BusinessDay 18 Feb 2020

NSA Monguno blames national security woes on Abba Kyari’s interference SEGUN ADAMS (Lagos) & SOLOMON AYADO (Abuja)

N

igeria’s national security adviser, Babagana Monguno, has criticised Abba Kyari,

President Muhammadu Buhari’s chief of staff, for meddling in meetings with service chiefs and heads of security organisations

Biggest Gainer

Premium Times, a copy of which was sighted by BusinessDay, Monguno asked the service chiefs to disregard instructions from Kyari unless they are writContinues on page 35

FMDQ Close

Everdon Bureau De Change

Bitcoin

Foreign Exchange

Biggest Loser

Guaranty 4.35 pc N29.9 27,570.94

N3.45

out Kyari for stepping outside his constitutional role and disrupting the national security framework.

In the letter dated December 9, 2019, reproduced online by

businessday market monitor NSE

Oando

thus undermining security and defence efforts by the president.

Monguno, in a letter copied to President Buhari, Ministries of Foreign Affairs, Defence, Interior, and Police Affairs called

-3.01 pc

Foreign Reserve - $37.2bn Cross Rates GBP-$:1.29 YUANY - 52.08 Commodities Cocoa US$2,886.00

Gold $1,581.48

news you can trust I ** tuesDAY 18 february 2020 I vol. 19, no 501

Prices of phones, computer parts, accessories rise on Coronavirus, China travel ban FRANK ELEANYA

T

he freeze on travel to and from China following the outbreak of Coronavirus is putting a toll on the ability of Nigeria’s technology supply market to bring in new hardware supplies.

Since the virus began to spread forcing the Chinese government to place travel restrictions, prices of computer parts, accessories and phones usually imported from China have risen sharply.

A supplier at Saka Tinubu in Lagos, one of the major computer and phone markets in Nigeria, told BusinessDay that the suppliers have added between N4,000 and N5,000 to the price of their phones following the ban.

“Phones are not coming into the country for now, so the prices of the ones available Continues on page 35

Inside

There’s a better way to treat private sector, Ghana P. 34 shows Nigeria

₦3,511,980.26 -0.83

N300

Sell

$-N 357.00 360.00 £-N 468.00 474.00 €-N 389.00 395.00

Crude Oil $ 57.24

I

Buy

g

www.

Market

Spot ($/N)

I&E FX Window CBN Official Rate

364.95 306.95

Currency Futures

($/N)

g

fgn bonds

Treasury bills

3M 0.00 2.56

NGUS jan 27 2021 365.40

6M

5Y

0.33 3.78

-0.01

10 Y 0.00

30 Y 0.02

9.71

10.88

12.34

NGUS jan 29 2023 374.57

@

NGUS jan 29 2025 379.81

g

FMCGs’ slump raises red flag 5 months to AfCFTA ODINAKA ANUDU & GBEMI FAMINU

F

ast-Moving Consumer Goods (FMCGs) firms operating in Nigeria are struggling to stay afloat in the face of the African Continental Free Trade Area (AfCFTA) which commences five months from now.

The slump raises a red flag on the competitiveness of Nigerian companies whose readiness will be tested by top-notch firms across the continent.

Manufacturers’ margins are being hit, data from their latest earnings results show, despite the border closure which started in August that ordinarily should favour some of the firms.

AfCFTA is set to open opportunity for Nigerian companies to tap into the continental opportunities, but it also comes with a sledgehammer.

Bismark Rewane, CEO of Financial Derivatives, said last year that the AfCFTA would favour Nigeria, Kenya, Egypt Continues on page 35

As border closure not translating to gains

L-R: Temitope Iluyemi, P&G government relations director for Africa; Magesvaran Suranjan, P&G president for Asia, Middle East and Africa; Vice President Yemi Osinbajo; Omar Channawi, P&G vice president for Asia, Middle East and Africa, and Adil Farhat, P&G MD for Nigeria, at a high-level visit to the VP to discuss P&G’s plan to increase its investment in local manufacturing.

2

Tuesday 18 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Tuesday 18 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

3

4

Tuesday 18 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Tuesday 18 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

5

6

Tuesday 18 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Tuesday 18 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

7

8

Tuesday 18 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Tuesday 18 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

9

10

Tuesday 18 February 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Bequeathing future generations with a healthy environment

STRATEGY & POLICY

MA JOHNSON

E

ver since the creation of man, natural resources have been exploited. Up to the industrial revolution, the negative impact of man’s activities has been bare minimum. With industrialisation coupled with scientific and technological advancements, man’s exploitative activities have increasingly devastating impact that not only threatens other species within his environment, but the survival of humanity.

Economic growth and healthy environment are very essential to the survival of humanity. It is well known that most governments and economists are interested in either increasing the Gross Domestic Product (GDP) or per capita income of people through production.

In an attempt to increase production, the environment is subjected to undue pressure.

Some scholars have argued that economic growth is necessary regardless of environmental pressure. On the other side of the debate are those who argue that economic growth must be decoupled from environmental pressure. Decoupling economic growth from environmental pressure, they explained, involves ensuring that the latter does not deplete the natural resource on which future growth is predicated. To drive home their point, they say, social and economic developments must be pursued in a manner that does not prejudice options available to future generations for the use

of natural resources.

Today, available evidence shows that serious environmental degradation is taking place in many parts of Africa. Desertification, soil erosion and deforestation degrade the quality of the environment. You may wish to recall that the World Economic Forum (WEF) in its 2018 Climate Change Vulnerability Index, predicts that half of Africa’s GDP is under threat as a result of climate change even though, Africa contributes least to global warming per capita. With rising sea levels, increasing temperatures and changes in rainfall patterns leading to floods or severe droughts, most cities in Africa will have their expanding population and investment opportunities threatened, according to experts.

It is true that industries pollute the air, land and water with solid and liquid wastes which pose serious danger to the health of humanity. The world’s largest emitter of global emission is China, followed by the U.S. in recent times. These are two most industrialized countries of the world. The rise in the earth’s temperature was alarming that world leaders from 195 countries converged in Paris in 2015 at the United Nations climate talks.

The aim was to find ways to keep the increasing global average temperature to well below 2 degrees Celsius.

At the climate talks, it was agreed according to reports, that developed nations will pay a compensation of about US$ 100 billion to developing countries by the year 2020. Thankfully, the year of our Lord 2020 is here, the WEF Annual Meeting in Davos was just concluded.

This year’s forum marked 50 years of the WEF with the theme “Stakeholders for a Cohesive and Sustainable World.” World leaders, economic gurus among other professionals assembled Davos to address urgent climate and environmental challenges, the ecology and economy of most countries particularly, those in Africa.

This year’s forum equally addressed:

“How to transform industries to achieve more sustainable and inclusive business models as new political, economic and societal priorities change trade and consumption patterns; how to govern the technologies driving the Fourth Industrial Revolution so that they can benefit businesses and society while minimising their risks; and how to adapt to demographics, social, and technological trends reshaping education, employment and entrepreneurship.”

Reflecting on the 2020 WEF Annual Meeting, one observes that the issue of climate change and the future of works were at the front burner on the agenda.

There are reports that the WEF took farreaching decisions which some analysts call “ambitious goals” on climate and future work. For climate, the WEF came up with an “ambitious goal” of growing, restoring, and conserving one trillion trees over the next 10 years. And for the future of works, the forum equally outlined an “ambitious goal” of providing better jobs education and skills to one billion people by 2030.

Many have questioned these “ambitious goals” and the underlying motivation. Why focus on these “ambitious goals” above everything else? Why did WEF make such a potentially risky commitment? The end state of providing better jobs, education and skills cannot be overemphasised bearing in mind the future of work. These “ambitious goals” are warning shots that we must be thinking of bequeathing a healthy environment to future generations while the continued relevance of talents in a changing world of knowledge is not negotiable. A nation that is unable to develop the skills and knowledge of its people and utilise them effectively for industrial purposes will find it challenging to develop.

Globally, the business of government is to keep the economy healthy by creating an enabling environment so that businesses can thrive and ultimately, the people can be prosperous. The quality

‘

All things being equal, if Africa is able to muster good leaders with well-articulated but effectively implemented policies, the continent may witness some level of development

Johnson is an author and a retired naval engineer who has passion for African development and good governance

Co-operative as a tool towards meeting economic needs

C

o-operative society, to many, especially the enlightened and the rich, is seen as a primitive method of savings meant for the “haves-not” in their midst. Its emergence meant nothing except the low incomeearners and traders who have embraced the concept as a life-saving method.

Practical experience has shown that a cooperating group usually finds it easier and faster to accomplish tasks set for themselves than for a single individual trying to execute same task, no matter the quantum of resources available to the individual.

Thus, little did human existence recognise the importance of Co-operative until the reaction of a group of 28 factory workers to the exploitative effects of capitalist economy being operated then?

The 28 factory workers who first conceived the idea of the type of economic co-operation in England were known as the “Rockdale Equitable Pioneers” in Manchester where these young weavers in August 1844 came together for this co-operative venture and they poised to float what became a countervailing economic measure against the forces of capitalism and exploitation, by setting up their own consumer shops in rebellion against the capitalist supermarkets which sold goods at exorbitant prices.

The “equitable” was conceived out of the equal status that each member had in the operation of the venture in the sense that not a single member had more influence or voting power nor stature over others.

Relating the development to the homestead, the Western State of Nigeria where the Co-operative Movement was not developed as the federal government’s development plans ever included Co-operative Programmes until its Third National

Development Plan for the period of 1975-1980.

Under the regional government, the Colonial Administration in 1933 sent Mr. CF Strickland, a British Administrator, to India to understudy the India-type of Cooperation. Upon his return to Nigeria, his report (indicated that Nigeria was a good ground for the introduction of Cooperatives), formed the basis for the enactment of the Co-operative Ordinance of 1934. Mr. Haig returned and he was appointed the First Registrar Designate for Co-operative in Nigeria. After him Nigerian successive Registrars now known as Director of Co-operative Services were appointed.

Therefore, the first trial co-operative society started with the Cocoa Farmers of the Old Western Nigeria at a village called “Gbedun” near Ibadan, Oyo state. Hence, the first registered Co-operative emerged in 1935 and it was known as “Gbedun Co-operative Farmers Society”.

It was in the old Western Nigeria, the Thrift and Loan Co-operatives were to emerge earlier, while in the Eastern parts of the country Marketing Co-operatives pioneered the co-operative efforts and the Thrift and Credit Co-operatives followed in the 1970s. And the development culminated in the establishment of a Federal Ministry of Cooperatives and Supply in 1976.

However, Co-operative movement in the Northern Nigeria was slow to begin, but it commenced with the establishment of the Cooperative Credit, and followed by Cotton and Groundnut Marketing Co-operatives.

The Nigerian Agricultural and Co-operative Bank (the main source of Co-operative Finance) was established by the Government, following a report submitted by a panel constituted on 2nd August, 1977 by the federal government with a term of reference to “Review the existwww.businessday.ng

ing Co-operative Societies Laws in Nigeria with particular reference to the restrictions imposed by the laws on the establishment and operations of Co-operative Society to determine whether or not such restrictions constituted a constraints to the growth of Co-operative Movement in the Federation.

Thus, Co-operatives can be defined as a collection of individuals, having common felt needs, decided to pool their resources together in order to jointly meet their needs. To a large extent, it is also a type of functional economic circumstances made primarily in response to a desire on the part of participants to maximize individual economic advantages.

Co-operative calls for pooling resources together to address hitherto difficult or impossible task or target. It is an autonomous Association of people, united voluntarily to meet their common economic, social and cultural needs, and they are expected to be independent of government and not owned by anyone other than members.

In underscoring the importance of the Cooperative to economic growth and development, in 1976, with the establishment of the “Operation Feed The Nation (OFN) by the Military Administration of General Olusegun Obasanjo, the National Food Production Programme as was as the River Basin Development Authorities that were established across the country, were implemented using the Co-operative Societies as agents.

Accordingly, 32 Livestock Feed Mills, 70 grain storage depots were also established by the Federal Ministry of Co-operatives and Supply which was a new Ministry, then. In the similar vein, in 1985, the Federal Military Government boosted the Co-operatives activated with the establishment of the “Directorate of Food, Roads and Rural

https://www.facebook.com/businessdayng

of people and stock of natural resources are principal assets of a country’s balance sheet. If we fail to protect the health of our people and the viability of our natural resources, then we have put everything else at risk. One of the ways of protecting the health of our people is for African governments and over one billion people to ensure that we have a healthy environment.

All things being equal, if Africa is able to muster good leaders with wellarticulated but effectively implemented policies, the continent may witness some level of development. It is most likely that Africa’s population growth rate which is currently at 2 percent, with a prediction by the Africa Development Bank (AfDB) that the economy will grow by 3.9 percent in 2020, will give rise to poverty reduction in the continent that is home to high proportion of younger people. It is yet to be seen how the fourth Industrial Revolution will help solve one of the continent’s most pressing challenges- an unemployment rate almost running at around 30 percent.

Some analysts have expressed fear that the Fourth Industrial Revolution will make jobs disappear.

In Nigeria, we are faced with various environmental-related challenges which include poverty, water and air pollution, coastal and marine pollution, waste management, soil erosion, deforestation and desertification amongst others. Bearing in mind these environmental challenges, we must quickly realize that we need to exercise some restraints in our relationship with the environment. Individually and collectively, we must guard and keep a close watch on our environment. We must keep our environment clean; observe and report to appropriate authorities any moves or activities capable of destroying our God-given environment. If we destroy our environment, there may be no economic growth. Thank you!

Toluwalopemi Layade Kowo Infrastructures” (DFRRI) and the “Better Life” Programme, using the Co-operative as agents.

Also, the Mass Mobilization for Social and Economic Recovery (MAMSER), Programmes were activated by the Co-operatives through the “Food First” programme. In 1992, the “Family Support Programme” (FSP), through Co-operatives, with the aim of improving the economic prosperity of co-operators. The number of Co-operative Colleges increased from three in 1974 to more than 30 tertiary institutions today, including Co-operative education in their curricula.

In Ogun state, upon the creation of the state on February 3, 1976, the Department of Cooperative Services was created, manned by the Registrar of Co-operative Services appointed by the State Governor, and saddled with the following responsibilities and duties with powers to, register Co-operative Societies, including the societies bylaws and their amendments; audit and inspect Co-operative Societies and also empower an Audit to audit Co-operative Societies; hold and inquire or direct any competent person to hold an inquiry into the constitution, working and financial state of Co-operative Society; surcharge any person who misapplied the Society’s funds or fail to supply information he knows of, to an Arbitrator or Inquirer appointed by him; approve or disapprove the Division or Amalgamation of registered Co-operative Societies; promote activities of Co-operative Societies and general public on Co-operatives’ modus operandi, among others.

Kowo, is the deputy director of Information, Planning, Research and Statistics, writes from Laderin, Workers’ Estate, Abeokuta, Ogun State.

@Businessdayng

BUSINESS DAY

Tuesday 18 February 2020

comment

11

comment is free

Send 800word comments to comment@businessday.ng

Social media and free speech in Africa (1) Rafiq Raji

I

t is probably true that African elections are not won on social media.

Still, the same cannot be said of public opinion. There is evidence the dominant narrative on social media is influential. Sometimes, and increasingly so, the first anyone knows about a government policy is when it is announced on social media.

American president Donald Trump is the archetypal example of this practice.

Of course, and unfortunately so, what “trends” on social media could also be false. Recently, for instance, it was falsely reported that Nigeria’s president, Muhammadu Buhari, married two of his female cabinet ministers. And even now, despite the country’s secret service bringing the culprit to book, the false report is still widely believed.

Little wonder, African governments are increasingly concerned about social media and the influence it wields. Put another way, African governments are finding that they cannot easily control the media narrative as much as they would like or used to be able to. They are not taking the assault lying down.

In Nigeria, a social media bill is in the works. It certainly does not help that Singapore, a paragon of development, has one already. In fact, in the Nigerian

case, the draft social media bill reportedly takes a cue from the Singaporean law. To be sure, one is not suggesting that mischief-makers, and there are plenty of those on social media, should be given a carte blanche. But the risk of stifling free speech in the process is real and significant. What is to be done then?

Fake news predates social media “Disinformation is as old as humanity. When the serpent told Eve that nothing would happen if she ate the apple, that was disinformation. But today, spreading lies has never been easier.

On social media, there are no barriers to entry and there are no gatekeepers.” This exposition by former Time magazine managing editor & one-time American under-secretary of state for public diplomacy and public affairs, Richard Stengel, in his 2019 book, Information Wars: How we lost the global battle against disinformation & what we can do about it, highlights the longstanding use of disinformation or fake news for mischievous ends.

2019 Nobel prize joint-winners in economics and couple Abhijit Banerjee and Esther Duflo’s Good Economics for Hard Times: Better answers to our biggest problems highlights the issue rather succinctly. Social media is not the problem. But social media magnifies the problem with relative ease. For instance, old media, not new or social media, motivated the genocide in Rwanda.

Banerjee & Duflo assert “altogether, Radio Television Libre des Mille Collines (RTLM) propaganda is estimated to be responsible for 10 percent of the violence, or about fifty thousand Tutsi

deaths.” The point is that propaganda & fake news predated social media with perhaps even more fatal consequences.

One concedes, however, that social media has made it easier for mischiefmakers to practice their ugly art. Unsurprisingly, fake news and rumours are increasingly first planted on social media before germinating to old media.

Fact-based journalism is undoubtedly under attack. Even when news is genuine, the brief format of many a social media platform and the seemingly unquenchable thirst of enthusiasts often means not much is read after the headlining tweet or Facebook/Instagram post. And once a tweet or other social media post goes viral, whether true or not, it is usually difficult for the original author to control the message thereafter.

Better information war strategies needed Clearly nowadays, it does not take much to plant fake news and get it to permeate through social media with relative ease. Understandably, there is a growing call for regulation. Still, as it is very difficult to discern what is fake news or disinformation, regulation would hardly be a solution. Not without some creativity, at least. Because even when effective, regulating social media would almost certainly stifle free speech.

Stengel acknowledges as much. Democracies, by their very nature, being as they thrive on openness to ideas, are not well-equipped to fight disinformation.

Put another way, fighting disinformation through classical regulation, which would probably require full censorship, would almost certainly push

‘

Fighting disinformation through classical regulation, which would probably require full censorship, would almost certainly push a government towards autocracy. And true to type, countries like China and Russia that have a relatively tight lid on disinformation today are autocracies

a government towards autocracy. And true to type, countries like China and Russia that have a relatively tight lid on disinformation today are autocracies.

Incidentally, they are also the leading purveyors of disinformation towards geopolitical ends around the world.

Simply put, as Stengel highlights, “in a democracy, government is singularly bad at combating disinformation.” So, should purveyors of falsehoods be allowed to continue going haywire, leaving immeasurable damage in their wake?

One of the first ideas Stengel mulled – to funnily much turf war-type resistance initially – at the American foreign ministry is already being implemented by many governments. But back then, it was a novelty; even for the United States.

He suggested a digital hub of sorts, not as originator or author of content but an aggregator to “share, amplify and coordinate” American foreign policy and actions; which essentially involved retweeting and reposting news about the US state department’s activities each day. African governments, which already do this in one form or another, clearly do not think this is enough; in light of their quest for more stringent social media regulation. They are probably right about the limited reach of their current strategies. Even so, they would probably be more effective if they ascribed as much seriousness to the task as they do for old media institutions.

“Dr Raji is chief economist at Macroafricaintel.

He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”

Economic diversification, the unending rhetoric of the Nigerian government

T

he sudden resurgence of the word diversification in our economic literature, as the effect of China’s Corona virus takes its toll on the economy, reminds me of the old-time amusement park ride on a merrygo-round, where children sit and enjoy rides on plastic horses revolving about a fixed centre.

Diversification simply put, is the process of shifting an economy away from a single income source towards multiple sources from a growing range of sectors and markets. Nigeria continues to live in disillusion of its intended reality to get back to its enviable position in the league of nations as one of the top net exporters of agricultural produce in the 60’s, a status that kept it self-reliant and self-sufficient. But how has the mighty fallen, no thanks to the discovery of crude oil in 1956, in the Niger-delta, which was meant to be a blessing to the nation, instead has become a resource curse due to high level of mismanagement. Government over time had relied on petrodollar to fund their growth and development plans, thereby leaving the other productive sectors of the economy to suffer.

However, the recent developments in the global oil market has revealed the price elasticity and volatility of crude oil ranging from the discovery of shale oil in the US, non-compliance of OPEC member countries to regulation and the discovery of new wells across non-traditional oil producing nations. Needless to talk of the impacts of territorial politics, natural disaster, war and economic sanctions. All has a role in the determination of the crude oil price.

I was perturbed seeing a report by one of the national dailies stating the plan of the Ministry of Mines and Steel Development to boost the mining industry’s contribution to GDP from 0.3 percent to 3 percent as part of the government’s drive towards economic diversification. This leaves me to wonder about what we have been doing as a nation at least from the last recession witnessed in 2016 when crude oil traded for as low as $34 per barrel (pb), which reveals the extreme volatility of the Nigerian economy as a result of its over dependence on crude oil. I

would expect to see a more radical increase in the non-oil sectorial performance and contribution to GDP, with the way the gospel of diversification was spreading as at that time and many analysts and thought leaders coming out as proponent of this age-long economic principle as the way forward to remedy the nation’s destiny whose glory has been baptized by immersion in the pool of oil.

With popular hashtags such as #buynaijatogrownaira, #madeinnigeria, and a host of others, one would think that we have learnt our lesson, given the devastating effect of the crash in crude oil price on our economy when oil price fell from the height of $112pb recorded around 2014 to less than $39pb in 2016. The government was prudent in drafting the 2016 appropriation act by lowering the benchmark price to $38pb at a time the product was trading at c$56 pb in 2015.

Few days after the 2016 budget was released, it fell to $34pb, a 400-basis point deviation from the budget. It was then everybody knew that the oil party was over, the economy that was once buoyant and acclaimed “Giant of Africa” slid into recession.

Since the outbreak of Corona virus in the city of Wuhan in China, Nigeria seems to be one of the worst hit of the nations of the world as the impact cuts across various sector of the economy considering the relationship between the two countries, ranging from exportation of crude oil to importation of basic amenities, labour and infrastructure. Our fiscal institutions were not left out in the marriage between Nigeria and China as the ministry of finance is in the process of securing a $17 billion loan from the China-Exim bank to be used for the funding of infrastructure projects in the country.

Of the world’s total crude oil consumption of 93 million barrels per day, China consumes 13.5m bbl./day, which is 14.5 percent of the world’s consumption, making it the second largest consumer of crude oil in world after the United State of America with average daily consumption of 18.5m bbl./day, accounting for 20 percent of total world’s consumption.

www.businessday.ng

These statistics no doubt explains the reason for the continuous decline in oil price we have witnessed since the outbreak of the epidemics in China at the beginning of the year. Oil price opened the year with $64 pb and decreased consistently to $55pb by February 2020.

China has since cut down on demand for oil as economic activity has reduced and government’s effort geared towards combating this gruesome corona epidemic. Flight operations were shut down due to restrictions on movement in and out of the country, coupled with the elongation of their new year holiday. Consequently, there is a glut in crude oil supply as the demand from China declined.

On the domestic scene, China is the largest importer of Nigerian oil after India. This situation no doubt will leave the country in a precarious state if this condition is not remedied in good time. The impact is already weighting down on our foreign reserve which also continues to drop consistently, currently at $36.7 billion (liquid) compared to $37 billion recorded in December 2019 (liquid).

Production cut by OPEC is also imminent as a response to the dwindling oil price in order to keep the benchmark crude oil price competitive.

This will lead to a double whammy effect on the Nigerian economy as the country grapples with the possibility of being hit by the twin blow of low oil price and production cut below the estimated level in the 2020 budget. Since oil remains the main stay of the economy, accounting for over 90 percent of foreign exchange from export, our foreign reserve will continue to fall as daily revenue from oil sales head south.

The capital market and the money market are not left out in this party. We are threatened by capital flight as foreign investors who are the major players and drivers of the market are faced with the decision of whether to run or stay considering the current state of affairs.

The CBN restricted non-bank institutions from participating in the primary and secondary market OMO auction with the aim of spurring economic growth by directing funds to the real

https://www.facebook.com/businessdayng

Remilekun Iwalehin sector and lowering interest rate. However, the OMO auction was open to foreign investors in a bid to sustain US Dollar inflows by shoring up our reserves and reducing the currency devaluation fears.

Amidst this economic reality comes the age long rhetoric loaded with empty promises and national aspiration - diversification. At the heat of the economic recession in 2016 when oil price fell to a record low, all on the lips of the government was diversification which was also attested to by their body language. Four years down the line, the narratives never changed.

In a comment credited to the CBN governor in May 2019, he stated that Nigeria may slide into another recession if measures are not taken to tackle the high rate of unemployment and other economic crisis. In a similar vein, the World bank in December 2019, warns of another recession if oil price drops by 25 percent at the time when the Brent crude oil price was $60.8 bd.

How long are we going to depend on the foreigners to be major players in our economy?

How long are we going to pray for disruptions in the middle east so that oil price can go up?

Even though the government in defence claims that the economy is well diversified considering the sectoral contribution to the GDP, however the source of the revenue driving the economy remain undiversified. What we want is the diversification of the revenue source which translate to tangible results on the populace and not diversification in “tall talk”.

Iwalehin is a finance and accounting consultant with PwC. He was also the immediate CFO of Mainstreet Bank Capital limited where he oversees the financial strategy and treasury operations of the company.

@Businessdayng

12

Tuesday 18 February 2020

BUSINESS DAY

EDITORIAL Light manufacturing in Nigeria

Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

US watchmaking history offers lessons for Nigeria’s go-slow industrial development

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

L

abour and an abundance of raw materials are advantages Nigeria has failed to exploit to develop its potential as a hub for light manufacturing. Making shoes and clothes require modest skills.

Within two weeks inexperienced workers can learn to operate sewing machines.

Cheap “dollar” watches, first manufactured in the 1890s by the Waterbury Watch Company in the US, are a vital part of America’s “peculiar” innovation. It is the story of interchangeable parts, standardisation and division of labour. An ecosystem of apprentice mechanics and machinists and tinkers that became inventors, venture capitalists, patents and benign insolvency laws caused a manufacturing contagion: a mass production factory system that spread to the manufacture of shoes, clothes and watches which though inelegant were cheap, practical and useful.

In “The Watch Factories of America, Past and Present: A Complete History of Watchmak-

ing in America from 1809 to 1888 Inclusive” we find protagonists of watchmaking such as Aaron Dennison. He foresaw the mass manufacture of wristwatches using interchangeable parts.

In 1846, furnished by his frequent visits to Eli Whitney’s armoury in Springfield, Dennison concluded that mass production of watches was possible. In 1789, Whitney, an inventor, used interchangeable parts to make 10,000 muskets for a federal government contract.

Whitney replaced skilled labour with stamping and cutting machines, substituting machinery, used for manufacturing standardised interchangeable parts, with the custom work of skilled labour. With unskilled workers the parts were assembled into guns. It was this peculiar American innovation that Dennison applied to watchmaking.

In 1849 Dennison and Edward Howard, a friend and veteran watch and clockmaker, convinced it was a profitable undertaking sought Samuel Curtis, a capitalist, who invested $20,000 in the venture.

Dennison spent the initial capital

on a tour of England, to observe the watchmaking process and secure supply of materials. Dennison returned certain that the interchangeable system was most convenient for production of watches in the US. The watchmaking system in England which involved outsourcing “dial-making, jewelling, gilding, motioning, etc, to others, down almost the entire length of the alphabet” came with risks: quality, timely delivery etc. Besides, the US, at the time, was short on skilled labour. In the mass manufacture of watches, unskilled labourers assembling parts made from machines raised productivity.

Though Dennison’s first venture failed, because the investors were not “bountifully supplied with money”, he founded the Waltham Watch Company, which in its prime churned millions of wristwatches.

Cities in the environs of Massachusetts, overtime, became a cluster for watchmakers. There Dennison and others with money from several capitalists invented automated machines, tweaked and tinkered and designed, reduced the number of parts for a watch and

perfected the production process that resulted in cheap watches like the $1 Waterbury watch.

Rising productivity in the watchmaking industry had to contend with higher wages and high interest rates which made borrowing money to buy new machinery expensive.

However, because technological improvements increased productivity and the return on capital, new investments increased. The US economy was characterised by technology efficiency, high wages, high interest rates and rapid growth.

Can Nigeria, with its abundant human and natural resources, replicate this? Can we profitably employ the millions of youth who are neither in school nor active in the labour market in light manufacturing? Can well managed companies turn leather from the north, cash crops from the west, east and south, into a shoe and agribusiness industry?

Good economics dictates that scarce resources are applied sparingly and abundant resources generously; but infrequent electricity supply and low human capital development are serious constraints.

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

Tuesday 18 February 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

The World Bank – chasing the image of the shadow?

Tunde Arogunmati

W

orld Bank President, David Malpass’s outburst at a World Bank-International Monetary Fund debt forum in Washington, last Monday chiding other development banks for lending too quickly to heavily indebted countries, saying some were helping worsen alreadychallenging debt situations, was as unexpected as it was deeply puzzling.

According to his stated opinion, the Asian Development Bank, the African Development Bank (AfDB), and the European Bank for Reconstruction and Development were contributing to debt problems and in his words, “We have a situation where other international financial institutions and to some extent development finance institutions as a whole, certainly the official export credit agencies, have a tendency to lend too quickly and to add to the debt problem of the countries.”

In specific terms, the Asian Devel-

13

opment Bank was “pushing billions of dollars” into a fiscally challenging situation in Pakistan while the African Development Bank was doing the same in Nigeria and South Africa.

As would be expected, the AfDB has put up a robust response, discounting the statement as “inaccurate and not fact based,” also stating that, “It impugns the integrity of the African Development Bank, undermines our governance systems, and incorrectly insinuates that we operate under different standards from the World Bank. The very notion goes against the spirit of multilateralism and our collaborative work.”

The AfDB went further to list supporting assertions, such as; The World Bank, with a more substantial balance sheet, has significantly larger operations in Africa than the African Development Bank. The World Bank’s operations approved for Africa in the 2018 fiscal year amounted to $20.2 billion, compared to $10.1 billion by the African Development Bank. With regard to Nigeria and South Africa, the World Bank’s outstanding loans for the 2018 fiscal year to both countries stood at $8.3 billion and $2.4 billion, respectively. In contrast, the outstanding amounts for the African Development Bank Group to Nigeria and South Africa were $2.1 billion

and $2.0 billion, respectively, for the same fiscal year. With reference to the countries described as “heavily indebted,” our Bank recognises and closely monitors the upward debt trend. However, there is no systemic risk of debt distress.”

The intent of this write-up, is not necessarily to shore up the AfDB’s integrity and corporate reputation, as it already speaks for itself, notably and not in the least, in the cutting-edge conceptualisation and successful kick-off in November, 2018 of the innovative African Investment Forum, with the second edition hosted last November once again, in Johannesburg, South Africa, that culminated in fifty six deals worth $67.6 billion making it to the boardroom discussions at the forum, a 44 percent increase on last year, and of which, 52 made it to approval.

The deals, from 25 countries, secured investor interest worth $40.1 billion – an increase on the $37.1 billion garnered in the first forum.

