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news you can trust I **MONDAY 11 NOVEMBER 2019 I vol. 19, no 432

PROPOSED FINANCE BILL

VALUE ADDED TAX (VAT)

STAMP DUTIES

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Section 4: Rate of VAT increase from 5% to 7.5% Section 10 Taxes for Non-resident companies (NRCs)

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- Removal of exemption of dividend paid out of petroleum profits from withholding tax

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COMPANY INCOME TAX

Section 9- Charge of Tax

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Section 13- Tax for e-commerce and digital platforms Section 16-Removal of double taxation for Insurance companies

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Imported goods will be liable to excise duties.

CAPITAL GAINS TAX

PERSONAL INCOME TAX Intending and existing bank users to provide TIN for banking operations.

increase in the maximum amount of “compensation for loss of office” exempted from tax to 10 million naira.

CBN wades into OMO market as buyer of last P. 2 resort

Infographics: David Ibemere

New Finance Bill to stimulate start-ups, insurers, markets

firms with turnover below N25m to pay no CIT removes impediments to securities lending

OLUWASEGUN OLAKOYENIKAN & OLUFIKAYO OWOEYE

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igeria plans to amend dozens of its existing tax laws in a move that could see a major transformation of tax administration and compliance in the

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Stamp duties of N50 to apply on deposit of N10,000 and above

CUSTOMS AND EXCISE TARIFF

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PETROLEUM PROFIT TAX

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President Muhammadu Buhari presented the 2020 budget proposal at a joint session of the National Assembly on October 8, 2019.

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country. Yet not much is known about the proposed changes in tax policies that would soon become law. President Muhammadu Buhari presented the 2019 Finance Bill alongside Nigeria’s 2020 budget at a joint session of the

National Assembly last month. The bill, which has so far scaled through the second reading at the parliament, aims to promote fiscal equity, reform local laws, introduce tax incentives, support small businesses, and raise revenues for the government, according to the president.

A copy of the Finance Bill seen by BusinessDay shows it contains changes to the Companies Income Tax (CIT) Act, Value Added Tax (VAT) Act, Petroleum Profits Tax Act (PPTA), Personal Income Tax Act, Capi-

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Foreign Reserve - $40.233bn Cross Rates - GBP-$:1.28 YUANY-N 51.74 Commodities Cocoa

Gold

US$2,498.00

$1,462.49 $62.64

Crude Oil

Alaghodaro 2019: Edo residents, participants say ‘it is a summit to remember’ … SMEs, artists, others optimistic of the future OSA VICTOR OBAYAGBONA

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esidents of Edo State a n d p a r t i c i p a nt s at Alaghodaro 2019 say this year’s summit has opened another vista into the

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news CBN wades into OMO market as buyer of last resort …to fight illiquidity ...foreign investors may sell on maturity MARKETS

LOLADE AKINMURELE

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he Central Bank of Nigeria’s longstanding bouts of unorthodox policies have been put under the spotlight once again by its latest move to step in to fill the demand gap created by an earlier policy which imposes restrictions on the purchase of its short-term securities. In a first-of-its-kind move, the Abuja-based bank says it would now act as a buyer of last resort for Open Market Operations (OMO) bills when sellers are unable to find buyers in the secondary market, according to a Friday, November 8 circular seen by BusinessDay. “As part of our liquidity management function, the Central Bank of Nigeria will be in the market on a daily basis to enhance the liquidity of the CBN instrument (OMO bills) by providing market-related quotes across all tenors,” the circular read. The circular then said the CBN would provide quotes on a one-way basis to purchase instruments from the market. It noted that the Deposit Money Banks (DMBs) are expected to perform their market making function and can only come to the CBN as a last resort. The CBN’s move to step up as a buyer of last resort in the OMO market

comes after the restriction it placed on non-bank firms and individuals from participating in the market, reducing active players to only the Deposit Money Banks and foreign investors. Prohibiting every investor save for the banks and foreign investors from playing in the OMO market meant the CBN was cutting off a large chunk of the demand side. Non-bank firms and individuals held 26 percent of the outstanding OMO bills (N3.7 trillion of N13.8 trillion) as at August 2019, while foreign investors held N6 trillion. The DMBs held N3.8 trillion. Cutting off such a big chunk of demand has reduced one of the most vibrant and liquid asset classes in Nigeria’s capital market to a frozen and illiquid asset with dire consequences for the economy. “The CBN wants to now act as the market maker or liquidity provider in the OMO market, since it has taken out some big drivers of demand,” said Johnson Chukwu, CEO of Lagosbased asset management firm, Cowry Assets, whose firm is one of the parties now banned from investing in OMO bills. “Once the liquidity of

an instrument is dependent on the regulator, it tends to have a negative effect on investor confidence and typically leads to a reduction in the flow of capital,” Chukwu said. According to Chukwu, if the flow of capital into Nigeria reduced, it would adversely affect the CBN’s external reserves as well as cause problems for the exchange rate and inflation. The general feeling of five economists and money managers interviewed was no different. They said the CBN was stifling the free flow of market principles in a reminder of how the foreign exchange market was distorted in 2016. “It was always clear that freezing dominant players in the OMO market would break the market, create illiquidity and spook investors fearing they may be stuck whenever they tried to exit,” said Wale Okunrinboye, head of research at fund manager, Sigma Pensions. “The CBN’s solution to managing that illiquidity is flawed because there’s no way it doesn’t dent foreign investors’ confidence, especially when they think back to what happened in 2016 when the CBN tried and failed at being the sole provider of liquidity in the FX market,” Okunrinboye said.

Economic insight by FDC

The steam is sizzling out

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ased on our survey, headline inflation is expected to continue its upward trajectory in October. The index is estimated to soar by 0.36 percent to 11.60 percent. The factors driving inflation remain supply shocks with underlying cost push pressures. The impact of the border closure was further exacerbated by unusual heavy rainfall in October, which had a negative impact on harvest. Money supply growth also played a crucial role in stoking inflationary pressures. M2 grew by 2.22 percent in September and is expected to increase by 5 percent in October as banks increase lending in compliance with the CBN’s 65 percent LoanDeposit-Ratio (LDR) directive. Average opening position of the interbank money market spiked by 75.41 percent to N326.04bn. The month-on-month inflation (a more relevant measure of prices) is projected to inch up to 1.06 percent (13.54 percent annualized). All other inflation sub-indices are expected to move in tandem with the headline inflation.

Money supply growth fuelling inflation Money supply has a direct relationship with the general price level. In September, broad money supply (M2) grew by 2.22 percent to N27.66trn. It is expected to increase by 5 percent in October as banks increase lending to creditworthy customers in compliance with the CBN’s 65 percent LDR directive. Credit to the private sector was up 12.15 percent to N25.47trn in September. PMI falls to 54.1 points The Purchasing Manager Index (PMI), a measure of the health of the manufacturing sector, declined by 3.74 percent to 54.1 points in October. Lower output without a corresponding fall in the supply of money could result in much money chasing fewer goods, thus signaling heightened inflationary pressures in subsequent months. Peer Comparison – inflationary pressures across Sub-Saharan Africa The inflation trend across the sub-Saharan African (SSA) countries revealed that inflationary pressures

are beginning to mount. Of the six SSA countries under our review, three have released their October inflation numbers, all posting increases. The rise in inflation was bolstered by higher prices for food, housing and utilities. Contrary to monetary easing in most advanced economies due to global economic slowdown, trade war and geopolitical tensions, most of the African central banks left their monetary policy rates unchanged Outlook: Festive season and consumer expectation Typically, consumer prices tend to increase towards the end of the year due to rising demand for goods and services for the Christmas festivities. This, at a time when the border closure has created some shortages, will further push up prices. The monetary policy committee will meet this month. We expect the rising inflation trend to be a major consideration. More importantly, the committee will be interested in inflation expectations as it strives to achieve a single digit inflation rate.

•Continues online at www.businessday.ng

Qatar’s new gas initiative exposes Nigeria’s untapped potentials DIPO OLADEHINDE

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atar’s decision to jettison oil cartel and its new status as a gas giant are shedding light on Nigeria’s missed opportunities and untapped potential as corruption and inefficiency hobble oil and gas industry in Africa’s largest economy. Last week, Qatar invited international oil and gas majors including ExxonMobil, ConocoPhillips, Shell, and Total to file bids for the expansion of the Qatari part of the world’s largest gas field and the country’s Liquefied Natural Gas (LNG) export capacity. This contrasts with the situation in Nigeria, whose oil and gas industry is in a state of decline as policy inertia feeds a lack of investments by oil majors. According to Qatar’s Minister of State for Energy Affairs

Saad Al-Kaabi, the country plans to increase its LNG production capacity by 43 percent from 77 million tons annually currently to 110 million tons a year in five years’ time. “Qatar aims to award by the end of this year the contracts for work on the North Field, which Qatar shares with Iran and which Iran calls South Pars,” Al-Kaabi, who is also the president and chief executive at state-held Qatar Petroleum, told OilPrice.com. The new export capacity includes expansion projects set to be completed in 2024. Qatar will be competing with Australia and the United States over the next few years for the world’s top LNG exporter title. “In the first quarter, we would have secured all the contracts for construction to start production in 2024,” AlKaabi told Bloomberg.

Already, Qatar has shortlisted several big oil firms willing to buy a stake in its mega project to expand its LNG export capacity, and would look at what the majors could offer in exchange for a piece of the project. Qatar has selected a few “big players” which it has invited to submit bids, AlKaabi said. But until Qatar raises its LNG export capacity, Australia will consistently export more LNG than Qatar within the next year as LNG facilities in Australia are ramping up production and exports, according to the U.S. Energy Information Administration (EIA). Currently, Australia will be the next top LNG exporter, but it will likely retain that title for just a little while, as both Qatar and the United States plan major expansions in their LNG export capacities over the next five years.

businessday market monitor NSE Biggest Gainer GUARANTY N28.60 5.93pc

Bitcoin

Biggest Loser DANGCEM N145.80 -1.42pc

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FMDQ Close

Everdon Bureau De Change

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$-N 357.00 £-N 456.00 €-N 393.00

Sell

360.00 465.00 400.00

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Market I&E FX Window CBN Official Rate Currency Futures

($/N)

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fgn bonds

Treasury bills

Spot ($/N) -0.02 362.77 13.14 306.90 NGUS JAN 29 2020 362.99

3M

5Y -0.06 13.30

0.00

12.35

NGUS APR 29 2020 363.96

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30 Y 0.05

13.18

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NGUS NOV 25 2020 366.22

S/Africa’s tech-based property register holds lessons for Nigeria CHUKA UROKO

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n real estate development, South Africa has always been ahead of Nigeria. For Nigeria’s less than 1 percent mortgage contribution to GDP, South Africa has about 30 percent. In South Africa, it takes lesser time and costs less to register property. It is also less cumbersome. Nigeria lags behind South Africa in terms of home ownership. For South Africa’s 56 percent, Nigeria has 25 percent home ownership level for its 200 million population and acclaimed largest economy in Africa. The country comes far behind Indonesia and Kenya where the levels are 84 percent and 75 percent, respectively. Recently, South Africa outpaced Nigeria with the

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development of its first blockchain-based property register made possible by a partnership between Centre for Affordable Housing Finance in Africa (CAHF), research consultancy 71point4, and Seso Global. A blockchain is an aspect of what is now popularly called PropTech, a short form of Property Technology which is a collective term used to define start-ups offering technologically innovative products or new business models for the real estate market. The new development in South Africa will be the first working example of a blockchain-based property registry in the country. Aside from creating an immutable record of who owns which house, it will facilitate and record transactions such as sales and transfers out of @Businessdayng

deceased estates. The blockchain solution comes with benefits. Daniel Bloch, CEO of Seso Global, a blockchain property registry company, explained that the solution allows data to be stored in a decentralised, secure database that can be updated without any loss of historic data. “This means there is a secure, back-to-back record of all transactions that is completely tamper-proof. Eventually the vision would be to integrate this record into the Deeds Registry when other impediments to transfer have been removed,” Bloch said. This is a major lesson for Nigeria where getting data remains a big issue, making the property market in the country very opaque.

•Continues online at www.businessday.ng


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news

Obaseki hails women’s contribution to Edo’s development

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Monday 11 November 2019

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do State governor, Godwin Obaseki, has hailed the contribution of women to achievements recorded by his administration in the last three years. He explained that they were solid pillars behind reforms in basic education, healthcare, housing, child protection, and the fight against human trafficking and illegal migration in the state. The governor said this at the Edo Women Summit, which is part of activities lined up for the five-day Alaghodaro 2019 Summit, holding from November 8 to 12, in different locations across Benin City, the Edo State capital. The Women Summit was organised to celebrate good governance and the role of women in transforming Edo State. The Alaghodaro 2019 summit, held to celebrate the thirdyear anniversary of the Governor Obaseki-led government in the state, kicked off with Jumat Prayers and the Women Summit, showcasing how the administration was prioritising the welfare of women and protecting the rights of children and other vulnerable persons in the state. The governor explained that most of the successes recorded by his administration are as a result of the doggedness of the women in his cabinet, adding, “The areas we have made the most improvements are headed by women. These areas include basic education, housing, healthcare, child right laws, reducing the incidence of human trafficking and irregular migration. Others are the Edo State Skills Development Agency (EdoJobs) and Edo Production Centre, among others.” He assured that with the reforms and their impact on society, the state is getting rid of thuggery and other manifestations of violence as children are now better prepared to face the challenges of the 21st Century. Edo State first lady, Betsy Obaseki said the Edo Women Summit was organised to celebrate good governance, and women emancipation and empowerment by the Governor Obaseki-led administration. According to her, “We are here to celebrate good governance and appreciate the governor and his deputy for celebrating and projecting women in the state. Edo has produced one of the best performing governments in the country going by its support for women initiatives.” Obaseki added that the governor has agreed to continue to appoint more women into his government, adding, “Last year, the governor appointed women as Special Assistants on Gender. He has also promised to appoint Senior Special Assistants on Gender across the 18 local councils before the end of the year.” She appealed for women to be given special consideration during campaigns and elections.

LAPO Microfinance Bank champions sustainable finance HOPE MOSES-ASHIKE

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mid low adoption globally, LAPO Microfinance Bank Limited, a pro-poor financial institution, is championing the cause of sustainable finance in the industry. The adoption of sustainable banking principles by banks, discount houses (merchant banks) and development finance institution was approved by the Central Bank of Nigeria (CBN) in agreement with Bankers’ Committee in 2012. The aim of this was to deliver positive development impacts to

the society while protecting the communities and environments in which financial institutions and their clients operate. “I believe that LAPO champions the move for sustainability in the environment,” said Uche Olowu, president/chairman of council, Chartered Institute of Bankers of Nigeria (CIBN). Olowu said, “The way we look at it from CIBN is how you direct your efforts to clients that are in the vanguard of sustaining the environment. How do environmental, social and governance risks are modelled to make sure that we sustain the environment.” “The climate change is a big

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problem,” he said, saying, “How do we need to continually fund the degrading environment? We direct finance and manage our risk in such a way that we continue to push for sustainability in the environment.” Kenneth Amaeshi, chair in Business and Sustainable Development University of Edinburgh, United Kingdom, who delivered a keynote speech on ‘Rethinking Sustainable Development Goals (SDGs) as an investment opportunity,’ at sustainable finance conference organised by LAPO in Lagos, noted that uptake of sustainability is low in the global financial sector.

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He said Sustainable Development thinking and practices help to minimise risks and explore opportunities, noting that risk

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minimisation and opportunity exploration were both important for immediate and long-term success.


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Why should we care: Nigeria in a mess – rising debt levels (Third in the series of address delivered at Dowen College, on 7th October 2019)

Bashorun J.K Randle

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e must all (whether young or old) wake up as matters have reached frightening proportions and dimensions. Our country is in a mess. Here is a front-page report in “The Punch” newspaper of 1st October 2019 (Independence Day Special Report) headlined “Federal government plans N4.6 trillion borrowings, debt to hit N30 trillion.” “The federal government is planning to borrow fresh N4.6 trillion within the next three years, covering 2020 to 2022, to finance its programmes, figures obtained from the Ministry of Budget and National Planning have revealed. If the N4.6 trillion new borrowings scale through legislative scrutiny and get executed, then Nigeria’s indebtedness to local and foreign creditors would hit about N29.55 trillion by 2022, going by the country’s current debt profile of N24.95 trillion. The fresh

borrowings were contained in the Medium-Term Expenditure Framework (MTEF ) recently submitted to the National Assembly by President Muhammadu Buhari. The MTEF, which is currently being worked on by the committees on finance and appropriation, contains the fiscal strategy of the federal government for the next three years. An analysis of the document shows that the federal government is planning to borrow N1.7 trillion in the 2020 fiscal period. A breakdown of the N1.7 trillion shows that the sum of N850 billion is expected to be sourced locally while the balance of N850 billion is expected to be raised from foreign creditors. In the 2021 fiscal period, the government plans to borrow N1.6 trillion which would be sourced in equal proportion of N800 billion each from domestic and foreign sources. For 2022, the government projects to raise N1.3 trillion through debt instruments to finance its operations. This is made up of foreign borrowing of N650 billion and domestic borrowing of N650 billion. Experts said there was the need to be concerned about the nation’s debt as a huge chunk of government revenue was being spent on debt servicing. A professor of economics at the Olabisi Onabanjo University Ago-Iwoye, Ogun, Sheriffdeen Tella, told our correspondent that the country currently had a debt problem. Tella said that with the federal government spending about 20 percent of its budget size servic-

ing the country’s debt, it was practically impossible for Nigeria not to have a debt problem. He called on the government to discontinue borrowing in order to avoid the current situation where a huge chunk of the country’s annual budget was spent on debt servicing. Tella said, “We have a debt problem because when you have problem with debt servicing, then you have a serious debt problem. Currently, what we are still doing is debt servicing using a huge proportion of the annual budget to pay debt. That is serious because the money that you would have used for other things is now being used to pay debt. We have a serious problem with debt. We should not even accumulate further debts beyond what we currently owe.” Also speaking, a former Director-General, Abuja Chamber of Commerce and Industry, Chijioke Ekechukwu, said the rising debt portends danger for the economy.” It is not unlikely that, unwittingly, the teachers (and parents) of students of Dowen College may have overprotected those who are graduating. Their sheltered existence is about to come to an end. Once they venture into the larger society where the rule of the jungle has overwhelmed the rule of law, it is going to be a different ball game where there is no umpire to mitigate the survival of only the fittest. Nevertheless, we must not underestimate the resourcefulness

We have a debt problem because when you have problem with debt servicing, then you have a serious debt problem. Currently, what we are still doing is debt servicing using a huge proportion of the annual budget to pay debt

of students. You should draw inspiration from the young Pakistani woman Malala Yousafzai who is now studying at the University of Oxford. Malala defied the Taliban as a young girl in Pakistan and demanded that girls be allowed to receive an education. For her activism, she was shot in the head by a Taliban gunman in 2012, but survived and went on to receive the Nobel Peace Prize in 2014. Equally impressive are the guts and tenacity of purpose demonstrated by Greta Thunberg of Sweden who has carried the message of climate change and the danger it poses for the entire world to all nooks and corners of the globe. Her performances at the United Nations and other arena have been spellbinding. At the mere age of 15, she began protesting outside the Swedish parliament in August 2018 about the need for immediate action to combat climate change. Soon, other students engaged in similar protests in their own communities which then led to an organized school climate strike movement under the name “Fridays for Future”. After Thunberg addressed the 2018 United Nations Climate Change Conference, student strikes took place every week somewhere in the world. In 2019, there were at least two coordinated multi-city protests involving over one million students each. Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

Protecting consumer rights: Highlights of provisions in FCCPA (2)

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ello friends, last week I highlighted some provisions in the Federal Competition and Consumer Protection Act, 2018 (FCCPA) with emphases on the protection of consumer rights and duties of manufacturers, importers, distributors, suppliers which I termed noteworthy. Today, we will conclude these provisions also comparing them with what was obtainable under the repealed Consumer Protection Council Act, 1992 (CPA) just as we did last week. Right to fair dealings – Section 124: A consumer shall not be subjected to coercion, physical force, undue influence or pressure, harassment or unfair tactics or any similar conduct in connection with marketing or supply or negotiation of agreement to supply goods or services. The highlighted conducts should also not be meted out on a consumer in demanding for or collecting payment for goods or services. A consumer who is physically or mentally challenged, illiterate, ignorant or unable to understand the language of an agreement should not be taken advantage of as a result of any of the stated limitations. Right to safe, good quality goods – Sec-

tion 131: Every consumer has a right to receive goods that meet such requirements as; reasonably suitable for the purposes for which they are generally intended; of good quality; free of defects; durable and usable; comply with applicable standards set by industry sector regulators. The FCCPA also imposed some duties on manufacturers, importers, suppliers and distributors. The FCCPA defines a supplier as one who supplies goods and services to consumers. Manufacturers, importers and distributors were not specifically defined in the FCCPA. It would be right to say that the terms will be given their ordinary meanings. The duties imposed on manufacturers, importers, suppliers and distributors are as follows: Duty to label goods properly – Section 134: A manufacturer, importer or distributor has a duty to label or describe goods in a manner that will be easily traceable to it. It is noteworthy that this is not the duty of the supplier. A violation of this duty amounts to an offence punishable (in the case of a natural person) by imprisonment not exceeding three years or a fine not exwww.businessday.ng

ceeding N10,000,000 or to both the fine and imprisonment. Where the manufacturer, importer or distributor is a body corporate, upon conviction, it shall be liable to a fine not exceeding 10% of its turnover in the preceding year. Its directors would also be liable to imprisonment not exceeding 3 years or a fine not exceeding N10,000,000 or to both the fine and imprisonment. Section 135(2) & (3). Duty to withdraw hazardous goods from the market – Section 135: Manufacturers and distributors have a duty to notify the general public once becoming aware of any unforeseen hazard arising from the use of goods already placed in the market. They also have a duty to withdraw such goods from the market. A violation of this provision attracts the same consequences as highlighted above. Section 135(2) & (3). Some other implied duties include duty to adequately display the price of goods and services to the consumer – Section 115, duty to disclose second hand, re-conditioned, re-built or re-made goods – Section 117, duty not to advertise in a manner that is misleading, erroneous, false, fraudulent or deceptive – Section 123.

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ULOAKU EKWEGH

The FCCPA no doubt has laudable provisions aimed at protecting the rights of consumers. Therefore, it is important that all stakeholders acquaint themselves with the various provisions as it concerns them. Businesses especially need to ensure that in their dealings with consumers, they don’t violate the provisions of the FCCPA as the prescribed penalties could have very significant impact on its finances. Ekwegh is a private legal practitioner with over 15 years legal experience in law firms and as in-house counsel. She is also a fellow of the Institute of Management Consultants. Email: uloekwegh@yahoo.com

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Circular logic

Patrick Atuanya

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ince the Central Bank of Nigeria (CBN), released 2 circulars in July, 2019 with the potential to alter the landscape of the domestic banking sector, a rapid fire dose of new circulars have been emanating from the apex bank. First a recap. On July 3, the CBN issued a notice to all banks in a circular with reference number BSD/DIR/GEN/ MDD/01/045, signed by Ahmad Abdullahi, director, banking operations, directing them to maintain a minimum Loan to Deposit Ratio (LDR) of 60 percent by September 30, 2019. It said the ratio “shall be subject to quarterly review.” The apex bank warned that failure to meet the stipulated minimum LDR by the specified date “shall result in a levy of additional Cash Reserve Requirement (CRR) equal to 50 percent of the lending shortfall of the target LDR.” The banks that failed to meet increased loan requirements by the deadline were subsequently debited to the tune of N499 billion although the CBN later refunded some of the amounts. Another Circular was released

barely a week later on July 10th by the CBN, limiting the amount of excess cash Banks can park with it and earn interest on. In the circular FMD/DIR/CON/ OGC/12/019 to all banks and discounts houses titled ‘Guidelines on Accessing the CBN Standing Deposit Facility (SDF)’, signed by Angela Sere-Ejembi, director, financial markets department, the CBN said the remunerable daily placement by banks shall not exceed N2 billion. The SDF is basically a liquidity mop-up mechanism which the CBN uses without necessarily issuing government securities. Prior to November 2014, banks could deposit as much liquidity at their disposal with CBN and be remunerated (paid interest) for same. The CBN capped the minimum remunerated deposit through the window at N7.5 billion in November 2014, however banks could keep excess cash with the CBN earning zero percent as they wished. With the new framework, the allowable daily deposit through the SDF that will now be paid interest on by the CBN is now capped at N2 billion at the applicable Monetary Policy Rate (13.5% today) minus 500 basis points, equivalent to 8.5 percent. The CBN in September issued a circular on commencement of charges on deposits in addition to already existing charges on withdrawals. Consequently, customers are to pay huge fees for cash deposit or withdrawal above N500, 000 for

individual account and N3m for corporate account. In the circular to deposit money banks signed by Sam Okojere, director, payment system management department, the nationwide implementation of cashless policy will take effect from March 31, 2020. Barely a month later in October the CBN jerked up the loan to deposit ratio for banks to 65 percent, just as the banks were adjusting to the earlier 60 percent threshold! “All Deposit Money Banks are required to attain a minimum of LDR of 65 percent by December 31, 2019,” the CBN said. “To encourage the SMEs, Retail, Mortgage and Consumer Lending, these sectors shall be assigned a weight of 150% in computing the LDR for this purpose.” Again in October, the CBN ordered lenders to stop investing in its Open Market Operations (OMO) auctions on behalf of local corporates and individuals in an attempt at demand management to reduce its OMO liabilities and return the liquidity management tool to its traditional use. In a circular released Oct.23 with number FMD/DIR/GEN/ OGC/14/009, titled ‘LETTER TO ALL BANKS’, the CBN said: “Effective today, October 23 2019, the Central Bank of Nigeria directs that individuals and local corporates are specifically excluded from investing in Open Market Operations (OMO) auctions. Therefore your participation at the auctions should be on propriety and nonproprietary basis, without these classes of investors.”

As a result of the CBN directive, OMO liquidity in the secondary market collapsed and one of Nigeria’s deepest markets for securities would nearly freeze up

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

The spirit of the ECOWAS common external tariff

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know! You are tired of reading about the border closure. Enough with that already. I apologise but as long as the borders remain closed, we will have to keep talking about it. Each time I read or listen to some analysis about why the borders are closed, I get the sense that people do not really understand the reality of the region we are living in. So, I will try to add a bit of context here just so we have more information when discuss the consequences of the closure. We know the history of the borders of current African countries. At some point in 1884 a bunch of Europeans sat down in Berlin and carved out pieces of the continent as their territories. They basically got a map and drew lines and divided the continent. Those divisions ended up being countries after independence and those borders carved up in Europe mostly remain the borders today. However, when they actually went to these borders, they realised that they mostly made no sense. Towns were split in half. Ethnic groups ended up with the left side in one country and the right side in another. There were mostly no geographical demarcations like river or mountains. Basically, there were just ar-

bitrary lines in the sand. They stuck with them though. And today those borders are still the borders. The problem however is that when you think of operating as an independent country, those borders become logistical nightmares. You cannot really man them because the costs of doing so would be too much. You cannot really justify splitting families and communities with centuries of history. And as far as trade policy is concerned, you cannot really stop people from moving things in and out. At least not sustainably. You can have trade policy but if your neighbours do not have similar policies then you end up with multiple prices for the same goods and arbitrage opportunities that render your trade policy useless. So, given this border reality what was the agreed solution? Cooperation of course. You may not be able to police your artificial borders, but you can police your ocean facing borders much more easily. If you all agree to have the same trade policies then you only have to enforce at the seaports. Of course, there are issues with regards to making sure that customs duties and other trade rules are obeyed. But the fundamental issue is the agreewww.businessday.ng

ECONOMIST

ment. The agreement that we will all charge the same set of duties for goods that come into the region and we will all have the same set of rules around international trade with countries outside the region. The birth of the ECOWAS common external tariff policy. Unfortunately, Nigeria has recently had other philosophical ideas about trade compared to our other ECOWAS counterparts. Since the foreign exchange crisis in 2015 we have taken our already protectionist leaning to new levels. Produce what you consume. Ban imports of X and Y. Restrict access to foreign exchange for so and so. You name it. The result is that we have raised tariffs and effectively banned imports of many things. We did this without carrying our neighbours along although even if we wanted to, they probably would not have agreed to go down that road. Some of our ECOWAS neighbours still have sense when it comes to trade policy. The expected outcome of our abandoning the spirit of the CET is that we have ended up back where we were in the beginning with prices for many goods that are so different that the arbitrage opportunities are too profitable to be ignored. Smug-

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The new rule would not apply to foreign portfolio investors, because they hold a significant amount of OMO bills estimated at nearly $18billion, and a move to restrict them would have impacted the foreign exchange market. The CBN would later clarify the circular to include a ban on secondary market trading of such OMO securities by domestic corporates and individuals. As a result of the CBN directive, OMO liquidity in the secondary market collapsed and one of Nigeria’s deepest markets for securities would nearly freeze up. To get around this new problem the CBN issued yet another circular on Friday Nov. 8, stating that it would in all intent and purposes become a day trader in the securities it issues. “As part of our liquidity management function, the Central bank of Nigeria will be in the market on a daily basis to enhance the liquidity of the CBN instrument (OMO bills) by providing market related quotes across all tenors,” the circular with number FMD/ DIR/CON/OGC/14/063, said. So the apex bank has come full circle, selling securities into the markets and trading same securities. There is a sense that all of this is being rolled out without a grand strategy but as a knee-jerk response to issues that have arisen as a result of some other CBN policy. Welcome to circular logic!

NONSO OBIKILI

gling has of course soared as a result. Our response has been to line troops across the border and block everything. We know we cannot do it forever and we know doing it will be disastrous for the economy, but we are doing it anyway. Sense be damned. The other minor issues are still there, and policy makers continue to focus on those minor issues. Is transhipment a problem? Yes, it is. Is the “rules of origin” problem there? Yes, it is. But those are really just minor issues. The major issue is that we have abandoned the idea that we need to cooperate on trade policy with our neighbours, and that issue is all on Nigeria. If we really want to stop smuggling then we need to go back to cooperating. Dr. Obikili is chief economist at Business Day

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BUSINESS DAY

Monday 11 November 2019

EDITORIAL Publisher/CEO

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

Bashir Ibrahim Hassan

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

In defence of dissent

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here is growing repression of dissenting voices in the current All Progressive Congress led government but the most pathetic part of this is that mostly young, uninformed Nigerians, whose future is being impacted, goaded by some amoral intellectuals who have bartered clear reasoning for a seat at the banquet table, are urging them down a path that will only have a disastrous outcome for Nigeria’s democracy. Section 39 (1) of the 1999 constitution protects free expression and a free press. It is the same constitution from which the president gets his powers. The media is the fourth realm and holds a unique position helping the public hold government officials accountable. This critical role is being undermined by this government in active connivance with sections of the public. Buhari’s four years in office have been marked by incidents of journalists harassed and detained for doing their job. Buhari may have claimed to be a democrat, his actions belie that claim. Taking a cue from him, state governors are now arresting and threatening journalists and bloggers and

even citizens who criticise them on social media. We have discovered an even more insidious pattern of press intimidation by this government through paid agents including his Buhari Media Organisation. These people have coalesced into a waiting army ready to be summoned at will to disparage media reports that appear critical of this government. So far, social discourse has degenerated into virulent namecalling and savage attacks by these young people who have no idea that they are doing violence to their own future. Thomas Jefferson, third president of the United States, who also drafted the Declaration of Independence said, “the only security of all is in a free press.” We are undermining this security fighting for the vision of old people who won’t even be in the future they are shaping for a country where over 65 percent are 20-year-olds. To put things in proper perspective, Buhari is fallible like everyone else and his ideas like everyone else must be subjected to critical evaluation. Neither economics nor business is a strength of Buhari. Unlike some ex-generals who sit on the board of companies or run large industrial farms and ranches, he left the army to hibernate in Daura,

his hometown. Discourse about national issues should be civil and not always limited to puerile PDP/ APC divisions. The United States, once a beacon of democracy is bogged down by partisanship that it can’t get much done. We are fast heading that way. Nigerians must learn to separate emotions and argue rationally. Since the education system is largely in tatters, this seems like a big ask. But each person has a duty to check his bias. As Nigerians, it is our duty to demand for better governance and the media is an important vehicle to articulate this demand. We should not buy the false narrative that elevates poverty to saintly status and disdain wealth. Pain is not a virtue; lack is not evidence of piety. In the last four years, about 90 million people have fallen miserably poor and the bulk of these people feed the army of paid choristers singing Kumbaya to penury. We are saddened by the fact that otherwise intelligent people who serve in this government have reduced public discourse to personal attacks. Social media aides of politicians now engage in gutter fights with strangers. Professionals who point out flaws in government policy are called “fencists” and “roadside econo-

mists”, their cognitive abilities have since been impaired. We warn that this vocal minority which includes false intellectuals are not only polluting public discourse, they are destroying the fabric of society and creating the conditions that will allow tyranny. Under this government, the roar of civil society has been replaced by helpless barks, the judiciary once thought of as the last hope of the common man is now need of redemption, the press is being muzzled and calls for protests are crushed with the fury of angry thunders. This has bred hairbrained policies like the plan to regulate social media. The media who hold government account must also behave responsibly. News must be reported objectively removing the journalist’s bias which we have watched seep into reporting by every media outlet including ours. To earn the tag opposition media is not a compliment any more than to be called a progovernment when ownership is private. The haste to break the news does not remove the obligation to be balanced, fair and accurate. As criticisms follow poor policies, praise should be credited to the government when it is due. This way the media can maintain a devotion to truth while checking tyranny.

