12-02-2018

Nigeria’s Financial & Business Newspaper 

February, Monday 12 - Sunday 18, 2018 www.businessamlive.com 

business 

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Executive, legislature face-off 

slows economic policies 

AJOSE SEHINDEMI 

BISMARCK VV, FINANCIAL 

analyst and chief executive 

officer of Lagos-based Financial 

Derivatives Company Ltd 

(FDC), has indicated that the 

political face-off between Nigeria’s Presidency 

and the National Assembly is choking 

economic policy implementation and 

stalling economic growth. 

Rewane cited some outcome of the faceoff 

to include the 2018 budget, which 

he said was in limbo; the inability of the 

Monetary Policy Committee (MPC) of the 

Central Bank of Nigeria (CBN) to meet on 

lack of quorum due to non-confirmation 

of members by the lawmakers; and the 

near lack of leadership at the Pension 

Commission. 

In a presentation at the executive breakfast 

meeting of the Lagos Business School 

(LBS) last week entitled ‘’2019: The 

Changing Political Calculus’’ he said the 

face-off does no one any good. 

“Oversight function is becoming an elegant 

shakedown and NASS is right in 

seeking for compromise from the Presidency 

on policy issues as the Presidency’s 

intent on playing a winner takes all game 

is not good for the system.” 

He noted that the ruling APC are in a dilemma 

on the direction to go in shaping 

the economy as election is fast approaching 

and all their decisions will be on winning 

the election. 

“APC are stuck between pleasing the electorate 

and delivering on economic reform 

from now until 2019, as the policy options 

are in three buckets: Political expediency 

- Vote catching sound bites; Economic 

necessity – Keep the economy going and 

creditors happy; and material convenience 

– sharing the spoils.” 

Page 2 

Summary 

Coys to gain on new tax laws 

NIGERIAN CORPORATES AND ELIGIBLE 

taxpayers are expected to gain some reliefs 

when the ongoing tax law reforms are approved 

and implemented, according to details 

of the recommendations of the National Tax 

Policy Implementation Committee (NTPIC) 

seen by business.a.m. 

Page 2 

FINANCE & INVESTMENT 

Treasury bills bearish 

The treasury bills market has been predominantly 

bearish since the last primary 

market auction on the 31st of January 2018. 

The average T-Bills yield has advanced by 

1.00 percent, following yield increases on 

all tenors. 

Page 14 

COMPANY NEWS 

Multi-Trex N5bn lifeline 

MULTI-TREX INTEGRATED Foods Plc, 

the indigenous production company, long 

troubled over a mounting of debts that led to 

the intervention of AMCON could be in for 

a lifeline as the Nigeria Export-Import Bank 

(NEXIM) says it has N5billion facility on the 

table to revamp the company and bring it 

back to production. 

Page 20 

TECHNOLOGY & INNOVATION 

High data cost challenge e-commerce 

E-COMMERCE is challenged in Nigeria by 

myriad of issues including ease of doing 

business, infrastructure deficit, culminating 

in high data and operating cost. 

Page 22 

L-R:Yemi Osinbajo, vice president of Nigeria; Mauricio Alarcon, managing director/CEO, Nestlé Nigeria Plc, and Yetunde Onanuga, deputy 

governor of Ogun State, at the commissioning of Nestlé Milo Ready-to- Drink factory in Agbara,Ogun state, on Thursday 

THE MONDAY INTERVIEW 

I vote for low interest rate 

Mustafa Chike-Obi is an interesting 

subject for any serious financial journalist 

to interview. As an international 

investment banker with a Goldman 

Sachs’ pedigree, the pioneer managing 

director/CEO of AMCON, now executive 

vice chairman, Alpha African Advisory, 

talks a lot of sense in this interview with 

business a.m. Page 16 

EXECUTIVE KNOWLEDGE SERIES 

A pathway to scale in emerging markets 

IN 2012, CHINA LAUNCHED a series of 

reforms aimed at incentivising growth in 

the private sector of the country’s healthcare 

system. Like many emerging economies, 

China faces a host of challenges in 

delivering high-quality healthcare access 

Page 9 

News: 2 & 4 Comment: 6 & 7 Industry: 27 Commodities & Agriculture: 31 

WORLD BUSINESS & ECONOMY 

UK posts largest trade deficit 

THE UK’S DEFICIT on trade in goods and 

services widened by £1.2 billion to £4.896 

billion in December 2017 from an upwardly 

revised £3.652 billion in the previous month 

and way above market expectations of £2.4 

billion. It was the largest trade deficit since 

September 2016. 

Page 24 

ENERGY, POWER & RENEWABLE 

Nigeria rig counts rise 

Signs that drilling activities in the oil and gas 

industry are picking up and reflecting the 

increased crude oil production in Nigeria 

are showing up in the number of rigs being 

deployed Page 26 

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No 002

2 

BUSINESS A.M. FEBRUARY, MONDAY 12 - SUNDAY 18, 2018 

NEWS 

Executive... 

Page 1 

He said policies would be driven 

majorly by three considerations 

including politically expedient, 

economic necessity or imperative, 

and materially convenience 

in response to electoral pressure 

caused by Obasanjo’s letter 

which will force greater efficiency 

and speedy response by 

incumbent, embolden opposition 

forces to coagulate, leading 

to greater transparency in public 

sector 

“Aggressive tax collection/excise 

duties is not politically expedient 

for the government but it is of 

economic necessity and materially 

convenient. Minimum wage 

review is politically expedient, 

economic necessity but not materially 

convenient”, he asserted. 

He forecast that money supply 

growth would increase in Q1 

while Primary Treasury bills issue 

would be much lower than 

maturing bills as the average stop 

rates of Treasury bills in February/March 

will decline to 11- 12 

per cent per annum with interbank 

interest rates falling in tandem. 

“Interest rate to decline despite 

no Monetary Policy Committee 

(MPC) meeting as the correlation 

between M2 growth and Consumer 

Price Index (CPI) had broken 

down in 2017. 

“The more positive correlation is 

CPI and the credit to the private 

sector as once credit availability 

is abundant at good rates -average 

rate 21 – 25 p.a., productivity 

and output will increase and 

bring the price level down. The 

fear that excess liquidity will lead 

to transmission effects on prices 

and markets is overblown, with 

growth increasing simultaneously 

oil price, production revenue,” 

he noted. 

On global developments, he said 

the drop of the pound to 1.18 

against the dollar in 2016 reduced 

Nigerian Diaspora remittances 

by over $3bn as 30 percent 

of Nigerians in the Diaspora are 

in the United Kingdom. 

The proposed 

changes to 

the tax laws 

would achieve 

the following: 

increase and 

diversify 

government 

revenue, 

simplify paying 

taxes and 

doing business, 

promote 

MSMEs, protect 

vulnerable 

persons, 

and remove 

obsolete, 

ambiguous and 

contradictory 

provisions in the 

law. 

Companies to gain additional 

reliefs as new tax laws underway 

STEVE OMANUFEME 

NIGERIAN CORPO- 

RATES AND ELIGIBLE 

NEWS taxpayers are expected 

to gain some reliefs 

when the ongoing tax 

law reforms are approved 

and implemented, according 

to details of the recommendations of 

the National Tax Policy Implementation 

Committee (NTPIC) seen by 

business.a.m. 

The NTPIC had on Friday, February 

2, 2018, presented its progress report 

on the review of tax laws and regulations, 

and proposed tax reforms 

to Kemi Adeosun, the minister of 

finance. The recommendations are 

put together in two Executive Orders 

and five Amendment Bills as follows: 

Executive Orders Value Added Tax 

Act (Modification) Order; Review of 

Goods Liable to Excise Duties and 

Applicable Rates Order; 2017 Amendment 

Bills Companies Income Tax 

Act (Amendment) Bill; Value Added 

Tax Act (Amendment Bill); Customs, 

Excise, Tariff etc. (Consolidation) Act 

(Amendment) Bill; Personal Income 

Tax Act (Amendment) Bill; and Industrial 

Development (Income Tax 

Relief) Act (Amendment) Bill. 

The proposed changes to the tax laws, 

according to Taiwo Oyedele, the vicechairman 

of the committee, would 

achieve the following: increase and diversify 

government revenue, simplify 

paying taxes and doing business, promote 

MSMEs, protect vulnerable persons, 

and remove obsolete, ambiguous 

and contradictory provisions in the law. 

Some of the major areas of the recommendations 

by the NTPIC include 

reviews of the Company Income Tax 

Act, Value Added Tax Act, Customs 

Excise and Tariff Act (CETA), Personal 

Income Tax Act (PITA)/ Pension 

Contribution, and Industrial Development 

(Income Tax Relief) Act (IDI- 

TRA) and Tertiary Education Trust 

Fund (Establishment, Etc.) Act. 

The mandate of the committee was to 

carry out reviews of tax laws and regulations 

in accordance with the rec- 

L-R:Adeniyi Oshinowo, Admiral and commandant, National Defence College; Peter Danke, deputy commandant and Kemi 

Adeosun, minister of finance and representative of Vice President of Nigeria, Yemi Osinbajo, at a lecture delivered on behalf 

of Osinbajo by Adeosun, to the Course 26 participants of National Defence College in Abuja 

N20bn daily revenue under threat as maritime workers 

plan to force govt.’s hand on port access roads 

Ajose Sehindemi 

REVENUE ESTIMAT- 

ED at about N20 billion 

NEWS 

that the Nigerian government 

earns daily 

from activities at the 

Apapa ports are under threat from a 

proposed strike action being planned 

by workers unions in the maritime 

industry, who are trying to force the 

hand of the government over the state 

of access roads leading to the ports in 

Apapa, Lagos. 

The workers want the government 

to fix the roads into Apapa, host to 

Nigeria’s two most utilized ports, the 

Tin Can and Apapa ports. The town 

accounts for 80 percent of Nigeria’s 

export and import activities, earning 

for the government about N20 billion 

daily, according to Paul Gbededo, 

ommendations of the NTP, while taking 

into consideration the Economic 

Recovery and Growth Plan (ERGP) 

and the Ease of Doing Business Plan. 

One major boon of the recommendations 

is deletion of Section 16(7) of 

CITA, which restricts carry forward 

of losses by insurance companies to 

four years and replacing it with a new 

subsection that allows indefinite carry 

forward of losses. 

There is also an amendment of Section 

19 of CITA to avoid double taxation 

of retained earnings on which tax 

has been paid and exclude exempt 

profits from excess dividend tax. 

Others are deletion of commencement 

rule provisions to reduce the 

impact of double taxation on new 

companies, amendment of Section 

31(2)(a)(ii) to allow for indefinite 

carry forward of losses made by companies 

during their commencement 

period, deletion of Section 39(1)(e) to 

remove bureaucracy regarding ministerial 

approval for loan obtained for 

group managing director of Flours 

Mills Nigeria plc, one of the country’s 

food companies. 

Jonathan Nicol, who is president of 

the Shippers’ Association, Lagos State 

(SALS), had earlier said the country 

was already losing N1 trillion annually 

as a result of cargo diversion to ports 

in neighbouring countries due to bad 

roads to Lagos ports. He said the losses 

arose from import duties and other 

charges not paid to Nigerian ports. 

Aliko Dangote, Africa’s richest man 

and president, Dangote group, had 

also disclosed that N140 billion was 

being lost weekly to traffic gridlocks 

on the roads leading into the two 

ports because of the perilous and 

dilapidated state. 

Haruna Omolajomo, executive 

secretary, Association of Bonded Terminal 

Operators in Nigeria, said his 

association is seeking a common front 

gas projects and to improve ease of 

doing business, and deletion of other 

overlapping and obsolete provisions 

On value added tax, the committee 

recommended that Section 2 and 46 

of VATA be amended to include “intangible 

property” as a chargeable 

item and define ‘taxable supplies”, 

respectively. 

The inclusions cover guidelines on 

turnover thresholds for VAT registration 

and giving the ministry of finance 

the power to amend the threshold, 

and inclusion of a section imposing 

obligation to self-account for VAT on 

recipients of taxable supplies by nonresident 

companies (NRCs), regardless 

of whether the NRC charged VAT 

on its invoice or not. 

Overlapping and obsolete provisions 

in the VATA were equally recommended 

for deletion as well as 

modification of Part 1 and 2 of the 

First schedule to VATA, through an 

Executive Order, to include residential 

property leases or rentals, shared 

of all maritime groups to confront the 

challenge posed by the continued 

neglect of the port access roads by the 

federal government. 

Omolajomo said the association has 

started to rally other interest groups 

with the objective of jointly declaring 

a state of emergency on the port access 

roads. 

He said groups like the Association 

of Nigerian Licensed Customs Agents 

(ANLCA), National Association of Government 

Approved Freight Forwarders 

(NAGAFF) as well as truck owner 

groups like NARTO, AMATO and 

JCOST should align with the Maritime 

Workers Union of Nigeria (MWUN) in 

declaring a state of emergency on the 

port access roads. 

He said the government has failed 

in its responsibility to provide the 

necessary infrastructure for port 

businesses to thrive. 

passenger –transport services, life 

insurance as VAT exempt goods/services 

and deletion of obsolete provisions 

Regarding Customs Excise and Tariff 

Act (CETA), NTPIC recommended 

the introduction of a specific rate 

system in addition to the existing ad 

valorem rate system for tobacco and 

alcoholic products and the inclusion 

of eight additional items to the list of 

goods manufactured in Nigeria that 

are subject to excise duties in line 

with ECOWAS directive. 

For individual tax payers, the Personal 

Income Tax Act (PITA)/ Pension 

Contribution, the mode of delivery 

of notice of objection is modified to 

include delivery in person, by courier 

or via electronic mail, to accommodate 

developments in ICT. 

Other modifications include the admissibility 

of the different names adopted 

by State Revenue Authorities 

admissible by the law and deletion of 

overlapping and obsolete provisions. 

Omolajomo said the level of federal 

government’s neglect of the roads has 

got to the point where all hands must 

be on deck to forcefully draw government’s 

attention to the lives that are 

being lost daily and businesses ruined 

by the failed roads. 

He said: “Government should understand 

that the sector is a key factor 

to economic growth and must be 

given the urgent attention needed to 

encourage and complement the entrepreneurial 

spirit of the private sector. 

“Only a fraction of the revenue generated 

daily from the ports is needed to rehabilitate 

and reconstruct the ports access roads,” he said. 

He wondered why government has failed to 

realise the enormous harm being done to the 

economy by neglecting the roads. 

“I am in total support of what the Maritime 

Workers Union of Nigeria plan to do 

to ensure that the roads are fixed for once,” 

Omolajomo said.


3


4 NEWS 

UK offers initiative for holistic approach 

to infrastructure devt in Africa 

Business a.m. 

UK HAS IN- 

DICATED that it 

NEWS would increase 

its efforts to 

work closer with 

African governments 

and private sector on 

infrastructure development 

through a vehicle, the Africa 

Infrastructure Board. 

On the sidelines of the Mining 

Indaba in Cape Town last 

Friday, the UK government 

and private sector presented 

the Africa Infrastructure Board 

and emphasized the unique 

proposition UK companies 

and government could offer in 

providing a holistic approach 

to infrastructure development 

in Africa. 

The UK Department for International 

Trade (DIT) hosted 

a number of African delegations 

attending the Mining Indaba 

at a roundtable to present 

the Africa Infrastructure Board. 

“This is an initiative that brings 

together and puts the case forward 

for choosing the UK as an 

ideal partner not only to develop 

projects in the mining sector but 

to create a holistic solution that 

will benefit the wider community 

by developing the associated 

infrastructure around the 

project,” a statement from the 

DIT read. 

Nigel Casey, the High Commissioner 

of UK to South Africa, 

said that the UK would be 

increasing its efforts to work 

closer with African governments 

and private sector. 

“Mining projects are much 

more than just mining,” he 

said, adding that they don’t 

work without the associated 

infrastructure. 

He noted that the UK was 

conscious that there is plenty 

of competition out there when 

it comes to offering comprehensive 

solutions to African 

partners. 

“We felt the need to up our 

collective game,” he said, “and 

create a new government industry 

partnership called the 

Africa Infrastructure Board, 

which brings together all the 

players in the UK whether that 

is government through DFID, 

or UK Export Finance, one of 

our best kept secrets, or the 

deep pockets of the Commonwealth 

Development Corporation 

(CDC), and private sector 

operators, all operating in one 

single place to offer an end to 

end solution.” 

Oliver Andrews, chief investment 

officer at the Africa 

Finance Corporation (AFC), 

who was one of the panelists 

during the roundtable, noted 

how DFID, the UK’s government 

development arm, was 

instrumental in developing 

the model currently being 

used in infrastructure project 

financing. 

Craig Sillars from the Department 

for Trade showcased 

a number of projects where 

opportunities in the mining 

sector are being structured in 

a way that truly develops the 

infrastructure and act as a catalyst 

to develop other sectors. 

The UK DIT, for example, 

is working with a UK investor 

in Angola on resurrecting an 

iron ore mine. But as well as 

the mine they are developing 

a smelter, which will ensure 

in-country beneficiation of 

natural resources, and that 

will involve the extension of 

an existing railways, and the 

expansion of a port. “There 

will be 600MW of power attached 

to that,” he went on to 

add, “and 25,000 of agriculture 

land provided grow biomass to 

help provide charcoal for the 

smelter.” 

“The approach we are taking,” 

he told the participants, 

“is to produce masterplans 

that will benefit the communities 

not only for the next four 

to five years but the next 60, 

which is what we are doing 

in Angola, and that when the 

mining project is finished the 

infrastructure will continue to 

benefit the whole region.” 

Francis Gatare, CEO of the 

Rwanda Mining Petroleum 

and Gas Board, had said that 

most of the Rwandan involvement 

with the UK had been 

through government, but that 

private sector interest was 

growing. 

This is an initiative 

that brings 

together and puts 

the case forward 

for choosing the 

UK as an ideal 

partner not only to 

develop 

projects 

business a.m. Accra conference to 

boost sustainable development in West 

Bukola Odufade 

Businessnewscorp 

Limited 

Nigeria, 

NEWS 

publishers of 

business a.m. 

and businessamlive.com 

has said that in 

order for organisations and 

businesses in West Africa to 

balance the three pillars of 

sustainable development, 

social progress, economic 

growth and environmental 

protection, they have to integrate 

sustainability in their 

everyday business. 

To this end, the company 

has concluded plans to host a 

two-day conference that will 

bring together different organisations 

and businesses, 

as well as government and 

civil society groups focused 

on the issues around sustainability 

with and aim to share 

ideas and proffer solutions to 

the challenges that confront 

organisations anf governments 

engaged or trying to 

engage the subject. 

In the statement released 

by the company on at the 

weekend in Lagos, Amadi 

Iheukwumere, chief operating 

officer, of Businessnewscorp 

Limited said: “There is 

need for more businesses 

in countries in West Africa, 

large, multi-national and 

even small and medium sized 

businesses to integrate sustainability 

in their everyday 

business so as to help bring 

solutions to the myriad of 

problems and challenges of 

poverty, unemployment, environmental 

degradation and 

disease in the region.” 

He said that as sustainable 

businesses look beyond 

their walls to support society 

through corporate social 

responsibility projects and 

broader sustainability initiatives, 

in order for them to 

make more impact, sustainable 

companies have to collaborate, 

working with others 

to make these initiatives more 

impactful and more largescale 

oriented. 

With the maiden event set 

to be held in Ghana, the focus 

of the conference is on West 

Africa as a sub-region and an 

exploration of the dynamics 

and role of businesses 

investing to impact lives and 

society. 

The conference 

will also seek 

to elevate 

discussions 

and debates on 

issues around 

how government 

could encourage 

businesses to 

be involved in 

sustainable 

economic 

“The conference will also 

seek to elevate discussions 

and debates on issues around 

how government could encourage 

businesses to be 

involved in sustainable economic 

agendas and how businesses 

are responding to 

challenges posed by the environment, 

climate change; 

as well as issues around clean 

energy and health,” he continued. 

Iheukwumere noted that 

the aims of the event is to 

provide innovative solutions 

to challenges of the market, 

create platforms for agenda 

setting and idea generation 

and sharing; and impact indi- 

vidual, institutional, business 

and economic growth across 

West Africa. 

The discussions at the conference 

will address the sub– 

region’s capacity to increase 

its global competitiveness on 

all fronts and build resilient 

economies in the face of globalisation. 

Targeted and expected dignitaries, 

speakers and panelists, 

include Nana Akufo– 

Addo, the president of Ghana; 

Christine Evans – Klock, UN 

resident coordinator, Ghana;, 

Ola Bello, executive director, 

Good Governance Africa 

(GGA); Adejoke Orelope Adefulire, 

Senior Special Assistant 

to the Nigerian president 

on Sustainable Development 

Goals. 

Others are Ijeoma Nwagwu, 

faculty member, Sustainability 

Centre, Pan Atlantic University, 

Lagos, Nigeria; Samuel Agbevem, 

Partner and Practice 

Lead, Sustainability and Climate 

Change, Ernst & Young, 

Nigeria; Omobolanle Victor– 

Laniyan, Head, Sustainability, 

Access Bank Plc, Oluwasoromidayo 

George, Director, 

Corporate Communications, 

Unilever, West Africa. 

L-R: Nnaemeka Achebe, obi of Onitsha; Christopher Kolade; Anya O. Anya, and Ufot Udoeme, group managing director, SO &U, 

at the 15th annual lecture of the Centre for Value and Leadership in Lagos 

Returns, members contribution push pension assets to N7.7trn in FY:2017 

Steve Omanufeme 

Nigerian 

pension assets 

NEWS have risen to 

over N7 trillion 

as at end-2017, 

according to 

data released recently by the National 

Bureau of Statistics (NBS). 

The data, which shows a 

breakdown of pension assets and 

retirement savings account (RSA) 

membership, indicated that as at 

December 2017, total Fund Assets 

Under Management (AUM) 

was valued at N7.5 trillion, up 

22.0 percent year on year and 4.9 

percent quarter on quarter from 

N6.2 trillion and N7.1 trillion in 

FY:2016 and Q3:2017 respectively. 

Similarly, total number of 

registered RSA holders grew 6.5 

percent year on year and 1.5 

percent quarter on quarter to 7.8 

million people from 7.3 million 

and 7.7 million individuals as of 

FY:2016 and Q3:2017 respectively. 

Analysts at Afrinvest attribute 

the impressive growth in pension 

assets (which was higher than 

16.1% in FY:2016) to increase in 

members’ contribution as well as 

impressive return on investments 

(ROI) generated by pension fund 

administrators (PFA) in a favourable 

investment climate of high 

yield on fixed income securities 

and bullish sentiment in the equity 

market. 

However, the historical risk 

aversion of PFAs, they said, remains 

evident in asset allocation 

strategy as the ratio of government 

securities to total assets stayed 

at peak level of 72.4 percent with 

FGN bonds and treasury bills the 

dominant holdings. 

Assets remained skewed to 

FGN bonds (53.8% of total assets), 

up 4.4% Q-o-Q to N4.0 trillion 

from N3.9 trillion in Q3:2017. 

PFAs also invested in recently 

introduced debt instruments in 

the domestic market such as the 

Sukuk and Green Bonds issued 

in the quarter while reducing 

their positions slightly in treasury 

bills and agency bonds - down 7.3 

percent and 0.5 percent Q-o-Q 

respectively. 

Data equally indicated that 

domestic equity security assets 

surged 34.3 percent Y-o-Y to 

N672.2 billion, the fastest annual 

growth since 2013, against the 

backdrop of improved sentiment 

in the equity market which 

buoyed returns and probably led 

to additional investments. 

“Yet, the ratio of ordinary 

shares holding (domestic and 

foreign) to total assets in FY:2017 

(10.3%) remained below regulatory 

cap of 20.0%. Similarly, total 

PFA portfolio invested in infrastructure 

funds was estimated 

0.1% compared to regulatory cap 

of 5.0%,” the Afrinvest analysts 

noted. 

Since the Pension Reform 

Act of 2004 was passed into law, 

pension assets have recorded 

steady growth and PFAs have now 

become the largest non-bank domestic 

institutional investor base; 

yet, they have faced increased 

criticism for risk aversion and 

perceived asset-liability mismatch 

due to high concentration of assets 

in risk-free government securities. 

In their defense, the relatively 

small size of pension assets (in 

comparison to GDP and Middle 

Income Countries), volatility in 

macroeconomic indicators and 

weak enforcement of contracts 

make the case for investing in 

risk assets and infrastructure less 

compelling.


5 

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EDITORIAL 

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87, Oduduwa Crescent, 

GRA Ikeja, Lagos, Nigeria. 

Tel.: +234 907 986 3875 


Website: www.businessamlive.com 

The FIRS property 

evaluation and 

assessment 

At some point we think that government and business will 

need to find a way to work together for the good of this country. 

This is because for as long as anyone could remember, 

there has been no love lost between the Nigerian government 

and business. 

Government after government, the story has remained the same that 

those who are at the helm of governance either misunderstand business 

or deliberately choose to misunderstand business. We think that 

this position is borne out of the fact that politicians think and believe 

strongly that politics trumps every other thing because it places them in 

the position of power and nothing else matters. 

But this is far from the truth. Politics are for winning elections. Governance 

is the act of delivering on promises made during campaigns. 

And delivering on campaign promises is largely a function of political 

economy management, which necessarily involves creating an enabling 

environment for business to thrive so that they can create the jobs that 

politicians promise during campaigns. 

For indeed, the truth is that politicians do not create jobs anywhere in 

the world as government jobs are not the real job creating opportunities 

real politicians talk about when they talk about jobs. Politicians enable 

business to create jobs by making it possible for business to operate by 

not been obnoxious through their policies and actions that could stifle 

the space for growth and wealth creation that business is better placed 

to help politicians deliver. 

While we agree that Nigeria has suffered from a hangover on its now 

diminished oil wealth and government is doing everything possible to 

correct the mistakes of the past, we are of the view that it is not carrying 

business along. This attitude is historical and it is a behaviour which is 

not appropriate for correcting past errors. 

Policies must be tested on a cost-benefit basis and they must offer 

serious consideration if, against the backdrop of positive intention, they 

are found to be the wrong antidote for the infractions they are purposed. 

The Federal Inland Revenue Service (FIRS) is trying very hard to pack 

many life times of failings by Nigerian governments into a capsule of time 

as if it is launching a rocket into space. In this drive to raise additional 

revenues for the country, it appears to have entered an area that is now 

causing serious discomfort to business and for which we think that there 

is need for an urgent review. 

The FIRS has introduced a property valuation and assessment programme, 

which business, represented by the Organised Private Sector, 

is up in arms against. It would seem to us that the FIRS in its search for 

places to eke out revenues has not considered it necessary to consult with 

business about this new programme. 

