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news you can trust I **WEDNESDAY 13 JUNE 2018 I vol. 15, no 74 I N300

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Brain drain 2.0: Nigeria’s best doctors are leaving as medical schools deteriorate

CALEB OJEWALE, ANTHONIA OBOKOH, & MICHAEL ANI

usinessDay year-to-date analysis of the performance of 10 equity funds in Nigeria between January and June 1st 2018 shows Stanbic IBTC aggressive fund topping the gainers chart with a 3.82 percent

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…Lifesaving goods stranded for 3 weeks …As Customs blames ‘system upgrade’ for inability to release cargoes

he new Customs Area Comptroller, of Murtala Muhammed International Airport (MMIA) Jayne Shoboiki is causing untold hardship and chaos for Nigerians who

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ENDURANCE OKAFOR & OGHOGHO EDOSOMWAN

New Customs area comptroller causes chaos at Lagos airport IFEOMA OKEKE

ess than 24 hours after BusinessDay reported the number of Nigerian trained medical doctors working in the UK, the number increased by one when BusinessDay checked again yesterday bringing Nigerian doctors practicing in the country to 5,340, ac-

Stanbic IBTC aggressive fund, United Capital, ARM lead equity funds performance in 2018

fgn bonds

Treasury Bills

Inside

L-R: Bola Onadele. Koko, non-executive director, FMDQ Clear Limited; Daisy Ekineh, chairman board of directors; Omolola Olowu, company secretary, and Kaodi Ugoji, non-executive director, at the first annual general meeting of FMDQ Clear Limited, a wholly-owned subsidiary of FMDQ OTC Securities Exchange in Lagos, yesterday.

Ikeja Military Cantonment owes N1.57bn unpaid electricity bill P. 47

Investors overlook Nigeria’s $9bn potential liabilities from sovereign legal disputes, for now LOLADE AKINMURELE & DIPO OLADEHINDE

look at the yield spread between Frontier market debt and the 10-year US treasury, shows Frontierfocused bondholders already demanding a premium for risky assets and are unlikely to be substantially fazed by legal rows involving a sovereign, at least for now.

… yields on bonds due 2027 rise 40bps … frontier debt appetite trump risks Nigeria’s pending legal cases, according to a Eurobond prospectus for a $1.5 billion debt issued back in 2017, could cost the country as much as $9.3 billion in potential

lawsuits. Yields on the $1.5 bn Eurobond maturing 2027 has increased 40 basis points since issuance, rising from 6.5 percent to 6.9 percent as

Soyinka confronts Buhari’s contradiction of honouring P. 46 Abiola, venerating his tormentor

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of June 8, according to the most recent data provided by the Debt Management Office (DMO). Assuming the country is required to take up the cost of those lawsuits, which comes to 19.7 percent of the $47 billion that Africa’s

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Brain drain 2.0: Nigeria’s best doctors... Continued from page 1

cording to data from the UK General Medical Council website. An average of 12 doctors who had their primary medical education in Nigeria are said to register for practice in the UK every week, and when Nigerian trained medical personnel in other places such as the US, Canada, and some oil rich gulf countries are added, the total number of Nigerian doctors practicing abroad could be in excess of 20,000. BusinessDay correspondents visited some public and private hospitals within Lagos, to interact with doctors and with the exception of only one doctor with a contrary view, all expressed willingness to go abroad at the first chance they get. The only doctor (practising in LASUTH) who said he’s not eager to go abroad, said this is because he has some other personal businesses he is engaged in. For the majority however, the perception is that “leaving the country to practice abroad gives you the opportunity of being exposed to recent technological advancements in the medical health sector, and an opportunity to for instance, conduct surgeries with more effectiveness (for patients) and ease (for the doctors).” Others expressed more personal reasons like the need to get the best education for their children, since they cannot afford the huge cost of sending their children to private schools considering the poor state of the public schools’ system. “Our best doctors are leaving Nigeria. Over 50 doctors left LUTH (Lagos University Teaching Hospital) this year,” a senior medical practitioner told BusinessDay. Kelechi Otuneme, public relations officer at LUTH, however said while he could not confirm the number of doctors who have left, more importantly, it cannot be established that they left the country entirely. The unfriendly work environment has implied health workers in Nigeria continually find every possible way to exit the country, leaving behind a health system which many in the mildest of descriptions, say is simply not working; not for the patients and not for the medical practitioners. “We are having a second wave of brain drain of medical professionals in the country. Interestingly, those who participated in the first wave of brain drain of medical professionals in the early 90’s want to come back now that they are older. But the conditions back home are not encouraging them to come back with the skills and experience they have acquired from their years of staying abroad,” said another senior medical practitioner who operates a hospital where he says three of his doctors have already relocated abroad in the

last one year. In 1948 when the university college hospital Ibadan was set up, up till the 1970s, it ranked among the top four in the commonwealth, but now it is not even rated, BusinessDay findings show. But as doctors, nurses, and other health workers leave the country in droves, even the medical schools that are supposed to train doctors to replace those leaving are also suffering. Some of the country’s best hands in the medical schools are also finding their way out of the country, with the quality of medical education gradually eroding away. Informed sources in the health sector told BusinessDay that the quality of medical education has depreciated, almost as much as medical facilities in the country. It was even stated that at some point some medical schools were threatened with decertification of some courses, and of note were the Surgery and Dentistry programmes at the College of Medicine, University of Lagos (CMUL). “The quality of medical education in the country has dropped significantly,” said Ogbonnaya Igbowke, head, Health Thematic Group, human capital policy commission, Nigeria Economic Summit Group (NESG) “A lot of what is done today is more of theory and less of practical, and the reasons are not far-fetched. There is indeed lack of materials, equipment and research grants or funds to boost learning outcomes in medicine and medical health sciences.” “We are in a deep problem to say the least. Most doctors have never seen physically, most of the machines that they are required to use in the course of their practice and they have been in practice for a long time,” said Igbokwe, who is also CEO of Heartwells Group. The President, Association of Resident Doctors in one of the tertiary health facilities who did not want his name in print, told BusinessDay there are “universities that are losing accreditation because of basic things to train medical personnel. If these things are not available, why would I as a lecturer want to train students that I am sure cannot boast of being compared to others in other parts of the world? “A lot of good brains, people who are distinction candidates, who should have stayed back to impact knowledge are no longer in the country but abroad because of the same set of reasons that we have. Even teaching aid to teach medical students are not available in a lot of our universities,” he said. Besides poor equipment, most medical schools have been accused of taking in more students than they can cater for adequately. “We have medical schools admit-

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L-R: Babagana Kingibe, former vice presidential candidate of the SDP in the June 12, 1993 Presidential Election; Vice President Yemi Osinbajo; President Muhammadu Buhari; Kola Abiola, son of the acclaimed winner of June 12, 1993 Presidential Election, MKO Abiola, and Bukola Fawehinmi, wife of late civil rights activist, Gani Fawehinmi, during a special national honours.

Stanbic IBTC aggressive fund, United Capital,... Continued from page 1 increase in its unit price, for the period, according to SEC Nigeria data. Other top gainers include; United Capital asset management Ltd equity fund (+ 3.22%) and ARM aggressive growth fund (+0.36%). Meanwhile the benchmark of the Nigerian Stock Exchange (NSE) all share index return for the period stood at - 3.73 percent. On the reasons why the equity funds outperformed the NSE return in the period under review Wale Okurinboye, Head, Investment Research at Sigma Pensions said: “They outperformed the market all share index because they are were not holding DANGCEM at market rate, considering DANGCEM that has 30 percent of the NSE market capitalisation was down 3 percent in that period. As a result if the overall market was going down theirs would not have not gone in the same direction.” Tajudeen Ibrahim, Head of Research at Chapel Hill Denham Securities said the equity funds that outperformed the NSE return in that period are most probably exposed to growth stocks. “These are the kind of stocks that might not necessarily give dividend but their stock prices rally in the back of their growth story and not necessarily driven by dividend payment,” Ibrahim said in a phone response. Other equity funds that outperformed the benchmark include; Stanbic IBTC Nigerian equity fund (-0.13%), FBN capital asset management (-1%) and AXA Mansard investment Limited (-3.65%). Johnson Chukwu, Md of Cowry Asset Limited said the basic thing that happens is that, if a fund is actively being managed, the fund managers will invest in assets, they will also be selective in their choice of instruments, and they will invest in instruments that have very strong potential. Continues on wwwbusinessday online

Yields to rise as world’s biggest Central Banks decide rates HOPE MOSES-ASHIKE

he cost of foreign borrowing by the Federal Government and corporates, as well as yield on fixed income securities may rise following the plan by the world’s three biggest Central Banks to update their monetary policy stance, this week Tuesday through Thursday. The Central Bank of Japan’s monetary policy meeting will hold on Thursday June 14, and Friday June 15, the governing council of European Central Bank (ECB) will meet on Thursday June 14, and the Federal Reserve, U.S. will conclude its two day meeting today. Nigeria’s Central Bank will hold its next Monetary Policy Committee meeting in July 23 and 24. Expectations are for the Bank of Japan to hold policy unchanged, the European Central Bank to flesh out its plans to end its bond-buying program currently scheduled to finish in September, and for the Federal Reserve to hike rates. With unemployment in the U.S. so low, Fed officials could update their projections from three to four rate hikes this year, a move which would further increase pressure on developing-economy currencies, Bloomberg reports. Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited said the recent improvement in the global economy justifies monetary policy normalisation in advanced countries. This monetary policy stance he said should cause global yields to rise. “And the implication of this on the Nigerian economy is that domestic yields of fixed income securities may rise causing the Federal Government of Nigeria (FGN) and other corporates to borrow money in the domestic market at relatively higher interest rate than the current level. In addition, the cost of borrowing for the FGN in the international

market may rise. The implication of these developments is that the cost of borrowing for the government may rise,” Akinwunmi, told BusinessDay. Yields on government securities have been easing since September 2017, losing about 300 bps to April 2018 according to Gbenga Sholotan, head of research, Rand Merchant Bank Nigeria Stockbrokers. The closing prices and yields of US$500 million July 2018 Eurobond remained at US$99.983 and 5.218 respectively, data from Debt Management Office (DMO) indicated. Nigeria’s total public debt stock is put at N21.725 trillion as at the end of December2017. The Federal Government’s domestic debt at the end of 2017 was N12.589 trillion, according to the DMO. The Central Bank of Nigeria (CBN) at the last Monetary Policy Committee (MPC) meeting held in May, kept its monetary policy stance at 14 percent, for nine consecutive months, amid slowing inflation rate. The CBN also kept unchanged the liquidity ratio at 30 percent, Cash Reserve Ratio at 22.5 percent and +200-500 basis point asymmetric corridor around the MPR, hinting that it would not consider easing until inflation fell to single digits. The U.S Federal Reserve left interest rates on hold in May, but signalled that inflation was nearing its 2% target, and lining up further rate increase at its next meeting in June. The Bank of Japan (BOJ) maintained its short-term interest rate target at minus 0.1 percent in April 2018. The ECB held interest rates steady on May 2018, amid signs the euro area’s growth outlook may have softened. The ECB’s interest rate on its main refinancing operations and the interest rates on the marginal lending facility and the deposit facility remained unchanged at zero, 0.25 and -0.40 percent respectively.

Wednesday 13 June 2018

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COMMENT SMALL BUSINESS HANDBOOK

EMEKA OSUJI Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

he value of savings products in the survival of a microfi nance institution lies in role of savings in promoting liquidity, which is vital to the survival of the institution. It is often the case that microfinance institution (MFIs) pay scant attention to savings mobilization, due partly to the nature of the operating environment, the seeming drudgery in deposit mobilization and the perceived multiple challenges associated with savings programmes. But almost always, as their operations expand, service providers find that keeping pace with demand for credit requires a stable flow of savings into the system. The first rule in savings product design is to make sure that the deposit instruments is appropriate to local needs. This requires a clear understanding of the conditions in which the client lives, and the nature of their economic activities. This is where market research becomes important. Many operators do not place any significant value on market research, because they are either not quite sure of the value it brings or, quite often, they do not have the capacity to carry out such studies. However,

GBOYEGA ATOYEBI Atoyebi, FCA, is a Financial Services Executive and an alumnus of Lagos Business School. abayomiato@ yahoo.co.uk

ope deferred makes the heart sick, but a desire fulfilled is a source of joy and new life (proverbs 17;8 adapted) and so it has been for the believers in the symbolism and concept of June 12 since 1993 until the landmark pronouncement of President Muhammadu Buhari on June 8, 2018 with the declaration of June 12 as Nigeria’s democracy day and the posthumous award of Grand Commander of the Federal Republic (GCFR) and Grand Commander of the Order of the Niger (GCON) on Bashorun MKO Abiola and Chief Gani Oyesola Fawehinmi respectively. I therefore celebrate with and congratulate the families, all leaders and supporters of the movement and believers in democracy and its ideals.

Wednesday 13 June 2018

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Developing successful savings products in microfinance it is advisable for operators to engage the market and understand where the clients are coming from while designing deposit products. Luckily they do not have to do the research themselves. There are professionals who can read and interpret any market today. Again, there must be proper market segmentation. Operators often do not realize that the market, no matter how simple it may appear, is not usually homogeneous. There must be variety in the products on offer so as to respond effectively to the liquidity requirements of different kinds of markets and clients. Appropriate mix of deposit instruments must therefore be provided to capture the differing circumstances of clients. Surely, this calls for intimacy with, and appreciation of, the operating environment of both the institution and its clients. To be able to offer a good mix of deposit products, operators must properly segment the marketand adequately reflect the seasonality and liquidity differences of all segments of the market. Unfortunately, the conventional foolishness (not wisdom) is for operators to open shop and go straight to lend money to all manner of people. The result is what we are talking about today in very low tones – non-performing accounts. The disdain for research and, sometimes, knowledge in general, is a national challenge that is reflected even at the highest level of leadership in our country. Many of us believe that theory is “grammar” that adds little or no value, while practice is everything. The result is

A successful savings product design begins with an understanding of the existing savings services or opportunities available to clients in the informal sector. This will reveal the limitations of such existing services and the new product would simply attack those shortcomings that we find it very hard to accept costs that may arise from any effort to inquire and understand the theoretical underpinnings of what we do. Unfortunately, those who change the course of history through inventions or innovations would confirm the fact that no successful practice is devoid of sound theoretical foundations. Many of the failed programmes of this country did so because we went into them without an analysis of the “what ifs” and “supposings” that interrogate processes and reveal possibilities ahead of implementation. To make us accept the cost and patience entailed in research and development should be a worthwhile national project. A successful savings product design begins with an understanding of the existing savings services or opportunities available to clients in the informal sector. This will reveal the limitations of such existing services and the new product would simply attack those shortcomings. Studies in

the Far East and South America have shown that voluntary savings are more successful than group savings. Voluntary savings has contributed to the growth of some of the leading microfinance institutions in the world. Both Bank Rakyat Indonesia (BRI), probably the oldest and most profitable bank in Indonesia and Grameen Bank, the flagship of microfinancing,all place serious value on voluntary savings and market research as a precursor to the launch of their services. Many of the MFIs in Nigeria that became microcommercial banks did so because they had the wrong idea of the business into which they got. They looked in the wrong place for clients and when they found none they went for the customers of regular commercial banks. The result, expectedly, is the regular breach of single obligor lending limits and a mirroring of the failed conduct of commercial banks – misplaced overhead expenses, high staff and infrastructure costs and undue profit orientation leading to finagling with clients’ accounts. Many banks are now learning that they can no longer continue to steal client’s money by spurious charges as the courts will give back every kobo wrongly taken from customers. Many operators, perhaps due to poor knowledge of the business, introduce savings products in all branches at the same time. This may not be the optimal approach. A lot of leakages occurs when savings mobilization is democratised in all the branches. Some seasoned operators therefore prefer to do pilot savings schemes on savings products. Such pilot schemes normally review the ac-

ceptability of the scheme, value addition to clients, security of funds, particularly handed over to officers, as they travel from the client through the account officer to the bank. Furthermore, savings products must take account of the need for liquidity. People save for emergencies as for other reasons. In that regard, there is need for a mix of savings products reflecting different levels of liquidity – liquid, semi-liquid and time deposit products. Inte re st rate s o n sav i ng s should be attractive enough to provide both financial incentive and risk premium to savers. For commercial MFIs, especially those operating in competitive markets like Nigeria, this should reflect in rates that are slightly above the prevailing market rate to provide a risk premium and a financial incentive to savers. On the other hand, and as a reward for their work, operators may exclude from interest payment, savings account balances that fall below a certain minimum. This action has two possible effects. It incentives the clients to save rather than withdraw their money, and helps the operator to cover the administrative costs of managing such accounts. These are some of the features ofa successful voluntary savings programme. In all, operators must not neglect the need for deposit mobilization because of its relative drudgery compared to fixed deposits. At the end of the day, financial intermediation is not complete until surplus and deficit unit have a handshake.

even if it is difficult. It is a message in our ability to tear down walls today and in future of dictatorship, violence, ideology and hostility”. The events of June 12, its symbol (Bashorun MKO Abiola) and the movement /struggle it birthed is, in my opinion, such a phenomenon which title, award or official recognition neither adds nor removes from. “June 12” symbolizes the Nigerian people’s desire for and commitment to these ideals – unity, equity, justice and freedom. Therefore considering the state of these ideals under this dispensation, the announcement after the initial euphoria, left a sour sweet after taste and upon reflection on the grantor and his timing, I sense both duplicity of person and dubiousness of intent. On the person of the grantor, nothing in his antecedents, neither words nor actions suggested a support for “June 12”. In fact, prior to this maverick political masterstroke, his recent remarks on the person and regime of General Sani Abacha

(under which the movement, its symbol and the ideals the movement stood for suffered the most) connoted a veiled adoration and a tacit support of same which would inherently be inconsistent with these awards and declaration. The timing, on the eve of an election, without looking a gift horse in the mouth could not have been without the consciousness of the political collateral it confers. I will not begrudge a man of the good fortunes accruable to him due to his own good gestures. All said, I will implore all Nigerians and the government in particular to go beyond the symbolism of awards and recognitions and strive for the entrenchment of the ideals of unity, equity, justice and freedom in our national consciousness and realities for which these great Nigerians, the Peoples President and the Senior Advocate of the Masses fought and died.

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June 12: Beyond symbolism However, at the risk of being a wet blanket, I opine that there are people that are larger than titles, achievements greater than awards and events bigger than official recognitions. One person that readily comes to mind is Mother Teresa. By the time of her death, she was already a saint in the hearts of the millions of people her life and life’s work had touched such that her beatification and subsequent cannonisation (though a great title) added little to her stature in the hearts of these people. Of course, we cannot forget the people’s princess, Lady Diana, Princess of Wales, one of the most charismatic and influential persons of her time. Upon her divorce from Prince Charles and the consequent loss of the use of the title, Her Royal Highness (HRH), her stature did not diminish but rather grew and Prime Minister Tony Blair said it right during the official announcement of her death –“she is the people’s princess and

that’s how she will stay, how she will remain in our hearts and in our memories forever”. Also, the collapse of the Berlin wall that led to the reunification of Germany is such an event. A global event which took place November 9, 1989 with the announcement of the abandonment of border control by East Germany (German Democratic Republic) resulting in the freedom of its citizens to cross over to West Germany (Federal Republic of Germany). This global event, with an estimated 2 million people crossing the borders to West Germany over that weekend not only signaled the beginning of the reunification of Germany but also the end of the cold war. This epic event, though celebrated annually on October 3, remains a celebration of freedom and the triumph of soul force as was aptly captured by the current Chancellor of a united Germany during its 25th anniversary in 2014 thus: “This is a message of hope and that dreams can come true, nothing has to stay as it is,

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EDITORIAL PUBLISHER/CEO

Frank Aigbogun

EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

Security vote and corruption in Nigeria

study published, last month, by global human rights watchdog Transparency International and the Nigerian based Civil Society Legislative Advocacy Centre (CISLAC) showed clearly the link between the practice of maintaining “security vote” funds and corruption in Nigeria. The report titled: “Camouflaged Cash: How Security Votes Fuel Corruption in Nigeria” demonstrates how an opaque practice started during military rule, lacking in accountability and not subject to legislative oversight or independent audit, has been sustained even under socalled democratic governance and is being used to siphon billions of dollars from the public treasury without accountability. TI described the use of security vote as “one of the most durable forms of corruption operating in Nigeria today” with successive presidents and state governors treating it as slush fund and directing it to political activities or more often simply embezzling it outright. To be sure, “security votes are budgeted funds provided

to certain federal, state, and local government officials to spend at their discretion on—in theory— anything security-related. They are budgeted separately from planned security expenditures such as personnel salaries, allowances, equipment, training and operational expenses. Security votes also differ from extra-budgetary defence spending that may be authorised by the President—often in secret—from opaque sources like the Federal Government Independent Revenue account.” The global human rights watchdog puts the average annual security vote budget to be about N241.8 billion ($670 million). This surpassed annual combined budgetary funding for the Nigerian Army, Nigeria Air Force and Nigerian Navy. State governors are supposed to use a significant portion of their security vote to provide top-up funding to federal security agencies— whether Police, Army, SSS, Nigeria Security or Civil Defence Corps (NSCDC)—operating in their states since a significant portion of the funding to these agencies operating in the states are withheld or altogether embezzled by the top brass of the agencies. Therefore, if state governments do not provide these top-up fund-

ing to cater for their operational expenses and allowances, they do nothing and allow security situations to deteriorate in the states. Security votes therefore become “a self-perpetuating cause and consequence of security sector corruption.” It is no wonder that despite the billions of naira allocated as security votes yearly, insecurity has continued to spiral out of control in the country. All over the country, one form of insecurity or another - cattle rustling, killings and kidnappings in the northwest ; the Boko Haram insurgency in the northeast ; sustained and unrelenting herdsmen attacks and killings in the north-central; cultism, armed robbery and kidnapping in the southeast; vandalism, cultism and kidnapping in the southsouth; and armed robbery, gang violence and kidnapping in the southwest – are threatening to tear the country apart with political and security operatives appearing helpless and incapable of tackling the menace. The report states that although President Buhari in 2016 briefly scaled back his use of security votes compared to his predecessor, the use of security votes has again being ramped back up in

2017 and 2018 evidently as the election approaches and the government is in need of funds to bankroll campaigns. The 2018 budget shows a significant increase—43 percent—in the total amount budgeted for security votes. While some devote their security votes to funding elections, some godfathers see those funds or at least part of it, as theirs by right. We recall the reason given by the late Lamidi Adedibu for masterminding the impeachment of then governor Rasheed Ladoja as the refusal of the governor to give him at least one-third of the security vote of the state. While agreeing that some security and intelligence expenditure should remain classified and not open to public scrutiny, we agree with TI that “the widespread use of security votes by federal, state, and even local officials clearly undermines transparency and accountability, and the practice is highly unconventional when set against international practice.” It runs counter to Nigeria’s democratic and constitutional norm and must be reformed or scrapped altogether if we are truly desirous of fighting corruption in the country.

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Wednesday 13 June 2018

BUSINESS

COMPANIES & MARKETS

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Family Homes Fund to facilitate 500,000 homes supply, create 1.5m jobs in 5yrs

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C o m pa n y n e w s a n a ly s i s a n d i n s i g h t

Prestige Assurance increases authorised capital to N3bn …plans expansion Modestus Anaesoronye

nderwriting firm, Prestige Assurance plc has secured the approval of its shareholders to increase its authorized share capital to N3, 000,000 from the initial N2, 223,489,000 by the creation of 1,553,022,000 ordinary shares of N.50k each. This was part of the decision reached at the Company’s 48th Annual General Meeting held in Lagos. As part of the special business also, the directors got shareholders nod to issue bonus shares from its share premium account in the sum of N7, 82,569,517.00 being 41 new shares for every 100 shares held thereby increasing the issued share capital of the Company from N1, 908,706140 to N2, 691,275,658 by issuing 1,565,139,035 ordinary shares of N0.50 kobo each, to shareholders who are on the Register Members at a

date to be determined. Hassan Usman, chairman of the Company who announced performance of the firm said gross premium income rose 45.7 percent at the end of the financial year ended December 31, 2017 to N3.81 billion from N2.61 billion in 2016. He said the investment income also appreciated remarkably by 98.9 percent to N830.91 million from N417.82 in 2016. Profit for the year stood N531.84 million, 139 percent increase from N22.99 million in the previous year. While total assets rose 21.53 percent to close at N11.78 billion in 2017, from N9.69 in the previous year, earnings per share rose 139.7 to close at 9.90 kobo in the review year. Usmam said the world economic crisis has created avenues for business growth and development, stating that Prestige Assurance see strength and not weakness and as such is prepared to

widen her business horizon to deliver quality returns to her Stakeholders. “It is obvious that there are great potentials for the Insurance Industry in Nigeria, particularly with the various initiatives that our regulator, the National Insurance Commission (NAICOM) and trade association have put in place to bring sanity into the industry as well as policies that are needed for business to thrive.”

Xpress Payment Solutions targets 100,000 agents to drive financial inclusion KELECHI EWUZIE

press Payment Solutions Limited, a wholly owned indigenous company says it targets to recruit 100,000 agents across the country as part of plans to support the national financial inclusion strategy of the Central Bank of Nigeria (CBN). Oluwadare Owolabi , CEO, Xpress Payment Solutions Ltd observed that the number of banking agents targeted by the company is one sixth percent of the CBNs target of 600,000 by 2020, adding that leveraging technology will aid the penetration of agency banking in Nigeria. Owolabi in his presentation on agency banking as a driver for financial inclusion in Lagos observed that Nigeria’s predominantly

brick and mortar branch network approach to provision of financial services has not made significant gains towards achieving the 2020 target of CBN. He pointed out that mobile money penetration in Nigeria stands at a paltry 1 percent even after 5 years of operation compared to penetration levels of 60 percent and 40 percent respectively for Kenya and Ghana. According to him, “Nigeria can potentially drive f i na n c i a l i n c l u s i o n v i a agency banking model as critical success elements of agency banking are hinged on the ability of the model to drive financial inclusion via Increase in customer base from areas hitherto difficult to cover but have large numbers of persons who are financially excluded”. Owolabi further said Xpress Payment Solutions

Limited is committed to building the business, and focus on areas where other competitors have not focused on. To him, “We want to do things differently by making sure our customers are happy by being accessible to them at all times. He said by driving agency banking across the country especially in the northern part of the country, the company will present its services as a driver for financial inclusion that would have lasting effect; since it makes business sense; translates into profits and financial growth for the service providers. He opines that with the right support for agency banking, Nigerian economy could grow by 374 percent, should 100 percent financial inclusion be achieved with political and socioeconomic factors kept constant.

“Our Company has positioned itself to succeed in a vibrant financial market and more importantly in insurance sector by introducing new products and processes that guarantee good returns on investments, as such, no stone will be left unturned to build financial supermarket that delivers quality services and generate profits to our loyal and esteemed Shareholders.”

Usman further stated, “We realize the competitive environment of the insurance industry could be as challenging as ever, especially with the entrance of international giants into the Nigeria market. We welcome this development, not only because of the opportunity it presents to upgrade insurance practice in Nigeria, but also in recognition of the rare competitive strength we have built over

the years as one of the oldest and most experienced operators in the Insurance Nigeria market. At Prestige, our in-depth knowledge of the Nigeria market with very strong international links gives us cause to believe that we are well poised to tap into areas of opportunity in the Nigerian market with our market-winning products and services. During the year under review, we launched two new products-the Prestige Salary Protection Shield and the mediclaim policy with both products showing success and potentials. As part of our strategy to achieve our intention to be one of the top three insurance company in Nigeria, we are opening single Man Offices across the country with the intention of spreading our outreach to new frontiers, new products and there are plans to sell open more branches with the intention of acquiring more market share of the insurance industry.

Entrepreneurial training key to ending youth crimes - Okoli

ounder/Chief Executive Officer, Emzor Pharmaceuticals Limited, Stella Okoli has called on Nigeria to pay attention to entrepreneurial training if it wishes to end youth crimes and unemployment. Speaking while delivering an address at the 12th Annual Heart & Soul Gala of the Chike Okoli Foundation, Okoli who is also the Board Chairman of the foundation noted that with training in entrepreneurship, youths can learn discipline, financial management, good habits and horn innate skills that could take them and their families out of poverty. She noted that it is because of the importance of this kind of training to the nation that the ChikeOkoli Foundation has taken it as its core responsibility not only to mould the heart and minds

of Nigeria’s next generation, but inculcate in them 21st century skills, techniques and competencies. According to her, “it was in bid to advance these ideals that the ChikeOkoli Centre for Entrepreneurial Studies (COCES) was established at the NnamdiAzikiwe University, Awka in 2011”. Also speaking at the occasion, YemiOsinbajo, vice president, thanked the ChikeOkoli foundation for its contribution to healthy living and entrepreneurship. Noting that the Foundation has so far trained 5,000 businesses owners and budding entreprenuers, Osinbajo said the Foundation has now become a fountain of hope that the nation needs at this time of its development. On the late ChikeOkoli in his honour the Foundation was set up, the Vice President commended his family

for turning the ashes of the tragedy to a monumental phoenix of inspiration for all. In her opening remarks, Chairman of the Occasion, Barr. (Mrs.) Uju C. Ifejika, Chairman/CEO, Brittania-U Group harped on the benefits of charity and touching lives. According to her, Government cannot do everything, and it is left for Nigerians to rally round and contribute in all ways possible. She also used the opportunity to call on individuals and organisations to support the Chike Foundation which also carries out medical outreach programmes across Nigeria apart from its entrepreneurship engagement. Established in 2007, the ChikeOkoli Foundation aims to foster a healthy and prosperous society by focusing on promoting healthy lifestyle and entrepreneurship among the younger population.

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COMPANIES & MARKETS

Family Homes Fund to facilitate 500,000 homes supply, create 1.5m jobs in 5yrs …plans N1trn cumulative spend by 2023 CHUKA UROKO

y the next five years, the Nigerian property and labour markets shall have got a big boost with an additional 500,000 homes supply and 1.5 million jobs creation, both to be facilitated and supported respectively by the Family Homes Fund (FHF) Limited. The fund is a partnership between the Federal Ministry of Finance and the Nigerian Sovereign Investment Authority as founding shareholders. It is expected that the fund will be the largest affordable housing focused-fund in SubSahara Africa, leveraging its significant capital, which is in excess of N1trillion by 2023, to facilitate access to affordable housing for millions of Nigerians on low to medium income. Over time, there have been significant efforts at various levels, including government ministries, agencies and the private sector, at addressing the acute need for affordable housing in Nigeria without much success.

But with FHF initiative, there are good reasons for optimism that new partnerships and initiatives supported by the federal and state governments will help provide the over 17million new homes Nigeria needs over the next 15 years. It has to be pointed out, however, that the capital which the fund has to leverage to support the supply of new homes for families on low to medium income is only a means to an end. The key priority for the fund is to take advantage of the opportunity a large-scale house building programme offers to create jobs. These are jobs that are sustainable and offer families security, improved quality of life and hope. With a projected cumulative spend of up to N1trillion by 2023 on various inputs into the house building process including doors, windows, tiles, roofing materials, blocks, paving stones, paint etc, there is opportunity to incubate large numbers of small scale industries, creating significant employment. The fund aims to catalyse

the creation of new jobs through the investments it makes. Alongside investment by other players in the housing sector, Nigeria has a real opportunity to achieve positive real positive impact on families, women who often carry the biggest burden in poor households and young people. At national level, when this potential effectively harnessed, could generate up to 1.5 percent increase to the GDP by 2023. The Fund’s approach to creating jobs will be driven by 3 priorities. These are policy, partnership and people. The Fund aims to support ongoing dialogue around development of a local contents framework for inputs into the house-building process. A long-term objective is to ensure that up to 80 percent of manufactured inputs are locally produced. Through partnership, Nigeria can achieve much more than any single player can. The fund aims to build strong partnerships with many institutions and agencies to maximize this opportunity. It will work with existing and new partners in the building

NSE profit rebounds as transaction fees surge 130% D av i d I b i da p o, E m eka Ucheaga,Sobechuckwu Eze, and Cynthia Ikwuetoghu

he financial results of Nigeria Stock Exchange (NSE) released three days ago showed that the boost in transaction and listing fees pushed 2017 NSE total revenues to N5.87 billion. Transaction and listing fees accounted for 88 percent of total revenue for the period, showing that NSE earnings are highly dependent on the performance of their transaction and listing businesses. Trading volumes were up only 5 percent in 2017 but the value of the trades jumped from N577 billion to N1.07 trillion, an increase of 86 percent. The small change in trading volume and large increase in trade value implies that market

prices were significantly higher as sentiments turned bullish in 2017 from the bear market of 2016. NSE ASI returned 42 percent in 2017 compared to 6.2 percent negative return in 2016. Therefore, there was more of buying activities in 2017 as compared to higher selling activities in 2016. The low revenue of about N1.6 billion generated in 2016 was as a result of a severe drop of 62 percent in transaction fees from its 2015 level as Nigeria economy tumbled into a recession in 2016 which caused trading activities to fall drastically. As the economy recovered in 2017, trading activities picked up which drove transactions fees to N3.76 billion and listing fees N1.4 billion, up 130 percent and 111 percent from their 2016 levels respectively. Investors will therefore pay close attention to the transaction and listing activity figures from the Exchange as a precursor to

the financial performance of the NSE on a quarterly and annual basis after the demutualization and listing process for the NSE is completed. Still a cause for concern is an increase in the wage bills of the exchange despite a fall in head count. The total personnel expense was N2.7 billion, up 9.5 percent from 2016 levels despite a 10.8 percent drop in total employee headcount. A deeper dive into the employee emoluments showed that up to 22 percent of NSE employees earn more than N9.5m annually. This is down from 23 percent of staff who earned above N9.5m in 2016. BusinessDay observed that less than a dozen staff who exited NSE in 2017 were high earning staff, that is those earning N9.5 million and above. However, this did not help in reducing the wage bill at the Exchange as personnel expenses still increased by N210 million.

L-R: James Formby, global CEO, Rand Merchant Bank; Michael Larbie, CEO, Rand Merchant Bank Nigeria (RMBN)/regional head West Africa; Remi Odunlami, RMBN non-executive director; Abimbola Ogunbanjo, president, national council of the Nigerian Stock Exchange, and Abiola Adekoya, CEO, RMBN Stockbrokers, during the 5th year anniversary celebratory dinner of RMBN and official launch of RMBN Stockbrokers in Lagos.

materials industry offering where appropriate guaranteed purchase commitments, thus enabling critical access to capital for investment. Through its investments,

the fund will equip a new generation of young Nigerians with high-level skills in modern methods of construction and technologies and, through a combination

of these activities, the FHF aims to create or support up to 1,500,000 jobs by 2023, making a real difference to the quality of life of their families and the economy.

Lagos commends NANTA on fight against fraudsters in tourism trade IFEOMA OKEKE

agos state government has commended the strategic efforts of National Association of Nigeria Travel Agencies (NANTA) to rid the travel trade sector of fraudsters. In line with this development, the state government assured that it would as matter of urgency initiate visible partnership platforms that will enthrone effective utilization of NANTA’s local and international reach and experience in marketing Lagos as Africa’s must visit destination. Steve Ayorinde, commissioner of Tourism, Lagos state who made the remarks during a visit to Bankole Bernard, NANTA President in his office noted that NANTA has shown through its determination to have an enabling regulatory act to guard its membership

and an industry identification card as a signs of a serious and well focused association which deserves support and encouragement from any serious tourism facilitator or state. According to Ayorinde, NANTA has shown capacity to lead the industry through brilliant and many commendable projects under Bankole Bernard’s leadership which stands it out among the many nebulous tourism associations in Nigeria. “In the many associations in tourism industry NANTA to me stands out and we are going to encourage and work with NANTA to build and create a new Lagos tourism. Indeed, we were once on course in this direction but the relationship nosedived but am happy today that we are back on the same page”, the commissioner stated. Earlier in his welcome address, NANTA President, called on the commissioner to aggressively rebrand Lagos and push

ahead creative ideas that will stand out Lagos as the most populous destination in Africa with concrete marketing offices in New York, Jo’burg, London and Dubai. “We appreciate all the infrastructural drive of Lagos governor to better Lagos tourism tomorrow, particularly in having an agency solely devoted to the promotion of Lagos tourism products but again we caution that all inputs must be evaluated to avoid the pitfalls associated with past efforts in this quest”, he added. Bernard congratulated the commissioner for his noticeable and well intentioned efforts to change the narrative of Lagos tourism since he came into office few months ago and urged him to keep the fire burning. availing participants of valuable resources that will help them in their growth as chess players.

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Politics & Policy

Abiola’s posthumous honour won’t put food on people’s table - Bello 19

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2019: In extraordinary campaign, Atiku strategises to unseat Buhari INNOCENT ODOH, Abuja

head of the 2019 general elections, former Vice President, Atiku Abubakar, is planning what many of his supporters have described as the “mother- of- all” campaigns that could dislodge President Muhammadu Buhari and his All Progressives Congress (APC) from power. According to a source within the Atiku campaign team, who preferred anonymity, the Turakin Adamawa has perfected a national campaign structure and also in the 36 states, adding that support groups have gone ahead to set structures down to the local governments and wards. “We are planning to leverage on the massive structures beginning from the grassroots where Atiku has attracted massive following in recent times,” the source said. Atiku recently appointed former Governor of Ogun State, Gbenga Daniel as the Director General of his presidential campaign organization. Atiku defected from the ruling APC and returned to the People’s Democracy Party (PDP), where he has since declared his intention to run for the presidency of the country in 2019. On whether Atiku will be a beneficiary of a coming grand coalition of about 35 political par-

Atiku

ties and the PDP, the source noted that “Atiku recognizes that politics is a game of number and you can’t leave anyone behind. We are trying to reach people whose vision and values align with the party and I know that a lot of work has gone on both at his own personal level and that of the party. Yes I can assure you that there is a plan for a major coalition.”

He blasted the APC government for allegedly failing Nigerians in the last three years, stressing that the APC never had any policy document when they came to power, which was why the party plunged Nigerians into untold hardship. He added that it now requires emergency efforts to rescue Nigerians from the failures of the APC. “Atiku is working on a policy

document and any time soon it will be unveiled and it will contain the nitty-gritty of how he plans to initiate economic development, create jobs and to revive all the sectors that have been floundering,” he noted. Speaking on the alleged desperation of the Buhari government to clampdown on opposition figures and slam charges of corruption

against people perceived to be a threat to his reelection bid as allegedly being meted out to the President of the Senate Bukola Saraki and others, the source said no matter what the government does, it will never override the collective will of the Nigerians people. He stressed that the Nigerian people are eager to vote Atiku, who they believe will rescue them from the bondage of the APC. “Even if the president scuttles ambition of individuals, he cannot scuttle the collective aspiration of the Nigerian people. It is very clear that Nigerians are sick and tired of the situation they found themselves in. Nigerians are looking for somebody to come and redeem them and bring Nigerians together as we use to be. “Atiku fits that calling and he is a man that can drive this push for unity and economic regeneration. So if that is the aspiration of the Nigerian people, nobody will stop it,” he said. Atitku had on Friday expressed concerns in a statement over alleged threat to clampdown on opposition figures following the alarm raised by former President Olusegun Obasanjo, who on Friday issued a statement alleging that President Buhari is planning to hang corruption charges against him because of his criticisms of the government.

ADP can drive Nigeria out of mono-economy - Yabagi …Says declaration of June 12 as Democracy Day is political gimmick BY INNOCENT ODOH, Abuja

he National Chairman of the Action Democratic Party (ADP), Yusuf Yabagi Sani, has assured that his party has the strategic blueprint to drive Nigeria out of the mono- economy dependent on crude oil even as he stressed his party’s agenda on diversification would encompass investment in real sectors. The ADP chair gave this declaration when the party rolled out the drums as thousands of its faithful thronged the party’s National Headquarters in Abuja to celebrate the one year-anniversary of its registration as a party. Sani, in his speech during a press conference lamented that the nation’s economy has over the years, remained disarticulated and almost dysfunctional due to a plurality of poor policies and corruption of

past and present administration in Nigeria. “It is disheartening today that Nigeria has been mindlessly turned into a mono- economy so dependent on crude oil to the neglect of other sectors of the economy. Crude oil now constitutes about 90 % of Nigeria’s foreign exchange earnings and about 80% of its total export. “The most pathetic aspect is that successive leaders in Nigeria have failed to add value to the crude oil. It is shameful that over 90% of Nigeria’s crude is exported abroad for refining at great cost to this country and the leaders don’t feel a tinge of conscience,” he said. Sani said further that the ADP has developed a strategic blueprint to change the structure of the Nigerian economy and diversify the real sectors of the economy beyond rhetoric. He added that in the last one year, the ADP has redefined politics as many now troop to take membership of the

party because of its irresistible brand of politics, which is focused on ideas and institution building. “Our core principles are All-inclusive government at all levels, Democratic empowerment of youth/ Women and Party supremacy. The process of selection of leadership at all levels of our party organs is through direct primaries where all card carrying financial members of the party are allowed to vote for a candidate of their choice. The delegate system of primaries used by most political parties in Nigeria was rejected due to its fraudulent tendencies,” he said. He slammed the President Muhammadu Buhari –led All Progressives Congress (APC) administration for the poor living standard of Nigerians which rapidly deteriorated especially in the last three years, adding that the President promised so much in 2015 and has so far delivered so little. He urged Nigerians to align their

democratic choices with the party ahead of the 2019 general elections stressing that the party has all it takes to drive a new policy on trade and investment that will entail opening up opportunities for local and foreign investors whether they are small or medium enterprises or multinational companies. “By so doing Nigeria’s global competiveness index will improve as investors both local and foreign will release their energies to exploit the vast potentials that abound in Nigeria. That is the only way we can create jobs for the jobless and diversify the economy because government does not create jobs,” he said. While fielding questions with reporters, the ADP chairman also called for restructuring of the country to allow states maximize their potentials to sustain themselves. “Each state in the country is capable of earning foreign exchange if their natural resources are properly developed. Why

we are in this straight jacket kind of economic system is because we have refused to match the potentials of this country with the requisite ideas to govern the country. Restructuring is therefore a necessity,” he said. On President Buhari’s declaration of June 12 as Democracy Day, Sani suggested that it was probably motivated by self-serving political interest. “Sometimes you have to weigh it against the politics of the time. Is it not a Greek gift? Is it not to appease certain people, patronize certain sections of the country? “We must go beyond playing politics with the future of this country. I am not saying that people should not be honoured. We recognize the role of MKO Abiola and those who lost their lives during that unnecessary phase of our development but they must be honoured in a proper way for altruistic reasons and not for twisted or political reasons,” he said.

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Buhari, APC gagging opposition ahead of 2019 JAMES KWEN, Abuja

s the clock ticks in geometrical progression towards the 2019 general elections, evidences abound that the All Progressives Congress, APC, government led by President Muhammadu Buhari is allegedly gagging the opposition. Nigeria has for almost two decades now been practising democracy, a system of government that gives room for citizens’ fundamental human rights. As enshrined in the 1999 amended constitution of Nigeria, citizens are entitled to freedom of expression and association which empowers them to constructively criticize the government and belong to political parties of their choice. Unfortunately, however, as the nation matches to another round of elections, the ruling party, APC led at the centre by President Muhammadu Buhari appears to be intolerant of opposing views to its policies, programmes and general modus operandi. It is evidently clear that opponents even within the party are not spared the descent of state powers whenever they openly or surreptitiously lampoon or hold divergent views to that of the government. The travails of the outspoken Dino Melaye, Senator representing Kogi West who is always critical of the APC led Federal government readily come to mind just like the case of Bukola Saraki, President of the Senate, leaders of the main opposition Peoples Democratic Party, PDP among others. Under the APC regime, state apparatuses such as the Economic and Financial Crimes Commission, EFCC, the Police and other security agencies are usually unleashed on perceived enemies under the pretext of the war against corruption and crime. Prominent instances of the demonstration of the conscious effort by the APC to muzzle the opposition within its prism was the arrest and subsequent detention of Melaye over alleged possession of illegal fire arms and the summon of Saraki by Police for complicity in the Offa robbery saga. In the opposition category instances include the continued incarceration of Sambo Dasuki, former National Security Adviser and Olisa Metuh, former PDP Spokesman over corruption charges even as courts granted them bail on health ground while Sule Lamido, former Jigawa State Governor and PDP Presidential aspirant among others are under watch. Recently too, former President Olusegun Obasanjo cried out loud that the government is planning his prosecution sequel to his critical stance on the activities of the Buhari led APC government which he is battling tooth and nail to unseat in 2019. Obasanjo, in a recent press statement alleged that the Muhammadu Buhari administration is planning to frame him on false evidences

Buhari

as there is a plan to frustrate, intimidate and blackmail him into abandoning his “divine mandate”. Obasanjo revealed that he has been told that his security of life cannot be guaranteed because operatives are perfecting how to curtail him. “Impeccable security sources have alleged Chief Obasanjo’s name is on their Watch List and that the security of his life cannot be guaranteed. According to these informants, many of who are in the top echelon of the Nation’s security management and close to the corridors of power, the operatives are daily perfecting how to curtail the personal liberties of the former President and hang a crime on him,” Obasanjo alleged. The former president claimed the steps being taken to frame him can only be compared to era of the late dictator, Sani Abacha. “The content of the alleged beastly designs, it was learnt are two-fold for now. One, to cease his International Passport and clamp him into detention indefinitely, in order to prevent him from further expressing angst on the pervasive mediocrity in the quality of governance, economic management and in the protection of lives and property by the Government. “But, since that could expose the Government to a swath of international condemnation, embarrassment and outrage, it is said that another plot being hatched is to cause the Economic and Financial Crimes Commission (EFCC) to reopen investigation into the activities of Chief Obasanjo’s administration using false witnesses and documents. This will be a re-enactment of the Abacha era in which Chief Obasanjo was one of the principal victims,” Obasanjo further alleged. He also said that Senate President Bukola Saraki and Yakubu Dogara, Speaker of the House of Representatives, are being threatened by the current administration. “We are currently in a nation where the number three citizen is currently being harangued and the number four citizen is facing similar threat within the same Government they serve,” he said. The former president also said many Nigerians are currently living in fear ahead of the 2019 elections.

