BusinessDay 21 Aug 2019

Cars45 Price Guide Buy

Nigerian Used

Tokunbo

Grade A Toyota Highlander 2003-2007 Toyota Sienna 1999-2003

Sell

Grade B

Buy

Sell

Grade C

Buy

N2.92m

N3.80m N2.27m

N2.95m

N1.54m

N2.01m N1.20m

N1.56m

Sell N1.79m

Buy N2.33m

N948,000 N1.23m

Grade D Sell

Buy

N1.56m

Grade E Sell

N2.03m

Grade A Grade B

Buy

N1.31m

Sell

Buy

Sell N1.55m

Buy N2.02m

Grade C Sell

Grade D

Buy

N1.28m

N1.66m

Grade A

Sell

Buy

N1.15m

N1.50m

Grade E Sell

Buy

N1.71m

N1.92m

N2.50m

N913,163 N1.18m

N828,000 N1.07m N696,000 N904,800

N1.03m

N1.34m N836,822 N1.08m N691,589 N899,065 N622,430 N809,159 N491,720 N639,235

With the goal to help hundreds of customers to buy, sell or trade-in their cars, Cars45 is creating trustworthy delightful consumer experiences. Data used for this pricing guide is derived from a wide variety of sources that include our online auction platform, dealer transactions, depreciation costs and consumer information. It is important to note that these prices are estimates that can be used to verify used-vehicle cost or help you determine what to pay for a used car.

Sell

Swap

bm| 1om7bাom

Grade B

Close to mint with minor blemishes

Grade C

oo7 1om7bাom ‰b|_ blemishes, wear and tear

Grade D

ˆ;u-]; 1om7bাom

Grade E

;Ń´o‰ -ˆ;u-]; 1om7bাom

Check car prices and values when buying and selling tokunbo or used vehicles

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businessday market monitor

Biggest Loser

Biggest Gainer NESTLE N1121.20 0.66pc

MTNN N132.60 27,058.62

4.40pc

Foreign Reserve - $44.24bn Cross Rates - GBP-$:1.22 YUANY-N 51.35 Commodities Cocoa

US$2,174.00

Gold

$1,516.50

â‚Ś3,837,981.23 +1.16 pc

Foreign Exchange

Buy

Sell

$-N 357.00 360.00 ÂŁ-N 438.00 450.00 â‚Ź-N 392.00 404.00

Crude Oil

$ 59.75

news you can trust I **WEDNESDAY 21 AUGUST 2019 I vol. 19, no 376 I N300

FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

Market I&E FX Window CBN Official Rate Currency Futures

($/N)

g

www.

Spot ($/N)

3M

363.68 306.95

-0.16 14.86

NGUS OCT 30 2019 362.03

IFEOMA OKEKE

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irlines operating in Nigeria have continued to spend millions of naira annually just to tow their aircraft into the various aerobridges, a point to disembark passengers after landing, as a result of the failure of the Federal Airports Authority of Nigeria (FAAN) to address infrastructure deficit at the Murtala Muhammed International Airport (MMIA), Lagos.

BusinessDay’s checks show that in other climes, airlines taxi their aircraft into the aerobridge.

In Nigeria, however, airlines pay to taxi their aircraft to the bridges because the aerobridges are old

Continues on page 38

L-R: Dele Kelvin Oye, 2nd deputy national president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA); Ayoola Olukanni, directorgeneral, and Saratu Iya Aliyu, national president, during their courtesy visit to BusinessDay head office in Apapa, Lagos, yesterday.

Pic by Olawale Amoo

6M 0.41

0.00

10 Y -0.01

20 Y 0.00

15.44

14.48

14.23

14.46

as escalators pack up

5Y

NGUS JAN 29 2020 362.48

@

g

Aircraft towing persists at Lagos airport over infrastructure decay NAHCO, SAHCO pocket N985m annually for towing

fgn bonds

Treasury bills

NGUS AUG 26 2020 363.53

g

Buhari bars ministers from direct contact with him ...asks them to pass through SGF, Chief of Staff TONY AILEMEN, Abuja

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s ministers prepare to take offices, President Muhammadu Buhari on Tuesday barred them from direct contact with him. He

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Inside Police re-arrest notorious kidnap kingpin P. 2 ‘Wadume’

Ghana sees dollar rain with slave heritage tourism, P. 4 Nigeria should too

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Wednesday 21 August 2019

BUSINESS DAY

news Diaspora remittances could hit $34.8bn in 3 years – PwC ISAAC ANYAOGU & FIKAYO OWOEYE

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emittances from Diaspora Nigerians into the country could grow to US$25.5bn, US$29.8bn and US$34.8bn in 2019, 2021 and 2023, respectively, indicating how important these inflows are becoming to the Nigerian economy, a new PwC report has found.

For four consecutive years, official remittances have exceeded Nigeria’s oil revenues but these figures could be considerably higher considering that many transactions are unrecorded or take place through informal channels, PwC said in a release.

The report, titled ‘Strength from Abroad: The Economic Power of Nigeria’s Diaspora’, is an analysis which shows the critical importance of the diaspora to Nigeria’s economy, said Andrew Nevin, partner & chief economist at PwC. Nevin said the recently established Nigerians in Diaspora Commission (NiDCOM), led by Abike DabiriErewa, indicates that the Federal Government recognises the strategic importance of the Nigerian diaspora.

“The key next steps for the newly established Commission are to formulate and execute a strategy to maximise the benefits of Nigeria’s diaspora,” he said.

In April, the World Bank in its Migration and Devel-

opment brief estimated that officially recorded annual remittance flows to low- and middle-income countries reached $529 billion in 2018, an increase of 9.6 percent over the previous record high of $483 billion in 2017.

G l o b a l re m i t t a n c e s, which include flows to highincome countries, reached $689 billion in 2018, up from $633 billion in 2017.

“Over a 15-year period, PwC expects total remittance flows to Nigeria could grow by almost double in size from $18.37 billion in 2009 to $34.89 billion in 2023,” the report said.

Nigeria accounts for over a third of migrant remittance flows to sub-Saharan Africa, the PwC report said. The 2018 migrant remittances translate to 77.2 percent of the Federal Government budget in 2018 and 10.1 times the FDI flows in the same period. Nigeria’s remittance inflows were also 6.8 times larger than the net official development assistance (foreign aid) of US$3.4 billion received in 2018.

In Africa, Egypt and Nigeria account for the largest inflows of remittances into in 2018.

“We’re very keen to see state governments start to engage the diaspora. The primary benefits of remittances to recipient households is the improvement in their general welfare, and studies show that

L-R: Lai Mohammed; Gbemisola Saraki, and Babatunde Fashola, all ministers-designate, during day 2 of the Presidential retreat for ministers designate, federal permanent secretaries and top government functionaries at the State House Banquet Hall in Abuja, yesterday. NAN

Nigeria’s risk premium surges to highest in 2019 LOLADE AKINMURELE

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nvestors are demanding much more from Nigeria to be holders of its debt.

That’s after the country’s risk premium widened to the most in 2019, a sign that investors risk perception of Nigeria is at an all year-high.

Analysts say Nigeria’s risk perception has heightened on the back of lower oil prices and a fresh lawsuit against the federal government by an Irish gas company, P&ID, which has been awarded the right by a British court to Continues on page 38 seize Nigerian assets worth $9bn.

The Central Bank said Monday that it will “defend the reserves” but that has not stopped investors from fearing the worst which could mean a $9 billion or 20 perMeanwhile, the Inspector cent set back to current exGeneral of Police, Moham- ternal reserves of $44 billion. med Adamu, while commending the police operatives for their perseverance and painstaking efforts, expressed his profound gratitude to all Nigerians for their unparalleled show of love and empathy to the Force and JOSHUA BASSEY the families of the officers igerians are at a and patriotic civilians who loss over who to paid the supreme price in the believe between service of their fatherland, the t h e Ec o n o m i c statement said. and Financial Crimes ComThe IGP believes that the mission (EFCC) and former re-arrest of Wadume will, governor of Lagos State, no doubt, help in bringing Akinwunmi Ambode, on the answers to the numerous but issue of the reported raid on hitherto unanswered ques- the Lagos homes of the lattions touching on the incident ter, Tuesday. and the larger criminal enterWhile former Governor prise of the suspect.

Ambode through his media The suspect was at the cenaide, Habib Aruna, contre of the recent controversy firmed that the EFCC conand bitter face-off between ducted a search on his Epe the Army and the Police following the killing of the three and Parkview Ikoyi homes police officers and civilians and urged his supporters to

by Nigerian soldiers allegedly remain calm, spokesperson to rescue the kidnap kingpin of the EFCC, Tony Orilade, said to have links with some denied reports that the operatives of the anti-graft security operatives.

Police re-arrest notorious kidnap kingpin ‘Wadume’ INNOCENT ODOH, Abuja

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he operatives of the Nigeria Police Force have re-arrested the notorious kidnap kingpin, Hamisu Bala, aka ‘Wadume’.

A statement issued on Tuesday by the Force Public Relations Officer, Frank Mba, noted that ‘Wadume’ was rearrested in the late hours of Monday, August 19, 2019 in his hideout at Layin Mai Allo Hotoro area of Kano State.

It would be recalled that the police had been on the massive manhunt for the suspect since August 6, 2019 following the unfortunate incident in Ibi, Taraba State, which resulted in the brutal killing of three police officers and two civilians, and injury to five others.

“The suspect, who was appropriately restrained at the time of the incident, was subsequently released by his ‘rescuers’ after they had destroyed the restraining handcuffs,” the statement said.

“The P&ID $9bn claim was like a sucker punch to investors who were already concerned about lower oil prices,” said Tajudeen Ibrahim, head of research at investment bank, ChapelHill

MARKETS Denham.

“The risk premium is likely to widen further if oil prices continue falling, because the CBN will be forced to raise rates to compensate for the additional risk investors are taking,” Ibrahim added.

A risk premium is the return in excess of the risk-free rate of return an investment is expected to yield.

An asset’s risk premium is a form of compensation for investors who tolerate the extra risk, compared to that of a risk-free asset, in a given investment.

For sovereign bonds, the US bond is considered as risk-free-and as such another sovereign’s risk premium can be determined by comparing the yields on the sovereign’s local bond to that of the US treasury.

The US ten year treasury yielded 1.6 percent Monday while investors demanded for as high as 14 percent to hold Nigeria’s one year Treasury bill. That leaves the risk premium at 12.4 percentage points, the highest spread this year.

It means investors are demanding an extra 12.4 percent yield to hold the one year Nigerian treasury bill.

Nigerian dealers raised their secondary-market bids for one-year treasury bills to 14 percent from 11 percent last week, traders said on Monday.

The bid-offer spread on

the paper doubled to 200 basis points, traders said, adding that some investors had bid for bills at 16 percent on Friday, when news first broke that a British court had ruled in favour of P&ID. The federal government says it has instructed its lawyers to appeal against the judgment.

In a statement released on Friday evening, Dayo Apata, the solicitor general of the federation and permanent secretary, federal ministry of justice, said Nigeria will seek for a stay of execution.

Meanwhile, oil prices remained below the federal government’s $60 per barrel budget peg for the third week running Monday.

Brent crude, Nigeria’s benchmark grade, sold for $59 per barrel as at 6pm Monday.

Who raided Ambode’s Lagos homes?

…Ambode confirms search by EFCC, says ‘no cause for alarm’ …but agency denies, says Ambode under investigation

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agency raided Ambode’s homes.

The former governor, who reacted to the development in a statement titled “EFCC search: No cause for alarm”, urged his supporters and the general public to remain calm and law-abiding as there was no cause for alarm.

Ambode in the statement said the operatives of the EFCC conducted a search on his Epe country home and Parkview Ikoyi residence without any incident, adding, however, that the commission, till date, has not opened any direct communication with him on any issue.

The former governor said he was ready and willing to respond if or when the commission decides to open

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communication with him on any allegation.

“This morning, operatives of Economic and Financial Crimes Commission visited the Epe country home and Parkview Ikoyi residence of Akinwunmi Ambode, former governor of Lagos State, with warrants to conduct a search. These searches were carried out extensively and at the end of the exercise the operatives left without any incident,” the statement said.

“The former governor reiterates that the EFCC has till date not had any direct communication with him on any subject matter whatsoever and if or when it occurs, he is ready and willing to respond,” it said.

“The former governor wishes to assure his support@Businessdayng

ers and the generality of Lagosians to continue to remain calm and law-abiding as there is no cause for alarm,” it further said.

Ambode reiterated his belief in the rule of law and due process, adding that he remains grateful for the opportunity to have served Lagos State diligently and conscientiously.

In an earlier response to allegations by the EFCC that it had frozen certain accounts linked to him, Ambode had insisted that no account of his contained N9.9 billion let alone being frozen by the commission as those accounts were opened and operated by the Lagos State government.

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news ANALYSIS

Ghana sees dollar rain with slave heritage tourism, Nigeria should too ISAAC ANYAOGU

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lavery may have ended over 400 years ago, but Ghana is milking its anniversary for what it’s worth. This year it expects to rake in almost $1 billion from tourists visiting the country to mark what it calls the year of return.

Yet Ghana is not the only African country with a history of slavery. Nigeria has even more colourful stories but Ghana has been the most strategic about marketing its potential for tourism and is clearly emerging the smartest about turning it into an opportunity for economic boom.

The Ghanaian tourism Authority expects 500,000 visitors this year, up from 350,000 in 2018. Of those, 45,000 are estimated to be seeking their ancestral roots, a 42 percent increase from last year according to a Reuters report.

Ghana has packaged its tourism around ancestral heritage to cash in on renewed interests in people traveling to places connected to their ancestry. U.S. genetics company African Ancestry said its sales of DNA tests tripled after last year’s release of the superhero film “Black Panther,” an Afro-centric blockbuster with a predominantly black cast.

The company is launching an ancestry-based travel service

later this year.

Ghanaian officials see it as an opportunity to entice some much-needed foreign investment into their economy that is struggling with high inflation and public debt that has needed an International Monetary Fund (IMF) lending program to fix.

Analysts estimate that with an average spend of $1,850 per tourist, Ghana could see revenue rise over $925 million, a 50 percent increase from 2018, and almost half of the $2billion the country generates from selling cocoa.

Ghana packaged its “slave river,” where captured Ghanaians submitted to a final bath before being shipped across the Atlantic into slavery centuries ago, never to return to the land of their birth into an almost spiritual experience that has drawn celebrities including Steve Harvey. They regard it as a place of somber homecoming for the descendants of those who spent their lives as someone else’s property.

This month’s anniversary of the first Africans to arrive in Virginia has caused a rush of interest in ancestral tourism, with people from the United States, the Caribbean and Europe seeking out their roots in West Africa.

Awuracy Butler, who runs a company called Butler Tours

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said that business has doubled as African diaspora tracing their family history return. Some Nigerians who are planning holidays say on social media posts that they have had to cancel because literally all the hotel rooms in the country have been booked some over three months ago.

As in Ghana, Nigeria has physical representations of its cultural heritage including palaces, architecturally sophisticated city walls and gates, shrines, smelting furnaces, arts and crafts, pottery making, traditional foods and drinks but could do more to promote them despite petro dollars.

Sites commemorating the slave trade exist in the coastal town of Badagry and artefacts including chains used to shackle slaves are spread across the museums, two of which are small single-story buildings with corrugated iron roofs but visitors are few and far between largely due to the poor state of the road to Badagry.

Last year, Yemi Kale, Statistician-General of the Federation and Chief Executive Officer, National Bureau of Statistics said tourism and other sectors which support it such as trade accounted for 34 per cent of GDP and about 20 per cent of the country’s employment creation in 2017.

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COMMENT

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Collateral Registry as support infrastructure for microfinancing SMALL BUSINESS HANDBOOK

EMEKA OSUJI

E

conomic exclusion remains a major challenge to Nigeria’s socioeconomic development. Undoubtedly, those who are structured to the exteriors of the economy or who operate outside the financial system, cannot maximally benefit from measures taken to enhance their well-being. The reason is simple: the world has become intensely financial and not much happens without finance in the forefront.

Besides, financing has changed from what it used to be. For instance, it is now optional for people to visit their bank.

Most banking services can be remotely accessed from anywhere in the world.

Those who have no bank accounts or have no access to the infrastructure necessary to handle such remote banking activities will suffer financial and economic inequity. Fortunately, this is one fact that the Nigeria government has taken to heart and is currently pursuing with vigour.

Over the past several decades, but particularly from 1977, when the rural banking programme was launched, the pursuit of financial and, by extension, economic inclusion has received serious attention in Nigeria. That programme had its roots in the desire of the Nigerian government of the time to give the citizens a fair opportunity to participate in their economic affairs.

It was part of the global programme of domesticating the economy and giving Nigerians control of the commanding heights of their economy. The flagship project of this programme was the Indigenization Programme. This programme was successful in transferring the ownership and control of major foreign companies in Nigeria to some Nigerians. Although criticised for excluding those sections of the country that just came out of the Civil War, in particular the south-east, whose citizens had neither the contacts nor the finance to participate in the exercise, it marked a major shift in capital ownership in Nigeria.

Under the rural banking programme, commercial banks in the country were obliged to establish functional branches in the rural areas. The target clients were the rural farmers and petty traders in the villages who saved their money by putting them in bottles and burying them in secrete places; those who save by hiding their funds under pillows because they had no access to any kind of banking services. The programme was intended to offer them both credit and savings facilities and to help in boosting the rural economy.

To show its seriousness, government offered a number of incentives in the areas of tax and the period needed to write off certain costs relating to rural branches.

The programme took off very well as bank branches began to spring up in the hitherto unbanked local communities.

Unfortunately, due to a combination of factors, some of them are still key players in our economic setback. They include lack of basic infrastructure like telephones, insecurity, and epileptic power supply. Others were lack of skilled workers to man the rural branches and inexperience on the part of banks in dealing with rural financing and the entailed micro nature of the transactions.

The introduction, in 2005, of a national microfinance framework, marked a watershed in Nigeria’s financial and economic inclusion efforts. However, continuous review adjustment and improvement is fundamental to sustainable Moreover, the banks were required to lend a certain proportion of the deposits they mobilize from a locality to the businesses in that community. The banks could not find adequate vent for the deposits they mobilized from the rural areas as most of the business entities around were micro, unregistered and essentially unbankable.

The result was that banks took deposits from the poor in the local communities and passed them to the more endowed urban customers. Banks began to worry about the poor bottom lines of their rural branches, and turned them literally to observatories they for reasons other than commercial banking.

But Nigeria never gave up on the idea of banking the rural communities and in particular, the economically active poor. The strategies adopted might have changed but the objective remains the same. It has now taken new forms and manifested in the establishment of new financial institutions and instruments, geared towards financial liberalization and inclusion. The introduction, in 2005, of the framework for a national microfinance practice, marked a watershed in our financial and economic inclusion efforts. However, continuous review adjustment and improvement is fundamental to sustainable Other efforts in that direction include the introduction of agency banking and mobile money strategies. On the financing part, the Central Bank and the Bank of Industry have led the way in providing all kinds of financing packages. For example, the SMEIS,

‘

Nigeria never gave up on the idea of banking the rural communities and in particular, the economically active poor.

The strategies adopted might have changed but the objective remains the same

Anchor Borrowers’ Fund for farmers, funds for Nollywood fashion designers.

The financing space is awash with cash.

To what extent have these funding opportunities helped the large SME sector in the country? How much have we achieved in our financial inclusion project? If we consider the Rural Banking Scheme as the beginning of our financial inclusion project, we are looking at a project that has been on for forty years.

There is no doubt that some progress has been made but we are looking at a programme on moving at snail speed.

An honest opinion will be that there is room for improvement. However that room is a bit too large. Clearly, the fact that 39.7 percent of Nigeria’s adult population is still excluded financially after 40 years of effort says something negative about our financial inclusion efforts.

Why are we making very slow progress? The answer is not farfetched. The country’s financial infrastructure is very poor. Without doubt we need to work more seriously on a number of things including the power sector, the charges on bank services and the deployment of equipment. Perhaps a new form of rural baking programme focusing on POS and ATM machines deployment and use might be considered and if necessary compelled.

In addition, government in 2017 introduced the Collateral Registry Law that has made it possible for lenders to advance credit to owners of chattels, which were hitherto of no financial value to their owners. Dead Capital as they are often termed have therefore been resurrected and become useful again.

Nigeria’s microfinance industry can do a lot if the law is taken serious and diligently applied.

Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emekaosujii

There is no milk import problem

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ne of the most enduring lessons I’ve learnt from the man who taught me to love economics is this – where you collect data from is not always the same place where the problem originates.

Four years ago, The Economist magazine interviewed a certain Muhammadu Abubakar of L&Z Integrated Farms about the challenges of dairy farming in Nigeria.

Mr Abubakar, at the time, ran a sizeable dairy farm in Kano. He listed several problems with producing milk from cows in Nigeria. The first one is obvious – power.

He had to run his generators 24 hours a day as power supply was so erratic. Then there is water – cows drink a lot of water (a rule of thumb is that 1,000 cows will need to drink 20,000 gallons of water per day).

There’s also a lack of cows and seeds to grow fodder so both have to be imported.

If after all of that you manage to produce some milk, getting that milk to the market is another big challenge. He tried flying the milk to Lagos from Kano but suffered losses due to the milk sitting at the airport and not being flown on time. He then switched to refrigerated trucks but those ones too came with their own challenges namely bad roads and various ‘authorities’ who harass them for bribes and all manner of ‘licence’ fees during the journeys. Long story short, by the time his milk arrives in Lagos from Kano, it costs about three times the price of milk in Europe.

None of these problems is about milk.

You can be trying to produce water or wine in Nigeria and you will run into the same

problems. At the same time, you cannot solve these problems just for milk. It will be ridiculous to build a 100MW power plant, for example, just to serve the dairy industry. It will take forever to sell enough milk to pay back the cost of the plant and make a profit for the power plant’s owners. We also cannot build ‘milk roads’ for milk trucks to ply so they can get to market faster.

If one then looks at how much Nigeria spends on importing milk and decides it is a problem, you cannot possibly deduce where the real problems lie from that import bill figure alone. That is to say, the data on milk imports is in one place while the reason for the milk imports is in a totally different place.

Yet, the Central Bank Governor, Godwin Emefiele, has collected some (dubious) data on milk imports; decided that it is where the problem is; and proceeded to ‘solve’ it by effectively banning the import of milk. People import milk because they are confronted with a hard constraint in the market – in a country with plenty of poor people, there is a limit to how much people can pay for milk and unfortunately the local cost of production is above that limit.

Of course, some can always afford milk that is produced locally however expensive; but as milk is not something that people cannot survive without, many will simply and quietly choose to go without it.

Banning the use of forex for the import of milk does not solve the milk problem.

You will simply solve the problem at the point where you collected the ‘problem’

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data from. If you look at the amount spent on importing milk as a problem, you can easily make that problem disappear by refusing to give anyone forex to import it.

But you will not solve any of the problems faced by Mr Abubakar in producing milk.

Instead you will make it possible for him to continue his business as it is while giving him a bigger market by eliminating the alternatives.

It is disturbing how the Nigerian government does not have any qualms about implementing its economic ideas on top of the food that Nigerians eat. Is milk really a problem worth solving in Nigeria of today? I have two young children and they consume far more milk than I do as an adult. I can go several days without milk at all (when I drink coffee, I drink it black) but my children have milk almost every day.

There’s a good reason why this is so.

Ninety percent of a human being’s brain grows in the first 1,000 days (about 3 years) of a person’s life. The nutrition, care and mental stimulation that children receive in those first 1,000 days will determine their ability to learn anything later on in life. Millions of children born in Nigeria every year already face a challenge of being born into what we must admit is a tough environment.

How much is Nigeria going to save from milk imports (which is not even in the top biggest 10 imports for the country) that can be worth having millions of adults later in life who are not able to reach their full cognitive abilities simply because they

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FEYI FAWENHINMI

did not get a chance to receive nutrition as children? A few hundred millions of dollars in forex saved today will cost you billions in future spent on education for which you cannot receive full value simply because you tried to save money on milk in the past.

There is no milk import problem.

Nigeria consumes far less milk per capita than even its African peers, never mind comparing globally. There is a lot of scope to increase the demand and consumption of milk locally by tackling the actual problems that make it out of reach for Nigerians instead of focusing on the source of the data. If you double local production of milk today and also double imports, the market will easily absorb it provided the price moves in the opposite direction. But the Central Bank’s policy is simply to take the demand for imported milk and shift it to local producers.

What a tragedy.

Fawehinmi is an accountant and public affairs analyst

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COMMENT Lost but not out of reach

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CHARACTER MATTERS WITH DAPS

DAPO AKANDE

T

he fact that social media has taken centre stage in the lives of people all world over can hardly be disputed; but for the sake of this discussion let’s focus on Nigeria. Helpless, and in all honesty, feeling utterly defeated, I’ve watched as our case has increasingly become a case of, “show me your Facebook friends and I’ll tell you who you are.” Our youths and adolescents no longer fancy going through the rigours of reading books but prefer to rely on snippets of information readily available on social media; and that’s enough for them.

The painstaking and gradual task that is the joy of acquiring knowledge is too arduous and in this day and age, is no longer necessary. Or so they believe. You can now ‘grab’ your info on the go. So they view the world through the shallow prism of social media which tells them what is ‘good’, what is ‘bad’, what is ‘useful’ and even more importantly to them, what is trending. This, by far holds a greater appeal to them than a good book, the traditional repository of knowledge.

A good book, which with subtle skill would gently invite them on a beautiful and at times maze-like journey to discover and develop their own value positions is despised. It therefore should come as no surprise that we find ourselves where we are as a nation. There’s no getting away from the fact that a society’s value system is inevitably determined by the tripod of family, religious institutions and its educational system.

Education, amongst other things, is the primary mode in which a society safeguards and transmits from one gen-

eration to the next, its values, beliefs and culture. It’s so critical that The World Bank describes its role thus: “Quality education, beginning with primary education, is fundamental to endow individuals with the capacity to successfully pursue their private goals, while at the same time equipping them with the knowledge and skills as well as values and attitudes, necessary to contribute effectively to their societies.”

Unfortunately and with the help of social media we now find that many young Nigerians are satisfied with merely receiving information which unbeknownst to them is the most basic form of education and does little to positively transform one’s thinking. And it stands to reason that a people and the society they live in cannot develop further than their level of thinking. I believe it was Albert Einstein, the most celebrated genius in modern times, who said, “Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought.”

And God knows we need leaders who can think differently to get this country out of its current mess. That’s why it saddens me to no end that we keep recycling the same old political leaders. A man who performed woefully as the Governor of his state oils his way to the Senate. What do you expect the quality of his legislation to be? I’ll leave you to answer that.

Ditto those who get appointed Ministers. Ditto those who have remained in the corridors of power for the last 20 to 30 years. How can we possibly expect them to proffer solutions to the myriad of problems they and their ilk created?

The fact that we keep sprouting leaders who lack just about all the characteristics of leadership is evidence enough that there’s something lacking in our education system.

True and holistic education comprises of three tenets: knowledge, understanding and wisdom. Knowledge is the knowing

of facts or the successful conversion of information. It’s therefore necessary we apply ourselves to moving from the level of just having information to becoming knowledgeable. It is the duty of the cardinal providers of education in society – parents, schools and religious institutions, to create in our children a hunger to become a solution to society’s challenges and problems. This hunger will drive them to seek knowledge.

It has however been said that, “any education worth its name must include understanding that we are not defined solely by what facts we know or what prizes we have won.” This takes us to understanding which goes beyond just knowing. It equips one with the ability to reason, discern and to interrelate. The lack of this produces what we call ‘educated illiterates’; those who are knowledgeable but whose behaviour betrays an acute inability to reason. A contradiction in terms you may say.

Last but not least is wisdom and the Bible tells us that this is the principal thing. You may ask, “But why is it that so many developed nations continue to progress even though they’re now almost totally bereft of religion? How can they be wise?” Simple answer. Long before they became so humanistic, they had already inculcated God’s principles in their laws, policies and way of life.

The way they think and treat each other is more Godly and more akin to his likeness so he will have little choice but to bless them. In contrast, the way Nigerians behave towards each other has often caused me to ask myself, “Do we truly love God or do we just observe religious rituals with the hope of appeasing him?”

Having said this, the situation in Europe was no better than ours currently is; but for the timely intervention of John Wesley in the 18th century and others such as John Knox, Martin Luther and John Calvin who whipped the policies of

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A good book, which with subtle skill would gently invite them on a beautiful and at times mazelike journey to discover and develop their own value positions is despised

European countries in line with the tenets of God. They have never looked back since.

The initiator, John Wesley and his reformation team, through Christian teachings transformed England and by extension Europe by emphasizing values and ethics of diligence, faithfulness, productivity, excellence, patience, perseverance, love, honor, order, discipline and service. These are the hallmarks of transformational leadership. John Wesley can be said to be both directly and indirectly responsible for the emergence of a class of pioneer social activists who put the interest of their society first.

To develop their respective communities, they established various social amenities such as free schools to educate the poor, medical dispensaries and shelters for widows; all in line with the word of God which admonishes man in 1 Timothy 5:3 to, “take care of any widow who has no one else to care for her.” These conscientious social crusaders led the causes of both civil and religious freedom and thereby awakened the conscience of England to the evil inherent in exploiting the poor.

For the first time, through equal access to education for both the rich and the poor, every citizen hoped for a better future. Success was no longer the exclusive preserve of the monied class as a good education provided a path to escape poverty. John Wesley’s crusade brought a revival which soon produced irreversible socio-political and economic changes which not only tackled the twin evils of injustice and poverty head on but led to the emergence of a formidable middle class. This is a class considered so sacrosanct, it’s often referred to as the engine of any economically ambitious society.

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

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

Forex restrictions: A message to the Central Bank and the Presidency

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few weeks ago, the Central Bank of Nigeria (CBN) announced that it planned to restrict foreign exchange allocation for the importation of milk into the country. Apparently emboldened by the bank’s announcement, the Presidency few days ago ordered that the same policy be applied to all food imported into the country. Both proclamations have terrible consequences for the Nigerian economy for different reasons.

The restriction of milk importers from forex at the official rate follows the dollar demand management template of the CBN in recent years.

When oil prices slumped in 2015 and dried up the nation’s dollar supply, the CBN implemented a declared 41 items, including essentials like rice, ineligible for forex allocation. Unfortunately, over the last four years, the CBN’s monetary policy management has proven to be ineffective and in fact inimical to economic growth.

Since then the CBN has rolled out a string of policies geared towards maintaining an artificially strong naira, but the Nigerian economy has suffered a plethora of woes including the exodus of Foreign Direct Investments, low GDP growth and high inflation. Nevertheless, the bank has doubled down on its template, while the presidency seemingly believes that this approach is the solution to our economic woes. This cannot be farther from the truth.

In reality, the CBN’s forex demand management is a futile and costly approach for an economy like Nigeria which requires significant foreign exchange to satisfy demand – in 2017 Nigeria spent $51 billion importing goods and services.

The local manufacturing industry relies heavily on imported raw material. This means that the nation requires significant foreign exchange to satisfy demand for both finished products, as well

as raw materials for local production.

Furthermore, while the CBN claims that restricting dollars to certain imported items was implemented to encourage local production of these products and protect the local population from exploitation, this policy has failed to achieve these aims.

In fact, the federal government’s two most popular import-substitution policies in recent times, the ban on cement importation and the auto industry policy, have failed to have meaningful positive impacts on majority of Nigerians.

In order to boost the local cement industry and eliminate importation of cement, cement companies who could not prove that they were developing local processing capacity were barred from importing cement in 2002; cement is included in the aforementioned 2015 list of items ineligible for forex. Nevertheless, local cement prices remain prohibitively high and out of reach for the typical Nigerian in a country burdened with a housing deficit of 17 million homes. In fact, Nigerians pay one of the highest prices globally for cement.

The federal government’s auto policy has also failed to achieve its goal of spurring local production of cars. Despite the imposition of heavy duties on imported cars and the surge in the number of licenses issued for local car assembling, there has been no significant increase in local car production. Instead, cars are now typically smuggled into the country through land borders and have become more expensive.

Basically, whenever the government or any of its agencies bans or restricts access to a product, history has proven that the proclaimed expected benefits seldom materialize. Rather the Nigerians tend to suffer for such policies. It is therefore befuddling that the nation continues to double down on policies which are not only ineffective,

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costly and inimical to economic growth, but also render Nigerians poorer.

Thus the presidency’s directive that all food imported into the country should be restricted from forex at the official rate is not only appalling for being a tacit support of this ineffective policy, and even more so because the presidency is meddling in the affairs of the central bank, and as such eroding its independence.

The President’s new proclamation attacks one of the tenets of the central bank – the bank’s independence. The central bank is an institution which strives to ensure the proper functioning of an economy via a range of monetary policy and regulatory tools free of political interference.

Political interference in the affairs of the bank is highly unwelcome and unacceptable.

The dangers of a compromised central bank cannot be overstated. Political interference in central bank decision making often results in terrible policies. Already, there are undertones of such policies in the Nigerian economy, including the ineffective forex restriction. In fact, Nigeria’s current economic woes can be partially traced back to the political interference with the bank.

Under President Buhari, the CBN has implemented a fixed-float monetary policy that the President favours, despite the strong headwinds and adverse macro conditions which should have dictated otherwise.

Furthermore, political meddling in the affairs of a central bank always results in the loss of credibility with international finance institutions – a situation which Nigeria should be keen to avoid given the nation’s unfavourable economic outlook.

Overall, both the CBN’s adamant stance on an ineffective forex demand management policy and the President’s statement that the ineffective

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LANREWAJU RUFAI policy be extended to the entire food industry are damaging for the Nigerian economy.

