BusinessDay 18 Sep 2019

New economic council must be more than a political chess game

T

he appointment of an Economic Advisory Council (EAC) by President Buhari is certainly a welcome development.

Members of the council are well-known academics and pro-

fessionals that the nation has relied on over the years for sound advice.

However, a closer look at the council and its purported role gives cause for some concern.

Members of the council include

COMMENT Mohammed Sagaki, a well-known economic adviser to PDP presidential candidate Atiku Abubakar, and Charles Chukwuma Soludo, a former Governor of the Central

Bank of Nigeria, remembered for his aggressive drive to clean up the banking system which resulted in a streamlining of the number of banks from over 100 to a little over 20 at the time. Both individuals, interestingly, have PDP leanings.

Doyin Salami and Bismarck Rewane have, at various times, served on Transition Committees – Salami in 2015 and on presidential panels; Rewane on the mini-

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news you can trust I **WEDNESDAY 18 SEPTEMBER 2019 I vol. 19, no 396

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igeria could unlock a flood of capital if it loosened up on its other state assets in the manner it did with the Nigeria Liquefied Natural Gas (NLNG).

Africa’s largest oil producer can do with more foreign direct investment (FDI) at a time when only $222.8 million was imported as FDI in the second quarter (Q2) of 2019, the lowest since Q2 2016, according to the National Bureau of Statistics (NBS).

Not only does that compare poorly with FDI flows to African peers from South Africa to Egypt, it translates to an FDI per head of $1.14 compared to the Africa average of nearly $100 per head, ac-

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Falling FDI piles pressure on FG to replicate NLNG model LOLADE AKINMURELE & DIPO OLADEHINDE

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Oil cuts losses on conflicting reports over Saudi resuming production ...as Pentagon to release attack report within 48 hours …Nembe Creek pipeline goes offline adding to supply concerns ISAAC ANYAOGU

L-R: Michael Olawale-Cole, past president, Nigerian-British Chamber of Commerce (NBCC); Kayode Falowo, president, NBCC; Harriet Thomson, deputy British high commissioner; Alan Davies, deputy president, NBCC, and Dipo Odujinrin, past president, NBCC, at a cocktail hosted in honour of the Deputy British high commissioner.

O

il pared an earlier decline Tuesday on contradicting reports about when Saudi Arabia will restore production lost in

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Wednesday 18 September 2019

BUSINESS DAY

news Pension assets hit N9.37trn as investments in FG securities make up 70% MODESTUS ANAESORONYE

N L-R: Otto Orondaam, member, board of trustees, Lagos State Employment Trust Fund (LSETF); Solape Hammond, commissioner for wealth creation and emplopment, Lagos State; Bolaji Dada, commissioner for women affairs and poverty alleviation, Lagos State; Folashade Adefisayo, commissioner for education/representing Lagos State governor; Dele Martins, representing the chairman, LSETF; Teju Abisoye, acting executive secretary, LSETF; Funmi Dawodu, member, board of trustees, LSETF, and Dele Muyiwa, team leader, climate change/environment, United Nations Development Programme (UNDP), at the 2019 LSETF graduation ceremony in Lagos, yesterday.

Pic by Olawale Amoo

In biggest layoff for African tech industry, Andela dismisses 420 FRANK ELEANYA

T

uesday morning, at about 9:10, the management at Andela summoned an impromptu meeting of all Andelans - as many of the more than 1,500 young men and women now call themselves.

Only a few in the crowd had any idea what the meeting was about.

“We were informed that the partners have reached a decision to let go 420 Andelans; 250 from the Nigerian and Ugandan offices and 170 in Kenya, they told us that an email has been sent to everyone to know what their status is,” a source who was among those affected by the decision told BusinessDay. “We had no idea this was going to happen.”

The Andela announcement is arguably the biggest layoff of any tech startup in Africa. Olayiwola Osoba, marketing, and communications manager,

...to focus on senior talent development

Andela told BusinessDay that the junior engineers affected were “a little over 300” while staff and a few engineers made the number.

“I have lost some of my friends,” another engineer who was not affected by the decision told BusinessDay. Jerome Johnson, CEO, and co-founder of the company described the move as part of a shift in strategy in which the company focused on identifying high-potential talent on the African continent, train them in software development (with a heavy emphasis on remote work and soft skills) and then place them as full-time distributed engineers.

“We saw an opportunity to build a business while investing in talent creation across Africa, and that’s exactly what we did,” he noted in a statement.

As part of releasing the 420

junior engineers, the company which in January received $100 million in fresh funding from investors, will close the D0 program in Nigeria, Kenya, and Uganda. The D0 (Developer at level 0) program will now be focused in Rwanda, where Andela recently opened a pan-African hub.

The D0 program is a simulation and apprentice stage in which talent is just joining the program. Talents that qualify from this stage move on to D1, the first stage of partner readiness, and on till D5.

Tech talents, especially software engineers, are in very short supply on the African continent. Chika Nwobi, the founder of Decagon, a Nigerian-based firm which like Andela trains recruits talents and train them to become software engineers, estimates that Nigeria has

about 6,000 software engineers, representing close to 0.00003 percent of the country’s population.

“This would mean that India, Poland, and Ukraine are all doing 100 times better than us at converting talent to software engineers to meet the growing global demand for software engineers,” he said.

To train one person to become a software engineer, Andela told BusinessDay that it spends around $20,000 (N7,200,000) for six months before placing them to work on partner projects. Currently, the company has over 1,500 engineers. Some of the firm’s partners include Mastercard Labs, Viacom, GitHub, and SeatGeek.

The engineers’ sign contracts to work for two years, but they are expected to stay for four.

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Harvest season supports Nigeria’s slowing inflation despite forex restriction on food items …inflation moderates for third straight month by 11.02% OLUWASEGUN OLAKOYENIKAN

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igeria risked a higher inflation rate following a recent pronouncement on foreign exchange (forex) restriction but that was offset by increased food supply which trailed the harvest season, moderating the country’s inflation rate for the third straight month in August 2019.

Nigeria’s measure of composite changes in the prices of consumer goods and services purchased by households decelerated by 11.02 percent on a year-on-year basis in August 2019 from 11.08 percent in July, according to data released Tuesday by the National Bureau of Statistics (NBS).

The August headline inflation, which is the lowest since January 2016, was driven by sustained moderation in the sub-indices that track price changes of food items and all other items. This is despite President Muhammadu Buhari’s directive to the Central Bank of Nigeria (CBN) in the month to stop providing forex for food imports.

Food inflation rose at a slower pace of 13.17 percent in August compared with 13.39 percent increase recorded in the preceding month, while the measure of inflation of all items excluding agriculture produce rose by 8.68 percent in the review month as against 8.80 percent recorded in July.

“We attribute the observed softening in food price preswww.businessday.ng

sures to the positive impact of early harvests, which kept markets well supplied even in the lean season,” analysts at Lagos-based investment house, CardinalStone, stated in a report seen by BusinessDay. “The moderation in core inflation coincided with tamer price increments in clothing & footwear and Alcoholic beverage, Tobacco & Kola sub segments.”

In addition, the Federal Government partially closed Nigeria’s border with Benin Republic on August 20, but the statistics bureau claimed the 11-day closure period to the end of the month was not enough to impact on prices, noting that inflation rate was the average prices for the whole month and not only the price of goods and

services in the last few days of the month.

Analysts at United Capital plc felt otherwise. According to them, the slowdown in the core inflation subindex could be attributable to the partial closure of the border. This “affected smuggling of petroleum products negatively, buoyed domestic supply of the products and reduced pressure on prices”, the analysts said.

The inflation rate declined by 0.99 percent in the review month on a monthon-month basis from 1.01 percent, as all major components of the country’s headline inflation witnessed sluggish increase for the third consecutive month in August.

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igeria’s pension fund assets have hit N9.37 trillion as at the end of July 2019, an increase of 0.45 percent from N9.33 trillion at the end of June 2019.

From the total fund under management by the Pension Fund Administrators (PFAs), the Federal Government has borrowed about 70.77 percent, amounting to N6.63 trillion, through different kinds of bonds and treasury bills (securities). This is according to the National Pension Commission (PenCom) monthly report released on Monday.

The growth in pension assets month on month was as result of new enrollees into the contributory pension scheme as well growth in investment made the PFAs, said Ronke Adedeji, president, Pension Fund Operators Association of Nigeria.

“You know that as people graduate from school and get into new employment, they join the scheme and

that is adding to whatever the contributions are, both from the public and private sector,” Adedeji said.

A breakdown of investment of the pension funds assets as at the end of July shows that Federal Government securities, including FGN Bonds, took N4.4 trillion, equal to N47.93 percent, while Treasury Bills took N2.04 trillion, equal to 21.52 percent. Sukuk Bonds took 0.8 percent, while Agency Bonds took 0.11 percent and Green Bonds 0.11 percent.

From the analysis, money market securities received N1.138 trillion of the total funds under management, equal to 12.15 percent, with N1.033 trillion going into banks instruments, translating to 11.03 percent.

Domestic ordinary shares investment which has been dropping over time as result of poor state of the capital market during the period under review received N482.51 billion, Continues on page 39

New economic council must be more...

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mum wage implementation committee.

Furthermore, members of the new council – many of whom are well-known freemarket capitalists – have at various times provided advice to the current government which it has often failed to take.

A most recent example is the report of the Minimum Wage Implementation Committee. This report provided advice to the Federal Government on steps it needs to take to raise revenues. These include the sale of assets and government interests in stateowned enterprises and removal of fuel subsidy.

During the early days of the previous administration, members of this committee were known to have specifically provided advice on foreign exchange devaluation.

It is unlikely that Iyabo Masha, an economist with the International Monetary Fund, will propose anything different from the advice provided by the IMF Nigeria country team – much of which has gone unheeded.

Which brings us to the next question: what, practically, will the Economic Advisory Council do? It appears to be a group of individuals who are external to government processes, at least one of whom has been resident abroad for several years who will meet monthly and perhaps, meet with the president quarterly.

It would also appear that the creation of this advisory council puts an end to the existence of the Economic Management Team.

For clarity, the Economic Management Team, chaired by Vice President Yemi Osinbajo, has membership from across government and comprises @Businessdayng

the ministers of finance, budget, industry and trade and includes core economic parastatals like the Central Bank of Nigeria, Budget Office of the Federation, the Debt Management Office and the Investment Promotion Council. It also has representation from the Office of the Chief of Staff.

The EMT holds weekly technical sessions to ventilate economic issues, develop policy which is then referred to the Federal Executive Council.

Policy issues discussed and addressed by the EMT include tax policy, developing the National Trading Platform to improve revenue at the ports, trade policy and the establishment of the Nigerian Office for Trade Negotiations. In addition, the EMT holds consistent consultations with the private sector through its Quarterly Business Forum Meetings which provides detailed briefings to private sector on government economic policy.

It is unlikely that a group of occasional visitors to an issue are in a better position to provide economic advice to a president who is well-known for his aversion to economic issues. What then does this mean? Is the EAC a decoy for some people to appropriate economic decisionmaking to themselves?

A more fitting architecture to manage the economy would have been to have the Advisory Council provide advice to the president while the operational management of the economy continues under the EMT. Nevertheless, as the EAC has been constituted, it must be truly empowered to do its job and the advice it renders should also be considered with the seriousness that the difficult times Nigeria faces demands. It must not be another manifestation of a power play or political chess game in Aso Rock.

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South Africa pervasively in Nigeria!

FRANKLIN NGWU

W

hile we all condemn the South African xenophobic attacks, it is important that we ask ourselves a fundamental question. Are we really pained with the attacks and sincere in our condemnations?

As I analyse the attacks, I find it very difficult to agree that we are sincere and genuinely troubled with the South African situation.

Reason being that across the length and breadth of Nigeria, there are pervasive actions and inactions of our leaders that clearly demonstrate their intensive creation and support for situations that cause attacks similar and worse than the South African ones.

If we are genuinely concerned with South African situation, the best way to demonstrate it is to committedly ensure that we do not replicate the causative factors in Nigeria. Unfortunately, we seem to be doing exactly the opposite –creating, supporting and sustaining the sources of such attacks.

These include the different forms of wrong and lack of policies, actions and inactions of oppression, marginalisation, tribal persecution, negligence and other social vices that negate or suppress the freedoms and opportunities of citizens.

When our governors confiscate over N500 million monthly in the guise of security votes rather than

use the money to improve the primary and secondary education or the health sectors of their state, then we are preparing for attacks similar to the South African ones. Not only do they confiscate hundreds of millions of naira, many of them seem to have abdicated their governance responsibilities such as job creation and provision of basic development amenities.

Rather than innovatively govern their states, many prefer to junket across globe with obscene displays of very wasteful life styles while escalating the unsustainable debts of their states. In such situations, which is regrettably, true of many of our states, the only feelings and behaviour that will emerge and grow will be that similar to the ones that cause xenophobic attacks in South Africa.

When through ineptitude and negligence, we are now confronted with about $85 billion debt and a possible liability of about $10 billion, we are getting ready for a fiscal crisis that will embolden attacks similar to South Africa.

As about 100 million Nigerians cannot afford the basic needs of life and described as extremely poor with the supposed ameliorative economic plans evidently ineffective, then we are preparing grounds for attacks worse than South African ones.

This is also the case when the major seaports in the country remain largely inaccessible, power generation seemingly impossible, and farm cultivation significantly reduced due to unprecedented insecurity. With our villages and communities repeatedly attacked with many killed, injured and others permanently displaced within their country, are we not worse than South Africans.

South Africans are killing and chasing away foreigners but we are killing and maiming fellow Nigeri-

ans – our countrymen, women and children. With many of those killed and displaced helpless and unable to fight back, the feelings of hate, oppression and desire to revenge are deep.

An encounter with my Uber driver, Jonah from Chibok is a vivid example of South Africa in Nigeria.

After running away from Chibok about 8 years ago, Jonah is unable to return or visit his most cherished village, powerless to see or even hear from his mother and younger ones. He is left frustrated and deeply embittered while he toils for daily survival on the streets of Lagos.

As we have millions like Jonah in almost all parts of the country and with no clear and convincing plan to properly address their pitiable and avoidable sufferings, we have South Africa in Nigeria!

When the security architecture of the country is evidently one sided in a plural society of intense mistrust, are we not deliberately flaming situations for more suspicion and crisis.

Relatedly, when elections in areas perceived to be dominated by specific ethnic group are deliberately and violently disrupted to disenfranchise the group in order to achieve preferred electoral outcomes, then we are preparing for South Africa.

Moreover, as such barbarism received little or no condemnation from our leaders and treated with levity even by relevant security agencies, then we are encouraging the development of negative subcultures and beliefs akin to ones in South Africa.

When very patriotic calls for the restructuring of the country based on overwhelming evidences that we are in a wrong direction and failing in all measures of acceptable human existence are ignored, we are beckoning and signifying that we prefer the attacks similar to South Africa.

The problem is not really with

‘

If we are genuinely concerned with South African situation, the best way to demonstrate it is to committedly ensure that we do not replicate the causative factors in Nigeria

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail- fngwu@lbs.edu.ng,

The Saudi oil crisis, volatile leaders and the risk of escalation

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or decades, any list of global geopolitical risks will have had “attack on Saudi oil facilities” near the top.

Now it has happened.

The good news is that the world is less vulnerable to an oil price shock than it was in the 1970s, when the Opec oil embargo created turmoil in the global economy. It is also true that all of the major powers involved — Saudi Arabia, Iran and the US — have strong incentives to avoid an all-out conflict.

The bad news, however, is that the key decision makers in this particular drama — Donald Trump, the US president, Mohammed bin Salman, the crown prince of Saudi Arabia, and the leadership of Iran — are all headstrong and prone to taking risks.

It is likely that, if the US sticks to its claim that Iran was behind the attack, it will stage a military response. If and when that happens, there are no guarantees that the conflict will not escalate further. Given that the weekend attacks have already caused a 20 percent spike in the price of oil, the potential for further mayhem on the markets is clear.

The importance of Gulf oil to the wider world has been imprinted on the collective memory of the west ever since Opec imposed an embargo in 1973. It caused oil prices to quadruple, doing serious damage to markets and the world economy. The lesson learnt — that stability of Gulf oil supplies is crucial to the world economy — helped drive the

west’s ferocious response to Iraq’s invasion of Kuwait in 1990.

Almost 30 years after the first Gulf war, western economies are considerably less vulnerable than they were to disruption of oil supplies from the region. The rise of shale-oil production in the US means that American oil imports from Saudi Arabia are now just one-third of the level they were in 2003.

But less vulnerable does not mean invulnerable. There is still a global price for oil; and Saudi Arabia remains the world’s leading oil exporter. So, if Saudi supply is disrupted, consumers and industries across the world will quickly feel the impact.

The vulnerability of Saudi oil facilities to attack has also just been demonstrated. If the attack was carried out by drones, as first reported, it is a shocking insight into how open advanced industrial facilities are to assault by cheap and widely available new technologies.

The Saudis also have cause to worry about the safety of their water supplies. The kingdom gets around half of its drinking water from desalination facilities, one of which was targeted in a rocket attack last June.

Awareness of their vulnerability to further attack should make the Saudis wary of escalating the conflict. The kingdom’s social and political stability is also a factor; the ruling family has long fretted about the threat of internal unrest from their large Shia minority.

Despite massive military spending, Saudi

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Arabia has also been unable to prevail in a brutal war in Yemen — which is a much less intimidating proposition than Iran. So, while the Saudis have been ardent supporters of the Trump administration’s policy of “maximum pressure” on Iran, they have minimal interest in an actual war.

Iran also has a strong interest in avoiding an all-out conflict, which would expose the country to the firepower of their well-armed Gulf neighbours and, above all, to attack from the US. In recent months, the Iranians have staged an array of provocations including seizing western oil tankers in the Gulf and (probably) encouraging its Houthi allies in Yemen to hit soft targets in Saudi Arabia.

But this kind of Iranian brinkmanship has been interpreted by most western Iranwatchers as an effort to demonstrate that Tehran is not powerless in the face of sanctions.

The Iranians were also seen as attempting to gain leverage ahead of a possible resumption of talks with the US. As for Trump, despite his bellicose rhetoric, the US president’s most recent actions have shown that he is keen to make a diplomatic breakthrough with Iran. One important reason that Trump fired John Bolton last week is that his former national security adviser was too hawkish and opposed suggestions that American sanctions on Iran should be eased in the interests of getting talks started.

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rejecting calls for restructuring, the frustration is the inability of the few who reject it to provide a convincing alternative or even commit to a proper discussion on the merits and demerits of restructuring for our dear country.

While being in power can create illusionary understanding of our sad state as a country, it is important that our leaders remember that power is transient and that today and tomorrow will become yesterday. To this end, the commendable legacy for our leaders is to listen to wise counsels such as the rapidly growing calls for the restructuring of the country, rejigging the security architecture of Nigeria and developing/executing a well-crafted economic development plan that is sustainable and pro-poor.

Continuing to reject these genuine calls from South West, South East, South South, North Central, North East and even North West can only be described as allowing the feelings and sentiments that led to the South African attacks to fester and grow in Nigeria.

When about 21 million brothers and sisters are reported as unemployed while our government continue to borrow mainly to sustain the lavish lifestyles of very few Nigerians, then attacks similar to the South African ones might not be far.

While verbal condemnation of the South Africa or boycotting the World Economic Forum are commendable, what is more appropriate is genuine and effective actions to address the causes of crisis and attacks similar to that of South Africa.

GIDEON RACHMAN

So, all sides have economic and strategic interests to step back from the brink. Unfortunately, all sides have also shown themselves to be erratic, emotional and prone to miscalculation.

Saudi Arabia’s Prince Mohammed has demonstrated his own propensity for violent miscalculation through his conduct of the Yemen war and by apparently authorising the gruesome murder of the journalist, Jamal Khashoggi. As for the Iranians, if they did indeed authorise an attack on Saudi oil facilities, they have taken an enormous risk, with consequences they cannot control.

Trump’s volatility has been amply demonstrated. The US president’s willingness to rip up the Iran nuclear deal — but then sack his most hawkish adviser on Iran — also does not inspire confidence that he knows what he is doing. It also means that the White House is entering what could be the biggest security crisis of the Trump years, with no national security adviser in place.

Ever since Trump’s election in 2016, nervous observers have wondered how the president would behave in a real foreign policy crisis. We are about to find out.

All sides have an interest in compromise — but that does not mean it will happen.

FT

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Increasing VAT is not the ultimate solution to Nigeria’s revenue problem LANREWAJU RUFAI

N

igeria’s finance Minister, Zainab Ahmed, recently admitted that Nigeria has a revenue problem. That was a euphemistic method of describing Nigeria’s current predicament.

Since 2015, national expenditure has doubled but the nation has continuously failed to meet revenue targets, necessitating the need to incur debt to meet the government’s obligations.

The reasons for Nigeria’s declining revenue are not farfetched.

Nigeria derives the bulk of its government revenue and foreign exchange earnings from oil exports.

However, the inflow of petrodollars has steadily declined in recent

years owing to a fall in the price of crude oil from a peak of $113 per barrel in 2012 to around $60 in 2019. A situation, which has resulted in the inability of the government to meet revenue targets.

To make up for the shortfall, the government has attempted to increase revenue generated from taxation, with the number of taxpayers doubling since 2015. Nevertheless, there remains a gaping hole in the nation’s coffers necessitating the need for heavy borrowing to make up the revenue shortfall.

However, Nigeria’s revenue shortfall is only half of the problem. The state of the government’s expenditure also leaves more to be desired. Currently, the government expends most of its earning on debt servicing with data from the Debt Management Office (DMO) revealing that 60 percent of government’s revenues goes into debt servicing. What is left goes into public administration, particularly paying salaries of public servants and government employees. It is therefore not difficult to deduce that not only does Nigeria have a revenue generation problem, it has an equally seriously problem with expenditure management.

It was therefore unsurprising that last week’s announcement of a proposed increase in the Value Added Tax (VAT) rate from 5 percent to 7.5 percent has been met with condemnation. While the federal government’s desire to increase the VAT rate is understandable, given that Nigeria not only has one of the lowest VAT rates in Africa, but also one of the

world’s lowest ratios of tax to GDP; increasing the VAT rate in current circumstances is illogical at best.

In an economy, which still grapples with the aftereffects of the recession it suffered in 2016, as well as spiralling unemployment and a low growth rate, increasing taxes is counterproductive to economic growth.

Typically, nations struggling with low economic growth and other forms of macroeconomic pressure tend to reduce tax rates in order to spur production and boost consumption, Nigeria instead has done the opposite. By increasing the VAT rate, the government is directly increasing tax burden on companies and consumers, thus reducing disposable income available for consumption of goods and services. This is far from ideal for the growth of the economy.

In addition, contrary to the rhetoric emanating from the government that the increase in VAT has no effect on poor people, the VAT is a regressive tax which affects the poor more than it affects the rich. Basic commodities including food, transportation etc. will invariably become more expensive, with the severest effects suffered by the nation’s poor. In a nation already adjudged the poverty capital of the world, a policy, which results in higher cost of living, should be the last on the government’s agenda.

Therefore, rather than increase the VAT rate or introduce new ones, the government’s priority should be improving tax collection. Currently, Nigeria ranks as one of the nations with the largest

‘

Rather than increase the VAT rate or introduce new ones, the government’s priority should be improving tax collection.

Currently, Nigeria ranks as one of the nations with the largest VAT gap in Africa

VAT gap in Africa. This implies that the government currently does not collect as much VAT as it should lends credence to the opinion that the focus should be on improving tax collection, not increasing rates.

There is an urgent need to improve the nation’s tax collection system such that the informal sector is adequately captured while also expanding the nation’s tax base to cover more taxable persons.

Furthermore, rather than increase the VAT rate, the government should be focused on addressing structural deficiencies in the macro economy, as well as improving the ease of doing business across the nation. Both acts will help to engender economic growth and ensure the successes of businesses, two scenarios which will expand the economic pie and result in higher tax revenues to the government, without destroying the spending power of citizens and bottom lines of businesses.

Also, perhaps there is a need to drastically reduce government expenditure.

In summary, Nigeria has a revenue problem. However, there are no short-term solutions to this problem. Increasing taxation without addressing the underlying fiscal and structural issues might increase government revenue in the short run but will ultimately render the Nigerian people and nation worse off in the long run.

Rufai holds a first class degree in Management and Masters degrees in Management and Finance. He is a finance and strategy analyst and can be found on Twitter @LanreRufai_.

Some inexpensive measures to help alleviate the Lagos traffic situation

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ne of the greatest challenges faced by residence of Lagos is the difficulty of commuting. The state government in appreciation of this fact is expending large sums of money on improving the road infrastructure and the deployment of traffic officers.

While commending these moves, I will like to suggest a few inexpensive measures that can help complement the on-going effort.

A significant proportion of the traffic congestion on our roads can be traced to the rough patches and potholes on our roads. Several of these start out as little holes/depression on the road, which when unattended to, expand into grapping holes that cause major traffic congestions. Given their large numbers, the bureaucratic way things are handled in government and limited funds at the disposal of government; it could take years to fix some of these.

To help solve this problem, I will like to suggest that the state government designate a number of approved civil engineering firms, and let it be known that individuals, communities or businesses in the state can as a way of supporting government efforts, approach these to fix potholes/ rough patches in their neighbourhood.

The selected civil engineering firms would

get whatever approvals are required from the relevant local government authority to carry out the necessary repair work.

The above could be expanded to a scheme wherein the state and local government will stand ready to provide matching funds to any neighbourhood that can raise 50 percent of the cost of tarring its local road.

Secondly, the state should launch a “Staff Boat Initiative”, to be personally driven by the governor.

Passenger boats cost about the same amount as a similar capacity passenger bus. These will help reduced travel time and provide better quality of life for staff – it takes approximately 45 minutes from VI to Ikorodu by boat, while it takes about 2 hours to complete the same trip by road.

That translates to a daily saving of over 2 hours on travel time; valuable time that can be spent with family, studying, etc.

It will also reduce traffic congestions by diverting traffic to the waterways. The program will also result in more effective use of the various government and private jetties being built across the state. Finally, it could help give a beneficial boost to the Nigerian boat building industry – John Holts, Nigerdock, etc.

Also, the menace of one-way driving is

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another contributor to the traffic congestion in the city, and notwithstanding the various effort of the government to stop it, the phenomena refuses to go away because there are not enough law enforcement agents to enforce it.

I will like to suggest that the government encourage motorist to use their camera phones to take photographs of such offending motorist and send them in to a designated motor licensing office phone number, where the offenders will be made to pay the appropriate fine whenever they are renewing their license or their cars are impounded for other traffic offences.

More so, the state government should expand the remit of LASTMA to include been the think-tank that comes up with inexpensive solutions to the traffic situation in the state.

This can be accomplished by challenging every LASTMA official to begin to see themselves not only as traffic enforcers, but as solution providers; they should be on a continual lookout for opportunities where inexpensive tinkering with the existing arrangements can help ease up congestion.

All officers should also be provided with walkie-talkie to enable them properly coordinate the active of resolving gridlocks.

There are a several spots around the

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OYEWOLE TOYIN state where minor re-constructions or reorganisations can help reduce the traffic gridlock presently been experienced at those locations. For instance, there is usually a gridlock at the Onikan roundabout, coming down from the 3rd mainland bridge and those from Awolowo Road.

A reduction in the size of the inner radius of the roundabout at Onikan would allow for 2 to 3 vehicles negotiating the roundabout simultaneously. This will go a long way in easing the flow of traffic at that major intersection.

Meanwhile, I will also like to suggest an agency under the governor’s office that will be charged with actively encouraging the population to send in ideas.

No government can claim to have all of the answers to the challenges that face the state. But by tapping into the vast idea bank that exists amongst the populace, the state government will not only be promoting popular participation but will also get workable solutions to the challenges that it is grappling with.

Oyewole Tosin is an economic development strategist 080 3726 1004

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Wednesday 18 September 2019

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EDITORIAL PUBLISHER/CEO

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

Bashir Ibrahim Hassan

Taxation and the rule of law

W

e understand government’s desperation to raise revenue through taxation. However, the manner it has gone about it: exercising its power of substitution by ordering banks to freeze alleged tax defaulters’ accounts without recourse to the taxpayers, and without establishing that the alleged liabilities are final and conclusive is illegal, a breach of tax-payers’ rights to fair hearing and ultimately, a breach of the constitution of the federal republic of Nigeria.

Much more, such actions do contribute to making the business environment more difficult and unpredictable and is sending a message to investors that Nigeria is not business-friendly and cannot be relied upon to uphold its own laws.

The Federal Inland Revenue Service (FIRS) on August 7, wrote a “letter of substitution” to banks directing them to release statements and other financial records

of companies, freeze the accounts of defaulting taxpayers to prevent them from drawing funds. The letter also appointed the banks as “collecting agents” requesting them to set aside any sums mentioned by FIRS “and pay same to the credit of these attached companies in full or partial amortisation of its aforesaid tax debt” and to do this “prior to execution of all or any related transactions involving these companies or any of its subsidiaries” It is not news that Nigeria is having a serious fiscal crisis, with revenues falling far short of target and majority of those revenues (about 70 percent) used to service debts alone. Consequently, the government has to borrow to maintain operations and finance the budget. It is therefore understandable that the government is doing everything within its powers to grow its revenues, especially through taxation. It is also noteworthy that it is trying to enforce tax payment by high net worth individuals and corporate organisations who have capitalised on

Nigeria’s lax tax regime to evade taxes for years.

However, those reforms must conform to the rule of law and must never be arbitrary. Sadly, some companies and CEOs who were slammed billions in illegal taxes have demonstrated full compliant to tax regulations. Where they are able to convince the FIRS of full compliance with all the tax laws of the country, they were still requested to “pay something.”

The arbitrariness of the tax bills being sent out have unsettled many companies and even shareholders especially of multinationals operating in the country. The potential impact on company’s cash flow of such debits is creating panic within the business community.

Besides, it is sending negative signals to multinationals operating in the country, current and future foreign direct investors about the uncertainty and unpredictability of the Nigerian environment.

We are at pains to stress that although FIRS have the author-

ity to freeze accounts of tax defaulters, it must only do so on the orders of the court after the tax liability of the tax payer must have been established.

Besides, a taxpayer has the right to file tax returns, which will be audited by FIRS if it is not satisfied with the returns.

The turnover comes in only if companies choose not to file their returns.

The action of FIRS also raises question on “bank customer confidentiality” a key principle in commercial banking relationship. With the FIRS asking banks to debit their customer’s accounts and also submit their customer’s bank details, that confidential relationship between banks and their customers is being broken.

FIRS must exercise its powers with caution to avoid negative impact on the business environment and ease of paying taxes. The current desperation to squeeze money legally or illegally from companies is shortsighted and may deepen rather than alleviate the revenue crisis of the government.

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

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Wednesday 18 September 2019

COMMENT What is it all about?

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implore you, let’s take a step back to ask ourselves this important question. Why do we need to go through the rigours of educating ourselves? It’s crucial because it determines our future.

Is it to do what everybody else seems to be doing? Should it aid self-determination –help set our own course in life? Are we driven by a genuine desire to learn? Drive for independence – to help enhance our ability to reason and decide for ourselves what is best for us?

Is it to expand the mind and give direction, helping us to see what the undereducated can’t see or is it merely to prepare us for our chosen career? Is it to make us cleverer and more knowledgeable than before or should it empower us to be wise, to make better decisions and to have a deeper comprehension of what is right and what is just?

Is it expected to positively influence our outlook on life, causing us to see things from a position of greater understanding? Is it to help us understand better that our way isn’t necessarily the only way, leading us to value others and their views too? This speaks to having a heart of tolerance and love as there are several ways to fry an egg and none is more superior than the other.

Are we to use the advantage education bestows upon us as a weapon to oppress the less privileged, the uneducated and the undereducated?

Or is it meant to furnish us with a mindset to lead them all better? Is it to gird and embolden our hearts in the midst of seemingly impossible

situations or is to equip us with the understanding that because it hasn’t been done before, doesn’t mean it can never be done? Is it to open our eyes to the fact that things can and should be better than they are?

Is it to enlighten us to the point where the proverbial bulb lights up in our head? That pursuit of the common good, really is the rational way to go. Is it so we can come to the realisation that it behoves everyone to play his or her own part if we sincerely desire a better future for our society?

Do we agree with the philosophical school of thought that education should guide leaders to rule well and condition the minds of citizens to pursue perfection in citizenship by obeying the laws of the land? Should it inform us of the nexus between rights and duties, privileges and responsibilities? I know many of us parents, have lectured our children overtime about this one. All I can say is, “the Lord is our strength”.

Some say education, as a life transforming exercise, should discipline the mind. As there is hardly a surer proof of disciplined thinking than disciplined action. should educated people not make punctuality a watchword? As further proof, should they not also do the right things without being forced to do so?

I don’t believe we’re quite there yet. Correct me if I’m wrong but as a people we rarely seem to do the right thing even when we know what the right thing is. Many believe rules are made to be broken in pursuit of our selfish interests rather than help to standardise good behaviour, which would ultimately benefit all.

But then, how many truly care about all? Instead, we appear totally defenceless as we’re mercilessly ravaged by the “do you know who I am syndrome?” We flaunt our unmatched ability to flout all rules with impunity as confirmation of just who we are. This always acts a measure of our clout. Funny thing is, this sickness is no respecter of persons as it plagues

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If we all agree that education should generally result in placing a higher premium on life, we shouldn’t stop there. An educated person should be able to ask what sort of life he wants

all classes; from the billionaire to the “brokenaire”. None is immune. All seem to have something to prove.

Don’t ask me what.

Is it not one of the objectives of education to produce individuals, excellence in ability as well as excellence in character? People who become useful to themselves as well as to society? Some, making indelible contributions to humanity by way of scientific advancements and social re-engineering. Should it not in the process broaden our horizons, providing us a healthy and critical outlook on reality? Is its purpose not to help us acquire the right values, propelling us to take right actions on our own? Shouldn’t education bring us to the inevitable conclusion that without justice in the land, peace will forever remain an illusion?

A truly educated person should understand that his life ought to have some meaning and place a higher value on preserving it.

I say this with commercial motorcycle (Okada) riders in mind. Most appear to place very little or no value on their lives which is sad enough in itself. It becomes more worrisome when you realise that someone who has little regard for his own life is not likely to have much regard for the lives of others either. This makes them little better than kamikaze projectiles; ready to destroy and be destroyed.

So, if we all agree that education should generally result in placing a higher premium on life, we shouldn’t stop there. An educated person should be able to ask what sort of life he wants. Should it be one of suffering and just getting by? Which may be more accurately termed as merely existing rather than living. Or should it be one of flourishing as a human being, achieving self-actualisation and all that? A need inherent and peculiar to mankind. If the answer is yes, then some schools of ethical thought insist this ought to mirror our thoughts on how everyone should live too.

Declining English language use by Nigerians and sundry issues

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recent article in The Guardian of the UK, titled “Why it’s time to stop worrying about the decline of the English language,” critically outlines the issues regarding the possibility of a breakdown in communication due to the deterioration in the quality of the English language spoken in the world today.

This is even more glaring due to the advent of the social media and the bastardisation of what we now know as the Queen’s English and the imperatives of received pronunciation.

In the age of globalisation, Twitter, Instagram, Facebook and instant messaging, the grammatical structure of the English language is being assaulted in all its semantic and syntactic aspects by junk words and meaningless syllables that corrupt what we mean and what we say.

