Vanguard Markets, July 14, 2014

Vanguard Markets | Monday, July 14, 2014 | Issue 001

INTERVIEW

A cerebral approach to transactions at Olaniwun Ajayi LP ! Deal Engineer - page 3 Wolemi Esan

C-SUITE

Inside

Meet Mr. Capital Markets Software

Rickety Piketty

Jaywalker discusses Thomas Piketty’s bestselling book, Capital in the Twenty-First Century, and wonders aloud if it could strike a note on these shores

! Page 2

Striving to Stay No. 1

Leoplast is a plastics company that is reinventing itself to retain its top position in a competitive industry with thinning margins. Read how the company is doing so.

! Page 6

Time to move beyond rhetoric

Uchenna Igwebuike, Zanibal LLC

Soft-spoken and personable Uchenna Igwebuike has the canny art of putting people at ease on first encounter.

At 6 feet 4” and weighing 250

pounds, this gentle giant has all it takes to have made a career in gladiatorial America football. Instead he chose the geek’s trade: coding. Six years

after returning to set up his company in Nigeria he looks back at the journey that has brought him to this point. In this interview, he talks about

his formative years, early interest in computers, career in Silicon Valley, and the boundless opportunities that exist in serving companies in Nigeria

through first-class software applications delivered by firstclass Nigerian programmers.

NIBOR

O/N 1M

If Nigerian companies are serious about competing successfully for global capital they need to adopt stricter governance standards that build market confidence.?

! Page 7

! Page 4

Fixed Income & Forex

FGN Bonds & TBills

FGN Bonds Treasury Bills

80B

12.00

70B

11.75

60B

11.50

50B

11.25

40B

11.00

30B

10.75

20B

10.50

10B

10.25

0B

1M 2M

NITTY

3M 6M

9M 12M

15

02/07

07/07

10/07

FX ($/N)

Bid Ask

163.0

14 13 162.5 12 11

10.00 27/06

3M 6M

10 30/06

03/07

08/07

11/07

162.0 30/06

03/07

08/07

11/07

30/06

03/07

08/07

11/07 Source: FMDQ

2

INSIGHT

VM | Monday, July 14, 2014 | Issue 001

JAYWALKER

Picketing Piketty Thomas Piketty, a French professor of economics has written a bestselling book, Capital in the Twenty-First about rising income inequality in developed countries.

Lately, Capital in the 21st century, the 700-page popular economics bestseller written by Thomas Piketty, has drawn scorn from those that question his objectivity in claiming that inequality is widening in advanced economies. Not long ago, Chris Giles and Ferdinando Giugliano wrote a withering critique in the Financial Times dismissing the economist’s data as academic pretensions

Our investigation found numerous mistakes in Piketty’s work: simple fat-finger errors of transcription; suboptimal averaging techniques; multiple unexplained adjustments to the numbers; data entries with no sourcing, unexplained use of different time periods and inconsistent uses of source data.

Champagne seller in open market store, Lagos.

Source: www.wijn.nu

Big Boy Tinz

Income Distribution in Nigeria 2.5%

50%

2.0%

40%

1.5%

30%

1.0%

20%

0.5%

lowest 10% highest 10%

10%

Income share held by highest 10%

obiora.onyeaso@customsstreet.com

Income share held by lowest 10%

Obiora Onyeaso

However, since the 1970s Keynesianism and similar interventionist policies have been eroded by the unbridled dominance of laissez faire.

Fast forward to the 21st century, and inequality has reasserted itself to a degree not seen since before the Great War. Piketty cites a plethora of sobering statistics to back up his claims. In Europe up till 1914, 90 per cent of the aggregate wealth was held by 10 per cent of the citizens.

More shocking is that 60 per cent was held by the top 1 per cent. In contrast, today about 60-70 per cent of the aggregate wealth is held by the top 10 per cent, and about 20-30 per cent is owned by the top 1 per cent. Looking downward, the bottom 50 per cent of the populace owns less than 5 per cent of aggregate wealth.

Piketty posits that because wealth tends to grow faster than economic output, a

1986 1989 1992 1995 1998 2001 2004 2007 2010

eLDee

The lyrics of Big Boy, a song by eLDee, an architect-turned-musician, says it all about the likely reaction of Nigerians to such academic discourse:

I got some stunna shades on, Prada on my back, Louis [Vuitton] on my feet, Gucci on my wrist I’m a Big Boy, they hate on me cos I’m a Big Boy...

In Nigeria, inequality is fine so long as the citizens’ deep-seated consumerist culture is left untampered with.

Source: World Bank, Development Research Group

fundamentally motivated by rhetoric, and not research.

First, a little bit of background. Piketty, who earned his PhD at 22, has written a book that sets out to answer if: ‘The dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, or if the balancing forces of growth, competition, and technological progress lead to reduced inequality and greater harmony among the classes?’

He traces the evolution of inequality over three centuries to discover if wealth concentration is receding or not.

He finds that it is increasing.

For a moment in time, after the major social-political upheavals wrought by the two World Wars, deliberate government policies helped to engender a broad upward mobility.

condition he describes with the elegant formula r > g (where r is the rate of return to wealth and g is the economic growth rate), faster economic growth allows output to catch up, and close the income disparity gap.

Conversely, slower economic growth will amplify it, and increase the returns accruable to wealth.

The implication is clear.

Only a leap in productivity or government intervention in developed countries can restore the balance between the very rich and those at the bottom of the pyramid. To fix this, Piketty solicits for a global wealth tax to ameliorate the risk of social instability from these appalling inequalities.

Giles and Giugliano are having none of this. They dismiss the book as ridden with ‘simple fat-finger errors

Hardcover: 696 pages Publisher: Belknap Press; First Edition edition of transcription; suboptimal averaging techniques; multiple unexplained adjustments to the numbers; data entries with no sourcing, unexplained use of different

time periods and inconsistent uses of source data.’

Whether one agrees with Piketty or not, he has made the debate on inequality and growing concentration of wealth a fashionable topic.

This leads one to ask if his work, which is concerned with developed societies that have slowing growth and declining populations, bears any utility for countries like Nigeria. With official annual growth rates of 7 per cent can Nigeria escape the Piketty conundrum of rising income inequality?

Aviation sector statistics show that from 2007 to 2012 a total of 120 private jets worth $6.5 billion were bought by wealthy Nigerians. In the same period, its private charter market grew to $3.5 billion. Despite the sharp contrast between the very wealthy and most of its

citizens, it is rare to find Nigerians begrudging their nabobs of helping themselves to the finer things of life.

Reni Folawiyo, proprietress of the Alara concept store and wife of Tunde Folawiyo, one of Nigeria’s richest businessmen told the Wall Street Journal that ‘just because we live in a country that has problems does not mean we are excluded from the enjoyment of beautiful things.’

The interest these uberrich Nigerians attract is mainly social and not academic as evidenced by the number of glossy titles and blogs that peep into their gilded lives.

In a sense, it all depends on how one views widen-

a

ing income inequality or the perception of it. The optimist in most Nigerians sustains them in their belief that one day, one day, they too shall enter the magic circle. The zero-to-hero overnight mentality is hard-coded into the national DNA. Attitudes like these evade the question that Piketty sought answers for. In a country where most wealthy people are first-generation millionaires many retain the belief that one day the stars will shine on them too. Considering this fluidity of class identities it is little wonder that Nigerians would take pity on his worries, or worse, think him petty for begrudging the rich the fruits of their lucre. ;

Follow the Latest Business News at http://www.vanguardngr.com/category/finance/

VM | Monday, July 14, 2014 | Issue 002

INTERVIEW

3

DEAL ENGINEER

Wolemi Esan Partner, Power & Infrastructure Practice, Olaniwun Ajayi LP Wolemi Esan is a partner in Olaniwun Ajayi LP’s Power and Infrastructure Practice. He has done extensive work with private companies and public agencies in a variety of situations that cut across his core practice area, and other expert verticals. He has a strong background in financial matters, and is widely acknowledged as a leading authority in derivatives and securitization in the Nigerian securities market.

What is your role at the firm?

Until recently, I was part of the Firm’s Specialized Transactions Practice. Essentially, the practice deals with the most innovative transactions in the market. Its responsibility is to craft bespoke solutions to situations that often have no precedent in market. For instance, on one occasion we had a client who needed financing to develop its upstream petroleum asset. After we considered a number of options, we settled on a forward sale structure, whereby we presold the crude reserves to raise the necessary funds needed to exploit its proven reserves.

Putting together deals of this nature is what our Specialized Transactions Practice is known for.

Then about two years ago, I moved to the Power & Infrastructure Practice, and as the name suggests, the practice focuses on two key sectors of the economy, in which we are privileged to frequently attract the top mandates. Only last year, during the privatization of the Power Holding Company of Nigeria, Olaniwun Ajayi LP advised on 9 out of the 15 privatized assets. We have also been advising on the Azura-Edo Independent Power Project, which is widely regarded as the template for future IPP development projects in these parts.

On the infrastructure side, we are also working with a client on the development of a deep seaport to serve Nigeria’s burgeoning maritime needs as well as a number of other major PPP deals.

What qualities characterise Olaniwun Ajayi?

I would say our bias for technical, intellectually demanding high-end work.

Olaniwun Ajayi’s reputation is not built on the solicitation of vanilla-category briefs.

We push the envelope of the law. We advised on the first Liquefied Natural Gas project, the first utility scale Independent Power Project, the first bond issuance

by International Finance Corporation and so on. We do not see ourselves in the narrow sense of passive dispensers of legal opinion.

