrastructure Development Fund (PIDF) that gulped N163.8 billion.

The projects are the LagosIbadan Expressway, Second Niger Bridge, Abuja-Kano Expressway, East-West Road, and the Mambilla Hydro Projects being funded by the Nigeria Sovereign Investment Authority (NSIA).

The invite by the Senate followed a revelation by the managing director of NSIA, Uche Orji, that the contracts for the projects were denominated in naira and CBN exchange rate for the disbursed fund was N325/ dollar instead of the official rate of N305.

According to Orji, NSIA in the third quarter of 2013 invested in critical sectors like healthcare, presidential fertilizer initiative, education, real estate, international financial instruments to the sum of $1 billion.

He further revealed that in 2018, the Federal Government injected $650 million for the PIDF from which N163.8 billion had so far been disbursed

NAIDP is being reviewed, not suspended - NADDC DG MIKE OCHONMA

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irector-general of the National Automobile Design and Development Council (NADDC), Aliyu Jelani, has assured local auto assemblers of the commitment of the Nigerian government towards pursuing the country’s National Automotive Industry Development Plan (NAIDP) to its long term and sustainable conclusion.

He made this known last week in Abuja when members of the Nigerian Automotive Manufacturers Association (NAMA) visited him in his office.

Jelani dismissed insinuations in some quarters that the automotive policy had been suspended. He explained that the Automotive Bill for legislation of NAIDP into law was being reviewed to make it more comprehensive, more engaging, robust and effective towards achieving sustainable growth and development of the automotive industry in Nigeria within the shortest possible time.

The director-general stated that the NADDC is in close

interactions with the presidency, the federal ministry of industry, trade and Investment, federal ministry of justice and collating inputs from other critical stakeholders towards fast-tracking the review process of the NAIDP Bill while the joint committees on industry at the National Assembly are eager to facilitate speedy passage of the bill, when re-presented.

He assured the NAMA members that the Federal Government was enormously excited about the auto industry, adding that everything was being done to complete the process of legislating the NAIDP into law so as to guarantee the confidence of investors.

Responding, Tokunbo Aromolaran, NAMA chairman, commended the various initiatives being spearheaded by NADDC, especially relating to the auto policy, vehicle finance scheme, local content, patronage of made-inNigeria vehicles, automotive test centres, auto industrial parks, pilot auto service hubs, mechatronics training and others. www.businessday.ng

for the three projects from approved N672.4 billion that was earmarked.

However, Senator Adeola insisted there was urgent need the CBN interface with the committee to avail the contract document of all the projects. The meeting is to hold on Monday, November 4.

“This committee will like to see the contract documents for these projects and why the exchange rate for the dollar to naira was at N325 to a dollar instead of the official rate of N305 in a government to government transaction for these key infrastructure projects.

“We are not indicting NSIA or conducting an investigation

or probe of CBN but we like to know the reason why this different rate was used,” Adeola stated.

The senator stressed further the need for more investment in diverse areas to grow the $1.5 billion Sovereign Wealth for its contributors which are the Federal Government, State Governments, Local Governments and FCT so as to reap the economic benefits.

Concurring with Adeola, Ayo Akinyelure (PDP, Ondo Central) stated that NSIA might have been shortchanged in the CBN transactions and that the rates explained the seeming slow progress, delay and noncompletion of the key projects.

WIMBIZ holds 18 annual conference November 7 SEGUN ADAMS

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omen in Management, Business and Public Service (WIMBIZ), a non-profit organisation that promotes greater representation of women in leadership, has announced November 7 and 8 for its 18 annual conference, where focus would be on taking the future and developing winning strategies for women.

The two-day conference takes place in November every year and is the flagship event of WIMBIZ, which attracted as many as 1,600 women in business, management and public service last year.

The event will hold at Eko Hotel & Suites, Victoria Island, Lagos and is themed “Shaping the Future: Strategising to Win.” At the conference, there will be practical sessions designed to equip the women with winning strategies and hands-on knowledge to take on new challenging roles, explore emerging business opportunities, as well as build and sustain a successful career in today’s fast-paced world, WIMBIZ said.

WIMBIZ 2019 will engage participants on relevant issues that speak to the times and the existing situation.

According to the organisers, delegates at the conference will learn how to develop winning strategies to secure their seat at the table, discover how to collaborate to win, and understand consumer behaviour.

They will also reach those who are not on the internet; overcome trauma and silence shame; rise above the imposter syndrome and much more through each of the six deep dives and seven plenary sessions, the organisation said.

The annual conference, in line with tradition, will be wrapped up with an engaging debate session closely trailed by its signature afterparty.

Preceding the annual conference on Day One, Thurs day, November 7, there will be the Networking Breakfast where participants will learn to make a stellar one-minute elevator pitch, and then be allowed to practice it while meeting at least 10 new people in a structured speed networking session.

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rivates companies in Nigeria can leverage international partnerships to accelerate growth in the domestic economy, Japan says, as it showcases products and services from 37 firms affiliated to the Asian country at the ongoing Lagos International Trade Fair.

Japan wants deeper trade and investment with Africa’s biggest market and has asked the private sector in both countries to exploit opportunities inherent in their relationship.

“The Nigerian government is trying but has its challenges.

However, private companies in Nigeria have sufficient buying power to collaborate with Japanese firms in improving the Nigerian market,” said Shigeyo Nishizawa, JETRO’s Trade Commissioner/managing director, at the trade fair at the weekend.

At the ongoing event where Japan is participating for the sixth time, Japanese agents and local distributors are exhibiting brands like Honda, Yamaha, Mitsubishi, Toyota, Isuzu and Suzuki, Canon, Sharp and Brother, Plascon Paint and Alteco adhesive.

Big names in the food and beverages industry like Briscoe Nigeria plc, Olam Sanyo Foods, Tomoe engineering, and Ajinomoto are also showcasing the quality and reliability of Japanese products.

The Japanese pavilion features financial services firms like Double Feather Partners, and IT companies with innovative products like SENRI, a sales automation system that helps

businesses achieve greater sales productivity by monitoring field staff, generating reports from the field, streamlining order process, route management, payment management and customer management.

The products offered at the trade fair have good reception and Nigerians are developing new applications, said Anothy Okpara, MD/CEO, Green Diamonds Limited, which makes UMA curry mix seasoning, a curry paste of Japanese origin already in many Nigerian kitchens.

The synergy between Japanese and Nigerian businesses is also making a social impact.

For instance, SATO is helping to make Nigeria open defecation free through its affordable, smart, plastic toilets that can be mounted over pit latrines to create more hygienic toilets.

Women are not left out of the event and there is a dedicated “Made in Japan, Made for Women” corner exhibiting products and services that help women access more fashionable and convenient items including cosmetics and hair wigs.

The fair offers Nigerians the opportunity to purchase authentic hair products like X-pression, made from raw materials supplied by Toyokalon, at affordable rates.

“Toyokalon, has for over a decade, been supplying us with the quality of materials we desire,” said Grace Ejikeme, marketing manager of Xpression. “Nigerians and Africans as a whole are satisfied with what we produce with their raw materials.”

Border closure: Threat to jobs in chemical sector - Labour JOSHUA BASSEY with agency report

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rganised labour under the aegis of National Union of Chemical Footwear Rubber Leather and Non-Metallic Products Employees (NUCFRLANMPE) says the recent border closure by the Federal Government is threatening the jobs of its members.

Goke Olatunji, NUCFRLANMPE president, who fielded questions from journalists after the union’s National Executive Council (NEC) meeting in Lagos, said chemical companies could no longer export goods to neighbouring countries. Nigeria’s land borders, including the busy Seme and Idiroko borders, linking the country and neighbouring Republic of Benin had been closed since August 22.

According to the government, the closure is aimed at checking the influx of smuggled goods, especially rice, small arms and ammunition, as well as illegal immigrants, to the country.

The chemical companies are threatening to lay off their workers as several goods have remained in the warehouse unsold as a result of the closure, Olatunji said, saying, ‘’Some of the member companies are already lamenting over the poor sale, because their products @Businessdayng

cannot be exported to neighbouring country.

“Companies such as Unilever cannot export Vaseline, Vitafoam and Moukaform are all affected. These companies can no longer sell to neighbouring countries.’’

He urged the government to put in place effective monitoring and control measures at the border to curb illicit importation and exportation of outlawed commodities, noting that total closure of the land borders without considering locally produced products meant to be exported to neighbouring countries should be reviewed.

“Nigeria economy cannot be better because of the land border closure. By closing land borders, some other sectors of the economy are suffering. If the options are weighed, it is for us to open the border while putting in place efficient and effective monitoring and controlling measures to curb prohibited commodities,’’ he said.

The NUCFRLANMPE president said laying off of more workers would further impoverish the people, increase insecurity and cause decline of membership, and for the economy to become better, there was the need to return to the basics such as mining, agriculture and manufacturing as these sectors needed serious attention.

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news Brickstone Africa tackles $108bn Africa’s infrastructure gap GBEMI FAMINU

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rickstone Africa has reiterated its commitment to help bridge $108 billion annual infrastructure gap in Africa. The company whose goal is to be Africa’s infrastructure catalyst has set up the Brickstone Dealcamp Series. As part of this programme, the Project Advisory and Asset Management firm has set up a training themed Project Finance Fundamentals for Infrapreneurs.

The training was designed to help, everyone developing large-scale projects, improve their knowledge of project and corporate finance principles in making deals happen.

Therefore, for infrapreneurs and project entrepreneurs developing infrastructure projects, Brickstone Africa, The training will hold in major African cities, including Abuja, Lagos, Port Harcourt and Accra.

The annual infrastructure deficit in Africa was estimated at $108 billion by the African Development Bank (AfDB) in its African Economic Outlook 2018. Thisinfrastructure

needs present an investment opportunity, especially for infrapreneurs – entrepreneurs or business owners who are typically in corporate business but now want to develop a new project. Although the public sector plays a leading role in major infrastructural developments, there is still a scope for private sector involvement, especially in the housing, power and transport sectors. Therefore, for infrapreneurs and entrepreneurs who would successfully navigate the project delivery process, there is need to develop their project finance capabilities.

Also, research has identified financial constraint and lack of requisite training as two of the main causes of delays and abandonment of project.

This partly explains why Nigeria leads the rest of Africa in the number of abandoned projects, with a survey by the Chartered Institute of Project Management of Nigeria valuing abandoned projects -- with regards to the structure(s) already on ground – in the country in excess of N12 trillion.