The OPS says the exercise involves revaluation and reassessing of 

properties in which its members do business for the purpose of imposing 

new taxes on them. It says this poses a threat to the continued existence 

of many of them. They claim this represents double taxation and they 

even claim it is an illegal act because it is not backed by law as the part of 

the law the FIRS says it is relying on no longer exists; it has been deleted. 

The tax man is feared all over the world. He is not feared in sane environment 

because it does not take the law into its hands. It is feared only 

when you fall foul of the law. This must not be different in this country. 

The OPS makes a lot of sense in their argument for which the FIRS 

should consider. They say, for instance that: 

· Section 30 of the Companies Income Tax Act from where the 

FIRS purportedly derived its power for the exercise is no longer in force, 

pursuant to its deletion by section 12 of Companies Income Tax (Amendment) 

Act 2007. 

· There already exists a plethora of property valuation-based taxes 

in Nigeria. The Land Use Charge payable in Lagos State, which is being 

replicated across the country, is based on property valuation. The governor’s 

consent fees payable on alienation of interest in property across 

the country is based on property valuation. Capital Gains Tax payable 

on disposal of property is somehow influenced by property valuation. 

Rent payable on lease of real estate property is subject to withholding 

tax deduction. 

· The properties of its member companies were also subjected to 

valuation pursuant to the provisions of the Companies and Allied Matters 

Act (CAMA) Cap C20 Laws of the Federation for the purposes of 

companies’ annual accounts leading to payment of tax on their profits. 

We align with these arguments and think that there is still a whole lot 

of confusion around the kind of federal system that we operate, where 

there seems to be eagerness to over duplicate punishments in the name 

of chasing taxes. 

Path to economic transformation 

KINGSLEY 

MOGHALU 

Moghalu is a 

former deputy 

governor of 

the Central 

Bank of 

Nigeria. 

When we 

vote to select 

our leaders, 

we must 

remember that 

these three 

issues are the 

ones that really 

matter for our 

welfare. It is 

not, as many 

of us are led to 

believe, falsely, 

ethnicity, 

religion 

or other 

primordial 

considerations 

(“na my 

broda”) 

With economic growth of 0.55 

percent in the second quarter 

of 2017 Nigeria seems headed 

out of its recession, the worst 

it has experienced in 25 years. 

Make no mistake, however. That is only recovery 

in a technical sense: a recession technically 

happens when Gross Domestic Product (GDP) 

growth in an economy is negative for two consecutive 

quarters. This growth was driven by the 

oil sector, not the real economy, and remains 

fragile. If we continue to record positive GDP 

growth, even from our current very low base 

and no matter how small this growth may be, 

we will have started recovering from recession 

— technically. No doubt, some of our leaders 

will flaunt such a meager performance as evidence 

of progress. 

Make no mistake also: we have suffered 

economic destruction on a massive scale in 

the past two years. From a GDP of $568.5 billion 

in 2014 we are down to $406 billion in 

2016 — and that is if you are using the official 

exchange rate of about 305 Naira to the dollar. 

If you calculate with the parallel market rate of 

N366 to a US Dollar, our GDP today is well less 

than $300 billion. That is a massive erosion of 

our national wealth. 

Foreign investment into Nigeria was $5.16 

billion in 2016, the lowest in seven years. That 

figure was $9.6 billion in 2015, and $20.75 billion 

in 2014. This means that we have had more than 

a 75 percent decline in foreign investment into 

our economy between 2014 and now. 

Why did all this happen? And what should 

we as Nigerian citizens do about it? 

This massive economic contraction has 

happened largely as a result of cumulative bad 

political leadership. We know, of course, the 

story of the sharp decline in oil prices starting 

from 2014, which is a major factor. There 

are two other important factors. The first was 

the depletion of the Excess Crude Account by 

the Federal Government and State Governments 

that insisted on drawing down from 

the account, from about $22 billion in 2007 to 

approximately $2 billion as of December 2014. 

This left our country with no protection for the 

rainy day as oil prices began to decline in late 

2014. We therefore had no fiscal buffers to help 

us defend our economy from the implications 

of the oil price fall for the naira. The value of the 

naira depends on external reserves built on the 

back of crude oil price sales that bring in more 

than 90% of our forex earnings. 

The second factor is that of weak economic 

management by the present federal government. 

The government refused to make the necessary 

policy adjustments and has instead gone on a 

borrowing spree. We have increased our external 

borrowing by 46 percent (from $9.46 billion 

to $13.81 billion) in the past two years. We now 

spend over 60 percent of all our revenues, weak 

as they already are, on debt servicing. 

We are where we are because of wrong 

political decisions that have prevented us from 

achieving real economic development. From 

the very nature of Nigeria as a petrostate on fiscal 

life support from crude oil sales for nearly 50 

years instead of creating a productive economy 

with diversified streams of forex income, to the 

venal depletion of our savings by politicians 

who insisted, against the advice of technocrats, 

that we should not save for a rainy day because 

“the rain is already beating us”, and on to a rigid 

and statist approach to economic management 

for political reasons that have served vested 

interests but not the poor masses in whose 

name these misnomers were proclaimed as 

“policy”, our political leadership choices have 

kept our economy down. The policy response 

of the present federal government only bred 

corruption and arbitrage in the management of 

forex and negatively impacted manufacturing 

companies, leading to declining output and 

further job losses. 

Our nominal GDP per capita, which is the 

best measurement of the inclusive nature or 

otherwise of the wealth of nations, is $2,260 as 

of 2016. That is just 19% of the global average. 

Our GDP per capita has averaged $1648.26 from 

1960 to 2016 (a truly abysmal statistic). You get 

the picture. Malaysia’s per capita GDP is $9,360; 

Brazil’s is $8,727; South Africa’s is $7,504 and 

54% of the global average. 

As citizens, we must take our destiny into our 

hands and take the political actions necessary 

to ensure that we do not remain a poor country. 

This means that we must understand that the 

political choices we make in leadership selection 

matter a great deal. As I have demonstrated 

here, the decisions taken by political leaders 

determine whether we are rich or poor. There 

are three ways in which this reality matters. 

First, the primary requirement of leadership 

is the character, ability and competence 

to create positive transformations, to lead a 

people or institution from where the leader 

meets them to a much better place. Second, 

an economy cannot make progress beyond 

the vision, capacity and competence of the 

political leadership, regardless of how many 

brilliant technical economists abound in a 

country. If the political leadership lacks vision, 

is venal and focused on other priorities, sound 

technocrats can’t achieve very much. Their full 

potential contribution will be suppressed by 

political decisions above them, usually taken in 

caucuses at night in places that are not offices. 

Third, the political and constitutional structure 

of Nigeria affects its economic management, 

in our case in a very negative manner because 

the potential productivity of the country’s component 

regions and states is suppressed by the 

rent-seeking politics to control absolute power 

at the center and dispense patronage. This is 

part of why constitutional restructuring for a 

true federalism is so essential. 

When we vote to select our leaders, we must 

remember that these three issues are the ones 

that really matter for our welfare. It is not, as 

many of us are led to believe, falsely, ethnicity, 

religion or other primordial considerations 

(“na my broda”). We need to begin to elect 

competent Nigerians with leadership skills, a 

clear economic vision, and the capability to 

make such visions into reality. This is the only 

way Nigeria can become globally competitive. 

Some African countries are achieving inclusive 

growth economies – Botswana, Ethiopia, 

Mauritius, Morocco, and Rwanda. They have 

not gotten it right because their elected leaders 

are angels. Rather, they have made real 

progress because their leaders are competent. 

They are competent because they understand 

how leadership can create a shared sense of 

nationhood amongst their citizens. They are 

competent because they understand political 

economy and economic development at intellectual 

and practical policy levels. They are 

competent because they have a philosophical 

worldview you can identify. 

As a university professor, one of my favorite 

reading assignments to students was a powerful 

essay in defense of industrial policy written by 

the late Ethiopian President Meles Zenawi. Despite 

industrial policy having fallen out of favor 

in contemporary economic orthodoxy, which 

favors unrestrained free markets and very little 

state involvement in national economies, Meles 

insisted, with sound intellectual argument, on 

his vision of an economy powered by industrial 

policy in which state guidance is combined with 

private enterprise to pursue inclusive economic 

growth. He has applied that vision competently 

to his country’s economic policy. It is working 

in Ethiopia. The country has had a growth rate 

of 8-11% for the past decade, and has one of the 

lowest rates of income inequality in the world. 

Leadership. 

In Rwanda, Paul Kagame has led his country 

to some interesting outcomes, although the 

political space remains restricted. Like Meles, 

Kagame reads wide and deep, and is intellectually 

curious. He has a clear vision which he has 

been able to communicate effectively to his 

citizens, and utilizes performance contracts to 

ensure effective governance. To paraphrase a 

popular saying, the problem in our country is 

that many in power have no ideas, and those 

with ideas have no power. We once were led 

by intellectual politicians – the likes of Nnamdi 

Azikiwe and Obafemi Awolowo – who most of 

our politicians today don’t read. They are more 

interested in peddling ethnicity, religion and 

other primordial factors as their passport to 

power. Naively drawn in by these sentiments, 

we are left with the short end of the stick at the 

end of the day. High poverty and unemployment 

rates have been our lot. 

We have had enough. We should have had 

enough. When we continue to vote these kinds 

of compatriots into power, we are great accomplices 

in our continuing poverty. As citizens, 

we have the power to change our destiny. It is 

time to understand and to use that power. The 

path to economic transformation begins in our 

political choices.


COMMENT 

7 

Why good infrastructure governance is 

key to unlocking Africa’s potential 

CHRIS 

HEATHCOTE 

Heathcote is 

the CEO of 

Global Infrastructure 

Hub 

(GI Hub), a 

G20 initiative 

Infrastructure is crucial to 

Africa’s growth prospects. 

It’s also hard to get right. 

Until now, policy makers 

have focused on improving 

access to finance. But a consensus 

is developing globally 

that a major factor hindering 

infrastructure implementation 

is a lack of good governance and 

well-planned projects. 

There’s certainly no denying 

the need for infrastructure 

development on the continent, 

as has been emphasised during 

the course of Germany’s G20 

Compact with Africa initiative. 

In Sub-Saharan Africa, only 35 

percent of the population has 

access to electricity. Access to 

modern transport has declined 

in the region over the past 20 

years, and 23 percent of the 

population still lacks access to 

safe water. 

Against this background, 

it’s understandable that the 

investment focus over the past 

10 years has been on utilities 

and trying to improve access 

to electricity and water. For 

some countries this is a significant 

challenge. Ethiopia, 

for example, needs to spend 

20 percent of its GDP to meet 

its electricity Sustainable Development 

Goals (SDGs) and 

another nearly seven percent 

to meet its water SDGs. 

So, how do African countries 

attract and retain the kind of investment 

in infrastructure projects 

needed to help stimulate 

that growth? The InfraCompass 

tool created by GI Hub recently 

studied infrastructure markets 

across 49 countries to pinpoint 

the best conditions for infrastructure 

delivery and found the 

strongest driver of investment 

was the rule of law. 

There’s a growing realisation 

globally and in Africa that if you 

get the governance aspects 

right, the finance will follow. 

Get it wrong and the investment 

will dry up. 

Getting the governance right 

also allows for efficient and 

disciplined planning, which is 

crucial if a proposed infrastructure 

project is to be sustainable 

and contribute to growth and 

lift people out of poverty. 

A 2014 study by the International 

Monetary Fund (IMF) 

found that increased public 

infrastructure investment raises 

output in the short term by 

boosting demand and in the 

long term by raising the economy’s 

productive capacity. 

The boost to GDP a country 

gets from increasing public infrastructure 

investment offsets 

the rise in debt, so that the public 

debt-to-GDP ratio does not rise. 

In other words, investment 

in public infrastructure can pay 

for itself and more, but only if it’s 

done correctly. That’s a big if. 

We’re all familiar with projects 

that have turned into white 

elephants, beset with fraud, 

waste, and inefficiencies.t 

Infrastructure is a very 

powerful engine of economic 

growth, but only if it’s an economically 

crucial piece of infrastructure 

created as part of 

carefully thought out development 

plan. If not, a country risks 

falling into the trap of building 

infrastructure that does not 

create growth and which it 

can’t afford to maintain, which 

then falls into disrepair. This is 

known as the ‘build, neglect, 

rebuild cycle’. 

It’s why when canny investors, 

whether they be multi-lateral 

institutions or private sector 

players, look at markets they 

want to understand why a particular 

piece of infrastructure is 

necessary, what revenue it will 

it drive and whether it is affordable. 

They know it can only be 

affordable if it’s driving growth 

by one means or another. 

This is also why corruption is 

such a hindrance to economic 

growth. Consider those IMF 

multiplier figures again. If you 

assume that corruption adds 

a 40 percent ‘inefficiency premium’ 

to a project, then any 

multiplier effect evaporates. 

Instead, the project becomes a 

drag on the economy. 

We at GI Hub have found 

that public-private partnerships 

(PPPs) can play a valuable role 

in combatting corruption by 

encouraging transparency regarding 

bidding and payments. 

Where we see countries improving 

in terms of their corruption 

indexes, we quite often see 

PPPs being used to overcome 

that corruption and to improve 

levels of transparency. 

So, how 

do African 

countries 

attract and 

retain the 

kind of 

investment in 

infrastructure 

projects 

needed 

to help 

stimulate that 

growth? 

EDITORIAL 

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TOWARDS MORE EFFICIENT MARKETS

EXECUTIVE 

KNOWLEDGE 

SERIES 


9 

Two new commandments 

of customer engagement 

Mark Lee Hunter And 

Luk Van Wassenhove 

TH E DIGITAL 

REVOLUTION is 

transforming the 

relationship between 

consumers 

and companies. Nearly all 

business functions are feeling 

the effects, but conventional 

marketing sits squarely on 

the fault lines of disruption. 

Brand-authorised messages 

increasingly cannot compete 

with online customer ratings 

and reviews—neatly packaged 

and aggregated on sites like 

Amazon—in terms of authenticity. 

Online feedback even 

promises to infiltrate the physical 

shopping experience: e.g. 

the shelves at Amazon’s new 

brick-and-mortar bookstores 

proudly display the scores of 

highly rated titles. 

The predicament facing 

marketing practitioners also 

mirrors the current state of 

journalism, as detailed in our 

new e-book Power Is Everywhere. 

Not unlike marketers at 

many large firms, news media 

are at once rated by their users 

and struggling to retain them 

while battling competitors 

empowered by digital media. 

Thus independent advocacy 

news is filling the void left by 

mainstream media outlets as 

they downsized capacity and 

content in the 21st century. 

Simultaneously, opportunities 

are emerging that mainstream 

media and marketing 

are just beginning to unlock. 

The key to renewed success 

is that contrary to myth, digitally 

empowered publics will 

pay for content that they find 

meaningful and valuable. The 

Washington Post and The New 

York Times are the most striking 

mainstream examples; 

both have sharply increased 

subscriptions and revenues 

since they focused on valueadding 

information for the opposition 

to Donald Trump. But 

the amplifying effect of online 

communities has particular 

import for smaller competitors 

looking to level the playing 

field. Non-mainstream media 

like Greenpeace.org have mastered 

the strategy of echoing 

their messages through and 

toward receptive communities. 

Although online social capital 

comes cheaper than print 

and television advertising, it 

requires skilled, committed talent, 

which isn’t free, either. But 

the potential ROI is enormous. 

Tip One: Find your ambassadors 

Several years ago, we read 

that Microsoft was actively 

scanning software-user forums 

in search of 1,000 people 

who offered consistently good 

advice. In other words, the 

firm was building a network 

of lead users who possessed 

credibility among their peers. 

Sometime after, we went to one 

such forum and asked about 

free photo-editing software. 

One of the people who wrote 

to us directly identified herself 

as a Microsoft “ambassador” 

and proposed one of the firm’s 

freeware solutions. It worked. 

Meanwhile, Microsoft had 

extended its ambassador programme 

to college campuses. 

One of our MBA students at the 

Rotterdam School of Management, 

who had helped to manage 

the programme, explained 

to us the perks for participants. 

These included priority access 

to new software, meetings 

with company executives and 

developers, as well as training 

in useful career skills. Microsoft 

benefited hugely. When it 

began that programme, it was 

one of the most hated firms in 

the world. (Around then we did 

a search for the term “I hate 

Microsoft” and it turned up 

33 million hits. Bill Gates once 

literally wept for his public 

image at a high-level company 

meeting.) 

The company seems noticeably 

less despised now. 

One reason is that its ambassadors 

solved a great many 

customer problems, as they 

did for us. A second reason is 

that when the ambassadors 

couldn’t solve a problem, they 

informed the firm, which often 

committed resources to 

solving it. Microsoft’s recent 

acquisition of the online community 

platform LinkedIn will 

take this strategy much further. 

Media firms that adopt 

similar strategies – identifying 

committed users, engaging 

them in the firm’s mission and 

treating them like partners, not 

instruments – have a far better 

chance of thriving. DeCorrespondent.nl 

is one of the first 

online news media to develop 

its own engagement platform. 

And in the U.S., Hearken is 

emerging as a leader with offthe-shelf 

platform solutions. 

Tip Two: Help the believers 

promote you 

User communities can help 

under-recognised and undercapitalised 

companies get their 

due in the marketplace. This 

“equaliser” effect helped the 

U.S.-based guitar maker, Reverend 

Musical Instruments, 

succeed in the 2000s despite 

competing with iconic brands 

Fender and Gibson. 

From the outset, founder 

Joe Naylor embraced the burgeoning 

community of online 

guitar enthusiasts, often 

jumping into website forums 

to help visitors resolve their 

guitar-related issues. He made 

no excuses about wanting to 

stoke their curiosity about his 

own products, and because his 

advice was expert and generous, 

he was accepted on those 

terms. One forum user said 

Naylor’s attempts to seem “fast, 

friendly and concerned” were 

“only natural” considering that 

“he wants the right things said 

about his product”. 

Naylor’s self-described “PR 

move” in the guitar forums 

evolved in another direction 

when anarchic price cuts began 

to destabilise Reverend’s 

distribution network. Rather 

than continuing to rely on 

underperforming dealer relationships, 

Reverend opted to 

sell direct to consumers. Temporarily, 

the company website 

became its one-and-only sales 

platform. Primed by years 

of forum experience, Naylor 

turned the firm’s website into a 

community centre. The forum’s 

members, nearly all Reverend 

owners, became Naylor’s customer 

relations force as they 

answered newcomers’ questions 

and recounted their own 

experiences with the firm and 

its products. 

More than one new user 

jokingly referred to the forum 

regulars as a “cult”, but their 

enthusiasm aroused interest. 

Meanwhile, Naylor offered sale 

terms, including a zero-risk 

returns policy that encouraged 

new buyers to try out guitars 

they could not find locally. 

The user base carried Reverend 

through a delicate period 

of transition, wherein production 

shifted from the suburbs 

of Detroit to an overseas plant. 

Members posted positive reviews 

on websites frequented 

by guitar players, attesting that 

Reverend’s product quality had 

not been sacrificed in the offshoring 

process. 

By analysing the auction 

prices of secondhand guitars 

on eBay, and crossing them 

with customer reviews from 

popular guitar forums, we 

found that Reverend’s user 

base, its only promotional 

asset, fully compensated for 

its brand recognition deficit. 

Reverend averted crisis with 

the support of its users, and its 

instruments are now widely 

recognised as among the best 

values in the industry. 

What transforms users into 

promoters and salespeople? 

This shift happens when they 

want you to stay in business, 

because you’re giving them 

essential value. Thus High 

Country News (HCN), an environmentalist 

magazine “for 

those who love the American 

West”, built a community that 

needed non-political, expert 

news about how to defend 

that environment. HCN ran 

into financial trouble early on 

and was saved by its users, who 

volunteered capital to save the 

magazine. As it grew, HCN kept 

those users at its core – an attitude 

symbolised by an opendoor 

policy of office tours for 

visitors. 

News is also a service 

Reverend and Microsoft’s 

style of consumer engagement 

focuses on solving users’ 

problems – helping them save 

money and even more important, 

time. 

Many of their exchanges 

are minute, but users visibly 

remember them. Media firms 

are no different from others in 

that regard. 

Journalists do not only 

create value by providing a 

product called information. 

They, too, are in the business 

of improving their users’ lives. 

When they do that, the users 

come back – to say thanks, to 

learn more, to contribute. This 

is where we’re going, and we 

can be glad for the path. 

This post is based on the 

book Power Is Everywhere: 

How stakeholder-driven media 

build the future of watchdog 

news, which is available 

for free download. 

Mark Lee Hunter is an Adjunct 

Professor and Senior 

Research Fellow at INSEAD, 

and the author of Story-Based 

Inquiry: A Manual for Investigative 

Journalists (UNESCO 

2009). 

Luk Van Wassenhove is Professor 

of Technology and Operations 

Management and the 

Henry Ford Chaired Professor 

of Manufacturing at INSEAD. 

Maria Besiou is Professor 

of Humanitarian Logistics at 

Kühne Logistics University. 

BNC Innovation Series 

...The Future is Now

10 



Our work with 

Sankara pointed 

us to two key 

dimensions that 

influence the 

degree to which 

organisations in 

emerging markets 

are able to scale up, 

while at the same 

time improving 

or maintaining 

overall healthcare 

accessibility 

A pathway to scale in 

emerging markets 

Ridhima Aggarwal 

IN 2012, CHINA LAUNCHED 

a series of reforms aimed at 

incentivising growth in the 

private sector of the country’s 

healthcare system. Like 

many emerging economies, China 

faces a host of challenges in delivering 

high-quality healthcare 

access. An ageing population 

combined with a high prevalence 

of chronic conditions has imposed 

a significant burden on public 

hospitals. 

The result has been long wait times 

and shortages in care that the 

government has been unable to 

address on its own. Consequently, 

private hospital chains such as 

China’s Aier Eye Hospital Group 

have seen rapid growth in recent 

years: Aier currently operates 

more than 100 hospitals across 

China, with plans for continued 

investment to expand its reach. 

Although the private sector in 

emerging markets has often been 

successful in alleviating the strain 

on public healthcare systems (particularly 

against the backdrop of a 

rising middle class), firms in this 

sector face significant challenges 

as they approach the process of 

“scaling up”. Growth and access are 

often intertwined objectives in an 

emerging market: More than half 

of the population in China, and 

nearly 70 percent in India live in 

rural areas with limited or no access 

to healthcare. 

How can private healthcare 

delivery organisations in emerging 

economies simultaneously scale 

up while at the same time meet the 

challenge of ensuring access to the 

rural poor? 

The cross-subsidisation approach 

We examine the scaling-up 

issue in a recent case study on 

Sankara Eye Care, a chain of specialty 

eye hospitals in India. In the 

case, “Double Vision: Making Eye 

Care Accessible through Cross- 

Subsidization”, developed with 

INSEAD Professor Stephen Chick, 

we explore Sankara’s business 

model, which relies on a crosssubsidisation 

approach where 

revenue from the 20 percent of 

its patients who can afford the 

market price for services is used 

to fund services for the remaining 

80 percent of customers, who are 

generally poor and non-paying. 

Sankara’s network includes 

some urban hospitals run strictly 

for profit, as well as community 

hospitals that offer free and heavily 

subsidised care for the poor. 

This allows Sankara, where appropriate, 

to operate within easy 

access of affluent, convenienceseeking 

patients in big cities, like 

Bangalore and Mumbai. However, 

the rising urban middle class can 

choose from a wealth of eye-care 

options, necessitating competitive 

pricing even as Sankara tries to 

raise enough profit from paying 

customers to fund its outreach 

work. 

Sankara’s altruistic aims have 

limited marketing appeal because 

the cross-subsidisation model has 

become so familiar in India. Other 

healthcare delivery organisations 

there have adopted similar models 

in cardiac care (Narayana Health 

hospital group) and maternity care 

(LifeSpring Hospitals). In addition, 

other Indian organisations in eye 

care have adopted such models 

(Aravind Eye Care System and the 

LV Prasad Eye Institute), with the 

key focus, like Sankara, of eliminating 

avoidable blindness caused 

by cataracts. 

Where Sankara differs from 

their direct competition is in its 

aggressive plans for scaling up. 

Sankara’s ten community hospitals 

– eight of which are less than 

a decade old – currently span the 

north, south and west of India, 

with further expansion planned. 

Operational focus and funding 

model 

Our work with Sankara pointed 

us to two key dimensions that 

influence the degree to which organisations 

in emerging markets 

are able to scale up, while at the 

same time improving or maintaining 

overall healthcare accessibility: 

the scope of operations and the 

funding model. 

Sankara operates a lean service 

in which operating rooms are 

organised as an assembly line, 

accommodating anywhere from 

eight to ten non-paying patients 

at any given time. Physicians can 

perform up to eight cataract surgeries 

per hour. Apart from the cost 

differential (relative to the West) 

associated with running a hospital 

in India, efficiency is derived from 

having multiple patients in the operating 

room, with nurses setting 

up and processing two patients 

per station to the left and right 

of the doctor at any given point. 

Strict procedures are maintained 

for monitoring patient clinical outcomes. 

Surgical complication rates 

are lower than those in developed 

countries. 

A second dimension influencing 

Sankara’s ability to scale up is 

its funding model. Whereas both 

Sankara and Aravind are organised 

as non-profit trusts, only Sankara 

utilises a dedicated fundraising 

arm, the Sankara Eye Foundation. 

As of 2013, the U.S.-based 

foundation was raising about 

US$3.5 million annually. Sankara’s 

grant-based approach enables the 

organisation to reduce the percentage 

of patients paying above 

cost (as compared to Aravind 

and LV Prasad), with operational 

deficits and hospital expansion 

costs covered over the short run 

through donations. Established 

Sankara hospitals are driven to 

reach financial self-sufficiency; 

two have already achieved this. 

In the meantime, grants allow 

for the creation of new hospitals 

alongside those that are financially 

sustainable. 

Multiple goals, multiple pathways 

Scaling up is indeed a key challenge 

in emerging economies, 

where the goals of accessibility and 

sustainability must be pursued simultaneously 

while keeping costs 

low. Emerging markets across Asia, 

Africa and Latin America face similar 

challenges, which firms address 

in various ways. On the funding 

dimension, for example, in 2015, 

Brazil’s largest hospital provider, 

Rede D’Or São Luiz, agreed to an 

investment deal with the Carlyle 

Group, the global private equity 

firm, which should provide 

Rede with the capital necessary 

to expand its locations across the 

country. 

The particular ways in which 

private sector healthcare delivery 

firms manage the scaling-up 

process to provide access to large 

population groups, particularly 

those at the bottom of the pyramid, 

will be important over the 

next decade. Within this context, 

healthcare organisations will have 

to make a set of important choices 

across the operations and funding 

dimensions that will shape how 

the objectives of growth and access 

can be pursued in tandem. 