Instead, we like to think

of our lawyers as trusted advisors and enablers of transactions, not academics.

We are known to take a commercial, business driven approach to law. If you look at the profiles of our lawyers, you will find that a number of our lawyers have MBAs, and one of our partners is currently pursuing a DBA. We are constantly at work thinking up new ways of solving clients’ problems.

What is OA’s client solving approach?

strong residue of public distrust and resentment over the privatization of common assets. What is your view?

One thing we can all agree on is that the government has no business being in business. That said, it is understandable that when people do not fully appreciate the constraints faced by the government in funding costly, large-scale socially beneficial projects like power and infrastructure all by itself, and the attendant op-

indeed, privatisation, has the potential to deliver benefits at lower costs to taxpayers and customers.

Sector-wise, does the work-mix at the firm evolve with trends in the economy?

As a full service firm, we receive instructions in both contentious, that is, litigious, and non-contentious, that is, advisory, matters from our clients. Naturally, most of our advisory work, being transaction-driven will

Olaniwun Ajayi law firm library

About the Firm D Founded: 1962 0 Number of Partners: 8 B Number of Associates: 65 Education University College, London (UCL) Master of Laws (LLM) Lagos State University Bachelor of Laws (LL.B.), Law

Recent transactions • Advised on the US$3.15 billion financing of Dangote Industries Limited for the development of a 400,000bpd refinery • Advising on the US$1.5 billion financing of the development of a deep seaport in Lagos, Nigeria • Advised on the US$1.2 billion financing of the development of a fertilizer plant in Eleme, Rivers State • Advising on the on-going development of the greenfield AzuraEdo IPP, a c. 459MW open cycle gas-fired plant in Edo State • Advised on the US$500 million financing of an international shipping conglomerate for the expansion of its vessel portfolio

Our bias for technical, intellectually demanding high-end work sets Olaniwun Ajayi apart.

We believe our clients come to us for cutting-edge solutions to intricate legal problems. We also believe that each matter needs a multifaceted approach to find the best solution. Accordingly, whatever the nature of the instruction, we are insistent on a cross-functional, rigorous approach when exploring solutions for our clients.

We discourage silo thinking here. For instance, if a bank-

portunity cost, there is a tendency to leap to wholesale condemnation of privatization. Knowing the magnitude of competing demands faced by state and federal governments, I will say that privatizations, PPPs, and similar arrangements ultimately serve the public good when properly structured. That the government and sponsors do not always do a good job of communicating the ration-

Our clients come to us for cuttingedge solutions to intricate legal problems. ing client has a pending case we will pool resources from our litigation, and banking practices to brainstorm on the matter. Throughout the process we maintain open communications with the client. This helps in developing our case management strategy, which is compiled in a single document for easy reference when needed by new team members.

In spite of the government’s efforts to draw in private sector participation into power and infrastructure there is a

ale of these sales, cannot be an indictment of the ethos of these arrangements. Let us not forget that these same arrangements were the battering rams used to dismantle the inefficient monopolies enjoyed by state-sponsored companies in the past. The choices and convenience they have brought have been a great service. For example, we all remember the bureaucracy Nigerians suffered under NITEL until the GSM licenses were sold. When we take out sentiment, what we find is that, when properly executed, deregulation and

reflect the push-and-pull of economic forces. For example, during the banking consolidation round of 2004-5, we worked with over 60% of the financial institutions.

Again, in 2009, during the Central Bank’s banking sector intervention we worked closely with the regulator to assure financial system stability. As situations arise, we adapt and fit in, whilst retaining our core essence. It is the only way for a firm to remain relevant and indeed thrive.

What recent global M&A transaction would you have liked to work on?

That would have to be the aborted Pfizer-AstraZeneca combination. The sheer scale of the two companies’ global operations, multiple regulatory jurisdictions, and the size of the offer gave it all the tantalizing features of a transformational deal on so many levels. In the end, AstraZeneca shrugged off the suitor’s offers, and Pfizer chose not to launch a hostile take−over for AstraZeneca.

If it had gone on a full offensive, one would have liked to see the creative defensive structures that AstraZeneca’s lawyers would put in place. It would have been the stuff of case-study dreams for years to come. I would have liked to work on this deal advising the sell side. ;

4

BUSINESS

VM | Monday, July 14, 2014 | Issue 001

C-SUITE

Silicon Valley Émigré From Coding to Complex Business Problem-Solving Uchenna Igwebuike is a co-founder of Zanibal, an on-demand business solutions provider. He started the company with two friends in Silicon Valley, California more than a decade ago. Since he returned to Nigeria shortly before the global financial crisis, he has successfully built up Zanibal as a foremost enterprise software developer. Notably, the company has established its dominance in capital market service solutions that ease processing activities at firms, and improve the customer experience.

Earliest Memories

2 Important Lessons

I wrote my first computer programs in BASIC on an Atari computer my dad got me on my 9th birthday. He was a development economist and my mum was a high school biology teacher.

They encouraged us to read widely. I was regularly reading TIME and The Economist before I turned 10. It was not a monastic upbringing but it was an intellectually stimulating one.

1. When a company’s business processes are fundamentally bad, the best software would help them do bad things a lot faster.

2. A software company whose only value is product expertise will sooner or later go out of business. A software vendor’s job is really to help clients figure out problems.

Academic Interests From an early age I was drawn to the intersection of economics and computers. I first got admitted to university at the age of 14 but could not take up the offer because I was considered too young.

I waited another year. At the University of Nigeria, Nsukka’s Electrical & Electronic Engineering department, I was intrigued by Control Theory, and Reduced Instruction Set Computing, or RISC. Now I think back I imagine that these interests were born from the fact that stripped to the bones, the first bridged the interdisciplinary divide between engineering and social sciences, and the second, sought to simplify instructions for large scale computing systems to achieve results more efficiently. In certain ways, these remain at the core of problems I try to solve for clients at Zanibal.

sity. This unique course was one of the first to meld computer science, finance, operations research, and business in a way that pushed engineers, broadly categorized, to appreciate the economic implications of their tinkering in the lab.

Being at the epicentre of Silicon Valley, Stanford is renowned for fostering a change-the-world philosophy among its students. I got infected by the bug, and

Beyond this academic layer, there was a part of me that had an entrepreneurial inclination.

This was not in the narrow sense of what to buy and sell at a profit.

Rather, it had more to do with urge to understand how value is created and rewarded in the marketplace.

Career Affirmation I got good grades in school.

However, a shining academic performance does not always equate to the enjoyment of the career path it leads to.

I was fortunate that in my third year at the university I got to spend a 6-month industrial attachment at Mobil in Lagos. It was my first experience working with these large scale computing systems.

At Mobil I saw a real world need for what I had learnt at school and my extracurricular interests. I enjoyed the work I did immensely which spurred the choice of my final year project. This was on neural sciences, blended fuzzy logic and artificial intelligence algorithms to create an adaptive learning solution. Essentially, it was about using the concept of neural networks to make a computer think like a human being by incorporating feedback to improve its operation.

expertise will sooner or later go out of business. A software vendor’s job is really to help clients figure out problems.

These two lessons have stuck with me since.

After i2, I berthed at Sequoia Capital, one of Silicon Valley’s storied venture capital investors, as an entrepreneur-in-residence. This gave me the chance to catch my breath, and filter my ideas.

An advantage of the Sequoia

My professors at the faculty were supportive of ambitious academic undertakings like these because we were trained to be and believe we were as good as other engineering undergraduates at the best universities around the world.

My professors at the faculty were supportive of ambitious academic undertakings like these because we were trained to be and believe we were as good as other engineering undergraduates at the best universities around the world. After graduation, I went back to Mobil and worked for a year before I left for grad school.

I left Nigeria at 21 to pursue a master’s degree in Electrical and Electronic Engineering at the University of Illinois.

How come the leap from engineering to finance?

My father, Dr. Raphael Igwebuike, earned his PhD at Stanford in 1975 doing re-

search on the agricultural development problems faced by rice farmers in the Abakiliki area. At home, I would pick up his economics journals and ask him questions. That was how the interest was seeded.

Beyond this academic layer, there was a part of me that had an entrepreneurial inclination. This was not in the narrow sense of what to buy and sell at a profit. Rather, it had more to do with urge to understand how value is created and rewarded in the marketplace.

After I completed the course at Illinois, I was admitted to the Engineering Economic Systems’ doctoral program at Stanford Univer-

when the first dotcom balloon began to blow I took a study-leave to follow the road much travelled.

What happened next?

I joined i2 Technologies, a company that used to be the leader in supply chain software. My time there collided with the turbulence of the dotcom crash but my experience there taught me two things.

One is that when a company’s business processes are fundamentally bad, the best software would help them do bad things a lot faster. The second major lesson I learnt is that a software company whose only value is product

program is that you can be nominated to fill a managerial position in one of their portfolio companies.

By this time, my interest had shifted to enterprise search where I saw a big opportunity to help companies find interconnected needles of valuable information in haystacks of big data. One company, MarkLogic, a Sequoia investee, already had an advanced product in this category, and that is where I headed next.

At MarkLogic my responsibilities included the development of products that solved information discovery problems for traders in finance. This was in 2007. My problem statement at Mark-

VM | Monday, July 14, 2014 | Issue 001

BUSINESS

C-SUITE

VOX

With trading itself becoming commoditized it made sense for brokers to explore other value additive services that they could offer clients.

One trick pony?

Investors would demand: = Mobile and flexible access to trade securities = Online/Real time price transparency = Online stock portfolio management and valuation tools = Out-of-hours order submission = Reach of the market regardless of location sults is a valid problem solving endeavour.

