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Chaos looms as DisCos consider returning power licences to FG …may adopt Yola DisCo template …analysts fear it will worsen regulatory risk perception ISAAC ANYAOGU

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arge swaths of electricity consumers in Nigeria could see long spells of blackouts and a collapsed electricity market if power distribution companies (DisCos) make good their

threat to declare force majeure and return licences to the government, analysts have said. The electricity distribution companies are raging over the recent

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L-R: Amaechi Okobi group head, communications and external affairs, Access Bank plc; Herbert Wigwe, CEO and group managing director, Access Bank plc; Jordi Borrut Bel, managing director/CEO, Nigerian Breweries plc, and Emmanuel Orhiaki, marketing director, Nigerian Breweries plc, at the media unveil of the Access The Stars music platform.

businessday market monitor

Biggest Loser

Biggest Gainer MTNN N130.00 1.17pc

NESTLE N1215.00 -1.22pc 26,598.94

Foreign Reserve - $41.52bn Cross Rates - GBP-$:1.22 YUANY-N 50.68 Commodities Cocoa

US$2,407.00

Gold

₦2,922,962.95

Crude Oil

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N300

Foreign Exchange

Buy

Sell

$-N 357.00 360.00 £-N 442.00 451.00 €-N 382.00 392.00

+0.34pc

$1,508.24 $58.48

news you can trust I * *THURSDAY 10 OCTOBER 2019 I vol. 19, no 412

FMDQ Close

Everdon Bureau De Change

Bitcoin

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Spot ($/N)

I&E FX Window CBN Official Rate Currency Futures

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362.50 307.00

3M -0.12 12.24

NGUS DEC 24 2019 362.68

6M

10 Y -0.02

20 Y 0.00

14.30

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NGUS MAR 25 2020 363.53

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In a world awash with capital,

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IMF asks FG’s economic team, advisory council to provide growth plan

Nigeria can’t lay hands on it N N LOLADE AKINMURELE

igeria is in the shadows as countries attract funds in a world awash with liquidity. The 59th general assembly and annual meetings of the World Federation of Exchanges (WFE) opened in Singapore, Wednesday, with a key message being of a world awash with capital. But back home, Nigeria struggles with an acute shortage of the capital the country urgently needs to grow a stuttering economy and create jobs for a burgeoning population. Speaker after speaker, including Jacqueline Loh, deputy managing director of the Singaporean Monetary Authority, and Juan

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L-R: Urs Ruegsegger, chairman, WFE/chairman, Six Swiss; Nandini Sukumar, CEO, WFE; Ed Tilley, vice chairman, WFE/chairman and CEO, CBOE; Sitting: Robert Schaefer, CEO, Luxembourg Exchange, and Oscar Onyema, CEO, NSE, at the signing ceremony for the MOU between Luxembourg Exchange and NSE, The MOU creates a framework for dual listing of Green Bonds on both markets at the sideline of the annual meeting of the world federation of exchanges WFE in Singapore Wednesday.

...says CBN financing of govt muddling monetary policy ENDURANCE OKAFOR & SEGUN ADAMS

igeria must turn to its economic team and the new advisory council to design and monitor a comprehensive package that would spur growth and reduce the effects of external shocks, a visiting International Monetary Fund team has said. The team called for action on a coherent and coordinated set of policies in the face of slow

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Inside Nigeria seeks $62bn from Shell, Chevron, Exxon, Total from past profits P.38


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news UN raises concerns over influx of hard drugs in Africa ... says Nigeria alone intercepted 150 tons in 2018 AMAKA ANAGOR-EWUZIE in Abuja

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he United Nations Officeon Drug and Crime (UNODC) said on Tuesday in Abuja that a massive volume of illicit drugs was being smuggled into Nigeria and other West African countries by sea. According to the UN, the most prominent kind of drugs being smuggled into countries in West and Central Africa are tramadol and cocaine. Speaking with newsmen on the side lines on day two at the ongoing three-day Global Maritime Security Conference (GMSC) holding in Abuja, Oliver Stolpe, representative of UNODC Nigeria, said in 2014 Nigerian authorities seized about 8 tons of tramadol that were smuggled into the country, saying the latest data showed that in 2018, the volume of seized tramadol hit a recordhigh of 150 tons. “There is massive increase in quantities of tramadol that are smuggled into the country and all of these seizures happen at the seaports,” Stolpe said. According to Stolpe, the Nigerian government has done a few things right by signing into law

the Suppression of Piracy and other Offences Act, which for the first time, gives a comprehensive framework to tackling the issue of piracy and other maritime crimes. “Nigeria is on a good path, but the big issue is specific: follow up with prosecutions because that has been lacking. One of the challenges in the Gulf of Guinea countries is basically the extremely fragmented legal framework in countries in the region,” he stated. He said there were regional, international and sub-regional frameworks like the ECOWAS level of framework, but there is a gap between countries having signed on to these different legal frameworks, to actually being able to put them into domestic legislation or policies. “At the moment, that is a crucial gap but UN is actually working very extensively with the Nigerian government and governments of other countries in the region to assist them in terms of legal reforms and capacity building for judges, prosecutors and law enforcement agencies,” he said. Guiseppe Sernias, a pro-

gramme officer for UNODC, said that the countries in the Gulf of Guinea, and the whole of West African waters, were recording high levels of drugs and cocaine trafficking by sea, judging by the seizures in recent years. According to him, Cape Verde, for instance, recently seized 10 tonnes of cocaine, which is a huge amount in the market while Guinea Bissau authorities recently seized large quantities of cocaine that mainly come by sea. “Therefore, we need countries to implement trade agreements that would enable vessels to be boarded at sea. Countries need to be able to apply the Vienna Convention on Narcotic Substances, which article 17 provides for proceeding to board a vessel of foreign flags, so that coastal countries could board a vessel of another flag. This can be put in the national legal framework,” he further said. Meanwhile, the Federal Government has been advised to invest in the development of the Niger Delta region, and also create a special maritime court to handle cases of piracy and other maritime offences.

More days to endure on Nigerian roads as FG reduces spending on works, housing CHUKA UROKO

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rom an aggregate expenditure of N10.33 trillion proposed by the Federal Government for 2020, a total of N262 billion was appropriated to the Works and Housing Ministry, according to the budget proposal presented to joint section of the National Assembly on Tuesday by President Muhammadu Buhari. Though that is the highest allocationinthebudgetappropriation, but it is still clearly a drop of water in the ocean, given the deep rot in roads’infrastructureandthehousing deficit in the country. Works and Housing are two bigandstrategic ministries rolled into one. Until August this year when President Buhari inaugurated his cabinet and unbundled the ministry, Power was part of it. In the current 2019 fiscal year, the Ministry of Power, Works and Housing has budget

allocation of N428.4 billion. This is higher than the N127 billion appropriated for Power and the N262 billion for Works and Housing put together by about N39 billion. This means that Nigerians will still have more days and years to endure collapsed roads infrastructure in the country. It also means that those who are hoping that through government’s policies and programmes in the housing sector they will be able to own homes will have to endure more days before their dreams are realised. Government has explained that the reduction in its actual spending is because it plans to leverage private sector funding through tax credit schemes to ensure its capital programmes are sustained But private sector operators are sceptical of government’s said plans, saying that Nigerian

government is not known to work well with the private sector. Wale Babalakin, chairman/ CEO of Bi-Courtney Limited, says public private partnership (PPP) initiative is under threat in Nigeria because government officials do not respect terms of contracts and agreements, but see private investors in public infrastructure as either competitors or inferior partners. Roads infrastructure in Nigeria areinterriblecondition.Theyneed huge capital deployment to fix them. That kind of money is a lot bigger than what the Federal Government has appropriated for two giant ministries that are in deficit. It remains to be seen how far the government’s Road InfrastructureTaxCreditSchemecangoeven thoughthepresidenthasapproved theconstructionandrehabilitation of 19 Nigerian roads and bridges measuring 794.4km across 11 states through the scheme.

How to access affordable healthcare in Lagos - Sanwo-Olu JOSHUA BASSEY

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everal months after the Lagos State government launched the Lagos Health Insurance Scheme, the state governor, Babajide Sanwo-Olu, has submitted that the scheme is the only guarantee to access affordable healthcare, whether in public or private health facilities in the state. The state health insurance scheme was launched in December 2018 by the immediate past governor, Akinwunmi Ambode. However, its implementation in the state since the launch has not been impressive, as residents seem not to be looking in its direction. Industry sources have blamed the poor penetration of the health insurance scheme on inadequate public awareness. The scheme majorly targets to eliminate out-of-pocket payment

for healthcare service and its dire consequences on the health of the citizens. With the increasing poverty level in Nigeria, majority of the citizens can barely access healthcare, just as cases of patients being detained in hospitals for inability to pay up their medical bill are regularly reported. But Sanwo-Olu believes all this can change if Lagosians embrace the health insurance scheme. “For health to be completely affordable and accessible, people must subscribe to our Health Insurance Scheme, where we need to increase coverage in terms of registration. This is how developed countries are able to tackle their health financing and access,” said Sanwo-Olu at Medic West Africa conference that kicked off at Eko Convention Centre, Victoria Island, on Wednesday. According to the governor, www.businessday.ng

the financing process of the scheme is such that anyone who falls ill at any given time will have full access to treatment because such person contributed to the scheme. The scheme also allows the option of health facilities to be used by a subscriber to include private hospitals. The governor noted that the state government would also start the process of revamping its road ambulance scheme, with the objective of creating more ambulance points across the state. This, he said, would include deployment of emergency responders each ambulance point to give palliative treatment to the injured before being transported to hospitals. Aside upgrading the stateowned specialist hospitals, primary healthcare centres, he said, are also being strengthened to reduce pressure on the secondary health facilities. https://www.facebook.com/businessdayng

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Minimum wage: FG, Labour meet over consequential adjustment Innocent Odoh Abuja

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inister of Labour and Employment, Chris Ngige, on Wednesday met separately with members of Joint National Public Service Negotiating Council; the leadership of Trade Union Congress (TUC) of Nigeria and the Nigeria Labour Congress (NLC) to resolve the impasse over the consequential adjustment of the National Minimum Wage for Nigerian workers. This was disclosed in a statement issued on Wednesday by Charles Akpan, deputy director press and Public Relations of the Ministry of Labour and Employment. He said while the meeting with the Labour commenced by 11:30am and ended 2pm, that with the Joint National Public Service Negotiating Council started. It was resolved however that each group would hold further meetings to sort out all outstanding disagreements before a high level conclusive meeting to wrap up all discussions scheduled for October 15, 2019. This will pave the way for an equable implementation of the Consequential Adjustment of the Minimum Wage, the statement said. Organised Labour had

given the government October 16 deadline to meet Labour’s demands over the implementation of the minimum wage or face industrial action. While payment for workers for level 1 to 6 has commenced on the new minimum wage of N30,000, controversy still trails the adjustment for grade levels 7 to 14 and 15 to 17. The minimum wage bill was signed into law by President Muhammadu Buhari on April 18. Those in attendance in Wednesday’s meeting were Minister of Finance, Budget and Planning, Hajia Zainab Ahmed; Minister of State, Finance, Budget and Planning, Clement Agba; Minister of State, Labour and Employment, Festus Keyamo; Head of Service of the Federation, Folashade Yemi-Esan, and director-general, Budget Office of the Federation, Ben Akabueze. Others were acting chairman, National Salaries Income and Wages Commission, Ekpo Nta; the Accountant General of the Federation, Ahmed Idris; Deputy President NLC, Amaechi Asogwuni; the General Secretary of the NLC, Emmanuel Ugboaja; Achaver Simon, as well as the representatives of the TUC standing in for the Labour.

More danger on our roads as NNPC raises alarm over spike in pipeline vandalism

Olusola Bello & Harrison Edeh

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he menace of fuel laden trucks on Nigerian roads continues to increase as there has been an astronomical rise in pipeline vandalism in recent times. More heavy trucks laden with fuel are now on the roads, thereby causing serious damages on substantial portion of the country’s major roads, a situation that often results in fatal accidents with attendant consequences. The Nigerian National Petroleum Corporation (NNPC) in its latest monthly financial report raised an alarm on the increasing menace of pipeline vandalism, which hit a record high of 228 pulverised points in July 2019 alone. The corporation’s July 2019 Monthly Financial and Operations Report (MFOR) informed that the breached lines represented an awful increase of 115 percent from the 106 vandalised points recorded in June 2019. Samson Makoji, NNPC acting group general manager, group public affairs division, in a release in Abuja, said out of the vandalised points, 15 failed to be welded, while five

points were ruptured. A breakdown of the incidents indicated that the Aba-Enugu axis accounted for 35 percent of the breaks, while Port Harcourt-Aba route recorded 22 percent, with Ibadan-Ilorin layout hitting a 16-percent mark. Similarly, the Lagos Atlas Cove-Mosimi Zone logged 12 percent with other locations recording the remaining 15 percent of the breaks. The NNPC noted in the report that to ensure sustained supply and distribution of Premium Motor Spirit (PMS) across the country, a total of 1.73 billion litres of the product, translating to 55.74 million liters/day, were supplied for the month under review, adding that it continued to diligently monitor the daily stock of fuel to ensure smooth distribution of petroleum products and zero fuel queue across the Nation. In terms of gas supply, a total of 730 million standard cubic feet of gas per day (mmscfd) was delivered to gas fired power plants in the month of July 2019 to generate an average power of about 2,864MW.

Simba TVS celebrates Independence Day with free rides

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he Simba Group, distributors of TVS King – Nigeria’s most popular Keke – celebrated Independence Day once againbyofferingfreeridestocommuters during the holiday. A fleet of tricycles, specially branded to commemorate Nigeria’s 59th year of independence, were a welcomed sight on roads onTuesday.Passengersexpressed

their delight with the offer for free rides from the company. “This is a great gesture by Simba TVS,” said Olumide Ajayi, a school teacher in Ajahwhoc who regularly uses Keke for his commute. “My wife and I thought it was lovely to see these tricycles in the nation’s colours but learning that the ride was free was really wonderful.” www.businessday.ng

L-R: Lashe Osoba, group head, brand management, United Bank for Africa (UBA) plc; Ezechukwu Ngozi, English teacher, Holy Child College, Ikoyi; Bola Atta, MD/CEO, UBA Foundation; Ogechi Altraide, group head, direct sales agency, UBA, and Ebele Ogbue, group head, energy and oil, UBA, at the commencement ceremony for the 2019 UBA Foundation National Essay Competition for senior secondary school students in Nigeria held at UBA House

Lives, properties in coastal communities at risk as flooding, shoreline erosion surge …study sees global flood losses rising from $6bn per city to $52bn yearly by 2050 CHUKA UROKO

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uetoacombination of factors, notably flooding and rise in sea level, lives and properties in coastal communities have been put at risk. Whereas sea level rises as a result of climate change impact,floodingarisesfromseasonal rainfall and erosion of shorelines of seas and lagoon. This is a global problem and in Nigeria, particularly in Lagos, the country’s commercial nerve centre,floodingandshorelineerosion have been wreaking havoc in its many coastal communities. This makes the protection of the shoreline critical. Desmond Majekodunmi, an environmentalist, says it is the responsibility of the Federal Government to protect the shorelines as it is done

inotherpartsoftheworld.“10metres of the shoreline has been lost in just six months this year, which makes Federal Government’s intervention to avert the impending disaster very urgent,” he said. Faulty physical and urban planning, poor habits, and indiscriminate dumping of waste materials in unauthorised areas have made many other areas in the city vulnerable. This explains why in the last couple of months of constant rainfall, many parts of the cityhavebeennegativelyimpacted. In some parts of the world, including Nigeria, flooding and coastal erosion surge have caused heavy losses and many more have been predicted. A study led by the World Bank and Organisation for Economic Cooperation and Development (OECD) forecasts that average global flood losses will multiply

from $6 billion per city in 2005 to $52 billion a year by 2050. The report takes into account socio-economic factors, such as increasingpopulationandproperty values. Cities in developing countries,thereportsays,moveupthelist whenfloodcostsaremeasuredasa percentage of city gross domestic products (GDP). Many of them are growingrapidly,havelargepopulations, are poor, and are exposed to tropical storms and sinking land. An environmentalist, Ferdinand Ameke, confirms to BusinessDay on phone that in most coastal cities like Lagos and Port Harcourt, the poor are at greatest risk as rapid urbanisation has pushed them into the most vulnerable neighborhoods, often in low-lying areas and along waterways prone to flooding. He recalls that before now, the coastal communities such

as Igbo-Efon, Okun-Ajah, OkunAlfa, Lafiaji in Lagos, which were about 13,000 metres from the Kuramo waters had no fear for coastal erosion. But because of the land reclamation activities and the construction of the Apapa ports, which pushed the Atlantic Ocean waters westwards, a road along the shoreline in one of these communities, was completely washed away just between December 2015 and April 2016. Nde Dafinone, chairman of the Nigerian Conservation Foundation (NCF) disclosed, is worried by the ugly developments in the coastal communities. He said at a media briefing in Lagos that the Lagos State government had started making efforts to check the erosion surge by constructing groins along the shoreline of Alpha Beach.

Absence of reliable data hindering Nigeria’s development - Buhari Tony Ailemen, Abuja

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igeria’s development is being hindered by the absence of reliable homegrown statistical data, President Muhammadu Buhari on Wednesday, said. ThePresidentstatedthiswhile administering oaths of office and setting agenda for members of the newly constituted Presidential Economic Advisory Council (PEAC),headedbyaneconomist, Doyin Salami, at the Presidential Villa, Abuja. The Council, which was constituted on September 16, 2019, to replace the Economic Management Team (EMT), also has Mohammed Sagagi, who will serve as vice-chairman. Others include, Ode Ojowu, Shehu Yahaya, Iyabo Masha, Chukwuma Soludo, Bismark Rewane, as members, while Mohammed Salisu, senior special assistant to the President, Development on Policy Matters, will serve as the secretary. The President in his charge toldthecommitteetofocusondeveloping reliable data that would

... sets agenda for Economic Council properly reflect happening in the country. Describing the PEAC task as “the most important national assignment,” the President said the committee must “focus on primary data collection. ‘‘Today, most of the statistics quoted about Nigeria are developed abroad by the World Bank, IMF and other foreign bodies. Some of the statistics we get relating to Nigeria are wild estimates and bear little relation to the facts on the ground. This is disturbing as it implies we are not fully aware of what is happening in our own country. ‘‘We can only plan realistically when we have reliable data. As you are aware, as a government, we prioritised agriculture as a critical sector to create jobs and bring prosperity to our rural communities. Our programmes covered the entire agricultural value chain from seed to fertiliser to grains and ultimately, our dishes. ‘‘As you travel in some rural communities, you can clearly

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see the impact. However, the absence of reliable data is hindering our ability to upgrade these programmes and assure their sustainability.” He said his administration was working to measure the impact of the Social Investment Programmes (SIPs) targeted at improving the well-being of millions of poor and vulnerable citizens. Following the appointment of MinisterforHumanitarianAffairs, the President had directed the Ministry to commence a comprehensivedata-gatheringexercisein all Internally Displaced Persons (IDPs) camps in the North East. Heberatedthestatisticsreeled outbyinternationalhumanitarian organisations on their activities in the North East, especially those relating to their financial commitmentsintheregion,saying,“Their claims do not reflect realities on ground. “Today, we hear international organisations claiming to spend hundreds of millions of dollars on IDPs in the North East. But when @Businessdayng

you visit the camps, you rarely see the impact. ‘‘In 2017, when the National EmergencyManagementAgency tookoverthefeedingofsomeIDPs inBorno,YobeandAdamawa,the amountwespentwassignificantly lower than the claims made by these international organisations. ‘‘Therefore, actionable data is critical to implement effective strategies to address pressing problems such as these humanitarian issues. ‘‘I, therefore, look forward to receiving your baseline study as this will help us shape ideas for a sustainable and prosperous future,’’ the President said. On his expectations from the council,thePresidenturgedthem to proffer solutions on how to move the country and economy forward. He directed the Council to coordinate and synthesise ideas and efforts on how to lift 100 million Nigerians out of poverty in 10 years, working in collaboration with various employment generating agencies of government.


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My verdict on cashless policy: No to KITA!

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ashless-policy is not new; it started in Nigeria in 2012 with charges for deposits and withdrawals above given thresholds. Since the policy was introduced in 2011 and became operational in 2012, I have been an “interested party” playing from the side lines. My interest was and is due to two factors: my banking and change-management and my selfimposed responsibility to mind other peoples’ business. Since 2011, I have written about 6 general articles on cashlessness and two published academic papers. The first one was and probably the first empirical work on the policy was based on a study conducted three months after the commencement of the programme (Ik Muo et al 2013); “Managing social change: The case of CBNs cashless policy. Journal of Applied Finance and Banking; 3(2) 75-87). The second one was published in June this year, 3 months after the CBN governor declared that the policy was on its way back and three months before the recent cashless big-bang (Ik Muo 2019 “Strategic options for Nigeria’s cashless policy. Journal of Research in National development; 17(1). I have shared the contents of some of my general commentaries on this policy in the past two weeks. I want to share the contents of my intellectual work on this policy as stated above before giving my verdict. But before I do so, a word on KITA an acronym for “Kick in the ass,” was introduced into managerial lexicon by Hertzberg when he propounded his two-factor theory of motivation. It is the process of using threats of punishment to coerce somebody into doing something. It is coercion because while force can compel somebody to do something,

it can never motivate! The first paper (2013) reviewed the cashless policy and assessed peoples’ behaviours and attitudes towards it in Lagos where it first became operational. It was found that 72 percentage of the respondents believed that the cashless policy was necessary; only 40 percentage believed that the CBN approach to its implementation was the best but only 36 percentage believed that the policy would succeed. The 64 percentage who believed that the policy would fail justified their doomful predictions on the power supply situation, poor implementation and non-availability of cashless channels in the rural areas. A disturbing feature of this policy since its inception has been the several reversals, which indicated that the CBN did not do its homework well or is not surefooted about it. The date for its take-off, the pilot states, the cash thresholds and punishments have all be fiddled with. In effect, it has been one step forward, two steps backwards, three steps inside the bush and back to square one! The latest and most disturbing of these amoebic developments occurred in February 2017. The CBN had reviewed the policy, revised its charges upwards and directed that these should become operational in the pilot states on 1/4/17 and staggered its nationwide implementation from 1/5/19 to 1/10/19. Surprisingly on 20/4/19, it reversed itself on the new charges and on the nationwide roll-out and reverted its implementation to the pilot states My recent intellectual intervention, which was based on the postulations of Seth & Fraiser (1982) and Christensen, Marx and Stevenson (1986) concluded that inducement and leadership tools are the most optimal strategies for the effectiveness of the cashless policy. Inducement (persuasion and economic incentives) becomes the preferred strategy when people have positive attitude towards the desired change but do not or cannot change. Leadership tools (negotiation and salesmanship) are preferred when people agree on what they want but disagree on how to go about it. Nigerians are not opposed to the cashless

policy per se; they are opposed to the knee-jerk, KITA approach! My verdict then is simple and emphatic: “AWAY WITH KITA.” You cannot force people to change unless you want them to pretend to have changed. My argument since 2011 is that Nigerians should be encouraged (not forced) to embrace the cashless policy through persuasive communication and incentives. Customers should be paid to go cashless and this payment can be done through CBNs regulatory intervention or from the cashless-induced savings by the banks. Furthermore, communication should focus on the benefits of the policy, not on the punishment for contravention. When you see the crowds at our ATM machines all over the country, including Lagos, it becomes obvious that the banks should up the ante. So, no to punishment-based strategy, which is what KITA is all about. I also believe that it is wrong to punish people for depositing their money in the banks. Transporters, fuel-stations, supermarkets and traders in general will surely find this very herculean. The other day, a woman nearly went berserk at a bank where she was charged almost N40,000 because a customer had lodged cash into her account! I don’t know whether she made up to N40,000 from that transaction. Let people pay in the cash and then hold them by the jugular when they want to withdraw the money by insisting on cashless withdrawal. Of course, the government should walk the talk. Just the other day, Our Vice President was openly sharing cash to traders in the name of “trader money” And then, how did Lagos state give the N20,000 to the South African returnees? In the next 10 years, we shall review the situation and I can bet as sure as day follows night that if the CBN does not change this approach, we should be where we are today. Other matters: Governance, a huge joke in Nigeria. Governance is all about ensuring that those “in charge” promote and protect the interest of the stakeholders. For a government, the number one stakeholder is the citizen, for whose security and welfare, the government

You cannot force people to change unless you want them to pretend to have changed. My argument since 2011 is that Nigerians should be encouraged (not forced) to embrace the cashless policy through persuasive communication and incentives

exists. All over the world, governance is a serious affair but in Nigeria, it is a huge joke and here are my evidences related thereto. Sometimes this year, my townunion, which has a hall somewhere in Lagos, joined with other stakeholders in their neighbourhood and requested the local government to do something about their road. A part of the road was constructed sometimes ago and was done in such a way that it gave room to several interpretations and misinterpretations. About half a kilometre to the hall and two other community halls, the straight road veered off its normal course, and in effect became L shaped. It appeared as if there was a deliberate effort to deny those down the road, including these community halls, the dividends of the tarred road. Well the LG declared that it had no money and that the communities should either pay the LG to do the road (yes, you heard right), or ask for permission to do it themselves. The LG also gave its own quotation for the job. (So, The LG is now a building contractor!). The concerned stakeholders, compared notes and found that other contractors could do the job at 50 percentage of the LG’s bill and thus wrote to the LG for the authority to adopt the DIY (do it yourself ) model. The day this was discussed at the meeting, (28/7/19), there was also a report that the union had paid the current parking and entertainment fees to the LG, which was and is where our responsibilities actually ended. We met again on 29/9/19 and this was the feedback on the matter: The LG had not yet given the approval! So, the LG collects all dues and levies from its stakeholders, fails to do the community road, offers to be the contractor for the same road and refuses to approve a DIY option for the affected stakeholders. That is governance in practice at the LG level; head or tail you lose! 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

Are we asking for too much?

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irst, I congratulate Nigeria on the celebration of her 59th Independence anniversary. It speaks volume that a man or woman of this age, which is a stone thrown from the round figure of 60, should be counting significant milestones of positive achievements and impact on others. From my tiny window of over 30 decades as a born Nigerian, I x-rayed some areas of concerns and I am left worried if my generation has had a sense of good governance. Half the time I heard the generation of my father say things were better in the 50s, 60s and 70s. Fortunately I was born into the mid-80s and from when I knew myself as a rational being till date, I have consistently heard the chorus, “government was better in our time.” I am sure, if the rot continues, my generation will also sing the same chorus to the coming generation. If I were to define good governance without consulting any textbook or dictionary; I would simply say it is the ability of the government (rulers) to provide basic amenities (infrastructure) for the wellbeing of the people. The absence of good governance in the affairs of the nation has given me sleepless nights, leaving me to age away. These thoughts got heightened when my principal friend from birth (my father) called me on a Saturday morning to lament the spate of decay on the federal road

passing through our hometown. I immediately flashed back to memory lane what the road used to look like as a kid. It was a red dusty busy highway connecting the West (Lagos) to the North (Abuja). I recall how the roofs/buildings close to the road were naturally painted in wine colour. I enjoyed visiting home to see grannies and watch the vehicles ply in their numbers on jet speed. Succour finally came between 1997 and 1998 during the regime of the late General Sanni Abacha, then Head of State, who approved the contract for the reconstruction of the federal road through Lampese community in AkokoEdo LGA, Edo State all the way to Lokoja leading to Abuja. This was handled under the watch of the Petroleum Trust Fund (PTF) headed by Muhammadu Buhari, then Major General. The contract was awarded to Dantata and Sawoe for execution. Upon completion, like a beautiful bride, she (the federal road) attracted the establishment of businesses all around the adjoining communities at the speed of light. Lampese and other communities became a beehive of economic activities, day and night. Today, over 20 years down memory lane, the state of that road is a nightmare, a snare to keep travellers stranded due to neglect. It is most worrisome to hear of the harrowing experience inter-state travellers have passed through sleep-

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ing over for days just to make head way to and fro the gateway of the community. There is no need asking if we have a government because we truly do. But are they sensitive to this and many of such deplorable states of infrastructure? The question that begs for an answer. This state of this road and many others is enough to give any government sleepless nights and spur them to declare a dare state of emergency on all federal roads. I am not sure if Nigerians at any time have asked for too much from the government other than simple basic amenities from taxpayers’ money. We just need a government that is humane. A government that listens to the lamentations of the people, with eyes to see the excruciating state of the people, nose to perceive the decay of the infrastructure, emotions to feel the agony, and initiative to act right to alleviate the sufferings of the people. Palliative measure is not the answer to this road and other federal roads across the country. If truly what is worth doing at all is worth doing well, then those concerned should deploy machineries for reconstruction work to commence on the faded portions of the road from the Lampese end all the way to Lokoja. Worthy to remind us that decayed infrastructures like roads lock down businesses, which rub offs on the overall economy. Business

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activities, transit of goods from the north to the south-west vice-versa, are heavily carried out via that single route. Farmers’ activities have been partially crippled as they cannot move their produce to the market centres. Companies who have found pastures for backward integration are also counting their woes as personnel are trapped and not able to move. May I remind the government (elected officials) that what the people seek for is nothing more than good roads, electricity, pipe-borne water, functional educational institutions, healthcare as well as affordable housing units. If we have all these or half of them, Nigerians that I know, would be less bothered of other things because the basics are available. Adejumoh is a Public Relations Practitioner. He enjoys contributing to national issues through his articles. He is the Corporate Communications Manager at Nosak GroupTweet @kenadejumoh 08140363593 (SMS only)

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Lagos blue line rail project – Setting the record straight KOLAWOLE OJELABI

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he Blue Line Rail project is the flagship transport project of the Lagos state government. Blue Line project is a 27-kilometre rail route designed to run from Okokomaiko eastwards to Mile 2, and then proceeds to Marina via Ijora. A major part of the rail alignment runs in the middle of the ongoing Lagos Badagry Expressway (LBE) road expansion development from Okokomaiko to Iganmu before ascending on an elevated railway bridge to the National Theatre, and proceeds via Ijora to Marina. Construction of the Theatre to Marina is a 5.5 km elevated rail section consisting of a terminal station at Marina, bridge works and track works. The Blue Line Rail project was awarded through an international competitive bidding and won by China Civil Engineering Construction Company (CCECC), subsidiary of China Railway Construction Corporation (CRCC). The project has over the year rekindled hope of better transport experience when it finally commenced operations. However, the project has been through ups and down in its implementation. As a result, and of late, a lot of untruths had been peddled about the project. It is therefore germane to set the record straight. The Blue Rail line is said to have been awarded at the contract sum of $182 million as against $1.2 billion advertised by the state government

as the cost of the project. Those who made the outrageous claim allegedly relied on a document attributed to CRCC, the parent company of CCECC. The report also alluded to the fact that the contract of RMB1.256 billion ($182 million) was for both blue and red-light rail projects. Instructively, the Lagos state government had awarded three contracts for the survey and design of the Blue and Red Rail lines for implementation respectively in 2009 and Blue Line phase 2A for the construction of earthwork, ballast, sleepers and tracks for one kilometre and Iganmu Station between Iganmu to Mile 2 at the cost of $182 million. This was captured in the CRCC’s report in 2010 and is now being falsely assumed as the cost of implementing the two rail lines. The Lagos state government had intended to implement the red line as the first rail line but due to the unavailability of the corridor as a result of the constraints contained in the railway Act for using the corridor, it decided to concentrate efforts on the blue line. The survey and design for the red line was therefore stepped down. The project’s global cost of about $1.17 billion as contained in the Lagos state government document on the rail project is the verified project cost of the blue line rail project as at the time it was approved in 2009. The project includes construction of the civil works particularly fixed infrastructure; rolling stocks, signalling and telecommunication, operational control centre (OCC), fare collection system, maintenance depot and equipment, power generation and supply, fencing and security of entire alignment which are currently on-

going. The government has continued to implement the rail project within the global contract cost. For the avoidance of doubt, the Lagos state government has successfully completed the survey, mobilisation and detailed design of the 27-kilometre blue line rail project, completed all civil infrastructure works from Mile 2 to National Theatre which includes the construction of rail bridge, stabling yard, Pway track and completed four railway stations namely Mile2, Alaba, Iganmu and National and is currently constructing the bridge crossing the lagoon from National Theatre to Marina. On the comparison of the blue rail line with the Addis Ababa light rail project, it must be stated that rail construction worldwide is not compared on the basis of like-for-like because of difference in terrain (swamp, lagoon, removal of ship wreckages), design of project (elevated sections and stations), infrastructure, technology (UIC60 tracks manufactured to European standard), compensation as construction passes through already built up environment, third party issues and taxation among others. The project is an urban rail project and this means that a lot of issues ranging from acquisition, payment of compensation and resettlement of project affected persons would have to be taken care of to ensure a smooth sail. For instance, about a third of the 27-kilometre blue line rail project is elevated, crossing swampy terrain and the Lagos lagoon where a lot relocation, reconstruction and resettlements were involved. Construction within the swampy terrain and the lagoon entails that some piers founda-

The project has over the year rekindled hope of better transport experience when it finally commenced operations. However, the project has been through ups and down in its

ussia’s renewed interest in Africa has taken the centre of recent discussions as political analysts and about everyone else evaluates Moscow’s true intent in seeking a comeback on the continent. The eastern European country has historically had its eye on Africa from as far back as the 1920s. A paper by Collège Des Forces Canadienne, the Canadian College force establishes that in 1923, Vladimir Lenin, former premier of the Soviet Union in an article in the Union’s official newspaper, Pravda, advocated for a strategy of interventionism in the “third world” via expanding the Union’s relationships with the colonies in Africa. The Soviet Union saw African as an opportunity to form an alliance against the West which it deemed exploitative, capitalistic and inhibiting the prospect for growth of the African continent. Thus, the relationship was said to have on the one hand the Union’s interest and the other liberation of Africa from the “evils of the west.” But following the collapse of the USSR in 1991, the links between the Communist bloc and Africa weakened. The Russian federation became a shadow of its former self with its economy crunching by 50 percent while poverty rose. The rest of the 1900s, focus on Africa was lost as survival became paramount for the once great empire which rivalled the West. As Russia recovered from its downturn, there was a desperate attempt to rebuild its relationship with Africa, regain lost grounds in the tussle for “superpower” with the West. Moscow would borrow a leaf from the USSR’s play book in its quest to rise to the peak of global politics, a former yet ever-present ambition. For Russia the move has become all the more urgent as other nations including China and India, the Asian tigers have pitched their expanding

tent in Africa for economic and other reasons. Strategy for re-entry into Africa has taken a form of economic relationship with Russia exploring opportunities for trade and commerce in the continent. The eastern Europe nation seeks investment in the oil, gas and nuclear power sector – critical sectors for Africa and of strategic importance to Russia’s grand moves in the chess game of politics. In 2006, Anadolu agency reports, Vladimir Putin visited South Africa in the first-ever visit by a Russian leader to sub-Sahara, intensifying Moscow’s desire to foster investment and involvement in the region by political initiatives, businessmen delegations, and securing access to natural resources. Russia also engaged Ethiopia in the development of a nuclear energy facility and resume daily flights from Addis Ababa to Moscow as part of speeding up the growing ties between the two countries. For Zimbabwe, Russia is developing one of the world’s largest reserves of platinum group metals. The foreign policy concept of the Russian federation of 2008 underscored Russia’s strategy to form an alliance with Africa. The policy direction stated that economic cooperation in the African energy sector was of strategic importance to Russia’s interests. While on the surface all of the moves made by Russian have been innocuous, there have evidence of resource exploitation and unwholesomeness in the tryst. The Guardian in June 2019 reports that Russia is seeking to bolster its presence in at least 13 countries across Africa by building relations with existing rulers, striking military deals and grooming a new generation of “leaders” and undercover “agents”.