Ridhima Aggarwal is a Research 

Programme Manager with 

the Healthcare Management Initiative 

at INSEAD.



11 

To manage millennials, 

lead them well 

A 

COMMON 

VIEW about the 

millennial generation 

– generally 

defined as 

individuals born between 

1980 and 2000 – is that they 

can be difficult to engage 

and retain as employees. The 

stereotype suggests that they 

rapidly hop from one job to 

another, and companies that 

hire them grumble about bad 

attitudes and high employee 

churn. As with most stereotypes, 

some data supports 

this narrative. Analysis from 

Gallup reveals that 21% of 

millennials reported changing 

jobs in the last year, a rate 

three times higher than the 

number of non-millennials, 

costing the U.S. economy 

$30.5 billion annually. 

However, a growing body 

of research minimizes the 

actual differences in attitudes, 

values and actual job-hopping 

behavior compared to previous 

generations. This was certainly 

the experience of John 

Sanchez, whose organization 

found success by resisting 

the temptation to pile on the 

millennial-bashing bandwagon 

and instead focused on 

delivering meaningful leadership. 

Sanchez is the former 

executive vice president of 

global operations at Sysomos, 

a fast-growing, high-tech 

startup with offices in Toronto, 

New York, San Francisco and 

London. In this opinion piece, 

he explains how he and his 

colleagues implemented a 

strategy to engage and retain 

100% of their largely millennial 

operations team for three 

years. 

At the end of my first day 

at our Toronto headquarters, 

I was invited to “an airing of 

grievances.” The newly appointed 

CEO of Sysomos, a 

high-growth cloud service 

startup, had called a meeting 

with customer-facing teams 

to hear concerns about the 

direction of the business, and 

he asked me to tag along. 

At the front of a room full of 

20-somethings, an energized 

young woman with a French- 

Canadian accent paced 

around the easel, jotting down 

the group’s objections with an 

air of urgency. I found myself 

wondering: What have I gotten 

myself into? 

In my mind, I played back 

my discussion with the CEO 

defining my role and responsibilities, 

held shortly before 

my official start date. Sysomos 

delivered important insights 

from conversations on social 

media to some of the world’s 

largest and most important 

brands, and had a great vision 

for the future. I was to 

focus was on professionalizing 

operations and preparing the 

business for the challenges of 

scale. To be fair, during our 

hiring discussions the CEO 

briefly addressed some of the 

turnover and engagement 

issues. While the trend of 

25%-30% annual churn did 

not fall outside of norms for 

the tech industry or for millennial 

workers, neither he nor I 

expected the level of discord 

that was playing out before us. 

As our scribe dutifully added 

comments to the long list 

of concerns, the true weight 

of the challenge began to 

dawn on me. It was clear 

that the teams felt frustrated, 

disengaged and marginalized 

and were now at a breaking 

point. I hadn’t worked in 

the tech space or exclusively 

with millennial teams, but I 

had spent decades leading 

teams, about half of that time 

as an executive in a traditional 

service environment. 

My experience bore out the 

exhaustive research and case 

studies that establish the positive 

relationship between 

strong, engaged teams and 

thriving service organizations. 

Attending to our team could 

not be an afterthought; it had 

to be the foundation of our 

strategy, grounded in effective 

leadership. 

The Imperative of Leading 

Well 

Rather than downplaying 

the apparent low engagement 

among client-facing teams 

and writing off problems to 

any of the popular theories 

that blame millennials, I spent 

time speaking with our staff to 

corroborate their concerns. It 

was obvious that our leadership 

practices were not serving 

the team. “Leading well” 

goes beyond checking the box 

of the specific actions that address 

the core responsibilities 

of leadership. These include 

setting objectives, organizing 

resources, training and motivating 

followers, balancing 

needs, and ensuring that the 

organization and members 

benefit from the relationship. 

The most critical and difficult 

dimension of leadership 

responsibility is the balancing 

of needs, also called the dilemma 

of leadership. Employees 

join organizations expecting 

to learn and develop skills, 

become part of a team, and to 

satisfy economic and other 

needs. When organizations 

consistently fail to address 

those needs, people typically 

disengage and ultimately defect. 

That pattern was emerging 

at Sysomos. 

“Unfortunately, today’s 

millennials often join organizations 

only to find themselves 

diminished, maligned 

and marginalized by the very 

leaders and tenured colleagues 

who should be mentoring 

them.” 

Simply attending to team 

members’ needs, however, is 

not enough. A leader’s actions 

only take root in a healthy 

atmosphere. A leadership 

climate is the pattern of shared 

assumptions that inform the 

way members perceive, think 

and feel about problems. 

Leaders must act as positive 

role models and use their 

power to influence in the 

service of the organization to 

reinforce values of fairness, 

respect and dignity. Unfortunately, 

today’s millennials often 

join organizations only to 

find themselves diminished, 

maligned and marginalized 

by the very leaders and tenured 

colleagues who should 

be mentoring them. When I 

joined Sysomos, the leadership 

climate was out of balance, 

and because of that, the 

effectiveness of our engagement 

efforts were diminished. 

A Turnaround Plan 

With input from the team 

and key leaders, and the support 

of our CEO, we executed 

a turn-around plan. Our approach 

had two points of focus: 

Developing solid leadership 

actions that concentrated 

on the core responsibilities 

and creating a healthy leadership 

climate. 

Leadership Actions 

With an eye towards effectively 

leading every team 

member, regardless of generation, 

and maximizing their engagement, 

I focused on thorough 

implementation of an 

established leadership model 

and recognized best-practice 

approach called “service profit 

chain.” The idea of the “service 

profit chain” was popularized 

in the 1990s by James Heskett, 

Thomas Jones, W. Earl Sasser, 

Leonard Schlesinger, and 

Gary Loveman, professors 

of service management at 

Harvard. The service-profitchain 

model describes the 

positive relationships between 

“employee loyalty,” “service 

value,” “customer loyalty” and 

profitability. I personally experienced 

the power of this strategy 

from my work at Caesars 

Entertainment, where Loveman 

deployed it as a capitalefficient 

source of competitive 

advantage that helped propel 

Caesars Entertainment to the 

top of its industry. 

For the purposes of this 

discussion, I will focus on the 

elements of the Service Profit 

Chain relevant to developing 

team-member loyalty: job 

p. 12 

Rather than 

squander 

management 

capacity on 

wrongheaded 

initiatives, 

leaders should 

work to earn 

the loyalty and 

respect of their 

teams through 

time-tested 

principles

12 



...Lead them well 

p. 11 

design, selection and development, 

adequate tools to serve customers, 

rewards and recognition, communication, 

and workplace design. 

Job Design: Commitment only 

begins when team members understand 

what they give and what they 

get, so clarifying expectations was a 

top priority. We reviewed every role 

to ensure that job descriptions, objectives 

and performance measurement 

criteria were clear. An important 

and often overlooked element of 

job descriptions is a definition of the 

member’s responsibility, latitude and 

authority with regard to serving customers. 

This was critical to reducing 

intergroup conflict based on unclear 

boundaries between different functions 

(pre-sales, sales, sales ops, legal 

and customer success). Partnering 

with our human resources team, we 

reviewed our compensation plan 

designs to ensure they were clearly 

defined and market competitive. I set 

the expectation that leaders confirm 

members’ understanding of their job 

descriptions and reinforce boundaries 

during regularly scheduled 

monthly coaching meetings. 

Selection and Development: 

I invested at least one-third of my 

time finding and nurturing talent 

and expected my fellow-leaders to 

do the same. Our selection process 

focused on talent, attitude and fit. 

After completing departmental interviews, 

candidates participated in 

realistic job previews and met with 

front-line team members to ensure 

there was clarity with respect to our 

cultural norms, standards and job 

expectations. Before extending any 

hiring offer, I personally interviewed 

every candidate as a last check to 

confirm fit that we’d followed all of 

our hiring best practices. To some, 

this step might seem excessive, but 

hiring is the most important decision 

we make and organizations do well 

what leaders check. 

Leader selection is the most consequential 

aspect of selection and 

development. Accordingly, it was 

my highest priority. I am proud of 

the leadership team we built. Our 

front-line leaders were passionate 

about teaching and mentoring, and 

coached team members for success 

in their current role with an eye toward 

preparing them to succeed in 

their careers. As referenced earlier, 

one of the most important tools that 

we relied on to support team members 

was the monthly development 

meeting. Leaders invested heavily in 

preparing for, delivering and documenting 

these discussions with team 

members. As a result, all involved 

shared a common understanding of 

progress against objectives and next 

steps to drive individual success and 

that of the team. 

Tools to Serve Customers: Research 

shows that the ability to deliver 

results to customers is critical 

to job satisfaction among front line 

team members. We employed lean 

and business transformation strategies 

in our pursuit of continuous 

improvement of systems and processes 

to serve external and internal 

customers. As a result, we deployed 

a customer-success technology stack 

that made it easier for team members 

to better serve more customers. 

Rewards & Recognition: Effective 

rewards and recognition are 

valuable to team members and consistent 

with organizational goals. We 

actively sought out opportunities to 

celebrate our colleagues when they 

exceeded customer expectations 

with formal and informal rewards. 

We had all of the normal “employeeof-the-month” 

type recognition programs. 

We also made a big deal about 

positive customer feedback, especially 

when it came through on net 

promoter score customer surveys. 

Rewards do not need to be expensive. 

They must be authentic. We often 

used hand-written notes containing 

a simple and specific, expression of 

appreciation. For example: 

“Dear Maggie, I heard from Jeff 

about the training program that you 

built that helped our customer share 

the value of our toolset across their 

organization. Thanks for being a role 

model for our team! Best, John 

Communication: An entire category 

of technologies support communication 

and collaboration in the 

modern office, and we used most of 

them. While the technologies were 

helpful, especially in situations when 

team members worked remotely or 

different offices, they do not replace 

traditional communication tools. We 

trended key performance metrics 

on bulletin boards and updated our 

staff about company developments 

during regular team and interdepartmental 

meetings. 

The informal conversations that 

happen as team members encounter 

one another are just as important 

as the formal ones. “Open-door 

policies” in and of themselves don’t 

stimulate the open, honest, transparent 

and broad communication that 

most executives agree is essential 

to productivity and satisfaction. Sysomos 

offices had open floor plans 

and an open-door policy, but team 

members seemed uncomfortable 

speaking with managers. The responsibility 

to reach out lies with leaders. 

When I arrived at an office, I would 

walk around, smile and greet team 

members by name and, depending 

on their schedule, take a few moments 

to connect. I’m convinced that 

these small investments in personal 

communication were important to 

our subsequent success. 

Workplace Design: Considerations 

of workplace design influence 

satisfaction and productivity. During 

my tenure at Sysomos, I oversaw 

the office relocation and expansion 

projects in Toronto, San Francisco 

and in the Silicon Valley. Input from 

our team was integral to our facilities 

planning process, which balanced 

factors of accessibility to transportation 

networks, ergonomic workspace 

design, lighting, acoustics 

and meeting space with timing and 

cost. In Toronto and San Francisco, 

many of our team members relied 

on public transportation, walked 

or rode bicycles to work. Access to 

major highways and parking were 

important to our tech teams in the 

Silicon Valley. 

Creating a Healthy Leadership 

Climate 

We spared no effort in attending 

to our leadership climate that reinforced 

Sysomos’s values. Every team 

member, regardless of age, gender, 

race, ethnicity, religion or sexual orientation 

was welcomed and appreciated. 

Kindness, courtesy, respect, 

dignity and fairness set the tone for 

the way we treated one another. We 

valued clear thinking, problem solving 

and initiative. Our plan to establish 

and sustain a healthy leadership 

climate had four parts: leadership 

philosophy, emphasis on courtesy, 

expectations for role models and 

engagement surveys: 

Leadership Philosophy: I first 

learned about the concept of a leadership 

philosophy as a young Army 

officer more than 25 years ago. My 

leadership philosophy is a one-page 

declaration of my view of the purpose 

of our team, what teams should expect 

from me, and my expectations of 

leaders and team members. Leaders 

reporting to me developed their own 

leadership philosophies, which they 

shared with every team member. 

By living up to our own words and 

accepted standards of fairness we 

earned credibility and trust from 

the team. 

Common Courtesy: As George 

Bernard Shaw wrote in his play Pygmalion, 

“The great secret … is not 

having bad manners or good or any 

particular sort of manners, but having 

the same manners for all human 

souls.” Classic books by Dale Carnegie 

and Gallup offer time-tested 

advice that every leader should know 

about the importance of common 

courtesy and interpersonal skills. 

These gestures cost nothing but consideration. 

Leadership is a contact 

sport. Our leaders were present in 

the moment and never missed an 

opportunity to smile, say hello, shake 

hands and express courtesy, respect 

and appreciation for team members. 

We expected team members to do 

the same. 

“Rather than squander management 

capacity on wrongheaded initiatives, 

leaders should work to earn 

the loyalty and respect of their teams 

through time-tested principles.” 

Great Role Models: Strong, positive 

role models are essential to 

establishing a healthy leadership 

environment. I was fortunate to find 

a great collaborator in our customersuccess 

department head, who appreciated 

the importance of strong 

role models. We held ourselves to 

high standards of conduct and we 

worked to model our team values. 

As the business grew and we came 

under pressure to quickly expand 

the leadership team, we refused to 

compromise on quality. Peer leaders 

played an integral role helping 

to onboard new team members. By 

observing and emulating role models, 

team members learned to act in 

ways consistent with our values and 

become successful. 

Leadership Climate Survey: 

We set up an anonymous online 

climate survey and discovered it 

was an invaluable tool in our quest 

because it helped leaders and team 

members reach a common understanding 

of our engagement levels. 

We shared the summarized results, 

participation statistics, comments 

and responses to every question. 

Teams composed of front-line staff 

and leaders built initiatives around 

the lowest scoring survey questions. 

Conclusion 

Some might argue that there was 

nothing ground-breaking about our 

approach to leadership, nor was 

there anything special about the way 

we approached our millennial team. 

As a matter of fact, our approach was 

surprisingly conventional. What my 

colleagues and I learned is that the 

common stereotypes about millennial 

employees are wrong. Rather 

than squander management capacity 

on wrongheaded initiatives, leaders 

should work to earn the loyalty 

and respect of their teams through 

time-tested principles. As Lazlo 

Bock, former senior vice president 

of people operations at Google, has 

noted, “Every single human wants 

the same thing in the workplace – we 

want to be treated with respect, we 

want to have a sense of meaning and 

agency and impact, and we want our 

boss to just leave us alone so we can 

get our work done.” 

In our case, the results spoke 

for themselves. For 36 months, not 

a single member of our customersuccess 

team resigned. In fact, we 

were able to promote about 25% of 

our staff into other teams where they 

became top performers. Our customers 

raved about our customer service 

to account reps and on net promoter 

score surveys. Productivity soared as 

team members found ways to offer 

better service at lower costs. 

Just as important were the intangible 

benefits. The positive energy 

Unfortunately, 

today’s millennials 

often join 

organizations only 

to find themselves 

diminished, 

maligned and 

marginalized by the 

very leaders and 

tenured colleagues 

who should be 

mentoring them 

and enthusiasm that grew within the 

teams made everyone better. People 

smiled, said hello on the elevator and 

as they passed in the hall. They took 

pride in their work, and you could 

hear it in their voices when they went 

the extra mile to help customers. It 

became competitive to land a role 

with the client-experience team, 

which became recognized as the 

“cool” place to work. 

The best internal candidates lined 

up to apply for open positions and 

some even took pay cuts so they 

could work in our department. Our 

best team members referred their 

friends. 

As our alumni infiltrated other 

teams, interdepartmental cooperation 

improved. Team members liked 

coming to work and often spent time 

together outside of work. Casual 

hallway conversations turned into ad 

hoc brainstorming sessions to solve 

problems. 

With commitment and followthrough, 

there is nothing to stop any 

firm from realizing similar results not 

just with millennial employees but 

also with everyone else. 

It was my privilege to play a part 

in this story. The main credit for the 

success of our team @Sysomos lies 

with the superb members and frontline 

leaders. 

This article is republished courtesy 

of Knowledge@Wharton. Copyright 

Wharton School of the University of 

Pennsylvania.



13 

Equities market loses 3.4% w-o-w on 

the back of sell-offs across sectors 

L-R: Remi Babalola, former minister of state for finance; Lateef Feyisitan of Alternative Capital Partners, and Obinna Ekwonwa, chief 

executive officer, Weco Systems International Limited, at the 15th CVL Leadership Symposium in Lagos 

Bank ratings volatility likely to subside in 2018 

as positive outlook outweighs negative - Fitch 


Fitch Ratings has said the 

share of bank ratings with 

stable outlooks is at its highest 

level in recent years, suggesting 

that bank ratings will be less volatile 

in 2018. 

It said the pace of rating changes slowed 

significantly in 2H17, and the numbers of 

upgrades and downgrades were almost 

equal. This is evident in its recent ratings 

of Nigerian banks as it affirmed First City 

Monument Bank Limited’s (FCMB) Long- 

Term Issuer Default Rating (IDR) at ‘B-’ 

with a stable outlook 

This is ditto for Union, Wema and 

Sterling banks, which had stable outlooks. 

However FBN Holdings Plc. (FBNH) and 

First Bank of Nigeria Ltd (FBN) had negative 

outlooks. It affirmed First Bank’s Viability 

Ratings (VR) at ‘b-’ and the Support 

Ratings at ‘5’. The Long-Term National Ratings 

have been affirmed at ‘BB+(nga)’. 

Though negative outlooks still marginally 

outweighed positive outlooks at 

end-2017, it said the balance shifted as the 

share of positive outlooks almost doubled 

over the course of the year., adding that it 

was mainly due to revisions in Europe. 

The foremost rating agency noted 

the share of negative outlooks declined 

slightly, as outlooks tended to be stable 

following rating downgrades. 

“Outlooks are on balance positive in 

Europe but negative in the Middle East, 

Africa and emerging markets in the 

Americas. 

“We changed 65 bank Issuer Default 

Ratings in 2H17, down from a record 

high of 92 in 1H17. Downgrades were 

almost matched by upgrades - the first 

time since 1H14 that downgrades have 

not been significantly ahead,” it said. 

Regional rating trends were seen diverged, 

with developed markets showing 

a more positive dynamic than emerging 

markets and that upgrades were concentrated 

in Europe, where the economic 

recovery is improving banks’ operating environments, 

while most downgrades were 

in emerging markets, mainly in the Middle 

East, Africa and the Americas, mostly 

driven by sovereign downgrades. 

“Almost half of all bank-rating changes 

in 2H17 were driven by sovereign rating actions, 

which triggered 23 downgrades and 

six upgrades. Most of the sovereign-driven 

rating actions reflected revisions of our 

views on sovereign ability to provide support, 

notably in Qatar (nine downgrades),” 

it stressed. 

Business a.m 

THE BEARISH 

TREND that began 

in the previous 

week was sustained 

this week as the benchmark 

index further slid 3.4 

percent week on week (W-o-W) 

to settle at 43,127.92 points 

while YTD return moderated 

to 12.8 percent. 

Accordingly, market capitalisation 

lost N541.9 billion in 

value to settle at N15.4 trillion. 

Sell-offs were recorded across 

small to large cap stocks with 

losses in DANGCEM, FBNH 

and GUARANTY as the major 

drags to performance. 

However, activity level was 

mixed as average volume rose 

35.4 percent 

to 885.1 million 

units 

while average 

value 

fell 13.8 percent 

to N4.9 

billion. The 

top traded 

stocks by 

volume were 

STERLING 

(1.8bn), 

S K Y E 

(282.m) and LASACO (266.9m) 

while STERLING (N3.9bn), 

ZENITH (N2.2bn) and GUAR- 

ANTY (N1.7bn) were the top 

traded stocks by value. 

The NSEASI started the 

week on a negative note and 

this was sustained till the end 

of the week. On Monday, the 

ASI shed 45bps on account of 

losses in market bellwethers 

- DANGCEM, UBA and FBNH - 

and further weakened 87bps on 

Tuesday following sell-offs in 

banking stocks, especially ZE- 

NITH, FBNH and GUARANTY. 

On Wednesday, the benchmark 

index shaved 77bps 

on the back of profit taking 

in DANGCEM, NIGERIAN 

BREWERIES and STANBIC 

while price depreciation in 

Consumer and Banking sector 

counters dragged the ASI 

49bps lower on Thursday. The 

market closed the week in the 

red, falling 34bps on Friday; 

hence a decline of 3.4 percent 

was recorded W-o-W. 

Performance across sectors 

was bearish as all indices 

closed in the red. The industrial 

goods index led laggards, 

down 3.5 percent on account 

of losses in CCNN (-6.9%) and 

DANGCEM (-4.1%). Following 

closely was the banking index, 

which shed 3.4 percent due to 

sell pressure on SKYE (-25.2%) 

and WEMA (-14.0%). 

Similarly, the consumer 

goods index fell 2.6 percent 

on account of profit taking in 

NESTLE (-5.9%) and NIGERI- 

AN BREWERIES (-5.3%), while 

the oil & gas and insurance 

indices were dragged 1.3 percent 

and 0.7 percent lower by 

price depreciation in MOBIL 

(-7.6%) and WAPIC (-14.7%) 

respectively. 

Investor sentiment as measured 

by market breadth (advance/decline 

ratio), weakened 

significantly to 0.3x from 1.2x 

recorded the previous week as 

22 stocks advanced relative to 63 

stocks that declined. 

The best performing stocks 

for the week were LINKASSURE 

(+25.0%), CAVERTON (+21.0) 

and PRESTIGE (+16.7%) while 

HMARKINS (-27.1%) SKYE 

(-25.2%) and UNIC (-21.7%) led 

decliners. Although the market 

closed the week negative, the 

analysts say, “we expect to see 

a rebound as a result of bargain 

hunting by investors as well as 

positive expectations for the full 

year earnings season.” 

Naira stable across windows despite drop in oil prices 

Remilekun Davies & 

Ademola Badmus 

Nigeria’s foreign 

exchange 

market, which 

plays host to various 

kinds of players, each 

contributing to the challenge 

in the multiplicity of rates 

and the ever-widening gulf 

between the official and the 

unofficial rates, produced a 

relatively stable naira at the 

official and parallel windows 

last week, business a.m. currency 

monitoring across 

markets shows. 

In line with historical 

trend, at the start of the week, 

the CBN injected US$100.0 

million via the wholesale 

SMIS intervention window 

into the system in order to 

maintain stability across all 

segments of the foreign exchange 

market. 

Accordingly marginal 

movements were recorded 

at various segments of the 

market during the week despite 

drop in oil prices. 

FX rate at the interbank 

market weakened N1.47 during 

the week from N332.90/ 

US$1.00 last week to settle at 

N334.37/US$1.00 on Friday. 

Similarly, the CBN’s FX rate 

opened the week at N305.80/ 

US$1.00, depreciated 5 kobo 

to N305.85/US$1.00 by midweek 

and traded flat till the 

end of the week. 

However, at the I & E FX 

window, the naira traded 

at N360.36/US$1.00 at the 

start of the week, which was 

a 14 kobo depreciation from 

the previous Friday’s close of 

N360.12/US$1.00. This rate 

was sustained till Wednesday 

but reversed on Thursday 

with the naira appreciating 

by 27 kobo to N360.09/ 

US$1.00. This rate was maintained 

on Friday, presenting 

a three kobo appreciation 

week on week. 

At the parallel market, an 

unauthorized window, but 

plays a prominent role in 

access to forex, there were 

some variations in the price 

at which the naira exchange 

for the dollar. 

In all, the naira traded 

flat at N363.00/US$1.00 all 

through the week across 

various areas in Lagos, the 

commercial capital of Nigeria, 

visited by business a.m. 

reporters who monitored 

the market 

Activity level in the I &E 

window weakened relative 

to the previous Thursday as 

total volume of transactions 

fell 32.4 percent week on 

week to US$716.6 million 

from US$1.1 billion recorded 

the prior week. 

At the FMDQ OTC futures 

market, the total value of 

open contracts of the naira 

settled OTC futures closed 

the week at US$3,320.75 

million (08/02/2018), 

US$34.0 million higher than 

US$3,286.86 million in the 

prior week. The APR 2018 

instrument was the most 

subscribed with a total value 

of US$657.9 million while the 

JAN 2019 contract was the 

least subscribed with total 

value of US$10.0 million. 

Analysts say despite decline 

in crude oil prices during 

the week, they maintain a 

positive outlook on the CBN’s 

ability to sustain its intervention 

in order to maintain 

stability in the FX market. 

“Furthermore, we anticipate 

a Eurobond issuance in 

the first quarter of the year 

and we believe this could 

further buoy the size of Nigeria’s 

external reserves in 

the near term,” said analysts 

at Afrinvest.

14 



Fixed Income Market 

Fixed income, 

currencies 

transactions 

decline 1.3% 

in January 

TRANSACTION TURN- 

OVER in the fixed income 

and currencies 

(FIC) markets for the 

month of January 2018 amounted 

to N11.71 trillion representing a 1.28 

percent decrease (N0.15 trillion) 

from the value recorded in December 

2017 and a 28.17 percent increase 

(N2.57trn) year-on-year 

The monthly statistics of FMDQ 

OTC released at the weekend indicates 

that, activities in the treasury 

bills market accounted for 39.24 

percent of market turnover, while 

the foreign exchange market accounted 

for 37.50 percent of the total 

turnover against 33.63 percent in 

December 2017. 

Money market repurchase agreements 

(Repos)/buy-backs and unsecured 

placements/takings) accounted 

for 16.90 percent of market 

turnover compared to 24.31 percent 

in December 2017. 

The three segments thus had a combined 

contribution of 93.64 percent to 

the total turnover in the FIC markets. 

Transactions in the FX market 

settled at $14.01 billion in January 

2018, an increase of 8.91 percent 

with the value of $1.15 billion when 

compared with the value recorded 

in December 2017 amounted to 

$12.86 billion. 

During the month under review, 

the naira appreciated slightly at the 

Investors’ & Exporters’ (I&E) FX 

Window closing at $/N360.00 from 

$/N360.33 as at December 29, 2017 

whilst, also trading at a discount to 

the parallel market which closed 

at $/N364.00, from $/N363.00 as at 

January 2, 2018. 

Total value traded at the I&E FX 

Window in January 2018 settled at 

$5.25 billion, an increase of 36.87 

percent ($1.41 billion) relative to the 

value recorded in December 2017 

($3.87 billion). 

Turnover in the fixed income market 

for the month under review settled 

at N5.33 trillion, representing a 7.16 

percent increase, month on month. 

Transactions in the treasury bills 

market accounted for 86.11 percent 

of the overall Fixed Income market, 

an increase from the 84 percent recorded 

in December 2017. 

Outstanding Treasury bills at the 

end of the month stood at N11.47 

trillion as against N10.60 trillion in 

December 2017, an increase of 8.21 

percent, month on month. 