The issue behind the worry is essentially how to ensure that communication and meaning are not destroyed by the lowering of linguistic standards.

Talking of “future plans,” “past his-

tory,” “new initiative,” “safe havens,” or “live survivors,” we are already undermining the integrity of the language. Yet, the writer was insistent that those who fear the degeneration of English do not understand linguistic flexibility and how languages acquire sophistication.

Why is this analysis important for an institutional reformer in Nigeria? Institutional reform demands that there are significant dimensions of a nation’s life that must be factored into the national development process.

From women to the youth, and from a state’s intellectuals to her educational system, there is a need to calibrate a systematic reform framework that ensures that a state is aware of all the elements that enables her to achieve good governance on behalf of the people.

We could say, it takes little reflection to see the place of language in national development. While this is so for other countries, the case of Africa, and specifically Nigeria, is different. The reason is

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not far-fetched.

Africa’s encounter with colonialism foisted on the continent an amalgamation process that spelt postcolonial crisis in terms of social cleavages along ethnic, religious, cultural and particularly linguistic lines. In Nigeria, for example, there are more than four hundred languages and dialects competing for national attention. It therefore become a pragmatic consideration to retain English or French or Portuguese as the lingua franca in different regions of the continent.

It is at this point that English as a colonial language enters into the discourse on national development in Nigeria. The argument has always been that a foreign language cannot interact with the indigenous dynamics of a culture or a society in ways that would engender proper development for the people. The advocates of what we call the mother tongue development thesis hold strongly to the point that a people can only be reached at the

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After all, they say what’s good for the goose is also good for the gander, so how moral would it be for you to think that you are the only one who deserves the good life?

Unfortunately, this is not always the case but my immediate concern is our part of the world where it seems to be so pronounced.

Here, the Aristotelean philosophical theory of moral weakness screams at us, reminding us it’s still very much alive and not prepared to offer us any apologies to anyone. Or what would possess a normal human being, recruited to protect his compatriots to decide instead to oppress, molest, defile and destroy the lives of those under his watch, at the various Internally Displaced Persons (IDP)camps in the war torn North?

What sort of mind would do that to anyone, talk less of those reeling from unimaginable calamities already?

What sort of man would unethically enrich himself and in the process sentence millions to a slow and painful death from abject poverty? Knowing the right thing to do but lacking the restraint that would prevent one from following the socially destructive path of self-interest is not a sign of sound reasoning.

I have no doubt in my mind that education is a moral enterprise.

Some years ago, I asked my daughter who was eight at the time if she could tell me the difference between a knowledgeable man and an educated man and her response struck me. She said, “a knowledgeable man knows the right thing to do but doesn’t do it but an educated man knows and does the right thing.” If you ask me, one of the best ways to do right by your children is to do right before them.

Changing the nation...one mind at a time.

Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

TUNJI OLAOPA

level of their understanding; and what best avenue to do this than through their indigenous languages.

As far as the development discourse go, this is a solid argument that speaks to one dimension of the development issues. But then, reform thinking has never been founded on unilinear thinking about anything.

The business of institutional reform demands a rounded perspective that takes insights from multiple levels. In this case, the mother tongue thesis lacks the immediacy demanded by Nigeria’s development troubles. In other words, there are so many dimensions of the development impasse that the thesis fails to speak to directly.

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Dapel is a past fellow of the Scottish Institute of Research and Economics

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Strong FX potential seen in $4bn coconut market for Nigerian growers JOSEPHINE OKOJIE

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igerian farmers and exporters can tap into the $4billion global coconut market to earn foreign exchange to improve their livelihood as demand continues to rise with key producers struggling to keep up.

Coconuts’ remarkable level of resilience means that they can be grown on a wide variety of soils, although they do require a relatively high amount of rainfall.

It is a cash crop that is grown in 22 of Nigeria’s 36 states, with Lagos State having the largest production area.

The crop serves as a raw material for numerous industries such as the pharmaceutical, cosmetics and food and beverage, with limitless domestic and export potentials.

The most sought-after component of the fruit is the coconut water, which is very rich in potassium and other electrolytes, is considered a health drink and recommended for diabetic patients, among others uses.

“It is a great opportunity that farmers can tap into, especially now that the country is in need of dollars,” Mufutau Akinlolu, president, Coconut Growers Association in Badagry, told BusinessDay in a telephone interview.

“The government needs to invest in new trees and fertilisers to

increase yield per hectare and also in the value chain. There is very little investment in coconut processing currently,” Akinlolu said.

Akinlolu stated that for the country to increase its production of the coconut crop, the government must address the issue of land acquisition, which he noted is the biggest challenge confronting farmers.

Despite the potential of the crop, the country is yet to fully harness

the economic benefits from growing coconut, on account of aging trees and low-quality seeds, say experts.

“Most of the coconut trees in the country are aging and there is a need for their replacement,” Akinlolu added.

The coconut fruit is also processed into fine vegetable oil that can be used for cooking as well as for cosmetics.

Nigeria produced about 288,615 metric tonnes of coconuts in 2017

and occupies the 18th position on the world coconut production index, according to data obtained from The Food and Agricultural Organisation (FOA).

Coir, which is the fiber from coconut husk, is used in making ropes, rugs, mats, brushes, sacks, caulking for boats and stuffing for fiber mattresses.

The fronds (leaves) are used for brooms, cooking skewers, woven into mats or burnt to ash to yield lime.

The husk and shells are a source of charcoal and can be used for fuel.

Celestine Ikuenobe, director at the Nigeria Institute for Oil Palm Research (NIFOR) says that coconut “is a crop in which the country should exploit its comparative advantage because it can be grown in 22 states. It grows very well mostly in coastal regions.”

Ikuenobe had told BusinessDay in 2017 that the country would soon have new investments in the cultivation and production of the coconut in Cross River State, adding that the institute had already been contacted by a group of new investors. He added that the investors had approached the institute to develop hybrid coconut seeds.

He said traders were already exporting the crop on a very small scale, calling on the government to assist in boosting the production of the crop to enable it to earn foreign exchange for the country, especially now that the government is focused on diversifying its revenue through agriculture.

According to Ikuenobe, there are now hybrid varieties of coconut that mature and bear fruit in between two and three years.

Currently, the price of a metric ton of the crop has increased by 9 percent from $657.3percent in July to $719.3percent in August, according to data obtained from Index Mundi.

UM6P, OCP Africa launch impulse accelerator NEPC identifies cocoa, rice as strategic programme for agritech start-ups export products for Cross River

…to provide solutions to smallholder farmers challenges JOSEPHINE OKOJIE

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h e Mo h a m m e d V I Polytechnic University (UM6P) and OCP Africa have collaborated to launch the impulse accelerator programme for start-ups in the agritech space to provide solutions to problems limiting African smallholder farmers’ productivity.

The programme aims to help start-ups in the fields of agritech, agricultural biotech, mining tech, and materials science and nanotech build capacity and address issues facing the African smallholder farmers and reinforce the innovation system of OCP Group.

The programme is also designed to contribute to the development of innovation hubs in Morocco and the rest of the African continent.

Adnane Alaoui Soulimani, programe director, Impulse, explained that Impulse accelerator programme is the first step towards the creation of a much bigger sector-agnostic accelerator called - MassChallenge Africa, that will accelerate

each year between 50 to 100 start-ups working on African farmers’ challenges.

“Start-ups that will be selected for our program will benefit from the mentorship of senior managers and business experts from OCP Group, one of the world’s leaders in the fields of phosphate and phosphate based fertilisers,” Soulimani said.

“Start-ups will also have access to potential business opportunities, training and prize money,” he addeHe noted that application is currently on-going for startups who can use technology and science proffer solutions to farmers’ challenges, noting that it would run through to 30th September, 2019.

Also speaking during the launch, Caleb Usoh, country manager, OCP Nigeria, said that OCP Africa was moving from mining fertiliser and producing to partnering with entrepreneurs that have innovative ways of addressing issues of smallholder farmers.

“OCP is concerned with the rapid population growth in Africa and the need to harness opportunities in the www.businessday.ng

trillion-dollars agric economy by adding value through collaboration to expand the agricultural space,” Usoh said.

In his keynote address, Ayodele Balogun, business technical services, African Fertiliser and Agribusiness Partnership, noted that until recently, much attention was not paid to sustainable agriculture in Nigeria.

He urged the start-ups to provide solutions that improve productivity and bring in transparency into the sector.

“Start-ups need to come up with technology and new methods that will change the culture in the sector and create value,” Balogun said.

Dennis Goje in his keynote speech advised star t-ups to familiar ise themselves with government socio-economic policies in order to identify the opportunities therein.

“It is critical to understand government policies as they concerns agriculture in order to be successful and I encourage start-ups to pay careful attention to these policies,” Goje said.

MIKE ABANG, Calabar

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mmanuel Etim, trade promotion advisor, Nigerian Export Promotion Council Calabar Office, has said that his agency has identified cocoa and rice as strategic export products whose potentials can be harnessed to generate foreign exchange, c re at e j o b s, g row t h e nation’s gross domestic p ro d u c t ( G D P ) , b o o st global esteem, promote industrialization.

Etim disclosed this in Ikom Local Government Areas of Cross River State d u r i n g a n i n t e ra c t i v e meeting with cocoa stakeholders and exporters in the cocoa value chain over the weekend.

“As you are aware, the Nigerian Export Promotion Council is the apex agency of the Federal Government to spearhead the diversification of the national economy through the development and promotion of the nonoil export sub sector. The

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council has initiated the implementation of the one State, one product (OSOP) as a veritable tool for achieving t h e z e ro o i l n a t i o n a l economy in each State of the Federation including Cross River on export promotion’’ He said the interaction would explore possible areas of cooperation to boost the development of Cocoa in the State for export. The meeting also focused on achieving massive production and @Businessdayng

massive marketing, identify cocoa produce for export, identify reputable cocoa value chain, impute and suppliers, seedlings, appropriate chemicals, among others.

The promotion advisor said the meeting also afforded the agency opportunity to know the current level of youths’ involvement to sustained cocoa production in the State.

Wednesday 18 September 2019

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How Nigeria can leverage greenhouse technology to achieve food security

10,000MT silo ready in 5months, says Oyo government

JOSEPHINE OKOJIE

...settles contract litigation

he adoption of greenhouse technology in farming has been seen as a way of narrowing the increasing food gap in Nigeria as its population growth rate continues to grow at an alarming rate.

Nigeria is currently populated by 200 million people who must be fed.

However, there is still much demand-supply gap in most of its food, even as the population growth rate stands at 2.6 percent per annum.

Stakeholders in the agric sector believe that with the adoption of greenhouse technology and innovative farming techniques, Nigeria can reduce its food insecurity risks.

“Greenhouse technology is aimed at providing farmers with an all year round technique to produce and increase the yields of greenhouse crops such as tomatoes, pepper, cucumber and sweet-melon,” Antti Ritvonen, former country manager of Dizengoff Nigeria said.

“It is a technique which provides steady income for

REMI FEYISIPO, Ibadan.

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he Federal Government has indicated its readiness to collaborate with the University of Ilorin (UNILORIN) to maximise the part of the university’s 15,000 hectares of landmass for agricultural purposes.

Mo h a m m e d B r i m a h, special adviser to the President on Job Creation and Youth Employment, d i s c l o s e d t h i s re c e nt l y during the commissioning of the N-Power Business Ventures Farm at UNILORIN. Br imah des cr ibe the N-Power Business Ventures Farm as impressive and one of the most successful social investment programmes (SIP) of the Federal Government.

He s a i d t h e Fe d e ra l Government was hopeful that the N-Power programme would inspire the kind of initiative that had emanated

g ov e r n m e n t m e t t h e project at the stage of incompletion and subject of litigation despite the disbursement of over 98percent of total contract sum by the immediate past administration and the work done to date was adjudged to be 67.8percent.

He said the present administration entered into dialogue with all stakeholders to settle the issue amicably out of court as it was in the interest of the state to have value for the huge amount of money already expended on the project.

“The present administration met the contract at 68percent completion and a lawsuit which we immediately entered into and settled amicably out of court.

The result is what you are witnessing today,” he said.

“We have successfully resolved the issue and the contractor is back to the

will help in the export of farm produce that hither to have always suffered destruction due to rot as farmers do not have facilities to store in this capacity,” the commissioner said.

Ojekunle charged the contractor to reciprocate the kind gesture of Governor Seyi Makinde, by swinging into action as soon as the fund was released to ensure the project would be of good quality and completed and delivered within the shortest period stipulated.

Mufutau Raheem, executive chairman, Ra hve t Int e r nat i o na l Limited, appreciated the Governor Makinde for the opportunity given his company to return for the completion of the project and gave his words of assurance by promising that the project would be completed and delivered at the stipulated period of five months’ time.

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the farmer as well as the transfer of knowledge on how to improve the quality of their produce, reduce field losses and ensure higher profit for their investment,” Ritvonen said.

With greenhouse technology Nigeria can bridge its demand –supply gaps in the production of fruits and vegetables as well as double its production.

Countries like Kenya and South Africa in Africa are leveraging greenhouse technology to boost their fruits and vegetables production.

Experts say that farmers using greenhouse technology can recoup their investment within the shortest possible

period as the average yield of a vegetable grown using the technology yields about 30 times more that on the same square meter in an open field farm.

They noted that the technology encourages all year round production and protects the crops against pest and diseases as it is grown in an enclosed environment.

Nigeria’s demand for vegetables is put at over 2.3 million metric tons per year and the country is only able to produce just about 1.8 million metric tons, with the adoption of greenhouse technology, the country will be able to narrow the gap.

Currently, it is estimated that Kenya has over well

172,000 units of greenhouse technology while Nigeria has about 4,000 units.

“Growing your crop using greenhouse is a very wise decision. You grow more using less space,” Dokun Ogunbodede, managing director, Sedfort Limited told BusinessDay on a visit to his greenhouse farm in Ogun state.

Ogunbodede said that the country would only benefit from greenhouse technology when there is a serious effort from the government to support farmers in buying the units.

He says it is currently too expensive for farmers to afford despite its ability to boost their productivity.

FG, UNILORIN collaborate on agriculture SIKIRAT SHEHU, Ilorin

yo State Government has said that the 10,000 metric tonnes (MT) silo project at Aawe in Oyo town would be completed by contractors within the next five months.

The contract had been a subject of litigation when the last administration revoked it. The contractor claimed it was at 68percent completion stage and headed for the law court to seek redress.

Muyiwa Jacob Ojekunle, Commissioner for Agriculture, explained that the present

site today as documents relating to the contract have been perfected and he is to complete it to avoid waste of scarce resources.

“The contractor has promised that the completion period is five months and after this, we believe that our farmers will be the ones to benefit from the project as the present administration is poised to make farm produce available to the people at cheap price,” he added.

“The silo will assist in storing 10,000 metric tonnes of grains and other farm produce, while it

from N-Power beneficiaries who have taken the initiative to collaborate with the University of Ilorin.

“We are now moving to the promised land. Plans are in place to implement pending SIP and also commence State level SIPs,” he said.

While elaborating on the N-Power programme, the University of Ilorin alumnus said that, “What we are doing here today serves as a typical example of what the Federal Government set up to achieve by running Social Investment Programmes in our country”.

“We currently have over 520,000 N-Power youth across the country selected on an online platform. Their identities are authenticated through their BVN and bank details (submitted online) by NIBSS. “The programme was initially designed to run for two years, after which the beneficiaries will exit the www.businessday.ng

programme.

“It is expected that within the period of volunteering, you will have developed adequate skills, have access to finance, gathered relevant experience and also developed strong work ethics. There are various opportunities for N-Power vo l u nt e e r s t o e x i t i nt o permanent employment programmes,” he noted.

In his address, Abdulkareem Age, professor of Engineering and the Vice-Chancellor of the University of Ilorin, who was represented by Mikhail Buhari, Deputy ViceChancellor, noted that the university decided to key into the agricultural policy of the President by making further use of its land for agricultural purposes, given that only 1,200 hectares were utilised over the last 40 years.

Abdulkareem disclosed that the university had

entered into partnership with two different agricultural industries, which will make use of a total of about 12 hectares.

He explained that the University management had tackled the violation of the University Research Farm and other parts of the University campus by h e rd s m e n t h ro u g h t h e provision of infrastructure such as schools and homes for the herders, some kilometres away from the core academic activities at the University.

In his remarks, Olusegun Adeyemi, head of the Kwara State Office of the National Orientation Agency (NOA), who is also an alumnus of the University, urged the University management to take the partnership further by providing farm settlements for the N-Power farmers operating on the University Campus.

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COMPANY NEWS ANALYSIS INSIGHT

BANKING

Five foreign lenders account for 78% of Nigeria’s imported capital in 3 years ISRAEL ODUBOLA & SEGUN ADAMS

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n analysis of Capital Importation data in the first half since 2017 shows that Nigerian outlets of global banking majors have been a conduit for no less than 70 percent of imported funds, leaving 21 local peers scrambling for the rest. Data shows an average of 78 percent in three years.

The overseas-based lenders enjoy the international presence of their parent companies and can easily tap into their group’s balance sheet and expertise to edge out local players. Also, foreign lenders usually offer more attractive terms of credit and fees.

This on the part of domestic players highlight the low global presence of Nigerian brands, inadequate knowledge in global investment and deal structuring, and a relatively less robust balance sheet, among others, experts say.

For instance, a South African foreign inves-

tor who wants to borrow fund to invest in Nigeria would find it easier approaching a Standard Chartered Bank which has Stanbic-IBTC Holdings as its Nigerian Subsidiary for all or some of the above-stated reasons.

Otherwise, the foreign investor would have to meet local lenders who

might even need to form a consortium in other to raise the necessary fund.

The Capital importation data published quarterly by the National Bureau of Statistics (NBS) shows how many foreign funds come into the country, by type, by sector as well as the financial institution serving as

channels.

In the mid-year periods, Nigeria banks have been accounted for less than 30 percent of total capital inflows; in 2017, 27 percent was channeled through local banks then it dipped to 17 percent in 2018 then rebounded to 22 percent in 2019.

In monetar y terms,

Ni g e r i a n b a n k s h av e floated $5.9 billion in the last three half-year periods while the Foreignbased lenders flowed in $22.9 billion or about four times more than their domestic counterpart.

Stanbic IBTC Holdings has in the last three years remained dominant with

42 percent of the $28.8 billion total capital importation in the period facilitated through the bank.

In the second place, Standard Chartered Bank Nigeria Limited has accounted for 12.86 percent or $3.71billion while Citibank Nigerian Limited, with group head in New York has seen 11.81 percent flow through in the review period.

The other three foreign lenders are Rand Merchant Bank, a South-African lender (9.29%), and Ecobank Transnational Incorporated Nigeria, with head office in Lome, Togo (3.41%).

On the other hand, Nigerian tier-one lender Access Bank accounts for 5.19 percent or $1.497 billion while United Bank for Africa (UBA) accounts for 2.32 percent which is $669 million.

Zenith Bank floated in 3.97 percent or $1.1 billion, Guaranty Trust Bank (GTB) 1.9 percent or $547 million and First Bank of Nigeria Holdings (FBNH) floated in 2.1 percent or about $605 million.

OIL & GAS

Saudi Aramco may shift IPO as risks mount on oil assets

…Moody’s says attack is credit negative OLUFIKAYO OWOEYE

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tate-owned Saudi energy company, Aramco, is considering shifting its initial public offering date after a drone attack shaved more than half of the kingdom’s oil output.

A r a m c o, t h e w o r l d most profitable company is preparing for an IPO, dubbed the world’s largest initial public offering, in which it had hoped to first sell a sliver of itself to investors on the local Saudi exchange and then list shares internationally, the listing plans have long been dogged by questions overvaluation.

The weekend attacks present Aramco with arguably its biggest hurdle so far on the road to going public.

However, the company is expected to move forward with presentations to

analysts and meetings with bankers as planned, but Saudi energy officials and Aramco executives are debating a rescheduling of the IPO until after the company fully restores its production to normal levels.

Officials had hoped to pull off its Saudi listing sometime in November.

Officials say that they want to wait to get a full assessment of the damage from the attack before pushing any listing back.

Rehan Akbar, Moody’s vice president, said the attacks on Saudi Aramco’s oil facilities on Saturday are “credit negative and the disruption is significant,” said Akbar added that the rating agency does not expect the attacks “to leave a long-lasting impact on Saudi Aramco’s financial profile given its robust balance sheet and strong liquidity buffers.”

“This event, however, highlights the credit linkages the company has to Saudi Arabia both in terms of geographic concentration, and more importantly exposure to geopolitical risk,” Akbar said on Monday The attack on the heartland of Saudi Arabia’s oil industry, including damage to the world’s biggest petroleum-processing facility has driven oil prices to their highest level in nearly four months. The attack also shut 5percent of world production has seen oil prices ballooned as high as 19percent, the highest intraday surge since the 1991 Gulf War. The attack on stateowned producer Saudi Aramco’s crude-processing facilities at Abqaiq and Khurais cut output by 5.7 million barrels per day with accusing fingers pointed at Iran, a claim Tehran has denied.

The two countries, Saudi Arabia and Iran, have been enemies for decades and are fighting a number of proxy wars, also tensions between United States and Iran are already running high because of a longrunning dispute between the two nations over Iran’s nuclear program that led the United States to impose sweeping sanctions In a swift reaction to the attack, Donald Trump, U.S. President, has authorized the use of the U.S. emergency oil stockpile to ensure stable supplies while also threatening that the U.S was “locked and loaded” for a potential response to the attack on Saudi Arabia’s oil facilities.

The implication on total crude oil supply A c c o rd i n g t o I n t e rnational Energy Agency (IEA), the Organization of the Petroleum Exporting Countries (OPEC) global

supply cushion was just over 3.21 million barrels per day (bpd) before the attack, out of this; Saudi Arabia had 2.27 million bpd of that capacity, leaving around 940,000 bpd of spare capacity, mostly held

by Kuwait and the United Arab Emirates.

U.S. shale producers to the rescue?

U.S. shale producers have added millions of barrels to global crude supply in recent years; however, this does not mean they can fill the gap for lost barrels from weekend attacks on Saudi Aramco facilities.

The spike in oil prices offers relief at a critical time for U.S. shale producers, which have seen investors flee after the sector largely failed to generate shareholder returns while rapidly growing output.

Shale producers generally could use the expected jump in crude prices to

add hedges, or contracts that lock in future prices, allowing them to capture some of the expected price increase. Also, if the Saudi outage is prolonged and oil prices rally significantly, then shale producers will raise output.

Where does Nigeria stand in this mix Sadly, the increase in oil prices does not translate to increase in revenue as the government would have to spend more on subsidy. The country still depends largely on fuel refined abroad to meet the local demand. According National Bureau of Statistics, the Federal Government spending on the importation of Premium Motor Spirit, also known as petrol, soared by nearly 50 percent to N2.95tn in 2018, while the country spent N1.97tn on PMS imports in 2017, N1.63tn in 2016 and N1.14tn in 2015.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: Samuel Iduh

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Wednesday 18 September 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

DEALS

Digital banking startup raises 10mn Euros for Nigeria investment JUMOKE AKIYODE-LAWANSON

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airMoney, a Parisbased fintech startup, has closed a 10 million-euro Series A round of investment that will be used to scale the company’s engineering team in order to develop a fullyfledged mobile banking offering in Nigeria and beyond.

The investment round was led by Flourish, a venture of The Omidyar Group, the partners of DST Global, and existing seed investors Newfund, Speedinvest, and Le Studio VC. Launched in 2017, FairMoney started as a mobile app that uses alternative smartphone data to underwrite microcredit in Nigeria. Today, more than 200,000 customers use FairMoney, with a majority using the platform to finance their small business needs. Alongside the investment round, FairMoney has

also introduced the in-app payment function to its users, which allows them to top up their phone subscriptions, buy mobile data, pay electricity or internet bills, among others, already facilitating more than 400 payments daily.

The company has revealed that other features, such as digital wallet and saving account are scheduled to launch soon.

“Our vision is to build a holistic financial platform for underserved customers in emerging markets. We want to do that by offering an easyto-use product to our customers and become a financial one-stop-shop for them,” said Laurin Hainy, CEO of FairMoney. “We started with credit for small business owners and individuals, and we are expanding our services rapidly.

Think digital bank for emerging market consumers.”

AccordingtotheWorldBank, more than 2 billion people glob-

ally have limited access to financial services and working capital.

Access to loans for this segment is extremely limited given that they do not have a credit score.

FairMoney’s approach to underwriting credit is based on a proprietary algorithm that applies machine learning techniques to smartphone data. The average loansare30Eurosandcustomers can grow their loan limits up to 400 Euros over time by showing good repayment habits.

“After backing digital banks in the US, UK, Latin America and South Asia, we are excited to support one of the first companies to bring this model to Africa. We believe that customers will ask a lot more of their banks--to be relevant, banks will have to move fromserviceproviderstobecome financial mentors for their customers,” said Ameya Upadhyay, principal at Flourish and FairMoney’s new board member.”

Continue online @www. businessday.ng

L-R: Muyiwa Gbadegesin, MD, Lagos State Waste Management Authority(LAWMA); Sade Morgan, corporate affairs director, Nigerian Breweries Plc/chair, Food and Beverage Recycling Alliance(FBRA), and Chris Ogbechie, director, Lagos Business School, sustainability centre, at the CEO Roundtable on Sustainability in Lagos

APPOINTMENT

Advans La Fayette MFB makes new executive appointment JOSEPHINE OKOJIE

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dvans La Fayette Microfinance Bank has announced new executive leadership appointments in its bid to transform the business into a growth-oriented and customer focused financial institution following its national license status upgrade.

Charged with the task to position the bank innovatively with a huge appetite for growth and digitization of the company is Gaëtan Debuchy, managing director/chief executive officer.

Debuchy is expected to deliver expert services to transform the MFB into an expanded financial services organisation that drives customer satisfaction, SME growth and become a reference in the Mi-

crofinance industry in Nigeria.

Also announced is Obinna Ukachukwu, as deputy/chief executive officer, who is expected to combine marketing and communications, risk, back office operations, business development management and strategy as a single function.

Ukachukwu is an executive management leader and a business growth expert with a proven record of accomplishment in risk management and business development.

He will create a consolidated team with a clear mandate for driving global growth while creating sustainable impact for the SME’s.

Completing the list is JeanLuc Nzoubou, also appointed as a deputy/chief executive officer. Nzoubou is backed with solid experience in the

launching and rapid growth of affiliates, in Cameroon and Ivory Coast, with an absolute knowledge of the Advans Group, and comes to Advans LaFayette with a proven expertise in people management and microfinance operations.

He will strengthen and accelerate the commercial activity and drive the national expansion of the bank’s network in the coming years.

According to the bank in a statement, the appointments is a building block for Advans La Fayette Microfinance Bank transformational journey, as the organization is moving quickly to structure for faster growth and also to ensure they are positioned to respond to the needs of SMEs. Continue online @www. businessday.ng

L-R: Wale “Tec” Davies, member, ShowDemCamp rap group; Chinwe Greg-Egu, brand manager, Tiger Beer; Grace Omo-Lamai, human resources director, Nigerian Breweries Plc; Emmanuel Oriakhi, marketing director Nigerian Breweries Plc, and Olumide “Ghost” Ayeni, member, ShowDemCamp rap group, at the launch of Tiger Beer’s new 33cl sleek can, in Lagos, recently.

APPOINTMENT

Microsoft appoints Gafar Lawal as MD of African Development Centre in Nigeria

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icrosoft has appointed Gafar Lawal as the managing director of its Africa Development Centre in Nigeria, launched in May 2019.

With more than 20 years of experience in various business functions, Lawal returns to Microsoft from Morgan Stanley where he served as Managing Director and Global Chief Technology Architect for the Wealth Management Division. Prior to his time at Morgan Stanley, Lawal spent over six years working at Microsoft’s US headquarters in Redmond, WA as Partner Architect in the Windows server group and Windows phone services division. He also spent ten years as First Vice President and Chief Technology Architect at Merrill Lynch.

“The ADC is unlike any other existing investment on the continent – enabling us to better listen to our customers, develop locally and scale for global impact – in the grand scheme of things, presenting a strategic opportunity for us to comprehend a continent that is rapidly adopting cloud technology and massive innovation at the intelligent edge,” says Mike Fortin, corporate vice president at Microsoft.

“We’ve been actively sourcing talent to join our team of engineers and are delighted to have Gafar bring his leadership skills to the team.”

ADC engineers are already working with local partners and customers on key issues for Nigeria, Africa, and the rest of the world. Through the

creation of an employment pipeline, local graduates and experienced technologists from industry can join Microsoft at the ADC in Lagos to begin or continue exciting careers in areas that include AI, mixed reality, and application development – making meaningful contributions on a local and global scale.

“I am looking forward to embarking on this incredible new journey with the Microsoft team and effectively playing my part in bringing digital transformation to the continent at large.

I hope that as we continue to not only identify and nurture talent but also bring about unprecedented change, that we will continue to aid every individual involved to achieve more,” concludes Lawal.

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L-R: Bode Ayeku, president/chairman, governing council, Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN); Sade Morgan, corporate affairs director, Nigerian Breweries Plc, and Obafemi Omokungbe, rector, Yaba College of Technology, at the presentation of award of excellence in corporate governance (corporate category) to Nigerian Breweries Plc, at the 42nd ICSAN annual conference/dinner in Lagos

L-R: Charles Elliman, senior vice president, commercial, Middle East and Africa; Samson Isa, director, Clickatell West Africa; Austine Abolusoro, group head, online banking, UBA Plc, and Hannes Van Rensburg, chief commercial officer, Clickatel Nigeria, at the 2019 Clickatell customer appreciation forum in Lagos.

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Wednesday 18 September 2019

BUSINESS DAY

19

cityfile Oyo moves to shut illegal schools

Air Commodore Mohammed Yusufu, commander, 153 Base Services Group Yola, who is representing the Chief of the Air Staff, deworming a child during a free medical outreach

by Nigeria Air Force for WauruJabbe community in Yola South Local Government Area of Adamawa State on Monday.

NAN

REMI FEYISIPO, Ibadan

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Ebonyi community rejects airport project NKECHINYERE OGINYI, Abakaliki

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he people of Aguogboriga and Onueke, Umuoghara in Ezza North local government area of Ebonyi, have rejected the planned siting of an international airport in their community, urging the state government to rather move the project to a “vast empty land in Agu Umuoghara.”

The people who, argued that the Aguogboriga, is their ancestral h o m e, a c c u s e d s o m e stakeholders of in community of bringing government into their land so that they can use the opportunity to acquire land and build hotels and other business ventures in the area.

The state governor, David Umahi had secured the approval of President Muhammadu

Buhari and Federal Aviation Authority of Nigeria (FAAN) for the construction of an international airport after mapping some hectares of land in Ezza North and Ezza South local government areas of the state.

The acquired lands include Amuzu and Oriuzor. But the locals are contending that over 3,000 houses in the community have been marked for demolition as a result of the project and this will bring untold hardships on the people.

The governor, however, last week invited all the stakeholders in Ezza North and South to a meeting, where he promised to pay compensation to the people that would be displaced as a result of the airport project.

But residents of t h e A gu o gb o r iga a n d Onueke moved en mass

and protested extension o f t h e p ro j e c t s i t e t o their community accusing some stakeholders of masterminding the extension to enable them build hotels and other facilities in the area.

Bulldozers were seen clearing lands in Aguogboriga community last weekend while the resi d e nt s ; a g e d w o m e n , men, youth, school children in their hundreds moved in to protest against it.

The protesters carried their properties to the site to protest the acquisition of their lands.

Speaking to journalists, some of their leade r s, i n c l u d i ng A gu i y i Oke, Ignatius Akochi, Alieze Igwe, Nwafor Toochukwu, Anyigor Innocent, Obioma Okohu and Cecilia Nwafor said they were not against construction of the airport but that Aguogboriga community which

they described as their ancestral home should not be included as the project site.

They appealed to the state government to take a vast land in Agu Umuoghara which they said was larger than the whole project site for the construction of the airport.

They explained that their crops have been destroyed with bulldozers and raised the alarm that hunger was imminent in the community even as they lamented that no records of the c ro p s a n d l a n d ow n ers were taken before the bulldozers started clearing the lands in the community as a sign that they would be compensated.

“In the history of Ezza nation, no village has ever collapsed or migrate into other community for cluster or resettlement,” they said.

Flooding: Residents brace up as rains pound A/Ibom ANIEFIOK UDONQUAK, Uyo

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esidents of Uyo, the Akwa Ibom State capital are bracing up for flooding as heavy rains continue to wreak havoc with many streets being washed away.

Properties worth several millions of naira are reported to have been lost due to the flood.

Experts have warned that due to the impact of climate change, many communities are likely to witness flooding and environmental disasters.

According to checks,

the rains have been pouring recently even when ‘August break’ had been expected to set.

Among the areas worst affected are Abak Road, Wellington Bassey Way and Urua Ekpa Street, all within Uyo metropolis.

As part of efforts to check this menace, however, the state government in partnership with the Federal Government is set to begin flood control programme along IBB Way in the state capital in which the a section of the road had been cut off.

Commuters had lamented untold hardship www.businessday.ng

on the IBB Way. The partnership is said to have been sealed earlier at a pre-bid meeting procedure for the construction of surface and underground drainage structure for collection and final discharge of metropolis flood water.

The project is expected to be undertaken by Erosion & Watershed Management Project which is backed by the World Bank.

The commissioner for environment and petroleum resources, Ekong Sampson, who led the inspection team, thanked the World Bank and the

Federal Government for partnering the state government to salvage the flood situation on the IBB Way and its environs.

Sampson stressed that Akwa Ibom would not compromise speed and efficiency in the award of the IBB Way contract, emphasising government’s is commitment to a holistic approach to tackling flood and erosion in the state.

It was not however clear when the flood control project would begin given that the road which is in the heart of the town has been in a deplorable condition for months.

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yo State government says it is set to shut illegal private primary schools. The government said on Monday that a taskforce would be set up in earnest to address the menace.

Nureni Adeniran, executive chairman, Oyo State Universal Basic Education Board (SUBEB), who stated this during an inspection of schools in the state capital, said that the government without further delay would constitute a task force for this purpose.

According to him, the task force would close down all mushroom private schools endangering quality in the education sector.

Ad e n i ra n , h o w e v e r, charged parents and guardians to enrol their children and wards in public schools, noting that the free education policy by Governor Seyi Makinde was already yielding positive results in schools in the 2019 academic session.

“Looking at the influx of new intakes in public schools, it is apparent that the free-education policy is yielding good fruits in the state.

“It is important that those private primary and secondary schools be put under searchlight to know those operating without government approval and monitoring.

“We will henceforth close such schools found within the state,” he said.

The chairman expressed government’s readiness to place public schools as favourable competitors with private schools, saying the government was working on the provision of basic amenities for both teachers and students.

Schools visited by the SUBEB chairman and his team include People’s Primary School, Adeoyo, Street; Williams School, Oke-Ado; AUD School, Foko; Islamic Primary School, Bode; St. David Primary School, Kudeti among others.

Oyo begins mobile court trial of traffic offenders REMI FEYISIPO, Ibadan

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raffic offenders apprehended by Oyo State Road Traffic Management Agency (OYRTMA) are now face mobile court trial, Akin Fagbemi, chairman of the agency has disclosed.

