BusinessDay 06 Aug 2020

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Biggest Gainer MOBIL N173.40

0.92pc

Everdon Bureau De Change

Bitcoin

NSE Biggest Loser ZENITHBANK N16.95

24,882.04

-2.65pc

Foreign Reserve $ 35.7bn Cross Rates GBP-$:1.29 YUANY - 55.70 Commodities Cocoa US$2,477.00

Gold $2,038.20

… Petrol pump price could top N150/per litre for August ISAAC ANYAOGU

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+0.37

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N300

Buy

Sell

$-N 467.00 474.00 £-N 583.00 596.00 €-N 535.00 544.00

Crude Oil $ 45.87

news you can trust I ** THURSDAY 06 AUGUST 2020 I vol. 19, no 622

Fuel queues loom as government’s swap deals come under pressure

₦5,201,301.86

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www.

FMDQ Close Foreign Exchange

Market

Spot ($/N)

I&E FX Window CBN Official Rate

389.25 381.00

Currency Futures

($/N)

3M -0.01 1.20

12m NGUS jul 28 2021 421.79

6M

5Y

-0.11 1.70

1.44

10 Y 0.00

30 Y -0.11

6.38

8.02

10.29

36m NGUS jul 26 2023

60m NGUS jul 30 2025

495.26

581.52

@

g

g

SPECIAL SERIES

Why Nigeria needs single FX rate - IMF OLUFIKAYO OWOEYE & segun adams

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ong queues could soon return to petrol stations across Nigeria as the Pipelines and Product Marketing Company (PPMC), the

he International Monetary Fund (IMF) has again urged the Central Bank of Nigeria (CBN) to quickly come up with a clear strategy and timeline on how it intends to achieve full unification of the country’s multiple exchange rates.

According to the IMF, this will

Continues on page 30

Inside

Heirs Holdings appoints Dan Okeke as group executive director P. 31

fgn bonds

Treasury bills

Continues on page 31 President Muhammadu Buhari (r), with Aminu Masari, governor, Katsina State, during a meeting on the security situation in Katsina and the North West at the Presidential Villa in Abuja, yesterday.

See full report, titled, ‘Expert Prognosis of Nigeria Economy’ on pages 26 & 27

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news Agusto, GCR affirm ‘AAA’ long-term credit rating of Infracredit, with Stable outlook

BUNMI BAILEY

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eflecting the strong fundamentals and credibility of Infrastructure Credit Guarantee Company Limited (InfraCredit), foremost rating agencies, Agusto & Co (Agusto) and Global Credit Ratings (GCR) simultaneously reaffirmed the “AAA” credit rating of the premier infrastructure guarantee company.

Notwithstanding the unprecedented impact of the COVID-19 pandemic, which continues to weaken global and domestic macroeconomic outlook, InfraCredit sustained its strong risk capital and broader balance sheet, with significant headroom to underwrite further guarantees in pursuit of its mission of unlocking long term local currency infrastructure finance in Nigeria’s real sector.

Notably, InfraCredit’s “AAA” National Scale Rating, which is at par with the Nigerian Sovereign and reinforce the unparalleled credibility of its unconditional irrevocable guarantees, partly reflects the support of its shareholders and capital providers, which include the Nigeria Sovereign Investment Authority (NSIA), Africa Finance Corporation, GuarantCo (a Private Infrastructure Development Group company), and reput-

ed multilateral institutions, including KfW Development Bank, who are committed capital providers.

In addition, InfraCredit’s balance sheet and guarantee programmes are further supported under risk-sharing arrangements with the United States Agency for International Development (USAID), amongst other development finance institutions.

In arriving at its rating, Agusto reiterated, “The rating assigned to InfraCredit recognises its strategic importance and developmental role in the provision of local currency guarantees to enhance the credit quality of debt instruments issued to finance creditworthy infrastructure assets in Nigeria.”

The rating agency further noted, “The assigned rating reflects InfraCredit’s quality guarantee and investment portfolios, backed by an acceptable risk management framework, good return on investments and an experienced management team.”

Similarly, GCR emphasised, “InfraCredit’s “AAA” rating, with a stable outlook reflects its operational uniqueness as a guarantee provider, strong ownership and management profile, demonstrated financial flexibility, strong liquidity position, and profitability track record so far.

Residential real estate tops considerations as investors rethink, refocus products offering CHUKA UROKO

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n the present unusual time full of uncertainty, complexity and anxiety arising from the impact of a novel virus that has ravaged global economy, residential real estate offers low hanging fruits for investors as they rethink, refocus and even reimagine their investment choices and products offering, experts have said.

The reason for this, the experts say, is simple. Bola Adesola, vice chairman for Africa, Stanbic IBTC Bank, explains: “If tailors or fashion designers, caterers and chemists are rethinking their strategies in line with the

opportunities Covid-19 has presented to them, there is no reason investors in real estate should not do the same in the direction of the opportunities that may also lie in the sector.”

It has been noted that opportunities seem to be drying up in commercial real estate, especially in commercial office space, as a result of companies embracing the new normal or working virtually or remotely away from physical office buildings.

Lay-offs, pay-cuts and other factors that are the reasons for rising vacancy rates, estimated at 40 percent and 30 percent, in office buildings and retail outlets, respectively, are on the contrary, reasons for the rising demand in the residential market. But this demand is mainly for small-

size, pocket friendly, family housing units.

It needs be pointed out however that pocket of opportunities still exists in commercial real estate. Businesses still need offices despite working at home; manufacturers need factories and warehouses while e-commerce companies need logistics, such as sorting and dispatch centres and this is why, according to Adesola, developers should still build commercial premises. For this reason, she advises that investors should not limit themselves. “While we focus on our lives and livelihoods, and even our liberty, in the midst of this pandemic, we need to think smart; “opportunities exist even for tenants, and property transactions will always happen even in this

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lour Mills of Nigeria plc, market operator in food and agroallied products, finished the year strong with record 184 percent profit growth, analysis of its audited 2019/20 financial results shows.

With a growth in all three key segments of Food, AgroAllied and Sugar businesses, the 60-year-old company reported a Profit After Tax (PAT) increase by N7.4 billion from N4 billion in the full year 2019 to N11.4 billion in 2020.

Analysis of the financial result announced on August 3 shows that the 2020 profit growth rate is the highest the company has recorded in the last six years. Closest to the 184 percent records was in 2016, when it reported a PAT growth of 70 percent.

The Group had a successful year despite prevailing economic headwinds and the difficult operating terrain of Apapa.

In line with management’s strategy to continue to stimulate organic growth

in all segments of the business, Flour Mills 2020 financial revealed that its AgroAllied division reached profitability in 2019/20, and this was behind the consistent and focused investments that have been made in its locally sourced segment over the last few years.

Flour Mills had invested about N95 billion in its agroallied business. The company in 2016 injected N45 billion in its Sunti Golden, one of only two sugar mills in the country capable of producing crystallised sugar from locally grown sugar cane. This was an addition to the already invested N50 billion in a state-of-the-art sugar refinery in Apapa capable of refining up 2000mt of sugar per day.

“Our PAT nearly tripled from N4 billion last year to N11.4 billion in the current year. This is partly attributable to the improved performance of our Agro-Allied Businesses and in line with our strategy to continue to grow the wealth of our shareholders,” Paul Gbededo,

Continues on page 30 www.businessday.ng

Continues on page 30 Ibrahim Ida, (Sardauna Katsina), chairman, Bristol Palace Hotel, when he received the Best Nigerian Tourism Award for his outstanding contributions to the development of the Nigerian tourism industry, recently.

How Flour Mills rides on agro-allied business to post highest profit growth in 6yrs Endurance Okafor

trying time,” she notes.

Andrew Nervin, chief economist at PwC, agrees, saying, “Now is the time for people to participate in the real estate market. There are opportunities in Lagos as the largest city in the country.

After this crisis, we are going to have a new approach to real estate.”

Nervin, who spoke at a webinar hosted by Fine and Country West Africa in Lagos, is of the view that what Nigeria needed now was to ensure that the environment was enabling and also to do economic restructuring.

Explaining further the reason developers and investors opt for small-size residential family units such as one-

Investors may rethink Unilever’s shares on plan to separate N1trn worth tea business Iheanyi Nwachukwu

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nilever plc, the parent company of Unilever Nigeria plc, plans a strategic review of its global tea business, which includes brands like Lipton, Brooke Bond and PG Tips.

Unilever Overseas Holding B.V. owns a 60.04 percent share in Unilever Nigeria while other investors account for just 40 percent of its equity.

The multinational says it will retain only the tea businesses in India and Indonesia, and the partnership interests in the ready-to-drink tea joint ventures.

The decision, according to Unilever, will make the rest of its tea brands and geographies and all tea estates have an exciting future, “and this potential can best be achieved as a separate entity.”

The tea business that will be separated generated €2 billion (N1.06trn) in 2019.

A process will soon begin

… Nigeria affected to implement the separation, which is expected to conclude by the end of 2021, which Unilever Nigeria has notified the Nigerian Stock Exchange (NSE) about.

“We shall keep the NSE informed of any subsequent development on this matter as it affects Unilever Nigeria plc. The disclosure is made for and on behalf of the Board of Unilever Nigeria plc,” according to an August 5 note signed

by Abidemi Ademola, general counsel/company secretary, Unilever Nigeria plc.

Unilever Nigeria manufactures and markets consumer products primarily in the home, personal care and foods categories. The company sells products such as Omo washing powder, Key soap, Royco bouillon, Lipton tea, Pears baby care goods, Vaseline petroleum jelly, Lux soap, and Close Up toothpaste.

In recent times, the fortune

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of the once colossus in the consumer goods space has been on a free fall, no thanks to the intense competition in the sector that has seen price sensitive consumers shift to cheaper brands.

The N11.20 per share, which Unilever Nigeria stock traded on August 4, places it among worst performing equities on the Nigeria Bourse.

The stock has lost 49.1 percent of its year-open value.

Market analysts differ in their advice to existing and potential shareholders of Unilever Nigeria as evidenced in their target price (TP) for the stock.

“Unilever Nigeria continues to sit on an increasingly high cash balance, now at N44.6billion. We review our year-end target price to N14.86/share (expected return of 13.5percent) largely buoyed by the company’s healthy cash position,” said United Capital research analysts in their July 22 note. They want investors @Businessdayng

to “Hold” the stock.

On the contrary, Vetiva Research analysts, who set a target price of N8.21 for the stock, want investors to “Sell”, noting that the company’s half-year results released recently show costs, impairment losses are deterring earnings momentum.

Nigeria’s large population remains very attractive to consumer-facing companies and retailers, buoyed by the rapid urbanisation rate and the rising spate of the youthful population that is eager to try new products and brands.

However, weak consumer disposable income and high poverty rates continue to make the case for growth less compelling.

Also, Nigeria’s tough operating environment - decrepit infrastructures, porous borders, double-digit inflation and sluggish economic recovery, have further compounded consumer goods companies’ woes as they struggle to break-even.

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Research&INSIGHT A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

In association with briu@businessday.ng

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Analysing the gender gap in English literacy in Nigeria ADEMOLA ASUNLOYE

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n Nigeria, self-reported literacy rates in reading and writing in English Language is generally higher among males than in females: this was extrapolated from the Nigeria Living Standard Survey Report of 2018/2019.

As of the reference period, 58.5 per cent of the male population who are above 5 years of age were reported to have acquired knowledge in English literacy compared to females (of the same age as males) in which 49.0 per cent of female population are literate in reading and writing in English Language.

More male than female urban dwellers have higher literacy rates in English compared to the three major languages in Nigeria—Yoruba, Hausa and Igbo. Circa 76.2 per cent of the male population are literate in English while 65.5 per cent of the female population are literate in English.

Similarly, in rural settlements, the English-literate population which is a fraction of the male population culminated 48.5 per cent; this is higher than that of the female population, where 38.1 per cent of them are literate in English.

What this means is that, out of every 100 males and females who dwell in urban areas in Nigeria, about 76 and 65 of them respectively are literate in reading and writing in English; while this remains 48 and 38 of every 100 males and females respectively in the rural areas.

Across the states and the Federal Capital Territory (FCT) Abuja, English literacy is prevalent in Lagos with predominance of males than females; where 94.2 per cent of the male population are literate in English compared to 91.3 per cent

in the female population.

However, it is least prevalent in Jigawa State where 21.2 per cent of the males form the English-literate male population, while 13.0 per cent of the female population are literate in English.

Since making meaning is the heart of all literacy practices as it plays a central role in determining an individual’s life choices and chances, it was revealed that the English literacy is prevalent in the population between the ages of 15 and 24 years.

Of the total male and female populations separately and within the ages of 15 and 24 years, 78.3 per cent of the males are literate in English while 72.3 per cent females are literate. Whereas English literacy is expectedly least prevalent in children that are not more than 9 years of age.

The gender gap in English literacy gets wider and wider with increase in age. From the age group of 10 to 14 years, the gender gap in English literacy

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increased from a negligible 0.6 percentage points to 28.9 percentage points in the ages from 65 years and above: where there is dominance of male within most of the age groups.

A major reason for this gender gap is the number of years that was spent on education— more males than females have higher years of education. On average, males spend about 6.6 years on education compared to females who spend 5.6 years; with a year-of-education gap of 1.0 years. This puts the average number of years spent on education by a person in Nigeria to 6.1 years.

In a similar trend, disaggregated data into urban and rural demography reflected a predominance of more years of education on the former. With a significant gap of 2.6 years spent on education, an urban dweller (7.7 years of education) exceeds a rural dweller who spends an average 5.1 years on education.

While in urban settlement, the average number of years

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males and females spend in education is 8.2 years and 7.3 years respectively, people in rural settlements spend an average of 5.7 years (males) and 4.6 years (females) on education.

Across the states, people in Lagos State (8.9 years) and then Rivers State (8.5 years) have the highest average years of education. There, we also see male predominance, with a gender gap of 1.0 years of education in Lagos and 0.7 years in Rivers.

On the contrary, states like Yobe (3 years), then Niger (3.2 years) have the least years of education among their respective populations.

The gender gap in years spent on education at 2.0 years is widest in Taraba State, where from its population, males spent an average of 5.5 years while females, 3.5 years. Niger State with a gap of 1.7 years trails Taraba on the chart.

Across the states in the country, net attendance rates and enrollment rates against the population of school age

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declines with increased level of education (schooling) in Nigeria. Net attendance rate among children of primary school age in Nigeria is 65.8 percent. At the Junior Secondary Schools, it dropped to an average 38.2 per cent, and further to an average 33.8 per cent for students in Senior Secondary Schools.

The highest rate of net attendance in Primary Schools (84.9 per cent) was recorded in FCT Abuja; the highest rate of net attendance in Junior Secondary Schools was recorded in Imo State; while the highest rate of net attendance in Senior Secondary Schools was recorded in Ekiti State.

Similarly, the gross enrolment rates decline with level of schooling. At the Primary level, the enrolment rate which was at 87.1 per cent dropped to 67.6 per cent at the Junior Secondary level, then a further to 63.0 per cent at Senior Secondary Level.

The gender gap in enrolment rates across the three levels of schooling was relatively constant at 3 to 4 percentage points; overall the gap was at 3.0 percentage points.

Between the ages of 6 and 17 years, more than half of the of children (58.8 per cent of the male population and 57.2 per cent of the female population) attend public schools, about 32 per cent of the children attend private schools, about 8 per cent attend religious schools, while about 1.9 per cent attend other educational institutions.

Even though getting education is a critical step to walking a path of success and to becoming socially acceptable, about 14.3 per cent of the population above 5 years of age in Nigeria have never attended school. This number is higher in rural areas (18.9 per cent) compared to urban areas (6.3 per cent).

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UBA’s MSME workshop – a pivot point for economic development Positive Growth with Babs

Babs OlugbemI

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he United Bank for Africa was at it again in the journey to building Africa’s economy through the development of the micro, small and medium enterprises (MSMEs). The bank organised an online workshop on July 29, 2020, focusing on booking and accounting, and tax management for small businesses.

I was connected to the programme because building sustainable businesses is what I do with my team for a living. For over two years, I have used this column, Positive Growth with Babs to share tips on how businesses could develop from the idea and initiative of one person to a global brand that outlives the owner. I have shared tips on leadership, culture, teamwork, employee engagement and experience, capacity building, customer management and institutionalisation of organisations to promote the sustainability of businesses. The reasons are not far-fetched. Africa needs more of the MSMEs to develop economically, utilise the capacity of her population and maximise the potential of her vast resources. The high rate of unemployment in Nigeria is attributable to the low volume of productive and successful MSMEs. Most of the developed economies have strong MSMEs as the foundation of their employment rates and high standard of living. In the United Kingdom, the number of private sector businesses as of 2019 according to the UK government was put at 5.9 million. Of which 5.82 million businesses were small (0 to 49 employees), 35,600 enterprises were

medium-sized (50 to 249 employees), 7,700 companies were large (250 or more employees). In India, the total number of MSMEs was more than 63 million, with over 31 percent GDP contribution in 2019. India also has a government ministry for MSMEs, with a cabinet minister who focuses on MSMEs in the country due to their colossal employment generation and contribution to the standard of living.

According to the NBS, the total number of SMEs in Nigeria is estimated at over 41 million. The number of SMEs in Nigeria is grossly inadequate for her population of 250 million people given the high component of the youth and agile segment which must be productively engaged and keep away from criminal activities.

In the past years, my team has intentionally focused on helping the MSMEs to build sustainable business culture and processes to transform ideas behind the enterprise into generational outputs. In my experience as a leadership and business consultant, I have seen businesses that are in their third or fourth generations, especially in the FMCG distributorship line. These businesses, without structure and failure-proof processes, have trained and fed many people as dependable sources of livelihood. I have equally seen successfully built companies with over four decades of existence crumbled because of ignorance and inadequate succession plans. I had seen an heir apparent who mistook turnover of her mother’s business to be the profit of the company and ordered four new sets of cars as his first business decision when he took over the company. He crunched the figures against the business built before his birth.

The value of UBA’s MSME Workshop is generational. The bank aside from providing financial services has contributed to the sustainability of the businesses of the attendees. I attended the workshop out of keen interest and can attest that the duo of Chioma Ifeanyi-Eze and Emeka Amadi did excellently in their presenta-

tions. Chioma, who is the founder of the Accounting Hub, taught the participants on book keeping and accounting basics for small businesses. She highlighted the importance of recording all expenses and income using the accrual basis and the need to use relevant accounting software for ease of processing and accuracy of the reporting.

Amadi, the taxman and the group head of UBA tax management team, focuses on the importance of recordkeeping and knowledge of relevant tax laws. He explained the need for the business to file their annual tax returns and be responsible to the society. I have no iota of doubt that the attendees’ businesses will not remain the same if they put into practice what was shared with them. It is good that UBA is taking the lead in developing the capacity of the MSMEs. It is easier for banks to get the attention of the small business owners than the business consultants who struggle to convince their clients of the need to have structure around their businesses.

Given my experience, getting the MSMEs owners to embrace enduring policies, processes, procedures, and building a business culture that guarantees sustainability is not easy. There is a different psychology and methodology to change the “I own it and know it all” of an average MSME’s owner who might see business consultants as people with theories and without the practical knowledge required to help his or her businesses. I met a lot of resistance in my journey as a business coach when I started.

Today, my team is supporting businesses with presence outside Nigeria and in five countries across Africa. We were in the United Kingdom last year to support the expansion plan of one of our clients, and I have visited countries in Africa for a client who sees value in building capacity for his business through our coaching and process improvement services. What we do and focus on is to make the company independent of the owners and focus the owners strategically for diversification of revenue streams. The more a business

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If the banks do more than granting credit facilities by focusing on developing the business capacities of this segment, the success rate of MSMEs will be high resulting in increasing levels of employment, high standard of living and business survival

Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng Babs Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

The paradox of lower yield but higher risk (1)

BALA AUGIE

Why credit ratings, guarantees, other enhancements matter

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t is amazing how everyone looked forward to 2020 as the “magic year” only for the yearning aspirations to be undermined by the unsuspecting outbreak of the novel coronavirus; COVID-19, which has infected over 17 million people, with almost 700,000 mortalities, globally. With unprecedented response, coordinated and fragmented, aimed at stemming the spread ahead of a vaccine, most economies have seen the worst economic shock since the global depression.

Whilst the International Monetary Fund (IMF) expects the global economy to shrink 4.9 percent in the year, it posits more adverse impact on emerging and frontier markets. For instance, Nigeria, South Africa and Brazil are projected to record negative 5.4 percent, 8 percent and 9.1 percent GDP growth respectively.

In developed countries, accommodative monetary policies are complementing fiscal efforts in mitigating the shock on economies, albeit fiscal authorities in Africa and most developing regions are stuck between a rock and a hard surface, as there is very limited room for fiscal accommodation.

Indeed, as commodity prices plummet and traditional taxes wane, given weak aggregate demand and generally low economic activities, African governments are increasingly seeking alternative revenue streams to keep governance afloat and hopefully tame rising debt profiles.

Like peers in Europe and Americas, African central banks have loosened monetary policies,

easing interest rates to stimulate local credit to all economic units – household, businesses and the government, particularly as foreign capital withers.

While empowering the Central Bank of Nigeria (CBN) to leverage unorthodox measures to counteract the unending exchange rate pressures, Nigeria’s monetary policy committee reduced benchmark rate by 100 basis points to 12.5 percent at its May meeting. More so the CBN has used varying administrative measures, including the prohibition of non-bank domestic investors from open market operations (OMO) and the regulation of minimum loan-to-deposit ratio for banks, to lower interest rates. Observably, yields on sovereign securities have declined an average of 500bps across maturities, with the most impact being on the short-dated securities – treasury bills; the 90-day, 180-day and 360-day treasuries were printed at 1.2 percent, 1.5 percent and 3.4 percent as at 29th July, 2020.

Quite exciting that yields on the FGN Bonds are down to single digit, setting new record-low, as yields come-off peak levels to trade at decadelow levels, last seen in 2009/10 accommodative monetary policy cycle. Notably, the 10-Year FGN Bond closed at 6.0 percent at the last auction on 22 July 2020, with the 30-Year Note also printing at 9.95 percent.

Taking stocks in a changing rate environment, are there gainers or losers?

With Nigeria’s debt service burden rising towards unsustainable levels, the low interest

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rate may help to ease the fiscal pressure, as it provides an opportunity for the government to refinance maturing debt obligations at lower interest rate, thereby partly mitigating the risk of reaching a fiscal cliff. Corporates, particularly SMEs, may leverage the current rate environment to reduce cost of capital, thereby improving profit margins, even so other macroeconomic factors may mask such potential upside to margins, as depreciating Naira and consistent uptick in headline inflation may be eroding the benefit of lower financing cost.

Whilst the government and corporates (with net debt exposures) are clear gainers, who bears the cost? Juxtaposing the current yield environment with rising headline inflation, reinforces the negative real return on Naira-denominated assets, a risk which continues to discourage savers and investors in Naira-denominated financial assets.

Whilst the FGN 12.98 percent March 2050 (the 30-year sovereign bond) trades at an effective yield of 9.76 percent, headline inflation printed at 12.56 percent in June, thus reinforcing the negative return on Naira-denominated assets. The impact of a negative real return is particularly harsh on pension and life insurance funds, given that the opportunity cost of a negative real return is perhaps the highest for these class of investors. For Retiree Savings Accounts, the negative real return translates to lower pay-out to pensioners, thus implicitly reducing their standard of living. Given that

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can operate without undue interference from the founders, the better it is for it to be sustainable and stand the test of time.

I recently shared my thoughts with a protégé who is delving into consulting for the MSMEs. Getting an average small business owner to pay for consulting service is difficult but not impossible with time. At the enlistment stage, I have always asked my prospective clients how they will feel at age 70 seeing their businesses thriving and pay the salary of the employees. I use their answers to let them know the importance of building enduring structure and processes to sustain their business ideas. I am also fond of asking my new clients a question asked by one Harvard professor to identify their intention for their businesses. I will ask them if they will continue to do their main business or not when given all the money they need to live till the end of their existence. Those who still choose to do their existing business activities even without the need for money are the people that are doing the businesses as their life calling.

I take delight in working with them. It is my life’s call to support businesses and individuals to be at their best and generate visible results within 90days.

In the book, the value chain banking, I wrote on how bankers should classify their MSMEs customers into four quadrants to support them to build sustainable businesses. I equally advise bankers on what the customers are looking for before they start relying on their bankers as business partners for progress. MSMEs owners want bankers they can trust and respect. The trust and respect quadrants are critical in the relationship mapping and building for business bankers.

annuity payments are fixed, the opportunity cost of a low interest rate environment is borne by the life insurance firm, resulting in major underwriting losses for most life insurance firms whilst also making new annuity offerings less attractive to new clients.

Here lies the risk Pundits suggest that the low interest rate environment may persist through the next economic cycle, thus informing the appetite of some fund managers to adjust to this low rate environment as the new normal. Albeit there are contrarians whose perspectives are shaped by concerns on Naira stability and the need to increase interest rate in the near term to attract foreign portfolio investments and stem the rising demand for foreign currency. The uncertainty on interest rate outlook brings to fore the dilemma of fund managers, who are stuck in between the risk of reinvesting maturing assets at lower returns should the low interest rate environment persist and the risk of piling up low-return assets which may undermine relative performance of the funds should interest rate rises. Beyond the reinvestment risk, there are salient but perhaps more pertinent risks, such as the risk of adverse selection, which may result from probable aggression of fund managers to seek higher yields. With leading indicators suggesting that Nigeria may once again slip into recession over the next few quarters, credit ratings, guarantees and other credit enhancements become pertinent in appraising investment opportunities.

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NDDC, NSITF, NEDC & rapacious ‘lootocracy’: It has always been like this!

ik MUO

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ometime ago, I resolved to devote this column to the Coro war front. However, the relentless bloodletting in the land, NDDC et al and the 2M affair (Magu & Malami) are irresistible. Today I face the NDDC et al and start by reminding us that there is nothing new. But I will start with some Coro-related stories President Buhari has harkened to my call on 6/7/20 as he wore the facemask recently on his trip to Mali. Up PMB? Cross River State has reacted drastically to the Coro-induced meltdown by slashing its 2020 budget from N1.1 trillion to N147 billion. The PTF has extended the ease of lockdown by 1 week and authorised exit classes to reopen by 4/8/20. I don’t know whether the schools have complied with the impossible conditions issued last week but while we are at it, South Africa, (with 13000 health workers coronised) has closed its schools which it opened earlier on.

It is also on record that Nigeria Ghana, Cote d’Ivoire, Senegal and Guinea account for 80 percent of cases in West Africa while Lagos State Government spends about N1m daily to treat each severe Coro-case. Brazilian president Jair Bolsonaro who tested positive thrice (now off the hook) downplayed the dangers cruising on his power-bike, mask-less and chatting with his ground’s keepers outside the presidential palace while his Mexican counterpart, Andres Obrador discarded the face-mask advisory, saying it is not scientifically proved.

And then the vicious coro killed 13 sisters in one Michigan Convent while it appeared that coro was on a bull-mood on 23/7/20, when South Africa, Australia and California recorded the highest daily coro death tallies! But it is not all gloomy.

Our brother, Victor Osage has received a special commendation from the British Government for his ingenuity in the mass production of Ventilator, telling him that “your energy, ingenuity and camaraderie made a tremendous difference. You are a shining example of the best UK has to offer”. But he should have been helping us out in Nigeria though I doubt if the environment would have been favourable and whether he would have received this top-notch, “from the bottom of my heart” recommendation.

Now to the issue of the day.

I am in deep sorrow. I am perplexed.

I am even confused. No, nothing happened to me directly or indirectly. It is the happenings around us that have placed me in this melancholic state: the killings by herdsmen, bandits and BH; the gluttonous lootocracy by apparently responsible people we have elected and appointed to serve us; the confusion in government in which brothers are engaged in savage fighting.

Our people say that everything you seek is in the native doctor’s goatskin bag and that the elder has more disused clothes than the young. I have been observing and commenting on Nigeria for the past 42 years and as such I have a repertoire of happenings in Nigeria; the good, the bad, the ugly and even the VERY UGLY. In 2002, I wept openly about how they managed our finances.

