BusinessDay 22 Aug 2019

NERC steers power sector to market contracts with tariff review ISAAC ANYAOGU

T

he Nigerian Electricity Regulator y Commission (NERC) is steering the power sector towards reactivating contracts

from July 1, 2019.

NERC’s projection allowed cost-reflective tariff from 2016 to 2019 and found that DisCos still recorded shortfalls despite the

...electricity bills to go up by 30% based on market pricing with projections for tariff review that will run till 2024, taking into account such variables as change in inflation, exchange rate and

gas prices.

According to details published on NERC website, obtained on Wednesday, August 21, NERC has undertaken a

minor review of the 2015 Multi Year Tariff Order (MYTO) for each electricity distribution company (DisCo) which will run from 2016-2020 but takes effect

Continues on page 38

businessday market monitor

Biggest Loser

Biggest Gainer NESTLE N1,200.00 7.03pc

OKOMUOIL N44.50 -9.18pc 27,352.94

Foreign Reserve - $44.18bn Cross Rates - GBP-$:1.21 YUANY-N 51.32 Commodities Cocoa

US$ 2,207.00

Gold

$1,513.80

news you can trust I **THURSDAY 22 AUGUST 2019 I vol. 19, no 377

₦3,837,981.23 +1.16 pc

$ 60.25

N300

Foreign Exchange

Buy

Sell

$-N 357.00 360.00 £-N 438.00 450.00 €-N 392.00 402.00

Crude Oil

I

FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

g

www.

Market

Spot ($/N)

I&E FX Window CBN Official Rate Currency Futures

($/N)

362.77 306.95

N

igerian President Muhammadu Buhari’s 43 cabinet ministers all have their work cut out for them.

But it’s four of them that will attract the most scrutiny as they set about their task of resetting the struggling economy of Africa’s largest oil producer.

First on that list, and perhaps with the most daunting task of all four, is Zainab Ahmed.

Ahmed retained the position of finance minister which she undertook in acting capacity for nine months, following the resignation of her predecessor, Kemi Adeosun, in September 2018.

Ahmed also gets additional re- See full list on p.4 sponsibilities for budget and national planning. This time, however, she’s the senior minister, a role that was formerly filled by Udoma Udo Udoma.

She had served in a junior role to Udoma as the minister of state for budget and national planning in Buhari’s first term before she

Continues on page 38

L-R: Umaru Ibrahim, managing director/chief executive, Nigeria Deposit Insurance Corporation (NDIC), and WI Seongbak, chairman/president of Korea Deposit Insurance Corporation (KDIC), display the Memorandum of Understanding (MOU) signed in Seoul, South Korea, to deepen the Deposit Insurance System (DIS) between the two bodies.

3M -0.09 14.78

NGUS OCT 30 2019 362.03

6M

5Y

-0.11

-0.14

15.33

14.33

NGUS JAN 29 2020 362.48

10 Y 0.04

20 Y 0.00

14.27

14.46

NGUS AUG 26 2020 363.53

@

g

Four ministers to watch as Buhari assigns cabinet portfolios OLUSOLA BELLO, CHUKA UROKO, LOLADE AKINMURELE, DIPO OLADEHINDE, MICHAEL ANI, Lagos, ONYINYE NWACHUKWU & TONY AILEMEN, Abuja

fgn bonds

Treasury bills

g

Atiku to Buhari: You lied on oath to contest presidential election …your petition lacks evidence to upturn my election, Buhari replies …as tribunal reserves judgment, to communicate delivery date FELIX OMOHOMHION, Abuja

T

he candidate of the People’s Democratic Party (PDP) in the February 23, 2019 presidential election, Atiku Abubakar, on Wednesday insisted that President Muhammadu Buhari lied on oath to seek clearance to contest

Continues on page 38

Inside GTBank mulls more East Africa acquisition, bullish on LDR target P.4

2

Thursday 22 August 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 22 August 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

3

4

Thursday 22 August 2019

BUSINESS DAY

news GTBank mulls more East Africa acquisition, bullish on LDR target Investors shun FG’s bonds as auction OLUFIKAYO OWOEYE & OLUWASEGUN OLAKOYENIKAN

T

ier-1 lender, Guaranty Trust Bank (GTB), says it is committed to meeting the 60 percent L o a n - t o - D e p o s i t Rat i o (LDR) target as recently directed by the Central Bank of Nigeria (CBN).

The bank’s LDR is currently at 57 percent and it is on track to growing its loan book by about N40 billion-N50 billion to meet CBN’s new LDR target by the September 30, 2019 deadline, Segun Agbaje, chief executive officer, GTBank, said on an investors’ conference call.

“An application of the 1.5x multiple on target sectors in the computation process could even drive the bank’s LDR above the new regulatory limit,” Agbaje said confidently.

According to the bank, it is ramping up efforts to grow its digital loan book, with related exposures now at c.N25.0 billion and NonPerforming Loan ratio at 0.07 percent.

“Targeted sectors for loan growth are manufacturing, retail, consumer lending, and telecommu-

nications,” he said.

On the mid-to-long-term growth prospects, Agbaje noted that the bank was open to exploring inorganic growth avenues that may also include potential acquisitions outside of Nigeria.

“In East Africa, we have to do one of two things; we either have to bring in capital or we have to think of acquisitions,” he said.

GTB already has operations in Kenya, Uganda, Tanzania and Rwanda, and will also consider ways of expanding existing businesses.

Commenting on the bank’s loan exposure to the oil industry, Agbaje noted that it was more concerned about its downstream exposures than it was on its upstream and midstream exposures.

“Sp e cifically, dow nstream exposures now account for 9 percent and 59.0 percent of total oil and gas exposures and NPLs, respectively,” he said.

Speaking on its noninterest income, the bank disclosed that it was yet to really scratch the surface on lines such as transactionrelated fees as it plans to boost its fee income to make up for lost revaluation gains.

“In addition, the bank

sees recoveries as a key part of its strategy for boosting non-interest income at least until FY’20. These recoveries relate to the initial IFRS 9 write-offs, part of which the bank expects to write back,” Agbaje said.

The management noted that impairments spiked in the second quarter because the bank took prudent measures on exposures that appear to be non-performing.

It is likely that the bank will pursue recoveries on these exposures.

On regulatory concerns, GTB said it expects the CBN to use more moral persuasion than fiat to drive lending as it does not anticipate a ban on banks’ investments in treasury securities or other measures that will destabilise the banking system.

“Overall, management does not see the policies of the CBN as negative for the revenue-generating capacity of the bank as the bank is about $1 billion long on its balance sheet and currently has no swaps,” he said.

GTBank expects the licensing of Payment Service Banks to increase competition in the retail space. It, however, believes that its brand, strong retail base, and digital offerings will support its market position.

records first undersubscription in 2 years OLUWASEGUN OLAKOYENIKAN

E

xpectations of higher yields o n N i g e r i a ’s local debt instruments on the back of rising global and local risks coupled with tight liquidity have undermined investor appetite for August Federal Government (FGN) Bonds as auction conducted Wednesday recorded its first undersubscription in 2 years.

Out of the N145 billion the Federal Government sought to raise through t h e D e b t Ma n a g e m e n t Office (DMO), across 3 i n s t r u m e nt s w h i c h a re re - o p e n i n g s, o n l y N 9 5 billion total subscriptions were recorded, implying the DMO undersold at a bid-to-cover ratio of 0.14x.

This is the first undersubs c r i p t i o n s i n c e Au g u s t 2017.

“There was a very weak demand at the auction,” said Nnamdi Olisaeloka, a fixed-income analyst at Lagos-based Zedcrest Capital Ltd. “Yields on Nigerian Treasury Bills have

become very elevated and that has dampened investor interest for bonds.”

The debt agenc y offered N40 billion for the five-year, N50 billion for the 10-year and N55 billion for the 30-year Bond with total subscription at N10.41 billion, N37.47 billion, and N47.21 billion, respectively.

Allotments were made to successful bidders at the rate of 14.29 percent for the five-year, 14.39 percent for the 10-year and 14.590 percent for the 30-year Bonds. This indicates the auction yields cleared c.63bps higher from their previous levels.

Yields on Nigerian fixed-income instruments have been trending higher to 15 percent as offshore investors continued to sell off their assets on gloomy global economic outlook driven by escalating trade tensions in the global market, a move which mounted pressure on Naira.

The local currency has been trading above N362 to a dollar in the Investor

NDIC signs Mou with Korea Deposit Insurance Corporation

T

he Nigeria Deposit Insurance Corporation (NDIC) has signed a Memorandum of Understanding (MOU) with the Korea Deposit Insurance Corporation (KDIC) on a wide range of issues intended to facilitate the robust implementation of the deposit insurance system in their respective jurisdictions.

Both institutions are key members of the International Association of Deposit Insurers (IADI).

The MOU was effected at an elaborate ceremony within the premises of the KDIC in Seoul, South Korea, on August 7, 2019.

WI Seongbak, chairman and president, signed on behalf of the KDIC, while Umaru Ibrahim, managing director/chief executive, NDIC, signed on behalf of the Corporation.

The ceremony was witnessed by the chairman of the Board of the NDIC, Josephine Ibironke Sokefun, and some of her colleagues who were on a study tour to the KDIC. Under the terms of the MOU, both parties noted the increasing globalisation and complexity of large financial institutions and the unique challenges they portend for

regulatory authorities and committed themselves to the promotion of communication, enhancement of existing levels of cooperation, provision of support, mutual understanding, and collaboration on areas related to the development of the deposit insurance systems in the two jurisdictions.

The MOU also provided for effective international working relationship between both agencies along with the enhancement of their roles in financial regulatory initiatives and policy deliberations.

There will also be periodic exchange of staff between both institutions and bilateral meetings on regular basis towards enhancing mutual understanding that promotes the development of the deposit insurance system (DIS) in both Nigeria and South Korea.

Reflecting on the visit, Ibrahim described the study tour and MOU signing as a deeply rewarding experience given the insight gained by both deposit insurers from the various technical sessions held during the visit.

•Continues online at www.businessday.ng www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

& Exporter (I&E) window of the foreign exchange market but appreciated ma rg i na l ly to N 3 6 3 . 7 7 per dollar on Wednesday after President Buhar i allocated portfolio to his cabinet members. “ Total subscriptions received from both Competitive and Non-Competitive bids amounted to N139.58 billion,” the DMO said in a statement which accompanied the auction results. “The strong demand from investors for the FGN Bonds offered at the Auction was in spite of the pre vailing tight liquidity experienced in the financial markets.”

According to Olisaeloka, DMO was not comfortable selling above where it cleared the auction and market players wanted higher yields.

“The expectations are that yields should keep trending higher towards y e a r- e n d , a n d w h e n yields get to attractive levels, they will meet their demands for the bonds at the secondary market,” he said.

Thursday 22 August 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

5

6

Thursday 22 August 2019

BUSINESS DAY

news Dubai records 28% increase in number of Nigerian visitors in H1 OBINNA EMELIKE

D

L-R: Gloria Enyinnaya, finance executive, Auldon Toys; Paul Orajiaka, chief executive officer, Auldon Toys; Vladimir Kivaka, chief executive officer, Polesie, and Alexander Subbota, international sales director, Polesie, during the memorandum of understanding signing to market Polesie Toys across Africa at the company’s factory in Belarus, recently.

Edo rallies stakeholders to check adulteration, diversion of petroleum products … as state meets burrow pit managers, tipper drivers over abnormalities in operations

E

do State commissioner for minerals, oil and gas, Joseph Ikpea, has reiterated the state government’s commitment to check adulteration and diversion of petroleum products in the state.

Ikpea said this when he led other members of the ministry on an unscheduled visit to Benin Depot of the Nigerian Pipelines and Storage Company Limited (NPSC) in Benin City, Edo State.

He commended the Depot management on the availability of petroleum products in the state, noting, “The Governor Godwin Obaseki-led administration will not tolerate adulteration and diversion of petroleum products.

“Whosoever engages in such acts, if caught, will be made to face the law. This government is people-oriented and will not allow the citizenry to suffer.

“We will clamp down on il-

legal refineries in the state and ensure that petroleum products available to residents are of top quality. As a government, our focus is to ensure that Edo people enjoy the dividends of democracy which includes the availability of petroleum products across the state.”

He said his team was at the depot for an on-the-spot assessment of its operations, noting, “We have heard that the Depot gets about three to four trucks per week which might not be enough to distribute across the state.

“We are here to ensure that the challenges facing the depot are addressed and ensure the depot runs on optimal level as we have been told that the pipelines are functioning but facing issues with vandals.”

The superintendent, Benin Depot, Atikpo Andrew, who represented the depot manager,

Gage Awards to reward outstanding players in Nigeria’s digital ecosystem AKUDO OKORO

G

ageAwardsissettolaunch its maiden awards’ ceremony next year, in a move that seeks to help hasten the pace ofhumandevelopmentinNigeria and Africa at large through innovation,inspiration,entertainment and business.

TheGageAward,aplatformthat aimstoshedlightandrewarddigital activities, is poised to recognise and reward outstanding players that have contributed immensely to Nigeria’s digital industry.

The conveners of the award stated, “We have set up such an award at this time to ensure the enormous resources that are available in the World Wide Web is geared to the development of human good, especially in Africa.

“There are lots of interesting happenings online and the time for that space to have a proper standard that would drive growth

and inspire new talents is now.

The Gage Awards seeks to raise that standard and reward brands and individuals who have used thedigitalplatformtosimplifyand make lives better.”

Initsmaidenedition,theGage Awards will reward 24 categories, with winners of six of these categories to be determined by the public.

To ensure a fair selection process, nominees from different categories will go on to become winnersafteraseriesofrigorousauditing processes that will be managed by industry professionals.

Speaking further on the Awards, head of the organising committee Adetukasi Adedayo, said, “We are excited to be heralding this initiative that recognises the achievements and successes of our counterparts from various industries in the digital space. We hope that thiswill be a tradition for years to come.”

thanked the commissioner and his team for the visit. He said the depot is faced with several challenges, which affect its operations.

He noted that collaboration with the host community and the state government, the management of the depot was checking vandalism.

The commissioner also visited headquarters of Zone 5 of the Nigeria Police Force in Benin City, where he sought the cooperation of relevant security agencies to check the activities of vandals of petroleum pipelines in the state.

Meanwhile, the state government has expressed concern over what it described as challenges and abnormalities observed in the operations of burrow pits in the state.

Commissioner Ikpea, who said this in Benin City, explained

that a meeting had been scheduled for stakeholders in the sector to address the challenges.

The commissioner said: “Following series of challenges and abnormalities discovered in the operations of burrow pits in the state, all burrow pit operators are invited to a meeting with the Honourable Commissioner for Minerals, Oil and Gas slated for Thursday 22nd of August, 2019 at 1pm prompt.”

He said, “The venue for the meeting is the office of the Honourable Commissioner, Ministry of Minerals, Oil and Gas, Ezoti Street, Benin City.”

Hon. Ikpea further said that similar meeting will be held with tipper drivers on Thursday August 22, 2019 at 11am, as there are “series of abnormalities discovered in the haulage of minerals including sand through and within Edo State.”

NNPC GMD, Midwestern meet, identify solutions to sector’s challenges DIPO OLADEHINDE

A

s part of efforts to collaborate effectively in ensuring timely resolution to challenges of Nigeria’s oil and gas industry, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, recently met with the management of Midwestern Oil and Gas Limited.

The meeting held at NNPC headquarters Abuja provided a platform to chart a path towards the industry’s success.

The Group Managing Director/ CEO of Midwestern Oil & Gas CompanyLimited,CharlesOdita, who declared support for the new GMD’s transformation agenda, enumerated some challenges faced by operators in the industry.

Odita noted that the current spate of pipeline vandalism coupled with a high rate of crude theft was stunting the sector’s growth.

According to Odita, “As much as over 40 percent loss of crude

www.businessday.ng

was experienced about three months ago and this amounts to significant revenue loss to companies and the government.” He acknowledged the government’s efforts towards addressing this issue and urged that more effort be put into this to tackle and reduce if not eradicate these thefts.

In addition, Odita identified Over Riding Royalty Interest (ORRI) computation as another major challenge confronting the industry, noting that in the past, when the laws were written, it was stated that ORRI payment was based on production at the wellhead. As at then, this was exactlythesamevolumeasinjection at terminal.

Over time, companies have recorded significant difference between wellhead and terminal injection due to losses and crude theft as such he proposed that NNPC should compute ORRI based not on wellhead production volumes but on terminal injection.

https://www.facebook.com/businessdayng

ubai, a foremost tourism destination in the gulf region, has announced a 28-percent increase in the number of Nigerian visitors to the country in the first half of the year.

According to the latest data released by Dubai’s Department of Tourism and Commerce Marketing (Dubai Tourism), the city welcomed 8.36 million international overnight visitors in the first six months (January-June) of 2019, with Africa showing strong growth with 9 percent increase in terms of visitor numbers.

However, the impressive increase in the number of African visitors to Dubai, according to Dubai Tourism data, was bolstered by the 28 percent growth from Nigeria, which it described as one of the rapidly growing emerging markets in Africa.

With the record increase, Nigeria is now in Dubai’s top 20 international visitors’ bracket for the first time in 2019. Explaining the reason for the swelling visitor numbers, Dubai Tourism noted that in the first six months of 2019, the city continued to focus on providing its residents and tourists a plethora of firstclass entertainment offerings and attractions, including the opening of the Coca-Cola Arena, the region’s largest multipurpose indoor entertainment centre with a capacity to hold 17,000 visitors, and the Quranic Park, which spans over 60-hectares with two

mainattractions,TheGlassHouse andTheCaveofMiraclesthatoffer holistic understanding of the city’s Islamic heritage, among others.

According to Helal Saeed Almarri,directorgeneral,DubaiTourism, “Our first-half results are a particularly encouraging reflection of our progress towards this ambitionandunderlinetheeffectiveness of our diversified market outreach with holistic ‘awareness to booking’ cycle content amplification and audiencedelivery,throughadeeply networked ecosystem of global partners,industrystakeholdersand government enablers.”

At the global level, India once again led the pack, drawing the highest half-year volumes with 997,000 visitors, Kingdom of Saudi Arabia emerged second largest feeder market with 755,000 visitors, while the UK was the top three traffic driver with 586,000 travellers beating all odds against a significantly devalued British Pound (vs. US Dollar), amidst growing political and economic turbulences surrounding Brexit.

As well, the United States made the seventh spot with 329,000 visitors, marginally up from 327,000 visitors in H1 2018.

The new figures reinforce the continued strength of Dubai’s tourismsectorasakeydriverofeconomic diversification and a reliable catalyst for GDP acceleration through 2020. The largest traffic generators andnewerhigh-potentialsegments havesetastrongpreparatorypaceto fuel Dubai’s climb to becoming the most visited global destination.

Gas poised as notable power source in sub-Saharan Africa MIKE OCHONMA

G

as is positioned to be a notable contributor to an increased electrification access rate in sub-Saharan Africa (SSA), says GE Gas Power sub-Saharan Africa commercial executive, Nosizwe Dlengezele-Motsitsi.

She says gas could also potentially replace oil, which is its costlier and less environment-friendly counterpart for use in power generation in most countries.

“We’ll see the generation mix continue to shift substantially more towards renewables, but natural gas generation complements the mix best through its being dispatchable, flexible, affordable and fast power,” she states.

According to the Oxford Institute of Energy Studies 2019 ‘Opportunities for Gas in sub-Saharan Africa’ report, the liquid petroleum gas (LPG)-to-power solution should be fast-tracked to counter rising power unavailability. Moreover, a rise in energy demand, owing to cooler weather conditions in South Africa, should be expected.

Nigeria, Angola, Tanzania, Mozambique and Senegal have gas reserves that are large enough for export to neighbouring countries, while Equatorial Guinea, Angola, Nigeria and Cameroon are key exporters of liquefied natural gas (LNG). @Businessdayng

Dlengezele-Motsitsi asserts that these opportunities in gas present the potential use of aero-derivative gas turbines such as GE’s trailer-mounted turbine, the TM2500.

The TM2500 turbine is a re-engineered jet engine that would normally power a large aircraft. GE calls them “aero-derivatives” because of their aviation pedigree, as each turbine can generate up to 35mw. Notably, the containerised TM2500 can be brought up to full power in as little as ten minutes.

The turbines are borne from market-leading technology developed by GE Aviation, and their jet engines comprise a fan to provide thrust, a compression section to bring air to high pressure, a combustion chamber where fuel is injected and the turbine section where combustion gases are expanded.

GE’s aeroderivative portfolio features highly flexible and mobile technologies for use in a variety of applications. Aeroderivative gas turbines provide cleaner and more affordable power, support grid stabilisation and have lower emissions.

They can also be installed quicker – in as little as a few weeks to help alleviate frequent outages, making them especially well-suited to countries in Africa.

Thursday 22 August 2019

BUSINESS DAY

7

news

Kumuyi, others to address youths at Deeper Life success camp 2019 Seyi John Salau

D

eeper Christian Life Ministry has announced its annual National Youth Success Camp (NYSC) 2019 with the theme, ‘Preparing for a Secure Future’.

In a statement announcing the event, Peter Elias, national coordinator of the youth arm of the church, said the Success Camp would feature “Complete transformation, developing excellence, digital awareness, success insight, empowerment discovery, heart talk, future skills and lots more”.

Explaining the genesis of the programme, Elias said: “The Convener, William Folorunsho Kumuyi, pastor and general superintendent of the Deeper Christian Life Ministry, more than thirty years ago started Free Vacation School to assist students of secondary schools and colleges in Mathematics as a renowned expert in the field and to make the most of the holiday period through Godly transformation.”

A c c o r d i n g t o E l i a s, “Over the years, this event has evolved into an annual summer camping programme called ‘Success Camp’. As the name suggests, the overall goal is to unravel secrets of success to young people based on Godly, scriptural values.”

He further explained that the aim was to prepare youths for the jobs

of the future.

The national coordinator also disclosed that this year’s programme would hold simultaneously in major cities of Nigeria and other countries in Africa from August 27 to 31, 2019, and would be residential.

He urged the youth to “Join Pastor Kumuyi as he leads other anointed men of G od, seasoned technocrats, reputable professionals and erudite teachers to unravel the ke y t o t h e u n b e at ab l e life, success principles, life skills and leadership nuggets.”

The organisers of the programme also said a m o ng o t h e r re s ou rc e persons and organisations that would impart knowledge in the participants is Konverge Media Limited, which would train the participants on Google Digital Skills leading to becoming a certified Google Digital Skill Personnel. “ I n t e re s t e d p a r t i c i pants should contact the nearest Deeper Life Bible Church in their neighbourhood for full details about the venue of the s u c c e s s c a m p n e a re s t to them. Participation, including registration, accommodation, feeding and transportation to the venue is free. There is adequate arrangement for the safety and security of all participants,” Elias said.

“Youths are invited to come, learn and secure a glorious future”, he further said.

Oil/gas, tech, financial services top prime office demand drivers in H1Y

… as market expects fresh 110,000sqm amid 61% vacancy rate CHUKA UROKO

T

hough the real estate market in Nigeria witnessed transactional movements in the first half of 2019, demand activity in the A-grade segment of the market slowed relative to that of second half of 2018, when a number of large transactions were concluded, especially towards the end of the year.

But this is understandable given that, unlike other segments of the market, there is clearly an oversupply of office space and demand is such that much of it came from just a few oil and gas, tech and financial services companies.

Available statistics reflecting the situation in the market show that year-to-date (YTD), a total of 33,000 square metres

Gbemi Faminu

… advocates improved economy

N

that cannot be sufficiently produced at the moment.

Speaking during a courtesy visit to BusinessDay head office in Lagos, Aliyu, who was also the former president of the Kaduna Chamber Of Commerce and Industry (KCCI), said Nigerian firms and foreign investors were pumping money into the mining sector.

She urged the government to pay adequate attention to the sector, adding that efforts were ongoing, including partnership with the World Bank, to encourage and boost local mining in line with global best practises.

Aliyu was joined by Ayoola Olukanni, NACCIMA directorgeneral; Dele Oye, and Chinaza Ezeoke, NACCIMA brand manager. According to Aliyu, BusinessDay has continued to play the role of information disseminator for the public, providing the citizenry with unbiased information that has formed the basis of the partnership, as the media are the tools through which organisations www.businessday.ng

H2:2018 reveal one-off transactions in the oil and gas industry in response to the ramp-up in global oil prices.

“Large transactions, such as 10,000 square metres in a single take-up, were recorded in a market that had mainly witnessed take-up in the 250 – 500 square metres range,” explained Nnenna Alintah, head, Broll Property Intel Nigeria.

BusinessDay had earlier reported, based on interaction with developers and sector analysts, that the first six months of 2019 was a defining moment for the real estate market which had been on the throes of recession until the first quarter of the year when a 0.93 percent growth pulled it out of recession after 12 straight quarters of negative growth.

The report quoted Gbenga

Olaniyan, CEO, Estate Links, as saying, “we have seen movements in the market; we may not see what we had in 2008 nor the boom days of 2011 to 2013, but what we see happening now are increased activities and deal closures in the market.”

But this viewpoint agrees with the new Broll Property report, differing only in landlords’ attitudes and reactions in which case most of them still perceive the market to be a tenant’s market and, therefore, continue to offer competitive leasing terms to prospective tenants.

“This is done on a case-bycase basis, especially with the anticipated increased market supply. It is more so the case with developers who have debt servicing obligations associated with their properties,” Alintah noted.

L-R: Mobola Akinkugbe, partner, AO2 Law; Nwamaka Onyemelukwe, public affairs and communication manager, Coca-Cola Nigeria Limited; Solape Hammond, co-founder, Impact Hub Lagos; Frank Aigbogun, publisher/CEO, BusinessDay Media, and Simi Lawoyin, founder, JASS Academy, at the ongoing 2019 BusinessDay CEO Apprentice Entrepreneurship Programme for Teenagers in Lagos, yesterday. Pic by David Apara

NACCIMA canvasses formalisation of artisanal miners to unlock potential igerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has called on the Federal Government to legalise and formalise illegal miners to enable them steer the economy.

Dele Oye, second deputy president of NACCIMA, said Nigerians must take a cue from Ghana to encourage small-scale mining among citizens.

According to Oye, power is partly responsible for the poor competitiveness of locally produced goods, as it is necessary for the government to establish boards that will include private stakeholders and various chambers to ensure unadulterated decision-making.

Saratu Iya Aliyu, national president of NACCIMA, who spoke on the backdrop of the Federal Government’s proposed restriction on food items, advised that there should be plans and procedures in place before restricting food items

were completed while 110,000 square metres space are under construction and expected to be completed and offloaded into the already saturated market by year-end.

Construction work on 64,000 square metres of office space has been placed on hold with no foreseeable timeline and schedule for future completion.

Year-to-date gross absorption stands at 11,600 square metres while vacancy rate has risen to 61 percent, up from 57 percent in the last quarter of 2018.

These were negative reflections of the market within the period under review, but Broll Property Intel Nigeria’s new ‘office market viewpoint’ notes that while this is the case, the indicators are not necessarily a major drawback as further analysis into the transactions closed in

are being heard.

The new NACCIMA president promised that the administration would focus on positioning agriculture as the preferred business, specifically targeting the youth as well as fostering a strategic partnership with institutes, such as the International Institute of Tropical Agriculture (IITA), to develop and implement innovative solutions across the agric value chain.

Olukanni said the mining sector was projected to increase its contribution to GDP growth by 2025, adding that it was a big asset and a thriving business in the future, and urged the government to create an enabling environment for it to thrive locally.

Frank Aigbogun, publisher of BusinessDay, who was excited at the proposed partnership between NACCIMA and BusinessDay, expressed his delight and looked forward to having an interesting relationship that would be valuable to both parties.

Why inclusion of emerging chronic illnesses is key to attracting residents to LHIS Temitayo Ayetoto

S

elling health insurance scheme successfully to citizens may need to move beyond coverage of familiar infectious diseases to coming to terms with the reality presented by emerging chronic illnesses, which treatment requires continuous payment.

Laudable as the Lagos Health Insurance Scheme (LHIS) is, the impression among some stakeholders and healthcare providers who spoke with BusinessDay is that residents will be more attracted to the scheme if it extends coverage to non-communicable diseases that have become the nightmare of some Nigerians.

The LHIS caters for family planning and counselling, adolescent reproductive healthcare, health education, emergency health services, antenatal and postnatal care. It also covers normal delivery and caesarean section, prevention of mother to child transmission of HIV, im-

https://www.facebook.com/businessdayng

munisation, growth monitoring and promotion and management of childhood illnesses.

These areas constitute 63 percent of mortality factors, which receives the most inflow of out-ofpocket health expenditure.

But emerging challenges including cancer, diabetes, hypertension, chronic kidney disease, chronic liver disease, cardiovascular and certain types of dental problems and surgeries are not covered. The World Health Organisation (WHO) in 2018 estimated that they account for 29 percent of all deaths. These diseases have been found to have an increasing impact on the health status in populations, with higher rates in developing countries, and constitute the leading cause of mortality worldwide.

“Part of the major challenge is that most of the services that are being provided are services that people can somehow pay for without having to buy insurance,” Oluwajimi Sodipo, the vice-president, Medical Guild, @Businessdayng

said. “If you are just going to treat yourself once, it is possible to still be able to pay for it. People that have chronic medical illnesses definitely find it difficult to pay for those services. They have to ensure that the coverage of services that they provide attract these people to the scheme.”

The LHIS is a mandatory programme that targets all registered residents of Lagos under a N3,850 monthly plan per family of six and N8,500 yearly for single persons. To guarantee operational funding for the Lagos State Health Management Agency (LASHMA) in including all stakeholders in the formal and informal sector, it became a law.

The law created equity fund that is a minimum of 1 percent of the consolidated revenue of the state to take care of the very poor people. According to sources in the state government, the agency used some fund in the first of 2019 to enrol people confirmed by an assessment to be poor slum dwellers.

8

Thursday 22 August 2019

BUSINESS DAY

news

Sanwo-Olu harps on judiciary impartiality … as Alogba sworn in as 17th CJ JOSHUA BASSEY

G

overnor of Lagos State Babajide Sanwo-Olu says impartial judiciary is critical in his administration’s quest to taking the state to greater heights.

Sanwo-Olu spoke on Wednesday while swearing in Kazeem Alogba as the 17th Chief Judge (CJ) of Lagos State, saying his administration would strengthen the cordial relationship between the executive and the judiciary, without eroding impartiality and independence the courts.

According to Sanwo-Olu, the government will also support the judiciary to enable it provide the needs of judicial officers and discourage the people to recourse to self-help.

The governor said the ultimate goal of the judicial reforms, which the new chief judge has been part of, was the need to ensure speedy delivery of justice to all parties irrespective of status,

stressing that this was the only way to strengthen the confidence of our people in the justice system.

Sanwo-Olu, who congratulated Alogba on his appointment, said: “I wish to use this opportunity to declare the total support of the executive arm. The objective to achieve a ‘Greater Lagos’ would not be possible without having impartial and independent judicial arm of government.”

Alogba, an indigene of Ikorodu, has been presiding over the affairs of the state judiciary in acting capacity since June 13 before his ratification by National Judicial Council (NJC).

The new chief judge while speaking said his tenure would witness transformation of judicial arm of government, promising to create what he described as “smart judiciary”. This, he said, would be achieved by deploying technology tools that would enable the courts to dispense complicated cases on time.

www.businessday.ng

Importers, exporters stranded as NCS shuts Seme, Idiroko borders AMAKA ANAGOR-EWUZIE

T

housands of importers and exporters from Nigeria and other West African countries that rely on land border to bring in or take out their consignments were on Wednesday stranded at theSemeandIdirokobordersafter theNigeriasecurityoperativesshut down the borders for joint security exercise.

BusinessDay gathers that the joint security operatives led by the Nigerian Customs Service (NCS) and the Nigerian Immigration Service (NIS) have in collaboration with the Armed Forces of Nigeria(AFN)aswellastheNigeria Police Force (NPF), launched an intelligencegatheringoperationby conducting a joint border security exercise, codenamed “EX-SWIFT RESPONSE”.

A statement by Joseph Attah, national public relation officer of NCS, said the operation was part of the measures put in place by the government to secure Nigeria’s land and maritime borders from smuggling and other nefarious activities.

He said the joint security 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,NorthCentral and North-West.

However, it was gathered that the exercise had led to the closure of Nigerian borders to human

movement, import and export businessesbetweenneighbouring countriesofBeninRepublicwhere a good number of Nigerians travel through on daily to access markets in both Benin, Togo, Ghana and Ivory Coast.

A source close to the Nigeria Customs Service, Idiroko command, who spoke on anonymity, confirmedtheclosureoftheborder to our correspondent.

The source said that vehicular movementinandoutoftheborder has been stopped by the security operative.

When asked when the blockage will be lifted, the source said, “I don’t know but I know that the operation is led by the Nigeria Customs Service.”

LasisFanu,chairman,AssociationofNigerianLicensedCustoms Agents (ANLCA) Seme border chapter, confirmed the closure of the border.

He said the exercise had made travellers stranded at the border as businessactivitiesatthetwoborder stations remain standstill.

“When the Federal Government decided to do something, there is nothing anybody can do about it. They (Customs) just informedusandtheysaidweshould continuewithournormalbusiness butunfortunatelythenormalbusiness is not happening because everything is standstill,” he said.

