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news you can trust I **MONDAY 20 AUGUST 2018 I vol. 15, no 1201 I N300

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$-N 357.00 360.00 £-N 459.00 467.00 €-N 408.00 416.00

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Foreign Exchange

Market Spot ($/N) I&E FX Window 362.50 CBN Official Rate 306.10

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10 Y 0.14

20 Y 0.00

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NGUS OCT. NGUS JAN. NGUS JUL. 30, 2019 24, 2019 31, 2018 0.00 362.23

0.00 362.68

0.00 363.58

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Saraki: Oshiomhole’s impeachment plot hits the rocks ... As APC senators reject his unconstitutional approach Innocent Odoh & Owede Agbajileke, Abuja

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he efforts being made by the National Chairman of the All Progressives Congress (APC) to procure the impeachment and Continues on page 46

L-R - Ogochukwu Ekezie-Ekaidem, head, corporate communications and marketing, Union Bank; Clare Omatseye, president, Healthcare Federation of Nigeria; Emeka Emuwa, chief executive officer, Union Bank; Claire Wathen, community manager, Skoll Foundation, and Toyosi Etim-Effiong, TV producer, at the TEDx Lagos event sponsored by Union Bank and Skoll Foundation, at the weekend.

Banks fail to turn on lending tap despite N840bn T-Bills redemption BALA AUGIE

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espite the redemption of treasury bills by the Federal Government that resulted in enhanced liquidity, banks have refused to turn on the tap on lending to the private sector as loan books continue to shrink.

This means they are unconvinced that the risk level is not Continues on page 46

Inside Restoring moral leadership to Africa P. 33

The Week Ahead: PVC angst, more stock sell-off, bond yields edge higher P. 43

Analysts forecast naira resilience amid offshore outflows

On current account surplus, higher oil prices Net outflows hit $2bn year-to-date

LOLADE AKINMURELE

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t’s not a tale of dejavu for the most stable emerging market currency this yearthe naira.

Despite a sustained foreign sell-off that has dealt a blow to emerging market currencies, it will take something special for the Nigeria naira to weaken materially like in 2016.

Emerging market currencies from the Russian Rubble to the South African rand have taken a beating this year alongside other emerging market currencies thanks to rising interest rates in the US which has trigged fund flow reversals. The Mexican Peso, Indian rupee and Turkish lira have also suffered.

It’s not the case for the Nigerian naira which has not

budged amid the currency rout in emerging markets, thanks to the Central Bank’s interventions.

Analysts polled in a Business Day survey say higher oil prices which has fed into a current account surplus and helped push external reserves to some $46 billion, has put the Central bank in a better place to defend the naira this time.

Nigeria’s current account sur-

plus rose 21 basis points quarter on quarter to 4.8 percent of GDP in the first quarter according to the most recent CBN data.

Oil prices have held above $70 per barrel for the most part of the year and although the external reserve is down by about a billion dollars in the past month, it still provides 12 months of Continues on page 46

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FX utilisation for invisible trade up 52% to $12.48bn in 2017 ... CBN conducts third Chinese Yuan auction HOPE MOSES-ASHIKE

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ggregate foreign exchange utilisation rose by 9.7 per cent to $27.64 billion in 2017 compared to $25.19 billion in 2016 according to the Central Bank of Nigeria (CBN).

The CBN’s 2017 annual report revealed that visible imports declined by 16.1 per cent to $15.16 billion, from $18.07 billion in 2016, and accounted for 54.8 per cent of the total.

Foreign exchange utilisation for invisible trade increased by 57.37 per cent to $12.48 billion in 2017 from $7.93 billion in 20016, and accounted for 45.2 per cent of the total.

Meanwhile, the CBN on Friday held the third Chinese Yuan auction as it asked banks to submit their bids.

The CBN had in May this year signed a $2.5 billion three-year currency swap deal with the People’s Bank of China to facilitate trade between the two countries and reduce reliance on the dollar.

The Apex bank sold 69 million Chinese Yuan (CYN) in its first auction in July 27 at a range of N53.35k.

In the second auction, the CBN also sold a total of CYN69 million in the spot and short-tenored forwards at the same range.

Naira appreciated marginally at the investors and exporters forex window, gaining N0.03k to close at N362.5k per dollar on Friday from N362.53k/$ traded the previous day, data from FMDQ indicated. At the black market, the local currency gained N1.00k or 0.27 percent. It closed at N359 per dollar on Friday compared to N360/$.

Nigeria’s external reserves, which rose to a peak of $47.865 billion on May 10, fell to $46.41 billion as at August 16, 2017, data from CBN’s

website show.

“We have seen stability in the exchange rate being sustained, GDP growth higher than 2017, and although there are capital reversals in our capital market, it is a little bit bearish but the fact is that capital outflow in the Nigerian economy is far less compared to many emerging economies,” said Ahmed Abdullahi, CBN’s director, banking and supervision.

A breakdown of visible import showed that foreign exchange utilisation in the industrial and agricultural sectors rose by 12.4 and 3.0 per cent, to $6.97 billion and $0.30 billion, respectively, in 2017.

However, oil, transport, and manufacturing sub-sectors fell by 40.3, 26.2, and 23.0 per cent to $3.67 billion, $0.41 billion, and $2.23 billion, respectively, during the year.

Similarly, the amount utilised for food products and mineral import, declined by 20.4 and 19.6 per cent, to $1.51 billion and $0.08 billion, respectively, in 2017.

A disaggregation of invisible imports indicated that utilisation in respect of tourism and travel related services, construction and related engineering services, distribution services, and communication services increased, significantly above the levels in 2016 by 358.8, 282.4, 125.7, and 114.8 per cent to US$0.10 billion, US$100.00 million, US$30.23 million, and US$0.23 billion, respectively.

Also, foreign exchange utilised for business, financial, transport, and educational services were US$1.27 billion, US$8.72 billion, US$0.87 billion, and US$0.51 billion, indicating respective increase of 96.8, 40.0, 34.4, and 15.9 per cent, over the levels in 2016. Foreign exchange utilised in respect of health-related and social services, however, declined by 48.8 per cent to US$2.15 million in 2017.

Insurers’ Half-Year results: Rising premium income offers opportunity for growth BALA AUGIE

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he gradual economic recovery has bolstered premium income of most insurers quoted on the floor of the bourse, as an embryonic industry leaves room for improvement in the future.

These firms operate in a tough and unpredictable macroeconomic environment, as the country’s penetration rate is one of the lowest in Sub-Saharan Africa while industry contribution to GDP remains abysmally poor.

Analysts are of the view that there are room for improvement and that the price of some products need upward review.

“If investors see something good, they will invest in the sector. There are room for insurers to grow revenue and remain competitive,” said Peter Irene, CEO and managing director of International Energy (IEI) Insurance.

“For example, Third party motor vehicle insurance has been N5000, and it should be N50,000. It is when you have surplus premium that you invest in short term government, fixed income and real estate,” said Irene.

Analysis The cumulative gross premium income of 16 largest public insurance firms that have released half year 2018 results increased by 18.44 percent to N137.16 billion , from N115.80 billion the previous year.

Gross premium income and net premium income were up 17.65 percent and 19.35 percent to N111.94 billion and N78.26 billion as at June 2018, an impressive performance that shows consumers are beginning to take up a policies after the economic lethargy of 2015 and 2016 damped their appetite for insurance.

A lot of them were able to make money from oil and gas and marine insurance thanks to the rebound in crude oil price and the introduction of the Investors and Exporters window (I and E) that resulted in relative flexibility in the foreign exchange market.

Recall that the drop in oil price tipped the country into its first recession in 25 years and resulted in the reduction in the cover of assets such as vehicles whose prices dropped.

However, rising claims expense, increase in annuity fund, acquisition and maintenance costs, resulted in a

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ith a desire to expand revenue, Seplat Petroleum Development Company Plc said the recent gas agreement for delivering about 3.4 billion standard cubic feet of gas per day, with state-owned Nigeria National Petroleum Corporation (NNPC) already has a market outlet.

Speaking to BusinessDay on his 60th birthday celebration Seplat’s CEO Austin Avuru said there is a market ready for the gas to be produced under its signed agreement with NNPC as Seplat has plans to expand and invest more in its gas businesses.

“The market in Nigeria is currently under-served as total supply today is far less than the market demand; there is still a lot more market demand for Seplat to meet,” Avuru told Businessday.

Also, Chairman of Seplat Ambrose Orjiako said all commitments Seplat made with NNPC towards producing gas already has a market as there is an increasing market demand to meet and with good pricing.

“Nigeria’s environment remains shortofgassupplyforpower,shortofgas supply for industry and short of gas supplyforagriculture;sowehaveawholelot to do,” Orjiako told Businessday.

Orjiako further said that the company made good progress last year as it focused on key priority to de-risk future

cash flows through diversification of oil export routes, investing in and scaling up its domestic gas business.

Recall, last week, NNPC and Seplat signed five agreements to expedite the development of a project aimed at delivering about 3.4 billion standard cubic feet of gas per day by 2020.

The NNPC said the project, Assa North and Ohaji South gas development scheme, was one of the seven critical gas development projects that would boost gas production and infrastructure development.

Seplat’s gas business continues to make increasing contribution to revenues as it generated $85.3 million at an average gas price of $3.04/ Mscf in H1 2018 which is a 57 percent increase compared to $54.4 million in the same period last year.

The half year 2018 financial statement showed overall Seplat’s aggregate indebtedness at 30 June 2018 stood at $550 million while cash at bank stood at $509.9 million to give a net debt position of $40.1 million with $100 million undrawn headroom on the Revolving Credit Facility (RCF) which implies the firm is well capitalised and fully funded to execute its organic growth plans and also well positioned to pursue inorganic growth opportunities in line with its price disciplined approach.

•Continues online at www.businessdayonline.com

reduction in profit.

For example, combined profit after tax declined by 5.21 percent to N11.37 billion in June 2018 from N12.0 billion the previous year, and cumulative average profitability margin dipped to 10.10 percent in June 2018 from 15.89 percent the previous year.

A lower ratios means a firm isn’t using its sales to generate higher profit.

But, Aiico Insurance’s profitability ratio of 11.15 percent beats this year’s industry average of 10.15 percent, according to data compiled by BusinessDay. The insurer’s 95.60 profit growth is the fastest among peers, thanks to exceptional items like net realised gains.

Despite rising claims and expense ratio, insurers have maintained efficient underwriting capacity as combined ratio (CR) was less than the 100 bench mark.

We have decided to use the National Insurance Commission (NAICOM) method , which is the addition of claims and expense divided by net premium earned multiplied by 100 t0 arrive at the CR ratio.

•Continues online at www.businessdayonline.com L-R: ABC Orjiako, chairman, Seplat Petroleum Development Company plc; Matthew Kukah, Bishop of the Catholic Diocese of Sokoto; Austin Avuru, CEO, Seplat Petroleum Development Company plc/the celebrant, and Fola Adeola, keynote speaker, cofounder/former CEO, Guaranty Trust Bank plc, at the industry stakeholders lecture to commemorate Austin Avuru’s 60th birthday in Lagos.

Seplat says buyers secured for NNPC gas agreement Olusola Bello & Dipo Oladehinde

Monday 20 August 2018

Stanbic IBTC after-tax profit up 78.7% on non-interest revenue ... declares N1 interim dividend Cynthia Ikwuetoghu & Abimbola Hassan

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tanbic IBTC Group Plc last released audited financial results for the half year (H1) ended June 30, 2018, showing positive performance across all financial indices as Profit after tax (PAT) grew by 78.7 percent.

The group posted gross earnings of N114.21 billion in H1 2018, up by 17.5 percent from N97.20 billion recorded from its corresponding period in 2017.

Profit before tax (PBT) grew by 73.9 percent to N50.73 billion from N29.17 billion likewise its PAT also grew by 78.7 percent to N43.08 billion from N24.11 billion.

Non-Interest revenue grew by 33.6 percent to N53.83 billion in 2018 from N40.29 billion posted in 2017.

Net income likewise, had a growth of 73.6 percent to N41.63 billion from N23.98 billion.

Its balance sheet snapshot reflected a marginal increase in total assets by 7.8 percent year on year

(YoY) to N1.37 trillion for the period ended June 2018 from N1.27 trillion in 2017. Total liabilities also grew by 4.47 percent to N1.16 trillion from N1.11 trillion owing to a 57.7 percent drop in trading liabilities.

Shareholder’s fund, or total equity increased by 30.3 percent to N210.47 billion from N161.47 billion posted in half year 2017. Capital remains strong with Capital Adequacy Ratio (CAR) of 27.4 percent in spite of the implementation of IFRS 9.

Return on Equity which measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested stood at 19.8 percent in H1 2018 from 14.9 percent in half year 2017.

Return on Asset (ROA) a profitability metrics that measures how well a company is generating profits from its total assets stood at 3.0 percent from 1.9 percent in 2017.

Earnings per Share (EPS) increased to N4.16 in H1 2018 from N2.30 in H1 2017, representing a 80.9 percent growth year on year.

Stanbic IBTC Plc closed at N50.05

per share on Friday, with a one year returns of 38.72 percent.

However, the board of directors of the bank also approved an interim dividend of 100 kobo (N1) per ordinary share of 50 kobo each.

Also, the Register of Shareholders will be closed from Wednesday 29th of August 2018 to Tuesday, 04th of September 2018. The qualification date is Tuesday, 28th of August 2018.

The Dividend Payment date in respect of this Interim Dividend shall be on Wednesday 26th of September 2018. This Interim Dividend (whether cash or scrip) is only applicable to shareholders whose names appear on the Register of Members as at close of business on Tuesday 28 August 2018.

On the above Payment Date, shareholders who have not elected to receive their Interim Dividend by way of Scrip Dividend, will have their Cash Interim Dividend paid electronically (provided that they have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their Bank accounts), or have dividend warrants dispatched to them (for those without e-dividend mandates).

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Monday 20 August 2018

Auto policy will drive foreign investment into Nigeria - Leventis ODINAKA ANUDU

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Abimbo Ikumariegbe now DMD/COO of VDT Communications

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bimbola Ikumariegbe, formerly general manager, sales and marketing department of VDT Communications, has been elevated to the position of deputy managing director/chief operating officer (DMD/COO) of the company.

A graduate of English Language from Obafemi Awolowo University, Abimbola also holds an MBA from Obafemi Awolowo University and has attended series of marketing and managerial training programmes. She is an alumnus of the prestigious Lagos Business School, Pan-Atlantic University, and also has certification in ITIL and she is ISO 9001:2015 & ISO 200001:2011 knowledge resource.

She started her professional career with Magic Software.

After a stint at the company as a sales executive, she furthered her journey in Bitcom Systems Nigeria Limited, which is now the parent company of VDT Communications. She is a pioneer staff of VDT Communications, which she joined in 2001 as sales executive and rose through the ranks to her present position. In all, she has garnered over 17 years of cognate experience in the ICT/ telecoms sector.

An excellent team player and leader, she was instrumental to the formation of the sales and marketing department of VDT Communications, and with her managerial style, led the growth of the company from a marginal turnover to a firm now worth multiple billions of naira.

Under her watch, VDT has also evolved a strong positive brand image with an extensive increase in brand visibility.

Sallah: FRSC deploys 700 personnel

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he Federal Road Safety Commission (FRSC), Anambra Command, has deployed no fewer than 700 personnel across the state to ensure free flow of traffic during the Eid El Fitri break.

Sunday Ajayi, Sector Commander of the FRSC in the state said the personnel would include regular and special marshals as well as Mobil Court to enhance enforcement.

G Leventis Nigeria says the Nigerian Automotive Industry Development Plan, popularly called Auto Policy, will drive many more foreign investments in vehicle assembly into Nigeria.

“When we have this Auto Policy, it makes foreign companies bring in their businesses here. You can see the VW Brazil coming here. When you have this, you improve the economy, compared with when you are bringing in new trucks,”

Sunday Asade, chief operating officer, AG Leventis, said in an interview with BusinessDay. Asade said it was the policy that engineered a partnership between AG Leventis and Volkswagen (VW) Brazil, which has now birthed a local assembly plant in Nigeria.

“VW products are rugged and they are meant for Nigerian roads. When you look at the current infrastructure we have in the country, you will appreciate that these are trucks that can work for long hours, and they are better in terms of economic efficien-

cy,” he said.

He said locally assembled trucks produced by AG Leventis can compete anywhere in the world as they are durable and economical to manage.

“In terms of infrastructure, what you have here is what you can find all over the world. That shows that whatever we assemble here is durable. If you have any issues, you have the technical partners who will come down from Brazil. Our people are well trained by the same VW. We offer regular training in terms of after-sales.

You can be sure in terms of

maintenance, which is why I said that the total cost is much better than buying a cheap product without support,” he explained On second-hand vehicles, he said they are cheap in the short-term but expensive in the long-run.

Pius Okonkwo, assistant general manager of Oritsetimeyin Logistics Limited, which purchased 10 more units of VW 17220 in addition to the fleet they have, said his firm has confidence in VW trucks, having been using them for six years.

“We have been using the trucks since 2012. To be very

factual, the trucks have been wonderful and are specifically built for Nigerian roads.

They are rugged and cost-effective,” Okonkwo said.

Similarly, Ayo Akinyemi, transport manager, Oritsetimeyin, pointed out that his firm keeps returning for VW products because of durability.

“The trucks have been serving us well. The servicing part is very economical and easy and the trucks are specifically for Nigerian roads. We have been using other products, but theirs are stronger and cheaper to maintain.”

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Monday 20 August 2018

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90 [ninety] candles for Dr. J.K. Randle BASHORUN J.K RANDLE Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

• Continued from last week

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hen John Campbell served as the Ambassador of the United States of America to Nigeria from May 20, 2004 to November 1, 2007, he was very professional.

On his return to the U.S., he joined the formidable Think Tank known as Council On Foreign Policy.

He was very blunt in delivering his previous warning regarding the descent of Nigeria into chaos and anarchy – the inevitable hallmark of a “failed state”.

This time around, he insists that matters have gone beyond lighting candles.

This is the message he delivered under candle light: He warned the Federal Government to tread cautiously in the way it is handling the case of the spiritual leader of the Islamic Movement in Nigeria (IMN), Ibrahim El-Zakzaky, He also warned that ElZakzaky’s ongoing trial could worsen the nation’s security.

In a piece titled, “Nigeria’s Treatment of Shia Minority Recalls That of Boko Haram,” posted on the website of the American think-tank organisation, the Council on For-

eign Relations, the former envoy said – “there is an escalating conflict between Nigeria’s Shia minority, some of whom are organised into the Islamic Movement of Nigeria (IMN), and Nigeria’s secular government” that has been largely overlooked by the Western media.

The current focus are the eight charges of murder brought by Kaduna State against IMN leader Ibrahim el-Zakzaky, whom the government has detained for two years without charge. Complicating the issue is the Iranian government, which has periodically protested el-Zakzaky’s confinement.

Beginning in April, there have been daily protests in Abuja and cities in the north against elZakzaky’s continued detention.

According to the Nigerian media, some of these demonstrations have turned violent and the capital has occasionally been ‘shut down.’ The demonstrations may have provoked the Kaduna State authorities to formally charge el-Zakzaky with murder; if convicted, he could face the death penalty.”

The former US envoy pointed out alleged similarities between the way the founder of Boko Haram, Mohammed Yusuf, was treated and the manner el-Zakzaky’s case is being handled.

He said federal, not state, authorities are holding el-Zakzaky in custody, “and federal spokesmen have said that he cannot be released until the Kaduna State judicial process is completed.”

In December 2015, el-Zakzaky and his IMN group were accused of attempting to assassinate the Chief of Army Staff, TukurBuratai, when they blocked his convoy.

Following that, the Nigerian Army

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...there is an escalating conflict between Nigeria’s Shia minority, some of whom are organised into the Islamic Movement of Nigeria (IMN), and Nigeria’s secular government” that has been largely overlooked by the Western media

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attacked IMN facilities, killing hundreds of people, including members of el-Zakzaky’s family while the MIN leader and his wife were seriously wounded and arrested.”

“The Zaria episode is in some ways similar to the 2009 clash between the army and followers of Mohammed Yusuf in Maiduguri, which led to Yusuf ’s death and to the emergence of Boko Haram in its present form. But unlike Mohammed Yusuf, el-Zakzaky has not been murdered by the police.

Advocacy of violence aside, there are striking ideological similarities between IMN and Boko Haram, at least for outside observers. Both see the secular state as evil; both want an Islamic state based on Islamic law, and both want the end to Western influence, including in education.

Both also seek the end of northern Nigeria’s traditional political and religious elite. “For IMN, the model appears to be the aspirations of the post-revolutionary Iranian Islamic state. Boko Haram’s vision appears more nebulous and less developed, but both try to function as a statewithin-state.”

Warning the federal government further, the former American ambassador to Nigeria noted: “El-Zakzaky has claimed to have followers ranging from a few hundred thousand to three million.

Whatever IMN’s numbers, it has demonstrated the ability to shut down Abuja, if only for a few days at a time. Were el-Zakzaky to be tried, convicted, and executed-the worst-case scenario-Abuja could very well face the ‘black swan’ of an insurrection.”

We had invited the indomitable WinnieMandela to speak at the Colloquium but she gave up the ghost on 2ndApril, 2018.The least we can do is light a candle for her.

Tribute to Dr Gabi Williams We were served long notice of Dr. Gabi Williams’ farewell which climaxed with his 80th birthday celebration in an environment and circumstances thrown into tumult and bewilderment as our instinctive disposition to thank the Almighty that he had lived a long life of superlative achievements – as a great family man; an outstanding doctor; an illustrious public servant versus our subdued grief and shock on sighting the celebrant in a wheel chair – a mere shadowy reflection of our beloved brother and friend, when he was presented with his birthday cake at the Metropolitan Club, Victoria Island, Lagos.

What had become of his vi-

brancy, infectious good humour, and sportsmanship (on the squash court, the golf course and as umpire in the boxing ring)? That is now history.

Now, we have to deal with the final curtain as he takes his bow.

It has been a long good-bye but through it all he remained calm, steadfast and dignified.

He neither wallowed in self-pity nor moaned about his affliction. Till his last breath he fought bravely.

His greatness was firmly anchored on his humility and mostly self-deprecating good humour. To all, he extended friendship, generosity of spirit and goodwill without any regard for creed, colour or gender. In all the years since I got to know him, not once did I ever hear him say an unkind word in jest or anger against any man or woman.

To call him a gentleman is an understatement. He truly earned the prefix and adjective “perfect” to deserve the double honour of being undisputedly a perfect gentleman.

Beyond that, he was everybody’s brother and I can testify to his integrity, uprightness and patriotism. He served both Lagos State and Nigeria with uncommon zeal and passion.

His soul mate, his darling wife Mrs. Abisola Williams, his children and siblings are truly blessed to have been bequeathed an inestimable legacy of enduring hope and excellence.

It is now time to summon the auditors to take stock and tell us how many like Dr. Gabi Williams are left.

May his great soul rest in perfect peace.

Bashorun J.K. Randle, FCA; OFR Send reactions to: comment@businessdayonline.com

Leveraging big data to drive development

KAZEEM TEWOGBADE Tewogbade is the Managing Director of Bluechip Technologies, a leading data and analytics company based in Lagos, and the Founder of LeadPath Nigeria

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he relevance and use of big data – large data sets which are analyzed to track trends and patterns in information, and used to determine and reveal outcomes – has steadily grown in recent years. The amount of information that can be collected from big data sets is vast and is critical for improving decision-making.

Mostly used by private organizations globally, it helps companies to business performance and better understand their target audiences – provide early warning signs, realtime awareness and real-time feedback on issues and required areas of development.

This ability to draw information from millions of different sources is especially beneficial to developing

countries with a predominance of rural areas and poor institutional capacity, as it has the potential to better lives by forecasting poverty and shared prosperity through mobile phone data, using satellite imagery to monitor and map electrification of rural areas, to better understand the targets of financial inclusion and climate smart agriculture, to name a few.

This activity has been implemented by private organizations in various African countries: in Kenya, a solar energy provider – M-kopa– uses cloud technology to generate data and manage its solar panel devices. They generate more than one million device readings every day which provides information related to the batteries, temperature of the devices, and sensors, as well as geographical data on where the devices are located; they have also been able to use data to calculate their customers’ savings – up to have US$338 million since they started five years ago. Farmerline, based in Ghana, provides local farmers with access to accurate, up-to-date weather forecasts and market prices, thus, they gain immediate knowledge of competitive pricing and often larger and steadier yields. Increasingly, the power of big data is now shifting from being used solely by private enterprises, to being used by

governments, especially in publicprivate partnership initiatives, to identify development gaps; assess areas for improvement; citizens’ identity; and manage/mitigate risk.

Despite these successful usecases, the digital divide and slow adoption and operation of advanced technology in most developing countries have, so far, limited the possibility for the potential and capabilities of big data to be fully harnessed. This is being addressed by international institutions such as the Organisation for Economic Co-operation (OEC) and the United Nations Development Programme (UNDP), which are working to reduce the infrastructure and skill divide in order to effectively facilitate the use of big data in developing countries. An organization called Big Data 4 Africa is also working in partnership with the Global Partnership for Sustainable Development Data to close the data gap in Africa, by improving availability and accessibility to data and analytics in sectors such as food security, healthcare, financial services, etc.