I wept again in 2008 and today, we are still weeping. This write up is from my archives (See how they manage our finances, BusinessDay, 28th March, 4th April and 11th April, 2008. Just compare what was happening then and what has been happening in the past 2 weeks.

Read on Those who are shocked and scan-

dalised at the revelations of the latest TV show in town (House Public Hearing on the Power Sector) either have short retentive memories, or are suffering from selective amnesia, or have not been observing the unique financial management strategies in Nigeria since 1999 or are flowing with the tide of public opinion or are just new to the Nigerian environment. Of course, the outpouring of rage is significant in one material particular: it shows that even though Nigerians have seen enough absurdities to last them for the next ten generations, they can still be shocked by such matters!

In the very beginning of Obasanjo Administration, the tendency towards financial rascality was recklessly exhibited. We all remember the N12 billion paid to Julius Berger before Obasanjo had settled down in Aso Rock and the Abuja Stadium which nobody knew the cost and which was awarded on anticipatory approval. By 2002 the financial absurdities became so enormous that I had to “weep” publicly over the matter. (See how they manage our finances: Tears for my fatherland; Business Day,15/7/02).

The weeping was incidentally due to the outcome of another House of Reps ad-hoc Committee, which reported that N133 billion privatisation proceeds were not reflected in the consolidated revenue account, that N28 billion petroleum tax fund and $8 million oil sales since 1999 were not collected, that NNPC takes months to remit money to the federation account (in this online age), that there were outrageous excesses in recurrent expenditures while the capital budget was implemented to the tune of only 33 percent.

A similar Senate committee complained about $10 million dash to Niger Republic, selective extra-budgetary allocation to favoured ministries/ministers especially Works and Housing, Water Resources and Power & Steel which received N33 billion from nowhere in 2001…N40.7 billion Abacha loot was

‘

I am in deep sorrow. I am perplexed. I am even confused.

No, nothing happened to me directly or indirectly. It is the happenings around us that have placed me in this melancholic state: the killings by herdsmen, bandits and BH; the gluttonous lootocracy by apparently responsible people we have elected and appointed to serve us

not reflected in the consolidated revenue account and that only N29 billion was in the account… and the Presidency, which spent N31 billion instead of N5.6 billion allocated for its recurrent operations” In the 2002 budget, the president had a long-drawn out battle with the National Assembly. While the president claimed that the NASS increased the budget by N250 billion, the NASS countered that the N250 billion was at the request of the president to cover items that it forgot, underestimated or were started without budgetary provision. Some of the items forgotten were NYSC allowances, foreign statutory obligations, civil service wage adjustment while those being executed without budgetary provisions included Lagos Ring Road (where is that one sef?), Kaduna Bye-pass, Kano-Maiduguri road and Ibadan-Ilorin road, We should remember the Azie (Auditor General) report for the year ended 31/12/2000 in which recurrent expenditure was N404 billion as against approved N206 billion, a revenue deficit of N5.3 billion against government claim of N109 billion surplus, revenue collected differed significantly from what was recorded while basic books of account were not kept. In the first 5 months of 2002, the CBN stated that the deficit was N93 billion. But the presidency said it was “forty-something” billion while the Minister of Finance said it was “eightysomething” billion! Even as at then, the issue of how much was spent on NEPA had become contentious. Whereas it was claimed that $2 billion had been spent on NEPA, Senator Imoke countered that it was $700 million. Even NNPC was not sure how much it was owing its 6 joint venture partners.

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

A Nigerian President of Igbo extraction is a desideratum now

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igeria, a former British colony, is a nation of nations. It is a multi-ethnic country with diversities in areas like religion, language, and other aspects of culture. One of the features of the British colonial system of administration in Africa was the lumping together of disparate ethnic entities under one administrative unit for the reason of political expediency and convenience. So, the onetime governor general of colonial Nigeria, Lord Frederick Lugard, amalgamated the Northern and Southern protectorates of Nigeria.

But, was the amalgamation of the Northern and Southern protectorates of Nigeria, which are dissimilar in many areas, not a recipe for the eruption of ethnic rivalry and conflicts in Nigeria? To make matters worse, Nigerians, who are by nature very conscious of their ethnic origins, owe their loyalties to their ethnic nations rather than their country. And they do place their ethnic groups’ interests above the interests of Nigeria.

So, our disposition and attitudes sowed the seed of the existence of ethnic disharmony in Nigeria.

Little wonder, during the colonial era, the political parties were formed along ethnic lines.

Action Group (AG) was to the Yoruba people what the Northern People’s Congress (NPC) was to the Hausa/Fulani people. And not a few Nigerians believed and thought the NCNC to be a solely Igbo Political Party. Not surprisingly, following the political disagreements that cropped up among our politicians, then, the northern people threatened secession in their nine-point programme.

And, upon our attainment of political freedom in 1960, the departing British imperialists helped a northern Muslim, Alhaji Tafawa Balewa, to become our prime minister when either Nnamdi Azikiwe or Chief Obafemi Awowolo could have

been a better choice. But, sadly, and unexpectedly, the first republic collapsed owing to the January 15, 1966 coup and the July 1966 counter – coup.

Consequently, Alhaji Tafawa Balewa, our Prime Minister, was murdered.

Since the collapse of the first republic, and until 1999, Nigeria alternated between despotic military regimes and inept corrupt civilian governments with the northern people calling the shots. And since the end of the Nigeria- Biafra civil war, other Nigerians have been treating the Igbo people with utter disdain and suspicion. And the people of Igbo origins are being given raw deal in the areas of education (admission of pupils into Unity schools), and appointment of military personnel into top security positions in the country.

More so, now, when compared to other parts of Nigeria, the Southeast geopolitical zone has less federal presence than other geopolitical zones in the country.

Worse still, no person of Igbo descent has ruled Nigeria in the true sense of the word since we became a politically independent country.

But, is it fair and just for us to account and equate the murdered Aguiyi Ironsi’s brief stay in office (six months) as the Igbo people’s leadership of Nigeria? However, Rtd Gen Ibrahim Babangida, Muhammadu Buhari, Sani Abachi, Murtala Mohammed, Abdusalami Abubakar are northern soldiers, who ruled Nigeria as military men in the past. And at the dawn of the second republic, Alhaji Shehu Shagari, a northern Muslim, became our first executive president, having been helped to power by Northern political interests and other king makers. And, he led Nigeria between 1979 and 1983.

In the fourth republic, Chief Olusegun Obasanjo, a Yoruba man, was helped by the northern

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people and other interest groups to become our President in 1999 in order to placate the indignant Yoruba people over the annulled June 12, 1993 Presidential election. And, following the death of Alhaji Umaru Musa Yar’adua in office, Goodluck Jonathan completed their joint tenure and was re-elected for another term in office. While Alhaji Musa Yar’adua was a Northern Muslim, Goodluck Jonathan hails from the Niger-Delta region, the golden goose that lays the golden egg. Crude oil, the mainstay of our mono- economy, is got from that region.

Now, it is evident to us that the South-East, the homeland of the Igbo people, has not produced the president of Nigeria. Other geo-political zones, save the South-East, have taken turns to produce Nigeria’s national leaders at different times.

Thankfully, now, the unwritten principle of zoning political offices to different geopolitical zones has been effective in Nigeria since the inception of the fourth republic. The practice of zoning political offices to different geopolitical zones in the country is intended to engender national cohesion, deepen our unity, and allay the fears of people from the minority ethnic groups, who feel that they are being marginalized and dominated.

Were Nigeria a truly united country, the factor of competence will override the issue of ethnic origins and religion when it comes to electing the President of Nigeria. Sadly, our country has been sundered by ethnic rivalry and religious differences. Now, Nigeria has not become a true nation-state where competence will take precedence over the factors of religion and ethnic origins when electing our President and appointing people into key positions in the government at the Federal level.

So, in the interest of peace and unity in Nige-

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Chiedu Uche Okoye ria, and for the sake of our country’s continued existence as one indivisible country, common sense dictates that all the major political parties in Nigeria should cede their Presidential tickets to politicians of Igbo descent. Each country in our today’s world reserves the right to evolve its own variant of political culture and democratic rule, which can guarantee it political stability, peace and unity, and accelerated national development.

The emergence of a Nigerian President of Igbo extraction has become an over-riding imperative for Nigeria, now. When an Igbo person becomes the President of Nigeria, it will disabuse the minds of Igbo people of their feelings and notions that they are second class Nigerian citizens, who are unwanted in Nigeria.

Again, the emergence of a Nigerian President of Igbo extraction will decelerate the high tempo of the clamour for the carving out of the Sovereign State of Biafra from Nigeria.

So, I urge my Igbo compatriots, especially Igbo politicians, to close ranks, bury their political differences, build political alliances with other ethnic groups, and support a consensus political candidate of Igbo lineage.

Okoye, a poet, wrote from Uruowulu- Obosi, Anambra State

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Thursday 06 August 2020

BUSINESS DAY

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Why Nigerians steal when they ‘get there’ Remi Adekoya

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n 2016, a childhood friend of mine moved back to Lagos after twenty years in America. He’d left just after finishing secondary school, so he returned in his mid-30s.

He had “done well” in America, to use a popular Nigerian phrase, so he came back with some capital to start a business and lots of ideas for how to improve things generally. The night before he left for Lagos, we spoke on the phone and he asked me rhetorically: “If we Nigerians don’t change that country, who will?”

Fair point.

During his first year back, we had very positive phone conversations.

Lagos had welcomed him warmly, everyone seemed to like his ideas, he was establishing his business. My friend had attended a prestigious secondary school, so many of his childhood friends are from “connected” families and currently in high places both in Nigeria’s private and public sector. His Facebook posts were full of pictures of him hanging out with friends in posh Lagos restaurants and at expensive-looking parties. He seemed happy.

Things started changing towards the end of 2017. His business took a turn for the worse. Revenues started drying up.

He did what he could, but things were generally going south in his sector of the economy. His tone grew increasingly depressed when we spoke on the phone.

Not because he wasn’t making money.

My friend is an American citizen, owns a beautiful home in California and has a great credit score in the US (anyone who has lived there knows how vital that is). If things didn’t work out in Nigeria, he could always return to the States and start afresh. No, he wasn’t really

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depressed about his business woes. He was depressed by the reaction of his friends and family to his business woes.

Because he is an upfront guy, he was open about his worsening financial situation. People’s attitudes towards him changed drastically. Folk stopped picking his calls. Texts went unanswered.

Even his jokes no longer seemed to amuse anyone. Things he’d say before that got people roaring with laughter now elicited deadpan reactions. His opinions no longer seemed to matter, even to his own family members. They suggested perhaps he needed to learn a thing or two from his younger brother who happened to be in a better-off industry. I literally felt his spirit crumbling under all this treatment.

Anthropologists suggest most societies are either predominantly dignity cultures or honour cultures. The starting point of a dignity culture is that every human being possesses an intrinsic value that is not dependent on the opinions of others in society. While the practise may vary, the fundamental belief is that all of us, for the mere fact of being human, have an inherent value that cannot be taken away by anybody else. Even if you are a “failure” or a criminal in prison, you deserve some basic respect.

But in honour cultures, your value is not derived automatically from your status as a human being. It is socially conferred, and thus dependent on the opinion of society. Society decides if you are a “somebody” or a “nobody.”

And society can grant or withdraw its esteem for you at any given moment.

It all depends on your present circumstances. In honour cultures, you must thus constantly strive to earn and maintain your esteem in society. This is why respect means everything in Nigeria.

And because respect in today’s Nigeria is largely dependent on how much money you have; my friend could literally feel the disrespect towards him increasing by the day.

In response, his attitude towards things started to change. In his first year back, he’d been involved in meetings bringing together American investors with decision-making people in Nige-

rian government. He had always been disgusted by the fact the Nigerian officials invariably implicitly or explicitly demanded a bribe to facilitate things, even if the project would hugely benefit the public good. “They are not even interested in being offered equity in the projects. They just want cash upfront,” he would complain bitterly. He was also very critical of comments by his well-connected friends who he said were often “praying to God to give them their own opportunity to loot.”

While my friend’s business had started picking up by the second half of 2018, things were still far from desired.

Most importantly, he still wasn’t feeling the respect his self-esteem required.

So, he started entertaining thoughts of running in the 2019 elections. He had a family connection who could make that possible if he really pushed. “So, if you get there, will you chop too?” I asked him. “I will o! You’re nothing in this country if you don’t have money. But if you do, everybody will treat you well no matter how you got it. I’m tired of being disrespected,” he replied.

In the end, my friend didn’t run for office. He had a crisis of conscience and decided he didn’t want to be the kind of person he had always sworn not to be.

So, he packed his bags and headed back to America. “People respect money in America too. But that does not mean you will be denied respect if you are seen as not having plenty of it,” he said.

Sometimes, it is really difficult to distinguish between how many of Nigeria’s problems are attributable to structure and how many to agency. The country has been independent for sixty years and the overall picture is a mess.

Most educated Nigerians interested in governance have always emphasised the need to “build strong institutions” that can tackle issues like corruption and abuse of power. But “institutions” are not independent entities run by robots or aliens from Mars. Institutions are ultimately just buildings with people in them. Real flesh-and-blood people who have been given an official rule-book they may or may not follow.

It is what those flesh-and-blood

‘

No commodity is hoarded in Nigeria quite as much as respect. Yet it costs nothing to give. Whether I treat with respect 2 people or a 100 has no impact on my bottom-line.

So why hoard my respect?

Much of the looting done in Nigeria is not perpetrated by people possessed by evil demons

people working in courthouses, ministries and police-stations do on a daily basis that shapes institutions. You can introduce the most sophisticated anti-corruption rules in the world, but if people are determined to render them ineffective because they are desperate to become rich, they will find creative ways to do so, as Nigeria’s current reality clearly shows.

Nigeria obviously needs an economic transformation for any realistic hopes of reducing the temptation for people to loot when in a position to do so. Expecting people to cease practises they consider necessary to their everyday survival is asking a bit much. But the other, arguably easier, thing that could be done today is to become more generous with our respect.

No commodity is hoarded in Nigeria quite as much as respect. Yet it costs nothing to give. Whether I treat with respect 2 people or a 100 has no impact on my bottom-line. So why hoard my respect? Much of the looting done in Nigeria is not perpetrated by people possessed by evil demons.

It is done by those who want to have a comfortable life, yes, but who are also determined they will not endure the kind of disrespect my friend endured.

And that determination drives some to acts they would normally never have even considered if not for their fear of being treated like “nobodies” by Nigerian society.

This is all so unnecessary, for we will all ultimately end up dust in the earth. So why not make the life of your fellow man or woman that bit more pleasant in the brief time you have here? This cultural shift would be the cheapest reform Nigeria could ever undertake. All it would cost is a decision today to do our best to treat everyone around us, irrespective their station in life, with respect and dignity. As we ourselves would like to be treated. No more, no less. Surely that cannot be asking too much.

Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs, Washington Post and Politico among others. He tweets @ RemiAdekoya1

Nigeria is a politician’s perfect haven

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igeria is a country adrift: from the Boko Haram armed insurgency still raging in the Northeast; insecurity and wanton killings in the Northwest and Northcentral regions; pogroms in Southern Kaduna; organised gangs/cults, kidnappings and armed robberies in southern Nigeria; repression of minority groups and police killings and brutality.

Worse, the state has been helpless in responding to these challenges. The army, over the last months, has been sustaining huge casualties in the fight against Boko Haram, security agencies have been almost helpless in stopping the killings in the Northwest or even watch unconcerned as roving Fulani herdsmen or bandits kill, rape and destroy people, farmlands and properties in the Northcentral and Southern Kaduna.

In like manner, the police has had little success against the organised gangs, cults, and kidnappers terrorising the south. Rather, they join in the bazaar, killing and brutalising innocent citizens in search of lucre. As usual, almost nobody gets prosecuted or punished for the killings or crimes even among the security agencies.

The natural result is the total loss of trust and confidence in governments and institutions to protect the people or help them get justice. This has compounded the problem with Nigerians now resorting to self-help to protect themselves leading to the proliferation of “self-protecting armed militias and cases of ‘jungle justice”.

If you add the problems of desertification, climate change, exploding population and grinding poverty, and a shrinking economy to the mix, you get the picture of a failing or failed state.

Yet, last week, during the Sallah celebrations, the president, Muhammadu Buhari, bold-facedly told Nigerians they know he has done his best in tackling insecurity in the country. Talking to the Press shortly after performing the Eid prayers with his family and aides at the forecourt of the State House, Abuja last week Friday, Buhari was quoted as saying: “I want Nigerians to be very conscious of their country and what we inherited when we came in 2015 was Boko Haram – North East and the militants, the South-south. Nigerians know that we have done our best.”

Although he would admit that the security forces need to do more in Northwest and Northcentral, he was satisfied with his administration’s handling of the insecurity in the Northeast and Southsouth and is giving himself a pass mark, even if his best is clearly not good enough or even good at all and the country is gradually sinking into total anarchy.

Buhari’s refusal to even acknowledge the mess the country is in even in the face of mounting pressure from the National Assembly to rejig the security apparatuses and strategy is not surprising. As I have argued here on several occasions, although Nigeria claims to subscribe to the Western model of liberal democracy

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with checks and balances on the powers of the president, in reality, we have created a powerful and dictatorial presidency that, if the occupant so chooses, can govern with little or no checks on his powers and can sidestep all other institutions of restraints put on his way. This has been compounded by a citizenry that sees its leaders as masters and is unable or even unwilling to hold their leaders to account.

Ibrahim Magu’s name was twice submitted for confirmation to the Senate for the position of Chairman of the Economic and Financial Crimes Commission (EFCC). His nomination was rejected on both occasions on the strength of a damning security report from the Department of State Security (DSS). Despite that, Magu still served a total of five years as Acting Chairman of the EFCC and the Senate could do or say nothing to the president.

Also, last year, the speaker of the House of Representatives, Femi Gbajabiamila, invited the Service Chiefs to brief the House on the spate of insecurity in the country. The Service Chiefs ignored him and refused to appear before the house. The only response a thoroughly embarrassed Speaker could give to that affront on constitutional authority was that he was going to report them to the president. Of course, nothing came out of that report nor has he summoned the courage to invite them to the House again.

The Senate, on more than two occasions, has also made passionate representations to

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CHRISTOPHER AKOR the president to sack the service chiefs over the floundering war with the Boko Haram insurgency. The President has flatly refused and has continued to retain the services of the failed service chiefs, who have exceeded their statutory years of service leading to low morale, grumblings and dissatisfactions in the armed forces.

The service chiefs continue to hold forth while their juniors are being retired. But how does Buhari care? Despite their gross failure, the service chiefs have made history as the longest serving service chiefs in the history of the country and continue to preside over the decimation and humiliation of the Nigerian military in the war against the rag tag Boko Haram insurgents. Of course, there are many voices now even within Mr Buhari’s governing All Progressives Congress (APC) saying the war on Boko Haram is a cash cow and the service chiefs are not going to allow it to end.

Note: The rest of this article continues in the online edition of BusinessDay @https://businessday.ng

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BUSINESS DAY

Thursday 30 July 2020

Editorial Publisher/Editor-in-chief

Nigeria equities in the time of coronavirus

Frank Aigbogun editor Patrick Atuanya

Investors look beyond exchange rate readjustment

DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule NEWS EDITOR Osa Victor Obayagbona NEWS EDITOR (Online) Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude 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

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f a devaluation of the naira was the sole factor that decided the price of stocks on the exchange, foreign and local investors would be flocking to the Nigerian Stock Exchange Market (NSE) now. There is more, however, to a stock price than the devaluation.

Earlier this year, the Central Bank of Nigeria technically devalued the naira; making it cheaper to the dollar. It moved the rate at which the dollar is sold to foreign portfolio investors from N366.7 to N380.2. Currently, the Investor & Export FX rate is priced at N389/$. The official exchange rate which was priced at N307/$ was moved by the CBN to a “market determined” rate of N360 to a dollar. The apex bank further devalued it to a current rate of N381/$. This isn’t without implication to the Nigerian stock market. Although some analysts believe that an exchange rate between N450 and N500, would reflect more the forces of demand

and supply.

A devaluation should see foreign investors flock to the stock market given the low levels fundamentally strong stocks are currently trading. The COVID-19 outbreak coupled with the oil price slump are double whammies that have hit the Nigerian economy.

Even so foreign investors aren’t investing, depriving the bleeding stock market the reprieve it needs.

Meanwhile, about 32 central banks across the globe have been forced to cut their interest rates following the outbreak of COVID-19.

In effect, lower borrowing costs in advanced economies creates an opportunity for carry trade which should benefit emerging and frontier economies like Nigeria with higher rates.

However, the risky perception of the economy has made investors hold back cash, some take flight to safety causing the market to bleed further, while others turn bargain hunters – taking short term advantage of cheap stocks and selling off at a more favourable price.

Savvy investors make investment decisions on a number of factors. These include political climate, industry regulations, company earnings, economic conditions, regulatory consistency and clarity etc.

Unfortunately, poor political climate, economic conditions, policy obscurity and inconsistencies make the equity market in Nigeria less attractive to foreign investors at a time like this.

These factors have made investors thickly sceptical over the years. More recently, their doubts are about the role of a central bank that isn’t immune from political interference which has led to unorthodox policies that favour the federal government.

The federal government is mostly preoccupied with implementing an economic sustainability plan which in our view is dead on arrival if barriers to its success are not pulled down (We shall revisit this in an upcoming editorial). Daily the outlook of the economy grows bleaker as

the global economy slides into a recession.

Standard & Poor (S&P), one of the world’s top rating agencies, downgraded Nigeria’s credit rating barely a month after lowering the nation’s outlook from stable to negative. Nigeria’s long-term credit was downgraded from B to B- on Thursday. S&P feared that Nigeria may not be able to mitigate the effect of low oil prices and at the same meet financial obligations with falling foreign reserves.

As at Monday, the Nigeria stock market had shed N1.72 trillion in market value year to date (YTD) while the outlook in the short to medium term remains bleak.

Changing the narrative isn’t rocket science. Investors seek well defined, clear and consistent policies that are market driven.

This resonates with the need for bold reforms from the fiscal and monetary sides of authority. Also, the CBN must regain its autonomy, quarantine itself against political interference, and must avoid being behind the global policy curve.

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 Haruna Jalo-Waziri Clement Isong

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Thursday 06 August 2020

BUSINESS DAY

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BUSINESS TRAVEL How lockdown of international travel is delaying recovery process - IATA Stories by IFEOMA OKEKE

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he International Air Transport Association (IATA) released an updated global passenger forecast showing that the recovery in traffic has been slower than had been expected. In the base case scenario: Global passenger traffic (revenue passenger kilometers or RPKs) will not return to pre-COVID-19 levels until 2024, a year later than previously projected.

The recovery in short haul travel is still expected to happen faster than for long haul travel. As a result, passenger numbers will recover faster than traffic measured in RPKs. Recovery to pre-COVID-19 levels, however, will also slide by a year from 2022 to 2023.

For 2020, global passenger numbers (enplanements) are expected to decline by 55 percent compared to 2019, worsened from the April forecast of 46 percent.

June 2020 passenger traffic foreshadowed the slower-than-expected recovery. Traffic, measures in RPK, fell 86.5percent compared to the year-ago period. That is only slightly improved from a 91.0 percent contraction in May. This was driven by rising demand in domestic markets, particularly China. The June load factor set an all-time low for the month at 57.6percent.

The more pessimistic recovery outlook is based on a number of recent trends: Slow virus containment in the US and developing economies: Although developed economies outside of the US have been largely successful in containing the spread of the virus, renewed outbreaks have occurred in these economies, and in China.

Furthermore there is little sign of virus containment in many important emerging economies, which in combination with the US, represent around 40 percent of global air travel markets. Their continued closure, particularly to international travel, is a significant drag on recovery.

Reduced corporate travel: Corporate travel budgets are expected to be very constrained as companies

continue to be under financial pressure even as the economy improves.

In addition, while historically GDP growth and air travel have been highly correlated, surveys suggest this link has weakened, particularly with regard to business travel, as video conferencing appears to have made significant inroads as a substitute for in-person meetings.

Weak consumer confidence: While pent-up demand exists for VFR (visiting friends and relatives) and leisure travel, consumer confidence is weak in the face of concerns over job security and rising unemployment, as well as risks of catching COVID-19.

Some 55 percent of respondents to IATA’s June passenger survey don’t plan to travel in 2020.

Owing to these factors, IATA’s revised baseline forecast is for global enplanements to fall 55 percent in 2020 compared to 2019 (the April forecast was for a 46 percent decline).

Passenger numbers are expected to rise 62 percent in 2021 off the depressed 2020 base, but still will be down almost 30percent compared to 2019. A full recovery to 2019 levels is not expected until 2023, one year later than previously forecast.

Meanwhile, since domestic markets are opening ahead of international markets, and because passengers appear to prefer short haul travel in the current environment, RPKs will recover more slowly, with passenger traffic expected to return to 2019 levels in 2024, one year later than previously forecast. Scientific advances in fighting COVID-19 including development of a successful vaccine, could allow a faster recovery.

However, at present there appears to be more downside risk than upside to the baseline forecast.

“Passenger traffic hit bottom in April, but the strength of the upturn has been very weak. What improvement we have seen has been domestic flying. International markets remain largely closed. Consumer confidence is depressed and not helped by the UK’s weekend decision to impose a blanket quarantine on all travelers returning from Spain. And in many parts of the world infections are still rising. All of this points to a longer recovery period and more pain for the

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industry and the global economy,” Alexandre de Juniac, IATA’s Director General and CEO said.

“For airlines, this is bad news that points to the need for governments to continue with relief measures—financial and otherwise. A full Northern Winter season waiver on the 80-20 use-it-or-lose it slot rule, for example, would provide critical relief to airlines in planning schedules amid unpredictable demand patterns. Airlines are planning their schedules. They need to keep sharply focused on meeting demand and not meeting slot rules that were never meant to accommodate the sharp fluctuations of a crisis. The earlier we know the slot rules the better, but we are still waiting for governments in key markets to confirm a waiver,” de Juniac said.

June international traffic shrank by 96.8 percent compared to June 2019, only slightly improved over a 98.3 percent decline in May, yearover-year. Capacity fell 93.2 percent and load factor contracted 44.7 percentage points to 38.9 percent.

Asia-Pacific airlines’ June traffic plummeted 97.1percent compared to the year-ago period, little improved from the 98.1 percent decline in May. Capacity fell 93.4 percent and load factor shrank 45.8 percentage points to 35.6 percent.

European carriers saw demand topple 96.7 percent in June versus a year ago, compared to a 98.7percent decline in May. Capacity dropped 94.4percent and load factor lessened 35.7 percentage points to 52.0percent.

Middle Eastern airlines traffic collapsed 96.1percent for June against June 2019, compared with a 97.7 percent demand drop in May. Capacity contracted 91.1percent, and load factor crumbled to 33.3percent, down 43.1percent percentage points compared to a year ago.

North American carriers had a 97.2percent traffic decline in June, barely improved from a 98.3percent decline in May. Capacity fell 92.8percent, and load factor dropped 53.8 percentage points to 34.1percent.

Latin American airlines suffered a 96.6percent demand drop in June compared to the same month last year, from a 98.1percent drop in May.

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NCAA writes airlines on airworthiness directive on Boeing 737

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he Nigerian Civil Aviation Authority (NCAA) has written a letter to all airline operators, directing them to comply with Emergency Airworthiness Directive (EAD) on Boeing 737 aircraft identified by the US Federal Aviation Administration (FAA).

The letter referred to the compliance to correct technical issues concerning these particular aircraft types and was directed to all airlines that operate Boeing Company Model 737-300, -400, -500, -600, -700, -700C, -800, -900, and -900 ER series of airplanes.