He said with the “worrisome” dimension things have taken, citizens fear they could be hounded “or even killed” Buhari using blackmail to silence opposition Obasanjo further accused Buhari’s government of using various means to suppress opposition in the country. “While it is regrettable how the government has sunk in its shameless desperation to cow opposition, a resort to blackmail, despotism and gestapo-tactics being employed by the goons of this government would not hold water. And no government ever remains in power forever,” he said. The former president also maintained his readiness to face probe over allegations that he mismanaged $16 billion electricity funds. However, he said the investigation into the allegation be by an independent and credible panel. Obasanjo reiterated his readiness to face probe again after that of the House of Representatives, the Senate, the ICPC, and the EFCC, but before an independent, objective and credible panel of enquiry to account for his stewardship in government and beyond. While many Nigerians started seeing the plot by the APC government to silence opposition recently, a human rights Lawyer, Franc Utoo said the administration took off with this draconian posture.

Solomon Gbenga, National Director of Youth, Young Democratic Party noted that the APC government is not just gagging opposition but it is fighting Nigerians generally who are opposed to its whims and caprices ahead of 2019

Utoo said, “right from the first week, the new party, the new President (Buhari) was in office they started on a wrong footing by using state institutions to further personal ambitions”. He observed that APC has not lived up to expectations of Nigerians because if one sees the motto of party, “it is justice, unity and peace and we have not seen much of the reflection of these three words in the govt. There is no so much justice in the land, there is no so much unity in the land and there is no so much peace in the land”. “There is no too much tolerance to the opposition. We have seen how opposition leaders are being hounded, being clamped into detention and embarrassed. No one is above the law of the land but in applying the law we need equity too. “It should be a blanket application, it should cover everyone. I have seen where when someone defect to APC cases against him in court becomes deliberately frustrated and become truncated at the end of the day and some cases get halted at the end of the day. “We have seen cases where in some instances there is a pretension of prosecuting a case but behind the scene we know that there is no seriousness attached to it. “Its quite evident that the ruling party has stood up vehemently against opposition members and to a very great extent becomes intolerant of dissenting views. We have seen where the moment you raise a voice against the government, charges will be concocted against you. “We have seen the case of Dino Melaye, we have seen the case of the Senate President ( Saraki), we have seen the cases of Senator Misau, Senator Shehu Sani in Kaduna State and in so many other places. “It is quite unfortunate, its not suppose to be this way, we thought that the APC which of course was my party will bring the needed change to Nigeria and bring the major democratic ethos as a fundamental in the practice of our nascent democracy but for me to this date this has not been achieved. “One of the reasons I voted for this government was primarily to see that our institutions of state are strengthened to serve the state and the people above personal interests but unfortunately, the reverse is the case right now. “You see that institutions of state are used by those at the helms of affairs in furtherance of their selfish ambitions and of course it started from the very first day the government was inaugurated. “If you remember vividly the choice of the party for the office of the Senate President was a different person but Bukola Saraki exuded his fundamental human rights of expression and association and went into that election and was elected and immediately after that, he became hounded. “I want to tell you that if Saraki had not contested for the office of the Senate President his travails before the Code of Conduct Tribunal wouldn’t have happened. That is

just the bitter truth. “You could see what is happening between the IGP and the Senate. You could see what is happening between the Federal government and some of its suspects in her custody like Azzaki, like Peace Corps and even Dasuki. No matter the gravity of charges against these people, a court of competent jurisdiction has granted them bail. “In the case of Peace Corps so many court orders have been given for the government to open the National Headquarters of Peace Corps and up till now nothing has happened. So you seem gross violation of the rule of law, a gross violation of court orders. This is desecration of our state institutions and if this continues we will not have a country at all”, Utoo affirmed. Similarly, Solomon Gbenga, National Director of Youth, Young Democratic Party noted that the APC government is not just gagging opposition but it is fighting Nigerians generally who are opposed to its whims and caprices ahead of 2019. “The fight is not just APC against opposition but the President against Nigerians. There should be freedom of speech, freedom of action and all of that. I wonder why a President of a country will decide to gag the media, attack every person that is speaking against his government. Look at the attacks on a the National Assembly. “A lot of Nigerians are now scared of their lives because the president/ APC wants to be reelected at all cost. The President and APC should understand that everybody has the right to contest. “The President is using EFCC to silence opponents. The police no longer work for the people but work directly for the President and go about arresting his opponents. Once you speak against the government, the security agencies will go against you, look at the case of Dino Melaye. “We are not in a military rule again, we are in a civil rule and he should respect our democracy. We are in a democratic rule and not anarchical rule. “He is using the fight against corruption to witch hunt anybody who is contesting against him. See what he is doing to Atiku, see what he is doing to Saraki, Sule Lamido is already condemned. Every Senator who is against him is going down the line. Look at the case of Senator Shehu Sani”, Gbenga alerted. However, Idayat Hassan, Director, Centre for Democracy and Development observed that beyond the issue of the ruling party gagging the opposition both of them are overheating the polity with counter accusations. Hassan noted that all the campaigns of the APC and the opposition, particularly the PDP are not issues based, thereby plunging the country into myriad of rhetorics. “Both the ruling party and the opposition (PDP) are plunging the nation into a lot of rhetoric. They are not addressing the real issues in their campaigns. They are busy blaming one another”, she maintained.

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Politics & Policy

Abiola’s posthumous honour won’t put food on people’s table - Bello A governorship aspirant of the People’s Democratic Party (PDP) in the forthcoming election in Osun state, Adejare Bello, has queries the posthumous honour conferred by President Muhammadu Buhari on the acclaimed winner of the annulled June 12, 1993 Presidential election, Moshood Abiola, saying it will not put food on people’s table. In this interview with journalists in Abuja, the two-time Speaker of the Osun State House of Assembly also says he is contesting the September 22 governorship election in Osun to rescue his state from the bondage of the All Progressives Congress (APC). OWEDE AGBAJILEKE was there. Excerpts: You are going into the governorship race in a state not under PDP’s control. What are your party’s chances? can tell you authoritatively that the governorship seat of Osun State is for take. In fact, the People’s Democratic Party has very little campaigns to do in Osun State. The campaign for PDP to be in office in Osun State has been done largely by APC itself with maladministration. In the last seven and half years, what the people of Osun State experienced is nothing to write home about. It is hunger, chaos, It is non-development. And with that, all PDP needs for now is the right candidate to fly its flag. Apart from that, I don’t think there is any problem.

Do you agree that the posthumous national award to MKO Abiola will swing some votes in favour of President Muhammadu Buhari in the South West in the 2019 election? The posthumous honour to Abiola is belated. That cannot swing any vote in Osun State. Can the posthumous honour to MKO Abiola turn to food on the table of people of Osun State? The answer is no. So, it doesn’t make any difference. In fact, that honour, to Osun people, is a non-issue. What are your chances in the election with the defection of Senator Iyiola Omisore from PDP to Social Democratic Party (SDP)? To people outside Osun State, Iyiola Omisore is very powerful. In fact, people did not know anybody again other than Omisore. And that was the albatross in 2014. In fact, PDP should be in Government House in Osun State if we had not picked Omisore. But they abandoned many of us. They said we had no money. But I want to tell you that you cannot pursue two things at the same time. You have to leave one for the otherIntegrity and money. I don’t have money but I have integrity. If for eight years, nobody ever made any attempt to impeach me as Speaker of Osun State House of Assembly; it was because I was able to offer quality leadership, which I want to replicate in the Executive arm of government. So, whether Omisore remains in PDP or in SDP, it will make no difference. But all the members of PDP must work harder to cover the vacuum created by him, especially in Ife land. We have four local governments in Ife land. There is no doubt that Omisore is a factor in Ife land. But when you come to my town, Ede, what influ-

Bello

ence does Omisore have there? What about Oshogbo, the state capital that has the largest voting strength? And we have told our people in Ife. The former National Secretary of the party, Wale Oladipo, is from Ife too. A prince for that matter and he is loved by his people. And more importantly, it is not those of us in PDP and APC that will determine who controls the Government House of Osun State. It is the electorate and the electorates have witnessed hell under the current administration. And they are prepared to have a change of mind and change for better this time around. If you claim not to have money, who is funding your campaign? If God wants to favour you, He will not ask for your bank account. I believe it is my time to govern the state. Almost everything points to that simple fact now. As to who is funding my campaign, it is God almighty. Money belongs to God. And if it is God that is in control and I have run the race for 19 months now, I started precisely on the 12 of October, 2016 and I have not borrowed one naira from anybody. And I have gone round all the thirty local government areas twice. And a lot of people are encouraging me to take the ticket and they

would support me. My party will not abandon me. I have friends. I am close to many of them in power; I wouldn’t want to mention names. Even many of them in APC won’t abandon me. And God has done it in a very little way for me. But more importantly, it is not about money, it is about your integrity, your acceptability and how you can carry people along. And people know me as a team player. You said you have a lot of support from APC. Is the party funding your campaign? I am not being funded by APC. What I am saying is this: the current Speaker of the House of Assembly was under me before I left. The current Deputy Speaker, Majority Leader, were all under me before I left. I trained many of them. So, they are my boys. If PDP picks me as their candidate, on the 17th of July when we will conduct our primary, you will be hearing people jumping the boat from APC to join me. We worked together. I have my support all over. People in APC will abandon that party and defect to PDP once I emerge the governorship candidate. You are from Ede Constituency with Senator Ademola Adeleke, who has also thrown his hat into

the ring. What are your chances against him? In the month of June last year, my dear brother, Senator Adeleke who hails from the same town with me, approached the party from APC to pick our ticket. Unhindered, he was given the ticket. And we won nine out of ten local governments in my area. Everybody worked for it because we wanted to demonstrate to the incumbent government that the governorship election this year is for take. Now, if my brother wants to overstretch his luck, he has the constitutional right to contest and nobody can stop him. But whether that will divide Ede on who to follow, they have resolved on who to follow. And if they pick me, Ede’s vote for PDP is very intact. If they pick Ademola (Adeleke), Ede will vote because you need to be in that town to see the underdevelopment there. Everybody is prepared to vote for PDP. So, there is no problem whatsoever. The transparency of the primaries promised by Uche Secondus and his team and the PDP Chairman in Osun State, is giving everybody confidence. And in terms of money, I am the least qualified. But in terms of experience, the lawyer in me will suggest to me that I am an aspirant to beat as far as the race is concerned in Osun State.

2019: Varsity don counsels voters to shun material inducement SIKIRAT SHEHU, Ilorin

n appeal has gone to the electorate to consider the capacity for good governance in electing the next set of leaders rather than allowing materialism to influence their judgment in order to ensure Nigeria attains her full potentials in the 2019 general elections. AbdulGaniyu Abdussalam Oladosu, professor of Arabic Education and the Chief Imam of the University of Ilorin, gave the advice on Saturday while delivering the 12th Quarterly Ramadan Lecture, organised by the University of Ilorin Muslim Community at the University Auditorium. Oladosu, whose lecture was titled “Islam and Good Governance: The Case of Nigeria” expressed dismay over the position of things in the country since independence despite her numerous comparative advantages. The University teacher stressed the need for voters to be weary of politicians who care less about the progress of the country but are only interested in self-aggrandizement, in order to ensure a paradigm shift in the regrettable state of affairs in the country, often dismissed by critics as “big for nothing”. According to him, for the country to claim its rightful place as a worldpower, a responsibility imposed on it by its intimidating size, huge natural endowment and high quality manpower, Nigerians must denounce corruption, laziness, violence and every form of barbarism which are now prevalent across the country. Oladosu also condemned what he described as the “mindless desperation for power and offices” as he challenged Muslim political leaders to desist from self-perpetuation in power, particularly when those they are leading have had enough of their presence. The Chief Imam insisted that Muslim leaders had no choice other than to govern well because there is no justification for inelegant dispositions in the religion they profess as Islam encourages every element of good governance in private and public affairs long before the United Nations Development Programme (UNDP) index for good governance was enunciated in 1994. The cleric further explained that, the concept of popular participation, consultation, transparency, responsiveness, equity, economic welfarism and so many other positive attributes that accounted for the growth of the advanced nations are well-established in Islam through several Quranic references which he copiously quoted but often neglected by successive leaders. Oladosu enjoined Muslims to “promote peace and unity in every situation in order to build a harmonious society devoid of rancour, friction, envy and violence”, noting that in Islam, peace-building takes precedence over the obligatory daily devotions, which he described as “the fundamental essence of Islam”.

BUSINESS DAY

Wednesday 13 June 2018

BUSINESS DAY

SHIPPING

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LOGISTICS

Wednesday 13 June 2018

MARITIME e-COMMERCE

Late Global West owner’s family may petition EFCC over alleged company’s mismanagement Stories by UZOAMAKA ANAGOR-EWUZIE

he family of Late R o m e o It i m a , the founder and pioneer managing director of Global West Vessel Specialist Limited (GWVSL), a maritime security company, are considering the option of petitioning the Economic Financial Crime Commission (EFCC), to take up the case against Winfred Itima, who took over the affairs of the company after the demise of the original company owner. According to them, the EFCC can investigate the alleged cases of fraud against Winfred, the present MD, who was said to have been moving huge amount of money out of the company’s account without the authorisation of Romeo’s direct heirs. Speaking in Lagos last week during the official media view of a documentary named ‘The Price of a Dream,’ produced by Kevin Itima in honour of Late Captain Romeo Itima, his father, Kevin said that there was already a civil case in the court against Winfred, but the family cannot rule out

A cross-section of passengers on a ferry ride recently deployed by SIFAX Group on Ebute Ojo-Apapa (Liverpool) and Mile 2 (Capital Oil Jetty)- Apapa routes.

the possibility of a criminal case or a formal petition to the EFCC, if the lawyer advised them to. The family also alleged that Winfred was also involved in administrative and financial misconduct, such that he unlawfully reduced late Romeo Itima’s shares of 2,000,000 to 300,000 and made himself the highest shareholder in the company. This, according to the family was a deliberate attempt to deprive them of

their rights, interests, and entitlements. “Since Romeo’s death, Winfred has left us in the dark over the management of the company and also terminated the employment of Zion Itima, the eldest son of late Romeo from GWVSL. “As MD, you get paid a salary and bonus. If you want to be a shareholder, you can officially buy shares. Being part of the ownership can be done with the consent of other shareholders and if

you do them without their consent, that is illegal and the EFCC should take up the case because we have enough evidence,” Kevin said. Kevin, who advised the government to go ahead and finish its case against Global West, pointed that the family was not asking for the ownership of the company that killed their father, said that the fight was that the present MD is not the owner of the company and anything he does was without the

concept of the shareholders. My mum, kevin said, still works in the State for 12 to 15 hours due to the financial status of the family, and “there has not been any formal meeting to discuss what is going on with the company, shareholding and compensation regardless of how much we have asked since my father dead.” On the death of Romeo, Kevin believed that his father was murdered because he was the most experienced seaman on the boat. “Therefore, it became questionable that at the dead of the night, wave came and killed only one man, who owned the company and was the most experienced. “From the autopsy, it would have been believable if he fell into the water and struck his head or chest on something, but in his case, there was nothing like that making it difficult to believe. “The story was so inconclusive. And judging by what happened after his death especially with money missing, it was too convenience for him to have dead by accident. Initially, my elder brother was told there was no need for autopsy or contact the police but as the

Water transport gets boost as SIFAX begins ferry services in Lagos

NPA gives recognition to INTELS for supporting sports devt

IFAX Group, a multinational corporation with diverse interest in logistics business, has commenced ferry operations from its newly-concessioned terminal, Ebute-Ojo Jetty, in Ojo Local Government Area of Lagos State. The ferry service operates on Ebute Ojo-Apapa (Liverpool) and Mile 2 (Capital Oil Jetty)- Apapa routes from 7am to 7pm on week days in addition to 24/7 charter services for private individuals and fun seekers, who want to explore the Lagos water fronts. It has deployed two 30-passenger ultra-modern boats for the operation. Olugbade Ibrahim, managing consultant to SIFAX Ferry Terminal, Ojo, said the desire to create alternative means of transportation for commuters and to support the efforts of the Lagos State government in developing

NTELS Nigeria Limited, Nigeria’s oil and gas logistics giant, has been honoured by the Nigerian Ports Authority (NPA) for its partnership, commitment and contribution to sports development in the Authority. The recognition was bestowed on INTELS in Calabar at a gala night and award ceremony marking the end of the 2018 edition of the Nigerian Ports Authority Sports Association (NIPOSA) games, organised to strengthen stakeholders’ collaboration and create a social network for the port community. R e x f o rd A s a i k p u k a , head, government and public affairs department of INTELS, who represented Silvano Bellinato, INTELS’ general manager, said NPA and INTELS enjoy cordial working relation-

water transportation sector, accounted for the new venture. “We are conscious of adding value and bringing innovation to the waterway business. Our objectives are well aligned with that of the Lagos State Government in the development of the waterways. This has prompted us to acquire two ferries and we plan to increase the number soon. Our ferries are the same with what is obtainable in advanced countries. It is safe, fast, convenient, spacious, durable and manned by experts with tested experience,” he explained. According to Olugbade, the ferry service alongside other facilities at the terminal would provide passengers with excellent customer service experience, which is the hallmark of SIFAX brand. “The two boats that service the Ebute-Ojo ferry

terminal to Apapa and Mile 2 have 500 horse power engines each. As a safety conscious company, we use the best brand of life jackets while onboard entertainment is also guaranteed. We have quality customer service personnel to attend to customer’s complaints and suggestions. Soon, we will add more ferries and open up more routes across Lagos waterways. The terminal building itself will be equipped with wi-fi, eateries and also banks,” he added. John Jenkins, Group managing director, SIFAX Group, said that the company’s investment in the water transportation is part of the overall strategic plan of SIFAX Group to deepen its commitment in the nation’s transport sector, thereby, providing jobs, supporting government’s initiative and helping grow the country’s economy.

ship, which has endured over a long period of time. He said INTELS supported the annual games as part of its commitment to the promotion of healthy living in the maritime industry. “INTELS is well known for its value-addition services to the maritime and, oil and gas sectors in Nigeria. Our partnership with the NPA, which has lasted for over 30 years, has ensured the development of certain strategic infrastructures that helps Nigeria to derive high value from its natural endowments especially its hydrocarbon and maritime endowment. “Our partnership has made it possible for us to build a one-stop-shop oil and gas service centre, which has led to improved efficiency of personnel, reduction of the downtime

children, we had to fight for official autopsy to be done, but nobody was arrested,” Kevin said. On the autopsy, Zion Itima, Romeo’s eldest son, said that he was there when the brain and heart of their father were opened, but no water was found in the lungs of the man who was said to have drowned for two days. Global West was a legitimate company that was able to generate revenue during the time of Late Romeo. Here, when ships enter the nation’s waterways, they pay levies to NIMASA, but before the coming of GWVSL, some of these ships enter without paying. “So, Global West was contracted to ensure that people pay duties associated with their ships. Imagine how many ships that comes into the country without paying appropriate duty? This was why Global West was able to make huge money for government why a small percentage of that goes to the company. It was a very lucrative contract for people with the experience, competent and equipment to catch these vessels and make them pay their duties,” Kevin explained.

of offshore rigs and the provision of quick response to offshore emergencies,” he said. He stated that the oil and gas service center has also enhanced physical monitoring and follow-up of equipment in stock; modularisation of operational areas and better control of supply vessels. “On top of all these, we are always delighted to support our communities through various initiatives including sports development and community projects. It is in this regard that we found it worthwhile to support the NPA sports event.” As NPA concessionaire, INTELS has supported government’s port reform, efficiency, and modernisation as well as enhanced government revenue generation from the port.

Wednesday 13 June 2018

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BUSINESS DAY

Tax Issues

Evading tax payment to get tougher STEPHEN ONYEKWELU

igeria has fully embraced a system of automatic e x c ha n g e o f data where financial data of citizens are easily accessible and makes tax evaders have nowhere to hide. Tax evasion is now a serious global issue and the tools available to tax administrators to tackle tax evasion and aggressive tax avoidance have undergone a step-change in recent years. For instance, high profile leaks, such as the release of the ‘Panama’ and the ‘Paradise’ papers by the International Consortium of Investigative Journalists (ICIJ) showed that the world has turned strongly against tax evasion and aggressive tax planning. Also, thanks to groundbreaking international agreements which make difficult to hide assets by placing them in offshore a c c ou nt s o r s t r u c tu re s. Banking secrecy has been quickly disappearing and cooperation between tax administrations is rapidly improving. In Nigeria, when it comes to tax, there is no political party sentiment and prosecutors of tax evaders are expected to have no allegiance to any political party. It is very simple, Nigeria needs money. In Nigeria today, it is less than three weeks to the June 30 deadline of the one year tax amnesty granted defaulters to regularise their obligations and the Federal Government is said to have set up necessary machinery to prosecute defaulters and organisations that fail to leverage this window of opportunity. The tax amnesty –Voluntary Asset and Income Declaration Scheme (VAIDS) – which took-off on July 1, 2017 enables taxable Nigerians to declare their assets and incomes and get certain waivers, including penalties and interest payments. The scheme covers the whole gamut of taxes, and gives Nigerians until end-June 2018 to regularise their tax affairs. Should they not meet the deadline, they are liable, if convicted, to imprisonment of up 5 years, the payment of accrued interest at an annual rate of 21percent, penalties and possible confiscation of assets. The data mining efforts of the Federal Ministry of Finance domiciled in ‘Project Lighthouse’ helped identify a new batch of more than 130,000 high net worth Nige-

rian individuals and companies that have potential tax underpayments. Nigeria had signed the Multilateral Competent Authority on Common Reporting Standards, which allows for exchange of financial account information. AsoRock also engaged a leading international Asset Tracing and Investigation Agency (Kroll) to trace and track illicit flows and assets. In addition to data mining and matching between government departments and agencies, the Federal Government also employed a US household name in asset recovery to link land registry records and tax receipts. Other areas of interest to the authorities include b u re a u x d e c h a n g e re cords, the whistle-blowing scheme, data held at the Corporate Affairs Commission (CAC), Wikileaks, the ‘Panama papers’, the registration of private jets and yachts, and bank verification numbers. Cu r re n t l y , a t o t a l o f N30billion has been recovered from individuals and companies under VAIDS, of which the Federal Inland Revenue Service (FIRS) collected 90 percent or N27billion. Nigeria’s tax-to-Gross Domestic Product (GDP) ratio at just 6percent is one of the lowest in the world compared to India (16percent), Ghana (15.9percent), and South Africa (27percent). Most developed nations have tax-to-GDP ratios of between 32percent and 35percent. The Taxman collected d at a f ro m a nu m b e r o f sources including land registries of the Governments of Lagos, Kaduna, Kano and Ogun States as well as the Federal Capital Territory

(FCT) and also has been able to request and receive data from a number of nations including traditional tax havens. For the overseas data Federal Government has used exchange of information protocols. Under these protocols, information relating to bank records and financial filings for tax purposes is obtained from tax havens like British Virgin Islands and Mauritius that are signatories to information sharing agreements. The Taxman has been unearthing tax payers data from using Bank Verification Number (BVN), foreign exchange (F X) applica tion, land registry, company dividends, car registration, Corporate Affairs Commission, and foreign property ownership. “The focus right now is on those that make substantive amount in Nigeria that have not declared or are underpaying their taxes,” according to Tunde Fowler, FIRS executive chairman. With a record of N30billion revenue through

high profile leaks, such as the release of the ‘Panama’ and the ‘Paradise’ papers showed that the world has turned strongly against tax evasion

VAIDS, Federal Government has only succeeded in realising only 8.3percent of the target $1billion (N360billion) expected tax revenue through the amnesty programme. President Buhari had in April approved the extension of the Voluntary Assets and Income Declaration Scheme to June 30, making it easier for corporates and individuals that have been defaulting in tax payments to take advantage of this amnesty scheme so as to avoid reputational risk. The national taxpayers’ database has now increased from 14 million in 2016 to over 19 million in 2018. Federal Government set out to bring in 4 million new tax payers into the tax net. The Federal Government has approved the issuance of Declaration Certificates to taxpayers under VAIDS. The Declaration Certificates, which was approved by the Finance Minister, Kemi Adeosun are to be given to taxpayers who voluntarily declared their previously undisclosed assets and income. “The robust implementation of VAIDS has seen an increase in the number of tax payers from 13 million before the assumption of office by the President Muhammadu Buhari administration to 14 million in 2016 and 19.3 million in 2018,” Adeosun twitted recently. The taxman’s stepped up its role as a result of increased desire by Federal Government to shore up tax revenue as Nigeria’s tax-toGDP ratio at 6percent is one of the lowest in the world, implying tax’s contribution to the economy is low. “The Taxman derives no joy in closing businesses of tax defaulters. The Tax-

man’s only desire is to raise funds for the well-being of Nigeria and her citizens,” according to the VAIDS office at the Federal Ministry of Finance. “The macro importance of mobile money is that it helps to bring people into the taxpaying net”, according to Gregory Kronsten’s team of analysts at FBNQuest in their June 4 note, where they noted that the principal drivers of record increase in the number of taxpayers may “have been computerisation, enforcement steps and the tax amnesty rather than mobile money.” T h e Jo i n t Ta x B o a rd (JTB) had in a communiqué issued at the end of its 140th meeting held from March 25 to 28, 2018 wants revenue authorities nationwide to ensure that all efforts are made to increase the ratio of national tax revenue to GDP to at least 20percent by December 31, 2018. VAIDS is one of the key policies being used by the Fe d e ra l G ove r n m e nt to reposition the Niger ian economy and correct inherited underdevelopment. This tax amnesty scheme is not to persecute individuals and companies but an opportunity for everyone to regularise all their tax irregularities, according to Federal Government which has also empowered the taxman who has been busy digging into the financial transactions and wealth structures of individuals and corporates. The Chartered Institute of Taxation of Nigeria in its TaxBits noted that when then Acting President, Yemi Osinbajo, signed the Executive order that ushered in the Voluntar y Assets and Income Declaration Scheme, in June 2017, it promised waiver of interest and penalties, among other sweeteners in the course of the programme. “These waivers are considered the best yet by any tax amnesty programme anywhere in the world as the government has only requested for what should ordinarily have been paid over to its coffers, in terms of taxes. This is analogous to a wealth manager who has only indicated interest in collecting his principal leaving interest and other default charges on transactions of mutual interest. “The whole idea was to make the tax package juicy enough for tax defaulters to come forward and make their declaration in as honest and complete way as possible further to

their call to civic action as provided by Section 24(f ) of the 1999 Constitution of the Federal Republic of Nigeria, as amended”, CITN noted. The way for ward, according to CITN is that the clear and unambiguous words of the executive order need to be carried out to the letter. As part of the implementation of VAIDS, many high net worth individuals (HNIs) and very important personalities (VIPs) have been receiving letters from Ministr y of Finance and various State Boards of Internal Revenue Services on their tax status, requesting them to take advantage of VAIDS to regularise their tax status. As deadline for VAIDS gradually approaches, penalties for non-compliance include: liability to pay in full, the principal sum due, all interest and penalties due (10-100percent of the tax due or forfeiture of related asset); and criminal prosecution in accordance with relevant extant laws, including up to 5 years in jail. Federal Government insists that tax evasion is one of the easiest cases to prosecute and has put in place a prosecution team including the Ministries of Finance and Justice, the Economic and Financial Crimes Commission (EFCC) and the Federal Inland Revenue Ser vice (FIRS) to follow through in the prosecution process. Other penalties facing tax defaulters include withdrawal of any reliefs, which may have been granted to the participant; liability to undergo comprehensive tax audit ; and relating to undisclosed information, any sum voluntarily declared may be counted as part payment of outstanding tax. The International Monetary Fund (IMF) in a most recent country report on Nigeria blamed the nation’s re ve nu e a d m i n i st rato rs for the low tax collection records of Africa’s largest economy. “The very low tax collection rates in Nigeria are a direct reflection of weaknesses in revenue administration systems and a high level of systemic noncompliance” IMF noted. “Estimates of tax potential from the literature suggest that a non-oil tax capacity of 16 to 18 percent would be optimal for a country with Nigeria’s economic structure and per capita income levels. This estimate implies space for additional tax collection of 12 percent of GDP”, IMF stated.

Wednesday 13 June 2018

C002D5556

BUSINESS DAY

COMPANIES & MARKETS Business Event

Gr8jobsng launches LMS to enhance employability

T L-R: Adewole Afolabi, managing partner, Universal Bipolar Consults Limited; Andrejs Alferovs, managing director, Kortext Limited, and Nadine Prowse , group operations director, during a media sneak preview of an academic library support product, in Bournemouth, United Kingdom recently

L-R: Olakunle Fadumiye, landside infrastructure manager, Lekki Port LFTZ Enterprise (LPLE); Steven Heukelom, general manager - projects, LPLE; Emmanuel Adesoye, chairman, LPLE; Tobechukwu Okoroji, senior prefect, Albesta Academy Ibeju-Lekki (winner), and Sandeep Parasramka, chief financial officer, LPLE, during prize presentation at the finals of the third edition of Tolaram Science Challenge organized by LPLE held in Lagos recently.

L-R: Ugorji Franklin, official, National Youth Service Corps (NYSC); Kolawole Gbeminiyi, one of the winners, and Baldwin Onuigbo, zonal head, Wuse, First City Monument Bank, during first draws of the FCMB Millionaire Promo Season 5 in Abuja/North Region.

L-R: Emmanuel Agu, portfolio manager, mainstream lager and stout brands, Nigerian Breweries Plc, Chibuzor Nelson Azubuike a.k.a., Phyno, Life Continental Lager Beer Brand Ambassador, and Franco Maria Maggi , marketing director , Nigerian Breweries Plc, at the unveiling ceremony of Phyno as the new Life Continental Lager Beer Brand Ambassador at Nigerian Breweries Plc corporate head office in Lagos

he Learning Management System (LMS) is an initiative by Gr8jobsng to aid jobseekers in Nigeria become more employable through interactive employability courses. During the launch of the LSM, Omomene Odike, managing director/CEO of Gr8jobsng, a HR expert with over 14 years in the industry, spoke about the increasing rate of unemployment in Nigeria, and lamented the sad truth about most Nigerian youths being unemployable. This endemic situation in the country led her team to come up with the LMS, with a drive to revolutionise the way HR is seen in Nigeria and beyond. According to Odike, most of the time, when you do not get offered that job, it may not be because you are not qualified; it can just be that your soft skills are missing. The way you opened the door, the way you chewed that gum, the way you answered the first question, your grammatical tenses or it can just be your CV presentation, she said. Soft skills are right skills, in-

formation and exposure required to be employable. They will always enable you secure that dream job and this is why you must continue reading this piece. Gr8jobsng platform launched in June 29, 2016 and is been recognised as the number one recruitment platform in Africa. The platform enables employers to advertise their job vacancies for free, access world class HR services in the areas of recruitment, outsourcing, training, pre-assessment testing, employee verification, CV purchase, among other services. She also says in today’s Digital Age, LMS is here to stay as more and more organisations large and small are adopting LMS as it is providing a solution that is attractive, reliable and cost effective. This LMS has been designed solely for Nigerians and there is no age or class restriction. Young adults from their secondary school level can take part in the one-year exercise. There’s always room for any Nigerian adult who wishes to learn more on this

platform. All it takes is for you (Nigerian youth) or parents (who wish to help their children stay grounded in the job world) to sign up on www.gr8jobsng.com. Input all your necessary information including a lovely photograph of yourself, go platinum, pay a fee less than 3,000 and start taking your courses. The good thing is you don’t have to burn a lot of data, as the longest course is 10 minutes only. Once you’re done listening to your short lecture, you take a test and immediate get your result and certificate. Gr8jobsng LMS comprises of over 40 courses and the platform covers a wide range of assessments from, Interview Skills, how to search for a job, writing a good CV, Business writing skills, Customer Service, Critical thinking, Sales & Marketing, Leadership, Time Management and so many more Tell someone to tell another person about this wonderful initiative and you’ll be helping reduce the rate of unemployment and unemployable youths in Nigeria and Africa as a whole.

Wednesday 13 June 2018

C002D5556

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Equatorial Guinea’s new flare

N.J AYUK Ayuk JD/MBA is a leading energy lawyer and a strong advocate for African entrepreneur., He is the founder and CEO of Centurion Law Group.

hanks to a landmark agreement signed last month between Noble Energy and Equatorial Guinea’s Minister of Mines and Hydrocarbons, the West African country has a renewed shot at fulfilling its ambitions of a second era of development, this time fuelled by natural gas. The agreement, signed May 10 and including the state-owned GEPetrol and third-parties, will see Noble Energy pumping 600 billion cubic feet of natural gas from the offshore Allen field to the already-established Punta Europa integrated gas complex. In a strategic move, the Minister of Mines and Hydrocarbons of Equatorial Guinea, Gabriel Mbaga Obiang Lima, at the same time announced his plans to build a natural gas Megahub operating from Punta Europa that will be the groundwork for Equatorial Guinea to rise as a significant player in the global LNG exports market. TheMegahub will aggregate the production of any existing and new natural gas discovery in the country.

MUHAMMAD AJAH Muhammad Ajah is an advocate of humanity, peace and good governance in Abuja. E-mail mobahawwah@yahoo.co.uk.

igerians who were in the multipurpose hall of the Lagos Television at the weekend to parley on the peaceful coexistence in Nigeria must have gone back to their homes with purified minds to be good citizens and ambassadors of peace in their societies. That was a wonderful gathering that should be organized regularly by all responsible media and religious organizations in the country. The stage was overwhelmed by the lecture of the the Secretary-General of Nigerian Supreme Council for Islamic Affairs (NSCIA), Professor Ishaq Olanrewaju Oloyede, titled: “Achieving peace, stability and good governance in a multi-religious and multi-ethnic nation: The Islamic perspective. It was a mixture of spiritual reawakening, heart stimulation and philosophical connotation to convince the audience on the maintenance of peace in Nigeria. Peace, to him, is not the absence of war, but a situation where people are able to resolve their conflicts without violence and can work together to improve the quality of their lives. The event was organized by Right Development Limited, Publishers of The Point Newspaper. Nigerians should work hard together for a peaceful nation where every citizen lives in safety, without fear or threat of violence. No law tolerates violence. There should be equality and justice for all. The rights of Nigerian citizens must be protected. However, peace requires that everyone participates in shaping political decisions. The government

Noble Energy agreement with the EG government opens a new door to gas monetization in West Africa he said in the announcement. in the country’s natural gas, energy and The country’s gas revolution will Under the agreement, a This is a fundamental message economic policy could not have been have a dramatic impact on all aspects 65-kilometre pipeline will to industry players that are weary of accomplished so swiftly and successof Equatorial Guinea’s economy — negotiations and bureaucratic fully without the cooperation of OPEC providing opportunities for economic be built to connect Noble’s delayed difficulties. A message that we stated as and non-OPEC members. diversification, creation of local conTheir contribution in gathering tent and jobs, and ensuring that the operations to Punta Europa. fundamental in our analysis of Equatorial Guinea’s natural gas policy in “Big information and sharing know-how state-owned gas company, Sonagas, The rest of the upstream Barrels: African Oil and Gas and the helped in reviving declining oil and gas will take a leading role in the developQuest for Prosperity,” and that is now fields, which in all helped Equatorial ment and marketing of LNG. facility will require only materializing. Guinea rise up from the oil price slump Once the agreement comes into efminor modifications to be strongly It seems that Equatoguinean lead- that sent its budget and those of many fect, Noble’s natural gas output will go from being injected for enhanced conable to operate in this new ers are finally gearing up for a true other oil nations into disarray just a gas-based revolution and at quick pace. few years ago. Mr. Obiang Lima said densate recovery to fuel the Marathon fashion According to the minister, if we account that the participation of international Oil-operated Alba Liquefied Petroleum Gas plant and EGLNG’s Liquefied Natural Gas (LNG) facility, located at Punta Europa. This is no small project. Today, Equatorial Guinea’s only LNG facility receives natural gas-feed from the ageing Alba field and production is estimated to decline dramatically by as early as 2020. Under the agreement, a 65-kilometre pipeline will be built to connect Noble’s operations to Punta Europa. The rest of the upstream facility will require only minor modifications to be able to operate in this new fashion. Further, the pipeline will be designed with the capacity to receive not only Alen’s output, but also that of surrounding fields. The remainder of the fields in blocks 0 and 1, where the Alen field is located, will also be able to provide feedstock for the country’s gas-processing facilities with little to no investment. This answers not just the need for further feedstock but also limits the country’s dependency on a single upstream project. In all, this single development brings assurance to the continuity of

Equatorial Guinea’s gas-based economic development strategy. In an official statement, Gary W. Willingham, Noble Energy’s executive vice-president, said that “this project will transform the Alen platform into an offshore hub for potential development of additional gas fields nearby.” First production from the project is expected to come online as early as 2020. The big picture These developments are representative of something bigger than figures. After all, we have been hearing Equatoguinean leaders speak of gas-fed industrialization and a gas-based petrochemical revolution for years. What the Noble deal and the natural gas Megahub represent beyond its economic potential, is a statement to the industry and the international community that is best encapsulated in the words of Gabriel Mbaga Obiang Lima at the Africa Oil and Power, London conference: “This will prove to the world that Equatorial Guinea doesn’t just talk”,

for existing gas-processing infrastructure, the final goals of the natural gas Megahub are already 25 percent to 30 percent complete. Gabriel Obiang was clear during his address: the project is to be complete by “2020 or even before.” Further, the Punta Europa Megahub opens the door, not just to boost Equatorial Guinea’s LNG production exports, but to bring in gas production from neighbouring countries to produce LNG. The dream of turning Bioko Island into the Singapore of West Africa seems more alive than ever. Just a few days before his speech at AOP London, Mr. Obiang Lima signed a Memorandum of Understanding with Shell Gas & Power Developments, stating the intent to undergo a joint evaluation and development of business opportunities in the country’s gas industry at the same time that the MMIE is evaluating the sale of LNG to independent and state-backed oil companies and traders from 2020 onwards.

organizations is a fundamental tool for progress and that African nations should strive to be at every high-level negotiation table, non-least in matters of energy. The application for OPEC membership made by the Republic of Congo in January followed precisely on the influence and experience of Equatorial Guinea within the oil cartel. The Equatorial Guinea-promoted LNG2Africa program, which is fostering intra-African LNG trade and use for power generation and industrial development, or the LNG sales agreements signed with Ghana, Burkina Faso and others, now come full circle with the advances in Equatorial Guinea’s internal natural gas industry and strengthen the country’s stand to become an LNG hub for the whole of Africa. It seems we are finally seeing a move from words to action in the small West African nation, and that represents great opportunity for all involved.

Building bridges One thing seems certain — advances

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Panacea for peace, good governance in Nigeria must be accountable to the people. Peace, logically, requires that every citizen has fair and equal access to the basic needs of life such as food, clean water, shelter, education, healthcare and a decent living environment; everyone has an equal opportunity to work and make a legitimate living, regardless of gender, ethnicity or any other aspect of identity. Peace, the don maintained, is the totality of condition of well-being felt by individuals, groups and the society at large. The overlapping and dynamic identities are at the root of recurrent problems in Nigeria. An identity assumed by a person or group of persons in Nigeria is not static but dynamic depending on what is at stake and for how long. A person who is a religious champion can soon become a socio-political or ethnocentric champion. More often, momentary interest dictates the identity and its tenure. But Nigeria being a federation of geo-political entities presently referred to as “State”, used to be “Regions”. The States are generally not monolithic in terms of ethnic composition. They appear to be generally arbitrary and circumstantial in origin. With over 250 ethnic groups and over 500 languages in Nigeria, it is wrong to regard ethnic group as a unit of the Nigerian Federation, though ethnic loyalties are very strong. While the Nigerian media choose to constantly refer to Nigeria as “Secular”, no constitution of Nigeria has ever used the word “Secular” to describe the nation. Rather, the popular notion is derived from Section 10 which is “non-adoption of religion-clause”. The Constitution contains clauses which

acknowledge the multi-religious nature of the country. Another controversy can be thrown into the discussion by citing a statistical data on religious demography of Nigeria which put Muslims as 52%, Christians 46%, African traditional religion 1% and others 1%. Prof. Oloyede, who has demystified the mandate of the Joint Admissions and Matriculation Board (JAMB) as its Registrar and received wide national and international accolades for the unprecedented huge funds generated for the federal government within two years, dwelled on various sensitive national issues that affect Nigeria and good governance. He was full of lamentations that some religious “actors” in the country prefer lies and falsehood in promoting their religious causes. He believes that religion in Nigeria should not be used for disunity. The spread of intolerance, ignorance of the beliefs of others and rivalry amongst religions are antithetical to unity and peaceful coexistence. But for Muslims, he noted, things cannot be the same. Muslims should realize that employing falsehood to propagate a religion is ungodly and is punishable in the sight of Allah. No matter how attractive, religious services should be devoid of falsehood and fictitious allegations against others and Islam has eased the way to attain these laudable abstractions: peace, justice, fairness, good governance, by prescribing the codes of conduct for its adherents in their dealing with people of other faiths. Every Muslim is made responsible to employ good manners in dealing with all human beings, whether Muslims or non-Muslims. It is incumbent on Muslims to be faithful in dealing with non-Muslims.

The age-long conflict between Tiv and the Fulani, as bad as it is, is being aggravated by political and religious irredentists assisted by irresponsible media. A deep reflection of what is being presented as a new clash would have shown that it is a conflict that is as old as Nigeria. The colonial masters, according the don, created grazing routes, forest reserves and mediating teams to address the economic and social friction between the Tiv-farmers and the roving herdsmen. He recalled that President Obasanjo was the President, General Theophilious Danjuma Minister of Defence and Mike Okiro as the Commissioner of Police in Benue State when the Tiv versus herdsmen conflict resurrected with unprecedented venom. “No one ascribed the conflict to the religious affiliation of the public officers.” Between 2007 and 2009, the uprising gained national and international notoriety that led to the inauguration of a Resolution Committee jointly headed by Tor Tiv and the Emir of Gombe at the instance of Governor Gabriel Suswam. “Without equivocation or fear of contradiction, we insist that those who are suggesting that the violence of herdsmen is religiously-motivated are dancing naked to the tunes of the devil. This is because the insinuation is, and can only be, fraudulent, malicious, crude and ungodly. Religion should not be used for devilish purposes.” On the issue of Christians being killed by herdsmen and other bandits, the truth remains that more Christians, like their Muslim counterparts, were killed by Boko Haram and other bandits during the presidency of Dr. Goodluck Jonathan who was held responsible

by any religious body. He cautioned on the politicization of Leah Sharibu and the threat of war by the Christian Association of Nigeria (CAN) should the girl die in captivity of Boko Haram. The unfortunate abduction of the girls, who are Muslims and Christians, hurt all right-thinking persons. The leadership of the NSCIA explored to all possible channels to reach the group with a proposal to secure amnesty for the group provided Leah and other girls in captivity are released and the group surrendered their arms. The declaration of support of the Nigerian Christians for the escalation of crises in the Middle East is inexplicable and the call for the movement of Nigeria’s Embassy to Jerusalem is misplaced. Pope Francis’s voted for peace and called for the preservation of the sacerdotal status of Jerusalem for Christian, Islamic and Judaic religious traditions has also been echoed by the National Council of Churches, which represents some 35 Million American Protestants across 38 different denominations from Presbyterian to Methodist to the National Baptist Convention. Nigerians should, therefore, join well-meaning organizations across the world including the United Nations and World Council of Churches to reject the decision of the United States of America on the relocation of its embassy to Jerusalem.