The question that would arise, therefore would be, what is the real intent of this loaded barb, judging from its timing and inappropriate nature, especially considering that all the institutions concerned are actually meant to be operating within the same development finance orbit, in inclusive synergy and should at all times be sharing knowledge and one another’s

‘

It’s quite amazing that at a time, when all hands should be on deck to collaborate on global sustainable development, the Big Brother of DFIs deems it fit to muddy the waters, for no discernible or logical reason, or is there something here, to seriously begin to worry about?

overlapping burdens?

It’s quite amazing that at a time, when all hands should be on deck to collaborate on global sustainable development, the Big Brother of DFIs deems it fit to muddy the waters, for no discernible or logical reason, or is there something here, to seriously begin to worry about?

Is the World Bank, for instance, trying to divert attention from ongoing internal challenges, such the worrisome turnover, of chief economists, the most recent of which is Penny Goldberg which was not unrelated, to the blocking of the publication of internal research showing a correlation between foreign aid to developing economies in the past (including World Bank aid) and jumps in their deposits in foreign financial havens ( re: the Economist Feb 13, 2020 edition).

Or, is the World Bank President simply trying to rock the boat, for latent strategic agenda, yet to unfold within these regional enclaves?

While his response, in the coming days will be expected to be more conciliatory and less pontifical, it is left to Malpass to tread carefully and desist, as much as possible from throwing stones from within his exquisite glass mansion.

Arogunmati is the executive director of African Incentive Partnerships

Performance beyond profit: Environmental, Social and Governance (ESG) leadership as a performance driver

T

he year 2020 has started with a bang from an ESG perspective.

Climate change was right at the heart of discussions at Davos, global fund managers (they don’t get much bigger than BlackRock) announced aggressive intentions to channel investment towards companies who are ESG-compliant and the UK Investment Association announced at the UK-Africa Investment Summit that its members, who control £8 trillion of assets, must report on their climate change impact by 2022.

This is a seismic shift by major institutions not historically celebrated for allowing their social conscience to shape investment decisions. It’s a powerful signal that ESG is increasingly recognised as a core sustainability strategy, driving both risk mitigation and value creation.

What does this mean in practical terms and why is it relevant in Nigeria? ESG considerations are a fundamental element of assessing job quality and sustainable job creation. Nigeria needs to create millions of jobs over the coming years to reverse poverty trends and establish the basis for social mobility. ESG is critical to the sustainability of this effort. Jobs that are here today and gone tomorrow are short term solutions. Incorporating ESG principles into job-creating businesses ensures sustainable and high-quality business operations with a labour force that is motivated and appropriately empowered.

At times ESG is still primarily considered a compliance issue in Nigeria. A contrasting path – where environmental and social principles and values are embedded in company governance to drive long term performance is now however becoming more prevalent. This shift in approach to ESG considerations is increasingly impor-

tant in Nigeria’s market where rapid industrialisation is possible but if it is not well designed, may have a detrimental impact on future sustainability. Nigerian private equity funds are at the forefront of this and are increasingly structured and resourced internally to integrate ESG analysis at the heart of their decision-making processes.

As risk management and ESG efficiencies come to the fore, private equity as an asset class is adapting to better understand how ESG processes can act as a business benefit, rather than a compliance cost.

CDC is at the forefront of these discussions.

Together with Norfund, we have this week convened more than 60 private equity fund managers and their portfolio companies’ leadership teams in Lagos to explore the impact of ESG on business performance, with a practical focus on problem-solving and learning how to persuade company management to prioritise and quantify how ESG considerations link to sustainable and long term impact.

Established companies across the oil and gas, power and manufacturing sectors in Nigeria have comparatively wellestablished environmental, health and safety orientated management systems and processes. This is especially noticeable where they have a significant relationship with a multinational who draws upon global good ESG practices such as IFC Performance Standards. Even in these sectors though, the level to which ESG policy and processes lead to effective implementation varies from organisation to organisation. Implementation becomes even more variable in smaller and medium size businesses where systems are less formal and resources fewer. Smart decision making, support and prioritisation of ESG from PE firms is one effective way of systematising

www.businessday.ng

improvement.

While guidelines governing how companies must act from an ESG perspective exists in Nigeria – such as regulations on environmental and social impact assessments, laws on local pay or the Central Bank of Nigeria’s Sustainable Banking Principles, there is a need to strengthen existing sectoral guidelines and ensure a more robust approach to enforcement.

Renewables and energy efficiency have gained some traction within the overall energy mix, with significant momentum for renewables driven mini-grids in 2019.

Alignment of solutions to Nigeria’s power problems with ESG principles would be a major step forward – not just to address the obvious environmental issues but to optimise social impact and strengthen governance. Recent examples where industry has decided to turn to coal as a fuel (to ensure reliable supply) rather than gas (because of disrupted supply) demonstrate that there is a long way to go before there is an acceptance of environmental impact over commercial interests, and better incentives need to be put in place to drive optimal behaviour.

Beyond the environment, a further critical element of the social pillar is gender considerations. One in four board members of companies in Africa is a woman according to the McKinsey Global Institute, leading the world averages, but too many women from poorer backgrounds remain excluded from the financial system or overlooked within the corporate value chain. More needs to be done by companies to empower women by offering training and professional development pathways to ensure they are fairly represented at middle and senior management levels.

Further thought needs to be invested in

https://www.facebook.com/businessdayng

GUY ALEXANDER & BENSON ADENUGA

how companies design supply chains to ensure women-owned businesses are set up to compete successfully for contracts, and in how they design products and services to make them affordable and accessible to women on low incomes. These considerations are not just important for social wellbeing, they help companies to build a competitive labour force, optimise their value chains and grow into new market segments.

This is where governance is critical and transparency and accountability is best evidenced by thorough sustainability reporting, in line with internationally recognised frameworks. Strong leadership is emerging in Nigeria’s capital markets, with listed companies now required to release an annual sustainability report as part of listing requirements and the emergence of national and corporate green bonds.

This is not about creating new onerous compliance regulations, but about designing the opportunities – big and small – for Nigeria to develop rapidly and achieve transformative environmental and social gains in the process. By designing ESG management systems thoughtfully, using global ESG standards and frameworks as a foundation, CDC believes that Nigerian companies will not only find that their performance is stronger, but they will also position themselves favourably to global capital markets to power future growth.

Alexander is manager, Environmental and Social Responsibility, CDC Group. Adenuga is head of office and coverage director, Nigeria, CDC Group.

@Businessdayng

14

Tuesday 18 February 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

Healthcare

May & Baker Q4 turnaround lifts 2019 profit by 84% to N629m SEGUN ADAMS

L

isted pharmaceutical firm May & Baker Nigeria Plc turned the corner in the fourth quarter of 2019 to push its annual profit after tax up by 84 percent, even though sales in the year disappointed.

May & Baker manufactures and distributes pharmaceutical products, such as vaccines, antibiotics, and sera. The Company also sells diagnostics, medical equipment and bottled water.

Audited financial report of May & Baker published Friday shows the company made a profit of N155.3m in the last three months of 2019 compared to a loss of N72.07m in the same period of 2018.

As a result, total profit for the year almost doubled to N628.9m compared to N342.69m from continuing operations in 2018 (total comprehensive income in 2018 was N585.2m following the disposal of food business in the year.)

The improvement in bottom-line was, however,

not owing to improved sales of the drug and beverage maker; full-year revenue declined by 5.52 percent year-on-year to N8.08bn.

May & Baker noted a decline in its main business segment (the production and sale of human pharmaceuticals and human vaccines) which offset gains from the beverages segment.

The slowdown in revenue weighed on May & Baker’s gross profit which fell by 7.17 percent to N2.94bn notwithstanding a 4.5 percent decline in cost of goods sold.

Consequently, May & Baker made N36.34 from every N100 sales in 2019, slightly lower than N36.99 in the prior year.

“Our drive for ambitious revenue growth appears to have stalled in 2019. This is because we have failed over the years to renew our ageing products portfolio,” said Nnamdi Okafor, Managing Director, May & Baker in his new year address.

Okafor said May & Baker was suffering from lost revenue (about N1.8billion) in the past 18 months from the market withdrawal of some of its old products whilst

blaming competition and a weak domestic economy.

Administrative expenses fell almost 25 percent but it was not enough to grow operating income (N1bn vs N1.2bn) as higher selling and general expenses combined with lower ‘other operating income’ worsened the effect of a lower gross profit.

However, May & Baker saw an astronomical increase of over 10,000 percent in interest income on fixed deposits with commercial banks (N36.98m in 2019).

Profit on disposal of property, plant and equipment rose four-folds to N7m in the period.

Finance cost trended lower by 45 percent to N185.69m.

“We successfully concluded recapitalisation exercise in 2018 through a Rights Issue that injected N1.87 billion into the company helping us pay off expensive short term debts, boost working capital, fund marketing plans and finance equity investment in Biovaccines and a new paracetamol plant,” said Okafor.

May & Baker’s share of loss from Joint Venture

cut down significantly to N12.84m in 2019.

This improved profit before tax by 13 percent to N924.8m - around N70m shy of one billion naira.

The jump in net profit in the period boosted earnings per share to 36.45 kobo compared to 34.97.

May & Baker’s subsidiary company Biovaccines Nigeria Limited has re-started operations and plans to commence construction of a planned vaccines production plant in 2020, it said.

The pharmaceutical company in December last year announced a contract manufacturing agreement to produce four brands of French pharmaceuticals Sanofi.

The deal which was signed with Sanofi Nigeria, the local outlet for the global drug company, would see May & Baker use its World Health Organisation (WHO) certified manufacturing facility to produce four products brands of Sanofi for sales in Nigeria and West

African Markets.

The Sanofi brands which May & Baker would be producing locally include “Flagyl tablets and Suspension and Tarivid tablets, anti-infective medicines and Malareich tablets- an antimalaria drug.

“Our Company is therefore now better positioned to launch into the next phase in its evolution which is driving the new vision; To be a leading Healthcare Brand in Sub–Saharan Africa,” said Okafor.

L-R: Adeyemi Sanni, chartered, Chartered Institute of Taxation of Nigeria (CITN) Lagos District Society; Oluwasike Ibiwoye, assistant general secretary; Adeyeye Asebayo Joel, chairman; Adesina Adedayo, vice president, CITN; Kunle Quadri, past president, CITN, and Zaynab Abdul Kareem, deputy vice chairman, CITN Lagos District Society, at the 2020 annual tax week organised by CITN Lagos District Society in Lagos.

Tax

FIRS grants more powers to state tax controllers OLUFIKAYO OWOEYE

T

he Executive chairman of Nigeria’s tax body, the Federal Inland Revenue Service, (FIRS) Muhammad Nani, has announced the decentralization of its operations by granting tax controllers at state levels more powers.

Speaking at KPMG Tax Breakfast Seminar held in Lagos Nani said overcentralization of power at the centre by FIRS has led to critical issues not being attended to early has led to inefficiencies on the agency’s part.

According to Nami, he inherited over 97 IT consultants when he assumed office, many of whom have been disengaged.

“There was a prolifera-

tion of IT initiatives with little or no contribution to tax revenues resulting in slow adoption of ITAS” he said.

Nami announced that the agency would move to ITAS platform henceforth noting that the agency would deploy 30percent of its workforce to audit and investigations in line with global practices.

A part of strategies for the successful implementation of the Finance Act includes the creation of VAT monitoring unit in all tax offices nationwide, simplification of the TCC administration process, the introduction of taxpayer appreciation day among others.

Nami also said FIRS under his watch would leverage international and local tax associations to such as

CATA, ATAF, WATAF to enhance capacity on emerging tax issues.

Nami called on capable private sector to embrace the road trust fund scheme noting that the private sector should utilize channels such as the Citizens Budget portal, quarterly business frum to provide feedback on projects.

The event also witnessed the launch KPMG’s consumer pricing survey report and the Finance Bill outlook The new Finance Bill recently signed into law would drive the government’s fiscal responsibilities this year and subsequent years.

Speaking at the event Kunle Elebute, senior partner KPMG called on the government to come up with policies that would drive the economy for the

government to generate taxes.

“Businesses pay taxes when it thrives and succeeds, taxes should not be about stifling businesses to death but enable them to expand and grow,” he said.

Ben Akabueze, DirectorGeneral of the Budget office said the success of the 2020 Budget would depend on the implementation of the new finance Act, noting that the current tax-GDP ratio of 6percent is one of the smallest on the continent.

The new Finance Act made changes to the Companies Income Tax (CIT) act, Value Added Tax (VAT) Act, Petroleum Profits Tax Act (PPTA), Personal Income Tax Act, Capital Gains Tax Act (CGTA), Customs and Excise Tariff Etc. (Consolidation) Act and Stamp

Duties Act. Under the Companies Income Tax (CIT) Act insurance companies would be able to carry forward losses indefinitely as opposed to the 4-year restriction currently in place, also, Life and non-life businesses would no longer be liable to special minimum tax provision and all wholly, exclusively, reasonably and necessarily incurred expenses will be tax-deductible, the law also removes the double taxation caused by excess dividend tax (EDT) thereby encouraging corporate savings and retention of profits.

In a bid to boost the government’s shrinking revenue, the new Act increased Value Added Tax rate to 7.5percent from the current 5percent. Hence-

forth, banks are to request for Tax Identification Number (TIN) before opening business bank accounts for individuals, while existing account holders must provide their TIN to continue operating their accounts.

Under the Petroleum Profits Tax Act, the new law repealed the provision of PPTA that exempts dividends paid out of profits derived from petroleum operations from withholding tax. Taxpayers in this space would now be saddled with the responsibility of withholding tax when paying dividends.

The new Act increases the stamp duty on receipts to ₦50 on every transaction from ₦10,000 and above, and expands the definition of receipt to cover electronic transactions.

Tuesday 18 February 2020

BUSINESS DAY

COMPANIES&MARKETS Oil & Gas

Seplat’s Target Price revised lower as Coronavirus dampens global oil outlook

15

Business Event

…upstream stock still a BUY, says Chapel Hill Denham SEGUN ADAMS

T

he United States Energy Information Administration (EIA) 2020 average oil price forecast cut as deadly coronavirus roils global markets has necessitated a lower target price revision for upstream oil and gas stock Seplat, according to analysts at Lagos-based Chapel Hill Denham.

Seplat is now expected to trade at N770.90 in 12 months, translating to a total expected return of 27.4 percent when compared to its current price of N605 a unit (both at the time of analysis and the start of the current trading week).

The new TP is N181.65 lower than was anticipated before the virus outbreak dampened oil price outlook, but Chapel Hill Denham maintains its BUY rating on Seplat.

“The TP cut is underpinned by the lower FY20E oil price forecast of US$59/b and lower longrun oil price assumption of US$60/b (US$61/b previously),” said analysts at Chapel Hill Denham.

The analysts assigned a stronger weighting to relative valuation and assumed lower multiples, to reflect the broad decline in market sentiment on upstream play-

ers and capture the recurring NAV valuation gap.

Furthermore, their analysis reflects uncertainty in the Niger Delta, frequent infrastructure downtime and vulnerability to oil price shocks.

Currently, the impact of the coronavirus outbreak on the global economy is expected to be worse than a similar epidemic in China 17 years ago.

This is because the role and size of China’s economy - at the epicentre of both outbreaks - has become more significant than when the SARs epidemic struck in 2003.

Already, China’s central bank has injected more than $300bn to stimulate the economy which almost ground to halt on city-wide quarantines to quell the disease.

But it would mean little as the Chinese economy will record a slowdown by the end of the first quarter and the year, owing to disruption in international trade and consumer spending especially since its biggest home-coming event was disrupted by the virus.

The resultant effect would be a slowdown in the global economy given that China is the world’s second-biggest market.

US EIA has downgraded

its 2020 average oil price forecast to US$61/b from US$65/b previously.

A combination of a slowdown in demand from China and the rest of Asia, as well as, rising inventory levels in the US would pressure price lower.

Chapel Hill Denham citing Chinese Energy Executives say Chinese oil consumption in February is expected to fall by about 25 percent year-on-year, which amounts to 3 to 4 percent drop in global oil consumption.

“We note that EIA’s revised forecast compares favourably with our prior average realized oil price forecast of US$62/b for Seplat, albeit, we lower our average realized price forecast for 2020 to US$59/b,” said Chapel Hill Denham.

The analysts noted the possibility of deeper supply cuts by the Organisation for Petroleum Exporting Countries (OPEC) by an additional 600kbpd to a total of 2.7mbpd for 2020 half-year, but say a consensus with the Russian led OPEC+ will be critical to any decision.

For Seplat, 2020 revenue forecast was cut by 8.5 percent to US$1.15bn on lower oil price and weaker demand outlook, while profit is expected to rise about 71 percent on an annual basis.

L-R: Ademola Abiola, senior medical officer, General Hospital Ikorodu; Oyewole Oyeleye, business manager, Ikeja Electric Ikorodu Business Unit; Okudero Abimbola, deputy medical director, General Hospital Ikorodu; Enobong Ezekiel, chief commercial officer (CCO), Ikeja Electric, and Felix Ofulue, head, corporate communications, Ikeja Electric, at the Ikeja Electric’s donation of phototherapy.

L-R: Yusuf Haruna, head, aviation and marine, infrastructure concession regulatory commission; Abayomi Obadare, general manager, Billing, Ports and Cargo Handling Services Limited, a subsidiary of SIFAX Group; Jobson Oseodion Ewalefoh, director, contract compliance, Infrastructure Concession Regulatory Commission and Talabi Adekitan, senior manager, legal and claims, Ports and Cargo Handling Services Limited, a subsidiary of SIFAX Group during the 2020 Compliance and Performance Monitoring of Public Private Partnership (PPP) Projects of the commission to Tin Can Island Terminals.

Insurance

AIICO launches “Gift A Pension” to boost Micropension penetration in Nigeria SEGUN ADAMS

A

IICO Pension has unveiled an initiative that will allow Micro Pension Plan (MPP) to be bought for third parties, a move that will boost financial inclusion by increasing the number of informal sector participants in Nigeria’s voluntary pension scheme.

“Gift A Pension” will enable people to reward their personnel and domestic staff by gifting them an MPP, and contributing on their behalf regularly, the Pension Fund Administrator (PFA) said at the product launch in Lagos Friday.

“At AIICO, we believe everyone deserves a pension whether they work in the formal sector or the informal sector,” said Bankole Ekundayo, corporate communications head at AIICO Insurance Plc. According to Ekundayo, AIICO observed that a lot of people could not afford to have a pension and decided to come up with an initiative that allows workers in the formal sector become responsible

for funding the micro pension account of their loved ones and domestic or personnel staff who are not in formal employment. “…we are very confident this initiative would deepen the financial coverage because beneficiaries of the product have sponsors in the formal sector,” said Ekundayo.

In 2017, the International Monetary Fund (IMF) estimated the size of the informal in Nigeria at about 65 percent of the economy.

This meant millions of self-employed Nigerians and those in unprotected jobs did not have the safety nets their counterparts in the formal sector enjoyed, especially access to the contributory pension scheme.

President Muhammadu Buhari in March 2019 launched the MPP to reach the informal sector thus encouraging the financial stability of millions of Nigerians and financial inclusion.

The government also set a target to attract as much as N3trillion and reach as many as 3o million people through

the micro pension scheme.

“Many people had hoped micro pension would be the next big thing because, at that time, less than 10 percent of the working population had pension accounts,” said Babatunde Fajemirokun, MD/ CEO AIICO Insurance Plc. “The experience, however, has been totally different.”

The uptake of micro pension has been slow on the back of a slowly recovering, low-wage economy.

Also, because the micro pension scheme is voluntary, it has become a secondary consideration for many Nigerians in the informal sector some of whom are domestic workers, farmers, and merchants.

The problem of information, ease of access, education has also played a role in the rate of enrollment for pension products.

“As a result, we have had to examine the environment and look for a niche entry. Micro pension for us is research and development being a long-term investment,” said Fajemirokun.

L-R: Ahmed Sanda, president Association for Environmental Impact Assessment of Nigeria (AEIAN), Haduza Mailafiya, former minister of Environment, Abbas Suleiman, acting director environmental assessment, ministry of Environment and Lola Okwuosa, environmental consultant, Global Environmental Health Solutions, at the 5th Charlie Wolf lecture, theme “Learning from the UK Impact Assessment Journey” in Abuja. Pic by Tunde Adeniyi.

L-R: Uche Okeke, executive director, corporate services, ANAMMCO Limited; Yazidu Abubakar, planning officer, National Automotive Design and Development Council (NADDC); Iheayichukwu Ogbonna, GM, ANAMMCO Limited; Joke Onireti, team leaders, NADDC, and Tajudeen Nasiru, assistant director, NADDC, at an inspection tour of ANAMMCO assemble plant in Enugu.

16

Tuesday 18 February 2020

BUSINESS DAY

Media business Innovation Festival debuts in Nigeria to curate talents in Africa Daniel Obi

A

pan-African platform, Innovation Festival, (IFest) has been launched in Nigeria as an empowerment platform to harness talents that will advance the course of humanity and address the societal problems and challenges facing Africa in some critical sectors.

Unveiling the iFest platform in Lagos, the chairman of IFest , Prince Dapo Adelegan stated that, “IFest is an empowerment platform created to showcase and incubate African talents/ideas and to harness those talents to full potential while solving our societal issues.

“Africans are talented and it is evident in the way and manner African youths have been able to advance the course in other western countries. Young talented Africans and Nigerians are all over without necessary support, exposure and capacity building to unbundle their hidden talent,” Adelegan said.

According to him, IFest as a platform would encourage and collate great innovative works from young Africans, especially in key areas that would assist to drive the continent out of poverty, and cre-

ate jobs opportunities for millions of Nigerians/Africans through the convergence of all stakeholders- government, venture capitalists, businesses and innovators and implementing some of the great ideas discovered.

IFest, in its inaugural edition themed: “Exploring the possibilities of innovation”, is powered by Maxxconnection, an experience marketing company.

At IFest, the executive director of the Innovation Festival Owolabi Mustapha stated that “We recognise that the possibilities of the human imagination are infinite and the only way to get our desired utopia is to unleash the latest

innovative potential innate in all of us,” adding that “We are creating a platform that brings together all stakeholders to explore the possibilities of innovation.”

The Commissioner for Information and Strategy, Lagos State, Gbenga Omotosho, represented by Aruya Temilade, assistant director, public affairs, Lagos State ministry of information said that Lagos State is excited to be part of the project.

According to her, “IFest could not have come at the right time as Lagos is moving in the same direction of innovation. The mega city project requires innovative ideas to achieve it, therefore we are

very excited to be part of this project,” she said.

Some of the key take aways at the IFest will be to educate and showcase to all stakeholders what innovation really is, harness the potential of the innovation to address important societal issues such as unemployment, insecurity and power and to open doors of opportunity by giving innovators a platform to showcase their innovation to different investors who will help bring crafts to life.

Apart from providing opportunities for budding innovators in most areas of business and trade, IFest also has potential to throw up fun memory and entertaining collaterals such as networking opportunity, sales and exhibition opportunity and entertainment.

The IFest experience encompasses an innovation pitch, a showcase of innovative products (product launch), innovative features, upcoming technology, and discussions on the effect of present and future innovations in the business community.

Other dignitaries who attended the launch include Tunji Bello, Commissioner for Environment and Water Resoures, Lagos State; other officials of Lagos State government and bankers.

Devon King’s sponsored Street Foodz Naija competition produces winner

O

lukayode Christopher Omowa, owner of Cripsy and Grill by Grubs Republic, representing the city of Lagos has emerged winner in the first edition of the Street Foodz Naija Kings Competition powered by Devon King’s, a Brand of PZ Wilmar Foods Limited, in partnership with Foodbaytv.

The grand finale had the last six (6) contestants battle for the King of Street Foodz in Naija crown which came as a tough one for the Celebrity Judges- expert Nutritionist, Adedamola Ladejobi also known as AskDamz and Street Foods and Grill Chef, Etteh Assam, as they decided on the eventual winner.

Christopher beat the other 5 contestant to be crowned the King of Street Foodz Naija of 2020, after his meal “Stuffed sweet potato balls with shredded chicken and vegetable sauce ” was adjudged the most ‘Creative Dish’ of the night.

He won for himself the grand prize of N1 million , a renovated outlets and a year’s supply of Devon King’s products. Also rewarded were the 1 st runner up Anifowose Segun Johnson – King Glab Cuisines and 2 nd runner up Oghenefego Samuel Daniels – Boxdfood who also got renovated outlets as well as the sum N500, 000 and N200, 000 respectively..

The event was well-attended and the audience not only enjoyed the different Street Foods and drinks served but also the performances by popular artistes Zlatan and

Teni the Entertainer who lit up the stage as they performed their popular hit tracks to the utmost appreciation of the audience. Sharing her excitement on the successful flagship edition of the Street Foodz Naija KingsCompetition was Category Development and Activation Manager, PZ Wilmar, Toyin Popoola- Diana, who congratulated the winner as well as all the contestants.

“I am quite pleased with the outcome of the 1st Season of the Street Foodz Naija Competition. The platform has given opportunity for the contestants to be noticed around their neighbourhoods and the entire country at large and they now serve as inspirations to others aspiring to venture into the food business. “ As a brand we are delighted to have been part of this project, being the first of its kind in the country, the competition was well received by the public, and the participation and entries recorded for the competition was quite high.

Paga, Wealth.ng enter into strategic Rise unveils free dollar investment App partnership to create Investment Platform to shield Nigerians from inflation Daniel Obi

P

aga, Nigeria’s foremost mobile money company and Wealth.ng a growing investment marketplace, have entered into partnership to foster access to investment opportunities by leveraging Wealth.ng’s simplified investment platform.

This partnership will combine Paga’s innovative payments platform and Wealth. ng’s team of knowledgeable money experts to offer Paga customers a sustainable service for managing investment portfolios. Through this, Paga users can build alternative investments in Fixed Income, Stocks, Savings, Agriculture,

Real Estate, funds, and more.

These portfolios are available to investors and intending via the Wealth.ng investment marketplace on Paga, according to the officials.

Speaking on the benefits of this collaboration; General Manager, Online and Mobile, Paga, Folakemi Falodun in a statement said; “Paga was founded on the simple belief that digital technology can be leveraged in building an ecosystem that enables people to digitally send and receive money and offer simple financial access for everyone.

We aim to accomplish our purpose by launching our services in various emerging markets and partnering with relevant financial institutions

www.businessday.ng

to deliver our services”.

On the goal of building an all-in-one investment solution, Kayode Kalejaiye, Senior Vice President Digital Products, Wealth.ng expatiated; “Everyone deserves a shot at success, regardless of their background or current social status. But not many understand how to build sustainable wealth. People know how to work for money but do not know how to make their money work for them. This is the very reason Wealth.ng was created; to help bridge that knowledge gap and put real Wealth in the hands of as many people as possible”.

Paga’s mission is hinged on making it simple for one billion people to access and use money. Since it was founded in 2009, the company has played a key role in driving financial inclusion across Nigeria, through its online and Agent network channels. This partnership with Wealth.ng is a step in providing financial services to the banked and under-banked.

Daniel Obi

R

ise, a growing Nigerian fintech startup, has rolled out dollar investment app designed to make automated and global dollar investments possible for Nigerians from as low as $10.

Formerly known as CashEstate, Rise built the app to make automatic dollar investments in US real estate, stocks, Eurobonds possible. Rise started from a free investment club that allowed its members to invest in US stocks and US real estate from Nigeria. In doing so, the company came up with the idea to build a holistic wealth management app along with a community that offers financial guidance and long-term investment to help thousands of people stabilize their financial future.

Rise is founded by Eleanya Eke (former co-founder of crypto exchange, Buycoins) and Bosun Olanrewaju (exAndela fellow).

https://www.facebook.com/businessdayng

“Our goal is to change the way people invest in Nigeria and rest of the continent,” says Eleanya Eke, Founder, and CEO of Rise in a statement. “Our product allows you to start building a portfolio of US stocks, US real estate or Eurobonds right here from Nigeria and it automates your funding so that you can consistently invest and watch your returns grow over time.

Research shows that’s the best way to invest. And we believe that to succeed with investing in the long term, everyone needs a diversified, dollar portfolio that grows over time and it is relatively immune to our local currency and market fluctuations.”

Rise has a reputable history of promoting an investment culture through its investment club founded to help Nigerians to understand money, investments and learn how to make better money decisions, he said.

According to co-founder, Bosun Olanrewaju, we already live in a global village, @Businessdayng

with ideas, information, and culture being transmitted across the world through social media and the Internet. Rise’s mission is to leverage technology to put the best investment opportunities around the world in the hands of Nigerians, regardless of where they live or what their net worth is.

“We want to democratize access to the best investments around the world, and using technology, we can allow everyday Nigerians to access and invest in US and global assets just like the ultra-wealthy”, he said in the statement.

Rise is incorporated in the United States and Nigeria and invests for its users in Nigeria under a cooperative license, and its portfolio of global dollar investment options includes stocks of leading companies like Facebook, Amazon, Delta Airlines and more. It has an intuitive wallet that allows users to add their bank and cards so they can fund their plan at any time.

Tuesday 18 February 2020

BUSINESS DAY

17

ADVERTISING How Generating Demand Management, GDM’s evolution will shape innovation marketing

I

L-R: Victor Afolabi, CEO, GDM Group; Labake Yussuff, COO, GDM Group; Lampe Omoyele, managing director, Nitro 121; Iquo Ukoh, managing director, Entod Marketing; Doja Ekereuche, Board, Eko Innovation Centre and Frank Ozekhome, head, group srategy, Insight Redefini at GDM Group’s Marketing Innovation Masterclass tagged ‘Raising the Bar’ held in Lagos recently.

portfolio evolve with the dynamics of today’s marketplace - innovation.

With its evolution as Nigeria’s premier marketing innovation firm it launched three bespoke innovative marketing products in commemoration of its 10th anniversary.

The products were unveiled at the firm’s Client Appreciation Dinner event which held at the prestigious Radisson Blu Hotel in Ikeja, Lagos, recently. The event had in attendance some clients from the over 40 multinational companies and 182 brands the innovation marketing Group has worked for including Nestle, Unilever, Nigerian Breweries, Suntory, Lafarge, Friesland WAMPCO Campina, Diageo, the Lagos State Government, BOI, Mouka among others.

The marketing innovation products launched by the firm are Retailar, a B2B e-commerce platform that enables retailers effortlessly access products at the price of the manufacturer, order for them and have them delivered to them, right from the comfort of their phone, cheaper, faster and more efficiently.

Also unveiled was Retailscope, an audit platform which provides quantitative primary retail data about FMCG products. It is going to be shared with people in the marketing ecosystem for free. The innovation firm explained that having worked for the Federal Government on TraderMoni as an aggregator, it has acquired the capacity and competence to have had people across all the country, we have people in all local governments, we were in 774 local government areas to get raw primary data clients can www.businessday.ng

rely on. Retailscope is going to be made available free of charge to the ecosystem via Nigeria’s foremost award winning brands and marketing communications centric magazine, Brand Communicator as well as BusinessDay Newspaper.

Finally, the firm unveiled Alpha Geak, a subscription-based solutions platform which the agency has used in the past two years for enumeration, for validation and managing point of sales material for salesmen automation like a Sales Force Automation, SFA, developed for big projects. This, it unveiled to help small businesses scale up and compete favourably in the market.

