BusinessDay 17 Sep 2020 by BusinessDay

businessday market monitor FMDQ Close Benchmark NTB* & CP*

Bitcoin

NSE

Everdon Bureau De Change

Foreign Reserve $35.7bn

Biggest Gainer NB N41.05

2.31pc

Biggest Loser CADBURY N7.75

25,550.31

-8.39pc

Cross Rates GBP-$:1.29 YUANY - 57.06 Commodities Cocoa US$2,617.00

Gold $1,969.10

news you can trust I ** THURSDAY 17 september 2020 I vol. 19, no 653

Crude Oil $42.01

N300

Market

₦ 4,998,039.32 +1.73

Foreign Exchange

Buy

Sell

I&E FX Window CBN Official Rate as at September 16, 2020

ntb

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-34 386.00 379.00

$-N 450.00 465.00 1m £-N 580.00 600.00 Currency Futures 30-sept-20 389.54 €-N 515.00 545.00 ($/N)

Benchmark Sovereign & Corporate Bonds

0.00 1.51

0.00 4.48

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

-0.12

-0.11

-0.02

8.88

8.01

8.95

11.14

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

420.81

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

590.10

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

Foreign investors, PE firms seek 100% stake in Nigerian insurers I F

Virus leaves Nigeria’s 41.5m SMEs vulnerable amid FX, credit crunch

Josephine Okojie

Modestus Anaesoronye

oreign insurers as well as private equity (PE) investors are taking stronger position in the nation’s insurance industry, with a new trend for total ownership in firms where they have equity stake. Market analysts, who have watched the trend after about three major deals were concluded recently, say the atContinues on page 30

President Muhammadu Buhari (r), assisted by Yemi Osinbajo (l), vice president, and Boss Mustapha, secretary to the government of the federation, during the unveiling of the Logo of Nigeria’s 60th Independence Anniversary at the Presidential Villa in Abuja, yesterday. NAN

n combination with foreign exchange and credit crunch, coronavirus (COVID-19) has pushed millions of small businesses to the brink, with many now unable to continue operaContinues on page 30

Inside

Prominent African female business leaders speak on Success Factors P. 2

Thursday 17 September 2020

BUSINESS DAY

news R-L: Godwin Emefiele, governor, Central Bank of Nigeria, Segun Aina, past president, Chartered Institute of Bankers of Nigeria (CIBN); Bayo Olugbemi, president/ chairman of council, CIBN, and Zainab Ahmed, minister of finance, budget and national planning, during the hybrid 13th Annual Banking and Finance Conference, Abuja.

Nigeria aims to create N7.5trn solar energy market ... Offers single-digit, long-term loan for manufacturers, distributors of solar energy components ditional N7 billion increase in ing the creation of 250,000 new … Operators excited but seek clarity on security tax revenues per annum and jobs in the energy sector. ISAAC ANYAOGU

he Federal Government as part of the Economic Sustainability Plan (ESP) aims to achieve the roll out of 5 million new solar-based connections in communities that are not grid connected. This is expected to

create a N7.5-trillion annual market opportunity as current penetration is less than 5 percent of total market potential. Under the Solar Connection Scheme, the President Muhammadu Buhari-led government seeks to rapidly scale up pay-as-you-go (PAYG) off-grid technologies, and this is expected to generate an ad-

$10 million in annual import substitution. The objectives are to connect 25 million individuals to electricity through solar home systems (SHS) or connection to a mini grid; increasing local content in the off-grid solar value chain and facilitating the growth of the local manufacturing industry, and incentivis-

To complement the project, the Central Bank of Nigeria (CBN) says it will provide a long-term low interest credit facilities to the Nigeria Electrification Project (NEP) prequalified home solar value chain players that include manufacturers and assem-

Continues on page 30

Meet best and worst countries to start a career ... Nigeria ranks one of the worst Mercy Ayodele

he United Kingdom, Germany, Canada, United States and Japan have been ranked the best five countries to start a career globally by US-based CEOWORLD magazine. Nigeria was joined by Uruguay, Libya, Syria and Yemen on the list of the worst countries to start a career. The unattractiveness of starting a career in Nigeria helps explain the upsurge in Nigerians exiting the country for countries with better prospects for starting a career, like the UK and Canada. Africa’s largest economy occupied the 124th spot globally, falling behind peers such as South Africa, which ranked highest in Africa at 59th, followed by Egypt at 65th and

Mauritius at the 66th spot. The UK was the best country to begin a career globally, with Germany, Canada and the US in the 2nd, 3rd and 4th spots, respectively. The study is based on a questionnaire-based detailed global survey by the CEOWORLD magazine in partnership with the Global Business Policy Institute (GBPI) with a sample of 186,000 graduates. CEO magazine researchers carried out this survey across 127 countries using 19 criteria under two broad categories, which include: Liveability and Professional opportunities. Liveability was assessed under metrics like pollution, affordability, income inequality, quality of life, nature and park, economic stabil-

Continues on page 30

www.businessday.ng

Dionne Searcey Toyin F. Sanni Ibukun Awosika Arunma Oteh Group CEO, chairman, First Academic Scholar, Politics Reporter Emerging Africa Bank of Nigeria University of Oxford New York Times (Moderator) Capital Group

Lamia Merzouki Deputy General Manager, Casablanca Finance City

Onikepo Akande Group Chairman, Emerging Africa Capital (Chairperson)

Peace Hyde Forbes Africa Head Digital Media & Partnerships Correspondent (Compere)

Prominent African female business leaders speak on Success Factors

he Emerging Africa Capital Group (Emerging Africa), a leading investment banking franchise, recently featured prominent African and international female business leaders at the largest women’s leadership webinar so far themed “Women Who Lead,” a virtual event that registered 4,000 participants from 24 countries across the globe. Held on September 10, 2020, the event was hosted in honour of the 55th birthday of its Group CEO and one of Africa’s leading capital markets players and gender equality champion.

The event, which was also the maiden outing of the group’s new division, Emerging Africa Capacity Building, was designed to educate women leaders, CEOs, professionals and entrepreneurs on how to successfully manoeuvre their careers in a volatile and male dominated world. Speakers at the event included Nike Akande, group chairman, Emerging Africa Group and Nigeria’s first female minister of industry; Arunma Oteh, academic scholar, Oxford University and former treasurer of the World Bank; Ibukun Awosika, chair-

https://www.facebook.com/businessdayng

man, First Bank of Nigeria; Lamia Merzouki, deputy head of the Casablanca Finance City, and Toyin Sanni, the celebrant. Discussions at the event were moderated by Dionne Searcey, Pulitzer Prize Award Winning New York Times reporter and author. Speaking at the event, Nike Akande shared important tips for success, stating, “The qualities of a great leader are hard work, honesty, transparency, intellectual and professional rigour and a winning mind-set.” Ibukun Awosika shared constructive advice for women including personal develop-

@Businessdayng

ment, managing key relationships as well as balancing the demands of work and family. Arunma Oteh shared her 10 Success Principles, Values, Investing in oneself, excellence, courage and risk taking. Lamia Marzouki reminded participants that “The most powerful tool you have in your journey is your selfawareness, which would give you more confidence, courage and audacity.” The celebrant, Toyin Sanni, shared her key priorities, which are God, People, Purpose, Timing and Meaning, and advised leaders on the importance of empathy and building trust.

Thursday 17 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

NEWS

Lagos, Ogun take 72% investments BoI slashes interest rate to 6% to boost local content development in 2 years as 34 states lag ODINAKA ANUDU & GBEMI FAMINU

agos and Ogun have taken 72 percent of all the manufacturing investments made in 2018 and 2019, leaving 34 states scrambling for 28 percent, data from the Manufacturers Association of Nigeria (MAN) show. Analysts say Lagos is attractive to investors due to its proximity to a booming market of over 20 million people, and presence of infrastructure such as seaports. Olusegun Osidipe, director of research and statistics at MAN, told BusinessDay in 2019 that it was easier to check who owned a piece of land on the system in Lagos. “You know how much to pay on Land Use Charge (LUC) in Lagos,” he had said. Ogun is leveraging its proximity to Lagos by making cost of doing business easier. “There are a few landmarks in Ogun State. Manufacturers and other investors have more room for expansion,” Ambrose Oruche, acting director-general of MAN, told BusinessDay

on the phone last month. Investors in the manufacturing sector have taken a preference for Lagos and Ogun State as other states prove less attractive due to their lack of competitiveness. In 2018, Lagos and Ogun collectively controlled N473.99 billion (85.76 percent) of N552.64 billion invested in the economy. In 2019, both states recorded 285.88 billion worth of investments (57.62 percent) out of the total N496.11 billion manufacturing investments. On the average, the two states had 71.69 percent of all the investments in both years. Part of the challenge is that many other states are insecure. Ike Ibeabuchi, managing director, MD Services Limited, a manufacturing and services outfit, said many of the states in the country are insecure and lack infrastructure that can attract investors. “Again is proximity to the market and cost of doing business,” he said. Industry experts say the central location of Lagos and Ogun— which provides access to West African markets— available landmass and the promise of a larger market

www.businessday.ng

…as NCMDB forecasts 300,000 jobs by 2027, retention of $20bn annually

have endeared these states to investors. In addition, investors see both states as being businessfriendly in policies and environment. Ogun State holds its annual Investors Forum established in 2012, where it gathers captains of industry from around the country, with a view to intimating them with opportunities in the state. Lagos State government also engages investors from time to time through the Lagos Corporate Assembly. The $13 billion Dangote Refinery is ongoing in Lagos, in addition to investments by Dangote Sugar, Honeywell, PZ Cussons, Guinness, among others. Ogun has investors such as Fidson Healthcare, May & Baker, Pure Chemicals, Eagle Packaging, Nycil Limited, among others. Companies such as Dufil, Flour Mills, among others, are located in both states. According to Oruche, manufacturers are more attracted to locations that will make business easy to run. He said availability of infrastructure, security, ease of doing business, port availability and market proximity attract investors.

OLUSOLA BELLO

he Bank of Industry (BoI) in collaboration Nigerian Content Development and Monitoring Board (NCDMB) have slashed interest rate on loans advanced to local companies in the oil and gas from 8 to 6 percent to cushion the effect of Covid-19 and boost local content development. This is also as the NCDMB has released additional $150 million to the $200 million Nigerian Content Intervention Fund that is being disbursed to local contractors, bringing the total amount $350 million. A total of 31 projects have benefitted from the money within two years. Creating the Intervention Fund is part of the efforts by the government to enhance local content development capacity in the country. Simeon Aranunu, an executive director at BOI who disclosed this, stated that the bank signed a memorandum of understanding (MoU) in 2017 in respect of disbursement of the fund to local con-

https://www.facebook.com/businessdayng

tractors. The BOI chief who spoke at the 12th HSSE “Nigerian content development: Facing the future” forum, stated that the fund started with $200 million, adding that the conditions for accessing it, are that a company must be indigenous and a contributor to the fund. He explained that in less than 18 months after signing the MoU with NCDMB, the bank disbursed the $200 million that was advanced to the fund to interested indigenous companies. Giving a breakdown of the categories of the subsector that could benefit from the loan, he said a limit of $10 million was allocated for asset acquisition; manufacturing subsector in the oil and gas industry, allocated $10 million; contract financing $5 million and community contractor financing has a limit of N20 million. Also speaking at the occasion, Patrick Oboh, NCDMB’s director in charge of planning, research and statistics, stated that the plan of the agency was to be able to grow the Nigerian content to 70 percent

@Businessdayng

by 2027. “At the end of the 2027 when we would have been able to achieved 70 percent local content if it is well implemented and the policy is sustained, the exercise would have been able to create over 300,000 direct jobs and retain about $14-20 billion annual income from oil and gas industry and, of course, Nigeria would be capitalising on ship yards to do some other jobs. Total Exploration and Production Nigeria which was represented by Alex Agehedo, executive general manager for operation support service, said the company has started entering into collaboration with NCDMB to renovate, equip and rebuild technical schools in Port Harcourt. “We are going to rebuild the schools and provide them with technical materials and also expose their teachers to international educators.” Nigeria needs people that can do plumbing, carpentry and other basic things that are missing in our society today. We must unlock this part of technical in competence,” he added.

Thursday 17 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Around the globe: COVID-19 and criminal entrepreneurship

ik MUO

ntrepreneurship is the process of identifying and profitably exploiting opportunities. It starts with entrepreneurial alertness. Criminal entrepreneurship in the WAC (War against Coro) is thus the ability to identify and optimise opportunities for criminal enrichment in the management of the pandemic. This is not limited to Nigeria. Before we move into the main item on the agenda, here are some updates It is gladdening that Lagos has flattened the curve, and that Nigeria recorded just 79 new cases on 13/9/20. It is however an irony that on that day, the world recorded the highest singleday rise in new cases. The PTF also reports that States no longer conduct tests and have also stopped submitting their figures as only 13 states submitted their figures on 13/9/20. In another twist, Plateau State, has taken the “silver medal” in Nigeria, and even upstaged Lagos in the highest number of new cases on Friday,11/9/20. There is also the worrisome report that the cost of Coro testing in Nigeria is the second highest in Africa ($131) after Morocco ($136), while it is $86 for Ghana, $30 for Egypt and $0 for Madagascar, Sudan and Cameroun (that is FREE!!!). Is this a part of criminal entrepreneurship? There is even a beer-parlour talk (even though I am not a beer-parlour patron) that the thing is supplied free to us. (I hope there is no N5m fine attached to beer-parlour news). When LASU announced its resumption, I asked no one in particular (on 3/9/20), “with which lecturers?” Well,

on Monday, 14/9/20, the lecturers and other staff locked out the VC from the campus. Three weeks ago (27/8), I announced the availability of a $1.5 million face mask being produced by an Israeli Company, Yvel. Well I am glad to announce that I have identified some affordable brands, including the $1k Louis Vuitton mask, and another golden one for $5000 from India and then, a hand-made, local content one for less than $.01.Muo & Muo unlimited is the authorized distributor for these affordable facemasks and still out of my kindness, they will be priced in Naira. Finally, the Non-Communicable Disease Alliance has announced that Hypertension, Cancer and HIV et al kill about 600,000 Nigerians annually. So? Why have we diverted all attention and resources to Coro, which has mercifully killed only 1093 as at 14/9/20, while ignoring the major killers, including malaria, diabetes and birth-related deaths? It appears that we have, borrowing an analogy from Peter Obi, locked up our shop to run after shop-rats. Have we totally abandoned all health issues so as to fight Coro, the latest Sherriff in town? Well, the Bill and Melinda Gates Foundation in its “2020 Goalkeepers Report” has also raised alarm that Coro, in its 25 weeks of rampage has reversed the gains recorded in the health sector in the past 25 years. This is because governments have diverted all resources to Coro while people have stopped going to hospitals to avoid being infected while hospitals also do not have the time for non-Coro patients! We need to have a strategic rethink. Now on coro-related criminal entrepreneurship. Coro-related criminal entrepreneurship is pervasive and diverse; it is deep and wide; it is in cash and kind; it is big and small and it is routine and extraordinary. Down to specifics, an avalanche of fake taskforce members are on the prowl in Anambra, were some Task-Force officials were “caught in the act of collecting their fine in kind, (sexually that is) from a girl who flouted

the face-mask protocol, right inside the task-force vehicle. Probably they had learnt from Inspector Peter Iba of River State, who raped a lady all night long for face-mask violation. He argued that it was between willing buyer and willing seller, and that he settled her with N4000! In faraway Kenya, a prison warden raped a quarantined female Coro patient while James Mbam, of the Nigeria Security and Civil Defence Corps, was caught smuggling two people into Ebonyi (surely for a fee!) during the period of interstate lockdown. There were also verifiable reports of extortion bazaar along our highways, during the interstate lockdown while Nigerian Customs also impounded a COVID-19 vehicle used for smuggling frozen chicken from Bene Republic. The vehicle was arrested at Ijebuode The Ekwulobia Community in Anambra State protested against Reverend Emeka Ezike and two others were accused of cornering the communal share of palliatives, while in Niger state, some palliatives found their way into the open market and others ended up in a private warehouse. In Kano, a bench warrant had to be issued for the arrest of Kabiru Ado-Panshekara, the Chairman of Kumbotso LGA, over palliative diversion. In Abuja, people flooded the market with fake sanitisers while some Pharmacies indulged in price deceit. In the same Abuja, Charles George, a fake doctor was treating Coro patients in his one-room apartment. In Congo, two doctors were arrested over fake Coro diagnosis while in Bangladesh, Mohammed Shaheed, a hospital owner was arrested over fake coronavirus test results. Out of the 10,500 coronavirus conducted by the hospital 4,200 were genuine and 6300 given without conducting tests” I don’t know whether this is similar to viral response from an unknown lab to an oversea-bound client “If you come to us, N60, 000, if we come to you, N75000; if we don’t come to us and we don’t come to you, N40000. What does the last option mean? We now move to more serious

‘

The Ekwulobia Community in Anambra State protested against Reverend Emeka Ezike and two others were accused of cornering the communal share of palliatives, while in Niger state, some palliatives found their way into the open market and others ended up in a private warehouse

matters in criminal entrepreneurship. In South Africa, the Auditor General reports that corruption has become ‘amplified’, with a ‘frightening’ misuse of coro funds as, for example, PPEs are bought at 400 percent of their market price. In the same South Africa, 7 men stormed the OR Tambo Airport in a failed attempt to steal PPEs. Moving to high profile cases, The Bolivian Minister of health bought 179 ventilators at the $27,683 apiece while it actually goes for a maximum of $12,000 each. In Zimbabwe, the Minister of Health Obadiah Moyo got enmeshed in a $60m Coro fraud, which included the procurement of facemasks at $28 (N13,000) apiece. Two Nigerians, Adesanya and Abass, were involved in € 2,380000 Coro scam while a small boy, David Hines, in Miami defrauded the government of $4m in Coronavirus Funds, and used $318,000 to buy Lamborghini the same thing that Andrew Marnell did to the tune of $9m gambled some of it away in Las Vegas. In an insider-dealing, corporate governance infraction, some executives made billions of Dollars when the shares of their companies soared after the US government shortlisted their vaccines in its Operation Warp Speed programme. In another high-wire global case, UK, US and Canada accused Russia of coro-vaccine theft and in what has been called the covid-bonanza in UK, over 177 contracts worth over £1bn were awarded under the fast-tract rules to private companies without going through normal bidding protocols. Similarly in Nigeria N534m worth of Coro emergency contracts (including N18m for liquid soap, N40m for custom facemasks and N48m for sanitisers by NSCDC), were awarded to 19 unknown contractors and others which did not meet the procurement protocols. Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

Nigeria in focus: Thoughts for manufacturing and agricultural businesses (1)

he world economy notably presents opportunities for learning about developing economies, Nigeria inclusive, and more emphatically as they strive to attain a place of reckoning in the global market. Whereas also, Nigeria’s history of low manufacturing productivity and poor agricultural business even in recent times would be acknowledged as no news, both on the part of the citizenry, the government, industry stakeholders as well as the international community. However, the country’s drive over the years for more export earnings makes inevitable the clamor for manufacturing and agricultural output growth, as well as export diversification, among others, which are to aid improve the ability of the Nigerian economy to earn more foreign exchange resources through other world traded commodities beyond Brent crude oil and since it is argued that a nation’s vibrant exports trade are invariably a reflection of her height of sectoral productivity. In other words, from an examination of progress made in other world economies, even the success story of the East Asian economies, there remains a lesson(s) for Nigeria – the vivid case of the importance of performance in manufactured goods exports. Thus, a challenge posed to industry stakeholders within the Nigerian hemisphere is for them to bear in mind that at the very instance their businesses can to a greater degree meet local demand with quality and affordable products, they invariably would be well-positioned, i.e. of capacity, to have (same) products compete globally as a testament of value contribution and as an evidence of increased market share.

Besides, amidst varied conceptions of a firm’s (or company’s) competitiveness, here attested of at best is the viewpoint that competitiveness transits from, but never losing, the practice of economies of scale (offering quality at lower costs) to improvement in market share (concurrently with output growth), and of which such is likened to the emphasis the firms (or companies) must be cost-effective, quality conscious and operationally efficient to continuously provide customers with greater value and satisfaction than their competitors, and a means, amidst others, going forward to achieve the foregoing would be to produce innovatively with local sources to meet domestic demand and not at this phase of the country’s industrialisation path to mean competing with foreign substitutes. The decried state of Nigeria’s manufacturing sector, in brief, could be appreciated thus from the following. From reports, documented evidence has that the sector contributed about 18.8 percent of the Gross Domestic Product (GDP) in the year 2000, and recent computation showed the sector contributed only 9.3 percent to real GDP as of the second quarter in 2018 (Q2-18). Hence, such makes a case for speedy efforts to revitalise its productivity. Nigeria’s manufacturing is as well noted as concentrated in a few products – in light-goods or consumer-goods manufacturing which makes evident the country’s dearth in capital-goods as well as intermediategoods production domestically – with textiles, cigarettes, beverages, soaps, and detergents, and cement accounting for about 60 percent of total manufacturing output, and these subsectors at-

www.businessday.ng

tested to over the years benefited substantially from foreign investments, to be highly dependent on imports, and therefore vulnerable to foreign exchange difficulties. Also, to note, the prevalence of rising production costs and poor appetite among Nigerian citizenry for locally-produced goods are identified as some of the factors constraining growth in manufacturing output. Statistics also reveal the food, beverage, and tobacco subsector to be a high contributing component of the country’s manufacturing GDP, while the textile, apparel, and footwear subsector could likewise be adjudged a viable investment destination. It is obvious thereof that revitalising the manufacturing sector will require among others, major investments in infrastructure and productivity-enhancing production systems. On the other hand, the Nigerian agricultural sector which is reported to have contributed 41.5 percent of GDP in the year 2000 witnessed a dip relatively in her proportion of aggregate GDP put forth as 22.86 percent as of Q2-18, but still, the sector undoubtedly has so much potential that can be exploited. More of than not, while in the thought of the sector, there are tendencies to suggest or conclude as the case may be that activities here entirely relate to the act of tilling the soil and other sundry activities since the man with the hoe seems to be a typical description of the Nigerian farmer – a state of low-level mechanised production. But their possibilities Nigeria’s agricultural sector offers interested enthusiasts and or participants (either as entrepreneurs, ancillaryservices providers, etc.) which are either not

https://www.facebook.com/businessdayng

Godwin Uddin recognised or identified with. Furthermore, it is notable that the agricultural sector is perceived in some quarters to be progressively less profitable, partly due to the challenges delimiting the sector’s performance over the years such as weak growth in crop production, fishing, and livestock activities amid occasions of flooding of farmlands, unrestrained pollution of water bodies, unavailability/poor deployment of irrigation solutions, poor competitiveness of Nigeria’s agricultural output, inconsistencies in agricultural projects/ policy designs, amidst others. However, the possible intra-sectoral and inter-sectoral linkages, most especially within the agricultural sector as well as between the same sector and the manufacturing sector need not be underestimated. Also, the continual depreciation of the naira in recent times demonstrates the importance of local sourcing by firms (or companies) domiciled in Nigeria – a need the agricultural sector in Nigeria, if well engaged-in and supported, can fulfill, and by extension, reinventing the agricultural value chains would go a long way to revitalise the sector, to meet domestic demand and to yield the country a place of reckoning in the global market. Thus, the preceding argument justifies the need to promote more the agro-allied industry. (To be continued) Uddin is a faculty member at the School of Management and Social Sciences, Pan-Atlantic University, and worked at PearlMutual Consulting Limited, both in Lekki, Lagos, Nigeria.

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Nigeria’s compromised central bank CHRISTOPHER AKOR

n my reflections on institutions in Nigeria, I have maintained the position that Nigeria suffers from isomorphic mimicry – a situation where institutions are created and made to act in ways to make themselves “look like institutions in other places that are perceived as legitimate,” but which in reality are not. We have created various institutions of governance that are supposed to work like institutions in western countries – with elaborate laws and provisions providing for their supposed independence. However, our presidential system ensures that regardless of the laws establishing these institutions, they ultimately operate at the whim and caprice of the president, who, if and when he chooses, can disregard the law and ride roughshod over those institutions. Successive Nigerian presidents, even if they manipulate supposed independent state institutions, are careful, at least in public, to portray these institutions as independent and for very good reasons. The first reason is to deny responsibility for their actions and the second is to prevent unsavoury repercussions from the international community or the international markets.