‘Organisations must address environmental, social, governance issues to achieve sustainable development’ KELECHI EWUZIE

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rofessionals in consulting, audit, tax and advisory services have highlighted the need for organisations to address environmental, social and governance (ESG) issues if they hope to contribute towards sustainable development.

They note that sustainability should be the paramount concern of both external and internal stakeholders.

Anthony Olukoju, chief operating officer, Deloitte West Africa, says the development of sustainable organisations by improving environmental and social performance has become a global challenge for businesses around the world and must be addressed.

Olukoju, while speaking at a breakfast session on Sustainability Reporting with the theme ‘Distilling Leading Practices in Sustainability Reporting’ organised

by Deloitte Nigeria recently, states that both external and internal stakeholders should place sustainability on their

priority list.

B o l a A d e e k o, h e a d , Shared Services Division, Nigerian Stock Exchange, in his keynote address, says mainstream sustainability reporting will require the effective engagement of key players, both locally and internationally.

Adeeko opines that the Sustainability Disclosure Guidelines of the Nigerian Stock Exchange is positioning sustainability reporting at the mainstream within the Nigerian business ecosystem.

According to Adeeko, “Reporting formats in smaller organisations may differ from the established practices of large companiesbutwemustrecognise and accept that we are all at different stages of the journey towards embeddingsustainabilityintoour respective organisations.”

The Sustainability Reporting session organised by Deloitte to share best practices with industry players included panel session which was facilitated by Bernard Orji, Partner and Deloitte West Africa Consumer Industry Leader.

Adeola Simon joins Brent Mortgage Bank as ED

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oard of Brent Mortgage Bank has announced the appointment of Adeola Simon as executive director, Credit AND Enterprise Risk Management. Simon joins Brent Mortgage Bank with a broad range of experience working at top financial institutions such as Suntrust Bank, J.P. Morgan Chase, and N.A. She has over 15 years of work experience, of which over 12 years have been in the banking sector. The newly appointed ED completed her undergraduate studies at Howard University, Washington DC. She graduated with a Bach-

elor of Sciences with honours (MAGMA CUYM LAUDE) in Biology. After a shift in focus to the banking sector, she enhanced her core competencies by completing her MBA at Kennesaw State University, Kennesaw, G.A. Her focus was on organisational leadership and management.

According to Simon, a focus on fostering client-centric environments will ultimately lead to establishing profitable business relationships. Simon has proven track record of success specifically in the areas of operations, risk management, and revenue management to mention a few.

L-R: Asif Sheikh, vice president, digital banking, CR2; Afolabi Oke, MD/CEO, Global Infoswift Limited, and Daniel Akumabor, country manager, Nigeria, CR2, at the Fintech revolution roundtable in Lagos, at the weekend.

Nigeria ranks least lucrative market for engineers in Africa BUNMI BAILEY

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igeria, Africa’s biggest economy, is ranked the least lucrative in terms of pay packages for both senior and junior engineers among countries surveyed, according to a survey by Timon Capital, early-stage investor in subSaharan Africa and think tank Briter Bridges.

The survey focuses on nearly 50 start-ups in Kenya, South Africa, Nigeria and Ghana. These countries were chosen based on the fact that they are often regarded as Africa’s most advanced markets for tech start-ups and ecosystems.

BusinessDay’s analysis of the data from the survey shows that on average, engineers in South Africa earn more than the rest, while Nigeria, despite being home to the continent’s most valuable start-up ecosystem, earns

the least.

“What they have analysed is no different from what is happening in the power industry. I want to tell you that engineers are one of the least paid. We are the mainstay of the society. You can imagine an engineer having been in the system for more than four years and is still earning below N120,000 despite how risky the system is,” Alfred Ategle, an electrical engineer, says.

Ategle says, “I don’t think there is a proper regulation in the engineering bodies that we have in Nigeria because if they are doing their work, they should have sat down and draft a salary scale for engineers. And also there is no proper structure laced down for companies and organisation to follow. And that is the reason why anyone can just draft out any salary for us.”

According to the survey, on an average, a senior engineer in South Africa, Kenya, Ghana, and Nigeria earns $76,666,

$32,222, $27,083, and $18,636, respectively.

Also, a junior engineer in Nigeria, Ghana, Kenya and South Africa earns $12,727, $16,666, $18,888 and $55,714, respectively.

Ayokunmi Kunle-Salami, an information and technology engineer at Cowry Asset Management Limited, says, “I still feel that we are getting very underpaid. In Nigeria, they are pricing you based on your skills and what you can offer, but you cannot compare it to Canada or South Africa where they price you high because they know the value of engineering in their system.”

According to a research paper by Leah Siczkar titled “The Importance of Engineering to the Society, engineers aim to benefit the people of the present by employing effective structures that are intended to improve transportation and living habits of earth’s inhabitants. By extension, it is planning for the continual growth

of the human population and ensuring there are sufficient resources for the people of the future. The role of the engineer is to protect the environment and the people within it.

The smaller pay packages on offer for Nigerian engineers has also fuelled a growing brain drain over the past year: with local start-ups unable to match higher salary packages elsewhere, local engineers have increasingly resorted to moving abroad given better career prospects.

Ayodeji Ebo, MD, Afrinvest Securities Limited, notes that the rumination system in Nigeria is faulty and as a result people are moving to where they are most suited and appreciated. “Based on the current challenges in the Nigerian structure, the very good opportunities are not enormous. And Nigerians don’t understand the value engineering brings and they are not willing to pay enough for their services,” he says.

Time is now to invest in Africa, African SMEs, Elumelu tells global investors in Paris

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ounder of Tony Elumelu Foundation (TEF) and chairman, United Bank for Africa (UBA) and Heirs Holdings, Tony Elumelu, opened the ‘ambition Africa” conference organised by the France Invest Africa Club in Paris, France.

As Elumelu delivered the opening address, he urged French investors to look to Africa for long-term investment opportunities.

The French Minister of Economy and Finance, Bruno Le Maire, as he introduced Elumelu to the audience stated that France could position itself and direct investment towards Africa to end the cycle of poverty and to accelerate development globally.

He commended Elumelu’s stance on strengthening the SMEs in Africa to catalyse de-

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velopment. “We share the same ambition in Supporting African SMEs and entrepreneurs as this is essential for the economic development of Africa,” he said, referring to Elumelu’s passion to create wealth on the African continent.

Reiterating the stance to partner with Africa on long-term investments, Le Maire said “We will ensure that investments in Africa are sustainable, exemplary and environmentally friendly.

We want to go fast, go quickly in the race against poverty and renunciation, throughout the continent.”

Elumelu on his part said, “We need to do much better and be much smarter in channelling funds to emerging markets.

These markets present huge opportunities – as well as risks for investors, but investors need

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to fulfil a critical need to catalyse and improve the economy. We salute companies like Total, Bouygues, Accor, Orange, and Bolloré as well as others who have accepted this challenge, but there is room for many more.”

He stressed the importance of private equity inflow into Africa, with a focus on investing in small and medium scale businesses, the lifeblood of the African economy. He stated that Africa had the youngest workforce in the world, with over 60% of its population below the age of 25. This he said was a potential demographic doom that could be turned around to become the continent’s greatest asset if the youths have jobs and economic opportunities.

According to Elumelu, “Africans do not need aid. Rather, our @Businessdayng

young people need investments.

“Private equity is a force for positive development in Africa. We have a large youth population, who are eager and innovative. They are looking at solutions to problems in their communities but are hampered by the access to capital and investment, mentoring and training. When done right, this kind of investment can bring not just capital but can also strengthen job creation, corporate governance and help improve sustainable business practices.”

He cited the impact and growth rate of the beneficiaries of the TEF as evidence of the potential of SMEs in Africa today.

His Foundation has endowed $100 million dollars of his family wealth, to fund over 10000 African entrepreneurs in 10 years.

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Monday 04 November 2019

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World Business Newspaper

ANDREW ENGLAND AND ANJLI RAVAL

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audi Aramco launched its long-awaited initial public offering on Sunday after delays triggered by doubts over the ability of the world’s most profitable company to secure the $2tn valuation coveted by the oil-rich kingdom’s Crown Prince Mohammed bin Salman.

The listing of the state energy firm is the centrepiece of Prince Mohammed’s ambitious plan to overhaul Saudi Arabia’s oiladdicted economy and would mark a milestone in his aggressive drive to reshape the conservative kingdom.

It is expected to be the world’s largest IPO with Riyadh hoping to raise as much as $60bn. However, the process has been dogged by questions over the valuation of Saudi Aramco, with bankers and analysts saying $1.2tn to $1.5tn is more realistic.

The company said the final offer price and the number of shares would be determined at the end of the bookbuilding period.

Yasir al-Rumayyan, Saudi Aramco’s chairman, said: “Today marks a significant milestone in the history of the company and important progress towards delivering Saudi Vision 2030 [Prince Mohammed’s reform plan], the kingdom’s blueprint for sustained economic diversification and growth.”

Mr Rumayyan said Aramco’s valuation would be determined in the roadshow and the bookbuilding exercise. Asked about a poten-

Saudi Aramco launches long-awaited IPO

Delays to the anticipated $60bn offering were triggered by doubts over $2tn valuation

Bankers and analysts have said a $1.2tn to $1.5tn valuation is more realistic © Reuters

tial international listing, he said “currently just the Tadawul”, the Saudi Arabian stock exchange.

Saudi Aramco’s formal announcement of its intention to float is the closest the government has come to finalising the listing.

The company did not provide details of the timetable for the listing, but the shares are expected to begin trading in December, with the prospectus issued on November 9.

Amin Nasser, Aramco’s chief executive, said: “Our mission is

to provide our shareholders with long-term value creation through crude oil price cycles by maintaining our pre-eminence in oil and gas production.”

Alibaba, the Chinese ecommerce company, launched the globe’s largest IPO when it raised $25bn in 2014. Prince Mohammed, the kingdom’s de facto ruler, first disclosed his intention to partially privatise Saudi Aramco three years ago, and Riyadh hired advisers to prepare for a listing

as early as 2018. Saudi Aramco is expected to sell up to 3 per cent of the company, which made $111bn in net income last year.

However, two people briefed on the process said despite the formal announcement of an intention to float, Saudi Aramco could still pull the listing at a later stage depending on the response from investors.