Fanu, who decried the closure of the border, wondered why Nigeria that is a signatory to many protocols shut down its borders.

https://www.facebook.com/businessdayng

Bargain hunting sees MTN market share position short-lived … Dangote returns as market leader DAVID IBIDAPO

B

arely a day after MTN Nigeria was announced as the new most capitalised company on the Nigerian Stock Exchange (NSE), its stock reversed gains to see former “defending champion” Dangote Cement assumes once again market leader by capitalisation.

Bargain hunters, who took advantage of an imminent official inclusion of MTN on the MSCI index that saw sustained bullish run of Nigeria’s biggest foreign direct investment (FDI) stocks sold off on perceive most preferable exist price.

Due to sell offs witnessed during trading that saw the Nigerian All Share Index (ASI) shed by 0.22 percent in value on Tuesday, MTN stocks slumped 4.4 percent to N132.60 from a previous close of N138.70 at the end of trading.

This saw the telco giant’s lose in market value N124.135 billion to settle at N2.699 trillion, relinquishing the recently assumed most capitalised firm on the Exchange to formal title holder, Dangote.

Dangote cement, Nigeria’s biggest cement producer on the other hand maintained a 3-day bullish run gaining 1.23 percent, 0.30 percent and 0.91 percent respectively to outperform the Telco giant by a market value of

@Businessdayng

N130 billion to settle at N2.829 trillion at the close of trading on Tuesday.

“It is an interesting race to watch out for,” Gbolahan Ologunro, analyst at CSL stockbrokers told BusinessDay. This race isn’t likely to end soon as both companies’ performances would be driven by strong fundamental and perceived growth prospects.

Although the end of trading on Wednesday saw investors push up by 2.56 percent MTN market value to N2.707 trillion against N2.699 trillion it settled at the previous day, gains were not sufficient enough to displace the cement giant as the most capitalised firm on the exchange.

Dangote cement on the other hand remained flat after a 3-day gain streak at N166 with a market cap of N2.829 trillion according to data obtained from the Bloomberg terminal.

MTN, being a technology driven company while Dangote Cement, a potential solution to Nigeria’s housing and infrastructure deficits amid rising population still hold potential for growth in earnings, hence strong fundamentals.

Current market rout fuelled by general negative sentiments of investors however remains a critical force weighing down performance of bellwethers in the market, forcing low prices and year returns to investors.

Thursday 22 August 2019

BUSINESS DAY

RESEARCH&INSIGHT

9

In association with

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

briu@businessday.ng

08098710024

Performance analysis of players in the Nigerian brewery industry ISAAC ESOWE

T

billion in Q3’2018 to N31.5 billion in Q3 2019, while gross profit margin fell from 33.7 percent last year March to 31.1 percent same period this year.

Operating profit followed the same path as it fell by 31.3 percent from N10.7 billion to N7.33 billion during the reference period. Profit after tax fell by 16.4 percent to N4.25 billion compared with N5.09 billion in similar period in 2018.

The half year unaudited financial statement of Nigeria Breweries Plc (NB) showed a consistent decrease across all the metrics. Revenue for the period was flat at N170.19 billion as against N172.7 billion the company made in same period in 2018. But the cost of goods sold witnessed a marginal increase of 2.03 percent from N96.6 billion to N98.5 billion during the period. Essentially, the cost of goods sold to revenue was up to 58 percent from 56 percent in corresponding period in 2018.

Consequently, gross profit declined to N71.7 billion in June 2019 down from N76.1 billion in June 2018. That resulted in a gross profit margin of 42.1 percent in June this year as against 44.1 percent in June 2018.

Operating profit was down by 22.6 percent from N31.6 billion to N24.5 billion during the reference period.

Similarly, profit before tax fell to N19.41

billion down from N18.4 billion in corresponding period in 2018.

The brewery industry has been facing a number of challenges which are already weighing on the profitability of players in the sector. The challenges of the breweries industry have been for a while. After the release of its full year audited report for the period ended December 31, 2018, a leading investment house, United Capital stated as follows: “After sustaining an average revenue growth of 6.5% over the last five years, NB’s revenue declined in FY-18, despite gradual improvements in the broader economy in 2018. Revenue growth saw a considerable amount of pressure as the impact of growing competition in the brewery space, limited price increases and strains on consumer wallet took its toll on volume growth. According to management, while the premium segment of the market continues to expand with Heineken growing by double-digit, the mainstream segment remains under challenge as consumers shift to value brands. Additionally, volume declines impacted fixed cost coverage negatively as Cost-to-Sales ratio worsened to 60.9% from 58.4% in FY-17. Thus, gross income fell by 11.6%y/y to N126.9bn. Notably, due

to the Oligopolistic nature of the industry, NB was unable to pass on the full impact of the graduated excise duty to consumers, especially in its mainstream and value segments, as it reversed its initial price increase in Jul-18 due to a refusal of competitors to follow the trend.

“Bottom-line numbers were further pressured by the sharp fall in Other Income by 60.5%y/y, with higher Operating Expenses inching higher by 2.5y/y. The decline in Other Income was traceable to the absence of extra-ordinary income from insurance claims which had boosted 2017 numbers. Also, increases in personnel cost, one-off cost as a result of rightsizing activities engaged by the company during the year and sales support cost, drove OPEX higher. Meanwhile, Net finance expense reduced significantly as FX losses moderated sharply from N5.0bn in 2017 to N648.9mn in 2018. This was on the back of a sharp decline in its net foreign currency transaction exposure.

Overall, PAT fell by 41.2%y/y to N19.4bn in 2018 and net margin deteriorated by 3.6% to 6.0%. NB maintained a 100% dividend payout ratio observed since 2015 with DPS totalling N2.43/share”, United Capital, one of the leading investment firms in Nigeria stated in a note to stakeholders.

12734BDN

he breweries industry is listed under the consumer goods sector of the Nigerian Stock Exchange (NSE). The beer industry comprises four listed players which are the International Breweries Plc, Golden Guinea Breweries Plc, Guinness Nigeria Plc and Nigeria Breweries Plc. The figures collated from the financial statements of each player were used in analysing their performances; essentially, as this would help ascertain whether these companies are improving or deteriorating, and also measures the financial standing of the players when compared with the industry average. Additionally, it is to compare a company to one or more other companies operating in its sector to see how they fare.

Based on the half year 2019 interim results of International Breweries Plc, H1 2019 revenue was up by 29 per cent to N68.6 billion from N53.1 billion in June 2018; cost of goods sold increased by 41 per cent from N31.2 billion in 2018 to N45.4 billion while gross profit grew by 11 per cent from N20.9 billion to NGN23.2 billion.

Cost of goods sold expressed as a percentage of revenue rose from 61 percent in June 2018 to 66 percent in June 2019, meaning that it cost the company more to sell its products during the reference period.

Additionally, profit margin deteriorated further from -5.36 percent to -9.97 percent in June 2019 consequent upon the loss after tax of N6.84 billion in June 2019 as against a loss after tax of N2.85 billion in corresponding period in 2018.

The unaudited third quarter financial statement for Guinness Nigeria Plc for the period ended March 30, 2019 showed a slight decline in revenue by 4 per cent from N105.48 billion in Q3’2018 to N101.4 billion in Q1’2019. When analysed by regions, the decline in sales came primarily from domestic market while the export market witnessed some improvement. Domestic sales in the nine months ended March 2019 fell to N95.57 billion compared with N99.86 billion in similar period in 2018.

On the contrary, export rose to N5.83 billion up from N5.62 billion during the reference period.

During the reference period, the cost of goods sold remained flat at N69.898 billion in Q3 2019 as against N69.898 billion in corresponding period in 2018. Gross profit dipped by 11 per cent from N35.59

WIDE OPEN MINDED RMB Nigeria. Solutionist Thinking.

www.businessday.ng

Rand Merchant Bank Nigeria Limited is an Authorised Financial Services Provider

https://www.facebook.com/businessdayng

We believe in stretching ourselves.

In broadening our horizons and embracing the unconventional to consider every possibility. Solutionist Thinking means deliberating together and collaborating with our clients to unlock exceptional prospects for the future. It’s the magic that inspires everything we do.

www.rmb.com.ng

@Businessdayng

10

Thursday 22 August 2019

BUSINESS DAY

comment is free

COMMENT

Send 800word comments to comment@businessday.ng

Can fixing the favelas help?

TONY MONYE

A

t Boundary bus-stop, Apapa I heaved. A sigh that besought for strength. The most tasking phase of my mission starkly gave some hard stare as well as scare. Ajegunle beckoned, with a weakly-shining mid-morning sun overhead. This rundown residential district has always held great fascinations for me as well as many.

Even a cursory glance at this shantytown reveals a lot more, beyond its rugged, congested terrain.

Nigeria is uncovered in its wholeness; its many heartening and disheartening attributes exposed.

Ajegunle isn’t one of a kind. This ghetto landmass is symptomatic of the existing scenarios in many a part of the country, especially viewed from rudimentary economic standpoints.

It doesn’t weigh if it is in the north, east, west and south of the country, they are all alike. Name its numbers; compare them with the figures in many states in the federation. They are quite analogous, telling similar sort of tales, if not exactly the same. Slums, like

this, are the common sights across the main centres of Nigeria. These favelas aren’t just shantytowns, they are the emergent emblems of our country.

Of course, we have often heard it beginning goodish decades ago, if not hundreds of years, a photo calls out a thousand words. What about the much-maligned word? It is not empty. At the least, it reels out a milli-photo. Isn’t it true that the better the verbal description; the clearer the picture? A few strides down the main promenade into the heart of Ajegunle, many sights came to view, describing this slum. The massive commotion of activities; the heat of the swarming masses beating down several side alleys to god-knows where.

In terms of population per square kilometre, this favela breasts the tape ahead of many other areas. With idle crowds dawdling about, residents looked stuck in a rut, enmeshed in perplexing and incomprehensible fatalistic philosophy. Someone out of reach decides all about my existence. With the visibly entrenched uneconomic cultures, it is obvious Gross Domestic Product (GDP), average family size per room, per capita measures, etc. would certainly be hurt.

Idleness and despondency neither create wealth, nor help economics at both the individual and national levels. According to backyard statistics, over ninety percent of Ajegunle’s salaried adults earn below the poverty line. Never

mind the wicked figures. There was defeat and desperation in the eyes of many. Yes, desperation is arguably a good meal for the mind. Most here celebrate ‘creative’ survival.

A gaunt-looking young fellow with rheumy eyes complained of unemployment, pointing at his mates. Malnourished children played about, oblivious of the tough years ahead. Three disillusioned pregnant teens sat behind a grocery table, each owning a portion of the wares on display.

The fertility rate is high, about eight per woman. Those about a newsstand with ‘free-readers facility’ were unemployed young folks, reflecting a higher dependency ratio.

Violence for existence is cuddled here, almost a way of life.

Less than a kilometre away, I saw three corpses metres apart. There was a turf war the previous night between rival gangs. Revenge attacks still being expected. This is Ajegunle City where life expectancy is almost ten years less than the national average.

Isn’t it about the moment Nigerian governments realised that time, unfortunately, doesn’t alert like the clock? Time soundlessly fades away, rewarding none of indolent existence, which predominates in Ajegunle and other shanty zones. With the country’s average per capita income estimated at below $5,000 benchmarked against the United States’ fortune at almost $60,000, Nigeria’s breathtaking challenge is to curb dreadful and

‘

Poverty, in various shades, is everywhere; from Lagos to Maiduguri; from Calabar to Sokoto. Nigeria urgently needs focused, wellintentioned, visionary leadership, with shrewd sense of economic management

devastating poverty.

Poverty, in various shades, is everywhere; from Lagos to Maiduguri; from Calabar to Sokoto. Nigeria urgently needs focused, wellintentioned, visionary leadership, with shrewd sense of economic management, capacity to plan and faithfully implement and direct the whole exercise. Nigeria needs broadminded leaders with ability to engage its citizenry, explain the painful economics of their actions and inactions.

It’s quite corny to say Nigeria is a land of resources. Everyone knows that. It sells a brilliant illusion to think somehow everything will fall in place at the right time without our leaders putting in the work.

With absolute GDP figures higher than regional economic rivals, Lagos, Kano, Abuja and Rivers are the lion economies in their various regions. With a few others are supposed to hold the torch for Nigeria.

Disappointingly, they tread short too, beset by mundane economic mismanagement issues. When the king economies snooze, they ‘inspire’ the weaker, dependent ones into forty winks.

The hissings here in Ajegunle are loud and clear even to the hard at hearing: fix the favelas; fix the country. My weak voice calls on the government to lean its ladder against a different wall with regard to the country’s rapidly expanding favelas. A small leap for the ghettodwellers, without a single lane of arguments, will birth a giant leap for Nigeria.

Why the presidential system fails to deliver at the state level (1)

R

ecently I came across an old almanac of the US, the 1993 Almanac to be precise. It detailed everything you needed to know about the US, and more importantly it explained in detail how the American government is actually run.

Who held what post and how they actually got there. In reading the Almanac I realized what a shoddy and dangerous counterfeit of the American presidential system we are practicing I am not talking about the obvious problems we have at the federal level. That has been over flogged by so many people so many times. We could go on for days talking about what is wrong at the federal level; from the concentration of power in the hands of the president to the unitary aberration of our so called federal system.

The list is endless.

What troubles me is the criminal and dysfunctional counterfeit we have created at the state level. The state and the local government levels are the levels at which the impact of any government in power should be felt. But in Nigeria what we have succeeded in creating at this level are comical and megalomaniacal Governors, though I must admit very rich comedians and megalomaniacs.

Where are the institutional checks and

balances? Did I hear you say what about the legislature and the judiciary? I will soon come to that but permit me to lay out to you what real institutional checks and balances are as I found out from that Almanac.

In the US the Lieutenant Governor (who we call the Deputy Governor here) stands for election on his own ticket, on his own merit. He is not tied, or shackled to the whims and caprices of any governor; he does not need to bootlick any governor to get what is his by right, and the constitution over there has ensured that. He is not the lapdog of the governor. Oftentimes he does not even belong to the same party as the governor.

Check and balance number two: The chief law officer of the state, the Attorney General, is not determined by the whims and caprices of the governor or the shenanigans of any party for that matter. You want to be the Attorney General of any state in the US, you stand for election, period.

He is not at the mercy of the governor.

Sometimes corrupt governors end up being prosecuted by the Attorney General. It makes you wonder what the fate of Gandollar would have been in Kano state if the Attorney General was truly independent.

Check and balance number three: the

www.businessday.ng

office of the State Treasurer or Comptroller who we call here the Commissioner of Finance is an elective office and often the holder of that office belongs to a different party. This serves as an effective check on the proclivity of any governor to turn the state treasury into his personal account.

The beauty of it is that he cannot be sacked by the governor.

Check and balance number four: Almost in every state in the US, is the office of the Secretary of State. This office is not about foreign affairs at the state level. The holder of that office is the secretary to the state government and the head of the civil service. It is equally an elective office that could end up in the hands of any party including independent candidates. This means that it is impossible for any governor to fill the civil service or any of its organs with party members or members of his own tribe or family.

Check and balance number five: The office of the State Auditor is equally an elective office. This means the holder of this office is not in anybody’s pocket or at anybody’s mercy. Here is a case of somebody who can publish and not be damned.

He is just doing what he is elected to do.

You can now begin to see why the presidential system of government, after 20

https://www.facebook.com/businessdayng

DOTUN ADEDOYIN

years, has failed to deliver. The system has given us governors with too many powers, and office holders whose office is nothing but a mockery of the phrase.

So how did we fail to include all these checks and balances in our own system?

How did we miss it? Deliberate omission?

Sheer intellectual laziness? Oh yes, checks and balances such as the legislature and the judiciary? I have bad news for you.

The system as it is now puts those two institutions in the pocket of the almighty Governor.

Adedoyin writes from Lagos

@Businessdayng

Thursday 22 August 2019

BUSINESS DAY

COMMENT

11

comment is free

Send 800word comments to comment@businessday.ng

Awolowo, Azikiwe and the Igbo-Yoruba ‘Lagos Press War’

REMI ADEKOYA

I

n the last series we discussed the political debates provoked by the 1947 Richards’ Constitution and its tri-regional structuring of Nigeria into the eastern, western and northern regions. Today, we’ll discuss another very significant event during this period; the 1948 ‘Lagos Press War’ between Nnamdi Azikiwe’s West African Pilot newspaper and Daily Service, the mouthpiece of the panYoruba Egbe Omo Odùduwà group.

From its inception, the Egbe Omo Odùduwà, of which Obafemi Awolowo was Secretary-General, faced accusations from Zik and his media of ethnicizing politics. The latter conveniently ignored the fact an Igbo equivalent of the Egbe Omo Odùduwà, the Igbo Federal Union, likewise existed and operated at the time.

For most of 1948, the rival newspapers waged an aggressive war of words.

For instance, after Zik supported the creation of a rival Yoruba socio-cultural organization, the Yoruba Federal Union, Daily Service published an editorial titled ‘Nnamdi Azikiwe is warned not to strain the patience of Yoruba people.’ Its author stated: ‘The picture that leaves me bewildered is that of Zik, an out-and-out Ibo inaugurating a Yoruba Federal Union!

It may be said in mitigation that he had but the poorest materials out of which to erect the Yoruba Federal Union, having only managed to scrape together the waifs and strays of the Yoruba race, he had no Yoruba unions to ‘federate’ for no Yoruba Union would submit to the degradation of being federated by Zik. Nevertheless, the daring of the man is staggering. By attempting so openly to create divisions among the

Yorubas, he is approaching the zero hour of his chequered political career.

He is playing with the trigger of a loaded gun, the muzzle of which is pointed ominously toward his own forehead.

Can anyone imagine a Yoruba man in Onitsha or Nnewi organizing an Ibo Federal Union?’

In response, Azikiwe’s Pilot argued that: ‘Henceforth the cry must be one of battle against the Egbe Omo Oduduwa, its leaders, at home and abroad, uphill, and down dale, in the streets of Nigeria and in the residence of its advocates.

The Egbe Omo Oduduwa is the enemy of Nigeria; it must be crushed to the earth. There is no going back, until the Fascist organization of Sir Adeyemo Alakija [leader of Egbe] has been dismembered.’

A mass meeting of Igbos in Lagos declared any attacks on Zik would be considered attacks on the ‘Igbo nation’.

In response to this declaration, Awo sent Daily Service editors a telegram with instructions on how to react. I discovered the telegram in Awo’s personal library at his Ikenne home. To the best of my knowledge, the contents of this telegram have never been published and are very revealing of the atmosphere of the day. Awolowo wrote: ‘So the Lagos Igbos regard attack on Azikiwe as attack on them. Even so the attack must go on with unabated fury for to do otherwise would be to dethrone reason and put suicidal madness in its place. Fight on redoubtable Service. Now that the Igbos have placed themselves on the side of the evil that is Azikiwe the issue is clear. Lagos Igbos lied ignominiously when they said that Egbe diplomatically turned down offer for settlement before present press war started the fact is offer was made after war started and was not turned down.

They also lied when they said Egbe’s express aim is to put Igbos at their right place. It is incredible and it is an outrageous affront on Yoruba manhood and womanhood that whilst Igbos resented reprisals on Azikiwe they approved of his unprovoked attacks on respected and respectable Yoruba leaders. We had thought that it was an issue be-

tween individuals but now that Igbos make Azikiwes cause theirs we too make Alakijas Majas and Davies cause ours we accept the challenge without flinching we must not attack first but every aggressive onslaught must be repulsed with stronger force we must so fight that our opponents would soon discover that there is more courage and more brains and resourcefulness on this side than there. Lagos is a Yoruba town and four million Igbos cannot terrorize its Yoruba inhabitants into submissive silence. Surely Azikiwe’s time is up it is only a matter of weeks.

Am writing series on recent events for publication from next week. Meantime please show our Igbo friends that the Yorubas though gentle in manners are formidable in action.’

Awolowo thus asserted an ethnoterritorial claim to Yoruba ownership of Lagos while portraying the on-going conflict as part of a concerted Igbo effort to subjugate Yorubas in their own homeland. By September 1948, the prospect of Igbo-Yoruba fighting on the streets appeared real; especially when radicals on both sides started buying up all the available cutlasses in Lagos. To prevent the worst, extra policemen were deployed on the streets. Meanwhile, Zik claimed Igbos were brandishing cutlasses merely ‘for propaganda purposes’, a rather unconvincing explanation.

Things eventually calmed down, but the damage was done as the conflict had led to the aggressive politicization of the Igbo Federal Union and the Egbe Omo Odùduwà. In December 1948, the Igbo Federal Union morphed into the Igbo State Union ‘to organize the Igbo linguistic group into a political unit.’

Zik was elected president of this new pan-Igbo association, leading to accusations from Awo that he was, deep down, ‘an Igbo jingoist’ rather than the Nigerian nationalist he professed to be.

Scholars have suggested Yorubaelite resentment at the rising status of Igbos in 1940s Nigeria as the major psychological factor underlying the conflict. Due to the educational advantages of the Yorubas in early colonial

‘

In essence, a conflict of interests and personal antipathies between Igbo and Yoruba elites was transposed onto their ethnic groups

Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs,Washington Post and Politico among others. He tweets @ RemiAdekoya1

Why so many senior women are unfairly judged at work

B

“

itches.” That was how one woman described her previous female bosses when she approached Andrea Kramer, a lawyer and author, after a talk Ms Kramer had given about women in the workplace.

These bosses had been so awful, the woman said, that she would now only work for men.

When challenged as to why the women had been so much worse than male managers, there was silence. “I thought she was unconscious,” laughs Ms Kramer. In fact, the woman was experiencing an epiphany: she realised that the women had treated her just as the men did but she had judged them more harshly.

This was not the first time that Ms Kramer and her co-author and husband, Alton Harris, had heard such stories. Many women and men complained to them of “mean girls”.

So much so that the pair decided to explore the alleged hell of other women in their new book, It’s Not You, It’s the Workplace: Women’s Conflict at Work and the Bias that Built It.Popular opinion — backed by books with titles such as Mean Girls Grown Up; Catfight; Mean Girls at Work; Working with Bitches; The Stiletto in Your Back — holds that senior women are cold, unable to work with other women and conniving to hold them back.

This opinion is explained, the two authors write, by “evolution, socialisation and the internalisation of the dominant culture’s misogyny”. And the central argument of It’s Not You is that women have no more frequent conflicts in working with other women than men do working with other men. Nor is there any evidence, they write, “that women are more mean-spirited, antagonistic or untrustworthy in their dealings with other women than men are in their dealings with other men”.

In fact there is considerable evidence that “more women than men are paying it forward to ensure the future advancement of the women (and men) who work for them”.

What often happens, as with the woman who approached Ms Kramer, is that ambitious women are held to different standards than men: a businesslike woman is seen as cold, her equivalent male peer is deemed professional.

Women’s conflicts are seen as “disruptive” or motivated by “personal antagonism or petty jealousy”, while men disagreeing with men are simply part of the normal “rough and tumble of high-intensity workplaces”.

The result is that women often get penalised, they write, with “poor evaluations, social

www.businessday.ng

exclusion and co-worker animosity in ways that men never experience”.

This is not to say female managers or senior women are maligned saints but perhaps that some of their behaviour — if it is indeed objectively bad — can be partly explained by organisational culture, not inherent bitchiness. They might want to distance themselves from other women in a company that seems to value men. Sisterliness might look rather sappy.

The pair found examples of women treating female bosses differently — for example, appealing for extended deadlines because of family demands in a way that they might not to a male boss. “They expect that women should be their sister not their boss,” Ms Kramer says over the phone from the couple’s home in Chicago.

As a husband and wife team who have worked together as lawyers and writers, they are well aware of the gender dynamics at home and work. “If I say to a guy, ‘You don’t get it,’” Ms Kramer says, “their eyes roll in their head. But if Al says it, they listen. Having the two voices helps.”

Senior women are unfairly scrutinised because there are fewer of them, says Mr Harris. “When there’s a few [senior female

https://www.facebook.com/businessdayng

Nigeria, most of the more desirable bureaucratic, economic and political activity in Lagos was dominated by Yorubas for much of the early 20thcentury. However, by the late 1940s, the Igbos were fast eliminating the education gap and becoming increasingly assertive in both business and politics.

This vexed many Yoruba elites who saw Zik as the personification of this Igbo ascendance, one they perceived as aggressive and threatening. In essence, a conflict of interests and personal antipathies between Igbo and Yoruba elites was transposed onto their ethnic groups. Personal attacks on Zik came to be viewed as attacks on the ‘Igbo nation’ while backing down from the conflict was portrayed as tantamount to group defeat and subjugation, as Awo alleged in his telegram.

The idea defeat and dishonour for elite actors signified defeat and dishonour for the whole group reflected a strong personalisation of ethnic discourse in which elite honour is equated with group honour, elite rivalries are portrayed as group rivalries and elite interests are interpreted as congruent with group interests.

This discursive fusion of elite and non-elite interests was achieved by portraying the social class of the individuals involved in the conflict as of secondary importance to their ethnic identities. ‘Yoruba leaders’ are being insulted, the ‘Igbo nation’ is under attack, you must join us to defend the group. So went the rallying cries.

In the next series, we shall look at the controversial 1951 Western regional elections which involved claims and counter-claims of hidden agendas for Igbo and Yoruba domination by both Awolowo and Azikiwe’s parties and media groups. Till then, take care folks!

EMMA JACOBS

bosses] who behave harshly it’s attributed across the board. We have no question that [some] male leaders are jerks but because they don’t represent all men, they don’t have to be representative.”

The book is interesting on the reasons for women’s stalled careers, often attributed to lack of ambition, low confidence — or motherhood. It is workplace bias that limits ambition, insist the couple, whose previous book was Breaking Through Bias. “The greatest contributors to women’s waning ambition,” they write, “are the lack of opportunity for advancement, lack of support from managers, and a scarcity of female role models.”

Chief among the problems is “affinity bias” — in other words, the way that humans gravitate to people like them. In the workplace, the in-group is often white, male, ablebodied and straight. “As a result,” the authors write, “male managers often simply don’t invite women to join teams, work on highvisibility projects or participate in informal social activities”.

@Businessdayng

12

BUSINESS DAY

Thursday 22 August 2019

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 GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

A central bank or the piggy bank of government?

T

he extra-legal, or in fact illegal, funding of the government by the central bank of Nigeria is not only threatening the economic growth of the country, it is portraying the country as a lawless country; one that cannot be relied upon to uphold its own laws or to conform to regionally agreed best practices.

The norm for financing of the government budget deficit by the central bank is capped at 5 percent of revenue, according to the CBN Act of 2007 and the Economic Community of West African States (ECOWAS).

Doyin Salami, an erstwhile member of the Monetary Policy Committee (MPC) of the CBN raised the alarm about the illegal funding of the government by the apex bank in July 2017, likening the CBN to a “piggybank” of the federal government.

The claim of the CBN

on the federal government (consisting of overdrafts, treasury bills, converted bonds and other such lending) surged from N922 billion in 2014 to a whopping N8.12 trillion in 2018, according to data obtained from the CBN’s statistical bulletin. A 780 percent increase in three years, and over 22 or 23 times over the limit. In simple English, what the CBN has been doing is illegally printing money for the government and mopping up the money in supply to control inflation.

Of course, the CBN governor tried to explain away the illegality claiming the apex bank was only lending against the federal government’s deposits in its Treasury Single Account (TSA). But the funds in the TSA strictly do not belong to the government wholesale.

At the root of the crisis is government’s inability to generate revenue to meet its growing expenditure since the decline in oil revenue. Hence it resorted to wanton borrowings in-

ternally and externally to meet even its recurrent expenditure. The situation is now so bad that it’s official debt-to-revenue service is put at 70 percent i.e. for every 100 naira earned, government spends 70 naira on servicing debt.

Even if those figures are being disputed, analysts point out that the government has cleverly excluded some debt items from its computations. If these are taken into consideration the ratio may be in the region of 90 percent.

In effect, Nigeria is at the brink of a fiscal crisis and a debt default unless the price of oil miraculously recovers. This much was confirmed by the presidency this week when Garba Shehu warned in a press release that “it would appear that the country might be heading for a fiscal crisis if urgent steps are not taken to halt the negative trends in target setting and target realisation in tax revenue.

Rather than think of a lasting solution to raise

revenues, the government is taking the easiest way out by ordering the CBN to print more and more money illegally to continue to maintain a semblance of normalcy until the cookie finally crumbles like it has in Zimbabwe and Venezuela.

That the central bank has no real independence and is being hopelessly controlled and manipulated by politicians, despite what the law books says, is a greater damage to the country that. Investors and the market generally frown upon political interferences with monetary policy decisions. This overly cosy relationship between the CBN and the federal government isn’t lost on the international community either.

The CBN governor must realise he has a sacred duty to defend the integrity of such a critical national institution; history will judge him harshly if he fails to and jeopardises the collective economic wellbeing of the nation.

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

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo

ENQUIRIES NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

ADVERTISING 01-2799108 08034743892 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessday.ng The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria.

01-2799100 LEGAL ADVISERS The Law Union

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

OUR CORE VALUES

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven.

• The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests.

• Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessday.ng

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Thursday 22 August 2019

comment is free

COMMENT

13

Send 800word comments to comment@businessday.ng

Analyzing the Siemens Electricity Roadmap Proposal ODION OMONFOMAN

O

n July 22, 2019, the Federal Government and Siemens signed an agreement, Nigeria Electrification Roadmap (NER), for the financing and implementation of several projects in the Nigerian power sector.

It is important to clarify that the NER is not a new policy document but only a technical proposal by Siemens to the Nigerian government. It is also important to clarify that what was signed with Siemens is not the actual definitive contract for the financing, implementation and execution of the proposed projects under the NER. Definitive contracts under the roadmap will be signed between Siemens and the respective stakeholders in the power sector namely participating DisCos, TCN, the Ministry of Finance, Ministry of Power, BPE, NNPC, etc.

Siemens is no stranger to the Nigerian power sector and is a key player in both the energy sector and Nigeria’s economy.

Siemens is well known for building and commissioning the 414MW Geregu power plant-1 acquired by Femi Otedola’s Amperion Energy, and the 434MW Geregu power plant-2 owned by the NDPHC. Siemens has a full team in Nigeria, operating primarily in the power, oil & gas and telecommunications sectors. Beyond its solutions, Siemens is known for its very strong project management and project delivery capabilities. These, coupled with world class solutions, are what set the company apart from its competitors.

Phase one of the proposed roadmap will focus on identifying and de-bottling constraints at TCN/DisCo interface and within DisCo networks, with a view to increase the amount of energy delivered to, and distributed by DisCos by an ad-

ditional 2GW, significantly reduce ATC&C losses and achieve improved grid stability and reliability.

Contrary to several public perceptions, no new additional generation capacity is planned in Phase one. The additional 2GW is the estimated amount of stranded generation capacity that would now be available for transmission and distribution to customers.

Siemens also proposes to rehabilitate and implement a national Supervisory Control and Data Acquisition (SCADA) /Energy Management System (EMS) and associated telecommunicated infrastructure for the TCN under Phase one of the roadmap. The implementation of the SCADA system will provide the TCN with real time visibility, monitoring and dispatching of the transmission grid.

The implementation of Phase 1 is estimated to cost at least €1 billion. Given the state of the transmission and distribution infrastructure and the financial losses therefrom, this amount seems a modest sum.

Phase two of the roadmap proposes to increase the transmission grid capacity from 7GW achieved under Phase one to 11GW. It will focus on the continuation of transmission and distribution assets upgrate and expansion, introduction of SCADA for DisCos for network automation, execution of embedded power generation projects and the implementation of gas processing projects that would utilize and gather flare gas for power generation.

Phase three of the roadmap is perhaps the most ambitious of the phases. It proposes to increase the transmission grid capacity from 11GW to 25GW, in addition to adding new generation capacities from large scale power projects to be executed

by Siemens.

There are a number of issues critical to understanding the proposal and which may affect the implementation of the roadmap.

The participation of TCN and Discos is most critical to achieving the objectives of phase one of the roadmap. Both need

to provide relevant data and/or access to their networks for the detailed planning and successful implementation of the NER. Financing is another critical element of the roadmap. We anticipate that financing for the proposed Roadmap (specifically phase one) would be provided by several German development and export credit finance institutions such as Hermes, KfW, and perhaps other European development and commercial financial institutions. It is almost certain that the federal government may issue direct sovereign guarantee(s) to Siemens that would underpin the financing. It may need to also provide counterpart funding as well. President Buhari mentioned that the Siemens transaction is proposed as a Government-to-Government (G2G) arrangement. Thus the National Assembly may need to approve the financing arrangements of the roadmap.

The financing and contractual terms between Discos and the federal government may determine the willingness of DisCos to participate in the implementation of the roadmap – any financing arrangements between the federal government and Siemens would ultimately become financial obligations/liabilities on the respective balance sheets of Discos and the TCN. Thus Discos will need to first accept any proposed financing and contractual terms.

Considering that the NER is ultimately a loan by the federal government to DisCos and the TCN, DisCos have to ensure that the MYTO electricity tariffs can accommodate the recovery of the capital expenditure and other financing terms under the roadmap. A tariff review will thus be a pre-condition.

The roadmap anticipates that Siemens would handle the procurement for the projects under a sole sourcing procurement arrangement. Sole source procurement for such a large scale, multidimensional and integrated projects is a concern, but should not constitute a problem. There is established precedence with the sole source procurement for the

‘

The government must mindful of entering into an agreement that it may be unable to fulfil the conditions for whatever reason. The case between Nigeria and Process & Industrial Development Limited (P&ID) is a recent example

Chinese railway construction projects in Nigeria.