However, that fact was lost on Mr Buhari and his handlers. While hosting governors of the ruling All Progressives Congress (APC) party in his home in Daura last month, he said he ordered the Central Bank of Nigeria (CBN) to stop providing foreign exchange for importation of food into the country due to “the steady improvement in agricultural production and attainment of full food security.” Not done, his publicist, Garba Shehu – a supposed veteran journalist who should know the drills – issued a statement with the headline: “Don’t give a cent to anybody to import food into the country”. On September 10, at a meeting of the National Food Security Council at the State House in Abuja, Mr Buhari again repeated his directive to the CBN. But this time, it wasn’t only importation of food items that are banned from obtaining forex, but also fertilizer imports. Not done, he went on twitter the next day to make the same point. “I am restating that nobody importing food or fertilizer should be given foreign exchange from the Central Bank. We will not pay a kobo of our foreign reserves to import food or fertilizer. We will instead empower local farmers and producers.” He provided his reason: “we have a lot of able-bodied young people willing to work, and agriculture is the answer”. Of course, following his orders, the CBN added food items and fertiliser to the list of banned items for foreign exchange. Never mind that the same federal government last month admitted that it borrowed a total of 5,000 metric tonnes of assorted grains from the food stock of the Economic Community of West

African States (ECOWAS) to address the apparent hunger and deprivation in the country. But even as the president was ordering the banning of all food imports, the CBN had to issue special emergency approval for four companies to import maize into the country to tackle scarcity. Since Mr Buhari’s ascension to power in 2015, he has taken over the powers of the CBN and issues routine directives to the bank– thanks, in large part, to a thoroughly subservient and compromised Central Bank governor, whose only ambition is to retain his position and get a second term in office – a feat no central bank governor has been able to achieve since 1999. In 2015, the naira was under serious pressure due to low oil price with investors suspending investment decisions to Nigeria until the currency is correctly valued. Instead of allowing the CBN to perform its statutory function, Mr Buhari jumped the gun ahead of the CBN and declared that there shall be no further devaluation of the Naira. Expectedly, after the pronouncement and even before that, the CBN lost its independence to determine the country’s monetary policy and has relied instead on reading the ‘body language’ of the president and taking actions that will conform with that ‘body language’. The CBN was then forced to roll out various kinds of policies – including placing some items on import prohibition list, an action the Economist derided as archaic and irrational in a July articled titled “toothpick alert” – to protect the beleaguered Naira. Despite all the efforts of the CBN, the Naira still ended at N360 to a dollar – far worse than it would have settled

‘

Is it any wonder that the CBN has been turned into the government’s piggy bank, printing trillions of naira for the government to spend while crowding out the private sector?

had the naira being floated earlier. Even when the president was made to literally eat his words and allow for a devaluation of the naira in the face of severe forex scarcity, he still keeps making comments to show that he never liked the decision. At a gathering of business leaders in June 2016, Mr Buhari was quoted as saying: “I don’t like the returns I get from the CBN...” “How much benefit can we derive from this ruthless devaluation of the naira? I’m not an economist neither a businessman-I fail to appreciate what is the economic explanation.” Is it any wonder that the CBN has been turned into the government’s piggy bank, printing trillions of naira for the government to spend while crowding out the private sector? Is it any wonder that the CBN just doles out money to satisfy every of the president’s whimsical ideas and programmes in the name of development financing? Is it any wonder that the CBN continues to enrich the close associates of the president through the arbitrage opportunities in the current unsustainable foreign exchange management system? Is it any wonder then that at the slightest sign of trouble, virtually all foreign and portfolio investors have fled the country thus exacerbating forex scarcity? Like Olu Fasan, BusinessDay’s leading columnists and political economists noted on twitter last week, “All these @MBuhari ‘asks’, ‘orders’, ‘directs’, ‘instructs’, the @cenbank to do this or that is doing enormous damage to the credibility of #Nigeria’s central bank. That the government is not even subtle about these orders shows utter disregard for the independence of the central bank”.

Anthropomorphism of economy: How 40% is discounted from N151.56 price of PMS (1)

ometimes, the only difference between realities and dreams is politics. With that said, would there be any need to be taken aback if you understood what President Buhari meant when he asked Nigerian elites to judge his administration fairly in governance? There is no gainsaying that production, indirectly through importation, has largely drifted offshore as businesses and politicians have embraced the upsides of globalization. However for many, particularly developing nations of Africa like Nigeria, the coronavirus pandemic has shown that the benefits of globalisation- as evident in low tariffs, cheap cost of labour, goods and services- has now become unattainable and unsustainable, following the global economy’s grind to a halt. Consequently, also promoted by policies, industries now have to increasingly bring their operations onshore, even if it means at a higher cost. For example, on the 11th of September, President Buhari tweeted via his official twitter account, that people importing food or fertilizer into the country should not be given foreign exchange from the Central Bank of Nigeria (Foreign Reserves). He made the statement because of his administrations’ averred to grow the agricultural sector, through the empowerment of local farmers and producers, which is believed to be the single largest solution to the nation’s array of economic problems, amongst which inflation is highly ranked. Although, local production may be costlier than importation, it is pertinent to understand that local production is the lever-

age to the upside of globalization, which is currently highly decreased. Local production is what can reform and give businesses and the economy their sustainably feasible and viable long term needs, which includes; reduced cost of production and living, encouraged innovation, and an unclouded environment for investments. Without a higher cost, operations cannot continue. And without operations, nothing gets produced. And without production, recession will rein our economy. In other words, without increased cost (which culminates into increased price of outputs), another recession is inevitable to enter into, in no long time from now. This is premised on the economics study that has to do with the Theory of Cost. The theory, supported with that of Economies of Scale and Operating Leverage, explains why and how cost (particularly fixed cost) is reduced when spread over more units, or when output is increased. Economies of Scale, on the other hand, are cost reductions emanating from a significant rise in output without a comparable increase in fixed costs, whilst Operating Leverage explains how high operating leverage Companies (that is companies with high fixed costs relative to variable costs) have greater potential for increased profitability by increasing outputs, since it leads to lower total costs per unit. Presently, because the global economy is greatly slowed by reason of the pandemic crisis amongst others, outputs and its demand has greatly reduced, which has led to higher cost of production and lower profitability. The Energy (fuel) and power (electricity)

www.businessday.ng

industries, for example, have high operating leverage, given the cost of refinery plant and power plants with their respective raw materials for production, vis-à-vis the dollar exchange rate. By implication, in the economic sense of things, increased cost is inevitable to sustain their profitable operations. And until they are profitably operated, investment in them cannot be up-scaled. Reportedly, for instance, the World Bank gave Nigeria the condition to introduce new electricity tariff that is reflective of cost before she disburses the $3 billion loan the country applied for, out of which about 25 percent is earmarked for electricity. Though President Buhari recently approved the electricity tariff increase effective from 1st of September, the former Minister of Power, Babatunde Fashola, during his term, defended and justified the tariff hike, arguing from the economic and investment point of view. Aside from the inflexion point being reached simultaneously by both power and energy industries at this time, the same kind of drum-beats sounding in the power sector is also what is obtained in the energy sector. President Muhammadu Buhari, speaking at the closing of the first-year ministerial performance review retreat held in Abuja very recently, said that the average production of oil in the country, from 1999 to 2014, was 2.1 million barrels per day, sold at an average price of $100. Whereas, when his administration assumed office in 2015, the price collapsed to $37/$38 per barrel and the production went down to half a million barrels per day. The subsidized fuel price at fuel stations, prior to 2015, was largely N97

https://www.facebook.com/businessdayng

Adeyemi Adebiyi

per litre and the exchange rate was under N200 to $1. Currently; exchange of $1 is over N380, production per day is quite less than 2.1 million barrels due to the covid-19 pandemic, fuel price at pump stations are no longer subsidized; production factors are quite increased due to the depreciated Naira and the highly levered nature of most critical industries. These variables cannot support profitable operations and productions without increased cost of output which culminates into price. For instance, draw a comparison between 2012 and 2020; 2012, one of the years where exchange rate of $1 to Naira was under N200, and 2.1 million barrels per day were sold at an average price of $100, the federal government at the time announced the removal of fuel subsidy to increase price of PMS to N141 per litre. As of today, exchange rate of $1 to Naira is over N380, production is less than 1.5 million barrels per day, and oil price is under $45. What do you expect, especially if you consider that the country’s revenue has dropped by 65 percent according to reports by both the Ministers of Finance and Information? (To be continued) Adeyemi is an independent consultant. Email: adebiyiadeyemi@outlook.com

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Philip Shaibu: The deputy man of the year Positive Growth with Babs

Babs OlugbemI

f you can select your deputy in any position, be it in politics, business, or social setting, what would be your top priority? Is it loyalty, capacity or what? In a leadership sense, your deputy must be someone who can see beyond your dreams and selflessly give himself or herself to the common goal. He must be someone you can trust to deputise for you in all capacities. He must be your worthy successor who can take the dream beyond the limit of your time and existence. The selection, experience and the reality of deputy governors in Nigeria are different from my opening paragraph. Deputy governors in Nigeria have been endangered species involving in many of the tough love gone bad between them and the governors they won elections with. The exception to this is Philip Shaibu who has so far proved to be a different breed deputy governor in the Edo state drama. What is different about the man-Philip Shaibu? I am not sure the people of Edo state will want to give Adams Oshiomhole his fourth term in office as the governor of Edo state by electing Osagie Ize-Iyamu as their governor next Saturday. In the last gubernatorial election in the state, Oshiomhole description of Ize-Iyamu with various acrimonious words in

favour of Godwin Obaseki is enough proof of the politics of the carrot we have allowed in Nigeria. I am sure the River Jordan would not have watched Ize-Iyamu for the APC’s candidacy if not for the desperation of Oshiomhole, the uprightness of Shaibu and the boldness of Obaseki to challenge the godfathers of the state. It is not a good omen for our politics of no ideology to see the carpet crossing and recycling of candidates between the PDP and APC in Edo state. It shows how desperately united the political class can be in their quest for power. Be that as it may be, the only reason Obaseki stands the chance of completing his tenure is simply the man Philip Shaibu. Without Shaibu purported principle and relational intelligence, the story would have been different. Obaseki has a credit in his relationship with Shaibu, and this might likely be the ‘Queen’ in his chess game against Oshiomhole. If you are in doubt of the power of Shaibu and the potency of Obaseki’s relationship management skills, read the next paragraph. In eight year of his tenure, a former governor in Jigawa state had three deputy governors. A deputy governor’s sin in Bayelsa truncated his master’s ambition and wasted over 300,000 votes of the people. In Nigeria, the sins of the deputy governors and their frosty relationships with the governors in power tussles that are never in the interest of the people. Asiwaju Tinubu changed his deputies’ twice-Kofoworola Bucknor and Femi Pedro but made progress and that was a rare exception. Aside from Lagos and Jigawa, the movie titled ‘entangled governors and their deputies’ was acted in Abia, Adamawa, Akwa Ibom, Anambra, Bauchi, Edo, Ekiti, Enugu, Ondo, Osun, Ogun, Oyo, Plateau, Niger, Kano, Kadu-

na, Sokoto, Bayelsa, and Zamfara states. Where else are we looking in Nigeria? Recently, a former deputy governor celebrated the successful completion of his eight years tenure in office with a thanksgiving service in the church. Are deputy governors’ endangered species? There is a cost to the masses if the governors and their deputies are at war and using the state’s resources to fight political battles. These fights for successions or supremacy also involve the states’ assembly and judiciaries that are in most cases, weapons of massive destruction of the deputy governors. Again, what is different about Philip Shaibu? Why is it difficult for Adams Oshiomhole to get Shaibu to grab the carrot of replacing Obaseki instead of going for the rotten fruits he condemned four years ago? What has Obasaki done differently in the governor-deputy governor relationship in Edo state that made his house of politics undividable for the Abuja merchants? We need more of the young Philip Shaibu’s loyalty to their masters if it is in the best interest of the people and to institutionalise our political system. It is shameful to see Oshiomhole going around to campaign for Ize-Iyamu as it is for Obaseki to be the PDP flag bearer in the coming election. It confirms the shamelessness of our politics and the ‘demoshameology’ (the politics for personal gains) we practice in Nigeria. However, every adversity has within it the seed of an equal or more significant benefit, according to Napoleon Hill. The seed of benefit and ideology in the Edo state House of Drama is a deputy governor who is standing with his principal ignoring the promises of the godfather and the ambition to be a governor as soon as possible. The political credentials of Philip

‘

We need more of the young Philip Shaibu’s loyalty to their masters if it is in the best interest of the people and to institutionalise our political system

Shaibu are rich, as stated on his website. Philip could be the new political with a radical departure from the old norm-the game of the godfather. Shaibu has put his neck on the gun for what he believes in and for Obaseki particularly. Will posterity to judge him right. I am not eligible to vote in the Edo state election, but my vote would not have been for Obaseki nor Ize-Iyamu despite the former giant strides and his readiness to fight the godfathers. My vote would have gone to Philip Shaibu, a 50years old deputy governor. He chose to go through the lane not popularly journeyed by the past deputy governors for an Obaseki and the people of Edo state. I do hope the future in terms of a second chance for Obaseki, an improved educational rating, available healthcare services and increase the standard of living for the Edoites will justify Shaibu and writes his name in gold among politicians in Nigeria. I do believe the reward for being patriotic till the end that favour and prod Goodluck Jonathan to the presidency will one day push Shaibu to more leadership positions in Edo state and Nigeria. Suppose Obaseki remains the governor beyond Saturday, September 19, 2020, and becomes the man of the year in Edo state for the killing of the godfathers. In that case, kudus will be for Philip Shaibu, who is not just a deputy governor but a leader that shows character beyond self-gratification for his people. On Saturday, my vote is for Philip Shaibu as governor of Edo state and Godwin Obaseki as the Edo state’s man of the year. Babs Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

Boosting access to credit: The role of the credit bureaus

he Micro, Small and Medium Enterprises (MSMEs) sector in Nigeria accounts for about 90 million jobs in the economy. However, less than 15 percent of MSMEs have access to finance. Lack of access to financing, most notably workingcapital financing, has led to the crimping of the sector growth and a loss in latent innovation, creativity and productivity. The Nigerian government has demonstrated its commitment to improving the ease of doing business and access to credit to consumers and small businesses through various policies and initiatives. These include the promotion of credit reporting infrastructure and collateral registry, enacting enabling laws – including the Credit Reporting Act 2017 and the Secured Transaction in Moveable Assets Act (Collateral Registry Act) 2017, promoting financial inclusion, and advancing various forms of direct and indirect interventions in loans and grants to strategic economic agents. The commitment resulted in Nigeria making the greatest stride in improving access to getting credit in the World Bank’s ease of doing business rankings. The country moved from 32nd position in 2017, to 6th position in 2018. The interventions and initiatives by the government provided a necessary enabling environment and a strong regulatory framework that behoved credit granting institutions to do more, though access to credit by MSMEs and consumers in Nigeria still remains very low. Despite the country’s huge population of over 190 million people, less than 15 million persons/entities have enjoyed at least one form of credit from formal banking institutions. In addition, according to a communiqué given by the Central Bank on Nigeria in January 2020, credit to the private sector grew from 12.82 percent in November 2019 to 13.1 percent in

December 2019. Access to capital is a major ingredient in growing businesses and economies. Lack of access to finance is a key constraint on the growth of small and medium enterprises in Sub-Saharan Africa, and an important limitation on employment, economic growth and shared prosperity. The problem of access to credit is a recurring complaint from manufacturers and businessmen. Aside the facts that interest charges are high; many small businesses cannot access credit. Figures released in 2019 by the Enhancing Financial Innovation and Access (EFInA) revealed that about 36.6 million Nigerian adults, which represents about 36.8 percent of the Nigerian adult population, do not have access to credit, which compares poorly with the higher rates recorded in a number of other developing countries. Nigerian Banks generally seek to lend money and earn the resultant incomes. However, they have become extremely careful due in part to the level of defaults being experienced. While most banks today will advance credit to blue chip companies and their employees, the willingness to lend to small businesses is hampered by lack of credible information. Also, research indicates that lending is higher and credit risk is lower in countries where lenders share information, regardless of the private or public nature of the informationsharing mechanism. It is common knowledge in Nigeria that the Small Medium Enterprises (SMEs) have challenges in obtaining substantial loans from some financial institutions mostly as a result of the high interest rates imposed by the banks as well as the collateral required that most SMEs do not own. In most developed countries, they use credit histories to determine unique interest rates to

www.businessday.ng

suit each customer/potential borrower. Credit histories are accrued based on information on the person’s financial responsibility in handling previous debts, bill payments and public information. Credit bureaus in these countries can generate what is known as a Credit Score, a numerical value calculated to ascertain the creditworthiness of potential borrowers. Credit histories equip banks with information they need to determine a customer’s creditworthiness and charge interest rates based on the individual’s risk profile. Credit growth drives the economic growth of the country. Credit promotes investment which has propelled many economic booms and strengthens entrepreneurship. As SMEs cover over 75 percent of Nigerian jobs, their ability to raise capital to expand is crucial for economic growth and development in Nigeria. According to Statista, a leading provider of market and consumer data in Hamburg, Germany, the value of domestic credit granted to private sector in Nigeria was about 10.9 percent of Nigeria’s GDP in 2018. A more robust solution to this prevalent challenge would be the utilisation of credit bureaus. A credit bureau is an institution that aggregates the information used to build credit histories; hence they are in fact the most important players in bridging the information gap and solving the asymmetric information challenge in the Nigerian credit market. Currently, there are three credit bureaus in the country – FirstCentral Credit Bureau (Formerly XDS Credit Bureau), CRC Credit Bureau and CreditRegistry. Each of the three licensed credit bureaus today has an average repository of about 25 million records of credit data from institutions across various sectors of the economy including but not limited to commercial banks,

https://www.facebook.com/businessdayng

OLADEJI O. PETERS microfinance banks, mortgage banks, retailers, cooperatives, finance companies, leasing companies etc. In view of this phenomenon, credit bureau coverage remains low in Nigeria at 8 percent compared with 64 percent in South Africa, 25 percent in Egypt and 17 percent in Ghana. We need to urgently change the narrative of credit concentration and increase access to credit. The products and services provided by credit bureaus improve the ability of lenders to evaluate risk and of consumers to obtain credit and other products with speed and at competitive terms. Credit reporting expands access to finance, especially for consumers and MSMEs and plays a key role in improving the competitiveness and efficiency of credit granting institutions by reducing credit processing costs and time. The availability of credit information therefore implies a more efficient allocation of credit at lower interest rates accompanied by higher economic growth and a more diversified credit distribution. The credit bureau infrastructure is also designed to provide support for the introduction of new products in the financial system such as credit cards, mortgage loans, personal loans, auto loans, working capital for small businesses, etc. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Peters is the Acting MD/CEO, FirstCentral Credit Bureau and Chairman, Credit Bureau Association of Nigeria (CBAN)

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

Editorial Publisher/Editor-in-chief

Frank Aigbogun

Nigeria’s contradictory policies will only threaten welfare and impede recovery CBN must focus primarily on its core responsibility, price stability

editor Patrick Atuanya 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

estoring growth to the Nigerian economy will only be a mirage or undermined if policies become barriers and not enablers. In the last six years, experts and analysts have called for a synchronisation in economic policies by the monetary and fiscal authority. However, the narrative has been a case of the Central Bank of Nigeria (CBN) stepping into the fiscal space while neglecting its core responsibilities to the Nigerian economy. We have seen the CBN use unorthodox policies to drive down the cost of borrowing for the federal government, rendering investment in the fixed income space unattractive for the general public and PFAs most especially. Also, fuelling the quest to stimulate local production of goods and achieve diversification, the CBN has also resulted in restricting FX access on food imports. It also firmly supported the federal government’s move to close the land borders. This has affected the economy. Nigeria’s inflation rate accelerated to 13.22 percent in August, highest in 29 months according to an inflation report by the National

Bureau of Statistics (NBS). In simple terms, it reveals how much the policies of both the CBN and the FG is eroding the purchasing power of Nigerians in an economy suffering from economic contraction amid rising population, declining income and rising unemployment rate. Outlook for the inflation movement in coming months is bleaker given the recent move of the FG on food imports. Just like the position of the CBN in August 2019 that the President’s comments – to stop providing foreign exchange for food imports – were consistent with the Bank’s foreign exchange (FX) policies since 2015, it is most likely that Buhari’s orders to the CBN not to give a kobo for food, fertilizers imports last week Thursday, will receive a nod. Once again, the CBN will keep prioritising its objective to manage dollars given its obsession with naira above its most important and core responsibility of maintaining price stability in the economy. The actions of our policy makers aren’t only hurting households who are yet to recover from the brunt of the COVID-19 pandemic but will undermine potential benefits from reforms in the power and petroleum sectors of the economy. The CBN’s FX policy is hurting

investment appetite in naira assets as foreign investors take caution for now. With inflation at 13.22 percent, yields on 1-year bond at 2.55 percent and heightened risk of policy inconsistency, Nigeria will have to offer a higher risk premium. Also, following the government’s renewed push for reforms; we should normally see the Nigerian stock market respond positively, however, this isn’t the situation given the CBN’s stance not to undertake FX reforms. For an administration that claims to take the welfare of Nigerians seriously, it is rather unacceptable that the results of policies are at variance with their objectives. It means only either these policies are myopic or they entirely lack the interest of the general public. The moves for reforms in two key sectors of the economy are commendable efforts from the federal government. Although households have to pay more for petrol and electricity now, the long term gain is worth the current pain. However, factors such as Nigeria’s unfriendly foreign exchange policy and closure of the land borders will only worsen the pains of Nigerians and may render a mirage intended gains from the FG’s bold

reforms. To alleviate the suffering of Nigerians, we suggest that the CBN must focus primarily on its core responsibility to stabilise prices in the economy. Rice, a staple dish in every household, now cost at least N26,000, accounting for at least 87 percent of N30,000 minimum wage of an average working class Nigerian. We also suggest a reopening of the land borders and a relaxation of FX restriction orders while the CBN carries out necessary reforms in the FX market. Building and stimulating domestic production in Nigeria doesn’t necessarily have to take the protectionism route. There are fundamental infrastructural challenges like lack of power, good roads etc. that are affecting the local industry. Fix it! This will boost the capacity of local producers to compete favourably with foreign products and gradually see consumers shift focus to locally produced goods and reduce demand pressure on dollars. There is no justification to repeat the route of interventions in boosting local production when the answer lies in allowing a free market economy just as the FG recently permitted in the petrol and power sectors of the economy.

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

Enquiries NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

ADVERTISING 01-2799110 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessday.ng The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 Legal Advisers The Law Union

Mission Statement To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world.

OUR Core Values

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven. • The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests. • Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessday.ng

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

L-R: Olaniyi Adefabi, product manager, 9Mobile; Bashir Are, chief executive officer, Lagos State Lotteries Board; Andrew Humber-Osofisan, CEO, Humber International Lottery (promoters of TYL Games), and Joy Okum, assistant director, Lagos Zonal Office, National Lottery Regulatory Commission, during the soft launch of TYL Games in Lagos recently

Nigeria’s biggest beer makers record first loss in 7 years Mercy Ayodele & Favour Olarewaju

igeria’s biggest beer makers posted their first combined loss in seven years in the first half of 2020, as revenues plunged. The beer makers surveyed by BusinessDay include Nigerian breweries, International Breweries, Guinness Nigeria and Champion Breweries. The four companies posted a N9.7 billion loss combined as revenues declined 14.3 percent to N320 billion in the first six months of 2020 from N373.8 billion a year ago. Although their cost of sales reduced by 11.8 percent to N216.9 billion from N246 billion in the period under review, the beer companies found a record loss impossible to avoid. Beer makers in Nigeria are struggling to make sales this year due to weaker demand for consumers who have been hit by declining purchasing power and rising inflation. Most recent data by the National Bureau of Statistics (NBS) shows inflation accelerated to 13.2 percent in August 2020, the highest in 29 months. The COVID-induced economic lockdown in the most part of the second quarter also took a toll on the revenues of beer makers following the closure of bars, restaurants, clubs, hotels and other social spots across the country. The adverse economic impact of the pandemic contributed to a record 6.1 percent contraction of Africa’s biggest economy in the second quarter, according to NBS data. “We are working in a sector which is under pressure at the moment,” said Baker Magunda, CEO Guinness Nigeria in a recent interview with Business Day. Magunda also alluded to a cash squeeze that is hurting the industry.

“Many of our distributors are in that category—from small to medium enterprises; unfortunately, access to cash from the banks has been too difficult for them.” “The cash squeeze permeated through the industry and has led many FMCGs into trading on debt,” Magunda said. Nigerian Breweries Nigeria’s biggest brewery by market capitalization saw revenue dip by 10.8% to N151.8bn in H1 compared to N170bn in 2019. Cost of sales was also down by 6.0% to N92.7bn in H1’2020 from N98.5bn recorded in the same period last year. Profit before tax and profit after tax declined sharply by 57.0% and 58.0% to N8.3bn and N5.6bn respectively in H1’2020. The biggest brewery has also seen its share price crash from N63.00 in June 2019 to N35.00 in June 2020 but has improved since then, closing at N41.05 per share on Monday. Guinness Guinness recorded its biggest loss in 9 years in the first half of the year as the company recorded a Loss before and after tax of N17.1bn and N12.6bn, respectively. Revenue tumbled by 20.63% to N104 billion in the first half of the year from N131 bn recorded in the same period last year. Gross profit also dipped by 16.9% to N33.3bn in H1’2020 compared to N40.1bn in the first half of 2019. Guinness Nigeria saw its share price plunge from N97 per share in the first half of 2020 to N14.50 per share as at June 2020 and closed at N13.45 per share on Monday. It was not all gloom and doom for Guinness as the CEO said they were able to save some cost. Cost of sales declined by 22% to N71 billion in H1’2020 from N91.4 billion recorded in the same period last year. www.businessday.ng

“In spite of the muted growth in the industry, we delivered strong volume growth,” said Baker Magunda, CEO Guinness Nigeria in a recent interview with Business Day. “We saw an improvement in cost control, our cost of goods was good; in a country where inflation is 12 percent, we grew the cost by only two percent,” Magunda said. Champion Breweries Champion breweries saw revenue dip by 2.14 percent to N3.3 billion in H1’2020 compared to N3.4 billion recorded in the same period last year. Also, cost of goods sold dropped by 2.14 percent to N2.1 billion in first half of 2020 from N2.2 billion recorded in June 2019. Net profit dipped by 73 percent to N120 million in H1’2020 from N208 million recorded in June 2019. Champion’s share price dropped by 44 percent to N0.95 in June 2020 from N1.69 in June 2019. It has however declined even more since then, falling 5 percent to close at N0.90 on Monday. International Breweries International Breweries (INTBREW) saw revenue decline by 11.7% to N60.6bn in H1’2020 compared to N68 billion recorded in the same period last year. The company’s loss before tax rose to N12 billion in H1 2020 up from the N10.5 billion recorded in 2019. INTBREW also saw its loss after tax worsen from N6.8 billion in H1’2019 to N2.8 billion in the first half of 2020. Cost of Sales declined -5.3% year on year and gross profit slowed by -35.05% compared to last year. The share price which stood at N38.10 kobo per share in the first half of 2019 plummeted to N4.10 kobo per share in H1’2020. Share price for INTBREW on Monday closed even lower at N3.10 kobo per share.

L-R: Rufus Olise, events manager, International Breweries Plc (IBPLC); Stanley Okie, distributor development manager, IBPLC; Ejue Okwen, million naira prize winner, and Chinwe Odum, district manager, IBPLC, at the Million Naira Cheque presentation from Hero Lager Beer’s RiseLike-A-Hero Promotion in Port-Harcourt, Rivers State.