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Spain prays for a solution to political deadlock The country will hold a fourth election in as many years. Polls suggest the impasse could continue

Daniel Dombey

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he old dictator who ruled Spain for almost 40 years had just been exhumed from the mausoleum he himself had ordered built. A white helicopter bore away the remains of Francisco Franco, past the biggest stone cross in the world. Pedro Sánchez, Spain’s caretaker Socialist prime minister, hailed the events as a triumph of democracy, even though the country — one of the EU’s great success stories in recent decades — is now living through one of its deepest political crises since Franco died in 1975. “Modern Spain is the opposite of what the Franco regime represented,” Mr Sánchez said as he celebrated the transfer of Franco’s corpse to a private grave on October 24. “Where there was isolation, there is Europe; where there was machismo and homophobia, there is feminism and tolerance.” Yet the question now is whether that story of success is coming to an end. Spain is suffering from an extreme form of the malaise that has afflicted the EU: social and political polarisation and the fragmentation of the party system. The country is contending with not only the Catalonia crisis, western Europe’s most bitter territorial dispute, but also a rupture in the old political order that has led to its fourth general election in four years this Sunday, barely six months after the last one.The result has been instability and stasis: parlia-

ments incapable of the basic business of approving laws and pushing through budgets. The crisis in Catalonia has polarised opinion on both sides of the political spectrum, despite signs that tempers could soon cool. “We have to end the impasse which is Spain’s principal political problem,” Mr Sánchez said during a party leaders’ TV debate on Monday. Opinion polls indicate that Mr Sánchez’s Socialist party will top the polls, but possibly on a declining share of the vote and with no chance of a majority in the 350-seat Chamber of Deputies. But the numbers are too close to say whether the combined forces of the left or the right will come out on top, and a majority could well be beyond either. New political parties — such as the radical left Podemos and the pro-market Ciudadanos — that emerged in response to the financial crisis and to corruption scandals, have proved strong enough to undermine the old forces of centreright and centre-left, but too weak to displace them. Sunday’s poll, in which Catalonia is the dominant issue but which has also highlighted fears over a slowing economy, was triggered by Mr Sánchez’s failure to agree a coalition deal with Podemos. Ciudadanos refused even to entertain the possibility of an agreement with the Socialists until the very last moment. Politics in the country has long been polarised. There has never been a coalition government in modern democratic Spain. One veteran of the centre-right People’s party accuses the Socialists — banned from politics during Franco’s reign — of having an air of moral superiority. But the politics of division are spreading. The far-right is on the rise in a country long considered to be inoculated against such extremism because of the living memory of fascism. Catalan separatist parties, who in other circumstances would hold the balance of power after any election, are now shunned by both the Socialists

and the PP. Huge, sometimes violent protests have swept through Catalonia since Spain’s Supreme Court handed down prison sentences in October to nine separatists for their part in an illegal 2017 referendum and declaration of independence. Catalonia’s pro-independence parties have the support of about 2m of the region’s 4m voters. But the separatist campaign has triggered a backlash elsewhere in Spain, where the far-right Vox party — which has called for a state of emergency to be imposed in the region — hopes to become the third biggest force in parliament. Meanwhile Ciudadanos, which supporters had hoped could establish itself as a liberal centrist party, has seen its support plunge in the polls. Felipe González, Spain’s Socialist prime minister between 1982 and 1996, has contrasted the country’s political instability with the long-lasting postFranco governments, when Spain focused on joining first the European Community and then the euro. Speaking last month, he argued that Spain has an “Italian parliament” in terms of fractured party support — but no “Italian politicians” to master it. His comparison was a wounding one. Until recently, Spain was seen as an exemplary democracy, Italy a dysfunctional one. His point was that Spain needs to move beyond polarisation. Yet the opposite appears to be the case. “Now we have two kinds of polarisation feeding off each other,” says Ignacio Torreblanca of the European Council on Foreign Relations. “One is the ideological divide between left and right, the other is the debate over Catalonia.” At first sight, the Socialist headquarters in Barcelona looks more like a police station under siege than a nerve centre of the country’s ruling party. The building is marked by splashes of yellow paint — the colour of Catalan independence protests — while the walls on either side have been daubed with separatist graffiti. Even at midday, the shutters are down. Yet, if Mr Sánchez is to form a stable

The party has never had a good victory in the general election without doing well in Catalonia

government, his Socialist party needs a strong result in Catalonia. “The party has never had a good victory in the general election without doing well in Catalonia,” says Salvador Illa, the Socialists’ campaign manager in the region. He highlights Catalonia’s status, together with Andalucía, as the country’s most populous regions and his party’s two biggest vote banks. In the April general election, the Socialists won 29 per cent of the national vote, putting the party comfortably in first place but denying it the number of seats it wanted to form a stable government. In Catalonia, it won 23 per cent, coming within 60,000 votes of the triumphant pro-independence party, the Catalan Republican Left, or ERC, and netting 12 seats. Despite the polls’ indications of slippage in the Socialist vote, Mr Illa says he expects to equal or better that result as a result of divisions in the separatists’ ranks and support for the socialists “proportionate” response to the crisis. Nevertheless, the paint stains and graffiti are testimony to the strength of feeling among his opponents. “Our party leader has just been sentenced to 13 years in prison,” says Sergi Sabrià, head of the ERC group in the Catalan parliament, referring to the verdict against Oriol Junqueras, the former vice-president of the regional administration. “We are not going to have any problem with voter mobilisation; people are furious.” The conflict between Catalan separatists and Madrid has deep roots. One of the more accurate predictors of whether a voter favours separatism is whether most of their grandparents were born in Catalonia or instead migrated from other, typically poorer, parts of Spain.

Note: the rest of this article continues in the online edition of Business Day @ https://businessday.ng FT

Genevieve’s Lionheart movie award disqualification: Did the Oscars break some laws?

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igeria’s first-ever submission for best international feature Oscar consideration, “Lionheart” has been disqualified by the Academy of Motion Picture Arts and Sciences based on a misguided and discriminatory view that the movie directed by ace Nollywood actress, Genevieve Nnaji, had “too much English dialogue”. According to the Los Angeles Times, Lionheart, one of 10 African films that were submitted for Oscar consideration this year, was deemed to have ran afoul of the academy rule which states that an International feature film category must have “a predominantly nonEnglish dialogue track.” Regardless, that move may not only be unfair – but also illegal – as unlawful discrimination against an artistic product (movie) set partly in English language by African artists from a country where English has been a lingua franca since 1960: more than half a century ago. In an apparent, even if unwitting effort to normalise the discrimination, the Los Angeles Times wrote that, “this isn’t the first time the academy has disqualified a foreign film from consideration for having too much English dialogue; in recent years, the 2015 Afghan film, Utopia, and the 2007 Israeli movie, The Band’s Visit, were disqualified for the same reason.” Sonia Rao of the Washington Post was equally silent as to the legality of the Oscars call. “Lionheart,” the directorial debut of starring actress Genevieve Nnaji, follows a woman as she navigates a male-dominated industry to save

her ailing father’s business. The film’s characters speak in Igbo, a language spoken in southern Nigeria, for a small portion of the 95-minute run time, but not long enough to meet the category’s requirement that each entry feature a “predominantly non-English dialogue track.” However, unlike Nigeria, the lingua franca or national language of Afghanistan and Israel aren’t English. Indeed, Afghanistan despite being a multilingual country like Nigeria asserts two indigenous languages – Pashto and Dari – as their lingua franca. For Israel, Hebrew is historically and officially recognised as the national language. Interestingly, under the same Oscar rules, the Algerian film Papicha, which is a favourite in the category, features a good deal of French – the language Algeria inherited from its erstwhile colonisers – France. As noted by a writer for the TheGuardian, Afua Hirsch, “the message seems to be that as long as your imperial power spoke what Americans regard as a “foreign” language – in other words, anything but English – you can speak it and remain authentic. But if you share an imperial past with the US to the extent that English is your nation’s lingua franca as a result, then it is somehow less authentic to speak it.” Intriguingly, while the commentaries in the WashingtonPost and TheGuardian strove to set up a negative narrative against the Oscars based on the hackneyed themes of racism and colonialism, none of them went far enough to recognise the elephant in the room: the legality of the move. That is, whether the Oscars’ parent www.businessday.ng

body may be in legal jeopardy (something that, borrowing their preferred race and colonial construct, would have been a given, perhaps, if the same treatment was meted out to someone who was resident in the US or UK or a work connected closely with both countries). In a tweet on her official Twitter handle, Genevieve rightly noted: “To the academy (Oscar), You disqualified Nigeria’s first-ever submission for Best International Feature because it’s in English. But English is Nigeria’s official language. Are you barring this country from ever competing for an Oscar in its official language?” Further, in her response to one Ava Duvernay’s tweet, Genevieve Nnaji said: “I am the director of Lionheart. This movie represents the way we speak as Nigerians. This includes English which acts as a bridge between the 500+ languages spoken in our country; thereby making us one Nigeria… “It’s no different to how French connects communities in former French colonies. We did not choose who colonised us. As ever, this film and many like it, is proudly Nigerian.” More importantly, the Academy of Motion Picture Arts and Sciences which is behind the Oscars is a Beverly Hills, California, United States based legal entity subject to a slew of federal anti-discrimination laws. There is the State of California’s non-discrimination regime, specifically under the “Language Discrimination” framework which outlaws discrimination based on language considerations. Furthermore, under the Immigration-Based Discrimination rules, it is unlawful to discriminate against any

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Samuel Eleanya person(s) based on their national origin or historical peculiarities associated therewith. While jurisdictional hurdles can be expected, there can be little doubt that the brand of the Oscars, under close legal scrutiny, may be the one with more to lose if legal challenge is taken up as a push-back against its dismissive treatment of the hearts and minds behind the LionHeart movie. It would be interesting to see what simple letter to the parent body of the Oscars by a US based Attorney would excite. Such patronising dismissal of artistic works due to the origin of its producers is not one condoned under California and US laws and so the producers of the Lionheart may have a remarkable opportunity to right some wrongs for past and future African movie makers. This may be a case someone may be happy to settle out of court – while reframing the rule to prevent similar treatment are meted to future content producers from countries who had adopted the language for their erstwhile colonisers. As astutely captured by another Twitter user, Britain Danielle, “Something about this doesn’t seem fair. The film was disqualified because it’s mostly in English. Meanwhile, the official language of Nigeria is…English.” Samuel Eleanya is a lawyer and a managing partner at Lawnigeria.com

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Monday 11 November 2019

BUSINESS DAY

In Association With

Thinking only positive thoughts

Saudi Arabia should listen to critics of its reform programme Instead it locks them up

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NSIDE AN ORNATE conference hall the boss of a $100bn tech fund spoke to rows of empty chairs. Then he briefly fell asleep. Outside the hall Anthony Scaramucci, the colourful financier who lasted ten days as Donald Trump’s communications director, dispensed questionable political analysis. An American company hawked jetpacks. A robot urged passers-by to tickle her head. “It will make you feel better,” she said. This was the third Future Investment Initiative (FII), Saudi Arabia’s flagship business conference. The event, which wrapped up in Riyadh on October 31st, attracted some 6,000 guests. That made Saudi officials feel better. The first FII, in 2017, was a coming-out party for the economic-reform programme of Muhammad bin Salman, the crown prince (pictured). But the second, last year, was overshadowed by the murder of Jamal Khashoggi, a journalist, by Saudi agents. Top executives stayed away. They had no qualms about attending this year’s event, where officials pushed a narrative of progress. Many guests argued that the kingdom had learned a lesson from the furore over Khashoggi. It is true that Saudi agents have not dismembered any journalists in the past 12 months. But this reflects conquest, not contrition: critics have been cowed into silence. On November 6th two employees of Twitter were charged in America with using their access to help Saudi Arabia spy on dissidents. Determined to stifle dissent at home and whitewash its image abroad, the kingdom has deprived itself of valuable input on a bold but flawed reform agenda. To be sure, there are positive signs. Non-oil growth has ticked up and unemployment down. Officials at the FII were eager to talk about the kingdom’s jump in the World Bank’s Ease of Doing Business Index (it rose 30 places, to 62nd). Riyadh, the dour capital,

A Balkan betrayal Squeezing the rich

Billionaires are only rarely policy failures Indiscriminate attacks on the super-rich will do more harm than good

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has loosened up in ways unthinkable five years ago. A cultural festival hosted performances of the “Wizard of Oz”, a remarkable sight in a place that long prosecuted people for “witchcraft”. In September Saudi Arabia began issuing tourist visas to citizens of dozens of countries. Saudi Arabia signed $20bn of deals at the FII. More than half of that, though, came from a single $11.5bn joint venture to build power plants and other infrastructure in the western city of Jizan. Such projects tend to create few jobs for Saudi nationals. Though inward foreign direct investment (FDI) more than doubled last year, to $3.2bn, it is still far below the levels of a decade ago (see chart). Many of the attendees at the FII were keen not to invest but to win state contracts. After a contraction in 2017, the Saudi economy is growing, with non-oil GDP up by 2.9% in the second quarter of this year (though weak oil revenue left overall growth at 0.5%). So the finance ministry says it will stop priming the pump and reduce spending by 3% in 2020. But it is hard to say what is “non-oil”

growth in a country where even sectors such as construction rely on oil-funded government spending. On the kingdom’s most important priority, creating jobs for citizens, progress is both visible and slow. Young Saudis welcome guests to hotels and brew lattes in cafés, unimaginable sights in most Gulf countries. But unemployment among nationals remains above 12%. Executives grumble about ever-higher fees for employing foreign labour. In September the cabinet waived such fees for five years in the manufacturing sector, which employs 645,000 migrants, 10% of the total foreign workforce. The concession was a sign that many Saudi firms cannot turn a profit with costlier local labour. While inward FDI was modest, more than $21bn flowed out of Saudi Arabia last year, much of it through the Public Investment Fund (PIF), a sovereign-wealth vehicle controlled by an ally of Prince Muhammad. The PIF hopes to earn big returns abroad and use them to bankroll diversification at home. But it has made some bad bets, particularly its $45bn investment in SoftBank’s

Vision Fund. On November 6th the firm announced an $8.9bn quarterly loss for the fund, much of it due to the troubles of WeWork, an office-rental startup. The PIF may soon receive a fresh infusion of capital from the initial public offering (IPO) of Aramco, the state oil giant. On November 3rd the Saudi market regulator approved the offering. Saudi Arabia is keen for local investors to buy a piece. It has encouraged banks to finance such purchases, despite concerns this will tie up liquidity and deter other lending. Many Saudis are eager to buy shares, seeing it as both a lucrative opportunity and a patriotic duty. Yet this could turn Aramco into a political problem for Prince Muhammad. He believes it should be valued at $2trn. Banks working on the IPO think it is worth much less. There could be a backlash if locals pile into an overpriced offering and get burned. But few Saudis dare raise such concerns in public. An economist who questioned the IPO was jailed last year. “You can’t do business here if you’re not seen as loyal,” says a businessman. “You can’t question the narrative.”

ASHING BILLIONAIRES is gaining popularity—especially among candidates to be America’s president. Elizabeth Warren wants to take up to 6% of their wealth in tax every year. Bernie Sanders says they “should not exist”. “Every billionaire is a policy failure,” goes a common left-wing slogan. In Britain’s election, too, the super-rich are under fire. Jeremy Corbyn, the leader of the Labour Party, says that a fair society would contain none. On October 31st he vowed to “go after” Britain’s plutocrats, singling out five individuals and bemoaning a “corrupt system”. Left-wingers blasting inequality is nothing new. But the idea that vast personal fortunes are made possible only when government goes wrong is a more novel and serious idea. It is also misguided. Personal wealth is at best an unreliable signal of bad behaviour or failing policies. Often the reverse is true.

The left’s charge is based on a kernel of truth. When competition is fierce and fair, persistently high profits should be difficult to sustain. Yet on both sides of the Atlantic too many companies crank out bumper profits in concentrated markets. Some billionaires have thrived where competition has failed. Facebook and Google dominate online advertising; Warren Buffett likes firms with “moats” that keep rivals out. Meanwhile America’s political system is riddled with lobbyists cheerleading for incumbents. About a fifth of America’s billionaires made their money in industries in which government capture or market failure is commonplace (see article). Yet many others operate in competitive markets. The retailers owned by Mike Ashley, one of Mr Corbyn’s targets, are known for low Continues on page 15


Monday 11 November 2019

BUSINESS DAY

15

In Association With

Europe alone

Assessing Emmanuel Macron’s apocalyptic vision Europe is “on the edge of a precipice”, says France’s president. Is he right?

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O DAY ’S EU RO P E owes its existence to the United States. America fought two world wars on European soil; American diplomacy was midwife to what became the European Union; American arms protected western Europe from Soviet invasion; and American statesmen oversaw German unification. Now, in a dramatic plea to all Europeans, France’s president, Emmanuel Macron, has warned that America is cutting Europe loose. The old continent is “on the edge of a precipice”, he warns. Unless it wakes up, “we will no longer be in control of our destiny.” In his Elysée Palace office, Mr Macron spoke to The Economist in apocalyptic terms (see article). NATO, the transatlantic alliance, is suffering from “braindeath”, he says; Europe needs to develop a military force of its own. The EU thinks of itself as just a market, but it needs to act as a political bloc, with policies on technology, data and climate change to match. Past French presidents have argued that Europe cannot rely on America, and should look to France instead. Mr Macron is not just rehashing this view. He believes that America and Europe have shared interests and has worked tirelessly to keep good relations with President Donald Trump. But he argues that for the first time America has a president who “does not share our idea of the European project”. And even if Mr Trump is not re-elected, historical forces are pulling the old allies apart. American priorities are changing. When President Barack Obama, who was intent on pivoting towards Asia, chose not to punish the use of chemical weapons in Syria it signalled that America was losing interest in the Middle East. Mr Trump’s recent abandonment of America’s Kurdish allies in Syria not only reinforced this, but also undermined NATO. America did not inform its allies, and Turkey, a NATO member, promptly invaded Syria. “Strategically and politically,” Mr Macron says, “we need to recognise that we have a problem.” Asked whether he is confident that an attack on one NATO member would today be seen as an attack on all—the idea that underpins the alliance’s credibility—Mr Macron says that he does not know. He acknowledg-

es that NATO thrives operationally, but he calls for Europe “to reassess the reality of what NATO is in the light of the commitment of the United States.” Europe, he says, has yet to grasp the immensity of the challenge ahead. It still treats the world as if commerce and trade alone were able to ensure peace. But America, the guarantor of world trade, is becoming protectionist. Authoritarian powers are on the rise—including Russia and Turkey on Europe’s borders. While America and China spend vast sums on artificial intelligence, which they see as an essential component of their hard power, the EU devolves too much say to industry. Mr Macron warns that slow-moving, head-in-the-clouds Europe must open its eyes and prepare itself for a tougher, less forgiving world. It is an astonishingly bleak picture for a centrist European politician and an avowed internationalist. But it is also unusually thought-through and, as far as Mr Macron is concerned, a spur to action. It is hard to overstate the scale of the change he is asking from his fellow Europeans. Take defence. Mr Macron thinks that his new European Intervention Initiative and the EU’s Permanent Structured Cooperation, underpinned by the European Defence Fund, can integrate military operations and boost Europe’s capabilities, by implication providing a foundation for Europe’s post-NATO

defence. But these buildingblocks are rudimentary. America’s departure would leave vast holes in areas like air and missile defence, intelligence and surveillance, and aerial refuelling. Its military budget is twice as large as the rest of NATO’s combined. European governments will be reluctant to plug the gap, since they have other priorities. It may be easier to adapt NATO, so that it both protects Europe and is also more useful to the United States. And then there is diplomacy. Mr Macron thinks Europe can best establish its global influence as a power that mediates between the gorillas of China and the United States. Its role will be “to stop the whole world from catching fire”, he says. A first step would be to get a grip on its own region by rebuilding relations with Russia—a task that he accepts could well take a decade. Again, however, that ambition assumes a unity of purpose that the EU seldom achieves. Many of its members tend to shun hard power for a foreign policy focused on human rights and commerce. As Mr Macron’s Russian proposal illustrates, power politics requires you to deal with people whose actions you deplore. For him, realpolitik is necessary for European values to prevail. It is not clear his fellow European leaders would agree. Last is industrial policy. Mr Macron wants the state to take strategic decisions over key technologies, and favours a

policy to foster European champions. This tends to channel funds and contracts to politically connected incumbents. A better way to create a thriving technology ecosystem would be to encourage more competition. If Mr Macron will not embrace that, why should others? The EU’s formula is unique: an arrangement between states, without any hegemon, that keeps the peace. But how do you get 27 countries—plus Britain, a big power now in the EU’s departure lounge—to agree to build fully functional armed forces, let alone convince Europe’s foes that they would ever be used? Mr Macron’s critics scoff that he is “drunk on power”. Some countries, including Poland and the Baltic states, would be alarmed at the idea of parting with America and pursuing detente with Russia. Others, including Germany, Italy and Spain, are too embroiled in domestic woes to entertain a grand global vision. Plenty of times in the past, pious calls for Europe to make its weight felt in the world have turned out to be empty. This time, Mr Macron argues, must be different. He is asking his fellow leaders to imagine how Europe will thrive in a dangerous world without a cast-iron American alliance. How should they deal with Russia, with the conflict and religious fundamentalism roiling the Middle East and north Africa, and with the authoritarian challenge of China? He deserves an answer.

Billionaires are only... Continued from page 14

prices and ruthless competition (as well as questionable working conditions), not rent-seeking. For every Mark Zuckerberg, the boss of Facebook, there are several technology entrepreneurs with lots of rivals. Think of Anthony Wood, who created Roku, a video-streaming platform; or Tim Sweeney, co-founder of the firm behind “Fortnite”, a video game. Nobody can seriously accuse these innovators of having sewn up their markets or of depending on state favours. The same goes for sportsmen such as Michael Jordan or musicians like Jay-Z, billionaires both. Even hedge funds face ferocious competition for investors’ funds, which is why so many are throwing in the towel. When capitalism functions well, competition whittles profits away for some but also produces them for others as entrepreneurs seize markets from sleepy incumbents. Their success will eventually set off another cycle of disruption, but in the meantime fortunes can be made. The founders of MySpace, a social-media website, got rich when they sold it to News Corp; Facebook subsequently ate its lunch. Blockbuster, a video-rental store, helped make Wayne Huizenga a billionaire; then Netflix arrived. This process creates vast benefits for society. According to estimates by William Nordhaus, an economist, between 1948 and 2001 innovators captured only 2% of the value they created. Perhaps that is why billionaires are tolerated even by countries with impeccable social-democratic credentials: Sweden and Norway have more billionaires per person than America does. Taxes should be levied progressively. But that does not justify limitless redistribution or punitive levies. Ms Warren’s proposed wealth tax has already doubled once during her campaign. Thomas Piketty, an economist behind many of the most-cited inequality statistics, wants a wealth tax of up to 90% on the richest billionaires. Such expropriation would surely chill incentives to innovate and to allocate capital efficiently. An economy with fewer entrepreneurs might have fewer billionaires but would ultimately be less dynamic, leaving everyone worse off.


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Monday 11 November 2019

BUSINESS DAY

In Association With

Bartleby

Take the money and run The benefits of fitter workers

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LATIN PHRASE beloved by every old-fashioned British schoolmaster was mens sana in corpore sano—a healthy mind in a healthy body. With that, the pedagogue would dispatch some shivering schoolchild in vest and shorts on a three-mile cross-country run. It turns out that those tutors were on to something. Greater physical activity is associated with better mental, as well as physical, health. And it might also be linked to greater worker productivity, and thus faster economic growth. That is the conclusion of a new report from RAND Europe, a think-tank, that was commissioned by Vitality, a British health insurer. It is reasonably well established that physical activity reduces the risks of heart disease, type 2 diabetes, strokes and some cancers. And a report by Britain’s Physical Activity Guidelines Advisory Committee in 2018 found that engaging in around 30 minutes of exercise a day could lower the likelihood of depression by more than 40%. RAND conducted a workplace survey across seven countries, and it found that those who reported

higher levels of activity (equating to 150 minutes a week of moderate exercise, or 75 minutes of vigorous workout) had better mental health on average. Does this make them better workers? Previous studies have suggested that those who exercise more tend to earn 5-10% more on average. A number of factors could explain this, however. Those who participate in team sports may make contacts in the locker room that help them in their careers. Or it could simply be that higher earners can afford to take advantage of sports facilities, such as

gym memberships. The RAND study looks at different measures: absenteeism (when workers take time off for illness) and presenteeism (when they turn up for work but are less productive because of sickness). The latter measure was self-reported by employees, who were asked whether their work was adversely affected by health issues. The survey suggests that between 3 and 4.5 working days each year are lost as a consequence of workers being physically inactive. This is between 1.3% and 2% of annual working time. The bulk of

this was down to presenteeism. Another potential gain from improved fitness is reduced health-care costs. In many countries, these would accrue to the public sector. But in America, where health care is often provided through employment-based schemes, firms could benefit. It is hard to know what proportion of these costs could be trimmed, but RAND estimates that total American health savings could be $6bn a year by 2025 (using the same targets for moderate or vigorous exercise as before). That is a rounding error in America’s annual health-care bill of $3.5trn. But, with the help of fancy econometrics, the study’s authors conclude that if people met these exercise targets, global GDP could be around 0.170.24% higher by 2050. Nothing to sniff at in a world of slowing growth— though the uncertainties involved in forecasting over such long periods mean such estimates should be treated with extreme caution. How to encourage workers to become more active? Incentives are useful but only if they have conditions; giving all employees subsidised gym membership does not seem to work. Another RAND Europe study exam-

ined an experiment in which workers were given an Apple watch, payable in instalments at a discounted price—but only to those who agreed to have their physical activity monitored. Monthly repayments depended on how much exercise they took. If they met the targets they ended up paying 10% of the watch’s list price; those who took no exercise paid the full whack. This approach takes advantage of a behavioural bias known as loss aversion—people are eager to avoid paying more. On average, participants in the scheme undertook 30% more exercise than before. The problem is that many people are too optimistic about their health, underestimating the risks they face. This means that participation in workplace exercise schemes tends to be low, around 7% in the sample studied by RAND. Firms are not the only ones that can encourage a healthier lifestyle; friends and families are likely to be more important. But businesses can play a bigger role. If RAND is right, this may bring them financial benefits. Company taskmasters may yet grow fond of an adapted adage: mens sana in corporate sano.

A war of words

English-speaking villages are burning in Cameroon A report from a forgotten conflict

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N A PLANTATION in Tiko, in south-west Cameroon, Adeline rubs the gap in her right hand where her index finger used to be. She arrived in the town in July 2018, having fled Ekona, 15 miles away. In that village soldiers terrified civilians by burning houses and shooting indiscriminately as part of a crackdown on militias that want the primarily English-speaking areas of Cameroon to secede from the predominantly Francophone country. Adeline hoped Tiko would prove a sanctuary. It was anything but. A year ago Adeline was tending to an oil palm in the plantation when about 20 members of a separatist militia grabbed her, stuffed leaves in her mouth and tied her to the tree. They whipped her and cut off her finger. Her apparent crime: working for the Cameroon Development Corporation (CDC), a state-run company. “As I close my eyes I see the boys coming to get me,” says Adeline. “The trauma is still there.” Cameroon was until recently a stable country in a fragile region. Today it is battling the jihadists of Boko Haram in the north, dealing with an influx of refugees from the Central African Republic in the east—and, most devastatingly, the “Anglophone crisis” in the west. Adeline’s is one of hundreds of thousands of lives ravaged by this conflict over the past three years. Paul Biya, the authoritarian who has ruled Cameroon for 37 years, had hoped that the crisis

would prove short-lived. So did foreign powers, which have been largely quiet. Yet the conflict shows no sign of ending. The origins of the turmoil began a century ago. After the first world war Britain and France took over different parts of the German colony of Cameroon. Upon independence in 1960 and 1961 the larger French territory joined the southern part of the British one to make modern Cameroon. It quickly became one of the most centralised countries in Africa. Today just 1% of public spending is devolved to local governments, versus more than 50% in Nigeria. The country is officially bilingual, but the roughly 20% of people (4-5m in a country of 24m) who mainly speak English claim decades of marginali-

sation. Promises of devolution have been broken. In late 2016 frustrations boiled over. First lawyers went on strike against the erosion of the Englishstyle common-law system. Teachers soon joined the protests, citing, among other things, the appointment of French-only speakers in classrooms. Protest groups organised “ghost towns”: weekly shutdowns of towns such as Buea, the capital of the south-west region, that continue to this day. The government hit back hard. The internet was shut off for four months. Groups organising the protests were banned and their leaders arrested. In October 2017 separatists responded by proclaiming the independent state of “Ambazonia”, named after Ambas bay in the south-

west. This led to a massive, violent escalation. International NGOs estimate that 3,000 people have been killed during the crisis. But aid workers think the true figure is several times higher. Both separatist militias and security forces have committed atrocities, but the Cameroonian army is believed to be behind most of the bloodshed. Security forces have burned more than 220 villages in the Anglophone region, according to the Centre for Human Rights and Democracy in Africa (CHRDA) in Buea. One was Ekona. Formerly the site of a bustling market, today it is an eerie place, where the walls of charred houses are pockmarked with bullets. “It’s like ‘Full Metal Jacket’,” says one aid worker, in reference to trigger-happy soldiers in a film about the Vietnam war. Ayuk, who lived in Ekona for four years before fleeing in April, says he can recall hundreds of incidents where soldiers fired at villagers. In one case his neighbour and two others were shot in their car on their way back from sowing plantain. “We had to bury him quickly,” Ayuk recalls, in case the army shot them as well. Tah Mai, a journalist, lost two brothers in separate incidents involving the army. In November last year his brother and his wife were shot outside their house in Buea. A few months later his other brother was shot in the back in his home village in the north-west. “Mine is just like

the many stories that you haven’t heard,” says Mr Tah. No refuge At least 500,000 people have been forced to leave their homes. Tens of thousands have fled to Nigeria, but most are in the bush, making it hard to count them. Even in the forests displaced people can be found by the army. Frida, who was also forced to flee Ekona, describes how she watched soldiers enter her bush camp. They shot two women accused of cooking for separatist fighters. Then they killed the informer who brought them.


Monday 11 November 2019

BUSINESS DAY

COMPANIES & MARKETS

17

COMPANY NEWS ANALYSIS INSIGHT

MARKETS

From zero to hero: Kenya shows Nigeria how reforms can spur stocks LOLADE AKINMURELE

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he stocks of Kenya’s 20 biggest companies went from $6 million worth of trades since the beginning of the year to $13 million in three weeks. That’s the power of reforms. The rally came after the removal of a controversial cap on interest rates first introduced in 2016 by the government to force bank lending. With the cap removed after creating more problems than solutions for the Kenyan economy, investors have cheered the move in classic style as has reflected in their renewed appetite for once discarded stocks. “Investors have made a classic response to a market-friendly reform,” said Gregory Kronsten, head of fixed income research at FBN Quest. The Nairobi Stock Exchange had been in double-digit negative territory since the beginning of the year, along with the Nigerian Stock Exchange in Lagos, since the end of July. “The turning point for investors has been the removal of the legal cap on interest rates, which should give the private sector additional access to capital and provide a boost for growth,” Kronsten said. The Kenyan economy has been growing by more than 5 percent annually but investors did not respond until the reform was announced. In comparison, Nigeria has not achieved 5 percent GDP growth since 2014 and has continued to footdrag on critical reforms needed to give the economy a much needed lift. The lack of reforms is taking a

heavy toll on the stock exchange which closed at a year to date loss of 16.28 percent Friday, November 8. The two largest new listings on the NSE since Dangote Cement (MTN Nigeria and Airtel) have failed to lift the market despite an initial boost from the former that proved unsustainable. Momentum under President Muhammadu Buhari’s second term has been tepid. Key reforms in the downstream petroleum sector, electricity market and foreign exchange market have stalled.

The stock market has aptly reflected the downturn in investors’ sentiments but that has not struck a chord among politicians in the capital of Abuja. Stock market turnover through to end-September was 27 percent down on 2018, which on its own was a poor year. The split between domestic and foreign participants was again roughly 50/50, unchanged from the previous year. The downturn is despite cheap valuations of Nigerian stocks which are trading at a discount to market

peers including Kenyan stocks. MSCI Nigeria index is trading at a price to earnings ratio of 4.8 times with a 12-month target, an all-time low. “It’s hard to see any positives on the horizon with a government that is largely statist and has disdain for private capital,” a senior banking source said. The government’s latest moves from the impossible-to-enforce closure of land borders to all trade and the CBN’s increase in minimum LDRs to 65 percent (effective end-2019) have not helped investor

sentiments. The latter policy may support earnings growth for stronger banks, “but it is hard to reconcile policies that force private sector lending with those that severely restrict trade,” EFG Hermes said in a note to clients in October. “These factors keep us Underweight on Nigeria relative to Frontier and Emerging Market peers.” Foreigners have been net sellers of Nigerian stocks for much of the year, totalling USD106 million year to date. To make matters worse, local pension funds have kept cutting their exposure to equities after a regulation change in early 2019 that eliminated minimum allocations to variable return assets. What is clear is that the lack of optimism about the economy has soiled appetite for Nigerian stocks, a barometer of the health of the economy, home and abroad. Big companies with sound fundamentals from Guaranty Trust bank to Dangote Cement are trading at near 52-week lows, as the lack of marketstimulating reforms take a toll on valuations. If the Nigerian government ever questioned the impact that reforms could have on a downtrodden stock market, Kenya has stepped up with an example. “Potential reforms to lift the Nigerian market, Kenya-style, would include: the passage of a petroleum industry bill in some form; fuel price deregulation; a review of exchangerate policy; and power sector reform, not just confined to cost-reflective tariffs,” Kronsten of FBN Quest said.

MANUFACTURING

Dangote, Togo agree on $2bn Phosphate Project, $60m Cement Plant in Lome SEGUN ADAMS

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angote Group and Togo have agreed on a $2bn deal to develop fertilizer processing in the phosphate-rich country, both parties announced Friday, with the industrial giant also signing a deal to build a $60 million cement factory in capital city, Lome. It is unclear what contributions will come from either party but experts believe the deal would position Dangote as a top player in West Africa’s fertilizer market. Togo is estimated to be one of Africa’s top phosphate producers with more than two billion tonnes of the resource it has mostly exported in their raw form, unable to process it. The country would therefore rely on Dangote to help mine and process some of its phosphate to fertilizer,

in Togo, for export to other markets in West Africa. An estimated one million tons of fertilizer is expected to be processed at Dangote’s new fertilizer plant in IjebuLekki Lagos which would commence operations next year. “Ammonia is a key ingredient in the transformation of phosphate into phosphate fertilizers derived from phosphates,” Dangote said in a statement. Togo will be providing access to phosphate resources while Dangote Group will provide access to ammonia and the Nigerian market, the company said. Bloomberg, citing a London-based commodities consultancy, reports that Nigeria accounts for as much as half of harvested land in West Africa, making it a top market for fertilizer consumption growth. “ B y p ro c e s s i n g o u r

phosphate, we will not only create jobs, but we will also be able to provide our farmers with good quality fertilizers at an affordable cost,” said Faure Essozimna Gnassingbé, President of Togo. Dangote Group, which said the partnership was part of its transformation agenda to create prosperity and strengthen economic development in Africa, will also be constructing a $60m cement factory in Lome. Construction of the factory is expected to commence in the first quarter of 2020 and production by the end of next year. The planned cement plant with an annual capacity of 1.5 million tons would intensify competition for HeidelbergCement, a worldwide producer of cement with presence in 60 countries including Togo where it operates three companies.

L-R: Tokunbo akande, special adviser to the executive chairman, Lagos State Internal Revenue Service (LIRS); Ladi Smith, senior partner, SIAO; Titilayo Fowokan, group head, strategic tax and compliance, Dangote Industries Limited; Sunday Okeowo, deputy director, Federal Inland Revenue Service (FIRS), and Innocent Ohagwa, representing the president Chartered Institute of Taxation of Nigeria (CITN), at the SIAO quarterly breakfast series in Lagos. Pic by Olawale Amoo


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Monday 11 November 2019

BUSINESS DAY

COMPANIES&MARKETS TECHNOLOGY

Dousing trade tension takes glitter out of gold …Big US banks turn bearish as bullion suffers worst week in 3yrs SEGUN ADAMS

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hile waning trade t e n s i o n i s e xpected to bring relief to global markets and economies, already weighed by gloomy forecast, gold bulls are not excited about a truce as fortune change for safe-haven assets which had benefitted from trade-induced global uncertainties. Gold dropped 3.7 percent last week to $1,462.5 on the spot market Friday, delivering its worst weekly performance in three years, as the United States and China, both world largest economies, hinted on a temporary deal to roll back tariffs, de-escalating tension. Silver dropped 7 percent last week and is at its lowest since August. Other precious metals have also taken a hit. Amid gyrations in equity and negative-yielding bonds, global investors had seen high prospects in bullion as fears of a currency war arising from global uncertainties sent investors packing from risky assets

into safe havens like gold, stoking price of the lowerrisk assets. Given current events, U S - b a s e d Inv e s t m e nt Bank, JPMorgan Chase has become pessimistic turning underweight from a previous overweight position while peer, Citigroup is no longer bullish on gold. Only three months ago, Goldman Sachs and Citigroup had predicted that gold could be reaching $1,600 with the latter estimating the advancement to be within 6 months, at least. Bank of America Merrill Lynch, on the other hand, said bullion price could near $2,000 within two years, beating the all-time high of $1,921.17 established in 2011. Also, a Bloomberg survey showed 69 percent of trader and analysts were bullish on gold advancing with none bearish for the first time since March 2019. The gold rush has become threatened as both “warring economies” near opening up trade, the absence of which had seen the International Monetary Fund (IMF) predict 2019

global growth at slowest pace since the 2008-2009 global financial crisis, and cut global output in 2020 by 0.8 percent. Both the US economy and the Chinese economy have suffered from the trade dispute although Washington’s economy slowed less-than-expected on the back of better consumer spending in the third quarter this year. Eurozone was also affected, with Germany having ben on the verge of a recession as its manufacturing suffered. Latest figures now suggest a relief for the European powerhouse as new orders for German factory goods rose 1.3 percent in September, according to official statistics. Meanwhile, main equity gauges in the US, the Dow Jones Industrial Average and the Standards & Poor 500, rose to record high Thursday following news of a trade truce. Excitement lightly cooled Friday as markets across the world turned cautious to the potential end of a long-protracted trade war.