Prior to the appreciation

‘

Marketing innovation masterclass is an annual GDM platform where the company connects with stakeholders in the marketing and innovation industry for knowledge sharing purpose

‘

‘

nnovate or die’ is a phrase often used to describe the approach brands must take to stay ahead in an ultra-competitive market characterised by rapidly changing consumer demand.

Antonio Lucio, the former Global Chief Marketing Officer of HP but now with Facebook in similar capacity captures the importance of innovation in marketing when he said that innovation is not one more thing that marketing professionals need to do, but the way they need to think and behave. This relates to what the famous Peter Drucker said: “because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions; marketing and innovation. Marketing and innovation produce results; all the rest are costs. This is the distinguishing, unique function of the business.”

This is enough reason to take a deeper look at the purpose and role of marketing from an innovation perspective. Marketing includes tasks to increase sales. The focus is on customer and market orientation; all products, services and processes are to be aligned with the needs of customers and users. Basically, its influence is key to ensuring new offerings fit with a strategy determined by customers’ needs, so companies are not stuck trying to sell something for which there is no demand. But brands have to balance being insightdriven with being able to launch products that no one would ever think to suggest.

Here is where innovation plays a pivotal role. Innovation is about establishing desirability, feasibility and viability. Do customers want it? Can we make it? Can we make money from it? Innovation is as much about insights as ideas. The insights come from knowledge of consumers, users and customers, and provide opportunities to meet recognised needs, as well as to identify potentially unrealised ones.

To help brands and organisations in the highly competitive Nigerian market effectively proffer answers to the posed vital marketing questions and to help its many clients solve marketing problems from an innovation angle, Generating Demand Management (GDM) Group, one of Nigeria’s foremost 360 marketing consulting firms has evolved into Nigeria’s premier marketing innovation outfit.

Having provided marketing solution services for over 150 brands in the 40 of the biggest companies in Nigeria, including multinationals across FMCG, Financial Services, Telecoms, Technology, etc, GDM Group is embarking on a journey to help brands under its

https://www.facebook.com/businessdayng

dinner, GDM held a series of activities to commemorate its anniversary. Recall that recently, GDM empowered students of Gbagada Junior Comprehensive Secondary School with educational materials. The marketing innovation firm also renovated the Junior Secondary School’s multipurpose hall and presented 21 new white marker boards for classrooms, among other educational items.

This, they explained, would enhance the capacity of the students to learn whilst harnessing their creativity and encouraging innovation. The Founder, GDM Group, Victor Afolabi, while speaking at the event, disclosed that the effort was also driven by the idea of giving back to the society.

According to him, “The wealth of this nation is in its people which is one of the reasons we decided to take our quota of corporate social responsibility to a secondary school. Where we can directly reach and impact the future of our nation.”

Afolabi added: “This is the beginning of what would be a prosperous partnership between our organisation; the Lagos State Government and the society, as we intend to continue to do more of these development driven initiatives.

This was followed by an impactful Marketing Innovation masterclass tagged ‘Raising the Bar’ held recently as a bid to give back and show its appreciation to the ecosystem that has contributed to its successes. The free event featured foremost and seasoned industry players who drew from their wealth of experience and knowledge to impact participants at the Eko Innovation Centre, @Businessdayng

Ikoyi, Lagos.

Setting the tone for the wellattended full day programme was the Managing Director of Nitro 121, Lampe Omoyele, respected business leader who has been previously Marketing Director at Cadbury, Airtel, PZCussons and Glaxo SmithKline; Managing Director, Nielsen West Africa.

He lectured participants on the topic, “Marketing Innovation and Strategy in 2020.”

This was followed by a session from the Managing Director of Entod Marketing, Iquo Uko who by dint of hard work and high level of professionalism at Nestle Nigeria, became the first and only female Marketing Director at an Executive Management level till date, took participants through an exciting journey with “Timeless Principles of Effective Marketing.”

Group Chief Executive Officer and Chief Creative Officer of Nigeria’s most creative agency, X3M Ideas, Steve Babaeko who was named among the prestigious Adweek 100 most creative professionals in the world followed Uko’s presentation with a highpowered inspiring motivational salvo on “The Guts to Win the Innovation Game.”

Other faculty members that impacted participants at the event include Frank Ozekhome, Head, Group Strategy, Insight Redefini who spoke on “Trends to Leverage in Marketing Innovation and Doja Ekeruche, Board Member, Eko Innovation Centre who covered the grounds on “ROI-Focused Marketing.

At the end of the rigorous but rewarding exercise, participants were all issued certificates free of charge. This gesture, according to the Founder and CEO of GDM Group, Victor Afolabi, is part of the Group’s gesture in giving back as well as impacting the ecosystem.

He said that beyond the maiden edition, this will be an annual event the GDM Group will be organising.

He added, “Marketing innovation masterclass is an annual GDM platform where the company connects with stakeholders in the marketing and innovation industry for knowledge sharing purpose. The 2020 maiden edition will curate conversations around innovation in marketing, leveraging trends, data, storytelling and technology.”

Earlier in his address, Afolabi shared the decade-long story of GDM Group and how the company has been successfully distilling complex marketing problems, how it serviced some of the largest homebred and cosmopolitan brands, how it emerged as an institution leader, and now it is now raising the bar in the marketing world.

18

Tuesday 18 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Tuesday 18 February 2020

BUSINESS DAY

AVIATION GUIDE

19

in association with

Aero has earned airlines’ confidence on aircraft maintenance – Sanusi Ado Sanusi is the managing director and chief executive officer of Aero Contractors, Nigeria’s oldest airline. In this interview with IFEOMA OKEKE, he speaks of the success stories recorded from its Maintenance Repair Overhaul (MRO) facility, the situation of Nigeria’s Instrument Landing Systems, (ILS), amongst other issues.

Let us look correlation between having more airports with airfield lightening and enhancing operations. How will it aid operations? very airport is supposed to be built based on commercial viability. Every landing instrument or lightening system in the airport must be based on commercial viability. If commercial airplanes don’t land at night in the airports, why will you go and invest between two to three million dollars instrument, which you will not use. So everything has to be commercially driven. We have between 20 to 22 airports in the country. Do we need these instruments in all the 22 airports? No, because some of them are not commercially viable.

Do we need to have the entire enlightening systems for the airport? No, because some of them are not going to be used for night operations but the ones that need to have lightening, then the lights must work and it must be 24 hours. The airport traffic system must sustain the lightening systems.

You can’t have an international airport with one of the runways not having lights. You can’t have two runways and you have an international airport where you have said it is 24hours operations without lightening systems. If in a year you are going to have one week or month foggy weather, then you will go back and look at your traffic and see how many flights in that one whole month are coming and how many flights will be affected if you don’t have that CAT III system.

If the economics suggests that you need to make the investment, then you make the investment. If your airport does not have weather for the CAT III, then you don’t need the CAT III. If it is for two days in a whole year that you have weather phenomena, you probably will not need that because it doesn’t show the commercial sense. So, it is all commercially driven. Coming back to Lagos airport, is it commercially viable to have CAT III landing facility? You have to do the numbers but I think that we can have the CAT III and operate it when it is necessary to and downgrade it when it is not necessary to

E

Ado Sanusi

operate it. You can have CAT III and downgrade it to CAT I and when the time comes, you operate it to CAT III because it is very expensive to operate a CAT III permanently.

This is what most airports do.

Considering the maintenance checks that you do in Aero, are there any incentive the government is giving you. Secondly, has the removal of VAT on importation of spare parts been implemented?

For government incentives, we are not really getting any incentive from government but they have encouraged us because if they have not encouraged us, we will not be here. The Asset Management Corporation of Nigeria, (AMCON) is very proud about what we are doing. In terms of real incentives like giving us tax breaks and waivers, we haven’t received any.

However, we still believe that the government will give us some incentives and this will encourage other Maintenance Repair Overhaul, (MRO) that are behind us. The removal of VAT on transportation system is a welcome development and I hope they implement it all the way to airlines.

www.businessday.ng

You don’t pay VAT when you enter taxies and buses but it only when you pay for air ticket that you pay VAT. So, the removal of VAT from transportation system completely including aviation is a welcome development because it will help the airlines have disposable revenues that will bring down the price of ticket. Because we buy the spare parts for aircraft outside the country, it is usually tax free because we are not using it there, so they don’t charge us tax.

The only time we pay tax is when we bring it in and the customs decides to put the tariff. If the zero duty for aircraft spares is extended, that will go a long way to promote safety, protect the growing aviation industry and assist the airline but the problem we have seen several times is the implementation of zero tariff on aircraft parts and aircraft itself. The implementation is not total and that is a big problem that we face.

I believe the way forward is for customs to work closely with the airlines and the manufacturing organisations outside the country to know that these are spare parts.

I see that you are increasing your frequencies and expanding your routes and for an airline to do this, it means you are bringing in aircraft. So how are you able to do this?

We just finished the first D-check in Nigeria. We did the first C-check some years back and since then we have done many C-checks in the country. We have done for our own aircraft and for third party. Now, we have just done the first D-check in the country in the 737-500 and that is why you are seeing us increasing our fleet. So, what it means is that we can fly all our aircraft for as long as we want because we can do the highest check on the aircraft, which is the D-check. So, we have done one and that is why you are seeing us increasing our frequency. We are also doing something that has not been done in the country. We are looking at airlines that are undergoing restructuring like Med-View and the rest and we tell them that if they have capacity, we can lease the aircraft from them and utilise them rather than them parking the

https://www.facebook.com/businessdayng

aircraft and the aircraft deteriorating. We have leased one aircraft from Med-View and we will work with him. We have leased engines from Chachangi and Chachangi its aircraft on ground. We are also introducing other things that have not been seen in the aviation industry in Nigeria but it is what is obtainable outside the country. We now have five airplanes flying and hopefully, we are going to increase it to six.

When you started the C-check, some airlines were reluctant and when they bring their aircraft they will be hiding it.

Do they still have that sane disposition now?

When we started, there was a lot of scepticism. People thought that we cannot do C-checks. Some thought it was not possible, some weren’t sure on what we were doing.

So, what we have done is to make sure that we earn the confidence of the people. So, all the airlines that are operating in the country and outside the country have seen that we can do it. And we can do it better than what is obtainable outside the country. So, some that brought in their airplanes when it was dark have now agreed to even go on television to say that Aero Contractors MRO is maintaining their airplane. This is because we have proved that we can do better than what they can obtain outside the country.

For you to have more planes flying, means you are employing more people.

From those that you sacked when you were restructuring, how many have you been able to call back?

We have paid redundancy for over 120 people. When I came in, we sacked about 70 percent of the workforce and it was really tough for us. Those that we put on redundancy, we started paying them gradually.

We have paid over 120 of them. We have recalled over 150 people. We have called back another 100 on contract basis because of the MRO. So, what we do is that we call them for six months when we have a lot of jobs on aircraft maintenance and they are very happy about that. Our projection is to call back as many as 250 of the over 700 that were affected by the restructuring.

@Businessdayng

20

Tuesday 18 February 2020

BUSINESS DAY

EDUCATION

Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

JA Nigeria, LBS deepen management capacity for 50 serving youth corp members KELECHI EWUZIE

D Venture in Management Programme 2020 Participants and members of LBS Faculty and JA Nigeria Staff

Reasons for the huge rush for Nigeria, Africa’s growing student population KELECHI EWUZIE with agency report

S

tatistics has shown that Nigerian students in particular and African students in general account for more than one in 10 international students schooling in several universities across the globe.

In Nigeria alone, fewer than 40 percent of university applicants are regularly admitted to Nigerian universities, leaving an estimated one million students without any university placement in the 158 citadels of higher learning currently approved by National universities commission (NUC).

Online platforms are tapping this growing interest in higher education. Unicaf University, an online higher education platform, enrolled 25,000 in

January 2019, a 108 percent growth in four years. eLearnAfrica announced a partnership with the Association of African Universities that would expand online learning opportunities for students enrolled in its 380 member institutions, potentially making educational opportunities available to 10 million African students.

The e-learning arm of the Pan African University was officially launched in December 2019, allowing millions of Africans to enrol in online courses and programmes.

Such statistics suggest that increased economic growth will likely translate into more African students who can afford a university education.

Currently there is insufficient capacity, but there are opportunities for colleges and universities worldwide to increase their international student popu-

lations by enrolling African students, either in ‘traditional’ brick and mortar settings or through online and MOOC (massive open online course) enrolments.

It is the belief of industry watchers that Nigerian and indeed African students will increasingly enrol in online programmes. Stefan Trines, research editor for World Education News and Reviews in the report, “Educating the Masses: The rise of online education in Sub-Saharan Africa and South Asia”, opines that Africa is “the most dynamic e-learning market on the planet”.

A case in point is the National Open University of Nigeria, with more than 250,000 students, is looking to increase the number of MOOC courses available to students unable to enrol in Nigerian universities.

Tolu Odugbemi, former vice chancellor, University of Lagos

opines that universities and other higher institutions as innovation hubs have major roles to play in using science and technology to drive development in in online learning.

According to him, “Developing economies, such as ours, can only fast-track and/or leap frog their growth through targeted research and development. A practical way to do this is to do what is generically referred to as reverse engineering. It is these institutions that must provide the roadmap to circumvent those roadblocks to indigenous technology enhancement necessary for driving innovation and development of the nation. The competition for African students Reports show that an increasing number of African students, if not enrolled in online degree programmes, will opt to remain closer to home for tertiary education.

etermined to produce and prepare university graduates for a successful entry into the world of work, Junior Achievement Nigeria (1A Nigeria) in a partnership with Lagos Business School (LBS) has trained 50 youth corp members in Venture in Management Programme (ViMP) The week-long programme led by facilitators from the Lagos Business School (LBS) and some key industry leaders prepares future business leaders for the responsibilities, opportunities and demands of tomorrow’s business world.

Uchenna Uzo, MBA director, Lagos Business School while speaking at the annual ViMP Alumni mixer programme in Lagos said the 50 participants were trained under a stimulating classroom sessions, case studies, panel discussions, networking, study groups, guest speakers and recreation, culminating in a strategy workshop, during which the participants presented solutions to real-world case studies.

Simi Nwogugu, executive director, Junior Achievement Nigeria, said the 20th edition which is proudly funded

by African Capital Alliance Foundation (ACA Foundation) and Total E&P Nigeria Staff Multipurpose Cooperative Society Limited is a oneweek intensive mini-MBA programme aimed at introducing 50 selected members of the National Youth Service Corps (NYSC) to the different facets of managing a business, making crucial business deci-

sions and developing skills for management.

Nwogugu while speaking at the annual ViMP Alumni mixer programme in Lagos, said the Venture in management programme (ViMP) rivals short executive education courses from the world’s top business schools with case studies focusing on Business Ethics, Accounting & Finance, Marketing, Strategy, Social Enterprise, General Management, Leadership and Entrepreneurship.

Nwogugu opines that the 50 selected participants from different universities across the country also engaged in a community service project at local primary schools as a way of teaching them to give back to the society.

She further stated that aside from funding from African Capital Alliance Foundation, Total E&P Nigeria Staff Multipurpose Cooperative Society Limited, Other partners include Verraki Partners, Channels Television and Sky Cinema. Due to the support of our various sponsors and partners, the prestigious programme has continued to remain free to all participants.

“In addition to this, our VIMP alumni engaged in the corporate world are also leading the companies’ CSR efforts and winning awards for their community service”, Nwogugu said.

Adenike Adeyemi, Executive Director, FATE Foundation (ViMP Alumnus, 2002) said the ViMP experience is a lifetime investment that keeps on yielding. The careerdefining experience gave me the foundational knowledge on leadership strategy and financial management that I still use today.

The importance of good manners and other positive behavioural traits

OYIN EGBEYEMI

W

e live in a peculiar environment in Nigeria, where customers’ services may be taken for granted.

Sometimes, it even seems like the concept of good etiquette is not viewed to be a key aspect of running a business or providing a service. In general, we tend to be very much fixated on some more obvious areas of development such as academic excellence, skills in extracurricular activities, career success, social status and many more. While these are great to have, behavioural traits such as good man-

ners and etiquette are critical areas that help us interact with each other and within our communities appropriately. These also enhance our personalities and give good indications of our upbringing, values and views of life. They really go a long way in making people stand out as well cultured individuals.

Polite behaviour and good manners should be no-brainers. However, there seems to be a school of thought that politeness may equate to weakness, particularly in the dog-eat-dog world in which we live. Some assume that people who imbibe this mode of good behaviour may be” push-overs” or will be taken advantage of. In spite of this, confidence and assertiveness carried out in a polite manner can replace rudeness in all situations. For instance, when people have opposing views on www.businessday.ng

a certain topic of discussion, it is possible to have a healthy argument, get an understanding of different perspectives and agree or agree to disagree; all done with politesse. After all, human beings cannot always have the same opinions about everything; a reflection of our unique environments and experiences, which is also the beauty of life.

Another example is in the area of punctuality, which is something that we seem to struggle with in Africa. Being late to meetings and appointments is absolutely unacceptable behaviour, except in cases of extenuating circumstances, during which notice and updates should be given to attendees of the appointment.

Lackadaisically arriving late is a very impolite way of sending a subliminal message to others

who make the effort to arrive on time that the late comer’s time is more important than that of the others.

Yet another example is in the area of table manners. We would be surprised that many adults do not know how to eat properly or use basic cutlery (forks and knives). While it is also appropriate to eat our local food with our hands, table manners is an area that we should carefully take note of, especially when we are at formal dinner settings, consuming continental food.

So, where do we start from to ensure that we exhibit good etiquette? We can always adapt our behaviour and soft stills, but with most things, it is best to start learning while we are young. Therefore, there is dire need to teach our children while they have the ability to

https://www.facebook.com/businessdayng

learn and adapt to the various modes of exhibiting good behaviour. This way, there are higher chances of these soft skills sticking when children grow older and develop into adults, thereby making them more effective individuals.

The truth is that learning good manners is not an overnight process; and we can very easily tell those within our social and work environments who were brought up with these values: Those who greet politely, open doors, speak appropriately, know how to use cutlery correctly, and carry out all that they do with decorum and confidence.

Good etiquette could even go a long way in securing jobs, interacting with clients, making social connections, meeting the right mate and making good quality friends. Doing things, @Businessdayng

the appropriate way adds unquantifiable value in ways that we may not initially acknowledge, but would appreciate when results, connections and such general value creation as these mentioned above yield.

Below are some of the advantages of good manners: • In the work place, professional manners get positive attention. While the basic skills on a particular job are critical, knowledge of the work is not all that is important. The manner with which the work is carried out; and in situations of teamwork, the mode and language used when interacting with colleagues go a long way. People who exhibit such are respected in the workplace.

Oyin Egbeyemi is an executive administrator at The Foreshore School, Ikoyi, Lagos.

Tuesday 18 February 2020

BUSINESS DAY

21

EDUCATION New private universities outstrip combined number of Federal, States’ in ten years STEPHEN ONYEKWELU

P

rivate universities are springing up across Nigeria to fill a widening gap created by government’s growing inability to meet the educational needs of its largely youthful population at the tertiary education level.

From 2010 to 2020 the National Universities Commission (NUC) approved 68 universities. Fifteen of these where established by the Federal Government of Nigeria, fifteen were established by state governments and 38 were established privately owned organisations and individuals. This does not make graduates of private universities necessarily best fits at the workplace.

A 2016 Philips Consulting report on Education and Employability showed that of the 20 universities that produce the most employable graduates only two are private with Covenant University, a private university heading the list.

The top ten most employable universities according to the report included, Covenant University, Ota; University of Agriculture, Abeokuta; Obafemi Awolowo University, Ile-Ife; Federal University of Technology, Akure; University of Ilorin; Ekiti State

University; University of Uyo; Olabisi Onabanjo University, Ago-Iwoye; Babcock University, Ilishan Remo; and the University of Lagos.

“In general terms private universities might produce more employable graduates because of the flexibility and relative autonomy in curriculum design unlike public universities with central controls; employability involves manners and etiquettes” Oyewusi Ibidapo-Obe, former vicechancellor of the University

of Lagos said in an earlier report. “However, in terms of academic excellence, public universities tend to perform better because they have better facilities and human resources.”

In a conversation with two heads of department at the University of Lagos, BusinessDay learnt that about 50 percent of lecturers in public universities have their children either studying abroad or in a private university.

The reasons advanced for their decision were teacher-

student ratio, which is lower at private universities and the opportunity provided by some private universities for international exchange programmes.

Stakeholders have raised concerns about the ability of the Federal Government to provide quality university education at a subsidised rate, given dwindling foreign exchange accruing from crude oil revenues.

The FG subsidises tuition leading to most Federal universities; charging tuition

fees of between N9, 000 and N25 000.

The minister of education Adamu Adamu once said the government was making efforts to increase tuition fees in all federal universities to about N45,000. This move was opposed.

Some experts say raising the fees may not be enough because quality education costs money. For instance, research and scientific experiments require state of the art facilities that most universities lack.

Ike Mowete, professor of electrical/electronic engineering at the University of Lagos told BusinessDay that it is difficult to subsidise quality education.

Students Ghana’s public universities pay an average of N600 000 ($1, 500) per annum and there are bound to be variations according to regions and nations. Also, the range in South Africa is between N731, 341 (R30 000) and N853 231 (R35 000).

It costs approximately N270 000 on the average, per annum to train a science student in some federal universities in Nigeria. It costs over N800 000 on average, per annum, to train a medical student, BusinessDay investigation has shown.

Yet students at the University of Lagos, a federal university, pay N14 000 for Arts faculty and N15 500 for science, including medical students, as tuition fees.

This impacts the quality of education.

This means private universities have a chance to seize the market and provide better quality education.

There is an increasing infrastructural decay on federal university campuses. This is telling on the quality of the products of our federal institutions. In some federal universities, teacher-student ratio in a class can be as high as 1:400-500.

First class ambitions, first class manifesto and life lessons thereafter (1) MUNACHIM AMAH

I

t is one thing to dream about having “First Class Honours” printed in bold letters on your degree certificate and another completely different thing to accomplish it. Like every dream in life, finishing with a First Class requires careful planning, hard work, consistency and a great deal of luck.

Oh yes, you will need a lot of luck, especially if you are studying in the typical Nigerian University where some lecturers are die-hard sadists and will rather you fail than succeed. So, here are a few things to keep in mind if you want to have a First Class or you know someone

you think you can encourage to work towards it.

One, you need to have a plan. Before I was admitted into the university to study Economics, I already understood how the cumulative grade point average (CGPA) system works and how it entailed that I need to start working hard from the very first semester to the last because every single grade counts towards the final grade.

Many young people do not know this before they get into university and so, first year for them is for getting used to the university system, making friends and socializing. Sometimes they don’t wake up to the reality until it is third year, and late.

To know that every single www.businessday.ng

course counted towards the final CGPA helped me map my path even before I got admitted into the university.

I knew that I had only four years to make this lifelong achievement and that I had to give it everything. You will need to decide (and you will do well to decide on time) what you want to achieve before you start, and then make plans; daily, weekly, monthly, yearly plans.

Two, hard work does not kill. It will hurt. It will be painful. But it will not kill. This is from first-hand experience.

You will be pushed by lecturers: assignments, impromptu quizzes, seminars, crazy deadlines, difficult exam questions, so many materials to study and all, so you need to develop thick skin. Burn

the midnight candle.

Sacrifice your weekends for studies. Study. Study hard. Sometimes, your back will stiffen in protest and you will fall sick, but you need to keep your eyes on the prize.

Immerse yourself in every assignment, in every quiz, in every exam. Let it mean everything to you. I like to think of every exam as going to war and that I have to be prepared and ready. I don’t know what works for you, but use anything. Invent anything, any prompt, and make it work for you.

Three, be consistent.

Don’t start working hard in your first year and suddenly slowdown in your third year because you think you are already getting enough good grades. There’s never

https://www.facebook.com/businessdayng

enough. Or even worse still, don’t hope to start working hard from third year to make up for the earlier years. You mess up from the beginning, you mess your final CGPA. Start from the very beginning to work hard and stay committed until the final examination in your final year. Don’t allow yourself to get distracted by anything, anything at all. You will have to always bear in mind that it is just a few years and those few years matter. They will come and go and never come back to you again, and so you need to give it everything you have.

Four, be aware of details, even the tiniest of them. You will need to become a psychologist in this sense. Try to understand the lecturers @Businessdayng

and know what they really want from you, the student.

Be very attentive in class. Pick out every single detail, every single illustration they use, and every single question they ask.

Play with them at your free time. Imagine yourself in an exam and cook up possible exam questions based on your understanding of the lecturer. Get a grip of what works for a particular lecturer and what doesn’t, how to answer their questions, what to do to get their attention when you are answering questions.

MUNACHIM AMAH is a Media and Communications expert, alumnus of the School of Media and Communication Studies, Pan Atlantic University

22

Tuesday 18 February 2020

BUSINESS DAY

Investments

ENERGY INTELLIGENCE

Market Insight Companies Commodity Tracker Policy

OIL

GAS

PETROCHEMICALS

POWER

INVESTMENT

Oil majors are not leaving Nigeria, only their investment dollars ISAAC ANYAOGU

O

n many occasions last year, representatives of major oil companies said they were not leaving Nigeria, but analysis of their investments plans this year indicates that their investment dollars do not share the same commitment.

Global oil firms are preparing to spend more than $53 billion in Guyana’s coveted Stabroek Block in the next ten years according to a research by Rystad Energy, a Norwegian independent energy research and business intelligence firm.

With more than 8 billion barrels of recoverable oil discovered in Stabroek thus far, companies are set to boost their capital expenditure for the area, with ExxonMobil leading the way.

The Liza field – the first and largest discovery in the block – has increased the oil major’s appetite, as its capital expenditure in Guyana is forecast to reach around $22.6 billion between 2019 and 2030, said Rystad Energy.

The analysts reported that US independent Hess is expected to follow with a capital expenditure of some $15.1 billion and CNOOC of China with $12.6 billion. The Liza field will attract most of the expenditure, with the Turbot field and the Payara field expected to round out the top three.

The 2015 Liza find has completely rewritten the script for Guyana’s economic outlook, with capital investments (including exploration) having surpassed $3 billion in 2019.

“Currently, most of the costs are being spent on developing Liza and finding new resources.

Soon, however, capital-intensive new development projects are likely to kick off, with greenfield costs forming a major part of the spending,” said Palzor Shenga, senior upstream research analyst at Rystad Energy.

All over the world, enthusiasm for new investments in oil and gas

projects are waning. Analysts at Rystad forecast that overall global upstream investments in 2020 will decrease by around 4 percent with investments in shale/tight oil expected to contract the most, by almost 12 percent.

The forecast was premised on anticipated lower oil price and weaker cash flows which could force shale companies to reduce activity. Deepwater is the only segment expected to grow above 5 percent in 2020, spelling a boom for the industry. But the recent drop in prices precipitated by the coronavirus is a stark reminder that things may not go according to plans.

On a regional level, only Africa, Russia, and South America are expected to see growth or flat development in investments next year, with key players like Mozambique, Libya, and Mauritania pushing the largest continent’s growth to the highest worldwide at 11 percent.

Nigeria may have some of the biggest reserves on the continent, but it dims its chances of attracting investments through an inability to reform its oil sector fiscal and regulatory frameworks, especially failing to pass the critical Petroleum Industry Bill The country’s chances were further hampered by policies like

imposing a bruising $62billion in back taxes to oil companies for failing to follow a law it couldn’t even enforce. The situation is complicated by frequent attacks on oil installations in the Niger Delta, violent crimes and policy uncertainty in Nigeria.

Waning investments also show that outrage is not a smart strategy in the sector. In November, President Mohammadu Buhari assented the Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Act, 2019 which requires an adjustment of the revenue due to the Federal Government from production sharing contracts (PSCs) whenever the price of crude oil exceeds $20 per barrel in real terms.

The amended law further provides for the replacement of the existing production-based royalty regime with a combination of production and price-based royalty regime and mandates the Minister of Petroleum Resources to cause the Nigerian National Petroleum Corporation to call for a review of the PSCs every 8 years.

Nigeria also introduced offence and penalty for non-compliance with the provisions of the Act seeking to end perceived extortive practices of oil majors.

The club of oil producers

warned that the new law would discourage investments. Global oil companies don’t play well unless the rules are rigged in their favour.

Guyana’s anti-corruption agency is investigating how exploration rights were awarded in the world’s biggest new deepwater oil region, including those now controlled by Exxon Mobil and Tullow Oil after a watchdog group accused ExxonMobil of depriving the country over $50bn in a shady oil deal.

The new normal for countries seeking investments from oil majors is a willingness to make deep concessions and cede previously cherished rights.

In Mozambique, ENH, its stateowned energy company, tasked with developing and coordinating the legislation, licencing, exploration, production, transmission, distribution, transport and global trade of Mozambican energy, takes a stake of between 10 and 30 percent in all energy projects and allows generous terms for investors to recover cost. The country is on course to realise over $32billion in investments into its Rovuma LNG project.

In Algeria, the oil companies literally wrote the law. Algeria’s new hydrocarbon law approved in November 2019 aimed at attracting foreign investment into

its oil and gas sector was drafted in collaboration with five major international oil companies operating in the country and cut their total tax burden from 85 percent to around 60 percent.

Algeria relies on hydrocarbons, which represent 40 percent of government revenues and 95.6 percent of its exports. Backed by state-owned Sonatrach, the country’s law makes a compromise between having the oil in the ground or giving away generous concessions to attract investments that will lead to extraction.

The tragedy with Nigeria’s case is that it does not have a cohesive strategy of how it wants to manage its oil and gas sector. The NNPC is spending billions of naira drilling in the northern inland basins while the biggest finds are in deepwater in the Niger Delta. The security situation in the north limits the worth of these finds. While it lacks the expertise to explore in deep waters, it does little to offer incentives to those with the capacity to drill in the area.

Like Nigeria, oil and gas production in Algeria is falling on the back of vastly reduced investment by IOCs. Nigeria has had the ambition to grow production by 4million barrels per day since the 90s and every new NNPC GMD continues to pirouette this inane twaddle.

As Nigeria works to close loopholes in its laws, IOCs are shipping their money out of the country, firing contract staff by the thousands and kicking Final Investment Decisions (FIDs) further down the road.

Oil majors are also looking at Brazil’s Marlim and Mero projects which could prop up South America to a predicted growth of almost 6 percent this year, said Rystad Energy Analysts.

Nigeria’s oil sector has come to a sorry pass through many years of brigandage by opportunistic governments that enabling its own exploitation looks like an acceptable compromise to get it off life-support.

Glut in LNG market makes case for increased use locally ISAAC ANYAOGU

L

iquefied Natural Gas producers have been encouraged to shut in some supply amid the global glut that is helping drive down price in Asia making a case for policy and investment decisions that will encourage use in Nigeria.

At the 19th annual S&P Global Platts LNG Conference in Houston, analysts said that the explansion and additional units coming online in the US built by

Qatar and supplies coming from Australia and other exporting countries, are pumping more LNG into traditional end-use market than they can handle.

New additions are coming including from Nigeria who only few months ago, reached final investment decision on Train 7 of the Nigerian LNG project. This is expected to add….