L-R: Michael Olawale-Cole, deputy president, Lagos Chamber of Commerce and Industry (LCCI); Ohioze Unuigbe, managing director, Bureau Veritas; Toki Mabogunje, president, LCCI; Adenike Akinbote, systems certification manager, Bureau Veritas, and Muda Yusuf, director general, LCCI, during the official presentation of ISO 9001:2015 Certificate to the Lagos Chamber of Commerce and Industry by Bureau Veritas in Lagos

L-R: Lai Mohammed, minister of information and culture; Hope Uzodinma, governor, Imo State; AbdulRasaq Isa, chairman, Watersmith refinery and petroleum company, and Abdul Isa, general manager of the refinery, during the visit of the Minister to the Modular refinery Limited in Ibigwe,Ohaji Egbema, Imo State

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

Innovation

Apps

BUSINESS DAY

Start-up

Gadgets

Ecommerce

IOTs

TECHTALK

Broadband Infrastructure

Bank IT Security

Why I resigned from Cars45 to build Autochek - Etop Ikpe The resignation of Etop Ikpe as CEO of Cars45, a Nigerian-based digital automotive platform, was one of the most discussed topics in the Nigerian tech community in recent times. Left unaddressed, the discussion quickly led to rumours - fuelled by some media platforms - that there was a leadership crisis that was responsible for the exit of some co-founders and staff of the company. In this interview, Etop Ikpe speaks to BusinessDay’s FRANK ELEANYA on what really happened. He also speaks on the gaps in the automotive industry that led to the founding of Autochek, a company that has acquired Cheki Nigeria and Cheki Ghana.

What really happened with Cars45? t all started with my resignation, and maybe the expectation of people was that something must have happened. The media misconstrued it. My quietness might have contributed to the narrative but it was because of the journey I was about to embark on. I don’t really see myself any longer as just being in the industry. I have seen the automotive sector, the value, and the potential that it holds. In India, the manufacturing segment of the automotive sector alone contributes 30 million jobs. 35 percent of manufacturing GDP in India comes from the automotive industry. It is an industry whereby any single country globally has its automotive brand aligned to them. Look at how the West reacts to it and see where Tesla is at the moment. As I began to look at it, I wondered to myself that across the world you see the amount of impact the automotive industry brings and it is not like cars are not moving around in Nigeria, so why is the industry not providing as much value to people here? If you trace it back, you find out that in the 1970s Nigeria was manufacturing over 300,000 vehicles. We had Range Rover, Leyland, automotive factories manufacturing batteries, windscreens, and wipers. And you begin to question and say “What happened?” This is a sector that provided a lot of value, technical competence. What has happened? I have come to realise that the automotive industry has become so fragmented, operating individually and that is the reason why there is little value there. So I internally dedicated myself to using the opportunities that I am lucky to have to create wealth and employment. I feel that the biggest problem we have in Africa is unemployment. We need to put people to work. I have seen that this industry can have a massive impact. For me, I would dedicate everything I have towards ensuring that I build solutions that can create wealth, especially for young Africans. My resignation is a function of the dream I have for Autochek. What we are doing with Autochek is not for one segment. It cuts across the entire industry. What is the actual reason Nigerians don’t have cars? They want a place where they can access it and that is what we are trying to build. We are trying to build technology solutions and provide a solution to the people who trade with the platform to serve their customers. They don’t have to be there. The technology will do the job. I believe very strongly in the direction that we are taking being able to deploy solutions that can contribute to all the segments. So my focus is being able to offer people guarantees and warranties on cars that they buy and financing is very

Etop Ikpe

important. Less than one percent of vehicle purchases are transacted through institutional finance. These are not problems that one individual can solve. The final thing is that nothing works without providing efficient maintenance and support. If you look at the industry overall, it is not possible to provide everything. If you look at the brand new car industry there is support there. 99 percent of the cars that are driven originate from being used cars. There is no efficient after-sales support. These are the sectors that we are aiming to solve. If we can bring all these sectors together, then people can have a better buying experience. People cannot finance a car if they do not have a guarantee that the car they are spending money on is going to be maintained, not by road-side mechanics who depreciate the car. We realised that the industry in itself is a very symbiotic industry. All the various verticals within the industry support each other. We want to provide that technology that enables each of these segments to operate seamlessly with each other. These are the reasons that led to my decision. It is not a one minute-decision like the way the public perceived it. Having a purpose in life means that sometimes you have to follow that purpose. My goal transcends brand, I see people and I see lives. Would Autochek be like a Super App? It is not a super app yet but we want to be able to bring on every single player unto one central point for them to be able to offer services within the automotive industry. So we would basically be focused on maintenance, after-sales and financing, warranties, and eventually grow that space whereby both from a dealership perspective to a financing perspective. It is our knowledge of the industry that has helped us

understand how these things work. From a consumer perspective, you can access all these services. You can also access cars from multiple marketplaces. As a dealer, you can serve a customer through multiple applications as well. It has made us very excited about what we are trying to do. I guess you would understand a lot better as to why I made that decision. I have to point out that I would not make that decision if I was not confident in the leadership team in Cars45. It is an extremely experienced team, very innovative and I think they are going to do better than I ever did. That is the confidence that I have. Now it is time for us to focus on a deeper data problem. Some people would look at it as “This is going to be a competition for Cars45”, what do you think? What we are doing is symbiotic in the sense that we are focusing on the solutions that will be the catalyst for the industry. There is not one individual or player that we cannot work with. We are focused on solutions that will enable trade. I am very sure we are going to do more business in the future and I am sure we would announce partnerships in the future. I think it is people’s perception of competition. The reality of the solution is that the technology we are bringing to the market is one that would work with every single player in the market. We are trying to lay the bedrock for people to transact much more effectively. So there is nobody in the industry we cannot work with or partner with. Outside Nigeria, you would notice that global brands like Mercedes, Volvo, Volkswagen have different brands sold at prices that many people can afford. Nigeria has limited versions of these brands. Many have said it is the business environment they have that is

enabling that. What is your view? That is the essence of bringing everything together so that there can be a lot more transparency in the industry. For instance, there are people that have bought cars with their own money in the last five years or ten but the problem is that they haven’t bought from any institutional body that can say this was how their usage was, this is how much they bought the car for, this is when they changed their next car. Nobody is collecting that information or data. Think about all the cars being maintained across the country, who knows what parts are being changed, what parts wear out so quickly? Everything is just based on guesswork. But the more people begin to use technology to transact, the more you can begin to have data to understand what kind of cars people should be using. In the past, the Matrix (Corolla) was very popular but it has been discontinued. You know there has not been a replacement brand for the Matrix in Nigeria because it was discontinued internationally. Nobody is feeding that information back to say “This car should be continued in a way.” The G-Wagon has been released in China with a four-cylinder engine. Why are they doing that? Because they have realised that people in that market do not mind a big body with a small engine. That is the kind of data that should be fed into the local market for manufacturing but you cannot get that information if you are not already collecting the data of the transactions that are happening. Anybody that is going to invest would only be doing guesswork. Transactions are happening every day in Nigeria but there is no data. What is the average price of the car that is traded in the country? What are people trading on? Who are the people currently buying this car? What type of car are they buying? If you have that data, the manufacturing would know this is what we should be making or this is where we should be going into. But the information is not available and that is why we are bringing the solutions to the market and why we are going through the dealerships which already exist. We do not need to create new dealerships. The dealerships are everywhere, just give them the solutions that would make them work. These are hard-working businessmen that have put food on the plate of their families for years. We just need to collect the data and enhance the workshops that are currently there. What would acquiring Cheki achieve? Cheki is a very amazing platform. It has been in existence for over ten years with a great reputation in

the market and has supported a lot of dealerships and consumers. In fact, it was really the first digitized experience for most Africans in terms of buying a car. It has built a huge customer base over the last ten years. The previous owners of Cheki, ROAM fortuitously for me, have maintained a very good relationship over the years. I have known them from my time at Deal Day. We have very similar views and because they have been in the industry for so long they have come to see what the industry needs. We have similar views on what the future of the automotive industry should be in Africa. It has given us a very unique opportunity to be able to access a broad market that has accepted a lot of dealerships and consumers. It also gives us a very good entry into two markets that we consider to be very similar and very core to the growth of West Africa. And because we have pan-African ambitions, it gives us the opportunity to access the market very quickly. Vehicle financing has existed for a long time, yet not every salary earner can confidently work into a bank and access the credit. What do you think is missing? There are four core reasons that will make it possible for a bank to lend. But sometimes financial institutions sometimes take on the operations of vehicle financing that they should not be doing in the first place. The four things the banks need to learn are 1) Conditional analysis of the vehicle. That means what is the actual condition of the car. 2) They need to be able to access the customers’ personal issues in real-time. This is because used cars are a unique item. If you are learning on a brand new car, I can go somewhere, it can take me more than one month to process the loan but there are more than 1000 of the same car sitting inside a warehouse and once my loan is ready I can go and process that car. But every used car is unique; two Corollas, two different engine performances. So every used car has a different valuation in itself. What that means is that if I want to take a loan on the car it cannot be processed quickly, the likelihood is that by the time my loan is ready that car is not available. What are the chances that I would find the exact same car in the exact same condition and the bank is willing to lend on that car again? The preapproval process is very important. 3) Is the residual value of that car. What is going to be the valuation of this car twelve months down? This helps a bank be able to weigh their risk. 4) The final thing is the disposal of the car. In the event that I recover this car from an individual because they are unable to pay, can I quickly liquidate this asset?

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

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

Thursday 17 September 2020

BUSINESS DAY

INTERVIEW

Why Suleiman Hussein Adamu, Water Resources Minister, feels Nigerians should pay for water On the face of it, there’s water everywhere. Indeed, water is often likened to the free air that we breathe. Like air, it is generally believed that water is one of the things that nature has freely endowed society with. However, that would be true if nothing was required to make the many types of water from different natural sources – rains, brooks, streams, rivers, oceans, etc – potable. We just must reckon with the fact that human efforts and resources are required to achieve water potability, not just for humans but even for animals and plants. And there is also the fact that there is a nexus between water and health that compels governments to take every step to preserve, conserve and protect natural water sources in order to maintain ecological balance that is critical to environmental sustainability. The point being made here is that water is a more serious business than we have tended to imagine in this country. Engineer SULEIMAN HUSSEIN ADAMU, Honourable Minister of Water Resources, recently sat with a team from BusinessDay to share his perspectives and opinion on the water supply situation in Nigeria and underscored the fact that “water issues transcend the four years or eight years of an administration”, in the context of his 15-year National Water Resources Roadmap.

hat is your outlook on the water situation in Nigeria? Let me begin by saying that everybody is looking at the next election to see what will be shown. Last week a State Governor, came on courtesy visit and said that in his state, there are over 3 million people, but the water supply scheme can only cater for 1.5 million of them. Even then, the system is not operating at optimal capacity –and that is double jeopardy especially considering the fact that the existing facility is not even up to installed capacity in the face of increasing population. Until the States begin to plan properly and understand that water issues transcend the four or eight years of an administration, we will continue to have problems in the Water sector. When I came into office as the Minister, I knew that maybe the best guarantee I had was four years, but I did not plan for four years when I rolled out the National Roadmap for the sector. I planned for 15 years and hoped that whoever succeeds me would continue to work with the Roadmap. So I made sure that the Roadmap touched all the key the issues in the sector to turn around the sector for the good of Nigerians There are a lot of strategies that we can deploy at the Federal Government level but there is much more that can be done if the states key into it. Very soon I will have to go round to the states again for an advocacy visit and equally seize the opportunity to talk with them at the Governor ’s forum, and the National Economic Council. Many the State Governors have done well, so we give them credit. Since the introduction of the Roadmap, which of the states, from your assessment, have stood out in terms of buying into your vision for the sector? There are quite a number. Plateau, Kaduna, Ekiti and Ondo States are doing quite well. Some other states have launched some initiatives but lack the kind of vigour that I desire to make the required impact in the Sector. However, some of them are not even talking to us. Even with the PEWASH program (Partnership for Water, Sani-

tation and Hygiene programme) in which we are trying to support states with 50 percent contribution for rural water supply, there are some states that have not come up to express interest. We initially had about 12 states which signed onto the protocols. Up till the time that we launched it in 2016, but by the time I left office in May, we had 22 states that had signed onto the programme. And when I came back after my reappointment, another 11 signed onto the protocols, so we now have 33 but there are still three states that are yet to key in. We started with the pilot programme and the first two states to show interest were Kano and Ogun. We launched the pilot programme for the two states between 2018 and 2019, and we were able to rehabilitate over 700 water supply schemes in these two states. We recently launched another intervention for 10 states, then two additional states came up to meet all the stated requirements. You must know that it is not enough for them to signify interest – they must commit their 50 percent project funds. We want to see their budget for Water Supply and, in some cases, we would need to see that they open a separate account to start the programme. The idea behind PEWASH programme is that we focus on an entire local government area and ensure that it has 100 percent access to water. Now we are starting with 12 states, the other two states are going to invest their money before we bring our own intervention funds. We did not add them up initially, they came later to indicate that they would be committed to the programme ,and because we have exhausted our funds for the year, we requested that they can join when they have their funds. So at the end of the day, if we intervene in providing water supply in two local government areas and the state does two, we would have four local government areas with complete rural access to water. How does this programme fit into the food programme of the president? First of all, we decided to revitalise all the River Basin Development Authorities in the country. Until we came into power, all the River Basin Authorities executing procurement for constituency and the ministry’s projects.

38 for irrigation and about 43 for water supply. We carried out extensive professional audit for these projects and made some of them our priority for the next four years, but now, I’m looking at some new projects in irrigation that will bring in another 12,000 hectares. We are working with the World Bank on what we call the ‘Transforming Irrigation Management in Nigeria’ project, which is expected to bring in about 48,000 hectares scheduled for implementation in 2022. We want to make sure that the River Basins become very relevant. As part of the restructuring, we have reintroduced agriculture extension services. We have also created a new position of Executive Director for Agric. Services. The next thing we need to do is find a way to equip them because during the privatisation exercise in the 80s, they were compelled to sell their equipment, including heavyduty equipment. They need those equipment now and it costs a lot of money to procure. We understand the importance of our role in implementation of the agricultural strategy of this government and we are working towards realisation of that objective. In terms of states sharing your vision for water supply, do you think there should be a law that mandates states to comply and make them do better? The Federal Government has done a lot in the different sectors – security, education, health, etc. But the fact remains that if every state and everyone plays his or

Suleiman Hussein Adamu

‘

“Water, water, everywhere, and all the boards did shrink; Water, water, everywhere, nor any drop to drink” ― Samuel Taylor Coleridge, The Rime of the Ancient Mariner

The first question I asked was to know how many hectares of land for irrigation that they have added in the past five years. It became obvious that indeed, they had completely derailed from

their functions. We told them that the President Muhammadu Buhari administration has made food production a focal activity and that they must key into the scheme, because they are better placed than any other agency to key into the agenda. We rejigged the management and stopped the River Basins from becoming places where those that failed election were given appointments. We dissolved the managements and decided that whoever would be at the helm of affairs in the different departments would have to be a professional –for instance, if you are heading the finance department, you must be a finance professional; if you are heading engineering, you must be a qualified engineer, and so on. We asked each management to give us a four-year action plan. I scrutinised their budgets personally. If I do not see projects that have to do with increasing agricultural productivity, I will send it back and request them to go and rework it, and in their annual reports I

want to see how many hectares of land for irrigation they have added to the already existing ones. Next to revitalising the River Basins is the National Irrigation Development Programme which I launched to move from 170,000 hectares in 15 years to 500,000 hectares. The country has a potential for about 3.14 million hectares for irrigation. So, at federal level, we want to increase it from 170,000 to half a million hectares by 2030. We are trying to encourage the states and the private sector to come and develop another 1 million hectares. And, of course, for the private sector operators looking for brown fields, seeing the success in the rice programme, a lot of people are coming around to look for land, from 100 to 2,000 hectares. Sokoto State has acquired some land for their community and in Cross River State, we have 1,000 hectares in one community. There are some communities in Kebbi State, around the banks of the River Niger, with similar land holdings. The River Basins had a lot of land that was not developed, they had been acquired for many years but left unde-

veloped. So we told them, ‘If you can’t develop the land let us get people that are interested.’ We have leased about 55,000 hectares of it to commercial farmers. Some of them have, however, not been able to put theirs to use for some finance and security reasons, but in all of this, we are trying all we can to encourage commercial farmers to come in and invest. In Gurara, we had several hectares allocated to small holder farmers. As at 2019, we compressed the land and allocated same to nine large-scale commercial farmers to provide modern farming. By the end of this year, we should have additional 100,000 hectares under our irrigation development programme. As at the end June this year, we had about 90,000, so we need just 10,000 hectares more, and if we are not able to achieve it, I think 90 percent is fair enough. Of course, we prioritised all the projects we inherited and we are trying to finish the ones that we can. When I was appointed into this position, I made a decision that we were not going to start any new project because we had about 116 projects which we inherited, including 37 for dams,

her part, there will be no problem. As I speak, the projects envisaged for support by international financial institutions are in danger of being frustrated by politicking and reluctance by some states to meet counterpart obligations, although Water is a basic economic commodity that practically every politician promises voters during election campaigns. Some politicians during campaign will say, ‘If you elect me, you will not pay for water.’ But why won’t they pay for water? We have done whatever we need to do. Even the President had declared a state of emergency in the sector – first time in Africa. We launched Partnership for Expand-

ed Water, Sanitation and Hygiene (PEWASH) programme and the National WASH Action Plan and this is the way the country should go. In that document, you will see clear roles for the Federal Government and roles of the states and local governments. We are urging all governors to read the document, and keep pushing. The President states in the document: “Henceforth Federal Government’s intervention in any water projects in the states will depend on the commitment of the government of the state to water, sanitation and hygiene”. I inherited the Central Ogbia Water Supply scheme (in exPresident Jonathan’s community). It was about 80-90 percent completed. When I came into office, I asked that we finish the project. I came in November 2015 and by September 2016, I commissioned it. However, a year later when I sent a team to go and inspect the scheme , the state government had locked it, saying that they cannot afford N2 million monthly to buy diesel and that was how they deprived 13 communities of potable water. As part of the audit again, I discovered that Federal Government built the Owena Dam. Almost 15 years ago the Federal Government built a new treatment plant for Ondo State, and the state was supposed to do the transmission pipeline, storage and distribution network. Up to that time that had not been done. As at the time when I came into office, the treatment plant was eight years old, still brand new, and still under lock and key. But I give credit to Gov. Akeredolu who has been making effort to secure finance to finish the project. Owiwi Earth Dam in Ogun State is brand new, with a brand new treatment plant. It’s just for Ogun State government to tap the water, do the transmission, distribution network and overhead

tanks. But till today, they have not done these. Only some few days ago, I saw (former President Olusegun) Obasanjo saying he wants to carry out cage fish farming in the dam. We have over 200 dams built by the Federal Government in the last 40 years. It is left for the states to tap in and provide water for their people or provide irrigation facilities to enhance farming and increase agricultural development for the people. And these governors are aware of all these, but they will still come back and say that the Federal Government should support them. So why should we be making investments without getting the required impact? Going forward, we have said that we are going to put a lot of conditions on support we are providing for states. Now, the Federal Government support for urban water scheme is limited to 30 percent and rural water scheme is 50 percent, because the masses need it more, since everybody is drilling his/her own borehole in cities, which also is not sustainable. Will it be too much to ask that the Federal Government cascade down its function to do a sample project in each region? That is what we are trying to do now. We are meeting with the World Bank for a $700 million facility. Of this, we are going to commit $350 million for rural water, and states must compete for it. The World Bank has said that it would be performance-based. Our plan is that we want to take a city from each geo-political zone and make it a model city by providing 100 percent coverage. But the states will be the ones to borrow the money. Unfortunately, the World Bank says they will likely approve only half of the money for now because of the Covid-19 pandemic; the rest will come in 2022.

Thursday 17 September 2020

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

“I am engaging with the honourable Attorney General on the issue” - NBA president speaks on Purported RPC Amendment

he NBA President has in the early hours of this morning issued a statement regarding the purported amendment of the Rules of Professional Conduct by the Attorney General of the Federation. It would be recalled that on Saturday 12 September, a publication making the rounds revealed that the Attorney General of the Federation, Abubakar Malami SAN, had purportedly amended the Rules of Professional Conduct, effectively removing certain provisions, including the provisions on stamp and seal for legal practitioners and payment of practicing fee. There have been varying reactions from Nigerian lawyers to this development. In the NBA President’s statement, he made it clear that as there had been no meeting of the Council of the Bar as required under the Legal Practitioners Act, there cannot have been said to be an amendment of the RPC. He urged lawyers to continue to carry out their activities as before and assured them that he was engaging with the Honourable Attorney General of the Federation and will ensure that the interests of lawyers are reflected in whatever amendments are to be made to the RPC. The statement read in part, “I have seen and read Statutory Instrument No. 15 of 2020 (the “Instrument”), making the rounds on social media and which purports to amend certain provisions of the 2007 Rules of Professional Conduct for Legal Practitioners (RPC). Since the Instrument was released, I have received numerous calls and messages from lawyers across the country seeking clarification and guidance on the purport of the Instrument. “By virtue of the Instrument, the following provi-

sions of the RPC are to be deemed deleted: Rule 9(2), which relates to default in payment of practicing fees; Rule 10, which relates to stamp and seal for legal practitioners; Rule 11, which relates to mandatory continuing professional development; Rule 12, which relates to the Annual Practicing Certificate for legal practitioners;

Olumide Akpata, President, Nigerian Bar Association (NBA)

and Rule 13, which relates to the obligation to give notice of the commencement of legal practice to the branch of the Nigerian Bar Association (“NBA”) responsible for the jurisdiction in which the practice is located. The NBA President observed that the explanatory note to the Instrument suggests that it was done to bring the RPC into conformity with the provisions of the Legal Practitioners Act, the Law Officers Act, and the Constitution of the Federal Republic of Nigeria, 1999 (as amended). He said, “For the avoidance of doubt, the Legal Practitioners Act (as amended) confers the power to issue rules of professional conduct for legal practitioners, and any amendments thereto, on the General Council of the Bar (the “Bar Council”). The Bar Council comprises the Honourable Attorney-General of the Federation (“HAGF”), the Continues on page 22

Own an App? Here are some

INSIDE Intellectual Property issues to consider

Transparency in asset declaration regime: SERAP remains dauntless in the face of obstacles

LB Correspondent dvocacy group, Socio-Economic Rights and Accountability Project (SERAP) has once again called on President Muhammadu Buhari and VicePresident Yemi Osinbajo to lead by example by publishing the content of the assets declaration forms they submitted to the Code of conduct Bureau (CCB). This is in line with the mandatory requirement for all persons taking public office to declare their assets with the Code of Conduct Bureau was designed as an effective tool for checking corruption. It is however, largely believed that the CCB lacks the resources to embark on a physical inspection of declared assets in the forms submitted to it by public officeholders, as public officeholders have been known to declare non-existent assets in anticipation that they would divert public funds to acquire those assets while in office. Leading the charge in the struggle for transparency in the asset declaration regime for Nigerian public officeholders, SERAP is steadfast in its principle that Nigerians ought to know the specific assets declared by public officeholders to the CCB so that members of the public can do their independent verification of these assets and hold the public officers to account. In a January 3, 2020 FoI request, the advocacy group urged Buhari, Osinbajo, the 36 state governors and deputy governors to “make public details of their assets, specifically property and income, contained in their asset declaration forms submitted to the CCB since assuming office.” In the FoI request made by its Deputy Director, Kolawole Oludare, SERAP said it strongly believed that “public disclosure of summary of assets submitted to the CCB would help to uncover any irregularities and trigger formal verification of declarations by the CCB and other anti-corruption agencies.” It added that public declaration of assets was “entirely consistent with government’s expressed commitment to prevent and combat corruption, provide a safeguard against abuse, and serve as an incentive to public officials to provide exact information when

CMSAABL2020: Experts suggest ways to leverage opportunities in Nigeria’s capital 21 market to improve health sector

filing and submitting their asset declarations.” “Non-public disclosure by public officials of their summary of assets undermines the effectiveness and integrity of the constitutional and statutory obligations to submit asset declarations,especiallygiventhat declarationsaredesignedtocurb grand corruption and weakens the public trust in the asset declaration regimes,” it added. But Buhari, Osinbajo, the 36 state governors and deputy governors spurned the request. Niger and Lagos states, which managed to acknowledge the receipt of SERAP’s FoI request, declined releasing the requested information but rather contended that “the FoI Act is inapplicable to state governments, their agencies and officials.” Reacting during a television interview to SERAP’s request, Buhari’s Special Adviser on Media and Publicity, Femi Adesina, said was no legal basis for his principal to make his declared assets public. “SERAP asking the President to declare publicly, on the basis of what law? The President will do what the law requires of him and what the law requires is that he should declare his asset which he has done. Declaring publicly is not in our laws; it can only be a voluntary thing,” Adesina said. Then the struggle shifted to the Federal High Court in Lagos where SERAP filed a suit marked FHC/ABJ/ CS/65/2020, seeking “an order for leave to apply for judicial review and an order of

How Not to Use Social Media – for Lawyers

mandamus to direct and/or compel President Buhari, VicePresident Osinbajo, 36 state governors and their deputies to make public their summary of assets.” SERAP went further to seek a mandamus order to compel the CCB “to make available to the public, specific details of asset declarations submitted to it by successive Presidents, Vice-Presidents, Senate Presidents, Speakers of House of Representatives, state governors and their deputies since 1999.” SERAP argued that asset declarations forms submitted to the CCB by public officers were public documents and public officers could not hide under the fundamental right to privacy to keep their assets secret, having been entrusted with the duty of managing public funds. The suit was vehemently opposed by the CCB, which contended that no law empowered it to release to the public the assets declaration forms submitted by public officers. The CCB said it needed a clear legislation by the National Assembly to be able to release to the public details of declared assets by public officers. The court, in a May 11, 2020 judgment by Justice Muslim Hassan, agreed with the CCB and dismissed SERAP’s suit. “I agree with the CCB that the duty to make the asset declaration form of public officers available is dependent upon the terms and conditions to be proscribed by the National

Assembly. The terms and conditions must be specific and related to asset declaration of public officers and not legislation of general nature such as the Freedom of Information Act,” Justice Hassan held. Beaten but not bowed, SERAP proceeded to the Court of Appeal in Lagos to challenge the verdict. In the appeal, SERAP’s Deputy Director, Oludare, described Justice Hassan’s verdict as a miscarriage of justice. He insisted that with the FoI Act, the National Assembly needed not to make any other law specifically empowering the CCB to release to the public contents of assets declaration forms by public officers. “Asset declaration forms submitted by public officers are public documents in the custody of the CCB. The CCB is under a legal obligation to provide the information requested by SERAP in accordance with the provisions of the Freedom of Information Act, and the African Charter on Human and Peoples’ Rights. “The learned trial judge failed to determine whether the asset declaration forms kept in the records of the CCB are public documents. The judge failed to determine whether the public interest in disclosing the information outweighs whatever injury that the disclosure would cause the CCB and public officers,” Oludare argued. SERAP is urging the Court of Appeal to set aside Justice Hassan’s verdict and compel the CCB to release the asset declaration forms.