FINANCIAL SERVICES

OPay gets CBN approval for international money transfer INIOBONG IWOK

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Pay, a provider of payment, ride-hailing, food delivery and loan services have been given approval by Nigeria’s Apex Bank Central Bank of Nigeria (CBN) to commence international money transfer in Nigeria. The approval would enable OPay to start facilitating B2B, B2P and P2P remittance services into Nigeria. This is coming off the heels of the earlier announced $50 million fundraised from a major venture capitalist some months ago. “The plan is to distort the remittance space and ensure that international money transfer into Nigeria is safer, faster and more affordable” Kunle Olamuyiwa, Director of Remittances Services at OPay, said. With OPay’s infrastructure in Nigeria, it will be easier and faster for global remittance companies to partner with OPay to help their customers to receive

money from their business partners, customers and loved ones directly into their OPay wallet and any bank account or mobile wallet in Nigeria. Also, recipients can cash out their funds from their OPay wallets at any of over 100,000 OPay mobile money agents in Nigeria. “We are already working with major global remittance companies around the world and will start facilitating remittances to Nigeria with these partners in December ensuring the best fees and exchange rates, speed and security,” Kunle added. When asked how this will benefit the recipients of money transfers in Nigeria, Kunle said that there is a plan to commence a big-bang promo in December, with lots of prices for recipients of money transfer who receive their money directly into their OPay wallets. “I can only advise everyone who has families around the world to get an OPay Wallet. They will get better

value for these funds doing transfers to any bank, paying their bills, buying food and also using our on-demand transport services i.e. Oride, OBus and Otrike. “And on top of all, they can channel unused funds to OWealth and earn interest on it daily. It is indeed better times for recipients of international money transfers in Nigeria,” he added. OPay launched its mobile payment service in August 2018, creating an infrastructure on which the company is now also adding new services. The agent-centric mobile payment operation focused on reaching the massive unbanked population of Nigeria. Currently, OPay has expanded into other verticals like ride-hailing (ORide and OTrike), an online food delivery (OFood), as well as facilitating access to thirdparty provided microloans (OKash) and wealth management (OWealth) and there will be more to come in the coming months.

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Monday 11 November 2019

BUSINESS DAY

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Monday 11 November 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

COMPANY RELEASE

CAP plc commits to delivering value without compromising sustainability

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hairperson of the board of directors of Chemical and Allied Products plc (CAP), Awuneba Ajumogobia, says the company would be strategic to deliver remarkable value to stakeholders without compromising sustainability. She stated this when the new leadership, the board of directors of the Chemical and Allied Products plc (CAP), paid a courtesy visit to the Nigerian Stock Exchange (NSE) to reiterate the new board members’ commitment to shared values and the company’s innovative strides. Ajumogobia, who led the delegation, also rang the closing bell on the trading floor as part of activities to mark the company’s new direction. She said current realities and changes have made it imperative for CAP plc to realign, particularly in the digital space. “Today’s closing bell ceremony is remarkable for us and commemorates the new direction that we have embarked

on,” Ajumogobia said. “We want to ensure that every CAP plc customer can attest to having an outstanding experience. This is why we are leveraging technology. We are also using technology for our internal processes, so we are investing in applications to ensure that our processes are running more efficiently,” she stated. Expressing faith in the new leadership, she emphasised that the new management is resolute to ensure that CAP plc becomes a flagship company on the NSE with progressive policies and strong leadership. “The quality of the new Board and Management assures me that we have what it takes to improve on the strong brand which the company has built over the years. We will be strategic to deliver remarkable value to stakeholders without compromising sustainability,” she said. David Wright, managing director, CAP plc, said the management team is leveraging every opportunity in terms of

technology to grow volumes and revenue. “ We a re p a r t i c u lar about sustainable growth for the company. Technology is a major factor to achieve this and be able to deliver on our promises to all stakeholders,” Wright said. Oscar Onyema, chief exe cutive officer of the Nigerian Stock Exchange, commended members of the CAP plc board, urging them to “strive for sustainability by adhering to high standards of corporate governance, deeper social impact, higher regulatory compliance, and greater returns for shareholders”. He assured that the NSE would continue to provide a platform to support listed companies to meet their strategic business objectives. CAP plc has a vision to create a new Africa inspired by colours. It is understood that the company intends to accomplish the vision by providing customers, be they individuals or corporate bodies, with products and services to help them create colourful and exciting spaces.

L-R: Wana Udobang, Nigerian poet; Natalia Molebatsi, South African poet; John Pepper Clark, Nigerian poet and playwright; Abasiekong Udobang, senior manager, programme implementation, and Efe Paul Azino, poet/curator, LIPFEST 2019, at the command performance of the 2019 edition of the Lagos International Poetry Festival held at the Muson Centre, Lagos

L-R: Grace Obaro, training manager , Vivo Nigeria; Fu Yulu, head, finance; Jack Ma, head sales; Felix Lu, country manager, and Tayo Odunowo, marketing manager, at the launch of Vivo flagship product Vivo and Vivo V17 pro in Lagos. Pic by Olawale Amoo

L-R: Aisha Sadauki, director, MTN Foundation; Sonia Iroghama, recipient of the 2019 MTN Foundation Scholarship Award; Uwa Suleiman, representing of the minister of communication and digital economy, and Omah Godman, recipient of the 2019 MTN Foundation Scholarship Award, at the Northern Region award ceremony and Alumni Induction held in Abuja.

L-R: Adedoyin Adeola, vice president, network operations, Airtel Nigeria; Olusina Adegoke, regional operations director, Airtel Nigeria; Toki Mabogunje, deputy president, Lagos Chamber of Commerce and Industry, and Oladokun Oye, enterprise director, Airtel Nigeria, at the ongoing 2019 Lagos International Trade Fair, where the telco was honored for its commendable advocacy and partnership with LCCI www.businessday.ng

L-R: Kunle Oyelana, managing director, GSK Consumer Nigeria plc.; Sherifat Akinwonmi, technology manager, GSK Nigeria; Gasper Olarenwaju, administrator, Regina Mundi Catholic Hospital, Mushin, and Soji Awotiwon, head of sales, GSK Consumer Nigeria, during a visit to Regina Mundi Hospital to mark GSK’s 2019 Orange day in Lagos.

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Monday 11 November 2019

BUSINESS DAY

21

cityfile Artisan bags 9 months

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L-R: Azeru Opara, member, Rivers State House of Assembly; Patience Ozokwor, Nollywood actress; Chinedu Okoli, Agwu Mike and Ibuchim Chinwo, keke winners, and Godwin Komone (Gordons), comedian, at the presentation of prizes to winners of Glo Recharge and Win BIG promo, (My Own Don Beta) at Mile 1 Market in Port Harcourt.

Oil spills put 16,000 children at risk of death annually in N/Delta Samuel Ese, Yenagoa

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ohn Sentamu, archbishop of York and chairman of the Bayelsa State Oil and Environmental Commission (BSOEC) has raised the alarm that over 16,000 children risk death due to the negative effect of crude oil spills in the Niger Delta region. S entamu state d this when he presented the commission’s interim report to Governor Henry Seriake Dickson in Yenagoa, just as he indicted oil companies operating in the region, describing their actions as environmental genocide. According to him, about 40 million litres of oil wind up in the Niger Delta annually, eight times more than is spilled in America, the world’s biggest producer and consumer of crude. Early analysis, according to the commission’s chair-

man, showed that if Bayelsa’s share of oil spilled is the same as oil pumped, as much as a barrel of oil may have been spilled for every man, woman and child living in the state. “It is estimated that the consequences of oil spills may kill around 16,000 infants in the Niger Delta annually within their first month of life,” he said, adding that “our environment knows no bounds, we are all global citizens.” The commission chairman further noted that such level of environmental devastation would not be acceptable in Europe and America, and accordingly, should never be acceptable in Africa. “Oil companies today have a moral obligation to uphold the same high environmental standards wherever they operate, anything less are to knowingly continue an environmental genocide against the

people of places like the Niger Delta.” The Bayela State governor, Dickson, while receiving the report from Setamu, praised the commission and the global community for highlighting the long-held injustice on the world stage. “The commission has finally provided a voice for every man, woman and child in Bayelsa that has struggled for over half a century with what can be deemed as environmental terrorism. I established the Bayelsa State Oil and Environmental Commission to hold oil companies to account, to shift the mindset of multinationals operating in Bayelsa and to inspire a global sustainable change. Everyone deserves the same rights, whether you live in Nigeria or in the USA,” said Dickson. He explained that since the first oil well was drilled in Bayelsa in 1956, the people of the state have rarely

benefitted from oil, as they faced the destruction of their environment, rivers filled with oil, farmlands destroyed, and health problems, including the deaths of children. “I a m grateful to the archbishop for sharing what he has seen with the world. We, the people of Bayelsa and the world wait to hear the steps the oil companies will take to address this environmental injustice.” The Bayelsa State Oil and Environmental Commission is expected to publish its final report in January 2020. The commission was inaugurated by Governor Dickson in March 2019 and has Valerie Amos, former undersecretary general at the United Nations, and John Kufuor, former President of Ghana, and a number of other experts including, Michael Watts as commissioners

Federal High Cour t in Lag os has sentenced one Kelvin Dennis to nine months imprisonment for drug trafficking charges The convict, 22, was charged by the National Drug Law Enforcement Agency (NDLEA) on a twocount charge bordering on trafficking 900g of cannabis sativa, other wise known as hemp. The charged is labeled FHC/L/349C/2019 and Dennis pleaded guilty to the charge. Following his plea, the court, presided by Justice Muslim Hassan, convicted the defendant after the prosecutor; Jeremiah Aernan reviewed the facts of the case. Aernan had tendered

a written statement of the convict, a request for scientific aid form, a drug analysis form and the remnant of substance, all admitted as exhibits. The prosecution then urged the court to convict the defendant based on the pieces of evidence adduced. In his judgment, Hassan, found the defendant guilty and after conviction, sentenced him to nine months imprisonment beginning from date of arrest. Th e pro s e cu to r, Jeremiah Aernan had told the court that the convict committed the offence on August 29, 2019 and was arrested on a tip-off at the Oyingbo area of Lagos while trading in hemp, a restricted narcotic similar to cocaine and heroin.

Flood wreaks havoc in Adamawa

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ver 141 communities are still suffering from the impact of the heavy flooding that hit various parts of Adamawa in October, according to Muhammadu Sulaiman, executive secretary, Adamawa State Emergency Management Agency (ADSEMA). Sulaiman said in Yola that 7,666 houses were destroyed by the disaster. According to him, 101,929 farmlands in seven local government areas were also destroyed by the flood that affected 173,049 people. He said that the floods resulted from the volume of water in River Benue, adding that those displaced had been camped in nine temporary Internally Displaced Persons camps. “The temporary camps are located in Yola North, Yola South, Girei and Demsa Local Government Ar-

eas,” he said. Sulaiman said that the flood destroyed about 60 per cent of rain feed crops in the affected areas, and expressed fear of possible hunger if urgent measures were not taken to avoid famine. He appealed to the Federal Government and relevant humanitarian agencies to assist the affected communities with relief materials and dry season farming inputs. He said that the worst hit areas included Fufore, Yola South, Yola North, Girei, Demsa, Numan and Lamurde. Muhammadu Gidado, the district head of Ribadu, said that the flood affected farmers in all the 11 wards in his district. Gidado said that he was disturbed by the level of destruction to farmlands in the district, saying that there was nothing left to feed their families.

hectares of farmlands with cash crops and property worth millions of naira. The communities affected include Anegbette, Udaba, Osomegbe, Ugochi, Ofukpo, Agbaburu, Uzanu and Ifeko. Some of the victims also blamed the flood on the surge of River Niger. One of the victims, Sunny Emokpa, lamented the losses to the incident, saying that the entire communities were flooded. “Our farmlands have been destroyed, while

houses have been submerged by water, thereby rendering us homeless. “Our schools are now at the mercy of the flood as pupils have to manage to get to the class, while some are completely out of school as the water had gone beyond what the children can manage. “We are appealing to the Federal and State Governments for help,’’ Emokpa said on Friday. Another victim, Sunny Eshemoboh, told said he lost his entire property to the flood.

Man attempts selling son for N5m ...blames action on economic hardship

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asarawa State command of the Nigeria Security and Civil Defence Corps (NSCDC) has arrested 42-year-old suspect for attempting to sell his three-year-old son in Lafia. Mohammed MahmoudFari, the state commandant of the NSCDC told newsmen in Lafia that the man was arrested on following a sting operation by the officers of the command.

According to MahmoudFari, the man, who hails from Obi local government area, had concluded plans to sell his son for N5 million. “Our undercover officers got wind of his plan and opened negotiation with the suspect who offered to sell the son for N5 million. “He opted to collect the money in cash and it was in the process that we arrested him in Lafia,’’ MahmoudFari said at the weekend. According to the NSCDC www.businessday.ng

boss, investigation further revealed that the man has five wives and 23 children, out of which he had already sold a daughter. Meanwhile, the suspect confessed to the crime and attributed his action to economic hardship, saying he resorted to sell his son to enable him take care of the family. The commandant also presented to the newsmen a 45-year-old man arrested for allegedly defiling his

neighbour’s 10-year-old daughter at Al-Makura Street in Lafia. MahmoudFari said the suspects would be prosecuted accordingly. Flood hits Edo as 3,000 houses affected IDRIS UMAR MOMOH, Benin No fewer than 3,000 houses in Etsako Central local government area of Edo have been submerged by flood, following River Niger surge due to the release of water from Lagdo dam in Cameroon. Also destroyed were

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22

Monday 11 November 2019

BUSINESS DAY

Monday 11 November 2019

BUSINESS DAY

23

TUNJI OYEBANJI

CEOINTERVIEW

Managing Director 11 Plc

Interview with Private Sector Leaders

Stifling regulation, tight hold on downstream keeping oil industry at infancy – Oyebanji TUNJI OYEBANJI, managing director, 11 plc (formerly Mobil plc), has close to 40 years’ experience in petroleum products retailing markets (downstream oil and gas) in Nigeria, the Middle East and across Africa. In this interview with STEPHEN ONYEKWELU, Oyebanji, who is also chairman of Major Oil Marketers Association of Nigeria (MOMAN), speaks on a number of issues affecting the sector as well as what his company is doing to stay profitable. Excerpts:

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hat is your take on the frequent fatal oil tanker accidents on Nigerian roads? These are regrettable accidents. The incidence themselves, when they happen are worsened because certain services that should mitigate such as fire service are not there, therefore, what may have been a small incidence then ends up being a very big tragedy. In addressing the problem, we have to look closely at all of the issues together. To do this I should also add bad roads as part of the problem. Let me take the one of equipment (the trucks) first. For you to be able to invest in any business, whether it is newspaper publishing, whatever it is, you need capital and you need the business you engage the capital in to be viable. This means it should give you adequate returns, so that you can make a profit and will also be able to reinvest in the business. But when a system, particularly in terms of petroleum products, is controlled and managed such that what you make is predetermined by government, irrespective of the cost involved either in acquiring that equipment or running and maintaining it, you are just given a figure and asked to go and live with. What then happens is that is yes indeed people go and live with it. What they do therefore is whatever they can do to make sure that within what is allowed, as their margin, they can make some profit and generate some income. Now, it is that income that they also will use as a source of investment to either maintain or purchase new trucks, because it is very small, rather than invest in a pristine new state of the art equipment. Since their margins are small people will now rather than import standard brand new equipment, they will go and look for the one their money can reach. They go to China, where there may be cheaper new ones, or go to Europe where there will be 20-yearold vehicles which they now import, to supply fuel across the country. When they bring in these 20 to 30-year-old equipment, they ask themselves what else they can do. They may proceed by considering the tractor head. Suppose the tractor head was built to carry 20 tonnes load, instead of putting a 20 tonnes tank behind it, they use as much as a 45 tonnes tanker to make more money. So you then have a tractor head of 30 tonnes pulling a tanker of 45 tonnes. Meanwhile, the mechanism that fits the tanker to the tractor head, was built for 30 tonnes, you now put 45 tonnes, what is the next thing that will happen? When it is climbing a steep place, maybe the pin will fail and the tanker falls over. Given that the vehicle is 20 years old or more, they may say the breaks are still manageable, maybe all the breaks should have been changed but it did not happen. At the end of the day, going back to the point I made earlier about cause and effect, when you regulate everything, stifling it, the result is that the investment that needs to be taking place will not occur. Any time people

think of marketers, they say these people are making money. Anyway, we have a situation today where nobody is making money on fuel business. Therefore, people are cutting corners. The dangers associated with tanker accidents are more obvious because that is how we move the majority of our products, assuming we were moving more products through pipelines, it would not have been so difficult. The pipelines go to the depots so the distance a truck will have to go maybe at most 200 kilometres from the various government depots scattered around the country. But because the pipelines do not work; they are all perforated and there has been no fresh investment beyond the pipelines that the government laid maybe 30 years ago. Everybody is moving with tank trucks. These trucks cover 1,000 to 1,500 kilometres, with bad trucks and on bad roads. At the risk of sounding sadistic, there are bound to be more of such accidents if we do not change. If you continue to plant rice, you will only get rice. It was Ochanja market in Onitsha the other day; tomorrow it can be some other place. What, in your view, could be done to ameliorate the situation? This is why we continue to clamour for the government to reconsider our margins. Government priority today is fuel security, this means no queues. This is the only thing government is really interested in. They have known over time that Nigerians react negatively to fuel queues. The government gets bashed whenever this happens, therefore whatever it takes; government is willing to do to keep the queues away from petrol filling stations. So, we are borrowing more money when money that we should be using to better social goods are being used to subsidise our consumption of cheap fuel, because of this, the government is not willing to give us margin. This means those who are private players in the industry in many instances are going down, because the margins are not there, they are not really making the kind of money that they need to make so that they can reinvest and build up their companies, and make them stronger for the future. Five years down the line when they decline and start to lay off people, what you find is, everybody will get involved and ask how can you lay off people. But when the problem was been created, it was not addressed, it has now grown to the extent that companies are laying off people. It is also stemming from the fact that people are not making the returns and when you are faced with that you start to look for ways to reduce your cost if you are a responsible person. If you are not, you will do all sorts of other things and take short cuts. On the drivers themselves, the vast majority are illiterate. What we try to do is to ensure that nobody enters our terminal without a valid driver’s licence. This assumes that the authority granting the driver’s licence has also done a full and rigorous job to ensure only people who are qualified and are trained have the licence. We cannot determine that. www.businessday.ng

Another thing we can do is that because many of these people lift our products, we can train them; we work with the unions to train their members so that more people are equipped with modern driving techniques, methods and theories that are used in other countries. Again if the people are mostly illiterate, it is one thing to train, another to have a driver’s licence but do people obey the laws. Last year, 11 plc was one of the two petroleum products retailers that had profit margins above the industry average. How are you achieving these profit goals? We have to recognise that we have one big advantage that many of our competitors don’t have. Many years ago, we invested in a whole big real estate complex. So, if you look at our results very closely, you will see that we are supported very much by the results we generate from our real estate business. If we were to strip that out completely from my results, then the picture will not be the same. It depends then on the perspective you are looking at from. From an investor’s perspective, at the end of the day, what he wants is a dividend from the business. But as a business manager, you have to ask, look, where are all my costs? My costs are all on the fuel business. Is it breaking even or going to negative? I am subsidising as it were from my real estate business to help my situation. So if you are looking at it from a purely business mindset you would say look, why don’t I just forget this fuel side of the business. After all, how many people do I need to run the real estate business? Now, I am not saying that is our plan. What I have just said is that when you look at the business situation, we can only hope that things get better. We will try and soldier on. But the simple answer to your question is that returns on our real estate business have helped us significantly. Another thing we’ve done is that we try to put emphasis on areas that are not controlled by the government, for instance, lubricants. We have invested a lot in upgrading our facilities; we have embarked on nationwide awareness campaigns and promotion to make sure that this area of our business, which government does not have as much involvement or control or issues of subsidy; all that doesn’t exist on lubricants. We are able to produce world quality lubricants and can price them appropriately. Based on the quality we deliver our customers are able to reward and pay us slightly more than they may pay our competitors because of the quality that we deliver. In addition we have gone into some other businesses, where we didn’t operate before. One of these is our liquefied natural gas (LPG), cooking gas. In several retail outlets now, we dispense LPG for customers. We have returned aggressively into the aviation fuel business that we have not done for maybe four or five years. But we have come back in a very big way. These are some of the things that have helped us keep our head above water. We have also over the years invested in technology, so that we able to steer the busi-

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ness with fewer people compared to some of our competitors. Again, some small diversion here, we have been conservative in managing costs. We are careful about what we spend on and what we do. In the same space, how people deploy shareholders’ funds is different. We try to pay our people well. We try to retain as much as possible within the business. We have also benefitted from our long association with ExxonMobil in terms of standards. The new investor has also pumped a lot of money into the business and that makes us more competitive. We have been able to increase a lot of our storage and warehousing facilities. On inventory, many areas where we used to run out of stock we now have adequate stock so that run outs reduce and we are able to generate more revenue compared to before when quite often we will not have any products in our tanks or we run out of key raw materials. What are some of the challenges that when addressed will make the downstream roar back to life and attract new investments? On the first part of the question, what I will say simply is what you have seen in other industries. When you free everything up, things start happening. Take the

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media for instance, when I was growing up, all there was, was the Nigerian Television Authority (NTA). Then you had the Daily Times and the Daily Sketch. But the government put policies in place where somehow things were opened up. Private players were able to come in, you did not say, now free up newspaper printing but no paper should sell more than N50, because you do not want people to suffer. However, this is not the case and this is why people are investing and today on a given business day, I go through over five national dailies. I have BusinessDay, the Punch, This Day, the Guardian, Vanguard – these are not the only newspapers in operation but maybe because of the presentation and quality of content, I buy them. Now, everybody is pricing around N200-N300 and because BusinessDay serves a particular audience, they can afford to charge a premium. If I was able to do that in retailing my petroleum products, you will be able to find five-star petroleum products in my filling stations. A photo was circulating one time on social media of a Rolls Royce inside the flood and people pushing a Silver Ghost inside the flood in Lagos. That kind of car should be using the highest octane rated fuel. But because of the

circumstances, that car has to use whatever they can find. Anything about fuel in Nigeria is just minimal, the basics. What that tells you is that the regulation and tight hold on the downstream is keeping the industry at its infancy. Some people may say it is going back because there is one dominant player today in the industry, the national oil company and other players in the industry are gradually shrinking and getting smaller. Freeing up the industry will drive competition and improve quality delivery. When the sector is freed up, it may turn out that a certain class of people may prefer Mobil stations because of the quality product and service they receive. The price may be a bit higher too. Other people may go to another station because of many reasons and water eventually finds its level. It is the same problem with education but that sector is getting a bit better because the government freed up space. If it were only government, all the universities would have been in the same state as government universities, strikes every other day, underfunding, no payment of salaries of lecturers and many more. Have you ever heard that Covenant University went on strike? Have you heard lecturers complaining about non-payment? But you have to have big money to send your child there. That is how things work in the real world. So, some people want to have the standard at Covenant University but pay like they were attending Osun State University. It does not work like that. There are state universities and there are private universities. If you want to send you child to Harvard University, you will pay heavily but have better chances of quality education and brighter job prospects. What the industry needs is deregulation, so that the professionals and real players in the space will invest, grow and make the business better for everybody. They argument has always been, it will bring about price increase and the poor will suffer. But my first question is, all these countries around us, there are poor people there, yet they have deregulated, have they all died. I don’t think so. Secondly, half of our products find their way across the border because it is more expensive in those places. We are subsidising other people with this subsidy that we have put in place. The country cannot even afford it. We spend more to keep the price at that level than we are spending on the things that we need: roads, schools and hospitals. To me, it is not rocket science. If we got things right in that area, more resources will be available to the government. To make matters worse, we are now borrowing money. We are selling petrol at giveaway prices and you are going somewhere to borrow money, which we could have recouped from the money you are giving away and all those debts are accumulating. We had negotiated and eliminated all our foreign debt but it is coming back. Like the minister of finance said recently, it is becoming a burden on the country. The government should just be concerned about the quality of products that come in, measurement, to make www.businessday.ng

sure people get the right quantity for what the paid for. The government should not struggle for space with private players in the industry. What are 11 plc’s expansion plans? For 11 plc, we are going to continue to concentrate on things that have less government control such as lubricants. We want to expand our LPG to increase our existing storage; we are also looking at increasing the storage for raw materials for our lubricant production. All these are areas where there is not as much government control. We see an opportunity for a brighter future in these areas. If we can keep discipline, despite the challenging environment we will continue to keep our head above water. On a personal note, what were some of the various turning points that launched you to your current position? I can spend a whole day talking about those things but since this is a short interview I have to try and make it succinct. After 39 years there are many people who will even question the sanity of my remaining here close to four decades now, especially young people. I joined Mobil on 29 December 1980. When some of my colleagues want to make fun of me at meetings they refer to me as Methuselah. A lot of it was a matter of choice. At the time I was looking for what I might describe as an oasis of sanity. So, in the midst of an environment where things were not working, I was looking for a company that at least was close what you might find in other countries outside Nigeria such as in Europe or America. So, I am here in Nigeria, and at the same time, I am exposed to the latest management practices, techniques, technologies and all that. This drove my initial thoughts about choosing my career. After a few years, I told my colleagues I needed to differentiate myself because we were about 12 or 13 that joined at the same time and went into training. I asked myself in five to 10 years’ time how am I going to be different from you guys, apart from performance. I decided to go and do my master’s degree. I recall my colleagues asking what I needed a master’s for, that after the hassle, when I am back, I may end up in the same position. I said the company may do this but a time will come when it will make a difference. I left, did my master’s and came back, indeed I was returned to the same job. But because I now had the additional qualifications (a Master of Business Administration (MBA), a diploma in marketing from the British Institute of Marketing), I was now able to be competitive for other roles within the company, which my colleagues were not competitive. I pushed and was able to get into an elite department, corporate planning at the time. This was where the difference started emerging. When opportunities came, I was considered and in a way, I had the opportunity to leapfrog my colleagues. I took on new responsibilities because of corporate planning training. From there, I had another opportunity, I was asked

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to go to the United States of America. I went to the US for two years on what we used to call a developmental assignment. This exposed me to senior managers not only at the Nigerian level but globally. I got to know these people on a first-name basis. Even when I came back to Nigeria, when there was an interaction between our senior management and the expatriates, they will ask after me and my welfare. These things helped me, propelled and put me before opportunities. At my return from the US, I was put in charge of our business in the northern part of Nigeria. Then I came back to Lagos, did various other jobs, and eventually became a director. At some point along the line, I had a history of dealing with the unions. I was always in a position that made me the one interacting with the unions. So when the corporation has some issues in some countries in Africa that needed that kind of expertise also, I was invited. I first went to Ethiopia, and later in Cameroun, to take on a role which involved many sessions of discussions with the unions. Again, because of doing this kind of job, I got further recognition; I became a manager at the regional level – Middle East and Africa, based in Brussels at the time. I did that job for another two years where I was travelling across Africa and the Middle East. When I finished that assignment, I came to Nigeria and took over as the managing director of the company. In brief, I would say, the first thing is to have a clear vision for the future, planning and taking steps, to manage that plan. It is easy to get distracted. The early part of my career was not at the head office but in the field. The tendency was that nobody is looking at you in the field so if you liked you could resume at 12 noon and close by 3 pm, nobody is monitoring you. But in my stupid brain, I told myself that if I were in at the head office, resumption will be 7:30 am so I was resuming at that time even in the bush and doing my normal hours. I was always my own greatest critique. It is also important to spot and seize opportunities. You need to also be willing to learn. When I joined corporate planning I did not even know how to use a computer. Computers were just coming into the country. I had a boss at the time who will say, small boys like me should not touch the computer until after 6 pm. I will wait and that was how I learnt how to use it by myself without going for training. Integrity also helps so that you are not found in any situation where a small act of misdemeanour ruins a career you have built over time. I have always told myself I will never take what does not belong to me. At the time when I was a branch manager, my friend was the internal auditor and I used to say to myself that anything I do that will make that my friend to investigate me, I will not do. Try and have a good relationship with everyone. There is no part of Nigeria I have not been to for weddings, funerals and other social events. This serves you in good stead. I think above all, try to be content. Focus on what you want to achieve. I must say the grace of God is important. I may not be the richest man, I may not be the happiest but I am okay.

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24

Monday 11 November 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 08 November 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. 327,016.08 9.20 9.52 278 71,069,792 UNITED BANK FOR AFRICA PLC 225,716.18 6.60 3.94 339 58,961,540 ZENITH BANK PLC 538,449.87 17.15 0.88 714 127,296,172 1,331 257,327,504 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 208,192.70 5.80 7.41 183 11,439,361 183 11,439,361 1,514 268,766,865 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,483,250.59 122.00 -0.81 105 749,797 105 749,797 105 749,797 BUILDING MATERIALS DANGOTE CEMENT PLC 2,484,505.98 145.80 -1.42 73 1,902,603 LAFARGE AFRICA PLC. 236,784.59 14.70 5.00 113 8,179,055 186 10,081,658 186 10,081,658 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 332,471.18 565.00 - 12 454 12 454 12 454 1,817 279,598,774 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 11,873.80 4.45 - 11 16,335 11 16,335 11 16,335 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 1 200 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 1 200 1 200 12 16,535 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 50,509.53 52.95 - 19 58,921 PRESCO PLC 34,600.00 34.60 - 9 9,850 28 68,771 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,440.00 0.48 4.35 9 254,081 9 254,081 37 322,852 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 741.24 0.28 - 0 0 JOHN HOLT PLC. 214.03 0.55 - 1 4,972 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 41,054.47 1.01 1.00 24 3,015,305 17,864.04 6.20 - 49 738,812 U A C N PLC. 74 3,759,089 74 3,759,089 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 24,486.00 18.55 - 13 49,072 ROADS NIG PLC. 165.00 6.60 - 0 0 13 49,072 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,520.44 0.97 - 8 146,102 8 146,102 21 195,174 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,751.20 0.99 - 2 5,240 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 1 100 GUINNESS NIG PLC 51,035.92 23.30 - 72 1,860,258 INTERNATIONAL BREWERIES PLC. 80,801.10 9.40 -8.29 13 162,649 NIGERIAN BREW. PLC. 371,855.95 46.50 - 27 95,063 115 2,123,310 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 111,250.00 22.25 - 0 0 DANGOTE SUGAR REFINERY PLC 119,400.00 9.95 - 80 548,511 62,325.77 15.20 - 18 71,438 FLOUR MILLS NIG. PLC. HONEYWELL FLOUR MILL PLC 7,771.59 0.98 8.89 45 2,318,180 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 - 16 9,600 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 159 2,947,729 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 16,903.82 9.00 - 16 43,738 NESTLE NIGERIA PLC. 911,554.69 1,150.00 - 116 319,583 132 363,321 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,440.50 3.55 - 15 103,542 15 103,542 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 22,036.15 5.55 - 14 71,473 UNILEVER NIGERIA PLC. 112,602.11 19.60 -9.47 59 1,207,483 73 1,278,956 494 6,816,858 BANKING ECOBANK TRANSNATIONAL INCORPORATED 128,446.86 7.00 - 62 3,284,728 FIDELITY BANK PLC 53,023.88 1.83 2.81 47 13,726,127 GUARANTY TRUST BANK PLC. 841,731.73 28.60 5.93 249 7,325,200 JAIZ BANK PLC 17,089.26 0.58 5.45 18 1,410,519 STERLING BANK PLC. 63,338.92 2.20 - 366 45,489,083 UNION BANK NIG.PLC. 203,845.27 7.00 - 18 101,071 UNITY BANK PLC 6,662.92 0.57 -1.72 10 1,663,239 WEMA BANK PLC. 22,758.93 0.59 - 10 248,357 780 73,248,324 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 4,989.75 0.72 2.86 27 3,703,000 AIICO INSURANCE PLC. AXAMANSARD INSURANCE PLC 17,325.00 1.65 - 1 5,000 CONSOLIDATED HALLMARK INSURANCE PLC 3,170.70 0.39 - 0 0 CONTINENTAL REINSURANCE PLC 24,687.13 2.38 1.71 2 188,911 7,217.46 0.49 - 16 1,013,500 CORNERSTONE INSURANCE PLC GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,904.09 0.26 - 1 5,000 LAW UNION AND ROCK INS. PLC. 2,362.98 0.55 10.00 4 120,000 LINKAGE ASSURANCE PLC 4,080.00 0.51 - 0 0 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 11 3,869,500 NEM INSURANCE PLC 10,561.01 2.00 - 8 58,708 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,745.10 0.51 - 0 0 REGENCY ASSURANCE PLC 1,400.44 0.21 - 2 26,000 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 0 0 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 4,000 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 4,282.48 0.32 - 24 756,062 97 9,749,681

