BusinessDay 26 Feb 2018

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36 BUSINESS DAY C002D5556 Monday 26 February 2018 COMPANIES ENDURANCE OKAFOR Markets Intelligence Nigerian Insurers’ share price Year-to-Date on NSE … Aiico, Mansard, Linkage, N.E.M Insurance shares lead on return Nigerian quoted insurance firms with stock price less than N0.50 are the worst performers on the Nigerian Stock Exchange (NSE) so far in 2018. A stock is said to underperform if it produces a worse return than an index or the overall stock market BusinessDay analysis revealed eleven of the listed insurance firms had their Year-to- Date return not just less than the NSE All Share Index (ASI) of 11.32 percent but was at the negative trajectory, as at the close of market for as at Friday last week. The insurance companies that were surveyed includes; Cornerstone Insurance Plc with a share price of N0.43 and YTD return of -14 percent, Equity Assurance Plc share price was N0.40 with YtD return of -20 percent. Also, Lasaco Insurance Plc, Standard Alliance Plc, Regency Alliance Plc, Mutual Benefits Assurance Plc, Niger Insurance Plc, Prestige Assurance Plc, Africa Alliance Plc, Soveriegn Trust Plc and Unity Kapital Assurance Plc had both share price and YtD return of N0.33 & -34 percent, N0.48 & -4 percent, N0.48 &-4percent, 9 Mobile remains viable investment amid uncertainties DIPO OLADEHINDE 9Mobile remains viable for investors as the mobile network company continues to attract subscribers according to data from the fourth quarter (Q4) of 2017 National Bureau of Statistics’ (NBS) telecom report. 9Mobile attracted the highest number of incoming porters from other networks despite the challenges it faced during the period under review. Total Numbers Ported Incoming from Other Networks to 9mobile was at 5,177 followed by MTN at 1,538, while Airtel and Glo had 1,173 and 740 incoming porters respectively. “Provision of good quality service by the telecom network to its subscribers led to the increase in the in-porting customers”, Boye Olusanya, CEO 9Mobile told BusinessDay on phone. In the fourth quarter of 2017, total number of incoming and outgoing porting activities stood at 8,628 and 8,830, representing a decrease of 48.67 per cent and 47.14 per cent respectively over the previous quarter of Q3 2017. BussinessDay investigations however revealed there was a 55 per cent decrease from 11,517 incoming porters in Q3 compared to 5,177 in Q4 2017. 9mobile also accounted for the least total numbers outgoing subscribers to other Networks with 1,447, followed by Glo with 1,848 while Airtel and Mtn recorded the highest number of outgoing customers at 2,760 and 2,775 respectively. Notwithstanding the tremendous increase in the subscribers N0.48 &-4percent, 0.46 &-8percent, N0.47 & -6 percent, N0.42K & -16percent, N0.48 & -4 percent, and N0.37 & -26percent respectively . that ported into the network in Q4 of 2017, the embattled company ranked the lowest in the total number of network subscribers among its peers. In the fourth quarter, the four largest voice communication providers were MTN, Globacom, Airtel and 9Mobile contributed to 36.14 per cent, 26.39per cent, 25.74per cent and 11.72per cent of the total telecom communication subscriptions respectively. Total Active Voice Subscriptions in the fourth quarter of 2017 decreased by 6.12 per cent when compared with the same quarter of 2016, from to 154,529,780 in 2016 Q4 to 145,065,953 in Q4, 2017. The figure also indicates a 3.69 per cent increase from the number reported in the third quarter of 2017. Among the top four network providers, Airtel, 9mobile (EMTS) and MTN only specialise in GSM technology, while Globacom operates both in the GSM and Fixed/ Fixed Wireless Telecommunication technology space. South West states recorded the highest active voice subscriptions with a total subscription of44, 465, 508 active voice subscriptions. Lagos, Ogun, and Oyo states were the top three states and jointly accounted for 25.06 per cent of the total voice subscription of the country. Lagos led the pack with 19,417,181 total active voice subscriptions and 19,118,767 GSM users by the end of the fourth quarter, equalling 13.18 per cent of the total nationwide subscriptions. Following the top three states were Kano with 7,382,805;Kaduna with 6,642,801 and Rivers Before now, a stock could not drop below its N050 par value, even if the owner was willing to sell below that price just to cash out. However, stocks became with 5,456,860. Bayelsa state accounted for the lowest number of active voice subscriptions in the quarter under review, with 954,353. The telecom company failed to reach an agreement on possible repayment plans with 13 Nigerian banks, where it took out a $1.2billion medium term syndicated loan facility in May of 2013, with the hope to refinance the existing commercial medium term debt of $650 million, but missed payment in February 2017, due to an economic downturn and scarcity of foreign exchange in the country. exposed to low valuation when NSE removed the decades-old par value price floor of 50K. The NSE introduced new pricing methodology and par value rule, which was approved by the Securities and Exchange Commission (SEC) and it became effective from Monday, January 29 2018. The policy specifies that the price of every share listed on The Exchange shall be determined by the market forces and equities may now trade below the erstwhile price floor of fifty Kobo (N0.50) per unit and as such, the removal of price floor is expected that investors have better opportunities to dispose of stocks that they have held for