The IPO stalled last year amid concerns about the valuation and after the royal court ordered Saudi

Warren Buffett’s Berkshire Hathaway increases cash pile to $128bn

Wilbur Ross ‘optimistic’ on US-China trade talks

Sage of Omaha has struggled to find large acquisitions to boost returns

Commerce secretary says sticking points in first phase of negotiations could be resolved soon

RICHARD HENDERSON AND JENNIFER ABLAN

prehensive Economic Partnership, a proposed mega-trading bloc comprising the 10 Asean nations that would also include China, India, Japan, South Korea, Australia and New Zealand that has been under negotiation since 2012.

Hopes that a final deal on RCEP would be reached at the Asean summit receded at the weekend as leaders of the 16 nations argued over last-minute details of the proposed agreement.

India, which is wary of the repercussions of opening its market to Chinese goods, is among the countries pushing for concessions.

Mr Ross said that the US, which has voiced scepticism about RCEP, thought there were “quite enough regional associations”.

However, he denied Washington would reward countries that refrained from joining, or punish members of the new grouping. “We treat countries favourably even if they have trade pacts with other nations,” he said.

On Monday the Americans will host an “Indo-Pacific Business Forum” in Bangkok, in which Washington will seek to present itself as an alternative business partner for countries living in China’s shadow that have questioned the financial, environmental and other costs of Beijing-backed projects. The US commerce secretary will travel to Indonesia and Vietnam later in the week.

erkshire Hathaway increased its cash pile to a record $128bn in the third quarter, as Warren Buffett struggled to find large acquisitions to boost Berkshire’s returns.

Mr Buffett has gone nearly four years since completing a major acquisition, forcing him and Charlie Munger, his longtime business partner and vice-chairman of Berkshire, to look elsewhere to invest their cash hoard.

Berkshire’s holding of cash or short-term Treasuries marks an increase from the $122bn it held in the prior quarter, the company said on Saturday as it reported third-quarter earnings.

Bill Smead, chief executive of Smead Capital Management, said Mr Buffett had not found an attractive M&A target and could be building the “monstrous cash hoard in the event Buffett or Charlie Munger — the masterminds of Berkshire — go into the hospital”. Mr Buffett is 89 years old and Mr Munger is 95 years old.

Mr Smead said Mr Buffett could also be waiting to deploy

JOHN REED

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ilbur Ross, the US commerce secretary, said on Sunday that he was “quite optimistic” that remaining sticking points in the first phase of American trade talks with China could be resolved soon, adding that the countries’ leaders still planned to meet later this month.

US president Donald Trump and Chinese leader Xi Jinping were on track to meet in November, Mr Ross said, although the venue was a “work in progress”, following last week’s scrapping of the planned Apec summit in Santiago during Chile’s recent unrest.

“You won’t have a deal on anything until you have a deal on everything,” Mr Ross told the Financial Times in Bangkok, where he is part of a large delegation of US officials attending a summit of Asean, the regional grouping, and associated meetings with Asian and Pacific leaders. “But we are quite optimistic that the remaining issues for the phase one can be closed out.”

Mr Ross said that Alaska and Iowa — the latter mentioned by Mr Trump on Friday in a tweet — were potential alternative venues for the talks, and that “some [countries] in Asia as well” might host them.

For Asian countries, the focus is on progress over the Regional Com-

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Aramco to buy a 70 per cent stake in Sabic, the kingdom’s biggest petrochemicals company, from the Public Investment Fund, the country’s sovereign wealth fund.

Riyadh revived the process after company’s debut $12bn bond in April was massively oversubscribed. And it pushed head with the planned listing despite missile and drone attacks, blamed on Iran, in September that struck the heart of Saudi Aramco’s infrastructure, temporarily knocking out half of the kingdom’s crude production.

However, Riyadh postponed the launch of the IPO again last month, although it continued to pressure advisers to ensure the listing went ahead this year with Prince Mohammed keen to prove his economic reforms are on track, analysts say.

Asked about the timing of the IPO after the delays, Mr Rumayyan said: “Thequestioncouldbe:Whynotnow?”

“That’s what I’ve been asking myself . . . this is the right time for us coming to a juncture where we want to take Aramco to be a public company to have more disclosure,” Mr Rumayyan said. “We want to share the Aramco shares with the citizens of Saudi Arabia, we want to get financial investors from all over the world.”

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Berkshire’s cash in the event the stock market faced a bear market akin to the 1987 crash.

As the cash pile grows, so too do profits from its vast business empire. The group posted a record $7.8bn in quarterly operating profit in the third quarter, a 14 per cent rise from the same period last year. These profits reflect earnings from Berkshire Hathaway’s businesses, but do not include paper gains from its investment holdings, which fluctuate with the stock market.

When these are included, the group’s overall profits were reported to have eased to $16.5bn in the quarter from $18.5bn for the same period in 2018.

“These are very strong results reflective of a strong domestic economy despite all of these challenges,” Jim Shanahan, an analyst with Edward Jones, said.

The gains were driven by strong results from its railroad, utilities and insurance companies, he said.

Berkshire bought back about $700m of its own shares in the third quarter, bringing its total buybacks for the year to $2.8bn. The Omaha, Nebraska, conglomerate changed its buyback policy last year, and some @Businessdayng

shareholders are frustrated that the company hasn’t spent significantly more cash repurchasing its stock.

In addition to Berkshire’s portfolio of businesses, the group has expansive stock holdings dominated by shares in financial companies. American Express and Wells Fargo are among the group’s biggest holdings, while Apple stock, which Berkshire first bought in 2017, is now the largest.

The value of Berkshire’s shares in the iPhone maker grew $7bn to $57bn in the third quarter as Apple stock rose. Further gains by Apple in the fourth quarter so far have pushed that holding to $65bn, marking a $25bn paper gain for Berkshire this year alone.

In his annual letter to shareholders earlier this year, Mr Buffett said “sky-high” prices meant the likelihood of putting the excess money to work in a large deal was “not good.”

“That disappointing reality means that 2019 will likely see us again expanding our holdings of marketable equities,” he said.

“We continue, nevertheless, to hope for an elephant-sized acquisition.”

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Here is what’s going on with the yield curve Bond markets are not convinced that the Federal Reserve has done enough GAVYN DAVIES

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he Federal Open Market Committee has foreshadowed a lengthy pause in the programme of US monetary easing that has been under way throughout this calendar year. Instead of significantly raising policy rates, as promised when the year began, there have been three “insurance” cuts of 25 basis points in US rates since midsummer.

In his press conference on Wednesday after the latest cut, the Federal Reserve chairman Jay Powell claimed that this adjustment has left US monetary policy “in a good place”. The Fed offered no guidance about the likely direction of the next move in rates, which it says will be determined by new economic data in coming months.

Mr Powell was asked whether he believes that the US monetary policy stance is now “accommodative”, which is a way of asking whether the Fed is seeking to encourage faster growth and higher inflation.

His nuanced answer was that it is “somewhat accommodative” and is “appropriate” to support the Fed’s economic outlook. He added that there is a range of plausible estimates for America’s current “equilibrium” interest rate — which neither boosts nor slows the economy. He also specifically mentioned that these estimates are still being revised downwards.

This raises a very interesting issue. The recent behaviour of bond yields suggests that the market is less confident than the FOMC that monetary policy is at the moment either “accommodative” or “appropriate”.

Rather than seeing the rate cut as providing additional stimulus to the economy, the market seems to believe that the equilibrium rate has fallen and the rate cuts are an effort by the Fed to catch up with it.

This is best observed in the Treasury inflation-protected securities or Tips market, where investors directly trade real interest rates on government debt (see Graph 1 in box). The decline in real long-term rates in Tips (a proxy for the equilibrium rate) has been very similar to the drop in real policy rates since the Fed changed tack and started easing monetary policy in January.

If investors believed the rate cuts were going to spur growth, long-term rates should have risen relative to short-term rates and the yield curve — which shows the difference between short-term policy rates versus long-term bond yields — should have become steeper. Instead, the yield curve in the Tips market has changed very little.

What is going on? One plausible interpretation is that the market has become more concerned about chronically low growth, or “secular stagnation”, in the global economy in 2019.

As Lawrence Summers and Lukasz Rachel have argued in new research, global equilibrium interest rates have been falling precipitously for several decades, especially in the private sector. It is possible that this decline was temporarily arrested during the economic upswing of 2016-18, helped by the US fiscal stimulus, but has now reasserted itself.

Messrs Summers and Rachel believe that, in the absence of major new policy initiatives to reduce private savings, boost private investment and increase budgetary stimulus, the equilibrium real rate of interest may well become negative in the advanced economies.

The bond market seems to have some sympathy with this point of view, even in the US, where the case for secular stagnation seems weaker than in Japan or Germany. During the latest economic slowdown, the US bond market appears to have reduced its estimate of the equilibrium real rate from around 1 per cent to an average of about zero in recent months (see Graph 2 in box).

Much of this downward shift may have stemmed from concerns about whether interest rates in the eurozone and Japan can remain persistently below zero. With interest rates stuck near the zero lower bound in those economies, world policy rates may be too restrictive. This may, in turn, be exerting strong downward pressure on the US economy and its equilibrium real interest rate.

On this interpretation, the Fed may have raised US policy rates too much during 2018 and has since been forced to play catch-up by following global equilibrium rates downwards without being able to ease its effective monetary policy stance much this year.

Deadly clashes in the capital Addis Ababa threaten the region’s precarious peace © Tiksa Negeri/Reuters

Ethiopian activist slams ‘authoritarian’ Nobel winner Abiy Ahmed

Spate of violence provokes the strongest criticisms yet yet of PM’s leadership TOM WILSON

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thiopia’s most prominent activist and media owner has accused prime minister Abiy Ahmed of increasing “authoritarianism” just weeks after the leader was awarded a Noble Peace Prize for his efforts to build stability in the Horn of Africa.

Elected in 2018, Mr Abiy has been celebrated for a peace deal with neighbouring Eritrea and sweeping domestic reforms enacted during his first months in office. But a year later, those reforms have been followed by an increase in intercommunity violence across the country, provoking strong criticisms of his leadership.

“Abiy did liberalise the political sphere in the first six months but I think he has become increasingly authoritarian,” Jawar Mohammed, the 33-year-old founder of the Oromo Media Network, said in an interview.