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MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,515.30 1.10 - 1 25 1 25 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,200.00 1.00 - 1 100 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 2,265.95 0.20 - 0 0 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 1 100 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,900.00 3.95 - 78 3,180,823 32,350.25 5.50 10.00 8 175,465 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 1 100 FCMB GROUP PLC. 36,833.04 1.86 7.51 34 2,258,063 1,029.07 0.20 -4.76 3 147,497 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 387,517.72 37.00 - 12 42,158 12,600.00 2.10 -3.67 80 4,151,213 UNITED CAPITAL PLC 216 9,955,319 1,095 92,953,449 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 781.69 0.22 - 1 100 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 1 100 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 7,302.26 3.50 7.69 26 804,500 GLAXO SMITHKLINE CONSUMER NIG. PLC. 7,534.02 6.30 - 13 50,062 MAY & BAKER NIGERIA PLC. 3,381.46 1.96 - 8 88,050 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 740.67 0.39 - 5 77,500 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 52 1,020,112 53 1,020,212 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 816.96 0.23 - 7 1,598,000 7 1,598,000 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 - 0 0 TRIPPLE GEE AND COMPANY PLC. 316.77 0.64 - 0 0 0 0 PROCESSING SYSTEMS CHAMS PLC 1,127.05 0.24 -4.17 11 765,327 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 0 0 11 765,327 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,157,510.66 308.00 - 8 777 8 777 26 2,364,104 BUILDING MATERIALS BERGER PAINTS PLC 2,173.68 7.50 - 6 5,750 CAP PLC 17,010.00 24.30 -4.89 47 36,609,101 CEMENT CO. OF NORTH.NIG. PLC 230,011.27 17.50 6.71 96 4,338,326 MEYER PLC. 313.43 0.59 - 1 500 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 150 40,953,677 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,377.78 1.35 -3.57 4 1,114,351 4 1,114,351 PACKAGING/CONTAINERS BETA GLASS PLC. 26,898.49 53.80 - 2 46,251 GREIF NIGERIA PLC 388.02 9.10 - 0 0 2 46,251 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 2 11 2 11 158 42,114,290 CHEMICALS B.O.C. GASES PLC. 2,547.42 6.12 - 0 0 0 0 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 - 2 60,000 2 60,000 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 83.60 0.38 - 0 0 0 0 2 60,000 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 1 3,289 1 3,289 INTEGRATED OIL AND GAS SERVICES OANDO PLC 41,396.60 3.33 -1.19 64 1,636,795 64 1,636,795 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 53,332.04 147.90 - 9 6,635 CONOIL PLC 10,686.86 15.40 - 15 30,429 ETERNA PLC. 3,716.81 2.85 - 16 80,431 FORTE OIL PLC. 20,709.45 15.90 - 31 45,165 MRS OIL NIGERIA PLC. 4,663.23 15.30 - 6 20,409 TOTAL NIGERIA PLC. 41,829.09 123.20 - 7 1,418 84 184,487 149 1,824,571 ADVERTISING AFROMEDIA PLC 1,642.45 0.37 - 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. 270.56 0.23 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 3 6,000 TRANS-NATIONWIDE EXPRESS PLC. 398.52 0.85 - 1 1,500 4 7,500 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,016.43 0.97 -9.35 12 787,290 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 41,042.18 5.40 - 2 110 TRANSCORP HOTELS PLC 14 787,400 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 205.63 0.34 - 0 0 LEARN AFRICA PLC 902.60 1.17 - 1 20 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 616.92 1.43 - 4 20,671 5 20,691 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 745.97 0.45 2.27 3 181,500 3 181,500

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Monday 11 November 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

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• Utilities • Managing your Tax

How to maintain unity in a family for many generations The Solid Wealth Messenger

Grace Agada

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family is made up of different people with different goals, dreams and agenda. Despite their differences members of a nuclear family stay together under the same roof in the first generation. They are led by a central parental leadership that binds them together. As the family work together they create wealth that is centralized in one place. But as children spread abroad and form their own families the ability of a family to stay together comes under stress. Members of a family begin to separate. The leadership system is decentralized and a family shift from a nuclear family to an extended family. The result is a family where wealth is pulled in different direction. It is at this point that the unity in a family begins to break. If a family is not prepared for the risk of family expansion, family unity fades, sibling rivalry ensue and brothers and sisters begin to fight. It is this difference between a nuclear and extended family in subsequent generation that proves that current family unity cannot guarantee future unity. Subsequent generations face a different set of challenge that requires a different set of solution to foster unity. Unlike the nuclear family leader, who manages and lead a small nuclear family. Subsequent generation face the challenge of bringing together a diverse group of people made of bloodline and non-bloodline family members brought in by marriage. The advantages of a once closely knit family are absent and maintaining family unity at this stage is hard. To help subsequent generation overcome these challenges, family leaders must put mechanism in place to foster unity when a family enters its extended phase. To do this a family

leader must create a central formidable force that pulls members of a family together. This central force must be timeless and effective unlike the parent or bloodline bond. The parent bond fades away when parents die and the bloodline bond is diluted as new family members enter into a family. This central force must therefore be able to keep wealth and family together for many generations. This type of force is present in many organization, clubs and ethnic group where people come together to perpetuate causes initiated by dead men. Certain generational cultures exist because certain people perpetuate them. Some companies live far beyond their founders because certain people believe in their vision. Many associations and clubs have succeeded many generations despite the death of their founders. The reason these people perpetuate these causes is because they see how it help them achieve their own goals. It is their alignment with these causes that pulls them together to perpetuate the cause. Families who want to stay together for many generations must do the same. So how can family leaders establish this kind of cause and unite family members for many generations? Family leader must do three things. First, they must establish a cause that family members believe in and are motivated to perpetuate across many generations. This cause must pull members of their family together. One of the best ways to create this kind of cause is to establish a unified family vision. A family vision is a clear picture of what a family wants to be or where a family wants to go. Family members who perpetuate family vision must see how a vision benefits them support their goals and aligns with their mission. It is the ability of a vision to help family members that motivate them to perpetuate it. To find this kind of vision family leaders must answer certain questions. Is our family where it should be? Do our children look forward to come back home? Do they see our family as supportive to their goals and dreams? Does unity in this family mean endurance, silence and denial rather

Objectives • Solid Wealth Creation • Solid Wealth Preservation www.businessday.ng

than true unity? Is there a clearly defined purpose for wealth? Is there fairness in this family? And so on. Creating a clear picture of what a family and its members want to be is the first step towards building lasting family unity. Second, family leaders must create a unity perpetuating Plan. That is a plan that shows a family how a vision will be ingrained in across multiple generations. Creating a unified vision is only the first step. A unified vision will not perpetuate itself. It is a perpetuating plan that ensures that a vision does not die. This plan must be clear and simple with actionable steps. If a family is to stay together and wealth is to endure forever, they must carryout certain activities to keep the vision alive. Third, family leaders must know what can kill the vision or break the family unity and guard against it. This is the only way to maintain the integrity and effectiveness of the family vision across many generations. Without the commitment to a vision members of a family cannot stay together for long. If families must stay together and endure beyond the weak influences of their parents, they must commit to a vision that works for all. So how can families create this kind of vision? Family can create a unified vision through an expert facilitated diagnostic family meeting. A diagnostic family meeting is a specially facilitated family meeting that helps a family creates a unified vision that aligns with the family and its members. It also helps families develop the motivation they need to commit to a

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Family can create a unified vision through an expert facilitated diagnostic family meeting. A diagnostic family meeting is a specially facilitated family meeting that helps a family creates a unified vision that aligns with the family and its members

@Businessdayng

unified family vision. If a family understands their collective and individual purpose as well as the purpose of wealth they will create family vision that works for all. Members of a family can only stay together when they commit to a vision for a self-motivated reason. The goal of the diagnostic family meeting is to help families find this self-motivated reason and to help them create a unified vision that works for all. If you want to create this kind of unified vision so your family can stay united together for many generations, we can help you. For more details send an email to info@ createsolidwealth.com. When a group of people believe in a vision they will defend it, protect it and perpetuate it out of their own accord.

Grace Agada is a Generational Wealth Advisor, Legacy Expert and Author of the popular Solid Wealth Book. She is a Consultant and Coach to an exclusive list of top executives and entrepreneurial clients running Businesses from $1-million to $1 billion in size. She help Affluent clients prepare and execute a Ten Generation Wealth Legacy, Diagnostic Family meetings, Family Business Succession, Family Bank Systems, 90 days Sudden death contingency plan, Next generation grooming, and second opinion review of existing Trust and Estate Plans to support generational wealth goals


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Monday 11 November 2019

BUSINESS DAY

Start-Up Digest

In association with

Ezekwueche: Nigerian-born fashion influencer carves a niche in Canada IFEOMA OKEKE

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h u kw u n o n s o Ez e kw u e c h e, a registered pharmacist in Ni g e r i a w h o worked for a few years in the community practice before relocating permanently to Canada in 2017, has carved a niche for himself as an exceptional fashion influencer in Canada, thereby meeting the needs of several brands. Ezekwueche, who developed an interest in fashion at a young age, turned out to be a fashion influencer, as he currently works with brands in the fashion and lifestyle industry to promote awareness and recognition on Instagram where he creates content for these brands with the aim of showing men how to dress on a budget as well as influencing their buying decisions. The fashion influencer, who is of the opinion that one does not necessarily need to splurge on expensive designer labels to look fabulous, has a tagline ‘Showing men how to dress without breaking the bank.’ Speaking on what motivated him into going into this line of business, he said, “After I moved to Canada, I observed that the fashion scene

was still struggling when compared to USA, Paris and Milan. I felt I could meet the needs in my own little way, so I rebranded my social media and started showing men that they could dress on a budget and still make a fashion statement. I have been in the influencing business for almost three years.” Ezekwueche believes his business strategy is sustainable and unique because it appeals to everyone, both young and old. He noted that nobody wants to spend thousands of dollars on a suit, for example, when they can buy a more affordable one that still looks good. “The tagline ‘Showing men how to dress without breaking the bank’ is quite a catch because in this day and age of job cuts and unemployment, people want to know how to save more money and put it towards other needs. I strongly believe that my business model resonates with everyone and is here for the long haul. On the other hand, being a new immigrant in a foreign country has its drawbacks, but I see every situation as an opportunity to learn and grow.” He said his tagline was borne out of the need to correct a wrong mindset in most people that the more

Chukwunonso Ezekwueche

expensive the outfit, the more heads you turn. “This is not always the case. I believe that style comes from within, your poise, your energy and how you carry yourself. Fashion can be bought, style one must possess.” On how far the brand has lived up to its tagline, the fashion influencer said, “I almost do not have any expensive designer labels in my wardrobe, not that I have something against them but

I don’t see the need when there are cheaper alternatives. You will not catch me wearing anything I can’t really afford just because I want to impress people. The companies I have worked and am currently working have products whose price range appeals to the average man’s pocket.” When asked if he is able to meet the demands of Nigerian men in Canada through his brand, he said,

“One cup of water does not make a mighty occasion, but I have had success introducing them to where I shop and how to get more affordable clothing. Social media is a very powerful learning platform. I just live my truth and people emulate.” Ezekwueche, who shared some success stories with BusinessDay, said he has enjoyed tremendous growth in his social media platform and has gained recognition as an authority as a fashion influencer in Toronto. He said he has worked with a handful of brands in Canada and have been privileged to be invited to and be a part of Toronto Fashion Week, African Fashion Week Toronto, International Fashion Encounter Toronto, Fashion Forward, When Fashion Meets and a bunch of other VIP events. “I have had so many press features from Nigeria, Canada and the USA. I have been featured in notable Nigerian newspapers and other online news platforms such as Vanguard, The Nation, Sunnewsonline, Legit, and PM news. I am currently a fashion contributor for www.pulse. ng where I educate men on how to dress. The best is yet to come,” he added. Some of the brands Eze-

kwueche has worked with include Fashionnova, Original Penguin, Daniel Wellington, Linkedin, Huawei, World Remit, Beckett Simonon, Ace Marks, American Tourister Canada, Alfred Sung, Peter Hunt, and Champs Luggage, among others. He said that his versatility stands him out from other fashion influencers. “I don’t just stick to one style, I think it’s boring to have one style. I am able to pull off different kinds of outfits. One day, you will see me in a suit, the next day in ripped jeans and t-shirt. I like to keep people guessing what I would wear next. I like to make my page look a fashion catalogue where people could choose a style from what I have worn and replicate it or even add their own unique touch and make it better.” The fashion influencer is also empowering aspiring fashion influencers. According to him, “We rise by lifting others. I get tons of direct messages on Instagram from up and coming influencers asking me to mentor them on how to get started. In fact, I have written a few published articles on how I became an influencer and how to pitch and work with brands.”

Bellafricana partners Nest Cooperative to fund creative MSMEs Veritasi mentors 30 entrepreneurs

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ellafricana has partnered Nest Cooperative to launch a fund for creative MSMEs in Nigeria. This is in recognition that creative indigenous businesses lack the required skills and support to grow a sustainable business that can compete globally. Bellafricana platform is targeted at creative businesses with skills and support to grow a sustainable and competitive business. Bellafricana is an organised community which provides the much needed support and creates an enabling environment for the world to connect and trade online with reliable and credible creative indigenous businesses anywhere. To further this goal, they have identified a similar interest in MSMEs with the Nest Cooperative and are partnering with them to drive it home via their Investment fund bouquet. Nest Cooperative, through Finn Labs Ltd, is a registered cooperative focused on developing and enabling mostly

SMEs to be better business corporations in Nigeria through the facilitation of smarter and improved financial systems, including savings, investments and loans. During the signing of the agreement, Bukky Asehinde, CEO of Bellafricana, said, “This initiative is a necessity at this point and especially with the African Continental Free Trade Agreement, as a lot of micro, small and medium businesses need this support to enable them scale effectively to be able to participate in this global

trade opportunity.” “We believe that businesses producing quality products made-in-Nigeria play a key role towards increasing our export income as well as taxable income for the economy. Seeing that Nest Cooperative has a proven track record of providing financial expertise with a focus towards SMEs in Nigeria, we couldn’t think of any reasons why not to partner with them.” Through the Bellafricana platform, various business categories have been vetted,

L-R: Seyi Olusanya, COO of Nest Bank, and Bukky Asehinde, CEO of Bellafricana at the signing of MoU tofund creative SMEs in Lagos recently www.businessday.ng

trained and guided through the different business management facets and many of them are currently registered and listed with Bellafricana as verified Nigerian businesses. These categories include food and beverage, fashion, arts & crafts, home and living, health & beauty, to name a few. Other partners that have already signed up with the community are the Lagos Chamber of commerce and industry, the Nigeria-American Chamber of Commerce, National Export Promotion Council, DHL, and Digital Marketing Skill Institute, among others. Seyi Olusanya, COO of Nest Bank, said, “It is quite impressive to see the amount of quality products with attention to details that are being made by members of the Bellafricana community and this becomes a great encouragement to ensure that the support they need to succeed is being provided, and that is why NEST has extended its unwavering commitment to supporting SMEs and ensuring their growth through funding and advisory services.”

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on creative business skills Josephine Okojie

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eritasi Homes and Properties Limited has mentored thirty entrepreneurs drawn from across the country on innovative skills to scale their businesses. The mentorship programme, which is the maiden edition and tagged ‘Learn Business with Nola’, trained entrepreneurs on the needed practical guide to succeed in their business ventures. “In this our maiden edition, we have empowered 30 entrepreneurs, and as we await the next edition of the event, we are grateful for the success of this,” said Adetola Nola, convener and founder of Veritasi Homes and Properties Limited, during the event held recently in Lagos. “The aim of ‘Learn Business with Nola’ is to make businesses work in Nigeria by creating interactive training sessions and teaching business owners the right measures to grow as statistics show that 80 percent @Businessdayng

of small businesses fail within the first five years,” Nola, who was recently listed as one of the Forbes Africa 120 game changers in 2019, said. On key takeaways for entrepreneurs, he stated that creating wealth can be learned as it does not always have to be based on hereditary factor. He assured participants of a more promising second edition which is still under the planning phase. The training sessions were in three parts: first on the basic/ essential requirement for starting and registering a business, second on life-saving negotiation skills and the third on financial intelligence. Participants also had the opportunity to network and connect with stakeholders and fundraisers during the mentorship program. Since the commencement of the event, several social media posts on the impact of the programme have been put up by various participants with the hashtag - #learnbusinesswithnola.


Monday 11 November 2019

BUSINESS DAY

27

Start-Up Digest GTBank: Scaling MSMEs through Fashion Weekend ODINAKA ANUDU

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hen Nig e r i a’s tier one lender Guarantee Trust Bank (GTBank) started Fashion Weekend in 2016, it, perhaps, did not anticipate that it would become a mecca of sort for businesses. Three years down the line, the Fashion Weekend has become a platform for showcasing Africa’s finest in fashion and ancillary industries. It has become a consumer-focused platform designed to showcase the best of Africa’s Fashion to a global audience while promoting the effervescent enterprises of the continent’s growing fashion industry. In the last four editions, the show has hosted over 500,000 fashion enthusiasts, 400 micro and small business owners, as well as 80 leaders in the fashion industry from more than 15 countries. The show has so far offered 37 master classes, providing fashion entrepreneurs the rare opportunity to learn from global industry leaders and experienced brands.

The series so far have covered topics addressing challenges and opportunities across the business value chain, including: Entrepreneurship, marketing, growth & profitability, retailing, and several others. Since 2016, the GTBank Fashion Weekend has promoted enterprises in Africa’s rapidly growing fashion industry. It has assembled the best of fashion experts to interact with hundreds of thousands of young Africans passionate about fashion and entrepreneurship. This year, the GTBank Fashion Weekend featured over 30 distinguished fashion leaders, designers and industry experts, providing more than 130 indigenous small businesses with free stalls to showcase and sell Africa’s finest ensemble of apparel and fashion accessories. This year’s GTBank Fashion Weekend held on the 9th and 10th of November, bringing together the most promising, talented and recognised fashion designers brands and retail enterprises from across Nigeria and abroad to showcase trends and products to a large and diverse audience of consumers. Entrepreneurs in the

fashion industry were excited at the opportunity given to them by the bank. One of the entrepreneurs said the Fashion Week enabled her to have access to more customers and learn how to better manage her business. Small businesses showcased a diverse range of carefully curated affordable and luxury apparel, footwear, accessories, beauty items, and much more. Participants at the weekend were excited at the ex-

Gbemi Faminu

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ntrepreneurs have urged the federal and state governments to support micro, small and medium businesses by creating the right environment for them to scale. Speaking at the launch of Emeka Osuji’s two books centred on entrepreneurship and microfinance entitled ‘Entrepreneurship and Small Business Development’ and ‘Leading Essays on Microfinance’. Leo Stan Ekeh, chairman, Zinox Group, chairman of the event, who was represented by Emeka Onwuka, partner and head of private clients at Andersen Tax Nigeria, said micro, small and medium scale enterprises (MSMEs) constitute an important part of economic growth and development, but the entrepreneurship ecosystem is bedevilled by numerous challenges including funding. “The SMEs are important catalysts of growth. In Nigeria today, we have about 37 million SMEs and most of them are micro businesses and they are not able to easily access funds,” he said. “The level of ‘ostracisation’

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director of Guaranty Trust Bank Plc, said. “Our goal is to not only showcase the wealth of talent, innovation and enterprise that abound in Africa’s fashion space, but to also grow the continent’s contribution to the global fashion industry by empowering budding entrepreneurs at home with everything they need to thrive on the world stage,” he noted. He further said that at the heart of the GTBank Fashion Weekend is the

L-R: Tara Fela Durotoye, SME100AFRICA Global Advisory board member; Hakeem Adeniji director of commerce, Lagos State Government; Ibijoke Sanwo-Olu , First Lady, Lagos State; Charles Odii, executive director, SME100AFRICA; Sanusi Aderinola, beneficiary, SME100AFRICA; Beverly Naya , actress/producer. SME100AFRICA at a courtesy visit to the First Lady of Lagos recentl

Experts task FG, states to create convivial environment for MSMEs in access to finance in the country is quite high and over the years, despite efforts in financial inclusion and banking penetration, it has not changed significantly. As at 2009, only 100 companies were borrowing over 40 percent of all the bank loans in the country and this has not changed significantly over the years,” he stated. He said in order to reduce the problem of fund inaccessibility, the Central Bank of Nigeria proffered various initiatives to expand the reach of financial services to the under-banked and also enhance access to capital, stressing that access to capital is significant in alleviating poverty and increasing economic growth. Reviewing the book, Victor Chukwuma, founding director, Centre for Entrepreneurial Studies, Olabisi Onobanjo University, Ago-Iwoye, Ogun State, said the book strategically explains the importance of SMEs, which is like a guide on how to prosper for entrepreneurs and a landmark contribution to the body of knowledge for the general public. Speaking on the entrepreneurship ecosystem and economic growth in Nigeria, he said balanced development is a pre-

posure, master classes and funding opportunity provided by the programme. A number of small businesses urged the bank to do the programme twice in a year to enable the fast-growing fashion industry to scale. “Africa is home to some of the most creative fashion talents on the planet, and we are delighted and proud to provide them with a global platform that connects them to the world,” Segun Agbaje, chief executive officer and managing

requisite for sustainable growth, and SMEs contribute their quota to economic development. “In emerging economies, SMEs contribute 45 percent to employment and 33 percent of GDP. When the combination of informal businesses is taken into account, SMEs contribute more than half of employment and GDP irrespective of income levels,” he said. Speaking on challenges of entrepreneurs, he said the Nigerian entrepreneurship ecosystem is visibly segregated into four segments of the 1st, 2nd, 3rd and 4th industrial revolutions, which are agriculture, industry, information and technology, adding that most entrepreneurs are yet to advance into the technological revolution. He said, “The government of underdeveloped countries need to make large investments in a number of sectors that will enlarge market size, increase productivity and provide an incentive for the private sector to invest. “The Nigerian government needs policy makers that look at the challenges of entrepreneurs and come up with practical solutions not just on paper but in real life action,” he further said.

bank’s vision of “promoting enterprise in industries where we believe that we can help small businesses grow and dominate.” “In fashion, as well as in food and the creative industry, we see not just the amazing talents and passion of our people, but how, by championing their entrepreneurial spirit, we can enrich millions of lives, uplift communities and grow our economy,” he further said. Oyinade Adegite, group head, corporate communications and external affairs of the bank, told BusinessDay that the biggest takeaway is that small businesses are able to see how they can connect with customers and create new markets for themselves. “The biggest story about the SMEs is the story of being able to push the boundaries— the paradigm shift— and being able to see opportunities,” she said. “The biggest stories that touch our heart as an organisation are the ones that talk to us about breaking boundaries and seeing opportunities where people do not see opportunities,” she further said. She stressed that the banks wants to see fashion entrepreneurs on the continent prosper.

How Eloy Foundation supports women entrepreneurs IFEOMA OKEKE

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n a bid to groom and empower entrepreneurial women, Eloy Foundation is set to sustain women empowerment through its business sustainable programme. This was announced recently at a press briefing by Tewa Onasanya, president of Eloy Magazine. Speaking during the press briefing, Onasanya said that the empowerment programme is a conference done regularly which is hinged on sustaining women, gearing to perform better in their businesses and curbing the rate of business failures. “Every year, we try to do things special and unique essentially for women empowerment. This year, we are holding a conference sectioned into five master classes and five panel discussions directed at sustaining women. “Also, they will have access to training, networking, multiple finance as well as

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mentoring, so we are going to be having women that we will be mentoring. They will have access to free legal clinics, free legal advice, it’s all in a bid of sustaining women,” Onasanya said. She further said, “We want the numbers of women starting and failing in their business to reduce, we want to help them scale their businesses to the next level and grow their businesses. “At the end of it all, we will be giving away 1 million for entrepreneurs who need it, to make them scale to the next level.” She said the platform is for women who have registered businesses that can send in their business plans and personal statement of why they should become a part of Eloy business sustainable empowerment programme. “Asides this, we also have the Eloy Foundation Network, where thousands of women can join from all over the world. This network gives them opportunity to get information about things that @Businessdayng

are happening, as well as trainings to enable them grow their businesses,” she added. She, however, spoke about the misconception of assuming that the CEO is always a man. “Women can as well be in a higher position. We want to start reducing the assumption that everything up there is done by a man. We want people to start recognising the fact that women are up there too. So we want to start the competition going. “We want to start getting people thinking right, we want a situation where if you walk into a big company you could meet a man or a woman. We want to people to get off that unconscious norm,” Onasanya further said. Also speaking at the event, Yetty Ogunnubi, PR director, ELOY Awards & Foundation, said that the system is consistent in empowering women on year to year basis. “This is a system that works. There is continuity and sustainability, in what we are doing,” Ogunnubi said.


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Africa: Lack of insurance leave millions vulnerable to climate change, natural disasters Modestus Anaesoronye

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illions of low-income households and small businesses across Africa still have no insurance, leaving them vulnerable to climate change, natural catastrophes, food insecurity, accidents, illness and untimely death. The Landscape of Microinsurance in Africa 2018: focus on selected countries, launched at the 15th International Conference on Inclusive Insurance in Dhaka, Bangladesh, is based on data collected on the microinsurance activities of 100 insurers in Africa in 2017. Through their microinsurance activities, these insurers collectively covered a total of 15 million lives — almost 2 percent of the estimated 700 million people in the low-income bracket in the continent —and brought in total premiums of $ 420 million, representing less than 1 percent of overall insurance premiums in Africa.

L-R: Emmanuel Onu, chapter chairman, Chartered Insurance Institute of Nigeria(CIIN), Enugu Chapter; Edith Okolo, executive secretary, Enugu State for Universal Health Coverage; Muftau Oyegunle, deputy president, CIIN; Josephine Onyia, permanent secretary, Office of the Secretary to the Enugu State Government; Sunny Adeda, past president, CIIN; and Richard Borokini, director general, CIIN at the Enlightenment Programme on Compulsory Insurances organized by the Insurance Industry Consultative Council(IICC), held in Enugu

“Insurance should play a vital role in lifting millions of people out of poverty,” said Katharine Pulvermacher, executive director of the Microinsurance Network, which commissioned the study with

the support of the Government of Luxembourg, Munich Re Foundation, the Center for the Economic Analysis of Risk (CEAR) at Georgia State University and AXA. “Insurance can build resil-

ience to crises and disasters, and boost productivity, food security and well-being. But our study shows that only a tiny percentage of insurance business in Africa caters for low-income people and the

emerging middle class,” highlights Pulvermacher. It’s not all bad news though. One positive trend is in inclusive health insurance products, which are experiencing something of a boom. Insurers are supporting comprehensive public schemes, while simple, complementary health products such as hospital cash and health value-added services are also increasingly popular. “The positive trend in inclusive health insurance shows that insurers have been able to offer value to customers and governments in a sustainable way,” said Quentin Gisserot, project manager at AXA Emerging Customers. “We’re also seeing new distribution opportunities emerging such as fintech players, e-commerce and ride-hailing platforms.” “Unfortunately, the health success story is not reflected in other areas,” highlighted Dirk Reinhard, vice chair of the Munich Re Foundation. “Crop and livestock insurance, for example, are still struggling to reach anywhere

near the number of farmers facing climate and extreme weather risks, an area of growing focus for our Foundation.” In certain countries, the implosion of “freemium” insurance policies sold through mobile network operators significantly reduced the number of people insured. That’s why insurers and intermediaries must ensure clients know if they have cover, what they are covered for, and when and how to claim. “It is unclear whether these statistics represent a genuine, worrying trend or are due in part to a lack of relevant recent data reported by insurers or collected routinely by regulators,” explained Professor Glenn Harrison, director of the Center for the Economic Analysis of Risk (CEAR) at Georgia State University. “Deeper, better and more timely data is needed before definitive conclusions can be drawn.” Out of 44 countries targeted in the research, only six yielded usable data on premiums collected and lives covered.

Old Mutual appoints Olalekan Oyinlade MD general business Modestus Anaesoronye

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he Nigerian subsidiary of pan-African Insurance giant and leading global financial services group, Old Mutual Limited (OML), has announced the appointment of Olalekan Oyinlade, as the new managing director for its General Insurance business in Nigeria. The appointment was announced in October 2019. Oyinlade joined the company from Veritas Kapital Assurance Plc, where he was

an executive director, Operations responsible for the overall Business Development and Technical Operations of the firm. Oyinlade’s experience as a wealth and risk management expert came from his 22 years of cognate experience in various insurance roles including Chief Underwriter, Reinsurance Manager, among others. He specializes in direct and treaty reinsurance, underwriting, commercial claims handling, as well as extensive client and broker’s relationship management. Olalekan Oyinlade is a

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graduate of the prestigious University of Lagos (UNILAG), and started his professional career with Sovereign Trust Insurance Plc where he acquired considerable experience in General Business Underwriting and Reinsurance Operations. He joined AXA Mansard Insurance Plc in February 2004 and left in 2017 as Chief Underwriting Officer with additional responsibility for the company’s distribution activities in the Public & Infrastructure Sectors and management of the Life and Savings Portfolio. Oyinlade is an Associate

Olalekan Oyinlade

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of the Chartered Insurance Institute of Nigeria (ACIIN) and Council of Registered Insurance Brokers of Nigeria (ACIB) as well as a member of Chartered Insurance Institute of London (CII). He has attended several technical courses including Engineering & Special Risk courses organized by Africa Re, Oil & Energy Seminar organized by Munich Re and Energy Underwriting Seminar by HSBC, London. He has also attended development programmes at leading institutions including the Finance for Non-Finance Executives,

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IMD Switzerland and the Senior Management Programme, Lagos Business School. He is a prolific lecturer in the area of risk management with a personal bias for Reinsurance and Alternative Risk Transfer Mechanisms. Old Mutual General Insurance Company and Old Mutual Nigeria Life Assurance Company are part of the globally acclaimed Old Mutual brand, which has over 170 years of experience in providing life assurance and wealth, personal finance savings and general insurance services.


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Capital Express Assurance targets acquisition in industry recapitalisation …posts N563 million profit in 2018 Modestus Anaesoronye

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ife specialist underwriting firm, Capital Express Assurance Limited said it’s planning to acquire life companies in the ongoing recapitalization exercise in the insurance

industry. The company said it’s already talking to three companies for possible acquisition and it’s hopeful to retain the brand name post recapitalisation. “Acquisition is part of our recapitalisation plan, which we submitted to the National Insurance Commission (NAICOM) and it was approved, Adebola Odukale, managing director/CEO of the company said. Odukale who was responding to shareholders questions at its 18th Annual General Meeting in Lagos said it has embarked on strategies to increase its authorized capital from initial N7.5 billion to N10 billion, and depending on the palliatives extended on the basis of the recapitalization directive, it hopes to increase the figure from N10 billion to N15 billion.

L-R: Joy Sulucainan, secretary/chief compliance Officer, Capital Express Assurance Limited; Anthony Aletor, acting chairman, Adebola Odukale, managing director/CEO and Ademola Adenuga, during 18th Annual General Meeting of the company in Lagos

According to her, other plans of the company to meet the new capital requirement, which also got the shareholders approval includes rights issue and private placement.

IICC takes public awareness on compulsory insurance to South East Modestus Anaesoronye

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he Insurance Industry Consultative Council (IICC) has taken insurance awareness to the South Eastern part of the country, in its ongoing efforts to deepen knowledge and appreciation of the different compulsory insurances in Nigeria. Compulsory Insurances are those classes of insurance made compulsory by law, with the objective of providing protection to third parties and the general public in the event of accident. Among the insurances made compulsory under the law in Nigeria includes - Group Life Insurance, Builder’s Liability Insurance, Occupier’s Liability (public building) Insurance, Healthcare Professional Indemnity Insurance and motor third party. Eddie Efekoha, chairman of IICC in his opening remark at the awareness seminar held in Enugu, said as a result of lack of knowledge, many of these compulsory Insurances are neither taken up by concerned parties nor enforced by the relevant agencies or bodies set up for the purpose. Efekoha represented by Muftau Oyegunle,

deputy chairman of IICC said it’s against this backdrop that the IICC has decided to periodically bring all Insurance stakeholders together to sensitize them on their obligations towards the enforcement of the various Compulsory Insurances in Nigeria. “Earlier in the year we were in Asaba and today, we are here in the historic city of Enugu. This train will continue round cities in Nigeria and I promise that we will not relent in our crusade to propagate the gospel of Insurance.” Josephine Onyia, permanent secretary, Office of the Secretary to the Enugu State Government, lauded the IICC on the initiative and called for more enlightenment programs of a similar nature to be held at various levels of within the state and targeted at stakeholders. She pointed out that the enlightenment program had greatly helped to greatly change the notion most of the participants had about insurance, insurance companies and the attitude to compulsory insurances. Richard Borokini extended the heartfelt gratitude of the Council to the attendees and assured them that the IICC would not rest on its oars to ensure that the gospel of Insurance is spread to all nooks and crannies of the country.

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On the financial performance for the year ended December 31, 2018, Capital Express Assurance recorded a 48 percent increase in gross premium written, moving from N2.297 billion in 2017 to N3.391 billion.

Net underwriting income also rose by 41 percent to N3.317 billion in the review year, from N2.360 billion the previous year, just as the underwriting profit also rose by 3,367 percent to N1.132 billion from N32.664 million in 2017. The company which was in negative position in 2017, also increased its profit before tax by 267 percent to close at N575.272 million, while profit after tax also rose from a negative N353.71 million to a positive N563 million, a 259 percent jerk up. Tony Aletor, vice chairman of the company said the company’s sterling performance despite the challenging business environment was due largely its strategy for sustained growth momentum and reinvigorated marketing team. Aletor also stated that the total assets and shareholders fund grew by 28 percent and 44 percent to N8.890 billion and N3.108 billion respectively, up from N6.925 billion and N2.156 billion in 2017. “We will continue to build on our financial strength in support of the plans of our clients and those they love in order to reinforce unwavering commitment to fulfilling our obligations, he said.

Flying has never been safer, a new Allianz report reveals Modestus Anaesoronye

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espite record numbers of over 4 billion passengers globally, statistics show that flying has never been safer. The global airline industry has experienced some of its safest years ever in terms of fatal accidents in recent times, according to the new “Aviation Risk 2020: Safety And The State Of The Nation” report published by the corporate and aviation insurance specialist Allianz Global Corporate & Specialty (AGCS) in association with Embry-Riddle Aeronautical University, the largest, fully accredited university specializing in aviation and aerospace. Three of the past four years have been the safest ever. For example, in 2017, for the first time in at least 60 years of aviation there were no fatalities on a passenger jet flight, making it the safest year ever. Even 2018, which saw a total of 15 fatal airliner accidents with 556 victims, ranks as the third safest year ever, according to statistics from the Aviation Safety Network, with 2015 ranked second. Overall, the report notes that the lifetime chances of a person dying in a commercial aviation accident are extremely unlikely compared with other forms of transport such as by car or bicycle, as well as other more unex-

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pected scenarios such as accidental gun discharge or dog attack. “The continuous improvement in aviation safety can be attributed to several factors such as design improvements, new technologies, more effective pilot training as well as significant improvements in manufacturing processes, aircraft operations and regulation,” explains Tom Fadden, global head of Aviation, AGCS. Aerodynamic and airframe improvements, fly-by-wire aircraft and more effective safety inspections have had a dramatic impact on accident rates over the past decades. At the same time engine manufacturers have almost eliminated the chance of engine failure. Radio and avionics are extremely precise today and improved air traffic control technology and better collision systems have also had a positive impact. “Pilots now have much more live information at their fingertips while current navigation systems have the capability to determine an aircraft’s position to the thousandths of a mile,” says E. David Williams, assistant professor of Aerospace and Occupational Safety at Embry-Riddle Aeronautical University. “Improvements in science have also allowed the aviation industry to better understand how human factors can affect safety. Pilot fatigue, training, crew resource management and other factors have become increasingly important issues.”

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Attractive people get unfair advantages at work. Can artificial intelligence help? TOMAS CHAMORRO-

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roadly speaking, beauty bias concerns the favorable treatment that individuals receive when they are deemed more attractive, regardless of whether this happens consciously or unconsciously. Identifying this bias is surprisingly simple. But what does the science tell us? Studies show that physically attractive students tend to obtain higher grades in school, in part because they are deemed more conscientious and intelligent, even when they are not. Unsurprisingly, this bias transfers into the workplace. There is also a well-established association between attractiveness and long-term income. Correlation does not mean causation, but let’s not forget that correlations do have causes. One delicate issue is the possibility — supported by much evolutionary psychology research — that the cause of the correlation between beauty and career success is not (only) prejudice or bias, but (also) actual talent. In other words,

could it be that, at least in part, attractive people do better in life because they actually possess more adaptive traits, such as intelligence or talent? This proposition is hard to test, not least because of the common absence of objective performance data that is not already conflated with subjective preferences. If we teach artificial intelligence to imitate human

preferences, it will not just replicate, but also augment and exacerbate, human biases. Furthermore, at times it is hard to determine whether appearance should be treated as a bias factor or a job-relevant trait, especially when employees’ performance depends on the perceptions customers or clients have of them. Physical attractiveness contributes to better

sales and fundraising potential, so is it sensible to stop employers from hiring more attractive salespeople or fundraisers? Perhaps it is, because the alternative is to discriminate against less attractive individuals, including people from minority groups who don’t fit dominant “beauty norms.” But when employers simply pretend to ignore attractiveness, focusing on

candidates’ past performance or interview performance, and interpreting these data as objective or bias-free, there is no guarantee that less attractive candidates won’t be handicapped. It is no different from pretending to ignore race or social class while selecting based on academic credentials, which are themselves actually conflated with race and social class. Clearly there’s an unfair advantage to being deemed more attractive, and an unfair handicap to being deemed less attractive. Although employers can mitigate this bias by removing appearance data from their hiring practices — by not only using artificial intelligence, but also focusing on science-based assessments, past performance and résumé data — such measures will not be sufficient to eliminate bias, since they are also influenced by historical or past bias. Still, that is no reason to avoid the issue or perpetuate the beauty bias at work.