In Nigeria, big data is still in the early stages of implementation, even more so in the public sector; in the private sector, it is mainly being used by multinational technology companies and start-up tech companies, such as IBM Innovation, Dell EMC, Terragon Group etc. A few companies in the FSI sectors

are exploring big data too. TLcom Capital recently invested $5M intoTerragon Group, a data analysis organization because of the potential big data analytics has in making an impact on the country. The first Big Data Economy Summit in Nigeria also took place on the 12th of October 2017 had representatives from Diamond Bank, MTN, Data Science Nigeria and other nationally prominent organisations. Bluechip Technologies also recently released BluePrime, an analytics software that is positioned to revolutionise business-to-consumer relationship management – providing valuable, in-depth insights into customer behavior, trends, experiences, and sentiments, and through a campaign engine, also provides messaging templates for businesses to tailor their communications to their target customers.

Nigerian telecommunications companies began to make use of Big Data through the SIM registration process; they adapted their BI platforms to integrate data analysis, in order to better understand the customer and use the information more efficiently. However, the method of collection and categorization then was flawed due to its simplicity, as only one data set –location – is used for analysis, rather than multiple sets. This caused a number of problematic loopholes, as traders and business CEOs end

up in the same category because they both make calls to certain locations around the country; therefore, practices to target that demographic would then have varying impacts on the people in the category.

In 2014, Ogun State announced the opening of 300 tertiary control points to boost survey access and conduction across the State in an effort to upgrade and re-equip the Department of Survey in the State Bureau of Lands and Survey. The control points were also going to collect data from tertiary workers’ registrations as well as surveys with the aid of three Continuously Operating Reference Station (CORS) as the data collection medium. This attempt to collect data through survey points appears to be a good idea on the surface, but when implementation began, it proved more difficult. The lack of technological advances caused the project to stall, as the data quantity increased over the years. Also the lack of consolidated and continuous efforts caused the project to lag behind.

Note: the rest of this article continues in the online edition of Business Day @https://businessdayonline.com/ Send reactions to: comment@businessdayonline.com

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Is the English language important for scientific research and development?

MOHAMMED DAHIRU AMINU Dr. M.D. Aminu (mohd.aminu@gmail. com/@mdaminu) wrote from Yola, Nigeria.

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ften, there is this back-and-forth argument on whether the English language is even needed for our scientific development as a nation, because being Nigerians, we are not a native English-speaking country by any real definition of the terms. It is a fact that our sense is found in our thoughts; not in our language; even though the language is very critical in communicating our sense. But to be successful in the business of creating knowledge, and especially in science, we must learn to communicate concisely to present our sense.

As a postgraduate student in the United Kingdom, my doctoral progress review committee once told me that 50 percent of the problem of science and scientists rests on communication. A lot of scientists around the world have brilliant ideas that can change the world in many ways, but for that change to come to the world, the scientist must communicate effectively in the language accept-

able to science. Scientists could have their papers rejected for publication in journals because they could not communicate their brilliant ideas effectively; while some could have their papers accepted even though they may have presented some not-tooimpressive ideas albeit in impressive language.

To publish our work in the top journals of the world, our language is as important as our ideas.

How we get to make this effective communication is entirely left to us. Reviewers, who check the sense in a manuscript aimed for publication, do make comments on the command of language.

Although we may often mistake the deployment of high caliber vocabularies (read: ‘big words’) in our writings as an indication of a good command of the English language. However, a good command of language is only evident from the clarity of words, and for scientific communication, a good language command is the ability to make a good story in plain language while being clear, simple, logical and concise.

It is therefore not a surprise that journal editors and reviewers also request authors to have their manuscripts proofread (sometimes by a native English speaker) as a condition for publication.

Amongst my doctoral research objectives included conducting a critical and extensive literature review to appraise the current developments and future outlook on carbon dioxide storage. Before we published the review in a high impact factor journal, I have lost count on the number of times my

‘

I am not sure that anyone can rise to global acclaim in the business of knowledge creation without being mindful of their communication, in effective terms

’

manuscript was proofread by a native English speaker from Canada, to raise the chances of publishing it.

Another manuscript from my doctoral work, which was submitted for publication in a top journal in the energy discipline was returned with a positive feedback from reviewers.

Aside commending the originality of our work, both reviewers also commended the command of language.

It is for this reason that in the academia, academic writing is a skill on its own that is learned as part of the journey to get accepted into the fold. All new research students must develop the skill necessary for scientific research which includes writing skills. Thus, professors are even glad to admit students who do not take too long to acquire these skills. For scientific writing,

some postgraduate students often master it faster than others, and the earlier the skill is mastered, the faster and better the student can explore the world of science.

I am not sure that anyone can rise to global acclaim in the business of knowledge creation without being mindful of their communication, in effective terms.

Those who believe that good command of English language plays no significant role in knowledge production/portrayal of intelligence are entitled to their own opinions but are not entitled to the facts. In the past, during the 15th through the 17th centuries, historian Michael Gorin, explained that scientists communicated their work in either their native languages or Latin. The native language was used to discuss science in their conversations with scientists within their own countries, while Latin was used to correspond with the scientific community who were from outside the home country. By the early 19th century however, only English, French and German were used for scientific communication. Today, the situation has changed greatly in the scientific community around the globe. English has become the language of choice such that academic work published in English outnumber those published in any other language. Scopus, which is the world’s largest abstract and citation database for peer reviewed literature requires that journal papers written in a language other than English, must, at the minimum, include abstracts written in English.

Thus, as it stands presently,

English is the language of science.

Making an example from the Japanese and/or the Chinese people as having advanced in science and technology without necessarily being effective in commanding the English language (as an implication that they do not need the language to be intelligent) is quite a problematic argument. Scientists from Japan and China still derive their ideas from peers around the world who publish such ideas in the English language. The Japanese and the Chinese scientists themselves must learn to write down their ideas in good English before it is accepted in the world of science.

It is important to note that the dominance of the English language in scientific communication should not imply that people of the world must not develop their ideas in their own languages if, they need to. But to have access to the vast body of scientific knowledge, or to contribute to it, the language of communication, which is English, is very crucial. All the scientific ideas that changed the world would not have done so if those who conceived them were not able to communicate effectively, in the language of science. It is important to state, however, that ideas such as those contained in Newton’s Principia paper, for example, was written in Latin. Some of Einstein’s papers were written in German; and Marie Curie’s papers written in French. But, in the world of today, English is the only language of science; and mastering it is critical for scientific advancement.

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Corporate disclosures: Striking the right balance

BISI ADEYEMI Bisi Adeyemi is the Managing Director of DCSL Corporate Services Limited. For comments and reactions, kindly contact badeyemi@dcsl.com.ng.

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orporate entities are required to make certain disclosures at the instance of regulators for the benefit of stakeholders, particularly shareholders and would be investors. These disclosures range from financial (performance, earnings forecast, share value, etc) to non-financial information (significant shareholders, related party transactions, risk management, internal controls, sustainability issues, etc). The strength of an organization’s corporate governance systems and the quality of public disclosures are becoming increasingly important as sustainability becomes more critical. Expectations around transparency are raising the

bar for more comprehensive and proactive disclosures.

A detailed and well-structured system of corporate disclosures enables investors to understand, and obtain accurate and reliable information about the corporations in order to make more informed investment decisions.

However, a major area of concern with respect to mandatory disclosures relates to sensitive information (marketing strategies, research, new product development, market entry, etc) that could deprive companies of their hard-won competitive advantage. Others include bargaining disadvantage from disclosure to suppliers, customers and employees (employees demand higher wages with improved corporate earnings) as well as frivolous suits.

Beyond mandatory disclosures, companies also make voluntary disclosures when they consider that the benefits of disclosure exceed the related costs. According to Healy and Palepu in their research findings published in the Journal of Accounting, companies voluntarily disclose information for the following reasons: •Capital markets transactions hypothesis: A key element is the assumption that Management has

superior knowledge to investors of a company’s future prospects. Through increased voluntary disclosure of information prior to an equity offering, Management can reduce cost of equity capital.

• Corporate control contest hypothesis: Managers are accountable for earnings and stock performance.

Bad stock performance is a reason for Management change. Voluntary disclosure provides an opportunity to explain poor performance and could prevent undervaluation.

• Stock compensation hypothesis: Managers are rewarded by stockbased compensation plans. Voluntary disclosures correct any perceived undervaluation prior to the expiration of stock-option awards.

• Litigation cost hypothesis: Legal actions for inadequate disclosure might be an incentive to increase voluntary disclosures, like reporting bad news prior to regular reporting.

The capital market cannot function optimally without robust disclosure as an efficient disclosure regime reduces information asymmetry and enhances investor confidence which in turn improves the efficiency of capital allocation and reduces the cost of capital.

According to a study undertaken by the Financial Accounting Standards Board (US), the reduction in

the information asymmetry with increased disclosures and the resultant reduced cost of equity capital is trade off against disadvantages of voluntary disclosure. If the information asymmetry is small, voluntary disclosure is not likely to reduce cost of equity capital and mandatory disclosure is thus sufficient.

While disclosure is seen as a good thing in the eyes of investors and other stakeholders, too much disclosure can lead to information overload and can also become a burden to market participants.

Furthermore, the disclosures of one company may not be appropriate for another company. Given the variability in company characteristics and circumstances, one size disclosure does not fit all, and the degree of comparability with other companies’ disclosure is not the most appropriate standard by which to judge the quality of disclosure.

One way of preventing information overload and assuring that just the right amount of information is made available is to adopt a disclosure management process that allows for the roll-over of past reporting templates. Companies can this way, update relevant information periodically, using a defined template with the adequate balance of mandatory

and voluntary disclosures.

Finally, the materiality, timeliness as well as accuracy of information disclosed rather than the volume or frequency of disclosures will create more value to the investing public and other stakeholders. Thus regulatory requirement for mandatory disclosure by companies should be balanced with emphasis on material, accurate and timely information in such form as can be easily understood and interpreted by the users of such information.

Regulators should however place more emphasis on the disclosure of non-financial information including ESG (environmental, social and governance)as these provide a more robust assessment of the health of the entity.

On Thursday, August 30th, 2018, we will be hosting a Board Effectiveness Masterclass, themed “Strategic Leadership - The Role of the Board” at the Radisson Blu Anchorage Hotel, Victoria Island, Lagos, where the topic “Board Size & Composition – Striking a Balance” will be discussed extensively. Please contact Nike at 08037699347 orntaiwo@dcsl.com. ng for further details.

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Editorial PUBLISHER/CEO

Frank Aigbogun EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya

EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

Monday 20 August 2018

Developing Nigeria’s domestic gas market

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he Nigerian National Petroleum Corporation (NNPC) has committed to supply 5 billion standard cubic feet (SCf ) of gas daily to Nigeria’s domestic gas market to drive willing buyer, willing seller pricing model. This plan, however, might hit a cul-desac. This is because investors have stayed away from Nigeria’s domestic gas market due to opacity of fiscal terms, lack of functional gas infrastructure and high entry barriers, which have, in turn, kept the market underdeveloped and has negatively impacted gas utilisation.

To ensure there is willing buyer, willing seller model in the domestic gas market, the NNPC decided to supply 5 billion standard cubic feet of gas daily to the market. This will be sufficient to create a viable and sustainable domestic gas market.

For incentives, the NNPC has stipulated variable gas prices for different sectors of the economy to drive invest-

ment inflows and competitiveness. There is one gas price for power, one for industries and another for industries that use gas as feedstock to manufacture fertilizers and petrochemicals. In this sense a Nigerian fertilizer manufacturer should be able to compete with other fertilizers makers around the world.

However, the economics of natural gas development and utilisation are driven by the high cost of gas production and transport facilities, and the need for economies of scale.

Therefore, to drive an increase in private-sector led activities, government has to execute at the least, the gas infrastructure blueprint as contained in the Gas Master Plan.

The Nigerian Gas Master Plan (GMP) specified a revised transitional pricing structure for gas to power projects in 2010, and ultimately a price of $2.50 per million British thermal unit (MMBTU) was set in 2014 for contracts that are supplied under the domestic gas supply obligation (DGSO) scheme.

The price by 2010 was $1.99 per MMBTU. The GMP also imposed penalties for noncompliance with the DGSO which includes: payment for volumes not supplied, or a penalty price of $3.50/Mscf, whichever is higher; and disqualification from supply of gas to any export projects.

Gas is a big source of economic diversification. It can transform agro based industries and boost food production through the development and manufacturing of fertilizers. But to attract the needed investment, Nigeria needs fiscal terms to motivate investors. Some companies have supplied gas but have not been paid. Africa’s top gas producer also needs fiscal terms that encourage small and medium term projects.

To achieve the target of developing Nigeria’s domestic gas market, huge upfront infrastructure spending is needed.

The oil and gas sector needs $20 billion to $30 billion annually to maintain production.

As long as there are no pipelines to move the gas from

where it is produced to where it is utilised, the domestic gas market will continue to suffer.

An initial phase of about 2,500km of gas pipeline infrastructure was planned to be completed by the end of 2018.

This target, when achieved, will boost investor’s confidence in natural gas market in the country.

Experts say some pipelines that need attention include: expansion of the Escravos-Lagos Pipeline System (ELPS) from 1.1 Bscf/day to 2.2 Bscf/day.

The Trans Nigeria Pipeline Project (TNPP) needs to be completed. TNPP aims to connect the gas pipeline systems in Nigeria to create an interconnected system that will provide flexibility and better management of gas supplies.

The framework of this system is an integration of the three gas pipeline systems : Obiafu-Obrikom-Oben (OB3) system with a flow capacity of 2.0 Bscf/day, the CalabarAjeokuta-Abuja system with flow capacity of 3.0 Bscf/day, and the Abuja-Kaduna-Kano system.

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo

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Monday 20 August 2018

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The mighty v migrants

Europe is coddling Arab strongmen to keep out refugees This is no way to foster long-term stability in the Arab world

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UCH of Syria lies in ruins, but Bashar al-Assad’s bureaucracy of repression hums along. Earlier this year a pro-opposition website published a list of Syrians wanted by the regime.

The database is both staggering in scope—1.5m people, or 7% of the pre-war population—and incomplete. Jamil Hassan, the head of the airforce intelligence service, is said to have told senior officers in July that he wants to arrest twice that number. On August 9th another regime official announced that 100,000 Syrians have died of “unknown causes” since 2017. Many were tortured to death in Mr Assad’s dungeons. Yet European politicians are debating whether to send refugees back to this bloody oubliette.

Seven years ago, when Arabs revolted against their autocratic rulers, European leaders engaged in a collective mea culpa. Decades of working with dictators had not created a stable, prosperous Arab world. From now on, democracy and human rights would be the cornerstones of the European Union’s Middle East policy, they vowed. But the high-mindedness was shortlived. Driven by a fear of migrants, European governments have once again embraced strongmen.

Without a political transition in Syria, the EU refuses to help the regime rebuild the battle-scorched country. But some member states, eager to see refugees go home, want to do it anyway. Russian diplomats have offered to help repatriate migrants in exchange for construction materials and money, and the proposal

Cornhusker dues

The death penalty is becoming more popular again in America Nebraska has just executed its first prisoner for 20 years

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HE first of the four drugs was administered on August 14th at 10.24am at the state penitentiary in Lincoln. Fifteen minutes later a curtain was lowered, and by 10.47 Carey Dean Moore, aged 60, who had been incarcerated for 38 years for murdering two taxi drivers, was pronounced dead. It was the first time in 21 years that Nebraska had executed a prisoner. And it was the first time ever that fentanyl, a powerful synthetic opioid, had been used for an execution.

After declining for years, public support for the death penalty is on

is getting some attention in European capitals. “It’s going to be very difficult to keep the consensus on this issue,” admits a diplomat in Brussels.

Politicians from Germany and Denmark have visited regimeheld Syria to assess if it is “safe”; the anti-immigrant Alternative for Germany party says it is.

In Libya, where EU members helped overthrow Muammar Qaddafi in 2011, they now work with warlords to round up migrants. Italy has paid off local militias, which hold migrants in abysmal conditions.

Torture and rape are common.

France’s president, Emmanuel Macron, wants Libya’s feuding factions to hold elections in December. He claims it will stabilise the country. It is more likely to shatter a fragile UNbacked transition and boost Khalifa Haftar, the strongman who rules the east. The EU’s own election observers say the vote will be too unsafe to monitor. But Mr Macron thinks it will help keep African migrants off French soil.

The EU set a precedent in 2016 when it asked Turkey’s authoritarian president, Recep Tayyip Erdogan, to limit the number of migrants crossing the Mediterranean. He got €6bn in aid and visa-free travel to the EU for some of his citizens. “Arab states saw there was a kind of hysteria, and they knew they could play that card too,” says an official at the European External Action Service, the EU’s diplomatic corps.

In June the Speaker of Egypt’s parliament, Ali Abdel Aal, led a delegation to Brussels. His government holds thousands of political prisoners and is the world’s number-three jailer of journalists. Questioned about this, Mr Abdel Aal offered a laughable defence. Locking up bloggers and activists, he argued, would mean fewer negative stories about Egypt, and thus more tourists. Pressed further, he turned to a familiar argument. Egypt is a country of 97m people just 220 miles from the EU. The threat was

obvious: if you thought the Syrian refugee crisis was bad, imagine what would happen if Egypt collapsed.

Such scaremongering is effective. The EU has offered only tepid criticism of Egypt’s army-backed government.

Until this summer, none of it was aired publicly. Britain and France have welcomed the president, Abdel-Fattah al-Sisi, for official visits. Even Italy is pursuing closer ties—despite the death in 2016 of an Italian graduate student in Cairo, who was probably killed by the police. “The EU is acting like the junior partner,” complains an Egyptian activist. “Even Trump is tougher on Egypt.”

The conditions that sent millions of Arabs across the Mediterranean still exist. Egypt’s population is young, poor and restless. Militias in Libya today can be just as brutal as Mr Qaddafi’s regime was. And Mr Assad, needless to say, is not a stabilising force. The EU might succeed in sending some refugees home. More will come.

the rise; 54% of those surveyed are in favour, compared with 49% two years ago, according to a recent poll by the Pew Research Centre. Death sentences are also a little more frequent than in the recent past, says Robert Dunham of the Death Penalty Information Centre. That may be related to the political rhetoric in Washington. President Donald Trump has proposed executing drug dealers to curb the opioid epidemic.

Nebraska is a deeply conservative state and its Republican governor, Pete Ricketts, is a fervent supporter of capital punishment (not least, some say, because he was so shocked by the gruesome murder of one of his cousins). Yet the state has been unsure about the sentence for years. In 2015 a bipartisan group of lawmakers overrode the governor’s veto of their vote to abolish the death penalty. The next year Mr Ricketts used his family fortune to bankroll a referendum on its reintroduction; voters endorsed the measure overwhelmingly. But in the weeks before Mr Moore’s execution, Nebraska’s Catholic bishops again appealed to the governor, a practising Catholic.

They asked him to consider the doctrinal change announced by Pope Francis in early August, whereby the Catholic church now holds Continues on page 15

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Too big to jail

Efforts to tackle official abuses in Kenya are failing

The government has the upper hand over those who might hold it to account

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INDING evidence of police brutality in Kenya should not be too tricky.

Amateur footage of officers shooting suspected crooks in the back of the head is shared on social media.

Vigilante police groups post photographs of suspects they have killed, or intend to kill, on Facebook. “Let them have their time in hell,” one officer wrote beneath an image of a bloody corpse.

Yet since starting work six years ago, Kenya’s police watchdog has managed to secure convictions against just three officers, despite receiving nearly 10,000 complaints of abuse. The Independent Policing Oversight Authority (IPOA) was among a raft of state institutions established under Kenya’s constitution of 2010. The new dispensation was meant to make the country fairer and less corrupt after 1,400 people were killed, hundreds by the police, in a disputed election three years earlier.

Little has changed. Corruption scandals abound and inequality persists, even as Kenya grows richer. When the country returned to the polls last year, 92 people died, according to a governmentappointed commission. Most were killed by the police, who were also accused of mass rape and torture.

IPOA was a bold creation.

When it was formed, there was only one police watchdog in sub-Saharan Africa. Yet its paltry conviction rate has disappointed many. Activists blame internal divisions and poor investigative skills for some of its shortcomings.

After police raided a house during last year’s election violence and allegedly beat to death a six-month-old infant, IPOA failed to identify the culprits. Instead it recommended a judicial inquest, which often takes years to complete.

See something, say nothing IPOA has a poor record on witness protection, too. In 2015 three officers visited the home of Josephat Mwendwa, a

motorcyclist who complained to the authority that he had been shot and wounded by the police. “We will kill you and your body will never be found,” the officers allegedly told him. Six months later the mutilated corpses of Mwendwa, his lawyer and the taxi driver who had driven them to court were found in sacks by a river. They had last been seen in a police cell. Such incidents inevitably deter complaints.

IPOA’s relationship with the police itself is troublingly fraternal. In June an inquest ruled that Alexander Monson, a young Briton, had been beaten to death by the policemen who detained him on suspicion of possessing cannabis in 2012. The Monson case was IPOA’s first investigation, and the body hailed the ruling as a triumph. Yet it had previously backed tendentious police claims that the Briton died of a drug overdose, even theorising in court that bruises to his groin were caused by vigorous oral sex.

Such convolutions point to deep-seated problems within many of Kenya’s new watchdogs. The state bodies they oversee are too powerful and have little incentive to cooperate. Policemen who kill or injure suspects are meant to report themselves to IPOA, but because there is no punishment if they do not, few bother. Evidence is often destroyed, while officers refuse

to testify against those being investigated, an IPOA official complains.

Self-preservation hampers progress too. Kenya’s president, Uhuru Kenyatta, largely selected the panel that chose IPOA’s board. The body’s budget, like those of other oversight bodies, is set by parliament, which the ruling party dominates. Going after the powerful and politically connected is risky.

So IPOA has restricted itself mainly to investigating lowranking policemen, just as Kenya’s anti-corruption commission has generally gone after fairly small fry. It has a higher conviction rate than IPOA, but of the 26 officials convicted in the year to June 2017, nearly half had stolen less than $100.

The commission’s former chairman reckons that $6bn is stolen from the government’s budget every year. The recent detention of prominent officials has excited Kenyans. But no politician of note has been charged and cases are often dropped when the media’s attention wanes.

Politicians have little interest in ending a system from which they benefit. So it is hardly surprising that Kenya’s constitution is not robust enough to stem corruption.

“These laws and institutions were not created to actually address the underlying problems,” says Patrick Gathara, a commentator. “They’re there

for show.”

There has been one exception. Kenya’s judiciary was once known for its pliancy and crookedness. But in recent years it has shown its mettle.

Last year the Supreme Court overturned Mr Kenyatta’s election and ordered a rerun.

The ruling emboldened other judges, who have struck down bad laws.

A purge of corrupt judges 15 years ago, less presidential involvement in appointments to senior courts and doggedly independent chief justices are some of the reasons for this improvement. But, having made enemies in government, the courts face pressure too. Their budgets have been slashed and judges have been intimidated.

Kenya’s government is gaining the upper hand over those who might hold it to account.

But there has been little pushback from the public. The killing of protesters—hardly covered by Kenya’s once independent media—is welcomed by many in the middle class, who fear instability will undermine the economy. The murder of criminal suspects is similarly applauded. Judges who challenge the government are dismissed as partisan and frequently vilified. “Our rulers are getting away with what they want because we are letting them,” says a lawyer.

“We are getting the government we deserve.”

The death penalty is becoming more...

Continued from page 14

that capital punishment is always wrong.

The bishops’ appeals fell on deaf ears. Mr Ricketts considers the death penalty to be an important tool for public safety and the only appropriate punishment for the most heinous crimes. Yet there is scant evidence to suggest that deterrence works. The murder rate in New York, New Mexico and Connecticut continued to go down after those states abolished the death penalty. Southern states execute more people than any other region of the country, yet the murder rate in the South is the highest. The death penalty is also much more expensive than imprisonment for life, because of costly trials and lengthy appeals. Ernest Goss of Creighton University estimates that each death-penalty prosecution costs Nebraska’s taxpayers about $1.5m more than life without parole. Ten people remain on the state’s death row.

Since the death penalty returned to America in 1976, 162 death sentences have been reversed and 1,480 people have been executed, so roughly one in ten was found innocent. Mr Dunham believes that, of those who were executed, at least a dozen were innocent. He cites the case of Carlos DeLuna, who was executed for murder in Texas in 1989 and who is now generally believed to have been convicted in error.

Nonetheless, it may get technically harder for Nebraska to carry out executions. After giving Mr Moore Valium to sedate him and fentanyl to render him unconscious, the executioner administered cisatracurium besylate to paralyse his muscles and potassium chloride to stop his heart. If the first two drugs did not work well, says Eric Berger of the Nebraska College of Law, then Mr Moore would have been in excruciating pain, much like being burned alive from inside. According to eye witnesses, he turned red and purple before the curtain was lowered. If an autopsy reveals that he suffered extreme pain, Nebraska will find it even harder to buy drugs from pharmaceutical firms fearful of the public outcry over their use.

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Pilot error

China is conducting fewer local policy experiments under Xi Jinping Officials are increasingly scared to try new things

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OME December, it will be 40 years since the Communist Party endorsed Deng Xiaoping’s proposal for reform.