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tion would go down between 40 and 88 metres. On the claim that a loan for the construction of the project was guaranteed by the World Bank, the Lagos state government, for the umpteenth time, states clearly that it has not received any loan to support the construction of the blue line rail project. While government is committed to completing the project, we appeal to members of the public to be wary of those bent on sowing the seed of discord through unsubstantiated allegations of improper conduct in its award and implementation. The Lagos state government appreciates the concerns raised by wellmeaning Nigerians on the need to set the record straight on the project. Government has over the years spent internally generated revenue to fund the construction of the rail project without recourse to borrowing. With the determination of the Babajide Sanwo-Olu administration to tackle traffic congestion and improve transportation, the rail project is set to breathe fresh breath of air to bring the project to passenger operation in the life of this administration. The Lagos state government will continue to show enough commitments and strength in ensuring that Lagosian travel in comfort, at affordable fare and reduced travel time.

Kolawole Ojelabi is an assistant director of corporate communication in Lagos Metropolitan Area Transport Authority (LAMATA) Tel: +234-803-855-6452, 809-449-9138 Email: kojelabi@lamata-ng.com Website: www.lamata-ng.com

What is Russia’s real interest in Africa?

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TEMISAN ADIO The claims were based on leaked documents that showed Yevgeny Prigozhin as chief executor of Moscow’s ambition to wrestle the continent from the United States and drive former colonial powers, UK and France out of the region. The big question is if Russia’s real interest in Africa is best for the continent, given its desperation to have Africa for itself? In a bid for Libya’s oil, Russia sought to interfere in the country’s election backing rebel and warlord in what undermined the African nation’s democracy. A report by The National in July points out Prigozhin to be likely the mastermind behind the Russian mercenary group Wagner which had been reportedly deployed to Libya to prop up Field Marshal Haftar’s Libyan national army. According to the reports, “Russia is seen as one of the most prominent international backers of Haftar, who regularly visits Moscow and was a guest of honour on Russia’s flagship aircraft carrier, the Admiral Kuznetov, in 2017.” The Kremlin is also said to have printed millions of dollars’ worth of dinars for his government. The Telegraph has learned, puts in better perspective the scale of Russia’s involvement when it cited a Whitehall source to said Wagner Group has been supporting Khalifa Haftar with 300 personnel in Benghazi and has supplied his Libyan national army with artillery, tanks, drones and ammunition. The sleazy move to Central African Republic (CAR) lends credence to mistrust that have trailed Russia’s fellowship to Africa. In a 2018 article by Jack Losh and Owen Mathews they quote a senior United Nations security official in Bangui: “The Russians want to implant themselves in the Central African

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Republic so they have an axis of influence through Sudan in the north and southwards into Angola.” The top-official which sought anonymity said, “The French are hated as the old colonial power. American troops have left. It’s a free country for the taking.” Twisting the arms of the United Nations and through wiles, Russia edged out American and French peacekeeping forces and put itself in line to distribute arms to crisis-torn CAR; many of this arm were later discovered to have been made available to anti-government elements with both sides as pawn in Moscow’s game. Kyran Goodison, in April 2019 published on Philologia: “Through increasing personnel and establishing infrastructure within CAR, Russia creates an ideal environment to access CAR’s vast stores of natural resources. With increased access to natural resources, Russia establishes itself as a counter to China.” Together, these factors enable Russia to exploit the conflict in CAR to “establish a presence for itself in Africa’s geostrategic heartland” for Russia’s own gain and power,” (Korybko, 2017). The name is economic corporation but it is actually a long game that provides resources, conflict and strategic advantage for Russia’s ambition to upset the west-and China. The losers? Africa. Russia is said to be planning on securing a naval supply centre on the red sea but the facility would only ease Russia’s ease of channelling CAR’s rich mineral resources away. In essence, the right hand of Russia in Africa is for taking, looting and plundering in a manner that puts the continent at unprecedented risk. Adio is a social commentator and writes from Lagos

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BUSINESS DAY

Thursday 10 October 2019

EDITORIAL PUBLISHER/CEO

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

Bashir Ibrahim Hassan

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

FG’s tax drive: In whose interest?

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e estimate that the raft of new taxes being implemented by the government and the new regime of shakedowns of citizens and businesses by tax authorities may not necessarily increase government revenues. They will only reduce income for individuals and revenues for firms and businesses hence lead to unemployment and lower tax revenues for government. The government should rather busy itself with enforcing existing tax laws and selling off dead assets to improve its revenue profile. Nigeria is in the midst of a revenue crisis. Oil revenue has greatly declined. Foreign and domestic debts are at an alltime high of $81.27 billion (N24.947 trillion) as at March 2019. Government revenue to debt service ratio, by some conservative estimates, is put at 70 percent. Consequently, the government has to borrow to maintain operations

and finance the budget. The government even queried the Federal Inland Revenue Service (FIRS) on its inability to meet revenue targets. To shore up revenues, the government has gone about increasing taxes and aggressively enforcing tax payments. It issued notice of a planned 5 percent Value Added Tax (VAT) on online transactions effective January 2020. A new Nigeria Police Trust Fund was also created, compelling companies operating in Nigeria to pay 0.005 percent of their after-tax profits to the fund to help equip the police. It also planned increasing the VAT charge from 5 percent to 7.5 percent. The Senate, while disagreeing with VAT increase, has suggested instead a 9 percent communication service charge. What is more, the government, through the tax agency, is exercising its power of substitution, ordering banks to freeze alleged tax defaulters’ accounts and deduct alleged taxes due from the accounts without recourse to the taxpayers. This is in addition to undue and unnecessary shakedowns of

individuals and businesses to pay more tax even after it is established they are up to date with their tax payments. We understand government’s desperation to raise revenues. But we are also concerned that these new taxes and tax raise will not substantially improve government’s revenue and will instead put the economy in a worse shape than it is at present. To begin with, ad valorem tax – whether value added or sales tax – leads to income loss, at least for individuals, since firms are expected to pass it on to individual. We also have to assume that this income loss is equal to revenue loss by the firms. The moment firms are affected, they will be forced to reduce labour demand, which will, in turn, affect negatively employment. Meanwhile, the minimum wage has also been increased and it will ultimately affect bottom line of firms and businesses. The combined effects of new taxes, raised VAT and the new minimum wage which will come into effect soon will be squeezed margins. And

if we know anything about firm behaviour when faced with squeezed margins, the first line of response is to reduce labour cost by laying off workers. Unemployment will increase and aggregate demand will also drop. Naturally then, the effect will be lower revenues to government, far lower revenues than before the new tax and tax increases. Granted that the current VAT rate is one of the lowest in the world and that government needs to increase revenue, its timing and strategies may not be right. This is an economy on the brink of another recession, growing at less than 2 percent (lower than population growth) and with unemployment rate at an all-time high of 23.1 percent. For such a struggling economy, introducing new taxes and raising VAT will just compound the problem and drive the economy into another recession. There are a surfeit of measures to adopt in tackling revenue shortfalls, some of which include better collection of existing taxes and selling off dead government assets.

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Thursday 10 October 2019

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Positives of Big Brother ‘Naija pepper dem’ THE PUBLIC SPHERE

CHIDO NWAKANMA

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ore than anything, the numbers generated by Big Brother Naija Season 4 has brought pepper to some eyes. People are either amazed, surprised or angered by the statistics of voting and income. Anger is the response of moralists and the old-school to the obvious humungous viewership of this popular yet much-hated programme. BB Naija 4 Pepper Dem ended on Sunday, October 6. It was the most popular and most-watched of the Nigerian version of Big Brother since its inception. DSTV reports that 50 million citizens voted during the duration of the programme. Accountants out in the streets quickly calculated that to mean income of N7.2 billion. You need to add to this income from sponsorship and advertising to appreciate the scale of revenue in only 99 days of programming. Miss Mercy Eke walked into the history books that day as the one with the most pepper and the first female housemate to win. She earned N60m, half of that in cash. There would be other benefits as she goes around to popularise her win.

Mercy Eke, 26, exemplifies some of the reasons BB Naija Pepper Dem has implacable enemies and critics. Followers of the series accuse her of lacking any discernible talents as if the programme was a talent hunt. They say she was on the side of all that is wrong with the program: showy, irreverent, pretentious, materialistic and engaged in relationships with the opposite sex that would not pass muster in the morality test. Twenty-six participants became housemates when they entered the house on 30 June 2019. Only five made the final cut on 6 October. There were 12 males and 14 females. Big Brother Naija was annoying to old school viewers. For 24 hours each day, it showed young people doing nothing except scheming to emerge winner of N60m in 99 days. The organisers and the coordinator, Biggie, had to improvise activities. This seeming aimlessness was the main beef with the programme. Add the others such as unclear criteria for the award, questionable twists, sex and romance, and the absence of engaging content. BB Naija 4 fitted into the mould of reality TV everywhere as programming that documents purportedly real-life situations starring unknown individuals rather than professional actors. Such programmes gained prominence beginning in the 1980s. Prototypes are Survivor, Idols, and Big Brother, all of which are global franchisees. They also include The X Factor, Got Talent, MasterChef, Dragons’ Den, Deal or No Deal and Who Wants to Be a Millionaire. Candid Camera (1948) of the US is considered the first. Hidden cameras captured people in unusual situ-

ations. More recent reality shows are competition-based with the audience as the judges. Criticisms of BB Naija 4 followed the global trend. People say the reality TV programmes do not reflect reality as situations are artificial, deceptive, with some programmes coaching participants on behaviour, while they generate storylines ahead of time. Others say they humiliate or exploit winners, rig the outcome, and make stars out of unworthy people lacking in genuine talent. Finally, they glamourise vulgarity, immorality and materialism. These programmes hold an intense fascination for people. Kim Kardashian is a daughter of one of the OJ Simpson defence attorneys and commenced her programme soon after the trial. OJ Simpson was reality TV. The appeal of BB Naija despite the criticism by elders and moralists provoked my interest. There are many lessons, beginning with the winner Mercy Eke. She was proof of the power of positive thinking and claiming things by faith. From day one, she asserted that she had come to claim the prize and take home the money. She drove down in an iconic vehicle, the Citroen saloon. There are many other elements of the programme, including character, influence over others, emotional intelligence versus IQ, and focus in the face of distractions. How would you behave in such a situation even as unlikely as it seems? The survival of the fittest setting of BB Naija is a spellbinder for audiences. They speculate on the outcomes, then watch every move of the housemates. BB Naija more significantly speaks to the shortage of arresting programmes

Criticisms of BB Naija 4 followed the global trend. People say the reality TV programmes do not reflect reality as situations are artificial, deceptive, with some programmes coaching participants on behaviour, while they generate storylines ahead of time

Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@ gmail.com.

Let your employees be themselves

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ne of the companies I studied during my work vacation to Europe is a retail giant with thousands of employees and affiliations with quality brands and merchants. I was keenly interested in how the employees are motivated, engaged and kept as productive members of the teams. This company has a massive online presence, with over 85 percent of its sales orders being processing via the web. The company’s warehouses were built 10 years ago, operated on three shifts of 24 hours daily and attended to 80 percent of the online customers’ orders within 12 hours for immediate delivery. The staff members, both those on core administrative and support functions, appeared happy and engaged based on my observations of the process and value chain relationships among the departments. For example, there are reports of the activities of the teams after each shift which serves as an input to the work-plan for the leaders of the next shift. The reports show details of the unfulfilled customers’ orders, the output required from the requisitioning department, the packing units expected of the direct to customers (D2C) sections and the expected ‘route-fall’ for the delivery department. As good as the warehouses are fortified with technology, the impact of having engaged teams of people who work 24-7 to meet and exceed customers’ expectations with no or little failure points should interest leaders who are desirous of keeping effective teams and delivering value to their stakeholders. One of the key takeaways from this experience is that the employees can be themselves while at work if leaders allow this to be part of their strategy to make the workplace a place to be. No doubt there are rules of engagement like the safety, code of conduct for resump-

tion, food or tea breaks and closing at work, the implementation of these rules was done without any coercion, shouting or the use of vulgar words as are often seen in our environment. No one is threatened as the leaders, and the led worked harmoniously focusing on the results to be delivered. One of the things this company is doing to keep her staff stay engaged is the availability of information at every point of need. The staff are referred to as partners, not employees. At each of the departments are meeting sections where all information both current and static relating to work, expected output, emergency and the procedures for dealing with every area of interest are highlighted. There is no ambiguity of whatsoever in the standard of conduct. Everything is so simplified and measured to the extent that the performance of each of the team members on duty is automated in a dashboard which is flagged at the end of the shift. The way supervisors communicate with the team members at the beginning of work, and the end of the shifts are devoid of arrogance. I didn’t witness the ‘I’m the boss’ speaking in the tonality of voice and body language. Employees in the process of executing their job functions have options to sit, sing, use earpieces and anything to make them comfortable while working on the agreed deliverables. A notice that you can be yourself is everywhere making people healthy and happy at the workplace. Thus, the atmosphere is enabled to enhance productivity and positive communication without losing focus on the goals of working together as partners to serve the customers. This experience is quite different from what is dominantly manifesting in our workplaces where rules and ethical standards are

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interpreted to favour the leaders and people spoken to as if they are in slavery. A typical example where an employee initiative is stifled is the case of Emmanuel. He once reported to a boss called “Prof” who stifled the thinking capacity and ability of his direct reports. Under his leadership, it was a crime for you, even as a manager level person with 20 years’ experience to reply to any email without consulting him, especially if he was copied. Your response will have to be printed for him to review and he can make corrections for up to as many times as possible in the process wasting the precious time, he was paid to lead others and to add meaningful value to the business. Truth be told, he would have made some grammatical corrections to your work, but stifling staff of their originality where the materiality of the intention is not lost is like making people not to be themselves. Prof was also fond of insisting on doing things his ways. You must copy people in your response to emails after scaling the correction hurdles based on their level of seniority. The worldwide standard is to put people in the copy of mails on the need to know basis. You cannot close for the day before him, and even if he must wait for the traffic on the road to his house to resides, staff must wait for the boss to go home first. Many a time, he will be playing scrabble in the office waiting for traffic to be better at the same time tying down his subordinates in the office. Leaders must see the workplace as a place for collaboration and encourage employees to be themselves. Aside from providing effective communication and ensuring civility in the workplace, an effective way to get the best out of people is to allow them to use their latent talents. If employees can express them-

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on TV. Nigeria needs serials with active appeal and messaging to which audiences can relate. The Mexican soaps, based on the Sabido Methodology, continue to hold the attention of substantial number of viewers. Then there is a mix of Nigerian and foreign soaps with strong audience appeal. Recently, we had Battleground, Halita, Mehek and Tinsel. BB Naija adopted elements of the Sabido Methodology without the ultimate objective of social change. Named after Miguel Sabido, producers deploy the Sabido Method for compelling stories that draw in audiences and subliminally affect behaviour change. Some dub it the “sex, soap and social change” approach. Audiences bond with the characters in serials based on Sabido, as they did with BB Naija 4. They get entertainment and valuable information. The entertainment function is a dominant one of the many features of the media and has excellent persuasion quotient. BB Naija proved the appeal of entertaining content. However, it lacked the education component of Sabido Methodology. Producers and programmers need to look at BB Naija with fresh eyes to see elements that made it such a compelling view for audiences and so profitable for brands that advertised or sponsored programmes. Then deploy it to create compelling platforms for messaging positive values.

POSITIVE GROWTH WITH BABS

BABS OLUGBEMI selves, they will find the workplace a place to be, get more enthusiastic about the organisation and become more engaged spirit, body and soul. The effects of having a high rate of disengaged employees are low productivity. The millennials of today are often challenging to keep because they have low tolerance rate for being caged. They want to express themselves, unlike the older generation, who are more security-oriented in their approach to life. The clarion call is for leaders to create teams with go-to employees by allowing them to do more of the activities that play to their strength zones. If your staff can sing, utilise her singing talent as any slightest opportunity like the end of the year party. If he can write, why not allow him to write for your brand. If she can speak, why not enrol her to be one of the trainers in your academy. The generation of today will only give more when their inmate need is met. It is time; we go beyond the rigid workplace to a place where strength-based education and lifestyle are encouraged if it complements the company’s vision and mission. Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, the Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

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14

Thursday 10 October 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

EQUITY

Nigerian stocks down 14.7% year-to-date as investors run for safety ...fixed income market remains bullish OLUWASEGUN OLAKOYENIKAN

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here was no respite to the bearish sentiment bedeviling the performance of stocks listed on the Nigerian Stock Exchange (NSE) as investors continued sell off their holdings on the back of high risks to take advantage of opportunities in the fixed income segment of the Nigerian capital market. Unlike the stock market where a portion of a company is bought with hopes that the firm would grow and deliver returns for investors, debt securities, such as bonds and treasury bills are traded in the fixed income market and offer little or no risks. The government and corporate organisations borrow from investors with guaranty of an interest payment. However, stocks trading on the NSE delivered no return for investors since the start of the year, rather investors who bought parts of the publicly-owned companies when the year began are now counting their losses as investors’ wealth has

so far been slashed by 14.7 percent to N13.1 trillion. This compares with frontier market peers which have gained 3.9 percent from the beginning of this year. The worth of all stocks on the Nigerian bourse, measured by the NSE AllShare Index (ASI), depreciated for six straight trading days after the close of business on Tuesday, while the Nigerian treasury bills and government bonds continued to record positive performance. The losses recorded in the market were triggered by depreciation MTN Nigeria and Dangote Cement, the two most valuable companies on NSE, as well as United bank for Africa (UBA). Although, market participation improved in the stock market as the total volume and value of trades advanced by 22.56 percent and 68.63 percent respectively, that was not enough to improve the market value of 14 stocks that fell at the trading session. However, the strong participation of investors in the treasury bills and bond market translated to a positive performance in

the markets. Buy pressures were witnessed across all Tbills maturities and the long-dated maturities of the Nigerian government bonds. On the average, the total return investors expected to get on Nigerian treasury

bills was 12.94 percent as of Monday. However, due to increased demand for the securities on Tuesday on the back higher volume of money recorded in the market, prices of the assets surged, leaving average return investors can expect at

lower rate of 12.21 percent. A similar trend was observed in the bond market as average return for investors who were willing to hold their assets until maturity date weakened to 14.39 percent. Analysts at Afrinvest

Securities Limited said they expect the negative performance in the market to persist as investors gravitate toward lowerrisk investments as they continue to perceive the relatively high risk in the stock market.

TECHNOLOGY

Airtel partners Mastercard to transform digital payments landscape …to connect 100million African customers through Airtel Money JUMOKE AKIYODE-LAWANSON

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irtel Africa on Tuesday announced a partnership with Mastercard that will enable over 100 million Airtel Africa mobile phone users across 14 African countries, to leverage Mastercard’s infrastructure and proposition for superior digital experience by driving the adoption and usage of Airtel Money. Through this partnership, Airtel Money customers, even those without a bank account, can now make online payments globally with their Airtel

Money Mastercard virtual card. The Mastercard virtual (non-plastic) card allows Airtel Money customers to make payments to local and global online merchants that accept Mastercard cards, while ensuring that the customer’s financial data is always secure and private. In addition, Airtel Money customers will also be able to make in-person payments at outlets via Quick Response (QR) codes (whereby payments are made from an Airtel mobile phone by scanning the QR code displayed at checkout or by entering a merchant identifier, at any location

worldwide that Mastercard QR is accepted). To date, over 1 million merchant locations across Africa that accepts Mastercard QR payments. Airtel Money customers will also benefit from competitive pricing and preferential exchange rates for international payments, and gain access to other domestically relevant use cases including bill payments, merchants payments and value added services such as cash management solutions. Raghunath Mandava, the CEO of Airtel Africa said, “Airtel and Mastercard have a shared passion for

digital transformation and making mobile financial services accessible to everyone across the continent. Through our partnership we will enable over 100 million Airtel Africa customers make safe mobile money purchases online and in person. The partnership will also significantly bolster Airtel’s position as one of the largest offline-toonline digital payment network in Africa. We are really excited to embark on this partnership with a globally trusted brand like Mastercard. This partnership is truly revolutionary in our market, giving millions of people better access to the

digital and online world.” Amnah Ajmal, executive vice president for market development, Mastercard Middle East and Africa, said, “across the MEA region our digital partnerships strategy remains focused on enabling digital transformation for our partners so that their consumers can enjoy seamless access to payments and a superior experience. We are very excited to partner with Airtel to lead the transition to digital by enabling access to their millions of consumers for online and in-person payments across the globe. Mastercard is uniquely positioned as a

single technology provider to enable our digital partners like Airtel to transition seamlessly into digital”. Mobile internet connections are expected to grow rapidly in Africa due to low cost smartphones and high-speed GSM networks being rolled out by Mobile Network Operators (MNO) like Airtel. This growth in internet connections is creating increased demand for digital content, social media, m-commerce even online education and a need to make online payments easily and securely by both banked and unbanked consumers.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: Samuel Iduh


Thursday 10 October 2019

COMPANIES&MARKETS

BUSINESS DAY

15

Business Event

INSURANCE

Allianz Nigeria strengthens position as avant-garde insurer with self-service portal MODESTUS ANAESORONYE

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llianz Nigeria, local operating entity of global insurance giant, Allianz, has announced its provision of a self-service insurance portal that allows users to book short-term marine insurance covers. The Nigeria fast-moving consumer goods industry continues to be imports-intensive because of the need to ship in essential items necessary for local manufacturing. These imports are not only capital intensive but are also associated with significant risks such as theft, damage (either by fire or water) and loss in transit. Frequent importation requires frequent insurance covers which take up administrative time for quotes, rates and insurance certificates either directly from the clients

or insurance brokers. “Here at Allianz Nigeria, we have developed an online application, a ‘Marine Portal’, designed to enable business people service their marine insurance needs by reducing administrative turnaround time in generating quotes, sending emails, issuing insurance certificates, and so on,” explained Taiwo Tella-Ndukwe, B2B sales director at Allianz Nigeria. “Italsocaterstobusinessinterruption by allowing the opportunity to work on weekends and public holidays. Then there is the cost savings element for both parties by obviating the need for use of stationery items such as papers, stamps,andthelike,”Taiwoadded. The marine portal saves executive time by freeing members of staff to attend to less routine tasks, allowing clients and brokers achieve a quicker turnaround time during their business transactions. The margin for human error is also

significantly reduced. The Allianz Group is one of the world’s leading insurers and asset managers with more than 92 million retail and corporate customers. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from Property, Life and Health insurance to Assistance services to Credit insurance and Global Business insurance. Allianz is one of the world’s largest investors, managing around 673 billion euros on behalf of its insurance customers - while their asset managers PIMCOandAllianzGlobalInvestors - manage an additional 1.4 trillioneurosofthird-partyassets. Thanks to a systematic integration of ecological and social criteria in their business processes and investment decisions, the Allianz Group holds the leading position for insurers in the Dow Jones Sustainability Index.

L-R: Jens Bjarnason, president/CEO; Eloisa Gomes, sales director; Raul Andrande, vice president, sales and marketing, and Antonio Socorro, ground operations director, all of Cabo Verde Airlines, at a press conference on the official inauguration of the airline in Lagos. Pic by Pius Okeosisi

POWER

Ikeja Electric assure customers of improved services ...as it celebrates customer service week

OLUSOLA BELLO

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keja Electric Plc, has joined the global community to mark the Customer Service Week, while reassuring customers of improved experience and commitment to providing exceptional service delivery, Anthony Youdeowei in a statement signed by the Managing Director/Chief Executive Office, he said, Ikeja Electric brand is driven by an endless desire and resolve to offer customers an extraordinary experience as the company will stop at nothing to ensure that each interaction across all its touch points culminates in something more for the customer. “As a responsible customer

centric organisation, we are determined to ensure that provision of quality, reliable and improved services to our esteemed customers remain our priority”, he said Youdeowei said the 2019 Customer Service Week theme “The Magic of Service” underscores the company’s acknowledgment of the strategic importance of its customers, which according to him is the reason why Ikeja Electric will continue to creating sustainable initiatives that will foster improved customer services. At the Corporate headquarters in Alausa, the company used the opportunity to acknowledge and appreciate customers around, while cus-

tomers were also provided the opportunity to share useful insights on their experience with the services of Ikeja Electric. The Disco CEO also pointed out that the company has embarked on optimization of its network for improved power supply while employees are also undergoing various training that ensures strict adherence to the company’s values for excellent service delivery. The company recently commissioned its franchise centres at Olowora, Ikosi, Arepo, Bariga, Ketu and Ogudu, as part of its strategy to extend its customer footprint and provide ease of access to services. Continue online @www. businessday.ng

COMPANY RELEASE

Universal Insurance disowns ‘Standard Payment Investment Scheme

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he management of Universal Insurance Plc has disassociated the Company from the “Standard Payment Investment Scheme” currently circulating in some social media platforms and elsewhere, purporting to collaborate with Universal Insurance in its bid to extort money from unsuspecting members of the general public in the name of investment for higher returns. The Company, in a statement yesterday, stated that it does not know anything about Standard Payment Investment nor does it have any dealings whatsoever with the promot-

ers of the Ponzi scheme and advised the general public and its esteemed customers against dealing with unauthorized persons in their relationship with Universal Insurance Plc. “We stand to refute the claim by Standard Payment Investment that it has collaboration with Universal Insurance Plc. We do NOT know who they are talk less of having any dealings with them whatsoever. “Our esteemed customers know us for what we stand for having been in the business of insurance for over five decades and still counting. “We, therefore, wish

to warn the general public against associating the name of Universal Insurance Plc with the anonymous group of scammers.” Ben Ujoatuonu, Managing Director and Chief Executive Officer of the company has said. He further revealed that the Company has taken steps to involve anti-fraud and law enforcement agencies in a bid to nip the fraudulent activity of the group in the bud and to prevent them from further dragging the reputation of Universal Insurance Plc in the mud.

Continue online @www. businessday.ng

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L-R: Ayodele Oyebanjo, CEO, Digilearn Centre; Obinna Nweje, GM, customer acquisition & compliance, MTN Nigeria; Vincent Acha, winner, MTN Agent Big Bang Reward, and Josephine Sarouk , regional GM, operations, Lagos & South West, MTN Nigeria, at the Kit Operators General Meeting (KOGM) 2019 at Digital Bridge Institute, Oshodi, Lagos 

L-R: Wanle Akinboboye, president, LA Campagne Tropicana Beach Resort; Adeyemi Obalanlege, Olota of Ota Kingdom, Ogun State; Andrew Iro Okungbowa, president, Association of Nigerian Journalists and Writers of Tourism (ANJET), and Tope Ogbeni Awe, former president, ANJET, at the annual tourism seminar 2019 “Tourism and Jobs: Better future for all” in Lagos.

L-R: Mario Ottiglio, MD, High Lantern Group; Sherwin Charles ,CEO/co-founder, Good Bye Malaria; Nancy Wildfeir-Field, president, GBC Health; Ochuko Keyamo-Onyige, country manager, corporate Alliance on Malaria in Africa, Nigeria; Omobolanle Victor-Laniyan, head, sustainability, Access Bank; Cassie Dormond, associate director, High Lantern Group, and Suleman Ibrahim, sustainability, Access Bank, at the Corporate Alliance on Malaria in Africa High Level meeting, during the United Nations General Assembly in New York.

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16

Thursday 10 October 2019

BUSINESS DAY

RESEARCH&INSIGHT

In association with

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

briu@businessday.ng

08098710024

Appraising NBS’s report on micro, small & medium enterprises ADEMOLA ASUNLOYE

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icro, small and medium enterprises (MSMEs) in developing and developed countries are the bedrock of the economy anywhere. This is evident in the number of persons they engage as well as the value contribution they make to the Gross Domestic Product (GDP). In Nigeria, MSMEs’ contribution was put at about 49.78 percent to the GDP in 2017. Overall, MSMEs have contributed significantly to the creation of wealth and the improved socio-economic conditions of citizens in Nigeria, especially to individuals directly engaged within the sector. MSMEs play significant roles as engines of socio-economic transformation, including industrialization of many economies in the world over, even as they present a vital platform for boosting technical, technological and entrepreneurial capacities amongst critical segments of the populace. It significance spans across sectors, transitioning from agriculture-based economies to industrial ones, providing opportunities for value chain linkages that generate sustainable livelihoods for the bottom-of-thepyramid citizenry. Report from the national survey on MSMEs 2017 which was conducted by the National Bureau of Statistics (NBS) in collaboration with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) revealed that the sector recorded an increase in its contribution to GDP, employment and overall business performance compared with the previous year. Findings from the exercise are used to track government policies and programs, as well as to aid the design of new programs and interventions within the sector. A total of 1,480 enumeration areas (EAs) were covered across the country, 40 EAs were selected per state and in the FCT. Also, a total of 22,200 households were sampled across the 36 states and the FCT. In each state and FCT, 600 Households with enterprises were interviewed while 15 households with enterprises were systematically selected per EA; cutting across 16 sectors of the economy. Findings from the reports showed that the total number of MSMEs as at December 2017 stood at about 41.54 million with components as follows: 41.47 million micro enterprises (MEs) which accounts for 99.8 per cent of the total sector; 73,081 small and medium enterprises (SMEs) representing 0.2 percent of the sector. Enterprises in the education and manufacturing sector formed a major constituent in the small and medium enterprises while the larger chunk of the micro enterprise is formed by wholesale and retail trade as well as agriculture enterprises. Analysis from the report showed that

Source: NBS

Lagos States had the highest number of enterprises across all classes, whereas only three states: Katsina (36.4 percent); Rivers (21.7 percent) and Kaduna (18.1 percent) recorded significant increases in the number of enterprises in the reviewed period. The five major sectors that contributed to the MSMEs growth were wholesale/retail trade accounting for about 42.3 per cent of the total MSMEs; agriculture, 20.9 per cent; other services, 13.1 per cent; manufacturing, 9.0 percent and accommodation & food services contributed about 5.7 percent of the total sector. Cumulatively, these account for about 91.0 percent of the MSMEs. The survey report further showed that while males were dominant in agriculture comprising about 84.9 per cent of the sectoral players, females showed dominance in accommodation & food services comprising about 86.8 per cents; manufacturing, 68.7 per cent and wholesale/retail trade comprising about 64.5 of females. In addition, most of the entrepreneurs which constitute about 30.2 per cent of total entrepreneurs were within the age brackets of 26 - 35 years) and 40.2 per cent were between the ages of 36 - 50 years. At the same time, male-ownership was dominant at 51.3 per cent of the overall entrepreneurs. Of the overall employment opportunities created in Nigeria during the period, MSMEs accounted for 59.65 million persons including owners as at December 2017. Most of the MSMEs did not utilize professional services; however, it emerged that the

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services of business consultants followed by accountants/auditors had the most patronage. About 24.4 per cent and 65.1 per cent of MEs and SMEs had used a business plan and comparative values for business insurance penetration while on-line business set-up dropped sharply to 3.3 per cent and 1.8 per cent, respectively. Analysing the limited financial capacity of operators within the sub-sector, about 85 per cent of businesses had an initial start-up capital that is less than N100,000 which was complicated by their limited access to formal credit. Only 5.3 per cent of businesses (21.6 per cent for SMEs) had access to bank credit even with 40 per cent of operators having personal banking relationships. The predominant source of raw materials and machinery amongst over 87.5 percent of the MSMEs was local source. This is indicative of the innate capacity for local content utilization. Unlike most operators who have little or no need for power supply (most likely because of the large numbers of operators in wholesale/retail trade), 25 percent of the real sector (75 percent for SMEs) depended daily on alternative sources for more than 10 hours. This is a recurring factor for high operating costs, with implications for competitiveness. On the other hand, marketing of MSMEs products was dominated by local channels (as contrasted with export). Also, consistent with the economic downturn observed in 2017, most MSMEs reported average monthly sales/ turnover of more than N100,

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000. Nevertheless, exports contribution by the sub-sector, improved marginally to 7.64 percent (from 7.27 percent in 2013) with contribution to GDP posted at 49.78 percent. The survey report also discovered that of the total MSMEs, 4.47 million MSMEs (11 per cent offered salaried employment (and/or are formally registered). The latter represented the so called “opportunity” enterprises, which alone can serve the national aspiration of jobs(wealth) creation at a time when unemployment, has arguably become a major cause of youth restiveness and escalation in violent crimes nationwide. The distribution of small and medium enterprises (SMEs) in 2017 by ownership structure showed that sole proprietorship, at 65.7 percent dominated the sector. This is followed by limited liability companies, 20.8 percent; faith-based institutions, 5.7 percent; partnerships, 5.0 percent, and Cooperatives contributed only 0.9 percent of the data-set on ownership structure. There is need for the government to accelerate and drive growth in the sector as it is responsible for most of the advances in new products and processes, creation of most of the employment opportunities, absorption of productive resources at all levels of the economy as well as support to the formation of flexible economic systems in which small and large firms are inter-linked. Such linkages are very crucial for the attraction of foreign investment which further unveils them as the distinctive mainstay of the economy that requires befitting attention.