(Tomas Chamorro-Premuzic is the chief talent scientist at ManpowerGroup.)

3 ways health care leaders can encourage experimentation DAVID A. ASCH, KEVIN B. MAHONEY AND ROY ROSIN

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uccessful health care innovation follows the pattern of successful science. It requires laboratories where experimentation is encouraged and can proceed safely so that change seems less fraught. We’ve found that the approaches below can help support this essential kind of experiment: — DELAY CONSENSUS: Highly specialized expertise and narrow licensing and credentialing make health care organizations so matrixed that it seems anyone can say no, and no one can say yes. Risks are easier to take at lower organizational levels where getting input, which is directionally useful, doesn’t turn into requiring consensus, which is often directionless. Health care innovation requires allowing teams pursuing novel models to get started without all the permissions they will eventually need to scale what works. — ENABLE EXCEPTIONS:

Guidelines recommended early postpartum visits to manage hypertension among women with preeclampsia. But clinic appointment rates remained low. The suggestion that we try a text-based monitoring system led to concerns that texting is not secure. Changing the request from “Can we text patients?” to “Can we try it, for a limited time, in a limited population?” made it a safer proposition. In health care, even seemingly small exceptions to protocol create outsize concerns about setting new precedents. — FREE THE DATA: The opportunities arising because health care data are increasingly digital sit alongside laments that these opportunities remain out of reach. Processes created by electronic health record vendors and hospital information technology policies aim for scale, reliability, standardization and security. While clinical uses and needs should dictate design and pace, the felt experience in hospitals is often the other way around. For us, success has required creat-

ing platforms and extensions that sit between the EHR and clinicians, allowing data manipulation and presentation in new interfaces outside the locked-down systems. Successful innovation requires experimentation. But health care change requires we tinker with the health care

system we depend on. To support the people determined to drive change quickly, we need to find ways to bend institutional norms safely. (David A. Asch is director of the Center for Health Care Innovation at the University

of Pennsylvania. Kevin B. Mahoney is the CEO of the University of Pennsylvania Health System. Roy Rosin is the chief innovation officer of Penn Medicine at the University of Pennsylvania.)


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Remote monitoring can reduce hospital visits for cancer patients with whom they collaborate. If a patient needs to be physically seen, the team can determine the right setting for evaluation. A more proactive, connected cancer-care system will ultimately benefit patients, providers and society at large as cancer-care quality and patient experience improve and costs fall. Our Insight Care program is a promising initiative on that path which we hope other providers can learn from. Everyone wins when patients with cancer can avoid the emergency room and do better as a result.

BOBBY DALY, ABIGAIL BALDWIN-MEDSKER AND WENDY PERCHICK

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ntil the 1990s, patients with cancer requiring chemotherapy typically had to be admitted to the hospital to receive treatment. This inpatient care was stressful for patients, and expensive. Since then, thanks to improvements in chemotherapy administration and symptom management, most treatment has moved from the inpatient setting to outpatient clinics, which have proved more patient-centered and able to provide high-quality care at lower cost. The InSight Care program seeks to identify high-risk patients and provide digitally enabled, proactive, coordinated care before they need hospitalization. The digital connections allow us to keep patients in sight beyond our walls, and lower barriers for patient communication with

team members. To this end, the program leverages three interlocking elements: — A NOVEL RISK PREDICTION MODEL: InSight’s predictive analytics framework was built from 10,000 observations of patients starting chemotherapy and has been refined to predict risk of acute hospitalization based on 270

patient characteristics spanning socio-demographics, the nature of the malignancy and treatment, lab results, medical and social history, medications and prior emergency department visits and hospitalizations. — DIGITAL MONITORING: Patients enrolled in the program receive a daily symp-

tom survey through a patient portal based on our analysis of common symptoms leading to acute-care visits. — DIGITAL TEAM-BASED CARE: A dedicated, centralized cohort-management team consisting of registered nurses and nurse practitioners acts as an extension of the primary oncology team

(Bobby Daly and Abigail Baldwin-Medskeris are clinical leads for the InSight Care Program at Memorial Sloan Kettering Cancer Center. Wendy Perchick is a senior vice president at Memorial Sloan Kettering Cancer Center.)

Two big reasons that digital transformations fail MIKE SUTCLIFF, RAGHAV NARSALAY AND AAROHI SEN

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lenty of cash is flowing into digital initiatives at large, industrial companies. In fact, the executives we surveyed recently at 1,350 of these businesses globally reported investments in digital reinvention totaling more than $100 billion between 2016 and 2018. The problem is that the expected results often fail to materialize. Most of the leaders we surveyed (companies representing 17 countries and 13 industries) reported poor returns on their digital investments. The primary reason: unsuccessful efforts to scale digital innovations beyond early pilot work. What’s keeping companies from scaling pilots successfully? And what are the companies that are experiencing better returns on digital investments doing differently from the rest? Two critical challenges — and

their remedies — emerged from our analysis: — UNSPOKEN DISAGREEMENT AMONG TOP MANAGERS ABOUT GOALS: If top managers aren’t on the same page, it makes it difficult for their direct reports to agree on what to prioritize and how to measure progress. The remedy: Define and articulate not only the opportunity but also the problem it solves, and how the company will build the organization around the desired solution before investing. — A DIVIDE BETWEEN THE DIGITAL CAPABILITIES SUPPORTING THE PILOT AND THE CAPABILITIES AVAILABLE TO SUPPORT SCALING IT: When this problem isn’t addressed, companies may face a choice between accepting long delays in ramping up production or attempts by leadership at rapid, unwieldy change to meet what they have promised. The remedy:

Look outside to close gaps or nurture pilots internally, ramping up digital capabilities across the organization from the get-go. When companies anticipate the challenges we’ve outlined here, they’re better positioned to make a compelling case for funding. And they’re much more likely to succeed with their innova-

tions.

(Mike Sutcliff is the group chief executive of Accenture Digital. Raghav Narsalay is a managing director at Accenture Research in Mumbai. Aarohi Sen is a manager at Accenture Research in Delhi.)

Brought to you courtesy of First Bank Nigeria


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real sector watch Implementing NIRP to boost manufacturing sector ODINAKA ANUDU

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n 2014, Nigeria launched its most comprehensive and ambitious industrial plan with a view to revivifying the economy and making it an industrial hub. The five-year plan was conceived and prepared by Nigerian experts, the United Nations Industrial Development Organisation (UNIDO) and several technical partners with the view of building a resilient manufacturing sector that would drive jobs, generate wealth, diversify the economy, substitute imports, boost exports, and broaden the tax base in three to five years. The expectation was that N5 trillion would be added to manufacturing revenues annually. “With the National Industrial Revolution Plan (NIRP), we have begun to shape a new economic direction for Nigeria; and with strong conviction, an eye on the future, and hard work, we will sustain this journey of transformation and attain the goals of industrialisation,” Olusegun Aganga, Goodluck Jonathan’s outspoken minister of industry, trade and investment, said at the launch of the National Industrial Revolution Plan (NIRP) on February 13, 2014. But this plan will end soon in the shelves of the Ministry of Industry, Trade and Investment. In the automotive indus-

try, the NIRP specifies the development of auto supplier parks and creation of auto industrial parks, with dedicated ports and berths for assemblers. The government also pledged to encourage private sector procurement of locally assembled automobiles. But these are not happening. Patronage for locally assembled vehicles was down to 6,999 in 2017, according to PricewaterhouseCoopers (PwC), as against 555,716 in South Africa; 181,001 in Egypt; 168,913 in Morocco, and 94,408 in Algeria. The attention of government since 2015 has been shifted to raising 35 percent levy and

35 percent duty on imported vehicles, including 30 percent duty on ‘accidented’ vehicles. “Imported used car segment (Tokunboh) dominates the industry, accounting for 74 percent of all vehicle imports, making Nigeria the largest in the world. Ten percent of imported cars are less than three years old, while 63 percent are over 11 years,” Andrew Nevin, partner and chief economist at PwC Nigeria, said in Lagos in 2018. Apart from gas industries parks/cities which only exist in the papers, the government in the plan pledged to facilitate the development of eight industrial cities in Nigeria, with a combined land size of

6,000 to 10,000 hectares and 700 to 1,200 megawatts of captive power capacity. This has not happened. “Industrial cities will be operating hubs (or delineated areas) where manufacturers have the required infrastructure and support to succeed,” the NIRP plan said. But this is yet to happen. The government agreed that the textile industry was important and that it would lift the sector by targeting cotton fund and providing support for cotton farmers. This has not happened. But all the manufacturers BusinessDay spoke with didi not agree that this has happened. “We used to have about

127 textile firms in Nigeria but that has come down to two or three now,” said Grace Adereti, president of the Nigerian Textile Manufacturers Association (NTMA) in Lagos at a Made-in-Nigeria stakeholders’ meeting in Lagos in 2018. The NIRP recognises the importance of housing and construction to industrial development and agreed to build 300 units of housing in each state of Nigeria. However, five years down the line, the 17 million housing shortage figure is yet to change since 2014. In fact, many more are becoming homeless as the population rises by 2.6 percent annually. The Bureau of Public Service Reform (BPSR) said in 2017 that 108 million Nigerians were technically homeless as of that year. The government further pledged to establish an appropriate pricing regime for the electricity industry, but this is far from being a reality. Up till now, Nigerians are paying less for electricity, with many unable to procure meters from the electricity distribution companies. “We are sure that there is a need to review of the industrial plan, assess the level of achievement of the plan and project for the next five years,” Mansur Ahmed, president of the Manufacturers Association of Nigeria (MAN), told BusinessDay on the phone. “There are areas where the plans have not met expectations in terms of today’s realities and we have to review it

to make it more realistic for today’s situation,” he further said. The NIRP further promises to review the Export Expansion Grant to promote export of finished goods. Up till today, the government is yet to re-start the export grant suspended in 2013. Also, the NIRP promised to link skills development to real jobs to enable Nigerians to develop competence in areas they can put to immediate industrial use. Part of the plan is to develop skills development boards at the national level, and in each of the 36 states. This has not happened. More than ever before, many graduates leaving Nigeria’s higher institutions are ill-prepared to compete in the 21st century, with many industries seeking talents from other parts of Africa, Europe, Asia and the America. “We must re-define our education for the future and tailor it towards what the industry of the future requires,” Ibukun Awosika, chairman of the First Bank, said recently at the Nigerian Economic Summit in Abuja. Though the plan was prepared by the immediate past government of Goodluck Jonathan, the present administration of Muhammadu Buhari has, on many occasions, pledged to implement it. “Government is a continuum, and half-hearted implementation only shows how much un-serious we are,” a manufacturer, who did not want his name in print, said.

Does Olam’s acquisition of Dangote Flour mean more M&As? Gbemi Faminu

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ig-ticket deals have taken place in recent times in the manufacturing sector. On November 1, Olam International Ltd. completed the acquisition of Dangote Flour Mills for N120 billion. In April 2019, the Singaporean company submitted an offer to acquire 100 percent equity of Dangote Flour. Under the arrangement, Olam would acquire all the outstanding and issued shares of Dangote Flour through a Scheme of Arrangement. Dangote Flour Mills said in a regulatory filing that the takeover had become effective due to communication of the court’s decision to CAC. It further said that the conclusion of the acquisition meant that the shares of Dangote Flour Mills would be delisted from the Nigerian Stock Exchange (NSE). Flour Mills of Nigeria (FMN) has remained the market leader over the years with a 32 percent share, with

Olam squaring 24 percent, and Dangote Flour having 19 percent share. Charghoury Group (11 percent) and Honeywell (10 percent) come fourth and fifth in market ranking while others share the rest four percent, according to a 2016 research report by KPMG on Nigeria’s flour milling industry. But a potential 43 percent ( 24+19) market share by capacity is possible with the deal between Olam and Dangote. “I think it is a business strategy by Dangote,” Muda Yusuf, director-general of Lagos Chamber of Commerce and Industry (LCCI), had told BusinessDay in a telephone interview, during the announcement of the deal in April. “I suspect Dangote wants to concentrate on areas of competitive strength and consolidate there. They would have done their numbers and found the decision right,” Yusuf had said. In early 2016, Olam acquired BUA Group’s flour in a deal worth $275million. Earlier in 2010, Olam had acquired Crown Flour Mills (CFM) in www.businessday.ng

Nigeria and consequently expanded its capacity and set up milling operations in Ghana, Senegal and Cameroon. Dangote’s current market capitalisation is N59 billion. The acquisition shows that though the economic fundamentals may be trending negative, firms still bet on Nigeria. “I foresee more M&As,”said Ike Ibeabuchi, CEO of MD Services Limited, which specialises in the manufacture of chemicals and provision of specialised services to firms. “It is about cost-benefit analysis. In an economy like ours, M&As are ideal for survival and economies of scale,” he further said. The Coca-Cola Company recently announced completion of its acquisition of Chi Limited in Nigeria. Coca-Cola first announced a minority investment in Chi three years ago and, as planned, acquired full ownership of the company last week. Chi is an innovative, fastgrowing leader in the beverage categories, including juices, value-added dairy and iced tea. The company, founded in

Lagos, Nigeria, in 1980, produces juice under the Chivita brand and value- added dairy under the Hollandia brand, among many other products. Coca-Cola acquired a 40 percent stake in Chi in 2016 from Tropical General Investments Group, the holding company for Chi Ltd. Juices and valueadded dairy categories rank among the fastest-growing beverage segments in Nigeria and Africa. This acquisition signals Coca-Cola’s optimism about Africa’s consumer opportunity and a commitment to its longterm investment and growth plan on the continent, where it has been present for more than 90 years, Coca-Cola said. “Coca-Cola is continuing to evolve as a total beverage company, and Chi’s diverse range of beverages perfectly complements our existing portfolio, enabling us to accelerate expansion into new categories and grow our business in Africa,” said Peter Njonjo, president of the West Africa business unit of Coca-Cola. “We will support the Chi management team in building on

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the company’s remarkable heritage and achievements, while using the scale of the Coca-Cola system to replicate their success in more markets across Africa.” Data from Global Transactions Forecast report released by Baker McKenzie and Oxford Economics, a global law firm, said that M&A deals in 2017 amounted to $469.8 million in Nigeria and rose by 475 percent to $2.7 billion in 2018. The report said that going forward, M&As would be on a continuous rise, especially as companies scrambled for larger market share as well as larger resources. It further said that this would increase M&A deals to $5.2 billion in 2019, adding that increasing allocation to technology-driven transformation was the key to future growth. Firms are struggling to stay afloat due to recurring challenges inherent in the business environment. However, start-ups in the tech space have found ways to proffer solutions to these challenges through innovation and M&As. In 2014, Wakanow, a Nigeri@Businessdayng

an travel agency, acquired Oya. com.ng, an online bus ticketing startup, for $2.5 million. In 2015, One Africa Media (OAM) Group, acquired Jobberman. com, a recruiting portal. In 2018. Zinox Technologies acquired Konga, and Konga, in turn, merged with another ecommerce platform Yudala, which is affiliated with Zinox. Nigeria ranks 116 with 48.3 points on the Global Competitiveness Report and 131st on the World Bank’s 2020 Doing Business Index. Although this is an upward movement by 15 places from its previous position of 146, the country is yet to surmount basic challenges such as multiple taxation, infrastructural hiccups and power cuts. The manufacturing sector is the biggest hit. A report by the World Bank themed ‘Trouble in the Making?: The Future of Manufacturing-Led Development’ said that changing technologies and shifting globalisation patterns were destined to reshape manufacturing-led development strategies.


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real sector watch Beyond manufacturing, FMN cares about Nigerian families, consumers Odinaka Anudu & Gbemi Faminu

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eyond the jarring sound of factory machines, the Flour Mills of Nigeria (FMN), Nigeria’s food giant, also cares about its consumers and their families. FMN, through the Feed Your Love campaign, started a campaign in July this year, where intending couples were encouraged to send in entries asking the company to participate in their wedding. During the campaign period, Golden penny attended the wedding ceremonies of seven couples across six cities in Nigeria, including, Lagos, Ibadan, Akure, Edo, Warri and Kaduna. The couples entered the campaign by submitting a short video message, disclosing why they loved Golden Penny. Several entries were received, but only seven of these entries were adjudged winners after their posts received the highest interactions. The seven couples from the first round then had

L-R: Devlin M. Hainsworth, MD, Foods Division, Flour Mills of Nigeria Plc (FMN), Enitan Olaleye, and David Olaleye, winners ; Rita Tsehai, head of marketing, FMN; Gina Ehikodi Ojo of Geena Food and Spices blog, at a presentation ceremony for the Olaleyes, the winners of an all-expense paid honeymoon to Dubai, by Golden Penny ‘Feed Your Love’ Campaign, held in Lagos recently

to post a second set of videos after their weddings. The couples whose video got the most interaction after this process was later selected as winners of the grand prize of an all-expense-paid honeymoon to Dubai. David Olaleye and his lovely wife, Enitan, won the

prize of an all-expense paid honeymoon to Dubai. They are on their way to Dubai for a five-night all expenses paid honeymoon, after they emerged winners of the Golden Penny ‘Feed your love’ campaign. The couple, who stumbled on the promo on Ins-

tagram, a social media platform, said they actively participated and left no stones unturned in order to emerge winners. They both expressed delight and appreciation at the opportunity offered to them by the company and said, “This is a dream come true,

and we are grateful to Flour Mills for helping us achieve this.” The Olaleyes were full of smiles at the presentation ceremony held in Lagos recently. The couple were received by Devlin M. Hainsworth, MD, foods division, and Rita Tsehai, head of marketing, at the head office of FMN in Apapa. “We are always delighted to welcome new households into the Golden Penny Family,” said Tsehai during the presentation ceremony. “Like most newlyweds, they deserve all the support they can get as they embark on this new experience together. And we are only happy to be a part of the journey by ensuring that they have access to all the delicious and nutritious family favourites that Golden Penny is known for,” she added. Tsehai further said that the programme will continue annually considering the warm reception the maiden edition has received, assuring that provisions for the Season 2 will be made in the coming year. She noted that the company decided to use wed-

dings as a platform for the programme because they wanted the younger generation and newlyweds to experience and adopt the satisfaction that the brand provides for its consumers. Enitan Olaleye, full of excitement, said, “Although we were hopeful, I really didn’t think we could win. As a matter of fact, we had friends who still doubted the campaign until we were announced as winners.” She further said, “I am so thrilled and grateful to Golden Penny. Our bags are already packed; we are leaving for Dubai tomorrow.” Gina Ehikodi, host of the Foodies & Spice Show, who partnered with the consumer goods company, said, “The initiative was accepted by everybody and we had several entries which show acceptability and affordability of the brand.” Flour Mills has advised their consumers to stay glued to the social media pages (@thefmngroup and @gpennyfoods) and look out for the commencement of Season 2 of the Golden Penny ‘Feed Your Love’ Campaign.

Delineate onshore Right of Way on sand mining licenses, WAPCo tasks FG Josephine Okojie

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he West Afr ican Gas Pipeline Company (WAPCo) has tasked the Federal Government to support the organisation by ensuring that the onshore Right of Way is delineated on all documents of licensing for sand mining in the country. This, the organisation said, will help curtail the unregulated sand mining activities carried out on areas across the country with gas pipeline facilities. Koffi Mensah, external relations manager, WAPCo, made the call during the organisation’s annual workshop on sand mining with stakeholders in the sector to discuss the devastating effects of sand mining and its adverse effects. Mensah argued that illegal sand mining has remained a huge threat to the integrity of the gas pipelines which cuts across four coun-

tries in the West Africa region -Nigeria, Benin, Togo, and Ghana. According to him, the activities of these illegal sand miners pose serious environmental problems such as land degradation, loss of agricultural lands and, most importantly, fire disaster that could result from vandalisation of the gas pipeline buried deep into the grounds. “We have over the years battled these illegal sand miners, informing them of the dangers because of the gas pipeline Right of Way (ROW), specifically around Ota, Igbesa and Pako beach in Lagos State,” he said. He advised that as a matter of urgency, government agencies responsible for issuing mining licenses must ensure the Right of Way of gas pipelines are delineated on all documents of license for mining activities as well as the need for universal surveys for all the lands. “If decisive actions are not taken now, the host comwww.businessday.ng

munities risk a major disaster that could cut across borders. So, it’s important we work out a synergy between various relevant institutions, including traditional rulers on how to stem the tide before it’s too late,” Mensa added. Speaking also at the event, Omosebi Mayowa, federal mines officer, Ministry of

Mines &Steel development, explained that the ministry is working assiduously in ensuring that due process is followed when it comes to issuing sand mining licenses. According to him, all stakeholders need to look inwards in finding solutions to the activities of these illegal miners, noting that

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traditional rulers have a key role to play because they are closer to the people. “We are not totally exonerating our people. Some civil servants are also to blame because we have heard stories of them conniving with miners to circumvent the procedures, but I can assure you that the

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ministry of mines and steel is on top of the situation and will not hesitate to punish any of its people caught in such acts,” said Mayowa, who is representing Olamilekan Adegbite, Minister for Mines and Steel. He urged WAPCo to provide geographical coordinates of its pipeline to the ministry to include in the cadastral database as done with bitumen in the country. Speaking on behalf of other traditional rulers at the workshop, Oba Ogungbayi Akanni Wasiu, the Olu Owode Otta, argued that most often, traditional rulers are not consulted before mining licenses are issued to miners, and therefore they have little control over the activities of these miners. He called on management of WAPCo as well as government agencies to involve traditional rulers because they are closer to the grassroots and could easily identify and monitor activities of the miners in their communities.


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GTBank uses employees to generate more profit than peers BALA AUGIE

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uaranty Trust Bank Plc (GTBank), the largest lender by market capitalization in Africa’s largest economy is more optimal in using its workforce in generating higher profit, as a low yield environment cast a pall on industry earnings. For instance, GTBank’s 3,396 staff generated N43.28 million each in profit (based on nine months net income), which shows it is more productive in using people in achieving the organization goal congruence. That compares with Zenith Bank’s 6,253 staff strength that generated profit per employee of N24.10 million; Access Bank’s employees that generated N14,25 million each. Interestingly, United Bank for Africa (UBA) has the largest number of workforce (12,999), but it staff strength generated profit of per employee of N6,323 million. Net Income per employee (NIPE) is a company’s net income divided by the number of employees. This number shows the company how

efficient or productive its employees are. Theoretically, the higher the net income per employee the better. Aside from increasing the productivity of employees, this number could be increased by a number of other factors. The company can become more efficient by using better and more advanced technology than before. The company could also have released a commercially successful product

that they made huge profits off of. However, there is way in which the NIPE could be increased directly from the employees. This could be from employees getting a higher education or having better skill sets in their particular job. Industry sources tell BusinessDay Markets and Intelligence that banks have sought to find ways to manage costs, one of which is a reduction in staff costs. Thus, while the banking sector staff strength has grown by 29.5 percent over the past three years, many of the hired staff have been contract staff. According to National Bureau of Statistics (NBS) data, over the past three years, there has been a 14.6 percent decline in the number of senior staff, an 8.9 percent increase in the junior staff number while the number of contract staff is up 104.8 percent. Data from the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) showed that the percentage of banking sector workers who fall within the casual, contract and outsourced category stands at 65.0 percent. The cumulative total operating expenses of the largest lenders stood at N1.13 trillion in September 2019,

an increase of 11.41 percent. A breakdown of the figure showed they incurred N368.69 billion in staff costs in the period under review. While the proportion of expenses to revenue is shrinking for most banks, total operating expenses have been growing. Access Bank’s total operating expenses were up by 34 percent to N194.2 billion in the period under review, reflecting the impact of the enlarged franchise. A sum of N7 billions of total operating expenses relates to merger cost, comprising of professional fees, regulatory charges and branding. FBN Holdings’ total operating expenses were up 16.59 percent to N215.16 billion in September 2019, as the lender attributed rising costs to increase in regulatory costs and business growth as it adopted a revised AMCON charges. FBN Holdings said regulatory cost constituted 13.2 percent of total operating cost in 9M 19 in the period under review. Fidelity Bank’s operating expenses increased by 14.5 percent to N57.87 billion as at September 2019, driven largely by NDIC|AMCON| Advert which accounted for 60.3 percent of the increase in operating expenses. Interest income has been growing at a single digit due to a sharp drop in yields that started in 2018, but an aggressive foray into retail banking is driving profit. The macroeconomic uncertainty and inability of Federal Government to formulate policies that will help propel the economy to growth has been undermining earnings growth across sectors. The country’s gross domestic product expanded by 1.94 percent in the second quarter of 2019, but the figure is lower than the 2.10 percent expansion in the first quarter, according to a recent data by the NBS. While inflation rate has reduced to 11 percent, it is still below regulatory range of 6 percent and 9 percent.

As Consumer goods stocks fall they become more expensive BALA AUGIE

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t’s a Paradox only the stock market can conjure. Shares of consumer goods firms trading on the Nigerian Stock Exchange (NSE) have been in a freefall for a while. Despite this they keep getting more expensive for potential buyers as earnings slide. Investors have lost confidence in the Fast Moving Consumable Goods (FMCG) Industry as compa-

nies’ stocks continue to be beaten down, but a rebound in consumer spending could invigorate tepid earnings. For close to a decade, firms were recording double digit revenue and profit growth and investors were willing to price in the growth in the valuation. However, a precipitous drop in the price of crude oil prices in mid-2014 that tipped the country into its first recession in 25 years stoked a severe dollar scarcity that

hindered retail and manufacturers from importing raw materials and equipment to produce goods. While the introduction of a new foreign exchange policy in 2017 and a hike in key products added impetus to earnings in 2017/2018 financial year, the euphoria among shareholders was cut short by macroeconomic uncertainties. Since the start of 2019, profit of companies has been shrinking, as analysts fret that earnings could go up in flames.

PZ Cussons Nigeria Plc, the maker of Lipton Tea, Imperial Leather Soap, is trading at a price to earnings ratios of 96.80 times, while shares closed at N5.50 on Friday as at 2:00 pm Lagos. Its shares price was at an all-time high of N35 as of June 12th of 2015. Honeywell’s is trading at multiplies of 133.95 times earnings, while its shares which closed at N3.98

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SHORT TAKES $2bn Dangote Group and Togo have agreed on a $2bn deal to develop fertilizer processing in the phosphaterich country, both parties announced Friday, with the industrial giant also signing a deal to build a $60 million cement factory in capital city, Lome. It is unclear what contributions will come from either party but experts believe the deal would position Dangote as a top player in West Africa’s fertilizer market. The deal will see Dangote help Togo mine and process over two billion tonnes of phosphate which would have otherwise been exported in raw form.

3.7% Gold dropped 3.7 percent last week to $1,462.5 on the spot market Friday, delivering its worst weekly performance in three years, as the United States and China, both world largest economies, hinted on a temporary deal to roll back tariffs, de-escalating tension. JPMorgan Chase has become pessimistic on gold, turning underweight from a previous overweight position while peer, Citigroup is no longer bullish on gold.

N3bn C&I Leasing Plc last week notified its shareholders, stakeholders, the Nigerian Stock Exchange (NSE) and the general public, that the Company has obtained an approval from the Securities Exchange Commission (SEC) to conduct the signing ceremony with regards to the proposed Rights Issue of 539,003,333 ordinary shares of 50kobo each at N6 per share.

Continues on page 38

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

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

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Bond investors win as CBN OMO ban push investors to fixed income market IFEANYI JOHN

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he decision by the Central Bank of Nigeria (CBN) to ban non-bank institutions from the Open Market Operations (OMO) auctions in both primary and secondary market has triggered a liquidity squeeze in the treasury bill market that has send treasury yields higher in the past week. While treasury yields averaged 12% in the week before the ban, treasury yields have now moved one percentage point higher to 13% in the past week as price discovery has become more difficult in the OMO market with limited participants. The OMO ban means that only Deposit Money Banks (DMBs) and Foreign Portfolio Investors (FPIs)

can participate in OMOs, while everyone else, including non-bank financial institutions, will have to shift focus to T-bills and other investment options. It appears individuals and

non-bank institutions who were prevented from participating in the OMO market have been turning their sight to fixed income market. Average bond yields fell from 14% to 13% in the past week

as bond prices rallied off the back of increased activity in the fixed income space. “We expected to see bond yields drop in response to increased activity in the fixed income market. Money has

to flow somewhere and if you stop it going into the treasury bill market, investors will go for the next best thing which the long-dated bills,” said Dr. Tochukwu Okafor, Lecturer in Banking and Finance at Covenant University. About N1.2 trillion in OMO bills owned by non-bank institutions and individuals will fall due over the next two months and will not be rolled over due to the ban. This then means that we could see over N1trillion flow into the fixed income market over the next two months, sending bond yields even lower. “I think we might see bond yields trading around 11.5%-12% towards yearend as the big rush into the fixed income market sends bond prices higher. The big winners from this decision may be the bond investors who will be enjoying a double

blessing of higher yields and higher bond prices. Suddenly bonds have become the best place to be in the market,” Okafor added. Analysts had earlier forecasted that investors may consider returning to the stock market due to the OMO ban. The All Share Index closed the week higher, returning 0.1% week on week growth. This halted a 5-week losing streak in the market for investors. “Investors may not necessarily be rotating asset class from treasury bills to stocks here. It may just be a case of stocks being repriced higher as bond yields decline. I wouldn’t pay too much attention to the stock market, it is not really a reasonable alternative for a risk shy investor who you will typically see in the OMO market,” Okafor told BusinessDay.

Naira devaluation conversation resurfaces as experts forecast lower crude oil price in 2020 IFEANYI JOHN

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fter enjoying 3 years of relative stability, Nigerian Naira may suddenly be under pressure again as weaker crude oil prices and declining foreign external reserves have increased the probability that a currency devaluation may occur in the first half of 2020. The size of Nigeria’s foreign reserves which is positively related to the stability of Naira has been shrinking for the last few months. Since July, Nigeria’s foreign external reserves has dropped by around $5 billion in less than 4 months. “I think the decline we see in the foreign reserves today is a sign that the Central Bank of Nigeria has been defending the currency for a while. We have long said that Naira is overvalued and should be depreciated by at least 30% from the official exchange rate of N305. We are finally only able to see the pace of decrease in the foreign external reserves because the price of crude oil has been declining for months,” said Jeremiah Ejemeyovwi, Lecturer in Economics department at Covenant University.

Crude oil prices have declined by around 11.4% over the last 6 months, falling from as high as $70 in May to $62 as at market close on Friday. Crude oil price even fell below Nigeria’s 2019 oil price benchmark of $60 in August and has traded around the $56-$62 band for most of the period since excluding the week in which the Saudi Refinery was bombed. The U.S. Energy Information Administration (EIA) forecasts lower crude oil prices next year as global supply is expected to increase by

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around 2million barrels per day (mbpd), growing from around an average daily production 100mbdp in 2019 to an average daily production of 102mbpd in 2020. This greater crude oil production is expected to reduce the market price for crude oil as oil demand cools due to weaker global economic growth. “Naira stability is heavily hinged on crude oil prices. Depending on the direction of crude oil prices, Naira can either be due for a devaluation for it can remain very stable. Weaker crude

oil price is always going to be a concern for us in 2020 especially with the fact that the government is preparing to spend more than N10 trillion to fund its budget next year. If oil prices are weaker, the repercussion on the currency can be very steep. We can’t put off the possibility of a devaluation next year even if oil prices remain stable. Naira has been overvalued for some time now and you just can’t defend an unreasonable peg forever,” said Obinna Uzoma, chief economist at EUA Intelligence.

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As Consumer goods stocks fall ... Continued from Page 38 on May 2015, now trades at N0.98. Unilever’s is trading at a price to earnings of 42.50 times, while its shares closed at N19.60 on Friday, but the highest it closed was at N62.20. Nigerian Breweries’ has a price to earnings ratio of 21.70 times, as it shares closed at N46.50 as of Friday, this compares to N191 it traded in August 2017. Nestle Nigeria has a price to earnings ratio of 18.47 times, while its shares closed at N1150 as of Friday. It closed at N1615 April 2017. Cadbury Nigeria is trading at 12.90 times earnings, while its shares closed at N9 as of Friday. It closed at N46.63 in August of 2014. Flour Mills Nigeria has a price to earnings ratio of 11.82 times earnings, while it shares closed at N22.50 as of Friday. However, Dangote Sugar’s stocks are attractive amid a beleaguered industry as it trades at 6.23 times earnings. Analysts say there has to @Businessdayng

be a recovery in earnings growth for people to have confidence in the industry. The price to earnings (P/E) multiples shows earnings have collapsed. The earnings growth must be very low, according Wale Okunrinboye, Head of Investment Research at Sigma Pensions. The border closure by Federal Government has hindered companies from shipping their goods out and out of the country, as a proposed hike in consumption taxes are expected to damp consumer wallets. This means the prognosis are negative, and shareholders may not receive bumper divined as companies are facing cash-flow crises. With margins under pressure, and inability of firms to further pass on rising costs to consumer in form of higher prices, it will take the donkey passing through the eye of the needle for some of them to break even.


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abujacitybusiness Comprehensive coverage of Nation’s capital

MFF Foundation Moves to End Housing Deficit in FCT Solomon Ayado, Abuja

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L - R: Sunny Anene, group executive director , United Capital Plc, Abike Dabiri- Erewa, chairman Nigerians in Diaspora Commission, Peter Ashade, group chief executive officer United Capital and Odiri Oginni, MD United Capital Asset Management during the 2019 Nigeria Diaspora Investment Summit in Abuja. picture by TUNDE ADENIYI.

CTA threatens to revoke underdeveped plots James Kwen, Abuja

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he Federal C a p i t a l Te rritory (FCT) Minister of State, Ramatu Tijjani-Aliyu has threatened that undeveloped plots in all the resettlement sites may stand the risk of revocation to pave way f o r s p e e d y d e ve l opment in various sites across the Territory. Aliyu however, assured that the FCT Administration will not jettisoned the Resettlement Scheme, despite seemingly challenges being faced, stressing that the vision of

President Muhammadu Bahari’s administration is to embark on completion of all abandoned and ongoing projects. The FCT Minister of State gave this threat at Shere Galuwyi Resettlement site while on tour of facilities in Bwari Area of the Territory, just as she called on allottees to commence development. Also, the Minister has directed the Satellite Towns Development Department, (STDD), to evolve measures that would fast track complet i o n o f Mp a p e, Sh e re Galuwyi road project.

She affirmed that the Mpape, Shere and Galuw y i road was one of the major satellite roads that if completed would boost the economic life of Bwari residents and FCT as a whole, while regretting that the project that had started in 2 0 0 6 , ha s n o t re a c h e d appreciable stage. According to her, the marching order on the 19 kilometer road was in line with President Muhammadu Buhari led administration’s determination to deliver dividends of democracy to the people including residents of the Territory.