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Innovation, cheap funds seen steering agric revolution JOSEPHINE OKOJIE

xperts in the agricultural sector have said that Nigeria can only steer a revolution in its agricultural sector when farmers adopt innovation and can access cheap funds. Despite the agricultural sector is being touted as the most viable contingency plan for economic diversification, it is still faced with a lot of challenges ranging from inadequate access to cheap finance, poor infrastructure, low quality seeds and inadequate research funding, among others. “To harness the potentials of the agric sector, issues such as low technology usage, insufficient access to credit, high dependence on rain fed farming and subsistence farming culture and inadequate roads r will have to be addressed,” Kolawole Adeniji, managing director, Niji Group Limited said. “There are many areas in the agricultural sector where most states in Nigeria can exert their competitive advantage and leverage it to not only grow their internal generated revenue but also position their states as major export hubs in the African continent,” Adeniji said. The Federal Government has devoted a lot of energy at deepening agriculture with initiatives as the Anchor Borrowers’ Programme

(ABP), but experts believe much more is still needed to be done in the area of finance and mechanisation, which according to them is vital for increasing production and boosting productivity. “Finance is the biggest challenge confronting farmers. It is a very serious problem that the government need to address by providing farmers

will single digit loans,” said Tola faseru, national president, National Cashew Association of Nigeria. “We need very cheap fund so that our products can be competitive globally. Most agricultural products cannot compete effectively with imported products and this is one of the reasons we have high importation rate of crops we can

DAWN, Orbital Solutions partner to boost agribusiness in South-west ODINAKA ANUDU

n a bid to make farming a profitable business for the people of the South Western Nigeria, the South West Farmers Association in conjunction with the Development Agenda for Western Nigeria (DAWN) has signed a Memorandum of Understanding (MoU) with Orbital Solutions Global Services Limited, a data gathering firm operating on the platform of ‘AgroXchange’. The aim is to end harvest losses and avoidable clashes between farmers and herdsmen. The MoU was effected last Tuesday at the DAWN head office office, Cocoa House, Dugbe, Ibadan, Oyo State, by Seye Oyeleye, director general of DAWN, and Adewale Adegoke, managing director of Orbital Solutions Global Services Limited. Speaking at the MoU signing, Oyeleye noted that the objective of the partnership was to make farming profitable. “This partnership majorly seeks to do everything possible towards making farming very profitable for our farmers in the South West. We cannot continue to rely on when the rain will come before embarking on

our farming business”. “Things have changed as a result of climate change and so it is high time we adapted to the change. Farming overseas has gone beyond what we practice here, and so we need to develop new methods of farming in this country. Most of our farming methods and techniques have become obsolete. This is the month of June, and the question before us is: Where is the rain? This is why we have gone in partnership with Orbital Solutions Global Services Limited to implement AgroXchange to gather agricultural production data”. Oyeleye also noted that lack of technology in farming was one of the problems that had hurt Nigerian farmers for ages. “A t i n y c o u n t r y l i k e t h e Netherlands has used technology to advance her farming business. So, DAWN as a non-profit organisation is poised to find technological solutions to the problems of farming in the South West through partnership arrangement”. DAWN’s development activities, according to Adedotun Seyingbo, include making land accessible for agriculture in the region; organising agro-input system ; improving agricultural activities; organising

cooperatives for associations ; imbibing transformative technologies; efficient marketing support systems; and providing financing opportunities for the purpose of productivity in this two-year partnership arrangement. On his part, Orbital Solutions Global Services Limited’s Adegoke said his technology-driven firm would use geography to map the locations of farms, gather data on how to link farmers to the market in order to get optimal profit. “Through our platform, our aggregators will connect with the farmers. Real farmers will be identified and strengthened, and data collection jobs created for the youths in the farming communities. With the recent award of a drone for agriculture grant to Orbital Solutions Global Services Limited by the International Center for Agricultural and Rural Cooperation (CTA), a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU),remote sensing and imaging services will be made available to South West farmers to improve crop quality, estimate yield, monitor plan health and facilitate application of inputs according to the index of plant need.

grow here,” Faseru added. Nigerian farmers are lagging behind because of their inability to raise productivity and improve yield per hectare due to low level of agricultural mechanisation and modern farm inputs. Available statistics show that Nigeria is one of the least mechanised farming countries in the world with

the country’s tractor density put at 0.27 hp/ hectare which is far below the Food and Agriculture Organisation (FAO)’s 1.5hp/hectare recommended tractor density for Africa and other developing countries. “ Me c ha n i s at i o n i s a ve r y critical issue because it will help eradicate poverty of rural farmers,” Sani Dangote, president, Nigeria Agribusiness Group (NABG) and vice president of Dangote Industries Limited, said in an interview with BusinessDay. “If farmers continue to use crude equipment, their poverty can never be eradicated and the country will be unable to diversify the economy through agriculture,” Dangote said. According to Dangote, the only way youths can find agriculture attractive is through mechanised farming. “With mechanisation, agriculture becomes attractive for the youths and they can take it up as a profession,” he added. A mechanised farm with the appropriate machineries is able to sow 15 hectares a day, compared to if it is manually done with hoes, cutlasses and human labour- the best under a favourable condition is one hectare. The government plans to spend N119 billion for the agricultural sector in 2018 budget, with N65.2 billion on capital expenditure and N53.8 billion on recurrent expenditure.

Cocoa farmers get free hybrid seedlings JOSEPHINE OKOJIE

ocoa farmers in Cross River State are to receive free hybrid seedlings and training on rehabilitation of old cocoa fields using budding and grafting system from the Cocoa Association of Nigeria (CAN). In a statement released by the Cross River State chapter of the association the exercise is part of the activities lined up to flag off this year’s cocoa planting and rehabilitation programme by CAN in conjunction with the Cross River State government. Over 500,000 seedlings of the new TC1-TC8 varieties of cocoa developed by Cocoa Research Institute of Nigeria (CRIN) will be distributed to the farmers. The main objective is to make the new varieties available to cocoa farmers in the country’s second largest cocoa producing state. According to the statement, the free distribution of the seedlings to farmers will further cement the state’s position and entrench the culture of using approved planting materials in cocoa farms across the 10 cocoaproducing local government areas cut across the 3 senatorial zones in

Cross River. Godwin Ukwu vice chairman and Roland Enah, zonal state chairman, both of CAN noted that the association had been providing this corporate social responsibility service for the past 10 years to support government’s effort in promoting increased cocoa production in terms of quantity and quality. At a ceremony planned for the 2t6h and 27th of June, Anna Muyiwa, research scientists, CRIN will lead a practical session to train farmers how to undertake rehabilitation of their cocoa farms and equally demonstrate grafting and budding techniques that will help farmers to revamp their farms without losing any income. Governor Ben Ayade will give a Keynote Address on investment opportunities in Cross River State while Ndoma Egba, former senate leader, will challenge the youth in a talk on ‘untapped opportunities for youth and women in cocoa growing regions’. The highlight of the event will be the presentation of awards to deserving farmers and other stakeholders. The market place for the programme will feature latest technologies, inputs and products in the cocoa value chain.

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Experts hinge low agric productivity on poor finance ...call for increase budgetary allocation IDRIS UMAR MOMOH, Benin

xperts in the country’s financial sector have hinged low agricultural productivity to inadequate finance for smallholder farmers in the

country. The experts who are from various Microfinance banks in the country made this known at a one-day symposium with the theme, ‘Serving the Agricultural Sector Through MicroBanking’ also called for increase in budgetary allocation to the sector. The experts noted that the increase in allocation would enable the government set aside funds in Microfinance banks to fund rural farming. Some of the experts include Godwin Ehigiamusoe, founder and managing director of LAPO Microfinance bank limited, Rogers Nwoke, managing director and chief executive officer of Hasal Microfinance bank limited, Taiwo Joda, managing director and chief executive director of Accion Microfinance bank limited and Akin Lawal, managing director and chief executive officer of Nigerian Police Force Microfinance bank Plc.

Olusegun Osinowo, former director, Institute of Food Security, Environmental Resources and Agricultural Research (IFSERAR); Morenike Dipeolu, deputy vice chancellor-academic, FUNAAB and Bamidele Oluwatosin, director, IFESERAR during a workshop on Animal Handling in Abeokuta, Ogun state, recently.

The experts opined that agricultural activity which is the mainstay of the rural dwellers economy will remain unproductive to contribute meaningfully to food security if not adequately funded. In his remark, Rogers Nwoke, who is also the national president of Nigerian Association of Microfinance Banks lamented that the sum of N220 billion initially set aside to Microfinance bank

FUNAAB, CAVA II deepen processing of high quality cassava flour RAZAQ AYINLA, Abeokuta

s part of efforts to deepen production and processing of high quality cassava flour for local consumption and exports, the Federal University of Agriculture, Abeokuta (F UNAAB) and the Cassava Adding Value for Africa II (C:AVA II) have organised an intensive training for the Nigerian fabricators centred on modern technology on the manufacturing and fabricating of flash dryers and other equipment used in cassava processing and preservation. Speaking at a two-day training held recently at FUNAAB, the Deputy Director, Natural Resources Institute (NRI), United Kingdom, Prof. Ben Bennet stated that Nigerian fabricators have the potentials of becoming a force to reckon with in the fabrication of simple effective equipment that can meet the needs of Africans, if given the opportunity and adequate support. Bennet said that flash dryers that are exported from Nigeria are working perfectly well in other countries in Africa, pointing out that this is something that the Country should be proud of and capitalize on. According to him, There are many examples of inter-regional technology exchange at this kind of level and I think you should be extremely proud of that because it’s a great achievement and the people in Nigeria don’t really realise that this sector is driving forward. He added, “I believe you really have an opportunity as a group of

equipment makers to make simple effective equipment that is easily maintained, well designed and wellengineered, that fits the pocket and fits the condition that you find when you go out to other countries in this region”. Earlier in his Opening Address, the Prof. Kolawole Salako, vicechancellor, Federal University of Agriculture, Abeokuta (FUNAAB), called for an enabling environment for researchers and fabricators in Nigeria to flourish saying, though most advanced countries are more technologically ahead of Nigeria, nevertheless Fabricators in the Country can contribute to the technological development of the nation if only they look inward to identify and address the needs of the people. Buttressing his point, the ViceChancellor disclosed that, “the prototype idea for pounding yam emanated from a researcher in the University of Ife but today you have the yam pounding machine coming from Japan and China. Nobody gives credit to that man again”. In his remarks, the Deputy Vice-Chancellor (Development) and Country Manager CAVA II, Prof. Lateef Sanni noted that the workshop was aimed at enhancing the efficiency of the flash drying system in Nigeria for the cassava industry. According to him, the expectation at the end of the Workshop is to identify the gaps with the fabricated machine and come up with newly improved system that will be used for agricultural commodities in the country.

was however allegedly diverted to empower Micro, Small and Medium Enterprise (MSMEs) in the country. He however urged the federal government to restate the N220 billion funds and refocus it to Microfinance banks as rural agricultural scheme to enable it lend more to rural farmers. He said in 2012, Hasal Microfinance bank spent about 27 per cent of its portfolio on agriculture, and that the

money would have been lost if not for the funding from the now defunct Millennium Development Goals. Nwoke noted that Microfinance banks are willing to lend to farmers but they are however constrained by paucity of funds. On his part, Taiwo Joda of Accion urged the central bank of Nigeria to increase its funding to agricultural sector. He opined that for agriculture to grow and improve in the rural areas there must be proper financing by the Microfinance banks. He also advocated that the agricultural value chain must be broken down in departments of agriculture must be properly financed. In his contribution, Godwin Ehigiamusoe, the founder and managing director of LAPO Microfinance bank, said Microfinance banks as a pro-poor financial institutions must invest in the rural economy where agricultural is the major occupation. Ehigiamusoe, who listed some of the challenges militating against agricultural financing in Nigeria to include inadequate value chain financing, lack of agricultural insurance cover for farmers, interference and low pricing as well as low rotation of invested capital.

He however, called for the establishment of agricultural, lending structure. The LAPO managing director recommended for institutional commitment, deepening the insurance services, greater engagement between the MFBs and the CBN development officers at the state level as solutions to the challenges. He also recommended for the digitalisation of the delivery processes, strengthening the Agricultural value chain, continuous capacity building as well as involvement of agriculture cooperatives. Also, Micheal Marx, long term expert, AFOS Foundation- Germany, urged the Central Bank of Nigeria to increase the loan ceiling for Microfinance banks from N500,000 to N10 million to compensate for inflation and allow for financing of farmer groups and value chain operations. Marx, also want the central bank to offer refinance for term loans for one to three years in Naira to Microfinance banks to enable it lend for small equipment, without policy strings attached as well as to request Microfinance and Microfinance institutions to express their interest rates and charges as annual percentage rate.

Investing in egg production OLUMAKINDE ONI

nimal protein consumption is very vital for human development. The importance of animal protein in the food cannot be overemphasized. Protein helps in body building, growth and development of children in terms of bones, teeth and other reproductive parts. Investing in table eggs production is seen as a contribution to the physical and mental development of Nigerians, will contribute positively to the productivity of Nigerians. With the recent revitalisation of the Agricultural Credit Guarantee Scheme of the Central Bank, individual and corporate bodies can now have access to finance to fund this kind of scheme. In this regard, funding of this project will not constitute any problem. With the increasing awareness of Nigerians on the need to take at least one egg daily, the market for eggs is widening daily. With a population of 190 million people, the market for eggs is rather unimaginable. Neighbouring West, East and Northern African Countries also depend on table eggs from Nigeria, as the weather for production of eggs is highly conducive in Nigeria compared to these neighbouring countries. Not only this, inputs for production of animal feeds are readily available in Nigeria. The market also has a huge export potential as Nigeria is the largest egg producing country in Africa with 10.3 billion eggs produced annually, data from the Poultry Association of Nigeria (PAN) shows. For persons or corporate bodies looking for a project that generates

income on daily basis, egg production is one of such projects. Eggs are used in preparation of foods such as ice-cream, bread, cakes, biscuits, noodles, and doughnuts. It can likewise be rehydrated to make dishes such as scrambled eggs and omelettes. The land requirement for a poultry projects is minimal. This means that the project can be established with ease. The project also gives room for flexibility. That is, one can start from a small-scale production and graduate to large-scale. With the introduction of vaccines and drugs, mortality rate in poultry has been reduced to the barest minimum. Technical Information Egg production entails the procurement of day old chicks of layer birds. These birds are kept in poultry shed and nurtured till it starts producing eggs daily. Birds’ domestication involves feeding with poultry feeds; water and keeping the farm clean through regular disposal of their wastes, disinfecting the pens and restriction of foreign bodies from entering into the pens. The only key input in poultry farming is the feeds. Farmers keeping more than 5,000 birds are always advised to have their mini feed mill so that they can compound their own ration on the farm. This will reduce feeding costs and also assist the farmer to monitor what constitute the feeding ingredients. It is also an additional source of income because one can be compounding feeds for other farmers. Investors must always consult agricultural experts and consultants in the process of planning such project.

Financial Implication Project Cost: We are looking at the possibility of setting up a 5,000 per day egg laying farm. The financial implication is listed as follows: N 1. Land and Buildings : 5,000,000 2. Laying Birds (point of lay) : 8,000,000 3. Provision for Mini feed mill : 2,000,000 4.Feeds Ingredients: 2,000,000 5. Project vehicle : 1,500,000 6. Utility/Others/cages : 6,000,000 Total N24, 500,000 ============ The project cost may be lower or higher depending on the financial strength of the investor. One can start with lower number of birds and then expand later. The project will also definitely attract finance from the Commercial Agricultural Credit Scheme of Central Bank of Nigeria where individual or corporate bodies can be assisted from N10 million to N1 billion. Some commercial banks are also well disposed to this project. Wellpackaged feasibility study is a prerequisite to sourcing of finance from this scheme. This can be provided on request. Profitability Daily revenue of N120, 000 has been computed with operating costs put at N50, 000 on daily basis. Monthly net income of N2.1 million is therefore achievable. Serious minded Investors can be assisted in the realisation of the project right from inception to completion. Olumakinde Oni: 08023058045, 08033660177.

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We aim to create an intimate relationship with our customers – AXA Mansard Boss AXA Mansard Insurance Plc is a major player in the nation’s insurance industry, offering excellent services and meeting customer expectations. Rashidat Adebisi, divisional director, Retail Solutions of the Company in this interview shares her thought on unique services offered by the company, key innovations to drive growth, and future of the insurance industry in Nigeria. Excerpt:

Give us an overview of AXA Mansard and what the company does? XA Mansard is a member of the AXA Group, the worldwide leader in insurance and asset management with 166,000 employees serving 107 million clients in 64 countries. AXA Mansard was incorporated in 1989 as a private limited liability company and is registered as a composite company with the National Insurance Commission of Nigeria (NAICOM). The Company offers life and non-life insurance products and services to individuals and institutions across Nigeria whilst also offering asset/investment management services, health management services and pension fund administration through its three subsidiaries AXA Mansard Investments Limited, AXA Mansard Health Limited and AXA Mansard Pensions Limited. You are a major player in the nation’s insurance industry, what is unique about your services? We aim to create an intimate relationship with our customers by partnering with them and this enables us to adequately recognize their requirements and priorities. In line with our core ideals and values, we focus on our customers at all times, seeking to understand their business and objectives, such that we are able to meet and anticipate their needs. What are some of AXA Mansard’s innovations to drive business penetration and growth? Our straight through online motor insurance product, AutoFlex, affords

Rashidat Adebisi

With our 24/7 customer care service, they can reach us whenever they want. Most importantly, we have products to address all classes of people: our goal is to ensure that they are protected in all financial forms without limitations

our customers flexibility and allows them to customize and choose the covers they want. Customers can also purchase our travel insurance product, 24/7, online and offline at their convenience. Furthermore, our AXA Mansard retail health insurance plan, Easy Care, offers access to affordable and quality health care, thus promoting inclusion as it caters to the lower middle class segment of the economy. What is your claims payment culture as an organisation? We are a prompt claims settlement organisation. We settle claims swiftly without compromising our organizational values. Where will AXA Mansard be in the next five years? We will be the leading provider of non-banking financial services in Nigeria through our innovative and creative approach to serving our customers. What words of assurance do you have for your customers? AXA Mansard is particularly committed to nurturing relationships beyond business alone. In this age of automation and innovation, our priority is to evolve along with the ever changing demands of our customers and ensure their satisfaction. We have integrated systems to personalize the customer experience journey because we understand that our customers are unique and deserving of an exclusive service. We have transitioned our business processes to a digital format to enhance this experience: customers can now enjoy on-the-spot solutions to their needs, some of

which include easier claim filing and redemption processes. With our 24/7 customer care service, they can reach us whenever they want. Most importantly, we have products to address all classes of people: our goal is to ensure that they are protected in all financial forms without limitations. Through our numerous offerings, our customers can be assured that AXA Mansard is a brand that cares and as such, we will not relent in our efforts to provide the best of services. What is the future of the insurance industry in Nigeria? The insurance industry in Nigeria today is largely focused on corporate clients. It should however be said that operators are beginning to focus on the retail segment. The regulator, itself NAICOM recently released guideline to regulate the microinsurance industry. Showing their commitment and belief in the future growth of that market segment. The insurance penetration today is still below 1 percent. This shows that the market can only get bigger and is there for the taking. However it’s one thing to have great and lofty dreams and aspirations, it’s another to find the means to achieve them. The industry is keen to drive different channels to meet the customer as well as emerging technologies being driven by insurtech solutions. With strategies focused on technology – mobile and big data, and in addition to the increased support we are getting from the regulators, we expect Insurance’s contribution to the GDP to grow exponentially in the coming years.

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Starting out your retirement life… the hurdles to watch

etirement is a critical stage in somebody’s life that throws its own challenges. Having retired from your paid employment after attaining a certain age in line with the terms of your employment, you are retired and now meant to face a new phase of life. How much you plan and understand this stage determines how well you are going to spend the time till when death will come. For participants under the Contributory Pensions Scheme (CPS), understanding how to start and cope with life in retirement is an important aspect of the scheme that takes priority attention of operators and the regulators. The National Pension Commission (PenCom) at a pre-retirement workshop for Federal Government employees that will retire in 2018 organised by the Commission in Lagos, remphasised the need for would be retirees to understand what they are going into, to actually drive home the essence of the CPS. Wilson Ideva, chief executive officer, High Street Consulting Ltd in his presentation at the event said there are key huddles or starting phase of retirement which the retiree must go through in entering the new phase of life. Ideva said you are confronted with suddenly waking up and not seeing yourself going to work as before; thinking or making decision on where to stay, remaining at place of retirement or relocating to your place of birth or village or state capital. According to him, at retirement, one must take time off to “debrief” or “refresh” in order to be able to think right. ‘Do not take hasten decisions.’ He said where to make permanent place of residence in retirement should be where you own a personal house because you must avoid rent payment in

retirement; where can you fit into; where do you have most friends or acquaintances and where have you been used to in terms of business contacts, connection, place of worship and usual place of recreation? Ideve said the next major decision would be what you should be doing in retirement. What to do again will depend on what your passion is; what you can do with minimum effort; what you can do consistently to avoid running in and out of business; what your resources can support, and again be aware that your fund is now limited and you cannot gamble with it?. “The next pertinent question to ask after deciding where to stay and what to do is what the opportunities available to you are now that you are retired. Some of these opportunities include much time; freedom of choice of action; freedom to decide how you can deploy your scarce resources; and freedom to plan the usage of time available since all days (Monday to Sundays) appears like weekend”. Another major consideration you face while starting your retirement is ability

to take financial decisions. Upon retirement you have a one-off bulk fund called “Lumpsum” and thereafter, you have monthly pension that is intended to sustain your retirement life. It is therefore critical that you plan the investment of such bulk fund properly and judiciously. In doing that, you must consider need to keep liquid asset (cash); need to ensure sustainability; need to be aware of all risks in any financial decisions; need to be aware that replacement of such fund is impossible; what you can do with minimum effort; what you can do consistently to avoid running in and out of business and what

your resources can support, and again be aware that your fund is now limited and you cannot gamble with it. Another pertinent issue is what type of investment should the retiree put his money in? What type of investments should be embarked upon if the above tools of financial planning and decisions are to be strictly adhered to, and such investment decision should be based on the following: “Investment that generate regular income stream (do not lock up your capital at old age but put it in a venture that can generate regular income to enable you maintain the same lifestyle in retirement;

Investment that generate regular income stream (do not lock up your capital at old age but put it in a venture that can generate regular income to enable you maintain the same lifestyle in retirement; Investment that you have control over and not through third party

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Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com

Investment that you have control over and not through third party (the nature of business must be known to you; and Investment with limited risk which may give low “return” as against highly risky ventures with attendant risk or possibility of total loss.” “Knowledge of the business venture is paramount and you cannot trust a third party to give you the business idea and you depend on him/her for the outcome. For instance, if you do not know much about oil and gas Industry, no matter the temptation of high return from smooth talking youngster, do not gamble with your hard earned resources and Investment in retirement should be in business with short term gestation period in order to guarantee regular cash flow.” Investing in retirement requires that we watch where we invest. According to Wilson Ideva, the types or nature of investment that we should be involved in retirement Federal Government instruments (Saving Bonds and Treasury bills); Buying and selling; Running supermarket/stores; Annual or yearly agriculture farming such as maize, guinea corn, cassava and beans. After critically deciding on the type of business and the amount to invest, you should understand basic principles of entrepreneurship in order to be successful and for the business to be sustainable. Some of these principles includes: Feasibility study (Know fully well the nature of business, market potentials and profitability). This will entail: Getting some body or personally analyzing the business; Analyse availability of markets; Determine human capital requirement; Determine cost to be associated with the business (both direct and indirect costs); Choosing a suitable location for the business; Determine

how much to invest; Finding out gestation period (when will the investment be fully recovered); Deciding type of banking support, if any Also very important is reingratiation into the society because relationship management is key to a successful retirement. “Retirement is a period of rest when we should “slow” down from our normal course of activities. This also includes “slowing down” in financial obligations. Effective relationship management in retirements entails Knowing that you have to take care of yourself; Knowing that you are only obligated to your spouse; Knowing that children and other family members becomes secondary and their financial obligations should be seen as secondary.” It requires that you maintain cordial relationship with your colleagues or your friends who shares the same lifestyle and with “common interest”, and it also involves effective personal relationship management which includes balancing societal obligations but certainly not the time to start struggling for tittles Because health is critical, how to maintain a healthy lifestyle and wellness in retirement is serious issue to bother about. “Wellness is a state of complete physical, mental and spiritual wellbeing. In retirement, it is very vital that we maintain a balance of Physical wellness: - Being free from disease or sickness; Mental Wellness: - Ability to reason logically and discern to point; Social Wellness: - Ability to relate with people with minimal issues or quarrels and Spiritual Wellness: - Being right with God and the ability to withstand the test of time (trials and temptation). If we maintain a good balance of the above, then, we can be assured of “real rest” during retirement.

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

BUSINESS DAY

Wednesday 13 June 2018

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UK rail fares come under spotlight in new talks Page 33

Airlines seek new response models to changing business climate Page 32

Dubai’s SPA market set to grow 11 percent by 2021 Page 32

NRC needs technology uptake to solve challenges Page 33

African auto market unviable without policy support ...Nigeria has a promising future, says Mike Whitfield Stories by MIKE OCHONMA

f African governments do not develop sustainable, long-term automotive industry policies including policy measures that address the issue of the sale of used vehicles they will fail to develop automotive sectors within their economies. This was the submission of Mike Whitfield, vice chairman, African Association of Automotive Manufacturers (AAAM), and also the managing director of Nissan Group of Africa while speaking at a Deloitte Africa Automotive Insights conference in Johannesburg, South Africa recently. He said Nigeria sold 7,000 new vehicles last year. The used car market far exceeds this number. One study estimates that in 2014, around 410,000 cars were imported into Nigeria, with around 74 percent of this number used cars. An analysis of the age of these cars show that 10% were less than three years old, with about 63 percent more than 11 years old. It is not only Nigeria’s automotive market that is dominated by used car sales. A number of African vehicle markets witness large-scale used imports, rather than the assembly and sale of new vehicles. Whitfield noted that Nigeria’s new-vehicle market can grow to between 200,000 and

300, 000 units a year should the country manage to implement its fledging automotive policy, which included regulations regarding imported vehicles. It was a good policy, he added, but it appeared as if there was insufficient support to execute it. Nissan established a semi-knockdown plant in Nigeria, in 2014. Volkswagen Group South Africa (VWSA) corporate and government affairs director Nonkqubela Maliza emphasised that the development of all global auto industries had been preceded by government policy intervention. “You need to limit imports. It is not possible to grow the sector through assembly or any type of manufacturing if your policy does not limit imports,” she added. Standard Bank Group vehicle and asset finance head Sim-

phiwe Nghona concurred, noting that “everything depends on policy”, including recovering assets where the client stopped vehicle payments. “You need policy that governs that.” The absence of such policy provided challenges to establishing vehicle finance houses within many African countries, which further hindered the sale of new vehicles, as it affected affordability. Most vehicle purchases in East and West Africa were cash transactions. Whitfield said AAAM was not suggesting a complete ban on imported vehicles should any African country attempt to develop an automotive industry, but rather a focus on banning vehicles with limited, adding that five-year-old used vehicles are okay. Whitfield added that establishing African automotive assembly operations outside the

manufacturing hubs of South Africa and Morocco were “not about today, but about the future”, as the continent continued to struggle economically since the collapse of the oil price in 2014. Martyn Davies, automotive leader at Deloitte Africa Emerging Markets & Africa and Africa noted that countries with high manufacturing value-add had the lowest levels of inequality in the world, providing motivation to pursue a manufacturing agenda on the continent. “I’m personally frustrated that Africa is viewed as a dumping ground for substandard products. That needs to change.” He lamented. Nissan was interested in Kenya and Ghana as new potential vehicle assembly sites, with Volkswagen, already present in Kenya, mulling the potential in Ghana, the Ivory Coast and Ethiopia.

Toyota’s Camatte Petta takes kids on exciting journey into future

ut of a desire to convey the joy and dreams of motor vehicles to the next generation and to encourage parents and children to become more familiar with cars, Toyota has been exhibiting a series of “Camatte” concept vehicles at the Tokyo Toy Show every year since 2012, and this year was no exception. Toyota Motor Corporation (TMC) demonstrated its way of introducing the Toyota brand to the drivers of tomorrow, hands on, on the basics of driving inside an exciting toy car called the Camatte Petta, at the just

concluded 3-days International Tokyo Toy Show which held from June 7-10, in a way that builds interest and excitement in a generation that, as young adults, may be too busy online to bother

about learning to drive. The Camatte Petta is an open-top, three-seater car, measuring a little more than three metres long and powered by an electric motor, the latest in a series of child-

focused show cars that started in 2012. The Camatte Journey mixes real and virtual; with children sitting in an adapted version of the Camatte Petta miniature car decorated with colourful stickers from worldwide travel destinations and a vintage suitcase on the boot. They learn about the position of the brake and accelerator pedals using a tablet before moving off in the car down a short course, with changing landscapes projected onto a 220-degree screen, as they take a simulated trip past some of the world’s greatest travel destinations.

Cheki dangles carrot to auto dealers

heki.com.ng, the digital marketplace for quality vehicles in Nigeria, has rolled out the ‘Cheki Winning Dealer Campaign’. This initiative aims to reward car dealerships that provide high quality service to their buyers while listing their cars on the Cheki website. In highlighting how the winning dealer offering works, Cheki shared details of what car dealers stand to win as well as the criteria for winning: Participating car dealers have the opportunity to win a total of 8 different packages including a banner in Cheki’s weekly newsletter that gets sent to over 250,000 buyers across the country valued at N50, 000, a winning Dealer badge on the dealer’s listed cars for one month, valued at N20,000 They will also enjoy premium visibility with a microsite being built for them, two top of the list sponsored prominence products, valued at N10,000, one-week of social media mentions worth N10,000 and priority used car financing for the dealer’s customers who need financing regarding eeasy car loans. Furthermore, there will be dealer

interview published on the Cheki video channel and social media platforms including certificate of excellence signed, framed and presented by Cheki’s CEO In picking the winning dealers, Cheki considers a total of seven criteria; if dealership is self-servicing, that is uploads listing by itself, has a minimum of 100 listings in a month, listed by dealership have adequate descriptions, uploads good quality minimum of even images. Among the criteria is if dealership does not have duplicate listings (i.e no duplicate vehicles), maintains a minimum of three months subscription and pays subscription upfront has been a Cheki customer for a minimum of three months According to the CEO, Cheki Nigeria, Gbenro Dara, the idea to reward car dealers in Nigeria was born from a need to show appreciation to car sellers. “This is our way of saying ‘thank you’ to the car sellers who have given us an opportunity to give car buyers the kind of cars they come to Cheki Nigeria to buy. This has helped us build a strong foundation of trust with both our car buyers and car sellers over the years,” said Dara. The campaign will reward one car dealer per month throughout the duration of the project.

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MTRAVEL

Wednesday 13 June 2018

odern

Apps for planning your business or holiday trip

Airlines seek new response models to changing business climate Stories by MIKE OCHONMA

n today’s aviation industry, checks reveal that these days, discriminatory taxes and commissions paid by both the foreign and local airlines have prompted the travel industry to streamline their business and adapt to new business models in order to guarantee their long-term profitability. Not long ago, local airline operators operating in the country’s airspace threatened that, members will no longer be paying taxes to the regulatory authorities in protest to what the group described as unfair and unjust treatment in view of the fact that other no other means of movement are not subjected to go the way route. One way they have accomplished this is by shifting their commission-revenue model to a service-fee revenue model. Indeed service fees are not only a way to compensate for the loss of airline commissions but also a way to generate new revenue sources for the travel industry. Looking the increasing services offered, travel agencies used to be the only place where you could purchase an airline ticket. However, the advent of the internet and the growth of online self-service booking, combined with the loss of commissions from airlines, created a severe disruption in the industry. The travel business needed to adapt quickly and either change

their business model or go out of business. The new business model has less dependence on commissions. The result of this changing business model is that many travel agencies are expanding their service-fee models, both in terms of the fee amounts charged for their services and in terms of the number of services for which they charge fees. By generating more revenue from service fees, travel agencies will reduce the risks resulting from commission cuts. Travel agencies can also anticipate a potential shift to increased booking of leisure services such as tours, car rentals, cruises, etc. Tour operators and rail companies have already lowered the commission levels for travel agents while asking them to sell more products to get those commissions or incentives. Increasing effectiveness. If their information technology roadmap is adhered to, and their service-fee models are effectively implemented, travel agencies can increase both customer loyalty and customer satisfaction. Having the most up-to-date information in their database is critical to increasing effectiveness. Disparate databases can be challenging, and can make it almost impossible to find related services across silos. Automating processes such as charging fees can help to avoid expensive errors and add to an agency’s efficiency and productiv-

ity. When margins are tight, integrated master data management techniques can make the difference between being profitable and losing money. To ensure that they stay ahead of the game and one step ahead of their competitors, it is crucial that travel agencies understand what trends to be watching. Mining their data to find buying trends and realize efficiencies in costing services and matching available services to customer preferences. Booking packages and creating custom itineraries typically pay higher commissions, but only if the agency can be efficient in managing these more expensive and timeintensive tasks. Agency staff needs to be able to quickly find and access details of relevant add-on services that they can suggest to their customers, depending on what that customer is looking for. To be profitable, the travel industry must sell the value of their services and expertise to sustain long-term relationships with their customers. This means that they have to consider the impact of new technologies and identify cost-efficient service-fee management solutions to meet their business requirements. It is important for the travel industry to educate staff, and to communicate with customers up-front to inform them of the new servicefee driven business models. Customers who see the value of the services offered will be more inclined to pay for them.

rivate, family or business travel is always a routine. It can get to that time of the year again when we start booking flights and buying all of the sunscreen that we can carry. It can be sometimes exciting, boring and discomforting, but traveling brings with it a number of inherent issues. Luckily, thanks to the magic of technology, many of these problems are easily remedied with apps for your mobile device. With cheap and easy flights to pretty much any country you can think of, it’s never been so easy to travel the globe. Still, traveling brings with it many inevitable headaches that can drive you crazy. To help make the whole experience of traveling less of a hassle we have collected the best travel apps available on the market today. This list includes a wide range of different kinds of apps to cover every facet

of travel, from how to get there, to activities you can enjoy once you arrive, how to communicate with the locals and even apps that take the hassle out of paying for stuff. It couldn’t hurt to get some games downloaded on your device as well. So before you pack your bags and wait in line for your passport if you are on international trip or traveling within the country, make sure you are equipped with one or more of those important items installed on your iOS or Android device because you never can tell where and at what stage you will make use of it. For instance, there are already lots of services offering you podcasts, but if you’re an Audible user, you can now find a new selection of exclusive shows on its service and the current podcasts offer you the top-of-the-line listening pleasure and shows that you will never forget in a hurry.

Dubai’s SPA market set to grow 11 percent by 2021

his will be a piece of good news for Nigerian travellers as the number of five-star hotel spas in Dubai is on track to increase by a compound annual growth rate of 11 per cent to 2021, according to data released by Colliers International. According to the report, Spa & Wellness Travel, produced exclusively for Arabian Travel Market, the number of five-star hotel spas in Dubai will increase from 107 in 2017 to 157 in 2021, in close correlation with the emirate’s hotel pipeline. High profile openings over recent months include The Spa at Palazzo Versace Dubai and The Bulgari Spa, which will contribute to projected annual spa revenues in

the emirate of $495 million, by 2019, according to Visit Dubai. Simon Press, senior exhibition director, Arabian Travel Market, said: “Regionally, the spa sector is multi-faceted and sensitive to events and developments in many other sectors, including global health, beauty and wellness trends. “In 2017 we saw focus increase across these areas and Dubai was quick to capitalise and innovate, with the debut of a number of luxurybranded hotel spas. However, spas are no longer associated exclusively with the luxury market’’. “As a result, we see more choice at various price points, a diversification in treatments, competitive marketing techniques and an increase in the number of spa management courses available to professionals.

“In 2018 and beyond, we expect to see these trends converge, further cementing Dubai and the region’s reputation as a leading medical, wellness and health destination’’. In 2015, wellness trips to the GCC increased 44 per cent compared to 2013, while the number of spas increased 27 per cent, with Oman and Bahrain leading growth. Bahrain also saw the highest increase in revenue over the same period, at 17 per cent. The report concluded that such performance indicates a mature market capable of absorbing new supply. Testing this, the UAE will welcome 83 new hotels in 2018, many featuring spa and wellness amenities and, across the Middle East, a further 500 new properties are due to open by 2020. The 25th edition of Arabian Travel Market was held at Dubai World Trade Centre, from April 22 – 25, 2018.

Wednesday 13 June 2018

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BUSINESS DAY

Local and global rail news as it breaks

NRC needs technology uptake to solve challenges …Inside story of idle N500 SURE-P STC project Stories by MIKE OCHONMA

s successive governments in Nigeria embarks on a long journey to inject life and vibrancy into the hitherto decrepit rail system, there are mounting concerns that, the move must embrace some of the emerging developments from the global technology space. In some African countries like South Africa for instance where the rail system is more developed than Nigeria, although there has been some progress in establishing continuous connectivity in the form of WiFi networks on railway systems in South Africa, political issues have limited the uptake of technologies in the rail industry. In South Africa for instance, the rail system prioritising WiFi and other Internet of Things (IoT) technologies introducing. With this technology, it will be possible to monitor situations train operations live. This could improve overall service delivery and scheduling, which, in turn, will decrease delays and passenger frustration, and give rise to increasing numbers of people wanting to use rail as a means of transport. Progress in terms of technology within the rail sector for instance has been made in South Africa and other Sub-Sahara African countries apart from Nigeria. Some of these issues include alleged corruption and governance issues within rail parastatals. During the administration of former President Goodluck Jona-

than when Seyi Sijuwade was the managing director of Nigeria Railway Corporation (NRC), efforts were made to modernise the communication equipment of the parastatals. Unfortunately, this lofty project worth N500 million is said to be stalled inside the NRC premises till the time of filing this report when political power changed hands form Peoples Democratic Party to the All Progressive Congress since 2015. About five years ago, the NRC launched with it called Safe Train Control (STC) project that was designed to be technologically driven. The STC is a control centre located within the NRC headquarters in Ebute-Metta, Lagos where train movement across the country can be controlled and monitored as part of the modernization of the operations. The project, which started in 2013, was funded through the Subsidy Re-Investment and Empowerment Programme (SURE-P) of the immediate past administration of

President Goodluck Jonathan. Under the SURE-P, created following the partial removal of fuel subsidy, government diverted its share of the re-investible funds into critical programmes among them railway modernization. The STC was part of the projects carried out under the Railway Project Implementation Unit of SUREP for which over N30 billion was released. The former NRC managing director had said on August 6, 2015, that, “Before now, we relied on GSM phones to communicate with our drivers. If there is any breakdown or accident or any other challenge, our drivers communicated with the engineers via phone. There’s no way we can monitor all our operations at a glance. This will stop with the deployment of this equipment,”. “Among other features, the equipment enables us to monitor and control train speed, to avoid derailment and collision, and also enhance fuel economy.

It promotes efficiency and ensures adherence to journey time by drivers; minimises damage to tracks and other infrastructure. It has the capacity to increase frequency of train movement, with consequent increase in revenue. The Joint National Assembly Committees on Land Transport during an oversight visit to the NRC On February 2016, inspected the Control Room with Fidet Okhiria, the current managing director, and Niyi Ali, director of operations, explaining the operation of the project to the lawmakers. NRC told visiting he committee members that, the project was stalled by lack of funding. Okhiria at the time said, “It is one of the projects being funded by SURE-P. A lot of equipment was shipped in for the project. They have installed the on-board computers connected with 17 locomotives but the completion and duration is driven by availability of funds. We have received 80 per cent of the equipment needed.”

UK rail fares come under spotlight in new talks …Following KPMG’s new research

ritain’s rail companies are launching a public consultation to seek ‘root and branch reform’ of fares and ticketing regulation. The announcement follows new research by KPMG which shows that only one in three (34 percent) rail customers is very confident that they bought the best value ticket for their last journey and fewer than one in three (29 percent) were very satisfied with the experience of buying their ticket. Reform has the potential to transform the buying experience for customers, making it easier for people to be confident they are getting the right ticket. Well-intentioned but ultimately counterproductive regulations underpinning rail fares have remained unchanged from the mid-1990s, when the 1995 Ticketing Settlement Agreement spelled out how fares should be set and sold. It assumes all customers will buy their ticket by visiting a ticket office and sets out in detail how

NYCT to accelerate subway modernisation

customers must be able to buy a ticket from each of the 2,500 stations in Britain to every other station in the country. Since then, further layers of requirements have been added through individual franchise agreements, with little or nothing taken away. This means that long-standing “anomalies” are becoming locked in resulting in bigger problems for customers, and there are now around 55 million different fares.

As a result, it has become increasingly difficult for rail companies to guarantee the right fare. Regulations have failed to keep pace with the rise of smartphone technology or how people work and travel today, with part time working and self-employment having increased by over a third in 22 years. Updated, fit-for-purpose fares regulation would enable the right changes for the long-term. The consultation will help the indus-

try to establish a road map which delivers against these principles. The industry wants to then work with governments to make fares simpler, easier and more trusted while continuing to enable investment in the railway. To help frame the consultation, the Rail Delivery Group, which brings together all rail companies, has commissioned an independent report from KPMG to identify key principles which are driven by what customers and the country need from the railway. These principles should underpin fares offering that is fit for the future and include: being transparent, predictable, fair, trusted, easier to use and value for money for customers, offering integration with other modes of transport, enabling growth, innovation, efficiency and choice, providing funding for investment and avoiding the need for additional taxpayer subsidy and offering personalised, flexible fares which best serve customers in different markets.

ew York City Transit (NYCT) president Andy Byford has unveiled plans for the modernisation of the city’s bus and subway networks, bringing forward major improvements to signalling and stations. The Plan to Modernise NYCT focuses on four key priorities he identified in his first day in office transforming the subway, re-imagining the bus network, improving accessibility for all modes, and engaging more closely with the workforce to deliver better service. “What is needed is not mere tinkering, a few tweaks here and there,” Byford says. “What must happen is sustained investment on a massive scale if we are to deliver New Yorkers the service they deserve and the transit system this city and state need.” The plan envisages a three-

fold acceleration of the CBTC programme to deliver capacity benefits in a shorter timescale. In the first five years of the plan, CBTC will be rolled out on five lines, alongside modernised interlocking’s and power supply enhancements where required. This will benefit 3 million passengers a day on lines A, C, E, 4, 5, 6, F, M, R and G. More than 1200 subway cars will be equipped with CBTC in the first five years of the plan and 650 new vehicles will be added to the fleet. State-of-good-repair work will be carried out at more than 150 stations and accessibility will be improved at 50 stations, ensuring passengers are never more than two stops from an accessible station. Within 5-10 years, NYCT plans to extend CBTC to a further six lines serving around five million passengers a day on lines 1, 2, 3, B, D, F, M, C, N, R, Q and W. More than 3000 new subway cars will be delivered, and all rolling stock will be equipped with CBTC by the end of the 10-year plan period. NYCT plans to make 130 stations accessible in the second five year phase of investment with the balance of all possible stations being upgraded by 2034. In addition to rolling stock and infrastructure improvements, a new station management model will be introduced by the end of this year and a new fare payment system will be rolled out by 2020.