The mobile court will start sitting on Wednesday, September 18, 2019 (today).

Fagbemi, disclosed when this when the Chief Magistrate of Oyo State Mobile Court, Moruff Mudashiru visited him in Ibadan. Fagbemi charged the court to ensure fair and speedy trial of offenders to minimise what he called the culture of indiscipline by some road users in the state.

He expressed the readiness of the agency to work closely with the judiciary to bring the nuisance of unnecessary traffic violation to a halt as his men have been trained to be civil in their approach to motorists while they were on the road.

The OYRTMA chairman maintained that motorists whose vehicles were confiscated or impounded by the officers of the agency would be made to face the mobile court.

“We are ready to work @Businessdayng

with the mobile court to bring to barest minimum, the culture of road indiscipline by some road users who will not respect the rights of others on the road by parking indiscriminately, driving against the traffic flow among other offences.

“By Wednesday, the court will start trying offenders and we will give the mobile court the best of our support to make their job easier and prompt to ensure sanity is returned to our roads,” Fagbemi said.

He solicited for the commitment of the court in speedy adjudication of all cases in line with global best practices and dictate of the traffic laws of Oyo State so as to promote development.

The chief magistrate, Mor uff Mudashir u expressed satisfaction with the operational and administrative changes at the agency since the appointment of Fagbemi as its executive chairman.

He further affirmed that sanity would be returned to the highways and major roads across the state as all traffic offenders would be tried fairly without recourse to social status, creed, gender, religion or political affiliations.

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Wednesday 18 September 2019

BUSINESS DAY

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Wednesday 18 September 2019

BUSINESS DAY

21

FINANCIAL INCLUSION

& INNOVATION

Identity remains barrier to financial inclusion target …as big banks attract KYC penalty of N10m in H1’19 Stories by ENDURANCE OKAFOR

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h e p rov i s i o n of identification and other relevant documents are the bedrock for on-boarding a customer in the bank. The lack of such means of identity is one of the reasons why 36.6 million Nigerian are excluded from the financial cycle, BusinessDay survey has shown.

According to Lanre Osibona, the Senior Special Adviser to the President on Information, Communication and Technology, over 37 million Nigerians have been registered under the National Identity Number (NIN).

Nigeria’s current population is estimated by the United Nation (UN) to be around 201 million people; going by that figure, Africa’s most populous nation has about 164 million of its citizens without any formal means of identification, as compiled from BusinessDay’s calculation.

Commenting on the issue, Uzoma Dozie, the last Group Managing Director of Diamond Bank, and Founder/CEO of Sparkle, a mobile-first platform said

the lack of identity resulting from low collaboration between various institutions in Nigeria is the reason for the country’s high exclusion rate.

“To spur financial inclusion; one of the major requirements is identity.

India was able to solve its financial inclusion problem through the introduction of the Pradhan Mantri Jan Dhan Yojana (PMJDY) system, which is used as a means of identity, and through that people could open bank accounts,” Dozie told BusinessDay. As part of the Know Your Customer (KYC)

and Customer Due Diligence (CDD) procedures as implemented by the Central Bank of Nigeria (CBN), Deposit Money Banks (DMB) in Nigeria are required by the regulator to obtain identification documents before opening account for their customers.

“I went to open a bank account and they asked for my National Identity card; it made me shy because people were looking at me for not having anything to show. So now I want to register because even if I don’t want to open account again, I

need the ID card to receive the money my sister will send to me from the US,” Ofure Imafidon lamented.

Checks by BusinessDay revealed that Nigerian biggest banks paid penalty to the tune of N10 million in the first six months of 2019 for issues relating to the document used in opening accounts for their customers.

“During the period, the Bank paid a penalty to CBN of N2 million for newly opened accounts without evidence of independent verification of means of identifica-

tion and search report for some corporate accounts,” Zenith Bank said in its Half year financials.

The same amount was paid by Guarantee Trust Bank (GTB) for AML/CFT regulation on three tiered KYC. While in the same per iod under review, United Bank for Africa (UBA) paid N6million as penalty resulting from “deficiency in account documentation/late record retrieval.”

In January 2012, the apex through its collaboration with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) in which it projected that it will ensure 80 percent of Nigerian adult population are included into the financial cycle by the year 2020.

Latest figures by EFInA put Nigeria’s financial inclusion rate at 63.2percent, meaning that as much 36.8 percent adults still lack access.

If the CBN is going to achieve its 20 percent exclusion rate by 2020, the lender would have to ensure it bridge the 16.8 perecnt inclusion gap in less than five months.

“For millions of Nigerians to have means of identification, we would have to leverage technology,” Dozie said.

According to Oghogho Osula, financial expert and former Managing Director/Chief Executive Officer of Coronation Trustees Limited, Nigeria has a large mobile market, and the huge number provides an opportunity to use it in deploying easy-to-use technology that can improve access to financial services across Nigeria’s mobile financial service platform and “could be the answer to bridging the gap in inclusion level.”

Data by Nigerian Communications Commission (NCC) analysed by BusinessDay revealed that the total number of subscribers per each individual telecoms operator as at June 2019 stood at 173.75 million.

“With a very well-developed mobile market, and many tech-savvy consumers, there are exciting opportunities for mobilebased digital identity solutions in Nigeria,” Calum Handforth, Senior Consultant at GSMA said.

Fast Credit targets 36m unbanked Nigerians through micro loans …partners PFS for accounts reconciliation solution

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ast Credit Limited, a financing house focused on providing fast and need-oriented, payroll-based consumer loans, has said it is rolling out products that will not only provide credits to low-income earners, but will also include them into the financial net.

Established in August 2014, Fast Credit is into the business of financing personal, business and emergency loans with more of its portfolio in the public sector.

According to Idechi Amucheazi, Group Head, Fintech & Innovation at Fast Credit, the company is designing products that will encapsulate the needs of the specific sector of the society, all in line with the financial inclusion agenda

of the Central Bank of Nigeria (CBN).

“Yes we have something we are currently working on for the unbanked informal sector and within the next few weeks we’ll be launching it,” Amucheazi told BusinessDay during a recent press briefing at Fast Credit headquarters in Lagos.

In his remarks, he added that it was important that Fast Credit knew what the financially excluded Nigerians were into and how they do it in order to design suitable products to meet their needs.

“All of it will fit into our own process and we want something that will be technology driven in order to avoid the traditional way of reaching out to them.”

The national financing house licenced by the CBN will be targeting about 36.6 million Nigerian adults, representing 36.8percent of the Nigerian adult population, who do not have access to formal financial services.

“Fast Credit is into the micro lending market because there are huge untapped opportunities in the market. We provide value-based lending to this bottom of the pyramid that may not have access to credit from the traditional banking system in line with the financial inclusion policy of the CBN,” Emeka Iloelunanchi, Chief Operating Officer, Fast Credit, said.

The lender is different from some conventional credit-financing institutions because while some

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commercial banks require a customer to have a bank account with them before they can access loans, Fast Credit does not care if a customer has an account with them or not before giving such a person a loan.

“The bottom line is that we have entered into partnership with the relevant agencies, authorities and employers which makes our loan repayment policy seamless and this gives us an almost zero nonperforming loan ratio,” Iloelunanchi said.

The national licensed financing house has a business model that runs like a microfinance lending but as an operator, it is focused more on public sector lending, even though it also provides

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lending services to the private sector in the portfolio ratio of 80:20.

According to the MD, Fast Credit as a consumer lending institution focuses on salary earners in the civil service: federal and state governments’ employees, and the Para-military agencies. Going forward, the company will also be reaching out to the informal-sector operators, who are not included in the financial net.

According to the finance house which is audited by KPM, the need to ensure that the company has a good record keeping system led it to employ the services of Cleric, an account reconciliation software manufactured by PFS, a Nigerian financial software provider. @Businessdayng

“The quest to ensure that we have good books that will also help us in our business made us go in search of a software that will help us with our accounts reconciliation,” Iloelunanchi said, adding that Fast Credit concluded that only Cleric was able to meet the pedigree and the quality that matches the company’s aspiration is Cleric from PSF, and that is why they entered into a partnership with them.

“Cleric as we have it is an account reconciliation solution and the need for this product actually came up in 1990 when the need for automation of account reconciliation was not met,” Philip Ayeni,”the DMD at Precise Financial Services.

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Wednesday 18 Seprtember 2019

BUSINESS DAY

MARITIMEBUSINESS SHIPPING

LOGISTICS

MARITIME e-COMMERCE

Shipping lines plan to cut charges on Nigerian shipments down to 35% by October AMAKA ANAGOR-EWUZIE

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hipping liners calling Nigerian ports have given their consent to cut the charges imposed on Nigeria-bound cargoes down to 35 percent

by October this year, BusinessDay has learnt.

It was also gathered that the shipping lines, which currently have about 16 charges imposed on Nigerian cargoes including Container Deposit, Peak Period and demurrage among others, have agreed to reduce the charges to about six.

Speaking at the third Maritime Stakeholders’ Interactive Session held in Lagos last week, Hassan Bello, executive secretary of the Nigerian Shippers Council (NSC), who expressed worry over the high cost of doing business at Nigerian ports, said Nigeria needs to have comparative advantage because her ports are competing with ports in the

neigbouring countries.

“We have negotiated with the shipping companies and 35 percent of the cost as we know them today will disappear by next month. We have reduced the cost with the shipping lines but we are also appealing to the terminal operators to also come onboard for us to discuss on cost reduction,” he said.

According to him, Nigeria has proximity and historical bond with Niger Republic that does millions of tonnes of cargoes annually, but instead of

using Nigerian ports, Niger importers get their cargoes through Cote Ivoire, Benin and Togo because of cost differentials. He said that those countries lowered their cost to attract cargoes from land-locked countries.

“Government owes responsibility to the private sector to create conducive atmosphere for their operations. The operating atmosphere in Nigeria is a little bit harsh. Government must improve on infrastructure. Apapa for example, so much is be-

ing collected but there is nothing much happening.

If not for the intervention of the Nigerian Ports Authority (NPA) in providing truck transit parks and call-up system, we would not have been enjoying the relief that we enjoy today,” he said.

He further said that the relief has brought down the haulage fee as moving one container from Apapa to Ikeja, from N800,000 to about N300,000, adding that there is the need to sustain it. “We need to link the port with rail because

our dependence on one mode of transportation is one of the problems,” Bello said.

He however, called on the Minister of Transportation to check the excesses of government agencies, especially their charges because such has direct consequences on cost.

“NPA has the right to raise charges without coming to the council but some time they go to the ministry to get approval but agencies like Nigerian Railway and NIMASA have no right to impose charges unless they discuss with Shippers Council,” he further said.

He said the minister also needs to take the concentration on maritime industry to the highest level by having a dialogue with the Nigeria Customs Service (NSC) in order to restore sanity at the ports.

“As part of the minister’s concentration on the Maritime industry, there is the need to remove certain distortions to ensure that processes are automated

to cut down delays. It is not actually the revenue because with Ease of Doing Business, Nigeria will have more volumes and more revenue. Reform must be instituted no matter how painful they are,” he suggested.

Reacting, Hadiza Bala Usman, managing director of the NPA, who disclosed that cargoes with high tariff like rice and vehicles are being diverted most to other ports, said Customs needs to deploy scanners for cargo inspection in Nigerian ports.

“Right now, all the cargoes coming into our ports are being examined physically by all the agencies of government, and this automatically translates to congestion. We like the minister to intervene with Customs to deploy scanners in our ports. We need to facilitate inspection of cargoes at our ports using scanners and in order to eliminate delays and cost.

This is an integral part of Ease of Doing Business,” she added.

AU must make AfCFTA a mechanism for local industrialisation – Jadesimi

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frican Union (AU) needs to develop a continental-focused solution designed to make the Africa Continental Free Trade Agreement (AfCFTA) a mechanism for tangible economic growth, focusing on local industrialisation, job creation and development, says Amy Jadesimi, managing director of LADOL, a Lagos-based industrial free zone.

Speaking with Neil Mushi of Financial Times, Jadesimi said the trade agreement should be aimed at creating jobs for African populace and also lifting African economies through industrialisation.

Experts have argued that AfCFTA has the potential to spur economic growth in a bloc of nations with a combined gross domestic product of more

than $3 trillion, and creating the world’s largest free trade zone.

However, Jadesimi said the pact needs to offer incentives to boost African manufacturing or it will fail — by becoming an outcome that could turn the continent into a dumping ground for cheap Chinese, US or European goods.

“Are we going to create an entirely new paradigm

for trade, that is Africacentric, controlled by African countries, and that disincentivises foreign companies and countries outside of the continent from importing; are we going to do that?” she asked, adding that such is going to be really tricky.

According to her, the agreement must also contend with a history of regional trade agreements

that have largely flopped and done little to bolster trade integration — the AfCFTA will need to be harmonised with eight of such regional pacts.

“Beyond the issue of whether the costs of an open market outweigh the benefits to specific countries, there is also the question of whether it is possible for Africa to overcome its structural

challenges to trade,” she said.

Findings however, show that AfCFTA aims to remove 90 percent of tariffs to create a single market with free movement of goods and services but critics question the ability of under-resourced governments, deprived of that tariff revenue, to be able to fund infrastructure upgrade.

VESSELS EXPECTED AT LAGOS PILOTAGE DISTRICT SHIP

AGENT

PORT

TONNAGE/UNI

EXP

E. T. A

LENGHT

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ALRAINE

ENL

17000MT

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190M

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BLUESTAR

GDNL

44000MT

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190M

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136M 161.3M 142M 155M 264M 261M 193M 194M 228M 260M 261M 249M 233M 228M 228M 190M

G/CARGO G/CARGO G/CARGO G/CARGO CONT CONT B/SUGAR B/WHEAT PMS CONT CONT CONT CONT CONT CONT B/WHEAT

S/N

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DONG BANG GAINT NO 1 KOTA BAKAT FAN ZHOU 9 GUO RUI CMA CGM.JAMAICA ANL WYONG DESERT OASIS DESERT GLORY GRACE VICTORIA ZIM SAO PAOLO ALS JUNO KMARIN AQUA KOTA KASTURI KOTA SETIA KOTA SEMPENA GENCO LOIRE

SHIP

BLUESTAR DAN. REF 3783.604MT BLUESTAR DAN.REF 19530.86MT BLUESTAR DAN.REF 758.611MT BLUESTAR DAN. REF 13108.75MT CMA CGM.NIG APMT 600FCL CMA.CGM.NIG APMT 500FCL GOLDEN ABTL 52430MT GOLDEN ABTL 42300MT GREENLINK SBM 54998.840MT LANSAL APMT 850FCL MAERSK APMT 430FCL MAERSK APMT 410FCL PIL APMT 540FCL PIL APMT 530FCL PIL APMT 560FCL UNION MARITIME GDNL 44818MT MPTOR VESSELS AWAITING BERTH AT LAGOS

www.businessday.ng AGENT

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DATE ARRIVED

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02/08/19 07/09/19 12/09/19

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BLUE STAR CMA CGM.NIG CMA CGM.NIG

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Wednesday 18 Seprtember 2019

BUSINESS DAY

23

MARITIMEBUSINESS SHIPPING

LOGISTICS

MARITIME e-COMMERCE

‘Effective policy implementation, indigenous participation to drive growth in maritime sector’ Last weekend, industry stakeholders, gathered in their numbers for the fourth edition of the Taiwo Afolabi Annual Maritime (TAAM) Conference held in Lagos with the theme, ‘Innovations and Practical Reforms towards Sustainable Growth in the Maritime Sector.’ Speakers also took turns to list the urgent reforms which managers of the nation’s economy must embark on to drive growth in the nation’s maritime industry vis-à-vis the ports, writes AMAKA ANAGOR-EWUZIE.

W

ith over 217,313 kilometers of Exclusive Economic Zone (EEZ), Nigerian maritime sector has huge untapped potentials, which cannot be allowed to remain undeveloped.

Research has shown that Nigeria has natural endowments including crude oil and other mineral resources that generate over 100 million metric tonnes (MMT) of cargoes annually. As a result, over 5,000 vessels call at Nigerian harbours yearly with about 50,000 seafarers but less than 10 percent of this number, are Nigerians.

With this volume, experts strongly believe that shipping automatically has become one of the most lucrative businesses that can generate massive employment and create wealth for Nigerians.

Sadly, just less than 7 percent of this annual volume is being carried by vessels owned by Nigerians, showing that over 90 percent of the volumes are carried by foreign-owned ships.

Owing to these shortcomings and other challenges facing the nation’s maritime business, stakeholders at TAAM conference argued that for Nigerian maritime sector to witness exponential growth, drivers of nation’s economy must aim at promoting sustainable policies.

Taiwo Afolabi, group executive vice chairman of SIFAX Group, who stated that the nation’s maritime industry has several policies including Coastal and Inland Shipping (Cabotage) Act, truck standardisation policy and others that have catapulted the industry to the next level, said that more reforms and policies as well as strong implementation of existing once are needed for sustainable growth.

For instance, the Rail Modernisation Policy of the Federal Government, which aims at linking some ports to the national rail network such that cargoes can be evacuated from Apapa port to the hinterland, has been described as a much needed policy that must be fully implemented.

But, according to Afolabi, who believed that effective use of rail for cargo evacuation is crucial to efficient port system, the Federal Government needs to ensure that all Nigerian ports are linked to the standard gauge in order to spur the expected growth in the sector.

“For our sector to grow, strict security measures must be put in place both onshore and offshore. There have been various instances of piracy, attacks on ships and various terminals by men of the underworld.

This has led many shipping lines to introduce war-rick surcharges on consignments heading to Nigeria,” he said.

Afolabi described Nigerian Port Reform Policy, which brought private sector into port operations as one of the successful policies judging by the shorter turnaround time of vessels and shorter cargo dwell time at our ports today and other benefits of port concession.

He however, appealed to the government and its agencies to further fortify the nation’s coastal areas and maritime boundaries against maritime crimes. He added that attacks on ships at berth, anchorage or off the coast can effectively be tackled with the right approach.

He called for strong implementation and feedback mechanism as well as opportunity for the initiators of reforms to be allowed to conclude the processes.

In his keynote speech, Hassan Bello, executive secretary of the Nigerian Shippers’

L-R: Oliver Omajuwa, general manager, SIFAX Off Dock, Trinity; Tunji Olusinde, executive director, Legal Services/Company secretary, SIFAX Group; Ibraheem Olugbade, executive director, SIFAX Off Dock; Mariam Afolabi, executive director, Compliance, SIFAX Group; Adekunle Oyinloye, group managing director, SIFAX Group; Ayodele Atsenuwa, Dean, faculty of Law, University of Lagos; Adewale Olawoyin, senior lecturer, University of Lagos and staff adviser, Maritime Forum, University of Lagos and Olayinka Afolabi, executive director, SIFAX Marine, during a visit to the Dean at the fourth edition of the Taiwo Afolabi Annual Maritime Conference held in Lagos.

Council (NCS), said infrastructural reform is very important to making transport system very efficient.

According to him, government must take the responsibility of providing infrastructure such as good roads, linkage of rail to the ports.

“We have to regulate the carriage of goods by land which means there must be liability, insurance, responsibility of the owners of the transport and carriage. In the freight forwarding practice we have called for consolidation, professionalism, reforms in the trucking system, and the haulage system,” he said.

On her part, Vicky Haastrup, executive vice chairman of ENL Consortium, said the port cannot be reformed if Nigeria does not have an enabling law in place.

“We need the National Transport Commission Bill (NTCB) to be passed to bring reforms and necessary innovations that the nation’s maritime industry needs at this critical time,” she said.

According to her, government should see to it that NTCB is passed into law because it will moderate the way business is done at the ports as well as the responsibilities of all players including government agencies, service providers and port users.

Other stakeholders, who took turns to give suggestions on reforms that would enthrone

sustainable growth in the maritime sector, called for more indigenous participation in the nation’s shipping business as a way to creating both wealth and employment opportunities for the youths.

Haastrup, who said Nigeria needs participation in shipping business through vessel ownership, called for an enabling law that would support ship acquisition.

According to her, the nation’s maritime sector has a lot of foreigners, who come to Nigeria to invest in shipping business and such investors get high patronage from International Oil Companies (IOCs) because Nigerian policies and laws do not support the growth of indigenous ships.

“Government needs to use laws to force IOCs to support and patronise local ship owners in order to encourage indigenous participation. Ship acquisition does not come cheap, which means that investors borrow from banks to acquire such vessels,” she said.

Adetola Bucknor, a maritime lawyer and partner Paul Usoro & Co, who stated that Nigeria has existing laws like Coastal and Inland Shipping Act (Cabotage) designed to encourage indigenous participation in shipping, blamed weak implementation for the failure of those laws.

“For instance, foreigners take advantage of the waiver clause in the Cabotage Act to dominate the Cabotage trade that originally

L-R: Vicky Haastrup, executive vice chairman, ENL Consortium and chairman, Seaport Terminal Operators Association of Nigeria; Adekunle Oyinloye, group managing director, SIFAX Group; Rollens McFoy, executive director, operations, Oceandeep Services, and Adetola Bucknor-Taiwo, partner, Paul Usoro & Co, at the TAAM Conference.

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should belong to local ship owners. Therefore, government needs regular consultation with industry stakeholders to find solutions to the limitations,” she suggested.

Bucknor, who noted that there is need to consider setting up Maritime Development Bank to address issues around funding gap in ship acquisition, urged members of ship owners associations to consider becoming pressure groups that would ensure that the Nigerian National Petroleum Corporations (NNPC) puts its foot on ground to bring Nigerians onboard crude oil lifting business.

Kunle Folarin, another panelist, who opined that government has the responsibility of creating employment, empowerment and wealth for its citizens, decried that 16 years after the enactment of Cabotage Act, nothing has happened.

He suggested that Nigeria needs to consider several other models like public private partnership used in other parts of the world to grow her shipping business.

“We need to sit back and reason again.

In my view, if government does not want to invest in the sector, it is okay because it is said that government has no business in business, but we must have a caveat that says that Nigerians must be allowed to even monopolise the sector,” he suggested.

Rollens McFoy, executive director, Oceandeep Services, a panelist, who stated that time has come for government to create employment for over 70 percent of Nigerians youths through the effective implementation of Cabotage Act, said that IOCs should be given a mandate to create certain quota for Nigerian owned ships.

She believed that such would create opportunity for Nigerian graduates and seafarers to be gainfully employed in the nation’s maritime sector.

“Nigeria has laws but the challenge is that our laws are always designed to fail rather than achieve their purpose. This is because we mostly give room for political considerations in every good law,” Olayiwola Shittu, former national president of Association Nigerian Licensed Customs Agents (ANLCA), said.

Shittu, who was also a panelist, said that the waiver clause in the Cabotage Act was only created to satisfy the political office holders.

He added that Nigeria lacks the political will to make things work in the maritime industry.

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24

Wednesday 18 September 2019

BUSINESS DAY

BANKING Banks’ deposit rates mixed, lending charges trended upwards in July Stories by HOPE MOSES-ASHIKE

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oney market rates were g e n e ra l l y s t a b l e a n d moved in tandem with the level of liquidity in the system in the month of July.

Provisional data from the Central Bank of Nigeria (CBN)’s economic report for the month of July indicated that movements in banks’ deposit rates were mixed, while lending rates generally trended upwards in July 2019.

With the exception of the 6-month, 12-month and over 12-month deposit rates, which rose to 10.31 per cent, 10.42 per cent and 9.78 per cent, respectively, from its preceding month’s levels of 10.24 per cent, 10.36 per cent and 9.72 per cent, all other rates of various maturities, fell from a range of 3.64 per cent – 9.24 per cent in the preceding month to a range of 3.58 per cent – 9.19 per cent in July 2019.

The weighted average prime and maximum lending rates rose by 0.61 percentage point and 0.08 percentage point to 16.82 per cent and 30.94 per cent, respectively, in July 2019.

Consequently, the spread between the average term deposit and the maximum lending rates widened by 0.12 percentage point to 22.24 percentage points at end-

July 2019. Similarly, the spread between the average savings deposit and maximum lending rates widened by 0.11 percentage point to 27.01percentage points at the end of July 2019.

The average inter-bank rate, which stood at 8.38 per cent at the end of June 2019, rose by 0.79 percentage point to 9.17 percent at end-July 2019. The Open-buy-back (OBB) rate, which stood at 8.71 per cent in the preceding month, rose by 2.36 percentage points to 11.07 per cent at end-July 2019.

Similarly, the Nigerian inter-bank of-

fered rate (NIBOR), for the 30-day tenor, fell to 11.93 per cent in the review period, compared with 12.10 per cent at end-June 2019. With headline inflation estimated at 11.13 per cent in July 2019, all deposit rates remained negative in real terms, while lending rates were positive in real terms.

During the review period, major financial market indicators remained relatively stable due to efficient liquidity management strategy of the Bank in both the domestic and foreign exchange markets.

The net liquidity position and interest rates in the economy reflected the impact of liquidity injections and the Bank’s liquidity management operations.

Movements in domestic money market rates were influenced, largely, by the level of liquidity which was triggered, mainly, by inflow through fiscal disbursements, maturing CBN securities and Federal Government of Nigeria (FGN) securities, as well as, outflow arising from provisioning and market participants continued access to the Bank’s discount window.

The total value of money market assets outstanding in July 2019 was N12.39 billion, showing an increase of 1.2 per cent, in contrast to the decline of 1.9 per cent in the preceding month.

The development was attributed to the 4.0 per cent and 17.2 per cent increase in the FGN Bonds and Commercial Paper outstanding, respectively.

Deposits of banks and the private sector with the CBN, on month-on-month basis, rose, while deposits of the Federal Government with the CBN fell, relative to the levels at the end of the preceding month. Overall, aggregate deposit at the CBN declined by 0.5 per cent to N16,013.52 billion at the end of June 2019. Of the total deposits at the CBN, the shares of the Federal Government, banks and the private sector were 42.9 per cent, 37.9 per cent and 19.2 per cent, respectively.

Union Bank, Leading Lady Africa promote CIBN presents accreditation certificates to LBS, ICAN, Ecobank Academy , others financial inclusion among women

A

s part of its financial inclusion drive, Union Bank Plc is partnering with Leading Lady Africa to enhance the capacity of Nigerian women through an enterprise and leadership programme using Alpher platform.

The Alpher platform for women is a value proposition that targets Nigerian individual women as well as women in business. It basically provides an enabling environment and support whether it is through products and services but more importantly the capacities and opportunities that they need to grow and thrive and also it will pave way for others that come after them.

“We think about an enterprise leadership programme and so we partnered with the Leading Lady Africa, and Union Bank is reiterating its commitments to women, to small scale businesses as well as paving a forefront for the Nigerian society,” Lola Cardoso, chief digital and innovation officer, Union Bank, said.

Aside its focus on individual women businesses, the bank is also spotting businesses that

support women. “The specifics around Alpher, we have taken some time to invest a valid proposition in the platform and one of the questions you might ask is why a bank? But in many ways we are also a trusted partner to Nigerians, so in many ways when we invest in programmes like this, it is not about being a bank, it is what else we can do to grow businesses and start-ups,” she said.

On her part, Francesca Uriri, Founder Leading Lady Africa, Enterprise and Leadership programme is an initiative of Leading Lady Africa.

She said it was important to partner with an institution that had the history of not just supporting women businesses but supporting enterprise.

“For the enterprise entrepreneurship programme, we opened it up and we received nearly 2000 entries from women and that again is a pointer to the fact that female entrepreneurs do need capacity building,” she stated.

“We are also interested in creating an ecosystem for the Nigerian woman. In that ecosystem you have all the support that you need to thrive.

From understanding what their problems are we were able to draw up a curriculum. A good number of them came to us with some specifics asking what does modelling and innovation mean to a fish farmer?,” Uriri said.

According to her, a lot of the conversations are always just focused on funding. “While funding is important, if you don’t have businesses that have structure, that can scale, if it attract funding it is just going to be like water in the basket and so for us, the idea behind the enterprise and leadership programme is to provide that structure for women businesses.” www.businessday.ng

T

he Chartered Institute of Bankers of Nigeria (CIBN) has officially presented Certificates of Accreditation to more 20 Educational Training Service Providers (ETSP), eight Tertiary Institutions and one Bank Academy.

The presentation was in accordance with its role as the accreditation agency for the implementation of the competency framework which was released as part of the strategy to redirect the banking industry towards the path of entrenching a sequenced competency development programme to build capacity for the stability of the financial system.

The Institutions included Lagos Business School (LBS); Institute of Chartered Accountant of Nigeria (ICAN); Ecobank Nigeria Plc; Chartered Institute of Stockbrokers (CIS); Phillips Consulting; Wright and Co Limited; Kainosedge Consulting; Augusto Consulting; IBFC Alliance Limited; Intermarc Consulting; Lagos School of English and Mathematics (LASEM).

Others are: Adekunle Ajasin University, Ondo State; Abraham Adesanya Polytechnic, Ogun State; Ambrose Alli University ,Edo State; Benson Idahosa University, Edo State; Federal University Of Agriculture, Ogun State; Gombe State University, Gombe; Igbinedion University, Edo State and Yusuf Maitama Sule University, Kano Speaking during the presentation, Uche Olowu, CIBN President/chairman of council said the institutions had undergone rigorous processes and scored above the minimum threshold on all the parameters of measurement. He stressed that apart from addressing competency challenges, the accreditation exercise was to enthrone a minimum standard

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for practitioners in the industry.

He added, “This accreditation carries a definite tenure. Subsequent renewal would depend on the level of performance and the extent to which parties keep faith with the provisions of the Agreement.”

He equally informed the gathering that the Institute was in the process of reviewing the curriculum of the banking and finance professional examinations to ensure that its professionals are equipped for the banking of the future.

Olowu announced that the exposure draft of the curriculum which was developed by PWC Nigeria, a multinational consulting firm would soon be released for stakeholders input.

In addition, he said as part of the efforts toward promoting ethical conduct and enhancing integrity in the banking sector, the Institute in collaboration with the SubCommittee of Bankers Committee and Industry Standards had commenced an Ethics Compliance Certification Programmee for the staff of all banks.

The CIBN President reiterated that the Institute would continue to play an effective role in capacity building as well as the promotion of ethics and professionalism in the Financial Services Industry which are the core mandate of the Institute.

The Chairman, CIBN Capacity Building and Certification Committee, Abdulrahman Yinusa, stated that many institutions had applied but “only few scales through” because of the rigours of the process.

He added, “Whatever you are seeing here is that we had already separated the wheat from chaff. Only those who have scored above the minimum approved standard are presented.”

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Wednesday 18 September 2019

BUSINESS DAY

PENSION today

25

In Association With

PFAs receive N16.01bn on pension liabilities from defaulting employers

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Aisha Dahir-Umar, acting director-general, PenCom

that the Commission received 6,480 applications for the issuance of compliance certificate, out of which 6,433 certificates were issued, while 47 applications were declined due to non-remittance of pension contributions for the appropriate period and/or non-provision of Group Life Insurance Policy for the employees.

The sum of N28.96 billion was remitted to 96,308 employees’ RSAs by the 6,433 organizations that were issued with compliance certificates.

The pension industry also recorded a 1.78 percent growth in the scheme membership during the second quarter of 2019, moving from 8.63 million contributors at the end of the preceding quarter to 8.79 million. The growth in the industry membership was driven by the Retirement Savings Account (RSA) Scheme, which had an increase of 153,572 contributors representing 1.79 percent. However, membership of the Closed Pension Fund Administration (CPFA) Scheme declined by 58 members (23,258) while the Approved Existing Scheme (AES) membership re-

‘

The objectives of the Pension Reforms are to ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory or Private Sector receives his retirement benefits as and when due

‘

ension Fund Administrators and managers of the Contributory Pension Scheme (CPS) have received a total of N16.01 billion pension liabilities and accrued penalties from defaulting employers since inception of the Scheme, following the engagement of recovery agents by the National Pension Commission (PenCom).

This comprises of principal contributions of N8.22 billion and penalty of N7.79 billion, which has since been credited to the respective Retirement Saving Accounts (RSAs) of the affected employees.

During the second quarter of 2019, demand notices were issued to 37 defaulting employers whose pension liabilities had been established by the Recovery Agents ( RAs), which resulted in the remittance of outstanding pension contributions of N260.62 million, representing principal contributions of N151.59 million and penalty of N109.64 million.

The National Pension Commission (PenCom) through its appointed recovery agents has continued to follow up with defaulting employers who collect employee’s pension contributions without remitting and those who have not implemented the scheme as provided in the Pension Reform Act 2014.

The RAs were mandated to review the pension records of the employers assigned by the Commission with a view to recover outstanding pension contributions with penalty.

Further to the Commission’s strategy of driving compliance with the provisions of the PRA 2014 by employers through the conduct of public awareness programmes, the Commission has continued to organize sensitization workshops on the Contributory Pension Scheme (CPS) for employers’ associations/unions to enlighten and encourage them to key into the Scheme.

The Commission in collaboration with the Nigeria Employers’ Consultative Association (NECA) during the period under review conducted an interactive session on the current developments and challenges in the implementation of the Pension Reform Act, 2014 for the organized private sector in Lagos, Port Harcourt, Abuja and Kano.

Compliance by the private sector during the period under review shows

mained unchanged at 40,951.

The RSA registrations grew to 8,722,609 as at second quarter, 2019 moving from 8,569,037 as at first quarter, 2019, repre-

senting a growth of 1.79 percent (153,572).

The growth can be attributed to the increased level of compliance by the private sector as a result of the various steps taken by the Commission to improve compliance and coverage, as well as marketing strategies of the PFAs. Meanwhile, the total monthly pension contributions received from contributors from both the public and private sectors was N5.45 trillion as at the end of the Second quarter, 2019.

This shows an increase of N169.90 billion representing 3.22 percent growth over the total contributions as at the end of the previous quarter. During the review period, the total contributions received from the public sector amounted to N72.42 billion (42.63 percent) while the private sector contributed N 97.48 billion (57.37 percent). A review of the aggregate total contribution received shows that N2.73 trillion or 50.09 percent of the contributions came from the public sector, while the private sector contributed the remaining 49.91 percent (N2.72 trillion).

The aggregate total pension contributions of the private sector increased from N2.62 trillion as at first quarter of 2019 to N2.72 trillion as at the end of the reporting period representing a growth of 3.72 percent. Whereas, the aggregate total pension contribution of the public sector increased by 2.72 percent from N2.66 trillion to N2.73 trillion over the same period.

The objectives of the Pension Reforms are to ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory or Private Sector receives his retirement benefits as and when due.

It is also to assist individuals by ensuring that they save in order to cater for their livelihood during old age and thereby reducing old age poverty; and also to ensure that pensioners are not subjected to untold suffering due to inefficient and cumbersome process of pension payment.

It also aims at establishing a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the public service of the federation, federal capital territory and the private sector and stem growth of outstanding pension liabilities.

IS NOW RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State.

Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@accesspfc.com Website: www.accesspfc.com

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This section is created to increase awareness and deepen knowledge about the Contributory Pension Scheme.

If you have enquiries or contributions, send to this e-mail: accesspfcbusday@yahoo.com

26

Wednesday 18 September 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Investment banks, financial advisers hustle around insurers for merger, acquisition deals Modestus Anaesoronye

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s insurers get ahead with their recapitalization plans, Investment Banks and Financial Advisers are hustling around the companies to arrange merger and acquisi-

tion deals as well as private and public placements to raise funds.