The Minister directed Directors of Resettlement Department and Satellite Towns Development Department, to synergize and come up with processes that would provide the enabling environment for the people to move in. “All the p e ople that have allocations in Galuwyi should hesten up work on them, by doing so more developmental projects will come. But if they are having some challenges they should channel them to us. Economic life of these people that will stay in this place must be taken into consideration

private Housing Sector Developer, the Millard Fuller Foundation (MFF) has employed alternative measures to end the housing deficit in the Federal Capital territory. Housing and accommodation is a major challenge faced by residents of the FCT as many people live in suburbs of the territory due to inability to afford houses in the city center. The Centre for Affordable Housing Finance in Africa (CAHFA) has so far found houses built by the Millard Fuller Foundation to be the lowest-priced homes by a private sector developer in Africa. Alternatively, one of the lowest priced houses developed by the Millard Fuller Foundation was commissoned at the GrandLuvu Estate, situated in Luvu-Madaki, Masaka community of the FCT-Abuja. The houses, funded by Reall in 2016 were executed in estate development initiative featuring 1-bedroom, 32sqm homes with a sales price of $8040 each. According to Chief Executive Officer of MFF, Sam Odia, in 2018, the Family Homes Fund, an initiative of the federal government of Nigeria bulk-purchased

Abuja newspaper distributors hail FCT Minister’s reappointment James Kwen, Abuja

Group tasks FG on adequate budgetary allocation for healthcare financing James Kwen, Abuja

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he Federal Government has been urged to make adequate budgetary allocations to healthcare for proper financing so as to improve the sector and help address health challenges in the country. Romeo Ode, the African Representative o f No r l a n d I n d u s t r i a l Groups who made the call during a seminar and empowerment programme held in Abuja, said adequate utilization

of available funds by the government would help to improve the health sector and raise the standards of lives of Nigerians. According to the Company’s African Representative, healthcare financing remained the solution to functional health system in the country and called on Nigerians to key into the Norland empowerment programme and products for healthy living. Ode noted that some Federal Government funded hospitals in the country have insufficient machines to treat cancer, in spite of the apparent www.businessday.ng

increase in the number of Nigerians down with the disease. “Norland is a health care revolution that deals with different kinds of health products and we have products that can take care of degenerating diseases that can only be managed but not cured. “We are planning to build our company, hospitals and hotels in Nigeria so that a lot of people can be employed through Norland”, he said. Ode recommended that there should be nondiscrimination of individuals seeking medical care

and transparency in the availability of healthcare information to the public. He also tasked youths in the country to acquire adequate skills and avoid all forms of vices to be self reliant for the development of the country. “The youths of every economy are the manpower of the economy and if our youths are fully engaged the society will be crime free. We have a lot of potentials and natural resources in this countr y but yet we are still poor, if we engage the youths Nigeria will be better”, Ode state.

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400 completed units for resale to civil servants and low-income earners in Nigeria through an affordable long-term mortgage arrangement. He said with over 700 homes built by MFF, the foundation is determined to deliver affordable homes not just in the FCT but for all Nigerians in need through collaborative partnerships with individuals and housing developing organisations. Odia said, “we are pleased to have been recognised by the Center for Affordable Housing Finance as builders of the most affordable homes in Africa. With the rising housing deficit in Nigeria, the need for truly affordable homes cannot be over emphasised. Our desire is to further drive down the cost of our houses in order to accommodate the low-income earners who are in dire need of shelter,” he stated. The Centre for Affordable Housing Finance in Africa (CAHF) promotes investment in affordable housing and housing finance across Africa and it is funded by several international partners such as UKaid, FSDAfrica, Agence Francaise de Developpement (AFD) and the African Union for Housing Finance respectively.

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ewspaper distributors in the Federal Capital Territory (FCT) have commended the reappointment of the FCT Minister, Muhamad Bello by President Muhammadu Buhari, describing the development as the best thing to happen to the FCT in the last few decades. Leader of Abuja Newspaper Distributors Association, Benji Obute who stated this in Abuja praised the Minister for focusing on the projects that had direct impact on the lives of FCT residents like road constructions, water reticulation projects and even the promotion of agriculture, saying these have helped to make life easier in the FCT. Obute particularly applauded the completion of work on the three major arterial routes into and out of the FCT namely the Umar @Businessdayng

Musa Yar’Adua Expressway otherwase known as the Airport Road, the Kubwa/ Zuba Expressway as well as the Nyanya/Keffi expressway, all of which have helped to free traffnc flow into and out of the city and reduced the loss of many hour on the roads. He also commended the completion of several connecting bridges, tangents and loops in the FCT, includmg other major road networks that were started by previous administrations, saying these developments have made motoring around the FCT a pleasure. Obute observed that the city centre which used to be a ptethora of open manholes and refuse dumps before the Minister’s first appointment, are now a thing of the past as the stolen manhole covers have all been replaced while the refuse dumps have equally been evacuated


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investment opportunities abounding in the state. T h i s y e a r ’s s u m m i t marks Governor Godwin Obaseki’s third anniversary in office. A cross-section of participants and residents who spoke with journalists said their waiting and participation in the various events so far have been worthwhile, saying the summit, apart from celebrating the governor’s third edition in office, it heralded the various achievements in basic education, healthcare, urban renewal and others sectors of the state’s economy. Major roads and streets in the capital city of Benin now wear new look as branding materials dot the city’s landscape. This year’s Alaghodaro 2019 summit, themed ‘Delivering to the People: The Next L evel,’ hosts investors, g overnment f u n c t i o na r i e s, y o u t h s, women and other players in the state’s bourgeoning private-sector driven economy. A trader in Oba Market, Ring Road, Gabriel Ehiagwina, expressed delight over the new look of Benin City, noting that preparations were ongoing to ensure the new status was maintained at the 2019 summit. “We have been hearing a lot about Alaghodaro 2019 summit on the streets, markets and even on radio and television. The governor is marking his third year in office and we are happy to be celebrating w ith him. Governor Obaseki is someone we are all proud of. My children in school are happy going to school because of the way they are now being taught. It is really surprising. I am so happy,” according to Ehiagwina. Blessing Igbinovia, another trader, said the Obaseki-led administration had done a lot to correct the mistakes of past administrations, especially with the clearing of touts from the streets and restoring sanity to public life. “I am very happy with the government and I am eager to celebrate with the governor. A lot has happened since he came on board. We are better off, I can say that for sure because sanity has returned to the market. People are now really interested in what the government is doing,” she said. Meanwhile, with the

2019 summit coinciding with the Edo Trade Fair 2019, operators of Small and Medium Enterprises (SMEs), light manufacturers and artists in the state are gearing up for an eventful line-up of activities, slated for the two events to make brisk business. A cross-section of SME operators, who spoke with journalists, said the Alaghodaro Summit and the Edo Trade Fair present entrepreneurs and traders an opportunity to showcase their product to a wider audience, expressing appreciation to the state government for opening up the business space in the state. Helen Atekha-Odemwingie, president, Benin Chamber of Commerce, Industry, Mines and Agriculture (BENCCIMA), said SMEs in the state had reached out to the chamber with enquiries on how they can partake in the trade fair, noting that the reception had been overwhelming. “We worked hard to ensure that, in partnership with the state government, we revive the Edo Trade Fa i r. Th e f a i r i s b e i ng held as part of activities lined up for Alaghodaro 2019, held to mark the governor’s third year anniversary. That is why the activities will run concurrently with the summit,” according to Odemwingie. The chamber has been inundated with enquiries by exhibitors and business owners, who want to participate in the Fair, she said, noting, “The fair secretariat has been a beehive of activity as a lot of businesses have expressed interest in participating in the fair. We are making sure everything is set so we can host the crème of Nigeria’s business community at the fair.” Emmanuel Oboh, a businessman in Mission Road axis of Benin City, said the business community in the state was upbeat to witness the revival of the Edo Trade Fair, noting, “A lot of my colleagues are very much elated to learn that the Trade Fair is being revived. We appreciate BENCCIMA and the government for their effort.” A trader, Antonia Efe, said the state government had done a lot to promote entrepreneurship in the state, adding that the fair would present an opportunity for businesses in the state to form alliances and increase productivity. www.businessday.ng

L-R: Noel Dongjur, chief of staff, Plateau State; Lynda Saint Nwafor, chief enterprise business officer, MTN Nigeria; Simon Lalong, governor, Plateau State; Ferdi Moolman, chief executive officer, MTN Nigeria, and Tobechukwu Okigbo, chief corporate relations officer, MTN Nigeria, during a courtesy visit by the Plateau State governor to MTN Nigeria in Lagos. Pic by Pius Okeosisi

New Finance Bill to stimulate start-ups... Continued from page 1

tal Gains Tax Act (CGTA), Customs and Excise Tariff Etc. (Consolidation) Act, and Stamp Duties Act. Companies Income Tax (CIT) Act In the amended Act, Section 9 of the Companies Income Tax (CIT) focuses on charge of tax which was amended to ensure that companies are not taxed twice on the same income stream. The section introduces a specialised framework for securities lending transactions and stimulates activity in the nation’s capital market. The Federal Government earned N358 billion in CIT in the third quarter of 2019, the highest this year and more than twice the average of N169.5 billion per quarter in the first half of the year, according to a recent report by the Central Bank of Nigeria (CBN). Meanwhile, in a bid to synchronis e taxpayers’ banking and tax databases to improve tax compliance and ease of tax administration, the bill requires all companies to provide their Tax Identification Number (TIN) as a precondition for opening a bank account or in the case of an account already opened before the 30th September 2019, such TIN shall be provided by all companies as a precondition for continued operations of their bank accounts. This means henceforth request for Tax Identification Number becomes a prerequisite for opening bank accounts for individuals, while existing account holders must provide their TIN to continue operating their accounts. Section 13 of the CIT focuses on e-commerce platforms and digital econ-

omy. The amended Act expanded the basis for taxing non-resident companies with a significant presence in Nigeria by including digital, electronic services, online adverts & payments and services rendered outside Nigeria to a Nigerian beneficiary – if such trade or business comprises technical, management, consultanc y or professional services outside Nigeria to a person resident in Nigeria. This means foreign ecommerce platforms carrying out business transactions to Nigerians would also be taxed to ensure the country earns a fair amount of revenue from such activities. To ensure that insurance companies are taxed in a fair and equitable manner relative to other companies operating in other sectors of the economy, section 16 of the CIT removes double tax provision and recognises regulatory cost that will be incurred by such companies in compliance with the conditions imposed by the insurance regulator. This includes, among others, provision for outstanding claims. It a l s o i n c l u d e s t h e restriction of deductible claims and outgoings to percentage of total premium, restriction of period to carry forward tax losses to four years, special punitive deemed profit basis for minimum tax computation, restriction of deductible unexpired risk and introduction of time-apportionment basis. This means insurance companies can now carry forward tax losses indefinitely, deduct reserve for unexpired risks on time apportionment bases while special minimum

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tax for insurance has been abolished. Also, to address the excess dividend tax rules which currently result in excess double taxation for corporates, Section 19 of the Act exempted tax on dividends paid out of retained earnings that have suffered tax under CITA, PPTA and CGTA. This would help eliminate double taxation risks by exempting dividends paid out on retained earnings that have suffered tax under CITA , PP TA and CGTA, profits or income of a company regarded as franked investment, distributions made by a real estate investment company to its shareholders from rental income, and dividend income received on behalf of shareholders. To further boost investment and remove cases of double taxation, Section 29 addresses loopholes that currently exist under the commencement and cessation period – the beginning and the ending of the reporting period. The amended Act deletes the old basis for computing basis periods for new businesses and ceasing periods. It further introduces a simplified “actual year basis” for computing basis period during commencement and cessation periods. According to the Act, w he re a c ompa ny p ermanently ceases to carry on a trade or business in an accounting period, its assessable profit shall be the amount of the profits from the beginning of the accounting period to the date of cessation and the tax shall be payable within six months from the date of cessation. Section 33 of the Act focuses on payment of minimum tax which would @Businessdayng

help promote fiscal equity. Small businesses earning lower than N25 million turnover in any tax year will also benefit from the amendment as any business in that category will be exempted from Companies Income Tax which is 30 percent of the profit earned by registered companies in Nigeria. Similarly, medium-size companies will also have their bites of the government’s tax largesse aimed at helping businesses grow. Companies in this category with revenue running between N25 million and N100 million in any tax year will be required to pay a company income tax rate of 20 percent. This means non-resident companies will now pay minimum tax. To create incentives for early payment of tax under the self-assessment framework, Section 77 of the Act proposes a 2 percent and 1 percent bonus for a medium-sized and a large firm, respectively, where CIT liability is paid before 90 days to the due date of filing/payment. The third schedule of the CIT Act addresses interest on foreign loans with restriction on tax exemption on foreign loans. The seventh schedule introduces a thin capitalisation rule of 30 percent of EBITDA for interest deductibility. Any excess deductions can be carried forward for five years. Value Added Tax (VAT) Act A 50 percent upward review was proposed for the nation’s VAT rate to 7.5 percent from the current 5 percent, while the government introduced an exemption from VAT registration and filing obligations for companies with an annual turnover of N25 million or less. The definition of goods

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New Finance Bill to stimulate ... Continued from page 42

R-L: Adelana Ogunjirin, team lead, agric finance and export, Heritage Bank; Hadiza Gado; Abba Bello, managing director /chief executive, Nigeria Export-Import Bank (NEXIM ); Bose Owolabi, managing director, Dukia Gold, and Tunde Fagbemi, during NCIS Summit 2019–Mining Master Class held at Transcorp Hotel Abuja.

Nigeria’s bleak oil-dependent future may worsen as US-China trade deal stalls STEPHEN ONYEKWELU

… and big global economies contract

raders are betting less on crude oil, this has pulled down oil futures as the United States of America and China’s long-awaited trade deal continues to delay amid rising inventories and slowing growth among the world’s biggest economies. Brent crude, the global benchmark, was down 16 cents, or 0.3 percent, at $62.13 a barrel on Friday after gaining 0.9 percent in the previous session. US West Texas Intermediate (WTI) crude was down 23 cents, or 0.4 percent, at $56.92 a barrel. Third-quarter results show big economies are contract-

ing, which means slowing global economic growth and lower demand for oil. Gross domestic product (GDP) in China, the world’s biggest importer of crude oil, expanded by 6 percent in the third quarter, the weakest growth rate in roughly three decades. A slower economic growth rate in China means demand for oil will also decrease, dragging oil prices down with it. A scenario that means Nigeria, Africa’s biggest exporter of crude oil may experience a sharp drop in its foreign exchange earnings and will consequently have limited capacity to continue defending the naira.

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FG says MSME clinic has strengthened one-stop shop for businesses HARRISON EDEH, Abuja

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inister of State for Industry, Trade and Investment, Mariam Katagum, says the MSMEs clinic under the present administration has strengthened and deepened the one- stop shop for business owners and operators in Nigeria. The minister disclosed this in her address at the 25th edition of the National Micro, Small and Medium Enterprises clinic in Asaba, Delta State. She explained in a statement on Friday that experiences gathered from MSME clinics had been useful towards strengthening and deepening the one-stop shop for MSMEs across the country. She said, “Some of the lessons learnt from previous MSME clinics led by His Excellency the Vice President, include the need for Agencies such as the Standards Organization of Nigeria (SON), Corporate Affairs Commission (CAC) and the National Agency for Food, Drug Administration and Control (NAFDAC) to reduce registration fees and process timelines, which have been successfully implemented by these Agencies.” The minister stated that MSMEs clinics were aimed at creating a platform where en-

terprise challenges were identified and solutions proffered by a multi-disciplinary team of experts from various agencies statutorily saddled with MSMEs development. Katagum reaffirmed, “The MSMEs Clinics is part of the present administration’s specific initiatives that targets support for the MSMEs sector in Nigeria and the Federal Ministry of Industry, Trade and Investment in collaboration with the Office of the Vice President have substantially progressed towards creating the much needed awareness and support for the sector. “The MSMEs is a key component in the Economic Recovery and Growth Plan (ERGP) and the National Enterprise Development Programme (NEDEP), both prioritizing government’s business support initiatives that provide diagnostic and business improvement advice to pre-starts, start-ups, and other existing businesses to help them thrive and grow. “Over the next two days, business owners and operators in the MSMEs space will be engaged by regulators and business advisory experts ranging from entrepreneurship, skill development, finance quality and standards on how to facilitate and grow their businesses and enterprises. www.businessday.ng

Signs of slowing economic growth are also showing up in Germany, Europe’s biggest economy, and in the United States of America, the world’s largest economy. In Germany, the manufacturing sector seems to be stuck in negative territory. The IHS Markit/ BME Germany Manufacturing purchasing managers index (PMI) showed a slight uptick in October to 41.9, up from 41.7 in September, but below market expectations of 42. Anything below 50 is considered a contraction in activity. The number for September was the worst reading since the financial crisis. “Hopes of a return to

growth in Germany in the final quarter have been somewhat dashed,” Phil Smith, an economist at IHS Markit, which produced the PMI data, told Bloomberg. In the US, business equipment declined for a second consecutive month in September. Caterpillar made news when it reported disappointing third-quarter figures and cut its full-year profit forecast. The equipment manufacturer is viewed as somewhat of a proxy for industrial activity. Caterpillar said that its earnings would take a hit as major companies hold off on equipment purchases due to concerns about the health of the global economy.

WIMBIZ conference: Glo harps on women empowerment for economic development Jumoke Akiyode-Lawanson

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lobacom, a leading telecoms focused on digital transformation, says women empowerment remains a major requirement for total development of the family unit and every economic sector. The company stated this on Thursday in a statement to coincide with the opening of this year’s edition of the annual conference of the Women in Management, Business and Public Service (WIMBIZ) held at the Eko Hotel and Suites, Victoria Island, Lagos. Globacom, a major sponsor of the conference, was represented at the women conference by a team of five senior female professionals drawn from various departments of the company. The company reiterated that women empowerment would lift the family unit out of subsistence level of living and make women big players in the economy. According to Globacom, “When you empower a woman, you improve the overall wellbeing of the family unit, as a woman plays a pivotal role in the stability of a home.”

The company expressed its delight at being the major sponsor of WIMBIZ 2019 with the theme ‘Shaping the future: Strategising to win,’ saying that it was convinced the platform would offer Nigerian women the conducive environment to brainstorm on strategies needed to unleash the latent ability in them to make something great of their future. In her welcome address at the opening ceremony of the conference, Olubunmi Aboderin-Talabi, the Chairperson, WIMBIZ executive council, said WIMBIZ is a nonprofit organisation formed to be a platform for professional women in careers or running their own businesses. She expressed confidence that the conference would not only give participants the inspiration they needed to gather their strength and forge ahead, but also the requisite techniques. The conference opening session was chaired by Rose Ukeje, former Federal Court Chief Judge (2001 to 2008), and was graced by women and men from all walks of life, including Fred Swanikerthe Founder and CEO of Africa Leadership Group, Fred Swaniker.

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was expanded to cover intangible products, property and assets but excluding land, among others. A definition for services was also introduced. Furthermore, the VAT exemption list was expanded to include some other basic food items – defined as agro and aqua based staple food – such as additives, bread, cereals, cooking oils, culinary herbs, fish of all kinds (other than ornamented), flour and starch, fruits, live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables, and water. Other items introduced to the VAT list are locally manufactured sanitary towels, tuition (primary, secondary and tertiary education), and services rendered by microfinance banks. The increase in VAT rate, which was to enable the government to generate additional revenues to fund its budget, would translate to increase in the prices of vatable goods. While this could impact negatively on sales and cost of production of companies, the exemption of the companies with an annual turnover of N25 million or less would mitigate the effect of VAT policy review on the masses and motivate Small and Medium scale Enterprises to grow, thereby contributing to the aggregate economic activities of the nation. Similarly, the introduction of threshold would also align local VAT laws with international best practice and protect the most vulnerable to the exposure to VAT. Furthermore, the controversy over the definition of “basic food items” which has led to some court cases with the FIRS would be settled. The inclusion of fresh items to the exemption list would mean low-income Nigerians can purchase more items without paying VAT. Petroleum Profit Tax (PPT) Section 60 of the Act makes provision for the deletion of exemption for dividend paid out of petroleum profits. This means dividend from petroleum would be subjected to withholding tax. Personal Income Tax Personal relief and relief for children and dependent relatives will be deleted from the Personal Income Tax. Currently, individuals in Nigeria enjoy personal tax relief of N2,500 for each child up to a maximum of four children (at most 16 years), and a sum of N2,000 for each dependent relative up to a maximum of two who are widowed

or infirmed or incapacitated by old age. But with the planned amendment, the N2,500 and N2,000 tax reliefs for each child and dependent adult would cease to exist. Also, the government seeks to ensure every bank user has tax identification number to further enhance tax collection. The bill requires both intending and existing bank users to provide Tax Identification Number for banking transactions, creating a room for tax authorities to track tax evaders and improve tax receipts. Capital Gains Tax (CGT) Act Section 50 of the CGT Act gives clarity on the circumstances under which CGT will apply to transfer of assets during business reorganisation. Also, Section 52 of the Act stipulates compensation for loss of employment below N10m to be exempted from CGT. Customs and Excise Tariff On customs and excise tariff, an amendment is sought for the fifth Schedule to the Customs and Excise Tariff Etc. (Consolidation) Act to include “goods imported” into Nigeria in order to incentivise local production. As a result of this, imported goods will be liable to excise duties, thereby getting rid of undue advantage the items have over locally made products. This could discourage importation of some goods into the country, a move that could reduce the pressure in the country’s foreign exchange market. Stamp Duties The government clarified on the mode of stamping instruments. It noted that an impressed pattern, marked by means of an engraved, inked block dye as an adhesive stamp, an electronic stamp, or an electronic acknowledgment for denoting the duty would be regarded as a stamp. This is expected to formalise the way banks charge stamp duty and bolster government revenue. Furthermore, the government introduced electronic payment option for stamp duty and also increased the stamp duty threshold to N10,000. This implies a one-off levy of N50 will apply to bank transfers on an amount from N10,000 and above. A bank customer will not be charged stamp duty for transferring funds between his or her accounts in the same bank, while exemption shall be granted for share transfers and payments made in a Regulated Securities Lending transaction.

Obaseki sets up special team to combat cultism

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do State governor, Godwin Obaseki, has set up a special team to review and curb the incidence of cultism in the state. The governor disclosed this while addressing journalists after the monthly state security meeting held at Government House in Benin City, the Edo State capital. Obaseki said the special team would ensure that the law passed on cultism in the state was activated while persons found culpable of cult-related crime would be prosecuted, @Businessdayng

noting, “Our goal is to make sure that cases of cultism are properly dealt with. We will ensure that we have conviction particularly in our institutions of higher learning.” The governor noted that the review of the incidence of crime in the state for the month of October showed that kidnapping was on the increase, adding that the cases of kidnapping are reviewed with a view to improving local and state government strategies in combatting the crime.


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Goddy Jidenma Foundation to hold 2019 bi-annual lecture in Lagos DESMOND OKON

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n order to drive the conversation on critical national issues, Goddy Jidenma Foundation will hold the sixth edition of its bi-annual lecture at the Nigerian Institute of International Affairs (NIIA), Victoria Island, Lagos, on November 26. According to a statement made available to BusinessDay, the lecture is part of the Foundation’s objectives to promote thought leadership through its bi-annual public lecture series. Like always, this year’s lecture will focus on engaging the Nigerian public on issues of national and continental relevance, and former director of Kenyan Anti-Corruption Commission and Kenya School of Laws, Patrick Loch Otieno Lumumba will facilitate the lecture as the guest lecturer. Lumumba is expected to bring his anti-corruption crusade experience to bear on issues stemming from corruption that are holding down growth in Africa when he speaks on the lecture topic: ‘Governance, Insecurity, Poverty and Economic Development: Whither Africa?’ BusinessDay also learns that the event will be chaired by Joy Ogwu, former minister of foreign affairs and former permanent representative of Nigeria at the United Nations. “Goddy Jidenma Foundation is a not-for-profit, nongovernmental organization that was established in 2007

in the memory of Arc Goddy Jidenma, who died in 2006. He was a selfless leader who made indelible impacts in the lives of the people around him particularly among the disadvantaged. “He achieved this through philanthropic acts that helped to uplift and improve the living conditions of widows, orphans, aged spinsters amongst others,” the statement reads. Since the foundation held its first lecture in 2009 with a topical lecture by the renowned constitutional lawyer, Ben Nwabueze, on ‘Strengthening the Foundations and Institutions of Democracy in Africa’, the foundation has been successful in contributing to national development though significantly engaging lectures. Relevant issues of national import have been addressed through topics like “Democracy and the Politics of Petroleum: comparative African Perspectives”, “Leadership, Responsibility & Good Governance”, and “The Challenge of Economic Growth in Nigeria” Key political players, thought leaders as well as captains of industries are expected to be present at this year’s event. “Attendance at the Lecture is free and the Nigerian public is invited to this Lecture which is expected to be highly informative and thought provoking and contribute to this year’s discourse which is of great national and continental relevance,” the statement further reads.

Immigration Service denies knowledge of breach of border security Stella Enenche, Abuja

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he Nigeria Immigration Service (NIS) has denied knowledge of alleged security breach within the country’s borders. This was as the NIS said its involvement in the ongoing Operation Swift Response was to ensure regular human mobility, against the backdrop of closure of land border. BusinessDay recalls that the Federal Government had, sometime in August this year, announced the closure of land borders to check illegal cross-border activities such as drug trafficking, smuggling of goods and arms, among others. Apart from the NIS, the Nigerian Customs Service (NCS), Department of State Services, and the National Intelligence Agenc y are among agencies involved in the “operation swift response.” In the face of the operation, however, there are concerns that some people were designing new smuggling strategies to enter the country with foreign goods. Inve s t igat i o n f u r t h e r s h ow e d t hat s o m e m e n

along the border collect money from those businessmen, with a view to facilitating their illicit activities. Speaking on allegations of smuggling in relation to the border closure, the NIS maintained that it was collaborating with the Customs and others to enforce the presidential directive. Spokesperson for the s e r v i c e, S u n d ay Ja m e s, who stated this in a telephone conversation with our correspondent, said: “We (NIS) don’t involve ou r s e l v e s i n s mu g g l i ng activities. We deal with human mobility. “Our collaboration with the Nigerian Customs is based on the directive of the federal government that there should be an operation called operation swift response which i s b e e n c o o rd i nat e d by the office of the National Security Adviser(NSA)and that is why I say, I am not aware of any other thing than the operation that is going on. “The lead agencies are the Nigerian customs and the Immigration. Others are in support like the military, DSS and the NIA. www.businessday.ng

L-R: Jude Chukwuemeka, divisional head trading business, Nigerian Stock Exchange (NSE); Mobolanle Adesanya, MD/CEO, First Central Credit Bureau; Jameelah Sharrieff-Ayedun, MD/CEO, CreditRegistry and chairman Credit Bureau Association of Nigeria (CBAN), and Tunde Popoola, MD/CEO, CRC Credit Bureau, at the Nigerian Stock Exchange gong ringing closing ceremony in Lagos.

UBA assures of innovative service to boost trade, financial inclusion in Africa TEMITAYO AYETOTO

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nited Bank for Africa (UBA) plc has assured its customers that it is dedicated to facilitating intra-African trade and financial inclusion, by providing premium services through consistent innovation and relentless investment in technology. This, the bank said, is targeted at spurring financial inclusion on the continent. Chiugo Ndubisi, the bank’s group executive, transformation and resources, made this disclosure during the Africa Day Celebration at the 2019 Lagos International Trade Fair. “As Africa’s global bank, we understand the importance of intra-African trade. Therefore, we have put services in place to support this. With Africash, our intra-African money transfer services, customers can easily move money around for trade and investment within the continent,” Ndubisi said at the event which had the theme ‘Boosting Intra-Africa Trade: Institutions, Finance and Technology’.

“More importantly, financial institutions like the UBA have taken up the Financial Inclusion challenge, using different digital channels to expand access to financial services,” he said. Explaining UBA’s role in service delivery to its customers, Ndubisi said, “In our quest to make every UBA branch a home branch to our customers, regardless of the African country they come from, we introduced UBAConnect, a service that has effectively supported trade in the Central African Economic and MonetaryCommunity(CEMAC) region. We have recorded massive success in this regard.” Ndubisi added that UBA customers in the CEMAC region - Gabon, Cameroon, the Central African Republic (CAR), Chad, the Republic of the Congo and Equatorial Guinea - can enjoy instant access to their accounts in the bank’s branches anywhere within the region, explaining that these services are in line with the bank’s belief that greater access to financial services can contribute to increase in the productivity of businesses, especially Micro,

Small and Medium Scale Enterprises (MSMEs) – engines of economic growth on the continent. “At UBA, we are excited about the possibilities the future holds for intra-African trade, with the required number of countries ratifying the African Continental Free Trade Area Agreement (AfCFTA). The agreement will create a single African market of more than a billion consumers with a total GDP of over $3 trillion. UBA is well positioned to support individuals and businesses when AfCFTA comes into force,” he noted. On his part, Ruwase while addressing the participants and business owners said the African Continental Free Trade Agreement (AfCFTA) is a welcome development, adding that almost all African nations have shown interest in the agreement. Ruwase said, “We believe the pact will further boost trade in a continent with a population of 1.2 billion and market size of about U$2.5 trillion, as it allows members to specialize in their areas of comparative advantage.”

“However, it is important to note that AfCFTA may not work out as planned if members fail to reform their business environment, diversify their exports base, fix their infrastructural problems, address regulatory challenges as well as institutional constraints, and map out strategies to improve their economic competitiveness, he noted. A high point of the event was the visit to UBA branch by Ndubisi, were a first- hand experience of UBA’s self- printing debit card machine was carried out. While at the branch it was a bee-hive of activity as tons of customers gathered in their numbers to enjoy the unique service recently introduced by the bank. The new self-printing debit card machine allows for seamless business transactions with great value to customers and businesses. The Product is Self Service Mobile Kiosk designed to give customers control of the following Banking transactions as they can initiate and complete the following requests/transactions with little or no interaction with Bank staff.

Osinbajo, Okowa say MSMEs will fast-track economic growth Francis Sadhere, Warri

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ice President Yemi Osinbajo and Delta State governor, Ifeanyi Okowa, last week said Micro, Small and Medium Scale Enterprises (MSMEs) were the fastest ways of growing the economies of states and the nation. They made their positions known in Asaba at the 25th edition of MSMEs Clinic organised by the Delta State government in collaboration with Office of the Vice President. Osinbajo commended Okowa’s administration for its commitment to growing MSMEs, noting that efforts of the state government were in line with President Muham-

madu Buhari’s resolve to make businesses work in Nigeria. “The Federal Government is determined to create a Nigeria where small businesses are nurtured and encouraged to thrive and prosper. Nigeria is an economy driven largely by small businesses and it is clear that there can be no real national growth and development if we do not ensure that our small businesses are developed. “If every small business in Nigeria add just one more employee, the gap that single action will fill in our unemployment figures will be much larger than if one single conglomerate were to employ 10,000 people. “So, we really believe that the MSMEs are the engine of

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growth in our country and we are therefore, fully committed to ensure that as a government, we will remove all the obstacles that is standing in the way of the MSMEs so that they can have the opportunity to thrive and grow,” he said. The vice president added that efforts were on to ensure single-digit interest rates for MSMEs, emphasising that the clinic afforded the MSME operators the opportunity to present their challenges to relevant government agencies. Okowa had in an address said “MSMEs have been globally recognised as engines of rapid economic growth, wealth creation, employment generation and social inclusion. @Businessdayng

“They are also known as incubators of innovation while providing opportunities for increased participation of women in the economy. “Defined as enterprises with less than 10 employed persons and annual turnover of less than N20 million, MSMEs are more feasible and attractive to the mass of people seeking entrepreneurship, self-employment, livelihood incomes and economic participation.” He commended the vice president for supporting things that had to do with Delta, adding that his administration would always identify with any programme or concept that focused on nurturing, supporting and promoting the growth of MSMEs.


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news SEC says FMDQ brings healthy competition in capital market Iheanyi Nwachukwu

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cting director-general of the Securities and Exchange Commission (SEC) Mary Uduk has commended FMDQ Securities Exchange plc on its achievements so far, saying its entry has brought about healthy competition in the capital market. Uduk, who spoke with journalists at the Gold Awards and Dinner organised by FMDQ in Lagos, weekend, said FMDQ had increased the tempo of activities in the capital market. According to Uduk, “They have created more activities in the market. A lot of areas that seemed dormant before now like the bond market has seen a lot of activities because of the active trading on FMDQ platform. They have done very well since they started six years ago.” She disclosed that they had also partnered the regulator in several areas of training like derivatives among others. “Since their entry, there has been competition and we are excited about the competition. Investors and operators now have a choice of where to go and that is a good one for the market,” she said. While commending FMDQ for attracting capital to the market, she disclosed that the

Commission also has several initiatives in place to attract both local and foreign investors to the capital market. For instance, she said, an important goal of the Capital Market Master Plan (2015-2025) is to transform the Nigerian capital market, making it competitive, while contributing its quota to developing the nation through funds mobilization. The Plan is hinged on four strategic themes, namely; Contribution to National Economy, Competitiveness, Market Structure and Regulation & Oversight. In contributing to the National Economy, she said the SEC, in conjunction with the market, has worked on initiatives that simplified the process of raising capital and reduced time to market. The recent efforts towards developing the Nigerian commodities ecosystem and the Fintech space are also important contributions to the Nigerian economy. “In order to enhance market Competitiveness, the minimum capital requirements for capital market operators were raised, transaction costs have been reduced for both equities and fixed income segment of the market, a robust complaint management framework was introduced and various other initiatives are being implemented to enhance

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liquidity of the Nigerian capital market. “Towards improving the Market Structure, minimum operating standards for all market operators have been implemented. Some of the ongoing initiatives such as the e-dividend, multiple subscription, direct cash settlement and electronic distribution of companies’ annual reports are geared towards achieving an innovative market structure. On Regulation and Oversight, the Acting DG said the SEC has undertaken numerous initiatives to protect the interest of investors. A National Investor Protection Fund has been established, a Risk Based Supervision Framework is being implemented with focus on Systemically Important Financial Institutions (SIFI) and regulatory actions are often taken against illegal operators as well as violators of the corporate governance code. According to Uduk, “Therefore, not only do we need capital inflow, we also have the market and the potential to optimise such flows. As we continue to improve on our macroeconomic, business and regulatory environment, we look forward to being able to retain more domestic capital and attract necessary foreign capital.”

