BusinessDay 12 Dec 2017

4 BUSINESS DAY
C002D5556
Tuesday 12 December 2017
NEWS
EM fund manager eyeing Nigeria
after betting big on India
Robert Marshall-
Lee ran one of the
best-performing
emerging-market
funds this year by
betting big on India and China.
He’s holding off -- for now -- on
places like Argentina, Nigeria
and Vietnam.
Marshall-Lee’s $291 million
Dreyfus Global Emerging Markets
Fund returned 37 percent
since January with stakes in
companies such as Vakrangee
Ltd., the Mumbai-based software
developer that is the fund’s
largest holding.
According to him Lagos beckons,
but not anytime soon.
“We’ve been waiting to invest
L-R: Modestus Anaesoronye,
Insurance
and Pension editor,
and Patrick Atuanya,
news editor, both
of BusinessDay; Ofure
Christopher Ibhakomu,
MD, Lifecard
International Limited/
guest lecturer; Zebulon
Agomuo, editor,
BDSunday; Chuka
Uroko, property editor,
and Jumoke Akiyode-
Lawanson, ICT
correspondent, all of
BusinessDay, at the
BusinessDay knowledge
sharing lecture
series in Lagos.
Pic by Pius Okeosisi
in Nigeria for the last four or
five years, just being patient for
the economy and the currency
to shake out,” London-based
Marshall-Lee, 45, said in an
interview with Bloomberg. “We
think the opportunity is there.”
Marshall-Lee’s fund is among
the top 11 percent of emergingmarket
funds since the end
of last year, data compiled by
Bloomberg show.
On other frontier markets that
stand out, Marshall-Lee says:
“It depends on the time horizon.
Vietnam is developing in an
attractive way. Argentina, there
are some strong possibilities if
they can get on top of their fiscal
and inflationary situation.”
On oil and other risks: “The
oil market disruption risk is
huge over the next 10 to 15 years.
We’ve got electric vehicles which
are likely to grow very rapidly,
particularly in China and Europe.
That’s a big risk to the
Middle East particularly. Even
somewhere like Nigeria. Nigeria
is a petro-economy. Russia is
also a petro-economy. We have
no oil companies in our fund. We
have no Russian exposure in our
fund, so there’s all sorts of things
that a highly active benchmarkagnostic
manager can avoid well
ahead of time.”
Marshall-Lee’s investment
strategy include: Investing in a
five-year horizon, and a focus
on return on capital, particularly
when cash flows from the current
operations are recycled into
new capital investments.
“We look for companies that
can recycle profits into future
projects,” he said.
“On the other hand, you might
have a really good family-run
company in India, for example,
which doesn’t fulfil any of those
tickboxes. They might not produce
a nice, glossy corporate governance
report, but over the long
term they’ve had great capital allocation
positions and they always
treat the minorities very fairly.”
The MSCI emerging-market
stock index rose 0.9 percent at
8:20 a.m. in New York.
Lagos unveils
N1.04trn
budget for 2018
JOSHUA BASSEY
Lagos State governor, Akinwunmi
Ambode, on Monday
presented a 2018 appropriation
bill of N1, 04 6,121,181,680 to
the State House of Assembly for
consideration and subsequent
approval.
The 2018 proposal represents
an increase of 28.67 percent over
that of 2017 which was N813 billion.
It is made up of N347.039 billion
in recurrent expenditure (representing
33 percent) and N699.082
billion capital expenditure, (representing
67 percent) of the total
budget size.
The estimated total revenue
for year, as proposed by the state
government, is N897.423 billion
of which N720.123 billion will be
generated internally.
Also, a total of N148.699 billion
will be sourced through deficit financing
within the state’s medium
term expenditure framework.
Presenting the proposal tagged
“Budget of Progress and Development,”
Ambode said it marked
another basic point of reference
in the progressing radical transformations
and changes that the
residents have been witnessing in
the state since the inception of the
administration in 2015.
“Our investment in new technology
and the reforms put in
place will galvanize the efficiency
of our revenue collection from our
citizens,” Ambode said.