Investment advisers give advice to clients about investing in securities such as stocks, bonds, mutual funds, or exchange traded funds, and can help client’s package deals

L-R: Egboboh Nelson, head, Brand and Corporate Communications; Koyenikan Olubukola, head, Enterprise Risk Management; Adebisi Ikuomola, executive director, Technical; Ebose Augustine, managing director/CEO; Olajide Fasanmi, general manager, Business Development; Ime Umoh, company secretary/Legal Adviser and Bayo Mustapha, controller , Business Development, all of Anchor Insurance Company Limited during the media launch of the Company’s Travel Insurance and Agriculture Insurance at its Victoria Island Head Office in Lagos.

to help them raise funds for expansion and growth.

Yesterday, Tuesday 17th September 2019, a lot of insurers received approval or otherwise to their recapitalization action plans submitted to the National Insurance Commission (NAICOM).

NAICOM had fixed 17th September 2019 as last day to complete review of recapitalization plans submitted by insurance companies and give direction for effective actions on how to comply with the minimum paid-up requirement.

An industry CEO had told Business Day that “We are not foreclosing a merger deal, as long as we can find those who share the same vision with us.”

According to the CEO, merger is not a bad option for us, but it has to be right in such a way that it creates shareholder value.

Sunday Thomas, acting commissioner for Insurance/CEO, NAICOM had noted during a seminar for Insurance Director’s in Lagos that the Commission has received reasonable number of companies recapitalization action plans, but however noted that some did not understand the guideline.

Anchor Insurance set to deepen penetration with launch of two new products

Tope Smart to chair Business Journal Lecture 2019 Modestus Anaesoronye

… Agric insurance, travel insurance Modestus Anaesoronye

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s part of efforts to deepen its penetration and gain larger market sure in the country’s insurance market, Underwriting firm, Anchor Insurance Company Limited has added to its staple two new products. The products, Anchor Travel Insurance and Anchor Agriculture Insurance, the Company said has been developed and designed after stringent research to meet the needs of nits teaming customers and close perceived gap in the market.

Austine Ebose, managing director/CEO of Anchor Insurance speaking at the media launch in Lagos said the company is excited to add to its product lines Anchor Travel Insurance and Anchor Agriculture Insurance having received approval from the National Insurance Commission (NAICOM).

“We were particularly glad when we received the approvals as it provides the opportunity for us to extend our well known passionate

service difference and finesse to drive the products for the maximum comfort of our potential customers. For about 30 years that Anchor Insurance Company has been in operations, we are remarkable for excellent delivery of services to our teeming customers, Ebose said.

On the Anchor Travel Insurance, he said “This product which we are running under an agreement with Mapfre Asistencia, based in Spain, comes with different features and benefits. It comes with a family plan which ensures that children between three months and 18 years travelling with their parents only pay half of the premium rate being charged. It further comes with premium discount package for group subscriptions. The group is expected to have a minimum of 10 persons.

The discounts range from 5 percent to 25 percent according to the number of persons that make up the group.”

According to Ebose, because of perceived risks associated with certain categories of age, the policy comes with variations in the premium charged to persons aged between 66 and 75 years, 76 and 80 years and 81 years old where

only the Schengen policy is available.

“The policy comes with three travel protection plans: Schengen, Worldwide and Worldwide 1.”

According to him, there are several unique benefits the product offers and this includes Medical emergency assistance which includes medical expenses and hospitalization abroad, emergency medical evacuation, repatriation of family member travelling with the insured, emergency return home following death of close relative, repatriation of mortal remains; Personal assistance benefits which include legal assistance, pre-departure services, abroad information assistance about lost luggage and passport, delivery of medicines; Losses and delays benefits which include loss of passport, driving licence, national identity card abroad, compensation for in-flight loss of checked-in baggage, compensation for delay in the arrival of luggage, delayed departure.

Other benefits include Personal accident benefits which include accidental death, permanent disability, as well as Civil liability benefits.

African Alliance Insurance supports global leaders at 2019 HIVE Africa Conference

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n the bid to promote leadership and financial independence, African Alliance Insurance Plc, Nigeria’s foremost life insurance company, sponsored the Hive Africa’s Global Leaders Program (GLP). The conference was held in Lagos between September 11 – 14, 2019 in Lekki, gathering young global leaders and influencers.

Speaking at the event, Azuka Ochonogor, head, Group Life for African Alliance Insurance spoke on the value of life Insurance and the role

it plays in our community. He emphasized the importance of living a healthy life and making provision for our dependents while we are alive.

He also stressed the need for making the right investments and tying this to life insurance.

African Alliance also recently embarked on campaigns to demystify life insurance across digital channels, promoting its importance in building a healthy relationship and ensuring continuation in life and business.

The Hive Africa GLP is a 3-day world class www.businessday.ng

transformative program on leadership community, integrating elements of entrepreneurship, purpose, life design, wellness, authentic relating, personal development, and global systems thinking for mission-driven leaders, innovators, and entrepreneurs held around the world.

African Alliance Insurance Plc was present throughout the event to support these growing community of leaders on a quest to serve and make an impact in creating a safe and secure world.

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Thomas said “we shall review the plans and guide them, and where we need to meet such companies’ directors we will, he said.

Guy Czartoryski, head of Research, Coronation Research, an arm of Coronation Merchant Bank said he expects to see mergers and acquisition in the course of the insurance industry recapitalization.

“The potential impact of the May 2019 circular on the Composite Insurers could be drastic. We might see eight companies either seeking to merge or raise a considerable level of fresh capital.”

NAICOM had in a circular dated July 23rd, 2019, sent to the all insurance and reinsurance firms titled: “Re: Minimum Paid Up Share Capital Policy for Insurance and Reinsurance Companies,” signed by Pius Agboola, director, Policy & Regulation Directorate, NAICOM stated that the recapitalisation plan should include among others, capital status of the companies as at the last audited financial statements; board resolution on how to comply with the directives, and detailed action plan on how the funds for the recapitalisation are to be sourced with timeline and deliverables.

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ope Smart, chairman, Nigerian Insurers Association (NIA) and also Group Managing Director/CEO, NEM Insurance Plc will chair the Business Journal 2nd Annual Lecture/Awards 2019 which will examine the impact (opportunities & challenges) of digital disruption on various sectors of the Nigerian economy, including insurance.

The event which is scheduled for Friday, September 20, 2019 at Sheraton Hotel, Ikeja has Digital Nigeria: The Path to Sustainable Economic Growth as theme. The keynote speech would be delivered by Professor Umar Dan-

Tope Smart, chairman NIA

batta, executive vice-chairman, Nigerian Communications Commission (NCC). The panel includes Tola Adegbayi, executive director, Leadway Assurance Company Limited; Aituaz Kola-Oladejo, former head, Research & Development, Nigeria Inter-Bank Settlement System (NIBSS); Aare Ganiyu Koledoye, immediate past Ppesident/chairman of Council, National Institute of Marketing of Nigeria; Chuddy Oduenyi, managing director/CEO, Compact Communications Limited and Jide Akintunde, publisher, Financial Nigeria.

Commenting on the 2019 Annual Lecture, Prince Cookey, publisher/CEO of Business Journal said:“The Business Journal 2nd Annual Lecture 2019 is indeed a rare opportunity for stakeholders and professionals to critically evaluate the opportunities and challenges of digital disruption on the various segments of the Nigerian economy.

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Wednesday 18 September 2019

BUSINESS DAY

27

insurance today E-mail: insurancetoday@businessdayonline.com

REGIC strengthens capacity as it makes inroad into agric insurance Modestus Anaesoronye

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oyal Exchange Insurance Company Limited (REGIC) has embarked on a strategic efforts to strengthen its internal and external capacity as it makes major inroad into agricultural insurance.

The company is boosting the knowledge of its staff as well as its reinsurance and broker partners, to enable close the technical capacity gap in the firms new focus area, agriculture.

Royal Exchange General Insurance Company (REGIC), last week in con-

junction with the Frankfurt School of Finance and Management and the InsuResilience Investment Fund (IIF), held a two-day Workshop in Lagos on agriculture insurance and climate change products for staff and partners in the Nigerian market.

Speaking during an interview on the sideline of the workshop, Benjamin Agili, managing director/ CEO of REGIC said that the workshop is aimed at changing the story of agricultural sector of the economy and contribute in deepening insurance penetration and awareness.

He said that the move is part of efforts to unlock new

growth potential that will increase consumer value and better returns on investment to its shareholders.

He explained that the company is also focusing on ensuring food security, increase employment and boost financial inclusion.

“For us, agriculture coverage ticks all the right boxes and can help the company unlock doors to new clientele and market reach in a way that other commercial lines of coverage cannot.

We are specifically focusing on the small holder segment, which currently faces risks from climate change consequences to which our insurance packages offer

solutions.”

Royal Exchange had in 2017 secured the approval of the National Insurance Commission (NAICOM) to underwrite agric-business.

The Nigeria’s foremost finance and insurance services group also in July this year announced the 39.25 percent acquisition in its general insurance subsidiary, Royal Exchange General Insurance Company (REGIC) by the InsuResilience Investment Fund (IIF), established by the German Development Bank and managed by Swiss based Impact Investment Manager, BlueOrchard Finance Investment Limited (“BlueOrchard”).

Ntukamazina takes over from Prisca Soares as Secretary General of AIO

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tukamazina Jean Baptiste has taken up duties as the new Secretary General of the African Insurance Organisation, AIO. He takes over from Prisca Soares whose mandate at the helm of the African Insurance Organisation ended in June 2019 but was retained as a Consultant for the AIO till June 2020. Soares has piloted the affairs of the AIO for the past twelve years and brought the Organisation to limelight with a consequent increase in membership not only in Africa but Europe and the Middle East.

Ntukamazina was appointed recently by the AIO’s General Assembly during the 46th Conference and Annual General Assembly of the Organisation which took place in Johannesburg, South Africa from the 9th to 13th June, 2019.

He has previously served as President of the African Insurance Organisation in 2014-2015, as well as an executive committee member between 2012 and 2015. He

is a seasoned professional in the insurance and financial services industry with over two decades experience in top management positions.

He served as Financial Security Advisor for OPTIMA Insurance Services Inc., Canada, Chief Executive Officer of Batco Invest Co. Ltd, Rwanda, Chief Executive Officer of Prime Insurance Company Ltd, Chief Executive Officer of COGEAR Insurance Company Ltd. Rwanda, Secretary General, IT Manager and later General Manager of BICOR S.A, Burundi. He is a past president of the Association of Insurance Companies of Rwanda.

Jean Baptiste Ntukamazina holds a Master of Science in Business Administration (MBA) with specialization in Project Management, Master of Science (Engineer) in Computer Engineering and is a Certified Life Insurance Professional. He is fluent in English, French and Russian.

His immediate task will be to implement the AIO’s new Strategic Plan of Action.

PTAD boss charges staff on commitment to duty, increased productivity

N L-R: Shola Ajibade, general manager, Operations, Continental Reinsurance Plc; Benjamin Agili, managing director/CEO, Royal Exchange General Insurance Company; Jane Ekomwereren, executive director, Royal Exchange General Insurance Company; and Wale Banmore, managing director/CEO, Royal Exchange Prudential Life Assurance at the Agriculture Insurance Workshop organised

by Royal Exchange General Insurance and the InsurResilience Investment Fund (IIF) held in Lagos.

NSIA Insurance announces success of ISO 9001:2015 recertification

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SIA Insurance is excited to announce the successful completion of its 2019 ISO Surveillance Audit by the Standards Organization of Nigeria (SON).

This year’s Surveillance Audit was conducted in the month of May across five of the ten NSIA Insurance locations within the Country. Due to the consistency in compliance to the ISO Standards and the excellent quality of service provided to clients in the locations visited, the company and all its branches were recommended for con-

tinued certification.

NSIA Insurance Limited was awarded the ISO 9001:2015 Quality Management System Certification in May 2018. This certification was achieved due to the successful implementation of the Quality Management System and priority for customer satisfaction. This has ensured that all processes within the organization are standardized to meet best practices. It is worthy to note that this certification aligns with NSIA Insurance’s drive for excellence. www.businessday.ng

Udo Okeke, head of Internal Audit and Quality Coordinator at NSIA Insurance in her statement said, “This is an exciting milestone for us as it speaks to one of our core values – Professionalism. We are optimistic that this recertification will improve client satisfaction and perception of our business by stakeholders”.

ISO 9001:2015 is the latest and most advanced International Standard for Quality Management Systems.

The prompt adoption of this standard by NSIA Insurance lends credence to their com-

mitment to quality in all of their business processes and products.

NSIA Insurance Limited is a first class composite insurance company driven by Integrity, Care, Innovation and Professionalism with its head office in Lagos, strong regional presence in Abuja and a large network in strategic states across the country.

NSIA Insurance offers a wide range of insurance services at competitive rates to meet the changing financial, investment and lifestyle needs of its corporate, commercial and individual customers.

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ewly appointed Executive Secretary, Pension Transitional Arrangement Directorate PtAD, Chioma Nnenna Ejikeme has commended management and staff for their hard work and dedication in the discharge of their responsibilities during the Parastatals Pensioners Verification Exercise in the South East which ended on Saturday September 7, 2019.

The Executive Secretary gave this commendation at her first meeting with management and staff since her assumption of office. She assured them that she will among other things be guided by the core values of the Directorate namely: Passion, Transparency, Accountability and Drive.

She said that her mission is to continue to build on the legacy left by her predecessor now Minister of Environment (State), Sharon Ikeazor with regards restoring hope in pension administration and building trust among pensioners while also promoting good governance and best practices. Pensioners are now been treated with dignity, and with the respect that they deserve.

She also welcomed the new staff and encouraged them to be dedicated to learn@Businessdayng

ing about pension administration and the policies guiding PTAD’s operations and service to pensioners from the older staff. She said “I see that PTAD is one big happy family. I pray that it continues to be that way and I pray that the new staff will also be integrated into this new family and it will be a good experience for them as it has been for the older staff.”

She assured them of her commitment to staff welfare and encouraged them to continue to be punctual to work and dedicated to their assignments so that human errors will be minimized as there is still a lot of work to be done especially as the Directorate continues to gather pensioners data to build a credible database.

She said “there are now proper staff placements and promotions. It is going to be a continuous thing and we will make sure that hard work is rewarded at every level.”

Ejikeme reminded management and staff that PTAD as a highly technology driven, first class organisation must continue to remain topnotch.

She asked for their support, loyalty, dedication, passion, innovation and big bright ideas that will take the Directorate further on the next level with regards pension administration.

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Wednesday 18 September 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

The dangers of categorical thinking BART DE LANGHE AND PHILIP FERNBACH

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our mind is a categorization machine, busy all the time taking in voluminous amounts of messy data and then simplifying and structuring it so that you can make sense of the world.

For a categorization to have value, two things must be true: First, it must be valid. You can’t just arbitrarily divide a homogeneous group. Second, it must be useful.

The categories must behave differently in some way you care about.

But in business we often create and rely on categories that are invalid, not useful or both — and this can lead to major errors in decision-making.

Categorical thinking can be dangerous in four important ways.

It can lead you to compress the members of a category, treating them as if they were more alike than they are; amplify differences between members of different categories; discriminate, favoring certain categories over others; and fossilize, treating the categorical structure you’ve imposed as if it were static.

COMPRESSION When you categorize, you think in terms of prototypes. But that makes it easy to forget the multitude of variations that exist within the category you’ve established.

THE MYTH OF THE TARGET CUSTOMER: Consider what happens in segmentation studies — one of the most common tools used by marketing departments.

The goal of a segmentation study is to separate customers into categories and then identify target customers — that is, the category that deserves special attention and strategic focus.

Segmentation studies typically begin by asking customers about their behavior, desires and demographic characteristics. A clustering algorithm then divides respondents into groups according to similarities in how they answered.

This kind of analysis rarely yields highly differentiated categories.

But instead of seriously evaluating whether the clusters are valid, marketers just move on to the next steps in the segmentation process: determining average values, profiling and creating personas. This

is how “minivan moms” and other such categories are born.

However, the segments that most businesses work with are not as clear-cut as they seem. Customers in a segment often behave very differently. To resist the effects of compression, analysts and managers might ask, How likely is it that two customers from different clusters are more similar than two customers from the same cluster?

AMPLIFICATION Categorical thinking encourages you to exaggerate differences across category boundaries. That can lead you to stereotype people from other groups, set arbitrary thresholds for decisions and draw inaccurate conclusions.

GROUP DYNAMICS: Success often hinges on creating interdepartmental synergies. But categorical thinking may cause you to seriously underestimate how well your teams can do cross-silo work together. If, say, you assume that your data scientists have lots of technical expertise but little understanding of how the business works, and that your marketing managers have the domain knowledge but can’t wrangle data, you might rarely think about having them team up.

DECISION-MAKING: Whenever you make a decision using a cut-

off along some continuous dimension, you’re likely to amplify small differences. After the financial crisis in 2008, the Belgian government bailed out Fortis, a subsidiary of BNP Paribas. As a result, the government owned millions of shares of BNP Paribas. According to the Belgian newspaper De Standaard, at the end of January 2018, when the stock price was a little over 67 euros, the government decided that it would sell its shares if they reached 68 euros again. But they never did; instead the price plummeted, and those shares are now worth only 44 euros.

Nobody in the Belgian government could have predicted that the stock price would fall so much.

But the government’s mistake was to make selling its shares an all-ornothing affair.

DISCRIMINATION Once you’ve imposed a categorical structure, you tend to favor certain categories over others. But insufficiently attending to other categories can be harmful.

OVERTARGETING: Targeting online ads broadly often yields a higher return on investment than targeting narrowly. Researchers have found that online ads tend to increase purchase probability by only a small fraction of a percent. If

the chance that someone will buy your product without seeing an ad is 0.10%, exposure to an ad might move the probability up to 0.13%.

The positive impact of the ad may be a bit greater for target customers, but in many cases it won’t compensate for the additional cost per click. Marketers, however, get obsessed with their target customers, ignoring the value that can be extracted from everyone else.

FOSSILIZATION Categories lead to a fixed worldview. They give us a sense that this is how things are, rather than how someone decided to organize the world.

INNOVATION: Innovation is about breaking the tendency to think categorically. Many businesses aim to increase the efficiency of their operations through categorization. They assign tasks to people, and people to departments. Such disciplinary boundaries serve a purpose, but they also come at a cost. Future business problems don’t fall neatly within the boundaries that were created to help solve past problems. And thinking only within existing categories can slow down the creation of knowledge, because it interferes with people’s ability to combine elements in new ways.

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LIMITING THE DANGERS OF CATEGORICAL THINKING So how can a thoughtful leader avoid the harm that comes from categorical thinking? We propose a four-step process: 1. INCREASE AWARENESS. Anybody who makes decisions needs to be aware of the oversimplifications that categorical thinking encourages and the invisible biases it creates. Companies should help their employees be more comfortable with uncertainty, nuance and complexity. “Is a categorization valid?” is a question that should be part of the decisionmaking mantra.

2. DEVELOP CAPABILITIES TO ANALYZE DATA CONTINUOUSLY. Any company that uses segmentation studies as a major part of its marketing research or strategic planning should employ well-established metrics offer and develop in-house expertise for interpreting the data.

3. AUDIT DECISION CRITERIA. Many companies decide they will act only after they pass some arbitrary threshold on a continuum.

This increases risk and can impede learning. To avoid these problems, we recommend that you perform an audit of decision-making criteria throughout your organization.

4. SCHEDULE REGULAR ‘DEFOSSILIZATION’ MEETINGS. Even if you follow the three steps above, fossilization is still a danger. To avoid it, hold regular brainstorming meetings at which you scrutinize your most basic beliefs about what is happening in your industry.

Categories are how we make sense of the world and communicate our ideas to others. But when we see categories where none exist, it warps our view of the world, and our decision-making suffers.

Today, as the data revolution progresses, a key to success will be learning to mitigate the consequences of categorical thinking.

Bart de Langhe is an associate professor of marketing at ESADE Business School, Ramon Llull University, in Barcelona. Philip Fernbach is a marketing professor at the Leeds School of Business, University of Colorado Boulder, and a coauthor of “The Knowledge Illusion: Why We Never Think Alone.”

Wednesday 18 September 2019

Harvard Business Review

BUSINESS DAY

29

MANAGEMENTDIGEST

Managing an employee who wants to impress you all the time LIZ KISLIK

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CONNECTING here will always be team members who want to make it into your inner circle, and sometimes a subordinate can be singularly focused on pleasing you and gaining your favor. This kind of courtship usually comes from fear and is often a misguided attempt to protect one’s selfimage and job status. Unfortunately, while a person obsesses over keeping you happy and tending to nonessential tasks that he hopes will reinforce his relationship with you, he may be neglecting their real work and creating friction with his peers.

Here are four ways you can redirect the attention of employees eager to please you back to their performance: — AVOID FEEDING THEIR NEED TO PLEASE: Because of your power and their fear, you may have to watch yourself more carefully than you do with other subordinates. I’ve observed relationships in which pleasers were willing to eat, watch (TV and movies) or wear what their boss liked, all in an effort to create a sense of com-

panionship. This kind of sucking up can become dangerous if the boss succumbs to affinity bias and gives the pleaser more attention than it is due.

— STRUCTURE YOUR INTERACTIONS TO BALANCE SPECIAL ATTENTION WITH OBJECTIVITY: If you have weekly one-on-ones with your direct reports, make sure everyone gets the same amount of time and be sure you’re giving kind and simultaneously rigor-

ous feedback to everyone. Relying on concrete scheduling and project management tools can be especially important if you work in an office where people drop in for ad hoc discussions and one person could easily monopolize your time.

— GUIDE THEM TO DEVELOP THEIR OWN DECISIONS: One senior leader I worked with was so concerned about failing to fulfill the CEO’s expectations that she was some-

times afraid to move forward with her own judgments and proposals. I worked with the CEO to be clearer about project requirements and with the subordinate to give the CEO sets of options that included clearly differentiated assumptions. By gauging his reactions to these differing scenarios, she was able to better understand his thought process. Over time, the subordinate developed more confidence in being able

to generate proposals the CEO would accept, and the relationship became less fraught for both of them.

— ASSIGN THEM TO WORK WITH OTHER LEADERS OR PROJECT TEAMS: This will take the pressure off the unhealthy dynamic between you and increase the potential for them to collaborate better with others.

Pleasers often put so much energy into observing and interacting with their boss that they exhaust their capacity to deal with others, particularly when they’re stressed or frustrated. By explicitly directing their attention away from you, you’ll learn whether they have the capacity to behave better with their colleagues.

It’s better for everyone when subordinates’ competence and performance earn them recognition and regard, rather than special status with the boss. By adopting these four approaches, you’ll have a much better chance of getting your pleasing subordinate on a more independent path that will serve you and the organization.

Liz Kislik helps organizations from Fortune 500 to national nonprofits and family-run businesses solve their problems.

How to become ubiquitous vate reporters, attend networking events and create a robust portfolio of content.

— GO SOMEWHERE COOL: Sometimes, inevitably, you’ll miss something important because you’re away. Your suitors may even be disappointed or miffed that you can’t attend the meeting or turn around a new request. You may never make them happy — but you can at least intrigue them. “I’m on vacation” is a fairly boring, lazysounding excuse. But “I apologize for the delay in getting back to you; I just got back from Puerto Rico” is a fascinating conversation starter. So consider this your permission to go somewhere fabulous and make the best of it.

DORIE CLARK

WORK VS. LIFE t was 8 a.m. on a Tuesday, and I stumbled into my local coffee shop. Laptop in tow and shaking off jet lag, I steeled myself for the onslaught: the hundreds of emails that had built up while I’d been on a luxurious 12-day vacation in Spain.

What had I missed? What moves were competitors making in my absence? That’s when I spotted Mimi, one of the most connected players in town. She smiled and walked over to my table. “How’s it going?” she said. “You’re everywhere.”

In that moment, I realized you don’t have to be present in order to be ubiquitous.

Ubiquity, of course, is a major marketing goal. You want to be top of mind for your customers, so they call you (not your competitors) when they need a lawyer, a website redesign or more widgets. But how do you pull it off without sleeping in your office and surgically implanting your iPhone?

Here are four strategies to consider: — SCHEDULE YOUR SOCIAL MEDIA PRESENCE: The Twitterverse never sleeps, and unfortunately you lose face if you let your Twitter feed languish. If you’re intent on building a strong personal

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Dorie Clark teaches at Duke University’s Fuqua School of Business and is the author of “Entrepreneurial You.” (or corporate) brand, you need to be consistent. But that doesn’t mean you can never escape. Every few months, I’ll spend an afternoon coming up with a few hundred nuggets to post on Twitter. You can schedule them weeks or months in advance via Tweet Deck. Sure, you’re not replying in real time — but at least you’re putting something out there when you’re lolling in your cabana.

— RESPOND QUICKLY WHEN www.businessday.ng

IT MATTERS: When you’re away from the office, practice triage. If you have a corporate assistant, ask him or her to monitor your email and call you if anything urgent arises. If you’re a solo practitioner, shell out for a virtual assistant through a service like Upwork. Most of what passes over the transom can be safely ignored — but you don’t want to miss a new client inquiry from that account you’ve been hoping to land.

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— ENLIST MESSENGERS: Perhaps the best way to seem like you’re everywhere is to get other people talking about you. Whether it’s people reading about you in the newspaper, suggesting you to speak at events, citing your advice or mentioning they saw you at a fundraiser, you can quickly create an “echo chamber” if you’re vigilant (during your nonvacation time) about building your brand strategically.

Specifically ask for referrals, culti@Businessdayng

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Wednesday 18 September 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

WAAS set for new solution in auto care

Boustani becomes Ford North Africa/SSA CEO

MIKE OCHONMA Transport Editor

MIKE OCHONMA

orporate, fleet, organisational and individual vehicle owners are in for a new deal as the momentum gathers and excitement builds ahead the maiden edition of the West Africa Automotive Show (WAAS), a new international trade exhibition, is set to bring the region’s automotive parts industry together under one roof in November.

For three days, an estimated 100 exhibitors from Nigeria and other countries will be gathering to network, forge new business ties and show off the latest developments and products in the spare parts and services sector. Suppliers, dealers and manufacturers will also be able to discuss best practices for the industry and find out more about the developing local motor manufacturing industry.

With free admission, more than 3,000 visitors are expected to attend WAAS which holds from November 6 to 8, 2019 at the Landmark Centre on Victoria Island, Lagos.

There will be national pavilions for Morocco and China, smaller groupings from Thailand, Egypt, Tunisia and India, and a dozen more countries will also be represented. Nigerian businesses will be well represented which will account for about 30 percent of exhibitors.

WAAS is organised by BtoB Events, which has had two successful show launches in Lagos over the past year, Beauty West Africa and Food and Beverage West Africa.

According to Jamie Hill, managing director of BtoB Events’ “We have a wealth of international exhibitors looking to bring hightech equipment to Nigeria for the first time and a large number of local exhibitors are looking to expand their business and increase exports to surrounding countries We are now looking forward to seeing the regional automotive sector come together under one

ord has announced the appointment of Achraf El Boustani to an expanded role, as managing director for North Africa (NAF) and Sub-Saharan Africa (SSA) to oversee the management of Ford’s operations in SSA from the company’s regional headquarters in Casablanca.

Moroccan national Achraf El Boustani, 40, has deep knowledge of the NAF and SSA region, with almost 20 years’ experience in both the aviation and automotive industries across the markets.

Since joining Ford in 2015 as general field manager for North Africa, he has successfully led commercial operations with the region’s distributors.

In 2017, as managing director of Ford’s North African operations, he was focused on strengthening sales growth and improving the brand’s competitiveness in North Africa.

In his new role, he will continue to lead the brand’s sales and commercial activities in the region, driving forward partnerships and a customer-centric mind set.

Additionally, as part of this new organisation, Hajar Dinar has also taken on the expanded position of communications manager for North Africa and SSA. She will be responsible for leading communications, positioning and branding in the region.

Hajar joined Ford in March 2017 having been appointed to the position of communications manager for Ford North Africa. With close to fifteen years of experience in communications and public relations, brand management and partnership development.

She has held senior positions in renowned companies in Morocco and France in the automotive industry (Renault Maroc Group), territorial development (CDG Group) and the entertainment and media industry (Vivendi Universal). Achraf and Hajar will both take on their expended roles, with immediate effect, from Ford’s regional headquarters in Casablanca.

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roof as he launches WAAS”.

Having the largest population on the continent creates a huge market opportunity in Nigeria.

BtoB has selected Lagos to launch the show as it recognises Nigeria is well placed to become the automotive hub of the African continent with over 11.5 million vehicles on the roads.

“With over 60% of vehicles on the road being over 12 years old, there is a huge aftermarket industry. The need for high quality and affordable spare parts is becoming increasingly important,” said Hill.

“There is also a real hunger to boost the local assembly of vehicles across the country with the 2013 National Automotive Industry Development plan (NAIDP).

With more assembly plants being set up, this again significantly increases the demand for spare parts. We are committed to supporting Nigeria reach its forecast of having 70% of new cars sold being assembled or manufactured domestically by 2050’’.

WAAS has the official endorsement of the National Automotive Design and Development Council

(NADDC) and the show’s founding partner is ASPMDA (Auto Spare Part and Machinery Distributors Association).

Hill continued: “ASPMDA represents the largest spare part market across Africa and acts as the re-export hub for sub-Saharan Africa. No other country on the continent can boast a trade hub such as ASPMDA with over 20,000 member businesses, so Nigeria immediately positions itself as the most important for foreign exporters.”

Leonard Okoye, Secretary of the Foreign Trade and Investment Committee at ASPMDA explained the Association “is supporting WAAS as an inroad to meet other manufacturers in the competitive market of automobile industry.

The advice for stakeholders in the auto industry is that, they should continue to attend all exhibitions because learning is a continuous process.”

To support Nigerian companies at the exhibition, the WAAS organisers are drawing up a small conference seminar to throw the spotlight on local businesses.

“It is great to give the local companies a platform to grow their market share, increase exports and highlight that the Nigerian original equipment manufacturers (OEMs) are not out of place amongst the global companies,” said Hill.

At the same time, local entrepreneurs will be able to meet with their overseas counterparts and see what the global aftermarket industry has to offer with a range of products from across four continents.

While the exhibition is fast approaching capacity, BtoB Events is still inviting applications from exhibitors and potential sponsors, who can find out more on the WAAS website at https:// westafricaautomotive.com/ or by contacting Ken Baber on ken. baber@btob-events.com.

Anyone connected with the automotive spare parts and services industry be it importers, distributors, manufacturers, assemblers, commercial garages, retailers, mechanics, fleet operators, logistics companies can attend the show free of charge.

Super rich Banana Island residents set for new BMW X7 SAV MIKE OCHONMA

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oscharis Motors Nigeria plc, exclusive franchise owner of BMW in Nigeria is set to officially reveal the very first-ever BMW X7, the pinnacle of brand’s X Sport Activity Vehicle (SAV) line-up and a statement of the luxury class at this year’s Banana Island Festival next week weekend.

Abiona Babarinde, general manager, marketing and corporate communications, Coscharis Group said that, the objective of the reveal at Banana Island is to strategically offer customers and prospects an opportunity

to see and feel the all new BMW X7 within their home and work www.businessday.ng

contexts.

“The new X7 becomes the sec-

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ond BMW model to be launched at the Banana Island Cultural festival. The very first was the BMW 5 series in 2017. The new series will be added to this reveal, in order to pull back the covers on a new definition of automotive luxury’’.

He stated.

BMW brand manager for Coscharis Motors, Cletus Aregbeshola, also said that, the X7 builds on the class leading comfort, handling, safety and technology of all the previous BMW X Sport Activity Vehicle model lines that have been produced at the Spartanburg plant since 1999.

A re g b e s h o l a s t a t e d t h a t BMW’s latest premium Sports @Businessdayng

Activity Vehicle is designed to reflect the personality and requirements of the owner. It not only adds a new top model to the X family, but also defines a progressive approach to luxury for the BMW brand.

The X7 offers standard three row seating for 7 with optional second-row captain’s chairs offering a more exclusive seating arrangement for 6 occupants. Standard two-axle air suspension, 21inch alloy wheels and advanced driver assistance systems ensure that it lives up to expectations of style, driver engagement, passenger comfort and all-weather and all-terrain capability.

Wednesday 18 September 2019

BUSINESS DAY

31

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Europcar signs TVS continues investments in Africa, sponsorship partnership celebrates one million sales on HLX models with Fulham FC E

TVS Motor Company has announced that the TVS HLX series of motorcycles, which was launched in 2013, has crossed one million units milestone in sales. This is an incredible feat for an Indian motorcycle developed exclusively for international markets. The TVS HLX series made its first foray in Africa few years ago, the brand was developed to cater to tough usage conditions of commuters. TVS Motor Company achieved this through extensive customer research, understanding of ride cycles, robust engineering and extensive field trials. This led to HLX becoming the benchmark for quality and a leader in its segment in Africa and across global markets. The 1 million milestones is a reinforcement of TVS Motor Company’s endeavour to continue offering superior products and complement them with dedicated customer satisfaction initiatives. BusinessDay recently spoke with R Dilip, executive vice president in charge of international business of TVS Motor Company about their plans for Africa, and Nigeria in particular.

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lans for TVS Motor in Nigeria and its important is this market for you Nigeria is an important market for TVS Motor Company and we have been present here for over a decade. With the help of our distributor TVS Simba, our products have found acceptance in the market with TVS HLX becoming the fastest growing motorcycle in its category.

The quality and reliability synonymous with TVS Motor Company has resonated strongly with our customers. Certainly, the investments made by the company and our distributor, particularly in our assembly plants and service centres based across the country have been critical to this.

Which of the models are doing well here Our leading brand in the African continent is the HLX series.

Launched in 2013, it has stayed true to the brand’s promise of being a sturdy product which is highly reliable across tough terrains.

TVS HLX has been instrumental in transforming millions of lives across Africa by providing an easy mobility solution for riders, as well as, becoming an employment generator by creating opportunities for riders.

It is synonymous with fuel efficiency, durability and comfortable suspension. Thoughtful features such as USB mobile charger ensure that the customers are well equipped in areas of frequent

R Dilip

power outage. The long seat and easy serviceability are unique selling propositions of the HLX series, and are particularly loved by its customers.

HLX has seen success across the globe. What are your plans for this product Our immediate focus is to ensure that TVS HLX is available across the entire continent of Africa. Today we crossed over 1 mil-

lion sales across the globe and we are confident that it will continue to do well in these regions.

What are the plans for across markets We have been present in Kenya for over 15 years. The wide product range and easy availability of TVS products have contributed to our popularity in the region. As in Nigeria, we have also set up an assembly plant in Kenya which

serves the dual purpose of local hubs as well as creates job opportunities.

Do you plan to launch newer models in Nigeria the future Launching new products is a continuous process. TVS Motor Company keeps customer insight at the centre of all our offerings which helps us identify the gap in their requirements and provides products accordingly. We will keep you posted as and when we launch these new products.

What is the products portfolio of TVS Motor Company TVS Motor Company provides two-wheelers and three-wheelers for both personal uses as well as for commercial point-to-point transportation.

Tell us more about TVS Motor Company TVS Motor Company is a reputed two and three-wheeler manufacturer and is the flagship company of the $8.5 billion TVS Group. We, take pride in making internationally aspirational products of the highest quality through innovative and sustainable processes.