While there are mini LNG projects in Nigeria largely built

by Greenville Energy, the focus of Nigeria’s LNG is exportbased. NLNG signs long-term

supply contracts to countries in Asia and Europe which insulates it from the uncertainties of spot trading. But its difficulty remarketing new volumes to buyers are getting more volumes from the spot market speak to the need to evaluate its strategy.

Some analysts have continued to champion greater use of LNG in Nigeria. Olufola Wusu, an energy lawyer and founder of Megathos Law Practice says LNG finds uses in different segments of the economy including shipping, agriculture and other

sectors.

The effect of oversupply in the global LNG market is the forces price south. Weakerthan-expected demand, relatively mild winter weather, the coronavirus outbreak and Chinese tariffs have made the situation worse.

“The global market needs to balance things by turning off supply. Its got to get somebody to that. It has not done that in a significant size,” said Andrew Helm, a senior LNG trader at British utility Centrica at the

conference.

According to SP Platts, in the US, currently the world’s biggest growth market for liquefaction capacity, utilization at the six major export terminals has remained robust despite challenging market environment, although feedgas deliveries have dropped in more than 1.5 bcf/d from the recent record levels, driven in parts by maintenance that Cheniere Energy and Sempra Energy were conducting at their Louisiana facilities.

Tuesday 18 February 2020

BUSINESS DAY

23

ENERGY INTELLIGENCE Investments

Factories running on Compressed Natural Gas point to investment opportunities …virtual pipelines fill gap created by deficient gas infrastructure STEPHEN ONYEKWELU

S

ome factories in Nigeria are switching to compressed natural gas to reduce the cost of energy by adopting clean fuel amid a global effort to curb greenhouse gas emission and slow global warming. This opens an opportunity for investment in supply channels.

The Nigeria Gas Company Limited (NGC) estimated that Nigeria could save an average of N10 trillion yearly if three cities (Lagos, Port-Harcourt, and Abuja) alone converted to use of Compressed Natural Gas (CNG). Additionally, the deregulation of the automotive gas oil (AGO) diesel four years ago also shot up energy costs and big industrial consumers of power are looking for cleaner and cheaper alternatives.

CNG is natural gas mainly comprising methane that is stored under high pressure (while remaining in its gaseous form), mainly to transport it, or as storage

for later use as vehicle fuel.

CNG is used widely as an alternative fuel for vehicles as it has a high-octane rating. CNG is not to be confused with liquefied natural gas, which has been turned into a liquid and must be at very low temperatures. Although it’s still in its gaseous form, compressed natural gas is under more pressure and takes up a smaller volume than ordinary natural gas (but more volume than

liquefied natural gas).

“Our factory runs strictly on CNG. This is because we know it is a cleaner fuel and healthier for the environment than diesel,” Ayodapo Keshinro, general manager, sales and technical at Pacegate Limited.

Pacegate manufactures 210 litres steel drums in the tighthead, open head and internally lacquered drums. The plant is Africa’s largest fully automated steel

drum facility located in Ilupeju, Lagos. The factory can produce 5,000 steel drums daily in line with the United Nations and International Society Organisation (ISO) standards.

Nestlé Nigeria Plc. pioneered the use of CNG as a fuel source for its Flowergate Factory, in 2013, enabling the big nutrition, health and wellness company in the West African economic powerhouse to

reduce electricity cost by 30 percent.

Flowergate Factory receives its regular CNG using specially designed vehicles, to serve as a back-up against unforeseen disruptions in the national supply.

The successful demonstration of the use of CNG as a catalyst for manufacturing performance has attracted the attention of other industry players.

Insecurity, unstable demand, high initial development cost, bureaucratic bottlenecks and challenging terrains have limited the construction of new gas transmission pipelines and stalled projects. But CNG lends itself readily to transport by virtual pipelines, making it cost-effective.

A virtual pipeline is a system that allows for natural gas transport in the form of compressed or liquefied gas using modules coupled to mobile platforms, which are transported by trucks, ferry boats, boats and/or rail platforms.

“We are betting big on gas-fired independent pow-

er plants. We will deploy virtual pipelines to transport our gas, particularly the compressed natural gas, which is gaining currency among industrial customers,” Chudi Obianwu, vicepresident of A. P. Moller told BusinessDay. The investment house owns Impala Energy, which is aggressively seeking to address the energy needs of industrial customers.

The advantages of CNG go beyond its use for powering industrial complexes.

In Lagos, the major intracity transporters (Lagbus and BRT), are estimated to spend an average of N14.8 billion daily on automotive gas oil (AGO), and can save up to N11 billion by expending just N3.8 billion on CNG. Natural gas powers more than 175,000 vehicles in the United States and roughly 23 million vehicles worldwide. The advantages of natural gas as a transport fuel include its domestic availability and reduced greenhouse gas emissions over conventional petrol and diesel fuels.

Market

IMO 2020: How Nigeria, OPEC, shipping companies are faring so far DIPO OLADEHINDE

C

ompliance with the biggest shake-up to the oil and shipping industry in decades has recorded mixed reactions for shipping companies, Nigeria and the Organisation of Petroleum Exporting Countries (OPEC).

The new International Maritime Organisation (IMO) rules which kicked off January 1 prohibits ships from using fuels containing more than 0.5 per cent sulphur, compared with 3.5 per cent through the end of December, unless they are equipped with exhaustcleaning scrubbers.

For some of the world’s biggest oil producers, the new rules coming into force represent a source of great concern while for others, it’s an opportunity to grow oil revenue.

Nigeria In a closely watched monthly report, the Middle East-dominated producer group, OPEC, said Nigeria oil

production increased from 1.75 million bpd in December 2019 to 1.77 million bpd in January 2019 citing secondary sources while direct communications showed an addition of 38,000 bpd.

Steve Jones founding director at Energex partners said Nigeria’s grade of crude oil (sweet crude) currently have a high demand in the export market due to its low Sulphur content.

“Nigeria crude is more valuable and favourable for refiners,” Jones said.

Analysts at Cardinal Stone Partners Limited, an investment banking group envisage a higher demand for Nigeria’s low sulphur Bonny light crude oil in 2020 due to the new Annex IV rule.

“Further to the current undesirable state for the marketers, they may have to suffer thinner margins from the expected increase in associated shipping costs following the new IMO shipping fuel rule,” CardinalStone said.

www.businessday.ng

OPEC members Middle Eastern oil producers such as OPEC are likely to lose out given their over-reliance on crude with high sulphur content.

Although multiple sources said production decline was caused by deadly coronavirus, the Vienna-based group said in its monthly report, citing secondary sources, oil production declined by 28.86 million barrels per day (Mmbpd) last month. Overall, Libya, Iraq and Kuwait saw the major drops, while Saudi Arabia and Nigeria led the gains.

The second-largest reduction came from the group’s second-biggest producer: Iraq. Output is estimated to have fallen 68,000 bpd to 4.5 Mmbpd. Meanwhile, Kuwait recorded a loss of 44,000 bpd in January, to average 2.6 Mmbpd.

Shipping companies According to sources, shippers are responding to it by employing LNGpropelled vessels, using Low Sulfur Fuel Oil (LSFO) or

https://www.facebook.com/businessdayng

refining High Sulfur Fuel Oil (HSFO) with a scrubber (a system used to remove particulate matter and harmful components, such as sulphur oxides and nitrogen oxides ).

With the price of LSFO soaring this year, shippers using the refining HSFO method are currently succeeding in reducing fuel costs to a large extent and those that adopted the LSFO are choosing to use scrubbers in a hurry. LNGpropelled vessels, in the meantime, are emerging as the most effective longterm measure against the environmental regulations.

Peter Sand, chief shipping analyst at the largest of the international shipping associations representing shipowners BIMCO told S&P Global Platts that the shipping industry has been riddled with market uncertainty in recent months, but the bunker sales in the port of Singapore provide one of the first readings as to how the industry has transitioned @Businessdayng

into compliance with the IMO2020 regulation.

Singapore is globally the largest bunkering hub and is located along one of world’s busiest waterways, with close to 1,000 ships anchored there at any given time. A ship calls at Singapore port every two to three minutes, bringing the total to around 130,000 ships a year and making its performance-critical for bunkering and shipping industries.

“We have now surpassed the first wave of IMO2020 and hopefully the accompanying market uncertainty will diminish as we proceed into 2020,” Sand said.

The International Maritime Organisation said in a statement that the transition to its global sulfur limit rule for marine fuels have been “relatively smooth.”

“The next important target is fast approaching, when carrying non-compliant fuel oil on board ships becomes prohibited on March 1, 2020,” IMO secretary-general Kitack Lim said.

24

Tuesday 18 February 2020

BUSINESS DAY

OFFGRID BUSINESS News

We will convert 20 of our stations to run 100% on renewables, says Forte oil CEO DIPO OLADEHINDE

I

n a move that will see the business diversify its commercial portfolio, Olumide Adeosun, CEO of Forte Oil Plc, says the company has plans to convert 20 of its over 500 stations to run 100 percent on renewable energy.

In an interactive discussion with the media including BusinessDay, Adeosun assured shareholders of business continuity while also insisting that the new owners of the oil firm are in for a long term investment and might be exploring business opportunities in renewable energy.

“We believe it’s important we run Energy Company in a way that does the least damage to the environment. We are going to try and convert 20 of our stations to run purely on renewable,” Adeosun said.

“We’ll have generators only as back up.”

Adeosun noted that the company is devoting a lot of time and effort in developing its renewable energy business, especially solar and will also look at leveraging the assets it currently possesses.

“The company we are

looking to create is one that is going to try to balance its portfolio; we’re strong on petrol or diesel and even stronger on lubricants but there are cleaner fuels most especially in the renewable energy space, and I think we really need to get into that

space,” Adeosun said.

Femi Otedola, former chairman of Forte Oil, announced on June 19 2019 that he had completed the sale of his majority shareholding in the business to Prudent Energy, a local oil trading firm.

Following the sale, Forte Oil announced Adeosun’s appointment as CEO after the resignation of Akin Akinfemiwa.

The new CEO said the company will explore more business opportunities in the renewable energy space.

“It’s odd for the CEO of a downstream petroleum company to be talking about renewable energy, but we can see the potential in the renewable energy business and anyone who doesn’t get into it might regret it,” Adeosun said.

With over 18 years of experience in the oil and gas sector, renewable energy, power and strategy before resuming as CEO, Adeosun said the company would undergo a name change to reflect the new structure.

Investment opportunities abound in Nigeria’s power sector, with a fast-growing population of about 180 million sharing 5,074MW. The power generated isn’t enough even. Put into perspective, South Africa with a population of 52.4 million generates 35,819MW. The lack of capacity to meet the countries high energy demand causes Nigerians to seek alternative sources of power. Approximately 80percent of Nigerians use alternative sources of electricity supply, particular generators to supplement their inadequate energy.

However, renewable energy most especially solar power provides a better and preferable source of energy to cater to the growing demand for power. According to a recent study by Bloomberg New Energy Finance, Nigeria has the largest potential for C&I solar in Africa due to its high opportunity of replacing diesel power.

Sub-Saharan Africa countries saw record spike in renewables investment in 2018 – Study

I

n 2018 $2.8 billion were spent on renewables projects in subSaharan Africa (excluding South Africa), setting a regional record at some $600 million more than the previous year, according to a new report by BloombergNEF (BNEF). 1.2GW of PV are expected to come online in 2021 - more than twice the amount commissioned in 2018 underpinning a larger renewables investment flow than ever before outside of mature markets such as South Africa.

More renewables investment flowing to subSaharan African countries than ever before is a testament to how cheaper technology, investor familiarity and subsidy schemes are helping clean energy spread across the continent.

As investors cast a wid-

er net, projects are being built outside of mature markets such as South Africa. Many utility-scale solar projects are being developed in countries that have not built much renewables infrastructure to date. Some 1.2GW of PV are expected to come online in 2021 outside of South Africa – that is more than twice the amount commissioned in 2018.

Country-level targets and incentives are backed by assistance from multilaterals, which remain a key source of finance and have helped roll out renewable energy auction programs. The World Bank’s Scaling Solar program for instance awarded just under 400MW of PV capacity over 201518, equivalent to 39% of the total installed outside of South Africa over the same period. Such auc-

tions have yielded some of the world’s lowest bid prices for solar power – several projects have won capacity at prices under $0.04/kWh. But such auctions are double-edged. On the one hand, they prove that large-scale renewables can be procured throughout the region and help develop local familiarity with clean energy. Many are bundled with features designed to reduce project costs and risk, such as pre-secured sites. Yet, as BNEF analyst Antoine Vagneur-Jones points out, “that helps lower prices, but can also lead to government expecting to procure power at the same rates for projects that are not backed by such frameworks.”

Other hurdles remain to be overcome. Several sub-Saharan African

countries sport an apparent surplus in installed power generation capacity. Taken at face value, this can weaken the case for adding renewables.

But plant availability issues and transmission constraints mean that the gap between supply and demand is often less clear than it would seem.

Meanwhile, a prevalence of take-or-pay contracts means that producers are remunerated for power that is not consumed. Whether by attempting to terminate or renegotiate contracts, governments are striving to reduce their obligations in countries such as Ghana, Kenya and South Africa. Achieving clarity on how to balance future clean energy investments with procurement agreements will be vital if the clean energy is to grow

ANALYSTS: Isaac Anyaogu (Team Lead), Stephen Onyekwelu, Dipo Oladehinde

at scale.

The development of regional power markets will allow countries to move beyond such bilateral agreements. Power has long been traded in southern Africa, and nascent power pools in eastern and western Africa will enable countries to exchange surplus electricity across their borders.

But a lack of private investment in transmission infrastructure, concentrated power markets and small generation fleets will hinder their growth.

Developers having access to guarantees and hard currency lowers barriers to investment, but risk perceptions are such that access to local financing for large-scale renewables remains a distant prospect. Yet recurrent shortages of hydropower and a shift away from

financing coal by such backers as the African Development Bank are increasing the attractiveness of clean energy.

The complete SubSaharan Africa Market Outlook, published with support from the Department for International Development (DFID) in the United Kingdom, breaks down the trends shaping the region’s energy transition, and can be found at www.globalclimatescope.org.

Its release follows the publication of BNEF’s annual Climatescope survey, which scores and ranks individual markets on their overall potential for clean energy development. The latter’s findings, including complete data sets for all 104 emerging markets, can be found at the same link as above.

Feedback: 07037817378, 08137433034, 08135447789

email: isaac.anyaogu@businessday.ng, stephen.onyekwelu@businessdayonline.com, oladehinde.oladipo@businessdayonline.com

Tuesday 18 February 2020

BUSINESS DAY

BDTECH

25

In association with

E-mail: jumoke.akiyode@businessdayonline.com

Understanding the role of technology in promoting inclusive growth in Africa Jumoke Akiyode-Lawanson

A

s the world continues to become more digital, building an inclusive world in which the digital economy works for everyone, everywhere, is crucial. A research collaboration between the Mastercard Center for Inclusive Growth and The Fletcher School at Tufts University highlights the strengths and opportunities of six major countries in Africa for harnessing the true potential of technology to drive inclusive growth.

With financial support from the Mastercard Impact Fund, the African Leapfrog Index (ALI) – which was launched during the World Economic Forum (WEF) on Africa – uses Egypt, Ethiopia, Kenya, Nigeria, Rwanda, and South Africa as examples to provide insights on key drivers that could accelerate digital inclusion across the continent. The ultimate aim of the report is to help countries across Africa optimise their burgeoning digital evolutions, in order to accelerate economic development. The countries were selected based on their size, economic growth, the median age of residents, quality of governance, and digital momentum.

There are many reasons to be optimistic about the transformational potential of digitalisation in Africa.

According to the ALI, Kenya, for example, has seen the greatest amount of digital change over the past decade of all African countries studied, and

currently has over 80 percent internet penetration. Going forward, the country’s potential to leapfrog will benefit from leveraging this digital change to nurture jobs in the digital economy, such as online freelance, ridesharing, and in e-commerce.

With nearly 50 million people added to the labour force in the next few years, most of whom will fall somewhere on a spectrum between digitally sentient and digitally sophisticated, the digital economy is poised to be not just the driver of consumption but also of livelihoods.

South Africa, in particular, has been highlighted in the research for

its ease to create highly skilled digital jobs, primarily driven by strong consumer demand and an institutional environment with friendly regulations. Expanding the integration and use of digital technologies across all segments of society, particularly to those who sit at the lower end of the pyramid, will help the country tap into the full potential of this environment.

Raghav Prasad, divisional president, Sub-Saharan Africa, Mastercard said; “Digitisation has the greatest potential to overcome infrastructure barriers to accelerate inclusive economic growth across multiple sectors of the economy. Independent re-

search like the African Leapfrog Index equips policymakers and community leaders with data-driven insights to inform economic development; and it can help other key stakeholders across all sectors better understand the opportunity for – and pathways to – digital inclusion on the continent.”

The six countries were examined against three primary variables for harnessing digital technologies to facilitate development and inclusive growth. These variables are “Ease of Creating Digital Jobs,” “Resilience of Governance and Infrastructure” and “Foundational Digital Potential.”

Speaking on the findings of the

L-R: Ibrahim Lassa; acting commander Nigerian Army cyber warfare Command Representing the Chief of Army staff, Haru Alhassan; director new media and information security Nigerian Communications Commission (NCC), Garba Abari; director general National Orientation Agency (NOA), Isa Ali Ibrahim Pantami; minister of communications and digital economy, Umar Garba Danbatta; executive vice chairman/CEO of NCC, Adeleke Adewolu; executive commissioner stakeholders management NCC, during the Cyber Security Conference held in Abuja on Thursday 13, February 2020.

research, Bhaskar Chakravorti, Dean of Global Business at The Fletcher School at Tufts University said, “The ALI is intended to help countries and stakeholders in Africa recognise where the potential for technologyled leapfrogging is high. This means acknowledging the strengths of each country and which policy areas are prime candidates for intervention to enable stakeholders to prioritise resources appropriately.”

Other highlights include: • Leveraging its strengths in governance, digital evolution and mobile money, Rwanda has the potential to benefit from investments in infrastructure, greater internet penetration and online freedoms.

• With the largest population of all six countries, Nigeria has a major opportunity to leapfrog through improving the reliability of basic infrastructure. Continuing to invest in reducing power outages and other unintentional disruptions to the internet will be key to Nigeria’s growth potential.

• One of Egypt’s primary strengths lies in the ease of creating mediumand high-skilled digital jobs. Continuing to further efforts to drive digital payments and limit the usage of cash will significantly help drive digitalization.

• Ethiopia has the potential for greatest digital gain from creating strong digital foundations, improving on its low momentum and moving away from its near-total reliance on cash payments, towards digital payment rails.

Stakeholders say policy reformation, digital skills development are prerequisites for Nigeria in fourth technological revolution Jumoke Akiyode Lawanson

I

nformation Communication Technology (ICT) and telecommunications industry stakeholders have said that the formation of a policy framework that promotes digital transformation, with modern regulations, infrastructure and digital education are necessities in Nigeria’s fight towards participating and benefitting in the fourth industrial revolution.

The fourth industrial revolution (4IR) is the fourth major industrial era since the initial industrial revolution of

the 18th century. It is characterised by a fusion of technologies that is blurring the lines between the physical, digital and biological spheres, collectively referred to as cyber-physical systems.

Paul Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI), said that Nigeria must narrow the gap between technological potentials and the required policy framework needed to benefit in the global revolution.

Ruwase said; “it has become more pertinent than ever for us as a nation to focus on exploring innovative approaches to harness the benefits of

www.businessday.ng

technological advancement in this ever-changing world.”

According to him, recent technological advances such as Artificial Intelligence, Robotics, Big data, Augmented reality, Internet of Things, cloud computing, blockchain technologis and the likes, have the potential to fundamentally redefine the economy, and this presents ample opportunities that needs to be explored for the present and future generations.

“In order to catch up with the fastgrowing trends in ICT therefore, the country needs to address necessary

https://www.facebook.com/businessdayng

policy challenges in three key areas: E-commerce, data flows and new technologies,” Ruwase said.

Uwem Uwemakpan, the entrepreneurship manager for Tony Elumelu Foundation said it is unfortunate that Nigeria is currently falling behind on the fourth industrial revolution.

“The fourth industrial revolution is all about connectivity using technologies like the cloud, IoT etc. However, we are more focused on resource control which is reminiscent of the first industrial revolution. We have to catch up otherwise Africa as a whole will remain behind.”

@Businessdayng

On what the regulator is doing to ensure that Nigeria reaps the benefits of the fourth revolution, Ismail Adedigba, deputy director, consumer affairs, Nigeria Communications Commission (NCC) said that the commission is taken various steps to ensure that Nigeria participates and Nigerians are sensitized on the benefits of the revolution.

“This fourth industrial revolution also comes with a lot of risks, especially in terms of cybersecurity and that is why NCC is all out to educate consumers on benefits and risks of the digital revolution.”

26

Tuesday 18 February 2020

BUSINESS DAY

BDTECH

E-mail: jumoke.akiyode@businessdayonline.com

Four important steps for delivering an Industry 4.0 factory and supply chain Baljeet Nagi, ECEMEA SCM strategy leader, Oracle

A

lso referred to as the next industrial revolution, Industry 4.0 is synonymous with smart technologies such as artificial intelligence (AI), cloud computing, blockchain, the Internet of Things (IoT), and more.

It is expected to drive efficiencies and increase competitiveness in the manufacturing industry via faster, more agile internal processes and supply chains.

In Africa, several developments (such as the adoption of the African Continental Free Trade Agreement by 44 countries across the continent and signals that China will offshore some of its manufacturing in the near future) are presenting opportunities for organisations that adopt Industry 4.0 technologies to capture significant market share and gain global relevance.

In Kenya, for example, we already see Industry 4.0 technologies being utilised to address security concerns, including safety within communities, road safety, and the safety of individuals using online platforms. It has become apparent that tech and policies are important factors when creating a safer society. Take, for example, initiatives like Smart and Safe Kenya Transport (smarTTrans) who employ technology, analytics and policy experiments to save lives and help foster greater inclusive growth for Kenyans.

Industry 4.0 is, in fact, how Africa will remain on the map with global organisations and

Baljeet Nagi

individuals embracing this trend to remain competitive. We see companies like NIIT emerging as pioneers for quality IT training and education, resulting in over a million Nigerian students receiving upskilling in the latest IT programmes that are mapped to industry requirements and international vendor certifications. In doing so, it solidifies the country’s potential thanks to a talent pool equipped with a futuristic skillset.

In this new era, winners will not be determined by size or strength, but by their ability to respond quickly to shifting market requirements, driven by consumer demand for ever-higher levels of customisation. Importantly, this agility must be delivered not only

on the factory floor but throughout the entire supply chain, hence the importance of upskilling the youth and other industry players.

Step One: Establish a baseline and build a vision of a future state For organisations committed to delivering on the promise of Industry 4.0, the first step is to understand what their current capability and technology landscape looks like, across the whole value chain. What capability for measuring the performance of each asset is currently in place? Does the core application stack (including ERP, CRM, SCM, etc.) support integration with new technologies like industrial IoT platforms, blockchain, and AI? What are the current capabilities in terms of

Indigenous internet service provider introduces broadband for estates Jumoke Akiyode-Lawanson

C

iudad Infrastructure Limited an indigenous internet service provider (ISP) is bringing respite to various estates in the country by providing broadband and superfast internet services at competitive rate. Known as “Broadband for Estates (B4E)”, Ciudad has promised Nigerians fast internet that is comparable to what is gotten in advanced countries and at affordable prices.

Broadband has always been seen as an enabler for business growth, with the high demand for quality internet services today by Nigerians, the need to drive the Last Mile becomes imperative.

Speaking to media representatives on the importance of the broadband solution to housing estates in the country, Seun Olajide, the managing director of Ciudad Infrastructure Limited said; “we strongly believe that Nigerians must start enjoying affordable broadband in-

ternet at reasonable rates. This is in line with United Nations position on broadband access as part of basic human rights and the National Broadband Plan of the current administration led by ministry of communications and digital economy.

We are here to fill in the gaps and shorten the last mile.”

Having partnered with notable organisations to ensure that this happens, the company has assured Nigerians of nationwide coverage.

“We have partnered with notable organisations such as 9Mobile, Airtel and Telecom Italia (Italy) to ensure that the best of broadband services are made available to Nigerians similar to European markets. We took into consideration factors like coverage and cost. We have deployed in Lagos, Rivers State and other areas.

Our fiber optic to the home broadband is geared towards making life easier for Nigerians,” Olajide said.

With vast experience in last mile and internet connectivity direct to businesses, hotspots and consumer www.businessday.ng

broadband services; Ciudad provides completely (un)bundled solutions designed to meet various estates and homes’ requirements. This would avail businesses and residential homes in these estates to optimise and enjoy digital lifestyle which will in turn, boost their productivity.

Ciudad is managed by an experienced team of professionals with ample years of experience in the IT sector. Putting the customer at the centre, the company is on track to becoming a top 10 broadband service provider in Nigeria by 2025.

“We have deployed and are about to start running service in various estates such as Kits Courts - Ibeju Lekki, Golf Estate - Port Harcourt, Rivers State, Trinity Garden Estate also in Rivers State. We are also Banex Plaza and Sani Abacha estate in Abuja, this includes other big projects such as Lennox Shopping Mall. We have it as a mission to expand our reach and also ensuring that Nigerians start enjoying what it means to have superfast internet”, Seun Olajide said.

https://www.facebook.com/businessdayng

data capture, management, and analysis? With these questions answered, organisations can unpack and define what their future state looks like and pinpoint exactly where modernisation needs to occur.

Step Two: Focus on delivering data acquisition, data analysis, and digital execution The entire Industry 4.0 supply chain is built on the ability to capture and analyse data, and automatically optimise outcomes – often turning to technologies like IoT and AI. To meet this requirement, organisations must be able to manage vast amounts of data, from both internal and external sources, and orchestrate execution based on the analysis of this data (i.e., within the factory, and throughout the supply chain, even up to the end client).

For other organisations, this requirement raises questions about the IT infrastructure that is in place, particularly in terms of its suitability to provide for this integration and orchestration, and about the analytical capabilities of the workforce.

To capture maximum benefit from these technologies, leaders must focus on the capability to orchestrate data between them and core systems. Take, for example, the implementation of automation and how systems are now designed with a built-in quality management feature that eliminates potential human error in the quality process. These automated systems immediately compare inspection dates to specifications and alert the servers when discrepancies arise. Us-

ing this data, managers can then force a shutdown of production to prevent the situation from escalating.

Step Three: Share your plans For this process to be successful, leaders will need to ensure that all stakeholders involved are pulling towards the delivery of the strategic vision. This means ensuring that the various lines of business, technology partners, and up- and down-stream partners are prepared for the changes coming in the organisation. Collaboration, both internal and external to the organisation, is critical for the success of the broader project.

Industry 4.0 presents a fantastic opportunity for a revival of manufacturing across the continent. To deliver on this opportunity, leaders will need to understand exactly where their organisation is today and where it plans to be in the future. Only then can they focus on developing a data-led business and building a shared understanding of how to get there.

Step 4 - Future of Sustainability Disruptive technologies such as the Internet of Things (IoT), artificial intelligence (AI), big data and Blockchain are driving unprecedented environmental and business innovation by supporting real-time data collection and holistic decision-making that includes environmental impact. From thriving startup communities to large companies, organisations are leveraging these technologies to deliver new solutions—and, in many cases, to build entirely new business models, such as the sharing economy.

Trending apps TikTok

T

ikTok is a video-sharing social networking service owned by ByteDance, a Beijing-based company founded in 2012 by Zhang Yiming. It is used to create short lip-sync, comedy, and talent videos. The app was launched in 2017 for iOS and Android in markets outside of China and was ranked the 7th most downloaded mobile app of the decade (2010-2019), with over one billion downloads worldwide.

TikTok was the most downloaded app in the US in October 2018, the first Chinese app to achieve this. It is available in over 150 markets and in 75 languages.

The TikTok mobile app allows users to create a short video of themselves which often feature music in the background, can be sped up, slowed down or edited with a filter. To create a music video with the app, users can choose background music from @Businessdayng

a wide variety of music genres, edit with a filter and record a 15-second video with speed adjustments before uploading it to share with others on TikTok or other social platforms.They can also film short lip-sync videos to popular songs.

The app’s “react” feature allows users to film their reaction to a specific video, over which it is placed in a small window that is movable around the screen.Its “duet” feature allows users to film a video aside another video.The “duet” feature was another trademark of Musical.ly

Tuesday 18 February 2020

BUSINESS DAY

27

property&lifestyle 5 reasons why real estate is an attractive investment option in 2020 ENDURANCE OKAFOR

R

eal estate is generally considered a great investment option because of its predictable cash flow, less volatile nature which has many advantages over stocks, bonds or mutual funds and more especially as it appreciates, a resistant to inflation.

Nigeria’s property market is projected to stabilize and report growth in 2020. With an estimated 3 percent growth rate, the industry is expected to leverage the new policies by both the Federal government and the Central Bank of Nigeria, and the surge in the demand for affording housing to turn its 2019 contraction to a lucrative business for investors.

“The Nigeria real estate industry as a whole is stabilizing and it has the potential to fully stabilize and report growth in 2020, and this is because it is recovering from the effect of the recession,” Ayo Ibaru, COO /Director of Northcourt said.

After exiting 12 consecutive quarter recession in the first quarter of 2019, Nigerian real estate was hit by slow economic growth, lack of liquidity and dampened purchasing power and thus, ended the year on a negative but stabilising mode.

Nigeria’s economic growth of 2.28 percent eluded the real estate sector which contracted by 2.31 percent in the third quarter of 2019, the best growth in six months.

With a housing deficit of more than 20 million units, Nigeria’s property market which requires an estimated N170trillon to N200trillion to bridge the housing gap is considered one of the top investment options in Nigeria due to the following reasons: The surge in urban growth Access to affordable housing is a challenge for Nigeria’s 200 million population. With the high rate of urbanization coupled with the projection that the country’s population will double at 400 million by 2050, the real estate market is an area that holds good return

for residential and commercial investments.

Housing anywhere in the world is a basic necessity, which in the order of human needs, ranks third after food and clothing, and considering Nigeria has one of the lowest homeownership rates in Africa, the ability to create real estate projects that can bridge the supply-demand gap would mean a higher return on investment.

According to Northcourt, a Lagos-based real estate advisory firm, the surge in urban growth (at 4.3%, H2 2019) places pressure on real estate infrastructure, and as successful cities attract more population, the price of urban real estate will increase due to demand.

“Especially for well-conceived projects. This would require that new dwellings be provided to accommodate the growing population and businesses. This makes real estate an attractive investment media,” Ibaru said.

For a city like Lagos, which currently has the highest population in Africa, the small unit apartments is where residential investments hold most profits in 2020, as compiled from industry analysis.

“Investors and developer should consider exploring

the untapped potentials in the market especially in smaller unit accommodations and student housing,” an industry analyst said.

Declining Treasury-Bill rates Investors began reconsidering portfolio composition towards the end of 2019 as monetary policy changes caused Treasury bill (T-bills) rates to slide. The treasury bills market went bearish from the beginning of Q4 2019 as treasury stop rates dipped. The yields on the treasury bills went from double-digit at the beginning of Q1 2019 to single-digits towards the end of the year.

