BusinessDay 14 Sep 2020

businessday market monitor FMDQ Close Benchmark NTB* & CP*

Bitcoin

NSE

Everdon Bureau De Change

Foreign Reserve $35.7bn

Biggest Gainer STANBIC N38.50

Biggest Loser

25,591.95

GBP-$:1.29 YUANY -

Commodities

CAP

3.90pc N17.45

Cross Rates

-9.74pc

Cocoa US$2,548.00

Gold $1,940.55

news you can trust I ** MONDAY 14 september 2020 I vol. 19, no 650

₦ 4,677,162.08 56.75 -0.38

Crude Oil

$39.83

I

N300

Foreign Exchange

Sell

I&E FX Window CBN Official Rate as at September 9 , 2020

386.17 379.00

$-N 440.00 460.00 1m £-N 580.00 600.00 Currency Futures 30-sept-20 389.54 €-N 510.00 530.00 ($/N)

g

www.

MTN Nigeria plc CP

FGN

Dangote Cement plc

Axxela Nsp-spv Funding 1 (Natural Gas) PowerCorp plc plc

Spot ($/N) 25-Feb-21 5-Mar-21 23-Jul-30 30-Apr-25 20-May-27 27-Feb-34

Market Buy

ntb

Benchmark Sovereign & Corporate Bonds

0.00 1.51

-0.02 4.51

3m 2m 28-oct-20 25-nov-20 392.38 395.23

0.23

-0.48

9.00

8.24

6m 12m 24-feb-21 25-Aug-21 403.75

420.81

-0.42

0.13

9.18

11.18

60m 36m 30-aug-23 27- aug-25 498.32

590.10

*NTB - Nigerian Treasury Bills; *CP - Commercial Paper

@

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Edo offices, industrial park light up with 55mw power plant

L-R: Onome Adewuyi, non-executive director, Law Union & Rock Insurance plc; Ademayowa Adeduro, managing director/ CEO; Remi Babalola, chairman; Stanley Chikwendu, company secretary, and Olasupo Sogelola, executive director, at the 51st annual general meeting of company in Lagos.

… as Obaseki’s developmental strides draw companies to new industrial zone

Nigeria’s genomic capacity for drug G

ISAAC ANYAOGU

production grows on major investments N Temitayo Ayetoto

i g e r i a’s c a p a c i t y to generate essential genomic data for pharmaceutical productions that suit the med-

ical needs of Africa’s genetic framework is gaining more impetus on investors’ growing interest in the development of local molecular medicine.

Apart from the business side of it, the investments are pushing

the common goal of building a robust base of genetic resources that Nigeria and Africa in general have missed for decades.

The expansion of the required infrastructure is being spurred by the partnership

between 54gene, Nigeria’s fast growing genomics firm, and Illuminia, an American company that manufactures and markets integrated systems for the anal-

Continues on page 31

overnment offices and facilities in Edo State as well as a 1,500 hectares industrial park currently under construction are set to enjoy stable electricity supply following the completion of the 33KVA lines, part of the 55MW Continues on page 31

Inside

Oil companies eye billions in savings on process digitalisation P. 30

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BUSINESS DAY

NEWS

CBN to begin phased implementation of Basel III standard HOPE MOSES-ASHIKE

T Seyi Makinde (left), Oyo State governor, presenting frame to executive secretary, Tertiary Education Trust Fund (TETFUND), Suleiman Bogoro, during a dinner party in honour of Bogoro held at government house, Agodi, Ibadan, Oyo State.

Foreign investors say Nigeria’s FX policy overshadowing power, fuel reforms LOLADE AKINMURELE

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igeria’s renewed push to reform its power and petroleum sectors by doing away with subsidies and enthroning a market-based pricing system is being undermined by the country’s foreign exchange policy, which is keeping foreign investors on the sidelines.

“Efforts to remove the fuel and power subsidies are positives but there are negatives like the foreign exchange policy and closed land borders, which limit how positive you can be in investing in Nigeria,” Erik Renander, a London-based portfolio manager of a multi-asset fund, which invests in fixed income and

equities across Africa, said.

Renander, who spoke at BusinessDay’s capital market and investing conference, Thursday, said, “The FX policy is hurting investment appetite (in naira assets) and Nigeria is on hold for now in terms of new foreign investment.”

Renander sold his holdings in Nigerian Treasury Bills in February after he became “nervous” about oil prices and the CBN’s FX policy.

“If you want to invest in Nigeria where there is a risk of not knowing when you are able to get out, the 2 percent yield on T-bills is not enough,” Renander said.

Another foreign investor told BusinessDay that “ordinarily, the stock market for instance should be doing much better now following the government’s renewed push for reforms that have cast a dark

cloud on Nigeria for years but it is not happening because of the FX situation.”

“The power and fuel subsidy removals are potential game changers if the government follows through, but the economy may not reap the full dividends with such a foreign exchange policy,” the South Africa-based fund manager said.

Oscar Onyema, CEO, Nigerian Stock Exchange (NSE), said the Exchange was in talks with the CBN to find a way to address the foreign exchange situation that had cast a lull on the market. The market is down some 5 percent year-todate as foreigners who have historically led activity in the market snub equities.

Several investors have criticised Nigeria’s foreign exchange management, which has led to a rising dollar de-

mand backlog the CBN puts at $2 billion.

With some investors’ funds trapped in the country, Nigeria has fallen out of favour with foreigners.

For the first time in more than four years, no single foreigner invested in Nigerian bonds, according to data by the National Bureau of Statistics (NBS).

That compares with the $231 million and $361.2 million invested in Nigerian bonds in the preceding quarter and the same period last year.

But it is not only foreign investors who are reeling from Nigeria’s dollar crunch. Local manufacturers, who are unable to get enough dollars to import key inputs and banks, who are limiting dollar transactions on naira cards, are also feeling the pinch.

he Central Bank of Nigeria (CBN) said at the weekend it would commence a phased implementation of Basel III standards and revise the existing Basel II guidelines on Regulatory Capital and Supervisory Review Process in 2020/2021 fiscal years.

This is to reduce the risk of a build-up of excessive leverage in the banking system and provide a safeguard against excessive concentration.

Basel III standard is a global, voluntary regulatory framework on bank capital adequacy, stress testing, and market liquidity risk. The standard is intended to strengthen bank capital requirements by increasing bank liquidity and decreasing bank leverage.

To this end, the apex bank would issue guidelines to cover the following standards, amongst others: Liquidity Coverage Ratio (LCR), Liquidity Risk Management (LRM) and Internal Liquidity Adequacy Assessment Process (ILAAP), Large Exposures and Regulatory Capital definition.

This was stated in the Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for fiscal years 2020/2021, released on Friday by the CBN. To determine its level of compliance with the Basel Core Principles for Effective Banking Supervision (BCPs) the CBN shall carry out a selfassessment of compliance with the BCPs preparwatory to the Financial Sector Assessment Programme (FSAP).

Also, to further strengthen the regulation and supervision of cross-border banks, the CBN shall commence the conduct of country risk assessment in respect of banks embarking on cross-border expansion during the 2020/2021 fiscal years. To this end, guidelines on country

risk assessment shall be issued to the industry and all banks with international authorisation shall be required to comply. The guidelines aims at setting supervisory expectations regarding the management of country risk by banks and is applicable to all banks with international activities and exposure to country and transfer risk. The supervisory authority shall apply to this guidelines based on the nature of a bank’s international activities and cross-border exposures, as well as the risk in countries where the bank has or plans to have operations. The review of banks management of country risk by the CBN will be aimed at assessing the level of risk arising from their international activities and exposures and the effectiveness of their internal governance and controls for the management of exposure to country and transfer risk.

According to the CBN, interest rates in the 2020/2021 fiscal years shall continue to be market-driven. The CBN shall continue to influence interest rates indirectly, through the adjustment of its anchor rate, the MPR. Accordingly, interest rates used by banks in the 2020/2021 fiscal years shall comply with the following guidelines: a. Banks shall continue to pay negotiated interest rates on current account deposits at the instance of the customer. b. Where special purpose deposits (such as deposits held as collateral or other similar deposits) are held, banks shall pay interest at a rate negotiated with the customer, subject to a minimum of 30.0 per cent of MPR per annum for naira denominated deposits.

A special purpose deposit, as used in these guidelines, is a deposit made by, on behalf of, or transferred from the customer’s account, which is not accessible to the customer, for more than seven (7) days.

Poor power supply undermining manufacturing activities …as manufacturers spent over N67bn on self-generated power in 2019 GBEMI FAMINU

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oor power supply is hurting Nigerian manufacturers, raising their production costs and reducing their competitive advantage.

The 2019 annual report of the Manufacturers Association of Nigeria (MAN) states that in 2019, manufacturers spent over N67.

38 billion on self-generated

electricity with energy cost accounting for 38 percent of production cost.

According to the report, “Inadequate electricity supply and incessant increases in tariff without commensurate improvement in generation, transmission, and distribution still remain key challenges of the sector.”

A look at the financials of some quoted manufac-

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turing companies affirmed that claim, showing that these companies pay heavily for electricity used. In 2019, Lafarge Africa plc, one of the largest cement makers in the country, spent N42.7 million on fuel alone, Fidson pharmaceuticals spent N66.4 million, while GlaxoSmithKline Nigeria plc (GSK) spent N70 million.

Experts say that the high energy cost of these com-

panies increased their cost of production, forcing them to produce at higher cost.

The economy hinders them from passing on the cost to cash strapped consumers, in addition, epileptic power supply is majorly responsible for low productivity in the sector and reduces the chances of locally produced products in a competitive market. Many manufacturers are forced

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to compromise quality for quantity in order to adjust to the energy cost.

Funmilayo Bakare Okeowo, chief executive officer (CEO), FAE Limited, said in a phone interview, that “For we manufacturers, electricity is paramount and we incur huge cost when we have to generate it ourselves.

“We need better power supply to reduce our cost of production and the issue of tariffs should be properly addressed. We also need poli-

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cies to create an enabling and competitive environment,” she further said.

Similarly, Mansur Ahmed, president, of MAN, told BusinessDay at the 5th Nigeria Manufacturing and Equipment (NME) Expo earlier in the year that energy was the single most important constraint to productivity and competitiveness of the sector in Nigeria as the impact was felt across micro, small, and medium as well as large manufacturers

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BUSINESS DAY

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BUSINESS DAY

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Here’s why CBN took interim measure to approve emergency maize importation

Why we shut down refineries - NNPC

…as poultry farmers struggle with maize supply 2 months before harvest

ISAAC ANYAOGU

ENDURANCE OKAFOR

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source in the Central Bank of Nigeria (CBN) has disclosed why the apex bank approved four companies to import maize despite an earlier memo placing maize on the list of items not eligible for foreign exchange.

The CBN had earlier approved– Wacot, 60,000 tons; Chi Farms, 60,000 tons; Crown Flour, 22,000 tons, and Premier Feeds Mills, 120,000 tons – to import the product due to their capacity and already existing infrastructure. A contact from the apex bank explained that the interim measure that led to the selection of the four firms was geared towards stabilising food price and easing Nigeria’s high inflation rate.

A CBN source told BusinessDay, “We are spending a lot by way of credit to local farmers and have no interest in seeing more imports. This was the motivation for stopping the imports … we now expect the huge investment that has been made over the last five years to start yielding fruit.

“However, these four companies are only being allowed to complete the importation process that had started before the ban. And so far this year, 314 Forms M have been processed for maize importation alone.”

However, farmers say the importation would be counterproductive, as the containers would likely arrive at a period of harvest.

Analysts, on the other hand, say technical banning of maize would shoot up prices of the commodity and frustrate manufacturers using it as raw material while creating scarcity.

But the CBN and poultry farmers see merit in the policy.

To increase local production of maize, stimulate economic recovery, safeguard rural livelihoods and increase jobs the CBN on July 13, 2020, directed all authorised dealers to discontinue the processing of Form M for the importation of maize/ corn with immediate effect.

The implementation of the CBN directives of withdrawal of Form M for maize importation added more pressure on the sector, which was already burdened with the scarcity of maize – a fall-

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out of the adverse effects of the COVID-19 pandemic.

Data by the Poultry Association of Nigeria (PAN) show that the price of a metric ton of maize jumped by over 100 percent after the FX ban on the product, from about N90,000 per metric ton in January, the landing price of the product climbed to about N200,000 in August.

According to industry players, especially those in the poultry business, maize, which constitutes over 50 percent of poultry feed, became very scarce, and the price of the product hit a record high. The scarcity of maize and the continuous rise in its cost has dire consequences on not only the poultry farmers but on all associated sectors that are linked directly or indirectly to the poultry value chain.

To manage the high cost of poultry production after the ban on maize imports, the apex bank on August 6 granted four selected companies waiver to urgently bring in 262,000mt because of their capacity and infrastructure available to them at the ports in order to ameliorate the maize scarcity within a short period of time.

“In line with the govern-

…plans CNG refill plants across Nigeria

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he Nigerian National Petroleum Corporation (NNPC) says it deliberately shut down the nation’s refineries to enable it diagnose the issues which have overtime made it impossible for the facilities to operate to their installed capacities.

The NNPC in a statement by its group general manager, public affairs division, Kennie Obateru, in Abuja, on Sunday, explained that the shut down also became inevitable due to difficulties in feeding the refineries with crude oil via the pipelines that had been completely compromised by vandals.

The statement quoted the group managing director (GMD) of the corporation, Melee Kyari, as saying that the NNPC was moving rapidly to execute complete rehabilitation of the refineries under an exercise that would guarantee restoration of the facilities to at least 90 percent capacity utilisation.

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On the deregulation of the downstream sector of the petroleum industry, the GMD in the statement said that the corporation would begin activation of Compressed Natural Gas (CNG) refill stations for motorists across the 36 states and Abuja.

The CNG (methane stored at high pressure) is a fuel that can be used in place of gasoline, diesel fuel, and liquefied petroleum gas (LPG) and its combustion produces fewer undesirable gases than the aforementioned fuels.

The deregulation of the oil downstream had triggered increase in the price of Premium Motor Spirit (PMS) also known as petrol in the country.

Minister of state, petroleum resources, Timipre Sylva had announced that the Federal Government will in the next couple of weeks inaugurate CNG plants in all NNPC petroleum stations across the country.

This, he said would serve as alternative to petrol for

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motorists in the country.

He said the idea was to support the ongoing initiatives by the ministry of petroleum resources to provide alternate energy sources for Nigerians.

Kyari said that the corporation had already keyed into the gas penetration agenda championed by Sylva.

He noted that as an energy company with focus on cleaner and cheaper sources of fuel, the NNPC would continue to work with other stakeholders in the industry to provide viable alternatives to petrol.

This, he said, would ultimately lead to reduction in demand for the product, and eventual reduction in price.

He reiterated the commitment of the corporation towards openness and greater transparency in its operations.

Kyari said that in the months ahead NNPC would make public its 2019 audited financial statements as a sequel to the 2018 AFS released in June.

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Monday 14 September 2020

BUSINESS DAY

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CACOVID urges halt to community spread of COVID – 19 to restore economy TEMITAYO AYETOTO

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he private sector-led Coalition Against Covid-19 (CACOVID) has said that stopping the community spread of coronavirus in Nigeria was the only way to prevent a resurgence and get the nation’s economy back on track.

CACOVID, whose members have donated several billions of naira to the intervention against Covid-19, said the present situation calls for efforts to be geared towards grassroots campaign against community spread across the country if the gains of the past in combating the deadly virus were to be sustained.

Zouera Youssoufou, CACOVID administrator and CEO of Aliko Dangote Foundation (ADF), while receiving briefings from the Grassroots Awareness Campaign Team in Lagos, said the coalition embarked on grassroots awareness campaign against community spread

when it realised that experiences in other countries revealed that even after the virus is tamed, there would be a possibility of resurgence of the infection if people are not sufficiently educated on basic hygiene and made to comply with protocols and guidelines.

According to her, government at all levels and the private sector operators have done so much to tackle the global challenge posed by Covid-19 and it would therefore be preposterous to relax at this time and allow the people get back to old lifestyles and ignore the preventive measures against the disease.

Youssoufou explained that the coalition launched the phase two of the grassroots awareness campaign after experiences from the phase one of the campaign showed that a lot still needed to be done and a lot of areas remained to be covered to sensitise the people that preventing the virus is in their hand.

The CACOVID leaders have done a lot to pool resources to complement

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government efforts at curbing the disease and the awareness campaign is the next line of action that efforts should be geared towards.

Youssoufou said CACOVID has been involved in community engagements, creating awareness, putting out posters, distributing facemasks and liquid sanitisers and the response of the people to the campaign has been encouraging.

“This grassroots campaign is to help forestall further spread of the disease to suburbs and other rural communities in Lagos and Rivers States as well as in Abuja, the Federal Capital Territory,” Youssoufou said.

“The awareness campaign is to further strengthen the efforts of the government in the fight against community spread of COVID-19 pandemic in Nigeria, through inter-personal and sustained enlightenment campaign that will help to educate people in communities on the recommended hygiene protocols to keep individuals and families safe.

Lagos unveils phased resumption of classes from September 14 KELECHI EWUZIE

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agos State Government on Sunday unveiled graduated resumption of classes for public and private schools after months of lockdown to contain the spread of Covid-19 pandemic in the state.

The state commissioner for education, Folasade Adefisayo in a statement, directed public and private schools in the state to tidy up preparations for the resumption of certain categories of classes from September 14, 2020, while also

congratulating SS3 students who just concluded their exit examinations.

“We wish to congratulate SS3 students who have successfully completed their WASSCE exams and urge them to stay safe even as they await their results.

“The present JS3 and SS2 students in public schools in the state are to resume classes from Monday, 21st of September, 2020.”

Adefisayo noted that private primary and secondary schools were also permitted to resume from Monday, September 21, 2020.

“The resumption will permit the present JS3 students

who are already in an exit class to revise and get adequately prepared for their forthcoming Basic Education Certificate Examination (BECE) organised by the Lagos State Examination Board.

“It is scheduled between Tuesday, October 6 and Monday, October 12, 2020.

The resumption will also afford the present SS2 students an opportunity to prepare effectively for their transition to SS3,” she said.

She said that for the public schools, the ministry would be adopting a phased approach to opening the classes.

Lagos explains environment disruption in highbrow areas CHUKA UROKO

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agos State government has explained why the environment was disrupted with the removal of trees and green areas in highbrow neighbourhoods of the state, saying it was to enable the government to carry out road expansion and drainage projects so as to improve the state of road and drainage infrastructure.

The state explained further that the projects are also aimed to reduce flood risk, noting that, in achieving this, disruptions to the environment are not unexpected, which sometimes

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include felling of long-standing trees and clearing of some already beautified spaces.

In a statement jointly signed by the special adviser to the governor on works and infrastructure, Aramide Adeyoye, and the general manager, Lagos State Parks and Gardens Agency (LASPARK), Adetoun Popoola, the government also appealed to the residents of the areas for understanding.

Adeyoye explained that four roads in each of Ikeja, Ikoyi, and Victoria Island, which are the major highbrow areas of the state, were selected as pilot for holistic upgrade under the State Urban Regenera-

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tion Initiative.

She recalled that construction work on the road projects, in line with international best practice, were preceded by stakeholder engagements with all the participants taken through the scope, methodology, potential impact and mitigation of the projects.

“We understand the concerns of the residents of the area and appeal that the bigger picture in terms of urban renewal and flood control in Ikoyi area is given the necessary priority,” Adeyoye said, acknowledging the support of the Victoria Island Ikoyi Residents Association (VIIRA).

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Stop the hype! CAMA 2020 will not transform Nigeria’s business environment global Perspectives

OLU FASAN

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eorge Orwell must have had Nigeria in mind when he wrote in ‘Politics and the English language’ that political statements often “give an appearance of solidity to pure wind.” Nigeria is a country where miniscule progress is presented as a landmark achievement!

In 2018, when Nigeria moved up 24 places, from 169th to 145th on the World Bank’s Doing Business Index, one minister tweeted: “Congratulations Nigeria!!!

The gloating was so much that one newspaper described it as “rhapsodic self-congratulations.”

Now, we are having another moment of hyperbolism. Since President Buhari signed the Companies and Allied Matters Act 2020 (CAMA 2020) into law on 7 August, the euphoria has been stratospheric. One commentator said: “A perusal of CAMA 2020 reveals that it is, in every sense, a “revolutionary piece of legislation…” Another wrote that it “provides a robust framework for reforming onerous, legal, regulatory and administrative bottlenecks.”

These are all extravagant claims. Nigeria is starting from an extremely low base. While any marginal progress is commendable, it mustn’t be presented as transformational. Tinkering around the edges is not what Nigeria needs, but radical, root-and-branch holistic reforms.

I mean, adopting in 2020 company law principles that have existed in the companies acts of most countries for several decades is not “revolutionary.” The first CAMA was introduced in 1990, and for 30 years Nigeria’s company law was mostly out of kilter with international best practices. Now, if bringing Nigeria’s company law in line some basic company law princes 30 years later is what makes CAMA 2020 “revolutionary”, then the levels of ambition and aspiration in this country are extremely low.

Think of it, CAMA 2020 addresses mainly procedural and administrative barriers, not substantive supply-side constraints. It may make some aspects of operating a business easier, but does it remove or even reduce the structural obstacles to successfully running a business in Nigeria? The Manufacturers’ Association of Nigeria (MAN) reportedly said that about 272 businesses failed in 2016; the number would have skyrocketed since then, especially in this year of Covid-19.

Would CAMA 2020 stop the rate of business failure or collapse in Nigeria?