We endeavor to deliver the most superior customer experience across 60 countries. We are the only twowheeler company to have received the prestigious Deming Prize.

Our products lead in their respective categories in the J.D. Power IQS and APEAL surveys for four years. We have been ranked No. 1 Company in the J.D. Power Customer Service Satisfaction Survey for consecutive four years.

MIKE OCHONMA

uropcar Mobility Group UK has signed a new partnership to help its Europcar car rental brand reach a wider audience in the next couple of years.

The new partnership will see Europcar become the official car and van rental partner for Fulham Football Club for the next two seasons. At the centre of the relationship is the provision of a small fleet of Europcar branded Mercedes C200 Sport Autos for club use.

In exchange for the vehicle supply, Europcar branding will appear around the stadium during match days, including on the big screen and the pitch-side LED and static signage boards as well as the media backdrop.

Branding will also feature on perimeter boards at Fulham FC’s Motspur Park training ground and in the matchday programmes.

Fulham fans are also set to benefit from the partnership, with a range of exclusive ‘away match’ discounts set to be offered for Europcar car and van hire.

“We are extremely excited to be working with Europcar Mobility Group UK for the 20192020 and 2020-2021 seasons.The Mercedes C200 Sport Autos will be invaluable, for the Club to use. As importantly, the partnership means we can offer our fans great rewards for their support with a range of Europcar vehicle rental discounts’’. said Alistair Mackintosh chief executive of Fulham Football Club.

LBE road gridlock getting worst as CCECC project drags MIKE OCHONMA

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his is not the best time for users of the Lagos-Badagry Expressway project following the abysmally slow pace of work at the ongoing road project by the Chinese contractors handling the project.

Suprisingly, the stretch of distance where the horrible traffic snarl is just few meters apart and this is precisely at the very busy Lagos international trade fair complex referred to as the auto spare parts (ASPAMDA) and other articles market.

Governor Babajide Sanwo-Olu had during his campaign period assured that one of his top priorities would be to haten up the completion

of the Lagos-Badagry road project.

Upon assumption of office, the state chief executive had made good his campaign promises by bringing a glimpse of hope by mobilising the Chinese Civil Engineering & Construction Company (CCECC) back to site.

Unfortunately, the experience of commuters including BusinessDay along the corridor has always presented a terrible picture of hopelessness, despair, frustration and sense of rejection.

The situation is made worse by the failure of adequate traffic measure by the concerned authorities because the good and motorable road infrastructure is is not even there.

In the past two months, the CCECC; the contractors handling www.businessday.ng

the project is stucked in just one spot; and that is right in front of ASPAMDA, thus raising very critical questions among commuters as to whether the contractors have not been adequately mobilised or lacking in equipments and adequate manpower.

The Lagos Badagry road expansion and modernisation project was started in 2009 under the former governor Babajide Raji Fashola, but abruptly stopped when Akinwunmi Ambode, his successor took over as the state chief executive in 2015.

Many Lagosians are still left in utter bewilderment as to why both the All Progressives Congress controlled state and federal governments cannot accord the Lagos-Badagry Expressway road project the priority

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it deserves.

Some schools of thought have on various occasions described the lack of political will to hasten the project which connects Nigeria with other @Businessdayng

West African neighbours as a total embarrassment to both the state and federal governments that are under the control of the same All Progressives Congress (APC)

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Wednesday 18 September 2019

BUSINESS DAY

tax issues Evaluating FIRS’ proposed directive requiring banks to deduct VAT on payments made for ‘online transactions’ Ademola Idowu and Oladimeji Taiwo

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hold VAT at source.

While the obligation to collect and remit VAT is generally on the suppliers of VATable goods and services, the VAT Act provides for exception whereby only three groups of taxpayers are obligated to deduct VAT at source and remit directly to the tax authority.

These are: a. Nigerian companies that are carrying on VATable transactions with non-resident companies within the country; b.

Government ministries, statutory bodies and other agencies of government; and c. Companies operating in the oil and gas sector.

Thus, there is currently no statutory provision that requires or empowers the FIRS to direct banks, that do not fall into any of these three categories, to deduct VAT on payments made for online transactions through the banks.

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2. Basis of proposed directive (Power of substitution) Even where the FIRS intends to rely on its power of substitution as enshrined in Section 31(1) of the FIRS Establishment Act to appoint banks as agents for the collection of VAT, that power should only be exercised where there are established cases of default in payment of VAT that are already deemed to be final and conclusive in accordance with extant laws. As the banks hold fiduciary obligations to their customers, the FIRS directive mandating them to deduct VAT from monies paid into the customers’ accounts may expose the banks to risk, if the payment were to be made and it was subsequently discovered that no such liability (or less liability than the sum actually paid) was due from the taxpayer on whose behalf such payment

Given that the payments made through the banks for supply of VATable goods and services would typically be inclusive of VAT, there exists a risk that the banks will compute and deduct VAT on the total invoice amount (which includes VAT) www.businessday.ng

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he Federal Government (FG) of Nigeria has been perennially faced with the problem of shortage of funds to provide critical infrastructure for its teeming populace. This challenge has been aggravated by the vagaries of the international crude oil market as the country has for too long been mono-cultural with crude-oil sustaining its financial veins. Successive governments have made attempts to diversify the economy with suggestions being made in the areas of agriculture and mining, but these will require sustained commitment to infrastructure development, political will-power, targeted foreign direct investment inflows, etc. In this circumstance, tax revenue has naturally become the key focus to ramp up the FG’s revenue.

To this end, the Federal Inland Revenue Service (FIRS) has taken several commendable steps towards improving the FG’s revenue base in recent years by widening the tax net. One of the most recent propositions by the FIRS is its intention to direct Nigerian banks to commence the collection and remittance of Value Added Tax (VAT) on “online transactions” paid for through the banks’ electronic platforms. This effectively implies that the FIRS intends to appoint the banks as its agent for VAT collection. While this is one of the FIRS’ ways of fixing perceived VAT leakages and eliciting VAT compliance on online transactions, Nigeria currently has no enabling legislative framework for the taxation of online businesses/ transactions. The directive, as it is and without detailed clarity from the FIRS, is ambiguous. Hence, the legal basis and practicality of the proposed directive raise concerns that the FIRS should address before its implementation.

We have identified some of the challenges with the proposed directive below: 1.

Absence of statutory framework The VAT (amended) Act 2007 governs the administration of VAT in Nigeria. The Act requires suppliers of taxable goods and services to include VAT in their invoices, collect and remit the tax to the FIRS. However, the VAT Act does not give banks the obligation to with-

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was made.

3.

Lack of clarity on what constitutes “online transaction” The FIRS would need to define what it meant by “online transactions” as the term appears too broad. For instance, how would the banks distinguish payments that are transaction-based from those that are simply transfer of funds? Would the FIRS simply require the banks to deduct VAT from all inflows into a customers’ corporate account? Would the FIRS direct the banks to mandate customers to specify the purpose of payments made? Is the FIRS directive limited to e-commerce businesses or includes all forms of businesses so far as a payment is made through banking platforms?

4. Lack of clarity on how the FIRS intends the bank to delineate VATable and non-VATable transactions There is also the challenge of how the banks will differentiate payments for VATable goods and services from those that are nonVATable before deducting VAT on the transactions.

Also, given that the payments made through the banks for supply of VATable goods and services would typically be inclusive of VAT, there exists a risk that the banks will compute and deduct VAT on the total invoice amount (which includes VAT).

5. No clear mechanism for the adjustment of input VAT It is also not clear how the FIRS intends to deal with the issue of input VAT as the banks may have @Businessdayng

deducted and remitted the full amount of the output VAT. The amount of VAT payable should ordinarily be the net of output VAT on supply of goods and services over input VAT paid on raw materials, goods purchased for resale, etc. The FIRS directive would therefore impair the taxpayers’ ability to recover allowable input VAT and increase the overall cost of doing business.

6. Refund of VAT deducted where goods are returned by customers E-commerce businesses typically maintain “goods return policies” whereby refunds are made to customers for goods returned within specified period of time and subject to the fulfilment other stipulated conditions. Where the FIRS directive is implemented, the banks would have remitted the VAT on the initial full payment and there will be the challenge of how to recover the VAT on the returned goods.

This becomes more challenging considering that the tax refund system in Nigeria has not been known to be as effective as it should be. This will also leave affected businesses with the burden of paying VAT out of their capital rather than remitting VAT they collected.

Conclusion As the FIRS proposed directive is replete with challenges, the FIRS should consider engaging relevant stakeholders to understand the specific nature of transactions that it intends to capture. Also, the FIRS should not by an administrative fiat impose obligations to collect VAT on the banks, as such will simply exacerbate their already burdensome compliance obligations involving many agencies of government. While the FIRS’ continued drive to boost tax revenue by widening the tax net and eliciting voluntary tax compliance from taxpayers is justifiable, there is need for clarity and consistency on how this compliance will be achieved.

Although the FIRS has yet to issue an official publication on this matter, the appropriate step would be for the tax authority to pursue legislative amendments to the extant VAT Act through the National Assembly if it, indeed, wants to expand the tax net to include taxation of online transactions.

Ademola is a Manager; and Oladimeji is a Senior Associate, both at KPMG in Nigeria

Wednesday 18 September 2019

BUSINESS DAY

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CORPORATE GOVERNANCE PUBLICATION

Square peg in round hole: A tale of the ‘misfits’ OLAYIMIKA PHILLIPS

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lement, a budding entrepreneur, is desirous of starting a business in Nigeria. He conceives an amazing business idea, targeted at revolutionizing Nigeria’s transportation sector through technological solutions. In view of the capital-intensive nature of the project, he is desperately sourcing for high-net worth investors, as well as the support of a solid team comprised of a commercially savvy board and innovative employees to give life to his idea. In making the requisite decision, he is caught in between harmonising his interests and that of the investor(s) with the Company’s - The Conundrum” In this maiden edition of the column, it is fitting to begin with a discussion on the foundation of governance – the establishment of the business and the set-up of the board.

Most successful companies started either as the sole idea of an individual or the collective idea of a few individuals. A brilliant idea, though foundational, is not solely responsible for the sustained success of these companies. Partnership with the right stakeholderssuch as investors, directors, service providers, professional advisers, employees amongst others- play a critical role in the commercial excellence of companies.

Business partnerships have several advantages as they avail businesses a platform to pool resources and other necessary skill sets towards eventual success. The essence of establishing a partnership is really to stimulate a symbiotic relationship, such that the business is bolstered by the injection of the much-needed revenue from investors, whilst investors become increasingly nimble

and innovative by the novel ideas, products and/or services inspired by the founder.

Notwithstanding this, recent statistics have revealed that the global divorce rate for business partnerships is at an all-time high. This is largely attributable, amongst other factors, to inherently weak corporate governance structures, particularly where an investor with deep-pockets exerts undue influence on the board without due regard to the interest of

the Company. Unfortunately, desperate founders run the risk of operating with a silo mentality, solely targeted towards the capital injection without necessarily considering the longevity and sustainability of their brain child- the business.

Whilst there is no doubt that businesses require financial and other related aids to attain organisational growth, one must understand that having measurable goals, aligned interests and calculable projections are crucial to maintaining such businesses. The general belief is that founders can only sight the vista by mounting the shoulder of giants (in this case, investors), however req-

uisite due diligence must be conducted on the said “giants” to ensure no semblance with “Goliath”.

In this wise, there is a need to ensure adequate consideration of requisite factors before embarking on business arrangements and establishing partnerships, particularly between parties of unequal bargaining power – founder with the brilliant business idea and the investor(s) willing to fund the idea.

Before crossing the isle with an investor, it is advisable to identify one that shares similar values, ethos, goals, leadership style and skills. From experience, it is not uncommon to see businesses diversify from their core objectives to stay in tune with the commercial realities of the modern world. When this reality beckons, a founder would need a trusted partner to scale through this hurdle. It is at this stage that an investor with a creative and innovative mind becomes an added advantage.

Beyond this, a founder should also possess an unblemished integrity. The brilliance of a business idea is not enough, a founder must display

an aura of integrity. Investors, though risk-takers, are likely to partner with people who can be trusted with their hard-earned currencies.

Setting up The Board An identifiable risk a founder faces is the likelihood of ceding control of his brain-child to the investor. Typically, the investor who capitalizes the business would acquire controlling interests in the business and may

opt to sit on the board or appoint nominees and effectively control the board. The reality is that some investors or their nominees are on the board to pursue and protect their vested interests, without regard to the interest of the Company.

Over the years, these common occurrences have triggered several corporate governance issues to say the least. Accordingly, a clear picture of the long-term management of the business must be impressed in the mind of the founder prior.

A founder, before establishing any partnership with stakeholders, should satisfy himself that the board to be constituted comprises of commercially

savvy individuals with accomplished professional standing and proven integrity. It is critical for the founder to, for instance, carefully consider the managerial experience and industry-specific knowledge of the directors to be selected as they are typically better placed to drive the corporate vision, enhance the profitability of the company and improve shareholders’ value. In the wave of recent corporate scandals, the values, ethos and behavioural qualities of directors are indispensable. The track record of success and competency of the potential directors should occupy a dominant space in the founder’s minds. Relatedly, the considered directors must be truly independent and objective in their decision-making process such that the company’s interests are advanced at all times.

Most businesses often fail within three (3) to five (5) years of operation, and this failure is largely attributable to the failure or neglect to secure the right partnership to constitute a truly versatile, experienced and independent board. For a Clement who wants to revolutionise Nigeria’s transportation sector, he must place the right square peg in a square hole.

As Steve Jobs famously said, “great things in business are never done by one person; they are done by a team of people”.

However, it is not just a team of people but a team of the right ones.

Olayimika is a Partner in the law firm of Olaniwun Ajayi LP and has over 34 years of professional experience.

She specializes in corporate governance, providing pragmatic solutions to the diverse challenges which confront corporates at different growth stages and serves on the board of several companies (listed and privately held).”

Wednesday 18 September 2019

BUSINESS DAY

FEATURE

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Dangote Cement promo: Transforming lives, fulfilling dreams GBEMI FAMINU

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ever in the history of consumer promotions in Nigeria nor in the built sector has any company put up such humongous prizes as the ones Dangote Cement plc has been throwing at its consumers nationwide as reward for purchasing its products.

Though the prizes are unprecedented, industry watchers are also not too surprised because Dangote Cement is the leading player not only in Nigeria but in sub-Sahara Africa.

In a manner never witnessed before, it has been a harvest of goodies for loyal customers of the cement giant since July 1, when it launched in Lagos its “Bag of Goodies” national consumer promotion reputed to the biggest ever. By the time the promo comes to an end, over 21 million customers would have been proud winners of one item or the other.

Then the question is, what was on the mind of the management of the company before opting for the huge promotion?

Adopting the words of Michael Leboeuf, that “Every company’s greatest assets are its customers, because without customers there is no company”, Dangote Cement plc has used the ongoing nationwide promotion to showcase the value it places on its customers.

For the company, customers are its important intangible assets who should be valued, managed, and rewarded for continuous patronage. It is against this backdrop that the company has in the last nine weeks transformed the lives of ordinary Nigerians by presenting to them exceptional gifts of cars, tricycles, plasma televisions, etc.

To make this year’s promo eventful, the company has made available billions of naira worth of prize items. These include 43 brand new cars, cash prizes of N200 million, 24 tricycles, 550 refrigerators, 24 motorcycles, 400 television sets and goodies packs (containing various products from the group’s stables).

Enriching the consumers Already, many winners have continued to emerge in the promo, which is targeting the end users of Dangote cement. For example, block-makers, a moin-moin (bean cake) seller, labourers, housewives, job-seekers, an okada rider, an insurance marketer and artisans have been presented with brand new saloon cars by the management of Dangote Cement plc.

An Abuja-based block-maker, Emmanuel Boye, who won a brand new saloon car in the “Bag of Goodies” promo, never thought he could ever become a car owner in his several years of block-making business.

According to Boye, he sold his car recently to boost his investment in cement business, only to be rewarded with a new saloon car.

“Sometime this year, I sold my Toyota Corolla in order to boost my business. My wife thought that was a crazy idea. But, I used the proceeds from the car to stock Dangote cement for my block business.

Look at me now, I am the proud owner of a brand new car, and my business is boom-

L-R: Olukayode Akin-Bamidele, head, route to market, Dangote Cement plc; Awojobi Oluwasegun, star prize winner; Funmi Sanni, marketing director, Dangote Cement plc, and Abayomi Shittu, regional sales director, South/West, Dangote Cement plc, during the star prize presentation in the ongoing Dangote Cement ‘Bag of Goodies’ national consumer promo in Ilorin, Kwara State.

ing,” he said.

For Mujahid Shiabu, a labourer at a block-moulding site in Lagos Island, who returned from Borno State recently, the saloon car prize presented to him by the Dangote team was the most surprising thing that has ever happened to him.

The dreams of becoming car owners by the lowest income earners in the country could only be made possible through the determination of Dangote Cement plc to ensure all its cement users, regardless of their status, are rewarded for being loyal users of Dangote cement.

The most interesting aspect of this promo is that a consumer may not necessarily purchase a trailer load of cement to emerge a winner. This was the case of Momoh Ali, in Benin, who bought only 10 bags of cement and instantly became an owner of a beautiful new car.

“With just 10 bags of cement, I am now a proud owner of a GAC Saloon car. Today is the happiest day in my life,” he said, while being given his prize recently.

It was also a dramatic experience for an Abraka, Delta State-based cement retailer, Benjamin Igherighe, who emerged the grand prize winner.

Narrating how it all happened, Igherighe said he bought a trailer load of cement from a distributor, Fibo Ventures, and looked for loaders to offload the truck. He stated that rainfall disturbed the offloading as the loaders dispersed, which made him to hire two other loaders, remove his shirt, and join them in transferring the cement bags into his store.

According to the elated winner, he took a position inside the truck and was transferring the bags to the loaders on the ground, and in the process, three bags of cement got torn with one hanging on the railings of the vehicle. While scooping and rearranging the torn bags, a “Bag of Goodies” promo scratch card fell out, which he picked and placed inside his pocket. On scratching the card, he said, he saw he had won a saloon car.

“It was like a dream. I called the distributor and she said the promo is real,” he said.

Across all age levels Dangote Cement plc promo is not targeted at any particular age bracket. It has rewarded both the young and the elderly in the society. Alhaja Nimota Adetoro, a 70 year-old grandma, popularly call Iya oni moin-moin won the car in Ikirun, Osun State.

Few weeks ago, two others, a 64-yearold bricklayer, Iyowun Ezekiel, and a 20-year-old artisan, Godwin Godday, were also presented with the star prizes of GAC saloon cars.

Elated Ezekiel, who is based in IjebuOde, Ogun State, and has been a bricklayer for over 40 years found his prize-winning scratch card in one of the Dangote cement promo bags he bought from a distributor in Ijebu-Mushin. On the other hand, Godday, who is the youngest winner of the star prize so far, found his winning scratch card in a bag of Dangote cement while mixing concrete at a building site in Ikorodu area of Lagos.

More than just a promo The “Bag of Goodies” promo is not just a promo. The uniqueness of it is in the choice of items being won by the people. The Dangote Cement management reasoned that the company is intentionally empowering its customers through the promo. The cars, tricycles and motorcycles are items that lift the customers, create additional means of livelihood and improve the economy.

Funmi Sanni, marketing director of the company, said the company would always look for ways to make the customers happy and that the promo was just one of the many other lofty things that have been lined up for the Dangote Cement plc customers.

“Consumers are at the heart of what we do; without them there is no business.

Consumers are important and a fundamental factor of production without which

production process is incomplete and our ability to remain in business becomes impossible,” Sanni said.

“To grow our business, we must constantly create value in terms of quality product and service, competitive pricing and depositing in consumers’ emotional bank accounts in order to become their preferred choice of brand at the point of purchase,” she said.

Speaking on the significance of the promo, Joseph Makoju, group managing director of Dangote Cement plc, said the company decided to run the biggest promo ever in Nigeria as a way of contributing to the economic wellbeing of the consumers of its products.

He said the promo is to reward valued consumers for their unflinching partnership in ensuring that “our range of cement products remains today the first choice for construction purposes across the country”.

Makoju added that the consumer promotion gives opportunity for existing and new consumers to get a step ahead of their struggle for economic emancipation by winning any of the give-away items, which has economic value.

Stakeholders laud promo initiative The Dangote Cement plc promo has continued to receive commendation from stakeholders across the country.

Presenting the car prize to Sanusi Saíd, a businessman who won in Kano, and a bricklayer, Emmanuel Boye, who won in Abuja recently, the governor of Kano State, Abdullahi Umar Ganduje, lauded the transparency of the promo and thanked Dangote Cement plc for adequately compensating its customers through the promo.

Represented by Hajiya Binta Lawal Umar, permanent secretary in the state Ministry of Commerce, Industry, Cooperatives and Tourism, the governor said Dangote, being an honest man, has further demonstrated his honesty with the way and manner the promo was transparently conducted.

He said the government recognised the immense contributions of Dangote Group in helping the nation to grow from strength to strength, adding that they were very happy and proud with what Dangote is doing in the state.

Regulatory commission’s endorsement The National Lottery Regulatory Commission (NLRC), whose coordinator witnessed a star prize presentation ceremony in Abeokuta, Ogun State recently, commended the transparent process of rewarding the winners and described the promo as unprecedented.

Coordinator of the NLRC, Fasuhanmi Omotayo, said his commission has so far been impressed with the promo and lauded the management of Dangote Cement plc for the gesture of rewarding its cement consumers in such a manner.

He said the transparent nature of the promo was commendable because “what you see on the card is what you win”, adding that the promo, by all measures, has been successful.

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Wednesday 18 September 2019

BUSINESS DAY

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Wednesday 18 September 2019

BUSINESS DAY

news

N1.07trn to hit money market this week HOPE MOSES-ASHIKE

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iquidity in the Nigerian money market is expected to increase as N1.07 trillion inflows from combination of Treasury Bills maturity, Open Market Operation (OMO) and Primary Market Auction (PMA) hit the system this week.

A breakdown of the inflows show that N536.3 billion will come from Treasury Bills maturity, N356.5 billion from OMO and N179.8 billion from PMA. The money market last week recorded total inflow of N347 billion from ma-

tured OMO bills. However, the Central Bank of Nigeria (CBN) auctioned and sold OMO bills to mop up N527 billion, which caused a spike in average money market rates by 2,011 basis points.

Treasury bills closed on a negative note. Yields across the curve increased marginally by 1 bps on the average to 13.40 percent from 13.39 percent the previous day, according to analysts at FSDH research, an arm of FSDH Merchant Bank Limited.

Yields on medium and long term maturities increased by 4bsp, while the yields on the short-term maturities declined by 4bsp.

More than 2.6m patients die yearly over unsafe healthcare ANTHONIA OBOKOH

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s Nigeria joins the rest of the world to celebrate World Patient Safety Day, the World Health Organisation (WHO) has called for an urgent action to combat patient harm which causes 2.6 million deaths annually in low-and middle-income countries.

WHO is focusing global attention on the issue of patient safety and launching a campaign in solidarity with patients on the very first World Patient Safety Day on 17 September.

According to the report, four out of 10 patients suffer harm during primary care and outpatient treatment.

The most common errors occur in diagnosis, prescription and use of medicines. The cost of prescribing the wrong medication alone is $42 billion a year.

“No one should be harmed while receiving health care.

And yet globally, at least 5 patients die every minute

because of unsafe care,” said Tedros Adhanom Ghebreyesus, WHO Director-General.

Ghebreyesus added that “we need a patient safety culture that promotes partnership with patients, encourages reporting and learning from errors, and creates a blame-free environment where health workers are empowered and trained to reduce errors.”

Furthermore, the report reveals that unsafe surgical procedures result in one million deaths during or immediately after surgery every year. WHO stresses that this is unacceptable and encourages urgent action by countries to try to reduce this number.

WHO, improving patient safety can even lead to significant financial savings noting that the cost of prevention is much lower than the cost of treatment due to harm. In the US alone, certain safety improvements in Medicare hospitals led to an estimated $28 billion in savings between 2010 and 2015.

NIESV, Foundation partner to tackle problems of persons with attention deficit CHUKA UROKO

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igerian institute of estate surveyors and valuers (NIE SV ), Lagos State branch, an umbrella body of professional estate surveyors and valuers in the state, have entered into partnership with Dyslexia Foundation to tackle the problems of people suffering from dyslexia.

Dyslexia is a brain condition in people, especially children; it is a neurologically based condition that leads to attention deficit.

Worried about this condition, NIESV which is a frontline body of real estate and built environment professionals, and Dyslexia Foundation have decided to offer assistance through awareness creation.

The Foundation is an organization dedicated to identification and remediation of this brain condition.

Ben Arikpo, the chairman of the foundation, explained to BusinessDay that Dyslexia is an unfamiliar disorder that in-

terferes with acquisition and processing of language and varies in degrees of severity.

“It manifests in difficulty in receptive and expressive language,” Arikpo added, listing reading, writing, spelling, handwriting, etc as some of the areas of manifestation.

He cited a 1994 research work which reported dyslexia as the most common of all known learning disabilities, adding that the research found dyslexia as the leading cause of school drop-out and the most commonly shared characteristics of juvenile justice cases worldwide.

Early warnings of dyslexia in children, the chairman pointed out, are speech delay, inability to read at a particular age compared to age mates, inability to write legibly and inability to comprehend a read piece to answer questions.

He advised parents, teachers and employers of labour to look out for these signs which also include taking too long on assignments and home work, and taking too long to carry out a task in the work place.

L-R: Balarabe Safiya Iweyi, treasurer, Women Forum-Nigerian Bar Association (NBA); Aideyan Nsidibe, secretary, Women Forum-NBA; Oluyemisi Bamgbose, chairperson, Women Forum-NBA; Paul Usoro, president, NBA; Chinyere Okorocha, vice chairperson, Women Forum-NBA, and Foluke Dada, 2nd vice president, NBA, at the formal inauguration of the NBA Women Forum in Lagos, yesterday.

Pic by David Apara.

CBN reduces, unbundles charges on electronic merchants collections …nationwide implementation of cash-less policy to begin March 2020 …reschedules September MPC as analysts expect a hold on MPR HOPE MOSES-ASHIKE

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o further promote a cash-less economy and enhance the collection of applicable government revenues, the Central Bank of Nigeria (CBN) has announced a review of the process for merchant settlement.

With effect from September 17, 2019, the CBN has approved for banks to unbundle merchant settlement amounts and charge applicable taxes and duties on individual transactions as stipulated by regulations.

A statement signed by Sam Okojere, director, payments system management

department at the Bank, , also announced a downward review of the Merchant Service Charge (MSC) from 0.75 percent capped at N1,200 to 0.50 percent capped at N1,000.

Meanwhile, the CBN, in a circular to all deposit money bank (DMBs), also announced the commencement of charges on deposits in addition to already existing charges on withdrawals.

According to the circular, the charges, which take effect from Wednesday, September 18, 2019, will attract 3% processing fees for withdrawals and 2% processing fees for lodgments of amounts above N500,000 for individual accounts.

Similarly, corporate accounts will attract 5% processing fees for withdrawals and 3% processing fee for lodgments of amounts above N3,000,000.

The statement, however, disclosed that the charge on deposits shall apply in Lagos, Ogun, Kano, Abia, Anambra, and Rivers States as well as the Federal Capital Territory.

It added that the implementation of the cash-less policy would take effect from March 31, 2020.

The CBN on Tuesday also rescheduled the number 269 Monetary Policy Committee (MPC) earlier scheduled for Monday, September 23 and Tuesday, September 24, 2019, to now hold on Thursday,

September 19 and Friday, September 20, 2019.

In a statement signed by Isaac Okorafor, director, corporate communications, the CBN regretted all inconveniences caused by the change.

Efforts by BusinessDay to know the reason for the reschedule was not successful as the CBN spokesman could not respond to his calls.

Analysts said last night that it could be that the CBN has one assignment on the earlier date that triggered the rescheduling.

However, analysts in the financial market expect no change in the Monetary Policy Rate (MPR) as the MPC members begin their two-day meeting on Thursday in Abuja.

FG signals plans to source capital market funding for Family Homes Project ONYINYE NWACHUKWU, Abuja

T

he Federal Government hopes to source capital market funding as well as other third party monies to enable it implement the Family Home Fund project, with which it hopes to provide some 500,000 affordable homes for low-income Nigerians and create 1.5 million jobs in the next four years.

Zainab Ahmed, minister of finance, budget and planning, on Monday announced

government’s commitment to adequate public funding for the project, but said enough third party monies were also being expected to enable it deliver on the ambitious project.

“The Family Homes Fund will receive significant amounts of public money, in addition to other capital from development finance institutions and the capital market,” Ahmed said in Abuja as she inaugurated the board of the fund, headed

by Suleiman Barau, a former deputy governor of the Central Bank of Nigeria (CBN).

The Family Homes Fund which was launched since 2016 and has rarely made any significant impact was set up against the backdrop of widening housing gap in the country.

Ahmed raised concerns that lack of cooperation among various agencies tasked with the provision of housing was partly responsible for the poor delivery of affordable housing over the last 30 years.

The Fund is a partnership between the Federal Ministry of Finance and the Nigerian Sovereign Investment Authority

as founding shareholders, and the largest affordable housingfocused fund in sub-Saharan Africa, leveraging its significant capital (in excess of N1trn by 2023) to facilitate access to affordable housing for millions of Nigerians on low to medium income groups.

Authorities believe that through strategic partnerships with various players in the sector and some of the world’s main Development Finance Institutions, the Fund could facilitate and supply 500,000 homes by 2023.

Buhari directs Osinbajo to seek approval for agencies under him Iniobong Iwok with agency report

P

resident Muhammadu Buhari has directed Vice-President Yemi Osinbajo to henceforth seek presidential approvals for agencies under his supervision.

Under the laws setting up the agencies, the president is empowered to give final approvals for agencies under the Osibanjo, but findings shows that the provisions were not followed during the president first term.

Sources revealed that the directive to follow due process was issued via a presidential

www.businessday.ng

memo on Monday.

With the new memo, the vice-president will now have to seek approvals for contract awards, annual reports, annual accounts, power to borrow, and power to make regulations, among other key functions.

On Monday, Buhari appointed and Economic Advisory Council (EAC) and disbanded the Economic Management Team led by Osinbajo.

Reacting to the development, the Publicity Secretary of pan-Yoruba socio political group Afenifere, Yinka Odumakin, said he was not surprised

by President Buhari’s actions,

https://www.facebook.com/businessdayng

stressing that recent events had given the indication.

“The handwriting is clear on the wall; events in the last 24 hours have shown that, but whether Osibanjo is alert enough to see the handwriting is another thing,” he said.

Also, constitutional lawyer and human rights activist, Mike Ozekhome (SAN), said President Muhammadu Buhari will soon render Vice President Yemi Osinbajo and members of the All Progressives Congress (APC) loyal to Bola Tinubu in his administration, impotent in the coming days.

Ozekhome added that the @Businessdayng

battle for the heart and soul of the 2023 presidential election has already begun, stressing that President Buhari will also make them feel accommodated in APC and ultimately discard them.

“One thing I want to assure Nigerians is that going by the trajectory of President Buhari’s persona, the Vice-President, Yemi Osinbajo, and the Tinubu group will be rendered more and more impotent un-accommodated, and discarded.

“The battle for the heart and soul of 2023 has already earnestly begun. Read my lips,” Ozekhome said.

Wednesday 18 September 2019

BUSINESS DAY

PRIVATEEQUITY &FUNDRAISING

35

Africa’s M&A deals surge 31% in H1 2019 amid volume decline MICHAEL ANI

T

he first half of the year 2019, saw a surge in the value of Mergers and Acquisition (M&A) deals in the African continent despite a decline in the number of these deals.

The total deal value increased by 32 per cent in H1 2019 to $21 billion from the $16 billion that was raked in the same period in the previous year, according to an analysis by Baker McKenzie of Refinitiv M&A data for Africa. On the other hand, the number of deals within the period declined by 10 per cent, from 405 in H1 2018 to 365 in H1 2019.

Based on the data, the real jump in deal values came from domestic activity, which recorded a substantial rise of 276 per cent in deal values from $1.8bn in H1 2018 to $6.7bn in H1 2019. A Deal is considered domestic when the target company is in the same country as the acquirer parent company.

However, the values of cross-border deals within the period remained largely the same, with only a 1 per cent increase within the period. In H1 2018, deal value for cross border deals was US$13.7bn, rising to US$13.8bn in H 1 2019.

Morne van der Merwe, Managing Partner of Baker McKenzie in Johannesburg, said While market sentiments regarding large transactions in Africa tend to focus

on the risks of transacting in the African region mainly due to the large scale political and economic uncertainty on the continent, the data could be beginning to tell a different story, showing a trend towards an increase in high value M&A transactions in the region, but at a lower volume.

He noted that investors in Africa have had to consider extensive geopolitical and economic uncertainty on the continent as well as a plethora of country and region-specific governance, compliance and regulatory challenges when investing in the region.

“Those transacting on the continent have also had to contend with a critical lack of infrastructure and poor integration when transacting across borders in Africa. Yet despite this, the data shows that the value of investments on the continent is growing.

This could be an indication of the investment potential in Africa for investors who are willing to manage the risks. The rise in domestic M&A value in 2019 points to domestic investors in Africa appearing more comfortable to engage in high-value transactions and manage the risks of investing in environments that are generally known to be politically and economically uncertain, but that is familiar to them,” he says.

According to him, additional good news for investors in Africa is the recent launch of the operational phase of the African Continental Free

Trade Area (AfCFTA), which should provide an additional boost deal activity in the coming years. “The AfCFTA is the first continent-wide African trade agreement, with the potential to facilitate and harmonise trade and infrastructure development in Africa,” he notes.

Van der Merwe explained that the key to boosting this investment potential, and enabling African economies to make the most of their opportunities – is developing its infrastructure. “An important part of this is the creation of cohesive regional economic hubs by developing infrastructure that links countries together. This will increase the ease of crossborder transactions and grow investment across African regions organically,” adds van der Merwe.

On the flip side, the data showed that the Capital raised by African issuers declined by 28 per cent year on year to USD 341 million in the first half of 2019 (H1 2019), compared with USD 472 million in H1 2018.

The decline is attributed to the 80 per cent drop in domestic capital raising in Africa – standing at only USD 85 million from four IPOs, compared with USD 419 million from the same number of IPOs in H1 2018, noted in Baker McKenzie’s latest Cross-Border IPO Index for H1 2019, using data sourced from Refinitiv.

According to the Index, the largest IPO to come out of the region so far in 2019 is

Carbon Holdings Ltd, which is expected to raise as much as USD 250 million in London and Egypt sometime in June. Egypt is generating buzz around its pipeline of IPOs with some speculating this could be the busiest year for listings in Cairo since the uprising in 2011. Growing confidence in economic policies introduced since the currency float has boosted the EGX and is prompting companies to consider share sales. One large pipeline IPO is expected from Banque du Caire SAE in Q3 2019.