What followed was an economic transformation on a scale and at a pace that had never before been witnessed in human history. One of the secrets of Deng’s success was his encouragement of experimentation (see China section). He did not dismantle Mao’s disastrous “people’s communes” in one go. He did so over several years, allowing different places to try different methods. He turned a blind eye when local authorities allowed peasants to farm their own plots and sell their crops. When output soared, he made this official policy.

In 1980, to the horror of Maoists, he set up “special economic zones” along the coast to carry out freemarket trials. These too proved a success, and were eventually replicated nationwide.

Deng’s pragmatism helped rescue China from the dogmatic ditch into which Mao had forced it. His successors, though spooked

by the collapse of the Soviet Union, kept experimenting even in the political realm in the 1990s and early 2000s. People in some places were even given a bit more leeway to choose local leaders in grassroots elections.

The freedom to tinker has never been unlimited, and various autocratic habits have undermined some experiments. One is secrecy.

State media are often ordered to keep quiet about pilot projects in

case they go wrong. Results can often be published only in classified journals; leakers face years in jail.

If China’s experiments with a less draconian family-planning policy had been debated more openly after their launch in the 1980s, more heed might have been paid to their findings: that it was pointless (as well as cruel) to punish parents for having more than one child. Most wanted small families anyway.

Fear of trying Nonetheless, as in any country, let alone one as vast and varied as China, a suck-it-and-see approach yields better results than deciding everything centrally. Alas, under President Xi Jinping, experimentation of any kind has become harder.

In 2010—two years before Mr Xi took over—around 500 policyrelated pilot projects were being carried out at the provincial level, reckons Sebastian Heilmann of the University of Trier in Germany. By 2016 the number had dropped to about 70.

One reason is fear. Since he came to power, Mr Xi has been waging a fierce campaign against corruption—sometimes justified, but brutal. Bureaucrats have become less willing to suggest experiments because anyone adversely affected by them might retaliate by accusing the reformers of graft.

The other reason is to do with Mr Xi himself. The man who would be president-for-life has shown little interest in letting his subordinates do their own thing. When China-

watchers call him “chairman of everything”, they are only half-joking.

Rather than stifling experimentation, Mr Xi should unleash it. Several areas are crying out for fresh thinking. Many state-owned firms are woefully inefficient. Why not privatise some and see what happens? Chinese farmers lack clear title to their land. Perhaps some places could try giving them property rights? Rural migrants are treated as second-class citizens in big cities, deprived of public services. If their grievances are not dealt with, they could destabilise China. Why not ask some of these cities to try scrapping the pernicious household-registration system that is the root cause of the migrants’ woes?

The worry is not just that fresh experiments with local democracy are all but unthinkable under Mr Xi. It is that countless good ideas of all kinds will never be tried, will never prove their worth and will never spread. Wise leaders recognise that they do not have all the answers. Does Mr Xi?

Of pythons and ostriches

The number of money scandals in Trumpland is overwhelming Will voters care?

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S A candidate, Donald Trump promised to “drain the swamp” and make government work for ordinary Americans.

As a president, he presides over a staggeringly fetid administration. His former campaign chairman, Paul Manafort, even wears clothes made from swamp creatures. Among the luxury goods on display during his trial on 32 counts of financial fraud and money-laundering was a python coat for which he paid $18,500, nearly twice what he paid for an ostrich waistcoat, but a mere fraction of what he spent on clothes, rugs, and garden landscaping—all funded by lobbying for foreign governments.

The prosecution alleged that Mr Manafort lowballed his income by $16.5m so as to pay less tax, and fraudulently obtained $20m worth of bank loans (none of Mr Manafort’s 31 foreign bank accounts were apparently willing or able to supply the necessarily credit). The government’s lawyers also provided evidence that Mr Manafort dangled a job in the White House in front of a banker from whom he hoped to borrow. In response, Mr Manafort’s lawyers sought to remind jurors that he was a Republican, perhaps hoping that tribal loyalty would sway some of them to agree with the president that government prosecutors were engaged in a “total witch hunt”.

Mr Manafort’s case is the most outlandish, but it is no outlier in Trumpland. The president’s former fixer, Michael Cohen, is under

investigation for fraud. Neither man served in the White House, but plenty of other people followed around by money scandals have.

Two cabinet officials—Scott Pruitt and Tom Price—have been forced out amid ethics scandals (Mr Price spent over $1m of taxpayer money on private and military flights; Mr Pruitt’s alleged violations were too numerous to list). Other administration officials have similar concerns nipping at their heels. Democrats hope to convince voters that congressional Republicans bear some responsibility—and should pay the price in November—for the administration’s ethics deficit. That may prove harder than they would like.

Called to ordure If so, it will not be for a lack of targets. On August 13th, the Campaign Legal Centre (CLC), a non-partisan ethical watchdog, filed an extensive complaint against Wilbur Ross, the commerce secretary, urging the

Commerce Department’s inspector general to investigate him. The complaint alleges that Mr Ross helped make policy decisions that could have affected stock and other interests that he did not fully disclose that he owned. Mr Ross, via his personal lawyer, denied wrongdoing.

The Office of Government Ethics, an independent agency, has already accused Mr Ross of contravening his ethics agreement by taking short positions on holdings he promised to divest, and of “omissions and inaccurate statements”. John Thune, a Republican senator from South Dakota, joined Democrats in urging an investigation of Mr Ross’s finances. In July Mr Ross admitted to “inadvertent errors in completing the divestitures required by my ethics agreement”, and promised to sell his equities and put the proceeds into Treasury bonds. Mr Ross has previously faced allegations of concealing an investment in a Russian shipping firm with ties to Vladimir

Putin’s son-in-law. Forbes, which is to billionaires as Sports Illustrated is to swimsuits, has accused Mr Ross of inflating his wealth and reports that “many of those who worked directly with him claim that Ross wrongly siphoned or outright stole a few million here and a few million there”, an accusation Mr Ross also denies.

Five days before the CLC filed its complaint against Mr Ross, Chris Collins, a congressman from upstate New York and the first sitting member of Congress to back Mr Trump in 2016, was arrested.

Federal prosecutors allege that he tipped off his son that a biotech firm, on whose board he served and in which he was one of the largest shareholders, had a disappointing drug trial. His son, who was also charged, allegedly sold his shares and then tipped off four other people. Both Mr Collinses plead not guilty to the charges. Mr Collins has suspended his re-election campaign and is trying to remove his name from the ballot.

Many smaller scandals that would ordinarily draw more attention have become so much background noise. Earlier this year Brenda Fitzgerald resigned from running the Centres for Disease Control, America’s federal public-health agency, after she was discovered trading tobacco stocks.

Ben Carson, the secretary of housing and urban development, spent $31,000 of taxpayers’ money on a dining-room set for his office. He accepted responsibility, but also explained: “I left it to my wife, you

know, help choose something...I dismissed myself from this issue.”

Ryan Zinke, the interior secretary, has charged taxpayers for his private-jet travel, and failed to disclose that he owned shares in a gun firm in Montana and then met executives and lobbyists from that firm. A spokesman said that the value of shares was below the threshold required for disclosure, and that anyway the meeting was a social call. The desire to avoid other passengers while flying has been a recurring theme: last year Steve Mnuchin, the treasury secretary, took eight trips by military aircraft, costing taxpayers almost $1m.

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DAY

We will restore corporate governance at IEI—CEO

Pg. 27

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

‘We are very focused on bringing local investment into domestic opportunities’ Ijeoma Agboti, managing director of FBNQuest Funds Limited in this interview discussed the company’s history, past successes, the transition of the business model, recent activities and future prospects.

FBNQuest Funds Limited was formerly FBN Funds Limited; please tell us about this transition.

BNQuest Funds Limited is the Alternative Investments business of FBNQuest, predominantly focused on private equity and selectively on real estate and private credit.

As a part of the Merchant Banking and Asset Management group, the transition from FBN Funds Limited to FBNQuest Funds Limited was in line with our evolution under FBN Holdings.

FBNQuest’ for us was a brand development driven by the fact that over the years we have become bigger, stronger and more diversified as a subsidiary group.

We wanted a name that embodied our 125-year-old history as part of FBN Holdings, but which also speaks to where we believe we are headed with our clients.

We are taking our investors and our clients on a journey, we are growing perspectives, we are innovating, we are growing wealth, and we are diversifying. Currently, we are offering a lot more to our markets. We identified that people were becoming uncertain of where to go to meet their various objectives from an investment perspective within our business. So, we decided to create a brand name that holistically carries all of the businesses we do.

How would you say this name change has influenced the business?

The transition has impacted the business in many positive ways. Interestingly, within the FBNQuest Funds Limited business specifically, we are evolving a great deal. This is a 15-year-old business, which started as an SME investor back in 2003.Since then; we have significantly evolved our strategy from investing in SMEs and small enterprises to investing in larger businesses.

We have also grown our team and our assets under management. Now that we have become FBNQuest Funds Limited, we are diversifying into new products, adopting new business models, and have watched our portfolio mature and divest.

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So we think our growth, and the journey we are on, aligns quite well with our journey as FBNQuest overall.

You are one of the leading private equity and principal investing companies, having invested in more than 70 private companies directly in Nigeria. What do you see as your key achievements so far?

We have watched most of our businesses do very well and have had successful portfolio exits in our private equity model. Simply put, the goal is to invest in a business at an attractive valuation and actively work with the company’s management team to help them create value for the business. With this support, the company grows its revenues, earnings, and customer base, and this is what enhances the company’s valuation at the end of the day which we then return to our investors.

Furthermore, over the past few years, we have diversified our business model to go beyond just direct investment in companies. We have taken positions in other private equity funds. Doing this has allowed us to stick to what we do best but at the same time diversify into other African markets and investment strategies.

We have very selectively taken positions in a few other private equity fund managers to grow our portfolio, diversify and enhance value.

Can you shed more light on the investments of FBNQuest Funds Limited outside Nigeria?

Historically, we have invested predominantly in Nigeria. Our approach to diversifying outside Nigeria is to align with the growth of our portfolio companies, which we believe supports the objective of enhancing their revenue and customer base and growing into other markets. What we do, is work with our businesses to achieve that kind of growth.

Investing in other private equity funds have been a great opportunity for us to invest in several businesses in other African markets indirectly.

This has been especially significant in technology, having invested in two ICT funds with an approach that is Pan African. We have been

Ijeoma Agboti

able to see some interesting technologies out of Kenya, West Africa and Central Africa through these managers who are very much experts in the space, and we will continue to grow our African reach along these lines Yo u m e nt i o n e d t h e change in your business model - what was this change?

Our business model has evolved in two significant ways.

One is our transition from being an SME investor to being a midcap growth investor.

We started in 2003 when the CBN mandated that commercial banks set aside a certain percentage of their annual earnings for investment in small and medium enterprises. We then made a conscious decision as a firm to further develop our private equity practice and institutionalize it.

Secondly, we have historically been a proprietary private equity manager. This means that we have invested our own assets. Again, with regulatory tightening, but in line with our growth and the essence of our name (FBNQuest Funds Limited), we wanted to be able to offer our client base a full, diversified

suite of investment opportunities. We therefore sustained the business, and have evolved it in a manner that meets the needs of our clients.

Overall we consider private equity to be a diversifier and a return enhancer. For many investors, their investment portfolios are predominantly fixed income and public equity strategies. We want to help our clients and the broader market enhance and diversify their positions by offering them another side of the market. We are actively working on our maiden fund which we will offer to both new and existing clients.

What would you say are the key drivers for this new business model?

A key driver is the quest to offer the market something unique. With the new fund we are working on, we are very focused on bringing local investment into domestic opportunities which is why we have been engaging local investors closely. We want to be able to understand what their constraints are in accessing private equity, what types of product will enhance their interests, and importantly what is conducive to them from a regulatory perspective. We want to

address the need for a local approach to supporting local businesses. .

What types of companies does FBNQuest Funds Limited invest in?

We look at high growth businesses with high margin potential and strong customer traction. They also need to be focused on serving our local market, and exhibit the potential to expand to other markets in Africa.

At FBNQuest Funds Limited, we are like sectors that touch the consumer both directly and indirectly such as industrials, hospitality, services businesses, ICT, consumer businesses and financial institutions.

Overall, we prefer to be agnostic because we always want to be able to take a bit of a top-down approach. Strong management teams who are keen and aligned with our objectives for growth is another important aspect in the types of business we look at.

For a potential investor, could you take us through the FBNQuest Funds Limited investment process?

We start with a market view, looking at various industries and decide where there is alignment with the country’s growth. Once we have sourced the most interesting deals, we start our multi-step diligence process.

We look closely at their financials, their people, their history and their growth prospects. We ensure that the business objectives are appropriately ambitious, yet achievable. We perform extensive commercial, financial and regulatory due diligence.

Once we have made a decision about making an investment in a company, there is a closing process.

Another very important aspect of our diligence is deciding very early how we can exit the business, which is essential. Our decision making is driven by our investment committee before we proceed to closing.

What has been the learning in this position and what do you think is the future prospect for this business?

Our business has very strong prospects. FBNQuest Funds Limited comes from a very strong history, and we are associated with a fantastic brand.

The learning for me has been not just getting to know this business, but also the broader FBNQuest business and the individuals who have made it as strong as it is.

Understanding the different aspects of our overall business, the clients that we serve and meeting their needs is the greatest on-going learning.

This way, we all able to answer questions about who our clients are, what they need and how we can meet those needs. It includes assessing the broader private equity market, identifying what is specifically lacking for investors, how we can help, and the gaps we can close as FBNQuest Funds Limited.

I believe we have identified some very important things that now define our growth and evolution as we structure our maiden and future products.

We have a strong team who are responsible for bringing the business as far as it has come. Therefore, I credit them a great deal.

I think together, and with the support of our leadership, we are excited about the future ofour alternative investments business and where we can take our clients.

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BUSINESS DAY

COMPANIES & MARKETS Business Event

L-R: Ahmadu-Musa, deputy managing director, Total E&P Nigeria ; Olatunde Dodondawa ,chairman, Association of Energy Correspondents of Nigeria (NAEC) ; Roland Ewulere, group general manager, NAPIMS, and Charles Eberonwu, manager, external relations manager, Total E&P, during the 2018 NAEC conference, with the theme: PIGB: Emerging issues and concerns in Lagos.

Pic by Pius Okeosisi

L-R: Olakanmi Ogundele, chef operating officer, Sujimoto Construction; Chima Anyaso, managing director/ CEO, Ceecon Energy Oil and Gas Ltd; Sijibomi Ogundele, managing director/ CEO, Sujimoto Construction, and Bankole Omishore, special assistant on foreign affairs and international relations, at the # Sujimoto I day Internship Program held at Banana Island in Lagos.

L-R: Chiamaka Oguonu, senior Programme Coordinator, LEAP Africa; Adesina Fagbenro-Byron, CEO, Mothergold Consulting Nigeria; Femi Taiwo, executive director, LEAP Africa, and Margaret Fagboyo, regional Programme officer, United Kingdom Department for International Development (DFID) at LEAP Africa’s youth Stakeholders engagement in Lagos.

Pic by Olawale Amoo

L-R; Temi Ogunlesi, corporate brand manager, Interswitch; Niyi Adeleke, unit head, enforcement and compliance; National Lottery Regulatory Commission; Joy Okuma, assistant director and head, regulation and monitoring department, NLRC; Omolola Allinson, scientific officer, quality and assurance development, Consumer Protection Council and Adetayo Teluwo, group head, digital payments , Interswitch. during the Quickteller Delight Draw in Lagos . Pic by Pius Okeosisi

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Monday 20 August 2018

Monday 20 August 2018

BUSINESS

COMPANIES & MARKETS We will restore corporate governance at IEI—CEO BALA AUGIE

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he National Insurance Commission (NAICOM) appointed board of International Energy Insurance Plc (IEI) is working hard to restore corporate governance that led to the erosion of shareholders’ fund in the company, Peter Irene, chief executive officer of the company said.

Irene said “We first carried out a forensic investigation to ascertain the factors that led to the erosion of shareholders’ fund,” said Irene.

“We are clearing our claims and we have cleared it up to 31st December 2017. We are currently wooing investors and we will consider merger after settling the Daewo0 loans,” said Irene.

Peter Irene was appointed interim managing director and head of an interim board by National Insurance Commission

(NAICOM) after the regulator had dissolved the former board over series of infighting and irreconcilable differences.

His mandate was to rescue the oil and gas giant from collapse and he has succeeded in doing so as the company maintained an efficient underwriting capacity amid a tough and unpredictable macroeconomic environment.

Irene is upbeat the company’s liquidity position will improve after settling the Daewoo loan as he expects an healthy balance sheet.

In 2009, the company took an approximately N2 billion from KDB Daewoo Securities, and the loan had been converted to preference shares, making it easy to settle.

“We have identified and reported those that contributed to the erosion and the Economic and Financial Crimes Commission (EFCC) is working on it,” said Irene.

The oil and gas insurance

giant cut acquisition and maintenance costs to maintain an efficient under writing capacity.

Total underwriting expenses fell by 36.75 percent to N519.97 million in December 2016 from N822.16 million the previous year.

Total management expenses reduced by 14.95 percent to N1.82 billion in December 2016 from N2.14 billion as at December 2015.

IEI recorded an underwriting profit of N956.03 million in the period under review, a reduction in total underwriting expenses.

According to Peter Irene, the demand for insurance is low because of low penetration, saying that the country will benefit if a 5 percent penetration is achieved in the next five years. Inflationary pressures, reduced consumer purchasing power and apathy towards insurance, are responsible for slow premium growth.

The country’s insurance

industry contributes less than one percent to an economy of $440 billion. Its 0.32 percent penetration rate are lower than South Africa’s, (16.99 percent), Namibia,(6.69 percent); Lesotho; (4.76 percent); Mauritius,(4.18 percent); Zimbabwe;(4.09 percent), and Kenya, (2.83 percent).

“Third party insurance has been N5000, and in my opinion it should be around N50,000.

If we continue to charge such an abysmal amount, we will not grow premium,” said Irene.

IEI has total assets of N8.95 billion, which represents a 19.65 percent increase from the N7.48 billion recorded last year.

Irene said the industry is due for another round of recapitalization as he bemoaned the lack of corporation among operators.

“They should come together and speak with one voice. Brokers are ripping us,” said Irene.

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PwC launches third edition of Media Excellence Award Oluwatosin Dokunmu

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ntries are now open for the third edition of the PricewaterhouseCoopers (PwC) Media Excellence Awards, in what the company regard as capacity building through corporate social responsibility.

According to a statement released in Lagos by the professional services firm, entries for the award that celebrates excellence in business reporting in Nigeria will close on Thursday 13 September 2018 with the Award gala night slated to hold on Friday 5 October 2018.

The award which was first held in 2016 is open to professional journalists in a full time employment or freelancers, working in Nigeria, who have produced a story that falls within the categories covered by the award and that is available on a platform whose primary audience is Nigeria.

Uyi Akpata, country senior partner, PwC Nigeria said “part of our Corporate Responsibility strategy focuses on capacity building for the media and stakeholders in that industry. This has informed our various interventions in that sector over the years.

For five years now, we have been working to improve the quality and practice of journalism in Nigeria by providing free training for journalists through our annual Capability Enhancement Workshops.”

The launch of the 2018 edition of the Media Excellence Award, the third in the series, is a testament to the company’s commitment to the initiative. This year, the award is being packaged to be bigger and better and PwC is confident that with the level of success they recorded in the previous editions, this year’s edition will add even more value to participants.

“Our sustained effort in this regard is in recognition of the very important role of the media in society and in particular, the role that the media in Nigeria has and continues to play in informing and educating the public especially around taxation, the capital market, SMEs and the economy,” Akpata said.

The statement from the firm further indicates that entries will be received in four categories including tax, capital markets, SMEs and business/economy reporting and all submissions will be done online through the firm’s website.

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Monday 20 August 2018

Stocks

Currencies

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Commodities

Rates + Bonds

Economics

Funds

Week Ahead

BUSINESS DAY

Watchlist

Market rebounds from 13 month low as YTD loss approached 10 percent

The Purchasing Managers Index (PMI) of the manufacturing sector slowly expanded to 56.8 index points in the month of July with 13 out of 14 sub-sectors reporting growth.

Emeka Ucheaga & Abdullateef Eniola-Giwa

A composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change and below 50 points indicates that it is generally contracting.

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Dangote Cement leading to a year to date performance of 7.78 percent by the end of trading activities.

The market this year has not been short of economic headwinds from the west and closer home.

The two rate hikes by the Federal Reserve Bank of America earlier in the year triggered a great outflow of portfolio investments in emerging and frontier markets back to safe haven assets in United States.

More recently, the lira crisis precipitated a selloff in other emerging market currencies and stock market, negatively affecting the NSE market.

Political uncertainty in Nigeria has greatly contributed to the market selloff which has seen the market shed 10,513 points since reaching its 52 week high in January 19.

“The selloff in Nigerian equities this year was expected but the magnitude of the index drop and velocity of sell trades are nothing short of surprising. Typically, the stock market performs poorly in the years preceding an election, but this year the headwinds were not solely as a result of political uncertainty but also rising risk in several emerging markets like China and

Turkey which negatively affected market sentiment towards EM stocks. At the pace at which the market index is dropping, 2018 is now within touching distance of being the worst pre-election year ever”, said Faith Ogedengbe, research analyst, GDL Asset Management.

Analysts had hoped that the earnings season will help lift stock prices but the half year results for several companies were disappointing as earnings growth fell below market expectation.

The preceding year before the last election, the market dipped to as low as

29.8 percent from the price at the beginning of the year.

This dip was gradual and was not felt until the last quarter of the year.

In 2014, the market peaked in July and recorded positive year to date performance until the start of September when the market plunged till it hit an index point of 28,961 in December from a Julys’ high of 43,039.

The market recovered after it hit its lowest point in the beginning of December and by the end of that month, the market grew by 8,000 index points to end the year with a return of -16.13 percent.

Insurers qualify to operate in NAICOM’s Tier 1 category Chapel Hill

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urther to our report entitled “Risk-based capital; M&A and Capital Raising Become Inevitable “published on 7 August 2018, we reiterate that our calculation of the solvency margins in the report is not based on NAICOM’s approach.

As an excerpt from the report, we stressed that ‘We, however, caution that in determining the solvency

P.E

SHORT TAKES 56.8

economy

he stock market was up 1.87 percent on Friday after a spike in activity in the last trading hour on the floor of the bourse grew the index by 659 points. The Main board index was trending towards a consecutive daily decline up until 107,000 of Dangote Cement shares were traded at N224, 16 minutes before 2 o’clock.

Dangote Cement, which represents 29.5 percent of the Nigerian equities market eventually closed at N220 representing a 6.8 percent growth and trickled down into the market performance.

The market was down 0.11 percent at noon on Friday, pushing the index to levels last seen in July 2017. The year to date performance for the index at noon was -9.55 percent, taking total market losses this year to N611 billion.

This performance was however restored by the impact of the trades on

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margin for each of the insurers, we have used the shareholders’ funds rather than the admissible assets/ admissible liabilities approach.’

This means that the resulting solvency capital for each of the insurers may be different from the actual numbers and lead to the displacement of the insurers from the respective tiers we previously categorised them as indicated in our published tables

for composite, nonlife, and life insurers.

We have carried out further research to determine the tiers that insurers belong, based on risk-based capital.

This time, we have restricted our analysis to the 2017 results of the insurers that have made their financial statements public and disclosed the admissible assets/liabilities and

0.50 Overnight inter-bank rate rose by 0.50 percent to 4.25 percent on Thursday, from 3.75 percent after the Central Bank of Nigeria (CBN) auctioned the Nigerian Treasury Bills worth N215.5 billion on Wednesday August 1.

The CBN auctioned OMO on Thursday last week where it sold an additional N348.6 billion leaving liquidity level at negative N 75.9 billion as at close of market on Friday.

N5bn A rights issue and public offer for N5bn is FMDQs current plan to boost its operations and the shareholders who were at Annual General Meeting approved the plan alongside a new name.

The approved name change simply involves removing the OverThe-Counter (OTC) tag which may have constrained its reach as Nigeria’s foremost debt capital, currencies and derivatives securiContinues on page 30 ties exchange.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: samuel iduh )

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Email the BMI team patrick.atuanya@businessdayonline.com

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BUSINESS DAY

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Monday 20 August 2018

Markets Intelligence Economy

Still tracking the business cycle-United Capital

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n Q1 -18, banks earnings indicated that customer deposits improved modestly, loan growth remained modest, interest income came in weaker, and net interest margin contracted.

Also, profitability was marginally weaker as higher Cost of Funds (CoF) pressured margins. Clearly, this should filter into H2-18 (as ob-

served from the Q2-18 filings) amid sustained moderation in the yield environment, poor appetite for loan growth and higher rates on deposits placement.

Also, while credit quality is seemingly improving for the tier-1 banks (NPLs ex-FBNH eased to 5.1%), tier 2 players, continue to struggle with high NPLs (averaging 9.3% in Q1-18).

Insurers qualify to operate in NAICOM’s Tier 1 category Continued from page 29

the solvency capital. Equipped with these numbers, we note that only few insurers qualify to be categorised as Tier 1 with majority in Tier 2 and Tier 3. In the composite segment, we see only Leadway Insurance as a Tier 1 insurer while AIICO, Cornerstone (2016 results), LASACO, and Niger are Tier 2.

We see AXA Mansard, NSIA, and Great Nigeria as Tier 3 insurers. In the non-life segment, we see Zenith Insurance, Custodian and Allied, WAPIC, and NEM as

Tier 1 insurers with others being largely Tier 2 and Tier 3.