BUSINESS DAY

Wednesday 13 June 2018

ECONOMIC INSIGHT Peak Oil, Fiscal Policies and Nigeria’s Growth

n May 9, the United States withdrew from the Joint Comprehensive Plan of Action (JCPOA), a deal that was established to prevent Iran from developing nuclear weapons. With the USA’s exit from the agreement, it will reinstate sanctions on Iran and on companies that do business with Iran, which is expected to reduce Iranian oil production. In the days leading to the announcement, the market priced in the expectation and oil price rose from $73 on May 1st to $77 on May 9th. This rise in oil prices is beneficial to the Nigerian economy in the short term. In the week following the withdrawal, both houses of the National Assembly passed the 2018 budget, which budgeted expenditures N500 billion higher than the previous version, based largely on higher expected oil revenues. For decades, oil consumption has outstripped production (see Figure 1) and oil producers, such as Nigeria, took rising demand for granted - as long as the global economy was still growing, oil demand was expected to grow. The worries in the world of oil were about supply, and as recently as 10 years ago, there were fears about peak oil supply. However, given increasing concerns

is at hand, and that oil demand may soon reach its peak. These fears stem from the imminent decoupling of global economic growth from fossil fuel consumption, as the world comes to rely less on oil and more on sustainable energy sources such as solar and wind to power its economy. The spectre of catastrophic weather events caused by climate change led to the Paris Climate Agreement in 2015, which sought to keep global warming at less than 2°C above pre-industrial levels or even possibly at 1.5°C. This poses major threats to fossil fuels as governments around the world strive to reduce carbon emissions. Since the agreement, results are starting to show. According to BP’s 2017 Statistical Review of World Energy, Carbon emissions were essentially flat in 2016, marking the third consecutive year where little or no growth in carbon emissions were recorded. This is a significant break from 10 years ago where emissions grew by almost 2.5% per year. So far, 195 United Nations Framework Convention on Climate Change (UNFCC) members have signed the agreement, of which 176 have ratified it. This development is likely to serve as a major catalyst in ensuring decreased patronage of oil in the

about climate change and technological developments, the situation could be reversing and there are now fears of peak oil demand. Predictions as to the exact timing differ - Shell expects that a peak may come as early as 2023, Norway’s Statoil forecasts a demand peak by 2030, while the International Energy Agency (IEA), Total, and BP put their forecasts for peak oil demand at around 2040. The inconsistency in the predictions provides a glimpse into the nature of the global crude oil market itself – uncertainty rules. Notwithstanding this uncertainty, the last fifteen years have provided us shifting patterns that will continue to shape underlying market conditions, drive price dynamics, and have implications for Nigeria’s fiscal policies in the years ahead. In coming decades, three shifts are poised to change global demand conditions for crude oil. These are the improvements in electric vehicles, improvements in renewable energy efficiency, and sustainable energy policies designed to slow or reverse climate change such as the Paris Climate Agreement. The Threat of Renewables In the past, oil demand was expected to continue growing, as long as global populations and economies grew as well. Although these factors are still currently driving demand, there have been growing fears within the oil industry over the last decade that the end of rising oil consumption

coming years as keeping carbon emissions below 2°C will require a drastic reduction in oil consumption. Already, major world economies as well as the largest oil companies around the world are shifting their energy investments. In 2016, Shell won a contract to build a 700 Megawatt offshore wind farm in Netherlands, while Statoil is committing to invest 15% to 20% of its capital spending on renewable energy by 2030. Total in particular has taken the lead in renewable energy investments in recent years, holding controlling stake in SunPower, one of the largest solar power companies in the US, and the unveiling of a gas, renewables and power division in 2016, as part of its goal to become the leader in renewables and electricity storage within the next 20 years. Major oil importers like China and the European Union, both accounting for a combined 26% of global oil consumption in 2016 have made, and are continuing to make, substantial investments in renewable energy. The Tesla threat? However, although the growth of renewable energy consumption in the last decade has been nothing short of remarkable, growing at an annualized rate of 16.1% between 2000 and 2015 - they still only account for 3.2% of world energy consumption. Additionally, most of the growth in renewable energy has been in electricity generation, a sector that accounts

for 2.55% of oil demand (see Figure 2). Even if oil is completely displaced in electricity generation, this is unlikely to affect oil demand strongly as the more important demand sources like road and air transport could see major demand increases as people in developing countries get richer and buy cars or begin to take foreign holidays. Given that transport fuel currently accounts for about 50% of crude oil demand, with cars accounting for 25%, the development of electric vehicles (EVs) appears to be the biggest threat to oil demand. Although EVs are currently too expensive compared to similar gasoline-powered cars, the pace of technological development could make them more cost-competitive with their fossil fuel powered counterparts in the coming years. Bloomberg New Energy Finance (BNEF) suggested that if the annual growth rate of 60% continues, EV’s could displace oil demand by 2mbpd as early as 2023, which could create an oil glut equivalent to what triggered the 2014 oil price decline. While at a 45% and 30% growth rate, 2mbpd would be displaced by 2025 and 2028 respectively. Similarly, BP believes that the number of electric cars would climb sharply to 100 million by 2035 compared to 1 million today, displacing 1mbpd to 1.5mbpd of oil demand. Wood Mackinzie, a global energy consultancy group expects roughly 2mbpd to be lost to EVs by 2035, while Statoil Chief Economist, Eirik Waerness, revealed that expectations of higher EV adoption were the major reason for the company’s peak demand forecast of 2030, a decade earlier than BP and Total which put theirs around 2040. However, the rate of adoption for electric cars will depend largely on the cost, range, and efficiency of their batteries. Battery technology is currently too underdeveloped and expensive for EVs to become mainstream. Although battery prices have fallen by 73% since 2008, according to Fitch, the battery still accounts for a third of the cost of building an electric car. Battery prices will have to fall as low as $100/kWh to become cost-competitive. Furthermore, the pace of growth of EV sales depends, to a large extent, on the seriousness of efforts to fight climate change. The US has pulled out of the Paris Climate Agreement while even those countries that have remained are not taking the decisive steps needed to achieve the goals set out in the agreement. Following the US’s withdrawal from the Paris Agreement, the Environmental Protection Agency (EPA) recently announced that it would likely weaken the fuel economy standards set by the Obama administration. This was soon followed by an announcement from Ford that it would pivot towards making

more SUVs and trucks, which consume more fuel. If the Trump administration weakens fuel economy standards and other countries follow, this could slow the development of EVs as it would reduce the incentive that carmakers have to invest in their production. Given that global environmental regulations and the pace of technological development are uncertain, EVs might not overtake gasoline-powered cars for many decades to come. This uncertainty is reflected in the wide range of estimates for the timing of peak oil demand - estimates range from as early as 2025 to 2040. Notwithstanding, Nigeria’s future oil earnings are not only threatened by changing demand conditions. The US shale oil revolution has also upended global oil markets from the supply side. US crude oil production, which had been in long-term decline prior to 2009, rose from 5.4 million barrels per day (mbpd) in 2009 to 9.4 mbpd in 2015, and is poised to rise to 11 mbpd in 2019, mostly due to shale production. This massive increase in supply was a major contributor to the rapid drop in oil prices from over $100 per barrel in early 2014 to about $30 per barrel in early 2016. Other countries with large shale oil deposits as well as other unconventional oil sources could find it economically viable to explore these alternatives as new technologies emerge. This could lead to an expansion of supply in non-OPEC countries, which would make it more difficult for the oil cartel to influence global oil prices. For many years, oil under shale formations was mostly inaccessible or too expensive to extract. Even though hydraulic fracturing or “fracking”, a technique to extract this oil from these shale deposits, had been around since the 1950s, it was not economical until the late 1990s when a Texas oilman named George Mitchell combined it with another technique called horizontal drilling. The combination of hydraulic fracturing and horizontal drilling transformed US shale gas production starting in the early 2000s but did not do the same for oil until 2009. Currently, shale oil is only produced in four countries; the US, Canada, Argentina and China, with most shale production in the US. But total recoverable shale reserves worldwide are set at 418.9 billion barrels, of which about 34% lies in these four countries. As other countries develop the technology for exploiting their own shale wells, worldwide shale production will increase, threatening oil prices. Although fracking is banned for environmental reasons in some countries such as France, many of these reserves are in developing countries, which are less likely to forego an important revenue source for environmental reasons. As fracking technology develops, extraction of shale oil

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BUSINESS DAY

ECONOMIC INSIGHT could become cheap enough to allow shale companies to stay in business even while oil prices are low, thereby undermining OPEC’s pricing power. Coal as a metaphor for Oil In 2016, OPEC responded to low oil prices by signing an agreement with major nonOPEC oil producers including Russia. This agreement in itself signifies a shift in OPEC’s relative ability to control oil prices, and is reflective of an emerging pattern in the face of increasing shale oil production – a decline in OPEC’s pricing power. This scenario, if it worsens, would hardly be beneficial for Nigeria because it requires deep cuts in oil production, thereby reducing its oil revenue. For now though, given the ubiquity of oil in the global economy it is unlikely that oil demand will drop precipitously, even by the middle of the century. In fact the fears about peak oil demand may be overblown; American oil-producers, Exxon and Chevron, as well as Saudi Arabia’s state-owned oil company Saudi Aramco all say they do not foresee a peak in oil demand. Oil’s fate may come to mirror that of the fuel it displaced –– coal. Before oil came to rule the global economy, coal was king. Coal provided most of the global economy’s energy needs from the time of the Industrial Revolution until 1965 when oil overtook coal as the principal fuel in the world economy. However, this did not mean that coal went out of use. In fact, it still provides 28% of global energy needs - more than any fuel source except oil (see Figure 3). Despite its wide usage, coal is the source of few fortunes today; many coal companies are struggling financially in contrast to their oil counterparts that are some of the most valuable companies in the world. In 2016, when oil prices were at the lowest they had been for a decade, coal prices were approximately $69.8 per tonne compared to about $300 for oil. This could be the future of oil. Although it may never be displaced in petrochemical applications or in air transport, if demand reduces enough to reduce its centrality to the global economy, prices may be as low as coal prices are today. Siamese Twins – Nigeria’s Fiscal Policy and Oil Prices But even if fears of peak oil demand and the rise of shale are overblown, oil producers must prepare for the possibility of a future where oil no longer brings in the kind of revenue it once did. This is especially true for Nigeria given that the Nigerian economy is extremely dependent on oil. Oil exerts an outsized influence over the Nigerian economy through its dominance of exports and government revenues. Although the oil sector only accounted for 8.7% of Nigeria’s GDP in 2017, it accounted for 83.22% of exports and 55% of inflows into the Federation Account as at September 2017. Whenever oil prices or production, and consequently, oil revenue, fall in Nigeria, government revenue also falls. Given that Nigeria relies on crude oil revenue to pay the salaries of government workers and to fund capital projects, oil price declines lead to a slowdown in economic activity in the country. With its revenue severely diminished, the government typically slashes capital spending and delays the salaries of its workers (especially at state level), which leads to a decline in aggregate demand that reduces the growth rate or even leads to a recession. Furthermore, the decline in oil prices reduces foreign exchange inflows, which creates a foreign exchange scarcity. The CBN typically resorts to capital controls and other demand management measures to slow the depletion of its foreign exchange reserves. However, unless oil prices recover quickly these measures are ultimately unsuccessful and devaluation occurs.

This harms the economy in three major ways: firstly, the foreign exchange scarcity means that many businesses that need to import raw materials or machinery are unable to access foreign exchange to do so, causing a slowdown in economic activity. Secondly, the demand management measures typically employed by the CBN cause distortions in the foreign exchange market, creating opportunities for corruption and arbitrage. The capital controls also discourage foreign investors from investing in Nigeria as they face growing fears about being able to access their foreign currency when required. Lastly, since the Naira is not a floating currency, devaluations tend to be sudden, leading to a sharp change in the economy that many might have failed to adequately prepare for. The sharp drop in income (in Dollar terms) reduces Nigerians’ purchasing power, diminishes asset values, leads to weak liquidity, and contributes to the drop in aggregate demand. For an illustration of how a period of low oil prices could devastate the Nigerian economy, we need only look at the events of 2014 to 2017. As oil prices fell in mid-2014 as a result of extra supply due to shale oil, and lower demand from China, oil prices fell from over $100 per barrel to below $30 in under two years. The reduced revenue from oil caused a number of currency devaluations in Nigeria as the downward pressure on the Naira drained the Central Bank of Nigeria’s foreign reserves. In 2016, this culminated in a foreign exchange scarcity, which contributed to the economic recession in 2016. Additionally, as the value of the Naira fell, first on the parallel and black markets, and later, on the official markets when the CBN floated the Naira, inflation rose into double digits as the price of imported goods sky-rocketed in Naira terms. The fall in prices also dealt a blow to

government revenue; total net distributable revenue for the Nigerian government fell from N6.2 trillion in 2014 to N4.7 trillion in 2015, and N3.6 trillion in 2016. The impact of lower government revenues rippled through the economy as the government was unable to pay the salaries of its civil servants, who in turn cut down their consumption while capital projects were cancelled and those that had been started were abandoned. These effects were felt even more strongly at the state level where the many states that rely on FAAC allocations to fund their budgets were unable to pay their employees’ salaries. Given that in many states in Nigeria, the public sector is the major employer of labour, the reduced ability of the state to employ Nigerians, contributed to the increase in unemployment. To make up the shortfall in revenues, the government increased its borrowings from both foreign and domestic lenders. This has led to a debt burden that will curtail the ability of the government to spend on capital projects in the future. Slow growth, high unemployment and inflation rates, high government debt; these are the consequences of low oil prices in Nigeria. It is also worth noting that the period of low oil prices, which threw Nigeria into recession lasted for less than four years. If oil prices were to be permanently low for decades, these effects would be compounded. This could even lead to severe political instability. In 2017, all but three states received more revenue through FAAC allocations than they generated internally. Without FAAC allocations these states would be unable to pay civil servants, fund schools and hospitals, and invest in capital projects. To compound their miseries, they would only be able to borrow at very high interest rates as the uncertainty of their future revenue sources will increase the risk of default.

These states would have to severely cut the size of their civil service, causing high unemployment; borrowing at extremely high interest rates and risk a future default; or seeking long-term bailouts from the Federal Government, thereby eroding the autonomy of the states. Policies to the rescue? Every analytical antidote provided by both domestic and international economists to Nigeria’s relevance in the international economy and the inherent volatilities and uncertainties in the global oil industry often point in two directions, both requiring shifts in Nigeria’s fiscal fundamentals. First, it requires a shift in the revenue pattern to reflect the levels and nature of production in the economy. This translates to government receiving its share of revenue, as a form of taxation, from actual production in the economy and not dependent on rent from the oil industry. In the context, the aggressive tax collection and broadening of the tax base that has been achieved in the last few years is in the right direction. However, without serious and deliberate reforms of the structure of the country’s taxation, its effectiveness may be limited. The reforms required will include an extensive integration of sectors of the economy that are currently not taxed and an expansion of the tax base to cover people who currently do not pay taxes. Effective taxation in this regard will mean that the tax base is broad, and tax revenues are less volatile. Additionally, the tax collection must be accompanied by improved public service provision to increase public buy-in and reduce the tendency for tax evasion. Bearing in mind that by the most optimistic (or pessimistic, depending on where you stand) estimates the prospect of peak oil demand is still at least a decade away, it gives Nigeria some time to prepare and plan for a future without oil. But that preparation must be underpinned by sustained, significant, and serious investment across soft and hard infrastructure. And that is the second direction analysts and economists have often suggested the country follows. Essentially, if Nigeria is to survive a period of prolonged low oil prices, it would have to take serious efforts to increase productivity by significantly changing and improving the way it spends its capital from the oil industry and what it spends it on. Analysts agree that without significant investments, Nigeria will not be able to significantly increase productivity, exports, and growth rates in the medium to long term. This translates to spending its revenues today on building both physical and human capital, which will support the growth of new industries that will underpin its economy for tomorrow. It will require investment in educating its citizens from the primary to the tertiary level so that these citizens can participate in the global knowledge economy and move Nigeria away from an oil based economy, and develop policies that will allow businesses to grow. Interestingly, richer oil producing nations such as Saudi Arabia and the UAE already have plans underway to end their dependence on oil. Saudi Arabia which is one of the top three largest oil producer in the world plans to float shares in Saudi Aramco – the state owned oil company which is worth over $1 trillion. It has also created one of the world’s largest sovereign investment fund which will invest in a wide range of industries from technology to healthcare. Likewise, the UAE, which is already one of the most diversified Gulf countries is investing in sectors such as tourism and education as it seeks to decrease the share of oil revenues in the composition of its GDP to 5% by 2021. Until and unless Nigeria does these and similar things, build a foundation for a new pattern of growth, it will continue to be vulnerable to swings in oil prices.

BUSINESS DAY

Wednesday 13 June 2018

INTERVIEW

‘TREXM’s latest technologies will positively impact Nigeria’s oil and gas sector’ Bolu Odusanya is the managing director of TREXM, an international trading and export Management Company, supplying products to oil and gas, and other commercial and industrial sectors. In this interview with Ifeoma Okeke, he speaks on latest innovations the company has deployed to provide best-in-class solutions for its clients. Excerpts. As the managing director of TREXM, what can you tell us about your organization? ur firm, TREXM Oil and Gas Services (TREXM) is deeply dedicated to serving our clients. This customer service orientation underpins the entire ethos of our business. We believe that investing in technology, people and unstinting customer experience is the way to grow the business. TREXM’s mission is to provide top of the range project delivery services using creative solutions driven by professionalism, integrity and tenacity with a keen focus on safety, quality, cost and operations optimization.

operators with the ability to pig and clean their lines while in operation and without the need for a shut down. Other metering technologies require the operator to shut down their operation, remove the meter and then proceed to clean the pipes. This obviously results in loss of productivity and cash for the operators hence they are demotivated in ensuring their pipelines are regularly cleaned and maintained. Due to its high level of accuracy, the ultrasonic technology will go a long way in boosting the Nigeria oil and gas sector and the Africa economy as a whole.

How successful has this metering technology been in other countries? The LCT meters have been widely deployed in various countries around the world for some of the largest IOCs and National Oil Companies.

What inspired your recent partnership with Baker Hughes, a GE company? Our commitment to best-in-class solutions for our clients is the main driver behind our partnership with Baker Hughes General Electric (BHGE). BHGE has the balance sheet, credibility and track record to aid us in delivering the highest level of quality for our clients. The BHGE suite of products and services meshes well with our core focus areas as TREXM and positions us to best serve our clients extensively. The ultrasonic metering is the latest trend in liquid custody transfer metering, can you shed more light on this technology? The Ultrasonic flow meter has currently outlived legacy being set by both traditional and other state-ofthe-art technologies. It has led to optimization in metering operations. The drive to change to this latest technology is being owed to the ability to carry out multiple functions which includes metering, leak detection and its high level of accuracy in custody transfer. That combined with its drift free performance over time and lower operating expenditure directly impacts operators’ profitability. What distinguishes ultrasonic metering technologies from other mechanical technologies? The ultrasonic flowmeter has no moving parts; no wear or tear is witnessed hence no measurement drift overtime which leads to inaccurate readings. Unlike other mechanical technologies, the ultrasonic flowmeter is independent of viscosity, gives room for advanced diagnostics and can tell you when something is wrong within the system. It also has Bidirectional measurement ability (in case of loading/offloading). Mechanical meters result in pressure drop within the metering system while the ultrasonic causes little or no pressure drop. A typical mechanical flowmeter is sized at ≤12 “ while the ultrasonic can accommodate sizes as

You recently partnered with the U.S embassy commercial desk to host a technology seminar on custody transfer metering, how did this partnership come about? The U.S. Embassy is very focused on assisting the Nigerian market to gain access to the very best technology from US entities such as BHGE as well as to sensitize the Nigerian operators on worldwide best practices. This is the basis for the partnership to help Nigerians understand and gain access to best-in-class technologies for their day to day operations. Bolu Odusanya

high as 48 “. This can be higher based on customer’s request. More importantly, because ultrasonic meters are full bore meters in that they can be installed with existing line sizes, they are ultimately cheaper from a capital expenditure and operating expenditure standpoint. You require less meters to measure your production so you’re spending less money up front, and since the ultrasonic meter has no moving parts, the operator doesn’t lose accuracy over time as there is no mechanical drift The Sentinel LCT-8 is the latest addition to the line of ultrasonic flow meters from BHGE, what improvements have been made to this model? The LCT-8 flowmeter from BHGE has been tagged as “The market’s best high accuracy meter” which has actually proven to be a perfect name. The LCT-8 linearity performance has been improved upon unlike the initial technology that was available. While installing the LCT-8 to guarantee a fully developed flow profile, the necessary piping work has been greatly improved on, Hence the hardware and installation cost of the

LCT-8 has been minimized. How does the LCT-8 guarantee high accuracy in flow metering considering the precarious state of pipelines? Considering the state of our pipelines, the LCT-8 can indicate/identify any loss of product flow from one point to another which could arise

TREXM is working on a number of exciting projects in the future all of which are aimed at providing solutions to the operators in the oil and gas sector in Nigeria to maximize production as well as keeping their cost base low

from leakages or any form of pipeline rupture. Its Pipeline Leak Detection ability is of high integrity. To get the best out of a Leak Detection System it’s highly recommended to connect Sentinel LCT8 to hardware and software system which runs smart computation filtering data and flag alarms only when a leak occurs while providing leak localization that the meter alone cannot achieve. Its low maintenance requirements, low pressure drop and large line size capability is an added advantage as it can be used for larger pipe diameters. In your opinion, how will these ultrasonic technologies positively affect the Nigerian oil and gas sector? The key function of metering operations is to act as a cash register for the oil and gas industry either in upstream, midstream or downstream operations. It therefore becomes important to be able to audit production to the highest accuracy. This is the beauty of the Ultrasonic meter. The LCT 8 meter is the most accurate meter of its kind in the market as such ensures that you’re accounting for your production and attendant cash flow accurately. The LCT meters also provide

What will you say was the overall reception of the seminar? The reception was overwhelming as we had a very large turnout for the seminar. More importantly, the level of engagement was impressive as the attendees really sought to understand the technology as well as the ability to perform in the Nigerian market. The Department of Petroleum Resources (DPR) representatives were in attendance to provide a first-hand account of their experience with the meter prior to certifying it for use in the Nigerian market. This went a long way in assuaging operators as to the viability for the local market as the regulations have finally adapted to the latest technology available. What future projects are in the works for TREXM? TREXM is working on a number of exciting projects in the future all of which are aimed at providing solutions to the operators in the oil and gas sector in Nigeria to maximize production as well as keeping their cost base low. This will be achieved by our unstinting commitment to Local Content by investing strongly in our people and resources to reduce lead time and maximize service to the operators.

Wednesday 13 June 2018

C002D5556

BUSINESS DAY

Trump to leave summit early after meeting with Kim 38

Cooperative entrepreneurship… the Chinese Gung Ho strategy 38

OPS give conditional nod to African trade integration 39

Delivering on the promise of social change in Nigeria 40

Rising profile of coconut oil Coconut oil is one wonder natural oil that today, has a wide acceptance across several categories of people, not only in Nigeria but in all other tropical countries where coconut plantations are abundant, and also in the U.S., Canada, Europe, and Australia, reports SIAKA MOMOH.

oconut oil has been there all along, we only failed to recognize its right of place - its indisputable cosmetic and most importantly, healthcare value. These were the words of my neighbourhood corn seller who sells coconut and corn to make corn meal a delicious offer. Coconut oil makers Mama Basira explained the advent of motley of the Whiteman cosmetic products pushed our local natural alternatives to the background. Thanks to the likes of Leo Ela International, Lekki, Lagos; GO2Gurl Limited, Lagos; Boon Cocoline Ajah, Lagos; Xtimeless, Ikeja; Traditions Virgin Toki-Mabogunje Coconut Oil, Abuja; and Botafrik, Abuja and many other home producers, who are into coconut oil production, coconut oil brands are making waves in Nigeria’s business space. Dr Ify Ugo Mgbemene, CEO of Leo Ela International says her Beauty Touch coconut oil “Is beauty cure-all oil. It has many uses because it can be used for makeup brush cleaner, home makeup scrub. It heals scars, moisturizes the skin, and refreshes elderly people’s Adesola MOMOH skin. It can also be used as lip balm, massaging oil, deep hair conditioner and leave-in conditioner. And it is used to treat dry hair and virgin hair before diet to help with her Alzheimer’s condition. It was application of shampoo. It is also used as stretch very helpful in slowing down the aggressive promark cream and to prevent dark spots and blisters.” gression of the ailment.” And according to Bembatoun-Young “Dr. Guruprasad Reddy B V, osh State Medical University Testimonies Ify finds allies in Toki Mabogunje, Deputy President Moscow, Russia says: ‘No one must die of cancer Lagos Chamber of Commerce and Industry (LCCI), except out of carelessness; first step is to stop all Shade Bembatoun-Young, CEO, Africa Sustainable sugar intake, without sugar in your body, cancer cell SME Export Trade Solutions (ASSETS), and Adesola would die a natural death; second step is to blend Momoh, OAP Unilag FM . Says Toki Mabogunje: “I a whole lemon fruit with a cup of hot water and do not use coconut oil for cosmetic reasons. I use it drink it for about 1-3 months first thing before food for health reasons. I use it in my hair. It keeps my and cancer would disappear, research by Maryland hair healthy. I have used it in my hair now for about College of Medicine says, it’s 1000 times better than 14 years. It helps hair growth. My hair is waist long. chemotherapy; third step is to drink three spoonfuls of organic coconut oil, morning and night and My hair is very full for my age and very healthy. “I use it for my skin, particularly in the harmat- cancer would disappear. “You can choose any of the two therapies after tan season. When I do that, I do not suffer the dry skin problems that others have in harmattan. It avoiding sugar. Ignorance is no excuse; I have been keeps my skin supple and relatively blemish free. I sharing this information for over five years. Let everyone around you know. Dr. Gupta encourages have used it for my skin for close to 30 years. “I now use it in my cooking. I started that about each person receiving this newsletter to forward four years ago when I included it in my mother’s it to another ten people, certainly at least one life

Ify Mgbemene

Shade-Bembatoun-Young

will be saved ... I’ve done my part, I hope you can help do yours!” For Adesola Momoh, “Coconut oil has become an essential for every millennial woman; from its health benefits to its aiding health growth exponentially. Little wonder why every lady values it. Coconut oil is used in growing hair, lashes and eyebrows. All that is required is applying it to those regions daily. It also helps to give the skin an even tone as well as relieve stomach pains.” Value of coconut Oil According to organicfacts.net, this wonder oil is useful for skin care, hair care, weight loss, treating yeast infections, improving digestion and boosting immunity against a host of infections and diseases; the oil is used in tropical countries, where coconut plantations are abundant, and also in the U.S., Canada, Europe, and Australia. Packaging/Pricing The packaging ranges between 100ml and 500ml.

Advertise here

Prices range between N400 and N3000 depending on who is selling. This is expected since they all come with varying cost layouts. Brands from formal organisations are on the high side. One should expect that such companies will not sell adulterated coconut oil. Some producers and consumers spoken to claim there are adulterated brands in the market. Dr Ify Mgbemene said adulterated brands are many in the market. Said she; ‘The raw material is scarce and expensive, so several producers of this wonder oil cut corners by adulterating their products. But ours is pure coconut oil – organic coconut oil - because we have a name to protect.” How to use and store coconut oil Our source explains: “Unlike most other oils, coconut oil has a high melting point – about 24 to 25 degrees Celsius or 76-78 Fahrenheit. Therefore, it is solid at room temperature and melts only when

Continues on page 39

BUSINESS DAY

Wednesday 13 June 2018

C002D5556

Entrepreneurship

Cooperative entrepreneurship… the Chinese Gung Ho strategy The process consists of recruiting and launching entrepreneurial teams of trained engineers and technicians who start off by organizing industrial cooperatives throughout the countryside. SIAKA MOMOH

ooperatives play a distinct role in motivating and enabling entrepreneurship at the grassroots. Therefore, in spite of the setbacks that cooperatives entrepreneurship has suffered in the past, they should be made to function in the economy. It is pertinent therefore, to showcase experiences of cooperative entrepreneurship from outside our shores, which Nigerians, who by nature are very entrepreneurial, can leverage on. What more is there to prove this when our workplaces are strewn with cooperatives engagements. Go to the schools, ministries, parastatals, and the private sector of course, you will get the message. First, let us look at excerpt from Gary B. Hansen, ‘Using “Cooperative Entrepreneurship” to Generate Employment and Income in Developing Countries and Eastern Europe’. Hansen’s work is the Chinese Gung Ho, which, according to him, is the prototype of organizations needed to institutionalize entrepreneurship to create jobs and stimulate economic development. Gung Ho means “working together” in Chinese - a cooperative movement conceived by Helen Foster Snow, the first wife of American journalist Edgar Snow, and developed and implemented by the two Snows, New Zealander Rewi Alley and their Chinese associates in war-torn China in 1938. According to Hansen, respond-

ing to the plight of the thousands of Chinese refugees streaming into Shanghai, Helen Foster Snow came up with the idea of cooperative entrepreneurship by raising the question: ‘Why not organize the Chinese workers into cooperatives owned and managed by themselves, financed by labour hours instead of cash capital? Here was a way to bring about the industrial revolution, to put the unemployed refugees to work in the interior to help win the war and to build up permanent prosperity in the villages. Here was a democratic base for whatever kind of society the Chinese might decide to have in the future’. For Hansen, the process they

devised consisted of recruiting and launching entrepreneurial teams of trained engineers and technicians who began organizing industrial cooperatives throughout the countryside. He cited Edgar Snow as describing how they went about it as follows: ‘Technicians and organizers went straight to the country and tackled the tremendous task of educating the people to a new idea. Everywhere they went they called meetings, preached their principles, and hung up their announcements and signs, promising technical help and loans to those who would organize for production. Suspicions had to be dispelled by performance. Slowly

the first units won public confidence. These men meant exactly what they said. Applications soon far outnumbered the capacity of the small staff and available capital, and thousands were put on waiting lists. Labourers were registered, selected according to health, experience and character, and grouped according to crafts. Co-operators taught them how to organize, how to conduct meetings and how to study local markets. Technicians helped them find machines often dragged hundreds of miles overland from the coast--how to locate safe factory sites, and how to use, and later how to make, simple machines. Above all

they taught them how to improvise with the materials available.’ This was in 1941. Hansen continued: “Using this approach to cooperative entrepreneurship, the Gung Ho cooperatives spread rapidly throughout the countryside, and the Chinese were able to create several thousand new manufacturing enterprises and nearly 300,000 jobs in the period from 1938 to 1945....” He said the Gung Ho system in China operated successfully for a number of years, but was eventually caught up in the political infighting within the Koumingtang and between Chaing Kai-shek and Mao Tse-tung and eventually lost its leadership and momentum. “The entrepreneurial heart of the system was dismantled before the end of World War II, and the remaining industrial cooperatives became casualties of the resurgent Chinese Civil War. The available evidence and published reports indicate that the Gung Ho system was successful both as a generator of jobs and income...,” he said. Similarly, according to analysts on cooperative entrepreneurship, the collapse of socialist regimes in the 1980s led to the decline of the cooperative movement in many Central and East European countries. They argued that as they were used to being subjected to State control, many cooperatives were not prepared to face the challenges of the competitive market and manage their social and economic development in an autonomous manner.

Global Matters

Trump to leave summit early - after meeting with Kim

n the latest twist in the drama-filled nuclear talks with North Korea’s Kim Jong Un, President Donald Trump announced on the eve of their historic meeting that he will be leaving Singapore early because the nuclear negotiations have moved “more quickly than expected”, according to AP report in Singapore. That was before the two had even met, and it was not clear whether it was good news or not. No details were given on any possible progress in preliminary talks between aides at the talks. And the abrupt change in schedule came shortly after U.S. Secretary of State Mike Pompeo had seemed to lower expectations for the meeting, which Trump had earlier predicted could potentially yield an on-the-spot end to the Korean War. Instead, Pompeo suggested the summit, while historic, might yield little in the way of concrete success other than to pave the way for more meetings in the future. On the day before the meeting,

weeks of preparation appeared to pick up the pace, with U.S. and North Korean officials meeting throughout Monday at a Singapore hotel. Trump spoke only briefly in public, forecasting a “nice” outcome for the summit during a meeting with Singapore’s prime minister. Kim spent the day mostly out of view — until he left his hotel for a late-night tour of Singapore sights, including the Flower Dome, billed as the world’s biggest glass greenhouse. Trump’s early departure will be second from a summit in just a few days. The sudden change in schedule added to a dizzying few days for foreign policy for Trump, who shocked U.S. allies over the weekend when he used a meeting of the Group of 7 industrialized economies in Canada to alienate America’s closest friends in the West. Lashing out over trade practices, he lobbed insults at the G-7 host, Canadian Prime Minister Justin Trudeau. He left early, and as he flew to Singapore, he tweeted that he was yanking the U.S. out of the traditional group statement.

As Trump was trying to build a bridge with Kim, he was smashing longtime alliances with Western allies with his abrasive performance at the G-7. He continued to tweet angrily at Trudeau from Singapore, saying Monday “Fair Trade is now to be called Fool Trade if it is not Reciprocal.” Trump advisers cast his actions as a show of strength before the Kim meeting. Economic adviser Larry Kudlow told CBS News in Washington that “Kim must not see American weakness.” Trump, after the first-ever meeting between U.S. and North Korean leaders, had been scheduled to fly back to Washington on Wednesday morning after spending Tuesday with Kim in Singapore. But on the eve of the summit, he altered his schedule, opting to return at about 8 p.m. on Tuesday after a full day of meetings with Kim — almost 15 hours earlier than previously anticipated. “The discussions between the United States and North Korea are ongoing and have moved more quickly

than expected,” the White House said in a statement. U.S. and North Korean officials have been holding preliminary meetings in the run-up to the Tuesday summit. In recent days, Trump had suggested the meeting could last days, potentially even resulting in a nuclear deal. But U.S. officials have since avoided such lofty declarations. Abbreviating the meeting to a single day could make it easier to cast the summit as an early, symbolic opening, rather than a substantive negotiation in which a lack of tangible progress would suggest failure on the part of the negotiators. The White House said the summit was to kick off at 9 a.m. Tuesday. After greeting each other — an image sure to be devoured around the world — the two leaders planned to sit for a oneon-one meeting that a U.S. official said could last up to two hours, with only translators joining them. The official wasn’t authorized to discuss the plans and insisted on anonymity. The daylong summit will also include a working lunch and a larger

meeting involving aides to both leaders, the White House said. On the U.S. side, Trump was to be joined by Pompeo, chief of staff John Kelly, national security adviser John Bolton and U.S. Ambassador to the Philippines Sung Kim, along with a few others. After concluding the summit, Trump planned to speak to reporters in Singapore before flying home, the White House said. Pompeo, addressing reporters ahead of the summit, said the U.S. was prepared to take action to provide North Korea with “sufficient certainty” that denuclearization “is not something that ends badly for them.” He would not say whether that included the possibility of withdrawing U.S. troops from the Korean Peninsula, but stressed the context of the discussions was “radically different than ever before.” “I can only say this,” Pompeo said. “We are prepared to take what will be security assurances that are different, unique, than America’s been willing to provide previously.”

Wednesday 13 June 2018

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Trade&Investment Matters

OPS give conditional nod to African trade integration ‘AfCFTA would expand market access for Nigeria’s exporters of goods and services, spur growth and boost job creation; eliminate barriers against Nigeria’s products; stimulate, specifically, an estimated 8.18 per cent increase in Nigeria’s total exports, with a small structural shift in Nigeria’s economy towards manufacturing and services.’ SIAKA MOMOH

igerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Lagos Chamber of Commerce and Industry (LCCI) and some other Nigeria’s Organised Private Sector (OPS) members, gave their nod to the African Continental Free Trade (AfCFTA), with a caveat recently in Lagos. The agreement, establishing the AfCFTA was signed by 44 Member States of the AU at the Extraordinary Summit of African Union Heads of State and Government held in Kigali, Rwanda, on March 21, 2018. Nigeria, Sierra Leone, Guinea Bissau, Burundi and Eritrea are yet to sign the agreement. NACCIMA’s National Vice Chairman, Jani Ibrahim, said at the meeting, organised by the Federal Ministry of Industry and the Nigeria Office for Trade Negotiations (NOTN) in Lagos, “NACCIMA has no objection to the signing of the AfCFTA subject to the remediation of the issues raised and articulated”. In the same vein, LCCI’s President, Babatunde Ruwase said “Nigeria can go for AfCFTA, it has nothing to be afraid of, but we must get our acts right…” For Ibrahim, “NACCIMA supports the AfCFTA and in any case we cannot pull out of an arrangement of this nature which if properly implemented stands to favour Nigeria more.”He advised that a standing National Trade Consultative Committee (NTCC) of the OPS be constituted immediately to work with a negotiating team (NOTN/NT) on every aspect of the negotiations as well as strategy for implementation to enable the buy-in of the OPS and timely inputs before any decision. For him, “Nigeria has no other continent than the African continent

and therefore it cannot stand aside in the face of the transformations that are sweeping across the continent. It must not only cash in and ensure most things, if not everything, are in her favour. Nigeria’s endorsement of the agreement must however take on all the concerns of the stakeholders seriously and attend to them, swiftly.” LCCI’s Ruwase argued, “We should be part of it. We know that it is something worthwhile to be part of. If smaller countries can be part of it, why can’t Nigeria? We have all it takes to go for it. Our fear are the bilateral trade agreements AU countries have with other groups in the world and the challenge of our infrastructural and industrial set-ups which make us non-competitive. These are legitimate concerns that must be addressed.” Degun Agboade, president of NASME, highlighted the importance of small enterprises to the economy stating that the sector represents between 80-85 per cent of the Nigerian workforce and 70 per cent of the informal sector, arguing that we should address the problems of electricity and cost of funding faced by small businesses – articulating and bringing them to the attention of government. He was saying in essence that these concerns must be addressed if these small businesses are to enjoy

Rising profile of coconut... Continued from page 37 the temperature rises considerably. It is often in this form and is not supposed to be kept it in the refrigerator. “If you are using coconut oil for topical purposes, especially hair care, just melt the oil (if it is solid) by keeping the bottle in the sun or soaking it in warm water. You can also take some oil out and put it in a small bowl and heat the bowl over a flame (don’t use a microwave). Then, take the oil on your palm and apply it to your hair. If you want to use it for internal consumption, simply replace butter or vegetable oil with coconut oil in your recipes. Remember, you don’t need to completely switch to coconut oil because then you will lose other benefits of more traditional oils and dairy products.”; we bring you news about

Making coconut oil • Heat four cups of water in a saucepan and put it on a burner. • Grate the meat of two coconuts. Use a fully developed brown coconut instead of a young green one. • Blend the coconut and water. Put the grated coconut in a blender. • Strain the coconut liquid. • Burn the coconut liquid and get your oil. NB/ Coconut oil can be in solid or liquid form. If you want it in solid form, you do not heat it. It is in solid form in temperate countries. Exponential build-up in the demand According to StartupTipsDaily, there has been an exponential buildup in the demand for coconut oil in

the benefit of AfCFTA. Ambassador Chiedu Osakwe, Chief Trade Negotiator/Director General, Nigerian Office for Trade Negotiations(NOTN), did a good marketing job highlighting the benefits of AfCFTA for Africa and Nigeria. For Africa, according to him, it includes the following among others: It covers a market of 1.2 billion Africans with a combined GDP of US$2.5 trillion; would increase intra-African trade by up to 52.3 per cent; it would enable all AU countries to share in the welfare gains which are estimated at around 2.64 per cent of continental GDP – roughly $65 billion in 2018 terms; it would expand the size of African economy to US$29 trillion by 2050 as estimated by the UN Economic Commission for Africa. He added: “The gains that are significant to Nigeria are, among many others, expanding market access for Nigeria’s exporters of goods and services, spurring growth and boosting job creation; eliminating barriers against Nigeria’s products; stimulating, specifically, an estimated 8.18 per cent increase in Nigeria’s total exports, with a small structural shift in Nigeria’s economy towards manufacturing and services.” This, he said, is expected to lead to a total increase in Nigerian economic welfare by 0.62 per cent – equivalent to around US$2.9 billion in 2018 terms.

Nigeria since the year 2006, because of its widespread health benefits. It notes that this constant-growing demand has attracted a lot of Nigerian producers to quickly get involved in the sector, since great-sales potentials abound in its production. It reports that according to a statista report, in 2015/16 the global export volume of coconut oil amounted to 3.32 million metric tons, while in 2017/18 the global production volume of coconut oil was forecast to amount to about 3.44 million metric tons, whereas Nigeria alone was estimated to have produced approximately 246,000 metric tons of coconut oil in 2017 alone. Coconut is a cash crop that is grown in 22 of Nigeria’s 36 states, with Lagos State having the largest production

COMING IN AUGUST: Ten lessons from Gung Ho.

BUSINESS DAY

Editor’s Note It is a new month, the month of light in divine parlance. We bring you good news that comes with light; we bring news about that wonder oil that comes from the wonder tree – the palm tree. The palm tree is a symbol of all round goodness – a symbol of something that flourishes. The palm tree is useful in totality – no part of the tree is waste. This why the Holy Book tells you ‘You will flourish like the palm tree. Our concern in this month is the coconut oil – the wonder oil that, today, has gained wide acceptance across several categories of people, not only in Nigeria but also in all other tropical countries where coconut plantations are abundant, as well as in the U.S., Canada, Europe, and Australia. It is acclaimed to be a great oil for its cosmetic and health values by great minds – business chieftains, celebrities, scientists, etc. Read the rest of the story in our lead story for the month. President Donald Trump announced on the eve of his historic meeting with North Korea’s Kim Jong Un that he would be leaving Singapore early because the nuclear negotiations have moved “more quickly than expected.” That was before the two had even met, and it was not clear whether it was good news or not. That is Trump for you. Read full story in our Global Matters section. We serve you too with

area. They are grown largely in Epe and Badagry areas of the State. The crop serves as raw material for numerous industries, such as pharmaceuticals, cosmetics and food and beverage, with limitless domestic and export potential. And according to data obtained from Food and Agricultural Organisation (FAO), Nigeria produced about 267,520 metric tonnes of coconuts in 2014 and occupied 18th position on the world coconut production index. According to a NAN report in October 2016, quoting a coconut processor, Mr Muhammad Mustafa, coconut trees might become extinct in Nigeria, in 50 years. Mr Mohammad cautioned against its use as building materials substitute. Mustafa, Executive Director, Doublem Enterprises Development Cen-

Siaka Momoh

the story titled ‘Cooperative entrepreneurship…the Chinese Gung Ho strategy’. The process consists of recruiting and launching entrepreneurial teams of trained engineers and technicians who start off by organizing industrial cooperatives throughout the countryside. Enterprise Strokes takes you through hot business ideas that are close to you but which you don’t see. For example, have you ever thought that it is good business to help a company or some individuals organize their clutter, their mess that pile up daily or has piled up over time? We have all these and more for you in your enthralling Non-Oil Digest this month. You are welcome on board.

For editorial contributions, reactions advert placements, and sponsorships, contact SIAKA through 234-8061396410, siakamomoh@yahoo.com.

tre, told the News Agency of Nigeria (NAN) in Lagos that using the tree’s trunk as planks and its fronds as roofing sheets was depleting the economic and ornamental tree. He said that if people continued to cut and use it to construct buildings as currently being witnessed in the tree’s zones, its usefulness as an economic resource will run out. “The government needs to invest in new trees and fertilisers to increase yield per hectare and also in the value chain. There is very little investment in coconut processing currently,” Akinlolu said. Akinlolu stated that for the country to increase its production of the coconut crop, the government must address the issue of land acquisition, which he noted is the biggest challenge confronting farmers.

BUSINESS DAY

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Delivering on the promise of social change in Nigeria

ADE ADEFEKO

igeria is faced with several challenges towards achieving meaningful economic growth and development. The population, estimated at 184 million, is growing at a 2.6% percent rate per annum. The number of citizens living below the poverty line of $2 per day is conservatively estimated at 82 million citizens (42.4% of total population). Following the economic recession of 2016, the nation started experiencing a fast paced increase in its unemployment rate. This rate rose to 18.8% in 2017; representing a surge from 6.4% in 2016. Under-employment was also estimated at 21.2% in 2017. This was more pronounced amongst the youth as Nigeria’s age distribution is significantly skewed to the younger generation or those often referred to as the millennials. In response, theBuhari/Osinbajo led government attempted a robust approach towards attaining macroeconomic stability, economic recovery and growth. This approach has been entrenched in social policies focusing on sectors that drive inclusive growth, such as education, agriculture and Small and Medium Enterprises (SMEs) in order to invigorate the economy and enhance human capital. Historically, there have been over 26 attempts at social protection and investment programs by successive Nigerian governments to close the poverty gap in the nation. This has largely been driven by the high poverty rate, low social mobility and poor financial inclusion among the lower income classes. In 2015, The FG set up a portfolio of four (4) social investment programmes to deliver socio-economic support to the disadvantaged Nigerians across the Nation. Following its launch in 2016, the programme aimed to transform citizens from poverty to self-sustenance through capacity building, investment and direct support. This initiative is strategically hosted within office of the Vice President. There has been some marked progress in the journey so far; Job creation and youth empowerment (N-Power) This programme addresses the skill gaps of non-graduates and graduates alike. It aims to provide skill acquisition opportunities through employment into the education, agriculture, health and construction sectors of the economy. Interested persons are selected on an online platform, so long as they are between the ages of 18 and 35, have the requisite qualifications and have bank accounts through which they are paid N30,000 each month So far, there are 200,000 graduates in the programme, and a further 300,000 verified graduates awaiting deployment. There are also 10,000 non-graduates in the N-Build category being trained in 23 States. There are a further 10,000 nongraduates awaiting to come on board pending the audit of skill centers in 15 states and explorations in terms of fit.