Here’s my point. Despite Nigeria’s improvement on the World Bank’s Doing Business Index, the world did beat its way to its door and private sector dynamism remains elusive. Similarly, CAMA 2020 will not, as someone said, “profoundly influence the direction of corporate activities” and “promote entrepreneurship and economic prosperity in Nigeria.”

Ralph Waldo Emerson reported said: “Build a better mousetrap, and the world will beat a path to your door.” Truth is, if Nigeria wants to attract foreign investors, if it wants to engender a dynamic private sector, it must “build a better mousetrap”, in the sense of transforming its business environment in a way that supports private sector development.

To be clear, I am not trivialising CAMA 2020. Some of its provisions are good; others are bad or not so good. Clearly, some of the business-related provisions are good. But most of the provisions affecting charities, NGOs and other voluntary organisations are not good, a subject that I addressed in my column in the Vanguard Newspaper last Thursday.

Many of the business-related provisions are, indeed, aimed at enhancing the ease of doing business, particularly for small companies. For instance, no one will disagree with the businessfriendly provisions, such as those: recognising single member/shareholder companies; allowing for statement of compliance signed by an applicant/ agent instead of, as previously, a declaration of statement attested to by a lawyer or Notary Public; and making the use of Common Seal non-mandatory. There are other provisions recognising the validity of electronic signature, electronic transfer of shares and virtual meetings; reducing filing fees for registration of charges; and exempting of small companies from the requirements to appoint

auditors and company secretaries.

All the above provisions, which mimic similar provisions in the UK Companies Act of 2006, will reduce regulatory and administrative for small companies, and that must be welcomed. The provision that requires the disclosure of significant control and beneficial ownership should also be welcomed. Creating public registers of beneficial ownership, which would disclose who owns what in any country, was part of the agreement reached at the international anticorruption summit in London in 2016. If sections 119 and 120 of CAMA 2020 help to prevent asset-shielding, that would be a good anti-corruption provision.

However, there are some not-so-good business-related provisions in CAMA 2020, particularly the protectionist elements. For instance, the purported attempt in section 22 to protect shareholders from the dilution of their shares by restricting who individual shareholders could initially sell their shares to is an affront on property rights. Similar provisions in the UK Companies Act are about allotment of shares, not individuals’ right to sell their shares. Similarly, the protective shield for debtors and companies in distress in section 717, which limits the rights of creditors, goes beyond provisions in other companies acts to facilitate settlements between creditors and de debtors. It could create a moral hazard and, counterproductively, make it more difficult for companies to secure credit.

All that said, the business-related sections of CAMA 2020 are, overall, good.

Yet, given the utter weakness of state capacity in Nigeria, it is very unlikely that the Corporate Affairs Commission will be able to implement the act effectively. But even if it did, my bigger point, considering the wild euphoria, is that CAMA 2020 alone will not transform the business environment and boost private sector development in Nigeria.

According to a World Bank report titled “Competitiveness Diagnostic Toolkit”, an effective business environment requires a regulatory regime that does not create unnecessary obstacles to running a business; a business-friendly tax environment; a legal framework that promotes market competition; and a sound governance and capable institutions. None of these is present in Nigeria.

Take the regulatory environment.

Recently, BusinessDay wrote a poignant editorial titled “Business-killing regula-

‘

Creating public registers of beneficial ownership, which would disclose who owns what in any country, was part of the agreement reached at the international anti-corruption summit in London in 2016. If sections 119 and 120 of CAMA 2020 help to prevent asset-shielding, that would be a good anticorruption provision

tions must go.” Would CAMA 2020 solve this problem? Would it, for instance, address the irrationality of maintaining different foreign exchange windows, despite foreign investors calling for a flexible and unified system? Would it end the bizarreness of closing Nigeria’s land borders for over a year now even though it is harming Nigerian businesses? Or would it stop the illiberal policy of excluding increasing number of products, currently 44, from access to foreign exchange or the equally illiberal policy of price controls? What about President Buhari’s credibilitydestroying orders to the central bank?

The World Bank report said that any analysis of the business environment must include four components: governance, business regulation, taxation and competition. Yet, on each of these four, Nigeria is a world laggard. Take governance. The meta-institutions, such as the rule of law, bureaucratic quality and sound policymaking, the protection and enforcement of contracts and property rights, etc, all of which contribute to the emergence of a dynamic private sector, are extremely weak in Nigeria.

What about business regulation? Well, as stated above, Nigerian businesses are over-regulated. They are subject to overlapping regulations, enforced heavyhandedly by multiple and overlapping regulatory agencies. Everyone knows about the multiple taxes. A World Bank study shows that there are 59 tax payments per year in Nigeria, compared to an average of 37 in sub-Saharan Africa.

And competition? Well, Nigeria is a very uncompetitive economy. For instance, while Nigeria is improving its rankings on the World Bank’s Doing Business Index, it’s wallowing at the bottom of the World Economic Forum’s Global Competitiveness Index, where it ranked 116th out of 141 in 2019, compared to South Africa’s 62nd!

So, yes, CAMA 2020, albeit belated, is broadly welcomed. But, no, the hype is uncalled for. Its enactment is not revolutionary and will not significantly transform Nigeria’s business environment. For that, Nigeria needs radical, comprehensive structural reforms, not tinkering at the edges!

Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Workplace high flyers, succession planning and employee turnover

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n today’s business world it’s hard to find good people, but harder to keep them. The hardest part even, is making them to stay long enough for you to build growth, vision and maybe your succession. It’s the founder and CEO’s dilemma. You have to create a special set out of your entire lot for this. You have to identify and build intentionally what you desire. That set to build succession will require that out of your many, that they are the most highly competent (highflyers) and loyal ones. That intersection is mainly personality based. It starts from identifying those fit enough to be called highflyers.

In earmarking a team member(s) for takeover, loyalty can be relative. Most highflyers are not loyal to the brand, but loyal to their needs that have to do with the brand. Just like the law of diminishing returns, as time goes in it, retention of that loyalty and commitment drops. It is best to identify high flyers with the right personality and SKA (Skill, Knowledge and Ability) to build succession with. It can’t be everyone but a subset of your perfect fit (those with competence, leadership traits and loyalty). When you identify those earmarked, communicate it to them. Codename them; (in this case I have called them “Inner Circle”). And then put them on a special plan.

Keeping the right people and making them part of your succession planning is beyond vision, salary, work and a good working condition. You should first identify who is a potential for succession planning with. That takes a team assessment and human resource audit in line with some predefined metrics that must be set.

For those you earmark, let them know. Generally, even when you find those fit to plan with, there are five levels of their human needs that should be important in considering grooming them for the workplace. Within each level are specific needs that allow for an individual to feel fulfilled. But it’s only a matter of time once a level is fulfilled that the staff guns for the next level.

The following are a series of different things that must be done interpedently yet concurrently in line with succession planning.

Structure and promotions We will have to draw out a promotion plan.

Having a structure, a culture and an organogram they can aspire to grow with to the top with is powerful. One strategy to retain employees is consistent and transparent promotion. Most employees (if not all) desire to climb the pyramid of their hierarchy of needs up to the level of self-actualisation. This can be achieved through www.businessday.ng

a carefully conducted periodic performance appraisal to measure employee’s performance in relations to organisational goals and objectives.

Although some of these employees may come in initially to satisfy their physiological needs, the management must design a transparent and consistent career path for them to guarantee growth and improvement. Employees tend to stay longer in organisations that provide them with opportunities for growth. However, this promotion must be accompanied with significant increase in monetary rewards to further motivate the employees.

Ownership opportunities and partnership Show them there is opportunity to own a part of the business over time. Employees who have worked in the organisation for at least 5-10 years should be considered for profit sharing, shareholding or partnership. This further creates a psychological connection to the organisation and also motivates such employees for better performance since the success or failure of the organisation would have a direct impact on his/ her dividends.

Open communication and a culture for feedback Employees must be heard in the organisation

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EIZU UWAOMA in order to retain them. In an autocratic system, where the employees are only on the receiving end, job dissatisfaction is most likely to creep in thereby leading to labour turnover. The “Inner Circle” employees must be positioned as strategic business partners with the employers rather than the “lord and serfs” relationship.

Opinions of the employees must be sought on every necessary matter, as bilateral agreements are more prone to implementation rather than unilateral imposition.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Uwaoma is a start-up, corporate restructuring and strategy consultant. contacteizu@gmail.com

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Resilience [forging ahead] – rising boldly against killings and land grabbing

Bashorun J.K Randle

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here Resilience Television is obliged (based on the advice of its promoters, the retired partners of KPMG who are still awaiting their gratuity and pension) to exercise utmost caution is in airing a statement allegedly attributed to Lt.-General T.Y. Danjuma, the former Chief of Army Staff and Minister of Defence: Headline: “T.Y. Danjuma: Fulanis have declared war against indigenous Nigerians and are grabbing our lands in the north and middle belt and we are playing games with Buhari...the game should be up now.”

“Retired General Danjuma has urged all indigenous Nigerians from North, South, East and West to face reality, to rise up and defend themselves.

The Nigerian Army under Buratai is working with President Buhari to grab lands from indigenous Nigerians owners and give it to Fulanis from West Africa and turn indigenous Nigerians people and land to modern day Fulani Colony.

Rise and defend your land now, rise now before it is too late. No election until this Fulanis killing is stopped and

lands grabbed, restored back people and the criminals identified, arrested and punished according to the Law of the land. This pogrom must stop, yes, it must be stopped. We did not elect them to murder us.

It is a big shame to about 165 million indigenous Nigerians from predominantly Hausa North, middle belt, Igbo East and Yoruba West to allow; only 3 million Fulanis (who are Arab Africans) we accommodated to take over Nigeria and be killing everybody in the name of Herdsmen and Boko Haram, and take over our ancestral lands.

Big shame to the rest of the people crying like fools. President Buhari’s primary objective to use Nigerian Armed forces, Boko and Herdsmen to fight jihad and massacre the indigenous people and take over our lands and give to Fulanis have started.

They have conquered Hausa, they lost who they are, now, they are fighting and killing people across middle belts (Kogi, Taraba, Plateau, Kaduna, Nasarawa, Brono, Benue etc.) sacking them from their communities and Presidency protecting and arming the murderers. They have conquered SW by half through the Tinubu dynasty, after the Middle Belt, they planned to work over the South West to gather strength to fight the SOUTH-SOUTH and SOUTH EAST. This will be the battle of Armageddon. It is a shame for indigenous Hausa, Igala, Tiv warriors, Idoma, Igbo, Yoruba, Calabar, Calabari, Benin, Ishan, Uhroboh etc. to name but few to sit and watch Buhari destroy and turn Nigeria to Fulanis colony.

This is a war against 165 million Nigerians declared by 3 million Fulanis

headed by Buhari. It is time to rise and stop Buhari and his gang of murderers called Fulanis Herdsmen. He is their patron and his loyalty goes to the Fulanis in West Africa and Arabs.

If you are a soldier, police, members of national assembly, professor, academicians, Governors, from these indigenous 165 million being used

by Buhari to destroy your ancestral inheritance and your people, you should be shamed and do everything now to stop Buhari.

Because in the end after using you to destroy your people, you yourself will be destroyed. We must all say no to Fulanis Herdsmen destruction now and stop them. Miyetti Allah now determines what happens in the presidency. They warn constitutionally elected governors of states and threaten destruction and Nigerian Army supports them. This is not about politics, it is pogroms and ethnic cleansing by Buhari and his gangs.

Let’s the indigenous Nigerians rise now and say enough is enough. Our soldiers should refuse Buhari and Buratai command and secure their people. The Senate and House of reps should stand up to their duties and stop this evil before Buhari destroys everyone.

Enough is enough. We are tired of mass burials of innocent people from across the Middle belt killed and murdered by Miyetti Allah and Fulanis Herdsmen and their land stolen and renamed.

It is time to rise up boldly against these killings and land grabbing and let us all say no to grazing root and planned illegal land grabbing by the Federal Government to give Fulanis Herdsmen in the name of open graz-

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It is time to rise up boldly against these killings and land grabbing and let us all says no to grazing root and planned illegal land grabbing

by Federal Government to give Fulanis Herdsmen in the name of open grazing and ranching

ing and ranching. Ranching should be a private business, not government business.

Let us all throw away our divisions and fight this war, unleashed on indigenous Nigerians by President Buhari and His Fulanis Herdsmen which he is their life patron.

Pass this and share until the indigenous Nigerians and their leaders wake up and fight this war and end herdsmen killing. They are not stronger than us. Our people in the Army, police, and navy should rise Against Buhari and his Fulanis commanders of Armed forces. Share to save life. Do not fear President Buhari and killing squads of Nigerian Army and Fulanis Herdsmen; do not be intimidated, they are not stronger than us. We gave him our sovereignty and now he has abused it and started to kill us and give our lands to foreigners, we must take our sovereignty back now.

We cannot wait till 2023, it is too far. We must fear only God not man, we have to be alive to do election.

Nigerians - 165 million Nigerians must arise now to stop Buhari and his 3 million herdsmen and Nigeria military who are killing the people paying tax that pays their salaries. The Fulani Herdsmen and Boko Haram they are supporting are not paying tax; they are foreigners - Arab Africans. This is more than religion; both indigenous Christians and Muslims are massacred under the supervision of President Buhari. It is land grabbing.

J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, J.K. Randle Professional Services.

Email: jkrandleintuk@gmail.com

COVID-19: Is capitalist economy on retreat?

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n the wake of the rampaging COVID-19 pandemic, the world as we know it has been in a state of topsy turvy. A lot seems not to be adding up any more; age long principles are being upturned and dismantled while some long held myths are being called to question.

One of such age long held beliefs is the dichotomy between the state and free market enterprise driven by the private sector.

The theory amongst capitalist economists has been that the two are like parallel lines.

Their argument has been that in terms of efficiently managing an economy, the private sector is shoulder above the state. This is anchored on the premise that the market is efficiently more primed to allocate resources better than the state and therefore should always be at the forefront in managing an economy.

The above argument appears persuasive when one juxtaposes the performance of market led economies over the years with those of the state run ones. With the exception of China and far distant Russia, socialist/command economies over the years have had to contend with a lot of dysfunctionality to the extent that many have abandoned that path or have had the system tinkered with profoundly by way of reforms. This is not to assume, however, that capitalist economies have had it smooth sailing all the while.

Which ideology is superior should be a topic for another day.

If anything, the advent of COVID-19 has brought once more to the fore the notion of whether the private sector and the state are indeed two parallel lines that can never

meet. COVID-19 pandemic as it is better known has actually pandemiced the world.

Aside the health hazards it has wrought on the world resulting in many deaths; jobs have been lost, many companies have closed down or just tottering while hunger, especially in many developing economies have assumed embarrassing heights.

In the midst of the foregoing, many governments all over have had to step in to bring succour to many companies, establishments and individuals.

In many advanced economies where established safety nets are already in place, doling out palliatives isn’t much of a problem; well laid out platforms are already in place. For many a developing economy, administering the palliatives has come with a lot of challenges. Though in some cases, the private sector has lent some support in terms of providing resources and cash, the actual administering (and the bulk of the resources and cash) has been carried out by governments using their agencies and platforms. If this is so, where then is the much vaunted argument of the private sector being a better allocation of resources?

In terms of efforts at flattening the pandemic curve, again, governments all over are leading in the crusade. Most of the testing and treatments of the COVID-19 patients are being conducted in government facilities, with private facilities in the minority and often under government authorisation. Data collection and dissemination regarding the pandemic are in firm grip of governments.

Where the pre-eminent position of the private sector vis-à-vis the state has glaringly www.businessday.ng

been called to question is in the bailouts being currently implemented by many governments. Ironically, the private sector has been calling on governments to intervene in order for them to stay afloat.

Today, all over the world, the call has been very strident, especially from operators in aviation, tourism and hospitality sectors for massive bailouts and many governments have responded in good measure. Micro, Small and Medium Enterprises (MSMEs) are not left out.

What of the call on governments to pay salaries and wages of some furloughed staff as currently being championed by some companies in U.K? They have posited that that is the only way some of them can bounce back to economic life. This is not adding the scaling down or in some cases the waiving of corporate taxes and levies that these companies ordinarily would be paying. That some governments have so far spent about one-tenth of their GDP (according to the IMF) in support of some businesses and providing palliatives says it all.

A priori, it seems that to all intents and purposes, the capitalist economy is not the putative behemoth that it has been portrayed to be. But has it ever thrived devoid of government support? Evidence on the ground seems to be in the negative. Even in many developed economies where capitalism holds sway, governments there have been known to support companies through erection of tariffs to protect companies from imports abroad, lowering of taxes and providing tax holidays to infant companies from time to time and outright subsidies in

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Emeka Okolo

some cases (like the relationship between the U.S government and its farmers). To many developing economies tilting towards capitalism, the cliché is that the government has no business being in business: it should restrict itself only in the area of providing enabling environment. But the majority of the businesses there still depend on governments for direction. In the case of Nigeria, for example, many businesses hardly plan for any given year without waiting for the government’s budget for that year.

Contrary, therefore, to the notion that the private sector and the state are like two parallel lines that don’t meet, they are in fact Siamese twins. No superiority should be assigned to any. If the question posed as to the status of the capitalist economy in the world today is resolved in the affirmative, it follows that all along it has been so.

Dr. Okolo is a Chartered Stockbroker and Management Consultant based in Lagos.

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Nothing is changing, so why is speaking out still so important?

David Hundeyin

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n the 90s, a magazine called TELL became the medium of record for all that went on during General Sani Abacha’s five horrible years. The travails of the intrepid journalists and writers who fearlessly chronicled the story of Abacha’s rapacious half decade in Aso Rock became the stuff of legend when detailing just how much journalists can be mistreated and dehumanised. There were beatings. There was torture.

There were suspicious accidents and disappearances. Family members and friends suffered mysterious misfortunes. It was a dark time for all concerned.

Growing up aware of all this because of a compulsive reading habit, I certainly had no desire whatsoever to be a journalist. The profession seemed to be all tribulation and zero reward, and I could not see why anybody would ever want to put themselves through any of that. Even after the interval of twenty odd years, having found myself inevitably drawn to the

space because that was where the universe had deposited my unique set of talents, I focused my energies on American European-centred journalism which offered significantly more respect, money and job satisfaction.

And then that all changed.

Journalism is dead?

At the end of the Abacha era, when a strategically administered apple from the belly of a comely Indian damsel allegedly put an end to the military’s reign of terror, the profession of journalism in Nigeria had been mortally wounded. Once a respected pursuit alongside the likes of Law, Medicine and Engineering, it was now a pale simulacrum of what it once was, having been literally beaten to within an inch of its life. TELL, which took most of said beating never truly recovered.

Even after Abacha’s demise, we then got the “democracy” that we are familiar with today, where journalists get insulted live on camera by politicians and thrown into jail

by Little Napoleon state governors, and people get yanked off the radio midair and fined 7-digit sums for talking about factual historical events. The minority of journalists who do manage to keep up something roughly approximate to the work of their state-persecuted forebears only do so out of a mixture of economic independence - whereby Nigerian journalism is practically their passion project as against their full time job - and fearlessness bordering on fatalism.

It would seem as if despite the best efforts of the good men and women at TELL, Newswatch and other similar publications of their

time, the military successfully defeated journalism in Nigeria. Which then begs the question - why do some of us even bother? Why do we continue to practise a profession that to all intents and purposes has been comprehensively destroyed and gutted of its intellectual core?

Why do we keep putting our own well-being on the line to tell stories about a hostile establishment to an ignorant - if not equally hostile - audience? What is the point?

Long live journalism The answer to this question lies in the fact that TELL and its co-travelers are still spoken about almost 30 years later. The brave documentation, reporting and storytelling from 1995 is the valuable archive resource of 2020. Yesterday’s journalism is today’s history. Were it not for the work of our older colleagues who bore the brunt of facing down a brutally hostile military establishment, we would simply have no information about certain aspects of Abacha’s government or life under him. Indeed the Oputa Panel made repeated reference to the work of these journalists while trying the likes of Barnabas Mshelia, aka “Sergeant Rogers.”

If someone did not report a story in 1995, it would have disappeared forever into a black hole of Nigeria’s traditional lack of historicity, condemned to become the historical equivalent of the hypothetical falling tree that some would argue makes no noise because nobody hears it.

The important things to note are that a.) regardless of how dark the night is, the morning has to come, because those trying to distort our ability to perceive reality itself

‘

If we want to maintain our full personhood as individuals and as a collective, there must always be a group of chroniclers who document the stories that will become history tomorrow

Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. He tweets @DavidHundeyin.

How you make money lies in your unconscious mind Let’s go to class. here’s an important psychology that should be understood before getting into the actual way of making money. One that explains to great detail, why some people fall for the same get-rich schemes or the reasons behind some other people’s hesitations when it comes to spending their money.

It’s called Freud’s model of the mind. In his findings, you’ll come across the “Psychic Apparatus” where he saw the human personality as having three aspects. Each of these three aspects work together to produce all of our “complex” behaviours: the Id, the Ego and the Superego. All three components need to be in balance in order to have a good amount of psychological energy available and to have reasonable mental health.

The Id The Id lives deep within our subconscious from birth. It’s the source of our sudden and most instinctive urges. When you find yourself doing what you know you shouldn’t do, blame your Id. It has only one rule → the pleasure principle - basically saying “I want it and I want it NOW, no matter what!”.

When Id is too strong = one is bound up

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in self-gratification and uncaring to others.

The Ego The Ego is the driver making the decisions. It is the rational part of the mind that decides between the devil (the Id) and the angel (the Super-Ego), yes, just like in those Tom and Jerry cartoons with the devil and an angel on either shoulder.

We have small voices in our head, and it’s up to the ego to decide which one to fulfil.