In the life insurance segment, we see FBN Insurance as Tier 1 while we see Custodian & Allied and ARM Life as Tier 2. On the business front, we expect significant flight to quality when insurance contracts are renewed in September 2018 and retain our view that the Tier 1 insurers in the respective licence segments will gain market share from the Tier 2 and Tier 3 insurers that will not scale up to Tier 1.

Additionally, Capital Adequac y Ratio (CAR) eased 0.9% across our coverage universe in Q1-18 as riskweighted assets expanded, probably reflecting the forward-looking impact of the I FRS 9 adoption in Jan-18.Going into H2-18, we expect a slight uptick in the yield environment (compared to H1-18) to support interest income on government securi-

ties, especially for the tier-1 banks. We maintain our position that appetite for risk assets will be muted by events in the socio-political space as observed in H118. From all indication, the transition to I FRS 9 will pressure risk-weighted assets and lower CAR in 2018.

Finally, we expect the lower yield environment to trigger local debt issuance by banks

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REAL SECTOR WATCH C002D5556

Monday 20 August 2018

BUSINESS DAY

When cheap funds elude small industries ODINAKA ANUDU

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emi Emeh is a palm oil miller in a community known as Umuogbuanu, one of the villages in Umuagwo, 26 kilometres from Imo State capital, Owerri.

Umuagwo is reputed for palm oil production in Nigeria. Seventy to 80 percent of its youths are engaged in this business. Some plant oil palm seeds, while others— mainly men— mill them to produce oil. The women in this community are an integral part of the marketing segment. They sell palm oil in open markets and even take it to other villages.

Emeh does not run his business like many smallholder farmers or smallscale millers.

His business—Remy Emeh Enterprises— is officially registered at the Corporate Affairs Commission and he has over ten workers.

He pays taxes to Imo State government and operates a business account in a commercial bank. Traders from Kano, Onitsha and Lagos— three of the major cities in Nigeria— often buy gallons of palm oil from him.

But he still uses a crude palm oil processing machine. The machine produces 150 gallons (of 25 litres) if there is no break-down. This may look considerably high for a crude milling machine, but Emeh and his workers apply a lot of human energy.

Besides, a mechanised milling machine can produce twice or three times that size.

No money for machinery Emeh has always wanted to acquire a fully-mechanised machine, but it costs over N5 million ($16,400), which he does not have. The crude machine he uses cost him N100, 000 ($330 at today’s

Remi Emeh in his mill

exchange rate) to acquire two years ago. He has gone to many commercial banks but none was willing to lend him a loan of that magnitude.

A second tier deposit money bank that was willing to ‘help’ Emeh could only give him one-thirds of that money. The interest rate on that loan was 29 per cent and the tenor was 12 months. Yet this rate was the cheapest he could get from all the commercial banks he interacted with in Nigeria.

“There is a bank that focuses on small businesses in the Niger Delta part of the country. Its officials were here in 2016 and they asked me questions about my business, which I answered.

I showed them my books and they expressed satisfaction at the way I do things here. They asked me to join a cooperative society, which I did. But they eventually disappeared,” Emeh says.

“I was happy initially that they could give me a single-digit loan, but this has not happened till today,” he laments.

Drugs and bank loan Emeh is not the only one in this situation. Ifeanyi Okeke runs a small-scale poultry farm in Umuleri, Anambra State. His farm contains 2,000 birds, which lay over 70 crates of eggs each week.

He needs an egg processor but no bank is willing to lend him N4 million to import it. One of the new generation banks asked him last year to pay a 28 per cent interest rate and return the money in one year, if he was serious with taking the loan.

“I ran away and never returned. You need to be dealing in illegal drugs before you can afford to pay back that loan in one year,” Okeke says.

No money, no supply The case of Gab Maduekwe is significant. Maduekwe runs a small-scale nylon production factory in Onitsha, Anambra State. Firms request his nylons regularly, but do not pay before production. They often place orders and then allow him to produce with his own resources. Payment usually comes two weeks after production. Maduekwe often gets orders but struggles to meet them because to produce more, he needs more raw materials, one more machine and must engage at least two more workers in addition to the three he has.

“One microfinance bank promised to lend me money, but asked me to pay six percent interest every month. How much were they ready to give me? Just N300, 000 ($983), which is nothing for me,” he says.

Nigeria’s 37million small businesses are starved of funds needed for expansion.

Those that are available in commercial banks attract high, double-digit interest rates and a short tenor of six to 12 months.

Small businesses in the manufacturing sector suffer more because they incur high costs on sourcing alternative energy sources due to incessant power outages across the country.

They need to power their machines on a 24-hour basis. The Manufacturers As-

sociation of Nigeria (MAN) says 40 per cent of the entire expenditure of factories in Nigeria goes to alternative energy sources.

Multinationals and conglomerates get loans from commercial banks at seven to nine per cent rates, whereas small and medium enterprises get same at over 20 per cent.

The average borrowing rate to small-scale manufacturers in 2017 was 22.8 percent, according to data from MAN. Ayodele Olojede, head of Emerging Businesses in Diamond Bank, one of the big banks in Nigeria, attributes this to the nature of risks borne by lenders while providing funds to small businesses.

“I will give money to a Nestlé or Cadbury (large enterprises) because the administrative cost of granting that loan is cheaper since I am dealing with one person and I have one big-ticket transaction, but with micro, small and medium businesses, the administrative cost is high,” Olojede says.

Between 2011 and 2014, the rejection rate for MSME loan applications by Nigerian commercial banks was higher than 50 per cent in nine banks (out of a total of 18 banks) and as high as 90 per cent in three banks, according to a KPMG report.

A 2015 report by The Economist said that only two per cent of Nigeria’s adult population received loans from a financial institution in 2014.

According to World Bank data, only 14 per cent of SMEs in Nigeria had access to a loan or overdraft account in 2015.

Nigeria’s monetary policy rate (MPR), which is a benchmark interest rate in the country, is 14 percent. This is the percentage at which the central bank lends to commercial banks.

Bismark Rewane, chief executive of Financial Derivatives Company, an economic research firm, believes that rate cut is paramount in Nigeria, insisting it is the only way to aid economic recovery for a country that just exited recession.

Nigeria highest in SSA Checks around sub-Saharan African shows that Nigeria, Africa’s largest economy, is lagging peers in interest rate cut.

The monetary policy

committee (MPC) of the South Africa’s Reserve Bank met in March this year and cut interest rates by 25 basis points.

The current repo rate (central bank lending rate to commercial banks) in South Africa is now 6.5 percent, and the prime lending rate (lending rate to customers) is 10 percent.

Similarly, Kenya Central Bank’s monetary policy committee cut the determining bank rate in late July to 9 per cent from 9.5 per cent.

Kenyans now borrow at an interest of 13 per cent (as against from 13.5 percent earlier) in line with the interest rate capping rule that limits lending rates to 4 percentage points above the CBR. Zambia is one of the emerging countries in SSA and its central bank cut benchmark lending rate by 50 basis points to 9.75 percent in February this year, citing lower consumer inflation and weaker economic growth, according to Reuters.

In October 2017, the central of Ethiopia raised its benchmark interest rate to 7 percent from 5 percent.

The Central Bank of Nigeria (CBN) has held the MPR at 14 percent for the 11th time, due chiefly to high inflation rate. Inflation rate in June 2018 was 11.23 percent.

Nigeria has some development finance institutions that offer single-digit funds.

The Bank of Industry (BoI) has done considerably well in this area, manufacturers say. But they add that the bank needs to be recapitalised to meet the surging funding needs of industries.

“No economy will grow when businesses get interest rate at a very high rate. What we need is a single-digit interest rate of five per cent as manufacturers. We believe that this is what can stimulate growth,” Frank Jacobs, president of MAN, says.

“It is important to fasttrack the recapitalisation of the Bank of Industry (BoI) to enable it to meet up with huge credit demands of the industrial sector,” Jacobs adds.

Ike Ibeabuchi, a smallscale chemical maker, says unless something is done to fund small-scale industries, Nigeria will continue to be a dumping ground for substandard cheap Chinese products.

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REAL SECTOR WATCH We need national strategy to create manufacturing renaissance — Dow

On June 20, 2018, Dow Chemical Company held a series of events to commemorate five years of its presence in West Africa. BusinessDay’s ODINAKA ANUDU had an interaction with Lanre Dairo, public & government affairs manager (West Africa), Dow Chemical Company, who spoke on the company’s footprint on the region.

Tell us about your operations in West Africa. ow has a long-standing history in West Africa.

Our corporate presence in the region started in the 1990’s, though political and business reality mandated operating solely through distributors for a period until 2012 when Dow officially re-entered West Africa with corporate offices in Ghana, followed

by Nigeria in 2015.

Dow serves West Africa from these two countries, with Dow Ghana, a sales licensed entity, currently the hub for operations and business development for Francophone West Africa.

The plan is to have an office in Ivory Coast that will be the hub for Francophone, while Nigeria remains our regional head office for West Africa.

Dow West Africa is positioning to support rapid growth in the region by ramping up local footprint, creating greater access to global expertise and providing growing product capacity through our Sadara joint venture – the largest chemical complex ever built in the world in a single phase, with 26 integrated world-scale manufacturing plants, over 3 million metric tons of capacity per year and a total investment of about $20 billion.

Dow uses its strengths as a technology and innovation leader – committed to sustainability - to build and advance existing partnerships and forge new mutually beneficial relationships in the region.

Dow businesses in the region are agro sciences, coating materials, polyurethanes, plastics, oil & gas, performance systems and industrial solutions, with shared selling for other businesses such as water, microbial control, construction chemicals and consumer products. The future growth potential of the market should have most (if not all) Dow businesses fully represented in

D

the region.

In specific terms, how much contribution has Dow made to the Nigerian and the West African manufacturing sectors within the last five years?

Dow combines the power of science and technology in helping manufacturers grow and be more sustainable.

Our innovations are found in a wide variety of industrial settings. We have helped in the manufacturing of goods and services with additive solutions that minimiSe friction and heat in mechanical processes; manage the oil and water interface; deliver active ingredients for maximum effectiveness; facilitate dissolvability, and enable product authentication.

Beyond our products and services, it is our view that by partnering with other private sector and multilateral institutions or governments, we can fulfil a significant role through involvement in the development of manufacturing-focused public policy.

Dow has been successful in completing and implementing advanced manufacturing plans for some of the world’s largest markets.

These include Argentina and Australia as well as one for Brazil (on-going). With momentum currently shifting towards sub-Saharan Africa, many governments on the continent have prioritised manufacturing and industrialisation as a means to kick-start their economies and increase the number of jobs and boost skills. With governments recognising the importance of manufacturing and looking to the private sector for increased collaboration, Dow is in a unique position to support them in the achievement of their development goals by transferring our own expertise, experience and solutions to our government partners and their projects.

How much has Dow invested in West Africa since 2013 when it entered the regional market?

We currently cover 23 coun-

tive innovation to meet the needs of customers and help solve global challenges.

DowDuPont brings together the complementary portfolios of Dow and DuPont, two innovative, science-based companies that hold leadership positions in the agriculture, materials science and specialty products industries. Working together, we intend to create three strong, independent companies that will be more competitive than either company could be on its own and well equipped for science-driven, profitable, long-term growth.

Lanre Dairo

tries in West Africa from Nigeria and Ghana and we are considering opening a third office in Ivory Coast with plans to build local warehouses, and establish semi processing plants.

Dow West Africa is positioned to support rapid growth in the region by ramping up local footprint, creating greater access to global expertise and providing additional product capacity from our Sadara joint venture – the largest chemical complex ever built in the world in a single phase, with 26 integrated world-scale manufacturing plants, over 3 million metric tons of capacity per year, and a total investment of about $20 billion.

Tell us about the number of jobs you have created so far.

Our operations in West Africa support the local manufacturing sector and have a key role in job creation and longterm prosperity. It employs millions of people, drives research and development, drives innovation, creates new products, while pushing the frontiers of science and technology. No other sector has the power to create more jobs. For every job created in the manufacturing sector, three to five jobs are created across the economy.

We need to develop and implement a national strat-

egy focused on creating an environment that will enable this manufacturing renaissance to take hold.

How are you dealing with the competition in subSaharan Africa, especially Nigeria?

At Dow, we are constantly evolving and innovating to meet our customers’ needs and stay ahead of the competition. At the core of this is our expertise. Behind every innovation at Dow is a team of world-class researchers able to move transformative ideas into real-world solutions. Our technical specialists, market knowledge, resources, and relationships deliver innovative solutions to the markets we serve. Dow’s commercial and technical expertise is strategically located across 16 countries in the Middle East, Africa and Turkey (MEA&T) region, allowing us to be close to our customers and ready to support their investment plans. Specifically, we have five technical experts located across the region, with three in Africa.

Additionally our recent global merger— ‘merger of equals’— creating DowDupont, brings together the complementary portfolios of Dow and DuPont to create three strong competitors that will lead their respective industries through produc-

Dow has been in the forefront of championing flexible packaging in West Africa. What is the level of acceptability of flexible or plastic packaging in the region?

Firstly, we should always remember that a package protects the product and serves as a vessel to take the product from the factory floor to the point of purchase. Better performing packages will positively affect the bottom line, because waste reduction leads to lower costs and better profitability. Good barrier properties lead to longer shelf life, so fewer products are wasted, and better seal integrity may lead to longer shelf life, much to the brand owner and consumer’s satisfaction.

Dow’s solutions are created with the entire product life cycle in mind, and our experts can help customers make the right decisions to optimise cost savings. We understand that volatile prices and rising costs of raw materials increase production costs and reduce margins for manufacturers, who are increasingly searching for cheaper substitutes.

This is where our flexible packaging solutions bring value. Their light weight ensures lower transportation overheads (as the vehicles use less fuel) and reduces overall supply chain costs.

Do you have confidence in the West African market, considering peculiar issues

such as poor infrastructure, multiplicity of taxes, challenging politics and policies, among others?

Absolutely. Challenges notwithstanding, the potential is undeniable. West Africa is crucial to our company’s future growth and business success. It is the last frontier.

There are few places in the world with such high potential growth rates, strong commitment for investment and untapped opportunities. While the region faces economic headwinds today – as a result in lower commodity prices, currency issues, droughts, political uncertainty, and security issues – West Africa remains a vital part of Africa, a growing continent in the world, just behind Asia. This is because some of the fundamentals are strong. Investment in infrastructure remains high.

It is the second largest destination for Foreign Direct Investment (FDI) inflows in the world, behind the Asia Pacific region. Banks are healthy: the 200 largest banks have combined assets worth $1.5 trillion - about 75 percent of the continent’s GDP. So not only is the continent abundant in natural resources, it also sits on significant untapped financial resources. The Investment Focus on Africa has become long term – also for Dow. Dow has what Africa needs: Science and technologies for infrastructure, construction materials, mining, oil and gas, water, clean energy, packaging and consumer goods. I don’t have to remind you that we are not alone in seeing the opportunities.

Many Fortune 500 companies are already very strong in West Africa or have their eye on the region as well.

What are your future plans for West Africa, particularly the Nigerian market?

Dow is positioning to support rapid growth in Nigeria and the larger region by ramping up local footprint, creating greater access to global expertise and providing additional product capacity starting from our Sadara JV.

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INTERVIEW Restoring moral leadership to Africa Aida Hadzic (MPP Class of 2016) sat down with Aigboje Aig-Imoukhuede, Chairman of Africa Initiative for Governance to discuss the challenges of governance in Africa.

The theme of the Challenges of Government Conference was ‘Bridging the Gap’. There are multiple gaps in many areas.

What is the gap between the private and the public sector and how is it relevant? think the principal gap lies in the fact that in the private sector there is greater common alignment, given the common perspective on profit. However, in the public sector, it is harder for us to agree on the common perspective.

In the private sector, we have a market-oriented approach to resolving challenges, whereas the public sector tends to be rather – let’s use the term – political. It is also more influenced by power when it comes to the way of approaching issues.

Who do you think should be most responsible in terms of overcoming this gap – who has more power?

Certainly, I have found that the hands are not equal. The government is the one who has more power in this relationship – the constitutional power rests with the government. To have any meaningful impact, the hand of partnership offered by the private sector must be accepted by the public sector.

A public official can do good and bad things – for example, prevent business from taking place by just signing a piece of paper. How do we protect the private sector from the government when the latter fails to carry out its responsibilities?

That is almost impossible. This was one of the motivations that led me to found the Africa Initiative for Governance. It comes from the frustrating reality that there is no safety net. If you have poor public policy the results are disastrous.

This brings me to my next question. What are the goals of the Africa Initiative for Governance and how can it have an impact for change?

The first thing that I wanted to create was constructive engagement, where the public sector accepts its faults and weaknesses, and welcomes partners who would like to make it perform better. The next thing was to ensure that, at least as far as Africa is concerned, this engagement is not an emotional one. We want a reasoned dialogue based on enlightened thinking and intellectual rigour, which is why we chose partners like the Blavatnik School of Government, where we can subject ideas to research and debate, but also learn from others across the world and how they have approached these issues. If

I

Aigboje Aig-Imoukhuede

you were to ask what are the indicators by which we would measure whether the Africa Initiative for Governance was successful, we have a few things we look at.

Firstly, how many competent and highly skilled men and women can we attract to work for the government? Secondly, as a result of the number of skilled men and women going into government, how has public policy improved in terms of impact on the people?

Thirdly, can we change the narrative about public policy? In Nigeria, has the narrative around the public sector changed from being seen as a disabler of progress to an enabler of progress?

Many post-conflict African states are now facing a transitional justice era. How do you ensure the observation of ideals such as integrity and moral values in this challenging era?

It is not that these values are absent in African states, it just happens that they are not very present in the lives and character of most of those in leadership positions at this point in time.

Some things happened to change concepts of morality in African society. One is military rule and conflict. As we know, dictatorial

systems of government can very easily abuse the position of privilege and power. So, many of those values are submerged within society and we must find a way

The key thing for us is to ensure that the rules of the game are followed and people are held accountable to play by the rules. For the referee, which is government, we must also ensure it is held accountable in its role

to elevate them, re-establish and institutionalise them. This is not going to happen organically. We have to make deliberate efforts to bring them out, which is why partnerships between civil society, NGOs, academic institutions like the Blavatnik School and platforms like the AIG working with people ingovernment are the key.

Since you mentioned the Blavatnik School of Government, we as MPP students have had this year a public service week, with the theme ‘How do I serve?’. Your profile represents an entrepreneur with a commitment to public service.

What is your message, how do you serve?

First of all, I have to devote a lot of my time. I am still an active entrepreneur so there is significant opportunity cost. The first thing you have to be is truly committed to bringing about change.

What drives that change? Those same values I want to see in a public servant – values of selfless service, integrity, and of course the courage to sometimes take on vested interests and face difficult situations. Everything that is required for a good leader in the

private sector is also required for a good leader in the public sector.

The difference is that the reward is not measured in financial terms but rather in terms of the impact that you are creating in the community. You also have to learn that as a leader in the public sector, you cannot seek the lifestyle of the private sector player; that should not be important to you. You have to desire to make people’s lives better. I do not think though that the definition of selfless service is one where your service is without ambition.

No, I believe you should be driven by the need to be appreciated for the contribution you make, it is just that your measure is not profit but lives changed.

All around the world, the business sector is viewed with suspicion because of its influence and lobbying. How do you as someone from that sector see an opportunity to protect the government from this approach?

You know, the concept of impartiality really has its roots in the rule of law. The key thing for us is to ensure that the rules of the game are followed and people are held accountable to play by the rules. For the referee, which is government, we must also ensure it is held accountable in its role. When those lines are blurred, people get away with a lot of things. However, I am sure most advanced countries would not be ready to swap their current challenges regarding corporate abuse with the challenges we face in African countries.

I grew up in Nigeria in the 1970s when so many things were available to us and we took them for granted. I look around today at the life of an ordinary Nigerian, and all those things I took for granted are no longer available.

Each time I look back at those people who led our public service then, I have even more respect and admiration for them. I look at my generation and think: are we going to be remembered as one that provided such poor leadership and destroyed the hope for succeeding generations? I don’t want to be remembered in that way at all. I have a strong and abiding desire to create a legacy where at worst, Nigeria and Africa return in relative terms to the way they used to be in my time.

At best, I wish to create a Nigeria and Africa where there is no difference from the life you live in advanced countries.

This interview is part of the Oxford Government Review : Bridging the Gap published by the Blavatnik School of Government.

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Interview

‘Technical skill is the new currency Joseph Ari is the director general of Industrial Training Fund (ITF). He highlights key efforts of the agency in addressing concerns of unemployment through providing technical skills programmes geared towards building capacity of Nigerian youths at a press conference held recently in Abuja. John Osadolor and Harrison Edeh were there for BusinessDay.

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ould you kindly talk us through the ITF-UNIDO skills gap survey you just conducted to address concerns of technical skills for y ‎ oung Nigerians?

If you go to our website: www. itf.ng.gov you will have access to the findings from that research in details. The result unveiled on the website is the study which we unveiled in April this year. This is the skills gap assessment and there is also the policy note. There are other results of the finding on some other policy issues, you will find them all there.

As a matter of fact, in addition to those findings that I mentioned in the address, you will also find our position on the labour market position information on career guidance and counselling. And a whole gamut of many others.

You also asked about the young men and women who are coming out of school. That is entirely a different matter, which the ITF took on a long time ago in 1973. Recall, that it was the ITF that brought about the Students Industrial Works Experience Scheme (SIWES) to which most of us here have participated in the programme one way or the other.

The ITF a long time ago identified the need to bridge the gap between the issue of theory and practice. Now, gentlemen of the press, our problem stems from the educational curriculum of our country which took after the British system, paying more premium attention to paper qualification rather than hands-on and that’s where we got it wrong.

So, the ITF saw this right from time and developed this package known as SIWES. The aim of that scheme was and is still to ensure that students in our Tertiary institutions have a feel of the work experience in industries, before going back to school, so that upon graduation they would have been well-prepared for the world of work experience.

Take for example, students

in the engineering field. In the four corners of the university, they may be talking about an implement or equipment which they have not set their eyes on. But that scheme enables them and provides the opportunity for them to go into the industries, get to know about these equipment which they talk about theoretically.

So the scheme serves dual purpose for the trainees. The students now get to know about these equipment and work on them. And secondly, it also aids the industrialists, in the sense that upon graduation, these students will be found employable for such industries, since they are already very knowledgeable about those equipment.

And so, SIWES has played a very key part and when ITF develop this scheme, it brought it to government.

Government initially took it to the federal ministry of education. But at that time it could not be well handled, so, it was brought back to the ITF and presently the ITF midwives the Scheme on behalf of the federal government. However, the challenges of the scheme ranges from so many things.

Number one, the scheme started in 1973 with only 11 universities. Today, the scheme is managing about 362 tertiary institutions involving universities, colleges of education and polytechnics as well as monotechnics, which is really challenging.

On the heels of this development, funding has been a major problem. Funding of allowances to the trainees and to the students; funding of allowances to supervisors among others. Going to check log books and all of that, placement of the students; then the growing number of institutions and getting accredited courses that are not only engineering based; there are many challenges.

The ITF in a bid to ensure that the scheme is seamlessly administered, on the assumption of the present management, held a stakeholders en-

gagement together with other regulatory agencies including the National Universities Commission (NUC), which regulates the universities.

We held a similar engagement with the National Board for Technical Education (NBTE), which regulates polytechnics and monotechnics

and the National Commission for Colleges of Education which regulates colleges of education. We all came together with the universities, polytechnics, because we have SIWES directors, coordinators in all these institutions. We had a stakeholder’s engagement at the Yar’Adua Center

including even the National Assembly to find a way.

The engagement cum conference afforded us the opportunity to come up with a communique that was accepted by all and now we have been going on well.

How have you been able to cope with the rising figure of

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of the world’ – ITF boss institutions demanding for the training services of the government?

With the little resources at our disposal from the Federal Government, we’ve been able to also pay close to N6 billion now on SIWES from 2006 till date. But you know the thing is that we are dealing with 262 institutions and they are on the rise with millions and millions of participants of the scheme.

So, the budgetary allocation has been quite inadequate and we’ve been taking care of the backlogs.

That’s why you find out that students who have graduated long ago are still owed allowances or the allowances are slightly delayed. However, we are hoping that as we bridge this gap and come up with very tenable plans this will be a thing of the past in time to come.

It is a very important scheme because if a student goes through the four corners of the university, an engineering student for example, and does not know about the equipment he is meant to work with in the industries he becomes a substandard material. So that is why we need to do this.

In the SIWES programme, we are taking after some other developed Nations of the world. Nations like Singapore, like Germany, this is what they do.

Under the German dual system for instance, they do apprenticeship like this. But in Germany, unlike our own the parents pay for the allowances of their wards and children. But here we have to do it in order to encourage then and because of our economic situation.

What is your level of collaboration with similar agencies of government such as the National Directorate of Employment and other related agencies?

Yes, we do have a strong collaboration with them. The Industrial Training Fund by the way is presently in the fore front of trying the world skill. It is a thing of sadness a very bad commentary indeed that up to this moment of our development, we have not heard the world skill competition, Nigeria cannot go into world skill competition.