Next stop, Nigeria It was a little turn from what I was doing at MarkLogic to cast my eye at what was happening on the Nigerian Stock Exchange, which was still in boom mode, and the revolutionary adoption of online banking by Nigerian banks.

I remember thinking that big opportunities may lie here. I took a look at the number of CSCS accounts and was convinced that there was a big retail investor story here. I then went about convincing my partners in Zanibal, a company we had set up in 2002 to do consulting work that we needed to take a closer look at Nigeria. The pulse was here.

Following on this discovery, I visited a good num-

Recognition Meristem Securities were our first client. Wole Abegunde, the chief executive, gets technology and its benefits. He is on a constant search for ways to disrupt the market. He took a risk and bought into what we were selling early on.

As we speak, Meristem controls more than twothirds share of the online trading in Nigeria. We made that possible. Today, we’ve grown to the point where 6 of the top ten liquidity providers on the NSE are our clients.

‘The consumption of cement per capita in this country is very low, about 150 kilos per person per year; while if you look at South Africa it is about 350 kilos, and in

By no means have we limited our services to the capital markets and financial services alone. We have launched products that also serve companies in need of customer relationship, accounting, and data management solutions.

When we started there were already entrenched players in this space. What set us apart was our approach to bringing value beyond software to the client’s business. This is really what it is about.

60

Rating

10

The securities industry regulators have been to our office to vet us, and they came away impressed what they found.

I can confidently say that in terms of our security infrastructure, and backup capacity we are at the highest level with the best in the world. Zanibal has never compromised on these things.

What I’d do differently It is tempting for entrepreneurs to spend inordinate amounts of time carrying out mental edits of the past instead of drawing the useful lessons. No-one has carte blanche to remake the past.

But going forward we can avoid past mistakes. This is not so much about bad decisions made, but about decisions that could have been tuned better.

Three things I would do differently are timing, footprint, and co-envisioning. On timing, we underestimated the duration to market recovery when we believed it would occur sooner and made significant investments based on that optimism.

Footprint-wise, Zanibal should have moved faster with our pan-African expansion strategy. Right now, we have are present in Ghana, Uganda, and Kenya. On coenvisioning, we have fixed that by spending more time with executives to tell them what is possible with their businesses.

Outlook I do not think that we’ve tapped up to 5% of the opportunities in the area of local software needs as a fulcrum to boost national productivity. As the growth story unfolds, Zanibal will be riding the crest of that wave. ;

Joseph Hudson, CEO, Lafarge WAPCO

Cement Manufacturing & Consumption in Nigeria 50

Total Capacity - MTPA Consumption - MT

40 30 20

0 2002

2011

2013

2015

2017

2019

2021

Source: Cement Manufacturers Association of Nigeria

M

ber of stock broking firms to gauge their capacity at handling the back office demands of this growth. What I saw convinced me that, as far as technology, was concerned they were outpaced by the market. Everything was done manually. It was a chore from hell.

I begun to push for the automation of the entire tradeto-settlement and cash settlement cycle. I got down to work right away to build a service oriented architecture that matched the custom needs of each house based on internal business processes, and client service requirements.

Moreover it was clear to me that while a few brokers perceived the tectonic shift that was going on, from an opaque market where only those with a seat on the NSE had access to prices and other sensitive information, to one where such exclusivity was unsustainable.

With trading itself becoming commoditized it made sense for brokers to explore other value additive services that they could offer clients.

And this is where we fit in grand scheme. Zanibal could help brokers to improve the efficiency in their back office operations, and brings costs down too, as well as empower them to offer clients valueadded services that earn income beyond the provision of liquidity.

Joseph Hudson

Egypt it is around 600 kilos.

The reason for this difference is capacity, but also not having found applications.

With a population close to 170 million in Nigeria and growing at around 3% a year, there is a lot of potential for growth if you look at that gap. The real size of the market would require 50 or 60 million tons of cement, and the figure currently is 25 million. So we still see a lot of needs to build factories, and not only ourselves but also the competitors.’

Num c i b ag

17m

er

Technology-driven changes in the market he foresaw in 2008 Stock brokers would need to: = Upgrade their Order Management Systems = Adopt the Financial Information Exchange protocol (FIX) = Implement minimum technology standards = Reduce costs by scaling up = Enhance simplicity and transparency of access by clients = Develop new business strategies = Commence use of high volume/ low latency trading platforms = Upskill their competence on new products and trading techniques

Logic could be boiled down to this: how do you build situationally aware intelligent information-driven trading systems?

Surprising as it sounds, no one else was going head-on at the problem. Not Bloomberg, not Reuters, not anyone else.

The company already had a good lead in performing analytics on vast amounts of data, and we felt that we could propagate this expertise into the finance area.

For example, how do we know or show that there is a relationship between a pipeline explosion in the Niger Delta and a spike in the price stocks of an oil company listed on the London Stock Exchange? The skill to take unstructured content– video, voice, text – put it into a repository, dissect it, and in a split second and spit out re-

5

Nigeria’s Housing Deficit VERBATIM

Magic Number

Siep Hiemstra

How has the insurgency in the north-eastern parts of Nigeria affected business?

A lot of out raw materials (sorghum) comes from the north and that worries us. So Heineken does not ignore the challenges but we certainly don’t get sucked up by them

In Nigeria, Heineken has about 50,000 farmers already working to produce 100,000 tons of sorghum that make up half of its supply. also. As a company we continue to concentrate on the promises, look at the promises whilst really taking into account that there are challenges.

Siep Hiemstra, President for Africa & Middle East, Heineken International B.V.

6

BUSINESS

VM | Monday, July 14, 2014 | Issue 001

THE EDGE

Leoplast of the Jungle The head office of Leoplast Industry Limited is located opposite the popular Aswani Market in Isolo. Established in 1978 as Papilon Industry, it is the oldest and biggest manufacturer of plastics in Nigeria. The company was founded by Rajendra Kumar Daswani, an enterprising businessman, who arrived Lagos in 1965 with a single suitcase and big dreams. Fifty-five years later, the company he started has grown to be a market leader with plants in Lagos, Sango-Otta, and Kano.

Each plant specializes in particular product lines. The Lagos plant is specialized in the production of furniture, coolers, buckets, and similar big items. The other plants focus on the other end of the spectrum, that is, packaging, bottles, casseroles, food packs, shaving sticks, and tops. Altogether, they have a production capacity of 80 metric tonnes per day, and a total built up area of 500,000 sq. ft. In addition to the plant in Kano, Leoplast has a sister company there. Rasa Beverage Industries produces C’est Bon bottled table water, and fruit drinks such as 2Cool juice flavours, and Smarty kiddies drink.

There are six brands in its portfolio: Leoplast Furniture, Leoplast Ballpoint Pens, Papilon Houseware, Powercool Coolers, Powerfit Paint Buckets, and Powerpack Food and Drinks Packaging.

After successfully piloting the affairs of the company for 3 decades, the founder took a well-deserved retirement in 2006. His son, Rohit, who was groomed for the role, has run the company since. Modest, and a self-confessed wizard of all things plastic, the boyishlooking old Harrovian, and Wharton alumnus knows the business of plastics like the back of his palm. After all, he was born into this. But looks can be deceiving. Behind the self-effacing exterior is a driven businessman adept at parrying his competitors’ punches.

For how long he will retain the champion’s title is what keeps him up at night.

In recent years, the influx of cheaper, albeit less durable products, has gnawed at the company’s dominant market position. The entry of non-unionized companies that produce at far lower costs, coupled with the biting economic times that push customers to patronise lower quality products, have led the company to embark on a 360° review of its business. Everything is being rethought: management practices, operations, inventory management, the supply chain, human capital deployment, financing options, and the product portfolio mix.

In March, Jerry Jallores, a process improvement and resource optimization expert, was brought on board. He brings over twenty years of experience to his new role, and is charged with transforming the company to a more agile one.

A native of the Philippines, his boyish charm and infectious enthusiasm, is immediately

It is not hard to question the sincerity of a state government in attracting investment when its policies decapitate companies with punitive and multiple taxes.

Companies are damned when they do things, and damned if they don’t.

Jerry Jallores, General Manager, Corporate HR

Leoplast Market Share Tables and chairs

15% Domestic housewares

15% Coolers and other insulated products

20% Ballpoint pens

25% Plastic takeaway packs

45%

evident from the first meeting.

The graduate of psychology from his country’s prestigious Ateneo de Manila University has built his career on jumping into the deep end in turnaround situations. Jerry is a

strong believer that people are the bedrock of successful companies.

Since he resumed, Jerry, who enjoys an intense game on the basketball court, has identified those areas where

Leoplast can cement its historic leadership of the sector.

He and Rohit have their work cut out for them. To innovate faster, fortify the brand, cull unprofitable products, launch aggressive value-based mar-

keting campaigns, improve market research, and provide better training for employees.

It is a tall list. Fortunately, unlike in most closely-held companies initiating a comprehensive reinvention pushed by a hired manager, the Daswani family are fully behind the plan. True to his professional antecedents, the HR practitioner is implementing his strategy on people-driven tactics.

Leoplast employs over 2000 people. Underlying the owners’ belief in fair terms of labour, the company maintains cordial relations with the National Union of Chemical Footwear, Rubber, Leather and Non-Metallic Products’ Employees (NUCFRLNMPE), the main sector union.

Through its nationwide network of distributors, it generates a further 35,000 jobs in the economy.

At its Aswani plant, warehouses are filled with plastic goods neatly stacked to the ceiling stretch as far as the eye can see. The burly store manager explains that the batches here will be gone in three days. The demand is insatiable. Outside, lorries with plate numbers from as far as Sokoto, and Bayelsa wait patiently to be called to the loading bay.