According to the governor, the
proposed 2018 budget will be used
to consolidate on infrastructure,
education, transportation/traffic
management, security and health
with an added emphasis on mandatory
capacity building for civil
servants, teachers in public secondary/primary
schools, officers
Continues on page 38
How NRC frustrates cargo transport by...
Continued from page 1
locomotives has been attributed
to lack of maintenance, ineptitude
and corruption. Without
locomotives, there can be no
rail service.
The total rail network is also
deficient, with about 3500 km
which is out of service in a number
of locations. Conversely,
South Africa has 20,000 kilometres
of rail track and 3,000 locomotives.
It has also recently
ordered for additional 1,000
locomotives. Nigeria however
has continued to rely largely on
what was handed down from the
colonial masters, with minimal
investments in developing the
rail system.
On account of its consistency
over the years, South Africa has
been able to achieve 60 percent
local content in the production of
locomotive manufacturing. The
country has reaped benefits from
technology development, achieving
stable, efficient management.
Industry watchers opine that
same can be achieved in Nigeria
if the will to do so is pursued.
Over the years, private companies
approach the Nigerian
Railway Corporation to lease locomotives
for cargo movement.
They however have to pay N500,
000 in bribes before getting locomotives,
sources tell Business-
Day. With the profit margin on
the average trip between N250,
000 to N500, 000 it implies NRC
officials request for almost all of
the profit.
As senior staff request gratification
for provision of locomotives,
BusinessDay gathered that
drivers also demand for N10, 000
to N20, 000 per trip since they are
aware their bosses are also getting
their palms greased.
Fidet Okhiria, managing director
of the Nigerian Railway
Corporation, however disputed
most of the allegations when
contacted by BusinessDay. He
insisted that any company that
has paid bribes to secure locomotives
for their cargo movement
should come out publicly.
“Can you bring the company
that says they collected money
from them? It is not enough for
me to say they are not collecting
but maybe you know someone
who has paid such (bribe),”
Okhiria said. “I want to know
the companies so that we can
work on it.”
On availability of locomotives,
Okhiria said “available
locomotives are sometimes five,
at other times eight or ten, and
this is because we have not been
able to buy spare parts.”
BusinessDay however declined
providing names of individual
companies as Okhiria
requested, as this may expose
them to victimisation. It has
also been suggested that some
people in NRC’s management
who are opposed to the possibility
of concession, are trying to
frustrate the process to make it
virtually impossible.
There are however potentials
for the rail sector. Rail transport
being faster, cheaper, safer,
would eliminate the chaos Apapa
has become as all three ports
in the area have train access for
cargo and petroleum products.
In moving cargo out of Apapa,
Rotimi Amaechi, the Transport
Minister has been pushing for a
container terminal in Papalanto.
This is expected to reduce the
vehicular congestion, while also
improving efficiency in cargo
delivery. However, this may be
unattainable unless the management
of NRC is overhauled to reflect
the vision of giving Nigeria
an efficient railway service.
Bringing things through Nigerian
ports is among the most
expensive in the world. Ships,
numbering up to 60 at a time
wait to berth and invariably
incur substantial demurrage.
The cost is in turn transferred
to the economy by way of inflation;
implying every Nigerian
contributes to paying the price
in the end.
According to the National
Bureau of Statistics, NBS: “Rail
transport is usually the most suitable
mode of transportation for
heavy traffic flows when speed is
also an advantage because of the
lower cost per person per load as
the train load increases. Nigeria’s
single-narrow-gauge railway
line constructed in the colonial
period was for many years the
only mode of freight movement
between the northern and southern
parts of the country.”
In Nigeria, rail transport accounts
for less than a half per
cent to the gross domestic products
of the transport sector.
Although rail has always contributed
a tiny proportion of valueadded
in transportation, its
share of value-added continues
to decline because road transport
(freight and passenger) has
virtually taken over all the traffic
previously conveyed by rail.
The relegated status of the
Nigerian Railways is a classic
illustration of a transportation
policy which has side-lined an
important and cheap means of
transport to foster the growth of
privately-owned long haulage
transport services.
Rail Transport is a very small
division of Nigeria’s transport
subsector. It once had the most
comprehensive set of data which
described its activities, but unfortunately,
the Nigeria Railway
Corporation (which is the
sole authority in charge of rail
transport) is today an ailing
parastatal.