Although it is unlikely that the CBN will actually obey the president’s directive given the impact such would have on food prices and the overall consequences on the economy, the use of forex restrictions as a medium of compensating for shortfalls in forex supply should be done away with totally. Given the relative failure of the policy thus far, there is no logical rationale for its continued implementation.

In addition, the presidency needs to realize that giving directives to the CBN is ill-advised, it harms the independence of the central bank and could have negative consequences for the economy. Both parties need to understand that government policies and actions directly impact the social and economic welfare of millions of Nigerians.

At the moment the CBN and presidency’s focus should be ensuring that the economy returns to its feet via sustainable economic policies, not stubbornly sticking to policies and proclamations which weaken it.

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

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Wednesday 21 August 2019

BUSINESS DAY

EDITORIAL PUBLISHER/CEO

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

The Justice Butcher $9b fine speaks to failures in corporate governance

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igeria is on tenterhooks as it awaits progress on the matter of a $9b penalty that a British court levied her for failure to honour a contract.

Mr Justice Butcher of a UK High Court ruled in favour of Process and Industrial Development (P&ID) Limited in the breach of contract claim for Nigeria’s failure to build a pipeline for a gas gathering facility the firm was to construct near Calabar, Cross River State.

Beyond the humungous sum what is even more worrisome is the failures of corporate governance and diligence in the management of Nigeria’s affairs it reveals. The issues are so elementary that getting to this pass suggests not just failures but even a conspiracy to fail. Many questions arise from the trajectory of the case. How and why it got to this point is a wake-up call for both government and citizens.

The facts are straightforward.

P&ID is a British-registered firm with claims to expertise in managing gas infrastructure. Nigeria signed in January 2010 an agreement with the firm. They would construct a facility to convert flared gas to one that our power plants could utilise. In return, Nigeria would build the pipelines to the site. The contract provided for dispute determination by a UK court, thus favouring the client rather than the principal from the beginning.

Both parties failed. However, P&ID was quick to claim breach against Nigeria. Negotiations commenced to the point where the outgoing government passed the notice of an agreement on a fee of $800m for execution by the incoming government.

“Government magic” a la Nigeriana then set in. The federal government did nothing.

It did not pay the agreed fee; it did not negotiate with the firm or convince it to go back to the site given the importance of the proj-

ect to the agenda of the Buhari government. Zilch. It did nothing until the P&ID went to court. The federal government then ignored the advice of its counsel, preferring to change the team.

The comedy of errors is unfortunately not funny at all.

The judgment sum is about 20 percent of our foreign reserves.

Nigeria could default on its Eurobonds and other loans if the matter sails through. The country risks another recession, too, if it pays that colossal debt.

The issue demonstrates the continued high price Nigeria has paid for the lethargy in government since May 2015. No one had eyes on the ball. Further disclosures speak of even more damaging causes of this failure.

The Auditor-General of the Federation reports the serial failure of government and its MDAs to observe procedures and requirements for accountability.

The report records improper records of transactions, false claims and failure to submit

reports at all. Then there is recklessness in the management of public finances.

The list of non-compliant agencies is bewildering. The Presidency, the spearhead of an alleged anti-corruption crusade, is the foremost culprit.

Then there is the EFCC and the National Assembly. The report implicates all the ministries.

The other issue is the disregard for the rule of law as well as due diligence. Who signs contracts that fail to take cognisance of national interest, such as agreeing to dispute resolution in a foreign land and in the home of a party to the issue? Treasury managers since the SAP era learnt to denominate payments in local currency given our currency fluctuations.

Finally, there is a lack of executive capacity. The federal government should rejig its team, focus on the ball and be committed to reforms. Nigeria must do all it can now to get a reversal of the Butcher fine.

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$81 billion debt: Inching close to a fiscal crisis

FRANKLIN NGWU

W

ith good training in econometrics, economists can create a correlation between almost everything and justify anything they want to justify. While one economist can argue that an economy is in recession, the other will maintain that the same economy is getting ready for a rapid growth or even for a steady state growth!

This seems to be the situation we find ourselves with our exponentially increasing national debt. It is like the more we shout of the impending debt crisis, the more some economists within the government are prodding the government to borrow more; their pathetic reason is that we are still within the 25 percent debt-to-GDP ratio. Excited with such advice, the government seems to be on a borrowing extravaganza increasing the total public debt from about $65 billion in 2015 to the current $81 billion (over N24 trillion) as at March 2019. The increase is significant, 25 percent in four years and 2.3 percent in just three months from January to March 2019.

Even with such unjustifiable and unsustainable increase, we are told not to worry! Relax, debt-to-GDP ratio is just

about 19 percent, so we can borrow more and most likely from China. Chinese concessionary loans have a low interest rate of about 1.5 percent compared to commercial loans from Europe and North America at about 6 to 8 percent.

This is the gospel from His Excellency, Pastor Yemi Osinbajo on his recent international preaching circus to American investors organized by Council of Foreign Relations in New York. While there is no doubt of Professor Osinbajo’s unshakeable inclined correctness of every action and inaction of the government, there is a serious concern as to the increasing obstinacy of the government especially on matters with both immediate and inter-generational consequences.

Through a combination of the goodwill of a fresh returnee to democracy, international diplomacy and expertise in economics and finance, the administration of former President Obasanjo secured a huge debt relief in 2005/2006.

The major question is how we have returned to the same level of debt within a very short period and with very little to show or justify the unbelievable increase?

Lamentably, with the impending contingent liabilities of about $9 billion to Process & Industrial Developments (P&ID) and another $2.3 billion to another firm, it is difficult to understand how we can avoid the impending crisis.

Moreover, in discussing our debt situation, a most important factor that the government prefers to avoid is the cost of debt service.

A situation where we use about twothirds of our revenue for debt service cannot be described as appropriate and sustainable. In the 2019 budget, while recurrent expenditure is allocated N4.07trillion, capital expenditure is N2.09

‘

In a country where all the economic development and growth indicators all point south.

Poverty and unemployment are increasing, population and insecurity escalating and yet we are just borrowing for public servants and politicians to consume

the Chinese now. As we lack diligent and prudent management of our resources and the loans, we are very close to a set of crises: debt, liquidity, fiscal and socioeconomic and political. With multilateral and commercial debts accounting for about 88 percent of our total external debt, it is clear that our current preference for bilateral and concessionary loans from China will not save us from the impending debt-induced crises. What is required is a properly formulated and executed national economic development strategy.

Our present debt and socio-economic crisis are way beyond the Next level campaign document or the recent limited economic plan announced by the government. With the cabinet announced and screened, it is imperative that a well selected economic team with a pro-poor patriotic inclination is urgently constituted.

As I have earlier advocated, it should be made up of some key ministers, members of the private sector and the academia. Of the present 43 ministers, it seems that there is just one economist, Gbemisola Saraki with only a first degree in Economics from University of Sussex. With such a cabinet, it is difficult to see how Nigeria will be saved from the impending crisis if urgent steps are not I think the man needs a detailed eco- taken starting with the creation of a robust nomic retreat to understand that debt is economic team to effectively craft and a cyclic economic vampire. What Nigeria execute a national economic developneeds is a strategic management and ment strategy! exit from debts and not a second phase of Chinese debt entanglement after the miraculous exist in 2005/2006, a friend called and said after listening to Osibanjo Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos in America.

Just as we started with concession- Business School and a Member, Expert ary loans in the 1970s and 1980s with Network, World Economic Forum. E-mailWestern lenders, so we are doing with fngwu@lbs.edu.ng, trillion with debt service at N2.14trillion.

I am referring to cost of servicing (not repaying) the debt. Just interest payments only! This is a country where all the economic development and growth indicators all point south. Poverty and unemployment are increasing, population and insecurity escalating and yet we are just borrowing mainly for public servants and politicians to consume.

With the way we are borrowing, the caution of Benjamin Franklin that ‘he that goes borrowing, goes sorrowing’ will soon be our situation. Like most developing countries, we started with concessional loans from developed countries and institutions but as it dried up, we turned to commercial loans. As the interests ballooned, we ran into a debt crisis which after hard negotiations, we got some debt relief during Obasanjo’s regime.

Rejoicing in our laziness and absence of a determined strategy to diversify the economy, China now disguises their own debt colonization as China Belt and Road Initiative to which we elatedly accept and elect to advertise. ‘We are part of the initiative and we subscribe to it’, Professor Osinbajo proudly tells the Americans!

How to win in African infrastructure

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s an infrastructure-focused banker, one of my favorite places to work in Africa is Djibouti.

No more than 9,000 square miles of land, abutting the Red Sea at the narrow chokepoint from whence it flows into the Gulf of Aden, the country depends for its economic vitality on some of the more interesting accidents of global geography, history and politics. At independence 42 years ago, the country was described (by the New York Times) as a tiny state with “no resources except sand, salt, and twenty thousand camels”.

I would have added to the cheery prognosis: oppressively hostile weather, and a terribly difficult neighborhood, geopolitically.

Much has changed since that glum assessment of 1977. In the last decade alone, several billions of dollars in foreign direct investment have flowed into Djibouti’s maritime and transportation infrastructure (uniquely, from a diverse array of sources: European, Asian, African and American, as well as from state-backed and private capital). With each visit to Djibouti, I learn something new about how this small, hardscrabble nation manages to attract substantial amounts of investment (more than 20 percent of GDP on average annually) in spite of its quite significant natural challenges.

Just this past week (over a sumptuous lunch of Red Sea lobster) my primary interlocutor in the country (a senior official of the government-owned Ports company), shared some more of the kind of long-term strategic thinking that underpins the economic success of his country. Djibouti is focused on being competitive for the next 100 years as the premier ports and logistics infrastructure

hub in its region. It’s a quite single-minded mission that reveals itself in a multitude of deliberate state actions, small and large.

For example, the design and construction of their existing port infrastructure has already taken into consideration the technical specifications of the next few generations of large, commercial shipping vessels currently being envisaged. With the assistance of multiple financing partners, billions of dollars by value of new projects are now under development, together aimed at ensuring all key elements of an integrated, modern shipping destination are in place, including: repair facilities, ever-expanding container storage capacity, fuel supply infrastructure, interconnecting roads and railways, and a major heavy industrial free trade zone.

More than the financial partnerships to deliver these projects, it is also easy to observe the focus on developing local human capacity for the future operations of these important assets: international maritime scholarship programs (one of which my lunch companion was a prior beneficiary of ), as well as commercial joint ventures and advisory partnerships with specialized international institutions in multiple areas.

The mindset of senior leadership is very transparently one of continuous development, in spite of the numerous challenges with governance and politics that are to be found here (like in every African country).

Critical to success in attracting finance has been a deliberate focus on establishing appropriate legal and regulatory frameworks, inviting technological and operational expertise, and entering into mutually beneficial commercial investment partnerships

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in relation to each desired project.

While there have been setbacks large and small, and there is a significant amount still to do in the areas of social infrastructure and broader human development, the general direction of Djibouti has been towards progress away from its inauspicious national origins.

Working simultaneously with leaders in multiple countries across Africa affords me the luxury of perspective in assessing the various current ideas and approaches to commercial and economic infrastructure development. One consistent lesson I have come away with is that the present approach in Djibouti is as close to best practice as there is in Africa.

There is no magic bullet to development, and no substitute for the honest discipline of setting overarching strategic goals, adhering to them in decisions big and small, incorporating the appropriate technical expertise into a long-term planning process, establishing a legal and regulatory framework well-designed for commercial investment partnerships, and empowering key institutions and persons to implement the plan.

Djibouti is not an exception in this regard.

Some or all of these key success factors can be found in several other African countries, and much of our work at Africa Finance Corporation is about supporting partner countries (acting through empowered people and partner organizations within those countries) that subscribe consistently to these principles in the area of economic infrastructure development.

In this column over the next few months, I will aim to share as many of these success stories in infrastructure development and

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FOLA FAGBULE

financing as possible (and perhaps a few not so successful ones as well). The development challenge in Africa is substantial and rapidly accelerating. This is evident in the epidemic of unemployment, poverty and social infrastructure inadequacy across nearly every country on the continent.

Economic infrastructure is a major (albeit not the only) plank upon which a solution to this challenge rests. The appropriate strategic approaches to securing sustainable longterm financing for important infrastructure works is (and should be) a top-of-mind issue for citizens and leaders everywhere in Africa.

Ultimately, my intention in sharing stories and experiences like the inspiring case of Djibouti, is to provide some ideas and examples that citizens and leaders might rely upon in advocacy and decision making.

Next week, I will share some lessons from another one of my favorite places to work in Africa, Rwanda.

Fagbule, is Senior Vice President, Africa Finance Corporation. His Twitter handle is @folafagbule

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Wednesday 21 August 2019

BUSINESS DAY

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How to make money from cashew processing with a 160 thousand metric per annum and is expected to reach 500,000 metric tons by 2020.

JOSEPHINE OKOJIE

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ashew is a crop with high export potentials especially when processed.

Currently, Niger ia process less than 5 percent of its total cashew exported, causing an annual estimated loss of N1.5 billion to the country.

This implies that the country exports about 95 percent of its total cashew nuts unprocessed.

According to Anga Sotonye, chief executive officer, Universal Quest Limited, the biggest opportunity in the cashew industry is processing and the industry is waiting to be tapped.

“Processing is where the money really is but we process very little for export. A ton of processed cashew as we speak is $12,000 while a ton of raw cashew is $1,700. You can see the difference is massive,” Anga said.

Going by Anga statement, this means that for every amount earned in export of raw cashew, Nigeria would have made about seven times the value of what it is currently been made.

Cashew sells like cakes in the United States, India, Spain and many parts of Europe.

Apart from helping to maintain a healthy heart and

Strive Masiyiwa, the outgoing chair of the Alliance for a Green Revolution in Africa (AGRA) and H.E. Hailemariam Desalegne, Former Prime Minister of Ethiopia being announced as the incoming chair of the AGRA board recently in Nairobi - Kenya.

bones, cashew also helps in weight loss.

Cashew nuts are used in producing chemicals, paints, varnishes, insecticides and fungicides, electr ical conductress, and several types of oil.

Cashew exporters in Nigeria made $300 million in 2016 and $350 million, according to Tola Faseru, former president,

National Cashew Association of Nigeria (NCAN), who disclosed this to journalists at the Annual Cashew Logistics meeting, held in 2017.

Tw o good things about cashew are that its return on investment is as high as 55 percent and its payback time is just 12 months, say experts.

The cashew crop can be grown in the entire South-West, South-

South and South-East region, with Enugu, Oyo, Anambra, Osun and Kogi having the largest production areas.

Nigeria’s cashew is usually harvested between FebruaryJune, though farmers stock the crop and export it all year round.

Nigeria is rated as the fourth largest producer of cashew nuts in Africa and sixth in the world,

Tips for Cashew export As a potential investor it is very important that a thorough research is carried out to have a clear understanding of the business, what it entails and the targeted market.

If you wish to process for the local or international market, t h e n b e re a d y t o p ro c u re machines such as boiler, sheller or cracker, dryer, packaging and machine.

Cashew nut kernels are produced by shelling the raw cashew nuts, which grows at the end of the cashew apples using a sheller or cracker. An average hand sheller machine can shell 900 cashew nuts per hour.

Cashew nut kernels are primarily judged by their sizes, colour and moisture content.

Ivory colour whole cashew kernels represent the highest quality grade while the broken kernels are seen as quality deterioration.

Apart from value addition, entrepreneurs must embrace innovation and technology, w h i l e e n s ur ing that their p ro d u c t s a re d e s i ro u s o f competing favourably at the international market.

How Agroyields empowers smallholder farmers

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o support the current diversification drive and mitigate the impact of oil price, Agroyields Africa Limited, Nigeria’s leading agrictech organisation is helping smallholder farmers secure credit needed to increase production and boost productivity by acting as a link between the farmers and investors.

A g ro y i e l d s t h ro u g h i t s online platform bring investors’ funds together with the aim of investing it in the primary production of the country’s agricultural sector to generate profits thereby impacting on farmers’ livelihood.

The investment by investors’ helps the smallholder farmers access the needed finance to expand their operations and move from subsistent to commercial farming.

“Through our platforms we are solving capital inefficiencies of smallholder farmers. We are

solving issues around credit for the farmers that we are currently working with,” Deborah Adesua Ameli, chief operating officer, Agroyields Africa said during a recent Agritech seminar in Lagos.

“We provide farmers with inputs and technical support to guarantee investment returns of up to 24 percent for investors as well as profit for the farmers,” she said.

Over the years, lack of finance has remained one of the major factors bedevilling the country’s agricultural sector and this impediment has continued to prevent farmers from investing in basic inputs, such as quality seeds, fertilizers and small-scale irrigation facilities needed to raise productivity and generate sustainable income.

As a result, yields have failed to increase significantly, leading to pervasive hunger and poverty.

Similarly, with little or no commercial financing and www.businessday.ng

Ayoola Oluga, co-founder/CEO Agrecourse; Bimbo Onakomaiya, managing director, Peakthrust Insurance Brokers Limited; Ayoola Fatona, head- agric &micro insurance, Leadway Assurance; Adeola Adegbayi, executive director, Leadway Assurance; Uka Eje, cofounder, Thrive Agric; Deborah Adesua Ameli, chief operating officer, Agroyields Africa and Godswill Umoh, vice president- business development and strategy, Agroyields Africa during the agritech seminar held recently in Lagos

other incentives available to entrepreneurs seeking to build businesses that could boost food production, agricultural production has continued to remain at a subsistence level.

To change all this for the

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Nigerian farmers Agroyields through its online platform is linking farmers to investors, who will invest in their activities to enable them boost productivity.

Similarly, to mitigate risks in farming and ensure @Businessdayng

that investors’ funds are safe, Agroyields ensures that all its farms are insured against risks beyond their control.

“To mitigate the risks we cannot control we ensure that all our farms are insured and Leadway Assurance is our insurer,” she said.

“We are constantly working directly with our farmers by monitoring of their activities.

We also providing them with training on good agricultural practices (GAP),” Ameli added.

She encourages interested investors who are willing to invest to visit Agroyields website to make investment on any farm of their choice on the platform.

She noted that the organisation has continued to build trust among investors with persistency. “We believe that with persistent we would further have more investors on our platform and build trust among them,” she said.

Wednesday 21 August 2019

BUSINESS DAY

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FX ban opens opportunity for yoghurt production JOSEPHINE OKOJIE

W

ith FX restriction a n d roadblocks t o importation in the country, yoghurt production is a sure bet.

Yoghurt is a healthy source of milk, and capacity to produce a low-sugar brand for the aged and diabetic as well as a moderately sugar type for other classes is an advantage.

Similarly, with the growing middle class in Nigeria who are sensitive about their nutrition, yoghurt is one of the dairy products which are highly demanded.

H o w e v e r, Yo g h u r t production is a neglected area, but statistics show that 98 percent of Nigeria’s dairy

L-R: Dayo Obisan, MD, Greenwich Asset Management Ltd; Tubosun Falowo, group executive director, Greenwich Trust Ltd; Oscar Onyema, CEO, Nigerian Stock Exchange; Oluremi Omotoso, chairman, Greenwich Trust Ltd; Ayodele Teriba, non-executive director and Tony Uponi, non-executive director at the official listing of Greenwich Alpha ETF on the floor of Nigerian Stock Exchange, Lagos on Monday.

needs, including milk, are imported into Nigeria.

According to operators in the dairy industry, the nation grapples with about $1.3 billion import bill for dairy products for a population of about 200 million people.

This shows the huge opportunity in the subsector for potential investors. With strong population growth, particularly amongst children and young people, consumption of milk products has been on the

Total, Value Drivers collaborate to train youth agripreneurs JOSEPHINE OKOJIE

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otal Exploration and Production Niger ia L i m i t e d a n d Va l u e Drivers Investment Limited have partnered to empower entrepreneurs in the agricultural sector.

The three-week knowledge empowerment i n i t iat i ve, t ag g e d ‘ To t a l Agriculture Entrepreneur Skills Acquisition Training P ro g ra m’, w a s a i m e d at empowering youths and boosting agribusiness in Nigeria.

The free and fully residential programme was sponsored by Total, as part of its Corporate Social Responsibility (CSR) programme, focused on building the capacity of participants on agribusiness in cassava, vegetables and snail production.

“This programme was designed with the objective of delivering top quality agricultural training that empowers Nigerian youths with livelihood skills,” said Charles Ngeribara, general manager -corporate social responsibility and sustainable development, Total in a statement made available to BusinessDay. “Through our capacity development initiatives, Total aims to empower as many people as possible and actively support nation building efforts in line with the UN Sustainable Development Goals numbers one and eight, which are ‘no

L-R: Nelson Ahmeku, chairman, Value Drivers Investment Nigeria Limited;Emmanuel Ikomi, manager-corporate social responsibility methods; Charles Ngeribara, general manager-corporate social responsibility/sustainable development, both of Total Nigeria Limited and Uzoh Nwankwo, chief executive officer, Value Drivers Investment Nigeria Limited during the TOTAL Agriculture Entrepreneur Skill Acquisition Training, in Lagos recently.

poverty’ and ‘decent work a n d e c o n o m i c g r o w t h’ respectively,” Ngeribara said.

The training programme involved classroom and field work in a reputable farm, facilitated by world class faculty drawn from Lagos Business School, Dominican Centre and other experts across the various agribusiness value chains.

Also, Uzoh Nwankwo, CEO, Value Drivers Investment in a statement said “at the end of the intensive residential training facilitated by agribusiness value chain experts, we are optimistic that participants have been empowered with the best knowledge to venture into agribusiness with confidence.”

Nwankwo commended Total for their support in making this initiative a reality.

“The participants had an all-round knowledge and experience across various areas such as farming methods, risk www.businessday.ng

assessment, farm produce branding, marketing, packaging, finance, business models and planning among others,” he added.

Giving the closing remarks, Nelson Ahaneku, chairman, Value Drivers Investment, encouraged the beneficiaries of the programme to go out and pave ways in the agribusiness sector.

“Our wish is for you to go far and for your products to be supplied nationwide and beyond,” Ahaneku said.

As part of the closing ceremonies, the beneficiaries, drawn from different parts of Nigeria were given starter packs to help them begin their journey.

The attendees expressed gratitude to the sponsors and the organisers, while beaming in optimism that knowledge gained from the programme will help them a great deal.

increase in recent years.

Yoghurt continues to be one of the more dynamic categories in packaged food, in trendy and flavoured formats that is widely available.

Some companies have

invested in the processing of milk into several products such as ice cream, ghee, powdered milk and yoghurt, among others.

Aliko Dangote, president of Dangote Group, who is also a dairy maker, stated that only two percent of the country’s dairy needs are met by local companies.

Producing yoghurt could cost between N2 million and N10 million, depending on the type of equipment used and their sources.

The major raw materials used to make yoghurt include: Milk, milk powder, stabilisers, sugar, flavour, colour, among others.

Raw fresh milk can be sourced locally from local dairy makers such as L&Z Integrated Farms Limited, Milky-Way Farms, Integrated Dairy Farms and Chanan

Elo’A Integrated Farms Limited among others.

Also, Yoghurt production requires major machinery such as motorised stainless steel mixer, incubator, pasteuriser, filling machine, UV Lamp, transfer pumps, PH Meter, shrink wrapper and weighing machine.

Some of the machines are imported into the country, but many of them are fabricated locally by the Federal Institute of Industrial Research Oshodi in Lagos or Projects Development Institute Enugu (PRODA).

Local fabricators can also help.

According to FIIRO, return on investment is 46.1 percent, while return on equity can go as high as 115 percent.

Payback period is 34 months and 19 days, while breakeven point is 51.8 percent.

Backward integration: Step in right direction SEYI JOHN SALAU

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ike the popular adage goes, ‘tough times never last but tough people do’. This is the typical description of the challenges manufacturers have been facing in the wake of the ban on 43 importable items by the Central Bank of Nigeria (CBN. Rather than lament the imposing challenges to the business ecosystem, it was a time for forward thinking local investors and manufacturers in the agribusiness subsector of the economy to revisit their business plans and devise a working strategy to remain productive in Nigeria’s business landscape.

Backward integration took centre stage at the recently concluded BusinessDay Agribusiness and Food Summit with the question; has backward integration been profitable for manufacturers using agricultural raw materials in Nigeria? This of course led to several correspondence and different opinions from leaders of multinationals who were in attendance.

It is pertinent to note that a venture into backward integration is a cumbersome task, but the result is more profitable. The process of setting up the value chain for backward integration is capital intensive and takes time to actualize, leaving the local manufacturer with the burden of paying back possible loans from commercial banks at 20 – 35 percent interest rate. However, importers do not suffer such fate as they import, pay duties and hit the market running, thereby making money in return to boost their bottom-line.

Undermining the capital intensive nature to backward integrate, many

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local manufacturers and multinationals in Nigeria like Nosak Group, an indigenous business group with interests in key sectors of the Nigerian economy such as agriculture, agro-processing and manufacturing have taken a giant stride to invest in backward integration knowing that it will pay off in the long run.

One of the group’s Strategic Business Units (SBU), Nosak Farm Produce Limited located at the corridor of the Lagos Port produces refined vegetable oil, refined bleached and deodorized olein (RBDO), palm stearin and fatty acid distillate with an average of 60,000 metric tons (200 metric tons per day) of refined vegetable oil per year, which is only a fraction of the total demand in the market. In addition, the activities in the refinery are complemented with the existence of tank farms with storage capacities of about 50 million liters per month.

The idea of the factory was birthed in order to optimize the 1,300 hectares of oil palm plantation of Saturn Farms Limited, another SBU of the Nosak Group located in Edo state, which records a yield of oil palm Fresh Fruit Bunch (FFB) estimated at 105,882 per annum. The farm is equipped with a 3-ton per day milling plant that process oil palm into crude palm olein.

However, due to rising demands of vegetable oil, a research indicated that the oil palm from Saturn Farms Limited would not be enough to feed the vegetable oil refinery thus it became evident that additional crude palm olein would be required as raw material for processing at the refinery. This led to the search for a suitable @Businessdayng

location with good access to the port for easy access to raw materials.

When the tides of the CBN’s ban on the 43 items ensued, the group had no choice but to rev up efforts to backward integrate towards sustaining investments in the refinery. In line with this, Nosak Farm Produce Limited acquired additional 13,000 hectares of land in Edo State for oil palm plantation. This it said was geared towards the expansion of the refinery from its current 200TPD to 1,000TPD within the next two to three years.

Between Q4, 2018 and Q1, 2019, the group procured 400,000 seedlings of palm oil from Malaysia, Costa Rica and Indonesian. These seedlings have been planted in batches through the pre-nursery to the main nursery with some currently undergoing intense care by a team of plantation experts at Saturn Farms.

“We are currently working with farmers in the entire value chain to source raw materials locally. This is poised to keep the factory running with the volume of raw materials required for production,” said Toni Ogunbor, the chairman of Nosak Group, stating it is the short-term plan put in place by management pending when the new plantation fields of over 13,000 hectares in Edo state would have been matured to yield FFB of palm oil.

As capital intensive as backward integration can be, the gains far outweigh the pains in the long run. Analysts call on the government at all levels to initiate favorable policies such as availability of funds at single digit interest rates, low taxes, and corporation from host communities.

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Wednesday 21 August 2019

BUSINESS DAY

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Wednesday 21 August 2019

BUSINESS DAY

COMPANIES & MARKETS

17

COMPANY NEWS ANALYSIS INSIGHT

BANKING

Zenith Bank’s non-interest income surges 24% in H1 on deepened retail banking …declares 30k interim dividend OLUWASEGUN OLAKOYENIKAN

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enith Bank Pl c, Nig e r i a’s second-biggest bank by market value, was off to a good start in a drive to leverage the retail segment for improved profitability, as half-year 2019 growth in non-interest income was strongly supported by electronic services in a show of progress in its retail banking initiatives.

Although net interest income fell some 7 percent in the first half of this year to N142.5 billion, the tier-one lender had a lot to cheer about as non-interest spiked 24 percent to N109.73 billion on the back of a 170 percent growth to N27 billion in fees from electronic products. This contributed 43 percent to fee and commission income as against 22 percent share it recorded in halfyear 2018.

The significant boost in non-interest income largely translated to N331.6 billion gross earnings recorded by the bank, which represents a 3 percent increase from N322.2 billion garnered in the corresponding period of 2018. “This continues to reflect increased traction on transaction volumes via

the bank’s electronic banking channels,” Aderonke Akinsola, a banking analyst at Chapel Hill Denham, said.

Besides the stellar performance in the electronic services, the lender recorded a 25.6 percent decline in derivative losses to N13.83 billion in the first half of 2019 compared with the same period last year, an achievement which supported the 22.5 percent

growth achieved in trading gains even as trading income on treasury bills showed significant improvement.

While the gross earnings befitted immensely from these advances, they were not limited to the top line as pre-tax profit witnessed a 4 percent growth to N111.7 billion from N107.4 billion, while earnings per share (EPS) jumped 9 percent to N2.83 from N2.60.

As a result, the Board of Directors of the bank announced payment of an interim dividend of 30 kobo per share, payable on September 2 to shareholders whose names appear in the register of members as at the close of business on August 29.

Furthermore, the Group’s customer deposits rose 3.2 percent since the start of the year to N3.81 trillion with retail deposits

increasing from N861 billion to N1.1 trillion.

“Despite the growth in our deposit base, we optimized interest expense leading to a 4 percent reduction from N74.7 billion to N72.1 billion due to the Group’s improved funding mix and our profound treasury management skills,” the company said in a statement sent to BusinessDay. Net Interest Margins (NIMs) witnessed a com-

pression from 10 percent in the same period last year to 8.6 percent as a result of the declining yield environment but the cost of funds improved from 3.4 percent to 3.0 percent.

Non-performing Loan ratio increased marginally 5.3% in the review period from 5 percent corresponding period of 2018 owing to a 3 percent reduction in its loan book from N2.02 trillion as at December 2018 to N1.95 trillion at the end of the period.

The tier-one lender assured it is creatively deploying new retail loan products to ensure it captures a reasonable share of the retail loan market.

The bank said it would consolidate on its leadership in the corporate space for the remaining six months of the year. “Our retail banking drive will continue unabated,” Zenith Bank stated. “We expect to see an improvement in economic activities even as we maintain our promise of delivering a unique service experience to our customers.”

Zenith Bank’s shares gained 2.41 percent on the Nigerian Stock Exchange Monday to close at N17, thereby reducing its loss since the beginning of the year to 26.25 percent.

OIL & GAS

ConOil’s revenue jumps 33% in H1, delivers N1.4bn pay-out OLUFIKAYO OWOEYE

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everaging on increasing retail outlets, downstream operator, Conoil’s half-year revenue for the period ended 30th June 2019 surged 32.56percent to N72.22bn.

Led by its revenue from the sale of white products popularly referred to as Premium Motor Spirit with a 95.14percent amounting to N68.71bn from N51.74bn in half-year 2018. Its lubricants

segment also increased 27.98percent to N3.51bn, a 27.98% Year-on-Year growth, the company, however, reported nil revenues from its LPG segment since 2017, and only reported direct costs of NGN167,000 in 2018.

At 36.26percent, the company’s direct cost growth rate was relatively higher than that of its revenues, its Cost-to-Sales ratio settling at 90.73percent for the year as against 88.27percent in the half year 2018, notably, much

of the increase in the overall cost of sales came from the White Products segment which saw a 36.66percent expansion in costs. Gross margin, therefore, pitched in at 9.27percent ConOil’s ooperating expenses -to-Sales for the halfyear was lower at 5.63percent as against 8.50percent in half-year 2018., with OPEX at NGN3.57bn.

Pre-tax and Post-tax profits were however slowed 104.00percent due to an increase in borrow-

ings, as finance costs saw a 8.63percent increase. Pretax margin stood at 2.10percent to N1.52bn, while after-tax earnings jumped to N1.03bn, a net margin of 1.43percent.

A further analysis of the result shows that inventories moderated by 3.60percent to N8.81bn, even as trade receivables ticked up by 1.76percent to N30.83bn.

While payables dropped 12.45percent to N30.70bn), borrowings increased by 1.04 times to N9.72bn, a

cause for concern, considering the cash hoard of N16.00bn and significantly higher finance costs of NGN1.17bn as against N1.08bn in half-year 2018.

In the meantime, sshareholders of the company have approved a dividend of N1.4 billion for the 2018 financial year, just as the company has expressed optimism about sustaining its tradition of delivering higher dividend.

The shareholders gave the approval at the 49th annual

general meeting (AGM) in Uyo, Akwa Ibom State.

Commenting on the company’s performance, the shareholders expressed satisfaction with the growth path which the board and management have charted for sustained profitability.

For the financial period ended December 31, 2018, Conoil profit before tax rose by 11.4 percent to N2.567 billion from N2.305 billion in 2017, while profit after tax grew faster by 13.8 percent to N1.796 billion.

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

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Wednesday 21 August 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

MARKETS

EM stocks return to gain territory on China’s interest adjustment ISRAEL ODUBOLA

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merging market equities halted its sixday bearish streak following China’s announcement to replace existing benchmark lending rate with a more market-driven rate system in a bid to make borrowing cheaper.

A gauge of emerging market equities gained a slim 0.7 percent to close at 970.27 index points Monday.

This came after EM assets was battered by a renewed trade war between world’s two economic bigwigs, United States and China, which saw investors pulled out over $5 billion.

The new policy is meant to improve the mechanism used to establish the loan prime rate, in a move to further ease real interest rates as part of the country’s broader market reforms.

Analysts say EM stocks will maintain a bullish tempo in

near term as the new policy provides respite to investors that developed markets will use stimulus measure to spur global growth.

Meanwhile, the Lagos equity index closed on a positive note Monday after a four-day losing streak, gaining 0.71 percent. But year-to-date performance of some 14 percent puts the Nigerian bourse among the worst performers globally.

