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Contrary to Buhari’s directive, Malami proceeds with Trobell contract against IOCs T D
Forex turnover at NAFEX window hits $105.9bn …as FPI inflows turn CBN regular buyer than supplier of FX
HOPE MOSES-ASHIKE
ISAAC ANYAOGU & DIPO OLADEHINDE espite a directive by President Muhammadu Buhari to Abubakar Malami, the attorney general of the federation, to terminate the contract the Ministry of Justice signed with Trobell International Limited to recover $43.747 billion from Interna-
Firm not registered as debt recovery agent
tional Oil Companies (IOCs) after a Supreme Court judgment, BusinessDay gathers that this has not been enforced. Garba Lawal, chairman of Trobell International Limited, in a phone conversation with BusinessDay on Wednesday, said the
company was yet to receive any notice from the attorney general directing it to back down. “As I speak to you, we have not received any instruction to terminate the contract,” Lawal said. Malami had in an 8-page memo dated January 7, 2019
emanating from the minister of justice, drawn the attention of the president to an October 17, 2018 judgment of the Supreme Court in suit number SC.964/2016 brought by the atContinues on page 38
he foreign exchange turnover at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) has totalled $105.9 billion from inception in late April 2017 through March 26, 2019, and $9.7 billion since February 27 alone. The surge over the past month is attributable to foreign portfolio investor (FPI) inflows to the fixed-income market, according to FBNQuest, as investors are comfortable with their ability to exit the market at will. Meanwhile, the outcome of the concluded general elections further gave the foreign investors comfort that the current foreignexchange policies are likely to Continues on page 38
Inside Experts seek to unlock value in Nigeria’s beleaguered healthcare sector P. 2
L-R: Yomi Jemibewon, director; Michael Nzewi, MD/CEO; Fola Adeola, chairman; Femi Ogunjimi, director, and Mohammed Garuba, director, all of CardinalStone Partners Limited, at the company’s annual general meeting cocktail in Lagos. Pic by Olawale Amoo
2 BUSINESS DAY NEWS
Thursday 28 March 2019
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The other side of Chinese investment in Nigeria EMILY FENG in Igbesa & DAVID PILLING, FT
W
ilson Wu has big plans for the free trade zone he manages in Igbesa, a scruffy town in Ogun State, some 60km from the frenzy of Lagos, Nigeria’s huge commercial capital. Casting his gaze over what is today a small cluster of in-
dustrial warehouses surrounded by mud roads and bush, Mr Wu can see an altogether brighter future. “We will have a five-star hotel, a golf club, a Walmart,” he says in a well-rehearsed pitch. “It will be like Dubai.” An electrical engineer by profession, Mr Wu’s journey to west Africa followed an assignment as a young man to Myanmar, where he worked for Power Construction Corporation of China, a state-owned group, upgrading the electricity grid. In 2011, hungry for more adventure, he packed his bags and headed for Nigeria, where, still barely 30 years old, he was tapped up to manage the Ogun State free trade zone, a privatepublic project in which the local government provides the land and Chinese enterprise the capital. Mr Wu is one of hundreds of thousands of Chinese citizens — a common estimate is about 1m — who have ventured to Africa over the past two decades to seek their fortune. Like many who have ended up there, he sees in Africa’s raw energy and ambition an echo of the forces that were unleashed by Deng Xiaoping’s reforms of 1978. “It is like the China of the 1970s and 1980s when you could open
a business and maybe earn a fortune,” he enthuses. “Those kind of fortunes are not possible in China today.” People like Mr Wu have been persuaded to test their ambition in far-flung corners of the world by tougher business conditions in China, where rising labour costs, industrial overcapacity and more stringent environmental standards are taking their toll. While many entrepreneurs have looked closer to home, to countries such as Cambodia, others have struck out to Africa. It is China’s massive infrastructure projects, including dams, railways, ports and telecommunications networks, that capture most attention. Between 2000 and 2014, the stock of Chinese investment in Africa went from 2 per cent of US levels to 55 per cent. McKinsey estimates that, at the current breakneck pace, China will surpass US levels within a decade. Washington has belatedly woken up to China’s growing presence which is transforming both the physical and diplomatic landscape of Africa. In December John Bolton, Donald Trump’s national security adviser, accused China of using “bribes, opaque agreements and the strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands”. Yet large companies such as Huawei, and big state-affiliated companies, such as China Bridge and Road, are not the only Chinese actors reshaping the continent. What officials in Washington may not fully understand is that thousands of hardscrabble entrepreneurs like
ANALYSIS
L-R: Emmanuel Nnorom and Peter Ashade, both directors; Obong Idiong, MD/CEO, and Eniola Fadayomi, chairman, all of Africa Prudential plc, at the 6th Annual General Meeting of the company in Lagos. Pic by Olawale Amoo
Experts seek to unlock value in Nigeria’s beleaguered healthcare sector KEMI AJUMOBI
M
edical experts in Nigeria have expressed dissatisfactionwiththe state of healthcare in the country, listing the challenges to include lack of infrastructure,inadequatemedicalprofessionals, exodus of medical practitioners, lack of enforcement of regulations, medical tourism, among others. Burdened with these countless challenges in the sector, the experts expressed their displeasure and proffered solution at a recently held roundtable organised by Ernst & Young. They also identified business opportunities in the healthcare sector as well as made projections on the future of health care in Nigeria, with many of them coming to a consensus that there is an urgent need for immediate overhaul of the health sector. “When you look at the healthcare
space and all the challenges experienced, people are really deterred from making investments in the sector,” said Olayinka Oyetunji, manager, transaction advisory service, Ernst & Young. “The sector is fragmented and challenged with regulations that should make it work. A lot is being done that is below world best practice, hence the reason for the roundtable to help highlight the issues and through the medical experts present, proffer solutions that will work,” Oyetunji said. Ola Brown, founder, The Flying Doctors, said it was essential for medical practitioners need to be influence drivers. “The importance of driving influence in the health sector of Nigeria as medical practitioners is key. Bankers drive influence, cement companies drive influence. The question is, how are doctors driving influence?” Brown asked.
