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igeria could spend about the same amount paying worker salaries and running its various ministries, departments and agencies in 2019, as it did on capital projects, debt servicing and recurrent expenditure combined in the whole of 2014.

Equals 2014’s total budget

That’s after Nigerian President Muhammadu Buhari presented a 2019 appropriation bill that reveals the Federal government’s plan to spend a whooping N4.04 trillion ($13.2 billion) on non-debt recurrent expenditure next year, only $2 billion shy of Ghana’s total budget

I&E FX Window CBN Official Rate Currency Futures

($/N)

Spot ($/N)

3M

364.54 306.95

-0.03 13.39

NGUS FEB 27 2019 365.25

6M

5Y

-0.69 13.27

-0.01

15.14

NGUS MAY 29 2019 365.70

10 Y 20 Y 0.00 -0.01 15.64

15.52

NGUS NOV 27 2019 366.60

g

Nigeria’s N4trn 2019 recurrent budget exposes bloated bureaucracy N

LOLADE AKINMURELE

Market

FGN BONDS

TREASURY BILLS

of $15 billion.

The amount is also 12.5 percent higher than the N3.59trn budgeted in 2018, following increases from salaries and pensions and provisions for implementation of a new minimum wage.

Continues on page 42

ANALYSIS

Nigeria’s economy tottering, not growing and this is why …20% of economy still in recession ENDURANCE OKAFOR & DIPO OLADEHINDE

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espite having potential to become a major player in the global economy by virtue of its natural resources, Nigeria’s economy is still akin to a year-old child, learning how to walk, and still wobbling and fumbling.

Analysts say the country remains ill-prepared for volatility in crude oil prices and production as the structure of the economy is still largely consumptiondriven and undiversified.

“In terms of the GDP, we had a fragile recovery in 2018,” Ayo Akinwunmi, Head of Research Continues on page 42

Inside

L-R: Sabo Ibrahim, commissioner of police (representing the Inspector General of Police); Nonny Ugboma, executive secretary, MTN Foundation; Julius AdebisiAdeluyi, chairman, MTN Foundation; Stella Ngozi-Ngwoke, deputy commander of narcotics, NDLEA, and Samuel Adekola, national chairman, Association of Community Pharmacists of Nigeria, at the launch of the MTN Foundation multi-stakeholder Anti-Substance Abuse Programme (ASAP) in Lagos.

A guide to having an actually happy Christmas P. 2

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NEITI: Oil, gas sector generated $17.05bn in 2016 HARRISON EDEH, Abuja

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he latest report of the Nigeria Extractive Industries Transparency Initiative (NEITI) has shown that the total financial flows from Nigeria’s oil and gas sector slumped to $17.05 billion in 2016.

The report further revealed a 31 percent decline on the $24.79 billion generated in 2015, and a 75 percent plunge on the sector’s peak earnings of $68.44 billion generated in 2011. In addition, the 2016 figure is the lowest in ten years and the fifth lowest in the 18 years covered by NEITI’s audit reports so far (1999 to 2016).

According to the NEITI 2016 Oil and Gas Industry Audit Report, obtained by BusinessDay on Friday, the plunge in revenue in 2016 resulted from the double whammy of low oil prices in the global market and reduced oil production in Nigeria, which in turn was caused by disruption and vandalism of oil assets and spike in crude theft, among others.

According to NEITI report, yearly average price of crude oil per barrel was $43.73 in 2016 as against $52.5 in 2015. Also, total oil production in 2016 was 659 million barrels as against 776 million barrels produced in 2015, a fall of 15 percent.

Losses due to crude oil theft and sabotage rose from 27 million barrels in 2015 to 101 million barrels in 2016, an increase of 274 percent. This was aside losses due

to deferment, which in 2016 was put at 144 million barrels which also went up by 65 percent when compared to the 87.5 million barrels in 2015.

“The bombing of the under-water 48-inch Forcados Oil Loading/ Export Pipeline was one of many major occurrences that befell the industry in the year under review,” the NEITI report stated.

“This incident occurred in February 2016 and the line remained in-operational for seven months.

Shell Petroleum Development Company (SPDC) declared force majeure on lifting from Forcados on 21st February 2016. Companies injecting into the Forcados Terminal such as SEPLAT, PANOCEAN, MIDWESTERN, ENERGIA, PLATFORM, PILLAR, WALTERSMITH, and EXCEL shut down production for over 147 days.”

In addition, SPDC declared force majeure on the Bonny Terminal due to a leak in Nembe Creek Pipeline between May and July 2016 while NAOC declared force majeure on the Brass Terminal between July and August 2016.

Similarly, Mobil Producing Nigeria Unlimited declared Force Majeure twice between May/ June and July/October 2016. This was due to a drilling process disruption and damage to the QIT loading system. The NEITI report stated that: “MPN’s total production within the four-month period was 4,616,825bbls, which is less

Continues on page 42

No certainty on FID signing date for NLNG Train 7 OLUSOLA BELLO

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he much publicised Final Investment Decision (FID) for train 7 of the Nigeria Liquefied Natural Gas (NLNG) limited that was anticipated to take place this month will not happen again, sources tell BusinessDay. The reason is that the exercise will not take place until after the completion of the Front End Engineering Design (FEED) which is expected to give investors a fair idea of what would be needed financially to complete the project.

The non-signing of the FID however does not mean that other commitments or activities that would facilitate the construction of the plant are not going on behind the scene, a source close to the company told BusinessDay. Expectation that the FID was going to be signed by the end of this year was high shortly after the

contract for the FEED was awarded in July this year.

NLNG said then that it would be in the global financial market looking for $7 billion from potential investors to expand its operations from 22 million tonnes per annum (mtpa) to 30mtpa.

Tony Attah, managing director of NLNG was quoted to have said that a financial adviser had equally been appointed by the company ahead of the expected FID. The sale and purchase agreements (SPAs) for the new volumes had been locked down with offtakers since 2007, but its terms would need to be concretised before the FID is achieved.

“The company has made efforts to do Train-7 since 2007, essentially, almost 10 years, but we believe that this is the moment. As one of my friends will say, the stars are lining up in favour of our company and this project,” Attah said.

Stranded travellers at Ojota Motor Park in Lagos, at the weekend.

Pic by Olawale Amoo

Kuramo Capital backed Green Airways shakes up Nigeria’s aviation with $11.7bn Boeing order IFEOMA OKEKE

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igeria’s Green Africa Airways has committed to order up to 100 Boeing 737 MAX 8 aircraft, from U.S based Boeing Company, a deal which will cost up to $11.7 billion and shake up Nigeria’s struggling airline industry.

The deal is the largest aircraft agreement from Africa, and will be reflected on Boeing’s orders and deliveries website, once finalized Boeing said today.

Green Airways announced in June, 2018 that it completed its Series A round of financing with private Equity firm Kuramo Capital, a Pan African investment firm based in

New York.

The new airline has received an Air Transport License (ATL) from the Nigerian Government and commenced its Air Operating Certificate (AOC) process, it said then.

Babawande Afolabi is the Founder and CEO of Green Airways Africa.

Green Airways is headquartered in Lagos, Nigeria.

A guide to having an actually happy Christmas TIM HARFORD, FT

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s Christmas a time of magic, generosity and conviviality? Or of overconsumption, stress, and social anxiety? It is easy to make a case either way: listen to Paul McCartney’s “Wonderful Christmas Time”,followed immediately by Tom McRae’s slow sighing cover of the song and hear the same lyrics convey backslapping cheer and solitary despair.

Messrs McCartney and McRae illustrate the dilemma, but they do not resolve it. For that, we need data, so I consulted some academics on the slippery subject of “subjective wellbeing”, or as you or I would call it, “happiness”.

Two years ago, wellbeing researchers at the London School of Economics surveyed a panel of experts, asking them: “Do you think that populations on average have higher wellbeing during major festive periods like Christmas?” None of the respondents was particularly confident, but the verdict was that Christmas is a time for good cheer: 54 per cent thought that Christmas increased average wellbeing, with 18 per cent disagreeing and the rest sitting on the fence.

Fence-sitting is perhaps the wise choice here: the topic has been rather sparsely researched, and what studies do exist provide viewpoints as contradictory as Messrs McCartney and McRae. One recent piece of research by Michael Mutz found that “the Christmas period is related to a decrease in life satisfaction and emotional wellbeing”.

An older study by Tim Kasser and Kennon Sheldon found instead that “subjects are on the whole reasonably satisfied with their holiday experience” and that while many people found Christmas a bit stressful, the majority did not. One thing we can say with confidence is that, contrary to the popular myth, suicide rates don’t spike at Christmas; they fall.

It may be more fruitful to ask about how different people experience Christmas — and whether we can suggest ways to enhance the joy and reduce the anxiety. One plausible hypothesis is that Christmas is an amplifier of existing inequalities.

Those who are relaxed, have no money worries and a good relationship with friends and family should find plenty to enjoy in Christmas; those who are anxious, isolated or financially stretched may find Christ-

mas makes everything worse.

An alternative view is that how we feel about the festival depends on how we approach it. Mr Mutz found that Christians felt happier at Christmas, while others felt less happy.

Similarly Messrs Kasser and Sheldon found that people who spent more time with their families or engaging in religious practices tended to have a better time of things.

Consumerism fared less well, according to Messrs Kasser and Sheldon; for all the money and effort buying and wrapping gifts, the activity “apparently contributes little to holiday joy”. I am not sure atheists would feel better if they headed to church, nor that people who dislike their relatives should seek them out anyway.

But these findings do suggest that the syrupy advice of a thousand moralising television specials — that the true spirit of Christmas is friends, family and the little baby Jesus — has something going for it. What, then, is an undercover economist to advise for a truly merry Christmas?

First, keep the crass spending under control. It is pointless to lament the commercialisation of Christmas, which is not new.

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Anyone who is ungrateful is a great fool (Another chance for redemption) Bashorun J.K Randle Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

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n Monday 17th December 2018 the Annual Thanksgiving Service for late Chief J. K. Randle M.B.E; M.V.O was held at the Cathedral Church of Christ, Marina, Lagos.

The service commenced promptly at 2 pm and even though it was Monday, the church was full. The Provost, Very Reverend Adebola A. Ojofeitimi who presided over the thanksgiving was assisted by Reverend Canon Adekunle Ajado.

Also, in attendance was Bishop (Dr.) George Amu (old boy of St. Gregory’s College; Bishop of

IBRAHIM YOUSSRY Youssry – Regional General Manager, North, West, East, Central Africa, Levant & Pakistan, Microsoft

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igital transformation is remaking the world around us, and artificial intelligence (AI) is a frontrunner. No industry will be left untouched by this digital journey, but one sector that is seeing the fastest and most fundamental effects is the financial services industry (FSI).

FSI players are geared to be dramatically disrupted by the power of AI – both internally (in the ways they operate) and externally (in terms of dealing with clients and customers).

A 2018 report from the World Economic Forum (WEF) on The New Physics of Financial Services unpacks this phenomenon at length, but one high-level take-away is that the AI changes here cannot be overstated. The long-term impacts of AI are radical and transformative, putting the FSI ecosystem into a period of reorganisation.

Competition from the underdogs FSI has traditionally been dominated by large and established

Goodnews Miracle Bible Church and Chairman of Lagos State Christian Association). The closing prayers were delivered by the retired Archbishop of Ile Ife, Bishop Oluranti Odubogun (an old boy of King’s College).

This was followed by a reception at “XKPMG House”, One King Ologunkutere Street, Park View, Ikoyi where the theme was: Anyone Who is ungrateful is a great fool. Chief J.K. Randle, Lisa of Lagos died on 17th December 1956 at the age of 47 years, shortly after his return from the Olympic Games held in Melbourne, Australia. He was the Chef-de-Mission of the Nigerian Olympic Team, while the Captain of the team was Alhaji K.A.B. Olowu. The 10 athletes on the trip were captain (100m and long jump athlete), K.A.B. Olowu; R.A. Oluwo, a pole vault athlete; J.O. Chigbolu; Vincent O. Gabriel (deceased), the late E.A. Ajado, 100m and 4x100m relay; T.A. Erinle; T. Obi; A.K. Amu (deceased), P. Esiri (deceased); and former Attorney-General of the Cameroons, P.B. Enigo, who participated in the triple and long jump events. The accompa-

‘

Chief J.K. Randle belonged to a generation of Nigerians whose influence cut across ethnicity, religion, race or whatever. Patriotism and selfless service were the hallmark of their commitment to building a great nation that would command the respect of the international community

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nying officials, all deceased, were Randle, (Chef-De-Mission), A.A. Ordia (coach), J.A. Enyeazu (assistant coach) and Arthur Cooper, Nigerian Attache, Melbourne. Chief

J.K. Randle was also the Chairman of Lagos Island Club and the Lagos Racing (Horse Racing) Club as well as a member of Lagos Town Council and member of the Lagos Executive Development Board.

He was a businessman, politician, philanthropist and outstanding all round sportsman (cricket, football, boxing, athletics, draughts etc).

While still a student at King’s College he played cricket at the international level as a member of the Nigerian team against Ghana (then known as Gold Coast) in 1929 and scored a century. Incredible!!

Special prayers were also offered for the abducted Chibok girls who had been in captivity for over four years. The sacrifices of the soldiers/security forces and the tragedy of victims of insurgency also merited prayers.

Chief J.K. Randle belonged to a generation of Nigerians whose influence cut across ethnicity, religion, race or whatever. Patriotism and selfless service were the hallmark of their commitment to building a great nation that would command the respect of the international community.

Several streets are named after

Chief J.K. Randle in Lagos, Apapa and Surulere. Also, the Chief J.K. Randle Memorial Hall at Onikan, Lagos (which was demolished by the Government last year) was built in his memory. Furthermore, Randle Secondary School, Apapa and Randle General Hospital, Surulere, Lagos are named after him.

He has bequeathed a huge legacy of goodwill and sportsmanship.

The Covenant between the Randle family and Nigeria as well as the crusade against oppression and injustice precedes the amalgamation of the Southern and Northern protectorates by Lord Frederick Lugard in 1914.

As far back as 1898, Dr. John Kehinde Randle; Dr. Akinwande Savage; and Joseph Ephraim Casely Hayford (of the Gold Coast) the founders of the National Congress of British West Africa had begun to agitate for the Independence of what later became Nigeria and the rest of West Africa. Praise God, both Lagos and Nigeria have flourished as non-moveable assets. It bears repetition: Anyone who is ungrateful is a great fool Send reactions to:

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How AI is transforming the financial services industry corporations, often with extensive heritage and market dominance. Through this, many FSI companies have enjoyed relatively low competition for customers, and have been slow to innovate and change ‘with the time’. Enter the leveling power of the cloud, accessible analytics and machine learning, and we see how a scrappy, determined fintech startup can disrupt a whole market or sector.

Many of these startups offer alternatives for banking, payments, transfers, payroll, credit, and other financial services. These digital-first businesses are highly agile, and are creating a whole new customer base that was underserved by established FSI companies – putting the pressure on older firms.

As a result, many FSIs have started embracing cloud technology and artificial intelligence (AI) to improve their own agility, their array of service offerings, and their customer experiences. Recent studies suggest that approximately 40 percent of African banking customers prefer to use digital channels for transactions over branch channels.

Added competition is good for the entire industry, and

customers will benefit from new and improved technologies that change the way the industry interacts with them and meets their expectations.

AI at the core of digital transformation But just what form do these advances take? AI lies at the heart of things like chatbots, advanced customer credit assessment, relationship management, security, anti-money laundering and fraud detection.

Chatbots draw from big data and machine learning to respond to customer queries and concerns. They can streamline customer support on routine services like banking transactions, and make product recommendations.

This is customer-facing AI that helps FSI companies be everpresent for their clients, while reducing the resources required to do so.

For fraud detection, AI-powered technology enables computers to mimic, extend and amplify the thought process of a human analyst, at a pace and scale unmatched by humans. It can review trillions of transactions in every possible portfolio in the organisation. Because of this, banks, fintechs and payment facilitators are able to detect or be alerted to potential fraud – receiv-

ing fast, efficient and accurate alerts of the likelihood of an individual’s card or account being compromised, for example.

Foresight beats hindsight AI and analytics can draw inference from vast stores of data and spot trends that are often beyond the possible scope of human sight, driving insight to analysts, investors and the like.

AI is also able to evaluate an organisation’s public remarks and documents, bundle that up with sentiment analysis, and crosscorrelate this with historical data to predict the performance of upcoming stocks, in literal split seconds.

These functions provide agility and resilience in an increasingly risky global market.

In short, they inject a new level of intelligence into our organisations. Pairing this with our unique human capabilities of relationship management and creativity, and we unlock huge potential for our FSI companies.

Safe as houses, and more democratic Through Microsoft’s security solutions (in which we have invested more than $1 billion year-on-year), we are working with FSI organisations to improve their security standards

globally. Solutions such as the Customer Lockbox for Microsoft Azure, for example, assists customers with controlling and auditing support engineers’ access to compute workloads on Azure that may contain data while resolving the support issue.

These solutions have a proven success record, evidenced by our work with Interswitch, a payment and fintech innovator in Africa. Through partnering with large banks and corporates in Nigeria, Interswitch has been able to build a bank-guarantee service on Azure that extends the reach of banking systems to non-traditional players, corporate suppliers and borrowers – allowing them to manage their supply chain financing under objective terms and transparency.

Within the next decade, Africa’s objective is to ensure that the next 100 million Africans are financially included. AI has the potential to achieve this. As AI adoption increases, we’re constantly thinking about how we can help institutions make the transition to modern innovations, while still taking advantage of legacy investments.

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Nigeria is running out of jobs for its youths

Anthony Osae-Brown For feedback, send Whatsapp message to 08152060502

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he latest data from the National Bureau of Statistics (NBS) has put some numbers behind youth unemployment in Nigeria and it does not look good, as we have always known.

The NBS, in its data, defines a youth as anyone between the ages of 15 and 34. They make up almost 50 percent of the active labour force or one out of every two persons in the country that is of working age and is actively searching for job.

In absolute numbers, there are 44 million youths in the active labour force of 90 million. But only 19.73 million, representing 45 percent of the active youth labour force, are in full time employment.

The NBS defines full time employment as anyone who works for more than 40 hours a week, which means that person is fully engaged at work for at least eight hours from Monday to Friday, which are the normal working days.

The other 55 percent of youths in the active labour force are basically hustling. The data shows 11.36 million youths, about 26 percent, work anywhere between 20

UGOCHUKWU FESTUS Festus is a member of the Golibe festival organising committee

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hristmas is here again.

It is a period of homecoming for the people of Eastern Nigeria living in other parts of the country and in the diaspora. This period is typically marked for family reunion, celebration, traditional wedding, conferment of chieftaincy titles and other cultural events. It is both a religious and cultural celebration for billions of Christians across the world. This explains why the period before, during and after Christmas day, down to the New Year is usually marked by conviviality, merriment, wining and dining.

Interestingly, the yuletide season in 2018 will be different especially in the ancient city of Onitsha. This is because the city is gearing up to host the unprecedented maiden edition of the Golibe Festival, the first of its kind in South East Nigeria and one of the biggest in West Africa.

Sponsored by indigenous energy multinational, Aiteo Group, The Golibe Festival Onitsha is positioned as a family-friendly, fun-filled festival with high educational content to showcase the city’s rich cultural heritage. It promises to fill the gap in entertainment offering available

hours to 39 hours in a week or less than eight hours are day. Another six million (14 percent) of youths in the active labour force work less than 20 hours a day while seven million youths, representing 16 percent of the active labour force, are sitting at home doing nothing, despite the fact that they are actively searching for job.

The NBS data puts total youth unemployment at 29.7 percent, which is a combination of those who work less than 20 hours a day and those who just do nothing despite wanting to work. If you add the underemployment rate of 26 percent, then what you get is that one out of every two youths in the active labour market is ‘hustling’ or not actively engaged in full time employment. This translates to good number of active youths having valuable time on their hands for mischief if they choose to.

While the current data is bad, what should concern policy makers and the government is the fact that youth unemployment has been growing steadily since 2010, which is as far as the current NBS data goes. However, the growth in youth unemployment has intensified since 2015, fuelled by a weak economic growth and a fast growing population. Youth unemployment has increased from 10.4 percent of the active labour force in the first quarter of 2015 to its current level of 29.7 percent. It has almost tripled in the last three years. This is not surprising considering that the economy contracted in 2016 and is yet to fully recover.

In absolute numbers, the number of youths that the NBS classi-

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… what should concern policy makers and the government is the fact that youth unemployment has been growing steadily since 2010, .... However, the growth in youth unemployment has intensified since 2015

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fies as having ‘nothing to do’ with their time has increase by about six million since the first quarter of 2015 while those who work for less than 20 hours has gone up by about four million. Within the same period, the number of youths in the active labour force also increased by nine million, an indication that almost every youth that joined the active labour force since 2015 has not been able to find a job.

The Nigerian economy looks to have run out of space for youth employment. The economy is not creating enough opportunities for its fast growing population and

that has grim implications for the future in a country that has one of the fastest growing and youthful population in the world.

The median age of the Nigerian population is estimated at about 18 years with more than half of the population under 30.

The country’s population is growing at an estimated 2.6 percent per annum but economic growth has largely remained below 2.0 percent since 2017 after contracting in 2016. The NBS data puts overall unemployment level 23.1 percent in the third quarter of 2018. This means youth unemployment level is even higher than the national unemployment level.

It is a reflection of the fact that the economy is not really creating new jobs for the new entrants coming into the labour force. The adults in the labour force are also not retiring or exiting the labour market fast enough, leaving the youths stranded at the edge of the country’s labour market.

Unemployed youths today are going to become the poor adults of tomorrow. They are missing out on the wealth creation period of their life. They are also missing out on gaining the job experience that they need to get better jobs in future. This puts them at a huge disadvantage for gainful employment as adults.

Studies have shown that youth unemployment have long term impact on the wellbeing of the society generally, including future lower pay potential, social maladjustment and even increased cases of mental health as adults. It also affects the future growth potential of the economy leading to lower GDP growth rates.

The youths that will become adults have not acquired the skills and investment needed to increase productivity in the long run. There many negatives of a high youth unemployment rate which is why the country must take it as a serious challenge. High youth unemployment does not only destroy the present but can also negatively impact the future.

But besides youth unemployment, the country has a huge unemployment burden. The NBS data also show there another 25 million people in the labour force who are of employment age but are not interested in working or are not actively seeking to work.

In total, there are 115.49 million Nigerians within the working age population but only 69 million people are in full time employment currently, a net increase of 1.6 million when compared to the 67.95 million that were employed as at June 2015, just about a month after President Buhari was sworn as president.

Another 18.2 million Nigerians, representing 20.2 percent of the country’s workforce are classified as underemployed. Combined, unemployed and the unemployed make up 43.2 percent of the country’s workforce. The country has an unemployment challenge that needs urgent attention but most importantly the youth unemployment is a crisis that is already probably reflected in the high levels of insecurity experienced in the country. The economy needs a return to job creating growth path urgently.

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Golibe Mega Yuletide Festival: Time to rejoice in Onitsha to over 20 million residents and visitors to the South-East, especially from the diaspora, during the yuletide.

‘Golibe,’ the name adopted for the festival has captured, in its totality, the essence of what the people who will decide to spend their holiday in Onitsha would be seeking. The yuletide season is the time for enjoyment and ‘golibe,’ the Igbo word for rejoice, is assured. The programmes that have been specially packaged by the organisers of the event point in this direction.

Being the biggest of its kind, the festival is slated for a period of ten days. It will commence with the Onitsha Choral Rendition, an event created to thrill all and sundry in the spirit of Christmas. The rendition will also feature a carol singing competition where the finest choral groups in South Eastern Nigeria will perform variety of Christmas songs as well as give their own interpretation of the Golibe theme song. The singing competition which commenced from the 10th of December will have its grand finale on the 23rd and 24th of December, 2018, at the Ime Obi Onitsha, ushering in the grand festival.

Being a family event, specially put in place for the young and the young at heart is the Golibe Dreamland Fun Fair which will feature

arcade games and entertainment (bouncy castles, train rides, video games booth), video documentaries about Onitsha people, history, culture and traditions, Cultural dances, Arts and crafts exhibition among others. Techquest is also on board with a Robotics Master class for children.

This will run from the 25 of December to the last day of the festival. Venue is also at the Ime Obi. For those who just want to relax in a comfy environment, the The Chill Zone, a hang-out arena for youths and adults which features a cozy lounge arrangement with music, games and gastronomy, is just for you. Besides entertainment, it provides avenue for promoting local talent and identifying new ones. Musical entertainment will be provided

by A, B and C List artists, renowned DJs, stand-up comedians and dancers within the Eastern Region. The chill zone will open from Christmas day and run till the 30th of December at the Festival Arena, Chuba Ikpeazu Stadium.

The festival will also feature the prestigious Ado League, a football competition among the 18 Onitsha villages. It started in the 1990s and has remained an annual event ever since. The event was conceived to provide additional flavour to the usual family reunions, marriages and similar events that take place

during the Christmas season. The league started in November (with 2 matches per week) and will end with the final match on 26th and 27th of December.

The highlight of the festival will be the Golibe Carnival, the largest street party in South Eastern Nigeria and one of the biggest in West Africa.

With a line up targeted at the teeming masses that return annually, the carnival will feature a pageant for the Golibe King and Queen, as well as the Golibe Homecoming King and Queen. This will be on the 27th of December.

As part of the carnival is the Street Arts Festival which is about promoting the spirit of street art, without imposing limits in the domain of the genre and medium of artistic expression, and without dividing art into elitist and popular.

The street Art will involve Visual Artists and Musicians performing at various venues throughout the carnival route. This event slated for the 28th of December is for the purpose of the revival of Onitsha as the geographical-cultural cross section of what Omambala peoples used to be and what the town could become.

The festival will flow into the grand carnival parade scheduled for the 29th of December. Start off for the parade will be at the DMGS roundabout, through the Oguta

road/ Ugwunabampka intercession and then Awka road. The parade will end at the Chuba Ikpeazu Stadium.

What is Golibe Festival without a Masquerade carnival? The 30th of December has been set aside specially for an event that will feature masquerades from all over Anambra, Bayelsa, Kogi and other States.

Some of the Masquerades to feature at Golibe Festival 2018 include: Ayolugbe, Agbogo Mmuo, Ogolo, Agaba, Ijele, Nnekwu Ugo, Ogwo Tulu Mgbe, Wonder, Ada, Izaga and Enyi (Elephant).

The masquerades will hold a procession along the Carnival Route and stopover at homes of selected eminent indigenes and residents of Onitsha.

Capping off the festival will be the Crossover Night Concert on the 31st of December. The Cross Over Concert will be a celebration and thanksgiving concert that combines gospel and Afro-Pop music in a world class concert setting with lights, sound, stage effects and adrenaline, and musical performance by A, B & C -List Artists from across the country.

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Editorial Publisher/CEO

Frank Aigbogun editor Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Monday 24 December 2018

Government has no business in business

R

ecently, the Nigerian Senate passed a bill to provide for the withdrawal of $1 billion from the Excess crude Account (ECA) for the completion of the Ajaokuta Steel Company. The bill titled: An Act to Provide for the Ajaokuta Steel Company Completion Fund for the Speedy Completion of the Project also puts a stop to government’s planned concession of the steel plant.

The bill, which had earlier been passed by the House of Representatives, also makes provision that additional appropriation can be made from the budget, and also loans and grants can be taken by the federal government to complete the Ajaokuta Steel mill. Effectively, the federal government is being given almost a blank check to get Ajaokuta working again.

This does not make sense.

Since its inception in 1979, the Nigerian government has spent $8 billion on the plant and it is yet to produce an ingot of steel. It was built to be the nation’s turning point

for industrialisation but has become a sinking hole of government spending. It is grandiose dream that has become a nightmare. Sadly, the Nigerian government is failing to wake up from the nightmare. For most private businesses, when they make a bad investment, the first advice is to cut your losses and run. In the Nigerian government case, it is obvious that there is no cap on the losses that the government can make on an investment before deciding when to cut and run.

It is difficult to understand the rationale behind the National Assembly’s decision to pass a special purpose bill to complete Ajaokuta. Why do you need a bill to complete a plant?

When the plant is completed, what happens to the bill? Even more concerning in the bill is the provision that the federal government must complete the repairs of the plant and make sure it starts ‘production at a very significant stage’ before it can be concessioned. In this case, the National Assembly is assuming that, the purchase price of the Steel Mill would be enough to cover whatever

cost of repairs are incurred.

This is a very faulty assumption because a buyer would pay a market price for the plant, which would be based on projections of potential returns on the plant and not based on what the government has spent getting the plant into shape, if it ever gets into shape.

This means that, even where the US$1 billion plus is sunk into repairing the plant, there is no guarantee that the government would be able to recover the money at the point of sale or even the US$8 billion that has been sunk into the plant from construction to date. Why this insistence on throwing good money after a bad investment?

Sadly, this attitude of holding onto a bad investment is not totally strange. It is the same rationale that has inspired the federal government holding onto the refineries despite the fact that they have been making losses for more than two decades now. For more than two decades, the federal government has consistently shown that it has no capacity to make the country’s refiner-

ies work. This is despite several commissioned turnaround maintenance that ends up swallowing billions of naira but fails to deliver refined products from the country’s three refineries located in Port Harcourt, Warri and Kaduna with a combined capacity to refine 445,000 b/d.

It must come to a point when the government must accept that it has no capacity to run some of these assets that it keeps holding on to. What is the benefit to the government and the people of Nigeria that the government is holding on to assets that are consuming money that could be used to provide other social needs like healthcare and education, when it could easily dispose of those assets and allow the private sector to turn it into a money making venture that creates lucrative jobs for Nigerians and boost revenues going to the government?

The government has no business in running a business.

It is not suited to doing so and the sooner the government realises that fact, the better for us all as a country.

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

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Monday 24 December 2018

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A prince fails to charm

Credit later Bruised,comes not broken

Saudi Arabia’s economic reforms are not attracting investors Or creating jobs

D

RIVE AROUND Riyadh and Saudi Arabia’s economy looks vibrant. Malls in the capital are crowded with shoppers and staff. Young people are eager to spend money on entertainment now that the oncefeared religious police are off the streets. The city feels like a building site, with workers breaking ground on new hotels and shopping centres.

The Saudi stockmarket is up by more than 9% this year. GDP is projected to grow by 1.9% and the non-oil sector by 2.3% next year.

This suggests “Vision 2030”, the kingdom’s ambitious plan to diversify its economy, is working. It aims to create jobs, attract investment and develop industries, such as tourism (see article). For decades oil-rich Gulf states have made similar promises, only to backtrack when the price of oil rises. Muhammad bin Salman, Saudi Arabia’s powerful crown prince, has kept his country on course better than his predecessors. But the progress is illusory. Dig past the headline numbers and, so far, the results of Prince Muhammad’s reforms are disappointing.

Take the stockmarket. It looks healthy in part because the government is secretly propping it up by placing huge buy orders to counter sell-offs following recent political crises, according to the Wall Street Journal. The GDP figures are also misleading. The economy remains yoked to oil. Higher prices for the black stuff, notwithstanding a sharp fall in recent months, are boosting all sectors. But for an economy with rapid population growth coming out of recession, the performance is hardly stellar. Three years ago GDP growth stood at 4%.

Prince Muhammad wants foreign investors to think that Saudi Arabia is a safe bet. But his capricious policies, from the locking-up of wealthy Saudis in 2017 to pointless diplomatic feuds with Canada and Germany, are scaring them off. Foreign direct investment fell to $1.4bn (0.2% of GDP) in 2017, from $7.5bn the year before. An investment conference in Riyadh in October was overshadowed by the grisly murder of Jamal Khashoggi,

Monday 24 December 2018

A federal judge in Texas rules that Obamacare is unconstitutional The law will stay in force until all appeals are exhausted

L

IKE WEEDS and superheroes, the Affordable Care Act (ACA) is hard to kill. Since storming Congress in 2010, Republicans have tried their darndest to take down the ACA, better known as Obamacare, only to find themselves stymied by internal divisions over what would replace it. On December 14th a federal judge in Texas dealt the law what many in the party hope will be a fatal blow. But as green-fingered hobbyists and the Green Goblin know in equal measure, it is unlikely to be so simple.

The issue is over a legal tech-

an exiled Saudi journalist, in a Saudi consulate in Turkey. Rich Saudis are trying to move their money abroad: $80bn left the country last year.

There have been steps to improve the investment climate, including a new law to bring order to Saudi bankruptcy procedures. Projects once dominated by the state are now planned as public-private partnerships. The housing ministry, for example, wants private firms to stump up most of the estimated $100bn required to build 1m affordable homes. More than 1.5m Saudis are on a waiting list for subsidised housing.

When he courts investors, though, Prince Muhammad focuses on state-directed mega-projects like Neom, a futuristic $500bn city staffed by robots on the northwestern coast. Little has been built.

On December 10th he broke ground on Spark, a $1.6bn “energy city” in the east that is meant to create 100,000 jobs. Such schemes rarely work. The King Abdullah Financial District, a $10bn project in Riyadh, still has more buildings than banks.

Rising oil revenues and austerity measures, such as cuts to subsidies and a new 5% value-added tax, have helped drastically reduce the budget deficit. The government has duly increased public spending, the lifeblood of the economy. Saudis are

buying more than they did during the recession. But many still feel pinched. Retail sales are sluggish, especially for big-ticket items. The number of retail jobs has fallen by 177,000 since 2017, negating the government’s efforts to create opportunities for Saudis by banning foreigners from many sales jobs.

Jobs are Saudi Arabia’s most immediate headache. It needs to create 1.2m of them by 2022 to meet its target of 9% unemployment for Saudi citizens. To free up work for them, it is discouraging the hiring of foreigners. Since January 2018 firms have been charged 400 rials ($107) per month for each foreign worker, with a discount if they employ more Saudi nationals than expatriates. The levy will double by 2020.