“The drop in African IPO values in H12019 was mostly because of political and economic uncertainty on the continent. Investors wanting to raise capital in Africa are thinking twice and waiting for political and economic stability to return before going ahead. Also eroding investor confidence in Africa are the escalating global trade tensions, which have culminated in, for example, the so-called United States (US) China trade wars and the possibility of a “no-deal Brexit” – both have the potential to impact African economies significantly,” says Wildu du Plessis, Head of Capital Markets at Baker McKenzie in Johannesburg The top cross-border IPOs

by African issuers were South African company Renergen Limited’s listing in Australia, which raised USD 7 million; and Egyptian company Carbon Holding’s pipeline dual listing in London and Egypt, which is expected to raise USD 250 million. Both

of these cross-border IPOs are in the energy and power sector. In terms of domestic IPOs, technology company BMIT Technologies PLC raised USD 55 million when it listed in Malta, real estate company ICON Properties PLC’s listing in Malawi raised USD 20 million, industrial company Skyway Aviation Handling Co raised USD 6 million when it listed in Nigeria and healthcare company Speed Medical SAE raised USD 3 million in a domestic IPO in Egypt.

A major deal that was excluded from African figures is Jumia Technologies’ debut on the NYSE, which raised USD 225 million in April. Jumia is a pan-African e-commerce start-up but its parent company, Jumia Group, is incorporated in Germany, so it is not included in the Africa report.

Du Plessis explained that in South Africa, capital raising has decreased substantially in recent years, due to economic and political uncertainty. “Political stability will hopefully begin to return now that country’s elections are over, but there is still a lot of work to do to stabilise the economy. The World Bank recently downgraded South Africa’s growth rates and I think there is at least another year of hard work before the economy starts to recuperate and capital markets in South Africa recover,” There is however good news in other jurisdictions in Africa. In addition to the healthy pipeline of IPOs in

Egypt, there were also signs of life returning to Nigeria’s capital markets.

Political instability was also to blame for a big collapse in capital raising in Nigeria in recent years, but the country looks to be recovering and, according to Baker McKenzie’s recent Global Transactions Forecast, there is a predicted return of IPOs in Nigeria in the next three years.

“A case in point, we saw the listing of Airtel Africa in both the London and the Nigerian market. Hopefully, this is the start of a long upswing in capital raising activity in the country,” On a global outlook, the data noted that capital raising in global IPO markets fell by 37 per cent, with volume dipping 34 per cent in the first half of the year compared to the same period in 2018.

A total of USD 69.8 billion was raised across 514 IPOs, which is the lowest for value and volume since 2016.

The US Federal government shutdown, continuing trade tensions between the US and Beijing, the on-going Brexit saga and the decline of mega IPOs all contributed to slower market performance. With fewer IPOs in the market, competition amongst exchanges is growing, as some listing locations make strategic changes to entice public offerings. The introduction of China’s Science and Technology Innovation Board looks set to shake up the market and challenge New York and Hong Kong for tech listings.

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

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

36

Wednesday 18 September 2019

BUSINESS DAY

CORPORATE GOVERNANCE PUBLICATION

Square peg in round hole: A tale of the ‘misfits’ OLAYIMIKA PHILLIPS

C

“

lement, a budding entrepreneur, is desirous of starting a business in Nigeria. He conceives an amazing business idea, targeted at revolutionizing Nigeria’s transportation sector through technological solutions. In view of the capital-intensive nature of the project, he is desperately sourcing for high-net worth investors, as well as the support of a solid team comprised of a commercially savvy board and innovative employees to give life to his idea. In making the requisite decision, he is caught in between harmonising his interests and that of the investor(s) with the Company’s - The Conundrum” In this maiden edition of the column, it is fitting to begin with a discussion on the foundation of governance – the establishment of the business and the set-up of the board.

Most successful companies started either as the sole idea of an individual or the collective idea of a few individuals. A brilliant idea, though foundational, is not solely responsible for the sustained success of these companies. Partnership with the right stakeholderssuch as investors, directors, service providers, professional advisers, employees amongst others- play a critical role in the commercial excellence of companies.

Business partnerships have several advantages as they avail businesses a platform to pool resources and other necessary skill sets towards eventual success. The essence of establishing a partnership is really to stimulate a symbiotic relationship, such that the business is bolstered by the injection of the much-needed revenue from investors, whilst investors become increasingly nimble

and innovative by the novel ideas, products and/or services inspired by the founder.

Notwithstanding this, recent statistics have revealed that the global divorce rate for business partnerships is at an all-time high. This is largely attributable, amongst other factors, to inherently weak corporate governance structures, particularly where an investor with deep-pockets exerts undue influence on the board without due regard to the interest of

the Company. Unfortunately, desperate founders run the risk of operating with a silo mentality, solely targeted towards the capital injection without necessarily considering the longevity and sustainability of their brain child- the business.

Whilst there is no doubt that businesses require financial and other related aids to attain organisational growth, one must understand that having measurable goals, aligned interests and calculable projections are crucial to maintaining such businesses. The general belief is that founders can only sight the vista by mounting the shoulder of giants (in this case, investors), however req-

uisite due diligence must be conducted on the said “giants” to ensure no semblance with “Goliath”.

In this wise, there is a need to ensure adequate consideration of requisite factors before embarking on business arrangements and establishing partnerships, particularly between parties of unequal bargaining power – founder with the brilliant business idea and the investor(s) willing to fund the idea.

Before crossing the isle with an investor, it is advisable to identify one that shares similar values, ethos, goals, leadership style and skills. From experience, it is not uncommon to see businesses diversify from their core objectives to stay in tune with the commercial realities of the modern world. When this reality beckons, a founder would need a trusted partner to scale through this hurdle. It is at this stage that an investor with a creative and innovative mind becomes an added advantage.

Beyond this, a founder should also possess an unblemished integrity. The brilliance of a business idea is not enough, a founder must display

an aura of integrity. Investors, though risk-takers, are likely to partner with people who can be trusted with their hard-earned currencies.

Setting up The Board An identifiable risk a founder faces is the likelihood of ceding control of his brain-child to the investor. Typically, the investor who capitalizes the business would acquire controlling interests in the business and may

opt to sit on the board or appoint nominees and effectively control the board. The reality is that some investors or their nominees are on the board to pursue and protect their vested interests, without regard to the interest of the Company.

Over the years, these common occurrences have triggered several corporate governance issues to say the least. Accordingly, a clear picture of the long-term management of the business must be impressed in the mind of the founder prior.

A founder, before establishing any partnership with stakeholders, should satisfy himself that the board to be constituted comprises of commercially

savvy individuals with accomplished professional standing and proven integrity. It is critical for the founder to, for instance, carefully consider the managerial experience and industry-specific knowledge of the directors to be selected as they are typically better placed to drive the corporate vision, enhance the profitability of the company and improve shareholders’ value. In the wave of recent corporate scandals, the values, ethos and behavioural qualities of directors are indispensable. The track record of success and competency of the potential directors should occupy a dominant space in the founder’s minds. Relatedly, the considered directors must be truly independent and objective in their decision-making process such that the company’s interests are advanced at all times.

Most businesses often fail within three (3) to five (5) years of operation, and this failure is largely attributable to the failure or neglect to secure the right partnership to constitute a truly versatile, experienced and independent board. For a Clement who wants to revolutionise Nigeria’s transportation sector, he must place the right square peg in a square hole.

As Steve Jobs famously said, “great things in business are never done by one person; they are done by a team of people”.

However, it is not just a team of people but a team of the right ones.

Olayimika is a Partner in the law firm of Olaniwun Ajayi LP and has over 34 years of professional experience.

She specializes in corporate governance, providing pragmatic solutions to the diverse challenges which confront corporates at different growth stages and serves on the board of several companies (listed and privately held).”

Wednesday 18 September 2019

BUSINESS DAY

37

Access Bank Rateswatch Market Analysis and Outlook: September 13 - September 20, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

1.94

Q2 2019 — lower by 0.16% compared to 2.10% in Q1 2019

Broad Money Supply (N’ trillion)

35.68

Increased by 1.88% in July’ 2019 from N35.02 trillion in Jun’ 2019

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

24.27 2.00

Decreased by 1.93% in July’ 2019 from N24.75 trillion in Jun’ 2019 Decreased by 0.55% in July’ 2019 from N2.01 trillion in Jun’ 2019

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

11.08

Decreased to 11.08% in July 2019 from 11.22% in June 2019

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

13.5 Adjusted to 13.5% in March 2019 from 14% 13.5 (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5%

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

42.91 62.98 1.87

September 11, 2019 figure — a decrease of 1.04% from September start September 12, 2019 figure— an increase of 2.89% from the previous wk August 2019 figure — a decrease of 4.8% from July 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Friday

13/09/19

6/09/19

NSE ASI Market Cap(N’tr)

27,779.00 13.52

27,146.57 13.21

Volume (bn)

0.17

0.31

Value (N’bn)

2.62

6.44

MONEY MARKET NIBOR Tenor

Friday Rate (%)

Friday Rate (%)

Change(%)

Indicators

13/09/19

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) (46.88) Agriculture Cocoa ($/MT) (59.27) Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Change Gold ($/t oz.)

Silver ($/t oz.)

(Basis Point) Copper ($/lb.)

2.33 2.39

1-week Change

YTD Change

(%)

(%)

61.00 2.58

(3.14) 7.05

(5.37) (15.58)

2331.00 103.55 62.36 12.00 488.50

4.30 8.26 5.69 9.69 5.34

20.40 (20.47) (19.54) (21.72) 12.69

1507.04 18.18 266.80

0.03 0.17 1.54

14.38 5.76 (18.61)

13/09/19

6/09/19

OBB

22.43

3.21

1922

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

24.71 12.25 13.12

3.86 4.35 13.78

2085 790 (66)

Tenor

13/09/19

6/09/19

90 Days

13.41

13.98

(57)

1 Mnth 3 Mnths

11.93 11.92

12.77 13.28

(84) (136)

6 Mnths 9 Mnths 12 Mnths

12.65 14.33 15.18

14.06 15.06 15.32

(141) (73) (14)

FOREIGN EXCHANGE MARKET Market

Friday

Friday

1 Month

(N/$)

(N/$)

Rate (N/$)

13/09/19

6/09/19

13/08/19

Official (N) Inter-Bank (N)

306.85 361.95

306.90 362.08

306.90 363.22

BDC (N) Parallel (N)

0.00 360.00

0.00 360.00

0.00 360.00

Friday

Indicators

Friday

AVERAGE YIELDS (%)

(%)

Change (Basis Point)

13/09/19

6/09/19

3-Year 5-Year 7-Year 10-Year 20-Year

0.00 14.38 14.34 14.34 14.45

0.00 14.46 13.85 14.25 14.40

0 (8) 49 10 4

30-Year

14.63

14.56

7

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

Change

(%)

13/09/19 Friday

(Basis Point)

Friday

(%)

Friday

Change

(%)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

BOND MARKET Tenor

Friday

(%)

(Basis Point)

6/09/19

Index

2,958.51

2958.12

0.01

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr)

8.98 5.70

8.98 5.71

0.01 (0.25)

YTD return (%) YTD return (%)(US $)

20.44 -35.32

20.42 -35.36

0.02 0.04

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

91 Day 182 Day

24,372.79 38,751.85

11.1 38,751.85

28-Aug-2019 28-Aug-2019

364 Day

145,475.02

12.89

28-Aug-2019

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

Date

Global Economy In the US, a report released by the Commerce Department showed the pace of growth in economic activity slowed by slightly more than initially estimated in the second quarter. The Commerce Department said gross domestic product increased by 2% in the second quarter compared to the previously reported 2.1% growth. The downwardly revised GDP growth seen in the second quarter compares to the 3.1% jump in GDP reported for the first quarter. The slightly slower than previously estimated growth reflected downward revisions to state and local government spending. In a separate development, customs data showed that China's exports fell by 1.0% year-on-year (y-o-y) in August as shipments to the US slowed significantly. Meanwhile, imports registered a 5.6% y-o-y drop, leaving a trade surplus of US$34.84 billion. The weak trade figures come amid the escalating trade war between the US and China. President Donald Trump's administration raised tariffs on Chinese goods at the start of September and is set to raise levies further in October and again in December if there is no breakthrough. Elsewhere, the European Central Bank (ECB) announced a host of stimulus measures to boost the Eurozone economy in the final rate-setting session chaired by the outgoing President Mario Draghi. The central bank slashed the deposit rate by 10 basis points to -0.50%, while it left the main refinancing rate and the marginal lending rate unchanged at 0.00% and 0.25%, respectively. The ECB also restarted its asset purchase programme, or APP, which it had previously ended in December 2018.

The bank said it will make monthly asset purchases of EUR 20 billion from November 1.

Domestic Economy The Federal Executive Council (FEC) approved N10.07trillion 2020 Budget proposal for onward transmission to the National Assembly for consideration and approval. The Minister of Finance, Budget and National Planning, made this known when she briefed State House correspondents on the outcome of the meeting of the Council which was presided over by the President. The minister also said the council approved the increase of value added tax (VAT) from the current 5% to 7.2%. However, she added that implementation of the new VAT rate would be subject to amendment of the extant VAT law. Briefing reporters at the end of the first FEC meeting, the Minister said the estimate was contained in 2020- 2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) presented to the council by her ministry. According to her, the document contains N10.07 trillion budget proposal for 2020 fiscal year, revenue target of N7.5trillion and additional N2.09 trillion revenues from VAT, $55 per barrel oil benchmark, N305/$ exchange rate and oil production of 2.1 million barrels per day. In a separate development, the Nigerian Bureau of Statistics revealed that total trade in Q2 2019 stood at N8.6 trillion comprising 46.6% imports (N4.1 trillion) and 53.4% exports (N4.5 trillion).

The value of total trade in Q2, 2019 was higher by 4.4% when compared to Q1 2019, but 24.2% higher when compared with Q2, 2018. The trade balance remained favourable, valued at N588.8billion. Major imports and exports include agricultural products, Raw material imports, Solid minerals imports, Energy goods, Manufactured products, crude oil and other oil products. Major export partners are India (17.27%), Spain (11.97%), Netherlands (10.41%), United States (7.68%) and France (6.09%). Major import partners are China (25.47%), United States (10.53%), Netherlands (9.33%,) India (7.48%) and Belgium (6.21%) Stock Market Performance gauges at the Nigerian stock exchange were bullish for the week ended September 13th, 2019. Traders took advantage of the prevailing low stock valuations to position, particularly in the oil and consumer goods sectors. Buying interest was also boosted by the

improvement in the half-year earnings reports presented recently by the banks and the building material-making companies. Accordingly, the All Share Index (ASI) improved by 2.33% to 27,779 points from 27,146.57 points the preceding week. Market capitalization also rose by N320 billion to N13.52 trillion from N13. 21 trillion the prior week. This week, we anticipate mixed performance as profit-taking from this short rally is expected while bargain hunters take advantage of low prices of equity to position.

Money Market Cost of borrowing spiked last week due to retail Secondary Market Intervention Sales (SMIS) that took place at the end of the week, draining market liquidity. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates climbed to 22.43% and 24.71% from 3.21% and 3.86% respectively the previous week. Call rates also jumped to 12.25% from 4.35% the prior week. This week, rates are expected to climb down slightly due to expected Open Market Operations (OMO) maturity of N357 billion.

Foreign Exchange Market The naira saw an appreciation against the greenback across most major market segments last week. The official window saw a slight appreciation as it ended N306.85/$, a 5 kobo gain from the prior week. Likewise, at the NAFEX window, the local unit saw a slight appreciation of 13 kobo to close at N361.95/$, while the parallel market remained unchanged at N360/$. The appreciation recorded in the NAFEX and official market segments may be attributed to the apex bank's regular interventions. This week, we envisage the stability in the market would continue due to consistent FX liquidity injections by the CBN. Bond Market The naira saw an appreciation against the green-back across most major market segments last week. The official window saw a slight appreciation as it ended N306.85/$, a 5 kobo gain from the prior week. Likewise, at the NAFEX window, the local unit saw a slight appreciation of 13 kobo to close at N361.95/$, while the parallel market remained unchanged at N360/$. The appreciation recorded in the NAFEX and official market segments may be attributed to the apex bank's regular interventions. This week, we envisage the stability in the market would continue due to consistent FX liquidity injections by the CBN. Commodities Oil prices slipped last week as a report that President Donald Trump is considering easing sanctions on Iran raised the possibility of the return of the country's crude to the world market. Bonny light, Nigeria's benchmark oil crude dipped $1.98, or 3.14%, to $61 a barrel. In contrast, precious metals prices climbed as monetary easing by the European Central Bank spurred safe-haven buying. Gold jumped to $1,507.04 an ounce, up 0.03% from the previous week's price, while the silver closed higher at $18.18 per ounce, compared to the preceding week's close of $18.15 per ounce. This week, oil prices are likely to receive support from Saudi Arabia's energy minister's comment that oil policy would not change and an OPEC deal with Russia and other producers to cut output by 1.2 million barrels per day (bpd) would be maintained.

For precious metals, prices will remain biased to the upside on the back of global monetary easing policies.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Sept’19

Oct’19

363

362

363

Inflation Rate (%)

11.2

11.2

11.5

Crude Oil Price (US$/Barrel)

67

68

68

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

www.businessday.ng

https://www.facebook.com/businessdayng

Nov’19

Exchange Rate (Interbank) (N/$)

@Businessdayng

38

Wednesday 18 September 2019

BUSINESS DAY

Government Enterprise & Empowerment Program

Brought to you by

MarketMoni, TraderMoni beneficiaries in Kebbi laud government

T

he Vice President, Professor Yemi Osinbajo was on hand to interact with beneficiaries from the MarketMoni and TraderMoni schemes during the Government Enterprise and Empowerment Programme (GEEP) town hall meeting in Central Market, Birnin Kebbi on Thursday, 12th September 2019.

The Townhall meeting provided an opportunity for beneficiaries of MarketMoni and TraderMoni to give valuable feedback on how the collateral and interest free loans have successfully helped them to expand their businesses.

In Kebbi state, 21,703

H

ajiya Amina Sulaiman, a MarketMoni beneficiary

H

small business owners across 670 market associations have received MarketMoni loans while

47,041 micro business owners across 25 markets have received TraderMoni loans. In Central Mar-

ket, Birnin Kebbi, 7,201 traders have benefitted from the TraderMoni scheme.

thanked the Vice President, Prof Yemi Osinbajo for the N50,000 loan she received under the Mar-

ketMoni scheme in 2018.

She invested the money in her recharge card business and this enabled her to

move from being a vendor to becoming a recharge card agent, allowing her to buy directly from the telecommunications company at a cheaper rate and expanding her sales from the cards to V2U and data.

Within two months of receiving the loan, she was able to repay the entire N50,000 loan and N2,500 administrative charge at her bank. She concluded by urging her fellow traders to repay their loans.

She confirmed receiving a text message asking her to register for the next level of the MarketMoni loan of N100,000 having successfully repaid the initial one. She promised to judiciously use the funds once received in diversifying her business promising to repay the money in order to continue to benefit from the scheme.

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ajiya Amina Ibrahim spoke about how she has been able to use the N10,000 TraderMoni loan in improving her business.

She used the loan to procure various sewing materials to aid her cloth repair business. She commended the federal government for the funds even as she noted that the elderly in the community have been able to use the money in opening home kiosks selling provisions. This, she believes is a better way to keep them active even as they are able to support their families.

She promised to keep repaying the loan through the newly introduced voucher cards (available in multiple denominations) to enable her receive the next level of N15,000 which will be used in the further expansion of her business.

Also in attendance was the Chairman, Kebbi Market Traders Association, Alhaji Umaru Dangura who expressed his delight with the progress in commercial activities being made as a result of the MarketMoni and TraderMoni programmes noting that the loans will go a long way in expanding the various trading activities.

Reacting to the warmth and generosity of the traders, Prof Osinbajo said that government remains committed to empowering and supporting micro businesses. He maintained that the TraderMoni loans were targeted at the petty traders and artisans and reminded them that upon successful repayment, they will receive increments of the loan ranging from N15,000 all the way up to N100,000.

He also thanked the state governor, Atiku Bagudu who was in attendance for rendering assistance to all

@Businessdayng

the traders in the state and for building a new central market in the capital city.

In his remarks, Governor Bagudu expressed gratitude to the Vice President for his continued commitment in promoting entrepreneurship.

He said, “Kebbi State is an entrepreneurial state with each of the four emirates having distinctive and unique entrepreneurial populace that have been in active entrepreneurship both within and outside Nigeria. Kebbi, both history and culture, is an entrepreneurial state, there is hardly any commercial centre in Nigeria that does not have somebody from the state.�

The governor maintained that his administration had provided funding support for some SMEs, fishermen, butchers and women associations to boost their businesses.

At the end of the Townhall meeting, the traders expressed their gratitude to the Vice President by gifting him with local produce in form of two big fishes and fifty bags of rice.

Wednesday 18 September 2019

BUSINESS DAY

39

news Oil cuts losses on conflicting reports over...

Continued from page 1

unprecedented attacks.

A Financial Times report citing unidentified Saudi sources contradicted an earlier article from Reuters that the kingdom is close to restoring 70 percent of its production it lost after the weekend attack on a key crude facility.

Brent crude cut losses to 3.3 percent after earlier dipping to a 6.9 percent loss.

Meanwhile, a Pentagon official said the agency is preparing a report on who was responsible for the Saturday attack at Saudi oil facilities and intends to make it public within 48 hours.

The Pentagon is the headquarters building of the United States Department of Defense.

Brent for November settlement fell $3.12 to $65.90 a barrel at 12:57pm New York time on the ICE Futures Europe exchange.

The Saudi disruption surpasses the loss of Kuwaiti and Iraqi petroleum output in August 1990, when Saddam Hussein invaded his neighbour. It also exceeds the loss of Iranian oil production in 1979 during the Islamic Revolution, according to the International Energy Agency.

US experts are conducting an intense examination of evidence on the ground in Saudi Arabia and reviewing intelligence such as radar tracks from the region, while the Pentagon’s Defense Intelligence Agency is working to pull together a public presentation of declassified material, according to the Pentagon official.

While Secretary of State Michael Pompeo has asserted that Iran was clearly behind the attack – rejecting the claim of responsibility by Iranian-backed Houthi rebels in Yemen – President Donald Trump has said he is holding off a judgment on who was responsible and what action should be taken in response until he hears more directly from Saudi Arabia.

“Our intelligence community at this very hour is working diligently to review the evidence,” Vice President Mike Pence said Tuesday in a speech in Washington.

“I promise you, we’re ready,” Pence said at the c o n s e r v a t i v e He r i t a g e Foundation. “As the president said, we don’t want war with anybody, but the United States is prepared.

We’re locked and loaded.”

As oil markets reel from the attack on Saudi Ara-

bian oil facilities which knocked off 5 percent of global production, Nigeria’s indigenous oil producer, Aiteo, said it has declared a force majeure on the Nembe Creek Trunk Line (NCTL), shutting in at least 8 percent of Nigeria’s production or150,000 barrels a day (bpd) of Bonny Light crude.

BusinessDay contacted the company for a reason for the outage but was yet to get one before publication. Some local oil companies prefer to keep mum over sabotage on their facilities while working back channels to resolve it in order not to alarm investors.

The pipeline is one of two that export Bonny Light through the Forcados terminal and carry crude for five other companies including Shell. Aiteo reopened the pipeline in May after closing it on April 21 due to a fire.

Analysts fear that if this closure is prolonged, it could further trigger oil prices struggling to find a floor to surge higher amidst concerns about supply uncertainty.

Oil prices spiked on Monday from around $60 a barrel to $71, two days after the largest oil disruption in history took place.

Prices pulled back slightly on Tuesday trading after the market absorbed the shock of the Saudi attack but concerns remain as Yemen primes for more attacks against the Kingdom that’s been pounding it with US-made bombs for the better part of two years.

Analysts had said the outages from Saudi Arabia would mean that other producers including Nigeria would have to sustain production to pare the losses but this new outage could upset those calculations.

“The challenge is if Nigeria can maintain current production in the face of the attacks,” Ayodele Oni, energy lawyer and partner at Bloomfield law firm, said.

The NCTL pipeline has suffered closure at least three times this year alone, twice due to leaks wherein one resulted in a fire. The company said no one died in the fire. It also said that it had incurred losses of over $2 billion in the last four years due to pipeline sabotage.

Aiteo is Nigeria’s largest indigenous company by production, pumping between 80,000 and 90,000 bpd. The company has ambitions to push production to 250,000 bpd in the long term. www.businessday.ng

L-R: Janviere Mucyo, CEO, Landa Global; Samuel Kauppinen, director, Africa Business Solutions; Dapo Abiodun, governor, Ogun State; Jokka Maksimainen, CEO of Silvere, and Rudi Ilumbe, CEO, Africa Business Solutions and the Local Partner Silvere in Africa, during an investment meeting with the governor in his office at Oke Mosan, Abeokuta

Falling FDI piles pressure on FG to replicate...

Continued from page 1

cording to World Bank data.

In 2018, while South Africa and Egypt attracted FDI worth $5.3bn and $6.8bn respectively, Nigeria raised $2bn, according to UNCTAD data.

The solution to unlocking sufficient amounts of FDI in Nigeria could lie in replicating the winning ownership and management model of NLNG across sectors where government has exclusive ownership, from rail to airports.

NLNG is run in a unique way that is different to other public assets, as it is owned partly by government and the private sector. It is however run exclusively by the latter, earning it plaudits along the way for its operational success.

The Federal Government, represented by NNPC, owns 49 percent of NLNG while international oil company, Shell owns 25.6 percent.

French oil company, Total Gaz Electricite Holdings owns 15 percent and Eni owns 10.4 percent.

The ownership structure makes it an independent incorporated joint venture, guaranteeing an independent board of directors, effective decision making as well as funding for its projects.

“The answer to why the NLNG is so successful is in the ownership structure,” Adeola Adenikinju, gas policy analyst for the World Bank and professor of Economics at University of Ibadan told BusinessDay. “NLNG is run like a serious business there is minimum government interference unlike NNPC,” Adenikinju added.

While NLNG points a way on how the Government can attract investments, the NNPC is the opposite.

A comparison of both has continued to beg the question of why the Federal government doesn’t adopt the NLNG model for all key oil and gas projects.

Unlike NNPC which is a golden goose to different political regimes, NLNG has

over the years been largely insulated from Nigeria’s harsh business climate, unpredictable political games and unfavorable investments conditions.

The company has also raised funds for its projects, from a combination of shareholders loans, internally generated revenue and thirdparty loans.

Not only has NLNG fully paid without default the $5.45 billion taken from its shareholders to build its six existing LNG trains, NLNG has also paid as much as $36 billion to its shareholders as dividends over the years, in addition to paying joint venture (JV) gas suppliers $28 billion for feed gas supplies while helping Nigeria cut about 6.3 trillion cubic feet (tcf ) of associated gas from being flared.

NLNG is discussing with the country’s top-10 lenders including Guaranty Trust Bank Plc and Zenith Bank Plc, to raise as much as $2 billion, and with foreign lenders and export-credit agencies for the balance which cannot be said of NNPC which still struggles to attract private capital. “ The NLNG business model needs to be replicated in order to generate opportunities for the power and gas sectors in the country,” Charles Akinbobola, energy analyst at Lagos based Sofidam Capital said.

A local investor in the Nigeria oil and gas market narrated to BusinessDay how he approached the NNPC concerning plans to build an export terminal to compete with the foreign IOCs terminal but was turned down in the final stage while the plan was given to another person who had no idea about the project. “Transparency and accountability is a major challenge when dealing with NNPC,” the local investor told BusinessDay. NLNG, as it is known, has signed sale and purchase agreements with existing customers to take the additional volumes from the new plant while it expects that aggregate market growth will be driven by demand from

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emerging markets, including new destinations such as Pakistan, Bangladesh, Jordan and Jamaica, CEO of NLNG Tony Attah said.

The Train-7 project is expected to ramp up NLNG’s production capacity by 35 per cent from 22 million tonnes per annum to 30 MTPA. With its plant construction, the company generated considerable Foreign Direct Investment (FDI) for the country. The project today has assets (i.e. property, plant and equipment) financed mainly by NLNG worth about $16 billion at cost, NLNG 2019 fact and figures said.

After signing the letter of intent few days ago, NLNG announced it preferred bidders for the much talked about Train 7.The project is advantageous for both Nigeria and NLNG Ltd. The expected increase in production capacity would increase Nigeria’s gas export, enabling the country regain its place as one of the top gas exporters globally, and encourage diversification of energy resources.

The project is expected to cut down poverty through the creation of massive job opportunities. Consecutively, this will increase fiscal and FOREX revenue which will drive economic activity and growth.

While NLNG seems to be performing relatively well, the same cannot be said of NNPC which is still plagued with age-long inefficiencies such as subsidy now called under-recovery, increasing pipeline maintenance cost and obsolete refineries.

In first three month in 2019 alone the government spent N132 billion on subsidies.

T h e c o mb i n e d v a l u e of output by the three refineries (at import parity price) for the month of August 2018 amounted to N8.67billion while the associated Crude plus freight costs and operational expenses were N9.78billion and N9.68billion respectively which resulted to an operating deficit of N10.79 billion by the refineries. @Businessdayng

Pension assets hit N9.37trn as...

Continued from page 2

equal to 5.15 percent of the total invested funds.

“On month-to-month basis, we keep growing the numbers of subscribers, that is, new subscribers keep joining and contributing. We also continue to grow in terms of overall assets under management, and let us remember that there is a solid base of existing contributors who keep contributing and whose earnings are expected to rise and as those earnings continue to grow their contributions will increase,” said Dapo Akisanya, managing director/CEO, AXA Mansard Pensions Limited.

He, however, noted that though economic growth is much slower than expected, it is still positive. “There is growth but it is marginal. But as long as we are growing, we expect that new jobs will be created, perhaps not at the extent we should see,” he said.

“But let us keep in mind that as stakeholders, from government to individuals on the street, people are not just folding their arms and looking at the state of things, there is effort to improve the trajectory in the economy, and hopefully we will also succeed in that line. You will definitely see the positive impacts on the industry,” he said.

Meanwhile, the total monthly pension contributions received from contributors from both the public and private sectors were N5.45 trillion as at the end of the second quarter 2019.

This shows an increase of N169.90 billion, representing 3.22 percent growth, over the total contributions as at the end of the previous quarter.

During the second quarter also, the total contributions received from the public sector amounted to N72.42 billion (42.63 percent) while the private sector contributed N97.48 billion (57.37 percent).

•Continues online at www.businessday.ng

44

FT

Wednesday 18 September 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper DANIEL DOMBEY IN MADRID

S

pain is heading for new elections in November after opposition parties spurned the ruling Socialists’ calls to allow the formation of a government.

On a frenetic day of talks Pedro Sánchez, the caretaker prime minister, called the other main party leaders to see if he could win the backing of parliament to form a minority government, and so avoid an early general election.

But the radical leftwing Podemos grouping said it would abstain in a parliamentary vote, while the pro-market Ciudadanos party said it was set to vote against Mr Sánchez.

The responses appeared all but certain to render irrelevant a round of formal consultations between King Felipe VI and party leaders, being held throughout Tuesday.

If the king concludes there is no prospect that parliament will vote next week to install a new government, Spain will hold a general election on November 10 — its fourth in four years.

The Socialists have 123 seats in the 350-member chamber of deputies. They would not be able to form a government if the 42-strong Podemos grouping abstains, and Ciudadanos and the centre-right Popular party vote against.

According to people close to the two left-of-centre parties, Mr Sánchez spoke on Tuesday to Pablo Iglesias, the Podemos

Spain heads for election after Sánchez fails to win rivals’ backing Lack of support leaves caretaker PM without plausible path to power

Ciudadanos’s leader Albert Rivera, second from left, said his party would vote against a Socialist-led government © FERNANDO VILLAR/EPA-EFE/Shutterstock

leader, who said his party would abstain unless it was admitted into a coalition with the Socialists. The prime minister has ruled out such an option.

Mr Sánchez was also involved in a bad-tempered exchange with

Split from centre-left Democrats shifts power in fragile two-week-old coalition

Region particularly vulnerable to cheap and nimble weapon that evades air warning systems

L

ong before the attack on Saudi Arabia’s oil facilities that knocked out half of its oil production, the kingdom knew it was vulnerable to assault from armed drones.

Houthi rebels in neighbouring Yemen have often used this new type of aerial weapon, alongside missiles, to target Saudi airports, desalination plants and crude facilities in the past 18 months.

The rising threat has prompted numerous Saudi agencies — from Saudi Aramco, the state oil company, to air defence, ports and civil aviation authorities — to scout the US and Europe for adequate defence systems, said one defence industry executive.

“They’ve been in a panic [over drones] since the new year,” the executive said. “It’s come down from the top — protect the nation.

If you tell me [your system] can do it, get it here now.”

The details of last weekend’s

MILES JOHNSON IN ROME

attacks on Abqaiq, a crude processing centre, and the Khurais oilfield, remain murky: On Sunday, Houthi rebels said they had used 10 drones to conduct the assault.

But Washington has blamed Iran, which is accused by the US and Saudi Arabia of smuggling arms to the Houthis, including missiles and drones. US media reported that US intelligence indicated many of the strikes were launched from the Islamic republic and could have involved missiles. Saudi Arabia has not yet backed up such claims. Iran has denied any involvement.

Either way, armed drones have become the latest weapon of choice across the Middle East.

And as tensions between the US and Iran have ramped up, the Iranian-aligned Houthis have escalated attacks across Saudi Arabia’s southern border. The cheap, nimble weapon that can easily evade air warning systems is posing a novel defence challenge for the world’s largest oil exporter — also one of the world’s biggest arms buyers — and other countries in the region. www.businessday.ng

posed that Ciudadanos abstain in a vote, if Mr Sánchez met three conditions: ruling out pardons for Catalan separatist leaders on trial for charges including sedition and rebellion; a promise not to increase taxes on the middle class;

Italy’s former PM Matteo Renzi forms breakaway party

Saudi oil attack highlights Middle East’s drone war HELEN WARRELL IN LONDON AND ANDREW ENGLAND AND AHMED AL OMRAN IN RIYADH

Albert Rivera, the Ciudadanos leader, who accused the prime minister of telling a “collection of lies” and confirmed that his party was set to vote against the formation of a Socialist-led government.

Mr Rivera had previously pro-

and a new coalition government in the Navarre region.

In a letter, Mr Sánchez argued that he had substantially met these conditions, a response that Mr Rivera depicted as dishonest.

People close to the government have presented Mr Rivera’s gambit as an attempt to play the “blame game” and shift the responsibility for early elections on to Mr Sánchez.

“There is a lot of last-minute manoeuvring because everyone wants to show they have done what they can to avoid new elections,” said Pablo Simon, professor of politics at Madrid’s Carlos III university.

Mr Sánchez easily won April’s elections with 29 per cent of the vote but he has since failed to put together a governing majority and lost a vote in July when Mr Iglesias opted not to give him Podemos’s backing.

Some people close to the Socialists suggest the party could increase its representation in a November poll, winning votes from both Podemos on its left and Ciudadanos to its right. But the party would also have to contend with the risk of abstentions among its electorate.

I

taly’s former prime minister Matteo Renzi is splitting from the centre-left Democratic Party to create a centrist political movement, shifting the balance of power inside the country’s fragile two-week-old coalition government.

Mr Renzi said he would continue to support the PD’s coalition with the Five Star Movement. But he is expected to take about 30 lawmakers into his new party, weakening the influence of PD leader Nicola Zingaretti, and could topple the government if he withdrew his support.

Leaving the PD is a gamble for the 44-year-old senator, at a time when his popularity — and that of the political centre — is low.

Polls show a majority of voters still split their support between the anti-immigration League and anti-establishment Five Star Movement — the two parties whose populist coalition collapsed in August.