Its goal is to find a compromise between satisfying both the Id and the Super-ego - basically saying- “I want it now but on second thought, I don’t need it now”.

When Ego is too strong = one is extremely rational and efficient, but cold, boring and distant.

The Super-Ego The super-ego is formed later in life to balance the Id. It forms and breaks off from the Id through our upbringing, parental guidance and our sense of community and beliefs. It continually strives for perfection based on set standards and consciousness.

Its power to enforce rules comes from its ability to create anxiety and people who are typically careful with their money have their strong super-ego to thank.

When Super-ego is too strong = one feels guilty all the time, cares about what others www.businessday.ng

Money Brain with

think and may end up having an insufferably saintly personality.

Now what does all this have to do with you? Naturally, your Id wants you to fulfil those “I want money and I want it now!” desires. Because of this need for selfgratification, those get-rich quick schemes and weight-loss diets are naturally popular – though we are aware a good number of them are untrue or unproven. A dominant Id ensures you are always willing to try anything. If this describes you - a word of advice - Be wary of opportunities that seem too good to be true because they might actually just be too good to be true.

With the Ego and Super-Ego however, you are willing to follow a steady path to achieve these same goals, this time through rational thinking, asking the important questions, getting help and doing your homework in general, before deciding how to make that money. A dominant superego or ego can also mean you are never willing to accept change, adapt quickly or leave your comfort zone unless you are armed to the teeth with facts. If this describes you - a word of advice - Take some calculated risks but don’t miss your opportunity to strike while the iron is hot.

If your goals for your finances include

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cannot live forever - at some point, their mortality will be the ultimate decider of things, and a generational power shift WILL inevitably happen; and b.) Yesterday’s news stories are today’s history lessons.

In other words, if we want to maintain our full personhood as individuals and as a collective, there must always be a group of chroniclers who document the stories that will become history tomorrow. It may not necessarily be at the scale and audacity of a TELL, and of course we do not work for free, but at risk of invoking the supernatural, I believe that some of us are seemingly ordained to carry out this task - whether it is appreciated or not. It is the documentation of our daily existence for posterity which is itself our task, not necessarily getting anything to change.

My belief is that regardless of how plainly unmoved and intransigent the Nigerian people and their government are in the face of documentation, facts and figures, the rare creature that is a “true believer” in the profession of Nigerian journalism must keep on speaking out and telling stories, because that is how we indicate our presence permanently on the record of humanity.

Like the TELL and Newswatch catalogue, which are now priceless detailing an entire decade of a country’s national story, someday our work - however reviled and underappreciated - will speak to future generations and tell them “We were here.”

JR Kanu

amassing wealth that outlives you, I encourage you to channel your Id to give you courage to take risks but channel your ego and superego to force you to calculate them first.

Kanu holds an MBA from Stanford University, a master’s in Journalism from NYU and a bachelor’s in Engineering from Calvin College. His career has included time at Konga, Amazon, The United Nations, Esquire, CNN, and Black Enterprise magazine. Armed with a strong conviction that you can live a great life no matter how much money you have, JR founded REACH Technologies, www. reach.africa. His company builds software to help young people and companies to manage and grow their money.

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BUSINESS DAY

Monday 14 September 2020

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

Nigeria needs to move forward, further and faster

Informal economy must be formalised, agriculture industrialised, and electricity fixed

DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule NEWS EDITOR Osa Victor Obayagbona NEWS EDITOR (Online) Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

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conomies like Nigeria are said to have enormous potential.

We hear that a lot.

We hear it so often we’ve taken it for granted? Remaining in potency to catch up, failing to converge, as emerging economies have with developed economies, is to be condemned to perpetual backwardness. There are advantages to backwardness i.e. sufficient room to catch up or converge.

For instance, China was once backward but the adoption and adaption of technology and economic policies have enabled it to achieve unprecedented growth.

The economy of Nigeria has grown, in fits and starts. And whatever progress there has been few have felt it. What will it take for a bigger portion of Nigeria to move forward, further and faster? Can we catch up? It depends.

It depends on our ability to absorb ideas and knowledge and map out how we intend to catch up. It depends on building capabilities to adopt and adapt

technologies to gradually bridge the distance to the frontier. To be sure, slow growth in developed economies will not cause frontier and emerging economies to leapfrog developed economies. Why? Because developed economies continue to innovate, to attract the best talent in the world, through their immigration policies, and thus renew themselves. In short, as Dani Rodrik, an economist, succinctly puts it “convergence is anything but automatic”.

Take the US and the invention of hydraulic fracturing (fracking), the technology used to fracture shale rocks to release the oil and gas trapped within. The story of George Mitchell, the man who invented fracking, is the typical American Dream. Mitchell was the son of immigrant parents. His relentless resilience, entrepreneurialism and gamblers’ instinct made him successful in a country with institutions that provide enablers and support enterprise.

The shale revolution is remapping global oil trade and geopolitics. The quality of Nigeria’s growth, the economy’s perfor-

mance, still depends on how much crude oil can be extracted and sold, subject to conditions that aren’t within the country’s control. Shale has eroded demand for crude oil.

Out of Nigeria, human and financial capital are being flown or shipped abroad, willingly and illicitly.

What you trade to catch up, whether goods or services, matters. So do policy, institutions and macroeconomic stability. To go beyond macroeconomic stability, to diversify and restructure the economy and to increase productivity Nigeria has to capture the gains from “automatic-convergence” industries.

Our largely informal economy must be formalised, agriculture industrialised, and electricity fixed to make leather shoes, plastics, pharmaceuticals and fertilizers.

These domestic job-generators require economic policies some of which the CBN has pioneered – development finance institutions (DFIs), for say, Micro, Small and Medium Enterprises (MSME), intervention funds, Nigerian Incentive-based Risk Sharing System for Agricultural Lending (Nirsal)

etc. But these policies are not easy to manage, for informational and political reasons. How does CBN know where to intervene, how does the apex bank stop rent-seekers from capturing the benefits of its interventions?

Oil, a commodity that Nigeria is overly dependent on, makes it hard to allocate resources into more productive sectors. Though it has spurred growth, poor economic management from this highly profitable sector has retarded productive employment. Unemployment and poverty are evidence that there are no genuine growth generators.

If they were, entrepreneurs, capital and job seekers would be moving into these sectors. To be fair, policies targeted at agro-allied sectors e.g., rice milling, poultry and fast-moving consumer goods (FMCGs) like noodles, pasta, sugar, cement, and beverages are generating benefits.

Even so, few people see these prospects because job-generating sectors need a functioning market.

Nigeria’s massive and stubbornly difficult to measure informal sector further masks the prospects.

HEAD, HUMAN RESOURCES Adeola Obisesan

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

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TSA non-compliance disrupts flights TrucksPoint to help 1000 youths build capacity in agric value chain as Nigeria re-opens airspace BUNMI BAILEY

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s Nigeria reopens its airspace and international flights resume at the airports, there are concerns that noncompliance issues in the payment of COVID-19 tests into the government’s Treasury Single Account (TSA), are causing disruptions to flights.

By law, passengers flying into Nigeria are required to present a negative PCR test certificate before boarding and are also expected to pay about N43,000 for a repeat test in Abuja and Lagos On Monday, an Ethiopia Airlines flight from AddisAbaba to Nnamdi Azikiwe Airport, Abuja was nearly aborted following a disagreement with passengers over Nigeria’s COVID-19 protocols for arriving passengers.

According to media reports, the pilot ordered Nigerian passengers whose repeat test payment had not been approved, to disembark from the plane.

The passengers, however, refused to exit the aircraft and vowed to abort the trip unless they were cleared to fly with other passengers. It was only after the intervention of influential Nigerians who

called relevant authorities that the pilot secured the nod to operate the flight following about an hour delay.

The payments for COVID-19 PCR tests are made through the National Centre for Disease Control (NCDC) via its National International Travel Portal (NITP). According to the NCDC guidelines, inbound travellers are to select an appointment date and laboratory for a repeat COVID-19 test to be done 7 days after arrival in Nigeria and then proceed to pay for it online.

However, investigations show that payments made by several passengers for the mandated COVID-19 test were not being processed through the stipulated national payment gateway as other payment processors have been introduced. This development is seen as a violation of the TSA guidelines which stipulated that all funds collection by federal government agencies should be done via the Remita TSA payment gateway.

“There is brazen flouting of TSA provisions going on as payments for the mandated COVID-19 tests are not transacted through the national payment gateway, Remita. One of the immedi-

ate repercussions of this is the complaints of payers boarding aircraft and being told their payments have not been approved,” a source said.

“Another consequence of this disturbing development is that when something goes wrong with the process, it is difficult to know where it is coming from since there are now multiple payment processors,” the source added.

Besides the NCDC and the Ministry of Aviation, several other government establishments have been accused of flouting TSA guidelines in the past. Prominent names include, the Nigerian National Petroleum Corporation (NNPC), Nigerian Immigration Services (NIS), Nigerian Ports Authority (NPA) and Nigerian Customs Services (NCS).

A media report by BusinessDay in June 2019 uncovered a private arrangement made by the NIS outside of the TSA for payments into accounts outside the Central Bank of Nigeria (CBN), raising serious questions whether the NIS, in fact, remits its revenue to the coffers of the government, makes full disclosures of monies received and makes itself available for revenue monitoring and audit as stipulated by the TSA.

Modestus Anaesoronye

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rucksPoint Logistics is offering to help over 1,000 Nigerian youths build capacity on agricultural value chain, ranging from product sales, logistic, and supply to end users.

This is part of TrucksPoint’s activities to mark the 20th anniversar y of Datapoint Microsystem, its parent company.

LuckyUduikhue, managing director, Datapoint Microsystems, said the training will be offered both online and physical and will cut-across the whole country.

“As part of the training, we are coming up with a mobile App which is going to be used to allocate and trace farm produce from r ural areas to urban cities. This will be made possible through the youths we have trained and with the support of our Truckspoint logistic n e t w o rk w h i c h w i l l b e used to transport the agricultural produce from rural to urban cities.

“The mobile App will assist accredited participants in the value chain

in subscribing to our services from the comfort of their homes,” he said.

Truckspoint is an online marketplace where Business Owners and the Tra n sp o r te rs ca n w o rk together in a transparent and mutually beneficial environment.

It is a place where peop l e ca n re q u e s t t r u ck s based on size, timing and need of their shipments.

With freight, hauling and logistics management ser vices at its core, the business has developed a reputation for its ontime and accurate service as well as sophisticated Web, App and software functionality, allow ing clients to align their busin e s s w i t h T r u c k s Po i n t trucking ’s ser vices and scheduling automatically.

Uduikhue added that Datapoint is going to employ the 1000 youths upon their graduation with its subsidiary Truckspoint.

He also announced the launch of Xpresspoint, an ecommerce and retail shops initiative that will be dealing on consumer goods.

“Xpresspoint is an online shopping and retail-

DBN advocate sustainability banking for MfBs

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s Nigeria and global communities continue to grapple with effects of climate depletion and economic uncertainties enforced by the covid-19 pandemic, Development Bank of Nigeria (DBN) has urged Microfinance Banks (MfBs) and other Participating Financial Institutions (PFIs) to improve sustainability efforts and become more responsive to social and ecological environment.

“Currently, the overall awareness of sustainability and its transitions for the microfinance ecosystem has not been clearly articulated in Nigeria due to the fact that most MfBs regard lending as the most essential service to be rendered to end-lenders,” Bonaventure Okhaimo, the chief operating officer of the DBN, stating that there is increased global attention on social impact and contribution of businesses to their environment and society.

This was the thrust of deliberations at a recent webinar session themed, “Creating a Sustainability Community of Practice

for Nigerian Microfinance Banks” which was organized

by DBN for MFBs and PFIs. According to Okhaimo, the initiative is focused on deepening DBN’s efforts to increase awareness on sustainability issues, and also positively influence its PFIs Sustainable Development Goals (SDGs) focused operations.

He opined that the webinar session was to initiate conversation around sustainability initiatives and implementation strategies for financial institutions in Nigeria. “...t2o have a more robust proposition about sustainability and open them up to myriad advantages, including external funding, generation of

deeper trust with stakeholders and legitimization of operations,” Okhaimo said.

Aisha Mahmoud, Special Adviser to CBN Governor on Sustainability, said deliberations on emerging issues of sustainability are important for the financial ecosystem.

According to her, MFBs by virtue of their mandate are already practicing the social pillar of sustainability by lending to the underserved sectors of the economy, but have to focus more on the environmental impact of their lending by looking into the activities and operations of their investees through a sustainability lens.

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er, with a strong customer base across different states in the country. We a re s p e c i a l i ze d i n Mo bile Phones, Computers, Gadgets, Consumer Electronics, Industrial Equipment, Fashion, Beauty, Ap p l i a n c e s, a n d m a n y more.

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16

Monday 14 September 2020

BUSINESS DAY

Business Event

Babajide Sanwo-Olu (3rd r), governor, Lagos State, his deputy, Obafemi Hamzat (2nd r); Kolawole Taiwo (m), chairman, IBILE Microfinance Bank Limited; Adegboyega Kazeem (3rd l), managing director; Abiola Masha (2nd l), executive director; Yemi Oni (l), director, and Bola Kazeem (r), director, and Abiodun Amokomowo, director, (behind), after a meeting with the governor on plans

by IBILE Microfinance Bank towards empowering MSMEs and stimulating financial inclusion among residents of the State.

L-R: Seun Ogunjimi, head, retail, Schools Kit Limited; Bayo Adepetun, director; Temilola Adepetun, managing director; Tayo Osiyemi, deputy managing director, and Fadekemi Sutton, head, human resources, during the 20th anniversary of Schools Kit Limited in Lagos. Pic by Olawale Amoo

L-R: Abidemi Shosanya, medical officer of health, Power Line Health Centre, Orile Agege LCDA; Lawrence Okoye, business manager, Akowonjo Business Unit, Ikeja Electric; Abisola Badejo, chief nursing officer, Orele Agege Health Centre, and Azeez Akinola, counselor ward A, Orile Agege LCDA, during the presentation of medical materials to the medical officer health, Power line, Orie Agege Health Centre Lagos.

Lion Adefunke Esan, president of Ikorodun Metro Lions Club (right), watching the instructor while she trains Leos in Ikorodun town on how to make Adire etc. This was an empowerment programme to celebrate the World Youth Day held recently in Ikorodun town.

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Monday 14 September 2020

BUSINESS DAY

17

COMPANIES&MARKETS Flour Mills of Nigeria declares 17% dividend increase at N1.40 per share Endurance Okafor

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lour Mills of Nigeria (FMN) Plc, owners of the popular Golden Penny Food brand and one of Nigeria’s leading food and agro-allied companies have declared a dividend of N1.40 per share after ending to March 31, 2020, on a strong note.

FMN made the declaration at the company’s 60th Annual General Meeting (AGM) in Lagos where its shareholders voted for the dividend payment.

The dividend which will be payable on Monday 14th September 2020 to shareholders, whose names appear in the Register of Members at the close of business on Friday 14th August 2020 will not be subject to withholding tax.

Meanwhile, the dividend of N1.40 per share is 16.67 percent higher than the N1.20 that was declared in the previous year.

The total dividend of N5.7 billion declared in 2020 is N800 million higher than the N4.9billion that was paid in 2019. According to the Vice-Chairman, Flour

Mills of Nigeria, Emmanuel A. Ukpabi, “the declared dividend was based on confidence in the business.” Despite prevailing economic headwinds and the difficult operating terrain of Apapa FMN finished the year strong with record 184 percent profit growth, as compiled from its audited 2019/20 financial results.

With a remarkable growth in all three key segments of Food, Agro-Allied and Sugar businesses, the 60-year-old company reported a Profit After Tax (PAT) increase by N7.4 billion from

N4 billion in the full year 2019 to N11.4 billion in 2020.

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

A breakdown of FMN’s 2020 financial revealed that its Agro-Allied division was a major catalyst in the growth record reported in the review year as the business segment

of the company reached profitability. This was largely due to the consistent and focused investments that have been made in its locally sourced segment over the last few years.

The management’s strategy has been to continue to stimulate organic growth in all segments of the business.

Flour Mills had invested about N95 billion in its agroallied business. The company in 2016 injected N45 billion in its Sunti Golden, one of only two sugar mills in the country capable of producing

Bank stocks gain by most in 3 months after CBN slashes interest rate on deposits LOLADE AKINMURELE

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igerian bank stocks gained by the most in three months Tuesday after the Central Bank of Nigeria (CBN) reduced the interest rate on savings deposits to a minimum of 1.25 percent per annum from 3.75 percent.

The rate reduction which became effective today (Sept.1) is expected to translate to increased profitability for banks as it reduces their cost of funds.

It means they can save money that would have gone into paying higher interest on savings deposits. Banks with already low cost of funds like Guaranty Trust Bank and Zenith Bank, are however expected to benefit the least from the new directive.

The banking index, which tracks the share price movement of publicly listed banks in Nigeria, was up 1.25 percent, with the big banks gaining the most in three months, according to data from the Nigerian Stock Exchange (NSE).

Ecobank gained the most with a 6.4 percent gain Tuesday, the biggest jump in three months.

United Bank for Africa (UBA) was also up 4.8 percent Tuesday while Access Bank climbed 3.23 percent.

First Bank was up 3.06 percent while Stanbic IBTC gained 1.25 percent. Zenith Bank and Guaranty Trust Bank rose 0.6 percent and 0.39 percent respectively on the day.

“Given that savings deposits account for around 20 percent of the deposit liabilities of commercial banks, the new directive should be positive for banks in terms of a slight reduction in their overall cost of funds,” analysts at Lagos-based investment bank, FBN Quest said in a Sept.1 note reacting to the new directive.

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crystalised sugar from locally grown sugar cane. This was an addition to the already invested N50 billion in a state-ofthe-art sugar refinery in Apapa capable of refining up 2 000mt of sugar per day.

“We will remain focused on increasing operational efficiency within the group as we continue to implement our accelerated cost optimization plans across all businesses to ensure profitability in the new operating environment,” Paul Gbededo, group managing director of FMN said.

18

Monday 14 September 2020

BUSINESS DAY

In Association With

The future of work

ABrexit Balkan betrayal law and international

Is the office finished?

Britain threatens to flout international law

The fight over the future of the workplace Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub

Boris Johnson’s readiness to break a treaty as a negotiating tactic is both foolish and dangerous

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OST PEOPLE associate the office with routine and conformity, but it is fast becoming a source of economic uncertainty and heated dispute. Around the world workers, bosses, landlords and governments are trying to work out if the office is obsolete—and are coming to radically different conclusions (see article).

Some 84% of French office workers are back at their desks, but less than 40% of British ones are. Jack Dorsey, the head of Twitter, says the company’s staff can work from home “forever” but Reed Hastings, the founder of Netflix, says home-working is “a pure negative”. As firms dither, the $30trn global commercial-property market is stalked by fears of a deeper slump. And while some workers dream of a Panglossian future without commutes and Pret A Manger, others wonder about the threat to promotions, pay and job security.

The disagreement reflects uncertainty about how effective social distancing will be and how long it will take before a covid-19 vaccine is widely available. But it is about more than that: the pandemic has revealed just how many offices were being run as relics of the 20th century, even as it triggered the mass-adoption of technologies that can transform white-collar work. As a result the covid calamity will prompt a longoverdue phase of technological and social experimentation, neither business as usual nor a fatal blow to the office. This era holds promise but also brings threats, not least to companies’ cultures. Instead of resisting change, governments need to update antiquated employment laws and begin reimagining city centres.

Two hundred years ago steam power brought workers to factories where they could use new machines.

As corporate giants emerged in the late 19th century, staff were needed to administer them. They held planning meetings and circulated memos, invoices and other paperwork to record

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T IS STAGGERING to see a British minister brazenly admit to Parliament that the government intends to breach international law. Yet that is what Brandon Lewis, the Northern Ireland secretary, did this week—even if he sought to qualify the move as “very specific and limited”. The plan in the proposed internal-market bill is to override parts of the Brexit withdrawal agreement, a treaty ratified only in January, that relate to trade between Great Britain and Northern Ireland.

Because it will remain subject to the European Union’s customs code and

what they had done. All this required workers to be close together and created the pattern of people commuting by car or train in order to meet in a central office.

This system always had glaring shortcomings, some of which have become worse over time. Most people hate the hassle and expense of commuting, which eats up over four hours a week for the average American worker.

Some dislike the noise and formality of offices, or suffer from discrimination within them. Office-bound workers find it harder to look after their children, a growing issue as more families have two working parents.

You might think that new technologies would have shaken up this unsatisfactory status quo. After all, the PDF electronic document was born in 1991, the cost of bandwidth collapsed in the 2000s, and Zoom and Slack, two firms whose technology powers remote working, are both nearly a decade old. Yet inertia has allowed the office to escape serious disruption. Before covid-19 struck, for example, flexible-office companies (including the troubled WeWork) had a tiny global market share of under 5%.

Most businesses were unwilling to switch wholesale to remote-working technologies before their clients did; or to write off sunk costs in the form

of property assets and leases.

Covid-19 has upended all this. Before the pandemic only 3% of Americans worked from home regularly; now a huge number have tried it. Even Xerox, a firm synonymous with office printers spewing unread pages, has many of its staff working from home.

As more people adopt remote-working technologies there is a powerful network effect, with each new customer making the service more useful. Together Microsoft Teams, Zoom, Google Meet and Cisco Webex now have well over 300m users. Bureaucratic hurdles to remote work have been blasted out of the way. Civil courts are operating remotely. Notaries have gone online and some banks have eliminated the need for new customers to enter a branch to confirm their identity and open an account.