Porters move about quickly loading trucks, and hurrying back to pile up more. It is a beehive of activity. Inside, the distributors, who are mainly women, form a queue in the pay office, and enquire in earnest if they will receive their full orders. The showroom located beside there is a veritable Ali Baba’s cave. On display are hundreds of different plastics products that range in size from cupboards to medicine bottles. The bustling energy of this nerve centre of commerce and productivity is unmistakeable.

In an industry cutthroat competition, and rapid obsolescence of designs, Leoplast leads by a margin it cannot take for granted. Since the company is privately held it does not break out its financial performance. Yet, it is safe to say that it earns a decent return on invested capital. As

proof of their international appeal, Leoplast products enjoy strong market positions in neighbouring countries too.

The prudence of its management team, and the profitability of its portfolio, notwithstanding, these are little comfort in a business that requires the reinvestment of significant amounts to maintain its lead. The challenges of running a manufacturing concern in Nigeria, namely taxes, bribes, imitation, and power supply, are taking their toll on business confidence and fuelling scepticism over the government’s commitment to help local industries. How else would one explain the incessant levies and arbitrary taxes imposed on industrial concerns in Lagos state, frequent even if subtle demands for the euphemistically labelled ‘settlement’, the brazenness with which copycat producers openly sell counterfeit products, thereby damaging the brand and undercutting prices, and the government’s tardiness in fixing the power situation in the country?

These four horsemen of the apocalypse negate the country’s development aspirations as much as they do harm to the industrialist’s net profits.

An economics lecturer at the University of Lagos, who spoke on condition of anonymity, articulated the frustration of industrialists like Leoplast: ‘It is not hard to question the sincerity of a state government in attracting investment when its policies decapitate companies with punitive and multiple taxes.

Companies are damned when they do things, and damned if they don’t.’

Leoplast gives the federal government kudos for banning the importation of plastic products to protect the industry from dumping. But a high score in tariff defence is dampened by an inability to guarantee stable power supply. Each year, the company spends several tens of millions to buy diesel to operate its generating sets pushing up its overheads and raising the price of its products in the marketplace.

VM | Monday, July 14, 2014 | Issue 001

THE EDGE

BUSINESS

7

GOVERNANCE

W Continued from Page 6

Product Launch Dates YEAR

PRODUCT

2014

Leoplast Shave Smart

2010

Powerpack foampack

2008

Powerpack takeaway boxes

2006

Leosmart ballpoint pens

2005

Papilon Honey 3000 food warmer with steel

2000

Powercool sunflower coolers

2000

Powercool PC45 cooler

2000

Leoplast Children table with 2 chairs

2000

Leoplast super student table

2000

Leoplast Unity folding chair

2000

Powercool sunflower coolers

2000

Powercool PC45 cooler

2000

Leoplast Children table with 2 chairs

2000

Leoplast Super Student table

2000

Leoplast Unity folding chair

1999

Leoplast President chair

1998

Leoplast Excel Cabinet

1998

Papilon Dish Rack

1998

Papilon vegetable trolley

1998

Papilon Deluxe Baby Bath Set

The debilitating effect of bribes is an accepted fact.

When officials make lightlydisguised requests for gratification to permit smooth corporate activity it hampers new investment, and raises the cost of doing business.

Not only these, it wreaks havoc on the company’s cash flow. It is a trite fact that there is no place in the budget of an ethical company for lubricants to grease the palms of corrupt bureaucrats.

Soji Apampa is the co-founder of The Convention on Business Integrity, which sponsors the Corporate Governance Rating System in partnership with the Nigerian Stock Exchange.

Soji.apampa@cbinigeria.com

Corporate governance is at the heart of how businesses are run. According to the Organization for Economic Cooperative Development

flows has rendered ethical relativism, the doctrine that morality exists in relation to culture or society, an unsound basis for setting corporate governance standards.

Nigerian companies must decide if they want corporate governance standards that lie in the eye of the beholder or those that lie in the eye of any beholder?

There are a good number of reasons why Nigerian companies need to upgrade the basis of their corporate governance standards to match good international practice.

First, because of the high cost of capital in Nigeria, companies that seek to compete on a larger scale are seeking capital from foreign capital markets or through the participation of international investors in local mar-

Market, must comply with stricter admission and disclosure standards. Seplat, the oil company, which went public in May has successfully done so. Companies with aspirations to list there are also required to comply with the UK Corporate Governance Code or explain why they do not.

Failure to do so invites various sanctions. Therefore, to compete globally and attract the quantity and quality of capital they require to operate at that level of market access, Nigerian companies need to adopt more stringent standards of corporate governance than the domestic environment necessitates. Good corporate governance practices demonstrates to global investors that their investments will be safe and managed in their best interest.

just opened its 1oth Nigerian store in Ibadan, to associate with suppliers that do not have clear reporting and good management practices. Suppliers that pose reputational risks to their brands and ethics are unwelcome. In an age when the Internet and social media rule, the reverberations from one critical tweet or negative online review in Lagos or Lusaka can be felt in London.

Furthermore, organizations need to practice good corporate governance to guard against other risks that threaten the going concern of the organization. Such risks include the liability or asset damage that may occur if managers enter into transactions that are self-serving and destroy the value of shareholders’ equity. In extreme

has led the call for stiff penalties for makers and importers of these imitated products comparable to what the National Agency for Food and Drug Administration Control (NAFDAC) has done for packaged foods, beverages, and medicines.

Privately-owned, big, successful companies are regularly asked when they plan to go public. Leoplast is no exception. On this subject, Rohit is silent. According to

Regrettably, most of these ballpoint pens are faked by some people and even though they have almost the same packaging features as if they are the ones made in Nigeria, they are substandard and sorely lack the quality that those made in Nigeria by reputable companies have.

As early as 2008, the chief executive was raising the alarm on the damage that counterfeited products were causing the consumer and economy as a whole. He condemned the black market importation of substandard plastics products that cloned the iconic designs of successful brands like Leoplast’s. The company’s popular Papilon ballpoint pens appear to be a favourite of the imitators.

‘Regrettably, most of these ballpoint pens are faked by some people and even though they have almost the same packaging features as if they are the ones made in Nigeria, they are substandard and sorely lack the quality that those made in Nigeria by reputable companies have.’ He

The Corporate Governance Imperative

one analyst, who follows the industrial sector closely, companies list their shares when they seek to raise funds, liquefy owner’s holdings, or diversify perceived regulatory risks of concentrated ownership.

He opines that Leoplast is not faced with any of these scenarios, so the question does not arise with any urgency.

While he is reticent on being drawn into a conversation about the future of Leoplast’s capital structure, Rohit is more than happy to give an answer to why the company has been so successful. Simple, he says. We stick with what we know. Plastics. You can’t fault him on that. Thirtysix years as the industry leader is all the proof one needs. ;

Next question please. Alhaji Aliko Dangote beckons for questions at the 8th AGM of Dangote Sugar Company Plc.

(OECD), ‘corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders’. Corporate governance, broadly speaking, includes board efficiency, transparency, reporting requirements, investor communications and sustainability.

Corporate governance standards in an organization are typically based on macro factors at play in the country where it operates.

These include the country’s legal and financial system, ownership structures, and cultural, economic and political realities. In Nigeria, where corruption is rife and endemic, corporate governance practices are usually lax. However, current economic realities like the globalization of capital

Businesses in Nigeria have to move beyond mouthing the buzzword of corporate governance to adopting sound corporate governance practices. It makes good business sense to do so. kets. Given the mainstreaming of corporate governance issues, financial markets all over the world have instituted either mandatory or recommended codes to guide the conduct of publicly quoted companies.

Till date, there are 7 Nigerian companies listed on the London Stock Exchange.

Although some are on the Alternative Investment Market (AIM), the LSE’s growth market, which has fewer guidelines, those companies who wish to be listed on the Main

It is not only the big companies that can benefit from adopting good and internationally acceptable corporate governance practices.

Small- and medium-sized enterprises (SMEs) stand to benefit as well. For example, it can win them entry to the value chain of multinational companies or even big local companies that demand similar standards from their business partners. For example, it will constitute a reputational risk for a big international brand like Shoprite, which

cases, it could lead to a loss of trust from customers that may lead to product boycotts and in the case of a bank, a run. Setting high governance standards is a business sustainability necessity because even codified global corporate standards usually constitute the minimum acceptable standard and may be insufficient.

In sum, good corporate governance is germane to the going concern of an organization because it determines the strategic direction of the firm in terms of the mission and values, culture, risk management and processes.