The Flurry of Activity in the Electric Power Sector: Understanding the Issues

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

Thursday 17 September 2020

BUSINESS DAY

LEGAL BUSINESSDIGITAL CONVERSATIONS

LegalBusiness

Huge Share Opportunity for Investors in Power Sector - Energy Law Experts Say

n March 2020, the Nigerian Electricity Regulatory Commission (NERC), introduced three (3) key policy & regulatory initiatives which suggest that the electricity distribution companies can charge higher tariffs in certain areas, if they improve the quality and reliability of supply of premium power. NERC also suggests with its “willing buyer and willing seller” policy that the market is open to new investors. In a recent BD LegalBusiness #Digital Conversation, Sola Arifayan, Partner, OAKE Legal as moderator and other esteemed luminaries, Olasupo Shasore, SAN, Partner, Africa Law Practice; Dolapo Kukoyi, Partner, Detail Commercial Solicitors, and Dr. Ayodele Oni, Partner, Bloomfield Law Practice, discuss how these initiatives impact potential investors, customers and other participants of the sector. Dolapo Kukoyi, referring to the initiatives as “stop gap efforts” by the government to make the best out of the situation said, “For the customers, there is a clear deficit in power supply and these initiatives give the consumer comfort because they would have a choice of suppliers and will pay based on the service they receive. However, this has limited coverage because

Olasupo Shasore, SAN, Dolapo Kukoyi, Partner, Partner, Africa Law Practice Detail Commercial Solici(ALP Ng & Co.) tors (DCS)

isn’t a sustainable solution for universal electrification. For the electricity distribution companies, these initiatives allow them to sell their product at a cost-reflective tariff in certain areas, subject to NERC approval. It also presents them with opportunities for investments while resolving problems of universal electrification.” Shasore, SAN stated that the sector market is over-regulated, under-invested and yet undercommercialized and the flow of independent power projects envisaged hasn’t happened because the electricity distribution companies have been hesitant to accept embedded generation projects. He noted that governments, at both federal and state levels are still key drivers of our economy and need to overcome the fear of getting involved in

Sola Arifayan, Partner, Oake Dr Ayodele Oni, Partner, BloomLegal field Law

the market. “I would love to see more state governments getting bolder in the market, delving into projecting delivery, because where private sector money is risk-averse, the government can de-risk the market easily because they are better able to absorb shocks, understand and iron out issues. State governments, in particular, need to understand that they are closer to the populace” Kukoyi agreed that the market is over-regulated, recommending, however, that the government and the regulators need to hands-off more until there is more innovation and creativity in the market- regulations are impractical when businesses aren’t growing, and residents self-generate. Dr. Oni noted that newer investors are interested in mini-

grids targeting the ultimate consumers, and excluding distribution companies who have proven difficult to negotiate with because of DUS rates. He added, “I don’t think anyone should even be on the grid. Energy federalism, I think is something worth considering. In areas where we could have certain sources of energy, we can concentrate on those. I’ve seen distribution companies looking at that service level, considering premium power sort of arrangement.” Panellists also noted that some distribution companies are adopting the concepts of mini-grids and are considering electrifying their customers along different segments. Others are becoming open to embedded generation, outside the grid. One of the key challenges in

the sector is the perception of sector monopoly by the distribution companies which has presented a significant barrier to financing and investing in the sector. Dr. Oni noted that a distribution license from a central federal authority does not grant exclusivity. He added, “Though it may seem unfair because of the initial investments, I’ve looked at the terms and conditions of licenses and I’m not even sure there’s such a term as monopoly in those terms or amongst those terms… maybe people could argue that distribution companies are natural monopolies of some sort. But if there was monopoly, you won’t have the IEDN, or these newer regulations. The privatization could have been done a bit differently, maybe government should have had more skin the game, or rather than pay money to immediately take over the assets, money could have been paid into an escrow account, with a five-year plan that matched that amount. Secondly, the subfranchising regime coming up, could be beneficial for distribution companies by providing room for collaboration.”

To be continued next week

INDUSTRYFILE Senior Advocates offer legal perspective on Edo State politics

earned Senior Advocates of Nigeria Charles Uwensuyi-Edosomwan, SAN and Osaro Eghobamien, SAN participated as speakers in a Webinar interview with Chuba Agbu of BusinessDay’s Legal Business Unit to shed some legal perspective on some of the political happenings in Edo State. In answering the question of whether the Edo State governor was encroaching too much into legislative affairs, and if this constituted a breach of the doctrine of separation of powers, Osaro Eghobamien said the following: “The executive normally pronounces the beginning of the house in the legislative. What this means is that there is an official announcement when it is time for the house to be inaugurated. What seems like an incursion is that when the governor made that pronouncement, and the clerk then invited members of the house to be inaugurated, only seven showed up. The governor is currently embroiled litigation pertaining to that, and that is why it looks like there is an interference. To give further background, when seven came, it meant that fifteen were absent. There is a precondition that must be satisfied before

you are inaugurated that condition is that you must take an oath, so the assumption is that only seven took the oath of allegiance and appeared and out of that twenty-four, fifteen contested the process on the grounds that they did not obtain a notice, that matter is still pending in court. The learned senior advocate www.businessday.ng

provided more context on the court process and how an absence of swift resolution would lead to further degeneration. He went on two identify the two issues that the court pronounced upon; the first being the national assembly’s takeover of the state assembly. The learned silk informed us that the court’s pronounced that

https://www.facebook.com/businessdayng

under current circumstances the national assembly could not take over the state assembly affairs. The second issue, he stated, was that the Port Harcourt court that adjudicated on the matter found that the State Governor, Godwin Obaseki had made his official declaration to start the house and he was not required to make an@Businessdayng

other one. What that meant was that there was legitimacy to the conduct of what Seven members did in the house. Charles Edosomwan, Offered an astute theoretical perspective citing that national assembly did not ordinarily have the right to take over the powers of the state house of assembly and this was evident if one applied the principles of separation of powers to federalism. He also elucidated on the concept of fused competence in the context of national and state house of assembly hierarchy and how this gave the National assembly, in the appropriate circumstances, the power to supersede legislation made by the state house of assembly. Former Commissioner, Environment and Sustainability, Edo State, Omoua Oni-Okpaku also participated and offered lengthy perspective on the topic. A noteworthy opinion was when she stated that irrespective of the semantics of the law if it didn’t favour the majority then there was something fundamentally wrong. The webinar occurred on the 2nd and 4th of September 2020 and is part of BusinessDay’s Legal Business Unit’s digital conversation series. Visit the BusinessDay YouTube channel to watch the full interviews.

Thursday 17 September 2020

BUSINESS DAY

LegalBusiness

Own an App? Here are some Intellectual Property issues to consider DAVIDSON OTURU

n application software (app) is a program or group of programs designed to help customers perform particular activities. These apps, which are usually on our electronic devices, are used to control several things ranging from health & fitness, music, movies, online shopping, gaming to mobile money transfers and even household appliances. Indeed, in today’s rapidly transforming digital world, there is an app for almost everything! However, while apps exist to satisfy the needs of customers, business owners can make a fortune through the use of these apps. Indeed, most of the profitable apps are the ones that gratify customers and convert them into long term users. For instance, a report issued by SensorTower, a U.S based mobile app market intelligence firm, shows that in 2019, mobile users spent $1.27 billion on top 10 subscription video on demand (SVOD) apps in the U.S alone. Similarly, on a global scale, the top 5 video streaming services, with Netflix leading the pack, made over $2.2 billion. With such revenues streaming in from profitable apps, businesses are rapidly getting involved in developing apps, thus making the market much more competitive. While some developers keep the competition fair by creating unique apps, some do not hesitate to make profits by copying already existing apps. Consequently, it is worth protecting apps against replication in the present marketplace. But how can business owners and developers avoid infringement claims and protect as much as possible, the creativity and inventiveness that is put into the development of their apps? One of the most effective ways apps can be protected is by effectively utilising intellectual property (IP) rights from initial concept to the launch and eventual commercialisation of the app. These IP rights include patent, copyright, trade secrets and trademarks and they each protect different components of an app. We consider them below. Patents Patents are granted to an inventor to own and enforce his invention. A patentee is granted the right to preclude any other person from reproducing or of-

fering the invented product for sale. However, the invention must be new or constitute an improvement to a previouslypatented invention and be capable of industrial application. A patent cannot be granted for an invention that is against public order or morality. A patent is registrable and expires 20 years after the date of filing the patent application. Once a patent expires, it can no longer be renewed and enters into the public domain. Although the Nigeria Patent and Designs Registry refuses to register apps occasionally, it is arguable that in general, the technological ecosystem of apps is a subject matter for patentability. For instance, a virtual keyboard, when introduced in mobile phones for the first time, was a patentable subject matter. Several front-end elements in apps can also be patentable for their novelty. Furthermore, the ways the apps communicate with a server or other mobile devices may also be a subject matter of patentability. Nevertheless, even though some of the apps may not be protected as patents, they can be protected as copyrights or trade www.businessday.ng

secrets. Trade secrets Trade secrets are IP rights on confidential information which may be sold or licensed. To qualify as a trade secret, it must have the following characteristics: (a) it is not public information and is only known to a few people; (b) its secrecy provides an economic benefit to their holder; and (c) the secrecy of the information is actively protected. As trade secrets are not registrable, the owner of a trade secret would have to execute a non-disclosure and confidentiality agreement (NDCA) with the third parties as this may be the only way to protect his trade secret and prevent the third parties from claiming his invention or idea as theirs. An NCDA is an agreement that creates a confidential relationship between the parties whereby they agree to protect confidential and proprietary information or a trade secret. NCDAs may contain clauses that can protect the person receiving the information so that if they lawfully obtained the infor-

https://www.facebook.com/businessdayng

mation through other sources, the receiving party would not be obligated to keep the information secret. Some additional ways owners of trade secrets can protect them include the following: Executing non-compete agreements with the employees. This agreement will place an obligation on the employees and prevent them from using trade secret even after they have stopped working for the employer; Keeping the trade secret in a safe location and granting access to a few individuals; and Ensuring that the employees are loyal and will not sell the trade secret to competitors. A recent high - profile suit involving the breach of confidentiality agreements was the case of Waymo v Uber. A selfdriving car engineer, Anthony Levandowski, was working with Google’s subsidiary, Waymo, until he left them for Uber. Apparently, Levandowski allegedly swiped 14,000 confidential documents from Waymo and delivered them to Uber. Waymo brought a $1 billion suit against Uber which was eventually settled for $245 million. Without confidentiality agreements in place, it may have been difficult for Waymo to prove its case. Many business owners that conceive the idea of developing an app usually have information on their application that qualify as trade secrets. However, some of these business owners are not computer programmers or software developers and would need to engage professionals to develop the app. Using an NDCA or a non-compete agreement can restrain the developers from disclosing trade secrets to third parties or new employers. Copyright Since copyright allows protection of the original work of authorship for literary and creative works, it is beneficial for securing computing codes, softwares and the presentation of apps during its workflow on different screens. Other features of apps that can be secured under copyright protection include images, videos, sound. More complex apps may in addition, include live streaming and allow usergenerated content. Generally, copyright comes into effect as soon as one creates something new and unique, and there is no legal requirement for copyright registration. However, @Businessdayng

one can file an application with the Nigerian Copyright Commission and obtain a certificate of notification which could be advantageous in a Copyright Infringement case. The decision to file a combined application for multiple subject matters, including user interface, layouts, images, etc., or separate copyright applications for each depends on the issues under consideration and can vary from case to case. Trademarks A trademark is a sign, logo or word that is used to identify certain goods and services as those produced or provided by a person or a business. It works in different ways in favour of the owner of the app. Apps operate following a particular process. For instance, each app first reaches the online platform, then gets downloaded by users on their devices, and is then continuously used by the users. It therefore serves as an identifier and makes the app easily identifiable. Be it during online promotions, downloading, or after downloading, the name and logo of the application are crucial assets as these are what make the customers identify a particular app. Furthermore, where the app becomes successful, competitors may want to imitate the name and logo to mislead customers. Having a registered trademark would mean that competitors are less likely to imitate it. Thus, registering the name and logo as a trademark is important as it may not only prevent others from infringing the name or logo but could also establish goodwill that would attract the users to download and use the app. Conclusion Apps can be regarded as fastmoving technological products that often start off as a small part of a business that can potentially become very valuable. A prime example is WhatsApp, an instant messaging app where the app has become the entire business. This is why it is important to always devise an appropriate IP protection strategy that allows the business owner extract maximum profits from the app without being bothered about infringers. Nevertheless, although the protection of IP rights is important, it is the effective execution of a business strategy that really makes an idea or app valuable.

Thursday 17 September 2020

BUSINESS DAY

INDUSTRYFILE

LegalBusiness

CMSAABL2020: Experts suggest ways to leverage opportunities in Nigeria’s capital market to improve health sector IFEOMA OKEKE

xperts in the capital market, the legal profession and the health sector, have said opportunities in the capital market can be leveraged to help improve Nigeria’s health sector. These insights are coming at a time when COVID-19 has exposed Nigeria’s weak and underfunded health care sector. Experts also suggested that the capital market is one of the best instruments to help fund the health sector in Nigeria. Speaking at the 2020 Capital Market Solicitors Association (CMSA) virtual annual business luncheon, Lamido Yuguda, director general, Securities and Exchange Commission said the health sector has been grossly underfunded and COVID-19 has exposed this. Yuguda said the health care sector is in need of infrastructure and manpower, adding that the sector needs investment from the public and private sectors. He further explained that infrastructure financing of the health care sector requires long term financing and the capital market will be able to fund Nigeria’s health care. During his Keynote address, Olabode Agusto, Chairman, Advisory Board of First Cardiology Consultants said the biggest risk that the pool of savings will face is inflation risk and this is because the long-term rate of inflation on the Nigerian naira is about 12 percent per annum. Agusto said this means that savings held in naira and debts that will be repaid in fixed naira terms will lose purchasing power at about 12 percent per annum, adding that it also means that the returns earned from investing the pool of savings (net of costs) must be at least 12 percent per annum to protect the buying power of the savings. “Finally, premiums must also be adjusted at least annually to reflect the purchasing power of the naira.

The bulk of the monies saved to pay for healthcare will be invested temporarily in fixed income instruments (i.e. lent to the federal government, state governments, banks and credit worthy companies in the real sector). “Capital market regulators would need to help set rules that will help ensure that those who borrow money from these pools of savings pay back as and when due. This is usually done by setting risk tolerance limits and monitoring compliance with these limits,” he explained. Agusto explained that the role of the capital markets can be summarized as protecting the purchasing power of the country’s savings and providing credit to investors in the healthcare industry. He further explained that the role of the lawyers will be to help to draft the relevant laws and regulations that will guide the operations of the industry. He however said that it is important that the reforms embarked upon in this industry follow several steps to include to study and understand the operating models used in select countries where the impact of the healthcare system on the citizens is strong; determine how we should tweak these models to reflect the realities of our environment; come up with a draft healthcare model for Nigeria and encourage debate amongst the key stakeholders on this model He suggested that the capital markets can help improve the health care sector by using contributions from these debates to come up with the final healthcare model for Nigeria, draft the relevant bills and regulations and get them passed. Speaking earlier at the event, Benjamin Obidegwu, the Chairman, Capital Market Solicitors Association, (CMSA) said this year, the COVID-19 pandemic exposed, to a very large extent, the huge infrastructure deficit the country has in its health sector, primarily because of lack of funds, the greater part of which comes from the government.

L-R: Kehinde Daodu, member, Capital Market Solicitors Association (CMSA); Efeomo Olotu, chair, planning committee, CMSA 2020 virtual annual business luncheon conference; Benjamin Obidegwu, chairman, CMSA; Edefe Ojomo, partner, George Etomi and Partners, and Adeleke Alex-Adedipe, member planning committee, CMSA 2020 virtual annual business luncheon conference, at the CMSA 2020 virtual annual business luncheon conference in Lagos, on Tuesday

L-R: Benjamin Obidegwu, chairman, CMSA; Edefe Ojomo, partner, George Etomi and Partners; Adeleke Alex-Adedipe, member planning committee, CMSA 2020 virtual annual business luncheon conference, and Otome Okolo, social/welfare secretary, CMSA, at the CMSA 2020 virtual annual business luncheon conference in Lagos on Tuesday

L-R: Kehinde Daodu, member, Partner, Babalakin & Co; Efeomo Olotu, chair, planning committee, CMSA 2020 virtual annual business luncheon conference/Partner, GEP; Theodora Kio-Lawson, BD Legal Business Manager/Editor and Adeleke Alex-Adedipe, Partner, Duale Ovia & AlexAdedipe (DOA), at the CMSA 2020 virtual annual business luncheon conference in Lagos, on Tuesday

discussion, we assembled a team of highly experienced industry practitioners in the health sector and capital market operators to share their experience with us,” he said. During her welcome address, Efeomo Olotu, Chair, annual business luncheon and partner, George Etomi & Partners said this year, they decided that discussions will focus on the current climate in the Nigerian health sector Obidegwu said that as capital market operators, they following the COVID-19 pandemic and the role expected have resolved to use the platform of its business lunch- of the capital market in creating pathways in strengthening eon to draw the attention of the public to an alternative the stunted health sector through easy access to capital in source of funding for the country’s health sector and resolving the prevalent challenges against affordability, accessibility, liquidity and funding. that is the capital market. Olotu said the opportunity afforded by digital techHe said this year’s conference therefore is aimed at broadening the perspectives of the Nigerian healthcare nology in reaching a wider audience who hold a similar sector through discussions on access to the financial interest in capital market operations, adding that 1,200 attendees have registered for the event as against 400-500 opportunities in the capital market. “To ensure that we have an engaging and robust participants at past annual events.

How Not to Use Social Media – for Lawyers ONYINYE UKEGBU.

s of January 2020, there were 4.54 billion internet users globally. For businesses, social media is an indispensable tool to connect with clients, other businesses, drive sales through advertising and promotion. In Nigeria, advertisement of legal services remains miry; however, it is imperative that progressive lawyers take advantage of the media to improve their visibility to clients, while maintaining conduct that is ethical and amenable to the Rules of Professional Conduct. In his book, “Social Media for Lawyers; Harnessing Social Media Resources to create Visibility and Grow Your Business”, Adedumade Onibokun, Founder @Legalnaija, a legal education blog in Nigeria addresses ethics, justice administration

and how to convert clients from social media, among others. Below are excerpts from Chapter 4- How Not to Use Social Media: • Avoid Misrepresentation: Be authentic. Communicating on social media is still communicating, and just as in real life, people can identify a fake from a few posts. Determine what your brand represents, don’t clout chase, or post a position that is contradictory and could bite back in the future. • Engage with Unnecessary Comments: In encounters with users who would stir up unnecessary arguments, refuse to have an even-toned conversation or even be abusive. Unless these comments directly affect your brand ethos, service or positioning, avoid trading words. • Share Incorrect Content: Avoid mistakes, especially in your www.businessday.ng

niche area. On the rare occasions that a mistake is made, correct it immediately by deleting or amending the post. Ensure, also, that the you apologize to your readers. Along the same lines, ensure that your posts are free of grammatical and typographical errors. • Jack of All Trades: You do not

https://www.facebook.com/businessdayng

need a presence on every platform or to be an authority on every subject; identify your target clients and focus on the social media platform that does the best job of reaching the audience. However, you may register your brand or law firm to secure your brand name all platforms. • Your Platform is not a Billboard: Avoid using your social media accounts as a billboard for promotional content; social media is about engaging, connecting and having fun rather than selling. By truly engaging on social media regularly, you strengthen old relationships, and build new ones - with potential clients. • Post Inconsistently: Have a content schedule and stick to it. It says that you’re dependable. If at any time you need to take a break, inform your network, and perhaps provide a @Businessdayng

contact for the mean time. • Quantity over Quality: Quantity might produce thousands of followers, but quality will invite users who have a real need for your services boosting your Return on Investments (ROI) or user engagement. • It’s All About You: Craft posts using the 60/20/20 rule – 60 percent of your posts should be something of an educational nature relevant to your followers, 20% should be trending, or hot topics and only 20% should be about promoting your firm. The book, featuring high recommendations from Hon. Justice Tsoho, Chief Judge of the federal High Court and Kehinde Ogunwumiju, SAN, FCIArb (UK) is comprised of eight nifty chapters, and lays a thorough foundational roadmap for lawyers looking to utilize social media effectively for their businesses.

Thursday 17 September 2020

BUSINESS DAY

POWERPERSPECTIVE with AYODELE ONI

The Flurry of Activity in the Electric Power Sector: Understanding the Issues payment obligations to NBET and the Market Operator (“MO”). Additionally, the Central Bank of Nigeria (“CBN”) on August 21, 2020 issued a circular address to all banks and titled “DMB Led Electricity Market Collections (the “Circular”)”. The Circular vests deposit money banks (“DMB”), who have provided bank guarantees to NBET and Transmission Company of Nigeria (“TCN”) on behalf of the DisCos, with the responsibility of ensuring collections from the concerned DisCos and remittances to NBET and the TCN. Where DisCos wish to open a separate collection account in another DMB, the consent of the DMB providing a bank guarantee must be sought. These measures could potentially increase the funds available to fulfil loan repayment and other obligations to market participants.

AYODELE ONI

T Proem:

he Nigerian electricity supply industr y (“NESI”) is plagued with multiple issues affecting all stakeholders. Investors in the industry are faced with low tariffs which are neither sufficient to cover operational costs nor to provide a reasonable profit margin. Customers have to suffer from inadequate power supply and poor metering, leading to arbitrary estimated billing. The Nigerian Electricity Regulatory Commission (“NERC”) has to deal with market indiscipline, including the failure of distribution companies (“DisCos”) to meter customers and to cease estimated billing, as well as their failure to meet minimum remittance requirements in accordance with the Multi Year Tariff Order (“MYTO”). To tackle the problems highlighted above, NERC has been working closely with the Minister of Power (the “Minister”) to develop policies and issue regulations to achieve a number of key objectives including improving the attractiveness of the NESI to investors, protecting customers through improved tariffs which are bench marked against the quality of services provided by DisCos to customers and ensuring stricter enforcement of market discipline particularly for DisCos. Thus, this piece addresses the measures being taken by NERC in conjunction with the Minister, with a focus on the MYTO 2020, highlighting its key provisions and providing commentary on some potential issues with its implementation. The MYTO 2020 Service Reflective Tariffs NERC released the MYTO 2020 with the main objective of implementing tariffs that are both fair to customers and sufficient to enable DisCos recover their costs of operations and earn a reasonable return on the capital investment. Fairness to customers is achieved by linking tariffs levels to the quality and availability of power supply to the customers which is determined by the average availability of power supply over a one (1) month period. A major development introduced by the MYTO 2020 is the reclassification of and disaggregation of customers and customers clusters based on each DisCo’s

service commitments. The old tariff classes were based on the status of the customer; residential, commercial, industrial or special classes such as street lights, with further subdivisions based on the number of phases and demand. With the new system, NERC divides customer in different customer clusters’/locations into ‘Service Bands’ based on the minimum service parameters which the DisCos have committed to meeting. These service parameters include average hours of supply per day over a period of one month, interruptions and service voltage levels. The Service Bands are also broken down based on voltage and demand levels. The MYTO 2020 sets the approved end-user tariffs for each Service Band, effective from September 1, 2020, until NERC issues a new Minor Review Order or any Extraordinary Tariff Review Order. However, tariffs for customer clusters where the DisCo’s commitment is less than twelve (12) hours of electricity supply per day (this covers customers in Services Bands D and E for the Eko Disco MYTO 2020) will remain frozen at the tariffs set in the December 2019 Minor Review of MYTO (“MYTO 2019”) and for customers consuming less than 50KWHrs, DisCos are to maintain the lifeline tariff of N4.00/KWHr to cater to the

less privileged. The ultimate aim is to encourage DisCos to make adequate investments towards improving the reliability and quality of electricity supplied to customers. In accordance with this, DisCos were required to make service improvement commitments to be achieved between September 1, 2020 and December 31, 2021. Where DisCos are able to meet with these commitments, customer clusters can move into higher bands and DisCos will benefit from the higher tariffs. However, where DisCos fail to deliver on committed service levels over a period of sixty (60) days in a particular customer clusters, these will be demoted to lower Service Bands and the lower tariffs applied retroactively. Remittance Obligations With respect to market discipline and DisCos’ fulfilment of their minimum remittance obligations (which include settlement of at least 75.3% of Nigerian Bulk Electricity Trading Company (“NBET”) monthly invoices), NERC is working to ensure that there is more market discipline, especially on the part of the Discos and they remit as and when due. DisCos are required to maintain an unencumbered letter of credit covering three (3) months of the minimum

Comments While the decision to link tariffs to the quality and availability of electricity supply is laudable. There are a number of concerns which may be raised regarding the timing of these measures and their practical implementation. Although NERC has made provisions to retain lower lifeline tariffs for the less privileged members of society, there are still concerns about whether any tariff increase is justifiable in the current economic clime. This is especially so as many other countries have focused on granting palliatives and waivers to their citizens, to cushion the negative effects of the COVID-19 pandemic. Increasing the cost of utilities amounts to increasing the cost of living at a time when unemployment is on the rise and most business, individuals and the nation as a whole are grappling to survive financially. Another concern relates to how NERC intends to practically monitor whether DisCos have complied with service level commitments in each customer cluster in accordance with the Service Band and determining whether the DisCos have complied with their service improvement commitment plans and timelines. This is of particular concern because of the historic issues which NERC has had with enforcing compliance by DisCos. As an example, arbitrary estimated billing is still rampant despite the Order on the Capping of Estimated Billing issued by NERC. It is therefore for NERC to ensure

both consistent monitoring and strict enforcement of penalties on erring DisCos. The positive effects which effective implementation of the Order will have cannot be overstated. If DisCos fulfil their obligations and fully service-based cost-reflective tariffs can be implemented, this would encourage investment in the power sector and speed up the transition to a fully competitive electricity market. An improvement in the power sector will have ripple effects for the Nigerian economy and the general quality of life of its citizens. There are also concerns which may be raised concerning the Circular. The Circular makes DMBs responsible for the DisCos’ remittances to NBET and TCN and therefore empowers DMBs to deduct these remittances directly from the DisCos collection accounts and remit same to the NBET and TCN in order to meet the DisCos minimum remittance requirements. Although this may result in increased compliance by DisCos with their minimum remittance requirements, this may have unintended negative effects on customers, where the DMBs deductions affect the DisCos’ ability to fund their operations, meet service level commitments and other obligations they may have to other lenders. This is especially so as the Circular does not prescribe a minimum notice period to be granted by DMBs to the DisCos prior to the deduction and remittance. Additionally, granting DisCos the sole right to process both energy and non-energy related collections for DisCos is contrary to previous policies issued by NERC which entitled DisCos to engage collection agents and other third parties to handle collections, especially as contained within the “Order on the Mandatory Migration of R3 class of Residential Customers, Industrial and Commercial Customers to Cashless Settlement Platforms and other Matters Relating to Revenue Protection in the Nigerian Electricity Supply Industry” issued on December 31, 2019. This highlights a lack of cohesion between key regulatory bodies in the NESI.