However, the main issue for the Nigerian government and the TCN/DisCos (as the ultimate obligors and beneficiaries) is how to ensure that the NER procurement process is competitive in terms of solution costs and actual needs. We advise that a well-defined procurement process/methodology to ensure transparency, price competitiveness and value-for-money, be developed as part of the contractual framework. There should also be significant local content as well under the NER procurement.

In general, the Siemens roadmap is ambitious, but well thought out. Siemens’ world class reputation provides comfort that the proposal is achievable.

In our opinion, the roadmap proposal is a good deal if it sails through the commercial and contractual negotiation stages.

The benefits to Nigeria and Nigerians far outweigh the proposed anticipated costs.

However, there are several weak points that need to be anticipated during the implementation of the Letter of Agreement.

The Nigerian government must also be mindful of entering into an agreement that it may be unable to fulfil the conditions precedent and/or conditions subsequent for whatever reason. The case between Nigeria and Process & Industrial Development Limited (P&ID) is a recent example.

Lastly, Nigerians are very optimistic people, and many have already expressed optimism that the NER would solve our power problems. However, the NER is just part of the solutions to addressing the problems in the power sector. To quote President Buhari, “this (NER) project will not be the solution to ALL our problems in the power sector. However, I am confident that it has the potential to address a significant amount of the challenges we have faced for decades’.

Omonfoman is an energy consultant and the CEO of New Hampshire Capital Ltd. He can be reached on orionomon@ outlook.com

The plague of long-running feuds in family businesses

A

“

ll happy families are alike; each unhappy family is unhappy in its own way.” Tolstoy’s opening lines to Anna Karenina apply equally to family businesses, and no wonder. Add the volatile variables of companies to the multiple maladjustments of most families and you have a potent mix.

It would be hard for fiction to match, for instance, the saga of the Redstones, and their media companies Viacom and CBS. There is the patriarch Sumner, once an all-powerful mogul, now a frail 96-yearold, whose will to cling on to power was literally forged in fire, after he survived a hotel inferno by hanging from a window as flames ate into his flesh. And there is Shari, his daughter, often ignored and belittled, whose influence over the companies has waxed and waned in tune with her relationship with her ageing father — and Sumner’s own relationships with carers and girlfriends.

Last week, Ms Redstone won through, when CBS and Viacom agreed to her longstanding plan to merge the companies, separated by Mr Redstone 14 years ago.

Since King Lear, intra-familial strife has made for great theatre, and even better copy. If there is a contemporary fictional parallel, it may be Succession, the HBO series about media mogul Logan Roy that

has just started its second season — partly inspired by the Redstones’ discord. In the opening episode of the show, 80-yearold Roy up-ends his succession plans by announcing: “Kids — I’ve changed my mind: I’m staying on as CEO and head of the firm.” Mr Redstone’s own pronouncements eclipse even that shock declaration.

When he was 91, he told the Hollywood Reporter he would not discuss succession because “I’m not going to die”.

Among my favourite real-life family feuds is the long-running battle between Gina Rinehart, the Australian mining magnate, and some of her children, over a family trust. When it reached court in 2012, she contended the collapse of the trust might be in the kids’ best interest “personal development-wise” because it would force them to reconsider “their holidaying lifestyles and attitudes”. That will have resonated with any parent who has had to close the Bank of Mum and Dad to further withdrawals.

The compelling Murdoch show, surely soon to enter its last season, also continues to grip viewers, with father Rupert shuffling and reshuffling the succession cards as the fate and finances of his offspring dangle in the balance. Like many such families, the Murdochs had to resort to group therapy in an effort to cut through

www.businessday.ng

the tangled knot of their personal, financial and corporate interests.

Plenty of long-running family companies have weathered brutal succession battles and ensured cultural harmony and long-term balance. At another US media company, Comcast, founder Ralph Roberts managed a harmonious handover to son Brian. “The elder Roberts never second-guessed his son. And the younger man never stopped consulting with his father. He actually wanted his father to come to work every day,” Joe Nocera wrote of the congenial succession process in The New York Times in 2007.

I’ve argued before that the vitriol-powered ambition of some family members can, just occasionally, provide strong, if unstable, fuel for advancement of personal and corporate interests. But infighting is almost always value-destroying for any outside shareholders and often souldestroying for the participants.

CBS and Viacom are a case in point.

Shari Redstone’s mission was helped by the decline and fall of CBS’s over-mighty chief executive Les Moonves. But by wrangling over the future, the Redstones, onetime kings of content, wasted time and, more damagingly, squandered opportunities. Meanwhile, rivals consolidated in the face of rapid digital change,

https://www.facebook.com/businessdayng

ANDREW HILL

including Murdoch-controlled Fox, which merged with Disney this year.

Mythology is another fount of family division, mostly featuring sons bent on seizing power from their fathers. (King Pelias’s daughters did chop him up and cook him, but they had been tricked into thinking a quick boiling would rejuvenate the ageing ruler, which is not a recommended succession plan.)

Ms Redstone’s story, though, is only the latest in what will be a new series in which daughters rather than sons take on their parents. It offers some lessons for those prepared to ignore Tolstoy’s warning against generalising about malfunctioning families. Keep a low profile; find trusted managers who can run the businesses under your supervision; and be patient.

Death and disease will fell even the hardiest and most stubborn dynast.

FT

@Businessdayng

14

Thursday 22 August 2019

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

COMPANY

Shoprite capitulates to currency devaluation, foreign exchange shortage as margin slumps OLUFIKAYO OWOEYE

A

frica’s largest food retailer, Shoprite’s sales growth in its South African stores did little to prevent a drop in its full-year earnings after tough economic headwinds, industrial action and complications related to a new IT system blighted the first half.

The group’s turnover growth for the 12 months ending 30 June 2019 increased slightly 3.6percent to R150.4bn, driven mainly by supermarkets in its South Africa operations through 1580 stores and representing 74.9percent of group sales achieved 4.9percent sales growth for the period to report sales of R112.7bn.

However, ongoing forex shortages, currency devalu-

ations and the aftermath of rampant inflation in Nigeria and Angola and its ongoing impact on affordability took a further toll on its revenue in other markets outside South Africa, where it reported a trading loss of R265 million for the year, with “no foreseen respite in short-term trading conditions in the region”.

“During the financial year, currencies of other large countries in which we trade, namely Nigeria and other markets, showed sharp declines against the US dollar of 29.4percent and 17.9percent respectively, this too hurt turnover growth, across the 14 countries outside South Africa in which we operate, we estimate that internal food inflation averaged 3.3% for the current year,” the company said.

Recent economic contraction left most consumers

with a shrinking wallet while consumers have also moved to cheaper brands forcing them to abandon the idea of shopping in big retail outlets.

Nigeria, with a GDP size of $492 million, and population of 200 million, has seen her citizens getting poorer as more than half of the population live on less than $1.98 a day; little wonder the country has surpassed India as the world’s poverty capital.

Unemployment rate is at an all-time high of 23 percent, and to further worsen the already anemic situation of consumers is the incessant fuel hike and devaluation of the currency. The retailer, with more than 2,900 stores, is however not relenting in its expansion plans as it plans to open 29 stores in various countries in 2020 and its domestic performance is keeping sales growth on an upward trajectory.

CONSUMER SPENDING

Buhari’s foreign exchange ban on food to compound retailers woes BUNMI BAILEY

T

he Federal Government’s directive to halt dollar sales for food imports could compound the woes of Nigeria’s largest retailers that are struggling to breakeven in a tough and unpredictable macroeconomic environment.

In a statement signed by Garba Shehu, President Muhammadu Buhari spokesman, on last week Tuesday, announced that he had asked the Central Bank of Nigeria (CBN) to stop providing foreign exchange for food importation in order to ensure the steady improvement in agricultural production, saying the country is now food secure.

Shoprite, Spar, Hubmart, Prince ebeano, and other

operators in the industry, may see further deterioration in margins as they will have to source dollars from the black market (which is more expensive).

The implication is that raw material costs will spike, raising concerns about the ability of firms to pass on cost to the consumer.

That’s double whammy for retailers that have seen sales drop, as a fuel hike and high inflationary environment have prevented consumers from opening their purse string.

In the time of economic boom, high employment, and low inflation, people tend to spend more, and throng of shoppers hit retail stores.

“For retail stores, what you would see is higher prices of their items and considering the already

weak demand and tight consumers’ purse strings, we might see downward

www.businessday.ng

pressures exerted on demand and consequently on sales despite their nature

https://www.facebook.com/businessdayng

of necessity,” said Ayorinde Akinloye, a consumer analyst at CSL Stockbrokers.

@Businessdayng

“And you would also see most retailers engage in price competition in order to attract tightening demand which could further lead to compression of retailers’ profit margins,” Akinloye further said.

In 2018, the retail industry in Nigeria posted slow growth in value terms at constant 2018 prices due to harsh and unpredictably macroeconomic environment and a volatile currency.

Accroding to experts, the retail sector contributes as much as 16 per cent to Nigeria’s Gross Domestic Product (GDP).

A report by McKinsey and Company, a New Yorkbased management consulting firm, also estimated that the growth opportunity in food and consumer goods in Nigeria will reach $40 billion in 2020.

Thursday 22 August 2019

BUSINESS DAY

Retail &

15

consumer business

COMPANY

Profit squeeze for Nigeria’s brewers as consumer head downmarket BALA AUGIE

T

he situation for Nigerian brewers is decidedly worst. The sector is feeling the pangs of the worsening economic condition more than peers in the consumer goods industry.

Historical analysis of the financial statement of dominant players in the industry shows pressured product volumes, dragged by the impact of stiff competition, lower consumer spending induced by recessionary pressures and elevated costs of production.

Nigerian Breweries (NB), International Breweries, and Guinness Nigeria are grappling with flat beer pricing environment, intense competition, and higher raw materials that have culminated into deteriorating margins.

A lot of consumers have downgraded to low cheap brands as premium larger beers are becoming inac-

cessible, further making it difficult for these firms to magnify revenue.

The combined average net interest margins of NB, International Breweries, and Guinness fell to one percent in June 2019 from 3.67 percent the previous year.

A low ratio means a company has not been able to translate top-line growth to the bottom-line or it is unable to turn each naira generated in sales into higher profit.

B u s i n e s s r i s k s a re mounting as cumulative operating profit margins are otherwise known as Earnings Before Interest and Taxation (EBIT) margin fell to 5.50 percent in June 2019 from 10.05 percent as at June 2018.

Brewers in the country are not efficient in turning raw materials into income as combined average gross profit fell to 35.65 percent in June 2019 from 39.02 percent the previous year.

The decision of the Nigerian government to im-

pose or hike excise duties on alcohol and spirits was another setback for brewers already grappling with economic lethargy.

Analysts had said that the tax increase would hit revenue, but firms responded to the levy by increasing the price of key products as they sort to pass on higher cost to consumers. However competitive pressure caused a reversal, and firms decided to bear the burden.

As a result of the multiple levies and higher material costs, the cumulative cost of sales or input costs increased by 11.080 percent (higher than July inflation figure of 11.02 percent) to N143.97 billion, while cost of sales ratio 64.34 percent in June 2019 from 60.87 percent the previous year.

A higher cost of ratio means a company is spending more on input cost to produce each unit of product, and if management and board of directors fail to curb rising costs, the company’s margins could be eroded.

Brewers operate in a tough and unpredictable macroeconomic environment as gross domestic

product expanded by 2.01 percent in the three months through March from a year earlier. That compares with

a 2.4 percent expansion in the fourth quarter.

Post-recession, growth in real household consumption peaked at 3 percent in the final quarter of 2017, before falling to 1 percent in the second quarter of (Q2-18).

Hitting the bar is least of the worries of Nigerians as over a population of 200 million live on less than $1.90 a day, as the country overtook India to become the poverty capital of the world.

However, data from the bureau of statistics shows Nigerians pay their hardearned cash on alcohol even amid the economic meltdown.

According to Tetra Pak, a global research firm, beer makes up 12 percent of total liquid consumption in Nigeria.

According to the latest data from the nation’s statistics bureau, in 2016 alone, Nigerians spent at least N208 billion on alcohols – this amount was more than the budget of Ondo State for that year.

COMPANY

Smartphone maker, Xiaomi’s quarterly revenue drags as competition heightens the second quarter ended June 30 increased to 51.95 billion yuan ($7.36 billion) from 45.24 billion a year earlier, short of the 53.52 billion yuan earlier expected by analysts. Its net income slumped 87percent to 1.96 billion yuan. Still, adjusted profit of 3.64 billion yuan beat the 2.74 billion expected by analysts.

According to Xiaomi, total smartphone shipments in the second quarter rose to 32 million. According to market research firm Canalys, Huawei’s market share in China surged by 31percent in June quarter, while Xiaomi’s

OLUFIKAYO OWOEYE

S

low growth in the Chinese economy, unabated U.S-China trade spat has seen Chinese consumers rally behind under-attacked phone rival, Huawei, who are buying the company’s phones after it was blacklisted by the United States, limiting access to U.S. components and technology.

This shift has however seen the market share of other phone brands plummeting. Chinese phone maker, Xiaomi’s revenue in

share plunged by a fifth.

Huawei is China’s largest tech company by sales and is going all-out to remain relevant in the phone market. The competition in the global phone market has become very intense in recent times as brands which before now play on the fringes of the market are currentlychallenging the market leadership of premium brands.

Despite being at the center of global scrutiny from the United States, Huawei posted a 25 percent jump in its 2018 profit.

The electronics giant

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

https://www.facebook.com/businessdayng

@Businessdayng

posted net income of 59.3 billion yuan ($8.8 billion) in 2018 as it won more customers for its smartphones and networking gear, while revenue for the year jumped almost 20 percent to 721 billion yuan. Revenue from its consumer business, which includes smartphones, jumped 45 percent to 348.9 billion yuan while sales in the carrier unit were little changed at 294 billion yuan.

Xiaomi listed last year, gets the majority of its revenue from mobile handsets, but also makes money selling online ads and other consumer devices.

16

Thursday 22 August 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 22 August 2019

BUSINESS DAY

COMPANIES & MARKETS

17

COMPANY NEWS ANALYSIS INSIGHT

MARKETS

CEOs of big lenders shed N34.96 billion in stock market rout DAVID IBIDAPO

N

i g e r i a’s economic struggles are taking a toll on business

owners.

The sustained market rout in the equity market has seen the biggest lenders’ CEOs shed significant value of their holdings to the tune of N34.96 billion.

The Nigeria all share index (ASI) which measures the performance of the equity market dipped 0.22 percent at the end of trading on Tuesday, reversing gains of 0.71 percent the previous day, further worsening its year to date loss to -13.91 percent.

Our analyses revealed that over the course of the year, big bank CEOs have counted losses.

Jim Ovia, CEO of Zenith Bank, in a market rout which saw the tier one lender lose 24.51 percent in market value, lost a whooping sum of N28.58 billion in total holding value (Direct + Indirect), accounting for 16 percent of a total loss of N177.41 billion in stock’s market cap year to date (YTD).

The erosion rate of his holdings slowed after the bank recorded in pre-tax gains of N111.7 billion, 4 percent growth over N107.4 billion and proposed to

pay an interim dividend of 30 kobo per share for the period ended June 2019.

At the end of trading on Tuesday, Zenith bank stock continued its upward move after gaining 2.35 percent.

Coming right behind Zenith bank’s CEO is Tony Elumelu, CEO of UBA with a total holding of 2.2 billion ordinary shares including direct and indirect holdings recorded a value erosion to the tune of N4.02 billion

in value.

During the period under review, UBA stock fell 24.03 percent to N5.90, which saw investors in the stock lose in market value N48.48 billion. Tony Elumelu’s lose accounted for about 8.3 percent of total lose in the bank’s stock.

Oba Otudeko, Chairman of First Bank also lost in market rout YTD N1.58 billion in value on a total holding of 537.97 million

ordinary shares after stock price of first bank dipped 37.11 percent during the period.

Meanwhile Access Bank’s Wigwe lost so far in market value N432.45 million on total holdings of 1.44 billion of ordinary shares both direct and indirect holdings. Access bank outperformed peers in the industry as stock dipped 4.41 percent since 2019 inception with investors los-

ing N15.67 billion in value as market rout persist.

Olusegun Agbaje, CEO of the most capitalised bank on the exchange GTB, lost in market value N335.10 million after stock price slumped 23.37 percent YTD. Agbaje currently holds in GTB a total share of 41.62 million units.

The month of July saw banking stocks take more hit amid general market sentiments which weighed

on all stocks, on the back off investors interpreting the regulation of the CBN to hold Loan to Deposit ratio (LDR) of 60 percent.

The fear in their hearts was the possibility that the new regulation could lead to banks underwriting high risk loans which could lead to further asset deterioration and destabilise the industry at a time when the regulator has limited scope for further bailout.

BANKING

Zenith to strengthen retail footing after LDR slip SEGUN ADAMS

Z

enith Bank, a tierone lender, is looking to increase its presence in Nigeria’s retail banking space in a bid to meet up with a regulatory benchmark for loan issuance after midyear result revealed a drop in the lender’s loan-todeposit Ratio (LDR).

The bank which is Nigeria’s second-largest by market value reported its LDR at 51.24 percent in the half-year period on

the back of a 3.2 percent growth in customer deposit to N3.81tn while loan book has shrunk by 3.2 percent since the start of the year.

“We are creatively deploying new retail loan products to ensure we capture a reasonable share of the retail loan market,” the bank said in an emailed statement to Bloomberg.

The big lender said an increase in lending will improve its non-performing loan ratio, which deteriorated to 5.3% from 5%, owing to the drop-in credit in

the first half.

As a percentage, Loanto-Deposit ratio measures how much a bank gives as a loan from the customer deposit it receives in a period.

Zenith’s mid-year LDR which is 8.8 percentage points below 60 percent minimum of the Central Bank of Nigeria the bank at risk of losing part of its funds if the lending gauge is not improved.

“In the absence of an expansion of the bank’s loan book by c.N334bn in Q3-19

or a cutback in deposits by N518bn (assuming loans are constant in Q3-19), over N150bn of Zenith’s funds could be sterilised by the CBN,” analyst at Lagosbased Investment House, Chapel Hill Denham said in a note to clients.

The analysts say this may further dampen the bank’s interest income in the second half and in full year 2019.

The Central Bank in July issued a directive mandating Nigerian Banks to loan out a minimum of 60 per-

cent of consumer deposits it received to boost credit and stimulate economic growth. Whilst the deadline for the stated target is the end of September, the minimum LDR would be reviewed quarterly, the bank has said.

According to the apex bank, lenders that fail to meet its minimum lending requirement will be required to raise their Cash Reserve Requirement equal to 50 basis point of how much it missed the LDR target. In other words, err-

ing lenders would increase the reserve they keep with the CBN. In the six-month ended June, Zenith Bank posted an increase in its Profit After Tax up to 8.7 percent. Noninterest income surged 23.9 percent to N109.73billion driven by growth in electronic banking.

The bank’s shares gained 2.35 percent on Tuesday to advance for the second straight day this week. Zenith proposed a dividend per share of 30kobo for mid-year 2019.

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

18

Thursday 22 August 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

TRANSPORT

OPay expands to bus-hailing, launches “OBus” SEGUN ADAMS

O

Pay, the start-up that is backed by Norwegian company Opera, has expanded its footprint in mass transit with the launch of “OBus” the country’s first bus-hailing service in Lagos, Nigeria’s commercial city, over the weekend.

The company, Opera-Pay, has since its entry into the Nigerian market expanded its business to include food and grocery delivery, and bike services, to its platform which facilitates bill payment, and transfer of money.

“OBus is like normal buses but it is more comfortable and supports cashless payments,” an OPay staff told Techpoint in an online chat.

The buses currently ply along the CMS-Ikeja routes and undergoing beta test.

Information from Techpoint suggests that a Quick Response (QR) enabled card

would be used in making payment for trips on the buses.

To use the service, commuters would have to update their OPay app and purchase a QR Cards from OPay agents at specified bus stops.

Upon boarding, the cards would be placed over a sensor reader inside the bus to read the ticket barcode which was generated through the mobile app before the trip. Withdrawal is made immediately.

OBus cards sale for as low as N200 and can be used for multiple trips until the credit is exhausted. Like other OPay services, payments can also be made through the OPay wallet.

The company’s latest venture is a testament of its aggressive bid for a significant share of Nigeria’s lucrative transportation industry.

Following the introduction of ORide, the company set out immediately to lure customers with attractive offers and is also said to have poached

on bikers and top talents from its competitors, one of which is Gokada- a hail-riding bike company that has temporarily suspended its operations.

ORide backed by Chinese fund has expanded to Ibadan recently introduced OTrike, its tricycle hailing service in Aba. Kano is also said to be a market for OTrike.

The company whilst admitting to its rapid expansion said the strategy presented an opportunity for learning.

“I admit that OPay is moving very fast. However, I believe we will learn from experience, just like Gokada is having its share of challenges already.”

OPay was quoted to have said.

OPay recently raised $50 million in funding.

ORide in the mass transit bus market would be in direct competition with “Danfo” and “Molue” commercial buses.

The company would, however, be relying on pricing and the convenience it provides to woo riders.

CONSUMER GOODS

FoodCo wins Multigenerational Company of the Year

F

oodCo Nigeria Limited, a diversified consumer goods company with interests in retail, quick service restaurants, manufacturing and entertainment has been named the Multigenerational Company of the Year at the inaugural Nigerian Business Leadership Awards (Excellence in Enterprise) held in Lagos recently.

FoodCo emerged winner in a category that included Churchgate Group and Chellarams Plc. Frank Aigbogun, Publisher and CEO, BusinessDay Media Ltd, organizers of the Awards, stated that FoodCo’s commitment to excellence in enterprise as well as its commendable growth profile across successive generations of leadership were key factors

that stood the company out.

According to him: “The selection of FoodCo Nigeria Limited for this award is in consideration of the ability of successive leaderships of the company to steer it towards greater levels of success. This is an uncommon feat in Nigeria where many enterprises do not survive the first generation. Despite the challenges prevalent in the Nigerian environment, FoodCo has maintained a strong market position and profitability, and is currently making entrance into new regions.”

“We are particularly impressed at the impact the company is making both in terms of job creation and innovation, especially in the Nigerian retail space. FoodCo is a shining example for home grown brands seeking to make the transition

into corporate institutions and we congratulate them for this milestone accomplishment,” he added.

Ade Sun-Basorun, CEOdesignate, FoodCo Nigeria Limited, who received the award on behalf of the company, expressed gratitude to the organizers for the recognition.

He said: “This award means a lot to the FoodCo team. Since inception 37 years ago, we have maintained a consistent focus in investing in people and in our communities. This enduring vision has helped harmonize the efforts of successive generations of the company’s leadership in becoming a responsible corporate citizen and reliable partner to our various stakeholders.

S

takeholders within Nigeria’s information technology space under an umbrella named Information technology association of Nigeria (ITAN) have raised concerns over the need for the government to extend keen concentration towards the ICT sector of the economy.

This they opined is a call for the federal government of Nigeria to learn from other developed nations of the world towards using technology to drive economy growth and create enabling environment where technology companies can thrive amid headwinds.

“Today if you are not investing in technology, irrespective of the industry you are playing, then you are not moving. Hence the call for the government to create the right enabling environment for the IT companies to take up the challenge of our environment and create solutions to them,” Bonny Mekwunye, Vice chairman, Kecam technologies ltd and Chairman of Lagos chapter of ITAN. A look into activities within the ICT sector as collated by the National Bureau of statistics revealed in Q1 2019, the industry recorded a slowdown in real GDP growth by -0.17 percentage points to 9.48 per-

L-R: Adeche Omotosho, asset manager, Midwestern Oil & Gas Company Limited; Chris Omoru, MD, Mart Umusadege Resources Nigeria Limited (MURNL); Nonye Barrow, head services, Midwestern Oil & Gas Company Limited; Charles Odita, GMD/CEO, Midwestern Oil & Gas Company Limited; Mele Kolo Kyari, GMD, Nigerian National Petroleum Corporation (NNPC); Blessing Ayemhere, MD, Umugini Pipeline Infrastructure Limited (UPIL); Morgan Oche, crude export supervisor, Midwestern Oil & Gas Company Limited; Alex Ejiofor, technical assistant to the GMD/CEO, Midwestern Oil & Gas Company Limited, at the Midwestern Oil & Gas Company’s management team pays courtesy visit to the Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Mele Kolo Kyari.

Continue online @www. businessday.ng

Information technology stakeholders calls for improved government focus, incentives in ICT … ITAN to tighten federal government partnership DAVID IBIDAPO

L-R: Bhaskar Rao, GM, West African Ceramics Limited; Onwubuariri Emmanuel, CEO, Embiz Building Company Limited, platinum winner (South West); Nick Nseakor, director, West African Ceramics Limited, and Abdulrahman Bello, human resources manager, West African Ceramics Ltimied, at the company’s awards presentation to the South East/South West distributors In Lagos.

cent quarter on quarter against 9.65 in Q4 2018. This is the lowest in the last four quarters.

In addition, data collated from the World Bank Data Index (WDI) showed that Nigeria’s ICT goods imports as a percentage of total goods imports in 2017 plunged to 3.27 percent, down from all time high of 9.48 percent in 2008.

To buttress more on the dilapidated state of the sector, ICT goods exports as a percentage of total goods exports in 2017, continued an 18 year trend to stand at 0 percent, contributing almost nothing to exports.

Continue online @www. businessday.ng

www.businessday.ng

L-R: Elias Nicolas, consul general of Lebanon; Ajibola Olubando, 2019 Lebanese Nigeria Initiative scholarship awardee, and Ali Safieddine, vice-chairman, LNI, at the presentation of first LNI Scholarship program awardee at the Lebanese Consul General’s Office in Lagos.

L-R: Dave Baro-Thomas, consultant, Crown Media; Jane Thomas, client service executive; Lucy Omosefe-Ajayi, executive director/CEO, Lagos International Trade Fair Complex Management Board; Obinna Azuonye, chief operating officer, Crown Media, and Mary Ogbonna, client service executive, Crown Media, at a courtesy visit to the ED/CEO, Lagos International Trade Fair Complex Management Board, by management team of Crown Media to intimate her of the forthcoming roundtable/awards for investors and stakeholders in the complex, in Lagos.

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 22 August 2019

BUSINESS DAY

19

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Why government is recapitalising Discos OLUSOLA BELLO

T

he vice President Professor Yemi Osinbajo has said the significantly low distribution capacities of the 11 electricity distribution companies has been responsible for the drive to recapitalise them.

The Vice president disclosed this at the commissioning of the New Abeokuta 2x60MVA132/3KV substation and associated transmission lines/sub-stations built by the Niger Delta Power Holding Company and handed over to Transmission Company of Nigeria at Abeokuta, Ogun State.

He said the distribution capacity in the 11Discos are significantly low, hovering at around 4,000 megawatts on average with a peak at about 5,400MW. He said: “So, despite the availability of about 8,000MW of generation and 7,000MW of transmission capacity, the lack of Disco infrastructure to absorb and deliver grid power to end-users has largely restricted generation to an average of about 4,000MW, and sometimes even falling below 4,000MW”.

Currently we have about 13,427Mw of installed capacity, while available capacity is now about 8,342Mw. According to him, this was achieved by efforts of the government and its private sector partners in rehabilitation and commissioning turbines at Shiroro,

The Vice President , Yemi Osinbajo left) discussing a thing of interest with Chiedu Ugbo, managing director and chief executive officer of Niger Delta Power Holding Company of Nigeria (NDPHC) at the commisioning of the 2 X 60MVA, 132/33KV substation and associated 132KV transmission lines at Abeokuta, Ogun

Egbin, Sapele, Gbarain, and Delta Power power stations.

Professor Yemi Osinbajo concluded that it is important for the government to improve the supply and quality of power to homes and businesses in Nigeria, saying “Before the end of this year, new generation capacities will also include, from Gbarain, an extra 115Mw, Kashimbila 40Mw, Afam V 240Mw, Gurara 30Mw, Dadinkowa 20Mw, and Kaduna 215Mw power stations He said it has become evident that despite all the efforts that has been put into trying to expand the grid, the structure of the market today cannot deliver on the government’s promises to provide power for

domestic and industrial use.

A substantial change of strategy is necessary. “There is clearly a need for a change of strategy. What we have done in the past has taken us to a point where there is clearly a change of strategy”.

He said the commissioning is an important part of the Federal Government efforts to improve the supply and quality of power to homes and businesses in Nigeria.

Some industry operators have said that it is important that the Federal Government intervenes despite the fact that the substantially the power sector has been privatised, and therefore lauded government effort at ensuring that the

Will NNPC, NSCDC collaboration over OLUSOLA BELLO

T

he Nigerian National Petroleum Corporation NNPC has pledged to work with the Civil Defence Corps (NSCDC) to run the pipelines and oil thieves out of business very soon. This is a good development but industry operators are not too impressed with the new romance between the two parties because all efforts in the past to tame this menace have yielded very little result.

This is however not the first time such arrangement between the government and para military and military outfits have been entered into with the aim of arresting the ugly situation of pipeline vandalism and oil thieves.

The activities of the vandals and oil thieves have caused a lot of damage to the Nigerian economy but the problem still persists despite all the efforts.

At the height of the Goodluck Jonathan administration the Olusola Bello, Team lead,

activities of these criminal got to the point that service chiefs were assembled in Lagos to discuss the issue and plan the strategy on how to arrest the problem.

Special fund was made available for the military to fight this menace but instead the military personnel could not live above board. Some of themselves were alleged to have gotten enmeshed in the activities of the vandals and became over night millionaires through this nefarious activity.

They deploy all manners of tactics to get money from operating oil companies yet the volume of pressure of crude oil pumped to flow stations constant dropped because some thieves have tampered with the pipelines with the military looking the other side.

The challenges relating to the prevalence of militancy and pipeline vandalism has resulted in NNPC a losing 157.81million tons of petroleum products in 2017.This is aside from the direct loss of revenue in terms of crude oil theft and pipeline vandalism.

The Federal Government was

Graphics: Joel Samson.

www.businessday.ng

I

keja Electric (IE) has signed an agreement with Magodo Resident Association to invest in electricity infrastructure in the Estate as well as provide reliable and quality electricity supply to the residents.

The contract, which is in line with the company’s Premium Power Purchase Agreement, was signed at the association’s community hall in Lagos with representatives of Ikeja Electric and Magodo Resident Association present.

By this agreement, IE will provide Magodo residents with electricity supply beyond the existing standards with guaranteed performance levels. In addition to the improved supply of electricity to the Estate, there will also be access to dedicated Customer Care and Technical teams for prompt resolution of queries and/or technical issues within the Estate.

Folake Soetan, Chief Operating Officer of Ikeja Electric, expressed confidence in the success of the trend-setting agreement which she noted was in line with the Federal Government’s “willing seller, willing buyer” policy.

“We are confident that this agreement will serve as a model for other power agreements in the power sector because, while it is in line with the Federal Government policy, it also reflects our unwavering commitment to our customers. This has also been made possible by the Nigerian Electricity Regulatory Commission’s directive to DisCos to provide an enabling environment with exceptional service delivery,” she said.

600mn lack access to electricity in Africa-UNILAG DVC

said to have lost over N3.8 trillion to shortfall in oil production due to militants’ attacks and oil theft in a few year back.

Specifically, Nigeria is said to have lost about 700,000 barrels daily throughout last year, for which at the oil price of $50 per barrel, the country would have lost $35 million (N10.6 billion) daily, amounting to N3.8 trillion.

The questions is what would NSCDC do to make a difference and reduce the level of pipeline vandalism and help to enable products flow freely to the over 20 depots scattered across the country?.

Mallam Kyari who disclosed at meeting with Commandant General of the Corps, Muhammadu, who represented by Deputy Commandant General, Aminu Abdullahi that as part of efforts to rid the nation of the menace of pipeline breaks, the new management was putting in place a performance-based pipeline protection system to enable relevant security stakeholders to live up to their billings.

distribution and transmission sectors are strengthened.

Chiedu Ugbo, managing director and chief executive officer of the company in his address the Niger Delta Power Holding Company has about 4704 megawatts installed capacity but said sadly 4000MW of this installed capacity is stranded as its average daily dispatch by the System Operator (SO) is 700MW The company he said currently contributes about 37% of Installed generation capacity to the grid.

According to him, NDPHC’s contribution to the Transmission grid system has transformed the hitherto radial 330Kv/132KV grid into a more

robust grid system with significant provision of alternative power flow routes which now serve as redundancies and which has resulted in a more reliable and stable Nigeria grid.

He said Of note in these respects he explained are the commissioning of the over 220KM long 330KV Double Circuit (DC) lines providing alternative supply route into Abuja and the FCT from Geregu, through a new Lokoja substation, a new Gwagwalada substation into the existing TCN Katampe and Apo substations with several significant expansion works on existing substation developments along this route.

Between May 2015 and now under the administration of His Excellency President Buhari, about 30 NIPP Transmission projects inherited by the administration have been completed while over 70 Distribution Projects have also been completed across the 6 geopolitical zones of the country.

“In addition to the projects we are commissioning here today, we shall in the next few months be commissioning Awka 2X60MVA 132/33kV Substation in Anambra State, Adiabo 2X60MVA 132/33kV Substation in Cross River State.