Migrants pay another fee for each of their dependents. At first glance these charges seem to be working.

Almost 1m foreign workers have left the kingdom since the start of 2017.

But Saudis are not replacing many of them. Construction has been disproportionately affected.

It employs 45% of the expats and accounts for 60% of the exodus.

The number of Saudis working in construction, though, has also fallen. Overall, since January 2017, the number of Saudis in work has grown by less than 100,000; the

unemployment rate has increased by 0.2 percentage points, to 12.9%.

Jobs once held by migrants are not being filled because they no longer exist. “You have these expats with low skills, low wages, and you can easily not renew their contracts,” says Abdullah al-Hassan, a government economist.

Young Saudis are reluctant to work with their hands—and anyway firms cannot afford them. A lowskilled foreign worker takes home around 1,500 rials each month. The de facto minimum wage for Saudi citizens is 3,000 rials. The pay gap is much narrower for skilled jobs and there is a pool of talent eager to do such work: 56% of Saudi jobseekers hold at least a bachelor’s degree.

Officials have therefore discussed putting the migrant fees on a progressive scale, linked to income.

Though many of them are unemployed, young Saudis, who make up a majority of the population, still speak enthusiastically about Prince Muhammad. Having alienated the kingdom’s clerics and other princes, he relies more on their support than past Saudi rulers did. His bold (some say rash) style is popular with them, but it worries investors. Without foreign money the prince will find it difficult to keep all of those young Saudis happy.

nicality known as severability: what happens to a law if part of it is found to be unconstitutional or unenforceable. As originally passed, the ACA included a requirement for all Americans to obtain health insurance or pay a penalty, known as the individual mandate. When the Supreme Court was asked to weigh in on the law’s constitutionality in 2012, it held that this was a legitimate exercise of Congress’s power to tax. But as part of their tax-cut bill in 2017, Republicans reduced this penalty to zero, killing the individual mandate. Republican officials from 20 states then sued the federal government, arguing that without the mandate, the entire law, based as it was on Congress’s taxing powers, should be struck down as unconstitutional.

For many constitutional-law experts—including libertarian ones who do not much like Obamacare—this argument was frivolous.

Reed O’Connor, a federal judge appointed by George W. Bush, took it seriously. He wrote that “because Continues on page 15

Monday 24 December 2018

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In Association With

Military misunderstandings

A federal judge in Texas...

More worrying than a US-China trade war is the risk of a hot one Better communication between their armed forces would help avoid one

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T IS A sobering thought that official military communication between America and China is still conducted by fax machine. The use of this obsolete technology symbolises a worrying lack of effective dialogue between the two countries’ armed forces. The giants jostle for space in the western Pacific; their ships and jets manoeuvre close to each other every day. Neither side wants war, but China is intent on keeping America at bay. It is easy to imagine how a collision in the air or at sea could escalate. Casualties could fan nationalist flames on either side and cause twitchy officers, or political leaders, to respond in ways that lead rapidly to disaster. So could a misunderstanding by either side of the other’s military movements.

Relations between China and America are already strained over trade and a host of other matters.

So it is only common sense to try to reduce the risk that their coldwar style sparring might turn hot.

American and Chinese officers are getting to know each other better. Exchanges between their military academies, port calls and high-level visits to each other’s countries have multiplied over the years (see article). But there is still a huge gulf. Much of the interaction is superficial.

American officers often describe the Chinese who talk to them as

“barbarian handlers”: polished, English-speaking political appointees, usually intelligence officers, whose uniforms have never been crumpled or muddied. The Americans are sometimes led around empty Potemkin bases and entertained with kung fu shows rather than genuine drills. They wonder why they should waste their time on such junkets, which offer little insight into Chinese intentions or how the two sides might defuse a crisis. When senior officers of the two sides meet, the Chinese tend to spend much of the time lambasting American foreign policy rather than discussing how to build trust.

In recent years China has forged ever-closer military ties with Russia. In September China sent thousands of troops to join Russia’s largest manoeuvres since the cold war. But when invited to take part in American exercises, China has behaved boorishly. In 2014 America, to its credit, allowed the Chinese navy to join RIMPAC, the world’s largest multinational war games at sea. Instead of responding with camaraderie, China demanded plum roles, sent spy ships to snoop on the manoeuvres and barred Japanese officers from the traditional shipboard cocktail party. America excluded China from RIMPAC this year in protest against China’s deployment of

missiles on artificial islands it has built in the South China Sea. That upset the Chinese navy, but the Americans rightly felt no loss.

Even when given an opportunity to build bridges, Chinese officers have chosen to ignore it.

The two armed forces do not just use faxes to communicate.

A channel called the Defence Telephone Link was set up a decade ago. A whizzier video link between the chairman of America’s joint chiefs of staff and his Chinese counterpart was established more recently. The problem is not a lack of channels.

It is how they are used. American officials have made clear that if China were to call during a crisis, they would pick up the phone.

They are not sure whether China would do the same.

Part of the problem is the way that China’s armed forces work. The Communist Party is present throughout the military hierarchy. Its political commissars often wield as much power as commanders who are genuine soldiers. Especially at higher levels, Chinese officers can move only at the speed of a committee.

But that is no excuse for China’s habit of unplugging the phone.

Swift communication may not end a crisis, but it can certainly reduce the danger of tensions flaring up over a misunderstanding.

Going ballistic Mercifully, when Barack

Obama was president, the two countries managed to establish some rules for managing close encounters between their ships and planes. That has led to fewer near collisions in the air and at sea. But that still falls short.

China’s relentless beefing up of its military forces has created an urgent need for wider-ranging agreements. Pentagon officials say China is arming its air force with nuclear weapons. That would give China a complete “triad” of nuclear weaponry, launchable from the air, land and sea. Yet the two armed forces have not held nuclear talks in over ten years. Even the Soviet Union agreed to give warnings about ballistic-missile tests. The Chinese refuse to consider such a confidence-building measure, despite the growing importance of missiles to both countries.

On a visit to Washington, DC, in November China’s defence minister, Wei Fenghe, said that communication must be strengthened. It is good that China recognises this. But all too often the country lets pique over unconnected business disrupt military contacts. In 2018 it cancelled multiple high-level talks, including an embryonic dialogue between senior military officers. Not since the cold war has it been so crucial for global peace for two defence establishments to talk.

Continued from page 14

rewriting the ACA without its ‘essential’ feature is beyond the power” of his court, the individual mandate was inseparable from the rest of the law—all of which would need to be dismantled. The Department of Justice declined to defend the law, leaving the task to Democratic state attorneysgeneral. They are sure to appeal; until these efforts are exhausted the law will remain in force.

If the ruling were to stand, the consequences would be disastrous. When the Supreme Court considered the law, Obamacare was not yet fully in effect. Today, it is embedded in American society.

Compulsory coverage of people with pre-existing conditions would disappear. Young adults counting on remaining on their parents’ insurance until the age of 26 would suddenly find themselves without health care. Expansion of Medicaid, the government health-insurance programme for the poor, would be undone overnight. At least 15m who gained coverage would lose it.

States like Ohio and Kentucky that are heavily reliant on Medicaid dollars to pay for counselling and treatment for those addicted to opioids would also be dealt a blow.

Since Obamacare went into effect, the share of Americans without health insurance has dropped from 16.8% to 10.2%; the decline was even steeper in states that chose to expand their Medicaid programmes.

Without the ACA—and with a sensible replacement unlikely to pass through a divided Congress—this progress would reverse.

An appeals court is likely to overturn Judge O’Connor’s ruling. Even for Republicans, that would probably be the best outcome. In the recent mid-term elections the party was pummelled by voters nervous about health-care costs and the possible evaporation of protections for people with pre-existing conditions. Having just demolished those protections, Republicans would struggle to run as the party defending people with such conditions.

Americans have a conflicted relationship with facts at the moment. But even the most partisan voters might recoil at such up-isdownism.

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Monday 24 December 2018 In Association With

General panic

Why did Nigeria ban UNICEF? The army has absurd ideas about what the baby-vaccinators are up to

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VEN AT THE best of times Nigeria is awash with speculation. Ask otherwise sensible people who is really behind Boko Haram, a jihadist group, and conspiracy theories come pouring out. National politicians have stoked the fighting, some say. No, others retort: it was American and British spies who started it. Not a shred of evidence supports these theories. Nor is there any plausible reason why any of them might be true. But none is as bonkers as the latest one from Nigeria’s army.

On December 14th Nigeria suspended the operations of UNICEF, the UN children’s fund, accusing it of spying for Boko Haram. The two groups do not obviously share a common interest. One saves children’s lives. The other uses them as human bombs. Nonetheless, commanders insisted that UNICEF was “training selected persons for clandestine activities”. They added that there was “credible information” that foreign aid agencies and NGOs were training and deploying spies for Boko Haram.

This was so absurd that, within hours, the army was forced to lift the ban on UNICEF. Still, damage has been done. By obstructing (and im-

plicitly threatening) aid workers, the army has put lives at risk. After almost a decade of conflict with Boko Haram in the north-east of the country, some

1.8m people are unable to return to their homes. Many rely on the UN for food and other essentials. More than 1.1m get clean water through

UNICEF projects.

The Nigerian army has long viewed aid workers in the northeast with suspicion. In 2017 it expressed concerns to the governor of Borno state, who agreed to set up a panel to investigate NGOs “to determine whether they are exploiting security challenges for profit”.

However, some suspect that the army’s real reason for harassing aid workers is to stem the flow of embarrassing information. The army often commits atrocities and loses battles. Aid workers notice these things. Indeed, they are often the only witnesses who dare to contradict the government’s story that it is winning the war. National elections are due in February.

President Muhammadu Buhari, who is standing for re-election, won office in 2015 after promising to restore security to the north-east. On December 17th an army spokesman threatened Amnesty International, a human-rights group, with closure for seeking to “destabilise” Nigeria.

The world this year

A

merica and China started a trade war, the world’s worst such dispute in decades.

America imposed tariffs on $250bnworth of Chinese products; China responded with tariffs of its own.

America also slapped duties on steel imports from Europe, Canada, Mexico and elsewhere, infuriating its allies. Donald Trump intervened on national-security grounds to scupper a $117bn bid from Broadcom, a chipmaker with ties to South-East Asia, for Qualcomm. It would have been the biggest-ever tech merger.

There was one de-escalation: America, Canada and Mexico struck a deal to update NAFTA. See article.

“Fire and Fury” In another dysfunctional year at the White House, Rex Tillerson was sacked as secretary of state, as was Jeff Sessions as attorney-general, both after the president had publicly undermined them. The investigation by Robert Mueller, the special counsel, into Russian influence in American elections rumbled on, laying charges against some of Mr Trump’s former aides. A voter backlash against Mr Trump propelled the Democrats to win the House of Representatives in the mid-terms, though the Republicans increased their majority in the Senate.

The messy spectacle of Brett Kavanaugh’s confirmation hearings to the Supreme Court polarised American politics even further. With the #MeToo movement fully behind them, Democrats wheeled out sexual- assault allegations from the early 1980s to try to block his path.

Mr Kavanaugh survived the media circus and was eventually confirmed in the Senate by 50-48, the narrowest such margin since 1881. He ap-

pointed a team of all-female clerks, a first for the court.

Bother Brexit After a year of tortuous Brexit negotiations, Theresa May and the European Commission agreed a deal for Britain’s withdrawal from the European Union, but Britain’s Parliament has not approved the agreement. Britain’s prime minister clung to power after hard Brexiteers in her party tried to bring her down.

Two-and-a-half years after the referendum, the opposition Labour Party still had no coherent Brexit policy.

Britain is due to leave the EU on March 29th. See article.

Tensions increased between Britain and Russia after two Russian intelligence officers poisoned Sergei Skripal, a dissident, and his daughter with a nerve agent in Salisbury, an otherwise quiet cathedral town.

They both survived. Russia paraded the attackers on television, claiming they were innocent tourists with an interest in church spires.

Facebook had a terrible year. The social network came under intense pressure to rein in fake news and

protect user data. The revelation that Cambridge Analytica, a political consultancy that had worked on Donald Trump’s campaign in 2016, had obtained information on 87m Facebook users through a thirdparty app shook the company to its core.

A large number of prominent chief executives left their jobs or announced their departures. The list includes Vittorio Colao at Vodafone, Indra Nooyi at PepsiCo, Paul Polman at Unilever, Martin Sorrell at WPP and Dieter Zetsche at Daimler.

John Flannery was ousted at General Electric, as was John Cryan at Deutsche Bank. Carlos Ghosn was dismissed from Nissan for alleged misdeeds. The carmaking industry lost another giant with the death of Sergio Marchionne, Fiat Chrysler’s boss.

Elon Musk stood down as Tesla’s chairman, but remains chief executive, after tweeting that he intended to take the company private, a move that fell foul of regulators. The electric-car maker at last hit its production targets, and actually made

a quarterly profit.

The world watched and waited as 12 boys and their football coach trapped in a flooded cave in Thailand were rescued in a complex operation involving thousands of people. A navy diver died in the attempt. Mr Musk tweeted unfounded claims that one of the rescuers was a paedophile. The rescuer had provoked Mr Musk by deriding his offer of a kid-sized submarine to help the boys escape as a PR stunt.

Carmakers ramped up their development of electric and selfdriving vehicles. A woman was run down in Arizona by one of Uber’s autonomous cars, the world’s first fatal accident involving a pedestrian and a driverless vehicle.

In Syria the regime of Bashar al-Assad used chemical weapons again, killing scores of people in Douma, the last rebel stronghold in Eastern Ghouta. America responded by firing missiles at military targets.

Later in the year a Russian military jet was shot down by Syria. Instead of blaming its ally, Russia said Israel was responsible because it had provided misleading information about a missile attack it had launched.

Xi Jinping confirmed his grip on power in China by promoting more of his allies to senior positions. Wang Qishan, who led a crackdown on corruption, was made vice-president. His new role includes helping to manage ties with America. The priority for the government was limiting the damage from the trade conflict with America; GDP in the third quarter grew at the slowest pace since the financial crisis.

China’s stockmarkets will finish the year well down.

Donald Trump hailed his summit with Kim Jong Un, North Korea’s

dictator, as a breakthrough, even going so far as to say “we fell in love” during the ongoing detente. But there has been little progress implementing the deal they signed. The North has been sending out mixed signals about whether it intends to denuclearise. The North’s PR offensive included sending a team to the Winter Olympics that marched with the South Korean side under a reunification flag.

Mr Trump’s attempt to replicate his tough-guy approach with Iran did not produce a similar rapprochement. He pulled out of the deal to roll back Iran’s nuclearweapons programme, describing it as “rotten”. The reimposition of American sanctions, especially on its oil and gas industry, crippled Iran’s economy.

Monday 24 December 2018

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Monday 24 December 2018

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Unity Bank shares rally in late investor response to bad loans cleanup

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C O M PA N Y N E W S A N A LY S I S A N D I N S I G H T

BANKING

Christmas windfall for Diamond Bank shareholders as stock rallies 111% ODINAKA ANUDU

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t was a tough call, but I am a millionaire for it.” Those were the words of Kayode Aderibigbe, an investor based in Nigeria’s commercial city, Lagos, who bought some Diamond bank shares last week, when almost every other person was selling.

“I am not going to sell till it hits N3 per share which is where it is headed,” Aderibigbe said, declining to state the value of his holdings.

Aderibigbe and some other minority shareholders of Diamond Bank Plc couldn’t have gotten a better Christmas gift than a “merger” with Access Bank Plc that has seen the retaillender’s share price gain 111 percent in four days.

Diamond shares closed at N1.37 per unit Thursday, according to NSE data.

Investors who bought Diamond Bank shares when it fell to as low as 65 kobo per unit Friday have just seen the value of their investments rise 111 percent. If those holdings were worth N1 million as at last week Friday, they are now worth N2.1 million, implying capital gains of N1.1 million if they sold Thursday.

But none of those shareholders are willing to sell, knowing that the stock is headed towards N3 per share, being the valuation of the bank by Access Bank.

“The rally has sparked a

frenzy,” one stock broker said.

“Diamond bank shares are on full bid and nobody wants to sell, not even at N2 per share,” the broker said Thursday.

A valuation of N2 per share for Diamond bank seemed almost improbable last week when the stock fell to a year-low of 65 kobo as investors feared the worst after concerns over the liquidity levels of the retail lender sparked credit downgrades by global ratings agency, Moody’s, Standard & Poor’s and Fitch.

Most investment banks were advising their clients to cut their losses and dump the stock which they thought had downside potentials ranging from 40 to 50 percent from a then market price of 80 kobo.

The stock crashed but some investors took a risky gamble to buy. That gamble has paid off remarkably.

Martins Ifijeh, another retail investor to have invested in Diamond bank at 65 kobo could not believe his luck.

“It was a big gamble,” Ifijeh told Business Day. “Just when I thought I was having a quiet Christmas, this happened and I can’t contain my excitement,” mid-aged Ifijeh said.

Retail investors are probably the largest beneficiary of the Diamond bank rally, given that institutional investors would have been constrained to take such a gamble with people’s money.

At N1.37 per share, it is prob-

ably too late to join the party, analysts say, but there remains another opportunity in the bank’s Eurobond.

Perceived as being equally as risky as the shares, the bank’s $200 million Eurobond due for paymentMay2019hadbeenhammeredrecentlywithyieldsrisingas high as 31 percent, which is triple the 10.9 percent average yield on the outstanding Eurobonds of other local commercial banks.

However, yields were down to 20.06 percent Thursday, according to FMDQ data, as investors are less concerned over the possibility of a repayment default.

The bond price has also sustained a steady march upwards, rising to 95.59 Thursday from 93.33 Monday and a record-low of 90 in November. The bond presents an opportunity for investors to make profit as the price nears its par value of 100.

The inverse relationship between bond prices and yields means that when yields decline, prices rally in a show of high investor demand. During a bond sell-off however, yields rise and prices fall in reflection of negative investor sentiment.

Some investors will be beating themselves for not betting on the Eurobond at a time the sell-offs intensified and yields climbed as high as 31 percent late November, which was three times higher than the 10.9 percent average yield on the outstanding Eurobonds of other

local banks.

Investors who could stomach the risk associated with the Eurobond have made a killing.

Business Day had reported last week that the struggling bank’s Eurobond presented a bargain opportunity for investors, seeing the price had slumped to 90 as against a par value of 100, less than six months to maturity.

S&P, Moody’s and Fitch all warned of a default risk, saying they had little optimism that the bank would be able to sell its UK unit in time to repay its dollar obligations. however, since the merger with Access, investors seem to be breathing easy.

The Bank’s merger with Access bank transfers Diamond bank’s Eurobond obligations to the new entity to emerge postmerger. With the new entity taking responsibility of paying international creditors for the loan taken in 2014 which falls due next May, initial concerns over a possible default have been squashed.

During a conference call Wednesday, Uzoma Dozie said

proceeds from the sale of the bank’s UK unit will help repay the loan and that arrangements have been made for full settlement.

Access and Diamond confirmed news of a “merger” Monday, in a deal that sees Access buy the retail lender for some N72 billion.

Access said in a statement that it emerged the preferred bidder after a competitive process undertaken by the Board of Diamond Bank.

The deal involves Access Bank acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank via a Scheme of Merger.

Based on the agreement reached by both parties, Diamond Bank shareholders will receive N3.13 per share, comprising a cash consideration of N1.00 (one Naira) per Diamond Bank Share representing a total cash amount of N23.16 billion (US$ 75.58 million).

The offer represents a premium of 260 percent to the closing market price of N0.87 per

CONSUMER GOODS

Cartier, Polo strengthen business relationship IHEANYI NWACHUKWU

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igeria’s foremost luxury goods company and authorized retailer of the Cartier Brand, Polo Luxury Group, recently hosted the executive team of Cartier from Geneva, Switzerland led by its Managing Director, Africa and Israel, Alessandro Patti.

Patti and his team were on official visit of the brand to Nigeria in a bid to further boost the business relationships between both Cartier and Polo Luxury Group.

Known for its giant strides in delivering artistic and creative pieces which has stood the test of time, the Cartier brand has a history of over 171 years of timeless and consistent delivery of quality and antique pieces, which has positioned the brand as one of the most important jewelry and luxurious timepieces brand in the world.

Speaking to select journalists during the visit, Patti lauded the Polo Luxury Group for the success of the Cartier brand since it came into the Nigerian market over 15 years ago, adding that the partnership with Polo Luxury Group in Nigeria is one which was born out of shared values of creativity, art and passion for luxury goods.

“The Cartier brand has maintained its strong positioning due to its unique timeless pieces, creativity and innovation in meeting client’s needs all over the world and ensuring they are satisfied when they wear their unique Cartier timepiece with a sense of pride and fulfillment at any time,” he said.

Polo Luxury Group remains one of the largest retailer of Cartier timepieces in West Africa and one of the brand’s foremost dealer on the continent, guaranteeing an exclusive collection of 100 per cent authentic Geneva.

Speaking on the viability of the Nigerian Luxury Market in recent years, Patti stated that “the partnership with Polo luxury group is one anchored on a long term shared vision of growth which has been evident over the years with Polo Limited’s experience of the Nigerian Luxury Market as well as its passion for creativity, immense sense of luxury and business strategy which has been vital for navigating the Nigerian market with huge opportunities and potentials” Welcoming the team to Nigeria, the Group Managing Director, Polo Luxury Group, John Obayuwana, expressed delight at the visit of the Cartier executive team, stating that such visit

by a strategic partner of the Polo Luxury group further highlights the key importance of the Nigerian luxury market in the African continent.

He further stated that the visit further solidifies business relationship between both Polo luxury group and the Cartier brand whilst also praising the efforts of the Cartier brand in pioneering creativity, innovation and uniqueness in the manufacturing of high-end timepieces.

Unveiling the Santos de Cartier watch, Alessandro Patti reiterated that, what differentiates the Cartier brand from other luxury brands, is its promise of timeless pieces, as despite the fact that the Santos watch is over a 110 years old, the brand has maintained its unique style as Cartier creations of today are treasures of tomorrow.

The 2018 update of the Santos watch has focused on improving ergonomics and the comfort of the wearer, while maintaining the timeless allure of the design.

Subtle changes have been made to create a sleeker shape and improve legibility – changes that might not immediately be apparent to the untrained eye – which highlight the brand’s luxurious approach to adapting its iconic designs to the modern lifestyle.

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

Uzoma Dozie, managing director at Diamond Bank

share of Diamond Bank on the Nigerian Stock Exchange as of December 13, 2018, the date of the final binding offer.

Diamond shareholders will also be allotted roughly 6.6 billion new Access Bank ordinary shares, representing 2 new Access Bank ordinary shares for every 7 Diamond Bank shares.

The completion of a transaction is subject to formal regulatory and shareholder approvals but a deal could be sealed by the second quarter of 2019, according to Herbert Wigwe, CEO of Access Bank.

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Carlyle invests $40m in Nigeria’s Wakanow OBINNA EMELIKE

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lobal private equity firm, Carlyle announced that it was investing some $40 million (N12 billion) in Nigerian travel agency, Wakanow.

Sources say that Carlyle is buying from Africa Capital Alliance (ACA) who had invested some $20 million in the travel agency in 2015.

A source familiar with the matter said, “The deal is not bad for ACA as it allows them an exit from Wakanow.”

Wakanow.com, one of West Africa’s largest online travel agencies requires significant capital in order to achieve its strategic growth plans. The African travel platform will benefit from the investment of $40 million by Carlyle Group, a global alternative asset manager.

Idris Mohammed, Managing Director, The Carlyle Group, said, “Wakanow has experienced incredible growth since inception, disrupting the travel market and taking market share both

online and offline. We believe that this strong growth trajectory will continue as Wa ka n ow b e n e f i t s f ro m an expanding middle class across the continent in addition to increasing internet penetration and mobile connectivity, which is driving increased online traffic. We look forward to working with Wakanow’s management team to help them deliver on their vision for growth and expansion.”

The online travel agency, which was founded in 2009, also had the support of some Nigerian banks with trading facilities during its high growth expansion. During the economic recession of 2016, which resulted in the devaluation of the naira, high airfares, the exit of many airlines among other challenges, many online travel agencies went out of business. While, Wakanow was not one of them, the company was certainly also negatively impacted, and as a result, could not settle its borrowings on schedule.

“With the banks declining to extend further facilities to the travel agency, Wakanow

L-R: Adam Nuru, managing director, First City Monument Bank (FCMB); Kayode Fayemi, governor, Ekiti State, and Bukola Smith, executive director, Business Development, FCMB, during a courtesy visit by the management of FCMB to the governor in Ado Ekiti, Ekiti State, recently.

chose to look for alternative investors in order to raise funds to offset the loans and stay in business,” Alimi Olakunle, an online travel agent, said. This route to financing makes sense if one considers that this time last year, International Air Transport Association (IATA), its trading partner, threatened

to cut off Wakanow from its services due to failure of the online travel agency to meet its payment obligations to IATA under the Billing and Settlement Plan(BSP) used by the industry to settle ticket sales and remittances.

The Carlyle Group investment ensures that Wakanow will benefit from Carlyle’s

global expertise in the online travel sector (where it has invested in companies such as C-trip, one of the major online travel agencies operating across China, the Latin American travel and tour operator CVC Brasil, and Vasco Turismo, one of the largest travel operations groups in Peru), strong oversight,

and the ability to finance its not insignificant ambitions.

These goals include strengthening Wakanow’s market position and customer offering, an African expansion, accelerating innovation, deepening its systems and processes to realize the vision of a truly world class online travel agency with African roots.

BANKING

AWARDS

Ecobank debunks rumors of financial fraud

International Breweries Hero’s foundation awards 44 entrepreneurs N84.5m

IFEANYI JOHN

E

cobank Transnational Incorporated has reassured its stakeholders and debunked social media rumors of the overstatement of its financial results. The bank buttressed, in a statement to the Nigerian Stock Exchange, that it had not violated any accounting standards.

The allegations of fraud include the overstatement of the banks’ balance sheet and income statements resulting from the use of incorrect exchange rates in translating the financial performance of its subsidiaries, including its Nigerian holdings.

In the opening remarks, the bank stated its assurance to its stakeholders. “We want to use this medium to allay the fears of any of our shareholders, creditors, and other stakeholders resulting from the unfounded allegation contained in the said publications.”

The statement went on to describe the use of official rates in respective countries to account for the financial performance in the respective regions. The Group reports its results in the United States dollar and it therefore the use of an appropriate exchange rate is needed when converting the financial results.

Under International Fi-

nancial Reporting Standards (IFRS), the existence of multiple FX markets with different exchange rates as well as the accessibility to such markets necessitates the review of the appropriate exchange rates that entities should use in accounting for and reporting its foreign currency transactions as well as foreign investments. Where a country, as is the case of Nigeria, has multiple exchange rates, an official quoted rate should be used as the spot rate.

The CBN currently has 3 quoted rates which can be used to convert or translate foreign currency transactions. Thus, the CBN official, NIFEX or NAFEX rates all technically comply with the requirements of IAS 21.

The company explained that, “as a policy within Ecobank Group, we use the official rate in the respective jurisdictions in which we operate to translate the results and balances of our affiliates into the Group’s reporting currency, the US Dollar. As a result, and in exercising the judgment allowed for within IAS 21, the Group currently uses the CBN official rate which is one of the 3 quoted rates and the official exchange rate according to the CBN.” “The use of this rate complies with IAS 21 and has been publicly disclosed to the market in all our press releases along with the impact of us-

ing the other available rates.

This is done so that users of our financial statements can easily quantify and adjust for the use of the other exchange rates if necessary.”

The statement went on to reiterate confidence its stakeholders. “We can confirm to all stakeholders that there were no misstatements in our financial statements as alleged in our financial statement for the year ended 31 December 2017 nor in our three quarterly reports released during the 2018 year. We also note that this unfounded allegation was made by a former employee of the Group who is currently in court claiming payment of 13 years’ salary for an alleged unlawful termination of his employment contract.” The statement added.

Ecobank Transnational Incorporated (‘ETI’) is the parent company of the leading independent pan-African banking group, Ecobank. It currently has a presence in 36 African countries. The Group employs 15,930 people in 40 different countries in over 940 branches and offices. Ecobank is a full-service bank providing wholesale, retail, investment and transaction banking services and products to governments, financial institutions, multinationals, international organizations, medium, small and micro businesses and individuals.

ENDURANCE OKAFOR

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orty-four promising entrepreneurs went home with N84.5million business grant at the third edition of International Breweries (IB PLC) Hero’s Foundation Kickstart Programme Awards that held recently.

The journey to the third edition of the programme began with a call for application in August 2018. Over 120 successful participants were invited to a rigorous one-week business training at the Nnamdi Azikiwe Business School in Awka, Anambra state apital, and fter which, the contestants submitted their business proposals.

The proposals were scrutinized based on the strength and sustainability of their business ideas by a team of judges led by Chukwuma Osisioma, a Professor, who carefully selected the final winners of the Programme.

Chairman of the Foundation, Nnaemeka Achebe, the Obi of Onitsha (Agbogidi), while

welcoming guests to the ceremony expressed joy that the foundation was able to run another successful Hero’s Foundation Kickstart programme. He urged all the awardees to use their business grants and all they have learned during the business training to create value for themselves and the society.

“I urge you all to absorb everything you have learned during the business training and apply them to your businesses as you move forward.

Running businesses is not for the faint-hearted, especially in Nigeria. I urge you all to keep pushing, do not relent, make the most of this amazing opportunity you have been gifted to create value for yourself and for the society,” Achebe encouraged.

In an address delivered at the award ceremony, the Executive Governor of Anambra State, Willie Obiano represented by his deputy, Nkem Okeke, thanked International Breweries Plc for continuing to train, empower and encourage young entre-

preneurs in the country.

“The Hero’s Foundation has taken upon itself the mission to instil the culture of entrepreneurship in our youth by empowering them with much-needed training and funds to start-up new businesses or expand already existing ones.

This brilliant purpose has pleased the governor, as well as fellow members of his administration because bridging the gap between the youth and productivity is a project we embark on with sincere passion,” Okeke said.

The Hero’s Foundation Kickstart programme is a Corporate Social Investment (CSI) of International Breweries Plc aimed at instilling a culture of entrepreneurship among Nigerian youths.

The programme kicked off in 2016 with the five core eastern states of Abia, Anambra, Ebonyi, Enugu and Imo but it has since expanded to include Benue, Edo and Delta State. This year, the programme further cast its net to include youths in Bayelsa and Rivers States.

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MARKETS

Unity Bank shares rally in late investor response to bad loans cleanup OLUWASEGUN OLAKOYENIKAN

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nvestors with holdings in Unity Bank Plc are gradually regaining their confidence in the mid-tier lender after a turbulent 2017.

But with increasing hopes on possible capital injection aimed at stabilising the bank coupled with elimination of bad loans and an Annual General Meeting (AGM) held on Monday, the bank’s shares have continued to rise steadily recording its biggest daily gain in more than two years on Thursday.

“For some time now since the AGM has not been held, it affected the confidence of the shareholders, but after the meeting, that sentiment has turned positive, when they heard the information that we have done our AGM and that we have written off the nonperforming loans and toxic assets,” anexecutiveofthebankwhoasked not to be named as he was not authorised to speak on the matter told BusinessDay. The bank sold N400billion

MANUFACTURING

Thomas Wyatt declares loss after tax of N24.49m as revenue dips OLUWASEGUN OLAKOYENIKAN

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homas Wyatt Nigeria Plc, a companythatmanufactures and distributes stationery, has declared a loss after tax of N24.49 million between April and September, 2018 driven by a significant shortfall in revenue.

The company’s unaudited financial statements for the six months ended September 30, 2018 filed on the floor of the Nigerian Stock Exchange (NSE) on Thursday, December 20, show an unimpressive performance as profits were hit by 36.39 percent drop in revenue to N32.66 million from N51.34 million in the same period in 2017.

The firm, which is listed in natural resources sector of the NSE, posted a loss before tax of N24.18 million for the review period as against N11.02 millionrecorded in the corresponding period of 2017, while it expended N3 million on finance cost.

Although the stationery firm showed it was able produce at a reasonable cost just as its cost of sales slid by 8.89 percent to N37.12 million for the half year ended September 30, 2018 from N40.75 million in the same period in the preceding year, but the effort was insignificant as it recorded a gross loss of N4.47 million for the review period as against a gross profit of N10.59millionrecordedinthecorresponding period of 2017.

In line with Thomas Wyatt’s cost control strategy, its administrative expenses and distribution expenses fell by 21.27 percent and 34.76 percent to N15.07 million and N1.89 million in the six months ended September 30, 2018 compared with N19.14 million and N2.9 million recorded in the same period in 2017 respectively.

Total assets were down by 0.76 percent to N431.07 million in the six months period ended September 30, 2018 from N432.38 million in the same period in 2017, while total liabilities of the company surged by 3.23 percent to N741.82 million in the period under review fromN718.64millionayearearlier.

of bad loans to clean up its balance sheet some months back. Its disposal of toxic assets to Frontier Capital Alternative Asset Limited led to a significant drop in its nonperforming loans ratio to near zero from almost 50 percent in 2016 when the Nigerian economy was batteredwithrecessionthatcaused badloanstosoar,andhelpedshore up its liquidity.

At the close of trading Friday, December 21 on the floor of the Nigerian Stock Exchange (NSE), UnityBank’ssharesappreciatedby 9.09 percent to an 11-week high of 96 kobo per share to complement gains recorded in the previous

trading sessions.

As a result, its week to date return stood at 39.13 percent, making the stock to book its best trading week after the week to Friday, January 19, 2018 when there was general boom in the Nigeria’s stock market.