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Osinbajo performs ground-breaking ceremony of Kajola wagon assembly plant … says rail sector holds key to commerce in Nigeria MIKE OCHONMA & STELLA ENENCHE

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nother landmark in Nigeria’s quest to revamp the rail transportation sector and restore the lost glory of the country’s rail sector was at the weekend recorded when Vice President Yemi Osinbajo performed the ground-breaking ceremony of the Kajola Wagon Assembly Plant in Kajola, Ogun State. The journey to last Saturday’s historic event is coming more than two years after the ground breaking ceremony performed by the Vice President on March 17, 2017, perform the ground breaking to mark the construction of the Lagos-Ibadan standard gauge railway line, which is the second segment of the Lagos-Kano standard gauge railway system with an extension to the Lagos port complex, Apapa. The event, which took off by 11am at the Ebute-Metta railway terminal, Lagos was attended by dignitaries cutting across the spectrum of the society including state governors, captains of industry and stakeholders in the transportation sector with the minister of transportation, Chibuike Amaechi, as the chief host. In his address, Vice President Osinbajo said the plant, which is a private investment to be

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undertaken by Messers CCECC, is central in the production of rolling stock needed for the railway modernisation programme being implemented by this administration. While describing ceremony as not just another event, he said it was a historic turning point. According to Osinbajo, ‘’For us, the railway is not only an alternative and comfortable mode of travel, it holds the master key to transforming commerce in Nigeria and across the continent. By linking our ports to rail lines and now, building the rolling stock locally, import and export business within, into and out of Africa’s largest market will never be the same.’’ When completed, it is expected that the plant would produce some parts of the wagons for the Lagos-Ibadan and Abuja-Kaduna rail lines, but also for the central rail lines and to satisfy the needs of other rail operators within the West-African sub-region. The country’s number two citizen said that citing of the plant in the country and the commitment to hiring Nigerians and Nigerian businesses affirms the President Buhari’s directives in Executive Order 5 on prioritising Nigerians and Nigerian businesses in the innovation, production and procurement

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of engineering projects and services. ‘’I have a message also from the President and this is to CCECC which is that, we expect that you move on very quickly to the next phase of this project which is assembly and construction of coaches and locomotives. This for us will be a significant breakthrough and we look forward to hearing from you as quickly as possible when this will come into operation’’. The plant is expected to offer an important platform for engineers, technicians, artisans and other professionals to gain the specialised skills required for the production and maintenance of rolling stock. This will invariably produce spin-off businesses in the region of operation and across the country wherever rail networks are in existence. The plant is expected to generate about 5,000 direct and indirect jobs. After completing the AbujaKaduna Railway project in July 2016, this administration commenced construction works on the Lagos-Ibadan Railway modernization project in March 2017, following which, we initiated the rehabilitation and completion of the abandoned Itakpe- Ajaokuta-Warri rail line which was started over three decades ago.


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Monday 11 November 2019

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news

Nigeria-Britain Association pledges to strengthen ties Daniel Obi

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igeria-Britain Association formed in 1969 has pledged its support in the strengthening of ties between both countries. Speaking at the association’s 50 years anniversary themed ‘Reconnection: Old Ties New Ways,’ its president, Shola Tinubu, said the association had a major role to play in strengthening the ties that bind UK and Nigeria. “I believe the ties that bind the UK and Nigeria - friendship, cultural, linguistic, historical connections - will only get stronger not weaker in the next 50 years and we as an Association has a major role to play,” he said. Tinubu listed the association’s key objectives to include encouraging the exchange of culture and building of relationships between Nigeria and Britain; engaging in sponsorship for

social causes and general public good and building working relationships with government, private enterprises and enjoying reputational benefits. The association is also keen to put in place a long-term business plan for growth and expansion, in line with the recently developed Carter Charter, he said, saying this will include expansion of its membership base and development of strategies to increase funding. In her speech, commissioner for tourism, arts and culture, Lagos State, Olufunke Adebolu, advised the association to build on the strength it had established over 50 years ago. One of the old members of the association, Bintan Famotimi, who joined the association 32 years ago, clarified that the membership of the association was not only for Nigerians but other nationals of the Commonwealth.

NCAA notifies pilots, operators of new format to report bird strikes IFEOMA OKEKE

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ollowing the evolution of a new format for Birds/Wildfire strike reporting, Nigerian C i v i l Av i at i o n Au t h o rity (NCAA) has notified pilots, airports/airline o p e rat o r s a n d a i rc ra f t engineers of a change in the reporting format to Birds/Wildlife strike. Bird strikes also known as bird ingestion (for an engine) or bird aircraft strike hazard (BASH) is simply a collision between an airborne animal (most likely a bird) and an aerial vehicle, usually an aircraft, while a wildlife strike is a collusion between a mechanical vehicle (aircraft in this case) and animals on the runway, taxiway. The notification was contained in an advis or y circular w ith reference NCAA/AAS/ BHC/04/006/11/132 dated July 30, 2019, to all airports/airline Operators, pilots and aircraft engi-

neers and was signed by Muhammed Odunowo, the director, Aerodrome and Airspace Standards, for DG NCAA. According to the regulator, the European Coo rd i n a t i n g C e n t re f o r Accidents and Incidents Reporting System (ECCAIRS) Excel-based format will now be used for ICAO Bird Strike Information System (IBIS) reporting. In view of the above and in accordance with the Nigeria Civil Aviation Regulations (Nig. CARs) 2015, Part 12.6.23.2 and Ae ro d ro m e St a n d a rd s Manual (ASM), Section 13.2.4.2, it is therefore mandatory that the above listed stakeholders forward to NCAA, Directorate of Aerodrome and Airspace Standards ( D A A S ) u s i n g t h e a ttached IBIS-ECCAIRS f o r m f o r a l l B i rd a n d Wildlife strikes at aerodromes on or before thirty (30) days of occurrence for the submission.

Court orders mean nothing today — Sheu Sani Ibrahim Adeyemi

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ormer senator of the National Assembly, Sheu Sani, on Thursday said the present day government had no regard for law and order. He said this while delivering a speech in a symposium tagged: Keeping Power in Check, which took place at NECA House, Ikaja, Lagos. The event, organised by the African Centre for Media Information Literacy, underscored a conversation on the shrinking media and civic space in Nigeria.

The senator however lamented the perpetual abuse of power in the present day government, noting that those who were in the forefront of fighting against authoritarianism were now the perpetrators of such. “Political party as it is today cannot defend democracy. And now the monster has returned. Court orders mean nothing today,” Sani said. He also noted that the future of democracy depended largely on the freedom of the press. www.businessday.ng

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L-R: Jude Anele, group head of retail and consumer banking; Chiugo Ndubisi, group executive, transformation and resources, United Bank for Africa; Babatunde Paul Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI); Osita Ede, head, retail banking, UBA Africa, and Gabriel Idahosa, chairman, Trade Promotion Board and Vice-President, Lagos Chamber of Commerce Industry (LCCI), during Africa Day Celebration at the ongoing Lagos International Fair in Lagos.

Tripping of some transmission lines led to partial grid collapse - TCN Isaac Anyaogu

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ransmission Company of Nigeria (TCN) says it restored full supply of power to the national grid at 4:54pm on November 9, 2019, after the partial system collapse that occurred at 11.15pm on Friday, November 8, caused by tripping of some transmission lines. It also said during the entire period, the nation did not experience full loss of supply at the same time hence a partial collapse, explains Ndidi Mbah, general manager, public affairs

at TCN. TCN said the incident was caused by the tripping of the Lokoja – Gwagwalada transmission lines 1&2 on power swing, due to causes yet to be determined, and the tripping of the Onitsha – Alaoji transmission line on overcurrent. These made the grid to operate in two parts, with the second part which is the Western and Northern axis experiencing outage. Efforts immediately commenced to bring the Western and Northern axis back into circuit, and as soon as that was almost complete, meaning supply was available most of the areas, the Eastern

axis went out. According to the statement, as TCN went on to fully complete the restoration of the Western/ Northern axis, it equally began the restoration of supply to the Eastern axis of the grid. When the grid was almost fully normalized, there was a fire incident at the Onitsha Substation which necessitated the isolation of that substation, to save lives and properties. At this stage, because the grid had not fully stabilised, the shutting down of Onitsha substation, led to the tripping of some power stations connected to the grid and supply loss in the North

and Western axis. Through the period of the power restoration process however, some other power stations equally tripped while others continued to supply the grid. This means that there was no one time that the entire grid was down at the same time as TCN effectively utilized power from the power generating stations not directly affected by the incident to attempt to stabilise the grid. TCN further noted that what had been described in the media as a second collapse does not exist as the process of restoration was still ongoing, during which technical hitches are expected.

GIG Logistics’ newly launched GIGGO App LCCI says Ogun must invest in housing to to make deliveries faster accommodate more investors

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ogistics and delivery subsidiary of GIG Group owned by Chidi Ajaere, GIG Logistics, has launched its logistics and delivery app, GIGGO, designed to ensure faster and more reliable delivery services. GIGL has effectively leveraged technology to succeed in a volatile and disjointed environment for increased shareholder value and customer satisfaction thereby positioning as Nigeria’s leading indigenous logistics company with the strongest delivery network. GIG Logistics constantly looks for ways to use technology to make processes simpler and user friendly thereby launching the GIGGO App. The GIG GO App, which runs on the in house built enterprise resource planning (ERP) “Agility”, is specially designed for fast and reliable deliveries. With GIGGO, customers can request for shipment pick-up from the comfort of their homes or offices for onward delivery within and across cities at the best rates. This will enable GIGL meet its 2-hour delivery window for intra-city deliveries as well as scale faster without committing too much resource, increase its market share, simplify operations and makes entry into new markets

easier. The app, which was unveiled on Tuesday, November 5th, 2019 is part of GIGL’s efforts to become the leading logistics company in Africa. GIGGO app provides users seamless shipment creation from the comfort of their homes and offices, eliminating the need to endlessly wait at pickup locations for their items to be dispatched. Once a request is made, the app locates a delivery partner nearest to the request and allocates the delivery request for pickup. According to the chief operations officer of GIG Logistics, Ayodele Adenaike, the company saw an opportunity in the space and decided to make a strategic move to allow a delivery process that is less cumbersome for users of its platform. “One of the ways the ways courier companies can seize the opportunity in the difficult Nigerian terrain is to consider customised IT solutions that are tailored to the company’s direction…GIG has effectively used technology to succeed in a volatile environment like Nigeria and hence positioning itself as a leading logistics company with the strongest delivery network.

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... as Lagos Trade Fair holds Ogun Day RAZAQ AYINLA

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aving considered the proximity of Ogun to Lagos with its several borders closely connected to several suburbs in Lagos, coupled with the overcrowding nature of Lagos, the Lagos Chamber of Commerce and Industry (LCCI) has requested Ogun State government to invest more in housing in order to attract investments and accommodate investors as well as expatriates. This advice comes on the heels of the increasing influx of investments to Ogun State having been dubbed as the largest investment hub of the country at present and LCCI is of the opinion that there must be investment in the critical infrastructure such as roads and housing to accommodate more investors and expatriates who are have either invested or planning to make investment in the state’s economy. Speaking at Ogun State Day held at 2019 Lagos International Trade Fair organised by the Lagos Chamber of Commerce and Industry (LCCI) on Thursday, Babatunde Ruwase, President of LCCI, noted that it was time @Businessdayng

for Ogun state to attract more investments to the state by providing befitting housing facilities to convince more people to reside in Ogun in order to increase taxes based on residency rule. Ruwase stated that Ogun stands good chance of making more revenue from the exodus of Lagos population and more revenue could be made from the outpouring if the critical infrastructure such as housing facilities, roads and others were provided by the Ogun government in order to domicile the rising population in Ogun. Ruwase, who explained that there is a huge deficit of housing and the nearest state to Lagos is Ogun, said “we have too many people in Lagos and if Ogun can provide accommodation for our people, we won’t mind, at least Lagos is over populated and housing is very key.” Responding, Governor Dapo Abiodun of Ogun State said there were systematic and strategic efforts to offer the desired enabling economic environment for the businesses to thrive, saying “Government of Ogun State has resolved to provide necessary infrastructure and conducive ambience for industries and businesses to thrive.”


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Sahara Group lauds UNDP’s ‘Africa’s Money Heritage Bank identifies high prospects in Nigeria’s £4bn Gold market miners the opportunity to also that the Bank will definitely for African Development’ Agenda HOPE MOSES-ASHIKE trade their commodities at in- earn a lot of income.” Segun Adams

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frica’s huge economic growth potential can be harnessed through robust intra-African trade, collaboration and a firm resolve to pursue shared goals, Temitope Shonubi, executive director, Sahara Group, says. Speaking Thursday at the United Nations Development Programme (UNDP) “High Level Dialogue” in Accra, Ghana, themed “Africa’s Money for African Development, a Future Beyond Aid,” Shonubi said Africa needed to look beyond dependence on foreign aid and embrace the pursuit of economic growth and development as a “single entity with common interests, goals and aspirations.” According to Shonubi, “It is Sahara Group’s firm belief that African businesses can be the greatest contributors to Africa’s success. But tackling some of the toughest global challenges cannot be achieved by any one company or sector alone. We therefore need to partner, not merely in business, but in building the better, stronger and more economically vibrant Africa that we all desire.” He noted that Sahara Group’s experience across the continent had shown that intra-African

trade can be enhanced through uniform trade policies, shared infrastructure and technology, ease of movement of persons and goods and transparent regulatory framework for different sectors. “As a leading energy conglomerate on the continent, Sahara Group has continued to champion calls for increased trading activities on the continent, especially in the energy sector,” he said. “Sahara Group has at different fora canvassed more collaboration and business activities involving African entrepreneurs, oil and gas businesses, traders and financial institutions, among others. Sahara is one of the first African companies to regularly carry out full cycle crude and product transaction using only African resources.” The event was chaired by Ghana’s President, Nana AkufoAddo, who reiterated widely held expectations that the African Continental Free Trade Agreement (AfCFTA) will facilitate a new wave of economic prosperity if implemented successfully. President Akufo-Addo also noted the need for African economies to become independent of aid, adding that upholding human rights, the rule of law and democratic accountability are key ingredients for sustainable development.

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AfCFTA commits countries to remove tariffs on goods, progressively liberalise trade in services, and address non-tariff barriers. As of the end of 2018, intra-African trade made up only 15 per cent of the total trading activities by the continent. Successful implementation of the agreement is projected to create a single African market of over a billion consumers with a total GDP of over $3 trillion. This will make Africa the largest free trade area in the world. UNDP’s director for Regional Bureau for Africa, Ahunna Eziakonwa, said the ‘dialogue’ would be positioned as an ongoing platform to inspire a global audience to recognise the opportunities for Africa’s future prosperity. The platform also seeks to increase thought leadership about Africa’s development towards self-sustaining futures, provide intellectual and analytical insights for the new Africa Continental Free Trade Resource Centre (AfCFTA), as it advances towards African Union’s Agenda 2063 and global goals in Agenda 2030, raise visibility and create momentum supporting Africa’s vision for future prosperity and foster new partnerships and create alliances for Africa’s transformation agenda.

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eritage Bank plc has disclosed that Nigeria’s Gold market is worth £4 billion with high prospects of profitability for all players in the subsector. The MD/CEO, Ifie Sekibo, who stated this at the NigeriaCanada Investment Summit, held in Abuja, weekend also disclosed that the enormous potential of the industry was one of the reasons why Heritage Bank delved into the mining sector despite enormous risks. According to Sekibo, the bank has Dukia Gold as its partner that would facilitate access to local miners and artisans to get value for their commodity at international market price after being registered with Dukia Gold. Sekibo, who was represented by the team lead, Agric Finance and Export, Adelana Ogunjirin, explained that prior to now, local miners of Gold found it difficult to trade their commodities favourably but with the involvement of Dukia and its partner, Heritage Bank, a Quality-and-Quantity test will be conducted based on the arrangement they made with Dukia Gold and that will lead to additional value to the small holder miners. He explained that this will leverage the small

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ternational market price. He further stated that a metric tonne of Gold is currently valued at $30 million, adding that it was worth investing in the industry, especially as gold was a kind of commodity that does not easily lose its value. He said: “Mining sector is an area which has not been fully tapped in terms of the potentials around it, as there are quite a lot of opportunities around that sector. Recently we secured $1 billion funding line with our funding partner AfreximBank, which also is to support areas like solid minerals. “Now with respect to this we have looked at the value chain of this space and we have looked at the opportunities that are there. A lot of fund providers have not really delved into this and it is because of the lack of understanding of the market. “In terms of value, gold is an area where you can enhance the value. You hardly see Gold losing value and you see that in different exchanges you even trade those commodities. “Looking at it in terms of trend, you see that gold is something that will appreciate definitely. So in terms of the profitability of this business, we have looked at it, the crunch, the numbers we see that is a space

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He also expressed optimism that other banks would like to come into the Nigerian mining sector, but may be studying to understand the sector properly. “Definitely other banks will come into the sector. For us we are leading, but the truth is they need to play in an area and space that they understand, as not everybody would be able to play in that space. “Heritage Bank has already carved a niche for itself in agribusiness space, just like the Gold commodity, this would be exported. So, in terms of export proceeds too, there are opportunities to be explored. Generally, looking at the Nigerian outlook, on the long run, this will also enhance the country’s external reserves. There are multiplier effects of what we are doing today and that is why we are also moving in this direction,” the MD noted. Also speaking, managing director, Nigeria Export-Import Bank (NEXIM), Abba Bello, revealed that the bank had gone into high level discussions with heavy equipment manufacturers and suppliers that would lease equipment to miners for exploration and processing, adding that this was expected to make the equipment accessible and affordable.


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Monday 11 November 2019

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World Business Newspaper OWEN WALKER

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nvesco’s core range of investment funds have bled more than $1bn a week over the past 12 months, placing the Atlanta-based group at the top of the 2019 rankings of the worst-selling global asset managers. Outflows are expected to continue in the wake of Morningstar’s decision to downgrade two of Invesco’s best-known UK funds, as retail investors respond to such moves by withdrawing their cash. “Outflows have been terrible,” said Brennan Hawken, a senior analyst at UBS, the Swiss bank. “It’s a combination of a few factors that have led to profound pressure on the business — there is no getting around that.” Inv e s c o, w h i c h ma na g e s $1.2tn, has been simultaneously hit by moves away from active managers in the US and a lack of confidence among UK investors due to Brexit uncertainty. The group’s $5.7bn acquisition of OppenheimerFunds, which concluded in May, has also prompted client desertions. Th e g rou p’s s ha re p r i c e, which peaked at $50.60 in 2000, has dropped more than half since the start of 2018 to $17.75. Martin Flanagan is one of the longest serving chief executives in the industry having taken the top job at Invesco in 2005. Invesco suffered $54bn of net outflows from its mutual funds in the 12 months ended September, excluding its low-fee exchange traded fund business, according to Morningstar. The next worst-selling managers, Natixis of France and Franklin Templeton

Invesco bleeds $1bn a week as it tops worst-selling league table Atlanta-based group hit by moves away from active managers and weak UK performance

Martin Flanagan has been Invesco’s chief executive since 2005 © Bloomberg

of the US, bled $40bn and $32bn, respectively. Even after including Invesco’s ETF range — which has grown as the group has bought specialist providers — the company still had the biggest global net outflows of $40.6bn. Invesco pointed to ETF inflows of $15bn so far this year, and said the group outflows resulted from clients reacting to market news such as Brexit uncertainty and the US-China trade wars. “Given Invesco’s global footprint, we’ve been impacted by

State-owned oil company offers scant details of stock listing in prospectus

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audi Aramco has published its long-awaited prospectus for its initial public offering, tipped to be the biggest on record, but left investors guessing on key details such as the number of shares on offer, the price range or even an indicative date for the listing. The 658-page document released on Saturday marks the furthest the kingdom has gone in its efforts to list shares in the country’s biggest revenue earner, almost four years after Crown Prince Mohammed bin Salman first disclosed plans to take the company public. After repeated delays, largely stemming from questions over the company’s ability to secure the $2tn valuation target sought by Prince Mohammed, it is set for a stock market listing in Riyadh as early as next month. If all goes to plan, Saudi Aramco will have non-government shareholders for the first time in nearly four decades. But the incomplete disclosures will stand as a test of investors’ willingness to leave themselves open to the

whims of the kingdom’s highest authorities. “An initial public offering in the Kingdom of this kind and size is unprecedented,” Saudi Aramco said. The total number of shares in the company amounts to 200bn. The document revealed that up to 0.5 per cent of the offering — or 1bn shares — will be offered to retail investors, but did not disclose the proportion to be sold to institutions. People familiar with the process have said the kingdom is seeking to sell 1 to 3 per cent of the company in total, raising $20bn-$60bn. Other people say Prince Mohammed has lowered his slights on valuation, with investors believing the company is worth between $1.2-1.5tn. Saudi Aramco had previously said that crucial details for the listing on the Tadawul exchange would be revealed after the bookbuilding period. In the prospectus it said this will take place between November 17 and December 4. The final price for the IPO is expected to be announced a day later. www.businessday.ng

The funds were downgraded due to concerns over their exposure to smaller and illiquid companies, as well as problems with their other holdings. When Morningstar downgraded Mr Woodford’s Equity Income fund in May it led to a spike in outflows, which ultimately led to the fund’s suspension two weeks later. On Friday afternoon, Mr Barnett offered a mea culpa to his investors following the downgrades, and sought to allay concerns over the liquidity of his

Brazil’s Paulo Guedes keeps faith in reforms despite Chile crisis

Saudi Aramco keeps investors in the dark on IPO details ANJLI RAVAL, ARASH MASSOUDI AND SIMEON KERR

this de-risking to an outsized degree relative to certain peers, offset somewhat by positive flows in key parts of our business,” the group said. Morningstar last week downgraded Invesco’s $7.8bn High Income and $3.5bn Income funds to “neutral”, with certain share classes cut to “negative”. Both funds were hugely popular with British investors under Neil Woodford and were taken over by his protégé Mark Barnett when Mr Woodford left Invesco six years ago.

portfolios. “The strategy of these funds has not changed,” Invesco said in a statement to FTfm. “More than 80 per cent of the Invesco UK Equity Income funds is invested in companies with a market cap of more than £500m and over two-thirds is invested in companies with a market cap of over £1bn. Liquidity in the portfolios remains strong and has to date proven to be very manageable.” FTfm last month reported that Invesco’s UK business experienced its biggest monthly outflows since Mr Woodford announced he was leaving the company to set up on his own six years ago. Invesco is absorbing OppenheimerFunds following its acquisition from MassMutual this year. The purchase was the biggest asset management deal in the US for half a decade. Invesco has cut 1,300 jobs as part of the integration so far, representing 12 per cent of the combined group’s headcount. The company has an annual costsaving target of £475m. The OppenheimerFunds deal was the most recent in a series of acquisitions overseen by Mr Flanagan. These include the $1.2bn capture of Guggenheim’s exchange traded funds business last year and the $500m purchase of Source, the specialist ETF provider, in 2017.

Finance minister claims backing from congress and president for ambitious economic measures MICHAEL STOTT AND ANDRES SCHIPANI

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hree weeks of riots and looting in Chile against free-market policies might have tested the convictions of many a devoted economic liberal — but the faith of Paulo Guedes, Brazil’s finance minister, is undimmed. In an interview with the Financial Times, Mr Guedes dismissed any suggestion of backing off on Brazil’s most ambitious economic reforms since the return of democracy in the 1980s. After his success in pushing through once-unimaginable cuts to generous government pensions, the Rio-born disciple of Milton Friedman last week presented his latest package of measures to slim down his country’s bloated state. “For the last 40 years we remained a closed economy. We didn’t give a damn about integrating global value chains, increasing competitiveness, increasing productivity,” said Mr Guedes. “Now we are going to do it.” The fresh proposals would comprehensively overhaul the government machine by freeing up more money for investment spending, triggering automatic austerity measures when fiscal limits are breached and decentralising public spending. It would

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wind up around a fifth of the country’s municipalities that are not financially viable and sell most of Brazil’s biggest utility, state power firm Eletrobras. Mr Guedes estimated economies from the administrative reforms alone at R350bn ($85bn) over the next 10 years. “The most important feature (of the new package) is fiscal responsibility,” he said, as he laid out how the automatic austerity measures would work. “You stop giving increases. There is no increase on wages, there is no promotion, you just freeze the wage bill for two years. So no fiscal crisis will last more than one year and a half in Brazil from now on.” President Jair Bolsonaro’s conservative government lacks a majority in congress, which must approve the measures. But Mr Guedes believes that final approval of the pension reforms last month is proof that the political climate in Brasília has changed as a result of public pressure. “I am surprised on how well things are going in the Congress now,” he said in his ministry office, which overlooks the Oscar Niemeyer-designed building that houses Brazil’s parliament. “There is no fight any more. They understand.” He repeats fondly the chant of progovernment demonstrators this year @Businessdayng

calling for R1tn in savings on state pensions: “Um trilhão, Paulo Guedes tem razão” or “one trillion, Paulo Guedes is right”. “The politicians looked at that and they were in panic,” the finance minister chuckled. “They said: ‘Jesus Christ, what shit this is, I have to approve a sacrifice. They are crying out for us to make a sacrifice. They are asking for a trillion’ . . . We saw that. It is amazing.” A former day trader who cofounded Banco Pactual — which later became one of Brazil’s biggest investment banks — before running his own fund, Mr Guedes frequently resorts to the vernacular of the trading floor. “Sell that shit”, “Jesus Christ” and prices “blowing high” are among his favourites. Now 70, Mr Guedes is seizing the chance to fulfil a life-long ambition: to unleash on his homeland the full force of the free-market economics he learnt from Friedman at the University of Chicago in the 1970s. Frustrated at the hostility to economic liberalism in Brazil after returning from the US, Mr Guedes worked in the University of Chile in the 1980s under the Pinochet dictatorship. He observed first hand the reforms of the “Chicago boys”, Chilean economists who had learned from the same guru.


Monday 11 November 2019

FT

BUSINESS DAY

58

NATIONAL NEWS

Spain votes in fourth general election in four years Polls suggest Socialists will win but with lower share of vote than last time DANIEL DOMBEY

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pain is voting in its fourth general election in four years on Sunday, after a campaign overshadowed by the crisis in Catalonia and the rise of the hard right. Some 37m Spaniards — out of a total population of 47m in the country — will have the right to vote at almost 60,000 polling stations around the country. They will be choosing the entire 350 seat chamber of deputies and the 208 member Senate. “There are 100 seats that depend on very narrow margins of votes,” said Ignacio Torreblanca of the European Council on Foreign Relations. “Whether parties have a few percentage points more or less — particularly around the 12 per cent level or, for the party that comes first, around 30 per cent — can have a brutal impact in the distribution of seats.” Voting is taking place between 9am and 8pm local time, with first results due out an hour after the end of polling in mainland Spain, because of a time difference with the Canary Islands. More complete results should be due by around 10:30pm. The election was triggered by the failure of Pedro Sánchez, caretaker prime minister, to win parliament’s backing to form a government. Opinion polls suggest his Socialists will retain first place, although on a lower share of vote than the 29 per cent they scored in the last election, in April. As of 2pm local time on Sunday, turnout was about 38 per cent. That was a little less than 4 percentage points below the figure recorded at the same time of day in the April elections, when heavy turnout by the Socialists’ base helped Mr Sánchez’s party. “It’s hard to see how this election gets us out of the hole we are in,” said Pablo Simón, professor of politics at Madrid’s Carlos III university. “It could well produce a shortlived and very weak government.”

The surveys also indicate that rightwing parties have benefited from a backlash in much of Spain to pro-independence protests in Catalonia that initially sometimes veered into violence. In his final election rally, in Barcelona on Friday night, Mr Sánchez called for support for “a strong government to stop the far-right and the other form of extremism, which is separatism”. While the prime minister has sought to champion a “firm, proportionate” response to the protests in Catalonia — which were sparked off by jail sentences for nine proindependence Catalan politicians — the parties to his right have called for tougher action. The far-right Vox party, which has called for a state of emergency in Catalonia, involving the suspension of basic rights, could mark up the most spectacular result. Polls have suggested it could increase its support from 10 per cent in April to 12-15 per cent, making it the third biggest force in parliament. “Sánchez has made a basic error that is very hard to understand in apparently not understanding that the verdicts in the Catalan case would benefit the right,” said Mr Torreblanca. “The big question for Vox is how many working class votes it gets,” he added, pointing out that much of the far-right group’s initial support has been among upper income groups. Santiago Abascal, the Vox leader, focused his last pre-election address on a request for the support of traditional leftwing voters who felt “abandoned” by the Socialists. He added that the other parties were “in a panic” about the rise of his farright party. Meanwhile the centre-right People’s party is hoping to mount a convincing comeback from its results in April, when it barely held on to second place with 17 per cent of the vote, but the pro-market Ciudadanos, which almost overtook the PP in April, is braced for a collapse in its support.

LONDON, ENGLAND - NOVEMBER 10: (NO SALE/NO ARCHIVE) Chancellor of the Exchequer Sajid Javid is interviewed on The Andrew Marr Show on November 10, 2019 in London, England. (Photo by Jeff Overs/BBC Picture Publicity via Getty Images) © Jeff Overs/BBC

Tories and Labour clash over cost of spending plans

Conservative assessment claims Corbyn commitments could reach £1tn over five years SEBASTIAN PAYNE AND JIM PICKARD

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enior British politicians exchanged barbs over the potential cost of a Jeremy Corbyn government, as a Conservative party assessment suggested the opposition’s spending commitments could total £1tn over the next five years. The costings, which were produced by the Tory party not the Treasury, suggested Labour’s plans could come to £650m a day during the next parliament. The totals were based on the opposition’s 2017 manifesto, plus estimated costings for policies announced more recently. Labour said the figures were “fake news” and “a work of fiction”. The 36-page Real Cost of a Labour government document included some policies that are relatively straightforward to price — such as free bus travel for under25s, which the Tories state would cost £7bn over five years, or the £30bn cost for improving home insulation.

But other claims as less certain. The £4.5bn cost for a universal basic income does not take account that Labour has only pledged to pilot the scheme. The £200bn cost for renationalisation may also be an overstatement, as Labour has suggested it would not pay market rates. The 32-hour working week, costed at £85bn, is not a compulsory proposal and would be implemented over a decade. Chancellor Sajid Javid had intended to publish a Treasury analysis of Labour’s spending commitments, but the government was thwarted by cabinet secretary Mark Sedwill, who blocked publication. The Conservative document mirrors similar dossiers produced in past elections. By highlighting Labour’s spending commitments, the Conservatives hope to paint their political rivals as financially reckless and untrustworthy to run the economy. But the debate may also remind voters of how much Mr Corbyn would like to invest in public services.

Paul Johnson, director of the Institute for Fiscal Studies think-tank, said that the “true scale of Labour’s stated ambitions” would not be known until the party publishes its manifesto, but the overall scope of its spending plans was clear. “We do know that they are committed to a very big and radical expansion in the size and scope of the state — they are quite clear about that. That’s what planning to double government’s investment spending, implement widespread nationalisations, and substantially increase current spending and taxes means.” Mr Johnson added that the challenge for Labour would be “doing that in a way which is effective and efficient, which supports rather than hinders the economy, and which does not cause interest rates on government debt to rise.” Mr Javid claimed that the figures represented “the true cost of Corbyn’s Labour” and said the dossier contained “the numbers that [shadow chancellor] John McDonnell did not want you to see.”

Canada’s housing market buzz is back as Toronto rebounds Property boom is opportunity for pop star developers but dilemma for central bank JASON KIRBY

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he American music producer, songwriter and fashion designer Pharrell Williams peered out from towering video screens at a public square in downtown Toronto and announced that he was co-developing a new condominium project in the city. “Physical space is only a backdrop,” his voice intoned on Tuesday last week. The backdrop to Mr Williams’ debut as property developer — a midtown two-tower project dubbed “Untitled” — is a Toronto housing market that is rapidly on the mend after a two-year slump. Earlier that day the city’s real estate board revealed the price for a typical home in the Greater Toronto Area jumped 5.8 per cent in October from a year ago to $810,900, just shy of an alltime peak reached in 2017.

The property market rebound in Toronto, and to a lesser extent Vancouver, is boosting Canada’s economy at a time when it faces headwinds from various trade wars and low oil prices that are weighing down the provinces of Alberta and Saskatchewan. But it is also making life difficult for Stephen Poloz, governor of Canada’s central bank, who is hesitant to join the global rate-cutting party for fear of exacerbating dangerously high household debt levels. “[Mr] Poloz has to walk a fine line,” said Benjamin Tal, deputy chief economist with CIBC World Markets. “He has to keep the dollar relatively low, but on the other hand he doesn’t want to pour fuel on the fire.” A graphic with no description Mr Tal believes the Bank of Canada will compromise with a one-off rate cut at its next meeting on December 4. www.businessday.ng

Signs of exuberance in Toronto’s housing market abound. The city’s skyline is a forest of cranes. There were 120 at the last count in July, according to the Rider Levett Bucknall crane index, more than America’s three-largest cities — New York, Los Angeles and Chicago — combined. Of the 5,000 properties listed for sale in Toronto, nearly half have an asking price of $1m or more. Only one house is available for less than $500,000 — a falling-down bungalow. Vancouver has also seen a recovery of sorts. In October home sales soared 45 per cent from a year earlier, even though prices declined 6.4 per cent to a typical $992,900 over that time. It was the slowest price decline in months, suggesting a correction that began in June 2018 is moderating. Economists point to several factors behind the rebound, most

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importantly that mortgage rates fell in lockstep with plummeting global bond yields this year. Canada is also experiencing its fastest population growth since 1990, while jobs and wages are on the rise. In September the employment rate for those aged 25 to 54 — prime working age — hit 83.6 per cent, the highest level since Statistics Canada began tracking the measure in 1976. It is a far different picture in western Canadian cities hit hard by low commodity prices. In Alberta, where business investment, household spending and labour markets are all deteriorating, house prices in Calgary have been on a steady decline since 2015. Yet even with most other housing markets in Canada gaining strength in recent months, the sector has yet to see anything like what Mr Tal calls “the crazy years” of 2015 and 2016, when nationally prices @Businessdayng

climbed 15 per cent annually and as much as 40 per cent in certain markets. That surge prompted regulators to impose measures aimed at preventing risky mortgages and curbing speculation. A graphic with no description When the Bank of Canada made its most recent rate announcement last month Mr Poloz credited those measures for removing “froth” from the market. “The housing market had a weak year or so, but it’s coming back across the board, so that’s all encouraging,” he said. However, household debt concerns have not lessened. Canadian households now carry $2.2tn in debt, a sum equal to 101 per cent of Canada’s gross domestic product. That exceeds the peak household debt-to-GDP level reached in the US during the Great Recession. Bank of Canada statistics show mortgage credit is growing at its fastest pace since 2017.


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BUSINESS DAY

Monday 11 November 2019

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Opening up to foreign capital would be a mixed blessing for China

This would be a dangerous way of trying to fix an unstable banking system MICHAEL PETTIS

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ast week, MSCI, the world’s top equity indexing provider, announced that it was raising the Chinese share of its emerging markets index. This was just the latest of a string of recent measures to open up China’s financial markets to foreign portfolio capital. But while this may boost domestic liquidity and prices, it does so at the cost of undermining banking stability and increasing Chinese susceptibility to financial disruptions from abroad. The most important of these measures was announced in September, when the People’s Bank of China declared that it was dispensing with the various restrictions that had limited the ability of foreign institutional investors to invest in mainland stocks and bonds. According to an article the next day in the People’s Daily, “international investors will be allowed unfettered access to the world’s second-largest capital market”. Earlier Euroclear, the global securities clearinghouse, had announced a memorandum of understanding with its Chinese counterpart to simplify the process by which foreign investors can gain access to China’s interbank market. The proposal will also allow foreign investors to pledge renminbi-denominated

bonds held in China as collateral for exposure elsewhere. By making it easier for foreign capital to participate in Chinese financial markets, these and other measures — including a proposal by the State Council to remove all restrictions on foreign banks, brokerages and fund management firms — could potentially achieve at least three benefits for China. First, they could help stabilise the country’s balance of payments if rising trade tensions, soaring domestic debt, and worries about currency depreciation were to cause nervous Chinese investors to flee the country. Second, if foreign inflows expand the financing available to private sector businesses, they could help generate growth that is less dependent on the public sector over-investment that has driven the Chinese economy. Finally, foreign capital inflows can help reform the country’s terribly unhealthy domestic banking system. In fact for years there have been rumours that some regulators believe — after over a decade of failed reforms — that internationalising China’s financial markets will itself help force through needed changes in the financial sector. The hope is that opening up China’s precarious financial markets to powerful external currents will coerce the leadership into accelerating banking reforms.