MTN Nigeria led the pack of advancers Monday after a 2.74 percent gain to N135/share, unseating West Africa’s biggest cement maker, Dangote Cement, as the most-capitalized stock on the Nigerian Exchange.

Not until the fiscal authorities come up with bold policy reforms that are deemed friendly to investors, the Nigerian equity market might bleed further, analysts have said.

Financial markets across the globe saw a horrendous early August as fears that the

protracted trade battle will drive the global economy into recession, triggered a flight from risky assets such as stocks and developing markets.

Portfolio flows to the said market halved to $24.3 billion in July from its 5-month high of $40.9 billion in June. Stocks received the hotter blow as it plunged 91 percent last month compared with bond flows that shed 19 percent.

Meanwhile, currencies were largely mixed, with rising oil prices after an attack on a Saudi oil facility by Yemeni separists adding pressure.

MSCI currency index ended Monday’s trade with 0.05 percent gain.

The World Bank has said that investment growth in the said market will slow to 3.9 percent by 2019-end from 4.2 percent in 2018, citing weak global growth, structural lapses and escalating debt levels as headwinds to EM’s investment prospect.

L-R: Angel Iheukwumere, management information system analyst, Spectranet 4G LTE; Akonte Ekine, lead strategist/CEO, AbsolutePR; Ajay Awasthi, CEO, Spectranet 4G LTE; and Busola Akindele, customer service manager, Spectranet 4G LTE, at the launch of Spectranet Home Fibre and Fibre on Air internet services in Lagos.

INDUSTRIAL GOODS

Lafarge Africa opens award entries for sustainable construction …opportunity for engineers ODINAKA ANUDU

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afarge Africa is calling for entries from professionals and students for the 6th International LafargeHolcim Awards for Sustainable Construction.

The LafargeHolcim Awards recognises and rewards innovative projects for professionals and ‘bold ideas’ from students that address sustainability in construction. The competition emphasises the important role that architecture, engineering, urban planning and related disciplines have in achieving a more sustainable future.

At a press conference recently held in Lagos, Folashade Ambrose-Medebem, communications, public affairs and sustainable development director for Lafarge Africa, urged more Nigerians to submit entries for the award. She disclosed that engineers, architects, builders, planners, construction firms, project owners, students and non-

governmental organisations working in the building industry are all eligible to apply.

“Our aspiration is for Nigeria to be well represented across the Middle East and Africa region,” AmbroseMedebem said.

“We are hopeful that more Nigerians would be encouraged by the success stories of others who have been recognised in past editions of the award, the likes of Nigerian-born Kunle Adeyemi.

In 2014, Adeyemi won an Acknowledgement prize in the LafargeHolcim Awards for Chicoco Radio Media Center; the amphibious building in Delta City of Port Harcourt in Nigeria. Such ambitious and creative entries are what we seek for again to put Nigeria on the world map of sustainable construction. We sincerely hope that our professionals and students will seize this opportunity.” AmbroseMedebem added.

While commending Lafarge

for the initiative, Tonye Braide, immediate past president of the Nigerian Institute of Architects, described the initiative as laudable, in view of the abundance of opportunities to all prospects. He added that with the growing population and rate of urbanisation in Nigeria, it is heart-warming to see an organisation like Lafarge championing sustainable construction.

Speaking further, Braide said that the process of evaluation is both fair and transparent, adding that with the credibility of a company likes Lafarge Africa behind the award, quality will not be compromised.

“Such transparency is what you get when you have independent experts as juries from across the world—from Europe, North America, Latin America, Middle East Africa and Asia Pacific—who are coming together to evaluate and select outstanding entries.”

L-R: Onyeka Onwenu, Nigerian Music Legend; Ken Maduako, Mega Key distributor, NB Plc; Chijioke Charles, winner of Hi-life fest 2019; Bright Chimezie, Highlife music veteran, and Uche Unigwe, NB Plc, sales director, at the grand finale of Hi-Life fest 2019.

L-R: Maje Ayida, CEO, Eden Lifestyle; Pamela Ajayi, MD, Synlab; Rassaq Ajala, chairman, OdiOlowu/Ojuwoye Local Council Development Area; Amira Obi-Okoye, sales director, Megalectric, and Chico Aligwekwe, programmes director, Classic FM, at the Doctors on air annual medical mission in Lagos.

Continue online @www. businessday.ng

COMPANY RELEASE

25 subscribers win N1.2m in StarTimes Kiddies Promo

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5 lucky subscribers have been rewarded with a total of N1,250,000 in the ongoing StarTimes kids billed to last till August 31.

The pay-TV giant had announced in July that 100 of its subscribers will be rewarded with a total of N5 million with 25 people emerging from weekly draws every week from August 1, as parts of efforts to cushion the cost of back to school items and school fees for its subscribers.

When contacted, one of the winners from Abuja, Alaba Ali-

yu, expressed joy over the win.

She explained that although she knew about the promo, she did not expect to win as she has never won in any promotion by any company.

Another winner, Okoh Linus, a subscriber in Enugu, said he was more than happy to have emerged a winner.

According to him, the cash gift will go a long way in helping him realise his dream.

On his path, Kunmi Balogun, public relations manager, noted that the promo was still

on and more winners would be announced this week.

“The promotion continues, this week another set of 25 winners will come from a draw. All you need to do as a subscriber is to pay a minimum of two months subscription on our Basic, Classic or Super Bouquet to qualify,” Balogun said.

StarTimes is the leading digital TV operator in Africa, serving nearly 20 million users through DTT, DTH and online streaming platforms with 480 authorized channels.

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L-R: Babagana Mohammed, representative of the president, Nigeria Society of Engineers (NSE); Aishatu Umar, honouree/national chairman, Nigerian Institution of Civil Engineers; Otis Anyaeji, immediate past president of NSE, and Hamid Abdulkareem, chairman of NSE, Giri Branch, at the first distinguished public lecture in honour of Aishatu Umar, at the NSE Main Auditorium in Abuja.

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@Businessdayng

Wednesday 21 August 2019

BUSINESS DAY

19

cityfile Students going for lectures at the ETF Hall as Senior Staff Association of Nigerian Universities (SSANU) and Non-Academic Staff Union of Universities (NASU) begin a one week National Strike, at the University of Abuja Main Campus in Abuja on Monday. NAN

Rains: Abuja residents lament collapse of bridges

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esidents of Obasanjo Road in Dutsen Sagbagyi II of Bwari area council, Abuja, have called on authorities of the Federal Capital Territory (FCT) and Bwari area council to save them from being cut-off from other parts of the city.

The residents made the call on Monday as they lamented the collapse of three bridges connecting the community to old Bwari road and other parts of Abuja.

A downpour which started in the early hours of Monday left majority of residents who work outside the community stranded, as neither cars nor motorcycles could ply the road. It was also a herculean task for the residents to trek out of the community due to heavy

occasioned by the rains.

The Obasanjo Road community, also known as Dutsen Sagbagyi II, is situated on a mountainous layout behind Dutse Baupma, off Dutse-Bwari Highway.

The community comprises five different layouts and settlements, which include Freedom Avenue Layout, Anglican Street Layout, Obasanjo Road Layout, Mountain Side Layout and New Layout.

Since inception, residents of the community had shouldered the responsibility of the construction, repairs and maintenance of the major link roads.

They have also been responsible for fortifying the bridges, opening up new roads as well as acquiring transformers and providing security through communal efforts.

Isa Mohammed, a re s i d e n t o f t h e c o m munity, said “residents of the community find it hard to swallow the reality that the road and bridges they laboured to construct has been destroyed by heavy flood.

“We are cr ying; we need government intervention and help from pr ivate organisations and individuals.

“If nothing urgent is done, we would be cut off permanently and economic activities would be grounded,” just as he lamented children from the community would be unable to go to school when they resume anytime from now.

Another resident, James Okechukwu said it was disheartening to see efforts and resources that took years to build washed away. He ap-

pealed to appropriate authorities to come to their aid in by fixing the bridges.

Another resident of the community, Nicholas Uzor, described the development as a colossal damage, saying it would paralyse economic and business activities in the community.

Uzor lamented that past appeals made to relevant authorities to assist the people had not yielded any result.

“Letters had been written to relevant authorities to come to our aid, as the costs required to fortify the bridges is beyond our power. On behalf of residents of this community, I join in calling on the Federal Government and Bwari area council to urgently come to the aid of this community,” he said.

Oyo plans satellite towns to decongest Ibadan REMI FEYISIPO, Ibadan

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yo State government is planning to decongest Ibadan by creating satellite towns in major communities of around the state capital.

Ibadan has the population of over three million people, making it the third most-populated city in Nigeria after Lagos and Kano State.

The state commis sioner for lands, housing and urban development,

Abiodun Abdu-Raheem, who disclosed this, said the intention was to make housing available and affordable to the people in the proposed satellite towns.

In a session with journalists, moments after resuming office on Monday, Abiodun said the state would also be creating opportunities for residents who are eager to have their own houses by acquiring land from targeted local government areas where the people have www.businessday.ng

interest to reside.

“The state government under Governor Seyi Makinde will not engage in cheap talk. We want to be realistic in our approach to governance by giving the best of our ability to the people in our land and housing policy.

“We will acquire more lands to give room for the public to have access to their choice of land at any location in the state at affordable rate. This will help decongest Ibadan and allow for further develop-

mental projects that will help beautify the capital city and spread to the other major towns in the state.

The commissioner assured the people of prompt process and dispatch of Certificates of Occupancy (C of O) which he added would come at affordable cost.

He called on the people of the state to desist from erecting illegal structures along road setbacks and stop dumping refuse into rivers, streams and waterways.

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Bandits kill 4 in Katsina

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he police in Katsina have confirmed the killing of four persons by bandits in Tsayau village, Jibia local government area of the state.

A statement by Anas Gezawa, spokesperson of Katsina command of the Nigeria Police Force, on Monday, said that the incident occurred on Sunday night. Gezawa said that the bandits also stole four cows from the village.

“Villagers mobilised and followed the bandits into the forest, and were able to recover the rustled animals. However, the bandits killed four persons and escaped into a thick forest,” he said.

Gezawa advised the public to always involve security agents in dealing with cattle rustling, banditry, kidnapping, armed robbery and other forms of criminal acts in the society.

Pipeline vandalism: NPDC adopts modern technology to monitor facilities

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igeria Petroleum Development Company ( N P D C ) / N D We s t e r n OML 34 Asset Management Team (AMT) says it has commenced the use of modern technology for effective monitoring of its facilities.

Sheidu Aiguedo, the company’s manager in charge of government, c o m m u n i t y re l a t i o n s and security, made the assertion at a media briefing in Warri.

Aiguedo decried the persistent attacks on oil facilities by miscreants, saying, the company had lost several billions of naira to their illegal activities.

“We are employing the use of technology to enhance our monitor-

ing capacity,” he said.

Aiguedo said activities of the oil thieves had caused serious disaster, adding that the company w ould continue to intensify awareness to its host communities on the dangers inherent in pipelines vandalism.

“The illegal oil bunkerers are destroying our facilities, and their activities are also destroying the environment,” he said.

A igue do urg e d the Federal Government to apply prevention, protection and prosecution approach to curtail oil theft in Delta.

He also advised the government to establish and increase its presence in the oil communities with a view to reducing theft in the area.

Banditry: Katsina bans 2 brands of motorcycle

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s part of measures to check bandits and increasing criminal activities in Katsina State, the government has banned the sales and use of “Boxer and Kasea’’ brands of motorcycle in the state.

Ali Tanimu, the state sector commander of the Federal Road Safety Corps (FRSC), who disclosed this to journalists in Katsina, said the ban became imperative to curtail the use of motorcycles for crime, particularly in the rural areas of the state.

The sector commander, therefore, urged dealers to desist from selling the banned motorcycles in the state.

Tanimu also warned tricycle operators against using tinted glasses, put@Businessdayng

ting curtain and loud music, adding that the FRSC would not hesitate to arrest anyone that violates the directive.

“We are equally calling on the ow ners of tricycles to be checking activities of operators.’’

He said the FRSC had already commenced registration of tricycles operating in the state to sanitise their operations.

“By the end of August, FR S C w ill commence enforcement and anyone arrested will face the wrath of the law. Our mandate covers all public roads across the state; so, we can make arrest anywhere,’’ he said.

The sector commander urged the media to assist the corps in sensitising the public to dangers of violating traffic rules and regulations.

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Wednesday 21 August 2019

BUSINESS DAY

Wednesday 21 August 2019

BUSINESS DAY

feature Expectations rise for Tony Elumelu Foundation Entrepreneurship Forum

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to this goal.

The challenge, as the stage gets bigger, is that many variables are thrown up to threaten focus and sustainability, even as expectations rise.

The Abuja event convened over 5,000 participants from 54 African countries, including representatives of the 7,521 beneficiaries of the Tony Elumelu Foundation Entrepreneurship Programme.

Founder of the Foundation, Mr. Tony Elumelu, reiterated the urgency in creating jobs on the continent to catalyse Africa’s development.

“Extremism is a product of poverty and joblessness. Poverty anywhere is a threat to everyone everywhere,” he said. “If our leaders understand the reason and rationale for our youths to succeed, they will do everything they can to support them.”

Emphasising the role of technology as a key enabler in accelerating development, he cited the TEFConnect, the digital networking platform for African entrepreneurs launched by the Foundation in 2018.

With over 500,000 registered

“

users, the hub provides a platform for entrepreneurs to network and forge business partnerships regardless of their location.

The interest of the Federal Government in the aspirations of Forum was evident in the presence of Vice President Yemi Osinbajo.

In a keynote, he commended the Foundation for birthing an intervention that compels “us to focus on what matters, our youth and their dreams.”

“The message to Africa’s emerging business giants is a clear one: How and what can you contribute like Tony Elumelu to empowering the next generation, helping them to realise their dreams?”

Established in 2010, The Tony Elumelu Foundation (TEF) is the leading philanthropic institution in Africa championing entrepreneurship and entrepreneurs across the continent.

The Foundation’s long-term investment in empowering African entrepreneurs was birthed by Elumelu’s philosophy of Africapitalism, which positions Africa’s private sector, and most importantly entrepreneurs, as the catalyst for the social and economic

The challenge, as the stage gets bigger, is that many variables are thrown up to threaten focus and sustainability, even as expectations rise www.businessday.ng

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he stage is getting bigger for the Tony Elumelu Foundation Entrepreneurship Forum; and so are the multiplicity of roles it is inadvertently assuming, and rising expectations.

Having five African Presidents, over 60 global speakers from the public and private sectors across three continents together is a large private sector platform for empowerment and generation of ideas.

At the two-day forum, which held in Abuja recently were Paul Kagame, President, Republic of Rwanda; Macky Sall, President, Republic of Senegal; Félix Tshisekedi, President, the Democratic Republic of Congo (DRC); Professor Yemi Osinbajo, Vice President, Federal Republic of Nigeria; and Hon (Dr.) Ruhakana Rugunda, Prime Minister, Republic of Uganda, who represented President Yoweri Museveni.

Also present to interrogate a related issue, “The Role of Healthcare in Economic Transformation,” were healthcare leaders in the private and public sectors. They included Dr. Awele Elumelu, Trustee, Tony Elumelu Foundation and Founder/CEO, Avon Medical Practice; Mrs. Aisha Buhari, First Lady, Federal Republic of Nigeria; Mme. Djena Kaba Condé, First Lady of Guinea; Mme. Keïta Aminata Maiga, First Lady, Mali; Gilles Carbonnier, Vice President, International Committee of the Red Cross (ICRC); Oulimata Sarr, Regional Director, U.N. Women Central and West Africa; and Dr. Tedros Adhanom Ghebreyesus, Director-General, World Health Organisation.

An assembly of so many people of diverse backgrounds has huge potentials for tourism and marketing of the country, a platform to attack problems with tested perspectives and for forging stronger inter-African relations. But it also means many more people have eyes from around the world are watching the Foundation.

At the centre of it all was the need for concrete steps for Africa to empower its youth and accelerate the continent’s development, as well as attracting the support of international development institutions.

The logistics for such megaevents could be scary, but the seamless flow of activities at the forum underscores the importance The Tony Elumelu Foundation, which has been at the forefront of advocating for entrepreneurship as the catalyst for the economic transformation of Africa, attaches

development of the continent.

Its flagship initiative, the TEF Entrepreneurship Programme, is a 10-year, $100 million commitment to identify, train, mentor and fund 10,000 entrepreneurs capable of changing the face of business across Africa.

The milestones achieved so far include: • Training, mentoring and provision of funding to thousands of start-ups in several African countries.

• Introduction of the TEF entrepreneurs to their political leaders at the highest levels of government to bring them and their challenges to the attention of policy makers who can effect changes that will improve the enabling environment.

• Leveraging access to unique data to produce original reports to support advocacy agenda to improve the ecosystem for African entrepreneurs: Unleashing Africa’s Entrepreneurs; improving the enabling environment for start-ups; Africans investing in Africa.

• Collaboration with University of Edinburgh to produce a report on Africapitalism, while a teaching case study is being developed by the Bertha Centre, University of Cape Town on the Foundation and its programme.

• TEF is the founding member of SPARK, launched by President Obama in May 2015 at the White House to promote global entrepreneurship; Presentation of TEF at • global entrepreneurship fora; • Signing strategic partnerships, including an MOU with the Nigerian Ministry of Information and Culture to invigorate the Nige@Businessdayng

rian creative industry; ECOWAS; International Trade Centre; Africa Development Bank, Microsoft, to name but a few. Many more in the offing.

Building Africa’s largest online • platform, the TEFConnect, a must-go-to destination for African entrepreneurs.

Some Takeaways The Abuja Forum, with a substantial array of leaders and experts, provided several takeaways. At the Presidential Dialogue were Mr. Elumelu; Dr. Tedros Ghebreyesus, DirectorGeneral, World Health Organisation; Dr. Akinwunmi Adesina, President, African Development Bank; Prof. Benedict Okey Oramah, President, African

Export-Import Bank; Dr. Sidi Ould TAH, Director General, Arab Bank for Economic Development in Africa; Gilles Carbonnier Vice President, International Committee of the Red Cross; Koen Doens, Deputy DirectorGeneral for International Cooperation and Development, European Commission.

The takeaways include those from: Akinwunmi Adesina Africa is not arising, it is already risen.

This year we project that the economic growth rate (GDP) will be 4%, next year 4.1% but that doesn’t tell story and the excitement of this continent.

We have 22 countries that are growing at well over 5% and 21 countries that are growing at 3-5%.

The global average GDP growth rate is 3.2%. That means Africa is doing well, and Africa is resilient.

However, I must be very quick to mention that although the GDP growth rate is important, but nobody eats GDP. GDP itself doesn’t create jobs.

The challenge that we have, the honest challenge we have as we sit here is a very humbling one. It is that we have six hundred and seventy-eight million young people in Africa today; and12-13 million people enter labour market every year but they can’t find jobs. Only 3 million of them can find jobs, and so when we talk about growth, the growth has to be a growth that creates jobs.

Not just any kind of jobs; I mean quality jobs to have a decent living.

So what we’ve got to do in my view, is to look at the young people of our continent that are going to grow, about eight hundred and forty million people by 2050, a billion people by 2063.

We can’t keep postponing their future into the future; we have to help them today; the young people are not liabilities but are assets.

As President of AfDB, the point I want to make is that we must begin to put capital at risk for the young people of Africa, this is fundamental.

Tony is doing a fantastic job, and we think we should clap for him again. However, it’s more than Tony; it’s more than each of us.

What I want to propose today is this: that it’s time for African leaders, African governments to begin to shift from youth empowerment to youth investment.

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I am happy that there is a fair convergence that in the 21st century, the development of Africa first lies in our hands

Koen Doens The big advantage we’ve had with migration is that it has put Africa much bigger on Europe’s radar screen than ever before. Thanks to migration, Europeans have started to understand that what happens in Africa doesn’t stay in Africa and that the future of Africa immediately affects the future of Europe.

That’s the first change.

Behind the immediacy of migration, there is a continent that is booming, and I think that what we see today, all the dynamism, the

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If it is, then those countries would’ve been somewhere else. I think it is people.

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Bisi Daniels

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power, the energy of African entrepreneurs is just the tip of the iceberg.

We see it all over the place, in plenty of countries, how young Africans, middle-aged Africans are having entrepreneurial spirit and skill.

Now, if I look at Europe; 99% of Europe’s companies are small and medium-sized enterprises; 85% of the jobs created over the last five years in Europe have been created by small and medium-sized enterprises.

There is no reason why African entrepreneurs cannot do the same in Africa and that is where we want to move now in Europe, which is we want to support this enormous potential of African entrepreneurship with our expertise with our means and the starting point for that is of course a shift of mindset in Europe.

We are looking at how we can use our means to support Africa in terms of developing and attracting, making easier, investment; public investment, private investment. We are now heavily going to invest in skills in vocational and educational learning because when jobs are created, you also need people who are capable of taking those jobs.

Benedict Oramah I think we are missing one thing, that one thing is our people because if you look at the world there are developing countries where they have built the infrastructure, where they have a lot of money but look at their development indices today and compare it to the indices in South Korea, Japan and all that and you see that very far away, and then you ask yourself is infrastructure the problem? @Businessdayng

Tony Elumelu I am happy that there is a fair convergence that in the 21st century, the development of Africa first lies in our hands. Two, that entrepreneurship is a way to sustainable development; three, that self-reliance is key and it is what we all should seek to achieve when we are living.

I like the fact that today we have in the audience, presidents of African countries who are committed to the development of our young ones; who have realised that as we prioritise our young ones, we also prioritise the development of the continent. That is fantastic.

But let me say to the young African entrepreneurs, the stage is now yours to take and actualise your dreams and aspirations. What we do at the Tony Elumelu Foundation is to create this kind of platform for all of you, give you the opportunity to interact with our leaders and give you little seed capital to help you prove your idea so that our young ones don’t go to the grave with their ideas. We want to see you succeed and I am happy that everyone is on board about prioritising you, about supporting you, about providing extra capacity to enable you to become our true future leader indeed.

To us, this is the changing narrative, and this is the changing mindset we would like international development institutions should have; that the way to go is to intervene and support Africa. We should support from helping Africans to become self-reliant.

With increasing support for Africapitalism and rising expectation of growth, the stakes are higher now. But beyond protecting a strong can-do reputation is a bigger expectation of helping as many African youths, as possible, utilise their ideas, rather than getting them buried in the Sahara Desert or in the Mediterranean Sea. • Bisi is a journalist and author based in Lagos

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Nigeria can earn N120bn revenue from export of sesame seed annually – Agusto report …Seeks investment in processing plant to retain loss AMAKA ANAGOR-EWUZIE

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f Nigeria improves on the business of exporting sesame seed to other global markets, the country can earn as much as N120 billion in revenue per annum, the latest Agro Commodities report released by Agusto & Co Ltd, has projected.

According to the report, Nigeria in the fourth quarter of 2018, earned about N30 billion from export of sesame seed alone to Asia and Europe, highlighting an export potential of N120 billion per annum in Nigeria.

Sesame seed, the report stated, remains in high demand abroad by pharmaceuticals and other industries that produce soap, shampoo, lubricant, paints, cosmetics and oil.

It is also use in the preparation of hummus, toppings on sushi cuisines and confectionery products.

Presenting the report to newsmen in Lagos last week, Chiamaka Ozorjiri, analyst at Agusto & Co Ltd, said cashew and sesame seeds remain key crops that will drive the export diversification bid of the Nigeri-

Gambo Ahmed, director, Maritime Labour and Cabotage Services, NIMASA, (3rd l) presenting an award to the best graduating student, Feyeun Emmanuel Michael (3rd r), with A.A Ibok (l), commander, Maritime Guard Commander of NIMASA; Micky Gnash of Homeland Security of Israel (HLSI), (2nd l) and S.J Bura (2nd r), commander, Pathfinder Base of the Nigerian Navy, who represented the chief of the Naval staff and V. Okoro (r), commander of 16 Brigade of the Nigerian Army, who represented the chief of Army Staff during the graduation ceremony of 298 surveillance officers in basic training course for the implementation of the Integrated Security and Waterway Protection Infrastructure, held at the military base in Elele, Rivers State recently.

an government, given the crops’ rapid developing markets.

She however frowned at the fact that both crops are exported in unprocessed form which creates a loss in value addition.

“Today, Nigerian farmers only remove the back of the cashew and sell the nuts raw.

This is poor compared to England and Vietnam where it is processed before the products are sold to other international buyers. They make more money because they buy from Nigeria at a cheaper rate, process and sell at higher prices,” Ozorjiri said.

She called on African

countries, to ride on the platform provided by the newly signed Africa Free Continental Trade Area (AFCTA) agreement to put resources together, and set up a processing plant for agro commodities like cashew and sesame seed in order to retain the huge annual loss.

NIMASA commissions security centre to enhance safe shipping AMAKA ANAGOR-EWUZIE

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s part of its efforts towards restoring the confidence of ships calling Nigerian ports, the Nigerian Maritime Administration and Safety Agency (NIMASA) has launched its Command, Control Computer Communication and Information (C41) operation centre.

The centre, which houses the C4I system, also known as the Deep Blue Project, is expected to eliminate, or reduce the scourge of piracy and other criminalities in the Gulf of Guinea, particularly in the Nigerian maritime domain, and consequently reduce or totally eliminate the war risk insurance premium charge on Nigeria-bound cargo.

Speaking at the official launch in Lagos over the weekend, Dakuku Peterside, director-general of NIMASA, said while the Gulf of Guinea holds a significant percentage of the world’s total oil and gas reserves and a rich deposit of natural resources, Nigeria accounts for about 70 percent of the maritime economic activi-

ties in the region.

Represented by Gambo Ahmed, executive director, Maritime Labour and Cabotage Services of NIMASA, Peterside said Nigeria also has “the highest number of port calls in the region and over 5,000 ship calls, comprising product tankers, crude oil tankers, LNG carriers and general cargo vessels and tankers operating in its exclusive economic zone annual.”

He said the region had become a source of concern to the international community due to high level of insecurity, with the Nigerian maritime domain the most hit, as insecurity became a major deterrent to existing www.businessday.ng

and prospective businesses.

“Therefore, combative steps must be taken to eradicate these cancerous elements that can sap business confidence in the country, with Nigeria’s economic life-wire depending strongly on its Exclusive Economic Zone and the Gulf of Guinea due to the volume of economic activities that take place in the region,” he said.

Peterside added that the project was designed as an early detection coastal security system to prevent illegal activities by identifying and analysing suspicious activities at the earliest possible moment, using a wide range of sophisticated air, marine and land assets.

“The C4I Operational Centre stands as the central nerve from which all actionable information needed by all other components of the project emanate. The centre will serve as the base for situational intelligence for the Deep Blue Project, with 40 personnel broken into operators, intelligence officers and shift supervisors manning the centre,” he explained.

A simulated operation was demonstrated at the launch by the Israeli firm, Home Land Security International (HLSI), while NIMASA assured that having formerly commenced operations, the C4I system would subsequently deploy the full complement of the sophisticated air, marine and land assets listed as part of the project, including fastmoving vessels and aircraft.

He charged the operators, intelligence officers and shift supervisors to realise that the success of the centre depends largely on them as the project’s coordinating centre of operations, thus the need for “high commitment, discipline and most importantly, team play.”

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“Nigeria just like Cote Ivories, Tanzania are among the African countries that contribute about 53 percent of the global cashew production.

And if these countries can set up processing plant, all the loss in value addition can be retained,” she pointed out.

She however said that for cashew and sesame seed processing plant to thrive, there is need to ensure adequate supply of raw material, and put in serious effort in addressing farming challenges such as poor access to funding, use of crude farming equipment and use of modern planting and harvesting equipment.

Analysing the report, she said that almost 40 percent of global cashew supplies are shipped to India and Vietnam for shelling, adding that this loss of value add totals about $200 million.

“There is need for increased private sector investment in cashew and sesame processing plant. This involves investment in state-ofthe-art processing facilities, raw material sourcing from reliable small and large scale farmers,” he noted.

Meanwhile, the report

pointed out that global cashew market has recorded strong expansion in the last decade with cashew nut production increasing at a compound annual growth rate of 5 percent to 790,000 metric tonnes in 2018.

It fur ther noted that growth in the international cashew market has been supported by increased consumption of cashew particularly in middle and upper countries due to the greater health consciousness.

Ozorjiri said there are expectation of a moderate growth in both markets in the short term with good rainfall, improved access to good quality inputs and assured demand from the international market.

While calling on industry players, policy makers and investors to patronise the Agusto Agro Commodities report in order to gain more insight on the potential and opportunities inherent in the Agricultural sector, she said the report outlines key competitive tools pertinent to the success of cashew and sesame export in Nigeria today.

Emperor’s bonded terminal, logistics confab holds tomorrow

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mperor Magazine said it has concluded plans to hold its 2019 Bonded Terminal/Logistics Conference slated to take place tomorrow, Thursday August 22, 2019, with the theme, Private Bonded Terminal: A Key Player in Cargo Distribution and Logistics Management Chain.

The conference, which is coming at a time when private bonded terminal investors are decrying total neglect by the authorities, will be chaired by Alex Okwuashi, educationist and the proprietor of Certified Institute of Shipping Nigeria (CISN).

The managing director/ CEO of Clarion Shipping West Africa Limited, will present a paper on “The Challenges of Bonded Terminal Operation in Nigeria” while Bashir Jamoh, national president, Chartered Institute of Transport and Management Nigeria and executive director, Finance and Administration of NIMASA will be the guest @Businessdayng

lecturer.

Ambrose Obioma Okehi, the convener/managing director, Richword Communication and Media Services, said this year’s event was the second in the series and the theme is apt based on the fact that the nation’s seaports particularly the Apapa and Tin-Can Island ports are currently facing vehicular and human traffic.

“With the bonded terminal in full operation, this congestion and gridlock on Apapa-Oshodi Expressway will be a thing of the past,” one of the investors pointed out.

The conference aims to bring together the bonded terminal owners and government officials as well as maritime stakeholders drawn from the haulage, transportation, courier service providers as well as shipping operators in one roof to rub minds on issues relating to cargo distribution and management chain.

Wednesday 21 August 2019

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Kobo360 secures $30m funding to deepen market penetration AMAKA ANAGOR-EWUZIE

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etermined to widen its presence in Africa, Kobo360, a digital logistics firm said it has successfully secured the sum of $20 million in an equity round led by Goldman Sachs, with participation from Asia Africa Investment and Consulting Pte. including TLcom Capital, Y Combinator, and the International Finance Corporation (IFC).

It also raised an additional $10 million in local currency as working capital financing from Nigerian commercial banks, bringing the total fund to $30 million.

With the fund, the management hopes to scale up the organisation by developing its technological offerings and accelerating supply growth as it plans to add 25,000 drivers to the platform in the coming months to power the recent Africa Free Trade Continental Agreement (AFTCA), expected to catalyse intra-

L-R: Ofie Sunday, assistant director, Port Administration, Federal Ministry of Transportation; Chinwe Ekekezie, assistant comptroller general of Customs/zonal coordinator of Zone “A”; Hadiza Bala Usman, managing director of the NPA; Kunle Folarin, chairman of PCC and major Henry Ajetunmobi (rtd), deputy chairman of PCC at the Council’s quarterly meeting held in Lagos recently.

African trade.

Beyond Nigeria, Togo, Ghana and Kenya, Kobo360 is also planning to significantly broaden its reach in Africa by entering 10 new countries by the end of 2020.

Obi Ozor, co-founder/ CEO of Kobo360 said, the fund will allow the company to invest in growing the talented team that is working hard on ground to systematically address

the inefficiencies within the African logistics sector, and strengthen its already extensive network of clients and truck owners across the continent.

“We are also focusing on developing partnership with drivers by training them on the use of mobile-enabled technology to enable them convey goods seamlessly and earn more money. We are already seeing drivers,

who are running trips on the Kobo360 platform, increase their monthly earnings by 40 percent,” he said.

“Kobo360’s on-demand logistics offering has generated impressive traction and we are excited to support the team as they harness technology to tackle one of Africa’s most pressing development challenges by increasing market

transparency, improving reliability and unlocking efficiencies for all participants in the logistics ecosystem,” said Jules Frebault of Goldman Sachs.

Omobola Johnson, senior partner of TLcom Capital, said they see this Series A round ($30 million) as a means to support an ambitious, laserfocused company who are using technology to actively solve problems for enterprises across the continent.

“We look forward to working with them as they continue to scale and transform the African logistics sector,” Johnson added.

Ko b o 3 6 0 h ow e v e r said is also developing a suite of driver-focused products to support the over 10,000 drivers on its platform. It has launched KoPAY, offering access to about $5,000 monthly working capital; KoboSAFE, access to an insurance product ; and KoboCARE, access to discounted petrol, comprehensive Health Management Organisation (HMO) packages and an

incentive-based education programme for drivers’ families.

Wale Ayeni, head of venture investing in Africa for IFC, said IFC’s continuous investment into Kobo360 stems from the company’s successful track record.

“Kobo360 is empowering and enhancing the capacity of the vast underserved network of ‘micro’ fleets in Africa to serve the huge unmet longhaul freight needs of large enterprises and SMEs, delivering value to both sides,” he said.

Launched in 2017 by Nigerian entrepreneurs, Obi Ozor and Ife Oyedele II, Kobo360’s techenabled services allows for the development of an efficient supply chain for end-to-end long-haul freight operations, connecting and supporting cargo owners, truck owners & drivers, and cargo recipients.

It serves enterprises like Dangote Group, DHL, Unilever, Olam, African Industries, Flour Mills of Nigeria, and Lafarge.