The stock had commenced its bullish trend on Tuesday when it gained 8.7 percent from 69 kobo to close at 75 kobo. It rose further Wednesday by 6.67 percent to close at 80 kobo per share.

The positive performance was sustainedThursday,December20 whenthestockclimbed10percent to close at 88 kobo per share, its

biggest daily rise since June 8, 2016.

The four-day rally triggered the stock’s year to date (YTD) return to improve to 81.13 percent – outperforming the benchmark index of the NSE, the All Share Index (ASI) at -19.17 percent – to emerge the best performing stock at the local bourse since the year began after Cement Company of Northern Nigeria (CCNN) with YTD return of 87.37 percent at the end of the week to Friday, December 21.

The lender in a filing to the NSEFriday,November23,notified its shareholders of plans to hold the AGM to receive the audited accounts for the year ended 31st

December, 2017 with reports of the Directors, Auditors and Audit Committee, elect or re-elect its Directors,andtoelectmembersofthe Audit Committee among others.

BusinessDay analysis of the bank’s financials reveals the company reported an unimpressive performance in 2017 as it slid into anegativecapitalofN242.31billion at the end of the year, implying an urgent need of the financial institution to recapitalise.

The bank’s gross income for the first nine months in 2018 fell by 59.82 percent to N26.13 billion as against N65.03 billion recorded in the same period in 2017. Net

interest income dropped sharply by 74.23 percent to N9.93 billion fromN38.52postedin2017,largely driven 67.52 percent shortfall in interest and similar income to N20.51 billion.

Although the bank showed prudency by effectively reducing its operating expenses to N15.41 billion in the nine-month period ended September 30, 2018 as against N18.62 expended in the same period in 2017, its profits before tax fell from N2.72 billion in the first nine months of 2017 to N643.78 million in the review period, while post-tax profit shed N1.86 billion to N585.84 million.

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LegalPerspectives

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Odunayo Oyasiji

Why Africa is not reaping the fruit of investment agreements signed with developed countries (2)

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his is a continuation of the topic that started last week Tuesday. The focus is on why countries in Africa do not attract FDI after signing trade agreements with developed countries. The A-D part was discussed yesterday.

The other reasons that have been identified aree. Lack of transparent and predictable government agencies- Multinational corporations investing in a country usually deal with many government agencies.

The problem they face at times in developing economies is that the agencies are often not predictable as corruption has eaten deep into the agencies. Integrity in a system is a key factor that encourages investors to invest in any country.

The foregoing entails curbing corruption, quality services from government agencies and a regulatory environment that supports investment. Absence of integrity is a major impediment to the inflow of FDI. Before the reforms in Egypt, there was a major problem in obtaining the licence to start business by investors- there is often deliberate delay on the side of public officials expecting to be paid before working on the application of investors. Sometimes an entire file/application is lost.

Companies are left with no choice but to offer bribe to obtain license.

In Malawi, there was an attempt to change the face of public agencies based on the advice of international institutions thinking it will bring about a more transparent and accountable public agency.

Rather, it led to a more corrupt setting. f. Lack of good tax policy – The issue of tax policy influences the decisions of investors. One of the major reasons why investors are particular about the tax policy of a country is because it has effect on the overall interest or profitability of their investment. Another evidence of the importance of taxation and that it influences the decision of investors is in the aspect of countries entering into agreements so that there will not be double taxation on investors i.e. tax by the investor’s home country and the one taken by the host country. Furthermore, it has also been noted that countries with high tax rates can harm FDI while those with more rational tax rate can have a level of influence on attracting FDI. Some African countries can be pointed to e.g. Namibia- unpredictable tax environment exists in Namibia and as such investors are avoiding the country. In Mauritus, low tax rates in the country is one of the reasons why the investment environment of the country is attractive to investors, Angola- the country reduced its mine tax to 25% in 2013 and this made it more appealing to investors. g. High level of political instability in Africa- This determines the level of political risk to be taken by an investor. The political risk/instability in Africa makes the country risk to be higher than the economic opportunities in the countries. Stable political environment encourages investment.

Political risk can be in different forms e.g. political violence or high profile terrorist attacks, sudden change in the laws regulating investment and overnight adoption of hostile Government policies like resource nationalism. Furthermore, investors are discouraged from investing in a country with high political risk because investment in such places are usually not as profitable as expected.

The main reason why Hyundai took the decision to start a car assembly plant in Botswana to cater for South African market was that it was seen as a stable country with higher level of certainties than other considered locations.

Another example of political instability can be found in constant terrorist attack in the northern region of Nigeria i.e. the terrorist sect popularly known as Boko Haram.

Like many other African countries, Nigeria witnessed multiple military coups that affected its progress as policies are often changed. This uncertainty makes investors to lose confidence in the business environment of a country. h. Policies relating to how the market functions e.g. competition policy- lack of policies having to do with healthy competition can create a barrier to the entry of investors into a country and as such breed monopoly or cabals as one person or few people control different aspect of the economy. Both manufacturers and consumers have a lot to gain under a proper business environment with policies encouraging healthy competition. The consumer benefits from lower prices, the manufacturer is not at risk of being frustrated out of the market and the market itself

functions with efficiency.

Issues relating to policies on how market functions can be identified in-Nigeria- MTN was the first mobile service provider in Nigeria and there have been allegations by other telecom providers that MTN wants to monopolize the industry. MTN started with per minute billing and they made Nigerians to believe that for them to switch into per second billing it will take years (you pay for a minute if your call lasts for even one second).

However, when GLO (another mobile network provider) came into the market they started with per second billing and as a result MTN was forced to switch to per second billing. In Ethiopia, a set of politicians formed a cartel in the fertilizer section and they jointly fixed high prices for fertilizers. In Malawi, few big transport companies dominated the transportation sector of the country and they set high prices for transportation. i. Lack of good and sufficient physical and technological infrastructure- Lack of good infrastructure is a major problem in sub-Sahara Africa. The presence of infrastructural facilities plays a major role in attracting FDI into a nation. Facilities like good roads, telecommunication system, port and electricity are highly essential to FDI. It has been said that the condition of Africa’s infrastructure is worse than that of other developing countries.

Infrastructural problems can be identified in countries like Nigeria- public funds meant to provide infrastructural facilities are usually embezzled by politician and public office holders. Public officers like Tafa Balogun (former Inspector General of Police in Nigeria) and Dimeji Bankole

(Former Speaker of the House of Representatives in Nigeria) were all accused of stealing public funds. However, the attempt to prosecute them by the Economic and Financial Crimes Commission in Nigeria didn’t yield any fruit. Access to electricity has been recognized as the greatest infrastructural problem in Africa as over 30 countries in the continent do not have stable power supply. In Mozambique, people raised the issue of poor roads as a barrier to smooth running of business and accessing other facilities like schools. In Liberia, access to health care facilities have been identified as a major problem. In Nigeria, South Africa and Cameroon, the problem in these countries has to do with electricity, roads, health care and education. j. Lack of good policies to attract investors in the host country – The general rule is that countries or economies that can offer investors what they need and also back it up with good and friendly FDI policies have a higher chance of attracting FDI. Lessons and examples as to what constitutes good policies and areas to focus on can be found in OECD countries and the policy framework developed by UNCTAD. It is worth pointing out that most of the factors considered for rating 189 countries under World Bank’s ease of doing business report falls within the areas focused on by OECD and UNCTAD for the purpose of proper policy framework.

OECD countries have a programme to develop good policies in order to attract investment. The areas they concentrate on are“trade policy, investment policy, investment promotion, competi-

tion policy, corporate governance, human resource development policy, policies on infrastructure, policy on promoting responsible business conduct, policy on financial sector development and on public governance”.

UNCTAD has an Investment Policy Review aimed at developing good policies for developing countries. These policies are a reflection of what investors look out for. The policy usually includes“Corporate governance and accounting standards, protection of intellectual property, rule of law, respect for property rights, competition policy, land issues, employment-including employment on non-citizens, foreign exchange regulation, taxation, licensing and administration of regulations and investment promotion including incentives”. k. Market size- This area is important because FDI that targets market happens to be the main type of FDI. The size of the domestic market and average income per capita are very essential. The average income per capita is essential because an investor who is seeking market needs to access whether the people will be able to afford it. It is essential to note that FDI in the manufacturing sector is mainly market focused. Therefore, the size of a country’s market is a fundamental factor when it comes to attracting FDI into that country.

At least 31 countries in Africa has a population that is less that is not more than 10 million. In fact, most of these countries have less than 5 million people. Therefore, these has a kind of negative effect when it comes to attracting FDI. Around 60 percent of the population in Africa live on less than 2 United States dollars in a day while around 40 percent of the population live on less than 1.25 United States dollars in a day.

This shows the prospect making reasonable or significant sales of luxury products. l. Non-availability of skilled and educated workers- when the workforce in a place is full of uneducated/unskilled people then FDI inflow into such a place will be lower compared to places with skilled worker. Human capital development has to do with the level of illiteracy in a country which in turn determines the availability of skilled workers. The absence of educated populace discourages an investor and makes the country unattractive. Therefore, human capital development is an aspect that any country that seeks to attract FDI must pay attention to. There is high level of illiteracy in Africa as sub-Sahara Africa is home to 25 percent of the world’s adult illiterates.

More than 50 percent of the adults in the African countries listed below are not literate- Benin Republic, Chad, South Sudan, Central African Republic, Burkina Faso, Cote d’Ivoire, Liberia, Ethiopia, Guinea, Niger, Mali, Sierra Leone and Senegal.

In conclusion, African countries will not succeed in their attempt to attract FDI if the factors identified above are not addressed.

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This is M NEY A daily guide to your Personal Finance

Grace Agada

O

ne of the worst things that can happen to you in wealth building is for you to have a wrong mindset and definition of what wealth is. Many people have set financial targets, achieved it, and still ended up feeling empty and unfulfilled. When your definition of wealth is wrong, you will keep moving from one financial target to the other frustrated, unhappy, bored and unfulfilled. While money might be the commonest means by which wealth is measured, it is not completely accurate.

There are thousands of people who have enormous amounts of money and still do not feel wealthy. Therefore, the way you define wealth has a huge impact on whether you feel wealthy, fulfilled, or disappointed.

The definition you give to wealth will also affect what you do to achieve wealth.

For example, if your definition of wealth is synonymous to having only material things, you might end up doing both moral and immoral things to attain it, risking your freedom and

Objectives • Solid wealth • Groomed Heirs • Undying legacy and Name • Rich relationships • Personal development • Healthcare Planning • Giving.

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• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

Defining wealth and building the anchors of irreversible wealth peace of mind.

One of the ways to know how you currently define wealth is to ask yourself the question: why am I passionate about wealth?

Understanding the reason and knowing where and how you developed your wealth mindset from, will reveal a lot of things about your attitude and definition of wealth. Most of our definitions, attitudes, and mindsets about wealth were derived from our childhood experiences and the environments we grew up in.

So, most of what currently forms our belief system about wealth is built from raw material, innocently obtained from biased sources.

Thankfully, we can change, unlearn, and reinstall new and positive wealth mindsets and wealth definitions to kickstart our journey to true wealth.

If you built wealth for the wrong reason you will lose wealth for the wrong reasons.

Many people have defined wealth in different ways based on their life experiences and perspectives and frankly, wealth is personal. It is like happiness and it means different things to different people.

It is important, however, to know that your definition of wealth whether positive or negative will affect how you relate to and handle wealth.

Here are some of the ways wealth has been defined: Wikipedia: “Wealth is the abundance of valuable resources or valuable material possessions.”

Robert Kiyosaki: “Wealth is measured in time, not dollars. Wealth is how long you can survive at your current standard of living if you quit your job today. That is, your ability to sustain your existence without working.”

Roger James Hamilton: “Wealth isn’t how much money you have. Wealth is what you are left with if you lose all your money.”

Buck Joffrey MD: “I do not measure wealth in dollars. I measure wealth in time. The more time you have to do the things you want to do, the wealthier you are. Wealth = Time.”

Mahatma Ghandi: “Health is the real wealth and not pieces of Gold and Silver.

You are exactly where

your current wealth definition and mindset has led you to. If you are not happy with your result, you need to alter your mindset and definition of wealth. After several years of assessing wealth through different lenses, I have come to the conclusion that solid wealth is a five-anchored structure.

The first anchor is to have good health (Health (H).

The quality of your health is determined by the number of positive things you do for your body minus the number of negative things that you do to your body. If it is not taken care of, it can distort your ability to achieve all your other wealth goals.

The second anchor is having the freedom of time and money through the acquisition of diversified financial assets (Asset (A). Having the

‘

You have the power to create solid wealth by cultivating and developing the correct wealth mindset that will replace the previous negative mindset you may have

‘

The Solid Wealth Messenger

BUSINESS DAY

right mix of financial asset is more important than having a few great investments.

The third anchor is having valuable and meaningful relationships (Relation-

ship (R). There is strong evidence that valuable relationships increase our personal resilience and contribute to a long, healthy, happy and wealthy life. The

fourth anchor is continuous personal development (Personal development (P) and it focuses on you knowing and acquiring skills in the areas of wealth where you lack them. The fifth and final anchor is giving (Giving (G) and it involves giving your talent, gifts, potentials and finances for the service of humanity. Together, I call them the ‘HARP G’ of solid wealth.

These five solid wealth anchors have the power to turn any ordinary, temporary, exposed, sporadic or fragile wealth into a solid and irreversible wealth that will transcend generations.

Wealth is NEVER the goal for a person with a solid wealth mindset. The goal is to BECOME rather than to HAVE. Becoming a person of value, impacting the lives of the people around you, and transforming the world is the goal. Monetary wealth is only a result of achieving the goal. When you create wealth based on a process of becoming rather than having, you become fulfilled and enjoy peace.

Becoming a person of value first to yourself, to the people around you and to the world, is the noble and guaranteed way of creating solid wealth.

You have the power to create solid wealth by cultivating and developing the correct wealth mindset that will replace the previous negative mindset you may have. This new mindset will move you towards peace and happiness and will be the difference between a life of emptiness and a life of fulfillment.

If Wealth is your end goal, then what after wealth?.

This article only gives a summarized insight into a special report that explains the five anchors of solid wealth. To get the special report with more details, kindly send an SMS “Send me the Solid Wealth Anchors” to 08101860042.

Keep building solid wealth.

Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer.

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CEO INTERVIEW

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Akeem Lawal

Divisional Chief Executive Officer (DCEO)

Interview with Private Sector Leaders

Interswitch redefines supply chain financing with Blockchain technology Sequel to the groundbreaking launch of Interswitch’s phenomenal blockchain service to redefine the process of supply chain financing, Jumoke Akiyode Lawanson, BusinessDay’s ICT Editor engaged Akeem Lawal, Divisional Chief Executive Officer (DCEO), in an extensive discussion on the initiative which is aimed at uniting entrepreneurs, major financial institutions and corporate organisations, all on a single platform with a view to providing end-to-end visibility that will ensure fast and seamless trade financing in supply chain operations. Excerpt:

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upply Chain Financing (SCF) is pretty new in this clime.

Naturally, new initiatives come with some sort of skepticism. How does Interswitch intend to gain acceptance for its new blockchain service across Nigeria?

Supply Chain financing has been around in the Nigerian financial services space for a considerably long time, howbeit without appreciable process improvement, so it is technically correct to assert that the use of technology to revamp the supply chain financing process is what is relatively new. In our 16 years of operation as Interswitch, we have equally experienced first-hand the bottle necks associated with the existing corporate-based financing infrastructure in Nigeria, so this is coming from a place of deep consumer insight. This platform was conceived to create a framework that allows for the speedy execution of contracts for SMEs, requiring bank guarantees, in a secure and transparent manner.

Prior to the launch of the Interswitch Blockchain Service, small businesses seeking financing to execute supply contracts, would usually spend an average of three months to secure bank guarantee and even get turned down eventually due to the lack of available verifiable funding history. The supply chain financing module hosted on the blockchain service platform provided

by Interswitch is going to serve as a common data layer which represents a single source of truth that provides visibility, reduces risk of fraud, creates revenue, and will ultimately lead to business expansion. In direct answer to your question, more people will appreciate and accept this innovation as soon as they begin to see the benefits and huge advantages from shared experiences, so we do not see it as a hard-sell, really. In our view, it is an idea whose time had come long before now.

Already with the Bank Verification Number (BVN), customers’ transactions can be tracked and monitored. So what niche is this module bringing into financial transactions and why should Nigerians be excited about the new service?

BVN is basically a unique identifier for individual users of financial transactions in Nigeria. It however doesn’t provide end-to-end visibility and transparency on the scale that distributed ledger technology (i.e. blockchain) does, particularly within the context of supply chain financing. Again, the BVN is a solution that provides a unique view of individual

bank customers in Nigeria, based on biometrics. BVN does not translate to corporates in the same fashion that it caters to individual identification, so really, the two solutions in question shouldn’t, in fact technically can’t, be seen as competing (in ‘either-or’ terms) as they currently address unique industry challenges in their own rights. Rather they could be potentially complementary solutions in the scheme of things down the line, as the right use cases emerge. I should highlight that the supply chain module built on the Interswitch-Microsoft blockchain platform is different from existing corporate financing infrastructure in the sense that the service using blockchain technology provides visibility and a distributed and shared data infrastructure among all parties involved in the transaction. Also, it effectively distributes data amongst the participating entities, while providing increased security, owing to its immutable attribute, which makes data hacking very difficult and for transactions among different entities that need to share data, it provides some level of trust among entities that would normally not trust one another.

Although blockchain technology is useful in solving problems of transparency and trust between entities, this provides a more secure infrastructure for storing data and is well suited to solve problems of ownership, as the owner and history of any asset can be traced and authenticated.We believe Nigerians should be very excited about this new service because it will allow more entrepreneurs to have access to finance, hence allowing them to scale their businesses. The cumulative effect of this can lead to more jobs, thereby driving economic growth for the country.

We noticed that the SMEs are the proposed primary users of this new service. Why is that so, considering that many financial institutions usually ‘ignore’ the small businesses?

That is partially correct, as the users are various actors/players within the ecosystem. However, we find it expedient to emphasize the proposition and benefits for MSMEs, considering that a major reason MSMEs are often ignored is because validating MSMEs takes longer time and more effort as there is little or no reliability/visibility of key considerations such as their credit history, credit worthiness and other relevant parameters. We have identified this problem and applied measures to help them gain more credibility to access funds easier and faster when using the service.

Besides SMEs, who are the

those processes are largely unaffected by the intervention we are providing. We are simply digitizing legacy processes e.g. automating processes involving paperwork, and creating visibility across board leveraging the blockchain DLT platform. Many other background/complementary services being provided to members of the blockchain consortium by fintechs will continue to run seamlessly in the background.

other major target customers for this new service?

Our initiative brings together entrepreneurs (MSMEs), major financial institutions (not limited to banks) and corporate organizations of all ranges, all on a single platform (or within an ‘ecosystem, if you like) to provide end-to-end visibility that will ensure fast and seamless trade financing in supply chain operations. These are the principal target markets. However, businesses of all sizes stand to benefit from the solution. With the launch of the Interswitch Blockchain Service module for Supply-Chain financing, small to middle-sized businesses can access more funding in a shorter time from participating banks, the current ones being United Bank for Africa Plc (UBA), Guaranty Trust Bank Plc (GTB) and Zenith Bank Plc. They also get to enjoy faster sales cycles from participating corporations such as the Dangote Group, who agreed to be our pilot client and worked very closely with our teams in conceptualizing and operationalizing the pioneer use case.

Given that SCF is an uncommitted credit product, how does one manage if funding partners suddenly change their credit policies and limits?

This is where the flexibility and scalability of the platform, earlier referenced, comes to the fore. It should be borne in mind as well that there is a governance framework which guides the activities of the consortium members, and this is consistently reviewed and updated periodically as it becomes imperative to take into account environmental changes. Remember that this is not altering the policies that guide the modus operandi of supply chain financing. It is pretty much a technological intervention that makes the same core processes faster, more efficient and more transparent. It is also key to note that not all aspects of the supply chain financing processes take place on the blockchain, so there are still off-chain activities and processes that the platform has however being designed to still be able to give visibility to.

Is there any chance that the blockchain service will replace the manual compilation of data on sales as well as tracking payments and so on?

Correct, the aim of this service is to digitize the entire process involved in trade/supply chain financing essentially factoring in the legacy considerations and nuances of the process in Nigeria. We painstakingly worked with our consortium members to draw up user journeys and customer-portraits to ensure we mapped out the pain points and issues faced by the various stakeholders to ensure the solution adequately addresses these and is scalable and flexible enough to progressively accommodate changes as the platform matures. The supply chain module of the Interswitch Blockchain service will help in streamlining the internal processes in the corporates and banks which contribute to the lag time responsible for the delay in processing these financial instruments. The service will also provide visibility on the different stages of a transaction and the repayment of the customer showing the credibility of the customer by showing history and performance of the small business in the repayment. A credible customer will have easy access to financing based on his credibility.

ing banks?

This shouldn’t be a major problem to deal with, in our view. Even as banks run their operations currently, they have managed to deal with these kinds of challenges. Typically, when such downtime occurs as a result of network challenges or any other technical constraints, they are resolved within a short period, and there are SLAs (in terms of platform availability and resilience benchmarks) built in to ensure that these do not become major constraints for extended periods.

Every one of the entities involved in the consortium are solid institutions who have invested in world-class infrastructure and data capabilities.

To provide additional assurances, the solution is built and hosted on the Microsoft Azure cloud which boasts of an uptime of 99.95%.

One major challenge we still face in Nigeria is that of ‘network issues’. Will poor or failed network in any way affect this new supply chain financing module e.g. across participat-

What is the benefit of this service (Supply Chain Financing Module) to Microsoft which Interswitch has partnered with to leverage its Azure Blockchain technology for SCF?

One of the realizations which essentially inspired this partnership between Interswitch and Microsoft is that both companies share the same goal of providing an infrastructure and the technology to make life easy for their customers, so Interswitch is essentially leveraging technologies provided by Microsoft to make all our customers prosper across Africa. This service is built and hosted using the Microsoft Azure Blockchain Technology which is an extremely secure and scalable platform which almost all banks and many major corporates are already using in testament to its unique advantage, so Microsoft is also extremely enthused about this initiative as it obviously expands the market for Azure as a platform, andoffers a basis for further innovation premised on use cases that would continue to unravel.

Already, Interswitch has partnered with three top commercial banks for financing. Are there also plans to bring on other banks to the platform?

Rightly as asserted, Zenith bank, UBA and GTBank were the pioneer bank consortium members for the pilot phase, and we’ve

certainly got plans to onboard other institutions subsequently. As a matter of fact, within a month of commercial launch, we’ve received expressions of interest from no less than 20 different entities, including but not limited to banks – other financial service providers such as insurers, corporates from sectors such as oil and gas, energy industries, and even other tech players all desirous of collaboration.

Apart from banks, what happens to other Fintech firms already automating payment processes and supporting the ‘onboarding’ process for suppliers? Are there plans to include them also on the Interswitch Blockchain service?

The primary actors in the consortium would however remain the corporate, its clients/customers (i.e. MSMEs who require supply chain financing) and the corporates banks or financial service providers who are underwriting the guarantee. As the supply chain financing regime operates today in its present form, you’ll realize that these fintechs currently provide payment automation or support functions to the banks/corporates/MSMEs, so

Since the blockchain service is believed to be immutable, what happens when a customer wishes to discontinue a transaction?

What essentially happens is that when a transaction is initiated by a party within the consortium, it is broadcast to every other consortium member (on a ‘need-to-know’ basis), and accordingly implemented. However, if there is need for a reversal, it simply is initiated within the blockchain network as another transaction – so the first transaction that needs to be reversed remains documented or time-stamped, it is not erased from the network, for transparency or ‘audit’ reasons. The ‘reversal’ transaction, once necessary buy-in is secured from all relevant actors, is equally consummated and recorded. Bear in mind that there is a governance framework enforced between all participating entities in the consortium. This is also a good place to highlight the important point that based on user insights, the platform has been flexibly implemented such that for certain peculiar or sensitive transactions in which two competing companies find them-

selves having to collaborate on the platform, data privacy or protection of confidential or trade information is very much possible such that the information is selectively shared on what I earlier called a ‘need-to-know’ basis. For example an information shared with a particular corporate’s bank may need to be selectively withheld from that corporate’s competitor who could possibly be co-existing within the same consortium on the blockchain The very interesting and rather unique thing is that Blockchain in itself is a remarkably disruptive technology trend that enables even the fiercest of competitors to collaborate without necessarily trusting each other, using ‘Smart Contracts’. These are lines of code that are executed to perform a certain task by itself based on certain triggers. Microsoft has instituted a blockchain platform for creating, configuring, and querying blockchain-enabled smart contracts that leverage both “traditional” cloud middleware and a suite of new Azure capabilities to support blockchain development that enable multiple use cases.

Does this blockchain-based SCF service work with existing Enterprise Resource Programming (ERP) and information management systems?

Broadly speaking yes, the Interswitch Blockchain Service Platform has got a front-end that has been built in such a way that it can be tailored to talk to a variety of ERP systems, and integration can be done to suit respective customer requirements. In the case of the pioneer corporation we worked with, Dangote Group, we are tailoring it for compatibility with their core ERP which runs group-wide. This integration is currently part of the roadmap.

Like many business people, Nigerians in particular are very cautious about how they transact their businesses.So how secure is the Interswitch Supply Chain Financing module?

Interestingly, contrary to how it is widely perceived, Blockchain, as a platform on its own merit trumps many other protocols in terms of security. Logically, data that is stored in one central point is far more vulnerable to being compromised, which is exactly the opposite of how blockchain technology is built. By being a ledger of information that is distributed across various P2P network, blockchain ensures the security of data by not having a single point of failure. While nothing is 100% secure, blockchain is designed to be immutable, tamper-proof and democratic.

It achieves this, more or less, through three defining characteristics: De-

centralization, Cryptography and Consensus. The complex interplay of these characteristics is what secures blockchain transactions and discourage foul play. Whilst Blockchain is still an emerging technology and evolving with each passing day, most security vulnerabilities are patched up quickly.

Microsoft, being a global tech leader has taken extreme measures to secure client data. Full physical and electronic contact to the cloud servers are closely monitored, including among Microsoft staff. Azure retains custombuilt moderation techniques that protect against DDOS attacks. Tracking back to the governance framework I earlier referenced for onboarding entities into our supply-chain financing consortium, the system has extremely high security standards which are verified and enforced to ensure there are no weak links that could compromise the security or fidelity of the holistic ecosystem Blockchain is still in its infancy in the business world, hence, it is considered risky. As with any new technology, resource persons with expertise on this service, are limited. How ready is Interswitch for the task ahead as regards the required human capital? For instance, does Interswitch already have the experts within or are there plans to outsource this task or to train existing personnel in blockchain technology?

We are only getting started and it has honestly not been a ‘walk-in-the-park’.

It’s also been a tremendous learning experience working with Microsoft and other consortium members to adapt the technology to a locally relevant context and use-case. We have had to learn as we have gone along, but we have no doubt that we are adequately (and uniquely) positioned for the tasks ahead. In the process, we have developed and built upon our expertise progressively and yes, we are keen to facilitate knowledge and capacity development for the benefit of the ecosystem locally. We are also open to collaborating with the tech communities with the right experience and expertise in resources to grow the development of many other use cases.

Seeing as this is the first enterprise-grade blockchain service in Nigeria, there may be errors that will need to be perfected over a period of time with increased use and more understanding. How are you planning to minimize any risks involved in the meantime?

We do understand this and indeed, the process of developing the first

functional use case was fraught with its ups and downs, which meant we were tasked with constantly fixing and tweaking things, especially when you consider the complexity of dealing with each consortium member’s requirements. The core technology is quite stable and has been implemented successfully for a couple of years on a global scale, so the biggest challenge really can’t be said to be emanating from that. In the end, whatever risks are seen to materialize over time can be proactively anticipated and managed, but the benefits far outweigh what any of these perceived risks may be.

What are the criteria for onboarding both suppliers and buyers? How easy is the enrollment process?

Small or medium sized businesses can access the technology through participating bank (account officer). However, the small business owner is required to have an email address to which notifications and progress of operations updates are sent. Although this is not a mandatory requirement, it allows for easily monitoring for the small businesses involved.

What are your plans to bring other corporations apart from Dangote Group on board?

As earlier highlighted, the Dangote Group was extremely forwardthinking and willing to challenge the status quo, and this made it possible for the company to pioneer this in Nigeria, along with a consortium of their bankers, Microsoft which provided the technology stack (Azure) and of course, Interswitch who conceptualized the initiative and operationalized it to adequately suit the use case. We must give credence to the vision and resolve of Prasanna Kumar Burri, Group CIO of Dangote Group and his team, who were closely involved in ensuring the pilot was a resounding success.We have numerous expressions of interest from various corporations across multiple industry lines and we are currently engaging with them regarding onboarding considerations, including socializing the governance framework with them.

The blockchain platform for supply chain finance is very much open for business, and whilst we’re focused on taking this to the next level, we have also started to develop new and profound use cases built upon the same core technology, to address other business problems which are germane to the growth and development of the financial services sector and economy as a whole, not limited to Nigeria but transcending the length and breadth of Africa as well.

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Legatum Prosperity Index ranks Nigeria 129th most prosperous country in the World in 2018 ISRAEL ODUBOLA

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igeria has been ranked the 129th most prosperous nation in the Legatum Prosperity index, an annual ranking produced and published by Legatum Institute, London.

The Legatum Prosperity Index offers insight into how prosperity is forming and changing across the globe, and also serves as a tool for leaders around the world to help tailor their agendas for growth and development.

The country’s score in the index for 2018 stood at 50.91, compared to 48.00 and 49.22 recorded in 2016 and 2017, respectively. The country moved from 136th and 132nd position recorded in the last two years, to 129th position in 2018.

The Index is based on 104 different variables analysed across 149 countries around the world.

According to the Legatum Institute, the index is constituted by nine sub-indices namely economic quality, business environment, governance, education, health, safety and security, personal freedom, social capital and natural environment.

Africa’s most populous nation recorded improvement in all the sub-indices between the current and previous year, except in safety and security.

In economic quality category, the country moved five spot higher to 139th. In business regulatory environment, the country shifted from 143rd in the previous year to 139th in 2018. In governance, Nigeria moved a spot higher from 108th to 107th. Similarly, in education, the country moved a spot higher to 123rd from 124th obtained in the previous year.

In health, the country moved two spots higher to 143rd. For personal free-

NAHCO appoints Olatokunbo Fagbemi GMD/CEO STELLA ENECHE, Abuja

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latokunbo Fagbemi, a transportation management expert, has been appointed the new group managing director/CEO of Nigerian Aviation Handling Company plc (nahco aviance), on the back of the adoption of a new group structure by the board of directors of the cargo handling company.

Fagbemi’s appointment was announced in a notice to the Nigerian Stock Exchange (NSE) by the company’s board in Lagos, weekend.

The notice said she assumed duties effective December 20, 2018, following the resignation of Idris Yakubu, the erstwhile managing director.

She is to drive the new group structure announced by the company, while all NAHCO’s subsidiary companies, including NAHCO Free Zone (NFZ), Nahco Energy and Power (EPI) and Mainland Cargo Options Limited (MCO), will report directly to the GMD/CEO. Fagbemi, a thoroughbred aviation management professional and a management

turnaround expert with IATA, ACI and ICAO certifications, will bring on board her wealth of experience in championing the agreed strategic transformation plan of NAHCO following a board and management retreat with inputs from KMPG. She will implement the new strategic plan, operationalise a seamless and harmonised group structure that will transform NAHCO into one of the best companies in the world. The new GMD will focus on improving customer experience, drive stakeholder value, enhance shareholders’ investment in the company, integrate and closely monitoring of the activities of the subsidiaries to create synergies and better returns on capital.

Fagbemi, would, in the immediate, have the task of repositioning the company, maintaining industrial harmony, energising the staff and improving stakeholder relationships and values.

She is also expected to coordinate and drive the new audacious, bold and challenging initiatives that will establish NAHCO Plc as the leading ground handling company in West and Central Africa in the shortest possible time.

The new NAHCO GMD/ CEO is an Airports Council International (ACI) and International Civil Aviation Organization (ICAO) certified International Airport Professional (IAP) and an IATA – certified Leasing Professional with expertise in Infrastructure Provision and Public Private Partnerships

dom, the country’s ranking shifted from 117th to 111th.

Nigeria moved a spot higher to 49th in social capital, and went two spot higher to 106th position in natural environment. A decline to 145th from 143rd in the preceding year was recorded in safety and security.

Nigeria has its highest ranking in social capital (49th) and worst ranking in safety and security (145th) in 2018.

The year’s prosperity ranking showed that other countries in Africa soil such as Kenya (66th), South-Africa (68th), Ghana (84th), Morocco (103rd) and Senegal (106th) are ahead of Nigeria.

“Global prosperity rises to highest ever level in the 12-year history of the index, with more people living prosperous lives than ever before, but falling safety and security poses major challenges, communities and nations around the world,” the Institute commented.

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Need to channel agric interventions to mechanisation TEMITAYO AYETOTO

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espite 2018 being a year that witnessed increase in financial interventions available to Nigerian farming community through the Anchors Borrowers Programme (ABP), there has not been a significant focus on bridging the mechanisation gap in agricultural processes, Taiwo Oyaniran, an associate director at PricewatersCooper (PwC), says.

The country’s mechanisation rate has been stagnant around 0.3 hp/ha compared to 2.6 or 8 in India or China, while the number of tractors in the country hovers around an estimated 22 million.