FGN bonds outstanding value also 

increased by 0.96 percent, month 

on month, to close at N7.64 trillion, 

from N7.57 trillion in December 

2017. 

Trading intensity in the fixed income 

market for the month under 

review settled at 0.40 and 0.10 for 

treasury bills and FGN bonds respectively, 

from 0.38 and 0.11 recorded 

the previous month respectively. 

Treasury bills between the six and 

12 months maturity buckets became 

the most actively traded, accounting 

for a turnover of 2.52 trillion 

in January 2018. 

Treasury bills market remain 

bearish on declining yields 

Stories: Kayode Ogunwale 

The treasury bills 

market has been predominantly 

bearish 

since the last primary 

market auction on the 31st of 

January 2018. The average T-Bills 

yield has advanced by 1.00 percent, 

following yield increases on 

all tenors. 

Amidst prevalent selling pressures 

in the secondary market, 

yield on the longer tenor, 

12-month, advanced the least 

(+0.25%) in the period. In contrast, 

the one-month instrument 

was the least favoured by investors 

as the yield on the instrument advanced 

by 1.46 percent. 

Although yields have been on 

the decline since the start of the 

year, they have remained attractive 

for risk averse investors. Also, 

investors have continued to favour 

longer tenor instruments. Subsequently, 

the last primary market 

auction recorded respective bid 

to cover ratios of 1.07x, 1.01x and 

1.57x on the 91-day, 182-day and 

364-day instruments. 

Since the last auction, system liquidity 

has improved, on the back 

of constant OMO interventions by 

the CBN, as the market received a 

net repayment of N373.68 billion 

in the period. 

Bearish sentiment lingers in bond market 

as average yield rises 0.4% w-o-w 

Investor sentiment 

in the domestic bond 

market was largely 

bearish last week as 

average yield trended northwards 

in 4 of 5 trading sessions. Average 

yield at the start of the week settled 

at 13.5 percent, marginally higher 

(1bp) than the previous Friday’s 

close, consequent on sell-offs in 

short and longer tenored instruments. 

It was however more skewed towards 

the longer end of the curve 

- JAN 2026 (+6bps) and MAR 2027 

(+4bps) instruments, which drove 

average yield higher. 

On Tuesday, sustained sell-offs 

across all instruments weighed 

on performance as average yield 

closed the day 28bps higher at 13.8 

percent. The bearish sentiment 

lingered into Wednesday as yield 

on most instruments save the APR 

2018, MAR 2024 and APR 2037, 

which saw increased buying interest, 

declined, thus driving average 

yield 10bps higher to settle at 

13.9 percent. This negative trend 

was halted on Thursday as average 

yield declined 4bps to settle at 13.8 

percent on the back of buy interest 

in mid-to-long tenored instruments. 

However, on Friday sentiment 

weakened as average yield 

increased 5bps to close the week 

at 13.9 percent, up 40bps week on 

week. 

The bearish sentiment filtered 

into trading activities on sub-Saharan 

Africa Eurobonds last week as 

yields across instruments trended 

higher, week on week, with only 

five of 22 instruments recording 

price appreciation. 

Nigerian Eurobonds recorded 

sell-offs as yields across all instruments 

increased week on week 

with the JUN 2018 (up 50bps) recording 

the most sell-offs. 

Average yield across the Ghanaian, 

Ivory Coast, Kenyan, Zambian 

and Senegalese instruments rose 

20bps, 30bps, 10bps, 30bps and 

Average rates across instruments 

in the past week trended 

higher on three of five trading 

sessions. At the start of the week, 

activities remained minimal with 

sell-offs seen at the shorter end of 

the curve and rates closing at an 

average of 13.9 percent (up 2bps 

from 13.9% recorded the previous 

Friday). 

The upward trend was maintained 

till the end of the week, 

closing 12bps higher on Tuesday 

(13.9%), increasing 21bps on 

Wednesday (14.2%), 22bps on 

Thursday (14.1%) to eventually 

close the week at 13.9 percent, implying 

a 30bps increase week on 

week. 

In the primary market, the CBN 

offered N40 billion, N30 billion 

and N70 billion of the 94-day, 191- 

day and 234-day instruments at 

stop rates of 12.6 percent, 14.4 percent 

and 14.4 percent respectively. 

All instruments were undersubscribed 

save the 234-day instrument 

which was oversubscribed 

by 1.4x (subscription: N95.7 billion). 

In the coming week, despite 

the OMO maturity of N55 billion, 

analysts expect money market 

rates to remain at current levels as 

the apex bank continues with its 

30bps respectively. YTD performance 

on all instruments save for 

the SOUTH AFRICA 2024 (+0.3%) 

and SOUTH AFRICA 2041 (+0.9%), 

is negative. The NIGERIA 2047 

(-4.0%), NIGERIA 2027 (-3.4%) and 

NIGERIA 2032 (-3.2%) have the 

least YTD return. 

Across the Nigerian Corporate 

Eurobonds market, sentiment was 

mixed albeit more bearish as yields 

on 8 of 12 instruments rose W-o- 

W. The ACCESS 2021 (up 20bps to 

7.6%) and ZENITH 2022 (up 20bps 

to 6.0%) instruments recorded the 

most sell-offs while the FBNH 2021 

(down 20bps to 8.9%) witnessed 

the most buying interest. 

The FBN 2021 instrument is the 

best performing with YTD return of 

(+3.1%). 

However buy interest in the domestic 

bond market has markedly 

improved in the past two weeks. For 

the week ended February 2, 2018 a 

total of 16,268 units of Federal Government 

Bonds valued at N17.053 

million were traded in 28 deals, 

compared with a total of 6,715 units 

valued at N5.318 million transacted 

previously 

The uptrend in buying weakened 

last week as 14,779 units of 

Federal Government Bonds valued 

at N14.050 million were traded in 

18 deals. 

frequent OMO mop-ups. 

However, the Central Bank of 

Nigeria (CBN) is scheduled to hold 

a Treasury Bills (T-Bills) Primary 

Market Auction (PMA) on the 14th 

of February 2018. T-Bills worth 

N176.00 billion are expected to 

mature, while an equal amount 

would be issued in 91-day, 182- 

day and 364-day instruments. 

The CBN is expected to auction 

N6 billion, N30 billion and N140 

billion in the 91-day, 182-day, and 

364-day instruments respectively. 

Analysts say they see more 

buy interest in bonds next week if 

the equities market continues its 

downtrend. 

“When the stock market corrects, 

as it inevitably does, investors 

seek the safety of bonds. As with 

any free-market economy, bond 

prices are affected by supply and 

demand,” an analyst said. 

The bond market has peaked up 

in 2017 with government issuing 

various grades and types of bonds 

including FGN bonds, Eurobonds, 

Diaspora bonds and Sukkuk. 

Only last week, the DMO appointed 

a consortium of banks to 

handle the planned Eurobond issuance, 

signaling strong commitment 

towards the sale of its USD2.50 billion 

Eurobond. 

The estimated proceeds of 

N762.5 billion will be used to redeem 

Nigerian Treasury Bills. 

The settlement of the maturing 

treasury bills is expected to pressure 

rates further, as witnessed 

after the settlement of N198.03bn 

worth of T-Bills in 2017. The expectation 

of the decline in yields, 

coupled with the possibility of a 

cut in the monetary policy rates 

should improve participation in 

this auction as investors try to 

take advantage of the current high 

yield environment.



15 

Governance 

Of demutualization, dalliance 

and the Nigeria Stock Exchange 

Olusegun Joseph 

DESPITE THE IN- 

NOVATIONS by the 

management of The Nigerian 

Stock Exchange 

(NSE) to make the market more 

investor-friendly in the last ten 

years, one thing still remain missing 

- demutalisation of the market. 

The Nigerian Stock Exchange 

(NSE) was established in 1960 as 

a trust or mutual association. As 

at March 7, 2017, it has 176 listed 

companies with a total market capitalization 

of about N8.5 trillion. 

Demutualising the NSE therefore 

means changing or transiting 

it from a mutual or co-operative 

association into a public company 

by converting the interests of the 

members into shareholdings. 

These holdings can then be traded 

like the shares of a company. The 

idea is to change the structure of 

exchanges that were originally 

formed as trusts. 

The concept typically separates 

ownership and voting rights from 

the right of access to trading on an 

exchange. 

It is believed that a demutualised 

exchange is a crucial tool 

towards boosting liquidity and 

growth of the economy. 

The first exchange to be demutualized 

was the Stockholm 

Stock Exchange in 1993. After that 

many exchanges have demutualized. 

These include the major 

stock exchanges like New York 

Stock Exchange, Chicago Mercantile 

Exchange, London Stock 

Exchange, Australian Stock Exchange, 

Deutsche Börse, Toronto 

Stock Exchange, Singapore Stock 

Exchange to name a few. 

Advantages of demutualization 

The advantages of demutualized 

stock exchange are as follows. 

Firstly, demutualization results in 

more flexible governance structure 

fostering decisive action in response 

to changes in the business 

environment. Secondly, it leads 

to greater investor participation 

in the governance of the exchange. 

Thirdly, it yields an improved 

platform in response to potential 

competitors in the form of alternative 

trading systems. Further, 

demutualization allows greater 

flexibility and access to global 

markets. Fifthly, it also facilitates 

faster and more complete consolidation 

of stock exchanges to 

enhance available synergies. And 

finally, it ensures increased access 

to resources for capital investment 

raised by way of equity offerings or 

private investment 

This first attempt at demutualizing 

the NSE was contained in a 

proposal by Ndi Okereke-Onyiuke, 

the former director general in 

2001. In 2011, the issue was also 

raised in an NSE paper – The Roles 

and Expectations of Regulators 

in the Demutualisation Process, 

alongside the inauguration of a 

21-member technical committee 

to develop a legal framework for 

the process. 

Oscar Onyema, NSE CEO 

In 2014, things appeared to be 

moving forward, as the NSE issued 

requests for proposals from local 

and foreign financial advisers to 

assist with the process of demutualisation. 

In February 2015, the Securities 

and Exchange Commission (SEC) 

issued draft rules on demutualisation 

of exchanges in Nigeria and 

invited comments. The SEC on 

the 12th April 2015 published its 

final rules on demutualisation of 

securities exchanges in Nigeria, 

which as at now nothing has been 

heard of the idea. 

Historical view of securities 

exchanges 

Historically, securities exchanges 

evolved as organisations 

mutually owned by its members. 

For instance, cooperative societies 

are owned, run and exist 

solely for the benefits of their 

members. Ownership of cooperatives 

is not based on the issue 

of shares and thus decisions are 

based on the votes of members 

on the basis of one-man-one vote. 

Again, a member’s interest is not 

transferable and ceases on the 

termination of membership. 

Equally, mutual organisations 

are not organised along the line of 

profit-making as they exist strictly 

to serve the interest of their members. 

Consequently, any excess 

income over expenditure or surplus 

as it could be technically described, 

in the course of carrying 

out their activities, is distributed 

among members. This has been 

the structure of stock exchanges 

until 1993 when the Stockholm 

Ndi Okereke-Onyiuke, the former director general in 2001. In 2011 

Nigeria Stock Exchange 

Upbeat statement 

THE APPROVAL of 

the demutualisation 

process will generate 

substantial motivation 

for the development of 

an agile exchange 

Stock Exchange (SSE) took steps 

to change its form and structure. 

What are we waiting for? 

This question is indeed timely 

and germane since members of 

the NSE have since approved the 

demutualisation process. 

At an extra-ordinary general 

meeting (EGM) of the Nigerian 

Stock Exchange in March 2017, 

members approved the demutualisation 

scheme of the Exchange and 

authorised the National Council 

and Management of the Exchange 

to proceed with the process leading 

up to the demutualisation of 

the Exchange subject to applicable 

laws and regulations and obtaining 

the approvals of members and the 

relevant regulatory authorities. 

They also ratified the engagement 

of financial advisers, legal 

advisers, tax advisers and any 

other adviser that may be required 

for the demutualisation of the 

exchange. 

Oscar Onyema, the chief executive 

officer of the NSE had 

indeed noted that “the approval of 

the demutualisation process will 

generate substantial motivation 

for the development of an agile 

exchange thereby consolidating 

its innovativeness and strengthening 

its leadership both at local 

and international levelswhilst also 

adding value to its stakeholders. 

“As a demutualized entity that 

is profit-seeking, the NSE will be 

in a better stead to capitalize on 

new income opportunities, free 

from any limitations arising from 

conflicting member interests and 

existing laws and more importantly 

be able to better support the 

economic growth of Nigeria”. 

National Assembly to the 

rescue? 

At a joint public hearing organised 

by the Senate and House 

of Representatives Committees 

on the Capital Market on a bill for 

an Act to facilitate the development 

of Nigeria’s capital market 

by enabling the conversion and 

re-registration of the NSE from 

a company limited by guarantee 

to a public company limited by 

shares and for related matters, 

2017, stakeholders agreed that the 

move was long overdue in order to 

stimulate liquidity in the system 

among other things. 

Leading deliberations on the 

legislation, the sponsor, Senator 

Foster Ogola, who is the acting 

Chairman, Senate Committee 

on Capital Market, said the NSE 

plays a critical role in the country’s 

financial market, arguing that the 

conversion and re-registration 

into a public company limited by 

shares is essential to developing 

and strengthening the market as 

well as enhancing the formation 

of capital for the expansion of the 

economy. 

He said: “It is anticipated that 

the demutualisation of the NSE 

will reinforce the continuous 

growth and development of a 

dynamic, fair, transparent and 

efficient capital market and thus 

significantly contribute to Nigeria’s 

economic development.” 

He said the planned demutualisation 

was in line with the 

2015-2025 Capital Market Master 

Plan taunted to promote efficiency 

in the creation and harnessing of 

capital, as well as creating liquidity 

in the market, adopting and 

strengthening corporate governance 

best practices. 

Taiwo Oderinde – National 

Coordinator at Proactive Shareholders 

Association of Nigeria 

said it is better to demutualise 

the Exchange because it will be a 

good news for shareholder activists 

who have been advocating for 

the demutualisation of the Stock 

Exchange. 

“If you look at some jurisdictions, 

some of their Exchanges are 

quoted while they try to adopt different 

models which we are trying 

to adopt presently. Demutualization 

will really help the investors 

because when people know that 

their own exchange is also quoted, 

there are some of the ways they 

will regulate better than when they 

have no stake. 

“They are now aware that any 

regulation they are bringing will 

also affect them too. It will make 

them to be more proactive and it 

will make them to be able to do 

things in a businesslike manner. 

“Aside from that, you discover 

that it will attract more companies 

to our Exchange and moreover 

it will encourage more investors, 

most especially the core investors 

and the institutional investors 

such as PFA’s and international 

investors. This is one area that will 

help the stock market and we the 

investors. This is thinking in the 

right arrangement”, Oderinde said. 

Another shareholder activist, 

Adetokunbo Gbadebo, said the 

demutualisation of the exchange 

would bring the Nigerian capital 

market at par with other international 

jurisdiction, resulting in 

enhanced governance, transparency 

and visibility while attracting 

strategic partners, investors and 

good quality issuers. 

From the above, it appears Nigerians 

are ready and raring to go 

on the demutualization of the NSE 

but only waiting for who to bell the 

cat. I think the National Assembly 

should be in the forefront to legislate 

and compel regulators like 

SEC to actually act on the legislation. 

We cant wait for longer. 

They are now 

aware that any 

regulation they are 

bringing will also 

affect them too

16 


THE MONDAY INTERVIEW 

Q&A 

INSIGHTS FROM NIGERIAN AND INTERNATIONAL BUSINESS & CORPORATE LEADERS 

I vote for low interest rate, 

double digit growth 

Mustafa Chike-Obi is an interesting subject for any serious financial journalist to interview. As an international investment banker with a 

Goldman Sachs’ pedigree, the pioneer Managing Director/CEO of Assets Management Corporation of Nigeria (AMCON), now Executive 

Vice Chairman, Alpha African Advisory, tapped by the Federal Government in the heady days of Nigeria’s own peculiar financial crisis that 

impacted heavily on the banking industry, to manage the bad bank set up to save banks from themselves, he talks a lot of sense when 

asked to speak on the global as well as the Nigerian financial markets and economy. PHILLIP ISAKPA and STEVE OMANUFEME met with 

him to ask him what he thought the economy and Nigerian financial markets hold in the near, medium and long term. But he started, in 

his usual characteristic upfront self, by asking: “What do you want to hear from me?” 

We would like to know your thoughts concerning the 

economy, what is happening in the financial services industry 

and, also, pick your brains on the system of recovery 

and bad loans in banks? 

We cannot divorce anything in 2018 from politics. 

Politics will cast a big shadow over everything 

we discuss, whether it is security 

or economy. In an election year, politics has 

a big impact on everything, so certain economic 

decisions that may make sense in the long run, nobody 

will touch them. 

So, going back to the economy, to be able to make things 

for ourselves and reduce our dependence on importation 

requires major sacrifices, from the common people to the 

president of the country. And it would be tough for two years. 

Politically, it is painful to tell people what they are to sacrifice, 

but leadership is letting people know what they have to 

sacrifice. One of the greatest leaders in the world, according 

to the bible, is Moses, and he led the Israelites through a brutal 

experience and he always said he would lead them to the 

Promised Land and he made sacrifices himself. So, if we want 

to save the nation, we must find leadership that tells us what 

we need to do and tells us the result of it and make personal 

sacrifices for us to get there. 

Yesterday [Thursday 1 February, 2018], we were discussing 

informally about the foreign reserves numbers being 

touted by the government and you said you had a view on 

it. What’s your view? 

Well, the problem I have with reserves is that there’s too 

much misunderstanding about reserves. We look at reserves 

as a combination of things that it is not. For most Nigerians, 

reserves represent a sort of savings; and reserves are not savings. 

Reserves are monies that have been earned in foreign 

exchange primarily from government, and CBN buys the foreign 

currency, and substitutes naira in its place. That naira is 

then distributed among the tiers of government and is spent. 

Reserves can’t be spent twice, they are not savings. The only 

true savings are the excess crude accounts and the sovereign 

wealth funds. So, reserves are not savings, and the only benefit 

to reserves is that they give you confidence that you can 

pay for foreign goods. 

Apart from reserves, the upward movement in the ease of 

doing business table, is also mentioned? 

The ease of doing business is not an economic indicator. It is 

a nice thing, but it doesn’t mean much when you go from 150 

to 130. It is not easy to do business in Nigeria. But let’s look at 

the indicators. Is the GDP growing faster? Is inflation lower? 

Is naira stronger or weaker? What is it that is better now? 

Let’s look at the banks. They have been declaring fantastic 

results, since we came out of recession, but banking 

industry analysts say they are not doing a lot of asset creation? 

You keep saying we are out of recession, which is a technical 

term, really technical. There is technical recession and there 

is a growth rate at which you improve the lives of your people. 

Where we are now, should be double digits, so it means they 

are dying more slowly, but we are all dying. Two percent GDP 

growth for a population growth of three percent is unacceptable. 

So, I repeat, anybody that doesn’t have a convincing plan 

to achieve double digits growth should be rejected, whether 

Igbo, Christian, Muslim, doesn’t matter, without double digits 

growth, this country would not survive, you would defeat 

Boko Haram and another one would jump up. You can’t have 

over four million Nigerian people born every year and you 

don’t have jobs and future for them, you can’t do that for ever. 

If you want to survive as a viable state and the constitution 

says the priority of the government is security and welfare, if 

we can’t provide an environment for the people we are creating 

today in Nigeria, I don’t see us surviving as a viable nation 

in the next 10 years. So, let us subject them to the test, come 

and tell us how you are going to provide for the future of the 

Nigerian people. My minimum test is 10 percent GDP; tell us 

how you would do it, and if we believe your story, that is the 

person we are picking. Forget zoning, APC or PDP. 

But INEC is not providing a platform for individual candidates, 

you must belong to a party? 

Yes, I tell people if you really want to change Nigeria, then 

change the political parties. If you can’t change PDP or APC, 

how do you expect to change Nigeria? If you’re serious about 

it and there are enough of you , then you can change it. You 

MUSTAFA 

CHIKE-OBI 

Profile: 

Mustafa Chike Obi 

Executive Vice Chairman 

at Alpha African Advisory 

Education: 

Bachelor’s degree in 

Mathematics from the 

University of Lagos (first 

class honours) and an 

MBA from Stanford University 

Graduate School 

of Business. 

I repeat, 

anybody that 

doesn’t have a 

convincing plan 

to achieve 

double digits 

growth should 

be rejected 

tell people that PDP can’t be changed but you can change Nigeria, 

it is silliness. I’ve listened to all of them. There is nothing 

they are saying that they can’t do in APC and PDP, but the 

reason they are avoiding APC is because they know the presidential 

ticket is blocked; so they want to go somewhere else 

they can challenge for presidency. If all these people get together, 

they can change APC. They can go in there tomorrow 

and say, we want a new chairman. But if you can’t do that, 

how are you going to change Nigeria, a much more difficult 

task? So you give up on APC, PDP or AD and you believe you 

can change Nigeria, which includes the parties? It is crazy. So 

let the APC or PDP, pick the guy who can grow GDP at double 

digits. In fact, let all of us pick those guys then we choose between 

10 plans. 

Some would ask how do you grow the economy at double 

digits? 

I can give you a plan now that in the next year, we would grow 

by double digits, but we would all make sacrifices and we

Q&A 


THE MONDAY INTERVIEW 17 

INSIGHTS FROM NIGERIAN AND INTERNATIONAL BUSINESS & CORPORATE LEADERS 

need a leader that can lead people there. A leader that can 

be trusted, can show the vision and who is willing to make 

personal sacrifices; but the plan is easy to conceive. 

We have heard you say regulators are too powerful in Nigeria, 

and you don’t think 10-year tenure for bank CEOs 

should be a policy matter. Well, the current Emir of Kano, 

Muhammadu Sanusi II, (Sanusi Lamido Sanisu, as he 

then was), who headhunted you to head AMCON, was instrumental 

in making CBN so powerful, as it was under 

him that the 10-year tenure policy was made? 

This is my issue and I have tremendous respect and friendship 

for Sanusi. He came in during a crisis and focused on 

stability. He said let’s keep everything stable and he did a 

fantastic job stabilizing the economy. What was needed next 

was a growth-minded CBN governor and that is what I am 

advocating. 

What of the forex window they opened? 

You see, you can’t create a problem and then solve the problem 

you created and then pat yourself on the back for solving 

it. The forex window was out of the problem they created, 

where people couldn’t take their money out and bring their 

money in. Now they can bring money in, but if there was no 

policy like that there would have been no need for the forex 

window. So you create a problem and then pat yourself on 

the back for solving it. You create a recession and we pat ourselves 

on the back for recovery. No, we didn’t have to have 

the recession, we policied ourselves into a recession. I don’t 

give anybody credit for solving a problem that was created by 

them. You said the banks are making record profits in naira. 

In 2011, GTBank made N100 billion in profit and naira was at 

150/$1; that was roughly $700 million. What did they make 

last year, around N160 billion, which is around $500 million 

dollars? They made less last year than in 2011? 

You haven’t answered the question about lack of asset 

creation by banks? 

Let me tell you about assets creation. You mean giving loans. 

Very few businesses can safely be lent to with 26 percent interest 

rate. It is difficult for banks to find businesses that they 

can lend to after thorough analysis and get their money back. 

It is a lot easier to buy treasury bills. At some point, they were 

making 18 to 20 percent on treasury bills and Nigerian bills 

are riskless because 

Nigeria has never defaulted on its treasury bills. Why won’t 

“ 

Reserves are monies 

that have been earned 

in foreign exchange 

primarily from 

government, and CBN 

buys the foreign currency, 

and substitutes naira 

in its place 

“ 

I buy treasury bills at 20 percent rather than lend money to 

him at 30 percent with the chance that he would default? It 

is rational. We have not created incentives for the banks. If 

interest rate went down to five percent and banks could lend 

money at eight percent to business, many of these bad loans 

will become good ones, because people will be able to service 

their debts at eight percent. But at 26 percent, all the money 

they make is used to service the loan at that rate. The policy 

of CBN can’t be divorced from the concept of bad loans. And 

the policy of CBN will encourage or discourage banks from 

making loans to the real sector. And worse than that, when 

they say they are giving loans to the real sector at low interest 

rate, it doesn’t work, because when you give a farmer a loan 

at six percent, but his customers are borrowing at 26 percent; 

his customers are going to squeeze him, but if everyone is at 

six percent, it works. But one person at six percent and everyone 

at 26 percent, it ends up killing the one at six percent. 

But the availability of credit has been a problem for very 

long? 

No, that is not true. When Sanusi [Lamido Sanusi] came 

in, he dropped interest rates to five percent and when that 

happened, and there was a bit of problem, he then started 

increasing it to prevent inflation. So my point is that there is 

policy response to one issue and a different policy response 

to another issue. At the time when interest rates were at five 

percent, there was no lack of credit, he had pumped money 

into the system. So that had not always been a problem. The 

reason why you have high interest rate is because you focus 

on two things. 

In economy management you can focus on two things, you 

can say you’re focusing on foreign exchange and interest 

rates, and this has consequences. The less productive you 

are, the higher you have to keep interest rates. And the consequences 

of the high interest rate are lack of credit and bad 

loans; but the biggest impact that nobody wants to talk about 

is the cost of servicing Federal debt. I believe that 60 percent 

of revenue is used for debt servicing. 

If interest rate dropped to five percent, it would drop from 60 

percent for debt servicing to 25 percent, which is manageable. 

When you look at your monetary policy architecture, 

you have to state what is important to Nigeria, and what the 

costs of it are. I would vote for low interest rate, and double 

digit growth and the consequences would be temporary 

high inflation and temporary weaker foreign exchange, but I 

would employ five million people a year and I would rather 

have five million people working and dealing with inflation 

than not working at all. That’s my view. 

When you ask Americans, they tell you to manage interest 

rates, but when they had their financial crisis they dropped 

their interest rate to zero; but they want us to keep ours high 

because they are going to keep selling their goods to us. 

American interest is to have a market in Africa; American interest 

is not for Nigeria to become a manufacturing country. 

Interest rate was at negative in Europe for a time and inflation 

was at four percent, so inflation can be higher than interest 

rate for sustainable growth. 

Everyone feels it in the economy? 

That is what I would like to caution on, and it is a serious caution. 

Don’t tell people things are better when they are feeling 

more pain. I would say most Nigerians don’t feel better off 

than they did in 2014. If you remember your financial worries 

in 2014, and now, you’d admit to me that it is much worse. 

People are now asking N5000 for food; a lot of families are not 

having three meals a day. If we are sensitive as a government 

we would tell of plans to relieve their pain. My advice is not a 

partisan but purely a love of Nigeria advice. Tell us how you 

plan to make it better in a way that we understand and then 

lead by example. 