We shall also in the same period be commissioning Major Distribution Injection Substations at Misau and Darazu in Bauchi State, Kumo in Gombe State and Agaye in Niger State”.

Ikeja Electric, Magodo resident sign power supply agreement

REMI FEYISIPO, Ibadan.

D

eputy Vice Chancellor (Development Services) University of Lagos, Folasade Ogunsola revealed yesterday that over 600million people in Africa lack access to electricity.

“The digital revolution is dependent on energy. The access rate to electricity in Africa has been slowly rising since 2000 and currently stands at 43percent but Africa accounts for 600m of the one billion people globally without access to electricity” he added.

Delivering the 7th annual public lecture of the Consortium for Advanced Research Training in Africa (CARTA) in Ibadan said the projection for sub-saharan Africa is that access will double by 2030 but there will still be about 600million without access due to high population growth rates and uneven development.

While saying this low

rate of access can be turned to a major advantage with t he embrace o f ren ew able energy such as solar energy,Ogunsola,a professor stated Nigeria must embrace the use of renewable solar energy to increase access to electricity in Africa and Nigeria.

While maintaining that the digital revolution requires energy, the don attributed low access to electricity to high population growth rate and uneven development.

She advised the government to urgently work on how to control the population saying unless the population is controlled infrastructure development will not match a geometrically growing population.

While saying Nigeria needs data for the future, the don advised the Nigerian governments to address health care system problems holistically.

Ogunsola don maintained that for Nigerian health institutions to be ready for the

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

https://www.facebook.com/businessdayng

@Businessdayng

future, it must digitize patient records in an electronic management system.

The University administrator who disclosed that very few countries of the world spend over one percent of their Gross Domestic Product on Research lamented that Nigeria spends less than one percent of her GDP on research.

According to her, government must invest in human capital development rather than in infrastructure saying only a literate populace will develop infrastructure.

In his speech, Vice Chancellor University of Ibadan, Idowu Olayinka,a Professor who was represented by the Provost College of Medicine, Professor Oluwabunmi Olopade-olaopa said that Africa researchers must conduct locally relevant researches that the leapfrog the continent into a global power.

According to him, African scientists are more relevant to solving Africa’s problems.

20

Thursday 22 August 2019

BUSINESS DAY

Thursday 22 August 2019

BUSINESS DAY

AGENDA FOR MINISTERS

AGENDA FOR MINISTERS

Nigeria’s ministers face task of reviving ailing economy ODINAKA ANUDU

F

orty-three ministers were sworn in by President Muhammadu Buhari on Wednesday with a charge to lift 100 million Nigerians out of poverty.

The ministers are coming at time when investor confidence is at the lowest ebb due to lack of direction and ill-advised, self-destructive policy pronouncements.

Beyond the euphoria of portfolios and geopolitical supremacy usually characterising Nigerian appointments, the ministers have the opportunity of writing their names either in the already-filled book of ignominy or empty book of fame.

The urgency of the times requires that the ministers must find solutions to fleeing investments, sky-high insecurity, stock exchange heavy losses (over N2.5 trillion since January 2018), high poverty rate (50 percent), unemployment malaise (23.1 percent), high number of out-of-school children (13.5 million children), illiteracy (38 million Nigerians), high mortality rate (821: 100,000), and slow growth (2.01 percent versus population growth of 2.6 percent).

Zainab Ahmed

ISAAC ANYAOGU & DIPO OLADEHINDE

T

he Petroleum Minister faces a task of drawing up competitive fiscal and regulatory terms for the oil and gas sector as well as organising transparent oil licensing bid rounds. He is expected to remove fuel subsidy, deregulate the downstream sector and liberalise gas prices, stakeholders say.

Buhari’s second term will have big impact on the Ministry of Petroleum Resources which controls Nigeria’s oil and gas sector – the heart of Africa biggest economy.

According to industry experts, the challenge before the Petroleum Minister is to improve the economic growth of a sector responsible for 90 percent of Nigeria’s foreign exchange earnings but whose GDP contribution has remained in the one-

LOLADE AKINMURELE

Why power minister must fix electricity market, enforce contracts ISAAC ANYAOGU

T

o rescue Nigeria’s floundering power sector, experts are asking the Power Minister to carry out deep structural reforms by instituting market tariffs, enforcing contracts and compelling operators to improve service delivery.

“Electricity pricing must be reflective and the regulator must step up action to check electricity theft and compel operators to improve,” says Ayodele Oni, energy lawyer and partner at Bloomfield lawfirm.

The administration of President Muhammadu Buhari broke with convention by merging the ministries of Power, Works and Housing, but the challenges in the sector require the full concentration of a minister. Buhari’s newly enlarged cabinet could address this issue.

Nigeria’s minister of power therefore is tasked with implementing government’s new directives to the Nigerian Electricity Regulatory Commission (NERC), the electricity sector regulator, to review tariffs to make them reflect the cost of

Major hurdles awaiting petroleum minister

digit margin, with all-time highest contribution of 9.84 percent in Q3 2017.

Experts in the oil and gas sector say reforming fiscal and regulatory terms by passing into law a competitive petroleum industry bill is the most urgent task facing the government.

Next is leveraging the oil and gas sector to provide

linkages across the economy and creating efficiency in the oil and gas sector.

For Adeola Adenikinju, director Center for Petroleum and Energy Economics and Law and member of the Central Bank of Nigeria Monetary Policy Committee, the most important agenda is ensuring the Petroleum Industry Bill

Finance minister needs to have Egypt, Indonesia counterparts on speed dial Babatunde Fashola

production and compel operators to fulfil their performance contracts.

Issued in June by the Federal Ministry of Power, Works and Housing, the policy directives and timelines also direct NERC to abide by the requirements for periodic major and minor reviews and processing of valid claims for deficits in tariff as provided for in the rules.

Absence of a cost-reflective tariff is one of the most contentious issues in the power sector.

Despite changes in the factors upon which the tariffs were based, including exchange rate,

gas prices and inflation rate, the NERC has compelled electricity distribution companies (DisCos) to price power around N32 per kWh (kilowatt) while DisCos say they are compelled to pay over N60 kWh since 2016.

According to the Power Sector Recovery Plan (PSRP), a reform plan for the sector, Nigeria should have reviewed tariff upwards by 50 per cent between 2017 and 2021. The review was meant to address accumulated deficit attributed by pricing power below cost of production.

DisCos are now in a dire situation, reporting accumulated

losses of N713.63 billion since the 2013 privatisation exercise while payables to both the Nigerian Bulk Electricity Trading Company (NBET) and the Central Bank of Nigeria (CBN) would now be approximately N2 trillion.

By implementing this policy directive, the electricity market could see increased liquidity by removing restrictions that prevented eligible customers from buying power directly from generation companies (GenCos) and setting a deadline for GenCos transition at least 59 per cent of the capacity contracted to NBET to bilateral contracts with DisCos, Eligible customers, franchisees and other traders.

The FG further directed NERC to strengthen the market by implementing existing orders promoting competition, approving pending mini-grid applications, enforcing performance agreements in operator’s contracts and setting up modalities to refinance accumulated debts.

The Federal Governmentowned Transmission Company of Nigeria (TCN) was directed to progress implementation of grid expansion plans, enforce full

21

payment of the Market Operator’s invoice in accordance with market rules and support transmission requirements of bilateral contracts with other investors to allow for more commercial use of transmission assets.

The new minister will oversee the implementation of the Siemens agreement with the Federal Government. The agreement is seeking to double Nigeria’s current generation output of around 12,000MW after 2023, improve distribution and transmission assets but does not address the market challenges.

“The Siemens deal looks good but the market and tariff issues have to be fixed first before it can work,” said Chuks Nwani, an energy lawyer based in Lagos.

This is why the lethargic attitude of the Buhari administration to appointing ministers does not inspire investor confidence because deep reforms often required in fixing ailing sectors of the economy like the power sector is outside the remit of permanent secretaries.

Section 27 of the Electric Power Sector Reform Act says only the Minister may issue a directive to NERC.

N

igeria’s next finance minister needs to grab the economy by the scruff of the neck to deliver big wins that don’t require reinventing the wheel.

The minister also needs to make close friends with the Indonesian counterpart, Sri Mulyani Indrawati and Egypt’s Mohamed Maait, seeing that both ministers could have a thing or two to share about economic reforms.

Abuja’s many economic struggles mean it wouldn’t require too much for the finance minister to make global waves. That’s assuming the minister can dodge the overbearing influence of President Muhammadu Buhari.

For starters, the minister could unlock quick economic wins by pulling the plugs on crippling power and petrol subsidies that have hobbled the economy and deterred investment.

The minister can lead the charge on privatisation of redundant government assets, effectively providing more opportunities for investors to invest in and seeking ways to replicate the successful and profitable NLNG model with other government assets.

This way the Minister opens up other sources of revenue for the government, thereby cutting down on a fastgrowing public debt stock and

lowering the budget deficit.

If the budget deficit is lower and the government can borrow less, that would free up credit to the private sector while also reducing the borrowing costs of the government.

In 2018, the federal government spent 66 kobo of every naira earned to service debt.

In the 2019 budget, recurrent expenditure to revenue ratio of 150 percent implies that the government will spend every naira earned as well as an extra 50 kobo borrowed on only recurrent expenditure this year.

The Minister needs to enforce a breakaway from the government’s spending on recurrent expenditure and debt servicing by pushing for reforms that reduce the cost of governance and spur spending on infrastructure.

Cutting corporate taxes for businesses to compete effectively against other countries amid the global hunt for capital, while ensuring higher compliance rates for taxpayers, would also bode well not only for the economy but even her reputation.

For the first time, there’s a good chance of Nigeria’s finance minister bagging the prestigious Bankers global finance minister of the year award that was last won by Indonesia’s Sri Mulyani Indrawati for her mark on SouthEast Asia’s largest economy.

Mulyani gained global acwww.businessday.ng

claim for a cocktail of tax reforms that entailed lowering income tax for small businesses and achieving higher taxpayer compliance which stimulated economic growth, created jobs and led to higher government revenues.

Taxpayer compliance hit 82.5 percent in 2019, a sizeable increase from the 74 percent recorded in 2014.

These changes to the tax system are integral to the finance minister’s aims of boosting state revenues by 12.9 percent to $146.5 billion in 2019, with the increased income from tax predicted to represent 80 percent of the target.

For the regional awards, it was Mohamed Maait of Egypt who clinched best finance minister in Africa.

Egypt’s ambitious programme of economic reform continues to win plaudits from around the world, with good reason.

In the space of four years, the country has enacted some of the most wide-reaching structural reforms in its recent history.

Admittedly, this has led to a high degree of short-term pain for Egyptian consumers – high inflation has emerged, for instance, as a result of the free float of the pound – but these reforms are undoubtedly paving the way for a brighter future for the country. And at the forefront of this reform story is Egypt’s finance ministry.

(PIB) is passed to provide transparency in the sector, including reform of the NNPC and provision of clarity for fiscal, regulatory terms so the oil sector can confirm to international standards.

“We have an upstream that’s not operating optimally; midstream that’s not functioning, and a

downstream that is dying so we have to think of a way to ensure private sector can make investment in the sector,” Ademola Henry, team lead at Facility for Oil Sector Transformation (FOSTER II), said.

Henry Biose, a petroleum economist based in Port Harcourt, said a petroleum industry law is a critical framework that will drive investments followed by actions to liberalise the gas sector.

“Our current laws are out-dated and if the PIB is not passed, uncertainty in the sector will increases and investors will stay away due to the absence of law to protect their investments,” Biose said.

Another major dilemma for the present government is the issues concerning oil bid round which last took place in 2011.

Last year, Madagascar, Algeria, Ghana started oil licensing rounds to boost

their reser ves, increase revenue as well as their capacity to take advantage of soaring oil prices, but Africa’s biggest producer has been unable to finalise bid round plans since 2016.

Over 186 marginal fields lie fallow because bid rounds have not been conducted leading to loss of billions of naira in revenue.

“Oil bid rounds should be more competitive and transparent, let Nigerians know who is bidding for each field,” Agboola told BusinessDay. Deregulation of the downstream petroleum sector is another key issue that faces the minister.

Today, Nigeria is only capable of pumping some 2.5 million barrels of crude oil per day despite sitting on more than 40 billion barrels of proven reserves with its mid-stream and downstream infrastructure are arguably in worse shape than upstream production.

Industry expects agric minister to make agriculture competitive …create environment for mechanisation JOSEPHINE OKOJIE

T

he Minister for Agriculture and Rural Development is expected to mechanise Nigeria’s subsistence agriculture sector and make it truly competitive.

Farmers in Africa’s most populous country are expecting the Agricultural Minister to address fundamental issues that have prevented Nigeria from attaining its food security target.

The Minister must lead the pack in creating the right environment to enable the private sector to steer innovation and irrigate the farms.

The private sector wants single- digit interest rate, and infrastructure to change the fortunes of Nigeria’s economy through agribusiness, with attendant exponential gains by way of earnings, employment, food provision and other spin-offs.

They note that the lingering problems in the sector have limited their inability to grow enough food for Nigeria’s 200 million.

“The main reason we have not made much progress with agriculture is our inability to address fundamental issues that are limiting productivity,” AfricanFarmer Mogaji, chief executive officer, X-Ray Consulting, said in a telephone response to questions.

“The Agric Minister needs to address these lingering issues

https://www.facebook.com/businessdayng

to drive growth in the sector.

How can we grow our agriculture with low use of technology and little or no infrastructure?”

Mogaji, who is also the head of Agriculture and Allied Group, Lagos Chamber of Commerce and Industry (LCCI), asked.

Growth in the sector has been on decline since the first quarter of 2017, with marginal growth rate recorded only in the fourth quarter of the same year, data from the National Bureau of Statistics (NBS) show.

Experts say the inability of the government to fix value chain deficiencies over the years has slowed growth in the sector.

Data from the National Bureau of Statistics shows that agricultural sector grew by 0.17 percent from 3 percent in Q1 2018 to 3.17 percent Q1 2019, while on a quarteron-quarter basis it increased by 0.72 percent compared to the preceding quarter. While improvement has been seen, growth in the sector is still below 2014 level.

Nigeria’s agricultural sector has been marred by several structural challenges ranging poor road networks, inadequate storage facilities and low quality inputs.

Ayodeji Balogun, country manager, AFEX Commodities Exchange Limited, during a recent BusinessDay Agribusiness Summit, said that developing agriculture is very critical in the country’s efforts @Businessdayng

to diversify, which, according to him, can only be achieved if heavy investments are made in infrastructure “There are no significant investments in the system to ensure that investors have a smooth operation and this is why we have not made any much progress in the sector,” Balogun said.

Nigeria is populated by about 200 million people who must be fed with staple foods ranging from yams, rice and cassava to beans, bananas and tomatoes, among others, but inadequate storage facilities have makes this a herculean task for farmers.

The tractors needed to grow these foods are lacking.

Nigeria is one of the least mechanised farming countries in the world with the country’s tractor density put at 0.27 hp/ hectare, which is far below the Food and Agriculture Organisation (FAO)’s 1.5hp/hectare recommended tractor density for Africa and other developing countries.

“We cannot grow our agriculture using hoes and cutlasses anymore. Mechanisation and irrigation are vital if we are going to feed ourselves,” Ibrahim Kabiru, national president, All Farmers Association of Nigeria (AFAN), said from his Kano farm.

“The Minister should focus on these areas if truly we are serious of attaining food sufficiency,” Kabiru said.

22

Thursday 22 Augsut 2019

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

N11.721 trillion

Week open (02– 08–19)

31,924.51 27,306.81

N13.307 trillion

2,268.01

Week close (16– 08–19)

26,925.29

N13.121 trillion

2,282.48

Year Open

Percentage change (WoW) Percentage change (YTD)

-1.40 -14.33

2,241.37

0.64 3.98

The NSE-Main Board

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

1,100.62

779.54

107.85

545.48

223.05

1,781.07

1,087.24

947.54

778.95

1,099.52 1,060.38

308.23

1,059.60

304.69

107.11

509.27

218.75

1,706.52

1,074.44

918.83

1,456.29

-4.98 -26.41

-0.08 -1.87

-3.56 -25.18

-1.15 -23.63

-0.69 -15.31

-6.64

-3.16

-31.99

-27.62

-4.19 -23.61

-1.18

-3.03

-13.20

-23.90

Buy low, sell high …is the time now?

Iheanyi Nwachukwu

T

h e Ni g e r i a n s t o ck market is lately at its newest lows but it might sound like a joke that those who want to make money from the market when it starts rising should begin to buy now.

“Buy low, sell high” is possibly the most famous adage about making money in the stock markets. It is simply the practice of buying a security when its price is (or is perceived to be) low and selling it when its price is high.

While this may sound like a tale in Nigerian context, there are still value stocks trading at their record lows that have the potential to appreciate in the near future.

What if you don’t buy them now?

You follow the crowd later when it starts to appreciate.

It is worth noting that though the law of supply and demand determines the direction of the market, but sometimes investors’ emotions and perceived greed also contribute in determining the level of wealth or losses they record in the market.

It is true that many stakeholders have underscored the need to intensify advocacy in order to draw government and other market regulators’ attention to the benefits of pro-market policies.

Your ability to buy low and sell high requires you to be able to determine roughly when the low and high prices for a security occur.

In their investment recommendation for this week, Vetiva Research analysts placed “Buy” rating on stocks like Zenith Bank, UBA, Access Bank, FCMB, Stanbic, Nigerian Breweries, Guinness, UACN, PZ, Dangote Sugar, Nestle, Seplat, Total, and Forte Oil Plc. For Afrinvest Research this week, investors should “buy” Fidelity Bank and Continental Reinsurance. They should also

www.businessday.ng

“hold” FCMB, “accumulate” Wema Bank, NASCON, Mansard and Forte Oil. Though the Nigerian stock market has negative return of circa -13.9 percent year-to-date (Ytd) as at Tuesday August 20, 2019, meaning that many stocks are at record lows, but it took-off this week on a positive note as more investors rallied around market bellwethers in a bid to take position in fundamentally sound

https://www.facebook.com/businessdayng

stocks.

As an investor, why do you go with the crowd when you have the opportunity to take earlier position? …and possibly take little margins when more investors go for the same stocks which results in corresponding price increase.

Stock investors buy into the future of the listed companies on the expectation of higher shareholder value.

@Businessdayng

“Astute and professionally guided investors should take position now that most stocks are trading lower than their net realisable asset value and expect handsome returns when the market shall eventually rally. A mere study of most of the company’s performance figures is most infor mative and points in the direction of a market that will definitely rally as soon as the economic team of government is in place”, Patrick Ezeagu, chairman, Association of Securities Dealing Houses of Nigeria (ASHON) had said last month.

He stated that a trend analysis of corporate earnings in recent time indicates that many companies across sectors have posted higher earnings with good returns but this has not significantly reflected in the upward movement of their share prices.

“Those who are selling off their shares right now are speculators and not real investors. Every stock market needs speculators for liquidity but they can change investment decision in one second. Our stock market is forward looking. Investors need not be nervous. They should consult professional stockbrokers for sound investment decision.

There is no basis for panic sale of shares. Many companies have announced strong financial performance with prospects of increased future earnings. Why should a shareholder of such a company embark on panic sale of shares?”, he had stated.

Thursday 22 Augsut 2019

BUSINESS DAY

23

Investor Helping you to build wealth & make wise decisions

United Capital Investment Views

Walking deeper into the negative territory...

Iheanyi Nwachukwu

T

he equity market continued last week to plunge deeper into the negative region, reducing hopes of a near-term rebound as investors continued to price stocks lower, in absence of bold economic reforms.

The Nigerian Stock Exchange (NSE) All Share Index (ASI) declined by 1.4percent week-on-week (w/w) to end the review week at 26,925.29 points, breaching the 27,000-support level.

Additionally, year-to-date (YtD) return touched a new low of -14.3percent while market capitalisation shed N185.9billion to close the review week at N13.1trillion.

Activity levels in the market were up, as average value and volume traded rose 45.1percent w/w and 12.1percent w/w

respectively.

The slogan for the week was “downhill”, as all major sector indices closed the week at lower levels. The Consumer Goods (-6.6percent w/w) sector index plunged the most, owing to price declines in NESTLE (-10percent) and NASCON (-10percent). Also, the Oil & Gas (-1.9percent), Banking (-1.2percent), Industrial Goods (-1.2percent) and Insurance (-3.9percent) sector indices trended southwards, dragged by s e l l - o f f s i n O A N D O (-9.5percent), STANBIC ( - 1 3. 4p erce nt), WAP CO (-6.7percent) and WAPIC (-10.3percent) respectively.

No t ab l y , G UA R A N T Y released its first-half (H1) 2019 financial results. According to the report, Gross Earnings declined by 2.1percent y/y to N221.9billion while Profit Before Tax (PBT) inched higher by 5.6percent to N115.8billion.

The bank declared an interim dividend of 30kobo/share.

Consequently, we saw some buying interest in the stock, up 1percent after the result was release.

Investors sentiment improved slightly, as market breadth appreciated marginally to close at 0.5x as against the 0.3x recorded last week. This was as 15 stocks recorded price appreciation, while 33 stocks receded. This week, we expect sentiments to remain tepid as risk-off sentiment across the globe, culminated by sluggish domestic economic momentum dampens investors’ appetite for equities.

However, the release of the outstanding Banks’ H1-19 earnings scorecard could possibly sway sentiments.

Money Market : Yields continue to trend higher The direction of liquidity in the money market space was mixed in the prior week. This

was as bond coupon payment (N47.1billion), OMO maturity (N122.9billion), NTB maturity (N34.4billion) and retail FX refunds to banks provided a boost to the overall liquidity level while prompting a fresh OMO mop up by the CBN, worth N88.7bn. Furthermore, inflows from Nigerian Treasury Bills (NTB) maturity and retail FX refunds were later mopped up via NTB and retail FX funding sales. In all, average interbank funding rates –Open Buy Back (OBB) and Over Night (O/N) rates –trended higher from 12.5percent to 18.8percent.

At the NTB and OMO auctions, the apex bank sent stop rates higher, especially on the long-dated bills, to spur a continued patronage of offshore investors and ease the recent pressure on the naira.

At the secondary NTB market, market bears

www.businessday.ng

continued to dominate the bulls as market players sought to fund their winnings at the OMO auctions - selling down their low yielding bills.

Thus, on a w/w basis, average yield spiked 128bps w/w to close the week at 13.6percent.

This week, the major liquidity inflow is via an OMO maturity worth, N92.3billion. Elsewhere, at the secondary market, we envisage a continued pressure on yields occasioned by CBN‘s expression of willingness to maintain the attractiveness of fixed income securities.

Bond Market: Bearish sentiments remain dominant Bearish sentiments continued to cloud the secondary market in the prior week. This was as yields across the curve trended higher amid a continued selling interest from offshore investors.

Consequently, average bond yield rose c. 43bps w/w to close the week at 14.2percent.

The recent selloffs within the market has been largely spurred by risk-off sentiments by foreign investors amid fears of recession in the developed market - signaled by the current inversion of the US and UK Treasury yield curves.

Specifically, for Nigeria, players remained on the sidelines and stayed cautious due to regulatory uncertainties.

Elsewhere, interest in Nigerian sovereign Eurobonds wanes as investors priced the below $60/b crude oil price, negatively. Consequently, yields on FGN dollar bonds inched higher across the curve as the average yield was up by 32bps w/w to 6.7percent.

Similarly, interest in Corporate Eurobonds was weak as only SEPLAT saw a marginal decline in yield while the other corporate dollar notes, recorded increase in yields.

Consequently, the average yield for the corporate segment (excluding the now redeemed ECOBANK note) inched higher by 2bps to 5.5percent.

We maintain our recent outlook that uncertainties in both the global and domestic market as well as a below $60/barrels Brent price, will continue to keep foreign investors off naira notes.

However, local investors will be looking to issuance at the primary market and fiscal policy pronouncements for guidance.

Investor’s Square •Have you been shabbily treated by your registrar, stockbroke r or other capital market operators?

Let us know and investor will help you investigate and report back.

E-mail: iheanyi.nwachukwu@businessdayonline.com

Economy & markets

Revisiting the calls for FX unification Iheanyi Nwachukwu

O

n April 4, 2019, Charles Robertson, the Global Chief Economist and Head of Renaissance Capital’s Macrostrategy Unit woke up many Nigerians with an interesting note titled “Nigeria: A good year to unify FX rates”.

Many of the Renaissance man’s readers like “Yours Sincerely” may have wondered what points he was driving at when he said: “Countries tend to hold onto multiple exchange rates until well after they have served their useful purpose.”

Robertson-led team went further saying that, “We believe Nigeria meets the FX and fiscal conditions needed to make a success of unification”. “The good news is that Nigeria may be preparing to unify its exchange rates, soon” the RenCap man said, while making reference to the ‘authorities’.

Last month, precisely on Monday July 29, 2019, the Financial Derivatives Company (FDC) hosted stakeholders in Lagos to discuss the unification of foreign exchange (FX) rates in Nigeria to enhance the African Continental Free-Trade Agreement (AfCFTA) which was signed in June by President Muhammadu Buhari.

The colloquium featured two panel discussions urging stakeholders to advocate for greater market determination and the use of a single exchange rate for the Naira. In his presentation at the FDC forum, Amine Mati, International Monetary Fund (IMF) senior resident representative and mission chief for Nigeria said, “Countries with multiple exchange rates have lower growth and higher inflation.”

The International Monetary Fund (IMF) stated the need for Nigeria to consider unifying its FX rate, saying it will help the country’s competitiveness in the regional and global trade.

Recall that Mike Obadan, a renowned Professor of Economics had noted in 2017 that, “a multiple exchange rate (MER) system has many costs in relation to the benefits, one of which is that large differentials in rates may encourage the over-invoicing of imports and the under-invoicing of exports in those markets with relatively low rates.”

He said also that, “MERs may create distor tions, become permanent, costly

https://www.facebook.com/businessdayng

and inefficient for resource allocation, unstable and not effective for their stated goals. Therefore, the CBN may consider reintroduction of a uniform exchange rate regime, to eliminate distortions created by MERs. It should then enhance access of preferred sectors/activities to foreign exchange by making it easily available.”

According to RenCap, “As so many have discovered over many decades, multiple exchange rates encourage corruption. Placing the decision over allocation of dollars at different exchange rates in the hands of unelected officials often leads to the enrichment of those officials.”

“Yet Nigeria in 2015 and 2019 has voted for a president who has made anti-corruption his key selling point to the electorate. It would be very optimistic to assume that Nigeria can avoid corruption from this policy choice, however well-meaning and honest the president and top CBN officials might be”.

In their report, the Moscowbased Investment Banking and Research group added, that, “It might be the first upside surprise for investors, following President Buhari’s re-election victory in February”.

“Apart from Venezuela (and that hasn’t gone well) we struggle to think of emerging or frontier markets with multiple exchange rates – except for Nigeria. What Nigeria’s history – and the history of other emerging markets tell us – is that (1) these systems don’t last, and (2) the longer a country waits to get rid of them, the harder it becomes,” RenCap added.

“In the meantime, multiple exchange rates are confusing (who had the biggest economy in Africa in 2018? It depends what exchange rate you use), they deter foreign direct investment (Ghana got 10 times more foreign direct investment (FDI) per capita, than Nigeria, in 2018) and they are often correlated with corruption”, he further noted. @Businessdayng

“In the meantime, FDI is deterred. In 2018, Ghana, which is about seven times smaller than Nigeria (in population or GDP terms), attracted $3.3billion in FDI, compared with $2billion for Nigeria.

South Africa and Ghana are now attracting 10 times more FDI per person than Nigeria, when Nigeria as the continent’s biggest economy should be attracting huge investments ($20billion or more annually to equal Ghana). Even Ethiopia, with a less literate population and half the electricity (per capita) that Nigeria has, received three times more FDI per capita in 2018”, RenCap noted.

The stakeholders’ forum was a unique opportunity for industry leaders to engage in interactive sessions and encourage the use of the AfCFTA provisions to fix Nigeria’s exchange rate problems.

“The IMF’s policy has been consistent on this issue, such that, we advise for the unification of exchange rates and the Central Bank of Nigeria (CBN) and Economic Recovery and Growth Plan (ERGP) are already working in this direction to ensure that the country has a unified exchange rate,” the IMF representative and mission chief for Nigeria further said.

In his opening remarks, Bismarck J. Rewane, Managing Director/Chief Executive Officer of Financial Derivatives Company (FDC) said, “Greater t ra d e c a n t r i g g e r d e e p structural change by increasing production efficiency and spreading knowledge and technologies across countries.

In this case, Nigeria needs complementary structural refor ms that can b o ost efficiency in sectors where we have competitive advantage.”

He said, “Unifying the exchange rate will impact the Nigerian economy more positively than the current multiple exchange rate regime does, which creates opportunity for arbitrage,” thereby also making a strong case for a unified exchange rate regime.

24

Thursday 22 Augsut 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Analysis

CCNN: Counting gains of successful business combination Iheanyi Nwachukwu

B

arely six months after Cement Company of Northern Nigeria (CCNN) Plc successfully consummated a landmark merger; the company is growing by leaps and bounds.

Cement Company of Northern Nigeria took a major leap in December 2018 through its business combination with Kalambaina Cement Company, a larger and newer Sokoto-based cement company.

With the receipt of shareholders’ approvals and all necessary regulatory and statutory approvals, the listing of the scheme shares to herald the new CCNN was done late December 2018.

Since the then, the Sokoto-based cement company appears to be reaping early gains of the business combination and recent strategic initiatives as shown in its recently released impressive first-half (H1) results.

With almost a consensus on the positive outlook for CCNN, the company appears to be on the right track to further consolidate its impressive growths over the years and increase returns to shareholders.

Advantages of the business combination A larger installed capacity not only provided CCNN with the necessary platform to compete in the Nigerian cement industry, it gave the company the ability to produce the volume for aggressive expansion in Nigeria and beyond.

As a listed company, the immediate competitive advantage was the leapfrogging of CCNN as the 12th largest quoted company in Nigeria.

But several compelling competitive advantages, which supported almost unanimous acceptance of the business combination by all stakeholders, were obvious.

With CCNN’s pre-merger 500,000 metric tonnes per annum capacity and Kalambaina Cement Company’s 1.5 million metric tonnes per annum capacity, the emergent CCNN’s installed capacity rose to 2.0 million metric tonnes capacity, strengthening

Abdulsamad Rabiu, Chairman, CCNN

Yusuf Binji, MD, CCNN

CCNN’s dominance as North-West Nigeria’s largest cement company.

Kalambaina Cement plant uses primary fuels such as coal, heavy oils and AGO, which helps to solve the power problem with limited downtime and further opportunities for growth and expansion.

CCNN and Kalambaina Cement Company had related core investor.

Damnaz Cement Company Limited held 50.7 per cent majority equity stake in CCNN. Abdulsamad Rabiu, who chairs the board of CCNN, holds the majority equity stake in Damnaz while his company-BUA International Limited held the 100 percent stake in Kalambaina.

This strategic ownership ensured seamless integration, especially given that the two merging companies had relevant experience and know-how in the cement industry. The business combination not only made 57 years old CCNN a stronger competitor in the cement market, but it also strengthened the company to deliver better returns to shareholders. Incorporated in August 1962, CCNN had commenced business operations in 1967 and was listed on the Nigerian

Stock Exchange (NSE) in October 1993. With some 40,000 shareholders, the business combination opened a new vista of growth and opportunities for the Sokoto-based cement company.

Impressive results CCNN is one of the highpoints of this earnings season at the stock market. With three-digit growth in all key performance indices, the company recorded well-rounded performance in the first half (H1) of 2019.

The six-month report for the period ended June 30, 2019 released at the Nigerian Stock Exchange (NSE) showed that total turnover rose by 166.14 percent to N32.15 billion in first half 2019 as against N12.08billion in comparable period of 2018. Gross profit grew by 163.07 percent from N5.47 billion to N14.39 billion.

Profit before tax (PAT) jumped by 165.3 percent from N3.66 billion to N9.71 billion. After taxes, net profit leapt by 180 per cent from N2.60 billion in first half 2018 to N7.28 billion in first half 2019.

Underlying performance ratios showed a generally stable outlook.

Gross profit margin stood at 44.76 percent. Pre-tax profit margin was

www.businessday.ng

https://www.facebook.com/businessdayng

steadied at 30.21 percent while net profit margin improved to 22.64 per cent.

The balance sheet also showed a stronger and better-positioned company with reduced leverage and increased working capital.

Total assets rose to N356.75 billion in June 2019 compared with N347.75 billion recorded for the year ended December 31, 2018. Total equity increased from N333.49 billion in December 2018 to N340.77 billion in June 2019.

Current assets had risen from N17.28 billion to N23.13 billion while non-current assets had increased from N330.46 billion to N333.6 billion.

The first half 2019 performance places CCNN in good stead to sustain its impressive year-on-year growth and cement its leading position as the fastest growing cement company.

The company had increased total dividend payout for the 2018 business year by 235 per cent to N5.26 billion after turnover and net profit jumped by 62 per cent and 77 percent respectively.

In the audited report and accounts for the year ended December 31, 2018, CCNN’s turnover rose to N31.7 billion in 2018 as against N19.58 billion in 2017. The top-line growth was due largely to increased domestic sales and exports.

CCNN produced 0.76 million metric tonnes of cement and sold over 0.74 million metric tonnes, an increase of about 59 per cent. Sale of cement in Nigeria rose by 49 percent to N28.9 billion while exports jumped from N0.2 billion in 2017 to N2.9 billion in 2018.