“Ethiopia needs to move towards a concessional democracy and that happens by facilitating dialogue, negotiation and bargaining among the elites of the country — he hasn’t done it all.”

Mr Jawar’s public criticism of the prime minister followed an incident last month at his house in the capital, Addis Ababa, when a government security detail guarding the property was told to stand-down and a second

police force surrounded the building.

Mr Jawar described the incident on Facebook, triggering protests by members of his Oromo ethnic group who clashed with other communities and state security forces, leaving at least 78 people dead. “I am now convinced, one hundred per cent, [the incident] was an assassination plot,” Mr Jawar said. “I cannot say for sure whether it was officially coming from [Mr Abiy] but it was orchestrated by individuals who were at the top of the food chain on security.”

Earlier in the day, Mr Abiy, also from Oromia, appeared to threaten his former ally in parliament, promising the government would “take measures” against media owners undermining “the peace and existence of Ethiopia”.

The public battle between Mr Abiy and Mr Jawar has focused attention on the stark challenges of reforming Ethiopia and risks of further violence.

The prime minister’s office declined to comment on Mr Jawar’s allegations.

Mr Abiy’s Ethiopian People’s Revolutionary Democratic Front and its allies control all 547 seats in the national parliament. Designed as a coalition of four parties from Ethiopia’s most powerful regions, the EPRDF is supposed to allow power-sharing between different ethnic groups but has became a mechanism for some regions to dominate others.

Mr Abiy ascended to party leader

in 2018 after two years of antigovernment protests, promising to reform the coalition and usher in multi-party democracy. He released political prisoners and unbanned opposition groups but failed, Mr Jawar said, to engage in a national dialogue, relying instead on his own judgment.

“When you permit all these politicians and political parties, it is like allowing ten, twenty soccer clubs into a single field without clear referees, without clear rules, and any clash between these players manifests itself in violence among the spectators in the stadium,” he said.

Since 2018, hundreds of Ethiopians have been killed in politically-charged clashes between different communities and millions displaced.

Mr Abiy wants to turn the coalition into a single national party and allow more space for other political groups ahead of parliamentary elections scheduled for May. Mr Jawar says the prime minister is taking unilateral decisions to consolidate his position. “His campaign is to reduce the autonomy of the federal groups and centralise decision-making,” he said.

The disagreement strikes at the heart of the question of how much power to vest in Ethiopia’s nine ethnic regions, and how best to democratise the country of 105m people after decades of authoritarian rule.

Shares in private equity firms soar on tax status change Decision by Apollo, Blackstone and others to switch from partnership to corporation status pays off MARK VANDEVELDE

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he shares of America’s biggest private equity firms have soared, swelling the fortunes of moguls such as Leon Black and providing them with firepower for deals after their decision to pay tens of millions of dollars a year in extra taxes by switching from partnership to corporation status.

Mr Black’s Apollo Global Management has notched up gains of more than 25 per cent since May, when it joined rivals Blackstone, KKR and Ares in renouncing a tax-advantaged partnership structure that made it difficult for mutual funds and index trackers to own the firms’ shares.

Vanguard, one of the world’s biggest mutual fund managers, now ranks among the biggest shareholders of all four firms, which are trading near record highs.

The higher share price could open the door to more deals in which private equity firms use their own equity as currency for acquiring strategic assets. Just last week Apollo paid $1.6bn, mostly in its own shares, to nearly double its stake in its affiliated life insurance company, Athene Holding.

“We think we’re only in the middle innings in terms of realising the benefits of our . . . conversion,” Joshua Harris, Apollo’s co-founder, said last week. He added that the firm’s inclusion in the so-called CRSP indices had prompted Vanguard to buy nearly www.businessday.ng

13m shares.

Rising valuations have also delivered a windfall to an ageing generation of financial tycoons who pioneered the alternative investment industry in the 1980s and 1990s. Most retain large stakes in the firms they founded, even in what some industry insiders speculate may be the final years of their careers.

Stephen Schwarzman, Blackstone’s founder, last year negotiated a suite of unusual retirement benefits, including the right to keep his office in the firm’s midtown headquarters and lifetime access to a car and driver — although the 72-year-old tycoon “has absolutely no intention of retiring”,the firm said at the time.

Mr Schwarzman’s Blackstone

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shares are today worth about $12.5bn, having risen by roughly $3.5bn since the firm announced in April that it was abandoning its partnership status.

The dramatic share price appreciation vindicates what looked like a risky gamble as recently as last February, when Ares became the first listed private equity firm to announce plans to become a corporation.

As partnerships, the firms were allowed to bypass corporate taxes on some of their earnings, instead passing the money directly to investors. But the tax-advantaged status came with heavy bureaucracy, forcing holders to file complex tax returns in multiple US states if they owned even a single share.

After Congress approved tax cuts that slashed the levy on corporate @Businessdayng

earnings, executives concluded the tax relief was worth less than the share price appreciation they could expect if mutual funds began buying the stock.

The firms have been rewarded with “meaningful shifts in their shareholder bases,” said Devin Ryan, an analyst at JMP Securities. “And it’s still early days. Long-only and passive ownership is up significantly, they are being added to indices, with more to come, and investor interest more broadly is up.”

David Rubenstein’s Carlyle Group will become the last major listed private equity group to make the switch when it drops its partnership status in January. The firm’s shares have climbed by nearly one-fifth since it announced the move in July.

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New insurance broker abolishes fixed hours and limits on holiday McGill and Partners look to attract staff in an ultra-competitive market OLIVER RALPH

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he City of London’s newest insurance broker has abolished fixed working hours and limits on holiday time as it looks to poach staff from rivals in an ultra-competitive market.

McGill and Partners, which was set up by former Aon group president Steve McGill earlier this year, is offering staff as much holiday as they want along with flexible hours.

Employment contracts would be based on “trust” and “the most progressive in the insurance industry,” said Mr McGill, who added that staff must take a minimum of 20 days’ holiday.

The idea of unlimited holiday has been around for some time in the tech and media industries.

Netflix, for example, has a policy that staff should “take vacation” but there are no rules about how many weeks per year. But it is a new concept for the financial services industry.

Competition for staff is intense in insurance broking, with poaching disputes often ending in bitter court battles. The judge in one recent case involving brokers Arthur J Gallagher and Ardonagh commented that one of the people involved was subject to a “frenzy of abuse” after he left.

Mr McGill said his new brokerage will focus on complex insurance policies for large clients,

competing with big rivals such as Marsh & McLennan, Aon and Willis Towers Watson which have expanded to offer a wide range of services. He plans to build the company through recruitment, rather than buying rival firms, which is why attractive employment terms are important.

So far, he has brought in 150 people from 26 companies, but hopes to expand to up to 500 people over the next five years or so. Half of his staff are under 40, he said.

Financial services companies have slowly been coming around to the idea that they need to offer more flexible contracts if they want to build diverse teams.

“We want an increasingly diverse workforce and we want to bring in high calibre talent and reward them,” Mr McGill said.

Two years ago, Aviva started offering six months’ of fully paid parental leave for both male and female employees.

The UK operation of Zurich Insurance advertises all of its vacancies as potential part time or job share roles. The company says that, in the first three months of the new policy, there was a 25 per cent increase in the number of female applicants.

Last week, Standard Life Aberdeen said it would offer nine months’ fully paid parental leave to either parent.

McGill is offering a year’s fully paid maternity leave, and six month’s fully paid paternity leave.

Zen Internet targets 80% of UK with broadband expansion Rochdale-based company obtains credit facility to boost presence in exchanges NIC FILDES

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en Internet has launched an expansion of its broadband network to put it within reach of 80 per cent of the country.

The Rochdale company remains one of the UK’s only established midsized broadband providers not owned by one of the big four — BT, TalkTalk, Sky and Virgin Media. The company was founded in 1994 by Richard Tang over a pint in his local pub, and he has refused to sell out of a business that has carved out a niche on the basis of strong customer service.

Mr Tang handed the reins of the company to former Sage executive Paul Stobart to close the gap on its huge rivals. The push has now begun after NatWest extended a £20m revolving credit facility for Zen to expand the reach of its network by more than 50 per cent.

Zen will use the funds to install its own equipment in an additional 250 telephone exchanges — a process known as unbundling — taking the total to 700. That means Zen’s network could reach 80 per cent of homes and businesses, according to Mr Stobart, who said the company was also ramping

up capacity to boost its speeds to ultrafast levels.

Mr Tang said Zen was a “little minnow” compared with its huge rivals but that it needed to become a “true challenger brand” with the network expansion The company, wholly owned by Mr Tang, has 80,000 business and retail customers but is targeting 250,000 after its network investment. It has traditionally charged a 40 per cent premium to its mainstream rivals but has now cut its price to about the same level as BT. That is a small fraction of the overall broadband market but Mr Stobart believes Zen could be a beneficiary of regulatory and government moves to make switching provider easier as the “inertia” in the broadband market is broken.

He argued that Zen was at a similar point in its trajectory to Sage, the Newcastle accounting software company, when he joined it in the 1990s before the company grew tenfold. “The opportunity here is just as exciting,” he said of the boom in demand for ultrafast broadband.

Zen reported revenue of £71m in the year to September 2018, up from £64m, while its pre-tax profit grew to £2.8m from £1.9m. www.businessday.ng

Saudi Aramco sweetens IPO terms to win over investors Valuation and foreign investor demand will be a big test for Riyadh ANJLI RAVAL, SIMEON KERR AND ANDREW ENGLAND

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or nearly four years Saudi Arabia has been dangling the promise of offering investors a chance to buy into the world’s most profitable company. On Sunday, it made a significant step towards delivering as officials sought to put aside questions over Saudi Aramco’s valuation to formally announce the kingdom’s intention to list the state oil giant.

The launch of the initial public offering process for Saudi Aramco in Dhahran was marked by a hard sell to Saudis who might be keen to have a slice of a national champion as well as foreign investors who are more sceptical about how Riyadh values the state energy company.

Amin Nasser, Saudi Aramco’s chief executive, told reporters, that an investment in the company was a unique opportunity. He emphasised the company’s access to some of the world’s most prolific oil reserves, low-cost barrels, as well as Saudi Aramco’s expansion plans into gas and chemicals. The company also lauded its low debt levels.

“It’s a historical moment,” he said. “Our mission is to provide our shareholders with long-term value creation through crude oil price cycles by maintaining our preeminence in oil and gas production.”