So, the ITF has brought in other partners like National Business and Technical Education Board, (NABTEB), National Board for Technical Education, (NBTE), even State organizations charged with the responsibility of developing skills to come together, form into

a coalition and thereafter register for the World Skills. We are doing that already with meetings have been held, and I think before long we should be able to present Nigeria on the map of World Skills Competition.

Aside from that, the ITF under the government ease of doing business went also into collaboration with the Bank of Industry (BoI) and SMEDAN or what is known as the National Enterprise Development Programme (NEDEP).

The programme is controlled under the aegis of the Federal Ministry of Industry, Trade and Investment as the three bodies or agencies are under that Ministry.

The ITF supplies the skills, the hands- on for all those to be trained. But we also want to see the possibility where people are trained and they can also set up on their own, but when you set up on your own sometimes you may have a bank loan proposal; you may even have the money but that’s not all. The technical know-how to run your business matters, so we bring in the SMEDAN. We come together to ensure that apart from the hands- on, minds -on, hearts- on approach; they also have the wherewithal , the knowledge to run their

autotronics, computer network, ICT, facility technology of culinary.

business.

We have also been in collaboration with the NBTE. As a matter of fact the ITF sits on the board of the NBTE. The director of technical educational skills training is our representative on the board of the NBTE. We collaborate with them because they are also the regulatory body for polytechnics.

Could you kindly rate your interventionist efforts so far in building skills for the youths?

I will not want to sound immodest, I think the gentlemen of the press here gathered are in a better position to rate us.

Nevertheless, like I said before, we in the ITF believe that when you have an assignment, because it does not necessarily mean that all Nigerians need to come together before we can change our landscape. But if everyone will bring some value in the little corner he or she has then this country will grow to be bigger than what it is. And that is what you saw in my address. I said that from the ITF perspective we do not

work as a civil service entity, we work as a quasi-commercial entity. Where we work for dawn to the dusk. We are on the move; we work in such a way and manner that we want to add value. That’s why we are having this world press conference. The essence is to sensitize Nigerians that skills development is the direction to go, without which our country will go nowhere. Imagine paper qualification, many degrees without hands-on training, you will go nowhere; you can’t fix the infrastructure, you can’t fix the building collapses, you can’t fix all the necessary deficits without hands-on training.

And we are talking also from the perspective of having insight into collaboration with other nations of the world. We are also talking about the current trends in training; we are in collaboration with Institute of Technical Education and Services of Singapore. It is together that we set up the Modern Skills Training Center in Abuja. It came with the Singaporean experience in five trade areas of mechatronics,

Could you speak further on the Model Skill Training Centre here in Abuja, and the services it renders?

Upon assumption of this office, we saw that MSTC had a myriad of problems and challenges. The members of the media you could remember, when we came in we have so many challenges including our students going to Radio Berekete, going to the National Assembly to protest.

We have put all that behind us, brought in the needed equipment, sensitized the students, and got the necessary certificates. Now when you graduate from the MSTC you’ll be a holder of three certificates: the certificate of innovation, the diploma in innovation, the national diploma, and also the international diploma.

And not only that, we have been able to work with the Joint Admission and Matriculation Board (JAMB), and we kept these trainees now registered with JAMB. We are in sound footing; for the first time we have trained 400 personnel of the Nigerian Air Force. We graduated them just about two weeks ago, and another set of 200 are coming in.

Gone should be the days where ‘hands -on skills’ are seen as the 3Ds: Dirty, Dangerous and Dreaded. They should not be seen as such again and that is why we are having this interaction with you. We need to tell Nigerians, skills should not be seen as dirty, as dangerous and as dreaded.

Skills like we said is the currency of the 21st century.

It is on account of skills that most nations of the world are developed. You can’t fix our infrastructure if you don’t have hands-on.

I appeal to you gentlemen of the press, please, let Nigerians know that we need to have a refocus, that’s the only way to go. So, I am not in a position to rate us; the only thing I will say is that from our little corner, we’ve been able to contribute our quota as part of our service to our fatherland. But, you are the better judges.

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In association with

Meet Lanre Howells, developer of farm estates JOSEPHINE OKOJIE

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a ny e nt re p re neurs are driven by p a ss i o n t o solve societal problems. For Lanre Howells, managing director of Beyond Building Investment Limited and Varden Farms and Resort, his driving force is to pioneer the development of commercial farm estates in Nigeria.

In the wake of the agricultural revolution in the country, Lanre saw the need to provide farmers with mechanisation and a complete farming ecosystem.

Lanre has been in the business of developing lands for clients, experimenting with different commercial real estate products. His vision is to make Varden Farms awesome, transforming it into one of the best farm estates in the country.

The Mass Communication graduate was inspired by his father who is a surveyor and the desire to be different in the industry. This prompted him to establish Varden Farms in 2014.

“In the advent of looking forward to being different was what gave birth to Varden Farms. Five years ago, we felt the need to explore and do news things, but we did not just want to start setting up farm lands. We were looking at the challenges of the people in that part of the real estate,” Lanre said.

The inspiration of the young entrepreneur also came during his days as an undergraduate. “While I was in school, I was already a business owner. I was in year one when I built my first shop. It was very challenging being a student and an entrepreneur,” he said.

“I also started Rent Masters in 2012 an online platform while an undergraduate. With the platform, people could see the different

Lanre Howells

type of houses they would like to rent rather than going through all processes— like seeing the agent and going to different places.

“As Rent Masters started to grow, we diverted into real estate to trade better to make sure that our platform represents everything we stand for. After graduation, we established the Young Building Investment,” he added.

Lanre started his business small and was able to raise his initial start-up capital from personal savings and from family and friends.

According to him, the business has grown tremendously since starting owing to integrity and excellent service it provides.

Lanre told Start-Up-Digest that Varden Farms has entered into partnerships with various organisations to provide farmers with tractors and train them on good agricultural practices that will help increase their yield per hectare.

“We have a partnership with a Chinese company that fabricates machineries here in Nigeria to provide farmers in Varden Farms

with tractors and other farm machineries,” he said.

“We are training farmers and youths on agriculture. Our main goal with empowerment programme for farmers’ cuts across the entire value chain of various subsectors in the agricultural sector,” Lanre explained.

The business now has two farm estates in Epe with over 50 farmers currently, he said.

He said that Varden Farms is focused on organic farming. “We are very focused on organic farming and we are making sure that

vegetables and livestock produced from our farms are organically grown,” Lanre said.

The communicator-turnedentrepreneur said lack of funds, government policies, and the country’s harsh economic situation remain some of the challenges confronting his business.

He stated that owing to the current economic situation, most Nigerians are not looking at investing in the real estate sector, noting that this has reduced the market for the industry.

“There are challenges of funds, policy, quality of personnel, market and harsh economic situation where people cannot even feed let alone invest in real estate,” he said.

He called on the government to provide more funds for agriculture and also bridge the country’s huge infrastructural gaps to drive investments in the sector.

Lanre said that the business plans to establish a processing factory inside the farm estate to help farmers in storing and preserving their crops as well as ensuring offtaking of crops produced within the estate.

He stated that the business also plans to partner with the Lagos state government to empower 5,000 youths in agriculture within the next one year.

“Part of what we are doing is that we are trying to partner with the state government and in the next one year, we want to empower 5,000 youths on this project in Nigeria to see how we can build programmes and not just empower people and live them alone, but make it sustainable,” he stated.

Answering questions on his advice to other entrepreneurs, Lanre said “Strengthen your shock absorber, ignore the distraction, and put your eyes on the goal if you are a young entrepreneur. Passion will see you through; it is only a matter of time.”

Boosting start-ups in Ogun with renewable energy RAZAQ AYINLA, Abeokuta

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steven Group, a renewable energy company based in Germany, has offered to provide green energy fund and power solutions to thousands of rural dwellers and operators of micro, small and medium-scale enterprises (MSMEs) in Ogun State.

The Germany-based renewable energy company will be commissioned in the first quarter of 2017 at Asese, along LagosIbadan expressway in Ogun State, and targets to provide renewable energy solutions to rural dwellers and operators of MSMEs in the state.

The renewable energy intervention scheme, which is expected to kick-start in Ogun State, with a plan to cover the whole country, will come as a follow-up to the World Bank’s Rural Access

and Mobility Project (RAMP), which provides the state with access to $60 million development fund that covers 500km of roads and households electrification

of rural areas covered in the 2017 fiscal estimates.

Speaking recently, Sunday Akpoyibo, managing director of the energy firm, said the firm came out

with energy solutions to address low level of power distribution in the country.

“We have energy intervention plan for Ogun State and Nigeria.

One of the intervention plans we have is for MSMEs. If you see our products, you will find out that we develop products for MSMEs and for the people in the rural areas, but for them to have access to energy, there must be access to finance,” Akpoyibo said.

Start-Up Digest Team ODINAKA ANUDU Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Angel James L-R: Felipe Pires, business consultant, Volkswagen Truck & Bus; Charles Awani, head, Volkswagen Trucks &Buses; Michail Economakis, executive vice chairman, AG Leventis Plc; Pius Okonkwo, assistant general manager of Oritsetimeyin Logistics Limited; Ayo Akinyemi, transport manager, Oritsetimeyin; Giannonsaa Nikolaos, general manager, Leventis Motors; Sunday Asade, chief operating officer, AG Leventis, and Marcos Forgini, vice president, international markets, Volkswagen, at the visit of Volkswagen to Leventis in Lagos on August 9

Joel Samson Graphics

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Start-Up Digest ‘Diamond Bank has lent N20bn to over 5,000 MSMEs this year’ Ayodele Olojede is the head of Emerging Businesses at Diamond Bank. In this interview with Start-Up Digest Editor, ODINAKA ANUDU, she enumerates some of the landmark achievements of Diamond Bank in the micro, small and medium business (MSME) space.

How does Diamond Bank define micro, small and medium businesses? here is no universally accepted definition of MSMEs. It all depends on the context or a country because different variables are considered. But a lot of banks use sales to measure sizes because it is the most convenient. In Diamond Bank, we see MSMEs as businesses that have sales of below N600 million. That is further categorised into different sizes. You have the micro, small and medium. For us, for the first category are businesses that have sales of N60m and below.

The next category is N180 million and below. Between N180 million and N600 million are medium or established businesses. We use sales because it is the most visible.

In Nigeria, you may have a business that is doing sales of N1 billion but has few number of employees. I will not categorise that kind of business as an MSME. So the most visible and most convenient is the sales.

challenges. We lent up to N1 billion to 560 MSMEs in eight to 10 months’ period. Our officers are trained to be able to help you put together your financial statement and your books, while taking care of issues relating to collaterals and succession plans. Outside of that, this year alone we have been able to lend N20 billion to over 5,000 MSMEs.

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What is Diamond Bank’s approach to the MSMEs market?

Available statistics show that there are about 37 million MSMEs in Nigeria, and 99 percent of them are at the micro level. In fact, over 96 per cent these do not have their businesses registered. If you do not have your business registered, it automatically creates an access gap.

In Diamond Bank, we work in partnership with lawyers to offer heavily discounted services to our customers. I am not sure any other bank is doing that.

When you want to open an account with any bank, there is a corporate search and every bank charges you for that. But if we helped you to register your business, we will wave that for you. We also help you to get tax identification number. No other bank is doing this. Another challenge that we have been able to identify is that a lot of businesses do not have business plans. This

Ayodele Olojede

accounts for a very high failure rate for MSMEs and is even why a lot of investors are unwilling to provide the support MSMEs need.

It is also why banks are reluctant to lend to MSMEs. We have had 64 seminars where we trained 16,000 MSMEs on various technical issues that would help them to be able to put in place structures and governance. We had a market forum with some of our customers at Alaba and Lagos Island. They gave us a feedback that they were struggling with how to manage their taxes. A lot of them said they were losing their identities due to tax issues.

So, you find a lot of them changing business names. They cried out to us and we got a very renowned speaker from PwC and he drove the message home. He told them that what they were avoiding was what would put them into trouble. He asked them to keep their books and

all their receipts because it would make them get a lot of deductibles.

It minimised their fear and everyone left there feeling confident that their troubles with the tax man were over. Those are the kind of programmes we put together to help them build the confidence they need. Also, we have clinics and we have had 6,000 of our customers attend these clinics. They were one on one with consultants who looked through their books and identified areas of challenges. They left there equipped. We also have an access-to-market initiative. We understand that a lot of MSMEs have visibility issues and are not able to sell beyond their immediate environment. We facilitate access to market. We have a partnership with a vendor that develops a website for as low as N15, 000.

Our bespoke lending programme takes care of all of the

How easy is it to access your loans?

Getting a loan is as easy as how ready you are. I spoke about being able to keep your books.

These 560 SMEs I talked about would not have been able to access the loans. But what we did was to make it easy for them to be able to access these loans. We are saying, ‘Keep your books’. I cannot be engaging with you and I ask you to show me what you sell and you tell me everything is in your head.

So, you will not be able to access finance. I want to be able to understand that the loan makes sense. I want to be able to understand that you know the difference between sales and profit. Many MSMEs have one pocket for their business, one pocket to take care of their homes and family. But you need to ensure they are able to pay back the money they took. It is different from when you are lending to a Cadbury or Nestlé and you are talking with the chief financial officer. I will not be asking him all of those questions because he is a staff member that earns a salary. But MSMEs run their businesses and everything comes from the same cash-flow We want to ensure that they understand the economics of finance.

So far, we are very comfortable and have not recorded any loss.

Are these reasons why banks avoid lending to MSMEs? I will give money to a Nestlé or Cadbury because the administrative cost of granting that loan is cheaper since I am dealing with one person and I have one big-ticket transaction, but with MSMEs, the administrative cost is high. For me to give

out how much I gave to a Nestlé, I will probably have to give it to 1,000 MSMEs. So you now begin to think of the resources I have to put in.

This is coupled with the fact that they don’t have collaterals, structures and they run one-man business and have succession plans issues. So, I have to price for that.

We appreciate that cost of funding to MSMEs is not so good. What we are doing is to partner with organisations that have specialties. What we are looking for are initiatives or partnerships that will bring down the risks. That is the aspect we are continually seeking ways to resolve.

Lending rate is 13 percent in Kenya; 6.5 percent in South Africa and 7 percent in Ethiopia. Ours is as high as 30 percent here. Is it about the Monetary Policy Rate (MPR)?

The state of development of any economy determines its interest rate. If I don’t use MPR as a yardstick, someone gives me funds and I pay at five percent. Where my problem is, is in the cost of operation. You are sitting down here, we are powering with the generator.

I have to cover for that cost. Our overhead is where the challenges are. The countries you have mentioned do not have the same infrastructure challenge that we have.

So where you have a 24-hour power supply, cost of operation comes down. It is market-driven. Those are the factors that will impact on cost of funds and operations.

Access to finance challenge is the interest rate and the tenor.

Development Bank of Nigeria has been able to solve the issue of tenor to some extent, but I still have to lend to my customers at doubledigit due to these issues.

What are the things we need to fix to ensure that MSMEs can get loans at single- digit rates?

I have already pointed out that cost of operation makes it very difficult.

What we are doing as banks is that we are going into partnerships with organisations that focus on growth in those sectors.

Kwara commits N2.25bn to SMEs’ capacity development SIKIRAT SHEHU, Ilorin

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ulius Babatunde Agboola, Kwara State commissioner for commerce and cooperatives, has said that the state government has injected over N2.25 billion in strengthening the capacity of SMEs since inception and is deeply committed to the direction with yearly budget of N500 million.

Speaking at the 3rd annual meeting of Kwara State Coalition of Business and Professional Association (KWACOBPA), Agboola, who represented Governor Abdulfattah Ahmed, said his ministry is in good relationship with federal agencies such as Bank of Industry, Bank of Agriculture, Nigerian Ex-

port Promotion Council, Federal Inland Revenue Services and oth-

ers geared towards ease of doing business.

Babatunde Paul Ruwase, president, Lagos Chamber of Commerce and Industry (l), and Geoffrey Onyeama, minister of Foreign Affairs, during LCCI’s courtesy visit to the minister in Abuja recently.

He said this is confirmed by the recent rating of Kwara State as 2nd best state in Nigeria in the area of micro ,small and medium enterprises(MSMEs) development.

Agboola challenged the association and private sector drivers to come up with suggestions to move and drive the state economy to its desired end.

On his part, H.O Adediji, chairman of KWACOBPA , suggested that Federal government can boost economy by pursuing efficient business policies that enhance development.

Adediji said poor policy implementations are hampering growth in the economy.

“Inefficient policy implementation is what is hindering economic

development in our country. The economy is harsh, most of the things we are seeing are not what we bargained for.

“Banks are harsh on people, no cash-flow, and it takes the grace of God for every business man to survive in the country,” he said.

“What we are clamouring for is that economy lies on generality of Nigeria and everyone should be part of it in order to move forward economically and socially,” he said.

“People in the ministry, for instance, should not be in charge of implementing business policy.

Government will come up with good policies but the truth of the matter is implementing those policies,” he stated.

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Live @ The Exchanges

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tanbic IBTC Holdings Plc has released its first-half (H1) results for the period ended June 30, 2018. The results at the Nigerian Stock Exchange (NSE) show the group’s gross earnings increased by 17.5 percent to N114.2 billion against N97.19billion recorded in the corresponding H1 period of 2017. Profit Before Tax (PBT) increased by 73.9percent for the period ended June 30, 2018 to N50.73billion against N29.16billion in H1’17.

The Board also declared an Interim Dividend of N1 per ordinary share of 50 kobo each, which amounts to N10.113billion, subject to deduction of appropriate withholding tax and regulatory approval. The share price remained stable at N50 after close of trading on Thursday at the Lagos Bourse.

The company’s profit after tax (PAT) increased by 78.7percent to N43.08billion against N24.11billion in H1’17.

Earnings Per Share (EPS) in the first half of 2018 increased by 80.9percent to 416kobo against 230kobo in the corresponding first half of 2017. Total assets in June 2018 stood at N1.37 trillion as against N1.39 trillion in December 2017.

The interim dividend will be paid to shareholders of the financial institution whose names appear in the Register of Members as at the close of business on Tuesday 28 August 2018. The Register of shareholders will be closed from Wednesday August 29, 2018 to Tuesday September 4, 2018. The Dividend Payment date in respect of this Interim Dividend shall be on Wednesday September 26, 2018.

“The operating environment in the first half of the year was characterized by rising oil prices, stable oil production level leading to accretion to the country’s external reserves, improved foreign exchange liquidity

Stanbic IBTC declares N10.1bn interim dividend as first-half profit rises by 73.9% Stories by Iheanyi Nwachukwu with attendant interventions from the Central Bank of Nigeria and moderating inflation amid declining yields on money market securities,” said Yinka Sanni, Chief Executive Officer, Stanbic IBTC Holdings Plc. He further stated, “Stanbic IBTC continued to deliver stellar performance over the course of the first half of the year. Profit before tax grew to N50.73 billion representing a 74 percent growth from prior year on the back of non-interest revenue growth and recoveries from delinquent assets previously impaired.

Our credit impairment line has a write back of N5.5 billion as at June 2018 as we continue to intensify recovery efforts on previously classified loans.

“Interest income increased by 6percent to N59.9billion, predominantly driven by loan growth. This was offset by increase in interest expense of 26 percent as a result of interest paid on maturing term deposits and other borrowings. We are making good progress on our drive to reduce cost of funds which has reduced by more than 100 basis points, manifesting in a 15 percent reduction in interest cost between Q1 2018 and Q2 2018,” Sanni said.

He noted that, “We have seen significant growth in transaction volumes across our digital platforms. The volume of transactions via our mobile banking, SME internet banking, USSD platforms and ATMs have increased by over 100 percent each year-on-year as we continued to drive non-

MTS Markets enhances BondsPro platform with list trading functionality

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TS Markets International, part of London Stock Exchange Group (LSEG), has enhanced its MTS BondsPro corporate bond trading platform with list trading functionality, enabling participants to benefit from the efficiencies of executing many trades simultaneously. The tool will streamline traders’ ability to execute trades against more than $17 billion of real-time resting corporate bond liquidity on MTS BondsPro. After uploading a list of orders to MTS BondsPro, participants can connect with multiple liquidity sources in the platform’s

anonymous all-to-all order book and execute on the best price for each trade. List trading delivers significant efficiency benefits to a trader’s workflow, particularly in the ability to enable execution of all trades with multiple liquidity sources at the same time.

In so doing, traders are able to achieve efficient Best Execution in a transparent, streamlined workflow.

MTS BondsPro connects a community of more than 600 broker dealers and buy-side clients within its anonymous all-to-all order book for corporate and emerging market bond trading.

interest income growth. Also, we kicked off the initial stage of implementing a virtual banking proposition.

Our Africa-China Banking Center was recently launched and it aims to provide bespoke solutions and address the needs of business communities in both Nigeria and China while leveraging our relationship with Standard

Bank and the Industrial & Commercial Bank of China (“ICBC”).”

Sanni said the group remains focused on driving long-term value for its clients and shareholders through its balanced and diversified business model, while thanking the various stakeholders – customers, employees and regula-

tors – for their contributions and support towards the achievement of these strong results.

The Group maintained capital adequacy levels that are significantly above the regulatory limit of 10 percent. The group’s total capital adequacy ratio for the period closed at 27.4 percent (Bank: 23.0 percent) and Tier 1

capital adequacy ratio of 23.3 percent (Bank: 18.5 percent).

The improvement in group capital adequacy ratio to 27.4 percent from 23.5 percent in December 2017 was as a result of the significant increase in retained profit. “We remain well-positioned to meet expected future capital requirements and growth”, Sanni stated.

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BUSINESS DAY Harvard Business Review

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Monday 20 August 2018

In association with

The best way for Netflix to keep growing Andrei Hagiu

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etflix has a lot to gain by becoming a multisided plat-

form.

Currently, Netflix is in the business of buying or making content, which it sells consumers access to at prices and on terms it fully controls (a monthly subscription). That’s unlike a platform such as YouTube, which enables myriad content providers to sell directly to users at prices they control, with limited intervention

by YouTube other than the enforcement of some content guidelines.

Netflix’s model has been undeniably successful to date. However, fighting

the blockbuster battle over content acquisition and creation is becoming ever more expensive, and it involves an increasing number of combatants.

Furthermore, the growth of Netflix’s subscriber base is slowing down.

In this context, it seems obvious that Netflix can and should become a platform. Why? Netflix’s big subscriber base and content-delivery infrastructure are potentially very attractive to many third parties. In addition to video content providers, these third parties include marketers and the developers of cloud gaming or other services.

How would Netflix become a platform? Simply by allowing these third parties to sell their prod-

ucts or services within Netflix’s service but outside Netflix’s subscription, on terms controlled by the third parties.

Becoming a multisided platform in this way would allow Netflix to tap a different dimension of

growth: selling more stuff to the same subscribers.

Why has Netflix not started on this path already?

There are only two plausible explanations I can think of: resource allocation and quality control. I don’t find either one very

convincing.

The resource-allocation argument would be that, given the resources (financial and human) needed to develop and acquire high-quality content, Netflix simply may not have the bandwidth right now to look at platform opportunities.

The quality-control argument would run as follows. Becoming a platform — allowing third parties to sell content whose quality is not fully controlled by Netflix, and on terms not completely determined by Netflix — runs the risk of letting low-quality content slip through the cracks and alienating customers, who would then hold Netflix responsible. I am not arguing that Netflix

should move to an open platform model like YouTube’s. Rather, Netflix can turn its service into a carefully curated platform, with relatively tight governance rules that can be relaxed over time.

My bottom line is that Netflix has little to lose and a lot to gain by shifting from being an aggregator of content under one subscription, to a hybrid aggregator platform on which various content providers sell directly, and at prices of their choosing, to users.

(Andrei Hagiu is an associate professor at Boston University’s Questrom School of Business.)

New supply chain jobs are emerging as artificial intelligence takes hold Gary Hanifan and Kris Timmermans

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ompanies are cutting supply chain c o mp l e x i t y and accelerating responsiveness using the tools of artificial intelligence. Through AI, machine learning, robotics and advanced analytics, firms are augmenting knowledge-intensive areas such as supply chain planning, customer order management and inventory tracking.

The combined power of humans and machines will create new sources of value for businesses.

We’ve explored the nature of the new valueenhancing roles that will emerge and identified

three new categories of AI-driven jobs: TRAINERS, who help AI systems learn how to perform, which includes everything from helping natural language processors and language translators make fewer errors to teaching AI algorithms

how to mimic human behaviors.

EXPLAINERS, who interpret the results of algorithms to improve transparency and accountability for AI decision making and processes.

SUSTAINERS, who en-

sure that intelligent systems stay true to their original goals without crossing ethical lines or reinforcing bias.

Concurrently, a new digital engineer role will emerge: a highly analytical, digitally savvy data scientist who manages,

models and tweaks the algorithms, alert protocols and parameters guiding the automated decision-making planning systems.

Supply-chain leaders need to ready their people for this inevitable shift that is already under way. Here are other ways supply-chain leaders can continue this momentum and enable human workers to work together with AI in the most effective way: — ATTRACT THE FUTURE WORKFORCE. Now is the time to identify exceptional talent by looking outside of the supply chain.

— REMOVE THE HUMAN. Prioritize and define both immediate and longer-term opportuni-

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate

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ties for AI, based on specific roles and tasks.

— PLACE YOUR INNOVATION BETS. AI can help businesses move beyond automation to elevate human capabilities that unlock new value.

The supply chain is and always has been a people business. We’re moving toward a world where humans and machines are collaborating, not just co-existing.