Earnings before interest and taxes rose by 86 per cent to N7.9 billion profit before tax (PBT) increased by 81 percent to N7.6 billion. Profit after tax rose to N5.86 billion in 2018 as against N2.91 billion in 2017.

Most analysts believe the business combination would further boost efficiency, productivity, output and better returns for CCNN. Stakeholders hopeful it will sustain positive growth trajectory “The opportunities within CCNN’s key markets and its export potential are almost endless. Situated just about 100km from Niger Republic and as the nearest cement plant to key markets in Northern Nigeria, the enlarged CCNN is now poised to compete effectively and serve those markets better at a lower cost with more energy efficiency through our use of coal,” Rabiu said.

Rabiu also hinted of plan to increase the company’s production capacity, while pointing out that the merger has led to introduction of new technology, reduction in operational costs and increase in the number of transport fleet.

He said: “The Company recorded its highest domestic exports sale during the year (2018). This was facilitated by the additional output from the enlarged entity. In 2019, we hope to have the full combined capacity of the two entities. With @Businessdayng

the new capacity, CCNN is now the dominant player in its home market of North West Africa”.

The Founder and Chief Executive Officer of BUA Group said CCNN is taking advantage of its proximity to the neighbouring West African borders, which has opened a new window for the export operations and revenue generation in foreign exchange.

Yusuf Binji, Managing Director, Cement Company of Northern Nigeria (CCNN) Plc said the company will sustain its positive growth trajectory as it is now in better and more competitive position to drive growth in its home market and exports.

He said the more benefits of the 2018 business combination and ongoing strategic initiatives will become more pronounced in the period ahead as the company continues to growth with economies of scale, enhanced operations and administrative efficiencies.

Most analysts are positive about CCNN’s outlook. On the back of the first half 2019 performance, analysts at Investment One Financial Services Limited said they remained positive about the outlook for CCNN, citing the synergies from its recent business combination and market advantage.

Analysts optimistic CCNN has potentials to grow sales, improve profitability While noting the decline in margin due to increased costs, analysts at Lagos-based Investment One said CCNN has potential to deliver improved sales and profitability.

Analysts believe that while the third quarter (Q3) may be a tepid quarter due to the rainy season, which slows construction, the company’s top-line performance may see support from potential increase in Federal Government capital expenditure spending following the appointment of executive cabinet and implementation of 2019 budget.

“In addition, the cement producer should continue to reap benefits of its merger with Kalambaina Cement if its plans to enter new market and expand market share continues to be successful,” Investment One noted “We also draw attention to a potential drop in cost in the medium term as its new factory is designed to run on multiple energy sources (such as gas and coal); this is unlike its old factory which is run predominantly with Low Pour Fuel oil (LPFO) which is the most expensive of all energy sources. If a switch in energy sources is effectively implemented, we see potential improvements in margin performance of CCNN as we have previously seen in other players operating in the sector,” Investment One stated.

They believe the top-line growth in first half 2019 suggests the company may be recording success in its plan to expand market share to other northern regions of Nigeria, “as the North-west region may not have the capacity to absorb new volumes”.

Thursday 22 August 2019

BUSINESS DAY

25

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Nigeria’s New Insurance Business Regime: In Search for Bigger and Better Fortresses AO2 LAW

B

y its circular dated May 20, 2019 captioned “Minimum Paid-up Share Capital Policy for Insurance and Reinsurance Companies in Nigeria” (the “Policy”), the National Insurance Commission (“NAICOM”) reviewed the minimum paid-up share capital requirement for all classes of insurance business in Nigeria, save for takaful and micro-insurance businesses. In the succeeding paragraphs, we examine the historical precedent of the capital requirements for insurance business in Nigeria, the new requirements of the Policy and our thoughts on what the Policy portends for the

INSIDE ǼLEX recognised as Nigerian ‘law firm of the year’ by WWL

26 Kenya wins Sh2.6b breach of contract case filed in UK: The Standard

27

NBA AGC to kick-off with Muslim Juma’at Prayers at the Lagos Central Mosque 27 DOA loses key member of team

28

Nigerian insurance industry.

Capital Requirements for the Insurance Industry through the

Years: The enactment of the Insurance Companies Act in 1961

and establishment of a Department of Insurance in the Federal Ministry of Trade commenced

the regulation of insurance business in Nigeria. The 1961 Act was however grossly inadequate in the wake of rapid commercial and business enterprise in the then newly independent Nigeria. To ameliorate this inadequacy, an Insurance (Miscellaneous Provisions) Act was enacted in 1964 and insurance Regulations issued in 1968 to give proper effect to and facilitate implementation of the 1961 Act. These legislations were repealed by the Insurance Decree No. 59 of 1976 as implemented by Insurance Regulations, 1977. Section 8 (1) of the Insurance Decree prescribes a minimum paid up capital of N300,000, N500,000 and N800,000 for life, non-life and composite offices respectively.

Continues on page 28

Voting opens for Africa Arbitration Awards 2019

… Spotlight on Africa’s Arbitration Excellence, Innovation and Achievements

T

he Africa continent projection for foreign direct investment remains positive, and with the ratification and coming into force the agreement establishing African Continental Free Trade Area (AfCFTA), the total value of FDI is expected to rise to $50 Billion. It goes without saying that this rise in international investment and trade will herald a rise in commercial and investment disputes, with arbitration increasingly preferred as dispute resolution mechanism.

The International Chamber of Commerce (ICC)’s recent caseload figures revealed that disputing parties from SubSaharan Africa reached 122 in 2018.

This growth of international arbitration in investment and contractual dispute resolution, as well as the continued development of international arbitration centers across the www.businessday.ng

Funke Adekoya, SAN

continent in countries like Nigeria, Kenya, Rwanda, Mauritius, Egypt etc., have all contributed to the rise of African practitioners in international arbitration.

It is for this reason that the organisers of the East Africa Arbitration Conference (EAI-

https://www.facebook.com/businessdayng

Georges Abi-Saab of Geneva

AC) 2019, recently announced the opening of voting for the inaugural Africa Arbitration Awards, which will take place on August 30th at the Radisson Blu, Nairobi.

The conference, which is colocated with East Africa Arbitra@Businessdayng

tion Conference (EAIAC) 2019, sets out to celebrate, recognise and honor outstanding practitioners and leaders in the Africa arbitration ecosystem.

Categories for the awards will feature, Arbitrator of the Continues on page 30

26

Thursday 22 August 2019

BUSINESS DAY

INDUSTRYFILE

BD

LegalBusiness

ǼLEX recognised as Nigerian ‘law firm of the year’ by WWL

L

eading Nigerian law firm, Ǽ LEX, has once again been recognised as Nigeria’s ‘Law Firm of the Year, 2019’ by Who’s Who Legal (WWL).

The firm was recognised at the WWL’s sixth annual ceremony held on May 16, 2019 at the Gibson Hall in London, where the firm’s Partner Davidson Oturu, received the award on behalf of the firm.

This is the sixth time the firm has won this award - recognition for its exceptional quality of work over the past year. Part-

ner ‘Soji Awogbade, who heads the firm’s Energy Practice, was recognised as one of the Thought Leaders Global Elite for Energy law from Nigeria. ǼLEX Managing Partner, Theophilus Emuwa, said it was an honour to be recognised again by Who’s Who Legal as the top law firm from in Nigeria.

“We understand that this recognition speaks to the quality of legal services we deliver,” he said.

Who’sWhoLegal has since 1996, identified foremost legal practitioners in multiple areas

of business law. In total, it has featured over 16,000 of the World’s leading private practice lawyers from over 100 national jurisdictions.

Every year at an award ceremony, individuals and firms that have performed exceptionally well are honoured after a comprehensive, independent survey with both general counsel and private practice lawyers worldwide. They identify a lawyer and a firm of the year in featured practice areas; and awards will be issued to these leading lawyers and firms in over 60 jurisdictions.

Theophilus Emuwa, Managing Partner, Aelex

Lawyers set to brace the future …As NBA-AGC opens in Lagos tomorrow with 12,000 lawyers in attendance

M

ost jurists, local and foreign, are quick to acknowledge that every case before them puts them and the judiciary on trial. This is because the judgment that is delivered in any and every case is a scorecard with which the jurists and the judicial system are judged. This is more like saying that the judiciary has always been on trial from time immemorial. It is not a Nigerian phenomenon, but what the judiciary is and should be in order to keep the judges on their toes, after all, their roles are too sensitive for them to be laid back.

In Nigerian, however, the judiciary has been in the eye of the storm in the recent past, and mostly for the wrong reasons – assault on the independence of the judiciary, allegations of corruption, allegations of conflicting judgments, seeming lack of cohesion among judicial officers and players, alleged to be lagging behind the times etc. It is no longer abnormal for parties to cases which judgments have been given to openly accuse judges of miscarriage of justice; some out rightly accuse the judges of corruption and bias. Unfortunately, some of these petitioners have had their cases proven at the National Judicial Council (NJC) and have got some of these erring judges sanctioned.

Recently, the judiciary was almost brought to its knees with the suspension of the then Chief Justice of Nigeria (CJN), Walter Onnoghen JSC by President Muhammadu Buhari, over the jurist’s alleged non-compliance with the Code of Conduct’s stipulations of asset declaration, and the swearing-in of Tanko Muhammad JSC as the acting CJN. It should be recalled that the President did

Members of the NBA Technical Committee on Conference Planning (TCCP) led by the President of the Nigerian Bar Association, Paul Usoro, on a courtsey visit to the host governor, Babajide Sanwo-Olu.

this hire and fire without the recommendation of the NJC, which many claimed, had roles to play in such circumstances. The fallout of these incidences were a harvest of injunctions and counter injunctions that Nigeria experienced only during the June 12 era.

Delay in the dispensation of justice is another evil that our judicial system grapples with.

The judiciary in the country seems to have become helpless in tackling this issue which has become a clog in the wheel of the administration of justice in Nigeria. Before the review of the Electoral Act that put timelines to elections petitions, judgments in election petitions dragged www.businessday.ng

and were, sometimes, delivered only months to the expiration of the tenures that some of these candidates were supposed to serve, thereby denying justice to some of the petitioners and their constituencies.

Some of these weaknesses and threats our judicial system experience, as well as the global trend in adjudication, including the changes that have been introduced in the world by technology and internet demand that our law, which guides everyday relationships amongst peoples and corporate bodies needs to acquaint itself with these current developments to be able to adjudicate between contending

https://www.facebook.com/businessdayng

parties in times of rift as well as be able to deploy these developments to achieve its own growth.

It is with this background and with eyes set in the future that the organizers of the 59th Annual General Conference (AGC) of the Nigerian Bar Association set the theme of this year’s conference to be ‘Facing the Future’. Like the quote attributed to the legendary Mahatma Gandhi, “the future depends on what you do today.” The Nigerian Bar is using this year’s conference to plan the future of its industry, its practice and the entire justice system in Nigeria.

According to its programme of events, the august conference “will address issues around the @Businessdayng

rule of law, independence of the judiciary, access to justice and protection of fundamental human rights, the economy and how to pilot the present to assure a better future. The theme ‘Facing the Future’ is borne out of the pressing need to invest in a sustainable foundation for an optimistic future.”

The Conference will also interrogate the current legal regulatory environment, lawyers’ response to technology and preparedness to harness these tools for efficient legal services delivery and a technology driven judiciary.

As usual, the NBA Sections and their respective specialist committee sessions are going to play active roles at the conference to assist in building the capacity of the participant lawyers, who would be given the opportunity to focus on their areas of interest and benefit from exposure to emerging practice areas to be better equipped for a better future.

One of the issues that will be discussed at the conference is sexual harassment in the legal and justice community. This is one issue on the lawyers’ conference agenda that the wider society is eagerly looking forward to as it would benefit from the deliberations and recommendations that the ‘learned men’ would proffer. People have attributed the dearth of convictions for sexual offences in this part of the globe to a weak judicial system that has failed to adequately protect victims of sexual abuses.

As the lawyers converge in Lagos for this year’s AGC, one would expect that they are going to find lasting solutions to some of the ills that bedevil our judicial system, in general, and the legal profession in particular.

Thursday 22 August 2019

BUSINESS DAY

GLOBALREPORT

BD

27

LegalBusiness

Kenya wins Sh2.6b breach of contract THEBAR NBA AGC to kick-off with Muslim Juma’at case filed in UK: The Standard Prayers at the Lagos Central Mosque

T

he Kenyan Government has scored a victory after a Londonbased International Arbitration Tribunal dismissed a Sh2.6 billion claim by a British energy firm. UK’s Cluff Geothermal Company and its local partner had moved to London Court or International Arbitration (LCIA), accusing Kenya’s Geothermal Development Company (GDC) of breach of contract.

UK’s Cluff Geothermal Company and its local partner had moved to London Court or International Arbitration (LCIA), accusing Kenya’s Geothermal Development Company (GDC) of breach of contract.

In 2013, GDC entered into a contract for provision of drilling services for 20 geothermal wells at its Menengai geothermal field for US$41,219,208 (about Sh4.2 billion).

However Cluff Geothermal and its local partner, Great Rift Drilling, stopped work on March 2015 and declared a dispute, accusing GDC of outstanding invoices.

By the time the case was referred to the tribunal on August 13, 2017, GDC had paid US$11,857,038.50 (about Sh1.9

T

he Technical Committee for Conference Planning (TCCP), the body saddled with the responsibility of organising the 2019 Annual General Conference (AGC) of the Nigerian Bar Association (NBA), scheduled to hold in Lagos from 23 August 2019 to 29 August 2019, has announced that the Conference would be kick started with the Muslim Juma’at Prayers.

Disclosing this to BusinessDay, the National Publicity Secretary of the NBA and Chairman of the Media and Publicity Sub-committee, Kunle Edun stated that the Juma’at Prayers

billion).

On June 3, the LCIA ruled that GDC will pay the claimants the sum of US$2,259,680 (about Sh226 million) in respect of invoices issued for work done and a further US$593,497.33 (about Sh60 million) as interest.

This makes the total award Sh286 million, saving the tax payer more than Sh2.3 billion.

would hold at the Lagos Central Mosque located at Lagos Island.

According to the programme shared with BusinessDay, The prayer, which has been fixed for the August 23rd, 2019, will begin at 1:00 pm at the Lagos Central Mosque, Nigeria.

The Chairman of the committee also disclosed that provisions have been made for transportation of conferees.

This he said will be stationed at the Lagos City Hall, also within Lagos Island as well as at the NBA Ikeja Branch Secretariat, from 12:00 noon, to convey Conference delegates to the mosque, for the prayers.

However, the amount due is likely to go up should Kenya delay in making the payments after the tribunal awarded a daily interest rate of about Sh46,000.

Kenya was represented by AG Paul Kihara, Solicitor General Ken Ogeto and a British lawyer, Michael Sullivan QC. --- StandardMedia.

£3.5m up for grabs in new lawtech competition

M

illions of pounds in funding is available for legal technology innovators in the UK, through two awards schemes inviting entries over the next few weeks.

The Enabling Data Access Innovation Lab, organised by Whitehall-funded Innovate UK, plans to award up to £3.5 million to projects developing data access methods to enable the application of artificial intelligence (AI) and data technologies in the accountancy, insurance and legal services sector.

The competition takes place in two stages: first, individuals apply on behalf of their organisations to join a three-day Innovation Lab from 14 October. Four weeks after the event, project consortia will be required to submit their proposals for assessment. Further details are here.

The deadline for applications is noon on 4 September.

In another initiative, business information giant Thomson Reuters is offering cash prizes of $30,000 (£25,000) for bright ideas which harness technology to solve legal regulatory challenges, as well as investments of £250,000 (£207,000) in startup businesses. The initiative is the

latest sign of interest in so-called ‘regtech’ to compliment the booming ‘fintech’ and ‘lawtech’ sectors.

Announcing the competition, Nick Jarema, vice president, Thomson Reuters, said the global regtech market segment is expected to nearly triple in size to $12bn over the next five years.

‘Businesses are increasingly looking to technology and automation to help navigate a rapidly evolving regulatory environment and rising costs of compliance,’ he said.

Entrants in the ‘Global RegTech Competition’ will need to demonstrate how their solutions help lawyers, tax and www.businessday.ng

compliance professionals and/ or governments solve regulatory and compliance challenges through the smart application of new technologies. Entrants will be judged on criteria that include: the market opportunity, the value proposition of their solution, technical expertise, partnership opportunities and quality of their presentation.

Start-ups in these areas are invited to apply by 9 September.

Meanwhile, entries in the SRA-backed Legal Access Challenge, which is making four awards of £50,000, closed last Sunday. The list of finalists is due to be published next month.

---Law Society Gazette

https://www.facebook.com/businessdayng

Coming Soon! @Businessdayng

28

Thursday 22 August 2019

BUSINESS DAY

INDUSTRYFILE

BD

LegalBusiness

DOA loses key member of team

N

ews broke in the early hours of Saturday about the untimely passing of Data privacy lawyer, and a key member of the DOA (Duale Ovia & AlexAdedipe) team, Adavize Alao.

Speaking about the loss, the firm’s managing partner, Adeniyi Duale said, “It is with deep sadness that we announce the death of our colleague, Adavize Alao. A gentleman in his prime, Adavize was full of life and vigour. The Firm has undoubtedly lost one of its shining stars. Our thoughts and well-wishes go out to his family and those he left behind.”

The late Adavize was also the co-founder of Lawyard, one of Nigeria’s foremost online legal media platforms which has been a resource for the legal community in Nigeria, and until his demise, he worked tirelessly and with an unflinching commit-

ment to the Lawyard dream of leveraging technology to provide solutions to resource challenges within the legal community.

He has been described by many in the legal community as a shining star who shone with excellence in all that he did.

In a tribute to its co-founder, the Lawyard team wrote, “It is with a deep sense of loss that we announce the untimely demise of our Co-Founder Adavize Alao, who until his painful exit from this realm, devoted his intellectual and financial resources to building the Lawyard brand as a reliable platform for legal information, statutes, essays and other research materials.

“He has similarly been pivotal to the success of new Lawyard initiatives such as the Lawyard Discourse, Lawyard Dialogue, Lawyard Quarterly Journal and the Lawyard Directory, some of which were at the final preparatory stages at the time of

his death.”

As a lawyer, Adavize demonstrated expertise in advising new businesses, especially within the Information and Communication Technology sector and was a rising voice in the areas of Data Protection, Data Privacy Corporate Governance Professional

and Digital Marketing expert with Experience in the Digital Economy.

The last encounter the BusinessDay Law Editor had with him was on Friday June 7th, 2019 when he had just come in from the UK and attended a special event of the NBA-SBL Young

Lawyers Committee tagged, “A Lawyers’ Tale” at the law firm of Odujinrin and Adefulu in Lagos.

Indeed, Adavize’s brilliance and potential was undeniable to all who knew him or had an encounter with him and he will be sorely missed. Rest in peace Adavize.

Nigeria’s New Insurance Business Regime: In Search for Bigger and...

Continued from page 25

A number of other insurance focused legislations were enacted between 1977 and 1997, notably the Insurance Special Supervisory Fund Decree, 1989 and Insurance Decree 58 of 991.

In 1997, the National Insurance Decree No. 1, now National Insurance Commission Act, Cap. N53 Laws of the Federation, 2004 (the “NAICOM Act”) created NAICOM with the principal object of ensuring the effective administration, supervision, regulation and control of insurance business in Nigeria. In the same year, Insurance Decree No. 2 required insurance businesses to attain a minimum paid up share capital of N20million and N150million for life and general insurance; and reinsurance, respectively.

General insurance companies with oil and gas; marine and aviation; credit insurance and other listed business were obligated to maintain a paid-up share capital of N70million.

The Insurance Act, 2oo3 currently compiled as Cap. I17, Volume 7, LFN 2004 (the “Insurance Act”) increased required minimum share capital for insurance companies to N150million, N200million for life insurance and general insurance while a

share capital of N350milllion was prescribed for composite and reinsurance businesses. In September 2005, NAICOM issued a Guideline, pursuant to an announcement by the Federal Minister of Finance, increasing the minimum paid up capital requirements for insurance companies.

The directive raised the minimum paid up capital base of reinsurance and composite insurance companies from N350million to N10billion and N5 billion Naira respectively. The minimum paid up share capital requirement for life and non-life insurance companies was equally affected by the www.businessday.ng

recapitalization exercise with a marked increase to N2 billion and N3 billion. Insurance companies were granted a transition period of one year and five months to comply with the new capital base requirements. This exercise culminated with the consolidation of the entire insurance industry; at the end of the consolidation exercise, only 49 out of the previous 104 insurance companies remained in operation. It is reported that despite the drop in the number of players within the industry, activities increased with enhanced public awareness of the sector, rapid expansion and

https://www.facebook.com/businessdayng

strategic business acquisitions and improved visibility.

In 2018, NAICOM issued a Tier Based Solvency Capital Policy for insurance companies in Nigeria (“TBS Capital Policy”). This attempt to implement another increase in share capital for insurance companies was withdrawn following an uproar in the insurance industry and an order of the Federal High Court.

The Policy and the New Minimum Paid Up Share Capital Requirement: NAICOM’s power to administer, supervise, regulate and @Businessdayng

control the insurance industry is derived both from its Establishment Act and the Insurance Act. Section 9(4) of the Insurance Act authorizes NAICOM to increase, from time to time, the amount of minimum paid-up share capital required to operate an insurance business. The Policy is issued pursuant to these powers. The Policy prescribes a minimum paid up share capital of N8 billion, N10 billion, N18 billion and N20 billion for life insurance, general insurance, composite and reinsurance businesses respectively.

The Policy takes immediate effect for new applications from the date of issuance; however, existing insurance and reinsurance companies are granted until June 30, 2020 to attain full compliance with the new minimum paid-up share capital requirement. The Policy mandates all new applicants to deposit an equivalent of 50% of the prescribed minimum share capital with the Central Bank of Nigeria (“CBN”). Existing insurers are required to make a statutory deposit of 10% of the prescribed paid up share capital.

Failure to deposit the stipulated amount shall constitute a ground for cancellation of the certificate of registration issued to the defaultContinues on page 29

Thursday 22 August 2019

BUSINESS DAY

YOUNG BUSINESS LAWYER Dress down Monday!

I

walked into the dentist’s office with an acquaintance. “What do you do?”

She asked. I responded, “I am a lawyer”. Her response, “I would not have thought, aren’t lawyers to wear only black and white?”

I was wearing a plum coloured dress and started to wonder how much of a disguise it was of my legal prowess at the same time, I had thoughts fleet through my mind on how much this unintentional action had impacted the perception of me and what I did. The saying “dress as you want to be addressed” is common knowledge and many testimonies of missed opportunities and gains because of inappropriate dressing abound; there really is no need to delve in.

I may have misled you with the title and the paragraphs above that I write about dressing and maybe you are already ticked off at the simplicity of this, I apologize. My focus is different.

In recent times, various companies have adopted flexible policies to accommodate the so-called “idiosyncrasies” of employees. Flexi-hours, permission to dress down and wear informal or semi-casual apparel, colourful sleeping pods, creches for children and in some creative spaces, critical business days like Mondays can also be dressdown days.

In many cases, the companies have undertaken these policy changes as knee-jerk reactions to staff attrition or for similar reasons and so one cannot say that the making of these decisions were driven by ratiocination or strategy. In other cases, the adoption of these policies resulted simply from just rep-

licating a picture or lay-out seen elsewhere. Increasingly, employers are realizing that some of these changes do not induce the expected results and the magnitude of investment in such may not deter the action they sought to cure. Likewise, professionals change jobs, move departments, adopt new roles and preferences at work with the same knee-jerk reaction, fear or emotional prejudice that has been described above. More actively, these professionals spend significant time clamoring for better conditions, protesting and getting fixated on the campaign for better working conditions without any particular strategy

as well.

Please note that working conditions are critical to performance and so this is by no means an attempt to demean them, but my question seeks to assess the value-add or benefit of intentionally dressing our work lives for optimal benefit such that whether employer or professional, any changes made or requested are driven at a properly reviewed objective.

In an article titled “Consultants you are next” published in the December 2013 edition of the Harvard Business Review magazine, the authors opined that the forces which had disrupted many industries were

BD

29

LegalBusiness

now re-shaping consulting and it was important for service providers (both as individuals and body-corporates) to begin to re-design the work space for efficiency and value to remain sustainable. This is a big elephant in the room that needs to be addressed as many professionals are yet to be positioned for the challenges that this may bring.

Working conditions are required to facilitate ideation and not a mere feel good feeling as such this should be the primary reason a company or employee campaigns for amendments.

If you were allowed to dress down on Monday, would that improve your capacity to deliver on work. For the employer, if you permitted employees to work from home, would it increase productivity and how would this be measured.

There is reportedly, a significant exodus from the professional services sector and it is traced to high stress and dissatisfaction with conditions of work. Flexi-hours alone will not solve the issue and where it is to be addressed, must be done holistically.

As such, for employers and professionals alike, in making choices or campaigning for flexible work conditions, the vote should be on any policy that would enable the following: Ideation and development: in a disrupted business world, ideation is a necessity. With digitization of processes, more routine functions are losing their peculiarity as such, constant ideation is critical and work conditions must enable this.

Symbiotic benefits- While at common law, contractual relations are a master-servant relationship, increasingly so, the

characterization of these relationships are taking on the form of collaborators and partners.

This is because both sides realize that there is value to be gained from aligning objectives and work together towards this end.

Team efficiency: a work from home policy that enables lethargy and lack of accountability can destroy the employer and the beneficiaries’ output, as such, the change must be so customized Work-life Equity: please note that the reference is not to “work life balance” but to a system which enables personal sustenance and satisfaction both in and out of work.

Unlocks personal capacity: work conditions which are not challenging create boredom and work conditions must be dressed in such a way as to encourage self-discovery and blossoming.

Lastly, in choosing, professionals must ensure that they remain accountable for tracking the skills garnered over time as in this age of machine learning and artificial intelligence, the professional must be careful to undertake working conditions which enable growth and seek to engage for amendments which further enhance skill acquisition from time to time.

• OYEYEMI ADERIBIGBE is a Senior Associate at Templars.

She is also the current ViceChairman of the Young Lawyers’ Forum of the Nigerian Bar Association -Section on Business Law and the Young Lawyers’ Committee Liaison Officer of the African Regional Forum of the International Bar Association.

Feedback – Oyeyemi.aderibigbe@templars-law.com; yemiimmanuel@yahoo.com.

Nigeria’s New Insurance Business Regime: In Search for Bigger and...

Continued from page 28

ing insurance company.

Scoring the Nigerian Insurance Industry: It is reported that Nigerian’s insurance industry has in the past decade achieved an average annual growth rate of 35.07% in both life and non-life insurance businesses. Gross premiums rose by 22% to N315bn in the third quarter of 2018 from N258bn in the corresponding period of 2017. Despite growing at a faster pace than the economy, Nigeria’s insurance sector is still relatively underdeveloped, compared to its peers. With a population estimated at circa

200 million people, and a penetration rate of 0.3%, Nigeria has the lowest penetration rate amongst comparable African countries.

South Africa currently stands at 14.7%; Kenya and Egypt boast of 2.8% and 0.6% insurance penetration levels respectively. Considering the growing middle class and increased life expectancy rate for Nigerians vis – à – vis insurance’s character as an efficient diversifier of risk, the potential for growth in the sector is enormous.

In Conclusion – Our Take: Historically, the impact of regulation on positive performance in the insurance industry cannot www.businessday.ng

be understated. Growth in life insurance premiums, for instance, has maintained a steady upward trend anchored on the compulsory group life insurance policy requirement on all companies. In this regard, we consider the new minimum paid-up share capital requirements as necessary to strengthen the depth of coverage capacity of local insurers in a bid to improve market penetration.

Low underwriting capacity, a current experience in the Nigerian insurance industry, is a barrier to a sustainable improvement of the market penetration data. We hope to see, in the coming days,

https://www.facebook.com/businessdayng

an effective implementation of the Policy resulting in a consolidation of the sector through amalgamations, mergers and acquisitions as insurance companies aspire to attain full compliance with the Policy within the 13 months’ period earmarked for existing insurance companies. The best outcomes for the insurance sector, would be the birth of recapitalised insurance companies able to take on high value and risked segments of the economy such as the aviation, marine and petroleum sectors, thus enhancing local participation and improved insurance penetration. An invigorated insurance

@Businessdayng

sector is fundamental to national economic stability as resilient and bigger institutions are better situated to withstand economic downturns, while providing a solid risk mitigation strategy for Nigeria’s teeming population.

•For further information on the foregoing (none of which should be taken as legal advice), please contact: Bidemi Olumide (bidemi.olumide@ao2law.com) or Ifure Udofa (ifureuwem.udofa@ ao2law.com) with the subject: “Nigeria’s New Insurance Business Regime: In Search of Bigger and Better Fortresses”

30

Thursday 22 August 2019

BUSINESS DAY

IN LAWS

BD

LegalBusiness

Nigerian Correctional Service: stakeholders continue to hail new law

P

resident Muhammadu Buhari, on Wednesday, 14th August 2019 signed the Nigerian Correctional Service Bill into law.

The bill, among other things, changes the name of the Nigerian Prisons Service to Nigerian Correctional Service.

The bill was first presented and read in the Senate in January 2008, 11 years ago by a former senator and current chairman of the Niger Delta Development Commission (NDDC), Victor Ndoma-Egba, in the sixth assembly.

Rights Advocates and stakeholders have continued to hail the law, which provides that correctional services must initiate behaviour modification in inmates through the provision of medical, psychological, spiritual and counselling services for all offenders including violent extremists.

Speaking about the development, Dr Uju Agomoh, Executive Director, Prisoners’ Rehabilitation and Welfare Action (PRAWA) described the move as a welcome one.

She said, “PRAWA is very happy with this news and congratulates Mr President, the 8th National Assembly, the Nigerian Prisons Service (changed to Nigerian Correctional Service), Ministry of Interior, Federal Ministry of Justice, all individuals and organizations that

worked with us as well as all Nigerians towards the realisation of this. This is a move in the right direction.”

KNOWING THE LAW… Below are some key points to note about the Nigerian Correctional Service Law: Name Change: With this new law, the Nigerian Prisons Ser vice is now known as the Nigerian Correctional Service.

The law now empowers the State Comptroller of Prisons to reject additional prisoners where the prison in question is

already filled to capacity.

It divides the Correctional Service into two main areas which are, a) The Custodial Service and b) Non-custodial Service.

The Custodial Service will, among other things, take control of persons legally interned in safe, secure and humane conditions and provide support to facilitate the speedy disposal of cases of persons awaiting trial.

The Non-custodial Service will be responsible for the administration of non-custodial

measures like community service, probation, parole, restorative justice measures and such other measures as a court of competent jurisdiction may order.

The objective of the law is to focus on correction and promote reformation, rehabilitation and reintegration of offenders.

The law stipulates that the Correctional Service will be headed by the Controller-General and a minimum of eight Deputy Controller-Generals.

The law states the Cor-

rectional Service must init i at e b e hav i ou r m o d i f i ca tion in inmates through t h e p rov i s i o n o f m e d i c a l , psychological, spiritual and counselling services for all offenders including violent extremists.

The law also states that where an inmate sentenced to death has exhausted all legal procedures for appeal and a period of 10 years has elapsed without the execution of the sentence, the Chief Judge may revert the death sentence to life imprisonment.

Voting opens for Africa Arbitration Awards...

Nigeria.

Continued from page 25

The panel of judges include,

Year, Young Arbitrator of the year, Innovation In Arbitration

Dipna Gunnoo, Head, MCCI Ar-

Award 2019, Lead Case Counsel

bitration and Mediation Center

Team 2019, Leading Arbitration

(MARC); Mauritius, Dr. Ismail

Service Provider 2019 (i.e. Arbi-

Selim, Director, the Cairo Re-

tration Funders, Experts, etc).

gional Center for International

Nominated in the category

Commercial Arbitration (CR-

for African Arbitrator of the

CICA), Egypt ; Professor Ike

year are, one of Nigeria’s lead-

Ehiribe

ing arbitration practitioners,

Professor, 7 Stones Com-

Funke Adekoya, SAN; Prof. Jus-

mercial & IP Chambers, United

tice Edward Torgbor, of Kenya;

Kingdom; Dr. Fidele Masengo,

Georges Abi-Saab, an Honorary

Secretary General, Kigali In-

Professor of International Law

ternational Arbitration Centre,

at the Graduate Institute of International Studies, Geneva; and Nigeria’s Babatunde Fagbohunlu, SAN, who is a Senior

Prof Justice Edward Torgbor of Kenya

Partner at Aluko & Oyebode.

Rwanda; and Lawrence Muiruri,

Babatunde Fagbohunlu of Nigeria

Mercy Okiro of Mwagambo

Lubulellah & Associates, Kenya

The category for Young Ar-

& Okonjo Advocates, Kenya;

and Abayomi Okubote, Senior

bitrator of the year, features,

Wilfred Mutubwa, a Partner, at

Associate at Olaniwun Ajayi LP

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Registrar/CEO, Nairobi Centre for International Arbitration, Kenya.

Thursday 22 August 2019

BUSINESS DAY

31

BUSINESS TRAVEL How infrastructural gaps across Nigerian airport worsen flight delays, cancellations IFEOMA OKEKE

T

he condition of the roads and reoccurring insecurity cases across the country have forced the average Nigerian to rather travel by air, thereby keeping more planes on the air.