Dr. Ayodele Oni (a lawyer), specializes in international energy (oil, gas and power) investment law and policy.

“I am engaging with the honourable Attorney General on the issue... Continued from page 18

Honourable Attorneys-General of the thirty-six states of Nigeria, and twenty members of the NBA. Consequently, the RPC and any amendments thereto may only be validly issued after it has been deliberated upon and approved at a properly convened meeting

of the Bar Council. “As far as the NBA is aware, no notice convening a meeting of the Bar Council was issued to its elected representatives on the Bar Council and no meeting of the Bar Council was convened and/or held to deliberate on the Instrument. To that extent, our position is that no authority www.businessday.ng

or approval was given for the amendment of the RPC. Consequently, the NBA maintains that the RPC has not been amended and enjoins all legal practitioners to remain calm and continue to conduct their affairs in the same manner as they did prior to the issuance of the Instrument. He thus assured members

https://www.facebook.com/businessdayng

that the leadership of the association was engaging closely with the HAGF on the issue and will provide further updates on our next steps in the coming days. “Indeed, as part of the commitment of the current administration of the NBA towards the welfare and capacity building of members and the overall im@Businessdayng

provement of the Bar, we intend to propose certain amendments to the RPC that will be critical to the attainment of those objectives.” The NBA President also promised members that in doing this, members will be carried along, with a view to getting their buyin as critical stakeholders.

Thursday 17 September 2020

BUSINESS DAY

BUSINESS TRAVEL

Amid strides by local carriers, FG’s support critical in recovery process IFEOMA OKEKE

wo months after the resumption of domestic flight operations and a few days after the restart of international flights, airlines are still battling with the impact of COVID-19 on their margins. As a result of the reduction in passenger traffic, most airlines have since reduced flight frequencies, yet prices of air fares have remained the same. These realities are affecting the top-lines and bottom-lines of airlines. As the federal government develops cold feet towards supporting the local carriers in Nigeria, against what obtains in other climes, domestic carriers have continued to do all they can to stay afloat, and are investing hugely in keeping lavatories safe and clean for passengers. Local carriers, even before COVID-19, had built capacity to cater for growing passenger traffic and operating international flights. Local airlines’ strides Following the take-over of Arik Air by the Asset Management Corporation of Nigeria (AMCON) in February 2017 and injection of N1 billion, the airline has shown some signs of stability with the return of nine of its aircraft, sustaining both local and regional operations. But this is not yet recovery,say analysts. Dana Air and Aero have also acquired more aircraft to feed the local routes. Air Peace is, however, the most stable of the airlines, and it is not by accident that the airlines accounts for about 40 percent of the 2018 total passengers on the local front. Air Peace placed a firm order for 10 brand new Embraer 195E2 aircraft. The order comprises purchase rights for another 20 E195-E2 jets and 124-seater jet in dual class and 146-seater jet in single class configurations. With all purchase rights exercised, the contract is valued at N640.5 billion ($2.12 billion) based on current prices. The carrier also ordered 10 brand new aircraft from Boeing, increasing its fleet size then to 37 aircraft. With the new order, Air Peace’s fleet size has increased to 67. Air Peace had earlier set a domestic record as the first Nigerian airline to acquire and register the Boeing 777 aircraft in the country. Three of the four wide-body air-

craft it acquired for its long-haul operations to Dubai, Sharjah, Johannesburg, London, Houston, Guangzhou and Mumbai have so far been delivered. Olumide Ohunayo, an aviation analyst, told BusinessDay that during the lockdown, what determined the power of carriers world-wide was the ability to support the industry, their country, and the economy and, most importantly, the health sector in providing supplies. Ohunayo noted that carriers all over the world converted the scheduled passenger carrier into cargo aircraft and some improvised as cargo aircraft, so as to convey health materials and services in the COVID, adding that Nigeria was not an exception and the only airline that flew our flag was Air Peace. He recalled that Air Peace lifted supplies from China, evacuated citizens and non-citizens of the country such as the Israelis, Indians and Chinese and was able to do it successfully. “As it is today, Air Peace is the only airline that is ready to take international partners and it is an area we need to look at. We have an airline on ground and this airline can take on the rest of the world. “Air Peace as an airline has built capacity and equipment over time that can comfortably beat its chest when it comes to operations within the domestic and western region and the international market. “The systems and processes need to be worked on. Air Peace should begin to look at passengers beyond their point of destinations and for this to happen, they need a partner airline. In doing this, they need to be sure of the system www.businessday.ng

and processes in place and be confident that their clients will not come back to sue them,” Ohunayo further said. Seyi Adewale, chief executive officer of Mainstream Cargo Limited, described Air Peace as Nigeria’s jewel in the air space judging from its very noble and patriotic front in evacuating stranded Nigerian citizens from foreign countries including China, UAE, India, UK, Israel, among others. Adewale said this flag carrier also supported the aggressive distribution of Covid-19 medical materials, stressing that Air Peace operated like the ‘National Carrier’ during the high and dreadful days of the pandemic. “Industry experts can also note its technical partnership with reputable aircraft maintenance firms in Israel and USA. Indeed, Air Peace has a robust Spare Part Storage with good replacement plan and procedures in place,” he added. Opportunities that abound for airlines Experts say although opportunities abound for local carriers during this pandemic, the government will need to help the airlines leverage these opportunities. Ohunayo explained that immediately the government came up with guidelines for resumptions of international flights, which included restricting entry points, reduction in frequencies and not approving some foreign airlines coming into our airspace, there was supposed to be an opportunity for Nigerian operators on the European route to take advantage of. Ohunayo regretted that these opportunities that abound now are being blown away because the government of Nigeria refused

https://www.facebook.com/businessdayng

to use some aero-political means to get its airlines in one of these routes. “I feel so bad that we are losing these opportunities and I hope the government can use this opportunity to support our airlines to operate on the international route. It is time to do that,” he added. On his part, Adewale hinted that the risk appetite of many top-rated foreign carriers has been tempered by Covid-19 and the resultant strategic control of entry point and frequency allowed opens up a new vista of opportunities for capable domestic airlines. Adewale noted that with the assistance or support of the federal Ministry of Aviation, local airlines could code share with these foreign airlines and ‘feed’ them or take up opportunities for potential slot increase through a partnership deal that is supported by the Ministry in order to meet up huge market demands in and out of their countries. “For example, Delta has huge traffic and backlog into Nigeria till Dec 2020. Delta could partner a domestic carrier with capacity to access more slots and frequency into Nigeria to meet this huge demand. This is possible with negotiations that are supported by the Federal Ministry of Aviation,” he said. Government’s support critical for survival of airlines Experts have also observed that no matter the strides made by local carriers amid the impact of COVID-19, if the government does not support them, some local airlines may close down in a few months. According to Ohunayo, Nigeria needs more airlines on the international route that can strongly carry its flag, saying that the way @Businessdayng

the government can do this is to support Air Peace that is already doing international flight. “When a domestic airline starts international flights, that airline automatically becomes your flag carrier. This was reflective of the recent report on countries without flag carriers. Nigeria was not on that list despite our do or die attitude of having a national carrier. Once you designate an airline to fly an international route, it becomes your flag carrier. It deserves all the support you are giving to your unborn national carrier. This is what is lacking in Nigeria. “Air Peace deserves all the cover including safety, security, diplomacy, aero political and every other cover that is needed. Again, the ministry of aviation and all other ministries must ensure all charter flights involving Nigerian government and Nigerians be led and moved by Nigerian carriers. “That is a way of opening access to market for them and exposing them to other countries just as Air Peace made use of that effort during the COVID. I also expect that we will start to look at the Fly Nigeria Act again and begin to put a stage by stage process or implementation,” Ohunayo said. For Seyi Adewale, Air Peace needs space to build its own hanger within the Lagos airport, adding that the government, through its responsible agency, can make this a possibility with terms and conditions that are business friendly. Adewale also suggested that support grants to local airlines should be made accessible to Air Peace quickly and timely, as this will enable the local airlines retain their important staff, continue with growth and development programmes, train and retrain, and run efficiently without the burden of debt overhang. He also suggested that the government should continue with its reciprocity initiatives and execute or renegotiate BASA that supports local airlines to begin to benefit from the economic and commercial traffic rights that it intends. “Nothing should stop or limit Air Peace from this benefit into other lucrative international routes,” he said. John Ojikutu, a member of an aviation industry think-tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, told BusinessDay that the federal government should open either Lagos or Abuja to foreign airlines and any other airport from Port Harcourt, Kano, and Enugu.

Thursday 17 September 2020

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

SPENDING TRENDS

Wine sales in Nigeria to fall 33% on COVID-19 restrictions BUNMI BAILEY

he impact of the COVID-19 pandemic is expected to affect the volume of wine sales in Nigeria by 33 percent in 2020. According to a wine report by Euromonitor, a global market intelligence platform, the expected decline in wine sales compares to an expected 8 percent rise forecast for 2020 during research conducted in May 2019, that is. before the spread of COVID-19.

“Most types of wine are set to suffer steep double-digit total volume declines in 2020, largely driven by the closures and restrictions placed on ontrade establishments (a term typically used in reference to sales of alcoholic drinks sold through bars, restaurants, cafés, hotels and other catering establishments) as part of the measures to combat COVID-19,” the report stated. The Public Health measures aimed at limiting the spread of COVID-19 have largely influenced the various aspects of social human interaction, as well as all sectors of the economy.

The wine industry which is part of the hospitality sector recorded the worst halfyear performance in history

as hoteliers, brand and franchise owners, and destination managers decry that the industry lost over N50 billion

in the first half of 2020. “The decline in sales is expected due to the lockdown of events to control COVID-19,” Ayorinde Akinloye, a consumer analyst at CSL Stockbrokers said. Before the pandemic, there was a growing preference for wine against champagne by consumers due to the weak purchasing power in the economy. Consumers shifted away from champagne due to its expensive nature and went for cheaper ones like wine. According to data compiled by Comité Champagne, a trade association

that tracks the volume and value of exported wine from France, Nigeria’s consumption of champagne imported from France dropped by 24 per cent in the past 5 years since 2014. The champagne brands on average are sold for N25, 000 since they are majorly imported from France. While a bottle of red wine can go as low as N500. Experts believe that wine sales will recover after the pandemic but could see meager growth in 2022, followed by accelerated performances over the remainder of the forecast period.

SPENDING TRENDS

Increase in bread price looms as bread makers squeezed over high cost of production BUNMI BAILEY

here may be an increase in the price of bread in Nigeria, as bread makers face incessant increase in the prices of baking ingredients, and their inability to pass on the cost to the Nigerian consumers. The Premium Breadmakers Association of Nigeria (PBAN) and the Association of Master bakers & Caterers of Nigeria (AMBCN) have therefore called the attention of government and Nigerians to the near wipe out of the bread making industry in Nigeria. In a press conference organised by PBAN and AMBCN, the associations called on the federal government to do everything within its means to ensure that the industry does not die as the association stressed that they “can’t breathe any longer.” The associations noted that their businesses have become comatose due to the incessant increase in the prices of baking ingredients, and their inability to pass on the cost to the Nigerian consumer, adding that profit in their line of business has been wiped out completely. They also disclosed that capital injection through loans and equity investments

have been pumped into a lot of these businesses and repayments are no longer possible due to the prevailing situation in the industry and the economy as a whole. The role of bread in food security of Nigeria cannot be over emphasized, as it has found its place on the table of every Nigerian household, regardless of social standing, making it the most popular staple in Nigeria today. Data has shown that about 70 percent of the flour consumed in the industry goes into bread production. Speaking during a press conference to disclose the woes of bread makers in Nigeria to the federal government and Nigerians, Tosan Jemide, President, PBAN said whilst the associations acknowledge the challenges the ghastly Covid 19 pandemic has thrown the entire world into, and they are not oblivious of the difficulties ahead, they are calling on the federal government to come to our aid as we can no longer breathe. According to Jemide, although bread makers have been experiencing difficulties for a while, the period between March 2020 and August 2020, the price of flour which is the major ingredient has increased from N10,500 per 50kg bag to N13,500 per bag. “Sugar increased from N13,500 per bag, went as

high as N29,000 and down to N19,000 per bag in the corresponding period. Margarine, from N5,800 is almost N11,000. A 25 litre can of Vegetable oil which was about N13,000 thousand now sells for N16,000 while milk which was hitherto N29,000, now goes for N52,000. “Preservative (Calcium Propionate) increased from N25,000 to N34,500, with the possibility of further price increases not ruled out. The data analysis below shows the percentage increase in prices of baking ingredients over the last 6 months of 2020, to enable you understand the precariousness the situation of the bread making industry

is in presently,” he explained. Buttressing the challenges, the president of PBAN said over the last six months, the prices of flour, sugar and other baking ingredients have skyrocketed without a corresponding increase in prices of bread by our member bakeries. He noted that as Associations, it is either they do something about the incessant increase in prices of baking ingredients in which there is no solution in sight, or we may close shops. He explained that most bread makers got loans with double digit interest rates from banks and other financial institutions to fund their

bakery projects and are finding it extremely difficult to meet their loan repayment obligations, adding that both associations shall henceforth be responding correspondingly to any indiscriminate price increases by millers, sugar refiners and ingredient manufacturers and suppliers with same measure in the prices of bread. Jemide called on President Muhammadu Buhari to help sustain the industry as it strives to excel in its role of food security by reining in on the millers or supporting them in whatever way they can to help them with the forex. He also requested the gov-

L-R: Adedeji Solomon, vice-chairman, AMBCN,Lagos; Omotunde Raji, chairman, AMBCN, Lagos; Tosan Jemide, president, PBAN and Bose Ofolu, deputy president, PBAN at a press conference jointly organised by the two bodies recently in Lagos.

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

https://www.facebook.com/businessdayng

@Businessdayng

ernment intervenes in the issue of rising cost of baking ingredients by prevailing on sellers as well as imploring millers to put a stop to the incessant increment of price, giving some consideration to the manufacturers. “Currently, there is a five percent tariff on wheat imports, plus an additional 15 percent levy (earmarked for the national wheat development program) totalling a 20 percent duty. Since 2012, the wheat development program in Nigeria has been in place, yet eight years later, we are yet to see the benefits of the 15 percent levy in the local wheat supply chain. “We therefore call on the government to look into ensuring that the wheat development program functions well to justify the additional 15 percent levy. If this is not a viable program, we appeal to the government to scrap it and give the millers this 15 percent back so it can cascade to the entire flour industry and the Nigerian citizens alike. “Considering that bread has become the most popular staple in Nigeria, we suggest that the government revisits its forex policy, by giving wheat importers priority for accessing foreign exchange since our local wheat production cannot meet up with the growing demand for flour,” Jemide explained.

Thursday 17 September 2020

BUSINESS DAY

RESEARCH&INSIGHT

In association with

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

briu@businessday.ng

08098710024

Nigeria’s real sector is in need of more credit ISAAC ESOWE

omestic credit to the private sector by banks refers to financial resources provided to the private sector by other depository corporations (deposit-taking corporations except for central banks), such as through loans, purchases of non-equity securities, and trade credits and other accounts receivable, that establish a claim for repayment. For some countries, these claims include credit to public enterprises. Different theories have proved that factors that promote investment is a credit to the private sector which has a weightier effect on economic activities than credit to the public sector. One of such theories is the innovation theory by Joseph Schumpeter which identified banks’ role in facilitating technological innovation through their intermediary role. He believed that efficient allocation of savings through identification and funding of entrepreneurs with the best chances of successfully implementing innovative products and production processes are tools to achieve this objective. (McKinnon 1973, Shaw 1973, Fry 1988, King & Levine 1993) have supported the above postulation about the significance of banks to the growth of the economy. And again, studies have shown that the efficient provision of credit has a positive and direct effect on output and employment opportunities

while a low level of financial development and its attendant inefficient private sector credit system distorts economic growth. Conversely, it will be safer to say the modern economy is a ‘creditdriven economy’. Thus, on this premises, every sector of the economy require credit for divers’ purpose, among other reasons are factors which either improve the quality of outputs or the efficiency with which inputs are

www.businessday.ng

transformed into outputs. So far, for the period of five years (2015 to 2019), the total value of domestic credit by banks to the private sector amounted to N303 trillion according to the National Bureau of Statistics (NBS) data collated and extrapolated by BusinessDay Research and Intelligence Unit (BRIU). The year on year breakdown shows that the total credit allocated by banks to the private sector increased by 15 per cent from N52.89 tril-

lion to N61.05 trillion in 2016. However, in 2017, there was a notable decrease from N63.28 trillion to N61.67 trillion and this represented a 3 per cent decline. At the end of 2019, bank credit to the private sector was up by 4 cents as against a decline of 3 per cent recorded in the corresponding quarter 2018. This increase could be traced to the increase in Central Bank of Nigeria (CBN’s) minimum loan to deposit ratio for com-

https://www.facebook.com/businessdayng

mercial banks which was moved from 60 per cent to 65 per cent. The rise in deposit ratio was a regulatory measure stipulated by the apex bank to improve lending to the real sector and also to weather the effect brought by the coronavirus pandemic on households and MSMEs. In a similar trend, total domestic credit to the private sector amounted to a tune of N37.31 trillion for the period ended June 2020, a disaggregated value shows that the banks’ credit to the private sector in Q1 2020 amounted to N18,49 trillion, and that however increased slightly by 2 per cent to N18,82 trillion in Q2 2020. Out of the shared total of N18.82 trillion credit to the private sector in Q2 2020, oil and gas industry (downstream, natural gas and crude oil refining) accounted for N3.60 trillion. This represented 19.21 per cent, and was followed by the manufacturing sector which got N1.99 trillion or 16.31 per cent. The general services segment also accounted for N1.60 trillion or 8.74 per cent while finance, insurance and capital market segment received N1.32 trillion credit. The oil and gas sector (upstream oil and gas services) attracted N1.29 trillion in May 2020; Trade and General Commerce attracted N1.25 trillion or 6.55 per cent. During the reference period, credit to the government rose by the highest as this accounted for 7.99 per cent of the shared total. Thus far, Nigerian banks are somewhat reluctant to lend to businesses among emerging

@Businessdayng

markets, with an average loan-to-deposit ratio below 60 per cent. That compares with 78 per cent across Africa, with 90 per cent in South Africa and about 76 per cent in Kenya, according to the data compiled by Bloomberg. Across international frontiers, Shawbrook Bank’s loan to deposit ratio on the British market between 2012 and 2016 increased from 74 per cent in 2012 to 102.7 per cent as of 2016 according to Statista. The breakdown of the credit portfolio shows that oil and manufacturing sector attracted a major share of the credit facility relative to other sectors of the economy. The real sector, a strategic component of an economy that produces and distributes tangible goods and services which require to satisfy aggregate demand in the economy, accounts for less. This could be attributed to the lack of effective credit rating agencies and misalignment among other factors are responsible for banks’ reluctance to lend to the productive sectors of the economy. The best way to address the paucity of funds to the real sector is through financial reforms and policies that should focus on how to narrow the gap between savings and lending rates. Banks should also be encouraged to lend to the entire economy as opposed to favouring some specific sectors and government should avoid excessive deficit and borrowing from the financial system, which prove to be crowding out private investment.

Thursday 17 September 2020

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Why FG form Special Purpose Vehicle to oversee Presidential Power Initiative olusola Bello

he Federal Government last week inaugurated a special Purpose Vehicle SPC that would own and manage the Presidential Power Initiative. This in one word is the entity that would oversee the overall activities in relation to the power project in which the pre-engineering contract has been approved. It is perhaps the formation of this SPV that the Federal Government was waiting for to approve the letter of contractual agreement between her and Siemens the company handling the project is being delayed. The SPV company would now take care of the interest of the Federal Government

in the discos where it has 40 percent stake and it will also be providing project management for the implementation of and serve as the key manager to ensure cohesion and seamless ex-

ecution. Some industry operators have therefore admonished the committee members to show commitment to the course of the power project and not allow ego to derail

Marketers highlight critical role of warehousing and logistics in growth of downstream sector olusola Bello

ith the continued drive by the Federal Government to fully deregulate the downstream sector of the Oil and Gas industry in Nigeria, the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), has reiterated its commitment to ensuring seamsless storage and distribution of products across the nation. DAPPMAN said the significance of deregulation goes beyond price determination, noting that the handling of petroleum products have far reaching effects on the health of the general public and environmental sustainability. According to Winifred Akpani, DAPPMAN Chairman, she said: “The critical role of DAPPMAN member companies in storage, distribution and supply infrastructure investment has been instrumental to the growth of the sector. As deregulation opens up the market, all stakeholders can be rest assured that DAPPMAN’s role in promoting global standards gives the buying public value for money with a huge premium Olusola Bello, Team lead,

on transparency and professionalism,” Akpani said the entry of private warehousing and logistics operators under the aegis of DAPPMAN has over the past two decades made the downstream sector more robust, competitive and efficient. She said DAPPMAN notes that a major part of the success of the oil and gas industry rests with investors in the warehousing and logistics aspect of the value chain as they enable producers, refineries, marketers and distributors to warehouse and transport their products in the short and long-term. This she stated continues to enhance local capacity in the management of strategic and essential storage operations as well as distribution through investments in new and additional pipeline networks. “This will certainly position the sector for increased growth upon full deregulation and translate to more value for consumers.” Industry experts say as has been the case over the last three decades, through their investments in major warehousing and logistics terminals totalling almost 1.029 million metric tonnes of products across the nation,

Graphics: Joel Samson.

www.businessday.ng

He said, “Following the Federal Executive Council Approval, the coast is now clear and the SPV has the responsibility of executing the Presidential Power Initiative (PPI), providing project management for the implementation of PPI and serving as the key manager to ensure cohesion and seamless execution.” The delay in releasing the letter of contractual agreement by the ministry of Finance has caused the project to suffer some delays already. This delay might affect the 2025 target of achieving 25,000 megawatts of electricity, an industry source stated The letter for the contractual agreement is supposed to spell out terms, conditions and the scope of the project and would be signed by the parties representing the Federal Government.

Eko Disco assures customers of improved service delivery olusola Bello

DAPPMAN has been instrumental to efficient management of growing increase in the supply and demand of petroleum products, resulting in a higher level of reliability, security and transparency across the country. DAPPMAN’s huge infrastructure development has helped improve the Supply Chain Management of the downstream sector, which has led to increased efficiencies in the distribution and retailing of petroleum products. Akpani said deregulation will also open up opportunities for other ancillary industries, while deepening economic activities and driving stable demand and supply mechanisms such as product blending facilities, necessary for the continued growth of the industry. “DAPPMAN sees a future of opportunities for all stakeholders through full deregulation of the downstream sector of the industry and believes that Nigeria is moving in the right direction towards becoming a major hub for warehousing and logistics management across the continent that would compete with major terminals across Europe, America, Asia and the Middle East.”

the objective. President Muhammadu Buhari inaugurated the Special Purpose Vehicle for Presidential Power Initiate to assist the government in improving the delivery of

power in the country. Members of the committee inaugurated by Buhari include the Attorney-General of the Federation and Minister of Justice, Abubakar Malami (SAN), the Minister of Finance, Budget, and National Planning, Zainab Ahmed; Minister of Power, Saleh Mamman; and Minister of Works and Housing, Babatunde Fashola. Others are Director-General of Nigeria’s Bureau of Public Enterprise, Alex Okoh, and the President Nigerian Society of Engineers, Babagana Mohammed. The president while inaugurating the committee described the power sector as one of the most critical components of sustainable development and expressed commitment to improve the delivery of power in the country as his enduring and defining legacy.

ko Electricity Distribution Company (EKEDC) has said that the newly introduced Service Reflective Tariff (SRT) which took effect from September 1 is to the benefit of the customers as it will bring about the desired growth in the sector. This was disclosed to journalists by the General Manager, Corporate Communications of the Company, Godwin Idemudia who reiterated the importance of the Service Reflective Tariff to

the growth of the Electricity ecosystem. He said: “We understand the economic impact of the pandemic is still, but there will never be a good time for the implementation of the new tariff.” He assured that the tariff review is aimed at bringing improvements to the quality of service EKEDC provides. Explaining further, he stated that with the new service reflective tariff regime, customers have been grouped into five service bands depicting the quantity and quality of supply they receive. Customers on

Band A will receive an average 20 hours per day, Band B customers will receive a minimum of 16 hours per day, Band C customers will receive a minimum of 12 hours per day while Bands D and E will receive a minimum 8 and 4 hours a day”. The Disco also allays the fears of customers within the D and E service bands that the implementation of the service reflective tariff regime is temporary frozen and the existing tariff will continues until the Company improves their supply hours as investments are being made to ensure that is achieved.