The non-graduate category is paid N10, 000 per month, through the period of 3 months of training and 9 months of apprenticeship. They are also provided with tool boxes and training, to enable them continue with their chosen vocations, as they exit from the training. Eight technology hubs are also in the pipeline, with the Humanitarian Hub in Adamawa State having taken off, in partnership with ICRC and the Adamawa State Government. 1,500 applicants submitted innovative ideas out of which 250 of the best were selected to make a pitch in Abuja and Yola. After those two events, 25 of them were selected to participate in a boot camp, commencing 28th of May in Yola, Adamawa State. At the camp, they would be mentored, coached and taken into the field to test and fine tune their ideas, after which 6 of the best would emerge winners by the 4th of June, with financial support and FGN backing to actualize their dreams. The private sector, and indeed the public, are encouraged to support the social entrepreneurs at their

serves to alleviate poverty, is a classical social welfare initiative involving transfer payments targeted at extremely poor and vulnerable households. A Social Register is being developed in every State, with information of the poorest and most vulnerable of our citizens, as the foundation for targeting only the poorest of the poor for the cash transfers. Coordinates relating to educational, health, connectivity, payment service provider and access roads in each of the communities are also being collated and shared with the State Governments, towards the strategic provision of critical infrastructure in the communities towards graduating communities out of poverty. The Register has been developed in 24 States, with 10 more slated to come on board before the end of June. Payment of beneficiaries currently spans across 20 States of the federation, involving 297,973 caregivers from each of the households. Almost 3000 community facilitators have been trained to mentor and support each of the caregivers in the poor households.

efforts to resolve our many challenges. The Lagos Climate Change hub is due to commence in June, in collaboration with the World Bank and the Lagos Business School, aimed at engaging interested applicants on solutions around clean energy. The 6 regional hubs would essentially follow the same pattern as the Humanitarian Hub. The Technology Hubs are designed to encourage creative and innovative minds engage with addressing our many concerns, providing the opportunity for the private sector as well as Governments to engage and harvest the ideas, at scale. National Home Grown School Feeding Programme (NHGSFP) The school feeding programme, which targets vulnerable school-age children in public primary schools, has succeeded in providing nutrition supplementation for over 8 million children. The programme has also significantly increased and encouraged school enrolment. The children on the programme are also being weighed, enumerated and dewormed, with the plan to link them to the nearest primary health care centres for community health insurance. As of May 2018, we have 87,261 cooks feeding 8,260,984 classes 1-3 pupils in 46,446 public primary schools across 24 States. The programme has also created opportunities for others in the value-chain, inclusive of cooks, suppliers and smallholder farmers thereby easing unemployment and stimulating the economy. National Cash Transfer Programme (NCTP) The cash transfer programme, which

Government Enterprise and Empowerment Programme (GEEP) The programme objective is to provide interest free non-collateral based micro-loans to 1.66 million micro, small and medium scale enterprises (MSMEs). This is inclusive of traders, women cooperatives, market women, enterprising youth, farmers, and agricultural workers. This cohort of business owners generally lack access to loans within the financial sector, necessitating intervention to attain sustainability and growth. So far, there are 298,790 loan beneficiaries across all the States of Nigeria, with 370,675 awaiting the release of funds. Conclusion The programmes so far have impacted 8.9 million direct beneficiaries against an initial target of 9.76 million. The job creation and youth empowerment, National Home Grown School Feeding Programme, National Cash Transfer Programme and Government Enterprise and Empowerment Programme have attained 13.1%, 149%, 29.7% and 17.9% performance against initial target respectively, with a positive impact on many more indirect beneficiaries as part of the value chain of our activities. Whilst the government has been heavily criticized for not delivering on its social promise, there just might be evidence to show that this is far from the truth and a fact check would have sufficed for the naysayers. Ade Adefeko is Chairman, NACCIMA Export Advocacy Group

Hot ideas you can invest on

hey may be so close to you but you wouldn’t see them. Should one say only the informed eyes can see them? May be, or may be one that is led by the spirit, one that God has destined to see these hot stuffs that can change destiny. Organizing clutter For example, have you ever thought that it is good business to help a company or some individuals organise their clutter, their mess that pile up daily or piled up over time? As a journalist for instance (I guess this is the case with my colleagues too) my bedroom is a mess of papers – books, journals, newspapers, magazines (old and new) – literatures of all kinds. It is a big task for me to organise them and throw some of them away if need be. Offices of all kinds have similar problem. Same goes for bookshops and printing companies. Closets are overflowing with clothes that you don’t need – there are many of them that you have not worn for two years or more; living rooms and kitchens are littered with disgusting items; furniture need to be changed or refurbished. So the glut of clutter in homes and offices is big business opportunity for home-improvement or home-makeover entrepreneurs. A hot idea This reminds one of the job-loss menace that the nation’s economy is currently saddled with. Take this hot idea: A construction company once got a contract to build a rail line cutting across a vast area of land. At a point along the route the rail should pass through, there was a problem – an obstruction, a mass of solid rock. That was not all. The company cut through the rock and behold water started gushing out of the rock. The company’s mandate was to contruct a railway not a waterway. All the company’s tested engineers were at a loss on what to do. But a solution came from an operative, a mere operative in the company. A hot idea! What was it? He was thirsty and had to drink some of the knotty water. He found it very soothing. He went on to his boss and suggested to him that it would be a good idea if the company bottled the water for sale. The company did and today the product is the best table water in Italy. Table water These ideas are with us. We only need to spot them. A few years back, when under-aged children sold water in polyethylene along Lagos streets, no one knew it was a big idea selling table water in sachets. For years Ragolis sold table water, many didn’t know it was a big idea. Swan table water came on later and today it is everybody’s business, even multinationals like May and Baker, Nestle, Nigerian Bottling Company

Plc, bottlers of Coca Cola range of soft drinks, etc. do, churning in millions of naira. Alternative energy Today, investment in alternative energy is a big idea and it will be a wise business decision to go into it now. The industrial world knows and they are paying good attention to it. Amanda C. Kooser of the Entrepreneur online says “with unstable gas prices and increasing environmental awareness, an alternative energy business could put you on the road to success”. He cited the case of Justin Carven of Greasecar Vegetable Fuel Systems LLC. He explains “The 29-year-old founder’s Easthampton, Massachusetts, business makes conversion kits that allow diesel engines to run on vegetable oil. “Ultimately, it’s the rising fuel prices that are convincing people to get on board,” says Carven. Greasecar sales have grown by more than 200 percent each year over the past couple of years... And the company is jumping into the commercial and municipal markets with enthusiasm.” We have all the potentials to invest in alternative energy hear too. Building houses There is also this idea of building houses with treated wood which an aspiring entrepreneur at the Pan Atlantic University YouWin selection session which held in Ajah Lagos had. This is a good one that will make Nigerians depend less on cement. It is a hot business idea. In fact, the young man shared the idea with reluctance with his group. That is a story for another day. Coconut oil and coconut water Coconut oil and coconut water manufacturing are hot business ideas too. You are familiar with this wonder products story already – we have shared them with you on this platform in two editions – past and present editions. Digital journalism Digital journalism is another hot one. It has truly emerged in Nigeria, and it is really waxing strong, puffing its muscles across the nation’s media space. And the space welcomes it with all business pleasantness. This new journalism has very promising prospects. Don Tap Scott, author and business executive, says we are heading towards a world with a global digital internet worked infrastructure that can support the majority of business and leisure activities. For him, “In this age, there will be little need for corporations to have physical manifestation; in place of the large corporate campus will be a network of ‘molecules’ that can perform functions as cheaply and efficiently as possible”. That is the new face of journalism for you.

Wednesday 13 June 2018

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BUSINESS DAY

In Association with

Ensuring compliance with credit risk management requirements in banks Stories by HOPE MOSES-ASHIKE

igeria’s regulatory and supervisory authorities had taken several measures to stem the tide of growing Non-Performing Loans (NPLs) in the banking sector. One of such measures was the risk based supervisory frame work that focuses supervision on critical areas of banks’ activities posing the biggest risks to the institutions including credits. The banking industry NPL ratio which stood at 10.13 percent as at December 2016 rose to 15.18 percent by September 2017. The Risk Assets examination of 20 Deposit Money Banks (DMBs) as at December 31, 2016, revealed that of the total industry loans portfolio of N15,597.32 billion, the sum of N3,105.94 billion (or 19.91%) was non performing. The 19.91 percent NPL ratio was a 79.04 percent increase over the average industry ratio of 11.12 percent

recorded as at December 31, 2015, according to the Nigeria Deposit Insurance Corporation (NDIC). The late 1980s and early 1990s witnessed rising nonperforming credit portfolios in banks and these significantly contributed to the financial distress in the banking sector. According to the Central Bank of Nigeria (CBN), there was the existence of predatory debtors in the banking system whose method of operation involved the abandonment of their debt obligations in some banks only to contract new debts in other banks. The need for a central database from which consolidated credit information on borrowers could be obtained became imperative. Consequently, the CBN Credit Risk Management System [CRMS] or Credit Bureau was established. The aim of the CRMS is to strengthen credit appraisal procedures of banks by generating accurate and reliable credit information on bank borrowers from a central database.

Last week, the CBN said it will commence monthly compliance status checks of each deposit money bank’s Credit Risk Management System (CRMS) returns to verify compliance with the

requirements. The CBN said this on Thursday in a circular to all banks signed by Tukur I.S, director, financial policy and regulation department, on “The Redesigned CRMS:

Notice of Commencement of CMRS Compliance Status Checks”. The regulator advised all banks to ensure that not later than 8th day after each month end live CRMS re-

cord are updated to ensure their totals match the FiNA month end returns. Section 6.2 of the CBN circular dated February 17, 2017 requires the chief financial officer to ensure that total loans/advances/ credits reported on FiNA or any regulatory platform for such submissions of returns must match total value of credit/exposures reported in the CRMS (including the distribution of exposures by ‘business lines’). “Given that banks must complete their routine endof-month processes required in order to generate balances required to correctly update the balance of each live CRMS record, there is need to align this compliance status check with the extant circular ref: BSD/DIR/GEN/ LAB/07/011 (dated April 10, 2014) on the timelines for rendition of statutory returns through the FiNA application to the CBN and the NDIC. This circular specifically provides a 5-day grace period after month end for banks to submit their end-of-month returns”, the circular reads.

Coronation Merchant Bank commits to NSE-LSE dual listing

oronation Merchant Bank Limited has demonstrated its commitment to the growth and development of the capital market and Nigerian economy through its sponsorship of the 5th edition of the NSELSE Dual Listing Conference which held recently in Lagos. Commenting on the decision to sponsor the conference, the managing director/ Chief Executive Officer of Coronation Merchant Bank Limited, Abu Jimoh, stated that we are delighted to be the official sponsor for the NSE-LSE dual listing conference. The conference provided timely perspective and insights into the role

of financial markets in facilitating economic growth in sub-Saharan Africa and it has generated a lot of excitement amongst the attendees. The provision of affordable, longer term financing is critical for sustainable economic growth and its absence is one of the key challenges facing corporations in Nigeria. Coronation MB was established to fill the gap in a long-underserved market segment, seeking to address the need for long term capital across key sectors of the economy. We will continue to focus on bringing world class advisory services, accompanied by innovative products and services to the sub region; whilst remaining committed to our

values of strong governance and transparency. Speaking at the conference, the Chief Executive Officer, NSE, Oscar N. Onyema, OON, said that, “this event comes at a time when Nigeria has turned a corner from its worst recession in over two decades to have the best performing stock Exchange in Africa and third best performing globally. I have no doubt that the insightful deliberations at this conference will drive the level of engagement and idea generation that will solidify and strengthen our capital markets partnership and reinforce the drive of Federal, States and Corporates in accessing the deep pool of capi-

tal inherent in the Nigerian capital market and on the London Bourse. He further added that, “The recent dual listing of the first-ever FGN Sovereign FX denominated $1 billion Eurobond on The Nigerian Stock Exchange and London Stock Exchange gives credence to the successful partnership between the two exchanges”. Nikhil Rathi, Chief Executive Officer, London Stock Exchange Plc said, “The fifth NSE-London Stock Exchange Dual Listing Conference is a reflection of the strength of the partnership between our two exchanges and the global investment community’s strong desire to be a part of the Nigeria

story. As the world’s most international exchange, London Stock Exchange looks forward to building on the success of existing dual listings in Nigeria and London and partnering with the NSE to showcase the rapid developments in Nigerian capital markets and the Nigerian economy.” Driven by its vision of becoming Africa’s premier investment Bank and with an asset base of over N130bn, the Banking group is certain to leverage its privileged direction by some of Nigeria’s individuals who excelled and rose to the top of merchant banking sector at its height of excellence to become the industry model for

risk management, corporate governance and responsible business practices. Coronation Merchant Bank’s quest for industry distinction is evident in its recently unveiled corporate identity which has been designed to communicate the Group’s vision, ambition and inner strength. The Group offers investment and corporate banking, private banking/wealth management and global markets/treasury services to its diverse clients. It also offers securities trading/brokerage, asset management and trustees services via its subsidiaries; Coronation Securities Limited, Coronation Asset Management Limited respectively.

42 BUSINESS DAY Financial Inclusion

& INNOVATION

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Wednesday 13 June 2018

Supported by:

Bank products for crude farmers could spur financial inclusion OLUWATOSIN DOKUNMU

pecifically creating products for farmers with the use of the currently existing mobile money initiative by the retail banks could increase the number of banked adults in Nigeria. With the huge rural finance gap in Nigeria among farmers where 94 percent of payments received for agricultural products in 2017 was “through cash only” indicating a 9percent increase from 2014 figures and just 2percent “through a mobile phone only” in 2017 as reported by the Global Findex Database, indicates a big menace and an urgent need for an immediate intervention from the appropriate quarters. In a publication by the Food and Agricultural Organization of the United Nations (FAO), which states the impact of poor access to credit amongst other numerous challenges constituted a hindrance to the productivity of

the agricultural sector which contributes over 21 percent to GDP. Also, evidenced in a study carried out by Nigeria Agriculture Public Expenditure Review (NAGPER), a collaborative study carried out by a research team from the International Food Policy Research Institute (IFPRI) and the World Bank indicated that Agriculture is underfunded in Nigeria and this has aggravated rural poverty in Nigeria. As it stands, the retail banks in Nigeria have been well positioned to take advantage of the mobile money initiative as directed by the Apex bank. The Apex bank in its directive on the operation of the Mobile Money Initiative (MMI) adopted the Bank-led and the Non-Bank led models in the implementation of this Initiative. With this approach, Telcos have been refrained from getting licences, hence giving room for Banks to take advantage of the market and create financial products for

the unbanked adults in the country. Also, the banks are believed to equally be strategically positioned with their level of expertise in financial servicing as well as adequate capital to run such segments. Furthermore, the CBN recently updated the MMI with the Shared Agent Network Expansion Facilities (SANEF) enhancing the retail banks to increase her agent network base to offer basic financial services as payments, savings, credit, insurance and pension to the unbanked farmers at the grassroots. As part of the mobile money initiative for financial inclusion, the CBN in conjunction with the Federal Ministry of Agriculture and Rural Development has created a robust framework ‘the Nigeria Agriculture Payment Initiative (NAPI). The NAPI is designed to leverage on the existing agriculture wallet infrastructure of Growth Enhance Scheme (GES) and Bank of Agriculture (BOA) wallets to ensure seamless flow of payments within,

across, and amongst all the NAPI participants. Taking advantage of the aforementioned and creating specific products for the unbanked farmers, could help improve financial inclusion figures of adults and most especially rural farmers which a BusinessDay Findings showed contribute about 70percent of agricultural labour. Financial products to be designed for the rural farmers will majorly be in terms micro loans which would be designed for farmers that open an account with the bank and have made their accounts operational for a minimum period. Also, payments platforms that would aid and encourage the transactions over the platform should be designed to take advantage of the existing GES and BOA wallets to increase financial inclusion. Additionally, the banks can leverage on their financing expertise to create an interest bearing savings platform, an insurance scheme for agricul-

tural produce as well as pension schemes to take care of the welfare of the farmers and guarantee a secured future for them. With the use of these perks, farmers will be easily lured to adopting the financial servicing platform provided through the MMI. Consequently, with the increasing clamour for financial inclusion, the Apex bank already has in issue, 21 mobile money licensed agents in a bid to achieve her 80 percent financial inclusion goal by 2020. This move is believed to have been informed from the benefits the platform has yielded to her peers in other sub-Saharan African Countries. Success has been recorded using a similar approach in Kenya - “Musoni” among female rural farmers who welcomed the idea as their financial needs were being met with little stress. The Musoni Kenya leverages on mobile technology using a simplified application process for loan disbursements and repay-

ments. According to one of the beneficiaries of the Musoni in Kenya, Alice stated that, “Using the mobile phone is easy for us and it saves time. No one knows what you are doing, or if you have money, so it is also safe for us.” This therefore indicates a win-win situation for both the banks and the rural farmers as both parties tend to benefit from the Initiative. Although this policy as stated by the Apex Bank is mandated to be bank led, success has been recorded more from the Initiatives championed by Telcos in Kenya most especially with Safari’s MPesa. This is mainly because, the Telcos are believed to have a larger reach than the banks and a similar case is evident in Nigeria with Nigeria Inter-Bank Settlement System (NIBSS) reporting about 86.5 million bank accounts while having 148 million mobile subscribers as reported by Nigeria Communications Commission (NCC).

To achieve true financial inclusion, let’s prioritise building an extensive and sustainable CICO network IBUKUN TAIWO & OLAYINKA DAVID-WEST

he benefits of an increasingly digitised economy, powered by a robust payments infrastructure have been the themes of several articles and research incursions. However, the journey to digitisation is a long and arduous one, especially in an emerging market like Nigeria whose payments infrastructure, though sophisticated, lacks the desired reach. For economies on the cashless journey, building out a reliable and extensive cash in-cash out network is the first, perhaps most important step, in extending financial services to the unbanked. Cash in-cash out, CICO as it is frequently called, is a service provided at financial service points where customers can convert e-money into cash and vice versa. CICO is a fundamental element of every financial services ecosystem and has existed in one form or the other since the emergence of formal banking. The most popular CICO point being the banking halls, and now ATMs, have supported ecosystem activity for the past century. However, the sustainability of an extensive bank branch or ATM network in the rural and remote parts of the country has put a significant strain on financial services distribution. Hence the need to seek out cheaper yet efficient alternatives. And this is where agent

networks come in. CICO, which is the primary service provided by agents, is an intermediate infrastructure that will take us into the truly inclusive and mostly cashless society we envision. It’s not the end goal itself but rather, it is a critical pittstop on the road to a financially included society. A valid question then would be, since we are envisioning a cashless economy where digital payments thrive, why prioritise CICO at all? Shouldn’t we simply make the jump to digital wallets, cards and so on? Well, for one, cash is obviously not going anywhere anytime soon. Even in countries with the most advanced payments infrastructure and high penetration of digital financial services (DFS), people still use cash in some form or the other. In Nigeria, cash is still the leading payment method

therefore it is unwise to simply pull the plug on it. At the current stage of the Nigerian payments ecosystem, digital payment systems act as alternatives to cash. As The Brooking Institute astutely puts it, “Without full backward compatibility with cash, digital payment systems could not take root.” The CICO infrastructure is what facilitates this backward compatibility. In the quest for financial inclusion and digitization of payments, a large agent network is required in the early years of the DFS ecosystem in order to ensure consumers are onboarded and providers are able to keep them within the system. Without the agent network, the financial inclusion objectives are incomplete. Aside being relatively cheaper, agents also have the inbuilt advantage

of putting a face to the financial services. Human touch points, as they are popularly called, are the secret ingredient of financial inclusion campaigns due to their ability to serve as financial service points while filling other gaps, and in a sustainable manner. For instance, agents provide financial services such as account opening, demonstrate and support DFS through customer education and most importantly, put a face to the service. In the bid to move the citizenry away from cash-centric methods of sending money and making payments, we have to be sure the alternatives on offer are, at least, as good and efficient as cash! Cash is prevalent because it is universally understood, globally accepted and free to use. The proposition of digital money safer, cheaper in the long term

and easier to receive and send money to family and loved ones - is yet to gain widespread consumer acceptance. However, for new users, the value propositions of digital money are walled behind a steep learning curve. Hence the need for agents to provide CICO along with the adjunct services mentioned earlier. The body of evidence in countries with mobile money successes demonstrates that mobile money growth correlates with the agent network size. Nevertheless, building out an agent network is not that simple. Since 2009, when the first mobile money operator came on the scene, till now, Nigeria’s agent network of about 50,000 agents, still remains inadequate. This is unsurprising if you consider the underlying conditions. CICO economics are brutal. In a country with a nascent DFS ecosystem, it is quite hard for agents to break even. Among the multiple challenges agents face, the relatively low throughput of transactions going through the country’s mobile money landscape is one of them. Since the volume is not there, activity remains low and profit is elusive. Another challenge is liquidity shortfalls. This means the agent either needs to visit a formal FSP often (in order to be able to perform cash out services) or needs another business to complement the agency business and serve as a source of liquidity for it. Then we come to intermit-

tent infrastructure hiccups such as power failure, equipment failure, network failure… it’s a long list that doesn’t paint a pretty picture. Then there’s the issue of regulated fees and charges. The CBN prescribes the fees for all financial transactions, irrespective of location and other ancillary costs associated with liquidity management, storefront operations, and so on. In the bid to build out the agent network which will provide CICO, it is becoming clearer that there exists a knowledge gap within the ecosystem. Stakeholders and policy makers require an evidence base to inform their decision making. For example, we need to know the viability of CICO activity based on the current model obtainable within the ecosystem. We also need to explore the impact of regulations on the agent network: how have the laws and guidelines affected agent activity? And so on. The clock keeps ticking and we’re running out of time. Meanwhile, more than 60 million people remain without the financial services they need to improve their lives and make the transition out of poverty. In what ways can we improve Nigeria’s agent network? Send your contributions to sustainabledfs@lbs.edu.ng or Twitter: @SustainableDFS

Olayinka David-West and Ibukun Taiwo are members of the Sustainable and Inclusive Digital Financial Services initiative of the Lagos Business School

Wednesday 13 June 2018

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Financial Inclusion

& INNOVATION

BUSINESS DAY

Supported by:

BusinessDay Radio programme; financial inclusion today Aired yesterday by 11:30am on Rhythm 93.7 FM

Themed: Poverty, lack of opportunity and lower economic growth: How financial exclusion leads to unsafe migration. ith special guest Alex Oturu, migration expert with refugees commission, BusinessDay analysts; Patrick Atuanya, Bala Augie, Lolade Akinmurele and Endurance Okafor, and anchored by Lehle Balde Addressing key issues on how financial exclusion leads to poverty, lack of opportunity, lower economic growth, and the way to go in tackling the issues that could help spur Nigeria’s economic growth. Alex Oturu, Head of Migration at the National Commission for Refugees, Migrants and Internally Displaced Person (IDPs), pointed out the challenges that usually lead to the migration of many Nigerians especially the young ones through various borders by foot. He cited financial and economic issues as the major reasons behind them leaving the country. “Most of these people are financially excluded, as they do not have access to financial institutions, with many of them unbanked, as they are mostly from the rural areas with very poor background, especially from Edo and Delta states,” Oturu said. He said it usually seem to these migrants that it is too hard for them to start a business or it is too hard for them to live a good life, and so they just feel like the best way to move forward is for them to go to a place where they feel there is a better economy and there

is access to fund. “When you look at Nigerian bank rate it is very high for a lot of them and they do not have collateral considering most of them are fresh graduate and probably they the only ones that are educated in their families, and so they feel like they have no choice other than to embark on these trips,” the guest explained. In explaining the differences between refuges, migrants and IDPs, the guest said refugees are people who come into Nigeria in

the course of some crisis in their countries, probably persecution, and have been recognised by the Nigerian government as refugees. Although he said for the fact that anyone comes into Nigeria because of a crisis does not mean they are automatically a refugee. “Sometimes, we tend to call people who have been displaced probably due to attack by the Boko haram insurgency, refugees. They are not refugees they are internal displaced persons because they are still within their country,” Oturu said on the radio program. He explained that Refugees in the general sense of the world are migrants and an IDP is also a migrant. But in his instance he said he was talking about returning migrants, that is those set of people who attempted to travel international probably in an irregular manner, that is they do not have proper travel document and so they tend to use some means that are not legal. They are therefore called irregular migrants not illegal because the United Nations (UN) decided that one can-

not criminalise a human being of such category but can say their method of travelling is irregular, and so they are irregular. So if they are returning migrants, obviously they should have right of every Nigerians and certainly they should have access to financial products and services. The root course for actually travelling in the first place, as discussed on the show, was due to lack of financial service because of the level of poverty in where migrants are coming from, the level of exposure, and the level of education as regards these products and services.

The root course for actually travelling in the first place, as discussed on the show, was due to lack of financial service because of the level of poverty in where migrants are coming from

Also another challenge that was cited was that Nigerian banks can have very high rates when one is trying to get a loan to start a business and as such it does not seem viable for these kind of people that comes from that kind of background. “A refugee is supposed to have all the rights that a citizen has, they get refugee Identity Card (ID) and when they go to open a bank account the financial institutions says they do not recognise the IDs , they do not know what it is, they can not accept the cards and they ask them to bring other forms of IDs that they know of, like international passport and the likes, which these set of person do not have,” he added. The guest stressed on the fact that there are need to educate financial institutions in that regard so they do not end up being excluded and therefore embarking on dangerous travels. When asked the measures that need to be put in place to help bring in either the refugees, migrant and IDPs Oturu said there is need for education across

board, there is need for enlightenment because a lot of the migrants are unbanked and under banked in some cases. He said there should also be some packages that are unique or specific to the various situations they find themselves, “like I mentioned that some banks not accepting the refugees ID cards or not even knowing what it is.” As such there is need for education on both sides, he said there has to be education on the part of the financial institutions and also on the side of the these persons of concerns. Building packages that will accommodate them is another major thing that should be considered by the financial institutions. This is following the fact that some of these people in these categories do not have collateral or the necessary documents that will make them eligible like the regular Nigerians have which can help them get access to financial services and products. So things should be tailored to serve them because of their peculiar situations. On how to go about documenting the migrants, refugees and IDPs the guest said they have registration like the ID cards and there are also government agencies that are responsible in handling them and providing vital information about them. He however pointed out the fact that there is need for synergy across boards for the stakeholders and institutions to realise that these are peculiar kind of people, as such they are supposed to have their information and there is also a national commission for refugees, Migrants and IDPs and other bodies that oversee their affairs. so information and all that should be known as them can be gotten from these bodies. The guest said he believed exclusion of these peculiar kinds of people is not only a Nigerian problem, as it is also experienced in other parts of Sub-Saharan Africa. He concluded by saying that there is also need for the private sectors to take the lead sometimes, and that these issues should not be left for the government alone. As such urged financial institutions and other profit and non-profit organisations to explore the opportunity.

BUSINESS DAY

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Wednesday 13 June 2018

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

research@businessdayonline.com

08106395676

How Blockchain Technology (BT) can speed up Nigeria’s economic growth rate ABISINUOLA DAVID-OLUSA

rom time immemorial, paper money, gold receipts, letters of credit have emerged to aid exchange of value while also protecting buyers and sellers. Over time, important inventions have emerged so as to increase efficiencies in transacting or exchanging value, especially through telephone lines and internet, amongst others. Still, this system made transactions expensive and vulnerable to frauds and cyberattacks. With the increasing transaction volumes which are fuelled by the growth of e-commerce, online banking and high mobility of people, the vulnerabilities, complexities and inefficiencies have become magnifying. Also in recent times, the emergence of Internet of Things (IoT) has helped to boost increase in transactions. The Internet of Things (IoT) is a system of interconnected devices that are provided with the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. In order to prevent inefficiencies in the transaction system, the world needs payment networks that are fast, foster trust, have no chargeback, and ensure transparency and efficiency. The need for an efficient, transparent, cost saving and secure system for conducting financial transactions led to the advent of blockchain technology. In 2009, Bitcoin was developed to address those weaknesses, vulnerabilities and inefficiencies. Unlike traditional currencies which have a central authority called the central banks, Bitcoin has no central monetary authority; rather, it is enabled by peer-to-peer network. Bitcoins are not printed like paper money but are mined by individuals or organizations that run computers all over the world, using software that solve mathematical puzzles. Compared with the traditional transactions, Bitcoin offers benefits such as eliminating the need for subsidiaries and ensuring a safe, secure and efficient transaction. However there is a difference between Bitcoin and Blockchain Technology (BT). BT is the foundation on which Bitcoin is built. Blockchain, which operates as a distributed ledger, has the ability to allow multiple parties to transfer and store sensitive information in a

space that is secure, permanent, anonymous, and easily accessible. The blockchain network is economical as it eliminates effort duplication and reduces the need for intermediaries. The Nigerian economy in retrospect The country experienced recession in 2016, the first in 25 years. This was driven majorly by low oil prices and production: low crude oil prices due to global supply glut and production due to Niger Delta militancy (i.e. pipeline vandalism). 2017 was a year of recovery

For instance, with the 35.2% internet penetration rate in Africa, the global revolution will lead to an enormous technology between Africa and technology-driven economies as there would be a difficult transition into breakthrough technologies such as IoT and BT

for the Nigerian economy as it bounced back from the full year recession between Q2’2016 to Q1’ 2017. In the second quarter of 2017, the economy was out of recession, recording a Y-o-Y real GDP growth rate of 0.55%. This was driven by about 29% rise in oil price from an over 10 years low of $40.68 per barrel in 2016 and also a ramp up in oil production after major declines due to the Niger-Delta militant attacks. Last year also saw the implementation of the Economic Recovery and Growth Plan (ERGP) and the Investors and Exporters FX Window which was to boost liquidity in the FOREX market. According to African Economic Outlook by African Development Bank (AfDB) there is a projected GDP growth rate of 2.1% in 2018 and 2.5% in 2019; this growth rides on the back of higher oil prices, crude oil production and stronger agricultural performance. Inflation rate in Nigeria measured by the Consumer Price Index (CPI) has been on steady downward trend in the past 15 consecutive months dropping to 12.48 per cent in April yearon-year, from 13.34 per cent in March 2018 according to the National Bureau of Statistics (NBS) report for April 2018. However with these good metrics, there are probing risks facing the country of which include lower oil prices and tighter external market conditions. Domestic risks include a heightened security strain and weak implementation of structural reforms,

amongst others. Relevance of blockchain technology to the Nigerian economy BT can be used to achieve transparency in financial management and efficiency in the different sectors of the Nigerian economy. “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value,” according to Don & Alex Tapscott. Going forward, modern economies will see economic structural shift where value will be derived from digital assets and intellectual property. Economies of the world will derive comparative advantages from their ability to process digital sources of value. Technology helps countries overcome barriers to grow quickly of which includes maternal health tracking, drone delivery of medicines, food tracking along the value chain, amongst others.Two critical features of the blockchain is the reduction of agency costs and auditable traceability which may help to bolster trade as well as to ensure compliance with specific goals regarding sustainability and inclusion. Furthermore, future economic growth depends on public sector digital adoption. With increasing global opportunities, it is imperative for the government to invest in education, especially Science, Technology, Engineering and Mathematics (STEM) so as to en-

sure its advantage in the future global economy. In particular, the internet and blockchain technologies aid the growth of decentralized networks which reduces the need for third-party verification, promotes transparency and minimize bureaucracy. Barriers to blockchain technology in Nigeria On the other hand, technology can lead to a digital divide creating global inequalities and poverty traps between countries that can adapt to the changing digital world and countries that cannot.Nigeria has the potential to become Africa’s leading nation being at the forefront of social and industrial reforms. However, potential is irrelevant without action, implementation and accountability which would steer the country in the right direction. Despite accomplishments, technology can easily deepen existing cracks and inequalities within the society. For instance, with the 35.2% internet penetration rate in Africa, the global revolution will lead to an enormous technology between Africa and technology-driven economies as there would be a difficult transition into breakthrough technologies such as IoT and BT. If Nigeria does not grasp the benefits of technology and scale up, the technology implementation would further create disparity between the rich and poor, urban and rural communities in the nation.

Wednesday 13 June 2018

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June 12: More honour for Abiola as Lagos unveils statue …PENGASSAN cautions against threats to democracy

JOSHUA BASSEY

L-R: Niyi Ogunnusi, regional vice president, Full Gospel Business Men’s Fellowship International-Nigeria (FGBMFI); Fola Aguda, district coordinator, South West 3 district, and Izuchukwu Arinze, national director, during their visit to BusinessDay for partnership on the forthcoming national convention of FGBMFI in November 14-17 in Lagos, yesterday. Pic by Olawale Amoo

Co-working space in growth trajectory as investment in start-ups rises

… huge investment opportunity for developers, only 50% in core business-line CHUKA UROKO

ollaborativework-spaces, commonly called coworking spaces, is in high demand growth trajectory that is driven by rising investment and increasing number of startup firms that are the major offtakers of these spaces. In Nigeria, particularly in Lagos, the country’s economic heart beat, co-working is already a trend that is driven by the city’s high start-up ecosystem. Nigeria has a strong entrepreneurial culture as catalogued in the Global Start-up Ecosystem 2017 Report, which valued the Lagos start-up ecosystem the highest in Africa with a growth index of 6.6. Though very new in the Nigerian commercial office space market, co-working is also a global trend being driven by the need for more cost-efficiencies in businesses and reinforced by the ease and flexibility that the co-working model offers. Expectation is that as these start-ups continue to spring up, there will be a stronger demand

for co-working real estate solutions which means increased investment opportunities for the space suppliers. A new report by Broll Nigeria confirms that co-working in Lagos is expanding quickly and the bulk of supply is by local service providers, typically operating in stand-alone converted residential properties or Cgrade office buildings. Demand is being driven predominantly by strong start-up growth. “In Lagos, we see the global co-working trend through a varied number of local service providers operating in the market. With over 50 local co-working operators, Regus is the only international brand operating under a direct franchise model in the market”,Bolaji Edu, Broll’s CEO, told BusinessDay. At the heart of co-working is the ‘plug & play’ concept which mitigates occupational obligations for tenants such as fit-out costs and lease negotiations while offering flexibility and ease of doing business. These inherent attributes make co-working increasingly

popular across the world and especially in emerging markets such as India and South East Asia. The Global Co-working Unconference Conference, (GCUC) estimates a global growth of 108 percent by the year 2022, up from the 14, 000+ global co-working spaces recorded in 2017, showing the speed at which co-working is to expand. However, the Broll report takes note of a few downsides in Nigeria as against global trend. Co-working in its truest essence is a fairly new concept in Lagos. Its operators tend to incur both the capital and operational costs of running their spaces, which is a deviation from global trends that incorporate other operating models. “Co-working in Lagos for many service providers is a secondary service line to other core service lines in the business; typically, these businesses tend to be knowledge hubs that diversify into co-working services,” Edu observed, pointing out that there is a strong patronage of co-working in Lagos

as many service providers are operating at full capacity and are rolling out expansion plans. Available statistics show that 87 percent of operators are unwilling to expand to prime grade buildings; average occupancy rate is 74 percent; 50 percent of the operators have co-working as the core business line, while only 19 percent of the operators own their own space. A recent market survey by Broll indicates that with the exemption of certain operators in the market, a handful of service providers have only existed in the market for less than 12 months. Operators that have operated longer than 5 years tend to incorporate coworking as an offshoot of other core service lines. So far, co-working has proved to be a highly competitive market, but even though demand for spaces is high and is anticipated to keep rising, some operators that are yet to establish their brand in the market, tend to price under costs to gain market share.

dding to the conferment of Grand Commander of Federal Republic (GCFR) on late Moshood Kashimawo Olawale Abiola (MKO Abiola) by the Federal Government, the Lagos State government on Tuesday also unveiled an imposing statue in honour of the late politician. Abiola died in detention on July 7, 1998, while still struggling to reclaim the electoral mandate given him by Nigerians who voted in the June 12, 1993 presidential election he presumably won on the platform of Social Democratic Party (SDP). The statue, which stands 37-feet tall at the Ketu-Ojota loop in Lagos, according to the state governor, Akinwunmi Ambode, is built to serve as a reminder to the greatness that Abiola represented in Nigeria’s socio-political landscape. Another honour on Abiola comes as Petroleum and Natural Gas Senior Staff of Nigeria (PENGASSAN) has called on the political class to ensure the enthronement of democratic values “that emerged from the struggle for the actualisation of the June 12, 1993 mandate.” Fortune Obi, national public relations officer of PENGASSAN, in a statement issued on Tuesday to mark the 25th anniversary of the annulment of June 12, 1993 presidential election, said the political class must not allow the struggles of past heroes to be in vain by overheating the polity. “The political leaders must urgently address and resolve all issues that threaten democracy, such as insecurity, the welfare of the citizens,” the union said. Ambode in his address before unveiling the Abiola’s statue, said: “Every society that seeks to progress and develop never forgets its history. The heroes and heroines of the past who contributed to the present day success deserve recognition and honour.” According to Ambode, Lagos as a state has made it a tradition to recognise and remember heroes and heroines who have contributed to the greatness of the country in general and Lagos in particular, adding that Abiola deserves the best from Lagos.

AMAKA ANAGOR-EWUZIE

Absence of functional rail system raises cost for shippers using Kaduna Dry Port

bsence of a functional railway system has increased the haulage cost of moving import goods

from ports in Lagos to Kaduna Dry Port, including moving export cargo from Kaduna to

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Lagos ports, shippers have said. They say the essence of

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investing in the development of Inland Container Depots (ICDs) across the six geo-

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45 NEWS

BUSINESS DAY

political zones in the country by the Federal Government, which was to bring port business closer to the users, will be defected if shippers are compelled to pay for high cost of moving cargo, due to absence of functional rail system. The Kaduna Dry Port, commissioned and openedup for business in January 2018, was built to allow importers and exporters in and around Northern Nigeria to import and export directly into and from Kaduna without having to travel to Lagos. Commencing business operations in Kaduna port was also geared towards saving cost and time by doing same business with ease from

AfDB to invest N43.2bn in transforming Africa’s cassava productions, others JOSEPHINE OKOJIE

frican Development Bank (AfDB) says it will invest $120 million (N43.2bn) in the next two to three years to boost productivity and transform Africa’s cassava production along with eight other commodities on the continent. The eight other commodities include rice, maize, sorghum and millet, wheat, livestock, aquaculture, high iron beans, and orange-fleshed sweet potatoes. “Transforming cassava on the African continent would help African nations to cut imports and redirect about $1.2billion into Africa’s domestic economies,” Martin Fregene, director for Agriculture at the AfDB said during the fourth International conference on cassava, organised by the Global Cassava Partnerships for the 21st Century, GCP21, in Cotonou, Republic of Benin, recently. In a press statement, Fregene said cassava was a strategic crop for the continent’s food security and wealth creation. “Another dimension to the importance of cassava is in nutrition where cassava can enhance the nutrition of children directly or as feed for poultry and other livestock,” he said. The AfDB investment is coming at the time African governments are scaling up efforts to achieve food security and create wealth. With the largest volume of cassava coming from Africa, cassava supports more than 350 million people in Africa. Gaston Dossouhoui, minister of agriculture, Republic of Benin, said cassava remains the cheapest staple consumed by Africans, adding that addressing the constraints of cassava production will have a positive impact on farmers. He lauded Akin Adesina, president of the AfDB for his commitment of investments in agriculture and cassava, in particular. The minister also commended the GCP21 for organizing the fourth International Conference on cassava, emphasizing that it would contribute to knowledge sharing that would help in removing the bottlenecks in the cassava sector.

Kaduna, and also helping to decongest Lagos ports. Speaking in a telephone interview, Tony Anakebe, managing director of GoldLink Investment Limited, a Lagos-based clearing and forwarding company, who pointed that the idea of building ICDs was to reduce cost for shippers, also said cost efficiency in ICDs would be difficult to achieve without a functional rail system. According to Anakebe, such situation will discourage shippers from using the dry port due to cost, which will make it very difficult for the concessionaire, Inland Container Nigeria Limited (ICNL), to recoup its investment in the port.

BUSINESS DAY

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Notore targets third-quarter for NSE listing by introduction IHEANYI NWACHUKWU

… will add over N100bn to market cap

n the next three months, agro-allied firm, Notore Chemical Industries Plc will list its shares by introduction on the Nigerian Stock Exchange (NSE). BusinessDay learnt that the company will be coming to the market at a price not more than N65 per share and has already obtained the approval of the Nigerian Stock Exchange (NSE) to list its shares. “They will be listing by introduction in next three months. The price is under N65 per share,” a market source told Business Day. Listing by introduction implies the company’s shares are listed without a prior Initial Public Offering (IPO). It implies that the company would usually have raised capital prior to applying to list by introduction, and also must meet the listing requirements – including a minimum number of public shareholders – 300 to list on the Main Board; 51 to list on the Alternative Securities Market (ASeM) and

minimum public float (20 percent for the Main Board; 15percent for ASeM.) Notore listing on the NSE will avail legacy investors the opportunity to exit if they wish. Notore was founded in 2005 by a group of investors led by Onajiite Okoloko. Other members of the consortium include Emerging Market Partners and Orascom of Egypt. The company bought over assets of the defunct National Fertilizer Company (NAFCON), Onne. NAFCON has a total of 1.61 billion shares valued at N62.50. This gives the company a valuation of N100.7 billion. “Primary markets activities on the Nigerian Stock Exchange (NSE) in 2018 have not continued the pace of resurgence we saw in 2017, although the pipeline remains strong. The 2017 primary markets activities were dominated mostly by supplementary offers, listings by introduction, debt issuances, mergers and divestments,” Oscar Onyema, chief executive officer, Nigerian Stock Exchange said. Notore operations are divided

into three units: fertilizer, power, and seeds. Early this year, (January), Notore obtained a Free Trade Zone (FZE) license. The FZE located in Eleme, Rivers State is expected to kick off operations in the next two years. “A resurgent public offering would help deepen equity market, provide more investment options and trigger greater investor participation in the long-run,” according to research analysts at Vetiva Capital Management Limited. Businesses have expressed renewed optimism about listing on the Nigerian bourse due to improved macroeconomic fundamentals. Telecoms giant, MTN has indicated it will list its Nigerian unit and raise funds through an Initial Public Offering (IPO) this year. SAHCOL, Nigerian Reinsurance Corporation and Indorama Eleme Petrochemicals are among companies following the footsteps of the MTN Group. They are expected to list in the second half (H2) of the year.

Akinwunmi Ambode, governor, Lagos State (m), his wife, Bolanle (2nd r); Linus Okoroji, chairman, June 12 Coalition (r); Doyinsola Abiola, wife of late MKO Abiola (2nd l); Oluranti Adebule, deputy governor, Lagos State (l), during the unveiling of the new MKO Abiola statue at the MKO Abiola Garden, Alapere, Ketu, Lagos, yesterday.

Soyinka confronts Buhari’s contradiction of honouring Abiola, venerating his tormentor CHRIS AKOR

olitics, they say, is a game of interests and compromises. And President Buhari, the hitherto straight talking, no nonsense General found himself pandering to divergent interests and making contradictory statements to satisfy different segments of the political divide in the country within a month. On Tuesday, May 22, the President, while receiving members of the Buhari Support Organisation led by the Comptroller-General of the Nigeria Customs, praised General Sani to high heavens for the projects he implemented during his rule.

