Wednesday 08 November 2017 12 BUSINESS DAY C002D5556 EDITORIAL PUBLISHER/CEO Frank Aigbogun EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITOR John Osadolor, Abuja NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi HEAD OF SALES, CONFERENCES Rerhe Idonije SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North) Bashir Ibrahim Hassan GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Wole Obayomi Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo NEWS ROOM 08022238495 08034009034}Lagos 08033160837 Abuja ADVERTISING 01-2799110 08116759801 08082496194 ENQUIRIES Federal Government: Get creative and forget about BVN funds The Federal Government in its culture of laziness as it searches for easy money has set its sights on monies deposited in banks by individuals and organisations. This hunt by the FG is predicated on an estimated 46 million bank accounts which are not linked to any Bank Verification Number (BVN). This has of course begged the question; why is the government always so desperate for ‘free money’? When other progressive nations are thinking of how to expand economic activity and invariably, increase the amount of money their citizens have in bank accounts, Nigeria’s government has for weeks been scheming to take money out of corporate and individual accounts. We however believe that the government should instead be more creative in its approach to managing the economy. The economic diversification chant should go beyond rhetoric, but given a strategic, committed, intelligent push. Different sectors of the economy from Agriculture, to Mining, Manufacturing, Technology and so many others only need concerted efforts to start blossoming. The present administration has in the last two years, favoured issuance of bonds and all sorts of debt instruments to stay afloat. If the government has however run out of places to get easy cash, the cash deposited in banks by Nigerian citizens and possibly non-citizens cannot be the way out. In fact, as noted in some quarters, such an action might send a wrong signal to foreign investors and the international community. At a time when the country seems to have made appreciable growth in ease of doing business, it therefore defies logic that investors will be expected to troop into a country where government can wake up, and clamp down on any “loose cash” in sight. The government’s decision like virtually every other endeavour of the present administration revolves around anti-corruption. But the simple logic which should have perhaps been allowed to prevail is that; accounts without BVN remain barred from transactions until it is done. Going beyond this to convert these monies into government use is cynical, and a lazy way to raise funds. Nigeria’s public debt as at June stands at N19.6 trillion (US$64.2 billion), which is about 16 percent of the 2016 GDP of US$405 billion. However, confiscating banks depositors’ funds through this BVN strategy, is far from being ingenious as a way of meeting the government’s growing financial obligations. Apart from the existing debt, there are also plans for a $5.5 billion eurobond. Nigerians remember only too well, the tortuous past of struggling to pay series of foreign debts which accumulated mostly through the military era. But this administration has not only favoured borrowing, but appears to have run out of potential foreign creditors, borrowed excessively from domestic banks, and now, simply wants to take by force, what it hasn’t been smart enough to build up on its own. As some reason in line with the government’s argument; ill gotten wealth could account for the chunk of the accounts without BVN. However, there are potentially millions of people in the diaspora, even in prison, or incapacitated one way or the other, and regardless of their conditions, have the right to access their funds whenever they are able to enrol for BVN. Until this is done, access to the funds only needs to be restricted, not converted to government use. SUBSCRIPTIONS 01-2799101 07032496069 07054563299 www.businessdayonline.com The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 LEGAL ADVISERS The Law Union MISSION STATEMENT To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world. 