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Thursday 10 October 2019

BUSINESS DAY

Investor

17

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

N11.721 trillion

Week open ((27– 09–19)

31,924.51 27,675.04

N13.472 trillion

2,302.03

Week close (4– 10–19)

26,987.45

N13.137 trillion

2,252.51

Year Open

Percentage change (WoW) Percentage change (YTD)

-2.48 -14.14

2,241.37

-2.15 2.62

The NSE-Main Board

1,456.29 1,118.08 1,086.04

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

774.30

1,136.12 1,104.34

338.69

113.89

560.36

238.51

1,767.14

1,073.49

989.81

325.36

120.39

532.77

233.15

1,712.24

1,075.01

966.86

-3.94

5.71

-4.92

-2.25

-3.11

0.14

-2.32

-22.86

-23.35

-13.16

-19.93

774.30

-2.87

0.00 -2.46

-24.57

-2.80 -22.07

-18.44

-4.81

-28.85

Money Market Funds net assets value surpasses N600bn …now 75% of Mutual Funds net assets Iheanyi Nwachukwu

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he Net Asset Value (NAV) of Mutual Funds grew to about N817.2billion as at September 20, according to the Securities and Exchange Commission (SEC) data on fund manag ement and colle ctive investment schemes as at that date. Mutual funds record asset growth is fueled by the 21 Money Market Funds cumulatively valued at N611.4billion, which represents 75percent of the total value of the Mutual Funds. A Mutual Fund is an investment vehicle made up of a pool of funds collected from numerous investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual Funds are operated by professional fund managers, who invest the fund’s capital and attempt to produce capital gains and income for the investors. These investors may be retail or institutional in nature. In addition to the Money Market Funds, other Mutual Funds under the regulation of the Securities and Exchange Commission (SEC) are: Equity-based funds, bond funds, fixed income funds, real estate funds, mixed funds, and ethical funds. As at September 20, Equity Based Funds’ net asset value stood

L-R: Juldeh Ceesay, deputy permanent secretary, Ministry of Finance and Economic Affairs The Gambia; Tony Iloka, principal manager, International Relations Division, Securities and Exchange Commission; Mariama Conateh-Gaye, senior bank examiner, Central Bank of The Gambia and Sulayman Cham, principal financial analyst, Ministry of Finance and Economic AffairsThe Gambia, during a Meeting between SEC and Ministry of Finance and Economic Affairs The Gambia, in Abuja, recently.

at N10.55billion or 1.29percent of the total value of mutual funds. Other mutual funds asset value are: Bond Funds (N24.68billion or 3.02percent); Fixed Income Funds (N97.05billion or 11.88percent); Real Estate Funds (N45.62billion or 5.58percent); Mixed Funds (N23.51billion or 2.88percent); and Ethical Funds (N4.47billion or 0.55percent). In a bid to promote access to

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diverse investment opportunities, the Nigerian Stock Exchange (NSE) in collaboration with the Fund Managers Association of Nigeria (FMAN) recently hosted Mutual Funds workshop. Jude Chiemeka, Divisional Head, Trading Business, NSE said the Nigerian Stock Exchange will over the next few months be rolling out measures and initiatives as well as leading further engagements

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aimed at providing an avenue for market stakeholders to engage on the prospects of Mutual Funds in Nigeria, promoting the usage of the Exchange’s Mutual Funds Platform and ultimately stimulating investor interest in Mutual Funds.” The Niger ian market has witnessed exponential growth in the popularity of Mutual Funds over the past few years, making it the fastest growing asset class. The

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forum was aimed at deepening knowledge and understanding of the growing asset class but also drive increased demand. As at September 20, Stanbic IBTC Money Market Fund with a unit price of N100 has Net Assets valued at N283.674billion, which is 46.40percent of the total value of money market funds. In the same period, FBN Money Market Fund with a unit price of N100 increased to N157.86billion, representing 25.82percent of the net asset value of the money market funds. In calculating a Collective Investment schemes Net Asset Value (NAV), the value of the total assets of the fund is subtracted by its liabilities, this amount is then divided by the total number of shares in the fund to give the unit price. United Capital Money Market Fund at N1 per unit has its net asset valued at N7.99billion or 1.31percent of the net asset value of money market funds. AIICO Money Market Fund priced at N100 per unit has its net assets valued at N1.076billion or 0.18percent of the entire money market funds assets. ARM Money Market Fund is priced at N1 per unit. Its net asset value is N68.602billion, representing 11.22percent of the total. Meristem Money Market Fund is priced at N10 per unit. Its assets are valued at N1.107billion, representing Continues on Page 19


18

Thursday 10 October 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

United Capital Research Investment Views

Investor’s Square

NSE ASI breaches the 27,000 points support level

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators? Let us know and investor will help you investigate and report back. E-mail: iheanyi.nwachukwu@businessdayonline.com

I

n the previous week, the equity market exper ienced losses on all trading days, w i t h t h e Ni g e r i a n Stock Exchange (NSE) All Share Index (ASI) declining significantly by -2.5percent week-on-week (w/w). As a result, year-to-date (YtD) loss increased further to -14.1percent, with the broad market index closing at 26,987.5 points. In terms of market value, market capitalisation shed about N334.7billion w/w, settling at N13.1trillion. Activity levels for the week trended southwards, as average value and volumes traded declined by -44.8percent and -22percent, to N2.3billion and 169.6million respectively. Looking at the performance of the major sectors we track, two out of five edged upward, with the remaining three receding. The Insurance (+5.7percent) led the winners, as sector heavyweights, CONTINSURE (+51.3percent) and CONERSTONE (+33.3percent) recorded

massive gains. The Industrial goods (+0.1percent) sector also gained, spurred by WAPCO (+11.2percent). On the flip side, the Consumer Goods (-4.9percent), Banking (-3.9percent) and Oil & Gas (-2.2percent) sectors fell, as GUINNESS (-11.1percent), CHAMPION (-11.5percent), ZENITH (-5.5percent), FBNH (-1.9percent), OANDO (-2.6percent) and MOBIL (-11.4percent) recorded losses. Investor sentiment remained underwhelming, evident by the market breadth of 0.5x (previously 0.6x), as 23 stocks gained while 50 stocks ended in the red territory. This week, we expect the equities market to remain tepid, as market participants factor in the activities in the global economy, as well as the fiscal environment atmosphere in Nigeria before locking in gains on stocks with strong fundamentals. We also expect third-quarter (Q3) earnings to trickle in. Money Market: System

liquidity remains buoyant System liquidity remained at a comfortable level in the pr ior w eek, largely owing to the sizable OMO maturities of c. N669.4billion which outweighed the overall outflows for the period. The major outflow came from CBN’s penalty CRR debit of N499.2billion from 12 banks for failing to comply with the 60percent minimum Loan-to-Deposit (LDR) ratio as at September 30, 2019. Additionally, the CBN mopped up another N120billion via OMO sales on Thursday. Meanwhile, the CBN successfully rolled-over total maturing treasury bills of N134billion. In all, average interbank funding rates (OBB & O/N rates) trended lower, down from 8.9percent to close the week at 3.1percent. At the primary market segment, while the CBN was able to rollover all maturing FGN treasury bills, it was only able to mop-up 17.9percent of the N669.4billion OMO maturity that came in on Thursday. Also, while the CBN was

able inch stop rates at the NTB auction lower across the board (91-day: 11.08percent previously 11.10percent; 182day: 11.60percent previously 11.75percent; and 364-day: 13.20percent previously 13.30percent) it was only able to drop OMO stop rate for the 364-day bills by 8bps to 13.40percent. In line with recent trend, demand at the auction was tilted towards the high yielding 364-day bills (Bid to cover: OMO-3.7x; NTB-2.9x) while demands for the other tenors remained underwhelming. Elsewhere, at the secondary treasury bills market, the buoyant level of liquidity in the system despite activities at the primary money market segment gave market bulls an upper hand against the bears. This was as average yield was down 4basis points (bps) w/w to 13.3percent. This week, we expect the CBN to maintain its liquidity tightening stance as N347.2billion worth of OMO www.businessday.ng

is scheduled to mature today Thursday. We expect the level of liquidity to continue to determine the level secondary market performance. Bond Market: FGN Bond returns to its tepid state Activities at the secondary bond market were largely muted for the major part of the week due to the expectations of an OMO auction. Though we saw pockets of buying interest on the long end of the yield curve, selling interest dominated as average yield rose marginally by 2bps w/w to 14.2percent. In the Eurobond space, we saw an increased selling interest for FGN dollar notes as oil prices continued to trade below Nigeria’s 2019 budget benchmark of $60/barrels. As such, yields tracked higher across the curve, up 20bps w/w on average to 6.6percent. H o w e v e r, w e o b s e r v e d a balanced sentiment in the corporate Eurobond space amid a mixed bag of buying and selling interest. Consequently, average yield in the corporate segment dipped marginally by 2bps w/w to 5.4percent. Looking ahead, we expect activities in the secondary bond market to remain tepid as investors look forward to further primary money market activities. Meanwhile, as events in the global space continue to unfold, the continued dovish chorus by developed market central banks should support buying interests in FGN dollar notes while crude oil price volatilities will cap overall interest at the segment. Currency Market: FX rate depreciates across two windows Across the three major FX windows, the Naira gave in to selling pressures, depreciating at two channels. At the I & E FX window, the Naira depreciated by 21bps to close at N362.8/$1. A similar trend occurred in the CBN Official window, with the Naira down by 2bps to N307/$1. However, the FX rate at the parallel market appreciated by 14bps, closing at N358.5/$1. During the week, activity l e ve l s w e re w e a k a s at Thursday, as average daily turnover at the I & E window decreased by 26.3percent to $115.6million. Also, the gross reserves continued its weekly decline, down by 60 bps w/w to $41.7billion. Overall, the weekly FX intervention by the CBN is likely to shore up the domestic currency in the short term. However, with the continuous declines in gross reserves, coupled with crude oil price dangling below $60/barrel, the near-term performance of the Naira remains questionable.

Economy & markets

Savings Bond offer for October closes tomorrow Iheanyi Nwachukwu

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h e Fe d e ra l Government of Nigeria Savings Bond offer for the month of October 2019 is ongoing. Savings Bonds, issued by Debt Management Office (DMO) on behalf of the Federal Government are investment vehicles offered by the Sovereign that serve to meet the investment needs of low-high income citizens in the economy. It enhances savings culture while also acting as an efficient

debt management tool for the Nigerian Treasury. The subscription for the Savings Bond, which guarantees quarterly coupon payments, re-opened on Monday October 7 2019. It remains open for five days till Friday October 11, 2019. The 2-Year FGN Savings Bond due October 16, 2021 is offered at a coupon of 11.244percent while 3-Year FGN Savings Bond due October 16, 2022 is offered at a coupon of 12.244percent. For the Saving Bond, Central Bank of Nigeria (CBN) is the Registrar and

Settlement Agent while the Custody, Clearing and Settlement roles are under the Central Securities Clearing System Plc (CSCS). Interest income is paid quarterly and directly into bond holder’s account. The Savings Bond is acceptable as collateral for loans by banks and can be sold for cash in the secondary market before maturity. It is good for savings towards retirement, marriage, school fees, house projects, etc. Its safety is backed by the full faith and credit of the Federal Government of Nigeria

Why Saudi Aramco’s IPO is no ordinary share sale Matthew Martin

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t makes more profit than any other company in the world, but is it the most valuable? The answer could come as soon as November, when Saudi Aramco is finally set to go ahead with a mammoth initial public offering. The delayed share sale is part of a grand vision to reshape Saudi Arabia’s economy by the kingdom’s controversial Crown Prince Mohammed bin Salman. It’s no ordinary IPO, and not just because of its size. What’s different? Saudi Arabia is leaning on its allies and subjects to help out. Wealthy families in the kingdom, some of which had members detained and accused of corruption by the government two years ago, have been encouraged to invest. Saudi Arabia is also trying to convince sovereign wealth funds to join the fray. How much is Aramco worth? That’s the big question. Prince Mohammed caused something of a shock in 2016 when he first announced the plan and estimated the oil giant’s valuation at $2 trillion. That’s almost twice the size of Microsoft Corp., the world’s most valuable listed company. Some equity analysts put the number closer to $1.5 trillion. ( Bl o o mb e rg Int e l l ig e n c e estimates $1.1 trillion.) A clearer picture should emerge when analysts publish reports on the IPO this month. Will it be a world record IPO? That depends on the valuation. The original plan was to sell 5percent of the

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company on international and domestic markets. That would have valued the IPO at something between $50 billion and $100 billion -far outstripping the world record $25 billion raised by Alibaba Group Holding Ltd in New York in 2014. But the proposal has been scaled back, with plans now to sell around 2percent only on the domestic exchange in Riyadh followed by another chunk later, according to people familiar with the matter. A 2percent stake sale would, however, represent a world record IPO at the crown prince’s $2 trillion valuation. Why no overseas sale? An international share sale is still in the offing, possibly as soon as next year. It’s proved fraught with complications. For instance, New York’s appeal was limited by a U.S. law allowing victims of terrorism to sue foreign governments linked to attacks, which may have opened the possibility of litigation targeting Aramco. Overseas listings also open the company to intense and unprecedented scrutiny. Aramco has taken steps in lifting the veil on its operations by releasing financial results. Why now? The timing has raised eyebrows. Oil prices have fallen 30percent in the past year and the outlook for global growth suggests they may drop further. An aerial attack on Aramco’s largest processing plant in midSeptember briefly wiped out half the company’s production capacity, highlighting its vulnerability as well as the region’s heightened geopolitical tensions. Saudi @Businessdayng

Arabia may be taking the view that it’s better to press ahead in case oil prices continue to slide. How attractive is the IPO? A ra m c o ma ke s m o re money than any other company, but investors may balk if the valuation is set too high, particularly given the political risk. To lure investors, the authorities are reshaping the oil producers’ finances (most of its revenue goes in taxes and royalties to the government) as well as promising bumper dividends. For instance, the royalty it pays for Brent crude prices below $70 a barrel is falling to 15percent from 20percent. The “base dividend” in 2020 will be $75 billion -- much bigger in magnitude than other oil giants pay but a good deal smaller in terms of yield. Will overseas investors buy? The deal has been extensively marketed to international investors, according to people familiar with the plans, approaches have been made to potential key investors including M a l a y s i a ’s P e t r o l i a m Nasional Bhd. and China’s Sinopec Group and China National Petroleum Corp. Aramco is also expected to use offering rules that enable it to market the shares directly to some international investors, according to the people. Following the IPO, foreign fund managers tracking the MSCI Emerging Markets Index are set to buy. They’re already large consumers of Saudi stocks, and Aramco stands to become the largest Saudi stock.


Thursday 10 October 2019

BUSINESS DAY

19

Investor Helping you to build wealth & make wise decisions

Market Review

Investors in Fidson, ETI, UACN, Africa Prudential, Beta Glass, others seen beaten …following last week’s N330bn loss Iheanyi Nwachukwu

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quity investors in Fidson Healthcare Plc, Ecobank Transnational Incorporated Plc, UAC of Nigeria Plc, Africa Prudential Plc, and Beta Glass Plc were severely beaten last week. These listed stocks and 34 others were responsible for the N330billion loss booked last week at the Nigerian Bourse. Other stocks on the list are MRS Oil Nigeria Plc, John Holt Plc, Conoil Plc, 11 Plc, and Livestock Feeds Plc. The record negative in the trading week ended October 4 came despite earlier expectation that equity investors would consider bargains in some fundamentally sound stocks especially those trading at their record lows. The value of listed stocks and the NSE All Share Index (ASI) stood remarkably low at N13.137trillion and 26,987.45 points respectively as against N13.472 trillion and 27,675.04 points recorded at the preceding week close. The NSE ASI decreased by 2.48percent. Despite research analysts’ expectation that discerning investors will begin positioning in fundamentally sound stocks, the impact is yet to be fully felt as the market still took off this week in the red. Fidson Healthcare Plc opened the week at N4.50kobo per share but decreased to N3.65kobo per share, making investors to lose 85kobo or 18.89percent in on week. Also, investors in the shares of Ecobank Transnational Incorporated lost N1.30 or 14.61percent after it moved down from N8.90 to N7.60. UACN Plc decreased from N7.65 to N6.55, which made investors lose N1.10 or 14.38percent. The record loss in the domestic market came on the heels of the

heavyweights that experienced sell pressure in the four-day trading week. The share price of Africa Prudential Plc decreased from N3.91 to N3.52, after losing 39kobo or 9.97percent. Beta Glass Plc decreased from week-open level of N59.75 to N53.80 at the closing of trading in the review week, making the equity holders to lose N5.95 or 9.96percent. MRS Oil Nigeria Plc decreased from N18.80 to N16.95, after shedding N1.85 or 9.84percent. Also, John Holt Plc recorded decline from 61kobo to 55kobo, losing 6kobo or 9.84percent. Conoil Plc joined the top losers’ league after its share price decreased N16.80 to N15.25, declining by N1.55 or 9.23percent. While 11 Plc dipped from N153.50 to N140, after losing N13.50 or 8.79percent, Livestock Feeds Plc share price also decreased from 47kobo to 43kobo, losing 4kobo or 8.51percent. In the review trading week, only 15 equities appreciated in price, lower than 22 equities in the preceding week. Thirty-nine equities depreciated in price, lower than 42 equities in the preceding week, while 112 equities remained unchanged, higher than 102 equities recorded in the preceding week. “We expect the equities market to remain tepid as market participants factor in the activities in the global economy, as well as the fiscal environment atmosphere in Nigeria before locking in gains on stocks with strong fundamentals. We also expect third-quarter (Q3) earnings to begin to trickle in”, United Capital Research analysts said. Investors in Continental Reinsurance Plc shares had reasons to smile last week as their equities

price moved up from N1.89 to N2.27, adding 38kobo or 20.11percent. Law Union And Rock Insurance Plc increased from 39kobo to 44kobo, after adding 5kobo or 12.82percent. Niger Insurance Plc moved from 20kobo to 22kobo, adding 2kobo or 10percent. CAP Plc witnessed an increase in its share price from N23.25 to N25.55, after adding N2.30 or 9.89percent. Caverton Offshore Support Group Plc rose from N2.40kobo per share to N2.60, adding 20kobo or 8.33kobo. Flour Mills Nigeria Plc gained N1 or 7.14percent, from N14 to N15. Wapic Insurance Plc went up from 34kobo per share to 36kobo per share, adding 2kobo or 5.88percent. Nigerian Aviation Handling Company Plc gained 13kobo or 5.56percent, from N2.34 to N2.47. AIICO Insurance Plc

advanced from 65kobo to 68kobo, adding 3kobo or 4.62percent ; while Jaiz Bank Plc gained 2kobo or 4.55percent, from 44kobo to 46kobo. Afrinvest Researcher who noted that their weekly sentiment indicator weakened to 2.6 points last week from 3 points recorded in the preceding week, expect the bearish sentiment in the market to continue “as there are no major catalysts to boost investor confidence,”. Although, they see opportunities for bargain hunting. The stock market recorded a total turnover of 660.654 million shares worth N9.189 billion in 12,032 deals in contrast to a total of 1.097 billion shares valued at N16.693 billion that exchanged hands the preceding trading week in 14,717 deals. The Financial Services industry

(measured by volume) led the activity chart with 458.190 million shares valued at N5.905 billion traded in 6,720 deals; thus contributing 69.35percent and 64.27percent to the total equity turnover volume and value respectively. The Conglomerates industry followed with 55.804 million shares worth N124.513 million in 545 deals; and Construction/Real Estate Industry with a turnover of 54.330 million shares worth N62.585 million in 135 deals. Trading in the Top Three Equities namely, Guaranty Trust Bank Plc, Access Bank Plc and FBN Holdings Plc. (measured by volume) accounted for 280.714 million shares worth N4.909 billion in 2,985 deals, contributing 42.49percent and 53.43percent to the total equity turnover volume and value respectively.

representing 1.59percent of net asset value of money market funds); EDC Money Market Fund Class A (N100 per unit; N9.67billion, representing 1.58percent of the net asset value of money market funds). E D C Mo n e y Ma rk e t Fu n d Class B which is priced at N1,000,000 per unit is valued at N679.080million, representing 0.11percent. Coronation Money Market Fund priced at N1 per unit; NAV of N6.361billion represents

1.04percent of the value of the e nt i re m o n e y ma rke t f u n d s. Zenith Money Market Fund is N1 per unit; with N8.63billion NAV, it represents 1.41percent of the entire value of the Money Market Funds. Afrinvest Plutus Fund (N100 per unit; N562.949million, representing 2.28percent). Legacy Money Market Fund is N1 per unit; its NAV of N8.392billion represents 1.37percent of the entire Money Market Funds.

GDL Money Market Fund is N10 per unit; its N821.431million NAV accounts for 3.33percent of the assets value of entire Money Market Funds. Vetiva Money Market Fund is N1 per unit. Its net asset value is N232.093million or 0.94percent of entire Money Market Funds; while FSDH Treasury Bill Fund priced at N100 per unit has its assets valued at N1.719billion representing 6.97percent of entire Money Market Funds.

Money Market Funds net assets ... Continued from Page 17 0.18percent. AXA Mansard Money Market Fund which is valued at N30.014billion or 4.91percent of the total is priced at N1. Greenwich Plus Money Market Fund is valued at N100 per unit. Its NAV is N3.815billion or 0.62percent of the total NAV of the money market funds. At N100 per unit, the net asset value of Cordros Money Market Fund is N7.87billion or

1.29percent of the total value of the Money Market fund. Others are PAC AM Money Market Fund (N10per unit, NAV of N669.597million, representing 0.11percent of total Money Market Funds assets); Chapel Hill Denham Money Market Fund is valued at N100 per unit. Its net asset is valued at N1.858billion, which represents 0.30percent of the total. Abacus Money Market Fund (N100 per unit ; N9.71billion, www.businessday.ng

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BUSINESS DAY

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BUSINESS DAY

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Thursday 10 October 2019

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

COMPANy

BUA Group sets up factory of the future BALA AUGIE

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ver a thousand jobs will b e c re a t e d w h e n B UA factory commences operation later this month, as the giant facility is expected to meet the needs of millions of consumers. The plant, with a capacity of over 1.2 million metric tonnes per annum, located in Port Harcourt Rivers state, is worth about $400 million, making it one of Nigeria’s biggest refineries. Analysts say the investment is copious, as the country is reeling from a recession. The BUA port and terminal project started operation in 2013, and its nearness to the Port and railways is expected to ease exports, and distribution of products to other parts of the country. That means the BUA Group will be a beneficiary of the newly signed Africa free trade agreement, which is expected to ease the movement of goods across the continent, and, propel the economy of Africa. Because the plant is located at the Port Harcourt

ports and terminal, it would be easy for raw materials to be transported from the ship into silos. This would help the company save cost and strengthen margins. The factory boost of a pasta plant with a production capacity of 500,000 metric tonnes per annum, in addition to a sugar plant of 720,000 metric tonnes per annum; the storage capacity of Wheat is said to be 320,000 tons while the

storage capacity of sugar is said to be 60,000 metrics per annum. Prices of high-quality brands and products are expected to reduce on the back of overhead cost curtailment. A 24-megawatt power generated through a gas turbine will run the factory. “We have the advantage of proximity to the ports the terminal is right behind the sugar drum so when the ship berths there the raw

material will be conveyed via conveyance belt into the factory that also reduces the cost of transporting the raw material from the ports to our factory,” said Muhammed Lile Ibrahim, General Manager BUA Ports and Terminal Limited. “We assure Nigerians that when the start our pasta, flour, and semolina will be one of the cheapest in Nigeria,” said Lile. BUA Group knows it operates in a tough and unpre-

dictable macroeconomic environment where fastmoving consumer goods firms are groaning under huge costs that make it difficult for them to deliver a higher return to shareholders. The cumulative cost of goods of 10 largest consumer goods firms that have released halt year results stood at N647.43 billion, which is 77.15 percent of the total revenue of N839.91 billion, leaving them with a slim margin. In the entire industry, the flour millers incur more costs, as they are more engaged in capital intensive activity that involves the construction and maintenance of plants. For instance, Flour Mills Nigeria Plc, the largest miller in Africa’s largest economy, has a cost of sales ratio of 85 percent. This means for every N1 the company generates in sales, it spends N0.85 on input cost. Input cost includes raw materials and overhead costs directly attributable to production. Dangote Flour Mills has a cost of sales ratio of 99 percent as of June 2019, which is why it recorded a loss, as input costs nearly

swallowed revenue. Honeywell Flour Mills, another miller, spends 82 precent on input cost to generate each of products, but it posted a profit that was below analysts’ expectations. While BUA factory is expected to create jobs across the value, Nigeria manufacturing activities have been slow. This is evidenced in the latest GDP report by the statistics body. The manufacturing sector contracted by 0.13 percent from the 0.81 percent expansion in the first quarter of (Q1-2019). The contraction contradicts evidence from manufacturing PMI data published by the CBN in the period which suggested that activities continued to expand, albeit at a weaker pace. The latest report by the NBS showed the economy grew at a slower pace of 1.94 percent in the second of (Q2-2019) from the revised first quarter (Q1-2019) of 2.10 percent. Federal Government record budget of N10.73 trillion and the implementation of the minimum wage are expected to spur consumer spending, a boon for BUA Group.

COMPANy

Packed food and beverage companies tap bond market to clean environment BALA AUGIE

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he roughly 170 million people who dwell in Africa’s largest economy are generating more waste than their scraping infrastructure; clearing garbage is a herculean task for a country that is home to the poorest people across the globe. With a population of 21 million people, Lagos State is more beleaguered by plastic bags (waste) among the 36 federating units. The sprawling mega city, one of the fast growing economies, disgorges 10,000 metric tonnes of waste a day. Overburdened municipal governments are reckoned to collect barely 40 percent of this rubbish. Only 13 percent of recyclable materials

are salvaged from the city’s landfills, according to Wecyclers, a young company keen to promote recycling and reduce waste. A pile of refuse plastic bags greets the eye as one drives or walks the roads especially in central areas and out sketch; some are heaped like the pyramid of Egypt, a sty for pigs, and a safe haven for rodents. Because there are no waste bins at the sides of the streets, people drop plastic cans on the floor, which rolls into the gutters, hence, blocking the carnages and drainage; which is why the city is susceptible to floods that destroys life and properties. Plastic bags have become a national issue as the Nigeria continues to grapples with decadence, but there are no consensus efforts by Federal www.businessday.ng

Government to stem the tide. Indeed Lagos is drowning in rubbish, as it has become a dump site for electronic waste (E-waste). An estimated 500 containers, each carrying about 500,000 used computers and other elec-

tronic equipment, enter the country’s ports every month from the United States, Europe and Asia. The country needs as much as to clean its environment, but the amount is gradually becoming inac-

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cessible for a country whose revenue has been shrinking in progression with a slide in crude oil price. However, there is light the end of the tunnel for Nigeria as beverage and soda drink makers are raising green bond with a view to combating climate change. According to Daniel Shurey, head of green finance at BloombergNEF,sustainable debt tools like green bonds are a potential way for beverage companies to fund transition activities toward a more environmentally and socially sustainable future, said, According to a recent article by the Economic Times, PepsiCo Inc. is offering senior unsecured green securities, and the 30 year yield 95 basis point above the Treasury, after initially @Businessdayng

discussing around 110, according to people familiar with the issue. Pepsi plans to invest the proceeds in sustainable development goals as defined by the United Nations, including eco-friendly plastics and packaging and cleaner transportation. The packaged food and beverage company already has about $34 billion of debt outstanding, but this will be its first green bond. Pepsi’s rival Coca-Cola Co., issued a sustainabilitylinked loan in June 2015, and both companies have pledged to use more recycled plastic in their bottles over the next decade. Over $120 billion worth of green bonds were issued in the first half of 2019, up from $85 billion in the last six months of 2018 according to BloombergNEF.


Thursday 10 October 2019

BUSINESS DAY

Retail &

23

consumer business

CONSUMER SPENDING

Coca-Cola’s desperate moves to regain market dominance could hurt margins BUNMI BAILEY

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he Nigerian Bottling Company has introduced a new Coca-Cola 50cl bottle (soft drink) so as to regain its market dominance, but the company may bear more cost and comprise quality, a double whammy for a company struggling with deteriorating margins. Earlier in September 2019, Coca-Cola increased the volume of its 35cl pet drink to 50cl for the same price of N100. Unlike like before, the 35cl goes for a price of N100, while the 60cl goes for N150. “What they are doing may affect their margins, because if they were offering 35cl for N100 and now increased the volume to 50cl for the same price that is about 42.9 percent increase,” said Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers said. They will be incurring more cost of production by offering increased volumes,” said Akinloye. According to Kola Oni, a

sales representative of CocaCola at Shoprite Ikeja, the 35cl and the 60cl bottles will be phased out of the market. Coca Cola has been struggling with intense competition with new entrant like B igi Cola, a product of Rite Foods Limited, marketers of Bigi and Rite Sausage Rolls. Bigi Cola has been leveraging on price and size to cannibalize a market once dominated by giant soft markers, as Nigerians, whose wallets are squeezed, are price sensitive. In 2016, when the wholesale price of a carton of PET bottle (50cl) of Bigi-Cola went for N950, Coca Cola was sold for N1150. Abiola Gbemisola, research analyst at Lagosbased Chapel Hill Denham said that the company is increasing the size to provide extra consumption (litres) to consumers and also attempting to regain lost market share since Bigi Cola, a major competitive carbonated drink produced by Rite foods limited entered the market. “Unlike some consumer goods firms, they are increasing the size and maintaining price but I feel this may indicate lower quality of

their drinks. Assuming input cost remains the same, this will mean using either lesser inputs or lowering the quality of inputs used or adulterating the content that will be sold,” Gbemisola said. Earlier in the year, CocaCola HBC, the parent company of the Coca-Cola Company in Nigeria disclosed in its 2018 full-year financial result that its Group volume increased by 4.2 percent in emerging markets. The volume also in-

creased by 4.3 percent with growth in all countries except Nigeria. In the report, the company said that the volumes in Nigeria declined for the year as a result of competitive pressures. “It (the company) recorded lower volume in Nigeria due to intense competition in the sparkling segment which comprises the trademark Coca-Cola and the Coca-Cola Zero variants, Water, while juice and Energy delivered positive results,”

the company added. A research conducted by BusinessDay showed that consumers’ preference for alternative drinks to Coca Cola such as the Bigi cola and Pepsi has slowed the demand for Coca-Cola products. What this means is that demand for cola drinks from Coca-Cola bottling company has fallen unlike when the 35cl bottle of Coca Cola was N100 and Bigi cola and Pepsi were both 60cl for N100.

John Ebo, a beverage retailer told BusinessDay that this period was not a good one for Coca-Cola as Bigi Cola, using the cost advantage strategy had entered the market and is without a doubt becoming a strong competitor against CocaCola. “A 60cl bottle of Bigi Cola is sold at N100 as against Coca-Cola’s, which has its centilitre as 50cl but sells at N100, thereby, making more beverage consumers embrace Bigi Cola which has almost the same taste like coke,” he said. A distributor of CocaCola products who spoke on condition of anonymity told BusinessDay that the growing sales of Bigi Cola has been a factor which has led to the fall in demand and sales of Coca-Cola, even after coming up with a small size pet bottle of 35cl sold at N100 which still could not beat the selling rate of Bigi Cola. “Before now, Nigerians had found an alternative in Pepsi, since Coca-Cola hiked the price of its product but Rite Foods introduced its beverage in a bigger size and quality taste,” Philip, a beverage patron said

consumer spending

Samsung’s Q3 profit tanks 56percent on declining memory chip demand OLUFIKAYO OWOEYE

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orld largest smartphone maker by market size, Samsung, said its third quarter operating profit would tumble 56percent to 7.7 trillion won ($6.44 billion) as slump in memory card business continues to weigh down on earnings. While, revenue fell 5.3percent to 62 trillion won in the third quarter from 65.5 trillion won a year ago. Samsung has struggled since late last year as a weak global economy and slower spending from data centre

tion by the U.S. banning them from selling phones with google maps. Huawei new Mate 30 smartphones are being shipped to Europe this month, but the sanctions mean the product lacks access to a licensed version of U.S. Google’s Android operating system, as well as mobile services that include its Play Store and popular apps like Gmail, Youtube or Maps. According to Analyst, Samsung would likely enjoy its popularity in Europe’s smartphone market as long as the Huawei ban lasts and could even lure back European customers who once left for Huawei.

customers ended a two-year boom in the memory chip market where Samsung rakes in around two thirds of its entire profit. However, improved sales in its phone Galaxy 10 series and Foldable phones help limit the impact of declining sales in memory chip segment. Samsung said it has sold more than 1 million of the 5G handsets in South Korea, making it the company’s fastest selling flagship model at home. Impact of U.S/China trade spat Ina d v e r t e nt l y , r i va l p hone ma ker, Huaw e i has lend a hand as sales dropped following imposi-

Team Lead: Bala Augie, Olufikayo Owoeye; Analyst: Bunmi Bailey; Graphics: Fifen Eyemisanre Famous www.businessday.ng

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Thursday 10 October 2019

BUSINESS DAY

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Thursday 10 October 2019

BUSINESS DAY

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Thursday 10 October 2019

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Simi Nwogugu, Elated, as JAN Celebrates 20 Years of Building Bridges Between the Classroom and the Workplace ONUWA LUCKY JOSEPH

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imi Nwogugu is all about seizing the day. Not for her the usual empty platitude about youths being the leaders (of a tomorrow that never comes). If they can lead today, why not? And if they are not conversant with the nuts and bolts of the process, how about equipping them with the skill? That’s what she’s been doing with Junior Achievement Nigeria (JAN), a member of Junior Achievement Worldwide (JAWW). After pioneering and piloting JAN for three years, she went to the Harvard Business School to pursue an MBA, whereupon she pursued other entrepreneurial interests before birthing right back at JAN in January 2016. It’s been a burst of activities and achievements as you would read in this delightful interview with a woman who is doing her bit to ensure that young Nigerians, rather than ending up disillusioned about the state of things, actually find fulfillment in the country of their birth by actioning those dreams that would otherwise lie dormant and be fodder for ‘what-mighthave-been’ stories later in life. Congratulations on your 20th anniversary. Could you give us a summary of things achieved by JAN in 20 years Junior Achievement Nigeria (JAN) is part of Junior Achievement Worldwide (JAWW), the world’s largest and fastest-growing nonprofit economic education organization with a 120-country network. Since inception in 1999, JAN has reached over 970,000 students in over 20,000 classrooms in all the 36 states across the country and the FCT through over 4,000 volunteers putting the organization on track to reach one million students by the end of 2019. JAN has implemented several transformative programmes in the last 20 years targeted at empowering young people for a successful future under the pillars of financial literacy, work readiness and entrepreneurship. Our success with building partnerships over the years with public, private and non-profit

Simi Nwogugu

sector leaders have contributed to our becoming the largest youth empowerment NGO in terms of reach and impact. For example, our partnership with the Central Bank of Nigeria allows us to reach approximately 70,000 students across the country annually with our financial literacy programs while partnerships with several companies and foundations allow us to reach another 30,000 annually with our entrepreneurship and digital literacy programs. Would you say you are meeting the objectives for which you exist? Our mission is to inspire and educate young people to become conscientious business leaders. We achieve this by implementing economic education programmes that develop attitudes and skills necessary for personal success and social responsibility. Primarily, our goal is to build a bridge between the classroom and the workplace so as to increase employability of young Nigerians. This has been achieved through the implementation of our flagship programme – Company Program. JA Company Programme teaches senior secondary level students how to start and run their own business, develop a product or service, and market their brand with the support of a volunteer. Students come together to form

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a company, choose a business name and elect company officers to oversee operations of the company for the program duration. Our Company Program alumni who are now running successful businesses say they got their first taste of entrepreneurship from the programme. Because the programme insists on a certain percentage of profits being allocated to corporate social responsibility (CSR) projects, our alumni also lead the CSR efforts of the firms they work in and most of them combine business and social strategies. One such example is Iyinoluwa Aboyeji, who did the Company Program in secondary school and is now a successful entrepreneur with a social mindset, having co-founded Andela and Flutterwave and now concentrating on investing in businesses that can improve Africa’s future. Another core JA program that has helped us achieve our objectives are LEAD Camp and ViMP. LEAD Camp was conceptualized with one mission in mind – to inspire and empower young girls to become high-achieving women leaders in our society. As indicated in the name, the LEAD Camp consists of activities in Leadership, Empowerment, Achievement and Development. These activities are supported by leading women from the private and public sectors in Nigeria serving as mentors and many of our LEAD Camp alumni are now successful women who return to the camp to inspire other girls. The Venture in Management Program (ViMP) is an annual program of Junior Achievement Nigeria since 2000. ViMP is designed as a one-week intensive “mini-MBA” session to introduce selected members of the National Youth Service Corps to the different facets of managing a business, making crucial business decisions and developing skills for General Management. Implemented in partnership with the Lagos Business School annually, VIMP culminates into a Career Fair that exposes the VIMP participants to different career opportunities. We are very proud of the fact that all our VIMP graduates obtain employment within 6-8 months of graduating VIMP in a country with almost 30% unemployment rates. We are also proud of the fact that almost all the leaders of the top NGOs in Nigeria are VIMP alumni. What programmes are in the offing for your 20th anniversary celebration? We have planned a series of events to commemorate this milestone year, including a Youth Leadership Conference, an ‘Excellence in Education’ Awards Luncheon and an ‘Excellence in Service’ Awards Dinner. These activities provide an opportunity to activate young professionals, engage policy makers, recognize and honor key stakeholders as well as launch the JAN Endowment Fund. Our anniversary also offers a platform to

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engage the wider community on how they too can help the underserved youth improve their future. The Youth Leadership Conference offers JAN the opportunity to, for the first time, gather alumni from across several programmes over the past 20 years, who are now running successful businesses or emerging as young leaders within the corporate workforce. The conference will build on the impact that JAN has had on the lives of alumni and other young professionals, especially those within the ages of 25 and 35, as they learn key tools for growing their businesses and/or being a high-performer within the corporate workforce. Master classes will also help them to plan for their financial independence even as they get ready for major events like getting married or buying their first homes. Tell us about your background and how it led to you being where you are now? I started out volunteering with Junior Achievement (JA) New York while I had my day job at Goldman Sachs and realized that if I had a Junior Achievement program in my secondary school, I would have known sooner what I wanted to do with my life. At that time, JA worldwide were trying to expand into five African countries and I volunteered to help bring JA to Nigeria. I quit my job at Goldman Sachs and moved back to Nigeria to set up Junior Achievement Nigeria (JAN). Why did you decide to play in the social enterprise space? Initially, I did not decide to play in the social enterprise space. I just wanted to help JA out and then ended up moving back to Nigeria to run it. The reason I continued to do social enterprise is because I realized that there is so much need in Nigeria and I feel like I need to be part of the solution actively working to make the country better. I feel like while I am in Nigeria, I need to spend time developing Nigerians and young people in particular so that they have a brighter future. What stands you JAN out from other intervention agencies? Junior Achievement is the world’s largest and fastest-growing non-profit economic education or@Businessdayng

ganization dedicated to empowering young people to own their economic success by enhancing the relevance of education. As a global organization we deliver unique, experiential programmes—focusing on the core content areas of work readiness, entrepreneurship and financial literacy—which ignite the spark in young people to experience the world of business and realize the opportunities and realities of work and life in the 21st century. The global network also allows our alumni to network with other JA alumni around the world and participate in global competitions like the Company of the Year programme. Locally, Junior Achievement Nigeria also enjoys a rich, diverse local network with a broad range of partners and a Board comprising ten companies, which include Agile Communications, Aliko Dangote Foundation, Channels Television, Citi, Deloitte, FirstBank, Schlumberger, Sigma Pensions Limited, Stanbic IBTC and Verraki Partners. Give us an idea what you do exactly every year – your programmes, etc. We begin each year with our flagship Company Program for senior secondary school students. This program runs for 13 weeks and during this period, students learn about accountability, creativity, critical thinking, collaboration, decision making, idea development, leadership, Product evaluation, Public speaking and Sales. It starts at the beginning of a new academic session and the National Company of the Year competition marks the end of the program. In July, we organize LEAD Camp for girls. LEAD Camp was conceptualized with one mission in mind – to inspire and empower young girls to become high-achieving women leaders in our society. As indicated in the name, the LEAD Camp consists of activities in Leadership, Empowerment, Achievement and Development. These activities are supported by leading women from the private and public sectors in Nigeria serving as mentors. Another program we do every year is Venture in ManContinues on page 27


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Corporate Social Impact

TEACHERS DAY NIGERIA Celebrating our Educators Past and Present… ONUWA LUCKY JOSEPH

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eachers. We all have had them. And they’ve not all been good ones. I remember one Mrs. Aina who, when I was a Pry 3 pupil, delighted in throwing our notebooks out the window after marking them, only for her to punish us for bringing those same dirty note books to her post next assignment. She was evil, as many can relate who have had teachers like that. But we’ve all had some stellar ones too. Folks who went out of their way to make us comfortable, to not feel out of place, to know that learning was something even acknowledged blockheads could do and excel at. Teachers know that students are at different rungs of a ladder. None is fully made. Which is why learning is considered a lifelong process. But as we are talking about the ones who have made it their life’s work to impart knowledge, it was good to see an outpouring of goodwill on Saturday, October 5, 2019, as the world marked World Teachers Day. The celebrants are influencers whose light, well pointed, guide through a lifetime. Applause, applause, applause! Corporate Social Impact appreciates those corporate brands, most notably Maltina from Nigerian Breweries who through their Maltina Teacher of the Year project, find a way to acknowledge the contributions of this group

Teachers of the Africa Community College Asokoro Abuja celebrating on Teachers Day

whose sacrifice is met nationwide with poor pay and remuneration. We know that this state of things is not about to change radically anytime soon despite assurances from Femi Gbajabiamila, Speaker of the House of Reps who in his goodwill message to teachers made “bold to say that the 9th Assembly, especially the House of Representatives, will champion

the cause of Nigerian teachers”. If they indeed do, trust us to crow about it. To ensure that the profession attracts the best, governments and private schools proprietors should endeavour to beef up wages while the rest of us need to do more with regards to encouragement for what they do so that good hands will not

be missing from the line-up of teachers in Nigerian schools. Teachers on their part, must deal with the bad eggs, the sexfor-marks types, the manipulators, the embezzlers of funds meant for schools. It’s clearly not a rotten institution, but like all other aspects of Nigerian life, some work needs be done to clean the Augean stable.