Ramping up of local production capacity has largely been hinged on expansion of cultivated areas, aiding a decline in the sector’s growth to 1.91 percent from 3.07 percent in Q3’17, but Oyaniran sees better results being achieved in terms of raising productivity, paring post-harvest loss, and scaling up farmer’s income through import

substitution with mechanisation. Government, he says has to find effective mechanisms to incentivise mechanisation for investors locally if Nigeria must lead a revolution against food importation.

“The government has to be able to say to investors that if you continue in business, you have my back and guarantee that you would be able to sell 1,000 of your tractors in a year. If an investor comes into that business and doesn’t sell more than five hundred he knows that he has recourse with the government. Those kinds of arrangement can make people to commit their investment,” Oyaniran said.

Speaking of discouraging industrial demand for agricultural produce while local harvest rot to lack of off-taking and uncompetitive pricing, the associate director canvasses for an enabling environment that reduces cost of production both for fixed overhead and indirect overhead costs, noting that issues around logistics and storage need to be addressed to limit impact on the unit cost of pro-

duce in Nigeria.

Although the tomato market currently appears a winwin for both consumers and producers, Sanni Yadakwari, secretary, Tomato Growers Association of Nigeria, said the industry continued to lose demand to importation, as major processors were inoperative.

Tomato and tomato paste is among the 41 items banned by Central Bank of Nigeria from accessing foreign exchange, but available data indicate industrial users still preferred importation of tomato concentrates to purchase of locally grown tomatoes for processing.

With production scale of 2.3 million tons as of 2016, Nigeria the 14th and 2nd largest producer in the world and Africa, was also the 13 and 3 largest importer of tomato paste.

Processed tomato serves as an alternative to preservation and has been a major export commodity pushed in from the US, Italy and China, among others. Commercial users find it cheaper to processing local tomato fruits.

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Nigeria’s lip service to diversification heightens economic woes on foreseeable oil run off HARRISON EDEH, Abuja

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igerian government’s continuous lip service on economic diversification is worsening its economic woes, as the oil, which is the mainstay of the country’s economic base, will soon run off in a foreseeable future.

The Federal Government has persistently relied on hydro-carbon resources as a major driver of its annual budgets, which has continuously exposed the economy to several shocks such as the global oil price volatility, adjustments in OPEC quota and vandalism of the oil and gas assets in the oil rich Niger Delta.

Apart from the afore mentioned risks, the recent disclosure by the Depart-

ment of Petroleum Resources (DPR) that the current reserves depletion rate of Nigeria oil reserves is 1.93 percent, revealing that on the average, Nigeria produced 1,973,995 barrels of oil per day (bpd) as at the end of June 2018, exposes high risk dependency on oil resources.

Also, Nigeria’s 2.5 million barrel daily production target has also been impeded by the recent OPEC’s meeting in Vienna, Austria, as Emmanuel Ibeh Kachikwu, Nigeria’s deputy petroleum minister, has confirmed that Nigeria won’t enjoy any exemption as it did not request for any exemption.

Kachikwu in Vienna at the recent OPEC meeting said, “Collectively, OPEC and their non-OPEC allies agreed to cut their

outputs by 1.2 million barrels per day (mbpd), with OPEC countries accounting for 800,000bdp of the cut, while non-OPEC will cut 400,000bpd.”

Against this backdrop, industry watchers have expressed concern that the government has no clear-cut diversification plan, as it continuously hinges its budget on oil revenue resources.

“Am yet to see any clearcut policy that is deliberately targeted at pushing/lifting people out of poverty and entrenching diversification.

“The National Bureau of Statistics latest release has declared 20.9 million people had lost their jobs. The performance of this year’s budget, specifically the capital component, is less than 30%. This is not a good sign for our budget,” Tunji Ogu-

nyemi, a budget historian and senior lecturer at Obafemi Awolowo University, Ile Ife, said. ”Am surprised that we are not factoring in the fact that Nigeria is an OPEC member and this would definitely affect our quota in the international oil markets. Even while we were given exemption by the OPEC country, we could not even do the 2.3 and 2.5 million barrels, we were doing between 1.89 million barrels,” Tunji said.

Suggesting measures for economic diversification, Kruz David, and economic expert said, “When am talking about diversifying this economy, it is all about how do you design, the appropriate tax policy mix that would become a catalyst to spur economic growth and prosperity.

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2019: How politicians violate Electoral Act with Christmas gifts JAMES KWEN, Abuja

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head the 2019 general elections evidence abounds that politicians, particularly those contesting for elective offices, are violating the 2010 Electoral Act via Christmas gifts.

The gifts range from bags of rice and salt, wrappers, TShirts, face caps, foot wears crested with their images and the logos of their political parties as well positions they are vying for, cows, goats, chickens and cash.

While some politicians claim that they always give Christmas gifts to their constituents or supporters, this year’s Christmas gifts are with different intent and purpose as they are clearly meant to induce voters to support them during the elections.

For instance, pictures of bags of rice crested with photographs of President Muhammadu Buhari, his wife Aisha and Governor David Umahi of Ebonyi State and his wife for distribution to people at Christmas have gone viral on social media while many governors and National Assembly members seeking re-election have taken to this strategy of vote buying.

A famous senator in North

Central Nigeria is said to have procured seven trailer loads of bags of rice crested with his campaign posters for distribution to the seven local government areas that made up his constituency.

This politically motivated benevolence in this year’s Yuletide season out rightly contravenes the Electoral Act 2010, which would be used to conduct the 2019 general elections after President Buhari declined assent to the 2018 electoral amendment act which also retain the provision on vote buying or inducement of voters in whatever guise.

According to Section 124 of the 2010 Electoral Act, “Any person who directly or indirectly, by himself or by any other person on his behalf, gives, lends or agrees to give or lend, or offers any money or valuable consideration; “Directly or indirectly, by himself or by any other person on his behalf, corruptly makes any gift, loan, offer, promise, procurement or agreement to or for any person, in order to induce such person to procure or to endeavour to procure the return of any person as a member of a legislative house or to an elective office or the vote of any voter at any election.

CSEA tasks government on 75% increase taxation on tobacco products HARRISON EDEH, Abuja

L-R: Jekwu Ozoemene, former DGM, Access Bank/guest speaker; Clement Osuji, chairman, CIBN Rivers State branch; Uche Olowu, president/chairman of council, CIBN; Idongesit Essien, deputy director, Port Harcourt Zonal Office, NDIC, and Collins Onuoba, prinipal manager, CBN Rivers State, during the 2018 CIBN Rivers State annual bankers dinners and awards night held at The Arrium Event Centre, Port Harcourt, Rivers State, recently

Buhari, other ECOWAS leaders call for concerted efforts against terrorism INNOCENT ODOH, Abuja

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resident Muhammadu Buhari and other leaders of the countries of the Economic Community of West African States (ECOWAS) have asserted that the scourge of terrorism bedevilling the subregion requires collective effort to address.

President Buhari, who is also the chairman of the Authority of Heads of States and Government of ECOWAS, said this on Saturday during the opening session of the 54th Ordinary Session of the Authority of Heads of State of ECOWAS in Abuja.

He said terrorism and violent extremism had continued to threaten the peace and security of the sub-region.

It is disturbing that the subregion is still confronted by several challenges including peace and security, he said, saying “it is a matter of concern that terrorism and violent extremism

have continued to threaten the peace and security in our sub-region. This threat calls for collective action on our part, if we are to effectively and definitively eliminate it.”

He added, “Indeed, as a community our aspiration is to create a bordered, peaceful, property’s and cohesive region, based on good governance and where our people have the capacity to access and harness its resources through the creation of opportunities for sustainable development, job creation and environment preservation.”

The President noted that insecurity is a threat to the aspirations to create job opportunities for the teaming population stressing that “These lofty ideals are however not attainable without peace and security”; adding that “ is why I have decided to make the issue of peace and security, the major focus of my chairmanship.”

He also told the gathering that the efforts so far by ECOWAS has achieved some

measure of success, saying, “We have been able to douse tension and restore confidence in some potentially disruptive political situations, particularly in Guinea Bissau, Togo and Mali.”

The president also called for the support of other partners in the efforts towards eliminating terrorism in the sub-region.

“As we work on new strategies to combat and eradicate this menace, we require the support of our partners to ensure the achievement of our objectives,” he added.

Besides, Buhari also tasked ECOWAS member states on the need to pay their dues promptly, saying that no institution can function effectively with output adequate funding.

“Our determination to create a safe and stable subregion must be predicated on a strong and capable Organisation. You will all agree with me that no institution can defunct ion effectively without

adequate finding.

“This would require that all hands are on deck and that all member states ensure the payment of the statutory community levy as and as when due. By so doing, we will empower and enable the commission to implement the integration agenda, as we march towards the year 2020, and actualised our vision of building an ECOWAS of people’s and not of states,” he added.

He therefore charged other leaders of the sub-region on the need to work towards eliminating other challenges bedevilling the region.

“In light of the continuing fragility of our economies linked closely to commodity prices, our nascent democracies, the negative effects of climate change on our farming systems, the globalization of crime and terrorism, we are required on daily basis, to join forces to eliminate these factors that militate against a secure, conducive and prosperous environment for the benefit of our people.

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he Centre for the Study of the Economies of Africa (CSEA) has tasked the Federal Government on 75 percent increase on taxes imposed on tobacco products as part of efforts to decrease drastically the consumption of tobacco products in Nigeria.

Executive director CSEA, Chukwuemeka Onyekwena, speaking in Abuja at the weekend, said tobacco provenance had been rising at 4 percent each year, and Nigeria was one the main tobacco production hubs in Africa.

He attributed the steady increase to the current 20 percent tax, which according to him, was moderate and not effective as prices had remained and demand increased.

He said the negative consequences of tobacco were also source of concern.

According to Onyekwena, “A total of 18.4 billion sticks of cigarettes were sold just in 2015. Tobacco related sicknesses were responsible for about 17, 500 deaths in 2015 and about 250,000 cancer diagnosis in Nigeria.

“The economic loses in the form of medical treatment and loss of productivity from tobacco related diseases are estimated at 591

million dollars in 2015. Twice the amount of all malaria treatment interventions in 2015.

“This calls for the need for effective tobacco control measures to minimise the use and impact of tobacco products in Nigeria.”

Onyekwena, while stressing that taxation is the most effective tobacco control measures, tasked the Nigerian government to adapt the World Health Organisation (WHO) recommended 75 percent for retail price to discourage consumption and boost public health.

Also, the programme coordinator for Nigeria Tobacco Control Alliance (NTCA), Olu’seun Esan, argued that the contribution of tobacco to the Nigerian economy was insignificant; hence, an increase in taxes would not affect the economy.

“The total people working in tobacco companies in Nigeria are not up to 1000 workers, the production has even been modernized, it’s not significant to the Nigerian GDP,” he said.

He informed that tobacco control was the heart of sustainable development in Nigeria while harping on higher retail prices, saying however the increase in the taxes would rather generate more revenue for the government to fund other sectors.

42 BUSINESS DAY NEWS Nigeria’s N4trn 2019 recurrent budget...

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Although no specific figure has been provided yet, Business Day estimates the largest increase came from personnel costs which could be up by N1.25 trillion following a 66 percent review in the minimum wage.

In 2014, Abuja spent exactly the same amount (N4.04 trillion) on capital and recurrent expenditure combined.

The implication of committing so much to non-dent recurrent expenditure alone, not forgetting the somewhat negative outlook for revenues and debt servicing in 2018, is that Africa’s most populous nation could be left with little or no cash to invest in critical infrastructure next year, which has put a cap on economic growth and impoverished tens of millions of its people.

That sets the stage in 2019 for a possible re-hatch of the poor capital expenditure outturn in 2018 and could pave way for yet another year of struggles for businesses and households in Nigeria who bear the brunt of the country’s decrepit infrastructure.

As at December 14, only a paltry

N820.57 billion had been released for capital projects, according to Udo Udoma, minister for budget and national planning in a budget performance presentation last week.

The plan in the 2018 budget was to spend some N2.87 trillion on capital projects, but the government didn’t have the revenues to make it happen. And it is probably the reason capital spend was trimmed by 18.57 percent to N2.28 trillion in 2019.

The government had raised only N2.8 trillion as at the end of September 2018, 53 percent of the cash projected for the period.

The underperformance comes largely as the N710 billion expected from some Oil joint venture asset restructuring are yet to be actualised.

“They have been rolled over to 2019,” Udoma, said of the proceeds to be realised from the deal.

That’s the second time it is being rolled over, to the worry of analysts who say the country’s ability to mobilise massive private capital will prove decisive next year and beyond at a time when public revenues are weak.

“There’s a need for investment!

Investment! Investment! and we know the government can’t afford

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the scale we need,” said Bismarck Rewane, an economist and CEO of Financial Derivatives Ltd. “When you compare growth expectations of 1.8 percent next year to population growth of 2.6 percent it becomes clearer that we are only going to grow poorer,” Rewane said.

In the third quarter of 2018, the economy expanded some 1.8 percent according to the National Bureau of Statistics (NBS) as a recovery in the oil sector creates an elusive growth. Since 2015, per capita GDP has shrunk and the IMF expects the trend to continue for another four years.

“Not a big surprise,” said Andrew Nevin, chief economist at Pricewaterhouse Coopers (PWC), in reaction to the IMF forecast.

“Nigeria needs investment of about N35 trillion a year to grow 6-8 percent and as long as we are only getting half of the investment we need, we are only going to grow at 2 percent and we are going to grow poorer,” Nevin said in a televised interview on CNBC. “I think the fundamental question we need to ask is why we are only getting half the investment we need and what are the structural reforms we need,” Nevin added.

While the current administra-

tion has often admitted the need to leverage private capital in meeting its infrastructural needs, signs of implementation are scarce.

Take for example- the government has only raised N5 billion since 2016 in privatisation proceeds.

Some say the government is not willing to allow the private sector take charge of the economy or sell state assets, some of which are unproductive, because the dominant ideology in the ruling party believes it is akin to selling off a crown jewel to greedy business men.

“The government also shows signs of being led to believing it can provide the entire infrastructure needs of the country,” a business leader who did not want to be quoted said. “Looks like they don’t even know how much we are talking about here in terms of the quantum of investment needed vis a vis the money they earn,” the person said.

In 2018, the government’s revenue target was cut by 2.72 percent to N6.97 trillion, as three straight years of over ambitious revenue projections consistently missed the mark.

The government may struggle to realise that projection, especially now that oil prices could fall below the budget benchmark of $60 per barrel and production estimate of

Monday 24 December 2018

2.3 million barrels daily looks increasingly untenable, after an OPEC imposed cut to 1.6 million barrels daily that was announced Thursday by the oil cartel.

To soften the blow of underperforming revenues, Abuja could turn yet again to borrowing as it has done in the past two years, without minding the cost.

The 2019 budget shows that the government plans to spend N2.1 trillion on debt servicing, 24 percent of total spending and five percent higher than in 2018.

Nigeria’s debt servicing costs have skyrocketed over time, hitting a record high of 67 percent this year.

Already, the International Monetary Fund (IMF) has warned the country about the unsustainability of its rising foreign debt stock, which has failed to translate to economic growth.

The Federal Government’s domestic and external debt (excluding states) is up 73 percent to N18.9 trillion as at June 2018 from N10.9 trillion in 2015, according to the Debt Management Office (DMO).

In the same period, GDP growth has declined from 2.5 percent in 2015 to 1.7 percent as at the end of the third quarter, with expectations for 1.8 percent full-year growth.

NEITI: Oil, gas sector generated $17.05bn...

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L-R: Ibukun Awosika, executive producer, God Calling; Karibi Fubara, lead actor, God Calling; Zainab Balogun, lead actress, God Calling; Pastor Paul & Pastor Ifeanyi Adefarasin of House on the Rock, at the premiere of the movie God Calling, in Lagos.

Nigeria’s economy tottering, not growing...

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at FSDH Merchant bank said re-

sponding to Nigeria’s 2018 economic performance.

Despite an average oil price of $75 per barrel and increased oil production to 1.94 million barrel per day (mbpd) in Q3 2018, the rebound in oil prices which helped pivot Nigeria out of economic recession last year was not enough to prevent the oil sector from contracting in Q3 2018.

Figures from the National Bureau of Statistics (NBS) showed despite an overall GDP growth of 1.81 percent in Q3, 2018, the oil sector which the economy depends on for growth contracted in both Q2 and Q3 2018.

The oil sector which contributed about 9.38 percent to GDP in Q3 2018 contracted by -2.91 percent (year-onyear) in Q3 2018, and -3.95 percent in Q2, 2018.

“Oil prices were not high long enough to make meaningful impact, and falling oil prices now have coincided with the political cycle; as elections are due in a few months,” Rafiq Raji, chief economist at Macroafricaintel explained.

Uncertainty continues to cloud the outlook for oil prices in 2019 as the U.S. Energy Information Administration is forecasting an average oil price of $61 a barrel while Citigroup Inc., forecasts $60 a barrel.

Responding to the likely outlook for Africa’s largest economy will in 2019; Ayodeji Ebo, managing director of Afrinvest Securities limited said he expect the pace of growth to slow down in the first half of 2019 due to political uncertainties.

“However it should pick up in the second half; we may begin to see results of some of the gains in the non-oil sector while we expect the contraction in the oil sector to moderate on improved production but may be impacted on lower oil prices,” Ebo said.

Projecting the exact growth rate for the Nigeria economy, Omotola Abimbola, a research analyst at Ecobank said he expects growth in 2019 to increase slightly to 2.2 percent from an estimated 1.9 percent in 2018.

“Supported by both the oil and non-oil sector; the Oil and gas sector will benefit from higher oil pro-

duction (2019f: 2.1mb/b vs. 2019e: 1.9mb/d), in view of expected onstreaming of Total’s 200kbpd Egina oil field and subsisting low-base effect in the sector,” Abimbola said by mail.

However, the Ecobank research analyst explained that tight monetary policy, structural fault lines of over-burdened infrastructure, weak ease of doing business metrics, and security challenges will continue to constrain activities in the industry, trade and agriculture sectors, thereby weighing on growth.

“However, cyclical uptick in demand related to the election-cycle, better FX liquidity, and increasing mobile phone penetration will help sustain ongoing modest expansion in manufacturing and services, helping to anchor non-sector growth above 1.5 percent,” he added.

Apart from the oil sector, 20 percent of the nation’s economy is still effectively shrinking as BusinessDay Quarter by Quarter analysis showed eight major sub sectors are still in recession, recording two consecutive quarters of negative growth rates in Q2 and Q3 2018.

The subsectors include Fishing, Coal mining, Metal Ores, Motor

than half of what was produced in each month previously as reflected in DPR reconciled sign-off records”.

After surviving the slump in the global oil market in 2008 and 2009, Nigeria’s oil sector rebounded in 2010 with a 49 percent increase in total financial flows to $44.94 billion, followed by the peak of $68.44 billion in 2011.

However, flows from the sector have been trending downward since that peak year with $62.94 billion generated in 2012, $58.08 billion in 2013, $54.56 billion in 2014, and $24.79 billion in 2015.

Similarly, oil production has been on a steady decline with 866 million barrels produced in 2012, 800 million barrels in 2013, 798 million barrels in 2014, 776 million barrels

in 2015 and 659 million barrels in 2016.

NEITI’s audit reports independently reconcile payments by companies against receipts by government agencies, and cover key financial flows such as earnings from sale of Federation’s crude oil and gas, sectorspecific taxes, fees and levies such as royalty, Petroleum Profit Tax (PPT), signature bonus, gas flared penalty, and other flows such as NDDC contribution, NCDMB levy, NESS fees, education tax and others. Breakdown of the payment shows that the major earnings for 2016 came from export and domestic sale of Federation crude oil and gas with $7.97 billion, petroleum profit tax PPT at $4.21 billion, and royalty oil at $1.57 billion.

vehicle and assembly, Post and courier services, Publishing, Motion pictures, sound recording and music production and financial institutions.

In reality, the government has not carried out much economic reforms to entice investor’s to deploy capital which will boost economic activities as focus has remained mainly largely on inefficient Government spending even if it means borrowing more.

Fresh data from the prospectus for Nigeria’s $2.8 billion bond programme shows that Abuja spent $3.5 billion or N1.07 trillion paying interest on money borrowed from local and international sources in the first six months of 2018, which implies paying $584 million (N178.7 billion) monthly and $18.8 million (N5.75 billion) daily, according to Business Day calculations.

Also, figures obtained from the Debt Management Office (DMO) website revealed Nigeria total debt as at June, 2018 stood at $73.2 billion (N22.38 trillion).

The Monetary Policy committee (MPC) of the Central Bank of Nigeria (CBN) has left the country’s interest rate unchanged at 14 percent since the hike in July 2016.

BusinessDay survey of the policies and ideas that impacted positively on Nigeria economy in the past 3 years saw the setting up of the foreign exchange (FX) window for Investors and Exporters (I&E) topping the list.

The I & E window reforms however came after a stubborn refusal by the Central Bank to allow a flexible and market driven exchange rate regime, and other reforms by the FG have been few and far between.

The I&E window was established by the Godwin Emefiele led Central Bank of Nigeria (CBN) in April 2017 on the aftermath of the foreign exchange crisis that hit the country following the 2014 global crash in the prices of crude oil, Nigeria’s main foreign exchange earner, and the exit of foreign portfolio investors from the country.

The new FX window for investors and exporters quickly lifted investor confidence in the foreign exchange market, improved price discovery, helped to attract dollar inflows from Foreign Portfolio Investors (FPIs), initiated the gradual re-introduction of a liquid inter-bank market and boosted production capacity in the manufacturing sector.

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Weak business environment constraining private sector to create jobs ISRAEL ODUBOLA

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takeholders in the private sector have attributed the incapacity of the sector to create jobs, which has consequently led to an increase in the incidence of unemployment, to the challenging local business environment and poor attractiveness of the economy to foreign investment.

The National Bureau of Statistics (NBS) disclosed last Wednesday that unemployment rate for the third quarter of 2018 climbed to 23.1%, up from 18.8% recorded in the corresponding quarter of the previous year.

The absolute number of unemployed adults was 20.9 million in the third quarter of the year. Out of this figure, 11.1 million worked for less than 20 hours in a week (too small to be included among

people who are employed) and the other 9.7 million did absolutely nothing, the statistics office said.

In a disclosure made by the Manufacturers Association of Nigeria (MAN), new jobs in the sector reduced by 35% in the first-six months of the year, from 9,355 and 10,257 jobs created in the first and second half of the previous year. Experts have continued to lament over the poor state of the country’s business environment, and claim it has limited the capacity of private sectors to provide job opportunities.

Commenting on the issue, Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), stated that government had reached a juncture where it could do nothing to create jobs, and therefore need to support the private sector for job creation.

“The private sector can cre-

ate jobs, but without an enabling environment, nothing can happen. The private sector is not robust and it is affecting the growth of the economy.

We keep borrowing to fund projects. Foreign investors are not going into sectors that are elastic with respect to job creation,” Yusuf said.

Babatunde Ruwase, president of the Chamber, said the failure of the country to monitor its rate of population growth vis-à-vis growth of GDP might be the consequences of vital economic concerns that centre on the material wellbeing of the citizens.

“Our population is growing at a faster rate than the rate at which the economy is growing. That is one of the problems we have. We have infrastructural decay, which the government is trying to solve.

Nigeria ought to be the production hub of West-Africa, but these challenges is limiting

the chances,” Ruwase said.

Rafiu Raji of Macroafricaintel attributed the inability of private sector to create jobs to the challenging nature of the country’s economic environment. In his words, “Some companies say that Nigerian graduates are not sound enough. So, some vacancies remain unfilled. Even so, we have seen companies retrench staff in the banking sector, for instance. Mental jobs in sectors like construction have not been forthcoming, either. All these are results of the challenging economic environment of the country.”

Speaking further, he said, “Unless we were in a command economy, the government could not realistically hope to significantly create jobs through its social programmes. Facts remains that even when we were having above 5% GDP growth, it was not particularly job-creating”.

L-R: CEO, Chris Baywood Ibe, Baywood Continental Limited: Babajide Olusola Sanwo-Olu, APC governorship candidate in Lagos State, and Austin Ugwu, president, Association of Enugu State Development Unions, Lagos State, during a courtesy visit to the APC candidate, in Lagos..

KWIRS generates N20.5bn, expends N275m on developmental projects SIKIRAT SHEHU, Ilorin

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he Kwara State Internal Revenue Service (KWIRS), has disclosed that it expended a total sum of N275 million on community service for development of the state since 2016, just as it generated revenue of N20.5 billion between January and November 2018.

Murtala Awodun, executive chairman of the agency, made the disclosure last Thursday while briefing journalists on the activities of KWIRS in the last quarter of the year.

Given the breakdown, Awodun said the agency realised N2.2 billion in January, February N2.39 billion, March N1.8 billion, April N1.29 billion, May N1.2 billion, June N1.18 billion, July N1.3 billion, August N2.5 billion, September N2.1 billion, Octo-

ber N1.6 billion, and November N2.7 billion.

He restated that the KWIRS had from first quarter to the third of the year, realised N6.4 billion, N3.6 billion and N5.9 billion, respectively.

He further explained that the revenues collected in 2016 and 2017 were N17.4 billion and N19.6 billion, respectively, while that of the 2018, excluding this month of December, was N20.5 billion.

He disclosed that in this year’s last quarter, the agency had already collected a total of N4.4b while still waiting for that of December.

The revenue boss expressed hope that by the time the December revenue was received, the amount of N26.96 billion budgeted as revenue to be collected by the agency for the year would be realised.

NAICOM withdraws, cancels State Insurance Producer policy MODESTUS ANAESORONYE

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ational Insurance Commission (NAICOM) has withdrawn and cancelled the State Insurance Producer (SIP) policy.

NAICOM stated this in a circular signed for the Commissioner for Insurance, by the director, Policy and Regulation, Agboola Pius, entitled, “Withdrawal of circular on State Insurance Producer Operational Guidelines, with reference number, NAICOM/DPR/CIR/20/2018 December 20, 2018 and sent to all insurance institutions.”

The circular read: Pursuant to the powers conferred by the enabling laws, the Commission hereby withdraws and cancels the Circular dated November 19, 2018 with reference number NAICOM/DPR/CIR/17 /2018 and titled “Operational Guidelines on State Insur-

ance Producer.”

NAICOM stated that the withdrawal and cancellation took immediate effect.

Reacting to the withdrawal and cancellation of the guideline, the Nigerian Council of Registered Insurance Brokers (NCRIB) expressed its appreciation to NAICOM for the magnanimity in withdrawing the guideline, stating that it will lead to the much desired progress and cohesion required for the progress of the insurance industry.

NAICOM had earlier released the SIP guidelines, which it planned to commence January 1, 2019, and pegged the operational licence at N2 million.

NAICOM simplified the payment process of the licensing fee by allowing the SIP pay from the first commission earned, a step taken to free state governments from financial burden in getting the licence.

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Why CBN’s licensing regime could slow Fintech growth BUNMI BAILEY

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he recent licensing regime announced by the Central Bank of Nigeria (CBN) aimed at regulating the country’s growing number of financial technology (Fintech) companies may pose a threat to investment innovations in the sector.

Implied in the move to introduce a new licensing regime is that Fintech which is on the cusp of growth in Nigeria requires to be reined in to mitigate a deleterious effect. But this new policy could reduce the volume of investment flowing into the local Fintech sector.

The proposed licenses are in three categories: Basic, Standard and Super. The basic license, which is for a period of two years, requires a minimum Shareholder’s Fund (SHF) of N50-N100 million, license fee of N100,000 and renewal license of N50,000.

A Standard license for three years requires a SHF of N3 billion, license fee of one million naira and renewal fee of N500,000, while Super license, also for three years, requires a SHF of N5 billion, a license fee of N2 million and renewal fee of N1 million.

The policy, if implemented will properly position the central bank to adequately address the emerging issues of Fintech with respect to cyber risks, risk management framework, capital adequacy, better focused regulation and oversight operations, the regulator explained.

But Fintechs by their very nature does not seem to lend itself to stiff regulation, especially as many are still at incubation stage. A report by Ecobank says that the minimum shareholder capital requirements are high for Fintech start-ups, which typically have low capital and shoe-string budgets.

The bank warned that if enforced, these requirements could raise the barrier for entry, inhibiting Fintechs’ ability to scale, and stifle innovation.

The licensing regime being conceived by the CBN would require high capital requirements which could choke off investments, as few investors would put their money into a Fintech before

it is able to demonstrate that its product or innovation works in the market, or that there is customer interest and revenue potential.

However, some analysts agree that Fintech companies should be regulated to protect investors’ interest due to the rate at which the companies are springing up, they warn that such excessive capital requirements may prevent the growth of the companies.

Ayodeji Ebo, MD, Afrinvest Securities Limited told BusinessDay that raising the capital base may be too early as Nigeria needs to create an environment that shows that we want to grow the Fintech space. It will become very difficult to access capital to set up a new Fintech company due to the initial capital required, he said.

Ebo also said that private equity firms may not be willing to take up much risk with the new capital requirement, hence preventing further growth in the industry. Also, he believes that the regulators should focus more on monitoring and providing minimum operational standards than raising capital requirements.

Similarly, Dolapo Ashiru, a stockbroker, says that most fintech companies, being start-ups will need capital to undertake research to produce innovations.

According to Ashiru, the proposed policy will stifle innovation or creativity as the new capital requirement threshold will be difficult to meet by the fintech start-ups.

Ibrahim Tajudeem, Head of Research, Chapel Hill Denham, says there should be different capital requirements levels for different kinds of businesses. He said for those small players that cannot afford to meet up with the requirements, they should consolidate or merge with others to become more qualified and stronger.

According to the African Start-ups Funding report by WeeTracker Research, a global tech media platform, Fintech managed to gather highest investors interest in 2017, when it recorded 47 deals amounting to $30.7 million, representing 18 percent of the total fund secured.

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46 BUSINESS DAY NEWS Import levels see current account to deficit zone in Q3 DAVID IBIDAPO

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urge in import levels experienced in Africa’s biggest economy has been said to deplete the current account of the country into a negative zone.

In Q3 2018, Nigeria’s current account returned to a deficit, equivalent to -2.9 percent of GDP. This is however against the downwardly revised surplus of 4.4 percent the previous quarter.

According to the National Bureau of Statistics (NBS), the deficit in Nigeria’s current account is not majorly as a result a slump in oil export earnings, “rather a surge in imports to their highest level since Q1 2015.

“Total imports of N4,172.3 billion in Q3 2018 was 73.8 percent higher than Q2 2018 value of N2,400.14 billion due to importation of submersible drilling platforms in August, which was quite expensive and of course occasional importation,” according to the NBS report.

According to report by FBNQuest, “We have therefore a similar trend in the trade (customs) and balance-ofpayment (BOP) series for Q3 2018. We note also that the

new BOP data incorporated sizeable upward revisions for merchandise imports in both Q1 and Q2.”

The net deficit on services increased from -5.2% to -6.4% of GDP in Q3. In dollar terms, it was the highest deficit since the start of the current series in 2008.

Although the CBN source summary provided little detail, the suspicion is that the freight and insurance costs attached to the import of platforms are to blame.

Net current transfers have remained within a range of 5% to 6.5% of GDP for two years but have slipped back since the start of this year.

The BOP data for Q3 are provisional. If this negative trend on the current account is sustained in coming quarters, then Nigeria’s external balance sheet, a core selling point in the credit story, becomes much weaker.

A national BOP committee has been established, chaired by the CBN and including the NBS. We understand that the treatment of transactions emanating from the oil joint ventures will be covered.

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Monday 24 December 2018

Oversubscription of Nigeria’s 2nd N100bn Banks’ NPLs moderate to 14.05% Sukuk indicates investor confidence - DMO in October - MPC members Nigeria, showed investors’ apONYINYE NWACHUKWU, Abuja

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n a show of confidence and soaring appetite for Nigeria’s sovereign securities, investors oversubscribed the second tranche of the Federal Government’s N100 billion Sukuk bond that closed last week Monday by N32 billion.

The Debt Management Office (DMO), which gave the update at the weekend, said it received subscriptions of over N132 billion from 2073 investors for the public offering.

The bond, which opened on December 6, 2018, is a seven-year 15.743 percent Sovereign Sukuk due 2025.

The DMO had said earlier that the proceeds would be used solely for the construction and rehabilitation of key roads across the six geo-political zones of the country.

Specifically, the proceed of the road projects is being planned to fund the reconstruction of Bida-Lambatta road in Niger State; the rehabilitation of Gwoza-Damboa-Goniri-Ngamdu road in Yobe/Borno states, and the construction of Ikom Bridge in Cross River State, among others.

“The high success rate of the Sukuk, which is the second by the Federal Government of

petite for FGN Securities and also their interest in the fact that the proceeds will be used to improve the state of road infrastructure in the country,” the DMO said in a mailed statement announcing the outcome of the deal.

It noted that the Federal Government issued Sukuk to fund the construction/rehabilitation of key economic infrastructure projects across Nigeria such as roads, to diversity the sources of government funding, and to offer investors an opportunity to invest in government-issued securities.

Nigeria’s Federal Government issued the first tranche of N100 billion Sukuk to fund the construction/rehabilitation of key economic infrastructure projects across Nigeria such as roads, diversity the sources of government funding, and to offer investors an opportunity to invest in governmentissued securities.

Patience Oniha, directorgeneral of the DMO, had severally explained that apart from the direct infrastructure benefits, the federal Sukuk was also useful to achieve a higher level of financial inclusion and to serve as a reference for pricing Sukuk issued by other bodies, especially private sector issuers.

HOPE MOSES-ASHIKE

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hough still above regulatory threshold of 5 percent, the No n - P e r f o r m i n g Loans (NPLs) ratio of Nigerian deposit money banks, which had risen to 14.70 percent in August 2018, has declined to 14.05 percent in October, signalling an improvement.