Although Saudi Aramco did not disclose how much of the company would be sold or how much money the kingdom planned to raise, people familiar with the IPO process have said Saudi Arabia could offer up to 3 per cent on the domestic Tadawul exchange and could raise as much as $60bn.

If all goes to plan, the prospectus will be released on November 9 with the listing in December.

Yet questions continue to hang over the company’s valuation and people briefed on the process say the kingdom could still halt listing plans at a later stage.

Crown Prince Mohammed bin Salman, for whom the IPO encapsulates plans to overhaul the country’s

Crown Prince Mohammed bin Salman is targeting a valuation of $2tn in Saudi Aramco’s flotation, despite analysts cautioning that $1tn to $1.5tn is a more realistic outcome © AFP

economy, has long advocated Saudi Aramco’s worth of at least $2tn. The proceeds are to be ploughed into the Public Investment Fund — the sovereign wealth fund spearheading his economic diversification plans.

“I believe it will be $2tn, above $2tn . . . it will be huge,” he told Bloomberg a year ago.

While some bankers and analysts have said $1.2tn-$1.5tn might be more realistic, others who secured work on the IPO have higher estimates. But people close to the IPO process have pushed to moderate the young prince’s valuation ambitions closer to $1.75tn in recent days, three people briefed on the matter have said.

Another person said Prince Mohammed has come to terms with the fact the market will determine the valuation and the success of his wider economic reforms are more important than securing a set target.

The valuation conundrum has been the core reason why the IPO, originally planned for 2018 has been repeatedly delayed, and why initial ambitions for a mega-listing at home and abroad have been scaled down to a domestic flotation for now.

A big test for the Riyadh listing, will be the level of foreign investor demand for the company that pumps one in eight barrels in the world but will expose them to the political risk of investing in Saudi

Arabia.

“I’m confident there will be ample local retail participation because it’s the crown jewel and there’s a sense of national pride in Saudi Aramco,” said a senior banker. But, the banker added, “it’s important to have global demand for the IPO.” Foreign institutions have raised concerns about state interference, governance and geopolitical risks that were underlined after drone and missile attacks on Saudi Aramco in September temporarily knocking out half the kingdom’s production.

Last year Saudi agents murdered journalist Jamal Khashoggi, triggering the kingdom’s biggest diplomatic crisis in years. A year earlier Prince Mohammed launched a crackdown on corruption that led to some 300 business tycoons and princes detained.

In a document outlining Saudi Aramco’s formal intention to float, the company showcased its earnings potential. After reporting net income of $111bn in 2018, latest figures showed Saudi Aramco earned $68bn in the first nine months of this year.

The kingdom has changed royalty rates, in an attempt to bolster Saudi Aramco’s valuation. Then on Sunday the oil company disclosed it would only pay a 20 per cent tax rate on its refining and chemicals business next year, down from a 50-80 per cent range.

HS2 decision to be delayed until after general election Review on high-speed rail project unlikely to be published before December GILL PLIMMER AND JIM PICKARD A decision on the future of the UK’s HighSpeed 2 railway line has been left until after the election, according to the deputy chairman of the official review into the project.

Tony Berkeley, a member of the panel commissioned by prime minister Boris Johnson to review the scheme, said his role had ended on Friday with the report headed by Doug Oakervee, a former chairman of HS2, yet to be completed.

“We are told that, when completed

by Doug Oakervee and the Department for Transport secretariat, it will be locked into the DfT vaults for the new S of S [transport secretary] to publish,” Lord Berkeley said.

HS2 is one of the country’s most controversial infrastructure projects in recent history. It has been beset by delays, contract scandals, and con-

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cerns over poor management as well as allegations by whistleblowers that parliament was misled on its budget for land purchases.

Time is running out for Mr Oakervee to publish his report before next week, when Whitehall goes into election purdah, which prevents the government taking important policy decisions. One person involved in the process said he would be “amazed” if the review came out before December.

A DFT spokesperson said: “The Oakervee review will conclude in the autumn and it would be inappropriate to pre-empt its recommendations.”

Lord Berkeley, a longtime critic of the project, expressed concern that he would be unable to propose changes to the final report, adding that this made it “unclear whether it would be balanced or a whitewash — but I hope it’s the former.”

“We have received several hun@Businessdayng

dred pieces of evidence and it’s important that these are taken on board and considered in an objective and thorough manner in the final report,” he said.

The prime minister announced the review into HS2 after the FT revealed that an internal assessment by the project’s new chairman, Allan Cook, found the cost of the line had risen to as much as £85bn. Mr Johnson has said it is likely to cost as much as £100bn.

The Serious Fraud Office is understood to have interviewed owners of property along the line’s route who believe their properties were deliberately undervalued by HS2, as well as former staff on the scheme, though no formal investigation has been announced.

Several Conservative party MPs are calling for HS2 to be scrapped, including Andrea Leadsom, the current business secretary.

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ANALYSIS

FT Falling interest rates wreak havoc in US pension system The strains on US corporate defined benefit plans are likely to intensify CHRIS FLOOD

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eneral Electric’s recent decision to freeze retirement benefits for 20,000 employees provides the latest unwelcome illustration of the problems confronting millions of US workers battling to secure a decent income in old age.

The pain felt by GE’s employees is shared by more than half a million workers across multiple US industries that also face cuts to pension benefits, according to the Washington-based Pension Rights Center.

GE’s pension obligations stood at $91.8bn at the end of last year, significantly higher than the industrial conglomerate’s $66bn market value on December 31.

It faces a funding shortfall of $22.4bn across its US and international pension funds. GE aims to reduce this by up to $8bn by cutting benefits and moving more staff into a defined contribution scheme, which places more responsibility on to individual workers for building a retirement saving pot.

Shifting workers out of generous salary-linked defined benefit pension schemes is a tactic widely adopted across US corporates.

Just 16 per cent of Fortune 500 companies offered a salary-linked defined benefit retirement plan to new employees in 2017, down from 59 per cent in 1998, according to Willis Towers Watson, the pension scheme adviser.

The strains on US corporate defined benefit pension plans are likely to intensify, due in part to the steep decline in long-term interest rates that are used to measure (discount) the value of future obligations to employees.

With the Federal Reserve Board cutting interest rates this year, the yield on the US 30-year Treasury bond has sunk to an all-time low at 1.94 per cent in late August, down from 3.12 per cent at the start of March.

This dramatic fall has led pension plan sponsors to cut their discount rate to nearly 3 per cent compared with 4.2 per cent in 2018 and 7.2 per cent in 2001, according to Goldman Sachs Asset Management.

“The most notable and direct impact from falling interest rates is to exert upward pressure on [the value of ] pension obligations and downward pressure on funded ratios,” says Michael Moran, a pensions strategist at GSAM. Goldman estimates that the funded status of the US corporate defined benefit system has dropped to 86 per cent from a high of 91 per cent as recently as April 2019.

The deterioration has occurred in spite of strong gains for US equities with the S&P 500 hitting an all-time high this week, up 21.5 per cent this year.

Declines in interest rates have also boosted the value of fixed income holdings for many pension funds but liabilities have risen even faster, resulting in the fall of funding levels.

Mr Moran says US corporate pension plans, particularly those

at or near fully funded levels, should maintain or increase hedges that would protect them against unexpected shifts in interest rates.

This is a potentially expensive strategy because reductions in interest rates have driven up hedging costs. But GSAM says it is “prudent” given many companies have pension obligations that stretch far into the future beyond the duration of their bond portfolios.

GSAM also advises corporate clients to “make low interest rates work for them” by borrowing in the debt market and using those proceeds to bolster their pension plan.

“Both UPS and FedEx have recently executed ‘borrow to fund’ pension transactions. We would not be surprised if more companies revisit this strategy if interest rates remain at these historically low levels,” says Mr Moran.

Jay Love, a partner at Mercer, the investment consultant, says low rates have encouraged more companies to undertake pension risk transfer deals where they pay an insurance company to take on the responsibility for pension liabilities.

The value of these deals, also known as pension buyouts, reached $27bn in 2018, up more than a fifth on the previous year, according to LIMRA Secure Retirement Institute, a data provider. A further $9.5bn were completed in the first half of 2019.

“We expect high levels of activity to continue in the de-risking market,” says Mr Love.

Ultra-low rates also present a profound challenge to the health of the US public pension system which oversees more than $4tn in assets on behalf of 20m active and retired public sector workers.

Public pension plans use an assumed return based on their historic performance to calculate their future liabilities, instead of the discount rate used by corporate defined benefit plans.

Public pension plans have gradually reduced their assumed return from 8 per cent in 2001 to 7.2 per cent but they have consistently underperformed this objective, according to the Center for Retirement Research at Boston College.

The average annualised return for US public pension plans since 2001 was just 5.9 per cent. The top quartile of performers delivered 6.7 per cent over that period while the bottom quartile underperformed with an average annualised return of just 5.1 per cent.

“As the period of underperformance nears 20 years, pressure has increased for public pension plans to use assumed returns that are better aligned with the reduced expectations for future market performance,” says JeanPierre Aubry, assistant director of state and local research at the CRR. That pressure appears likely to increase given the subdued outlook for fixed income returns and the reduction in the discount rate which has already occurred across the US corporate defined benefit sector. www.businessday.ng

Donald Trump’s whims stoke fears of instability in the Middle East Arab powers had thought the US president would prove a reliable ally but are disillusioned by his unpredictable policies ANDREW ENGLAND

I

t was an inglorious end to a crucial alliance in the US’s continuing battle against Isis.

As American troops in armoured vehicles pulled out of towns in north-east Syria and headed east to Iraq, Syrian Kurds hurled rocks, rotten vegetables and insults at the departing soldiers.

“What happened to America?” asked one man, as local traffic forced one of the imposing military vehicles to reverse down a street in Qamishli.

It is a question many in the Middle East are asking. President Donald Trump’s abrupt decision to withdraw US troops from the frontier, paving the way for a Turkish offensive against Kurdish forces that Washington had armed and trained to fight Isis, is the latest act to give the impression of creeping US disengagement from the region.

Arab powers, including Saudi Arabia, the United Arab Emirates and Egypt, which have for decades counted on Washington as their staunchest ally, condemned Turkey’s offensive as an “aggression” in a sovereign Arab state.