According to figures by the Federal Airports Authority of Nigeria, (FAAN) on passenger traffic obtained by BusinessDay, passenger traffic increased by 16,371,674 in 2018 from 13,706,345 in 2017, showing a 19.4 percent increase.

Also Lagos, Abuja, Port Harcourt, Kano and Enugu airports saw a surge in passenger traffic for the first quarter of 2019 with increase from 11,842 passengers in first quarter 2018 to 13,762 in 2019, representing a 16.21percent increase.

No doubt, Nigerian airlines have in the last few months experienced increase in passenger patronage and expectedly are working round the clock to meet demands.

Air Peace, Nigeria’s largest carrier in particular appeared to be prepared for the surge in influx of passengers as it recently placed a firm order for 10 brand new Embraer 195-E2 aircraft. The order comprises purchase rights for another 20 E195-E2 jets also, 124-seater jet in dual class and 146-seater jet in single class configurations respectively.

With all purchase rights exercised, the contract is valued at N640.5 billion ($2.12 billion) based on current list prices.

Air Peace also set a regional record in September 2018 when it ordered 10 brand new aircraft from Boeing, increasing its fleet size then to about 37 aircraft. With the new order, Air Peace’s fleet size has increased to 67 aircraft.

Other domestic carriers have also stepped up to the challenge with the return of aircraft that had gone on maintenance for some months.

Flight delays and cancellations However, despite the appreciable number of equipment to meet up with demand, flight cancellations and delays appear to be on the increase.

According to the latest record released by the Consumer Protection Department of the Nigerian Civil Aviation Authority (NCAA), domestic airlines operating in Nigeria recorded 7,926 cases of delayed flights in the first quarter of this year (between January and March 2019) alone. This represents more than 50 per cent of the flights within the period under review.

These data confirm that flights hardly take off at scheduled time

in Nigeria and more worrisome is that all the aforementioned airlines operated an average number of four aircraft or less during this period, except Air Peace, which operated about 18 aircraft on domestic routes and recorded about 90 flights a day.

Ordinarily, it is expected that airlines with fewer number of aircraft operate fewer destinations and therefore should record timely flight take-off because they are unencumbered by complex scheduling challenges, which airlines that operate many flights face.

Concerns have therefore been raised on why airlines continue to delay flights despite the lack of complexities in flight schedules and adequate equipment to meet surge in passenger numbers.

Air Peace, few weeks ago cancelled all its flights to Enugu International Airport over flooding of the runway. The airline was unable to operate into the airport as the runway was not safe to land or take off as a result of the flood.

BusinessDay’s checks show that no major maintenance has been carried out on the runway between 1977 and 2014 when Ethiopian Airlines was given clearance to fly to the airport.

Causes of flight delays While it is understandable that airlines may delay and cancel flights over technical and weatherrelated constraints and very little can be done to remedy some of these problems like weather-related ones, but infrastructural gaps continue to pose a huge challenge.

Infrastructural challenge In Nigeria, passengers spend unduly long time at security screening points because of insufficient number of X-ray machines, therefore passengers are forced to queue at security screening points, especially at peak hours.

In other climes, it takes between www.businessday.ng

30 seconds to two minutes to get screened but in Nigerian airports, it takes between five and 15 minutes to get screened depending on the number of passengers waiting to be checked. For example, Air Peace and Arik Air face a lot of delay processing passengers at the General Aviation Terminal (GAT) of the Murtala Muhammed International Airport, Lagos because there is only one functional X-ray machine at any point in time and hundreds of passengers going to different destinations during the morning rush hours must pass through one functional X-ray machine at each of the terminals at the GAT. John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART) and chief executive of Centurion Securities listed some of the infrastructural gaps that cause flight delays at Nigerian airports to include inadequate checking-in-counters; inadequate passengers screening checkpoints and screening machines or unserviceable screening machines resulting in manual screening; inadequate aircraft boarding gates; inadequate aircraft parking areas; inadequate ground handling equipment or facilities; and absence of taxiways or sufficient links from aprons to runways.

Ojikutu stressed that inadequate skilled manpower to man most of these facilities or system can cause delays especially the passengers screening checkpoints where the International Civil Aviation Organization (ICAO) recommended standard is at least five but Nigerian airports have two or three persons.

Other factors he mentioned include “Airspace management; inadequate and inexperience air traffic controllers particularly for aerodromes and approach control can cause delays if the traffic vol-

https://www.facebook.com/businessdayng

ume is beyond the capacity and capability of the controllers especially if there is no supervisors that can always intervene; inadequate and inefficient landing aids, poor communication both at terminal and enroute and poor weather at destinations, enroute and at alternative airports.”

Alexander Nwuba, managing director, Smile Air Ghana and former MD, Associated Airlines and WestAir Benin told BusinessDay that infrastructural gaps are connected to flight delays.

“I see the issues as interconnected. Airplanes are delayed because everything else is not working; your decision to fly is the result of the lack of the supporting infrastructure. For the most convenient and least expensive means of travel, the flight may not be your best option, but when all factors are considered in many cases, flying is the most viable option given today’s circumstances of kidnappers, herdsmen on highways, bad and dangerous roads.

“The delays may be frustrating but the airline has to face infrastructural challenges to get you to your destination safely,” Nwuba said.

Addressing the infrastructural gaps The management of Air Peace recently commended the federal government for the decision to close the Enugu international Airport in order to allow a proper repair and maintenance of the airports runway which has given us serious safety concerns.

The airline however suggested that the government should go all out to put everything in place, within the period of the closure, that would make the airport rank among the best international airports in the country.

The airline went on to plead with the government to make the @Businessdayng

airport a 24-hour flight operations airport by improving the night landing infrastructure,” the airline said.

Apart from the Enugu airport, several other airports do not have night landing infrastructures and this depletes the revenues of the airlines. Therefore an intervention by the government to provide night landing aids across Nigeria airports will benefit not just the airline but the flying public.

Alexandre de Juniac, CEO International Air Transport Association (IATA) said “Having the infrastructure to grow is vital to our industry’s future. But in many key places, it is not being built fast enough to meet growing demand and there are worrying trends which are increasing costs. One of these is airport privatizations.

“We have not found the correct regulatory framework to balance the interests of the investors to turn a profit, with the public interest for the airport to be a catalyst for economic growth. All the optimism supporting strong aircraft orders will mean nothing if we don’t have the capability to manage traffic in the air and at airports,” de Junaic added.

Allen Onyema, the Chairman/ Chief Executive Officer of Air Peace, recently made a case for the upgrade of airports infrastructure across Nigeria.

Onyema said “there is no way you can optimally use your planes in Nigeria. The airport infrastructure does not support that. And that is why we are saying, the first thing we should do in this country is to improve on our airports infrastructure. From check-in to flight navigational aids, making airport environment conducive, both for operators and passengers, the infrastructure is poor.

“There is no way airlines will optimally use their equipment. Air Peace has never, because many of the airports in Nigeria close shop at 6pm. So, when they close shop at 6pm, where will you go to? Besides Lagos, Kano, Abuja and Port Harcourt, the rest close shop at 6pm,” he said.

“It is a capital intensive business. Every penny counts. We must get our airport infrastructure right.

It is not about saying Nigerian airlines are weak. We should promote our own. Bring the legacy airlines of this world to come and do domestic operations in Nigeria, they will pack up in 72 hours. We know what we go through.

“The first thing is the improvement on airport infrastructure and aviation infrastructures generally.

It is very key. Don’t let anybody deceive you. This country will never be a hub to anybody or for anybody, except our airports infrastructure are improved upon.”

32

Thursday 22 August 2019

BUSINESS DAY

INTERVIEW ‘We have a holistic plan in place on how to make Apapa work again’ Though the task is daunting and the environment is unfriendly, the new Presidential Task Team on Apapa Gridlock says it is determined to make Apapa, Nigeria’s premier and busiest port city, work again. In this interview with CHUKA UROKO, Property Editor, the executive vice chairman of the Task Team, KAYODE OPEIFA, speaks on what they have done so far; how to sustain the success they have achieved, and their future plans to create a thriving port system where businesses flourish and residents are safe. Excerpts:

A

papa had seen one task force after another with little or no impact on the gridlock. What has your task team done differently that accounts for the relative improvement we have seen?

Let we say this first before I answer your question directly. The Apapa congestion or gridlock is not as complex as it is presented or portrayed. I was privileged to have been adviser and subsequently commissioner for transportation under Babatunde Fashola as governor of Lagos State. So I have been part of this problem for long.

In September 2011, I was the one who laid the declaration of state of emergency in Apapa. The state of emergency was declared not because of the trucks per se, but because of the environmental mess in which the port city was.

The problem at that time was about tankers. Whenever there was fuel scarcity, we had a problem managing them.

We left government in May 2011 and by the time we came back in June of the same year, Apapa had become a big problem. A lot of things changed including the management of Lagos State Traffic Management Authority (LASTMA).

The team that was sent to Apapa, especially around the Mile 2 axis, was weak and so they could not manage the crisis well. When we moved in by August of that same year, we found out that all the drainages had been silted with all sorts of rubbish.

Between 2011 and 2012, the situation became so bad that the federal government under President Goodluck Jonathan had to stop a federal executive council meeting to review the statement by the Lagos State government and directed five cabinet members to proceed to Lagos to meet with the Lagos State governor. This was because there was a realization that Apapa was a cash cow that was about to be destroyed.

What major action followed the meeting of the federal government cabinet members with the Lagos State government?

A committee was set up including the ministers for works, transport and finance; special adviser on economy, managing director of Nigeria Ports Authority (NPA); director of operations at NPA; general manager of Western Port and federal controller of works. All these were from the federal government.

Lagos State government came with the deputy governor, commissioners of transport and environment; managing director of LAWMA,

The Shippers Council is also doing its own, dealing with the shipping companies, making sure that shipping business is not too expensive.

The Apapa-Oshodi Expressway remains largely congested and impassable. What is the task team doing or thinking about that major route to the ports?

We have done substantial work on that expressway. When we got there, the trucks were driving in every direction and the whole place was militarized. There were fake army, navy and even ordinary civilians all over the place, taking a lot of money from the truckers to pass them. Truckers were spending close to a month on a journey that should not be more than two hours.

What we did was to dig trenches to prevent further indiscriminate movements by trucks. We cleared a 4-kilomentre stretch of the expressway from Tin Can end towards Mile 2 to enable the contractor to come in to do palliative work.

Kayode Opeifa

among others. The committee met and went round. We had an understanding of everything and discovered that the port concessioning of 2006 was wrong coupled with bad roads, port operations, etc. These were identified as the main problems, not traffic situation.

That time, the traffic problem was not on Apapa-Ijora-Wharf Road, but the Apapa-Oshodi Expressway. We impounded 200 tankers and the federal government had to intervene. NUPENG went on national strike. The committee met again and an agreement was reached that no truck would be allowed to stay stationary on Lagos roads.

With benefit of hindsight, we can recall that these measures did not help the situation at all. Why? Between 2007 and 2010, we did not have issues with trucks. It was in 2011 that we saw that the truck issue was becoming too much. The problem escalated following the killing of a LASTMA official, leading to the pulling out of the authority. When this happened, there was nobody in charge of traffic in Apapa and so the situation degenerated.

But, in 2017, I was back in Apapa to work with Area B police command for traffic control on the reconstruction of Wharf Road. It was after the reconstruction work www.businessday.ng

that they brought in the military and I warned them against that. I told them that what was needed was a traffic management to complement what was being done on port reforms. But they went ahead and brought the military and when they came, they shut down everything rather than use a traffic management plan. They were just enforcing and controlling misbehavior while traffic situation was getting worse.

Back to my question; with the military out and your team in, what have you done differently?

Our coming into Apapa problem was not an accident or a coincidence. It was the product of a two-year meeting and planning at the presidency. There had been several meetings by the federal government with the ministry of works, Defence, Customs, NPA, Shippers Council, police, and the Presidential Economic and Business Enabling Environment Council (PEBEC). It was PEBEC that articulated all the ideas and came up with a holistic plan of what needed to be done. What we are doing therefore is just a part of that holistic plan. What people are seeing physically is just the transport management.

There is an on-going ease of doing business reform inside the ports.

https://www.facebook.com/businessdayng

In specific terms, what are the strategies that have worked for you in this assignment and the results?

In a nutshell, what we used to get to where we are at the moment included enforcement, a clear traffic management direction and stakeholders engagement. We met with the stakeholders almost on daily basis, allowing everybody to say what they wanted to say, but we knew what we wanted to do.

We also developed an operational manual which we took to the stakeholders and it was adopted. After that, we started implementation.

So, we have a clear traffic management direction which we followed and are still following. We also have a manual call up system which is transparent to the stakeholders so they believe in it. We use the trade unions which we interface with and they usually take us to the shipping companies for discussions. We have incorporated more people into the task team and that has helped us a great deal. We have support from the Lagos State government. The NPA has also been of much help. We have been enjoying co-operation also from the truck unions and the Shippers Council.

Both Apapa local government and the residents association have been very supportive because everybody sees Apapa as a problem.

Apapa residents, business owners and motorists celebrate the improvement and respite they have seen so far. But the question on every lip is, how sustainable is the present situation?

@Businessdayng

I have said earlier that we have a holistic plan in place on how to make Apapa work again. Our job was supposed to end in 30 days and the next phase would take off.

We have started seeing part of that next phase. Today, containers are moved by rail from Ebute Emetta.

This will continue and the former minister for Transportation, Rotimi Amechi, assured that rail service would be extended to Apapa from December this year. Part of the plan is for LASTMA to manage traffic; FRSC is to ensure the road worthiness of the trucks and the police is to provide adequate security.

In addition to all these, the NPA is perfecting plans to introduce an electronic call up system.

There is no success story without its flipside. What have been your challenges doing all these?

Communication is a major challenge. This is because there is a limit to which you can communicate to the stakeholders. NPA and the Shippers Council who are regulators are the ones that should be communicating. We need to tell the truckers how to move and how not to move. Trucks approaching Apapa port should come through Iganmu and Ijora until Apapa Oshodi Expressway is ready. But what you see now is a situation where they come from every direction.

This is because we don’t have access to all the stakeholders. Also, we need to communicate to them that Lilypond is ready and this is how and when you should come.

We don’t have the capacity to do that. It is the job of the NPA. Another challenge is that the area is too militarized. A lot of people come from different military formations to make fast money.

There had been too many tasks force and they are yet to leave the scene. When they come, they come with aggression and are very vicious. Again the roads reconstruction is also a challenge because that is not making traffic management options possible.

Another major challenge is that we see corruption fighting back.

The people we have prevented from the regular ‘chop-chop’ are busy spreading wrong information about us and trying to frustrate the current effort, but we are determined to make the system work again. We are gearing up for the next stage of our assignment which is sustainability. We are working with all the agencies that will sustain this effort, and very soon, when Lagos State government appoints its commissioners for transportation and environment, we will get there faster.

Thursday 22 August 2019

BUSINESS DAY

33

INTERVIEW ‘We see significant infrastructure opportunities in Nigeria’

ALLAN WOOD, head of business development for Jersey Finance, was in Nigeria recently with a delegation from the Government of Jersey for a presentation and dinner reception in partnership with the Commonwealth Enterprise and Investment Council (CWEIC). The event was organised to strengthen evolving relationship with Africa and particularly Nigeria. In this interview Allan speaks about the opportunities and challenges in the Nigerian economy HOPE MOSES-ASHIKE reports.

W

hy are you in Nigeria?

Jersey’s forward-thinking international finance centre (IFC) has a lot to offer Nigeria. Our approach is to help new capital invest into the country to support economic growth and job creation, while also helping corporates, high net worth families and international organisations diversify their wealth. To quantify that, Jersey is a custodian of US$1.3 trillion of capital and US$500 billion of that is deployed into the United Kingdom (UK), in a range of assets and it supports 250,000 jobs in the UK, which represents five per cent of the UK’s foreign direct investment (FDI). From a European perspective, we facilitate €180 billion into Europe and that supports about 88,000 jobs.

The interesting thing is that US$600 billion is invested into global markets; our challenge is how do we invest that capital into Nigeria.

Why Nigeria and not South Africa, Kenya or any other African country. What’s the interest in Nigeria?

We are promoting and working across these three big economies you mentioned. South Africa already has a strong relationship with Jersey that dates back 25 years. So, from a South Africa perspective, we have a lot of big brands - Standard Bank, Nedbank, Investec, Ashburton and Alexander Forbes for example, as well as having a lot of South Africans living and working in Jersey. We also have about US$5 billion of South African private wealth under management. Kenya, on the other hand, is a market that we have been working closely with for the past two decades. From a Nigerian perspective, we have a fair number of Nigerian clients within the trust companies and investment houses in Jersey from our London network, and we now feel it is time to build on this relationship, which necessitated me and other Jersey professionals travelling to the region.

How optimistic are you about the opportunities in the Nigerian economy?

It wouldn’t be a strategic market for us if we didn’t believe in Nigeria. One of the challenges I recognise is that while the Nigerian economy is growing at two per cent, the population is growing faster and that creates a problem. There is no two ways about it, there is going to be people creating significant wealth here and we believe that Jersey is one of the best IFCs in the world to help clients in that respect. We also see that there are significant infrastructure opportunities in Nigeria as well as other sectors, that our members are interested in. But one thing that is clear is that you have to be committed to this market for the long term. I have been travelling to Nigeria for five years and this is my fourteenth trip, and I believe that as the economy turns around and growth starts to build again, you will see me making more trips to Nigeria. From our perspective, we have a long-term view about Nigeria. What we do is to promote the right ecosystem for investment.

What is the volume of capital that you are bringing in?

Currently, Jersey provides a conduit for between 0.5 per cent and 1.5 per cent of all FDI into the African continent, below the 2.8 per cent of total FDI we facilitate globally. Jersey can play a much bigger role going forward.

As Nigerian companies and fund managers look to access Western capital, it’s important

the ability to administer and collect taxes consistently and effectively. Foreign aid is too small, and often targeted at day-to-day needs. So foreign private investment must help fund the investment gap.

to understand that Western investors’ put a lot of emphasis on corporate governance.

As time goes on Nigeria will need more and more capital and Jersey can act as a key partner. We can help deliver sustainable growth through access to capital markets, investor protection, and expertise and governance experience in areas such as anti-corruption and tax transparency.

Are there local organisations you are partnering with to achieve your target?

Over the last five years we have been working hard to build our strategic partnerships with many financial services intermediaries on the ground in Lagos. Our success in this market will only work if we have strong local partnerships.

Are you not considering setting up a unit here in Nigeria?

We don’t have a presence in South Africa, Kenya or Nigeria at present, but it’s only a matter of time.

Do you consider the Nigerian environment before bringing in capital to the country?

Absolutely. I think investors recognise the demographic dividend that Nigeria offers and its huge opportunities. There are associated risks and I think the big challenge is finding the right partners and investors going forward; this is where we can work together with the CWEIC to try and bring in that opportunity.

What is your take on the AfCFTA that has been adopted by African countries?

My view is that it makes complete sense for Nigeria to sign the agreement and trade with other countries across the continent.

From a Jersey perspective, this will create more wealth for the continent and as people become wealthier, they will need to internationalise and diversify their wealth and this is where Jersey can come in and provide support. Jersey has 200 trust and corporate service providers, 70 asset managers and 28 banks, which is a deep pool of talent to help and support diversification. Not only will you get access to individuals, you also get investment opportunities in hard currencies such as British pounds, US dollars and Euros.

Are you looking at also going into partnership with some Nigerian banks?

We already have ongoing discussions with

www.businessday.ng

some banks. And, while we have 28 banks in Jersey now, which have global footprints and several South African banks, we are also very interested in having conversations with Nigerian banks. So, the discussions are ongoing.

With the Central Bank of Nigeria proposing a merger in the banking sector, don’t you think it will be an opportunity to invest in the Nigerian banking sector?

We work on behalf of our members, who happen to be banks, law firms, private equity firms etc. I certainly think there are investors out there that would be interested in these opportunities. I think one of the things that Nigeria needs to consider is how they promote opportunities outside the country, so that people gain an understanding of where the investment opportunities lie.

What has been the impact of your partnership with the CWEIC to what you do in Jersey?

On Monday 8 July, CWEIC Chairman, Lord Marland, signed a programme of work with Senator Ian Gorst, Minister for External Relations, from the Government of Jersey.

CWEIC has enjoyed a close partnership with the Government of Jersey since their joining in 2016. We look forward to working with the CWEIC – throughout the coming year.

So how many jobs has Jersey created in Africa?

I won’t be able to give you the exact number, but we have a significant piece of research which is called “Jersey’s Value to Africa” which quantifies the need for FDI into Africa. Africa is still a young continent which will make up almost a quarter of the world’s population by 2040. Greater life expectancy is a challenge for African governments, but it is also a great opportunity: their fast-rising working-age populations will boost urbanisation and sustain economic growth. Our research estimates that Africa’s economy could grow by five per cent a year to 2040. However, achieving such growth will require a surge in investment, - US$85 trillion by 2040 - for infrastructure, machinery, buildings and homes. Some of that could come from domestic sources, though entrepreneurs and investors would need reassurance that they would be properly rewarded in a region where the rule of law is often weak. Government investment could also help, but too many countries lack

https://www.facebook.com/businessdayng

What will you recommend being done to stimulate economic growth in Nigeria?

I think working with leading IFCs like Jersey can support economic growth and job creation. I am delighted that one of our Government officials was in Abuja recently and they had discussions about a potential Double Taxation Agreement (DTA). I think instruments or treaties like that with IFCs like Jersey, would bring about transparency into the system. We view corporate governance as a significant part of transactions and if that particular treaty was to be explored further, I think that would really help FDI into Nigeria. I am not saying Jersey is the silver bullet, but we want to play our part and increase FDI into the country. Technology seems to be thriving in Nigeria, which is very exciting. We have seen entrepreneurs come back from the United States looking to raise capital and we are working with them to see how we can structure funds and help them access the capital they need. So, private investment is a critical component.

Can you shed more light on the DTA? I am not a DTA expert, but it is an agreement between two or more countries that reduces the amount of tax that an international worker or company must pay, so they do not have to pay tax twice on the same income. Ultimately, it gives tax incentive to investors. The other instrument that will be interesting to investors is the Bi-lateral Agreement Treaty, which again gives further protection to investors and all of these help in de-risking transactions. So, we are playing our role in ensuring that there are the right solutions to structure product.

Infrastructure challenge is a big issue in Nigeria. Are you considering investing in that sector?

It is obvious that significant infrastructure is required, which includes building homes.

So, it goes back to that path of Nigeria having to promote these opportunities with the right people. From our perspective, we are trying to educate those in London, so that they can consider Jersey as the right platform to structure that infrastructure deal. So, if we can play a role that would be fantastic. I think there is an element of promotional work that is required to achieve that.

Are there any other challenges you see in Nigeria?

I think one of the challenges is perception.

From a Western world perspective, some forms of insecurity, such as the threat of Boko Haram and oil challenges, do have a certain degree of impact on investment. So, the challenge for all of us is to get more people that have the capital to travel to Nigeria to see these opportunities for themselves.

From our perspective we just see a great opportunity to help a wonderful country that has a huge demographic dividend and a very exciting future, when the Western world is aging. That said, further promotional work is required to let the world know what the sectors are and where people can invest.

@Businessdayng

34

Thursday 22 August 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 21 August 2019

Top Gainers/Losers as at Wednesday 21 August 2019 LOSERS

GAINERS Company

Company

Opening

Closing

Change

NESTLE

N1121.2

N1200

78.8

MTNN

N132.6

N136

3.4

FO

N6.25

N6.85

0.6

INTBREW

DANGSUGAR

N9.1

N9.6

0.5

CADBURY

CILEASING

N6.2

N6.7

0.5

ACCESS

ETI

Opening

Closing

Change

N49

N44.5

-4.5

N17

N15.3

-1.7

N12

N11.5

-0.5

N9.3

N9

-0.3

N6.5

N6.2

-0.3

OKOMUOIL

ASI (Points) DEALS (Numbers) VOLUME (Numbers)

27,352.94 3,451.00 363,972,805.00

VALUE (N billion)

4..515

MARKET CAP (N Trn)

13.306

Stock market up 1.09% as Nestle, MTNN, others rally

Generic 1st ‘DM’ Future 26,251.00USD +320.00+1.23%

Deutsche Boerse AG German Stock Index DAX 11,802.85EUR +151.67+1.30%

S&P 500 Index 2,927.25USD +26.74+0.92%

Shanghai Stock Exchange Composite Index 2,880.33CNY +0.33+0.01%

Group turnover slides q/q orte Oil’s fuel business reported a turnover of N35.9billion (-6percent quarter-on-quarter (q/q) in second-quarter (Q2) 2019, underperforming our estimate of N37.2 billion.

The q/q drop in fuel revenue, we believe, was driven by lower petroleum products supplies by the NNPC, as other top players (notably Total Nigeria Plc and 11 Plc) in the downstream industry reported declines in Q2 fuel sales. Given the industry trend of weaker fuel sales in Q3, we expect a marginal decline in fuel revenue to N35.7 billion in Q3’19, before strengthening to N36.4 billion in Q4’19, buoyed by anticipated increased spending activities during the December festive season.

The lubricants business, in contrast, recorded a modest q/q growth of 2percent, printing at N4.3 billion, which came in line with our estimate.

Our FY’19 outlook for FO’s lubricants business remains unchanged, with H2’19 lubes sales forecast at N8.7 billion (Q3’19E: N4.3 billion, Q4’19E: N4.4 billion).

Interest on subsidy propels earnings Gross margin worsened to 6.3percent in Q2’19 (Q1’19: 7.2percent), held down by higher estimated landing costs, as average

F

N

L – R: Bola Adeeko, divisional head, Shared Services, The Nigerian Stock Exchange; Jude Chiemeka, divisional head, Trading Business, The Nigerian Stock Exchange (NSE); Leenart Sjoerd, global head of Corporate Bank & Head, CEEMEA, JP Morgan ; Dapo Olagunju, managing director & Head for West Africa , JP Morgan; Paul Van Zijl, executive director, JP Morgan; Oluwatoyin Alake, head, Secondary Market, The Nigerian Stock Exchange; Olufemi Balogun, head, Market Services, The Nigerian Stock Exchange during the Closing Gong Ceremony in commemoration of the collaboration with the NSE to facilitate in-depth knowledge gap building on Derivatives Market at the NSE.

ket breadth. The share price of Okomu Oil Plc declined most, from N49 to N44.5, after losing N4.5 or 9.18percent; followed by Forte Oil Plc which decreased from N17 to N15.3, losing N1.7 or 10percent, while International Breweries Plc share price moved downwards from N12 to N11.5, losing 50kobo or 4.17percent.

United Bank for Africa Plc, Access Bank Plc, GTBank Plc, FBN Holdings Plc and Zenith Bank Plc were actively traded stocks. In 3,451 deals, stock dealers ex-

Nikkei 225 20,618.57JPY -58.65-0.28%

…Target price revised lower to N34.22

Stories by Iheanyi Nwachukwu

MTNN Plc followed from N132.6 to N136, adding N3.4 or 2.56percent, while Ecobank Transnational Incorporated Plc increased from N6.25 to N6.85, after adding 60kobo or 9.60percent.

In the absence of sell pressure in market’s most capitalised stocks, investors at the Nigerian bourse will continue to scramble for position in fundamentally sound stocks.

As such, market analysts expect the uptrend to continue on Thursday as evidenced in the positive mar-

FTSE 100 Index 7,203.97GBP +78.97+1.11%

Vetiva Research: Forte Oil: Subsidy income buoys earnings growth

…investors book N120bn gain i g e r i a ’s stock market re-routed northwards on Wednesday August 21 as investors rushed to take positions in low-priced value counters.

At the sound of closing gong for the day’s trading, stock investors booked approximately N120billion cumulative gain.

While increased bargains pushed the Nigerian Stock Exchange (NSE) All Share Index (ASI) higher by 1.09percent, the record negative year-to-date (ytd) return moderated to -12.97percent.

Week-to-date (WtD), the stock market has advanced by 1.59percent, while month-to-date (MtD), the stock market has declined by 1.32percent. The NSE ASI increased from preceding day low of 27,058.62 points to 27,352.94 points, while the value of listed equities increased from N13.186trillion to N13.306trillion.

Nestle Nigeria Plc recorded the highest gain after its share price moved up from N1121.2 to N1200, adding N78.8 or 7.03percent.

Global market indicators

changed 363,972,805 units valued at N4.515billion.

Dealing Members were notified that Red Star Express Plc through its Stockbroker, APT Securities and Funds Limited submitted an application to the Nigerian Stock Exchange for the approval and listing of a Rights Issue of 294,748,380 ordinary shares of 50kobo each at N4.50per share. The Rights Issue is on the basis of one (1) new share for every two (2) ordinary shares held. The Qualification Date for the Rights Issue is Wednesday August 21, 2019.

Brent price advanced to $68/ barrel (bbl) in Q2’19 from $64/bbl in Q1’19. Due to the weaker gross margin and higher operating expenses (+39percent q/q) observed during the quarter, FO reported an operating loss of N246 million. However, amidst the tough operating downstream environment, FO witnessed some respite in Q2’19 through devaluation of interest on subsidy, which boosted finance income to N4.2 billion (Q1’19: N198 million).

Stripping out the interest on subsidy, FO would have reported a loss before tax of N750 million in Q2’19. With our expectation of lower average crude prices in H2’19 alongside increasing lubricants contribution to turnover, we expect gross margin to improve to 7.7percent in H2’19 (H1’19: 6.7percent), translating to a FY’19 forecast of 7.2percent (FY’18: 8.4percent).

On segment basis, we expect gross margin in the fuel business to come in at 5percent in FY’19 (FY’18: 7percent); whereas we expect lubricants margin to advance to 24percent (FY’18: 20percent).

By year end, we expect an improvement in FO’s operating margin to 3.1percent (FY’18: 2percent), supported by gains of N2.7billion from the disposal of discontinued operations.

CIS attracts university dons to capital market

I L-R: Dapo Adelegan, past president, Nigerian-British Chamber of Commerce (NBCC); Lamin Manjang, chief executive officer, Standard Chartered Nigeria; Kayode Falowo, President, NBCC, and Olawale Cole, past president, NBCC, during a courtesy visit by the executive members of the Chamber to Standard Chartered Bank in Lagos www.businessday.ng

n a strategic move to strengthen its membership quality, the council of Chartered Institute of Stockbrokers (CIS) has commenced implementation of its Executive Conversion Programme (ECP) aimed at bringing top class university lecturers and chief executive officers in the financial markets to the league of stockbrokers in Nigeria.

The ECP, which aims at alignment of theory with practice on one hand and consummation of deep financial market knowledge with principles and practice in the securities market on the other, is a temporary

https://www.facebook.com/businessdayng

special window approved by the CIS’ Governing Council, to bring into the capital market ecosystem, an array of talents in the academia and industry. Addressing the first batch of beneficiaries at the maiden brainstorming session in Lagos recently, a past president of the Institute, Mike Itegboje who congratulated them on the rare opportunities charged the participants to uphold the core values of the Institute, including member-focus, professionalism, service quality, integrity, accountability, resourcefulness, transparency and respect.

Itegboje who made a comprehensive presenta@Businessdayng

tion on “Overview of the Financial Market and Institutions”, spoke extensively on the concept of financial market, its functions and instruments, distinguishing features, money market operations and a host of other activities in the financial markets.

Justifying the rationale for the ECP, the Institute’s second Vice President, Oluwole Adeosun said, “The council of the Institute has approved a special window to bring participants and stakeholders who are part of the Institute but have not gone through the whole realm of former examination on board.

Thursday 22 August 2019

Innovation

Apps

BUSINESS DAY

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

35

TECHTALK

Broadband Infrastructure

Bank IT Security

Lessons Nigeria’s next ICT chief can learn from Rwanda’s Akamanzi government of Rwanda appointed her as a diplomat and special trade negotiator at the WTO. later, she transferred to the Rwandan embassy in London, as the commercial diplomat. She was appointed as CEO of Rwanda Development Board in 2017. Here we highlight some of her qualities that could come in handy for the incoming minister of ICT.

Stories by FRANK ELEANYA

W

hile the trio of South Africa, Kenya and Nigeria are busy jostling for the position of top tech funding destination year on year amidst economic headwinds and poor governance indices, Rwanda is steadily rising as the country with the most profitable commercial hub, thanks to its very impressive ease of doing business environment.

Unlike South Africa occupying the 82nd position, Kenya at 61st and Nigeria at 146th, Rwanda is ranked 29th globally in the World Bank’s annual ‘Doing Business Report’.

Aside from its strides in ease of doing business, the country once scarred by genocide, now also has a lenient visa policy that has put it miles ahead of peers in investors’ estimation.

Much of that accolade goes to the work being done by the Rwanda Development Board under Clare Akamanzi. The Ugandan-born Akamanzi may not be Rwanda’s minister of information and communication technology (ICT), but in her capacity as the chief executive officer of Rwanda

Development Board, she is arguably one of the most influential public officials in sub-Saharan Africa in terms of her efforts to position the country as the innovation hub of Africa.

Under her stewardship, Andela, which originally launched in Nigeria, announced it was opening a pan-African tech hub in Kigali and moved quite a significant part of its major operations to the capital city.

“In Kigali, we have found a location that makes travel to-and-from other African countries

seamless and also has modern and connected infrastructure we require to collaborate with a global workforce,” said Jeremy Johnson, CEO of Andela during the opening of the hub in Kigali.