“No matter what opinion you have about (late Gen. Sani) Abacha, I agreed to work with him and the petroleum trust fund PFT. We constructed road from here (Abuja) to Port Harcourt, to Onitsha, to Benin and so on. This was in addition to other things in education, medical care and so on.” Then, on June 6, he surprisingly recognised the huge sacrifices made for Democracy by the late MKO Abiola, the winner of the June 12 1993 elections that was annulled by the military junta of General Ibrahim Babangida and conferred on him the national honour of Grand Commander of the Federal Republic (GCFR), the award reserved only for Heads of States. Surprisingly also, he conferred

on renowned human rights lawyer and activists, Chief Gani Fawehimni the title of GCON – the second highest honour in the land. Abacha as military head of state jailed and harassed Gani for seditious and treasonable acts. But it was Buhari’s alter ego, General Abacha, who arrested and imprisoned MKO Abiola for four whole years until he died in questionable circumstances just days or hours before his eventual release from detention by the Abdusalami Abubakar military regime that succeeded Gen Abacha after he unceremoniously died of a heart ailment on June 8 1998 in Aso Rock, the seat of power. Continues on wwwbusinessday online

Wednesday 13 June 2018

New Customs Area Comptroller causes chaos... Continued from page 1

have found it difficult to clear their goods, some of which are lifesaving drugs from the airport warehouses since the past three weeks. A visit by BusinessDay to the two air cargo handling companies, Skyways Aviation Handling Company Limited (SAHCOL) and Nigerian Aviation Handling Company, Nahco Aviance (NAHCO), which handles 100 percent of all export and import cargoes going through Nigerian airports, shows that over 3,500kg of cargoes are yet to be cleared by customs from the warehouses. These goods include lifesaving drugs of patients waiting to be treated in the hospitals, perishable items, wedding gowns of couples who are about to get married, machineries for harvesting and several other lifesaving equipment, BuisnessDay found. The customs service has blamed its new ‘systems upgrade’ for the delay in the release of cargoes and goods to Nigerians. A source close to one of the ground handling company wondered why the system upgrade is taking so long, even after NAHCO and SAHCOL provided customs with brand new systems for the upgrade to ensure there are no delays in the process. While the export sections at the airport were functional yesterday, the import sections were shut down, while importers queued up in their trucks in anticipation of having their cargoes cleared. Stakeholders told BusinessDay that each time a new Customs Area Comptroller resumes office; they try to show they can do better than their predecessors by introducing hazardous systems that could affect importers and the entire country negatively. “I have been visiting Skyways Aviation Handling Company Limited (SAHCOL) in the past 10 days to collect my cargoes that had arrived two weeks ago but I have not been able to clear any of them because customs claims to be having systems upgrade. This development has put a halt on my business as I cannot sell my goods or pay my lenders until the goods are cleared from the warehouse,” Ekene, an importer told BusinessDay. Another importer who craved anonymity told BusinessDay that Jayne Shoboiki, the new Customs Area Comptroller, MMIA has continued to make business difficult

for the importers, especially with the new systems upgrade, making it almost impossible for importers to clear their goods within 48hours as it was carried out before now. “The new policy introduced by customs demanding importers to provide Form M, (a document indicating the value of the shipment from country where the cargoes originated) will take not less than two weeks to one month to arrive and that will only drive importers away from air cargo to other means of transportation, since cargoes can no longer be delivered as fast as it should. “Importers cannot pay so much to have their cargo delivered by air and still wait for over three weeks to clear their goods,” the imported lamented. The Federal Government has touted its rise in the 2018 World Bank report on Ease of Doing Business (EODB) which placed it 145th position out of 190 countries in the index. According to the report, Nigeria moved up by 24 points from 169th position on the 2017 ranking to 145 in the current index. The current situation at the airports due to Customs service inefficiency threatens to reverse the gains, analysts told BusinessDay. A source at one of the ground handling companies told BusinessDay that custom is currently migrating from the Automated System for Custom Date (ASSCUDA) to the Nigeria Integrated Custom Information System (NICIS), which requires the importers or agents to provide Form M before their goods will be cleared. The source disclosed that in a situation where the importers cannot wait for the documentation to arrive in three weeks or more, they will be forced to pay triple the value of shipments they have declared. He added that the agents have refused to pay the huge sum for the goods to be cleared and that was why the goods have remained at the warehouse for two to three weeks now, pending when the documents arrive. “Airport is a speedy outlet and cannot be compared to shipment coming by sea. Shipments coming by sea stay about three weeks to 21days and above but the airport cargo is supposed to be fast in arrival. Within six hours the shipments are on ground but the documents take weeks to arrive. This implies that their shipments will wait for some days till their documentation arrive. Continues on wwwbusinessday online

Brain drain 2.0: Nigeria’s best doctors... Continued from page 4

ting 150 students when they have capacity to take in just 20-50 students. Some students have told us, they do not do much of practical but ‘theory of practical.’ They are asked to describe a practical procedure, instead of actually carrying out the procedure,” a senior medical practitioner told BusinessDay. When BusinessDay contacted Oladejo Azeez, the College Secretary and Head of Administration, CMUL, to confirm if the school has been threatened with decertification, he declined to comment. But BusinessDay also learnt from some practicing doctors that even internship positions have become scarce for trained doctors when they leave medical school. Some of them have to wait between one to two years to get an

opportunity to do internship, further putting the quality of their learning at risk. It is understood that poor funding means that most public hospitals do not want to take on new interns until they are sure they have the money to pay them. But in the process, they end up making this medical graduates stay idle waiting for internship positions. But sources say that because of the risk of not getting internship positions, most medical graduates have started writing foreign medical examinations from their 500 level, hoping they can pass the exams and leave the country. The result is that the falling standards of medical practice in Nigeria, has become the gain of other countries, and it is unlikely when the trend will come to a halt. Continues on wwwbusinessday online

Wednesday 13 June 2018

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R-L: Godwin Obaseki, governor, Edo State, his wife Betsy; Gbenga Oyebode, chairman, board of directors, Okomu Oil Palm plc, and Graham Hefer, managing director, Okomo Oil Palm Company plc, at the Okomi Oil Palm plc’s pre-annual general meeting dinner in Benin City, the Edo State capital

Ikeja Military Cantonment owes N1.57bn unpaid electricity bill ... as high transmission, distribution losses plague power sector 2018 Q1 Power sector energy flow in MEGAWATT

Damilare Asimiyu

lectricity supply to ikeja cantonment, Lagos, one of the foremost military information in the country has been restricted to two hours a day by Ikeja Electric following a huge electricity debt hanging on the military barrack. BusinessDay investigations revealed that the army formation before privatisation was owing the company about N1.5 billion and currently owes it about N1.57 billion. A source close to the power industry however said that the army formation has been paying paltry sums which most times could barely have an impact on the total debt on ground. Kola Adesina, chairman of Sahara Power group, while explaining the efforts the company is making to recover some of the debts being owed the utility company by customers across its operational area disclosed that electricity supply to the military formation has been restricted to two hours a day. The chairman who spoke at a power roundtable organised by Sahara Power stated further that the company must recover the money it is being owed if electricity generators (GENCOs) must be paid. According to Adesina, the company is applying the carrot and stick approach especially for the federal government owned institutions that are highly indebted to Ikeja Disco. He said with the illiquidity crises in the sector, no Disco can afford to meter its customers; as such capital investment cannot be borne by the Discos under present circumstances, as he blamed poor revenue collection on present tariff regime which he said is not sustainable. Accumulated debt profile of customers under the Ikeja Electric Plc network has hit over N102 billion, a development that is hindering the planned expansion programme, as most its revenues are stuck with consumers who are reluctant to offset their outstanding bills. Ikeja Electric Plc had introduced some innovations such as giving customers discounts to encourage them to pay their debts but it seems not be yielding any positive result as the debt owed keep mounting. The initiative, designed specifi-

12,522

4,869

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3,692

3,961.04 58.90 3,902.14 1,143.67 2,758.47

Non Capacity NonInstalled opcapacity available operationerational al for capacity genertion

capacity

Capacity generated

cally for unmetered non-maximum demand customers, was put in place to provide an avenue to support customers especially those who are financially constrained by the present economic realities. The sources said: “The three tier scheme had provided a 10 per cent discount for customers who owe between N50, 000 and N100, 000; 15 per cent discount for those owing above N100, 000 but less than N200, 000, and 20 per cent discount for customers who owe above N200, 000.” The Nigerian power sector value chain recorded 29 percent transmission and distribution losses in Q1 2018. Daily capacity generated for the period averaged 3961.04 Megawatt while the capacity transmitted and distributed averaged 3863.22 Megawatt and 2840.57 Megawatt respectively. The distribution channel recorded the highest level of inefficiency as 26.47 percent of the capacity transmitted was lost in the form of Aggregate Technical and Commercial Collection (ATC&C) losses, while transmission losses are 2.47 percent of the capacity generated and 48 percent of the capacity operational for generation. Capacity generated is the actual Megawatt of power generated daily below the maximum capacity due to gas, water, high frequency, and

Transmission Losses

Capacity Transmitted

Distribution capacity losses

Capacity distribut-

line constraints; while capacity operational for generation is the maximum amount of Megawatt of power that can be generated daily in the absence of any constraints. “The high transmission and distribution losses recorded in Q1 was largely due to Distribution Companies’ (DisCos) rejection of significant amount of power generated by the Generation Companies (GENCOs) because of the increase in their baseline losses from 30-35 percent at inception to between 50-60 percent due to power theft and inefficiencies associated with the process of recouping energy charges from customers,’’ Chucks Nwani, an energy expert said. Nwani added “although there are other technical and supply problem facing the sector, the lack of state support in terms of making legislation that will criminalize power theft with strict enforcement by the police has made it difficult for investors in the sector to realize significant return on their investment.” “Government should lead by example by ensuring that government ministries across the country pay their bills promptly as most government ministries owe several months of unpaid electricity bills due to inadequate budgetary allocation.” Continues on wwwbusinessday online

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BUSINESS DAY

Investors overlook Nigeria’s $9bn... Continued from page 1

largest oil producer has sitting in its external reserves, it can afford to, but that is unlikely to happen, according to sources familiar with the matter. “It shouldn’t come as a surprise to foreign investors that a third world country has some pending legal cases, and when you realise the total is about 20 percent of Nigeria’s external reserves, the less worry it elicits,” the source said. “It’s only when a sovereign defaults on a bond repayment that it is punished by investors.” One such scenario of how investors punish bond defaulters was the Argentine example in 2001 and more recently, Mozambique, which defaulted on $727 million of Eurobonds in January 2017. A chief investment manager at one blue-chip investment firm in South Africa told BusinessDay that “Investors will worry more about oil prices and production than these disputes, when it comes to pricing Nigeria risk,” the source who didn’t want to be named said. Oil prices have more than doubled from 2016’s low of $38 per barrel – a period that saw government finances slashed by more than 50 percent and contributed to the country’s first economic recession. Brent crude, Nigeria’s benchmark grade traded at $76 per barrel Tuesday, according to Bloomberg data. Production has also been stable since militants ceased blowing up pipelines, touching a two-year high of 1.8 million barrels in May, according to OPEC data. Wale Okunrinboye, head of research at Lagos-based Sigma Pensions says the production shutins by Shell that could see Nigeria’s overall production fall to a year low in July, is not in the same ball park with the crisis of 2016 and is nothing for investors to fret about. Shipments of Nigeria’s Bonny Light have been subject to force majeure for a month, following a leak on the pipeline. “We have to wait and see what happens,” Okunrinboye said. “But it’s the usual theft that has been happening in Nigeria for donkey years and not the full scale disruption of 2016 when militants deliberately damaged pipelines for personal vendetta.” “While oil prices remain supportive, all eyes are turning to the Federal Reserve meeting to see what happens in terms of rate direction and that could impact risk appetite for Nigeria,” Okunrinboye added. The US Fed is scheduled to meet today with expectations titling towards a policy rate hike, with hawkish forecasts stoked by the May jobs report that showed the economy added 223,000 jobs, beating economists’ estimates by 34,000. Legal experts are however not overly convinced that the legal rows hold no water. Despite noting that “the government will be exhausting all of the appeal options to its highest level on all the cases,”Ayodele Oni, energy partner at Bloomfield Law field also said “The government might be compelled to pay the awards when the international government starts talking about it which will become embarrass-

ing for the government,” Oni told BusinessDay. “The court cases will hurt the government more, as it will send negative signals to foreign investors about its inability to honour contract,” Oni said by Phone. Only last Tuesday, US-based gas processor, Process and Industrial Development Limited (P&ID) obtained a default judgement affirming a $6.59 billion arbitral award against the Federal Government, plus $2.3 billion in interest after a dispute that arose over a natural gas supply and processing agreement in January 2010. The judgement was awarded against Nigeria because the FG failed to even appear in court to mount a defence. Other cases brought against Nigeria mentioned in the Eurobond prospectus include; Interstella vs NITEL In June 2012, a Federal High Court sitting in Umuahia, Abia state ordered the Central Bank of Nigeria (CBN) to pay Interstella Communications Ltd a total of $286 million, including accrued interest. The high court ordered the CBN to debit the accounts of the Federal Government in order to pay the same to Interstella Communications. Interstella Communications, a Nigerian internet gateway operator, had instituted a legal action against Nigerian Telecommunications Limited (NITEL) since June 2007 in order to seek legal redress for a breach of contract. The company won a judgement against NITEL six years ago when the judge ordered NITEL to pay the sum of N1.944 billion per annum accruable to the plaintiffs as revenue from their investment on 36 E1 switch port beginning from 2002. The court also directed NITEL to pay 30 percent interest until date of judgement and thereafter at 25 per cent until date the liquidation of judgement debt hereby granted. NITEL appealed the ruling; however the 2017 court order given by Justice M.G Umar of the Federal High Court was challenged by the then Attorney-General of the Federation and Minister of Justice on the allegation that it was obtained without the knowledge of the Attorney-General. The matter is presently pending at the Supreme Court of Nigeria. Dispute with Korea National Oil Corporation In March 2017, Supreme Court ruled in favour of Korea National Oil Corporation (KNOC) that the decision of the Federal Government to re-award Oil Prospecting License (OPL) 321 and 323 to Owel Petroleum Consortium was illegal. The dispute commenced in 2009, when KNOC filled an action against the Federal Government entities at the Federal High Court of Nigeria. In the suit leading to the Court of Appeal and the Supreme Court, the Federal High Court upheld all KNOC’s claims against the Federal Government and had held that the decision of the President contained in a letter of January 8, 2009, purportedly revoking KNOC’s interests in the OPLs was illegal. Continues on wwwbusinessday online

Wednesday 13 June 2018

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A1 NEWS

BUSINESS DAY

Edo assures support for oil palm council, as Okomu holds first AGM in Benin City

s Okomu Oil Palm plc plans to hold its first annual general meeting (AGM) in Benin City, the Edo State governor, Godwin Obaseki, has assured stakeholders in the oil palm industry of his support for the establishment of an oil palm council in Nigeria. Obaseki gave the assurance when he attended the pre-AGM dinner held by Okomi Oil Palm plc in Benin City. He noted: “With a Council in place, Nigeria would be able to build a strategic plan for the oil palm industry to boost production for selfsufficiency and exportation.” The governor said he would work with successful oil palm companies for the establishment of the council before the end of 2018, saying with a council in place, Nigeria would be positioned to cultivate one million hectares of oil palm in the next five years. He averred that the establishment of such a council would return the country as

the largest producer of oil palm in the world. According to Obaseki, his administration has plans to ensure Edo becomes a major oil palm producing state, as well as support local and foreign investment in the oil palm value chain. He commended Okumo Oil Palm for hosting its AGM in the state, noting that the state was privileged to accommodate the company, listed in the Nigerian Stock Exchange. Board chairman, Okomu Oil Palm, Gbenga Oyebode, lauded Governor Obaseki for his support for the company especially on the plans for the company’s expansion. He said the company was ready to increase oil palm production, noting, “We are excited that our AGM is holding in Benin City, which happens to be the company’s first outing in Benin City. The credit for this achievement goes to the governor who has remained supportive of the company’s activities.”

Borno, Benue, Akwa Ibom paid highest for petrol in May 2018 - NBS CYNTHIA EGBOBOH, Abuja

orno, Benue and Akwa Ibom states paid the highest amount for fuel consumption in the month of May, according to a report by the National Bureau of Statistics (NBS). Borno, Benue and Akwa Ibom paid N166.08, N160.31 and N159.44, respectively, which is higher than the average price recorded in the period, which stood at N150.2. States with the lowest average price were Katsina at N144.82, Kano at N144.87 and Bauchi at N144.93. The NBS announced on Tuesday that it would now release May inflation report on Wednesday, after a day postponement. The report shows that the average price paid by consumers for petrol decreased by -0.3 percent year-on-year and -0.8 percent month-on-month to N150.2 in May 2018, from N151.4 in April 2018. Similarly, the average price per litre paid by consumers for kerosene increased by 0.65 percent month-on-month and decreased by -7.58 percent year-on-year to N280.29 in May 2018 from N278.49 in April 2018. States with the highest average price per litre of kerosene were Abuja at N327.50, Yobe at N313.33 and Cross River at N310.19, while states with the lowest average price per litre of kerosene were Borno at N233.33, Abia at N235.53 and Kogi at N251.04. Similarly, average price per gallon paid by consumers for kerosene increased by 0.80 percet month-onmonth and decreased by

-5.12 perccent year-on-year to N983.67 in May 2018 from N975.82 in April 2018. States with the highest average price per gallon of kerosene were Jigawa (N1143.33), Yobe (N1130.00) and Adamawa (N1088.89). States with the lowest average price per litre of kerosene were Oyo (N907.66), Delta (N884.62) and Rivers (N834.09). The report also shows that the average price for the refilling of a 5kg cylinder for Liquefied Petroleum Gas (cooking gas) increased by 0.68 percent month-onmonth and decreased by -15.30 percent year-on-year to N2,072.24 in May 2018 from N2,058.19 in April 2018. States with the highest average price for the refilling of a 5kg cylinder for Liquefied Petroleum Gas (cooking gas) were Bauchi (N2,500.00), G ombe (N2,500.00), and Borno (N2,428.57). States with the lowest average price for the refilling of a 5kg cylinder for cooking gas were Kaduna (N1,687.50), Ebonyi (N1,690.00) and Ekiti (N1,795.00). The average price paid by consumers for automotive gas oil (diesel) increased by 0.65 percent month-on-month and 4.91 percent year-on-year to N205.67 in May 2018 from N204.35 in April 2018. The states with the highest average price of diesel were Taraba (N253.33) Gombe (N227.50) and Kebbi (N224.50), while states with the lowest average price of diesel were Nasarawa (N162.27), Abuja (N183.00) and Adamawa (N186.67).

L- R: Uzoma Dozie, CEO; Kabir Alkali Mohammed, acting chairman, and Uzo Uja, company secretary/legal adviser, all of Diamond Bank plc, at the bank’s 27th annual general meeting in Uyo, Akwa Ibom State.

Information, record management stakeholders call for passage of data protection law JUMOKE AKIYODE-LAWANSON

pinion-moulders in information and record management sector have called on the National Assembly to speedily pass the data protection law, if the country will truly make any meaningful progress. Oyedokun Oyewole, president/chairman, governing council, Institute of Information Management - Africa (IIM-Africa), said this at the weekend to commemorate the International Archives Day 2018 celebration, in Lagos. He noted that the country lacked enabling laws that will ensure proper management of information and records. “In Nigeria today, we don’t have data protection laws, just last week i was in the UK for Institute of Information Management Induction and a day before our induction in the UK, the UK government, reintroduce their data protection regulation, that is, the generaldataprotectionregulation. “It came into force on May 25th, these are some of the things we as Africans should imbibe. There is need for the national as-

sembly to speedily pass the data protection law in Nigeria,” he said. Oyewole decried the production and issuance of National Identity cards by the Federal Government without adequate laws to ensure that data captured were used for the purpose for which they are being captured. In his words, “Over the years we have been hearing about the national identity card project, how on earth would you have such sensitive project without having enabling laws that will ensure that data, that are being captured are used for the purpose for which they said they are capturing them. “And the usage of those data, how are they being governed, are there rules, are there specifications, are there processes, are there procedures that will ensure that your information,yourdata,myinformation,mydatathatarebeingcollected are being used appropriately. “So, these are some of the several issues that are on ground that the institute is actually out to resolve because there is no government anywhere in the world that can move any country forward without recourse to quality information.

One million Rivers voters still to pick PVC – INEC IGNATIUS CHUKWU

ver one million voters in Rivers State are yet to collect their permanent voters cards (PVCs), according to the newly posted Resident Electoral Commission (REC) of the Independent National Electoral Commission (INEC), Obo Effanga, who paid a visit to the state governor. Effanga told Governor Nyesom Wike that Rivers State had more than three million registered voters, but that only 2.172, 467 voters have collected their permanent voters cards. The REC urged politicians and other stakeholders to play by the rules to support the process for credible polls, saying, “We are 248 days to the 2019. INEC is committed to credible polls. But credible elections depend on so many fact factors including the stakeholders. We expect

the stakeholders to play by the rules.” Responding, Wike said INEC and the police were the riggers of elections in Nigeria. Wike won elections twice as local council boss, helped former governor, Chibuike Rotimi Amaechi, once to win election, and helped the PDP to win both the presidential and governorship elections in 2015 in Rivers State, though his party did not make it in other states to win the presidency. Most of those elections were protested against by the losers who accused the police and INEC of siding with the ruling party then. The governor seems to now agree with the previous losers that INEC and Police were always swinging the results to the ruling party. He declared that if the two agencies played by the electoral rules, elections would be credible and peaceful.

June 12: Eminent Nigerians urge Buhari to honour Abiola, restructure Nigeria INIOBONG IWOK

minent Nigerians, including former governor, Orji Uzo Kalu, Gani Adams; Shehu Sani, Joe Okei-Odumakin, among others, yesterday urged President Muhammadu Buhari to go beyond just announcing June 12 as Democracy Day, and restructure the country. They made the call at an event organised by the Oodua People’s Congress (OPC) and the Nigerian UnionofJournalists,Lagoscouncil, to make the silver jubilee of the death of Abiola, in Lagos. They stress that restructuring the country will serve as a way of recreating the ideals that the late MKO Abiola, presumed to have won the June 12, 1993 election, which was later annulled by then head of state, General Ibrahim Babangida, stood for. They further urge the Independent National Electoral Commission (INEC) to announce the results of the election and publicly declare Abiola the winner, post-humoustly,whiletheBuhariled administration should pay all entitlements to the family of the late politician. Chairman of the occasion, Shehu Sani, commended PresidentBuhariforhavingthecourage to honour Abiola in spite of refusal of former leaders, but warned him nottoattachanypoliticalmotiveto the declaration. The Kaduna senator advised the President Buhari to be wary of fake apostles of June 12 struggle, who according to him, might want totakeadvantageofthedeclaration to claim glory for the 1993 election. “Todayisahistoricandmemorable day. I appreciate President Muhammadu Buhari for the honour and recognition given to the MKO Abiola and Chief Gani Fawehinmi “He has been able to do what his predecessors could not do in the nineteen years of civil rule in Nigeria,” the senator said. Sani also commended members of leading pro-democracy group,NationalDemocraticCoalition(NADECO),AareGaniAdams, Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) under Frank Kokori and others, who he said stood against the annulment of the election.

NIMASA takes delivery of multi-million dollars modular floating dockyard AMAKA ANAGOR-EWUZIE

igerian Maritime Administration and Safety Agency (NIMASA) has finally taken delivery of itslong-awaitedmulti-milliondollar modularfloatingdockfromEurope. Afloatingdockyardisanequipmentorplatformthatcanbetowed to a particular location, to allow a vessel to be floated in and drained to rest on a dry platform. It is used for the construction, maintenance andrepairofships,boats,andother watercraft. The multi-million dollar ship repair equipment, built by Damen Shipyard and NIRDA in Amsterdam,Netherlands,wassupposedto havebeencompletedanddelivered in 2017. Speaking with BusinessDay on Tuesday, Isichei Osamgbi, head, public relations unit of NIMASA, who confirmed the arrival of the modularfloatingdockyard,saidthe agencywasperfectingplanstosend an official statement on the arrival ofdockyardtothemediabeforethe end of Tuesday. Thefloatingdockyard,saidtobe Africa’sfifthlargestfloatingdockyard, measures 125 meters by 35 meters withthreeinbuiltcranes,transformers and other ancillary facilities. Recallthatduringthelastevaluationandinspectionoftheprojectin Netherlands in November 2016, by a delegation of National Assembly members together with NIMASA management, Dakuku Peterside, director-general of the NIMASA, saidthatthemodularfloatingdockyard would enhance ship repair capacity. He said that it also has the potential of transforming Nigeria’s maritime industry, generating wealth and creating employment for Nigerians. Industrystakeholdersdescribed the successful completion and arrival of the floating dock as big achievementforthepresentadministration of NIMASA considering the huge economic benefits to the national economy. “Currently, over 90 percent of the vessels operating in Nigeria carry out their dry docking jobs overseas, exporting jobs and the much needed foreign exchange at great cost to the country, but the completion and delivery of the dockyard will domesticate the formerly lost revenue,” Peterside said.

A2 BUSINESS DAY

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NEWS

Oil retreats as Saudi Arabian output rises in OPEC’s report DIPO OLADEHINDE

rude-oil future, which is the benchmark of Nigerian crude, traded slightly lower early Tuesday as a report on monthly oil output from the Organisation of the Petroleum Exporting Countries (OPEC) indicated higher production from the cartel led by swing producer Saudi Arabia. OPEC oil production increased by 35,000 barrels a day in May, month-onmonth, to average 31.87 million barrels a day, the cartel said Tuesday in its closely watched monthly report. The report, which cited secondary sources, said output in Saudi Arabia jumped by 85,500 barrels a day but was partly offset by production outages in Nigeria, Venezuela and Libya. OPEC’s top producer said it hiked output by 161,000 barrels a day in May, which brought the Saudis’ monthly production to just over 10 million barrels a day, pushing it towards the ceiling it agreed to in November 2017.

The monthly OPEC report comes amid news stories saying that Saudi Arabia, the world’s swing producer and the most influential of OPEC’s members, was ramping up production, along with nonOPEC member Russia. Signs of rising output also come as a coordinated effort to tamp down a global glut of crude and stabilize a downturn in oil futures from a 2014 peak is set to expire at the end of 2018. A gathering of OPEC members on June 22 likely will feature discussion on the outlook for production curbs. Geopolitical risks to supply in Iran and Venezuela two OPEC members prompted the Saudis and Russians to reconsider the output curbs in recent weeks after the international contract exceeded the symbolic $80 a barrel threshold. The oil cartel’s overall output was relatively steady, rising by about 34,000 barrels a day to nearly 31.9 million barrels a day, according to independent sources cited in OPEC’s monthly report. That total reflects a Saudi output figure slightly lower than the

kingdom reported itself, and a monthly jump that was roughly half as large. Looking ahead, the release Wednesday of the International Energy Agency’s monthly oil-market report, as well as weekly data on US petroleum inventories from the Energy Information Administration are in focus. However, reports of a possible arrangement between Washington and Riyadh appear to be fuelling a rift between OPEC members that want to keep the deal in place and those who want to consider raising output. Earlier last week, news surfaced that the US government asked Saudi Arabia to boost output to relieve pressure on prices. But Reuters followed up with a report on June 7, adding more contexts to that story. According to Reuters, a high level Trump administration official called Saudi Arabia a day before Trump was set to announce the U.S. withdrawal from the Iran nuclear deal, asking for more oil supply to cover for disruptions from Iran.

Obi of Onitsha appointed as new chairman International Breweries ABDULLATEEF ENIOLA-GIWA

he merger of Intafact Beverages Limited (a subsidiary of AB-InBev) and Pabod Breweries Limited with International Breweries plc has required a restructure in its Board of Directors. Representatives of the merged companies were appointed to the new board of International Breweries at the AGM on May 30, 2018. According to press release signed by Muyiwa Ayojimi, company secretary/general counsel, the Board, at its meeting on June 11, appointed His Royal Majesty, Igwe Nnaemeka Alfred Achebe, as the new chairman of its Board of Directors.

He replaces Sunday Akintoye Omole who recently stepped down as chairman of the Board following the merger of the three companies. Omole and Gbenga Awomolo will remain as non-executive directors. His Majesty Nnaemeka A. Achebe, Obi of Onitsha, had a 30-year career with the Royal Dutch Shell Petroleum Group of Companies in Nigeria and overseas. He was the chairman of Diamond Bank and Intafact Beverages. He is the chairman of the Anambra State Traditional Rulers Council and Chancellor of Kogi State University and Ahmadu Bello University, Zaria. He was educated at Stanford

and Columbia Universities in the U.S.A and also attended the National Institute for Policy and Strategic Studies, Kuru. He was appointed to the Board of Unilever Nigeria in March 2003, and is currently the chairman of that Board. Board members ratified by shareholders at the AGM include Annabelle Degroot as Managing Director, Annabelle has about 20 years exceptional experience in managing Corporate finances and has been responsible for the roll out of Integrated Business Planning processes and managing strategic Change Management projects within the then SABMiller now AB Inbev businesses.

N1.16bn fraud: Court jails Dariye 14 years FELIX OMOHOMHION, Abuja

he law took its full course Tuesday as another governor was jailed for 14 years over fraud related issue. Recall last week, Jolly Nyame, former governor of Taraba State, was jailed 14 years for filtering away the state’s money for personal use.

In another judgment, Tuesday, the same judge, Justice Adebukola Banjoko of the FCT Federal High Court, who sent Nyame to prison, had also jailed another senator and former Plateau State governor, Joshua Dariye. The court ordered that he spends the next 14 years in jail. He was found guilty of diverting N1.162 billion state ecological funds while he was governor between 1999

and 2007. He was first arraigned on a 23-count charge for the offence in 2007. The court sentenced Dariye to two years in prison for criminal breach of trust and 14 years for criminal misappropriation of funds. The sentences are to run concurrently. The court gave no option of fine. Before the sentence Dariye had begged for mercy.

Wednesday 13 June 2018

BUSINESS DAY

Wednesday 13 June 2018

Leadership SHAPING PEOPLE INTO A TEAM

New technologies won’t reduce scarcity, but here’s something that might VASILIS KOSTAKIS

n a book titled “Why Can’t We All Just Get Along?” MIT scientists Henry Lieberman and Christopher Fry discuss why we have wars, mass poverty and other social ills. They argue that we cannot cooperate with each other to solve our major problems because our institutions and businesses are saturated with a competitive spirit. But Lieberman and Fry have some good news: modern technology can address the root of the problem. They believe that we compete when there is scarcity, and that recent technological advances, such as 3D printing and artificial intelligence, will end widespread scarcity. Thus, a post-scarcity world, premised on cooperation, would emerge. But can we really end scarcity? We believe that the post-scarcity vision of the future is problematic because it reflects an understanding of technology and the economy that could worsen the problems it seeks to address. This is the bad news. Here’s why: New technologies come to consumers as finished products that can be exchanged for money. What consumers often don’t understand is that the monetary exchange hides the fact that many of these technologies exist at the expense of other humans and local environments elsewhere in the global economy. The intuitive belief that technology can manifest from money alone, anthropologists tell us, is a culturally-rooted notion which hides the fact that the scarcity experienced by some is linked to the abundance enjoyed only by a few. Many people believe that issues of scarcity can be solved by using more efficient production methods. But this may overlook some of the unintended consequences of efficiency improvements. The

Jevons Paradox, a key finding attributed to the 19th-century British economist Stanley Jevons, illustrates how efficiency improvements can lead to an absolute increase of consumption due to lower prices per unit, and a subsequent increase in demand. For example, the invention of more efficient train engines allowed for cheaper transportation, which catalyzed the industrial revolution. However this did not reduce the rate of fossil fuel use; rather, it increased it. When more efficient machines use less energy, they cost less, which often encourages us to use them more, resulting in a net increase in energy consumption. Past experience tells us that superefficient technologies typically encourage increased throughput of raw materials and energy, rather than reducing them. Data on the global use of energy and raw materials indicate that absolute efficiency has never occurred: both global energy use and global material use have increased threefold since the 1970s. Therefore, efficiency is better understood as a rearranging of resources expenditures, such that efficiency improvements in one end of the world economy increase resource expenditures on the other. The good news is that there are alternatives. The wide availability of networked computers has allowed new community-driven and opensource business models to emerge.

For example, consider Wikipedia, a free and open encyclopedia that has displaced the Encyclopaedia Britannica and Microsoft Encarta. Wikipedia is produced and maintained by a community of dispersed enthusiasts primarily driven by motives other than profit maximization. Furthermore, in the realm of software, see the case of GNU/Linux on which the top 500 supercomputers and the majority of websites run, or the example of the Apache Web Server, the leading software in the web-server market. Wikipedia, Apache and GNU/Linux demonstrate how non-coercive cooperation around globally-shared resources (i.e. a commons) can produce artifacts as innovative, if not more innovative, than those produced by industrial capitalism. In the same way, the emergence of networked micro-factories are giving rise to new open-source business models in the realm of design and manufacturing. Such spaces can either be makerspaces, fab labs, or other co-working spaces, equipped with local manufacturing technologies, such as 3D printing and CNC machines or traditional low-tech tools and crafts. Moreover, such spaces often offer collaborative environments where people can meet in person, socialize and co-create. This is the context in which a new mode of production is emerging. This mode builds on the conflu-

ence of the “digital commons” of knowledge, software, and design with local manufacturing technologies. It can be codified by the phrase “design global, manufacture local,” following the logic that what is light (knowledge, design) becomes global, while what is heavy (machinery) is local, and ideally, shared. Design global, manufacture local (DGML) demonstrates how a technology project can leverage the digital commons to engage the global community in its development, celebrating new forms of cooperation. Unlike large-scale industrial manufacturing, the DGML model emphasizes application that is small in scale, decentralized, resilient and locally controlled. DGML could recognize the scarcities posed by finite resources and organize material activities accordingly. First, it minimizes the need to ship materials over long distances, because a considerable part of the manufacturing takes place locally. Local manufacturing also makes maintenance easier, and encourages manufacturers to design products to last as long as possible. Last, DGML optimizes the sharing of knowledge and design as there are no patent costs to pay for. There is already a rich tapestry of DGML initiatives happening in the global economy that do not need a unified physical basis because their members are located all over the world. For example, consider the L’Atelier Paysan (France) and Farmhack (U.S.), communities that collaboratively build open-source agricultural machines for smallscale farming; or the Wikihouse project that democratizes the construction of sustainable, resourcelight dwellings. So, what does this mean for the future of tomorrow’s businesses, the future of the global economy, and the future of the natural world? First, it is important to acknowledge that within a single human being the “homo economicus” — the

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self-interested being programmed to maximize profits — will continue to coexist with the “homo socialis”, a more altruistic being who loves to communicate, work for pleasure and share. Our institutions are biased by design. They endorse certain behaviors over others. In modern industrial capitalism, the foundation upon which our institutions have been established is that we are all homo economicus. Hence, for a “good” life, which is not always reflected in growth and other monetary indexes, we need to create institutions that would also harness and empower the homo socialis. Second, the hidden social and environmental costs of technologies will have to be recognized. The so-called “digital society” is admittedly based on a material- and energy-intensive infrastructure. This is important to recognize so as not to further jeopardize the lives of current and future generations by unwittingly encouraging serious environmental instability and associated social problems. Finally, a new network of interconnected commons-based businesses will continue to emerge, where sharing is not used to maximize profits, but to create new forms of businesses that could empower much more sharing, caring, and collaboration globally. As the global community becomes more aware of how their abundance is dependent on other human beings and the stability of environments, more and more will see commons-based businesses as the way of the future.

(Vasilis Kostakis is a Senior Researcher at Tallinn University of Technology, Estonia, and he is affiliated with the Berkman Klein Center at Harvard University. Andreas Roos is a Ph.D. student in the interdisciplinary field of Human Ecology at Lund.)

BUSINESS DAY

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Wednesday 13 June 2018

NATIONAL

Is the Federal Reserve set to retire its low-rates guidance? SAM FLEMING

ccelerating growth and blockbuster hiring numbers will keep the US Federal Reserve on a steady path towards tighter monetary policy this week, despite global risks including the threat of a Donald Trump-induced trade war and emerging-market strains. The target range for the federal

funds rate is likely to be lifted by another quarter point, bringing rates to 1.75 to 2 per cent, in the seventh rise of the current cycle. Another one or two further increases will be signalled for the remainder of the year, with more to come in 2019. With the US central bank moving borrowing costs closer to a neutral level, and many officials signalling they expect policy to be pushed further

to restrictive levels, Fed chairman Jay Powell could start phasing out the lowrates guidance that the central bank deployed during the crisis. How is the Fed thinking about the economy? Officials appear upbeat — and with good reason. Tracking estimates for second-quarter growth point to a marked acceleration from the first quarter’s respectable 2.2 per cent an-

nualised rate, with the Atlanta Fed’s gross domestic product regular estimate signalling growth of as much as 4.6 per cent for the April to June period. Unemployment has fallen to just 3.8 per cent, far below the Fed’s 4.5 per cent estimate of its sustainable level. Core inflation is getting nearer to target after repeated disappointments last year. Adding further zest to the rebound

is a fiscal stimulus package that twins $1.5tn of tax cuts with a $300bn increase in federal spending, boosting the growth rate of real GDP by about 0.75 per cent this year and next. The stock market, meanwhile, is proving resilient despite the potential shocks stemming from Mr Trump’s hostile words towards America’s closest allies and willingness to slap new tariffs on partners such as Canada and the EU.

US opens new $255m de facto embassy in Taiwan...

Larry Kudlow treated for heart attack

Continued from page A5

President tweets news of top economic adviser’s admission to medical centre before historic meeting

Royce was not a “kowtow to Beijing”, said Elizabeth Freund Larus, a professor and Taiwan defence expert at the University of Mary Washington. “The US historically has not sent sitting high-level cabinet members to events in Taiwan, so her participation is in keeping with past experience,” said Prof Larus. Lauren Dickey, a Washingtonbased Taiwan analyst and a researcher at King’s College London, noted Ms Royce’s attendance “as a political appointee rather than a career civil servant” and said a “steady stream” of members of Congress and other US officials over the past year “points to the importance given to Taiwan”. While the ceremony had become viewed as a “test” of the Trump administration’s willingness to follow through with higher-level visits to Taiwan, Tiffany Ma, a director with BowerGroupAsia, a Taiwan-US focused consultancy, said “scrutiny over the level of seniority of US visitors has inadvertently overshadowed the momentous milestone of the opening of the long-awaited AIT facility”. “Symbolically, the new complex reflects US support for Taiwan at a critical time,” she added. China’s foreign ministry on Tuesday said the US decision to send officials to Taiwan would have a negative impact on Sino-US relations. Taiwan has been under siege from a series of Chinese diplomatic and military manoeuvres designed to undermine its government. In March, President Donald Trump signed a law promoting increased engagement with Taiwan. US officials slammed Beijing’s attempts to pressure US airlines to list Taiwan as a region of China on their websites as “Orwellian nonsense”, and criticised the country’s increased military activities near Taiwan-controlled territory. “This [US-Taiwan] friendship is rooted in our shared values — democracy, human rights, freedom,” said Kin Moy director of AIT, the US’s proxy ambassador in Taiwan, adding that the new building was “a tangible symbol that the United States is here to stay”. Mr Moy added that the presence of Republican Congressman Gregg Harper at the opening also reflected “strong” bipartisan congressional support for Taiwan. Prof Larus said that given the AIT opening coincided with the historic summit between the US president and North Korean leader Kim Jong Un in Singapore, the Trump administration “did not need to complicate international relations in the Asia-Pacific by pushing the envelope on the AIT opening”.

SHAWN DONNAN AND ALICE WOODHOUSE

The summit in Singapore was a milestone in US-North Korea relations © EPA

Trump and Kim pledge new chapter for North Korea • Kim promises ‘complete denuclearisation’ of North Korea. • Trump invites Kim to White House summit. • US commits to providing ‘security guarantees’ to Pyongyang. • US to suspend military exercises on Korean peninsula.

DEMETRI SEVASTOPULO, BRYAN HARRIS AND STEFANIA PALMA

onald Trump ended his historic summit with Kim Jong Un by declaring that the US would halt military exercises on the Korean peninsula, in a significant concession to North Korea as the two leaders hailed their meeting as a step towards a “bright future”. In the first meeting between a sitting US president and North Korean leader, Mr Trump and Mr Kim held five hours of talks that concluded with a joint statement, in which the US agreed to provide security guarantees in exchange for denuclearisation. “We are prepared to start a new history . . . and write a new chapter between our nations,” Mr Trump said during an unwieldy hour-long press conference. The summit was a milestone in US-North Korea relations, coming less than a year after Mr Trump called Mr Kim a “madman”, who in turn described Mr Trump as a “dotard”. Several thousand journalists poured into Singapore to cover the event, which was the most anticipated summit since Ronald Reagan met Mikhail Gorbachev in 1986. The two leaders arrived by heavily guarded motorcades at the Capella Hotel on the resort island of Sentosa shortly before 9am. After the leaders shook hands for the cameras, they went behind closed doors for discussions that Mr Trump said were “honest”. “The entire world is watching this moment. Many people in the world will think of this meeting as a scene from a fantasy or science fiction movie,” Mr Kim told Mr Trump as the two men strolled through the hotel in between one of their meetings. Mr Kim said the nations would

“leave the past behind” and “the world will see a major change”. Mr Trump thanked Mr Kim for taking the “first bold step for a bright future”. China, South Korea and Japan all welcomed the outcome, even as many analysts said Mr Trump had rewarded Mr Kim with a propaganda victory without securing concrete steps towards denuclearisation of the Korean peninsula — the goal of the talks. South Korea said the summit marked the “break-up of the last remaining cold war” and praised Mr Kim as “the one in history who takes the first bold step on to the world”. Jung Pak, a former CIA North Korea analyst, echoed the view of many sceptics, saying the statement was a “huge let-down” that was “lots of empty calories, no substance”. “The Trump administration is going to spin this as a Nobel-worthy meeting, but at the end of the day, can we honestly look in the mirror and say that we have reduced the threat from North Korea?” said Ms Pak, who is now at the Brookings Institution. In agreeing to halt the joint military exercises that the US regularly holds with South Korea, Mr Trump gave Mr Kim something that Pyongyang had long demanded. But it was unclear what he had received in return. Asked earlier if North Korea would start to denuclearise, Mr Trump said: “We are starting that process very quickly.” Critics of the summit argued that Mr Kim was playing Mr Trump in an effort to receive relief from international sanctions that are squeezing North Korea. At his press conference, Mr Trump said the sanctions would be eased when “nukes are no longer a factor”. He also said it was too early for both countries to normalise diplomatic relations. But the US president said he had invited Mr Kim to visit the White House at “the appropriate time” and

that the North Korean leader had accepted his invitation. The statement said the leaders had “committed to the building of a lasting and robust peace regime on the Korean Peninsula”. It added that Mr Trump agreed “to provide security guarantees to [North Korea] and Chairman Kim Jong Un reaffirmed his firm and unwavering commitment to complete denuclearisation of the Korean Peninsula”. While Mr Trump said he would stop military exercises, he said the security guarantees would not involve removing any of the 28,500 US troops stationed in South Korea. “No, we’re not reducing anything,” said Mr Trump, who had sparked concern among US allies during the presidential race by suggesting that he would withdraw troops. “I have to be honest . . . I want to bring our soldiers back home,” he said. “That’s not part of the equation right now. At some point I hope it will be but not right now.” The summit in Singapore is the product of intense diplomacy that began after Mr Kim signalled earlier this year that he wanted to meet Mr Trump. The opening came as the US continued to ratchet up a campaign aimed at squeezing North Korea economically in an attempt to bring Mr Kim to the negotiating table. Ahead of the meeting, Mr Trump hit out at the critics of his move to meet Mr Kim — a summit that only two weeks ago appeared to be in jeopardy following tough rhetoric from both sides. The summit comes on the heels of the G7 in Canada, where the US ended up badly isolated from its traditional allies over rising trade tensions that threaten to fracture the decades-old group of industrialised countries. In contrast to his sharp criticism of Justin Trudeau, the Canadian prime minister, Mr Trump has over the past few weeks praised Mr Kim, whom he had frequently referred to as “rocket man” last year.

arry Kudlow, Donald Trump’s top economic adviser, suffered what the White House called a “very mild” heart attack on Monday and was being treated at a Washington hospital. In a post on Twitter sent a few minutes before he was due to meet North Korean leader Kim Jong Un in Singapore, President Trump said the head of his National Economic Council was being treated at Walter Reed Medical Center, on the outskirts of the US capital, after earlier falling ill. “Our Great Larry Kudlow, who has been working so hard on trade and the economy, has just suffered a heart attack. He is now in Walter Reed Medical Center,” the president said. In a statement, press secretary Sarah Sanders later added that Mr Kudlow, 70, had “experienced what his doctors say was a very mild heart attack”. “Larry is currently in good condition . . . and his doctors expect he will make a full and speedy recovery,” she said. Mr Kudlow took over the role in March as head of the NEC, one of the most powerful roles in the White House, from former Goldman Sachs executive Gary Cohn when he left the post earlier this year after losing an internal battle over a plan to impose steel and aluminium tariffs. A veteran of Wall Street who also served in the Reagan administration, he is considered a free trade advocate and had been critical of plans to introduce tariffs before joining the Trump White House. In the administration he has often served as a spokesman and explainer for some of the president’s most unorthodox economic moves. In recent days, as Mr Trump has been embroiled in a rhetorical trade battle with allies over steel and aluminium tariffs that were imposed on June 1 on imports from the EU, Canada and Mexico, Mr Kudlow has sought to portray the president as a trade reformer rather than a protectionist. The heart attack came just a day after Mr Kudlow, a former CNBC commentator, lashed out at Justin Trudeau, the Canadian prime minister, after an acrimonious G7 meeting in Quebec that was dominated by tense discussions over Mr Trump’s tariff plans. Mr Kudlow accused Mr Trudeau of an act of betrayal against the US president ahead of his meeting with the North Korean dictator. “ I m e a n , h e re a l l y k i n d o f stabbed us in the back. He really, actually — you know what? He did a great disservice to the whole G7,” Mr Kudlow told CNN in an interview on Sunday. “This is a case where Trudeau — it was like, I don’t know, pouring collateral damage on this whole Korean trip. That was a part of Trudeau’s mistake.”

BUSINESS DAY

Wednesday 13 June 2018

C002D5556

E-mail: insurancetoday@businessdayonline.com

L-R: Funmi Babington-Ashaye, President and Chairman of Council, Chartered Insurance Institute of Nigeria (CIIN) and Elder AK Oniwinde, past president of the CIIN, while Ogala Osaka, past president, CIIN watches from behind, during the unveiling of the Institute’s electronic-library at the CIIN Secretariat in Lagos.

The Chartered Insurance Institute of Nigeria’s new Electronic Library

Rebranding: Going into an insurance contract, avoid ignorance …helping the insured understand insurance Stories by Modestus Anaesoronye

nsurance like any other contract is binding on affected parties, that is the insurer (insurance company) and the insured (policy holder), that each must keep their own side of the contract, to have a successful risk transfer and risk management. While the insurance company has the responsibility to ensure that it is there to pay the insured claims when they arise, the insured on his own must do certain things that will make the contract valid within the cover period. The insured must be open and give all information requested by the insured without hiding any material fact; must pay premiums as and when due without creating room for

argument, and also report loss at appropriate time. This implies that the insured must read the insurance policy document and understand it properly before going into the contract. Insurance does not accommodate ignorance as an excuse for not playing your own role. If you cannot read the policy document and understand it, get an insurance broker who is an intermediary between you are the insurance company. The broker does not charge you any extra money outside the premium for the insurance contract, which is paid to the insurance company, so do not be afraid of extra cost. A broker is paid by the insurance company, and does not affect the premium on the policy. With the broker, you can be sure that you are not going to run into

problems of ignorance, as long as you follow the broker’s professional advice. Insurance more than a number of these other investments, is technical in nature requiring that somebody going into it understand the secrets for effective insurance. Otherwise, use the broker because ignorance is not an excuse in law and worst is when someone has made loss, and there is a claim. To avoid all of these cork and bull stories, take the services of an insurance brokers who by virtue of their profession understand the deal and can mediate for you to undertake an insurance cover successfully. Just like an accountant or lawyer who provides you with professional advice based on years of training and experience, a qualified broker can do the same with your insurance.