The letter was signed by Godwin Balang, the general manager in charge of Air Operator Certificate and Safety, on behalf of Musa Nuhu, the Director General of NCAA. The letter stated, “The authority has reviewed the FAA AD2020-1651 vis-à-vis the COVID-19 pandemic lockdown that necessitated the storage of B737 aircraft and made a determination as follows: That compliance with the FAA emergency AD (Airworthiness Directive) must be carried out by affected operators of Boeing 737 aircraft in Nigeria as required by the AD and all affected operators should submit

evidence of compliance with the FAA AD2020-16-51 to their Principal Maintenance Inspector (PMI) within two days.”

NCAA also directed the airlines to “ensure strict compliance”.

An official of the regulatory body however told newsmen that there was no cause for alarm because everything is under control, remarking that the airlines would comply with the directive.

“NCAA has written to all the airlines operating B737s in the country and directed them to report back to the regulatory agency in two days’ time on their compliance. Any affected aircraft will be thoroughly inspected and proper checks will be carried out.

“It will affect some of the aircraft types while others will not be affected. Nigerian airlines will not feel the impact because not all the aircraft are being operated due to low patronage as a result of the recent resumption due to Covid-19,” the NCAA official explained.

According to the FAA, “This emergency AD was prompted by four recent reports of single-engine shutdowns due to engine bleed air fifth stage check valves being stuck open.

Ibom Air welcomes 5th CRJ900 aircraft

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bom Air has received it’s fifth Bombardier CRJ900 aircraft, the second of the two additional aircraft purchased in December 2019.

The aircraft, with registration number 5N-BXO, arrived Lagos from Calgary, Canada at 00.05 am local time, Saturday morning, 01 August, 2020).

With the arrival of this aircraft, the airline’s modern and efficient fleet grows to five aircraft and Ibom Air continues to operate the youngest fleet amongst Nigeria’s airlines.

The airline says the fleet strategy is in line with its vision to be a worldclass African regional airline.

A key benefit of Ibom Air’s very modern fleet of Bombardier CRJ 900 aircraft is that they all come factoryfitted with High Efficiency Particulate Air (HEPA) filters.

HEPA filters are high-intensity filters that do not just filter dust, but effectively capture greater than

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99.97percent of the airborne microbes in cabin air, including microscopic particles such as bacteria and viruses.

Cabin air in HEPA equipped aircraft generally pass through the filters every 2-3 minutes, removing contaminants and greatly enhancing the quality of air in the cabin.

Ibom Air thanked the Minister of Aviation, the Federal Ministry of Aviation, the NCAA, FAAN, NAMA and the Akwa Ibom State Government, for their consistent support.

“We also thank our highly valued customers for your continued loyalty and assure you that Ibom Air is now better prepared than ever, to continue to deliver the trademark services you have come to rely on us for: schedule reliability, on-time departures and excellent service!

“As our destination footprint expands, we look forward to welcoming more and more passengers on board our flights,” the airline stated.

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Thursday 06 August 2020

BUSINESS DAY

COMPANIES&MARKETS

UACN in 4 week-gain amid 51pecent share sale to Custodian Investment OLUFIKAYO OWOEYE

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hares of Nigeria’s oldest conglomerate UACN gained 7.14percent, a day after it announced the signing of a binding agreement with Custodian Investment for the purchase of a 51percent equity interest in UACN Property Development Company plc from UAC. This is the biggest daily gain since June 29 when it gained 7.38percent.

Highlights of the deal include the sale of 9.46 billion units of ordinary shares held

by UAC, representing 51percent of UPDC’s issued share capital, to Custodian.

The shares will be sold in two tranches with initial sale of 946.56million shares, representing 5.10% of the issued share capital of UPDC, on execution of binding transaction agreements, and the subsequent sale of 8.52billion shares, representing 45.90%

of the issued share capital of UPDC upon receipt of requisite approvals.

After streak of unimpressive performance, UACN unveiled plans to restructure and recapitalize UPDC. As part of its recapitalization exercise, it recently concluded its N15.96billion right issue program for its existing shareholders. The Rights Issue was done on the basis of 43 new ordinary shares for every 7 ordinary shares held by the company shareholders as at September 30, 2019.

It is also expected that at the end of the restructuring exercise, UAC will unbundle its 64.16percent interest in UPDC such that UAC will cease to be a shareholder in UPDC and UPDC will no longer be consolidated in UAC’s financials.

By implication, the ordinary shares of UAC in UPDC will be transferred, on a pro rata basis to all UAC shareholders who willhold such

UPDC shares in addition to their existing shares in UAC also UAC shaeholders will become direct shareholders of UPDC and hold units in the REITS. And for UPDC, it will unbundle its 61.5percent majority stake in REIT such that all units owned will be apportioned to UPDC shareholders on a pro-rata basis. This means UPDC as a company will no longer own any units in REITS, while shareholders of UPDC will now become direct unit holders in the REITS and benefit individually from a direct interest in REITS. In addition REITS will become a standalone entity where individual unit holders can benefit directly from its dividend cashflow. This means REITS will cease to be an associate of UPDC. Presently, UAC controls 64.16percent stake in UPDC, the real estate subsidiary of UAC. UPDC has 61.5percent

stake in UPDC Real Estate Investment Trust (REIT) and unlike UPDC which was enmeshed in losses since 2016, UPDC REIT is profitable and has a track record of consistent dividend payments.

Folasope Aiyesimoju, group managing director of UAC, said the transaction is a significant step in achieving its objectives for UPDC. “The Board weighed the long-term opportunities in the Nigerian real estate sector against the fundamental differences between the cash flow profile and capital needs of UPDC and those of the other entities in UAC’s portfolio. Following its review, the Board concluded that it would be in the best interest of UAC to exit its interest in the real estate sector, allowing UPDC to operate as a standalone legal entity, free to source appropriately structured capital and to unlock value for its shareholders,” he said.

L - R: Chairman Amuwo LGA, Dr. Valentine Oluwaseyi, Chief Operating Officer, Transgreen Nig. Ltd, Doreen Orakpo, The Executive Governor of Lagos State, Babajide Sanwo-Olu, CEO Transgreen Nig. Ltd, Cyprain Orakpo, and Representative of the DG NAFDAC, Joseph Asikpo during the official launch of the OCare Medical Face Mask Factory in Lagos yesterday.

Law Union & Rock weathers COVID -19 to grow 2020 Half year profit by 80% Modestus Anaesoronye

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eading underwriting firm, Law Union & Rock Insurance Plc has sustained its growth in 2019, recording over 80 percent growth in profit for half year 2020. The company achieved this despite a marginal drop in top-line, having tamed management, reinsurance and Net Benefit Claims costs.

According to management, Law Union posted an 80.89 percent increase in Profit after Tax in its 2020 half year financial accounts, rising from N102.7 million in 2019, to N185.8 million. A reflection of efficiency in asset utilization

and management cost control.

Under writing Profit grew to N485.5million from N364.5million in 2019, representing a 33.17 percent increase in underwriting performance for the period. Total assets grew by 4.5 percent from 12.87 billion in 2019 to 13.44 billion half-year 2020.

Further, shareholders fund and Investment properties results both recorded double digit growth from N6.4 billion to N7.3 billion and from N1.39billion to N1.82billion; representing14.74 and 31.04 percent half-year growth respectively.

On the other hand, Net Claims Expenses decreased by nearly 25 percent from

N775million to N585million,as well asInsuranceContract Liabilitiesreducing by 5.32 percent, from N4.77billion to N4.51 billion.This indicates that the management has adequately shored up their underwriting efficeincy accordingly, despite paying over half a billion Naira in claims so far.

The reduction in Net Claims Expenses, further indicates that the company was able to write more profitable business, despite average claims costs rising in the industry.

Further analysis showed that the company achieved 17 percent growth on Return on Assets, 31 percent Return on Equity and over 100 percent of Premium Written was earned.

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Commenting on the result, Ademayowa Adeduro, the managing director, said the company was pleased with its 2020 half-year financial, despite the challenges within the operating environment, especially with the COVID-19 pandemic.

However, they intend to do better in second half-year 2020 results indicates that the company will sustain the grow. He further made a statement of intent that the same level of performance into the following quarters would be sustained, to ensure commensurate growth for the year 2020.

According to him, these are all good indices showing the company is healthy and growing.

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Motorola Solutions launches new device designed for small, medium businesses in sub Saharan Africa IFEOMA OKEKE

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lobal leader in mission-critical communications, Motorola Solutions, has launched a new two-way radio device specially designed for small and medium businesses in sub Saharan Africa.

The MOTOTRBO DP540 two-way radio is built for costconscious businesses looking to transition to digital technology for reliable and efficient communications.

As demand for digital radio communication rises, small and medium businesses are looking for simple and affordable solutions for their communication needs without the need to compromise on quality. MOTOTRBO DP540 is the perfect tool for users in need of an entry-level digital radio, offering ease of use and powerful digital-enabled features.

According to Laurent Tribout, director of Motorola Solutions indirect sales for Sub-Saharan Africa, “the new device, available through certified Motorola Solutions resellers in sub-Saharan Africa, is based on the ETSI Digital Mobile Radio (DMR) Standard, proven worldwide in affordable digital systems with low complexity.

“In today’s economy, small and medium businesses are constantly under pressure to deliver more, and deliver fast, all while keeping a conscious mind on reducing costs. With this in mind, we’ve developed a communication solution that holds all the necessary features in one affordable device” One of the risks of migrating from analogue to digital technology is the transition period,

which can potentially interrupt business operations.

To make this transition smooth and easy, the MOTOTRBO DP540 can operate on both digital and analogue modes. In this way, radio users can operate and communicate on their new MOTOTRBO DP540 radios while on the job, as the business transitions to digital technology.

The compact, ruggedlyengineered device is built to withstand harsh conditions and resist corrosion even in the saltiest environments such as seaports and harbours. It boasts superior audio output and unique features, such as voice announcement customization, allowing users to customize the default voice announcement languages using their own audio files. MOTOTRBO™ DP540 is also built for multi-language working environments, with special audio profiles designed to deliver enhanced audio quality when speaking languages with distinct rolled “R”s such as French or Afrikaans.

As in many mission-critical work areas, healthcare workers rely on two-way radio communication for many of their daily tasks. Whether it’s coordinating patient arrivals, or briefing an ambulance team on the way to a scene. In many circumstances, such as medical staff treating COVID-19 patients, it is not ideal for personnel to be handling their radio devices.

The portfolio of MOTOTRBO devices, including the new DP540 model, is equipped with a Voice-activated Transmit (VOX) feature, which allows users to operate their radio without the need to press the Push-To-Talk (PTT) button.

Valerie Dixon’s ‘Too Black to Succeed’ Hits Books Stands

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he story of the near decimation of Jamaica’s indigenous business community following the introduction of liberal financial policies that disrupted its hitherto stable financial system has been told in a new book by Valerie Dixon.

In “Too Black to Succeed - The FINSAC Experience”, Dixon aims to engage Jamaicans at home and across the global Diaspora, as well as the millennial generation of Jamaicans, who she feels need to be more conscious of the important socio-economic factors of the past and present which are determining the quality of their lives and future.

From having a stable financial system with focus on supporting indigenous entrepreneurs, Jamaica’s economy @Businessdayng

fell into a prolonged collapse in the aftermath of the adoption of liberal monetary policies recommended by the World Trade Organisation (WTO) in the 1990s.

The country’s banking system virtually collapsed with the national government having to bail out many of the deposit money banks, most of which had the largest branch network and provided a reliable credit base for the local business community as well as small scale businesses.

Although the Jamaicans responded to the large collapse of businesses, most of which buckled under the weight of unsustainable debts, in the form of a special purpose vehicle - FINSAC (Financial Sector Adjustment Company) - it was seen as too little too late.

Thursday 06 August 2020

Innovation

Apps

BUSINESS DAY

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

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TECHTALK

Broadband Infrastructure

Bank IT Security

Globacom gains more internet subscribers than peers in half-year 2020 FRANK ELEANYA

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lobacom has emerged as the biggest gainer among the four top telcos in terms of the most data subscribers gained in the first half of 2020. The telco began the year with 29,205,304 and by June had climbed to 37,971,313, a gain of 8.766 million.

According to the latest data from the Nigerian Communications Commission (NCC), the second-largest telco by voice subscribers saw the most spike in internet subscriptions from the month of March and April. Between February and March, Globacom recorded nearly 3 million internet subscribers to emerge the top gainer in that period.

While MTN and Airtel have maintained their gaining streak, unlike 9Mobile, within the period of January and June the two telcos saw a growth of 5.076 million and 2.064 million respectively.

One of the major drivers of growth for Globacom is its extensive 3G and 4G coverage. The telco is reportedly the first network to achieve nationwide 4G coverage in Nigeria. Globacom’s major ally is the GLO-1 submarine communications cable with a minimum capacity of 640 Gbit/s which cost $700 million to complete in 2011.

The 9,800km long cable system is situated along the west coast of Africa between Nigeria and the United Kingdom.

The telco may also be

EbonyLife TV pulls plug on DSTV, to begin life as streaming service FRANK ELEANYA

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eeks after it announced that it was ending its service on DSTV, EbonyLife TV has finally pulled the plug on the pay-TV platform to begin life as a video streaming service.

A search by BusinessDay of the channels where EbonyLife used to air on Friday showed that it was no longer there. The company’s website was under construction at press time.

Mo Abudu, the founder of the platform had made the exit announcement on her social media handle. The new streaming platform known as EbonyLife On will henceforth host all shows and movies produced by the entertainment company.

“Remember when we used to wait a whole week to watch our favorite shows? Well, those days are gone forever.

Now we can binge on the whole series if we want to.

Therefore, we have decided that EbonyLife TV will no longer be available on DSTV from 31st July 2020,” Mo Abudu wrote in an Instagram post.

The Nollywood entertainment outfit had in June sealed a deal with Netflix, a video-ondemand platform. The deal requires EbonyLife to adapt two literary works by authors Lola Shoneyin (The Secret Lives of Baba Segi’s Wives) and Wole Soyinka (Death and the King’s Horseman) into a series and film respectively. Netflix also announced that Abudu’s company will produce two yet unnamed original shows, licensed films and another series.

In 2018, EbonyLife also struck a three-series deal with Sony Pictures Television, with the first project set to tell the story of the female warriors of the ancient West African kingdom of Dahomey.

reaping the profits of its huge advertisement spend.

Since 2015, Globacom has been among the top five advertisers in Nigeria. In 2015, MTN, Airtel, Etisalat, and Globacom made the 2015 top 10 advertisers in the communication and telecommunication sector with respective sums of N4.7 billion, N4.1 billion, N3.7 billion and N3.7 billion. In 2017, Globacom spent N2.8 billion to emerge third behind MTN (N7.0 billion), and Airtel (N3.2 billion).

Mazi Olayinka Owolewa,

a subscriber said he was driven to buy a Glo subscription because of the speed of other networks like MTN in the remote parts of Ibadan where he resides.

“A lawmaker was also forced to get Glo last weekend because your network disappointed him at his village,” Owolewa said.

While Globacom has in recent times increased interpersonal relationships with customers like sending data gifts on birthdays and other special days and different promo packages, the telco has not always had a

great relationship with its customers.

Complaints are around the speed of data, either it is slow or it finishes too quickly.

“I used to boast that the Glo network is the best for data connection until I moved to Badagry and I was transferred to Ikoyi waterside, then realized Glo is competing for speed with a snail,” Fashola Abiola, a consumer on Twitter posted.

Experts have said that one of the major challenges to internet speeds in Nige-

ria is cable operators such as MTN WACs; Glo 1; and MainOne, not fully utilising their carrying capacity. This is largely responsible for sub-service providers putting a cap on subscribers’ internet speed.

“Data consumption is based on your Network providers’ speed and your usage. There’s no best in terms of data consumption, Rather there’s best in terms of Cheaper data rate.

Which is GLO followed by Airtel then MTN and lastly Etisalat,” John Babatunde, a consumer said.

Huawei urges collaboration among telcos to tackle new pandemic realities FRANK ELEANYA

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hinese technology manufacturer has urged telecommunication companies across the world to work together to address the “shared” realities that have emerged due to the COVID-19 pandemic and forge a more inclusive future for all.

The company which recently overtook Samsung as the largest shipper of smartphones in the world said a better future for all requires a joint effort. People’s needs and expectations have evolved with the rapid advancements of information technology over the past 30 years. Unfortunately, the backwardness of digital infrastructure compared to technological developments was only laid bare by the

pandemic.

A recent data from the Information Telecommunication Union (ITU) showed that over half of the world’s population still does not have internet access nor access to other digital technologies. This has become most worrisome to many governments as the virus takes a toll on economies across the world.

“We envision a more connected intelligent, and innovative future” Catherine Chen, Huawei’s Corporate Senior Vice President and Director of the Board. “Above all else, we must ensure this is an inclusive, sustainable, and better future by all and for all.”

Chen was speaking at the online Better World Summit 2020 which held in July. She noted the increased investments by governments across the world to ICT initiatives

even as they announce various palliative measures to save the population from sliding into poverty.

“To revive the economy, we need top-down designs, as well as bottom-up creativity and vitality. Supporting government policies coupled with active digital transformation across the industry will bring the benefits of digital technology to all industries, boost their efficiency, and restore growth,” Chen said.

Other speakers at the summit included representatives from the International Telecommunication Union Radiocommunication Sector (ITU-R), Global System for Mobile Communications (GSMA), the European Competitive Telecommunications Association (ECTA), the South African Department of Communications

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com www.businessday.ng

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and Digital Technologies, Thailand's Office of the National Digital Economy and Society Commission, China's Academy of Information and Communications Technology (CAICT), Germany Association of the Internet Industry (ECO), and the ADL. Huawei said it is continuing with its flagship Seeds for the Future program. This program was launched in 2008 and is designed to develop local ICT talent. So far, this program has benefited more than 30,000 students from over 400 universities in 108 countries and regions. Due to the pandemic, the company is moving the program online and opening it up to more outstanding students than ever before. As more industries adopt digital technologies, they will drive the United Nation

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Thursday 06 August 2020

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

How Olumide Akpata won the NBA elections and why calls for cancellation may amount to nothing OUR CORRESPONDENTS

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he national elections of the Nigerian Bar Association (NBA) have come and gone with the immediate past chairman of the NBA Section on Business Law, Olumide Akpata emerging as the President-elect of the association.

Akpata who defeated his two contenders with a significant number of votes, is the first non Senior Advocate of Nigeria (SAN) to be President of the Bar since 1989, when Alao Aka-Bashorun served as President of the Bar. It is on record that Alao AkaBashorun is regarded as one of the finest Presidents the Bar has had yet. The incoming president revealed that his goal was to do even better.

However, while the public and members of the legal profession are celebrating the emergence of a young, dynamic, nonsenior advocate president of the NBA after 30 years, there are a few others who are not so happy about losing at the polls; and leading this pack, is an aspirant in the just-concluded elections for the office of the President of the NBA, Dele Adesina, SAN. Legal analysts have attributed Adesina’s failure at the polls to the entitlement mentality with which he went into the elections.

Explaining why he holds the opinion that Dele Adesina went into the elections preparing to fail, a key supporter of Olumide Akpata, Aderemi Oguntoye had thus to say: “Adesina believed he was entitled to be handed the Bar Presidency, since he served with Olanipekun as general secretary and was endorsed by the Egbe Amofin group (an association of Yoruba lawyers). He however failed to realise that Egbe’s influence had limitations and it was actu-

Olumide Akpata

that will usher in a new administration was led by Tawo Tawo, SANN. However, in the months and weeks leading up to the elections, the committee faced with various difficulties ranging from the lack of an efficient voters’ register, voter-verification crisis, to concerns about the voting platform.

Following these challenges and several complaints from all members who felt disenfranchised, the Chairman of the Electoral Committee of the Nigerian Bar Association (ECNBA) on Saturday June 27th issued a statement postponing the elections; and notifying members of the bar about the difficulties the committee was having with the compilation of the voters register.

They attributed this to the failure of branches to comply with the stipulations of the ECNBA. The elections were thus rescheduled to Wednesday, 29th July 2020 and Thursday, 30th July 2020,, as the committee urged all members who hadn’t been

ally counterproductive in the preceding circumstances of the endorsement.

Unfortunately, endorsement doesn’t win elections, preparation does.

“In the 21st century, nobody hands power and influence to you. You go for it. Junior lawyers (age 21-33 years) don’t understand tribal sentiments, which our seniors are preaching on Egbe’s platforms, what they understand is Instagram and Tiktok and that’s the language Olumide Akpata spoke to them,” Oguntoye said.

How the stor y unfolds…

As the Paul Usoro-led administration draws to an end, the outgoing President and his ExCo was charged with the duty of ensuring a new leadership was in place to take over from them.

Therefore, in March 2020, an Electoral Committee of the Nigerian Bar Association (ECNBA) was set up. This committee, charged with the responsibility of conducting a free, fair and credible election

INSIDE Meet the new national officers of the Nigerian Bar Association

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verified on NBA website to promptly do so without delay.

The elections…

In a chat with BusinessDay, one of the accredited agents for the candidates in the ECNBA ‘Situation Room’, Aderemi Oguntoye shared an eye-witness account of the elections starting from Wednesday 29th 2020.

He said, “When the election was about to commence, ECNBA officials addressed candidates’ representatives btw 10:50pm11:05pm. They explained the reason why they froze candidates from knowing ahead of time, the cyber platform to be utilised for the election. They basically guarded against likely direct interference by candidates with the platform/server providers (US company called Election Buddy). We were then invited to ECNBA’s local tech room at the NBA house and were shown round in order to assure everyone that the ongoing election back up tech installation was free from manipulation. You

Commencement of AfCFTA in 2021 would boost economies of member nations – Experts

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know what’s shocking?

This was at 1am, two hours after the election portal was opened and only I and Dr Ajibade’s agent were present, as Adesina’s rep/ agent was still nowhere to be found.

“At about 1:30 am when the results platform temporarily froze, I rushed up to the ECNBA server room where the officials put a call through to the Americans hosting the main computation server, who later assured us that the link will come back on. Apparently, there had been more traffic on the result link than the voting link. They were overwhelmed by the number of lawyers and non-lawyers following up on the results even at 1:30am. By 7:30am, I enquired from the ECNBA officials whether they had independent officials and they informed me that they had sent the link to nothing less than seven Judges/ Justices of different courts amongst other observers for monitoring.”

The agent revealed that the first time anyone at the situation room had a glimpse of Adesina (the Egbe Amofin petitioner)’s representatives was when they arrived in the afternoon of 30th July with the sole purpose of submitting their petition and this was well over 14 hours into the election.

The elections commenced at 11:00pm on Wednesday, 29th July 2020 with three candidates - two Senior Advocates of Nigeria, Dele Adesina and Dr Babatunde Ajibade, and one non-senior advocate, Olumide Akpata Contesting for the office of the president of the NBA. Post Election Voting ended the next day, July 30th at 11:00pm, with Olumide leading the polls with 9891 votes representing 54.3% of the vote cast to defeat Babatunde Ajibade who polled 4328 votes and Julius Adesina who scored 3982 votes

At about 11:45pm on the same day, the Chairman of the Electoral Committee of the NBA in an online broadcast officially declared Olumide Akpata winner of the Presidential elections having gotten.

While Dr Babatunde Ajibade, SAN the closest contender to Akpata in the elections has congratulated the president-elect, Dele Adesina, SAN alongside the association of Pan-Yoruba lawyers known as the Egbe Amofin have come out to reject the result of the polls, stating reasons of disenfranchisement and unlawful inflation of number of voters of some branches as reasons for this rejection.

BusinessDay recalls that Egbe Amofin had prior to the election adopted Dele Adesina as its presidential candidate for the election.

Several lawyers have however come out to condemn this move. One of such condemnations came from the former chairman of NBA Ikorodu branch, Bayo Akinlade.

He said, “I read with grave concern the communique by Egbe Amofin.

This is a body of very respected members of this great profession, many of whom have added value to the legal profession over the years. While I agree with the grounds of Egbe’s complaints and share in the logic of having much needed reforms, I struggle however, to agree with the calls for cancellation of the just concluded Elections.

“We all went to the polls knowing fully well that the process was flawed. If Egbe Amofin had not started by adopting a single candidate, or even positioned itself to be neutral in the treatment of its members who wanted to contest then perhaps EGBE would be in a position to make these calls for a rerun of the elections and would act in the capacity of an elder and

Continues on page 17

The Finance Act, 2019 – The tax man gives and takes?

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www.legal.businessday.ng legalbusiness@businessday.ng

Thursday 06 August 2020

BUSINESS DAY

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LegalBusiness

How Olumide Akpata won the NBA elections and why calls for cancellation...

Continued from page 16 arbiter but Unfortunately, Egbe picked a side so cannot come out now and claim to speak for lawyers in the west; except Egbe is a group for Yoruba lawyers only which will be quite unfortunate if they were.”

He added, “May I use this opportunity to call on my elders within Egbe Amofin to accept this elections with all its flaws but use their influences, leverage and expertise to promote structures that will ensure a free and fair elections within the NBA in 2022 and beyond.

Another lawyer, and co-convener of the Open Bar Initiative (OPI), Silas Joseph Onu had this to say: “I read a press statement credited to a group known and referred to as Egbe Amofin, relating to the just concluded NBA Election in which an overwhelming majority of lawyers cutting across tribe and religion, voted independently for Olumide Akpata.

Let me begin by emphasising that the NBA Constitution does not recognise any such group as Egbe Amofin. It is an illegal organisation, not known to law or the NBA. NBA is an Association made up of individual members and only such individual members, who are financially responsible, are recognised by the NBA to raise such concerns. Kindly ignore this group as they do not represent the views of majority of lawyers in Nigeria, who spoke loudly through their ballot.

“In the new NBA, there is no Igbo Lawyers, Yoruba Lawyers, Hausa Lawyers, Idoma Lawyers, Igala Lawyers, Eastern Bar, Western Bar, Northern Bar etc, there is only one NBA for all. In this new NBA, individual lawyers from all over Nigeria, are the determinant of our leadership choice, not tribal groups or forums. NBA was not established to create ethnic, tribal or religious sections within its fold. The old clueless leadership succeeded in splitting the Bar to satisfy their primordial interests.

That era is gone.

Lawyers who are Igbos, Yoruba, Hausa, Efik, Ikwerre, Urhobo, Igala and many others, voted for Olumide Akpata to emerge as President of the Bar. Therefore, a selected group that could not even field a unanimous candidate in an Election cannot claim or pretend to be speaking for and on behalf of the very wise Yoruba lawyers that i know to be very independent in reasoning when it matters most as they just did in the just concluded election.

I am an Igbo man and I have never recognised or subscribed to what the Eastern Bar Forum does in respect of deciding my choices when it comes to election – I will never be subjected to such an arrangement. I call on my good friends and brothers from the southwest, on whose behalf this group claim to be speaking, to individually dissociate them-

selves from the rebellious action of this group. The Bar is bigger than anyone or group or cabal.

We have taken back our Bar and no vested interest can scuttle that.

Yet another member of the bar said, “Regardless of the fact that I am a lawyer of Yoruba extraction, I hold the view that Egbe Amofin lost the credibility to make any objective call or statement on the election when they adopted a candidate. Anything said by them after such an adoption would be interpreted as speaking for the adopted candidate, especially when they echo his sentiments on the election which he lost.”

Was it a case of the petitioners playing the ostrich?

BD LEGAL BUSINESS notes that all the issues raised in Adesina’s petition are same as those listed in the Olumide’s open letter to the ECNBA published in the www.businessday.ng

Guardian Newspaper and the Vanguard Newspaper a week to the election and also reported in our last edition.

In fact, they were the same concerns he raised at the ECNBA interactive session with the candidates on Monday July 27th, 2020, where LEGAL BUSINESS correspondents were present and in which the other two candidates were not only noticeably silent but commended the ECNBA for its good work.

Speaking about this issue, another legal analyst said, “I recall that on all occasions these issues were raised, supporters of a certain candidate held the view that he was making much ado about nothing as he was afraid of losing and therefore dismissed the concerns.