(Gary Hanifan is a managing director at Accenture Strategy. Kris Timmermans is a senior managing director at Accenture Strategy.)

Monday 20 August 2018

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43 NEWS

BUSINESS DAY

Week ahead: PVC angst, more stock sell-off, bond yields edge higher

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awmakers are expected to approve the N189 billion request from INEC to fund next year’s election but may likely refuse the President’s directive to provide funding using money allocated for constituency project. Lawmakers could also direct the Executive to fund the supplement budget either through the excess crude account or public borrowings.

Nigerians rush to register for PVC after INEC extends voters registration till end of August Nigerians leave it late to do most important things and the voters’ registration isn’t any different. Thousands of Nigerians will flock INEC registration centres over the next two weeks trying to register for their temporary voters’ card or to collect their permanent voters’ card. Good luck if you haven’t already gotten yours yet, the queues will surely be terribly frustrating.

More political juggernauts in PDP declare their ambition to clinch the party’s presidential ticket for 2019 election The defection of high level politicians from APC to PDP will bring about a tightly contested primary presidential election in the party, per-

Senate, House to approve INEC budget with slight adjustment haps even much fiercer than the main presidential election next election. The likes of Atiku Abubakar, Donald Duke, and Bukola Saraki who defected from APC to PDP have already shown their interest in running for the highest office in the country. It is expected that Rabiu Kwankwaso and Aminu Tambuwal may also declare their interest to vie for the presidential ticket as they did during the APC primary presidential election in 2015.

Economy and Markets CBN support Naira in I&E window to cushion EM currencies selloff Naira is expected to remain steady in I&E window

despite the selloff in emerging market currencies due to continuous CBN exchange rate interventions. The Central Bank of Nigeria during the week will be expected to supply millions of dollars into the market to defend the national currency as emerging market currencies continue to come under attack as a result of fallout from the Turkish lira crisis and the Sino American trade war.

Defending a currency is expensive and could continue to pull the foreign external reserves lower.

Money market and fixed income rates to edge higher Foreign investors exiting fixed income securities

as the elections draw closer are likely to cause an upward spike in money market and fixed income rates this week.

Also, investors expecting an uptick in inflation during

the second half of the year may likely begin demanding for higher rates from Treasury bills. For the last three months, new auctions of the savings bonds have come at a higher rate to increase market demand. This trend is likely to continue and may spread into other fixed income and money market securities.

Market selloff deepens, may send NSE index down 10 percent year to date It is becoming increasingly worrisome that the only predictable thing in Nigeria today is that equity market will close lower when the bell rings. The downward trajectory for the stock market worsened since the political drama increased and shorting EM securities became the most popular trade for

foreign investors in the past month. From the Eurobond market to the stock market, no one is safe. Prices have trended downward all year and the negative sentiment is expected to continue. Investors seemingly can’t wait for the election saga to be history so they can go back to look at company fundamentals to determine prices once again.

Expect mixed results as NSE companies disclose half year performance The slow economic recovery is manifesting in the books of publicly listed companies on NSE as their financial performance in H1 2018 shows mixed results. Over the past month, while some companies have posted strong earnings performance, others have been very disappointing. Companies with poor results have blamed the fragile economy for the slow pace of recovery in their bottom line.

This week, we expect more earnings announcements to continue to be a mixture of the good, the bad and ugly financial performance in H1.

While a poor performance will worsen the stock performance of those companies in this current market dispensation, strong earnings results hasn’t really helped many companies either.

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Monday 20 August 2018

FG earmarks N720bn for maintenance of bridges Knights of St Mulumba creates new sub-councils in Lagos Metro Council

JOSHUA BASSEY

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igeria’s minister of power, works and housing, Babatunde Fashola, says N720 billion has been earmarked by the Federal Government to maintain and rehabilitate bridges across the country.

Fashola disclosed this weekend at an interactive session with members of social clubs in Lagos, just as he decried long neglect of federal bridges in the country, resulting in the collapse of some.

According to Fashola, the current administration has decided to prioritise such infrastructure by allocating N270 billion notwithstanding the fact that not all the bridges are in dire situation.

Fashola also noted that despite inherent risks in operating seaports without functional cargo scanners, successive governments turned blind eyes to the installation of scanners and operational tools in the nation’s ports.

This, he said, paved the way for smuggling of arms and ammunition, banned drugs, toxic wastes and other contrabands into the country.

He said the President Muhammadu Buhari-led government was working to install cargo scanners to allow for easy detection of contrabands and promote efficient inspection of consignment and clearance at the ports.

“You know there is no scanners in our ports that was what they left for Buhari, ports without scanners so Buhari’s government is the one buying scanners. It takes three hours to manually carryout cargo examination on any container that comes through the port when it can be scanned in five minutes. We are not busy incriminating them we are just trying to fix the problem,” he said.

To him, since the scanners are not equipment that can be purchased on the shelf, the government had to order for it to be manufactured and installed because the government is convinced that digital technology will contribute immensely to the ease of doing business at the seaports.

On the power sector, he said electricity distribution companies are responsible for poor power supply in the country, pointing out

that power generation in the country has increased from 4000 mega watts to 7,000mw. The government, he said was doing all that is required to ensure that regular power supply across the country to meet the demand of the people.

“Power generation has moved from 4,000mw to 7,000mw. The responsibility of now bringing power to your homes lies now with the Distribution Companies.’

“Let us be clear, all the powers that Government had, as far as the Power value chain, were already decided upon. The privatisation was already completed and the only control government had was as a transporter, in transmission.” The minister said plans were afoot to increase the megawatts, adding that power plants across the country were being engineered to increase power generation.

He said, “Azura will give us 459mw, while Kaduna is bringing 215mw, two turbines are already being tested. There’s 240mw in Afam and ready to go. If we add these 3, that’s roughly 1,000mw new power generation to the grid.”

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nights of St Mulumba in the Lagos Metropolitan Council has created three new subcouncils for knights and Ladies of the Order namely, Victoria Garden City (VGC) Sub-Council from Lekki Sub-Council, Gbagada Sub-council from Maryland Sub-Council and Amuwo-Odofin Sub-Council from Festac Sub-Council.

Speaking at the event in Lagos, at the weekend, the Parish Priest, Our Lady Queen of Apostles, Ilupeju, Rev Fr. Paul Anyansi, said the event was aimed at creating new sub- councils of the Knights and Ladies of St Mulumba.

Anyansi explained that the creation of new subcouncils which has Victoria Garden City (VGC) as one of them is aimed at strengthening and promoting the ideals of the Order through evangelisation of the Catholic faith and fostering a Catholic conscience and outlook in their respective sub-councils and apply Catholic principles

to all phases of societal life through examples and enlightenment.

He remarked that knighthood requires members to give their talent, treasure and time, adding that the newly created VGC sub- council no doubt will strive to be a leading light in fostering good Christian life among its members and maintaining a union of practicing Catholics in fraternal charity and fellowship. In his remarks, the Grand Knight, VGC Sub- Council, Ferdinand Odoemenem, pledged to foster fraternal association for the good and progress of the Church as well as the well being of its members.

Odoemenem assured members of the sub- council of the commitment of the new leadership to promote cooperation between one sub- council and the other.

He added that they want to put measures in place to sustain the relationship that they have between sub- councils.

“Our mother Sub-council

(Lekki Sub- Council) is precious to us and we will continue to bond together on many issues especially on evangelisation. “We are going to step up evangelization within our geographical area, and promote brotherhood among us. We will endeavour to live exemplary Catholic lives and to grow in the grace of God through the virtues of charity, meekness, fidelity, courage, humility, modesty and holiness.”

According to Odoemenem, with these virtues, we will be fired with a fervent zeal for the social apostolate required of a knight, while holding in high esteem professional competence and superior family values.

Grand Knight of the Lekki Sub-Council, the mother sub-council, Benji Ofodile, in his remarks described the new VGC Sub-Council as a joyful birth adding that both Sub-councils will continue to share and grow from each other’s strength in order to fulfil the aims and objectives of the Order.

Trace gives young creatives chance to get content on TV in upcoming university tour

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race has decided to bring the channel to her most dedicated fans, youth and the uber cool crowd in a whirlwind campus tour called Trace In The City, which will take the channel to seven cities across Nigeria.

The events feature a fusion of music, games and movies, bringing you the best of life’s experiences at your campuses and cinemas. Trace is also giving young creatives a chance to connect with Trace, meet the faces behind channel and submit videos or skits in a “Content Festival” in conjunction with the Nigerian Television Authority (NTA).

The tour, which will last for four weeks and visit seven cities, will feature a concert, games such as an eating competition, Indomie and Pepsi product giveaways, The NTA Content Festival and take over a Movie theatre in each City. The locations include: Zaria, Abuja, Calabar, Port Harcourt, Benin City, Lagos, and Ibadan.

“We decided to embark on this campus tour because the country’s entertainment scene is dominated and consumed by young people and they are eager for opportunities to have their creativity recognized. To respond to their aspirations, we partnered with NTA so they can drop their videos and submit content to air on TV,” Sam Onyemelukwe, managing director for Trace in Anglophone Africa, said.

Artistes to rock the stage

include Ice Prince, Mayorkun, Reekado Banks, Harrysong, Falz, Dj Neptune, CDQ, MC Galaxy, Classiq, LAX, Teni Entertainer, Dremo, Peruzzi, Idowest, Yonda, Odunsi The Engine, Ceeza Milli, Tjan, and many others. It will also feature each university’s popular acts. The city tour, which starts August 17, till September 15, 2018, is sponsored by

Indomie Nigeria, refreshed

by Pepsi, supported by Infinix Mobile and Clorets.

Launched in 2003, Trace is a multimedia group and brand dedicated to afrourban entertainment. With a presence in 160 countries, it offers engaging and innovative TV channels, radios, mobile services, digital platforms to millennials and multicultural audiences.

Monday 20 August 2018

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World Bank urges lending caution to countries with no debt sustainability framework HARRISON EDEH, Abuja

... hails DMO on debt sustainability analysis

he World Bank and other stakeholders have urged lending caution to countries with no debt sustainability, citing concerns of high rising debt profile in some African countries.

This measure, they said would ensure a more prudent and sustainable debt management strategy with rising concerns on debt currently mounting on some African countries.

“International Financial Institutions who are lenders to these countries have a lot of role to play. We should ensure responsible lending .We should ensure caution with countries at high risk and countries that don’t have sound debt management framework. “Gloria JosephRaji,a Senior Economist at

the World Bank said.

Speaking at the Global Economic Governance workshop Organised by Centre for the Study of the Economies of Africa in Abuja, the World Bank representative said, “As a World Bank, we see ourselves as partners in helping countries achieve economic and social development, so in that sense, we partner with member countries to ensure prudent and sustainable debt management” According to her, “For one, we did not provide budget support loans to countries where current and future debt is not sustainable One of the basic requirements for our budget support loans is that there must be a debt sustainability analysis, and the debt must be adjudged to be sustainable .We do that in conjunction with the Inter-

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national Monetary Fund, IMF, because the IMF engages countries on the issue of Macro-economic policies.”

On the three key areas they engage countries to ensure debt sustainability,she said,”We do analysis based,policy dialogue building .This analysis and capacity building mechanisms include our annual debt sustainability analysis in conjunction with the IMF.The Debt Management Office in Nigeria does it and it is commendable in ensuring debt sustainability” Besides what the DMO does, “we do our own at the World Bank,and that is the basis for the policy dialogue with the government, the World Bank representative adds further.

Earlier in his remarks,Adedeji Adeniran,a

Senior Research Fellow at CSEA said the workshop is geared towards responding to emerging issues concerning debts in Nigeria.

He said,”We are responding to the position of things when it comes to debt as some people are already worried whether we are on our way to another debt crisis.

We are not doing badly,but there are concerns in our domestic debt,and re-financing concerns,as we are now paying about N1.6 trillion on deficit financing and that is not good for the economy” He stated further that,”We are moving to external debt,and our concerns is that it is highly exposed to shocks.

Every country that has entered into debt crisis is due to external debt. The workshop is how do we manage these concerns”

L-R: Stephen Ambore, head, digital financial services, Central Bank of Nigeria; Olayinka David-West, academic director and senior fellow, Lagos Business School; Niall Saville, associate partner ; Dalberg, and Nneka Eze, partner/Nigeria director, Dalberg, at the customer segmentation framework report launch and art exhibition organised by the LBS sustainable and digital financial services initiative in Lagos.

Pic by Pius Okeosisi

CBN tasks bankers to leverage knowledge, technology in service delivery HOPE MOSES-ASHIKE

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entral Bank of Nigeria (CBN) at the weekend challenged bankers to leverage the knowledge they had acquired as well as technology to meet the changing needs of their customers.

Edward Adamu, deputy governor, corporate services directorate, CBN, said this in Lagos at the 2018 graduates induction and prize awards day organised by the Chartered Institute of Bankers Nigeria (CIBN).

Represented by Folakemi Fatogbe, director risk management, Adamu said the training that the CIBN provides was widely respected and that it was important that bankers

continuously improve themselves because banking was dynamic.

He noted that the changes seen in the sector in the past 10 years had been tremendous, making it clear to the graduates that their employers would expect a lot from them with regards to problem solving.

Usen Udoh, group chief human resources officer, Dangote Industries Limited, who spoke on the topic, “21st Century Professional: Vital Skill Sets for Success,” explained that the 21st Century was decidedly about ideas and meaning to the work, adding that it was about entrepreneurship and less about employment.

The CIBN said it would constantly review and en-

hance the competency of the banker through continuous professional development and Certification in specialised areas.

The move by the Institute is in recognition that the world is in the era of commoditization of competencies.

“The Institute regularly organises knowledge events, stakeholders forum and workshops for banking practitioners as well as the general public in a bid to ensure they acquire the relevant competencies and knowledge required to keep up pace in this dynamic industry,” Uche Olowu, resident/chairman of Council.

Delivering a welcome address at the event in Lagos, Olowu said, the emer-

gence of digital technology has been the major disruptor, which defies business as usual and long term strategic planning. Indeed, the digital revolution has brought about a new set of challenges and opportunities. This disruption, popularly coined the Fourth Industrial Revolution is characterised by a fusion of technologies dominated by robotics, artificial intelligence, virtual reality, machine learning.

“The reality is that while technology is taking jobs away, technology is creating new jobs. The question then should be, as individuals, do you have the skills for the new jobs created by technology? How will you not be disaggregated in the new hitech economy?”

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Top 10 Fintech advancements that drive banking services

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rom being an analogue nation, Nigeria is becoming a technology hub, as innovation space is constantly being widened. While acceptance may still be lower than anticipated, ICT innovative products being churned out are making Nigeria attractive to the world’s venture capitalists and attracting angel investors to the country’s young and unregulated technology start-ups.

Of late, there is an increase in the number of Fintech innovations driving banking services in Nigeria. This report looks at the top 10 Fintech innovations in the forefront of pushing banking services.

Paga This mobile payment platform helps to drive financial inclusion in Nigeria, where over half of the adult population remain unbanked and underbanked.

Flutterwave Flutterwave, co-founded by a 26-year-old Nigerian entrepreneur, has the most impressive start, having attracted $10 million in investment in 2017. It was founded just two years back by a team of ex-bankers, entrepreneurs and engineers, with the mission to provide a tech platform that allows businesses make and accept payments anywhere in Africa.

SystemSpecs SystemSpecs, owner of Remita, has received applause as it sits right at the heart of managing public funds. It has attracted national and international commendation when it was adopted as the payment gateway to Nigeria’s Treasury Single Account (TSA). It has helped the government achieve success in fiscal management such that Kemi Adeosun, minister of finance, and government officials, including Benue State, where the software identified 500 ghost workers, speak well about the payment platform.

SystemSpecs also hosts Bank Apps Interconnect Solution, which allows Nigerians with accounts in any commercial bank to have easy access to their account balances on one screen and conveniently make and receive payments through debit or credit cards across various bank accounts nationwide on a single platform. Remita provides payers with a wide range of payment channels on a single platform, including debit/credit cards, bank branches, PoS terminals, micro-finance banks, internet banking, collection agents, mobile wallets, account payment and direct debit.

Billers, merchants, e-commerce sites, etc, can use it.

NIBSS Another advancement that changed the face of e-payment is the National Automated Clearing System (NACS) deployed by the Nigerian Interbank Settlement System (NIBSS) and developed by Precise Financial System (PFS), a Nigerian software firm. The NACS is a future proof system that enables faster and more efficient clearing of cheques that is less resource intensive and accommodates various new requirements and practices in the clearing system.

PFS had also developed Mobile iTeller, which allows bank customers to deposit cheques from their phones through iTeller Mobile cheque truncation solution remotely without visiting the banks.

TeamApt One more advancement came out of the many tech

hubs in the country is Moneytor created by TeamApt, providing end-to-end solution that completely automates business processes, acquirers need to perform, acceptance of collections from merchants, from onboarding to settlement, arbitration and retirement. It provides solutions for corporate, retail and merchant banking. All features are available on both web and mobile interfaces.

AppZone AppZone has created CreditClub tech that addresses branchless banking challenges by providing a robust software core and embedded core banking application that seamlessly integrate with portable mobile phones and PoS devices as well as third party core banking applications. It offers mobile banking self-service applications and functionality for issuing and managing debit cards.

Piggybank Piggybank is a two-year old Nigerian Fintech start-up that recently announced that it had raised a $1.1 million seed fund to grow its online savings platform, Piggybank.ng. Founded by three students, Piggybank tackles the problem of savings, allowing subscribers deposit as little as $1 a day into their online Piggybank.ng account, and cannot touch their savings until an agreed withdrawal date, unless they are happy to pay a 5 percent early withdrawal fee, while all the time accruing around 6 percent interest per annum on automated savings.

Paylater Paylater is an app that bridges the lending gap, helping increase access to finance as ordinary Nigerians get low interest collateral free loans from N7,000 up to N1 million with just a few clicks on their mobile phones. Changing the face of e-commerce several tech companies have focused in particular on enabling small businesses receive online payments.

Through their merchant marketplace models and in-house payment platforms, Konga and Jumia, Nigeria’s biggest ecommerce firms, have been responsible for much of the progress seen with unregistered businesses getting online and receiving payments. Neither company requires certificates of incorporation or a corporate account for merchants to operate on its platform.

Paystack Paystack is a two-year old Lagos-based payments company, the latest start-up looking to make it easier for unregistered businesses to plug into the digital economy. Paystack has removed the compulsory requirement for businesses to provide a certificate of incorporation and a corporate bank account. wIt will now allow “starter businesses” to use its platform by verifying business owners’ phone numbers with Truecaller’s crowd-sourced verification system, thanks to a new partnership between the two companies. In addition, Paystack will also require merchants to provide verified personal bank details and a national ID. VoguePay VoguePay, a payment firm founded in 2012, allows unregistered businesses with verified bank details, national IDs and utility bills operate on its platform. Small businesses on the platform are able to safely make and receive payments in all major currencies, regardless of location.

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import cover at its current level of $46 billion. Brent traded at $70 per

barrel Friday.

“A current account surplus and higher oil prices are more than enough to offset any adverse impact on the naira in the short term,” said Omobola Abimbola, head of research at Ecobank Group.

“The CBN’s external reserves provide a 12-month import cover and we think the CBN is in a good place to maintain its defacto naira peg and that informs our expectations for no major fluctuation in the currency,” Abimbola added. “The most we can have are soft depreciations by one naira or two.”

The naira closed at N306 per dollar at the CBN window Friday and fell 0.01 percent at the Investors and Exporters window to N362 per US dollar.

Faced with low oil prices, a current account deficit, and thinning external reserves- which would go on to hit a record low of $28 billion), the central bank tried in vain to keep the naira stable in 2016.

It was inevitable that the naira would weaken and it did, shedding some 40 percent.

Fresh concerns are beginning to build around the naira’s stability again, given the level of foreign portfolio outflows from the country which has been triggered by political tensions ahead of the 2019 election and rising interest rates in the US. “The situation is different this time around,” said Wale Okunrinboye, head of research at Sigma

Pensions.

Beyond the current account surplus, higher oil prices and improved external reserves, Okunrinboye said next year’s election is another reason for the CBN to ensure the naira remains stable, as it could serve as a political tool to attract votes for incumbent President Muhammadu Buhari at the February 2019 elections.

“It’s not a question of whether the naira could weaken significantly in the build up to next year’s election, the worry should be that the CBN is not committed to any rate and it is unclear how much it would allow the naira weaken,” Okunrinboye said by phone.

“It will be difficult to speculate on the naira post-election in 2019,” he added.

In 2019, the CBN’s governor would have used up his tenure and it’s any ones guess what the exchange rate policy that the new CBN governor will adopt.

But between now and the election however, the CBN is expected to do all in its power to stabilise the naira.

The apex bank will also find another reason to defend the naira as it draws close to winning on its long standing battle with inflation which has declined for 18 months straight, settling at 11 percent in July.

The apex bank would ensure the naira is stable to ward off imported inflation because that could quickly scupper the disinflation gains.

Traders say the CBN has become a net seller at the Investors and Exporters window after being a net buyer in the months leading up to

May this year. The apex bank has also kept interventions steady in the parallel market.

“The CBN has had to sell more dollars in the market due to the foreign dry-up,” one trader said.

Between May and June, the CBN sold $1.1 billion, which helps explain why external reserves have cooled from a peak of $47.8 billion to about $46 billion. The CBN’s selling position is in divergence of when the apex bank was buying dollars from the market and growing its reserves.

Although it’s hard to estimate the total foreign portfolio outflows from Nigeria since the beginning of the year, analysts estimate net outflows to be no more than $2 billion. That’s 6.5 percent of the country’s external reserves.

“The movement in oil prices will be the deciding factor of what happens to the naira,” said Ayo Teriba, CEO of consulting firm, Economic Associates.

“If oil prices remain where they are and production is steady, the CBN will have more than enough firepower to keep the naira stable,” Teriba added.

Oil production has recovered from 2016’s low when militant agitations in the Niger-delta led to vandalisation of oil pipelines which in turn crimped production. Africa’s largest oil producer pumped 1.6 million barrels of oil in July according to the Organisation of Petroleum Exporting Countries (OPEC).

The naira has shown resilience despite the sell-off in the equities market which has plunged more than 20 percent since its January 19 peak and settled at a year to date loss of 7.78 percent.

L-R: Florence Otedola, professionally known as DJ Cuppy, musician and entrepreneur; Oscar Onyema, chief executive officer, Nigerian Stock Exchange; Babatunde Folawiyo, managing director, Yinka Folawiyo Group, and Margaret Onyema-Orakwusi, lawyer and principal partner of Margaret Onyema and Co, during the unveiling ceremony of Oscar Onyema Foundation in Lagos on Friday.

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low enough for them to start lend-

ing.

Experts are of the view that lenders prefer to invest in short term government securities because of the risk free rate than taking the risk of extending credit at around 30 percent to sectors that have not been de-risked.

A lot of them are beginning to surmount the headwinds caused by rising Non Performing Loans (NPLs) due to exposure to the oil and gas, telecommunications and power sector.

“I think this is not unique to Nigeria alone where authorities want banks to lend as much they

want. In United States and the United Kingdom (UK), authorities find other ways to encourage them to lend more,” said Olubunmi Asaolu, Head of Equity Research at FBNQuest Capital.

“No bank has decided to turn on the taps as they feel the risk level is not low enough for them to worry about lending,” said Asaolu.

Between December 2017 and June 2018, Federal Government redeemed N840 billion worth of Treasury Bills, a strategy that has resulted in reducing the yields on bench mark government securities to 11 percent and 14 percent in the first half of 2018 from 18.50 percent to 22 percent in January.

The cumulative total loans and advances to customers for the seven banks that have released half year results were down 7.88 percent to N7.43 trillion in June 2018 from N8.07 trillion the previous year, according to data compiled by BusinessDay. Drilling down into the numbers shows GTBank’s total loans and advances to customers reduced by 10.41 percent to N1.291 trillion in June 2018 from N1.44 trillion as at June 2017.

Zenith Bank’s loans and advances to customers dipped by 10.95 percent to N1.87 trillion in the period under review from N2.10 trillion as at June 2017.

First Bank’s loans and advances to customers reduced by 7.50 per-

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removal of the President of the Senate, Bukola Saraki and his deputy

Ike Ekweremadu, from office, suffered a terrible setback on Friday as some senators of the ruling party have reportedly distanced themselves from any unconstitutional plot to remove the Senate leadership, BusinessDay authoritatively gathered.

Public affair analyst, Katch Ononuju, who had interacted with the senators, especially those who were former governors, told our correspondent that the lawmakers do not want to follow the path set by Oshiomhole, because of the danger his alleged unconstitutional approach to the issue poses to the nation’s democracy.

The former Edo state governor had vehemently demanded that Saraki should vacate his seat after he and other lawmakers in the National Assembly defected to from the APC to the People’s Democratic Party (PDP) and other parties. Oshiomhole had boasted severally that he will instigate the impeachment of Saraki, by whatever means. However, many analysts have faulted his alleged threat to illegally and unconstitutionally remove Saraki outside the provisions of Section 50, sub section 2 of the constitution which stipulates 2/3 majority to remove a Senate President.

Oshiomhole and his men in the APC leadership ran into difficulty when it became glaring that they could not secure the 73 senators required to remove Saraki.

Their demand that the President of the Senate should resign also failed, which led them to allegedly plot to invade the National Assembly with hooded men of the Department of Security Services DSS on August 7, a gambit that failed and led to the sacking of the former DG of the DSS Lawal Daura.