Babington-Ashaye bequeaths world class e-library to Chartered Insurance Institute of Nigeria

unmi Babington-Ashaye, the 48th President and Chairman of Council of the Chartered Insurance Institute of Nigeria (CIIN) as part of her achievements in office has bequeathed a world class electroniclibrary to the Institute. The library, sitting on the third floor of the Institute’s head office on Lagos Street in Ebute-Meta, is equipped with state of the art facilities, comparable to what can be found in the library of other insurance institutes abroad. Babington-Ashaye speaking during the unveiling of the e-library said, “the coming on board of the library was a fulfillment of her vision to provide a conducive

study center in the secretariat, where members can come in to do research, and deepen their knowledge. “With experiences drawn from other professional institutes abroad including the CII UK, I feel accomplished that the Institute in Nigeria could boast of such a library of international standard. Babington-Ashaye said “It is mine believe that our members we take advantage of this facility to enhance their knowledge and update their skills for the benefits of the entire insurance industry”. The CIIN under the watch of Babington-Ashaye recently com-

pleted the upgrade of the secretariat building, started about two years ago with the vision to provide the secretariat staff a decent and conducive environment to work. Babington-Ashaye in her acceptance speech on 25th July 2017 when she assumed the presidency of the CIIN with the theme ‘Insurance: Imperative for Education and Enlightenment’ said the choice was informed by the need to confront lack of general awareness which is the greatest challenge facing the profession and the Industry. “People lack knowledge about Insurance and it is importance in all human endeavours including business undertakings.”

One interesting thing about using the services of a broker is the fact that, you the insured is not going to pay the broker for his services, but is paid by the underwriting company that gets the business, experts say. Like the experts put it, when arranging insurance, many people take shortcuts without seeking proper advice, understanding the fine print or considering whether they are getting value for money. Often they end up with cover they don’t need and - even worse - without the cover they really need. A broker will be aware of the benefits, exclusions and costs of competing policies on the market. They will also help arrange and place cover and can often provide advice on how to make the most of your insurance budget. Without having an insurance

protection one is not only exposing himself to avoidable risks, but also exposing those who rely on him or her for their daily needs and upkeep. Like an expert said- it is a moral irresponsibility not to provide for your family when you will not be there. It further stated that this is where insurance has an edge against other financial plans. The primary reason that you need to buy insurance is to transfer risk. Insurance allows you to transfer financial risks from yourself to an insurance company. The insurance companies prepare for this risk because they charge premiums to their customers and keep a large amount of money in reserve. When a customer files a claim, the insurance company has the money there to pay it. This allows you to focus on other things instead of worrying about possible losses.

STI promotes academic excellence in primary schools

overeign Trust Insurance Plc in line with its Corporate Social Responsibility programme has given out school bags and other educational items to a primary school in its host community. The company which has its corporate head office in Victoria Island, Lagos, said the initiative was to commemorate the celebration of Children’s Day which was marked on May 27, 2018. According to Segun Bankole, head of Corporate Communications & Brand Management of the underwriting firm, “the initiative is geared at promoting academic excellence and good behavioral conduct amongst pupils in public primary schools in the country.” He further mentioned that the initiative will go beyond the Children’s Day celebration as the company intends to make it an on-going one

in some other locations where they have business presence. Part of the criteria set in determining recipients included best pupils in all arms of the classes, (male & female) in Mathematics and English Language, most punctual pupil in the school, best behaved boy and girl, most improved pupil in the school in the male and female category as well. The Head Teacher of the School was full of praises for the organization as he thanked the underwriting firm for the kind gesture shown to the Pupils. He said in his words, “I am indeed very grateful for this very thoughtful initiative and I want to thank your organization on behalf of the pupils of the School and their parents who you have helpedone way or the other with this good gesture of yours”. I can only continue to wish your organization well in all your business endeavors.

Wednesday 13 June 2018

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NEWS Dangote, Flour Mills, NB, Nestlé push local input sourcing to 66% ODINAKA ANUDU

heresultsofbackward integration projects of Nigerian manufacturers are trending positive, with numbers showing a significant rise in local raw materials sourcing since the second half of 2016. According to the latest report released by the Manufacturers Association of Nigeria (MAN), local input sourcing in the manufacturing sector jumped to 65.70 percent in the second half of 2017, from 60.72 percent recorded in the first half period. In the second half of 2016, percentage of local sourcing was 59.98 percent as against 46.3 percent recorded in the first half of the same period. BusinessDay independent checks show that the spike in local sourcing in the second half of 2017 was driven by aggressive activities of Dangote Group, Flour Mills of Nigeria, Nigerian Breweries, Nestlé, Unilever, and FrieslandCampina WAMCO, Dufil Prima, Lafarge Africa, PZ, among others. “The upward movement was linked to the implementation of resource-based industrialisation and backward integration policy as contained in Nigeria’s Industrial Revolution Plan (NIRP),” MAN says in its latest economic review released to BusinessDay. Resource-based industrialisation is the use of locally available resources, such as raw

materials, manpower and natural resources, to grow domestic production. On the other hand, backward integration occurs when a company buys its suppliers or internally produces segments of its supply chain. According to the report, industries in Kano Bompai and Imo/Abia industrial zones beat those in Lagos, Ogun and others in local raw materials sourcing within the period under review. Imo/Abia zone recorded 73.6 percent as against 51.7 percent in the corresponding half of 2016. Similarly, Kano Bompai’s local input preference was 75.5 percent, while Ogun zone stood at 68.7 percent as against 68 percent recorded in the corresponding period of 2016. Apapa gave a good showing, recording 70.7 percent in the period as against 54 percent reported in the corresponding half of 2016. Local raw materials utilisation increased in Ikeja zones in the review period rose to 63.2 percent as against 61.3 percent in the corresponding half of 2016. However, Apapa’s and Ikeja’s are still lower than Kano Bompai’s and Imo/Abia’s. Harangued by foreign exchange crisis of 2016, manufacturers are now getting their raw materials from farmers and subsidiaries, while sourcing packaging materials from other local firms. The personal care manufacturer Unilever Nigeria is aggressively pushing its local input

sourcing towards 100 percent. “Unilever has achieved over 90 percent in local sourcing of packaging materials. The aim is to achieve 100 percent by the end of 2019 and overcome the current challenges of local vendor’s capacity to meet up with global best standard,” Thomas Mwanza, procurement director, Unilever West Africa, at Manufacturing and Equipment, Nigerian Raw Materials Expo held in Lagos recently. “In agro-allied sector, Unilever is partnering with intermediary companies, for the supply of cassava and starch,” Mwanza he said. Nestlé Nigeria is sourcing 80 percent of its maize, sorghum, millet, soya, cassava starh, cocoa powder, palm olein from more than 41, 600 local farmers and processors scattered across the country. “The Industry has huge needs and we must help farmers improve their yields to meet them. To achieve real success with connecting farmers to industry, a 360 degree approach which will include the aggregators, processors, and logistics suppliers must be considered within this value chain,” said Mauricio Alarcon, CEO of Nestlé Nigeria plc. Dangote Cement is sourcing over 80 percent of its limestone and gypsum locally, while Dufil, makers of Indomie noodles, sources its palm oil and maize domestically.

BUSINESS DAY

Nigeria falls short as African Trade Insurance sees annual portfolio doubling to $7bn 2023 … presidential power delays participation MODESTUS ANAESORONYE

he lack of presidential readiness to conclude documentation and signing of memorandum of understanding (MoU) between Nigeria and the African Trade Insurance (ATI) agency may shut the country out of the buoying continental business. The ATI expects its annual insured trade and investment portfolio to double to $7 billion within five years, driven by new members including Ghana and Nigeria, expected to finalise their registration before end of 2018. BusinessDay investigation reveals that ATI’s request to have a workshop in Nigeria, with Vice President Yemi Osinbajo being present to finalise registration requirements, has not been able to sail through. This development, analysts say, is undermining Nigeria’s participation in the continental insurance agency established to provide risk guarantee for private investors coming into Nigeria as well as exporters from the country. Minister of finance, Kemi Adeosun, had in September 2017 announced the Federal Executive Council meeting’s approval of Nigeria’s membership of the ATI agency. Adeosun said the council approved a memo she presented, which harped on the necessity of Nigeria to be part

of ATI agency to provide risk guarantee for investment coming into Nigeria as well as export from the country. The continental insurance agency, she said, is set up with the support of the World Bank, owned by African government and is registered under the United Nations treaty to provide insurance and promote economic growth in member countries She said joining the agency would provide risk guarantees, sovereign guarantee and risk mitigation, disclosing that many African countries were already members of the agency. George Otieno, chief executive of ATI, told Reuters in Kenya that the annual portfolio would rise by $1 billion this year to $3.5 billion and double to about $7 billion by 2022. The investment risk insurer is owned by 14 African nations and other organisations such as the African Development Bank. It was formed in 2001 with World Bank support to offer insurance for large investment and financing projects against risks such as sovereign default, war and insolvency, to spur investment by companies and private equity into Africa. “We are likely in the next five years to have another 20 countries on board,” Otieno said in an interview. He said ATI’s net profit grew 55 percent in 2017 to $10 million.

Nigeria, which could bring $500 million worth of business to be insured by ATI once it signs as a member, was expected to complete the membership process before the end of 2018, he said. Otieno said ATI had encouraged global insurance firms like Swiss Re and Lloyds of London to take on more exposure on the continent. It partners with those firms for re-insurance. “Some of those international insurers would not touch sovereign risks if we are not involved,” he said. Major insurance projects on the continent insured by ATI include electricity generation projects in Kenya and a $200 million mining project in the Democratic Republic of the Congo. African lenders, including Morocco’s Attijariwafa, are also turning to ATI to insure their cross-border lending as they look to expand across Africa, Otieno said. ATI said it would also help investors eyeing Ethiopia insure themselves against currency risks. Last week, Addis Ababa said it would sell stakes in its national airline and telecom operator to foreigners. The nation of 100 million people has a managed exchange rate and it is frequently plagued by dollar shortages. “We should be opening an office in Ethiopia within the year,” said John Lentaigne, ATI’s chief underwriting officer.

Wednesday 13 June 2018

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BUSINESS DAY

FINANCIAL TIMES Brazil’s central bank in firepower test with currency speculators

Trump and Kim pledge new chapter for North Korea Page A6

Page A7

World Business Newspaper

Flint sets new course to return HSBC to top-line growth The bank’s revenues rose last year but were still down 37% in the past decade MARTIN ARNOLD

he new strategy John Flint presented to HSBC investors on Monday is in many ways what you would expect from someone elevated to chief executive after a 28-year career at the bank: continuity and incremental improvement. But look more closely and it is clear that Mark Tucker has had a significant influence on the strategic trajectory of Europe’s biggest bank since being recruited from Asian insurer AIA last year to become its first external chairman. As well as building on the platform the duo have inherited from their predecessors as chief executive and chairman — Stuart Gulliver and Douglas Flint — their new eight-point plan also aims to correct some of the flaws left by the previous leadership team. HSBC is the supertanker of British banking with $2.65tn of assets, close to 230,000 employees and 3,900 offices in 67 countries. So anyone expecting Mr Flint to unveil radical changes was kidding themselves. Instead, Mr Flint promised to press on with the work started three years ago when Mr Gulliver presented his “pivot to Asia” strategy. The new boss said he would continue to redeploy capital from areas with low return on equity to more promising ones, notably in its main profit engine of Hong Kong and in China’s fastgrowing Pearl River Delta region. He committed to keep the dividend unchanged at 51 cents a share, disappointing some analysts who had hoped for a slight uplift. There was also a promise to continue the policy of buying back shares, at least to offset those it pays out for the scrip part of its dividend. “This was about John Flint demonstrating that he is a safe pair of hands and doing nothing revolutionary,” said Joseph Dickerson, banking analyst at Jefferies. “His tone was one of someone who is focused on getting the job done and getting the returns up.” So where are the signs of Mr Tucker’s

fresh eyes in all this? Firstly, as someone who was widely praised for the doubledigit annual revenue growth he consistently produced at AIA, Mr Tucker had told colleagues he was keen to return HSBC to top-line growth after a decade of shrinking revenues. While the bank’s revenues rose last year, they were still down 37 per cent in the past decade, weighed down by disposals, restructuring and low interest rates. Given his background, the chairman’s natural instinct was always to look at HSBC’s insurance and asset management operations as an opportunity to grow, particularly in Asia. Mr Flint duly promised that these would be key areas of investment. “One can see signs of Tucker in the plan’s ambition,” said Mr Dickerson at Jefferies. “Clearly there is a focus on growing the insurance and wealth management businesses, and you can imagine that with Tucker at the helm the board would welcome a plan that includes that element.” Second, Mr Tucker seems to have been taken aback by the level of bureaucracy in HSBC. The new plan aims to simplify the bank’s multi-layered organisation, streamline decision-making and speed up service for customers. This includes reducing board committees from seven to five, cutting the time it takes to sign up wealthy clients at the private bank from 65 days to 10, and slashing the approval process for small business loans from up to two months to one day. Finally, the new chairman has encouraged a laser-like focus on the longstanding effort to turn round the bank’s perennial underperformers, in particular its US business. For the first time, investors have been given a target for return on equity in its US unit to be lifted from a paltry 0.9 per cent last year to at least 6 per cent by 2020. It aims to achieve this with a mixture of increased unsecured lending to American consumers, expansion among international-focused customers and a return of excess US capital back to the group.

US opens new $255m de facto embassy in Taiwan Compound reaffirms Washington’s support for Taipei in face of pressure from Beijing EDWARD WHITE

he US has held a ceremony to mark the opening of its new de facto embassy in Taiwan, in a show of support for the government in Taipei amid mounting Chinese pressure on the self-ruled island. The diplomatic base reflected the “strength” of US-Taiwan ties and would “make possible even greater co-operation for many years to come”, said Marie Royce, assistant secretary of state for educational and cultural affairs, and the highest ranking US official in attendance on Tuesday. Taiwan president Tsai Ing-wen said at the ceremony that “as free and open democracies”, Taiwan and the US had an “obligation to work with one another to defend our values and protect our joint interests”.

“As long as we stand together, nothing can come between us,” Ms Tsai said. The $255m American Institute in Taiwan compound, located in Taipei’s affluent Neihu district, is an embassy in all but name. Its opening was a point of diplomatic tension between Washington and Beijing, with Chinese officials lobbying the US not to send a high-ranking official to Taipei to mark the occasion. The Chinese Communist party, which claims Taiwan is part of its territory, opposes formal engagement with the government in Taipei. The attendance of a senior cabinet-level official would have marked something of a break with precedent. However, the choice to send Ms Continues on page A6

Citi issues stark warning on automation of bank jobs

Investment banking leaders eye future in which machines take over ‘lower-value tasks’

LAURA NOONAN

itigroup’s investment bank has suggested that it will shed up to half of its 20,000 technology and operations staff in the next five years, as machines supplant humans at a faster pace. The forecast by Jamie Forese, president of Citi and chief executive of the bank’s institutional clients group, was the starkest among investment banking bosses in a series of FT interviews to mark the 10th anniversary of the financial crisis. Mr Forese said the operational positions, which make up almost two-fifths of investment bank employees at Citi, were “most fertile for machine processing”. “We’ve got 20,000 operational roles. Over the next five years could you make it 10,000?” he added, in comments that had echoes of former Deutsche Bank chief executive John Cryan’s claim that up to half of the

German bank’s workforce could be replaced by technology. If replicated across the industry, the potential job losses would represent a steeper rate of cuts than in 2007-2017, when almost 60,000 jobs were cut from eight of the world’s top 10 investment banks, according to FT research. Two of the top 10 investment banks were not included in the FT research; Citi, because its data were not available; and Bank of America because its 2008 merger with Merrill Lynch make precrisis comparisons futile. Barclays investment bank boss Tim Throsby said that the future would see a smaller number of employees making more money, while machines took over “lower-value tasks”. “If your job involves a lot of keyboard hitting then you’re less likely to have a happy future,” he added. Richard Gnodde, head of Goldman Sachs International, said: “There are so many functions today that technol-

ogy has already replaced and I don’t see why that journey should end any time soon.” Not every investment bank boss saw plenty of room for more cuts. At HSBC, Samir Assaf, head of global banking and markets, said there was “not much more to go” for technology replacing investment bank staff. “We get to a point from a riskmanagement perspective [where you can’t cut much more]. I think there is maybe another 5 to 10 per cent to go between now and the next five years.” Mr Gnodde stressed that technology could create new business opportunities and ultimately new jobs, such as Goldman’s fledgling online only consumer bank Marcus. Mr Forese said his bank would hire in other areas such as sales and research. “What people are doing, the type of work being done by the human rather than the machine will change,” he added.

Macron resolute on trade as Trump bromance cools Merkel backs French president in standing firm on EU position over tariffs ANNE-SYLVAINE CHASSANY AND TOBIAS BUCK

his time, there was no kissing, hugging or planting trees. Less than two months after Donald Trump and Emmanuel Macron displayed mutual affection in Washington, their encounter at the G7 meeting in Canada during the weekend was marked by angry rhetoric on US trade tariffs and a white thumbprint left on Mr Trump’s hand by a firm squeeze from the French leader. Mr Trump’s weekend onslaught on the postwar multilateral order has cooled his bromance with Mr Macron and reinforced the French president’s determination that the EU should stand its ground on trade, seen by the EU as a defining transatlantic issue. For Mr Macron and German chancellor Angela Merkel, who described the G7 outcome as “sobering” and “depressing”, the Québec debacle also emphasised how much the EU’s two dominant leaders will have to rely on each other in a colder multilateral era.

“Flattery has had no effect, we are now in a more confrontational phase,” said François Heisbourg, a geopolitical analyst. Josef Janning, senior policy fellow at the European Council on Foreign Relations in Berlin, said: “This moves Germany and France even closer together . . . Merkel and Macron tried different approaches with Trump, but both ended up getting their fingers burnt. We may look back at the G7 summit as one of those formative events.” In the first year of his presidency, the youthful and liberal Mr Macron bent over backwards to establish a friendly rapport with Mr Trump in recognition of the close economic and military ties between Europe and the US. But the wooing has yielded little and came with a political price at home for the French president. Since Mr Macron’s state visit to Washington in April, the Trump administration has pulled out from the Iran nuclear deal, imposed tariffs on EU steel and aluminium and threatened more duties on German cars. Mr Macron’s switch to a more

combative approach is partly designed to address criticism at home that his efforts to sway Mr Trump have gone too far. But analysts said the harder line also reflected a desire by the French leader to seize a rare opportunity to assert the bloc ’s independence and strength. In contrast to areas such as defence and economic integration, where national governments have led policy, the EU has long had a common stance on trade, which is managed by the European Commission in Brussels. To the satisfaction of Mr Macron, who has pushed to strengthen the EU’s role as a sovereign power, this has allowed the EU to respond swiftly to US tariffs in the form of retaliatory measures. It has contrasted with the union’s inability to mount a meaningful response to counter US sanctions on Iran. Mr Heisbourg said Mr Macron could afford to adopt a harder line with Mr Trump because Europeans were united on trade. “This is a domain where the EU actually has clout as an institution,” he said.

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Brazil’s central bank in firepower test with currency speculators The real once more comes under assault from foreign exchange traders JOE LEAHY AND ANDRES SCHIPANI

razil’s central bank president Ilan Goldfajn is facing the test of his career as the country’s currency has once more come under assault from foreign exchange traders. Mr Goldfajn, formerly an economist with Brazil’s largest private sector bank, Itaú Unibanco, has warned speculators he has the firepower to see them off in the form of dollar swaps, in effect a bet against the dollar settled in the local currency, the real. During the last bout of volatility before he took over in 2016, the central bank issued $115bn of the instruments. This time, the central bank has sold only slightly more than one-third of this amount, leaving it with plenty of room for more, in addition to its $380bn in reserves. “We can exceed the amount [of swaps] offered in the past,” Mr Goldfajn said in a speech to a Goldman Sachs conference on Monday. “We will intensify their use in the near term.” After the central bank committed to offering a total of $24.5bn new swaps by the end of this week, the real strengthened from its weakest levels last week of more than R$3.90 against the dollar to about R$3.68 on Tuesday. The country’s stock market, the Ibovespa, rallied early on Tuesday but has slumped more than 15 per cent in less than a month to 73,000, a level last seen in December. Brazil’s benchmark 10-year US dollar denominated bond yield rose above 6 per cent on Tuesday, up from 4.5 per cent earlier in the year, highlighting the scale of financial pressure facing the economy. Brazil’s local currency five-year government bond yields has risen towards 11 per cent from below 9 per cent in recent weeks. For some investors, a buying opportunity has yet to materialise for Brazil. “We are underweight or short pretty much everything in Brazil,” said Paul

Greer, emerging market debt portfolio manager at Fidelity International in London. “We think the central bank’s move has been ill-advised, and they are doing it with no support from monetary or fiscal policy … This is not at all a buying opportunity.” The Bank of America Merrill Lynch monthly survey released on Tuesday said investor “expectations are for the Ibovespa to remain between 65,000 to 85,000 while a third of participants expect the real above R$3.8 at year-end, a jump from mere 3 per cent in May”. The factors that have driven the real down 10 per cent since January to become the second-worst performing in Latin America this year have not gone away, namely rising US Treasury yields and political uncertainty as Brazil in October faces its most unpredictable election in decades. “The trend was driven by the external backdrop and the local political scenario,” said David Beker, economist with Bank of America Merrill Lynch. The sudden swings in the real over the past month have battered a market that had taken a benign view of Brazil’s economic prospects. Last month, a market rout in Argentina unnerved investors. The final straw for a re-rating of Brazil came when the normally pro-market government of President Michel Temer caved in to striking truckers and offered them a costly fuel subsidy. With populists from the left and the right leading in early polls for the October elections, investors began selling on concern that Brazilian voters were not ready for tough fiscal reforms that economists believe will be necessary to restore sustainable growth in Latin America’s largest economy. “The scenario is becoming increasingly challenging,” Itaú chief economist Mario Mesquita wrote in a research note. “Uncertainties surrounding the approval of reforms … remain high.”

Seattle bows to Amazon pressure over ‘head tax’ to help homeless City to repeal new charge on big companies aimed at tackling housing crisis

SHANNON BOND

eattle has backed down in its battle with Amazon as the city council said it would repeal a tax on large employers following pressure from the technology group and other large businesses. The city’s U-turn came less than a month after it unanimously passed a so-called “head tax” of $275 per employee on local companies with more than $20m in revenues to help tackle its homeless population, the country’s third-largest. Seattle’s economic boom, fuelled in part by Amazon’s success, has made it one of the fastest-growing cities in the US, but has also sent housing costs, and rates of homelessness, soaring. The tax, which caught Amazon offguard, has crystallised a debate over who should bear responsibility for the impact of technology companies’ rapid growth. “It is clear that the ordinance will lead to a prolonged, expensive political fight . . . that will do nothing to tackle our urgent housing and homelessness crisis,” said Seattle’s

mayor, Jenny Durkan, in a statement announcing plans to repeal the law. “We heard you.” The tax drew fierce opposition from Amazon, Starbucks and other big Seattle businesses. Amazon suspended a big construction project in the city, where it employs more than 40,000 people. Even after the city cut the tax from an initial proposal of $500 a head, the compromise left all sides unhappy. Following the May 14 vote, Amazon said it was “disappointed” and “remain[s] very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here”. Funded by more than $200,000 raised from Amazon, Starbucks and other companies, a coalition has been collecting signatures to put a repeal of the head tax to voters in November’s election. Advocates for the homeless said the $45m the tax was expected to bring in would not do enough to address the problems in a city that faces severe limits in how it can raise revenue, because of a state ban on income tax.

Ilan Goldfajn, president of the Central Bank of Brazil, has warned speculators he will use dollar swaps to see off assaults on the country’s currency © EPA

Markets take Trump-Kim summit in their stride Participants look to Fed and ECB meetings DAVE SHELLOCK

hat you need to know Historic meeting produces no major breakthrough, say

analysts Nasdaq Composite hits intraday record, Euro Stoxx 600 slips All eyes on US and eurozone central bank policy decisions Core US inflation rate ticks higher in May, as expected Italian stocks outperform again Overview Global markets adopted a cautious stance ahead of policy decisions from the Federal Reserve and European Central Bank as participants largely shrugged off the outcome of Donald Trump’s historic summit with Kim Jong Un. Equity markets on both sides of the Atlantic put in mixed performances, with the Nasdaq Composite touching a record intraday high but most European indices struggling to gain fresh ground. There was a muted response by South Korean assets to the TrumpKim summit. While the two leaders hailed their meeting as a step towards a “bright future”, analysts were more sceptical. “For all the symbolism on display, today’s summit produced no major breakthrough,” said Gareth Leather at Capital Economics. “There were no details on the timeframe for denuclearisation and no lifting of economic sanctions. “ Ahead of the conclusion today of the Fed’s June meeting, US consumer price data attracted plenty of atten-

tion. The “core” CPI, which excludes food and energy prices, rose 2.2 per cent in the year to May, up from 2.1 per cent in April, matching economists’ forecasts. “With the economy looking set to post growth in the region of 3.5 per cent annualised in the second quarter of 2018 — and the jobs market going from strength to strength — we think the Fed will hike rates [today],” said James Knightley at ING. “Trade concerns remain a major issue, but we expect the Fed’s statement to sound positive on economic momentum. The Fed’s ‘dot diagram’ should show growing expectations that they will hike rates two more times in the second half of the year.” In Europe, the day’s big economic release came in the form of the German Zew index of economic sentiment for June, which fell to its lowest level since September 2012. “The details of the report show that the drop was predominantly driven by collapsing expectations about Italy’s economy,” noted Aline Schuiling at ABN Amro. However, recent reassuring comments on Italy’s continued membership of the eurozone by the country’s finance minister offered further support to Italian stocks and bonds. The yield on two-year debt fell as low as 0.86 per cent while the FTSE MIB index rose 0.2 per cent Equities By midday in New York, the S&P 500 was up 0.2 per cent while the Nasdaq Composite was 0.6 per cent higher at 7,704, having touched 7,707.34. The Dow Jones Industrial

Average was flat. In Europe, the Stoxx 600 index slipped 0.1 per cent as the Xetra Dax in Frankfurt ended barely changed and London’s FTSE 100 fell 0.4 per cent. In Seoul, the Kospi share index slipped 0.1 per cent, but was still up nearly 3 per cent from its May low. The won was down 0.2 per cent against the dollar. Forex and fixed income The yield on the 10-year Treasury was up 1 basis point at 2.97 per cent, with the two-year yield also 1bp higher at 2.54 per cent. The German 10-year Bund yield ended flat at 0.49 per cent while Italy’s two year yield settled at 1.05 per cent, down 6bp on the day. The dollar index was unchanged on the day at 93.58 as the euro traded a shade lower at $1.1777. The US currency was up 0.2 per cent against the yen at ¥110.23. Sterling was up 0.2 per cent against the dollar at $1.3393 and the euro was 0.2 per cent lower at £0.8787 as UK prime minister Theresa May staved off defeat in a key Brexit vote after making a last-minute concession by paving the way for MPs to block a potential “no deal Brexit”. UK members of parliament voted on amendments to the EU withdrawal bill. Commodities Oil prices were mixed, with Brent crude down 0.1 per cent at $76.40 a barrel while US marker West Texas Intermediate was 0.5 per cent higher at $66.42. Gold was off $3 at $1,296 an ounce.

Merrill Lynch pays more than $15m in RMBS settlement JESSICA DYE

he US Securities and Exchange Commission said on Tuesday that Bank of America subsidiary Merrill Lynch has agreed to pay more than $15m to settle claims that its traders and salespeople misled customers into paying too much for residential mortgage-backed securities. Merrill Lynch employees allegedly duped customers into overpaying by deceiving them about how much the RMBS had cost, according to the SEC’s order. The order also

said that traders and salespeople also reaped gains through excessive, undisclosed commissions, known as “mark-ups”. Merrill was accused of failing to properly supervise its staff. Merrill Lynch neither admitted nor denied the findings but agreed to be censured and pay a $5.2m penalty, along with $10.5m in disgorgement and interest to customers whose transactions were at issue in the SEC’s order. Daniel Michael, chief of the SEC enforcement division’s complex financial instruments unit, said in

a statement: “In opaque RMBS markets, lying to customers about the acquisition price can deprive investors of important information. The Commission found that Merrill Lynch failed in its obligation to supervise traders who allegedly used their access to market information to take advantage of the bank’s own customers.” Merrill Lynch said in a statement: “We have addressed issues raised in this matter, which occurred between 2009 and 2012, and taken steps to improve our procedures.”

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Southeast Asia tops PE attractiveness ranking in 2018 ...As sub-Saharan Africa comes fifth MICHEAL ANI

merging markets have over time seen a boom in private equity (PE) flows, thanks to marginal improvements in overall Limited partnership (LP) sentiment toward its growth trajectory pointing to conviction on the part of investors in opportunities on offer in the world’s newest markets. The total amount of funds raised for private capital in emerging markets expanded over 814 percent over a 16 year period from $7 billion in 2001 to $64billion in 2017, according to a 2018 Global Limited Partners Survey by Emerging Market Private Equity Association. The survey which captured Limited Partners that are based in 36 different countries, that collectively represents global PE Assets Under Management (AUM) of approximately US$358 billion, and total AUM of $5.7 trillion shows that a higher proportion of the respondents plans to increase the dollar value of their commitments to EM PE than in any edition of the survey since 2014, suggesting cautious optimism may be in order for EM-focused fund managers. “Emerging markets should be in the advantageous part of their economic cycle relative to developed markets. Growth

has remained very strong, managers are better and capital markets are more supportive,” the surveyed Limited Partners said. “Thus, they are attractive for PE investment compared to the United States, where purchase multiples are high.” “Also emerging markets possess a combination of large opportunities supported by accommodative political and regulatory bodies as these markets are still very inefficient and provide growth that developed markets do not,” “We emerging markets to perform significantly better overall, primarily due to the opportunity set and ability to buy assets at a much lower price as assets are overpriced in the United States, restricting opportunities to add further value,” the expert said. Emerging markets are countries with low incomes but with high growth prospects and include countries like Nigeria, South Korea, Moscow, Pakistan, Taiwan, Poland, Indonesia, India, Mexico, Egypt, South Africa, Turkey, Brazil, Argentina, China, Bangladesh, Bulgaria, Chile, Colombia, Czech Republic, Greece, Hungary, Iran, Israel, Malaysia, Mauritius, Oman, Peru, Philippine, Qatar, Romania, Slovenia, Thailand, Ukraine, United Arab Emirate(UAE), Venezuela and Vietnam. The LPs’ reasons for increasing their commitments

PRIVATE EQUITY WORD FOR THE WEEK NEWCO is a generic term for a new company incorporated for the purpose of acquiring the target company from the vendor in a buyout transaction.

to EM PE appear to be evolving as 58 percent of survey respondents indicated they are seeking greater diversification in their PE portfolio, up from 38 percent of respondents in the 2014 survey. In contrast, half of respondents in the survey planned to increase their commitments because they expected PE to outperform other EM investment op-

making investment decisions, most do not maintain a dedicated allocation to impact investing opportunities. Southeast Asia has regained the top spot in EMPEA’s market attractiveness rankings, followed by India and China, forming a top three exclusively comprising markets in Emerging Asia. Despite its relative sta-

higher levels of perceived political risk and currency risk—as indicated by the percentage of LPs citing these factors as deterrents to investing—are associated with larger return premiums. Two-thirds of survey respondents plan to form between one and five new EM PE fund manager relationships over the next three years, in line with last year’s

portunities. Reflecting the strong growth in fundraising for EM venture capital and EM private credit documented in EMPEA’s Industry Statistics, the percentage of LPs planning to begin or expand investing via funds employing these strategies has increased over the last two years. While the majority of commercial investors take environmental and social impact into account when

bility at the top of the rankings, Southeast Asia has failed to attract more capital than many markets ranked much lower, though LPs are likely accessing the region through commitments to pan-Asia funds. For the first time, EMPEA asked survey respondents to indicate the return premium that would justify their decision to commit to PE funds focused on various emerging markets. The results reveal that

findings. The majority of respondents may be pursuing fewer new relationships, but LPs appear more likely to expand commitments to sector-specific and countrydedicated fund managers than to multi-strategy GPs, even though the latter would seem better positioned to absorb commitments from institutions writing fewer, larger checks. After declining over the last few editions of the sur-

vey, the proportion of respondents indicating that EM PE returns have met or exceeded their expectations increased in 2018. Likewise, the proportion of LPs expecting returns of 16 percent or more from current-vintage funds increased for both emerging markets overall and for each individual EM geography included in the survey. Despite the year-on-year increase in 2018, over a longer timeframe, return expectations have cooled for all EM geographies except for markets in Emerging Asia. Higher fundraising for emerging markets in 2017 may have been driven by US$1 billion-plus funds, but LPs expect middle-market vehicles in the US$250 million to US$499 million range to generate the highest net returns in the 2017 vintage. LPs expect GPs’ ability to drive operational improvement at the portfolio company level to have the biggest impact on the performance of 2017-vintage EM PE funds, followed closely by overall economic growth in emerging markets and entry multiples. However, despite the perceived importance of operational skills in generating returns, nearly half of survey respondents feel EM PE fund managers’ value creation abilities are behind those of their developed market peers. E-commerce and fintech represent the most attractive technology areas for investment in emerging markets over the next two years, according to this year’s survey respondents.

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: DAVID OGAR ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

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People & Perspectives

Nigerians pile into Piggy bank, as company sees 3000% savings growth Piggybank.ng, an online and mobile app, recently secured a $1.1 million seed funding for growth acceleration. ODUNAYO EWENIYI, the company’s Co-founder/COO, had a chat with BusinessDay’s LOLADE AKINMURELE and gave insights into the company’s performance.

igital solutions providers are looking like the real deal this year. As an industry player, kindly provide some data on how much tech firms like yours have attracted in private equity in 2018 compared to previous years. There’s definitely been an upturn in investment into Nigerian start-ups over the last 12 months, which is amazing news not only for us at Piggybank.ng, but also for our colleagues in the tech ecosystem. A report by Partech Ventures revealed that African startups had raised $560m in VC funding in 2017, a 53% y-o-y growth. That figure was most likely skewed by some mega raises like Andela’s $40M Series C, but deals and announcements like this can only be beneficial to the wider sector, as they shine a light on the talent and innovation and growth opportunities that the continent offers, and attract more investors, international and homegrown, to consider investing in tech start-ups. A list of these companies and how much raised would be useful. The latest deal involved Cellulant and TPG for some $47.5 million. Yes, Celluant raised a considerable sum this year. Other notable raises from the past 12 months across the continent include mSurvey, a Kenyan company that recently launched here in Nigeria and announced recently a raise of $3.5M, Africa’s Talking, another Kenyan company that recently confirmed a raise of $8.6M, Nigeria’s Terragon Group who raised $5M and also Nigeria’s Flutterwave, who saw their Series A of $10M. These are just a few of the success stories. PiggyBank.ng will use its $1.1M in new seed funding for “license acquisition and product development.” What is the motivation to morph into a micro finance bank? Aren’t you perfect just the way you are?

Perfect as we are? That is interesting; but no. We are very happy with the products that we have built so far, and the traction that we have seen. We have tens of thousands of happy Piggybankers who trust us with their savings. But the scale of the opportunity, the challenge we are looking to overcome in Nigeria’s finance sector, is massive. So we need to keep refining the products that already exist, to ensure they are fit for purpose, but we also need to develop new products to meet the needs of our customers, today and in the future. Tech moves so fast, and we do not want to be in the position where we are catching up; we see ourselves as leaders in this field, which means we never stop looking at ways to innovate and build products of the future that will serve millions of people. Piggybank.ng currently has 53,000 registered users- who have saved in excess of $5 million since 2016. To get a sense of progress made, where are those numbers coming from? How many

users and savings did you muster in your first year of service? We’ve seen 20 - 35% m-o-m growth in user traction over the past 12 months; primarily from peer-to-peer recommendations. Of our 53,000 registered users, approximately 60% are Nigerian Millennials, who have saved in excess of $5 million, which is a savings growth of 3000% between 2016-17. In 2016, our first year of operations, we only saved 21 million naira. Users need an acco u n t w i th o n e o f PiggyBank.ng’s bank partners to use the products. Who are your bank partners and I can’t imagine how relieved they must be to see you are willing to partner, given that you could be a threat to deposit growth, offering savers between 6-10 percent when the banks offer less? We partner with many banks and even microfinance banks to onboard Piggybankers. And the platform is bank agnostic so really, customers from any bank can save with us. The partnerships have worked well so far, and

we’re fortunate to have such dynamic, strategic partners. It’s important to note that we are not looking to replace the banking infrastructure, not at all. We are an additional service provider that delivers a complementary product for banks, so they can give their customers added value. You generate returns for small-scale savers (primarily) through investment in Nigerian government securities, such as bonds and treasury bills. Yields are falling fast, how is that reshaping your investment strategy? Well, we are diversifying our portfolio. Looking into other safe financial instruments and profitable partnerships. The market is fluid so our team studies it and take the best investment route from our models. What profitable alternatives are you looking to amid the yield slide? We have an experienced finance team that ensure we are always considering different ways of navigating issues such as yield slide.

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KKR tables $5.57bn for Envision in healthcare push

KR said on Monday it will take U.S. physician services provider Envision Healthcare private in a deal valued at $5.57 billion, its latest acquisition in the healthcare sector. The private equity firm saw off competition from peers Carlyle Group, TPG Global and others as it sealed the deal for $46 per share - a premium of 5.4 percent to Envision’s last close on Friday. Envision’s shares were up 2.4 percent at $44.7 in premarket trading. Including debt, the deal is valued at $9.9 billion. KKR already owns Envision’s AMR, the largest U.S. provider of ambulance services, which it bought for $2.4 billion last year and merged with its helicopter ambulance service. The firm also took WebMD Health private for about $2.8 billion. Private equity firms, armed with a record $1 trillion in cash, are investing more in public companies than at any time since the financial crisis. So-called take-private deals worldwide reached a decade high of $109 billion last year, according to data provided to Reuters from industry tracker Preqin. KKR itself said last month it would buy business software company BMC Software, in a deal that could be worth about $8.5 billion with debt, according to Reuters’ sources. As of March 31, KKR had $176 billion in assets under management. It held $1.88 billion in cash and cash equivalents, according to its latest earnings report. In the healthcare industry, Envision’s buyout is the latest in a spate of mergers and acquisitions activity among physician networks, a business that has struggled in recent years to adapt to changes in how U.S. health insurers reimburse providers. Envision said the deal marks an end to its efforts to find strategic alternatives, which the company launched after posting disappointing third-quarter results last year. The company has been struggling with lower patient admissions at hospitals. Ryan Daniels, an analyst with William Blair, said the purchase price was a fair multiple for Envision given a number of headwinds facing the industry. Daniels also cut the rating on Envision to “market perform”, citing little to no possibility of other bidders emerging. Reuters reported the deal on Sunday, citing a source. The deal is expected to close in the fourth quarter. Envision was advised by J.P. Morgan, Evercore and Guggenheim Securities.

U.S IPO experts expect tech listing boom in 2018 OLALEKAN IPELE

ince Dropbox’s splashy debut in the U.S market March, just two other U.S. tech companies have followed suit (Cardlytics and Zscaler). It is however expected that Spotify’s anticipated debut will essentially impact the IPO window. John Tuttle, global head of listings at the New York Stock Exchange, said “I expect a strong year if market conditions hold constant. I am optimistic about the pipeline for technology offerings, particularly enterprise technology companies” It’s been a long time since the U.S. market witnessed an IPO window big enough for a stream of companies to pass through. In 2013, 50 tech companies went public. In 2014, the number was 62. Things grew colder after that, with just 31, 26 and 27 companies getting out the window in 2015, 2016 and 2017, respectively. Some high-profile flops are one large factor for why the window has remained narrow. Last year, venture-backed darlings like Blue Apron and Snapchat braved the public markets, but it was public shareholders who had to keep a stiff upper lip as their shares abruptly sputtered. These kinds of scenarios can seriously spook pipeline companies and their advisors, particularly in the world of consumer tech. The availability of late stage capital is also making it far easier to stay private longer. With SoftBank’s $100 billion Vision Fund writing enormous checks to growth startups and traditional venture funds reacting by raising their own gigantic venture funds this trend is only expected to continue. There are also plenty of sky high valuations to consider. Startups were able to command numbers that weren’t necessarily tied to reality in 2014 to 2015. That makes the prospect of a public offering, at a potentially much smaller valuation, something to be put off as long as possible. “The number of tech companies, across the spectrum, now meeting with (if not engaging) bankers and working with the auditors to be ‘IPO ready’ is very definitely on the upswing,” The window is already wide open, and there is enormous pent-up demand at institutions for new companies that are priced reasonably” said Lise Buyer, an IPO consultant and partner at Class V Group. According to Tuttle “there are a number of far-flung tech companies looking to list their share in the U.S. Among these are three China-based companies with plans to raise hundreds of millions of dollars by selling American depositary shares in the not-too-distant future”

A12

BUSINESS DAY

Wednesday 13 June 2018

Live @ The Stock Exchange Top Gainers/Losers as at Tuesday 12 2018 GAINERS Company

Market Statistics as at Tuesday 12 June 2018

LOSERS Opening

Closing

Change

Company

Opening

Closing

Change

SEPLAT

N711.1

N769

57.9

GUINNESS

N99.75

N97

-2.75

NESTLE

N1450.2

N1495

44.8

NASCON

N24

N23.1

-0.9

MOBIL

N174.3

N183

8.7

N118

N117.1

-0.9

DANGCEM

N235.8

N239

3.2

FLOURMILL

N33

N32.3

-0.7

CADBURY

N12.5

N13

0.5

DANGSUGAR

N19.9

N19.5

-0.4

ASI (Points) DEALS (Numbers)

5.193

MARKET CAP (N Trn

In 3,769 deals, stock traders exchanged 341,483,010 units valued at N5.193billion. United Capital Plc, Dangote Sugar Refinery Plc, Africa Prudential Plc, GTBank Plc and United Bank for Africa Plc were actively traded stocks on the Bourse. On the losers’ side, Guinness Nigeria Plc recorded biggest dip, from N99.75 to N97, down by

341,483,010.00

VALUE (N billion)

Stories by Iheanyi Nwachukwu

cent, from N12.5 to N13. The Nigerian Stock Exchange (NSE) All Share Index (ASI) appreciated to close at 39,167.04 points from 38,844.32 points recorded the preceding trading day. The value of listed equities also increased from N14.071 trillion to N14.188trillion, representing N117billion in capital appreciation.

3,769.00

VOLUME (Numbers)

Nigeria stocks climb on Seplat, Nestle, others strength ig e r i a n stocks adv a n c e d further by 0.83percent on Tuesday June 12, 2018 as Seplat Petroleum Development Company Plc and consumer giant Nestle Nigeria Plc stocks kept the NSE indexes higher. The market yield is well position in the positive zone as its Year-to-Date (YtD) returns stands at +2.42percent. Seplat led 27 gainers as against 21 losers led by Guinness Nigeria Plc. Seplat stock price advanced from by N57.9 or 8.14percent, from N711.1 to N769. Nestle Nigeria Plc rose by N44.8 or 3.09percent, from N1450.2 to N1495. Mobil Oil Nigeria Plc also advanced by N8.7 or 4.99percent, from N174.3 to N183. The share price of Dangote Cement Plc increased by N3.2 or 1.36percent, from N235.8 to N239 while that of Cadbury Nigeria Plc rallied by 50kobo or 4 per-

39,167.04

N2.75 or 2.76percent; NASCON lost 90kobo or 3.75percent, from N24 to N23.1. Nigerian Breweries Plc declined from N118 to N117.1, also down by 90kobo or 0.76percent. Flour Mills Nigeria Plc lost 70kobo or 2.12percent, from N33 to N32.3; while Dangote Sugar Refinery Plc dipped from N19.9 to N19.5, down by 40kobo or 2.01percent.

14.188

Coronation Merchant Bank sponsors 5th edition of NSE-LSE Dual Listing Conference

oremost merchant bank in Nigeria; Coronation Merchant Bank Limited has demonstrated its commitment to the growth and development of the capital market and Nigerian economy through its sponsorship of the 5th edition of the NSE-LSE Dual Listing Conference which held recently in Lagos, Nigeria. The event which was themed “Attracting Global Capital to Drive Nigeria’s Economic Reforms and Sustainable Growth Development” had in attendance the Minister for Power, Works and Housing, Babatunde Fashola; CEO of the Nigerian Stock Exchange, Oscar Onyema; The Director Generals of the Bureau of Public Enterprises, Debt Management Office, Securities & Exchange Commission and the National Pension Commission; representatives of the London Stock Exchange Group, Heads of Industries amongst other delegates. Commenting on the decision to sponsor the conference, the Managing Director/Chief Executive Officer of Coronation Merchant Bank Limited, Abu Jimoh, stated that we are delighted

to be the official sponsor for the NSE-LSE dual listing conference. The conference provided timely perspective and insights into the role of financial markets in facilitating economic growth in sub-Saharan Africa and it has generated a lot of excitement amongst the attendees. The provision of affordable, longer term

Abubakar Jimoh, Managing Director/CEO, Coronation Merchant Bank

financing is critical for sustainable economic growth and its absence is one of the key challenges facing corporations in Nigeria. Coronation MB was established to fill the gap in a long-underserved market segment, seeking to address the need for long term capital across key sectors of the economy.

