4 BUSINESS DAY C002D5556 Tuesday <strong>12</strong> <strong>Dec</strong>ember <strong>2017</strong> 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 <strong>BusinessDay</strong>; 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 <strong>BusinessDay</strong>, at the <strong>BusinessDay</strong> 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,<strong>12</strong>1,181,680 to the State House of Assembly for consideration and subsequent approval. The 2018 proposal represents an increase of 28.67 percent over that of <strong>2017</strong> 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.<strong>12</strong>3 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, <strong>BusinessDay</strong> 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 <strong>BusinessDay</strong>. 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.” <strong>BusinessDay</strong> 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.
Tuesday <strong>12</strong> <strong>Dec</strong>ember <strong>2017</strong> BUSINESS DAY 5