Nigeria must address port infrastructural deficit to attain ERGP goals – NPA

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or Nigeria to actualise the objectives of the Federal Government’s Economic Recovery and Growth Plan (ERGP), the nation must address the challenges posed on trade by infrastructural deficit around the ports, Hadiza BalaUsman, managing director of the Nigerian Ports

Authority (NPA), has said.

Usman in a statement signed by Adams Jatto, general manager, Corporate and Strategic Communications of the NPA, said the actualisation of ERGP depends largely on how swiftly, the nation can correct the inherent deficits in the nation’s port infrastructure especially

the port access roads.

Speaking at the quarterly meeting of the Port Consultative Council (PCC) held in Lagos recently, she said NPA has embarked on projects geared towards ameliorating the challenges of doing business within the port environment.

She listed the projects

to include conversion of Lilypond Container Terminal to a holding bay for trucks, introduction of call-up system for trucks and other incentives to encourage the transfer of cargo through barges from Ikorodu, Epe and Ijegun among others.

She called on stakeholders to collaborate with

one another in order to achieve greater operational efficiency and proffer ways of tackling challenges impeding the progress of the sector.

Usman assured of the NPA management’s commitment to tackling critical issues facing optimal operational capacity in areas that border on mari-

time safety and security, port access roads and multimodal transportation of cargo.

Kunle Folarin, chairman of PCC, who commended Bala Usman for impacting positively in the sector, solicited for the support of all agencies in moving the council to the next level.

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Wednesday 21 August 2019

BUSINESS DAY

PENSION today

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In Association With

As data-recapturing paves way for Pension Transfer Window

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he successful completion of the ongoing data-recapturing exercise embarked by Pension Fund Administrators (PFAs) will pave the way for implementation of the long awaited pension transfer window.

Ronke Adedeji, president, Pension Fund Operators Association of Nigeria (PenOp) who disclosed the development said getting the data right among other benefits will pave the way for take-off of the transfer window She said pension operators are intensifying efforts towards the data recapturing exercise with the view to achieving harmonized information of all Retirement Savings Account (RSA) holders under the Contributory Pension Scheme (CPS).

According to the operators, one of the benefits of the data recapturing is to reconcile information of some pension contributors that may have inadvertently registered with more than one Pension Fund Administrator (PFA), in other words having more than one PIN. Transfer window is a platform created by the National Pension Commission (PenCom) to enable pension contributors who are dissatisfied with the services of their current PFAs to transfer to any other PFA of their choice.

According to experts, implementing the transfer window will be an exciting happening within the industry as PFAs are set to compete with each other on how to retain old contributors as much as possible, and also win new ones.

As PenCom therefore prepares to issue final guidelines for opening the Transfer Window as provided in the Pension Reform Act 2014, it will be interesting to understand some of the terminologies that you will encounter in trying to make the move.

Section 13 of the Pension Reform Act (2014) specifies that an employee may, not more than once in a year, transfer his Retirement Savings Account (RSA) from one Pension Fund Administrator (PFA) to another.

Definition of Terms Pension Administration System (PAS) shall refer to a central system to be domiciled at the National Pension Commission that would be responsible for warehousing all data on pension matters relating to registered contributors/members.

“Registration Module” (RM) shall refer to a module of PAS that would be responsible for the receipt of requests from Pension

Fund Administrators (PFAs)/Closed Pension Fund Administrators (CPFAs) for the registration of contributors/members as well as Employer initiated registration in compliance with Section 11 (5) of PRA 2014 for the purpose of generation of a Personal Identification Number (PIN).

“RSA Holder” shall refer to registered contributors and retirees.

“RSA Transfer” shall refer to the transfer of RSA from one PFA to another upon the request of the RSA holder within a calendar year and on the approval of the RTCM. “Transferring PFA” shall refer to the PFA from which an RSA is being transferred.

“Receiving PFA” shall refer to the PFA to which an RSA is being transferred.

“Retiree” shall refer to an RSA Holder who ceases to make further contribution into his/her RSA as a result of permanent disengagement from service and has executed a Programmed Withdrawal Agreement with his/her PFA. “Legitimate RSA Holder” shall refer to an RSA Holder whose identity has been confirmed by the Receiving PFA as being the bona fide owner of an RSA being transferred.

“Voluntary Contributions” shall be deemed to be non-obligatory contributions, made by an individual with the sole aim of providing retirement benefits for a

future date.

“RSA Transfer Form” shall refer to a document approved by the Commission and completed by an RSA Holder through a Receiving PFA requesting for transfer of an RSA from a Transferring PFA to a Receiving PFA. “RSA Transfer Clearing Module” (RTCM) shall refer to a module of PAS that would be responsible for coordinating the processes relating to the transfer of RSAs from one PFA to another.

“Transfer Notification” shall refer to the receipt, by RTCM of a duly completed RSA transfer form from the Receiving PFA, in respect of an RSA Holder intending to transfer his/her RSA from a Transferring PFA to a Receiving PFA. “Date of Receipt” of a transfer notification shall be deemed to be the day on which RTCM receives the duly completed RSA transfer form.

“Calendar Year” shall refer to a consecutive period of twelve months.

“Calendar Quarter” shall refer to a three-month period regarded as one of four parts of a calendar year. The 1st Quarter of every calendar year shall be deemed to be the period between 1st January to 31st March, while the 2nd , 3rd and 4th Quarters shall be 1st April to 30th June, 1st July to 30th September and 1st

October to 31st December respectively.

Therefore, where a transfer has been approved for an RSA within any quarter of a calendar year, such RSA shall not be eligible for another transfer until twelve consecutive months from the date of the last approved transfer.

“Effective Transfer Date” (ETD) shall refer to the last day of the last month of a calendar quarter namely 31st March, 30th June, 30th September and 31st December respectively. Notwithstanding the provisions of 2.1.15 above, where a transfer notification is received within the last month of a calendar quarter, the ETD shall be the last day of the last month of the following calendar quarter.

“Transfer Value Payment” shall refer to the balance standing in the RSA as at ETD. This shall include accumulated contributions and accrued rights paid into the RSA, plus all investment income earned and accruable within the transfer quarter.

“Detailed RSA Transaction History” shall refer to a detailed and complete statement of account of an RSA Holder starting from July 2004 or date of appointment if after July 2004 till ETD. “Net Transfer Position” shall be the summation of all transfers to and from a particular PFA within a specified transfer period, netted-off to arrive at either a credit or debit position.

“Net Credit Transfer Position” shall refer to an amount by which the total transfer value of RSAs coming to a PFA exceeds the total transfer value of RSAs leaving that particular PFA, within a calendar quarter.

Where this occurs, the affected PFA shall expect funds inflow from other PFAs. “Net Debit Transfer Position” shall refer to an amount by which the total transfer value of RSAs coming to a PFA is less than the total transfer value of RSAs leaving that particular PFA, within a calendar quarter.

Where this occurs, the affected PFA shall be expected to remit funds to other PFAs. “Transfer Suspense Account” (TSA) shall refer to a general ledger account maintained by PFAs and PFCs, for the purpose of warehousing RSA balances to be transferred upon receipt of an approved RSA transfer from RTCM. In addition, contributions received after ETD either relating to period before or after ETD shall be warehoused in the TSA before being remitted.

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

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

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

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

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Wednesday 21 August 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

New NAICOM brewing as market confirms speedy approvals Modestus Anaesoronye

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new National Insurance Commission (NAICOM) where employees are happy and working harmoniously, and where operators have less protocols to get approvals on products, appointments and strategies that could impact positively on their market growth and development is gradually creeping in.

Right from the directorate, to junior staff, there seems to be a new found love and cordial discharge of duties that hitherto eluded the commission in a long while, no thanks to protests and labour unrest that characterized the Commission in the last few years.

From the operator’s angle, some of the impending requests including confirmation of appointments, products and partnerships that had gone through approval processes got speedy consents in the last one week, which market watchers say could mean a new era for market.

Sunday Thomas, the acting commissioner for Insurance who only got a confirmation from the Federal Government penultimate week, to continue the headship of NAICOM pending the appointment of substantive Commissioner is humble and a well grounded professional who understand

Sunday Thomas, acting commissioner for Insurance

Tope Smart, chairman NIA

the needs of the market.

His earlier sojourn in NAICOM as executive director, Technical and in the insurance trade body, Nigerian Insurers Association (NIA) was remarkable with a lot of achieve-

ments. This is expected in NAICOM as he drives the ship of the regulatory agency in the days and months ahead.

Thomas was appointed deputy commissioner for Insurance, Technical by President

Linkage Assurance positive about growth year round Modestus Anaesoronye

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nderwriting firm, Linkage Assurance Plc is optimistic that it will sustain the growth achieved in the first half of the year all year around, as its growth initiatives already deployed were beginning to add value to performance of the company.

Daniel Braie, managing director/CEO of the Company said the firm has diversified its portfolio to achieve income efficiency with quality risk management, noting that management is actively watching its cost to ensure that it delivers value to shareholders.

Linkage Assurance Plc recorded a 16 percent growth in Profit After Tax (PAT) in the half year unaudited financial statement

Daniel Braie, MD/CEO, Linkage Assurance

for the period ended 30th June 2019. The figure rose from N439.77 million in the half year period of 2018 to N572.76 million in the same period in 2019.

According to the financial statement made available to the Nigerian Stock Exchange (NSE), Linkage during the period under review posted a Gross Premium Written(GPW) income of N4.130 billion as against N3.650 billion the previous year.

With efficient risk management, the underwriter during the period returned to profitability in underwriting performance, posting a 176percent increase, as the figure moved from negative N367.11 million in 2018 to positive N296.06 million.

Linkage Assurance total assets also grew by 8 percent, moving from N23.146 billion to N24.869 billion at the end of June 2019.

In terms of compliance to regulatory requirements, we are up and doing to ensure we remain above board and maintain our position in the industry, Braie said.

Linkage Assurance Plc. (“LINKAGE” or “the Company”) was incorporated in Nigeria on 26th of March 1991 as a private limited liability company domiciled in Nigeria.

It was registered by the National Insurance Commission on the 7th of October 1993 to transact general insurance business and commenced operations in January, 1994.

The Company’s high standard in corporate policies and governance are designed to encourage transparency in all its activities as well as ensure the protection of the long term interest of all stakeholders. The business of the Company is conducted with high level of integrity. www.businessday.ng

Muhammadu Buhari On April 15, 2017, having had over three decades of experience in the industry, both as regulator and operator.

Prior his appointment deputy commissioner Thomas held the position of director – general at the Nigerian Insurers Association (NIA) for seven years from May 2010.

He is vastly experienced and knowledgeable Insurance Professional with over 35 years uninterrupted service to the Nigerian insurance industry.

During these years, Thomas worked as a Director for 17 years at the National Insurance Commission from 1992 to December 2009 where at different times, he superintended over different departments in the technical division.

He had also worked as an insurance operator for over 10 years and rose to the position of Assistant General Manager at AIICO Insurance Plc until he left in 1992 to join NAICOM. Thomas is an active participant in the insurance industry activities and had served as member of several Committees not only within the insurance industry but the entire Financial Services Sector.

He holds a BSc (Hons) in Actuarial Science and an MBA Finance both from the University of Lagos.

MUFG, African Trade Insurance Agency sign MoU on market expansion Modestus Anaesoronye

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UFG Bank, Ltd. (MUFG) and the African Trade Insurance Agency (ATI), Africa’s only multilateral trade and political risk insurer, today signed an agreement that will allow for increased cooperation and information sharing in order to support ATI’s member countries as well as MUFG’s clients in Africa.

The Memorandum of Understanding was signed at its Annual General Meeting of ATI held in Cotonou, Benin.

MUFG has been working with ATI over the last 12 months to leverage ATI’s status as a supranational organisation and enhance their standing within the London insurance market to better structure transactions for the benefit of the region.

With ATI’s support, MUFG has recently delivered two successful transactions: an innovative structured finance for the Republic of Benin, the country’s very first commercial financing involving international investors, and Côte d’Ivoire’s issuance of the first ever Social Loan by an African sovereign government. This privately placed Social Loan financing evidences Côte d’Ivoire’s robust efforts to set world-class standards for governance, transparency and sustainability in the achievement of its economic and social development objectives.

Both transactions introduced a new class of investors to their respective governments, delivering long tenor financing at extremely competitive costs of financing.

Christopher Marks, head of Emerging

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Markets at MUFG in EMEA, said “It is fantastic that we are now able to utilise ATI to support our clients and business in Africa, particularly when handling trade flow and investment.

“This MoU has cemented the existing working relationship between the two entities, ensuring a strong, positive and respectful partnership remains between ATI and MUFG.” John Lentaigne, acting chief executive of ATI said: “It is a great honour for ATI to formalize our strategic partnership with Japan’s largest bank as both institutions look to support each other in developing innovative financing solutions for Africa’s governments and corporates. The last 12 months have seen ATI and MUFG partner to deliver on a number of major transactions and we have no doubt that even greater opportunities lie ahead.”

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Wednesday 21 August 2019

BUSINESS DAY

27

BANKING 60% LDR target: Banks face difficult Options HOPE MOSES-ASHIKE

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s the September 30 deadline given to banks to meet the 60 percent loan-to-deposit ratio (LDR) by the Central Bank of Nigeria (CBN) approaches, lenders are grappling with difficult options that face them.

Banks that currently do not meet the requirement are confronted with two choices: to increase their loan books or reduce deposits.

The CBN directed all deposit money banks to maintain a minimum LDR of 60 percent

by September 30, 2019. The focus of the LDR minimum is to promote consumer and mortgage credit to drive demand, the apex bank explained.

In the last three to four years, banks have not been bullish on increasing loans to the private sector. The overall availability of credit to the corporate sector decreased in Q2 2019 but is expected to increase in Q3 2019, according to Credit Conditions Survey Report published by the CBN. “I don’t think the CBN regulation that will be met in a couple of months will change that stance,” Ada Ufomadu, senior banking analyst at Agusto & Co said, adding that most Tier 2 banks are complying with the new LDR minimum requirement, but not all Tier 1 banks do.

Meanwhile, the banks have laid their complaints with CBN and there are discussions with

the regulator on their concerns. It is certain that the loan book is not going to reduce much. Right now the industry’s LDR is about 66 percent. So the difference between 66 and 60 percent is not a significant growth to be expected. Even at that the banks will not increase their loans and the easiest approach they might take is to reduce their deposits.

“It means that banks may begin to reject high-cost funds and when there are many funds

Fidelity Bank shows commitment to digital technology with adoption of open banking

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onsistent with its commitment to the adoption of innovative digital technology to drive its retail strategy, reduce cost and improve revenue and returns, Fidelity Bank has signed a Memorandum of Understanding with Open Technology Foundation (OTF) for the adoption of a standard Application Programming Interface (API) for its operations as a financial institution.

Open Banking is a system that provides a user with a network of financial institutions’ data through the use of application programming interfaces (APIs). The Open Banking Nigeria Standard defines how financial data and services should be created, shared and accessed. By relying on networks instead of centralisation, open banking helps customers to securely share their financial data with other financial institutions.

The bank recently took a bold step to further provide its consumers with improved services and solutions that meet their needs by leveraging the collaborative model of Open Banking.

Through this partnership, Fidelity Bank would deepen its financial services delivery through appropriate and time sensitive channels whilst collaborating with other stakeholders within the ecosystem.

Open Banking has been seen as the most transformational financial technology over the next decade which has seen about 47 countries at various stage of implementation. Recently, the Central Bank of Nigeria signalled its intention to lead Africa in digital payments innovation with the request for information about the National Payments System Vision 2030 for which Open Banking is a strategic priority.

Additionally, Fidelity Bank has by this development, joined other leading banking and financial services industry players, who have not only adopted but are also promoting this mode of operation, which among other benefits would drastically consolidate customer satis-

faction, grow revenue across diverse streams, promote financial inclusion, as well as assure a smooth but controlled data flow.

“As a digitally innovative and forwardthinking bank, we believe in the importance of investing in digital technologies and its significant contributions to shaping the future of banking globally” said Fidelity Bank CEO, Nnamdi Okonkwo.

“Therefore, this partnership with the Open Technology Foundation for the adoption of a standard, industry-wide API is a step in the right direction and is in alignment with our commitment to digital innovation, for the satisfaction of our customers” he explained further.

The Open Technology Foundation was established to analyse the need of the industry for a common API standard among banks and other financial institutions, develop the common API standards, provide a sandbox and other testing tools for certification, promote the adoption of an Open Banking standard with stakeholders across Nigeria, and to enable further innovation in the financial services industry.

“At Open Technology Foundation, it is our utmost delight to collaborate with players across the banking and services ecosystems for the introduction, adoption and promotion of Open Technology practices. We are convinced that this is one great move that would transform the financial space in Nigeria, with ripple effects across other industries in the country and by extension Africa,” said Ope Adeoye, a trustee of Open Technology Foundation.

Focused on select niche corporate banking sectors as well as Micro Small and Medium Enterprises (MSMEs), Fidelity Bank is rapidly implementing a digital based retail banking strategy which has resulted in exponential growth with savings deposits tripling over the last five years and over 40 percent of customers enrolled on the Bank’s flagship mobile/internet banking products. www.businessday.ng

in the system that the banks are not willing to take up then it means the interest rates on these deposit may reduce that is why we think the interest expense of the banks will drop,” Ufomadu explained.

However, the banks are aggressively pushing credit to consumers in compliance with the directives of the CBN. Consumer credit rose from N747.88 billion in May 2019 to N753.85 billion in June 2019. This is a significant increase from

the figure of N632.71 billion in December 2018.

Overall, personal loans accounted for 4.88 percent of total industry loans in June 2019.

“While this is a positive development, current and proposed measures by the monetary authorities should help to boost this ratio significantly,” said Adeola Festus Adenikinju, member of the Monetary Policy Committee (MPC).

In his personal statement, Edward Lametek, deputy governor of the CBN, said, “I am hopeful that the differentiated cash reserves requirement (DCRR) and the recent policy specifying a minimum loan/deposit ratio would improve the flow of credit to the desired sectors of the economy”.

In banks’ to meet the requirement, the rating firm has foreseen price war in the banking sector where Tier I banks that are more advantaged in terms of low cost of funds could cherry-pick customers of Tier II banks, and negotiate for a lower interest from such clients.

“We do not foresee a significant increase in loan book due to a potential increase in credit risks,” Ufomadu said while unveiling the banking industry report in Lagos last week”.

The banking industry is still very much controlled by top five banks – GTBank, Access, UBA, Zenith and First Bank. These banks account for about 57 percent of the industry’s asset and about 59 percent of the loan book.

According to the firm’s report, in 2018 the asset of the banking industry was about N33.3 trillion and growth in 2019 will be driven largely by the fact that a lot of banks are raising capital.

Stakeholders advocate AntiCorruption in FOREX trade Gbemi Faminu

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he Anti-Corruption and Transparency Monitoring Unit has called for transparency and principled trade in the Nigerian Foreign exchange (FOREX) markets dealing, stressing that transparency and ethical dealings will enhance the growth of the Forex trading in the country.

Speaking at the MBA Forex and Capital Investment Limited’s “Bare2Blue Revolution” Business Banquet in Lagos at the weekend, the Chairman, Anti-Corruption and Transparency Monitoring Unit, Presidential Villa, Ahmad Sulaiman, said ethical business tailored to the policy direction of the current administration remain the way forward in building a sustainable fraud free Forex market in Nigeria.

“The energy of Nigerian youths needs to be channelled into a sustainable and legitimate business to reduce the unemployment currently plaguing the country. Part of the drives to provide employment and create opportunity for Nigerian youths to engage themselves legitimately is Forex businesses” “If adequately monitored and regulated by policymakers, foreign exchange trading can tame unemployment in Nigeria,” Sulaiman said.

He said that the MBA Forex and Investment Limited as an upcoming economic catalyst has been certified by necessary regulatory agencies in Nigeria adding that the MBA’s method of operation is in line with the anti-corruption and transparency drive of the current administration.

Addressing the issues of establishing businesses in Nigeria, Sulaiman advised Nigerians

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against going into a business that is ethically deficit adding that any business lacking in transparency should be shunned as the current administration is combating strictly all forms of corruption.

“It is no longer business as usual. Nobody should go for any business that is not sustainable, accountable, transparent and ethical in Nigeria. But only business that has shown to be otherwise and operating within the ambit of the Nigerian laws should be encouraged.”

Sulaiman said.

Maxwell Odum Chief Executive Officer, MBA Forex, restated the company’s commitment to transparency and ethical dealings adding that agency regulation and government involvement in the industry will minimize the possibility or fraudulent and illegitimate dealings.

Odum added that “MBA FOREX is changing the narratives with the various licenses binding the company to operate ethically in the market and ensure investors’ money and other investments are safe.”

“Despite the options and opportunities available in the industry, it is yet to be fully explored and introducing the regulation of the Forex industry will help in combating fraudulent activities relating to Forex trade.”

The Business Development Manager, Exclusive Markets, Claude Herve Tchatchouang, said the foreign exchange market still remained largely unexplored in Nigeria adding that with the level of willing investors in the market, unemployment will be drastically reduced in the country.

“Right now, the FX is still a virgin market.

It is a market that still needs a lot of improvement and there is a lot of work going on to create awareness by MBA about the opportunities in the FX market.” Tchatchouang said.

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28

Wednesday 21 August 2019

BUSINESS DAY

INTERVIEW Poor funding, years of neglect affected CCB’s role as Professor Isah Mohammed is the Chairman and Chief Executive Officer of the Code of Conduct Bureau (CCB). He, in this interview with the BusinessDay’s media team led by Bashir Ibrahim Hassan (GM, Northern Operations) spoke on the key reforms going on at the Bureau especially with regard to proper preventive measures being put in place in monitoring conduct of public office holders to ensure high moral discipline amongst them for a better Nigeria. Excerpts: What can you tell us as your experience so far since you assumed office as the CEO of Code of Conduct Bureau? hanks. The bottom line of the word is that this is a very important institution. The Code of Conduct Bureau as you know is the creation of the constitution and as you know, there is an enabling law that created the Bureau.

It was created to check the excesses of public officers. Its mandate is enshrined in the paragraph 3 of the third schedule of the constitution.

The work it is expected to do is enshrined under the fifth schedule. I can call it a pioneer anti-corruption agency. It was constitutionally created by the 1979 constitution, but it came on board, after an enabling law was enacted in I989-so, it started operations in 1989, which is about 30 years now. The strategic importance of the Bureau is such that one would be very interested in knowing what the Bureau is all about. Going by my experience, and giving you background information of what the Bureau stands for as an anti-corruption agency, let me go briefly into that.

The Bureau is to check public officers -they are categorized under the law as elected political office holders-appointed political office holders, federal public servants, state and local governments’ civil servants. All of them are elected public office holders. These are elected and appointed political officers.

Also, we equally have them at the federal level, state and local government levels. So these are the three layers of the public officers that we have. Also, the judicial officers are also public officers, for the purposes of code of conduct for public officers.

The police, military, customs and all other para-military institutions-the personnel in these agencies are also public servants-hence nobody is spared in this category. More so, the president to the last person at the local government services is a public officer for the purposes of enforcing compliance with the code of conduct for public officers.

The Bureau is mandated to monitor the conduct of each public officer.

It is mandated to gather intelligence, and we conduct intelligence, investigate and eventually refer the case if the public officer is found wanting, to the code of conduct tribunal. It is mandated to receive complaints or petitions of noncompliance with the code of conduct for public officers. If the public officer is found wanting, the Bureau is mandated to refer the case to the code of conduct tribunal.

The Code of Conduct Bureau’s work is largely preventive because most of the corruption cases you find are

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Mohammed

perpetrated in public offices. So, ,if public officers are put on check, from time to time, the issue of even taking something unlawfully from public coffers would be minimised, not to talk of pursuing somebody after he has taken and empowered himself, and he or she begins to fight back. Because the person is already empowered with billions of naira from the public coffers, the person cannot stand or allow any authority or power to at least come up and insist on allowing the law to take its full course.

Most often in that case, since the person has been empowered, he takes the services of most expensive lawyers to go and defend his case because he has dipped hand into public coffers. That is why you see most of these high profile cases of people hanging in court without any meaningful progress, ever since the

fight against corruption becomes prominent. That is why you see a lot of cases of public officers are there ‎in court without any meaningful progress. That is why you see the fight against corruption because prominent in government circlee, particularly in Nigeria.

How far could you say you have achieved in curtailing this?

This is the second leg of the first question asked earlier. That is why I gave background information of the strategic importance of this institution earlier in my remarks. By this, you understand better and have a yard stick of measuring whether we have achieved anything or not.

When we came in, just barely seven months ago, we met the Bureau in serious crisis. There was a serious leadership tussle, between the acting secretary and the most senior director then in the Bureau. When the

“

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“

We have a special court -that is the Code of Conduct Tribunal, and they don’t have a special court like us. Our own work is more of preventive, and most of the offences are ‘strict liability offences’

last board was leaving, they handed over to the most senior director, by that time the acting secretary was not around then. Later, she was reinstated and when she came back, the most senior director could not accept it easily. So, there was this leadership tussle to the point that the Bureau was pressed to a standstill and nothing was happening. From four to five months before we were confirmed, nothing was happening in this place. There are lots of union activities that frustrated the activities of the Bureau then, even the offices were locked.

When we came in by the grace of God, within one week of our confirmation, everybody returned to work. All offices were opened, and everybody went back to the duty in his or her station-hence this is the first achievement. The polity was seriously heated if you could recall.

We decided to maintain some level of neutrality. We opened our doors to everybody, and we assured everybody that we are here to work and not to play. It was not about fighting somebody, or pursuing somebody forcefully, but it was about your own attitude as a leader. So, we tried to adopt the attitude of leading by example. Now, we have been able to make some changes internally, in the light of being able to reposition the place.

First, we have been able to achieve some level of accountability in the finances of the Bureau.

The little or meager overhead cost that comes to us monthly, we have been able to utilize it prudently. We block a lot of leakages and excesses for embezzlement, for charity begins at home. Second, we tried to see that all the relationships we had with other anti-corruption agencies and other agencies that matters, as stakeholders in corruption fighting are improved upon.

So, there is no way if we get a mail on investigation activities from the Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices and Other Related Offences Commission (ICPC) or Public Complaints Commission, and we sit down on that mail. Hence, we ensure that there is a speedy treatment of all mails that come from our partners with regard to anti-corruption, within a reasonable time. Third, complaints that are filed are treated with dispatch. Between the time we came in and now, we have filed about 50 cases at the code of conduct tribunal. Just last week, I received a brief on more cases to be filed and there are about 15 of them, which are high profile cases, and we are ready to prosecute those public officers.

Could you talk us through the @Businessdayng

recent prosecution the high profile case of the former Chief Justice of the Federation, and the experience with that case?

Yes, we succeeded in that case. You know, there is one thing peculiar about the Bureau and other anti-corruption agencies. We have a sister institution that is the Code of Conduct Tribunal, and no other anti-corruption agency has a Tribunal like us and that makes us peculiar. If the government wants to fight corruption effectively, if it can use CCB, I tell you, if CCB can be strengthened the way EFCC and ICPC are strenghtened,and being supported with funds, I tell you ICPC and EFCC would have less work to do.

Why did you say so?

We have a special court -that is the Code of Conduct Tribunal, and they don’t have a special court like us. Our own work is more of preventive, and most of the offences are ‘strict liability offences’. In law, when it comes to offence, there are two elements that you need to prove-the intent, and the act. But in our own case, once you can have the violation of the act, you have nothing to do with the intent. The most difficult aspect of proving an offence is the intent and not the act. If the law, for instance says: don’t be in possession of a knife, and you are seen with a knife in the corridors, the offence is completed, because of the possession. How you come about that knife, or what you intend to do with it, is immaterial. In our own case, your intention is immaterial.

But, for instance stealing, when you steal, you have a number of defences on how you have gone to somebody’s house to take away a property that does not belong to you. You could have a number of defences, and may even succeed at the end of the day, if you have competent lawyers to defend you. Conversely for offences such as asset declaration. Once you don’t declare, that is an offence. Your intention for not declaring is immaterial.

The law says as a public officer, you must declare your assets, before starting the functions of your office, and you did not declare, and it was discovered you did not; the law would take its course.

So many see Onoghen’s case as an isolated case, and there are concerns that he was targeted because of alliance with the opposition, how do you react to that?

I don’t want to go into that area, but as the Chief Executive of CCB, my own duty, is to receive petition and investigate, and if found wanting with regard to what the law says I take you to CCT. Onoghen, admitted, he did not declare his assets by himself. Because we have to respect him, and dignify his office, we sent our investigative team to his office. They met with him, and in the presence of a trusted staff of his, he wrote with his very hand and signed, and the staff counter-signed with her name, that all he had said and had written, he stands by it. So, what more do you need in this kind of case? Be it an isolated case or otherwise, an inclusive

Wednesday 21 August 2019

BUSINESS DAY

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effective corruption-fighting agency - Mohammed

case, what more do you or anyone needs when it comes to justice in a case like this?

What measures are you exploring to address concerns of lack of appropriate funds for the agency, to upscale your functions?

When we came in here, we noticed that the CCB had been dumped, as a toothless bulldog. Even the government, donor agencies, development partners and other public institutions’ attention, was not on CCB, as an anti-corruption agency. As God would have it, when we came in we realized this. We had no option than to struggle as much as we could to raise it from the ashes of condemnation, to the level of glory. We can only do this, if we can stand tooth and nail to discharge our mandates.

Because greatness and achievements are not made out of funds. They are made out of cheer honesty, determination and sincerity of purpose. From zero level, you can start and reach the peak, and that is what we are doing now. Hence we are in the process.

We just came back from the director general of budget’s office this afternoon.

We went and told him that the budget preparation process was around the corner, and CCB as an anti-corruption agency, didn’t have funds for foreign engagements. We cannot make foreign trips anywhere because we don’t have funds. There is even a circular from the government on foreign trips restrictions, but some other agencies have it in their budget provisions.

Second, we don’t have investigation funds, and three, we don’t have prosecution funds. We are not also not automated.

We don’t have any form of automation, as I speak with you, but this cannot deter us from delivering on our work. If I start making a list for you on how we are surviving among others, you will be surprised. I’m not indicting government for anything, but the agency, was mishandled and badly managed to this level. By the grace of God, we are working hard to get ourselves out of the ashes of failure, and we are on the road to success.

In that light, are you seeking any collaboration with foreign donors?

Yes. We have been on it ever since we came on. When I came in, we had the course to meet Mac Arthur Foundation’s country coordinator.

Following that meeting, they have now factored us, into their 2019 training packages.We are going to enjoy that training packages, and they are going to establish a department and finance the departments and all that is needed, as they have committed to supporting us in that regard. We are also working with ‘Rolak’. With Rolak, we have been able to develop a strategic plan for the Bureau. This strategic plan, was already adopted at our board meet-

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ing that we are now going to fix a date for a sort of ceremony towards its implementation.

When we came in, we met a lot of complaints in the investigations department, even without the strategic plan. I had to demand that all petitions after investigations, if the suspect not found wanting, the petitioner and the suspect be communicated. Hence, we cannot hence leave an axe to be dangling on the head of a suspect. That has been the tradition before. Once a file is opened, it is opened, and it cannot be closed. Hence once the investigation is through, we close our file. This means we have not found anything against you and should go about your normal businesses.

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What do you intend to do to checkmate this issue of anticipatory declaration, and public officers putting some elements in their forms that they truly don’t own thereby creating room for embezzlement?

What we are doing is working with the provision of purification .This purification provision; the Bureau would like to simplify it because of lack of funds. Instead of conference verification or physical verification, we would liaise with other institutions and MDAs. For instance, we have the NFIU, which could assist us verify monies in the banks and what have you with regard to verifying declared assets. If you give your phone number, they can access it and give it the right report about the bank accounts you declared.

In case of company declared and corporate interests, we would approach the Corporate Affairs Commission to verify. If you declare a number of shares or bonds, we would approach the Securities and Exchange Commission (SEC) to get whatever information that is needed from there. If you declare properties-real properties, we would go further to find out from various locations that they are, while conferring with land registries and conduct necessary searches to ensure their authenticity. Even if you acquired from somebody, we would be able to see it if it is properly transacted.

If the properties you declared and the funds you declared happen to be foreign properties, or in the case of foreign accounts: we liaise with the National Intelligence Agency to assist us and confirm that information. If there are some issues that need clarification, we would call you to confer with you on facts and figures. I don’t want the way we have done declarations traditionally before we came in here-in terms of calling the declaring for conference verification.

So, when the public officer does his own due diligence, and the CCB calls him or her for clarifications, it is done with facts. In the case of having to verify whether you have to go to the physical location of this property, may be you are going to the land registry to get more records on the assets declared, the address he has given would take you to that place to locate it. The neighborhood could be asked in terms of verifying the physical presence of a property to know the real person who owns it so that during verification, we confront him with those facts.

To be able to know whether there are anticipatory declarations, the conference verification being made before we came in was discouraged.

That is why from the time we came in; we have never sent people out to go for this ‘conference verification’.

The process we are working with, other relevant agencies make it easier for us.

In few words, what is your vision for the CCB generally?

My vision for the CCB is to be an anti corruption agency that minimizes corruption to its lowest ebb, @Businessdayng

while making Nigeria, most importantly, a corrupt free country and this is achievable with the political will of the government . Most of the advanced countries used institutions like CCB to achieve what they have achieved. Corruption fighting as a Muslim, especially issues of monitoring public officers, is something that has been there since the history of Islam.

(He tells a story using the Islamic analogy) Umar Abu Burea, when he met Prophet Mohammed was a pauper to the core. At a point in time, Umar met him, and asked him: if we say we are going to appoint you a governor, what would be your reaction?

He said, how can you appoint me a governor, under my condition? The Prophet told him, yes, it is possible, but if you want it, we would appoint you. He responded saying, if it a state assignment, I cannot reject it, since it is a service to humanity.