The BBC needs to adapt to the new media world The public service broadcaster’s model depends on young audiences

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he BBC’s mission to “inform, educate and entertain” has been unchanged since it was formed in 1922. In an era of fragmented audiences, however, questions over the corporation’s purpose are getting louder. A recent report from Ofcom, the UK media regulator, was grim reading. It found that young audiences were tuning out. The BBC, it said, risked losing “a generation of viewers” — and might not be sustainable in its current form. The BBC not only occupies a unique place in the nation’s democratic and cultural life, but is one of the UK’s most recognised brands and strongest exports. Its news channels are trusted globally. Its funding model, a licence fee paid by anyone who watches or records any live TV programmes or any BBC programmes on its online iPlayer service, has been vital to its success. Preserving it has never been easy. The current Royal Charter, which guarantees licence fee funding,still has eight years to run. But the pace and scale of change in the global media industry means consideration of the corporation’s future must start now. There have been inevitable tensions between the demands of the BBC’s mission to serve “all audiences” as well as producing “high-quality and distinctive output”. In recent years the strains have shown in a deterioration of the quality of some content. The media landscape has also changed radically since the charter was last renewed. The BBC was built for the time when TV was consumed through linear channels. A part of its future funding base is

already being eroded. Ofcom’s report found that less than half of 16- to 24-year-olds watched any BBC TV channels in an average week last year. Streaming services such as Netflix reached more young viewers each week than the iPlayer. Some younger viewers are watching BBC shows on demand on Netflix, which requires no licence. BritBox, the BBC’s subscription streaming service launched last week with ITV, will be a test of UK broadcasters’ ability to take on US rivals. Negotiations between the BBC and the government on the charter will not start for some time. Public service broadcasters have a role to play in the new media landscape but the current funding model may prove unsustainable. Policymakers should start exploring alternative mechanisms now. Sweden recently abandoned a licence fee model, moving to charging individuals a TV levy through income tax. A recent report for the rightwing think-tank the Institute of Economic Affairs proposed transforming the BBC into a National Trust-style membership model, owned and financed by its subscribers. But that would undermine its universality. As a House of Lords committee found last week, public service broadcasting remains vital to British democracy and culture. The rise of fake news makes objective reporting and analysis of events even more important. There should be broad agreement that for core public service functions such as news and current affairs it is essential to preserve the BBC’s universality. Beyond these functions it will be necessary to look at other funding sources. www.businessday.ng

Modern accounting plays fast and loose with limited liability Thomas Cook case shows how the rules can help to obscure corporate frailty JONATHAN FORD

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ere is a modern financial mystery that involves the now-bankrupt travel group Thomas Cook. It involves dividends of nearly £100m, which were paid eight years ago despite the company lacking the apparent wherewithal to pay a cent. Let’s set the scene. It’s 2011, four somewhat barren years after Thomas Cook merged with MyTravel, a rival operator, to create a giant travel group. A sharp downturn in the business has left Thomas Cook nursing a net loss of £520m, which rules out the possibility of paying dividends from current earnings. What about the past surpluses it has made and stashed away for a rainy day? No dice there either. Because of that year’s losses, the company has impaired the value of its subsidiaries by a thumping £1.5bn. That’s not only wiped out the £199m of retained profits on the parent company balance sheet that they need to pay an uncovered dividend; it has left Thomas Cook nursing a deficit of £1.3bn. So how did the directors pay out dividends without raising all sorts of embarrassing questions? Easy: they just shuffled some accounting numbers. First off, let’s take that pesky £1.5bn impairment. This may reflect a permanent diminution in the earnings capacity of those MyTravel assets, and hence a real loss to Thomas Cook’s investors who paid a premium over their net asset value to buy them. But no matter. Because Thomas Cook forked out for MyTravel in its own stock, it can write off most of that loss not against its retained profits but

Thomas Cook aircraft at Manchester airport. The company was nursing a net loss of £520m in 2011. Thomas Cook was nursing a net loss of £520m in 2011 © Christopher Furlong/Getty

a curious accounting artefact: the socalled “merger reserve”. This is no more than the difference between the nominal value of the shares it issued to buy MyTravel in 2007 and the “fair value” it computed at the time for those assets it purchased. The merger reserve has no real value whatever. And the idea that it is some form of loss-absorbing capital is the opposite of prudent. The second thing Thomas Cook does is even more mysterious. According to its accounts, the company lends almost £400m of cash to its subsidiaries, and receives a dividend from them of roughly similar value. This is treated as profit and added to Thomas Cook’s distributable reserves. Despite the apparent circularity, this is also entirely kosher — at least so long as any dividend payment made from them does not jeopardise the subsidiaries’ financial health. That is ultimately a judgment for the company, those subsidiaries and their auditors. Now it is worth stepping back and looking at where all these manoeuvres lead us. So, despite the thumping

losses, they mean that Thomas Cook’s distributable reserves in the parent company balance sheet do not drop from their 2010 level of £199m. In fact, they more than double to £447m. This gives the impression that the company’s solvency — and ability to pay a dividend — has actually improved. And that’s after paying out those near £100m of dividends — a sum roughly equal in value to Thomas Cook’s entire equity market capitalisation at the end of 2011. Now, neither of these intricate tactics appears to breach any accounting rules. But what each did in this case was to bathe the company’s finances in a misleadingly positive glow. And this raises a big question: which is whether, without all this accounting jiggerypokery, Thomas Cook’s directors would have been forced to take action much earlier to shore up the group’s balance sheet, rather than pursuing what followed — namely a leisurely path to September’s collapse, during which time the shareholders received further dividends and the executive directors banked almost £1m a year in bonuses.

Outsourcing of UK civil enforcement work causes concern Officers are currently employed by HM Courts and Tribunals Service and have the power of arrest GILL PLIMMER

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he UK government is set to transfer controversial work that includes the power to make some arrests to three private companies. Civil enforcement officers employed by the HM Courts and Tribunals Service will be transferred to private sector companies Jacobs, Marston and JBW Group, according to a contract notice released by the Ministry of Justice last week. The bailiff-style work involves the serving of warrants for magistrates’ courts, including the powers to arrest people who have failed to pay court fines — which range from speeding tickets and TV licences to more serious offences such as assault. According to the notice, the work “includes all warrants of control and warrants of arrest in relation to the enforcement of unpaid criminal financial impositions”. Although private contractors, with arrest powers, have been used in the past within the MoJ’s civil enforcement service, it is the first time that all of the work has been outsourced, a departmental source

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said. People close to the process said it is understood that the contract value, expected to be worth tens of million pounds a year, will be dependent on the number of warrants executed and the value of the goods recovered. It is aimed at saving the ministry £4.8m annually over the five-year contract, which includes a potential two-year extension. David McCluskey, partner at law firm Taylor Wessing, said: “The power of arrest in these cases involves a serious infringement of a person’s liberty so to put this entire function in the hands of private contractors with a primary motive of profit rather than social justice is a cause for considerable concern.” The deal comes despite high-profile outsourcing failures at the MoJ. Earlier this year G4S was stripped of its contract to run Birmingham prison while the ministry also announced a disastrous part-privatisation of the probation service would be ended early. Gov Facilities Services, the public sector organisation that took on prison maintenance work from the collapsed contractor Carillion, also revealed last month @Businessdayng

that the outsourcer’s management of prison facilities had been unacceptably poor. Meanwhile, the Serious Fraud Office is still investigating G4S for overcharging the ministry on electronic monitoring contracts for offenders, though it has reached a settlement with Serco. Jeremy Corbyn, the Labour party leader, has pledged to oppose any further privatisation, warning that a Boris Johnson government would “hijack” Britain’s exit from the EU in order to unleash “Thatcherism on steroids”. In this case the outsourcing is likely to be particularly contentious because the private sector operators will have the powers to arrest. The Public and Commercial Services union, which represents many of the workers, has consistently opposed the plans, said: “This highly sensitive work should be carried out by civilian enforcement officers employed directly by HMCTS, who are bound by the civil service code. “Unlike private bailiff firms, our members have no interest in wringing unaffordable repayment amounts from society’s most vulnerable and at risk citizens.”


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Monday 11 November 2019

BUSINESS DAY

ANALYSIS FT Five ways to look as though you care about women at work

Corporate women’s groups and diversity training will not close the gender pay gap PILITA CLARK

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s your company full of women who bang on about the gender pay gap and all the top jobs held by men? Would you like to look as if you care, without doing anything that would really make a difference? Now you can, thanks to a new British government report that offers a handy five-step guide. I am sure this was not the intention of the people in the Government Equalities Office who commissioned the study into what stops women from progressing at work and what helps them get ahead. Yet the message is clear in the research done by the Global Institute for Women’s Leadership at King’s College London. Its report summarises 175 papers on gender and work, a topic of more than academic interest for the thousands of British employers required to report their gender pay gap — the difference between the average hourly pay earned by men and women.

evidence they help women to progress. Second, offer training and networking opportunities after hours or outside the office. Women are often too time-pressed to take part. Third, start a mentoring programme. Here, the evidence suggests any positive effect on women’s earnings and advancement is “small”. It is hard to be sure mentoring causes improvement: it could be that those choosing to be mentored are more highly motivated. There is also a difference between a mentor, who offers advice, and a sponsor who actively advocates for a mentee to be promoted, and some research suggests male mentees get more sponsorship. The fourth step is diversity training. The report finds no evidence it has a long-term effect on attitudes. Worse, it may backfire if mandatory, “creating anger and resistance among those forced to attend”. Finally, and to me surprisingly, make sure hiring committees include women. There is little evidence it helps and one study of

BBC staff demonstrate against the broadcaster’s gender pay gap © Jamie Wiseman/ANL/Shutterstock

The gap is 17.3 per cent nationally for all workers and unlike unequal pay, when women are paid less than men for the same work, it is perfectly legal. Yet laws are imperfect: women earn £263,000 less on average than men over the course of their lifetimes, official data shows. Even women with a PhD or masters degree make less over their lives than men with undergraduate degrees. A big chunk of the gap is explained by women working in lower paid sectors or going part-time after having a baby. But that is not the whole story. The new study says a sizeable share of the pay gap is due to “unobserved factors” that cannot be explained by the data on, say, women having fewer years in full-time work than men. This could include discrimination, harassment or personal choices, “constrained or otherwise”. Either way, the pay gap is large, persistent and glaring, so a lot of companies have been trying to close it. Unhappily, the report shows what they are doing is often useless. I doubt this is intentional, but if you wanted a five-point plan for ineffective action, this is what to do. First, set up a women’s employee group. They can forge “a perception of an inclusive culture” and may ease social isolation, the report says, but there is no strong

150,000 candidates for the Spanish judiciary is worrying. It found female candidates were less likely to be picked when a committee had a greater share of women, while men were more likely to be chosen when a committee had at least one woman on it. So what should companies really be doing to help? The report’s list is long and sometimes onerous. Extreme hours and a belief that part-time workers are less committed are among the biggest barriers to female advancement, so flexible or part-time working should be offered widely and championed by bosses. Women also suffer if pay or promotion decisions are made behind closed doors, especially if the deciders are “social cloners”: people who champion others like themselves. Clear salary standards and formal career planning can help. So can audits of past promotion decisions to see if selection criteria really predict performance. The study has flaws. It says policies helping men do more childcare are “essential”, yet skims over one clear solution: generous parental leave for all, not just women. Still, it is a good starting point for any business that genuinely wants to change — and a bright warning light for those that merely want to pretend. www.businessday.ng

The new travellers

New technology and differing priorities are changing the way the NextGen travel — from summer camps for grown-ups to offices on the beach IMOGEN LEPERE, KATIE GATENS AND HANNA DOKAL

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oneliness is a modern epidemic — and something to which unmarried, social media-shaped twenty-somethings living in volatile rental properties seem particularly prone. In a recent YouGov poll, nearly a third of millennials reported “always” or “often” feel lonely, a figure far higher than older demographics. And so a growing number travel not to escape but to connect, to seek a sense of community abroad that evades them at home. Take the rise of retreats such as Lodged Out, a US start-up that runs summer camps for young adults. Its founder, Bobbilee Hartmann, a software engineer who recently turned 30, explains: “The busier we get and the more time we invest in social media, the more we’re separated from the world around us and the smaller our reallife circles become. I think my age group is craving the chance to meet new people in an authentic way.” At Hartmann’s retreats, this means staying in shared accommodation such as historic summer camps in remote locations without mobile reception or WiFi. Guests join workshops such as learning about photography and foraging herbs, participate in activities such as kayaking or archery, and enjoy conversations around the campfire. The retreats sell out within hours from a single post on Hartmann’s social-media channels, a sure sign of the times. Villa Lena, a Tuscan farmhouse with a revolving cast of artists in residence, offers a similar if less prescribed community experience and, according to owner Lena Evstafieva, its clientele is getting younger. While guests can book private rooms, they are encouraged to mingle by helping out on the organic farm, dining at communal tables and through creative activities such as writing workshops. While these experiences last several days, other forms of community-based travelling work to different timeframes. Norn, an international members club, taps into the craving for community by arranging 60-90-minute conversations between carefully matched

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strangers at its modish spaces in Berlin, London and San Francisco. “It gives members a way to understand the local zeitgeist in a more meaningful way and create authentic connections with people they’ve met 100 per cent offline,” says founder Travis Hollingsworth. A coffee machine stutters into action as a group of entrepreneurs on communal benches raise their voices above the din, gesticulating at a MacBook. Meanwhile, ambient house ripples through speakers and a baseball-capped skater grinds down a mini ramp. This could be the newest co-working space in New York or London, but in fact the Verse Collective sits on a beach fringed by coconut trees in remote Hiriketiya, Sri Lanka. Opened in 2017, it is one of a new breed of co-working spaces in remote locations that offer the chance to combine superfast broadband with a super-slow pace of life, and so are blurring the lines between work and holiday. “In one generation, the internet has totally changed the game,” says Verse’s South African co-founder Jeremy Klynsmith. “Now there are so many ways to earn a living while being location independent. Companies are saving money not having to lease offices and freelancers can network with people from all over the world.” One of the first on the scene was CocoVivo, started 18 years ago by Ulrich Gall on Isla Cristóbal in Panama’s Bocas del Toro. “Coworking didn’t exist at that time — not even as a word,” Gall says, over a high-speed fibre connection that links the island to the outside world. “Then about 10 years ago, internet access got better and the gig economy started to boom. Young people realised they could move to somewhere like Chiang Mai or Bocas del Toro, run their online business, and still have money left over.” Nevertheless, the island setting and lack of infrastructure can still present challenges. “We have two internet providers now in case a sloth chews through a cable somewhere,” says Gall. Remote co-working is also proving a beneficial lifeline for rural communities that have previously seen a brain drain. The village of Thingeyri (population 260) sits @Businessdayng

beside the sea in Iceland’s Westfjords, the distant region that only about 7 per cent of tourists to the country ever reach. Nevertheless, it is home to Blabankinn, a remote start-up incubator set up by Arnar Sigurdsson in 2017 that has had visits from Japanese app developers and entrepreneurs from Brooklyn. “There’s definitely an opportunity for small remote communities to revitalise and attract young, creative people, partially thanks to the increase in remote work,” says Sigurdsson. One major player in the sector is Selina, founded in Panama by Rafi Museri and Daniel Rudasevski. Since its launch in 2015, the company has expanded to 54 properties in 13 countries, and has plans to open in 400-plus locations by 2023. Selina combines co-working spaces with accommodation, also offering memberships that allow travellers to stay in the group’s properties worldwide for a fixed monthly rate. And they’ve got their sights set on Generation Z — “a new generation of two billion consumers who are entering the marketplace during a time of digital dominance,” according to Museri. Tourists have always cherished the fantasy of “living like a local”, if only for a few days. Now, though, technology is helping the next generation of travellers live out those ambitions in far more meaningful ways. Trippin, for example, began as a closed Facebook group where friends shared travel tips and has expanded into a series of online city guides written by young locals. “Travellers my age are seeking authenticity,” says co-founder Sam Blenkinsopp, 28. “We’re looking for places that provide genuine insights into the culture we’re visiting.” Blenkinsopp believes there is a lack of trust between people in their twenties and established information providers such as tour operators, TripAdvisor and conventional travel magazines. “If you don’t know who the source of information is, you don’t know if you align with their values or how real their experience has been. There is also a tendency to fetishise certain aspects of a culture in the travel industry. Content created by locals allows them to reclaim their narrative.”


BD Money

Monday 11 November 2019

BUSINESS DAY

COVER

FIXED INCOME

PERSONAL FINANCE

These five money spinners can make your Xmas

Currency in circulation declines by 3.9% in 10 months

Here are major changes in the Nigerian tax laws that may affect you

Christmas is a period we all let our hair down and relax those personal finance principles that have saved us big bucks year-long, creating moneymaking opportunities for savvy investors who believe business and pleasure meet in festive seasons.

Currency-in-circulation (CIC) in Nigeria dropped by 3.9 percent in 10 months to N2.05 billion in October, from N2.14 billion in January 2019, according to data from the Central Bank of Nigeria (CBN).

President Muhammadu Buhari presented the 2020 national budget proposal at a joint session of the National Assembly on October 8, 2019. But unlike previous budget presentations, the proposed spending plan was accompanied by the 2019 Finance Bill and presented to the lawmakers for consideration and perhaps passage into law.

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Monday 11 November 2019

BUSINESS DAY

Cover Story These five money spinners can make your Xmas SEGUN ADAMS

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hristmas is a period we all let our hair down and relax those personal finance principles that have saved us big bucks year-long, creating moneymaking opportunities for savvy investors who believe business and pleasure meet in festive seasons. Nigerians love to party-there is no denying. Casual observation suggests some families even spend up to 70 percent of their December income preparing for Christmas and the New Year celebrations, which typically leads to higher in inflation at year’s end, despite inevitable bills to be paid the following January. Amidst the fanfare, there are rewarding businesses one can tap into and five of them are highlighted below. Rice & Poultry Business Many Nigerians are so concerned about the implication of the border closure on the price of rice as Christmas nears, that they do not realise the business opportunity it presents. Rice price will rise-it is a fact and not just a rhyme; analysts expect upward pressure on the price of products like rice, frozen poultry, tomatoes, which have

excessive demand right now, and other food items including groundnut oil. You can profit from supplying Nigerian rice to individuals and even corporates, which gift their employee food products during Christmas. There is also the opportunity to breed local poultry for sales during Christmas as well as supply other food items that are in high demand. Fashion or Clothing Business Another business that gains traction during Christmas seasons is “looking good”. Well, “looking good” isn’t an actual business but fashion-design aka tailoring and other

clothing businesses are, and they boom during Xmas. If you have creative blood in you then you can add some spice and create Christmas design out of existing local materials (like Ankara etc). Cloth business including sales of footwear, beads, and even costumes is a sure bet as most people would be joining the “pepper them” gang as the year runs out. Online retailing will boom so if there is means to exploit digital channels, do. Beach sales: food, drinks and everything inbetween The beach and other recreational centres attract the most visitors during public holidays- the

Xmas break is one of the longest. As such, you can strategically place yourself for a bumper harvest by selling food and drinks, and anything things else you think people want, at these relaxation centres- especially the beach. You may, however, want to take into consideration cost (including fee) of setting up kiosks or stands at the beach unless you want to hawk. Gift Basket & Complimentary Cards Christmas is a period of trading gifts and even if it is not as pronounced in Nigeria, there is the culture of sending loved one’s tokens of affection during the season. You can arrange with malls or marts around you to shelves your home-made gift baskets and handmade complimentary card. Especially in highbrow areas, this venture can be profitable and would provide an outlet for your creative inner-self as you celebrate Christ’s birth. Uber or taxing If people are going to get around during Christmas, it would be in the most comfortable means possible and this makes Uber or taxi businesses good ventures during Xmas. In a way, the logistics business would also benefit as people look for convenient ways to move goods they buy or supply customers during the season.

Fixed Income

Currency in circulation declines by 3.9% in 10 months HOPE MOSES-ASHIKE

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urrency-in-circulation (CIC) in Nigeria dropped by 3.9 percent in 10 months to N2.05 billion in October, from N2.14 billion in January 2019, according to data from the Central Bank of Nigeria (CBN). Analysts attributed the decline in CIC to increased usage of electronic banking channels by customers in the financial services sector of the economy. Currency is issued to Deposit Money Banks (DMBs) through the branches of the CBN and unfit notes retrieved through the same channel. Currency deposited in the CBN by the DMBs are processed and sorted into fit and unfit notes in line with the Clean Notes Policy.

Currency-in-Circulation grew by 0.8 percent to N2,329.7 billion at end -December 2018. The growth in CIC reflected the high dominance of cash in the economy and increase in economic activities. A breakdown of the CIC indicated that, in terms of volume and value, the proportion of higher denomination banknotes (N100, N200, N500 and N1000) in total rose from 41.9 percent to 44.3 percent and 96.9percent to 97.6 percent, respectively. The lower denomination currency notes continued to be preponderant in terms of volume, constituting 55.7 percent of the total. In value terms, it constituted 2.4 percent of the total banknotes. The ratio of CIC to nominal GDP, which measures the moneyness of the economy, fell slightly by 0.1 percentage point to 1.8 percent in 2018. The decline in the CIC/GDP ratio reflected inwww.businessday.ng

creased usage of e-payment products such as electronic payment cards. The CBN’s 2018 currency operations annual report revealed that the CIC increased by N17. 25 billion or 0.80 percent to N2.49 trillion in 2018, compared with N2.16 trillion in 2017. The increase in CIC was due to the 2019 election and increase in economic activities. On currency disposal, as at the end of December 2018, a total of 1.8 billion pieces or 181,054 boxes valued at N915.bn was disposed, compared with 2.58 bn pieces or 257,501 boxes valued at N977.23bn disposed in 2017. The boxes of unfit notes disposed in 2018 decreased by 76,447 boxes, while the value decreased by N62.16bn or 6.36 percent compared with 257,501 boxes valued at N977.23bn disposed in 2017. On the other hand, the money market witnessed an increase in the overnight inter-bank rate after the CBN on Thursday issued N300 billion via Open Mar-

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ket Operation (OMO) in the secondary market. Consequently, the Overnight rate, which is the rate at which Deposit Money Banks (DMBs) borrow and lend to each other, increased by 0.43 percent to close at 5.57 percent on Friday. Also, the money market instrument used to raise short term capital, Open Buy Back (OBB) rate increased by 0.29 percent to close at 4.43 percent. The CBN on Thursday issued N300 billion via OMO but sold a total of N232.45 billion for the three tenor instruments. The N20 billion offered for 89-day tenor which is expected to mature February 4, 2020, recorded no sales, no subscription, and no stop rate. Johnson Chukwu, managing director, Cowry Asset Management Limited said investors are locking in on longer tenor instrument anticipating that rates will come down.

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BUSINESS DAY

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Personal Finance

Here are major changes in the Nigrian tax laws that may affect you OLUWASEGUN OLAKOYENIKAN

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resident Muhammadu Buhari presented the 2020 national budget proposal at a joint session of the National Assembly on October 8, 2019. But unlike previous budget presentations, the proposed spending plan was accompanied by the 2019 Finance Bill and presented to the lawmakers for consideration and perhaps passage into law. The Finance Bill, which has passed through the second reading at the National Assembly, seeks to amend various tax and fiscal laws in Nigeria including the planned 50 percent increase in the country’s Value Added Tax (VAT) rate to 7.5 percent from 5 percent to ensure the optimal funding of the 2020 budget. “The proposed changes in the tax laws will affect Nigeria companies, foreign companies, and individuals,” said Yomi Olugbenro, Partner and West Africa Tax Leader at Deloitte Nigeria. “Some long-standing pains are about to be removed and new wake up calls going out to taxpayers.” If all goes as planned, this would help the federal government achieve a 7 percent increase in revenue of a country which spends a larger chunk of its revenue to pay outstanding debts, leaving a paltry sum for capital projects as well as payment of salaries. Interestingly, the 40-page Finance Bill contains several amendments to the existing laws regarding tax collection in Nigeria, but Taiwo Oyedele, Head, Tax and Corporate Advisory Services at PwC Nigeria, as well as Olugbenro have highlighted major changes that you should know. The first is the amendment of excess dividend tax rules which currently results in double taxation and erodes corporate savings. When passed into law, the excess dividend tax will apply only to untaxed distributions other than profits specifically exempted from tax and franked investment income. This is to improve investor confidence and encourage foreign direct investment into the country. Small businesses earning lower than N25 million turnover in any tax year will

also benefit from the amendment as any business in that category will be exempted from Companies Income Tax which is 30 percent of the profit earned by registered companies in Nigeria. Similarly, medium-sizes companies will also have their bites of the government’s tax largesse aimed at helping businesses grow. Companies in this category with revenue running in excess of N25 million but lower than N100 million in any tax year will be required to pay a company income tax rate of 20 percent. The Finance Bill also seeks to modify the current commencement and cessation provisions. This is aimed at simplifying and eliminating the risk of double taxation to encourage investments. Minimum tax, which is payable by companies having no taxable profits or where the tax on profits is below the minimum tax, will be amended to 0.5 percent of the turnover of the company. The government said the move was to simplify and harmonise the minimum tax regime to promote fiscal equity. As a result, non-resident companies will also be liable to minimum tax like Nigeria companies to remove discriminatory treatments, according to Olugbenro. “Real Estate Investment Trusts are expected to enjoy clarity on applicable tax exemptions,” the Deloitte’s West Africa Tax Leader said. “This has been long in coming and hugely complementary to bridging the housing deficit and opening up space for commercial capital.” Furthermore, “insurance companies can now carry forward tax losses indefinitely, www.businessday.ng

deduct reserve for unexpired risks on time apportionment bases while special minimum tax for insurance has been abolished,” according to Oyedele. In a situation a registered company pays its company income tax 90 days before the due date, the government through the amendment hopes to reward such company for prompt compliance. The company will be entitled to a bonus (tax credit) of 2 percent of the tax payable for companies earning between N25 million and N100 million a year, and 1 percent for companies with more than N100 million annual turnover. Introduction of thin capitalisation of 30 percent of earnings before interest, taxes, depreciation, and amortization of a Nigerian company for interest deductibility will also apply; owing to this excess deduction can be carried forward for 5 years. “Deemed tax presence for non-residents with respect to imported technical and management services will now be taxable at a final withholding tax rate of 10 percent,” according to the PwC’s tax expert. “Any expense incurred to earn exempt income now specifically disallowed as a deduction against other taxable income.” Also, dividends paid out of petroleum profits will not be subjected to a 10 percent withholding tax. Banks’ know-your-customer requirements have been upgraded, while both new and existing bank customers would be required to provide their Tax Identification Numbers (TIN) for subsequent bank transactions after the passage of the bill.

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More so, taxpayers will have the privilege to reach out to tax authorities via email as the platform will be recognised when the bill becomes a law. The definition of “goods” was included to cover all forms of tangible properties that are movable at the point of supply excluding money and securities - and any tangible product, asset or property over which he derives benefits, and which can be transferred from one person to another - excluding interest in land. Similarly, the definition of “services” was included to cover anything other than goods, money and securities supplied excluding services provided under a contract of employment. There will be a specific requirement for VAT deregistration for discontinuing operations, the introduction of VAT on imported services, as well as introduction of VAT registration threshold of N25 million turnover in a calendar year to encourage SMEs. Tax authorities will be required to remit the difference between the output and input VAT paid in the preceding month to a taxable person with cash, while compensation for loss of employment below N10 million will be exempted from the capital gains tax Electronic payments will be introduced to stamp duty. Duty on bank transfers will now apply only on the amount from N10,000 and above and it will only attract a one-off duty of N50, while transfers between accounts of the same owner by the owner within the same bank will not be chargeable to duty

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Monday 11 November 2019

BUSINESS DAY

Data

Federal government Eurobond Yields on Eurobonds fell 0.184 percent point week on week from an average of 6.49 percent Thursday( data that used last week) to 6.3 percent this Friday following buying interest in Nigeria’s Sovereign Eurobonds.

Corporate Eurobond Yields on corporate Eurobonds dipped 0.053 percent points across all tickers from in the last week to Thursday October 30, with average yield rose slightly from 5.315 percent last week to 5.26 percent.

Week Ahead Ahead (Monday, November 11 – November 15, 2019) Week

Chart of the week

Week Ahead (Monday, 8th April – Friday, 12th April, 2019) Commodity

Oil: Crude oil prices fell on Friday following lingering uncertainty about how close the United States and China were to a trade deal and on rising U.S. crude inventories Brent crude rose marginally by 37 cents to $62.66 per barrel at 9:00 PM Nigerian time, while U.S. West Texas Intermediate (WTI) crude rose 28 cents to $57.43 a barrel. Stock The Nigerian equities market rebounded last week as the All Share Index rose 8 basis points to settle at 26,314.49 points. Currency The exchange rate was relatively stable across all market segments. It traded flat at N360/$ at the parallel market. At the interbank market, the currency hovered around N306 to a dollar, and traded between 362.00/$ and 362.70/$ on the Investor and Exporter window. Going forward, the naira is expected maintain stability across all windows given CBN’s continuous intervention in the currency market. Fixed Income A total of N406 billion inflows is expected to hit the market from OMO maturities this week. “We see a worsening of an already bad situation and expect capitulation from some local fund managers who have erstwhile been on the sidelines,” according to analysts at Zedcrest Capital Limited. The money market witnessed increased liquidity last week. Funding rates – including OBB and OVN rates – closed at 4.43 percent and 5.57 percent respectively following high system liquidity after Thursday OMO maturities hit the market. “With more OMO maturities expected next week and with a lower issuance by the apex bank, we expect rates to remain at mid-single-digits,” Zedcrest had said on Friday. www.businessday.ng

Gold dropped 3.7 percent last week to $1,462.5 on the spot market Friday, delivering its worst weekly performance in three years, as a potential truce between United States and China weighed on safe haven assets. Goldman Sach and Citigroup had in August forecast significant gains for gold bulls but have now themselves turned bullish on bullion with de-escalating trade tension on the heels of changing fortune for lower risk assets.

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Company IN FOCUS

BUSINESS DAY Monday 11 November 2019 www.businessday.ng

CCNN Plc: Achieving cost synergy, greater efficiency on BUA-Obu consolidation OLUFIKAYO OWOEYE

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ince the ban on importation of bagged cement into the country, Cement makers have deployed embarked on various expansion plans aimed at capturing the huge market available in the country. The competitive structure in the cement industr y has allowed for a non-aggressive rivalry as each cement maker appear to serve distinct market, CCNN is focused on the Nor thern market, the other two cement makers serve the Southern part of the country. Going by a recent publication by the Center for Affordable Housing Finance in Africa (CAHF), housing production in Nigeria is at approximately 100,000 units per year compared to minimum 1,000,000 units needed yearly to bridge the estimated 17 million housing deficit by 2033 at current annual population growth rate of 3.5% with the cost estimated at nearly N6 trillion (US$16 billion). This huge gap provides a goldmine for cement makers in the country to tap. CCNN was incorporated as a Limited Liability Company on the 15th August 1962 and commenced business in 1967, listed on the Nigerian Stock Exchange (NSE) in 1993. Cement Company of Northern Nigeria Plc finalized its merger with Kalambaina Cement Company Limited in D e c e mb e r 2 0 1 8 , t o e n l a rg e its business operation. The merger resulted in BUA Cement Company Limited, being the major owner of Kalambaina Cement Company Limited, Sokoto to have 87.42% stake in the enlarged entity. Since its entrance into the ma rke t, C C N N ha s e v o l v e d from b eing a niche cement operator into one of the key suppliers of cement in Nigeria, operating 2 million Metric Tonnes Per Annum (MTPA) across its two lines namely 0.5 million MTPA plant, installed i n 1 9 8 5 , 1 . 5 m i l l i o n M T PA plant, commissioned in 2018 configured to operate on multiple fuel sources including coal and LPFO. It also has added a 32MW captive power plant to power its non-kiln operations In December 2018. Figures from its nine months result for the period ended 30th Septem b e r s h ow s t hat t h e c e m e nt is already reaping the gains of merger exercise with Kalambaina Cement Company consummated earlier this year.

The period saw its net profit ballooned 118.3percent to N8.76bn from 4.01bn the the same period in 2018. The company recorded

strong growth in revenue in Q3’19 up 38.5percent, buoyed by a ramp-up in volumes, as capacity utilization increased at the Kalambiana plant.

However, energy cost almost doubled from N7.45bn in third quarter 2018 to N13.65bn the same period this year. Kalambaina Cement plant uses primary fuels such as coal, heavy oils and AGO, which helps to solve the power problem with limited downtime and further opportunities for growth and expansion. After the merger, CCNN’s installed capacity rose to 2.0 million metric tonnes capacity, strengthening CCNN’s dominance as North-West Nigeria’s largest cement company. The Sokoto-based cement company’s Net cash flow from operations improved to N14.6 billion in Q3 from N10.9 billion in half-year. The improvement in this front was primarily supported by cash proceeds from sales of cement in the third quarter. Ac c o rd i n g t o a na l y s t s at Cordros Capital, CCNN’s significant cost pressure did not come as a surprise considering its expensive imported coal which still dominates its energy mix, and the fact that the company still relies on thirdparty transportation to move the coal to its plants. “Thus, despite the strong topline performance, the uninspiring PAT run-rate could spike a negative reaction to the stock in today’s trading,” the report said. Last week, CCNN released

a proposed scheme of merger with Odu Cement Plc. After this scheme merger has been approved by shareholders, all the assets, liabilities, licenses and undertakings of CCNN, including employees, real property and intellectual property rights, would be transferred to Obu Cement, while the entire issued share capital of CCNN comprising 13.14bn would be cancelled and CCNN be dissolved without being wound up, lastly, each shareholder in CCNN shall be entitled to receive one scheme share for each CCNN share held as at the terminal date. Going by the scheme document, the total value of shares to be issued for the 13.1 billion shares owned by the scheme s ha re h o l d e r s i s N 4 6 0 . T h i s implies that the transaction values CCNN at N35per share, compared to its current market price of N17.50 at the close of trading on Friday. The 6MTPA Obu Cement, owned by Abdulsamad Rabiu and Isiaka Rabiu is located in Okpella, Edo-State and configured to operate on multiple fuel sources including gas and liquid pour fuel oil. Its main source of gas is a 30km gas pipeline built by Obu Cement from the Ajaokuta gas line to Okpella. The cement plant is also equipped with a 50MW captive gas power plant which will supply the plant’s non-kiln operations. The new entity will now have installed capacity of 8MT, split across Obu Cement (6MT), Kalambaina (1.5MT), and CCNN (0.5MT). According to the scheme of merger, CCNN will be delisted from the Exchange, while Obu Cement will be listed on an i n d i c a t i v e d a t e o f Ja n u a r y 8, 2020. From a 12.6percent ownership of CCNN, minority shareholders will now hold an 11.0percent stake in the enlarged Obu Cement, while BUA Cement Company Limited and Abdulsamad Rabiu will hold 33.9percent and 55.1percent stakes, respectively. Ac c o rd i n g t o t h e C C N N, the new merger in addition to meeting the demand from customers in the core regions in the country would also position the company to distr ibute its pro ducts in new geographical markets, creating the potential for additional shareholder value creation. In its notice of merger, the proposed merger would provide opportunities for significant cost savings and improved operational efficiencies by streamlining operations and optimising the use of combined resources.

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BusinessDay 11 Nov 2019  

BusinessDay 11 Nov 2019