“Unfortunately, the unpreparedness of the ECNBA and the

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untidiness in the electoral process cost all candidates, including Olumide Akpata, a huge chunk of votes, as approximately 10,500 eligible voters may have been unable to vote (either for reason of religious travel or poor network) or may have been disenfranchised as a result of not receiving links. Of the 10,500 unrecorded votes, going by the percentile voting pattern of 54:23.7:22.3, approximately 5,500 voters who would have voted Olumide Akpata were adversely affected as we kept getting reports from supporters who were waiting on end to receive their links. They remain very displeased about their disenfranchisement.”

With these developments, it is clear that Olumide Akpata’s concerns have been justified.

However, many supporters and non-supporters alike believe that this victory places a hefty burden on him to ensure that this travesty is not repeated in 2022.

“I am hopeful, that being a man of excellence and a quintessential administrator of men and resources, he will deploy the best skills and measures to ensure that a proper record of lawyers is maintained at the NBA Secretariat so as to make future use of such detail seamless and efficient.

A post-mortem of the electoral process is definitely necessary for appraisal of the ECNBA’s efforts - as it should be in all sane societies. In the meantime, and @Businessdayng

as Olumide Akpata has said, it is time for us to work together to Secure the Future of the NBA through a United Bar that Works for All,” a supporter said.

The President of the NBA, Paul Usoro, SAN has also urged both the winners and losers of the elections to join hands in healing the wounds and bruises that may have been occasioned by the Elections campaigns and results.

The Victory In his acceptance speech made available to BD’s Legal Business the president-elect said his victory was for the young lawyer who has become disillusioned with the way the NBA has been run over the years and how the profession appears to be disconnected from the challenges that face them and their future.

“It is for the progressive senior lawyer who refused to accept the status quo and took firm steps to ensure that things are done better.

It is for the corporate counsel, law officers, law teachers, the police and military lawyers, and lawyers in all components of the profession who for long have been treated as unequal members of an Association that ought to be the umbrella body for all legal practitioners,” the president-elect said.

Also thanking members who voted for him and his team, he said: “Thank you from the bottom of my heart. Let me assure

Continues on page 18

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Thursday 06 August 2020

BUSINESS DAY

The Bar

Meet the new national officers of the Nigerian Bar Association

T

he NBA election which was conducted e -v o t i n g h a d about 29,636 eligible voters. However, only 18,256 of this number was able to vote.

Less than hour into the

commencement of voting on Wednesday July 29th, 2020, “Non-SAN”, Olumide Akpata was already leading his contenders by a margin of 54% - a position he maintained right to the close of the election at 11:00pm the next day.

At the end of the election, Akpata emerged president-elect of the NBA as he polled 9891 to defeat the other candidates. He scored 54.3 percent of the votes.

Dr Babatunde Ajibade, SAN emerged the 1st runner up with 4,328 votes, while Deacon Dele Adesina, SAN picked the rear with 3,982 votes.

Fo r t h e p o s i t i o n o f Secretary General, Joyce Oduah Esq emerged the winner. The 1st Vice President was won by John Aikpokpo Esq, 2nd Vice

President saw Adeyemo Kazeem Debo Esq being victorious.

The position of Treasurer went to Ijato Mercy Agada, while Uchenna Nwadialo, emerged Assistant Secretary. Olukunle Edun Esq won the position of Welfare Secretary and Nduka Rapuluchukwu Ernest (PhD) got the office of Publicity Secretary. Afam Naza Ferdinand Esq won the contest for Assistant Publicity Secretary and Raphael Nnamdi Anagor, the position of Financial Secretary.

Welfare Secretary, Olukunle Edun

President-Elect, Olumide Akpata, SAN

Incoming General Secretary, Joyce Oduah

Nduka Rapuluchukwu Ernest, incoming Publicity Secretary

Incoming Treasurer, Ijato Mercy Agada

Ferdinand Afam Naza, incoming Assistant Publicity Secretary

Photo 3: Incoming Assistant Secretary, Uchenna Nwadialo

Raphael Nnamdi Anagor, Incoming Financial Secretary

How Olumide Akpata won the NBA elections and why calls for cancellation...

Continued from page 17 you that I do not take for granted the hard work, passion and commitment that you all invested into the process that has now culminated in my emergence as President-elect. When I decided to throw my hat in the ring, I was certain that the election was really not about me.

“I was driven by the passion to use my time, talent and resources to improve our Association by making it fit-for-purpose, beneficial to all members and

responsive to the needs of the society. Throughout the electioneering process, I saw many Nigerian lawyers who had either lost faith, or never been interested, in the NBA participate with utmost enthusiasm in the hope that things would become better. This further goes to show that the extraordinary movement that heralded this electoral victory was not and could never have been about me.”

Akpata is set to take over from the incumbent Presiwww.businessday.ng

dent, Paul Usoro, SAN, as the 30th President of the Nigerian Bar Association, come August 2020.

Moving On… Moving on, congratulatory messages have continued to pour in from individuals and organisations wishing the president-elect well as he takes on this new responsibility.

Among those who have congratulated the incoming president are, have President Mohammadu Buhari, former vice president Atiku, Senate President Bukola

Saraki, Governor Godwin Obaseki, Governor Ifeanyi Okowa, Dr Joe Abah, Kingsley Moghalu, Former NBA presidents, Olisa Agbakoba, SAN, Dr Olisa Agbakoba, SAN, as well as Chairmen of NBA branches across the country.

Former NBA President, and indeed the President who brought the universal suffrage system to fruition in the NBA, Augustine Alegeh, SAN, while congratulating Akpata hours after his victory said, “This is a time for unity in the

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best interest of the association. I implore all other candidates who were unsuccessful at the election to continue to contribute their quota towards the development of the Bar. “The elections are over, and we need to come together as a family to offer our support, advice and encouragement to the newly elected National Officers to enable them succeed in the task of delivering on the core mandate of the Bar. “We must appreciate the @Businessdayng

fact that elections are never perfect, and I trust that the incoming administration will improve on the gains recorded in the electronic voting system that guarantees universal suffrage under our Constitution.

We must appreciate the fact that without electronic voting it would not have been possible for us to hold this election during this COVID-19 pandemic. We must keep improving our electronic voting system,” the former president said in closing.

Thursday 06 August 2020

BUSINESS DAY

INDUSTRY FILE

BD

Commencement of AfCFTA in 2021 would boost economies of member nations – Experts

L

egal experts have assured that the commencement of the Africa Continental Free Trade Agreement (AfCFTA) in January 2021 would boost the economies of member nations.

They gave the assurance at a webinar organised by Alliance Law Firm with the theme: “Leveraging international trade law for the recovery of the global economy during the post COVID-19.”

Participants at the webinar, which included the president of Afreximbank, Prof. Benedict Oramah; director of Agriculture and Commodities division, World Trade organization, Edwini Kessie; Partner, King and Spalding LLP, Mr. Daniel Crosby; director of legal services, African Export-Import Bank, Samallie Kiyingi and the immediate past registrar, UNIRMCT, Dr. Olufemi Elias.

The event, which was moderated Folashade Alli, principal partner, Folashade Alli and As-

sociates, also had in attendance, the Chairman, Nigeria Bar Association Section on Business Law (NBA-SBL), Seni Adio (SAN); the chairman, International Trade Law Committee and managing partner, Alliance law firm, Uche Val Obi (SAN).

In his address, Prof. Oramah explained that in the absence of international cooperations towards a shared growth and prosperity at the world level, Africa has to take her destiny in her own hands.

“Thank God our leaders have risen to the challenge. The African Continental Free trade agreement provides that alternative. The journey for a rich African has already begun with the signing of the AfCFTA,” he said and lamented that the emergence COVID-19 has caused the shift of the commencement of the Agreement from July 2020 to January 2021 He stressed that AcFta is expected to boost inter-Africa trade. He charged lawyers to advise governments

and stakeholders on the essential elements of the agreement.

Speaking on how Nigeria could use the emergence of COVID-19 to address its challenges, the organizer, Obi (SAN), noted that the country hesitated in signing the agreement on the excuse that it wanted to carry all stakeholders along.

He however maintained that it was never in contest that AcFta was a very relevant continental pact meant for the economic growth of member states. According to him, the closure of land borders by Nigeria around October 2019 to curb smuggling aggravated the situation.

This is because it was coming at the heels of the pressure to sign the pact.

“COVID-19 provided an opportunity to assess the contribution of international trade to the global economy. Consequently, it has become imperative for concerted efforts to be made at the regional level to restore things,” he stated.

P&G Partner set to launch new book

T

olu Aderemi LLM, CIArb, a partner in the firm of Perchstone & Graeys is set to launch his new book titled – “Arbitration Law & Practice in Nigeria: The Practitioner’s Perspective”. The Book is a compendium of scholarly papers that focus on contemporary topics which will deepen the practice of arbitration; whether at a junior or mid-Senior level.

The book presentation which is in celebration of his 40th birthday, will also mark Aderemi’s 15 years of unbroken practice of the legal profession as a Barrister and Solicitor of the Supreme Court of Nigeria and 13 years of having qualified as an Arbitrator.

Speaking about the event, the author said, “In commemoration of this day, I have decided to contribute to the development of the jurisprudence of arbitration in Nigeria by publishing this book and it promises to be a valuable resource tool for Arbitration Practitioners and is a welcome contribution to the body of knowledge on the topic in Nigeria.”

The book focuses on topics that are unlikely to be contained

Tolu Aderemi

in one single text. It is therefore a Practitioner’s guide from very eminently qualified and senior Arbitration practitioners such as Kamal Shah (UK), Funke Adekoya SAN, Tunde Ajibade SAN, Doyin Rhodes-Vivour SAN, Hon. Justice Nnamdi Dimgba, Tunde Fagbohunlu SAN, Osaro Eghobamien SAN, Chief Bolaji Ayorinde SAN, Bode Olanipekun SAN, Tunde Busari SAN, Ikponwosa Omigie (Company

Secretary, NAPIMS),Prof Alero Akeredolu, Funmi Roberts and Prof Olawuyi. My Lord, Justice of the Supreme Court, Hon Justice Olu Ariwoola JSC OFR and the global President, Chartered Institute of Arbitrators (CIArb), Francis Xavier both wrote the FOREWORD (from the Bar and the Bench) to the book.

The Public Presentation is set to hold on the 20th of August, 2020.

CJ pleads fairness in administration of justice as Ogun appoints six chief, senior magistrates RAZAQ AYINLA, Abeokuta

J

ustice Mosunmola Dipeolu, Ogun State Chief Judge has directed all the Judicial Officers

in the State Judiciary to be fair and thorough in the administration of justice, asking them to resist the temptation of abusing judicial system and power in the course of adjudication. www.businessday.ng

Justice Dipeolu, who gave the admonition at the Judiciary Complex, Kobape Road in Abeokuta, the State capital while administering

Continues on page 20

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19

LegalBusiness

Virtual LegalTech Conference unveils New Ecosystem for Client/Lawyer Engagement

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s the COVID-19 pandemic continues to ravage economies all around the world, there has been an increased pivot in the use and adoption of technology across several industries, where hitherto technology was a mere tool and not a driver of day to day operations. The world as we knew it has changed forever and it is imperative that this paradigm shift is accentuated by current realities of how individuals, organizations, institutions and governments work and interact.

The realisation that the operation of businesses and delivery of services cannot go back to pre COVID-19 ways of providing goods and services has motivated putting together the first Legal Technologies Virtual Conference, by Nigeria’s foremost LegalTech company, LawPavilion Business Solutions Limited, in conjunction with Telnet Group, Nigeria’s leading digital transformation company, to be held on August 13-14, 2020.

The conference which will be available to participants from all around the world through Zoom video conferencing app features a line-up of erudite judges and legal practitioners in both public and private sectors. The Keynote Address will be delivered by His Excellency, Prof Yemi Osinbajo SAN, GCON, Vice President of the Federal Republic of Nigeria. Other dignitaries expected at the virtual conference include His Lordship, Hon. Justice Ibrahim Tanko Muhammed CFR, Chief Justice of the Federation of Nigeria and Chairman, National Judicial Council; the Honorable Senate President, Hon. Ahmed Ibrahim Lawan; Honorable Speaker of the House of Representatives, Hon. Femi Gbajabiamila; the President of the Nigerian Bar Association and other captains of industry and legal luminaries.

Briefing the press in Lagos, the Managing Director of LawPavilion Business Solutions, Ope Olugasa remarked that for almost two decades, LawPavilion has been at the forefront of providing and improving access to digital tools for the legal services industry. It has become imperative to leverage technology to accelerate access to justice for Nigerians and organizations interested in doing business in Nigeria.

Speaking further, Olugasa stated that while the general public tends to think of the judiciary as the least visible or important arm of government, the role of the judiciary comprising of judges, lawyers, arbitrators, mediators and legal institutions in economic growth and development is so critical, that where the justice system is fraught with inefficiencies and inadequacies, economic growth is stunted. He pointed out that for example, in today’s global market, true wealth is no longer in only expansive real estate or tangible cash, but in holding intangible intellectual property. Thus, economies that do not accord enough recognition and protection of law to intellectual property stand a genuine risk of not being at par @Businessdayng

VP Yemi Osinbajo

with other economies.

The conference, which will span over two days comprise of a keynote lecture and panel discussions on the role of an efficient justice system in driving the wheel of innovation and economic growth, with panelists such as Hon Justice Olukayode Ariwoola (JSC), Hon Justice Amina Augie (JSC), Dr Babatunde Ajibade SAN, Wale Fapohunda, AG Ekiti State, Folorunsho Aliu, Group MD of Telnet Nigeria Ltd and Gbenga Sesan, CEO Paradigm Initiatives. There will also be breakout sessions focusing on seamless court integration as well as tools and resources to run an efficient law firm post COVID-19 using technology. Some of the discussants at the breakout sessions will include Hon. Justice Kashim Zannah, Chief Judge of Borno State and Chairman of National Judicial ICT Committee, Hon. Justice Olutoyin Akeredolu, the Chief Judge of Ondo State, Dr. Ayodele Akenroye, Judge of Immigration and Refugee Board of Canada, Dapo Akinosun of SimmonsCooper Partners, Sesan Sobowale, Head of Legal, Union Bank of Nigeria, Mr. Raymond Ugbokwere, Head of Legal, First Bank of Nigeria and Seun Abimbola, Former AG of Oyo State and Chairman of NBA Section on Legal Practice.

Commenting further, Olugasa pointed out that there has been a significant revolution of the banking industry through the introduction and adoption of FinTech in Nigeria, which has exponentially raised the profile of Nigeria’s banking industry. There has been significant collaboration between banking institutions, stakeholders and government agencies to consolidate and rapidly enhance banking operations, irrespective of location or time.

Accordingly, the legal services industry is also ripe and well primed for such technological transformation and the virtual Legal Technologies Conference being hosted by LawPavilion, in conjunction with Telnet Group, will showcase the unveiling of an enterprise solution for the judiciary, LawRights App (for the general citizenry), Lagos State Laws in E-book version integrated into LawPavilion’s awardwinning legal research software, all of which constitute parts of a new ecosystem, seeking to institutionalize legal-technology in Nigeria’s justice sector.

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Thursday 06 August 2020

BUSINESS DAY

BD

LegalBusiness

The Finance Act, 2019 – The tax man gives and takes?

T

he Finance Act, 2019 (“the Finance Act”w h i c h c a m e i nt o force on 13 January 2020) has made significant changes to the tax regime in Nigeria. The Act makes changes to legislation such as the Companies Income Tax Act (“CITA”), Petroleum Profit Tax Act (“PPTA”), Personal Income Tax Act (“PITA”), Value Added Tax Act (“VATA”) and Capital Gains Tax Act “(CGTA”), amongst others.

We anticipate that some of these reforms would be of interest to companies operating in Nigeria, as well as potential investors who are interested in Nigeria. This is because the changes will have an impact on matters such as investment strategies, tax planning and revenue forecasts.

We will, in a two-part series, highlight some of the changes introduced by the Finance Act and potential implications for the corporate sector. In Part One of this series, we will discuss reforms related to digital and remote services taxation, withholding tax (“WHT”) exemptions for long-term foreign loans, thin capitalisation rules, and tax holidays for agricultural companies.

In Part Two, we will highlight changes pertaining to tax-free earnings for Real Estate Investment Companies (“REICs”), elimination of punitive taxation of tax exempt income and retained earnings, possible income tax and VAT exposure for foreign entities, VAT and CGT exemptions on business reorganisation, incentives for small businesses, and WHT on dividends from petroleum profits.

Taxation of digital and remote services A key reform introduced by the Finance Act relates to the taxation of foreign companies that provide digital content/services (or engage in digital transactions) or technical/management/consultancy/professional services to persons in Nigeria.

Before the Finance Act, the

physical presence of the foreign company or its agents in Nigeria was the primary consideration whilst determining whether profits of the company were derived from Nigeria. However, pursuant to the CITA (as amended by the Finance Act), a digital or virtual presence may now suffice.

Thus, the profits of a foreign company shall be also deemed to be derived from Nigeria where: • The company transmits signals, messages and data of any kind to Nigeria in respect of any activity including electronic commerce, online payment platforms and online advertisements, to the extent that the company has a significant economic presence in Nigeria and profit can be attributable to such activity; and • The trade or business involves rendering technical, professional, management and consultancy services outside Nigeria to a person resident in Nigeria, to the extent that the company has a significant economic presence in Nigeria.

In exercise of statutory powers, the Minister of Finance issued the Companies Income Tax (Significant Economic Presence) Order, 2020 on 29 May 2020 (the “SEP Order”) which became effective on 3 February 2020, stipulating what would constitute a significant economic presence of a foreign company.

Thus, where a foreign company that provides digital content/ services is deemed to have a significant economic presence in Nigeria, its profits will be subject to companies income tax of 30%.

Where the foreign company provides technical, management, professional or consultancy ser-

vices, it will suffer 10% withholding tax (“WHT”) when it receives payment for these services from a person resident in Nigeria or a fixed base or agent of a foreign company in Nigeria.

Planning points: Nigeria is currently a party to bilateral Double Tax Agreements (the “DTAs”) with 14 countries. Nigeria’s power to tax the profits of a company resident in any foreign territory covered by a DTA is only exercisable in respect of profits attributable to a ‘permanent establishment’ (in essence, a physical presence) in Nigeria. As such, there may be an opportunity for multinational enterprises (“MNEs”) with access to benefits under Nigeria’s DTAs to optimize their group structures with a view to mitigating the impact of the SEP provisions. In exploring that opportunity, it should be noted that the extent to which the DTAs prevail over the SEP provisions is still uncertain. Also, the OECD’s ongoing work on taxation of the digital economy could potentially extend the definition of a permanent establishment in the DTAs to include provisions similar to those of the SEP Order.

Removal of full WHT exemption for long-term foreign loans Prior to the enactment of the Finance Act, interest paid from a Nigerian company to a foreign lender were fully exempted from WHT if the underlying loan had a repayment period (inclusive of any moratorium) of more than 7 years. Partial exemptions were available on a graduated basis for shorter tenor loans and any WHT chargeable as a result was (and continues to be) the only

tax on such interest.

The amendments introduced by the Finance Act have reduced the WHT exemptions on interest on such foreign loans to a maximum of 70%.

Planning points: Given the reduction in the tax exemptions in respect of interest on foreign loans, investors will need to recognise the drop in net interest income from operating companies which have been funded with long-term debt, and its impact on things like PIK notes.

They will also need to reevaluate strategies for negotiating debt instruments, such as convertible loan notes.

Thin Capitalisation Rules Prior to the introduction of thin capitalisation rules by the Finance Act, Nigerian companies enjoyed unlimited deductibility of interest expense for income tax purposes, and interest not deducted could be carried forward indefinitely.

Under the amended CITA, a tax deduction in respect of interest paid on a loan received from or guaranteed by a ‘foreign connected party’ must not exceed 30% of the taxpayer’s EBITDA. From the wording of the amendment, it appears that the 30% limit also applies to interest paid in respect of a loan which is received from an unrelated party and guaranteed by an unrelated party.

Interest on debt provided by local lenders is, however, still deductible without limit. Interest not deducted due to the above restriction can still be carried forward, but only for a maximum of 5 years.

Planning points Investors should be mindful of the im-

pact of thin capitalisation rules on the after-tax profits (and consequently on the distributable profits) of their companies, where such companies are already funded using debt provided by a foreign related party or guaranteed by either a foreign related party or by an unrelated party. Companies which have raised project financing may be particularly impacted, especially where credit enhancement structures incorporating parent company or third party guarantees are in place. Consideration should be given to optimizing the debt mix by substituting local debt for foreign debt where possible, whilst bearing in mind transfer pricing rules that may adjust interest rates to reflect arm’s length conditions.

Tax holiday for agricultural companies The provisions in the CITA (as amended by the Finance Act) relating to tax holidays for companies engaged in agricultural production may make potential investments in Nigerian agriculture and agribusiness more attractive to investors.

Before now, such companies enjoyed income tax exemption under the Industrial Development (Income Tax Relief) Act for a period of up to 5 years. However, in terms of the amended CITA, companies engaged in agricultural production may now enjoy income tax exemption for up to 8 years, subject to the satisfactory performance of agricultural production. However, such companies will not be granted similar incentives under any other law, such as pioneer status under the Industrial Development (Income Tax Relief ) Act. _________________________ _______ ǼLEX is a leading full service Commercial & Dispute Resolution law firm in Nigeria and Ghana. AELEX Notes is a dedicated platform that provides insights into legal issues, developments, insights and perspectives of thought leaders. Visit us at www.aelex.com

CJ pleads fairness in administration of justice...

Continued from page 19 the oath of office on six newly appointed Chief and Senior Magistrates to the Ogun State Judiciary, also, implored them not to be carried away with enormous powers which various laws have conferred on them.

Legal Business reports that those appointed as Chief Magistrates include Awofeso Ireti-Olu Babatunde, Dipeolu Dehinde, Osinbajo Moriyike Oluwabunmi while Shodeinde Ogooluwa Adekunle, Kolawole Ogunbowale and Solana Shodeinde Abayomi were appointed as Senior Magistrates.

While asking the newly appoint-

ed Chief and Senior Magistrates to be honest, hardworking, diligent, time-conscious, reliable and fair in their dealings with their immediate environment and venture members of the public, the Chief Judge appealed to them to deal with citizens and litigants who appear before with human face.

She said, “Judicial Officers have a constitutional duty to serve this nation as competently, diligently, fairly, professionally and speedily as it’s humanly possible all things considered, as there are no sacred cows and that include the Judiciary.

“Judicial Officers are public servants whose salaries and other www.businessday.ng

entitlements are paid by this nation whose majority citizens live in abject poverty and judicial independence goes hand in hand with accountability.

“Indeed, our conduct must therefore be professional and above reproach at all times, Judicial Officers must earn the trust, respect and confidence of the people they serve.”

She therefore appealed to not only the newly appointed Chief and Senior Magistrates but also to all Judicial Officers throughout the Court structure and Judicial system in the State to always remember that there is a power to be exercised with utmost fairness.

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L-R: Solana Shodeinde Abayomi, Senior Magistrate; Osinbajo Moriyike Oluwabunmi, Chief Magistrate; Dipeolu Dehinde, Chief Magistrate; Justice Mosunmola Dipeolu, Chief Justice of Ogun State; Awofeso Ireti-Olu Babatunde, Chief Magistrate; Kolawole Ogunbowale Dorcas, Senior Magistrate; and Shodeinde Ogooluwa Adekunle, Senior Magistrate at the Swearing-in Ceremony of six Judicial Officers held at Judiciary Complex, Kobape Road in Abeokuta, Ogun State on Monday. @Businessdayng

Thursday 06 August 2020

BUSINESS DAY

21

FINANCIAL INCLUSION

& INNOVATION

‘For Max.ng, financial inclusion starts with revenue generation’ On a mission to fix Africa’s notorious last-mile delivery and online-retail problems by using mobile and web platforms to connect consumers and retailers, Guy-Bertrand Njoya, the CFO of Metro Africa Xpress (MAX) shares insight on how MAX is leveraging income generation approach to boost financial inclusion drive in Nigeria in this interview with BusinessDay’s Endurance Okafor. Excerpts: How have you adjusted your business model to accommodate the recent motorcycle ban in Lagos and the impact of COVID-19? can’t say we actually adjusted our business model because, in the first place, the model was built in order to deliver on our key mission which is to solve the challenges of mobility for all Africans; for consumers as well as small and large enterprises in Africa.

In order to do so, we were set up to build technology and financing infrastructure for the mobility space and what that means is that we are effectively and an agnostic platform that is active across logistics, transportation, financial and software solutions for the mobility sector.

So, as a business, for example, we started by providing last-mile services to the e-commerce operators and when we started in 2015, we started by being a last-mile service provider for customers such as Jumia, payporte and other e-commerce operators.

We did that for a couple of years before going into what most people came to know us for, the motorcycle ride-hailing.

Today, we remain the largest last-mile delivering operator in the e-commerce space in Nigeria and that remains a significant part of our business.

Also, the problem that we are solving does not only exist in Lagos but in other cities not only in Nigeria but in the African region. Our target market is the whole of the continent and that is why as early as June of 2019 we made the decision to expand beyond Lagos and so we launched our activities in Akure nd by the end of last year, we were active in three cities

I

in Nigeria- Lagos, Akure and Kano.

In line with that strategy, we opened our Ibadan office in January of 2020, before the motorcycle ban in Lagos but that’s not to say the ban was not something that was of great concern to us. For us, it was a further indication that our agnostic platform model was the right approach to building a robust, sustainable and fast-growing platform that is successful in making transportation logistics efficient and affordable for all Africans.

So on how we adapted to the recent realities, we reacted by really doubling down our strategy which is solving challenges across logistic and transportation and that is why we are the largest financier of drivers of private operators.

In response to the impact of COVID-19: it has been beneficial for us in terms of logistic and developing software solutions but the challenges also have been mostly in the decline in traffic for our riders.

What are the particular issues you have encountered in the course of doing business in Nigeria?

I think we face similar issues with most other businesses in the country. One of the key challenges we have had to continuously grapple with is the availability of talent and skill which is rooted in many different issues that we face both as a country and a continent.

Generally, the adequacy of our education system and so on. So access to adequate talent is a challenge and in the sector which we play in which is the technology sector, an engineer is in demand; think of the small start-up in need of an engineer, all the way to the large organisation in silicon valley who needs a software de-

plain about it, we try to be proactive that’s why we are very proactive in the way we engage the government across the country and the regulator to keep them abreast and informed them of what we are doing, who we are and the problems that we are solving because what we are doing helps them achieve their own objectives as a government and regulator.

So the issue of security, for example, is a massive challenge in our sector and so we understand where they are coming from when they make some of their decisions. We may not necessarily agree with the solutions adopted but we understand what the concern is.

Guy-Bertrand Njoya

veloper. For instance, they have the same need and are competing for the same talent and obviously with the spread of the greater acceptance of remote working, it has become much easier for a software developer, for example, to work from home for either a very small organization that can pay what they can afford or work for Google, and Andel for example.

So it’s a major issue and we are trying to solve it in our own way by continuing to build a top-level employer culture by solving issues and continue to source people that are passionate about such issues, so they can really buy into the mission and as such can find great satisfaction in solving the problems.

We are grappling with access to patient capital, although we have been fortunate enough to unlock capital and receive the support of some renewed and wealthy organisations

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across the globe, from Asia, Europe, North America and from some of the top VCs in Africa.

Again, in the face of the massive challenges that we are trying to solve, which also has massive opportunities, there is a significant demand for capital. So we are in continuous need of capital and this is sometimes challenging, but obviously, we also find ways to solve it.

It falls back again to the mission; we are very much into the mission and we believe that as long as we remain focused on that and we are able to demonstrate that we are implementing the right strategy, we will continue to unlock the right capital.

The last but not the least is the regulatory environment. It’s always difficult to operate in an environment where regulation is everchanging. It makes it even harder to plan for the long term and for the future.

We try not to just com-

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You recently added delivery services, digital wallet, and electronic payment to your platform, how has that impacted on your revenue inflow?

It is very instrumental to our growth and not just in this period, historically and more so, in this period. For us, our approach to financial inclusion is perhaps slightly different from most other organisations or the way people think about. For us, financial inclusion starts with revenue generation.