Big Oil goes looking for a career change

or most of the past century, Big Oil executives found it pretty easy to explain to investors how their businesses worked. Just locate more of the commodities that everyone needed, extract and process them as cheaply as possible, and watch the profits flow. That’s all over now. The change has been so profound that the chief executive officer of BP Plc recently found himself hyping the profit potential of another commodity. “People may not know—BP sells coffee. We sold 150 million cups of coffee last year,”

Bernard Looney said in an interview in August, referring to beverage kiosks attached to the company’s fuel stations. “This is a very strong business. It’s a growth business.” Perhaps it was tongue-incheek, or a way for the leader of the world’s fifth-largest international oil company to emphasize a relationship with consumers. But it’s clear Looney and other oil bosses are struggling to sell their plans for a future in which the world wants more green energy. Last year, for the first time in history, solar and wind made up most of the world’s new

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

https://www.facebook.com/businessdayng

@Businessdayng

power sources, according to BloombergNEF. If the margins on cappuccinos look good right now, that’s an indication of how hard it will be for Big Oil to rapidly ditch its winning formula of drilling, pumping, and refining while spending its way into renewables. “This is a time of energy transition,” says Daniel Yergin, the oil historian and vice chairman at consultant IHS Markit Ltd. “The supermajors were born of the trauma of the late 1990s,” he notes, and now “this global trauma of the pandemic will also be a decisive period.”

Thursday 17 September 2020

BUSINESS DAY

Garden City Business Digest Manufacturers in Rivers/Bayelsa yet to see kobo from Covid-19 intervention fund • MAN boss says demand for land papers not realistic Ignatius Chukwu

lmost all manufacturers have their land papers with commercial banks to back their running loans. Now, the federal government created intervention funds through the Bank of Industry (BoI) and the Central Bank of Nigeria (CBN) but these fund managers are asking the manufacturers to submit their land certificates to access the intervention funds, This has made the fund something for the gods, not human, according to manufacturers that spoke in Port Harcourt. The chairman of the Manufacturers Association of Nigeria (MAN), Rivers/Bayelsa, and national council member of MAN, the senator, Adawari McPepple, what is obtainable Europe and America is to use tax payments to determine viable companies, knowing that most manufacturers and other big businesses use their land papers to tap loans from banks. Pepple stated at the sidelines of the 2020 MAN virtual AGM in Port Harcourt: “Yes, BoI was set up for loans to manufacturers and we have been hearing of intervention fund from the CBN of about N50Bn to N75Bn. The issue is, who are accessing these funds?

Adawari McPepple

At this point when manufacturers are already indebted to banks with the pandemic and problems of paying back, how will manufacturers present land papers. If you want to intervene, you are asking for collateral that are already with banks. Where will they bring collateral from? “I have been calling for use of tax as a corporate citizen to qualify for intervention loans. The agencies can look for those genuine manufacturers who have been paying tax. Why not support them. In the UK, US, they do not demand for titled document of their factories. Its not done anywhere. You can do factory visit and establish ownership of the titles. You are playing to the gallery and killing the businesses. This simply shows that no manufacturer in the PH zone

has seen a kobo of intervention fund in this coronavirus era. This shows that post-pandemic era means nothing to manufacturers in this part of the country. Won’t stop wailing: Little wonder when the chairman was asked why the same problems of manufacturers are listed every year, he said: “We will not stop listing our challenges because the more we talk about them the more they get chances of being solved. Some would have been touched but some are not at all. We cannot stop talking about them annually.” Build industrial park in PH He went on: “Lockdown was big issue. We had problems before especially in sourcing raw materials but its worse now. That is why we have appealed to the state governments to consider industrial parks. Trans-Amadi has outlived its usefulness having been filled up with hotels and non-industrial purposes. We want action on this. We have done a paper on this through the commissioner and we are expecting the governor to respond. We will continue to invest in manufacturing. It entails a lot; land, equipment, operations, take off capital, employment, etc. Employing people is where the economy is touched with spiral effect. Government alone cannot do

it. Every economy is driven by businesses. When people get jobs in the businesses, nobody goes to disturb the government. “In the 1980s, people did not go to the state secretariat to look for jobs but at TransAmadi and NPA. It is since jobs dried up in the private sector that people have become politicians and civil service seekers. Some pay as high as N1m to get a job. Government employ a limited number of people but there is no limit to the number the private sector can employ. That is why the private sector needs to be galvanised all the time. Vision 2050 may still fail if… “The Vision 2050 being proposed may still fail like the Vision 2020. My advice is that we should stop paying lip service in provision of basic infrastructure with power as number one. If power alone is solved, the rest would be secondary. There must be power and road such that goods can move. Look, there is no gain in manufacturing in PH and there is no road to Onne Port. Trucks just fall. The private sector cannot build roads and railways except it is liberalised to allow private sector investors. That is the challenge because only government can build roads by law. If these things are not done, the vision 2050 will be another illusion.”

Rivoc! Rivers State Vegetable Company is back • But GM says Nigeria’s rich men invest only in politics for huge scoops back

Ignatius Chukwu

hen few years ago the Rivers State Vegetable Company (RIVOC) located in Trans-Amadi was crying for little capital to escape closure when the Indian investors pulled out, nobody seemed to spare a dime. The company crashed, workers lost out. At the 2020 Annual General Meeting (AGM) help in Port Harcourt, the announcement that Rivoc was back made huge impact. Rivoc was once the third largest fast moving consumer goods (FMCG) manufacturing company in Nigeria. It was also the largest producer of edible grade palm kernel oil in Nigeria. All of this dream crashed, just because most Nigerian moneybags do not care to invest in manufacturing which looks slow in returns to them but in politics where the winner takes all and recoup is huge. The general manger, administration and human resources, Godfrey Agorom, threw more light on the return of Rivoc and the experience with capital hunting. “Some of the plants not reactivated are waiting for funds. It has not been easy considering the state of manufacturing in Nigeria. People who have funds do not invest in manufacturing but in politics and get one huge reward overnight, but manufacturing will give returns to this generation and

Godfrey Agorom, Rivoc GM Admin & HR

generations unborn. You are sure of your investment over the years. “The company was acquired by a private organisation, now an indigenous company. The Indians abandoned the place and left. So, for the new outfit owned by Strides Nigeria Limited, several of the plants have been reactivated. We now produce soaps and detergents. Gradually, we will reactivated other lines and return to 100 per cent plus” To him, the expectation of the public is for the New Rivoc to meet the gap it had identified in the society. “Our products are preferred and they are all over Nigeria. Prayerfully, and gradually, we will surpass the level of the old Rivoc.” He said the company has captured back over 25 per cent of its lost market share.

Peaceful oil is possible - Kalabari youth leader Port Harcourt by Boat

IGNATIUS CHUKWU

big force behind the successes of Belemaoil could be the youths, especially Kalabari youths (that now has a formidable front known as the Kalabari Youth Council, worldwide). Now, one big gain of the divestment of oil majors and entry of marginal field operators, especially entry of community-owned oil companies such as Belemaoil is the community participation and return of peace in previously very volatile oilfields. For instance, OML 55 which until 2015 belonged to Chevron is a large block in the southeastern Niger Delta, according to McKenzie reports. It extends 65 kilometres from east to west and most of the infrastructure lies in shallow water or tidal swamp. “The block contains five fields, the largest of which is Robertkiri.

Two fields - Robertkiri and Inda - are located in water depths of more than five metres and are platform developments. The Jokka and Idama fields are smaller.” Simply put, OML 55 is offshore and mostly in the coastal areas. It’s a dangerous place to hang around. By the west of this oil field is OML 25 which Shell attempted to sell to Chrestar but was stopped by a court. Belemaoil fought to take it over, and the fight was stalled, too. OML 25 lies 50 kilometres southwest of Port Harcourt in the onshore eastern delta. The riverine and swamp environment makes for difficult operating conditions. Field facilities are mounted on semi-submerged piled platforms, experts said. So, operating in these Kalabari areas seems very difficult due to militancy and riverine nature of the entire areas. But, Belemaoil ventured in. To succeed, the marginal field operator tackled the major problem, militancy, which is often fueled by angry youths. By making the youths his partners, Belema Oil CEO, Jackrich Tein Jnr, created a model that seems to win where others failed. The Belema Model has something for the women, the men, the chiefs, the students, clerics, and finally the youths. These groups now look ro support the endeavour. Testifying on this, the president of the Kalabari Youth Council (worldwide), Godspower Ipalibo Madodoye, used the occasion of the empowerment of 600 women in skills by Elizabeth Aid Foundation run by Elizabeth Tein Jr,

www.businessday.ng

wife of the CEO, as a standpoint. He said: “It is amazing what the Elizabeth Tein Aid Foundation is doing. Imagine 600 women being trained and empowered in 10 different crafts. This is not the first time. Most of them are from the Kalabari houses. It is amazing. I can see the impact of this step. “Belemaoil has barely operated for three years and is doing this. Few months ago, 600 scholars were given scholarships and most of them are Kalabari persons given N200,000 each to support their education. Today again, this is happening.

Godspower Ipalibo Madodoye, Kalabar youth president

https://www.facebook.com/businessdayng

“Most of these beneficiaries have no skill, no future, but today, they have skills and a future. If you empower a woman, you empower the family and the society. This company is doing amazingly well and we urge them to do even more.” Now, the clincher, “We want the Kalabari youths to thank Belemaoil, NNPC, Elizabeth Aid Foundation and any one that has a hand in this. We will make the area peaceful especially Kula and Idama. This is same with anywhere Belemaoil wants to operate in Kalabari land especially the coastal areas. Yes, it is possible to make this happen. The areas are already peaceful, else, Belemaoil would not be drilling oil in these areas. “As president of the youths, I am saying this peace has to be an enduring one. The people are happy, and when the people are happy with a company, the petroleum industry will be stable. Look at the women all over this area rejoicing. We call it the Belemaoil Model. That is why other ethnic areas such as Ogoni are calling on Belemoil to come over to their areas. “This is the first time ethnic areas are demonstrating and saying, come and take our oil. We stand for peaceful exploitation of oil. The environment is peaceful. Kalabari has three LGAs and more then 60 communities. All the community youth groups are under one umbrella. The IYC is here, and all youth leaders in Kalabari are here. We will continue to make it peaceful for Belemaoil to thrive as long as they continue to do this kind of thing”. Bottom line: peaceful oil is possible!

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

news Virus leaves Nigeria’s 41.5m SMEs vulnerable...

L-R: Umar Garba Danbatta, executive vice chairman/CEO, Nigerian Communications Commission (NCC); Hope Uzodimma, governor, Imo State; Isa Ali Ibrahim Pantami, minister of communications and digital economy; Adeolu Akande, board chairman, NCC; Kashifu Inuwa Abdullahi, director-general, National Information Technology Development Agency, and Uche Onwude, member, NCC board of commissioners, during the commissioning of NCC’s Emergency Communication Centre, in Owerri, Imo State.

Continued from page 1

tions. In the last two weeks in Lagos, Nigeria’s commer-

Foreign investors, PE firms seek 100%... Continued from page 1

traction is the low penetration of insurance cur rently standing at less than 0.4 percent, lagging behind South Africa, Egypt and Kenya. They also believe that the country’s large population put at over 180 million with larger proportion in the middle class presents a huge opportunity for growth. Recently, Allianz Group offered to purchase all outstanding shares in Allianz Nigeria currently not held by Allianz through a ‘Scheme of Arrangement’. After receipt of the approval of the Nigerian Securities and Exchange Commission (SEC) for the transaction and the approval of the court, Allianz Nigeria will become a wholly-owned subsidiary of the Allianz Group and its shares will no longer be tradable on an over-the-counter securities exchange in Nigeria.

Coenraad Vrolijk, regional CEO of Allianz Africa who disclosed this, says by increasing its investment in Allianz Nigeria, Allianz Group has once again demonstrated its commitment to the Nigerian market. “The privatisation of Allianz Nigeria marks the beginning of an exciting new era for the company,” Vrolijk states. Also at Law Union & Rock Insurance plc, its majority investor, Verod Capital, a leading West African equity firm, has initiated moves to purchase the entire issued share capital of the company to which the company signed a Transaction Implementation Agreement through its investment vehicle, Kanuri LUR Limited. According to the company, the shareholders have accepted the new investor’s offer of N1.23 per share for every 50 kobo ordinary share they held. Remi Babalola, chairman,

Law Union & Rock Insurance, notes that the offer represents a total value of N1.23 per share, a 129 percent of the last traded share price of the company on February 27, 2020, at N0.95 per share, being the last business day prior to the date of the execution of the agreement. Also, Tangerine Life Insurance Limited, which had acquired 100 percent ownership of Nigeria’s Metropolitan Life, has also through the support of Verod Capital Management Limited, acquired a majority stake in ARM Life Insurance plc. The acquisition, which became effective February 28, 2020, propels Tangerine Life to fourth place in Nigeria’s life insurance industry. Livingstone Magorimbo, managing director of Tangerine Life, says, “The landscape of the insurance industry is evolving very quickly. At Tangerine Life, we have made a decision to ensure that we are always at the forefront of innovation within the

industry. As part of that innovation strategy, we have found collaboration to be a key instrument in ensuring that we build and maintain a sturdy, profitable business.” Magorimbo adds, “The acquisition will provide a perfect springboard for Tangerine Life to utilise the distinct strengths that ARM Life brings to bare, thereby strengthening the insurance services provided by Tangerine Life to create and deliver better value.” Daniel Braie, managing director/CEO, Linkage Assurance plc commenting on the acquisition trend, states, “The potential for growth in our market is huge,” saying the low penetration of insurance given the population is a growth opportunity, and these investors are seeing it. He says also that the Nigeria’s large population presents opportunity for retail market and that is the attractive factor for any investor in the industry.

Nigeria aims to create N7.5trn solar energy...

Meet best and worst countries to start ...

Continued from page 2 blers of solar components and off-grid energy retailers in the country. Yemi Osinbajo, Nigeria’s vice president, while speaking at the First Year Ministerial Performance Review Retreat organised for senior government officials last week, had said the Federal Government had begun the implementation of the N2.3 trillion stimulus packages to address the economic distortions and hardship caused by the COVID-19 pandemic. N152.4 billion of this sum was allocated for solar projects to power 5 million homes. According to the CBN guidelines seen by BusinessDay, two categories of participants are eligible: upstream participants, which include manufacturers, assemblers of solar components and those engaged in research and development, and the downstream participants include distributors, project developers and those involved in engineering, procurement and construc-

Continued from page 2

tion of mini-grids. The terms of the loan are flexible allowing for singledigit interest rate, up to 10 years tenor, depending on the category but beneficiaries will provide collateral for the Participating Financial Institutions (PFIs) The participants are obligated to use the facility for the purpose for which it was granted, adhere strictly to the terms and conditions of the facility and transaction, insure the project and make their records available for inspection by the CBN. Some of the renewable energy operators who spoke with BusinessDay say they are excited about the plan. “On paper, its sounds very good because they are making it compulsory that every project under the scheme will be produced in the country and, a lot of companies are talking to us to provide them solar modules so they can qualify. I can tell you the industry is excited,” Chuks Umezolora, a co-founder of Auxano Solar, states. www.businessday.ng

ity, workforce diversity, housing affordability, projected population growth, average monthly workplace earnings, museums and galleries, sights and landmarks, and concerts and shows. Professional opportunities were measured using job availability, progressiveness, robust economies, entrepreneurial atmosphere, unemployment rate, new start-ups per 100,000 residents, graduate opening per 100,000 residents and current and prior year’s employment growth rate. The ranking is not so much of a surprise as Nigeria is still lagging behind in most of the metrics taken into consideration in the survey. Employment and job availability Nigeria’s unemployment rate rose to 27.1% in Q2’2020 from 23.1% recorded in Q3 2018, according to the National Bureau of Statistics (NBS). According to the Bureau,

youth employment declined from 44.2 million in Q3 2018 to 40 million in 2020. “Employment and job creation are largely underwhelming in Nigeria,” said Gbolahan Olugunro, research analyst at Lagosbased CSL Stockbrokers, saying, “On one hand, employers are making the case that some graduates are unemployable due to the absence of technical skills required for the job.” “The employment condition in Nigeria makes it difficult to start a career in Nigeria,” said Oluebube Ezeoke, a senior analyst at Enzo, Krypton and Company. “An average Nigerian graduate is not skilled enough to meet the heavy requirement for employment, making it hard to get a job. The poor average starting salary also makes it difficult to invest in personal development while on the job,” she said. “We need to re-brand the syllabus in the tertiary institution to make graduate more employable,” Ologunro said.

https://www.facebook.com/businessdayng

cial nerve centre, at least two micro business owners have told BusinessDay about their plans to shut down and move into paid employment due to lack of funds to continue. Sales have dropped monumentally with many entrepreneurs seeing over 50 percent drop in their margins. Barbara Ndugbu, CEO of Oven Secret Limited, who makes cakes, says her production has dropped by 73 percent due to low demand occasioned by the virus and worsening economy. “The recent surge in the prices of key inputs such as sugar and flour has shot up our production cost, thus making it more difficult to make profit. The purchasing power is still low as sales have not picked up like before, “Ndugbu states. Babajide Esho, founder, Edustripe.com, an online education platform, says though online education has gained traction in this period, his revenue has dropped 40 percent due to low responses from parents complaining of data cost. “Many of the activities we had planned for the year could not hold anymore, such as our Parent Meetups, Tech Company Tours and Summer Camp Programme,” he notes. On his part, Young Ukpong, co-founder, Bridge Hospitality Consult, a consultant in the hospitality industry, says co-businesses have reduced their staff strength in a bid to survive. “Even now that the economy is re-opening gradually, many are still not requesting for our services. They want the economy to fully re-open before they would request for the services of a consultant. This has made business really difficult for us as we are just trying to stay afloat,” according to Ukpong. COVID-19 has infected more than 50,000 Nigerians and killed over 1,000. It has dislocated global supply chains and led to job losses and shutdowns. MSMEs are the worst hit with credit and FX crunch, including poor infrastructure, hitting them hard. MSMEs contribute 50 percent to Nigeria’s GDP and account for 86.3 percent of jobs (59.6m 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). The foreign exchange scarcity means many MSMEs cannot import inputs and machines. The Monetary Policy Rate is 12.5 percent, with deposit money banks charging 20-30 percent interest rate per annum. The CBN launched a N50 billion facility in April to cushion the impact of the coronavirus pandemic on small businesses, manu@Businessdayng

facturers, among others, but some MSMEs say they cannot access it. “We need to emulate the USA in the disbursement of palliatives to small businesses. Every SMEs operator I know that applied for the COVID-19 SMEs palliative did not get anything, then you begin to wonder who is accessing the funds,” says John Kachikwu, managing director/CEO of Jon Tudy Interbiz Nigeria Limited. “In the USA, even without applying for the stimulus package as an MSME operator, you will still get it as the government is accessing small businesses through their tax identification. But in Nigeria, the wrong people are the ones benefitting from palliatives for small businesses,” Kachikwu alleges, calling for a single-digit interest rate to help reduce the burden of small businesses and ensure they survive postpandemic. Nigeria does not have the fiscal space to fund the 41.5 million MSMEs, and experts say small businesses need more than money to survive the pandemic. Femi Egbesola, national president, Association of Small Business Owners (ASBON), told BusinessDay that uplifting MSMEs to create jobs and spur growth was beyond palliatives. “No matter the level of palliatives, without the right environment it will amount to nothing,” he said. “We need to fix our infrastructure and address issues around FX volatility. Most small businesses spend 7080 percent of their cost on generating power alone” Egbesola said. The FX volatility and huge logistics cost are also major problems for operators of small businesses, as they have doubled their operation cost since the outbreak, he said. Despite the compelling potential of SMEs, running small business in Nigeria is tough. Energy and bad road network remain big infrastructural challenges in Nigeria, increasing operational costs for small businesses, especially with the recent hike in electricity tariffs and fuel. Similarly, foreign exchange volatility has also played a major role in hampering the growth of small businesses as the country remains importdependent. Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), says SMEs operators in the country have continued to remain uncompetitive owing to the huge infrastructural challenges they continue to encounter. “Insecurity is also a big issue that has led to the collapse of many small businesses, especially in some parts of the country. How can SMEs operate if there is a high rate of insecurity in their environment of operation,” Yusuf asks.

Thursday 17 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

NEWS

DBN ready with N169bn to support SMEs …as NEPC grooms small exporters IGNATIUS CHUKWU, Port Harcourt

L-R: Olayiwole Onasanya, permanent secretary, Lagos State Ministry of Agriculture; Abisola Olusanya, acting commissioner for agriculture, and Olawale Oke, rice facilitator, APPEAL Projects, during APPEAL Projects Tour to Badagry in Lagos, yesterday

NERC caps meter prices but different specs challenge local manufacturers ISAAC ANYAOGU

he Nigerian Electricity Regulator Commission (NERC) has capped the price of electricity meters but without fixing a standard that Electricity Distribution Companies (DisCos) can order from providers. Local manufacturers say they are finding it difficult to keep up with varying standards. In the Nigerian electricity supply industry, the regulator and the Nigerian Electricity Management Services Agency (NEMSA) approve the standard of electricity meters used by consumers but DisCos are consulted in the process to ensure that the meter supplied meet the needs of their market. “The regulator has capped the price of electricity meters but the regulator has not capped the specifications or the requirements that the DisCos can ask for,” said Yahaya Yahaya, company secretary of Momas Electricity Meters Manufacturing Company Ltd (MEMMCOL), a local meter manufacturing outfit, in an interview following Business-

Day’s visit to the company’s plant in Ogun State. “So what we find is that while the regulator has capped the price of metering at the price of a Toyota, you have left the DisCos the unfettered discretion to ask for a Mercedes and you leave the metering company to perform by hook or crook,” Yahaya said. “The regulator recently increased the price of meter, but there is also a need to cap or give the maximum specifications that the DisCos can hand over to MAPs otherwise, you put the MAPs in a very difficult situation. Over 6.5million electricity customers have no meters to measure their output hence the regulator, NERC, created a Meter Asset Providers (MAPs) policy, wherein third-party investors can provide meters to customers for a fee in 2018. However, local meter manufacturers say that DisCos have different specifications for the meters they want and this is because “the standards for metering as laid down by NERC and NEMSA according to the metering code is very vague,” Yahaya said. “We found the 11 DisCos have different specifications

for electricity meters, that means a factory like ours is not able to invest in production and stock it in the warehouse because if you stock the meters in the warehouse, you are going to need an offtaker, so if you do not have a guarantee offtaker or an offtake agreement, it will be very difficult for you to make that type of investment. Local meters producers say the effect of these varying standards is that when a meter is damaged, it would be difficult to get exact replacement parts. It will counter the creation of ancillary component manufacturing plants for bolts, screws, panels that would have existed if standards are uniform. Nigeria’s vast metering gap has created over $600 million market for meters and component parts but without a uniform standard, the country will continue to ship jobs abroad and exhaust scarce foreign currency on meters and related components. However, the DisCos say that a uniform meter standard will be hard to achieve due to the peculiar nature of the market they serve. Some request for higher quality me-

ters to protect against tampering. Some DisCos in the north say they require cheap meters to serve customers in mud houses. To assuage some of these concerns, including foreign exchange challenges, NERC increased the price of singlephase electricity meters by 21 percent to N44,896.17 and three-phase meters by 23 percent to N82,855 in June. “In arriving at the approved unit costs, the commission has considered the recent changes in foreign exchange approved by the central bank and the applicable rates available to importers of meter components and/or fully assembled meters through the “Investors and Importers” forex window,” NERC said. Nigeria’s metering space comprises importers of meters, those who assembly Semi Knock Downs (SKDs) components to assembly and Original Equipment Manufacturers (OEM) and develop their own software and hardware solutions, like MEMCOL. The company, founded by Kola Balogun, employs over 250 Nigerians and produces about 20,000 meters on average, every month.

NLEMO begin plans to auction PHCN non-core assets DIPO OLADEHINDE

igerian Electricity Liability Management Company (NELMCO) has commenced plans to sell or lease some old assets such as 16-storey Eko Electric building in Lagos, corporate headquarters of Kano Electricity Distribution Company (KEDCO), a proposed head office for Ibadan Disco, among other properties belonging to the defunct Power Holding Company of Nigeria (PHCN) across the 36 states. The development is in line with the next phase of power privatisation exercise. NELMCO was designated to assume responsibility for all of the PHCN liabilities leading up

to the November 1, 2013 handover of the companies, as well as the management of the noncore assets of the companies, prior to disposition of same. It administers the stranded debts, settles PHCN’s Power Purchase Agreement (PPA) debts obligations, legacy debts, and sells, lets, mortgages as well as dispose of any of the property or non-core assets of the company. In its latest letter to prospective bidders, NELMCO invites buyers for property such as 8 story building at N0. 1-2, Ahmadu Bello Way Kaduna, Kaduna state available for lease, 4-bedroom detached bungalow at 16A, Western Way GRA, Zaria, Kaduna State, a fully opwww.businessday.ng

erational Tank Farm with capacity of 12,820 metric tonnes and storage building at Old Ijora Power Station, Ijora Olopa, Idodo, Lagos State. “NELMCO in pursuant of her mandate have gotten the approval of the National Council on Privatisation (NCP) to appoint sales agents and offer the under listed properties for sale to interested members of the public,” Adebayo Fagbemi, CEO NELMCO said in a letter seen by BusinessDay. Other properties available for auctioning includes a 16-storey building occupied by Eko Disco located at 24/25, Marina Street, Lagos, available for lease, proposed head office of Ibadan Disco located

at Kenneth Dike Road, Bodija, in Ibadan North local government, Oyo State, and corporate headquarters of KEDCO, located at 1 Niger Street, Nasarawa Kano, Kano State. NELMCO asked prospective bidders to pay an application fee of N50,000 alongside evidence of Certificate of Registration with the Corporate Affairs Commission (CAC), current tax clearance certificate, valid means of identification, and proof of financial capability and source of funding. Last month, NELMCO announced the Federal Government has a total liability of N823 billion remaining in the inherited stranded debts of the defunct PHCN.

https://www.facebook.com/businessdayng

evelopment Bank of Nigeria (DBN) says it has N169 billion ready to fund small and medium scale enterprises (SMEs) especially those eager to go into export. Similarly, the Nigerian Export Promotion Council (NEPC) has trained small exporters in the South-South on how to access the funds. Head of sustainability department of the bank, Lolade Awogbade, who spoke in Port Harcourt, Wednesday, said the bank has already disbursed N151 billion to over 100,000 SMEs in its first three years of operations. He noted that the DBN operates like the Bank of Industry (BoI) but with

focus on SMEs. She said its 21 partner banks disbursed the loans on its behalf while the DBN concentrates in training and leading the SMEs to do more. She said the DBN does not, however, fix the interest rates nor direct the commercial banks on who to give, apart from broad guidelines of making sure the loans go to SMEs and women. In his remarks at the training session, the South-South zonal coordinator of NEPC, Joe Itah said export financing was one of the bedrocks in the value-chain to successful export business. He said this informed the choice of the theme: ‘Building Sustainable MSMEs: A case of financial inclusiveness.’