The prophet said, before we appoint you, we would call on one of the Sahabas around, asking him to go and check all the properties of Abu Burea, so that before we give him an appointment, we take the inventory of his properties. Abu Burea, asked: what do I have that an inventory should be taken? The Prophet said yes, we would know what you have so that if we appoint you a governor and by the time you are leaving office, we would know what you are worth-That is asset declaration. He declared his assets.

Nowadays, we realise that when people become governors, they become businessmen within a short time. So, Islam requires that you declare your assets, if you are appointed to any position before you go into that office. That was how it was copied in our constitution by advanced nations, and they succeeded. And we would also succeed, if there is a political will from the government.

When do you see CCB achieving this vision?

As I said in my earlier remarks, that if CCB could have the required funding, I tell you that the work of EFCC and ICPC would reduce because they is no public officer who would steal money and go away with it because our work is largely preventive. Another beautiful aspect of it is that the CCB is empowered not only as a way of punishment, or prohibiting you from holding public office, but all items identified as subject of your prosecution-all subject matter of the crime or the offence be confiscated. If it is money in the bank, it would be confiscated; if it is property, vehicle, whatever, it would be confiscated to the federal government of Nigeria.

In ordinary criminal matters, you only earn punishment at the end of the day. With plea bargain now in place, you find out now that it is a matter of sharing 50-50. He gives some percentages and goes with the rest. But in CCB, CCT matters, the Bureau takes all, once it is proven before the court.

30

Wednesday 21 August 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

MAN flays Chinese used cars influx into Nigeria … local auto industry under threat, says Obi

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ish the damage the influx from Europe and America have been inflicting on the local industry over the years.

Last week, auto industry stakeholders expressed outrage over the impending arrival of Chinese vehicles at the ports. They advised the Nigerian government to take a cue from the United States of America, which has been locked in a trade war with China over the need to protect American manufacturers and their products from the invasion of imports from the Asian country.

Recalling how he received the news of the coming of used vehicles from China, an auto industry analyst and senior vice president (Strategy & Development), Centre for Values in Leadership (CVL), Rasheed Adegbenro, said, “when I got the information, my immediate reaction was, ‘used vehicles from China? We are finished!’ ” The vehicle brands expected to arrive Nigerian ports soon from China include Land Rover, Toyota, Hyundai, Volkswagen, Trumpchi, King Long, Yutong, Zhongtong and WOHO. The chairman of DVC Group; a pivotal role player in the auto-

motive industry warned that with the ban on production and sales of fossil fuel vehicles by Chinese provinces, European countries and other parts of the world, taking effect in a few years, Nigeria should not open its borders for the dumping of disused vehicles from industrialised countries.

According to him, one of the many implications of lack of a legal framework for the policy and the imminent invasion of Chinese tokunbo vehicles, is that many renowned OEMs (Original Equipment Manufacturers), who are afraid to invest in Nigeria because of our usual policy summersault, will remain reluctant because there is no assurance that their investments will be protected.

“It is also very ridiculous to hear the argument that tokunbo vehicles are not on the import prohibition list and therefore should be allowed to freely come in as long as they are not old. The emphasis should rather be on loss of jobs resulting from the present inactivity in the auto manufacturing sector.

In his submission, “Everybody knows that once China joins the used vehicles shipment to Nigeria, we are finished. Moreover,

T

oyota Motor Corporation (TMC) has seen its global sales increased by 4 percent in the first quarter (AprilJune) of 2019 with 2,303,495 units.

In many African markets including Nigeria, Toyota has yearin-year-out maintained the sales lead despite the sharp drop in the demand for brand new vehicles by institutional and individual customers.

Back in its home market Japan, TMC sold a total of 555,291 units in this period, up by 44,952 units. However, in another major market, North America, TMC faced a decline of 2,559 units in sales during this period with a total number of 743,576 units, reveals the company in a release.

The overall sales growth of the company in the first quarter of

Stories by MIKE OCHONMA Transport Editor

hina is capitalising on the impoverished middle clash in Nigeria that cannot buy brand new vehicles with the said commcement of importation of used vehicles from the country into Nigeria.

This coming after the rejection of the of the auto policy bill by the Presidency which industry analysts described as double tragedy. China has an estimated fleet of over 300 million privatelyregistered vehicles, the largest in the world.

Recalled that recently, the Chinese Ministry of Commerce announced that, a state-backed company in Guangzhou had officially shipped used cars to Cambodia, Myanmar and Russia with Nigeria as one of the major destinations for the first batch of 300 units.

The export, it was reported, was expected to deepen implementation of China’s Belt and Road Initiative (BRI), promote the stable growth of foreign trade, and increase demand for new vehicles in that country.

In what he described as very embarrassing to the Nigerian economy with its attendant negative impact on the local automotive assembly, David V.C. Obi warned that, the development may sound the death knell for the local auto industry unless government takes an urgent step to halt the invasion or impose heavy duties on the vehicles.

Obi who is the chairman, Motor Vehicles & Miscellaneous Assembly Sectoral Group of the Manufacturers Association of Nigeria (MAN), said that, the “Chinese gift” was not only shocking, but would also amount to opening the floodgates for used vehicles that may sink the local industry.

He lamented that if allowed to flood the local market, the used vehicles from China would fin-

Toyota’s Q1 global sales up 4 percent to 2.3m units

the shipment is an official initiative of the Chinese government and will be sustained over many years, which means that millions of vehicles driven in China will end their life-spans in Nigeria as the Chinese look forward to electric cars.

“Luckily for them, we are relieving them of the burden of disposing of vehicles they can no longer use. But, unfortunately for us, our government does not seem to know the implications of allowing this kind of dumping; one of which is stifling the efforts to promote local assembly, deepen auto technology and generate jobs.”

He lamented the refusal of President Muhammadu Buhari to give assent to the Nigeria Automotive Industry Development Plan (NAIDP) Fiscal Incentive and Guarantees Bill, arguing that the Chinese are simply taking advantage of a loophole resulting from the lukewarm implementation of the auto policy.

“And there is no way the situation will improve if we continue to allow used vehicles to flood into the country while we take one step forward and two steps backward with the auto policy’’. Obi stated.

FY20 was driven by the European market, where the automaker sold 273,964 units, marking an increase of 21,325 units. In Asian market too, the company has registered a hike by 4,011 units, with the total number of 398,240 units.

In other regions including Central and South America, Africa and Oceania and the Middle East, Toyota has sold a total of 332,424 vehicles, marking a dip of 365 units.

Despite the slowdown and headwinds, the automaker has not revised its consolidated vehicle sales forecast for this fiscal year that is ending March 31, 2020. In the release, the automaker says it still forecasts 9 million unit sales in FY20.

Daimler faces $1.12 bn fine over diesel cheating

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rosecutors in Stuttgart are set to fine MercedesBenz parent Daimler between 800 million and 1 billion euros ($897,000 to $1.12 billion) for diesel-related violations, report says.

The German motor vehicle authority (KBA) had discovered cheating software fitted to Mercedes-Benz C-class and E-class vehicles and ordered the automaker to recall 280,000 vehicles.

A fine of up to 5,000 euros

per vehicle is being considered by the Stuttgart prosecutor, the magazine said. A spokesman for the prosecutor’s office said the investigation was ongoing and would not be concluded before year-end. Daimler declined to comment while the investigation was under way.

In May 2017, German prosecutors searched Daimler offices as part of a fraud inquiry related to possible manipulation of exhaust gas after-treatment in diesel cars, and in February 2016 the U.S. Enwww.businessday.ng

vironmental Protection Agency asked Mercedes-Benz to explain

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emissions levels in some of its diesel cars. @Businessdayng

It would also berecalled that, prosecutors in Germany have used administrative orders to impose fines on Volkswagen, Audi and Porsche, blaming senior management for oversight lapses that allowed emissions cheating to take place.

In May, Stuttgart prosecutors fined Porsche Euros 535 million and supplier Bosch Euros 90 million , while prosecutors in Brunswick fined Euros VW 1 billion and Munich prosecutors imposed an Euros 800 million fine against Audi.

Wednesday 21 August 2019

BUSINESS DAY

31

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

BA to offer virtual headsets on New York route

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CCECC intensify LBE road project as gridlock mounts Stories by MIKE OCHONMA Transport Editor

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ollowing Lagos state’s response to repeated public outcry from motorists along the Lagos-Badagry Expressway (LBE) corridor, the ongoing road expansion and modernisation project handled by the Chinese Civil Engineering & Construction Corporation (CCECC) is now progressing intensively.

BusinessDay findings this week Monday reveals that CCECC is carrying out intensive project work in front of the Internation trade fair complex popularly referred to as ‘under bridge’ considered by motorists as the major critical spot with high human and vehicular traffic. This is primarily due to the high volume of economic activities inside the trade fair complex.

In recent times, the LBE has come under spotlight as a result of long period of abandonment by the immediate past government which attracted public condemnation because of the sufferings of that commuters face daily in their daily economic activities due to perennial traffic.

The deplorable condition of the Lagos Badagry expressway has in the past five years frustrated many workers living along the corridor and working at the other extremes

of Lagos to seek temporary places of residence during the week, only to return back to their fmily houses at weekends.

Hotel operators along the axis have also seen their occupancy rates go up due to the high demand for temporary accommodation by many companies operating along the corridor for their top management staff as well as increased patronage from other business travellers using the ECOWAS gateway.

On many occassions, the issue of security have remained a major problem as there is little or no police presence or routine and random security patrol at some of these blackspots whenever there is traffic. Within this vicinity, there is the Ojo military cantonment, the police Area E command in Festac, the Staellite town police station, Trade fair police and the Police station in front of the military cantonment Ojo, yet road users have remained at the mercy of criminals.

There have been many cases of robbery especially at nights with the flashpoints at the Alakija bus stop exits points into Festac and Satellite towns from Mile due to the gridlocks as a result of slow pace of work caused by the complexities of the project being experienced by the contractors handling the road project.

Last month, Obafemi Hamzat,

the deputy governor, while speaking during the kick-off of reconstruction at the Trade Fair complex located along the LBE corridor, said the exercise was in fulfillment of the promise made June 2 by Governor Babajide Sanwo-Olu. He stressed that the work by China Civil Engineering Construction Corporation Ltd (CCECC) would start on Segment 2 of Lot 2 of the road from the Agboju-Trade Fair complex axis which measures approximately 4.6 kilometres. He said the move is to alleviate the suffering of motorists and improve economic activities in that area.

Hamzat, while appreciating the co-operation of the Federal Government towards the project, disclosed that the reconstruction would be completed before the end of the year.He urged residents and motorists to obey traffic rules while palliatives are undertaken to ease stress of those staying within Okokomaiko and its environs, adding that a task force would be deployed to maintain decorum.

The international gateway was conceptualised by the Lagos state government in 1974 and constructed by the Federal Government in 1977 when the idea of having a highway to connect the sub-region was agreed upon at an Economic Community of West African States (ECOWAS) summit.

his is a piece of good news to all air travellers on the British Airways service as beginning from now until the end of 2019, customers will be transported to their own 3D cinema in the skies as the airline exclusively trials a new virtual reality headset.

Customers travelling on select flights in the first class service from London Heathrow to New York JFK airport will be able to enjoy a selection of award-winning films, documentaries and travel programmes in 2D, 3D or 360° formats.

The headsets from VR eyewear specialists, SkyLights, allow customers to fully immerse themselves in 3D view regardless of the position they are seated in.

The experience even works when they are lying fully flat. British Airways is the first UK airline to trial the technology and has worked with experts to select a range of therapeutic programmes,

New hotel stock drives visitor figures in Dubai

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ubai welcomed 8.36 million international overnight visitors in the first six months of 2019, posting a positive three per cent in tourism volume growth compared to the same period last year.

The new figures, released by the Department of Tourism & Commerce Marketing in Dubai, reinforce the continued strength of the emirate’s tourism sector.

The largest traffic generators as well as newer high-potential segments have set a strong preparatory pace to fuel Dubai’s climb to becoming the most visited global destination.

Coast-to-coast cruise train crosses Africa

A

nother milestone was recorded few weeks ago when a passenger train set out on the return leg of a coast-to-coast trip across Africa. Departing from the port of Lobito on Angola’s Atlantic coast and bound for the Tanzanian port of Dar es Salaam on the Indian Ocean, the train had arrived in Lobito on July 30, having left the Tanzanian city two weeks earlier.

Operated by private company Rovos Rail, the luxury cruise train carrying more than 50 passengers was the first to complete the 4,339 km journey across the African conti-

nent using the 1,067 mm gauge railways built to serve the Copperbelt.

Marketed as the Rovos Trail of Two Oceans Angola Tanzania, the train travelled over the Tazara railway to Kapiri Mposhi and then via Ndola to the Zambian border with the Democratic Republic of Congo at Sakania.

From there, the train continued through the Copperbelt to Lubumbashi and Dilolo near the border with Angola, then crossing into Angola to reach Luau where it joined the Benguela railway that was rebuilt by Chinese contractors in 2008-17. www.businessday.ng

One-way prices for the trip started at $12,820. Rovos Rail CEO Rohan Vos said that it had taken ‘over two years to acquire permission and have our proposed itinerary approved by the respective authorities’.

The Benguela railway carried an initial shipment of 1,000 tonnes of manganese ore from the Kisange mines in the Democratic Republic of Congo to Lobito in March 2018. The first 1,200 tonne shipment of copper ore from the DRC to travel over the Benguela railway reached Lobito September last year.

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including guided meditation and sound therapy, specifically designed for customers who have a fear of flying.

Sajida Ismail, head of inflight product at British Airways, said: “We are always looking at the latest technology to enhance our customers’ experience on the ground and in the air.

“Virtual reality has the power to revolutionise in-flight entertainment and we’re really excited to trial these new glasses as they should create a unique and memorable journey for our First customers.”

The AlloSky virtual reality headsets are designed by SkyLights, former alumni of British Airways’ parent company IAG’s Hangar 51 start-up accelerator programme.

Earlier this year, British Airways trialled the technology at Heathrow Terminal 5, giving customers a glimpse of the Club World cabin through virtual reality.

@Businessdayng

Helal Saeed Almarri, director general, Dubai Tourism, commented: “Tourism is one of the cornerstones of Dubai’s diversified economic growth, and we measure success based on our ability to aggressively advance towards our goal to be the number one most visited and most preferred city as envisioned by Sheikh Mohammed Bin Rashid Al Maktoum, ruler of Dubai.

“The consequent rise in value creation opportunities and more inclusive sector participation are core priorities, as we equally strive to sustainably grow GDP contribution’’.

32

Wednesday 21 August 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

The big idea: Managing political misfits Y. SEKOU BERMISS AND RORY M. MCDONALD

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hen CEOs weigh the decision to speak out on a hot-button issue, they tend to focus on how their words and actions might affect brand reputation and customer behavior.

But an equally significant question is how CEO activism affects employees. If the stance a leader takes leaves key employees feeling angry or disengaged — or if it provokes them to start looking for another job — the business effects may well be severe.

We began studying political ideology in the workplace in 2016, to understand the effects on employees of being a political outlier. Established research tells us that people who mesh with an organization’s culture are more likely to be satisfied in their jobs and perform better and, conversely, that those who feel they don’t “fit” have negative work outcomes. To find out whether this holds true for ideological misfits, we analyzed data on the career histories of more than 40,000 private equity investment professionals over 10 years . We then identified their political ideologies using data from the U.S. Federal Election Commission, which records individual contributions to candidates, campaigns, political action committees and political parties. We also conducted indepth interviews with 25 people working at various levels in the industry.

One theme emerged from our research right away: CEO activism is the tip of the iceberg. Our interviewees acknowledged that companies themselves can have a dominant political ideology.

For example, one partner at a private equity firm we spoke with noted that his company was “in alternative energy, so leans toward the liberal spectrum,” though he personally identified as conservative. (Some wellknown examples outside the private equity world are Starbucks and Google, on the liberal

side, and Chick-fil-A and Hobby Lobby, on the conservative side.)

Respondents were readily able to identify their firm’s ideology — liberal and conservative leanings were reported in roughly equal proportions — and discussed how it aligned (or not) with their own.

We also found that political ideology is a salient part of work interactions. One respondent reported that politics came up “when discussing possible investment ideas — such as investing in health care, which is very closely tied to politics.” A principal at a large investment firm elaborated: “Politics can affect the businesses in which we invest, so it matters for our portfolio companies and potential industries of interest. We talk about the implications of policy decisions — how they will impact our strategy and investments.” Others reported that political discourse routinely arose in casual, everyday conversations. “I was at my [previous] firm during an election season,” explained an investment associate. “It was a time where everyone was quite active in politics.”

None of our respondents spoke of being overtly harassed for their views, but people described subtle repercussions.

“I was one of two [ideological]

outliers that I know of,” an interviewee told us. “Usually, [we] hid in the shadows.” Another said, “There is not much political diversity where I work, so those who do feel differently are just quiet and uncomfortable.”

A conservative investment associate reported being laughed at after disclosing whom he had voted for in the 2008 presidential race. “Everyone was talking about the election, and I told them who my vote was for,” he said. “The response was not disdain or anything harsh; it was laughter. My co-workers would sooner think I was cracking a joke than voting for anyone but a liberal.” Rather than correct his colleagues’ assumption, the associate “continued with a wisecrack to sell it.” He expressed frustration that in this organization, “Statements were made about politics in such a way that they precluded any dialogue or debate on the other side.”

Using statistical techniques, we studied the ultimate measure of disengagement: departures from the firm. Our hypothesis was that misfits are more likely to move on than those who feel comfortable with a firm’s dominant ideology. That turned out not to be the case: Under certain conditions, they are actually less likely to quit. However, conser-

vative misfits are more likely to leave than liberal misfits; in fact, liberals were significantly less likely to move on than conservatives regardless of how well they fit ideologically within the organization.

Our overall findings have several implications for managers.

Leaders should be aware of their company’s dominant ideology, if one exists, and be sensitive to the fact that some employees may feel they don’t fit in. Executives and managers should create an environment in which different views are respected.

This is particularly important in light of increasing demands on CEOs to take activist stances.

While not the sole determinant of a company’s political culture, leaders’ public statements typically both reflect and reinforce it. Imagine, for example, that it is September 2017, and the CEO of a large company has just spoken out in opposition to the U.S. Justice Department’s decision to rescind the DACA program protecting immigrants who were brought illegally to the United States as children. Employees who disagree with the CEO’s position would undoubtedly find it more difficult to openly support the Justice Department’s action.

This kind of dampening atmosphere can be toxic for ideologi-

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cal misfits, and it is up to leaders to prevent its emergence.

Leaders might go a step further and encourage misfits to engage with and harness the tensions between the firm’s dominant viewpoint and their own. After all, strong organizations value vigorous debate.

When someone argues the business case for a proposed investment, for example, others rightly seek to poke holes in it. The same expectations should apply to political discussions — that debate is healthy, disagreements can often be resolved and people with opposing viewpoints have a valuable role to play.

As for employees, our research revealed two coping strategies respondents used to manage the pressure and discomfort of being an ideological outlier.

Some became “discreet dissenters,” supporting political causes in ways that didn’t draw unwanted attention, such as by privately donating to a candidate or party.

Others became “workplace missionaries,” striving to engage, educate and perhaps even convert fellow employees. A principal at a large private equity firm likened working at his organization to attending a liberal Ivy League college if one were a conservative. “It provides an intellectual challenge,” he said. “It can be a good thing to stand out and to be approached as the token conservative or liberal.”

Ideological tensions at work may even create a unique opportunity to reduce the political polarization we are experiencing in society at large. Work is one of the few places where people with differing worldviews are in regular communication. If we learn to disagree constructively in the workplace, perhaps we can do the same elsewhere.

• Y. Sekou Bermiss is an assistant professor of management at the University of Texas at Austin’s McCombs School of Business. Rory M. McDonald is an assistant professor of business administration in the Technology and Operations Management Unit at Harvard Business School.

Wednesday 21 August 2019

Harvard Business Review

BUSINESS DAY

33

MANAGEMENTDIGEST

Better ways to predict who’s going to quit BROOKS HOLTOM AND DAVID ALLEN

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WORK VS. LIFE ur latest research has focused on using big data and machine-learning algorithms to develop a turnover propensity index for individuals — a real-time indicator of who is likely thinking about quitting their jobs. We grounded the development of these predictive models in academic research on turnover and then conducted a series of studies.

Past research points to two main reasons why people leave their jobs: turnover shocks and low job embeddedness. Turnover shocks are events that prompt people to reconsider whether they should stay with the organization. Some shocks are organizational, such as a change in leadership, while others are personal, such as the birth of a child.

Job embeddedness refers to how connected people are to their organizations. When people don’t feel their work fits well with their interests and values, they have low job embeddedness and are a flight risk.

We worked with a talent intelligence firm to gather a large sample of publicly available organizational data on potential

turnover shocks, such as changes in Glassdoor ratings or legal actions against the firm. We also gathered personal factors tied to embeddedness that were in the public domain, such as an employee’s tenure, skills, education, gender and geography.

We accumulated these potential turnover indicators for more than 500,000 individuals working in the U.S. Based on our assessment of these turnover factors, we used machine learning to classify each

individual as unlikely, less likely, more likely or most likely to be receptive to new job opportunities.

Each individual in our sample was given a turnover propensity index, or TPI, score. We then ran two studies to see how well this score predicted each employee’s openness to outside opportunities and their likelihood of quitting.

First, we wanted to see how well the TPI predicted openness to recruitment messages. We sent email invitations to a smaller

sample of 2,000 employed individuals who had been identified by our algorithm as unlikely, less likely, more likely or highly likely to be receptive to an invitation to view available jobs tailored to their specific skills. Of these, 1,473 received the email, 161 opened the invitation and 40 clicked through. Those who were rated as “most likely” to be receptive opened the email invitation at more than twice the rate of those were rated as least likely. This suggests that the TPI

score could identify employees at greater risk of leaving. This finding also suggests that companies can strategically target top talent that might be more open to an outside offer — remember, this all came from publicly available data.

Second, to look at the ability of the TPI score to predict actual turnover, we focused on the remainder of the sample of 500,000 individuals. Over a three-month period, those identified as “most likely” to be receptive to new opportunities were 63% more likely to change jobs, as compared to those who were “unlikely” to be receptive. Those identified as “more likely” were 40% more likely to quit.

Our work in this area is demonstrating that by using big data, firms can track indicators of turnover propensity and identify employees who may be at an elevated risk of leaving the organization.

• Brooks Holtom is a professor of management and a senior associate dean at Georgetown University. David Allen is a professor of management and an associate dean at Texas Christian University, and a distinguished research environment professor at Warwick Business School.

If you want engaged employees, offer them stability some manner for a particular individual?

When we’re trying to retain valued employees or help them excel, we often look to outside factors, such as training practices, salary benchmarks or job titles. However, it might be more productive to look inward and first consider the psychological constructs that contribute to stability within our work environment. Identifying the issues that are preventing your employees from feeling psychologically supported at work will go a long way toward helping them perform at their best.

MARLA GOTTSCHALK HEALTH n their race to embrace innovation and digital transformation, many companies have lost sight of the importance of workplace stability. But there are strong indications that we should revisit its merits. If you want to develop an environment where contributors thrive, your workforce must be able to count on some basic things — such as role clarity, timely feedback and adequate resource allocation.

Both personal and organizational stability have always mattered — companies have simply made them a lower priority. It’s time for that to change.

Organizational practices such as clearly communicating your mission and goals can help. But many sources of stability can be easily overlooked when leaders and managers are addressing other issues deemed to be more urgent. To counter this, we must make a more concerted effort to bring stability to the forefront of our minds — and apply this thinking to individuals’ needs.

Here are two key topics to consider: THE PSYCHOLOGICAL CONTRACT. The psychologi-

I

cal contract is an often unstated agreement or set of promises about what we bring to work and what we can expect to gain from our employers in return.

Sadly, once stressed or broken, this contract is very difficult to repair. Reviewing the health of these contracts is a unique opportunity to increase stability, and in turn, to retain valuable employees, as psychological safety has been shown to correlate with outcomes such as job satisfaction, commitment and performance. Managers should address psychological contracts more openly by having regular www.businessday.ng

discussions about what is being exchanged in the employee/ employer relationship. This can help to clarify goals and drive performance.

PSYCHOLOGICAL SAFETY. William Kahn, a professor of organizational behavior at Boston University’s Questrom School of Business, defines psychological safety as “being able to show and employ one’s self without fear of negative consequences to selfimage, status or career.” While the concept has been studied for decades, we are only just now truly acknowledging the importance of its role in our work lives.

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Psychological safety allows both individuals and teams to face real-time challenges in a manner that is open and honest. When safety is present, underlying organizational problems can surface quicker, allowing for a more complete and effective response.

To assess the level of psychological safety in your own organization, ask yourself these questions: 1. Do team members share ideas and problems openly?

2. Has anything occurred within the organization or team that would affect openness?3.

Has trust been disrupted in @Businessdayng

• Marla Gottschalk is an industrial and organizational psychologist, diagnostician and adviser.

34

Wednesday 21 August 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

Here’re CBN’s findings on why women are most financially excluded ENDURANCE OKAFOR

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ow income, education and low trust in financial service provider are the key findings that undermined women’s access to financial services, a recent survey by the Central Bank of Nigeria (CBN) has revealed.

The apex bank disclosed the findings in its 2019 second quarter Financial Inclusion Newsletter where it stated that the “survey recommended that efforts should be made to advance education and income levels of women and create awareness on products and providers.”

The Survey on assess of Women’s Financial Inclusion in Nigeria was sponsored by the Enhancing Financial Innovation and Access (EFInA) and conducted by Dalberg Global Development Advisors and was presented at the 8th National Financial Inclusion Steering Committee meeting.

Nigeria has 36.8 percent of its adult population excluded from the financial cycle; this translates to 36.6 million people who do not have access to financial products and services as at December 2018.

According to data by EFI-

nA as analysed by BusinessDay, 44.1 percent of the total excluded adult population in Africa’s most populous nation are men while 55.9 percent are women, this leaves the gender gap at 11.8 percentage points.

Also, the 2017 figures from the World Bank’s global Findex database revealed that the financial exclusion gap in Nigeria widened by 24 percentage points in the review year.

According to the report, 51 percent of Nigerian men had bank accounts in 2017 compared to the 27 percent

reported for women. The gender gap was 4 percentage points wider when compared to the 20 percent gap that was reported in 2014 when the number of men with bank accounts stood at 54 percent while women were at 34 percent.

Meanwhile the Central bank remains optimistic about achieving 80 percent financial inclusion rate by the year 2020.

But w ith less than 5 months to the projected deadline, the apex bank has 16.8 percent gap to bridge for it to achieve the set 20 percent

exclusion target by next year.

According to the World Bank study of 2017, men remain more likely than women to have an account. The Washington-based lender said, “while account ownership has surged in some economies, progress has been slower elsewhere, often held back by large disparities between men and women and between the rich and

poor.”

As part of its efforts to promote financial inclusion and facilitate the emergence of an all-inclusive and growth promoting financial system in Nigeria, EFInA’s 2019 and tenth Agent Network Breakfast Series meeting which held recently in Lagos focused on the topic ‘Assessment of Female Financial Service Agents in Driving Financial Inclusion in Nigeria’.

The Agent Network Breakfast Series is a platform organised to provide credible market information to stakeholders; discuss obstacles to the deployment of ubiquitous agent networks in Nigeria, highlight regulatory obstacles and opportunities to move the industry to the next level.

Survey has shown that Agent Network is importance in driving access to financial services, especially at the last mile. In order to drive the deployment of widespread agent networks in Nigeria and close the gender gap in financial access, there is therefore need to encourage more participation of women in agent

Zenith Bank leverage electronic products to post N111.7bn PBT in H1

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ith a significant progress in its retail banking initiatives, Zenith Bank Plc. climbed on earnings from electronic products to report Profit Before Tax (PBT) of N111.7 billion in the first half of 2019.

The PBT reported for the review period is 4percent growth over the N107.4 billion reported in H1 2018.

The lender’s fees from electronic products increased

by N17billion (168%) from N10billionn in H1 2018 to N27billion in H1 2019.

In a clear demonstration of its resilience and strong market share, Zenith Bank’s audited results for the half year ended 30 June 2019, witnessed positive growth across key financial metrics, thus affirming the bank’s position as one of the leading financial institutions in Africa.

Gross earnings grew by 3percent from N322.2 billion to N331.6 billion driven by a significant growth of 24percent (YoY) in noninterest income from N88.6 billion in the previous year to N109.7 billion in H1 2019.

The bank’s earnings per share (EPS) increasing by 9percent to N2.83 billion

in H1 2019 from N2.60 billion in comparable period of 2018.

Between December 2018 and June 2019, the Group’s total deposit increased by 3percent with retail deposits growing by N267 billion (31%), from N861 billion to close at N1.1 trillion.

According to the GSM Association, Sub-Saharan Africa has more mobilemoney accounts than anywhere else in the world with about 396 million registered users at the end of 2018, a 14percent increase from a year earlier. As it catches on around the world, South Asia saw 29 percent growth in 2018, and it was 38percent for East Asia and the Pacific.

“Despite the growth in our deposit base, we optimized interest expense leading to a 4percent reduction from N74.7 billion to N72.1 billion due to the Group’s improved funding mix and our profound treasury management skills.

Net Interest Margins (NIMs) witnessed a compression from 10percent in the same period last year to 8.6percent in H1 2019, as a result of the declining yield environment but cost of funds im-

proved from 3.4percent to 3.0percent” the lender said.

According to the group, its robust risk management ensured that it absolute Gross Non-Performing Loans (NPLs) remained flat. However, the marginal movement in NPL ratio was as a result of the 3percent reduction in its loan book from N2.02 trillion as at December 2018 to N1.95 trillion at the end of the period.

“We are creatively deploying new retail loan products to ensure we capture a reasonable share of the retail loan market. We remain committed to maintaining our strong balance sheet with liquidity ratio at 74.6percent and Capital Adequacy Ratio (CAR) at 25percent, ensuring we remain above regulatory thresholds.”

Going into the second half of the year, the bank said it will continue to consolidate its leadership in the corporate space while its retail banking drive will continue unabated. “We expect to see an improvement in economic activities even as we maintain our promise of delivering a unique service experience to our customers.”

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banking, EFInA has said.

Studies have also shown that enlisting female agents may be the most effective way to overcome low literacy rate amongst the last mile across the country and build women’s confidence and trust in using financial services, EFInA revealed.

He n r y C hu kw u , P rogramme Specialist at Agent Networks noted that women participation in Agency business is one of the ways to reduce gender gaps in financial access. His presentation was followed by that of IDEO.org, an organisation that practices human-centered design, to solve problems and improve the lives of people in poor and vulnerable communities.

The CEO OF EFInA, Esaie Diei closed the event with an remark as he said EFInA will be willing to support stakeholders in the process of developing and implementing their strategy for female agents “whilst encouraging stakeholders to implement the lessons learned and develop strategy for female agent at organisational level.”

Wednesday 21 August 2019

PRIVATEEQUITY &FUNDRAISING MONTH

BUSINESS DAY

PRIVATE EQUITY DEALS IN 2019

ACQUIRER/FUND MANAGER

ACQUIREE

SECTOR

JAN

ACCESS BANK

DIAMOND BANK

BANKING

200

JAN

CARLYE GROUP

WAKANOW

AVIATION

40

JAN

VecIs and AGL

LEVENTIS

CONSUMER GOODS

JAN

ADVANCED FINANCE and INVESTMENT GROUP (AFIG)

NEM INSURANCE

INSURANCE

JAN

COCA-­‐COLA

CHI LIMITED

CONSUMER GOODS

JAN

CDC Group plc

CCAGF

FMCG/AGRIC

15

JAN

GeneraIon Investment Management (GeneraIon IM)

ANDELA

TECH

100

JAN

STAKE

AMOUNT ($ Million)

12 29% 100%

500

ABRAAJ GROUP

ABRAAJ group

FIN SERVICES

10

MARCH

SIEMENS LIMITED

DRESSER-­‐RAND

AUTOMATION

600

MARCH

VEROD CAPITAL MANAGEMENT

DAYSTAR POWER

ENERGY/POWER

10

MARCH

COX VENTURES ET AL

FARMCROWDY

AGRIC

1

MARCH

LENDABLES

ONE FINANCE (OneFI)

FIN SERVICES

5

MARCH

QUANTUM CAPITAL

TEAMAPT

FINTECH

5

MARCH May

THEMIS Rise Capital, Adventure Capital, IC Global Partners, First MidWest

KINGLINE GoKada

POWER TRANSPORTATION

5.3

JUNE

Consonance Investment Managers

Mdaas

HEALTH

1

June

NORTFUND and FINNDUND

STARSIGHT POWER UTILITY LTD

POWER

10

June

BREAKTHROUGH ENERGY VENTURES, NORTFUND

ARNERGY

ENERGY/POWER

9

June

IGNITE INVESTMENTS and COMMODITIES

FORTE OIL

OIL

235.8

JULY

IDG Capital, Sequoia China, Source Code Capital

OPAY

TECH

InsuResilience Investment Fund

Royal Exchange General Insurance

INSURANCE

JULY JULY

35

CANAL+

ROK TV

ENTERTAINMENT

AUGUST

OLAM INTERNATIONAL LIMITED

DANGOTE FLOUR MILLS

FMCG/AGRIC

AUGUST

GOLDMAN SACHS, NIGERIAN COMM BANKS

KOBO360

LOGISTICS

39

50

100

331.3 30

Landwey acquires 25% stake in a real estate online funding platform ENDURANCE OKAFOR

L

andwey, a real estate investment company has bought 25 percent stake in Vistafront, a tech platform for funding real estate projects online.