Businesses in Nigeria have to move beyond mouthing the buzzword of corporate governance to adopting sound corporate governance practices. It makes good business sense to do so. ;

8

MARKET DATA

VM | Monday, July 14, 2014 | Issue 001

MARKET SNAPSHOT 3-MONTH PRICE TREND OF BELLWETHER STOCKS

ACCESS

9.80 0.09

7.22

11.31

PE 6.01

07/07 April

May

June

DIAMONDBNK 5.86

6.24 0.16 PE 3.16

07/07 April

May

June

FLOURMILL

M T W T F

91.85 PE 26.80

07/07 April

May

June

98.35 PE 24.50

07/07 April

May

June

FBNH 11.50

PE 7.87

07/07 April

May

June

FO 20.34

M T W T F

259.94 PE 54.18

07/07 April

May

June

241.00 9.00

185.00

250.02 PE 20.34

07/07 April

May

June

FCMB 3.01

PE 5.03

07/07 April

May

June

GLAXOSMITH 53.06

M T W T F

71.44 PE 22.62

07/07 April

May

June

9.10 0.20

8.67

12.45 PE 10.11

07/07 April

May

June

FIDELITYBK 1.85

3.10

May

June

GUARANTY

PE 7.51

22.67

M T W T F

31.80

PE 9.33

07/07 April

May

11/07

29.97 0.37

11/07

M T W T F

M T W T F

07/07 April

11/07

2.00 0.00

11/07

69.00 1.00

11/07

M T W T F

M T W T F

5.02

DANGSUGAR

11/07

4.15 0.21

11/07

234.06 33.98

11/07

M T W T F

M T W T F

18.93

DANGCEM

11/07

16.23 0.43

11/07

78.00 0.00

63.91

74.25 0.25

58.27

11/07

M T W T F

8.00

CADBURY

MOST GAINED & DECLINED

June

11/07

M T W T F

FO

16.98%

NPFMCRFBK

16.67%

ASHAKACEM

12.24%

TRANSCORP

10.69%

DNMEYER

8.62%

NIGERINS

8.00%

ROYALEX

8.00%

LEARNAFRCA

7.10%

VITAFOAM

6.83%

RTBRISCOE

6.54%

AIRSERVICE

-8.98%

CUTIX

-8.63%

NEIMETH

-8.33%

CUSTODYINS

-7.94%

FIDSON

-7.69%

UBCAP

-7.66%

UACN

-6.68%

MANSARD

-6.67%

UNILEVER

-6.36%

UPL

-5.16%

INDEX DAILY MOVEMENT

NSEASI GUINNESS

205.00 10.77

162.00

266.70 PE 25.84

INTBREW

29.50 0.10

18.00

31.00 PE 32.80

JBERGER

68.05 0.95

59.18

76.45 PE 11.14

MANSARD

2.52 0.18

1.95

2.73

PE 13.26

Fr 07/07 April

May

June

NASCON

11/07

M T W T F

11.40 0.29

10.30

15.10 PE 10.92

07/07 April

May

June

NB

11/07

M T W T F

174.43 0.93

140.00

189.00 PE 30.18

07/07 April

May

NESTLE

June

11/07

M T W T F

1110.00 20.00

916.00

1250.00 PE 39.53

07/07 April

May

June

OANDO

11/07

M T W T F

27.99 0.51

9.32

36.89

PE 6.11

42,832.82

43.10 43.00 42.90 42.80 42.70 Mo

Tu

NSECNSMRGDS

We

1,053.69

Mo

Tu

We

NSEOILGAS 07/07 May

June

PZ

36.75 0.20

30.08

47.06 PE 29.93

07/07 April

May

June

TOTAL

187.99 PE 10.89

07/07 May

June

UBN

May

June

SKYEBANK 3.19

4.90

12.80 PE 21.39

PE 2.70

07/07 April

May

June

TRANSCORP

5.95

PE 47.66

07/07 May

June

UNILEVER

May

June

STANBIC 15.30

27.20 PE 14.54

07/07 April

May

June

UACN

71.20 PE 21.14

65.00 PE 40.55

07/07 May

June

WAPCO

May

June

STERLNBANK 2.09

136.73 PE 11.89

PE 4.44

May

June

Fr

477.63

Fr

Mo

Tu

We

NSEBNK

Th

Fr

438.08

0.440 0.439 0.438 0.437 0.436 Fr

Mo

Tu

We

Th

Fr

LEGEND

UBA

7.85 0.05

6.65

9.58

PE 5.23

07/07 April

11/07

M T W T F

Th

0.479 0.471 0.463 0.455 0.447

2.31 0.01

07/07 April

11/07

M T W T F

2.92

11/07

M T W T F

112.03 1.03

87.50

07/07 April

11/07

M T W T F

61.59 4.41

53.23

April

11/07

M T W T F

27.05 0.32

11/07

M T W T F

51.50 3.50

43.32

07/07 April

11/07

M T W T F

5.80 0.56

1.17

April

11/07

M T W T F

3.27 0.07

11/07

M T W T F

9.65 0.05

8.10

07/07 April

11/07

M T W T F

171.05 0.06

146.26

April

11/07

M T W T F

Fr

10.56 10.53 10.50 10.47 10.44 Fr

April

Th

May

June

ZENITHBANK 19.23

11/07

M T W T F

25.01 0.09 27.40

PE 8.64

1. 52-week low price 2. Year Low Price 3. Current price 4. Year High Price 5. 52-week high price 6. Current price 7. 5-Day Price Change 8. PE Ratio 9. Daily Prive Movement over 3 months.

10. 30-Day Moving Average 11. Daily Price Movement over Last Week 2 TICKER

9.80 0.05

4

7.22

11.79

1

3

5

PE 6.24

6

7 8

9 10 07/07 April

May

June

11/07

M T W T F

07/07 April

May

June

11/07

M T W T F

07/07 April

May

June

11/07

M T W T F

07/07 April

May

June

11/07

M T W T F

11 16/06

April

May

20/06

June M T W T F

MARKET DATA

VM | Monday, July 14, 2014 | Issue 001

9

MARKET SNAPSHOT DATA VIZUALIZATION

DATA PARTNER

www.customsstreet.com

www.afrinvest.com

MARKET SNAPSHOT Date

Deals

Turnover Volume

Turnover Value

Traded Stocks

Advanced Stocks

Declined Stocks

Unchanged Stocks

All Shares Index Value

1

07.07.2014

5,215

460,229,850

4,509,326,656.54

132 \ 111

23 \ 23

30 \ 36

79 \ 65

42,758.02

2

08.07.2014

5,363

523,328,904

5,129,645,266.31

117 \ 115

27 \ 28

32 \ 25

58 \ 44

42,861.78

Sector

%

3

09.07.2014

5,153

209,763,256

2,284,962,429.74

122 \ 118

29 \ 35

18 \ 29

75 \ 58

43,039.42

Financial Services

72 \ 77

4

10.07.2014

5,568

310,014,925

3,614,064,973.97

124 \ 121

28 \ 23

20 \ 34

76 \ 72

43,004.38

Conglomerates

13 \ 8

5

11.07.2014

5,222

328,421,273

3,855,454,115.47

122 \ 116

24 \ 33

31 \ 21

67 \ 57

42,832.82

Oil & Gas

6\7

Others

9\8

TRADING BREAKDOWN BY SECTOR

The \ arrow signifies week-on-week change in value. This week’s value is shown on the left of the \ sign, and last week’s value on the right.

INDEX PERFORMANCE

FGN Bond Index

Date

Week Opening

Week Close

Change

WtD

MtD

QtD

YtD

1

All Shares Index

43,031.81

42,832.82

-198.99

-0.46

0.82

0.82

3.64

2

NSE 30 Index

1,945.15

1,945.69

0.54

0.03

0.72

0.72

2.02

3

NSE Banking Index

437.35

438.08

0.73

0.17

1.2

1.2

-2.18

4

NSE Insurance Index

149.01

148.19

-0.82

-0.55

0.93

0.93

-3.06

5

NSE Consumer Goods Index

1,046.03

1,053.69

7.66

0.73

-0.43

-0.43

-4.23

6

NSE Oil/Gas Index

454.93

477.63

22.7

4.99

2.01

2.01

40.53

7

NSE Lotus Islamic Index

2,857.30

2,836.03

-21.27

-0.74

-1.34

-1.34

-0.95

8

NSE Industrial Index

2,724.03

2,705.31

-18.72

-0.69

1.45

1.45

6.23

+150% SLIPPING +140%

2840

11.9

2835

11.8

2830

11.7

2825

11.6

2820 07/07

LEADING 12

+130% +120%

The relative size of each individual stock’s bubble chart is determined by its market capitalization.

For indices, the relative size of each bubble chart is the total value of the capitalization modified values of each constituent stock.

Pink bubbles represent individual stocks, and grey bubbles represent indexes.

+110% +100%

YEAR-TO-DATE RETURN

+90% +80% +70% +60%

27

+50% 29

+40%

47 14

+30%

10

+20% 26

+10% 0%

13 1

16 21

39

-10%

24

-20%

41

44 33 42 3 2 119 9 5 25 23 115 28 30 0 48 46 34 118 7 43 5 4 20 32 45 11 1 117

-30% -40% LAGGING -10%

6 36 8

38

22 35

31

-5%

37

40

0%

+5% WEEK-TO-DATE RETURN

+10%

IMPROVING +20%

+15%

CURRENCY CROSS RATES Currency United codes/ Kingdom names Pound

Euro

Japanese Yen

Swiss Franc

Chinese CFA Franc CFA Franc Ghanaian US Dollar Yuan BCEAO BEAC New Cedi Renminbi

Hong Kong Dollar

Nigerian Naira

Saudi Riyal

Market Value YTD Return

South Utd. Arab African US Dollar Emir.