Similarly, CcHub, one of the pioneers of Nigeria’s innovation centers, also launched its new design lab in Rwanda. The lab has since nearly become its central base of operations as the company now holds most of its major meetings there. For instance, the lab played host to the first ever Technology & Creative Industry ecosystem

meetup on AfCFTA which Akamanzi alongside Oby Ezekwesili, former vice president of the World Bank group on Africa region, attended.

(Read more Creatives, tech ecosystem potentially most powerful pressure group in Africa - Ezekwesili) Born in Uganda to Rwandan refugee parents in 1979, Akamanzi probably understands a few things about negotiation and transformation. She began her career in 2004 in Geneva, Switzerland at the World Trade Organisation (WTO) headquarters. The

Prioritize goal-setting As a public servant and a cabinet member, one of the things Akamanzi understood early enough - which Nigeria’s incoming minister of ICT can borrow a leaf from - is goal-setting.

“We didn’t have the natural resources to finance our development but we had the vision. Our vision is to build Rwanda as an entry point for everyone who wants to do business in Africa,” she said during the AfCFTA meetup on Thursday, 15 August 2019. “We said we were going to be a middle-income country and become competitive in some areas.”

Eyes on quick fixes According to the CEO, “We didn’t have the big market, but knew what will make us different is how quickly and well we respond to businesses.

“We decided to isolate things that we felt we had control over and things that we didn’t have control over. For instance, if we wanted to build an airport that could contain 5 million people, we didn’t have the means to do that immediately, but we had the means to become efficient as a country for us to be able to deliver services quickly, for us to become competitive in the efficiency side of government.

These were something we thought was in our means.”

Akamanzi understood the strength and weakness of her country. She also knew what needed to be done both in the short term and in the long term. Her fixation and communication of the goal contributed to German auto manufacturing company, Volkswagen setting up its first African car-assembly plant in Kigali. The $20 million operation is expected to integrate a mobility solution that offers cas sharing and ride-hailing systems.

Her ability to see the future of Rwanda also meant some risks were necessary.

“We wanted to build Rwanda as a country for proof-of-concepts, meaning an environment where you can prove your innovation and if it works, you can try it out anywhere in the world,” she said.

Invictus Obi: Would tech or regulation save Nigeria’s ecosystem from fraud smudge?

N

igeria’s tech ecosystem reputation took a shot to the chest following revelations from the US Federal Bureau of Investigation (FBI) that it has arrested and charged Obinwane Okeke, popularly known as Invictus Obi, with an $11 million cyber crime.

Invictus Obi is the CEO of Invictus Group, a firm that claims holdings in agriculture, oil and gas and construction. He came to limelight in 2016, at the age of 28, when Forbes Africa named him in it’s June cover as one of Africa’s 30 entrepreneurs under 30. In 2017, he was a panelist at the Wharton Africa Business Forum, organized by the renowned University of Penn-

sylvania’s Wharton School of Business, United States of America. The BBC later featured him on its “Focus on Africa” program in 2018. The program described him as an “inspiring” entrepreneur.

“Very sad day for everyone building with true sweat,” tweeted Oluyomi Ojo (@OluyomiOjo) founder and CEO of Printivo.

In the affidavit dated August 2, 2019, the FBI disclosed that Okeke was being charged for committing conspiracy to commit computer fraud.

Unatrac Holding Limited, the UK Export Sales office for Mantrac Group had filed a report with the FBI in June 2018 stating they had been compro-

mised via a phishing email that fraudulently acquired sensitive log-in details of their Chief Financial Officer (CFO). Posing as the CFO, the intruder then sent wire transfer requests to the Unatrac internal Finance team leading to several transfers amounting to $11 million (N3.9 billion).

To s i n E n i o l o r u n d a, co-founder and CEO of TeamApt told BusinessDay that the arrest could potentially affect investors’ confidence in Nigerian tech startups.

“It’s likely foreign investors are watching,” he said.

“You don’t want to be perpetuating the already pervasive Nigerian Prince stories.”

The cyber fraud smudge

is not new to Nigeria. Prior to Okeke’s arrest, the FBI had in 2018 said it arrested 74 cyber criminals, 29 of whom where from Nigeria involved in sophisticated scam often targeting employees with access to company finances and businesses working with foreign suppliers and or businesses.

Adedeji Olowe, CEO of Trium Networks, a venture capital firm told BusinessDay that Okeke’s case points to a bigger problem of transparency in the tech ecosystem in Nigeria. Often times entrepreneurs make claims that are not verifiable.

“In this instance, did anyone do a simple due diligence on what a 28 year old can be doing to become the

chairman of Invictus Group of companies?” he asked.

Although Nigerian has a cyber law that mandates that companies report any exposure to criminals, in most cases companies don’t heed. Thus making it difficult for authorities to investigate, identify and prosecute cyber criminals.

Enyioma Madubuike, CEO of Legitng, an online legal services firm told BusinessDay that this is likely to change soon as a group of developers in Nigeria are already working on a solution.

“It is an anti-fraud database,” he said. “Collaborators collect parties who are fraudulent and upload them on the database to protect everyone from those

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

https://www.facebook.com/businessdayng

@Businessdayng

persons. It is similar to what many foreign banks abroad have and use to block suspicious online entities.”

While the database solution is still in its early stage, Rahmon Ojukotola, CEO of StartCredit told BusinessDay that in the meantime a lot of work has to be done to dissuade university students studying computer science in Nigeria from engaging in fraud though. As the instant financial gratification and social pressures compromises their morality.

However should that fail to dissuade them, there is the Economic Financial Crimes Commission (EFCC) which has the mandate to investigate, arrest and charge suspects.

36

Thursday 22 August 2019

BUSINESS DAY

cityfile Edo to construct bus terminus at Sokponba road

E

Some beneficiaries checking their vitals during a free eye test by organised by Rotary Club of Ibadan Jericho Metro, for Apapa comunity in Ibadan on Tuesday. NAN

Kano to convert 5 forests to herdsmen settlements REMI FEYISIPO, Ibadan

K

ano State government is planning to convert five forests to grazing reserves for herdsmen in the state as part of measures to forestall farmersherders’ clashes.

The state governor, Abdullahi Ganduje,

disclosed this while speaking with journalists in Abuja. Ganduje said that his administration had inaugurated a technical committee on farm settlements for herdsmen in the state.

He said further that the proposed settlem e nt w ou l d a s s i s t i n boosting socio-economic ventures in the state.

He noted that the

Ayade’s 23mw power plant suffers setback MIKE ABANG, Calabar

A

bout 72 hours into the testrunning of the 23-megawatt Calabar power plant, electricity supply from the plant has exper ienced a setback following an inferno at the popular Marian market in Calabar.

Some residents have, h ow e v e r, d o u b t e d t h e sincerity of the state government regarding the project.

Governor Ben Ayade had said the plant would supply power to the metropolis and some public institutions as well as benefit private business owners, including stylists, saloons and more.

A statement by Christian Ita, the media aide to Ayade, said the cut in supply of power from the plant was caused by

an inferno at the Marian market.

“The Cross River State g ove r n m e nt w i s h e s t o inform the general public that the cut in power supply from the 23 megawatts Calabar Power Plant in the last 24 hours to Calabar metropolis is due to a fire outbreak at the Marian market which affected some transmission cables.

The power plant had to be shut down to minimise damage caused by the inferno. A team of engineers is working round the clock to fix the problem.

“Power will be restored as soon as this is done.

Government regrets the inconveniences this has caused residents of the metropolis,” Ita said on Tuesday, urging the residents of Calabar to be patient, as everything was being to overcome the challenge. www.businessday.ng

settlement was also to discourage the movement of herders from north to south to address herders/farmers crisis. “ We w i l l p rov i d e social amenities such as hospital, veterinary clinic, market, security post and schools, so that herdsmen will enjoy facilities just like other Nigerians,” Ganduje said.

According to him, herders’ settlement should not be a national issue, it should be state issue because they live and flourish in every state.

He said that his administration would red ou b l e e f f o r t s t o e n sure that farmers enjoy more intervention programmes and projects to boost agriculture in the state.

Oyo to revamp Bola Ige business complex REMI FEYISIPO, Ibadan

I

n creating conducive environment for businesses within Oyo, the state government is planning to rebuild the dilapidated Bola Ige International Business Complex, Gbagi, Ibadan, to international standard as provided in the master plan of the market.

This was contained in a communique issued after a stakeholders’ meeting recently held at the market involving the market leaders and the task force committee set up by state governor, Seyi Makinde to restructure the business complex.

Chairman of the task force committee, Olusoji Oyewole, in his briefing, assured the market men and women of government’s resolve to provide basic facilities that would promote economic activities in the market.

“The government deems it fit to ensure that Bola

Ige International Business Complex regain its agelong status as a major hub for textile materials, servicing both neighbouring and distant states in Nigeria.”

“The intention of the administration in setting up this task force is not to witch-hunt anyone in the market but towards seeking their cooperation and support for proper dumping of refuse, maintenance of toilet facilities, parking lots and considerable open spaces.”

He called on the market community to stick to the environmental laws and town planning regulations of the state, as the traders stand to benefit if commercial activities are carried out in clean and serene environment.

A representative of Elders’ Forum in the market, A. Adebayo commended the state government and pledged the support of the market community towards lifting the market to international standard.

https://www.facebook.com/businessdayng

do State government has concluded plans to construct a bus terminus at 3rd Junction, Murtala Muhammed Way

by Sokponba road, Benin, as part of measures to ease movement around the state capital.

The project is being developed through the Edo State Development and Property Agency (EDPA).

Executive chairman, EDPA, Isoken Omo, said the terminus would ease traffic on Sokponba road and provide an efficient parking space around the popular 3rd junction of the road.

According to her, the bus terminus had been

captured in 2019 budget.

“The project will help in opening up the area, providing access to customers who come to conduct business at Ekiosa market. The contract for the construction work will soon be awarded and we are confident that the terminus would ease vehicular traffic in the area,” she said.

The agency has embarked on a number of projects in the state since its revamp, including Emotan Gardens, estate project being developed with Mixta Africa as well as the JARA shopping mall, which is being constructed close to its premises.

Taraba: Agency disburses N500m for community projects Nathaniel Gbaoron, Jalingo

C

ommunity and Social Development Projects (CSDP) has disbursed N500m to 50 communities for the execution of projects in 10 local government areas of Taraba State.

The rural projects to be executed include skill acquisition centres, classroom blocks, drainages, water boreholes, among others.

The beneficiaries of the first tranche of the programme include 14 communities in Wukari, ten in Takum, seven in Yorro, six each in Ussa, Sadauna and Gashaka, two in Lau, and one in Zing.

Others are Gass ol, Karim Lamido and Kurmi while Jalingo, Bali, Ibi, Donga and Ardo Kola local governments will benefit in the second tranche.

Speaking while presenting cheques to the communities, the state

governor, Darius Ishaku, applauded the CSDP for bringing development to the rural dwellers.

Ishaku, who spoke through the secretary to the government of the state, Anthony Jalloson, advised the representatives of the communities to be prudent in executing the projects.

The general manager of CSDP, Irmiya Danjuma, lauded the support of the government to the agency especially the N500 million counterpart funds paid by the state government in 2018.

“The projects are possible because of the support of Taraba State government. Last year the government paid counterpart of N500 million and this year the government is about to pay N300 million,” he said.

The general manager also advised the benefiting communities to protect the facilities.

Ogun LGs to benefit from World Bank projects RAZAQ AYINLA, Abeokuta

T

he World Bank is to extend its interventions in critical infrastructure like roads, bridges, water supply among others to six local government areas of Ogun State.

The councils to benefit from interventions include Ado-Odo/Ota, Abeokuta North, Ipokia, Yewa North, Remo North and Odeda local councils. The project is aimed @Businessdayng

at improving the standard of living of the people.

Speaking on the World Bank’s interventions in Abeokuta recently, Sakirudeen Salaam, the general manager, Ogun State Community and Social Development Agency (CSDP), noted that the micro projects would be executed by the state government with the supervision of World Bank and the designated supervisors in the selected communities.

Thursday 22 August 2019

BUSINESS DAY

news Africa: Almost polio-free as Nigeria celebrates three years without the disease ANTHONIA OBOKOH

N

igeria is the only country holding back Africa from being declared a polio-free continent, but as Africa’s most population nation marks three years without the disease, it is only a step away before it joins the rest of the world who have successfully defeated the virus.

Wednesday, August 21, 2019, marked three years since Nigeria’s last documented case of polio, which was also the last case recorded in Africa.

Nigeria’s last polio case was recorded on August 2016, in war-torn Borno, the state at the heart of the Boko Haram jihadist insurgency.

According to the World Health Organisation (WHO), this three-year landmark sets in motion a comprehensive evaluation process by the Africa Regional Certification Commission to determine if the entire WHO African Region of 47 countries indeed can be declared wild polio-free.

“We are confident that very soon we will be back here trumpeting the certification that countries have, once and for all, kicked polio out of Africa,” said Matshidiso Moeti, WHO regional director for Africa.

Certification that the WHO African Region is free of wild polio is expected in early 2020.

With 201 million populations, Nigeria is on the verge of being declared polio-free, which would mean the virus has been eradicated across Africa, and as such the continent can be certified free of the virus by the World Health Organisation-backed Global Polio Eradication Initiative once the remaining samples have been analysed.

“It is a big deal for Nigeria, for Africa and for the world,” said Tunji Funsho of Rotary International, the charity that has been at the forefront of the country’s fight against the disease, saying, “No child has been paralysed by the wild polio virus in Nigeria. We have been able to reach every child with a vaccine before the virus reaches them.”

Hundreds of thousands of volunteers have repeatedly vaccinated roughly 50 million Nigerian children under the age of five in the last few years. Largely driven by the effort of the Federal Government, through the Global Polio Eradication Initiative, a joint effort between the WHO, Rotary International, the US government, UNICEF and the Bill & Melinda Gates Foundation. Aliko Dangote, the richest man in Africa, has also contributed to the funding of the programme.

“We are here acknowledging this milestone while ensuring there is no complacency

www.businessday.ng

about the quantum of work that needs to be done to ensure certification, and to ensure population immunity continues to be maintained,” Faisal Shuaib, head of the Nigeria’s National Primary Health Care Development Agency, a government health agency, said.

It will take months of laborious analysis to run all of the samples but Wednesday’s milestone paves the way for Africa to be officially deemed polio-free by as early as the first half of 2020.

As at 2012, Nigeria accounted for more than half of all global polio cases, according to the WHO, with 223 victims.

According to the WHO, the incidence of polio worldwide has been reduced by more than 99 per cent since 1988, when more than 350,000 children were paralyzed annually in 125 countries. If Nigeria is ultimately declared polio free, the virus will remain in only two countries; Afghanistan and Pakistan.

https://www.facebook.com/businessdayng

@Businessdayng

37

38

Thursday 22 August 2019

BUSINESS DAY

news NERC steers power sector to market ...

Continued from page 1

adjustments. Abuja DisCo, for example, still recorded a tariff shortfall of N102 billion after cost-reflective tariffs were modelled by NERC. It also recorded cumulative market shortfalls of N176 billion and would have to repay N73 billion.

If NERC applied the minor review on the MYTO, electricity prices would rise on average between 28 and 32 percent across the various customer classes and across the different DisCos. This means that residential customers who currently pay N10,000 will now pay N13,000, while industries that pay N50,000 could begin to pay at least N63,000 a month.

For example, Abuja DisCo residential customers on R2 will see tariff rise from N24.30 to N31.96 per kilowatt hour, commercial customers on C1 will now pay N48.20 as against N37.39, and industrial customers will pay N46.48 while they hitherto paid N36.07.

The projected electricity tariff review will affect customers on every class except the lowest residential users classified as R1 whose tariffs will remain the same.

Analysts say implementing a cost-reflective tariff is a positive development for the sector as it will open it up for new investments.

“This review is timely and has taken care of some of the concerns for stakeholders. But NERC should ensure that the prices are fully cost-reflective in terms of gas pricing, exchange rate and inflation,”

said Chuks Nwani, Lagosbased energy lawyer.

To arrive at a cost-reflective tariff projection, NERC said, “This order has taken into consideration the actual changes in relevant macroeconomic variables and available generation capacity in updating the operation of MYTO -2015 Tariff Order for the period January 1, 2016 to December 31, 2018 in line with the provisions of the MYTO methodology.”

NERC further said it took into consideration all the variables that fed into the MYTO. These are inflation, natural gas prices and exchange rate.

The Commission said it used the actual yearly average inflation rate of 15.6 percent, 16.5 percent and 12.1 percent for the years 2016, 2017 and 2018 sourced from the National Bureau of Statistics (NBS).

It said it used the average exchange rates of N255.90/$1, N308.80/$1 and N309.14/$1 for the years 2016, 2017 and 2018. It also included a transaction cost of 1 percent.

On gas prices, NERC said, “The price of natural gas for the power sector has been regulated since the inception of MYTO in 2008.”

The Commission has maintained a gas price of US$2.50/MMBTU and gas transportation cost of $0.80/ MMBTU for the review.

“However, other generating companies had contracted different gas prices outside the regulated rates as provided in their respective individual Gas Sales Agreement (GSA),” NERC said.

•Continues online at www.businessday.ng

Atiku to Buhari: You lied on oath...

Continued from page 1

the election.

Atiku, in his final address to the Presidential Election Petition Tribunal sitting in Abuja, said that Buhari, as candidate of the All Progressives Congress (APC), lied on oath in his form CF001 before standing for the presidential election.

He said based on that, Buhari was not qualified to seek election for using fraudulent procurement for clearance to contest the election.

He told the tribunal that President Buhari’s clearance from the Independent National Electoral Commission (INEC) to participate in the poll was built on fundamental falsehood.

In the final address presented on his behalf by his lead counsel, Levy Uzuokwu (SAN), Atiku drew the attention of the tribunal to a portion of Buhari’s INEC form where he claimed to have three different certificates comprising primary school leaving certificate, WAEC certificate and Officers Cadet certificate.

The petitioners said it was

shocking and surprising that “no provisional certificate, no certified true copy of the certificates, no photocopy of certificates and in fact no electronic version of any of the certificates was presented by Buhari throughout the hearing of the petition to dispute the claim of the petitioners”.

“More worrisome is the fact that Buhari’s own witness, Major General Paul Tafa (rtd), who joined the Nigerian Army with him in 1962, told the tribunal that they were never asked to submit their certificates to the Nigerian Army Board as claimed by Buhari in his form CF001,” Atiku said.

“At any rate, the Secretary of the Nigerian Army Board, Olatunde Olaleye, had in a statement clarified that Buhari had no single certificate in his personal file with the Nigerian Army,” he said.

Atiku, therefore, urged the tribunal to nullify the participation of Buhari in the election on the grounds that Buhari lied on oath to deceive Nigerians and to secure unlawful qualification for the election.

•Continues online at www.businessday.ng www.businessday.ng

L-R: Muhammed Bukar, permanent secretary, ministry of works and housing; Babatunde Fashola, minister of works and housing, and Abubakar Aliyu, minister of state for works and housing, during the assumption of duties by the ministers in Abuja, yesterday.

Pic by Tunde Adeniyi

Four Ministers to watch, as Buhari assigns...

Continued from page 1

replaced Adeosun.

As minister of Finance as well as Budget and National Planning, Ahmed’s task is quite daunting.

Ahmed will lead in the face of weak government revenue, a ballooning public wage bill and rising public debt – the three factors threatening a fiscal crisis.

She must also deal with the constraints of boosting non-oil revenue at a time of tepid economic growth and squeezed company profits.

While the Federal Government could have afforded to paper the cracks by borrowing to fill revenue shortages four years ago, that option is almost a non-existent one today.

Not when public debt has nearly doubled in the last four years and debt to revenue ratio is already at unsustainable levels.

In 2018, the Federal Government spent 66 kobo of every naira earned to service debt. It gets even worse. In the 2019 budget, recurrent expenditure to revenue ratio of 150 percent implies that the government will spend every naira earned as well as an extra 50 kobo borrowed on only recurrent expenditure this year.

Ahmed must find a way to restore the country’s fiscal health, according to Wale Okunrinboye, head of investment research at local fund manager, Sigma Pensions.

“To perform, she will be asking the government to spit against its own shadow,” Okunrinboye said.

That’s because she has the difficult task of balancing the budget, boosting government revenue in a sustainable manner and, most importantly, tapping private capital – something the current government is not renowned for.

“The government has demonstrated a disdain for private capital and she must change that. She must have an expansive approach to privatisation and show a real desire to implement market reforms,” Okunrinboye said.

Ahmed also needs to en-

force a breakaway from the government’s spending on recurrent expenditure and debt servicing by pushing for reforms that reduce the cost of governance and spur spending on infrastructure.

Another minister that will grab the spotlight is Adeniyi Adebayo, the new minister of industry, trade and investment.

Adebayo, 61, will replace Okechukwu Enelamah, the immediate past minister in the ministry.

The University of Lagos law graduate is a veteran politician. He was the first executive governor of Ekiti State and is a top chieftain at the ruling All Progressives Congress (APC).

He faces an unenviable task of building investor confidence in an economy still struggling with weak growth.

Foreign direct investments (FDI) into Africa’s biggest economy tanked after a 2014 collapse in global oil prices, coupled with an agitation in the Niger Delta region that curbed production. Investment flows have not really recovered since then, despite improvement from 2016’s record low.

Data from the National Bureau of Statistics show that investment into the country dropped 53.5 percent in 2015 to $9.8 billion from $20.7 billion in 2014.

In the thick of the recession in 2016, the figure reached its lowest level at $5.1 billion. In 2017, foreign investment picked up to $12 billion and climbed further to $17 billion in 2018, which remains some way off the $20 billion inflow of 2014.

“The new minister will have considerable work to do in ensuring there’s an enabling environment for investors,” said Ayodeji Ebo, the managing director at financial advisory firm, Afrinvest Securities.

In 2018, Nigeria came in at 146th place out of 189 countries in the World Bank’s Ease of Doing Business rankings.

The lender in the report expressed investors’ worries over several bottlenecks that

https://www.facebook.com/businessdayng

have been hurting the growth of businesses in the country ranging from registration of property, enforcing contracts, access to electricity, among others.

Analysts are curious to see whether Adebayo’s legal background would play a role in ensuring the government better upholds contracts with private investors.

“If he can at least show prowess in addressing many of these bottlenecks, the country will definitely attract more investments,” Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry, said.

The third minister that will attract attention is Saleh Mamman, minister of power.

Mamman, a businessman and former Ministry of Works official, will need to tackle a poor electricity supply that holds back economic growth and the country’s industrialisation aspirations.

Nigeria’s average electricity supply of around 4,000 megawatts poorly compares to South Africa’s 40,000, despite the latter having considerably less population.

Mamman will be faced with crippling debts that have brought the power sector on its knees and held back investment.

Stakeholders in the power sector fear Mamman may take some time learning the ropes and this could slow the workings of the industry.

“We need to wait for his policy statement before we know where he is heading to,” said Ayodeji Dada, president, Association of Energy Engineers, Nigeria chapter.

The minister of state for petroleum resources, Timipre Sylva, who replaces former Exxon Mobil boss, Emmanuel Kachikwu, also has a tough task ahead.

Stakeholders say top on his priorities would be to navigate the security and community problems in the Niger Delta with the aim of allowing peaceful operation of oil companies in the area.

He will also need to move the needle on ensuring the passage of the Petroleum Industry Bill (PIB), which has been stuck with lawmakers @Businessdayng

for decades.

As the new minister of state for petroleum resources, Sylva, assumed duties with a pledge to reposition and chart a way forward for the Nigerian petroleum sector. A lot depends on keeping that pledge.

Oil accounts for about 70 percent of Nigeria’ revenue, but the Organization of Petroleum Exporting Countries (OPEC) member has been hit hard by a prolonged drop in crude prices that have caused the deepest crisis in Africa’s biggest economy for more than a decade. The new minister must shake off oil’s many troubles and attract new investments into the sector which has stalled recently.

Amid a series of changes, Buhari has himself retained responsibility for the full portfolio, despite the oil sector of the economy shrinking by -2.40 percent in Q1 2019 compared with -1.62 percent recorded in Q4 2018.

Sources familiar with the sector say they expect Sylva to bring his experience as a former assistant to a former minister of petroleum resources and a governor of Bayelsa State to bear on the industry.

Adeola Adenikinju, a gas policy analyst for the World Bank and professor of Economics at University of Ibadan, said it’s very important that the new minister of petroleum strikes a good relationship with the president and enjoys the confidence of the president in order to succeed.

“It’s one thing to have a technocrat who knows how to move the industry forward, it’s another thing to enjoy the confidence of the president,” Adenikinju said.

“He was a former governor, so he knows what it means to exercise executive authority. Rather than start from scratch, he just needs to have an assessment on what was on ground and prioritise which is important, most especially the Petroleum Industry Bill (PIB) which would have a huge impact on investments and profitability,” he told BusinessDay.

•Continues online at www.businessday.ng

Thursday 22 August 2019

BUSINESS DAY

39

news

Esentry Systems becomes Nigeria’s first ISO certified security operation centre Jumoke Akiyode-Lawanson

E

L-R: Annabelle Degroot, managing director, International Breweries; Eze Nnaemeka A. Achebe, chairman, International Breweries, and Muyiwa Ayojimi, company secretary, International Breweries, at the 42nd annual general meeting of International Breweries Plc at the Legacy Resort, Presidential Boulevard Road, Oke-Mosan, Abeokuta, Ogun State.

Buhari targets September for submission of 2020 budget to N/Assembly Tony Ailemen, Abuja

... gives Ministers a month to get 2020 budget ready

etermined to return to the January to December budget cycle, the Presidency has given newly inaugurated ministers marching orders to work on the 2020 budget to ensure it is submitted in September, as soon as the National Assembly resumes.

This was part of the directives passed on to the ministers on Wednesday by the Secretary to the Government of the Federation (SGF), Boss Mustapha.

According to the SGF, “You are to familiarise yourselves with the permanent secretaries of various ministries and within this period, set out to work particularly on the budget, and taking cognizance of the fact that we have assured the National Assembly that we are sending the budget immediately they return from

the recess.”

The Senate president had earlier advised the Presidency to submit the budget early to the National Assembly, to enable them pass the budget before proceeding on Christmas holidays in December, as part of plans to return to the January to December budget cycle.

The SGF assured the ministers that they would receive their ministerial mandates within two weeks, for them to review and take action, within the period.

Early passage of the Appropriation laws, which had been a major national concern, is seen as a necessary requirement for proper public accountability. It is also to help government to properly track budget implementation and effective service delivery by the Ministries, Departments

D

and Agencies (MDAs) of government.

Mustapha also directed the ministers to “attach your signatures and return for the purposes of safe keeping and also monitoring and co-ordination.”

Following the recent retreat, President Buhari had stated that the programme outlined a roadmap towards the delivery of government policies, programmes and projects for 2019-2023.

The President had expressed his administration’s determination to improve security, achieve diversified, inclusive economic growth and fight corruption.

This is also aimed at building a buoyant economy that supports inclusive growth and creates broad-based prosperity for every Nigerians, as govern-

ment vowed to absorb the 2 million Nigerians entering the labour market each year as well as reduce the backlog of over 20 million unemployed or underemployed Nigerians.

After the swearing-in, the ministers proceeded straight to their offices in appreciation of the challenges facing them, in their new assignments, as President Buhari had charged them on the need to address “the challenges confronting our nation in the best interest of our people and posterity.”

According to the President, “We must not allow such issues as political affiliation, sectional interest, and primordial loyalties to blind us against our patriotic obligation to drive our nation’s growth, development, and prosperity in an atmosphere of enduring peace, security and stability.”

Rise Labs kick starts 2019 AI Ideathon across Nigeria ANTHONIA OBOKOH rtificial Intelligence (AI) is expected to transform various industries just as electricity did over 10 decades ago, and global consulting firm, McKinsey, has stated that noninternet sectors like agriculture, education, energy, logistics and manufacturing will see a $13 trillion GDP growth driven by AI by 2030.

That’s why The Rise Labs by Rise Networks, Nigeria’s first AI powered learning, research and work readiness centre based in Lagos, in partnership with BusinessDay and other key private sector stakeholders, has launched the nation’s first Artificial Intelligence Ideathon by calling for revolutionary ideas that have the potential of solving Nigeria’s education, agriculture, healthcare and financial inclusion problems using AI and Machine Learning models and methodologies.

The 2019 AI Ideathon is open to students, data scien-

A

tists, working professionals, developers and academics across Nigeria who are passionate about becoming the early pioneers of groundbreaking innovative solutions to the challenges identified above by applying their knowledge and ideas in the realm of Artificial Intelligence and Machine Learning Solutions while encouraging research and collaboration to drive industryfocused AI innovation and the uptake of AI-driven results across sectors.

Winners of the Ideathon will get the rare opportunity of a veritable springboard to showcase and share their AI and ML models and applications to a broad community of stakeholders especially Policy Makers, Technology Experts and Organisations, Leaders in the Private Sector and Venture Capitalists to facilitate the scaling and execution of their ideas.

They will also win world www.businessday.ng

class, brand new work tools and software which include an Apple MacBook Pro (13-inch, 2018) +$1000, a Microsoft Surface Book 2 (13.5-inch), a 13inch, 2018 MacBook Air along with a Publication of their Ideas in The Rise Labs National AI Innovation e-book, Mentorship Support by some the best AI Innovators & Experts within Nigeria & around the World, National Public Recognition & Opportunity to Network and fundraise at WORKPLAN: Africa’s Action Plan on Education, Skills and the Future of Work for the Youth on November 23rd, 2019 and a Free 3-6months Workspace, Incubation and Technical support at The Rise Labs.

Submission of entries for the Ideathon begins at 12:01am on August 19th, 2019 and ends at 11:59pm on September 20th, 2019 (West Africa Time). Ideally, Participants in the Ideathon must be 18 years of age or older and Minors must have consent

of a parent or legal guardian.

With the poor quality education and healthcare systems in Nigeria in addition to the inequalities in access to financial services and infrastructural challenges facing Agriculture in Nigeria, the ultimate mission of The Rise Labs is to ensure that Nigeria plugs into and benefits from the 4th Industrial Revolution by leveraging emerging technologies like AI and Machine Learning and increase the global competitiveness of young Nigerians across industries by improving the quality of their skills and knowledge in alignment with the future of work.

AI powered Chatbots like ISE the Job Bot, created by The Rise Labs by Rise Networks which is the first Career Coaching Job Bot in West Africa, will power 85 percent of customer service by 2020 and cut business costs by $8 billion by 2022, according to Innovation Enterprise.

https://www.facebook.com/businessdayng

sentry Systems, a managed security services provider (MSSP) reputed for its focus on continuous security monitoring, threat detection, incident response and cyber security compliance, has become the first Nigerian company and only MSSP to be awarded ISO certification on its security operations centre (SOC).

ISO certification is an international standard that specifies requirements for a quality management system (QMS). Organisations use the standard to demonstrate the ability to consistently provide products and services that meet customer and regulatory requirements.

The company earned the certification by building a strong brand that offers security services to help enterprises achieve business resilience and accelerated growth through cyber risk mitigation.

According to the company, the ISO certification is a seal that confirms the expertise, professionalism and technical knowledge the brand has brought to the industry since its inception.

Commenting on how the company responded to the growing incidents of cyber attacks in Nigeria with proactive solutions, Adetokunbo Omotosho, partner, Esentry Nigeria, said, “The rate of Cyber-attack in Nigeria is alarming as every year Nigerian companies lose close to N130 billion to cyber-attacks – most

of which are not reported because it might lead to loss of customers confidence in such organisations.

“Esentry had to go through the rigorous audit process for months, making sure that we are fully compliant to global standards in security services and we are happy we are first cyber security company to get this ISO certification for a security operation centre in Nigeria.”

According to Omotosho, unfortunately, it is difficult for most organisations to have all the needed skills, technology and processes to run a security operations centre in-house. This is because the level of data source needed to predict an attack and respond instantly is huge, and the human resource needed comes at a huge cost.

“You can’t imagine what we have to do daily and in minutes to save the organisations. By the time you try doing it in-house, you will end up spending 80 percent of your business day fighting security incidents,” the industry expert said.

To him, fending-off cyberattacks comes at a lot of capital cost, especially with little know how on what security mechanisms are important for your specific businesses, coupled with the dynamic cyber security landscape.

With threats evolving daily and very quickly, organisations need to have a longterm partner with industry experience, intelligence and thorough understanding of cyber threats.

OML 42: Delta brokers peace between NPDC/NECONDE, host communities Francis Sadhere, Warri

D

elta State government has brokered peace between the NPDC/ NECONDE and host communities to OML 42, leading to the resolution of the crisis that had earlier led to the shutdown of operations at the flow station.

The state government commended the 12 host communities to the OML 42 operated by the NPDC and joint partners for embracing peace.

Commissioner, Ministry of Oil and Gas, Emmanuel Amgbaduba, who presided over the peace meeting held at the Government House Annex in Warri, praised the communities for agreeing to open the flow station for normal operations.

Amgbaduba disclosed that the decision by the host communities followed a truce brokered by the Delta State government between the communities and the joint partners of the OML 42.

The commissioner, accompanied by the special adviser to Governor Ifeanyi Okowa on Conflict Resolution, Edwin Uzor, permanent secretary in the ministry, Nkem Ajufo, and the director, Local Content, @Businessdayng

Aweka Avwainaghagha, said the meeting was to resolve the issues that led to the shutting down of the OML 42 on Thursday, August 15, 2019, by the host communities.