Sanwo-Olu assures creative industry of support …as Cinema operators say ready to reopen

overnor Babajide Sanwo-Olu of Lagos State, on Wednesday, declared his administration’s resolve to collaborate with the creative industry, assuring that everything would be done to ensure that the sector thrives in Lagos. Sanwo-Olu, at a virtual meeting with members of the Cinema Exhibitors Association of Nigeria (CEAN) and other stakeholders in the Nigerian film industry, said the government was mindful of the economic impacts of the Covid-19 lockdown on the entertainment industry, particularly the cinema sector, promising to work with the association to achieve a win-win situation. The representatives of CEAN at the meeting expressed concerns about their current challenges and appealed to the governor to reopen the cinemas and the entire sector for business. They promised to adhere strictly to the laid down Covid-19 safety guidelines. Speaking on behalf of the association, Moses Babatope said the cinema owners are ready to reopen. He said: “We are ready to open our cinemas any time today or tomorrow. Cinemas outside Lagos are already open and they are complying with all the necessary protocols. We understand that your office is being careful about health and safety of Lagosians but we also assure @Businessdayng

you that these are top considerations for us too.” The association also requested that the governor set up a film office whose function would include liaising with foreign investors while also serving as a major hub for the film industry in Lagos. A filmmaker and one of the participants at the meeting, Omoni Oboli appealed to Sanwo-Olu to grant them tax waivers, stressing that no one in the film industry has earned revenue in the past six months. “Mr. Governor, we want you to help us with some tax break. As you may be aware, none of us has earned any revenue in the past six months. We want you to use your good offices to help our industry.” Sanwo-Olu while responding, assured the film experts that his administration would ensure the protection of their interest, having seen the level of creativity and economic importance of the sector. He said: “We would work collaboratively with your industry. I am aware of the enormous challenges you face especially in this period of Covid-19 pandemic. But as you know, we have to do what is right to protect the lives and property of millions of Lagosians.” Governor Sanwo-Olu promised to look into all the requests made and return to them in due course.

Thursday 17 September 2020

BUSINESS DAY

NEWS

Visa ban on politicians will aid Nigeria’s democracy - analysts …want ban extended to corrupt politicians INIOBONG IWOK

he recent visa ban on Nigerian politicians by the United State (US) and United Kingdom (UK) would help in checking desperate politicians and restore sanity to the electoral process, analysts have said. The analysts also submitted that the visa ban and threat to assets forfeiture by the US and UK was an indication both countries were interested in the advancement of democracy in Nigeria. The US on Monday announced the decision to impose a visa restriction on some individuals for their actions during the November 2019 Kogi and Bayelsa States elections and in the run-up to the September and October 2020, Edo and Ondo States governorship elections, according to the Secretary of State, Mike Pompeo. Pompeo said the US imposed the visa restriction on these individuals due to their conduct in the run-up

to the poll. “In July 2019, we announced the imposition of visa restrictions on Nigerians who undermined the February and March 2019 elections. Today, the Secretary of State is imposing additional visa restrictions on individuals for their actions surrounding the November 2019 Kogi and Bayelsa State elections and in the run-up to the September and October 2020 Edo and Ondo State elections”, he had said. Speaking in separate interviews with BusinessDay on Wednesday, the analysts applauded the US decision, but urged that the banned politicians must be monitored, while its implementations should be vigorous. The analysts, however, called for the visa ban to be extended to corrupt politicians and individuals who had siphoned the nation’s wealth while in public office. Emmanuel Dania, political analyst, said the ban showed how the US can help Nigeria’s democracy, amid calls for overhaul of the nation’s electoral pro-

www.businessday.ng

cess, while adding that corrupt politicians and individuals who abuse public office must also face similar ban. “It would help to emancipate the Nigerian citizens; there is no doubt that the political elites have taken over the citizens. Things like this would begin to make them do things differently. I hope they extend it to people who are corrupt and can’t account for their source of wealth after serving in public office. “If they do that it would help put some level of sanity among those people. They all want to go out and I would like to encourage other countries and the United Nations to follow suit,” Dania said. Another analyst, Idowu Omolegan who commended the visa ban, urged the US to vigorously implement it, and check any lapses. According to him, “It could help, but we have to check and watch its implementation. The fact is that some people may be afraid and may not want to do anything to make America ban them.”

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

NEWS FG, Lagos to arrest traders on rail tracks over accidents MIKE OCHONMA

L-R: Gertrude Olutekunbi, company secretary; Sani Ndunusa, acting chairman; and Segun Balogun, managing director/ CEO, all of LASACO Assurance Plc during its 40th annual general meeting in Lagos

IOCs push for consolidation of NCDMB Act ahead proposed amendment HARRISON EDEH, Abuja

nternational Oil Companies (IOCs) and other stakeholders in Nigeria are seeking for the consolidation of the Nigerian Content Development and Monitoring Board (NCDMB) Act 2010, ahead of the Nigerian Oil and Gas Industry Content Act 2010 Amendment Bill 2020. The IOCs say the country needs to consolidate on the benefits of the NCDMB Act 2010, while strengthening its implementation to attract more investments into the economy, ahead of the proposed amendment. The NCDMB Act 2020 had the mandate of driving Nigerian content in the oil

and gas industry, and to be a catalyst for the industrialisation of the Nigerian oil and gas industry and its linkage sectors. Prior to the advent of the Act in April 22, 2010, Nigeria had lost $380 billion to capital flight. But the act is currently addressing that with 30 percent success recorded in local content promotion in Nigeria’s oil and gas sector. These submissions were made by the IOCs and other industry stakeholders at a virtual consultative summit on Wednesday in Abuja which focused on understanding the wider implications of the Nigerian Oil and Gas Industry Content Act 2010 Amendment Bill 2020. The summit was declared open by Ahmed Lawan, president of the Senate.

Ekiti partners private sector to boost banana export REMI FEYISIPO

kiti State government is set to commence exportation of banana under the One-State-OneProduct (OSOP) initiative of the Nigeria Export Promotion Council (NEPC). The OSOP initiative is an essential part of the “zero oil” plan where all states of the federation are to identify at least one strategic export product and its alternate product based on their comparative advantage from which the country can earn foreign exchange. Ekiti State commissioner for trade and industries, Muyiwa Olumilua who made this known in Ado Ekiti at a stakeholders’ forum on Banana Development for Export, explained that since the state was one of the highest producers of banana and cassava in Nigeria, the partnership with

NEPC would go a long way in supporting the agenda of tracking economic, commercial, infrastructural as well as agricultural and industrial revolution in the state. He reiterated the commitment of the Kayode Fayemi-led administration to creating and sustaining an enabling environment for individuals and corporate bodies who are ready to partner with the government to boost the economy of Ekiti State. The commissioner noted that the various programmes embarked upon by the investor-friendly administration in the state, have created an enabling environment for investment to thrive. In his keynote address, the executive director/ CEO of NEPC, Olusegun Awolowo commended Ekiti for its efforts in developing non-oil exports in the state. www.businessday.ng

The proposed amendment, among others, seeks to increase the local content levy from 1 percent to 2 percent, and the redefinition of the term ‘indigenous’ in the proposed amendment, in addition to seeking board approval for contracts worth above N100 million. “Some of the key concerns are hinged on the move to redefine the word ‘indigenous’ in the proposed amendment, as expressed by industry stakeholders. One of the primary mandates of the NCDMB Act 2010 is to promote and encourage indigenous participation in the Nigerian oil and gas sector,” Nicholas Odinuwe, chairman Petroleum Technology Association of Nigeria, (PTAN) said at the summit. Odinuwe added that “the

way to measure the indigenous content is to look at roles played by companies and managed by Nigerians, whose focus is on developing infrastructure, manpower, and technology, thereby encouraging profit and retaining investments in our economy.” Osagie Osunbor, country chairman of Shell Nigeria said the increased financial burden in the proposed bill which is seen in increasing the local content development levy from the current 1 percent to 2 percent calls for worry. According to him, “additional levies imposed on IOCs have a way of making our country less attractive for investments. One of the key things we have all agreed on is to continue to attract foreign investments,” he said.

CSR-in-Action 9th SITEI confab gears towards empowering women from extractive communities

SR-in-Action and partners have concluded plans to organise the 9th Sustainability in the Extractive Industries (SITEI) conference to discuss and proffer solutions to the increased risk and challenges the sector poses for women and girls, and to implement turnkey strategies that will holistically address these risks through focused engagement, investment in community women, and the reduction of the barriers to women’s progress. The annual conference is slated for November 10, 2020, and would be hosted virtually. The conference themed ‘Inclusive Communities, Inspired Women,’ will feature hundreds of quality delegates and expert speakers from the industries, academia, civil society, community, government, and business who will jointly facilitate focused interactions that aim to foster community inclusion and gender considerations in resource dialogue and benefits, leading to sustained and enhanced fairness, transparency, accountability, gender equity, and actively inspired economic women participants in the sector.

Personalities expected to headline this year’s conference include Olamilekan Adegbite, minister, Ministry of Mines and Steel Development; Adejoke OrelopeAdefulire, SSA to President Buhari on the SDGs; Bitrus Bako Nabasu, permanent secretary, Ministry of Petroleum Resources; Yuliya Zabyelina, International Criminal Justice professor and extractives author, and Lara Smith, managing director/founder, Core Consultants. Speaking on the upcoming conference, Bekeme Masade, chief executive, CSR-in-Action, stated, “Incisive conversations with key stakeholders of the industries show that the change in the environment, different access to employment, disproportionate involvement in decision-making and disruptions of established social patterns – which lead to inaccessibility to land and increased vulnerability – are all caused by the industries and have had a detrimental effect on women’s progress. SITEI 2020 Conference and subsequent activities of the initiative funded by Ford Foundation, will address these anomalies head on!’’

https://www.facebook.com/businessdayng

orried by the rate of accidents and the pace at which traders are abusing the rail tracks, the minister of transportation, Rotimi Amaechi on Wednesday said that the federal ministry of transportation in collaboration with the Lagos State government will commence arrest and prosecution of traders selling on rail tracks in Lagos. Addressing newsmen after his routine inspection of the Lagos-Ibadan standard guage rail, Amaechi explained that the abuse of the rail corridor, especially in Lagos has become worrisome. According to him, “The rate at which people defecate and display their wares on the rail tracks in Lagos is becoming worrisome. This has made the new standard guage to look like an old track. “The train accident on Monday occurred because a vehicle was parked on the narrow gauge rail tracks. I was told by the experts that, it takes 800 metres for a train to stop when it is at full speed. The vehicle was parked there because the occupants were waiting for people to open the Arena shopping complex. And because it takes 800 meters for a train to stop when at full speed, the train could not apply brakes when

the driver saw the vehicle parked on the rail tracks. That was why the train rammed into the vehicle, and unfortunately, a life was lost. “The Lagos state governor and I have agreed that the train tracks are not a parking space nor a market, so henceforth, traders arrested selling along the train tracks will be prosecuted and jailed. We need to stop people encroaching on the rail tracks in Lagos.” On the train stations, Amaechi said that the China Civil Engineering Construction Corporation (CCECC) has promised that by end of September, three stations would be ready for operations. “It will be unfair to say there are no changes in the train station construction. If you see the train station at Olodo in Abeokuta, that station is almost completed. The flooring has been completed. Just doors, windows and painting that are remaining. At Kajola, what is remaining is painting. There was slight improvement in Ebute-Metta station too. “The contractor has told us that by end of September, three stations will be ready. That by end of October, all the minor stations, about six or seven of them will be ready while the whole work will be ready excluding Apapa port by the end of December,” the minister said.

Ogoni clean-up: Group seeks independent monitoring of project KELECHI EWUZIE

ivil Society Legislative Advocacy Centre (CISLAC) has called on the Federal Government to demand accountability from the contractors handling the Ogoni land clean-up project. The group also called for an effective collaboration between the federal and Rivers State authorities, stressing the need to remove “political undertone in this people- oriented project.” Auwal Ibrahim Musa, executive director, CISLAC equally demanded that the recent restructuring announced by the minister of environment, Muhammad Mahmood Abubakar, be unpacked and clearly communicated to the public on specificities, bothering on administration, operations, finance, procurement, and personnel. Musa speaking at a media parley organised @Businessdayng

by CISLAC with support from the Catholic Organisation for Relief and Development Aid (CORDAID), in Lagos on Tuesday, said there was the need for a critical assessment of the project with regard to speed, effective and efficient utilisation of funds already approved by the Federal Government and the oil producing companies for the clean-up project. The executive director observed that nearly four years after the Federal Government flagged off the project and money approved for same, nothing tangible has been achieved. Salaudeen Hashim CISLAC’s conflict adviser on his part stated that life expectancy has dropped by 11 percent in the region as a result of environmental degradation while the livelihood of the people has been completely eroded, leading to high rate of poverty.

Thursday 17 September 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph Editor, (08023314782)

SUSTAINABILITY

Reforestation as NB Plc’s Recipe for Brewing a Better World

ONUWA LUCKY JOSEPH

he ongoing illegal activities of ‘agbegilodo’ or timber loggers have gone a long way towards making deforestation the reality in our erstwhile dense rain forests. The situation is not helped by the collusion of foreigners who induce these illegal loggers to fell long standing trees and with no plans for replanting new ones. Thankfully, Nigerian Breweries PLC has what seems like the perfect response to the brewing crises in our forests, at least for the Olokemeji Forest Reserve in Odeda Local Government Area of Ogun State. In furtherance of its sustainability campaign ‘Brewing a Better World’ (BaBW), it plans to plant 600,000 trees over a 10-year period, on 500 hectares of land. Sade Morgan, the company’s Director of Corporate Communications, at the signing of the Memorandum of Understanding with the Ogun State Government,

disclosed that NB PLC was committing N500million to the project which it would do in conjunction with The International Institute for Tropical Agriculture (IITA). She further affirmed that the reforestation project was NB PLC’s way of helping to preserve the environment, protecting the watershed and replenishing soil water, all in

an effort to obviate the effects of global warming, the ultimate goal being to meet the UN target of 45% reduction in greenhouse emission by 2030 and 0% by 2050. Tall goal, but doable, if alongside Nigeria Breweries, other corporates and especially States and the Federal Governments play their own parts.

Preservation of Base Transceiver Station: Our Collective Responsibility DANIEL ADE-PETERS

he advent of the 21st century technological advancement resulted to a leap from the analogue to digital means of communication which is evolving through 2G, 3G, 4G, cellular network and will continue to evolve to 5G, 6G even beyond 7G, until lapse in time in communication is fully redeemed through the use of data technology. It is no doubt that the modern communication technology has reduced Space, time and distance in communication, thus grossly impacting in the educational, health, entertainment, religious, security and all sectors of the world’s economy. It is therefore of crucial importance to state that these celebrated digitalised platforms are made possible by an infrastructure called Base Transceiver Station (Base Station) which is a piece of equipment that facilitates wireless communication between user equipment (UE) and a network. The telecommunication Base Transceiver Station is a vital infrastructure to the development of a nation. It is the bedrock upon which the technological stability and advancement of any nation lies. The Base Station handles the transmission and reception of signals; sending and receiving signals to or from amongst network entities. These Base Stations even though are erected by service providers to enable network and ensure continuous availability of reception to users, should be considered as a national heritage which must be preserved. Once the Base Station serving a particular community or neighbour-

hood is non-functional, there is a breach in the communication needs of such community, telephone calls will be hindered in spite of emergencies, ATMs shut down, insecurity is enhanced, computerized operations in offices are frustrated and so on. Since every facet of human life is now dependent on access to information technology, Base Stations which serve as the channel through which information is accessed must be collectively preserved. The understanding of the importance of Base Station makes us know that preservation of it cannot be left exclusively to the law enforcement agencies or service providers but, should be a collective responsibility. Citizens both in the urban and rural area, businesses and government at every level must preserve Base Stations within the state as part of the essential state’s infrastructure which www.businessday.ng

must not be tampered with. In MTN Nig. Comms Ltd v. Delta State Government, three justices of the court of appeal agreed that Telecommunications Masts are like Electricity Poles and Electricity Transformers. See also IHS Nigeria Limited v. The State of Osun (citation to be provided) A Base transceiver station is not only the lifeline of all form of communication, they are critical to the development of a nation which means the same way trespassers are not allowed to tamper or damage electricity poles or transformer, hindrances by community or anyone to the operations of Base Stations must be refuted. The shutdown of a single base station is tantamount to gradual shutting down of the development of a nation as whole, international relations, foreign investment as well as other key economic activities. In fact, it’s hard to imagine any government, individual or business that has not benefited from the digital revolution. Even sectors as hands on as agriculture use computers for production records, financial planning, research on technical issues and procurement. Imagine all reception from Base Stations are shut down, no access to internet, television, or any form of communication, the world would seem like it has come to an end. Communication is a vital element in a nation’s security. One of the first strategies to carry out a coup is to shut down all means of communication. For instance, during the Sudan crisis, the military government ordered a total shutdown of the internet. The internet was cut off after security forces violently dis-

https://www.facebook.com/businessdayng

StanbicIBTC Rolls Out University Scholarships for ‘Jambites’ ONUWA LUCKY JOSEPH

tanbicIBTC is continuing its tradition of youth empowerment by alerting the general public to the commencement of its 2020 edition of the university scholarship awards for indigent Nigerian undergraduate students. The Bank, which said, in its announcement of the intervention that the initiative is “in continuance of our goal to support dreams and aspirations of Nigerian youths as we have been doing over the years through various activities such as Youth Leadership Series (YLS), Higher Institution Football League (HIFL) and so on.” It is however not fully an equal opportunity arrangement as some courses – Data Science, Business Analytics, Economics, Accounting, Finance, IT – etc. that revolve around “the future of work” are deemed more advantaged. Another critical condition is that the candidates, to be eligible,

must reside in Nigeria, gotten a score of 200 and above in the 2020 UTME exams conducted by JAMB and subsequently enrolled and admitted to a Nigerian Federal or State university. Ultimately, “the Scholarship will only be awarded to 100 Applicants spread across the 36 States of the federation and FCT with a minimum of 2 Applicants per State.” Every successful candidate will have their full fees paid for by the bank over a duration of four years irrespective of the actual mandated duration of their academic programme. That bit, we hope, will be given another look. What’s worth doing, we think, is worth doing well and to the end. If the students are classified indigent, StanbicIBTC ought to let the scholarship run for the duration of the students programmes. But that is something that can be tweaked in due course. Excellent initiative, all things considered. Parents, students, go to the bank’s social media handles and do the needful.

Billionaires: It’s time to give until it hurts ANDRÉS SPOKOINY

ecently, the Washington Post reviewed the charitable donations of the 50 wealthiest Americans during COVID. What they found was concerning: On average, America’s wealthiest families gave just 0.1% of their net worth. That’s equivalent to the median American family giving $97.30. Hardly a sacrifice. Compare this to the average donations make by working-class and middle-class Americans, and the result isn’t flattering to the American billionaire class: By the Jewish Funders Network’s calculations, almost 90% of charitable dollars is contributed by working-class and middle-class individuals, who collectively own just 28% of America’s wealth. While poor Americans give an average of 4% of their income to charity, billionaires give an average of 0.01%. This means that on average, poorer Americans give 400 times as much proportionally as do billionaires. The relative stinginess of our

persed protesters camping in central Khartoum. Also, on 7 January, 2019 at 04:30 GMT, soldiers took control of the national TV (Radiotélévision Gabonaise), announcing their coup attempt. A few hours later, around 07:00 UTC, the number of Internet connection requests from Gabon dropped sharply, indicating the beginning of an Internet shut down. The Base Stations were shut down to achieve the completion of the coup de tat. Thus, when Base Stations are down, communication breaks down. To lend credence to the sustenance of governance through telecoms infrastructure, the Office of the National Security Adviser (ONSA) @Businessdayng

wealthiest individuals is, in a way, a violation of America’s social contract. United States taxes are low compared to other developed nations, and among the many rationales given for this is that it encourages individuals to be charitable, on the idea that philanthropic endeavors can operate more efficiently than government spending. When all is said and done, the thinking goes, more money is freed up to solve social problems through philanthropy than would have been through higher taxes. What’s applicable in America is applicable to Nigeria. Our billionaires ought to wake up to their philanthropic duties. The need is massive.

(Culled from Forward.com)

has published that telecommunication facilities are critical national infrastructure (CNI) which are central to national security and deserving of protection by the government. In line with the provisions of the Cybercrime Act of 2015, Telecommunications Infrastructures are designated CNI and therefore, any acts of vandalism or deliberate obstruction of service delivery is deemed unlawful and punishable by law.

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

Thursday 17 September 2020

BUSINESS DAY

POLITICS & POLICY

Edo 2020: PFN advises electorate to maintain peace during election The cleric further said: “The Church stands for truth. We stand for justice. We stand for equity. Let’s defend our values. Truth must overcome falsehood. Light must overcome darkness.” While enjoining the electorate not to sell their conscience by selling their votes, he urged them to stand for that which is only just and in the overall interest and development of the state. He also enjoined all Christians in Nigeria, particularly those in Edo State to be prayerful, go back to their core value as the pillar of truth and rise up in prayers against the forces of evil. He also noted that election is a period to reward good with votes and also a period to punish evil with Permanent Voter’s Card (PVC). Omobude, however, appealed to politicians to be more circumspect in their utterances and activities, by ensuring that they put the state first in all their conducts. “They should not let their ambitions blindfold them or override the peace of the state. It is important that politicians do not destroy the state and people they aspire to govern. “Furthermore, it is important that the security agencies and the Independent National Electoral Commission (INEC) carry out their jobs professionally, to engender peaceful, free, fair and credible election that we all will be proud of,” he added.

Idris Umar Momoh, Benin

he National President of the Pentecostal Fellowship of Nigeria (PFN), Felix Omobude on Wednesday called on the people of Edo State to maintain peace and orderliness before, during and after the September 19 governorship election in the state. Omobude made the call in a statement through his Media Aide, Ralph Okhiria and made available to newsmen in Benin City. The PFN national president, who is also the General Superintendent of Gospel Light International Ministry (GLIM) - New Covenant Gospel Church (NCGC), said the election of an individual politician is not worth the blood or life of any resident of the state. “My dear good people of Edo State, I identify and join my voice to the many other good citizens of the state to call for peace during this governorship election scheduled for Saturday, this week. “The contestants have traversed the length and breadth of the state and have told us what they intend to do and can do. It is now our duty to make our choices and then come out boldly to exercise our franchise. “I want to call on you to do what is right. Don’t give yourself to violence, don’t allow your children to be used for violent activities,” he said.

Felix Omobude

Edo 2020: Ex-EDHA deputy speaker predicts victory for APC Idris Umar Momoh, Benin

ekini Idiaye, a former deputy speaker, Edo State House of Assembly, Wednesday expressed optimism that the All Progressives Congress (APC), would win the Saturday governorship election in the state. Idiaye, member representing Akoko-Edo I, made the remarks while speaking with journalists on the chances of APC in the election. The immediate former Deputy Speaker was impeached after endorsing the All Progressives Congress governorship candidate, Osagie Ize-lyamu. He said the APC would win in his constituency because there are no tangible projects constructed by the state in the last four years in his constituency.

“There was little or nothing to show to the people of Akoko-Edo that should warrant voting for Governor Godwin Obaseki,” he said. He however, added that he refused to defect to PDP as a result of the outcome of his consultations with his constituency. Idiaye, who explained that politics was all about the people and not selfish interest, added that with the dictates of the constitution, it was improper for an elected member to defect to another political party while still serving the mandate given to him by the electorate. While advising the electorate to come out en-masse to vote for APC, he expressed confident that the election would be devoid of violence following deployment of security officers. The lawmaker, who denied collecting N40 million to remain in APC, described the allegation as politics taken too far.