How much of this change will stick when a vaccine arrives? The best available guide is from countries where the virus is under control. There the picture is of an “optional office”, which people attend, but less frequently. In Germany, for example, 74% of office workers now go to their place of work, but only half of them are there five days a week, according to surveys by Morgan Stanley. The exact balance will depend on the industry and city.

In places with easy commutes more

workers will go to the office; megacities with long, expensive journeys may see fewer.

Companies will have to adapt to this pattern of sporadic attendance in which the office is a hub, not a second home. There is a risk that over time a firm’s social capital erodes, creativity flags, hierarchies ossify and team spirit fades, as Mr Hastings fears (see article). The answer is more targeted staff interactions, with groups gathering at specific times to refresh friendships and swap information. New technologies that “gamify” online interactions to prompt spontaneity may eventually supersede the stilted world of Zoom. As they retool their cultures firms will need to rejig their property: sober investors expect a reduction of at least 10% in the stock of office space in big cities. With the typical corporate lease lasting at least half a decade, this will take time to play out.

For governments the temptation is to turn the clock back to limit the economic damage, from the collapse of city-centre cafés to the $16bn budget shortfall that New York’s subway system faces. Britain’s government has tried to cajole workers back to the office. But rather than resist technological change, it is far better to anticipate its consequences. Two priorities stand out.

single-market rules, special treatment is needed for the province to avert a hard border with Ireland. Reflecting the fact that there is no precedent for Britain unilaterally breaching an international treaty in this way, the government’s most senior legal adviser promptly quit.

What is Boris Johnson’s government playing at? It may be that he is resigned to Britain leaving the transition period on December 31st without a trade deal with the EU in place. The Brexit talks seem irretrievably stuck, so some in Downing Street now favour this option. Yet a kinder interpretation is that the prime minister is engaging in a tactical ploy to ratchet up the pressure on the EU. Threats to rewrite the withdrawal agreement are of a piece with his insistence that, unlike his predecessor, Theresa May, he will not blink at the last minute, and his claim that no deal would be a “good outcome” for Britain. By making no deal look more chaotic, he may hope Continues on page 19

Monday 14 September 2020

BUSINESS DAY

19

In Association With

Dreams of fields

The quest for secure property rights in Africa Handing out title deeds is not enough

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UILDERS ARE busy outside Louisa Qangiso’s house in Khayelitsha, a township on the outskirts of Cape Town. The 49-year-old is putting up eight studio flats in her backyard that she will rent out for 3,000 rand ($177) per month.

This could almost triple the value of her property, from roughly 570,000 to 1.6m rand. These are life-changing sums for Ms Qangiso, a grandmother whose warehouse job pays just 5,000 rand a month. “This is my dream come true,” she says, holding back tears.

The dream is reality because of Ms Qangiso’s grit—and because, unlike most people in the township, she can demonstrate ownership of her property. Aided by Bitprop, a startup, she proved her claim on the land, then used the title to raise money for the building works. Over the next decade she will split the rent with Bitprop, which also designs the flats, until its share is paid back. Thereafter the takings, as well as the increase in the asset value, are hers.

Ms Qangiso’s story encapsulates the latent power of property rights.

Twenty years ago Hernando de Soto, a Peruvian economist, published “The Mystery of Capital”, in which he argued that, without formal title, the real estate on which billions of poor people live and work is “dead capital”.

He estimated these assets to be worth $9.3trn ($13.5trn in today’s money).

Partly inspired by Mr de Soto, over the past two decades there has

been a flurry of attempts to map and parcel land in the developing world.

Between 2004 and 2009 the World Bank committed to 34 land-titling and registration projects worth more than $1bn, compared with three between 1990 and 1994.

Yet the potential of property rights remains largely unrealised, especially in Africa. Perhaps 90% of rural land in Africa is not formally documented. Just 4% of African countries have mapped and titled the private land in their capital cities.

Well-meaning reformers have often neglected the myriad other factors affecting whether titles are useful or not, such as custom, other laws and the capacity of the state to enforce people’s legal property rights. They have also underestimated the ability of vested interests, such as traditional leaders and urban elites, to obstruct

reform.

Covid-19 highlights the harm that insecure property rights cause.

Evictions and land grabs are rising, as newly jobless tenants cannot pay rent and bigwigs figure they can get away with skulduggery while everyone’s attention is on the pandemic.

The economic fallout of the coronavirus is so severe that some African countries face a lost decade. So they need growth-boosting reforms more than ever.

As history shows, land reform is hard. Policies in the colonial era varied, but white rulers often designated huge areas terra nullius (unoccupied land) and appropriated it for their colonies. Formal property rights were reserved for settlers and European firms. The rest of the agricultural land was given “customary” tenure, meaning it could be used but not

owned, and that it was always subject to seizure by the state. Colonists often ruled indirectly, via state-sanctioned “tribal” leaders who exercised control over the land.

After independence most African governments kept bifurcated systems. Urban elites replaced white colonists in state institutions. Customary systems in rural areas endured. Only towards the end of the 20th century did the notion of formalising more of the land take off. By this time the idea that a lack of property rights was a brake on development was commonplace.

Africa has half of the world’s usable uncultivated land, and its agricultural productivity is far below its potential. That is a huge drag on growth. Because people in the countryside do not have title to their land they typically cannot rent it out while they are away, and they may fear it may be taken by someone else. This discourages migration to the cities, where wages are higher.

Insecure tenure makes cities poorer, too. Dense urban populations normally make it easier for people to share ideas and find work. But African cities sprawl inefficiently.

The World Bank reckons that in some of them 30% of land is not built on, compared with 14% in, say, Paris.

Overlapping tenure regimes are one reason why. In Kampala, Uganda, a bewildering mix of freehold, leasehold, customary and “dual ownership” systems gum up formal land markets (see map).

A desperate despot’s dodgy deal

Will Putin save Lukashenko?

In exchange for Russian support, an autocrat prepares to sell out his country

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“

IRST THEY stole our country.

[Now] they are stealing the best of us.” So said Svetlana Alexievich, a Nobel prize-winning writer, of the rulers of her native Belarus. Since mass protests erupted after a blatantly rigged presidential election in August, riot police and plain-clothes goons have been beating up peaceful demonstrators. On September 7th, in broad daylight, men without uniforms abducted Maria Kolesnikova (pictured), one of three women leading the protests and the only one still inside the country. They threw her into a van and drove her to the border with Ukraine, like gangsters trying to drive a rival off their turf. Defiantly, she ripped up her passport, so she could not cross. She is now in detention in Belarus.

Ms Kolesnikova is being persecuted not only for her role in the protests but also, more importantly, because she is the leading member of the National Co-ordinating Council. This body was launched by Svetlana Tikhanovskaya, who probably won the election on August 9th but who has been forced into exile. It aims to negotiate a peaceful end to the unpopular dictatorship of Alexander Lukashenko. He has refused to negotiate, just as he has refused to talk to the German chancellor,

Angela Merkel.

He prefers to talk to Vladimir Putin, the president of next-door Russia, who props up his regime.

Mr Putin, whose own challenger, Alexei Navalny, has been poisoned by a nerve agent, has endorsed Mr Lukashenko’s rigged election and his use of violence. He has warned the West not to meddle in Belarus, which Russia has subsidised for many years and with which it has a common market. At Mr Lukashenko’s request, Mr Putin has pledged to support Belarus with his own law-enforcers if necessary. He has also dispatched propagandists to run its airwaves and consultants to manage the crisis.

Russia’s prime minister and finance minister have flown to Minsk to talk about an economic rescue package.

The West’s reaction has been divided, slow and weak. The Baltic states and Poland, which have had first-hand experience of Soviet occupation, have imposed sanctions on Mr Lukashenko and offered support to the Belarusian opposition. Germany and France, however, appear to have heeded Mr Putin’s warning to stay out of the dispute. The European Union has yet to impose any sanctions on Mr Lukashenko, though some measures are under discussion. Such caution about Belarus contrasts with bolder statements about Mr Navalny’s

poisoning from Mrs Merkel. She has pointed a finger at the Kremlin and raised the possibility of cancelling Nord Stream 2, a huge and controversial gas-pipeline project (see article).

The EU should speak up loudly about Belarus, and with one voice.

Simply warning Mr Putin against sending troops is not enough. A Russian invasion was unlikely from the start. Instead, Mr Putin wants the tottering Belarusian tyrant to integrate his country more deeply with Russia, giving Mr Putin control over its defence, internal security and certain key economic assets. In return, Mr Lukashenko might get an honorary post in Moscow some day. Russia might be hoping for a soft Anschluss.

That would be no more acceptable than Mr Putin’s annexation of Crimea, a Ukrainian peninsula, in 2014.

Belarusians have woken up. They will not submit quietly to Moscow’s rule and they continue to protest in vast numbers. They deserve support.

The EU should impose personal sanctions against Mr Lukashenko and his henchmen. And it must state that any agreement with Russia signed by Mr Lukashenko on behalf of the people who have clearly rejected him has no legal basis or validity. No one should recognise a dodgy deal struck by a desperate despot who would sell his country to save himself.

Britain threatens to flout international...

Continued from page 18

to force EU leaders to compromise in their rigid demand for a level playing-field on state subsidies (see article).

Yet such a tactical game is unlikely to work. As the world’s biggest market, the EU is a tough negotiator that does not commonly give in to threats. EU leaders know that the disruption and economic damage caused by no deal would be far worse for Britain than it would be for them. Faced with a similar prospect last year, it was not the EU but Mr Johnson who gave ground by accepting a separate status for Northern Ireland which implied customs checks in the Irish Sea. Moreover, to rewrite the withdrawal agreement unilaterally would undermine trust in the British negotiators. As EU leaders are already asking, how can they do a trade deal with a country that is talking of ripping up a treaty it agreed with them less than a year ago?

The ramifications of Mr Johnson’s threat to breach international law go wider than Britain’s relationship with the EU. Because his plan revives fears of a hard border in Ireland, it would go down very badly in America. Congress has already made clear that it will not ratify a free-trade deal with Britain if Brexit undermines the Good Friday peace process. The other prospective partners that post-Brexit Britain hopes to do trade deals with will be similarly deterred by the sight of it breezily overriding international commitments. Mrs May was right this week to wonder how other countries could now be reassured that Britain can be trusted to abide by its legal obligations.

Britain is a proud founding father of international law. If it is seen to be flouting it, that will only encourage others who dislike the concept (Vladimir Putin? Xi Jinping?) and would prefer to escape any constraints that it imposes. The Chinese press was quick to report the British case; China imposed its new security law unilaterally on Hong Kong. It would not be too far-fetched to expect other countries to think of their own cases. Spain, for example, might wish unilaterally to revisit the Treaty of Utrecht of 1713, under which it handed sovereignty over Gibraltar to Britain.

20

Monday 14 September 2020

BUSINESS DAY

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Monday 14 September 2020

BUSINESS DAY

21

real sector watch

Review lending rate, waive import duties on inputs, MAN tells FG Gbemi Faminu

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he Manufacturers Association of Nigeria (MAN) has urged the federal government to review the interest rate and waive import duties on active pharmaceutical ingredients (APIs) and food-related raw materials to support the manufacturing sector reeling from coronavirusrelated challenges.

Speaking during the association’s 48th Annual General Meeting held in Lagos last week, Mansur Ahmed, MAN president, said that the COVID-19 pandemic created unprecedented challenges in the global and local economies, leading to an economic shutdown and a halt in manufacturing activities, including low productivity, job losses, decline in consumer demand, and a general deterioration in living standards.

“Support manufacturing concerns by reviewing the terms of existing loan facilities, especially reducing interest rates to five percent with two years moratorium.

Manufacturers that are investing in order to scale production should be granted loans at five percent interest rate for a period of five to seven years,” he said.

L-R: Isaac Ade-Agoye, national treasurer, Manufacturers Association of Nigerian (MAN); Mansur Ahmed, president, and Ambrose Oruche, acting director general, during the press briefing at the 48th annual general meeting of MAN in Lagos.

Pic by OlawaleAmoo

Ahmed said regulatory agencies must aid the revival the manufacturing sector through necessary reviews and palliatives, following the impact of the coronavirus on the business environment.

Mansur further said that manufacturers were yet to recover from the impact of the pandemic and weeks of the lockdown, stressing that many sub sectors collapsed to the point of almost shutting down.

He implored the government and regulatory agencies to support the sector through the provision of stimulus packages, reversal of the Value Added Tax rate to five percent, review of existing loan facilities, waiver of import duties and demurrages, among other things.

He urged the CBN to extend its COVID-19 stimulus packages to manufacturers not covered by

Manufacturers, analysts hail new electricity tariff but question its timing Gbemi Faminu

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he Nigerian Electricity Regulatory Commission (NERC) recently raised electricity from N30.23 for one kilowatt unit of energy per hour (kwh) to as much as N62.33—representing more than 100 percent hike.

It is a service-based tariff system that aims to remove subsidies in the sector and ensure that consumers pay for their electricity.

Analysts and manufacturers say the policy of liberalizing the electricity market is good, but question its timing.

Ayodele Oni, partner and chairman, Bloomfield Law Practice, energy and natural resources practice group, said the tariff increase, although commendable, was wrongly timed. He said if there was economic prosperity the increase would not be met with so much resistance.

“The increase is commensurate with the quality of service to be received. For manufacturers, although this will increase their cost of production, the final consumer will have to bear the brunt in the form of increased prices,

and this might reduce the volume of sales considering the declining purchasing power of their clients,” he said.

“What manufacturers can do is to self-generate their own electricity and probably disconnect from the distribution companies if they are not encouraged by the tariff increase.”

Ambrose Oruche, acting director-general, Manufacturers Association of Nigeria (MAN), in a telephone interview with BusinessDay, said that the increase should be reviewed for manufacturers as it could lead to the foreclosure of some companies and productivity decline in the sector, noting that they were yet to recover from the impact of the pandemic and the lockdown.

“Energy is about 40 percent of the input used in some companies in the manufacturing sector. Once the prices of electricity go up, prices of goods and services will increase, consumers will no longer be able to make purchases as inflation will surge. In the process many manufacturing companies could shut down,” he said.

Many Nigerians say the new electricity tariff would crimp their purchasing power, but on the flip www.businessday.ng

side it liberalises the electricity market and cold guarantee availability of power. In the long run, electricity may be cheaper if customers are metered by DisCos. Vincent Nwani, a Lagos-based economist, said the increase is coming at a period when Nigerians were suffering from the pandemic and its negative and the government was yet to fulfill its promise of providing adequate electricity as promised.

“The issue is not about the price now, it is about constant availability. If they get value for their money, manufactures are ready to pay regardless of the increased rate. However, when they have to pay for electricity and also spend so much on self-generating power, it becomes a burden on businesses,” he explained.

Lai Mohammed, Minister of Information and Culture, had said at a press conference in Abuja on the recent increases in petrol and electricity prices that the increase was necessary to reduce the government’s expenditure on subsidising tariffs.

Ike Ibeabuchi, a manufacturer, said would be beneficial at the end but criticised its timing during a pandemic.

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existing CBN initiatives and also grant manufacturers increased access to the foreign exchange at pre-COVID-19 rate to support the importation of raw materials, machines, and spares that are not available locally.

Mansur equally called for the introduction of fiscal measures by waiving import duties on inputs, while exempting manufacturers from demurrages payable

between February and July 2020, especially those occasioned by the lockdown directives of government and others associated with the COVID-19 management.

He urged the federal government to direct all regulatory agencies to prioritise the request of manufacturers and also carry out their roles with empathy and while reducing their respective administrative charges by 50 percent.

Similarly, he said that the timelines for filing and paying taxes should be extended by six months after the economy returns to normalcy, adding that the excise duty should be based on sales and not production.

Mansur noted that in order to improve the disposable income of consumers, stimulate consumption, promote an upsurge in demand and increase production output, it was necessary to reverse the VAT back five percent and also reduce the Personal Income Tax to a flat rate of 10 percent for a year.

Mansur also commended members of the association who donated no less than N8 billion in cash and N300 million naira worth of palliative materials to both federal and state governments despite the decline in business activities.

Bureau of Foreign Trade Taiwan, others to host plastic, rubber machinery summit Josephine Okojie

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he global production of plastic products continues to rise due to increased demand for automobiles and consumer electronics, medical treatment, packaging, and construction, thus driving the demand for plastic and rubber machinery.

To help international plastic and rubber manufacturers face the future growth in plastic production demand, the Bureau of Foreign Trade (BOFT) Taiwan, R.O.C, and the Taiwan External Trade Development Council (TAITRA) are set to host a virtual plastic and rubber machinery summit.

The summit with the theme ‘Taiwan Excellence Plastic & Rubber Machinery’ is scheduled to hold on September 17, 2020.

Taiwan’s plastics and rubber machinery are internationally renowned and, according to the Taiwan Association of Machinery Industry (TAMI), its exports rank sixth in the world making it a global leader in related industries.

It’s plastic and rubber machinery industry has been developing for more than 50 years with a complete industrial cluster and is known for its sophisticated technology and @Businessdayng

high-quality after-sales service.

Currently, there are about 400 plastic and rubber machinery manufacturers in Taiwan.

In response to the trend of Industry 4.0, Taiwan’s plastic and rubber machinery industry combines Taiwan’s strong ICT strength, AIoT, intelligent automation, intelligent sensors, and advanced manufacturing technologies to build ‘smart, high-end, custom-made’ production solutions, making it an indispensable part of the plastic & rubber global supply chain.

Although COVID-19 severely disrupted economic activities and production planning in the first half of the year, but the pandemic has been ebbing, with countries gradually lifting lockdowns and people resuming to work, which is expected to increase machinery demand.

Four leading Taiwanese plastic & rubber machinery companies including Fu Chun Shin Machinery Manufacture Co., Ltd. (FCS), ChumPower Machinery Corp., Fong Kee International Machinery Co., Ltd., and Diing Kuen Plastic Machinery Co. Limited will present the latest trends and the newest technology, from injection molding machines and blow molding machines to extrusion machinery to buyers and media worldwide.

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Monday 14 September 2020

BUSINESS DAY

INTERVIEW Innovations will drive needed recovery to boost Nigerian hospitality & tourism industry Over the last 13 years, OLAOLU AKINGBOLA, managing director/principal consultant, Anchor Point Hospitality, has been professionally engaged in delivering hospitality customer service and support with recognized strengths, in brand culture training, financial management, quality assurance compliance, driving revenue strategies, and implementing operating procedures and executing market positioning initiatives. In this interview with BusinessDay analyst, MICHAEL ANI, he speaks on the recovery path for the battered tourism and hospitality sector as well as plans to enter into the Nigerian market.

G

ive us a rundown on your operations at Anchor Point Hospitality Anchor Point Hospitality creates lasting impressions through innovation and originality.

Our operations ideally are broken down into three major parts, each with a distinctive structure of tailored solutions unique to the market and the specific needs of our owners and developers.

1. We offer a targeted approach to hotel development, providing would-be hotel owners with a comprehensive and robust approach to hotel development, with our core focus in the developmental stages being, the guest experience, investor returns, and a design that supports operational efficiencies, all of which are important considerations to support a responsible business engagement which guarantees investor returns and satisfaction.

2. We offer hotel management services; Anchor Point Hospitality is able and equipped to profitably manage the overall operational infrastructure of a branded or independent luxury hotel on behalf of owners and investors. At Anchor Point Hospitality we believe in heartfelt service, attention to detail and the ability to create a personalized and local experience for our guests and patrons, which is the key to creating a sustainable brand identity. We also believe in financial responsibility which fosters profitable business practices, and ultimately in the development of human capital creating a fun and engaging workplace. As a thirdparty management company, our approach is a personalized and respectful one. The individual needs of each property in our management portfolio are taken into careful consideration and are critical in creating an effective partnership.

Anchor Point Hospitality’s flexibility is a company staple, prevalent across all segments of the business, but nowhere more significant than in the area of property management.

3 We offer Advisory services to hotel owners, we specialize in the provision of advisory services to the hotel, tourism and leisure industries, providing a full range of consultancy services to our clients who have investments in the sector, or who are looking to enter them through development, acquisition or by other means.

We offer a comprehensive range of advisory services and solutions tailor-made and specific to each project and market location. We assess the desired goals of our clients, prepare a tailored strategy, and efficiently execute our recommendations; which results in streamlined concepts that are local, improves hotel use, financial results, and

ness? Is that part of your operation?

We do not inject liquidity into the assets we manage or assume any liability; we invest human capital and our know-how which is an extremely valuable asset to the business we support. We are a service provider at our core.

Olaolu Akingbola

overwhelming guest satisfaction and brand loyalty.

Is it mere coincidence that your company is entering into the Nigerian market at a time when hospitality players are taking cautious stands due to the pandemic.

What are you seeing?

It is somewhat a coincidence that our market entry is aptly timed, I believe now is a time where hotel owners can benefit from the wide array of services we provide. The market requires hotel owners to reconsider business and commercial plans, as well as to re-evaluate daily operations, and the most important one being market positioning. So If you are an owner, asset manager, management company or operator and need short or longterm management support, we can assist with professional, low-key, non-disruptive, and non-intrusive in-depth reviews and assessments of your operations, revenue enhancement, marketing, market analysis, financial controls, food & beverage, and team-building concerns. We will prepare a clear, simple yet detailed brief with specific action plans for effective results or if you choose, we can implement the recommended solutions ourselves. Additionally, we can also provide short term or long term management services during a transition period such as this.

Why the Nigerian market?

Why not? the Nigerian market is rapidly growing and it’s projected to continue to grow, now 2020 may not be the best representation of this growth, but subsequent years will see significant growth in tourism receipts and domestic travel, with tourism accounting for about 5 percent of GDP, we want to be a www.businessday.ng

resource to our clients to prepare them to take advantage of this projected growth using strategic analysis.