The former governors, who oppose Oshiomhole’s antics according to Ononuju, include former Governor of Sokoto State, Aliyu Wammakko; former Governor of Zamafara state, Ahmed Sani; former Governor of Akwa Ibom state, Godswill Akpabio; former Governor of Kebbi state, Adamu Aliero; former Governor of Anambra state, Andy Uba; Senator Shehu Sani, Ibn Nallah, Gobir among others.

“These people believe that they should not follow Oshiomhole to undermine the law. For instance the votes needed to remove former Presidents of the Senate, Chuba Okadigbo and Evans Enwerem were up to 80 out of 109 senators and anything short of the required 2/3 and above will spell anarchy.

cent to N1.85 trillion in June 2018 from N2 trillion as at June 2017.

Union Bank’s total loans and advances to customers reduced by 9.07 percent to N470.15 percent billion in the period under review as against N517.15 billion the previous year.

There has also been consistent marginal decline in the Federal Government (FGN) Domestic Debt to N12.58 trillion in March 2017 and N12.15 trillion in June 2018 from N12.59 trillion December 2017, according to a recent report by the Debt Management Office (DMO).

It will be recalled that the country raised $3 billion in a two-part international bond sale with a view to funding a fiscal deficit and reducing its local-currency debt burden.

The low interest rate environ-

So if Oshiomhole tries it in the National Assembly it might spark an implosion that could cause a stalemate. The senate is like a place of work for the senators and they don’t want anything that will destroy that chance,” he said.

The lawmakers he said have refused to append their signatures on the list allegedly prepared by Oshiomhole to impeach Saraki.

Some of the lawmakers are said to have deep relationship with Saraki, because he appointed them in juicy Senate committees, where they are not willing to allow any form of illegality or unconstitutionality to scuttle their chance.

“What Oshiomhole is looking for is not to remove Saraki but to implode the National Assembly since they cannot control it. We cannot allow this damage to our democracy.

“You may not like Saraki, but the only way to remove him is to go through the rule of law. And this is where there is problem for Oshiomhole because he cannot railroad the lawmakers against their will as some of them were governors before him.

“It is not a party issue; it has to do with the country and with democracy and the availability of freedom because if the National closes due to crisis, where will the lawmakers go to work? The advantages that Saraki gave to Senators Gobir, Nallah, Wammako, and Aliero, who is chairman of aviation, Oshiomhole cannot give it to them. So they are battling for their own survival,” Ononuju said.

The senators were also said to have told Oshiomhole in plain language that they will not perpetrate illegality and that is why he is calm as he has now observed that he is alone and faces imminent defeats if he tries. Senators Ovie Omo Agege, Adeyeye Shola, were people who were with Oshiomhole before now but have now abandoned him BusinessDay learnt.

The diehard anti- Saraki APC lawmakers, who were initially backing Oshiomhole in his hardened position, have suddenly changed their position having realized the futility of trying to perpetrate illegality, sources tell BusinessDay. Some of them who are in the Committee on INEC have in the last three days participated fully in the work of the committee handling the INEC election budget.

BusinessDay gathered that Oshiomhole is not resting on his oars to unseat Saraki but he is in serious dilemma as to the ways to go about it without violating the laws of the land. The coming days are indeed pregnant with political uncertainties. ment means it is end of free money for banks as income from treasury bills are expected to shrink, with possible negative repercussions on future margins.

Analysts at CSL Stock Brokers said the recent issuance of commercial papers by corporates may suggest that commercial banks are still not compelled to channel credit to the private sector, while corporates are taking advantage of lower yields from commercial papers.

“We envisage that the issuance of commercial papers will continue to gain traction over the course of the second half of the year, more so that the prospect of a rate cut and an attendant reduction in banks’ loan rates is becoming elusive,” said analysts at CSL Stock Brokers.

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Enugu saves N1.89bn on due process in three years

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he Enugu State Government has said that savings from its adherence to Due Process in contracting and procurement has amounted a total of N1.89 billion in the past three years.

The government said in a statement that strict monitoring of procurement processes has been a major guiding principle following determination on savings without compromising quality of jobs. It said this has also enabled it to apply savings to other critical needs of the people of the State.

The State Commissioner for Information, Ogbuagu Bob Anikwe, said the admin-

istration of Governor Ifeanyi Ugwuanyi is business-minded and has focused on the extraction of every possible value in all its transactions, especially given the enormous responsibility it has towards the infrastructure revamp of the State.

He reiterated the resolve of the State Government to sustain a regime of responsiveness that will continue to positively impact on the socio-cultural and economic fortunes of the state.

Speaking after a Council Meeting, the Commissioner for Works, Greg Nnaji revealed of plans to revisit the International Conference Centre, a legacy project of the past administration.

The International Conference Centre, he revealed, was envisioned to further explore opportunities for global tourism while also being a multiplying enabler for other business clusters in the State.

“Enugu State and its people have earned a reputation as some of the most hospitable people in the world. We are of the belief that when this project is completed, the State, which already boasts of world class hotels and tourist attractions, will be choice destination for reputable global events and activities,” Nnaji stated.

He listed a wide-range of other projects valued at an estimated total of N942 million, which the Council

resolved to undertake in the coming months. These include a N400 million Rural Access and Mobility Project, a World Bank- assisted project designed to connect communities; N250 million for the rehabilitation of roads and another N202 million for a rural access road to connect three communities, namely; Enugu-Eke, Oguiyi Uno and Oma Eke, all in Udi Local Government Area of the State.

While also addressing the press, Commissioner for Culture and Tourism, Rita Mba, revealed the determination of the State Government to invest in the upgrade of hospitality facilities in the state as a sure way of attracting investment.

MTN Nigeria appoints new chief operating officer JUMOKE AKIYODE-LAWANSON

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azen Mroue has been appointed and the new chief operating officer (COO) of MTN Nigeria. MTN Nigeria today announced that his duties as the company’s COO of its Nigerian operations became effective on August 6, 2018.

With over 22 years’ experience in the telecoms and ICT industry, drawn from various MTN operations across Africa and the Middle East, Mazen Mroue joins MTN Nigeria from MTN Irancell, where he had also served as COO since July 2014. Before then he was at different times CEO of MTN Uganda and MTN Liberia in addition to which he served as a non-Executive Direc-

L

Commuters bear the brunt of high transport cost as Oshidi-Apapa gridlock persists MICHEAL ANI

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he poor masses are the once bearing the brunt of high transportation cost following the unending gridlock on Oshodi- Apapa axis, as bus drivers take advantage of the situation in their favour.

At the weekend, commuters toeing along that route witnessed a N50 increase in the price paid for fares from N200 to N250, risking their lives, as motorists driving against traffic flow on the Oshodi-bound lanes to sought alternative routes to escape the chaos.

Truck drivers took one of the lanes as parking space for their trucks defying orders from both Acting President Yemi Osinbajo and the Lagos

State government mandating them to evacuate all access to the ports.

“Transportation cost has increased due to the intense traffic situation seen on the road. The bus drivers risk our lives by following one way just to get pass through,” a resident in Amuwo-Odofin who identified himself as Sandra, said.

In July, Osibanjo made an unscheduled stop at Apapa Port area for an onthe-spot assessment of the gridlock and directed the commencement of a 72-hour joint operation to restore order around Apapa and environs, after activities of truck drivers had caused gridlock and made vehicular movement around the axis near impossible.

The directive saw the collaborative efforts of the Police, Nigeria Navy, Nigeria Army, the Nigeria Air Force, FRSC and the NSCDC, LASTMA, LASEMA, container drivers, National Association of Road Transport Owners, NUPENG, Road Transport Employers Association of Nigeria, that helped decongest the traffic situation for few days.

It has been a big problem, Tony Anakebe, a member of Fret forwarders association of Nigeria said, the vice president brought a lot of relief for us but later on, they came back taking stance in all the roads and with the raining season around, it is not helping issues, the problem persist definitely, businesses continues to slide to its lowest

level because.

“It takes us almost two weeks to get our containers loaded in the after finishing with the customs and while waiting for that two weeks, you are paying demurrage for nothing sake, who bears the burn, it is the poor masses of the nation as we importers shift the burden to them in the form of high prices of goods to recoup back his money.

Hence it has serious implication not only on the economy of the nation but also the individual business men and investors in the country,” he said.

However, the traffic situation is beginning to resurface as these truck drivers parked on the road, leaving motorist going about their normal business to crawl on a single path.

tor of MTN Cyprus and held different Leadership roles at MTN Ghana.

In his new role, Mroue will provide leadership and direction to the commercial and technical functions of MTN Nigeria.

Commenting on the new appointment; Ferdi Moolman, MTN Nigeria’s CEO, said: “Mazen brings a track record of achievements and a wealth of experience to the team, drawn from telecoms markets across Africa and the Middle East”.

“I am excited to join the Y’ello family in Nigeria at this exciting time where new technologies are able to shape customers experience and where digital innovations will be key for national development,” commented Mroue.

Third Mainland Bridge to be shut for 4 days JOSHUA BASSEY

L-R: ABC Orjiako, chairman, Seplat Petroleum Development Company Plc; Mathew Kukah, bishop of the Catholic Diocese of Sokoto; Austin Avuru, CEO, Seplat Petroleum Development Company Plc/ the celebrant, and Fola Adeola, co-founder/former CEO, Guranty Trust Bank Plc at the 6o birthday celebration of Austin in Lagos.

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agos State government says it is going to shut the Third Mainland Bridge to traffic for four days starting midnight August 23 to midnight August 26, 2018, for investigative maintenance test to be carried out.

Ade Akinsanya, the state commissioner for works and infrastructure, disclosed this on Sunday, saying the decision was taken after due consultation with the Federal Ministry of Power, Works and Housing.

The four-day closure, according to Akinsanya, will enable the contractors assess the true state of the bridge after which works would commence by the end of the year or early in 2019.

It would be recalled that the Federal Government had earlier announced plans to shut the bridge in July, but had to be shelved after due consultation with the state government and wide deliberations with other stakeholders, who expressed concern about the indiscriminate parking of articulated vehicles on other alternative routes, which would have ad-

versely affected traffic.

Subsequently, a joint task force set up to remove the articulated vehicles from the highway was able to achieve some success.

Justifying the need for the closure, Akinsanya said: “The Third Mainland Bridge which was opened about 30 years ago by the then military government has had haphazard maintenance and repairs in the past which the present Federal Government is committed to correct by carrying out proper and continuous maintenance and repairs on it.” Consequently, the state appealed for the cooperation, support and understanding of all motorists and residents, advising them to minimise non-essential travel and movements during the four-day closure.

Besides, the commissioner said all traffic management agencies including the Lagos State Traffic Management Authority (LASTMA), Federal Road Safety Corps (FRSC) and the Police, among others, had been mandated to ensure smooth flow of traffic on all the other alternative roads and traffic corridor across the metropolis to ensure free flow of traffic.

FG’s plan to list 40% of NNPC on NSE commended INNOCENT ODOH, Abuja

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he Atiku Presidential Campaign Organization has welcomed government plan to list 40 per cent of its shares in the Nigeria National Petroleum Company at the Nigeria Stock Exchange (NSE).

A statement issued by the Organization’s spokesman, Segun Showunmi, made available to BusinessDay, noted that “It is a cheering news that the Federal Government has finally submitted to good counsel as earlier proposed

by Atiku Abubakar, a leading

presidential aspirant of the People’s Democratic Party (PDP), for a privatization of some aspects of the operations of the NNPC. “It will be recalled that only recently, Atiku had called for the privatization of the NNPC as a core policy objective of his campaign for president in the 2019 election. Whereas some ill -advised officials of the present government criticized Atiku for the suggestion when it was first conceived, it is only laughable that the same characters today are praising the Federal Government for an idea that is patented by Atiku,” he said.

A2 BUSINESS DAY NEWS Texem organises training on big data for strategic outcomes

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igital breakthrough is shaping every aspect of our lives, from consumer goods to healthcare, energy to agriculture, transportation to telecoms, financial services to the public underscoring the potential for digital technologies to transform the way organisations operate.

While organisations in Nigeria collect an enormous amount of data, many organisations do not have the competence to translate this data into a competitive edge.

Leading in Nigeria is made more difficult than in other economically advanced climes due to poor application of available data and increasingly challenging contextual realities such as weak institutions, limited infrastructure, increasing security challenges and fragile political landscape.

Thus, organisations need

to invest in developing their people, process, and structure to turn big data into a viable source of stakeholder value creation.

This is why TEXEM, UK is inviting senior executives in Africa to the forthcoming executive development programme that will focus on ‘Harnessing Big Data: Insights and Action for Strategic Outcomes’ scheduled to hold from September 3 – 6, 2018 at Oracle University, Reading, UK. Focused on improving data-informed decision making, optimising leadership quotient, inspiring a culture of innovation and driving enhanced organisational efficiency and effectiveness, this programme offers steeper learning curves on how market-leading companies are using stakeholder data to reshape their companies and industries and how this could be applied in your organisation.

After completion of the programme, executives will be equipped with fresh insights and analytical skills required to harness the power and potential of big data and create more value for your company.

Executives who attend the programme would learn the secrets of modern-day competitive intelligence, the importance of virtual reality, robotics and artificial intelligence and how this could improve strategy development.

They would also gain insights to develop, implement, and manage collaborative forecasts and learn how to develop transparent, interrelated and aligned processes, Analytics and DataDriven Decision Making, actionable insights in leading an analytics transformation, Case Studies of Superlative Results from Harnessing Big Data and ways to avoid business analytic failures.

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FINANCIAL TIMES Superdry founder donates record £1m to pro-EU group

Brussels set to rule on $80bn LindePraxair mergerPage A7

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World Business Newspaper

Merkel and Putin discuss Syria and Ukraine at landmark meeting

Talks at chancellor’s retreat billed as turning point in Russo-German relations Claire Jones, Guy Chazan and Kathrin Hille

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ngela Merkel and Vladimir Putin have used a bilateral meeting in Germany to signal a desire for a working relationship despite strong disagreements in many areas.

The German chancellor and Russian president met at Ms Merkel’s Meseberg castle retreat north of Berlin, the first time she had hosted Mr Putin one on one in Germany since before Russia’s 2014 annexation of Crimea.

The Kremlin said the pair discussed the transit of gas to Europe from Russia, the conflicts in Ukraine and Syria, the Iran nuclear deal, and the consequences of the US administration’s trade and economic policies for third countries.

“The talks were long, they had a comprehensive, detailed conversation,” said Dmitry Peskov, Mr Putin’s spokesman. “It was not the goal to reach agreements, this was a very useful, necessary and timely conversation just to compare notes on a whole series of topical, developing issues.”

While no announcements of progress were made, Mr Putin used Ms Merkel’s invitation to show normality in relations with Europe — a priority for the Kremlin as Russians begin to tire of Mr Putin’s collision course with the west. The Russian president had travelled to Meseberg via Graz, where he attended the wedding of Austrian foreign minister Karin Kneissl.

Moscow sees potential transatlantic divisions created by the Trump administration’s erratic policies as a chance to rebuild ties with EU member countries.

Stefan Meister of the German Council on Foreign Relations said the meeting was a chance to normalise the German-Russian working relationship.

Issues such as Nord Stream 2, the war in Syria, the Iran nuclear agreement and the outbreak of a global trade war “demand a pragmatic interest-driven politics on both

sides,” he said.

“US policy under President Donald Trump is an important driver of this rapprochement,” Mr Meister said. “Both of them will want to send a signal to Washington that they will not be blackmailed.”

Nord Stream 2, the pipeline intended to expand capacity for delivering Russian gas directly to Germany, which is under threat from US sanctions, appeared to have dominated the talks. Mr Trump has described Germany as a “captive” of Russia due to its high dependency on Russian gas.

The Kremlin said both leaders spoke out against a “politicisation” of the pipeline and called it an entirely commercial project. They agreed that it was “necessary to take steps to shield it from potential attacks from third countries”, Mr Peskov said.

Prompted by Ms Merkel, Mr Putin supported a continuation of gas transfers from Russia to Europe through Ukraine. “[Nord Stream 2] does not close any possibilities for transit of the Russian gas through Ukraine,” he said. “I just want to emphasise that the main thing is that this transit through Ukraine meets economic requirements.”

The Kremlin said the two leaders had discussed a four-way dialogue focused on Syria between Russia, Germany, France and Turkey. The format would be explored but a summit of the four countries had not been discussed yet, Mr Peskov said.

The initiative is set to fuel expectations that Ms Merkel might be prepared to accept a role for President Bashar al-Assad, the Russian-backed Syrian leader, in any postwar dispensation for the country, in order to ensure that Syrian refugees in Germany can begin to return as soon as possible.

Moscow has been trying to pull European countries and regional powers into working with the Assad regime through refugee repatriation and humanitarian aid. France became the first western country to test such co-operation last month by having French humanitarian aid flown to Syria by the Russian military.

Midwest farmers take Trump to task over biofuels mandate EPA move to water down standard could reduce demand for corn as producer profits slide

Gregory Meyer

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merican farmers became casualties of President Donald Trump’s trade wars when China raised tariffs on their soyabeans. Now they are fighting to save another market: corn.

Under Mr Trump, the federal environmental regulator has been watering down a government mandate for biofuel use, corn advocates say. The actions could suppress

fuel ethanol companies’ demand for the yellow grain just as farm profits slide.

“Everything relative to ethanol has really been an uphill battle for us,” said Mark Recker, a farmer and president of the Iowa Corn Growers Association. “Although President Trump talks a lot about ethanol and wanting to build that industry and help corn farmers out, we’ve Continues on page A6

Angela Merkel and Vladimir Putin’s meeting at the German chancellor’s Meseberg castle retreat was the first time she had hosted him one on one in Germany since Russia’s annexation of Crimea © AFP

Beijing orders banks to boost lending to exporters Move comes ahead of critical week of trade talks as Chinese stocks and currency wilt Tom Mitchell

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hina’s banking regulator has ordered banks to boost lending to infrastructure projects and exporters as the government seeks to bolster economic confidence on the eve of a new round of trade negotiations with the US. Chinese trade negotiators led

by Wang Shouwen, vice commerce minister, are due in Washington for two days of talks starting on Wednesday, the first such discussions since the US imposed punitive tariffs on Chinese exports last month for alleged intellectual property theft.

Since the tariffs were announced on July 6, China’s currency and stock markets have suffered falls, reflecting investor nervousness about slowing economic growth and the longer-term impact of the trade war between the world’s two largest economies.

The benchmark CSI 300, which tracks the biggest companies listed on the Shanghai and Shenzhen

stock exchanges, has fallen more than 15 per cent.

Pressure has also been building on the renminbi, which over the same period fell almost 7 per cent against the dollar to a low of Rmb6.93 on August 15. The currency has since rebounded slightly as the People’s Bank of China introduced measures to curtail investors’ ability to short the currency.

The Chinese government has recently taken steps to boost flagging investment, but stopped short of introducing extraordinary stimulus measures as it continued a campaign to contain financial sector risk.

In a statement issued at the weekend, the China Banking and Insurance Regulatory Commission urged the country’s banks, most of which are state-owned, to support infrastructure projects and companies facing “temporary difficulties”.

The regulator added that financial institutions should “effectively promote stable employment and stabilise foreign trade and investment”.

The CSI 300 is at its lowest level since August 2016, after a series of government and central bank policy errors rocked the country’s stock markets and currency.

“In 2015 and 2016 the Chinese government’s problems were selfinflicted,” said one investment strategist who asked not to be identified. “This time the problems they face are driven by the domestic economic environment and trade friction, not policy mistakes.”

So far only about 10 per cent of China’s annual exports to the US have been hit with punitive tariffs, but US president Donald Trump recently threatened to impose taxes on half of all Chinese exports to the US by the end of October.

In a tweet on Saturday, Mr Trump implied that he would keep applying pressure on China as he attacked the ongoing investigation into his presidential campaign’s alleged ties to Russian agents. “All of the fools that are so focused on only looking at Russia should start also looking in another direction, China,” he tweeted.

Rome dismisses operator’s €500m Genoa bridge recovery offer Autostrade says collapsed viaduct in Genoa can be replaced within eight months Hannah Roberts

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taly’s coalition government has reacted sceptically to an initial offer of €500m from Italy’s biggest motorway operator Autostrade per l’Italia for building work and compensation after the collapse of a motorway bridge in Genoa killed 43 people.

Matteo Salvini, deputy prime minister and leader of the far-right League, called it “a minimum wage offer”. Luigi Di Maio, leader of the Five Star Movement and the other deputy prime minister, said the state would not accept “charity” from Autostrade.

“We demand credible redress and there will be no bartering,” Mr Di Maio said.

Last week’s collapse of the Morandi viaduct led to recriminations from government figures against Autostrade, the road operator maintaining the motorway, and the Benetton family, which owns more than 30 per

cent of Autostrade’s parent company Atlantia. Shares in Atlantia fell more than 20 per cent after Rome threatened to revoke Autostrade’s licence.

After a state funeral on Saturday for some of the victims of the collapse Giovanni Castellucci, Autostrade’s chief executive, said the company had established a fund for the “immediate needs of the victims, to be administered by the municipality”, and a compensation fund for all those who had lost their houses.

While expressing “profound sadness”, Mr Castellucci did not take responsibility for the accident on behalf of Autostrade. He pointed out that the bridge was built in the 1960s, by another entity and said an “indepth investigation” was needed to establish fault.

The bridge could be rebuilt in steel within eight months, Mr Castelluci said. He said the initial costs for structural work and compensation would

quickly reach €500m.

Autostrade’s board of directors is to meet in Rome on Tuesday and Atlantia’s board will meet on Wednesday, a spokesman for Atlantia said.

On Sunday Giancarlo Giorgetti, undersecretary at the prime minister’s office, told Il Messaggero newspaper that Rome now planned a nationwide infrastructure maintenance overhaul “of unprecedented scale”, covering schools, aqueducts, trains and motorways, as well areas of geological risk.

Mr Giorgetti suggested the plan would be financed irrespective of budget constraints. “On this front there are no deficits, GDP, or fixed European boundaries — we are convinced that the [EU] will be benevolent,” he said.

Mr Salvini had questioned after the bridge collapse whether EU spending constraints had hindered investment — a suggestion rejected

by Brussels.

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FT Midwest farmers take Trump to task over...

Saudi Arabia looks to technology to make hajj safer

Continued from page A5

Kingdom’s ‘hackathon’ scouts for fresh ideas for ancient religious ritual

encountered a lot of things that have really worked counter to that.”

Mr Recker travelled to the Iowa State Fair last week to press his case at a meeting with Andrew Wheeler, acting administrator of the US Environmental Protection Agency.

Underlining the farm lobby’s political clout, he was joined by Iowa’s governor, Kim Reynolds, and one of its congressmen, David Young.

Both Republicans are in competitive races in the November elections, where the mandate is a critical issue for rural voters.

Iowa is the nation’s leading corn and ethanol producer. It is also a swing state that voted twice for Barack Obama, a Democrat, and then backed the Republican Mr Trump in 2016.

It is hard to overstate the importance of the biofuels industry as a market for Midwest farmers’ crops.

About 38 per cent of the US corn harvest is sold to ethanol plants and a third of US soyabean oil is used to make biodiesel, according to the agriculture department. The US is the world’s largest biofuels producer, with most petrol containing 10 per cent ethanol and diesel averaging nearly 5 per cent biodiesel, EPA figures show.

The industry blossomed thanks to the Renewable Fuel Standard (RFS), the federal mandate set by Congress in 2007. It required blending more and more ethanol and biodiesel into the motor fuel pool each year.

With domestic fuel demand more sluggish than expected, the targets have become unworkable.

Under both the Obama and Trump administrations the EPA has invoked powers to tweak them, drawing lawsuits from various parties in the biofuels, farm and oil industries.

As of a deadline last Friday, the agency’s proposed volumes for 2019 drew more than 286,000 public comments.

Congress mandated the use of 28bn gallons of biofuels next year.

The EPA instead proposed requiring 19.88bn gallons to account for poor results from making ethanol from cellulosic materials such as wood fibre.

Even that level might be under threat. In the past two years the EPA has enraged the biofuels industry by exempting dozens of smaller oil refineries from the rules. The agency said such “hardship” waivers cut the equivalent of 1.5bn gallons from the mandate last year.

Kent Engelbrecht, an executive at grain processor and biofuel refiner Archer Daniels Midland and chairman of the National Biodiesel Board, said in comments submitted to the EPA that it was impossible to assess the EPA’s targets without considering small refiner waivers.

“Unfortunately,” he said, the proposal “is like going to the grocery store, buying a dozen eggs, and finding out after you get home there’s only 10, and you have no recourse.”

The EPA’s treatment of smaller refiners intensified pressure on Scott Pruitt, Mr Trump’s first EPA administrator, who quit last month under a cloud of ethics scandals.

Chuck Grassley, Iowa’s Republican senior senator, earlier threatened to demand Mr Pruitt’s resignation over his biofuels policy.

Ahmed Al Omran

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Superdry founder donates record £1m to pro-EU group Julian Dunkerton urges people to demand vote on the outcome of Brexit negotiations Jim Pickard

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he co-founder of the Superdry fashion chain has given a record £1m donation to a campaign group pushing for a referendum on the final Brexit deal.