Briefing newsmen after the peace meeting held behind closed doors, the commissioner disclosed that the host communities and the joint partners had agreed to the terms reached.

The agreement reached, according to the commissioner, will see the communities reopening the OML 42 for operations within the shortest possible time.

He expressed happiness with the speedy resolution of the disagreement and commended Governor Okowa for providing the platform for the realisation of the peace deal.

Their chairmen, secretaries and public relations officers represented the affected 12 host communities. While the OML 42 joint partners, NPDC and NECONDE had their representatives.

Some of the leaders of the host communities confirmed the agreement, saying they were ready to keep their own side of the bargain provided the OML 42 joint partners do not renege on their side.

Thursday 22 August 2019

BUSINESS DAY

A1

POLITICS & POLICY

Meet Nigeria’s new ministers JAMES KWEN, Abuja

P

resident Muhammadu Buhari on We d n e s d a y , August 21, inaugurated and assigned portfolios to the 43 ministers earlier screened by the Senate. Below are Buhari’s less-known secondterm ministers.

Uchechukwu Ogah (Abia), minister of state, mines and steel Ogah, a former APC governorship candidate in Abia State, is a Nigerian oil magnate, entrepreneur, investor and philanthropist. Ogah is the president of Master Energy Group, a conglomerate with over 15 subsidiaries and interests across a variety of industries. He holds a Master of Science Degree in Accounting from University of Lagos.

Godswill Akpabio (Akwa Ibom), Minister of Niger Delta Affairs A lawyer by profession, Akpabio was a senator of the Federal Republic of Nigeria and Senate Minority Leader in the 8th National Assembly. He was also governor of Akwa Ibom State from May 29, 2007 to May 29, 2015. As a former governor from the Niger Delta region, Akpabio should be able to handle the issues in the area.

Sharon Ikeazor (Anambra), minister of state, environment A lawyer by profession, Ikeazor was a banker and also worked with Shell Petroleum Company. On joining politics, she was elected National Woman Leader of the defunct Congress for Progressives Change (CPC) and until her appointment as minster, was director, Pension Transitional Arrangement Directorate.

Ya l w a j i K a t a g u m (Bau chi), Minister of State, Industry Ambassador, Permanent Delegate of Nigeria to UNESCO, Katagum holds a Masters in Administration and Planning from the University of Lagos, (B.A.) in English, Graduate Certificate in Education at the Ahmadu Bello University. As a Diplomat, Katagum should be conversant with industrial policies of other countries and help Nigeria accordingly.

Timipre Sylva (Bayelsa), minister of state, petroleum Sylva, a graduate of Eng-

lish Language/Linguistics from University of Port Harcourt, is a former governor of Bayelsa State and a member of the Rivers State House of Assembly in the 1990s. He was also APC governorship candidate in 2015 in Bayelsa.

George Akume (Benue), minister of special duties Holder of Master’s Degree in Labour and Industrial Relations from the premier University of Ibadan, Akume was a third term senator and Minority Leader of the Senate from June 2011 to June 2015. He was also the governor of Benue State from 29 May, 1999 to 29 May, 2007 and was before then a retired Permanent Secretary with the Benue State Civil Service.

Mustapha Baba Shehuri (Borno), minister of state, agriculture Shehuri was the minister of state for Power, Works and Housing in the first tenure of President Buhari and aspirant for APC governorship ticket for Borno State. He is a graduate of Sociology and Anthropology from the University of Maiduguri. Goddy Jedy-Agba (Cross River), minister of state, power A former Group General Manager, Crude Oil Marketing Division, Nigerian National Petroleum Company, Jedy-Agba obtained a Degree in International Studies from Ahmadu Bello University, Zaria and holds a Master’s Degree in International Law and Diplomacy from the University of Lagos, Akoka. Festus Keyamo (Delta), minister of state, Niger Delta Keyamo, a Senior Advo-

cate of Nigeria, columnist and human rights activist, was the Director of Strategic Communications, APC Presidential Campaign Council in 2019 general elections.

He received a Bachelor of Law Degree in 1992 from Ambrose Alli University at Ekpoma, Edo State and was called to the Nigerian Bar on December 1993.

Clement Ikanade (Edo), minister of state, budget Ikanade was Commissioner for Environment and Public Utility in Edo State and also briefly served as Commissioner for Lands, Survey and Housing. The former Staff of Chevron Petroleum Company holds Master’s of Business Administration from Arizona University.

Richard Otunba Adebayo (Ekiti), minister of industry, trade and investment Adebayo, first executive governor of Ekiti State from May 29, 1999 to May 29, 2003 and former APC Deputy National Chairman, South, attended University of Lagos where he studied Law. Ali Isa Ibrahim Pantami (Gombe), minister of communications Pantami, an associate professor, is the immediate past director general of the National Information Technology Development Agency (NITDA). He studied Computer Science at Abubakar Tafawa Balewa University in Bauchi, bagging B.Tech, MSc Degrees and a PhD from Robert Gor-

don University, Aberdeen, Scotland.

Emeka Nwajiuba (Imo), minister of state, education The present member representing Okigwe South Federal Constituency of Imo State in the House of Representatives, Nwajiuba formerly served as House Committee chairman on Land, Housing and Works from 1999 to 2003. He was called to the Nigerian bar in 1989, pursued his LLM at University of Lagos and PhD at University of Jos. Mohammed Mahmoud (Kaduna), minister of environment Mahmoud, the former chairman, Universal Basic Education Commission, holds a doctorate degree.

Sabo Nanono (Kano), minister of agriculture Nanono, a former chairman of the All Farmers Association of Nigeria in Kano, is a graduate of Ahmadu Bello University, Zaria and University of Wisconsin, Madison.

Bashir Magashi (Kano), minister of defence Magashi, a retired MajorGeneral, is a lawyer and a graduate of Ahmadu Bello University (ABU) Zaria. He was governor of Sokoto State from August 1990 to January 1992 during the military era.

Rahmatu Tijani (Kogi), minister of state for FCT Tijani graduated from Ahmadu Bello University with a Degree in Urban & Regional Planning. She also has an MPA (Masters in Public Administration) from Nasarawa State University, Keffi. Tijani is a one-time chairman in

the FCT. Gbemisola Saraki (Kwara), Minister of state for transport Former Senator and House of Representatives member and governorship candidate in Kwara State, Saraki attended the University of Sussex in the United Kingdom and earned a Bachelor’s Degree in Economics.

She is the female legislator with the highest number of sponsored bills in Nigeria.

Adeleke Mamora (Lagos), minister of state, health The former director-general of the Federal Inland Waterways Authority obtained a B.Sc, Health Sciences, Bachelor of Medicine and Bachelor of Surgery (MBBS), University of Ife, and became a health practitioner. Mamora was senator for the Lagos East District.

Mohammed Abdullahi (Nasarawa), minister of state, science and technology He is a former secretary to the State Government, Nasarawa State, as well as former Attorney General and Commissioner for Justice in Nasarawa. Abdullahi studied at Usman Danfodiyo University Sokoto (LLB/ BL).

Zubairu Dada (Niger), minister of state, foreign affairs He is a diplomat and has been an ambassador, Embassy of Nigeria, and Warsaw Poland, since 1999. He holds a Bachelor’s Degree in English and Master’s in International Law and Diplomacy from University

L-R: Babajide Sanwo-Olu, Lagos State governor, congratulates Hon. Justice Kazeem Alogba as the new Chief Judge of the State, during the swearing-in ceremony at Lagos House, Alausa, Ikeja, on Wednesday. www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

of Jos. Tayo Alasoadura (Ondo), minister of state, labour A former senator of the Federal Republic of Nigeria, Alasoadura obtained the Association of Chartered Accountants (ACA) of England Certificate as well as that of the Institute of Chartered Accountants of Nigeria (ICAN) in 1974.

Rauf Aregbesola (Osun), minister of interior Aregbesola, mechanical engineer, is the immediate past governor of Osun State and was also Lagos State commissioner for works and infrastructure.

Sunday Dare (Oyo), minister of youths and sports Dare is a former executive commissioner with Nigerian Communications Commission (NCC) and former media adviser to national leader of APC, Ahmed Tinubu. He bagged a Bachelor of Science (BSc.) in International Studies from Ahmadu Bello University and obtained a Master of Arts in Law and Diplomacy from the University of Jos. Pauline Tallen (Plateau), minister of women affairs Tallen, a one-time deputy governor of Plateau State, was also Minister of State for Science and Technology.

She got a Degree in Sociology at the University of Jos in 1982.

Maigari Dingyadi (Sokoto), minister of police affairs He is a former secretary to the Sokoto State government and holds both Bachelor’s and Master’s Degrees in Political Science. Saleh Mamman (Taraba), minister of power Saleh, a retired director with the Taraba State Civil Service, holds Master’s Degree from Bayero University, Kano. Abubakar D. Aliyu (Yobe), minister of state, works and housing He has served as deputy governor of Yobe State for the past 10 years, making him the longest serving deputy governor in Nigeria’s political history.

Sa’adiya Umar Faruq (Zamfara), minister of humanitarian and disaster managment Faruq, is a federal comm i s s i o n e r o f Nat i o na l Commission for Refugees, Migrants and Internally Displaced Persons, has a B.Sc. in Business Administration (Actuarial Science) and Masters in International Affairs and Diplomacy.

A2

FT

Thursday 22 August 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

JAMES POLITI IN WASHINGTON AND RICHARD MILNE IN OSLO

D

enmark’s prime minister on Wednesday insisted that the Scandinavian country was still interested in a “strategic co-operation” with the US in the Arctic even as she expressed her irritation at Donald Trump’s cancellation of his state visit to Copenhagen over her refusal to sell him Greenland.

Mette Frederiksen, the new centre-left Danish premier, reiterated that the world’s largest island was not for sale but said she hoped to discuss the “opportunities and not least the challenges” in the Arctic with the US. Ms Frederiksen told reporters in Copenhagen that she had received the news that Mr Trump had cancelled his state visit “with regret and surprise”. But she added that “the developments in the Arctic region call for further co-operation between the US, Greenland, Faroe Islands and Denmark. I would like to underline our invitation for a stronger co-operation on Arctic affairs still stands”.

In a tweet late on Tuesday, the US president said Denmark was a “very special country with incredible people” but he would be “postponing” the visit after Ms Frederiksen revealed she was not interested in discussing the purchase of the self-governing island that is part of the Danish kingdom.

“The prime minister was able to save a great deal of expense and

Donald Trump scraps Denmark visit after interest in buying Greenland is rebuffed

Danish PM says she would still like to discuss ‘strategic co-operation’ in the Arctic with US

A resident in Kulusuk, Greenland. The notion of buying Greenland may not have been at the top of Mr Trump’s agenda, but it was still at the front of his mind early this week © AFP

effort for both the United States and Denmark by being so direct. I thank her for that and look forward to rescheduling sometime in the future!”

Mr Trump added.

The president was due to visit Denmark on a brief trip to Europe in

Antitrust probe launched over concerns Libra coin could unfairly disadvantage rivals

F

acebook’s new digital currency, Libra, is under early scrutiny from the EU’s antitrust regulators, according to two people familiar with the matter.

The European Commission has sent out questionnaires to groups involved with the Libra project as part of a preliminary information-gathering operation, amid concerns the currency could unfairly disadvantage rivals, the people confirmed.

Facebook and the commission both declined to comment on the investigation.

The social media company has drawn heavy criticism from regulators, central bankers and politicians since it announced plans to launch a low-cost digital currency alongside 27 other companies — including Visa, Mastercard, Uber and Spotify — by the end of next year. Each of the partners has pledged to invest $10m in the project.

The social network also plans

to integrate its own Libra-backed wallet, known as Calibra, into Facebook services such as WhatsApp and Messenger.

The commission is “currently investigating potential anticompetitive behaviour” after fears over “possible competition restrictions” relating to the use of consumer data, according to a document seen by Bloomberg on Tuesday.

Facebook has come under fire from EU policymakers in the past two years over high-profile data privacy breaches such as the Cambridge Analytica scandal, the spread of online disinformation, electoral interference and terrorist content. However, the platform has not yet been the subject of an EU antitrust investigation.

So far, other regulators such as the international Financial Stability Board and the UK’s Financial Conduct Authority, as well as the Bank of England and the G7, have all said they will not allow the world’s largest social network to launch its planned digital currency without close scrutiny. www.businessday.ng

Partner, ally, friend.”

Rufus Gifford, a former US ambassador to Denmark, apologised to the Scandinavian country and called Mr Trump “a child”.

Denmark’s royal family, who had invited Mr Trump for the state visit,

Goldman Sachs claws its way into contention for Saudi Aramco IPO

Facebook cryptocurrency investigated by EU MADHUMITA MURGIA AND JAVIER ESPINOZA IN LONDON AND MEHREEN KHAN IN BRUSSELS

early September that includes a stop in Poland. Just a few hours before Mr Trump cancelled the meeting, Carla Sands, the US ambassador to Denmark, had enthusiastically said in a tweet: “Denmark is ready for the POTUS @realDonaldTrump visit!

said in a short statement to local media that the cancellation came as “a surprise” but had no additional comment.

Ms Frederiksen, on a visit to Greenland on Sunday, had called Mr Trump’s proposal an “absurd” idea. “Greenland is not for sale,” she said. “Greenland is not Danish.

Greenland is Greenlandic. I really hope that it’s not something that is seriously meant.”

The notion of buying Greenland may not have been at the top of Mr Trump’s agenda, but it was still at the front of his mind early this week.

In a tweet, the US president posted a picture of a town in Greenland, superimposing an image of Trump Tower on top of it. “I promise not to do this to Greenland!” he said.

The White House had touted Mr Trump’s trip to Denmark, a Nato ally, as an opportunity to have bilateral meetings with officials and engage with business leaders but had not mentioned Greenland or the Arctic as a special topic of interest.

Had Mr Trump’s visit proceeded, it would have been overshadowed by his controversial proposal, which he likened to a large real estate deal.

Bank makes strides after charm offensive by executives including former Trump official Dina Powell ANJLI RAVAL AND ANDREW ENGLAND IN LONDON, JAMES FONTANELLA-KHAN IN NEW YORK AND SIMEON KERR IN DUBAI

G

oldman Sachs has clawed its way into contention for a role in Saudi Aramco’s planned stock market listing, after a months-long charm offensive by top executives, including former Trump administration official Dina Powell, said several people briefed on the matter.

Ms Powell, who left Goldman in 2017 to work at the White House and came back to the Wall Street bank a year later, has leveraged her knowledge of the region and relationships with the kingdom’s highest authorities to seek business for Goldman, said one person close to the Saudi state energy giant.

“She’s a formidable operator,” he said. “She’s doing what she did for Trump, for Goldman . . . she is opening doors to win business.”

Ms Powell, an Egypt-born Arabic speaker, was instrumental in organising Donald Trump’s trip

https://www.facebook.com/businessdayng

to Saudi Arabia in 2017 — his first foreign visit as president — when she was deputy national security adviser for strategy, sitting in on high-level meetings including those with King Salman and his heir, Crown Prince Mohammed bin Salman.

A person close to Goldman stressed that the strides made by the New York bank in Saudi Arabia were part of a team effort, which included a trip this year by David Solomon, the bank’s chief executive, to the kingdom. Other key Goldman bankers involved in courting Saudi Aramco included Akila Raman and Dennis Coleman.

Goldman had failed to secure a top role in the public offering in 2017 when Saudi Aramco nominated banks including JPMorgan Chase, Morgan Stanley, Moelis, Evercore and HSBC to advise them on what could be the world’s largest listing.

The initial public offering was postponed following an inability to achieve the $2tn valuation for the oil group sought by Prince Mo@Businessdayng

hammed, but banks are now preparing their pitches for a flotation.

The successful launch of a $12bn international bond by Saudi Aramco this year renewed momentum for the IPO and revived optimism about the Saudi economy after the international condemnation that followed the killing of journalist Jamal Khashoggi.

Goldman is conducting preparatory work for the Saudi Aramco flotation, ahead of any formal pitching process, said several people familiar with the matter.

This follows the bank’s role as a bookrunner for the company’s bond and its involvement in sovereign issuance.

Saudi officials have maintained that a Saudi Aramco IPO remains a priority for the kingdom. They added that it would take place in 2020 or 2021, after the company had completed the acquisition of a majority stake in Saudi chemicals company Sabic from the Saudi sovereign wealth fund. Goldman advised the Public Investment Fund in the Sabic transaction.

Thursday 22 August 2019

FT

BUSINESS DAY

A3

NATIONAL NEWS

Central bankers seek fresh policy tools to combat slowdown Record-low rates trigger hunt for stimulus measures at Jackson Hole gathering BRENDAN GREELEY IN WASHINGTON

T

he world’s monetary policymakers arrive in Jackson Hole, Wyoming, on Thursday for their annual summer gathering with two problems on their minds.

One they have known about for a while: despite dropping policy rates — in some cases below zero — central banks in developed economies still cannot meet their inflation targets.

The other problem is new: the uncertainty of open-ended trade negotiations is beginning to weigh on growth, even in America. Central bankers are becoming increasingly uncertain about their tools, but may have to use them soon anyway.

“I would say this is the probably the most interesting environment for central bankers since the crisis,” says Raghuram Rajan, a former governor of the Reserve Bank of India, now at the Chicago Booth School of Business.

The Kansas City Fed’s yearly conference on monetary policy has become a key moment for investors and politicians, who have in recent years come to expect major policy announcements.

Jay Powell, US Federal Reserve chairman, will in particular be closely watched when he speaks on Friday. Since the financial crisis, the chairman’s speech at the Jackson Lake Lodge has often been used to roll out new policies.

That means investors will expect to hear something big from him — whether he has it or not.

In June, Mr Powell pointed out that the Fed’s policy rate, then at 2.5 per cent, was already close to zero, leaving little room to make a difference in the next downturn. This proximity was “the pre-eminent monetary policy challenge of our time”, he said.

The Fed is not alone. Since the financial crisis, central banks in other developed economies have dropped short-term interest rates; many are below zero. They have also purchased bonds in a bid to drag long-term interest rates down, a tactic that was once widely considered a heresy.

But after a decade of accommodative policies, central banks have failed to meet their inflation targets, and now they are left with low or negative policy rates.

“The question is, if you did two percentage points of easing, is that going to give you much oomph,” says James Stock, a political economist at Harvard. “We don’t doubt that it’ll work . . . it’s just not going to be that potent.”

As a result, economists are on the hunt for alternative measures.

One group of highly respected former policymakers recently proposed that governments of developed economies should have c l e a r l y - d e f i n e d f i s ca l spending project s ready for a downturn, paid for with debt bought by their central bank — a radical suggestion.

Jean Boivin, former deputy

governor of the Bank of Canada and now head of research for the BlackRock Investment Institute, co-authored the paper with Stanley Fischer and Philipp Hildebrand.

“It’s difficult to envision stimulus in the next recession coming from pushing yields a lot lower than they already are,” he said.

Randall Kroszner, a former Fed governor, said central bankers were searching for a “shock and awe strategy . . . to make sure that markets realise they’re serious, and that they are going to have an impact”.

But the concern that market expectations cannot be changed would “haunt” attendees at Jackson Hole, he added.

What in June was an academic question about tools has become, in August, a policy question of when to use them. According to Fitch Ratings, more than a third of central banks have eased in the past six months, the most abrupt shift since 2009.

Growth has slowed in China and collapsed in Germany. In the US, protracted trade talks have started to wear on manufacturing. In the past week markets, expecting fresh stimulus, have lurched.

But Mr Powell’s dilemma is that the US data are not as bad as they are in Europe. Industrial production has slowed but it is not shrinking. Unemployment remains at levels not seen since the late 1960s, and American consumers continue to spend.

This leaves the Fed chairman without a clear mandate to ease policy.

As a result, Mr Rajan said he did not expect any big announcements. The Fed has been “fairly clear that there’s a lot of uncertainty on the efficacy of the tools”, he said.

“It’s not clear to me that there’s a lot of additional enlightenment we can get at this point.”

In its most recent survey of consumers the University of Michigan asked about the Fed’s July rate cut, which Mr Powell explained as “insurance” against trade risks. Consumers answered that a cut was a sign of a recession. Perversely, bond price movements showed that investors did not believe the Fed had committed to easing policy.

Ellen Zentner, chief US economist for Morgan Stanley, said the Fed may pay a price for its open conversations about policy options.

“The market sees the Fed showing them their hand, showing them how the sausage is made,” she said. “You run the risk of showing the market there is very little you can do.”

Mr Powell is looking at ambiguous signals. Investors think he is unclear. And the president of the United States frequently accuses him of being slow to act.

As policymakers gather in Wyoming, he will be expected to say something that will satisfy all these constituencies — and his biggest problem may be that he has been too honest about the Fed’s limitations. www.businessday.ng

Pimco’s Daniel Ivascyn: ‘We’re a lot more defensive’ © Reuters

Italy’s politicians start talks over government crisis

Democratic party sets out demands for possible deal with Five Star to exclude Salvini HANNAH ROBERTS AND DAVIDE GHIGLIONE IN ROME

I

taly’s leaders began to try to seek a way out of the country’s government crisis on Wednesday, with President Sergio Mattarella embarking on a round of talks with party figureheads in the wake of prime minister Giuseppe Conte’s resignation.

With Mr Mattarella seemingly determined to seek an early resolution to the crisis, Nicola Zingaretti, the leader of the main centre-left Democratic party (PD), set out his demands for potentially taking part in a new coalition.

The government collapsed on Tuesday when Mr Conte offered his resignation, bringing an end to an uneasy 14-month coalition between two populist forces, the anti-immigration League and the Five Star Movement. Mr Conte blamed the collapse on Matteo Salvini, the League leader and interior minister, who he accused of acting in his own interests with a call for fresh elections.

Mr Mattarella is holding talks with all party leaders on Wednesday and Thursday to establish whether a new government could command

parliamentary support or whether fresh elections will be needed, only a year and a half into a five-year legislature.

One potential solution would be for Mr Zingaretti’s PD to agree a coalition with Five Star, in effect replacing Mr Salvini’s League in government.

On Wednesday Mr Zingaretti said he was open to negotiations with Five Star. But he told a meeting of his party’s leadership that a future administration would need to be in “complete discontinuity with the previous government”.

After the meeting Mr Zingaretti said he had set out five conditions for supporting a new government with Five Star. They included “reliable membership” of the EU — a reference to the Euroscepticism of Five Star — and a change in economic and social policies.

Three sources said that Mr Zingaretti had held telephone negotiations with Luigi Di Maio, Five Star’s leader.

Andrea Orlando, the PD’s deputy leader, said: “The PD wants a new direction, we are not the support wheel to replace the League. We are a political force that asks for the opening of a phase of radical

change.”

Matteo Renzi, the former PD prime minister, had first proposed the coalition. But a possible alliance with Five Star involving Mr Renzi, a polarising figure, would be problematic. Five Star has ruled out a government that includes Mr Renzi.

Maria Elena Boschi, a PD MP and close ally of Mr Renzi, said: “For some of us, this possible coalition with Five Star could be difficult, but the interests of the country and the Italians come first and we can put personal bad feeling aside.”

Five Star emphasised on Wednesday that it still had most seats in parliament and therefore precedence in forming a government. “We will wait for the result of the consultations,” it said. “This is a time to respect the institutions.”

The League accused the other parties of trying to patch together a deal because they were afraid to return to the polls.

League Senate whip Massimiliano Romeo said: “The League wanted to build an Italy that said Yes with tax cuts, investments in public works and fast trials . . . Others are thinking of a government of No and saving their seats. Let’s have elections and give Italians their say.”

Waymo to make self-driving data set public to fuel research Release includes high-resolution driving footage labelled with 12m objects PATRICK MCGEE IN SAN FRANCISCO

I

n a bid to shorten the lengthy process of teaching cars to drive themselves, Waymo announced on Wednesday that it would make “the largest fully self-driving data set ever” freely available to the research community “in the hope of accelerating the development of machine perception and self-driving technology”.

The Alphabet unit, which began life a decade ago as Google’s self-driving car project, said it hoped the release would fuel research into self-driving technologies by adding to the body of data that could be drawn upon.

Its data, collected using cameras

https://www.facebook.com/businessdayng

and sensors on Waymo vehicles in a variety of environments and road conditions, include 1,000 high-resolution driving scenes that have been “painstakingly labelled” to indicate the presence of 12m objects such as pedestrians, cyclists and signage.

Labelled data are vital to the development of self-driving algorithms, which must be “taught” to interpret the world around them by being fed millions of examples.

As Waymo is widely considered to be the most advanced company in the self-driving technology space, the move is likely to be seen as a concession that its go-it-alone approach is falling short of sky-high expectations. @Businessdayng

Banks such as Morgan Stanley and Jefferies have valued the unit at $175bn and $250bn, respectively — multiples of the world’s largest carmakers — on the belief that it could soon disrupt the notion of car ownership and offer a driverless Uber-like service in the world’s big cities.

In a briefing to journalists on Tuesday, Drago Anguelov, Waymo’s head of research, pushed back against the idea that the release was a concession. “It’s not an admission, in any way, that we have problems solving these issues,” he said. “We felt, and it was not just us . . . that the field was currently hampered by a lack of suitable data sets.”

A8

Thursday 22 August 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

industry Insight

BUSINESS DAY Thursday 22 August 2019 www.businessday.ng

Time to rebuild crumbled investor confidence ODINAKA ANUDU, MICHAEL ANI & GBEMI FAMINU

A

ll eyes are on Adeniyi Adebayo, Nigeria’s newly appointed minister for industry, trade and investment, to rebuild an already collapsed investor confidence in an economy still struggling with weak growth.

Foreign direct investments (FDI) into Africa’s biggest economy tanked after a 2014 collapse in global oil prices, coupled with an agitation in the Niger Delta region, which caused the country its biggest nightmare in more than two decades.

Data from the National Bureau of Statistics show that investment into the country dropped 53.5 percent in 2015 to $9.8 billion, from $20.7 billion in 2014.

At the thick of the recession in 2016, the figure reached its lowest levels at $5.1 billion. Not until the country exited recession in 2017 that investors started building up interest again.

“Nigeria is faced with liquidity challenge and unless the government rolls out far-reaching policies that would attract investments, the country would remain cash-strapped and not generate the needed revenue to achieve inclusive growth,” Ayo Terriba, CEO of Economic associates, said recently in Lagos.

Even though FDI in Africa’s biggest oil- producer has seen an uptick, the numbers are still wide off the mark when compared with 2014 levels.

But attracting investments comes with strict policy reforms.

Nigeria’s West African neighbour, Ghana, for the first time, overtook Nigeria in attracting investment in 2018, according to data tracked by the United Nations Continental Trade Agre ement (UNC TAD).

Ghana attracted investments valued at $3.1 billion ahead of Nigeria’s $2.2 billion.

At $2.2 billion, investments into Nigeria were the lowest in 13 years, UNCTAD noted in the report.

The World Bank Doing Business report put Nigeria in 146th spot out of 189 countries, a ranking that experts say foreign investors look out for when making investment decisions.

The Washington-based lender outlined key recommendations for Nige-

ria, including speeding up registration of properties, payment of taxes and fixing infrastructural deficits.

Industry experts say in order to build investor confidence, Adebayo must work closely with the Central Bank of Nigeria (CBN) to align fiscal policies with monetary sides.

Since 2016, Nigeria has held onto a multiple exchange rate system, which has produced mixed results.

The system was implemented with a view to cushioning the effect of dollar shortages as foreign investors dumped the naira to flee to other markets.

Even though the situation appears to have eased, the country has taken stance in defending the Naira by keeping multiple windows.

The International Monetary Fund, in its article IV released earlier this year, urged Nigeria to scrap its multiple exchange rates, remove fuel subsidies and review electricity tariff.

Though the issue of FX lies with the CBN, the investment minister must work closely with him to eliminate the inefficiencies in the FX market that hurt investors.

The World Bank raised a red flag in its 2019 Doing Business report scoring Nigeria as low as 28.89 percent in registering property.

Adebayo must, therefore, collaborate with the power minister to resolve pending issues around electricity supply. This is biggest energy occupies 30 to 40 percent of investors’ expenditure.

“Nigeria needs to fix the problem of electricity if at all it wants to make head way in attracting investments,” Muda Yusuf, director general, Lagos Chamber of Commerce and Industry, told BusinessDay. This means that Adebayo and his minister of state Mar yam Katagum must understand the enormity of their responsibility and the need to collaborate with other ministers to achieve results.

Manufacturers are confronted with high production costs caused by poor infrastructure such as bad roads and absence of railways which are cheaper for logistics.

In the first quarter of 2019 Manufacturers CEOs Confidence Index (MCCI) report released by MAN, 92 percent of CEOs interviewed said multiple taxation was their biggest impediment. But in the second quarter, the number

Adeniyi Adebayo

rose to 95 percent.

“This is substantiated by the numerous taxes, levies, fees and other charges that manufacturers pay to agencies of the federal, state and local governments,” the report says.

“Consequently, there is the need to streamline multiplicity of taxes and ensure that only approved taxes/ levies/fees are charged,” MAN suggests.

The CEOs complained that delays in clearing raw materials and machinery often result in high demurrages which increase production costs and slow down manufacturing op-

Mariam Katagum

erations.

A 2018 report by the Lagos Chamber of Commerce and Industry (LCCI) had supported the CEOs’ point.

The report by the LCCI had disclosed that 5,000 trucks seek access to Apapa and Tin Can ports in Lagos every day even though they were originally meant to accommodate only 1,500 trucks.

The report said that Nigeria loses N600 billion in customs revenue, $10 billion (N3.6trn) in non-oil export sector and N2.5 trillion in corporate earnings across various sectors on annual basis due to the

poor state of Nigerian ports.

The LCCI report further noted that 25 percent of cashew nuts exported from Lagos to Vietnam in 2017 went bad or were downgraded owing to delays at Lagos ports. Similarly, only 10 percent of cargoes were cleared within the set timeline of 48 hours while the majority of cargoes took between five and 14 days to clear. The report added that some cargoes took as many as 20 days to be cleared at the ports.

Just like the LCCI report of 2018, MAN’s survey generally shows that CEOs are frustrated by the state of the ports. Many of them want the federal government to improve the state of ports outside Lagos to decongest Apapa and Tin Can. This is one serious issue hurting investors. Delays of raw materials and export products have no other effect than lower margins for firms, thereby cutting jobs and reducing the GDP. The ministers must understand that unless they get involved in resolving Apapa and Tin Can problems, they may not achieve much. This is one area pervious ministers have failed, and industry players say the new ones must guard against it.

Think about funding. Nigeria’s benchmark interest rate is among the highest in Africa at 13.5 percent. Ethiopia’s is 7 percent; Kenya’s is 9 percent; South Africa is 6.75 percent; Zambia is 10.25 percent, and Cameroon is 4.25 percent.

Similarly, Rwanda is 5 percent; Mauritius, 3.5 percent; Algeria is 8 percent, and Senegal is 4.5 percent.

The National Bureau of Statistics (NBS)’s recent MSME report shows that 85 percent of businesses could not have access to external financing within 2013 and 2017.

In fact, only 5.3 percent of SMEs had access to bank credit, even with 40 percent of them having relationships with banks.

Due to high inflation rate and the monetary policy rate, deposit money banks give out loans at 20 to 35 percent interest rates per annum with a usually 12-month tenor while development banks like the Bank of Industry capable of issuing loans at singledigit interest rates lack the required capital to keep up with demands.

A CEIC data show that the lending rate of Nigerian banks dropped by 7 percent,

from 16.08 in February to 14.92 in March 2019.

Data from the NBS show that banking sector credit to the economy declined by 2.9 per cent, from N15.6tn in Q3 2018 to N15.1tn in Q4 2018. Similarly, the number of customers borrowing from commercial banks also headed south.

In 2018, MAN said in its economic review that lending rate to the manufacturing sector dropped to 22.21 percent in 2018, from 22.84 percent in 2017. But analysts see that rate as high and incapable of rejigging the majorly comatose productive sector.

What the ministers can do is to recapitalise the Bank of Industry which they supervise. The BOI is the only bank that truly funds production at single-digit rates. The Bank of Agriculture (BOA) is also desirous of funding the agric value chain at single-digit rates, but it is abysmally cashstrapped, with the CBN doing some of its work.

Recapitalisation of the BOI is, therefore, key to enabling it free money for productivity, which will cut the precarious unemployment rate of 23.1 percent. Poverty rate is almost 50 percent.

The investment, trade and industry minister has a role to play by ensuring manufacturers and investors get cheap loans to produce and employ.

Lack of infrastructure reduces productivity, constrains business potential and hinders the capacity to create jobs. Working with the transport minister to improve logistics and movement of goods from one end to another through the use of rails and sea ports will boost productivity and reduce the cost of production, analysts say.

Similarly, the minister must be part of the African Continental Free Trade Area (AfCFTA) agreement negotiations to ensure that Nigeria gets the right deals.

The Common External Tariff (CET) failed Nigeria because of poor negotiation and it must not be allowed to repeat.

Due to poor negotiation, the CET created a number of complications for Nigeria, with finished medicines from ECOWAS c ou nt r i e s e nt e r i ng t h e country at zero duty while raw and packaging materials came in at five to 20 percent tariff. Though this has been reversed, it caused a distortion in the pharmaceutical market.

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.