You can not be financially included if you don’t generate income for yourself or simply put if you don’t have money.

There is no way you can be financially included if you don’t have the finance to bring into the system.

The root cause of the problem and therefore the one that we are tackling first and foremost is how do we help the drivers on our platform to get to the position where they can start generating a steady predictable income and this is why we are deploying the many of the things we have done so far. @Businessdayng

For example, we provide them with a high-quality vehicle that they can operate for a number of years, for a much longer period of time than the typical low-quality vehicle that they have. This puts them in a position to be active for five-six years and that’s why we have also built a platform that connects commuters and enterprises to the drivers in real-time.

What that does is creates the market for the drivers and opportunities to generate an income and it’s on the back of that income that different financial solutions can now be built.

Once someone generates an income they start having different financial needs.

The first thing that we can all think of is, how do I secure my income which is access to a basic bank account and access to a final financial system.

So, it’s all starts with income generation, once someone generates an income, just like everyone out there; whether you are a salary earner, an entrepreneur, etc as long as you generate an income, you have financial needs.

Because you need to be able to manage and secure that income and you need to be able to protect it.

You also have to be able to protect yourself against the risk you may have to face, and be able to also protect your family in case anything happens to you, how do you ensure your family is protected and will continue to have a quality lifestyle. All these needs that exist in the formal sector are the exact same needs that exist in the informal sector but the challenge really is understanding how to build innovative solutions that can be adopted in the informal sector and how to also build in bridges that can gradually transfer them to the formal sector.

22

Thursday 06 August 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Market capitalisation

NSE Premium Index

The NSE-Main Board

N12.743 trillion

2,165.54

N12.882 trillion

2,205.73

NSE All Share Index

Week open (24-07–20)

24,427.73

Week close 29 07–20)

24,693.73

Percentage change (WoW) Percentage change (YTD)

1.09 -8.00

1.09 4.23

NSE ASeM Index

NSE 30 Index

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

1,011.03

741.05

122.34

404.25

182.20

1,824.65

1,106.55

920.06

1,014.69

1,040.14 1,053.21

270.41

740.58

278.60

122.34

402.48

170.34

1,845.77

1,146.73

930.13

3.03

0.00

0.36 -11.90

0.00 0.00

1.26 -10.58

-21.93

-2.77

-0.44 -32.11

NSE Lotus II

-6.51

1.16

-35.12

0.60

NSE Ind. Goods Index

NSE Pension Index

3.63 6.61

1.09 -11.76

Nigerian Breweries: Consumers’ pressured income, social distancing weigh on H1 earnings …analysts say stock still a good ‘Buy’ Storeis by Iheanyi Nwachukwu

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igerian Breweries stock price at N31 as at week open implies it has lost 47.5percent of its year-open value, but analysts still say it’s a good “buy”. The stock currently trades little above its 52-week low of N22, after reaching a corresponding week high of N59.75.

The brewer recently released on the Nigerian Stock Exchange its halfyear (H1) results for the period ended June 30 which show record decline across top-to-bottom lines figures.

Nigerian Breweries has 7,996,902,051 units in shares outstanding with market capitalisation of N247.903billion.

It is the largest brewer in Nigeria.

Fo l l ow i n g t h e m e r g e r w i t h Consolidated Breweries effective December 2014, parent company, Heineken maintains a 52percent controlling stake in the larger entity.

T h e c o m p a n y d o m i nat e s Nigeria’s brewery market with a circa 60percent market share and a brand portfolio that includes lager beer, stout beer, non-alcoholic malt drinks, carbonated soft drinks and ready-to-drink brands.

Analysts take A t a rg e t p r i c e o f N 4 3 . 4 5

and a “Buy” rating for Nigerian Breweries shares have been given by the Chinma Ukadike’s team of Lagos-based analyst at Vetiva. They believe that the implementation of lockdown measures amid Covid-19 pandemic combined with consumers pressured income levels slowed down beer consumption drastically. Also, social distancing in post-lockdown period has ensured that this trend of reduced beer volumes remained.

“Taking into consideration that the phased increases in excise duty have

ended, with the last increment in July 2019, the company should see some respite with respect to the impact on Net Revenue this year. However, despite the topline beat, we still maintain that the company’s revenue strength remains compromised and expect that the line item would come in at N292.7 billion, a 9.4percent year-on-year (y/y) decline, owing to depressed income levels and the impact of social distancing measures on alcohol consumption”, Vetiva stated.

The scorecards

The unaudited and provisional results show revenue decreased to N152 billion for the period under review from a high of N170.2billion in H1 of 2019. Gross profit printed lower at N59.14billion in H1’20 against N71.65billion in H1’19. Profit After Tax (PAT) of N5.7billion in H1’20 represents a decrease from N13.3billion recorded in H1’19. Basic Earnings per share (kobo) stood low at 71 kobo in H1’20 from 166kobo in H1’19.

Company speaks In a statement following the H1

results, Nigerian Breweries said the half-year results for the 2020 financial year “show a strong balance sheet for the Company despite several factors that negatively impacted on the Company’s operations – such as an increase in Excise Duty, a rise in inflation, an increase in VAT from 5percent to 7.5percent, as well as the impact of the coronavirus (Covid-19) pandemic on businesses worldwide.

Despite these challenges, the Company’s financial position shows stability and sustained profitability.”

“To support the fight against the Covid-19 pandemic, the Company, during the period under review, made various donations in cash and kind valued at about N531 million out of a phased commitment of N600 million to the Federal and State Governments’ Covid-19 Relief Funds.

The Board of Directors commended the Company’s Management for its efforts to mitigate the impact of the pandemic on the business, as well as the prudent management of its resources as reflected in a 7percent reduction in expenses incurred on marketing, distribution, and administration.

The Board expressed confidence that the Company is well-positioned to continue to deliver return on investment to Shareholders,” the brewer stated.

Shareholders approve Japaul’s $70m capital raising, share reconstruction, name change

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hareholders of Japaul Oil & Maritime Services Plc have approved major resolutions authorising the company to change it name, reconstruct its share capital and raise up to $70 million in new capital as part of significant redirection of the company towards growth and profitability.

At the annual general meeting (AGM), shareholders approved the change of the company’s name from Japaul Oil & Maritime Services Plc to Japaul Gold and Ventures Plc to reflect its new business focus from oil and gas servicing sector into natural resource management, specifically the exploration, mining, processing and export of minerals such as gold and lithium among others.

Shareholders also approved the reconstruction of all existing ordinary shares of 6billion ordinary shares of 50 kobo each while also authorising increase in authorised share capital to 60 billion ordinary shares. After the reconstruction, shareholders mandated the board to undertake

public offering through combination of any of book building and public offer to raise $70 million or its naira equivalent through all possible legitimate means.

The net proceeds of the proposed new capital raising will be used to finance the completion of expanded explorations; mining activities; mineral processing; export; engineering design; procurement; installation of a gold processing plant and working capital among others.

Chairman, Japaul Oil & Maritime Services Plc, Paul Jegede said the changes underscored the company’s commitment and proactive nature in exploring opportunities to bring value to its shareholders.

According to him, the diversification was due to the belief that natural resources are a viable substitute for oil, as necessitated by oil prices which have been nosediving even before the COVID-19 pandemic.

“The mining of these natural resources is not only profitable, it is without any negative impact on the www.businessday.ng

environment,” Jegede said.

He noted that Japaul has already acquired mining and exploration licenses through buy-overs for the exploration, mining and exportation of gold, lithium, copper, tin, lead and zinc across seven states in Nigeria where strategic minerals have been discovered in commercial quantities and reserves.

He added that the company has also started a landmark restructuring and transitioning to become Nigeria’s first indigenous publicly quoted company in that space.

Group Managing Director, Japaul Oil & Maritime Services Plc, Akin Oladapo said the diversification is as a result of the company’s five-year growth plan.

“We had the foresight that the situation of the oil and gas sector would not improve for a long time, which is the case today. We started training ourselves in mining related businesses and the rest is history. We have bought mining and exploration licenses for Gold, Lithium, Lead,

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Copper, Tin, Zinc etc., which our company will be working with,” Oladapo said.

He said the company already have Canadian expatriates that have been doing explorations works for it, specifically, MATRIX GEOTECH in Toronto, Canada adding that the company’s strategy is to start mining gold as from 2021 to 2022 while exploration works continue on other licenses that it has.

“With this new business focus, Japaul Gold and Ventures Plc is already positioned strategically for the supply of the oil of tomorrow to international markets which have unlimited demand as the world makes a more mineral-intensive transition from fossil fuel to low-emission energy and from the industrial revolution era to the use of more advanced technologies,” Oladapo said.

Jegede explained that the oil and gas servicing sector has been posing a whole lot of challenge as about $150 million was invested by the company for the purchase of different marine @Businessdayng

vessels, which have since stopped bringing returns to the shareholders because there have been no contracts with international oil companies (IOC) to engage them.

According to him, the few jobs available with the IOC became so competitive to the extent that the company had to give out a number of its vessels at daily charter rate which is below cost of operations. For instance, the AHTS vessel that it used to give out on charter for $30,000 per day came down to less than $10,000 per day which is even far less than the cost of running the vessel per day.

“With this situation, we have been incurring losses for some time now and no dividend is being paid and debt in the bank was mounting.

The company was finding it difficult to meet her various obligations. The way the daily charter rate for the vessels was going down is the same way the value of the vessels, which are the main assets of our company, was going down. The vessels became worthless,” Jegede said.

Thursday 06 August 2020

BUSINESS DAY

23

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

ENI says allegations against it in respect of OPL245 were all false …Nigerians to benefit tremendously from project despite delay olusola Bello

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ni one of the companies that is involved in the controversial OPL245 has debunked the allegations that were levied against it, saying it hey were totally incorrect.

It also enumerated what it thinks there are certain benefits that Nigeria could get if the field were to have been up and running in 2019 .

The company in a report cited by BusinessDay stated that there are seven incorrect aspects dealt with both by Non governmental organisation (NGO) which filed petitions with the Court and the Supervisory Authorities, and by certain news media.

The various interpretation given to it activities on OPL 245 Eni says are intended to contest Eni’s probity and transparency, the company said.

According to the company the acquisition of OPL 245 Block by Shell and Eni has been the subject of incorrect and speculative interpreta-

tions since 2011.

It stated that OPL 245 does not grant the right to exploit any acreage, but provides an opportunity to explore the area. This activity required significant investments – amounting to several hundred million euros – and will require further investments worth billions over a number of years to come before having any chance to proceed with full-scale oil production

activities.

OPL 245 does not grant the right to exploit any acreage, but provides an opportunity to explore the area. This activity required significant investments – amounting to several hundred million euros – and will require further investments worth billions over a number of years to come before having any chance to proceed with full-scale oil production activities. To date,

not a single oil barrel has been drilled.

Eni said it will demonstrate, through objective and documentary evidence, that Eni acted in full compliance with the law and the company procedures.

The project is expected to deliver great benefits to the Nigerian population.

As shown by OpenEconomics research centre the development of the block

Nigeria’s oil servicing industry may remain in limbo because of OFS lagging upstream revenue olusola Bello

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igeria oil servicing industry may be in the limbo for a long time to come because of the way they industry has been affected by COVID 19 according to industry analysts.

Many oil companies are currently just doing maintenance jobs and not seriously engaged in exploration and production jobs.

Hit by the Covid-19 downturn, the oilfield service market world wide is not likely to rebound to last year’s activity level until 2023 according to a Rystad Energy analysis. However, suppliers could diversify some oil and gas capabilities and replace up to 40percent of 2019’s revenue by servicing the renewable markets.

Analysis of the activity of the top 50 oil and gas suppliers, indicated that all they all together earned $220 billion in upstream revenue in 2019, $100 billion of which originated from well services and commodities.

Many services provided by well-focused suppliers will be challenging to deploy in the context of energy transition Olusola Bello, Team lead,

operations, especially fracking services, OCTG and drilling services and tools.

However, the top contractors providing engineering, procurement, construction and installation (EPCI) services – which earned around $55 billion in 2019 from the oil and gas industry – will find it easier to apply their competencies towards the green shift.

“Around $90 billion, or 40percent of the revenue from the top 50 players in the global service market, could potentially be replaced by energy transition projects, such as clean energy infrastructure and renewable energy production development services.

However, the supply chain industry must also look to avenues outside of the energy transition to stay afloat,” says Rystad Energy’s Head of Energy Services Research Audun Martinsen.

In terms of market opportunities, most traditional oilfield service suppliers are looking to expand into low carbon segments, meaning technologies or services aiming to reduce or prevent emissions from oil and gas extraction and production.

Graphics: Joel Samson.

This can be done by offering more efficient operations and digital solutions. This is a space where most suppliers, regardless of current exposure in the service market, have a role to play.

Another emerging market within the energy transition is clean energy infrastructure, where suppliers can provide services to support blue and green hydrogen infrastructure, carbon capture and storage, or energy storage in general. This is a market where engineering houses, fabricators and equipment manufacturers will find big opportunities for growth and for synergies.

A third option within the energy transition is to supply the end-to-end development and operations of renewable power generation itself, for example by developing solar power plants, wind parks offshore and onshore, and geothermal energy. The solar energy supply chain is highly fragmented and has become essentially out-of-box, yet the wind market offers great potential for offshore contractors to support the development of offshore wind.

However, the risk and in-

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would bring significant economic and social benefits to the Nigerian population, stating further that it is false to claim that it would impoverished Nigerians the more.

The development of the OPL 245 block, if initiated, would imply significant economic and social benefits for the Nigerian population.

In November 2018, the NGOs Re:Common, Global Witness, and The Corner House and Nigeria-based HEDA entrusted the company Resources for Development Consulting with an analysis of the impact of the OPL 245 operation on the Nigerian economy. According to this analysis, the agreement between Shell and Eni and the FGN would reduce Nigeria’s expected incoming taxes by a total of between $4.5 million and $5.9 million (Resources for Development Consulting – Government Revenues from OPL 245.

In March 2019, Eni asked OpenEconomics, a spin-off of the Faculty of Economics at the Tor Vergata University in Rome, headed by Professor Pasquale Lucio Scandizzo, to

assess the impact of OPL 245 on the Nigerian economy.

Over the course of the 25year project, OPL 245 could lead to a cumulative $41 billion increase of Nigeria’s GDP of at 2011 prices, which means an average $1.64 billion increase a year, with a 32per cent capital return.

The country’s tax revenues would increase by $3.9 billion at present values, while indirect benefits would amount to $10.2 billion.

Despite the delays,and assuming production began in 2019, the estimated positive effects would still be largely achievable. In terms of social benefits, the OPL 245 project will help the country achieve the UN Sustainable Development Goals (SDGs). These include: 1.2 million children obtaining access to a five-year primary education cycle 200,00 new jobs, 600,000 people receiving safe and sustainable energy for the first time An increase in food consumption by poorer families, valued at more than $107 million.

Roger Brown resumes as new CEO of Seplat vestment required for expanding into other energy markets beyond oil and gas will not be feasible for all oilfield service providers.

In terms of growth opportunities, the clean energy market represents a fast-growing industry. The installed capacity of all utility-scale global renewable energy assets has doubled every fifth year since 2010, and will total 1000 gigawatts (GWAC) in 2020, comprised of 600 GWAC of onshore wind capacity, 284 GWAC of utility PV capacity and 34 GWAC of offshore capacity. By 2025, we expect this number grow by at least 50% to 1500 GWAC, potentially reaching 1800 GWAC of global capacity in our high case.

Due to economies of scale and cost deflation, operator’s investment towards asset development will grow slower than capacity, but still much faster than the O&G market.

In Europe for instance, investments in offshore wind will exceed offshore O&G investment as soon as 2022.

Geothermal energy is also getting broader attention in the market, especially in Europe.

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oger Brown, the new Chief Executive Officer (CEO) of Seplat Petroleum Development Company Plc resumed on August 1, 2020.

Brown is expected to lead SEPLAT into the next phase of the company’s growth aspirations following the retirement of the founding CEO Austin Avuru on July 31, 2020 after 10 years.

Brown joined SEPLAT in 2013 as the CFO and played a key role in the successful dual listing of the Company in 2014 on both the London and Nigerian Stock Exchanges.

Similarly, since joining SEPLAT, he has played significant roles in various asset acquisitions by the Company as well as implementing the company’s financial business model.

Brown played critical roles in the company’s successful landmark deals, Initial Public Offering (IPO) and financial structure of debt and acquisitions, as well as increased returns to shareholders. He is very familiar with the local and global business environments and institutions. As the new CEO, he is expected to work towards reinforcing the company’s leading position in the Energy sector.

Brown brings to the CEO role, an extensive knowledge of the Company in his over 6 years as the CFO and a member of the

Email: energyreport@businessdayonline.com, Tel: +234-8023020011

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@Businessdayng

Board. He has strong financial, commercial and Mergers and Acquisition (M&A) experience as well as proven people skills which will be an asset as the Company embarks on the next phase of its growth. One area of priority for SEPLAT is to ensure that liquidity and cash flow of the company remains strong and that the company’s balance sheet maintains its resilience and robustness.

Prior to joining SEPLAT, Brown was an advisor to the Company since 2010 while he was the Managing Director and head of EMEA Oil and Gas at Standard Bank Group. During his time at the bank, he was instrumental in providing advice and deploying capital across the African continent in the Oil & Gas, Power & Infrastructure and the renewable energy sectors.

SEPLAT’s new CEO is a qualified Chartered Accountant from the Institute of Chartered Accountants of Scotland.

The product of Belfast Royal Academy also holds MSc in Finance from University of Ulster; BSc (Hons) in Finance from University of Dundee.

Brown joined Seplat and its board in July 2013, having previously been an advisor to the company since 2010, Roger set up the London office for the company prior to listing on the Nigerian and London Stock Exchanges (Main Board).

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Thursday 06 August 2020

BUSINESS DAY

INTERVIEW How I-invest can help to build wealth from stock market, by Oluseye Olusoga Sterling Bank Plc, in collaboration with Parthian Partners, launched a new mobile banking application known as I-invest in 2018 in a bid to encourage investors to build a savings and investment culture. The application, which is supported on android and IOS devices, provides customers with a secure, fast, and convenient way to access investment opportunities hitherto reserved for the elite. The application also provides customers access to an array of Treasury Bill investments, equities, and Eurobonds. In this interview, Managing Director and Chief Executive Officer (MD/CEO) of Parthian Partners, Oluseye Olusoga, says investors can leverage the I-invest App to invest in equities, enjoy good dividends, and build wealth over time, among others. Excerpts:

I

-invest has been around for about two years now, can you tell us what’s new about the app that was launched as an innovation in its category? Or it is the same old solution?

The App has come a long way since it was launched two years ago. We now have a variety of investment products, including Eurobonds and equities, which are the most recently added product offerings.

Why equities investment?

Are there opportunities in the equities market for retail investors?

Yes, there are some stocks that pay good dividends, whilst others are expected to appreciate in value over time. Equity investments can serve as a great way to aggregate capital and build wealth.

How much control does the I-invest platform give to the investor in terms of direct control over his portfolio viza-viz brokers and CSCS? I-invest connects customers directly with the exchange.

Therefore, they can place orders to buy and sell at any time of the day without any human interaction. Orders will be processed automatically on the exchange as soon as trading begins - markets are open on business days between 10.00 a.m. and 2.30 p.m.

All equities are held with CSCS. After two years, can you say that new and experienced investors at home and in the diaspora have embraced Iinvest?

Yes, given the volume that has gone through the app we believe investors to a large extent have

Oluseye Olusoga

strong enabler in bringing the product to life.

embraced the app.

A re t h e re m e m o r a b l e learning curves and/or milestones these past two years?

Yes, crossing the N10 billion turnover point was a big highlight. Also, managing different stakeholders was a steep learning curve.

Given the upsurge in phishing scams, wire frauds, identity theft and business email compromise, what is I-invest doing to give comfort to its customers?

We have enhanced security around client interface infrastructure and we will continuously enhance client safety on our platform.

Tell us about your partnership with Sterling Bank?

Sterling Bank has been a www.businessday.ng

Besides Sterling Bank, can customers of other banks use the I-invest app?

Yes, of course. It is not for Sterling Bank customers alone.

It is for all investors with BVN. So, your bank does not matter if you wish to invest via the I-invest app.

Is I-invest hindered by regulation from extending its footprints beyond Nigeria?

Why opt to be a Nigerian Fintech when I-invest can be a Fintech of Nigerian origin to the world?

It is not hindered by regulation. Nigeria has a population of over 200 million people who are driven and aspirational. As Nigerians, we have a duty to enrich the lives of our fellow country people before looking outward.

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Hired APC thugs from Kogi create COVID-19 scare in Ize-Iyamu’s home as wife vows to pack out … Your good work has spoken for you, Ibillo youths assure Obaseki

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t has been alleged that thousands of political thugs brought into Edo State to perpetrate violence before and during the Edo State gubernatorial election by the All Progressives Congress (APC) are at war with their hostess, Idia Ize-Iyamu, wife of Osagie Ize-Iyamu, who is the candidate of the APC in the September 19, gubernatorial election.

The thugs who have been stationed in Ize-Iyamu’s Ugbor residence, family sources say, have been constituting nuisance and pose a great deal of threat to the health of their hosts with the rising cases of coronavirus in the state.

Mrs Ize-Iyamu, it was alleged, has threatened to pack out of her matrimonial home if the political thugs from Kogi State do not relocate to the APC Secretariat, as she would not have them turn her house into a smoking and drinking joint.

News of the row between IzeIyamu and his wife broke when Mrs Audu, wife of Gani Audu, running mate to Ize-Iyamu and other guests visited recently.

Mrs Ize-Iyamu was said to have threatened to pack out of the house if her husband failed to call the miscreants who had shifted political party activities at the campaign secretariat in Etete Street to their residence in Benin City, to order.

Family sources said she criticised her husband for downplaying the indiscriminate smoking of cannabis within their premises by party associates under the guise of showing solidarity.

Just before Ize-Iyamu travelled to Edo North Senatorial District last Friday, his wife drew her husband’s attention to the growing cases of theft (automobile batteries and lawn mower) in their home, a domestic staff told this reporter.

Meanwhile, as the Obaseki campaign entered the second day Tuesday, youths in Ibillo Town, Akoko-Edo Local Government Area of Edo State have assured the Edo State governor, Godwin Obaseki, of their unalloyed support, promising to return the governor with a wide margin in the September 19 governorship election.

A cross section of the youths, who spoke when the governor and his campaign trail stormed Ibillo Ward 4 in the council, on Tuesday,

said they were totally in support of the governor who had brought development to the area.

Meanwhile, Speaker of the Edo State House of Assembly, Frank Okiye, Tuesday declared that no member of the Edo State House of Assembly endorsed the candidate of the APC in the September 19, governorship election, Osagie Ize-Iyamu.

Okiye said this during the People’s Democratic Party (PDP) campaign rally for the September 19, 2020 Governorship election at Ward 3 in the council area. He accused dissident members-elect, whose seats have been declared vacant, of impersonating the leadership of the legislative arm, which was proclaimed by the state governor on June 17, 2019.

A resident in Ibillo, Daniel Ojo, said Obaseki had done well, noting, “We can’t afford not to give him our support. This is the first time Akoko-Edo is enjoying massive infrastructural development.”

He said, “The entire Ward 4 is for Governor Obaseki. We are not going to let him down. We need to show him that he deserves his eight years as the governor of our great state.”

“Obaseki’s good work will definitely speak for him. The people are not blind,” he asserted Another resident, Bidemi Ogunubi, said Governor Obaseki is a great man, adding that pensioners in the local council are proud of him.

“I retired and got my pension benefits within one month of my retirement. My household and I are for the governor.”

On his part, the House Leader, Nosayaba Okunbor, who represented the speaker at the rally, said the Edo State Assembly was intact.

He, however, expressed regret for Emmanuel Agbaje (APC AkokoEdo II Constituency) who recently followed the path of perfidy by accepting bribe to do the bidding of a political godfather in the state.

According to him, “For us in Edo State House of Assembly, we have resolved not to collect money and do the bidding of anyone.”

He lauded Governor Obaseki for his pro-activeness in fighting the novel coronavirus (COVID-19) pandemic in the state.

Governor Godwin Obaseki’s campaign team at Ibillo, Tuesday. @Businessdayng

Thursday 06 August 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph Editor, (08023314782)

Abdulsamad Rabiu Leads the Charge against Covid-19 for Good Reason Onuwa Lucky Joseph

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bdulsamad Rabiu is the Nigerian billionaire who plays on the exact same turf as Aliko Dangote who, like him, is from Kano. They’re both illustrious progenies of illustrious forebears. They are about the same age, (Dangote 63, Abdulsamad 60). And because they are both ultracompetitive, they tend to lock horns every now and then, like they’ve been doing in Okpella, Edo State, both of them unrelenting in their ownership claims to the Obu-Okpella mining sites.

But this write-up is not about that fight. It’s about Rabiu’s concerted focus on

Covid 19 and his belief that the virus can be routed if we do the simple needful: wear our masks, wash our hands with soap and water, and practice social distancing. That message is everywhere, but Abdulsamad believes it’s incumbent on him, considering his status and influence to put a bit of

emphasis on it.

So the BUA Group runs this commercial online and on television on a regular basis, encouraging Nigerians and humanity in general to practice the needful in order for us to be quickly rid of the pandemic. This is aside the over N3Billion in cash, food items, medical

supplies and infrastructure that the Group has contributed towards the fight.

The import of these contributions is even more critical seen against the background of the numerous strange deaths that befell Kano State which in a short time span lost a good number of its prominent children. And this was after a multitude of ignorant young men were seen at the Emir’s palace chanting Babu Corona! (There is no Corona!)

Rabiu’s inter vention helps drive the message home at a time like this.

Not for fear to reign. But for the needful preventive measures to be observed so that the pandemic does not do more harm than it’s already done in Kano and in Nigeria.

GENDER EQUALITY:

Nneka Onyeali-Ikpe’s Rise to Fidelity CEO, Good for All Onuwa Lucky Joseph

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he recent appointment of Nneka Onyeali-Ikpe as the Managing Director designate for Fidelity Bank left many people jubilating.

Why? Aside her sterling performance qualities exhibited across 30 years in the industry serving in banks like Citizens International Bank/Enterprise Bank, Zenith Bank Plc. and Standard Chartered Bank Plc., she joins the small coterie of Nigerian women who have made it to the CEO pinnacle in the nation’s banking industry.

The few who have preceded her in the immediate past to that elevated position include the sage and winsome Sola David-Borha, formerly CEO of IBTC Standard Chartered Bank but now Chief Executive, Africa Regions, at Standard Bank Group. Bola Adesola also

makes the short list (pun intended) as MD/CEO of Standard Chartered Bank, Nigeria and West Africa 1.

Hats off, meanwhile, to the folks at Standard Chartered; they are doing something good that other banks and financial institutions would do well to emulate. Corporate diversity but especially C-Suite gender diversity is a good thing for everyone.

Oluwatomi Somefun, the Managing Director of Unity Bank, rounds off the list.

We reckon that it takes more than luck and likeability to be named the MD/ CEO of a bank like Fidelity.

For one, it’s a conservative set up that manages its business hawkishly. With a renowned “tight-fisted” Peter Obi, numbered amongst its erstwhile chairmen,

the bank has managed to navigate the shark-infested waters quite nicely, even managing, to the surprise of many, to acquire FSB International Bank and Manny Bank when it needed to recapitalise during the consolidation era of Charles Soludo.

W h a t w o u l d Nn e k a do differently at Fidelity?

We expect her first of all to stay the course charted

by Nnamdi Okonkwo of transforming the lender to Tier 1 status in the equities market by 2022. And if the CBN announces, as many experts expect it would, a new recapitalization benchmark for banks, it would be Nneka’s job to drive.

While we congratulate her, we trust that she would prove herself. And whether enjoying support or suffering opposition, to diligently personify the Fidelity payoff: We are Fidelity, we keep our word.