How can the issue of powerful politicians, interfering in 

the market and distorting capitalism, be resolved? 

What we can do is to highlight the problems and then to solve 

them requires whole policy discussion that can take us days. 

But lets us agree that it is a problem and we should be looking 

at who can solve the problems because, the solution can be 

mitigated one way or the other. That’s my short answer. It will 

take too long to answer you.

18 

BUSINESS A.M. FEBRUARY, MONDAY 12 - SUNDAY 18, 2018



19 

20 stocks trade below 50 kobo as price 

methodology rules review takes effect 

Kayode Ogunwale 

No fewer than 

20 stocks listed 

on the floor of the 

Nigerian Stock Exchange 

(NSE) were affected 

by the amended Par Value 

Pricing Methodology Rules of 

the Exchange last week. 

At the end of the week’s 

trading, 11.63 percent of 172 

equities listed on the bourse 

recorded sharp decline in 

their share prices since the 

commencement of the new 

rule on 29 January, 2018. 

The affected stocks are 

Amino International Plc., 

which ended the week trading 

at 25 kobo per share, 

Consolidated Hallmark 

Insurance Plc. (36 kobo), 

Lasaco Assurance Plc. (36 

kobo), Unic Diversified 

Holdings Plc. (36 kobo), Associated 

Bus Company Plc. 

(39 kobo), Multiverse Mining 

& Exploration Plc. (40 

kobo), Royal Exchange Plc. 

(42 kobo) and Japaul Oil & 

Maritime Services Plc. (42 

kobo) per share. 

Others are Cornerstone 

Insurance Company Plc. (43 

kobo), Unity Kapital Assurance 

Plc. (44 kobo), African 

Alliance Insurance Plc. (44 

kobo), FTN Cocoa Plc. (44 

kobo), Guinea Insurance Plc. 

(46 kobo), Courtville Business 

Solution Plc. (46 kobo), 

and First Aluminium Nigeria 

Plc. (46 kobo) per share. 

Equity Assurance Plc., 

Mutual Benefits Assurance 

Plc., Sovereign Trust Assurance 

Plc., Deap Capital Management 

& Trust Plc., and 

Chams Plc. all traded at 48 

kobo per share respectively. 

The new rules categorized 

listed companies into three 

groups, based on their share 

value. Group A, according to 

the NSE, are the stocks trading 

N100 and above for four 

of the last six months, or new 

security listings period at 

N100 or above at the time of 

listing. 

Group B are the stocks 

of N5.00 or above but lower 

than N100 for four of the last 

six months of new security 

listings, priced at N5.00 or 

above but lower than N100 at 

the time of listing. 

Group C are the stocks lower 

than N5.00 for four of the 

last six months or new security 

listings priced lower than 

N5.00 at the time of listing. 

The bourse maintained 

that the new rules specified 

revised price limit, 

price movements and tick 

sizes (price floor, minimum 

pricing increments and 

minimum quantity to be 

traded that will change the 

published price). 

The NSE highlighted that 

price discovery for every 

listed shares under the new 

Par Value Rule remain determined 

by market forces and 

thus, equities may now trade 

below the erstwhile price 

floor 50 kobo/unit. 

The implications of the 

new rules according to analysts 

at United Capital is that, 

the policy may result in sharp 

depreciation of up to 37 listed 

securities which have not 

traded above N0.50 kobo for 

a long time, especially insurance 

companies. 

Analysts believe that the 

new rules would increase 

market liquidity and improve 

price discovery especially for 

lowly priced stocks. 

“With reduced minimum 

price of one kobo, stocks in 

the C categories that are intrinsically 

less than N0.50 

kobo may be more prone to 

strategic trades or possible 

acquisition. 

“Some of the insurance 

companies that have not 

been performing optimally 

are the biggest suspects, especially 

as the sector remains 

ripe for further consolidation, 

amid the proposed implementation 

of more stringent 

risk-based supervision 

guidelines by the regulators,” 

an analyst said. 

According to him, other 

equities in this category 

include FTN Cocoa, John 

Holt, Multitrex, AfrInsurance, 

Aso Savings & Loans, 

Deap Capital, Resort Savings, 

Evan Medical, Union 

Diagnostic, Chan’s, Courtville, 

Omatek, Multiverse, 

Thomas Wyatt, Japaul Oil 

& Maritime Services, ABC 

Transport, Academy Press, 

Afromedia, Daar Communication, 

NSL Tech, R.T. 

Briesco, and Tantalizer, 

which closed at N0.50 kobo 

on Friday 26th Jan. 27, 

2018. 

Access Bank’s long-term national rating 

now A+ in Fitch latest asset quality review 

Business a.m. 

A C C E S S 

BANK, NIGE- 

RIA’S Tier-1 bank, 

has seen its longterm 

national rating upgraded 

by Fitch Ratings, one of the 

world’s leading rating agencies. 

The agency, moved the 

bank’s rating up one notch to 

A+ from A and the bank maintained 

its long-term issuer 

default rating (IDR) at B, in 

the rating agency’s latest asset 

quality review of the bank. 

The basis for the IDR, in 

the opinion of Fitch, is that the 

bank’s IDRs are driven by its 

intrinsic creditworthiness as 

defined by its Viability Rating 

(VR). 

Fitch said this was reflective 

of Access Bank’s financial 

metrics, which it described as 

solid, and are “stronger than 

most Nigerian banks.” 

Herbert Wigwe, group managing 

director and chief executive 

officer, in his immediate 

reaction to the ratings released 

by Fitch, said it reflected the 

bank’s strategic intent to adopt 

best global practices in all aspects 

of its business, adding, 

“We have grown over the years 

to become a formidable force 

within the financial markets in 

which we play, with an aim to 

becoming the most respected 

African bank.” 

Regarding the bank’s asset 

quality metrics, Fitch said they 

compare “especially well” with 

its immediate peers, noting 

particularly, that the bank’s 

“stock of non-performing loans 

has remained under control, 

comprising 2.6% of gross loans 

at end September 2017, the 

lowest of all large Nigerian 

banks.” 

Fitch also stated that the 

bank has a good corporate 

banking franchise and good 

management stability, made 

up of a robust risk management 

framework, all of which 

are reflected in the bank’s “resilient 

asset quality”. 

Reviewing the state of the 

bank further, Fitch identified 

the refinancing of the bank’s 

Eurobond in 2016 as helping 

to ease its foreign currency 

liquidity position, noting that 

the bank’s national ratings, 

“are a reflection of its relative 

creditworthiness to the best 

credits in Nigeria. 

Projecting into the future, 

Wigwe said the bank remained 

focused, noting: “As we embark 

on our next five – year cyclical 

growth strategy, we remain 

focused on establishing robust 

risk management and compliance 

frameworks, and seeking 

innovative ways to continually 

eschew sustainable banking 

ethos.” 

Access Bank has been quoted 

on the Nigerian Stock Exchange 

since 1998 and has over 

830,000 shareholders, made up 

of Nigerians and international 

institutional investors. It operates 

and serves its different 

markets through four business 

segments, namely, personal, 

business, commercial and 

corporate and investment 

banking. 

An information sheet released 

by the bank says the 

bank “has enjoyed what is arguably 

Africa’s most successful 

banking growth trajectory in 

the last twelve years, ranking 

amongst Africa’s top 20 banks 

by total assets and capital in 

2016.” 

It operates through a network 

of 383 branches and service 

outlets located in major centres 

across Nigeria, sub-Saharan 

Africa and the United Kingdom, 

with representative offices in 

China, Lebanon and India. 

Ahead of NBS data, headline 

inflation seen to dip to 14.90% 

Kayode Ogunwale 

Nigeria’s yearon-year 

inflation 

rate has been 

forecast to ease further to 

14.9% in January 2018. This 

is ahead the official release 

of inflation figures by the 

statistical authorities, the 

National Bureau of Statistics 

(NBS) 

The forecast figure represents 

a 0.47 percent decline 

from 15.37 percent in December 

2017. 

“If our estimates are correct, 

this will mark the 12th 

consecutive decline since 

February 2017. Our forecast 

is based on a simple regression 

model and empirical 

analysis. We expect month- 

on-month inflation to flatten 

out to 0.59% (7.33% 

annualized),” analysts at 

Financial Derivatives Company 

(FDC) said in their 

monthly economic bulletin. 

Similarly, analysts at Afrinvest 

expect inflation to 

further moderate. 

“Although we expect 

Food Index M-o-M growth 

to accelerate as seasonality 

effect begins to wear off, 

the effect on Headline Index 

will be offset by benign core 

price environment against 

the backdrop of stable FX 

market. Hence, we forecast 

headline inflation to moderate 

to 15.0 percent year on 

year,” they noted. 

The downward trajectory 

in headline inflation, 

according to FDC, can 

be attributed to the decline 

in most global commodity 

food prices such 

as sugar and rice and to a 

minor extent, the stability 

of exchange rate between 

(N363/$- N364/$). 

“A stable exchange rate 

encourages producers to finally 

pass through the benefit 

of cheaper imports to 

consumers. Furthermore, 

the decline in production 

levels due to the fall in demand 

(post-Christmas 

blues) in January - evident 

in the sharp fall in FBN PMI 

to 54.6 from 68.7 in Dec’17 - 

will taper inflationary pressures,” 

they said. 

In their view, core inflation 

is expected to remain 

flat at 12.10% year-on-year 

despite an increase in domestic 

transport fares due 

to the resurgence of fuel 

scarcity in January. 

On the other hand, food 

inflation is seen tapering 

to 18.61 percent year-onyear 

in January from 19.42 

percent in December 2017. 

Month-on-month food inflation 

is also projected 

to decline to 0.61 percent 

(7.59% annualized) from 

0.62 percent (7.72% annualized). 

The fall in food inflation, 

they pointed out, can be attributed 

to the decline in 

domestic food prices across 

the food basket, especially 

grains. 

When Nigeria is compared 

to peers, most countries 

in sub-Saharan Africa 

(SSA), with the exception 

of Uganda, recorded an uptick 

in headline inflation in 

January. The rise was driven 

A stable 

exchange rate 

encourages 

producers 

to finally 

pass through 

the benefit 

of cheaper 

imports to 

consumers 

mainly by an increase in the 

prices of food, housing and 

utilities. High global crude 

oil prices continue to adversely 

affect logistics and 

utility costs in these countries. 

The FDC analysts however 

see a reversal in the trend 

in the coming months. They 

claimed that as business activities 

pick up in the run up 

to Easter, there would be an 

increase in aggregate domes


20 

COMPANY 

L–R: Chinedu Moghalu, regional head, NEXIM Bank, Enugu; Obiora Madu; Gertrude Ukoa, head, NEPC, Enugu, and Anayo Agu, SME 

Centre, Enugu 

NEXIM’s N5bn lifeline for Multi-Trex 

on table awaiting AMCON clearance 


MULTI-TREX 

INTEGRAT- 

ED Foods 

Plc, the indigenous 

production company, long 

troubled over a mounting of 

debts that led to the intervention 

of Assets Management 

Corporation of Nigeria (AM- 

CON) could be in for a lifeline 

as the Nigeria Export-Import 

Bank (NEXIM) says it has 

N5billion facility on the table 

to revamp the company and 

bring it back to production. 

Information available to 

business a.m. suggest that access 

to this facility will depend 

on how quickly AMCON provide 

clearance to Multi-Trex. 

The N5 billion is expected 

to be sourced from a cocktail 

of funds that have been made 

available for such purposes by 

the Central Bank of Nigeria 

(CBN), including a N500 billion 

Export Stimulation Facility 

(ESF) and another N50 

billion Export Development 

Fund (EDF). Both funds are 

targeted at export oriented 

businesses to boost their 

businesses, create jobs, and 

contribute to the foreign exchange 

revenue earnings of 

the country, for which Multi- 

Trex qualifies for. 

Abba Bello, chief executive 

officer of NEXIM, said 

once AMCON gives clearance 

to the company, the facility 

would be made available. 

He made this pledge over 

the weekend at Multi-Trext 

factory in Warapa, Ogun State, 

during an oversight visit by 

the House of Representatives’ 

committee on banking and 

currency, led by Jones Onyereri, 

its chairman. 

Bello said the value addition 

of the company to the 

growth of foreign exchange 

and the gross domestic product 

of the country is the core 

reason for the intervention 

by NEXIM as the company’s 

factory, when operational can 

employ 1,500 workers with 

the huge number of indirect 

employments that the community 

will benefit from. 

For two years now Multi- 

Trex has been under AM- 

CON’s receivership over its 

indebtedness to financial 

institutions which AMCON 

bought over from the deposit 

money banks. It was 

only in September, 2017 that 

AMCON and the company 

reached a mutual agreement 

to settle the matter. 

AMCON laid claims to a 

debt of N13.3 billion being 

the contested sum of N8.5 billion 

eligible bank asset (EBA), 

bought from Skye Bank, plus 

AMCON’s own interest calculated 

for the period that the 

company has been prohibited 

by CBN from accessing working 

capital for its operations. 

Multi-Trex had faulted the 

procedure and claimed its acquisition 

by AMCON was unlawful 

as it was performing and 

meeting all its financial obligations 

with Skye Bank before the 

N8.5 EBA was acquired. Multi- 

Trex insisted on the sum of N6 

billion agreed with AMCON as 

full and final settlement. 

The CBN ban came via 

its issued guideline of September 

17, 2012, prohibiting 

Abba Bello, chief executive officer, NEXIM 

I tell them that I 

am too old to start 

something new as 

dreams are better 

continued by 

those that started 

them 

all Nigerian deposit money 

banks from lending to individuals 

and corporate bodies 

whose loans of up to N5 billion 

has been taken over by 

AMCON. 

Bello said Multi-Trex Integrated, 

which is the largest 

cocoa processor company in 

the country was encouraged 

to begin production as cocoa 

is the largest non oil export of 

the country and with it being 

in business, more foreign exchange 

can be earned from 

cocoa. 

He said the bank was ready 

to support other industries that 

are value addition based, which 

he said can guarantee jobs for 

the teeming population. 

Onyereri said the situation 

with the company should not 

have arisen in the first place 

as AMCON ought to have 

considered the situation before 

closing down the company. 

He said he is delighted to 

have visited the company and 

will use all within his means 

to make sure that the CBN 

takes urgent actions to expedite 

the recovery process. 

He said there is an urgent 

need to engage the private 

sector as it is annoying for the 

country to be termed the biggest 

economy in Africa, yet 

private sectors contribution 

to GDP remains low. 

He said: “I wished l had 

been made aware of the situation 

earlier than now though 

it’s not too late as the company 

ought to be encouraged 

by government and not what 

it has experienced. NEXIM 

should do well enough to put 

a project manager that will 

monitor the fund disbursement 

and other details as foreign 

exchange figures of the 

country will receive a boost 

once the company starts production 

and exportation.” 

Dimeji Owofemi, the vice 

chairman and chief executive 

officer of Multi-Trex said 

it was the company’s expansion 

drive that led it to seek 

for more funds to finance the 

expansion in 2008; but that 

it led to this current predicament 

as its private placement 

experienced a technical failure, 

leading to problems with 

its bankers. 

He said a tripartite agreement 

between NEXIM, Bank 

of Agriculture (BoA) and the 

Bank of Industry (BoI),with 

NEXIM leading, will quicken 

up the recovery process for 

full production to begin. 

“I have been in the cocoa 

business since July1 

1987,which makes it 31 years 

now and people are saying 

that I should move on. I tell 

them that I am too old to start 

something new as dreams 

are better continued by those 

that started them, hence the 

resilience to see the company 

back to production. I have 

learnt my lessons from the 

situation and it won’t happen 

again,” he added. 

Nestlé’s N4.1bn 

ready-to-drink Milo 

factory to create 

100 new jobs 


THE N4.1 BILLION 

INVESTMENT 

in a new Ready- 

To-Drink Milo 

factory by Swiss 

transnational food and drink 

company, Nestle, opened 

last week by vice president 

Yemi Osinbajo, will create 

100 additional new jobs in 

the economy, business a.m. 

has been told. 

The investment in the new 

beverage production plant 

became necessary, business 

a.m. learnt, to enable its Nigerian 

arm, Nestle Nigeria plc, 

meet the growing consumer 

demand of its product. 

The new plant is part of 

the existing Agbara factory, 

which has been operating 

for 37 years. The plant 

is equipped with the latest 

state of the art technology 

and adopts high safety and 

environmental standards, 

according to an information 

sheet made available by the 

company. 

While declaring the plant 

opened, Osinbajo said: “This 

new plant is a reflection of 

the continued confidence the 

industry has in the robustness 

of our economy. We are grateful 

to Nestlé for these significant 

investments, particularly 

for locating its factories in 

rural communities and sourcing 

its raw materials from 

local farmers contributing to 

the sustainable development 

of Nigeria.” 

The new plant produces 

Nestlé Milo Ready-To-Drink 

(RTD) beverage in 180ml 

cartons and has a yearly production 

capacity of above 

8,000 tonnes. 

Launched in October 

2017, Milo RTD is made from 

natural milk, malt and cocoa. 

The company described the 

drink as providing essential 

nutrients and that it is fortified 

with Nestlé’s unique 

blend of vitamins, ACTIV- GO 

(Vitamins B3, B2, B6, B12, vitamin 

C, and vitamin D) and 

minerals including Calcium 

and Iron. 

Mauricio Alarcon, the 

chief executive officer of 

Nestlé Nigeria said: “The new 

Nestlé Milo RTD is complementing 

the existing range 

of offerings of our iconic 

Milo brand. It is conveniently 

packaged to offer the unique 

Milo taste and meet the nutrition 

needs of active children 

on the go. This is in line with 

the company’s commitments 

to enable healthier and happier 

lives. 

“This new production 

plant is a true reflection of 

how Nestlé creates shared 

value for all, by providing 

good jobs, sourcing 80 per 

cent of our inputs with local 

farmers and investing in the 

development of rural communities,” 

he added. 

Nestlé has been operating 

in Nigeria since 1961. 

With staff strength of over 

2,300 direct employees, three 

manufacturing sites, eight 

branch offices and a head office 

located in Lagos, Nestlé is 

a major player in the Nigerian 

economy. It products include 

Maggi, Milo, Golden Morn, 

Nescafé and Nestlé Pure Life. 

The new 

plant is part of 

the existing 

Agbara 

factory


COMPANY 

Hedge Funds 

21 

Guinness makes board change, 

appoints Njoroge executive director 


Guinness Nigeria 

Plc. has notified the 

Nigerian Stock Exchange 

(NSE) and 

the investing public 

of a change in its board following 

the resignation of Ronald Plumridge 

as executive director. 

In a notification to the NSE last 

Friday, Guinness said it has approved 

the appointment of Stanley 

Njoroge as replacement to Plumridge 

effective March 1, 2018. 

Njoroge is a certified public 

accountant and member of the 

Institute of Certified Accountants 

of Kenya (ICPAK). He is an 

alumnus of both the University of 

Nairobi and Strathmore University 

in Nairobi Kenya. 

Within the Diageo family, he 

has held a number of key finance 

leadership roles across Asia and 

Africa including financial controller 

of EABI; finance director 

of PT Gitaswara Indonesia and 

finance director of Meta Abo 

Brewery SC/ Diageo Ethiopia. 

THIS WEEK ISN’T TURN- 

ING out to be great one 

for Uber in Japan. Two of 

its investors — Didi and 

SoftBank — are teaming 

up to launch a rival service, while 

one of its existing competitors has 

just landed a big cash infusion and 

highly influential backer after Toyota 

backed JapanTaxi. 

The auto giant said it will invest 

7.5 billion JPY ($69 billion) into JapanTaxi, 

an Uber-like service that 

is owned by Ichiro Kawanabe, who 

runs Japan’s largest taxi operator Ni- 

He is an alumnus 

of both the 

University of 

Nairobi and 

Strathmore 

University in 

Nairobi Kenya 

Toyota invests $69M in Japanese 

Uber rival backed by the taxi industry 


JapanTaxi also 

offers a fare 

calculator app if 

you took a taxi 

offline, and an app 

for booking rides 

for children 

In his most recent role as the 

Diageo global audit and risk director, 

Africa and Europe, he was 

responsible for providing assurance 

to the audit committee of 

Diageo Plc’s board of directors on 

the management of risks across 

Diageo businesses in Africa (Nigeria, 

East Africa, South Africa, 

and Africa regional markets) and 

Europe. 

hon Kotsu and heads up the country’s 

taxi federation. 

Toyota is also an Uber investor 

and it previously backed JapanTaxi 

via $4.5 million investment from its 

Mirai Creation Fund, according to 

Bloomberg. 

These new funds will go towards 

developing the service further, while 

Toyota said it plans “cooperation and 

business collaboration in such areas 

as connected terminals for taxis, the 

joint development of vehicle-dispatch 

support systems, and big-data 

collection.” 

JapanTaxi also offers a fare calculator 

app if you took a taxi offline, and 

an app for booking rides for children. 

Uber doesn’t provide business information 

or user numbers for its business 

Japan or other markets in Asia. 

However, it is said to account for less 

than one percent of Tokyo’s taxi market. 

JapanTaxi, meanwhile, claims four 

million downloads and 60,000 taxis — 

or around one-quarter of all taxi drivers 

in Japan — on its platform. 

Messaging app Line is another 

competitor in Japan, where peer-topeer 

rides are banned. Line’s hailing 

service sits inside its app — which is 

Japan’s most popular messenger — 

and it has integrated with taxi operators 

that include Nihon Kotsu, but it 

is unclear how popular it is now following 

its 2015 launch. 

Japan’s taxi industry is one of the 

largest at $15 billion per year. With 

Didi and SoftBank set to offer yet 

another competitor, it is no surprise 

that Uber CEO Dara Khosrowshahi 

has made Japan the first stop of his 

inaugural trip to Asia as head of the 

ride-sharing firm. 

Equity Assurance announces name 

change, now Sunu Assurances Nigeria 

EQUITY ASSURANCE 

PLC. has announced 

name change to Sunu Assurances 

Plc. The company 

in a notification to all 

stakeholders said having passed the 

necessary special resolution in line 

with section 31()3) of the Companies 

and Allied Matters Act (CAMA), 

Cap20, laws of the federation, 2004, 

and obtaining the approval of the 

Corporate Affairs Commission 

(CAC), it has changed its name to 

Sunu Assurances Nigeria Plc. 

It further said that pursuant to section 

31(5) of CAMA, it has been issued 

a new certificate of incorporation 

by the registrar general of CAC 

evidencing the change of name. 

Equity Assurance Plc was incorporated 

on 3rd October 1991 with registration 

number RC.175105. 

It provides non-life insurance to corporate 

and retail customers in Nigeria 

and Ghana. 

It operates through three segments: 

Non-Life, Asset Management, and 

Health Management. 

The Non-Life segment covers the 

Cadbury taps Mordi from Dangote to 

lead communications strategy 


CADBURY NIGERIA 

PLC, the Nigerian arm 

of multinational confectionary 

company, 

Cadbury, has tapped 

Frederick Mordi, a serial writer 

and journalist from Nigeria’s 

Dangote Group, to lead its communications 

strategy. 

Mordi was tapped in the closing 

headhunting season of last 

year, according to sources in the 

marketing communications industry. 

His role at Cadbury sees 

him functioning as the confectionary 

maker’s communications 

specialist. 

Cadbury has been without a 

substantive spokesperson since 

Omije Akomen left for Nigerian 

Bottling Company a few years ago. 

Money market rates to spike 

on tighter system liquidity 

MONEY MARKET 

RATES - Open Buy 

Back (OBB) and 

Over Night (OVN) 

- trended higher 

on three of five trading days in the 

past week as the Central Bank of 

Nigeria (CBN ) conducted OMO 

auctions on all days of the week. 

At the start of the week, OBB and 

OVN rates closed at 18.4 percent 

and 19.3 percent from 11.6 percent 

and 12.2 percent recorded the 

previous Friday following an OMO 

auction worth N110 billion as well 

as wholesale Secondary Market 

Intervention Sales (SMIS) worth 

US$100 million, which were conducted 

by the CBN. 

On Tuesday, OBB and OVN rates 

further increased to 35.8 percent 

and 37.4 percent respectively as the 

protection of customers’ assets and 

indemnification of other parties that 

have suffered damage as a result of 

customers’ accidents. 

The Asset Management segment offers 

finance leases to both individual 

and corporate clients. 

The Health Management segment offers 

health management to both corporate 

and individual clients. 

The company offers various insurance 

products, including fire and 

special peril, consequential loss, burglary, 

householder’s, cash in transit, 

goods in transit, public liability, 

products liability, fidelity guarantee, 

aviation, oil and energy, motor trade, 

machinery breakdown, professional 

indemnity, medical expense/evacuations, 

personal liability, and personal 

accident insurance products. 

Equity Assurance Plc is a corporate 

member of the West African Insurance 

Company Association (WAICA) 

and the Nigeria Insurers’ Association 

(NIA), the official umbrella of registered 

insurance companies in Nigeria, 

as well as The Africa Insurance 

Organization (AIO). 

Bala Yusufe, a sales and marketing 

professional has discharged 

communications’ function since 

then. 

A business journalist of repute, 

Mordi has over 15 years experience 

spanning economic and developmental 

journalism, public 

relations and corporate communications. 

He once wrote for Londonbased 

African Business magazine, 

a pan-African monthly publication. 

He had also worked with the 

now rested Financial Standard 

newspapers, where he rose from a 

reporter to news editor. 

Mordi holds a masters degree 

in Media and Communications 

from the Pan-Atlantic University, 

Lagos, and until recently, was the 

Prosci-certified change manager 

and group head, internal communications 

at Dangote Group in 

CBN mopped up N20 billion (offered 

N40 billion) through its OMO 

auction. 

Similarly, the uptrend was sustained 

on Wednesday as rates further 

surged to 53.0% and 53.1% 

respectively consequent on a N12.3 

billion decline in system liquidity 

which settled at N10.2bn. However 

on Thursday, system liquidity improved 

following an OMO maturity 

of N67.7 billion, which hit the system, 

hence OBB and OVN rate declined 

to 46.7 percent and 48.0 percent 

respectively. Money market 

rates remained in double digits on 

Friday, albeit lower than Thursday, 

closing the week at 43.3 percent 

and 45.5 percent, up 31.7 and 33.3 

percentage points week-on-week, 

respectively.

22 


TECHNOLOGY&INNOVATION 

Google-Nest merger 

raises privacy issues 

Business a.m. 

TECH GIANT ALPHABET 

is merging its Google and 

Nest divisions together. 

Nest was initially a start-up 

before being acquired by 

Google’s parent company 

The firm suggests the move will 

aid its efforts to build hardware and 

software to “create a more thoughtful 

home”. 