With the current T-bill rates which offer zero or negative return when adjusted for inflation, investors can find better return in investing in real estate either directly or indirectly.

More than N133.43 billion worthoffailedtransactionswere recorded at the T-bill auction conducted Wednesday 13th February by the Central Bank of Nigeria on behalf of the Federal GovernmentofNigeria(FGN)as investors bid at rates as high as 5.9percent,9.5percentand1318 percent on the 91-day, 182-day and 364-day bills.

Subsequently, the apex bank lowered rates across the three tenors to 3 percent, 4

percent, and 6.54 percent, respectively. While the rates on 91-day, 182-day are the lowest since January 6, 2016, they compare with 3.5 percent, 4.5 percent and 6.50 percent they cleared on the 91-day, 182day and 364-day bills at the previous T-Bills auction which saw rates crash to a single digit for the first time in 3 years.

New Finance Act President Muhammadu Buhari signed the Finance Bill, 2019 (now Finance Act) into law in January and it was specially designed to support the implementation of the 2020 National Budget and to create an enabling environment for businesses.

According to real estate experts, Nigeria’s property market is one of the sectors that will benefit the most from the new Finance Act, owning to the investment incentive it holds for the industry.

Described by industry experts as a major leap, the Finance Act which became effective February 1, 2020, holds benefits for both real estate investors and potential homeowners, analysis of the finance gazette shows.

According to section 23 (1) of the Company Income Tax Act (CITA) as amended in the Finance Act of 2019, “the dividend and rental income

received by a real estate investment company (REICs) on behalf of its shareholders” shall be exempted from Company Income Tax (CIT) “provides that a minimum of 75 percent of dividend and rental income is distributed “within 12 months of the end of the financial year in which the income was earned.”

“By amending the CITA provision on ‘Payment of Dividends by a Nigerian Company’ and including an exemption for distributions made by a REIC, this risk, and the obvious disincentive to invest in REICs, is managed,” KPMG said.

Commenting on how the new Act will impact the real estate industry, Albert Folorunsho, the Managing Consultant of Pedabo, a Lagosbased auditing firm said it will be encouraging for real estate investment as the company income tax will not be charged on the minimum 75 percent dividend.

“It is a major leap, and the provision can support the housing need of the public,” Folorunsho told BusinessDay. According to industry experts, REIT provides a practical, effective and efficient avenue for investing in real estate through the transfer of legal interests and has an

enormous impact on economic performance as a result of increased activities in both the capital markets and the real estate sector.

A REIT is a company owning and typically operating real estate which generates income. Most REITs specialize in a specific real estate sector, and properties included in a REIT’s portfolio may include apartment complexes, data centres, health care facilities, hotels, infrastructure—in the form of fibre cables, cell towers, and energy pipelines—office buildings, retail centres, self-storage, timberland, and warehouses.

Taiwo Oyedele, Fiscal Policy Partner & West Africa Tax Leader, PwC thought that the new Finance Act will make REITs more attractive.

“With the Finance Act, they will become more attractive as the tax effect produces the same result as REITs. As such, this initiative has the potential to encourage public investments and mobilise more liquidity for real estate projects with a corresponding positive impact on the capital market,” Oyedele said.

The prospects for REIS in Nigeria is perceived to be strong due to the high demand for, and undersupply of, real estate assets, and limited institutional investment.

However, the absence of an enabling tax framework had hindered investment in REITs and failed to unlock the potential benefits attributable to REIT activities, as compiled from industry sources.

Adeniyi Akinlusi, president of Mortgage Bankers Association of Nigeria (MBAN) and CEO, Trustbond Mortgage said the new Finance Act will encourage people to invest in real estate and when that happens the investment companies will have more funds at their disposal to execute projects.

The new Finance Act also holds an opportunity for small and medium enterprises (SMEs) with a turnover of N25 million and below as they will no longer pay company income tax (CIT). This means real estate start-ups with a profit of N25 million will be exempted from paying CIT, Continues on page 28

Real estate funds AUM shed N1bn in January ... displaced by bond funds to rank 4th in NAV ENDURANCE OKAFOR

R

eal estate funds shed N1.06 billion in its asset under management (AUM) in January 2020, data by the Securities and Exchange Commission (SEC) shows.

While the investment fund closed 2019 with a net asset value (NAV) of N46.16 billion low investors’ patronage

drove the asset down by 2.3 percent to post N45.1 billion as of 31 January 2020.

The total asset managed by the real estate funds accounted for 3.96 percent of the mutual funds entire market which had a NAV of N 1.139 billion. When compared to the 4.59 percent reported in December 2019, the real estate NAV share of the total asset managed by the mutual fund dropped 0.63 percent in

January 2020.

The bond funds with a NAV at N70.47 billion representing 6.19 percent of the entire asset managed by the mutual fund displaced the real estate fund to post the third largest asset, leaving the fund from the property industry to occupy the fourth position for the first time in many years.

“Real estate investment trust (REITS) is not very

www.businessday.ng

liquid, and it is very difficult to see people go to floor to buy REITS, as such one hardly see any trade in any of the REITS,” Paul Uzuma, MD of Halo Nigeria Capital Ltd said.

According to the Lagosbased analyst people don’t trade what they do not know and what they are not sure of.

Uzuma added that “the real estate funds do not really give adequate financial reporting

https://www.facebook.com/businessdayng

to update you on what is going on and so activities there are streamlined to may be the issuers.”

Real Estate Funds is an investment vehicle that pools resource together to invest in real estate, therefore allowing individual investors to partake in the benefits of the underlying properties.

“Real Estate Fund is an investment vehicle that can be used to address Nigeria’s housing shortage and encourage economic activity in the real estate sector,” said Ayo @Businessdayng

Akinwunmi, head of research at FSDH Merchant Bank Breakdown of the data by SEC shows that UPDC real estate investment fund raked the highest share of the real estate funds with an NAV of N 32.77 billion, 72.74 percent of the entire N45.1billion.

Managed by both SFS Capital Nigeria Ltd, Union Homes REITS and Skyle Shelter Fund shared the remaining asset in the real estate funds. They both posted a NAV of N9.83 billion and N2.44 billion as respectively.

28

Tuesday 18 February 2020

BUSINESS DAY

property&lifestyle Single digit inflation rate will solve Nigeria’s housing crisis - Afrinvest deputy MD ENDURANCE OKAFOR

I

f Nigeria wants to bridge its housing deficit and give affording housing to its 64 million people who are employed yet cannot afford to buy a house, it would have to first achieve a single digit inflation rate, Victor Ndukauba, deputy managing director, Afrinvest has said.

For the deputy MD attaining a single digit inflation rate is important for Nigeria’s housing industry which is trapped with a deficit of more than 20 million units because inflation rate is the key determinant of interest rate and pricing.

“I think to really address Nigeria’s housing deficit and to solve the challenges in the property industry it really comes down to what I like to call the primary objective of the central bank which is price stability,” Ndukauba told BusinessDay with the assurance that “If we are have single digit inflation rate we’ll bridge the housing deficit.”

The rate at which the prices of good and service increase in Nigeria (inflation) jumped to 11- month high in December 2019 fueled mainly by food prices which is as a result of border closure.

Figures by the National Bureau of Statistics (NBS) put Nigeria’s inflation rate (All items year on change) at 11.98 percent as at December 2019, the highest rate since January of last year. With the current inflation rate, the Central bank may be far from achieving its target of 6-9 percent.

The fear of a further spike in inflation regime forced the Central Bank to undertake a moderate tightening stance at the first monetary policy of 2020, leading to the raising of Banks’ cash reserve ratio (CRR) by 500 basis point, from 22.5 per cent to a new level of

Victor Ndukauba

27.5 percent.

The move by the Central Bank is to mop up what the apex bank described as liquidity surfeit in the Nigerian economy, responsible for driving the inflation since August of 2019.

“Today inflation is at 12 percent and this translates to low yields on investments; all yield from short term instrument to one year and even up to the 30 year bond is priced at 10 percent, so we are all losing value in our pension fund,” Ndukauba said.

According to industry analysts, the high cost of funds for real estate development is one of the reasons why the products in the market are too expensive for a lot of Nigerians to afford.

“With a high inflation rate comes high lending rate which automatically means the developers would have to factor in that cost when they are selling the properties to the end users,” an industry source who ask not be identified said.

Another factor cited by industry experts on why Ni-

geria’s housing deficit has continued to expand in the last decade is the low earning capacity of the country’s citizens, a reflection of the country’s slow economic growth.

Recent data shows that only 5 million of the 69.54million Nigerians reported by NBS to have been gainfully employed as at third quarter of 2018, earn a salary of N3 million and above per year, According to the data by Graeme Blaque Group, a Lagos-based advisory firm the data put employed Nigerians who can buy affordable housing at only 7.19 percent, meaning as much as 64.54 million people who earn less than N3 million cannot afford to own their own home except of course there is an increase in their income level.

Whereas homeownership level is 84 percent in Indonesia, 75 percent in Kenya and 56 percent in South Africa, it is only 25 percent in Nigeria whose population is estimated at 200 million. Going by United Nations projection, the

country’s population will be as high as 400 million in 2050.

According to the Association of Housing Corporation of Nigeria (AHCN), the underdevelopment of Nigeria mortgage sector in driving homeownership is worrisome as more than 90 percent of new homes utilise funds from personal savings for incremental construction.

“The structure of the mortgage industry is the problem; there is the high-interest rate and this is on the back of the economic condition,” Adeniyi Akinlusi, president of Mortgage Bankers Association of Nigeria (MBAN) and CEO, Trustbond Mortgage told BusinessDay. A typical mortgage rate in Nigeria ranges between 7-10 percent for Federal Mortgage Bank of Nigeria (FMBN) and between 15-25 percent for commercial mortgage institutions, making it one of the highest in the world.

Aside from the interest payable, the potential buyer must also have a certain percentage of the total amount needed for the purchase readily available; this amount is known as equity and should range between 30-70 percent of the total cost of the home.

Citing Morocco as an example of a country where low inflation rate has impacted on the property market, Ndukauba said inflation rate in the country is between 1.8 to 2 percent.

“You can get a mortgage at 4-6 percent in Morroco, immediately you graduate from university and get a good job you can get access to a mortgage,” Ndukauba said.

Going forward, Ndukauba recommended pension fund as a sector where Nigerian real estate developers can access long term capital to provide the affordable properties needed by a lot of Nigerians.

5 reasons why real estate is an attractive...

Continued from page 27 initiative experts have said will spur growth in the sector.

“The amendments contained in the Finance Act should positively impact companies operating in the real estate sector and thus spur the growth of the industry.

The tax-exemption of small companies and the reduced CIT rate for medium-sized businesses, for instance, will increase their capacity to absorb the shocks in the Nigerian macroeconomic environment and improve their cash flow position,” Akinlusi said.

Hedge to inflation Real estate investments are often described as inflation hedge investments. Inflation resistant investments are typically assets that are ex-

pected to increase, or at least maintain in value. This plays into three aspects that make real estate a great tool to fight inflation: appreciating value, increasing income (rents) and depreciating debt.

Simply put, inflation means as time goes on and the prices of goods and services go up, one’s buying power becomes less and less with the same amount of money.

For example, if two years ago an apartment in Lagos, was going for a monthly rent of N36, 000 ($100) due to inflation, that same apartment can cost as much as N72000 ($200). The fact that real estate projects appreciate with time is the major reason why it is resistant to inflation.

Figures by the National www.businessday.ng

Bureau of Statistics (NBS) put Nigeria’s inflation rate (All items year on change) at 11.98 percent as of December 2019, a record of 11-month high.

The fear of a further spike in inflation regime forced the Central Bank to undertake a moderate tightening stance at thefirstmonetarypolicyof2020, leading to the raising of Banks’ cash reserve ratio (CRR) by 500 basis point, from 22.5 per cent to a new level of 27.5 percent.

The move by the Central Bank is to mop up what the apex bank described as liquidity surfeit in the Nigerian economy, responsible for driving the inflation since August of 2019 “To avoid loss of capital, investors need to invest in inflation-protected instruments.

With the drop in the T-bill rates occasioned by the CBNs policy, real estate is now positioned to protect against the decrease in investment portfolio value. Increased demand for real estate products, and its potential to withstand the effect of inflation has positioned it to be a good investment option in 2020,” an industry expert said.

High tangible asset value Real estate is a tangible asset that can always be monetized through renting or residing in the property, regardless of financial market conditions.

This makes it far more resilient against asset market swings compared to traditional stocks or bonds. Real estate is part of the broader category of alternative investments.

https://www.facebook.com/businessdayng

Talking Real Estate

With Oluwakemi Adeyemo

Managing culture in real estate joint venture partnership

C

ulture describes the ‘way of life’ of groups of people. It is the way they do things.

Whereas genes are inherited, culture is learnt. Culture is reflected in people’s writing, religion, music, clothes, cooking, what they do and how they do it. Different groups may have different cultures.

The concept of culture is very complicated. The word ‘culture’ has many meanings and finds its most common use in three ways: - The excellence of taste in the fine arts and humanities, also known as high culture.

- An integrated pattern of human knowledge, belief, and behaviour.

- The outlook, attitudes, values, morals, goals, and customs shared by a society.

Real estate culture therefore, is the way an individual or a group of people do real estate investing.

Real estate is perceived and defined in different ways by the various ethnicities or race of people around the world. And, these different definitions are evidenced in the way the different groups approach real estate investing.

If a group of people were drawn from various ethnic groups and placed within a defined location, each group will maintain and reflect their individual perception and definition of real estate. Even when bound by location, people do not default to a unified real estate culture.

There are groups of people, in some states in Nigeria, who situate burial sites within habitable areas such as having a tomb in a living room or close to a bedroom. Many people would find this absolutely unimaginable but, for such groups, this is a normal way of life. As a matter of fact, some people make personal investment in real estate for the purpose of owning a burial site.

Not only does culture impact on real estate investments, it also reflects in the way limited real estate resources are utilized through joint venture partnerships.

Culture is what determines the success or failure of a joint venture project.

Joint Venture real estate projects leverage on the resources and strengths of the parties involved in the partnership to achieve a common goal. Often times, the real estate culture behind the strength of the parties and the accumulation of resources is not considered.

PwC, at a presentation in 2018, identified cultural differences as one of the threats to the success of joint venture real estate projects and, in many @Businessdayng

cases, its failure in Nigeria.

Since values are reflected as culture, misalignment of values in a real estate joint venture will impede the success of the venture. For instance, when a JV partner does not place a premium on the environmental impact of a project such that the effect of the project on the environment is factored in from the start, such project will, in the end, not deliver on expected goals.

When you enter into a JV arrangement with a group or individual whose way of doing thingsinvolveszerotolerancefor safetyissues,you canexpectthat such culture will reflect in how they approach the partnership.

A partner with high sentiments regarding their contribution to a project can be rigid on the actual value of their resources. That rigidity will definitely have an impact on the success of the project goal.

How to spot culture.

For many investors, culture is already set. It is not a newly acquired skill. So, it is not safe for partners coming together for a joint venture project to be oblivious of the existence of a set culture.

The various possible culture in a group of people or individual plays out during conversations. It is important that partners intending to enter a real estate joint venture discuss as often as possible to observe and identify cultural traits that can either impede or enhance the project success.

Understanding why a partner is interested in a real estate project is a good way to begin to uncover such a partner’s culture or way of doing things.

How to manage culture Culture reflecting in a real estate joint venture arrangement is not all bad. As a matter of fact, a strong positive culture enhances strategy.

To manage culture, the goal of a real estate joint venture project must be clearly defined by stakeholders and communicated as often as required. Every stakeholder wants the greatest financial reward from an investment but that does not eliminate the interference of culture.

Existing culture, if well understood, can be used as a reward system when there is an alignment. It can as well be used to get the buy-in of stakeholders.

A partner’s culture can become attractive to other stakeholders. Partners should always maintain a level of awareness of the other party’s culture to ensure alignment and re-alignment when necessary. Non-alignment at any point in time can negate the overall success of the project.

Tuesday 18 February 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Monday 17 February 2020

Top Gainers/Losers as at Monday 17 February 2020 LOSERS

GAINERS Company

29

Closing

Change

GUARANTY

N29.9

N29

-0.9

0.07

BUACEMENT

N35.8

N35

-0.8

N6.05

0.05

INTBREW

N7.75

N7.05

-0.7

VOLUME (Numbers)

N1.11

N1.15

0.04

ETI

N7

N6.4

-0.6

VALUE (N billion)

N0.64

N0.68

0.04

DANGSUGAR

N12.85

N12.35

-0.5

MARKET CAP (N Trn)

Closing

Change

OANDO

N3.45

N3.6

0.15

AFRIPRUD

N4.68

N4.75

CUSTODIAN

N6

NPFMCRFBK JAIZBANK

Company

ASI (Points)

Opening

Opening

DEALS (Numbers)

27,570.94 3,302.00 134,612,472.00 1.583

Global market indicators FTSE 100 Index 7,435.87GBP +26.74+0.36%

Nikkei 225 23,523.24JPY -164.35-0.69%

S&P 500 Index 3,380.16USD +6.22+0.18%

Deutsche Boerse AG German Stock Index DAX 13,788.91EUR +44.70+0.33%

Generic 1st ‘DM’ Future 29,460.00USD +65.00+0.22%

Shanghai Stock Exchange Composite Index 2,983.62CNY +66.61+2.28%

14.359

Investor protection key to market development – SEC Stories by Iheanyi Nwachukwu

I

nvestor protection has been identified as one of the cardinal points of market regulation that contributes to deepening the capital market.

This was disclosed by acting director general, the Securities and Exchange Commission, Mary Uduk while speaking with journalists in Lagos, weekend.

According to Uduk, one of the ways of growing and developing the capital market is to ensure that investors are able to receive the benefits of their investments.

“When people invest, it’s because they are expecting some returns. So, we ensure that no one takes your money away in an illegal manner and also ensure that when profits are declared, investors benefit. “ We a l s o e n c o u r a g e investors to try to diversify their portfolio, try to talk to experts and also explore the different vehicles of investments in the market so in one way or the other they will diversify their risks”.

L-R: Suleyman Abdul Ndanusa, seminar chairman/ CEO, Global Mandate Consulting Ltd; Bola OnadeleKoko, chief executive officer, FMDQ Group; and Mary Uduk, Ag. director general, Securities and Exchange Commission (SEC); at the SEC’s Budget Seminar in Lagos.

Uduk said it is the responsibility of the SEC to ensure that investors are not short changed in any transactions in the market and therefore urged them to participate in the market to grow it.

She stated that it is to this end

Agile Practitioners Association of Nigeria set to hold annual conference

T

he Agile Practitioners Association of Nigeria, Nigeria’s largest Agile professional body, has concluded plans to host the 3rd edition of the Annual Agile Nigeria Conference 2020, with the theme “Accelerate Your Delivery”.

This indication was given at a press conference organised on Saturday in Lagos. The event is scheduled to take place in Lagos from Thursday March 5 to Friday March 6, 2020.

The annual Agile Nigeria Conference is dedicated to furthering Agile principles and providing a venue for people and ideas to flourish. The main conclusions of the Agile Conference will be reflected and incorporated into the declaration of how Agile will help transform workplaces, businesses and services as well as the adoption of Agile frameworks by the participants at the Conference.

Agile Practitioners Association of Nigeria is a nonprofit Organizstion, soon

to be a Chartered Institute & Governing Body for all Agile Practices, Training and Certifications in Nigeria.

Chief Executive Officer/ Founder, The Agile Advisor A f r i ca, Ab i o d un O s o ba, expressed delight at the emerging opportunities, growing appetite and evolution of Agile in Nigeria.

She said the forthcoming 3rd edition of the Agile Nigeria Conference, comes on the heels of the hugely successful 2nd edition held recently in Lagos, which attracted over 100 executives, managers, software developers and researchers from over three countries who gathered to hear from recognised experts, authors, innovators and practitioners who offer their unique insight.

“This year’s conference promises to be bigger and better than its previous editions. We have lined up no fewer than 29 subject matter experts from within and outside of Nigeria as speakers. www.businessday.ng

that the Commission is taking steps to reduce transaction costs in a bid to ensure that investors do not bear unnecessary costs.

She said: “We are doing a lot to boost investors’ confidence in our market. But I want to say that both local and foreign

investors are very good for the market. Investors’ fears can be of two folds, firstly they could be afraid because they feel that capital market operators will mismanage their investments, secondly is looking at the volatility of the market that

makes investors skeptical.

“For the first scenario, we have a number of initiatives that we have put in place to boost investors’ confidence. We have the e-Dividend mandate system, the Direct Cash Settlement as well as multiple subscriptions in place. For the second category, investors have to take ownership of their investments. They have to be able to monitor their investments, attend Annual General Meetings as well as read the annual reports sent out to them.

The Acting DG said investors are also protected through the National Investors Protection Fund (NIPF) Risk Based supervision that enables the SEC to supervise the operators to ensure that they do not do what they are not supposed to do.

According to her, the Complaints Management Framework enables investors to know where to complain to and how long it takes for such complaints to be resolved. For those of the investors that are averse to risk, they should get their financial advisers to advise them properly on where to invest.

“We also advise retail investors to invest in Collective

Investment Schemes and Mutual Funds because those are managed independently by professionals and they are diversified thereby reducing risks.

“We are committed to protecting investors in the work we do. We will keep working on our rules and the possibility of amending them when the need arises, we want more transparency in the market so that investors will feel comfortable and the market can be better,” Uduk added.

On price movement in the equities market, The Acting DG said the regulator is more concerned about ensuring an efficient market and a market that is liquid.

She said “For the regulator, what we are concerned is do you have an efficient market, do you have a liquid market so that transaction cost will be reasonable, so that someone does not take advantage of another person? But market can move up or move down all we can do as a regulator is to ensure that people do appropriate disclosure so that I don’t have one information and hide and then use that information to your detriment .

United Kingdom’s CISI courts Nigeria members

T

he United Kingdom’s b a s e d C h a r t e re d Institute for Securities and Investment (CISI) has announced its preparedness to upscale the skills and competencies of its members in Nigeria to prepare them for global competitiveness.

The Institute had last week organised Breakfast Meeting where its members in Nigeria discussed the 2020 global economic outlook and its implications on Nigeria.

The well attended free event, perhaps the first in the series, is expected to broaden the members& horizon on the changing dynamics in the global capital market and boost their Continuing Professional Development (CPD) metric.

Addressing the participants, the Country’s Representative of CISI, John Osuoha, who co-ordinated the programme explained that there would be series of such forum to equip the members with analytical tools for enhanced professionalism.

Osuoha, who expressed

optimism at the attendance, urged members to take advantage of numerous certification courses offered by CISI to widen their professional practice.

Addressing the participants on the 2020 Global Economic Outlook, the Chief Executive Officer, Emerging Africa Group, Toyin Sanni stated

that economic growth in Sub-Sahara Africa was under pressure and the key players such as Nigeria, South Africa, Kenya and Rwanda should manage their fiscal and monetary policy to stabilise the economy.

Sanni, who reviewed some global economies, including Nigeria advised that all

projections be reviewed downward as a result of the on-going coronavirus which was not initially factored as a risk element but has become a subject of global concern.

“Countries should adjust their projections in the wake of coronavirus which was not factored as a risk element initially.

L-R: Wumi Iledare, African region director, Society for Petroleum Engineers; Olayemi Anyanechi, founder/ managing Partner, Sefton Fross; Bank Anthony Okoroafor, chairman, Petroleum Technology Association of Nigeria (PETAN) & Bitrus Nabasu, Permanent Secretary, Ministry of Petroleum Resources during the panel session on In-Country Value at the Nigeria International Petroleum Summit (NIPS) held in Abuja recently.

https://www.facebook.com/businessdayng

@Businessdayng

30

Tuesday 18 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Tuesday 18 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

31

32

Tuesday 18 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Tuesday 18 February 2020

BUSINESS DAY

33

news

Minister warns institutions against admissions outside CAPS ... commissions over N200m projects for JAMB Godsgift Onyedinefu, Abuja

M

L-R: Ahmed Dangiwa, MD, Federal Mortgage Bank of Nigeria (FMBN); Adeeo Adewale, chairman, board of directors, FMBN; Babatunde Fashola, minister of works and housing; Tony Odigie, representative of the Minister of Federal Capital Territory, and Andrew David-Adeo, representative of the secretary to the Government of the Federation, at the inauguration of Wood Hill Estate at Kuja Area Council in Abuja.

States’ continued reliance on FG risky, unsustainable, Sanwo-Olu, Ahmed warn JOSHUA BASSEY

N

igerian states have been urged to explore ways of reducing dependency on monthly allocations from the federation account by adopting creative and innovative strategies to boost IGR, as their continued reliance on the Federal Government for economic sustenance is risky and unsustainable.

Babajide Sanwo-Olu, governor of Lagos State, and Zainab Ahmed, minister of finance, budget and national planning, gave this admonition at the opening of Federation Account Allocation Committee (FAAC) retreat in Lagos on Monday.

They said the states must devise ways of shoring up their internally generated revenue (IGR) for self-sustenance.

Sanwo-Olu, who was represented by his deputy, Obafemi Hamzat, said each of the states needed to diversify its revenue sources rather than waiting on Federal Government for monthly allocation.

Sanwo-Olu also encouraged the Federal Government to look beyond oil revenue by diversifying into agriculture and other sectors of the economy.

“We must also do anything we can to boost revenue along the line of manufacturing. It is important every state first look for ways to diversify.

We must reduce our dependence on federal allocation,” Sanwo-Olu at the retreat themed ‘Efficient Federation Revenue Allocation as a Nexus for National Economic Diversification’.

Describing the FAAC as one of the most important national institutions due to the critical nature of its re-

ALATbyWema beautifies Murtala Muhammed Airport

W

ema Bank’s ALAT, Africa’s first fully digital bank, went all out to excite travellers flying out of Lagos with the ALAT airport mural.

The ALAT mural sprang out of an understanding of how travelling evokes different emotions in different people – excitement, paranoia, fear, anxiety, to list a few, and the need for them to hold on to the memories that matter to them.

The ALAT brand has positioned itself and been known to be the brand that not only offers Nigerians convenient banking services but that also supports their lifestyle.

According to the chief communications officer, Funmilayo Falola, for ALAT and Wema Bank, marketing is more than just the direct sale of a product or service, it is about creating an experience for the customer.

She stated that infusing conversations and storytelling into advertising and marketing communications is one of the strategies the bank is applying to engage existing customers and gain new ones.

The ALAT airport mural is

one of the many ways the bank expresses its deep-seated interest in the stories and overall lifestyle of its expanding customer base. The mural is dedicated to the many and widely varying Lagos experiences across both the Mainland and the Island.

The new boarding gate look at MM2 gives boarders a walkthrough of iconic places in Lagos for travellers, who are often filled with a mirage of emotions at the point of leaving a place for another. At the ALAT mural, they can identify places they are familiar with in Lagos, maybe have a flash of unforgettable memories they’ve had in those places or remember what those places mean to them and have a pretty background to take one or two selfies before they board to fly out of Lagos.

The ALAT airport mural is also very strategic for people who are new to Lagos. Its showcases the many places in Lagos in a perfect blend of images and text. This is also a way for Wema Bank to help departing visitors visualize many places that they may not have had the opportunity to visit during their stay. www.businessday.ng

sponsibilities, Sanwo-Olu said there was the need for fair and just revenue-sharing formula, for the component states to achieve a meaningful diversification and sustainable growth in IGR. Also to make revenue sharing formula fairer, equitable, and more development-oriented, he suggested the need to attach increased value to population density as a critical factor, in addition to the nominal population figure.

Zainab Ahmed, minister of finance, budget and national planning, said the Federal Government had embarked on policies and measures to improve the fiscal health of the country.

“To the states, these measures include various financing options in form of bailout funds, budget support facility, relaxation of conditions for borrowing and ease of doing

business,” said Ahmed, who was represented by Mahmud Dutse, permanent secretary in the ministry.

Ahmed said the Federal Government had over the years been committed to efficient management of the nation’s resources through fair, just and equitable distribution of revenues accruable to the federation account to the three tiers of government as monthly statutory allocations.

She, however, expressed concern that states have relied largely on federal allocations to finance their budgets, describing it as risky and unsustainable.

She urged the government to take the issue of diversification of sources of revenue at national and sub-national levels seriously, plug leakages and ensure effectiveness in revenue collection.

Fear, anxiety mount over Ishaku’s long stay in Abuja Nathaniel Gbaoron, Jalingo

I

t is no longer news that the Taraba State governor, Darius Dickson Ishaku, has been out of the state for over 54 days.

Governor Ishaku was last seen December 22, 2019, after presenting the 2020 budget to the Taraba State House of Assembly.

It was alleged that the governor was on medical trip abroad shortly after the Christmas and New Year celebrations, but has since returned to Abuja, according to sources from government house who confided in our correspondent.

Theworryofthepeopleiswhat theydescribedasthemovementof Taraba State government house to Abuja, where government functionaries fly to for signing documents using taxpayers’ money.

Ishaku’s sojourn in Abuja amid kidnapping and crises has prompted the state chapter of the All Progressives Congress (APC) to threaten court action against him for leaving the state to its fate.

For staying in Abuja for over54

days, “the Taraba State chapter of theAPCshallexplorelegaloptions against the state governor, Darius Ishaku.

“The party will also explore options to compel the governor to return to the state if the Taraba State House of Assembly fails to comply with necessary constitutional provisions”.

The state chairman of the party, Ibrahim el-Sudi, and the APC governorship candidate in the 2019 elections, Muhammad Yahaya, stated this at a joint press conference in Jalingo, the state capital.

They also accused Governor Ishaku of leaving the state for about two months without transmitting power to his deputy, Haruna Manu.

El-Sudi said: “The governor has failed to do the needful and he has been out of the state for more than 54 days now. The House has also failed to invoke the necessary constitutional provisions.

We, therefore, call on the House to urgently do this in the interest of the state.”

https://www.facebook.com/businessdayng

inister of education, Adamu Adamu, has again warned the leadership of higher institutions to desist from offering admissions to candidates without prior approval of the Joint Admissions and Matriculation Board (JAMB) or outside the Central Admission Processing System (CAPS), saying such act will be treated as corruption.

This is as the Board had warned institutions that admission made outside CAPS would jeopardise the participation of the innocent candidates in the compulsory National Youth Service Corps (NYSC) mobilisation exercise or any job placement.

Adamu tasked all institutions to play according to the rules and ensure that they conduct admission processes only through CAPS. The minister gave the warning in Abuja on Monday while commissioning a new General Services Department Building and two generators at the cost of over N89 million and N141 million, respectively.

The CAPS ensures due process, fairness, discipline and equity in the process, he said, noting, “It is through the automated system that ordinary Nigerians are now hopeful of not being denied their right-

ful place in the admission exercise.

“It is also instructive that CAPS protects the traditional right of Senate or Academic Board of the institutions since CAPS does not allow anyone other than the admission officer and the Vice-Chancellor, Rector or Provost to initiate, propose or recommend any candidate for admission, but it also requires the documentation and tracking of any deviation by the institution from the approved policy on admission.”

He also warned candidates billed to sit for the 2020 Unified Tertiary Matriculation Examination in the next few days to refrain from any form of malpractice, saying the administration detests all forms of corruption including examination malpractice and admission racketing.