It’s Customer Service Week! Why it matters ONUWA LUCKY JOSEPH

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here might be some red carpets in some old offices this week, rolled out for ‘distinguished’ customers who might just have ‘erroneously’ thought of themselves as ‘long suffering’ all along. Don’t be surprised if you see one. It’s World Customer Service week, after all. And what better time than now for organisations big and small to showcase their customer service bona fides. What the companies say, however, sometimes mean nothing when it comes to actual service delivery. This not necessarily because there’s any documented company policy targeted against the customer but more as a result of management not being omnipresent and therefore in no position to check the bad attitude of staff who treat customers like trash. Some staff will handily tell you that they do this because company treats them no better. So the things they do to drive customers away is more a well-considered

rather than spur of the moment action. But good customer service is the lifeblood of business. Without it business can neither grow not be sustained. While it takes a whole lot to acquire a new customer, an old one, well managed can bring in repeat income on a regular, sustained basis. Which is why ‘The customer is king’ must go beyond this week. www.businessday.ng

In fact, she is mostly Queen nowadays, and we know fussy royalty can be. Your customers are not regular folks. Get that? They are royalty. And all the proof you need is their cash or card or the swipe from their phones. According to Eric Schiffer, a reputation management consultant, writing in The Entrepreneur, he swears by five customer service rules which, well deployed, ought

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to work for you as well: His customers are Guests, not Clients or Customers. The company staffs are dutiful hosts who strive to give the ‘guest’ a great experience every time they visit. Anticipate the needs. And meet them promptly Be respectful. Be courteous. You can pay dearly for lack of it Treat everyone like a VIP. “There’s only one boss, the customer,” Sam Walton once said. “He can fire everybody from the chairman on down simply by spending his money elsewhere.” Show immediate action and solutions, not blame In concluding, he quoted Henry Ford who said “A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.” Sounds like the sort of embarrassment every business would rather have. (For feedback, contact us at csrmomentum@gmail.com / 08023314782) @Businessdayng

Simi Nwogugu, Elated, as JAN Celebrates 20 Years of... Continued from page 26 agement Program (ViMP). ViMP is an annual program of Junior Achievement Nigeria since 2000, designed as a one-week intensive “mini-MBA” session to introduce selected members of the National Youth Service Corps to the different facets of managing a business, making crucial business decisions and developing skills for General Management. The goal of ViMP is to prepare NYSC members for the world of business as managers and entrepreneurs. This opportunity is designed to expose future business leaders to the responsibilities, opportunities, and demands of a career in management. Furthermore, JAN in partnership with the Central Bank of Nigeria (CBN), Child & Youth Finance International Organization (CYFO) and financial institutions across Nigeria come together to celebrate Global Money Week with an annual Financial Literacy Day event. Global Money Week is a worldwide celebration held in the month of March to empower the next generation to be confident, money savvy global citizens. The event is held simultaneously in select schools across the Nation in efforts to create a financially literate generation. Financial institutions come together and mentor JAN participants on Financial Literacy Modules created by JAN. There are other JAN traditional programs which include JA Our Nation, JA Career Success, JA Be Entrepreneurial, and some other digital programs such as Safe Online, Hackathon, CS First, and JAN STEM Innovation. These are some of the programmes we do yearly. Is there an age limit for participation in JAN? Junior Achievement Nigeria (JAN) delivers practical, experiential hands-on programs under the three pillars of financial literacy, work readiness and entrepreneurship to young people between the ages of 5 and 27. Any notable alumni whose name you might want to mention: Yes! There are: Iyinoluwa Aboyeji, Co-founder Andela and Flutterwave. He was part of our Company Program in 2005; Ink Eze, founder Aso Ebi Bella. She was part of our LEAD Camp in 2005; Tunji Eleso, Managing Partner, Growth Capital by CCHub. He was part of our Venture in Management Program (ViMP) in 2001. Adenike Adeyemi, Executive Director, FATE Foundation. She was part of our Venture in Management Program (ViMP) in 2002. How much support do you get from corporate sector? Any stand out names: Junior Achievement Nigeria has enjoyed tremendous support from companies such as Citi, Union Bank, African Capital Alliance, Google, FirstBank, Stanbic IBTC, Deloitte, Schlumberger, Sigma Pensions, Facebook, Microsoft, IBM, Agile Communications, Channels Television, Verraki Partners and many more. We are open to more partnerships also.


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Keynote Address Delivered by the Honourable Minister of Power, Engineer Sale Mamman, at the 2019 BusinessDay Power Conference themed Unlocking the Potential in the Nigerian Electricity Supply Industry, Held on the 3rd October, 2019, at The Wheatbaker Hotel, Ikoyi, Lagos.

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Sale Mamman

transmission and distribution capacity in the country: i. Mini Grid Regulation (2016) Mini-Grid is the term for any isolated or interconnected generation capacity of up to 1MW. It is an electricity supply system with its own power generation capacity supplying electricity to more than one customer and can operate in isolation from or be connected to a Distribution licensee network. ii. Eligible Customer Regulation (2017) The policy is to allow power consumers who use up to 2MW of power and who do not get regular or enough power especially due to lack of distribution infrastructure to apply to be considered as an Eligible Customer for the purpose of getting more regular power. iii. Meter Ass et Provider (2018) The Meter Asset Provider (MAP) Regulation is aimed at ensuring that electricity consumers only pay for what they actually consume, quickly close the metering gap and encourage the development of independent and competitive meter services in the electricity industry. iv. Franchising Regulation This has gone through public www.businessday.ng

consultations and would soon be effective. v. Distribution Expansion Programme The Programme is meant to wheel part of the 2,000MW of unutilized power available on the national grid to the consumers using standard equipment. This programme complements the recent Memorandum of Understanding

The theme of the conference is apt considering the fact that this gathering was essentially conceived by private sector players who are willing to invest in the power sector

t is with great pleasure that I welcome you all to the 3rd Edition of the Business Day Future Power Conference with the theme “Unlocking the Potential in the Nigerian Electricity Supply Industry”. This gives the power sector an opportunity to present its regulations and investment opportunities. Future Power Conference (FOP) has become an important feature in the landscape of the Power Industry in Nigeria, bringing together Industry Players from Public, Private, leading power sector experts, financial institutions, and international development partners. It is pertinent to note the recent progress in the Nigerian Electricity Supply industry (NESI) under the leadership of President Muhammadu Buhari. The sector has been going through transition from a government-controlled monopoly to an industry driven by private investment in generation and distribution. Generation capacity now exceeds 7,000MW. Virtually all available generation can be transmitted to trading points around the country. The current challenge is to raise distribution capacity and actual delivery from the grid to the same level and beyond. The national consensus as stated in the Electric Power Sector Reform Act (EPSRA) of 2005 was that, the National Electric Power Authority (NEPA), the vertically integrated monopoly that operated the entire electricity industry could not “meet the needs of its citizens in the 21st century and required fundamental reform at all levels of the power industry”. Thirteen years after the Act however, and five years after the privatization and handover of the generation and distribution segments of the industry to private investors, Nigeria is still searching for an electricity industry that would meet its needs. Notwithstanding the gains we have made since 2015, too many people still have no access to electricity, too many of those who do are not satisfied with the quality of their service, and the industry still requires N25 billion or more per month of Government financial support to sustain its operations. The industry has been privatized and we acknowledge that to establish sustainable electricity supply, policy implementation has to be quick and comprehensive. The administration at inception had planned on incremental, stable and uninterrupted power supply which the Ministry as the formulator of policies endeavours to achieve. Government is making concerted effort to implement policies that will achieve this goal and sustain progress to enable customers get better service. The following recent policies are expected to expand generation,

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(MoU) between Government and Siemens of Germany and the German Government. vi. Economic Recovery and Growth Plan (ERGP) 20172023 The efficiency and provision of adequate power is intrinsic to the growth of every nation. Federal Government recognizes this and identified the power sector as one of the priority areas in the Economic Recovery and Growth Plan. The implementation of ERGP has been instrumental to Nigeria’s economic recovery and led to a 1.93% real GDP growth in 2018. Investments in the power sector are critical to unlocking the potential in the Nigerian Electricity Supply Industry. The theme of the conference is apt considering the fact that this gathering was essentially conceived by private sector players who are willing to invest in the power sector. The power sector has been privatized as stated earlier and it requires a great deal of investment to enable government achieve uninterrupted power for its citizens. I would therefore like to inform our prospective investors of the following investment opportunities that abound in off/on grid and @Businessdayng

other areas of the Power Sector: i. Small Hydro: The fastest route to investing in small hydro in Nigeria lies with converting existing dams to hydro power stations. To this end, there are over 25 small dams distributed across Nigeria capable of generating 30MW or more if converted to hydro power plants. These plants have the embedded power that can supply additional power for target communities. ii. Large Hydropower: Feasibility studies have been conducted for over 200 locations with large hydro potential. iii. Solar: Irradiation levels in Northern Nigeria makes solar an attractive option for Nigeria. There has been a surge in interest from numerous developers seeking to harness solar power for generation. There have been several solar studies conducted. iv. Wind: There is a 10MW wind power plant in operation in Katsina State. There is a lot of room for investors for production of wind power plant in the country. v. Biomass: Nigeria has a population of over 190 million people and a large stock of livestock and biowaste that can sustain biomass generation. vi. Coal: Nigeria has abundant but still largely untapped coal reserves notwithstanding the fact that coal mining in Nigeria long predated other mining discoveries. Coal deposits have been proven to be available, in large quantities in states like Enugu, Kogi, Anambra, Delta, Benue and Gombe states. Based upon a calorific value of the coal in Nigeria’s Anambra Basin, coal fired plants will require approximately 3.2 million tonnes per year of coal for each 1000MW of capacity. This recommendation is without prejudice to the current clamour on activities to mitigate climate change. As a developing country our needs have to be prioritized. vii. Gas: Nigeria has abundant gas reserves and remains one of the world’s most prolific flarers. Investors should tap in and reduce these wastes. viii. Distribution Infrastructure: Getting available power to customers is an immediate challenge in Nigeria due to inadequate distribution infrastructure. It is acknowledged that it is the weakest link in the value chain. There could be bankable partnerships to provide the substantial investment needed to fill this gap. In conclusion, I wish to express my appreciation to BusinessDay for organizing this wonderful event at a time like this. May I also use this opportunity to assure our new and prospective investors, local and international of the Government’s continued support in making the emerging market space conducive for business. Thank you.


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LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

The seat of arbitration is more than where you sit

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n many respects, arbitration can be described as the preeminent mechanism for the resolution of international commercial disputes. A great deal of the agreements through which international commercial transactions are carried out today have arbitration clauses embedded in them. By reason of the fact that such international commercial agreements are typically made between parties from different jurisdictions and disciplines, there is inevitably an interaction of more than one legal framework in relation to any arbitration that may be conducted under the agreements. In this regard, there are generally three separate laws that may come into play concerning an international arbitration, which are the law of the substantive contract, the law of the arbitration and the internal procedural law of the arbitration. It is against the backdrop of this interplay of applicable laws that the determination of what is widely regarded as the ‘seat’ of the arbitration becomes of importance. Importance of the Seat of Arbitration In entering into an international commercial agreement, when parties agree on arbitration as the mechanism for the resolution of disputes under the agreement, a fundamental and critical decision that they ought to make is as to the ‘seat’ of the arbitration. Notwithstanding the meaning that the literal interpretation of the word ‘seat’ suggests, when it comes to international arbitration, the seat of arbitration does not necessarily refer to the physical location where arbitration hearings will be held, which is also often referred to as the ‘venue’ of the arbitration. It also does not necessarily reflect the law of a contract. In simple terms and in the

INSIDE Highlights from the Africa Legal & Tech (ALT) in Lagos 30

New female players in Nigeria’s legal market celebrate notable wins after one year 30

FCCPC applauds ABU decision to sack staff over alleged sexual harassment and corruption 31

Mofe Tayo oyetibo

interplay of applicable laws in an arbitration, the seat of arbitration (also sometimes called the ‘place’ of arbitration) is a legal construct that refers to the country or jurisdiction the laws of which mandatorily apply to the arbitration itself and will determine important matters relating to the arbitration. These include but are not limited to, arbitrability, appointment and removal of arbitrators, enforcement of the award, power of arbitrators to rule on their jurisdiction, possible rights of appeal, availability of interim remedies before or during the arbitration and the extent to which the national courts of the seat will support or supervise the arbitration. Due to the fact that the arbitration laws of most jurisdictions typically relate to matters of public policy concerning arbitration in such jurisdictions, parties and tribunals are usually not allowed to circum-

vent these laws. Where parties to an international commercial arbitration have expressly and unambiguously agreed on Nigeria as the seat of their arbitration or that the arbitration is to be conducted in accordance with Nigerian law, the law governing the arbitration will be Nigerian law. Accordingly, the law applicable to such an arbitration will be the Arbitration and Conciliation Act (The ACA), which is the principal arbitration statute in Nigeria. However, where the parties have made no agreement as to the law that is to be applicable to the arbitration or have entered into an agreement that is ambiguous as to the law of the arbitration and the substantive contract is governed by Nigerian law, section 16(1) of the ACA will apply for the purpose of determining the seat of arbitration. Section 16(1) of the ACA provides that:

“Unless otherwise agreed by the parties, the place of the arbitral proceedings shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.” Similarly, Article 16(1) of the Arbitration Rules in the First Schedule to the ACA provides that: “Unless the parties have agreed upon the place where the arbitration is to be held, such place shall be determined by the arbitral tribunal, having regard to the circumstances of the arbitration.” Based on the above mentioned provisions of the ACA and the Arbitration Rules, the failure of parties to be very clear in their selection of the seat of their arbitration invariably means that the determination of the seat is for the arbitrator(s) to make, having regard to both the circumstances of the case and the convenience of the parties. Such a scenario may present unexpected results for either one or both of the parties to the arbitration the consequences of which, in certain cases, could be rather staggering. In this regard and for added context, it is worth taking a brief look at the ongoing dispute between the Federal Republic of Nigeria (FRN) and the company known as Process and Industrial Developments Limited (P & ID). In some respect, the FRN’s travails following its dispute with P & ID is traceable to the issue of the identity of the seat of the arbitration that emanated from the agreement between both parties, by reason of which it is useful to have a look at the circumstances of that case here. The P & ID V FRN Case The dispute between the FRN and P & ID attained notoriety almost overnight, having dominated the news as a result of P & ID’s efforts both in the United States and United Kingdom to enforce

against the FRN an international arbitral award with a widely reported value of over $9 billion. This award is possibly the largest arbitral award ever made against the Nigerian state. On 11th January, 2010 the FRN and P & ID entered into a Gas Supply and Processing Agreement (GSPA) by which both parties were to do a barter exchange of natural (wet) gas and natural gas liquids stripped from wet gas for a period of 20 years. However, when a dispute broke out under the GSPA, P & ID commenced arbitration proceedings against the FRN, pursuant to the dispute resolution provision in clause 20 of the GSPA, which stated (among other things) that: “The Parties agree that if any difference or dispute arises between them concerning the interpretation or performance of this Agreement and if they fail to settle such difference or dispute amicably, then a Party may serve on the other a notice of arbitration under the rules of the Nigerian Arbitration and Conciliation Act (Cap A18 LFN 2004) which, except as otherwise provided herein, shall apply to any dispute between such Parties under this Agreement… The venue of the arbitration shall be London, England or otherwise as agreed by the Parties.” Upon the commencement of the arbitration and at its initial stage, the question of the seat of the arbitration was apparently not in issue or dispute between the parties. However, during the course of the arbitration the question of the seat of arbitration arose, by reason of which the arbitral tribunal had cause to interpret clause 20 of the GSPA and give a determination of what it considered to be the seat of arbitration. Although in a Continues on page 32

GEP deepens knowledge in power sector through master class programme IFEOMA OKEKE

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n a bid to educate professionals who are interested in understanding how the Power industry works following the privatisation of the industry, George Etomi & Partners (GEPLAW Legal Practitioners) hosted a one day Master Class. The Master Class which was focused on the Fundamentals of NESI (Nigerian Electricity Supply Industry), brought together various players in the value chain with an aim to advise policy makers and business men who want to take advantage of the new opportunities that are created by the privatisation reforms. www.businessday.ng

Speaking during the master class, George Etomi, principal partner, George Etomi and Partners said his law firm recognises that there are so many actors in the entire value chain from the gas producers through the generating companies, the transmission companies and the distribution companies and eventually the consumers.

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He said the idea is that as the sector opens up, Nigeria needs people who can advise policy makers and business men who want to take advantage of the new opportunities that are created by this reform. “Knowledge is key and because the sector was wholly in the hands of the government before, many people didn’t know about the sector. Now that it is in private hands, the information flow about how the sector works is now out there. “The idea of master classes like these is to get professionals who find themselves in advisory capacity in various industries understanding these issues. Our background is that we do a lot of work for many members of the @Businessdayng

value chain and we have hands-on experience we are willing to share so that the more people come to understand how the value chain works, the more businesses can be better advised about how to take advantage of it. “As you know, power holds the key to the diversification of the Nigerian economy, so that our over-dependence on crude oil will not come back and sting us. But if we get the power sector right, it will lead to stable electricity. Stable electricity will lead to more economic activities, which will lead to growth all round for the economy,” Etomi said He said present at the workshop are legal advisers, compliContinues on page 31


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Secretary, Adeoye Adefulu leads discussion on Highlights from the Africa Legal & Tech (ALT) in Lagos NBA-SBL regulatory quality Management at 25th economic summit

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he Africa Legal & Tech (ALT) Network held its inaugural summit in Lagos, Nigeria on September 19, 2019 at Commerce House, 1 Idowu Taylor Street, Victoria Island. The theme of the event was “ Addressing Technological disruption in Law and Business. The event was well attended by a good mix of lawyers and business executives, particularly those from the Fintech Industry. In the opening address Nankunda Katangaza, the founder of the ALT Network, stated that the ALT Network was created in response to questions she and her colleagues were constantly encountering on the implications that technological disruption had for lawyers, including the fear that lawyers and the legal industry as currently set up will soon be extinct. This led to a decision to create a network of lawyers who were addressing the same concerns. The vision is to

build a Pan-African Network of various players, including technology providers, lawyers and business people who work in the same terrain and have the same issues and concerns. The Lagos Summit addressed carefully curated topics ranging from “Legaltech” and “Data Protection” through “Artificial Intelligence and the Internet of Things” to “Technovation” and “Access to Legal Justice”. These were discussed over five panel sessions by a panel which included, legal practitioners, academics, risk managers, legaltech, fintech, agrotech and health tech enterpreneurs. The key highlights from a legal perspective were the discussions on legaltech, regulation of the tech industry and the role of lawyers. Legal Tech The panel on legaltech recognized that: Technology has caused positive

disruptions in the legal industry. Davidson Oturu of Aelex and Seye Amusa of Law Pavilion noted that the introduction of legal tech tools such as electronic law reports and chatbots like Law Pavillion’s Timi, made research for lawyers much easier and significantly faster than it used to be. Oturu further commented that developments like cloud computing had made it possible for lawyers to work from whatever part of the world they were in. It was however noted that despite the strides made in the use of technology, Nigerian lawyers were yet to scratch the surface and optimise the potential benefits of legaltech. Tobi Adebowale of Lawyard, commented that in foreign jurisdictions legal tech was already being used to produce smart contracts. Similarly, Kelechi Achinonu noted the development of tools that could create visual contracts in some jurisdictions.

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he secretary of the Nigerian Bar Association Section on Business Law (NBA-SBL), Dr Adeoye Adefulu (1st from Left) led discussions at the regulatory workshop which held during the 25th Nigerian Economic Summit in Abuja. At the workshop, participants deliberated on the current state of regulation in Nigeria and pro-

posed solutions to the challenges identified. One of such recommendations was for the government to adopt a “Total Regulatory Quality Management Framework” hinged on transparency, clear regulatory KPIs, stakeholder engagement amongst others. Other streams discussed Competition and Consumer Protection.

To be continued next week

B&I Partner, Asue Ighodalo plays host to President Buhari, others at 25th economic summit

New female players in Nigeria’s legal market celebrate notable wins after one year THEODORA KIO-LAWSON

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new player in the Nigerian legal space, known as Pavestones Legal is happy to mark its first year in an already inundated legal market, as it begins to make gradual impact in the industry. The firm, which was established in September 2018, is run by two young industrious and resilient women, Seun Timi-Koleolu and

Aderonke Alex-Adedipe, both of whom have extensive experience working at top law firms in Nigeria and servicing clients ranging from government entities, to multinational and small companies. Defying the odds, the duo joined forces when they discovered an opportunity in the market to provide legal services to StartUps, by helping them transform their innovative ideas into reality whilst ensuring the continuity and scal-

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ability of those ideas. Speaking about the growth of the firm in the last one year, managing partner, Seun Timi-Koleolu said, “In our one year of existence, we have successfully advised clients who provide services in the financing, technology, gaming, health, insurance and e-commerce industries. We recognise that technology is the future and we are deliberately positioned to serve the rapidly growing industry.” Confirming this, founding partner, Aderonke Alex-Adedipe added, “We hit the ground running as soon as we opened our doors for business, and after one eventful year, we can conveniently say that we are proud of our achievements. Our team has tripled in size and we have advised several local and international clients across various sectors. She added, “We are also revolutionizing the practice of law by creating a work-life balance and adopting the use of modern technology in delivering legal services.” The young law firm has exhibited impressive growth potential in the last one year, with its current client base and continuous demonstration of its knowledge of the business of law. The partners who say they are in the industry to “change the game” also expressed gratitude for the confidence that their clients have entrusted in them and are optimistic about the success of their future.

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sue Ighodalo, founding partner, Banwo & Ighodalo (B&I) and Chairman of the Nigerian Economic Summit Group (NESG) on Monday October 7th, and Tuesday

8th, 2019 played host to President Muhammadu Buhari, business leaders and top government functionaries at the 25th Nigerian Economic Summit in Abuja. SEE PHOTO BELOW:

Aluko & Oyebode Partner appointed as co-chair of IBA Abr40

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amid Abdulkareem, a Partner at Aluko & Oyebode, has been appointed member of the International Bar Association (IBA) Arbitration Committee with effect from January 1st, 2020 to December 31st, 2021. With this appointment, Hamid will co-chair IBA’s under-40 subcommittee (IBA Abr40), along with Anina Liebkind of Baker McKenzie. Speaking about his appointment, Hamid said, “This is an opportunity to further advocate for best practices in arbitration, especially amongst future leaders of the profession. I look forward to @Businessdayng

Hamid Abdulkareem

working with Anina and members of the Arb40 Steering Committee in delivering our mandate.”


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FCCPC applauds ABU decision to sack staff over The seat of arbitration is more than... alleged sexual harassment and corruption Continued from page 29

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he Federal Competition & Consumer Protection Commission (FCCPC) has applauded what it described as “the bold and decisive action of Ahmadu Bello University (ABU) authorities” to terminate the employment of 15 staff and demotion of one academic staff on account of conducts bordering on corruption and sexual harassment. In a statement signed by the Chief Executive Officer, Babatunde Irukera, which was shared with Businessday, the commission expressed satisfaction at the level of investigation which preceded the disciplinary action. It read in part, “It established unsolicited and unwelcome sexual advances and behaviour toward members of the school community, illegal allocation of, and alteration of grades, and extortion of students. “These types of conduct materi-

Babatunde Irukera

ally affect the entire community, diminish scholarship and negatively skew academic outcomes in a manner that violates the rights of targets of the behaviour and victimises others who are invariably indirect victims. The inappropriate behaviour undermines the quality and validity of education and questions the credibility of educational outcomes.”

The Commission stated that it was further encouraged by ABU’s commitment to a broader and continuing investigation of others within the community. It thus, commended the university for its robust and farreaching effort and the confidence it restores and promotes in our institutions, systems and processes. “A transparent, fair and just educational community is vital for all members of the community, especially students, and the Commission is keen to ensure that students, as consumers, are afforded the necessary protections, and our campuses are safe and secure always,” the CEO of the Commission stated. The FCCPC also urged other educational institutions to pursue aggressive and open initiatives to ensure harassment, corruption and other vices are eradicated from educational systems.

ance officers and industry participants. He explained that no matter where people find themselves in the value chain, they want to understand how the other person is working, adding that the whole idea is to have this collaboration and sharing of knowledge. He explained that he and his partners run a commercial law firm and they have always been on the cutting edge of commercial law activities. “I was the pioneer chair of the section of Business Law of the Nigerian Bar Association, (NBA). So we have always promoted learning in new frontiers and power is the latest of the aspect of the economy that has just been recently opened by the government. So, we thought we should be out there to bring that knowledge to everyone. It is going to be so huge in the future.

The more people become knowledgeable about how it works, the better for the future,” Etomi said. Edwin Enwegbara, a director at Solar Shop Ltd and a participant of the master class told BusinessDay that he attended the master class to familiarise himself and his company with the inner workings of the Power Sector. “We are finding out that beyond the existing traditional Electricity Distribution Companies (DisCos) and Generating Companies (Gencos), a lot of people come in to invest in the power sector but maybe on a smaller scale. So everyone needs to know the inner workings of the sector for them to know what to do and how to invest,” Enwegbara said. “The master class will help him understand better how everything works and how all the different bodies and regulators communicate with each other and who to interface with if we want to invest,” he added.

BARPROFILE

Celebrating a quintessential bar man Templars Partner and immediate past chairman of the Nigerian Bar Association Section on Business Law (NBA-SBL), Olumide Akpata became a year older on Monday October 7th, 2019. In this edition, LEGALBUSINESS profiles the life of this high achiever and some of the indelible marks he has left and continues to make in the legal industry.

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lumide Akpata is a Partner and the Head of the Corporate and Commercial Practice Group at Templars. With almost three decades of experience advising local and international corporations on leading transactions including cross-border transactions in Nigeria and sub-Saharan Africa, his experience spans several core areas of commercial law and practice including mergers & acquisitions, corporate governance and compliance, corporate restructuring, employment, immigration, governance and anti-corruption, regulatory compliance and tax. He has been recognised by IFLR 1000 as a leading Mergers & Acquisition (M&A) lawyer in Nigeria; ranked as ‘Global Leader’ by WhoisWhoLegal; and by Chambers and Partners “as having long  experience in representing foreign clients” in his area of practice. Akpata has also served the legal profession, particularly the local and international bar associations in various capacities. He served as secretary, vice chairman and also chairman of the Nigerian Bar Association Section on Business Law (NBA-SBL). Under his leadership as Chairman of the NBA-SBL, he was widely acknowledged and applauded for his innovative and qualitative programs; one of which was the inauguration of the first ever ‘SBL CLUB’ at the Faculty of Law, University of Lagos on Wednesday March 7th, 2018. Several others have been established after this. The initiative, which is primarily aimed at introducing Law Undergraduates to contemporary

issues in commercial law, was part of his vision to build capacity and to promote the development of commercial law practice in Nigeria. Olumide Akpata also facilitated the NBA-SBL involvement with the National Assembly Business Environment Roundtable (NASSBER) - a legislative/private sector initiative established to develop a framework for the improvement of the economic and business environment in Nigeria and, in particular, through law reform “NASSBER”, an acronym for The National Assembly Business Environment Roundtable, was founded as a result of the ongoing collaboration between the National Assembly [NASS], the Nigerian Economic Summit Group (NESG), the UK Department for International Development [DFID] through two of its developmental programs, namely, ENABLE II and GEMS 3, and the Nigerian Bar Association Section on Business Law (NBA-SBL). In 2018, nominated to serve as a pioneer member of the United Nations Nigerian Humanitarian Fund Private Sector Initiative Steering Group alongside other leaders of the Nigerian business community. Speaking about his nomination, Akpata had this to say, “I am extremely delighted to have been nominated to serve, alongside such eminent personalities, as a member of the UN NHF Steering Group – for a cause that I consider to be extraordinary and most timely and I definitely intend to contribute my quota to this noble effort and in the process, add appreciable value.” www.businessday.ng

Due to his passion for service and excellence, the former NBA-SBL leader was once again called upon, to serve as Co-Chair for the 2019 Annual General Conference (AGC) of the Nigerian Bar Association (NBA), alongside Gbenga Oyebode who was the conference Chair. The conference, which has a history of being marred with operational glitches, was a huge success this year with impressive feedback trailing this great achievement. Being the quintessential leader that he is and quite characteristic of him, Olumide Akpata in the days leading up to his birthday, offered to sponsor 60 young lawyers from the Lagos branch of the Nigerian Bar Association to the BeyHealth ‘Medicine Accountability and Law’ conference, which holds from October 9th to 11th, 2019 at the Eko Hotels & Suites, Victoria Island, Lagos. Every year, as Chairman of the NBA-SBL, Akpata sponsored not less than a 100 young lawyers to various paid trainings and capacity building programmes across the country – a practice he has maintained before and after his tenure, as Chairman. In 2018, he donated an e-library to the Benin branch of the NBA, which many described as an expression of his commitment to the continuous development of young lawyers, in a bid to raise standards in the profession. On the occasion of his birthday, we join the rest of the industry, to celebrate an exemplary leader and a consummate bar man. Here’s wishing you greater accomplishments for your dedication to service.

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L-R, Immediate Past Chairman of the NBA-SBL, Olumide Akpata, former Senate President, Bukola Saraki and Current Chairman, Seni Adio, SAN

Olumide Akpata, Chairman, Nigerian Bar Association Section on Business Law (NBA-SBL)

Registar of the CAC, Bello Mahmud flanked by .the SBL Council , L-R, Ayuli Jemide, Olumide Akpata, Seni Adio, Chuka Agbu, Mena Ajakpovi & Agada Elachi.

NBAAGC2019 with Olumide Akpata @Businessdayng


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Thursday 10 October 2019

BUSINESS DAY

DOCKET

BD

Federal High Court declares that law firms are not eligible to pay companies income tax and vat

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he Federal High Court siting in War r i coram Emeka Nwite J. d e l i v e re d a groundbreaking Judgment on Monday, September 30th 2019 in suit No. FHC/WR/ CS/27/2019: Ama Etuwewe Esq vs. Federal Inland Revenue Service &Anor. The court in this case, held that law firms not being companies are not within the contemplation of the Companies Income Tax Act, to pay companies income tax. Regarding the payment of VAT by law firms, the Court held that evidence abound that the client of Ama Etuwewe, in this case, Chevron Nigeria Ltd, paid VAT in respect of the professional fees paid to the Plaintiff, and therefore, the Plaintiff is not required to make VAT remittance and

Continued from page 29

OECR set to raise the bar for effective dispute resolution, justice dispensation

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tion on Business law (NBASBL) was elevated to the rank of Senior Advocate of Nigeria 9SAN) in September, 2019.