Ondo guber poll: How Akeredolu’s N10m largesse tears political group apart KORETIMI AKINTUNDE, Akure

s the October 10 governorship election in Ondo State draws closer, a political group tagged, ‘Coalition 2020 Platform’, on Tuesday allegedly factionalised over N10 million largesse which was collected from Governor Rotimi Akeredolu, candidate of the All Progressives Congress (APC) as part of the political move to adopt him as their candidate. The ‘Coalition 2020 Platform’ being led by Akin Akinbobola, conducted a mock election in order to know the candidate to support in the forthcoming gubernatorial election. Governor Akeredolu, however, defeated the trio candidates of the People’s Democratic

Party, Eyitayo Jegede; his deputy, Agboola Ajayi, who is contesting on the platform of the Zenith Labour Party and Dapo Adelegan of the African Democratic Congress (ADC). Akeredolu scored 162 votes, his deputy Ajayi scored 89 votes, Jegede polled 67 votes while Dapo Adelegan of the ADC got 6 votes. It was gathered that over 400 delegates participated in the mock election. But the pioneer chairman of the group, Bamiduro Dada, alongside some members disagreed with the conduct of the poll, having observed that those who were picked as the delegates of the member political parties and professional associations were strange people alleged to have been planted by APC against the wishes of the leadership of the group.

www.businessday.ng

Police, other security agencies to deploy 3 personnel to each polling booth for Edo poll Idris Umar Momoh & Churchill Okoro, Benin

he Nigeria Police Force on Wednesday said no fewer than three police officers and personnel of sister agencies would be deployed in each 2, 627 polling booths, to strengthen security during the September 19 governorship election in Edo State. Adeleye Oyebade, deputy inspector-general of Police in charge of Research and Planning, made the disclosure during a meeting with the Inter-agency Consultative Committee on Election Security (ICCES) in Benin City. Adeleye assured that the officers deployed would be apolitical, neutral and professional in the conduct of their constitutional responsibilities. The DIG, who is to coordinate security operations during the election, posited that the election would serve as another litmus test of determining the strength of Nigeria’s democratic process. He further assured that the security agencies would provide adequate security for ad-hoc staff of the Independent National Electoral Commission, electorate, party agents, candidates irrespective of their political party, media, local and international observers as well as other stakeholders involved in the election. He warned those planning to foment trouble with the motive to disrupt the election, and scuttle the democratic process to desist from such act as the arm of the law will catch up with them. “Our objective is to provide an enabling environment for a free and fair election that will remain a reference point in election security. Previous elections may have had their chal-

https://www.facebook.com/businessdayng

lenges, it is our resolve to improve on them, and make the 2020 Edo State governorship election freer, better, more inclusive, safer and more credible. The credibility of this election and indeed future elections remain our major focus,” he said. According to him, “Violence during elections can exceedingly debase the very essence and foundation of our jealously-guarded nascent democracy. Elections marred by violence, and other forms of malpractices cannot be said to be free, fair and credible.” He reiterated that, “No one is allowed to wear any cloth, emblem or colour signifying any political party to the polling units, and there shall be restriction of movements on the day of the election. “Everyone is enjoined to vote and return to their respective homes or remain peacefully within the approved parameters of the polling centre. Vehicles branded in any political party colour or emblem are not allowed to be deployed on any election assignment,” he further said. The DIG, who disclosed that they have established a joint control room for efficient management of information and security, urged voters to exercise their franchise without let or hindrance. He enjoined all security personnel and all those involved in election duty to adhere to the protocols of coronavirus (Covid-19) as stipulated by the Nigeria Centre for Disease Control (NCDC). The Inter-agency committee comprises the Nigeria Police Force, Army, Department of State Services, Nigeria Security and Civil Defence Corps, Nigerian Immigration Service, Nigeria Correctional Service, Nigeria Customs Service, Federal Road Safety Corps, National Drug Law Enforcement Agency and Independent National Electoral Commission.

@Businessdayng

Thursday 17 September 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Market capitalisation

NSE Premium Index

The NSE-Main Board

N13.358 trillion

2,213.55

N13.351 trillion

2,225.19

NSE All Share Index

Week open 4- 09–20)

25,605.64

Week close (11- 09–20)

25,591.95

Percentage change (WoW)

-0.05

Percentage change (YTD)

0.53 5.15

-4.66

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

1,090.26

728.51

135.00

433.37

194.20

1,846.38

1,124.23

995.27

1,084.04

1,088.70 1,086.63

302.09

728.51

293.97

134.11

432.21

191.77

1,848.99

1,128.20

988.88

-2.69

-0.66

0.35

-0.64

4.52

-6.18

-0.57 -5.88

0.00 0.00

-0.19 -7.74

-7.74

6.59

-0.27 -27.10

0.00 -27.10

NSE Lotus II

NSE Ind. Goods Index

0.14 0.78

NSE Pension Index

Here are analysts’ views on stock market this week Storeis by Iheanyi Nwachukwu

he record negative returns seen year-to-date (ytd) in Nigeria’s stock market implies that investors will still have to keep their eyes on the market’s balls till they get off the hook. When it comes to stock investing, nothing will pay off more than educating yourself. There is a risk in every stock investment, so be prepared for the ups and downs. It is better to invest in a down market and to “get out” in a soaring market, as per the philosophy of Warren Buffett. Research analysts’ recent views INVESTOR collated explain this. Most of them expect Nigeria stock buyers to remain cautious while others still see bargain hunting opportunities. “Although market performance bucked the trend last week, we anticipate a resurgence of interest on quality counters that present attractive dividend yield”, said Meristem research analysts. “We expect investors to keep their eyes peeled for counters with

upcoming qualification dates for interim dividends. However, in the absence of inspiring domestic macros and fragile global economic conditions we expect investors to remain cautious while seeking bargain hunting opportunities. “We project that elevated system

liquidity following the maturities in the fixed income space, and a dearth of attractive alternative investment options would spur some buying interest in the equities market. We thus expect the market to close positive this week”, Meristem research analysts stated.

“Despite the profit taking witnessed in the early trading sessions of last week, we expect to see some modest recovery this week as investors take position ahead of interim dividend payment by the top tier banks (Zenith, Guaranty, Access, and UBA) whose qualifications date for the interim dividend this week”, according to GTI Research. “We expect to see some buying interest in the equity market amid anticipated sizable maturities in the debt market scheduled to hit the system”, said Lagos-based United Capital Research analysts. “Market participants are expected to remain wary while they reposition their market portfolio in light of current macro economy trend”, Access Banks team of economic intelligence said in their September 14 note. “ We e x p e c t t h e b e a r i s h momentum to persist in the absence of any major catalyst”, Afrinvest analysts said. “We 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”, Vetiva Securities analysts said. The Nigerian Stock Exchange (NSE) All-Share Index (ASI) had decreased slightly by 0.05 percent last week 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. Though, investors still booked N5billion loss despite that we saw how dip buyers poured into beatendown banking shares. The market has increased by +1.05 percent in this month of September; while its negative return year-to-date (YtD) stands at -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).

Investments and the impact of policies on asset management in Nigeria

ince the inception of Asset Management in Nigeria in 1991, its relevance to the economy, contribution to society and how it has enhanced the performance of Nigerian banks have been critically questioned. With regards to its track record and its input to the development of the financial market, asset management, which can be described as a securitisation vehicle, has not done badly. The present value of Nigeria’s assets under management (AUM) is estimated at N1.2trillion. The fastest-growing fund in the industry is the Money Market Fund, which is currently valued at over N800billion. This fund has immensely contributed to the development of the financial market and helped to improve the savings culture of many Nigerians. In a recent interview, Oladele Sotubo, Chief Executive, Stanbic IBTC Asset Management Limited, expressed his views on investments and the impact of policies on the asset management sector of the fund market and how its opportunities can be harnessed. Sotubo emphasised the need to urgently diversify the economy to create more broad-based investment opportunities. That way, corporate entities will be able to access the capital market more efficiently. He said: “When an economy is diversified, the impact will be

evident on the number of financial instruments available for investment and also increase the number of companies participating in our capital market. Ultimately, all these will positively affect the tax revenue and by extension, infrastructural development of the nation.” Sotubo stated further: “There is no denying that asset management has improved the savings culture of Nigerians. Commercial lending policies made by the Central Bank of Nigeria (CBN) affect the rates at which government instruments like the treasury bills and open market operations bills are issued and traded. In turn, this affects the investment space and return on investment yield is also affected by the rate of inflation.” While highlighting the impact of

Dele Sotubo www.businessday.ng

key statutes and regulations guiding the fund market, Sotubo attributed the successes achieved in the industry thus far to regulations instituted by the Securities and Exchange Commission, guiding the operations of asset management companies, thereby protecting the investors. He stated that regulations issued by SEC have enhanced professionalism while also promoting healthy competition amongst fund managers. The impact has been very positive on the industry as there has been more collaboration between the operators and the regulators. The positive outcome is also reflective in the continuous growth of the industry. In 2017, the CBN developed a regulatory framework for the establishment, licensing, regulation, management and supervision of licence d ass et manag ement companies in Nigeria. According to Sotubo, the CBN policy provides a framework for privately owned asset management companies in Nigeria that will be eligible to purchase nonperforming loans or classified assets from financial institutions and specialised institutions. The federal government in 2011, set up the Asset Management Commission of Nigeria (AMCON) to purchase non-performing loans from banks. The upside is the derisking in the banking sector as

https://www.facebook.com/businessdayng

banks sold their non-performing loans to these companies. There was also the development of capital markets in the area of structured alternative investments such as Asset-Backed Securities and Mortgage-Backed Securities. When asked about the effects of the ravaging pandemic on the asset management industry, Sotubo said the sector was not immune from the negative impact and economic uncertainties. As witnessed in many sectors that were affected in various ways, there were drastic changes in business processes, rise in digital and virtual activities as well as the transition to the new normal. The measures of success in the fund industry will be gauged by how a business stays in touch and how customers are engaged. This simply means there will be more focus on digital platforms for client engagements and product distribution. From Stanbic IBTC Asset Management Limited’s perspective, success will be measured in terms of positive customer experience and how well organisations support their clients in achieving their investment objectives. Like every sector faced with risks, the Nigerian asset management industry is not a sacred cow. The key risk is the fast-rising number of unlicensed money managers and Ponzi schemes luring @Businessdayng

people with lofty promises of quick financial prosperity. Their sole aim is to reap unsuspecting victims of their money and the associated risks have doubled, especially because these schemers can reach their victims through various digital platforms. People fall prey to the activities of plotters largely due to ignorance and in other cases, greed. To negate and counter these devious activities, Stanbic IBTC Asset Managers churn out ways to educate the public, especially on its digital platforms. Also, SEC does a good job of coming up with actions aimed at checkmating these schemers. On the notable developments the Nigerian asset management industry has enjoyed in the last decade, Sotubo gave his view in comparison with the industry in other African countries. According to him, the Nigerian Asset Management industry has witnessed its fair share of growth in the Collective Investment Scheme segment. Citing the data from SEC in December 2011, the Nigerian funds market had 44 funds with the Asset Under Management circa N73billion and 103 mutual funds with industry asset under management of N1.26trillion by May 2020. An AUM of N5trillion would have been possible if there had been a National Savings strategy.

Thursday 17 September 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 16 September 2020

Top Gainers/Losers as at Wednesday 16 September 2020 LOSERS

GAINERS Company NB

Opening

Closing

Change

Company

Opening

Closing

Change

N41.05

N42

0.95

CADBURY

N7.75

N7.1

-0.65

BERGER UBN OANDO

CAP

ASI (Points) DEALS (Numbers)

N6.05

N6.5

0.45

WAPCO

N13.5

N13

-0.5

N5.35

0.35

NEM

N2.25

N2.03

-0.22

N2.25

N2.35

0.1

ZENITHBANK

N17.2

N17

-0.2

VALUE (N billion)

N17

N17.1

0.1

INTBREW

N3.2

-0.2

MARKET CAP (N Trn)

VOLUME (Numbers)

25,550.31 3,651.00 211,816,446.00 2.417 13.352

Global market indicators FTSE 100 Index 6,078.48GBP -27.06-0.44%

Nikkei 225 23,475.53JPY +20.64+0.09%

S&P 500 Index 3,415.19USD +13.99+0.41%

Deutsche Boerse AG German Stock Index DAX 13,255.37EUR +37.70+0.29%

Generic 1st ‘DM’ Future 28,097.00USD +189.00+0.68%

Shanghai Stock Exchange Composite Index 3,283.92CNY -11.76-0.36%

Cadbury, Lafarge, NEM Insurance, other stocks push NSE ASI further south Iheanyi Nwachukwu

igeria’s equities market continued its d o w n w a rd trend on Wednesday September 16 as more investors sold stocks like Cadbury Nigeria, Lafarge Africa, Zenith Bank, International Breweries and NEM Insurance. This week, the market has decreased by 0.13percent while this month it has increased by 0.91 percent. Many investors have continued to adopt cautious approach to stocks trading while expecting clarity around global indicators. In the absence of positive catalysts capable of lifting investors’ sentiment, the Nigerian equities market will still remain weak. Crude oil prices rose for a second day on Wednes-

L-R: Olanrewaju Odufuwa, team tead, Growth Segment, Primary Markets, The Nigerian Stock Exchange (NSE); HRM Oba Shakirudeen Kuti, Elewu of Ewu Land, Lagos; Frances Akpomuka, company secretary & head, Corporate Resources, Red Star Express Plc; and Oladipupo Ige, Domestic Operations Manager, Red Star Express Plc, during a donation of face masks by Red Star Express Plc as part of the Masks For All Nigerians campaign today in Lagos.

day, gaining more than 2percent, as a hurricane closed U.S. offshore pro-

duction and an industry report showed U.S. crude inventories unexpectedly

LASACO Assurance targets October to meet first phase recapitalisation requirements Modestus Anaesoronye

omposite underwriting firm, LASACO Assurance Plc said it has put strategies in place to meet the first phase recapitalisation requirement set for players in the industry by the National Insurance Commission (NAICOM). According to the Company, it has increased its authorized share capital to N20 billion to accommodate new investments, in line with the ongoing recapitalisation in the industry. Segun Balogun, managing Director/CEO of the Company who gave explanation during the firm’s 40th Annual General Meeting in Lagos said it has engaged the services of financial consultants who are working hard to conclude the necessary regulatory protocols. He assured shareholders that LASACO will meet the

new capital requirement, as there are a various options open to the Company. Sani Ndanusa, acting chairman of the Company said “Following the approval of shareholders secured at the extra ordinary general meeting held in 2018, your company has engaged the expert services of professionals towards actualising the recapitalisation plans before the deadline given by the National Insurance Commission.” Ndanusa also disclosed that LASACO Assurance Plc achieved a modest growth in 2019 in some of the financial metrics, as its gross written premium grew by four percent to N9.34 billion from N9.01 billion recorded in 2018. This is as net underwriting income increased by 29 percent to N6.7 billion in 2019 from N5.2 billion in 2018. He said that profit before tax went down by 64 percent to N347.7 million in 2019 from N958 million www.businessday.ng

in 2018 while total asset increased by nine percent to N18.5 billion from N17 billion. On the future outlook of the company, Ndanusa said that the company is restrategising to deliver better services to customers. “We are currently restrategising and restructuring our processes in order to deliver a better, efficient and cost effective service to our numerous customers” According to him, the success of any business in today’s dynamic environment depends on its ability to constantly add value to its customers. “In order to achieve this, we have embarked on digitisation of our operations. We shall continue to ensure quality delivery in all our products and services. As you may be aware, we have also improved on promotion of Lasaco brand by engaging in partnership with media houses for regular presence in the public domain.”

decreased. More than a quarter of U.S. offshore output was

shut on Tuesday due to Hurricane Sally. The American Petroleum Institute on Tuesday said crude inventories fell 9.5 million barrels, rather than increased as analysts expected. Brent crude rose 94 cents or 2.3, to $41.47 a barrel by 1350 GMT, while U.S. crude added 92 cents, or 2.4percent, to $39.20. Both contracts rose by more than 2percent on Tuesday. At the Nigerian Stock Exchange on Wednesday, Cadbury Nigeria Plc decreased most at the close of trading session after its share price moved from N7.75 to N7.1, shedding 65kobo or 8.39percent. Also, Lafarge Africa Plc decreased from N13.5 to N13, losing 5kobo or 3.70percent. NEM Insurance dipped from a high of N2.25 to N2.03, losing 22kobo or 9.78percent. Zenith Bank decreased from N17.2 to N17, shedding 20kobo or 1.16per-

cent; while International Breweries Plc decreased from N3.2 to N3, after losing 20kobo or 6.25percent. At the close of trading session, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) which tracks the performance of the Bourse decreased by 0.15 percent to 25,558.81 points from 25,597.96 points the preceding trading day. Also, the value of listed stocks (market capitalisation) decreased by N2billion to N13.352trillion from N13.354trillion recorded the preceding day. The market’s negative year-to-date (ytd) return increased to -4.78percent. In 3,651 deals, investors exchanged 211,816,446 units valued at N2.417billion. Banking stocks were actively traded, led by that of FCMB, Access Bank, UBA, Zenith Bank, and FBN Holdings.

Four professional bodies set to float securities institute

he Chartered Institute of Stockbrokers (CIS) in collaboration with three other professional bodies has signed a Memorandum of Understanding (MoU) to establish Chartered Institute of Securities and Investment Management (CISIM) to bring securities dealers and investment managers in Nigeria under one umbrella. The CISIM’s Bill, which is currently with the National Assembly, will replace the Chartered Institute of Stockbrokers Act 105 of 1992 when passed into law. At the last count, apart from the CIS, the three other professional bodies that signed the historic MoU are the Association of Investment Advisers and Portfolio Managers (AIPM) The Fund Managers Association of Nigeria (FMAN), Association of Issuing Houses of Nigeria (AIHN) with ASHON’s Chairman, Onyenwechukwu Ezeagu as an observer. The Chartered Institute of Stockbrokers Act 105 of 1992, which established the CIS

https://www.facebook.com/businessdayng

provides that individual operators that deal in securities, including Stocks, Treasury Bills, Bonds, Commodities etc shall be trained and certified by the Institute. At the moment, certain gaps in the Act are exploited by some individuals to deal in securities without any form of certification and requisite training. Therefore, the CISIM Bill when passed into law, will bring capital market professionals under a common objective without encroaching on one another’s business, make regulation easier, and enhance global competitiveness. “We share common goals and there is a need for standardization to enhance our advocacy. The Association of Investment Advisers and Portfolio Managers (AIPM) subscribes to the ideals of the proposed Chartered Institute of Securities and Investment Management (CISIM) in Nigeria. “Our collaboration will bring about rapid development of the entire financial system. Nigeria is in dire @Businessdayng

need of funds for infrastructure development. Substantial part of the fund can be mobilized from the capital market. We implore the National Assembly to hasten the passage of the Bill in the overall interest of the economy “, said the President, AIPM, Prince Abimbola Olashore. Commenting on the MoU, the President, CIS, Olatunde Amolegbe who said the proposed Bill was nothing unusual, commended the professional bodies that signed the MOU for sincerity and unity of purpose. Amolegbe explained that the Securities and Exchange Commission (SEC) and The Nigerian Stock Exchange (The NSE), the apex regulator and SelfRegulatory Organisation (SRO) respectively, regulate Stockbrokers but the ISA provides for individual operators that deal in securities to be certified by the Institute while their organisations are regulated by SEC and The NSE and these are two different roles.

industry Insight

BUSINESS DAY Thursday 17 September 2019 www.businessday.ng

When will Nigeria fix age-old problems hurting industrial prosperity? Odinaka Anudu

t is a crying shame that some of the issues hurting Nigeria’s industrial prosperity in 1980s and 1990s are still the same problems discussed today in every forum. Industries complained about poor infrastructure in the 1980s and are still crying over it more than 30 years after. The “up NEPA” situation is still not over as irregular energy supply and high cost of alternative sources are still issues bedeviling the manufacturing sector today—as they were in 1980s and 1990s. A change from NEPA to DisCos has not changed that. Discussions around import bans are not new. In 1978, 26 items were broadly restricted from being imported into the country. The number kept increasing till 1990. In 1980s, 95-96 percent of textiles were restricted from being imported into the country just as 50 percent of food, beverages and tobacco were not allowed in, according to Ademola Oyejide, A. Ogunkola and A. Bankole in their work entitled ‘Import Prohibition as a Trade Policy Instrument: The Nigerian Experience.’ These are still issues being discussed by manufacturers in 2020. The method of restrictions may have slightly changed as there are now more monetary policy restrictions in terms of not allowing certain items to have access to foreign exchange than the earlier fiscal measure of placing items on import prohibition list. But the policies are the same. Between 2000 and 2009, 820 manufacturing firms shut down, according to Bashir Borodo, the then president of the Manufacturers Association of Nigeria (MAN). Companies are still shutting down today. In 2016 and 2017, 54 manufacturers went under, according to MAN. Many are still closing down. In 2018, America’s biggest non-oil investment in Nigeria, Procter & Gamble at Agbara, Ogun State, shut down its operations. The difference now could be that the sector is keeping less data on shutdowns; otherwise data could have disclosed shocking number of shutdowns in the manufacturing sector. The challenge before Nigeria is to fix those age-old problems that have continued to make its industrial sector uncompetitive. The Nigerian manufacturing sector experienced 8.78 percent drop in growth in the second quarter of 2020 due obviously to COVID-19 , according to data from the National Bureau of Statistics (NBS). It had 0.13 percent drop in growth in the Q2 of 2019 and 3.36 percent slump in Q2 of 2016. The only Q2 periods it recorded growth since 2016 were in 2017 and 2018, where it registered 0.64 percent and 0.68 percent growth respectively.

The simple reason for the woes in the sector is that age-old problems die hard and only little effort is being invested into solving them. First is that the country’s infrastructure is getting worse. Clearly, rains are increasingly exposing the poor state of roads in the country. From Agbara industrial cluster in Ogun to Apapa in Lagos, roads are bad or inaccessible. Access road to Apapa and Tin Can ports has continued to be nightmares for manufacturers and exporters. Between October 2019 and March 2020, cost of moving goods in a 40-foot container from Apapa to Ikeja (ordinarily 40-minute drive) rose from N350,000 to N650,000 to N700,000. Similarly, goods stay for weeks on bridges before being exported. Perishable goods get spoilt, in addition to frustrations by the port authorities due to lack of functional scanners. It is worse today with workers and businesspeople spending hours on Apapa bridges just to gain access to the port city. In the first quarter of 2020, MAN undertook a CEO survey to determine what constituted challenges for them. At the end of the survey, 94 percent of the CEOs interviewed agreed that congestion at the ports significantly affected their productivity negatively. “Most worrisome are the issues of deliberate delay in cargo clearing time, raising of technical barriers, rejection of relevant documents by officers of the agency that approved import documents, multiple agencies with duplicated functions and other rent-seeking activities of vested interests at the port that excessively fleece operators,” the CEOs said. It is impossible to talk about infrastructure without discussing power. Though the cost of alternative sources of energy by manufacturers dropped from N82.6 billion in 2018 to N67.38 billion in 2019, signifying an 18.4 percent decrease over the period, the cost of energy is still

high. Most manufacturers have long ditched DisCos because of irregular supply of power, which raises their production costs significantly and forecloses their chances of competing with international peers. Local products are often more expensive than imported Chinese products because production costs in the country are significantly higher than China’s, especially when key issues such as taxes and regulations are factored in. Apart from infrastructure, regulation is a major issue hurting the sector. In Nigeria, Africa’s most populous country, agencies of the government work at cross-purposes. For instance, the Standards Organisation of Nigeria (SON) does not accept tests done by the National Agency for Food and Drug Administration and Control (NAFDAC) and vice versa. Worse still, their responsibilities overlap. Similarly, local or state governments do not accept agreements by the Federal Government, particularly when it

‘‘

Most worrisome are the issues of deliberate delay in cargo clearing time, raising of technical barriers, rejection of relevant documents by officers of the agency that approved import documents, multiple agencies with duplicated functions and other rent-seeking activities of vested interests at the port that excessively fleece operators

has to do with money or taxes. In the CEO survey mentioned earlier, 94 percent agreed that multiple/over-regulation by agencies of government hurt productivity in the manufacturing sector. “Quite often, agencies of the federal, state and local authorities regulate the same manufacturing process resulting in man-hour loses, supervisory duplication using similar checklist and multiple regulatory charges which ultimately translates to increased cost of production for manufacturers,” MAN said. Another critical issue bedeviling the industrial sector is funding. Nigeria is cash-strapped due to falling oil prices. This is hurting the country’s capacity to fund projects and critical sectors. However, pool of funds from the CBN and development finance institutions is stashed in banks which are sometimes unwilling to lend to businesses due to what they call ‘high-risk level’ of lending to businesses in Nigeria. Consequently, several manufacturers have complained that they are unable to access most funds advertised by the government. Manufacturing needs funding, especially long-term, single-digit funds, to compete. In 2019, China set up a $21 billion fund to further develop its advanced manufacturing sector. India has billions of dollars for funding start-up manufacturing firms. In the face of foreign exchange scarcity, which is stalling manufacturers’ capacity to import inputs, firms are pumping billions to source raw materials locally and beat the FX crunch. The projects require funding and friendly environment to continue. While some manufacturers have accessed funding from the CBN, Bank of Industry and others, the feeling in the sector is that funds are not easily accessible by all players. Next to this is policy inconsistency. There is no guarantee that some of the current CBN policiesas protectionist as they are- may

survive in the next dispensation. Farmers of maize are complaining of CBN’s sudden U-turn where it gave four companies licenses to import 262,000 metric tons of maize despite pronouncing total FX restrictions earlier. Though the policy itself is seen as detrimental to poultry farmers and manufacturers, it represents policy inconsistency to do a U-turn two months after pronouncing it. Some investors may have invested money into the industry and it could hurt their investments, especially if the companies exploit a loophole and exceed the quotas given them. This has been a common event in the last 10 years. Take the Export Expansion Grant (EEG) as another example. It was targeted at raising the competitiveness of Nigerian products at the global market. But by 2009, it had been suspended five times. In 2013, it was suspended again, putting a lot of firms who borrowed from banks in jeopardy. Firms had borrowed from banks to process their exports with the hope that the government would, as promised, give them incentives. But the government in 2013 suddenly suspended it. Up till now, it is yet to fully re-start, though a lot of processes have been undergone by exporters, including approval by both houses of the National Assembly. Perhaps, Nigeria can learn one or two things from Bangladesh. At independence in 1971, the South-East Asian country had 82 percent of its citizens below the poverty line. But by early to mid-2000s, it had lifted 33 million citizens (23-26 percent of the population then) out of poverty. Two of the reasons adduced by analysts for this miraculous jump out of poverty pit were industrial policies and market reforms. Bangladesh’s garment industry is partly responsible for rising prosperity witnessed in the country, according to Brookings Institute. “Bangladesh offered a better environment for manufacturing firms to achieve economies of scale and create a large number of jobs,” Kaushik Basu, an economic analyst, said. The country offered low and organised tax system, cheap funding, and empowered its manpower, skilling its youths to fit into the new industrial vision. “And though Bangladesh still needs much stronger regulation to protect workers from occupational hazards, the absence of a law that explicitly curtails labor-market flexibility has been a boon for job creation and manufacturing success.” Bangladesh earned $33 billion from exporting garments in 2018—10 times what Nigeria earned from exporting 25 products the same year. Nigeria today is world’s poverty capital with nearly half of its population in extreme poverty.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.