Nest had run as a standalone unit 

since its $3.2bn (£2.3bn) takeover in 

2014. Its smart home products benefit 

from gathering data about its users. 

Nest previously pledged the data 

would be kept separate from Google’s 

other operations. Privacy campaigners 

have raised concerns at the reorganisation. 

But Google has said it will be 

“transparent” about any changes that 

might be made. 

‘Consumer choice’ 

Nests’s products include: 

internet-connected security cameras 

for inside and outside the home 

thermostats that use motiondetecting 

sensors to detect when the 

owners are about 

a camera-equipped doorbell 

a movement-detecting alarm system 

and smoke detector 

In addition, the division’s app can 

be set to gather data from other products 

- including cars, ovens, fitness 

trackers and even sensor-equipped 

beds - to help “save energy... and 

stay safe”. 

Nest’s latest products include an 

alarm system that registers when 

users leave and return to their home 

In July 2015, Tony Fadell - the 

co-founder and former chief of Nest 

- told the BBC that consumers could 

be reassured that efforts had been 

made to ringfence this data and prevent 

it being mixed with all the other 

information Google gathered about 

the public. 

“When you work with Nest and use 

Nest products, that data does not go 

into the greater Google or any of [its] 

other business units,” he explained. 

“We have a certain set of terms and 

policies and things that are governed. 

“So, just when you say we may be 

owned by Google, it doesn’t mean that 

the data is open to everyone inside the 

company or even any other business 

group - and vice versa. 

“We have to be very clear on that.” 

When the BBC asked Google if 

that promise would be respected in 

the future it provided the following 

statement: 

“Nest users’ data will continue to 

be used for the limited purposes described 

in our privacy statement like 

providing, developing, and improving 

Nest services and products,” it said. 

“As we develop future plans and 

future product integrations, we will 

be transparent with users about the 

benefits of those integrations, any 

changes to the handling of data, and 

the choices available to consumers in 

connection with those changes.” 

The firm also provided a link to 

its current privacy statement, which 

states that it will provide notice of any 

changes on its website or by contacting 

customers’ directly. 

‘Data harvesting’ 

The Big Brother Watch campaign 

group said it was concerned by the 

development. 

“Google already harvests an incredible 

amount of detailed information 

about millions of Internet users 

around the globe,” said director Silkie 

Carlo. 

“Now, Google is becoming embedded 

in the home, through ‘smart’ soft 

surveillance products. 

“Adding data from Nest’s home 

sensors and security cameras will significantly 

expand Google’s monopoly 

on personal data. Many customers 

will be justifiably anxious about 

Google’s growing, centralised trove, 

especially given that its business 

model relies on data exploitation.” 

Another company watcher said 

there could be benefits from allowing 

Google engineers working 

on the Home smart speaker and 

other Assistant-enabled hardware 

to work alongside their Nest counterparts. 

But he acknowledged that some 

device owners would still be concerned. 

“It would be naive to expect that 

as Nest is folded into the bigger 

Google entity, that there aren’t efforts 

to bring its platforms and all 

of the intelligence together,” commented 

Ben Wood from the CCS 

Insight consultancy. 

“It will be positioned as enhancing 

the products, but for some customers 

that may be something that they feel 

uncomfortable about.” 

Snap trying to 

lure Instagram 

advertisers by 

offering them free 

ads 

Remilekun Davies 

Snap wants to attract new 

advertisers — specifically, it 

wants to attract advertisers 

who are spending money 

with its biggest competitor, 

Instagram. 

To lure them over, Snap is reaching 

out to those advertisers that are buying 

vertical video ads on Instagram 

and other competitors, and offering 

them free advertising credits to give 

Snapchat a try. 

A Snapchat spokesperson confirmed 

that the company has indeed 

started reaching out to advertisers 

who are spending money on competing 

services. 

Snap is directing advertisers to an 

online application, which requires 

them to upload a proof of purchase 

that they bought ads on a Snapchat 

competitor “sometime within the 

past three months.” 

Snap is then offering those advertisers 

credits in the range of “several 

hundred dollars,” according to a 

source. 

Snap hasn’t been shy about its 

need to increase its pool of advertisers. 

The company sells almost all of its 

vertical video ads through a process 

called programmatic ad buying — in 

other words, automated software programs 

that auction off ad spots to the 

highest bidder. The problem for Snap 

thus far has been that many of its auctions 

don’t have much competition, 

meaning that there aren’t enough 

advertisers bidding for the ads, and 

those that are using the service are 

getting the ads on the cheap, since 

few other advertisers (or no other advertisers) 

are bidding against them. 

More advertisers would mean 

more competition, and theoretically, 

higher ad prices and more revenue 

for the company. On Snap’s last earnings 

call, when the company reported 

better-than-expected results, CFO 

Andrew Vollero called Snapchat’s ad 

auction “the engine that drove the 

growth in the fourth quarter.” 

It’s also impossible to ignore the 

thinly veiled swipe at Instagram, 

which is without a doubt Snapchat’s 

biggest competitor. 

Broadcom fails in second attempt to buyout Qualcomm with revised $121bn offer 

Edidi Abdulrafiu 

THE DOMINANT 

PHONE chips maker 

said the proposal to 

acquire all outstanding 

shares for $82 per 

share “materially undervalues” 

Qualcomm and contains “serious 

deficiencies in value.” The new 

proposal doesn’t adequately address 

the risk that the transaction 

could fail because of antitrust concerns. 

After rejecting the revised $121 

billion buyout offer from Broadcom 

on Thursday, Qualcomm 

Inc. suggested the two companies 

meet to address what it called the 

proposal’s “serious deficiencies in 

value and certainty.” 

Broadcom originally launched 

an unsolicited bid for Qualcomm, 

the world’s largest maker of chips 

and processors for phones in November 

2017, for $70 per share or 

$105 billion. If the acquisition was 

successful, the move would have 

been the biggest in tech history, 

surpassing AOL’s purchase of Time 

Warner in 2001. 

A combination of the two companies 

would create a chip giant 

supplying components to a wide 

array of electronic gadgets found 

in your home or pocket. 

A deal would also mark a surprising 

turnaround from nearly a 

decade ago, when the companies 

were bitter courtroom rivals. 

In a letter to Broadcom CEO 

Hock Tan, Qualcomm Chairman 

Paul Jacobs addressed concerns 

about a deal falling through, saying, 

“If you are not willing to agree 

to do whatever is necessary to ensure 

a transaction closes,” Jacobs 

wrote, “we will need you to be extremely 

clear and specific about 

exactly what actions you would refuse 

to take, so that we can properly 

evaluate the risk to Qualcomm’s 

shareholders.”

OLX, Efritin, Konga exit 

High data, 

operating cost 

challenge 

e-commerce 

growth in Nigeria 

Business a.m. 

E-COMMERCE, POPU- 

LARLY referred to as 

the fourth industrial 

revolution, the age driven 

by the digital space, 

which includes online business, 

transactions, activities and interactions 

is challenged in Nigeria 

by myriad of issues including ease 

of doing business, infrastructure 

deficit, culminating in high data 

and operating cost. 

The e-commerce success story 

of Amazon has inspired the evolution 

of new firms in the Nigerian 

and African market. From Jumia, 

Konga, Dealdey, Wakanow, Jiji, 

OLX and Payporte, Nigeria had 

its fair share of companies driving 

the e-commerce service in Nigeria, 

providing jobs to a young vibrant 

population in the country while 

seeking to bring a shift to online 

shopping in the country. 

However, the impact of the 

sector is waning due to inhibiting 

challenges to operations, including 

ease of doing business, respect 

for contracts, infrastructure and 

broadband deficit, and a host of 

others that have left some of the 

startups either exiting the country 

or selling out. 

As at 2017 the e-commerce 

market industry in Nigeria, according 

to reports was valued at 

$13 billion (N4.5 trillion). The 

National Bureau of Statistics (NBS) 

is projecting that in 2018 it could 

hit N10 trillion. 

These are promising projec- 


tions, but there are challenges and 

concerns at the moment. OLX, 

Efiritin have since left and lately investors 

in Konga have sold out, all 

because of operating challenges. 

However, Zinox, which acquired 

Konga, has assured that the 

acquisition of the company will 

boost the e-commerce ecosystem. 

But the OLX development raises 

concerns over the impact of the 

business model in Nigeria. 

Analysts say there are great 

potentials for the e-commerce 

segment to thrive in Nigeria and 

position it as a market leader in 

Africa, from a huge population, 

ready market of over 180 million, 

an increased adoption of mobile 

technology, spread of telecommunications 

coverage to an increase 

in internet data usage. 

“The challenge of the e-commerce 

industry in Nigeria seems 

huge and enormous but surmountable,” 

they said, adding that 

the pathway is in collaboration, 

strong ecosystem, viable reforms 

and policies, deploying new technologies, 

respect for contracts, 

improved broadband penetration, 

infrastructure, cost of doing 

business and the repositioning of 

NIPOST. 

“We believe the e-commerce 

industry has a bright outlook in 

Nigeria, but the spate of businesses 

shutting down operations raises 

concerns, but if the aforementioned 

issues are addressed there 

are prospects of sustainability 

instead of the survival race for the 

businesses,” one analyst told business 

a.m. 

TECHNOLOGY&INNOVATION 

Google faces $21.1m anti-trust fine for search bias in India 

Business a.m with agency 

ANOTHER ANTI- 

TRUST FINE for 

Google. India’s 

competition commission 

has issued 

a 1.36BN rupees (~$21.1M) 

penalty on the search giant for 

abusing its dominant position 

in the local search market for 

online general web search 

and web search advertising 

services. 

“Google was leveraging its 

dominance in the market for 

online general web search, to 

strengthen its position in the 

market for online syndicate 

search services. The competitors 

were denied access to 

the online search syndication 

services market due to such a 

conduct, writes the Competition 

Commission of India 

(CCI) in a press release. 

“Further, prohibitions imposed 

under the negotiated 

search intermediation agreements 

upon the publishers 

have been held to be unfair as 

they restricted the choice of 

these partners and prevented 

them from using the search 

services provided by competing 

search engines.” 

Detailing a specific instance 

of Google’s search bias, the CCI 

says its investigation found 

that Google was directing web 

users who were searching for 

flights to its own flight search 

page — and thereby disadvantaging 

businesses trying to 

gain market access, while also 

unfairly imposing its products 

on users of general search services 

as well. 

The watchdog did also clear 

Google of any competition 

violations related to other elements 

of its business — specifically 

specialized search design 

(OneBoxes), AdWords, online 

intermediation and distribution 

agreements. 

The original complaint 

against the company was filed 

in India in 2012 by a local 

matchmaking website. 

Commenting on the order, 

a Google spokesman told 

us: “We have always focused 

on innovating to support the 

evolving needs of our users. 

Further, 

prohibitions 

imposed under 

the negotiated 

search 

intermediation 

agreements 

The Competition Commission 

of India has confirmed that, on 

the majority of issues it examined, 

our conduct complies 

with Indian competition laws. 

“We are reviewing the narrow 

concerns identified by the 

Commission and will assess 

our next steps,” he added. 

The size of the CCI’s fine was 

calculated based on Google’s 

revenue from its operations 

23 

FedEx, 

UPS hit as 

Amazon ‘plots 

shipping 

expansion’ 

AMAZON IS REPORT- 

EDLY EMBARKING on 

further expansion of its 

shipping services with a 

programme to pick up 

from companies that sell on its site. 

The firm is considering offering the 

service to other businesses as well, according 

to Wall Street Journal report. 

Investors dumped shares of existing 

shipping companies FedEx and 

UPS in response to the news. 

Amazon already offers shipping 

services to merchants that use its 

warehouses. 

Under its Fulfillment by Amazon 

and other programmes, Amazon 

handles delivery of products that merchants 

store in the firm’s warehouses, 

including to non-Amazon customers. 

The new programme goes a step 

farther, including pick-up from the 

vendor, according to the WSJ report. 

It has started in London and expects 

to launch soon in Los Angeles, 

with the aim of expanding to other 

cities this year, the report said. 

Amazon did not respond to a request 

for comment. 

The e-commerce giant has long 

focused on speeding delivery of online 

purchases, eliminating the lag 

time that provides traditional stores 

an edge, while trying to reduce the 

costs of shipping, which hit $21.7 billion 

(£15.7bn) in 2017. 

The focus has led the firm to invest 

billions in its logistics network, 

building warehouses, deploying aircraft 

and hiring delivery trucks. 

Amazon also purchased upmarket 

grocer Whole Foods last year. 

This week, the firm said it would start 

making two-hour grocery deliveries 

from the stores for Prime customers 

in some cities. 

As Amazon’s network expands, it 

has led to increased questions about 

how well longstanding shipping 

companies such as FedEx and UPS - 

which count Amazon as a customer 

- will compete. 

FedEx and UPS shares fell by more 

than 2 percent on Friday morning as 

the market volatility continued. 

in India only, and equates to 

around 5 per cent of its turnover 

in the market. 

Meanwhile Google’s parent 

company, Alphabet, reported 

full year revenue of 

$110.8BN for 2017. So $21M 

really is just pocket change 

for the US tech giant — which 

also continues to flesh out 

the feature set of its vertical 

search products. 

Last summer the European 

Union’s Competition Commission 

made its presence more 

firmly felt by slapping Google 

with a record breaking $2.7BN 

antitrust fine relating to the 

Google Shopping search comparison 

service and following a 

multi years investigation. 

In that case search placement 

that privileges Google’s 

own commercial products also 

got the company into hot water. 

The EC’s antitrust watchdog 

objected to it systematically 

privileging its own shopping 

product in search results and 

also found that it had been 

demoting rival vertical search 

services in its general search 

results. That combination of 

actions was deemed illegal 

under the bloc’s competition 

rules. 

In the EU Google has since 

made changes to how it displays 

shopping search results 

to try to remedy the situation 

— and avoid further fines — by 

letting anyone bid for the ads it 

displays at the top of productrelated 

search results.

24 


WORLD BUSINESS & ECONOMY 

US jobless claims drop 

beating forecasts 


THE NUMBER OF 

AMERICANS filing for 

unemployment benefits 

dropped by nine 

thousand to 221 thousand 

in the week ended February 

3rd 2018, well below market 

expectations of 232 thousand. It 

is the lowest value in three weeks. 

Claims taking procedures in Puerto 

Rico and in the Virgin Islands 

have still not returned to normal. 

The 4-week moving average 

was 224,500, a decrease of 10,000 

from the previous week’s unrevised 

average of 234,500. This is 

the lowest level for this average 

since March 10, 1973 when it was 

222,000. 

On a non-seasonally adjusted 

basis, the biggest decreases in initial 

claims were seen in Missouri 

(-7,636); California (-4,767); NY 

(-3,742); Georgia (-1,983); Pennsylvania 

(-1,579) and Connecticut 

(-1,506). Claims in Puerto Rice fell 

by 159 and in Virgin Islands by 27. 

The advance seasonally adjusted 

insured unemployment 

rate was 1.4 percent for the week 

China inflation rate at 6-month 

low of 1.5% in January 

Agency Report 

CHINA’S CONSUMER 

PRICES rose by 1.5 

percent year-onyear 

in January of 

2018, after a 1.8 percent 

rise in the prior month and 

matching market consensus. It 

was the lowest inflation rate since 

July 2017, due to a slowdown in 

cost of non-food and a further fall 

in cost of food. 

Politically sensitive food prices 

declined by 0.5 percent (from 

-0.4 percent in the prior month) 

in January, while non-food cost 

rose at a softer rate of 2.0 percent 

(from 2.4 percent). Cost of consumer 

goods went up 1.0 percent 

(from 1.1 percent) and those of 

services increased by 2.3 percent 

(from 3.0 percent). 

Among food, prices dropped for: 

pork (-10.6 percent from -8.3 percent) 

and fresh vegetables (-5.8 

percent from -8.6 percent). 

ending January 27, unchanged 

from the previous week’s unrevised 

rate. 

Continuing claims during the 

week ending January 27 were at 

1,923,000, a decrease of 33,000 

from the previous week’s revised 

level. The previous week’s level 

was revised up 3,000 from 

1,953,000 to 1,956,000. 

The 4-week moving average 

was 1,946,000, an increase of 

12,500 from the previous week’s 

revised average. The previous 

week’s average was revised up by 

750 from 1,932,750 to 1,933,500. 

In contrast, prices rose for: eggs 

(14.2 percent from 11.4 percent); 

milk (0.9 percent from 0.6 percent), 

fresh fruits (6.4 percent 

from 6.3 percent) and tobacco 

(0.1 percent from a flat reading in 

December 2017). 

For non-food, prices increased 

at a slower pace for most categories: 

rent, fuel & utilities (2.7 percent 

from 2.8 percent); household 

goods and services (1.5 percent 

from 1.6 percent); transport and 

communication (0.2 percent from 

1.2 percent); education, culture & 

recreation (0.9 percent from 2.1 

percent); healthcare (6.2 percent 

from 6.6 percent) and other goods 

and services (1.2 percent from 1.9 

percet). Meantime, cost went up 

more only for clothing (1.4 percent 

from 1.3 percent). 

On a monthly basis, consumer 

prices increased by 0.6 percent, 

following a 0.3 percent gain in 

the preceding month and slightly 

above estimates of a 0.7 percent 

rise. It was the highest monthly 

figure in a year. 

The producer price index increased 

by 4.3 percent from a year 

earlier in January 2018, compared 

to a 4.9 percent rise in the prior 

month, while markets estimated 

a 4.4 percent gain. It was the 17th 

straight month of rise in producer 

prices but the least since November 

2016. Cost rose less for means 

of production (5.7 percent from 

6.4 percent in December, namely 

extraction: 6.8 percent, raw materials: 

7.3 percent and processing: 

4.9 percent). 

UK posts largest trade deficit 

in 15 months to December 2017 


THE UK’S DEFICIT on 

trade in goods and services 

widened by £1.2 

billion to £4.896 billion 

in December 2017 from 

an upwardly revised £3.652 billion 

in the previous month and 

way above market expectations of 

£2.4 billion. It was the largest trade 

deficit since September 2016. 

Imports of goods and services to 

the UK rose by three percent to 

an all-time high of £57.02 billion 

in December from £55.35 billion 

in the previous month, boosted 

by a 3.8 percent increase in purchases 

of goods, mainly fuels (6.6 

percent), and a 0.7 percent gain in 

imports of services. Among trading 

partners, imports of goods from 

the EU jumped 6.5 percent, mainly 

from Germany (6.1 percent), the 

Netherlands (5 percent), Belgium 

& Luxembourg (16.9 percent) and 

France (0.9 percent). In addition, 

purchases from non-EU countries 

advanced 0.8 percent, as imports 

increased the most from Norway 

(12.4 percent) and the US (7.9 

percent). 

Exports from the UK increased at a 

slower 0.8 percent to £52.12 billion 

in December from £51.70 billion in 

November, due to higher sales of 

goods (1.5 percent), mainly manufactured 

goods (2.8 percent), while 

exports of services fell slightly (-0.1 

percent). Among major trading 

partners, exports of goods to the 

EU grew 6.9 percent, as sales increased 

mainly to Germany (16.8 

percent), France (21.7 percent) 

and Ireland (2.3 percent). By contrast, 

exports of goods to non-EU 

countries declined 3.6 percent, 

namely to China (-27.4 percent), 

Hong Kong (-30.4 percent) and 

South Korea (-20.3 percent), while 

exports rose to the US (6.9 percent). 

In the three months to December 

2017, the trade deficit widened by 

£3.8 billion to £10.8 billion, due to 

a £3.3 billion widening of the trade 

in goods deficit and a £0.5 billion 

narrowing of the trade in services 

surplus. Large increases in fuels 

In the three 

months to 

December 2017, 

the trade deficit 

widened by £3.8 

billion to £10.8 

billion 

import prices along with decreases 

in fuels export volumes had the 

largest impact on the widening of 

the trade in goods deficit. 

Considering 2017 as a whole, the 

trade deficit narrowed by £7.0 

billion from the previous year to 

£33.7 billion, as exports rose 11.3 

percent to £617.2 billion while imports 

increased at a softer 9.3 percent 

to £650.9 billion. Main exports 

were mechanical machinery, cars, 

electrical machinery and medicinal 

and pharmaceutical products, 

and the biggest export partners 

were the United States, Germany, 

France, the Netherlands, Ireland 

and China. Meanwhile main imports 

were electrical machinery, 

mechanical machinery, cars, other 

miscellaneous manufactures and 

medicinal and pharmaceutical 

products. The most important 

sources of imports were Germany, 

China, the Netherlands, the United 

States and France. 

BoE keeps rate at 0.5%, warns rate hike sooner than expected 

Business a.m. 

THE BANK OF ENG- 

LAND voted unanimously 

to keep the Bank 

Rate at 0.5 percent on 

February 8th as widely 

expected, saying that inflation is 

expected to remain around 3 percent 

in the short term, reflecting 

recent higher oil prices. The bank 

also warned that interest rates may 

rise sooner than anticipated, as the 

economy will expand faster than 

expected over the next couple of 

years lifting inflation above 2 percent 

target. 

The Committee also voted unanimously 

to keep the stock of UK government 

bond purchases at £435 

billion and the stock of sterling 

non-financial investment-grade 

corporate bond purchases at £10 

billion. 

Excerpts from the BoE Monetary 

Policy Summary: 

CPI inflation fell from 3.1% in November 

to 3.0% in December. Inflation 

is expected to remain around 

3% in the short term, reflecting 

recent higher oil prices. More 

generally, sustained above-target 

inflation remains almost entirely 

due to the effects of higher import 

prices following sterling’s past depreciation. 

These external forces 

slowly dissipate over the forecast, 

while domestic inflationary pressures 

are expected to rise. The 

firming of shorter-term measures 

of wage growth in recent quarters, 

and a range of survey indicators 

that suggests pay growth will rise 

further in response to the tightening 

labour market, give increasing 

confidence that growth in wages 

and unit labour costs will pick up 

to target-consistent rates. On balance, 

CPI inflation is projected to 

fall back gradually over the forecast 

but remain above the 2% target in 

the second and third years of the 

MPC’s central projection. 

As in previous Reports, the MPC’s 

projections are conditioned on the 

average of a range of possible outcomes 

for the United Kingdom’s 

eventual trading relationship with 

the European Union. The projections 

also assume that, in the interim, 

households and companies 

base their decisions on the expectation 

of a smooth adjustment to 

that new trading relationship. 

Developments regarding the United 

Kingdom’s withdrawal from 

the European Union – and in particular 

the reaction of households, 

businesses and asset prices to them 

– remain the most significant influence 

on, and source of uncertainty 

about, the economic outlook.


ENERGY, POWER & RENEWABLE 

25 

Conference report: WAPIEC 2018 

Regional local content seen to drive growth 

in West African, but integration is key 


AFTER NIGERIA IM- 

PLEMENTED its local 

content act in 2010, 

other African oil producing 

countries have 

followed suit and some, like Ghana 

and Uganda, even modeled their 

local content act, using Nigeria’s 

loacl content act as a framework. 

However, there is little to no 

regional local content integration 

across the West African region. 

This was one of the concerns 

raised at the second annual West 

African International Petroleum 

Exhibition and Conference 

(WAIPEC) held for two days last 

week in Lagos, Nigeria. 

“With so much focus given 

to national local content, we are 

gradually realising that as West African 

countries, we can’t go on this 

journey on our own,” said Juliette 

Twumasi-Anokye, managing partner, 

Anojul Afriyie & Company. 

Although many at the conference 

generally agreed that regional 

integration of local content is the 

next step to take, in reality, they 

said, this continues to be farfetched. 

Olusoga Odusela, general manager, 

Nigerian Content Development, 

Chevron Nigeria asked: 

“What is the business structure 

of Nigerian contractor? Are we 

focused on Nigeria alone or are 

we regionally ready? Are our work 

processes and ethnics globally 

competitive and can they be audited 

to global standards? Because 

if you want to go beyond the shores 

of Nigeria, that means you’re now 

going international.” 

Odesela said the price structure 

of local companies makes 

them uncompetitive outside of 

the country, asking pointedly, “Is 

our price structure competitive?” 

He noted that in some cases, “our 

pricing makes it challenging for 

us to compete in the West African 

region.” 

The reluctance of Nigerian contractors 

to willingly develop local 

community contractors, he said 

represents another challenge, adding 

that in order to reduce the cost 

of doing business, developing local 

capabilities will go a long way. 

According to him, the Nigerian 

business environment is mature 

enough to compete favourably 

in the West African region, but 

that local companies need to 

build themselves up to be able 

to overcome the barriers. “There 

is nothing to be done in terms of 

exploration and development in 

oil and gas industries in Ghana 

or Togo that has not been done in 

Nigeria,” he said. 

Austin Uzoka, Nigerian content 

manager at Shell Petroleum 

Development Company (SPDC) 

cited three barriers for the non-integration 

and non-standardization 

of local content in the region, one 

being cultural barrier. 

“Nigeria being surrounded by 

Francophone countries means 

there is a big cultural gulf that we 

West Africans need to overcome 

particular in terms of collaboration,” 

he said. 

Regional integration is still 

non-existent because of the cultural 

diversity that the region has, 

Uzoka said. He drew example from, 

“Nigerians preferring to fly to Accra 

to do trainings, which is an 

Anglophone country but further, 

rather than Lomé, where French 

is the primary language but closer.” 

With so much focus 

given to national 

local content, we are 

gradually realising 

that as West African 

countries, we can’t 

go on this journey 

on our own 

Another fact hindering integration 

is what he called the ‘reality 

phenomenon’, which is the fact that 

West African countries don’t have 

bilateral and multilateral treaties 

that can sustain cross-integration 

or intra-country integration across 

the West African terrain. 

However, this is a deliberate 

act on the part of government of 

the various countries who haven’t 

encouraged the transfer of knowledge, 

technology and skills across 

the region, he explained. 

He also noted that the ease of 

doing business is higher in other 

West African countries than in Nigeria, 

because certain restrictions 

are not faced in those countries 

and incentives have been put in 

place for them, he said. 

For instance, Uzoka spoke 

about drilling pipes that are imported 

into Nigeria but the company 

had no use for them, so it was 

decided that the pipes should be 

sold to Ghana. According to him, 

when calculations were done, it 

turned out that it would have been 

cheaper to import through Ghana 

rather than Nigeria. 

He said aspiration will drive reality 

as aspirations are impeded by 

the cost of business. “As the cost of 

business in Nigeria remains high, 

it begins to challenge our competitiveness 

with our West African 

counterparts, Uzoka also said. 

Opportunities are present, he 

said, but noted that in order to harness 

the opportunities and drive 

change, we have to be deliberate, 

focused and target-oriented. 

Oduselu also advised Nigerian 

entrepreneurs to make their business 

focus beyond the shores of 

Nigeria, noting that the country 

should be the hub in supporting 

other West African countries. 