Richard Ajayi, CEO, The Bridge Clinic, said Nigerian medical practitioners have moved from focusing on treating patients to searching for money to run their clinics/hospitals. He blamed the situation on the Nigerian environment, arguing that the case was different in developed countries. “In the process of looking for funds, we become business-inclined because we need funds to work. It is a problem because it shouldn’t be so because there is a difference between the practice of medicine and the business of healthcare. This practice is done by doctors who are distracted. If funds are available, doctors can focus on their work,” he said. The poor quality of health-care services delivered to Nigerians has been a major concern over the years and is partly responsible for the surge in medical tourism. Many outbound medical tourists from
Continues on page 38
Concerns as new Act seeks to whittle down SEC powers on mergers IHEANYI NWACHUKWU
I
f not properly scrutinised and regulatory roles duly outlined, the Federal Competition and Consumer Protection Act, 2018 will only succeed in cutting down the powers of the Securities and Exchange Commission (SEC) on mergers of businesses, a copy of the Act seen by BusinessDay shows. The Act which is now a public document seeks to establish the Federal Competition and Consumer Protection Commission and the Competition and Consumer Protection Tribunal. Though the explanatory memorandum of the Federal Competition and Consumer Protection Act, 2018 claims it is for the promotion of competition in the Nigerian markets at all levels “by eliminating monopolies, prohibiting abuse of a dominant market position and penalising other restrictive trade and business practices”, the power to approve mergers is now granted to the new commission, instead of the Securities and Exchange Commission (SEC). A merger occurs when one or
more undertakings directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another undertaking, according to the Act in section 92(1)(a) of Part XII – Mergers, for the purposes of this Act. It adds that a merger contemplated in paragraph (a) of this subsection may be achieved in any manner, including through (i) the purchase or lease of the shares, an interest or assets of the other undertaking in question, (ii) the amalgamation or other combination with the other undertaking in question, or (iii) a joint venture. Analysts at KPMG Nigeria said as hitherto applicable, the participants to a small merger do not need to notify the Commission unless the Commission specifically requests that they do so within six months of deal close. “The Act also prescribes rules for large mergers as the only other type of mergers. The definition of mergers under the Act is all-encompassing, and includes acquisitions. Consequently, although the Act did not independently define ‘acquisitions’, it seems to have extended the term ‘merger’ to include ‘acquisitions,” the
analysts said. “Disappointingly, the Act does not go far enough to cover the current gap in the Investments and Securities Act (ISA) and SEC Rules around de-mergers, spin-offs, deconsolidations, etc. Consequently, there are still no provisions governing such transactions. Mergers under the Act are still regulated, using the size designation thresholds. However, the Commission has yet to issue guidelines to delimit the threshold. We envisage that the threshold under the ISA will be modified,” they said. Section 92 (2) notes that for the purposes of subsection (1) of the Act, an undertaking has control over the business of another undertaking if it - (a) beneficially owns more than one half of the issued share capital or assets of the undertaking; and (b) is entitled to cast a majority of the votes that may be cast at a general meeting of the undertaking or has the ability to control the voting of a majority of those votes, either directly or through a controlled entity of that undertaking.
•Continues online at www.businessday.ng
Continues on page 38
What 400,000ha of forests loss yearly means to Nigeria’s economy, food security CHUKA UROKO
D
ue to pressures arising from large scale deforestation and degradation in order to make land available for competing needs, especially real estate activities, forests in Nigeria are under intense pressures, leading to loss of between 350,000 hectares and 400,000 hectares of forest landscapes every year. Conservationists note that this rate of loss is among the highest in the world and therefore needs to be reduced, reversed and ultimately halted because, in their view, it has grave implications, not only for the ecosystem and the entire environment, but also for the country’s economy and food security. Phillip Asiodu, a foremost conservationist who is the president of the Nigerian Conservation Foundation (NCF), recalls that at independence, Nigeria had about 30 percent forest cover but due to human activities, the forests have depleted to about 4 percent. “At the moment, less than 5 percent of the total land area in Nigeria is afforested, and even the sparse forest remainders are under threat with land use pressures from agriculture, infrastructure, housing and resources-harvesting,” he said. What this means is that, as humans, Nigerians are at great risk because they also depend on forests
for survival. Forests are believed to be the lungs of the earth as they provide the oxygen man breathes. When forests are destroyed, thereby depleting the oxygen available for breathing, man is finished. Beyond providing livelihoods for humans and habitats for animals, forests also offer watershed protection and ecosystem services, prevent soil erosion, enhance global food security and mitigate climate change, meaning that Nigeria is already at risk of food insecurity and hunger is imminent unless something is done urgently to halt what could be termed impending disaster. Deforestation, which is a big threat to the ecosystem, is a global problem. Globally, forests are estimated to cover 31 percent of the world’s land surface but have been grossly depleted. A recent Global Forest Resources Assessment report reveals that more than 80 percent of the natural forests with their associated resources have been destroyed at an estimated rate of 20,000 hectares per day. In the same vein, the Food and Agriculture Organisation (FAO), in its 2018 report, estimated that about 15 billion trees are cut down every year while the global tree count has fallen by 46 percent since the beginning of human civilisation. Likewise, an estimated 7.3 million hectares of forests are lost every year.
•Continues online at www.businessday.ng
Thursday 28 March 2019
BUSINESS DAY
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