The minister expressed sadness over the recent abduction of six JAMB officials along Obajana-Kabba road.

He assured that they would be rescued and the Muhammadu Buhari-led administration was doing everything possible to ensure that the protection of lives and property remained a topmost priority.

The registrar, JAMB, Ishaq Oloyede, thanked the minister for continued support to the board.

Economic potentials of rail take centrestage at 2020 infrastructure dialogue James Kwen, Abuja

E

conomic potentials of the railway system such as in movement of goods and services, investment opportunities and generation of employment will be the crux of the 2020 Infrastructure Dialogue holding in Abuja, Thursday.

Organised by the Infrastructure Summit Group in partnership with the Federal Ministry of Transportation and Infrastructure Concession Regulatory Commission (ICRC), the dialogue is to explore development, investment opportunities, financing and challenges in global infrastructure.

Onuoha Nnachi, managing partner, Infrastructure Summit Group, while briefing journalists ahead of the event in Abuja, said there was nothing that drives the economy like infrastructure, especially economic infrastructure such rail, hence the dialogue would concentrate on: ‘Rail Infrastructure Rebirth’.

The dialogue is aimed at bringing stakeholder, including the regulators and the investors together to chart the way forward in making the economy viable through rail infrastructure, Nnachi said.

According to Nnachi, “If you take a good look at global investments dynamisms you will discover that economic @Businessdayng

infrastructure are made up of purely private investments.

“We in the Infrastructure Summit Group decides to put up these conversations to ask questions on what is holding a particular sector from growing, what is really pushing one sector better from the other and we are taking this conversation as deep as we can.

“For this one that is coming up on the 20th of February, 2020 which is called rail Infrastructure rebirth, it is no longer news that rail infrastructure has kick started in Nigeria, but it is still doubt that what economic potential does it represents.

“What is the economic potential that rail infrastructure rebirth can give us, how will it affect our industrialisation? A country of 200 million people can no longer depend on roads to convey people and goods”.

Also speaking, Emmanuel Onwodi, director, Transportation Infrastructure Department, ICRC, said Nigeria needed to close infrastructural gap, starting with rail infrastructure.

He noted, “The best way to move people or goods is through rail. The quantum of investment that we expect in the rail sector is quite huge and the best way to start a dialogue of this nature is to focus on the rail. So the ICRC is happy to be part of this so that we can sit down and discuss this issue.”

34

Tuesday 18 February 2020

BUSINESS DAY

news Nigeria swims in natural gas but clean fuel eludes industries STEPHEN ONYEKWELU

N

igeria has been described as a natural gas territory with some crude oil reserves but the lack of a marketdriven pricing mechanism, clear legal framework and gas sale agreements have discouraged investments and depressed gas supplies.

Nigeria has around 202 trillion cubic feet (Tcf) of proven gas reserves plus about 600 Tcf unproven gas reserves, according to the Nigerian National Petroleum Corporation (NNPC). Although this secures Nigeria a spot on the list of top 10 countries by gas reserves, the country is not among the top 20 gas producers in the world. This has been attributed to the lack of a comprehensive legal and fiscal regime for natural gas. Nigeria has no legal framework to attract sufficient investment in the gas industry.

Nigeria is one of the world’s largest economies where businesses rely so heavily on diesel-powered generators.

Telecommunications companies need them to run their mobile phone towers across the country. Telecoms giant MTN told local the media in 2015 that it spends N8 billion ($26 million) annually on diesel.

The Manufacturers Association of Nigeria has estimated that its members spent N129 billion in 2016 and N117 billion in 2017 on private diesel-powered generation.

The data also revealed that the manufacturers spent a further N43 billion on private power generation in the first half of 2018. The machines guzzle cash and spew pollution.

This is despite the country’s abundant gas reserves. Current opportunities to utilise gas in Nigeria include gas to reinjection schemes, gas to power schemes, gas to petrochemicals (as feedstock), liquefied natural gas (LNG), liquefied petroleum gas (LPG) and compressed natural gas (CNG).

“Fresh investments into Nigeria’s gas value chain have stalled for reasons such as the non-passage of the Petroleum Industry Bill (PIB), unclear legal framework and gas sales agreements, and the absence of willing-buyer willing-seller enablers,” Chichi Emenike, head, gas ventures at Neconde Energy Limited, told BusinessDay on phone.

Neconde Energy Limited is in a joint venture with the Nigerian Petroleum Development Company (NPDC) on Oil Mining Licence (OML) 42.

•Continues online at www.businessday.ng

Bidders criticise Nigeria’s gas sales plan, as DPR moves to halt flares ISAAC ANYAOGU

A

ll is not well with Niger ia’s ambitious plan to commercialise over 700 MMscf/d of gas at 89 flare sites in the Niger Delta region as investors have raised questions over the accuracy and reliability of data about the quantity of gas available in some flare sites.

At the bidder’s conference organised by the Department of Petroleum Resources (DPR) on Monday in Lagos to provide clarifications and address bidders’ questions, potential investors criticised the programme for substituting concerns for the environment with a drive to raise revenue.

On different occasions the moderator had to assure the audience that the project was not a scam. During a particularly heated exchange, the officials requested that the cameras in the room be turned off.

Some investors who have submitted proposals and have accessed data on potential flare sites said there was no gas in some of the flare sites the government was inviting bids for and some had only a quarter of the gas advertised.

Nigeria is targeting investments of about $5 billion which could potentially add

$1 billion to the country’s GDP from commercialising gas flares in 89 locations around the country through the Nigerian Gas Flare Commercialisation Programme (NGFCP), an initiative of the Federal Ministry of Petroleum Resources.

Under the NGFCP, licences are granted to third parties to access and collect such gas on behalf of the government from the flare points of oil producing companies.

Bidders submitted questions during the course of the programme but those who felt the responses they were getting from Sarki Auwalu, director, DPR, and Musa Zagi, head, gas monitoring and regulation at the agency, were inadequate began to freely express their misgivings.

For example, representatives from Pioneer Technology and Green Energy who were acting on behalf of their principals queried the process, indicating their checks show the data from the government are unreliable.

“Please bring all these questions to the portal, the legal and technical team will review the observations you have made to this agreement then we will share with you what we have inputted into it,” the DPR officials said.

•Continues online at www.businessday.ng www.businessday.ng

L-R: Umar Nnamadi, deputy governor, Jigawa State; Obafemi Hamzat, deputy governor, Lagos State; Mahmoud Isa-Dutse, permanent secretary, Federal Ministry of Finance, and Rabiu Olowo, Lagos commissioner for finance, at the Federal Account Allocation Committee (FAAC) retreat, in Lagos.

There’s a better way to treat private sector, Ghana shows Nigeria LOLADE AKINMURELE

W

hen the Ghanaian government said late last month thatitwasconsidering compensating companies and traders who have lost their goods and other valuables as a result of the closure of the Nigeria-Benin border, it left many Nigerian businesses, particularlythesmallandmediumscale enterprises, wishing their governmentcouldbeasmindful of them.

The compensation is yet to come, but the Ghanaian government has demonstrated genuine interest in creating an enabling environment for its private sector.

The first place to look to see evidence of Ghana’s better commitment to its private sector compared to Nigeria’s is the World Bank’s annual ease of doing business ranking which measures reforms made by government to simplify the lives of the business owners plying their trade on their turfs.

Ghana had a score of 60 points in the 2020 rankings, bettering its much bigger West African neighbour by 4 points, as Nigeria managed 56.9 points. In terms of position, Ghana sits in 118th position of 190 countries with Nigeria much lower at 131.

Despite moving 15 spots to get to its position of 131, it’s Ghana that’s ironically closer to a target set by Nigerian President Muhammadu Buhari to move within top 100 by 2020. With the year of reckoning upon Nigeria, that target looks every bit unrealistic.

“For its size, Ghana is showing an ability to get things done better than Nigeria and is genuinely interested in creating an enabling environment for its private sector to flourish and make positive social impact,” said Timothy Olawale, director-general, Nigerian

Employers Consultative Association (NECA). NECA, which has some 5000 member companies, is an umbrella organisation of employers in the organised Private Sector.

Ghana is getting many things right and it’s not just it, but a host of smaller African nations that are gradually gaining grounds on Nigeria while the country continues to bask in the euphoria of being big and mighty, according to Olawale.

“Nigeria needs to cut out its larger-than-life approach to the economy and realise that until the private sector is thriving, job creation, poverty reduction and sustainable economic growth will not happen,” Olawale told BusinessDay in his Ikeja, Lagos office.

Policy inconsistencies, lack of infrastructure from power to roads and constraints to trade – which has taken a turn for worse with the near six-month abrupt land border closure – are some of the well-known challenges to doing business in Nigeria.

Only in seven countries globally is it harder to get a property registered than in Nigeria, according to World Bank data. Trading across borders and getting electricity are also high ranking challenges for businesses.

Nigeria somewhat shines in the area of getting credit, as that is where it has its highest rank of 15. Some small businesses, however, have their reservations about whether getting credit is easy in Nigeria. A local monthly survey done by the Central Bank has ranked lack of access to credit, along with lack of electricity and other infrastructure, as some of the biggest constraints to businesses since it started compiling data.

Ghana is not without its challenges but it has managed to get one of the most important hindrances to business,

https://www.facebook.com/businessdayng

unstable electricity, out of the way – something Nigeria has failed to resolve despite being much bigger and with more resources.

Ghana moved from a shortage of electricity as recently as 2014 to being burdened with too much electricity five years later. A good problem, say many Ghanaian businesses who now enjoy 24-hour power supply, even though the government is contractually obliged to spend money for excess capacity that is not being consumed.

Ghana has an installed capacity of 5,083 megawatts, according to the Energy Commission of Ghana. That’s almost double peak demand of 2,700MW. In Nigeria, official data suggest there’s an installed capacity of 7,000MW but businesses and households consumed an average of 3,713MW of electricity in 2019, according to CBN data.

The International Monetary Fund estimates the annual economic loss of Nigeria’s struggle to keep the lights on at about $29 billion (N8.9 trillion).

Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), estimates the economy loses even more than that at N10 trillion.

“The obstacles to doing business is why the likes of Ghana are able to attract more investment than Nigeria, which is an anomaly given Nigeria’s sheer size,” Yusuf said.

“Resolving the multifaceted power problem in Nigeria is one of the ways government can turn the page in ties with the private sector.”

Another area where the Ghanaian government has demonstrated its willingness to create an enabling environment for the private sector is in its investment in human capital and education.

That investment has meant @Businessdayng

Ghana’s adult literacy rate has shot up from as low as 57 percent in 2001 to 79 percent in 2018, growing at an average of 17 percent per annum.

Nigeria, on the other hand, has an adult literacy rate of 62 percent, 17 percentage points behind Ghana.

Higher literacy rate increases the amount of goods and services that an employee is able to produce and that adds to the overall productivity of the company where he or she is employed.

Higher literacy rate also helps businesses spend less on training staff, thereby keeping costs lower.

The two outcomes in literacy rate experienced by both countries is a function of their spending. In the last 40 years, government funding in the education sector in Nigeria has varied between 6 percent and 9 percent of the national budget, according to data from the budget office.

This is lower than most other African countries which range between 11 percent and 30 percent. In Ghana, the government spends 20 percent of its budget on education.

Ghana’s economic policies have yielded robust growth for the economy of 27 million people. The economy grew 7 percent in 2019. Nigeria, on the other hand, probably grew 2.1 percent in 2019, ahead of the February 24 release date for fourth quarter GDP. The Nigerian economy has grown below population growth rate since 2016, making the task of curbing rising poverty even more difficult.

“The country surely needs to re-evaluate its ties with the private sector if it must achieve its economic and social goals,” one South Africabased economist said. “What I see is a lack of trust in the private sector by the government and the longer that stays, the more disastrous for the economy and the people.”

Tuesday 18 February 2020

BUSINESS DAY

35

news Prices of phones, computer parts, accessories...

L-R: Grace Udu, public relations officer, Passport Office, Ikoyi; Mac Atom, group head, enterprise business resources, Access Bank plc; Manir Yari, deputy comptroller of immigration and passport control officer, Passport Office, Ikoyi; Adaeze Okonkwo, head, travels and protocol, Access Bank plc, and Yahaya Momodu, assistant comptroller, Passport Office, Ikoyi, at the presentation of equipment donated by Access Bank to the Nigerian Immigration Service, Ikoyi Office, Lagos.

Continued from page 1

have increased,” he told

FMCGs’ slump raises red flag 5 months...

Continued from page 1

and Ghana and other big

countries, but warned that any government that was not effective would fail within the AfCFTA environment.

The struggles of Unilever Nigeria, one of the leading consumer firms in the country, are well noted. Revenue of the former Lever Brothers slumped 58 percent to N9.13 billion in the fourth quarter of 2019, from N21.7 billion reported in the corresponding period of 2018. Other metrics did not fare any better. There was a loss after tax of N4.76bn and other income recorded a huge decline to N65 million, from N2 billion reported a year earlier.

“This is largely a reflection of the weak demand conditions,” Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), said.

“Sluggish economic growth impacts negatively on demand for goods and services,” he said.

If you think that Unilever is the only consumer firm that is neck deep in the slump, you are wrong.

The revenue of McNichols plc dropped 17 percent to N679.13 million from N818.56

million in the full year of 2019.

Profit of the sugar maker followed similar trajectory, crashing 55 percent to N18.58 million from N40.89 million, the firm’s financials showed.

Analysis of Nigerian Breweries’ 2019 full-year results showed that revenue declined by a marginal 0.4 percent to N323 billion, from the N324 billion realised in the previous year.

The decline in revenue was due to the country’s challenging environment which also affected it in 2018, according to the company’s financial report.

“The results of the company were adversely impacted by the increased excise duty rates which came into effect during the year coupled with a challenging operating environment,” Nigeria’s biggest brewer said.

But the company’s profit before tax fell to N23 billion from N29 billion. Also, profit for the year fell by 16 percent to N16 billion, from N19 billion.

In spite of the border closure, the 2019 full-year revenues of palm oil makers Okomu and Presco dropped 3 percent and 7 percent, respectively, while profits fell 33 percent and 8 percent.

NSA Monguno blames national security...

Continued from page 1

ten documents bearing

President Buhari’s signature.

Monguno’s rebuke comes amid increasing public outrage at the failure of Buhari’s administration to solve the country’s security challenges and calls for the sack of the service chiefs.

The spat between the highlevel office-holders shows signs of cracks within the president’s core team, political analysts say.

“You are reminded that the Chief of Staff to the President is not a presiding head of security, neither is he sworn to an oath of defending the country,” Monguno said in the letter.

Monguno accused Buhari’s chief of staff of disregarding protocols and hindering the flow of communica-

tion between the president and the security advisers.

Kyari was also said to be overstepping the boundaries of his constitutional duties, which Monguno said is limited to conveying the president’s written directives as far as security is concerned.

“As such, unprofessional practices such as presiding over meetings with service chiefs and heads of security organisations as well as ambassadors and high commissioners to the exclusion of the NSA and/or supervising ministers are a violation of the Constitution and directly undermine the authority of Mr President,” said Monguno.

According to the national securityadviser,theactsandcontinuousmeddlesomenessbythe www.businessday.ng

Nigerian consumers are hard hit by a slow growing economy and elevated inflation which has dug a deep hole into their wallets. Spending power is low as poverty and unemployment spread among the majority of the population. Africa’s most populous country is now the world’s poverty capital with 87 million people living in extreme poverty, said the Brookings Institute’s 2018 report.

The latest unemployment rate is 23.1 percent, according to the National Bureau of Statistics (NBS).

United Capital’s recent Consumer Goods Industry Report said while Nigeria’s market size was its biggest case for consumer companies to invest in the nation, weak consumer disposable income and high poverty rates had made the case for growth less compelling.

“Additionally, the country’s tough operating environment, decrepit infrastructures, porous borders, double-digit inflation and sluggish economic recovery, have further compounded sector players’ woes as they struggle to breakeven,” the report stated.

PZ’s 2019 half-year revenue dropped by 3 percent but the personal care company made a loss of N1.58 billion.

Honeywell might have made

a revenue gain of 6 percent in the third quarter of 2019, but it made a loss of N925 million.

Nigeria’s consumer firms, which are mainly manufacturers, struggle with poor infrastructure, high energy cost, regressive port system and multiple taxation, said the Manufacturers Association of Nigeria (MAN).

Capacity utilisation in the manufacturing sector slowed to 54.1 percent in the first half of 2019, from 54.50 percent recorded in same half of 2018, said MAN. Average number of power outages in the first half of 2019 increased to five times dally from the four times daily recorded in the second half of 2018.

Many unquoted firms are also struggling. Ede Dafinone, chairman of the MAN Export Group, told BusinessDay recently that many exporters had stopped exporting to several parts of Africa, which would eventually affect their margins in the end. He also said there was no longer any support for Nigerian exporters.

“There were issues of operating costs, forex policies, energy costs, difficult tax environment and challenges at ports. It is often not feasible to pass on additional costs to consumers because of high demand elasticity issues,” Yusuf of the LCCI said.

chief of staff have not only ruptured the country’s security and defence efforts but have slowed down any meaningful gain the president has sought to achieve.

The security of the Federal Republic of Nigeria requires concerted and centralised effort taking into account internal, external and diplomatic factors, he said.

Monguno warned Kyari to desist from the “illegal acts that serve nothing but the continuous undermining of our national security framework”.

“Any breach of this directive will attract displeasure of Mr President,” Monguno said.

In a response to Monguno’s letter, the People’s Democratic Party (PDP) on Monday said the NSA’s revelation that strange persons have been presiding over critical affairs of governance further validated its position

that President Buhari has abdicated the responsibilities of his office.

Kola Ologbondiyan, PDP national publicity secretary, said in a statement that security is the most important element of governance, followed by the welfare of citizens and since President Buhari has relinquished these statutory responsibilities, he has no other reason to remain in office.

“The PDP describes the Gen. Monguno revelation as a national tragedy which showcases the fact that Mr. President Buhari has become so irredeemably overwhelmed to the extent that the responsibilities of his office, including presiding over very sensitive security matters, have now been taken over by his Chief of Staff, Mallam Abba Kyari, who functions as a de facto president,” Ologbondyan said.

https://www.facebook.com/businessdayng

BusinessDay on condition of anonymity.

Chinese technology companies in Nigeria are also experiencing their share of service disruptions.

Joseph Adeola, public relations manager at OPPO Nigeria, told BusinessDay that the travel ban has affected operations in the country.

OPPO Nigeria is the West African regional arm of the Chinese global smartphone and technology manufacturer OPPO. First, the Coronavirus recently renamed Covid-19 by the World Health Organisation (WHO) started about the time of the Chinese New Year celebration. A number of the company’s staff travelled to mark the Chinese New Year.

Due to the outbreak and the quarantine campaign declared by the Chinese government, many of these staff are unable to resume work. Adeola said as a result of the ban, they are unable to import any new products from China for the time being.

OPPO, along with other global manufacturers, has also been forced to pull out of the Mobile World Conference (MWC) slated for February in Barcelona. The programme was cancelled by the organisers, GSMA, on Thursday.

Over 20,000 participants from China were expected to attend the programme which is a platform that big technology companies use to launch their latest innovations. Adeola said OPPO was preparing to launch one of its latest inventions.

“With due regard to the safe and healthy environment in Barcelona and the host country today, the GSMA has cancelled MWC Barcelona 2020 because the global concern regarding the Coronavirus outbreak, travel concern and other circumstances make it impossible for the GSMA to hold the event,” GSMA said in a statement.

The WHO defines Coronavirus as a large family of viruses that cause illness ranging from the common cold to more severe diseases such as (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV). A novel coronavirus (nCoV) is a new strain that has not been previously identified in humans.

Since it broke out in the Wuhan state of China, 64,472 people have been affected while 1,384 have lost their lives. 7,182 people have also been successfully treated and declared free from the disease.

Egypt on Friday, February 14 confirmed a Coronavirus case, the first and only African country to have done so.

The affected person was a foreigner who was immediately put into isolation. Nigeria and the rest of the continent @Businessdayng

are yet to report any case of the virus.

However, following its outbreak and spread, the Chinese embassy said on February 4 said it had stopped issuing visas to Nigerians until the virus is contained.

Ambassador Zhou Pingjian also advised suspension of travelling to China.

Additionally, China’s effort at containing the spread of the virus means that factories in China as well as logistics and shipment suppliers have shut down.

“This means that African tech businesses that rely on imported resources from China will be mostly affected,” said Chuba Ezekwesili, cofounder and partner at Future Africa, a company that is democratising access to foreign investments in start-ups on the continent. “Investment deals into tech companies in Africa are likely to get affected as Chinese businesses turn inwards to tackle the fall-out of the virus.”

The second effect, for Ezekwesili, is that the general rise in prices of commodities will affect everyone including the tech space. Infrastructure projects are also likely to halt during this period, which will indirectly affect African tech businesses.

Beyond Africa, the Coronavirus-induced ban which also affects other continents has seen big tech companies like Facebook informing their customers that there will be difficulty in procuring tech products such as the Oculus Quest, as the Coronavirus would affect production of the virtual reality (VR) headset.

Tayo Fasunon, co-founder and director of Quadron Studios, told BusinessDay that the Oculus Quest is the most preferred VR headset in Nigeria. As of 1 January, the company had back-ordered the Quest till February.

“So this might mean that even if we got a new client right now, their headsets might not arrive anytime soon, which would in turn hamper our ability to deliver value to them,” Fasonun said.

The Oculus Quest released in 2019 is already out of stock in some regions, according to UploadVR, a VR news website.

Vinsight, a start-up that provides artificial intelligence-based glasses that help the visually impaired read and walk, told BusinessDay that it was also facing challenges with sourcing its hardware in China.

“As it is, we have to wait for the end of the virus before we get our supplies,” said a spokesperson for the start-up.

In the meantime, the first antiviral drug was given the green light to fight COVID-19 on Monday. The drug was domestically developed in China by Zheijiang Hisun Pharma Company.

36

Tuesday 18 February 2020

BUSINESS DAY

news

AfDB commits $500m to revamp special agro-processing zones across Nigeria Cynthia Egboboh, Abuja

T

he African Development Bank (AfDB) has announced its commitment of $500 million to revamp the special agro-processing zones (SAPZs) across Nigeria.

SAPZs, a framework aimed at deepening the Nigeria agricultural production, also seek to ensure that the locations of the processing facilities are within the areas of agricultural resources across the country.

Ebrima Faal, senior director, AfDB, speaking at the SAPZ inception workshop in Abuja, said the fund was aimed at strengthening both the agricultural and industrial space of the Nigeria economy.

He said, “This is a project that the President of AfDB Adesina Akinwumi has been working on while he was the minister of agriculture, and we are focusing on Nigeria being the biggest economy in the African region.

“On this project, we are

committing from our resources a total of $500 million and we hope to leverage on funds from other development partners”.

Oyebanji Oyelaran-Oyeyinka, senior special adviser on industrialisation, AfDB, said the project present an end-to-end solution to the challenges in the Nigeria agriculture sector.

He further said SAPZ would leverage on technology to enhance productivity, reduce post-harvest losses as well reduce the cost of production in the sector.

“The aim of this project is to reduce food importation into the country, boost revenue from agro-export and create wealth for rural farming communities,” Oyeyinka said.

Speaking further, Oyeyinka stressed that the implementation of the project would be on brown field areas - where agro-processing activities are already being carried out, adding that the produce of focus would include commodities that could generate

foreign exchange.

“Our approach for this project is to revitalise the abandoned federal and state government assets, attract private sector as well as state government investment,” Oyeyinka said.

Fidel Odey, representing the minister of finance, budget and national planning, said the importance of the agro-processing zones cannot be overemphasised as agro-food industry played a fundamental role in Nigeria food production and revenue drive.

“This project is of great importance to us as it is aimed at improving the entire agricultural value chain and blocks the various leakages in the market.

“This project also has the potential of creating jobs and deepening the economic development agenda of the Federal Government. But its actualisation is dependent on the resilience of all stakeholders to ensure effective implementation,” Odey said.

DETAIL’s 10th Business Series examines Finance Act, effect on Nigerian businesses ENDURANCE OKAFOR

I

n a bid to assess the Finance Act 2019 and its impact on business within different sectors, experts in the legal and tax industry gathered at the 10th DETAIL Business Series in Lagos to provide insights on the new law.

Borne out of the desire to provide a robust platform to engage industry experts on topical issues, DETAIL said it identified the need to discuss the Finance Act and its implication for businesses in different sectors of the economy to educate Nigerian businesses on how to tap from the opportunities presented by the Act. Giving a keynote address at the business series, Taiwo Oyedele, the Fiscal Policy Partner and West Africa Tax Leader, PwC, noted that the Finance Act was the first of its kind in the last 20 years, and stated, “The Finance Act has over 100 amendments and amends 7

different tax laws.”

His presentation underlined the key changes introduced by the Finance Act and encouraged businesses to manage their tax affairs by seeking to understand the Finance Act, assessing the impact on their operations, implement the areas relevant to their businesses, and lastly to review and revalidate their tax positions.

Examining the Finance Act from a legal perspective, Chukwudi Ofili, associate partner, DETAIL, and Anthony Ezeamama, senior associate, DETAIL, emphasised the changes made by the Finance Act to the Companies Income Tax Act, Personal Income Tax Act, Value Added Tax Act, Customs, Excise Tariff, Etc. (Consolidation) Act, and the Stamp Duties Act. His presentation on an “Overview of the Finance Act” covered the effect of the Finance Act on different industries in the economy including the Energy and Utilities Sector; Digital and Electronic Services, Real Estate

Investment Companies, and Banking and Capital Markets.

The event, which also featured a panel session on “Thriving as a business in 2020 and beyond” had Abimbola Ogundare, director, Transaction, Advisory Services, EY. She lauded the changes of the Finance Act for MSMEs as an improvement considering GDP contribution of MSMEs to the Nigerian economy. She also stated that “in consumer markets, little profit margins are significant and the exemptions granted by the Act will make the consumer market a winner”.

During the panel session, Victor Ndubauka, deputy managing director, Afrinvest West Africa Limited, noted that the changes made by the Finance Act were overwhelmingly positive but emphasised that the variables affecting investments are more macro-based. He stated that other “challenges in the country, such as issues with infrastructure and power are crucial to investments.”

Lafarge ranks fourth in Forbes Africa top 50 CSR companies SEYI JOHN SALAU

L

afarge Africa has restated its commitment to building for growth across the African continent, especially in the built environment as Forbes Africa ranked the cement maker the fourth-best in Corporate Social Responsibility (CSR) and Sustainability Company in Nigeria for the year 2019.

The Forbes Africa awards ranking is a culmination of impact assessments of over 910 organisations operating in Nigeria over the past 13 years.

The criteria for the selection include the company’s participation and its recognition in national and international investments in CSR

and Sustainability projects in the period under review. The assessment also focused on the work of the organisation in line with the United Nations Sustainable Development Goals, the number of stakeholders impacted by the programmes.

Folashade Ambrose-Medebem, communications, public affairs and sustainable development director for Lafarge Africa, said the company had been encouraged to do more. “Lafarge has become a global leader in Corporate Social Responsibility (CSR) and Sustainability and we are happy that our impacts are being recognized. Our CSR and Sustainability programme is one major part of our business. Our empowerment programme cuts across four www.businessday.ng

cardinal areas of social intervention which include education, health, infrastructure development and other forms of support,” AmbroseMedebem said.

According to Ambrose-Medebem, one of Lafarge Africa’s flagship CSR program is the National Literacy Competition, which is in its sixth edition. “We introduced the Lafarge Africa National Literacy Competition (LANLC) in 2014 to engage public primary school pupils across the country who display and improve their literacy skills by competing in literacy-related activities. Since its inception, the competition has impacted more than 700,000 pupils in 1,665 schools across 544 local government areas (LGAs),” she stated. https://www.facebook.com/businessdayng

@Businessdayng

Tuesday 18 February 2020

BUSINESS DAY

37

news

OML 98: Pan Ocean, other stakeholders’ Through lockdowns, sacrifices, China contains equity will be protected – DPR 99% of COVID-19 cases within borders

T

he equity and economic interests of all stakeholders will be protected as Pan Ocean Oil Corporation (Nigeria) Limited hands over OML 98 to the Nigerian Petroleum Development Company (NPDC) Limited.

This disclosure was made last week at a meeting involving representatives of the Nigerian National Petroleum Corporation (NNPC), the Department of Petroleum Resources (DPR), NPDC and Pan Ocean, as part of the asset handover process.

The DPR in March 2019 revoked Pan Ocean’s OML 98 licence over issues bothering on royalty payments. Over the last eight months, Pan Ocean has spared no effort at ensuing a smooth transfer of the asset.

Assuring stakeholders that the midstream assets on OML 98 and those associated with the Mining Lease will continue to deliver value to them, Sarki Auwalu, director, DPR, said outstanding operational costs incurred by the NNPC/Pan Ocean JV would receive due attention after verification.

He directed the NNPC/Pan Ocean JV to sort out members of staff associated with the asset while pointing out that legacy debt on the asset would be settled amicably, exploring available options, without recourse to legal steps.

According to Auwalu, “The equity and economic interests of all investors are recognised.

We will ensure that no one is short-changed. Everyone will recoup their investments on all the assets and no investor will be discouraged.

“Pan Ocean must work together with the new owner of OML 98, especially on the midstream assets. OML 98 cannot be operated efficiently and profitably without the midstream assets,” he said, while promising that a letter would be delivered to Pan Ocean in the next few days to assure the company about the security of its assets and equity.

While reassuring the regulators of Pan Ocean’s commitment to a smooth transition, Olajide Ishola, chief operating officer, Pan Ocean, said, “Since last year when the revocation of the asset came into effect, a lot of things were left in limbo.

This meeting set the tone for the handover and future of the asset. In the months ahead, we will continue to work closely with regulators to ensure that there is no significant disruption in production as a result of change in ownership.”

Pan Ocean has engaged in economic activity on OML 98 since 1973. Within the period, the company created jobs, contributed to the development of critical national oil and gas assets, and improved infrastructure in host communities.

The meeting was attended

by DPR management team led by the director, Sarki Auwalu, NPDC team led by Ferdinand Bariwei, and representatives of Pan Ocean, Jide Ishola, Olayiwola Sufianu, Oluseyi Oladapo, Veronica Folorunsho, Olu Daramola, and Kehinde Ogunwumiju. Selected energy, oil and gas editors were also at the meeting.

… 10,844 cured, 1,770 deaths recorded, 70,548 confirmed cases Innocent Odoh, Abuja

T

he Chinese government says it has contained more than 99 percent of the confirmed cases of the Coronavirus (COVID-19) within its borders through enormous self-imposed sacrifices and lockdown of cities, which has so far prevented a major global outbreak.

The Embassy of China in Abuja in its Newsletter on Monday said since the outbreak of the virus, China has been taking decisive and unprecedented measures, including locking down cities, to protect public health both domestically and globally.

According to the Newsletter, the National Health Commission of China as of Sunday, February 16, received 70,548 reports of confirmed cases on the Chinese

mainland, including 1,770 deaths and 10,844 patients cured and discharged from hospital. There still remained 7,264 suspected cases.