Robert Asogwa, member of the Monetary Policy Committee (MPC), said this in his personal statement at the last meeting held in November, which was released on Wednesday by the Central Bank of Nigeria (CBN).

He said the modest improvement in the Capital Adequacy Ratio (CAR) and the Profitability Indicators (ROE and ROA) in October as compared with August showed that the financial sector weaknesses, which were a key concern at the last MPC meeting of September, were partly being halted.

Adeola Festus Adenikinju, a member of the MPC, also admitted that the report on the banking system stability showed some improvements across major financial soundness indicators, like the capital adequacy ratio,

liquidity ratio, returns on equity and assets as well as the NPLs ratios.

This, according to Adenikinju, is an indication that the measures taken by the apex bank have started to yield some positive results.

“I am also pleased about additional measures being considered by the bank to ensure the continuous soundness of the banking and financial sector. This is critical to address the incidence of NPLs, improve credit flow to the economy and perhaps more importantly, boost confidence of the banking public on the overall soundness of the financial sector,” he said.

Dahiru Hassan, another member of the MPC, noted that the ratio of credit to gross domestic product (GDP) was low, noting, “Credit to other sectors of the economy, particularly when Deposit Money Banks (DMBs) are not willing to do so is weak; therefore, we can encourage the establishment of more microfinance banks and strengthen the existing ones so as to improve access to credit to poor. However, this may result into conflict of interest to the CBN.”

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Analysing Atiku’s education plan ODINAKA ANUDU & KELECHI EWUZIE

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tiku Abubakar, the presidential candidate of the People’s Democratic Party (PDP), has promised to transfer the responsibility for funding and control of public primary education to the local governments if he is elected president in 2019.

Abubakar also promised that senior secondary and tertiary education, provided through universities, polytechnics, mono-technics and Colleges of Education (CoEs), will be under the jurisdiction of state governments.

He wants the state governments to assume responsibility for all the federal unity schools and Federal Ministry of education-owned and funded universities, polytechnics, technical colleges and the colleges of education located in their respective areas.

Atiku believes that the current division of responsibility between the state and federal government and a multiplicity of institutions is chaotic and often unclear with overlapping functions.

He promised that the central government shall function as a regulator and shall remain responsible for policy design and harmonisation.

According to his policy statement, Atiku believes that as a regulator, the central government will set certifications of quality; define standards for vocational, technical and other education, while also monitoring compliance with

Atiku Abubakar

standards.

He wants the central government to collaborate with states to prioritise science and technical education including ICT and related IT- based programmes in order to support the country’s growth into the 21st Century, The PDP presidential standard bearer said if elected, he will ensure that federal government works with

states to carry out far-reaching reforms of the system with a view to developing a knowledge-driven economy. He believes that this is one way in which the generation and exploitation of knowledge would play a predominant part in the creation of wealth.

While speaking on Atiku’s education plan, Isaac Adeyemi, former vice Chancellor, Bells University

of Science and Technology Otta, Ogun State, told BusinessDay that solutions to the socio-political and economic problems in Nigeria lie in quality and sustainable education.

Adeyemi observed that quality and sustainable education has the potential to create employment, improve wellness, and create a wellinformed or politically-informed citizenry.

He appealed to Atiku not only to make promises but also declare a state of emergency in the education sector and implement developmental plans that will address and remedy the problem of access and quality within a specified period.

Florence Obi, former deputy vice chancellor, University of Calabar, said Atiku’s plan to hand over levels of education to the local and state governments, if implemented properly, is a move that would increase capital development to aid teaching and learning, adding that the Nigerian education system is not where it should be.

A Demographic Health Survey(DHS) conducted by the United Nations Children Fund (UNICEF) and the Nigerian government shows that the population of out-of-school children in Nigeria has risen from 10.5 million to 13.2 million.

As lofty as Atiku’s plan is, he has not stated clearly how he plans to take these children back to school.

Like Buhari and many other candidates, Atiku has failed to identify specific plans that will take Nigerian children back to school.

Atiku is yet to clearly state how to stop perennial ASUU strikes in universities. He also needs to articulate the curricula or system to be used under him?

Commendably, the former vice president has pledged to devote 21 per cent of federal budget to education if elected president in 2019. However, can he sustain this for four years, considering raging security and emerging problems ravaging the country?

Why VAT removal policy on air transport should be sustained IFEOMA OKEKE

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hile domestic airlines in Nigeria battle with infrastructure challenges, high foreign exchange rate, absence of aircraft maintenance facility and high cost of aviation fuel, amongst others, they are also threatened by imposition of charges like the Value Added Tax (VAT) on imported aircraft spare parts.

Airlines are often squeezed because there is little they could do to cushion the effect of huge costs emanating from different charges.

The alternative for them could be to increase ticket prices for the passengers, but the increase must be minimal so as not to discourage the travelling public.

Therefore, the recent increase in fare rates was insignificant to the amount airlines pay as VAT. The average price of a ticket from Lagos to Abuja is N26, 000.

The base fare, which actually goes to the airline, is N11, 000.

Fuel surcharge is N12, 000. Five percent is for Ticket Sales Charge (TSC), which is remitted to the Nigerian Civil Aviation Authority (NCAA) and shared among various aviation agencies such as the NCAA, Accident Investigation Bureau (AIB), Nigerian Airspace Management Agency (NAMA), Nigerian College of Aviation Technology (NCAT) and the Nigerian Meteorological Agency (NIMET). An addition to the total fare, is N1, 000 charged each passenger travelling within the country. This amount goes to the FAAN. The base fare of N11, 000 goes to the airline from which th five percent VAT is paid to the FIRS. Therefore, when the federal government announced the removal of VAT on importation of aircraft spare parts, it was indeed a huge burden taken off the backs

of operators. As expected, it resulted in the reduction of air fares, to an extent.

President Muhammadu Buhari while commissioning the ultra-modern Por t-Harcour t International Airport terminal few weeks ago said the recent decision by the Federal Government to remove VAT from domestic air transportation was to make air travel more affordable to citizens.

He said the removal of the VAT was also meant to create job opportunities in the nation’s aviation sector.

The president also explained that the government’s decision to charge zero VAT from domestic air transportation was in line with global best practices.

He assured that this will make air travel more affordable and subsequently lead to the creation of jobs by the air transport service value chain as well as increase

revenues for the government.

It follows that taxation of air travel or cargo directly reduces the economic benefit for all passengers and shippers. It can as well prevent a number of people travelling while stopping a number of shippers using air cargo services.

Aside heaving a sigh of relief over removal of VAT on air travel, domestic airlines in Nigeria are expected to save over N5 billion annually.

Figures made available by the Nigerian Civil Aviation Authority (NCAA) indicate that domestic carriers raked in N93.605 billion from ticket sales in 2017. Local carriers transported no fewer than 10,135, 009 passengers in 2017.

At an average of N25, 000 per ticket, five per cent VAT was in excess of N5 billion.

Obi Mbanuzuo, accountable manager, Dana Air, told Business-

Day that VAT removal is so far being implemented but stressed the need for sustaining proper executive approval.

“What I mean is that tomorrow someone else should not come and change it. The current administration has given instructions that this is what should happen but in the books, nothing has changed. So, if the minister changes or the administration changes, things may change. This is not the way things should be.

Things should be documented and put properly the way they ought to be,” Mbanuzuo added.

Several airlines have closed shop as a result of huge costs, with most arising from policies that do not favour the airline operations.

The government needs to review these policies as the country currently does not require disjointed but holistic reforms. The airline business must not be killed with agonizing tax burden.

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Capacity Utilisation in manufacturing sector falls to 54.6% ODINAKA ANUDU

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apacity utiilisation in the manufacturing sector of the Nigerian economy declined slightly to 54.6 percent in the first half (H1) of 2018.

This indicates 0.43 and 4.64 percentage points decline from 55.03 percent recorded in H1 of 2017 and 59.24 percent reported in the second half (H2) of 2017 respectively, H1 Economic Review by the Manufacturers Association of Nigeria (MAN) says.

Capacity utilization measures the extent to which a plant uses its installed productive capacity. This figure, therefore, shows that the sector is not using 45.4 percent of its installed capacity (100-54.6=45.4).

According to MAN, the

slight decline can be ascribed to the general low macroeconomic ambience in the country.

Analysis of sectoral group

performance shows that capacity utilisation declined in the food, beverage and tobacco group to 58.88 percent, representing 5.1 and

Manufacturer raises alarm over influx of sub-standard batteries ...amid SON certification SIKIRAT SHEHU, Ilorin

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oseph Offorjama, chief executive officer and managing director of Forgo Battery Limited in Ilorin, has raised the alarm over the influx of substandard automotive batteries into the Nigerian market.

He calls for an intervention of the Standards Organisation of Nigeria (SON) to rid the market of sub -standard batteries.

Offorjama spoke at the presentation of MAN Conformity Assessment Programme (MANCAP) Certificate to his firm, Forgo Bat-

tery Limited, an indigenous company.

The CEO, while commending the efforts of directorgeneral of SON for meeting up with the Federal Government on ease of doing business, said: “It is a major threat to battery manufacturers/ assemblers who add value to the economy by way of revenue generation. We think and hope that the director-general of SON will come to our aid in that direction.”

He pointed out that fake manufacturers give no value for money and waste country’s resources.

“People are being deceived to buy the wrong thing

Easter Okon, director of SON in Kwara, presenting MANCAP certificate to Joseph Afforjoma, CEO Forgo Battery Limited in Ilorin recently

and then they waste their money there. Our foreign exchange is used to import these products and they come in through land borders. So, it is a menace to the economy and we expect SON to come to our aid in that direction and save our economy.

“Some of us that are playing by the rules are being pushed to contemplate closing shop soon. Due to the porosity of our borders, we have so many products that are sub- standard coming in and it is a major threat. So, consumers should look out for SON’s mark on products and be proud that we have best products here that can compete with powerful brands in other parts of the world.”

Offorjama said Forgo brands would continue to lead in terms of quality and comply with Nigeria NIS standards always to serve consumers better.

Four brands of 14 Forgo products were SON-certified.

The products were: UPLUS, Auto Adamant, Forgo Power Plus and Botch.

Esther Okon, director of SON in Kwara State, confirmed that Forgo has complied with the Nigeria Industrial Standards requirements.

3.62 percentage points decline from 63.98 percent recorded in H1 of 2017 and 62.5 percent recorded in H2 of 2017.

Capacity utilization in textile apparel & footwear group also declined to 50.17 percent in H1 of 2018, from 52.98 percent recorded in the corresponding half of 2017.

Capacity utilisation in motor vehicle and miscellaneous assembly group, however, rose to 56.38 percent in the period under review, indicating 11.05 and 2.88 percentage points increase from 45.33 percent reported in H1 of 2017 and 53.5 percent in H2 of 2017 respectively.

In Ikeja industrial zone, which is now seen as the manufacturing hub of Nigeria, capacity utilisation declined by 4.42 percentage point in H1 of 2018, from 59.6 percent recorded in the H1 of 2017 and 63.2 percent in H2 of 2017.

In Ogun zone, seen as the investment hub of the country, capacity utilisation declined by 6.54 percentage point in H1 of 2018,

from 68.7 percent reported in H2 of 2017. It, however, showed an increase of 5.86 percentage point from 56.3 percent recorded in H1 of 2017. Also in Apapa zone, it declined in the period under review by 3.9 and 13.3 percentage points respectively, from 61.3 percent in H1 of 2017 and 70.7 percent of H2 of 2017. However, capacity utilisation in Anambra/Enugu zone showed an increase of 0.83 and 10.83 percentage points, from 51.3 percent and 41.3 percent in H1 of 2017 and H2 of 2017 respectively.

Nigerian manufacturers are facing high energy costs, as they rely on sources other than DisCos to power their plants. They also incur high logistics costs and multiple taxation. Smuggling and Apapa gridlock are also eroding their margins, hurting their capacity to produce and meet wage obligations of workers regularly.

LCCI targets increased Nigeria - UAE trade …targets trade above $1.7 billion Angel James

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he Lagos Chamber of Commerce and Industr y (LCCI) has partnered Dubai to increase trade volumes between Nigeria and the United Arab Emirates.

During a business session with the Dubai Trade Mission in Lagos, Babatunde Ruwase, president, LCCI, said there is a great deal of benefit in the promotion of trade relations between the two countries.

Ruwase, who was represented by Muda Yusuf, director-general, LCCI, said the current trade level between both countries, which is about $1.7 billion, is still very low, adding that this can change with closer cooperation between the private sectors of both countries.

Yusuf stated that there are opportunities for cooperation and investment relations in infrastructure development, especially in the areas of power and engineering infrastructure.

He explained that one of

the key objectives of Nigeria’s Economic Recovery and Growth Plan {ERGP} is to reduce the dependence on imports and produce more domestically.

“This is important for job creation, poverty reduction and our desire to build an inclusive economy. I believe that increased trade between Nigeria and the UAE will enhance our drive for economic diversification,” he said.

He assure d that the chamber would extend all necessary support to improve trade and investment relations between Nigeria and Dubai.

He implored Nigerian businesses to take advantage of the meeting to broaden the scope of their businesses.

Fahad Altaffag, UAE Ambassador to Nigeria, expressed his country’s readiness to deepen economic ties with Nigeria to promote investment and trade between both countries.

Altaffag stated that both countries have certain similarities and opportunities that could be explored to

boost trade and investment by leveraging technology, innovation and youthful energy across all sectors.

“Over the past 15 years, our total bilateral non-oil trade growth witnessed a 17 percent increase, reaching about $1.7 billion in 2017.

More than 20 Nigerian trademarks are registered with the Ministry of Economy in Dubai,” he said.

He stressed that the investment of Nigerians in the UAE have risen to about $120 million across all sectors in 2016, due to the ease of doing business policy of the country’s government.

He pointed out that there are huge opportunities for both economies to achieve more with deeper synergies.

To achieve this, it is imperative to establish the right legislative infrastructure by defining the investment protection and promotion agreement to reduce stress between investors from both countries, he said, adding that economic outlook is not defined by the limits of the past but liberated by the positivity of the future.

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real sector watch Vitafoam eyes first oil filter factory …partners FG on youth empowerment Gbemi Famuni

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itafoam Nigeria plc, one of Nigeria’s leading manufacturers of foam and flexible/rigid polyurethane products, is set to establish Nigeria’s first oil filter factory. The company says the factory will begin production in 2019.

“Nigeria does not have any oil filter company, which is bad, but Vitafoam has invested in that sector. Although it involves a highly technical process of production, investments have been made in large volumes as regards the knowledge, expertise and machines and it will commence production in the next three months, and we will introduce our oil filter into the Nigerian market,” Taiwo Adeniyi, group managing director, Vitafoam Nigeria Plc, said while addressing participants at the one-day Entrepreneurship Seminar for Undergraduates themed, ‘Polyurethane Application for Small and Medium Enterprises’ at the University of Lagos.

L-R: Taiwo Adeniyi, group managing director, Vitafoam Nigeria Plc; , Gerson Silva, guest speaker; Oluwole Familoni, deputy vice chancellor, academic and research, University of Lagos; David Aribike, head of department, Chemical and Petroleum Engineering, UNILAG, and Bamidele Makanjuola, chairman, Vitafoam Nigeria Plc at 2018 Polyurethane Development Seminar in Lagos last Monday.

Adeniyi explained that economic transformation and diversification must be rooted in the development of strong SMEs, stressing that growth of the economy is directly proportional to the numbers of SMEs being created.

Adeniyi described polyurethane as materials such as fibres, plastics, cloth-

ing, footwear and generally household and industrial products, explaining that the raw materials can be manufactured as furniture parts, cooler, boxes, mattresses, garage doors, water heaters, fridges, car parts, powder puffs and many other domestic gadgets.

According to the Economic and Statistics Depart-

FIIRO, inteRNAS, LASU develop local capacities for sweeteners ODINAKA ANUDU

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he Federal Institute of Industrial Research Oshodi (FIIRO) has partnered the International Conference on Alternative Sweeteners (inteRNAS), Lagos State University (LASU) and others to develop simple process technologies for commercial extraction and optimisation of high-grade Thaumatin and Miraculin, a low calorie sweetener and flavour modifier.

Gloria Elemo, directorgeneral, Federal Institute of Industrial Research, Oshodi (FIIRO), said this move was apt considering that global high intensity sweetener in both natural and synthetic market was estimated to be close to $1.3 billion in 2008 and would quadruple by 2021.

Elemo, who stated this at the opening ceremony of the ‘International Conference on Alternative Sweeteners’ tagged ‘Harnessing of the Economic Potential of Thaumatin (Thaumatococcus danielli) in Africa’, pointed out that attention was shifting to sourcing of alternative sweeteners, mainly non-nutritive phyto chemicals, from plants in order to close the gap between the

production/ consumption of sweeteners and sweetening/ flavor enhancers.

According to her, there was an increasing large segment of the population with special dietary requirements containing non-nutritive sugar, such as the diabetic patients, pointing out that over the past few decades non-nutritive sweeteners had been gaining significance and were expected to develop into a major source of high potency sweetener for the growing natural food and pharmaceutical markets.

She added that in Nigeria, there was a huge gap between sugar production and consumption, saying this represented a serious problem since an estimated amount and quantity of 2.5 million tonnes would be imported to meet local demand.

She said almost all the commercially available sweeteners for industrial and domestic use in Nigeria were imported, stressing that the commercial sweeteners sugar, saccharin, acesulfame K, cyclamates and the like, aside from nonavailability and high cost, all had their attendant negative health implications.

“On the account of this, FIIRO as an organisation has

over a long period of time been involved in herbal programmes and project for sweeteners, medicines, spices, condiments, nutraceuticals, foods and functional foods. FIIRO also has well-established medicinal aromatic and pesticidal plants research laboratories for research and development activities,” she said.

Also speaking at the event, Muhammed Musa, a director at the Raw Materials Research Development Council (RMRDC), said the council had a scheme called ‘Strategic Projects’ targeted at developing the nation through industrial technology, pointing out that thaumatin was a focal point of the scheme.

He stressed the need to have plantations to domesticate the plant, adding that the council had also put in place different initiatives for processing the plant for commercialisation.

The keynote speaker, Bidemi Kappo, a professor in the University of Zuzuland, South Africa, said, “It is my hope that from the experience I bring from South Africa, we can come up with a product that we can take to the market, which can actually ameliorate metabolic diseases in Nigeria and Africa at large.”

ment, American Chemistry Council, the Polyurethane Industry operates in nearly 1000 locations in the United States, directly generating $28.6 billion output and 48,800 jobs. The top end- use markets for polyurethane consumption are building and construction, transportation, furniture and bedding industry.

“Our core objective of this seminar is how to create sustainable jobs for our youths as a support for the Federal Government’s policy of youth empowerment. Let people see why they do not need to line up and seek employment. Rather, they can create jobs for themselves.

They can be chief executives as soon as they finish their schooling and start their own businesses and help to develop this economy. Vitafoam has a strong capacity to provide the required support structure for SMEs in the polyurethane industry,” Adeniyi stated.

He listed some of the challenges facing SMEs in Nigeria to include: funding, lack of technical support, difficulty in accessing raw materials, lack of necessary knowledge and relatively high stock holding, stating that Vitafoam is ready to help SMEs achieve profitability and sustainability.

The guest speaker, Gerson Silva, who runs the largest polyurethane company in Brazil and also a nonexecutive director of Vitafoam, while speaking on ‘Discovery and Historical

Progression of Polyurethane’ stated that a wide range of products and services, especially for daily use, are derivable from polyurethane, “hence economic benefits of the technology can only continue to grow.”

Also present at the seminar was Oluwatoyin Ogundipe, vice chancellor, University of Lagos, represented

by Oluwole Familoni, deputy vice chancellor, academic and research, who expressed appreciation to Vitafoam Group for its continuous support of the institution.

Olorunfemi Eniyadunmo, a final year student of the department of Chemical Engineering, University of Lagos, expressed gratitude to Vitafoam for the training and urged other corporate organisations to follow suit to empower Nigerian youths.

The entrepreneurship seminar was organised as one of Vitafoam’s new job creation strategy, aimed at expanding the scope of the SMEs in line with the economic diversification programme of the Federal Government in order to grow the economy.

MAN president heads African Manufacturers Association ODINAKA ANUDU

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ansur Ahmed, president of the Manufacturers Association of Nigeria (MAN), has been appointed as the interim chairman of the committee to evolve the African Manufacturers Association (AMA).

This follows the announcement made by Albert Muchanga, commissioner of trade, African Union Commission (AUC), at the just concluded Intra-African Trade Fair (IATF) held in Cairo, Egypt.

Mansur Ahmed

The role of the chairman is to supervise the process of working out the modalities of the association, in conjunction with other members, including drafting Articles of Association for the body in preparation for its inauguration next year, a statement by MAN says.

In addition, Segun AjayiKadir, director-general of MAN, and Joyce Njogu, head of Kenya Association of Manufacturers Consulting, were appointed as joint interim secretaries to drive the process.

While accepting the role,

Ahmed stated that he and other members of his Committee would engage all the manufacturers’ associations across Africa to mid-wife the birth of the pan-African body.

“Now is the time for the private sector to come together to tackle the challenges that hinder intra African trade,” he said.

He said that the platform of the association would enable manufacturers in Africa to engage, know and work with each other better to bring about inclusive growth on the continent.

Muchanga while inaugurating the interim council of the association noted that establishing the association was a direct fallout of the initiative of the African Union to promote and deepen IntraAfrican Trade in goods and services.

The official inauguration of AMA will hold before or during the African Industrialisation Day in November 2019.

The Association becomes necessary as the vision of African countries towards intraAfrican trade must be fully and effectively implemented with the cooperation of individual African countries, particularly their private sector.

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real sector watch Manufacturers scrambling for cheap credit to expand operations ODINAKA ANUDU

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igerian manufacturers a re s c r a m bling for cheap funds t o e x p a n d o p e r a t i o n s, but lending rate remains among the topmost in subSaharan Africa.

Most of the funds in Nigerian banks are only accessible to manufacturers at over 20 percent, they say.

Nigeria’s monetary policy rate (MPR), which is a benchmark interest rate in the country, is 14 percent.

Compared with other countries, it is easier to see why Nigerian manufacturers are facing tough times.

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

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

The Reserve Bank’s MPC had earlier cut the repo rate in July 2017 by 25 basis points from 7 percent to 6.75 percent.

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

BusinessDay gathered that Kenyans now borrow at an interest of 13 per cent

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

In October 2017, the

central of Ethiopia raised its benchmark interest rate to 7 percent from 5 percent.

At least the benchmark interest rate of most SSA countries have remained single digit, barring few, meaning that it is cheaper for businesses to access funds there than in Nigeria.

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

Nigeria is facing a make-or-

mar general election, which will see politicians spending huge sums on campaigns and vote-buying. Analysts see this as one of the main reasons why the CBN is reluctant to cut rates.

The average borrowing rate to manufacturers in 2017 was 22.8 percent, according to data by the Manufacturers Association of Nigeria (MAN). While Nigeria has some development finance institutions, single-digit funds available for onward lending,

especially to SMEs, are small. SMEs also complain of short tenor of most available funds in the country.

Bismark Rewane, CEO of Financial Derivatives Company, has been consistent on asking the CBN to cut rates to aid economic recovery for a country that just exited recession.

“No economy will grow when businesses get interest rate at a very high rate. What we need is a single-digit interest rate as manufacturers. We believe

that this is what can stimulate growth,” Frank Jacobs, former president of MAN, told BusinessDay recently.

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

He said government now needs to open up access to various development funds created by the Central Bank of Nigeria (CBN) such as the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) and the N300 billion Real Sector Support Facility (RSSF) by relaxing stringent conditions denying manufacturers and businesses access to these funding windows.

Babatunde Paul Ruwase, president of the Lagos Chamber of Commerce and Industry (LCCI), said the current state of the economy shows the government must prioritise stimulation of investment and growth.

“The proposition is that low interest rate will stimulate investment, impact positively on growth, create more jobs, increase income, and boost output.

This would ultimately have a moderating effect on inflation,” Ruwase said.

Ikecukwu Madu, a manufacturer in Port Harcourt, said Nigeria should create a separate bank for the manufacturing sector if it is serious with boosting the fortunes of manufacturers.

Palm oil makers canvass policy consistency to meet expansion plans ODINAKA ANUDU

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alm oil makers say government needs to guarantee consistent policy in the Nigerian economy to enable them meet expansion plans.

They say the country must close its borders against smuggling if it is willing to compete effectively with Indonesia and Malaysia.

Santosh Pillai, managing director of PZ Wilmar, a palm oil refiner, told BusinessDay that there are illegal and questionable

imports into the country, which prevent genuine investors from having a level playing field.

“Visit any supermarket or traditional market in Nigeria and you will see that plenty of imported vegetable oil, which is banned in the country, is easily available.

The current policies are only aiding cross-border trade and smuggling. The leading domestic refineries in Nigeria are facing a crisis and many in the country are not operational,” Pillai said.

International data show that palm oil worth 400,000

tonnes per annum are smuggled into the country annually. Palm oil is currently one of the commodities restricted by the Central Bank of Nigeria (CBN) from accessing the foreign exchange market, but smuggling from Malaysia to Ghana, down to Kano, is rife and hurts local investors.

“This discourages further huge investment by investors like us and creates unhealthy competition in the market,” Felix Nwabuko, managing director of Presco, told BusinessDay. Romanus Oguegbu, managing director of a medium-

scale palm oil mill in Uburu, a community in Imo State, said he is cutting down production as purchases from Kano, Abuja and Lagos oil traders have dropped significantly because they prefer to buy smuggled brands that are relatively cheaper.

“I normally produce 400 gallons (of 25 litres) each week. But this has dropped by half. This affects the number of workers we employ.

The number of workers has fallen to eight, from over 15 during peak demand,” Oguegbu said.

“This is too bad to us, and

no one knows the type of palm oil smuggled into Nigeria. It could be hazardous to health,” he added.

Nigeria produces 900,000 to 1.3 million metric tonnes (MT) of palm oil, with national demand standing at 2.1 million MT. The huge gap provides an opportunity for smugglers and importers evading duties.

Large and established firms such as PZ Wilmar, Okomu and Presco cultivate about 400,000 hectares of land, while smallholders farm above 900,000, according to Henry Olatujoye,

national president, National PalmProduce Association of Nigeria (NIPPAN).

“The only viable means of bridging that gap now is develop the domestic plantation industry and to support the local refineries.

“However, critical long terms goals should aim at supporting development of palm oil plantations within Nigeria by providing timebound critical infrastructural and policy support, developing the palm oil supply chain by implementing a robust smallholder scheme,” Pilai stated.

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economy

What Access Bank Financial Statement could look like post acquisition?

BALA AUGIE

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ccess Bank Nigeria Plc consummated the acquisition of Diamond Bank in to become the largest lender in Africa’s largest economy by deposits and asset.

The acquisition is unsurprising because Diamond had been grappling with huge impairment on assets brought on by exposure to the oil and gas. Little wonder ratings agencies downgraded it due to deteriorating balance sheet.

Access offered N3.13 a share for Diamond, against recent price of just N0.87.

It will pay cash and swap new Access Bank shares for every seven Diamond Bank shares.

We have carried out a simple calculation of what the balance sheet of the new entity (Access + Diamond) would look like immediately after the acquisition.

Of course the aim of any scheme of merger and acquisition is to form synergies that will ensure the acquisition of technology, cost savings, a solid distribution and marketing channels.

Access Bank’s total assets will hit N6.02 trillion post acquisition, eclipsing Zenith Bank and First Bank as the largest lender by total assets.

Also, Access will have a total deposit (both bank and customers) of N4.14 trillion immediately after the acquisition, this compares with Zenith Bank; N3.27 trillion, First Bank Holdings; N3.38 trillion and United Bank for Africa (UBA).

Of course any firm that acquires Diamond will benefit from the lender’s retail franchise. Diamond Bank has a strong franchise on the liability side given its low cost of funds; this will be advantageous to shareholders of Access in the long run.

Diamond Bank has a strong branch network (277

53

P.E

SHORT TAKES $8.134 billion In August, the central bank ordered MTN and its banks to bring $8.134 billion back into Nigeria, sending the company’s shares plummeting. The regulator alleged the firm had sent the funds abroad in breach of foreign exchange regulations.

14 percent Nigeria’s central bank kept its main interest rate at 14 percent on Thursday, its governor Godwin Emefiele said.

25 years Nigeria emerged from its first recession in 25 years in 2017 but continues to suffer from sluggish growth and high inflation. branches across Nigeria), and will add value to any bank that acquires it.

For instance, chief executive of Access Bank, Hebert Wigwe said the new entity would have a customer base of 27 million, including 12 million mobile accounts, making it Africa’s largest bank by customers.

While Wigwe has allayed the fears of shareholders and investors that the Diamond Bank’s toxic asset would not spill into Access Bank’s books, there are concerns about that Diamond’s huge impairment

could erode shareholders value.

“Overall, why we see a strategic alliance between both banks that could potentially translate into enhanced value for all stakeholders, we are wary of the impact of the extensive NPLs in Diamond Bank’s books on the profitability of the deal and we are also unsure of complete shareholder’s assent to the deal,” said analysts at CSL Stock Broker Limited.

“We estimate NPLs of c.N221bn (covered only by regulatory risk reserves

1.50 percent

of N31bn and provisions of N51bn) compared to the c.N100.7bn reported by the bank for 9M 2018.

An impending Impairment Charge of between N150bn

to N180bn as communicated by the CEO of Diamond Bank will significantly erode the bank’s capital position,” said analysts at CSL Stock Broker Ltd.

Economic growth dipped to 1.50 percent in the second quarter, continuing a slowing trend that began in the first quarter.

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

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

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23 Manufactures incur N1.30 trillion in costs in Q3 BALA AUGIE

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hile manufacturers are spending less to produce each unit of product this year, thedownside risks are that ebbing disposal income and decrepit infrastructure will hinder themfrom delivering a higher return on investment to shareholders.

Of course investors should fret because revenues are not growing at a blazing speed tocover operating and production expenses, while recent rise in yield on short term government security could balloon interest expense.

The above negative scenario means an erosion of shareholders value is inevitable, and to further compound the woe of consumer goods firms, third quarter employment report by the National Bureau of Statistics (NBS) showed more Nigerians are jobless. This means consumers will not open the purse string.

According to the statistics body, 20.93 million Nigerians are actively searching for jobs but cannot find any to do while unemployment rate increased to 23.40 percent in the period under review from 18.80 percent the previous period.

However, amid the tough and unpredictable macroeconomic environment, manufacturers production cost are stable while analysts see nexy year’s inflation rate remain benign.

For instance, the cumulative average cost of sales ratio of 23 quoted manufacturers quoted on the floor of the bourse fell to 63.94 percent in September 2018 from 82.89 percent the corresponding period of 2017.

This means on average firms spent N0.63 on input cost to produce each unit of product; a lower ratio shows a firm is efficient in using input costs to produce each unit of product.

The combined production and operating expenses- Administration and distribution expenses plus input cost-of the 24 firms under our coverage was flat at N1.30 trillion in the period under review from N1.31 trillion as at September 2017.

The reduction in costs was largely due to significant reduction in production cost of consumer goods firms. Combined input costs of 13 largest consumer

goods firms fell by 6.61 percent to N801.85 billion as at September 2018.

“Costs have been stable for the most part of 2018 and we do not expect strong inflation in 2019 and we expect operating expenses to be stable,’’ said Ifedayo Olowoporoku, consumer goods analyst at Vetiva Capital Management Limited. However, there are indications federal government could hike tariff on electricity and fuel, which

means consumers wallet remain squeezed, a double whammy for manufacturers who are grappling with decrepit infrastructure and low consumer purchasing power.

“There are concerns as that there removal of petrol subsidy and devaluation of Naira next year and if it happens could offset the gains from minimum wage increase,” said Christian Orajekwe, equity research analyst at Cordros Capital.

Nigeria’s economy has been growing but sluggishly as GDP expanded by 1.8 percent in the third quarter of 2018, but lower than 2.10 expansion when the country existed recession in the fourth quarter of 2017.

The gridlock at the Apapa ports has made it practically difficult for firms to ship goods to warehouse, hence stoking high stock turnover.

The number of production we have lost due to the Apapa gridklock is staggering. It affects your efficiency and profitability; some workers will have been laid off due to weak margins, “according to Nnamdi Okafor the managing director and CEO of May and Baker Nigeria Plc. Little wonder the cumulative cost of sales of the largest drug markers quoted on the floor of the bourse increased by 8.17 percent, albeit lower than November inflation figure.

Why Investors are willing to pay more for Dangote Cement’s stocks compared to peers?

Firms could apply brake on rights issues on sliding stock market

BALA AUGIE AND OLUWASEGUN OLAKOYENIKAN

David Ibidapo

F

B

y conventional measure, Dangote Cement has an attractive valuation, as the company’s stock costs 19 times the company’s estimated per share future earnings.

That means investors are willing to pay much more for each Naira of Dangote Cement’s earnings than for shares of Cement Company of Northern Nigeria (CCNN), Lafarge Africa, Beta Glass, First Aluminium, Cutix, Port land Paints, and Premium Paints.

Little wonder analysts at investment house United Capital Limited recommend owning the stock.

This means Dangote is a value stock because of its growth opportunities amid a tough and volatile macroeconomic environment.

To understand why Dangote is a bargain is to acknowledge the efficiency with which it minimizes costs and maximizes profit while at the same time pursuing aggressive expansion plans that has propelled market share.

Dangote’s market capitalization is far greater than the industry in which it operates as it continues to maintain growth momentum required to deliver a higher return on investment.

The foremost cement company is leaving no stone unturned to expand its operations not only in Nigeria, where it has its biggest market, but

also across other African countries including Tanzania, Ethiopia, Ghana, South Africa Cameroon among others where it has its operations, to outshine its competitors and make its products the most preferred by customers.