“I have decided to leave the PD and build, together with others, a new house to do politics in

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a different way,” Mr Renzi wrote in a Facebook post that referred to internal divisions in the party. “After seven years of friendly fire I think we should take note that our values, our ideas, our dreams cannot be the subject of daily internal quarrels.”

PD figures criticised Mr Renzi, saying his move would increase the risk of an election that could usher the League, under its popular former interior minister Matteo Salvini, back into power.

Dario Franceschini, PD culture minister and party grandee, compared Mr Renzi’s actions to the split between Italian liberals that allowed the dictator Benito Mussolini to to take power in the 1920s, arguing that his actions would only strengthen the country’s far right.

But Mr Renzi said he told Prime Minister Giuseppe Conte that he believed a new party would broaden the appeal of the government.

In an interview with La Repubblica, Mr Renzi said he was not trying to undermine Mr Zingaretti.

“I do not have a personal problem with Zingaretti, and nor does he have one with me,” he said.

Mr Zingaretti said he regretted the split, calling it “an error”.

Sofia Ventura, a political-sci@Businessdayng

ence professor at the University of Bologna, said the government’s survival would now depend in part on Mr Renzi.

“But both parties do not have an incentive to go to elections, so that could mean it lasts for longer than people expect,” she said.

A survey of political pollsters conducted by the Corriere della Sera newspaper predicted that a new Renzi-led centrist party could win the support of between 3 per cent and 8 per cent of voters.

Mr Renzi, who has low approval ratings among Italian voters but retains influence inside the PD, was the driving force in urging the party to agree a tie-up with Five Star following the collapse of the last coalition government.

Enrico Letta, another ex-PD prime minister and rival of Mr Renzi, said splitting the party “was without logic” and called for “unity and humility”.

Paolo Gentiloni, another ex-PD prime minister and recently appointed EU economics commissioner, defended the party. “Today it is one of the strongest and most forward-looking European progressive parties. In such difficult times, let’s keep it tight,” he said.

Wednesday 18 September 2019

FT

BUSINESS DAY

45

NATIONAL NEWS

US cattle states seek to rein in substitute meat labelling Farmers object to use of term by fast-growing vegetarian alternatives GREGORY MEYER IN CHEYENNE, WYOMING

U

S states that raise cattle and poultry are trying to fence in the fast-growing alternative meat industry.

Wyoming, Oklahoma and South Dakota are among the states working to control the labelling of meat substitutes as the products appear in more restaurants and supermarkets.

Their efforts address an industry that threatens sales of beef, pork and chicken. Alternative meats could grow to become 10 per cent of the $1.4tn global meat industry over the next 10 years, according to Barclays.

The alternative meat industry was “terribly unfortunate. I can’t support it”, Mark Gordon, Wyoming’s governor and a cattle rancher, said in an interview. “Do they present a threat?

I believe they do. I think that’s their intent,” he added.

Mr Gordon this year signed a bill into law that bans the word “meat” from being used if the meat in question does not come from an animal. A dozen states have passed such statutes since last year, with more legislation introduced elsewhere.

The laws come as plantbased protein producers strive for the taste, texture and juiciness of ground beef. Their products are now available in fast-food chains such as Burger King and in the meat aisles of grocery stores.

Beyond Meat, a leading producer, has a market capitalisation of $9.2bn, or more than 50 times revenue, after making an initial public offering in May. Impossible Foods, a competitor, says its mission is “making meat using plants, so that we never have to use animals again”.

Such messages rankle US states that depend on animal agriculture. “My response to that is you are going to also be killing communities, the ecology of some of these places,” Mr Gordon said.

Among the states passing labelling laws, Oklahoma, Missouri, South Dakota, Montana, Kentucky and North Dakota rank in the top 10 for beef cattle inventory, according to the US Department of Agriculture.

Alabama, Arkansas, Mississippi and South Carolina are in the top 10 for broiler chickens.

Some of the laws address plant-based meat substitutes, while others regulate only cultured meats grown from tissue cells, which are not yet on the market.

Arkansas’s law declares that the word “meat” shall not include a “synthetic product

derived from a plant, insect, or other source” or a “product grown in a laboratory from animal cells”. Anyone caught branding these products as meat is subject to a $1,000 fine.

Montana’s law, the “Real Meat Act”, makes clear that the definition of a hamburger “does not include cell-cultured edible products”.

“The cattlemen are quite concerned,” said Doug Farquhar, programme director for environmental health at the National Conference of State Legislatures. “If you are able to grow this stuff rather than raise cattle, you are going to turn this entire market on its head.”

The state of Missouri was the first to pass a labelling law in 2018. It limits use of the term “meat” to livestock and poultry meat.

Missouri has since been sued. “The aim of the statute is to protect the animal agriculture industry from competition from plant-based meat and clean meat producers,” according to the complaint filed by plaintiffs including the Good Food Institute, a plant-based foods organisation.

“We call them label censorship laws, because that’s exactly what they’re doing,” said Nicole Manu, staff attorney at the Good Food Institute. Two other lawsuits are also pending against Arkansas and Mississippi.

In Wyoming, which has more cattle than people, alternative proteins have made inroads.

Epic Egg, a restaurant a block from the State Capitol building in Cheyenne, began serving Beyond Meat burgers in February, said Jessica Rehling, a supervisor.

“People have really enjoyed it,” Ms Rehling said. “We have quite a few people who order it and ask if we’re sure it’s a veggie thing and not a meat product.”

Jim Magagna, executive vicepresident at the Wyoming Stock Growers Association, the oldest cattle lobby in the state, said he had stopped visiting Epic Egg since the plant-based burgers arrived. “I like my veggies but I want them to be veggies, not my burger,” he said.

In the grasslands outside Gillette, Wyoming, Gerry and Gwen Geis raise cattle and sheep. They offered a wary opinion of plant-based competition.

“Realistically, with today’s science you can create almost anything in a lab. That does not make it a replacement. It’s not the same thing,” said Gerry Geis, a life-long rancher.

Gwen Geis, his wife, added: “We have nothing against them.

We just want to keep the playing field level.” www.businessday.ng

Brad Pitt stars as Roy McBride in ‘Ad Astra’

Brad Pitt wrestles with attractive clutter and empty cliché in Ad Astra

James Gray’s space adventure has moments of wonder but too much weighty rumination NIGEL ANDREWS

T

o infinity and beyond.

James Gray’s Ad Astra, set in the future, takes us to the planets and back with little Buzz Lightyear braggadocio, but with so much weighty rumination it would sink any believable spaceship. The spaceships aren’t quite believable here.

But for an hour they are capriciously compelling, even when hosting the trans-spatial soliloquies of Brad Pitt.

He plays an astronaut sent to meet his dad — Tommy Lee Jones in the briefing photographs — who is “still alive, near Neptune” and the last survivor of a mission gone rogue.

Cosmic ray surges have resulted in “the uncontrolled release of antimatter”. Calamities are occurring Earth-wide; 43,000 people have died. Pitt has to be the best man to send, since Colonel Kurtz — sorry, I’m thinking Heart of Darkness (and so, I suspect, is film-maker Gray) — since Prospero — sorry, I’m thinking The Tempest (ditto) — since Clifford

McBride (Jones) is not just his dad but very possibly his dark, fathering, necromantic other self.

How to travel to Neptune? In a film like this, it’s pretty much like getting from Wandsworth to Wimbledon, allowing for the odd exploding bus in Tooting or adventure with zero gravity in Colliers Wood. The Moon and Mars will be stopovers.

Just try to avoid the old guy on the cosmic bus route who offers you DIY route guidance. He will be played in a scary, witchy, entertaining cameo

by Donald Sutherland.

James Gray made The Lost City of Z and before that a series of chamber movies about the displaced or misplaced (We Own the Night, The Immigrant). He likes adventures, but he likes mind music too. Ad Astra tries to be both. But instead of marrying, they are mostly at each other’s throats.

We think excitedly “Ooh, Gravity again!” in scene one, when Pitt is thrown from the giant space mast he is helping to fix; later again when he free-whirls through voids, battling

rubble while hopscotching between space vessels. Elsewhere comes the monologuing, of which there is much.

Freudianism 101 — “I don’t want to be my dad” — is mixed with that other prime number in sci-fi metaphysics, 2001. Pitt’s character is his very own HAL 9000. And, at risk of giving you too much shopping to carry, his Prince Hal too to his father’s “uneasy lies the head” cosmic crown-wearer.

In the Relativity Theory of filmwatching, too much almost always adds up to too little. By climax time, Ad Astra has accumulated so many echoes we realise we are in emptiness. After promising us bounty (including a mutiny to precede and set the plot), Gray delivers a boom chamber. There are wonderful moments, including a lunar “car chase” with space pirates, and some production-design deliriums out of Michael Powell by Salvador Dalí.

But psychological platitude, Oedipal cliché and holistic commonplace about love and humanity can’t be hidden by attractive clutter and kinetic action, even in space.

Nosak Group partners CMD to promote capacity building for employees

I

n today’s competitive corporate world, employees are tasked to be goal oriented to deliver on efficiency. This came to bear when the management of Nosak Group, a leading indigenous conglomerate recently organized a two-day training session for executives on Goal Setting and Personal Effectiveness.

Addressing the trainees at the Nosak Learning Centre in Amuwo, Lagos, the Company Secretary and Legal Adviser, Mrs. Judith Aikhoje said the training is meant for the participants to learn, unlearn and relearn new skills to become more effective.

She called on the participants to have an open mind to accumulate new techniques in their career part. “For you to deliver effectively, you need to sharpen your skills through trainings and

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re-trainings in order to be at your optimum best to deliver results”.

In his presentation on ‘Goal Setting for Enhancing Success’, the Principal Management Development Officer, Centre for Management Development (CMD), Jacob SundayDogosaid the training will empower the employees to understand the real concepts of goal setting, be able to describe the framework for managing goals and apply appropriate tools to enhance success through goal settings.

He defined goal setting as a mechanism by which the business delivers results in line with its strategy.Dogo went on to state that goal settings can be achieved with laid down framework, which includes the ability to cascade organizational goals, align team member goals, manage priorities, address development needs and keep employees @Businessdayng

engaged.

The participants were also trained on ‘Personal Effectiveness and Self-Awareness’, as well as ‘Financial Management’. Trainees were told that personal effectiveness and self-awareness like twins, go together. They were tasked to have a proper understanding of their capabilities and have a positive mindset in order to perform at an optimal level.

Reacting after the training, Administrative Executive from Grand Vilas Limited, Yewande Durojaiye applauded the management of the Group for organizing the capacity building session with seasoned facilitators to drive the training courses. Through the lectures, she has learnt that it is important for people to understand their weaknesses and work on them to improve on their strengths.

46

Wednesday 18 September 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Fed to inject $75bn into financial system after funding squeeze Key repo rate had surged higher in sign of money market tensions ADAM SAMSON, JOE RENNISON, COLBY SMITH AND ROBIN WIGGLESWORTH

T

he Federal Reserve said it would inject $75bn into the financial system to staunch a sharp rise in US short-term funding costs.

The cost of borrowing cash in exchange for US Treasuries overnight using repurchase agreements — known as repos — surged on Tuesday to as high as 10 per cent, according to Refinitiv data.

That dragged the effective federal funds rate higher to 2.25 per cent, the very top of the Fed’s targeted range of 2 to 2.25 per cent.

In response, the New York Fed, which conducts market operations for the central bank, said on Tuesday it would launch a rare repo operation “in order to help maintain the federal funds rate within the target range of 2 to 2.25 per cent”.

It said the operation would be conducted with an aggregate amount of up to $75bn. News of the Fed’s intervention sent the repo rate tumbling back towards zero.

Repos are a way for borrowers to raise short-term funding by agreeing to buy and sell securities over very short timeframes.

In practice they function as shortterm loans and are a vital lubricant of the financial system.

Banks have become increasingly active in the repo market, lending out some of the surplus money they hold at the Fed to earn a little extra return in a safe and liquid way.

Analysts said there were technical factors squeezing the repo market rather than the systemic issues that drove overnight rates much higher during the financial crisis. They said the market had been hit by corporations pulling cash out of the market to pay taxes.

Ashish Shah, co-chief investment officer for fixed income at Goldman Sachs Asset Management, described the moves in the repo market as a “big deal”.

“When things like this happen it increases the uncertainty and leaves fixed income markets jittery. And that is the job of central banks to avoid,” he said.

The dramatic moves come on the first day of a meeting of the Federal Open Market Committee, the central bank’s policy-setting panel, in Washington. The bank is expected to reduce rates by a quarter of a percentage point.

Some analysts noted a more structural explanation for the sharp move higher in the repo market. The Fed has been shrinking the size of its balance sheet, which also reduces the amount of bank reserves held at the Fed, limiting the available cash on hand for short-term payments.

“We think that the culprit is the scarcity of bank reserves, which are the only asset that provides banks with intraday liquidity,” said TD Securities. “Reserves have been declining since 2014 and we expect them to decline further as Treasury’s cash balance increases and currency in circulation grows.”

Additional reporting by Michael Mackenzie

WeWork bond prices tumble after it shelves IPO United Auto Workers demands carmaker ‘recognise the contributions’ employees have made ERIC PLATT AND JOE RENNISON IN NEW YORK

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eWork’s bond prices tumbled on Tuesday after the property group shelved its initial public offering, in the clearest sign yet of the financial strain afflicting the lossmaking company.

The company’s $702m of junk debt is one of the few gauges that investors have to judge WeWork’s financial condition.

The yield on the debt, which rises when its price falls, surged to a high of 8.9 per cent in early trading on Tuesday, according to bond trading platform MarketAxess. When the company borrowed the $702m last year, it yielded 7.875 per cent.

The group’s parent, We Company, late on Monday evening delayed the listing after it received a frosty reception from the institutional investors who

can make or break an IPO. WeWork had planned to launch its roadshow for the listing this week before selling shares to the public next week.

The company said it now expected to clinch the multibilliondollar listing by the end of the year.

But it was unclear if WeWork would be able to complete an offering this year, after investors raised concerns over WeWork’s growing losses, its complex corporate structure and the sway co-founder and chief executive Adam Neumann had over the company, according to people briefed on the matter.

The subinvestment grade bonds were trading heavily after the company decided to shelve the listing. The price of the bond hit a low of 95.5 cents on the dollar, down sharply from the 103 cents on the dollar it had traded hands on Monday. www.businessday.ng

JP Morgan’s Jamie Dimon, AT&T’s Randall Stephenson and Dennis Muilenburg of Boeing. The Business Roundtable believes directors must use their judgment to balance the interests of all stakeholders © Getty

Directors have a duty to look beyond their shareholders The stakes for responsible corporate governance have never been higher MARTIN LIPTON

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he stakes for responsible corporate governance and investor stewardship have never been higher.

Recognising this urgency, the Business Roundtable, a large group of US chief executives, last month embraced a broader view of governance and urged companies to focus on sustainable value creation.

Yet, as directors of American corporations seek to answer these calls, they remain subject to countervailing market pressure to deliver outsized shareholder returns over short periods of time.

Directors need support to mediate this challenge and make responsible long-term corporate decisions.

My law firm has long argued for a stakeholder-centred model of corporate governance rather than rote application of the “shareholder primacy” model. Investors and the asset managers who represent them share with the rest of society an interest in sustainable prosperity.

Our “New Paradigm” seeks to rethink corporate governance as a collaboration among shareholders, directors, managers, employees, customers, suppliers, and the communities in which corporations operate.

This solution would be far less intrusive than proposals by presidential candidate Elizabeth Warren to put worker representatives on boards. It also offers an effective alternative to the shareholder-value maximisation principle that has dominated corporate thinking for 50 years.

The myopic view that shareholder returns are the central aim of corporate governance is no longer politically or commercially viable.

Corporate law is in the midst of an evolution that we believe will eventually restore the broader social mission of the corporation.

But directors cannot wait that long. They must manage massive risks to environmental and human capital resources and drive growth without fully-formed governance

principles.

The environmental, social, and governance investing movement provides a useful starting point. ESG proponents urge corporations to adopt long-term sustainable growth policies that take into account the broader costs to society of company behaviour. Some boards have sought to integrate ESG considerations into their decisions; others have yet to address them.

To meet these challenges, directors have the ability, and in many instances the obligation, to use their reasoned business judgment to balance the interests of all stakeholders — not just shareholders, but also employees, business partners, and national and local communities.

We do not need new laws or court decisions allowing well-informed directors to take all stakeholders into account. Some states have enacted “constituency statutes” that specifically reference stakeholder interests; others, including Delaware, where most big US companies are incorporated, have not.

Swedbank admits to money-laundering failings Sweden’s oldest bank offers clearest comments yet on lapses in $135bn dirty money scandal RICHARD MILNE, NORDIC AND BALTIC CORRESPONDENT

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wedbank has told Swedish and Estonian regulators it still has “shortcomings” in its anti-money laundering work as Sweden’s oldest lender attempts to overcome a $135bn dirty money scandal.

The largest bank in the Baltics released part of its response to a joint Swedish-Estonian investigation on Tuesday, saying it still had problems with know-yourcustomer and risk-assessment

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practices in both countries.

Swedbank also admitted it had “not allocated sufficient resources and competence” to combat money laundering; that the division of responsibilities inside the bank was not clear enough; and that it had “not always complied with internal policies”.

The comments are the bank’s clearest yet on what went wrong in a scandal that has cost Swedbank more than a third of its market capitalisation since February as well as the jobs of its chief executive and chairman. It @Businessdayng

is also facing multiple inquiries

by US regulators, first revealed by the Financial Times, that investors fear could lead to large fines.

About €135bn of “high-risk, non-resident” money flowed through Swedbank’s Estonian operations over a decade, according to an internal report seen by Swedish public broadcaster SVT. Publicly, Swedbank has only released a heavily redacted report that merely looked at its links to a €200bn money-laundering scandal at Danske Bank, Denmark’s largest lender.

Wednesday 18 September 2019

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BUSINESS DAY

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ANALYSIS

Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates Billionaire philanthropist urges investors to back tech that helps cut emissions instead BILLY NAUMAN AND ANDREW EDGECLIFFE-JOHNSON IN NEW YORK

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limate activists are wasting their time lobbying investors to ditch fossil fuel stocks, according to Bill Gates, the billionaire Microsoft co-founder who is one of the world’s most prominent philanthropists.

Those who want to change the world would do better to put their money and energy behind the disruptive technologies that slow carbon emissions and help people adapt to a warming world, Mr Gates told the Financial Times.

“Divestment, to date, probably has reduced about zero tonnes of emissions. It’s not like you’ve capital-starved [the] people making steel and gasoline,” he said.

“I don’t know the mechanism of action where divestment [keeps] emissions [from] going up every year. I’m just too damn numeric.”

Pension funds, the Church of England and even a vehicle for the Rockefeller family’s oil fortune are among a growing group of investors that have divested their fossil fuel holdings in recent years, driven by a belief that finance can be a tool to combat climate change.

However, Mr Gates questioned the divestment movement’s “theory of change”, arguing that investors who want to use their money to promote progress will have better results by funding innovative businesses such as Beyond

Meat and Impossible Foods, two alternative protein companies he has backed.

“When I’m taking billions of dollars and creating breakthrough energy ventures and funding only companies who, if they’re successful, reduce greenhouse gases by 0.5%, then I actually do see a cause and effect type thing,” he said.

Activists said arguments against fossil fuel divestment miss a larger point. The idea is not to starve companies of capital but to remove their “social licence to operate” and make it easier for governments to act on climate issues by breaking the fossil fuel companies’ hold on politicians, according to US-based climate group 350.org, which has signed up more than 1,100 investors to pledge to eliminate or reduce their fossil fuel holdings.

The theory is based on the movement to divest from South Africa in the 1980s, according to Richard Brooks, divestment campaigns co-ordinator at 350. org. “We looked at campaigns that created real change,” he said.

“The taking down of the apartheid system was linked to the divestment movement. It wasn’t the sole contributor but it was definitely a contributing factor.”

The Bill & Melinda Gates Foundation on Tuesday released its new “Goalkeepers” report, which sets out to gauge the world’s progress towards the UN’s Sustainable Development Goals adopted in 2015.

AB InBev cuts ambitions for second attempt at Asian business IPO World’s largest brewer revives its shelved July listing but aims to raise far less HUDSON LOCKETT, GEORGE HAMMOND AND DANIEL SHANE IN HONG KONG

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nheuser-Busch InBev has scaled back its ambitions for an initial public offering of its Asian business, with the world’s largest brewer planning to raise about half what it aimed for just two months ago.

The company, whose portfolio includes Stella Artois, Budweiser and Becks, said on Tuesday that it would raise up to HK$37.9bn ($4.8bn) selling shares in Hong Kong next week in a move that would value its Asian business Budweiser APAC at as much as $50bn.

The second attempt to sell a minority stake in the Asian business comes two months after AB InBev abandoned plans to raise almost $10bn as investors balked at the price. Days after shelving that plan, AB InBev sold its slowergrowing Australian beer business to Japan’s Asahi for $11bn.

“We are even more a growth company than we were two months ago,” said Jan Craps, chief executive of Budweiser APAC, pointing to the sale of the Australian beer business.

After a decade-long acquisition spree that culminated in the 2016 takeover of SABMiller for £79bn, AB InBev is juggling a debt pile

of more than $100bn and the loss of market share in the US for key beers such as Bud Light and Budweiser.

Mr Craps insisted on Tuesday that the brewer would again be willing to drop the Asian IPO if the price range of HK$27 to HK$30 failed to appeal to investors.

“Of course it’s conditional on getting the right valuation and the right market conditions,” he said. “Of course it’s possible [that we walk away], but we’re quite confident that the interest is there.”

In contrast to its first IPO effort in July, AB InBev has secured a so-called cornerstone investor — a shareholder that subscribes for a large chunk of shares in advance subject to a lock-up period. This type of investor is common for Hong Kong offerings.

GIC, the Singapore state fund, has agreed to buy $1bn of shares and hold the stock for at least six months, Budweiser APAC said.

Bookbuilding for the sale will begin on Wednesday, with pricing expected on Monday. Shares are due to begin trading on the Hong Kong bourse, whose parent company is trying to buy the London Stock Exchange, on September 30.

Mr Craps said that the brewer was keen to expand in Asia following the IPO. Revenues at Budweiser APAC climbed 7.4 per cent to $6.74bn last year. www.businessday.ng

The hedge funds split over following market trends Industry divided over the future of trend-tracking vehicles that manage $300bn of assets LAURENCE FLETCHER IN LONDON AND ROBIN WIGGLESWORTH IN OSLO

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n 1982, Mike Adam, a scholarship student who had dropped out of Magdalen College, Oxford, took a backroom job in his father’s sugar broking firm in London.

The new job entailed drawing commodity price charts by hand and tracking the brokerage’s trades. To save time, Mr Adam programmed the first computer to arrive in the firm’s offices to do the job for him. Soon, overcome by curiosity, he began to test whether the computer could be coded in such a way that he could make money from trading patterns.

Together with his close friend from university, Marty Lueck, who was a programmer, and David Harding, a Cambridge-educated scientist fascinated with finance, he designed a trading system. At its heart was a simple concept — financial markets exhibit trends, and computers can be programmed to spot those trends and profit from them.

Amid much scepticism from a finance industry that largely believed using computers to predict market moves was little more than hocus-pocus, the trio in 1987 launched AHL — a name based on the first letters of their surnames.

The firm, which now runs $30bn in assets, went on to help spawn a $300bn-dollar industry of similar hedge funds that follow market trends and which have minted vast fortunes.

But a long period of prolific performance has been replaced by lean, often lossmaking years for much of the decade since the financial crisis.

That has created a major faultline: on one side are managers who think trend-following no longer works as well as it once did. On the other are those who say the flat returns of recent years are merely a historical blip. They are urging investors to stick with trend-following to avoid missing out when the good

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times return.

The three co-founders of AHL, who all left the firm many years ago following a 1989 takeover by investment firm Man Group, embody the differing views of what has happened to trend-followers and why.

Trend-following is now delivering “a pretty uneconomic level of return”, says Mr Harding, who is now chief executive of hedge fund Winton Group. “Certainly not enough to justify being a big swinging dick hedge fund.”

Mr Lueck disagrees with the idea that the strategy has become overcrowded and has run its course. “As a species, we have not evolved very much” in terms of the crowd behaviour that drives trends, he says.

Behind it lies a more fundamental question about financial markets: do they essentially work the same way through the centuries, because humans tend to behave the same way? Or does the way they function change subtly over time, for instance because of technological or societal developments, or even because of the way investors trade, eventually rendering some trading strategies obsolete or less effective?

Trend-following is as old as financial markets. David Ricardo, the early 19th-century economist, first formulated the basic rules as “cut short your losses” and “let your profits run on”. But AHL, which went on to be wildly successful, showed that computers could do it far better than any human.

In its early days it could charge clients an annual fee of 6 per cent — a rate most hedge funds today can only dream of — plus a performance fee of 15 per cent, plus trading commissions. Mr Harding estimates that in 1990 about $1bn of fees or more were earned by an industry containing a relatively small number of these so-called managed futures funds.

Frequent double-digit annual returns during the 1990s and 2000s helped pull in investors. But the sector really burnished its reputation during the credit crisis, with an 18

@Businessdayng

per cent average gain in 2008, according to data group HFR, helped by bets on falling stocks and the sharp fall in oil prices. That helped persuade many large, institutional investors that these funds could help protect their portfolios.

The concept of trend-following is simple. A basic approach would be to monitor when an index’s shorter-term moving average, for instance 30 days, crosses its longerterm moving average, for example 100 days. When the 30-day average moves above the 100-day, it suggests an uptrend has emerged and that it is time to buy. When it moves below, it is time to sell.

Such models tend to make lots of money when prices move in one direction — either up or down — for long periods. When markets are rangebound and have few clear trends, these funds may start to buy, thinking the market is trending up, only to find the market quickly moves against it. Huge market moves, such as Monday’s oil price rise, can badly hurt them if they had believed the market was trending the other way.

A shortage of clear trends appears to be at least partly to blame for mediocre returns in recent years.

An investor who put $1,000 into such funds at the start of 2011, for instance, would have made a profit of just $72 by the end of August this year, according to Financial Times calculations based on HFR data — although performance in recent months has been much stronger.

Remarkably, before June this year such a position would have been lossmaking. In contrast, from the start of 2011 until the end of August this year, a $1,000 investment into the S&P 500 would have turned a $1,327 profit.

Much is at stake. In addition to the $300bn of funds which directly use trend-following, the strategy’s success has spawned an unquantified amount — which some industry insiders estimate at hundreds of billions of dollars — of cheap, replica products that also follow market trends.

Wednesday 18 September 2019

BUSINESS DAY

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MAN urges EAC to partner with private sector, seeks business-friendly policies Gbemi Faminu

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he Manufacturers Association of Nigeria (MAN) has applauded the appointment of an Economic Advisory Council (EAC) to advise the president on economic matters, and requested the council to partner with the private sector in the discharge of its functions. MAN described the establishment of the council as timely, appropriate and demonstrated the president’s determination to re-energise the management of the economy.

The Federal Government announced Monday the dissolution of the Economic Management Team (EMT) headed by Vice President Yemi Osinbajo, and the appointment by President Muhammadu Buhari of the EAC, whose responsibility is to advise him on economic policy matters and also report directly to his office.

The advisory council is headed by Doyin Salami

with members including Mohammed Sagagi (ViceChairman), Mohammed Adaya Salisu, Ode Ojowu, Shehu Yahaya, Iyabo Masha, Chukwuma Soludo, and Bismark Rewane Segun Ajayi-Kadir, director-general of MAN, i n a s ig n e d s t at e m e nt Tuesday, said that with members of the council comprising private sector players, the council would be able to operate independently and effectively.

The council would also be more receptive to a wide range of opinions and innovations without being troubled with government and political interference, he said.

He requested the council to partner with the private sector and critically review policies that inform government actions and also work with an outline that would guide the actions of the economic managers in the future.

Ajayi-Kadir noted that while other policies such as the Nigerian Industrial Revolution Plan (NIRP), Economic Recovery and

Growth Plan (ERGP), the 2020-2022 Medium-Term Fis cal Frame w ork and Fiscal Strategy exist, the council should put in place logical and sustainable programmes that will improve the business environment of the country.

“The EAC is coming on the heels of the promised National Action Committee on African Continental Free Trade Area (AfCFTA).

The AfCFTA is unarguably the most pressing preoccupation of continental economic actors in Africa today. The right composition of the Committee will augur well for the needed synergy with the Council to boost our chances of being net gainers in the continental free trade area. We eagerly look forward to this prospect,” he said.

“The Organized Private Sector, particularly MAN, is adequately prepared and eager to engage the Advisory Council in a bid to achieve the desired growth and development of the nation’s economy,” Ajayi-Kadir added.

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Wednesday 18 September 2019

BUSINESS DAY

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Wednesday 18 September 2019

BUSINESS DAY

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Wednesday 18 September 2019

BUSINESS DAY

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Live @ The Exchanges Market Statistics as at Tuesday 17 September 2019

Top Gainers/Losers as at Tuesday 17 September 2019 LOSERS

GAINERS Company STANBIC OKOMUOIL PZ CCNN NASCON

Opening

Closing

Change

N35.15

N37.5

2.35

AIRTELAFRI

N52.9

N54.95

2.05

FLOURMILL

N13.5

N13

-0.5

N5.9

N6.45

0.55

NCR

N4.95

N4.5

-0.45

N16.15

N16.6

0.45

ZENITHBANK

N19.1

N18.8

-0.3

N13

N13.4

0.4

CUSTODIAN

N6.3

N6

-0.3

Company

Opening

Closing

Change

N315

N283.5

-31.5

ASI (Points)

27,407.04

DEALS (Numbers) VOLUME (Numbers)

3,830.00 198,034,375.00

VALUE (N billion) MARKET CAP (N Trn)

2.898

…SEC says Sukuk rules enhance issuance process Stories by Iheanyi Nwachukwu

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L-R: Joseph Alegbesogie, finance director, Vitafaom Plc; Owoade Shola, commercial director, Vitafaom Plc; Taiwo Adeniyi, group managing director Vitafoam Plc; Olumide Bolumole, head Listing Business Division, Nigerian Stock Exchange (NSE); Abagana Abatcha, group Technical and development director, Vitafoam Plc, during courtesy visit of the NSE to Vitafoam recently.

of positive movement in the large cap stocks.

In a related market development, the Securities and Exchange Commission (SEC) said that the release of rules on Sukuk bonds has enhanced the issuance process and fostered participation in the instrument.

Mary Uduk, Acting Director General of SEC stated this during a two-day international capital market conference held in Lagos by the SEC in collaboration with the University of Lagos.

Uduk said that following the development, Osun State issued a Sukuk bond to finance building of schools while the Federal Government used two series of Sukuk isuances to finance roads and other infrastructure.

“As we move into the future, we expect to see the issuances of such new products in our market,” she said.

Uduk noted that to further support infrastructure financing, especially projects with positive environmental impact, SEC released the rules on Green Bonds in December, 2018.

“The rule defines Green Bond as any type of debt instrument, the proceeds of which would be exclusively applied to finance or refinance in part or in full new and/or existing projects that have positive environmental impact.

You may agree with me that green bonds are essential elements of our journey towards economic development and sustainability.

“So far, the Federal Gov-

ernment has issued two green bonds to finance afforestation, renewable energy, provision of clean energy and other climate change initiatives. Also, two companies (NSP-SPV Powercorp Limited and Access Bank Plc) have issued this instrument to finance eligible green assets and projects,” Uduk said.

“As we move into the future, we need to continuously embrace innovation in the way we carry out our market operations and regulation. Financial innovation is germane for the conception and delivery of a dynamic industrial society.

Market participants and regulators have to continually familiarize themselves with the rapid ever-changing economic, regulatory and business environment” she added

Stanbic IBTC Holdings CEO reiterates commitment to delivering long term value to stakeholders

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inka Sanni, Chief Executive, Stanbic IBTC Holdings Plc has assured Nigerians that Stanbic IBTC Bank remains strong, stable and sustainable in its operations.

In a statement released on the Nigerian Stock Exchange (NSE) on September 17, Holding Company (HoldCo) restated its commitment to operating to the highest level of corporate governance standards while delivering sustainable long-term value to clients and other stakeholders through worldclass innovative operations and our customer-

centric approach.

The Chief Executive assured that the Group’s achievements are an indication that its strategy is delivering on set goals and objectives, adding that the organisation will continue to invest in its people, processes, and its communities to ensure business sustainability.

He added that in 30 years, Stanbic IBTC has built a culture of excellence in providing its clients with innovative financial products and services as well as contributing to the attainment of the developmental aspirations of the country. Stanbic IBTC Holdings Plc posted a profit of www.businessday.ng

N36 billion for the half-year (H1) which ended June 30, 2019 and rewarded shareholders with an interim dividend of N10.2 billion at 100 kobo per share.

The financial ser vices institution has experienced several transformations in its 30year history. Investment Banking & Trust Company Limited (IBTC) was incorporated on 02 February, 1989 as a merchant bank. Following the introduction of universal banking and a regulatory requirement for financial institutions to have a N25 billion minimum capital base, IBTC merged with Chartered Bank Plc and Regent

Bank Plc in 2005 to become IBTC Chartered Bank Plc, which effectively transformed it into a universal bank. Two years later in 2007, IBTC Chartered Bank Plc merged with the Nigerian subsidiary of Standard Bank Group Limited, to become Stanbic IBTC Bank Plc. The reforms in the Nigerian financial system, which led to the review of the Universal Banking Policy of the CBN and the introduction of a holding company model, led to the adoption of a HoldCo structure

by Stanbic IBTC in 2012 to retain its non-core banking businesses.

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FTSE 100 Index 7,320.40GBP -1.01-0.01%

Nikkei 225 22,001.32JPY +13.03+0.06%

Generic 1st ‘DM’ Future 27,026.00USD -54.00-0.20%

Deutsche Boerse AG German Stock Index DAX 12,372.61EUR -7.70-0.06%

S&P 500 Index 2,996.21USD -1.75-0.06%

Shanghai Stock Exchange Composite Index 2,978.12CNY -52.64-1.74%

13.341

Nigerian equities shed N81.4bn he Nigerian equities market dipped for the second straight day in the week, causing investors to lose approximately N81.4billion on Tuesday September 17. The Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased by 0.61percent.

At the sound of trading closing gong, 22 stocks gained as against 15 losers. Despite that the direction of the ASI is still majorly dependent on the performances of market heavyweights there are indications that sentiment is marginally positive.

Airtel Africa Plc led the losers table after its share price moved from N315 to N283.5, losing N31.5 or 10percent, while Stanbic IBTC Holdings Plc advanced most from N35.15 to N37.5, adding N2.35 or 6.69percent.

The NSE ASI moved down from 27,574.32 points to 27,407.04 points from while year-to-date (YtD) returns stood at -12.80percent. In 3,830 deals, equity dealers exchanged 198,034,375 units valued at N2.898billion.

The value of listed equities decreased to N13.342billion from preceding day’s N13.423trillion.

Market watchers expect to see a similar pattern on Wednesday in the absence

Global market indicators

J.P. Morgan Securities fined N396bn over allegations of misconduct

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he United States Financial Industry Regulatory Authority (FINRA) has slammed a whopping $1.1million (N396billion) penalty on J.P. Morgan Securities (JPMS) for failing to timely disclose 89 allegations of misconduct over a six-year period.