The worth of the 25 percent stake by the Lagos-based investment company which operate within the commercial, retail and residential property segments was however not disclosed but the investment was to enable Vistafront offer more investment opportunity to Nigerians.

Since investing in real estate can be a capital intensive project for many, Vistafront

was established to give people the opportunity to fund real estate projects from the comfort of their mobile devices and earn good returns at the end of the project cycle “Vistafront will be gleaning from the wealth of experience that Landwey has in the real estate business, to launch different projects that will be made available for funding on the platform,” Olawale Ayilara, Founder of Landwey said.

The founder added that with as low as N25,000 per unit Nigerians can fund as many units as they desire and will be able to make 12percent return in 6 months.

“There is an on-going

project called Bloom 1, it is a bridge financing for land acquisition for 14,000 square meters nested in the heart of Lekki Epe Expressway, Lagos State, Nigeria,” Ayilara said.

Vistafront’s mission is to provide quality infrastructure for all, so 1percent of every unit you fund goes toward Social Infrastructure Impact Project (SIIP) like schools, community homes, hospitals and other social amenities accessible to the less privileged.

However, once 1percent of your total funding reaches N10,000 for any project, Vistafront will automatically place a cap so that the total amount you pay for SIIP does not exceed N10,000 irrespec-

tive of the number of units funded.

“We have gotten a lot of positive feedback since we launched and we have plans to continue to launch new projects. For every project we feature on the site, we also have in place a strict vetting process carried out by our in-house team and our other partners like Nachtwey Advisory Services Limited, a SEC registered Asset Management company, Emerging Africa Capital Group, a licensed Trustee firm and AXA Mansard, a trusted insurance company,” Segun Ajuwon, Managing Director of Vistafront say said.

Nigerian real estate sector

has evolved with technology resulting in ease of operations and better customer service.

The birth of online property platforms in Africa’s most populous nation is making transactions among, developers, property owners, prospective buyers, and potential tenants easier, compared to the cumbersome processes witnessed few years ago.

At the recently concluded West Africa Property Investment Summit (WAPI), industry players were of the opinion that the deployment of technology will make the coubtry’s property industry more investable, increase liquidity and drive greater home ownership.

“Think back to the 80s and 90s, if you were going to purchase a property you would spend many days trying to find a decent agent who will charge you high fees to take you from property to property in only a few locations -meaning he was limited,” Yemi Johnson, the Chief Operating Office of Hotels.ng said.

Statistics have shown that for 7 out of 10 every Nigerian feels house hunting is painful, as it usually starts with calling friends of friends or walking long distances with a road side agent who more often than not do have direct access to landlord thereby making one pay multiple ‘agent’ fees.

Verod, Red Bull GmBH invest in West African clothing manufacturer MICHAEL ANI

W

est Africa’s largest clothing manufacturer, DTRT Apparel Ltd (DTRT), has closed an undisclosed investment amount from leading investment firm Verod Capital Management and Red Bull GmbH, in a transformative deal for the West African apparel industry.

DTRT supplies cost-competitive products to major US and EU-based brands via a global network spanning three continents. The company employs over 2,000 people in West Africa, pro-

cures textiles from Asia and exports primarily to the EU and US markets, benefitting from supportive trade arrangements between the US/ EU and Ghana.

The investment is a massive boostforapparelmanufacturing in West Africa. Verod Capital is investing alongside a major strategic investor, Red Bull, the $7bn producer of Red Bull energy drinks and one of the most innovative marketers in the world.RedBullwillbeananchor customer for DTRT, and DTRT will be a part of Red Bull’s global apparel sourcing operations.

“This milestone deal is an affirmation of our vision of

sustainable apparel manufacturing in Ghana – with the highest production, environmental and labour standards – and affords us the opportunity to significantly expand our production capacity and capabilities to make DTRT Africa’s leading apparel manufacturer.” Skip Richmond, co-Founder and co-CEO of DTRT Apparel said.

“We’re very excited to work with our partners and strategic investors to drive growth and provide our value-added services on a larger scale to current and future customers,” he added DTRT Apparel was founded

in 2013 by two apparel industry entrepreneurs in a joint venture with a renowned Ghanaian fashion entrepreneur, Salma Salifu, Managing Director of Dignity DTRT, the company’s manufacturing partner. Founded on a commitment to “Do the right thing”, the company is an industry leader in sustainability and has a Gold-level Certificate from the Worldwide Responsible Accredited Production (WRAP) organization, verifying the company’s commitment to ethical manufacturing and employment practices. DTRT provides access to training and healthcare.

Environmental sustain-

ability is also at the core of the DTRT business model. The business works with suppliers to produce a polyester fabric that requires 80 percent less water for dyeing than the traditional fabric-dyeing process.

DTRT estimates they have saved over 200,000,000 litres of water over the last five years using this fabric.

As a small example of its efforts to support their community, the Company utilizes leftover fabric from production for conversion into reusable sanitary pads that are then provided free-of-charge to lower-income people in the nearby community.

Danladi Verheijen, Verod Managing Director said: “Verod Capital’s investment in DTRT is predicated on the very rapid growth of the Ghanaian economy, due largely to its political stability, and Ghana’s unique advantages for cost-competitive production.

The DTRT team are highly experienced operators who are also 100 percent committed to improving the lives of West Africans, which aligns with the mission of Verod Capital. We look forward to working with the Founders to build up this business but also to help West Africa become a major hub for apparel manufacturing.”

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: SAMUEL IDUH ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

36

BUSINESS DAY

Wednesday 21 August 2019

Wednesday 21 August 2019

BUSINESS DAY

news

Supreme Court ruling: Atiku says no cause for alarm FELIX OMOHOMHION, Abuja

N

igeria’s former vice president and presidential candidate of the People’s Democratic Party (PDP) in the 2019 general elections, Atiku Abubakar, says there is no cause for alarm

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over the Supreme Court ruling on Tuesday, which refused his request to inspect the central server of the Independent National Electoral Commission (INEC).

The apex court had in a judgment held that Atiku’s request was statute-barred because it was brought after parties had joined issues on the existence or otherwise of the server.

In the unanimous judgment delivered by Justice Chima Nweze, the Supreme Court said the Presidential Election Petition Tribunal was in order in refusing to grant Atiku’s request at the

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PUBLIC NOTICE

Owners want to Partner with Reputable Estate Developers /Firms on the joint venture development of a 20hectares Land in a prime Location in Abuja!!! For Further Enquiries contact Dapo:08023487717

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time it was made so as not to prejudice other parties in the matter.

In addition, the apex court held that the appeal lacked merit because the appellants failed to prove how the decision of the tribunal was unfair to then.

Justice Nweze said a party can only complain of the lack of fair hearing when discretion of court was wrongly or arbitrarily used by the court, adding that in this instant case the tribunal used its discretion judicially and judiciously.

“I see no reason to depart from the decision of the lower court, the appeal is lacking

in merit and is hereby dismissed,” Justice Nweze said.

However, Atiku said there was no cause for alarm over the ruling.

Atiku, who spoke through his lead counsel at Tuesday’s proceedings, Eyitayo Jegede (SAN), said this kind of decision was anticipated and that proactive action had been taken during the hearing of the petition.

Jegede said the issue of server which was aimed at establishing that the election was rigged during collation of results was thoroughly addressed through witnesses and documents tendered and

admitted during the presentation of the petition.

He expressed optimism that the tribunal would do justice at the end of the day.

Atiku had approached the Supreme Court praying for an order to set aside the decision of the tribunal which refused to compel INEC to allow him access to the central server allegedly used in the conduct of the presidential poll.

The senior lawyer had told the five-man panel of the apex court led by Justice Mohammed Datijo that access to the INEC’s central server was germane to the joint petition of Atiku and PDP and urged

the court to grant the request of the appellants by ordering the electoral body to allow access to its database.

However, President Muhammadu Buhari, represented by Wole Olanipekun (SAN), asked the court to turn down the request and dismiss the appeal on the grounds that the appeal had become academic.

Olanipekun drew the attention of the court to the fact that the life of the appeal would expire today (Wednesday) and even if the request was granted, it would serve no purpose to the two petitioners since they had long closed their case.

Nigeria/Malaysia ‘trade corridor’ opens investment opportunities for oil, gas Innocent Odoh, Abuja

N

igerian, Malaysian Business Council (NMBC) has averred that the new trade and investment corridor established last year will open significant trade and investment opportunities for both countries to boost the oil and gas sector.

This was the crux of a business meeting with Malaysian Oil and Gas Companies organised by the High Commission of Malaysia to Nigeria in collaboration with the NMBC, in Abuja on Tuesday.

President of NMBC, Michael Aderomo, said in n address that the meeting was organised to bring together private sector players of both countries to develop bilateral relationship and stimulate business and investment in the oil and gas sector and other sectors of the Nigerian economy.

Aderomo told reporters that

both countries came out with the formula of Nigeria, Malaysia ‘trade corridor’ to meet the challenges of the changing times in a new economic world order.

“There is a kind of reshuffling and changing trade patterns like what is happening between China and US and Nigeria needs a model and direction to have a value addition to our economy and Malaysia is one of the countries we are having these relations in various sector and we are starting with oil and gas and very soon we will go to other sectors,” he said.

Nigeria will benefit from Malaysia’s technical skill and expertise in local content, as they have been able to develop their own local content formula, he said.

“They have been able to use their local content formula to develop their oil sector and most of our companies deal with Malaysia but not directly they are going through others to get services. Nigeria has potentials and

Malaysia is ready to do business with Nigeria and we are trying to benefit by collaborating with them.

“Nigerian economy needs capacity development to have impact on our GDP and also to have positive impact on our human development index, which means a component of trade and investment that have been developing with human capital.

The benefit will be very robust for Nigeria. The important aspect is our resources, and we need to develop the capacity of our people.

We have to sustain the relationship to create a win -win situation and we are putting emphasis on internal market,” he said.

In her remarks, the Malaysian High Commissioner to Nigeria, Gloria Tiwet, said the bilateral relations between Malaysia and Nigeria had continued to record positive growth, as in 2018, total bilateral trade between Nigeria and Malaysia grew by 15.7% to

$712 million.

“In 2018 major imports from Nigeria to Malaysia were metal ore and that constitutes 46.6%; crude petroleum 35%; agriculture products 14.7%; iron and steel products stood at 1.5% and natural rubber 0.9%. Meanwhile exports from Malaysia to Nigeria were palm oil and palm-based agriculture products that stood at 31.7 %; petroleum 9.4%; machinery 9.3 %; transport 8.5% and chemical and chemical products,” she said.

She noted that Nigeria, which produces approximately 2.5 million barrels of crude oil per day, is an important partner to Malaysia in oil and gas sector, stressing that there is great opportunity for both countries in the oil and gas sector even as she urged business men of both countries to exploit the opportunities therein to grow business for the benefit of both countries.

Total E&P invests to boost next generation of agribusinesses DIPO OLADEHINDE alue Drivers Investment Limited in partnership with Total Exploration and Production Nigeria Limited has rounded off a three-week knowledge empowerment initiative, tagged ‘Total Agriculture EntrepreneurSkillsAcquisitionTraining Programme’ in Lagos, aimed at empowering youths and boosting agribusiness in Nigeria.

The free and fully residential programme sponsored by Total Exploration and Production Nigeria Limited, as part of their corporate social responsibility (CSR)

V

programme, focused on building the knowledge of the participants on Agriculture as a Business, with expectations that on graduation the beneficiaries can set up agribusiness in the areas of Cassava, Vegetables and Snail production.

At the event, Uzoh Nwankwo, CEO, Value Drivers Investment NigeriaLimited,said,“Thejourney to this event, started three weeks ago. Here we are, at the end of the intensive residential training, facilitated by agribusiness value chain experts, optimistic that participants have been empowered withthebestknowledgetoventure intoagribusinesswithconfidence.”

HecommendedTotalExploration andProductionfortheirsupportin making this initiative a reality.

“This programme had several parts, ensuring that the beneficiaries,drawnmostlyfromthesix geopolitical zones of the country, had an all-round knowledge and experience across various areas which include; farming methods, agribusiness value chain, risk assessment,farmproducebranding, marketing, packaging, finance, business models and business planning to name a few.” He noted that the program was in furtherance of Total E&P Nigeria Limited CSR in Nigeria.”

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In a statement, Charles Ngeribara, general manager, CSR and Sustainable Development, Total, said, “This programme was designedwiththeobjectiveofdelivering top quality agricultural training that empowers Nigerian youths with livelihood skills.

“Through our capacity development initiatives, Total aims to empower as many people as possible and actively support nation building efforts in line with the United Nations’ Sustainable DevelopmentGoalsnumbersone and eight, which are ‘no poverty’ and ‘decent work and economic growth,’ respectively.”

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Wednesday 21 August 2019

BUSINESS DAY

news Buhari bars ministers from direct ...

Continued from page 1

rather opened two channels of communication, one through the Secretary to the Government of the Federation (SGF) and the other through the Chief of Staff to the President.

Buhari, speaking at the end of the two-day retreat for the ministers at the Banquet Hall of the Presidential Villa on Tuesday, said the ministers must learn to collaborate with other political appointees if they must succeed in their given assignments.

He stated that the ministers would find that “working collaboratively and purposefully will enable us to achieve quicker results, recognising that four years is not a very long time”.

“For the new ministers, make sure you engage and benefit from the experience of the older ministers and former governors in the cabinet,” Buhari said.

“In terms of coordination, kindly ensure that all submissions for my attention or meeting requests be channelled through the Chief of Staff, while all Federal Executive Council matters be coordinated through the Secretary to the Government of the Federation,” he said.

Similar directives during his first tenure had frustrated many ministers who had wanted to make one-on-one contact with the President to share ideas and issues of national importance.

Some of the memos never got to the President, forcing some ministers to leak such memos to get his attention.

The President while declaring that “public service is not easy work, and at times it can be thankless”, however, charged the ministers “to see this opportunity to serve as an honour, to give your best to deliver on this mandate, for a more prosperous Nigeria, not for some, but for all Nigerians”.

Boss Mustapha, SGF, in his closing remarks, stated that the retreat had afforded an opportunity to prioritise the key strategic initiatives required to drive accelerated economic growth, as well as the critical enablers required for seamless execution.

He urged the incoming ministers to uphold values which the nation stands for – “hard work, honour, integrity, ingenuity, and the relentless belief that in Nigeria all things are possible and that together we can accomplish extraordinary things”.

Mustapha also empha-

sised the need to work effectively with all other arms of government, such as states and the National Assembly, for major high impact initiatives such as provision of large-scale land for agriculture and food security, and passage of critical legislations.

“The work we have done here has been critical to laying the foundation for what we will accomplish in this administration. But this work alone is not why we are here,” Mustapha said.

“Now it is time to turn our words into actions – to take everything that we have learned, all the strategies and approaches that we have discussed, and go execute our priorities.

This work begins now. The people of Nigeria are looking to this administration for results – and they expect them quickly,” he said.

He assured that Federal Government was committed to delivering on and implementing all agreed initiatives within the stipulated timelines. To ensure effective implementation, the initiatives would be cascaded to the relevant ministries, whose ministers would champion the responsibility for driving implementation and execution, he said.

He charged the ministers to ensure they work to achieve the Key Performance Indicators (KPIs) to aid in the implementation of the agreed initiatives and that the outcomes from the two-day session would be documented and shared with all the ministers. This, he said, would serve as a guide on the key initiatives and action steps required.

“The monitoring and evaluation framework will also be instituted to track the performance of each ministry against its cascaded strategic initiatives based on the outcome of this retreat. This is an integral measure to ensure we deliver on our agreed objectives,” he said.

Mustapha, who reminded the ministers that they would face challenges, both anticipated and unanticipated, urged them not to be discouraged.

“Do not let these challenges discourage you – let them serve as motivation to work even harder, to think more creatively, and to come up with new solutions. And remember that you have an entire team to help you, including myself, and remember to escalate issues as appropriate to ensure we can resolve roadblocks in a timely and systematic manner,” he said. www.businessday.ng

Ebenezer Onyeagwu, group managing director/ chief executive, Zenith Bank plc, (2nd r); AhmaduKida Musa, NBBF president (1st r); Dennis Olisa, executive director, Zenith Bank plc (1st l), and Adaora Elonu, D’Tigress captain (2nd l), during the team’s visit to Zenith Bank, the sole sponsor of the Nigerian female basketball league, following their successful defence of the FIBA Women’s Afrobasket Championship in Dakar, Senegal.

Aircraft towing persists at Lagos airport...

Continued from page 1

and not automated to align with newer or larger aircraft.

While this process has continued to constitute unnecessary delays to passengers who are forced to remain in the aircraft for 15 to 20 minutes for the aircraft to be towed after landing, the airlines continue to pay ground handling companies as much as N985 million annually to tow their aircraft into the aerobridges.

Henrietta Yakubu, general manager, public affairs of FAAN, told BusinessDay that towing of aircraft is an extra precautionary safety measure adopted by FAAN. Experts in aviation, however, say these measures are totally unnecessary in the first place if the right infrastructure is provided.

Alexander Nwuba, managing director, Smile Air Ghana and former managing director, Associated Airlines and WestAir Benin, who explained the technicalities to BusinessDay, said airlines have to tow their aircraft into the bridges because the bridges are very old and not suitable to align properly with newer aircraft and the lights that serve as visual aids to pilots may not be functional.

“The aerobridges at the

Lagos airport are very old.

For instance, it is not the same bridge you use for a Boeing 777 that is used for a Boeing 737,” Nwuba explained.

He said that in other countries, when an aircraft lands, the pilot is told what bridge to go into depending on the aircraft type.

“So, with the bridges we currently have, it is safer for the aircraft to be towed into them, while some developed airports use automated bridges,” he said.

“In addition to this, there are some equipment markers in form of lights that give visual aids to the pilot when he lands and taxies into the bridge. The light changes colours as the aircraft taxies into the bridge to indicate its final stop. We need to ask FAAN if those lights are working,” he further said.

BusinessDay’s checks show that all 30 international airlines operating in Nigeria pay nothing less than N985,500,000 annually into the coffers of the Skyway Aviation Handling Company (SAHCOL) and Nigerian Aviation Handling Company Plc (nahco aviance) to tow their aircraft.

According to figures from the Nigeria Civil Aviation Authority (NCAA) on passenger movement, international air-

Diaspora remittances could hit ...

Continued from page 2 70 percent of remittances are used for consumption purposes, while 30 percent of remittance funds go to investment-related uses,” Nevin said.

“So it is important that Nigeria has a diaspora strategy both at the national and state level,” he further said.

According to a 2017 United Nations report, there are 1.24 million migrants from Nigeria in the diaspora but this figure is likely to be higher in 2018 and 2019 with the recent trend in migration

from the country, PwC said.

Almost half of Nigerian adults have indicated their willingness to leave the country in the next five years, according to a 2018 survey conducted by the Pew Research Centre. This feeds the estimates that remittances will be higher.

The PwC report cited findings from a study by the United Nations Conference on Trade and Development (UNCTAD) on the impact of remittances on developing countries which said that remittances have had direct impact on the overall

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lines operate a daily average of 30 flights from the Murtala Muhammed International Airport (MMIA). This implies that the airports will process nothing less than 10,950 flights annually.

Ground handling companies charge airlines $250 per towing. This implies that airlines pay up to $2.737 million every year to tow their aircraft into the finger. This amounts to N985.5 million using an exchange rate of N360 to a dollar.

Several private sector businesses told BusinessDay that they had personally volunteered to assist the concerned agencies fix the problem with the bridges (as part of their corporate social responsibility) but they had received a negative answer each time because of the amount the agencies realise from towing aircraft into the bridge on a daily basis.

Experts say this development totally discourages the ease of doing business the government promised to implement across Nigeria, including at the airports.

John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART), and chief executive of Centurion Securities, said the fingers (aircraft parking lot) in most of Nigerian airports were built in 1975, and no improvement has been done on them.

He said apart from the fingers in Abuja airport, the ones

in other airports are out-dated and may not accommodate certain aircraft types. Thus, the airlines have no choice but to tow their aircraft into the fingers.

“Some airlines insist on using certain fingers. For instance, in 2007, Airbus 340 had long wing fan and Emirates was flying Boeing 777. The two of them chose fingers that were closer to each other to park.

The pilot alone cannot safely park that aircraft side by side with the other one. So, they park outside and the towing vehicle will come and tow them into the finger,” Ojikutu said.

He noted that there were also risks in towing the aircraft as the vehicles of the handlers sometimes hit the aircraft.

“If you hit the engine of a 777, it costs about $20 million. The Nigeria Civil Aviation Authority (NCAA) should ensure handlers operate with insurance to cover their operations,” he added.

But the story goes beyond the aerobridges as a visit by BusinessDay to the Lagos airport recently showed that the escalators are currently in a bad shape, thereby constituting hassles to the passengers, especially the aged.

Yakubu, however, promised that the new Lagos airport terminal billed to be completed by the end of 2019 would address some of the infrastructure gaps raised.

economy, as well as the consumption and investment of households.

However, to get the most from diaspora remittances and make them contribute to national development, PwC recommends the creation of national platforms that increase accessibility of crucial information for Nigerians in the diaspora.

The report also encouraged the creation of pooled investment vehicles.

“One of the major barriers to investing for those in the diaspora is the minimum amount of funds, which investing firms accept. Therefore, pooled investment vehicles where members of

diaspora can be vetted and can aggregate funds for private equity investment, for example, would encourage greater investments,” the report said.

Early-stage businesses with smaller financing needs present a great opportunity for those in the diaspora to invest through angel networks, the report recommended.

This is because “such efforts will also encourage employment-generating activities, reduce further emigration and save workers from exploitative conditions abroad by providing them alternative livelihood options in their own country”, it said.

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Nigeria Customs partners NIS, others to deepen border security Cynthia Egboboh, Abuja

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he Nigeria Customs Service (NCS), as part of measures to secure Nigeria’s land and maritime borders, is partnering the Nigerian Immigration Service (NIS), the Armed Forces of Nigeria (AFN) as well as the Nigeria Police Force (NPF) and other security and intelligence agencies to conduct a joint border security exercise, code named “EX-SWIFT RESPONSE.” In a statement signed by Joseph Attah, public relations officer at NCS on Tuesday, the department said the joint exercise was being coordinated by the Office of the National Security Adviser (ONSA) and would take place in four geopolitical zones - South-South,

South-West, North-Central and North-West According to the statement, the exercise aims at promoting inter-agency cooperation and increase their preparedness to address trans-border security challenges such as terrorism, armed banditry, smuggling, proliferation of small arms and light weapons, among others.

“The exercise will involve the movement of personnel, vehicles and equipment within the affected parts of the country,” the NCS explained.

“Therefore, we call on members of the public not to panic and should continue to engage in their normal duties. The overall objective is to ensure a peaceful and secured country in the interest of our National Security,” it said.

NAHCON accused of breaching agreements with Med-View on pilgrims’ airlift IFEOMA OKEKE he ongoing annual hajj operation to Saudi Arabia has been marred with controversies following accusation from Med-View Airline, a player in the exercise, against the National Hajj Commission of Nigeria (NAHCON).

A source close to the airline accused NAHCON of breaching its contractual agreement with it on the airlifting of pilgrims to Saudi Arabia, which prompted the carrier to petition the Presidency on the alleged breach.

Documents with various dates by a source close to the airline alleged that NAHCON through Abdullahi Mukhtar, its acting chairman, acted “wickedly, in contravention of the agreement and frustrated MedView Airline from continuing with the exercise.”

This is as a source in NAHCON saying the ongoing hajj exercise is flawed with “personal interests.”

Med-View insisted that the act of NAHCON through Mukhtar amounted to econom-

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ic sabotage, claiming that he attempted to compel the airline to partner a Saudi Arabian’s carrier, Flynas, despite its partnership with another Nigerian airline, Max Air, also participating in the exercise.

The solicitor to Med-View, Debo Adeleke, in an interview explained that Med-View made down payment of $8,897,663.63 as the total contractual sum for the airlift of 5,720 pilgrims on May 20, 2019, with First Bank as the guarantor.

According to Adeleke, the contractual agreement stipulated that on execution of the contract, NAHCON was to make 50 percent payment to MedView, which was supposed to be $4,448,831.08 to enable the airline conclude all necessary arrangements for the commencement of the hajj operations.

But, rather than 50 percent in the contractual sum, the commission made available only 25 percent payment on July 15, 2019, five days into the exercise.

According to him, Med-View was given $2,412,539.

Buhari alerts on rising e-fraud activities, cyber crimes

... charges African regulators to protect consumers Stella Enenche, Abuja

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resident Muhammadu Buhari has raised concerns over possible rise in electronic fraud and other cyber-related crimes, saying efforts must be intensified at protecting consumers of technological evolution from criminals.

Specifically, President Buhari charged telecoms regulators to be alive to their responsibilities in order to ensure the realisation of the benefits of technology in the various sectors of the economy.

The President gave the charge at the Second Edition of the Conference of African Telecommunications Regulators on Consumer Affairs (CATCO) on Tuesday in Abuja.

Buhari, represented by Polycarp Shambo, Chief of Staff

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an African Towers Limited (PAT), a leading telecoms infrastructure and wireless service provider, has raised an undisclosedamountofdebtfundingfromtheNigeriaInfrastructure Debt Fund (NIDF), managed by Chapel Hill Denham.

The debt financing is being used by Pan African Towers to achieve its aggressive growth plan to reach all parts of Nigeria.

Pan African Towers aims to deploy up to 35,000 towers within the next five years to help bridge the broadband coverage gap in Nigeria and accelerate Nigeria’s strongappetitefornextgeneration mobile broadband growth and internet penetration.

Adebayo Shittu, Nigeria’s former minister of communication and Umar Garba Danbatta, the executive vice chairman of the NCC, the regulatory body for Nigeria’s communication sector, are of the opinion that the country requires around 70,000 to 80,000 towers to ensure proper quality

and coverage for 4G and 5G technology.Nigeriacurrentlyhasclose to 30,000 towers; as a result, there is room for enormous growth in the sector.

Nigeria Infrastructure Debt Fund, managed by Chapel Hill Denham, is Africa’s and Nigeria’s firstlistedinfrastructuredebtfund.

The fund is structured to enable domestic long-term savings such as pension and retirement assets to be safely channelled into productive infrastructure assets in the country. While supporting commercially attractive projects, NIDF enables its investors to benefit from the predictable returns available from long dated infrastructure debt investments.

Commenting on the transaction, Wole Abu, CEO of Pan African Towers, said: “We are excited to have NIDF as our long-term financing partner. A key aspect of the transaction is that the funds are denominated in the local currency,whichharmoniseswithour overall strategic goal of delivering affordable and financially sustainable telecom services to the

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merce, entertainment, transport, and so on, bringing a lot of efficiency in service delivery as we are witnessing in Nigeria.

“However, these channels may also be hijacked and manipulated to the detriment of vulnerable consumers as can be demonstrated by rise in e-fraud activities and cyber crimes.

“It is in this light that I wish to charge telecoms regulators in Africa that, as you focus on deepening access to digital services in your respective countries, attention must also be paid to how consumers are empowered to be protected from the antics of abusers of these technologies.

This, therefore, underscores the relevance of this forum in our digital ecosystem.”

Earlier in his address, the executive vice chairman (EVC) of the Nigerian Communica-

tions Commission (NCC), Umar Dambatta, recalled that during the maiden edition of CATCO, a 17-point resolution was reached on various approaches African regulators could adopt, with a view to safeguarding and protecting telecoms consumers.

Dambatta said since the 2013 edition, the conference had not held owing to some circumstances beyond the commission’s control.

“It is based on the foregoing that I most earnestly consider the theme for this second edition of CATCO: ‘Empowering the Telecom Consumer in an Era of Technological Evolution’ apt, as it provides another veritable platform for us to discuss the technological evolution that has characterised the telecommunications space in the last six years,” he said.

R-L: Abdulrahman Abubakar, governor of Kwara State; Segun Awolowo, CEO, Nigeria Export Promotion Council, and Dayo Benjamins-Laniyi, founder, DBL Bold, at the Tony Elumelu Foundation Entrepreneurship Forum 2019 in Abuja, recently.

Pan African Towers raises debt funding from Nigeria Infrastructure Debt Fund JUMOKE AKIYODE-LAWANSON

(CoS) to the Secretary to the Government of the Federation, Boss Mustapha, maintained that information and communication technology (ICT) had become a catalyst for economic growth across nation’s of the world.

He, therefore, charged African telecoms regulators on the need to ensure efficiency in service delivery, in order to achieve optimal results.

This was as the President informed the regulators and other participants at the conference that the ICT sector had remained the main driver of his administration’s transformation agenda.

He said: “Globally, technological evolution has facilitated innovations in various sectors of the economy such as banking, agriculture, healthcare, com-

Nigeria people.

“The NIDF team’s ability to structure bespoke transactions using global-standard project financetechniques,whileworking within an expedited timeframe, is extremelyimpressive.Thisisamajor milestone in our business and welookforwardtomoresynergies in the relationship.”

Anshul Rai, CEO, Nigeria Infrastructure Debt Fund said: ‘Availability of long-term financing is critical for sustainable infrastructure development in Nigeria. By channelling institutional capital into productive assets, NIDF is supporting the country’s strategic imperatives of adding to its infrastructure stock as well as providing the enabling services that are critical for both economic diversification and social development. Sponsors such as PAT have taken the prudent decision of matching the currency of their financing with the currency of their revenues (both being Naira), thus significantly improving the overall risk profile of these projects.’

Conflict, corruption behind slow investment in Niger Delta - experts Cynthia Egboboh, Abuja

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onflict and corruption are the main reasons the much needed investments in Nigeria’s oil rich Niger Delta have been slow, according to experts that spoke Tuesday on the matter.

Speaking in Abuja at a documentary screening of a film titled “Time for Collective Action against conflict and corruption in the Niger Delta” they attributed the near absence of key investments like industries and infrastructure to what they referred to as “conflict entrepreneurs.”

Zibima Tubodenyefa, lecturer, Nigeria Delta University, speaking at the event to unveil the documentary in Abuja, said the conflict entrepreneurs activate violence against planned investments that give them ample access to rents.

“We realised that what this conflict entrepreneurs do most-

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ly and very effectively is to stoke legacy issues, ethic issues, land disputes among others, apart from using the instrument of ignorance against the people to their personal advantage,” Tubodenyefa said.

He lamented that the “conflict entrepreneurs” had and control information around potential investments but often let out misrepresentation of the facts and become key stakeholders when at point of negotiations.

“These group of persons who cut across government, its agencies and the host communities are said to be feeding fat on the current rent seeking system they operate and ready to stall investment in the region that is not to their personal benefit,” he said.

The documentary screening was sponsored by Facility for Oil Sector Transparency and Reform in Nigeria (FOSTER) is titled: “The Impact of Corruption and Conflict on Invest@Businessdayng

ments in the Energy Rich Niger Delta Community.”

The convener of the documentary, Louis Brown Ogbeifun, however, stressed on the need for citizens to hold government responsible, and accountable for failure to provide social amenities, infrastructure, and encouraging pervasive corruption in high places, which had left the people in worse situation.

He said, “These are individuals that have turned themselves into principalities and powers who must be worshipped and consulted without which no investment can prosper in the Niger Delta region.”

The experts cited a clear example of the Gas Revolution Industrial Park, Ogidigben in Delta State and the Gelegale Seaport in Edo State, which had failed to kickoff despite the preparedness of foreign and local investors to invest in projects.

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Buhari to inaugurate CBN Centre of Excellence at ABU, Zaria HOPE MOSES-ASHIKE

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resident Muhammadu Buhari, as part of his visit to Kaduna State, will on Thursday, August 22, 2019, inaugurate the Post-Graduate Centre of Excellence built by the Central Bank of Nigeria (CBN) at the Ahmadu Bello University (ABU), Zaria.

The CBN Centre of Excellence, which is sited at the Samaru campus of the university, was conceived as a world-class post-graduate school focused on various business and finance disciplines.

Thursday’s ceremony comes seven months after the President inaugurated a similar project at the University of Nigeria, Enugu (UNEC) Campus in January 2019.

The Zaria project comprises a 360-seating capacity auditorium, a telepresence room, lecture theatres, lecture rooms with a total seating capacity of 544; tutorial rooms with 240-seating capacity, Cafeteria/Kitchens; offices and a 68-seating capacity Library and a 50-seating capacity ICT Centre.

The complex also has hostel accommodation and gymnasium for students.

Isaac Okorafor, director, corporate communications, disclosed that the aim of the Bank, in conceiving the projects at ABU, UNEC and the University of Ibadan, was to ensure that students at post-graduate levels in Economics, Accounting, Banking and Finance, Business Administration and Statistics study in a serene ecosystem that will support effective learning and boost learning in the financial services sub-sector.

Global demand for aluminium set to outstrip growth - Fitch MIKE OCHONMA

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here are strong indications that global aluminium market is likely to experience a number of deficits over the coming years as solid demand growth, driven by the construction and automotive sectors, outpaces production growth, says Fitch Solutions Macro Research.

Fitch expects the global primary aluminium market to remain largely undersupplied until 2026, as modest demand growth outpaces that of production. From 2026 onwards, it expects the market to shift into oversupply.

The global aluminium demand outlook is set to benefit from solid construction industry growth in key countries and growing roles in automotive as a lightweight substitute for steel.

Fitch forecasts the global aluminium market to witness deficits or be almost in balance from 2019 to 2023, with the aluminium stock-to-use ratio to decline steadily from 10.5 percent to 4.7 percent over the same period.

Global aluminium production is set to continue to rise over the coming years as higher prices incentivise producers to continue increasing output.

The global production growth rate is expected to average 2.7 percent year-on-year over 2019 to 2028, representing a slight slowdown compared with the average growth rate of 5 percent over the previous 10-year period.

