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BusinessDay 14 Feb 2018

4 BUSINESS DAY C002D5556

4 BUSINESS DAY C002D5556 Wednesday 14 February 2018 BUSINESSDAY MARKET AND COMMODITIES MONITOR NSE 42,600 42,400 42,200 42,000 41,800 Biggest Gainer AGLEVENT N0.04 +7.02pc Commodities FMDQ Close Foreign Exchange Brent Oil US $65.49 Gold $ 1,323.00 Cocoa $ 2,060.00 Bitcoin N3,080,796.35 +0.29pc Powered by Market Spot $/N I&E FX Window 360.22 CBN Ofcial Rate 305.90 Treasury bills 3M 6M -1.44 0.38 13.61 15.96 41,600 6a 7a 8a 9a Day range (41,614.10 - 42,735.32) 41,708.15 Previous close (42,737.89) - 1,029.74 (-2.41pc) YtD return (9.06pc) N0.04 -7.14pc PRESTIGE Biggest Loser Exchange Rate BDC $-N 360.00 £-N 497.00 €-N 434.00 TRAVELEX 363.00 506.00 444.00 Everdon Bureau De Change $-N £-N €-N BUY 360.00 495.00 434.50 SELL 363.00 504.00 444.50 FGN Bonds 5Y -0.08 13.77 10Y 20Y 0.06 -0.04 13.87 13.51 Businesses spend N116bn on oil palm importation despite forex restriction - Senate ... seeks total ban OWEDE AGBAJILEKE, Abuja & JOSEPHINE OKOJIE The Senate has disclosed that businesses imported 450,000 metric tons of palm oil at a total cost of N116.3 billion into the country in 2017. This is despite the crop being among the 41 items restricted from accessing foreign exchange by the Central Bank of Nigeria and the growing concern of the country’s high food import bill, which gulps $3 billion yearly. Francis Alimikhena, (APC Edo North), who made the disclosure at plenary session Tuesday, did not disclose the source of his figures. But data from the National Bureau of Statistics (NBS) show that Nigeria imported a total of N14.42 billion worth of Crude Palm Oil (CPO) in the third quarter of 2017, up from N7 billion in the second quarter, indicating a 106 percent increase on a quarter on quarter basis. Nigeria has seen imports of CPO rising rapidly as domestic production has remained stagnant for the past five years, despite growing demand of the crop. Currently, the country produces about 970,000 metric tons of CPO, while local consumption is put at 2.7 million metric tonnes per annum; indicating an estimated demand-supply gap of over 1.7 million MT. Nigeria imports from countries such Indonesia, Malaysia, Ivory Coast and Ghana to bridge the huge supply and demand gap. Alimikhena expressed concern that the unbridled importation of palm kernel and allied palm products into Nigeria was a threat to the Federal Government’s campaign for the diversification of the economy through increased agricultural production and exports. “The Senate is aware that Nigeria was the world leading producer of palm oil at independence but unfortunately, Indonesia and Malaysia have overtaken Nigeria and we now import palm oil,” Alimikhena said. “The government must reverse this trend with copious investments in the local palm industry and the protection of local producers from unnecessary imports. We have the land and the manpower to become a formidable force in oil palm production,” he said. Since losing its position as one of the world’s largest palm Continues on page 42 Shoprite hit by difficult operating... Continued from page 1 Organisation of Nigeria (SON) is forcing businesses, including Shoprite, to pay N3 on each product as Product Authentication Mark (PAM), even though most of the products have SON- CAP and MANCAP certifications already. The company has also faced some legal issues. Three weeks ago, a Lagos State High Court in Ikeja ordered Shoprite Checkers Limited operator of Shoprite outlets in the country, to pay $10 million to A.I.C Limited for ‘breach of contract’. It is not clear if Shoprite is appealing the decision as they declined comment for this story. Shoprite, which operates in 14 countries outside of South Africa, made a profit after tax of R3.9 billion or N93.5 billion in full year 2016 on total sales of R71.29 billion or N1.7 trillion. It did disclose specific sales and profits for its Nigerian operations even it stated that revenues jumped 60 percent in the country. However, BusinessDay gathered from top business sources that Shoprite is incurring losses in Nigeria and may pull out of the country like it did in Tanzania and Egypt if the operating environment does not improve. ‘Shoprite is a case of government not being interested in making the environment friendly. What the government continuously does is to think of how to raise revenue from N50 trillion this quarter to N100 trillion the next quarter,’ said Oladapo Abiodun, chairman of SME Group at the Lagos Chamber of Commerce and Industry Onajite Okoloko (l), group managing director/CEO, Notore Chemical Industries plc, and Dmitry Mazepin, deputy chairman of the board of Uralkali, at the recent signing of a partnership agreement in Moscow, Russia, for production and distribution of NPK fertilisers across West Africa. (LCCI). ‘Instead of using fiscal and monetary policies to support businesses; local, state and federal government return with the same type of taxes. If you are into food business, for instance, NAF- DAC certifies you to produce and SON comes again to repeat the same process. Why not merge the two?’ Adiodun asked. Osita Aboloma, director-general of SON, has defended PAM in an interactive session with the business community at various times, saying it is optional. However, SON is pushing on with PAM and there is no evidence that non-compliance will not be punished. “When you consider the cost implication of PAM per product on already very high cost of production, you will see that such additional cost will translate into high prices of Nigerian made products and high inventory of unsold goods. For instance, an additional N3 on products can raise the domestic prices by as much as 15 percent which will certainly further dip the competitiveness of our products,” Frank Jacobs, president of Manufacturers Association of Nigeria (MAN), said. The National Association of Super Market Operators of Nigeria (NASON) criticised PAM as double taxation, which would not only hurt margins of business but will impact jobs and the economy. Nigeria desperately needs investors, local and foreign, to boost its recovering economy and create jobs for the unemployed. The National Bureau of Statistics said in the third quarter of 2017 that 16 million Nigerians were unemployed within the period. This is mainly attributed to poor business environment resulting from taxes, levies, and lack of energy and poor road network facing businesses. Taxes in Nigeria negate Adam Smith’s canon of certainty, say analysts. Matna Starch, which used to supply starch to multinationals such as Nestle, left Ondo State owing to multiple taxation by government agencies, including the Nigeria police. PZ Wilmar in Cross River is facing this same challenge with local and state governments repeating taxes imposed by the Federal Government already. The villagers are even threatening to impose levy on each truck ferrying fertilizer to Wilmar’s plantations in Biase, Calaro and other estates. BusinessDay gathered that four years ago in Cross River State, there were over 30 firms in quarrying business but the number is less than 10 today. The firms left owing to harassment by government for frivolous taxes and community demands. ‘The impact of such a reckless abuse of opportunity is that you will continue to lose existing investors and getting new ones will become so hard,’ Ike Ibeabuchi, managing director of MD Services Limited. Muda Yusuf, director-general of LCCI, told BusinessDay that “If you want investors to come, create the right environment. Have friendly policies.”

Wednesday 14 February 2018 BUSINESS DAY 5

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