The seat of arbitration is more than... Part Final Award made on 3rd July, 2014 the Tribunal had referred to England as the seat of arbitration in the determination of some other issues, a formal determination of the question of the seat of arbitration subsequently became of fundamental importance owing to the fact that the FRN had approached the Nigerian Federal High Court to seek injunctive relief in respect of and inimical to the arbitration. The FRN also subsequently approached the High Court of Lagos State for an Order setting aside an award that had been made on 17th July, 2015 on the liability of the FRN to P & ID (The Liability Award). In determining that the seat of arbitration was England and not Nigeria, the arbitral tribunal held in its Procedural Order 12 that “…the parties’ selection of London as ‘the venue of the arbitration’ rather than of any particular steps (such as hearings) in the arbitration indicates that London was selected under section 16(1) (of the ACA) as the place of the arbitration in the juridical sense, invoking the supervisory jurisdiction of the English court, rather than in relation to any particular events in the arbitration… the parties and the Tribunal have consistently acted upon the assumption that London was the seat of the arbitration…the Tribunal considers that the Government must be taken to have consented to this being the correct construction of the GSPA.” Based on this determination of the seat by the

DISPUTE RESOLUTION

CHUKA UROKO

withholding tax to FIRS. Ama Etuwewe,SAN a member of the Council of the Nigerian Bar Association Sec-

tribunal, although the Nigerian courts had granted the FRN the injunctive reliefs earlier sought in respect of the arbitration and also set aside the liability award, the arbitral tribunal pointedly ignored the decisions of the Nigerian courts and in that regard stated that “… As the parties will be aware from Procedural Order No 12, the Tribunal has decided that the seat of the arbitration is England. It follows that the Federal Court of Nigeria had no jurisdiction to set aside its Award.” The arbitral tribunal ultimately made a final award in favour of P & ID, which then sought to enforce the award in the same manner as a judgment or order of the High Court of England and Wales. In the enforcement proceedings, the issue of the seat of arbitration came up once again and fell for determination by Mr Justice Butcher of the High Court. In determining the issue, the court considered the position earlier taken by the tribunal as to the seat of the arbitration and affirmed that position by concluding in the following terms that the seat of arbitration was England and not Nigeria: “…I conclude that the terms of Procedural Order No. 12, coupled with the fact that neither it nor the Final Award have been set aside by this or any court, determine the location of the seat of the arbitration as being London, England, and that that is not a matter which the FRN can now ask this court to revisit…I conclude that, while there are significant arguments the other way, the GSPA www.businessday.ng

provides for the seat of the arbitration to be in England…It is significant that clause 20 refers to the venue “of the arbitration” as being London. The arbitration would continue up to and including the final award. Clause 20 does not refer to London as being the venue for some or all of the hearings. It does not use the language used in s. 16(2) ACA of where the tribunal may “meet” or may “hear witnesses, experts or the parties”. I consider that the provision represented an anchoring of the entire arbitration to London rather than providing that the hearings should take place there…” For the foregoing, among other reasons, the English High Court granted P & ID’s application by making an Order enforcing the final award of the arbitral tribunal in the same manner as a judgment or order of the court. The consequence of the decision of the English High Court, reported as PROCESS AND INDUSTRIAL DEVELOPMENTS LIMITED V THE FEDERAL REPUBLIC OF NIGERIA [2019] EWHC 2241 (Comm), is that the decision of the High Court of Lagos State setting aside the arbitral award has been rendered totally nugatory on the ground that Nigeria is not the seat of arbitration. Consequently, no Nigerian court can presently make any effective or binding order in respect of the award and the FRN cannot derive any tangible benefit from the decision of any Nigerian court in respect of the award. To be continued next week

LegalBusiness

n effective and trusted method of resolving disputes outside litigation and arbitration is currently taking centre stage in Nigeria. The on-going controversial P&ID case highlights the limitation of litigation and arbitration, where technicalities obscure the justice and fairness elements in a commercial dispute. It is for this reason and more, that mediation as a dispute resolution mechanism is becoming mainstream. Leading Mediators and Mediation Advocates in and outside Nigeria have come together to establish the Organisation of Expert Conflict Resolvers (OECR). The organisation was launched to the business community on Wednesday, October 2, 2019 in Lagos, Nigeria’s commercial capital, where the compere for the day, Yemi Akisanya welcomed guests from across legal and business communities. The chairman of OECR’s Steering Committee, Osarieme Ezekiel had earlier explained the mission and objectives of the organisation as being primarily to set the professional framework and standard for mediation practice, while establishing measures that would ensure integrity throughout the mediation process, by cooperating with the various Multidoor Courthouses and ADR Institutions. Akisanya expatiated on this, when he said OECR would ensure that standards remained high by raising the bar for mediation as a viable alternative for resolving conflict. To this end, OECR set up a Governing Council chaired by respected jurist, Justice Adesuyi OlateruOlagbegi (rtd.), with renowned Prof. Andrew Goodman of England, Prof. Ben Uwazie and Caroline Etuk as some of the eminent members, along with, other accredited mediators.

At the well attended event, the main speaker of the day, Babatunde Fagbohunlu, SAN, amplified the OECR’s Mission Statement, when he said, “the inadequacies of the legal profession and lawyers to resolve disputes have led to the evolution of alternatives like mediation.” He said further that there was a growing demand for conflict resolution, but the infrastructure has not been growing. He offered insights on the limitations and inadequacies of both lawyers and litigation in the judicial system. He hailed the launching of OECR and explained that because of the inadequacies he had mentioned, corporate bodies and business entities have started looking to organisations like OECR for the resolution of their conflicts. This means that opportunities abound for the organisation. This explains why the coming together of leading mediators and mediation advocates in and outside Nigeria to establish the OECR, is raising the hope of Nigerians and in particular the business community. “We are out to raise the bar for mediation which is not just a means of resolving conflict, but also a mentality and a mindset that deals with ethical and legal issues,” Akisanya of the Steering Committee reiterated. OECR is set to ensure that those who practice as mediators are people of highest moral and ethical probity. It is not a matter of making money, but of delivering value and service. Ms. Ezekiel reiterated that a key advantage of Mediation in Nigeria, in comparison to some other jurisdictions such as England and Wales, is that the process is courtconnected and therefore, when the proper process is complied with, a resolution can become enforceable as judgment of court. Lagos is a leading jurisdiction within

Nigeria in this regard, as attested to by Yinka Aroyewun, the Director of Lagos Multi Door Courthouse, who was present at the launch. Fagbohunlu pointed out that there was general lack of ethics; corruption was widespread while lawyers lacked the moral courage to advise their clients who have bad cases against going for litigation, stressing that a sizeable percentage of people who go to court are those that want to avoid justice. “People run to court to get injunction because they want to evade justice. One of the darkest features of litigation is its cash and carry nature. It shows the erosion of ethics in litigation,” he said, disclosing that “a natural human instinct in litigation is to get the upper-hand. The senior advocate had good news for his audience when he stated that the legal profession was standing on the tresh-hold for a paradigm shift, adding that the need to reverse the decline in ethics was now critical, and the major beneficiaries of that shift were bodies like OECR. Dele Oye of NACCIMA expressed the readiness of the business community to embrace Mediation as a mainstream solution to resolving conflicts and indeed, in delivering justice. He too, alluded to the ludicrous instance of the P&ID matter where even an arbitration panel considered any sum whatsoever due to a paper business entity like P&ID, when in Mediation, the obfuscating technicality would not have been in the way, and the facts would have been laid bare with the aid of a neutral mediator, acting with integrity. Some of the Steering Committee members include; Yinka Kolade, Yemi Adeyinka, Josephine Akinwunmi and Kenneth Onyema, among other seasoned Mediation practitioners.

L-R: Yinka Kolade, OECR member; Dele Oye, Yinka Aroyewun, Director, Lagos Multi Door Courthouse (LMDC); Yemi Akisanya, OECR member; Babatunde Fagbohunlu, SAN, Guest Speaker; Josephine Akinwunmi, OECR member; Achere Cole, Deputy Director, LMDC; and Wale Adediran of CIPM

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@Businessdayng


Thursday 10 October 2019

BUSINESS DAY

33

cityfile Edo donates relief materials to flood victims

Ignoring the downpour, boy hawks to earn a living at IleEpo market, Alimisho, Lagos. Pic by David Apara

Agency seizes 4582.57kg of narcotics in Edo IDRIS UMAR MOMOH, Benin

…as 65 suspects nabbed

do State Command of the National Drug Law Enforcement A g e n c y ( N D L E A ) ha s arrested 65 suspected drug traffickers and seized 4,582.57 kg of illicit drugs State commander of the agency, Buba Wakawa told newsmen in Benin, the state capital, that the arrests and seizures were made between July and September 2019. According to

Wakawa, those arrested include 39 males and 26 females. The ages of the suspects range from 15 to 65 years. He explained that the substance suspected to be cannabis with a total weight of 4,561.57kg accounted for the bulk of the seizures while 1.02kg o f p s y c h o t ro p i c s u b stance was also seized. A breakdown of the arrests showed that 28 suspects were arrested with 442.61kg of suspected illicit drugs in July, while in August, 11 suspects were

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arrested with 452.36kg. In September, 26 suspects were arrested with 3,687.60kg of drugs. Wa k a w a s a i d t h a t within the period und e r re v i e w , t h e c o m mand discovered and destroyed 11 farmlands measuring 5.19 hectares where cannabis sativa was cultivated. The far mlands, according to him, have the capacity to grow a total of 1,7041.80kg of cannabis sativa. The commander said that most of the sus-

pects were from Edo and Delta, noting that 35 of the suspects, representing 53.85 per cent were from Edo while 13 others, representing 20 per cent were from Delta. He said that about 24 drug dependent persons were successfully counseled by the command during the period under review. Wakawa reaffir med that the command would continue to work very hard to reduce the problem of drug production, trafficking and abuse in the state.

Crimes: Enugu to issue security number to tricycle operators

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er, denied the rumours that the ministry was already impounding tricycles without the security number, noting that the enforcement would only commence after enough sensitisation of the tricycle riders.

Edo State Government has distributed relief materials to flood victims in five local government areas of the state. The affected local government areas include I g u e b e n , E g o r, O r e d o, Ovia South-West, IkpobaOkha and Uhunmwonde. Among the items distributed were 500 bags of rice, 300 bags of beans, 300 bags of garri, 2000 cartoons of instant noddles, gallons of vegetable oil and palm oil. Speaking with journalists during the sharing of the items to officials of the benefitting councils, Yakubu Gowon, the special adviser on spec i a l d u t i e s, w h o s t o o d in for Governor Godwin Obaseki, said the presentation was in line with the mandate to ensure that flood victims in the state were given the necessary support. He a s s u re d t h at t h e state government would continue with the distribution of items to other areas affected by the flood, including students residing in Victor Uwaifo’s residential estate, in Egor local government area. “The primary responsibility of any government is the security and welfare

Man jailed 12 years over rape

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n FCT High Court in Apo has sentenced a 31- year man, Emeka AkIle, to 12 years in prison for raping a 19-year in Lugbe, Abuja. Delivering his judgment, Olukayode Adeniyi, sentenced the convict under section 2B of the Violence Against Persons (VACA) (Prohibition) Act 2015. Adeniyi did not give the convict an option of fine. “After the final analysis, I hereby sentence him to the minimum prescribed by the provision of section 2B VACA without an option of fine.” Adeniyi ruled.

s part of measures to check rising insecurity in the country, Enugu State Government is now to issue security number to all commercial tricycle operators in the state.

The measure, according to Ogbonna Idike, the permanent secretary in the state ministry of transport, would checkmate activities of the operators as well as protect passengers. Idike told newsmen in Enugu on Tuesday that the

RAZAQ AYINLA, Abeokuta

Bank bullion van escorts want safety prioritised

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peratives that offer security services for bullion vans have raised an alarm over associated hazards and security risks. The commercial bank security personnel, who

didn’t want their names in print, appealed to the Central Banks of Nigeria (CBN), the Nigeria Police Force and other regulatory agencies within the sector to compel commercial banks to observe the laid www.businessday.ng

association of tricycle operators in the state would come up with modalities for the issuance of the number, including the financial implication, adding that the ministry would approve such modalities. The official, howev-

down rules for cash-intransit and the safety of bullion van escorts. The concerned operatives, who spoke with journalists in Abeokuta, the Ogun state capital, accused commercial banks

of violating the CBN directives which require them to make adequate provision for safety of personnel and cash in transit. They alleged that commercial banks have continued to breach govern-

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of the people. We have been doing this and will continue to expand our reach to other victims,” Gowon said, adding that victims of rainstorm in th e state w ere a ls o recently assisted. He said “the distribution process will continue to be transparent because the government has consti tu te d an au d i t c om mittee, while the Local Government Emergency Management Committee (LGEC) will ensure that only persons affected by t h e f l o o d w e re b e n e f i ciaries. Representative of the chairman of Ikpoba-Okha local government, Balogb a n Ki n g s l e y , s a i d t h e donation was as timely. He pledged the council’s readiness to deliver the items for onward distribution to the victims of flooding in the council area, noting that only the affe cte d victims w ould benefit as spelt out on the distribution list. Chairman of Igueben local government area, Jossie Ogedegbe said that the council would continue to support the Obaseki-led administration to empower indigenes of the state, especially those affected by flood.

ment’s policy on cash movement. According to them, CBN’s directive requires vehicles moving cash to be armoured, but banks are not complying. “Apart from the prevail@Businessdayng

He further said the sentence would count from the day he was arraigned and remanded in prison. Akile was arraigned on March 16, 2016 by the National Agency for the Prohibition of Trafficking in Persons (NAPTIP) under the Violence Against Persons (Prohibition) Act 2015. He pleaded guilty on September 30. Malik Esomi, the NAPTIP counsel, said that the convict raped a 19-year in Lugbe, Abuja.The prosecutor said the offence contravened the provisions of Section 1 of Violence Against Persons (Prohibition) Act 2015. ing insecurity in the country, nobody; be it policeman, CBN or commercial bank staff should be left unprotected, unless the banks and CBN are saying that the lives of these personnel are not worth more than the insured cash they are accompanying,” the operatives said.


34

Thursday 10 October 2019

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

Why Nigerian billionaires are absent in scramble for local tech startups’ equity Stories By FRANK ELEANYA

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n an interview with Bloomberg in October 2019, Africa’s richest man, Aliko Dangote said he plans to invest 60 percent of his total profit from his massive commercial real estate outside Africa, including the US and the UK, in order to preserve the family wealth. While Dangote’s plan is in good company with the position of many of Nigeria’s billionaires, it is nevertheless, a clear departure from a global trend in which many of the world’s wealthiest individuals and families are investing in technology companies, as a way to bet on the future at a time when fewer startups are going public. For proper context, six out of ten richest people in the US made their fortunes through technology. They also have significant equities in several tech businesses. Whereas in Africa, only one out of the ten richest people on the continent grew rich from tech-related business. Egypt’s Naguib Sawiris’ wealth comes from the telecommunications industry. Dangote, the continent’s richest individual made his money from selling cement. According to Forbes’s most recent ranking, aside from Aliko Dangote who has remained at the number one spot in Africa, Nigeria’s billionaires on the top 10 list include Mike Adenuga, Femi Otedola, Folunsho Alakija, Theophilus Danjuma,

Abdusalam Rabiu, Tony Elumelu, Orji Uzor Kalu, Jim Ovia, and Oba Otudeko. Only 3 of them have some form of exposure to startups in the Nigeria tech ecosystem. Tony Elumelu and Oba Otudeko through their respective organisations - Tony Elumelu Foundation and Honeywell Group - provide risk-free support for tech entrepreneurs. The Tony Elumelu Foundation in collaboration with many international organisations has so far provided support to 3,054 entrepreneurs across 54 African nations with non-refundable seed grants of $5,000. Honeywell through Itanna, promises a four-month incubator programme for tech startups at its enterprise factory. Each cohort receives $25,000 in initial funding as well as

Nigerian children to learn coding, computer science as Google expands digital skills program CALEB OJEWALE

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oogle has announced plans to expand its Digital Skills for Africa program to reach children in Nigeria, Kenya and South Africa, in a partnership that will see the Tech company engaging local organisations through the Cape Town Science Centre to train 200,000 students in the three countries. Google in a statement described CS First as a program aimed at children aged 9 to 16. Created by educators and computer scientists, CS First introduces coding and computer science to students in a collaborative and creative club environment. CS First club members build projects in Scratch (scratch.mit.edu), a blocks-based programming language. The training will be delivered through 26 collaborating organisations across Nigeria, Kenya and

South Africa. For areas with limited access to the internet and limited devices, CS First may be delivered through CS Unplugged. In addition, Google also aims to reach students through an Online Safety Roadshow project building on its work with the Web Rangers program. This project according to Google, will reach parents, teachers and students in all three countries. Also, the company is once again collaborating with SAP and UNESCO as part of Africa Code Week 2019 to engage community-focused organisations across Africa to enable them to host coding workshops for children (aged 11-18) in their local communities during Africa Code Week this month. These activities, according to Google, form part of its commitment to train 10 million Africans in digital skills by 2022.

mentorship. Although these intervention programmes go a long way to help tech entrepreneurs bring their ideas to reality, they, however, fell short of positioning the benefiting startups as serious players in the highly competitive tech world. A Nigerian tech startup with a grant stands little chance against a competitor backed by a series of investments from Silicon Valley. Even back home, these local tech startups are unable to compete with foreign companies that play in the same space. For instance, OPay, a well funded Chinese tech company that provides fintech and ride-hailing services, is outspending its Nigerian competitors leaving them flat in the dust. Though equity funding in the tech space has grown

over the years, it is primarily led by foreign investors. Nigerian startups have also consistently represented on the top three leaders spots of the most funded African tech businesses. Stakeholders nonetheless have stressed the need for local investors to drive funding in the tech space. Jim Ovia, chairman of Zenith Bank, is arguably the only billionaire on the list with sizeable equity in a Nigerian tech company, through his venture capital (VC) firm, Quantum Capital. Quantum Capital’s $5 million investment in TeamApt is the largest equity stake by a Nigerian VC and a billionaire in Nigeria. But some analysts say Ovia is not new to the tech space. Ovia’s dalliance with the tech ecosystem goes way

back to the time of Omatek Computers as an early investor. Zenith Bank, the financial institution he founded, also invested in a cybersecurity firm, Cyberspace Network Limited where Ovia is presently the chairman. He is also the chairman of both the Nigerian Software Development Initiative (NSDI) and the National Information Technology Advisory Council (NITAC). He is a member of the Honorary International Investor Council as well as the Digital Bridge Institute (DBI). Collins Onuegbu, vicechairman of Signal Alliance and an angel investor with Lagos Angel Network (LAN) says the billionaires had in the past invested in early tech startups and may not be so active today because the lines are still blurred in the space with no clear path to profitability. “An African High Networth Individual (HNI) will understand investing in a bank better than doing VC or a fund,” said Victor Asemota, African partner Alta Global Ventures and a tech expert. “Even when you manage to get them into a fund structure, you’ll end up doing so much reporting to them on “their money” you will regret it. I have a VC friend who told me that he gets more grief from his local LPs [local partners] than he gives his founders. Imagine if he wasn’t there as a buffer?” Onuegbu says that just like Ovia, there is a possibility that the billionaires are

Without power, telecoms sector growth, broadband penetration remain limited - Experts CALEB OJEWALE

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igeria had a plan to achieve 30 percent broadband penetration in 2018, today it stands at 33 percent, but for the country to do even better, deployment of technologies and infrastructure have to be complemented with growth in power supply. As experts suggested at a Power and Telecommunications Synergy Conference, sponsored by IHS Nigeria and organised by Thistle Praxis this on Tuesday, equipment to deepen telecommunications services are intrinsically tied to being able to power them; particularly in a cheap, efficient manner that does not require constant fuelling through expensive alternative sources. Deliberations at the conference focused on

the potentials for expanding telecommunications coverage, and how synergy between both the public and private sectors is required to achieve those potentials. Mohamad Darwish, IHS Towers senior vice president, Co-founder and IHS Nigeria CEO, said at the event, that the conference was designed to provide insightful and constructive solutions to help achieve the nation’s vision for broadband growth and inclusive prosperity. “The telecommunications sector is of ultimate importance to the economic growth of Nigeria. We are excited to be part of those broader solutions emerging from the power and telecommunications sector to address the country’s major challenges and those of West Africa at large,” he said.

Darwish stressed the need for both private and public sectors to collaborate on driving innovative solutions that will enable Nigeria to meet its growing demand for broadband connectivity. “As of March 2019, according to the Nigerian Communications Commission (NCC), broadband penetration in Nigeria was pegged at 33 percent and an increase to the 70 percent target will require everyone’s efforts. This endeavour is too complex to be addressed solely by governments, operators or society. This needs to be a shared goal. We must all work together to achieve connectivity nationwide,” Darwish said. James Momoh, chairman, Nigerian Electricity Regulation Commission described the power and telecommunications sec-

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

investing but through instruments other than themselves. “Some may not want their investments known, I don’t think we should generalize. also, it’s not as if they have a duty to invest in tech. Tech has a duty to prove that it’s a good investment for old money. Has it done that? There is a promise but that’s in the future,” Onuegbu. In terms of being a “good investment”, a few startups have burnt their share of midnight candles and are now pushing their way to the top tech space on the continent. Thus, there is certainly a case to be made for more “old money” taking big equity slice in the tech space. Flutterwave, a Nigerian fintech startup founded by Iyinoluwa Aboyeji and Olugbenga Agboola was recently ranked 97 among the top 102 startups that have graduated from US-based global accelerator, Y Combinator. It is Africa’s only representative on a list of companies valued at about $150m each . The startup has raised a total of $20.1m to date, with the latest known round made in October 2018. Much of the rounds were from foreign VC firms. Co-Creation Hub (CcHUB) founded by Bosun Tijani and Femi Alonge has also set the pace by becoming the first incubator in Africa to acquire another incubator. Early in 2019, Carbon, formerly Pay later also became the first local fintech startup in the lending segment to acquire another fintech firm, Amplify.

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tors as key economic pillars in Nigeria. According to him, paying attention to the growth and development of both sectors will further aid the diversification of the country’s economy. “This conference was enlightening in terms of the various ways in which we can expand within and outside of our industry. It addressed key concerns that will ultimately lead to a better understanding of both industries. It provided insights through engaging sessions with experts, which I believe will have significant impact in the near future,” he said. The Conference hosted experts within the power and telecommunications industries in an effort to lead discourse on the continued development of Nigeria’s telecommunications industry.


Thursday 10 October 2019

BUSINESS DAY

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BUSINESS TRAVEL

Turkish Airlines invests in technology, services to improve customer experience …as corporate club conference highlights travel trends Mehmet Ilker Aycı, chairman and CEO of Turkish Airlines, Melanie Garrett, vice president, Supplier Strategies, Global Business Travel Association, (GBTA), Celeste Headlee, journalist, author, and accomplished speaker. Other speakers present at the event were Chris Crowley, Alenjandro Aguirre, Michelle Schoenfeld, Christian Rosenbaum, Mritunjaya Chandra Mohan, Simon Carmouche, Jennifer Fackelman, amongst several others. Held under the main theme of “Expanding the Opportunities,” the conference’s first session hosted an interview between Aaron Heslehurst, the renowned anchorman of BBC News, and Ilker Aycı.

IFEOMA OKEKE

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u rk i s h A i r l i n e s, a leading global airline with over 300 aircraft (passenger and cargo) flying to over 300 destinations worldwide has said that it will continue to invest hugely in technologies, equipment and services to give customers an experience they will hardly find in any other airline across the world. The airline which has built a good connection for passengers travelling across the world through its extensive network, central, strategic, unique position of its Istanbul hub, which bridges two continents, has stepped up in meeting the rising demand occasioned by increase in passenger number through investments in its product offerings. Speaking during the 10th year anniversary of its Corporate Club Conference in Istanbul, Mehmet Ilker Aycı, chairman and CEO of Turkish Airlines said Istanbul has become a natural hub for Turkish Airlines and how the airline will take advantage of the hub to take passengers to their various locations is important. Aycı said what is more important is that the airline is changing its technologies and the way it is doing business to give passengers the best of experiences. “Our most important competitor is ourselves. We look at what passengers expect from us and how we can improve their comfort and make them happy. From the beginning to the end, we want the process to be a great experience for them. We want you to feel at home irrespective of your nationality. What is most important to us is your comfort. This is the traditional Turkish experience. “Not everyone can give this feeling to customers. We make you feel like you are being taken care of at home. Whether you are in economy or business class, we take care of your experience. “In the last 15 years, Turkish Airlines have grown three times more and we are still growing and changing our technologies to newer ones,” he said. Speaking on the airline’s fleet, the CEO said Turkish Airlines has the youngest fleet in the world. “We have changed everything from corporate identity, to appearance, to uniforms amongst others.” On the suspension and resumption of Boeing 737 MAX

aircrafts on its fleet, Aycı said the airline awaits the investigation of the Federal Aviation Administration, (FAA). “FAA is a reliable organisation. I believe in them and I have a strong conviction that FAA will do their job. They are working on it and they are making additional and security measures. The passenger perception on the aircraft is also there and this is a challenge. We are committed to the safety of passengers. Our job is to give maximum safety and high quality services. Our first priority is safety. We have built the largest airport in the world and we are currently building the largest maintenance facility in the world,” he explained. Global business travel trends Also speaking at the event in Istanbul, Melanie Garrett, vice president, Supplier Strategies, Global Business Travel Association, (GBTA) spoke on business travel trends that are been affected by slow economic growth, trade uncertainty and emerging markets. She said Turkey is the 17th largest business travel market in the world, with spend of 14.7 billion dollars in 2018. According to her, by 2020, modest air price growth is expected in North America (2.4percent), Western Europe (1.5 percent), Asia Pacific (2.2percent), Latin America (3.2percent), Eastern Europe(3.2percent) and Middle East and Africa (2.2percent). For modest hotel price growth expected in 2020, she explained: “North America (2.4percent), Western Europe (1.7 percent), Asia Pacific (2.2percent), Latin www.businessday.ng

America (4.5percent), Eastern Europe (4.1percent) and Middle East and Africa (2.5percent).” Garrett disclosed that the best ways to cut cost but maintain productivity are to reduce the number of business trips but spend the same amount per trip and reduce the quality of travel but travel at the same frequency. On travel policies globally, she advised that travellers must follow rules to be reimbursed and must be abreast with set of rules and guidelines that allows for exceptions and flexibility. She stressed that regardless of region, technology is a major part of the travel manager’s role. She said some of the yardsticks to measure for effectiveness include traveller feedback, cost savings mechanisms, policy compliance, employee productivity, return on investment for airlines, employee retention, appeal to potential employees and return on investment per trip. On artificial intelligence (AI) and machine learning and how it is changing the airline business, she said for personalised search, search results are presented based on traveller preference or purchase history; chatbot assists during booking process and audit helps with automated problematic expense reports. She said some of the top challenges facing global travel include: “traveller technology integration such as apps or tools, internal technology integration (such as OBT and Expense, HR data feed), data accuracy, travel data integration, booking compliance, availability of travel content and internal communications with travellers.

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“Other challenges include providing stakeholders with the information they need, internal communications with company stakeholders, vendor compliance, understanding travellers needs and understanding stakeholder needs, amongst others.” Turkish Airlines Corporate Club event 2019 The Turkish Airlines Corporate Club event 2019, which marked its 10th year anniversary, was the prestigious gathering of business travel professionals from all over the world. According to Mert Dorman, senior vice president, corporate sales, Turkish Airline said its corporate club membership have increased over the years, adding that in the next few years, the airline hopes to get more corporate club members from all over the world. Dorman said it has its corporate club members in England, USA, Spain, Far East, Japan, China and Italy, amongst others. As part of its Turkish Airlines Corporate Club program designed exclusively for corporate customers, Turkish Airlines hosted the Turkish Airlines Corporate Club Conference held in collaboration with the Global Business Travel Association (GBTA) between 7th and 8th of October 2019. An international event where global industry leaders gather once a year to discuss the future of business travel, the conference was attended by over 1200 guests from 75 countries this year. The event welcomed prominent names of the global business travel industry in Istanbul such as @Businessdayng

About Turkish Airlines Established in 1933 with a fleet of five aircraft, Turkish Airlines has grown into a leading global airline with over 300 aircraft (passenger and cargo) flying to over 300 destinations worldwide. Thanks to its extensive network and the central, strategic, unique position of its Istanbul hub, which bridges two continents, Turkish Airlines is the airline that flies to more countries than any other airline in the world. As a widely preferred global airline, Turkish Airlines delivers a delightfully different travelling experience to its guests in Economy Class and Business Class, and it is internationally recognized for its excellence in products and services offered. Turkey’s national flag-carrier invests in its quality of service, in-flight entertainment systems, comfortable seats, gourmet cuisine and its employees. As one of Europe’s oldest airlines, Turkish Airlines is always at the forefront of the latest technological advances and innovations in the aviation industry and boasts one of Europe’s youngest fleets. Turkish Airlines understands the responsibility of being a pioneer within the industry, and is determined to carry out its mission moving forward. Being a prominent global airline, Turkish Airlines is proud to be preferred for its unparalleled service, superior quality, trustworthiness and reliability. Turkish Airlines is also a Star Alliance member. The Star Alliance network was established in 1997 as the first truly global airline alliance to offer worldwide reach, recognition and seamless service to the international travellers.


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Thursday 10 October 2019

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

450,000 barrels of stolen crude unsettle oil firms ... want FG to intervene Stories by OLUSOLA BELLO

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he acti v i t i e s o f crude oil thieves are given the operators of Oil Mining Lease (OML 26) some sleepless nights. The operators are, therefore, calling on the Federal Government to come to their aid and rescue their businesses. About half of the production of the asset is being siphoned on daily basis and this is seriously impacting the operations of companies that are equity holders in the asset and the Nigerian economy at large, they say. The asset produces 10,000 barrels per day but it is losing around 5,400 barrels to oil thieves daily. Implying that over 450,000 barrels of crude are lost within three months. The asset which is jointly managed by officers of Nigeria Petroleum Development Company (NPDC) and First

Asue Ighodalo, chairman, Nigeria Economic Summit Group; Taaj Shobayo, President Muhammed Buhari’s commercial integration manager, Shell Nigeria, and Bashir Bello, Shell Nigeria’s general manager, business and government relations, during the visit of the President to the exhibition booth of Shell companies in Nigeria at the opening session of the 25th Nigeria Economic Summit in Abuja… on Monday

Hydrocarbon under what is called Asset Management Team (AMT) has suffered series of tapping on its crude oil pipeline by the thieves. The stolen crude is either taken to illegal refineries site

which has around 40 refineries scattered deep in the forest where they cook the crude or the crude is allegedly trucked out of the area to other destinations in the night. One of the most worrisome

Kyari says Petroleum Legislation will give focus to Oil and Gas Industry

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n a bid to accelerate Foreign Direct Investment (FID), the Nigerian National Petroleum Corporation (NNPC) has expressed the determination of the Federal Government to work with the National Assembly and all other stakeholders to pass the long awaited petroleum legislation considered to be capable of providing a winwin scenario for all players in the Oil and Gas Industry. Mele Kyari, Group Managing Director of the NNPC, made this commitment while making a presentation at the 25th anniversary edition of the Nigerian Economic Summit Group (NESG) with the theme: ‘Rethinking the Future of Extractives’. As release by NNPC acting group general manager, group Public affairs division, Samson

Makoji, said Kyari explained that for Nigeria to make the most of the Oil and Gas Industry, passage of the petroleum legislation was imperative as the bill has the prospect to guarantee a robust fiscal regime, protect the environment, ensure development of host communities, ensure proper alignment with other sectors and encourage investors to expand their investments in Nigeria. “Getting the petroleum legislation passed is the right thing to do because investors will not invest their money if they are not sure of how they are going to get their investment back and what benefits can they get from their investment and how stable the investment climate is. We must resolve the petroleum legislation and am

aspects of the whole saga according to the company officials, is the fact that where this is happening at Agbarha-Otor which housed the LACT Unit of the company is around 700 meters away from the 222 Bat-

talion of the Nigerian Army headquarters. According to Blessing Okpowo, manager, Government, Security and Community Affairs, the thieves started stealing from about 500 barrels a day, then to 800 barrels; they increased to 1000, to 1,500 barrels a day. As of last week, the asset was losing 5, 400 barrels every day. When this is calculated over time, it has lost well 450,000 barrels of crude within three months. He said the line being tapped comes from the company’s Flow Station at Ozoro. “It is 29 kilometers from our flow station to the LACT Unit where we offload into the major trunk line that goes to the TFP (Trans Forcadoes Pipeline). So, it is in-between the 29 km that they have this tapping points and steal our crude,” Okpowo said. The company he stated works closely with the soldiers and who also supports the organisation in providing security. “There are over 40 soldiers

that are in the company’s operations.” He, however, stated that It is a mystery to him how the thieves still succeeds in stealing the crude oil without anybody getting arrested. The Modus Operandi of the thieves is that they come to connect their holes to the pipeline in such a way that anyone can hardly notice it, he added. “We discovered a threeinch pipe which they connected to our 10 pipeline, insert a valve and begin to load into trucks and go away. Underneath this place is where our 10” pipeline that goes to the LACT Unit in Eriemu,” he said. “We came and harvested the three-inch pipeline that was connected to our pipeline and dug underneath three kilometers away before inserting their valve, we removed their pipe and clamped the hot tap spot. This is just the preliminary of what they did, the real refinery, that is where they are cooking the crude is deep inside the forest,” he added.

DPR warns oil, gas laboratory operators not to comprise data analysis results

aware that this administration is working assiduously to get the law passed within the shortest frame of time,” Mallam Kyari assured. He stated that the petroleum law, when passed, would create a robust fiscal regime that would make the Oil and Gas Industry competitive, even as he expressed optimism that International Oil Companies (IOCs) in the country would be spurred to invest more in the petroleum sector after the passage of the bill. Mallam Kyari assured that before the petroleum legislation is passed, a lot of fora would be organized to harvest inputs from relevant stakeholders, saying that the proposed law would be aligned to best practices and it would be a win-win for all.

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n ensuring industry ethical standard and best practices, the Department of Petroleum Resources (DPR), has warned oil and gas laboratory operators to avoid compromising data analysis results and upheld objectivity and sincerity of purpose. Shakur Ahmad Rufai, acting director of DPR gave the warning at the 3rd Oil and Gas Industry Laboratory Stakeholders Workshop held in Lagos to chat a new direction for laboratory managers and operators towards embracing industry best practices in laboratory data analysis in the oil and gas industry . The 2-day workshop is themed ``Enhancing laboratory best practices and capacity Building towards promoting sustainable development in the Nigerian oil and gas industry’’.