Your operations are centred in the U.S and West Africa, can you tell us your success stories in the various markets where you operate Anchor Point Hospitality is a strategic partnership and alliance of highly successful, proven, and professional hoteliers dedicated to the single goal of supporting and operating hotels to maximize their performance.

Our depth of combined industry expertise encompasses years of producing results by enhancing asset value regardless of conditions or circumstances, while at the same time creating exciting environments where our associates thrive and our guests become lifetime friends.

A hospitality investment is a complex vehicle requiring each aspect to be not only performing at peak effectiveness at all times but most importantly, to be synergistically in concert with all other disciplines of the operation to ultimately produce the required return on investment. This requires attention to detail, sound leadership, technical know-how, and a team of proven experts who enthusiastically work well together to achieve a common goal of producing extraordinary results through extraordinary service and sound marketing techniques.

This has been our story and continues to be our realities, as we engage and take on new clients and opportunities in the markets we operate in.

In your operations in dealing with clients, do you also inject capital into the busi-

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The hospitality sector is one of the hardest hit with the impact of Covid19. What do you think industry players, as well as the government, can do to lessen the impact of the pandemic on the sector?

The coronavirus (COVID-19) pandemic has triggered an unprecedented crisis in the tourism economy, especially in Nigeria given the immediate and immense shock to the sector accompanied by very strict lockdown measures implemented by the Government.

The Government and stakeholders can play a major role to lessen the impact of COVID-19, by making investments into the sector to promptly restart operations safely.

The impact of the crisis is being felt throughout the entire tourism ecosystem, and reopening and rebuilding destinations will require a joined-up approach. Tourism businesses and workers are currently not benefiting from any economy-wide stimulus packages, In Nigeria, if this is implemented it will go a long way in sparking a quick recovery.

Also, there are some specific measures, the Federal, and Local Governments in concert with industry partners should focus their efforts on: Lifting all travel restrictions and working with businesses to access liquidity supports, apply new health protocols for safe travel, and help to diversify their markets.

Restoring traveller confidence and stimulating demand with new safe and clean labels for the sector, information apps for visitors, and domestic tourism promotion campaigns.

Preparing comprehensive tourism recovery plans, to rebuild destinations, encourage innovation and investment, and rethink the tourism sector.

The pandemic has taught businesses to adjust their operations to the new normal, and we believe hospitality players are not left out. How can they rethink their business strategy to adjust to the post COVID era?

I believe innovation will drive the recovery we seek, the hospitality industry by design encourages operators to be adaptable, that said there are different variables at play here and most hotels will have to review their business mix and re-evaluate @Businessdayng

the commercial plans they have.

The focus for every hotel operator should be the domestic traveller, as they will be the key to recovery.

From your over 13 years of experience in the sector working in various clime, what can Nigeria learn from others that would spur growth in the hospitality sector?

I think Nigeria has come a long way in the development of the human capacity needed to service the surging demand for talent in our market, however, more investment is needed in developing local talent with the specialized skills needed drive exceptionalism in our industry, which in turn, will help hotel owners and investors save money by limiting the need to import expatriate talent.

As MD of Anchor Point Hospitality, what would you say is your biggest achievement(s) I would have to say putting the infrastructure and faculty in place to ensure that our hotel owners will be supported by a sophisticated infrastructure, and a highly experienced management teams, who understand how to tackle and resolve the core issues of optimizing revenue across the spectrum; from increasing room sales, upgrading F & B revenue, maximizing meeting and conference opportunities, and enhancing the unique image and positioning of the hotel properties we support.

Putting up a team to render quality services like the one you do, require funds. What is your source of funding and who are the shareholders behind your company.

We have been able to secure the initial capital required to establish the shared services platform that forms the core of our service offering to include an ERP solution provided by Oracle Technologies which will support our accounting, forecasting, and budgeting functions. These shared services help us to reduce costs for all hotels in our portfolio.

Our main source of funding comes from our fees, we tailor our fees to mirror the needs of clients, our management agreements charge a base fee of 2.7 percent of total revenue or a predetermined minimum flat fee, in addition to that we tie our success to that of the owner by charging the bulk of our compensation in incentive fees which ranges from 8-10 percent of GOP, what that simply means is that if the owner is not making money, we are not as well. We also charge a minimal fee for implementation and shared services which are determined when the contract is executed.

Monday 14 September 2020

BUSINESS DAY

23

FEATURE

Inside Nigeria’s bitumen irony These are 21 million people that this country is responsible for we and accountable to. We owe it to these people to make it work.

This is a step in the right direction. This policy is something to be excited about but there no denying that it is also something to be anxious about. This is not the first time bitumen has gotten attention. This is also not the first time a policy is approved for projects which end up shelved and left to gather dust.

OLUWAMAYOMIKUN DEJI-OMOTAYO

Nigeria is home to the second largest bitumen deposit in the world; spanning about 120km.

Nigeria is also home to some of the worst roads in the world.

I

How ironic. n July 2020, the Minister of Works and Housing, Babatunde Fashola revealed that the Federal Executive Council (FEC), with the President Muhammadu Buhari presiding, approved a new policy on the local production of bitumen. The apparent need for this new policy emerged from the review of a policy memorandum which revealed that a substantial amount of the bitumen used in road construction in Nigeria is imported; costing billions of dollars. The aim of the new policy is centred around further diversifying the economy and stimulating growth through the local production of bitumen.

Somehow caught unaware by the obvious …

In Ondo state alone, about 16 million barrels of bitumen are available for extraction. The bitumen reserves in the country are estimated at about 42.7 billion metric tonnes with the expectation that the locally produced bitumen will be sold at less than 50% of the current price of imported bitumen.

This places the local industry at an advantage with an available supply at a cheaper rate to service the existing demand for bitumen of about 500,000 metric tonnes.

Billions of dollars are leaving the nation’s coffers annually to pay for value we have the resources to create ourselves.

Bitumen was first discovered in Nigeria as far back as the 1900s with the first exploration efforts made in 1905. Bitumen has always been here. We have been aware of its existence for over a century so the need for exploration should have been birthed alongside its discovery, given its importance.

There is an abundance of bitumen deposits in the country and a billion-dollar market exists for it to be traded, yet, there has been no sufficient and lasting effort to explore this resource for many decades. Leaving these reserves untapped does not limit the conversation to what we could generate if only we harnessed this growth potential – the opportunity cost- but it also creates room to shed light on the other costs of this inaction; the environmental damage. It is quite interesting to discover that the earth is practically bleeding bitumen and begging to be exploited. In bitumenrich environments, the people

are faced with the challenge of a degradation of their farmlands and the quality of their arable soil.

Bitumen can be found so close to the surface that it actually seeps through.

Communities in Ondo state, where the largest bitumen deposits in the country can be found, have been crying out for years for investors to flood their communities and bring about growth, development, employment and generally a better life for the citizenry by utilizing their wealth of natural resources. These communities have been trapped in a vicious cycle of unmet expectations and dashed hopes.

When we look at this plainly, we see that in the failure to offer them the chance at a better life, we are inadvertently eroding the quality of their current one.

These are not new discoveries.

These are not new problems.

So, as exciting as the new directive for local exploration of bitumen is, it gives rise to question “why now?”. We have clearly waited all this time so why now?

Resource curse … who will deliver us?

There has been more chatter about bitumen exploration in recent years and steps taken geared towards this vision. In 2017, the Ondo state government was awarded an oil block license to explore bitumen to kick-start something new.

The general attitude appears to be leaning towards the idea of Nigeria having found her new “black gold”. However, I do hope with every ounce of my being that we do not handle bitumen with the same manual that we did crude oil, otherwise, we would be back here having these same conversations in a few years; we might forever be searching for something new.

It has become impossible to www.businessday.ng

speak of the Nigerian economy for all that it is in its glory and its setbacks without oil strutting its way to the centre of the discussion.

There is no denying that for the last 50 years, the country’s economic performance has been pegged to the performance of crude oil in the global market. This overdependence on oil over the years, has robbed us of much economic autonomy, so to speak. There has been little control over the dictates for the nation’s economic direction because the economic health is largely tethered to external influences beyond the control of internal policies. This one natural resource has made up over 90% of the nation’s export earnings and about 70% of government revenue. With every crash of global oil prices, the Naira bleeds and the country weeps.

We must avoid the same fate for bitumen at all costs.

Our abundance is the source of our insufficiency.

It is the paradox of plenty. We have plenty of natural resources available to us but we have been unable to successfully achieve that translation to wealth and economic growth. Perhaps, we can say it is a form of complacency; the presence of that urgency to succeed has been lacking. This abundance creates the illusion of wealth by default but all that we have truly had this whole time is simply the potential to create said wealth, which we have left largely unexplored.

The policy makers are aware of this. Hence, the many visions, plans, policies and initiatives over the years; the most recent one: the “Made in Nigeria” capacity.

I maintain that the threat to national development so far is not at all for want of ideas, vision or resources. All of these things and more are present in this country in impressive amounts but where is the synergy? This lack of synergy is

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what makes for the crooked path between ideation and implementation. This is where things often go awry: that gap between what is said and what is actually done, the gap between what should be and what actually is. If Nigeria was solely a reflection of all the great ideas she has churned out, the rest of the world would be running to catch up.

It’s been said. Will it be done? …

The doors for local exploration of bitumen are open. Now what?

Investments. Jobs. Income.

Growth. Development…Or not?

It is imperative that this policy be utilized to achieve the maximum possible social benefit and not to further profit the rich at the expense of the poor. The wide gap between the private costs and benefits compared to the social costs and benefits is where corruption has found a home in this country. Social objectives: job creation, human development, poverty alleviation, etc. are often trampled and thrown aside to be replaced by supernormal private profitability.

The Minister of Works and Housing, Babatunde Fashola, has called for the private sector to take advantage of this new provision with the hope of creating employment for thousands.

This can work.

All parties involved have a responsibility to the country to make this work. Nigeria is a country with so much character and personality that we must always look beyond the numbers and the seemingly abstract and find the people. There are over 21 million people without jobs in this country, without a stable means to put food on their table. Real people with faces and names having a hard time trying to build a life for themselves and their families. @Businessdayng

Not another Niger Delta please …

The hotspot for the exploration of bitumen is Ondo state. We have seen what happened to the Niger Delta as a result of the exploration of crude oil. It will not be out of place to say that it brought more problems than benefits to that region.

It would be quite embarrassing if there is a repeat of this in the bitumen-rich regions. We must protect these communities opening their homes to investors and development. Corporate costs should be reflective of the true costs of their production activities; this is inclusive of the costs of sustaining the environment. Investors must be held accountable for the resultant effects of their actions and understand that they are visitors in a place that people call home and the aim should be a win-win situation for both parties. These communities should benefit from the exploration of their resources and private sector should be required to conform to socially responsible behaviour.

So much promise …

Manufacturers lose over ₦20bn annually due to the poor state of the roads in the country and the country loses over a trillion naira annually because of this. It is quite frustrating to be faced with this problem when we have an abundance of the main component of our solution.

We have the second largest deposit of bitumen in the world.

That is a lot.

We could supply bitumen to build roads across the globe. We could tap into the billion-dollar market and grow our export earnings.

We could literally build a better Nigeria, one road at a time, help to build a better world; the whole time creating jobs and bettering the lives of Nigerians. Imagine that.

The trick, however, is also not to become overly dependent on this new black gold or another 50 years from now we would be back here, same problem, same weak solution, different resource.

Rinse and repeat.

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Monday 14 September 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Warren’s words of wisdom the long term that stocks have shown their ability to outperform many other asset classes.

“Whether we are talking about socks or stocks, I like buying quality merchandise when it is marked down. That’s what value investing is all about.”

When things are on sale such as clothes, household items, we tend to rush out to buy at a discount so why should we act differently when it comes to stock?

We should look out for “sales” in the same way.

To recognise quality merchandise and stock, do your research too and seek professional advice to ascertain the true intrinsic value of your purchase.

This measure is arrived at through an objective calculation and not its currently trading market price.

“Nothing sedates rationality like large doses of effortless money. Successful investing takes time, discipline and patience.”

This speaks to a culture of wanting to “get rich quick”. It’s about instant gratification and wanting to make money right now and with little or no effort.

Yet the most successful investors will tell you that it takes discipline, time and patience to build and sustain wealth. This is not just true about investing; it is true about life. True sustained success comes from vision, planning, hard work, and patience.

“It’s better to hang out with people better than you. Pick out associates

If you ‘don’t find a way to make money while you sleep, you will work until you die

‘

L

egendary investor, Warren Buffet, celebrated his 90th birthday last week.

For decades, the investing community has enjoyed his deep insights into the world of investing and indeed about life as he dishes out priceless nuggets. Here are some of my favourites: “You want to be greedy when others are fearful and you want to be fearful when others are greedy.’’

The impact of emotion is often underestimated when it comes to investing. Yet two emotions are dominant market drivers in the stock market: Fear and greed. To be a successful investor, one must be in control of one’s emotions.

It is usually in an atmosphere of fear that investments are sold at bargain prices. Fear creates panic selling, which forces prices downward regardless of a company’s prospects. This provides a buying opportunity for the astute investor ready with cash to buy up the stocks that others are dumping. Ultimately, that long-term economic value will eventually pull the stock price back up in line with its fundamental realities; if a business does well, its stock is likely to do well.

Sadly, for investors who bought in the overheated market, it can take an extended period for the value of even the most outstanding companies to catch up with the price that they paid. They are also limited in their ability to take advantage of opportunities, as cash is tied down in vastly devalued portfolios.

“Diversification is a protection against ignorance. It makes very little sense for those who know what they are doing.”

This is contrary to the popular strategy of diversifying risk, or not putting all your eggs in one basket.

Warren Buffet leaves diversification to those who do not fully understand what they are doing or perhaps don’t have large sums to

invest. After carefully studying an interesting company, he can confidently invest a significant sum.

The idea is that such conviction will cause one to focus and do the necessary homework before investing, and closely monitor thereafter.

“Investment must be rational. If you don’t understand it, don’t do it.”

Warren Buffet spends time and effort studying interesting companies so that he can make an informed assessment of their long-term prospects.

Financial disasters tend to follow ignorance and greed; if you invest without understanding what you are investing in or because they worked last week for somebody else, the stock market can be merciless.

It is important to understand what you are doing, or seek help from those who do. Do your homework and research on businesses in which to invest. Be rational in your investing journey and stick to what you know. “Risk comes from not knowing what you are doing.”

“Only buy something that you’d be perfectly happy to hold if the market shuts down for 10 years.”

This speaks to investing for the long-term. A longterm approach to investing will keep you on track in a bear market because you are invested to meet long-term objectives. If you put your short-term funds in the stock market, you are more likely to lose your money as volatility is a given in investing. It is in

whose behaviour is better than yours and you’ll drift in that direction.”

This encourages us to surround ourselves with the right people. There is an adage that says “You are the average of the 5 people you spend the most time with”. If you and your friends live without purpose and discuss only frivolities, seldom adding value to one another, either you all need to change your behaviour, or you need new friends! Choose people that encourage you, are ambitious, empower you, support you and of course, remember that relationships should be reciprocal; you must do

the same.

“I believe in giving my kids enough so they can do anything, but not so much that they can do nothing.”

If you spoil children or over indulge them, you could be making it very difficult for them to be successful adults. Teach them to value money, and the importance of hard work, saving, investing, giving. Guide them in earning from their passion and talents. Children who have been groomed in money matters early, are more likely to become well adjusted and financially responsible adults.

“If you don’t find a way to make money while you sleep, you will work until you die.”

Financial freedom is attained when you can work because you want to and not because you have to.

If you are serious about financial freedom and security, then do embrace the passive income machine.

Passive income generally includes income that is not directly related to your daily activity and which you can generate without having to actively work for it; in fact, your money is actually working for you with no extra effort on your part, apart from the act of active investing.

Creating a passive income stream takes time, effort, discipline, and consistency at the beginning of the cycle before it becomes passive. It will involve disappointment, failures and frustration, but if you invest your time and effort upfront, it can be the most fruitful and worthwhile investment of your time, as it continues to pay you long after the work has been completed.

“The difference between successful people and really successful people is that really successful people say no to almost everything.”

We must all learn to set boundaries for ourselves.

For most ambitious people, we want to accomplish things. We are driven for results, doing more, learning new things, starting a new venture, starting a new role etc. We also have our personal lives and family priorities, social commitments, as well as the pursuit of interests

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@Businessdayng

and hobbies; these all need focus for balance and fulfilment.

Perhaps we need to simplify our lives. This means saying no to some of the unimportant things that come our way to distract us, and staying razorfocused on those things that truly matter.

The Coronavirus lock down ought to have highlighted this to us all; what truly matters. We must be careful not to go back to that frenetic lifestyle that we all let. Learn to say no.

“Invest in as much of yourself as you can, you are your own biggest asset by far.”

Investment in self is the greatest investment of all!

You are your greatest asset. Invest in yourself constantly and be proactive about developing yourself both personally and professionally.

We live in a world that is in a constant state of flux. This presents both opportunities and challenges. You should always be learning, growing and adapting to the times. By continuously growing and learning, you will naturally become a better person; you also become more invaluable. Warren Buffet spends time learning and on personal development; yes, even at the age of 90.

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

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

Monday 14 September 2020

BUSINESS DAY

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Monday 14 September 2020

BUSINESS DAY

Government Enterprise & Empowerment Program

Brought to you by

Africa’s most impactful financial inclusion programme: Why GEEP works odinaka Anudu

C

hief operating officer, GEEP, Uzoma Nwagba, showing the programme’s live activity to the vice president, YemiOsinbajo, at the GEEP Command Centre Abuja.

GEEP is beyond a social good. It is a matter of economic security. It is a more direct effort of the federal government to break the multidecade jinx of economic growth without shared prosperity.

MSMEs contribute 50 percent to Nigeria’s GDP and accounts for 86.3 percent of jobs (59.6million jobs in 2017), according to a report by the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).

Over 85 percent of Niegria’s 41.5 million MSMEs cite ‘access to finance’ in their top three challenges, as only 0.4 percent of banking loans in 2017 were lent to this microenterprise segment.

GEEP’s beneficiaries are of this segment often-neglected by traditional banks unwilling or unable to handle scale and informality.

They are the Nigerians for whom ₦10,000 to ₦300,000 represent a complete turnaround in their businesses and livelihoods. And with the power of biometrics, a BVN as digital collateral, mobile data capture, mobile wallets, and a 4000-strong agent network, GEEP has been able to properly target, document, profile, and deliver credit to 2 million people in this demographic.

GEEP’s achievement – and continued mission – remains to provide access to finance, and sustainable financial inclusion, and to do this at scale. The programme is making good on this agenda. Recently, it was awarded the most impactful financial inclusion programme in Africa at

the African Bankers’ Award. It also gained recognition at the 63rd UN Commission on the Status of Women, where the executive director of the Micro Enterprise Division of the Bank of Industry, Toyin Adeniji delivered a presentation which showed how GEEP is being deployed using technology and how beneficial it has been for empowering women.

Since its inception in 2016 GEEP has served and strengthened over 4,084 cooperatives with GEEP loans nationwide, enabled the creation of over 1.4 million new mobile wallets, and 350,000 new bank accounts, provided job for over 5000 people who are now GEEP agents nationwide, and, thus expanded agency banking.

Over 55.41 percent of beneficiaries are women, and the programme has footprint across all 774 local governments across the 36 states and the FCT. GEEP has proven to be a sustainable model for driving financial inclusion and ensuring easy access to affordable capital in Africa; here are a few reasons why GEEP works: Last Mile Focus driven by largest agent network in Africa The majority of GEEP beneficiaries have not used financial services before; see going to the bank as very expensive inconvenience, and have a natural aversion to technology. Bearing this in mind, GEEP uses market cooperatives and field agents as an acquiring structure. Every single day, over 5,000 agents go to the markets across the 774 LGAs across Nigeria to register petty traders at their point of trade. This has enabled GEEP register over 7 million MSMEs in Nigeria, over 2 million of whom have benefitted from the GEEP loans. It has also allowed the programme gain scale; visiting over 1,600 markets since inception.

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Agbo Nnenna

Extensive KYC and data validation via mobile forms GEEP agents are equipped with proprietary application that enables full registration and capture of applicant data e.g. biodata, information on the market, nature of trade, GPS coordinate of the trade point, association member and all other data that enables credit assessment. Data on every captured beneficiary are delivered to Bank of Industry real time to enable verification, appraisals and credit assessment. While captured beneficiary data go through several points of verification within the system and against connected third party data sources, the beneficiaries only involvement is a call from one of GEEP’s 120 GEEP call center representatives to confirm their profile details.

Mobile Wallet, Bank Account Disbursements and automatic loan booking There is no need for further documentation; every verified applicant who does not have a bank account immediately has a mobile wallet created for them.

Disbursements are made into the bank accounts or mobile wallets.

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This allows every loan disbursed to be booked automatically on a core banking system that is plugged to all commercial banks in the country. Consequently, every loan given out on the programme can be traced to a beneficiary involved in a known trade, at a known location, within a known market association, cooperative or farming cluster.GEEP works with mobile wallet operators and all banks to ensure seamless disbursements.

Ubiquitous repayment options and automatic qualification after repayment GEEP makes it easy for beneficiaries to repay the loans by breaking it down into weekly repayments (for marketmoni and Tradermoni loans) or allowing farmermoni beneficiaries pay during the season of harvest. Beneficiaries can walk into any bank in the country and make repayments the same way they make utility bill payments.

GEEP also developed repayment scratch-cards for beneficiaries much farther away from banks.