In recognition of these immense efforts by China to tame the virus, Fotis Provatas, president of the Chamber of Greek-Chinese Economic Cooperation, organised an event where hundreds of Greeks and Chinese people living in Greece, held a gathering and walked around the neighbourhood, holding Chinese red lanterns to express solidarity with China in the fight against the novel coronavirus (COVID-19) pneumonia outbreak.

“The world should show gratitude to the Chinese people for their courage and sacrifices in battling the disease decisively and in preventing its spread to other countries,” Provatas said.

As of Saturday, when nearly 70,000 people in dozens of countries have tested positive for infection, the number of confirmed

cases of infection outside China accounts for less than 1 percent of the total, the embassy said.

“We appreciate and we admire all this gigantic effort, their determination and discipline, because they know that this is the only way to help themselves and the world from the further spread of the epidemic,” Provatas said.

Mario Cavolo, an Italian American writer living in China’s north-eastern province of Liaoning, said, “If you think about the responsibility of a dutiful citizen, 1.4 billion people in China have to stay at home, doing what should be done -- not spreading the virus. It’s amazing.”

While implementing the strictest measures to prevent and control the disease across the country, China is also cooperating with the international community to prepare other countries for a potential outbreak and prevent the epidemic from growing, the Newsletter noted.

Also speaking, director-den-

eral, Tedros Adhanom Ghebreyesus of the World Health Organisation earlier this month, said, “If it weren’t for China’s efforts, the number of cases outside China would have been very much higher.”

Since the outbreak of the epidemic in Wuhan city, the capital of the Hubei province, China has implemented the most comprehensive and rigorous measures to prevent and control the spread of the virus.

Wuhan city, an important transportation hub in central China was locked down since January 23, with all public transportation suspended. Several other cities in Hubei Province have followed suit.

To improve medical treatment capacity, tens of thousands of workers were mobilised to build two makeshift hospitals in Wuhan with a total of 2,600 beds for patients in serious condition.

The construction of each hospital took only 10 days.

Fake CBN governor bags 3 years imprisonment for N4.5m fraud Innocent Odoh, Abuja

J

ustice Agatha Anulika Okeke of the FederalHigh Court,Uyo, Akwa Ibom State, at the weekend,convictedandsentencedone Nwalozie Onyebuchi Julius, alias Dr. Godwin Emefiele, the governor of Central Bank of Nigeria (CBN), to three years imprisonment without an option of fine.

Accordingtoastatementissued onMondaybyTonyOrilade,acting head of media and publicity of the Economic and Financial Crimes Commission (EFCC), the convict wasarraignedbytheUyoZonalOffice of the EFCC on a count charge bothering on impersonation and obtaining by false pretence to the tune of N4.5 million.

Nwalozie’s journey to jail began on December 6, 2019, when he was arrested by the operatives of Uyo Zonal Office of the Commission, based on reliable intelligence on the activities of internet fraudsters, operating in Owerri, the Imo State capital.

Upon arrest, the convict confessed to the crime and a forensic analysis of the HP laptop recovered from him further implicated him as several incriminating documents of false pretence and fraudulent extortions were printed from his laptop, which he also admitted, emanated from him.

Investigation also revealed that the convict’s specialty was Business Email Compromise BEC and his modus operandi

involved searching for email addresses via Google search and sending convincing emails to his victims. He also confessed to have used a particular email address, (emefielegodwin586@ yahoo.com) purportedly belonging to the CBN governor, Godwin Emefiele,indefraudingoneOmar Deep, who thought he was actually dealing with the real CBN governor.

The one-count charge against the convict read: “That you, Nwalozie Onyebuchi Julius (alias Dr. Godwin Emefiele, the Governor of Central Bank of Nigeria) on or about 26th day of August, 2019 inNigeriawithinthejurisdictionof thishonourablecourt,fraudulently impersonated one Dr. Godwin Emefiele, the governor of Central Bank of Nigeria by using email address: emefielegodwin586@ yahoo.com, with intent to obtain money, property or any advantage from one Omar Deep and other unsuspecting persons, the pretence you knew to be false and thereby committed an offence contrary to Section 22 (2) (b) (ii) of the Cybercrime (Provision, Prevention Etc) Act, 2015 and punishable under Section 22 (2) (b) (iv) of the same Act.” He pleaded guilty to the charge, prompting Joshua Abolarin, the prosecuting counsel to pray the court to review the facts of the case through a prosecution witness,HaliruAbubakarBagudo, an operative of the EFCC. www.businessday.ng

R-L: Vice President Yemi Osinbajo; Shamsuddeen Usman, CEO, Susman and Associates; Temitope Popoola, CEO, Renaissance Capital, and others, at a visit by Renaissance Capital and group of international institutional investors to the Vice President in Abuja.

Buhari reiterates commitment to address unemployment, tasks NUC on practical solutions to Nigeria’s challenges Solomon Attah, Lafia

P

resident Muhammadu Buhari has again assured graduates of Nigeria’s tertiary institutions that his administration will continue to work relentlessly to address the global phenomenon of unemployment in Nigeria.

President Buhari, who spoke at the 2nd, 3rd, 4th and 5th combined convocatio of the Federal University of Lafia, last Saturday, tasked the National Universities Commission (NUC) to be on the guard to find practical solutions to the country’s many challenges through research works.

The president, represented by the deputy executive secretary, NUC, Sulieman Raman Yusuf, said the huge investment on higher education in Nigeria underscored government

position to provide access to education regardless of gender, age, background or ethnic nationality.

“I assured you that the present administration is determined to work relentlessly to change the style through position policies interventions,” he said.

President Buhari, who reiterated his quest to transform and sustain the nation’s educational system as laid down by the country’s founding fathers, called on all patriotic Nigerians to continue to drive the country through global relevance that would lead Africa to becoming the digital country.

“Today, Nigeria as a nation faces mirage of problems and challenges, which are surmountable. I called on Nigeria Universities to collaborate with government as partners in working towards nation building and

https://www.facebook.com/businessdayng

national development,” he said.

The president said, “In order to continue to be relevant, National Universities Commission should as a matter of urgency breast up to the responsibility of providing the intellectual vanguard for finding practical solutions to the country’s many challenges, ranging from insecurity, corruption and unemployment, which are the focus of this government.”

While calling on management, staff and students to remain committed to the core mandate of their institutions, and urged the graduates to take advantage of government economic policy, which are design to transform you into wealth and employer of labour, to shun the oath of perpetual seekers of white collar jobs.

Governor Abdullahi Sule, in a remark, urged the graduates to fly the banner of the university @Businessdayng

with honour and integrity, saying, “You must go and build your communities, the nation and humanity as a whole; and not become agents of destruction under whatever guise.

“I have no doubt that you all have passed through this great institution, having been mentored in learning and character, and you are expected to give back in equal measure and more. Despite all the challenges, society does not expect less from you”.

Aside the construction of a female hostel, construction of 1.2km road from the multidisciplinary research laboratory to the hostel area, state government would offer automatic employment and provision of scholarship award to five first-Class students of the university, including a physically challenged student from Kogi State, he said.

38

Tuesday 18 February 2020

BUSINESS DAY

news

Hope rises as NNPC, JV partners disburse $360m for Ogoni clean-up Sokoto to spend N65.7bn loan on infrastructure HARRISON EDEH, ABUJA

T

he Nigerian National Petroleum Corporation (NNPC) and its Joint Venture partners of Shell Petroleum Development Company (SPDC), Total Exploration and Production of Nigeria (TEPNG) and Nigerian Agip Oil Company (NAOC), have disbursed $360 million towards the Ogoniland clean-up project, as recommended by the United Nations Environment Programme (UNEP).

Group managing director of the NNPC, Mele Kyari, made this disclosure during a presentation to the House of Representatives Committee on Environment and Habitat at the National Assembly complex in Abuja on Monday, a release by the corporation’s

group general manager, Group Public Affairs Division, Samson Makoji, has said.

The GMD, represented by the NNPC chief operating officer, Upstream, Roland Ewubare, stated that funding was not the challenge of the Ogoniland clean-up project, stressing that the NNPC and its JV partners were up to date in their financial remittance to the clean-up project fund based on the UNEP framework.

“Ogoni clean-up is a massive issue and NNPC and its JV partners are ready to fund the project as prescribed by the UNEP Report. We have so far disbursed $360million out of the $900million recommended. The disbursement was based on the standards set which required that we release funds based on the implementation parameters of

the clean-up exercise,” Kyari said.

He noted that though NNPC and its JV partners were not responsible for the implementation of the clean-up, all stakeholders must come together to ensure that the project was carried out successfully.

The implementation of the clean-up was very important as the exercise would enable the restoration of land, water and the economic well-being of the people in the area, he noted.

He decried the misinformation about the Ogoniland cleanup and urged the Hydrocarbon Pollution Remediation Project (HYPREP) to ensure that the narrative was corrected for the effective implementation of the project.

A member of the House Committee who was a former

minister of environment, Aishatu Jibrin Dukku, applauded the NNPC and its JV partners for their commitment to the Ogoni cleanup project and urged all other stakeholders to join hands with HYPREP to ensure the successful clean-up of the area.

In his remarks, Johnson Oghuma, chairman, House of Representatives Committee on Environment and Habitat, expressed the commitment of the current leadership to ensure full implementation of the UNEP report on Ogoniland for the common good of the people of the area.

It would be recalled that the UNEP report on Ogoniland clean-up had estimated an initial clean-up costs of over $1 billion for the first five years of a 25 to 30-year process.

projects, investments in agric, health, others FIKAYO OWOEYE

T

he Sokoto State government has announced plans to utilise the loan of N65.7 billion it will raise to embark on massive infrastructural projects and investment in critical projects in agriculture, health, housing, urban renewal projects, construction of roads and bridges as well as education.

Unveiling the economic development plan at the management retreat of Sokoto State Ministry of Finance held at the weekend in Lagos, Abdussamad Dasuki, commissioner for finance, said this would be achieved through a multi-faceted approach.

Dasuki said the state government was embarking on the massive infrastructure development to make Sokoto an investment destination.

The commissioner said the proposed N65.7 billion loan earmarked for critical projects in agriculture, health, housing, water resources and education would fast-track the economic transformation of the state and position Sokoto as a leading economy in Nigeria and Africa.

Noting that central to the objectives of the Governor

Aminu Tambuwal administration are human capital development, remodelling of the state into an investment destination, and establishment of enduring socio-economic infrastructure and institutions, the commissioner stated that the efforts of the government were already yielding fruits.

“Our efforts to transform the economy by making the environment private sector driven are already yielding many fruits among which include the attraction of the biggest fertiliser blending company in the world to Sokoto and the biggest rice mill

by Alhaji Aliko Dangote,” Dasuki said.

“In addition, we are advancing the ease of doing business in the state by making it easier for established business to scale and enabling new ones to spring up,” he said.

According to him, this would in turn translate to empowering families in the state and the effects would trickle down to everyone.

“We have witnessed rapid growth of business enterprises as more organisations now have the capacity to meet more market needs, resulting in increased revenue and a more prosperous economy,” he said.

‘Obaseki deserves second term for good governance’

E L-R: Clem Ugorji, director, public affairs and communications, West Africa, Coca-Cola Nigeria; Folashade Jaji, SSG to Lagos State government; Adejoke Orelope-Adefulire, SSA to the president on SDGs; Akin Abayomi, commissioner for health, Lagos State, and Adebajo Madewa, medical director, Alimosho General Hospital, at the handing over ceremony of Biomedical Equipment and consumables donated by Coca–Cola and MedShare to Alimosho General Hospital, Igando, Lagos. Pic by Pius Okeosisi

‘Save Edo, we don’t want to go the way of Bayelsa, Zamfara, others’

6th Naturallia conference set to hold September

... as more party chieftains call for Oshiomhole’s sack

N

A

s t h e A l l P ro g re s sives Congress (APC) continues to rue the loss of the Bayelsa State g overnorship election to the People’s Democratic Party (PDP), party chieftains and leaders in Edo State have called on the Presidency and the party’s National Executive Council (NEC) to rein in the embattled national chairman of the APC, Adams Oshiomhole, to avert a repeat of the sad development in the state.

The pa r t y ch i e ftai ns, who spoke in separate interviews in Benin City, said the bulk of the blame should fall on the feet of Oshiomhole whose recklessness and choice of personal preference over established conventions and regulations continue to br ing w oes upon the party.

Calling for the sack of Oshiomhole by the APC leadership to forestall a reoccurrence of the avoidable loss, the worried party members specifically

warned that the APC may l o s e Ed o, l i ke Z a m f a ra, Rivers and Bayelsa if nothing was urgently done to check the excesses of the national chairman.

According to Austin Eweka, an APC chieftain in Edo South, “The damage done by Comrade Oshiomhole is incalculable.

As in Bayelsa, so it was in Taraba, in Zamfara and in Rivers because top officials of the party subverted established norms for personal interest.”

He said Oshiomhole was manipulating the party’s NWC to do the party grave disservice.

Another par ty leader in Edo Central, Theo Okoh, noted, “It is quite saddening that our party, the APC lost Bayelsa State to the PDP. But if t h e t r u t h mu s t b e t o l d , Comrade Adams Oshiomhole as the National Chairman of the party is the architect of this present predicament and must be held accountable for this failure.”

BUNMI BAILEY aturallia 2020, the main international trilingual (French, English and Spanish) business forum of various sectors including Small and Medium Enterprises (SMEs) around natural resources is set to take place on September 1-3, 2020.

The event taking place in the Abitibi region, North West of the province of Quebec, Canada will have in attendance companies from four key sectors of the Canadian economy including the valueadded wood processing, mining suppliers of related goods and services, intelligent and renewable energies, as well as advanced technologies related to the first three sectors.

It will also assemble the finest companies and SMEs of the country and from overseas.

“Globalisation has greatly accurate the markets and SMEs must get together and promote local, national and international exchanges between businesses operating in the key natural resource sectors. Competition and lack of resources highlights the need for more collaboration and business alliances generate more re-

www.businessday.ng

sources to improve SMEs and leading industries,” Alain Thivierge, Naturallia director, said.

“The conference will connect businesses with the world’s most efficient suppliers, improve or complete their range of products, services and gain access to new distribution networks and new markets,” Thivierge said.

There will also be industrial visits, round tables and social activities. Businesses registered for Naturallia will benefit from two days of strategic targeted meetings, which will allow for very effective time management. Using the formula devoted to “speed meeting or lightning meetings for business people”, representatives of the participating SMEs can effectuate remarkable exchange that will ensure the basic conditions are met for promising business partnerships.

Naturallia is looking forward to meeting as her guest at Val D’or, the Nigeria being the largest economy in Africa and the cream of her growing C-level business executive, entrepreneurs to meet their potential international counterparts to exchange ideas that would create a sustainable and enduring future for the world.

https://www.facebook.com/businessdayng

do State commissioner for energy and water resources, Moses Agbukor, has reassured that the Governor Godwin Obasekiled administration will not relent on its efforts in delivering the dividends of democracy to the people of the state, noting that the governor has in the last three years proved to residents that he is an agent of good governance.

The commissioner spoke with journalists in Benin City, when he received a certificate of integrity stewardship as a ‘Service Ambassador,’ by the Centre for Peace and Self Value Re-orientation.

Commending the governor for giving him the opportunity to serve, Agbukor described Obaseki as a man of integrity with zero tolerance for corruption, adding, “Governor Obaseki has mandated us to be transparent in all we do because we are accountable to the people of Edo State.”

The commissioner, who reassured that Edo will be open defecation-free in 2025, noted that the award will be a motivation to do more for the people of the state.

According to Agbukor, “Governor Obaseki’s administration is the best in terms of good governance; he should be begged to contest for a second term because it is Edo people who would benefit from this.

“The governor has done so much in terms of providing water for rural dwellers. Over 100 water and sanitation projects have been implemented in the state since 2017. Obaseki is not interested in making noise with his achievements @Businessdayng

but from the first week in March, we will commence commissioning of these projects across the state.

“This administration has done well in the water sector than any other government.

By 2025, open defecation should no longer be tolerated in Edo State as the governor is investing in projects to make this a reality”.

Earlier, Abraham Oyibo, executive director of Centre for Peace and Self Value Reorientation, commended the Obaseki-led administration for implementing peopleoriented projects to better the lives of Edo people.

He said the Obaseki-led administration had performed excellently as far as good governance was concerned, adding, “This government has brought to bear a lot of human capacity development projects and is taking governance to the grassroots. The government has embarked on projects that directly impacts on the masses.

“The role of ethical leadership and socio-economic development of any country can’t be over emphasized; hence our visit here today is to say a big thank you for thinking right, acting ethically and serving as an advocate for good governance”.

Maria Edeko, commissioner for Social Development and Gender Issues, who called on the people of Edo State to continue supporting the governor in his second term bid, applauded Governor Obaseki for ensuring water got to her village in Ekpoma, after 50 years of neglect by past administrations.

Tuesday 18 February 2020

FT

BUSINESS DAY

39

FINANCIAL TIMES

World Business Newspaper

Democratic calls to break up Big Tech raise fears in Silicon Valley Arguments to curtail power of technology companies gain traction in presidential race KIRAN STACEY AND KADHIM SHUBBER

T

he race for the Democratic presidential nomination has fuelled trepidation in Silicon Valley, as arguments for breaking up the world’s largest tech companies gain traction among the field of candidates.

Both Bernie Sanders, who won the New Hampshire primary, and his fellow progressive Elizabeth Warren, have called for a break-up of America’s largest technology companies. Moderates such as Amy Klobuchar and Joe Biden are also looking at aggressive measures to curtail the power of companies such as Facebook, Amazon and Google.

Arguments that were once confined to leftwing fringes are being examined more closely by government officials as well. Last week the Federal Trade Commission, which enforces competition laws, said it would review every takeover by a large technology company of a smaller start-up in the past decade to see whether they had displayed anti-competitive behaviour.

For decades, regulators had resisted taking action against companies on competition grounds unless consumers were being harmed through rising prices.

But for the past few years, a small group of leftwing academics has argued that large technology companies are causing damage in other ways, such as by killing off smaller competitors and eroding data privacy.

This group is close to one candidate in particular: Ms Warren.

“Competition is dying,” the senator said in a speech that first laid out

Among those pushing for a split of big tech companies is Senator Elizabeth Warren © AP

her ideas on tech antitrust in 2016.

“Consolidation and concentration are on the rise in sector after sector.

Concentration threatens our markets, threatens our economy, and threatens our democracy.”

Through her advocacy, their ideas are now gaining a wide hearing in the 2020 presidential race.

“What Warren is channelling is a variation of antitrust that the progressive left has managed to resurrect over the past five years,” said Rob Atkinson, president of the Information Technology and Innovation Foundation, which is funded in part by large tech companies.

Ms Warren’s 2016 speech, which has now become famous in legal and technology circles, was written after a series of informal policy seminars with Barry Lynn, director of the

Open Markets Institute, and a handful of other like-minded academics and lawyers who have become her brains trust on tech policy.

“This was the most important speech by a major public figure about the dangerous concentration in the United States since probably the 1930s,” said Mr Lynn. “There was no recognition of the problem, and then there was that speech that highlighted the problem in a way that people could not ignore it.”

Lina Khan, who published a seminal paper in 2017 while still in law school, is another member of the group. She has argued that Amazon is too powerful and should be investigated for monopoly violations. Critics have latched on to her youth, branding the movement she has come to represent as “hipster

antitrust”.

Ms Khan has also advised the House of Representatives antitrust subcommittee, which is conducting a wide-ranging investigation of corporate power in the technology sector.

Ganesh Sitaraman, a professor at Vanderbilt University, has acted as formal and informal policy adviser to Ms Warren since 2012. Those close to Ms Warren say Mr Sitaraman was influential in getting her to see that the arguments she was making about the need to curb the power of big banks also applied to technology companies.

Democratically aligned antitrust enforcers are also on board. Rohit Chopra, one of the Democratic commissioners at the Federal Trade Commission, has argued against the

corporate power built by the likes of Facebook. Democratic strategists say he is a likely candidate to take over the FTC should a progressive candidate win the presidency.

In his July 2019 judgment on the Cambridge Analytica scandal, in which the data of Facebook users were harvested and used for political campaigning without their consent, Mr Chopra echoed many of the arguments advanced by Mr Lynn and Ms Khan. “The case against Facebook is about more than just privacy,” he said. “It is also about the power to control and manipulate.”

Ms Warren’s campaign is looking for a fresh burst of momentum following disappointing results in Iowa and New Hampshire. But even if she fails in her ambition to become president, her approach to tech antitrust has already taken hold.

Ms Klobuchar, the moderate who outperformed expectations in New Hampshire, has argued for greater scrutiny of tech megamergers, while Mr Biden says he wants social media companies to be liable for the content posted by third parties on their platforms.

Only Michael Bloomberg, the former mayor of New York, stands apart as a staunch defender of Silicon Valley. “Breaking things up just to be nasty is not an answer,” he said last month.

Despite Mr Bloomberg’s opposition, many in the Democratic party think the consensus on Big Tech has now changed for good.

“There were a small number of us that were talking about this type of thing, and our views were seen as somewhat far-fetched,” said one Warren adviser. “I really think she transformed the debate in a way that nobody has.”

Japan on course for technical recession, economists warn Coronavirus impact looms as GDP shrinks at 6.3% rate after consumption tax rise ROBIN HARDING

E

conomists have warned Japan is on course for a technical recession, as the impact of the coronavirus outbreak threatens to compound a dire final quarter of 2019 that saw the economy shrink at an annualised rate of 6.3 per cent.

Gross domestic product data published on Monday came in well below analysts’ expectations of a 3.7 per cent decline, causing several to cut their forecasts for the first quarter of 2020 in anticipation of a further contraction. That implies Japan is facing a technical recession, defined as two consecutive quarters of falling output.

The weak output data for the final quarter of 2019 demonstrated that last autumn’s rise in consumption tax hit the economy even before this year’s coronavirus outbreak

shut down tourism from China and disrupted supply chains for Japanese companies.

The rise in consumption tax hit the economy almost as hard as a similar increase in 2014, suggesting that stimulus measures that Mr Abe had hoped would cushion the impact of the tax rise did not work. It also raised questions about whether seven years of so-called “Abenomics” — a mix of fiscal stimulus, loose monetary policy and structural reforms — have done anything to make Japan’s economy more resilient to shocks.

“Negative impact from the consumption tax hike was much larger than expected,” said Kiichi Murashima, chief economist at Citi in Tokyo, who expects the country to enter a technical recession. “The outcome was completely different from the consensus view six months ago.”

Japan’s Topix stock market barometer closed down 0.89 per cent. www.businessday.ng

“According to our retail team, the severity of the impact on department store sales [in the first half of February] was close to the one seen in the post-Lehman period,” noted Takeshi Yamaguchi, chief economist at Morgan Stanley in Tokyo.

Mr Yamaguchi cut his forecast for the first quarter of 2020 from 1.2 per cent growth to a 0.1 per cent contraction.

The data put pressure on prime minister Shinzo Abe and the Bank of Japan to mount a policy response.

Chief cabinet secretary Yoshihide Suga said the decline was not as bad as 2014, blaming typhoons and a warm winter for part of the impact on consumption.

“We’ll continue to examine the impact of the consumption tax rise and the coronavirus outbreak to ensure a suitable economic and fiscal policy,” Mr Suga said.

Consumption fell at an annual-

https://www.facebook.com/businessdayng

ised rate of 11 per cent and was the main cause of the fall in output. But business investment also fell at a 14 per cent pace.

There was no real bright spot in the data. Final sales of domestic product, which strips out inventory movements to give the best reading of underlying demand in the economy, fell at a 6.7 per cent rate.

Mr Abe had vowed to avoid similar economic trauma to that caused by the 2014 rise in consumption tax with an elaborate set of stimulus measures, including a system of cashback points for spending in small retailers.

There were some signs that the measures had made shoppers less likely to bring demand forward to beat the tax rise. But it has still dealt a blow to consumers who have been struggling with low levels of real income growth.

“The beneficiaries from free kin@Businessdayng

dergarten education and the point reward system are different to those suffering a negative impact from the tax rise,” said Mr Murashima, arguing the latter group cut back without the former spending any more.

After launching a large monetary stimulus in 2013, the Bank of Japan has become reluctant to ease monetary policy any further because it fears there will be negative side effects on the financial system.

It will now have to assess if there is any risk of a downward spiral in demand. Consumption by Chinese tourists has become important to Japan’s economy in recent years but tourism all but ceased following the coronavirus outbreak.

Mr Abe’s government has already launched a fresh fiscal stimulus to take effect this year, offering some support to demand but making it difficult to add any further spending or tax cuts in the short-term.

40

Tuesday 18 February 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Global stocks rise as investors pin hopes on more stimulus US solar industry powers ahead as investors back batteries G

CSI 300 gains as traders bank on Beijing easing further to cushion coronavirus impact HUDSON LOCKETT AND

Fund managers and energy-hungry tech companies bankroll ‘solar-plus-storage’ projects GREGORY MEYER Solar power is no longer confined to daylight hours. hanks to a wave of investment, solar farms across the US are increasingly being built with industrial-scale battery packs on site so that noontime surpluses can be stored for release in the evening hours when people come home to switch on lights, appliances and air conditioners.

Fund managers, power producers, utilities and energy-hungry tech companies are among those making big financial commitments to “solar-plus-storage” projects, introducing a helpful cushion for America’s finely balanced electricity markets and easing the way for a sharp rise in renewable generation.

Announcements are coming thick and fast in states from California to Florida — the latest last week when the Tennessee Valley Authority, a federal agency known for hydroelectric dams and coal and nuclear plants, announced a 200MW solar project tied to a 50MW battery system in Mississippi.

Such projects have become economical after a 77 per cent decline in solar panel prices and an 87 per cent fall in lithium-ion battery prices over the past decade, said research group BloombergNEF and the Business Council for Sustainable Energy. Some projects are now able to offer power at prices lower than natural gas-fired plants.

“The market has really exploded,” said Rob Gramlich, president of Grid Strategies, a consultancy.

“It’s been a dramatic expansion, and has surprised everybody.”

Government policy has also stoked investment. Batteries installed alongside renewables will earn a US tax credit. Battery operators have been allowed to sell power on the wholesale market, thanks to a rule passed in 2018 by the US Federal Energy Regulatory Commission. Some states require utilities to install storage.

Battery capacity in the US, the largest market, is set to more than double this year to about 4,800MW and surpass 32,000MW by 2025, BNEF said in its latest forecast — enough power to serve about 26m American households.

But capacity forecasts are still only a fraction of the US’s more than 1m MW in electricity generating capacity. “It’s a drop in the bucket,” said Gary Ackerman, former executive director of the

T

Solar-plus-storage projects have become economical after the costs of panels and batteries dropped © Bloomberg

Western Power Trading Forum, an industry group.

Batteries have drawbacks. They lose charge after several hours, so while they can make daytime solar power available in the evenings, they are impractical for saving energy for the next cloudy day, let alone storing power generated in spring for use over a long, hot summer.

The FERC rule to allow battery operators to sell into the wholesale market has also been challenged in court by traditional power generators and a state utility regulators’ association, putting batteries’ competitiveness in jeopardy.

Yet storage is not just a financial opportunity; in some cases it is a financial imperative.

In California, solar and wind generators selling into the main electric grid were forced to discard almost 1m megawatt-hours of production last year because there was nowhere to deliver it, according to the state’s independent system operator. Even when power is delivered to the grid, the daytime glut crashes prices.

The state is bringing on more storage capacity than any other in the US. It has only 263MW of utility-scale batteries currently, but has required investor-owned utilities to procure 1,325MW of storage by this year, and more than 3,400MW of solar-plus-storage projects have been commissioned for the future, according to BNEF. In Los Angeles, the municipal utility recently agreed to buy electricity from a project with 400MW of solar and 300MW of storage capacity owned by Capital Dynamics, a Swiss-based fund manager.

“There’s been a massive shift,” said John Breckenridge, Capital Dynamics’ head of energy in-

frastructure. “A 20MW system a couple of years ago would have been a huge system. Now, that’s changed.”

In neighbouring Nevada, the tech giant Google and NV Energy, a division of Warren Buffett’s Berkshire Hathaway Energy, are awaiting government approval to run a new data centre on 350MW of solar panels and up to 280MW of batteries. The companies described their partnership as “the nation’s largest solar-plus-storage corporate purchasing agreement”.

In Florida, known as the sunshine state, a utility owned by NextEra Energy will open the world’s largest solar-powered battery in 2021.

Batteries tied to renewables such as solar and wind are “now at a tipping point of large-scale deployment”, said David Scaysbrook, co-founder and managing partner of Quinbrook Infrastructure Partners, whose $1bn Gemini project plans to supply NV Energy from a solar-plus-storage complex built on 7,100 acres outside Las Vegas.

The federal tax credit is scheduled to shrink over the next few years. However, “improvements in efficiency, production and the cost are expected to more than outweigh the reduction”, said Mr Scaysbrook.

The lifetime cost of solar-plusstorage is more than solar alone, with a midrange of $83 per megawatt hour compared with less than $50 for the latter, BNEF estimates.

But the technology is now cheaper than coal and some projects are competitive with gas-fired plants.

Minneapolis-based utility Xcel Energy recently agreed a deal to buy solar-plus-storage power at $36 per MWh, Greentech Media reported.

lobal markets rose after Beijing signalled it was likely to ramp up stimulus measures as authorities seek to cushion the economic blow from the coronavirus outbreak.

The prospect of central bank support has prompted investors to flood back into equities this month even as China’s economy faces significant disruption and the impact spills into global supply chains.

European stocks climbed, with the benchmark Stoxx 600 index up 0.5 per cent to take its gains so far in February to more than 5 per cent. US markets are closed for Presidents’ day.

Chinese stocks rose sharply, with the CSI 300 of Shanghai- and Shenzhen-listed shares climbing 2.3 per cent. The index has now recovered all the losses from its biggest one-day sell-off in more than four years in early February.

Monday’s move came after the People’s Bank of China cut interest rates by 10 basis points on Rmb200bn ($28.6bn) of loans offered via its medium-term lending facility, a key rate for interbank lending.

The onshore traded Chinese currency rose 0.1 per cent on Monday to Rmb6.9809 per US dollar, on track to notch its first gain in four sessions.

“The market is largely trading on the expectation of policy easing” similar to that delivered in 2015, said Larry Hu, chief China economist at Macquarie, when the central bank opened the spigot as investors feared the economy was heading for a hard landing. “At this stage, the most likely policy options are to cut rates and provide targeted easing to impacted companies and areas.”

Moody’s has lowered its forecasts for global growth this year,

warning that the coronavirus outbreak has “diminished optimism” about the world economy.

“If the outbreak persists, the domestic and international supply chain disruptions are likely to become significant, amplifying the shock to the global economy,” said Madhavi Bokil, a Moody’s vicepresident.

The coronavirus outbreak has wreaked havoc on the Chinese economy by closing manufacturing plants and disrupting supply chains. That has prompted some economists to forecast that growth in gross domestic product could fall below the important 6 per cent mark in 2020.

But President Xi Jinping said in a commentary published in an influential Chinese Communist party journal over the weekend that the country’s leaders “still need to deliver this year’s economic and social targets”. That has fuelled market expectations Beijing could ramp up stimulus in order to ensure targets are met.