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Wednesday 08 November 2017 C002D5556 BUSINESS DAY 13 COMPANIES & MARKETS Company news analysis and insight Apple taps debt markets to fund $300bn in returns P 14 Linkage Assurance Q3 profit spikes on dividend income BALA AUGIE Linkage Assurance Nigeria Plc’s investment in shares in other firms, Treasury Bills (Tbills) and bonds has yielded fruit as the insurer’s third quarter profit surged. For the first nine months through September 2017, Linkage Assurance’s profit after tax surged by 297.01 percent to N2.44 billion form N616.15 million the previous year. Profit before tax followed the same growth trajectory has it spiked by 272.92 percent to N2.87 billion from N770.12 million as at September 2016. The growth in net income was underpinned by a 31,913 percent surge in dividend income to N2.51 billion in the period under review. “Insurers hold those premiums you pay them in assets like bonds, shares, and Treasury Bills (T-bills) so that if there is a claim they can sell it,” said a top analyst who does not want his name mentioned. “They buy shares of other firms and earn income from it,” said the analysts,” said the analyst. Linkage Assurance was able to utilize the resources of its owners in generating higher profits while margins improved. Return on equity (ROE) increased to 11.93 percent in September 2017 compared to 3.73 percent the previous year. Return on assets moved to 10 percent in the period under review as against 3.30 percent as at September 2016. Linkage Assurance has been introducing innovative and market driven products with a view to increasing its share of the Nigerian market. Some of the new products introduced by the insurer include: Linkage Purple Motor Plus; Linkage Third Party Plus; Linkage Shop Insurance; Linkage Event Insurance; Linkage Estate Insurance and Linkage SME Comprehensive. The economic downturn showed, were faced in the numbers of the Nigerian insurer as premium income slowed in the period under review. Net premium income dropped by 13.73 percent to N2.01 billion in September 2017 from N2.33 billion as at September 2016. Gross premium income was also down 2.77 percent to N3.15 billion in the period under review as against N3.24 billion. As a result of receding premium income, and rising underwriting expenses, Linkage Assurance’s underwriting profit reduced by 87.62 percent to N65.04 million in September 2017 from N525.75 million the previous year. The Nigerian insurer’s claims expenses were down by 4.84 percent to N697.49 million in September 2017 from N733.01 billion. Claims ratio increased to 34.65 percent in September 2017 from 31.37 percent as at September 2016. Oil climbs above $64 a barrel after Saudi crackdown Concerns about stability and policymaking in world’s largest crude exporter David Sheppard and Anjli Raval in London Oil surged above $64 a barrel to the highest level in two years on Monday after Saudi Arabia’s crackdown on dozens of princes and business tycoons raised concerns about stability and policymaking in the world’s largest crude exporter. The sharp move in Brent crude, the international benchmark, came shortly after Saudi officials warned that they had found “widespread corruption” among the suspects detained in the weekend sweep and threatened to freeze assets of those being held. Brent hit a high of $64.23 a barrel, taking gains since June to more than 40 per cent, in a move that is likely to be closely watched by central banks already monitoring rising inflation. US benchmark West Texas Intermediate hit $57.41 a barrel, its highest in two years. Crude was on an upward trend even before Saudi Arabia’s crown prince Mohammed bin Salman launched his purge, which has included the detention of billionaire investor Prince Alwaleed bin Talal, whose holdings include stakes in Citigroup, Apple and 21st Century Fox. The crackdown was widely seen as a move to consolidate Prince Mohammed’s power as next in line to the throne. Because Saudi Arabia is Opec’s leading member, pumping one in every nine barrels of crude produced globally, political manoeuvring in the kingdom is closely watched by oil traders. “The impact on oil could be significant on the perceived increase in volatility in the kingdom,” said Cyril Widdershoven, at Dutch consultancy Verocy. Kingdom Holdings, Prince Alwaleed’s investment vehicle, issued a statement saying that the Saudi government had expressed its “full confidence” in the investment firm that manages $12.5bn of assets globally. Employees have told business partners that there is a vacuum of information within Kingdom Holdings, with questions swirling about the fate of the firm’s assets. “Everything is on hold,” said one person close to the company. Unlike oil, shares in listed companies in which Prince Alwaleed holds large stakes were initially unaffected by his detention. Oil’s move above $60 a barrel has been supported by the strongest economic growth globally since the financial crisis, with consumption booming in both developed and emerging markets. Opec has also been cutting output in co-ordination with Russia and other large producers since January, removing about 1.8m barrels a day, or roughly 2 per cent of global supply from the market, helping to draw down surplus oil inventories that have built up since 2014.
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