Rand Dirham

09/06

11.5 11/07

# TICKER

WTD

1 DANGCEM

-3.60 10.05

YTD

2 NB

0.54

3 GUARANTY

1.25 10.92

3.89

4 NESTLE

1.84

5 ZENITHBANK

-0.36 -8.72

-7.50

6 FBNH

2.72

-0.43

7 WAPCO

0.93

-2.58

8 GUINNESS

5.55 -13.14

9 ETI

-0.58

10 STANBIC

1.20 26.70

6.30

11 UBA

-0.63 -11.80

12 FO

16.98 139.40

13 OANDO

-1.79 15.42

14 TRANSCORP

10.69 33.33

15 ACCESS

0.93

16 UNILEVER

-6.36 -4.28

2.08

17 FLOURMILL

0.00 -10.34

18 UBN

0.52

0.21

19 PZ

0.55

2.84

20 CADBURY

-0.34 -9.80

21 UACN

-6.68 -8.08

22 DANGSUGAR

-2.15 -22.22

23 INTBREW

0.34

24 DIAMONDBNK

-2.50 -15.10

2.79

25 JBERGER

-1.38

26 FCMB

-4.82 12.47

27 ASHAKACEM

12.24 55.07

28 GLAXOSMITH

1.47

29 7UP

0.00 43.60

30 TOTAL

-0.04

31 FIDELITYBK

0.00 -25.65

3.55

1.47 0.62

32 STERLNBANK

0.43

33 MOBIL

-0.04 13.83

-7.60

GBP

1

0.7952

0.005754

0.6546

0.5836

0.001213 0.001213

0.09463

0.1769

0.0753

0.003633

0.1556

0.05457

0.5836

0.1589

34 CONOIL

0.31

EUR

1.2578

1

0.007237

0.8232

0.734

0.001524 0.001524

0.119

0.2225

0.09471

0.00457

0.1957

0.06864

0.734

0.1999

35 SKYEBANK

-2.10 -25.68

JPY

173.811

138.193

1

113.763

101.426

16.4468

30.7459

13.0874

0.6315

27.0464

9.4848

101.426

27.6198

36 PRESCO

2.87

37 OKOMUOIL

0.00 -25.00

0.2108

0.2108

CHF

1.528

1.2149

0.008792

1

0.8917

0.001853 0.001853

0.1446

0.2703

0.1151

0.005552

0.2378

0.08339

0.8917

0.2428

USD

1.7137

1.3625

0.009861

1.1217

1

0.002078 0.002078

0.1622

0.3031

0.129

0.006226

0.2667

0.09351

1

0.2723

XOF

824.727

655.957

4.7454

539.811

481.247

1

1

78.037

145.884

62.0972

2.9963

128.33

45.0037

481.247

131.051

XAF

824.735

655.957

4.7454

539.816

481.251

1

1

78.0378

145.885

62.0978

2.9964

128.332

45.0042

481.251

131.052

CNY

10.5773

8.4098

0.06086

6.9232

6.1721

0.01283

0.01283

1

1.871

0.7964

0.03843

1.6459

0.5772

6.1721

1.6808

GHS

5.7126

4.542

0.03287

3.7391

3.3334

0.006927 0.006927

0.5405

1

0.4301

0.02075

0.8889

0.3117

3.3334

0.9077

HKD

13.2818

10.5609

0.07642

8.6934

7.7502

0.0161

0.0161

1.2567

2.3494

1

0.04825

2.0667

0.7248

7.7502

2.1105

NGN

280.558

223.065

1.6143

183.634

163.712

0.3402

0.3402

26.5468

49.6271

21.1244

1

43.6558

15.3095

163.712

44.5812

-3.43 -1.14

38 CAP

1.30 -19.50

39 NEIMETH

-8.33 -3.97

40 MAYBAKER

5.99 -27.76

All Shares 41 Index

-0.46

3.64

0.03

2.02

42 NSE 30 Index

SAR

6.4278

5.1106

0.03699

4.2072

3.7508

0.007794 0.007794

0.6082

1.137

0.484

0.02335

1

0.3508

3.7508

1.0214

NSE Lotus Islamic Index NSE Industrial 44 Index NSE Consumer 45 Goods Index

0.73

-4.23

ZAR

18.3434

14.5856

0.1055

12.0064

10.7038

0.02224

1.7357

3.2447

1.3812

0.06664

2.8543

1

10.7038

2.9148

46 NSE Banking Index 0.17

-2.18

NSE Oil/Gas 47 Index NSE Insurance 48 Index

0.02224

USD

1.7137

1.3625

0.009861

1.1217

1

0.002078 0.002078

0.1622

0.3031

0.129

0.006226

0.2667

0.09351

1

0.2723

AED

6.2958

5.0057

0.03623

4.1208

3.6738

0.007634 0.007634

0.5957

1.1137

0.474

0.02287

0.9797

0.3436

3.6738

1

43

-0.74 -0.95 -0.69

6.23

4.99

40.53

-0.55 -3.06

10

AGENDA

VM | Monday, July 14, 2014 | Issue 001

RESEARCH

BANKS The Effects in GDP Rebasing on NSE Sectoral Weighting and Consumer Demand The last has not been heard from disruptions caused by the rebasing of the country’s gross domestic product (GDP). In a recent speech he delivered at the Capital Market Committee’s second quarter meeting, Oscar Onyeama, chief executive of the Nigerian Stock Exchange, lamented that the revision has caused a drop in the bourse’s contribution to GDP. Onyeama explained further that the rebasing has made it necessary for the NSE to review the sectoral spread of its listings to reflect the real economy.

Recently, McKinsey Global Institute published its analysis on the prospects for packaged beverages such as juices and instant drinks excluding soft drinks and beer. According to the consulting firm, 10 Nigerian cities are on the threshold of the ‘hot zone’, where the sales of packaged drinks will grow by 1.84 per cent for every 1 per cent rise in GDP per capita.

It would be illuminating if the consultants at McKinsey had carried out a similar study on Nigeria’s pasta and noodles’ food segment.

While not calling the top of consumer demand, it is not altogether unthinkable that the rapid growth and margins observed in recent years may come under review. Acute competition, and overcapacity in the flour milling sector have driven Dangote Flour to cut flour prices in a bid to sustain volumes according to Oyakhilome Ibhagui of Dunn Loren Merrifield.

Sectoral Contribution to Nigerian GDP Compound annual growth rate ( CAGR ), 2010 –13, real %

510

GDP growth, 2010 –13 %

40

Other services

7 16 16 17

Entertainment, music

23.1

3.7

Construction

14.6

7.2

5.4

2.6

Professional and technical services Finance and insurance

8.1

8.7

18.6

7.5

4.5

2.5

13.0

14.3

18

Public administration

35

Manufacturing

41

Real estate

6.9

8.2

49

Telecommunications and ICT

6.6

10.4

74

Resources

2.2

5.1

85

Trade

7.7

20.1

112

Agriculture

2.6

9.4

270

2

12

4 41 52

10 1

88

48

94

Pre -rebasing

Rebased

Nominal

7.7

13.8

Real

7.0 2

6.4

CAGR, 2010 –13 % 1 Resources do not include oil refining, which is included in manufacturing.

2 For pre-rebased real CAGR, we use 2010–12, as real 2013 was unavailable.

NOTE: Numbers may not sum due to rounding.

Source: Nigerian National Bureau of Statistics; McKinsey Global Institute analysis

The analyst notes that ‘a depleted brand equity and tighter distributor credit control measure’ may be

responsible for up to 26.3 per cent year-on-year decline in the company’s pasta and noodles’ business justifying

a new target price N8.67, and an upwardly revised recommendation to HOLD from BUY issued in February.

CONSUMER GOODS Nestlé’s revenues took a hit as a result of the security situation in northeast Nigeria write analysts at Chapel Hill Denham. Weaker consumer spending took its toll as households made do with cheaper alternatives. The analysts are more optimistic about the company’s beverage busi-

ness, which achieved a robust compound annual growth rate (CAGR) of 22.6 per cent against 12.7 per cent for the food segment in the three year period (2011-13). CHD maintained its HOLD recommendation on the stock but cut its 12-month target price to N1,091.19 from N1,202.56.

NestlÓ Product Portfolio Comtributions (2013) Nido, 3% Maggi, 36%

Nescafe, 4% Pure Life, 9% Golden Morn, 12%

Milo, 22% Source: Company Filings and Greenwich Trust Limited

& Business Banking as well as Wealth division has impressed investors. They are confident Stanbic will sustain the efficiency drive for the rest of the year.

Zenith Bank’s liquidity places it in an unassailable position as regulatory changes push up competition among banks write analysts at CardinalStone Partners who maintain a BUY rating on the stock, and raise its target price from N24.79 to N28.78. The expectations are that over the medium term (2014-16), the bank will tap opportunities in power, real estate, and agriculture as well as continue to build on its reputation as a creator of high quality risk assets.

Is a change in Zenith Bank’s strategy on the horizon? Analysts at Chapel Hill Denham think that with the resumption of a new CEO nothing of off the table.

They reason that a flat net interest income in Q1 may induce the bank to ‘relax its exclusive focus on corporate lending in a bid to improve yields.’ They also picked up that the bank’s cost of risk over the last two years has been higher than the average for its tier-1 peers, ‘despite the bank’s conservative approach to lending.’ It is not unthinkable that this may be the canary in the coalmine that Zenith Bank’s historically vaunted kosher lending standards may be slipping. The analysts raise their target price on the bank by 3.2 per cent to N25.17 from N24.38 and downgrade their rating to a HOLD from a previous BUY rating issued in March.

CORPORATES

Unilever-sponsored world-record breaking Teeth brushing Challenge

Unilever sees a silver lining on the cloudy sky of soft consumer spending. Yaw Nsarkoh, the chief executive, is waxing bullish. ‘We will see some growth in consumer spending this year, in spite of the turbulence in the market and a certain degree of sales depression in some regions.’

The boyish-looking Nsarkoh, who was appointed to his position in February joined Unile-

ver 20 years ago, and is widely seen as a miracle worker. He will be needing all of his Midas touch to drive growth in Nigeria. Analysts at Chapel Hill Denham are not so sanguine.