The DPR director who was represented by Musa Zagi, deputy director, Health, Safety & Environment (HSE) Division of DPR said laboratory practice in the Nigerian oil and gas Industry should not only be viewed as a business or money-making venture. He said that laboratory practices should be seen as a critical and sensitive component which inputs are critical for decision-making across the oil and gas value chain. According to him, `It is indeed a great pleasure and honour as I stand here in your midst today to kick-off this very important stakeholders’ workshop represented by CEOs of laboratories, members of the academia, representatives of oil and gas companies, “I wish to express my pro-

found appreciation to all our esteemed guests and stakeholders, here present for making out time to come from far and near, in spite of your tight and busy schedules, to attend this workshop. “This, to me, signifies the seriousness and importance that you all attach to this engagement which is geared towards continuous improvement of laboratory practice in the Nigerian oil and gas industry. “In the same vein, I would like to thank the head of HSE and his dedicated team for successfully putting this year’s stakeholders’ workshop together,’’ he said. The DPR boss said the question here is how equipped and efficient are our laboratories for conducting these scientific observations and analyses?

Ibadan, Eko Discos say meeting customers satisfaction is not negotiable

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badan Electricity Distribution Company has fagged off its 2019 Customer service week designed to appreciate its Customers across the seven states of the federation for their partnership all through the year. It stated that it will work at all time to satisfy it customers because that is the reason it is business The 2019 Customer service week coincides with the introduction of the Customer Relationship Management initiative (CRM). The CRM rooted through the Customer Olusola Bello, Team lead,

care across the franchise will give the customers better and faster access to getting their complaints resolved. The states which the company services include Oyo, Ogun, Osun, Kwara, parts of Kogi, Niger, and Ekiti With the CRM, all customers’ details are well synergized and digitized for easy call up and follow of issues, even with the not so learned Customers, the CRM allows for input of complaints by customer Relations officers. The CRM also gives power to

Graphics: Joel Samson.

the Customers to know and be able to cheek for updates and progress of their complaints as they would be issued Ticket Identity Cards and get notifications of work done. As part of appreciation of its Customers, IBEDC has also come up with the debt settlement plan which encourages negotiations, discounts and a better spread of huge outstanding. Also Eko Electricity Distribution Company (EKEDC) had a similar event in the week. Adeoye Fadeyibi, managing

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director and chief executive officer of EKEDC while addressing journalists emphasized the importance of the customer service week. He said “The week is an opportunity to celebrate and appreciate our most important stakeholders, that is, our customers. Without our customers, we won’t be in business. It is also an opportunity to celebrate our staff who is our internal customers because they work effortlessly to ensure we achieve our goals”. Commenting on the company’s Corporate Social Re-

sponsibility (CSR), the EKO boss said the company has partnered with many orphanages as part of its CSR. “We did a school feeding programme recently which has continued into this new session, we have partnered with Ikoyi prisons to supply relief materials to inmates, we also involve ourselves with sports and youths development and one of our beneficiaries just won the just concluded squash competition in Abeokuta. We have a tennis event sponsored by us at Ikoyi club among others”.

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He said that customer-centricity is an integral part of the company’s growth strategy which has helped improve the image of the company and its service delivery. Iyiola Ezichi, Head of the customer service department of EKEDC, explained further that was full of activities ranging from Corporate Social Responsibility activities to customer and staff awards night. We did not only celebrate our customers but our staff; especially the ones that support our customer service delivery”.


Thursday 10 October 2019

BUSINESS DAY

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news

MDAs to begin 2020 budget defense October 10 SOLOMON AYADO, Abuja

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pokesman of the Senate, Adedayo Adeyeye said on Wednesday that Ministries, Departments and Agencies (MDAs) would begin defense of their allocations in the 2020 budget on October 10, 2019. Adeyeye stated this while fielding questions from newsmen in the National Assembly, saying the National Assembly was committed to ensuring early passage of the Appropriation Bill, and the defense by MDAs would end October 29. “Budget defense w ill start by October 10, and end on October 29, 2019, after which all MDAs will be coming in for defense,” Adeyeye said. Commenting on the resolve of the Senate to collaborate with the House of Representatives to have joint budget defense meetings, he agreed that the collaboration was to enhance speedy process and foster timely passage of the budget. “ The collaboration is

true; is like letting the cat out of the bag. The Senate and Reps will collaborate to hasten the defense process that is going to be done,” he said. It would be recalled that Senate president, Ahmad Lawan, had on Tuesday, stated that the National Assembly committees were ready to receive the ministers and other heads of government agencies for the defense of the budget estimates of the various MDAs. Lawan had directed all MDAs to appear before the committees for the defense of their budget estimates within the month of October, saying, “We have earmarked the month of October to be the sole window for all budget defense activities in this year, by all MDAs. “In this regard, our committees will be expected to conclude their work on budget defense within October, this year. The subsequent necessary legislative work will be carried out in November and December, leading to eventual passage before the end of this year.”

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Sex-for-marks: Senate fixes five-year jail term, N5m fine on offenders SOLOMON AYADO, Abuja

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enate on Wednesday fixed five-year jail term and N5 million fine on any lecturer convicted for sexual harassment on male or female students. This was contained in a bill on sexual harassment sponsored by Deputy Senate President, Ovie Omo-Agege (APC, Delta Central). The bill, passed by the eighth Senate, was reintroduced in the ninth Senate. The bill had suffered a major setback because it was not granted assent by the President after being passed by the eighth Senate. The reintroduction of the bill is particularly hinged on the rampant cases of sex for marks witnessed in schools across the country in recent time. The decision by the senators comes amid allegations of sexual harassment levelled against two lecturers of the University of Lagos by female students. The stories,

reported by the BBC, have provoked condemnations from all segments of the Nigerian society. Me d i a re p o r t s n o t e d Wednesday that the university authorities had suspended the affected lecturers. The bill states, “An educator will be “guilty of committing an offence of sexual harassment against a student if he/she has sexual intercourse with a student who is less than 18 years of age; has sexual intercourse with a student or demands sex from a student or a prospective student as a condition to study in an institution, or as a condition to the giving of a passing grade or the granting of honour and

CHANGE OF NAME

I, formerly known and addressed as Dormes Felicia Tanee now wish to be known and addressed as Felicia Tanee. All Former documents remain valid. General public please take note.

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scholarships.” It further stipulates, “Any person who commits any of the acts specified in Section 4 of this Act is guilty of an offence and shall, on conviction, be sentenced to imprisonment of up to five years, but not less than two years without any option of a fine.” Lawmakers have argued that the bill should be more inclusive and not discriminatory or targeted only at university lecturers. Meanwhile, seven bills scaled first reading in Senate on Wednesday. They are Federal Polytechnic Daura Act (Amendment) Bill, 2019, sponsored by Babba Kaita Ahmad (APC,

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I, formerly known and addressed as Colleen Ernest Clifford now wish to be known and addressed as Colleen Ernest Cliff-Tolofari. All Former documents remain valid. General public please take note.

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Katsina North); Modibo Adama University of Technology Bill, 2019, by Aishatu Ahmed Dahiru (Adamawa Central); National Rice Development Council Bill, 2019, sponsored by Muhammad Enagi Bima (APC, Niger South), and National Health Insurance Commission Bill, 2019, sponsored by Yahaya Oloriegbe (APC, Kwara Central). Others are National Institute for Business Studies Nnewi, Anambra State Bill, 2019, by Ifeanyi Patrick Ubah (YPP, Anambra South), and Federal College of Education Monguno, Borno State Bill, 2019, sponsored by Abubakar Kyari (APC, Borno North, respectively.

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I, formerly known and addressed as Miss Aderonke Olubusayo Akinwande now wish to be known and addressed as Mrs. Aderonke Isaac Otitieme. All Former documents remain valid. General public please take note.


38

Tuesday 10 October 2019

BUSINESS DAY

news Nigeria’s chase after taxes could be at expense of economic growth MICHAEL ANI

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L-R: Hassan Usman, MD/CEO, Jaiz Bank; Adesola Adeduntan, CEO, First Bank of Nigeria Limited; Umaru Mutallab, chairman, Jaiz Bank; Dame Susan Rice, chair of the Scottish Fiscal and member of the Banking Standards Board, and Sarah Breeden, executive director, Bank of England, at the Ethical Finance Conference, at Royal Bank of Scotland, Edinburgh

Nigeria seeks $62bn from Shell, Chevron, Exxon, Total from past profits DIPO OLADEHINDE

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igeria is seeking to recover as much as $62 billion from international oil companies (IOCs) using a 2018 Supreme Court ruling it says enables it to increase its share of income from ProductionSharing Contracts (PSC). The PSC is a form of joint agreement for exploration, development and production of oil resources that makes extractive companies bear the cost of production, unlike the joint venture agreement where government is indebted with cash calls. Under the PSC law, companies including Royal Dutch Shell plc, ExxonMobil Corp., Chevron Corp., Total SA and Eni SpA agreed to fund the exploration and production of deep-offshore oil fields on the

basis that they would share profit with the government after recovering their costs. According to documents seen by Bloomberg and verified by Nigeria’s Ministry of Justice, Nigeria is now seeking to recover as much as $62 billion from the IOCs. The government is building its premise on a 17 October 2018 Supreme Court judgment in the case between the Attorney-General (AG) of Rivers State, and two others versus AG of the Federation. The judgment mandates the Federal Government to increase its share of revenue under oil Production Sharing Contracts (PSC) whenever the price of crude oil exceeds $20 per barrel in line with Section 16 (1) of the Deep Offshore Inland Basin Production Sharing Contract Act (DOIBPSCA). “There is no doubt that section 16 of the Act provides

for a periodic review of the Act and a review of the provisions if the price of crude oil exceeds $20 per barrel. It, however, did not prescribe how it should be done whether by a regulation or by order. The absence of a mode of review created ambiguity and a lacuna in the Act,” said Taiwo Ogunleye of the Department of Business Law, Faculty of Law, Obafemi Awolowo University, Ile-Ife. Andersen Tax, an independent tax firm with a worldwide presence, said it is still unclear how such lost revenue would be recovered by the Federal Government from contractors in the PSC arrangement as it appears this judgment seeks to retrospectively apply a new fiscal term on previous sharing arrangements. “More so, the Federal Government failed to exercise its right to upwardly review its revenue share when the price

of crude oil exceeded $20 per barrel,” Andersen Tax said. But analysts say the IOCs operating in Nigeria’s oil and gas sector will be looking at options available to them. “The IOCs will definitely go to court of arbitration which will drag for a long time. The Federal Government cannot blame the International Oil Companies (IOCs) for exploiting a weakness in Nigeria’s legislative structure,” Ademola Henry, team leader at the Facility for Oil Sector Transformation (FOSTER), told BusinessDay. According to stakeholders, the PSC had attracted IOCs due to its favourable fiscal and legal regimes, which offer a higher profit share for the more marginal and high-risk projects offshore.

•Continues online at www.businessday.ng

World Bank lowers SSA growth forecast on global uncertainty ...again warns Nigeria, SA, Angola slowing down region’s prospects ONYINYE NWACHUKWU, Abuja

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he World Bank has lowered its earlier growth forecast for sub-Saharan Africa by 0.2 percentage points to 2.6 percent in 2019, amid concerns on how global uncertainty continues to slow down Africa’s economies. The forecast is, however, higher than 2.5 percent recorded last year. Growth in sub-Saharan Africa remained slow through 2019, hampered by persistent uncertainty in the global economy and the slow pace of domestic reforms, according to the 20th edition of Africa’s Pulse, the World Bank’s twiceyearly economic update for the region. This edition of Africa’s Pulse includes special sections on

accelerating poverty reduction and promoting women’s empowerment. “Empowering women will help boost growth. African policy makers face an important choice: business as usual or deliberate steps toward a more inclusive economy,” Hafez Ghanem, World Bank vice president for Africa, said in a mailed report on Wednesday. “After several years of slower-than-expected growth, closing the opportunity gap for women by removing barriers to their economic participation is the best way forward,” Ghanem said. Global uncertainty is taking a toll on growth well beyond Africa, and real GDP growth is also expected to slow significantly in other emerging and developing regions. The Middle East and North Africa, www.businessday.ng

Latin America and Caribbean, and South Asia regions are expected to see even larger downward revisions in their growth forecasts than in subSaharan Africa for 2019. The World Bank noted that for sub-Saharan Africa’s regional averages, the picture is mixed. The recovery in Nigeria, South Africa, and Angola – the region’s three largest economies – has remained weak and is weighing on the region’s prospects. In Nigeria, growth in the non-oil sector has been sluggish, while in Angola the oil sector remained weak. In South Africa, low investment sentiment is weighing on economic activity, it said. Excluding Nigeria, South Africa, and Angola, growth in the rest of the subcontinent is expected to remain ro-

bust although slower in some countries. The average grow th among non-resource-intensive countries is projected to edge down, reflecting the effects of tropical cyclones in Mozambique and Zimbabwe, political uncertainty in Sudan, weaker agricultural exports in Kenya, and fiscal consolidation in Senegal. In Central African Economic and Monetary Community countries, which are also resource-intensive, activity is expected to expand at a modest pace, supported by rising oil production. Growth among metals exporters is expected to moderate, as mining production slows and metal prices fall.

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igeria has opted for aggressive increments in taxes levied on its citizens, rather than intensifying efforts at increasing the number of people in the tax net, even though the former might have some negative implications in an economy struggling to grow above 2 percent. The Federal Government is planning a hike in indirect taxes across a range of goods and services from telecommunication to banking and consumables, a move that analysts say is ill-advised, considering that the effects of higher costs of goods and services would invariably be borne by consumers. Many of these consumers are already burdened by weak purchasing power. The aggressive tax increase which is aimed at boosting government revenues, in the wake of a shortfall, is coming at a time when Africa’s biggest oil-producing economy is stuck in slow growth, high unemployment, low investment, harsh operating environment, low government finances, high inflation and insecurity. And even the readings from Purchasing Managers Index, a forward indicator of economic activities, are not showing signs of any improvement.

First, is the government’s plan by 2020 directing banks to impose a tax on all online transactions for the purchase of goods and services, then a move to increase by 50 per cent Value Added Tax (VAT), from 5 per cent to 7.5 per cent. Nigeria has also passed the Nigeria Police Trust Fund (Establishment) Act into law. The new law, aimed at throwing support for police training, equipment purchases, and other police personnel matters, calls for the imposition of a 0.005 per cent levy on the net profit of companies carrying on business operations in the country. Without allowing the dust of the aforementioned planned increase to settle, the Senate is proposing a Bill entitled “Communication Tax Bill, 2019”. The Bill if passed into law will require consumers of voice, data, Short Message Service (SMS), multimedia message services and payTV services to pay a 9 per cent tax on the fees paid for the use of these services. This additional tax is exclusive of the 5 per cent VAT, already paid by consumers and communication services, as well as the 12 per cent Customs import duty paid on ICT devices, and the 20 per cent tax levied on SIM cards.

•Continues online at www.businessday.ng

NSE, Luxembourg Stock Exchange sign MoU to expand green bond markets IHEANYI NWACHUKWU

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he Nigerian Stock Exchange (NSE) and the Luxembourg St o c k E x c ha n g e (LuxSE) on Wednesday signed a Memorandum of Understanding (MoU) to cooperate in promoting cross listing and trading of green bonds in Nigeria and Luxembourg. The Nigerian green bond market received international recognition following the issuance and listing on the NSE of the N10.69 billion Federal Government sovereign green bond in December 2017. This issuance sparked significant interest from the international and local capital market communities as it opened new investment opportunities, especially for domestic investors, to increase their exposure to financial instruments that generate social and environmental impact. The MoU signing ceremony led by Oscar N. Onyema, NSE CEO, and Robert Scharfe, LuxSE CEO, took place during the annual meeting of the World Federation of Exchanges in Singapore. The MoU further estab-

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lishes an agreement for the two exchanges to collaborate with a view to sharing best practises and organising joint initiatives in their respective markets. “This collaboration reinforces NSE’s drive to foster the growth of sustainable finance in Nigeria, a journey that commenced with the launch of the first Sovereign Green Bond by NSE, in partnership with the Federal Ministry of Environment, Federal Ministry of Finance and the Debt Management Office,” Onyema said. “With the MoU, issuers will enjoy the benefit of increased visibility through the cross listing of their securities in Nigeria and Luxembourg. The partnership will further facilitate the growth of the green finance industry in Nigeria and ultimately deepen the Nigerian capital market through the mobilisation of the foreign green capital needed to fund sustainable projects in Nigeria,” he said. On his part, Scharfe said sustainable finance was becoming a truly global movement.

•Continues online at www.businessday.ng


Thursday 10 October 2019

BUSINESS DAY

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news R-L: Roderick Wolfenden, head of Markets, EY Africa; Tokunbo Uko of EcoBank; Henry Egbiki, regional managing partner for West Africa, EY, and Ashish Bakhshi, head of markets, EY West Africa, at the official launch of EY Africa Attractiveness Survey Report 2019, in Lagos.

IMF points Nigeria to country’s economic... Continued from page 1

economic recovery, increasing external vulnerabilities, and elevated fiscal deficits that have seen the Federal Government rely on the central bank for bailouts, thereby complicating monetary policy. “A comprehensive package of measures – whose design and implementation will require close coordination within the economic team and newly-appointed Economic Advisory Council – is urgently needed to reduce vulnerabilities and raise growth,” said Amine Mati, the team lead, after a two-week visit which ended Monday. Reacting to the IMF report, spokesman for the Honorable Minister of Finance, Budget and Planning Yunusa Tanko Abdullahi said overall the report was good because it acknowledged the effort of government in improving the economy through transparency and inclusiveness. “Particularly also the IMF team acknowledged the decreasing inflation rate which has continued to fall for nine consecutive quarters and emphasized that growth is expected to pick up to 2.3% this year” Abdullahi told BusinessDay on phone. Buhari in September scrapped the former economic management team headed by Vice President Yemi Osinbajo and set up an economic advisory council

led by Adedoyin Salami, a central bank board member until 2017 and associate professor of economics at the Lagos Business School. The council has Chukwuma Soludo, a former central bank governor, and Bismarck Rewane, a leading economist, as members of the eight-person team. Recommendations of the Washington-based fund follows observation that constrained purchasing power of Nigerians coupled with heightened cautiousness of foreign investors in committing to Nigeria’s economy continues to drag growth below population expansion, dampening outlook under current policies. The team noted that deficit in Nigeria’s current account, triggered by a one-off import surge, would likely persist while the pace of capital outflows would still weigh on Nigeria’s foreign reserves which have fallen below $42 billion as at the end of August as foreign holdings of short-term securities and equity decline. The continued dependence of the Federal Government on the CBN to plug deficits of its “over-optimistic revenue projections” is seeing more than half of government earnings go to interest repayment and requires an ambitious revenue-based fiscal consolidation, the IMF team noted.

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Chaos looms as DisCos consider returning... Continued from page 1

threat by the Nigerian Electricity Regulatory Commission (NERC) to revoke the licences of eight DisCos for failing to meet remittance threshold set for July 2019 and the government’s decision to impose new members to their board, sources told BusinessDay. “While NERC has the power

to cancel licences of erring operators, doing it now could put the market into chaos,” Ayodele Oni, energy lawyer and partner at Bloomfield Lawfirm, warned. The affected DisCos include Abuja Electricity Distribution Company plc, Benin Electricity Distribution Company plc, Enugu Electricity Distribution Company plc, and Ikeja Electric plc. Others are Kaduna Electricity Distribution Company plc, Kano Electricity Distribution Company plc, Port Harcourt Electricity Distribution Company plc, and Yola Electricity Distribution Company plc. DisCos have held a flurry of meetings since the Bureau of Public Enterprise (BPE) ordered the addition of two more representatives to their board.

This brings the number of BPE board members on DisCos’ boards to three, but the agency has not reviewed the shareholder agreement which gives it overriding powers based on the previous one member on the board. Industry players say the government, by this action, has strengthened its position on the board of the DisCos without conceding anything to them. Some analysts say the action of the regulator sends a bad signal for investors as it worsens regulatory uncertainty which constrains new investments into Nigeria. Regulatory risks are considered the biggest risks facing businesses in Nigeria. “This kind of power is wielded sparingly by a regulator, otherwise you risk hurting new investments as investors will be scared of the country,” said Chuks Nwani, energy lawyer and partner at PowerHouse International. NERC has threatened to cancel the licences of these DisCos for failing to meet remittance thresholds that were a precondition for a tariff increase.

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In a world awash in capital, Nigeria can’t lay hands on it Continued from page 1

Blackwell of the Ontario Teachers’ Pension Plan Board that has over $180bn in management, highlighted the abundance of private capital globally. “The liquidity is there but you might not be able to transfer it to where it is needed,” said one of the speakers in a manner that will resonate in Nigeria where the shortage of capital means the country is focused on defending the naira instead of lowering cost of capital to grow the millions of small business. The government, despite consistently failing to deliver the infrastructure required to lubricate Africa’s biggest economy, has also been somewhat hostile to private capital. According to the speakers, the goal of every nation is to ensure it can get enough of the capital it needs by focusing on shaping the market profiles, mitigating market risks, enthroning sensible regulatory regimes and helping to engender resilience of the economy. Nigeria seems to be lost on all of these metrics. Leading economist Ayo Teriba says Nigeria’s numerous economic challenges boil down to mainly one issue – illiquidity or the shortage of development capital – and that it is for this reason the government is pursuing wrong-headed economic policies which will never be enough to get the country out of its crisis of tepid economic growth. The example of Vietnam was showcased at the WFE meeting to show how by becoming a successful supply chain disruptor – that is position itself as a place to manufacture for the world – the country has effectively engaged with the global capital market and is now a major recipient of foreign direct investment (FDI).

Vietnam attracted $15 billion worth of FDI in 2018, according to data from the United Nations Conference on Trade and Development (UNCTAD). The amount is up five-fold from the $3 billion average investment Vietnam got in the early 2000s. Another proof that a global liquidity glut has eluded Nigeria is reflected in the stock exchange’s low levels of capital. For example, Singap ore’s sto ck e xchang e which is hosting this year’s meetings has over 700 listed firms with a total market capitalisation of about $900bn and it is 200 percent of the country’s GDP compared with Nigeria’s market capitalisation which is a mere 9 percent of GDP. Singapore’s largest company by market capitalisation is Jardine Matheson Holdings valued at $65bn. The company is only 7 percent of the Singaporean Stock Exchange, highlighting the robust and diversified state of the local exchange. In Nigeria, the most capitalised company, MTN Nigeria, accounts for 20.4 percent of the total market capitalisation of the stock exchange, a signal of the NSE’s lack of depth. To attract more capital, the government needs to demonstrate urgency in luring private capital and clear the several bottlenecks inhibiting investment, according to Muda Yusuf, director-general of private sector advocacy group, the Lagos Chamber of Commerce and Industry (LCCI). “It should then follow the reforms by creating worthy opportunities for investment,” Yusuf said. Yusuf ’s thoughts were re-echoed by Teriba who said the government needs to “open new spaces for foreign investors to unlock Greenfield FDI”. As surprising as it

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sounds, there are limited opportunities for foreign direct investors looking to park their cash in Nigeria. That’s because Abuja has maintained its 100 percent ownership of key infrastructure, including rail transport, pipelines, power transmission, stadiums, public universities and tertiary hospitals across the country, effectively limiting options for private investment in the country. Even the oil and gas sector, which has typically attracted the larger chunk of new FDIs to the country, has come unstuck, as a set of fiscal reforms (contained in the Petroleum Industry Bill meant to unlock new investments) has stalled for decades. The lack of investmentfriendly reforms has been telling. FDI flows fell to $2.2 billion in 2018, the lowest in 13 years, according to UNCTAD. The poor performance of the stock market, which is down some 14 percent since the start of the year, is also an indicator of the little confidence investors have in Nigeria. “Nigeria’s loss on the FDI front has been a gain for other countries,” said Kya r i Bu k a r, a f o r m e r chairman of the Nigerian Economic Summit Group, a private-sector think-tank. “Countries that recognise the benefits of financial globalisation have implemented reforms to attract capital by creating an enabling environment for business and privatising government assets,” Bukar said. Nigeria’s struggles with attracting the capital required was highlighted earlier this week when US oil giant, Exxon Mobil awarded a $33bn LNG contract in Mozambique at a time investment into the Nigeria’s oil industry is drying up. Sources familiar with @Businessdayng

the matter say Mozambique’s business-friendly fiscal policies and regulatory environment means it is better positioned to attract capital ahead of Nigeria. The regulatory uncertainties in Nigeria make it difficult for investors to put money in the country. It’s so bad that the country seems rigged against the bulk of investors who are not politically connected, according to Atedo Peterside, the founder of Stanbic IBTC Plc, who added that it could further worsen investment inflows to the country if not checked. The renowned banker, Peterside, said this while delivering a keynote speech on the occasion of the dinner to celebrate the ongoing 25th Nigerian Economic Summit in Abuja. He said in Nigeria of 2019, only the well-connected could expect security of life and property; prompt dispensation of Justice; sanctity of contracts; no harassment from multiple rogue regulators; access to land via the Land Use Act ; freedom from multiple illegal State and Local Government levies; provision of good roads and pipe-borne water to their door-step; access to subsidised financing; and public sector employment opportunities. If Nigeria is to tap into the global liquidity glut, resolving these issues must take the front burner. “Investors will not come until we correct the structural dysfunction that frightened other investors them away in the first place,” the banker said. “Our Investment/GDP ratio is likely to remain low until we make it possible for all other investors – Nigerian and foreign – to come back and partake in the task of baking a bigger cake on the basis of a level playing field,” Peterside said.


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Thursday 10 October 2019

news Mental illness is more than stripping naked, say experts ANTHONIA OBOKOH

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igeria is currently losing the mental health awareness and suicide prevention battle on many fronts, not least of them is the stigma attached to mental illness. As the country joins the rest of the world to commemorate World Mental Day today, October 10, experts say a lot more needs to be done. The World Health Organisation (WHO) statistics of mental healthcare delivery for Nigeria show that for every 100,000 cases of mental healthcare delivery, Nigeria has 46 psychiatrists, 20 psychologists and 20 nurses against its 200 mllion people. “Mental health is an aspect of our health that is highly neglected from various reasons, either from the fact that we do not understand what is mental health in general, or people are really in denial or ignorant about the fact that mental health does not come physically with blood or fractures that you can see and say you have a problem,” said Maymunah Yusuf Kardiri, medical director and psychiatrists, at Pinnacle Medical Services Limited, while discussing on this year’s World Mental Day theme “Mental Health Promotion and Suicide Prevention” on Classic FM 97.3. According to Kardiri, men-

tal health is as important as our physical health, explaining that health is holistic wellness, not neglecting the mental health and focusing on one’s physical health because they are both interwoven. To her, we have to take mental health much more seriously than physical health. Quoting the WHO, Kardiri said mental health was a state of wellbeing, where an individual had the ability to realise his or her potentials in life, which means the ability to work productively, fruitfully. It is also the ability to deal with the day-to-day stressors and the ability to give back to the society or community. “Everyone has mental health but we just do not have mental illness or disorder. There are two distinct words. Mental health has various degrees but we do not have mental illness which is the medical condition,” said Kardiri. Also speaking Adisat David Moyo, consultant psychiatrist, Centre for Mental Health Research Initiative, said Nigeria need to pay more attention to increasing awareness among citizens. “Mental illness is more than stripping naked; it is not limited to such symptoms. There are some silent symptoms that people who have mental health problems will be coping with because we did not really know about,” she said

World Bank lowers SSA growth forecast on global uncertainty ... again, warns Nigeria, SA, Angola slowing down region’s prospects Onyinye Nwachukwu, Abuja

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he World Bank has lowered its earlier 2019 growth forecast for subSaharan Africa (SSA) by 0.2 percentage points to 2.6 percent in 2019, amid concerns on how global uncertainty continues to slow down Africa’s economies. The forecast is however higher than 2.5 percent recorded last year. Growth in SSA has remained slow through 2019, hampered by persistent uncertainty in the global economy and the slow pace of domestic reforms, according to the 20th edition of Africa’s Pulse, the World Bank’s twiceyearly economic update for the region. This edition of Africa’s Pulse includes special sections on accelerating poverty reduction and promoting women’s empowerment. “Empowering women will help boost growth. African policymakers face an important choice: business as usual or deliberate steps toward a more inclusive economy,” Hafez Ghanem, World Bank vice president for Africa, said in a mailed report on Wednesday. “A f t e r s e v e r a l y e a r s of slower-than-expected

growth, closing the opportunity gap for women by removing barriers to their economic participation is the best way forward.” Global uncertainty is taking a toll on growth well beyond Africa, and real GDP growth is also expected to slow significantly in other emerging and developing regions. The Middle East and North Africa, Latin America and Caribbean, and South Asia regions are expected to see even larger downward revisions in their growth forecasts than in Sub-Saharan Africa for 2019. The World Bank notes that Sub- Saharan Africa’s regional averages, the picture is mixed. The recovery in Nigeria, South Africa, and Angola-the region’s three largest economies-has remained weak and is weighing on the region’s prospects. In Nigeria, growth in the non-oil sector has been sluggish, while in Angola the oil sector remained weak. In South Africa, low investment sentiment is weighing on economic activity. Excluding Nigeria, South Africa, and Angola, growth in the rest of the subcontinent is expected to remain robust although slower in some countries.

L-R: Yolanda Moreno-Bello, editorial manager, Oxford Business Group (OBG); Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI); Christophe Bonami, country director Nigeria, OBG, and Segun Alabi, communication director, LCCI, at the press conference to officially announce the launch of THE REPORT NIGERIA 2020 by Oxford Business Group in association with LCCI, in Lagos, yesterday. Pic by David Apara

DisCos can save N18bn yearly co-sharing assets with minigrid operators – report Olusola Bello & ISAAC ANYAOGU

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ower distribution companies (DisCos) in Nigeria can save about N18.3 billion ($60m/$1=N306) annually allowing mini-grid operators share distribution assets to provide power for rural customers who cost them a lot to serve and generate lower returns, according to a new report funded by All On and produced by Rocky Mountain Institute (RMI), Clean Tech Hub and Energy Market and Rates Consultants (EMRC). Rural communities without adequate power rely on expensive diesel or petrol generators. Some investors have seen a business opportunity serving these communities by building minigrid plants where up to 1MW of power is generated in areas DisCos have no distribution assets. DisCos will save cost serving communities where they have distribution assets but inadequate supply by allowing private operators build minigrid plants in those areas and connect consumers using

… offering minigrid owners $1bn in annual revenue their distribution assets, the report, titled: Electrifying the Un11derserved: Collaborative Business Models for Developing Minigrids Under the Grid, states. It says DisCos can reduce financial losses to serve rural customers by 60 percent – 100 percent from the current average of about N7,000 ($19) per connection per year. A single DisCo transitioning 400 undergrid communities to minigrid service could reduce annual financial losses by N1–2 billion ($3-$6m); this equates to nearly N10–20 billion across all DisCos and 4,000 communities across Nigeria. The report says implementing 4,000 undergrid minigrid projects have the potential to save Nigerian distribution companies $30–$60 million annually while offering minigrid owners $1 billion in annual revenue and saving communities $170 million in yearly energy expenditure. Ifeoma Malo, CEO of Clean Technology Hub who contributed to the report, says the growth of the energy access sector in Nigeria is evident in

the growing interest of distribution companies in increasingly exploring ways to grow their market base and meet underserved needs. The four business models that can be implemented under today’s social, political, and economic environment include a minigrid operator-led approach, in which a private minigrid operator leads development in consultation across the distribution company and community; a special purpose vehicle (SPV)-led model, wherein the SPV may include distribution company investors; a cooperative-led approach formed by the community to lead minigrid development; and a collaborative SPV-led model wherein ownership and operation are shared among stakeholders. “The business models outlined in this report can kickstart the undergrid minigrid industry in Nigeria by providing guidance on how to start projects, which will provide a precedent for private sector, community and utility collaboration that is applicable across many other

countries in sub-Saharan Africa and around the world,” said James Sherwood, principal at RMI and coauthor of the study. According to Wiebe Boer, CEO of All On, an off-grid energy investment company backed by Shell that funded the research, “The undergrid minigrid business models introduced through this research provide a framework for minigrid developers, distribution companies and communities to collaborate to provide reliable, affordable and sustainable power at scale to millions of underserved, low-income households and SME customers across Nigeria. We need collaborative approaches like these to address Nigeria’s energy access gap and improve livelihoods nationwide.” The report authors say these business models were developed with extensive stakeholder consultation and consideration of commercial dynamics and regulatory frameworks in the Nigerian Electricity Supply Industry to ensure successful project implementation that meets the needs of all actors.

Flooding: Obaseki approves erosion control projects in Benin, Ekpoma, Agenebode

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do State governor, Godwin Obaseki, has approved erosion and flood control projects in the state’s three senatorial districts to mitigate the impact of flooding. Commissioner for communication and orientation, Paul Ohonbamu, disclosed this at the end of the Weekly Executive Council (EXCO) meeting, chaired by the governor, at Government House in Benin City, the Edo State capital. Ohonbamu said the EXCO approved the commencement of erosion and flood control projects in the three senatorial districts where the problem of flooding and erosion had caused serious devastation. The development is in fulfilment of Governor Godwin Obaseki’s campaign promise to bring succour to residents

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… swears in Iyase as commissioner for special duties in the communities affected by flooding across the state. The commissioner noted, “The EXCO approved construction work to arrest flooding and gully erosion in the following communities: Edo College and Ogiso-Osunde Road in Ikpoba Okha Local Government, in Edo South; Emu-Orhodua Road, Ambrose Alli University, in Edo Central, and Igbe and Fugar-Agenebode Road in Edo North. “The first phase of the project, which has been completed, includes sites at Oshiobugie Flood and Gully Erosion plain, Auchi; Queen Ede Flood and Gully Erosion plain, Benin City and Ekehuan Road Gully/ West Moat Flood and Gully Erosion catchment, Benin City.”

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He said it was pertinent to inform Edo people of the development “of deliberate efforts of spoilers and enemies of the state, who are attempting to feed Edo people a diet of lies.” Ohonbamu said the state executive council congratulated the Governor on the honour of the 2019 Best Performing Governor, bestowed on him by the Nigeria Union of Teachers (NUT), restating its resolve to ensure that the gains recorded are sustained. He said ongoing restructuring and reconstruction of the Edo State College of Agriculture and Natural Resources, and the College of Education featured prominently during the session, adding that “the governor expressed satisfaction with the status of the work @Businessdayng

done. He commended the transition from planning to execution phase, assuring that the funding for the projects has been secured. The boards of the schools would soon be constituted.” Meanwhile, the state governor sworn in the new commissioner for special duties, Iyase Benjamin, describing the appointment as a call to service. The governor said, “The newly sworn-in Commissioner will be working directly with me as Commissioner for Special Duties and responsible for policy areas that will be assigned to him. I have continued to emphasise to all my Commissioners that their appointments, including yours, are a call to serve Edo people, and not a call to self-service.”