In the shorter term, Fitch expects output to accelerate by 3.4 percent this year, owing to its expectation for a recovery in output this year following supply disruptions hindering output last year, ranging from stoppages at Norsk Hydro’s Alunorte refinery, in Brazil, to US tariff-related disruptions at Alcoa.

However, there will not be

an outright decline in absolute output over the coming years, and Fitch expects the country’s aluminium output to edge higher, from 34.1-million tonnes this year to 40.8-million tonnes by 2028, averaging 2.1 percent yearly growth, compared with an average yearly growth rate of 11.7 percent over the previous ten-year period.

In terms of demand, the global aluminium picture will be stable over the coming years, driven by steady demand growth in Asia and the growing application of aluminium in industries such as automotive and aerospace,

Lagos Assembly confirms Alogba as new CJ Iniobong Iwok

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agos State House of Assembly has confirmed Justice Kazeem Alogba as the Chief Judge of the state. Alogba was confirmed at the plenary session held Tuesday at the Assembly Complex, Alausa, Ikeja.

The CJ, who came to the Assembly with some of his judiciary staff, gave account of his educational and professional career.

It would be recalled that the Lagos State Governor Babajide Sanwo-Olu, appointed Justice Kazeem Alogba as the acting chief judge of the state in June this year.

The development came up as Justice Opeyemi Oke retired from the state judiciary on June 10, 2019, after spending the statutory number of years in service.

Prior to his appointment Justice Kazeem Alogba was the most senior of the 58 Honourable Justices in the State Judiciary next to the out-going Chief Judge, and had chaired the Committee on the review of the High Court Civil Procedure Rules, which culminated in the new High Court of Lagos (Civil Procedure) Rules of 2019 that came into force on 31 January 2019.

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says Fitch.

However, global demand growth will gradually slow compared with previous years as Chinese economic growth and, therefore demand for metals, ticks lower.

The research firm forecasts aluminium consumption to increase from 62.9-million tonnes this year to 78.6-million tonnes by 2028, averaging 2.8% yearly growth.

Aluminium integration is set to rise in more regulated automotive markets such as the US, the European Union and Japan, while developing markets will present further growth opportunities.

Wednesday 21 August 2019

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news International Youth Day: GWC tasks youths on productivity LUCKY NWANEKWU

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L-R: Ronald Kayanja, director, United Nations Information Centre (UNIC), Nigeria; Adetola Juyitan, national president, Junior Chamber International (JCI) Nigeria, and Ketil Karlsen, head of delegation, European Union, during the press conference to Pic by Olawale Amoo commemorate International Youth Day held in Lagos, yesterday.

Sanwo-Olu breaks 20 years’ record, names female works commissioner JOSHUA BASSEY

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or the first time since Nigeria’s return to democratic governance in 1999, a female commissioner for works and infrastructure has been appointed in Lagos State.

Adeyoye Aramide Monsurat, a certified civil engineer and construction practitioner, will be holding sway in the works ministry over the next four years.

She was sworn in on Tuesday

by Governor Babajide SanwoOlu alongside 21 other commissioners and 13 special advisers who, together with the governor and his deputy, Obafemi Hamzat, secretary to the state government, chief of staff, deputy chief of staff, and head of service, form the kernel of the state executive council.

Recall that three other cabinet nominees of Sanwo-Olu

were on Monday denied confirmation by the Lagos State House of Assembly, without official explanations.

Speaking at the swearing in ceremony, which held at the state secretariat, Alausa, and attracted families of the new cabinet members, chieftains and grassroots politicians of the ruling All Progressives Congress (APC), Sanwo-Olu tasked them on diligence to duties, saying “we must accelerate the trajectory of growth and development of Lagos as we can’t afford to disappoint Lagosians.”

According to the governor, the cabinet members must be ready and willing to pay the price towards actualising the new administration’s vision of a greater Lagos.

“Be prepared to pay any price, bear any burden, meet any hardship, and support or

oppose whomever you must, in order to accomplish our grand ambition of building one of the great cities of the 21st Century, a beacon of social, commercial and political excellence for the rest of our dear nation.”

Sanwo-Olu reminded the cabinet members that the challenges whether security, waste management, transportation, or environmental sustainability, though not peculiar to Lagos, but could be tackled.

“They must surely be addressed before they undermine our achievements and hinder our progress,” the governor said.

Congratulating them, he said their appointments were welldeserved and a testament of their capacity, accomplishments and track record of hard work, commitment, dedication and professionalism in their private and public endeavours, which

must be brought to bear in their new tasks.

“Let me emphasise that this is not just our goal, it is what the people expect from us and we cannot afford to disappoint them.”

Some of the cabinet members and their portfolios include Tunji Bello, water resources and environment; Gbenga Omotoso, information and strategy; Olowo Onaolapo, finance; Gbolahan Lawal, agriculture; Folashade Adefisayo, education; Moyo Onigbanjo, justice/ attorney general.

Others are Olalere Odutsote, energy and natural resources; Lola Akande, commerce and industries; Samuel Egube, economic planning and budget; Frederic Oladeinde, transportation; Joe Igbokwe, special adviser on drainage and water resources, among others.

Tech reforms: Facebook launches Paga hits N1.5trn in transaction value Developer Circle in Benin FRANK ELEANYA

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lobal technology firm, Facebook, has launched its Developer Circle in Benin City, a platform that allows people, who are technologically inclined to engage with local experts, learn new technology as well as collaborate with technology developers to build products.

Speakingduringtheinauguration of the Facebook Circle at the Edo InnovationhubinBenin City, theEdoStatecapital,oneofthecoleads of the Facebook Developer Circle Benin, Izoduwa Asemota, says the circle is a community for tech developers to broaden their skills.

The Facebook Developer Circle Benin is aimed at setting up a community of people who are passionate about technology and entrepreneurship, Asemota states, saying, “It will bring a lot of youths together to work in startup groups and build products that willhelpdevelopthecommunity.”

He explains the Benin circle plans to have an incubation centre where start-ups would be mentored to come up with great products.

Senior Special Assistant to Edo State Governor on Skills Development and Jobs Creation, Ukinebo Dare, says the Edo State government is proud to be part of the Facebook Developer Circle Benin.

“IthasbeenlaunchedinLagos with about 20,000 members and as at today, about 1,000 members have registered on the Facebook Developer Circle Benin and we expect more people to register,” Dare states.

Dare, who was represented by Uyi Umagbai, director for Cluster Promotion and Management, EdoJobs, says the Facebook Developer Circle is an opportunity for developers to collaborate, get educated and grow their start-ups and business ideas.

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aga, a Nigerian mobile payments company, has announced that it has crossed N1.5 trillion in transactions since its commercial launch in August 2012, showing a continuous pattern of steady growth.

Since 2012 to date, the company has processed 87 million transactions, valued at N1.5 trillion or $5.4 billion using monthly nominal exchange rates.

“Reaching one trillion in transaction value is a major milestone for Paga. We are proud of our success in digitizing cash and making it easier for people to pay and get paid.

We are working round the clock to continue to bring innovative solutions to the mobile payments industry as we expand our range

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of services,” Tayo Oviosu, founder/CEO of Paga, said.

With over 13 million users across all 36 states of Nigeria, Paga is an omni-channel payments platform offering users a safe and convenient way to send and receive money and pay their bills. Users can access the platform on any mobile phone through its USSD code *242#, mobile apps or website (www.mypaga.com). In addition, Paga’s innovative wallet allows Nigerians to link multiple bankcards or their bank account - this way customers can use Paga with money from their bank account.

Paga celebrated the 10th anniversary of its founding in April 2019 and at that time announced its plans to expand its services into new global markets.

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lobal Wissen Consult (GWC) has called on youths to embrace the opportunities presented by digital marketing so as to become productive.

The firm said this recently in Lagos at a seminar convened to sharpen and improve the financial skills of youths in digital marketing, acquiring and usage of crypto currencies using block chains.

GWC is an organisation that aims at improving social and economic skills of people outside of the usual formal classroom school education in Nigeria.

Speaking at the event, themed, ‘To the Moon,’ convener/CEO, GWC, Nwokeji Oscar, said, “We are promoting other skills that youths could pick up aside from what is taught in the formal education.

“There are many doctors, but few working hospitals in Nigeria, so, are other professions. Then, we saw the need to go ahead of normal school curriculum, by teaching them these new skills in a classroom setting they are already used to, rather online.

“We teach programming, Networking, Block Chains, Trading, and many others.”

On the topic of Block Chaining, he said, “It is the space of the future, whether anyone likes it or not, though the acceptance is slow in Nigeria, but, it will defi-

nitely come through “That is why we organised this seminar for youths to prepare them ahead, and begin to invest in this future. It is an open space for the Nigerian youths to jump on, so we are showing them how, and revealing to them all the crypto currency, which are international coins.

“At this point, it is the youths who will go and learn and study properly, and equip themselves.

They are the people who are going to be employed to manage those things.”

Other speakers at the event were founder, BitFxt, Peters Franklin; CEO, Naira Coin, Shekoni Oladimeji, and CEO, Crypto TV, Tony Emeka.

Franklin Peters, who spoke on the relevance of block chain in day-to-day activities, and its use in solving problems, said, ‘‘We are pushing for the right solution to society’s problems through Block chain, so that people will know the good in it. The block chain is transparent, it is open for anybody to see, it is fast, and it is secure.”

On his part, Tony Emeka, said, “Blockchain could help in Agriculture. It could help farmers know the time a particular crop is ready, and also let the consumers to know the particular place he could get a particular produce.

“With the block chain, we can be able to track monies given to politicians to carry out projects, and ensure that those monies are used for their purposes.”

Nigeria launches Knowledge Hub to boost sustainable development CHUKA UROKO

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group of Nigerians has established the Knowledge for Development Initiative, an association committed to inclusive knowledge-based growth, the Agenda 2030, Sustainable Development Goals, Paris Climate Agreement, the Agenda Knowledge for Development, the Knowledge Development Goals and their implementations.

According to its promoters, the initiative provides a platform that assures the local and international community that Nigeria and friends of Nigeria are committed to inclusive growth and sustainable development.

The organisation will be officially unveiled in Nigeria at its maiden Knowledge for Development Partnership Roundtable holding in Lagos August 20, 2019.

Themed ‘Knowledge Agenda Nigeria’, the event, which is holding in collaboration with the Lagos Chamber of Commerce and Industry (LCCI), will feature Austrian Ambassador to Nigeria, Werner Senfter, as guest of honour and LCCI president, Babatunde Ruwase, as chair.

Ibrahim Gambari, erstwhile foreign affairs minister and under-secretary general of the United Nations, is keynote speaker.

According to Lekan Fa@Businessdayng

dina, CEO, Knowledge Hub (City) Nigeria, the initiative has a membership of high local and international recognition and accomplished individuals and organisations in various sectors of human endeavours.

“Members appreciate that knowledge is at the heart of development and is an essential resource for all parts of governments, business, individuals, NGOs and development institutions. It believes that collaboration and partnership are veritable tools for meeting the challenges of the future – sustainable development, youth, gender, digital world, climate change, circular economy, low carbon world, future of work, technology, knowledge cities and entrepreneurship,” he said.

Fadina, an economist, scholar, management consultant, environmentalist, educationist and development expert, believes that the mission of the initiative is future-oriented, inter- and trans-disciplinary, reflective, multi-disciplinary and global.

He lists its aims and objectives as developing and promoting global peace, wealth and sustainability by advising knowledge in societies and fostering partnership with individuals, organisations and networks globally to achieve inclusive growth and sustainable development of knowledge.

Wednesay 21 August 2019

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FINANCIAL TIMES

World Business Newspaper

MEHREEN KHAN IN BRUSSELS, SEBASTIAN PAYNE IN LONDON AND GUY CHAZAN IN BERLIN

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he EU has firmly rejected Boris Johnson’s demand to remove the Irish backstop from a Brexit divorce deal, claiming the UK had offered no “realistic alternatives” to prevent the creation of a hard border in Ireland.

The UK prime minister sent a letter to Donald Tusk, president of the European Council, on Monday night laying out why he wanted to remove the “undemocratic” backstop from the withdrawal agreement ahead of meetings between Mr Johnson and the leaders of France and Germany in the coming days.

In a terse response, Mr Tusk rebuffed Mr Johnson’s suggestion that the UK and EU could come up with “unilateral” measures to maintain the 1998 Good Friday Agreement that ended decades of violence in Northern Ireland, and accused the government of pursuing a strategy that would result in a new hard border.

“The backstop is an insurance to avoid a hard border on the island of Ireland unless and until an alternative is found,” Mr Tusk tweeted.

“Those against the backstop and not proposing realistic alternatives in fact support re-establishing a border. Even if they do not admit it.”

Responding to Mr Tusk’s statement, a Downing Street spokesperson said that the government

Donald Tusk rejects Boris Johnson demand to scrap Irish backstop

European Council president says UK lacks ‘realistic alternatives’ to prevent hard border after Brexit

Donald Tusk: ‘Those against the backstop and not proposing realistic alternatives in fact support re-establishing a border. Even if they do not admit it’ © Thierry Roge/AFP

was “deeply invested in the peace, prosperity and security of Northern Ireland” and would never introduce “infrastructure, checks or controls on the border”.

“But it is clear that unless the withdrawal agreement is reopened

Trade officer was returning from trip to Shenzhen when he went missing

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n employee of the British consulate in Hong Kong has been detained in mainland China, threatening to trigger a diplomatic rift between London and Beijing.

Cheng Man Kit, a Hong Kong resident who worked as a trade and investment officer at the British Consulate General in the city, was detained on August 8 against a backdrop of protests that have plunged the territory into its worst political crisis in decades.

The detention of Mr Cheng, who worked for Scottish Development International, Scotland’s inward investment agency, is believed to be related to his presence at the protests, according to people familiar with the matter.

Mr Cheng’s girlfriend, who would identify herself only as Ms Li, denied that he participated in the demonstrations and said there was “no reason” for his detention.

The UK and China have exchanged sharp words over the escalating protests in Hong Kong. Domi-

nic Raab, the UK’s foreign secretary, called Hong Kong chief executive Carrie Lam on August 9 to ask for an independent investigation into the recent events in the city. Beijing hit back, telling the UK to stop interfering in an internal matter.

“It is simply wrong for the British government to directly call Hong Kong’s chief executive to exert pressure,” a spokeswoman for China’s foreign ministry said at the time.

Ms Li said Mr Cheng was stopped at West Kowloon station, a transport hub in the heart of Hong Kong that connects the territory to mainland China by high-speed rail, after attending a technology conference in Shenzhen. The station includes an immigration checkpoint area that is legally mainland Chinese territory, the first piece of land to be given that designation in the city.

Ms Li said her last contact with Mr Cheng was a message “pray for me” just before he tried to pass through immigration at the station.

Mr Cheng has a home return permit, a document given to most Hong Kongers that allows them to travel to mainland China. Ms Li said he usually used the permit when crossing the border. www.businessday.ng

good faith, an alternative to the backstop, with provisions to ensure that the Irish border issues are dealt with where they should always have been: in the negotiations on the future agreement between the UK and the EU.”

Italian prime minister Giuseppe Conte to resign

UK embassy says Hong Kong staffer detained in China NICOLLE LIU, PRIMROSE RIORDAN, JAMIL ANDERLINI AND CHRISTIAN SHEPHERD IN HONG KONG

and the backstop abolished there is no prospect of a deal. It has already been rejected three times by MPs and is simply unviable as a solution, as the prime minister’s letter makes clear,” the individual said.

“We are ready to negotiate, in

An official close to Mr Johnson described the EU’s response as an “overreaction to a reasonable proposal” and if the EU27 leaders did not change their stance on the backstop, it would face the reality of having to start building a hard border in 73 days.

In a note sent to EU27 diplomats on Tuesday, the European Commission and council “regretted” the UK’s stance and said claims in Mr Johnson’s letter were “incorrect” and “misleading”.

The letter disputed three of the UK government’s assertions: it said that the backstop did not contravene the Good Friday Agreement, that Northern Irish citizens would have a say over laws under the backstop and that an open border could not be maintained if Northern Ireland diverged from EU laws.

“EU law provides the common framework needed to enable frictionless trade between member states today,” the note said.

“Without this common framework, checks and controls become necessary to protect consumers’ health, the integrity of the single market and Ireland’s place in it.”

PM blames League leader Matteo Salvini for government collapse HANNAH ROBERTS AND DAVIDE GHIGLIONE IN ROME

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iuseppe Conte is to resign as Italy’s prime minister after launching a barrage of criticism at Matteo Salvini, accusing the far-right interior minister of weakening the country by calling for fresh elections.

Mr Conte said he planned to go “to the president of the republic to tell him that this government has come to an end and put in his hands my resignation as prime minister”.

Addressing Italian lawmakers, Mr Conte placed the blame on Mr Salvini, leader of the populist League party, who said this month that there was no future in his coalition with the Five Star Movement.

“The decision of the League forces me to interrupt government,” said Mr Conte. He added that Mr Salvini’s decision to trigger the crisis hampered Rome’s negotiations with Brussels over

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its budget deficit and betrayed citizens’ desire for change.

“Salvini has shown that he pursues his own personal interest and those of the party,” Mr Conte said.

The prime minister’s resignation was expected to be formally presented to Sergio Mattarella, Italy’s president, later on Tuesday.

Mr Mattarella will have to see if there is scope for a new coalition to be put together or whether the country will need to hold fresh elections, which could interrupt delicate negotiations on the country’s annual budget.

Italy’s FTSE MIB stock index was trading 0.9 per cent lower, underperforming its European peers, but Italian government bonds rallied as Mr Conte addressed parliament, sending yields lower.

The benchmark Italian 10year government bond yield fell 4 basis points to 1.389 per cent, as investors moved into the debt.

The spread with German Bunds of the same maturity, a measure of bond market anxiety over Italy, also narrowed. The euro edged higher against the US dollar. @Businessdayng

The League and Five Star went into coalition little more than a year ago after both populist parties emerged as the biggest winners from a general election. Since then their fortunes have diverged, with Mr Salvini — whose League was the coalition junior party — emerging as the country’s most popular and prominent politician.

The government’s 14 months in office have been marked by sporadic clashes with EU leaders over Italy’s spending plans, which Brussels has said are out of line with the bloc’s budget rules. Italy has the eurozone’s most significant debt burden after Greece.

Responding to Mr Conte’s attack, Mr Salvini told lawmakers he “would redo everything he had done again”.

“I am a free man without fear of the judgment of the Italians. Those that are afraid to go to elections are less free,” he said.

He said the reason he had brought about the crisis was because his plans were blocked “by too many Mr No’s” in government.

46

Wednesday 21 August 2019

BUSINESS DAY

FT

NATIONAL NEWS

Now bigger than eBay, Shopify sets its sights on Amazon Canadian ecommerce company plans move into logistics after rapid growth TIM BRADSHAW, GLOBAL TECHNOLOGY CORRESPONDENT

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obi Lütke, the Shopify chief executive, prefers his employees to refrain from checking the ecommerce company’s share price too often.

Anyone caught doing so has to buy the rest of their team a box of TimBits — a doughnut-like Canadian delicacy.

Staffers at the Ottawa-based company might be forgiven for stockpiling TimBits lately. Shopify’s shares, which first listed on the New York Stock Exchange in May 2015, have been on a tear this year.

The stock has climbed more than 150 per cent since the beginning of 2019, making Shopify more valuable than well-known internet companies including Twitter, Square and Spotify. Its market capitalisation — now more than $40bn — surpassed that of ecommerce pioneer eBay earlier this year.

“I had to remind everyone in [corporate messaging app] Slack that our share price is based on supply and demand, and is something that Wall St does,” said Mr Lütke, comparing the equity markets to sports betting.

Shopify has investors excited because it is increasingly seen as the most likely challenger to Amazon’s ecommerce dominance.

While many retailers, both traditional and online, have tried to tackle Amazon’s “everything store” head-on, Shopify has succeeded by arming individual merchants with the same technology and capabilities, but with more control.

Retailers from Kylie Jenner’s multimillion-dollar make-up venture to the online equivalent of mom-and-pop stores can use Shopify’s tools to build a website, list their products and take payments — all under their own domain and brand. Most of the shoppers who spent more than $40bn across 800,000 Shopify merchants last year would have had no idea they were transacting with the Canadian company.

“There was no ‘powered by Shopify’ anywhere,” said Mr Lütke, who started what would become Shopify in 2004 as a side-project of his online snowboard store. “We built a brand behind other people’s brands.”

Beyond the Valley Shopify’s absence from the Silicon Valley spotlight has been by design. Germany-born Mr Lütke has long resisted the San Francisco Bay Area’s gravitational pull, calling the costly fight for talent and property there “one of the most pure examples of groupthink gone wrong”. “I’m flabbergasted why anyone would ever consider starting a company in that area at this point,” he said.

But that does not mean Shopify is shying away from Silicon Valleystyle ambition. The company has just begun the difficult shift from the internet to the real world with the launch of its own fulfilment network, offering to take on mer-

chants’ warehousing and logistics needs — mirroring similar operations at Amazon.

Logistics is a problem Mr Lütke has wanted to tackle for many years. Small businesses — which make up the vast majority of Shopify’s merchants — find it “wickedly difficult” to keep up with the messy, expensive business of shipping, returns and storing inventory, particularly in light of the high consumer expectations set by the likes of Amazon, which sees orders delivered within a day or two.

“Giving that [capability] to more people who don’t happen to be part of the Jenner and Kardashian clan is exactly the kind of thing we want to do,” he said. “If nobody does this kind of thing, then all the benefits accrue to the people who are already big.”

But tech industry observers have suggested that Shopify’s move into fulfilment puts it on a collision course with Amazon itself — a battle that few ecommerce companies have fought and won. It also adds a layer of complexity to what is already a tangled relationship.

Currently, Shopify merchants can use its platform to sell through Amazon’s Marketplace, as well as their own website. But a big part of Shopify’s value proposition is the ability for retailers to tailor their online stores and maintain a close relationship with their customers, rather than use the boilerplate Amazon listing.

So while Mr Lütke is diplomatic when it comes to Amazon, it is also clear that he is rooting for the Davids taking on Goliath.

“In a lot of ways, Amazon are the guys who are convincing everyone that online shopping is simply superior,” he said. “But after you purchased all your necessities on Amazon, you want to buy some things that you are really looking forward to . . . you very quickly end up outside Amazon, which usually means Shopify stores.”

Mr Lütke added that he does not see Shopify as an Amazon rival, per se. Instead, he describes his business as a “factory for competitors to Amazon”.

‘Hey, they want us dead!’

As pressing as the challenge from Amazon is the future of Shopify’s existing revenue streams — in particular, ecommerce via social media platforms such as Instagram and Pinterest, which have become vital to growing online retail outside Amazon, and increasingly important to Shopify.

“Instagram has been the most phenomenal growth vector for small businesses,” said Mr Lütke.

“It’s a great way to tell stories about products that Amazon, with its static pictures and very sanitised listings, doesn’t offer people.”

One potential hurdle is that Facebook itself is also pushing into ecommerce, from creating Instagram Checkout — which allows people to buy items they see in posts without leaving the app — to its ambitious project to create an alternative global currency, Libra. www.businessday.ng

Pimco’s Daniel Ivascyn: ‘We’re a lot more defensive’ © Reuters

Pimco looks to offload ultra-hot bonds after huge rally

Bond giant trims positions, saying debt prices could slump on US-China trade détente ROBIN WIGGLESWORTH IN OSLO, NORWAY

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imco has pared its positions in government debt on fears that a breakthrough in USChina trade talks could trigger a violent sell-off, putting an end to one of the biggest fixed income rallies in history.

The Bloomberg Barclays Multiverse index — the broadest bond market gauge that tracks debt with a market value of more than $59tn — has returned more than 7 per cent already in 2019. If the rally continues at the same pace, this year will be the best for the gauge since 2003.

Although Pimco remains confident that bond yields will remain relatively low — and could still plumb new depths — the sheer power of the rally over the summer means that the balance of risks has now shifted, according to Dan Ivascyn, group chief investment officer at the giant investment house.

“We’re a lot more defensive,” Mr Ivascyn said in an interview.

“Even if we get a narrow trade agreement [between the US and

China] we could see a pretty powerful snapback in yields.”

Several big Pimco funds controlled by its investment chief, including the $128bn Pimco Income Fund, have therefore been lightening up on their positions in the UK, European and — to a lesser extent — the US government bond markets. But even in the US, Mr Ivascyn noted, there are chances of a sell-off if inflation data come in stronger than expected, prompting the Federal Reserve to stay on hold.

“We like the US market more — it still has more room to rally in a global flight to safety,” Mr Ivascyn said. “But it wouldn’t take much of an uptick in inflation to cause a meaningful repricing.”

Money pouring into fixedincome funds has pushed the yields on over $16tn of bonds below zero, while cutting the average yield of the Multiverse bonds close to an all-time low of 1.4 per cent.

Many investors are convinced that yields will continue to sag lower, as the Federal Reserve is forced to unwind its interest rate increases and the European Central Bank readies another round of monetary stimulus.

Mr Ivascyn’s flagship fund is the top performing bond fund in its category tracked by Morningstar over the past decade, but the cautious stance on the government bond rally has weighed on its performance this year. The Pimco Income Fund has gained 4.4 per cent so far in 2019, putting it in the 94th percentile of similar funds tracked by Morningstar.

“Expensive things can certainly get more expensive,” Mr Ivascyn conceded, noting that the prospects of a complete truce in the trade war seem remote. “We think we’ll at best get a partial agreement on trade, and this friction will be with us for a long time.”

The big question for investors is what could be a catalyst for a reversal of the bond market rally. For example, markets have shrugged off a run of solid US data — including strong retail sales and faster inflation — because they remain convinced that growth is slowing and rate cuts are imminent.

However, a handful of former central bankers working for BlackRock, the world’s biggest asset manager, last week highlighted one scenario that would force bond yields higher.

Deadly banana fungus reaches Latin America Arrival of disease threatens to devastate crops in some of world’s largest exporters GIDEON LONG IN BOGOTÁ AND EMIKO TERAZONO IN LONDON

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deadly fungus that threatens the future of the banana has reached Latin America, the leading exporter of the fruit to world markets.

The Colombian agriculture and fishing institute (ICA) has confirmed the arrival of Panama TR4 disease, a soil-dwelling fungus that has devastated plantations in south-east Asia over the past 30 years. It threatens the Cavendish banana, the variety that accounts for half of global production and

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95 per cent of the world’s exports.

The ICA has declared a “national emergency”, expanding preventive measures to the whole country.

Latin America’s plantations are the source of two-thirds of the global banana trade.

“The first landing of TR4 in Latin America is a very serious issue. It is a disease that is very difficult to control and to manage,” said Professor Gert Kema, a leading banana expert and the head of tropical phytopathology at Wageningen University in the Netherlands, who was part of the team that analysed the banana plants from Colombia.

The fungus does not affect @Businessdayng

humans but infected plants stop producing fruit. Spreading through soil movement, typically caused by workers and machinery, it has destroyed plantations in Asia, Africa and the Middle East. The disease was first suspected in Colombia in June in the province of La Guajira in the far north-east of the country.

The country has increased sanitary controls at all ports, airports and border points. The ICA said it had eradicated plants in an area encompassing nearly 170 hectares of quarantined plantations, adding: “The current challenge is to work on containment in La Guajira.”

Wednesday 21 August 2019

BUSINESS DAY

47

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Artificial intelligence promises to enhance sustainable investing Computers and data scientists can unearth key themes missed by traditional research BILLY NAUMAN IN NEW YORK

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nvestment managers within the environmental, social and governance sector are looking to gain an edge by using artificial intelligence, a computer-driven discipline already employed by some of the world’s most successful hedge funds.

Financiers say machines can go through vast reams of ESG data in a sector where information is often presented in incompatible ways because of the lack of reporting regulations.

“We know what data we need,” said Jennifer Wu, head of ESG investing at JPMorgan Asset Management, but “we are looking elsewhere to see where we can find it”.

While some companies might not report on their carbon usage, for example, there are other ways to see what they are doing, Ms Wu said. By using AI to scrape for keywords in patent filings, JPMorgan can find companies that are linked to new low-carbon technology.

“If you think about textual data, nobody can read everything,” said Ravit Mandell, the chief data scientist at JPMorgan, who recently helped launch a so-called “Themebot” algorithm designed to identify relevant information

from unstructured data.

Other companies are employing similar methods. By using a data science team, portfolio managers can access more granular information than is usually available from a third party, said Richard Nackenson, who runs a multi-cap fund at Neuberger Berman.

One example of how traditional analysis could miss key ESG themes can be seen in research into Ball Corporation, one of the largest manufacturers of aluminium cans in the US. Ball has scored poorly with ESG rating agencies because of its high energy usage, Mr Nackenson said.

However, looking deeper into the company’s ESG data and its products, Neuberger’s data team saw an opportunity for future outperformance.

“Many people didn’t recognise that over 75 per cent of the aluminium that has ever been produced is still in use today . . . In the long run it reduces energy consumption and pollution,” he said. Furthermore, consumer tastes and behaviour are changing as people become more aware of the environmental problems caused by plastics, and that is good news for a company like Ball, Mr Nackenson added.

German 30-year Bund: the final frontier Bond markets boldly go ever deeper into the parallel universe of negative interest rates

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hich is worth more — a euro today, or a euro in three decades from the Berlin government? Duh! The latter, obviously.

Germany on Wednesday auctions 30-year debt with an interest rate — or coupon, in the jargon — of zero. Investors will probably pay more than par value for the Bunds, guaranteeing a loss if held until maturity. They will be behaving entirely rationally.

Bond markets boldly go ever deeper into the parallel universe of negative interest rates. The first forays, following the global financial crisis, led to fears of economies falling into black holes.

Stars would explode. Swivel-eyed extraterrestrials would appear in trading rooms. In reality, financial systems coped. Economic theory has been rewritten. Nevertheless, the latest falls in borrowing costs are reason for broader concern.

Buying longer-dated, negativeyielding debt makes sense for pension and insurance funds matching assets to future liabilities. Paying to lend money to governments is also profitable — if a year later investors pay even more for the privilege. Thirty-year Bunds bought 12 months ago have generated returns totalling more than 30 per cent. Returns on Amazon shares were flat in euro terms over

the same period. The German Dax share index lost 5 per cent.

Repeating that performance would require a further percentage point fall in 30-year yields, says Bank of America. Scarily, that is not ridiculous. US president Donald Trump wants the US Federal Reserve to slash its benchmark interest rates. Other central banks would have to follow. Global trade wars and Brexit could give them cover. Supplies of German Bunds are limited, pushing prices up and yields down. Finance minister Olaf Scholz has mooted a €50bn stimulus package to avert recession, as after the 2008 financial crisis. Even if a fifth of it was funded through 30-year Bunds, their volume would rise by just 4 per cent.

The further interest rates fall, however, the less effective they become. Banks that have compensated for the margin squeeze by expanding lending books will hit balance sheet constraints.

Charging ordinary customers for deposits will be hard. They could instead hide cash under mattresses. If the credit impulse fails, central banks will lose credibility.

Chances would rise of a sustained and damaging economic downturn. No one knows when that tipping point will be reached. But negative yields on 30-year Bunds take us one step closer. www.businessday.ng

Although aluminium canmaker Ball Corporation scores badly with ESG rating agencies, Neuberger sees an opportunity for future outperformance because more than 75% of the aluminium that has ever been produced is still in use today © AFP

Collapse in Argentine bonds alerts distressed debt specialists Decline comes amid market rout that razed stocks and knocked value of peso COLBY SMITH IN NEW YORK

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argain-huntersarebeginning to circle Argentine assets after last week’s savage sell-off, but some investors say they would need prices to drop further before the risk of an Alberto Fernández presidency is fully factored in.

On the heels of a surprise primary election result that raised fears of a return to populism in Argentina, the country’s once-vaunted 100-year bond traded to a record low of 45.76 cents on the dollar. The fall came amid a market rout that razed stocks and bonds, while knocking the value of the peso by more than 20 per cent against the dollar.

The country’s dollar-denominated bond maturing in 2117 has since regained some ground, in line with most of the government’s debt, to just shy of 50 cents on the dollar. Even so, many emerging market bond investors are keeping their eyes trained for the bonds to sink to a range they say is in line with the expected recovery value in the event that Buenos Aires defaults on its debt.

“Argentina dollar bonds in the 40s are good value,” said Paul Greer, a London-based portfolio manager for Fidelity International. “The . . .

premium would be appropriate for the risk that you’re taking, and it starts to look interesting.”

Edwin Gutierrez, the head of EM sovereign debt at Aberdeen Asset Management, also sees “decent value” should the bonds remain in the 40s.

But to step in, Mr Gutierrez cautioned, he needs “forced sellers to get out” so “the guys interested in buying have enough of a discount to get back in”.

The spectre of default has grown in recent days, with the implied probability of Argentina missing a payment within five years rising to more than 90 per cent, according to credit default swaps pricing. Moreover, Fitch Ratings warned of “increased signs of a probable default”, when it downgraded the country on Friday alongside fellow rating agency Standard & Poor’s.

“If dollar bonds do trend into the 40s, you are all but pricing in the recovery scenarios in line with what the market is expecting,” said Pramol Dhawan, the head of the EM portfolio management team at Pimco, the investment group. “If that is the case, the bonds become a distressed asset.”

Others have estimated recovery values as high as 50-60 cents on the dollar, but caution that there are too

many unknowns to get a firm grasp of what is feasible.

“Forty is a historic recovery value and could offer some price support, but that doesn’t mean it’s the floor,” said Siobhan Morden at Amherst Pierpont Securities. “We have to understand the Argentina-specific situation before we can do any serious calculations.”