A Nightmare Working On Happening…

Onuwa Lucky Joseph

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his emergent gully is on the main road that links Nassarawa State to Abuja, right after where a conspicuous military checkpoint used to be. The gully is the result of road works in the rainy season as well as the rains themselves that are digging relentlessly so they can emerge at the other side of the road since they can’t climb uphill. How long can you block water? It will find a way. And

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this way happens to be on the other side of the road. www.businessday.ng

This developing disaster ought to be nipped now, before it cuts the road into two and prevents vehicular and human traffic. This is the stretch on which you have Nyanya, New Nyanya, Mararaba, Masaka, Keffi, etc.

Millions will be lost in manhours and finances when the road is eventually carved up by the waters.

Where is the Federal Roads Maintenance Agency (FERMA) when you need them? Where is the Federal Ministry of Roads and Trans-

port? This is no road to look at until it breaks into two.

Going by predictions from NIMET, the rains are only just beginning. You don’t want to imagine the nightmare if this road breaks into two.

This ought not be another NEMA multimillion naira emergency intervention.

Now is the time to fix it.

Now!

(Kindly send feedback to 08023314782 / csrmomentum@gmail.com)

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How Wealth Inequality Is Warping the World of Philanthropy KRISTIN TOUSSAINT

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haritable giving has been on the rise in recent years—in 2019, U.S. charities received a record $449.6 billion—and most of that philanthropy is coming in the form of big donations from a few wealthy donors. While that may seem like a good thing, especially as the top 1% keep getting richer, a new report shows how this “top heavy” giving exposes underlying issues with foundation requirements, our tax system, and who has the power to influence the world through philanthropy.

Take a look at The Giving Pledge, a commitment by a group of billionaires, led by Bill Gates and Warren Buffett, to give away at least half of their wealth before they die. It was first launched in August 2010, and 10 years later, the combined wealth of the 62 signatories who were billionaires at that time has nearly doubled, from $376 billion to $734 billion.

That’s not to say they haven’t been giving money away, but that their wealth is growing more quickly than they are giving, because of the nature of our economy, “where the rewards are wired to flow to the top,” says Chuck Collins, director of the Program on Inequality and the Common Good at the Institute for Policy Studies and coauthor of the new report, titled “Gilded Giving 2020: How Wealth Inequality Distorts Philanthropy and Imperils Democracy.” They can’t give it away fast enough.

And when they do give money away, not all charitable giving is equal. Wealthy donors have increasingly turned to private foundations and donor-advised funds (which let the wealthy earmark money for charity—and reap the tax benefits—before they actually give it to an organization).

Between 2005 and 2019, the assets of private foundations grew 118%, per the report, from $551 to $1.2 trillion, and the number of private foundations increased from 71,097 to 119,791. Donations to donor-advised funds have gone up from $20 billion in 2014 to more than $37 billion in 2018—an 86% increase over five years.

“The richer you are, the more likely you give through an intermediary,” Collins says. “You create a private foundation, which only mandates that you give away 5% of your assets a year, or you put your money into a donoradvised fund, you take the tax break, and there’s no mandate that that money move to working charity. You can just sit and warehouse it.”

That means that $1.2 tril@Businessdayng

lion estimated to be sitting in private foundations right now, during the pandemic, is not necessarily going to move to nonprofits. The Institute for Policy Studies is recommending that Congress implement an Emergency Charity Stimulus, which would be a three-year mandate requiring private foundations to double their payout from 5% to 10%, and require a temporary 10% payout for donor-advised funds. This could move about $200 billion into charities on the front lines, per the report, without increasing taxes or adding to

Warren Buffett

the deficit.

Some donors do give directly to nonprofits, like MacKenzie Scott, who recently donated about $1.7 billion to a variety of organizations. Collins applauded her approach, which did not park money in a private foundation or donor-advised fund (“that we know of”), but he noted that all that giving also helped her, by giving her a tax dedication and reducing her total capital gains and estate value, which lowers the amount of taxes she’ll have to pay on her wealth.

On average, every dollar a billionaire gives to charity means up to 74 cents in lost tax revenue—74 cents the public has to subsidize.

“Philanthropy is not a substitute for a fair tax system,” Collins says. “We sometimes forget that. Maybe we wouldn’t need as much charity if we had a more meaningful, economically just society.” Philanthropy can also be a distraction, he adds, from the other work that needs to be done. And when the wealthy dominate philanthropy—the top 1% income earners are responsible for a third of all charitable giving— they have the power to pick and choose what nonprofit work is funded, what issues are worth being solved, and what think tanks can carry out their research.

“Philanthropy is power,” says Collins. “It’s becoming an extension of the private power of wealthy people.

These are the people who already dominate our politics and election and dominate ownership of enterprises and media, and their philanthropy is another extension of influence.”

(Culled from Fast Company)

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Thursday 06 August 2020

BUSINESS DAY

EXPERT PROGNOSIS OF NIGERIA’s ECONOMY EXPLAINER

A guide into Nigeria’s multiple exchange rates FADEKEMI AREO

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esides the official exchange rate, used mainly for government transactions and the budget, Nigeria maintains a number of other rates.

The rate for investors and exporters, known as Nafex, also acts as a spot rate for the naira. This rate has averaged 388 naira per dollar since March.

There is a rate for small businesses that want to import raw materials. This rate is now 380 per dollar after the central bank devalued it from 360 on July 3.

There is another rate for Bureau de Change operators, mainly to allow Nigerians to access foreign currency to pay school fees for their wards abroad, or for travel. There have been no sales of foreign currency to BDCs since the outbreak of the pandemic.

Then there is the blackmarket rate, where the dollar sells for 463 naira to those who cannot access any of the official windows.

Reas on for different rates Price stability is a key aim of Nigeria’s centralbank policy. A weaker naira could stoke inflation, which at 12.56 percent in June is already at a two-year high and well above the targetrange ceiling of 9%.

The central bank aims to curb inflation by using the stronger official rate for imports of items like fuel that have an impact on prices. Africa’s largest oil producer imports almost

all of its gasoline because its three derelict refineries have not processed any crude for more than a year.

Electricity tariffs, which the government subsidizes, are also linked to the dollar and a weaker naira would lead to a significant rise, fueling inflation.

Devaluation expectations Africa’s most populous countr y has the w idest spread between 12-month currency forwards and onemonth contracts among its peers on the continent, suggesting traders expect a large depreciation. That increases the risk of holding Nigerian assets and deters foreign investors.

Fair value for the naira Ten economists surveyed

by BusinessDay think the naira should be trading

closer to N400 per dollar, that’s weaker than the I& E rate of N388 which the Central-bank Governor Godwin Emefiele is targeting.

Some investors and analysts also believe that the currency should be north of N400.

How exchange rate movements affect you An exchange rate is a key

economic indicator due to its role in the imports and exports of an economy.

The appreciation/depreciation of the Nigerian naira affects the economy at large and also at the business and individual levels.

Effect on businesses: Changes in the exchange rate have the potential to reduce the cash flow of firms.

This is because of the increase in import costs and rising inflation as a result of the depreciating naira exchange rate in the parallel market. This effect is more pronounced for firms that rely on imported goods or machineries to produce their goods and services as they are more vulnerable to currency changes due to

transactional and economic risks.

Ta k e f o r i n s t a n c e, a firm that purchased a machine worth $3,000 in 2016 at an exchange rate of N253.49/$1, this would imply about N760,470 as the cost to purchase.

However, to buy the same machine a year later at an exchange rate of N305.79 would cost the firm about N917,370. Hence, implying that exchange rate volatility induced a 20.63 percent increase of the firm’s costs of operations.

A depreciating currency also increases the tendency of a financial market crisis to occur. This is because the value of foreign denominated debt rises against the Naira leading to the possibility of financial institutions failing to meet debt obligations on maturity.

Effect on individuals: One of the most direct channels of the effect of a currency crisis on individuals is in the reduction of purchasing power. A depreciating currency (especially in an import-dependent country) leads to a rise in the cost of imported goods, thereby causing “imported inflation”.

There is a strong relationship between inflation and exchange rate for the period 2010 to 2018. As the chart indicates, following the devaluation of the naira in 2014, inflation started trending in line with the reducing value of the naira. The effect was high prices of goods and services, a major rise in unemployment and a significant pressure on the spending power of people.

Why Nigeria needs single FX rate - IMF Continued from front page

enhance foreign exchange availability for FX-strapped businesses, promote both domestic and foreign investment and create conditions for a boost in economic activity for Africa’s most populous country.

Speaking with members of the American Business Council, Jesmin Rahman, the IMF’s mission chief for Nigeria, said it was important for Nigeria to have a well-functioning foreign exchange market with uniform rules of engagement.

“This will enhance confidence, improve business

continuity and governance,” Rahman said, noting, “In addition, greater flexibility of the exchange rate is desired because of Nigeria’s low buffers.”

She is not the only one calling for the unification of Nigeria’s foreign exchange rates. Several leading economists in Nigeria as well as President Muhammadu Buhari’s economic council have long prescribed the measures as necessary for the country to exit the tough business climate, which it finds itself.

At Wednesday’s breakfast meeting of the Lagos Business School, the issue was www.businessday.ng

top of mind for the CEOs who attended the meeting.

While Nigeria has pledged to merge its multiple exchange rates at the more market-reflective Investors and Exporters window rate, the CBN has seemingly been reluctant, fearing that this could plunge the economy into further turmoil.

The apex bank has moved the official rate from N305 to the dollar first to N325, then N360 and now to N380, but the drip-feed approach to the unification has occasioned more pain and confusion for investors.

The IMF’s Rahman believes there is still a long way

to go given the multiple windows, large parallel market premiums, and low turnover in the I&E window, which many now hope will become the only market.

There is a record N80/$ gap between the I&E rate and black market rate, a sign of the growing FX illiquidity in the country, and the longer it takes Nigeria to get its acts together, the harder businesses and households would suffer, analysts say.

Due to the FX shortages, manufacturers have been unable to open letters of credit required for imports of key inputs.

The dollar shortages have

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also taken a significant toll on banks that announced plans to reduce the amount customers could spend abroad using debit cards last month, as lenders try to limit foreign currency settlement risk.

One of the banks planning the move, Zenith Bank, says it will temporarily suspend the use of debit cards abroad for cash withdrawals and cut the monthly spending limit abroad by more than half to $200.

The tier-one bank says “the review is in response to today’s economic realities,” in a notice, advising clients to request prepaid dollar cards. @Businessdayng

A source familiar with the matter says, “There appears to be an attempt to suppress demand for FX, and that means we are headed for the rocks.”

Bankers say the dollar crunch means it now takes more than six months to settle foreign lines of credit.

David Cowan, Citi Bank’s chief economist for Africa, however, bet on the CBN to resolve the crisis soon, saying it would be “fundamentally depressing” if issues surrounding Nigeria’s foreign are not resolved faster than it took the central bank after the 2015 crisis.

“So, I think we’ll see a

Thursday 06 August 2020

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EXPERT PROGNOSIS OF NIGERIA’s ECONOMY speedy response, which I hope would speed up the recovery and I still expect to see some sort of exchange rate adjustment in the NAFEX in the final quarter of this year,” he says.

The collapse of oil prices in March forced the central bank to take the first step, adjusting its official currency peg against the dollar. The adjustment was cheered by the IMF, from which Nigeria obtained a $3.4 billion emergency loan.

The Fund approved the loan after Nigeria promised to seek a unified and more flexible exchange rate, even though that was not a precondition. Authorities are also in talks with the World Bank for another loan needed to cover its budget gap.

Nigeria’s multiple exchange rates practice started in 2016 following a sharp drop in oil prices.

Exchange rate unification was part of policy commitments made by the Nigerian government as part of reforms to be implemented after the COVID-19 pandemic struck.

Other commitments include resumption of domestic revenue mobilisation once the crisis passes, transparent use of emergency fund through various measures introducing budgetary lines and having an audit of these funds, and safeguard assessment of the central bank.

One of the recommendations of the Economic Sustainability Committee (ESC) headed by Vice President Yemi Osinbajo, was to “unify exchange rates to maximise naira returns to Federal Account Allocation Committee (FAAC) from foreign exchange inflows” and “manage the exchange rate in a sustainable manner.”

This sent out the signal that Nigeria will exit its baseless pursuit of managing demand of FX and instead go

for broad policies to promote supply and help Nigeria to become competitive in attracting inward investment.

Nigeria’s foreign reserves are under $36 billion but there is probably a FX demand backlog of around $5 billion and then add the estimated value of swaps of around $7 billion.

At the LBS breakfast meeting, CEOs outlined the many benefits of having a unified exchange rate as well as a market that is free from the grip of the central bank.

These include the boost to government in terms of higher revenues.

“A rate convergence will be positive for monthly revenue shared (FAAC) between all tiers of the government, which includes revenue generated from sales of crude oil,” said Ayodeji Ebo, MD Afrinvest Securities Limited.

“Now that things are tight they should be able to share revenue based on prevailing rates and not one fixed by the CBN,” Ebo said.

The long-standing argument has been that by unifying the windows and allowing market-driven pricing, there will be a scope for

increased capital inflows into Nigeria and a boost in dollar liquidity.

The case of Egypt that utilised the 2016 oil crash to float its pound and the consequent inflow of investments into its economy is a clear indication of how much investors value market forces.

“The multiple exchange rates have been a major challenge for investors when bringing money into the Nigerian economy vis-à-vis peers sub-Saharan Africa and emerging markets,” Gbolahan Ologunro, equity research analyst at CSL Stockbroker, said.

“By collapsing the exchange rate, the country would also successfully derisk the exchange rate from shocks in the external sector, such as a decline in crude oil price,” he said.

The existence of multiple windows has created room for arbitrage and unfair pricing, which discourages investors from buying Nigerian assets even if the opportunities to invest are attractive.

To attract dollars and keep the naira stable, the country has had to keep its

main interest rate (Monetary Policy Rate - MPR) elevated at the cost of domestic growth.

For an economy with growth concerns, this would be an opportunity to avoid costly trade-offs involved in

currency stability.

Substantial capital inflows into the economy are also critical due to Nigeria’s balance of payments deficit, which economists expect to hit $7 billion this year.

However, the creation of multiple exchange rates by the CBN has been justified in the past by the apex bank as necessary to help the country manage its dollar shortage by selling at different rates to different sectors hence ensuring critical needs are prioritised.

An economic crisis emanating from oil declines four years ago led to the creation of window for investors and exporters in 2017 and the introduction of forward settlements in efforts to control demand for dollars and help keep the naira steady.

Economists say one dilemma in implementing a unification of rates is in regards to the timing, considering the shock brought by the global pandemic.

The initial reaction to a

steep depreciation in the currency could further exacerbate the impact of the global pandemic and result in an increase in price levels.

But experts say providing a clear direction regarding FX as well as providing liquidity will result in business confidence.

“Investors need to be sure of the direction... this is a bigger problem than a depreciation or devaluation of the naira,” said Ebo, noting, “If everyone knows its N500/$ today, they will work with that rate but if they are not sure the rate will stay the same, then they get worried about losing money.”

Ologunro said the longterm gains would make up for the short term and the fact that there was greater price discovery before all the risks crystalise, the naira would be priced at its true market value.

Egypt’s message to Nigeria is that bold reforms need to happen even if they come with some short-term pains.

Views on Nigeria’s multiple exchange rates Jesmin Rahman ahman, the IMF’s mission chief for Nigeria, at a recent webinar, says it is important to have a well-functioning market with uniform rules of engagement.

‘This will enhance confidence, improve business continuity and governance,” Rahman says.

“In addition, greater flexibility of the exchange rate is desired because of Nigeria’s low buffers.”

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David Cowan owan, Citi Bank’s chief economist for Africa, is betting on the CBN to resolve the crisis soon.

Cowan says it would be “fundamentally depressing” if issues surrounding Nigeria’s foreign exchange multiple windows are not resolved by mid-2022.

“So I think we’ll see a speedy response which I hope would speed up the recovery and I still expect to see some sort of exchange rate adjustment or in the NAFEX in the final quarter of this year,” he says.

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Yvonne Mhango hango, Renaissance Capital’s sub-Saharan Africa economist, says the naira should be anywhere between N427 naira and N491 to the dollar, converging with the black-market rate, in a note to clients on July 7.

“It could depreciate even more if the unofficial rate weakens further, and when the central bank lifts restrictions on access to dollars, which has created a hard currency shortage hurting local importers,” Mhango says.

M

Ayodeji Ebo bo, MD Afrinvest Securities Ltd, says the benefits of having a unified exchange rate are not only limited to the economy but also to the government in terms of higher revenues.

“A rate convergence will be positive for monthly revenue shared (FAAC) between all tiers of the government which includes revenue generated from sales of crude oil.

“Now that things are tight they should be able to share revenue based on prevailing rates and not one fixed by the CBN,” Ebo says.

E

Gbolahan Ologunro logunro, an equity research analyst at CSL says “The multiple exchange rates has been a major challenge for investors when bringing money into the Nigerian economy vis-à-vis peers Sub Saharan Africa and emerging markets.

“By collapsing the exchange rate, the country would also successfully de-risk the exchange rate from shocks in the external sector such as a decline in crude oil price,” he says.

O www.businessday.ng

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@Businessdayng

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Thursday 06 August 2020

BUSINESS DAY

news

Richfield Lagos introduces scheme to NASS to pass PIGB before end of 2020 ...as NILDS, NNRC seek legislative intervention help people own property in extractive industry

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ichfield Lagos Limited, a subsidiary of The Landwey Group, has introduced a new scheme tagged “The Portfolio” to help individuals own a piece of property in Lagos, Nigeria’s commercial hub, through flexible, attractive and secured real estate investment.

Speaking on the initiative, Ibukun Osunrinade, managing director, Richfield Lagos, says the company has taken upon itself the mandate to meet the needs of the average Nigerians in terms of shelter.

“The goal of Richfield Lagos is to help individuals own properties at very affordable prices. To make this achievable Richfield Lagos is introducing to the public ‘The Portfolio.’

“The Portfolio process is overseen by Richfield Lagos as the sole administrator in which there is no administrative fee involved. The types of properties offered under The Portfolio are landed properties, which could be sold off by the buyer only when the complete payment has been made for either

a 300sqm or 600sqm.

“To start out on The Portfolio, one is expected to make an initial deposit of N150,000, which secures a 50sqm plot. A subsequent instalment after the initial payment is to be determined by the subscriber (buyer) over a period of 5 years (i.e the buyer can pay however he wants within 5 years).

“Richfield Lagos plays within the commercial and retail as well as the residential property fragment of the real estate industry.”

Hero unveils campaign to reward consumers

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ero, a beer brand from the stable of International Breweries is set to reward its teeming consumers as it launches “Rise like a Hero” campaign.

Under the campaign, consumers will get a chance to win cash prizes of N10,000 and N50,000 through an E-draw while grand prize winners of N1,000,000 will emerge weekly.

The campaign which kicked off on August 1 was launched to appreciate the support of Nigerians who have stuck with the Hero brand over the years.

Speaking on the idea behind the promo, marketing director, International Breweries, Tolulope Adedeji said in a statement that Hero was on a mission to appreciate Nigerians this season. She noted that launching the “Rise Like

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a Hero” promo at this time is deliberate and strategic given the economic impact the Covid-19 pandemic has had on individuals and businesses.

Explaining further, Adedeji noted that the under-thecrown promotion would see consumers win instant airtime when they send the number under their Hero crown to a short message code or via a designated promo website.

James Kwen, Abuja

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he National Assembly says it is working to ensure the passage of the Petroleum Industry Governance Bill (PIGB) before the end of 2020.

President of the Senate, Ahmad Lawan stated this at the validation and public presentation of the National Institute for Legislative and Democratic Studies (NILDS)/ Nigerian Natural Resource Charter (NNRC) toolkit for the Nigerian legislature to support engagement with the extractive industry in Abuja on Wednesday.

Lawan said that the petroleum industry “is almost stagnant and for long needing profound reform”, saying, the legislative guide on the extractive sector was coming at a very important time when oil revenues are dwindling, a fact made worse by the coronavirus pandemic.

“This further accentuates government’s drive to diversify the economy from oil and the extractive sector presents im-

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mense opportunity in this regard. Nigeria has huge reserves of mineral resources. Over 450 mineral occurrences have so far been documented.

“More than 30 of them occur in commercial quantities in different parts of the country.

Despite this abundance, the solid minerals sub-sector of the extractive industries is largely underdeveloped.

“According to the National Bureau of Statistics, in 2016, this sector contributed only 0.45 per cent to Nigeria’s GDP in the third quarter of 2013 (NBS). This is in sharp contrast to the sector’s contribution of 4-5 percent contribution to GDP in the 1960s-70s.

“This fades into insignificance when compared to other African countries such as Botswana, Democratic Republic of Congo and South Africa where mining contribute 40, 25 and 18 percent to the GDP respectively (DPRS & MMSD, 2017)”, he noted.

The Senate president said that realising the potentials of the contribution of solid minerals to Nigeria’s economic growth, the Federal Government in 2015, identified the

@Businessdayng

sector as one of the key sectors to drive the desired diversification of the Nigerian economy.

He noted that the governance of the extractives sector was an integral component of transforming resource wealth into development and citizen wellbeing, assuring that the legislature has an important role to play in achieving sustainable and effective governance of the sector.

“In the exercise of its powers, the National Assembly has enacted several laws since 1999 to promote governance of the extractive sector. These include: Niger Delta Development Commission Act, 2000; Nigeria Minerals and Mining Act (NMMA) 2007; the Nigeria Extractive Industry and the Transparency Initiative (NEITI) Act 2007.

“In the 9th Senate under my leadership, we have passed the Finance Bill, the Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Act 2019 (Act), which President Muhammadu Buhari assented to on November 4, 2019 and the Public Procurement Act (Amendment) Bill”, Lawan added.

Thursday 06 August 2020

BUSINESS DAY

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@Businessdayng

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Thursday 06 August 2020

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news Residential real estate tops considerations...

Continued from page 2

bedroom and two-bedroom apartments, Adetokunbo Ajayi, CEO, Propertygate Development and Investment Company, says those whose luxury houses were already on the market cannot find buyers.

“But there is market for affordable small-size family housing units. Investors in this house-type are among the few gainers in the sector at the moment,” he notes.

Fine and Country affirms this in its recent report on the State of the Real Estate Market, stressing that multi-family units, specifically apartments, top the list in order of preference for most developers and investors in Nigeria.

The report explains that apartments make more economic sense to developers as multiple units can be developed on a piece of land without taking up too much space, adding that land optimisation leads to maximising value when developers are considering development options and also the ease of sale, lease or rent.

David Mbah, manager, commercial sales at Fine and Country, explains to BusinessDay that returns were higher for smaller apartment units, especially 2-bedroom, which means that demand is more for these house-types than the big-size apartments.

“It also means that smaller-unit apartments are the new investment destinations

and any investor wanting to enter the market amid the COVID-19 pandemic should look in that direction,” he says.

He offers insights on where investors could move cash to and get good returns, citing examples from the report that shows that, in terms of rental values and returns on investment for different areas and house-types, Victoria Island and Ikoyi have more promising outlook and offer.

Rental values in Victoria Island as at the end of second half of 2019 stood at N1.5 million per annum for 1-bedroom apartment; N3.5 - N8.5 million for 2-bedroom; N5.5 - N15 million for 3-bedroom, and N6 - N25 million for 4-bedroom apartment.

In Ikoyi, it is N4 - N5 million per annum for 1-bedroom; N6.5 million for 2-bedroom; N10 million for 3-bedroom, and N10 - N25 million for 4-bedroom apartment.

Return on investment on these apartments is quite significant. In Victoria Island, the return on the different apartment sizes stood at 2.7—3.7 percent per annum for 1-bedroom; 7—10 percent for 2-bedroom; 6.1—10 percent for 3-bedroom; 6.1—9.2 percent for 4-bedroom duplex, and 3.75—6 percent for 4-bedroom terrace.

In Ikoyi, it is 9 percent for 1-bedroom; 5.4—8.6 percent for 2-bedroom; 5.3—8 percent for 3-bedroom; 4.5—8.3 percent for 4-bedroom duplex, and 4.8—5-4 percent for 4-bedroom terrace.

How Flour Mills rides on agro-allied business...

Continued from page 2

group managing director of Flour Mills, said.

Gb e d e d o sa id , “ Th e 2019/20 financial year was a remarkable year for our Group and I am pleased with the result.”

Breakdown of the company’s 2019/2020 financial report reveals that the Group’s revenues grew by 9 percent year-on-year (YoY) from N527.4 billion a year ago to N574 billion in 2020.

Meanwhile, the agroallied arm of the group company contributed the most revenue in the year under review. Revenue from the agro-allied increased by 20 percent from N88.1 billion the previous year to N105.5 billion in 2020.

This was closely followed by the 18 percent growth in the revenue contribution from its Sugar business.

From N82.7 billion in the year before, the Sugar arm of the Group increased to N97.6 billion. The Food segment also reported a revenue contribution increase by 7 percent.

According to Gbededo, “The Food business recorded

accelerated growths within the business-to-consumer (B2C) segments in line with projections, as our focus to improve customer experience saw the introduction of a range of new products and our strategic marketing and promotional activities to win over new market segments yielded the desired result.”

Flour Mills had in 2019 outlined an ambitious business plan for the next five years with the target to double its business within this period to revenue of over N1.2 trillion in 2024.

The strategy of the business expansion of the company, which has over the years diversified into fast-moving consumer goods, is not only organic growth but acquisitions and partnerships.

Meanwhile, since 2017 when oil-dependent Nigeria emerged from its economic recession, the ability of businesses in Africa’s largest economy to grow their revenue has been poor, especially for consumer goods companies who have continuously reported low sales amid dampening consumers’ purchasing power. www.businessday.ng

L-R : Abidemi Raji, permanent secretary, Lagos State Ministry of Finance; Rabiu Olowo, commissioner for Finance, and Gbenga Omotoso, commissioner for Information and Strategy, during a news conference on the 2020 New Land Use Charge Reforms Law, by the Ministry of Finance in Lagos, yesterday. NAN

Gold keeps its shine as oil surges above $46

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old added to its recent gains, rallying past its $2,000 milestone, as crude oil and global stocks pushed higher on upbeat data from Europe counterbalanced a less optimistic report on America’s labour market.

Oil prices advanced for a fourth day, with Brent crude adding nearly 4 per cent to $46.06 a barrel.

That put the price of the global benchmark back to March levels, a time when Saudi Arabia initiated a price war with Russia forcing prices to drop to as low as $15.98 on April 28, the darkest days of the global pandemic lockdown.

But Brent crude is still 31

per cent lower this year.

Equities have maintained their ascent even in a year when gold has added a third of its value, a counterintuitive scenario that highlights worries among some that the trillions of dollars in stimulus deployed by governments and central banks could at once stoke an economic rebound and a bout of high inflation.

US stocks followed Europe higher on Wednesday with the S&P 500 gaining 0.5 per cent at Wall Street’s open, even after a report revealed that the private sector created fewer jobs than expected last month.

Non-farm private employers added 167,000 jobs in July, said payroll processor ADP,

Fuel queues loom as government’s swap...

Continued from page 1

downstream subsidiary of the Nigerian National Petroleum Corporation (NNPC), is finding it increasingly difficult to sustain the country’s unique arrangement where it is the sole importer of petrol and other refined products.

BusinessDay gathers from sources close to the NNPC that the strict enforcement of the production cuts ordered by OPEC under its price stabilisation mechanism has constrained the ability of PPMC to meet supply under the swap deals.

Added to this challenge is the pressure from Nigerian state governors who want the NNPC to fully account for all oil exported and to ensure the cash is remitted into the Federation Account, so it can be shared among the various tiers of government.

This leaves little wiggle room for the PPMC to continue the controversial crude for products swap deals, which have seen AA Rano emerging as clear leader in the pack of beneficiaries of the swap arrangement.

According to new OPEC output curbs, Nigeria can only pump about 1.4 million barrels per day. The PPMC swaps

Nigeria’s crude for refined petrol under a problematic Direct Sales Direct Supply Programme (DSDP) as the sole importer of petrol.

The challenge for Nigeria is how much of the 1.4 million barrels per day it is restricted to, that can be sold for cash to run government programmes or swap for petrol.