But it was not the fate of the Kurds that concerned them. What they fear is Mr Trump’s unpredictable actions and worry that arch rival Iran, which has capitalised on its support for the Assad regime during the Syrian civil war, will strengthen its foothold in the heart of the Arab world, analysts say.

It is creating uncertainty at a time of heightened regional tensions, fuelled by the stand-off between the US and Iran. At issue is whether Washington can still be counted on as a dependable ally — and whether Mr Trump, who is averse to costly military interventions, would be there if they got into a fight?

“People are disillusioned with the US. The truth is Trump is just staunchly pro-Israel. He doesn’t respond to Arab issues unless it’s for money,” says one Arab diplomat.

“There will be consequences of the US’s slow disengagement, it’s going to be filled by others.” Mr Trump has said the US will send some troops back into north-east Syria to protect

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oil facilities and claimed a success after special forces killed Isis leader Abu Bakr al-Baghdadi last week. But the moves are unlikely to assuage the broader concerns.

The US has long been the dominant foreign power in the oil-rich Middle East, militarily and politically. But there is renewed talk of how Washington’s perceived pivot away from the region is providing an opening for Russia. The Kremlin backed the Assad regime, and has gained control of air bases and ports in Syria and brokered a deal with Turkey that means Russian and Turkish forces now conduct joint patrols in the north-east — the region from which American troops have withdrawn.

Moscow has also been strengthening ties with Saudi Arabia and the UAE, the US’s closest Arab allies and the region’s most powerful Sunni states vying with Shia Iran. In a coincidence that came to symbolise the shifting dynamics, Vladimir Putin, Russia’s president, was receiving lavish royal welcomes in Riyadh and Abu Dhabi in mid-October, just as Mr Trump was fending off a Congressional backlash triggered by his decision to withdraw US troops from Syria.

“If America decides to turn its back on us, the Gulf and the wider Middle East, it would set in motion the thinking that we need to turn our back to America,” says Abdulkhaleq Abdulla, an Emirati commentator.

“If there is less of America, even 10 per cent, there’s going to be a vacuum and someone is going to fill it.”

Others see another dynamic evolving from Mr Trump’s actions, particularly his apparent reluctance to use military force against Iran.

They argue that it has emboldened hardliners in Tehran at exactly the moment when Gulf states are more aware of their vulnerabilities to potential attack by the Islamic republic or its proxies than ever before.

Ultimately this could persuade Riyadh and Abu Dhabi to pursue their own diplomatic tracks with Iran to avert the risk of conflict, analysts say. In July, the UAE sent a maritime delegation to Tehran, the first such talks in six years. Saudi Arabia is showing signs that in the wake of the September attacks on @Businessdayng

its oil facilities it has become more serious about ending the war in Yemen — holding back-channel talks with the Iran-aligned Houthi rebels it has been fighting in that country, western officials say.

Likening Iran to the region’s “school bully”, the Arab diplomat says Riyadh and Abu Dhabi tried to “enlist the support of their big brother from outside, but “it became clear the brother was not interested in fighting the bully”.

“They must either submit”, the diplomat says, “or try to take it [Iran] on in ways other than a direct fight.

They have two options; either they sign their Versailles Treaty with Iran or they keep resisting. So far, they didn’t choose to surrender.”

Debate over a US withdrawal from the region has been simmering for a decade. The costs of interventions in Iraq and Afghanistan have weighed heavily on Washington.

“It’s real,” says veteran US diplomat Robert Ford, referring to the shift.

“In the White House talking about the Syria conflict [during the Obama administration], boy I heard about Iraq — none of us wanted troops in Syria.”

While careful not to overstate the changing dynamics, he adds, “The era where only America mattered among foreign states effecting the Middle East, that may be over”.

From an Arab perspective, it was the US failure to back Hosni Mubarak during a popular uprising that ended the Egyptian president’s 30-year rule in 2011 that first triggered alarm bells. Two years later, those concerns were exacerbated by Mr Obama’s decision not to follow through on his “red line” warning to the Assad regime over the use of chemical weapons. The former US president then infuriated the Saudi-Emirati axis by signing the 2015 nuclear accord with Iran.

For many in the region, Mr Trump was supposed to be different. Just over two years ago, he wooed Arab leaders by choosing Riyadh, where he raged against Iran, for his first foreign trip as president.

A year later, he pulled the US out of the atomic accord and began imposing what he describes as the “toughest ever” sanctions against the Islamic republic.

BD Money

Monday 04 November 2019

BUSINESS DAY

personal finance

cover

Personal Finance

FIXED INCOME

How to ensure this Black Friday doesn’t lead to red bank account

Will renewed productionpush boost local wheat competitiveness, industrial demand?

How to ensure hackers don’t access your financial details (2)

OMO Bills and T-Bills sound confusing? Here’s a quick guide to understanding both

It is November! The time of the year when massive discounts are offered to shoppers across various product categories, heralding the yuletides.

Nigeria has again renewed the commitment to expand domestic production of wheat in President Muhammadu Buhari’s bid to halve importation and secure a significant chunk of demand for local producers.

Page 3

Emeka is as meticulous as a medical doctor should be- at least he thinks so. The 27-year-old loves taking written notes of important events and things like his mobile banking application password. One Saturday morning, he wakes up to a bank alerthis bank account had been hacked.

Page 4

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Since the Central Bank of Nigeria (CBN) announced the restriction of individuals and Nigeria’s corporates from participating in both primary and secondary markets of its Open Market Operation (OMO)...

Page 5

Page 6

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BD Weekly Tenders Wrap-up

Market Review

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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Monday 04 November 2019

BUSINESS DAY

65

Personal Finance

How to ensure this Black Friday doesn’t lead to red bank account Olufikayo Owoeye

I

t is November! The time of the year when massive discounts are offered to shoppers across various product categories, heralding the yuletides.

The Black Friday is the day after Thanksgiving Day, a holiday on the fourth Thursday of November, and is symbolically seen as the start of the critical holiday shopping season.

Black Friday sales have become an important period for many retailers across the globe as they hope to offer discounts to boost their profits.

It was reported that in 2018 sales growth in the UK was highest in November, with experts attributing it to Black Friday stealing Christmas sales. Last year UK shoppers spent a reported £1.23billion over the Black Friday weekend.

In Nigeria, retail outlets and supermarkets are not left out in the excitement that comes with Black Friday sales as Nigerians are known shoppers despite the stuttering economy.

For Jumia, a major online shopping mall, it is Black Friday every Friday starting this week through November.

According to Jumia, this year’s edition of Jumia Black Friday will start on 8th of November and it would be offering massive discounts of up to 80 percent off from its millions of products.

Shoppers will also enjoy amazing discount packages such as free vouchers, free shipping using Jumia Prime among others.

There would also be Jumia flash sales.

Konga, another online shopping mall, Black Friday has been present since 2013.

The shopping holiday is called “Black Friday Yakata”, and is where customers find all kinds of products at even more competitive prices.

Sadly, online scammers have taken advantage of the period to send spam emails to anxious customers promising them mouth-watering deals and requesting information about their debit cards, while awoof-loving Nigerians are set to break the bank this November.

The measures outlined below can help you maximize Black Friday while ensuring

you do not go broke.

Create a budget Right budgeting is the Holy Grail in

“

You should be careful about jumping at discounts because a website publishing a 30 percent price cut might be selling at a discount of say 10 percent if you compared the actual worth of the product

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personal finance because the goal is to get enough value for every kobo spent without jeopardising your financial future.

Ahead of the Black Friday, you must decide on your needs and wants as well as how much you can afford for shopping.

To achieve this, ensure you are not already going through online catalogues as that would influence your decision.

As a reminder, only 50 percent of your income should be spent on needs (food, shelter and clothing) while 30 percent can be spent on wants with the other 20 percent as savings or investment.

Research the best deals The next step is to thoroughly search the internet for the most attractive deal while keeping quality in mind.

You should be careful about jumping at discounts because a website publishing a 30 percent price cut might be selling at a discount of say 10 percent if you compared the actual worth of the product.

A platform may be selling a pen for N10,000 while the average price is N5,000 on other platforms. Because there is a 30 percent discount announced, non-discerning consumers may opt for the offer instead of a 5 percent discount by other platforms. Of course, you can tell which

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platform benefits more.

Use the sell-to-buy technique It is very easy to buy and hoard when offered attractive deals, after all, there is only one November in a calendar year. To ensure you do not waste money buying what you already have, you may consider selling an old item before you get a new one.

An advantage is that you also get cash to fund your new purchases and create room for new items in your wardrobe, closet and anywhere else.

Be wary of fraudsters By nature, humans like freebies and fall easily to scams when there is a promise of a reward for doing virtually nothing.

Make sure you make a hundred-meter dash whenever Pops ups like “Best Black Friday deal in town, click me” appear on your screen.

Those little boxes could be baits with mischievous people at the other end waiting to access information on your devices through “backdoors” they create.

You can use browsers that block adverts to reduce your chances of encountering these malicious pop-ups. It is worth mentioning that not all pop-ups are bad but it is better to err on the side of caution.

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Cover Story Will renewed production-push boost local wheat competitiveness, industrial demand?

Monday 04 November 2019

N

How to ensure hackers don’t access your financial details (2) SEGUN ADAMS

E

meka is as meticulous as a medical doctor should be- at least he thinks so. The 27-yearold loves taking written notes of important events and things like his mobile banking application password. One Saturday morning, he wakes up to a bank alert-his bank account had been hacked.

It is easy to conclude that the medical doctor made a silly mistake writing down passwords in his note pad, thereby making himself vulnerable to cyber-attacks, but hackers today exploit lapses one thinks one is aware of, like Emeka and loopholes that beats ones’ imagination.

Oftentimes these cyber attacks can be prevented by taking simple measures such as using strong passwords that are

000 per 100 kilogrammes and in a worse case, N15,000. But surprisingly flour millers offered N13, 000,” Salim Saleh Vice President of WFAN told BusinessDay. In suitable conditions, farmers harvested about three tonnes of wheat per hectare but that plunged to 1.5 ton per hectare as of 2018, dampening the country’s prospect of raising output.

Besides pricing, a more troubling argument by millers and manufacturers of bread and pasta, the most consumed flour-based foods in the country, is that locally produced varieties of wheat don’t fit well for milling due to higher protein content, lower moisture and lower gluten. Consequently, local wheat flour goes into the preparation of traditional more than, reaping from the huge demand.