As such, the lack of clarity about the contours of an economic programme or cabinet appointees from Perónist Alberto Fernández — who is slated to be the next president after the election proper in October — gives Ms Morden pause.

“His lack of sensitivity to financial stress is very worrisome,” she said.

“It shows he doesn’t understand that it could reach a point where the situation is ungovernable for him in October.”

Analysts said much depended on what economic tack Mr Fernández would take and what relationship he would seek to maintain with the IMF — which extended the country a record $56bn bailout in 2018 that Mr Fernández said must be renegotiated. But Ricardo Adrogué, the head of global sovereign debt at Barings, said the bigger risk stemmed from his running mate.

Yield curve inversion hammers US small banks Asset-sensitive lenders face a hit to profits because of slump in yields

ROBERT ARMSTRONG IN NEW YORK

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he inversion of the yield curve — the market indicator that has rattled Wall Street — has had a particularly pronounced effect on US regional banks, whose shares are among the worst performers of the past few weeks.

So-called asset sensitive banks, those with a business heavily weighted towards floating-rate loans such as to businesses, face a hit to their profits because of the slump in yields, which pulls down the interest they will receive.

Another result: in some cases, their shares appear to have started

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trading in lockstep with changes in the yield curve.

“The moves up and down on a daily basis [in response to] the curve have been so violent and so quick that I’m not sure it is traditional asset managers that are causing this,” said Anton Schutz, who manages a portfolio of smallcap bank stocks at Mendon Capital.

He suspects that macro hedge funds and algorithmic traders have the banks in their sights. “Machines are trading this,” he said.

The yield curve describes the yields on different maturities of US government debt, and its inversion — when rates on long-term bonds fall below those on short-term debt — has been a reliable indicator of @Businessdayng

recessions in the past.

It also makes it much harder for asset sensitive banks to make money, since they cannot offset falling income from floating rate loans by cutting the rates they pay depositors, since these are already at rock bottom. Larger banks can have other fee-based businesses such as wealth management or payments that make their profits less sensitive to the yield curve.

Shares in institutions including Silicon Valley Bank, Comerica and Citizens, Wall Street darlings just a year or two ago, have traded in lockstep with the change in the relationship between threemonth Treasury bills and the 10-year note.

48

Wednesday 21 August 2019

BUSINESS DAY

ANALYSIS

FT

Europe must be braced for a trio of trade shocks It is high time for the EU to unlock the fiscal side of its macroeconomic armoury MARTIN SANDBU

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S President Donald Trump has been lampooned, with good reason, for his claim that “trade wars are good, and easy to win”. But in one sense he is right. The American economy is huge and relatively closed. That combination means trade turmoil involving the US can inflict much greater damage on others than its own economy has to absorb.

Despite a contraction of US industry and higher prices for American consumers, overall growth remains adequate. It remains to be seen how the latest market gyrations affect the economy, but so far, the brunt of the macroeconomic damage has fallen not just on Mr Trump’s main target — China — but on Europe, which has been caught in the crossfire.

Unlike the US, the EU economy is as trade intensive as China’s, and accounts for the largest share of world trade of the three. While China is experiencing a slowdown partly due to US actions against it, Europe is suffering just as much in collateral damage.

Europe’s growth rate has slowed to a trickle and has been markedly lower than the US’s for the past two years. Trade is not the only cause, but it is the most important one. The OECD has highlighted that European countries’ trade growth stalled last winter, both among themselves and with the outside world. Germany, the continent’s trade-oriented economic core, has been one of its worst performers over the past year. It saw gross domestic product shrink in the last quarter, its car production continues to plummet and industrial weakness has spread to other EU economies.

Worse may yet be to come.

As Shahin Vallée of the German Council on Foreign Relations warns, the US-China stand-off may intensify from trade war to currency war, with competitive devaluations adding to Europe’s export woes. The big question now is whether the crisis in tradedependent manufacturing will weigh on domestic confidence and reduce demand for the much larger services sector. There are signs this is already happening.

All this is bad enough, but it is only one of three possible traderelated shocks about to hit the EU. In addition to being a collateral casualty, Europe is at risk of becoming the next direct target of American trade aggression. The OECD’s chief economist, Laurence Boone, said in July that the trade war will move to the EU “probably at the end of the summer”. Mr Trump has been rattling his sabre in that direction for both French wine and German cars — the bloc’s single biggest agricultural and industrial export items. Trade flows between the two economies amount to more than $1tn a year.

The third risk is a no-deal Brexit on Halloween, which would throw up big trade barriers overnight.

Britain and Ireland would be the most hurt by this, but that does not mean the shock to other members of the bloc would be negligible.

If this trifecta of trade shocks materialises, the German car industry, which has big markets in both the US and the UK, will again be at the centre of the trouble. Given its importance in the German economy and its interconnections with the rest of Europe, the sector can act as a superconductor of shocks to other industries and countries. That is the lesson of the first of the three shocks; there is all the more reason to fear similar effects from the other two.

IMF officials in talks with Argentina government after market rout Fund’s staff to head to Buenos Aires amid fallout from Mauricio Macri’s setback in primary polls JAMES POLITI IN WASHINGTON

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MF officials are in talks with Mauricio Macri’s government in Argentina as it develops “policy plans” to tackle the brutal sell-off that has afflicted the Latin American nation since a primary vote this month foreshadowed a populist victory in upcoming presidential elections.

“We are closely following recent developments in Argentina and are in ongoing dialogue with the authorities as they work on their policy plans to address the difficult situation that the country is facing,” Gerry Rice, the IMF spokesman said on Twitter on Tuesday. He added that IMF staff would travel to Buenos Ai-

res “soon”.

Mr Macri, Argentina’s sitting president, suffered a severe blow in primary elections this month.

Alberto Fernández, a populist challenger, is now the clear frontrunner ahead of the presidential election set for October.

Mr Macri had negotiated a package of reforms that allowed Argentina to receive a $57bn bailout from the IMF — the largest in IMF history — which could be in peril if Mr Fernández were to secure control of the presidency in the autumn.

The rising chances of victory for Mr Fernández sent Argentine assets, including its currency, the peso, plummeting, jeopardising the economic stability that had returned to the country in recent months. www.businessday.ng

Coal industry stakes survival on carbon capture plan Is the technology more of a marketing stunt or part of the solution to global warming?

HENRY SANDERSON IN LONDON

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n late February Peter Coates, Glencore’s nonexecutive director, appeared at an event in Sydney to make a rare intervention from a mining leader — a full-throated defence of the coal industry, whose very existence is under threat because of its role in global warming.

“Our industry has allowed itself to be cast as the villain too often,” said Mr Coates, a veteran coal executive, at the mining industry event. “We have allowed the vacuum, about what we do and how we do it, to be filled by celebrity scientists and radical activists whose purpose is not to seek solutions but to divide and destroy.”

Six months later, the industry decided to take action to improve the image of the dirty fuel. Coal21, an industry body in Australia that is backed by 26 mining groups including BHP, Anglo American and Glencore, launched a new $4m advertising drive. It issued a tender for a campaign on Australian TV, social media, radio and print advertising, according to a document seen by the FT. “The campaign is targeted at men aged 18 to 39 and women aged 40 and over — ‘soft converters’ identified by previous research as having limited information about the Australian coal industry and open to being convinced of its future role,” the pitch says.

The core idea of the campaign is a technical fix — the concept that coal can be made cleaner by capturing the carbon emissions from coal-fired power stations and storing them underground.

These “low-emissions technologies”, as Coal21 describes them, are now the centrepiece of the $360bn coal industry’s efforts to ensure its survival — a push that supporters believe could play an important role

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in limiting global warming but which critics believe is an expensive exercise in reputationlaundering.

As well as the marketing push in countries such as Australia, carbon capture technologies have also received backing from President Donald Trump, who has pledged to revive coal mining in the country, as well as Congress, which has given tax breaks to those who install carbon capture and storage facilities.

But the coal industry’s lobbying has raised concerns among critics and investors, who say it is an unwise bid to prolong coal’s life in a world of ever cheaper renewable energy such as wind and solar. In addition, they say technologies to extract carbon from power plants are prohibitively expensive and better suited to other industrial sectors such as oil and gas production.

“It’s a very sophisticated media play — it’s just public relations. There is no such thing as clean coal, our reliance on coal is not compatible with a liveable planet,” Brynn O’Brien, executive director of the Australasian Centre for Corporate Responsibility, says. “It’s an industry in an existential fight and they will do whatever they can to survive.

They are making impossible a transition that will make the rest of the economy resilient with the inevitability of climate change.”

Technology to remove carbon emissions and bury them has been around for over 40 years, and is predominantly used in natural gasfields. The Sleipner gasfield in the North Sea, which started capturing carbon emissions in 1996, removes around 1m tonnes of CO2 every year.

As emissions rise, the technology has received renewed attention as a solution to global warming, especially for sectors such as steel and cement, which are energy intensive and hard to decarbonise because of the @Businessdayng

materials they use. Every tonne of steel, for instance, requires 800 kilogrammes of metallurgical coal, according to Glencore.

However, many in the energy sector are unconvinced about the efficacy of using the technology for coal. There are questions about whether carbon capture and storage should be put in coal-fired power plants because wind, solar and batteries are increasingly competitive on price.

Analysts at JPMorgan estimate that renewable energy is cheaper than coal in India, China and the US, the three largest coal-consuming countries.

“It’s not a wise use of resources,” says Simon Lewis, a professor at University College London. “It makes no sense to invest heavily in expensive technology that is itself energy intensive to strip the CO2 from the flue gas and pump it underground, just to keep on using coal when there are alternatives available.”

The World Coal Association, the coal industry’s main global lobbying organisation, defends the technology, arguing that it has “a proven 90 per cent capture rate of the CO2 produced from the use of fossil fuels in electricity generation and industrial processes”.

The International Energy Agency’s Clean Coal Centre in London says carbon capture and storage is needed for the simple reason that there are still so many coal-fired power plants in operation. Coal plants currently contribute around a third of CO2 emissions, and half of them are less than 15 years old.

Adding carbon capture technology “may significantly reduce or even neutralise CO2 emissions”, the IEA says.

It forecasts that meeting the Paris climate agreement’s target of keeping global warming “well below” 2 degrees will require some 210 gigawatts of coal-fired plants to be fitted with carbon removal technology by 2040.

Wednesay 21 August 2019

BUSINESS DAY

Live @ The Exchanges

POLITICS

MTN, other stocks lead NSE into the red zone Stories by Iheanyi Nwachukwu

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igerian stock market routed into the red zone on Tuesday August 20, 2019 as investors rushed to take profit in MTNN Plc and others.

The All Share Index (ASI) dipped by 0.21percent while the week-to-date (WtD) return still stood positive at 0.50percent.

Stock trading activities on the Nigerian bourse slowed down on Tuesday as volume and value traded depreciated by 16percent and 22percent respectively.

GTBank, Zenith and Nestle accounted for 35percent, 18percent and 16percent of value traded respectively.

The NSE ASI closed at 27,058.62 points as against preceding day’s 27,115.89

points.

Month-to-Date (MtD), the market has declined by 2.38percent; while yearto-date (Ytd) it is down at -13.91percent. The value of listed stocks decreased to N13.186trillion.

MTNN led the losers table on Tuesday after its share price moved from N138.7 to N132.6, losing N6.1 or 4.40percent; followed by Conoil Plc which declined from N17.65 to N16.8, after losing 85kobo or 4.82percent; while PZ Cussons dipped from N6 to N5.5, losing 50kobo or 8.33percent.

Although the market closed in red, all sectoral indices closed in the green and market breadth remained in the positive region for two consecutive trading days indicating positive investor sentiment on the local bourse, said Lagos-based analysts at Vetiva Securities.

Makinde tasks LG administrators on openness, accountability

Meanwhile, Nestle Nigeria Plc advanced from N1, 113.9 to N1, 121.2 adding N7.3 or 0.66percent; followed by Dangote Cement Plc which rallied from N164.5 to N166, after adding N1.5 or 0.91percent; while Berger Paints Plc advanced from N6.85 to N7.5, adding 65kobo or 9.49percent.

In 3,743 deals, equities dealers exchanged 209,620,775 units valued at N3.236billion. With most counters trading at their lowest points in 52 weeks, the analysts expect investors to take advantage and continue to position.

“However the direction of the ASI remains positively correlated with movement of market heavyweights (DANGCEM and MTNN), hence trades on them is expected to continue to impact the ASI,” Vetiva added.

REMI FEYISIPO, Ibadan

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ocal government administrators have been urged to be accountable to the people at the grassroots to make the leadership style operating at the state level cascade to the local government.

Oyo State Commissioner for Local Government and Chieftaincy Matters, Olufunmilayo Orisadeyi said this on Tuesday while hosting members of Conference of Local Government Administrators at his office in Ibadan.

Orisadeyi said for the people at the grassroots to key into the policies and programmes of the Seyi Makinde administration and give their maximum support; they should be carried along on what the local government administration has in stock for them.

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L-R: Taiwo Asaolu, former dean, faculty of administration, Obafemi Awolowo University, Ile-Ife; Oluwole Adeosun, 2nd vice president, Chartered Institute of Stockbrokers (CIS); Michael Itegboje, past president; and Rufus Olowe, head of department, Banking and FInance, University of Lagos, at CIS’ Executive Conversion Programme in Lagos.

Analysts still bearish in near term

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N13.1trillion.

Looking into this week, research analysts at FBNQuest said in their August 19 note that “The equities market remains weak and demand depth is very shallow. We expect this lacklustre trend to continue”.

“We expect sentiments to remain tepid as riskoff sentiment across the globe, culminated by sluggish domestic economic momentum dampens investors’ appetite for equities. However, the release of the outstanding banks’ half-year 2019 earnings

scorecard could possibly sway sentiments,” said research analysts at Lagosbased United Capital According to Vetiva research analysts, “We expect sentiment in the equities market to remain general weak, as a result of uncertainty around the global space and frequent oil price volatility to weigh on the market.” “We expect sell pressures to dominate in the near-term given the generally negative mood and absence of catalyst to spur investor interest”, said Afrinvest researchers in their recent note.

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She called for periodic stakeholders’ meetings between the local government and their respective communities so as to engender open government system which she said the incumbent governor held sacrosanct.

“While appreciating this visit, I want to call your attention to the need to carry along the people at the local government or the grassroots on the programmes and policies of the present administration.

The government in the state will always rely on your capacity to represent its interest in extending good governance to our people.

“No individual will fail to support government when the government is always carrying the individual along as regards its plans to develop the people and physical infrastructures,” Orisadeyi said.

Speaking on her capacity to perform as a woman commissioner, Orisadeyi said she

would like to rest the insinuation that she might not perform well at the ministry as a woman, assuring the people to expect excellence in her performance.

She asserted that she would bring to fore, her experience in administration and as a lawmaker at the Oyo State House Assembly in administering the ministry, adding that she believed she was a round peg in a round hole, having served as the chairman, House Committee on Local Government and Chieftaincy during her stint at the state House of Assembly.

Oyadeyi was the first woman to hold the office of the Commissioner of Local Government and Chieftaincy Matters.

The former Oyo Lawmaker appealed to the Local Government Administrators to cooperate with her and be diligent in the discharge of their duties for a better Oyo State.

APC talks tough, ask Ishaku to form cabinet in Taraba Nathaniel Gbaoron, Jalingo

look at some of the investment companies’ researchers’ reports on Nigerian equities show how bearish they are in the short-to-medium term.

In the trading week ended August 16, the Nigerian Stock Exchange (NSE) All Share Index (ASI) declined by 1.4percent to 26,925.29 points.

The review week’s year-todate (YtD) return touched new low of -14.3percent while market capitalisation lost N185.9billion to close the review week at

49

lose to three months after his inauguration as the governor of Taraba State for the second term, Governor Darius Dickson Ishaku is yet to constitute his cabinet to help run the the affairs of the state.

In this regard, Taraba State chapter of the all Progressives Congress (APC) has asked the governor to immediately constitute cabinet in order not to rob the state of development.

Ibrahim El-sudi, state (APC) chairman, made the demand Tuesday during a phone interview with Busi-

nessDay correspondent in Jalingo.

In another development, the state leadership of the party has urged the state governor to sign into law the 2019 Budget appropriation bill that was passed by the House of Assembly since February this year.

According to him, there was no reason whatsoever for Governor Ishaku to hold the state to ransom in this regard, as the delay is capable of endangering the economy of the state.

The APC chairman also expressed worry over the governor’s delay in accenting to the 2019 Budget appropriation bill that was passed into law since Feb-

ruary 2019.

He called on Tarabans to rise to the occasion and save the state and the citizens from what he described as danger against the development of the state.

Bala Dan-Abu, senior special assistant (SSA) to Governor Ishaku on media and publicity, however, opposed the position of the APC, claiming that the governor was only doing a thorough job to put the state on a part of ultimate development. He also asked the citizens to remain calm as the governor was doing his thorough job to select the best cabinet members for a smooth and good governance of Taraba State.

Insecurity: Buhari must urgently rejig security strategy - Group Iniobong Iwok

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group, Congress for Better Nigeria (CBN), has charged President, Muhammadu Buhari to urgently rejig his security strategies to check the worsening security situation across the country.

The group said the increasing wave of killings and kidnapping across the country pose a serious threat to the unity of the Nigeria.

In recent times, Nigeria has experienced renewed wave of banditry, killings, kidnappings, clashes between suspected Fulani herdsmen and farmers in the northern region. These

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have also spread to the Southern region.

But speaking in an interview with BusinessDay, Tuesday, Idowu Omolegan, national leader of the group, said the current administration adopted a wrong strategy to tackle the insecurity, which he said has failed.

According to him, “Let us be frank; the security situation is bad; the President must act; let him rejig the security apparatus; it has failed. Right now, we cannot distinguish between Boko Haram and herdsmen, and they are everywhere now, that is why Buhari is failing on security.

“The herdsmen are terrorising and he is talking of drones and CCTV; it would @Businessdayng

fail. Have they not tried it in the past?”

The group further said that President Buhari had no reason to fail in his second term in office, because of the cordial relationship between the executive and the current leadership of the National Assembly.

“We know there were those who worked against his government in the last administration; I mean some people sabotaging him; but now he has the support of the lawmakers, there is no reason for him to fail,” Omolegan added.

Speaking further, he condemned the recent call for revolution and protest

by Omoyele Sowore over alleged bad governance and mass poverty in the country.

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Wednesay 21 August 2019

BUSINESS DAY

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@Businessdayng

Wednesday 21 August 2019

BUSINESS DAY

51

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 20 August 2019

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 231,043.97 6.50 6.56 149 3,808,480 UNITED BANK FOR AFRICA PLC 201,776.59 5.90 3.51 190 5,919,560 ZENITH BANK PLC 546,298.99 17.40 2.35 589 34,106,092 928 43,834,132 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 179,476.46 5.00 7.53 199 6,320,813 199 6,320,813 1,127 50,154,945 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,699,008.43 132.60 -4.40 133 2,423,799 133 2,423,799 133 2,423,799 BUILDING MATERIALS DANGOTE CEMENT PLC 2,828,724.23 166.00 0.91 59 230,694 LAFARGE AFRICA PLC. 223,092.97 13.85 0.73 39 1,706,938 98 1,937,632 98 1,937,632 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 288,337.83 490.00 - 6 692 6 692 6 692 1,364 54,517,068 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 1 100 1 100 1 100 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 100 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 46,741.59 49.00 - 24 107,216 PRESCO PLC 44,800.00 44.80 - 4 3,910 28 111,126 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,350.00 0.45 - 12 268,645 12 268,645 40 379,771 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 661.82 0.25 - 3 61,600 JOHN HOLT PLC. 179.01 0.46 - 1 862 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 40,241.51 0.99 10.00 152 43,590,569 U A C N PLC. 15,126.81 5.25 9.38 84 2,149,368 240 45,802,399 240 45,802,399

BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 27,192.00 20.60 - 7 8,910 ROADS NIG PLC. 165.00 6.60 - 0 0 7 8,910 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,884.22 1.11 - 27 738,524 27 738,524 34 747,434 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 13,231.85 1.69 - 0 0 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 90,681.85 41.40 - 17 27,040 INTERNATIONAL BREWERIES PLC. 103,150.34 12.00 - 1 7,000 NIGERIAN BREW. PLC. 400,644.79 50.10 0.20 72 2,459,736 90 2,493,776 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 105,000.00 21.00 -0.48 165 3,285,190 DANGOTE SUGAR REFINERY PLC 109,200.00 9.10 - 65 496,598 FLOUR MILLS NIG. PLC. 56,585.24 13.80 - 46 163,111 HONEYWELL FLOUR MILL PLC 7,375.08 0.93 -6.06 25 890,907 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 33,382.92 12.60 - 20 466,398 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 321 5,302,204 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 17,467.28 9.30 - 24 99,401 NESTLE NIGERIA PLC. 888,726.19 1,121.20 0.66 95 470,301 119 569,702 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,366.12 4.29 - 14 115,270 14 115,270 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 21,837.62 5.50 -8.33 26 216,328 UNILEVER NIGERIA PLC. 160,285.65 27.90 - 14 33,897 40 250,225 584 8,731,177 BANKING ECOBANK TRANSNATIONAL INCORPORATED 114,684.70 6.25 4.17 139 24,211,637 FIDELITY BANK PLC 45,490.43 1.57 9.03 128 6,221,040 GUARANTY TRUST BANK PLC. 776,983.13 26.40 0.38 304 42,969,163 JAIZ BANK PLC 10,017.84 0.34 -2.86 7 539,450 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 69,097.00 2.40 - 13 609,517 199,477.16 6.85 -2.14 36 500,161 UNION BANK NIG.PLC. 8,065.64 0.69 6.15 3 272,709 UNITY BANK PLC WEMA BANK PLC. 22,758.93 0.59 3.51 24 2,109,129 654 77,432,806 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 150 4,435.33 0.64 -3.12 32 1,662,276 AIICO INSURANCE PLC. AXAMANSARD INSURANCE PLC 17,850.00 1.70 - 6 470,020 CONSOLIDATED HALLMARK INSURANCE PLC 2,439.00 0.30 - 0 0 CONTINENTAL REINSURANCE PLC 14,521.84 1.40 - 8 169,840 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 2 100,000 909.99 0.20 - 0 0 GOLDLINK INSURANCE PLC GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,123.80 0.29 3.57 12 324,950 LAW UNION AND ROCK INS. PLC. 1,546.68 0.36 9.09 5 216,500 LINKAGE ASSURANCE PLC 4,160.00 0.52 - 3 31,000 MUTUAL BENEFITS ASSURANCE PLC. 2,458.00 0.22 4.76 5 210,692 NEM INSURANCE PLC 10,613.81 2.01 - 7 147,000 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,583.62 0.48 - 0 0 REGENCY ASSURANCE PLC 1,333.75 0.20 - 2 8,010 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 6 235,279 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 4,817.79 0.36 2.86 26 1,096,501 115 4,672,218

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 2,446.70 1.07 - 2 20,500 2 20,500 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,158.00 0.99 - 1 300 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 1 300 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,500.00 3.75 4.17 32 448,062 CUSTODIAN INVESTMENT PLC 35,585.28 6.05 2.54 15 238,750 660.00 0.44 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 33,664.61 1.70 1.19 74 3,533,140 ROYAL EXCHANGE PLC. 1,131.98 0.22 - 0 0 STANBIC IBTC HOLDINGS PLC 348,178.80 34.00 0.74 41 808,562 UNITED CAPITAL PLC 11,760.00 1.96 3.16 84 2,288,323 246 7,316,837 1,018 89,442,661 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 781.69 0.22 -8.33 3 485,000 3 485,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 9,388.62 4.50 - 1 50 GLAXO SMITHKLINE CONSUMER NIG. PLC. 9,567.01 8.00 - 10 33,170 MAY & BAKER NIGERIA PLC. 3,295.20 1.91 -6.83 21 654,852 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 968.57 0.51 - 1 12,241 556.71 3.62 - 0 0 NIGERIA-GERMAN CHEMICALS PLC. PHARMA-DEKO PLC. 325.23 1.50 - 0 0 33 700,313 36 1,185,313 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 781.44 0.22 - 8 176,549 8 176,549 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 594.00 5.50 -5.17 2 77,124 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 1 3,000 3 80,124 PROCESSING SYSTEMS CHAMS PLC 1,080.09 0.23 9.52 18 2,783,359 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 10 184 28 2,783,543 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,215,762.01 323.50 - 12 775 12 775 51 3,040,991 BUILDING MATERIALS BERGER PAINTS PLC 2,173.68 7.50 9.49 11 149,309 CAP PLC 17,325.00 24.75 - 19 66,710 CEMENT CO. OF NORTH.NIG. PLC 190,580.76 14.50 - 7 15,510 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 37 231,529 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,483.46 1.41 -9.62 34 1,182,797 34 1,182,797 PACKAGING/CONTAINERS BETA GLASS PLC. 29,873.33 59.75 - 2 25 GREIF NIGERIA PLC 388.02 9.10 - 0 0 2 25 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 73 1,414,351 CHEMICALS B.O.C. GASES PLC. 2,547.42 6.12 - 2 4,300 2 4,300 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 2 2,245 2 2,245 4 6,545 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 11 541,700 11 541,700 INTEGRATED OIL AND GAS SERVICES OANDO PLC 47,860.94 3.85 10.00 31 821,227 31 821,227 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 9 567 CONOIL PLC 11,658.40 16.80 -4.82 47 296,785 ETERNA PLC. 3,260.36 2.50 - 20 264,079 FORTE OIL PLC. 22,142.18 17.00 - 35 232,071 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 1 41 TOTAL NIGERIA PLC. 35,921.41 105.80 - 50 31,117 162 824,660 204 2,187,587 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,499.47 4.24 - 2 2,500 TRANS-NATIONWIDE EXPRESS PLC. 361.01 0.77 - 0 0 2 2,500 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 1 1,543 IKEJA HOTEL PLC 2,972.68 1.43 - 2 59,000 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 1 100 TRANSCORP HOTELS PLC 41,042.18 5.40 - 2 1,015 6 61,658 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 211.68 0.35 - 0 0 LEARN AFRICA PLC 1,072.32 1.39 - 5 75,064 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 690.26 1.60 - 8 274,375 UNIVERSITY PRESS PLC. 13 349,439 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 497.31 0.30 - 2 17,400

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BUSINESS DAY Wednesday 21 August 2019 www.businessday.ng

Markets yield to fears of a global downturn The original fear gauge suggests that a recession may be looming but is it correct?

Robin Wigglesworth in Oslo

T

he nearest thing the global economy has to a doomsday clock ticked a little closer to midnight this week, triggering fear across financial markets. On Wednesday, the US yield curve — the slope formed by the interest rate paid by Treasury bonds of various maturities — turned upside down for the first time since the summer of 2007, with the US government now paying less to borrow for 10 years than two years.

Although seemingly obscure, the yield curve enjoys a cult following among investors as the leading market forecaster of recessions. Normally, countries should pay less to borrow money for shorter time periods. When this relationship flips it has historically been an omen of economic downturns — presaging every US recession since the second world war.

This week’s inversion rattled global stock markets even though the move was widely forecast, extending the FTSE All-World index’s decline in August to over 4 per cent as investors fret that the countdown to the next recession may now have begun.

“The yield curve is one of the best signals out there,” says Robert Michele, chief investment officer at JPMorgan Asset Management. “Its accuracy is eerie.”

The yield curve is essentially a reflection of the distilled wisdom of millions of investors, from individual savers, financial advisers and small Midwest banks to Middle East sovereign wealth funds, Asian insurers, European pensions and Wall Street money managers. If the economic outlook dims they tend to look for safety and buy government debt, pushing up their price and crimping their yields. But when long-term yields fall below short-term ones — which are more closely linked to the interest rates set by central banks — it indicates that investors foresee a downturn and imminent interest rate cuts.

President Donald Trump weighed in, blaming the Federal Reserve’s slowness in lowering interest rates for the “CRAZY INVERTED YIELD CURVE!”. Former Fed chair Janet Yellen downplayed the inversion, predicting that the US economy would avoid a recession, but conceding that “the odds have clearly risen and they’re higher than I’m frankly comfortable with”.

The yield curve’s ability to forecast recessions is hotly debated, but the inversion indisputably reflects the bond market’s mounting fears over a global economic slowdown.

The IMF last month trimmed its forecasts for global growth to 3.2 per cent for 2019 — which would be the lowest in a decade.

Some economists think even this is too optimistic. Trade tensions between the US and China, the world’s

The Porsche production line in Stuttgart. German economic output has gone into reverse © RONALD WITTEK/EPA-EFE/Shutterstock

two economic superpowers, have been ratcheted higher since the IMF’s latest forecasts. The German economy, the European powerhouse, has contracted, adding to the market alarm.

The most eye-catching manifestation of the anxiety is bonds trading with negative yields, with many countries — and even some companies — in practice now paid by creditors to borrow. The phenomenon picked up speed over the summer as expectations have risen that central banks will have to aggressively ease monetary policy.

Many investors predict that this move would prevent a slowdown from becoming a recession, and argue that panic over the yield curve is overwrought.

Nonetheless, a sense of gloom is spreading across markets, with few signs that the trade war will disappear any time soon. The longer the tensions linger, the bigger the toll on the global economy, and if they deepen then all bets are off, investors warn.

“We think it’s a manageable conflict,” says Bob Browne, chief investment officer at Northern Trust. “But if it becomes unmanageable and we have a full trade war, then that’s a risk that even the Fed can’t avert.”

The world’s central bankers meet next week on the outskirts of Jackson Hole, a rural town in Wyoming, for the annual monetary policy extravaganza thrown by the Federal Reserve’s Kansas branch.

The scenic location, first selected to appeal to former Fed chair Paul Volcker’s love of fly-fishing, has become one of the premier venues for a select group of policymakers, academics and investors to discuss the biggest economic issues. The slowdown and ways to address it will be prominent for those attend-

ing this year’s symposium.

Nearly $16tn worth of bonds are now trading with sub-zero yields, or about 27 per cent of the global total, according to Deutsche Bank.

Negative interest rates in Japan and Europe, coupled with the central banking bond-buying splurge, are big contributors to the odd trend of creditors paying borrowers. But the growing fear over the global economic outlook is also a big factor, analysts say, with investors willing to pay for the security of safer debt.

“No one has a playbook for negative rates,” Mr Michele says. “It’s uncharted territory, and that’s what makes central banks so uneasy.”

The US Treasury market has thus far remained untouched by the phenomenon. But with the Federal Reserve cutting interest rates last

”

People are extrapolating from weakness in manufacturing to services and consumption, and I just don’t buy it

month and expectations of more aggressive cuts to come, even the once unthinkable — negative yielding US government debt — has become at least feasible.

“There is international arbitrage going on in the bond market that is helping drive long-term Treasury yields lower,” former Fed chair Alan Greenspan said this week. “There is no barrier for US Treasury yields going below zero. Zero has no meaning, beside being a certain level.”

There is still some way to go before US government bond yields dip into negative territory. But this week’s yield curve inversion both reflects and exacerbates the current bout of nervousness surrounding the economic outlook.

There are many ways to measure the shape of the yield curve, such as comparing 30-year Treasuries to five-year ones, or 10-year yields to three-month Treasury bills — another popular measure that turned upside-down earlier this year. But the two-year, 10-year yield curve inversion that happened this week is particularly popular as an economic omen among many investors.

“Although other measures of the US yield curve have progressively inverted over the last few quarters, [the] 2s-10s inversion is the one that worries me most,” says Jim Reid, a senior strategist at Deutsche Bank.

“It has the best track record for predicting an upcoming recession over more cycles than any of the others.”

Adding to the pessimism, on Thursday, the 30-year Treasury yield went below 2 per cent for the first time ever, after China accused the US of “a severe violation” of their previous trade agreement, and said that it “will have to take the necessary countermeasures”.

Many investors argue the gloom is overdone. The global economy is

slowing, and trade wars are a major risk, but aside from the bond market’s amber warning light there are few concrete signs that a recession is looming.

That is especially true in the US, where jobs are still being created at a healthy clip and American household spending — arguably the single-biggest engine of the global economy — remains robust. Data released on Thursday indicated that industrial production contracted in July, but retail sales were much stronger than expected.

“People are extrapolating from weakness in manufacturing to services and consumption, and I just don’t buy it,” says Rick Rieder, global chief investment officer of fixed income at BlackRock.

Some analysts say the yield curve’s predictive powers are overstated or malfunctioning, because of the sheer amount of post-crisis bond-buying by central banks and pension funds. The Fed argues that it may be artificially depressing long-term bond yields and making the curve a less accurate harbinger of recession.

Moreover, the shape of the curve has been a poorer predictor of recessions outside of the US. Even there, the span of time between inversions and recessions has become progressively longer over the years. The post-second world war average lag between inversion and recession is about five quarters, but the curve inverted nearly two years ahead of the 2008 financial crisis.

Ashish Shah, co-chief investment officer for fixed income at Goldman Sachs Asset Management, says equity markets are far from pricing in a potential recession, despite the jitters. He argues that sagging bond yields are more reflective of the muted inflation outlook and expectations that central banks will once again do whatever it takes to buttress the global economy.

“The bond market’s takeaway is that if growth slows then central banks will act preemptively,” Mr Shah says. “And if it doesn’t then they won’t act aggressively to raise rates.”

For central bankers at Jackson Hole — and investors — the question they may have to confront is whether the global economy’s monetary superpowers have the ability to forestall any future recession, having already used up much of their firepower.

European Central Bank president Mario Draghi seems determined to launch one last big stimulus before he leaves the institution in October. But eurozone interest rates are already negative and the ECB is butting up against limits on how much government debt it can buy. Other central banks have also floored the monetary pedal, and while the Fed has some room to trim rates, it may not have enough to counteract a trade war-triggered global downturn.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.