Nigeria also has to answer to the IMF where part of the conditions to secure the $3.4 billion loan is a commitment to efficient use of government resources, which essentially abhors subsidies on petrol.

The implication of this is that fuel supply disruption is inevitable in the future unless private oil marketing companies step in and begin importing petrol to rescue the government.

“It is no longer a debate about whether or not subsidy should remain, it is a question of whether Nigeria will have fuel or not. If whoever is stepping in to import product cannot recover cost, Nigeria will go back to the days of long queues and madness at the filling stations,” said an official of the NNPC. Given that the private firms will seek to fully recover their costs, prices of petrol could

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indicating the recovery in the labour market has slowed as coronavirus cases have risen in the south and west of the US. June’s figures were revised upwards. Europe’s shares pulled back slightly in early afternoon Wednesday trade: the region’s Stoxx 600 trimmed an above 1 per cent gain to 0.4 per cent.

Frankfurt’s Dax did the same while London’s FTSE 100 climbed 0.8 per cent. A batch of positive data helped buoy market sentiment in the region.

Eurozone retail sales returned to pre-crisis levels while Spanish and Italian services sector activity picked up as government lockdowns eased in July and people re-

turned to bars and restaurants.

Resurgent coronavirus cases and localised lockdowns, however, have kept markets and economies on tenterhooks.

Many analysts see haven assets, such as gold and sovereign debt, set to maintain the momentum as the global economic outlook sours.

Gold has risen for 13 days in the past 14. It struck a peak of $2,039.3 a troy ounce on Wednesday, and was recently up 1.6 per cent in European trading. Silver followed in gold’s slipstream with a fourth day of records, rising 3.8 per cent on Wednesday to bring its 2020 increase to 52 per cent.

exceed N150 per litre given where international oil prices are headed.

BusinessDay learns that if products were imported into the country at N470/$1 and prices set using the average Platts for last month, the pump price of petrol today could be N174 per litre. But if the importer is able to source foreign exchange at N385/$1 it should be N151 per litre.

A pointer to what is in the offing is the PPMC’s ex-depot price of Premium Motor Spirit, also known as petrol, at N138.62 per litre.

The ex-depot price is the price at which depot owners sell the commodity to retail outlets. The ex-depot price per litre of petrol is often around N20 lower than the pump price, as the marketers would add cost of transporting the commodity from the depots to their retail outlets, in addition to other costs, such as marketers’ margin, among others.

In July, with ex-depot price at an average of N109.78 and N111.78 per litre to the marketers, the PPPRA announced a retail petrol price band of N140.80 and N143.80 per litre price, an increase of about N31 per litre.

There has been a number of meetings by key agencies responsible, but so PPPRA has been unwilling to release

the retail price advice for this month. But with the ex-depot price now fixed for N138.62, the retail price of petrol could go as high as N152 per litre even if PPMC is able to continue the swap arrangements.

The Federal Government said “the price of PMS advised

by Petroleum Products Price Regulating Agency (PPPRA), shall be the guiding retail price at which the product shall be sold across the country,” in paragraph 3, section 2 of the regulation dated March 20.

Relying on this regulation, the Federal Government claimed it had deregulated the sector but many in the industry disagree. “This is not really a full deregulation,” said Ayodele Oni, energy lawyer and partner at Lagosbased Bloomfield Law firm.

“As long as they have a role to play in pricing, I don’t think you can talk about deregulation,” Oni said.

Oil marketers have stayed away from importing fuel to prevent precisely this situation the government has found itself in. This is why analysts say the recovery of oil prices will test the resolve of the government with regards to subsidies. It seemed that day is getting near. Benchmark oil price Brent, sold $45.55 yesterday and traders.

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news

Heirs Holdings appoints Dan Okeke as group executive director GBEMI FAMINU

… releases healthcare research and development grant guidelines

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an-African investment company, Heirs Holdings, has announced the appointment of Dan Okeke as group executive director.

The appointment took effect from August 1, 2020.

Okeke joins Heirs Holdings following a distinguished three-decade career at the United Bank for Africa plc (UBA), where he most recently served as an executive director responsible for leading consumer, commercial and publicsector businesses.

At Heirs Holdings, he will be responsible for business coordination and growth across Heirs Holdings’ portfolio of pan-African investments in the power, financial services, oil and gas, hospitality, real estate, healthcare, and financial technology sectors.

Heirs Holdings is a family-owned investment company committed to improving lives and transforming Africa. Our portfolio spans the power, oil and gas, financial services, hospitality, real estate, and healthcare sectors, operating in twentythree countries worldwide.

D r i ve n by t h e A f r i capitalism philosophy of the Group’s founder, Tony Elumelu, which positions the private sector as the catalyst of African growth and seeks both social and economic returns on investment, Heirs Holdings invests for the long-term,

HOPE MOSES-ASHIKE

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bringing strategic capital, sector expertise, a track record of business turnaround accomplishment and operational excellence to companies within its investment portfolio.

Celebrating its tenth anniversary this year, Heirs Holdings has recorded consistent business success across its portfolio of investments.

Commenting on the appointment, Tony Elumelu, chairman, Heirs Holdings, stated: “As we continue to grow in scale and complexity, Dan’s appointment demonstrates our ongoing commitment to institutionalisation. We have always recognised the need to invest in human capital. This announcement is a clear demonstration of our intent and determination to create sustainable value in all our business operations.”

Commenting on his appointment, Okeke said, “I am delighted to take on this new challenge and look forward to contributing towards the fulfilment of Heirs Holdings’ objective of improving lives and transforming the continent.”

Virgin Atlantic files for bankruptcy as pandemic hits airline industry IFEOMA OKEKE

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irgin Atlantic has become Richard Branson’s second airline to file for chapter 15 bankruptcy in the U.S. this year as the industry continues to be ravaged by the coronavirus pandemic.

The company’s filing in U.S. bankruptcy court in the Southern District of New York said it has negotiated a deal with stakeholders ‘for a consensual recapitalisation’ that will get debt off its balance sheet and ‘immediately position it for sustainable longterm growth’.

This move came on the same day the billionaire’s space firm, Virgin Galactic, announced he will become one of the first to go into space on his company’s rockets in

CBN sets N500m limit as grant for development, manufacturing activities

an initiative costing millions of pounds.

The U.S. filing is in addition to a proceeding filed in a British court, where Virgin Atlantic obtained approval on Tuesday to convene meetings of affected creditors to vote on the plan on August 25.

Virgin Atlantic said that the company was pursuing a ‘solvent restructuring’ under British law. The filing means the airline is not yet going into liquidation or going out of business. But the company warned that if a deal with creditors is not reached, it could run out of cash by September.

The company’s filing came just a day after Branson announced he could launch into space aboard his Virgin Galactic aircraft as its first passenger early 2021, potentially blazing a path for commercial flights. www.businessday.ng

entral Bank of Nigeria (CBN) has set N500 million as maximum limit that can be accessed from the healthcare research and development grant for development and manufacturing activities.

This was contained in the healthcare research and development grant guidelines released on Tuesday by the CBN. Research activities are to access a maximum of N50.0 million As part of its policy response to the Covid-19 pandemic, the CBN on May 2020 introduced the Healthcare Sector Research and Development Intervention Scheme

(HSRDIS) to help strengthen the public healthcare system with innovative financing of research and development (R&D) in new and improved drugs, vaccines and diagnostics of infectious diseases in Nigeria.

The regulator stated in the guidelines that the scheme shall be funded from the Developmental Component of the Micro, Small and Medium Enterprise Development Fund (MSMEDF).

Disbursement under the scheme shall be made to beneficiaries in tranches subject to approved milestones achieved, the guidelines stated.

Activities eligible for consideration under the scheme include: research and devel-

opment of candidate drugs, herbal medicines and vaccines validated by relevant health authorities for the control, prevention and treatment of infectious diseases; manufacturing of drugs, herbal medicines and vaccines validated by relevant health authorities for the control, prevention and treatment of infectious diseases; and red biotechnological R&D in new health technology for the control, prevention and treatment of infectious diseases; among others.

The CBN noted that candidate vaccines undergoing pre-clinical testing or trials shall not be eligible for consideration under this scheme.

However, candidate vaccines undergoing clinical testing or

trials shall be eligible for consideration under the scheme if considered to have high potential to cross the clinical trial stage and prospects of scale by the Body of Experts (BoE).

In applying for the grant, the applicant shall be required to have conducted preclinical testing of the candidate drugs, herbal medicines and vaccines, and obtained certification from relevant health authorities for further research and development.

The scheme is intended to boost domestic manufacturing of critical drugs and vaccines to ensure their sustainable domestic supply and reduce the bulk manufacturing costs of the drugs, herbal medicines and vaccines in Nigeria.

L-R: Rauf Olaniyan; deputy governor, Seyi Makinde, governor, Oyo State, and Mohammed Fadeyi, deputy speaker, Oyo State House of Assembly, during the official inauguration of 21km construction of the Airport Road, Ajia-New Ife Express in Ibadan, yesterday. NAN

Completed modular refineries ignite hope of an end to petrol imports ISAAC ANYAOGU

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hree modular refineries are set to come on stream before the end of this year with the capacity to refine over 20,000 barrels per day of crude oil, raising hope that the country could one day cut its import of refined products.

Waltersmith Refining and Petrochemicals modular refinery with a capacity to refine 5000 barrels per day which secured a key equity investment from the Nigerian Content Development and Monitoring Board (NCDMB) is expected to be launched in September this year instead of the second quarter of the year earlier expected.

The company’s refining business is divided into two phases: Phase 1 is the delivery of 5,000 BPD modular capacity refinery located near the existing flow

station and will process around 6,000 bpd currently produced by the upstream business to the readily available market in the south-eastern part of Nigeria, the company said.

“It is expected to contribute about 271 million litres of refined products including diesel, naphtha, HFO, and kerosene annually to the domestic market and create both direct and indirect jobs, particularly within the host communities,” said a statement from the company published on its website.

The second phase is the delivery of 25,000 barrels per day crude and condensate refinery which is an upgrade on the 5,000bpd modular. refinery. The project is still at an early stage of development but is designed to produce the following products: gasoline, diesel, LPG, kerosene, and aviation fuel.

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OPAC Refinery, being constructed in Delta State, promoted by Pillar Oil Limited, Omsa Limited, and Astek Limited, is also expected to be completed before the end of the year. The refinery upon completion will be able to process at least 7, 000 barrels per day.

Pillar Oil will be supplying about 350,000 tons of crude per annum to the refinery once the facility begins operations.

OPAC will produce naphtha, kerosene, diesel, and fuel oil fractions upon completion. The refinery will have a storage depot for crude and finished products.

The Niger Delta Petroleum Resources Ltd, 1,000 barrel per day refinery located in Rivers State could see its capacity upgraded to 5,000 barrels per day.

The plant which produces only diesel, in 2014, celebrated the 1,000th Diesel Truck Load Out from the mini refinery. Cur@Businessdayng

rently, an expansion of the plant is ongoing to increase processing capacity to 11,000bpd in 2019, the company said on its website.

In January, BusinessDay’s analysis showed that only three or four out of the 45 refineries approved the Federal Government would be completed. Most of these licenses would expire this year.

All the licenses issued to date have a combined capacity to refine 2.15 million barrels of crude oil a day with the hope of turning Nigeria into West Africa’s refining hub and cut billions of naira, spent yearly in importing refined products.

Eighteen of the licenses were classified as active but analysis shows that barely five can boost of any real work on site. The 650,000 barrels a day Dangote Refinery will not be completed in 2020 as the commissioning date has been pushed to 2021.

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Nigeria records 3 straight quarters of negative net flows as foreign investors exit MICHAEL ANI

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ggregate dollar inflows through the Central Bank of Nigeria (CBN) in the first quarter of the year fell below outflows, as foreign portfolio investors repatriate capital due to Nigeria’s economic uncertainties caused by the coronavirus pandemic.

The net flows, which show the difference between FX inflows and outflows, in Q1 2020 stood at a negative $2.6 billion, to record its third contraction since Q3 of 2019, the CBN said in its quarterly economic report released, Tuesday.

In Q3 2019, net dollar flows stood at a negative $3.67 billion while in the fourth quarter, the value was put at a negative $2.7 billion, the CBN data shows.

Dollar outflows in the first quarter stood at $17.6 bil-

lion, an increase of 9.4 per cent from the $15.6 billion in the preceding quarter and 8.1 percent above the $16.3 billion in the corresponding period of 2019. On the other hand, dollar inflows in Q1 stood at $15 billion result in negative net flows.

The last time Nigeria recorded higher dollar inflows compared to outflows was in the second quarter of 2019 when net flows came to $3.76 billion.

Since then, dollar inflows into the country has continued to dry up as hot money continues to leave the shores of Nigeria over what analysts say is due to economic and political uncertainties that have bedevilled Africa’s largest economy; and further worsened by the pandemic.

“The reasons for the negative net flows is not farfetched because when you look at the event in Q1 when

we had the outbreak of the global pandemic that led to capital flow reversals from emerging markets particularly those that are vulnerable to a downturn in commodity prices that puts a lot of pressure on the capital accounts, according to Gbolahan Ologunro, an equity researcher at CSL Stockbrokers.

Also in March, we saw a moderation in oil prices that weighed on foreign exchange earnings from sales of crude oil which also affected the current account negatively, Ologunro said.

As a petrodollar economy, Nigeria has been battling with dollar inflows after an oil price war between Saudi Arabia and Russia, the world’s largest producers of the commodities, alongside a fall in crude oil demand that was occasioned by the pandemic, wiped out more than half of its revenue.

What Kunle Adeyemi’s appointment at UNILAG means for young professionals CHUKA UROKO

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fter over 20 years of practice and academic experiences in various incredible institutions including Harvard, Cornell, Columbia and Princeton University, Kunle Adeyemi has been appointed an Adjunct Visiting Professor at the University of Lagos (UNILAG), Nigeria.

Adeyemi, an alumnus of the University, is a renowned international professional architect who left UNILAG with a B.E.S/B.Arch Degree in 1999. He obtained his Masters Degree (M.Arch 11) from Princeton University in 2005.

Arguably one of the internationally recognised architects Nigeria has produced, Adeyemi sees his appointment as an opportunity to contribute to the excellence of the next generations in Africa.

He looks for ward to c o nt i nu i n g t h e l e ga c y o f ra i s i ng n e w t a l e nt s through research, innovative projects, international collaborations and knowledge exchange with various institutions and partners globally.

“His appointment is a huge plus for the Architecture profession as he is coming to do things differently. The younger generation of architects will benefit

Lagos engages stakeholders on 2021 budget JOHN SEYI SALAU

…puts 2020 half-year performance at 57%

agos State government has begun engagement with stakeholders to get their inputs into the making of the 2021 budget.

The state commissioner for economic planning and budget, Samuel Egube speaking at the 2021 budget forum which held in Ikeja, on Wednesday, said that for 2020, the state government has significantly minimised the effect of the ravaging Covid-19 pandemic through interventions in healthcare system, business support, sustainability measures and relief to the poor, and was looking to redirecting effort to boost employment and food production in the coming year.

“The state government has increased commitment to Micro, Small and Medium Enterprises (MSMEs) to help them during and post Covid-19.

“We intend to adopt consolidation and tactical redirection to areas that would help employment, food production and security, particularly to overcome the effects of Covid-19.

“We are going to flag off our internship programme by the ministry of wealth creation.

The idea is to get people to

work, and the state government will pay them, while working for SMEs to gather experience and tackle unemployment,” said Egube.

He noted that for the halfyear of 2020, the state recorded a budget performance of 57 percent - N334.838 billion which in absolute terms is higher than the 73 percentN316.676 billion for the same period of 2019.

“The Covid-19 pandemic with its resultant health and economic impacts greatly affected the state, like other geographies around the world and changed the context within which we execute development agenda.

“Within this very difficult context, LASG was able to achieve greater revenues, while managing expenditure with revenue stronger by six percent against the approved budget.

“In view of the dwindling revenue of the state’s internally generated revenue (IGR) due to the pandemic, the government is committed to growing the state’s IGR to sustain its developmental projects.

“We will continue to minimise wastage through tighter expenditure controls and pro-

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immensely from his appointment,” a lecturer in the Department of Architecture at UNILAG, who craved anonymity, told BusinessDay on phone.

CHANGE OF NAME I, formerly known and addressed as Miss Zainab Bisola Ahmed now wish to be known and addressed as Mrs Bisola Adimundu.

All Former documents remain valid. General public please take note. www.businessday.ng

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mote prudent spending.

“Plans to invest in comparative advantage areas such as aquaculture for quick wins are underway,” he said.

Egube said the state was also providing wage subsidies for the SMEs based on maintaining payroll and enhancing the access of SMEs to shortterm funding through the Lagos State Empowerment Trust Fund (LSETF).

“The rice mill at Imota is expected to employ 300, 000 people and is at 75 percent completion. “It is expected to produce 120, 000 metric tons annually, and increase local rice production by 75 percent.

Efforts are also ongoing to train rice farmers on the right variety of rice to produce to feed the mill,” he said.

The special adviser on economic planning and budget, Adebayo Sodade said the forum was an avenue to update the stakeholders on the half-year performance of the budget. Sodade said it also brought to general knowledge the resources available for the next budget, taking into cognisance all economic variables and externalities such as crude oil prices, inflation, interest rates and the effect of Covid-19 on the economy.

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news

Relief as Lagos waives N5.7bn 3 years’ land use charge penalty …reduces annual rate charge by 48% Endurance Okafor

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Cross section of Movement of Coalition for Revolution (CORE) protesting against repression, corruption, and bad governance in Nigeria, in Lagos, yesterday. Pic by Olawale Amoo

Hurdles ahead as NNPC courts private investors to manage refineries ISAAC ANYAOGU

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he Nigerian National Petroleum Corporation (NNPC) is considering ceding both majority stake and the management of its ailing refineries to private investors, after completing ongoing rehabilitation, but convincing investors that the refineries would be viable could become a challenge.

Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), in a televised interview on Sunday, said that the corporation is rehabilitating the refineries first and will sell majority stakes to evolve the same model on which the Nigeria Liquefied Natural Gas (NLNG) is operating.

Oil sector operators and analysts have long advocated this arrangement. For example, the Petroleum and Natural Gas Senior Staff As-

sociation of Nigeria (PENGASSAN) in January urged the Federal Government to adopt the NLNG model to revive Nigeria’s four ailing refineries.

However, the success of the NLNG is based on its unique assurances and guarantee, ownership and operating model which have limited external interference.

Its incorporation charter, with companies and their countries being represented, elevates the NLNG Act almost to the status of a treaty.

The ownership structure of the NLNG makes it an independent incorporated joint venture, guaranteeing an independent board of directors, effective decision making as well as funding for its projects.

N L N G ’s o p e rat i o n i s based on international best standards with all the parties carefully scrutinising every decision to ensure benefits are maximised. This is why the company currently ac-

Ogoni clean-up: ERA/FoEN urges Buhari to restructure HYPREP for effective service delivery Idris Umar Momoh, Benin

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nvironmental Rights Action/Friends of the Earth Nigeria, ( E R A / Fo E N ) h a s called on President Muhammadu Buhari to urgently restructure the Hydrocarbon, Pollution, Remediation Project, (HYPREP) for effective service delivery to the people of the oil-producing regions especially, Ogoni land.

Godwin Uyi Ojo, executive director of the body made the call at a press briefing titled, “A litany of failures and a season of discontent,” and the official presentation of ERA/FoEN’s performance indicators for the Ogoni clean-up to members of the public in Benin, Edo State, on Wednesday.

Ojo said that the structuring of the agency has become necessary because of the poor rate at which it is going about the clean-up of Ogoniland.

He argued that if the agency was not restructured, it would take it more

than 100 years to complete the more complex polluted sites in Ogoni land which they have not even started to address.

Th e E R A / Fo E N b o s s, who also called for the implementation of United Nations Environment Program (UNEP) recommendations on ways to halt artisanal oil refining and the re-pollution of the environment, however, sought for the enforcement of the polluter pays principle and the removal of Shell Petroleum D e v e l o p m e nt C o m p a ny from the oversight bodies, as well as the day-to-day management of the cleanup process. “ It w a s e x a c t l y n i n e years after the United Nations Environment Programme (UNEP) submitted a ground-breaking report to the Nigerian state detailing its findings, conclusions, and recommendations on the environmental assessment of Ogoni land and without any tangible results to show for it. www.businessday.ng

counts for at least 4 percent of Nigeria’s gross domestic product and is one of the biggest taxpayers in the country.

But the NNPC which had hitherto managed Nigeria’s refineries does not operate under these conditions. It is owned and managed by the government. It has spent billions of naira to repair the refineries and they still don’t produce enough petrol to even power their own generators. The NNPC maintains subsidiaries that make profit on occasion, is largely seen as inefficient, opaque and corrupt.

The plan to cede majority stakes in the refineries can work if similar conditions that have helped the NLNG succeed are created. Key is guaranteed access to feedstock, efficient infrastructure, including pipelines and modest valuation of the refineries considering their current state, experts say.

“A key issue is, what value will the NNPC place on the

refineries, the level of demand for a refinery now and even capacity?” said Ayodele Oni, energy lawyer and partner at Lagos-based Bloomfield Law firm.

Oni said that the plan will face challenges ranging from a world that seems to increasingly embrace renewable technologies to a government that is turning towards gas as transport fuel, and the advent of both modular refineries and the behemoth Dangote Refinery with 57 million litres per day capacity can replace Nigeria’s petrol imports.

The refineries currently are not profitable. NNPC’s 2018 audited accounts showed the refineries in Kaduna, Port Harcourt and Warri incurred a cumulative loss of N126.2 billion. They also had cumulative capacity utilisation 8.27percent in the year under review.

This does not exactly make the business attractive to investors.

Oyo approves fund for take-off of Amotekun

gitated property owners in Lagos can look to a relief, as the state government has waived N5.75 billion penalties from Land Use Charge (LUC) default accumulated in 2017, 2018 and 2019.

The state has also, in its 2020 Land Use Charge Law (as amended), adjusted the annual charge rates for lands in Nigeria’s business hub to accommodate a 48 percent reduction.

The state commissioner for finance, Rabiu Olowo, who announced these developments at a press conference on Wednesday said that the new reform in LUC by the Governor Babajide SanwoOlu-led administration has been necessary by agitations following the hiking of the rate in 2018 by the previous administration in the state.

“We considered the Land Use Charge reform necessary to accommodate the agitations of Lagosians and reduce the financial pressure on citizens as it relates to Land Use,” Olowo said.

In 2018, under the Akinwunmi Ambode-led administration, the Land Use Charge rate, as well as the method of property valuation were increased. The twin-shock in the period led to a sporadic increase in Land Use Charge payable by property owners, triggering wild agitations and protests across the state.

“The current administration decided to review the

Our quiz competition will deepen students test proficiency - Lagos commissioner KELECHI EWUZIE

…to upgrade Adeoyo Maternity to teaching hospital REMI FEYISIPO, Ibadan

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yo government on Tuesday approved N59.783 million for the effective take-off of the Southwest security network, codenamed ‘Operation Amotekun’, in the state.

The fund is for the procurement of 3000 units of uniforms, combat boots, lanyard, baseball hats, security belts and worsted socks. It will also cover the production of logo for the personnel to serve as identity and distinguish them from other security agencies in the state.

Commissioner for information, culture and tourism, Wasiu Olatunbosun, disclosed this after the state’s 19th virtual executive council meeting, which approved the fund.

“Further on the establishment of the state security network, codenamed ‘Operation Amotekun’ and for effective take-off of the agency, the council has approved the procurement of 3000 units of uniforms and accoutrements such as combat boots, lanyard, baseball hats, security belts,

worsted socks, production of Amotekun and Oyo State logo for 3000 Amotekun corps to be recruited into the agency” “The uniforms and accoutrements which will be given to each recruited Amotekun corp will serve as a form of identity for the corps and will distinguish them from other security agencies in the state.”

Olatubosun further stated that the council also approved funds for re-accreditation of Adeoyo Maternity at Yemetu in Ibadan as a full-fledged teaching hospital, as the accreditation initially gotten was withdrawn for failure to have necessary equipment in place, saying it was in conformity with the present administration’s passion to revitalise the health sector in the state.

He said the hospital would henceforth serve as residence training and gynaecology centre to add value to the iconic health institution and improve the image of the state. He further noted that the move would lead to the procurement of medical equipment for the teaching hospital at the cost of 75.877 million.

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Land Use Charge law by reversing the rate of Land Use Charge to pre-2018 while upholding the 2018 method of valuation,” Olowo said.

According to the commissioner, the reform also considered multiple land use charge payment channels and efficient customer service management by setting up a call centre (0700 LAGOS LUC) in other to ensure prompt issue resolution.

Some of the new provisions in the new 2020 LUC Law include the re-introduction of the 15 percent early payment discount with an additional Covid-19 incentive of 10 percent which will be granted on the total amount payable. “This makes the total discount for early payment 25 percent if payment is made before the due date.”

The annual charge rate for agricultural land was also reduced from 0.076 percent to 0.01 percent. This is an 87 percent reduction from the old rate.

Also, the penalty for obstruction of officials and damage to property identification plaque has been reduced from N250,000 to N100,000 while the penalty for inciting a person to refuse to pay LUC has been reduced from N250,000 to N100,000.

According to the 2020 LUC Law, the definition of pensioner has been expanded to include “all retirees from private and public institutions in the state or any person that has attained the age of 60 years and has ceased to be actively engaged in any activity or business for remuneration.”

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etermined to deepen the test proficiency readiness of students in both public and private schools, Lagos State government has revealed plans for the year 2020 Governor’s Quiz Competition.

Speaking on Wednesday, Folasade Adefisayo, the state commissioner for education said the programme, an initiative her ministry, was aimed at testing the knowledge of students in public and private schools and create opportunities for them to participate in programmes virtually while at home.

According to Adefisayo, the annual quiz competition was being held virtually this year due to the Covid-19 pandemic and adaptation to the ‘new normal.

She said: “Students/ schools have been selected across the six education districts to participate in the preliminaries which will herald the grand finale coming up August 7, 2020.” @Businessdayng

She further stated that the ministry has taken time to study the peculiarities that comes with the guidelines of keeping safe as well as ensuring social distancing and has deployed all necessary technical expertise to ensure that our students can compete in any competition or attend seminars virtually.

The commissioner implored parents and guardians to encourage their children/wards have access to watch the programme and learn from the event which is highly competitive.

Adefisayo assured that the government would not relent in providing a conducive atmosphere for teaching and learning during this Covid-19 period, while urging the students to shun all vices while at home and continue to learn extensively through the radio, television and online platforms.

She affirmed that the grand finale would be held on August 7, 2020, adding that the competition would be moderated by a renowned quiz master, Olusegun Adedeji.

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Thursday 06 August 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 05 August 2020

Top Gainers/Losers as at Wednesday 05 August 2020 LOSERS

GAINERS Company

Company

Opening

Closing

Change

N16.95

N16.5

-0.45

ETERNA

N2

N1.82

-0.18

1.5

MAYBAKER

N3

N2.9

-0.1

N19.5

N19.4

-0.1

N11.75

N11.7

-0.05

Opening

Closing

Change

MOBIL

N173.4

N175

1.6

ZENITHBANK

STANBIC

N30

N31.5

1.5

N15.4

N16.9

CAP

PRESCO

N47.45

N48

0.55

FLOURMILL

GUARANTY

N23.15

N23.6

0.45

WAPCO

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

24,882.04 3,860.00 383,289,488.00 3.892

Stories by Iheanyi Nwachukwu

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L-R: Hassan Usman, managing director Jaiz Bank, Lamido Yuguda, director general, Securities and Exchange Commission and Dayo Obisan, executive commissioner operations SEC, during a Meeting between SEC and Jaiz Bank in Abuja

ing day while the value of listed stocks increased from N12.959trillion to N12.979trillion.

In 3,860 deals, investors exchanged 383,289,488 units valued at N3.892billion.

UACN, FBN Holdings, Access Bank, Zenith Bank and Presco were actively traded

stock on Wednesday.