Earlier this year, the company in its quest to increase funding for its future expansion plans announced the issuance of N50 billion Series 1 and 2 Notes and another N50 billion Series 3 and 4 Notes under its N150 billion Commercial Paper Programme of which N91.34 billion was raised.

“Funds raised in the Commercial Paper (CP) Programme will be used for capital expenditure, working capital and general corporate purposes,” the company said in a filing to the NSE.

Among the expansion efforts embarked upon by the cement giant across African countries is the investment of $3 billion to build new manufacturing plants and import/grinding terminals across the African continent, according to Joe Makoju, the firm’s Chief Executive Officer.

The cement manufacturing company also plans to build export facilities at Nigeria’s seaports for the shipments of clinker and cement from Nigeria to neighbouring West African countries.

Investors in the shares of the largest producer of the building material will benefit as the country’s infrastructure and housing deficit are expected to spur demand for cement.

irms in Africa’s largest economy could put the brakes on rights issue as a sliding stock market and poor growth next year may make them postpone future expansion plans.

Normally, after a recession, corporate, whose shares have been beaten down, tap the market to raise capital in order to shore up their balance sheet and resume their focus and market penetration strategies.

“I think it is crystal clear that immediately after the recession companies that had suffered capital depreciation opted for rights issue to bolster working capital position and deleverage the balance sheet,” said Wale Okunrinboye, investment analyst with Sigma pensions Ltd. “But the farther you move away from the recession the lesser firms raise capital via rights issue. It is an economic cycle thing. 2017 was the year companies sold their shares at a very high price. Going forward, l don’t think the growth is strong enough to justify raising rights issue,” said Okunrinboye.

As the year comes to an end, total right issues in 2018 amounted to N237.6 billion initiated by 6 companies listed on the nation bourse.

These companies includes Flour mills with a right issue worth of N39.9 billion, Morrison Industries (N502 million), Lafarge Africa plc (N131.7 billion), UAC of Nigeria Plc (N15.4

billion), Consolidated Hallmark Insurance (N500 million) and Union Bank plc (N49.7 billion).

On Friday, the NSE All Share Index dipped -0.09 percent to close at 30,773.64 points with a market cap of N11.24 trillion. Year to date analysis shows that the market is down -19.71 percent, meanwhile in the last 5 years ASI has shed points by -23.68 percent.

In 2017, the NSE All Share Index (ASI) experienced an upward trend in the second quarter of the year. The ASI rose 79 percent to highest level in 5 years at 45,092.83 points in January 2018 from 25,189.37 points in April.

Explaining the idea behind right issues, “the reason why most companies have not gone ahead with right issues is because of the pricing of stocks.

Stock prices are currently down and market is currently down.

Companies would prefer to issue rights when prices are favourable” Paul Uzum, a Lagos based stockbroker told BusinessDay. BusinessDay analysis of total right issues approved and initiated on the Nigeria Stock Exchange market (NSE) in 2018 showed that despite decelerating economic growth, and negative market performance, some companies still felt motivated to tap into the market for funds.

Notore chemical industry came on board through a listing by introduction on Tuesday of 1,612,066,200 ordinary shares at N62.50 to give a market worth of N100.754 billion.

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Start-Up Digest

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In association with

Mike Adenuga inspires me each time I meet him— Babaeko

Steve Babaeko is a fast-rising digital advertising/ marketing/branding entrepreneur. He is the group chief executive officer of X3M Group, made up of X3M Ideas, X3M Music and Zero Degrees, among others. In this interview with ODINAKA ANUDU, he speaks on how he gets his inspiration, the advertising industry and prospects for 2019.

What is your assessment of the out-going year? think it has been pretty tough. Ideally, in an election year or a run-up to an election, they say businesses/economy, especially the marketing communications industry, should heave a sigh of relieve or enjoy some boost, but that has not been happening if the current situation in the country is anything to go by. That general notion too may not be the case for X3M Ideas because we have deliberately stayed away from that genre of (political) communication. This is because we want to be able to stand by anything we sell. If I am marketing a brand, it is sure a brand I believe in. All the brands we work for are brands I totally believe in. I do not want to sell a thing I do not believe in, which is why we would rather stay away from doing political marketing for now. However, overall it has been a challenging year for businesses in Nigeria but hopefully, this last quarter, some people and businesses may experience more spending which is good for the economy.

like Dr. Mike Adenuga, chairman, Globacom. Every opportunity of being in front of him in the last one year has been a year of continuous learning from the grand master.

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But government actually wants us to believe things are looking up?

Well, they must have their own statistics, but for me as an entrepreneur, I am looking at the brand health indices for some of the sectors of the economy. For instance, manufacturing – I know it has been challenging, a couple of business/manufactures have actually closed down. Procter & Gamble closed their factory in Agbara. Even in the banking sector, we are witnesses to the turmoil going on in there. These were the some of the viable sectors of the economy so if they are facing challenges, imagine the reverberations or after-effects on productivity and the economy in general.

In the advertising sector of the economy, have there been positive landmark developments in the outgoing year pointing to growth?

Well, I will answer ‘yes’ and ‘no’.

Yes, because you can feel that the regular players – top five or six agencies— are still there, able to weather the storm, which is good news. No, because you know that so many agencies have practically almost disappeared today, no thanks to the squeeze in the

Steve Babaeko

economy. The real thing is that the clients we all work for are limited in number but the agencies keep opening shops. There is more internal competition among these agencies scampering for those pieces of business. Therefore, you have to be in the top five or six brackets to be able to keep your head above the water. So, it’s been pretty challenging.

There has been this perennial discussion around consolidation, as it is happening in the banking sector. Why are players in your industry not keen about this?

Honestly, it beats my imagination.

Getting an answer may be pretty difficult. I know Sir Steve Omojafor said what he said because he can suggest it, but he cannot force agencies to merge or acquire each other and consolidate to build a bigger agency or media enterprise. The way I see it is that at some point, we would be forced to go down that route because the more you have all these bits and pieces agencies, the more volatile our industry becomes. So, the ideal is to have a big agency that will be able to fly the flag for the industry more effectively. People may lose one or two titles or so but the industry and profession is certainly going to be more viable and the better for it. The bankers do it every day, in manufacturing, it happens. Advertising? I am not sure we have got to that level of business sophistication where we

can see the big picture that will make us say it is the right way to go.

About a year ago, you commenced your Southern Africa operation. How has it been?

Quite frankly, working in a new country is challenging. It involves new set of regulations, and tax regimes, among others. You have to just work by the law. Be that as it may, we are trying to get used to that space – Johannesburg, Lusaka. We just did some business in Accra. If that business continues to do well, I am sure we may consider setting up in Accra as well. I am really excited because we are the only local agency in the country today, operating at that regional level. We are like trailblazers, if you like. It is mostly the foreign advertising networks that usually do what we are doing at the moment.

We are sort of experimenting and paving the way for other agencies on the continent to be able to go this route.

How do you sit in Lagos and run those offices?

Technology makes it happen.

But beyond this, because of the kind of the work we do, I have the opportunity to sit in front of big time entrepreneurs. For every time I go there to present to them, believe me, it is like being in a business school. Though just presenting, but I watched the way they run their operations and I am inspired. I am learning from those well-grounded business moguls

It was at about this time last year that X3M Ideas won the Glo Business. How has it been working for the brand?

Within me, I think it is one of the most interesting businesses we have ever had to work on. You are talking about the chairman who is totally passionate about advertising. Not every client is like that, so that is the edge you have working on the Globacom account first and foremost. The chairman is passionate, will give you all the support you need. He will push you, challenge you to deliver your best. That is a kind of inspiration.

So, it has been an inspirational year for us - going in there, listening to him, taking his suggestions and feedbacks. Sometimes, you go and maybe he is not pleased with the concept you brought. He has a way of challenging you and provoking those ideas that make you come back better. I do not think this affects the Globacom business alone. Some of the support and suggestions he has given us over the year has made our entire team stronger. I think it has been one year of fun, learning and excitement. Some of the big commercials we shot in the year were for Glo - to sell the World Cup and the Glo Oga sim.

Any Awards to their credit?

Yes, quite a number of them. We have already won about three African Crystals for Glo at the pan-African level and then at the last Lagos Advertising & Ideas Festival (LAIF), X 3M Ideas won five awards for Glo – 2 Gold and a couple of silver and bronze medals. It is actually more difficult for you not to win because the chairman really encourages you to display creativity. He wants you to think and think big. He puts everything behind you to make sure these big ideas actually fly and you succeed with them.

How has the businesses impacted each other?

Honestly, if you compare our business to Glo, it is like a drop in the ocean. There is really no basis for comparison. But I will say we have really drawn inspiration. Some of the things we are doing now are inspired by our relationship. The

chairman believes in excellence so much. Each time I watch how much energy he puts in, if he could still work this hard, I am more determined to work harder and be a better person than I am today.

What does next year hold for the industry?

Hopefully, the election/transition will happen smoothly. Once that is achieved, I believe we are going to see the rise of the industry and the Nigerian economy in general.

In the year, I emerged the vice president of the AAAN under the president, Ikechi Odigbo. We would really want to continue to actuallise some of the promises we made during the elections.

We have started some: The AAAN secretariat today is no longer what it used to be six months after as it is looking fantastic. The last LAIF Awards held with support our LAIF partners, members of association, the exco and clients.

Now, we want to make sure in 2019 that all the efforts to push the awards beyond the Nigerian shore materialise. We are not giving up.

For X3M Ideas, we really want to explore this continent. The opportunities are fantastic. There are 1.3billion people on the average. What else do we need to be able to trade among ourselves?

We want to go beyond sticking a pin somewhere on the map. The level of poverty on the continent is probably greater than anywhere else. The only thing to get out of poverty and pain is to encourage entrepreneurship. We need people to provide leadership, create opportunities and platforms that will get people out of poverty. This is what we are really passionate about. We might be doing East African and extend slightly to West Africa.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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How Daramola is redefining music industry through Supreme Chords Joseph Daramola is the founder of Supreme Chords International Music Academy based in Lagos state. He is a graduate of Business Administration in the University of Lagos and Advanced Studies at the National Open University. In an interview with BUNMI BAILEY, he discusses his passion and how he trains others to excel in music.

Tell us about your music school business. How long you have been running it? he name of my music school is Supreme Chords International Music Academy. I and my team train individuals on how to sing, play instruments, train church choirs, school students and carry out private home lessons for kids and teenagers.

I studied Business Administration, but I am driven and inspired by my love and passion for children, teenagers, youths having skills in music. As we all know, music knowledge is one of the important skills that one should know. And that’s how I came into the music business.

The music business has been nice. Through the help of God we have been able to strategise well even in the face of economic crisis.

We have spread out by teaching schools, church choirs and instrumentalists, taking students and schools to musical competition and running trainings at the music academy. I have been in the music industry for ten years and the music school has been running for three years.

music teaching, site reading, instrument playing, music theory and a lot more. Nowadays we see artistes/ musicians that have very sound knowledge about music.

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How did you come about the business?

After I was done with the University, I worked with an organisation for one year and at the end of that year, I felt I needed to do something different. So I resigned, not knowing

Who are your clients?

My clients are schools, individuals, which include youths, children, parents, adults and churches.

What are the challenges that you are facing in your business?

Sometimes, you have a nagging client as the mother of the parents you teach. Once you are ten minutes late to a lesson, you might receive the insult of your life. Having to deal with clients that have the resources to pay but delay payments due to reasons unknown to me is also a challenge.

Joseph Daramola

what to fall back on. Two months after, I was contemplating on starting a music school or a computer school. Then at the end of it all, I chose music school because I knew it wasn’t common everywhere and it was something people would appreciate.

How much capital did you start with?

I kick-started the music school with the token of N10, 000.

Can you say the music industry is performing well now?

Now we are glad the music industry is really doing well in the aspect of

Four entrepreneurial teams emerge winners at EmergeOndo Innovation Hackathon Josephine Okojie

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our teams of entrepreneurs have emerged winners at the first edition of the ‘EmergeOndo’ Innovation in Governance Hackathon, which took place recently in Akure, Ondo state.

The challenge, which held at Akure Tech Hub, Curators Hub and Premier Hub Innovation Center, focused on four thematic areas: agricultural accessibility, business linkages, education and renewable and clean energy.

Start-ups were grouped into different teams. The Gadges team won the clean and renewable energy category for providing access to affordable solar solutions.

Similarly, the Psyche team won the education category for creating a device that monitor students’ psychological states as it directly correlates academic performance.

Other winners are the FarmCred team that won the agricultural accessibility category by developing an application that improves access to agri-finance

for smallholder farmers.

While the Dunalinks team won the business linkages category with their design that links smallscale technicians with contractors for better jobs and growth opportunities.

Each of the teams went away with $1,000 award price money sponsored by Serve Consulting.

“It was really exciting to be in a room full of young men and women, all eager to solve problems that affect them daily. There was so much enthusiasm and willingness from the participants and I was especially thrilled to see so many women present. I am looking forward to how Ondo State government responds,” Chiemelie Umenyiora, regional coordinator-West Africa, for MakeIT in Africa, said.

The FarmCred team had the highest score in social impact, while Gadease had the most scores in innovative use of technology. Also, FarmSense was the team with the best pitch, just as Podra had the overall best score in the semi-final pitch.

The hackathon initiative was

borne out of a unique partnership between the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), GmbH Make-IT in Africa Program and Ondo State Government.

“Ondo is committed to supporting activities that drive growth, promote efficiency and, most importantly, foster job creation. We have made it a priority in the second half of our administration to bring into focus our SMEs, especially those doing innovative projects that will help move the state to one this is self-sustainable and facilitate our moving away from the status quo,” said Rotimi Akeredolu, executive governor of Ondo State.

“We congratulate all winners and are looking forward to supporting their growth and development,” he said.

Also, Deola Adejuyigbe, managing director of Serve Consulting, said: “Serve Consulting continues to support the development of innovative ideas and solutions that solve real problems in our economy.

What are the skills and tools that you need to set up your kind of business?

One should have a good knowledge about music from scratch, and one should know how to play about five instruments and more. One should have a marketable skill, basic music instruments, a good space and environment to start the business.

Note that all we need for a business to stand is a solid managerial foundation. The person driving the business must be up and doing.

And one must know how to tolerate others and learn to take actions.

And above all, the financial aspect must be checked and managed well. So, no matter the money you

pump into a business, if things are not structured, the business would fall.

How can these challenges be addressed?

Government can help by putting structures in place. The way we have business registration, we also need to have structured registration plan sent to every organisation.

Why do most start-up businesses fail even when there is adequate funding?

Lack of planning is a major problem. Every business that wants to grow must have a short-term plan and also a long-term plan. Failure to plan will damage your business.

Businesses that fail lose touch with their customers. Keep an eye on the trending values of your customers. Find out if they still love your products. Do they want new features? What are they saying?

Are you listening? I once talked to a chief executive officer who told me that they do not respond to negative reviews because they are unimportant.

Poor location is another disadvantage that might be too much to overcome. If your business relies on foot traffic, location is a strategic necessity. A poor location might make your customer acquisition costs too high. Revenue is not the same as profit. As an entrepreneur, you must keep your eyes on profitability at all times. Profit allows for growth.

Route A Initiative launches solutions to drives entrepreneurship ANTHONIA OBOKOH

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oncerned with the high youth unemployment rate, Route A Initiative has launched solutions to drive entrepreneurship in the country.

The non-governmental organisation held a roundtable discussion with stakeholders in the industry to address challenges facing entrepreneurship in the country and ways to activate the latent potential of millions of unemployed youths.

“This session is a first step for us on our mission to activate the potential of over one million Nigerian youths through strategic awareness and building the capacity of over 100,000 youths annually through the provision of free vocational and technical training opportunities.

Also, to link over 100,000 youths annually to internship and mentorship opportunities that will facilitate productivity” Nike Fagbule, founder and CEO, Route A Initiative said.

“We are here to change the narrative of the Nigerian youths, because we truly believe that the future of our nation is in the hands of the next generation. We call on all

stakeholders to join us to achieve these set goals” Fabule said.

During the session, Route A Initiative launched the maiden edition of its youth-focused and empowerment publication – ‘The Zebra’, a strategic tool to reach thousands of young Nigerians with content that will entertain, educate and motivate the passion for productivity.

Some key highlights at the session include: the examination of the impact of poor education on young disadvantaged Nigerians and their capacity to compete with their peers in the labour market, the lack of capacity building for driving entrepreneurial and vocational skills development as a tool to enable economic growth and the need for more access to information and opportunities that will facilitate the economic progression of the Nigerian youths.

Similarly, key activities of the session include: a break-out session to strategise on impactful solutions for driving youth productivity, and a panel discussion of young, accomplished pace-setters such as Jay Chikezie, co-founder Nairabox; Isioma Osaje, CEO, Agency 106; Funbi Sowande, country manager, Tramotina, and Osagie JohnOsarenz, CEO, The Zone Agency.

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Start-Up Digest

‘Small businesses need micro loans to stand on their feet’

Lydia Ekanem is the chief executive officer of Desire Cakes and Confectionery. She is an entrepreneur who is determined to go places. In this interview with Jonathan Aderoju, the young confectioner explains what motivated her to set up the business.

Tell me about yourself and your business. y business name is Desire Cakes and Confectionery. We help to make your events memorable with our delicacies. I liked cooking right from when I was young. I used to help the women in the catering department in church at times and I ran errands for them. I am a graduate of Mass Communication.

What inspired the business?

I had always wanted to make people happy, most especially kids.

You and I know that whenever kids see cakes they are happy. That was where I got my inspiration from.

What was your initial start-up capital and how were you able to raise the fund?

The start -up capital was from my savings. Actually, my mom did help me too by giving me the little she could raise. Most times, I use her cooking utensils too.

How would you say the business has grown since you started?

The business has not actually grown the way I want it, but it is better off now than when it was starting.

There was a time I hawked my products on the road, but now, I have a shop where I do my work effectively.

Do you have employees?

Yes, I have people who have worked with me and left to establish their own. But presently, I have one employee and some people who I teach.

Where do you source your raw materials from?

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Lydia Ekanem

I get my raw materials from our conventional markets like Ejigbo Market or Apongbon Market on the Lagos Island.

What are some of the challenges confronting your business?

Some of the challenges confronting my business are inadequate fund and location. Sometimes I get home services in states, but the stress of carrying my equipment without my own means of transportation makes it difficult sometimes.

How some of these challenges be addressed?

The government can help address these challenges by helping out with micro loans to young entrepreneurs so as to enable them stand and keep their business going.

Why should anyone buy your

product?

Anyone should buy my product because it is the best. It is something you eat and want to savour again.

What are some of your expansion plans?

I intend expanding my business by changing my location, because where I am is small and I plan on getting other baking equipment which I haven’t been able to because of inadequate fund.

What’s the biggest piece of advice you can give to other startups?

Well, my piece of advice for them is to actually know what they want to do and go for it. Don’t wait until you have money to buy everything at once. Start small, focus and gradually you’ll get there.

Young entrepreneurs can build more prosperous future for Nigeria—US Embassy ODINAKA ANUDU

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ussell Brooks, public affairs officer, United States Embassy, has said that the US government is interested in supporting Nigerian entrepreneurs because it believes that they can produce a more prosperous future for Nigeria.

Speaking at the Third Conference for Emerging Entrepreneurs organised by the embassy in association with Field of Skills and Dreams, Brooks said the US government believes that Nigeria’s people, especially its young people, are its greatest resource and can produce a Nigeria capable of inventing new products and services that will be attractive to markets around the world.

He said this crop of young people has the capacity to produce the growth, jobs and incomes that will enable Nigeria to take its rightful place among the leading nations of the world.

Quoting Victor Kiam, a famous American entrepreneur, bestknown for his successful turnaround of a razor blade company,

he said, “Entrepreneurs are risk takers, willing to roll the dice with their money or reputation on the line in support of an idea or enterprise.

They willingly assume responsibility for the success or failure of a venture and are answerable for all its facets.”

He said fewer people are aware that Kiam was a life-long entrepreneur, who took his first risks at selling a product at the tender age of eight.

“He used five dollars given to him by his father to buy 100 bottles of cola to sell to his thirsty neighbors.

Incredible but true,” he recounted.

The conference brought together 105 young, talented, ambitious young people looking to make their mark in the world of business. To aid them, Field of Skills and Dreams assembled a group of mentors.

Adeniji Kolawale, Africa’s largest cassava grower, said he started his career 28 years ago, admonishing young people to see opportunities I Nigeria rather than just problems.

He said he took calculated risks, stating that he travelled to see how farming was done in other climes and came back to Nigeria to replicate same.

Nigeria’s entrepreneurs, intrapreneurs need 21st skills to drive growth, experts say Josephine Okojie

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xperts in the educational sector have called on entrepreneurs and intrapreneurs to equip themselves with the 21st century skills to foster economic growth and development in the country.

The Experts who spoke at the Hot Topics Africa Forum 2.0 organised by Access Bank in partnership with Sussex University urged entrepreneurs to create a workplace that embraces learning culture and diversity as technology continues to disrupt business models and future work experiences.

“The world is transforming. Innovation and artificial intelligence (AI) are changing the work place.

How are we going to scale up to meet that change and transfer skills?

Individuals need to gain new skills to be prepared for the changes to drive economic growth,” Richard Follett, deputy pro vice-chancellor, internal, and professor of History, University of Sussex, said.

“Research has shown that the

most successful intrapreneurs and innovation-led organisations have supportive cultures and structures, and are connected with external partners in extensive innovation ecosystems, including universities, research institutions, and other companies.”

Follett urged youths in Nigeria to leverage opportunities that would equip them with the 21st century skills that businesses’ needs.

“It is tough being an average unemployed Nigerian, but you have to understand that taking yourself out of that situation is your own respon-

sibility and not the government’s or society’s,” he advised.

An intrapreneur is a person who takes on the responsibility to create new ideas, products and processes or invention within an organisation.

Also speaking, Deola Adejuyigbe,

Chimdi Aneke; strategic program manager-developers and startups at Facebook and Oo Nwoye, convener, TechCircle during a night out in Lagos sponsored by FBStart, Facebook, Flutterwave and Mainone.

executive director, Serve Consulting said, the population is changing the environment is changing.

“The world is changing the things we appreciate. Things we pay for are also changing. Therefore, it is imperative for businesses and employees to innovate for today’s realities.”

He noted that businesses are becoming increasingly short-lived owing to their inability to innovate, saying that accelerating technological changes for businesses is critical for their survival.

Omobolanle Victor-Laniyan, head of sustainability, Access Bank Plc, called on youths to seek to become entrepreneurs to create jobs and foster economic growth and development.

Victor-Laniyan stated that Access Bank is ready to support youths with excellent business ideas, while urging that to provide solutions to societal challenges.

“Young people must take action, but knowing the right steps to take at every point is key. You must take the first steps in the right direction and ensure that you are consistent with those steps and actions,” she said.

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National Discourse Politics: MAN, other groups should provide a countervailing force DANIEL OBI

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ecause politicians, especially Nigerian politicians, cannot be taken for their word, there is an urgent need for industry groups to transform into countervailing forces to checkmate and hold them accountable for every promise they make.

Many politicians don’t understand the relationship between politics and economics. And for those that do, a kind of wave blights their understanding once they are elected into the exalted position. This is because some Nigerian politicians see politics only as an act of aggrandisement – acquiring power and influence for personal reasons.

There is little wonder then why corruption is high and many of the politicians hardly maintain contacts with the grassroots after elections until the next campaign time when they come in their royalties with plenty of money.

Basically the essence of power is to use it to promote one’s social ideology and introduce policies and programmes to improve people’s lives, create jobs and grow the economy.

Politicians may not necessary be economists but they can employ economists’ viewpoints, backed by research for proper

governance. At present, it is really doubtful whether the tensed quest for power in some climes including Nigeria is really aimed to transform citizens’ lives. It is because of this that there is lack of trust between the people and politicians.

This mistrust is deepened as politicians often mount the rostrum and make promises to the gullible electorate which at the end are not fulfilled. The promises that the PDP and APC - two major political parties in the 2015 elections - used to woo votes are still fresh in Nigerians minds.

PDP promised to build a second Niger Bridge, create jobs, increase access to potable water, deal with insecurity, especially in the North East, and transform Nigeria’s economy.

APC on its part, made a lot of promises to Nigerians which included paying 23 million of unemployed Nigerians N5,000 monthly each; free education; reduction of fuel price from N87 to N45 per litre, and one free meal daily for public primary school pupils. Other promises by the party included to: revive all four refineries and build more to produce more petrol for domestic consumption, crush Boko Haram in three months once in office; provide three million jobs, and stabilise the naira and stop importation of refined products. Their litany of promises included to: ban all government officials from seeking medical care abroad; taming corruption; reviving Ajaokuta Steel Company; generation, transmission and distribution of at least 20,000 MW of electricity within four years and increas-

ing to 50,000 MW with a view to achieving 24/7 uninterrupted power supply within 10 years; recruitment and training of at least 100,000 officers into the Nigerian police force and establish a Federal Anti-terrorism Agency; eradication of requirement of state of origin and replacing that with state of residence to ensure Nigerians are Nigerians first before anything else, and many more promises.

The reader should evaluate the performance of the party with the list of promises.

Why industry groups should be involved The implication of the politicians’ promise and fail is that it makes it difficult for investors to make investment calculations based on the plans and promises of the politicians. And because what they promise may not always happen, a key economic outcome, such as job creation fails to materialise and with that the entire economy suffers.

This explains the fact that in Nigeria, trust in politicians has waned considerably. Now, when they make promises or propose projects, only a few people believe them. Speaking recently at the 2018 Caritas Reputation Leadership Roundtable tagged “Ethics, Reputation and Technology in a Volatile, Uncertain, Complex and Ambiguous (VUCA) economy, Yomi BadejoOkusanya, CEO of CMC Connect, regretted that in Nigeria, there is a trust deficit between the government and the people.

He argued that because of this, it is difficult for people to respond accordingly to government. At this period, people always query government’s intentions.

In this circumstance, the Manufacturers Association of Nigeria, MAN, one of the biggest and crucial bodies in Nigeria, in partnership with other relevant organisations such as labour unions, the Bankers Association can transform themselves into a lobby force to begin to hold politicians accountable on their promises. It is believed that the era of swallowing hook, line and sinker, all politicians’ statements is gone, as they need to be questioned on certain statements they dish out to the populace.

They make these bogus promises on the premise that many of the electorate are uneducated and cannot discern between spurious promises and genuine ones.

Politicians’ statements directly or indirectly affect the economy where various sectors including the financial, service and the industrial sectors are the major players. If operators in these sectors cannot take politicians’ statements and promises in good faith, then the ability of the economy to function well becomes doubtful. Even investors in such an economy can only take unsure steps.

The function of such pressure group is to begin to task politicians to prove and justify their statements and show concrete steps how they plan to achieve certain promises they make to the people. For instance, such pressure group could have challenged candidate Muhammadu Buhari in pre-2015 elections campaigns, when his party promised to pay 23 million of unemployed N5,000 monthly; free education; reduction of fuel price from N87 to N45 per litre and generation, transmis-

sion and distribution of at least 20,000 MW of electricity within four years, on how he wanted to achieve the promises. Such explanation will assure investors and other operators in the economy that the incoming politicians have concrete plans and perhaps that they are not just bamboozling the people.

Today, in 2018, the politicians have come again with promises.

Those interrogating the implementation methodology of the promises need a bigger force to make impact. This will assist investors and Nigerians in general, to know whether Nigeria will make a headway or not.

But the challenge with industry groups playing this important role is that some of the members blindly support politicians and clap for them even when they know that the politicians’ promises are not realisable. Such members are simply seeking contracts. For the media, some of them have allegiance and at the end, the politicians run away with the empty promises, only to come back after four years with refreshed and rehearsed slogans.

It is really high time a pressure group rose to seek explanations or steps on how a politician wants to achieve the promises he or she makes. If not satisfied with such explanations, the group should tag such promises as empty, just aimed at deceiving the people. Nigerians are really tired of empty promises. MAN and other groups can team up to checkmate this trend. This will save their organisations, employees and the public from the consequences of empty promises.

NEWS

Forward Africa empowers shoemakers, others in Aba … with support from Ford Foundation GODFREY OFURUM, Aba

F

orward Africa, a capacity building and development organisation, says it has completed the training of zonal leaders and 264 line chairmen of the Leather Products Manufacturers Association of Abia State (LEPMAAS) aimed at improving quality of finished leather products and promoting job creation within the cluster.

The programme sponsored by the Ford Foundation, is in line with the capacity building programme of LEPMAAS, geared towards improving the capacity of the Aba finished leather cluster, comprising shoes, belt, bag and trunk box makers, to produce seamlessly and compete fa-

vourably in the international market.

Okechukwu Williams, president, LEPMAAS, who was excited with the programme, thanked Ford Foundation for its support to the finished leather cluster, aimed at empowering operators to acquire modern skills that would enable them perform better and increase their contribution to the nation’s gross domestic product (GDP).

He also appreciated the efforts of the training team from Forward Africa and their partners to ensuring that members of LEPMAAS improved quality of their products.

Kenneth Amogu, programme coordinator, Forward Africa, observed that the training equipped LEPMAAS zonal leaders and line chairmen with relevant information, required by

them and their cluster members to improve on their micro businesses and become advocates for support to small businesses.

He explained that the training content included modules on effective communication, group, products standards, marketing and e-commerce, entrepreneur’s finance and business record keeping and partnership.

In his words, “This training is also positioning the over 16,000 LEPMAAS leadership and members to engage with policy makers, investors and other stakeholders, for enabling business environment, improved infrastructure, access to more funds to expand their businesses, open new markets within the sub-region and create more employment for

young people.”

Participants also received a micro business loan manual, a step-by-step guide for micro business enterprise loan applications.

The training curriculum was drawn from courses in the Executive Enterprise Education for Entrepreneurs and was conducted, by Forward Africa in partnership with Oluaka Training Institute; a Central Bank of Nigeria (CBN) approved Entrepreneurship Development Institute (EDI). The training team was led by Kenneth Amogu of Forward Africa and Sam Ekweribe of Oluaka Institute.

Ford Foundation West Africa, one of the largest and most influential private foundations in the world, intends to improve capacity of artisans in the Aba finished leather cluster.

This is to enable majority of the artisans to qualify for the N500 mil-

lion Bank of Industry (BoI) loan, to support the sector to produce seamlessly and improve quality.

As a strategic partner on the programme, Ford Foundation would ensure the provision of capacity development activities to the artisans to align with the organisation’s focus, to promote equality, ensure inclusive economic and free expression for citizens.

The Bank of Industry (BoI), in August 2018, officially launched the N500m Aba finished leather goods (FLG) cluster-financing programme.

The Aba FLG Cluster Financing programme provides affordable working capital credit to qualified members of the LEPMAAS with the aim of affording the artisans the opportunity to reduce the level of manually completed tasks, by purchasing small-scale production tools.

Monday 24 December 2018

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BUSINESS DAY Harvard Business Review

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Monday 24 December 2018

In association with

Digital growth depends more on business models than technology Mark W. Johnson

E

very successful company, whether it knows it or not, owes its success to its business model. I explained this in an article that was published in Harvard Business Review in 2008 and, now, 10 years later, that still holds true, as more and more of the business discourse is focused on digital transformation.

A digital platform, or a digital solution, may enablea new epoch of transformative growth, but when you get under a company’s hood, the engine of transformation turns out to be its business model.

In my article, I identified the four interlocking elements that, taken together, create and deliver value to both companies and its

customers: — Customer Value Proposition (CVP), which is a way to help customers get a job done.

— Profit Formula, or how you create value for yourself while providing value to a customer.

— Key Resources, which are the assets that are required to deliver the CVP to the customer at a profit, meaning the people, technology, products, facilities, equipment, channels and brand.

— Key Processes, the operational and manage-

rial capabilities that allow a company to deliver value in a way that can be repeated and scaled. These include manufacturing, budgeting, planning, sales and marketing, and customer service.

Successful business models have an exceptionally

strong CVP and a stable, scalable system in which all the elements mesh together seamlessly while complementing each other.

As simple as this framework may seem, its power lies in the complex interdependencies of its parts. Major changes to any one of these elements affect the others and the whole.

For an example of digitally enabled business model transformation, consider Domino’s Pizza, which has experienced a massive turnaround since 2010. As it improved its online and mobile platforms, it introduced heavily advertised features such as pizza profiles, which allowed users to order more easily, and loyalty programs, which boosted frequency of use.

Domino’s transformation was enabled by its online storefront, but it worked because it successfully at-

tracted and retained new customers while turning occasional customers into dedicated fans, at the same time that it extracted more value from each transaction.

Building its own digital platform was a game-changer for Dominos, but it’s not what changed its game. It did that by strengthening its CVP (adding more in the way of both convenience and fun) and its Profit Formula (by increasing its volume and its resource velocity), and by upgrading the resources and processes that it needed to support them. The key to transformational growth is still a powerful and coherent business model.

(Mark W. Johnson is a cofounder and senior partner of the strategy consulting firm Innosight.)

What businesses should know about Brazil’s new president Alec Lee

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n October 28, Jair Bolsonaro of Brazil’s Social Liberal Party defeated Fernando Haddad of the Worker’s Party in the country’s presidential election. Bolsonaro, a far-right candidate, picked up 55% of the vote.

Three factors led to this outcome. The most important was the lack of a strong economic recovery following the end of Brazil’s recession in 2017, the deepest in its history. These economic trends were exacerbated by both a deteriorating security situation across Brazil’s major cities, driven by rising un-

employment and cuts to public-security funding, and a strong anticorruption wave. These forces clearly favored Bolsonaro, an ex-army captain perceived to be the “cleanest” of the

candidates.