far too long because of the price floor. Meanwhile, other insurance companies like AIICO Insurance Plc, Mansard Insurance Plc (formerly known as GTAssure), Linkage Assurance Plc and N.E.M Insurance Plc had their share price above 50K and also their YtD return outperforming the NSE All-Share index of 11.32 percent. AIICO Insurance Plc had its share price at 75K and a YtD return of 44.23 percent, Mansard Insurance Plc, Linkage Assurance Plc and N.E.M Insurance Plc had both their share price and YtD return of 2.75K &42.49 percent, 92K & 39.39 percent and 1.9K & 14.46 percent respectively, as at market close Friday 23 February 2018. This forced the Etisalat group to terminate a management agreement with its Nigerian arm, given the business time to phase out the Etisalat brand in Nigeria after its appointment of a new management board to run operations. As a result, the telecom had to select a new brand name and identity, which it says is not a product of chance, but was carefully thought out and deliberated to represent its ‘Nigerianess’ (Naija-centricity) from the 0809ja heritage and the fact that it has operated in Nigeria for nine years. Last week, BussinessDay reported Barclays Africa has officially written to Teleology holding limited, informing the company that it is the preferred bidder for the 9mobile sale. In the letter sent to Teleology holdings, Barclays Africa, the financial adviser to the consortium of banks owed $1.2billion dollars by 9mobile (formerly Etisalat) said they had reviewed all bids submitted and recommends Teleology as the preferred bidder. The company was then asked to make a nonrefundable financial deposit of $50 million dollars within the next 21 days to seal the deal.
Monday 26 February 2018 Start-Up Digest BUSINESS DAY 37 Meet Akintunde Oyebode, the man who funds Lagos SMEs ODINAKA ANUDU If you are running a micro, small or medium business in Lagos and you need money for expansion, ask Akintunde Oyebode. Oyebode is the chief executive officer and executive secretary of the Lagos State Employment Trust Fund (LSETF), which was set up by Governor Akinwunmi Ambode to lift businesses and unemployed residents of the state. Two years into the office, Oyebode has shown that state of origin, tribe or race does not matter to him. As long as you have a business in Lagos and meet the loan requirements, Oyebode and his team will ensure you get funding. So far, 5,800 businesses have got approximately N4.9 billion from LSETF. He believes that by end of March this year, the number of businesses that have accessed loans will have been raised to 8,000. This number will have hit 15,000 by the end of the year. How does it feel to superintend such revolution in Lagos? “It is incredibly fulfilling for me to see small businesses get access to funding without bias, without nepotism, without nepotism. “It has been superb and exciting. We have been able to support thousands of businesses, so it is rewarding and fulfilling to see a lot of our work starting to show signs of delivering some value,” he tells Start-Up Digest in an exclusive interview. What exactly are Oyebode and his team looking for in a loan applicant? “We are looking for credibility. We are looking for those who have not misrepresented their performance. We are looking for clarity; people who know exactly what they are using the loan for, without inflating the cost of goods or services they want to pay for,” he explains. “We are looking for people who can repay their loans; people who can show that if they get the loans, they have a clear way of paying back. We are looking for people who, when we go and do credit checks, they have not been owing banks without repaying; they have not issued bounced cheques or lied about where they live or the size of their businesses. If you are selling 20 loaves of bread a day, you have not told us you sell 200 loaves,” he further explains. The executive secretary says the LSETF verifies all the claims of applicants and does not necessarily make impossible demands. “We are not asking anybody to bring their grandmother’s hair or for a collateral, but we are asking for integrity. This is tax payers’ funded project, so we need to show we are looking at the right things to ensure we get value from it,” he says. The LSETF does not just give out loans without providing capacity development. In affiliation with the United Nations Development Programme (UNDP), the LSETF trains 10,000 Lagosians under the Employability Support Project. The agency has already trained 600 people and will add 10,000 more Akintunde Oyebode by the end of 2018. It has also launched Lagos Innovate, which is designed to support innovation and tech start-ups in Lagos. Two programmes have also been launched and another—an accelerator programme—will be launched in April this year. “For the loan programme, we train you after we give you an offer letter. And that is a compulsory bootcamp to ensure you know how to run a business. But for our employability programme, we are training and placing people in jobs. We have gone to the industry and asked, ‘What jobs do you have skillsgap and struggling to fill?’ We are training people and placing them on those jobs. We are also giving people the opportunity of getting jobs. It is not a guarantee that you will get jobs but we try to provide jobs for them at the completion of training,” he elucidates. The LSETF is targeted at creating more and more jobs. The institution monitors, evaluates and periodically tracks job creation. But how does it ensure that people who get loans actually create jobs? “We track how they are putting people in the tax register. So it is not just enough for you to say you are employing people. Are they paying taxes? What kind of jobs are they doing? So we have an independent business development partner who will go in there to understand what is going on. But we also have the tax register to validate what we get. Monitoring and evaluation are critical parts of our programme. Without it, it is difficult to understand what is working, what is not working, what should be stopped” he says. Already loan beneficiaries have created 8,000 jobs and there will have been more by April/May when the majority of the loans will have been returned. Oyebode says that the LSETF also supports start-ups but pays more attention to existing businesses, which are the mainstay of the economy. He advises that when starting a business, it is not proper to get a loan because it has conditions and commitment of repayment, pointing out that the best bet is equity. “But we still support start-ups but not in excess of N250,000. That is the maximum loan and that just reflects the risk nature of start-up businesses. But if you then succeed with the N250,000 and you pay that back as and when due, we can them move you up to a higher loan of up to N500,000 or N5 million,” he discloses. He says that trade and service players are topping the chart of loan beneficiaries due to the nature of the Lagos economy. However, he adds that his agency has funded schools, film makers, DJs, photographers, beauty and ICT payers, among many others. Oyeode hopes to increase the loan book from N4.9 billion today to N10 billion by the end of 2018, but he says that the funding is insufficient in relation to demands. “We can do more if we receive donations from well-meaning institutions and individuals. The numbers I am giving you is based on the funding we expect to receive from the state. We call on well-meaning institutions and individuals who want to solve the job situation in Lagos to partner with us. With our funding and yours, we can go a little bit further than if we are in this journey alone,” he says. Compare the number of people seeking loans with number who get loans and you get 25 percent. This is a function of the capital the agency has available and a reflection of the readiness of businesses, he says. “To be fair, of the businesses we say ‘no’ to, half of them are not in any way ready to take loans. They haven’t shown the required readiness; their documentation does not suggest that they can pay back their loans,” he reveals. The good news is that those who are taking loans are repaying them, which is why repayment rate today is over 90 percent. The LSETF is N25 billion over a four-year period. The executive director believes that with what is being put on ground, the funding would outlive the Ambode-led administration. He further says that the twoyear journey of the LSETF has been outstanding. “I think it is a great start and a reminder that there is a lot more to do. It is a reminder of what possibilities are if we do things correctly. Even in such a short period, we are getting some very good testimonies about how these funds have helped them. If we do 10 times what we are doing today, the impact on the Lagos economy will be tremendous. That is what I always share with my team, that if we have done this little and got some feedback, imagine if we do five, 10 times, what the impact on Lagos economy will be.” Oyebode was head of SMEs at Stanbic IBTC. Start-Up Digest asks him to compare his experience then and now. “They are both rewarding experiences. When I was working in Stanbic IBTC, we pioneered unsecured lending in the SME space, and I found it rewarding going round the country, listening to people tell me how the funding we were giving them were making them significantly grow their businesses. I am now working for the government. It is also incredibly rewarding to hear people across Lagos tell us how these funds have changed their lives. I think the big difference between my previous job and now is that in this role, we are allowed to finance start-ups and we provide the loans at the concessionary rate of five percent, which means that it is likely to be more impactful,” he explains. The executive secretary feels that the challenge he faces at the moment is normal. “I think the biggest challenge we have faced is just the normal challenge of setting up a new enterprise, ensuring that we could hire the right people and ensuring we get the word out there, that this loan is available. It has been very fulfilling, but it has fewer challenges than I had earlier expected. It is a testament of the work of the board led by Ifueko Omoigui Okaru, who helped us set the exceptional governance framework, and also to the praise of the governor who followed through this vision of setting up this funding it appropriately. Despite a difficult economic condition, even when the economy was in recession, the governor was able to find funding for us. I think he deserves some credit,” he states. He likewise commends the work of the Presidential Enabling Business Environment Council (PEBEC), whose landmark has impacted Lagos. Oyebode believes that funding is a big challenge facing entrepreneurs, but not necessarily the biggest. “It is one of the biggest problems because they are also trying to solve other problems. They are also trying to get new markets, and expand access to markets. It is one thing to get capital but another thing to sell your goods and services,” he says.
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BusinessDay 26 Feb 2018

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