Thursday 10 October 2019

BUSINESS DAY

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Thursday 10 October 2019

BUSINESS DAY

Investing in Rivers State

How rebuilt Mile One and Fruit Garden markets may reboot commerce in Rivers ...to restore hope and save capital flight Ignatius Chukwu

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he Mile One Market and Fruit Garden Market which were commissioned recently now look like spots in Europe; neat, edifying and elegant. They seem to change the PH skyline a lot. Perhaps, the most significant economic activity of Gov Nyesom Wike as governor of Rivers State in his 100 days in office in the second tenure is the commissioning of the two rebuilt markets in the state capital. The famous Mile One (Rumujiwoji Market) and the Ogbun-Nu-Abali Fruit Garden Market were razed by fire at one time or the other in the past. Many trace the history of market inferno in Rivers State to as far back as the 18th century when the Bonny Market was set ablaze during the early reign of King Jaja during internal skirmishes which actually forced him to relocate with his supporters to the present day Opobo, a town between Andoni and the Iko Abasi, separated by waters. Ever since, market inferno has come to stay in the state and many other states, often as an act of war or tool of sabotage. The Mile One Market was a thriving economic nerve-centre before it was set ablaze by unknown persons in the days of fierce dispute over who should own and control the market in the Peter Odili days. It was never rebuilt until Celestine Omehia came to power and paid off front for its rebuilding. The design was a modern edifice in two phases that would be fire-resistant and have banks, clinics, etc. The Fruit Garden Market (European Foods Market) fell to fire at about 8pm on September 27, 2018. Sabotage was ruled out then because the guards there were sure of that. Rather, electrical connections and sparks were suspected. The fire service nearby never helped, saying they were on strike. Even if on duty, they were not known to have for once saved any fire disaster. Water is never available, according to victims who stoned them when they eventually came empty-tanked. If the fire service was not on duty, the governor was. He showed up, consoled the victims, and went into action the next morning. The result is a new edifice of international standards, plus financial relief of N400,000 each victim. Mile One market According to the permanent secretary, Ministry of Housing, Joseph Amiofori, the market has two banking halls, a clinic, police post, fire station, fire hydrants, pumping station and fire alert system. He said that it has 421 lock-up shops, 34 open stalls and 441 concrete tables. The market, according to union heads then, had 4900 traders with shops. Now, the phase one of the rebuilt market seemed to take care of about half sharing the spaces in the modern shops built by the Omehia/ Amaechi administrations, while the rest traders were accommodated in a nearby makeshift market or field. Now, they have a chance of coming into the new market. In his address at the commission-

ing, Gov Wike said that he pledged to rebuild the market and that the commissioning of the Rumuwoji Market was a fulfillment of that promise. “When we make promises to the people, we are bound to fulfill them. Hold us accountable to our promises, because there is no need for excuses.” He informed that the Rivers State Government has finished paying for the project. Governor Wike established a management committee for the market, directing the committee to ensure that the market serves the people. He announced that he will give allocation to Rumuwoji community, Rumuwoji women and other people will get their shops through open balloting. The Governor stated that he will build a market for the Nkpolu Community as a means of improving the economy of the area. It is not clear how the real traders that lost their shops years ago would get them back. The chairman of the Nigeria Governors Forum (NGF) and Ekiti State Governor, Kayode Fayemi, declared that the frequency with which Gov Wike churns out quality projects justifies his worldacclaimed name, “Mr Project”. Mayor of Port Harcourt City Local Government Area, Victor Ihunwo, commended the Rivers State governor for delivering a market of international standards to the people of the city. Chairman of the Rumuwoji Market Association, Eze Nyeche, thanked the Rivers State Governor for keeping his promise to the traders. Significance of Mile One Market If not the Mile One and Mile Three markets in PH, most of the Niger Delta areas especially Rivers and Bayelsa would be heading to Aba and Onitsha to source goods to buy. The markets serve as strategic economic nerve centres. The Mile One Market in particular reduces capital flight from the region. Most shops in the Niger Delta areas and creeks are stocked by goods from Mile One Market. Also, most goods in the rural areas needing exposure to urban dwellers www.businessday.ng

find their way to Mile One Market and Mile Three and Aggrey Road markets. In that case, the Mile One Market serves as a big off-taker of local produce. Nothing could justify this notion more than the choice of Mile One Market by the MTM to launch their MoMo Agent mobile money scheme days back. The managers said they found through a survey that it is the biggest centre of financial transactions in the oil region. Rebuilding the market especially creating a place for a village market beside it seems strategic enough. It is now the fish centre in the upper PH area and the place where goods exchange hands almost 24 hours. Its effects spiral to as far as railway market section and Olu Obasanjo areas. By turning the Mile One into a modern market centre with three floors and of two massive buildings, the Rivers State government seems to create a huge centre of commerce, a commercial hub. Fruit Garden Market The commissioning on September 24, 2019, was witnessed by almost all the important personalities in government and outside it. Gov Wike was accompanied by his wife (Sussette) and his deputy, Banigo Gogo Harry- Banigo, the Orgainsed Private Sector (OPS) led by the PHCCIMA president Nabil Saleh,PDP lords led by Felix Obuah, and royal fathers led by the Eze Rebisi. Gov Wike thanked the Rebisi people and Ogbunabali people and recalled how he came at night when this place was raging with fire. It was terrible, indeed, he noted. “We made promises and some persons also made their own promises. We gave N400,000 to 196,000 major victims and N300,000 to another set of victims. We thus compensated 205 verifiable persons. People supplied names of fake traders but could not prove them. “Traders whose shops were burnt will get them back. We have the authentic list from the compensation data. We will attend to the host com-

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munity, and if it remains, we ballot it. Let begin to put names of host communities on projects; thus, this one now is Ogbunabali Fruit Garden Market. Warning: On no account must anybody trade on this free way (car park) in front of the market. Trailers coming to off-load goods have their driveway and offloading bay right inside. Let them use it. Do not violate this rule, if you want both of us to continue to be in good terms. “Do not block tax collection. Do not dictate how tax will be collected or say union must collect tax. We have an agency that is doing that. We thank the traders for cooperating with the task force on illegal trading and motor parks. Yes, fore equipment is coming to help protect this place. If the market was set on fire as some hints insinuations, do not do it again. We will allow the Mayor to handle revenue collection in this market, though we had stopped such collection in the case of the Mile One Market. Work with him.” The traders jubilated to no end especially because they have hope to get their shops back. The mayor of PH, Ihunwo, said fire came few months when he came into office and consumed the market with goods. “You came immediately, consoled the victims, made promises to rebuild the market and to compensate the victims. You kept both promises, and today, this edifice stands here. We are celebrating a man who has kept his promise; a man who has done what no man has done before in government. You have wiped tears from their eyes.” The chairman of the traders, Chigozie Nnodim, said: “We thank you immensely. This place is our life. It got burnt in the late evening of July 27, 2018, and by September 24, 2019, we are commissioning a rebuilt edifice. On October 18, 2018, you personally laid the foundation stone of the entirely new market structure, plus support of N400,000 to each trader. You helped to relocate us to the Rebisi palace free of charge. This is how far you have kept faith with traders in this place. “You truly are a ‘Talk n Do’ gover@Businessdayng

nor. We love you. We ask for anti-fire tools to protect this place. You promised to give us back our shops in this place. Helpers in this effort include the Ezes, the mayor, Ken Chikere, the Catholic Bishop of Port Harcourt, etc. You are the grand patron of the Fruit Garden Market. That’s who you are. We present these baskets of fruits, special to you. Eat them and see the difference.’ The women in song: You are the one we are waiting for; yes, you are the one. Perm Sec, Bureau of Special Projects: Sunday Okere: The new Ogbunnu-Abali Market has four buildings (one storey each) and eight buildings (bungalow), designed to promote commercial activities. Other facilities in the market include: 232 Open Stalls, 72 Lock Up Shops, Toilet Blocks, car park, drainage, internal roads, a warehouse, generator, transformer, perimeter fence and a security house. The shops were built by the PH City Council and sold to the traders. Few years ago, it would take a trader about N600,000 to secure one and new ones before the fire bought at N1m each. By this calculation, the traders must have spent at least N360m some years ago to acquire the 600 shops at average of N600,000 each from the City Council. All of this was lost. On the demand to avoid fire, the chairman said it was never set by anybody because it happened at night when no one was inside it. He said nobody would be allowed to violate the governor’s order against trading on the road. BusinessDay team found that the market was in three sections: Cabbage line; Onions line, and Tomato line. One particular section was believed to have stored goods worth N1.4Bn. They all got destroyed. Significance of the Fruit Garden Market Some cynics saw little in the rebuilding and commissioning of the Fruit Garden Market during the 100 days in office but the traders saw these efforts as the greatest thing that happened to them. Market fires are deadly. When fires rage, market stalls go down, goods go down, billions of naira go down, incomes go down, and lives go down. With the rebuilding and the financial support with which they have been re-grooming their lives and capital, the traders would regain the power and opportunity to lead the south-south and most of south-east in European foods stocking and dispensing. Most expatriates, hotels and oil rigs owners depend on this market (Fruit Garden) to source their daily foods and meet their cuisine demands. If the market was lost permanently, the traders may have relocated to other states that may have developed beautiful and standard commercial centres. The expatriate community would have shifted there to such places to buy their needs. It would have denied PH the status of the melting pot of the international community and the state would have lost the food budget of the expatriate and oil communities. This is how much the Fruit Garden Market is strategic to the economy of Rivers State.


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BUSINESS DAY

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Garden City Business Digest Startup Port Harcourt

PH prepares for move from oil to tech Convener says creative and digital economy is new way for Garden City Ignatius Chukwu

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ast Sunday, October 6, 2019, three young persons (two men and a lady) took position before a battery of Port Harcourt journalists to paint a picture of hope for the Garden City in a new future depicting a transition from oil to technology. Sitting in the middle, the convener, Bereni Fiberesima, flanked by Amos Albert (a games developer/master) and Akelachi Kejeh, (an event planner), the young entrepreneurs, oozing with all confidence, said the future is here and the future is in their hands. They talked about the need to move to the creative and digital economy to help PH join other global cities and players to embrace the new economy. They said they had been operating only in the new media (social media) but now decided to step out unto the traditional media to declare that PH is also a happening city in the creative/digital economy. Bereni Fiberesima Fiberesima traced the history of the economy of Rivers State, thus: “It began with palm produce and this gave the area the name, Oil Rivers. Coal took over. Coal was mined in Enugu but was needed in Britain and Europe during the industrial revolution. A rail-line was built from Enugu to PH and Ph became a port city. So, coal powered the economy of the area. Next was crude oil, and it created a petro-dollar economy. Now, the digital economy is coming, it’s the high-tech economy. It is not if, but when, it will happen. The future is here. Artificial Intelligence (AI) is going to touch every sector.” In his briefing, the convener revealed the steam and the message. ‘From Oil to Tech; Preparing for the Future’ ‘Startup Port Harcourt’ is an annual conference for members of creative, innovative, and academic community in Rivers State and Niger Delta region to discuss the ecosystem. It is about the creative and the digital economy which is the new way. Rivers State has over three million youth population and there are not enough jobs available for all. If this trend (joblessness) is not well handled, it will lead to a sad commentary. The creative and digital economy is the new approach to tackle such situation, the new

L-R: Amos Albert, games design specialist; Bereni Fiberesima, convener and Akelachi Kejeh, planning committee member.

focus to escape damnation. Thus, the ‘Startup Port Harcourt’ is aimed at bringing together talents in the city. The example of the US has proved that brain (human capital) is better and bigger than mineral resources. We too can tap into our brain resources and do things. This conference series is in its 4th edition and notable achievements have been recorded. We have however realized that these feats are not captured in the mainstream media, so we felt like bringing them in at this point for greater exposure. It is also to counter the negative news trend from here whereas Port Harcourt is dong great things in the innovative and digital economy. PH has many Apps developers and creative persons earning income from it. An exhibition is planned for one week in the creative and digital economy; this will showcase Apps developers, innovators, digital experts, etc. We are in search of our own Mark Zuckerberg (founder of facebook) and for tech organizations that will employ people. Events include Hackathon, Demo Day, She-in-Tech, Gamers Party, Investors Dinner, Startup Kids, Startup Port Harcourt Town Hall Meeting, The Coffee House, FitFam, etc. Akelachi Kejeh The theme for the 2019 conference is; ‘From Oil to Tech: Preparing for the Future’. We realize that soon, AI will take over, blockchain technol-

ogy will be the in-thing, etc. The theme will explore cyber security, broadband technology, the future of work, ecosystem, glocalisation, standardization, etc. It’s is a melting pot of the creative economy and will run from October 20 to 26, 2019. The ‘Innovation Tour’ will encourage people to come out to look at creative spaces in the city. For instance, in 2018, we discovered nine hubs in the Garden City, coffee shops, etc, where digital people could stay to work. They do not need offices but just a seat and laptop. Before, coffee shops and restaurants reacted negatively to such young people and drove them away. Not anymore, because awareness has come. We have a day for security and ease of doing business talks. We have ‘She-In-Business’ day where female developers in PH will be showcased. Yes, we have them. We also have a day for kids because we have amazing producers from them. We have game developers in Port Harcourt and some of them are the best in Nigeria. For this, we will have ‘Town Hall Meeting’ for developers and innovators. People from all walks of life would be there to see what is in it for their sectors. We have university professors in medicine and law who have been abroad and have seen what digital creativity is doing in their fields. They are interested. There are game developers in Port Harcourt

actually and games Apps are taking bigger dimensions and more significance. Studies show that a 10 per cent increase in broadband penetration in developing economies could result in an increase of 1.3 per cent in the nation’s gross domestic product (GDP). 5G and advancements in artificial intelligence (AI), VR, IoT, Blockchain, etc promise even greater prospects. Amos Albert We target specific sectors. Gaming has grown up 150Bn pounds sterling per year; Canada alone controls 7Bn pounds per year, yet, no universities teach this aspect in Nigeria. Working from your home as a freelancer is now a new job area and this is up to $80Bn business. There are virtual exports; no containers, no customs charges. This sector will make PH to boom in business. More Fiberisma and his team explained that they strive to push for policies that favour the digital tech industry. They pointed out that coffee shops have been thus created to fast-track the work. The conference series will grow to influence policies. Innovation hubs, etc will emerge. On sustainability, they said this has been going on for four years and that government and some organizations are buying into the concept. Fiberesima went on; “We have got some support from PIND, SDN, Rivers State government, some startups, Money Flow Africa group, etc. There is free training by some organisations and this helps some persons to gain jobs around the world. A Uniport girl is now a globetrotter doing jobs around the world “There is hope for backward integration where persons with huge industry experience and retirement funds meet young developers and form partnerships that lead to great products. There are angle investors who invest in some startups. This initiative exposes the young people and attracts investors. “It creates links for youths to international organizations. Things we see inspire us. Cyber crimes grow because of ignorance. Simple ways of blocking hacking will be ignored for hackers to have a field day. Cyber security is important and it will feature in the conferences.”

Rivers deputy governor partners with female accountants on girl-child devt *Scholarships

* Career counseling

Port Harcourt by Boat

IGNATIUS CHUKWU

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ort Harcourt By Boat cruises around the Ph creeks every day and thus peeps at the Brick House as it rows past. Last week Wednesday, we saw the Society of Women Accountants of Nigeria (SWAN), Rivers State, talking with the deputy governor, a female medical doctor and respected woman in the state. SWAN, led by a vibrant mathematics brain and fellow of the accounting profession (ICAN), Chinedu Nwachukwu, met the deputy governor, Ipalibo Gogo Harry-Banigo, in her

office. The chartered accountant said she brought her executives, past chairpersons, and some other members to wish her well on her reelection along with the state governor, Nyesom Wike, and to also cement the cordial relationship that exists between them. They came to introduce the new leadership in the state led by Nwachukwu and to familiarize with their mentor and friend, the deputy governor. Sources said the women put protocol aside and did their thing their way. They hugged, cheered, and praised themselves because the women got such chance (female deputy governor) for the first time in the state in 2015. They praised the deputy governor’s humility, simplicity, love for all, and softness; all laced with grace and kindness. They put to her that she is very beautiful and ever young. They think they know the secret: when the heart is pure, the soul soars and the skin glows. To support her beauty, they presented a piece of cloth (wrapper) to her, pleading with her not to mind the smallness of the gift but the largeness of the heart the female accountants have for her. It seemed to go down well.

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* Training for market women They reminded her of how she supported them in their programmes aimed at the girlchild especially the scholarship and mentoring schemes. SWAN in Rivers State is known for these schemes. They go to secondary schools to encourage girls to study harder, to ignore immorality, to focus on their studies and choose right in careers. They ginger the

L-R: Chinedu Nwachukwu, SWAN chairperson, handing a gift to Deputy Governor, Banigo Gogo Harry-Banigo

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girls not to be afraid of accounting as a course. They also talk to undergraduates in catch them young endeavours. SWAN also organizes training for market women and petty traders especially on how to keep records and manage their small businesses better. All is not rosy. The accountants are part of those being owed for professional jobs done to the state. This is a volatile state where political intrigues catch good men and women off guard. It’s not clear how help may get to the distressed professionals. In her response, the deputy governor appreciated the female accountants and reaffirmed her support for their schemes especially the girl-child and market women schemes. She urged them to intensify efforts at grooming young girls in schools. She also urged them to do more for market women so they can train their children and shun immorality. She pledged continued support and partnership in these endeavours. Their stay in Govt House seemed very pleasant. They felt at home and looked forward for better days in the office of the deputy governor, their fellow woman.

@Businessdayng


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Thursday 10 October 2019

BUSINESS DAY

POLITICS & POLICY ‘Only INEC has exclusive responsibility to organise, T conduct, supervise elections’

History will be kind to Buhari on return to January-December budget cycle - BMO

VICTORIA NNAKAIKE, Lokoja

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olitical parties and other stakeholders in electoral process has been told that only the Independent National Electoral Commission (INEC) has exclusive responsibility of organising, conducting and supervising elections. Festus Okoye, national commissioner and chairman, Information and Voter Education Committee, stated this in Lokoja on Wednesday at a workshop organised by INEC for journalists ahead of 2019 governorship election in Kogi, stressing that INEC is a regulatory agency and not an advisory body. Okoye also said political parties are expected to have the responsibility of due diligence and quality control in party primaries and nominations, adding that only the Commission has the constitutional responsibility of enforcing the provisions of the constitution and sanctioning non-compliance. Speaking against the backdrop of some disqualified political parties that claim the commission could have scrutinised their nomination form and provide solution instead

Festus Okoye

of disqualification, Okoye pointed out that political parties should and must get their legal advisers and party organs to check their documents that were being submitted to the commission, emphasising that INEC has no constitutional power to waive a constitutional provision. He urged the media to sustain its indispensable status in the task of nation building, adding that it is imperative and equally the business of conducting credible election, noting that it is a shared responsibility of all the critical stakeholders in the country. “Media practitioners are critical stakeholders

in the electoral process with constitutional responsibility of holding government at all level accountable and acting as the tribune of the people. “In performing this national task, the media must in theory, practise and, in fact, posses certain skills and capabilities. The media cannot rely on instincts in reporting the electoral process. They should not depend on rumours, innuendoes, gossip and fake news in reporting the electoral process,” he said. He equally urged journalists to be mindful of their reportage, saying every story and report has national security im-

plications, stressing that one false report especially during elections can lead to breakdown of law and order. Okoye also charged the participating journalists at the workshop to take the training very seriously in order to avail themselves of the commission’s guideline on election. Oluwale Osaze-Uzzi, INEC director in charge of voter education and publicity, earlier in his address disclosed that media as a gate keeper should be able to report appropriately based on the ethics of the profession, adding that journalists should be objective in their reportage during and after elections.

Fasoranti remains Yoruba leader - Afenifere INIOBONG IWOK

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an-Yoruba social-cultural organisation, Afenifere, has said that Reuben Fasoranti remains the authentic leader of the Yoruba’s race, saying that there was no controversy over the issue. Recently, some groups in the Southwest under the aegis of Assembly of All Yoruba Groups Worldwide, elected a renowned historian, Banji Akintoye as the leader of the Yoruba race. It was reported that Akintoye had defeated the former governor of Lagos State and national leader of the ruling All Progressives Congress (APC), Bola Tinubu, to clinch the position. Akintoye, 84, was a senator during the Second Re-

public from 1979 to 1983. He was said to have been elected by delegates from at least 48 Yoruba emancipation organisations, across the world. He had at a news conference in Lagos organised to give his acceptance speech

Reuben Fasoranti

to the election, stated that what the nation needed was a Yoruba leadership that would be non-partisan. However, his emergence as Yoruba leader has continued to generate controversy. There was initial confusion if he was a direct

replacement for Fasoranti, while prominent leaders within the region have also frowned at the process that led to his emergence. But speaking in an interview with BusinessDay, Wednesday on the issue, Yinka Odumakin, publicity secretary of Afenifere, said that Akintoye was only leading the worldwide Yoruba groups which he had publicly admitted in Ibadan. Odumakin reaffirmed Fasoranti as the leader of Yoruba race, stressing that such position had not changed. “What Akintoye said in Ibadan today is that; he is the leader of the worldwide Yoruba organisations, he admitted that. That is a different body, Fasoranti remains the leader of Yoruba race, no changes,” Odumakin said.

he Buhari Media Organisation (BMO) has said that history would be kind to President Muhammadu Buhari for his bold step to re-calibrate Nigeria’s budget cycle by presenting the 2020 appropriation bill before a joint session of the National Assembly in October. This, it said, would go a long way in ensuring that the country finally begins implementing its national budget from the first day of the fiscal year. BMO said in a statement signed by its Chairman, Niyi Akinsiju and Secretary, Cassidy Madueke that the move is in line with the Buhari administration’s goal of leaving the country better than it met it. “For far too long, Nigeria

other large corporations, but will also provide a leeway for robust planning in the economy. BMO noted that by announcing that emphasis would be on completion of on-going projects rather than starting new ones, the President has shown his readiness to buck previous trend where annual budgets focused on new projects. “Nigerians must have heard him also emphasising government leveraging on private sector spending through tax credit schemes as well as ensuring a reduction in items that are considered as VATable. “These, among others, show that this is indeed a budget on the philosophy of sustainable and inclusive economic growth and

has had a budget cycle that runs contrary to what is obtainable in developed economies and other countries on a growth trajectory. “And that is partly due to the fact that annual appropriation bills have almost always, since 1999, been presented to the National Assembly in December, with a May to June budget cycle the norm rather than the exception. “But in line with his pledge to effect a quantum change in the polity, the President has now proved that what three predecessors failed to do; and did not even attempt, is doable by ensuring that the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) got to federal lawmakers in record time. “He did not only dare to be different by sending the MTEF/FSP on time, but also in ensuring that the budgets of the country’s major government-owned Enterprises (GOEs) are captured in the national budget estimates. “So, for the first time since the return of democracy, Nigeria is on the verge of having a budget cycle that not only aligns with the business cycle of many financial institutions and

shared prosperity.” The group hailed the leadership of the National Assembly for the convivial atmosphere that pervaded the legislative complex during the budget presentation. It also called on Federal lawmakers to ensure that they pass the 2020 Appropriation Bill in good time to ensure that the Buhari administration’s goal of institutionalising the January to December budget cycle is realised. “So what is now left is for the lawmakers to give speedy consideration to the Bill, similar to what they did with the MTEF/ FSP, even though they increased the initial budget estimate of N10.002 trillion to 10.729trn. “We recognise that both chambers did what the constitution expected from them, without acrimony and the Executive had no problem accepting the additional N700billion. This is the type of working relationship expected after 20 unbroken years of democracy and we hope that Senate President Ahmad Lawan and Speaker Femi Gbajabiamila will continue that trend now that the budget is with the National Assembly”.


Thursday 10 October 2019

FT

BUSINESS DAY

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FINANCIAL TIMES

World Business Newspaper

JUDE WEBBER AND MICHAEL STOTT IN MEXICO CITY

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ike many Mexican business people, Armando Santacruz, chief executive of chemicals company Grupo Pochteca, has faced numerous tax audits during the past decade. If new legislation designed to punish people accused of tax dodging as harshly as drug traffickers had been law back then, “I reckon I’d have spent nine out of the last 10 years in jail”, he fumed. The new initiatives, including mandatory pre-trial detention and the potential confiscation and sale of assets even before a conviction, are part of President Andrés Manuel López Obrador’s crusade to eradicate ingrained corruption in Latin America’s second-biggest economy. They target the rampant illicit practice of using fake invoices, often registered to phantom companies, to dodge tax — something the president says costs the treasury $25bn a year in lost revenue, although the estimate is hard to verify. Anyone accused of serious tax irregularities in Mexico could face prison without bail under provisions allied to the 2020 budget, currently before congress, and an asset confiscation law that was passed in July. Luis Niño de Rivera, head of Mexico’s Banking Association, said: “They are eliminating . . . the right to freedom, to property, to a hearing, a fair trial and the presumption of

Mexico‘s clampdown on tax dodgers stuns business Planned legislation threatens to treat evaders as harshly as drug traffickers

Talk in Brussels is turning to an extension of the Brexit process — something Boris Johnson has vowed cannot happen © Reuters

innocence and replacing it with mandatory pre-trial detention based only on suggestions and not real facts.” He said the policy could lead to arbitrary asset seizures, the freezing of bank accounts based on suppositions rather than

facts and business owners losing control of their companies even before being found guilty. “This is a very negative signal for the national and foreign investors . . . whom we need so much to get the economy growing,” he added. “It’s not the right

message.” Gustavo de Hoyos, head of the Coparmex employers’ federation, said it would be “very easy to criminalise a company that made a mistake” and lock up executives in top security jails “as if they belonged to a [drug] cartel”.

Business people have little faith that even if found not guilty they would be properly compensated for lost assets. Alejandro Armenta, president of the Senate’s finance commission and a member of the ruling Morena party, said criminal charges would only be automatic for large-scale fraudsters. But tough legislation was needed to crack down on companies selling tax invoices to clients who used them to duck taxes, he argued. “It’s not fiscal terrorism because from 2014 to 2019, more than 8,000 companies selling invoices were created and they issued 9m fake invoices, defrauding more than 350bn pesos [in tax],” he said. That was enough to pay for 220 hospitals, he said. “This is criminal in a country where half the people live in poverty. It’s not [a measure] against business people.” Mexico has the lowest level of tax collection in the OECD. But critics say that rather than raising that level, the measures will encourage people to stay in the informal sector — the more than half of the economy that pays no tax — simply to stay under the tax agency’s radar.

Number of EU citizens applying US accuses Iran of lying about oil delivery to Syria for settled status hits 2m Mike Pompeo calls on EU to hold Tehran accountable for violating sanctions Backlog grows to more than 147,000 following a record number of submissions last month BETHAN STATON IN LONDON

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he number of EU citizens and their families applying for UK residency after Brexit has hit 2m, following a record number of submissions last month that created a large backlog. In September 520,600 people applied to the settled status scheme, compared to a previous high of 389,000 in April. There are an estimated 3.6m European citizens and family members living in the UK. Priti Patel, home secretary, said she was “thrilled” with the surge in applications; the total includes 1.8m applications by the end of September and 200,000 so far this month. But only 373,000 applications were concluded in September, creating a backlog of more than 147,000. Maike Bohn, a spokesperson for EU citizens rights group the3million, described it as “worrying”. “This indicates cases are becoming more complex and people might have more and more difficulties evidencing their residence in the UK,” she said, adding that the3million regularly spoke to people waiting weeks or even

months for confirmation of their status while they submitted further documentation. The Home Office states that the average processing time for an application is five days, but has said this could be longer if people need to send further paperwork. Available support for applicants includes a helpline, toolkit and funding for community organisations, and an average of 20,000 applications are processed each day. “There is plenty of support and information on offer to help people apply and get the status they need,” said Brandon Lewis, security minister and deputy for EU exit and no deal preparations. Anxiety among EU citizens remains high, however. Ms Bohn said the jump in September applications was because EU citizens were “terrified of the consequences of [a] no deal” departure on October 31. EU citizens and their families have until at least December 2020 to apply for settled status. Until then the Home Office has guaranteed that they will be able to continue to live and work in the UK, under interim measures in place even if the UK leaves the EU without a deal on October 31. www.businessday.ng

DEMETRI SEVASTOPULO AND AIME WILLIAMS IN WASHINGTON AND ANDREW ENGLAND IN LONDON

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he US has accused Iran of delivering oil to Syria despite denials from Tehran that the Adrian Darya 1, a tanker seized by British commandos and released weeks later, had been sailing to Syrian ports to sell crude in violation of US and EU sanctions. Mike Pompeo, US secretary of state, said the tanker, which had remained off the coast of Syria for several weeks, had offloaded its oil via another ship called the Jasmine. “Oil from the #AdrianDarya1 has been offloaded in Syria, proving that Iran lied to the UK and Gibraltar,” Mr Pompeo said on Twitter. “This terrorist oil will fund Assad’s war and Iran’s sectarian violence. EU members should condemn this action, uphold the rule of law, and hold Iran accountable.” Mr Pompeo’s tweet included satellite images that appeared to

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show the Adrian Darya 1 transferring oil to the Jasmine a week ago, before heading to Baniyas port in Syria. A US official said the Jasmine made physical delivery of the oil on Monday. The UK accused Iran last month of selling the tanker’s oil to Syria, saying the Islamic republic had violated “international norms”. The sale — and now delivery — of the crude to Syria has angered and embarrassed the UK. British commandos had seized the ship off Gibraltar in July because it was suspected of violating EU sanctions by suppling oil to the regime of President Bashar al-Assad. Gibraltar, a British overseas territory, rejected a legal bid by the US to detain the Adrian Darya 1. It released the vessel in August after saying it had received assurances from Tehran that the crude would not be delivered to Syria. It then headed to the eastern Mediterranean and was seen via satellite sailing off the coast of the Arab state. Iran has been one of Mr Assad’s main foreign backers @Businessdayng

in Syria’s eight-year civil war, and it has supplied the regime with oil throughout the conflict. The US last month tried to secure control of the vessel by encouraging its captain to sail the tanker to a country that had agreed in advance to seize it on behalf of the US, and even offered the captain several million dollars as an inducement. The seizure of the Adrian Darya 1, which was previously called the Grace 1, heightened concerns about maritime security in the oil-rich Gulf. After it was detained in Gibraltar, Iran’s Revolutionary Guard seized a British-flagged vessel, the Stena Impero, in the Strait of Hormuz, a key Gulf waterway, in apparent retaliation. Iran released that vessel last month. The capture of the ship came amid growing international concern over maritime security in the Strait of Hormuz, one of the world’s most important oil trading shipping routes. Follow Demetri Sevastopulo on Twitter: @dimi


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Thursday 10 October 2019

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FT

NATIONAL NEWS

OECD takes aim at tech giants with plan to shake up global tax Proposal to stop companies shifting profits around the world to minimise bills CHRIS GILES IN LONDON

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he OECD has proposed a global shake-up of corporate taxation, overturning a century of rules that had allowed digital groups such as Facebook, Apple, Amazon, Netflix and Google to shift profits around the world to minimise their tax bills. The proposals, which were unveiled on Wednesday after months of behind-the-scenes negotiations, are aimed at extracting more corporate tax from large multinationals whether they are digital or own highly profitable brands, such as luxury goods makers or global car companies. The winners would be large countries including the US, China, UK, Germany, France, Italy and developing economies. These would see an increase in their rights to levy tax on corporate income earned from sales in their territories, while the companies themselves, tax havens and low tax jurisdictions such as Ireland would lose. The aim, the OECD said, was to create a new and “stable” international corporate tax system because “the current rules dating back to the 1920s are no longer sufficient to ensure a fair allocation of taxing rights in an increasingly globalised world”. The OECD had indications over the summer that its proposals were likely to win support from the leading global economies and this, it hopes, will persuade countries not to go down a unilateral route with domestic digital sales taxes, such as that proposed by France and the UK, which would further inflame global trade tensions. The Paris-based international organisation is seeking agreement in principle from the G20 by the end of January so that it can work up detailed rules. A graphic with no description The main problem it sought to address was that multinationals, whether they were the digital giants or had very profitable intangible brands, could shift the profits to low-tax jurisdictions, leaving little corporate tax revenue for large economies to collect despite most of their business activity taking place in these economies. It has proposed breaking a taboo in international corporate taxation that countries only had a right to tax activities from companies that had a physical presence on their soil. Instead, the OECD proposed that countries should have a right to tax a proportion of the global profits of highly profitable multinationals wherever these might have been shifted around the world. It would enable France, for example, to tax an element of the sales of Google to French advertisers and the US to have greater taxing rights over the profits attributable to the brands of the French luxury brand company LVMH

related to the sales in America. Emerging and developing economies would gain taxing rights over these companies for the first time because although the multinationals sell and market products widely in their jurisdictions, they often have no physical presence. “In a digital age, the allocation of taxing rights can no longer be exclusively circumscribed by reference to physical presence,” the OECD said in a consultation document published on Wednesday. The proposal would give countries two new taxing rights. First, for consumer-facing companies and digital businesses, they would allow countries to tax a proportion of the global profits of large multinationals, ending the ability to shift profits to escape taxation. The OECD is consulting on what would count as a “residual profit” which would be open to this form of taxation, but the tax base would be the sales of the global group in any country. Second, for emerging economies where multinationals sell but have no presence, there would also be a right to tax the distribution activities of products on an assumption of a reasonable fixed rate of return. Countries and the affected large multinationals should have access to “legally binding and effective dispute prevention and resolution mechanisms”, the OECD proposed. It envisaged there will be big international fights to come on the exact parameters of the new rules, which would have thresholds for size and profitability before companies would face these new rules, but officials in Paris said there was now an emerging consensus in favour of the approach. It made the proposals as a response to the US, Europe and emerging economies seeking to promote three incompatible and contradictory solutions to the same problem. The trick to secure the outline agreement was to ensure the world’s most powerful economies would all gain, so they would be willing to give up their proposed solutions, while the losers would be the owners of big multinational and tax havens. A French finance ministry official said on Wednesday that the OECD’s proposal “is a promising basis for further work. The principles and the unified approach follow the approach we decided upon with the G7 ministers last July in Chantilly.” The official added: “We will have a discussion on this basis next week at the G20 in Washington DC. I would like this discussion to give the needed political steer in order to achieve an agreement on international taxation in 2020. Of course, we’ll have to look into the details of this proposal to make sure it tackles the challenges brought by the digitalisation of the economy.” www.businessday.ng

© AFP via Getty Images

China state media take aim at Apple over Hong Kong map app

US tech company joins NBA in facing Beijing’s ire over protests in the territory YUAN YANG AND CHRISTIAN SHEPHERD IN BEIJING AND GEORGE HAMMOND IN HONG KONG

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ong protesters at the same time that criticism of the NBA mounted over its officials’ comments on the demonstrations. The influential People’s Daily said in a blog post late on Tuesday that Apple had “betrayed the feelings of the Chinese people” by approving the app HKmap.live, which crowdsources real-time locations of traffic obstructions, police and protesters in the territory. It also alleged Apple had “time after time” taken “inexplicable” actions related to the protests, with the Apple Music Store containing a song that advocated “Hong Kong independence”. Apple did not immediately respond to a request for comment. “The developers of the map app had not hidden their malicious

motive in providing ‘navigation’ for the rioters,” The People’s Daily wrote. “Apple chose to approve the app in the App Store in Hong Kong at this point. Does this mean Apple intended to be an accomplice to the rioters?” The unnamed developer of HKMap.live said in a statement: “Protest is part of our freedom of speech and I don’t think the application is illegal in HK. It merely consolidates information that is already available in public domain, eg Telegram groups.” The political crisis in Hong Kong, which began as opposition to an extradition law but has grown to include demands for universal suffrage, has ensnared a growing number of multinational companies. Beijing is pressing companies to take a clear stand against the protests. But businesses also run the risk of offending consumers in Hong Kong and the west by backing the Communist party’s hardline

approach against the movement. The NBA in particular is struggling to stem the fallout on its business in China, the league’s fastest growing international market, over a quickly deleted tweet by Houston Rockets general manager Daryl Morey that said “stand with Hong Kong”. Chinese state media’s anger over the incident has quickly spread from the Rockets to the NBA as a whole. On Tuesday, China’s official media took aim at NBA commissioner Adam Silver, who arrived in Shanghai on Wednesday, after he defended Mr Morey’s right to free speech. The Shanghai Sports Federation said in a statement on Wednesday that a “fan evening” event later that day was cancelled due to Mr Silver’s “inappropriate stance”. “The NBA will not put itself in a position of regulating what players, employees and team owners say or will not say on these issues,” Mr Silver had said in a statement.