Beneficiaries purchase the cards in their local markets and load them as they would a Telco recharge

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card. This immediately credits their loan account. Also,when beneficiaries take a loan and pay back, they automatically qualify for the next higher amount. Each new loan requires simply dialling a USSD code. Disbursements happen in minutes into their mobile wallets or bank accounts.

Partnerships GEEP has leveraged partnerships to scale. The Bankers’ Committee, a body that represents all commercial banks in Nigeria donated phones to the program.

These phones have been given to qualified beneficiaries who didn’t have phones and thus would have been unable to participate in the program. Airtel also donated free sim cards to go with the phones.

Good partnerships with other ecosystem players: all commercial banks in the country, over 1600 market leaderships, over 4000 market cooperatives and farming clusters, and several technology companies have enabled the smooth implementation of the program.

Strong governance framework, operational control, and ops embedded monitoring and evaluation With a fully functional operations control center and a team of analysts and behavioural scientists, GEEP embeds consistent monitoring and evaluation into its operations to ensure full program efficiency, and proactive issue resolution. It also has a robust governance framework that involves the Micro Enterprises Division of the Bank of Industry, the Ministry of Industry, Trade and Investment, the judiciary, the Central Bank, and the presidency through the office of the Vice President, and the National Social Investments Office. Consequently, GEEP’s operations follow a well-structured reporting framework to enhance transparency and national character.

Monday 14 September 2020

BUSINESS DAY

Start-Up Digest

27

In association with

Meet Evelyn Aylor, entrepreneur simplifying baby care for mothers Bunmi Bailey

E

velyn Aylor is the founder of Pritty Little Packages, an online firm that teaches mothers useful hacks and tricks on baby care.

Aylor has successfully helped mothers by tapping into the creative minds of kids with different hacks such as fear hack, travel hacks (all modes of transportation), thumb sucking hack, holiday hack, how to deal with toddlers, safety hack, security hack, how to avoid being an angry mum hack and so much more.

Her company has also successfully taught good family values and bonding because she believes that family is the number one foundation for making a good society.

“We target families and

make sure children experience love and structures that would make them powerful in the future, thereby raising powerful people to create a powerful nation,” Aylor says Aylor has a BSc in Information Technology from Salem University, Lokoja. She is also an American-trained flight dispatcher from Sheffield School of Aeronautics, Florida, USA. “I have always wanted to work in the aviation sector with NCAA (Nigerian Civil Aviation Authority) and after several attempts of applying to work with NCAA, I decided to turn to my love for kids,” she says.

Apart from teaching mothers, she also sells creative and imaginative toys and gadgets that help keep children excited and engaged.

“I have always had a passion for child care and kids’

Evelyn Aylor

growth process where young parents receive constructive strategies or hacks to solving

the mystery around toddlers and kids care,” she says.

Aylor, who started her

business in 2018 with $500, was inspired by her love for caring for other people’s kids. “I fell in love with babies, discovered some amazing hacks and tricks which I taught their mums, and I quickly became the Little Baby Expert,” she recalls.

Her products are usually sourced 50 percent locally and 50 percent from America, Europe and Asia.

Like every other business operating in Nigeria, she is faced with challenges such as funding, high exchange rates, false identities online, and logistics limitation.

“2020 started as a wonderful year until the Covid-19 pandemic hit the world and really affected my business adversely,” Aylor complains.

She believes that if the government can have accessible platforms where SMEs like hers can access funds to

boost their businesses, the country will be better for it.

“This pandemic has affected a lot of businesses to the point they are closing down and the truth is, the economy needs more SMEs. If the government doesn’t give them opportunities to survive, the economy won’t grow. Also, the government needs to improve the exchange rate. So many businesses are struggling because of this,” she suggests.

Aylor continues to take courses to improve her knowledge about her business and still looks for avenues to raise funds to boost her business and expand her customer base.

“In the next five years, Pritty Little Packages will have unveiled a lot of products and services that will make it number one hub for child care and services,” she says.

FG, UNDESA, ILO collaborate to develop roadmap for youth employment plan Josephine Okojie

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he Federal Ministry of Youth and Sports Development in partnership with the United Nations Department of Economic and Social Affairs (UNDESA) and the International Labour Organization have commenced a nation-wide campaign aimed at developing a roadmap for youth employment plans.

The campaign which is being managed by the Nigeria Youth SDGs Network, a coalition of youth-led civil

society organisations will help develop a roadmap towards designing effective policy and programs that will ensure that young Nigerians are adequately prepared to get and create jobs.

In a statement, Sunday Dare, Minister of Youth and Sports Development says the campaign is part of the implementation of the Nigerian Youth Employment Action Plan (NIYEAP) -a four-year detailed plan to address the youth employment challenge in Nigeria in a comprehensive and coordinated manner.

According to him, the NI-

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YEAP has been developed to complement and operate in the context of existing policies, frameworks, and strategies such as the Economic Recovery and Growth Plan; the National Youth Policy, the National Employment Policy, the United Nations Development Partnership Framework, and the Call for Action.

He noted that the ministry, however, commenced activities for the review of the NIYEAP in 2018, in collaboration with the United Nations which also launched the Global Initiative on Decent Jobs for Youth- a multi-

stakeholder partnership to advance the implementation of youth employmentrelated targets of the 2030 agenda.

He added that the NIYEAP serves as a commitment of Nigeria under the Global Initiative on Decent Jobs for Youth.

With a focus on Employment Creation, Employability, Equality, and rights as well as Entrepreneurship), the priority themes of NIYEAP the 4Es, are further delineated into strategic lines of action listed under each theme, with emphasis on sectors that have high

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job creation potentials, such as digital economy, rural economy, green economy and renewable energy sector, manufacturing, tourism, construction, and service.

The action plan is a fundamental framework to address youth employment and it emphasizes finding solutions with and for young people who are seeking decent and productive jobs, the statement states.

The nationwide campaign commenced on 21st, July 2020, with a survey that can be accessed through virtual platforms.

Through the survey, the

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ministry, UNDESA, and ILO are gathering the views of the Nigerian youth on employment prospects and the needs of youth that will inform policy direction and ensure the right approaches are pursued to implement NIYEAP. Currently, the survey has been filled by over one hundred and fifty thousand young Nigerians across the six geopolitical zones of Nigeria.

Details of the survey can be found on the following websiteswww.youthandsport.gov.ng and www.decentwork.ng.

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BUSINESS DAY

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BUSINESS DAY

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Monday 14 September 2020

BUSINESS DAY

news Despite e-dividend payment system unclaimed dividend soars - DG SEC HOPE MOSES-ASHIKE

H

armonising a single unique identity management system and updating the details of investors are some of the ways the Nigerian capital market is solving the rising issue of unclaimed dividend, according to Lamido Yuguda, director-general, Securities and Exchange Commission (SEC).

This means the Exchange working with the Central Bank of Nigeria (CBN) and other stakeholders in the markets to come up with one unique identity, not only for investors but also for issuers and operators in the market, Yuguda said.

The SEC director-general, who spoke at the 8th Investment and Capital

Market Conference organised by BusinessDay last week, said there had been a rise in the amount of unclaimed dividend even on relatively new issues, and this had been at the heart of the Exchange to solve.

“It is disappointing to see that in the relatively new issues, we are still having unclaimed dividends.

There is a fundamental problem in Nigeria. Identity management is very important,” the DG said.

An introduction of electronic dividend payment system (e- dividend) in 2015 was considered to be a lasting solution to issues regarding unclaimed dividend, but despite this, failed claims of already paid dividend to

Continues on page 31

Oil companies eye billions in savings on process digitalisation STEPHEN ONYEKWELU

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rolonged low oil prices environment is making oil companies speed up the digitalisation of processes to push down operating costs, save billions of dollars, promote transparency and optimise value creation.

Process digitalisation involves the use of digital data and technologies to transform existing business processes into more efficient, optimised, more profitable, streamlined and value-adding operations.

Last year, Rystad, an energy research firm analysis report, showed that the global oil and gas industry could save as much as $100 billion through automation and digitalisation in the 2020s. The

efforts could help cut about 10 percent of the $1 trillion spent in 2018 on operational expenses, wells, facilities and subsea by more than 3,000 producers.

In Nigeria, some oil companies have been leveraging digitalisation and automation to keep operating expenditures (OPEX) low, make processes repeatable, auditable and to shorten opportunity in maturity cycles by more than 60 percent. This has also led to efficient oil well stock inventory management.

“We have been able to save as much as $20 million in operating expenditure. Our OPEX is about the lowest in Nigeria’s oil and gas industry,” Emeka Onyeka, petroleum engineering manager, Eroton E&P Limited, said during the second edition of NNPC/ IDSL Asset Management Op-

erational Excellence Webinar Series themed ‘Process Digitalisation to Improve Asset Management Efficiency.’ “We were producing a barrel of oil at $12 until some security challenges set in and started eroding value,” Onyeka said.

The economic fallouts from Covid-19, which saw oil prices fall, remain low for long and added to the volatility in oil prices of the last six years have sent strong signals to oil companies, particularly in Nigeria, to push down the unit cost of production per barrel of oil by leveraging process digitalisation. On the average, crude oil production cost is between $21 and $30 per barrel in Nigeria.

Brent crude oil price fell to approximately $33 per barrel on Monday, March 9, the worst of its kind in a day since 1991. Earlier in 2020, oil

How Nigeria can speed up economic recovery by World Bank

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igeria, which faces a second recession in four years, can speed up the recovery of her economy by stepping up efforts at easing pressure on the foreign exchange market, the World Bank has said.

Nigeria has twice adjusted her currency in recent times but the World Bank, which acknowledges the moves, says Africa’s largest economy can and needs to do even more in this regard according to a report

by Bloomberg.

World Bank country director for Nigeria Shubham Chaudhuri says the resumption of dollar sale in Nigeria after a five-month stoppage is welcome, but adds that “continued and even stronger action and a clear commitment from the central bank will go a long way toward facilitating a stronger recovery.”

Nigeria halted its weekly interbank foreign-currency sales in March as oil prices collapsed and the economy entered a pandemic imposed shut down.

However, while peer economies have suffered worse contractions following the outbreak of the coronavirus and subsequent lockdown, Nigeria’s GDP numbers for the second quarter showed a 6.1-percent shrinkage and this is giving hope of an early recovery.

Businesses and importers have struggled in the face of measures to defend the Naira and preserve foreign reserves as their operations suffer and they lose capacity to repay dollar debt.

The Financial Times reported on Thursday that the World Bank backed power plant Azura, faces a default on its dollar-denominated debt because of the dollar scarcity.

“The Azura case is just one example of the difficulties that a number of established foreign

and domestic private firms in Nigeria have had in accessing the forex to meet their business and contractual obligations,” Chaudhuri said on Friday.

From banning the use of agents in import transactions to calling out exporters that don’t repatriate proceeds, Nigeria is trying to avoid another Naira evaluation.

On Thursday, President Muhammadu Buhari ordered it to stop providing foreign exchange for food and fertilizer imports.

The official naira rate has lost a quarter of its value and now analysts say the local currency risk that’s keeping foreigners from the Nigerian market could be a golden opportunity for local investors.

According to a Londonbased fund manager who’s dumped all his Nigerian assets while the probability of a naira devaluation remains a turn-off for foreign investors, it could boost the local stock market, as it happened in Zimbabwe.

Erik Renander, a portfolio manager at Emerging Markets Investment Management Ltd, the exit of foreign portfolio investors from Nigeria could also bolster confidence in the local market, he said.

“You could be sitting in front of a great opportunity,” Renander said in virtual conference. “Generally, when the currency devalues, the local stock market goes up a lot.

“Maybe the naira is going to go to 550 per dollar, and the Nigerian stock market could go to 50,000; you could easily have a double.”

Domestic participants accounted for 60% of transactions on the Nigerian stock exchange this year, according to the bourse head, Oscar Onyema. Excess liquidity has pushed yields on fixed-income instruments to low single digits. www.businessday.ng

prices had fallen to almost $45 per barrel, the lowest for years.

As of Friday, Brent crude was trading at $42 per barrel.

For oil companies to stay profitable in this lower prices environment it means conventional models would no longer work. Oil companies have to be more responsive and bring high operating costs within control.

“Inefficient processes cost money. A recent study shows 20 – 30 percent of value is lost to inefficiency by oil companies. Workflow processes are not transparent, unrepeatable, inconsistent and analogue,” said Sophia Weaver, manager, Production Technology & WRFM at FIRST E&P, an indigenous Nigerian oil company, at the Operational Excellence Webinar.

Continues on page 31 L-R: Tosin Ashaye, managing director, What If? Innovation Hub; Samuel Oyeyipo, regional coordinator, Nigerian Export Promotion Council (NEPC), and Ayodele Olojede, group head, emerging business, Access Bank, at the grand opening ceremony of What If? Innovation Hub , in Lagos, at the weekend.

Pic by Olawale Amoo

Why Nigerian insurers will see minimal COVID-19 claims compared to total global loss Modestus Anaesoronye

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i g e r i a n i n s u rers’ insignificant s h a re o f n o n material damage risk exposures will save it from heavy claims expected to hit the global underwriting industry following Covid-19 pandemic.

The global economy is facing huge claim losses due largely to business interruptions (non-material damage risks) caused by lockdowns instituted by various governments to contain spread of the pandemic.

This incidentally is not a common risk in the Nigerian market, as the policy is still novel with shortage of expertise.

Material damage, which is a common product in Nigeria, covers business owners against loss or damage to physical assets including buildings, contents, plant and equipment, equipment, fitout and stock.

Analysts at Switzerlandbased UBS Group AG, according to an Artemis report, expect that Covid-19 pandemic-related claims will range from $30 billion to $60 billion globally. This is as a non-US business interruption claims are expected to lie between $7 billion and $22 billion.

Statista, a leading provider of market and consumer data, also reports that the global insurance industry is expected to lose $203 billion due to the Covid-19 pandemic.

According to Statista, underwriting losses are projected to reach $107 billion alone, with the remainder coming from the hit their investment portfolios have taken in the wake of the outbreak.

Khalid Momodu, deputy general manager and head of Business Development at YOA Insurance Brokers Limited, speaking at the investiture of Reginald Eg-

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buniwe as the 12th president, Institute of Loss Adjusters of Nigeria held virtually weekend, said Nigeria was going to witness less Covid-19 claims because it was more into material damage exposures.

This is because the market is unlike its counterparts in advanced markets that have a lot of claims coming from business interruptions, litigations and other environmental exposures, Momodu said. “ Ye s, Ni g e r i a a s a n emerging market will not suffer much loss now, but we should begin to prepare for these exposures including climate change risks, cyber security risks among others.

“Environmental concerns will likely impact businesses in the future and insurers have to be there to support businesses.

“There was a kind of tremor in part of Abuja in March; there was similar @Businessdayng

thing in Accra recently, as well as in Kenya, and a new rainfall pattern is ongoing.

All of these show that we may begin to have climate risks in not too distant future,” he noted.

Mayowa Adeduro, managing director/CEO, Law Union and Rock Insurance plc, explained that Covid-19 pandemic was novel. It is an unusual occurrence that affected all countries of the world, and there is no previous statistics or estimation of possible disruption and loss of economic values.

Adeduro stated clearly that there was no Covid-19 insurance in Nigeria.

“However, it is possible for a company to offer ex-gratis payment to a client who suffered Covid-19 losses out of commercial relationship not on the basis of insurance contract provided. And I should think that can come if only one or two clients are involved,” he stated.

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31

News L-R: Joseph Umolu, company secretary, Flour Mills of Nigeria (FMN); Emmmanuel Ukpabi, vice chairman, FMN; Paul Gbededo, group MD/ CEO, FMN, and Anders Kristiansson, CFO, FMN at the 60th annual general meeting of the company in Lagos.

Nigeria’s genomic capacity for...

Continued from page 1

ysis of genetic variation.

The facility to be domiciled in Lagos, Nigeria, for genetics mapping, is equipped with Illumina’s cutting-edge sequencing and high-density microarray technology platforms. Abasi Ene-Obong, founder/CEO of 54gene, is bringing to bear his understanding of the nuances of the local healthcare system and experience of sophisticated health markets in the US and Europe in ensuring that access to molecular diagnosis in real time is fostered.

The samples stored in 54gene’s de-identified biobank will be genotyped, sequenced and analysed within the country against the common trend of exporting samples for genomic sequencing.

In 2019, the CEO raised a $4.5 million seed round considered the biggest round for a Nigerian healthtech startup from Y Combinator, Fifty Years, Better Ventures and KdT Ventures.

His recent partnership only adds to a gradually growing list of investment interests in Nigeria’s genetic space.

Due to poor indigenous investment, Africa has largely been by-passed by scientific investigations mostly championed by Europeans, despite hosting a diverse lineage of deoxyribonucleic acid (DNA) – the element that determines the genetic makeup of human cells.

Earlier in the year, Christian Happi opened a $4 million genomics centre, African

Centre of Excellence for Genomics of Infectious Diseases (ACEGID), at the Redeemers University.

The health infrastructure mainly funded by the World Bank produced the first Africa’s genome sequencing of COVID-19 within 72 hours, a time-frame considered the fastest in the world compared to China and some European countries. The detail of the mapping was immediately made available to the scientific community. Happi, one of Africa’s leading scientists trained at Harvard, was part of the team that sequenced Ebola during the outbreak.

While Ene-Obong’s approach is to collect 100,000 data samples by the end of 2020, possibly to start piloting clinical trials with pharmaceutical partners, Happi’s interest is in digging up more genetic information and throwing them at the behest of pharmaceutical companies in need of local resource.

Although Happi is equally engaged offering consulting services to parastatals of government and the private sector. The coming on stream of additional players, Happi told BusinessDay, will bolster molecular medicine in Nigeria.

“We were not really interested in terms of storing the samples or keeping the samples or making the fancy nature or science paper. And that’s what’s different between us that are on the ground and care about our people, and those that are called ‘parachute scientists,” he further said in a Financial Times re-

Despite e-dividend payment system...

Continued from page 30

shareholders had continued to rise. As at the end of 2019, some N158.4 billion of unclaimed dividend sits with the commission, without any trace to shareholders of the funds.

That is an increase of 32 percent from the 2018 levels of N120 billion, questioning the country’s data

tracking capability.

He explained that in resolving the issues, the Exchange was looking at leveraging Bank Verification Number (BVN) as a single identity as opposed to having numerous identity systems.

“We plan to leverage the BVN. It is an identity management initiative that has had impact in the country. www.businessday.ng

port seen by BusinessDay. Also, Charles Rotimi, senior researcher at the US National Institutes of Health (NIH) and a Nigerian, had cleared the early path for African genomics research by taking it as a scientific necessity and a subject of social justice.

As of 2018, 78 percent of individuals included in genome-wide studies looking for genetic variations associated with disease were European.

Only 2 percent of individuals were African, 1 percent Hispanic, 10 percent Asian, and all other ethnic groups were represented by less than 1 percent of individuals.

The amount of genetic difference among human populations is very small, but it may only take one genetic variant or mutation to increase or decrease the risk of disease, said epidemiologist Scott Williams from Case Western University in a report.

Seeing the potential untapped in Africa, Rotimi in 2012 created the H3Africa programme, an initiative funded by the NIH and the UK’s Wellcome Trust.

Under it, a consortium of roughly 500 African scientists is conducting ground-breaking research on the genetic causes of blindness, Alzheimer’s, cancer, kidney disease and other diseases.

“The scientific imperative is that there are things in the human genome that we cannot study anywhere else but on the African continent, because of the evolutionary history of humanity,” he said.

“The social justice issue is that if we don’t engage this part of the world, then whatever gains

we are going to get from using genomics to improve health or agriculture or even the economy, that part of the world is going to be left behind, just like a lot of other revolutions passed over Africa.”

Similarly, Olufunmilayo Olopade, another Nigerian who is one of America’s leading cancer researchers, years ago began noticing higher rates of breast cancer at earlier ages in women in Nigeria.

In 2018, she co-authored the first-ever study to use sophisticated genomics analysis of African women. The results shifted the understanding of how breast cancer would develop and how it should be screened regardless of origin.

“For a very long time, we have thought that cancer went through a systematic, slow growth, so you wait until 50 and you get your mammogram once every two years and you’re going to be OK,” said Olopade, a MacArthur genius grantee and director of the Centre for Clinical Cancer Genetics and Global Health at the University of Chicago, in a March 2020 Financial Times report.

“I think this really has just turned that on its head, because you may need to start earlier. And it shows that we need to do more genetic research in Africa, otherwise we will have the wrong policies, we will start in the wrong place, and that’s why we have not had the kind of progress we needed to have.”

The Nigeria Institute of Medical Research (NIMR) has been filling the gap in this area in the public sector, but it can be merrier with more players.

Capital market transactions start from a bank account and this process ends the same way,” he said.

“The commission has mandated all CMOs to update KYC information, and has also continued engagement with operators to harmonise identity management systems and processes in line with the drive to create seamless investor experience,” he said.

“We have been working with the CBN to ensure that

we have an identity management system that leverages the BVN that is unique to the capital market so that we don’t have different KYCs with different registrars or stockbrokers.

“This is still in the early stage, but we should be able to come up with an applaud-able framework within 12 months to address this,” Yuguda said, but did not provide the exact amount of unclaimed dividend as at date.

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Edo offices, industrial park light...

Continued from page 1

Independent Power Project (IPP) in Ologbo, near Benin City.

The project, a vision of the Godwin Obaseki-led administration along with Ossiomo Power and Chinese firm CCETC, includes a gas plant, a 55MW IPP, 33KVA line, an injection substation at the Government House, in addition to 11KVA mini-grid, comprises the industrial park and the Ologbo area.

This project is significantly increasing the power available to the people of Edo because the migration of industries and business to a more stable source of supply from the IPP will leave more power available to the people from the grid.