C & I Leasing N7bn Series I Bond records 133% subscription

&I Leasing PLC N7bn Series I bond which opened on Monday May 21 and closed on June 4, 2018 recorded oversubscription level of 133percent. The bond which is a 5 years bond will mature in December 2023. This was revealed at the issuance signing ceremony which held Monday June 11, 2018 at the company’s Head office in Lagos, Nigeria. The ceremony was attended by the Board of Directors of C & I Leasing PLC, the Issuing Houses, Trustees and other stakeholders involved in the

process. The bond which is the first series in a N20billion debt issuance programme is a Senior Secured Bond with a fixed rate of 16.54percent and was issued at a price of N1,000 per unit. According to Efe Akhigbe the Managing Director of Planet Capital- the Lead Issuing House; “The offer was very successful because of the track record of C & I Leasing Plc as a business with over 25 years of operations in Nigeria. The company’s investment in marine assets serving Oil and Gas Companies in various

mid to long term contracts, which was attractive to investors, in addition to the timing of the issuance was instrumental to the success of the bond which was largely patronized by top pension fund managers and insurance companies.“ At the ceremony, Andrew Otike –Odibi, MD/ CEO C& I Leasing Plc stated that the N7billion raised will largely be invested in business expansion and restructuring of the company’s debts over a period of five years therefore relieving the current debt profile on the group’s balance

Andrew Otike –Odibi, MD/ CEO C& I Leasing Plc

sheet while increasing profit margins and returns for shareholders. “The success of the bond is indicative of the market’s confidence in our business, they have seen our structure, focus and consistency with corporate governance in 27 years of operations and they can tell we have a good story unfolding. There is a niche market for Nigerian businesses in the Maritime sector to serve Oil and Gas companies, but it is not enough to be a Nigerian Company. Proper structure is also very critical, and this is one of our

strengths at C & I Leasing Plc” He said. C&I Leasing Plc has evolved to become a valuable resource and business partner for several indigenous and multinational blue-chip organizations. The company currently provides support services along three lines; Fleet Management, Personnel Outsourcing and Marine Services. The C&I Leasing group of companies which has its operational offices in Lagos, Port Harcourt and Abuja is also invested in subsidiaries - Leasafric Ghana and Epic International FZE.

BUSINESS DAY

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NEWS YOU CAN TRUST I WEDNESDAY 13 JUNE 2018

Opinion

The Skye challenge: A renewed mandate OPEYEMI AGBAJE opeyemiagbaje@rtcadvisory.com

have been tracking what I named “The Skye Bank Challenge” since the Central Bank of Nigeria (CBN) intervened in the board and management of Skye Ba n k P l c i n Ju l y 2 0 1 6 . My first comment on the matter published on this page in August 3, 2016 just over two weeks after the regulat o r y a c t i o n n o t e d t hat post-consolidation Skye Bank had grown to become a Systemically Important Bank emerging out of the combination of Prudent Bank, Eko International Bank, Bond Bank and others. The bank appeared from outside to be wellmanaged, with an interesting brand and from the customer perspective seemed helpful and friendly. The CBN, you will recall, stunned the mar-

k e t s a n d S k y e B a n k ’s customers and counterparties when it removed the board and executive directors of the bank ( w i t h t h e e xc e p t i o n at the time of some rec e nt l y - ap p o i nt e d e xecutives) due to lapses in corporate governance and deteriorating prudential ratios. In my a n a l y s i s, Sk y e h a d grown its industry relevance, branch network, electronic channels and franchise over the past decade till 2016, but it had also embraced some level of unrestrained ambition, making aggressive acquisitions especially of Mainstreet Bank and growing its loans and assets at the expense of pr udential, risk management and governance considerations! I expressed the hope that the CBN-mandated management led by M.K Ahmad as Chairman and Adetokunbo Abiru as GMD/CEO had the professional competences and more importantly, integrity to give the bank a chance of surviving the challenge. One year later on July

19, 2017, I did a follow up “The Skye Bank Challeng e-An Up date” i n w h i c h I re c o g n i s e d that Ahmad, Abiru and their team had “res t o re d re l at i v e d e p o s itors confidence and s i g n i f i c a nt l y s t e m m e d the outward flow of d e p o s i t s ”. . .“ s e t t l e d a significant portion of the inherited trade and counterparty obligat i o n s . . .”. . .“s i g n i f i c a n t l y improved the quality of loan security and collateral documentation”as well as “recovered more than N57.5billion of ove rd u e l o a n s” i n o n e year. The management team had also focused on optimising the bank’s cost structure. As the second ann i v e r s a r y o f i t s i n t e rvention approaches, CBN re cently in effe ct declared a strong vote of confidence in the management team by extending the tenure of t h e b o a rd f o r a n o t h e r two years till June 2020 as well as renewing its various regulatory support for the institution. This CBN assura n c e i s p re d i c a t e d o n

improvements in the b a n k ’s l i q u i d i t y l e a d ing to its exit from the CBN Short Term Lending Facility (SLF); substantial recovery on n o n -p e r f o r m i n g l o a n s reaching N94 billion between July 2016 and March 2018; repayment of over $300 million inherited obligations to correspondent banks ; significant cost savings w i t h a 3 1 % y e a r- o n y e a r ( Yo Y ) r e d u c t i o n i n o p e ra t i n g e x p e n s e s in 2017; and substantial cash realised from divestments from subs i d i a r i e s. I nv e s t m e n t s in business development are also showing positive resultstransaction volumes and value is witnessing steady growth across platforms including ATM, internet and mobile channels ;alternate channel adoption rate is improving with 11% and 15% growth quarter-onq u a r t e r i n t ra n s a c t i o n value and number of subscribers respectively; and the bank continues to retain its reputation for good customer service and customer

experience. In effect the M.K Ahmad and TokunboAbiru led team have justified the mandate of the CBN and the trust of depositors. In Nigeria, where assets held under defacto or dejure government control are routinely exploited for personal benefit by those to whom they are entruste d , t h e i m p rov e m e n t s in Skye Bank are heart warming and should be commended. As I pointed out in my update of last year, “The key concern of the management...should be and indeed is around a s s u r i n g t h e f u t u re o f the institution.” Clearly that w ould re quire recapitalising Skye Bank and that is where the attention of the bank ’s management and the regulator are now focused. I’m aware the bank has appointed a leading investment bank and a team of professional advisers to advice and lead exe cut i o n o f o p t i o n s f o r re capitalising the bank. Industry information c o n f i r m s ma na g e m e nt

is w orking clos ely w ith the regulators and government to conclude this process expeditiously. Management expects the process may commence in Q3 2018 but clearly resolution of the recapitalisation process and assuring future profitability and sustainability w ill re quire continue d strong support from government and the CBN. Tw o years into their mandate, the CBN-ap p o i nt e d b o a rd o f Sky e Bank has normalised the institution, restored its prudential stability, embraced proper risk management and corporate governance and most importantly restored customers’ and deposit o rs c o n f i d e n c e, ea r ning a w ell-des er ve d renewal of their mandate. All stakeholders, especially the management, re g u l a t o r a n d g ov e r n ment must now focus on a final resolution of the recapitalisation imperative within the management’s extended tenure.

Rethinking agricultural research & innovation in West Africa NDIDI NWUNELI Ndidi Okonkwo Nwuneli is the CoFounder of AACE Food Processing & Distribution Ltd, Founder of LEAP Africa and a 2018 Aspen Institute New Voices fellow.

t is rainy season in West Africa. Adamu, a maize farmer in Katsina State in Northern Nigeria, has waited anxiously for the rains to plant his recycled seeds in depleted soil, using archaic production and crop protection methods. If the rains are delayed, his family suffers from food shortages. Sadly, Adamu shares this experience with farmers across the region, in a sector that continues to struggle, resulting in persistent food insecurity, malnutrition and poverty. At the root of this underperformance is an agricultural research system that is divorced from the needs of the market. The priorities of the region’s more than 60 dedicated agricultural

research institutions are largely driven by the personal interests of researchers and by donors—and not by the farmers, processors and consumers who ultimately determine the relevance and impact of that research. As an agribusiness entrepreneur sourcing cereals, grains, herbs, and vegetables from 10,000 farmers in Nigeria, I constantly contend w ith the slow pace of change in the food system. Given the lack of credible research, my team and I are forced to make investments through trial and error, resulting in significant waste. Research and innovation could transform our entire food system by not only increasing food production but also improving postharvest handling, storage, processing and distribution. But today the region remains a net importer of food--despite close to a billion dollars of annual investments in research and development. There is an urgent need

to bridge this gap between the market, research and policy. Only then will West African agriculture be able to meet the region’s rising food demands from a population expected to more than double from 350 million today to close to 800 million by 2050. Changing course will not be easy, but West African governments and agribusiness can benefit from the experiences of other countries that are now net exporters of food, including Australia and Brazil. In a recent visit to Australia, I witnessed firsthand how farmers and f o o d p ro c e s s o r s d r i v e research priorities – in large part through directly funding that research. For example, the Australian Export Grains Innovation Centre (AEGIC) is largely funded by farmers who benefit from the improved seed varieties developed by the center. In fact, Australian wheat farmers willingly pay a research levy at the point of exporting wheat varieties developed

to meet the specific quality requirements of international customers such as global noodle manufacturers. Similarly, AgriBio,, a public-private partnership between the Australian government, through the Department of Environment and Primary Industries, and La Trobe University devotes 70 percent of its activities to challenges posed by the private sector, while 30 percent is focused on regional priorities in the areas of plant, animal and microbial biosciences, and biosecurity challenges. West African research institutions should consider adopting similar approaches to private sector engagement. By intro ducing expor t-focus ed levies linked to innovative research, establishing private sector advisor y b oa rd s, p r i vate -pu b l i c partnerships, and challenge funds to drive demand-driven research, they could diversify their funding and ensure wide-

spread impact. Cote D’ivore is one West African country already moving in this direction. The countr y’s National Centre for Agricultural Research (CNRA) is primarily funded by private producers. Food producers are organized based on commodity crop and pay membership fees to a fund that allocates at least 75 percent of its assets into research on that crop. The remainder supports a solidarity fund that serves farm sectors (mostly food crops) unable to raise sufficient funding through their membership fees. To b e t r u l y ma rke tdriven, West African research institutions must also restructure to fully embrace technology and performance-driven cultures. The Brazilian Agricultural Research Corporation (EMBRAPA) is an example worthy of emulation. Since its inception in 1973, EMBRAPA has led the transformation of the formerly degraded Cerradolands into a region

that now supplies nearly half of the country’s grain production. Its innovations have also quadrupled the beef and pork supply, and increased the chicken supply 22-fold, making Brazil one of the largest exporters of animal protein globally. EMBRAPA’s mandate in 2018, “a technological innovation enterprise focused on generating knowledge and technology for Brazilian agriculture” reveals an organization that has continued to reinvent itself to remain dynamic and relevant to the needs of food producers locally and even globally. This same ethos must drive West African agricultural research if it is to meet the region’s serious challenges and unique needs. Transforming an agricultural research system supported by entrenched interests will be challenging. However, as the experience of other countries shows, market-driven research can unlock the potential of an agricultural system capable of benefitting all.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 13 June 2018

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BUSINESS DAY

Interview

‘The structure of Nigeria’s petroleum downstream supply chain is not sustainable’ Page 5 finance people appointments

L-R: Audrey Joe-Ezigbo, 1st vice president, Nigerian Gas Association(NGA); Wendell VC De Landro, high commissioner of Republic of Trinidad and Tobago in Nigeria; Dada Thomas, president, NGA, and Odien Ajimogobia, former minister of petroleum resources, during the Natural Gas Business Forum 2018 / 19th AGM in Lagos. Pic by Pius Okeosisi

Debrief

Can soaring Africa’s domestic gas consumption unlock its industrial potential? FRANK UZUEGBUNAM

FBNQuest Merchant Bank supports ‘The New African Horizon’ at the 2018 oil and gas Africa Assembly

Page 6 OPEC weekly basket price DAY

PRICE

8/6/18

73.45

1/6/18

74.02

25/5/18

76.26

18/5/18

75.2

11/5/18

73.5 Source: OPEC

any African countries are now seeking to unlock their industrial potential through deliberate policy to accelerate gas utilization. The opportunities that come with it are overwhelming. “About $51bn investment opportunities currently exist in Nigeria’s gas sector,” said Konyin Ajayi, Managing Partner, Olaniwun Ajayi LP, who was the lead speaker at the Natural Gas Business Forum 2018 organised by the Nigerian Gas Association. The investment could be spread to Free Trade Zones (FTZ), central gas processing facilities, fertilizer plants, gas exploration

& production, pipe milling & local fabrication yards. Other available investment areas are virtual pipelines, gas transmission, and power plant projects, flare gas commercialisation initiatives and liquefied petroleum gas plants. “Gas is giving Africa a valuable opportunity to support economic growth by building a more sustainable energy mix. It can effectively help bring energy to the many people who still lack basic access to it while triggering a real industrial development,” Antonio Vella, Chief Upstream Officer of ENI said. The total volume of gas exported from Africa has witnessed significant reduction over the years because the region now is said to consume two-thirds of its produced gas leaving very little to export.

According to the 2018 Global Gas Production Report produced by the International Oil & Gas Producers Association (IOGP), export of gas from the region is down from 215 percent in 2006 to 150 percent. The fall according to Africa’s production Indicator of gas is because the region now consumes two-thirds of its produced gas leaving very little to export, compared to about 45 percent in 2006. Demand on the continent with regards to gas production has increased by 50 percent according to the report which has shown that Africa holds more than 500 trillion cubic feet of proven gas reserves, with three main producers: Algeria, Egypt and Nigeria. After 2000, Egypt and Nigeria joined the ranks of significant producers.

Today, Algeria still is Africa’s top gas producer, accounting for 44 percent of the region’s output; Nigeria and Egypt each produce about 20 percent. Since reaching a peak in 2009, however, Egypt’s gas production has decreased by about a third. Whereas Algeria has a history of stable demand dating back to the 1980s, demand in Egypt has risen by more than 40 percent since 2006, making it the African nation with the highest gas demand, accounting for 37 percent of the region’s requirements. Algeria comes second with 29 percent. The report also highlights the need for investment in responsible and sustainable oil and gas development that focuses on maximizing available energy while minimizing emissions to the atmosphere.

02 BUSINESS DAY WEST AFRICA Outlook Nigeria: LEKOIL targets 20,000 bopd at Otakikpo oil field by 2020

EKOIL Limited, the Africafocused oil and gas exploration and production company with interests in Nigeria and Namibia says it is focused on scaling up production volumes and productivity at its Otakikpo oil field. LEKOIL, which currently produces 8,000 barrels of oil per day at Otakikpo field, said it plans to raise production to 20,000 barrels of oil per day by 2020. According to the company’s final audited results for the year to December 31, 2017, LEKOIL achieved revenue of $30.8 million. Following this performance, LEKOIL plans an aggressive production boost and is already in the process of securing extra funding from industry sources to finance a second phase of development. Besides, the company is planning a two-well appraisal drilling programme at Ogo field, with long lead time items such as wellheads already ordered. This is as it awaits govern-

ment’s approval on its acquisition of an additional 22.86 per cent stake in OPL 310 which will take its total interest in the asset to 40 per cent. Once that is all sorted, LEKOIL expects to finalise its funding plans for the drilling programme. “Our priority for 2018 is to continue to grow production volumes and profitability at Otakikpo. Our planning for Phase 2

field development is already underway, targeting 20,000 bopd to be reached in 2020, subject to securing additional funding from industry sources” said Chief Executive Officer, Lekan Akinyanmi. Akinyanmi stated that part of the growth strategy includes further appraisal and development work at the Ogo field. “In tandem, we will aim to progress the

appraisal and development of our Ogo discovery in OPL 310. Once we receive the second Ministerial Consent, we plan to finalise funding plans for an appraisal drilling programme. The programme will comprise two wells which will include flow testing.” According to him: “Our aim is to secure enough information to enable the partners to take a Final Investment Decision in 2019 and then to proceed with development in partnership with GE Oil & Gas. LEKOIL had earlier signed a Memorandum of Understanding with GE Oil & Gas for the full field development of Ogo field.” Samuel Adegboyega, Chairman, LEKOIL added, “To our great satisfaction, 2017 saw LEKOIL’s first commercial production, and first crude oil sales. These are perhaps the most important milestones in the history of the Company and represent the fruits of efforts that have been ongoing since LEKOIL’s inception in 2010.”

the worst market slump in a generation. With Brent crude rebounding 15 per-

cent this year as output cuts by OPEC and its allies eliminated a global glut,

Wednesday 13 June 2018

oil

Brief Algeria: Algeria sees energy law amendments in early 2019

ong-awaited amendments to Algeria’s energy law are expected to be finalised by early next year, Energy Minister Mustapha Guitouni said. The North African OPEC member nation has been preparing changes to its hydrocarbon law in a bid to attract foreign investors that have stayed away in recent years, citing bureaucracy and tough terms. Algeria has hired consultancies, including US law firm Curtis MalletPrevost, Colt & Mosle LLP to help amend the law. “The amended hydrocarbon law will be ready by January or February 2019,” Guitouni said. The law is closely watched by foreign energy firms since the first amendment plans were announced in 2017. Guitouni has previously said amendments would include tax incentives and the alleviation of

administrative procedures to improve the attractiveness of the oil and gas sector after previous failed attempts to bring in enough foreign investors, affecting output and exports. Algeria awarded just four of 31 oil and gas field blocks on offer to foreign consortiums in 2014. In 2011, it received bids for only two fields out of 10. “The amendments will followed with projects,” Guitouni said in apparent reference to new licensing rounds. Algeria currently produces more than 1 million bpd of oil and 135 billion cubic metres of gas per year, with growing volumes going to meet domestic demand, which has hit exports.

Sudan: South Sudan and Sudan agree to repair damaged oil infrastructure

Africa: Oil rigs operating off Africa rebound to highest in two years il exploration in Africa is showing signs of recovery after the number of rigs off the continent rose to the highest in almost two years, with more scheduled in coming months. The number of active offshore rotary rigs climbed to 17 in May from a record low of nine in 2017, according to data from Baker Hughes. Africa-focused explorers such as Tullow Oil Plc cut their budgets to ride out

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there is renewed appetite for searching under-explored basins. Chariot Oil & Gas Ltd., a London-listed explorer, has contracted the Ocean Rig Poseidon to drill at least one well in Namibia by the end of the year, while Australia’s FAR Ltd. has also hired a drillship to explore a prospect off Gambia in late 2018. Total SA said in May that it expects to resume drilling South Africa’s first deepwater well by the end of this year or firstquarter 2019.

outh Sudan said it had agreed with its northern neighbour Sudan to repair oil infrastructure facilities destroyed by conflict within three months to boost production in Africa’s youngest country. Michael Makuei Lueth, South Sudan’s information minister, said officials agreed with their visiting Sudanese counterparts to “evaluate and assess the damage” to South Sudan’s oilfields in the Heglig area in the country’s north. “There is an agreement between the two oil ministries of the two countries.

They agreed to cooperate and work together in order to repair the damage,” he said. South Sudan depends virtually entirely on oil sales for its revenue but production has declined since war broke out in the country in 2013.

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Wednesday 13 June 2018

gas

BUSINESS DAY

WEST AFRICA

ENERGY intelligence

Brief Papua New Guinea: Oil Search finds new gas in Papua New Guinea

Equatorial Guinea: LNG project stumbles as Schlumberger quits

project, a pioneering design that shrinks complex infrastructure typically spread over hundreds of acres onto a single vessel. Golar operates an FLNG in Cameroon which became the world’s first converted FLNG project and boosted hopes for the Fortuna development. Like FSRUs, vessels which re-gasify LNG offshore, FLNGs are expected to inject flexibility and liquidity into the global LNG market because once they become accepted technologies they will reduce the time and costs of developing and exporting gas. But Ophir, an independent oil and gas company with little experience in complex LNG projects and a small balance sheet, has had problems concluding the $1.2 billion in financing and was told by the government it may lose the project. Overlooked by Western banks due to Fortuna’s design, Ophir wooed Asian lenders instead but were left scrambling after talks with Chinese players collapsed last year.

LNG Market: Asian prices continue climb towards double digits

pioneering liquefied natural gas project in Equatorial Guinea, bogged down by delayed financing, ran into further trouble after US oil services company, Schlumberger, pulled out of the venture. Ophir Energy, the London-based company heading the Fortuna development, and Golar LNG, which operates floating LNG facilities, said Schlumberger had decided to withdraw due to problems with the project’s financing. The Fortuna development would be West Africa’s first deepwater LNG project and includes a floating terminal that liquefies gas offshore, not onshore as usual. Reuters reported earlier this month the growing frustration of Equatorial Guinea’s government at the delays and its ultimatum to take the project off Ophir or scrap it altogether. Golar LNG participated in Fortuna as part of the OneLNG joint venture it had established

pot prices for Asian liquefied natural gas (LNG) climbed towards $10 per million British thermal units (mmBtu), spurred firm demand from China and gas plant maintenance denting supply. The continued spike in prices, currently at a fouryear seasonal high, could attract more arbitrage supply from Europe to enter Asia, which could cap gains. Higher-than-normal temperatures across Asia are also expected to boost LNG prices, data on Thomson Reuters Eikon shows. Maintenance and lower exports from several plants

L-R: Gbite Adeniji, Snr. Technical Adviser (Gas to Power) to the Minister of Petroleum Resources; Mohammed Mijindadi, director, Gas Power Systems (Nigeria) at GE Power; Abimbola Banjo, associate director PwC Nigeria; Joe Ezigbo, CEO, Falcon Corporation Limited; Chizor Malize, managing partner/CEO, Brandzone Consulting LLC; Effiong Okon, executive director, operations, SEPLAT Plc; Nkechi Obi, executive vice chairman, Techno Oil Limited; Victor Eromosele, chairman/CEO, M E Consulting Limited, at the LightUpNigeriaConference, organised by Brandzone Consulting LLC recently in Lagos.

new gas discovery was made in Papua New Guinea and data assessments are now geared toward commercial developments, a key regional player said. Oil Search announced that it encountered gas in an appraisal well dubbed Kimu 2. The prospect could be linked to other nearby reservoirs. “Evaluation of the well data acquired has now commenced and will be used to help assess options for the potential commercializa-

tion of the Kimu field,” the company stated. Oil Search is a partner in a liquefied natural gas facility in Papua New Guinea. The country is positioned well to take advantage of the growing energy demands from economies in the AsiaPacific region. Many of the island nations in the region lack adequate domestic reserves, so the super-cooled LNG, which has more options for delivery than piped gas, fills in the gap. Construction at the LNG facility in Papua New Guinea began in 2010. The facility is expected to produce more than 9 trillion cubic feet of natural gas over its 30-year lifespan. Led by Exxon Mobil, the facility marked a milestone with its 100th delivery three years ago. More than 7 million tons of LNG has been shipped from the facility since it opened.

are also supporting spot prices, traders said. Malaysia’s Bintulu LNG export plant is experiencing a sharp drop in shipments amid a logjam of vessels stuck outside port, potentially due to technical issues affecting the plant or fields. Feedgas volumes into Sabine Pass fell by a third to 2 billion cubic feet/day on May 15 and have remained there ever since, reflecting an outage at the plant’s liquefaction train, traders said. The APLNG plant on Curtis Island off the east coast of Australia will also undergo a partial maintenance over July, August and September, affecting half of a train.

with Schlumberger. The company said Schlumberger withdrew from OneLNG due to the financing problems and its own priorities for spending its resources. Iain Ross, Golar Chief Executive said funds would take time to find and may come from new equity partners that would replace Schlumberger. “I don’t believe it’s dead at all,” Ross said of the proj-

ect. “We would like to keep the project going and we are also in discussion with other potential partners to replace Schlumberger on the project. We believe in the project,” he told investors on a conference call. Ophir, which confirmed Schlumberger’s departure from Fortuna, also hinted at finding new equity partners. Fortuna is an FLNG

04 BUSINESS DAY WEST AFRICA Interview

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‘The structure of Nigeria’s petroleum downstream supply chain is not sustainable’ AKINSOLA AKINFEMIWA is the chairman of Major Oil Marketers Association of Nigeria (MOMAN). In this interview with journalists, he spoke on the problems militating against having a thriving and competitive downstream subsector and what MOMAN is doing to address the issues. JOSEPHINE OKOJIE was there. Excerpts: In 2016, you were elected as chairman of MOMAN after having had one chairman for a long time. What informed the baton change? OMAN’s emergence as a strong voice in the industry is as a result of the vision of the founding chairman, Wale Tinubu, whose tenure saw that standards were set for promoting best practices within the industry. As the leader of a growing diversified energy company along the value chain, of which marketing is part of, he could not devote the time required at a very tumultuous period for the sector and he relinquished the position and my colleagues in MOMAN elected me to take up the mantle of leading the industry at a time when importation was getting more difficult due to unavailability of foreign exchange, long outstanding subsidy payments was bringing the industry to its knees and many other challenges required collective efforts to overcome. What are the plans of MOMAN regarding the repositioning of the country’s downstream subsector in the light of recent happenings? Most of us have been in the Industry for a long time and we are critically aware of the cyclicality of the events of the last few years. Remember that we have a huge stake in the country’s economy with our investments in retail outlets, storage facilities, people and systems and this shows we are here for the long haul. Recall that the last fuel scarcity and distribution challenges were resolved largely with MOMAN resources. We ensured

Akinsola Akinfemiwa

product availability and pricing integrity across the nation because our pedigree means a lot to us and we see ourselves as partners in progress. That said, we are business concerns and we require an enabling environment to thrive. MOMAN is certain that we are stronger together and would actively seek areas of comparative advantage and collaboration along the downstream value chain as we currently do with the ATK tender and joint imports to the benefit of our customers. With the current supply costs hurting the amount accruable to the Federation Account making deregulation inevitable, we believe our investments put us in good stead to reap bountifully in the coming years.

What is MOMAN currently doing to recover the debts owed by government to its member companies from oil subsidy? I would like to answer this question as a downstream operator because the Federal Government does not see the dichotomy. We have gone through several rounds of verification exercises to ascertain the outstanding subsidies; late payment interest and foreign exchange differentials and several promises been made to clear the outstanding amount but we have not received any payment. We have not relented in our efforts to get the payments with submissions and engagements with the Presidency, National Assembly and other agencies

of Government. With the hard work already done, it is a matter of when not if we would be paid. How have MOMAN member companies been able to manage their working capital given the non-payment of debts owed it from the oil subsidy? It has been very tough. The working capital deficits have taken a more drastic turn with the banks taking a pessimistic view on lending to the sector. In these times, our reputation as worthy partners precede us in the marketplace with suppliers willing to support us especially with better terms for deregulated products. However, internally we keep finding ways to survive these hard times by reducing our cash cycles, curbing costs, improving efficiencies, inculcating good customer service, ensuring the integrity of our pumps and smart procurement of our inventory. How sustainable is the current supply chain and distribution model of the downstream petroleum sector given the huge landing cost of petrol which is said to be higher than the open-market pump price? It is clearly not sustainable. The best way is to deregulate the sector to stimulate the necessary investment in inland storages, pipelines and reduce the wear and tear on the roads and other infrastructure by heavy laden trucks which we use to distribute petroleum products. MOMAN just appointed a new executive secretary. What are MOMAN’s short to long term strategic objectives following this administrative change? I must first acknowledge

the great advocacy and proactive policy interventions done by the outgone executive secretary, Thomas Olawore. His experience and maturity was invaluable to all MOMAN members and he had a deep network that was ultimately beneficial to MOMAN. On behalf of all MOMAN members, I wish him a peaceful and healthy retirement. The appointment of Clement Isong as chief operating officer about six month ago was designed to ensure a seamless handover upon Olawore’s retirement. I would also like to use this medium to welcome him onboard. With respect to long term strategy, the industry is expected to evolve and as the largest single set of stakeholders by market share and investment, we carry the biggest risk if we do not adapt. The new ES is expected to drive the vision of the association in the transition to a deregulated market especially with the new regulations that would guide the process. We also expect a lot of selfregulation within the sector that would lead to the need for an expanded Secretariat to deal with the various teething issues that would arise in the transition. Our dealings with the public and governments at all levels, which is already being done, is expected to be through pooling of resources as we did to resolve issues around tanker movements within Apapa. Overall, we expect the Secretariat to become a reference point in all matters relating to the Downstream Sector by harnessing the limitless talent in the member companies for the benefit of our customers and economy.

Wednesday 13 June 2018

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POLICY

BUSINESS DAY

What happened to NNPC’s planned refineries overhaul? ISAAC ANYAOGU

ccording to the NNPC’s operations’ report for the month of January, refinery utilization capacity fell to about 10 percent - the worst in over a year. “The Corporation has been adopting a Merchant Plant Refineries Business Model since January 2017. The model takes cognizance of the Products Worth and Crude Costs. The combined value of output by the three refineries (at import parity price) for the month of January 2018 amounted to ₦26.18 billion while the associated Crude plus freight costs and operational expenses were ₦28.88 billion and ₦10.88 billion respectively. This resulted to an operating deficit of ₦13.59 billion by the refineries. Also, during the period under review, refineries combined capacity utilization was 10.89 percent,” the corporation said in its monthly financial and operations report for the month of January. This flies in the face of the corporation’s claims last year that it is raising the country’s refining capacity from the current nameplate capacity of 445,000 barrels per day (bpd) to 662,000 bpd be enlisting the services of the original builders of the refinery who have started conducting studies to determine the cost of fixing the plants and

returning them to 90 percent capacity utilisation by 2019, the corporation said in its quarterly publication. It is therefore curious that production capacity of these refineries are falling badly at a

Snapshot

10.89%

Nigeria’s two refineries produced 154,676 MT of finished Petroleum Products and 29,661 MT of intermediate products out of the 204,877 MT of Crude processed at a combined capacity utilization of 10.89 percent

time the original builders were supposed to be working hard at restoring it to full capacity. Consequently, NNPC continues to invoice the country insane amounts in the guise of petroleum subsidy. The original builders of Nigeria’s four refineries are IGC Corporation of Japan for Port Harcourt Refinery, Italy based Snamprogetti for Warri Refinery and Japan based Chyoda, for Kaduna Refinery. “Once the final costing was achieved, the Corporation would move swiftly to perfect the proposed funding option and execute the upgrade of the plants within 24 months window ahead of the 2019 deadline of the Federal Government for zero fuel import.” Anibor Kragha, chief operating officer in charge of refineries and petrochemical autonomous business unit in an interview said that they have

managed to raise refining capacity from 8 million barrels a year, about five percent of refinery utilisation to 24 million barrels a year or 15 percent in 2017. The name-plate capacity of the refineries is 162.4 million barrels a year at 445,000 bpd. “So, the government’s drive to exit importation of product requires additional or incremental refining capacity and that is where the Dangote refinery comes in because a lot has been made of the effort and we appeal to them to bring the refineries on stream as soon as possible and we expect that they should be on stream by 2019,” said Kragha. The current administration is still struggling to raise capacity utilization of the refineries to levels of 36.7 percent achieved in January 2017. It is doing a poor job of it and while attention is focused on the bo-

gus subsidy regime where the NNPC claims it is being diverted outside Nigeria’s borders. The NNPC claims it has received bids from 30 financiers and Kragha said they already have two winning bids for their refinery co-location plan. For Warri Refinery, he said a group called LR is proposing bringing a-117,000 bpd refinery to the perimeters of existing plants, while for Port Harcourt, a group called the J-Lambert Group is proposing bringing 100,000 bpd refinery and colocating them to the existing refinery. Co-location is acquiring brown field refineries in other places, decoupling them and assembling them near an existing plant to run as a unit again. It is only six months to the 2019 date when the refineries would be restored to their full capacity. It looks more illusory than ever.

06 BUSINESS DAY

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Wednesday 13 June 2018

WEST AFRICA

finance people appointments ENERGY intelligence Brief FBNQuest Merchant Bank supports ‘The New African Ghana loses $200m yearly to tax Horizon’ at the 2018 oil and gas Africa Assembly evasion in petroleum downstream

he Chief Executive Officer of the National Petroleum Authority, Alhassan Tampuli, has said the country loses over 200 million dollars annually in tax revenues due to the nefarious activities of service providers of the petroleum sector in order to evade tax. He said the Authority has rolled out stringent measures to tackle the problem head-on, in close

collaboration with the Ghana Revenue Authority (GRA), the Navy and other relevant security agencies. Some of the measures include intensification of digital solutions like the Bulk Road Tracking Sys-

tem, the integration of the Ghana Community Network and GRA Monitoring Platform into the Enterprise Relational Management System for harmonisation of information and monitoring. Tampuli made this known at the second edition of the Ghana International Petroleum Conference in Accra on the theme: ‘‘Realising the Vision of a Petroleum Hub’’. ‘‘Recalcitrant service providers will be made known to the public by way of naming and shaming offenders and directors would be banned from participating in any activities in the downstream petroleum sector,’’ he warned. Tampuli gave the assurance that all unpaid taxes would be recovered, noting that the recent measures had seen the Authority saving the nation nearly 16 million Ghana cedis in tax revenue alone and seven million Ghana cedis in unpaid margins. He said the Authority had intensified its safety compliance inspections on all petroleum products destinations nationwide and more stringent sanctions were being enforced including the shutdown of non-compliant stations.

he FBNQuest Merchant Bank has affirmed its belief on the Africa’s next stage of oil and gas industry growth. At the conference with the theme; ‘The new African Horizon’ and hosted by the Oil and Gas Council, the 2-day event is the region’s most influential corporate development strategy, finance and investment gathering of key stakeholders and seeks to promote the growth and development of the African energy industry. “Financing oil and gas in a cyclical industry means that a long term view on the underlying growth prospects of the recipient or project is necessary. Risk mitigation is about understanding the bankability of the project as much as it is about appetite”, stated Rolake Akinkugbe-Filani, Head of Energy and Natural Resources at FBNQuest Merchant Bank while speaking on funding strategies for the future African E&P Sector at the recently concluded 2018 Africa Assembly Oil & Gas conference in Paris. The conference focused on discussions around Africa’s oil and gas industry with panel sessions to highlight reg-

ulatory foundations for developing a sustainable and efficient energy industry, private equity and alternative funding, innovative financing solutions for local and international oil and gas companies, changing operational environments as well as future opportunities for the African market. FBNQuest Merchant Bank, as sponsors, joined over 800 delegates from across the world to contribute to the discourse on strategies needed to showcase Africa on its next stage of oil and gas industry growth. Speaking further on the subject, Afolabi Olorode, Deputy Head of Investment Banking at FBNQuest Merchant Bank stated “Over the last few years, the Nige-

rian upstream sector has increasingly diversified its funding sources from traditional reserve-based lending by banks to other sources, including offtake/pre-sale arrangements, ECA and OPIC financing, and private equity funding. We view this as a positive development for the sector especially in relation to funding gas monetization plans of the independent E&P companies.” Akinkugbe-Filani, also moderated the Women’s Council Breakfast Briefing at the conference, which focused on Women in the African Energy Industry. The growing trend of women emerging as foremost entrepreneurs and leaders is shaping the Energy industry and has

seen women take on bigger roles, including a new generation of female professionals seeking careers in the oil and gas fields. This encourages diversity and overall productivity which adds to the bottom line of the economy. According to Akinkugbe-Filani, “In Nigeria where the oil and gas industry has honed local content so well, some consideration of “gender content” in the oil and gas value chain may not go amiss if such policies are well targeted and periodically monitored. The Nigerian Content Development Act 2010 defines the minimum level of Nigerian content required for each sub sector of the oil and gas industry, thus providing a number of opportunities for local SMEs – implicitly including those owned by women - to create linkages to industries where their participation has been historically insignificant”. Every year, the Africa Assembly brings together senior industry stakeholders all under one roof, from E&P C-level executives, to key representatives from NOCs, ministries and local regulators to analyse the changes and evolution of the sector emerging into the new world order.

Powergas awarded Best CNG Company for the Year 2018

owergas Nigeria, Africa’s largest Compressed Natural Gas (CNG) producer and distributor, received the prestigious “Best CNG Company” for the year 2018 from Institute of Oil & Gas Research and Hydrocarbon Studies (IOGRHS) - a non-profit multilateral research Educational Institute operating in over 50 countries. Following an inten-

sive selection process, the award is bestowed to an internationally recognised CNG producer and distributor organization that is performance driven, innovative and contributes positively to the economic growth and prosperity of Nigeria. The IOGRHS recognised Powergas was the pioneer in the “Gas on Wheels” (virtual gas pipeline model) distribution network in Nigeria,

with both gas compression and distribution capabilities and commended them for continued investment in the industry. Powergas is not only the largest but also the fastest growing CNG supplier in Nigeria, having doubled its production capacity in the past year. This is Powergas’ third high notch award of this kind in the last three years. In 2016, Powergas received the Best Compressed and

Liquefied Natural Gas Production Company of the Year Award from The Institute for Government Research Leadership Technology (IGRLT). Also in 2017, Powergas was awarded the Best Compressed Natural Gas Company in West Africa by the Governing Board of Nigeria Pension Award in association with Africa Finance Award and International Brand Award Nominee (IBAN).

07 WEST AFRICA ENERGY intelligence

Wednesday 13 June 2018

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marketinsight

Oil falls on concerns over rising supply, weaker demand

il prices fell as concerns about surging US output and falling demand in China weighed on the contract and JP Morgan cut its price forecast. Brent crude futures settled down 86 cents, or 1.1 percent, at $76.46 a barrel. US West Texas Intermediate (WTI) crude futures ended 21 cents lower at $65.74 a barrel. For the week, Brent fell 0.5 percent, while US crude slipped 0.3 percent. In the past three weeks, prices have declined from three-year highs as the market has contended with supply concerns. Oil prices came under pressure after data suggested Chinese demand was waning and concerns lingered about growing US

output. JP Morgan cut its 2018 crude forecast for WTI by $3 to $62.20 a barrel. The bank said geopolitical tensions and lingering risks of supply disruptions may

push prices higher during the second half 2018, it expects prices will head lower late in the year, and remain capped in 2019. China’s May crude oil imports eased away from

a record high hit the previous month, customs data showed, with staterun refineries entering planned maintenance. May shipments were 39.05 million tonnes, or 9.2 million barrels per day (bpd). That compared with 9.6 million bpd in April. The surge in US production has pulled down WTI into a discount versus Brent of more than $11 a barrel, its steepest since 2015. Despite the decline, Brent remains more than 15 percent above its level at the start of the year. Markets have been tightened by supply trouble in Venezuela, where state-owned oil company PDVSA is struggling to clear a backlog of about 24 million barrels of crude waiting to be shipped to customers.

Europe aims to protect its position in Iran

he European Commission said it was moving forward with a measure to protect companies possibly trying to invest in the Iranian energy sector. US President Donald Trump pulled United States out of the agree-

ment May 8, meaning US sanctions pressures could force the deal to collapse without effective counter measures. The May 8 announcement set a 180day clock ticking for Iranian oil and gas clients to find new options or face US pressures.

Jean-Claude Juncker, European Commission President after Trump’s announcement said there was a unified position in Europe that respecting the UN-backed agreement with Iran was essential for peace. So long as Iran upholds its end of the bargain, European powers will stay in the deal, he said. By August 6, when the first set of US sanctions go into force, European companies could be protected by blocking statutes that allow them to recover damages and nullifies the effect of any judgment imposed by a foreign court. The commission said it adopted the statute that adds provisions for Iranian outreach through the European Investment Bank. “This enabling measure does not however commit the EIB to actu-

ally support projects in Iran as it remains for the EIB’s governing bodies to decide to take up such financing activities -- in line with relevant rules and procedures,” the commission’s statement read. The European Commission’s announcement followed comments from Jean-Yves Le Drian, the French minister of European and Foreign Affairs, who said it was incumbent upon European members to keep the deal in place. US sanctions pressures could pull about 1 million barrels of Iranian oil off the market by the end of the year. With the Organization of Petroleum Exporting Countries coordinating on voluntary production cuts, the loss of Iranian barrels could put the global oil market in a deficit.

BUSINESS DAY

OPEC Flakes OPEC global proven crude oil reserves fell by 0.4 percent in 2017

lobal proven crude oil reserves declined 0.4 percent in 2017 from the 2016 level to 1.483 trillion barrels, while gas reserves rose 0.2 percent to 199.4 trillion cubic meters, OPEC said in its Annual Statistics Bulletin. OPEC’s 14 members had proven crude reserves of 1.214 trillion barrels as of the end of 2017, the report estimated, a 0.3 percent decline from 2016. But the bloc’s share of total world crude

reserves rose to 81.9 percent in 2017 from 81.8 percent in 2016. Total OPEC crude exports averaged 24.86 million b/d in 2017, down 406,000 b/d, or 1.6 percent, from 2016, according to the report. About 15.56 million b/d of the exports went to the Asia and Pacific region, largely steady from previous years, while Europe increased its OPEC imports to 4.64 million b/d in 2017, up 240,000 b/d from 2016. North America imported 3.21 million b/d of OPEC crude in 2017, down 82,000 b/d from 2016. Global refinery capacity expanded by 104,000 b/d to hit 96.93 million b/d in 2017, “mainly supported by additions in the Asia and Pacific region, particularly in China and India,” the report stated.

OPEC to reject Iran request for discussion of US sanctions

PEC is likely to reject a request by Iran to discuss US sanctions against Tehran at this month’s meeting of the oil producer group. Iran’s OPEC governor Hossein Kazempour Ardebili had asked the chairman of the OPEC board to include a sanctions debate in the agenda for the June 22 talks. Last month, Iranian oil minister Bijan Zanganeh asked OPEC to support it against new US sanctions and signalled Tehran disagreed with Saudi Arabia’s views on the possible need to increase global oil supplies. “I would like to seek OPEC’s support in accordance with Article 2 of the OPEC Statute, which emphasises safe-

guarding the interests of member countries individually and collectively,” Zanganeh wrote last month in a letter to his United Arab Emirates counterpart, who holds the OPEC presidency in 2018. US President Donald Trump last month pulled out of an international nuclear deal with Iran, announcing the “highest level” of sanctions against the OPEC member.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 13 June 2018

talking points

In association with

Nigeria’s low electricity consumption indicates level of economic welfare STEPHEN ONYEKWELU

ccess to affordable, energy efficient electricity market has become a key indicator for measuring the economic welfare of lower-middle income countries such as Nigeria. The World Bank assigns the world’s economies into four income groups: high, upper-middle, lower-middle, and low. This is based on the Gross National Income (GNI) per capita calculated using the Atlas method. The units for this measure and for the thresholds are current US Dollars. Nigeria consumes 0.14 kWh per capita in contrast to South Africa, Africa’s most industrialised nation-state’s 4.14 kWh per capita; Kenya, consumes 0.17 kWh per capita; and Indonesia has 0.82 kWh per capita, according to data from the World Bank. Although, South Africa is not a lower-middle income country, having it on this list is based on the fact by Gross Domestic Product (GDP), Nigeria and South Africa are peers. “Electricity plays an essential role in modern life, bringing benefits and progress in various sectors, including transportation, manufacturing, mining and communication sectors” Solarin Sakiru Adebola, of the College of Arts and Science, Universiti Utara, Malaysia said in a paper ‘Electricity Consumption and Economic Growth: Trivariate investigation in Botswana with Capital Formation’. Brazil, with its state-controlled Electrobra and alleged corruption has Brazilians consuming 2, 601.37 kWH per capita, dwarfing Nigeria’s 0.14 kWH per capita. Brazil is a middle income country and in 2017 embarked on a drive to privatise Electrobra to improve energy efficiency. A journey Nigeria embarked on half a decade ago. It is widely accepted by people with

knowledge of the energy sector that electrical energy plays a vital role in modern economies, not only because it affects various aspects of the economic activity but also because it has a massive influence on a country’s efforts towards long-term economic growth and promotes the quality of life. Five years ago, Nigeria set off a comprehensive reform of the power sector, in a privatisation move that was acclaimed by players in the space as one of the boldest reforms. However, the journey has been bogged down by insufficient cash flows due to losses along the power value chain.

This reform was designed to achieve two things: fix chronic efficiency gap in old public utilities and attract private capital needed to drive the sector to meet Nigeria’s fast growing electricity demand. Half a decade later, the power sector has not recovered from one of its biggest challenges, ‘shortage’. From gas availability to electricity units delivered to the end-user, there are severe constraints that not only threaten the viability of the sector, but practically repel fresh funding and investment across the value chain. This has led to sub-optimal utilisation of generating capacity, inadequate transmission

infrastructure and distribution losses and low rates of collection. To illustrate this, over 3, 000 MW of generating capacity is stranded due to gas constraints. Transmission capacity can transport 50 – 60 percent of installed capacity, while collection losses range between 40 – 60 percent at the electricity distribution companies (DISCOs) level. People with deep knowledge of the sector say insufficient cash flows have significantly impaired the ability of electricity generating companies (GENCOs) and DISCOs to recover all costs and generate appropriate return on investment.