To understand where Brazil’s economy will go following Bolsonaro’s election, it’s necessary to first understand why the economic recovery has been so lethar-

The World Bank estimates that Brazil’s debtto-GDP ratio, which currently stands at approximately 75%, would rise to 150% by 2030 without a significant fiscal adjustment led by reform to the country’s existing pension benefits. This bleak outlook, and the continued lack of clarity around a potential fix, is the major reason why financial institutions have yet to aggressively increase gic. This can largely be lending and why busilaid at the feet of one nesses’ appetite for monumental failure of new investment has rethe current government mained muted. under President Michel Bolsonaro was the only Temer: the lack of a candidate in the runoff comprehensive pension election who supported a reform of the pension reform.

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

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system. Our forecasts suggest that while he is likely to pass pension reform in 2019 (both raising the retirement age and also reducing benefits), Bolsonaro is unlikely to make dramatic inroads into addressing other ills of the market, such as its burdensome tax system, its challenging labor code or its underfunded infrastructure. For all the differences between Bolsonaro and his predecessors, he will face many of the same governing challenges that they did.

(Alec Lee is a research analyst at Frontier Strategy Group.)

Monday 24 December 2018

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In association with

Stopping data breaches will require help from governments Samir C. Jain and Lisa M. Ropple

A

s the risk of cyberattacks has become better appreciated, we see an increasingly punitive focus in holding corporate America solely responsible.

Multiple, overlapping laws at the national and state level require companies to have “reasonable” security, a concept that is largely undefined and elusive. And regulatory enforcement actions and lawsuits in the wake of cyberattacks declare any exploited security vulnerability “unreasonable,” without a meaningful assessment of the company’s overall security program or acknowledgment that the company has been the victim of a crime.

It is simply not possible, at present, for every company in America to have sufficient internal cyber-expertise to manage the risk. The challenge is compounded by the resources and sophistication that state and criminal cyber attackers

can bring to bear.

Companies that suffer cyberattacks are, and should be treated primarily as, victims. Yet a company that suffers a breach faces a substantial risk of multiple regulatory investigations and class action lawsuits, all focused on assigning blame

to the organization for having inadequate security measures, no matter the strength of the company’s overall security program or the investment made.

That perspective is not only unfair, but counterproductive.

Instead of focusing on reme-

diating the incident, restoring operations, improving security and mitigating potential harms, a company in the midst of a cyber breach also needs to worry about the record that is being created, what is being written down, whether lawyers are sufficiently involved in the

forensic investigation and other considerations bearing only on protecting against liability.

Government has a number of comparative advantages over the private sector, such as the ability to collect and exploit intelligence and to coordinate internationally with other governments and law enforcement agencies. It should do more to give the private sector the benefit of these advantages.

Companies that meet a defined set of risk-based requirements, which could be developed through a collaborative, multi-stakeholder process, should have a safe harbor from liability, recognizing that they are victims, not perpetrators, of malicious cyberactivity.

(Samir C. Jain and Lisa M. Ropple are partners at Jones Day. This article represents the personal views and opinions of the authors.)

Impact investing could accelerate the fight against cancer Richard G. Hamermesh and Kathy Giusti

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generation of philanthropists whose wealth was created via entrepreneurship in technology-driven fields has the chance to make a real difference in accelerating the fight against cancer.

Our research has revealed a variety of investment approaches that can help speed up the development, approval and commercialization of new cancer therapies.

Rapid advances in precision medicine and immunotherapy are ushering in a new era in the treatment and cure of many cancers.

And impact investing has emerged as a path to meet their goals. Three big ideas underlie these approaches: precision medicine, disease-focused investing and investing at scale.

The improved odds of success in drug discovery are providing donors oppor-

tunities to back what has become known as venture philanthropy. In this system, drug discovery is developed around a specific disease and financed by the efforts of a disease-focused foundation. What is needed are many investments aimed at the underlying causes of each specific cancer type. While this creates concentration risks, which

are typically avoided by venture funds, they are precisely what disease foundations should be doing and where generation of philanthropists can make an enormous difference by taking on one particular type of cancer.

While venture-philanthropy funds represent a way to invest at scale in research related to a particular can-

cer, larger funds are beginning to emerge that invest at much greater scale in a broader range of cancers.

Andrew Lo, a finance professor at MIT, has been a trailblazer in this area.

Armed with numerous simulations, Lo has argued that a megafund of investments in cancer companies could not only help find cures but also produce more predict-

Brought to you courtesy of First Bank Nigeria

able returns for investors.

(Richard G. Hamermesh is a senior fellow at Harvard Business School. Kathy Giusti, founder of the Multiple Myeloma Research Foundation and the Multiple Myeloma Research Consortium, is also a senior fellow at Harvard Business School.)

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Monday 24 December 2018

BUSINESS DAY

CITYFile Relief as Abia opens Brass-Faulks Road to traffic GODFREY OFURUM, Aba

A Consumers and vehicles struggle for space at Christmas rushhour, at Ileepo-Oja, Agbado, Oke-Odo, Lagos, at the weekend. Pic by Olawale Amoo

Meet the hero saving Lagos from plastic wastes SEGUN ADAMS

A

t Oshodi, the restless rail and bus terminus in Lagos State, about ten minutes’ walk from the epicentre of the market, an enterprising man works tirelessly to remove plastic wastes from the roadsides and streets around the market. Over the years, the area has notoriously become a plastic wasteland.

Ernest Chukwuatu wakes up very early in the day to resume his plastic retrieval and handpicks as many as four hundred bottles before the first half of the morning. He ties the bottles in bales, ready to transport them to plastic processing plants in Ikeja and Ijesha.

There, he gets paid N50 for 1kg of plastic waste.

The plants are owned by foreigners.

Chukwuatu has taken it upon himself to rid the streets of Lagos of plastic wastes, the number one public enemy not many Lagosians consider to be an immediate threat to their lives and properties.

Explaining in Nigerian pidgin, the seemingly uneducated but diligent man explained that he could not remember the name of the companies as his concern is making sure he stays profitable.

“Many people are using it, they process it.

So the thing there is if government know (sic), they could have know (sic) we are helping them because this thing block the gutter and every premises and as you see motor climb it but we pack those one motor climb too, we pack all of them. It is just as if we are helping to clear the road.”

Ernest however bemoans lack of storage facilities and high cost of transportation. He hires pick-trucks to transport the wastes to the plants, and according to him, the cost could be as high as N10,000 or N20,000 per delivery, depending on the size. He currently operates by the roadside, outside the premises of a plastic company ‘’STARSONIC’’ which unfortunately has asked him to move his plastic wastes away.

Interrupting him to ask why STARSONIC does not patronise him, Ernest explained: “They buy when they have turn it to raw material, them no they buy like this. People wey dey buy like this dey go and grind it to use for raw material. According to the white man they use it for many things.”

It is no longer news that plastic wastes now define the topography of Lagos, turning the landscape to a visionless one while globally, cities like Toronto, Windhoek, Dar es Salam, Dubai, Cape Town, Libreville and Tokyo have become cleaner and greener.

Plastic wastes, which are non-biodegradable, are globally considered one of the greatest threats to the environment, human and animal lives. A number of countries, including African nations like Benin, Cameroon, Cote d’Ivoire, Kenya and Uganda, have imposed ban on various forms of plastic.

In Lagos state, Nigeria, where floods usually accompany rain due to drainage systems being blocked by plastics, it is almost impossible to get through the day without using plastic products.

Shopping bags, grocery wraps, sachet water wraps, bottled water container, straws, Styrofoam cups and foam, takeaway containers, are just a few of the plastics we use every day. Yet,

plastic users indiscriminately litter the streets as they go about their daily affairs unmindful of the chain of reactions that inevitably follow.

The Lagos state government, which has struggled with managing the city’s waste since the adoption of the Cleaner Lagos Initiative, now has to look inwards and devise an indigenous means to solve this waste crisis. Perhaps, an efficient way to do this would be to create economic incentives for Lagosians to join in the fight against plastic waste pollution.

With a national unemployment rate of 23.1 percent and the flock of urban immigrants rising, the government can create new employment opportunities by providing assistance to people like Chukwuatu, who can help take the waste off the streets.

All that people like him need, he said, is for the government to “give us space to be gathering this thing, clearing it from road, from blocking the gutters and causing dustbin everywhere (which) make the road to be rough.”

Chukwuatu believes that his efforts will complement the work being done by the Lagos Waste Management Authority (LAWMA).

LAWMA workers are doing a great job he says, but they are not able to clear all the plastic wastes from the gutters. “When we help them too the road will be free,” he pointed out.

He also has one more wish: if the government could provide them with a means of transporting the waste and space, as has been done for people who gather iron wastes in the state, that would be quite helpful.

“We cannot go and steal. We make ourselves dirty to be picking this from the road,” Chukwuatu said.

Forward Africa empowers shoemakers, others GODFREY OFURUM, Aba

F

orward Africa, a capacity building and development organisation, says it has completed the training of zonal leaders and 264 line chairmen of the Leather Products Manufacturers Association of Abia State (LEPMAAS), aimed at improving quality of finished leather products and promoting job creation within the cluster.

The programme sponsored by the Ford Foundation, is in line with the capacity building programme of LEPMAAS, geared towards improving the capacity of the Aba finished leather cluster, comprising shoe, belt, bag and trunk box makers, to produce seamlessly and compete favorably in the international market.

Okechukwu Williams, president LEPMAAS, thanked Ford Foundation for its support to the

finished leather cluster, aimed at empowering operators to acquire modern skills that would enable them perform better and increase their contribution to the nation’s gross domestic product (GDP).

He also appreciated the efforts of the training team from Forward Africa and their partners to ensuring that members of LEPMAAS improved quality of their products.

Kenneth Amogu, programme coordinator, Forward Africa, observed that the training equipped LEPMAAS zonal leaders and line chairmen with relevant information, required by them and their cluster members to improve on their micro businesses and become advocates for support to small businesses.

The training content included modules on effective communication, group, products standards, marketing and e-commerce, entrepreneur’s finance and business record keeping

and partnership.

In his words: “This training is also positioning the over 16,000 LEPMAAS leadership and members to engage with policy makers, investors and other stakeholders, for enabling business environment, improved infrastructure, access to more funds to expand their businesses, open new markets within the sub-region and create more employment for young people.

Participants also received a micro business loan manual, a step by step guide for micro business enterprise loan applications.

The training curriculum was drawn from courses in the executive enterprise education for entrepreneurs and was conducted by Forward Africa in partnership with Oluaka Training Institute; a Central Bank of Nigeria (CBN) approved Entrepreneurship Development Institute (EDI).

bia State government has opened BrassFaulks road, Aba, for traffic, following the completion of rehabilitation work on the road, which leads to Ariaria International Market, thereby bringing relief to residents and visitors to the area.

Built in 1976 by the old Imo State government, Ariaria, the pride of Abia State and the entire Southeast region of Nigeria, hosts patrons from West and Central African subregions.

Aba is not complete without Ariaria International Market. Apart from being touted as one of the biggest markets in West Africa, Ariaria also hosts the finished leather cluster, makers of the popular Aba-made shoes, trunk boxes, bags and belts.

Though the market has struggled to survive through thick and thin, it is also evident that it has lost its glamour as a result of lack of maintenance of its facilities.

Consequently, the reconstruction of Faulks Road, would address perennial flooding of the market and its adjoining streets.

According to Governor Okezie Ikpeazu, “We are embarking on holistic water management plan around Ariaria International Market and adjourning roads, and to also recover the natural water basin around Ifeobara, which links roads such as old express, Faulks road, Omuma, Port Harcourt and Uratta roads, which are strategic to Aba”.

The governor, said his decision to focus attention on critical infrastructure in the state, especially Aba, is to provide an enabling environment for entrepreneurs to make the commercial city to reclaim its rightful position as the micro, small and medium (MSMEs) enterprises capital of Nigeria.

Ikpeazu, while addressing the Aba business community last week, at a business luncheon organised by the Aba Chamber of Commerce, Industry, Mines and Agriculture (ACCIMA) explained that the modest achievements by his administration, is an indication of his commitment towards changing the narratives of Aba. Represented at the forum by Obinna Oriaku, his commissioner for finance, Ikpeazu observed that rehabilitating Ariaria International Market is key to the economic development of Aba and Abia and solicited the support of the people towards realising the objective.

Six Benue communities get N26.5m CSDP-AF funds

S

ix communities and groups in Benue have received N26.5 million for the implementation of projects via the intervention of the Community and Social Development Project, Additional Financing (CSDP-AF).

The intervention and disbursement was carried out to enable six “poorest of the poor” communities, which were identified by the World Bank, to execute choice projects in their various communities.

James Aboho, the general manager, Benue State Community and Social Development Agency (BCSDA), disclosed this in Makurdi at a news conference on the feats of the agency as to the CSDP-AF programme.

He said that CSDP was 90-per-cent funded

by International Development Association (IDA), an arm of the World Bank Group, while the money had a 40-year repayment period with 0.05 per cent operational charge only.

He said that 116 communities in the 23 local government areas of the state had benefited from the first phase of the CSDP intervention, which terminated in December 2013.

“It was after the termination that the Federal Ministry of Finance approached the World Bank for an Additional Financing (AF) programme, which the bank approved in 2015 and earmarked 140 million U.S. dollars for the 27 participating states and the FCT, Benue inclusive,’’ he said.

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World Business Newspaper

US faces risk of shutdown running into new year Mulvaney issues warning as Democrats and Republicans dig in over Trump’s border wall Demetri Sevastopulo

M

ick Mulvaney, the incoming White House chief of staff, warned that the US government shutdown could continue into the new year after Donald Trump failed to convince Democrats to fund his US-Mexico border wall.

Mr Mulvaney, who also serves as White House budget director, said it was “very possible” that the shutdown, which started at midnight on Friday, would continue until the new Congress was sworn in on January 3.

The White House and Democrats remain at an impasse over Mr Trump’s demand that Congress fund the wall on the US-Mexico border, which was a central plank of his presidential campaign.

The shutdown, which affects nine government agencies including the state department and justice department, has contributed to a chaotic end to the year in Washington as Mr Trump increasingly takes decisions that are against the advice of his top advisers.

“This is what Washington looks like when you have a president who refuses to sort of go along to get along,” Mr Mulvaney told Fox News on Sunday.

Before the weekend, Mr Trump had demanded that lawmakers include $5bn for the border wall in the spending bills that Congress must pass to fund the government. Democrats balked at the request, partly because they do not want to give him a victory for his 2020 re-election campaign, but also because he gave them a political gift two weeks ago when he said in an extraordinary Oval Office meeting that he would be “proud” to shut the government.

“If you want to open the government, you must abandon the wall, plain and simple,” Chuck Schumer, the top Senate Democrat said on Saturday.

Mr Mulvaney said the White House on Saturday made an offer to the Democrats — a request for border wall funding that was less than $5bn — but that they had not yet received a response.

Mr Trump on Sunday repeated calls for wall funding. “The only way to stop drugs, gangs, human trafficking, criminal elements and much else from coming into our Country is with a Wall or Barrier,” the president tweeted. “Drones and all of the rest are wonderful and lots of fun, but it is only a good old fashioned Wall that works!”

Democrats, and some Republicans, are furious at the way Mr Trump has handled the

African uproar at Disney’s ‘hakuna matata’ trademark US company has intellectual property right on Swahili phrase used in ‘Lion King’ film

David Pilling

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Walt Disney trademark on “hakuna matata”, a Swahili phrase meaning “no worries”, is stirring up controversy in Africa where a petition demanding the US entertainment company rescind its intellectual property is rapidly gaining signatures.

The petition on the change.org website likens the trademark on hakuna matata, the title of a song in the 1994 Disney animation The Lion King, “to colonialism and robbery”.

Westerners have for centuries exploited people and raw materials from Africa, say supporters of the petition, which has gathered more than 100,000 signatures. Africans, they say, are drawing the line at language. Shelton Mpala, an activist who started the campaign, said Swahili speakers were “shocked” at Disney’s actions.

Swahili, a Bantu language infused with words from Arabic and more properly known as Kiswahili, is a lingua franca for up to 150m people in Africa’s Great

Lakes region. It is spoken in Kenya, Tanzania, Uganda, the Democratic Republic of Congo and pockets of Mozambique and South Africa.

Although the Disney trademark was granted in 2003, the controversy has gained force recently because of next year’s planned Disney release of a computer-animated remake of The Lion King, starring Beyoncé, Seth Rogan and Chiwetel Ejiofor.

Several newspaper op-eds and blog posts have been written in east Africa in recent weeks, with some Kenyans even fretting whether they could say hakuna matata in the street without being tracked down

by Disney’s lawyers, according to Patrick Gathara, a cartoonist and commentator.

Kenya’s most famous novelist, Ngugi wa Thiong’o, has added weight to the controversy, wondering aloud on Facebook what to call Disney’s legal manoeuvre, “Language-Piracy? Kiswapiracy, appropriation or just good oldfashioned exploitation?”

Continues on page 64

Mick Mulvaney, centre right, arrives at the capitol with vice-president Mike Pence to resume talks on funding © AP

situation. Last week, he said he would sign a bipartisan compromise that would have kept the government funded into the new year. But he reversed course after several conservatives who are popular with his base slammed the decision.

“This is swamp behaviour at its best,” Rush Limbaugh, the conservative radio talk show host said in a reference to the “drain the swamp” mantra that Mr Trump repeated during the 2016 race.

Ann Coulter, a provocative

rightwing pundit who is popular with hard-right conservatives who want more border security, said she would not vote for Mr Trump in 2020 if he did not build the wall.

Bob Corker, the Republican senator from Tennessee who has been a critic of Mr Trump, described the situation as the “tyranny of talk-radio show hosts” who have undue influence on the president.

He accused Mr Trump of manufacturing the fight over the border wall to appeal to his

base.

“This is a made-up fight, so the president can look like he’s fighting,” Mr Corker told CNN. Mr Trump cancelled plans to spend Christmas at his Palm Beach resort. The White House said his wife Melania would return to Washington from Florida to spend the holiday with her husband.

“I will not be going to Florida because of the Shutdown — Staying in the White House! #MAGA,” Mr Trump tweeted on Saturday evening.

Congo election suspicions swirl after blaze leads to fresh delay Explanation for poll postponement is accepted by some in Kinshasa, but others are more sceptical Tom Wilson

T

he scene of the crime is a heavily guarded military depot in the centre of the Democratic Republic of Congo’s heaving capital, Kinshasa. “It is still smouldering,” said a soldier of the warehouse holding vital election materials that went up in smoke 10 days ago, ultimately dashing Congo’s last hope of holding its long-delayed presidential elections this weekend.

The fire destroyed voting materials for 19 of Kinshasa’s 24 constituencies, including 8,000 electronic voting machines, according to the election commission responsible for organising the historic vote. Late last week, the commission said it needed more time to replace the machines and delayed the vote — anticipated to be the country’s first democratic transition of power — for seven days.

While some in Kinshasa have accepted the technical delay as simple misfortune, many have not. Some opposition leaders say the fire may have been started by the state to delay the poll — a charge that the government denies. Others argue that the fire was an accident but that there were never any voting machines in the warehouse.

“Relying on the famous fire at its depot where it had supposedly stocked voting machines and election materials for the vote in Kinshasa sounds like pure manipulation,” said a statement from presidential candidate Martin Fayulu’s campaign in response to the delay.

The election commission, also known as CENI, refused a request for access to the site on safety grounds and said that an investigation into the cause of the fire was still on going.

Images and footage provided by CENI appeared to show half a dozen vehicles, racks of voting-machine batteries and some printers burnt to a crisp. The three guards guarding entry to the site on Saturday said the fire may have been started by Molotov cocktails thrown from an adjacent plot of land.

While little is known for sure about the blaze, the suspicion and mistrust is symptomatic of a contested election saga that has fostered unrest and stymied investment in Congo for more than three years.

President Joseph Kabila, in power for almost 18 years, was first due to leave office in December 2016.

When the planned vote was finally postponed in September that year — technical constraints were cited

— thousands of people took to the streets in protest. More than 50 people died, some gunned down by security forces.

The vote was delayed for a year, then another year, and now another week. Mr Kabila’s chosen successor is Emmanuel Shadary, whose main opponents are Mr Fayulu and Felix Tshisekedi. Mr Kabila insists he wants to hold the poll but, with each delay, his words carry less and less weight.

“It is two years that the Congolese population has been waiting for these elections and at a certain moment their stock of patience will run out, ” said Israel Mutala, a political analyst based in Kinshasa. “A fourth delay now will have no legal or political basis and will risk a civil explosion, an insurrection that threatens peace across the whole Congo,” he said.

The vote is seen as vital if Congo is to break from its troubled past. Africa’s biggest country, after Algeria, has held only four elections since independence in 1960 and has never had a transfer of power via the ballot box.

It has a bounty of natural resources, including copper, cobalt, gold, timber and arable land but corruption, conflict and mismanagement continue to hold back development.

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African uproar at Disney’s ‘hakuna matata’...

China’s share of global output ‘to fall’ by 2040

Continued from page 63

Reached by phone in the US, where he is professor of comparative literature at the University of California, Irvine, Mr Ngugi said: “It is appropriating a proverb in common collective use like ‘a bird in the hand is worth two in the bush’.”

Using an everyday expression “was different from developing your own phrase, like ‘Just Do It’,” he said, referring to the Nike slogan.

According to statistics from Box Office Mojo, The Lion King film has made $968m worldwide. Forbes said the franchise, including the successful stage production, had grossed $8.1bn, more than all the Star Wars films combined.

Disney denied its trademark would prevent ordinary use.

“Disney’s registration for Hakuna Matata, which was filed in 1994, has never and will not prevent individuals from using the phrase,” a spokesman said. “For many years, trademarks have been registered for popular words and phrases such as ‘Yahoo!’, ‘Vaya con Dios (Go with God),’ ‘Merry Christmas’ and ‘Seasons Greetings’ without impeding the use of these phrases and words in any cultural way.”

Intellectual property lawyers said Disney’s trademark covered only use of the catchphrase on Tshirts to prevent adulteration of the Lion King brand.

Liz Lenjo, an intellectual property lawyer at Kikao Law in Nairobi, defended Disney’s trademark, saying it protected the company’s creative use of the phrase for the particular purpose of clothing. A Kenyan company, she said, could equally trademark the phrase “Good Afternoon, Sir” if it had established it as a brand, say for a chain of coffee shops.

Christine Mungai, a writer, said she happened to be wearing a non-Disney T-shirt with a hakuna matata logo when the FT called.

“If I get on a flight and travel to the US with the T-shirt I am wearing today, am I walking into a possible trademark violation?” she asked.

“It worries me when corporations have so much power.”

Disney is not the only company to have trademarked hakuna matata. Tim Maggs, a chiropractor in Schenectady County in New York state, has a range of “children’s chewable fruit and veggie multivitamins” called Hakuna Matata. On the company’s website, Mr Maggs says the name came from a Kenyan running team that competed in marathons in his area in the 1990s.

There is also the Hakuna Matata Weddings & Events company based in Delray Beach, Florida — “Our motto: We mean no worries for your wedding/event day!” — and a Hakunamatata Spa and hotel outside Johannesburg in South Africa.

Ms Lenjo said Swahili speakers should be proud its influence had spread so far. It is commonly said of the language’s supposed bastardisation in its march across east Africa, “Swahili was born in Zanzibar, grew up in Tanzania, fell sick in Kenya, died in Uganda and was buried in Congo.” Now, according to some speakers, it has been stolen in California.

Monday 24 December 2018

The movement is bringing together performers with disparate styles but a common desire to escape the system Precious Adesina

I

Sudan’s president, Omar al-Bashir, is under growing pressure as anti-government rallies spread © AFP

Sudan hit by deadly clashes as food price protests intensify Anti-government rallies present significant challenge to President Omar al-Bashir

Tom Wilson

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nti-government demonstrations in Sudan over rising food prices have led to deadly clashes between state security forces and protesters in what may be the biggest popular challenge yet to the 29-year rule of Sudanese president Omar alBashir.

The protests, which started in the eastern city of Atbara on Wednesday over a government decision to raise the price of bread, have spread to at least three other cities, including the capital Khartoum. Amnesty International said on Friday that at least nine people had been shot by security forces, while local journalists reported on Saturday that as many as 28 may have been killed. The authorities also arrested 14 leaders of an opposition coalition, Reuters reported.

The violence follows similar protests in Khartoum in 2013 and in January this year over deteriorating economic conditions but the latest demonstrations are the most significant to date, analysts said.

“This is the biggest urban challenge to face Bashir’s government since it came to power, the scale

of the protests is unprecedented,” said Mohammed Osman, an independent analyst, by phone from the capital Khartoum. “It is very hard to see how the regime can survive this wave unscathed.”

Mr Bashir took office in a military coup in 1989 and has used his control of the army to closely rule the country ever since.

Accused by the US of sponsoring terrorism in the 1990s, Mr Bashir has survived a 20-year US trade embargo, an international arrest warrant for war crimes committed in Darfur and the secession of half of the country in 2011 but the country’s economic decline appears to be undermining his control.

The economy has been starved of foreign currency since South Sudan gained independence, taking with it three-quarters of the country’s oil production. US sanctions were lifted in 2017 but have done little to affect the trade deficit. The value of the Sudanese pound has plummeted by 85 per cent against the dollar this year and inflation is running at almost 70 per cent, rendering normal life virtually impossible for many of Sudan’s 40m people.

In October, the government, which is trying to rebuild trad-

ing relationships with the west, introduced a swath of economic reforms but each will take time to have effect and the population’s patience with Mr Bashir’s administration is wearing thin.

While the trigger for the unrest was economic, much of the anger on display on the streets of the capital is political, with many protesters chanting antigovernment slogans, Mr Osman said.

Amnesty International condemned the use of deadly force against protesters. “Opening fire on unarmed protesters cannot be justified,” Seif Magango, deputy director for east Africa, said in a statement.

“The government must address the root cause of the rapidly deteriorating economic conditions in the country instead of trying to prevent people from fully exercising their right to protest against the growing hardships they are facing,” he said.

The government did not respond to a request for comment.

On Friday, a government spokesperson defended the state’s response and said peaceful demonstrations had been derailed by “infiltrators”, according to local press reports.

Policymakers urge action on EU sovereign debt ‘doom loop’ Banks have accrued large stockpiles of their home nation’s debt for political reasons Stephen Morris and Patrick Jenkins

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wo of Europe’s most influential policymakers have spoken out in favour of ending the pretence that all sovereign government bonds are risk-free.

After the election of a Eurosceptic populist government precipitated a sharp sell-off of Italian debt over the summer, concern once again rose about the “doom loop” between under-pressure eurozone economies and their closely linked banking systems.

Danièle Nouy, the eurozone’s chief banking regulator, and Olivier Guersent, the European Commission official responsible for financial services, are calling for this to be addressed urgently.

Banks may hold a limitless amount of EU government bonds on their balance sheet with no capital requirements because the assets are assumed to be so safe they carry a “zero” risk weight. As a result, banks have accrued large stockpiles of the debt, particularly of their home nation for political

reasons.

However, the bonds have repeatedly proved risky and in times of crisis can be volatile, for example in Greece in 2015 and Italy this summer. When debt prices fall and yields rise, banks are forced to reprice their holdings and may have to reduce lending and raise capital to survive, further undermining the health and stability of their home country.

Ms Nouy, the departing head of the European Central Bank’s Single Supervisory Mechanism, said it was vital that banks’ capital regimes should reflect the risks they were taking when they held the sovereign bonds of less secure countries and ditch the “zero risk weighting” assumption that applied across the board.

“Legislators have to take responsibility” and must act urgently, she told the Financial Times. “Riskweighted assets [should be] based on the quality of the sovereign [and] on the concentration. [On] the two elements . . . there are things that can be done and it should be

done smoothly.”

Italian banks are the most exposed in Europe, holding €387bn of domestic sovereign debt — equivalent to about 10 per cent of their total assets, according to data from the ECB. The country’s two largest lenders, Intesa Sanpaolo and UniCredit, have exposures larger than the amount of capital on their balance sheet designed to absorb losses.

Concern about banks’ exposure to Italy’s persistently elevated public debt — more than 130 per cent of gross domestic product — has persisted, although investors have welcomed a deal struck between Rome and Brussels on Wednesday over Italy’s budget plans for 2019.

The commission had previously complained that Italy’s plans were an unprecedented breach of EU spending rules.

It is not just Italian banks at risk.

There are fears of continent-wide contagion as insurance companies and other lenders across the eurozone also own tens of billions of Italian bonds.

n a hotel in Lagos a group of Nigerian millennials in bucket hats, small sunglasses and androgynous clothing are having a party.

Someone is filming the scene and will compile the best clips for a music video for the song “Alté Cruise”.

The single, by musician Odunsi The Engine, featuring Zamir and Santi, is a nod to the alternative scene in Nigeria, a music-centric movement called alté, which cherishes individualism and experimentalism in a culture where fitting in is an unspoken rule.

“It’s not just about the music, it’s about freedom,” says Santi. “People don’t think it’s possible for you to be a Nigerian and have freedom to express yourself.”

Nevertheless, alté musicians are soaring to the top. Odunsi was a supporting act for Afropop producer and recording artist Maleek Berry at the Hard Rock Cafe in Lagos in December last year. Now, just a year later, Odunsi is playing a gig to promote his new album, rare., in the same venue on December 24.

Working on a new song at Warner/Chappell Music’s recording studio in London, Odunsi looks like any fashionable up-and-coming musician. Dressed in black and covered in vintage jewellery, he raises his middle fingers in the air in solidarity during his favourite parts.

“Alté describes someone who is a bit different, a bit edgy,” Odunsi says.

Although he didn’t coin the term — it is believed to have first been used by the Nigerian group DRB LasGidi in around 2010 — his album rare. has given the name prominence.

“The song, being almost like a cult success, kind of made the conversation go further,” he says.

“People were asking what it is, and different people came up with their definitions and how they felt about it.”

Alté was born out of a rebellion against mainstream music.

In 2016, Drake released the song “One Dance” featuring the Afropop musician Wizkid; it is the second most streamed song on Spotify ever. Wizkid’s style has become synonymous with contemporary Nigerian music, with African genres such as “Afrobeat”, “Afropop” and “Afrofusion” currently dominating international charts. But alté artists aren’t catering to a mass audience.

“I think the lifestyle is kids just being able to express themselves without Nigerian entertainment industry restrictions,” says the musician Lady Donli.

Many alté artists began their careers on SoundCloud, which allows performers to have full control of their music and its promotion.

Lady Donli began by writing songs in her bedroom, which she says is a fairly typical start for alté artists. “We just dropped our stuff on SoundCloud and people picked it up and because of that, we started building a small following,” she explains. “People started coming to our concerts based on the music they heard. So there was a serious shift in the industry because there was a way things were done before and the alté generation came and destabilised that.”

Monday 24 December 2018

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FINANCIAL TIMES

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COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Rio Tinto chief keen to ease up on asset sales

Jean-Sébastien Jacques says the bulk of divestments are now complete

Neil Hume

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he chief executive of Rio Tinto expects the pace of asset sales to slow next year and has played down the prospect of a large acquisition as the Anglo Australian miner seeks to build trust with investors.

Jean-Sébastien Jacques said the reshaping of Rio around its core assets in iron ore, copper and aluminium was nearly complete as he flagged the China-US trade war and slowing global growth as the key risks facing the mining sector in 2019.

“The bulk of divestments are behind us,” said Mr Jacques who took the helm of Rio in the summer of 2016. “We still have a few assets in the portfolio, which we regard as non-core.”

Rio has completed $11bn of divestments over the past two years, selling the last of its thermal coal assets, Europe’s biggest aluminium smelter and its interest in the giant Grasberg copper mine in Indonesia.

Mr Jacques said Rio would decide what to do with the $3.5bn of sale proceeds from the Grasberg deal before the company announces annual results in February.

Analysts think it will be returned to shareholders rather than spent on acquisitions.

“Rio has been returning proceeds from non-core asset sales to the market via share repurchases.

We believe at least a portion of the after-tax proceeds from this sale will be returned as well,” said Christopher LaFemina, Jefferies analyst.

On acquisitions, Mr Jacques said Rio had a watching brief but played down the prospects of a deal. “It is difficult to see something that makes sense for us at the moment,” he said.

“Investors are not overly concerned about growth . . . because we are operating in an uncertain and

volatile environment.”

In recent weeks, Rio has been linked with a bid for FreeportMcMoran, a US miner with a market value of $15bn, as a way to boost its copper business. At the moment, Rio makes more than 60 per cent of its earnings from steelmaking ingredient iron ore, tying the company’s fortunes to China’s vast steel industry.

Although miners are churning out cash and cranking up returns over the past 18 months, the sector remains out of favour with mainstream investors. The FTSE All-Share Mining index is down 10 per cent this year, while Rio has fallen 5 per cent.

Part of the reason for the lacklustre performance is a fear that miners will splurge cash on big acquisitions and projects just as they did during the commodities boom of the 2000s. They are also worried about growth in China, the world’s biggest consumer of commodities, and other parts of the world could slow sharply next year.

On China, Mr Jacques said he believed the economy was doing “very well” at the moment but the outlook would depend on whether Beijing and Washington are able to hammer out a trade deal by early March.

“The next couple of months are going to crucial. If there is a real trade war, a significant one, there will be an impact [on global growth],” he said.

Mr Jacques said the mining industry needed to remain patient and keep delivering on its promises.

Only then would it be rewarded with a higher stock market rating.

“It is absolutely clear that for the last 10 years the industry did not perform well from a shareholder standpoint,” said Mr Jacques. “We all know why . . . the capex overruns, the big deals that destroyed value, the write-offs.”