Boeing to invest $20m in Virgin Galactic Aerospace group signs partnership as Richard Branson’s space venture set to go public BETHAN STATON IN LONDON

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erospace group Boeing will invest $20m in Richard Branson’s Virgin Galactic when the company goes public later this year, beginning what the two sides said would be a new collaboration in the scramble for space tourism. The partnership announced on Tuesday comes three months after Virgin Galactic agreed to merge into a US-listed cash shell launched by former Facebook executive Chamath Palihapitiya, as it ramps up its effort to send customers on 90-minute rides to the edge of space. Boeing’s investment in new Virgin Galactic shares, which is contingent on the merger closing,

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will be made out of its HorizonX Ventures start-up investment arm and comes with a promise to work together. Boeing is heavily into space exploration, serving as a main contractor for Nasa’s planned Space Launch System for future manned flights into deep space and also working on a reusable space capsule to the International Space Station. The new partnership gives Boeing a stake in a potentially lucrative race targeting the wealthiest tourists. Virgin Galactic is the only private company to send people to the edge of space in commercial vehicles, making it a leader in a field in competition with Elon Musk’s SpaceX and Jeff Bezos’s Blue Origin. The merger with Mr Palihap@Businessdayng

itiya’s cash shell, Social Capital Hedosophia, provides Virgin Galactic with publicly traded shares without having to go through the traditional initial public offering process and returns some cash to its financial backers. Social Capital will emerge with 49 per cent of the company, which it estimated would have an enterprise value of $1.5bn. Laura Seward Forczyk, founder of space sector consulting firm Astralytical, said while Boeing’s investment was significant as a partnership, despite being relatively modest financially. “I think this is just the beginning,” she said. “Boeing brings over 100 years of flying experience and a significant investment of space travel. As Virgin gets closer to sending passengers into space we will see more Boeing involvement.”


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Why central banks are edging away from the dollar Political risks prompt rethink of US currency’s weighting in foreign exchange reserves EVA SZALAY IN LONDON AND COLBY SMITH IN NEW YORK

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he US dollar has long towered over global markets and finance. But cracks are starting to appear in the

edifice. The greenback’s pre-eminent role in official funds and international trade is formidable and unlikely to fade quickly. But the latest data from the IMF on central banks’ reserves show a subtle shift away from the dollar that analysts say could signal a rethink on the political risk embedded into US assets. “Central banks [are] chipping away at the dollar’s ‘exorbitant privilege’,” said Alan Ruskin, chief international strategist at Deutsche Bank in New York. “Politics are starting to infringe in ways that have the potential to challenge the dollar’s dominance.” In last month’s quarterly report on central banks’ reserves, the IMF said that the share of the global total denominated in dollars was just short of 62 per cent in the second quarter of this year, down 0.76 percentage points from the same period a year earlier. Euro-denominated reserves account for 20 per cent. While the dip is small, the apparent resilience is deceptive. As Mr Ruskin pointed out, the dollar was, during that quarter, the highestyielding currency in the developed world. In theory, that should have lured in investment at a faster pace than other currencies. Instead, central bank reserve managers — a powerful force in global markets — accumulated 3.5 per cent more dollars over the year, far behind gains of 17 per cent for the renminbi and even 8 per cent for sterling, despite the pound’s Brexitrelated troubles. The dollar’s falling share of reserves represents an “official sector

vote against US ‘exceptionalism’”, said Mr Ruskin. In his view, the data should give pause to US policymakers contemplating laws to tax foreign purchases of US assets, further sanctions based on the international use of the dollar and plans to restrict access to US capital markets. All are actions that could weaken the dollar’s influence. Mark Carney, governor of the Bank of England, warned policymakers in August that as well as being the dominant currency for invoicing and settling international trade, two-thirds of global securities issuance and official currency reserves are denominated in the dollar. This makes economic developments in the US the key driver for monetary policy elsewhere, particularly in emerging markets. In the long run, central banks should move to a “multipolar” economic system, Mr Carney said, adding that “the renminbi has a long way to go before it is ready to assume the mantle [but] the initial building blocks are there”. Goldman Sachs analysts said that dollar reserves slipped nearly four percentage points over 2017 and 2018. At the same time, reserve managers have continued to add to their renminbi and Japanese yen holdings, especially in countries that have had a fractious political relationship with the US. “So far, these flows have been fairly concentrated. Russia accounted for about 70 per cent of new renminbi reserves in 2018, and Brazil and Chile account for about 40 per cent of renminbi reserve accumulation in 2019,” said Mike Cahill, an economist at Goldman Sachs in London. The US has increasingly used the dollar’s dominance to further its foreign and trade policies. In response, ideas such as invoicing some of the world’s oil trade in the euro are getting more traction.

Johnson & Johnson hit with $8bn court order over antipsychotic drug Jury upholds claim that young men were not warned of breast growth linked to Risperdal HANNAH KUCHLER IN NEW YORK

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ohnson & Johnson has been ordered to pay $8bn after claims that it failed to warn that young men using its antipsychotic drug Risperdal could grow breasts, sending the stock down by 2 per cent in after-hours trading. The world’s largest pharmaceutical company must pay the punitive damages to Nicholas Murray, a man who had already won $680,000 in the lawsuit in the Philadelphia court. J&J is facing more than 13,000 product liability claims relating to the drug, which is prescribed to treat schizophrenia and other psychiatric disorders. The verdict came after J&J was ordered to pay $2.5m in another case, which claimed the drug caused an autistic child to grow large breasts from when he was eight years old — growth which cannot be reversed.

The plaintiffs claim that Risperdal causes gynaecomastia, or swelling of breast tissue in men, by activating a hormone called prolactin. They also claimed that the company pushed the drug to be used “off label” in children. The verdict comes as J&J’s family-friendly reputation is being compromised by a barrage of lawsuits. They stretch from accusations that it mis-sold opioids and contributed to the US opioid epidemic — to product liability lawsuits including claims that its talcum powder caused cancer. J&J contests both accusations. J&J said the award was “grossly disproportionate” with the initial compensation and it would move to set aside the verdict. The company said it was confident it would be overturned. “The plaintiff’s attorney failed to present any evidence that the plaintiff was actually harmed by the alleged conduct,” it said. www.businessday.ng

On the 10th anniversary of the September 2008 collapse of investment bank Lehman Brothers and the accompanying financial crisis, a man sits contemplating a view of Wall Street © Getty

From financial crisis to inequality — how economists got it wrong Three new books dissect how capitalism is changing and our failure to spot the danger signs EDWARD LUCE

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ive years before the financial meltdown of 2008, Robert Lucas famously declared that “the central problem of depressionprevention has been solved . . . and has in fact been solved for many decades”. The University of Chicago economist was not alone. Up to the eve of the worst crash in 80 years, America’s economic luminaries, including Alan Greenspan, former chairman of the Federal Reserve, and his successor Ben Bernanke insisted there was no cause for alarm. Having failed to foresee the crisis, many badly misread its aftermath. As early as December 2008, Mervyn King, governor of the Bank of England, anticipated breakaway wage growth. We are still waiting. Greenspan, meanwhile, predicted double-digit inflation. Eleven years into America’s weakest recovery on record, US inflation remains stubbornly below its two per cent target. As recently as last February, Jay Powell, the current Fed chairman, said it was a “bit of a puzzle” why wage growth had not yet taken

off. Why do economists continue to get it so wrong? One answer is that not all of them do. David Blanchflower, who was on the Bank of England’s monetary policy committee during the 2008 crash, insists that evidence of an impending crash was hidden in plain view long before it happened. Blanchflower, whose book Not Working: Where Have all the Good Jobs Gone? is a stinging rebuke to his profession, was consistently outvoted eight to one on the MPC, which sets UK interest rates. Unlike his colleagues, who were using models based on a 1970s-style economy, Blanchflower went out and talked to people. He calls this “the economics of walking about”. His peers, meanwhile, were relying on “largely untested theoretical models that amounted to little more than mathematical mind games”. Paul Romer, the former World Bank chief economist, calls this “mathiness” — playing with regression to give a false sense of precision. Others might call it alchemy. Lucas, whose Chicago School housed the high priesthood of mathiness, won a Nobel Prize for his rational expectations theory. It demonstrated that the market was always right.

The rise and fall of the Chicago School is chronicled by Binyamin Appelbaum in his admirable book The Economists’ Hour. As he shows, economists were treated as little more than backroom statisticians until the late 1960s. That was when the Chicago School, led by the Nobel-prize winning Milton Friedman, took over. The economists’ age of glamour had arrived, propelling them into the centre of power and on to our television screens. They drew inspiration from Friedrich Hayek, whose book The Road to Serfdom (1944) argued that almost any government role in the economy created a slippery slope to autocracy. The “economists’ hour” contained many overlapping schools. Some, like Friedman, were monetarists, who believed that inflation was solely a function of money supply — control the latter and you tame the former. Others, like Arthur Laffer, were supply-siders, who argue that tax cuts always pay for themselves through higher corporate revenues. All believed that the markets know best. As Greenspan once quipped: “I have never seen a constructive regulation yet”.

PG&E cuts power across northern California in bid to avert wildfires Nearly 800,000 to be affected as utility takes precautions ahead of severe winds sweeping state MYLES MCCORMICK IN LONDON

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acific Gas & Electric has begun to shut off power to almost 800,000 people across northern and central California as it looks to avert the breakout of further wildfires a year after wind damage to its electrical transmission lines caused the state’s most deadly blaze. With so-called ‘Diablo’ autumn winds set to sweep across much of the state this week, the utility said it is implementing a Public Safety Power Shutoff proactively, “based on forecasts of dry, hot and windy weather

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including potential fire risk”. The increased caution comes after wind damage to PG&E electrical transmission lines was found to have been responsible for the Camp Fire, which tore across northern California last November, killing 85 people and ultimately forcing the group into bankruptcy protection in January. “The safety of our customers and the communities we serve is our most important responsibility, which is why PG&E has decided to turn power off to customers during this widespread, severe wind event,” said Michael Lewis, PG&E’s senior vice-president of Electric Operations. @Businessdayng

“We understand the effects this event will have on our customers and appreciate the public’s patience as we do what is necessary to keep our communities safe and reduce the risk of wildfire.” PG&E began the shutoffs at 12:00am local time on Wednesday, cutting off power to 513,000 customers. A second phase will begin at midday affecting a further 243,000, and a potential third phase will hit another 42,000. The company said the winds were expected to last until midday Thursday, with peak gusts reaching 60 to 70 miles per hour on higher ground.


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Thursday 10 October 2019

BUSINESS DAY

ANALYSIS

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Turkey launches offensive in Syria Ankara defies international outcry over threat to Kurdish forces LAURA PITEL IN ANKARA, CHLOE CORNISH IN BEIRUT AND HENRY FOY IN MOSCOW

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urkey has launched its long-awaited offensive in north-east Syria, President Recep Tayyip Erdogan said on Wednesday, defying an international outcry over the threat posed to US-backed Kurdish forces and the campaign against Isis jihadis. The Turkish leader said that the operation — codenamed Peace Spring — would “eliminate the terror threat towards our country” from Kurdish militants and Isis. Writing on Twitter, he said that Turkey would destroy the “terror corridor” that some actors were seeking to form on Turkey’s southern border, and establish a “safe zone” that would allow Syrian refugees to return home. Turkey’s aim, he said, was to “bring peace to the region”. He added: “We will preserve Syria’s territorial integrity and liberate local communities from terrorists.” Shortly before the president’s statement, Turkish media stationed on the border with Syria reported the sound of fighter jets overhead followed by the boom of explosions near the Syrian town of Ras al-Ayn. The Turkish offensive began with local reports of air strikes on towns across the border area, which sent civilians fleeing for safety. Videos on social media showed people streaming out of Ras al-Ayn where bombings were heard. It was not clear what was targeted. Local media also reported air strikes as far east as Qamishli, confirmed by someone in the town. The Syrian Democratic Forces (SDF), which is spearheaded by Kurdish fighters of the People’s Protection Units or YPG, said on Twitter that initial reports indicated civilian casualties, but the claim has not yet been verified.

Turkey’s foreign minister Mevlut Cavusoglu had earlier said that the country’s “sole target” was “terrorists” in north-east Syria. He said: “This is our right, stemming from the UN charter, UN Security Council decisions, and international law. Our operation will be carried out in this framework . . . We will inform the UN and relevant countries, including Syria [of the plan].” In a statement on Wednesday, the Kremlin said: “In light of the plans announced by Turkey to conduct a military operation in north-eastern Syria, Vladimir Putin called on Turkey to carefully weigh the situation so as not to damage the overall efforts to resolve the Syrian crisis.” Russia’s military support for Syrian president Bashar Al-Assad has swung the more than eightyear-long Syrian civil war in his favour but has dragged Moscow into long-running efforts to forge a post-conflict settlement. US president Donald Trump appeared to give the green light to the Turkish operation on Monday after a phone call with Mr Erdogan, when he said that he was handing over responsibility for the battle against Sunni jihadis Isis to Ankara. Mr Trump was hit by a fierce backlash after announcing that US troops in the region would be pulled out of the immediate area of a Turkish operation. Washington had armed and trained the SDF as ground troops for the fight against Isis in north-east Syria, which was home to the capital of Isis’ self-proclaimed caliphate. But Ankara considers the YPG a terrorist group with intimate links to Kurdish militants who have waged a 35-year insurgency on Turkish soil. It was enraged by the decision by the US, a fellow Nato member, to support Kurdish forces in Syria — and has long vowed to attack.

Twitter misused users’ personal info for advertising Group ‘inadvertently’ uses emails and phone numbers but says data were not shared externally HANNAH MURPHY IN SAN FRANCISCO

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witter said it had “inadvertently” used personal information such as phone numbers and email addresses — provided by users to make their accounts more secure — to target advertising. The San Francisco-based social media company said in a blog post that it had matched users based on the email and phone numbers they provided “for safety and security purposes”, such as two-factor authentication, to advertisers’ marketing lists. “This was an error and we apologise,” Twitter said. Data misuse whereby platforms take information gathered for security purposes to instead bolster their ad targeting capabilities is not new, with Twitter rival Facebook coming under fire recently for the practice. Indeed, Facebook was explicitly banned from doing so in July as part of its $5bn settlement with the US Federal Trade Commission following an investigation into its privacy

practices. Twitter said on Tuesday that it “cannot say with certainty how many people were impacted” by its news, but added that “no personal data were ever shared externally with our partners or any other third parties”. The practice affected users globally, it said. The social media group said it had addressed the problem as of September 17, although it is unclear why the company did not notify users sooner. It is unclear whether the incident will count as a breach of Europe’s General Data Protection Regulation. Twitter told the Financial Times that it was working in co-operation with regulators where appropriate. The revelations come just two months after the company admitted it shared certain user and device data with advertisers without the permission of those individuals for almost a year, after their “settings choices may not have worked as intended”. Twitter said in September that it was still conducting an investigation into that matter. www.businessday.ng

Hunter Biden’s web of interests His ties span the globe and raise questions about the overlap of business and politics AIME WILLIAMS IN WASHINGTON, SUN YU IN BEIJING AND ROMAN OLEARCHYK IN KIEV

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unter Biden’s business interests often show up in unexpected places. Now, they are at the centre of the biggest political crisis of the Trump presidency and the fourth impeachment inquiry in US history. The son of Joe Biden, former vice-president and 2020 presidential candidate, Hunter Biden’s business ties are under scrutiny after Donald Trump leaned on the president of Ukraine to investigate his activities in the country. Mr Trump has also publicly called on China to investigate the Bidens. The Ukraine revelations have led House Democrats to open an impeachment inquiry against the president, but the nature of Hunter Biden’s business dealings in Ukraine, China and further afield raise questions about potential conflicts of interest while his father was in office. The Bidens have denied any wrongdoing. In addition to his ties to Ukraine through Burisma, the scandal-plagued gas company, and politically connected business ventures in the US, public records show that Hunter Biden still sits on the board of BHR Partners, a private investment fund backed by a number of Chinese state entities including Bank of China, China Postal Savings Bank and China Development Bank. Here, the Financial Times examines Hunter Biden’s business ties at home and abroad: Burisma Holdings NATURAL GAS | UKRAINE Hunter’s Role: Board member 2014-April 2019 Remuneration: Reportedly $50,000 per month Burisma, Ukraine’s leading privately owned natural gas producer, obtained some of its most prized production assets while its founder Mykola Zlochevsky headed a ministry that doled out gas licences under the kleptocratic administration

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of ex-president Viktor Yanukovich. After Mr Yanukovich fled to Russia in 2014, investigators started probing the company. That year Burisma appointed prominent westerners to its board, including Hunter Biden, who reportedly earned $50,000 per month for this role. Mr Trump’s calls for his Ukrainian counterpart Volodymyr Zelensky to investigate Burisma over links to Joe Biden, his potential Democratic rival in next year’s presidential election, triggered the impeachment probe. In tweets and in a July phone call with Mr Zelensky, Mr Trump and Rudy Giuliani, his personal lawyer, alleged that Joe Biden protected Burisma and his son’s interests while he was vice-president. Ukraine’s western backers deny this narrative. Paradigm Companies LLC HEDGE FUND | US Hunter’s Role: 2006-2010 Remuneration: Reportedly $1.2m annual salary In 2006, Hunter Biden acquired a stake in Paradigm, a hedge fund group, following a failed attempt to buy the entire company through LBB, a limited liability partnership set up with his uncle James Biden. Hunter Biden recently told the New Yorker that, while the failed deal sounded “super attractive”, it fell apart after he and his uncle learned that the company was worth less than they had thought. Both James and Hunter Biden faced a lawsuit from Anthony Lotito Jr, a former business partner, who accused them of defrauding him over the failed deal. The Bidens countersued Mr Lotito, accusing him of hiding company debts and falsely claiming he held securities licences. An independent audit of the fund conducted in 2008 found accounting problems at the firm including “failure to timely prepare financial statements” and “failure to reconcile Investment Advisors reimbursement of fund expenses”. Paradigm itself was founded by James Park in 1991, the son-inlaw of one of the founder’s of the Korean Unification Church, which some have called a cult. In 2009, @Businessdayng

a fund run by Paradigm became associated with Allen Stanford, a Texas financier, who was later convicted of running an $8bn Ponzi scheme. Stanford’s company was responsible for marketing one of Paradigm’s funds of hedge funds, and also invested millions of dollars in it. At the time, a lawyer representing Paradigm said neither Hunter nor James Biden had ever met Stanford. The Bidens filed for voluntary liquidation of the company in 2010. Seneca Global Advisors CONSULTING | US Hunter’s role: Founder, 2008 onwards Remuneration: Unknown Hunter Biden launched his consultancy in September 2008, weeks after his father Joe Biden had been announced as Barack Obama’s running mate on the Democratic presidential ticket. Mr Obama was elected president in November 2008, with Joe Biden as his vice-president. The consultancy pitched itself as a firm that could help small and midsized companies expand across the US and into foreign markets. Clients included Achaogen, a pharmaceutical company focused on anti-bacterial treatments that filed for bankruptcy in April 2019, and GreatPoint Energy, an energy technology start-up. In 2012, GreatPoint received a $420m investment from China Wanxiang Holdings, an industrial conglomerate. It was the largest venture capital investment into the US that year. It is unclear if Hunter Biden was directly involved in securing this investment. Rosemont Seneca Partners INVESTMENT FUND | US Hunter’s role: Co-founder, since 2009 Remuneration: Unknown Hunter Biden co-founded Rosemont Seneca Partners in 2009 with Christopher Heinz, stepson of John Kerry, the former secretary of state, and scion of the Heinz processed food fortune, and Devon Archer, a financier and former Abercrombie & Fitch model who attended Yale with Mr Heinz.


Thursday 10 October 2019

BUSINESS DAY

49

Live @ The STOCK Exchanges Prices for Securities Traded as of Wednesday 09 October 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 261,257.41 7.35 2.80 193 52,575,025 UNITED BANK FOR AFRICA PLC 205,196.53 6.00 0.84 137 5,128,000 ZENITH BANK PLC 563,567.06 17.95 -0.28 304 15,491,573 634 73,194,598 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 188,450.29 5.25 -0.94 155 12,959,154 155 12,959,154 789 86,153,752 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,646,086.70 130.00 1.17 56 352,259 56 352,259 56 352,259 BUILDING MATERIALS DANGOTE CEMENT PLC 2,470,873.57 145.00 -3.91 90 12,501,416 LAFARGE AFRICA PLC. 257,724.73 16.00 -0.62 76 28,151,810 166 40,653,226 166 40,653,226 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 304,225.84 517.00 - 8 81 8 81 8 81 1,019 127,159,318 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 1 25 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 13,074.52 4.90 - 0 0 1 25 1 25 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 25 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 52,417.35 54.95 - 22 135,335 OKOMU OIL PALM PLC. PRESCO PLC 38,400.00 38.40 -4.83 16 134,309 38 269,644 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,290.00 0.43 - 0 0 0 0 38 269,644 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 688.30 0.26 - 1 100 JOHN HOLT PLC. 214.03 0.55 - 2 2,822 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 40,241.51 1.00 -1.00 67 18,389,182 20,601.27 7.15 2.14 83 2,366,727 U A C N PLC. 153 20,758,831 153 20,758,831 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 24,486.00 18.55 - 3 2,018 ROADS NIG PLC. 165.00 6.60 - 0 0 3 2,018 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,884.22 1.11 - 6 76,584 6 76,584 9 78,602 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 8,142.68 1.04 - 9 141,794 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 2 20 GUINNESS NIG PLC 65,711.48 30.00 -7.69 76 20,233,925 INTERNATIONAL BREWERIES PLC. 108,307.86 12.60 - 10 26,717 NIGERIAN BREW. PLC. 383,851.30 48.00 -4.00 38 378,817 135 20,781,273 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 110,750.00 22.15 -0.67 59 744,688 DANGOTE SUGAR REFINERY PLC 122,400.00 10.20 - 45 321,135 FLOUR MILLS NIG. PLC. 61,505.69 15.00 - 46 2,622,755 HONEYWELL FLOUR MILL PLC 7,930.20 1.00 1.01 20 1,068,400 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 39,344.16 14.85 - 15 90,496 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 185 4,847,474 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,500.29 9.85 - 10 22,149 NESTLE NIGERIA PLC. 963,077.35 1,215.00 -1.22 100 247,055 110 269,204 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,878.29 3.90 - 22 537,970 22 537,970 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 25,014.01 6.30 -10.00 43 1,991,973 UNILEVER NIGERIA PLC. 153,391.64 26.70 - 12 23,434 55 2,015,407 507 28,451,328 BANKING ECOBANK TRANSNATIONAL INCORPORATED 139,456.59 7.60 - 37 340,185 FIDELITY BANK PLC 47,808.42 1.65 0.61 41 1,575,602 GUARANTY TRUST BANK PLC. 785,812.49 26.70 -0.19 294 21,840,535 JAIZ BANK PLC 14,142.84 0.49 4.26 8 664,359 STERLING BANK PLC. 56,141.32 1.95 - 15 475,011 UNION BANK NIG.PLC. 203,845.27 7.00 - 26 374,110 7,364.28 0.63 - 11 299,040 UNITY BANK PLC WEMA BANK PLC. 22,373.19 0.58 - 22 1,732,696 454 27,301,538 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 1,500 AIICO INSURANCE PLC. 4,504.63 0.65 -2.99 12 307,820 AXAMANSARD INSURANCE PLC 17,010.00 1.62 -2.99 26 733,682 CONSOLIDATED HALLMARK INSURANCE PLC 2,276.40 0.28 - 0 0 CONTINENTAL REINSURANCE PLC 23,857.31 2.30 -1.30 62 10,611,084 CORNERSTONE INSURANCE PLC 5,744.51 0.39 8.33 8 486,300 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 1,000 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,123.80 0.29 - 4 92,050 LAW UNION AND ROCK INS. PLC. 1,890.39 0.44 - 3 100,000 LINKAGE ASSURANCE PLC 4,080.00 0.51 - 1 900 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 0 0 NEM INSURANCE PLC 12,145.16 2.30 - 9 133,192 NIGER INSURANCE PLC 1,702.69 0.22 - 2 50,000 PRESTIGE ASSURANCE PLC 2,637.45 0.49 - 1 100 REGENCY ASSURANCE PLC 1,333.75 0.20 - 1 12,000 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 1 200,000 4,483.72 0.48 - 0 0 STACO INSURANCE PLC STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 4,683.96 0.35 - 71 5,660,063 203 18,389,691 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,743.97 1.20 - 10 951,235 10 951,235

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,158.00 0.99 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,000.00 4.00 - 30 607,604 CUSTODIAN INVESTMENT PLC 35,291.19 6.00 - 6 348,049,349 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 31,684.34 1.60 - 34 2,448,649 FCMB GROUP PLC. ROYAL EXCHANGE PLC. 1,080.53 0.21 - 0 0 STANBIC IBTC HOLDINGS PLC 388,041.40 37.05 - 18 2,171,377 UNITED CAPITAL PLC 12,000.00 2.00 -6.98 81 9,506,093 169 362,783,072 836 409,425,536 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 1 1,162 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 - 1 33,000 2 34,162 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,615.21 3.65 - 7 12,650 GLAXO SMITHKLINE CONSUMER NIG. PLC. 8,490.72 7.10 - 13 609,779 MAY & BAKER NIGERIA PLC. 3,450.47 2.00 - 3 10,050 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 816.64 0.43 -6.52 3 138,599 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 26 771,078 28 805,240 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 1 1,501 1 1,501 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 486.00 4.50 -9.09 2 130,000 TRIPPLE GEE AND COMPANY PLC. 292.02 0.59 - 1 500 3 130,500 PROCESSING SYSTEMS CHAMS PLC 1,220.98 0.26 8.33 5 710,192 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 0 0 5 710,192 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,157,510.66 308.00 - 5 10,129 5 10,129 14 852,322 BUILDING MATERIALS BERGER PAINTS PLC 2,173.68 7.50 - 5 2,515 CAP PLC 17,885.00 25.55 - 13 48,615 CEMENT CO. OF NORTH.NIG. PLC 199,781.21 15.20 - 10 8,945 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 28 60,075 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,730.05 1.55 -3.12 36 917,539 36 917,539 PACKAGING/CONTAINERS BETA GLASS PLC. 26,898.49 53.80 - 1 5 GREIF NIGERIA PLC 388.02 9.10 - 0 0 1 5 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 65 977,619 CHEMICALS B.O.C. GASES PLC. 2,547.42 6.12 - 2 2,500 2 2,500 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 83.60 0.38 - 0 0 0 0 2 2,500 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 2 7,000 2 7,000 INTEGRATED OIL AND GAS SERVICES OANDO PLC 44,753.08 3.60 - 39 399,891 39 399,891 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 53,332.04 147.90 - 17 1,722 CONOIL PLC 10,686.86 15.40 - 20 131,955 ETERNA PLC. 4,108.06 3.15 - 6 12,608 FORTE OIL PLC. 20,839.70 16.00 1.91 39 194,126 MRS OIL NIGERIA PLC. 5,166.13 16.95 - 20 74,370 TOTAL NIGERIA PLC. 41,829.09 123.20 - 24 27,318 126 442,099 167 848,990 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 294.09 0.25 - 1 1,500 1 1,500 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,387.46 4.05 - 7 109,812 TRANS-NATIONWIDE EXPRESS PLC. 361.01 0.77 - 0 0 7 109,812 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 2,452.98 1.18 - 0 0 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 0 0 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 211.68 0.35 - 0 0 LEARN AFRICA PLC 864.02 1.12 9.80 5 233,500 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 496.12 1.15 - 0 0 5 233,500 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 629.93 0.38 - 0 0 0 0 SPECIALTY INTERLINKED TECHNOLOGIES PLC 757.44 3.20 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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BUSINESS DAY Thursday 10 October 2019 www.businessday.ng

Good roads: Critical enabler of industrialisation ODINAKA ANUDU, MICHAEL ANI & GBEMI FAMINU

N

o countr y in the world has ever attained an industrial status without a good transport infrastructure. China is a classical example of a country that developed its infrastructure alongside industries in the early stage of development. The country has, today, gone beyond roads and railways to develop coastal regions and inland areas along major rivers. It did not just get to this stage by chance. Plans were in place and execution was religious. Even as late as 1990s, the World Bank, in one of its reports, said the country lost one percent of its GDP to decayed and obsolete transport infrastructure. Less than 30 years after, it has gone past that and now focuses on water and energy. Early in the year, China’s top economic planner National Development and Reform Commission (NDRC) approved construction of seven infrastructure projects in energy and water worth $72 billion this year. This is more than twice Nigeria’s 2020 budget. In Europe and the United States of America, the issue of roads is already taken for granted, and manufacturers and other businesses worry for bigger issues. While it is a given that Nigeria is still at an inchoate stage of development, it must be admitted that federal and state governments have got the process of contract awards and execution wrong. From Imo to Abia, down to Jigawa and Osun, roads that were paid for are abandoned, with contractors receiving certificates of completion from the government. Nigeria has about 195,000 km of road network, out of which about 32,000 km are federal roads and 31,000 km are state roads, according to data from the Infrastructure Concession Regulatory Commission. Of these numbers, only about 60,000 km is paved, leaving 135,000 km of road untarred. Even those that are tarred, a large proportion of them are in bad conditions due to poor maintenance. To show how deep the infrastructural deficit is, Nigeria would need to spend an estimated $300 billion annually, the African Development Bank (AfDB) noted. Bad roads are turning Nigeria into a jungle of wasted economic opportunities as many economic actors cannot maximise their time and duly harness possibilities for business development because of ineffective transportation systems. A 2019 survey carried out by the Chartered Institute of Project Management of Nigeria said that

Decrepit road leading to so-called Oseakwa Bridge

the value of abandoned projects across the country is N12 trillion. Fifteen thousand projects are abandoned in the SouthEast; 11,000 in the South-South; 10,000 in the South-West; 6,000 in the North-West; 7000 in the North-Central; 5000 in NorthEast, and 2000 in Abuja, the report said. A case in hand is a road linking Abia to Akwa Ibom—two states in the oil-rich South-East and South-South regions of Nigeria. This road has been in a state of disrepair for over 15 years. Aba shoe and textile makers now feel the pinch as they cannot reach the Cameroon market from there, as the case was in 1980s. In the 1990s, Aba shoe and textile makers ferried their products to Akwa Ibom through the road. But the road now looks as forlorn as its passers-by. The Aba section is overrun by dirty water. The axis crisscrossing Umuokpo and Onicha Ngwa communities in Obingwa Local Government Area is broken, with grass growing in the middle of the road. “They have abandoned us to our fate,” Nonso Obima, a shoemaker at Ariaria, who lives in Ogbor Hill area of the road,” told a BusinessDay reporter recently. “They have cut off the section through which we supply our shoes and textiles to neighbouring states and Cameroon,” he cried. The number of rural poor in Nigeria keeps soaring because they do not have access to markets. As a result, ever y year, unquantifiable agrarian products perish, thereby making life unlivable for many. And in an

attempt to escape poverty, many unskilled youths migrate. The gridlock in Nigeria’s busiest port has also made dealings between economic entities negligible. Fleeting congestion may be seen as a sign of economic growth, particularly when it is an indicator of an increase in mobility. However, perennial congestion like what we have in the Apapa axis is one of the unintended consequences of deficient road infrastructure that paralyses profitable business activities. The time it takes for freight to be conveyed from one point to the other within Lagos is too long, as it makes loss and damage inevitable. That exporters and manufacturers of products cannot thrive with the state of ports in Lagos because roads leading into Apapa are a nightmare. A situation where trucks transporting produce to be shipped overseas spend weeks on the road before getting to the export terminal does not show the government is truly ready to diversify Nigeria’s monolithic economy. In any economy, a good road network is seen as one of the basic and critical factors that shape the face of development, as it provides access to employment, market, health and education services, which are otherwise vital to any development agenda. Experts say the transport sector remains a major determinant of a country’s economic development as a good transport system is necessary in moving goods and services around, and enabling a wider market reach. Unfortunately, despite having

the largest road network in West Africa, Nigeria’s road transport system are in terrible conditions as the roads are dilapidated and are also not secure enough. Today, logistics cost to manufacturers is 20 percent—a strong disincentive after power/ energy. The popular is axiom among manufacturers today is that it is cheaper and faster to move goods from Europe to Lagos than from Kaduna to Lagos. Costs are piling up in the manufacturing sector, with attendant consequences on prices. Incidentally, manufacturers are selling to a population of people that are majorly poor. In terms of income, Nigerians are becoming increasingly poorer, with 8,000 citizens jumping into the extreme poverty train on a daily basis, according to Brookings Institute’s 2018 report. The report said last year that 87 million Nigerians lived in extreme poverty, amounting to about 44 percent. The World Poverty Clock said this year that the number has risen to 98 million—which is almost half of the population. This has consequences on consumption. Babatunde Ruwase, president of the Lagos Chamber Of Commerce and Industry (LCCI), said recently that infrastructure deficit was causing problems for business owners, especially in terms of transportation, adding that a functional and modern rail network would facilitate the movement of people and goods while reducing the cost of transportation and the total cost of production. Mansur Ahmed, president

of the manufacturers association of Nigeria (MAN), said at a recent forum that transport was important in the manufacturing value chain, adding that if the transport deficit was eliminated, it would reduce the total cost of delivery of products by 30 to 40 percent. According to the Nigeria Infrastructure Guide report for 2017, budgetary allocations for the transport sector were N19.5 billion in 2015; N424.27 billion and N365.1 billion in 2016 and 2017 respectively. Francis Meshioye, executive director, JMG Limited, said at a function recently that the deficit in the transport sector partly accounted for the snail-paced growth of the manufacturing industry, leading to a slow movement of goods from the manufacturers to the consumers. “ T h e g ov e r n m e nt s h o u l d make huge investments in the transport sector because doing so will reflect in the other parts of the economy. Adequate transport infrastructure will result in high employment rate, faster and competitive market reach, high income level, wider reach and connectivity for transaction purposes,” he said. Paul Gbededo, group managing director, Flour Mills of Nigeria, said that private companies could form collaboration and aid the government by providing infrastructure. He added that the seaports are underutilised while the rails should be well maintained and structured for use. https://ssl.gstatic.com/ui/v1/ icons/mail/images/cleardot.gif The point being raised by development experts is that Nigeria should borrow to fund infrastructure projects, rather than pay wages. The 2020 budget has less than 20 percent allocation to capital projects which cannot support industrialisation. “ Th e t o t a l bu dg e t s i ze i s N10.3tr illion. The recur rent component is N4.88 trillion, debt service is N2.45 trillion. Together, these two budget items amount to 7.33 trillion, which is 90 percent total revenue estimates. And from the track record of revenue performance, the percentage may be much higher when related to the actual numbers. All of these indicate that the hope for an impactful investment in infrastructure is dim and would remain so for some time to come,” Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry said in a statement released on Wednesday. “This underlines the imperative of appropriate policy choices to attract domestic and foreign private sector capital for infrastructure financing. The government needs to look beyond tax credit in its quest for more complimentary funding sources for infrastructure. We should be looking more in the direction of equity financing. But for this to happen the policy and regulatory environment must be right,” he further said.

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BusinessDay 10 Oct 2019  

BusinessDay 10 Oct 2019