Their profitability outlook is weak, and they are doubtful whether the company can grow revenue without ‘giving away profit margins.’ They place a SELL rating on the stock with a target price of N41.33.

CONGLOMERATES Baby Food, 14%

Unity Bank has a lot of catching up to do if its board wants the financial institution to stay relevant on the Nigerian banking scene.

Long gone are the days when some banking franchises had a stranglehold on particular regions. Free-for-all is the way they swing these days.

Kayode Omosebi of UBA Capital is not convinced that its muted loan growth of 5.25 per cent in 2013 will lead the bank to where it aspires to be.

He rates the bank a HOLD with a target price of N0.55.

At first glance, FBN Holdings’ Q1 results had little in it to cheer investors but Ikechukwu Ihenacho, and Muhammad MammanDaura, analysts at Chapel Hill Denham, are dismissing the gloom. It is true that earnings per share (EPS) dropped by 13.3%, no doubt helped along the downward slope by the removal of cost of transfer (COT) charges and cancellation of ATM charges. Nonetheless, they see bright spots on the trusty elephant. They forecast that loans growth by up to 15 per cent, a reliable pump of cheap deposits, and an improved asset quality will buoy performance in the rest of the year. Consequently, they have upgraded the stock’s rating to a BUY, but reduced its target price from N21.25 to N19.57. The CDH analysts downgraded their rating of Stanbic IBTC to a HOLD from a BUY in November 2013 due to concerns that the current valuation is ‘rich’ at a PE ratio of 10x forward earnings for 2014.

The drop in cost to income ratio (CIR) at the bank’s Personal

It is not often that seasoned analysts use gushing adjectives to describe companies. But that is just what the analysts at CardinalStone Partners have done.

They describe Transcorp’s

investment case as ‘very compelling as it presents an excellent opportunity into Nigeria’s emerging utilities sector.’ They rate the stock a BUY with a 2014 target price of N6.62.

Ladi Balogun, Group CEO, FCMB Group

FCMB Group has disclosed that it plans to raise up to $300 million of funding this year to boost consumer lending by about 20 per cent to N540 billion. Ladi Balogun, the chief executive officer, expressed a strong bias for tapping ‘the loan markets as opposed to bond markets due to more stable pricing.’

After announcing that it would merge its Nigerian and South African businesses, Lafarge has received its shareholders’ approval to raise N100 billion through a

public offer of debt or equity in local and international markets. Guillaume Roux, the Country CEO for Lafarge in Nigeria and Bénin Republic said that ‘the consolidation will enable the enlarged entity to accelerate growth on the continent and expand its product offering in South Africa across the region.’ The merger was advised by Standard Chartered Bank, whose South African origins have been a plus in the transcontinental deal, Chapel Hill Denham, whose CEO, Mobolaji Balogun, has been on the board of the cement company since March 1, 2005.

Like its Tier-2 peers, Diamond Bank is seeking new capital. The bank hopes that at the conclusion of its capital raising efforts, its capital adequacy ratio will increase by up to 3 percent from its current 17 per cent level. Alex Otti, the bank’s CEO, stated that its promotion from 11th to 6th place among Nigerian lenders in the space of 3 years, is proof that it is on ‘the right path.’

AGENDA

VM | Monday, July 14, 2014 | Issue 001

11

REGULATION

Who could have foretold?

Godwin Emefiele (left), with his predecessors in office, Sanusi Lamido Sanusi (centre), and Dr. Sarah Alade (right) at a function in US in 2013

The Quotations Committee of the Council of the Nigerian Stock Exchange has approved the delisting of 21 companies for failure to file quarterly and annual returns, as well as regularize their listing status.

The NSE stated that its action had become necessary ‘to protect the investing public from trading in the securities of entities that have provided no current information regarding their financial status.’ The affected companies are Investment and Allied Insurance Plc, Goldlink Insurance Plc, Pinnacle Point Group Plc, Adswitch Plc, Afroil Plc, Rokanna

Average interest Rates for 2014 20% South Afica Turkey Malaysia India Brazil China Nigeria

18% 16% 14% 12% 10% 8% 6% 4% 2% 0% A Treasure Bill Rate

B Landing Rate

C Inflation

A-C Real Rates

B-C Real Rates

MPR

Source: Central Bank of Nigeria

Industry Plc, IPWA Plc, West African Glass Industry Plc, Nigeria Wire & Cable Plc, Starcomms Plc, Daar Communication Plc, Mtech Plc, Big Treat Plc, G. Cappa Plc, FTN Cocoa Processing Plc, UTC Plc, Stockvis Plc, Nigeria Sewing Machine Plc, Jos International Breweries Plc, Capital Oil Plc, and Golden Guinea Plc. It remains to be seen if the matter dies there. Shareholder associations have announced that they will not take the matter lying down.

Godwin Emefiele has settled in nicely as governor of the Central Bank of Nigeria. Maybe this is the period of grace, but investors would like to know exactly how he plans to juggle stable interest rates, with lower interest rates, and free capital flow. Together, those 3 items must constitute the longest shopping list in Nigeria’s central banking history.

Since 2011, the apex bank has maintained rates at 12 per cent. He also hinted at a review of the Cash Reserve Ratio (CRR), which was raised to 50 per cent in July 2013 and later to 75 per cent in March 2014.

Emefiele indicated that he would proceed with caution because ‘reducing interest rates and maintaining exchange rates are very daunting twin goals but that the central bank will work assiduously to ensure that these goals are mutually achieved.’

In the June edition of its Middle Africa Briefing Note, analysts at Ecobank are sceptical that Emefiele can juggle all three aspirations with success. In their view, he would need to settle on two out of the Impossible Trinity.

CORPORATES Who is in, who is out, who is up, and who is down? It is that time of the year again when the Nigerian Stock Exchange reviews memberships of its market indices.

The big surprise here is Skye Bank, which leaves the NSE 30 Index. In May, Timothy Oguntayo, the group chief executive officer, had indicated that the bank was interested in acquiring Enterprise Bank, which has been put up for sale by the Asset Management Corporation of Nigeria.

If the bank’s bid is successful, it is likely to make a return to the index. Elsewhere, the bank has stated its ambition

He can choose a fixed exchange rate and free capital flow, in which case he would ‘forgo the ability to set interest rates independently and surrender an independent monetary policy.’ A second option would be to put in place a fixed exchange rate and independent monetary policy, in effect, restricting the free movement of capital out of Nigeria. His third choice would be to have an independent monetary policy and free capital flow with the understanding that there will be a floating exchange rate.

Tough choices. Welcome to the real world of central bank policy making Mr. Emefiele.

President Goodluck Jonathan has signed the Pension Reform Act 2014 into law.

The new law addresses many of the shortcomings of its predecessor, which served for 10 years. Some highlights of the new bill include the upward review of minimum contributions from 7.5 per cent to 8 per cent for employees, and 10 per cent, from 7.5 per cent for employers. The new law seeks to pull in employers in the informal sector by making it mandatory for companies with up to 3 employees to belong to the Contributory Pension Scheme. It is gladdening to note that the reform act allows more flexibility for investment in infrastructure and real estate assets. Of course, the most heartening for retirees is that they will now be able to access their savings with less hassle. In recognition of her tireless efforts in pushing the reforms, President Jonathan has submitted the name of the acting director-general of the National Pension Commission, Ms. Chinelo AnohuAmazu, to the Senate for confirmation.

IN CONTEXT to grow its loan book by 15% in 2014.

ARM Pension Managers disclosed that funds advised

by Helios Investment Partners will take a minority stake in

the company. With over $2.2 billion of assets under management (AUM), ARM Pension Managers is the country’s largest independent pension fund manager. In the eight

2014 Loan Growth Aspirations among Nigerian Banks Skye Bank

+15%

GTBank

+15-20%

FCMB

+20%

Sterling Bank

+25%

INDEX CONSTITUENTS’ CHANGES Index

Entrant

Exiting

NSE 30 Index

Ashaka Cement Plc

Skye Bank Plc

NSE Lotus Islamic Index

UACN Plc

NAHCO Plc

NSE Consumer Goods Index

Champion Breweries Plc

DN Tyre & Rubber Plc

NSE Banking Index

Sterling Bank Plc

Wema Bank Plc

NSE Insurance Index

Staco Insurance Plc Unity Kapital Assurance Plc

Consolidated Hallmark Ins. Plc Prestige Assurance Plc

year period since the country launched its pension reforms, the industry has grown by over 30 per cent annually, although more than 90 per cent of its 70 million-strong work force remains outside its mandatory contributory pension scheme.

ARM Pension Funds’ 2013 results show that its revenue grew by 43 per cent, and profit after tax leaped by 86 per cent.

FBN Holdings is finally dipping its toes in continental waters. Last month, the bank notified the NSE that First Bank of Nigeria, its commercial banking subsidiary, has completed the acquisition of 100 per cent of the equity in the West African operations of International Commercial Bank. With 28 branches, 17 ATMs, and total deposits barely above $171 million, to the casual observer this is not a game-changing deal for First Bank.

The bank itself recognizes this as much. Well, sort of. A document it released admits that ‘ICB operations in the

respective markets are small sized.’ It goes on to justify the deal anyway because it ‘presents an expanded capacity for growth with further capital injection and synergies extraction. ICB is present across Anglophone West Africa (Ghana, the Gambia, Guinea and Sierra Leone). The moral of the story is that no strategy is permanent. First Bank has long held out on jumping into the cross-border fray. Now that it has, perhaps, the last shall become the first.