Analysts expect that the loan prime rate, a benchmark for commercial lending, will also fall on Thursday at the monthly review.

“More cuts will come later as China is under a new rate cutting cycle, in our view,” Mr Hu said.

The “positive impact of these stimulus policies on economic growth should materialise increasingly from this week onwards as policy priorities have started to shift from containing the spread of virus to restarting industrial and services activities”, said LiGang Liu, Citigroup’s chief China economist.

China’s liquidity injection did little for equities elsewhere in Asia. Tokyo’s benchmark Topix stock index closed down 0.9 per cent after data showing Japan’s economy shrank at an annualised rate of more than 6 per cent in the fourth quarter.

Lit Foods limited positioned to breath freshness into Nigeria’s consumer sector

A

s a result of growing population and an emerging middle class, there has always been a growing demand for fast-moving consumer goods (FMCG) in Nigeria, Lit Foods limited is a key player in the fastmoving consumer goods (FMCGs) industry and gradually becoming one of Nigeria’s largest food and beverage companies.

Lit Foods limited was not a name that rang a bell ten years ago but the company is gradually rising from obscurity to becoming a major player in consumer sector.

As typical of emerging giants in the sector, the company is primarily focused on food processing, agriculture, manufacturing, trading, and more opportunities.

Lit Foods limited is also one of the first company that commercialize coated peanut snacks and chin chin snacks in Nigeria and is always evolving considering new ways to strengthen its operations.

“We pride ourselves in having

a vast array of brands and are dedicated to providing the highest quality Snacks, so our customers will always find the product that truly expresses their taste,” said Ijomoni Oghenekevwe, the director business development, Lit Foods limited.

According to her, the company distinctive advantages are built upon a firm devotion to quality, product integrity and a resolute commitment to customer experience and satisfaction.

Lit Foods limited is an advocate of giving back to its host community as it actively engages in corporate social responsibility (CSR), especially in activities that centre around SME development, environmental protection, and technological advancement, among others.

Aside from employing members of its host community, the company also aims to help more youth globally to have access to economic opportunities by 2030.

Tuesday 18 February 2020

FT

BUSINESS DAY

41

ANALYSIS

India: is Modi’s BJP introducing Big Brother?

Privacy data bill provides chance to follow the European model or China’s approach BENJAMIN PARKIN AND STEPHANIE FINDLAY

E

mad Ahmed says he is terrified by the rise of facial recognition surveillance in India.

Since December, the 26-year-old has been taking part in nationwide protests against Prime Minister Narendra Modi’s controversial new citizenship law that has fuelled anxiety over discrimination of Muslims.

The ruling Bharatiya Janata party has used what critics say are authoritarian tactics to contain the unrest, from mass detentions to suspending mobile networks and bans on rallies.

Mr Ahmed, a masters student in gender studies, says police are also relying on footage from ubiquitous cameras and drones to identify and intimidate people demonstrating against the Hindu nationalist policies of the BJP. Protesters have been arrested, served legal notices and even received calls from security officers threatening them to stay away from the protests, says Mr Ahmed. “It is very scary, we don’t feel safe in front of the police,” he says. “They say ‘you are under camera, you’ll be behind bars soon’.”

The surveillance build-up has sparked fears about the future of privacy in India, just as Mr Modi’s government embarks on a dramatic overhaul of how authorities and companies can use the data of the hundreds of millions of Indians rapidly coming online.

At the heart of the development is India’s first personal data protection bill, a comprehensive privacy framework introduced in December that was initially presented as the country’s answer to the EU’s General Data Protection Regulation, providing new protections for India’s internet users.

But New Delhi’s proposed law has alarmed many of its original champions by carving

out broad exemptions for authorities to access the personal data of its 1.4bn citizens. Now privacy activists fear India will build up surveillance projects with minimal oversight — in effect adopting a model for privacy rights that has more in common with China than with Europe.

The fierce debate about surveillance comes at a time of broader concerns about political liberty in the world’s largest electoral democracy. For many critics, Mr Modi’s muscular Hindu nationalist policies, including some provisions of the citizenship bill that has prompted widespread protests around the country, are undermining civil liberties and fomenting religious divisions.

BN Srikrishna is a retired Supreme Court justice, who was appointed in 2017 to write the original draft of the privacy bill.

He now says the version of the proposed legislation, which is being reviewed in parliament, is “Orwellian”.

“Somebody along the way has hijacked it,” he says of the considerably changed bill. “The government has carte blanche.

They can [do] what they want and get away with it.”

Mr Srikrishna says he had imagined India would forge a bold new path, distinct from both Europe’s GDPR on the one hand and China’s state control on the other, that could offer a privacy model to other developing nations by ensuring strict protections for individuals while giving businesses the freedom with data to help fuel the rapid growth of India’s digital economy.

He now fears that the changes give too much power to the state at the expense of civil liberties.

“It is unconstitutional,” he says.

“If I were the judge, I would strike it down.”

Like other countries, India has witnessed an explosion of personal data in the past decade, with the spread of smartphones and cheap data packages set to

propel the number of internet users to 850m by 2022 from 450m in 2017, according to PwC. In 2009, New Delhi launched Aadhaar, the world’s largest biometric identity scheme, providing citizens with a unique identity number after their fingerprints and iris scans are recorded. Championed as a way to improve access to vital services such as food rations and banking, it alarmed privacy advocates who said it opened the door to voter profiling and commercial exploitation.

While those concerns culminated in a 2017 Supreme Court ruling that Indians had a fundamental right to privacy, there remained little clarity on how to regulate the flood of online data.

The new bill seeks to address that gap.

It gives individuals the power to require their consent before others can process their data, singles out for special protection data it considers “critical” or “sensitive”, such as health or financial information, and proposes strict limits on the use of children’s data, defined as anyone under 18.

But critics allege that the exemptions undermine the bill’s ability to offer protection from the government itself. While Mr Srikrishna’s original draft made the ability of government to bypass privacy protections contingent on clearing a high bar, India has proposed that the central government itself be able to exempt any agency from privacy obligations on broad grounds, such as maintaining public order. “ There are many examples . . . of private companies being held to an even higher standard than GDPR,” says Udbhav Tiwari, a public policy adviser at internet non-profit group Mozilla. “But the government is being given extremely wide discretion when it decides that it doesn’t want certain provisions of the law to be applied to it.

“Right now there are no

meaningful checks and balances with regard to how the government exercises powers of surveillance,” he says. If enacted as law, the latest draft will not address this, he adds.

A government official who helped draft the privacy bill disputed the suggestion, arguing the bill represented a significant improvement from the current vacuum. If the authorities abused their powers they would be stopped in court, he says.

The new law comes as India rapidly builds its surveillance capability, buoyed by the enthusiastic use of facial recognition by local police departments. The home affairs ministry, which oversees domestic security, is inviting bids to build a nationwide facial recognition database that could be one of the world’s largest, collecting images from CCTV feeds and newspapers, for example. The government has argued this will help improve public safety.

The tender was the latest in a series of controversial surveillance initiatives by the government, including an order in late 2018 giving 10 government agencies — from the intelligence bureau to the tax department — blanket powers to monitor all computers in the country. The home ministry did not respond to a request for comment. Delhi police also did not comment, beyond confirming the use of facial recognition technology.

With about 10 CCTV cameras per 1,000 people, Delhi has become the 20th most heavily monitored city in the world, according to tech research group Comparitech. There is a boom in companies offering facial recognition technology, with research firm TechSci predicting that the Indian market will grow 36 per cent annually over the next four years to be worth $4.3bn in salesby 2024.

Innefu Labs, a New Delhibased security and data analytics firm, provides services including facial recognition to police in

Delhi, Mumbai and Jammu and Kashmir, the Muslim-majority region that was subject to an enormous military mobilisation and five-month internet blackout after the government scrapped its autonomous status in August.

Talking over tea at their New Delhi office crammed with young workers, Innefu founders Abhishek Sharma and Tarun Wig tout their ability to help police pre-empt suspicious movements or violence. “We can use it for crowd management, to see if there is violence,” says Mr Sharma. “It can identify if someone pulls out a weapon or a woman is in distress in a dimly lit spot.”

But he demurs on whether he had concerns about how that technology was being put to use by the government. “Our job is to give them the tools. How they use it is entirely up to them,” Mr Sharma says.

Many of the activists worried about growing surveillance point to an alleged hack of WhatsApp in India, the messaging service which has 400m users in the country, as a glaring example of why citizens need more robust protection.

From October, WhatsApp and the University of Toronto’s Citizen Lab informed a group of more than 20 Indian academics and lawyers that they believed their phones had been hacked using the Pegasus spyware. Israeli company NSO, which makes the spyware, has said it sells exclusively to governments. The alleged victims — many outspoken critics of the ruling party — accused Mr Modi’s government of targeting their phones using Pegasus.

New Delhi has previously denied the accusations. Instead, India’s IT minister Ravi Shankar Prasad turned the spotlight on WhatsApp, saying the government was “concerned at the breach of privacy” and ordering the company to “explain” what Continues on page 42

42

Tuesday 18 February 2020

BUSINESS DAY

FT

NATIONAL NEWS

Turkey wealth fund chief rebuffs criticism of Erdogan’s role Zafer Sonmez seeks foreign backers to scale up state body’s investment capacity LAURA PITEL

T

he chief executive of Turkey’s sovereign wealth fund has defended Recep Tayyip Erdogan’s close involvement in its running despite criticism from opposition parties and foreign investors, saying that “every sovereign wealth fund is a political animal”.

Zafer Sonmez, who was brought into run the fledgling $33bn fund in 2018, told the Financial Times that the Turkish president, who serves as its chairman, was “aware of everything” that it does.

The president’s son-in-law, Berat Albayrak, who is Turkey’s finance minister as well as the fund’s deputy chairman, was in “daily contact” with Mr Sonmez, receiving “continuous updates” as the most active member of its board, Mr Sonmez added.

Turkish opposition figures have accused Mr Erdogan of seeking to run the fund as a “family business”, while analysts wonder whether the fund will face political pressure to pursue investments that lack a sound business case. But Mr Sonmez rebuffed the criticisms.

“Every sovereign wealth fund is a political animal,” he said in a rare interview. “Can someone say to me, for example, that GIC of Singapore, chaired by the prime minister of Singapore, has no political relationship . . . [or that] the Public Investment Fund in Saudi Arabia, chaired by [Saudi crown prince] Mohammed bin Salman . . . is not politically related?”

The fund needed a “determined political mindset”, he said, adding that his mantra for countering the concerns was “governance, transparency and

Zafer Sonmez, chief executive of the $33bn Turkey Wealth Fund, insists ‘every sovereign wealth fund is a political animal’ © Bradley Secker/FT

accountability”.

The fund has just undergone an audit by KPMG to consolidate its assets, which have an equity value of $33bn. It has also been reviewed by credit rating agency Fitch, which last week announced that it would be rated BB- in line with the Turkish government’s rating.

Now Mr Sonmez, a former banker who is well regarded in the Turkish investment community and abroad, is on a mission to “win hearts and build trust” and attract foreign direct investment to Turkey — no mean feat when net FDI last year hit its lowest level since 2004.

Given Turkey’s lack of oil and gas reserves, the Turkey Wealth Fund (TWF) is not comparable with the vast funds run by the likes of Norway, Saudi Arabia or Qatar. Mr Sonmez describes it as an Asian-style asset-backed development fund. The inspiration is Singapore’s Temasek or its Malaysian counterpart Kha-

zanah Nasional, whose Turkey office he used to head.

The fund was established in 2016, just a month after a violent attempted coup d’état sent shockwaves through the country. The following year Mr Erdogan transferred the government’s stakes in a string of the nation’s biggest companies, including Turkish Airlines, Turk Telekom and two large banks, to the fund.

It aimed to jump-start the struggling economy by leveraging the fund’s assets to support key infrastructure projects. But it was largely dormant for its first two years as it was beset by infighting between factions loyal to the president and the thenprime minister. For a time it was chaired by a former bureaucrat who came to meetings carrying a gun.

In September 2018 Mr Erdogan asserted his authority by sacking the entire board and appointing himself as the

fund’s chairman. Mr Sonmez was brought in as chief executive.

The 45-year-old wants the fund’s assets to triple in value to $100bn by 2023. Within five to 10 years, he wants to make the TWF a “sustainable” payer of dividends to the government. At the same time, he wants to reduce the country’s chronic current account deficit by investing in petrochemicals, mining and coal, developing Turkey’s capital markets and supporting entrepreneurs by filling gaps in the start-up funding ecosystem. Right now the fund has little cash to play with; most of its income is generated from the national lottery and horseracing licences that it owns. Instead, it plans to ask foreign investors to help support an investment programme that it hopes will reach $10bn a year by 2023.

Analysts do not dispute the merits of the fund’s stated aims; their doubts are about its ability

to meet its targets and the risk of political interference. “There is good logic in what they are trying to do,” said Tim Ash, a strategist at BlueBay Asset Management in London. “Zafer is a good guy but, given what we know about Turkey, can he say no to Erdogan?”

Earlier this month, a change in the country’s banking law prompted speculation that the fund would be asked to finance what Mr Erdogan has termed his “crazy” project to dig a new waterway through Istanbul.

Mr Sonmez insisted that the change in the law was a technicality, but he did not rule out the prospect of getting involved in Canal Istanbul. While the $15bn project was “not on my list”, he added that the fund would explore anything that the Turkish government viewed as a strategic goal. With any project, he said, the fund would “look at the feasibility and economics, and, if it makes sense, we can invest”.

aren’t clear policies governing their behaviour, “in the future there will be much bigger issues to be concerned about”, he adds.

As tech titans face off with Mr Modi’s government, some Indian companies have positioned themselves as an alternative.

Last year India’s richest man Mukesh Ambani, whose oil conglomerate Reliance Industries has used its financial might to build a fast-growing digital arm including the smartphone operator Jio, cast the need to protect Indians’ data in patriotic terms.

Mahatma Gandhi “led India’s movement against political colonisation”, he said. “We have to collectively launch a new movement against data colonisation.”

Mr Ambani argued that foreign firms have for too long prof-

ited from processing Indians’ personal data without offering adequate safeguards. Reliance has suggested it will offer its customers more protection. “We will have to migrate the control and ownership of Indian data back to India,” he said.

But India’s more muscular approach to data regulation has set it on a collision course with the US, one of its largest trading partners, which accuses it of protectionism. Washington has painted India’s efforts to ensure foreign companies store data locally as little more than a trade barrier, arguing it is designed to hurt tech companies such as Amazon and Google which have lucrative businesses transporting and processing data internationally.

India: is Modi’s BJP introducing Big Brother?

Continued from page 41 happened. India’s parliamentary panel on information and technology is probing the hack, but a person close to the proceedings accused the ruling BJP of “obfuscation”.

Maharashtra’s state government, a coalition of three parties that overthrew the BJP in 2019, is also conducting an investigation into the hack. “It is a very serious issue,” says Sachin Sawant, a spokesperson for Congress in Maharashtra. “Leaders of the Congress party” were under surveillance, he says, adding: “This does not have any precedent.”

The hack intensified calls for a robust law to prevent such incidents in the future. “I do

feel exposed,” says Saroj Giri, an assistant professor of political science at Delhi university, who was among the alleged victims.

“It’s enormous power, arbitrary power without a check at any level.”

Mr Giri criticised the new bill.

“The government is trying to find ways to legally do surveillance,” he says.

The WhatsApp hack occurred when Mr Modi’s government was engaged in a long-running campaign to compel the Facebook-owned company to hand over de-encrypted messages on national security grounds.

Facebook has refused and is challenging the government in India’s Supreme Court. WhatsApp declined to comment.

Facebook did not respond to a www.businessday.ng

request for comment.

This battle epitomised the often antagonistic relationship between the BJP and Silicon Valley, for whom India is one of their most promising markets.

The government official argues that, if not robustly regulated, foreign tech companies pose a greater risk to Indians’ security than its own initiatives.

A lack of clear rules will leave Indians vulnerable to breaches, such as the unlawful use of US voters’ Facebook data by Cambridge Analytica, with minimal recourse.

“What’s happening with Facebook, Instagram, TikTok and WhatsApp will be much, much wider and more critical than what is happening with Aadhaar,” the official says. If there

https://www.facebook.com/businessdayng

@Businessdayng

Tuesday 18 February 2020

BUSINESS DAY

43

POLITICS & POLICY Ezekwesili, Utomi, Nweke, others canvass paradigm shift toward solving Nigeria’s leadership challenge Iniobong Iwok

E

minent Nigerians including Oby Ezekwesili, Pat Utomi and Frank Nweke Jnr on Monday canvassed a paradigm shift toward better leadership in Nigeria if the country must overcome its woes.

The political leaders said that democracy had failed in Nigeria because of the dearth of morally and upright leaders, while faulting the nation’s current political system which conferred powers on few individuals who perpetually monopolise the nation’s political system to their advantage.

The leaders stated this at a conference titled ‘#fix Politics, changing politics structurally for Africa’s prosperity’.

The two-day conference is an initiative of Ezekwesili and the Robert Bosch Academy and was held at the Federal Palace Hotel in Vitoria Island, Lagos.

In his keynote address, Johann Lambsdorff, who is professor of Economic Theory at the University of Passau, Germany, said it was imperative that citizens take more active roles, interest in

Oby Ezekwesili

the emergence of political leadership.

Lambsdorff added that it was crucial that in tackling graft and sanitising the political system citizens must put trust in their leaders rather than institutions which could be manipulated and compromised.

In her research presentation, Ezekwesili, a candidate in the 2019 presidential election, said the 1914 amalgamation of the country was

Pat Utomi

responsible for part of the nation’s woes, stressing that the amalgamation was purely for administrative convenience of the colonial leaders and was not for the interest of the country or Nigerians.

Ezekwesili further said the long years of military incursion in politics which truncated the democratic process in the country in several occasions stunted democratic practice, growth and culture from taking its root in Nigeria.

APC fumes over Ishaku’s long stay in Abuja Nathaniel Gbaoron, Jalingo

I

t is no longer news that the Taraba State Governor, Darius Dickson Ishaku has been out of the state for over Fifty four days.

Governor Ishaku was last seen December 22 of 2019 after presenting the 2020 budget to the state house of assembly.

It was alleged that the governor was on medical trip abroad shortly after the Christmas and New Year celebrations but has since returned to Abuja; According to sources from government house who confided in our correspondent.

The worries of the people is what they described as the movement of Taraba

State government house to Abuja where government functionaries fly with files for signing using tax payers money.

Is ha ku ` s l o ng st ay i n Abuja amidst kidnapping and other forms of social crises has prompted the state chapter of the All Progressives Congress (APC) to threaten a court action against him for leaving the state to its fate.

For staying in Abuja for over 54 days, “the Taraba State chapter of the All Progressives Congress (APC) shall explore legal options against the state Governor, Darius Ishaku.

“The party will also explore options to compel the governor to return to the state if the state House of Assembly fails to comply

with necessary constitutional provisions”.

The state Chairman of the party, Ibrahim El-Sudi, and the APC governorship candidate in the 2019 elections, Prof. Muhammad Yahaya stated this at a joint press conference in Jalingo.

They also accused Governor Ishaku of leaving the state for the past nearly two months without transmitting power to his deputy, Haruna Manu.

El-Sudi said: “The governor has failed to do the needful and he has been out of the state for more than 54 days now. The House has also failed to invoke the necessary constitutional provisions. We, therefore, call on the house to urgently do this in the interest of the state.”

According to her, “The Amalgamation of 2014 was for mere administrative convenience, colonial Britain merged the three district geographical areas into one country.

“There was no common identifying point of reference beyond the colonial power’s administrative convenience.

“As Europe got mired in its own internal rivalry and war among the key countries and began paying less attention to its colonies in Africa, the

fervor of nationalistic selfdetermination grew on the continent”.

Speaking further, she identified the failure of the nation’s post independence leaders for inability to agree on a common template as part of the problem which held the nation back.

“The failure of the independence nationalists to at the end of colonial governance, discuss and peacefully agree their self-negotiated terms for shared values and unified vision of Nationhood.

“The absence of prevented emergence of an agreed framework of a minimum Common Identity as a ‘New Nation’ of multi-ethnic, multi-religious multi-cultural and multi-lingual diversity of people who have negotiated the basis for Unity. These failures and gaps haunt the country and its people up until today,” she added.

The former Minister said part of the reasons for leadership failure and stagnation which the country had faced over the years was the inherent monopoly in the political system by few individuals and groups, while canvassing active participation of the citizenry in the electoral process for a change.

“Nigeria’s monopoly democracy has no incentive to yield the distortionary damage it does to Governance.

“In the absence of an effective regulatory system to reduce the powers of the monopoly, a few citizens can step up and take responsibility for correcting the distortion in the political system,” she further said.

Also speaking at the event, a former Minister of Information and Culture, Frank Nweke charged the electorate to rise above primordial sentiment in choosing their leaders, stressing that the electorate must share part of the blame for failed leadership in the country in recent time.

In his address, Pat Utomi advocated for paradigm shift in the manner politics was being practised in the country.

He, however, said the current political system in Nigeria does not make leaders responsive nor guarantee good governance to the electorates, while canvassing more citizen participation in the political process.

The two-day event is being attended by political leaders, political parties, members of the academic community and professionals from across the country.

Court restrains INEC from delisting 33 parties Iniobong Iwok with agency report

A

federal high court in Abuja has restrained the Independent National Electoral Commission (INEC) from deregistering 33 political parties pending the determination of a case before it.

Anwuli Chikere, the presiding judge, made the restraining order while ruling on a suit the parties filed against the attorney-general of the federation (AGF) and INEC. The plaintiffs had filed an amended originating summons on October 30 praying the court for an order restraining INEC from deregistering them.

Upon hearing the application for interlocutory injunction moved on January 23, the judge adjourned to February 17.

Chikere, in her ruling, asked all parties to maintain status quo until the substantive matter is heard and determined.

Meanwhile, Kehinde Edun, lawyer who represented the plaintiffs, said he has filed a motion for a mandatory injunction with an affidavit of urgency asking the court to compel INEC to restore the parties which have already been deregistered.

In the substantive matter with suit number FHC/ABJ/ CS/444/2019, the plaintiffs asked the court to determine “whether the provisions of section 225A b(i), b(ii), c(i), c(ii) and c(iiii) of the 1999 constitution by the 4th alteration act No.9 of 2017 are to be construed disjunctively/alternatively or whether they are to be construed conjunctively.

“Whether the 2nd defendant (INEC) can exercise any power

under section 225A (b) and (c) of the constitution without conclusive and democratic elections being first held and concluded into all constituencies of the federation.”

While delisting the parties on February 6, Mahmood Yakubu, INEC chairman, had said they failed to meet the criteria provided for by section 225A of the 1999 constitution (as amended) which include: ‘breach of any of the requirements for registration as a party, failure to win at least 25 percent of the votes cast in one state in a presidential election or 25 percent of the votes cast in one local government area, and failure to win at least one ward in a Chairmanship election, one seat in the national or state assembly election or one seat in a councillorship election”.

Kogi state remains committed to economic development, youth empowerment -Commissioner Innocent Odoh, Abuja

K

ogi State Commissioner for Information, Kingsley Fanwo, has said the state remains committed to revamping its potentials for economic revolution just as

it has outlined some strategic programmes to develop the teeming population of the youths.

The commissioner made this known in a statement he issued on Monday, stressing that the state government under the leadership of Governor Yahaya Bello initiated different www.businessday.ng

empowerment programmes such as; agricultural renaissance, educational scholarship and bursary increase, sports development, job creation through the Kogi Vigilante Service, Forest Guards and appointment of young people into government.

The commissioner also

said in the statement that the Youth Development Commission passed into law, would institutionalise youth development in a structured way.

These programmes, he said, will help Kogi improve its productivity in agriculture and other sectors of economic development in line with the

https://www.facebook.com/businessdayng

diversification agenda of the Federal Government.

The state commissioner added that these key empowerment programmes initiated in Kogi State through agricultural renaissance will create a pathway for the youth to take up active roles in the agric sector as a viable alternative to the @Businessdayng

nation’s dependence on oil.

He disclosed that the state government will devote the next four years to training over one hundred thousand youths even as the Kogi Vigilante Service Forest Guards will complement the efforts aimed at ridding Kogi State of all forms of criminality.

Thebigread

BUSINESS DAY Tuesday 18 February 2020 www.businessday.ng

China: An economy in coronavirus quarantine If lockdown remains and infections continue to rise, shock to the rest of world could be significant Tom Mitchell, Don Weinland and Brendan Greeley, FT

T

his was the week that Chinese industry and commerce was supposed to stir back to life after an extended new year holiday triggered by the rapid spread from Wuhan of the highly contagious coronavirus.

But Lü Hua, who owns a factory making car parts in the southern city of Shenzhen, is still waiting for local government approval to reopen the plant, which exports 95 per cent of its output.

“We have prepared everything based on government guidelines — masks, hand sanitiser and so on,” he says. “But one day before reopening, we got a notice from the government that the policy changed. We need to fill a bunch of new forms and apply again. The government will then send an inspection team.”

He adds: “We’ve been calling and following up. But there is nothing we can do. They just told us to wait. It’s really hard to explain to our clients.”

Even in Beijing, with a population of 22m, the response has been fitful. The Jing-A brewery, situated in one of Beijing’s glitzier shopping districts, remained open through some of the earliest and worst days of the epidemic, only to close on February 10 when district officials told staff they could not serve parties of more than two people.

With more than 64,000 cases of the virus in China alone, the prolonged shutdown in large parts of the country is beginning to cast a shadow over the rest of the global economy.

The Chinese economy is now more than four times larger than it was at the time of the 2002-03 Sars outbreak — and it is considerably more important as a source of demand and for its central role in many industrial supply chains.

As the immediate outlook for the Chinese economy worsened this week, shipping rates fell to record lows, oil demand is now expected to grow at its slowest rate in almost a decade and Fiat Chrysler warned it is weeks away from shutting a European plant because of supply shortages. The luxury industry is terrified about

Beijing’s business district is empty as coronavirus keeps people off the streets and businesses closed. © Kevin Frayer/Getty Images

the idea of a long lull in Chinese tourists travelling abroad.

The possibility of a deep slowdown in China comes at a time when growth in the eurozone is already limping and when US president Donald Trump is banking on the avoidance of an economic hiccup as he campaigns for re-election.

“Prior to the coronavirus outbreak, there had been signs that the worst was over for both world trade and the global manufacturing sector,” says Ben May, director of global macro research at Oxford Economics. “However, this tentative optimism has been dashed by the current disruption.”

In China, the evidence of a sharp deceleration is more than just anecdotal — it is starting to appear in broader indicators on economic activity.

On Wednesday national passenger traffic was down 85 per cent compared with the same day a year ago, according to data compiled by Morgan Stanley, indicating that workers were not returning to their posts at factories around the country after the Chinese new year break. As of midweek, daily coal consumption at six large power generation groups was down 43 per cent year on last year, a sign that factories were not responding to directives from President Xi Jinping to restart production lines.

“Xi has reiterated that [the gov-

‘‘

With more than 64,000 cases of the virus in China alone, the prolonged shutdown in large parts of the country is beginning to cast a shadow over the rest of the global economy

ernment] will stick to its growth targets despite this whole situation,” says Raymond Yeung, chief economist for greater China at Australian bank ANZ. “At the moment, they need to accept that hitting those targets will be very difficult.”

He notes that the global financial crisis pulled down Chinese growth in gross domestic product to 6.4 per cent in the first quarter of 2009, cutting it in half from the same period a year earlier. ANZ predicts growth could fall to as low as 3.2 per cent this quarter, half the rate for the first three months of 2019.

Others think that even this downgrade is wildly optimistic.

“I can’t believe that it’s going to grow by even 2 per cent,” says Jörg Wuttke, head of the EU Chamber of Commerce in China.

Mr Wuttke notes supply shortages of basic materials such as packaging are common for many companies. Other challenges range from 14-day quarantines for truck drivers as soon as they return home from a trip, to a myriad of new special permits required by officials across the country as they attempt to protect their fiefdoms from the virus.

“Every city has turned into a little Alamo,” he adds. “You need a lot of permits just to get things from point A to point B. It is unbelievable the challenges logistics departments are dealing with.”

Ether Yin at Trivium, a Beijing-based consultancy, says “officials are in a tough spot — they need to make sure they stop the spread of the virus in their jurisdictions. At the same time, they are under pressure to get things back to normal.”

Earlier this week Huang Qifan, a former mayor of Chongqing and an architect of Shanghai’s financial reforms in the 1990s, warned that the economic consequences of the disease outbreak could be “scarier than

‘‘

Outbound tourism, worth $278bn in 2018, is also drying up as countries impose increasingly stringent bans on visitors from China the epidemic itself”.

“Value chain and supply chain disruptions [stemming from the epidemic] will have a much larger impact than ChinaUS trade frictions,” state media quoted Mr Huang as saying, referring to the almost two-year trade war with the US. “Once supply chains are relocated and replaced, it’s extremely difficult to get them back.”

When Mr Xi finally emerged after weeks of relative invisibility to interact with those on the front lines of the coronavirus epidemic on February 10, his belated appearance was almost entirely about politics.

China’s president urged the masses to have faith that the battle against the “devil virus” would be won. He lauded the heroic doctors and nurses who combat the highly contagious respiratory illness every day. Only towards the tail-end of its 20-minute lead segment on Mr Xi’s activities that day did China Central Television’s main news programme mention in passing his instructions on the economy, saying mass lay-offs must be avoided.

But by Wednesday, as it became clear that efforts to restart the world’s second-largest economy were faltering, the party’s messaging started to become much more focused on the economy.

“We must correct overreactions [to the epidemic] and avoid an oversimplified approach involving blanket closures or suspensions of business,” state media quoted Mr Xi as saying at a meeting of the party’s most powerful body, the politburo Standing Committee.

Chen Long at Plenum, a Beijing research group, notes that China is the world’s largest importer of a wide range of products from raw commodities such as crude oil to “intermediate goods” used in the manufacture of everything from hair dryers to automobiles.

Outbound tourism, worth $278bn in 2018, is also drying up as countries impose increasingly stringent bans on visitors from China.

Beijing’s economic policy response to the epidemic has so far been modest, in keeping with the government’s longstanding campaign to rein in high debt levels and stamp out risky financial practices.

“The last resort would be easing property policies but I don’t think Beijing has made up its mind,” says Mr Chen. “It is just too risky to boost leverage.”

Yu Yongding, a prominent Chinese economist and former central bank adviser, says Mr Xi’s administration will need to be bolder.

“The battle against the coronavirus undoubtedly will be very costly and damaging to what China has achieved so far in reining in financial risks over recent years,” he says. “But in the face of the deadly virus, all problems of debt, inflation and asset bubbles are secondary.

“China can worry about these later when the situation has calmed down,” he adds.

It is more difficult to tell how severe an effect the virus will have on US growth. “We know that there will be very likely some effects on the United States,” Jay Powell, US Federal Reserve chairman, said during congressional testimony on February 11.

“The question we’ll be asking is: Will these be persistent effects that could lead to a material reassessment of the outlook?”

According to UBS, the most likely ways in which the virus could dampen US growth are a decline in Chinese tourism and weaker demand for American exports. But neither of these is likely to have a major effect, provided the outbreak is contained relatively quickly.

•Continues online at www. businessday.ng

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.