The off-taking arrangement, rather than www.businessday.ng

being a function of market fundamentals often takes the shape of corporate social responsibility on the part of compelled millers and charity by the government.

The Nigerian government, along with humanitarian relief organisations, and nongovernmental organisations (NGO) routinely purchase local wheat, deployed to internally displaced Nigerians by the Boko Haram insurgency.

Nigeria’s wheat consumption in the marketing year 2019/2020 is expected to rise to 5.26 million metric tons, accounting for nearly four percent or 200,000 MT higher than from 2018/19 estimate of 5.06 million metric tons, according to the U.S. Department of Agriculture (USDA) forecast. It attributed the increase to a rise in imports combined with an increase in food, seed and industrial (FSI) usage. The rise

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67

Personal Finance

Temitayo Ayetoto igeria has again renewed the commitment to expand domestic production of wheat in President Muhammadu Buhari’s bid to halve importation and secure a significant chunk of demand for local producers.

Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), a subsidiary of the Central Bank of Nigeria (CBN) will support the cultivation of about 400 hectares of wheat during this November and December cultivation season, BusinessDay learnt.

The Flour Millers Association of Nigeria (FMAN) also has acquired about 600 hectares for wheat cultivation, and another 20 hectares for seed production.

Meanwhile, the Wheat Farmers Association of Nigeria (WFAN) under the Anchors Borrowers Programme of the CBN plans to cultivate about 100,000 hectares of wheat.

But will tonnage increase alone resolve the poor price competitiveness facing Nigeria’s wheat farmers? Has the directive that millers purchase local wheat at a fixed price of $400 secured industrial demand? These were questions left hanging, which stakeholders believe must be addressed to create a sustainable wheat market.

Locally produced wheat has overtime struggled to ruffle feathers with much cheaper imports originating from Russia, the United States, Canada and Australia. Millers with gaze fixed of minimising input cost place preference on importation, despite the 20 percent levied by the federal government.

Farmers find the directive to sell at N145,000 per metric to millers unprofitable, preferring to sell to the institutional buyers and or export at premium rates.

The lack of stability in wheat pricing only offers loss where the cost of farming is high and the yield per-hectare low, farmers say.

“For a farmer to sustain his business, he is supposed to have got N18,

BUSINESS DAY

changed regularly, updating antivirus software regularly, avoiding click baits, and not opening strange emails.

There are also other steps necessary to avoid “stories that touch”.

Never Share Your Password with anyone It is a no-brainer, right? But humans are humans and this means we sometimes get to trust people so much that we share our deepest thoughts with them.

While our loved-ones may not necessarily set out to jeopardise us, it is not impossible that their mistakes put us at risk.

If you must share your password with anyone, ensure it is necessary and the other person has proven to be responsible in the past.

Take advantage of two-factor authenticity Two-factor or multi-factor authenticity uses a combination of two different factors to confirm identity before allowing access

“

A hacker may sometimes not bother with cracking your password if it is too difficult to guess. Instead, they might try to request a reset which would require answering secret questions like “what is your pet?” and “what is your mother’s maiden name?”. Of course, everyone knows your pet is Tom and your mother’s maiden name is Ann, so the hacker has easy access despite your strong password

in FSI wheat consumption is attributed to rising population, which is increasingly reliant on domestic and imported processed food products. The USDA sees production being retained at the 2018 levels of 60,000 metric tons, with yields holding steady at one metric ton per hectare.

Oluwasina Olabanji, executive director Lake Chard Research Institute said wheat farmers churned out less than 300,000 metric tons nationwide at the end of 2017/2018 farming season, declining from 625,000 metric tonnes during 2016/2017 season and 25 percent from 400,000 in 2015/2016.

He believes however that a round table meeting of the critical stakeholders on the 6th of this month would bring substantial support to wheat production. www.businessday.ng

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as a way of preventing intruders. The factors may include something a user knows, something the user has and or something they are. This measure is important because it makes it impossible for hackers who know your password to access your accounts if they do not also have your device, for instance.

A two-factor authenticity can require a user to enter a pin sent to the mobile phone or a secret code even after entering an account’s login details. Whatsapp, for example, has this feature.

Never assume it’s your bank (or a trusted party) on the other end Do you ever get a text or an email you believed was from your bank until you saw a wrong spelling?

It is easy to believe that the party at the other end of a conversation is a known and trusted one because of a corporate logo, colour or a simple claim they make.

To ensure you do not fall a victim of hackers, reach out to your bank on ways to authenticate their messages; of course, your real bank would never ask for sensitive information like your debit card pin.

Also always check whether the website you are on is safe. Secure websites always have “https” instead of “http”.

Ensure your alternative logins and secret answers are solid A hacker may sometimes not bother with cracking your password if it is too difficult to guess. Instead, they might try to request a reset which would require answering secret questions like “what is your pet?” and “what is your mother’s maiden name?”. Of course, everyone knows your pet is Tom and your mother’s maiden name is Ann, so the hacker has easy access despite your strong password.

In setting up secret questions, provide answers in a witty way only you can tell.

Do not recycle passwords One of the biggest mistakes one could make is using the same password across one’s various accounts on the internet.

If hackers get a hold of one password, the victim risks losing all his or her accounts- a far devastating loss than losing control of one account.

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BUSINESS DAY

Fixed Income OMO Bills and T-Bills sound confusing? Here’s a quick guide to understanding both

OLUWASEGUN OLAKOYENIKAN

S

ince the Central Bank of Nigeria (CBN) announced the restriction of individuals and Nigeria’s corporates from participating in both primary and secondary markets of its Open Market Operation (OMO) window, some people have been mistaking OMO Bills with Nigerian Treasury Bills (T-Bills). This has resulted in the wrong interpretation of the CBN’s OMO policy.

OMO is a liquidity management tool issued by the CBN to control the volume of money in circulation. When the central bank observes there is excess money in supply, it sells OMO Bills – also called CBN Bills – to investors through the

banks to mop up the surplus funds and vice versa.

Excess money in circulation could cause aggregate the demand of goods and services to rise above supply in the economy thereby worsening Nigeria’s already high inflation rate, a situation contrary to CBN’s core mandate of ensuring price stability.

Traditionally, OMO Bills are designed to mature within 14 to 66 days, but due to the peculiar nature of the Nigerian economy where its financial system often experiences excess supply of naira, the apex bank has not only extended the tenors of the OMO Bills in recent years up to a year maturity period, it has issued more OMO Bills since 2017 more than it did in the preceding decade.

Also, the interests on these Bills come at extra costs to the CBN and not the fed-

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“

T-Bills in Nigeria are guaranteed and backed with the full faith of the Federal Government. As a result of this, the government cannot default, and in the event that the government cannot pay, the CBN can print money to settle all investors

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eral government. This implies the apex bank bears the costs of repaying the Bills to investors including accruing interests, thereby hurting the financial regulator’s balance sheet. This is why a breakdown of the federal government’s domestic debt only includes T-Bills, Bonds and Promissory Notes, but excludes OMO Bills.

On the other hand, Nigerian T-Bills are short-term debt instruments issued by the CBN on behalf of the federal government with less than one-year maturity period. The federal government uses different debt instruments in the country’s financial system such as T-Bills, FGN Bonds, Eurobonds, FGN Sukuk Bonds, FGN Savings Bonds, Green Bond, among others to borrow money to finance its budget deficit.

T-Bills in Nigeria are guaranteed and backed with the full faith of the Federal Government. As a result of this, the government cannot default, and in the event that the government cannot pay, the CBN can print money to settle all investors. Also, the instruments are issued at an interest rate often referred to as a discount rate.

Besides all these, T-Bills and OMO Bills share some similarities such as they are both issued in maturities of 91-days, 182-days, and 364-days. Both T-Bills and OMO Bills can be bought in the primary and secondary market, and are discount instruments because the investor gets its interest upfront. It is also noteworthy that income from OMO Bills and T-Bills are exempted from taxes.

However, rates on the instruments depend on the objective and aggressiveness of the apex bank. The CBN could lower OMO rates to cut the cost of borrowing or keep rates attractive just as we currently have in Nigeria. This is to attract foreign portfolio investment and sustain inflows of dollars when the external reserves are pressured.

In simple terms, OMO Bills are issued and owed by the CBN. However, even though Nigeria T-Bills are issued by the CBN on behalf of the federal government, they are owed by the federal government and captured as part of its domestic debt burden.

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Data

Federal government Eurobond Yields on Eurobonds fell 0.047 percent point week on week from an average of 6.53 percent when the market closed last week to 6.49 percent as at Thursday (data available on FMDQ website on 8pm on Friday) following buying interest in Nigeria’s Sovereign Eurobonds.

Corporate Eurobond Yields on corporate Eurobonds saw an uptick of 0.01 percent points across all tickers from in the last week to Thursday October 30, with average yield rose slightly from 5.305 percent last week to 5.315 percent. www.businessday.ng

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Monday 04 November 2019

BUSINESS DAY

Fixed Income

Inter-bank rates decline after CBN mopped up N330bn HOPE MOSES-ASHIKE

T

he Overnight inter-bank rate declined by 1.29 percent to close at 4.07 percent on Friday after the Central Bank of Nigeria (CBN) on Thursday moppedup a total of N330 billion from the financial system, via Open Market Operation (OMO).

Also, the Open Buy Back (OBB) rate, the money market instrument used to raise short term capital, declined by 1.64 percent to close at 3.00 percent.

The CBN on Thursday auctioned N50 billion each for 96-day and 187-day tenors and N230 billion for 362-day tenor.

While the longer term bill (362day) was oversubscribed, the short (96-day) and medium term (187day) instruments were undersubscribed.

“The long term bills remained significantly attractive relative to the Primary Market Auction (PMA). Seems the banks and Foreign Portfolio Investors (FPIs) restrained from the PMA to invest in the OMO auction,” Ayodeji Ebo, managing director, Afrinvest Secu-

rities limited said.

Total subscription for the longer term bill stood at N419.09 billion at a bid range of between 13.00 and 14.2 percent. Total sale was N336.09 billion at a stop rate of 13.32 percent. The offer is expected to mature on October 27, 2020.

The CBN only sold N10.50 billion out of N50 billion offered to investors for the medium term instrument at a stop rate of 11.75 percent. The offer, which matures on May 5, 2020 was undersubscribed to the tune of N11.50 billion at a bid range of between 11.5 and 13.0 percent.