Sylvester Iduseri, capacity development 

manager, Total Nigeria 

also noted that, “local content is 

survival for the sustainability of 

any country,” citing Egina FPSO as 

an example. 

The representative from the 

Ghana Petroleum Commission 

advised that the focus should be 

on creating synergies within the 

region rather than duplicating 

capabilities as West African countries 

keep working separately with 

no integration or standardization 

approach. 

The governments of West African 

countries were also advised to 

offer incentives and tax waivers to 

stimulate the growth of the economies 

and regional local content. 

The regional economic organisation, 

Economic Community of 

West African States should be used 

as a platform for harmonizing 

standards to facilitate the integration 

growth, it was also suggested. 

The example was cited of the 

West African gas pipeline, which 

runs from Nigeria to Benin, then 

Togo and finally Ghana, where the 

governments of these nations let 

go certain restrictions to make it 

happen, because benefits were to 

be gained. 

PETAN and its other West African 

counterparts were also advised 

to start a dialogue on creating a 

path for the free movement of 

technical and engineering skills 

and not just leaving it to the government 

alone. 

US oil flood markets worldwide, taking share from OPEC nations in Asia, Europe 

In the two years since Washington 

lifted a 40-year ban 

on oil exports, tankers filled 

with US crude have landed 

in more than 30 countries, 

ranging from massive economies 

like China and India to tiny Togo. 

The repeal has unleashed a flood 

of US shale oil, undercutting global 

crude prices, eroding the clout of 

the Organisation of Petroleum Exporting 

Countries (Opec) and seizing 

market share from many of its 

member countries. 

In 2005, before the shale revolution, 

the United States had net imports 

of 12.5 million barrels per day 

(bpd) of crude and fuels — compared 

to just 4 million bpd today. 

US producers are making new 

customers out of some of the world’s 

biggest oil-importing nations in Asia 

and Europe, posing a serious competitive 

threat to the only other countries 

that produce as much crude: 

Saudi Arabia and Russia. At home, 

the export boom has filled pipelines 

and sparked a surge of investment in 

new shipping infrastructure on the 

Gulf Coast. 

US producers now export between 

1.5 million and 2 million 

barrels of crude a day, which could 

rise to about 4 million by 2022. The 

nation’s output is expected to account 

for more than 80 per cent of 

global supply growth in the next 

decade, according to Paris-based 

International Energy Agency. 

Much of the increased flow will go 

to China, the world’s top importer and, 

since November, the largest buyer of 

US crude other than Canada. 

Chen Bo, president of Unipec — 

China’s largest buyer of US crude — 

told Reuters that the firm expects 

to double US imports this year to 

300,000 bpd as it seeks to expand 

sales in Asia and find new customers 

for US exports in other regions, 

including Europe. 

Unipec — the trading arm of 

Asia’s largest refiner, state-owned 

Sinopec — is also considering 

long-term crude supply deals with 

US pipeline and terminal operators. 

The firm may also partner with 

such firms to expand and improve 

US export infrastructure, Chen said 

in an interview. 

“US crude flowing to Asia is a 

major trend in global oil trading,” 

Chen told Reuters.


26 ENERGY, POWER & RENEWABLE 

Nigeria rig counts rise 

by 3 as global count 

climbs in January, says 

Baker Hughes 

NNPC intensifies 

crackdown on 

petrol hawkers 

to eliminate fuel 

queues 


In a bid to eradicate fuel diversion 

of any kind to bring 

normalcy back to the fuel 

supply and distribution chain, 

the Nigerian National Petroleum 

Corporation (NNPC) said 

it has sustained its crackdown on 

erring marketers and fuel hawkers 

through its special task force on filling 

stations monitoring, which have 

apprehended more fuel hawkers. 

“In the latest raid yesterday 

(Thursday February 8) in Abuja, the 

task force apprehended four illegal 

fuel hawkers with jerry-cans of petrol. 

They are: Mohammed Mubarak, 

Idris Idris, Abu Yakubu, and Bashir 

Usman,” a statement singed by Ndu 

Ughamadu, group general manager, 

group public affairs division of the 

NNPC read. 

Ughamadu said the illegal fuel 

hawkers been handed over to the 

Nigeria Security and Civil Defence 

Corps for prosecution, adding that 

three other fuel hawkers - Salihu 

Ibrahim, Ayuba Alilu, and Magaji 

Umar - that were arrested earlier in 

the week have been charged to the 

Magistrate Court, Wuse 2, Abuja. 

“Of the three, only one, Magaji 

Umar, pleaded guilty and was fined 

N5,000 by the Magistrate, which he 

promptly paid and was released. 

“The other two, Salihu Ibrahim 

and Ayuba Alilu, pleaded not guilty 

and were ordered to be remanded 

at the Keffi Prison. The case was adjourned 

till 22 March, 2018. “ 

NNPC task force 

have apprehended 

more fuel hawkers 

recently 


Signs that drilling activities 

in the oil and gas industry 

are picking up and 

reflecting the increased 

crude oil production in 

Nigeria are showing up in the 

number of rigs being deployed to 

the field by oil producing companies, 

according data supplied by 

United States-based Baker Hughes 

Incorporated. 

Nigeria’s rig counts rose from 

nine in the month of December, 

2017 to 12 in January, 2018, the 

data show. 

The recorded increased rig 

counts show increased activity and 

confidence in the Nigerian oil and 

gas industry. With oil prices still in 

the $60 range, activities are picking 

up in the region despite threats 

from Niger Delta Avengers. 

Nigeria’s crude production currently 

stands at 1.8 million barrels 

per day and Ibe Kachikwu, state 

minister of petroleum, earlier 

said Nigeria is looking to increase 

production to 2.2 million barrels 

per day. 

The data released by Baker 

Hughes Incorporated revealed that 

world rig count also witnessed an 

increase of 86, as it recorded 2,175 

in January 2018 as against 2,089 in 

December. 

The OPEC members recorded a 

total of 399 rig counts in January as 

against 396 recorded the previous 

month, indicating that Nigeria’s 

United Capital analysts call for cleaner, renewable 

energy on fluctuations in gas-generated power 


POWER ANALYSTS 

are calling for a largescale 

diversification to 

cleaner and renewable 

energy such as solar, 

wind, and biomass to ensure more 

reliable electricity supply. 

The call is at the instance of 

vagaries and fluctuations in power 

generation in the country, which 

have been affected by too much 

reliance on gas-powered thermal 

stations, requiring high maintenance 

costs with some adverse 

environmental impacts. 

“Generation remains inhibited 

by heavy reliance on gas-powered 

thermal plants, requiring high 

maintenance costs with some 

adverse environmental impacts. 

Power depends on events in 

the oil & gas sector, which faces 

hydra-headed challenges of lack 

Iraq was second 

to Nigeria in terms 

of increase in rig 

count. Iraq rig 

counts increased 

from 54 to 56 in 

January 2018 

additional rig counts deployed were 

responsible for the rise in member 

countries rig counts. 

Iraq was second to Nigeria in 

terms of increase in rig count. Iraq 

rig counts increased from 54 to 56 

in January 2018. Saudi Arabia followed, 

slightly increasing by one to 

make the total rig counts 112; U.A.E 

also rose by one to reach 52. 

However, OPEC members like 

Venezuela, after adding 10 last December, 

shed 2 to land at 48. It had 

previously recorded 50 rig counts. 

Angola having recorded 2 decreased 

to one, and Ecuador also 

recorded a loss of one rig count. 

Five other OPEC members 

showed no changes in their rig 

counts namely, Algeria which 

remained at 50 rig counts, Kuwait 

at 53, Qatar also at six, Gabon 

recorded two, and Libya recorded 

one each. 

Going by regional rig counts, in 

Africa units increased to 80 from 

77. In North America the US was 

up 62 units to 937, a rally of sorts, 

as it marked the first increase in 

average monthly rigs running since 

July 2017, while Canada was up 71 

units to 278. Latin America gained 

six units in January to berth at 191 

rig counts. 

Generation 

remains inhibited 

by heavy reliance 

on gas-powered 

thermal plants, 

requiring high 

maintenance costs 

with some adverse 

environmental 

impacts 

of cost reflective gas price, poor 

gas infrastructure, and frequent 

pipeline vandalism,” analysts at 

United Capital Research said. 

In their Daily Market Commentary, 

Thursday, February 8, 

2018, the analysts specifically 

noted that energy generated in 

Nigeria have fluctuated to peaks 

and lows because gas-powered 

thermal stations account for most 

of the electricity generated. 

Citing NBS data, they affirm 

that an average of 94,627Mwh or 

77.5% power was generated via 

thermal stations in Q4- 17compared 

to 22.5% from hydro power, 

adding that over 40 percent 

of gas reserves are flared as it is 

more profitable due to uneconomic 

pricing. 

Meanwhile, hydro powered 

turbines are prone to seasonality 

and weather conditions. 

They stated that while recent 

strides, such as the improved 

wheeling capacity of the Transmission 

Company of Nigeria 

(TCN) to 7000MW, the 450MW 

Azura power project in Benin, and 

the recently signed Ogun State/ 

private sector MOU to generate 

286MW, are commendable, there 

is need for a large-scale diversification 

to cleaner and renewable 

energy such as solar, wind, 

and biomass, which is needed to 

ensure more reliable electricity 

supply. 

“In addition, a complete liberalization 

of the sector, amongst 

other bold policy changes are 

urgently needed to drive it out of 

the doldrums,” they stressed.


MANUFACTURING & INDUSTRY 

27 

Odds against manufacturing 

Ease of doing 

business at 

risk of failure 

really moving out of the country to 

set up their businesses. Because if 

I import a product and I am supposed 

to clear the product with about 

N500,000 and I end up spending over 

N1.5 million on clearing, that’s a huge 

disadvantage. I cannot compete favourably 

with those that are importing. 

That is the problem we have in 

this country. It’s the officials that are 

frustrating government policies. 

Being a pioneer manufacturer of any product or service in a 

country like Nigeria is not an easy task, considering myriads 

of challenges experienced, occasioned by government’s negligence 

to provide direction. With enough experience gained 

from the manufacturing sector over decades, United Kingdom 

trained engineer, MANNY IGBENOBA, is a ‘walking knowledge’ 

on manufacturing issues in the country. 

Igbenoba is the Managing Director, 7T Microns Powder Limited, 

and he relayed several difficulties and challenges manufacturers 

go through in setting up businesses in Nigeria. From 

the importation of raw materials, the Customs, taxes, getting 

funds from banks, documentation, down to the officials 

sabotaging government’s efforts, they are eye opening. Not 

even the present policy on the Ease of Doing Business by the 

present administration has lessened the burdens of Nigerian 

manufacturers, he said. 

But in spite of all these challenges, Igbenoba, who recently pioneered 

another product, a thermoplastic road marking paints 

that will save Nigeria over $113 million in foreign exchange 

annually, said local production is the only way to go if Nigeria 

must develop. He was interviewed by AJOSE SEHINDEMI. 

What challenges do manufacturers 

face when setting up business 

in the country? 

The challenges manufacturers 

face are many. For 

me, it is like when you 

have a dream of setting 

up an industry in Nigeria, 

it looks brighter on paper. But when 

you really get to actualise it, then you 

will discover you are actually swimming 

against the tide, especially if 

you have to import raw materials for 

production. It’s easy when you have 

the money, but when you have to 

source funds from the banks, or the 

Bank of Industry (BOI), to get the 

necessary approvals is a lot of stress. 

For instance, if you are going into 

the chemical sector, you will have to 

get approval from NAFDAC, permission 

from Standards Organisation of 

Nigeria (SON), and from the Nigeria 

environmental regulatory body. You 

have to get approval also for SON- 

CAP. You have several approvals to go 

through. Belonging to the Manufacturers 

Association of Nigeria (MAN) 

helps, because you can exchange 

ideas and get support. 

But we [manufacturers] all have 

many issues. Number one is the 

power supply issue, it is discouraging. 

For example, in a company 

like ours, we end up spending N1.6 

million in a week to run the generator. 

The public power supply comes 

about two times in a week. At the end 

of the month, we have to spend close 

to N670,000 on electricity for this 

small plant. We spend close to N1.6 

million on diesel every week and at 

the end of the month, we still spend 

such a huge amount on electricity. 

What do you experience while 

importing raw materials? 

The worst of it is when you are 

importing. The government will give 

such flamboyant impression that 

they are supporting Nigerians to set 

up factories locally. What about the 

officials that would actually carry 

out the instructions, Customs duties, 

charges at the end of the transaction? 

One is supposed to get, at least, about 

20 per cent discount between the 

imported item and the manufactured 

items in Nigeria. Because if you have 

less than 10 per cent, that means 

there is no attractive factor there. The 

imported thermo plastic road marking 

paint came and sold at about 

N12,500, but our final product is sold 

for N11, 600. What are the enhancing 

factors? If we import the raw materials 

to produce, clearing it would be 

a herculean task in spite of being a 

member of all these special groups. If 

one gets to the bank, Customs tariffs 

would still be high. Whereas, being 

a member of these bodies ought to 

have ensured that one gets a discount 

on the raw materials for local production. 

But if one does not want the 

goods to go into demurrage, then one 

just has to pay the extra fees quoted 

by the Customs officials, even if you 

have all the documents and one is 

helpless to do anything. 

Tell us about your company’s 

backward integration policies, do 

you source your materials locally 

or you import all? 

I can say that 70 per cent of our 

raw materials are sourced locally 

while the remaining 30 per cent are 

imported, but the cost of sourcing 

and delivery to the warehouse is 

almost the same as the 70 per cent 

sourced in Nigeria. That means we 

are not making any headway because 

if the cost of bringing raw materials is 

high, the cost of production will also 

be high. So the 70 per cent sourced 

I want to ensure 

that people in 

Nigeria, get 

something better 

than what they are 

importing 

locally has been rendered useless. 

For instance, in Ghana, they are 

actually encouraging firms to come 

and do business. The Ghanaian 

government will give you loan with 

nothing more than about five per 

cent. If you have a partner in Ghana, 

five per cent, and it gives you a grace 

of two years before you can start 

paying back. With that grace of two 

years, though the market is not as 

big as the Nigerian market, but there 

is normalcy in business in Ghana, 

Ivory Coast, and Cameroun. But in 

Nigeria, before you transport one 

finished product from one end to the 

other, you have to pay. If you do not, 

the driver cannot go anywhere. So if 

you now put all the costs together, 

you discover that you would have 

incurred more. 

What is the impact of the Federal 

Government’s Ease of Doing 

Business initiative on your company, 

considering the ranking from 

the World Bank, which stated that 

the country is doing well? 

If I say the impact of the Ease of 

Doing Business on private sector has 

been positive, the percentage is not 

up to 10 per cent. The ease of doing 

business is a mental policy, but the 

attitude of implementers needs to 

change. There is corruption from top 

to bottom in this country. That is the 

truth. Because if the government says 

it is supporting the investor to have an 

industry here, this is not supported by 

the fact that from the local, to state and 

federal governments, all that you have 

to pay is really frustrating. Yes, not 

until the government says specifically 

what an industrialist would pay; and 

not until it finds a way of enforcing 

that and making it easier for manufacturers 

to get their products at the 

right time, then setting up an industry 

in Nigeria would not be effective, as 

anybody is seeing on paper. I am still 

emphasizing it, if you have an industry 

in Ghana, it would not take you one 

week to clear your raw materials. But 

in Nigeria, even if you have all the 

documents right, you cannot clear 

your goods easily; it takes weeks. 

Nigeria was said to be out of 

recession, but in your opinion, has 

the country exited recession? 

From the manufacturing aspect of 

assessment, we are actually getting 

better, but we’re not really there. The 

manufacturers are crying because 

local government bills are there, the 

state government bills are there, the 

federal government’s numerous bills 

are there. So how do you then set 

up industry when you get bills in a 

suicidal manner? How do you want 

this policy to be on the positive side? 

Manufacturers are crying every day. 

If I show you the details even within 

the Manufacturers Association of 

Nigeria, they are crying every day. 

Though the decision makers are trying 

to come up with solutions, but 

they cannot enforce what is beyond 

their office. Due to all these inimical 

policies, some of our members are 

In spite of all these challenges, 

you are still in business. What’s 

your motivating factor, what’s your 

driving force? 

The driving factors, that is very 

simple – it’s what I want to explore. I 

want to ensure that people in Nigeria, 

get something better than what they 

are importing. If we all sit on the 

fence and don’t do anything, relying 

on the false rhetoric that Nigeria cannot 

do it, then we will not get there. 

Somebody must be there, and by the 

grace of God, in two, three or four 

years, I hope that our policy would 

be able to accommodate so many 

entrepreneurs. For example, if I have 

the knowledge of inventing the paint 

and I do not do that, that is not in 

the interest of Nigeria. That is what 

I mean. We started tiles adhesive in 

this country almost about 15 years 

ago. The tiles adhesive that is being 

imported from China and India is in 

Nigeria. When we started, we proved 

that in Nigeria, we can produce it. 

That is the same driving force behind 

my organisation pioneering the road 

marking paints in Nigeria. 

Is it the right time to produce 

considering the various challenges? 

This is the right time to go into 

production; there is no terrain that 

is not turbulent. Even though the 

terrain is turbulent, if we have to wait 

for the time that there would not be 

any problem, then there would not 

be any development in this country. 

I must tell you the truth, I am here to 

prove that made in Nigeria products 

can do better than what is being imported 

into this country. 

Yes, we are going to prove the fact 

that in Nigeria, we can do something 

better. How can we say in Nigeria, 

we are importing 100 per cent thermoplastic 

road marking paint? It’s 

ridiculous! When we studied in the 

United Kingdom, almost 30 years ago, 

we were first of three people in the UK 

on this production line. I was in the 

UK some months ago and somebody 

asked me what I was doing, that I’ve 

been part of the system there and that 

the business now is worth billions of 

pounds. I was working in the UK. I 

came back in 1979. And when I came 

back, I worked briefly with the military. 

And I said no, something must 

happen here. We must do something. 

That’s how we started the tiles adhesive. 

And we’ve added some other 

products. Now in that same spirit, 

I am tired of Nigeria importing this 

product, that is how we started. But 

the first challenge we had was when 

we needed to do analysis. 

Anyway, I won’t mention the 

university. I approached them for 

the analysis. You know how much 

they wanted to collect? N5.6 million! 

And I said to myself, why must I pay 

N5.6 million? And I sent it to UK. 

You know how much we paid? £520! 

Can you compare that? If we have 

been discouraged, nothing would 

have happened. And I can tell you 

in about a year or few years’ time, 

other companies will come up with 

thermoplastic paint. This is because 

they would have come to know that 

it is doable in Nigeria.


28 MANUFACTURING & INDUSTRY 

Executive Order 5 

Huge welcome trails 

‘Nigerian jobs for 

Nigerian people’ policy 

IN BRITAIN, IT IS CALLED GIVING BRITISH JOBS TO THE BRIT- 

ISH. JUST LIKE DONALD TRUMP’S INSISTENCE THAT AMERI- 

CAN JOBS SHOULD FIRST BE FOR AMERICANS, NIGERIA’S 

PRESIDENT MUHAMMADU BUHARI’S EXECUTIVE ORDER 5, 

THAT PROHIBITS GIVING FOREIGNERS JOBS THAT CAN BE 

DONE BY NIGERIANS IS BEING WIDELY APPLAUDED BY THE 

CITIZENS. BUT IN AN ECONOMY WHERE THE NUMBER OF 

FOREIGN CONCERNS OVERSHADOWS LOCALLY OWNED COM- 

PANIES, IS THE ORDER THE ROUTE TO ELDORADO AS MANY 

NIGERIANS BELIEVE? AJOSE SEHINDEMI REPORTS. 

PRESIDENT MUHAMMA- 

DU BUHARI’S executive 

order tagged Executive 

Order 5 is to improve local 

content in public procurement 

with science, engineering and 

technology components with the 

intent to promote the application 

of science, technology and innovation 

towards achieving the nation’s 

development goals across all sectors 

of the economy. 

The order seeks to ensure that 

all procuring authorities shall give 

preference to Nigerian companies 

and firms in the award of contracts, 

in line with the Public Procurement 

Act 2007. While it also prohibits the 

Ministry of Interior from giving visas 

to foreign workers whose skills are 

readily available in Nigeria. 

It also states that where expertise 

is lacking, procuring entities will give 

preference to foreign companies 

and firms with a demonstrable and 

verifiable plan for indigenous development, 

prior to the award of such 

contracts. 

This new order, according to many 

analysts, citizens, unemployed graduates 

and local business owners, is 

akin to manna from heaven as most 

citizens are concerned by the unwholesome 

activities of expatriates 

run businesses in the country. The 

expatriates are accused of neglecting 

locals in employment opportunities 

as it got so bad that forklift drivers, 

truck drivers were being brought in 

to the country to the consternation of 

local drivers. 

Some Chinese restaurants have 

Chinese as waitresses and a visit to 

some parts of the country will see the 

huge numbers of foreigners doing 

menial jobs to the abandonment of 

locals. 

The Public Relations Consultants 

Association of Nigeria, PRCAN, reacting 

to the order, commended the 

President for signing the Executive 

Order. 

In a release signed by John 

Ehiguese and Israel Opayemi, President 

and Publicity Secretary respectively, 

the association described the 

president’s action as “exceptional, 

courageous and an act of nationalism 

which puts our country first over 

and above the popular penchant of 

government officials for all things 

foreign, and particularly Caucasian.” 

PRCAN further assured President 

Buhari of its readiness to play the 

role of whistleblowers in relation to 

the public relations and marketing 

communications sector, promising to 

avail the Presidency with the details of 

foreigners operating agencies illegally 

in defiance of the laws regulating the 

industry in Nigeria. 

“President Muhammadu Buhari 

can be rest assured of our support 

in this regard. We will compile the 

names and addresses of those currently 

operating illegally here against 

the extant law regulating the Public 

Relations practice in Nigeria. 

L-R: Kufre Ekanem, corporate affairs adviser, Nigerian Breweries Plc; Oladunni Morenike, Customs area comptroller, 

Lagos Industrial Area Command, Festac; Patrick Olowokere, corporate communications and brand PR manager, Nigerian 

Breweries Plc and Ajuziego Maureen, deputy comptroller, enforcement, Lagos Industrial Area Command, Festac, during a 

courtesy visit by the Nigeria Customs Service to the Lagos brewery 

Every country adopts a 

local content policy in 

order to grow its local 

economy and it is an 

acceptable practice 

“That law is among those you 

promised to enact and enforce in 

your capacity as the President of the 

Federal Republic of Nigeria to protect 

businesses in Nigeria. We will make 

this task easy for you so that relevant 

government agencies can enforce 

the Executive Order and other extant 

laws,” PRCAN said. 

To Ayo Teriba, the chief executive 

officer of Economic Associates, 

the order is in the right direction but 

should not be confined to just science, 

engineering and technology sectors of 

the economy. 

“It is a policy in the right direction 

and it should not be confined to 

those areas that the executive order is 

covering. It should be wider. Any job 

that a Nigerian can do, no foreigner 

should do it. 

“President Buhari has done well but 

they should expand the coverage of such 

executive orders to preserve the employment 

space for Nigerians,” he said. 

To Chijioke James, president of 

Electricity Consumers Association of 

Nigeria, it is a good move considering 

what Nigerian professionals stand to 

gain when the order becomes fully 

operational. However, the government 

must be careful not to prevent 

knowledge transfer from international 

experts. 

He said: “It is a known fact that a 

lot of Nigerians have skills and expertise 

and as such should be given the 

opportunity to serve and function in 

some areas where we currently have 

foreigners. This executive order is 

expected to address such situations 

and also provide more opportunities 

for Nigerians. 

“Every country adopts a local 

content policy in order to grow its 

local economy and it is an acceptable 

practice. This applies to the power as 

well as other sectors of the economy. 

Where we have Nigerian engineers 

who are competent and have what it 

takes to do the job, why should they 

not be given preference over others 

for jobs within the country? I’m all for 

it. It is just like other countries trying 

to encourage their local industry. I 

support anything that the government 

of Nigeria must do to encourage our 

local industry to grow”. 

All these are enough reasons for 

any Nigerian to smile but for an entrepreneur, 

Jaji Adewale, the managing 

director of Soajaji Nigeria Enterprises 

limited, the policy might fail due to 

inconsistency of government in enforcing 

policy decisions. He said the 

local content act has been in law in 

the country for a while but it was not 

enforced as if enforced, the new order 

won’t be needed. 

He said government must go 

beyond issuance of statements and 

threats and deal decisively with defaulters 

as they are going to be many. 

“Those that will default have connections 

with those in the top echelon 

of law making in the country. Will 

those making and enforcing the laws 

allow their friends and cronies to be 

punished for any infraction when 

their palms have been greased? This 

is Nigeria and there is what is called 

government magic.” 

James sounded a note of warning 

as he said, though the presidential 

order is good and acceptable because 

it will help grow the economy and 

generate employment, in trying to 

ensure that this works effectively, government 

must also consider several 

other issues that are involved. 

Government must make sure that 

it puts in place the required value 

chain and remove bottlenecks which 

often frustrate efforts to get things 

done in this country. 

Will the new order be enforced or 

will it be just policy statement from 

government? Only time will tell as 

commendations continue to pour in 

for the government. 

OPS says FIRS property valuation, assessment could shut down industries 


MEMBERS OF NIGERIA’S 

ORGANISED private 

sector (OPS) say they 

are gravely concerned 

about an ongoing exercise 

by the Federal Inland Revenue 

Service (FIRS) involving the revaluing 

and re-assessing of properties housing 

their businesses for the purposes 

of imposing new taxes. They believe 

this represents a threat to the continued 

existence of industries, many 

of which may be forced to shut down. 

The OPS say this amount to double 

taxation, besides being an illegal act 

by the FIRS as it was not backed by 

law and outside the mandate of the 

tax agency. 

Meeting the media for the Manufacturers 

Association of Nigeria (MAN) 

annual media luncheon, the OPS, 

comprising of MAN, the Nigerian Association 

of Small and Medium Enterprises 

(NASME), Nigeria Employers’ 

Consultative Association (NECA), the 

Nigerian Association of Chambers 

of Commerce, Industry, Mines and 

Agriculture (NACCIMA), and Nigerian 

Association of Small Scale Industrialists 

(NASSI), said a section of the companies 

income tax law, which is being 

used for the exercise no longer exist. 

In a communiqué, the OPS stated: 

“Section 30 of the Companies Income 

Tax Act from where the FIRS purportedly 

derived its power for the exercise 

is no longer in force, pursuant to its 

deletion by section 12 of Companies 

Income Tax (Amendment) Act 2007. 

“The FIRS is very much aware that 

as a fundamental principle of our tax 

jurisprudence, the power to impose 

any tax on a citizen must be derived 

from an enabling legislation. 