Currently, the Benin Electricity Distribution Company gets on average about 9 percent of the power on the grid for Edo State, which translates to around 90/100MW, considering that around 3,000MW is allocated to the DisCos. There is a cluster of industries around Benin City who takes about 60MW since they are heavy users of electricity, so in reality the rest of Edo gets about 30MW and this has been the situation over the last five years.

For a government in a hurry to develop the state, this is an untenable situation hence the governor and his team began shopping for fresh ideas to improve power and encourage industries to set up in the state.

Part of the government’s plan was to construct an industrial power, build an IPP to support and encourage private investors to settle in the state as part of its ‘Invest in Edo Initiative.’

Through its InvestEdo initiative, the state government has

an ambitious plan to make the state the industrial hub of the South-South through the development of industrial clusters and free trade zones. Some of the projects under development include the various sectors of the economy - solid minerals, agribusiness, cement manufacturing, refining and petrochemicals, and technical training.

“In terms of the market, our primary objective is power for industrialisation, which is consistent with the objectives of the government of Edo State, which includes power to the state government offices, power to industries and power for the industrial park,” said Uwa Igiehon, managing director, Ossiomo Power.

According to Igiehon, the Ossiomo Industrial Park’s focused development includes marine facilities with a completed river port and natural gas pipeline infrastructure within the site underpinning the company’s focus on energy and petrochemicals.

The impact of the projects, according to Igiehon, is immense, apart from freeing up much needed power for the people of the state, it will lead to employment generation, production of cheaper goods, and contribute to Nigeria’s economic development.

In terms of development structure, the initial technical, commercial and financial development of the project was done by Ossiomo Power led by the managing partners, who are essentially Nigerians based in London with international finance and engineering background, Igiehon said. It partnered with Edo State government to execute the project, while the CCETC joined after completion of the project development.

Oil companies eye billions in savings ...

Continued from page 30

“Upstream E&P companies can save $73 billion annually through process digitalisation.”

A race among suppliers is currently underway as companies roll-out new digital products; the last 12 months have seen major releases by Schlumberger, Baker Hughes and TechnipFMC. One of the largest digitalisation initiatives was launched on September 17, 2019, the result of collaboration by Schlumberger, Chevron and Microsoft.

This ambitious project aims to visualise, interpret and ultimately obtain meaningful insights from multiple data sources across exploration, development, and production and midstream sectors.

However, Edirin Abamwa, chief operating officer of NPDC/NDW OML 34 AMT, said decisions were not purely based on data. The process of data gathering, integration, storage and democratisation is more valuable because of the critical information generated.

Abamwa argued that the current environment in @Businessdayng

which operators do businesses cannot make it possible, talk less of being feasible to bring down the unit operating cost to $10 per barrel by 2021 as Mele Kyari, NNPC’s group general managing director, recently suggested.

For a starter, sufficient censors are required for surface operators.

“We run systems that were set up 70 years ago and designed to militate against disaster. The systems ensure emergency preparedness and quick shutdown of assets but fail to address the issues of optimal performance. Let us start by changing these systems,” Abamwa said, noting, “With more censors in the operations, we can build a dashboard showing on a per-second basis how an asset is doing.”

At the exploration and production level, Total saves $1 billion yearly because it has begun digitalising some processes and continues to do so. At the affiliate level, the oil major saves $200 million yearly, according to Olatunji Akinwumi, executive manager, Deepwater Geosciences & Planning, Total E&P.

Monday 14 September 2020

BUSINESS DAY

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A1

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Monday14 September 2020

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Access Bank Rateswatch

Market Analysis and Outlook: September 11 – September 18, 2020

KEY MACROECONOMIC INDICATORS Indicators GDP Growth (%) Broad Money Supply (N’ trillion)

Current Figures Comments -6.1 Q2 2020 — lower by –7.97% compared to 1.87% in Q1 2020 36.82 Increased by 3.36% in July’ 2020 from N35.63 trillion in June’ 2020

Credit to Private Sector (N’ trillion)

30.19

Currency in Circulation (N’ trillion)

2.4

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

12.82

Monetary Policy Rate (%)

12.5

Interest Rate (Asymmetrical Corridor)

12.5 (+2/-5)

External Reserves (US$ million ) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

trillion from 25,604.64 points and ₦13.36 trillion, respectively the preceding week. This week, market

Increased to 12.82% in July 2020 from 12.56% in June 2020

continued to dramatically reduce economic activity, with

participants are expected to remain wary while they

Adjusted to 12.5% in May 2020 from 13.5%

declines seen in all sectors. Considering July only, the

reposition their market portfolio in light of current

Lending rate changed to 14.5% & Deposit rate 7.5%

economy advanced 6.6%. Education grew strongly as

macroeconomy trend.

35.78

September 9, 2020 figure — an increase of 0.31% from September start

some children returned to school, while pubs, campsites

Money Market

39.26

September 10, 2020 figure— a decrease of 6.52% from the prior week

and hairdressers all saw notable improvements. Car sales

Cost of borrowing surged at the end of last week compared

exceeded pre-crisis levels for the first time with

to two weeks ago following a retail Secondary Market

showrooms having a particularly busy time. All areas of

Intervention Sales (SMIS) and Cash Reserve Ratio (CRR)

manufacturing saw improvements, while housebuilding

debit. This led to an increase in short-term lender's charge

1.49

July 2020, figure — a decrease of 0.6% from June 2020 figure

Inflation Rate

COMMODITIES MARKET

Indicators

2 Weeks Change Ago (%) 11/9/20 4/9/20

25,591.95

25,605.64

13.35

13.36

(0.06)

0.21

0.42

(49.31)

Volume (bn) Value (N’bn)

2.28

MONEY MARKET NIBOR

3.79

Last Week 2 Weeks Ago Rate (%) Rate (%)

Tenor

OBB O/N CALL 30 Days 90 Days

11/9/20

4/9/20

14.50 16.50 15.95

1.63 2.25 2.94

2.48 2.67

2.64 3.02

(0.05)

(39.85)

Change (Basis Point) 1287 1425 1301

Energy 39.26 Crude Oil $/bbl) Natural Gas ($/MMBtu) 2.31 Agriculture

0.00 455.00

440.00

11/9/20 Official (N) Inter-Bank (N) BDC (N) Parallel (N)

379.00 385.72

BOND MARKET AVERAGE YIELDS

Tenor

5-Year 7-Year

475.00

(39.09) (24.41)

2562.00

(2.21)

32.33

Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

130.75 64.96 12.54

(2.17) 0.71 3.55

0.42 (16.18) (18.20)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

550.50

(0.94)

26.99

1945.12 26.79 303.95

0.30 (0.41) 0.85

47.63 55.85 (7.28)

NIGERIA YIELDS

INTERBANK

Last Week Rate (%)

TREASURY

BILLS

2 Weeks Ago Rate (%)

Change (Basis Point)

11/9/20

4/9/20

1 Mnth

1.01

1.15

3 Mnths

1.20

1.15

6 Mnths 9 Mnths 12 Mnths

1.37

2.25

2.18 2.90

2.85 3.12

Indicators

11/9/20

4/9/20 4.15

Indicators

11/9/20

4/9/20

Index

4,518.06

4472.14

5.16

5.91

(105) (75)

6.42

7.04

(62)

15-Year

9.64

10.00

(36)

20-Year

9.11

9.23

(12)

25-Year

10.00

10.06

(6)

10.05

10.07

(2)

Last Week

Mkt Cap Gross (N'tr)

2 Weeks Ago

14.60

Mkt Cap Net (N'tr) YTD return (%) YTD return (%)(US $)

10.29

10.14

83.93 -8.46

82.06 -10.33

Tenor 91 Day 182 Day 364 Day

3.1999

Interbank Offered Rate (NIBOR) declined to 2.48% and

impact of the coronavirus pandemic. In a separate

2.67% from 2.64% and 3.02%. This week, rates are

development, the European Central Bank (ECB) kept its

expected to decline as Open Market Operation (OMO)

main refinancing rate stable at 0% and pledged to buy up to

maturity of ₦350 billion hit the market.

€1.35 trillion worth of debt through June 2021 under its

Foreign Exchange Market

Pa n d e m i c E m e rg e n c y Pu rc h a s e Pro g ra m m e i n i s

The local unit depreciated against the dollar in most

September meeting. The interest rates on the marginal

market segments. The Nigerian Autonomous Foreign

lending facility and the deposit facility will also remain

Exchange Rate (NAFEX) weakened as well as the parallel

steady at 0.25% and -0.50% respectively. The ECB

market. The paucity of funds continued at the Investors

President said during the regular press conference the ECB

and Exporters' Window as well as the parallel market as

discussed the recent appreciation of the Euro but the bank

demand outweighed supply. The official market rate was

does not target the exchange rate. Regarding the

unchanged from prior week figure. The parallel market rate

pandemic programme, committee members consider it

dipped ₦15 to settle at ₦455/US$ from ₦440/US$. The

has been efficient and effective but did not announce any

NAFEX rate closed at ₦385.72/US$ from ₦385.64/US$.

changes. Under the new economic projections, the Euro

Th e o ffi c i a l m a r ke t ra t e re m a i n e d u n c h a n g e d a t

Area economy is projected to shrink 8% in 2020, a slight

₦379/US$. This week, we expect the Central Bank to

improvement from its June forecast of an 8.7% dip. The

intervene in the Foreign Exchange market through

outlook for both 2021 (+5%) and 2022 (+3.2%) was

provision of funds for SME and invisible segments.

unchanged. Inflation forecasts for 2020 were left at 0.3%

Bond MarketAverage yields in the b ond market declined as

but the outlook for 2021 was raised slightly up to 1%. In

bullish sentiment prevailed last week. Accordingly, we

2022, inflation is seen at 1.3%, also unchanged from June.

witnessed demand for all securities across the curve,

Elsewhere, Brazil's annual inflation rate rose to 2.44% in

particularly for the short tenured bonds. Yields on the 5-,

August 2020 from 2.31% in the preceding month

7-, 10- , 15-, 20-, 25- and 30-year papers tapered to 3.1%,

according to the Brazilian Institute of Geography and

5.16%, 6.42%, 9.64%, 9.11%, 10%, and 10.05% from

Statistics. Prices increased further for food & beverages

4.15%, 5.91%, 7.04%, 10%, 9.23%, 10.06% and 10.07%, in

(8.83% vs 7.61% in July); health (3.25% vs 2.70%); and

that order. The Access Bank Nigerian Government Bond

communication (2.98% vs 2.39%). On the other hand,

Index climbed to 4,518.06 points from 4,472.14 points,

prices eased for housing (0.41% vs 1.24%); personal

45.92 points higher. We expect that the bond market might

expenses (2.5% vs 2.84%); and education (1.14% vs

remain bullish in the absence of attractive alternative

4.95%). On a monthly basis, consumer prices went up

investments.

0.24% percent, slowing from a 0.36% percent gain in the

Commodities

previous month.

Crude oil prices remained bearish for the week ended

4

that Nigeria's debt stock increased by N2.381 trillion.

concerns over fuel demand recovery as the number of

Nigeria's total public debt stock stood at N31.009 trillion as

coronavirus continue to rise worldwide. Data from the EIA

1.03 1.02 1.40

of June 30, 2020. The data shows that the total public debt

showed US crude stockpiles rose by 2.032 million barrels in

stock which comprises the debt Stock of the Federal

the latest week, in line with the API data which showed a

Government, the 36 State Governments, and the Federal

build of 3 million barrels. Bonny light, Nigeria's benchmark

Capital Territory, increased by N2.381 trillion within 3

crude tapered 6.52% to close at $39.26 per barrel.

months when compared with the N28.628 trillion recorded

Precious metal prices went in various direction as gold

on March 31, 2020. The N2.381 trillion increase was

prices were bullish while silver prices dropped. Gold prices

accounted for by the $3.36 billion Budget Support Loan

inched up as the dollar retreated on weaker-than-

from the International Monetary Fund (IMF), New

expected US jobs data and as the European Central Bank

Domestic Borrowing to finance the Revised 2020

(ECB) kept its policy unchanged, while silver prices dipped

Appropriation Act including the issuance of the N162.557

on profit-taking. Consequently, gold prices edged up

billion Sukuk bond, and Promissory Notes issued to settle

0.30% or $5.76 to finish at $1,945.12 per ounce from

Claims of Exporters. In a separate development, the

$1,939.36 per ounce. Silver settled at $26.79 per ounce, a

Central Bank of Nigeria in a recent circular titled

0.41% drop from prior week price. This week, we anticipate

'Resumption of Sale of BTA/PTA to travellers' directed

that oil prices might remain pressured by current supply

1.87

authorised dealer banks to resume the sales of forex for

glut in the market, Covid-19 expansion, the lower oil

1.87

BTA/PTA in all their designated branches across the

pricing in the Middle East and the overall concern about the

country given the limited resumption of international

recovery of oil demand. Persistent concerns over the

12-Aug-2020

Sources: CBN, Financial Market Dealers Quotation, NSE, NBS, Energy Information Agency, Oilprice, Bloomberg and Access Bank Economic Intelligence Group computation. * Crude oil (Bonny Light) is as at the previous day .

Longer tenored rates such as the 30- and 90-day Nigerian

below the levels seen in February 2020, before the full

September 11, 2020. Oil prices were pressured by a

Amount (N’ Rate (%) Date million) 1.2 19,783.59 12-Aug-2020 54,592.59 1.5 29-July-2020 27,000.00

the increase in July, economic output remains 11.7%

surprise rise in US crude inventories and mounting

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

14.5% and 16.5% from 1.63% and 2.25%, respectively.

The Debt Management Office in a recent report revealed

Change (Basis Point)

14.46

such as the Open Buy Back (OBB) and Overnight (O/N) to

construction remain well below previous levels. Despite

(14)

(67) (21)

2 Weeks AgoChange Rate (%) (Basis Point)

also continued to recover. However, both production and

Domestic Economy

(88)

Last Week Rate (%)

3.10

TRUE

ACCESS BANK NIGERIAN GOV’T BOND INDEX

10-Year

30-Year

(6.52) (8.70)

Cocoa ($/MT)

(16) (35) Tenor

1 Month Ago 2 Weeks Ago Rate (N/Rate (N/$) $) 4/9/20 11/8/20 381.00 379.00 385.64 386.40 0.00 0.00

Last Week Rate (N/$)

YTD Change (%)

1-week Change (%)

11/9/20

FOREIGN EXCHANGE MARKET

Market

capitalization closed at 25,591.95 points and ₦13.35

Statistics. Coronavirus restrictions on movement

Last Week

Market Cap(N’tr)

to July, following a record 20.4% plunge in the three

Increased by 4.13% in July’ 2020 from N2.3 trillion in June’ 2020

External Reserves & Oil price

NSE ASI

market. Consequently, the All Share Index (ASI) and market

months to June according to the Office for National

FX Market N/US$

Indicators

responsible for the negative turnaround on the stock

In the UK, economy contracted 7.6% in the three months

Increased by 2.57% in July’ 2020 from N29.43 trillion in June’ 2020

NSE ASI & Bond

STOCK MARKET

Global Economy

flights. This is part of the CBN efforts to enhance foreign

global pandemic as well as the rejection in the US Senate of

exchange liquidity in the market. Authorised dealer banks

a Republican bill that would provide $300 billion in a new

are required to sell forex to BTA/PTA to both their

relief package would keep the bullion in positive territory.

customers and members of the general public subject to provision of a duly completed Form A, valid international

Monthly Macro Economic Forecast

passport, bank verification number and return air ticket.

Variables

Stock Market

Exchange Rate

Indicators at the Nigeria stock exchange were bearish last (NAFEX) (N/$) week cutting short over one month of bullish run. Stocks in Inflation Rate (%) the oil & gas, Industrial and consumer goods were majorly Crude Oil Price

(US$/Barrel)

Sep’20

Oct’20

Nov’20

388

389

388

12.90

12.96

12.98

44

46

46

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

www.businessday.ng

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Monday 14 September 2020

BUSINESS DAY

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Monday 14 September 2020

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Monday 14 September 2020

BUSINESS DAY

NEWS

Afreximbank disburses $200m to Zenith Bank to cushion impact of COVID-19

HOPE MOSES-ASHIKE

A

frican ExportImport Bank (Afreximbank) has disbursed $200 million to Zenith Bank plc Nigeria under its Pandemic Trade Impact Mitigation Facility (PATIMFA).

The fund will assist Zenith Bank to continue to maintain foreign currency trade flows impacted by the Covid-19 pandemic. It will also allow Zenith Bank to on-lend to eligible subborrowers involved in the manufacture and supply of medical resources needed to combat the Covid-19 pandemic.

Speaking on the facility, Ebenezer Onyeagwu, group managing director/ CEO of Zenith Bank, said: “The Afreximbank facility undoubtedly underscores the confidence reposed in Zenith Bank, and it will enable the bank to contribute to the fight against the Covid-19 pandemic by providing trade finance and foreign currency funding for the importation of urgent medical equipment and

raw materials.”

Zenith Bank plc is Nigeria’s largest bank by Tier1 capital. The bank serves more than 9 million corporate and individual clients through its network of over 500 branches across Nigeria and its subsidiaries in the Gambia, Ghana, Sierra Leone and the United Kingdom. It also has a representative office in Beijing China, and Dubai (UAE) a branch of Zenith Bank UK. Benedict Oramah, president of Afreximbank, said: “The Pandemic Trade Impact Mitigation Facility (PATIMFA) is designed to support and stabilise the foreign exchange resources of African countries, enabling them to support critical imports under emergency conditions. We are pleased to contribute to keeping economies going especially during this pandemic. The role that banks such as Zenith Bank play in Africa is huge. Supporting them to carry out their mandate is our greatest contribution to making sure that African countries and institutions build back better from the shocks of the

www.businessday.ng

pandemic.”

PATIMFA was set up in March 2020 to provide financing to assist Afreximbank member countries to adjust in an orderly manner to the financial, economic and health services shocks caused by the Covid-19 pandemic. This 3-year medium-term facility has been availed through direct funding. Afreximbank has already disbursed more than US$3.5 billion under PATIMFA. In addition, the Bank provided a grant of $3 million towards the Covid-19 Special Fund set up by the African Union as well as to the African Centre for Disease Control and other agencies.

Afreximbank has a history of providing support to African economies in times of economic crisis. During the 2015 economic crisis, it introduced a Counter-Cyclical Trade Liquidity Facility under which it disbursed more than $10 billion on a revolving basis to enable member countries to adjust to the adverse economic shocks. That facility helped key African economies to manage that crisis and recover swiftly.

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Monday 14 September 2020

BUSINESS DAY

A7

NEWS Policies, literacy seen pushing retail, young investors into capital market — experts MICHAEL ANI, FAVOUR OLAREWAJU & MERCY AYODELE

B

usiness leaders and operators of the Nigerian capital market say they need to see more policy framework that would encourage all types of investors to take the leap into the market.

This is as they said that the average age of investors in the market is 50 and above with the youthful population shunning the market due to a host of factors, including low literacy, the bureaucratic nature of the market, and the fear of getting their hands burnt again.

The experts, who spoke at the 2020 BusinessDay capital market conference, also said that the market has been largely dominated by institutional investors with the retail investors staying far from the market.

“More has to be done to educate people on how best to maximise the benefits presented in the capital market,” said Ete Ogun, managing director, Anchoria Asset Management “A lot of viable investments are in the markets but it has to go with the knowledge given prevalent currency risk and other uncertainties”, Ogun added.

Since the financial crisis of 2007/2008, most retail and young investors have stayed off the Nigerian capital market, after losing nearly all their investments following the crisis.

Since then, low participation has persisted, with the market struggling to return to its pre-banking crisis days. This has been further heightened by the negative real interest rate on nearly all short term assets where these segments of investors find interesting to invest.

For instance, only about

four percent or (564,000), out of the 13.4 million total accounts with the Central Securities Clearing System (CSCS), has been actively traded in the last 7 years, a pointer to the high apathy of investors.

The bureaucratic structure of the market has been a key discouraging factor for many people seeking to invest in the capital market, said Haruna Waziri, CEO, Central Securities Clearing Systems Plc. “There need to be some reforms seen around timing.

How will an investor wait for about 6 months to one year to raise capital from the market, while it can get a loan from the bank in just one week,” he said.

He noted also that reforms to increase retail and young investor’s interest in the market must go beyond just financial literacy and sensitisation, to broader macroeconomic reforms.

“For us at CSCS, there were

REMI FEYISIPO, IBADAN

two activities that caused a boom in account openings and they were not about financial literacy”.

“The first was when the Federal Government did privatisation of assets based on TCP guidelines. That raised the number of accounts opening from 1.6 million to 5 million, while the second was the banking consolidation, when the banks were raising capital to build their balance sheet, raising account opening from 4 million to 9 million. Those were not financial literacy,” he said.Nnamdi Nwizu, co-managing partner and executive director at Comercio Partners, while noting that the market is yet to recover from the financial crisis, said market sensitisation and investors literacy are important in order to cause a paradigm shift in retail and young investors perception in short term to long term returns.

L-R: Foster Ogola; Yakubu Oseni, chairman, senate committee on ICT and Cybercrime; Okey Jev, member, senate committee on ICT & Cybercrime; Tope Aladenusi, partner and head, Cyber Risk Services, Deloitte West Africa, during a tour of Deloitte’s Cyber Intelligence Centre in Lagos.

Edo 2020 debate: Obaseki, Ize-Iyamu promise to overhaul tax system … as Flash Poller scores Obaseki 76.3%, Ize-Iyamu 23.7% INIOBONG IWOK, LAGOS;IDRIS UMAR MOMOH & CHURCHILL OKORO, BENIN CITY

I

t is not government that will create the jobs but the private sector and we are going to give them the conducive environment to do this, according to Governor Godwin Obaseki, the People’s Democratic Party (PDP) governorship candidate at the gubernatorial debate in Channels TV yesterday.