The short term bill was also undersubscribed to the tune of N16.50 billion out of N50 billion earlier offered as investors bid at arrange of between 11.39 and 11.55 percent.

However, the CBN sold a total of N16.50 billion at a stop rate of 11.55 percent. The offer matures on February 4, 2020.

The CBN intervened through direct Open Market Operations (OMO) auctions, to influence liquidity in the system during the third quarter of 2019. The tenors to maturity of the instruments ranged from 84 days to 364 days. Total amount offered stood at N3.43 tril-

lion, subscription was N5.94 trillion and allotment wasN2.62 trillion.

The bid rates ranged from 11.20 per cent to 15.50 per cent, while the stop rates ranged from 10.00 per cent to 13.50 per cent. Repayment of matured CBN bills amounted to N3.45 trillion, translating to a net injection of N823.71 billion.

At the Government securities market, NTBs of 91- 182- and 364-day tenors, amounting to N1,000.51 billion, N2,434.83 billion and N1,000.51 billion were of-

Week Ahead Ahead (Monday, November 4 – November 8, 2019) Week

fered, subscribed to and allotted, respectively, at the auctions held in the third quarter of 2019 on behalf of the Debt Management Office (DMO). The CBN’s economic report for the third quarter show that total subscription and allotment at the 91-day auction, were N158.03 billion and N80.62 billion, respectively. The bid rates ranged from 9.00 per cent to 17.00 per cent, while the stop rates ranged from 9.74 per cent to 11.10 per cent.

For the 182-day auction, total

subscription and allotment were N233.18 billion and N124.42 billion, respectively. The bid rates ranged from 10.00 per cent to 15.00 per cent, while the stop rates ranged from 10.00 per cent to 11.80 per cent. Total subscription and allotment at the 364-day auction were N1,653.44 billion and N706.61 billion, respectively, with bid rates ranging from 10.50 per cent to 14.82 per cent, while stop rates ranged from 11.14 per cent to 13.30 per cent.

Chart of the week

Week Ahead (Monday, 8th April – Friday, 12th April, 2019) Commodity Oil: Brent prices traded a little above $60 per barrel in the previous week. The commodity settled at $61.26 at 7:00 PM Nigerian time on Friday following the news that the United States economy is doing much better than projected.

Stock The Nigerian equities market closed on a positive note on three out of five trading days last week, but the losses recorded in two days pulled in the market into the negative territory for the week. The NSE All Share Index shed 0.21 percent during the week to close at 26,293.30 points, largely driven by declines in banking and insurance indexes.

With Nigerian stocks down 16.34 percent year-to-date as well as the recent regulatory pronouncements by the CBN on OMO Bills which could depress yields in the money market, analysts at Afrinvest Securities believed that opportunities still exist for investors seeking superior returns in the equities market.

The analysts recommended a collection of liquid stocks with high dividend yields and strong fundamentals. These include - Total, Zenith Bank, UBA, Conoil, GT Bank, Dangcem, Nascon, MTN, Custodian and Access Bank.

Currency The exchange rate was relatively stable across all market segments. It traded flat at N360/$ at the parallel market. At the interbank market, the currency hovered N306 to a dollar, and closed at N362.75/$ on the Investor and Exporter window. Going forward, the naira is expected maintain stability across all windows given CBN’s continuous intervention in the currency market.

Fixed Income

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Nigeria’s gross foreign reserve has declined by $4.545bn as the Central Bank of Nigeria continues to support the naira which has remained relatively stable year-long. The reserve is now at its lowest in 2019 after peaking at $45.175bn in June. On a year-to-date basis the reserve has declined about 6 percent.

The CBN which has been intervening in the foreign exchange market blamed softer oil prices in the global market. Oil is Nigeria’s biggest foreign exchange earner.

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Budweiser vs. Heineken: ABInBev woos with promos as premium lager battle heats up OLUWASEGUN OLAKOYENIKAN & SEGUN ADAMS

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country.

As at September 2019, listed beer makers have spent a total of N387 billion on sales promotions since 2015. After spending N86 billion in 2015, players increased spending by five percent in 2016, nine percent in 2017 and 2018, spent 15 percent more than the previous year to record some N113 billion expenses.

Despite the steady increase in promotional expenses, industry sales growth has remained relatively flat at 11 percent per annum from 2016, although it rose to 12 percent in 2017 before a U-turn the year after.

But a closer look at trends for industry players suggests that International Breweries increased promotional expenses have paid off in greater market share.

The firm grew promotional spending by 42 percent in 2017 and saw market share rIse slightly to 6 percent from 5 percent a year earlier. Likewise in 2018, promotional expenses surged 312 percent to about N21 billion, while market share jumped from 6 percent to 21 percent.

Apparently, these are not the best of times for beer makers in the country as sluggish economic growth – which grew 1.94 percent in the second quarter of this year – has seen their profit margins reduced drastically.

Low purchasing power of consumers means beer makers cannot increase price to cover the increasing operating cost, epileptic power supply, and the notorious bad road network most especially the Apapa gridlock which is the road leading to the nation’s busiest port, which has hampered the profitability of the major players in the country.

The new excise duty recently introduced by the federal government also impacted negatively on their earnings. In 2011, there was a disruption in the beer market with the arrival of SABMiller, then, the world’s second-largest brewer, into the country, and its acquisition of majority shares in International Breweries Plc, makers of Trophy Beer, located in Ilesa, Osun-State.

However, in 2017, AB InBev the world’s largest brewer acquired 72.17 percent of SABMiller’s shares

”

he entrance of Budweiser into the Nigerian beer market coupled with the loads of promos accompanying the new brand in a bid to entice customers is changing narrative in the market.

Africa is the fastest growing region for beer consumption with Nigeria leading the pack of 10 biggest beer drinking countries on the continent, according to a report by Global Data, a market research group.

Beer brands make up just 16 percent of alcohol consumption in the country, while other drinks – spirits and locally-brewed drinks – make up a bigger chunk of 84 percent.

In its latest data the National Bureau of Statistics, (NBS) said Nigerians spent N208 billion on alcohol consumption in 2016, this was even during the mix of economic recession.

Nigerians are very hardworking and also have time to enjoy themselves despite the stuttering economy. For beer-makers in the country, despite the plethora of challenges, the Nigerian market offers an incredible opportunity.

Few years ago, the race for the biggest beer market share in the country was a duopolistic market structure between Heineken N.V., owners of Nigerian Breweries Plc and Diageo, owners of Guinness Nigeria.

Interestingly, the narrative seems to have changed with the recent introduction of new product such as Budweiser, dubbed as the king of beers, from the stables of AB InBev, the parent company of International Breweries, into the Nigerian market.

The introduction of Budweiser into the Premium lager beer segment of the market pitches it against Nigerian Breweries’ Heineken.

Since its entrance into the Nigerian market, Budweiser has continued to deploy various promotions and campaigns to lure drinkers who are looking for a change of taste.

A visit by BusinessDay to a popular joint in Ikeja reveals that Budweiser drinkers are now rewarded with an extra bottle of Budweiser drink after taking two bottles of the brand and are also rewarded with t-shirts and caps.

On the media side of things, Budweiser picked up the exclusive broadcast sponsorship rights for the FIFA World Cup Russia 2018 with DSTV, Nigeria’s largest pay-TV platform. It is also the sole sponsor of LaLiga matches on DSTV, leveraging on the popularity of the game of football in Nigeria.

The move is a strategy to put the new beer right in the face of Nigerians and also take advantage of the popularity of the game in the

The introduction of Budweiser into the Premium lager beer segment of the market pitches it against Nigerian Breweries’ Heineken. Since its entrance into the Nigerian market, Budweiser has continued to deploy various promotions and campaigns to lure drinkers who are looking for a change of taste

in International Breweries Plc, in a series of transactions which resulted in AB InBev acquiring controlling interests in the company.

To further extend its market presence, a merger arrangement was consummated with International Breweries Plc and two other local brewers: Intafact Beverages Limited, makers of Hero beer which is popular in the South-Eastern part of Nigeria, located in Onitsha Anambra State, and Pabod Breweries Limited, makers of Grand Lager, located in Port-Harcourt. All these Plants are now controlled by AB In Bev. In anticipation of the arrival of Ab InBev into the country, Nigerian Breweries Plc also acquired some regional breweries across the country. The company recently introduced the Tiger Beer brand into the Nigerian market. The company

acquired a controlling interest in Sona Group in January 2011 and also merged with Consolidated Breweries Plc, thereby adding its three breweries in Ijebu-Ode, AwoOmama, and Makurdi to the Nigerian Breweries.

AB In Bev owned International Breweries, recently commissioned a $250 million plant which is strategically located in Sagamu to feed demand in the Lagos market. The new plant is to intensify competition with Nigerian Breweries and also pushing more volumes of Trophy and Hero Lager into Nigerian Brewery’s important markets in the southwest and southeast.

Early this year, International Breweries Plc makers of Budweiser announced a price change in its premium brand. It however, announced a reversal of prices in March after the other two players namely Guinness and Nigerian Breweries refused to follow suit.

The interval of price change saw significant sales dropped in Budweiser, with Nigerian Breweries’ Heineken and Diageo’s Guinness Gold being the biggest winner in the price war.

Dayo Ayeni, vice president and Sub-Saharan Africa consumer analyst at Renaissance Capital said the lull performance in the premium lager segment may soon be over.

According to Ayeni, the premium lager segment has witnessed improved activity unlike years back when Nigerian Breweries’ Heineken dominated that market. Between Q2 2019 and Q2 2019, AB InBev has moved in with Budweiser which was launched on the eve of the soccer world cup held in Russia.

“The reason for that is the absence of strong price increases in their core brands mainly the mainstream brands and players are trying to drive net positive growth in gross revenue per hector litre for their brands which could help them extend margins,“ he said.

Ayeni further noted that management of IB will be stuck with Trophy and Hero drinks contributing to their bottom line. He however advised management to invest behind the brand as investors are looking for margin expansion and good returns.

“Management is now faced with the dilemma to support the brands with investment or do you step out slightly to get expansion in margins and hold back on branding and advertising,” he said.

He, however, lamented that the beer is industry still looking for the catalyst as the consumers are still under pressure.

“The consumer purchasing power will improve with the muchexpected minimum wage increase; the volume that these companies are reporting is still not driven materially as investors would.”

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