Julian Dunkerton said people were starting to realise that leaving the EU was going to be a “disaster”, and his £1m gift to the People’s Vote would be spent on a vast and detailed polling operation.

Mr Dunkerton, who started out in retail in the 1980s selling clothes from a market stall, helped build Superdry into a successful business with more than 500 stores.

The 53-year-old quit the company earlier this year to focus on other business interests, and last month sold a 6.7 per cent stake in the business for £71m.

In an article for the Sunday Times, he said it was time for people to have the confidence to demand a vote on the outcome of Brexit negotiations.

“I’ve got a good instinct for when a mood is going to change and we’re in one of those moments now,” he wrote. “It’s becoming clear now there is no vision for Brexit and the politicians have made a mess of it.”

The entrepreneur suggested that Superdry could never have become such a global success if Brexit had occurred 20 years ago, writing: “We would have struggled to cope with negotiating customs and tariffs.

Perhaps even more importantly, Europe was our staging post, because inside the single market we had no fear of opening a store in France or anywhere else in the EU.” Mr Dunkerton’s intervention came one day after hundreds of protesters gathered in Edinburgh to demand a second referendum.

The People’s Vote was launched in April by four MPs and the actor Patrick Stewart.

Both the Conservative government and the opposition Labour party are officially against a second referendum, but Labour leader

Jeremy Corbyn has never ruled out another vote.

Momentum, the pro-Corbyn campaign group, is facing calls to hold its own internal vote on whether to back a second Brexit referendum, after more than 4,000 of its members signed a petition supporting the idea.

Campaign groups on both sides of the Brexit debate are trying to influence prime minister Theresa May before the UK leaves the EU in March 2019.

Arron Banks, the millionaire insurance entrepreneur behind Leave.EU, has written to the group’s Eurosceptic followers urging them to join the Tory party to push for a new, more anti-EU leader.

An Opinium poll for the Observer found that 40 per cent of voters expected the UK to leave the EU without an exit deal, compared with 22 per cent who anticipated an agreement. The government is expected to publish some details of its preparations for a “no-deal” outcome later this week.

Former UN secretary-general Annan dies, aged 80 Nobel Peace Prize laureate passes away peacefully in Switzerland with family at his side David Pilling

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ofi Annan, the first black African to become UN secretary-general, has died aged 80.

Annan, who was the UN’s top diplomat from 1997 to 2006, died in his sleep in Geneva, his home for many years, after what was described by the foundation named after him as a brief illness.

He was at the helm of the UN during the 9/11 terrorist attacks on the US, and the subsequent invasion of Iraq by a US-led coalition, which came despite his diplomatic efforts to stave off conflict. His opposition to that war led to a rupture with Washington.

Annan was credited with spearheading the fight against the HIV/ Aids epidemic, which was particularly severe in his own continent, and for championing the Millennium Development Goals designed to prod governments into reaching minimum standards of health, education and gender equality by 2015.

A diplomats’ diplomat, he became almost an embodiment of the potential and limitations of the

intergovernmental body charged with fostering international cooperation and maintaining peace among nations.

He was the first UN secretarygeneral to be elected from within the ranks of the organisation.

António Guterres, the current UN secretary-general, said in a statement: “In many ways, Kofi Annan was the United Nations. He rose through the ranks to lead the organisation into the new millennium with matchless dignity and determination.”

Annan won the Nobel Peace prize in 2001 for what the committee said was his and the UN’s work for a “better organised and more peaceful world”. Annan, it said, had brought “new life” to the UN. “While clearly underlining the UN’s traditional responsibility for peace and security, he has also emphasised its obligations with regard to human rights,” it said.

Annan, a UN “lifer”, who originally joined in 1962, was not without his detractors. He was criticised by some for timidity at crucial moments, particularly when, as head of UN peacekeeping operations in 1994 he was accused of ignoring

warnings from his own mission about the impending genocide in Rwanda in which up to 1m people were killed in a matter of months.

He was also in charge of the UN during the Iraqi oil-for-food scandal, a humanitarian programme to relieve the impact of sanctions on ordinary Iraqis that ended in widespread abuse and corruption. A commission found the UN culpable of weak management and oversight during his time in charge.

Born in Kumasi in Ghana into an aristocratic family and educated at boarding school and later in St Paul, Minnesota, Annan was widely praised for his soft-spoken, dignified demeanour in trying to resolve some of the world’s most intractable conflicts.

In retirement, he served as a UN special envoy for Syria, and also sought to intervene in Myanmar where the government has been accused of ethnic cleansing of Rohingya Muslims.

He also threw his weight behind efforts to improve the efficiency of agriculture in Africa, something he thought crucial to lift tens of millions out of poverty and to contribute to wider development goals.

ith more than 1.6 million Muslims arriving in Saudi Arabia in the coming days for the annual hajj pilgrimage to Mecca, thousands of programmers and developers have been hard at work to come up with ideas that could transform the face of this ancient religious ritual.

At a so-called ‘hajj hackathon’ organised this month in Jeddah, inventors competed for prize money worth $420,000, as part of a new push by the kingdom’s authorities for a wider use of technology to make the pilgrimage experience safer and more enjoyable for the millions who perform it every year.

While hajj organisers have for years used technologies for many purposes such as large-scale simulation to predict the movement and flow of crowds, this has not prevented deadly accidents like the stampede that left hundreds of pilgrims dead in 2015. Officials hope that opening the door for ideas from outside the government could provide innovative solutions to complex old problems.

“Most apps or existing technologies used now in hajj are usually developed by government entities who build these technologies and platforms,” said Reda Banjar, head of technology events at a nascent government entity called the Saudi Federation for Cybersecurity, Programming and Drones (SAFCSP), which organised the hackathon.

“What’s new is getting people and the community involved, not just Saudis but all nationalities who want to serve hajj. They get a chance to offer apps and solutions that improve the experience and add value,” he added.

With a record number of developers and programmers from Muslim nations such as Egypt, Algeria, Morocco and Oman, as well as the UK and Japan, the three-day hackathon highlighted the social changes seen in Saudi Arabia over the last two years as Crown Prince Mohammed bin Salman continues to open up the country.

The top prize went to an allfemale team who designed an app that provides real-time translation of text and signage without connecting to the internet. “We managed to destroy the impossible and prove that Saudi women can achieve anything,” said developer Bayan al-Ghamdi. There was no gender segregation at the event, and the usual strict dress code for women —wearing a long flowing cloak in public— was noticeably relaxed. About one third of participants were women, Mr Banjar said, a much higher rate than what is typical in such events abroad in a sector traditionally dominated by men.

One female participant entered the venue wearing a pair of blue jeans, a white shirt with the sleeves rolled up to her shoulders and a Red Sox baseball hat. Security guards ushered her in without batting an eye.

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@ FINANCIAL TIMES LIMITED

Brussels set to rule on $80bn Linde-Praxair merger Vestager expected to approve deal but US regulator remains a hurdle Rochelle Toplensky

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russels will rule on the $80bn tie-up betw een Linde, the German chemicals group, and its US rival Praxair on Monday, an important milestone in a deal that would create the world’s largest industrial gas supplier.

Margrethe Vestager, the EU’s competition commissioner, is expected to clear the merger after the companies provisionally agreed to sell €5bn of Praxair’s European assets to Japanese rival Taiyo Nippon Sanso, to address concerns that the deal would raise prices and reduce choice for consumers.

The main remaining hurdle is the US Federal Trade Commission. In July, the companies had announced they would sell $3bn of Linde’s US assets to German rival Messer and private equity group CVC to secure FTC approval.

However, on 6 August, Linde representatives said US officials were making “more onerous (demands) than previously expected”.

Linde representatives said on the day that there was now “a higher probability” the divestments required to secure antitrust clearance would exceed the threshold agreed by the two companies, which could scupper the deal.

Linde and Praxair agreed that either party could walk away from the deal if antitrust officials require disposals of assets that

contributed more than €3.7bn in sales or €1.1bn in earnings before interest, tax, depreciation and amortisation.

The two disposals agreed by July would leave room to sell assets contributing another €1bn of annual sales, or about €400m of ebitda, according to UBS. The company and US regulators do not have long to reach an agreement — the deal must close before October 24 to meet a deadline imposed by German takeover laws.

Wolfgang Reitzle, Linde chairman, has pushed hard for the deal and staked his reputation on completing it.

An earlier attempt to combine the companies collapsed in late 2016 after the German company’s workers came out against the deal, ending with the departure of Linde’s finance director.

The new deal offered better terms for German workers, but still faced some opposition from unions.

Linde and the commission declined to comment. Praxair could not be reached for comment.

Linde, Praxair, Air Liquide and Air Products, are the four global suppliers of industrial, speciality and medical gases. They supply a wide range of gases including carbon dioxide for carbonated drinks, helium for magnetic resonance imaging scanners and oxygen for steel production and medical uses.

Mifid II impact on small and mid-cap brokers fuels consolidation talk

New European investment research rules trigger sharp drop in commissions

Hannah Murphy

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he UK’s small and mid-cap stockbrokers have begun to feel the impact of new European markets rules, prompting predictions of consolidation across the industry.

Groups including WH Ireland, Cenkos and Arden Partners have reported lacklustre performances in recent weeks, as City broking houses grapple with the fallout from Europe’s Mifid II legislation.

The rules, which came into force from January, include a mandate for banks and brokers to charge asset managers specifically for investment research. Previously, brokers would often bundle research with the fee they charged for executing trades.

The shake-up, which was designed to reduce conflicts of interest, has prompted many fund managers to cut back on the analyst research they receive, leaving banks and brokerages vying to stay on their research lists.

For some smaller City brokers — whose business models are more sensitive to the changes than deep-pocketed and more diversified banks — the overhaul is hurting the profitability of their research departments and has also made it tougher to win equity trading business that would previously have been bundled with their research.

City brokers have been struggling

for some years, squeezed by falling commissions and a tepid initial public offering market, partly due to bouts of market volatility and Brexitrelated uncertainty.

Mifid II heaps further pressure on the industry. Commissions paid to brokers dropped 28 per cent in the UK during the first quarter compared with the same quarter in 2017, according to data from ITG. The drop in commissions has left many brokers more reliant on deal fees at a time when fundraising has been fairly subdued.

“The broking world hasn’t collapsed post-Mifid, but some are clinging on,” said Mark Brown, chairman of broker Stockdale Securities and the former chief executive of Collins Stewart.

“The stronger are getting a bit stronger, the weak are getting a bit weaker,” he said. Consolidation, he added, “could be this year, it might be next year, but it will happen”.

Meanwhile, sources say asset managers have cut their research budgets to focus on larger, more liquid stocks. This has left some brokers battling to provide effective research services for the more thinly traded small companies that are their main corporate customers.

“It’s about the inability of the broker to tell the story to the right groups of people,” said Steven Fine, chief executive of City broker Peel Hunt.

The lira has lost more than 40% of its value against the dollar this year

Jay Powell will make his first Jackson Hole address as Fed chairman © Bloomberg

Emerging market turmoil set to take centre stage again Annual gathering of central bankers in Jackson Hole will also be in focus Michael Mackenzie, Roger Blitz and Nicole Bullock

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merging market turmoil shows little sign of abating as a new week beckons, while investors will also focus on the annual gathering of central bankers in Jackson Hole.

Emerging markets suffer the bearish blues from a strong dollar Global EM equities slipped into bear market territory last week, with the MSCI index dropping 20 per cent from its January peak. While plenty of attention has naturally focused on Turkey’s woes, the worry for investors is that a number of EM economies, their currencies and domestic bond markets are feeling a significant burn from a strong US dollar.

The surging reserve currency has also helped drive the Bloomberg index of industrials metals, such as copper, down nearly 20 per cent from its early April peak as trade tensions and weaker growth in

China have mixed with EM financial turmoil to produce a nasty cocktail. Indeed, China’s CSI 300 index closed at a near two-year low, and has fallen 26 per cent from its peak in January.

Few expect any relief for EM assets as the dollar remains ascendant given a robust US economy.

“At its essence, a stronger dollar would enhance the downside risks for developing economies with large dollar liabilities, and increase the odds of more volatility in days/ weeks to come,” notes Ian Lyngen at BMO Capital Markets.

Beyond Turkey, there are few clean shirts across EM, raising the risk that contagion will gain further momentum.

Alongside Turkey, the likes of Argentina, Chile and South Africa are notably reliant on capital inflows. Also on that list is Russia, and analysts at Miller Tabak & Co note that the country’s “high dollar denominated debt — around 15

per cent of GDP — and mediocre economic fundamentals give the rouble significant downside risk, beyond the 6 per cent decline it has already suffered since the crisis began”.

Late last week, hopes of an easing of Sino-US trade tension ignited a brief reprieve, but investors should be prepared for little to come from a Chinese delegation— led by vice minister of commerce Wang Shouwen, seeking to defuse the risk of a trade war later this month.

Fed meeting minutes and Jackson Hole Symposium loom The dollar’s strength reflects an accelerating economy and a Federal Reserve remaining on a steady policy tightening path as inflation pressure gathers pace. As such, the release of last month’s meeting minutes on Wednesday and the gathering of central bankers at Jackson Hole at the end of the week loom as key events for investors.

Carbon emission proposals to boost Trump’s drive to revive coal Release of plans coincides with rally in West Virginia heartland ahead of midterm elections Ed Crooks

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he US administration has drawn up proposals to replace Obama-era rules on carbon dioxide emissions with measures to support coal-fired power plants, as President Donald Trump seeks to fulfil his campaign pledge to “put our miners back to work”.

Draft versions of proposed rules on carbon emissions from electricity generation, due to be announced this week, include measures that could push utilities to invest in coal-fired plants to make them more efficient and competitive.

Michelle Bloodworth, president of the American Coalition for Clean Coal Electricity, which represents coal-fired generators and mining companies, described the proposed rule as “a big step in the right direction” by the Environmental Protection Agency.

She added that industry believed the regulations would “provide the flexibility to states to develop emissions guidelines that recognise the important role that our nation’s coal fleet plays”.

Mr Trump will be holding a rally on Tuesday in West Virginia, a heart-

land of US coal mining, and the administration is expected to announce its plan to coincide with that event.

The Obama administration’s regulations, known as the Clean Power Plan, have not yet come into effect, having been stayed by the Supreme Court in 2016, but were expected to accelerate the closures of coal-fired power plants.

It’s a carbon dioxide increase plan. They are willing to pervert the Clean Air Act to that end Conrad Schneider, the Clean Air Task Force, environmental group It would be difficult for the administration simply to reject the Obamaera plan, because of the EPA’s 2009 “endangerment finding”, a technical conclusion that greenhouse gases “may reasonably be anticipated” to endanger public health and welfare, and so should be regulated under the 1970 Clean Air Act. But the administration’s strategy for meeting that requirement could help coal-fired plants, and could lead to higher greenhouse gas emissions.

Joseph Goffman, who was one of the chief architects of the Clean Power Plan at the EPA and is now at Harvard Law School, said the Trump administration’s approach was argu-

ing that it had the authority only to regulate individual power plants, rather than looking at the electricity system overall.

The rules are expected to offer a menu of options for these regulations to each state, giving them ability to require coal-fired plants to become more efficient, so they have lower emissions for every megawatt hour they generate.

Conrad Schneider of the Clean Air Task Force, an environmental group, said the consequence could be that more efficient and competitive coal plants would run more often — displacing lower-emitting gas plants and as a result raising emissions overall.

He added that the plan was the latest in a series of attempts by the Trump administration to revive the US coal industry. “It’s a carbon dioxide increase plan,” he said. “They are willing to pervert the Clean Air Act to that end.”

Environmental groups and others who support action to address the threat of climate change are expected to challenge the Trump administration’s plans in court.

Germany’s coal task force can change things for Europe

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NEWS YOU CAN TRUST I MONDAY 20 AUGUST 2018

Insight PDP is in denial: The prodigals and rebranding won’t save it GLOBAL PERSPECTIVES

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

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hen the People’s Democratic Party (PDP) lost the 2015 presidential election, after 16 years in power, it suffered a post-defeat trauma, and went throughwhat psychologists call the “cycle of grief”. This cycle consists of five stages, namely: shock, denial, anger, despair and acceptance. Every individual or institution that suffers a major loss or setback goes through, in some form, the cycle of grief. My argument is that PDP has not completed this grieving process, and that until it does it can’t fully recover and regain power.

The loss of power after 16 years in government was indeed earth-shattering for the PDP. This was a party that arrogantly vowed to rule Nigeria for 60 years! Thus, after its defeat, the PDP was, naturally, in shock. There was complete numbness among its members across the country. But the shock soon morphed into denial, a refusal to accept the reality of the situation. For weeks, PDP leaders, stuck by the “un-realness” of the defeat, were still contemplating challenging, and hopefully overturning, it in court.

However, as the reality of the loss and its irreversibility sank in, denial turned into anger, characterised by the blame game. Somebody or something must be blamed, and for the PDP it was blame galore. The then chairman of the party, Adamu Mu’azu and the then chairman of the Board of Trustees, Tony Anenih, were both blamed for the loss and forced to resign.

So was the then chairman of the PDP Governors’ Forum, Godswill Akpabio, who recently defected to the All Progressives Congress (APC).

But the anger and blamegame soon turned into despair. PDP lost the will to live and was, as an organisation, in a complete meltdown, sapped of confidence, energy and hope. What’s more, it descended into a protracted crisis as two factions, led, respectively, by Ahmed Shinkafi and Ali Modu Sheriff, fought in and out of court for control of the party. It was debilitating.

The PDP failed to move to the final stage of the cycle of grief: acceptance, which involves

coming to terms with a loss, learning from it and rebuilding a newlife.

For any political party that has suffered electoral defeat and wants to regain power, the acceptance or closure stage must be followed by intense debates about its future direction: what it stands or should stand for; what its values, vision and policies are or should be. Truth is, the PDP has not gone through this process. It’s still in denial about why it lost power and what it must do to regain it.

Notwithstanding, some recent developments have put a spring in the party’s feet, giving it confidence, albeit premature, about winning next year’s presidential election.

The first was the Supreme Court’s confirmation of the Ahmed Shinkafi’s faction as the authentic PDP. This ended the 14-month leadership crisis that paralysed the party, and, crucially, helped unite the party, a key condition for electoral victory, as divided parties hardly win elections.

The second development was the coalition that PDP formed with 38 other parties, named Coalition of United Parties (CUPP), which, according to its MoU, would present one candidate, presumably from PDP, to face President Buhari in next year’s election. The last development was the return to the PDP of several former leaders, who joined the APC before the 2015 elections. The

years in government and then regain it just four years later is almost unimaginable. But can the PDP pull off a remarkable comeback next year?

Well, as I once wrote in this column, “PDP still has a mountain to climb to repair its damaged credibility and become electable again”.

Yet, I also argued that “APC’s electoral positionis not so unassailable as to make PDP’s

‘

...it would be a monumental mistake for the PDP to think that it can regain power simply by cashing in on Buhari’s failure without making itself a credible alternative

,

victory in 2019 unthinkable”, especially if you consider that Buhari beat Jonathan by only 2.5m votes. That’s not a significant margin and could be overturned, depending on what happens in the SouthEast, South-South and SouthWest in 2019 and, indeed, in the non-core North. I further argued that APC could be defeated if it underperformed and if its frail coalition, par-

said: “From the way things are going in this country, Nigerians will realise the PDP is the only alternative”. Really?

That seems remarkably complacent and hubristic.

It’s worth nothing that President Trump is a historically unpopular president. Yet his party, the Republicans, has been winning by-elections.

Similarly, despite Buhari’s unpopularity, APC has won governorship elections in Edo, Ondo and Ekiti states, and has won several by-elections. In a recent poll, BusinessDay asked: “With the defection of over 50 senators and lawmakers from APC, do you think PDP will seize power in 2019?” 74% of the respondents said “No”. So, what’s happening? Why is PDP not winning despite Buhari’s and APC’s underperformance and seeming unpopularity? The truth is that PDP is doing nothing to earn the people’s trust but relying on Buhari’s failure to propel it to victory.

Let’s face it, it would be a monumental mistake for the PDP to think that it can regain power simply by cashing in on Buhari’s failure without making itself a credible alternative. As the American journalist Franklin Adams famously said, “Elections are won by men and women chiefly because most people vote against somebody rather than for somebody”. What does that mean in the Nigerian electoral context? Well, it means that despite Buhari’s and APC’s unpopularity, if Nigerians don’t see PDP as a

60: The number of years PDP boasted that it would rule Nigeria unchallenged

prodigals include former Vice President Atiku Abubakar, three state APC governors, namely, of Sokoto, Bauchi and Kwara, several commissioners and state legislators, and, of course, over 50 federal legislators, both from the Senate and House of Representatives, including, notably, the Senate President, Bukola Saraki These developments – party unity, electoral coalition and returned prodigals – would, indeed, give any party a shot in the arm, and boost its confidence six months into a general election. But can they give the PDP victory in next year’s general elections?

Let’s be clear,PDP is trying to achieve a rare feat in the history of electoral democracy. For a party to lose power after 16

ticularly the North and SouthWest alliance that gave it victory, unravelled.

Now, the above analysis remains valid, in my view, but there is one missing element: the PDP itself. As things are, the PDP seems to think it can regain power by relying on some extraneous factors, such as the CUPP, which is a coalition of strange political bedfellows, the return of its prodigals and rebranding, i.e., by changing its name, as recently reported by some newspapers. But more significantly PDP thinks it can win by exploiting President Buhari’s undoubtedly monumental underperformance and failure. For instance, one PDP leader, Ifeanyi OKowa, Delta state governor, once

credible alternative they will vote subconsciously against PDP rather than for Buhari; in other words, Buhari would win by default!

So, what must PDP do to improve its chances of regaining power next year? Well, it must do three things. First, it must show genuine remorse for its failure in government and offer a genuine apology to Nigerians. Second, it must redefine itself: what does it stand for and what is its vision for Nigeria. It must offer voters a detailed and practical agenda of how it would tackle Nigeria’s multifaceted challenges. And third, it must present a credible presidential candidate.

Note: the rest of this article continues in the online edition of Business Day @ https://businessdayonline. com/

fivethings for your new week

Fascinating business facts

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$1.5trn

he biggest U.S. asset managers are going head-to-head to win a piece of a $1.5 trillion corporate cash comeback. That’s the sum companies are expected to bring onshore under the U.S. tax overhaul passed last year, according to Invesco estimates. About $400 billion has already been repatriated, according to the firm. Overseas, at least one major asset manager is losing out as a result of the changes.

Cisco Systems Inc. yanked 5 billion euros ($5.7 billion) from Deutsche Bank AG’s asset management arm, DWS Group, in recent quarters as it repatriated profits, Bloomberg News reported on Thursday. The loss amounted to 40 percent of Deutsche Bank’s outflows in the first half of the year.

E

$510

urope’srail operators such as France’s SNCF and Germany’s Deutsche Bahn AG could face a shake-up akin to that stirred by low cost airlines in the aviation sector as Europe pushes for competition in passenger train service. Lower fares could attract “millions of new passengers,” says Jacques Gounon, chief executive officer of Getlink SE, the company formerly known as Eurotunnel that manages the English Channel Tunnel. Getlink already runs a car-and-truck shuttle through the tunnel and is considering a discount high-speed service that would challenge Eurostar International Ltd., which now offers the only high-speed passenger service through the tunnel, with fares often topping £400 ($510) for a London-Paris round trip.

U

95.3%

.S. consumer sentiment unexpectedly fell to the lowest level in almost a year amid less favorable views on purchasing bigticket items and persistent concerns about trade tensions, a University of Michigan report showed Friday. The sentiment index decreased to 95.3 (est. 98) from prior month’s 97.9; lowest since Sept., below all analyst estimates while the current conditions gauge, which measures Americans’ perceptions of their finances, fell to 107.8 from 114.4 in July; 6.6-point drop is biggest since Aug. 201. Respondents also continued to express concern about how trade tensions may affect the economy. Negative references to levies remained widespread, with 32 percent citing unfavorable references to the trade policy in early August, according to the report, following 35 percent in July.

60,000

Many in Egypt are being forced to put off hajj plans indefinitely by the rising cost of living. Muslims are expected to join the annual haj at least once in a lifetime, provided they are physically and financially able. However, like others many Egyptian muslims have been badly hit by soaring prices, especially of fuel and electricity, as the government slashes state subsidies under IMF-backed economic reforms. Even wealthier pilgrims are now finding the journey more difficult after Saudi Arabia and Egypt both imposed additional fees for Muslims repeating the lesser pilgrimage to Mecca, known as the ‘umrah’, within three years. Meccas bound flights are cancelled as only 64,000 of Egypt’s 80,000 haj quota would now make the pilgrimage - a drop of 20 percent. Last year 80,000 Egyptians went on the haj.

T

$1trn

he global equity market is shrinking at the fastest pace in at least two decades, as a wave of corporate share buybacks swamps the overall volume of companies going public, issuing new stock or selling convertible debt. US companies have been particularly hyperactive buyers of their own stock, thanks to the earnings boost delivered by tax cuts and the robust economy. Goldman Sachs forecasts that the overall volume of US buybacks will reach a record-breaking $1tn in 2018. But companies in the UK, Europe and Japan are also aggressively repurchasing their shares, at a faster pace than new companies are going public or older ones are raising fresh capital through secondary share issues. Bernstein, a research house, estimates that the total value of buybacks in western Europe, Canada, Japan and the developed countries of Asia totalled $248bn by the end of July — double the volume over the same period last year.

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