Mobil Nigeria Plc share price advanced most during the remote trading session, moving from day open low of N173.4 to N175, adding N1.6 or 0.92percent.

It was followed by CAP Plc which increased from N15.4 to N16.9, adding

N1.5 or 9.74percent. Stanbic IBTC went up from N30 to N31.5, adding N1.5 or 5percent. Presco advanced from N47.45 to N48, adding 55kobo or 1.16percent, while GTBank share price also increased from N23.15 to N23.6, up by 45kobo or 1.94percent.

Ardova grows H1 revenue to N87.3bn

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rdova Plc has announced its unaudited results for the six-month (H1) ended June 30, 2020.

Its income statement shows revenue of N87.3 billion, up 5.5 percent year-on-year (yoy) as against N82.7 billion in H1’19. Operating expense of N4.4 billion represents a decline of 20percent yoy (Jun 2019: N5.5 billion).

Profit before tax printed low at N1.2 billion (Jun 2019: N6.3 billion).

Profit after tax (PAT) came in at N1 billion (Jun 2019: N5.5 billion).

Shareholders’ fund of N17.2billion represents an increase of 6.3percent yearto-date (Ytd) (Dec 2019: N16.2 billion). Total assets of N45.3 billion, indicates a decline of 3.6percent year-to-date (Dec 2019: N47billion). In the H1’20,

the company’s return on average equity (annualised) stood low at 13percent (Jun: 74percent); while normalised return on average equity (annualised) stood high at 13percent (Jun 2019: -3.4percent).

Commenting on the results, Olumide Adeosun, the Chief Executive Officer said: “The first half of 2020 was quite challenging globally as world economies dealt with the twin impact of COVID -19 and declining oil prices in the international market. Despite these challenges, we maintained a healthy working capital position, increased our top-line revenue, and effectively reined in cost, resulting in a 20percent reduction in operating expenses. Similarly, our operating expense ratio improved by 5.1percent with www.businessday.ng

a normalized growth in profitability.”

Adeosun further said, “Our consistently improved financial performance over the last two quarters shows that we are underway to building a formidable integrated downstream energy company. As the lockdown on economic activities gradually eases, we will continue to adopt precautionary steps to ensure the safety and health of our employees and various stakeholders while growing our market share responsibly across all products at attractive margins.”

“Our resolve to investing in new streams of non-fuels revenue remain firm and is expected to yield sustainable returns in the short to medium term Staying true to our strategic direction, we will continue to engage

right fit partners, adopt innovative capabilities and seek growth opportunities within the entire energy value chain as we deliver best-in-class customer experience aimed at value creation to our customers and shareholders”, he added.

Ardova Plc (AP) is a leading Nigerian integrated energy company with an extensive network of over 450 retail outlets in Nigeria and significant storage facilities in Apapa, Lagos and Onne, Rivers State. The company procures and distributes petrol (PMS), diesel (AGO), kerosene (DPK) and liquefied petroleum gas (LPG).

It also manufactures and distributes a wide range of quality lubricants from its oil blending plant in Apapa, Lagos.

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Global market indicators FTSE 100 Index 6,100.38GBP +64.38+1.07%

Nikkei 225 22,514.85JPY -58.81-0.26%

S&P 500 Index 3,329.05USD +22.54+0.68%

Deutsche Boerse AG German Stock Index DAX 12,660.25EUR +59.38+0.47%

Generic 1st ‘DM’ Future 27,044.00USD +327.00+1.22%

12.979

Stocks close another trading session in green as investors buy Mobil, CAP, Stanbic, others igeria’s stock market witnessed positive close for the third time this week, thanks to investors that bought shares of Mobil Nigeria Plc, CAP Plc, Stanbic IBTC Holdings Plc, Presco Plc, and GTBank Plc. Increased buy-side activities on the local Bourse made stock investors book N20billion gain.

The market continues to enjoy positive investors’ patronage as a number of bellwether stocks post better-than-expected earnings results. Market watchers expect no major shift from this pattern on Thursday, though not without the presence of short term players who might activate some level of profit taking after recent gains.

The Nigerian Stock Exchange (NSE) All Share Index (ASI) increased by 0.16percent to 24,882.04 points on Wednesday August 5, as against 24,841.94 points the preceding trad-

37

Shanghai Stock Exchange Composite Index 3,377.57CNY +5.88+0.17%

Airtel Africa says withdrawn from Kenyan subsidiary merger talks with Telkom

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irtel Africa plc and Telkom Kenya Limited (Telkom) are no longer pursuing the completion of earlier merger talks, a notice at the Nigerian Bourse shows.

Airtel Networks Kenya Limited (Airtel Kenya) an Airtel Africa Plc subsidiary, and Telkom Kenya Limited (Telkom) amongst other parties, had on February 8, 2019 entered into an Agreement to combine their businesses in Kenya.

The aim was to create an integrated telecommunications platform with mobile, enterprise, and wholesale divisions (the Transaction).

The completion of the transaction was subject to the satisfaction of various conditions precedent, including regulatory approvals.

Despite Airtel Africa plc and Telkom respective endeavours to reach a successful closure, the Transaction

has gone through a very lengthy process which has led the parties to reconsider their stance.

Raghunath Mandava, Airtel Africa CEO and MD said: “Kenya is a large and growing market and we remain committed to build a growing profitable business. We currently serve more than 14 million Kenyan customers, a number that is growing month on month, and in the last quarter our revenue numbers were up double digit in constant currency in Kenya. Our strategy to focus on winning more customers, invest in a best in class voice and data network and progressively expand our mobile money business, will continue to build on these results in order to deliver against the opportunities the Kenyan market has to offer”.

Chartered Institute of Stockbrokers set for virtual investiture of new president

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he Chartered Institute of Stockbrokers (CIS) has announced Tuesday, August 11 for the virtual investiture of the new President and Chairman of Governing Council, Olatunde Amolegbe, barring unforeseen circumstances.

In line with the Institute’s convention, an important aspect of the Investiture will be the formal send-off of the immediate past President, Adedapo Adekoje.

Amolegbe scaled up the corporate ladder, for a twoyear tenure, in a seamless transition, typical of the Institute’s succession policy, on May 19, 2020, after the virtual Annual General Meeting (AGM), which effectively marked the end of Adekoje’s tenure.

Amolegbe’s investiture, the eleventh in the series, will mark the formal handing over from Adekoje, who shall decorate the new President with the paraphernalia of office. The Institute’s Investiture, is a high profile ceremony that attracts top level dignitaries, including heads of state, governors, Regulators and other technocrats in the financial market.

Amolegbe, a fellow of the @Businessdayng

Institute, is an accomplished Economist, consummate Stockbroker, Investment Analyst and Asset Manager, with over 28 years’ experience in the Finance Industry, covering virtually all aspects of the business at various levels. He was the immediate past first Vice President.

In pursuit of the Institute’s capacity building, its scheduled virtual training for the Capital Market Correspondents on scholarship commences on Saturday, August 15, 2020 and will end on Saturday, November 1, 2020.

According to the Institute’s Registrar and Chief Executive, Adedeji Ajadi, the comprehensive training will cover Fundamentals of Financial Markets, Business Mathematics and Statistics, Business Communication, Business Law, Elements of Economics, Business Accounting and Business Management.

Ajadi explained that the free training programme was to equip the participants with the fundamentals of the courses to enhance their performance at the Institute’s Examination for Diploma in Securities and Investment.

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Thursday 06 August 2020

BUSINESS DAY

FT

FINANCIAL TIMES

World Business Newspaper

Beirut explosion: Death toll in Lebanon climbs to 100 amid search for survivors

Up to 300,000 left homeless after catastrophic blast that has devastated city Chloe Cornish in Beirut

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he death toll from t h e e x p l o s i o n t hat ripped through Beirut climbed to at least 100 on Wednesday, while about 4,000 people were wounded in the huge blast at the city’s port.

R e s c u e w o rk e r s c o m b e d through rubble to search for missing people after the blast which has dealt a devastating blow to a country already reeling from its worst economic crisis in decades.

Beirut’s governor Marwan Abboud said up to 300,000 people had lost their homes and the authorities were working to provide them with food, water and shelter.

Helicopters circled over catastrophic scenes with homes and offices miles from the port shattered. Two fires were still burning at the scene of the explosion, which the authorities said took place at a warehouse where 2,700 tonnes of ammonium nitrate had been impounded.

An Africa-bound ship carrying 2,750 tonnes of ammonium nitrate was seized at the Beirut port in late 2013, according to legal reports at the time. The law firm prosecuting the case said the cargo had been unloaded into a warehouse.

Hassan Diab, Lebanon’s prime minister, who described the explosion as a “catastrophe”, said details about the warehouse would be made public in due course.

“I will not pre-empt the investigations. At the moment, we are

A drone picture shows the scene of the explosion at the port of Beirut © Hussein Malla/AP

focusing on handling the disaster, pulling the martyrs out, and treating the wounded,” he said, according to Lebanon’s National News Agency. “But, I promise that this catastrophe will not go unpunished and those responsible will be held accountable.”

Badri Daher, director-general of Lebanese Customs, told broadcaster LBCI on Wednesday that customs officials had sent six documents to the judiciary warning that the material at the warehouse posed a danger.

“We requested that it be reexported but that did not happen.

We leave it to the experts and those concerned to determine why,” Mr

Daher said.

The Lebanese Red Cross’s top official said 100 people had died, while health minister Hamad Hassan put the death toll at 80, in comments to local channel LBC on Wednesday. The number is expected to rise.

The blast came as the country was already in financial meltdown and grappling with a rising level of coronavirus infections that was pressuring health services.

“No words can describe the horror of the disaster that has hit Beirut last night, turning it to a disaster-stricken city,” President Michel Aoun said on Wednesday,

Lebanon’s National News Agency reported.

“We are determined to move on with the investigations and expose the circumstances of what happened as soon as possible, to hold the responsible and the negligent accountable, and to sanction them with the most severe punishment,” he added The blast devastated Beirut’s port, a crucial artery for importdependent Lebanon, a country already enduring soaring food prices and rising poverty because of an economic crisis. Economists said data showed about threequarters of Lebanon’s imports

enter via the port.

The hangars which make up Beirut’s free zone were ripped apart in the blast, and a national grain silo was cracked open, spilling out its wheat.

Lebanon is one of the world’s most heavily indebted countries, and in March it defaulted on $90bn of debt. The Lebanese pound has collapsed and inflation has risen to about 56 per cent, while the IMF forecasts that the economy will contract 12 per cent this year.

In an economic recovery plan finalised in April, the government banked on receiving $10bn in international support, but fighting between rival political factions, who have long been blamed for failing to push through muchneeded reforms, have stymied talks with the IMF. “It’s a severe blow and it compounds what was already a very bad economic situation, the humanitarian consequences will be very alarming,” said Jason Tuvey, emerging markets economist at Capital Economics, which forecasts that the economy will shrink by 30 per cent this year.

Lebanon’s higher defence council has declared Beirut a “disaster zone” and recommended that the cabinet impose a twoweek state of emergency.

Social media pages have been set up in an attempt to locate the missing. A hospital in East Beirut was on Wednesday crowded with masked people waiting for information. Many of the institutions’ windows were blown out.

Dispute over aid for cities and states slows US stimulus talks Trump accuses Democrats of wanting to bail out local governments run by their party Lauren Fedor and Demetri Sevastopulo in Washington and Andrew EdgecliffeJohnson in New York

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onald Trump has accused Democrats of wanting to bail out US cities and states run by their party as the White House and lawmakers failed to bridge differences over the contours of another stimulus package to respond to the pandemic.

Mr Trump said his team was having a “very good discussion” with Nancy Pelosi, the Democratic Speaker of the House of Representatives, and Chuck Schumer, the top Senate Democrat. But he said both sides disagreed over the amount of money Congress should provide to local governments to help them deal with the pandemic and the economic pain it has caused.

“They want to do bailouts of their various Democrat-run states and cities,” he said. “They want a trillion dollars for that . . . They

Congressional leaders are locked in negotiations with the White House over a fresh round of economic stimulus © Bloomberg

want to do much more than Covidrelated. They want to bail out cities and states that have been in trouble for years of bad management — in all cases Democrat-run cities.”

Earlier on Monday, more than 100 top executives at US companies from Alphabet to Walmart urged Congress to provide more support for small businesses, as concerns mounted over the political deadwww.businessday.ng

lock on Capitol Hill. The letter was organised by former Starbucks chief executive Howard Schultz.

More than 25m Americans have filed for unemployment insurance since Covid-19 began spreading across the US. An extra $600 a week in jobless benefits was introduced in March as part of the $2tn Cares Act, but the enhanced assistance ran out last week.

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The White House is considering what Mr Trump could do on his own through an executive order if Congress fails to cut a deal. Speaking on Monday Mr Trump said he would be “talking about” suspending the payroll tax — a move that he has frequently touted in the past.

But the move has limited support on Capitol Hill, partly because it does not provide relief to people who are out of work and not paying tax as a result.

Mitch McConnell, the top Senate Republican, accused Mr Schumer and Ms Pelosi of “continuing to say ‘our way or the highway’ with a massive wish list for leftwing lobbyists”.

The two Democratic leaders told reporters on Capitol Hill that progress was being made, following a two-hour meeting with Mark Meadows, White House chief of staff, and Steven Mnuchin, US Treasury secretary. It was the lawmakers’ sixth meeting with White House officials to discuss the matter.

Ms Pelosi said the talks were @Businessdayng

“productive” and “moving down the track”, but added that: “We still have our differences.”

Mr Schumer said the meeting focused on the costs of the Democratic and Republican proposals, and the two sides were “moving closer together”.

While lawmakers agree on the need for another round of meanstested direct payments to Americans of up to $1,200 apiece, they are at odds over an unemployment benefit extension, as well as legal protections that would prevent employers from being held liable for workers who get infected on the job.

Democrats want the $600-aweek unemployment top-up to continue through to next year, while Republicans have argued that too many Americans are now earning more from benefits than they were at work.

Republicans, namely Mr McConnell, have led the charge on “liability shields” for companies, schools and charities, while Democrats have pushed for more legal protections for workers.

Thursday 06 August 2020

BUSINESS DAY

39

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Lira sinks after money market dysfunction rattles investors Pressure on the currency is intensifying despite heavy interventions Eva Szalay and Adam Samson in London, and Ayla Jean Yackley in Istanbul

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he Turkish lira has come under renewed pressure against the dollar, a day after short-term borrowing costs signalled that the country’s money markets were starting to malfunction.

Through most of June and July, Turkish authorities succeeded in pinning the dollar to less than TL6.85, even while the lira tumbled against other currencies. But the lira weakened beyond that point last week, and on Wednesday, the dollar jumped as high as TL7.05 to mark the lira’s lowest point since May 12.

The lira’s latest tumble comes a day after the costs of borrowing the currency overnight skyrocketed close to the record intraday highs struck in March last year.

The offshore overnight swap rate — the cost to investors exchanging foreign currency for lira over a set period — hit an annualised level of more than 1,000 per cent on Tuesday from 30 per cent the previous day, according to Refinitiv data.

Analysts and investors said the abrupt jump in the overnight rate, to levels generally seen only in times of broad market tumult, was a symptom of Turkey’s increasingly dysfunctional money markets and presented a fresh risk

The lira’s tumble comes a day after the costs of borrowing the currency overnight skyrocketed close to the record intraday highs struck in March last year © AFP via Getty Images

for the lira and other assets.

“The extraordinary situation at the start of the week came as Turkish lira liquidity in international markets dried up,” said Enver Erkan, economist at Tera Securities in Istanbul.

Mr Erkan said that with the swap market in effect frozen, there was “serious” selling in Turkish stocks and bonds as foreign investors scrambled to meet their lira liabilities. The Borsa Istanbul 100 stock index shed more than 3 per

cent on Tuesday while the prices on lira-denominated debt fell, pushing yields higher.

The yield on a 10-year, liradenominated sovereign bond reached 13.4 per cent on Wednesday, its highest level since the global market turmoil in March.

The money market tumult, which appeared to ease on Wednesday, came as the central bank lodged a fierce battle to defend the lira, according to emerging market analysts.

Goldman Sachs estimates

that in the first six months of the year, Turkey’s central bank spent more on propping up its currency than during the whole of 2019, with $65bn of reserves deployed compared with $40bn last year.

That kept the key rate against the dollar in check for a time, but the lira still sank heavily against other currencies such as the euro.

“The Turkish lira could be on the brink of yet another precipitous fall versus the dollar,” said Piotr Matys, strategist at Rabobank.

Fluctuations in the lira over the

past two weeks suggested the state lenders that act on behalf of the central bank to support the lira were “struggling” to keep it from falling more aggressively, he added.

These heavy interventions have severely eroded Turkey’s foreign currency war chest, depleting the country’s ability to fight any potential future runs on the lira. It also “undermines the credibility” of the central bank, Murat Unur at Goldman Sachs said.

One simple way to support the lira would be for the central bank to raise interest rates. That task is more complicated now, given the global impact of coronavirus, which has devastated the country’s crucial tourism industry. But even before the virus broke out, the central bank was cutting rates, reflecting deep disdain for higher interest rates from President Recep Tayyip Erdogan.

The central bank has slashed its key rate by about 15.75 percentage points in the past 12 months, in an attempt to encourage lending and to boost the domestic economy.

The dollar has gained more than 18 per cent since the start of the year against the Turkish currency.

“I suspect the next step should be emergency rate hikes if the currency stays under pressure like this,” said Ed Al-Hussainy, a senior rates and currency strategist at asset manager Columbia Threadneedle.

Treasury yields plumb new depths as bond investors fret Debt markets are signalling concern about the US economy even if equities are not Colby Smith in New York

U

S Treasury yields closed at new lows on Tuesday as anxious bond investors continued to drive a “relentless rally” in government debt that stood in stark contrast to America’s much more optimistic equity market.

The yield on the 10-year Treasury note dropped 0.05 percentage points to a record low 0.52 per cent, according to the US Treasury department’s daily closing calculation.

The debt benchmark has only once briefly fallen below that number in intraday trading at the height of the coronavirus crisis.

On March 9, the 10-year yield plunged to 0.31 per cent before rising again.

On Tuesday, the yields on three-, five- and seven-year notes also closed at fresh lows.

“What you are seeing right now is continuing angst about what the future holds,” said Pat-

rick Leary, chief market strategist at Incapital, citing the wobbly US economic recovery in the face of persistent virus infections and delays to a new round of fiscal stimulus.

“If you have a situation where things are not going well, the recovery is stalling and there is gridlock in terms of what is happening in Congress, you tend to see safe-haven plays.”

Emergency federal unemployment benefits, which provided a www.businessday.ng

key source of funds for millions of out of work Americans, expired last week and Congressional leaders have so far been unable to come to a compromise on extending them. A few days of lower Covid-19 case numbers across the sunbelt region has raised hopes that the spread may be decelerating again, but a vaccine that will bring the pandemic fully under control may still be months away.

Anne Mathias, a global rates

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and FX strategist at Vanguard, said there was a “good news gap” that had curtailed investors’ optimism for the time being.

As well as US Treasuries, the bid for safety has also given gold a boost. On Tuesday, prices for the precious metal hit a record high of $2,000 an ounce.

The US stock market is buoyant, however, as investors upset by the low yields in bonds have been pushed into riskier assets. The S&P 500 is within 2 per cent of its all-time high, and the tech-heavy Nasdaq already is at a record.

The divergence can be explained in part by the Federal Reserve, which has stepped in forcefully to support financial markets. Worried about the effects of the latest coronavirus spikes on the nascent recovery, it has also vowed to keep monetary policy extremely accommodative for the foreseeable future.

“Someone just opened a massive firehose of liquidity . . . and it has to go somewhere,” said Ms @Businessdayng

Mathias, flagging the growing “disconnect” between equity and rates markets. Still, she predicts the “relentless rally” in Treasuries would continue, given the long wait until the next Fed policy meeting in September.

The historically low Treasury yields suggests the markets see no problem absorbing the extra supply coming from a federal government whose deficit has ballooned.

On Monday, the Treasury department said it expected to borrow an additional $2.2tn by the end of the year, having already borrowed nearly $3tn in the second quarter.

Strategists anticipate the Treasury will increase the proportion of its borrowing through longer-term debt. Details are expected on Wednesday, but few are worried about the market’s ability to digest this new glut of supply, especially since the Federal Reserve has pledged to buy an unlimited quantity of government debt.

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BUSINESS DAY Thursday 06 August 2020 www.businessday.ng

The Covid Hero: UBA Foundation

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he Covid Hero campaign by The Luxury Network Nigeria, in partnership with Business Day, and Robert Taylor Media aims to applaud outstanding individuals, whose work is critical to the survival of Nigeria in these unprecedented and challenging times. It’s driven by the company’s ethos of partnership and collaboration for greater impact - especially in the ongoing fight against the coronavirus.

The next organisation under the spotlight is UBA Foundation. The Foundation was the first by a bank in Nigeria, and since inception of the Foundation in 2005, it has impacted hundreds of thousands of lives across the continent through various special projects carried out in various host communities. The CEO of the UBA Foundation is Bola Atta. Bola is also Group Director, Corporate Communications at UBA plc.

Read the interview with Cas Ojo, the MD of The Luxury Network Nigeria below: •Tell us about the Mission and Objectives of the UBA Foundation.

The United Bank for Africa (UBA) PLC is committed to being a socially responsible company and role model for businesses in Africa.

The bank established its Foundation, the UBA Foundation in 2005 as the Corporate Social Responsibility arm of the UBA Group. The UBA Foundation is committed to the socio-economic improvement of lives across Africa, focusing on development in the areas of Education, Environment, Economic Empowerment and Special Projects.

The Foundation draws its inspiration from the Group’s intrinsic values of Enterprise, Excellence and Execution and its mission statement: “to be a role model for African businesses, abiding by the utmost professional and ethical standards, and creating an enduring institution.”

•Can you tell us some little known, but interesting facts about the UBA Foundation?

United Bank for Africa is the first bank in Nigeria to institute a foundation – The UBA Foundation- in 2005. The Foundation since inception has donated hundreds of thousands of books across Africa through the READ Africa initiative, and has impacted over hundreds of thousands of lives across the continent through various special projects carried out in various host communities.

•Share some of the Foundation’s key projects to-date: The scope of the foundation covers 4 main areas: Education, Empowerment, Environment and Special Projects.

The Foundation is actively in-

Bola Atta

volved in facilitating educational projects and bridging the literacy gap on a pan-African scale. The Education pillar is the umbrella arm of UBA Foundation that guarantees this commitment. The Read Africa program and National Essay Competition are geared at stimulating the quest for sound knowledge and arming educational institutions/organisations with support and/or resources to meet various learning needs.

The UBA Foundation aims to make sustainable improvements in the lives of the needy and underprivileged by empowering youths through entrepreneurship programmes which benefit the community at large. The foundation regularly supports skillsacquisition and empowerment conferences, workshops, and seminars including Sponsorship of the TEF/UNDP Pitching Competition to identify and seed thousands of African Entrepreneurs in the Sahel/ Lake Chad region; the 7th Annual Celebration and Entrepreneurial Awards of the Fate Foundation, a private-sector-led non-profit initiative with a vision to foster the establishment of 5,000 businesses and the creation of employment for at least 50,000 Nigerians; the Gavi Vaccine Alliance “Give A Child A Chance” campaign to end infant mortality in Africa through vaccinations, and many more.

We have also rehabilitated educational institutions; built hostels

across Africa; sponsored adult literacy programmes; Provided entrepreneurial and job skills training; advocated financial Literacy; constructed foot bridges, Communication and Technology centres ; Trained teachers and students; Provided scholarships and so much more.

In May 2008, The UBA Foundation joined a group of elite financial institutions who signed on to the United Nations Environment Program Finance Initiative (UNEP FI) Statement. Through this, we have pledged our commitment to improving the environment and promoting sustainable development by maintaining a number of gardens across Africa and forging best practice throughout the industry.

•What are the primary goals of the UBA Foundation?: The UBA Foundation is committed to the socio-economic improvement of lives across Africa, focusing on development in the areas of Education, Environment, Economic Empowerment and Special Projects. These focus areas inspire the bank to ‘Do Well and Do Good’ by extending the hand of partnership and aid to those communities that need it the most.

•How has the viral outbreak impacted the work of the Foundation?

Since the outbreak of the virus in March 2020, The UBA Foundation has continued to play its role, albeit virtually when necessary.

We often go across the African continent with our Read Africa Initiative and encourage students in less priviledged communities, to read to hope for brighter futures.

With the onset of the Covid-19 pandemic, we were unable to take this physically to the schools but decided instead to do so online.

We were still able to ship books to various countries, even though many schools are closed right now.

The receiving ministries of education and other agencies who have received our shipment of books are able to distribute them effectively to those who need them.

With our National Essay Competition which is often written in a physical setting, the fact that many schools are shut at the moment has had an impact in delaying the competition for this year. We have however, decided to take the competition virtual in order not to deprive kids who have been hoping for a chance at scholarships to the tertiary level of education.

•What has the general response been to your work since the Covid-19 outbreak?

The United Bank of Africa Plc, through the UBA Foundation, donated USD 14 million to governments in Africa to fight the spread of the Corona Virus across the continent. We have worked closely with government agencies in all 36 states in Nigeria and in 19 African countries to provide aid in various forms across UBA Group host communities. The responses from host and international communities on the effort and the impact of UBA Foundation activities around the COVID 19 pandemic has been positive and well received. For some, it was a jump start at the beginning of the pandemic.

•What are the main challenges the Foundation has faced since the Covid-19 outbreak?

A large percentage of the activities the UBA Foundation undertakes is targeted at the under privileged but due to social distancing restrictions, we’ve had to develop and implement viable alternatives to be able to carry out our activities. However, a majority of the youth we aim to help remain marginalised as access to internet remains a challenge in the face of social distancing protocols. We are attempting to tackle this head on in steps. We recently collaborated with the Five Cowries Arts Education Initiative to provide comprehensive worksheets to substitute educational literature for youth that do not have access to internet or E-learning platforms and who are unable to attend school.

•What is the driving force that keeps the Foundation committed to its goals?

At the UBA Foundation, we believe in intervening and building capacity within communities to facilitate projects that act as a catalyst to social and economic development. Our primary driving force is to make a positive impact on the

lives and societies amongst whom we conduct business, and beyond.

It is imperative that we play an active role not only as Africa’s global bank but also as a brand that is known for doing good because it is part of our corporate DNA. As one of Africa’s largest financial services institution, we recognise the need for a social contract between the bank, the community and its people and we continue to work towards this goal.

•What are the most rewarding moments so far?

The most rewarding moments thus far for me are those moments when we bring joy to a child’s heart.

Like when we announce the winners of the National Essay Competition each year. To see the children and their families’ reaction is priceless. You know that these children through the competition, will be changing the course of their lives and even of generations with the opportunity to be able to go through university without the worry of funding. I always feel so privileged to be able to contribute meaningfully, no matter how small, to the future of our youths.

•Does the Foundation have any new advice for the public with regards to the ongoing crisis?

It is very sad that many lives have been lost due to the pandemic. Sad also that many have suffered ill health and financial stress as well as anxiety and loneliness amongst other things. But it would be even sadder if we went back to normal and never grew from this dark period. I feel that the pandemic brought on a season of reset. Reset of our values, both cultural and spiritual. This has been the first time for many families in many years, that they were able to bond together, eat together, study together, pray together and for a prolonged period. You cannot place value on how much that is worth. We cannot place value on the stillness of our environment as it has had a chance to heal and breath. If we take the good that came out of this period, we can continue to build a better world.

I hope that when we look back many years on this year 2020, we can dwell more on the growth and development that emerged from it.

I hope it has rung in a new era and one that is conscious of the earth most especially.

•What do you anticipate the future of Nigeria will be postcovid?

We operate in 20 African countries so the UBA Foundation does not speak to Nigeria alone. We work throughout our communities on the continent. We are preparing them for a future that is inclusive and that leaves fewer people behind. One that is more caring and less hectic. A future that is technologically driven without losing sight of humanity. This is the type of life we are working towards, post Covid-19.

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