FINRA’s big stick also fell on J.P. Morgan Securities for preventing numerous regulatory investigations; as well as preventing other member firms and public from learning about allegations including misappropriation of funds.

J.P. Morgan Securities is a brand name for a wealth management business conducted by JPMorgan Chase & Co (JPMC) and its subsidiaries worldwide. FINRA also required an undertaking by the firm to certify within 60 days that it has taken appropriate corrective measures.

FINRA found that from January 2012 to April 2018, JPMS failed to disclose, or timely disclose, 89 internal reviews or allegations of misconduct by its registered representatives and associated persons, including misappropriation of customer and company funds, borrowing from customers, forgery or falsification or alteration of documents, unauthorized trading, making unsuitable recommendations, structuring and other suspicious activity.

Broker-dealers are required to file with FINRA a Uniform Termination Notice for Securities Industry Registration (Form U5) within 30 days of terminating a registered repre-

sentative’s association and to file an amendment with FINRA within 30 days of learning that anything previously disclosed on the Form U5 is inaccurate or incomplete.

Firms must disclose, among other information, allegations involving fraud, wrongful taking of property, or violations of investment-related statutes, regulations, rules or industry standards of conduct.

FINRA uses this information to help identify and investigate potential misconduct, and sanction individuals as appropriate. State securities regulators and other regulators use the information to make informed regulatory and licensing decisions. Member firms use this information to make informed hiring decisions, and investors use this information-displayed through FINRA’s BrokerCheck-when considering whether to do business with a registered or formerly registered person.

Susan Schroeder, Executive Vice President of FINRA’s Department of Enforcement, said, “FINRA member firms have a responsibility to their fellow member firms, to FINRA and other regulators, and to the investing public to disclose allegations of serious misconduct by their registered representatives. Firms must live up to their responsibility as a gatekeeper and disclose allegations in a timely, accurate and complete manner. This disclosure responsibility is essential to providing transparency and maintaining the integrity of our industry.”

FMDQ Commences series II of Derivatives Market training for stakeholders

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MDQ Securities Exchange Plc activated the FMDQ Exchange Derivatives Market Development Project (the “Project”) in 2018 to set the tone for and facilitate the launch of a standardised derivatives market in Nigeria by the Exchange.

Critical to the success of this launch is education and capacity building for all market stakeholders on how a derivatives market works and how other countries/climes have used this very important market to leapfrog their financial markets and support economic development @Businessdayng

in the long r un. Having successfully run Series I of the Derivatives Market Training for Stakeholders, FMD Q Exchange has commenced Series II of these training sessions through its learning and development initiative – FMDQ Academy – which seeks to address financial markets capacity building requirements for participants and other stakeholders in the FMDQ Exchange markets; allowing them to maximise the potential of these markets towards positively impacting development of the Nigerian financial markets.

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BUSINESS DAY

news Chinese investors to explore new investment opportunities in Lagos …as Sanwo-Olu plans to leverage huge population JOSHUA BASSEY

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L-R: Fatai Jelili, group head, retail assets and liability; Benedicta Sadoh, head, SMS sales, and Olufemi Adewusi, head, value chain banking, all of Sterling Bank, during a press conference on the bank’s SME Value Proposition in Lagos, yesterday.

Pic by Pius Okeosisi

South Africa delays Air Peace evacuation flight for 24hrs over landing permit IFEOMA OKEKE

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he Air Peace flight billed to airlift Nigerians from South Africa was delayed for 24 hours because authorities at the OR Tambo International Airport, Johannesburg did not give permit to the airline for the flight in time.

The flight was billed to take off by 1:00am early Tuesday and arrive Johannesburg by 7:00 am.

The flight was also planned to leave the OR Tambo International Airport Johannesburg

by 12:00 pm back to Nigeria, to arrive the Murtala Muhammed International Airport (MMIA), Lagos by 7:00 pm.

Allen Onyema, The Chairman and CEO, who confirmed this said, “We did not take off by 1:00am as scheduled because South African authorities are yet to give us landing permit. We are hopeful that they will give us the permit.

Our crew waited till 3:00 am but when the permit did not come, they went back to the hotel. Once we get the permit we will set off to South Africa.

We don’t want to speculate

but we are hopeful they will give the permit,” Onyema said.

BusinessDay checks showed that the South African authorities eventually gave Air Peace permit to land at 8am on Wednesday morning. As a result of the development, the flight was rescheduled to take off from MMIA at 1.00am on Wednesday morning and arrive by 8am at the OR Tambo International Airport Johannesburg.

The Air Peace flight was therefore rescheduled to depart South Africa by 12 midday on Wednesday and arrive Lagos by 7pm same day.

Air Peace is expected to evacuate second batch of returnees, numbering 320 Nigerians as a result of the xenophobic attacks on Africans

by South African indigenes.

Nigeria is evacuating its nationals in South Africa following xenophobic attacks on black immigrants in that country which led to deaths and destruction of their business interests.

A South African government delegation that met with President Muhammadu Buhari in Abuja Monday apologised for the attacks.

NEPC identifies poor packaging, labelling as challenges confronting Nigerian export products Daniel Obi

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igerian Export Promotion Council, NEPC has linked poor packaging and labelling as the major challenges confronting Nigerian export products to overseas.

The Director, Business Development at NEPC, William Eze who spoke Tuesday in Lagos said Nigerian products destined for export, especially to US market, have been faced with poor packaging which resulted in rejections.

“A recent report says that

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30 percent of our (Nigeria) exports to US are rejected as a result of poor packaging and labelling, not quality of the products,” he said.

He spoke at the 2019 Packaging, Plastics, Food processing, labelling and print exhibition in West Africa, organised

by Afrocet Montgomery in Lagos, with the theme ‘Sustainability in manufacturing’ .

“Packaging and branding have been central to marketing tools both in domestic and export market,” adding that “the problem of packaging in Nigeria today is complex,

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because innovation keeps on changing due to the market trend of consumer demand and behaviour” “We must also follow the business squarely as SMEs or producers. Some madein-Nigeria products are faced with poor packaging which results in rejection.”

Eze therefore advised that businesses must know the system in order to be successful.

Also speaking, George Pearson, Regional Director, Afrocet Montgomery, said the continued progress in the agro-processing, pack-

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aging, printing and plastics industries in Nigeria makes the exhibition important to companies to present their innovative product solutions.

The exhibition has about 200 brands from over 40 countries in attendance.

On sustainability, George Pearson said that a with global shift in plastic waste and responsible packaging, the exhibition therefore looked at various steps that Nigerian manufacturers were taking to reduce plastic waste and how standards were being implemented.

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hinese investors are to explore new investment opportunities in oil and gas, agriculture, construction and manufacturing in Lagos State raising prospects for the injection of billions of dollars into the economy, Chu Maoming, Consul General of the People’s Republic of China, has said.

This is expected, as the Lagos State governor, Babajide Sanwo-Olu, says his administration is ready to leverage the huge population of the state to further create economic opportunities by training and equipping people with skills.

Both men spoke when Maoming led some Chinese investors on a visit to Sanwo-Olu at the State House, Alausa, on Monday.

According to the Consul General, the visit was an indication of the readiness of the Chinese business community to further inject billions of dollars in the Lagos economy.

“I arrived Nigeria in May and I have visited a lot of Chinese businesses operating across the country, including Lagos, but there is still good news. The Chinese business community has concluded plans to increase their size of investments in Lagos.

The presence of vice chairperson of the China’s biggest oil company, National Offshore Oil Corporation,

in this visit is an indication of the readiness of the Chinese business community to inject billions of dollars in the Lagos economy. We are exploring other areas of opportunity in which China and Lagos can cooperate to sustain our bilateral partnership,” said Maoming.

On his part, Sanwo-Olu said his administration’s development agenda was aimed at leveraging the population of the state for sustainable socio-economic development.

According to him, although the state faced the challenge of a growing population, the government was prepared to turn the burden to opportunities by training and equipping the people.

He said Lagos intended to strengthen its relationship with the Chinese government to build human capital by exposing young people to areas likes technology, agriculture, manufacturing, construction and cultural exchange.

“Lagos and China can learn from each other, because we share similarities in several areas. Both entities are both hugely populated, with Lagos being the most populous city in Africa.

China has a huge population not only in Asia, but also in the world. Based on these similarities, we can promote value exchange that would lead to improved human capital development on both sides, Sanwo-Olu said.

Inequality is threatening Sustainable Development Goals – Gates Foundation ISAAC ANYAOGU

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umans have been to the moon, conquered seas brought worlds together and built the most prosperous economy known to mankind, yet where you’re born is still the biggest predictor of your future, and no matter where you’re born, life is harder if you’re a girl.

The Bill and Melinda Gates Foundation on September 17, launched this year’s Goalkeepers report calling for a sustained action

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against inequality which restricts opportunities for nearly half a billion people— about one in 15— to access to basic health and education and this has become a barrier to achieving the UN Sustainable Development Goals (SDGs).

The new report titled ‘Examining Inequality’ features new data showing that while progress on health and development continues unabated, global inequality remains a major barrier to achieving the U.N. Sustainable Development Goals (Global Goals).

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Wednesday 18 September 2019

FT

BUSINESS DAY

A7

FINANCIAL TIMES

World Business Newspaper DANIEL DOMBEY IN MADRID

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pain is heading for new elections in November after opposition parties spurned the ruling Socialists’ calls to allow the formation of a government.

On a frenetic day of talks Pedro Sánchez, the caretaker prime minister, called the other main party leaders to see if he could win the backing of parliament to form a minority government, and so avoid an early general election.

But the radical leftwing Podemos grouping said it would abstain in a parliamentary vote, while the pro-market Ciudadanos party said it was set to vote against Mr Sánchez.

The responses appeared all but certain to render irrelevant a round of formal consultations between King Felipe VI and party leaders, being held throughout Tuesday.

If the king concludes there is no prospect that parliament will vote next week to install a new government, Spain will hold a general election on November 10 — its fourth in four years.

The Socialists have 123 seats in the 350-member chamber of deputies. They would not be able to form a government if the 42-strong Podemos grouping abstains, and Ciudadanos and the centre-right Popular party vote against.

According to people close to the two left-of-centre parties, Mr Sánchez spoke on Tuesday to Pablo Iglesias, the Podemos

Spain heads for election after Sánchez fails to win rivals’ backing Lack of support leaves caretaker PM without plausible path to power

Ciudadanos’s leader Albert Rivera, second from left, said his party would vote against a Socialist-led government © FERNANDO VILLAR/EPA-EFE/Shutterstock

leader, who said his party would abstain unless it was admitted into a coalition with the Socialists. The prime minister has ruled out such an option.

Mr Sánchez was also involved in a bad-tempered exchange with

Split from centre-left Democrats shifts power in fragile two-week-old coalition

Region particularly vulnerable to cheap and nimble weapon that evades air warning systems

L

ong before the attack on Saudi Arabia’s oil facilities that knocked out half of its oil production, the kingdom knew it was vulnerable to assault from armed drones.

Houthi rebels in neighbouring Yemen have often used this new type of aerial weapon, alongside missiles, to target Saudi airports, desalination plants and crude facilities in the past 18 months.

The rising threat has prompted numerous Saudi agencies — from Saudi Aramco, the state oil company, to air defence, ports and civil aviation authorities — to scout the US and Europe for adequate defence systems, said one defence industry executive.

“They’ve been in a panic [over drones] since the new year,” the executive said. “It’s come down from the top — protect the nation.

If you tell me [your system] can do it, get it here now.”

The details of last weekend’s

MILES JOHNSON IN ROME

attacks on Abqaiq, a crude processing centre, and the Khurais oilfield, remain murky: On Sunday, Houthi rebels said they had used 10 drones to conduct the assault.

But Washington has blamed Iran, which is accused by the US and Saudi Arabia of smuggling arms to the Houthis, including missiles and drones. US media reported that US intelligence indicated many of the strikes were launched from the Islamic republic and could have involved missiles. Saudi Arabia has not yet backed up such claims. Iran has denied any involvement.

Either way, armed drones have become the latest weapon of choice across the Middle East.

And as tensions between the US and Iran have ramped up, the Iranian-aligned Houthis have escalated attacks across Saudi Arabia’s southern border. The cheap, nimble weapon that can easily evade air warning systems is posing a novel defence challenge for the world’s largest oil exporter — also one of the world’s biggest arms buyers — and other countries in the region. www.businessday.ng

posed that Ciudadanos abstain in a vote, if Mr Sánchez met three conditions: ruling out pardons for Catalan separatist leaders on trial for charges including sedition and rebellion; a promise not to increase taxes on the middle class;

Italy’s former PM Matteo Renzi forms breakaway party

Saudi oil attack highlights Middle East’s drone war HELEN WARRELL IN LONDON AND ANDREW ENGLAND AND AHMED AL OMRAN IN RIYADH

Albert Rivera, the Ciudadanos leader, who accused the prime minister of telling a “collection of lies” and confirmed that his party was set to vote against the formation of a Socialist-led government.

Mr Rivera had previously pro-

and a new coalition government in the Navarre region.

In a letter, Mr Sánchez argued that he had substantially met these conditions, a response that Mr Rivera depicted as dishonest.

People close to the government have presented Mr Rivera’s gambit as an attempt to play the “blame game” and shift the responsibility for early elections on to Mr Sánchez.

“There is a lot of last-minute manoeuvring because everyone wants to show they have done what they can to avoid new elections,” said Pablo Simon, professor of politics at Madrid’s Carlos III university.

Mr Sánchez easily won April’s elections with 29 per cent of the vote but he has since failed to put together a governing majority and lost a vote in July when Mr Iglesias opted not to give him Podemos’s backing.

Some people close to the Socialists suggest the party could increase its representation in a November poll, winning votes from both Podemos on its left and Ciudadanos to its right. But the party would also have to contend with the risk of abstentions among its electorate.

I

taly’s former prime minister Matteo Renzi is splitting from the centre-left Democratic Party to create a centrist political movement, shifting the balance of power inside the country’s fragile two-week-old coalition government.

Mr Renzi said he would continue to support the PD’s coalition with the Five Star Movement. But he is expected to take about 30 lawmakers into his new party, weakening the influence of PD leader Nicola Zingaretti, and could topple the government if he withdrew his support.

Leaving the PD is a gamble for the 44-year-old senator, at a time when his popularity — and that of the political centre — is low.

Polls show a majority of voters still split their support between the anti-immigration League and anti-establishment Five Star Movement — the two parties whose populist coalition collapsed in August.

“I have decided to leave the PD and build, together with others, a new house to do politics in

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a different way,” Mr Renzi wrote in a Facebook post that referred to internal divisions in the party. “After seven years of friendly fire I think we should take note that our values, our ideas, our dreams cannot be the subject of daily internal quarrels.”

PD figures criticised Mr Renzi, saying his move would increase the risk of an election that could usher the League, under its popular former interior minister Matteo Salvini, back into power.

Dario Franceschini, PD culture minister and party grandee, compared Mr Renzi’s actions to the split between Italian liberals that allowed the dictator Benito Mussolini to to take power in the 1920s, arguing that his actions would only strengthen the country’s far right.

But Mr Renzi said he told Prime Minister Giuseppe Conte that he believed a new party would broaden the appeal of the government.

In an interview with La Repubblica, Mr Renzi said he was not trying to undermine Mr Zingaretti.

“I do not have a personal problem with Zingaretti, and nor does he have one with me,” he said.

Mr Zingaretti said he regretted the split, calling it “an error”.

Sofia Ventura, a political-sci@Businessdayng

ence professor at the University of Bologna, said the government’s survival would now depend in part on Mr Renzi.

“But both parties do not have an incentive to go to elections, so that could mean it lasts for longer than people expect,” she said.

A survey of political pollsters conducted by the Corriere della Sera newspaper predicted that a new Renzi-led centrist party could win the support of between 3 per cent and 8 per cent of voters.

Mr Renzi, who has low approval ratings among Italian voters but retains influence inside the PD, was the driving force in urging the party to agree a tie-up with Five Star following the collapse of the last coalition government.

Enrico Letta, another ex-PD prime minister and rival of Mr Renzi, said splitting the party “was without logic” and called for “unity and humility”.

Paolo Gentiloni, another ex-PD prime minister and recently appointed EU economics commissioner, defended the party. “Today it is one of the strongest and most forward-looking European progressive parties. In such difficult times, let’s keep it tight,” he said.

A8

Wednesday 18 September 2019

BUSINESS DAY

FT

NATIONAL NEWS

US cattle states seek to rein in substitute meat labelling Farmers object to use of term by fast-growing vegetarian alternatives GREGORY MEYER IN CHEYENNE, WYOMING

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S states that raise cattle and poultry are trying to fence in the fast-growing alternative meat industry.

Wyoming, Oklahoma and South Dakota are among the states working to control the labelling of meat substitutes as the products appear in more restaurants and supermarkets.

Their efforts address an industry that threatens sales of beef, pork and chicken. Alternative meats could grow to become 10 per cent of the $1.4tn global meat industry over the next 10 years, according to Barclays.

The alternative meat industry was “terribly unfortunate. I can’t support it”, Mark Gordon, Wyoming’s governor and a cattle rancher, said in an interview. “Do they present a threat?

I believe they do. I think that’s their intent,” he added.

Mr Gordon this year signed a bill into law that bans the word “meat” from being used if the meat in question does not come from an animal. A dozen states have passed such statutes since last year, with more legislation introduced elsewhere.

The laws come as plantbased protein producers strive for the taste, texture and juiciness of ground beef. Their products are now available in fast-food chains such as Burger King and in the meat aisles of grocery stores.

Beyond Meat, a leading producer, has a market capitalisation of $9.2bn, or more than 50 times revenue, after making an initial public offering in May. Impossible Foods, a competitor, says its mission is “making meat using plants, so that we never have to use animals again”.

Such messages rankle US states that depend on animal agriculture. “My response to that is you are going to also be killing communities, the ecology of some of these places,” Mr Gordon said.

Among the states passing labelling laws, Oklahoma, Missouri, South Dakota, Montana, Kentucky and North Dakota rank in the top 10 for beef cattle inventory, according to the US Department of Agriculture.

Alabama, Arkansas, Mississippi and South Carolina are in the top 10 for broiler chickens.

Some of the laws address plant-based meat substitutes, while others regulate only cultured meats grown from tissue cells, which are not yet on the market.

Arkansas’s law declares that the word “meat” shall not include a “synthetic product

derived from a plant, insect, or other source” or a “product grown in a laboratory from animal cells”. Anyone caught branding these products as meat is subject to a $1,000 fine.

Montana’s law, the “Real Meat Act”, makes clear that the definition of a hamburger “does not include cell-cultured edible products”.

“The cattlemen are quite concerned,” said Doug Farquhar, programme director for environmental health at the National Conference of State Legislatures. “If you are able to grow this stuff rather than raise cattle, you are going to turn this entire market on its head.”

The state of Missouri was the first to pass a labelling law in 2018. It limits use of the term “meat” to livestock and poultry meat.

Missouri has since been sued. “The aim of the statute is to protect the animal agriculture industry from competition from plant-based meat and clean meat producers,” according to the complaint filed by plaintiffs including the Good Food Institute, a plant-based foods organisation.

“We call them label censorship laws, because that’s exactly what they’re doing,” said Nicole Manu, staff attorney at the Good Food Institute. Two other lawsuits are also pending against Arkansas and Mississippi.

In Wyoming, which has more cattle than people, alternative proteins have made inroads.

Epic Egg, a restaurant a block from the State Capitol building in Cheyenne, began serving Beyond Meat burgers in February, said Jessica Rehling, a supervisor.

“People have really enjoyed it,” Ms Rehling said. “We have quite a few people who order it and ask if we’re sure it’s a veggie thing and not a meat product.”

Jim Magagna, executive vicepresident at the Wyoming Stock Growers Association, the oldest cattle lobby in the state, said he had stopped visiting Epic Egg since the plant-based burgers arrived. “I like my veggies but I want them to be veggies, not my burger,” he said.

In the grasslands outside Gillette, Wyoming, Gerry and Gwen Geis raise cattle and sheep. They offered a wary opinion of plant-based competition.

“Realistically, with today’s science you can create almost anything in a lab. That does not make it a replacement. It’s not the same thing,” said Gerry Geis, a life-long rancher.

Gwen Geis, his wife, added: “We have nothing against them.

We just want to keep the playing field level.” www.businessday.ng

Brad Pitt stars as Roy McBride in ‘Ad Astra’

Brad Pitt wrestles with attractive clutter and empty cliché in Ad Astra

James Gray’s space adventure has moments of wonder but too much weighty rumination NIGEL ANDREWS

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o infinity and beyond.

James Gray’s Ad Astra, set in the future, takes us to the planets and back with little Buzz Lightyear braggadocio, but with so much weighty rumination it would sink any believable spaceship. The spaceships aren’t quite believable here.

But for an hour they are capriciously compelling, even when hosting the trans-spatial soliloquies of Brad Pitt.

He plays an astronaut sent to meet his dad — Tommy Lee Jones in the briefing photographs — who is “still alive, near Neptune” and the last survivor of a mission gone rogue.

Cosmic ray surges have resulted in “the uncontrolled release of antimatter”. Calamities are occurring Earth-wide; 43,000 people have died. Pitt has to be the best man to send, since Colonel Kurtz — sorry, I’m thinking Heart of Darkness (and so, I suspect, is film-maker Gray) — since Prospero — sorry, I’m thinking The Tempest (ditto) — since Clifford

McBride (Jones) is not just his dad but very possibly his dark, fathering, necromantic other self.

How to travel to Neptune? In a film like this, it’s pretty much like getting from Wandsworth to Wimbledon, allowing for the odd exploding bus in Tooting or adventure with zero gravity in Colliers Wood. The Moon and Mars will be stopovers.

Just try to avoid the old guy on the cosmic bus route who offers you DIY route guidance. He will be played in a scary, witchy, entertaining cameo

by Donald Sutherland.

James Gray made The Lost City of Z and before that a series of chamber movies about the displaced or misplaced (We Own the Night, The Immigrant). He likes adventures, but he likes mind music too. Ad Astra tries to be both. But instead of marrying, they are mostly at each other’s throats.

We think excitedly “Ooh, Gravity again!” in scene one, when Pitt is thrown from the giant space mast he is helping to fix; later again when he free-whirls through voids, battling

rubble while hopscotching between space vessels. Elsewhere comes the monologuing, of which there is much.

Freudianism 101 — “I don’t want to be my dad” — is mixed with that other prime number in sci-fi metaphysics, 2001. Pitt’s character is his very own HAL 9000. And, at risk of giving you too much shopping to carry, his Prince Hal too to his father’s “uneasy lies the head” cosmic crown-wearer.

In the Relativity Theory of filmwatching, too much almost always adds up to too little. By climax time, Ad Astra has accumulated so many echoes we realise we are in emptiness. After promising us bounty (including a mutiny to precede and set the plot), Gray delivers a boom chamber. There are wonderful moments, including a lunar “car chase” with space pirates, and some production-design deliriums out of Michael Powell by Salvador Dalí.

But psychological platitude, Oedipal cliché and holistic commonplace about love and humanity can’t be hidden by attractive clutter and kinetic action, even in space.

Nosak Group partners CMD to promote capacity building for employees

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n today’s competitive corporate world, employees are tasked to be goal oriented to deliver on efficiency. This came to bear when the management of Nosak Group, a leading indigenous conglomerate recently organized a two-day training session for executives on Goal Setting and Personal Effectiveness.

Addressing the trainees at the Nosak Learning Centre in Amuwo, Lagos, the Company Secretary and Legal Adviser, Mrs. Judith Aikhoje said the training is meant for the participants to learn, unlearn and relearn new skills to become more effective.

She called on the participants to have an open mind to accumulate new techniques in their career part. “For you to deliver effectively, you need to sharpen your skills through trainings and

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re-trainings in order to be at your optimum best to deliver results”.

In his presentation on ‘Goal Setting for Enhancing Success’, the Principal Management Development Officer, Centre for Management Development (CMD), Jacob SundayDogosaid the training will empower the employees to understand the real concepts of goal setting, be able to describe the framework for managing goals and apply appropriate tools to enhance success through goal settings.

He defined goal setting as a mechanism by which the business delivers results in line with its strategy.Dogo went on to state that goal settings can be achieved with laid down framework, which includes the ability to cascade organizational goals, align team member goals, manage priorities, address development needs and keep employees @Businessdayng

engaged.

The participants were also trained on ‘Personal Effectiveness and Self-Awareness’, as well as ‘Financial Management’. Trainees were told that personal effectiveness and self-awareness like twins, go together. They were tasked to have a proper understanding of their capabilities and have a positive mindset in order to perform at an optimal level.

Reacting after the training, Administrative Executive from Grand Vilas Limited, Yewande Durojaiye applauded the management of the Group for organizing the capacity building session with seasoned facilitators to drive the training courses. Through the lectures, she has learnt that it is important for people to understand their weaknesses and work on them to improve on their strengths.

Thebigread

BUSINESS DAY Wednesday 18 September 2019 www.businessday.ng

Why DisCos need urgent business & finacial re-engineering

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Background he Nig er ia n Pow e r sector has presented challenges to the socioeconomic development of Nigeria despite persistent efforts by government and regulatory agencies to improve the Power situation in the country.

While there are challenges across the value chain (Generation, Transmission and Distribution), the Distribution Companies (DISCOs) would appear today to constitute the major bottle neck in the Power value chain. The expected investment in distribution Infrastructure post Privatisation in 2013 did not materialise resulting in a situation where distribution capacity is currently below 4000MW and rejection of Power from the Grid

by DISCOs has become prevalent.

Nigerian Electricity Regulatory Commission (NERC) in discharge of its responsibility has issued a number of Regulations and Directives to improve the situation. Such recent Regulations include: •Eligible Customer Regulation • MAP Regulation •Distribution Franchising (currently under development) These are very commendable.

For these measures to be effective, we need a comprehensive Business and Financial Re-Engineering of the DISCOs. This will start with understanding the real problems and implementing a range of measures to address them. Appendix 1 summarises exposure analysed by individual DISCOs on the basis of their published Financials at 31 December 2017.

The amounts payable to NBET/ TCN would have risen to about 1.6trillion by December 2018 and projected to exceed 1.8trillion by December 2019.

With cumulative loses currently in excess of 1trillion, the DISCOs lack the capacity to repay this indebtedness in the near term.

On the contrary, these exposures would be increasing by N25billion to N30billion monthly.

All DISCOs are technically bankrupt and insolvent and are only living on life support from NBET/TCN at the rate of N25billion to N30billion consumption per month.

Were NBET/TCN to stop increasing their credit/life support, the entire Nigerian Power System will collapse.

The exposure of the SPVs (used in acquiring the 60% stake in the DISCOs) to the Nigerian Banking System is currently estimated at US$1.6billion(N600billion) and should be approaching US$1.8billion by 31st December, 2019(N650billion). Please note, these exclude exposure related to GENCOs acquisition.

The systemic exposure of the DISCOs to the Nigerian economy will be more than N2.6trillion by December 2019. As currently constituted, the DISCOs lack the ability to service existing obligations. The 60% Shareholders (SPV) lack the ability to service its obligation to

ELECTRICITY DISTRIBUTION COMPANIES(DISCO) 2017 Financial Statements Summary (N'Billions)

DISCO

Sales

Net Loss

Cumm Losses

Abuja(2018) BEDC EKO ENUGU Ibadan Ikeja Electric Jos Kaduna Kano Port Harcourt Yola(2016)

82 62 69 60 70 69 32 42 42 52 11

(86) (9) (40) (24) (58) (76) (22) (49) (50) (42) (8)

(172) (7) (14) (51) (54) (251) (17) (78) (37) (97) (9)

Total

591

(464)

(787)

Asset Shareholders Funds Net Working CBN/NEMS Payables to (Deficit) Capital(Deficit) F Loan Revaluation NBET/TCN 44 62 47 83 19 -

(128) 55 (14) (51) (10) (37) (17) (30) (15) (23) (2)

255

(272)

Nigerian banks. Systemically, we substantial and will require Fedhave a loss of N2.6trillion to resolve eral Government Approvals and at the level of the DISCOs and re- Budgetary Provision. lated Major Shareholders.

•These adjustments will go This is at the core of the chal- a long way towards presenting lenges facing the business of the Investment grade and bankable DISCOs. There can be no third DISCO Business. party Private Sector Investor or 3.2. Tariff Review Lender in the DISCO segment until There have been clamour for theseBUSINESS loses are&resolved. changes in tariff. COMPANIES However, any FINANCIAL RE-ENGINEERING OF DISTRIBUTION All actions required to be taken change in tariff must take into must be taken concurrently and cognizance: holistically.

•There is an Industry Break 3.

Business And Financial ReVolume which should be close 1. BACKGROUND Engineering Actions to about 8,000MW and below A number of urgent actions are this volume, Nigerian consumers The Nigerian Power the sectordilemma has presented challenges to penalty the socio-foreconomic required to resolve should not pay systemic development of Nigeria3.1. despite persistent incompetence. efforts by government and regulatory with the DISCOs: Balance Sheet Restructuring •Benchmark with some West agencies to improve the Power situation in the country.

The reality is that with negative African Countries e.g. Ghana, Ivory Shareholder funds and across working Coast, While there are challenges the value chain etc.

(Generation, Transmission and capital deficit, the amount pay•Any tariff above N45/KWH Distribution), the Distribution Companies(DISCOs) would appear today to constitute the able

by DISCOs to NBET/TCN or US12.5cents could lead gradumajor bottle neck in the value chain.ally The to expected investment in distribution currently estimated at Power N1.8trillion exodus from National Grid willInfrastructure never be paid.

On the contrary, Power Supply by some consumers. post Privatisation in 2013 did not materialise resulting in a situation where these amounts are increasing by Increasingly, the costs of alternadistribution capacity is currently below 4000MW andpower rejectionsources of Power from Grid by a monthly average of N25billion tive are the declining, DISCOs has become prevalent.

– 30billion. These amount are ef- given advances in technology. For fectively undeclared or hidden example, Gas generators can now Federal Government subsidy to the (NERC) deliver power between N48/KWH Nigerian Electricity Regulatory Commission in discharge of its responsibility has Power There are also claims andto N60/KWH depending on the issuedSector. a number of Regulations and Directives improve the situation.

Such recent

by DISCOs of short fall in revenues closeness and cost of Natural Gas include:increase delays. It to the consumer. Furthermore, as aRegulations result of tariff is now time to courageously resolve advances in Solar Technology have EligibleFor Customer Regulation the issues. example: now brought Power delivery well • All proven and MAP Regulation genuine rev- below US10cents/KWH i.e. N36/ enue short falls related to tariffs KWH particularly with flexible  Distribution Franchising should be offset against (currently payableunder to development) Solar Panels deploying high yield NBET/TCN. Energy Technology.

These are very For these measures to be effective, we need afor •Balance leftcommendable. after the above It is therefore important should be capitalized a longRe-Engineering NERC toofanticipate comprehensive Business andasFinancial the DISCOs.the This potential will start term convertible loan (10 years or gradual exodus from Grid Power with understanding the real problems and implementing a range of measures to address more to DISCOs). should customers be compelled them.

•The amounts involved are to pay the price of an incompetent

2. DISCOs FINANCIAL CHALLENGES DISCOs FINANCIAL CHALLENGES The Distribution Companies’ total exposure to the Nigerian economy will be close to N3trillion by December 2019.

Dec 2017

Dec 2018

Dec 2019(Projected)

(N’Trillion) NBET/TCN/CBN Payables

1.2

1.6

2.0

SPVs(60% Shareholder) Loan with Banks

0.55

0.6

0.65

2.2

2.65

SYSTEMIC EXPOSURE TO NIGERIAN ECONOMY

1.75

(221) (48) (65) (73) (97) (157) (43) (95) (84) (72) (11)

(966)

23 16 3 15 20 6 7 8 12 -

110

235 88 65 124 127 109 63 116 82 111 18

1,138

system. We can draw parallel from what happened in the Telecom Sector with inception of Mobile Telephone Technology. Any Nigerian below 30 years old will not remember that there was an organization called NITEL that as of December 2001 had less than 500,000 landlines as the only communication option for Nigerians. With the advent of mobile telephones, we now have in excess of 140million mobile lines.

3.3. Installation of Transparent Board & Management at the DISCOs In order to strengthen the management of the DISCOs and institute more transparent and competent procurement system, there is an urgent need to ensure that all DISCOs put in place Independent Professional management that can manage the operations independent of the majority shareholder like most publicly listed companies. The major source of improving cost and operational efficiency is more transparent procurement system devoid of all Related Party Transactions.

3.4 NERC/CBN/Nigerian Banks To Create Common Restructuring Platform For SPV DISCO Debts To The Banking System In 2013, Nigerian banks made loans in excess of US$ (N650billion). Meanwhile, the underlying asset acquired is practically worthless based on existing Financials (of course the scenario could change with write off of NBET/TCN payables).

To improve the outlook of the DISCOs without resolving the indebtedness of the SPVs to the Banking System will be an incomplete solution. It is therefore recommended that joint action be taken by various Stakeholders to resolve the indebtedness. Possible solutions will include: - Offer Principal repayment option over a longer period (of e.g.

10 years with 2 years moratorium) - Write off part of accumulated Interests (e.g. 40-50%) - Capitalise balance of accrued Interest and restructure over say 10

years as in above.

- Consider an interest free/ freeze period (say 2 - 3 years).

- Consider change of Major Shareholder to create room for new investor.

It is possible that even with the restructuring a number of the SPVs would still be in default in which case all the legal conditions attached to the loan should be enforced by the banks or a special agency be established to do so. It is obvious that some SPVs (60% Shareholder) will exit or be acquired eventually.

DISCOS. Please note that these loans were not to the DISCOs but rather to 1.2billion for the purchase the SPVs holding companies that purchased 60% shares.

In practical terms, none of these loans are performing despite efforts by some SPVs to make contributions towards interest payment. With both principal and accumulative interest, the current exposure is now in excess of US$1.8billion 3.5. Fresh Capital Injection Into The DISCOs The overall objective of the Business & Financial restructuring is to permit fresh cash to be injected into the DISCOs to support infrastructure expansion. It is estimated that a minimum of US$2.5billion across the 11 DISCOs is required to build up DISCO Infrastructure to handle distribution of up to 12,000MW. This requires a combination of Rights Issue, Private Placements and Long Term Debts issuance to raise fresh funds in each DISCO. No equity or debt investor will make such funds available unless the issues listed above are addressed. A new Major Investor with technical and Financial resources will likely emerge in some of the DISCOs during this fund raising.

3.6. Other Technical/Commercial Issues In addition to the issues listed above, there are obviously other Technical/Commercial issues that must be addressed to create an efficient DISCO system. However, these can only be addressed when the challenges of Business/Financial Re-Engineering are adequately addressed.

4. Implementation Proposal It is recommended that as a matter of urgency, a Special Committee of Techno/Commercial/ Financial Experts be set up to deliberate on the Business and Financial Restructuring of the DISCOs and make appropriate recommendations. Their work should engage all Stakeholders in the Industry.

5. Conclusion The DISCOs’ exposure to the Nigerian economy is currently approaching N3trillion. This constitutes a major threat to the Nigerian economy. The losses already made should be openly acknowledged and then resolved.

A comprehensive business and financial restructuring of the DISCOs is a National Strategic imperative to be addressed urgently.

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