“There already exists a plethora 

of property valuation-based taxes in 

Nigeria. The Land Use Charge payable 

in Lagos State, which is being 

replicated across the country, is based 

on property valuation. The governor’s 

consent fees payable on alienation of 

interest in property across the country 

is based on property valuation. 

Capital Gains Tax payable on disposal 

of property is somehow influenced by 

property valuation. Rent payable on 

lease of real estate property is subject 

to withholding tax deduction.” 

The group said the properties of 

its member companies were also 

subjected to valuation pursuant to 

the provisions of the Companies 

and Allied Matters Act (CAMA) Cap 

C20 Laws of the federation for the 

purposes of companies’ annual accounts 

leading to payment of tax on 

their profits. 

Segun Ajayi-Kadiri, MAN’s directorgeneral, 

in the communiqué, asserted 

that member companies of the association 

paid huge sums of money to 

state governments under the above 

heads of taxation, “which we believe 

the states are utilising efficiently for 

the benefit of all.” 

“Using the value of the property 

housing the offices of companies to 

generate figures that will be charged 

as Company Income Tax is wrong as 

some companies are tenants in their 

buildings,” he added. 

The OPS said the exercise will have 

dire consequences on firms, households 

and government, noting: “The 

FIRS’ intention to value and assess 

the same property for tax purposes 

expressly negates the Federal Government’s 

objective of improving the ease 

of doing business recently initiated. 

“It is capable of discouraging new 

private investments and will place 

existing companies in precarious situation, 

which may lead to the closing 

down of their businesses. 

“As companies close down, government’s 

tax revenue will be adversely 

affected. Already, the ratio of Nigeria’s 

tax-to-Gross Domestic Product is 

abysmally small at six per cent. This 

will further dip,” the OPS stressed. 

According to the group, households 

will also be at the receiving end of high 

commodity prices and unemployment 

that will accompany company 

closures, adding: “From the foregoing, 

we therefore see the FIRS’ initiative 

as unlawful, impracticable and an 

economic misadventure, which will 

not benefit the economy, government, 

companies and households as the 

country will be the ultimate loser.”


MARKETS DATA 

29 

Company 

Previous 

Closing Price 

The Nigerian Stock Exchange 

Official Price List February 9, 2018 

Opening 

Price 

High Low Close Change% Trades Volume Value 

UNILEVER 47.6 48.5 49.5 48.5 49.45 1.85 81 7,183,461 352,836,634.10 

JBERGER 26.05 27.3 27.3 27.3 27.3 1.25 19 238,160 6,412,476.00 

STANBIC 45.05 46 46 46 46 0.95 22 103,426 4,753,425.85 

GLAXOSMITH 19.25 20.2 20.2 20.2 20.2 0.95 10 80,711 1,629,157.70 

DIAMONDBNK 2.76 2.85 2.96 2.71 2.94 0.18 318 37,613,482 107,459,268.41 

STERLNBANK 2.23 2.25 2.36 2.2 2.36 0.13 152 18,939,420 43,690,756.42 

NEM 1.8 1.89 1.89 1.89 1.89 0.09 22 3,239,038 6,114,805.82 

UNITYBNK 1.75 1.67 1.83 1.67 1.83 0.08 64 7,117,121 12,581,524.25 

CONTINSURE 1.55 1.62 1.62 1.62 1.62 0.07 4 227,600 363,087.00 

WEMABANK 1.23 1.17 1.29 1.17 1.29 0.06 70 6,261,034 7,883,477.56 

JAIZBANK 1 1 1.05 0.99 1.05 0.05 28 3,279,848 3,344,391.59 

SKYEBANK [MRF] 1.02 1.02 1.07 0.97 1.07 0.05 314 149,581,385 155,947,573.99 

LEARNAFRCA 1 1.02 1.05 1.02 1.05 0.05 11 1,464,820 1,519,656.50 

TRANSEXPR 0.85 0.89 0.89 0.89 0.89 0.04 2 4,400,000 3,916,000.00 

LINKASSURE 0.82 0.8 0.85 0.78 0.85 0.03 14 1,383,600 1,114,231.00 

HONYFLOUR 2.92 2.9 2.96 2.9 2.95 0.03 40 2,122,400 6,217,600.73 

FCMB 2.76 2.84 2.85 2.7 2.79 0.03 206 36,933,979 101,902,601.70 

AFRINSURE 0.42 0.4 0.44 0.4 0.44 0.02 11 22,469,792 8,995,708.80 

TRANSCORP 2.12 2.12 2.17 2.05 2.14 0.02 225 27,728,451 58,863,418.18 

FIRSTALUM 0.44 0.46 0.46 0.46 0.46 0.02 6 455,010 205,504.60 

AGLEVENT [BMF] 0.56 0.57 0.57 0.57 0.57 0.01 7 815,601 464,759.91 

ABCTRANS 0.38 0.37 0.39 0.37 0.39 0.01 28 1,652,399 622,178.75 

CILEASING 1.85 1.76 1.85 1.76 1.85 0 29 2,135,900 3,773,764.30 

NASCON 21 20.9 21 20.9 21 0 33 1,248,200 26,200,530.00 

PRESCO 70 70 70 70 70 0 19 469,716 32,879,878.65 

MANSARD 2.57 2.57 2.57 2.57 2.57 0 9 400,100 1,025,567.20 

PRESTIGE 0.56 0.58 0.56 0.56 0.56 0 60 35,033,760 19,619,045.64 

INTBREW 59 61.95 60 59 59 0 55 4,211,890 248,766,034.50 

ETI 19.65 19.65 19.65 19.65 19.65 0 33 103,414 2,036,721.00 

LASACO 0.36 0.37 0.37 0.36 0.36 0 34 6,474,378 2,333,776.08 

OANDO 5.99 5.99 5.99 5.99 5.99 0 51 421,693 2,525,941.07 

PZ 24 23.1 24 23.1 24 0 52 1,036,830 24,951,097.00 

UPL 2.25 2.25 2.25 2.25 2.25 0 7 652,323 1,471,781.75 

HMARKINS 0.36 0.36 0.36 0.35 0.35 -0.01 17 4,704,010 1,681,333.50 

WAPIC 0.65 0.67 0.64 0.64 0.64 -0.01 39 1,798,822 1,152,196.08 

UNIC 0.38 0.37 0.36 0.36 0.36 -0.02 7 136,622 49,203.92 

MULTIVERSE 0.42 0.4 0.4 0.4 0.4 -0.02 7 301,000 120,400.00 

UCAP 4.32 4.22 4.32 4.2 4.3 -0.02 96 3,568,837 15,114,809.88 

ROYALEX 0.44 0.42 0.42 0.42 0.42 -0.02 13 606,555 248,540.39 

JAPAULOIL 0.44 0.42 0.42 0.42 0.42 -0.02 3 111,000 46,620.00 

NPFMCRFBK 1.98 1.9 1.95 1.89 1.95 -0.03 24 1,118,336 2,127,982.14 

UAC-PROP 2.99 2.95 2.95 2.95 2.95 -0.04 15 272,324 807,877.38 

COURTVILLE 0.5 0.48 0.46 0.46 0.46 -0.04 2 110,000 50,800.00 

CAVERTON [BLS] 3.04 2.89 3 2.89 3 -0.04 43 894,478 2,656,157.41 

LIVESTOCK 1.1 1.05 1.05 1.05 1.05 -0.05 15 454,620 478,266.00 

AIICO 0.8 0.76 0.76 0.73 0.73 -0.07 21 1,624,955 1,201,217.15 

AFRIPRUD 4.9 4.9 4.8 4.8 4.8 -0.1 52 879,228 4,229,327.89 

SEPLAT 685.1 685.1 685.1 685 685 -0.1 10 185,912 127,362,158.20 

FIDELITYBK 3.38 3.32 3.44 3.22 3.26 -0.12 274 30,366,237 100,422,165.81 

CUSTODIAN 4.17 4 4 4 4 -0.17 12 1,378,367 5,518,263.60 

FIDSON 4.9 4.7 4.7 4.7 4.7 -0.2 19 534,263 2,513,710.81 

DANGFLOUR 16.15 16 16.2 15.8 15.95 -0.2 125 3,567,101 57,029,210.60 

DANGSUGAR 21.95 22.75 22.75 21.75 21.75 -0.2 89 2,434,414 53,403,713.55 

BERGER 9.25 9 9 9 9 -0.25 4 130,414 1,194,703.90 

UBA 12.35 12.35 12.35 12 12 -0.35 293 27,069,828 331,712,767.75 

FLOURMILL 33 32.65 32.95 32.6 32.6 -0.4 101 1,319,453 43,139,893.75 

UACN 17.2 17 17.5 16.75 16.75 -0.45 92 2,818,310 47,988,864.20 

NB 137.4 140 140 135.9 136.9 -0.5 152 1,209,202 165,949,547.80 

ACCESS 12.5 12.45 12.5 11.95 11.95 -0.55 141 4,656,330 57,341,834.20 

CADBURY 15.5 14.75 14.8 14.75 14.8 -0.7 30 397,877 5,914,147.95 

CCNN 19 18.15 18.15 18.15 18.15 -0.85 30 559,312 10,116,282.70 

GUARANTY 49 48.8 48.95 47.5 48 -1 238 8,801,801 424,554,904.15 

NESTLE 1372.8 1360 1360 1360 1360 -12.8 80 492,045 667,102,103.60


30 MARKETS DATA


COMMODITIES & AGRICULTURE 

31 

L-R: Babajide Arowosafe, executive director technical, NIRSAL; Aliyu Abdulhameed, managing director/CEO, NIRSAL; Karl-Heinz Knoop, chairman, RIELA, and Bernhard Schlagheck, ambassador 

of Germany to Nigeria at the signing of an MoU between NIRSAL and RIELA on mechanization of post-harvest processing held in Abuja 

Fortis Mobile Money deploying digital 

finance for small-scale agriculture 

Edidi Abdulrafiu 

Fortis Mobile Money 

has said it is deploying 

its newly 

designed Digital 

Finance for Rural 

Agricultural Development 

(DiFRAD) for the purpose of 

funding smallholder farmers, 

especially those in rural 

and peri-urban communities 

in the North Central, 

North East and North West 

of Nigeria. 

Samuel Oladimeji, managing 

director of the company, 

said the product is a 

digital agricultural initiative 

and was inspired when he 

had a first-hand encounter 

with some farming communities 

in Niger and Cross 

River states, during some of 

the company’s cash transfer 

programmes. 

“Most of the beneficiaries 

of the programs are 

farmers held down by the 

lack of financial services 

and sometimes know-how. 

The company immediately 

stayed working on the idea 

of bringing the banks to 

them, and bridging the gap 

between the farmers and 

agricultural developers,” 

Oladimeji said. 

Realising the initiative 

required Fortis to work in 

partnership with several 

microfinance banks, agricultural 

developers and 

insurance companies, working 

on a package of products 

that will cater for the extensive 

needs of the farmers, 

he further said, adding that 

it has been really difficult 

for Mobile Money Operators 

(MMOs) to craft a value 

proposition that will address 

the real needs of their target 

market even though that 

target market might differ 

across MMOs. 

Oladimeji said: “Fortis 

Money has always been 

going the extra miles in 

the right way. Although, 

the company can decide to 

improve value with bill payments 

and wallet-to-bank 

transfers, but then any sort 

of aggressive marketing of e- 

channels by the commercial 

banks would leave MMOs 

scrambling for market share 

in an already saturated market.” 

Oladimeji believes the 

product is unique because 

it focuses on the value chain 

instead of isolated financing. 

He noted that it was the 

company’s passion to end 

At Fortis Money, 

we see ourselves 

as a socially 

responsible 

organisation and 

DiFRAD to us is 

part of the ways 

we give back to 

the community 

the marginalisation of small 

holder farmers by buyers 

and even nature by providing 

knowledge and guidance 

as they journey through the 

digital finance value chain, 

and that is why it is in partnership 

with the microfinance 

banks and insurance 

companies, to financeÅ the 

entire value chain starting 

from provision of farm land 

through its clearing to its 

harvesting, processing and 

selling. 

The package also extends 

to the provision of inputs 

and we have consulted critical 

expertise to look at the 

proposition and ensure that 

we achieve the desired impact. 

This is why the whole 

process is mostly digital and 

going digital guarantees a 

level of transparency, Oladimeji 

explained. 

The Fortis Money CEO 

has a word for the central 

administration in Abuja: 

“We have witnessed demonstrated 

resolve of the government 

to properly incentivize 

agriculture. While the 

government faces challenges 

especially with regards to 

reaching the (BOP), small 

holder farmers, I believe 

that the solution is Public 

Private Partnership. The privately 

owned organisations 

with the right organisation 

and the right process have 

the opportunity to bridge 

the gap between the government 

and the rural farmers. 

“At Fortis Money, we see 

ourselves as a socially responsible 

organisation and 

DiFRAD to us is part of the 

ways we give back to the 

community. The overarching 

goal is to reduce the poverty 

level in rural communities 

seeing that their most recurrent 

occupation is farming,” 

Oladimeji added. 

Dry season farming 

under threat from delay 

in GES input supply 


THE ALL FARMERS 

ASSOCIATION 

OF NIGERIA 

(AFAN), Kaduna 

State chapter has 

raised the alarm over the 

non-supply of farm input for 

dry season farming. 

It said the call became imperative 

because dry season 

farming under the Growth 

Enhancement Scheme (GES) 

had not started. 

Nuhu Aminu, chairman 

of the association said this in 

Zaria, Kaduna while appealing 

to the Federal Government 

to intervene. 

He said: “The GES dry 

season farming programme 

ought to have started in October 

last year, but up to now, 

nothing had been done. 

“We are already in February 

and we are still waiting for 

its commencement. I want to 

use this medium to appeal 

to President Muhammadu 

Buhari to direct the Minister 

of Agriculture to launch the 

2017 GES dry season farming 

so as to enable farmers 

across the country to access 

farm input. 

“The fertiliser and seeds 

under GES are genuine inputs; 

they are supplied at subsidised 

rates to boost the morale 

of farmers and increase 

agricultural production. 

“We usually get discounts 

on the prices of the inputs 

and this assistance has been 

beneficial to many smallholder 

farmers.” 

Aminu said farmers across 

the country had complied 

with the directive of President 

Buhari to return to farm. 

He said the directive had 

yielded positive results as 

many Nigerians had now 

embraced farming as their 

livelihood. 

“As farmers, we have listened 

and complied with the 

President’s instruction; we 

went back to our farmlands 

and produced enough food 

last year. 

“However, we are already 

in the dry season farming 

period, which started since 

October, but up to this time, 

neither fertilisers nor seeds 

nor chemicals had been released 

to farmers,’’ he said. 

He stressed the need for 

the government to do something 

urgently to sustain the 

support of farmers for government 

policies and programmes. 

“Things are not moving 

well as far as dry season farming 

is concerned; therefore, 

government needs to do 

something urgently to improve 

agricultural activities 

and keep the farmers’ faith in 

it,’’ he said. 

Aminu, however, called 

on the citizens to support the 

government in its efforts to 

execute its agricultural policies 

and programmes. 

“Failure to supply fertilisers, 

chemicals and seeds will not 

augur well for the next farming 

season because we don’t have 

enough seeds to plant. 

“Apart from that, the assistance 

from government has 

been helpful in encouraging 

people, especially the youth 

at the grassroots, to embrace 

farming,’’ he said. 

Failure to supply 

fertilisers, 

chemicals and 

seeds will not 

augur well for 

the next farming 

season because 

we don’t have 

enough seeds to 

plant

February, Monday 12 - Sunday 18, 2018 

business 

a.m. 


MTN’s $500m IPO 

Follow us 

Finally, something for everyone 


THERE ARE MANY IN- 

STITUTIONAL and individual 

investors out there 

who have always looked 

forward to this day. Since 

South African MTN came to Nigeria 

in 2001 and began to make a lot of 

money, they had looked forward to a 

time when they could have a chance 

to partake of the fortune of the company 

by way of buying its shares and 

earning some nice dividends or taking 

profits from share appreciation. Suddenly, 

they now have a chance! MTN 

actually has no choice now. It is in a 

corner that it just has to do this. An 

Initial Public Offering seeking to raise 

$500 million. You could say its hands 

have been forced; forced by a fine of 

$1 billion or $1.7 billion and an agreement 

with the Nigerian government 

on how this could be settled. So, it has 

come to this and you won’t be wrong 

if you, being familiar with history, 

would say, “this is not our will, but let 

thy will be done.” 

Now, it’s not that they couldn’t 

have flown to South Africa where 

MTN is listed on the Johannesburg 

Stock Exchange to place an order 

with a stockbroker to buy them some 

shares, if they were available. But 

there was something sentimental 

and emotional with them about 

MTN Nigeria Limited, which is not 

a quoted company in Nigeira. Those 

sentiments and emotions derived 

from the fact that over the years, they 

felt that as the South African company 

was making its largest income from 

Nigeria out of all the places it operated 

in, it was not fair that they didn’t have 

the opportunity to benefit through 

share acquisition. 

It is not exactly correct, though, to 

say that Nigerians weren’t benefitting 

from MTN Nigeria through share 

ownership. After all, the company 

did not just fly into the country, set 

up shop and began to make all that 

money that made some people and 

some other companies jealous. For 

as it is with many markets, there 

was some handholding by local 

business heavyweights who did the 

usual introduction to the markets, 

softened the grounds and took them 

to places; and Pascal Dozie, founder 

of Diamond Bank and chairman of 

MTN Nigeria, led this pack of early 

investors. MTN Nigeria was at some 

point 75 percent owned by the parent 

company and 25 percent owned by 

the Pascal Dozie-led local investors. 

The arrangement may have been that 

the share structure still gave the parent 

company total control of the company, 

but these wise Nigerians who 

handheld MTN into Nigeria probably 

still hold some shares in the company 

and they reaped bountifully by their 

wise investment move. Now, a bit of 

history will suffice here. 

Some years ago, precisely in 2006, 

some of the local minority shareholders 

did put up a spirited battle when 

the parent company moved to whittle 

down their shareholding. At the time 

MTN brought out a war chest of $348.9 

million seeking to increase its shareholding 

in MTN Nigeria by buying out 

some of the minority investors. The 

plan was to pay $287.8 million in cash 

and six million shares in the parent 

company to take an extra 6.98 percent 

of the Nigerian arm which was to give 

businessamlive @businessamlive @businessamlive businessamlive Media 

it 81.87 percent of the entire stake. 

Many analysts had said then that 

this was a curious move because you 

would not have expected that after 

spending two years previously talking 

about stake reduction, it had chosen 

to do exactly the opposite. All the talk 

about listing MTN Nigeria’s shares 

on the local bourse did not start with 

the agreement reached with government 

over how to settle the hefty fine 

imposed by the government. In fact, 

in 2004, the company showed serial 

eagerness to list, and cited as reason 

for this move at the time, the need to 

introduce a broader range of Nigerian 

investors as backers. It talked about 

the listing offering potential to raise 

more cash (as is also the case now) 

to expand its network coverage (not 

exactly sure if this trumps settling of 

its Nigerian government’s fines) and 

to help counter criticism that it was a 

foreigner extracting money from the 

local economy (it has never been able 

to clean this impression from the hearts 

and minds of many). It said all this in 

2004, and that was all of 14 years ago. 

Time does fly indeed when you are 

making profit, but it comes to a halt 

when $1 billion fine is imposed on you. 

The known minority shareholders 

in 2006 when this move by MTN to up 

its stake in MTN Nigeria happened 

were, Celtelecom Investments, Celtel 

Funded Shares, Universal Communications, 

SASPV, N-Cell, Hermitage 

Overseas Corporation, Mobile Communications 

Holding and Mobile 

Communications Invest. We couldn’t 

The fact that Nigerians 

had been baying for a 

pound of MTN Nigeria’s 

investment flesh does 

not mean that they can 

take it all up. 

confirm which of them still has any 

stake in MTN Nigeria today. But the 

idea at the time had been for them 

to sell 28 million shares for $12,424 

each. The arrangement was such 

that MTN would then fund the cash 

portion of the payment partly from 

existing available cash at the time 

and partly by drawing on banking 

facilities. About $15 million of the cash 

settlement was to be used to off-set 

some loan accounts that the minority 

shareholders had with MTN, which 

had then reduced the cash payment 

to $272.6 million. Deutsche Bank was 

appointed to independently assess 

the deal, and it had then subsequently 

declared it fair and reasonable to existing 

MTN shareholders. 

Economic analysts are futurists. 

They like to talk about outlooks and 

projections. Having done that retrospection, 

it is not such a bad idea to 

return to the present. This time things 

are different. MTN has made money 

from its business in Nigeria, but it 

has also made contributions to the 

Nigerian economy; no mistakes about 

that. Launched in 2001, by 2006 it had 

become the country’s leading operator 

with 9.6 million subscribers with 

network coverage of 73 percent of the 

population. For the six months to June 

of 2006 it generated revenues of $1 billion. 

That was in 2006. The December 

2017 numbers recently released by the 

Nigerian Communications Commission 

(NCC) showed that MTN Nigeria 

now has 52.27 million subscribers. It 

has been the dominant player for such 

a long time that no one ever thinks it 

could be wrestled out of that position. 

So, perhaps the best thing to think of 

is how you can get your hand on its 

shares to share (no pun intended) in 

the company’s fortunes. 

We are sure that a lot of numbers 

are being punched right now. No one 

yet knows what the shares will sell 

for when they go to the market. It’s 

a whole lot of money what MTN is 

looking to raise through this IPO. In 

naira terms that’s N153 billion ($500 

million). As we live in a country with 

multiple foreign exchange markets 

(we can’t help ourselves, we just have 

to allow the dollar rule our lives, isn’t 

it?), depending on where you are 

calculating from and which foreign 

exchange markets rules your world, 

we are all likely to come to different 

naira figures for that sum. It is funny, 

but serious this dollar and exchange 

rates obsession! 

Now, remember that this same 

IPO was initially planned to happen 

last year before it was postponed due 

to ‘inclement investment weather’. 

This time, Citigroup and Standard 

Bank (represented by its Nigerian 

subsidiary, Stanbic IBTC Capital) 

have a six months timeline to do all 

the necessary number crunching and 

paperwork so that the IPO can open 

and get eager Nigerian investors, who 

have been waiting for years for MTN to 

come to the market, to get their hands 

on the shares. 

Nothing says this is a done deal. 

The fact that Nigerians had been 

baying for a pound of MTN Nigeria’s 

investment flesh does not mean that 

they can take it all up. Many planned 

Nigerian IPOs had been shelved 

since 2015/2016 because of what we 

have called ‘inclement investment 

weather’. But we understands that 

should local investors, institutional 

and individual, not be able to take it 

all up, there is a safeguard to bring in 

foreign investors; these we are sure 

would like an opportunity to own a 

piece of this money making machine 

called MTN Nigeria. 

And by the way, we understand 

that MTN is only selling as much as 

30 percent of its stake in MTN Nigeria. 

If it still holds at least 81.87 percent 

as it did following the 2006 minority 

shares purchase, then if it took out 30 

percent this time, MTN will still own 

51.87 percent and controlling stake, if 

not more. And it could be more. Did 

someone just say they bought out 

more minority shareholders since 

that 2006 episode? Well, let me go and 

confirm. We’ll be right back. 

Nigeria awake, cryptocurrency is here 

Samuel Benedict Ogbonnaya 

With the Venezuelan 

government officially 

recognizing 

the impact of 

cryptocurrency on 

its economy, global financial world 

policy makers can no longer pretend 

that this disruptive technology has 

come to stay. In recent times, Blockchain 

and cryptocurrency in general, 

with Bitcoin taking the lead, have become 

a thing of concern as the financial 

technology have been trending 

online, attracting the interest of various 

economies and industries. 

CryptoCurrency as defined by Coin- 

TeleGraph is: 

“A digital or virtual currency designed 

to work as a medium of exchange. 

It uses cryptography to secure 

and verify transactions as well 

as to control the creation of new 

units of a particular 

cryptocurrency” 

By this definition, it means Cryptocurrency 

is money and can serve 

the same purpose fiat (paper money) 

can serve. 

In December 2017, the President of 

Venezuela, Nicolas Maduro, officially 

said the pre-sale of the country’s 

proposed cryptocurrency 

– the “petro” will be launched this 

February 20, just a few days away. 

Bloomberg quoted Maduro as saying” 

“The petro will have a great impact, 

in how we access foreign currencies 

for the country and in how 

we obtain goods and services that we 

need from around the world.” 

Germany has also recognized the 

use of Bitcoin and cryptocurrency as 

legal tender. 

Looking at the facts above and the 

fast growth of this disruptivetechnology 

of Blockchain, is Nigeria going to 

launch one or adopt an existing cryptocurrency? 

If the Nigerian Government will 

produce one, what purpose will it 

serve? If they will adopt an existing 

cryptocurrency, which project will 

that be? 

While making further research 

on this, I came across a locally made 

cryptocurrency (ABJCOIN) currently 

listed on CoinMarketCap and 

trading on various international exchange 

websites with other good 

cryptocurrency projects. 

ABJCOIN, says the managers, is 

poised to foster a borderless trade 

and commerce in Africa and to other 

parts of the world. Looking at the 

roadmap of ABJCOIN as seen on its 

website (www.abjcoin.org), the Coin 

is set to 

· Connect all Nigerian and African 

banks. 

· Introduce the first Cryptocurrency 

ATM Machine in Africa. 

· Stand alone and won’t depend on 

Bitcoin to control volatility. 

· Remitting Cryptocurrency and Fiats 

across various industries across 

Nigeria and Africa at large. (Pay for 

Electricity bills, Schools and exam 

fees, transport and flights, malls and 

receiving payments) and 

· Almost zero transaction fees of 0.01 

ABJ. 

This seems an amazing roadmap 

coming from ABJCOIN and looks like 

a way forward if the Nigerian Government 

will adopt cryptocurrency. 

So, a few questions may arise: 

What is the Future of CryptoCurrency? 

- Cryptocurrency is definitely the future 

of money as it correlates with the 

cashless policy the Nigerian government 

is currently projecting. 

- By adopting cryptocurrency, everyone 

including individuals, companies 

and the government itself enjoys 

a cashless economy with an insignificant 

fee on every transaction. 

- Experts like Robert Kiyosaki have made 

positive statements about Cryptocurrencies 

being the future of money. 

- Developed countries such as Unites 

States, South Korea, Germany and 

China aren’t banning the activities of 

crypto, but regulating the activities of 

cryptocurrency companies to project 

investors. 

Nigerian policy makers and financial 

experts must pay more than 

a casual attention to this international 

trend to avoid lagging behind. 

*Ogbonnanya is the CEO Blockchain 

Tech Hub, Abuja

12-02-2018

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