Jean-Sébastien Jacques says the reshaping of Rio is nearly complete © Bloomberg

US shale’s financial blanket at risk of wearing thin in 2019

Model that dominates industry has been underpinned by low rates and quantitative easing Ed Crooks

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ll industrial revolutions need two things: technology and finance. The US shale revolution was made possible by the advances in horizontal drilling and hydraulic fracturing that allowed oil and gas to be released from previously unyielding rocks.

But the industry’s financing was equally important in turning those innovations into a production boom that has shaken the world.

The financial model that has dominated the industry has been a highly competitive group of exploration and production companies using debt raised from bond markets and bank loans secured on oil and gas reserves. Often they use derivatives to hedge some or all of their revenues, giving lenders confidence in their ability to make interest payments if oil and gas prices fall.

For most of the shale boom, that financial infrastructure has been underpinned by the low interest rates and quantitative

easing that followed the financial crisis. The surge in US oil production has been a result of monetary stimulus, just as much as the tech start-up boom and the rise in the S&P 500 have been.

As its output has grown, the US E&P industry has been unable to finance its drilling programmes from its operating cash flows, and a constant inflow of capital has been essential for keeping it afloat.

With stock markets and oil prices falling, and while the Federal Reserve is still signalling its intention to keep raising interest rates, the financial conditions that have protected the shale industry like a warm blanket may next year start to wear thin.

One issue that has been highlighted by Philip Verleger, an energy economist, is the outlook for the hedging used by E&P companies to protect their revenues and reassure their lenders. Strategies vary, but the standard practice is for companies to put a floor under the effective price of some or all of their production by buying put

options.

Mr Verleger argues that those options have been an important factor in the collapse of oil prices to a 15-month low since October.

The investment banks and others that sold those put options have to hedge their own positions, typically by selling oil in the futures market. The more likely it is that the options will be exercised, the more oil the finance companies have to sell, in a practice known as “delta hedging”. That creates a positive feedback loop: as prices fall, financial companies that have sold puts need to sell more oil, which drives the price down further.

The scale of US E&P hedging programmes is large enough, Mr Verleger has calculated, to explain much of the fall in crude since October. Once oil started to fall, tipped lower by the Trump administration’s decision to ease off on blocking exports of Iranian oil, and concerns about global growth, the delta hedging effect kicked in, turning the retreat into a rout.

Gatwick airport restarts flights after drone disruptions

Nestlé revives talks for Canadian pet food group Champion London hub seeks to clear backlog after at least 125,000 passengers affected Ralph Atkins, Leila Abboud and Arash Massoudi

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estlé has rekindled early stage talks to buy a majority stake in Champion Petfoods, the Canadian company it initially looked at buying earlier this year before discussions foundered, people close to the situation said.

The private, Edmonton-based company makes premium dog and cat foods with what it calls “fresh, regional ingredients” like vegetables, meat and poultry. One of its backers is private equity fund Bedford Capital.

The people familiar with the situation cautioned that there was no guarantee a deal could be reached. It is also not clear if Champion’s backers want to pursue a sale of the company, which continues to grow quickly.

Nestlé and Champion declined to comment on the deal talks. The Wall Street Journal first reported on talks about Nestlé acquiring a controlling stake for more than $2bn in July of this year.

If finalised, a Champion acquisition would build on Nestlé’s deal

earlier this year for UK-based tails. com, which makes personalised dog food tailored by breed, age, and activity level. Chief Executive Mark Schneider last year made pet care one of Nestlé’s four priority growth areas, along with coffee, bottled water and baby food, as the group seeks to offset weaker demand for its packaged foods.

Champion does not disclose its revenue or profit. But its products fit squarely into a fast-growing segment of the pet food market, namely responding to consumers’ desire to give their pets healthier and more authentic food and treats.

Champion touts its pet food as “biologically appropriate”, but faces about a dozen lawsuits alleging it contains heavy metals like mercury and lead. A lawyer for Champion said the lawsuits have no factual or legal merit.

“Champion intends to vigorously defend itself in all litigation and judges have already found in our favour regarding a number of our requests during procedural rulings for dismissal,” said Dave Coulson, a lawyer for Champion Petfoods.

Conor Sullivan and Naomi Rovnick

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lights restarted from Gatwick on Friday after drones brought Britain’s second-biggest airport to a standstill, creating chaos for at least 125,000 passengers in the lead-up to Christmas.

A Gatwick spokesman said the majority of the 837 flights scheduled for Friday would fly. A total of 150 flights had been cancelled, most of them before 8am. “Things are improving and the flow rate is increasing as the day goes on,” he said.

All flights in and out of Gatwick were stopped from Wednesday evening until the early hours of Friday morning.

Steve Barry, assistant chief constable at Sussex Police, said authorities had identified “persons of interest” who were potentially connected with the incident but that “it’s an incredibly difficult offence to detect and arrest the suspect for”.

Mr Barry said there was a “whole spectrum of possibilities from highend criminals to individuals trying to be malicious” for flying drones in

close range of the airfield.

He added that there was “no evidence” the drone attacks were state-sponsored.

The airport reopened because no drones had been seen since 10pm on Thursday, said Mr Barry.

Earlier on Friday, Chris Grayling, transport secretary, told the BBC that the attack was thought to have been carried out by “a small number of drones” that could have been operated by one person or a small number of people.

There had been “more than 40 sightings” between Wednesday night, when Gatwick was first forced to close, and Thursday night. But this was “the same small number of drones seen many times”, he said.

Mr Grayling said the government had “put in place every measure we possibly can to ensure this can’t happen again. What’s happening on the ground is a mix of measures taken to give confidence that aircraft can be safe . . . some of those are military capabilities.”

He added: “The reality is that this technology, the ability to stop drones, is really only just emerging.

We are going to have to learn from this what the existing technology can do, what else needs to be done.”

Mr Barry said there had been “no opportunity” to shoot down the drones. “Had that opportunity presented itself and the threat assessment was appropriate, I’m confident the offices would have gotten the authorisation to do that,” he said.

But he added that tests had shown this would have been a “relatively inefficient” way to address the drone problem.

Mr Grayling said it was “clearly a kind of disruptive activity that we’ve not seen before” and that he planned to “con Drones can pose a severe threat to aircraft. Government tests found that a 400g device could smash a helicopter’s windscreen while a 2kg drone could inflict “critical” damage to the windscreen of a passenger jet.

A popular hobby drone weighs 1.2kg; Sussex Police said the drones involved in the Gatwick disruption were believed to be of “industrial specification”.

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Monday 24 December 2018

ANALYSIS Tim Leissner: Goldman Sachs banker at the heart of 1MDB scandal The once rising star now poses one of the greatest threats to the bank in its history after pleading guilty to fraud

David Crow and Laura Noonan

W How to avoid burnout this Christmas Psychoanalyst Josh Cohen on why we all need a break over the festive season Josh Cohen

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any of you reading this will be anticipating your Christmas holiday. Perhaps you’re reminding yourself how much you deserve it, after all the expense and unpaid labour you’ve invested in preparing over the past few weeks: all that gift buying, wrapping, tree-trimming, food shopping, cooking, cleaning.

Those demands will likely have been piled on top of others. Perhaps your job required you to put in the odd extra shift, tie up loose ends before you could leave the office for a few days, especially if you’re covering for the colleague in Mauritius who booked her annual leave 11 months ago.

Perhaps you’ve just spent the first week of school holidays trying to stave off the deadly virus of child boredom; you probably needed a haircut or a root canal and, presumably, you remembered to drop the car in for servicing before that Boxing Day trek to the in-laws in North Wales? It’s not the ideal day to break down on the A5, mechanically or emotionally.

Hopefully, the demands will abate when you sit down to lunch on Tuesday. Unless you’re hosting, in which case you may spend much of the day in enervated transit between kitchen and dining table, fetching dishes, pouring drinks, remembering as your buttocks are hitting the chair to switch the stove off, get the bird out and the pudding in, all the while ensuring your gracious smile betrays none of your coiled resentment.

And so the break away from work ends up feeling dismayingly like work, only that bit more thankless and exhausting. Still, perhaps eventually you find a way to sit at the table without getting up every few minutes. That’s when we tend to succumb to blowout levels of food and drink that leave us less pleasurably satiated than catatonically sluggish.

The more stress and tension that we have accumulated over weeks and months, the more prone we are to extreme ways of discharging it, overloading our digestive and central nervous systems to the point that they (and we) crash. We act as though we don’t know the difference between relaxation and insensibility.

But then, relaxation is difficult when there’s so much on our minds. Insensibility, on the other hand, is sure to help us forget, at

least for a while, all those anxieties hovering at the edge of our consciousness — the report that hasn’t been written, the unanswered emails or the profit squeeze that’s menacing our job security. Then there are the nagging family tensions, stoked by their complaints that even when we’re at home, we’re at work.

When it’s all over and done with, we might railroad ourselves into the usual resolutions to improve our physical and mental fitness next year, to be more organised and efficient and punctual. But too often we take these up not in a spirit of genuine self-care, but in shamed and resentful obligation.

It is difficult to feel renewed for action when our few days off have only left us feeling more depleted than before.

If this generalised sketch of the coming holiday season seems to you gratuitously miserable, my apologies. Of course, not everyone will feel like this — and some may feel it only fleetingly. It nonetheless chimes with a sense from the patients in my psychoanalytic consulting room of a double predicament: the yearning for — and incapacity to find — respite from work.

We often see the impulse not to work, to stop, as an embarrassing accident of our make-up. I am a substantial being in so far as I achieve some definite, objectively useful end, not in how I doodle or invent a private scheme of rhyming slang. But what if we have this wrong? What if not working is at least as fundamental as working to who and what we are?

We are physical entities like any other, subject to the burden of our own weight. We can only move so far and do so much before we are forced to stop. Trying to override the law of inertia guarantees only that it asserts itself more implacably.

We are nervous of pressing the off switch on our machines and minds, as though fearing the void that might be made visible. Yet this wariness coexists with a hunger for silence and reclusion, a break in the unremitting flow of noise.

Andy Warhol, slave to an intensely punitive work ethic despite the cultivated languor of his public persona, described this feeling acutely in his Philosophy of Andy Warhol (1975): “People are working every minute. The machinery is always going. Even when they sleep.”

Warhol’s words evoke a patient of mine, a compulsively conscien-

tious civil servant, who spoke of waking in the middle of the night to find her fingers hovering over her bedspread, typing on an imaginary keyboard. Today, our inability to switch work off has found physical embodiment in the form of smartphones, external devices that have become a prosthetic extension of our hands.

Work colonises our inner space when we have it and when we seek it, whether we perform it with passionate dedication or resentful disdain. This troubled relationship is anything but new but, as a host of recent books and articles attest, our age is witnessing a fresh crisis of work.

Overwork is one of its most glaring symptoms; the looming threat of job scarcity is another. The robots assembling cars and computers, the retail stores manned by machines and the spread of self-driving cars and trains are all signs of the eventual automation of large sectors of the labour market.

At some point, AI may take over higher-level intellectual work as well. The threat of being replaced by a rival human or machine intensifies pressure on the job while closing all escape routes from it, giving rise to feelings of resignation, despair and entrapment.

The rise of robotics and AI raises the urgent question of how to live without work. What makes this prospect so daunting is that we’ve come to equate our humanity with the capacity for productivit y and purposeful action. The idea that the worth and meaning of our existence is only validated by what we achieve is what makes it so difficult to experience a real sense of peace. We feel embarrassed and self-conscious to be seen doing nothing. And yet, in the words of Oscar Wilde, “To do nothing at all is the most difficult thing in the world.”

The German-American psychologist Herbert J Freudenberger employed the term “burnout” in 1974 to describe the growing phenomenon of “physical or mental collapse caused by overwork or stress”. Freudenberger observed workers drained of positive commitment to their own role and to those around them, running on empty and depleted of all but the most minimal internal resources.

Burnout is the ultimate experience of that impossible bind: a yearning for a state of rest alongside the sense that it cannot be attained, a sense that some demand or anxiety or distraction won’t let us go.

hen Goldman Sachs partners — past and present — met to celebrate its 150th birthday this month, the mood was subdued. The crowd of 370 included famous Goldman alumni such as former US Treasury secretary Hank Paulson, one-time New Jersey governor Jon Corzine and the ex-Trump adviser Gary Cohn, all of whom turned out to mark the end of Lloyd Blankfein’s 12 years as chief executive of the bank.

But there was a notable absentee. Tim Leissner, once a star banker who brought in tens of millions of dollars in revenue at his peak, was not among the guests as they sipped their drinks in the Conrad hotel near Goldman’s Manhattan headquarters. Once praised by executives as an example to emulate, Mr Leissner has become a pariah inside the bank, after pleading guilty to bribery, conspiracy and money laundering charges in connection with a vast fraud at Malaysia’s state development fund.

He now poses one of the biggestever threats to Goldman’s reputation.

Roy Smith, a former partner and now a professor at New York University, says the fraud at 1Malaysia Development Berhad, or 1MDB, ranks among the biggest crises the bank has faced. “It could conceivably have a much larger price tag on it [than other scandals] because these things escalate over time,” he says.

It is not the first time the bank has been embroiled in crisis. In the 1990s, it faced widespread criticism for its role in the collapse of Robert Maxwell’s media empire. And in 2010 it was fined $500m— then a record for Wall Street — for misleading investors over Abacus, a mortgage-backed security that it sold in the run-up to the financial crash.

But as the full scale of the Malaysian scandal has become apparent, Goldman is under increasing scrutiny over its role in underwriting $6.5bn of bond offerings for 1MDB in 2012 and 2013, a service for which it reaped a hefty $600m in fees and trading gains. After the money was raised, $2.7bn was allegedly siphoned off by the Malaysian financier Jho Low, who is accused of masterminding the fraud, to pay for a lavish lifestyle and to bribe Malaysian officials. The cash allegedly ended up in Van Gogh paintings, Beverly Hills mansions and even financed the Wolf of Wall Street movie — itself a tale of financial excess.

Current and former partners express incomprehension that the firm has been plunged into such a huge crisis by three deals in an obscure market. Questions are being asked openly about who knew what about Mr Leissner’s operations and why Goldman’s extensive compliance operation failed to prevent it.

The bank has attempted to distance itself from the alleged fraud,

but those efforts were dealt a severe blow in November when as part of his guilty plea Mr Leissner said that concealing things from compliance staff was “very much in line” with the culture of the bank. Mr Leissner and his lawyers did not respond to a request for comment.

His former deputy, Roger Ng, has also been charged in the US, as has Mr Low. Mr Ng, who is fighting a US extradition request, also faces charges in Malaysia which he has denied. Najib Razak, Malaysia’s former prime minister, is accused of receiving $681m of the funds in his bank account and is facing almost 40 separate charges of fraud, corruption, money laundering and “criminal breach of trust”, which he denies.

As the scandal has gathered pace, investors have dumped shares in Goldman, wiping more than $8.5bn off its market value in the past month.

The bank is now under investigation by the US Department of Justice and faces a messy lawsuit brought by Abu Dhabi, which was a guarantor of two of the bonds . Malaysia’s attorneygeneral hasfiled criminal charges against Goldman, Mr Leissner and Mr Ng seeking fines of more than $3bn. The country’s finance minister

on Friday said that the bill to Goldman should be closer to $7.5bn .

US federal prosecutors investigating the 1MDB case identified the environment at Goldman’s Asian operation as a factor in the fraud. “[The] business culture . . . was highly focused on consummating deals, at times prioritising this goal ahead of the proper operation of its compliance functions,” the DoJ wrote in criminal charges against Mr Low. Chris Kotowski, an analyst at the investment bank Oppenheimer, describes the fraud as “shocking in scale and audacity”. But he also asks how it could have happened “between 2012 and 2014, when banks were paying tens of billions of crisis-related penalties and should have been on high alert. It obviously reflects poorly on Goldman . . . reputationally it is a disaster.”

Goldman has insisted it had no knowledge that Mr Leissner was party to the alleged conspiracy to misappropriate 40 per cent of the proceeds from the bond offerings, or that Mr Low was acting as a middle man to grease the wheels of the deal.

But those claims have been undermined in recent weeks by the revelation that Mr Blankfein met Mr Low on two occasions in 2009 and 2012.

This was despite a decision by Goldman’s private bank in 2010 to reject Mr Low as a client because they could not “validate the source of his wealth”.

Mr Low, whose whereabouts remain unknown, has maintained his innocence. In a statement responding to the US indictment, a spokesperson said the 1MDB bond offerings were “undertaken openly and lawfully between experienced, well-regulated financial institutions and government entities”.

Monday 24 December 2018

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COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

FG invests N2.7trn on provision of critical infrastructure in 2 years OYIN AMINU, Abuja

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ai Mohammed, Minister of Information and Culture, disclosed that the present administration has invested N2.7 trillion in infrastructure over the past two years.

Mohammed stated this during an interactive session with Dato’ Ku Jafafar Ku Shaari, D-8 Secretary-General in Abuja recently.

“Your Excellency, you cannot have tour ism w ithout infrastructure. There must be roads, airports, power.

“Without these things, you can’t even access the tourist attractions and it’s on record that this government has in the last two years – 2016 to 2017 invested massively in infrastructure,” he said.

He also expressed the resolve of President Muhammadu Buhari towards exploring abounding opportunities in the tourism sector through implementation of deliberate policies toward improving security and upgrading infrastructure were aimed at promoting tourism in Nigeria.

The Minister noted that without the provision of security and critical infrastructure, tour ism development w ill remain a mirage.

“Without peace and security, the best tourist attractions will be inaccessible to anybody. As a matter of fact, without peace and security and stability, travel advisories will actually discourage or even prohibit tourists from coming into those areas and the people don’t invest really in the areas where there is instability or insecurity. That is why the government has made it a cardinal principle to address the issue of insecurity in the country,” he said.

Mohammed argued that despite the recent setbacks in the fight against insurgency in the country, the government has succeeded in banishing Boko Haram to the fringes of Lake Chad, from where they carry out cowardly attacks.

He further observed that before the advent of the Buhari’s administration, a large chunk of Nigeria’s territory, including 20 out of the 27 Local Government Areas in Borno State, was under the effective control of Boko Haram.

While noting that before the administration assumed office, B oko Haram could stroll into the Federal Capital Territory to carry out deadly attacks, stressing that “today after three years, we have had no single incident of any insurgency in Abuja or its environs.”

Mohammed maintained that President Buhari has succeeded in mobilizing regional support to ensure the comprehensive defeat of Boko Haram in the Sahel Region.

In his remarks, Dato’ Ku Jafafar Ku Shaari, D-8 Secertary General said the working visit was aimed at obtaining the inputs of the government towards the development of a strategic vision on how member countries can share experiences and knowledge on tourism.

“The purpose of our visit today to the ministry is to learn from the government and the ministry in all the activities in respect of culture and tourism and where we can connect as an organisation,” he said.

He commended the Nigerian government for its efforts towards the development of tourism, especially the provision of security and critical infrastructure as well as the introduction of Visa on Arrival for Tourists.

Roche Diagnostics partners ASLM to strengthen laboratory services in Nigeria CYNTHIA EGBOBOH, Abuja

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oche diagnostics limited has collaborated with Africa Society for Laboratory Medicine (ASLM) to strengthen the laboratory services in Nigeria.

Taofik Oloruko-Oba, Roche country head, Nigeria, speaking to pressmen in Abuja, said that the collaboration is aimed at strengthening the Nigeria health system and create universal health coverage.

He said: “We have been partnering with several health related bodies around the world to strengthen the health services by building the capacity of the laboratories through training and retraining of

manpower as well as provision of laboratory equipment.”

Oloruko-Oba speaking further, said that Roche is currently building the capacity of 27 laboratories around the country, with over 1.5 million Nigerians undergoing treatment for HIV/AIDs. “We call on the government to partner with us, we are ready to part Eric with any state government to tackle health issues prevalence in such state as we have done in Taraba state,” he urged.

In his remarks, Duncan Mackay, Roche’s General Manager, explained that the agency’s commitment towards educating and training of doctors, as well as create public awareness and promote control of epidemic in Nigeria.

Kogi Assembly commends Speaker Dogara over resuscitation of moribund Ajaokuta Steel KEHINDE AKINTOLA, Abuja

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Recognising a faithful one, attended all Tomaville parties

FCTA saves over N300bn from out of court FCTA begins establishment of 20 settlement, to employ 45 lawyers in 2019 schools, records 229,035 enrolment JAMES KWEN, Abuja

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ederal Capital Territory Administration (FCTA) has saved over N300 billion through out of court settlement of over 200 cases through its Legal Secretariat.

Mohammed Umar, General Counsel of the Federal Capital Territory who made this known while speaking with journalists in Abuja, said this was to boost human resources capacity of the FCTA to save it cost of legal services.

According to him, 50 percent of the FCTA’s cases were handled by in-house Counsels.

In the bid to improve the legal services department, he unveiled the administration’s plans

to employ at least 45 lawyers in 2019 fiscal year.

He disclosed that with institutionalization of an alternative dispute resolution mechanism of the Legal Services Secretariat, the 14 years old protracted case of the 2004 FCDA/FCTA retirees the 7 years case between FCTA and African Reinsurance, a multinational corporation, Japanese embassy land matter among others have been resolved.

Umar disclosed that the Legal Services Secretariat has embarked on the review and digitalization of the laws of the FCT to enhance the operational efficiency of the FCT and promote the delivery of justice within its jurisdictional authority.

“We have equipment for various diseases, the most important thing to note is the need for adequate preparation to tackle and control any identified epidemic in the country.

“The ability to bring affordable equipment to the people depend more on the decision of the government, hence there is need for collaboration with the Nigeria government so as to make this services available to members of the public at affordable prices.”

Also speaking, Nqobile Ndlovu, ASLM Chief Executive Officer, stressed on the need for adequate preparation to prevent outbreak of epidemic by building the capacity of identified laboratories for quick intervention in case of disease outbreak.

JAMES KWEN, Abuja

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ederal Capital Territory Administration (FCTA) is to establish at least 20 new public schools yearly to carter for the enrollment figure of 229,035 in the last two academic sessions.

Bala Liman, Secretary FCTA Education Secretariat who announced this while briefing journalists in Abuja said the establishment of the 20 basic newly public schools comprising Primary, Junior and Secondary was for the foreseeable future.

Liman explained that the enrollment figure for public primary schools for the 2014-2015 session was 214,924 and this rose to 229,035 for the 2017-2018 session.

He said there was an increment of almost 15,000 students within this time period for only primary schools, for the Junior Secondary Schools within the same period, enrollment was 116,585 for the 2014/2015 academic session and 143,115 for the 2017/2018 session with an increment of over 26,000 students.

According to the Secretary, the increase in the number of school enrollment was due to security challenges in some parts of the country, where parents withdraw their children to FCT schools.

He said 140 private schools were given accreditation out of 500 applications in 2018 while 900 learners have completed mass literacy programme in 441 centers across FCT.

embers of the Kogi State House of Assembly have passed a unanimous resolution commending Speaker of the House of Representatives, Yakubu Dogara for his efforts toward reviving and revitalizing the comatose Ajaokuta Steel Company Limited.

In a unanimous resolution, the lawmakers recognised the Speaker’s leadership and advocacy in reviving the steel company which has the potentials of generating over three million jobs when fully functional.

In a letter addressed to Speaker Dogara signed by the Speaker of the State Assembly, Prince Matthew Kolawole, the MPs said they deliberated exhaustively on Speaker Dogara’s “working visit to the state for an on-the-spot assessment, inspite of other engaging national assignments and your personal determination to revitalizing the moribund steel company” “The Assembly resolved that in recognition and appreciation of your determination and bold initiatives in bringing together the Hon. Members of the House in an effort to revitalizing the Ajaokuta Steel Company, do herewith and accordingly forward to your good offices its commendation for your personal and official roles in making Ajaokuta Steel Company work again.”

The Kogi lawmakers further urged Speaker Dogara to continue with the good work of proving better legislation for the Federal Republic of Nigeria.

Recall that the Speaker led scores of lawmakers on a visit to Ajaokuta on February 12 2018.

Thereafter, the House organized a special sectoral debate on reviving the company where experts made presentations to the MPs in plenary.

BUSINESS DAY

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NEWS YOU CAN TRUST I MONDAY 24 DECEMBER 2018

fivethings

Insight 2019: Atiku is right to put marketisation above statism GLOBAL PERSPECTIVES

OLU FASAN Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

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his is the season for manifestos, a period when political parties and their candidates set out their offers to the electorate ahead of a general election. President Buhari, of the All Progressives Congress (APC), who is seeking reelection next year, has already launched his party’s manifesto, tagged “Next Level”, about which I wrote last week. My focus this week is Buhari’s main opponent, former vice president Atiku Abubakar, of the People’s Democratic Party (PDP). He too has published his manifesto, entitled “My plan to get Nigeria working again”.

The 213-page document is very strong on policy diagnosis, analysis and prescription, covering the “many economic and political structural fault lines” affecting Nigeria’s progress.

My focus here is on Atiku’s economic vision.

For me, this is really interesting because the difference between Buhari’s economic agenda and Atiku’s economic plan couldn’t be starker. It is often said that there are no ideological differences between Nigerian political parties and politicians. Well, there will be between Buhari and Atiku in next year’s election. For while Buhari elevates the power of the state, Atiku privileges the role of the market. Buhari’s manifesto is all about how the government would create jobs, fund investment and tackle poverty. By contrast, Atiku’s plan is based on stimulating the private sector to drive jobcreation, infrastructure investment and poverty reduction.As he puts it, “The promotion of private sector-led growth shall be the first basic principle of our economic development strategy”, adding that “We will expect a sizeable proportion, up to 70%, of the spending plans of the Federal Government to come from the private sector”. As a result, he promises to “pursue with vigour the process of de-regulation and liberalisation of the economy”.

Atiku’s marketisation or liberalisation approach extends to virtually every policy area, from measures toincreaseFDI inflows, expand Nigeria export base and increase investments in infrastructure to policies to create jobs andalleviate poverty.

TakeFDI inflows first.To stimulate this, Atiku promised to guarantee “a level-playing field for all investors irrespective of their country of origin”.

This is not something that

many international business people believe currently exists in Nigeria. The treatment of MTN and HSBC by the Buhari administration undermines any pretence to having a levelplaying field in Nigeria. Atiku’s plan also commits to guaranteeing the repatriation of funds “by removing all barriers to the repatriation of capital, profits and dividends out of the economy”. That would be music to the ears of foreign investors who would argue that the Buhari government does not provide such guarantee.

What’s more, Atiku promised to guarantee “freedom of entry and exit of foreign investors’ staff” and “non-expropriation of investment assets”. He also promised to consolidate and simplify investment regulations and laws in Nigeria, and to work towards achieving “the lowest corporate income tax rate in Africa”. Surely, Atiku’s plan would make Nigeria one of the countries with the most liberal investment regimes in Africa with positive spinoffs.

Then, take the plan to expand Nigeria’s export base.

Atiku rightly argues that Nigeria “must diversify the products we export and the markets we export to”. He wants Nigeria to export 10-15% of manufacturing output by 2030 and 25% by 2035. But how? Well, first, Nigeria must increase its market share in the African continent. So, to that end, his government would sign the agreement establishing the African Continental Free Trade Area (AfCFTA), saying:“We are confident of the potential gains of our participation (in AfCFTA) and conscious of the risks of inaction”.That’s a world apartfrom the Buhari government, which has failed to show leadership but has kicked the signing of the AfCFTA agreement into the long grass.

Atiku’s non-oil export drive strategy is, however, not just African-focused. His government would work with the private sector to identify how best Nigeria could harness the benefits of the US Africa Growth Opportunity Act (AGOA) and how to develop strong trade and economic relations with a post-Brexit Britain. Interestingly, he has not avoided the controversial issue of the Economic Partnership Agreement (EPA) with the EU. He promised a strategic response to the EPA, recognising that with 13 ECOWAS member states, bar Nigeria and The Gambia, having signed the agreement, “the EPA would ultimately draw those countries economically closer to the EU” than to the West African region. As someone who has long advocated a holistic, constructive and positive approach to external trade relations for Nigeria and Africa, I believe that Atiku’s plan is good for Nigeria.

Now, the private sectordriven, competitive and open economy that Atiku promises inevitably involves a greater public-private sector partnership.And here his liberalisation ethos plays out strongly with a

commitment to privatisation.

He promised to privatise stateowned enterprises, including all three government-owned refineries and the concession of Nigeria’s sea and air ports.

That’s pretty radical and, if done successfully, Nigeria’s

‘

It is often said that there are no ideological differences between Nigerian political parties and politicians. Well, there will be between Buhari and Atiku in next year’s election. For while Buhari elevates the power of the state, Atiku privileges the role of the market

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economy now “in bad shape”, according to President Buhari, would receive a positive jolt.

Furthermore, Atiku would liberalise the downstream sector of the petroleum industry to “allow market-determined prices for Premium Motor Spirit (PMS) and eliminate subsidies for its consumption”.

In other words, he would abolish the petroleum subsidies. Monies saved from the subsidy removal would be used in buildinginfrastructure in education, health etc.

Unsurprisingly, Atiku extends his market-based and private sector-driven approach to job creation and poverty alleviation. His government’s jobs strategy would not in-

2010 and 2015, the UK Government cut public sector jobs by nearly 25%, reduced budget deficits, cut government debt and promoted apprenticeships, entrepreneurship etc. Interestingly, as public sector jobs were falling, private sector jobs were rising, fuelled by a stable macro-economic climate as well as measures to increase the productive capacities of individuals. Today, the UK has the lowest unemployment rate in the OECD.The truth is, a coherent private sector-based job creation approach, backed with the right incentives, can work!

Which brings me to Atiku’s approach to tackling poverty.

Again, it is not statist or government-driven. As he puts it, “The best form of ‘economic empowerment’ and poverty reduction strategy is one that enhances access of the poor to economic opportunities”.

Thus, he promised to focus on “provision of skill acquisition opportunities and enterprise development for jobs and wealth creation – rather than direct cash distribution”. Of course, direct cash distribution is a plank of the Buhari government’s anti-poverty strategy.

But with youth unemployment rising from 3m in 2015 to 13m in 2018 (a 263% increase over 3½ years), according to the National Bureau of Statistics, it is clear that “pockets approach” is not working.

Now, the foregoing discussion has only focused on Atiku’s economic policy ideas, not on their implementation.

Of course, good ideas are not enough. They need to be deliverable. And here is where I become less enthusiastic about the Atiku economic agenda. For, let’s face it, he will face several

for your new week

Fascinating business facts

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xpectedly, alarm bells are ringing at OPEC capitals around the world as treasury managers of countries making up the cartel watch, almost helplessly, the unstoppable plunge in global oil prices that will have far reaching consequences for social cohesion and peace in especially countries like Nigeria which depend heavily on oil revenues.

The price of the global benchmark grade, Brent has fallen from $86 per barrel which it attained on October 3, to below $55 Friday. Analysts say this could wipe out almost 20% from Nigeria’s expected oil revenues which could fall to a mere $49bn in 2019 when the country holds crucial elections.

0.8% There is more than a week left until the new year, but at this point, it’s almost certain European stocks will post the worst year since 2008. The Stoxx Europe 600 dropped 0.8 percent on Friday in London, taking this year’s loss to 14 percent. Meanwhile, the blue-chip Euro Stoxx 50 is less than 1 percent away from entering a bear market after hitting the threshold earlier.It’s a testimony to how fragile sentiment is that even news of Chinese stimulus couldn’t lift the gloom, with U.S. futures pointing to a third day in the red on Wall Street. Tensions between America and China are simmering again after China demanded that the U.S. withdraw espionage charges against Beijing officials. A government shutdown also looms in the U.S.

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mbattled South African President Cyril Ramaphosa has asked his finance minister to begin the process to set up a council of economic advisers. South Africa which has just emerged from recession is asking itself if it is “not stuck in a thinking mode which is not relevant to the actual conditions in South Africa?” the finance minister said. Government officials are meeting in Pretoria to present policy proposals to raise the level of economic growth in South Africa’s where annual expansion hasn’t exceeded 2 percent since 2013.

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85%

lobal battery prices have fallen 85 percent since 2010, BloombergNEF reports in its annual Lithium-Ion Battery Price Survey, and with storage forecast to grow to 14 times its current level by 2030 as millions of electric vehicles hit the roads.

BNEF predicts demand will total 1,851 gigawatt-hours in 2030, up from the current 132. EV batteries are expected to account for 84 percent of that.

volve creating public sector jobs or “employing”graduates on a monthly stipend as done under the Buhari government’s N-Power programme.

Rather, it is based on creating private sector jobs both through wage-employment or entrepreneurship. His focus is on macro-economic stability, entrepreneurship, micro, small and medium enterprises (MSME) etc as pathways to job creation.This is similar to the approach successfully followed by the UK. Between

challenges, both philosophical and practical, in delivering on his promises.

The first is his commitment to do only one term of office as president. The elaborate agenda that Atiku lays out in his plan are not for a one-term only presidency. It is interesting that, according to the plan, most of theoutcomes would not manifest until 2025, two years after he would have left office, Continue online at www.businessdayonline.ng

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$11.7bn

frica’s troubled aviation sector is on the verge of a massive make over after it was announced that Boeing Co and Nigeria based Green Africa Airways have committed for up to 100 737 MAX 8 aircraft, in a deal that carries a list price of $11.7 billion. The deal is the largest aircraft agreement from Africa the commitment is evenly split into 50 firm aircraft and 50 options, it added. The 737 MAX 8 is the fastest-selling airplane in the Boeing fleet, accumulating more than 4,800 orders from over 100 customers worldwide. It is estimated that airlines in Africa will require 1,190 new airplanes as the continent boosts both intra-continental and intercontinental connectivity over the next couple of decades, Boeing said, citing its 20-year Commercial Market Outlook.

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