Before the debate, Chris Nehikhare, the state publicity secretary of the PDP, made the appeal at a press briefing in Benin City.

According to Nehikhare, who is also the chairman media and publicity subcommittee, Edo 2020 campaign council, the election is a very serious business and the party will not take it lightly.

“We want to appeal to all Edo State indigenes that the election is not a do-or-die

affair for Governor Godwin Obaseki. What we need is a free and fair governorship election, and we are confident that Governor Godwin Obaseki will get the second term,” he said.

But Osagie Ize-Iyamu, governorship candidate of the All Progressives Congress (APC) in the election coming up September 19, and Governor Obaseki promised to review the tax mechanism in the state to capture more indigenes and private sector if elected as governor.

Ize-Iyamu promised to engage in aggressive tax reform that would capture those who were presently not paying tax, but however added that his administration would be considerate and would not tax companies making profit as incentive to continue in business.

Meanwhile, shortly after the debate, the result received from Flash Poller, an international poll agency, www.businessday.ng

showed Obaseki garnered 76.3 percent of the positive votes while APC’s Ize-Iyamu scored 23.7 percent.

Also, the viewers who were sampled randomly

by Flash Poller noted that Obaseki demonstrated a firm understanding of development issues - resource mobilisation, partnership with development agents such as the World Bank and high premium on due process, transparency and the rule of law.

Some participants linked Obaseki’s outstanding performance in the area highlighted above, to his vast experience in the corporate world, his finance background, his eight-year job as head of the Economic Management Team in the state and his four years as governor of the state.

“From Obaseki’s presentation, it is glaring that he understands modern tools of development and governance, such as the effective de-

Odu’a Investment charts new 5-year growth strategy, adopts core values

ployment of Memorandum of Understanding (MoU) and strategic partnership with the private sector, traditional institution and other development actors,” a viewer of the debate, and poll respondent, said.

However, Ize-Iyamu’s 23.7 percent votes came on the back of his perceived ability to galvanise the political class, given his longer history in partisan politics. But the viewers surveyed said they wouldn’t know how this affinity with the political class would translate to enhanced socio-economic status for majority of Edo people.

Specifically, the sampled population for the poll scored Obaseki higher than the APC candidate in elocution, presentation, comportment, appreciation of issues, use of rebuttal, use of argument, factuality and comportment, amongst other rubrics, with an average score of 7 to 3, in favour of the PDP candidate.

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I

n its bid to improve performance and increase profitability, Odu’a Investment Company Limited, has mapped out growth plans that would re-position the conglomerate to fulfil the aspirations of the founding fathers and serve the interest of all the stakeholders now and in the future.

The group owned by the six Southwest statesOgun, Lagos, Oyo, Ekiti, Osun, and Ondo, is poised to operate with purpose and accountability with full engagement and inclusiveness of stakeholders.

The decision to chart a new course was made at the organisation’s twoday brainstorming strategy session facilitated by KPMG Advisory services for the company’s board of directors, chairmen of the board of subsidiaries and CEOs of its subsidiary companies and the management team of Odu’a Investment Company at the Lagos Airport Hotel, Ikeja, Lagos over the weekend.

It also had in attendance select special guests who are renowned entrepreneurs, subject matter experts, business leaders, technocrats, and the intellectuals among others.

The retreat articulated the building blocks for achieving the five-year ambitious plan based on the strategic pillars of growth and expansion, investment

excellence, profitability and efficiency, governance and reporting as well as people, culture and transformation.

Some of the resolutions arrived at the retreat was the decision to focus investment on priority sectors of real estate, energy including oil and gas, hospital, agriculture, logistics and storage, healthcare, ICT/digital and financial services. Innovation mindset will underpin the activities of the entire group.

It agreed to ‘sweat’ the group’s portfolio of assets to achieve an acceptable return on assets, reducing operating recurring cost significantly, ensure effective governance framework, oversight on the group and subsidiaries and also institute culture transformation initiatives to drive operational excellence.

Chairman of Odu’a Investment, Segun Aina, charged participants on the need to take the company and its subsidiaries to a level that everyone would be remembered for- delivering the Odu’a of our dream.

He noted that the retreat has put in place required strategies needed to refocus, recalibrate and accelerate delivery of Odu’a Investment’s desired result, which according to him include “delivering shareholder’s value and social impact which will be based on asset optimization and efficient management of resources”.

Int’l air travellers to access free COVID-19 treatment at Reddington Zaine Lab DESMOND OKON

A

s part of its contribution towards containing the coronavirus pandemic in Nigeria, Reddington says it will be offering free medical treatment to international air travelers arriving Nigeria, at its newly commissioned Armoured Shield Medical Centre, provided the PCR test is done at Reddington Zaine Laboratory recently accredited to test and treat Covid-19 patients in Nigeria.

Reddinggton, in a statement said while the outcome of most of the tests were expected to be negative, in the event of a positive Covid-19 test, the facility would offer free doctors’ consultation, X-ray or CT Scan, home isolation treatment and 50 percent discount of hospital treatment at the Armoured Shield Medical Centre. @Businessdayng

Olusola Oluwole, medical director of Armoured Shield Centre and Reddington Zaine Lab explained that to qualify for the free treatment services, all international air travelers must choose and register with Reddington Zaine Lab as their preferred laboratory for their PCR test on the NCDC travel portal and arrival documents while PCR test must be carried out on the 7th day of arrival in Nigeria. He said that sample collection centres have been opened at 26 Joel Ogunnaike street, GRA Ikeja with walkin and drive- through facilities for those on the Mainland and 6B Bendel Close off Aboyade Cole Street , Victoria Island for those on the Island while sample collection at Lekki facility will be on appointment. According to Oluwole special arrangement has been made for sample collection at home for VIPs on demand.

A8

Monday 14 September 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 11 September 2020

Top Gainers/Losers as at Friday 11 September 2020 GAINERS Company

LOSERS Opening

Closing

Change

STANBIC

N38.5

N40

1.5

CAP

WAPCO

Company

Opening

Closing

Change

N17.45

N15.75

-1.7

N12.2

N12.8

0.6

JBERGER

N17

N15.6

-1.4

FLOURMILL

N19.15

N19.5

0.35

ARDOVA

N12.6

N11.35

-1.25

ZENITHBANK

N16.95

N17.2

0.25

GUINNESS

N14

N13.5

-0.5

GUARANTY

N24.75

N25

0.25

INTBREW

N3.65

N3.5

-0.15

ASI (Points)

25,591.95

DEALS (Numbers) VOLUME (Numbers)

3,239.00 212,732,957.00

VALUE (N billion) MARKET CAP (N Trn)

2.278

Iheanyi Nwachukwu

N

L-R: Samuel Olufowose, Graduate Trainee, The Nigerian Stock Exchange (NSE); Disu Fatai, Vice chairman, Marina Branch A, Nigerian Union of Road Transport Workers (NURTW); Lasisi Gbolagade, vice chairman, Transport & Motor (T&M) Nigeria Limited, CMS Branch; Oluyemi Obadare, Business Continuity Manager, NSE; Murtala Lawal, chairman, Marina Branch A, NURTW; and Adaugo Udemezue, Graduate Trainee, NSE during the donation of face masks by NSE staff.

-4.66 percent.

Week-on-week (WoW), NSE Banking Index decreased most by -2.69 percent, followed by NSE Oil & Gas Index (-1.25percent).

The weekly performances of other sectoral indices show NSE Consumer Goods Index (-0.27percent), NSE Industrial Index (+0.35 percent),

and NSE Insurance Index (-0.66percent).

Analysts at Lagos-based Vetiva Securities noted that the domestic bourse recorded a mixed trading session in the review trading week, “with significant selloffs at the beginning of the week, and bargain hunting activities in the last two sessions due to dividend quali-

FTSE 100 Index 6,032.09GBP +28.77+0.48

Nikkei 225 23,406.49JPY +171.02+0.74

S&P 500 Index 3,323.06USD -16.13-0.48%

Deutsche Boerse AG German Stock Index DAX 13,202.84EUR -6.05-0.05%

Generic 1st ‘DM’ Future 27,414.00USD -12.00-0.04%

13.350

Nigeria’s equities market fails to close week in green igeria’s stock market failed to close the trading week ended Friday September 11 in green as investors booked N5billion loss.

The record negative close follows a mix of selloffs at the beginning of the review week and bargain hunting activities toward the end of the week.

Though market watchers saw how dip buyers poured into beaten-down banking shares.

The Nigerian Stock Exchange (NSE) All-Share Index (ASI) decreased slightly by 0.05 percent to 25,591.95 points as against week-open high of 25,605.64 points; also the valued of listed stocks on the Bourse decreased to N13.350trillion as against week-open level of N13.358 trillion.

The market has increased by +1.05 percent in this month of September; while its negative return year-to-date (YtD) stands at

Global market indicators

fication.”

The analysts expect the performance of the market in the next few sessions to be largely dependent on events around indicators such as; global crude oil price movements, news around the second wave of the Covid-19 pandemic as well as liquidity in the FX market.

Shanghai Stock Exchange Composite Index 3,260.35CNY +25.52+0.79%

Stanbic IBTC Bank appoints Oyedeji as Independent Non-Executive Director

T

he Board of Directors of Stanbic IBTC Bank Plc has appointed Wale Oyedeji as an Independent Non-Executive Director with effect from September 8, 2020, following the receipt of all required regulatory approvals.

Oyedeji holds a Bachelor of Science in Agricultural Economics from the University of Ibadan and a Master of Science in Financial Economics from the University of London.

He is also a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and an associate of the Chartered Institute of Taxation.

Oyedeji has over 25 years of banking experience across Corporate Banking, Treasury, and Commercial Banking. He served as Managing Director of Guaranty Trust Bank UK between 2008 and 2011. He was appointed to the Board of Guaranty Trust Bank PLC (GTBank) in October 2011, where he served as Executive Director for the Corporate Bank Group and contributed

Oyedeji

immensely to the growth of their business until his retirement in August 2018. Prior to joining GTBank in 1994, he worked with Ernst & Young, Lagos, for two years. He is an alumnus of the Advanced Management Program of Harvard Business School.

Speaking on this appointment, Wole Adeniyi, Chief Executive of the Bank stated that “the Board is pleased to welcome Wale Oyedeji to the Board of the Bank and will undoubtedly benefit immensely from his wealth of experience.”

FBNQuest says 2020 looks set to be another weak year for equities Continental Reinsurance acquires 100% stake in Botswana subsidiary

F

or FBNQuest equity research analysts, the year 2020 is looking set to be another weak one for Nigeria equities.

They however noted that the market has clawed back a bit of its losses since in April, adding that “stocks are still looking very cheap based on our fair value estimates”.

These were the views of Uwadiae Osadiaye and Tunde Abidoye, equity research analysts at FBNQuest in their presentation during the FBNQuest media engagement session held recently. The equity research analysts noted that the All Share Index (ASI) is down -4.6percent year-to-date (YtD) “after

two straight years of losses.”

“Looking at historical performance since 2017, the Nigerian Stock Exchange (NSE) underperformance is even worse at -3.8percent return versus circa +51percent, +108percent and +12percent for the S&P 500, Nasdaq and Johannesburg Exchanges. Kenya also returned +5percent.

“The key drivers include issues around FX liquidity, lower oil prices, reversal of capital flows following the Covid-19 pandemic, and weak GDP growth (-6.1percent in second quarter).

Performance not also helped by stimulus driven rally in the US market. Nigeria now faces the two twin deficits – fiscal and current account”, www.businessday.ng

FBNQuest equity research analysts added.

On their valuation for banking stocks, they said, “Excluding Stanbic IBTC and GTBank, almost all the banks are trading below book values. However, our preferred picks within the sector are Zenith and GTBank.”

Speaking on the Telecoms stocks, the analysts said their N206.1 price target (PT) for MTNN “implies a potential upside of 74percent from current levels”; while on Oil & Gas, the analysts believe that upstream companies are likely to record losses for the year “as sector is unlikely to make a strong comeback from a very weak half-year (H1)”.

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Modestus Anaesoronye

C

ontinental Reinsurance Plc has announced a change in the ownership structure of Continental Reinsurance Ltd (Botswana).

After its recent acquisition of a minority 40 percent stake in the company, through its holding company, CRe African Investments Limited (CRAFIL), from Botswana Insurance Company Ltd (BIC), Continental Reinsurance now holds 100 percent of the issued ordinary share capital in the subsidiary.

Femi Oyetunji, group managing director, commented: “The acquisition

means not only growth in economic size, but also presents us with an opportunity to enhance our strategic influence and broaden our market appeal through the expansion of stakeholder segments that we actively interact with.”

“Building on our talent growth and diversity strategy, we have appointed Francis Nzwili, previously with our Nairobi subsidiary, as managing director of the Botswana business. Francis comes on board with a wealth of experience in underwriting and business development that significantly complements the strength of the existing team.

The position of Managing Director was previously held by Cas Hansa who

@Businessdayng

has taken up new strategic responsibilities as Group Head: Underwriting and Claims,” he added.

The acquisition entrenches Continental Re’s stature as a strong panAfrican reinsurance brand committed to delivering value to its customers and long-term sustainable profit growth and returns for all internal and external stakeholders.

As at half-year 2020, the Group has reported strong growth across all key metrics. Gross premium income at N26.8 billion ($71.7 million) reflects a 27 percent growth over 2019. Underwriting profit at N2.7billion ($ 6.9 million) grew by 442 percent (2019: N457million /$ 1.3million).

Monday 14 September 2020

BUSINESS DAY

PRESS RELEASE Rejection of Petroleum Products Pricing Agency (PPPRA) Pronouncement of Administrative Levy on LPG Operations Dear esteemed NLPGA members and the entire LPG Industry, A recent directive circulated by the Petroleum Products Pricing Regulatory Agency (PPPRA) has come to the attention of the Executive Committee of the Nigeria Liquefied Petroleum Gas Association (NLPGA) wherein PPPRA circulated a directive to levy an (exorbitant) administrative fee on LPG despite the product having been deregulated for over 20 years.

The method and manner in which PPPRA has gone about this is disingenuous and frankly unethical. PPPRA approached the NLPGA round about 2018 requesting to join the Governing Council of the Association as an observer. At that time, the NLPGA communicated clearly to PPPRA that LPG is deregulated and, therefore, the PPPRA had no role to play in price setting (Indeed it is because of LPG being deregulated that the Nigerian market has grown from 50,000 tonnes in 2007 to 1 million tonnes today). PPPRA gave assurances to the NLPGA that its role would be as an observer. However, during the PPPRA’s attendances at our Council meetings, the entire effort was focused on surreptitiously gathering information on our members.

To our utter shock, PPPRA issued aforesaid pronouncement giving effect to an Administrative Levy on LPG effective 1st September 2020. This pronouncement was sent directly to members (whom PPPRA had gathered data on from NLPGA Council meetings) without even the courtesy of informing the industry.

Since the initial pronouncement via a communication late last month, the Association published a press release to debunk and robustly rebuff any attempt by PPPRA to implement any charge on LPG as PPPRA has no administrative role in a deregulated market. What are they administering? Without their administration, the market grew by 1,700%. How well did they administer kerosene and petrol subsidies? Without care, PPPRA will damage the nascent LPG market as they have done the other two products and the NLPGA will simply not stand for this.

As a first step, the Association has escalated this issue and other challenges with other government Regulatory Agencies to the Presidency. The Association reserves the right to take further steps to stop the incessant harassment of our members – we are not a cash cow!

NLPGA REITERATES CATEGORICALLY AND CLEARLY, THAT THE PETROLEUM PRODUCT PRICING REGULATORY AGENCY (PPPRA) HAS NO ADMINISTRATIVE ROLE WHATSOEVER IN THE ACTIVITIES OF NIGERIA’S LPG SECTOR AS CURRENTLY STRUCTURED, BEING A FULLY DEREGULATED PRODUCT AND THEIR PURPORTED ADMINISTRATIVE FEE IS NULL AND VOID AB-INITIO! This attempt to introduce price regulation through the ‘back door’ will negatively impact retail price for an already pauperised populace who are still struggling to recover from the ravages of the COVID19 pandemic.

Our members and LPG practitioners in general are advised to set aside the directive and proceed as normal.

Please accept the assurances of the Executive Committee’s unreserved highest regards.

Signed Olakunle Oyebanjo Executive Secretary, NLPGA www.businessday.ng

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BUSINESS DAY Monday 14 September 2020 www.businessday.ng

Dollar shortage squeezes World Bank-backed Nigeria power plant Project at risk of default on dollar-denominated loan after central bank restricts access to greenback Neil Munshi

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World Bankbacked power plant that prov i d e s a t e nt h o f Nigeria’s electricity is at risk of a default on its loan payments because of a severe dollar shortage in the continent’s biggest economy, according to three people briefed on the matter.

The $900m Azura-Edo Independent Power Plant in Edo state has been unable t o s ou rc e d o l l a r s t h rou g h the Central Bank of Nigeria, which has restricted access to the greenback in an effort to support the local naira currency, according to an industry executive and a financier briefed on the matter.

“They have the funds [in naira]— they just can’t make the payment because they’re in the queue for dollars at the central bank, and there just aren’t enough,” the financier said. A senior central bank official said its recent efforts to address the shortage would help Azura avoid default.

The World Bank and the multilateral lenders that funded Azura have long held it up as a model for major infrastructure project investment in Africa. They are unlikely to aggressively pursue repayment, the financier said.

But any default — even if only technical — would at least temporarily “slam the door ” on similar large projects in Nigeria, further squeezing foreign investment, the financier said. “If a project like this can’t get dollars then what are you really saying?”

The dollar shortage has been driven by a precipitous fall in the price of oil, which provides 90 per cent of the country’s foreign exchange, as well as a drop in remittances and an exodus of portfolio investors. The central bank, which has long resisted the more market-driven exchange rate desired by many investors, maintains multiple official rates, which are lower than the black market rate.

In a statement in response to questions about a potential default, Edu Okeke, managing director of Azura Power West Africa, said that Nigeria has faced a “tsunami of challenges”.

“The government is fully aware of the need to unify

the rates and clear the imbalance between the supply and demand for hard currency,” he said. “Indeed, in recent weeks, the central bank has already taken welcome steps in this direction.”

A senior central bank official said that it told Azura to seek dollars in its official Investors & Exporters FX channel in July when the company told the bank it was having trouble sourcing dollars and could default in November.

But there have been fewer dollar sales in recent months.

“We value Azura — we are one of their cheerleaders and we know they are doing very well,” the official said. “But when Azura approached us, w e c o u l d n ’ t h av e t re a t e d them separately because that would mean opening up a floodgate of companies coming to us to say ‘sell to us’ and

‘‘

Azura produces 460MW of power, receives payment in local currency and has enough naira to meet its obligations, the industry executive said

we would also be accused of crony capitalism.”

The CBN has for months held on to its dollars “because we had to understand the full effects of the pandemic on the economy and not fritter away the country’s reserves,” the official said.

B u t i n re c e n t w e e k s, i t has started selling $25m a week in the I&E FX channel in response to the shortage.

“That’s $100m every month, and November is still two months away,” the official said. “So if they play their game well, they should be able to source enough dollars to fend off any default.”

A zura produces 460MW of power, receives payment in lo cal cur renc y and has enough naira to meet its obligations, the industry executive said.

Du r i ng a s i m i l a r d o l l a r shortage in 2016-17, multilateral lenders extended terms for major projects, according to a senior development finance official. “I suspect that is what will happen now a s w e l l ,” sa i d t h e o f f i c ia l .

“But there is no denying the fact that there is a significant shortage here.”

Azura, which is backed by London-based private equity firm Actis, as well as by the CDC, the UK government’s development investment arm, has been held up as a model for how international investment could be deployed to fix the mass power shortages that make Nigeria one of the least electrified countries per capita in the

world and hobble industries from manufacturing to agriculture and agro-processing.

The country, often described as the powerhouse of Africa, in reality only has the capacity to deliver 4,000MW of the roughly 13,000MW of power it produces. By contrast, S outh Afr ica, which has one quarter of Nigeria’s population, produces four times more power.

T h e p ro j e c t ’s $ 6 8 6 m i n debt financing was rais ed in 2015 from 15 lenders — a reflection of the high risk associated with Nigeria’s power sector — led by the International Finance Corporation and including development agencies from France, Germany and the Netherlands.

Azura is not alone in struggling to access dollars as foreign reserves have sunk.

Nigeria imports the vast maj or it y of its raw mater ials and goods, and companies across the spectrum, from big conglomerates to small manufacturers, are being hit, said Muda Yusuf, head of the Lagos Chamber of Commerce and Industry, the country’s largest business lobby.

“Some of [our members] said they were about to lose their credit lines,” he said.

“Businesses are likely to go under, if some of them have not already gone under.”

Azura Power is a power company whose single ambition is to provide electricity to millions of people across Africa.

A z u r a P o w e r ’s f o c u s i s on base-load power plants across Africa and as well as renewables in Nigeria. The company’s first power proje c t i s t h e A z u ra - E d o I P P, a 461MW open cycle gas turbine power station and the first phase of a 1,500MW power plant facility near Benin City, in Edo State, Nigeria. The project reached f i na n c i a l c l o s e o n 2 8 D e cember 2015, construction started on 5 Januar y 2016, was completed eight months ahead of schedule in May 2018 and we have been operating successfully since.

We are currently developing and assessing a number of other power related projects in Nigeria and other markets in Africa based upon our assessment of the region’s substantial fuel, evacuation and regulatory constraints.

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