Stanbic IBTC has secured a $100 million loan from the Tunis-based African Development Bank (AfDB) for lending to the country’s small- and medium-scale enterprises as well as clean energy ventures in the ratio of 3 to 1. In a recent interview, Akin Oyebode, head of SME at the bank said that speedy approval and properly priced loans were the two big hurdles faced by borrowers in the segment.

Mustafa Chike Obi

People always talk about loan growth. I think loan growth in Nigeria is muted. I think loan growth should be higher than it is now. It is muted because of the CBN tight monetary policy on lending typified by the hike in cash reserve requirement for deposit money banks (CRR) for both public sector funds and private funds. That has dampened loan growth.

Mustafa Chike Obi, Managing Director of the Asset Management Corporation of Nigeria

12

ARENA

VM | Monday, July 14, 2014 | Issue 001

ART AS AN ALTERNATIVE INVESTMENT

10 Chart Topping Art Pieces

Oliver Enwonwu is the director of leading Lagos gallery, Omenka and president of the Society of Nigerian Artists. oliver@omenkamagazine.com

Welcome to my column, Art as an Alternative Investment.

Here you will find the latest news and insider intelligence on the African art market including auction reports and art transaction prices. I will also be investigating major trends and showcasing the artists and key professionals who drive the industry, as art from the continent continues to gain increased global attention and command staggering fees on the international market. For the serious collector, informed investor, and fiduciaries in wealth management and family offices this column

aims to provide an overview on art as a credible store of value. I will give readers a how-to guide on integrating art collection as a viable part of a wealth building strategy.

It is no secret that savvy investors are allocating a growing part of their portfolios to art.

This column will give a stepby-step tour on art as an alternative asset class.

There is no better way to begin than with the top 10 sales of artworks sold on the domestic market in Nigeria.

The secondary art market in Nigeria has experienced significant growth since the first art auction, Before the Hammer Falls organized by Nimbus Gallery in December, 1999 at MUSON Centre in Lagos.

From then on, there have been other successful sales by several auction houses in Nigeria.

Founded in 2007, market leader, Arthouse Contemporary holds the record price of N30.8 million ($192,500) buyer’s premium inclusive for the highest sold work in Nigeria in its November, 2011. The sum was achieved for Ben Enwonwu’s iconic bronze sculpture, Anyanwu (142.2cm) created between 1954 and 1955.

Indeed, the artist holds the top four spots for art sales in Nigeria. His 1957 fiberglass sculpture, Fulani Girl (78cm) is at second place with N17.1 ($106,563) against its previous estimate of N12,000,000 to 15,000,000 ($75,000$93,750). The sale took place at Arthouse in November 2013. Third is Enwonwu’s The Drummer (89cm). Made in fiberglass, it sold at N14.3 million ($89,375) against its previous estimate of N12 million - N15 million ($75,000$93,750) at the same sale.

The fourth spot is occupied

by Ben Enwonwu’s Untitled (37.5 x 32cm) 1980, ink on paper painting with the hammer price of N13.5 million ($84,375). It was sold in May, 2011 at Terra Kulture’s art auction against its previous estimate of N8 million to N9 million ($50,000 –$56,250).

El Anatsui takes the fifth and sixth slots. His 2013 wood and aluminium panels, Ends and Means Committee (217x106cm) sold in November, 2013 for N13.2 million ($82,500) at Arthouse. It was estimated to go under the hammer at between N12 million to N15 million ($75,000-

$93,750) while his 1992 wooden panels, Grandma’s Cloth Series VI (132 x 262 cm) estimated between N8 million to N10 million ($ 50,000$62,500) achieved the sum of N12.54 million ($78,375) at Arthouse in November of 2012.

Next is Greater Nigeria, a 2007 bronze foil (208.5 x 442.5 cm) by Bruce Onobrakpeya, estimated between N4.4 million – N5.5 million ($37,200-$46,500). It sold at N10.12 million ($63,104.5), at Arthouse in April, 2008.

Demas Nwoko breaks into the top 10 at 8th place. His wooden sculpture, The Wise Man, (72.4 cm) fetched a sum of N9.9 million ($61,732) against its previous estimate of N5 million– N6 million ($32,258$38,710) at Arthouse’s November, 2010 sale.

Tying in at 9th place with N8.8 million ($55,000) buyer’s premium inclusive, are; Ben Enwonwu’s 1980 bronze sculpture, Africa Dances (102.9cm); his 1960 painting, Untitled, (109.2 x 43.2 cm); and Yusuf Grillo’s 1966 oil, Blue Moon, (60 x 60cm).

The works were previously estimated at N6 million to N7.8

million ($40,000-$52,000); N8 million to N9 million; and N7.5 million to N8.5 million ($62,500-$70,830) respectively. They sold at Arthouse’s sales of May, 2011; November, 2011; and November, 2008 in that order.

El Anatsui rounds up the top 10 with his clay sculpture, Nsukka Shrine, (57 x 44 x 5cm) which achieved a sum of N8.58 million, ($53,625), at Arthouse May, 2014 sale, against its previous estimate of N 7 million - N9 million ($43,750-$56,250).

These results are compiled from auctions held in Nigeria over 6 years. In this period, positive interest in the market has been sustained and it appears that buyers are willing to compete strongly for classic examples of works by the older and established artists.

The recent successes recorded on the domestic scene are already influencing prices for Nigerian art on the international market. For example, in May last year, Bonhams, the international auction house, sold Enwonwu’s The Mirror Sculptures in wood, for £361,000 ($560,000) at its Africa Now sale. It is undeniable

able achievements - Forbes magazine mention, CNN Africa Startup feature, largest database for taxi drivers in Africa, strategic partnership with Samsung) he beams with a pride over the victory of his company against one of the e-

2012, he was the newest bright young thing in a long line of European business school imports to bring value-adding innovation to these shores. In his own case, the mission to save us from the stress of grocery shopping. Unlike many others who arrive with fixed ideas and proceed to impose them on customers with dismal results, he had taken the time to understand the Nigerian culture and

commerce giants in a recent football tournament.

On my left is the managing director of the biggest food delivery portal in Nigeria, whose model has been replicated all over Africa. At the time he launched the online service in

sensibility, which is so crucial to any service-related industry, e-commerce or otherwise.

His grasp on what would sell in Gidi is refreshing coming from an oyibo man. I am impressed.

The menu at Sky is impressive. Its Asian fusion cuisine

excels, and understandably so as Lalu Sudirham, the awardwinning head chef, is Indonesian with a background in French techniques. Being a creature of habit I order the duck – medium – with a side of noodles. Friday nights are busy at Sky with the usual schedule of birthday crowds and romantic twosomes, so it takes around forty minutes for the plates to arrive. There are several birthday parties so the light goes off for the perfunctory birthday song and cake display. This happened a few times that night and despite it being terribly inconvenient, it gave all the dinners a chance to really take in the view of Lagos in. Quelle vue - What a sight! It will be hard to find better views of Lagos.

Food has arrived – The duck is in thin slices stacked on a clear glass plate. The arrangement is simple with a chiffonade of pickled slaw and a refined take on a Yorkshire pudding as accompaniments to my favourite dish there. The duck is flavourful, and I suspect that they are Rouen ducks. My generous side of noodles also arrives and speaks to the heritage of

Anyanwu by Prof Ben Enwonwu MBE Bronze 1956 Height: 142.2cm that among the cognoscenti, authentic art pieces by recognized Nigerian artists are commanding a higher premium for both their critically acclaimed aesthetic value, and as an enduring store of value. ; *All prices quoted for sold pieces are buyer’s premium inclusive.

HIGH TABLE

Table for Ten

Ify Oji is a lawyer, writer and food lover. She is the creator of the GidiTang.com (synonym: Lagos Flavour) blog on food and drink in Lagos. teamlogiclimited@gmail.com

Even though I was an hour late, I was the first of the invited guests to arrive. As the guests troop in I notice we are a motley crew of returnees, uber -creatives and technology darlings. A successful curator at a thriving art gallery, a petite sultry modern jazz singersongwriter who was named after the Queen of Sheba (so beautiful she could have well

been from Axum), and an Old Etonian, who runs a nightclub in Abuja, spotting a curious Charlie Chaplin moustache that covered half of his upper lip.

We are a warm and friendly bunch. It does no harm that our crisp white clothed table is soon dotted with glasses of the house red and white. Tonight is reminiscent of dinner parties I hosted or attended as a student in Bristol. This time, however, it was not in my modest apartment in Redland. Neither are we gathered for a meal of jerk chicken brochettes à la Bristol Park Road Sainsbury’s 2-for-1 special. We were at the penthouse restaurant of Eko Hotel in Victoria Island and about to order from the menu of what is arguably the swankiest restaurant in Lagos. The panoramic views of the city are breathtaking. I am in for a good time.

Sitting directly opposite me is the dynamic yet unassuming founder of Easy Taxi, the definitive taxi app in Nigeria.

Amidst his numerous laud-

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the head chef Lalu. It is simply delicious. It is a combination of bok choi, prawns, and seasonal julienned vegetables. Dare I say this is value for money in this notoriously high priced restaurant? Other dishes that worth trying are the lamb, sea bass and salmon. If you are looking to have small chops or appetizers for business drinks, you may want to invest in their appetizer platter. The steamed dim sum in the platter are little bursts of intense flavour.

One point to remember though is to take enough cash.

The restaurant’s POS is not a friendly one. Oftentimes customers have to walk the full length of the hall sized restaurant to make payments. Nevertheless tonight’s experience is one of my most memorable in Lagos. ;

Sky Lounge and Restaurant Plot 1415, Adetokunbo Ademola Street, Eko Hotels & Suites, Victoria Island Tel: 01-2772700 Ext. 6303

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