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NEWS YOU CAN TRUST I **MONDAY <strong>26</strong> MARCH <strong>2018</strong> I VOL. 15, NO 18 I N300 @ g<br />

Milost sued in New York for fraud,<br />

violating US securities exchange law<br />

As shocking court documents emerge<br />

PE firm’s Nigeria dealings expose regulatory shortfalls<br />

See court documents: MacGregor v. Milost Global, Inc. et al, exclusively on www.businessdayonline.com<br />

IHEANYI NWACHUKWU &<br />

LOLADE AKINMURELE<br />

There’s a tiny detail that<br />

Milost has deliberately<br />

concealed from the<br />

unassuming Nigerian<br />

investing public.<br />

Milost Global Inc, a purported<br />

US-based private equity firm,<br />

is facing six different charges<br />

in the United States after being<br />

sued for fraud by one Alexander<br />

MacGregor, according to a<br />

document filed at the New York<br />

Southern District Court and obtained<br />

by <strong>BusinessDay</strong>.<br />

In the Case No. 1:17-cv-06691<br />

filed on September 1, 2017, Mac-<br />

Gregor through his counsel (Law<br />

Offices of Nolan Klein) sued<br />

Milost for damages bothering on<br />

wire fraud, common law fraud,<br />

conversion, breach of contract<br />

and civil conspiracy.<br />

The charges also include<br />

violation of the US securities exchange<br />

law by making material<br />

misstatements of fact related to<br />

a filing with the Securities and<br />

Exchange Commission.<br />

The case has been assigned<br />

to Judge Katharine H. Parker with<br />

Continues on page 45<br />

Back row - L-R: Jakaya Mrisho Kikwete, Tanzania president; Aliko Dangote, bride’s father/president, Dangote<br />

Industries Limited; Yakubu Gowon, former head of state; M.D. Abubakar, former IGP/groom’s father; Bukola<br />

Saraki, Senate president, with his wife Toyin.<br />

Front row - L-R: Olusegun Obasanjo, former president, and the couple, Jamil and Fatima Abubakar, at their<br />

wedding reception in Lagos.<br />

Shareholders smile<br />

as dividends surge<br />

36% to N412.96bn<br />

...GSK, Zenith Bank have<br />

highest yields<br />

BALA AUGIE<br />

Final dividend payments<br />

by Nigerian firms have<br />

garnered momentum in<br />

a sign of economic recovery as<br />

20 of them have rewarded their<br />

shareholders with N412.96 bil-<br />

Continues on page 46<br />

Debt recovery: National<br />

Assembly to give AMCON<br />

more powers<br />

MICHEAL ANI<br />

Chairman of House of Representatives<br />

Committee<br />

on Banking and Currency,<br />

Jones Chukwudi Onyereri has<br />

disclosed that the House of<br />

Continues on page 46<br />

Inside<br />

Full speech by Bill<br />

Gates at the Special<br />

session of the<br />

National Economic<br />

Council<br />

P. 32<br />

UBA reports PBT<br />

of N105.3bn in<br />

2017 with growing<br />

contribution<br />

from Africa<br />

P. 44


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Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

10 BUSINESS DAY<br />

C002D5556<br />

COMMENT<br />

BASHORUN J.K RANDLE<br />

Randle is Chairman/Chief<br />

ExecutiveJK Randle Professional<br />

Services Chartered Accountants<br />

•Continued from last week<br />

That is a sharp contrast to<br />

what currently prevails. It was<br />

Senator Shehu Sani of Kaduna<br />

Central who spilled the beans:<br />

“Nigerian Senators Receive<br />

N13.5 Million ‘Running Cost’ Every<br />

Month”<br />

“Mr. Shehu Sani, Senator representing<br />

Kaduna Central Senatorial District in<br />

the National Assembly has revealed he<br />

and his colleagues receive N13.5 million<br />

monthly as running cost.<br />

The revelation by the Senator was<br />

the first time a member of the National<br />

Assembly will confirm speculations that<br />

Nigerian senators are earning N41.5 million<br />

quarterly as a running cost.<br />

The Kaduna Senator who made the<br />

revelation in an interview he granted to<br />

The NEWS magazine said the running<br />

cost was in addition to the over N700,000<br />

monthly consolidated salary and allowances<br />

of each member of the Senate.<br />

The Senator said, “I think what we can<br />

say is that the running cost of a senator is<br />

N13.5 million every month,” the Senator<br />

said in response to the question on alleged<br />

bogus salaries and allowances of<br />

Nigerian lawmakers.<br />

According to him, while there is no<br />

specific instruction on what the fund<br />

should be used for, lawmakers must<br />

provide receipts to back up their expenses<br />

from the running costs. He added that<br />

comment is free<br />

Send 800word comments to comment@businessdayonline.com<br />

Lagos and Kano ruled the airwaves and the railways<br />

the running cost is in addition to funds<br />

earmarked for each senator for constituency<br />

projects.<br />

“But what I am saying is that that<br />

money (N13.5 million per month) must<br />

be receipted for what you do with it. But<br />

what you are given to go and spend without<br />

any accountability is N750,000.00.<br />

The constituency project itself is<br />

given on a zonal basis and almost every<br />

Senator will go with a constituency fund<br />

of about N200 million, but it is not the<br />

cash that is given to you.<br />

You will be told that you have N200<br />

million with an agency of government<br />

for which you will now submit projects<br />

equivalent to that amount. And it is that<br />

agency of government that will go and<br />

do those projects for you.<br />

Now, the corruption comes when<br />

the projects are not done and the money<br />

is taken. But right now, it is difficult to do<br />

that because NGOs and transparency<br />

groups have come into it. They track<br />

every allocation made to you and where<br />

they are being used.<br />

So, it’s becoming difficult for what<br />

used to happen in the past to happen<br />

now.<br />

But I can tell you that I would love a<br />

situation where we do away with running<br />

costs, constituency projects and<br />

leaves senators and members of House<br />

of Reps with salaries.<br />

And also, the public should be informed<br />

that nobody should come to any<br />

senator’s house asking for any kobo. That<br />

also would be helpful.<br />

There are issues that we need to<br />

understand. First, I don’t believe that<br />

members of the National or even state<br />

assemblies should be involved in carrying<br />

out what is called constituency<br />

projects.<br />

When people are elected into the<br />

National Assembly, they should just be<br />

involved in law making, raising motions,<br />

But I can tell you that I<br />

would love a situation<br />

where we do away with<br />

running costs, constituency<br />

projects and leaves<br />

senators and members<br />

of House of Reps with<br />

salaries.<br />

bills and also performing oversight functions.<br />

But we live in a society where people<br />

cannot differentiate between the legislators<br />

and the executive.<br />

When the people come to you, they<br />

want you to build roads, dig boreholes,<br />

build hospitals, schools, give money, pay<br />

school fees for them. Now, if we have a<br />

society in which people will stop asking<br />

legislators to do those things, then there<br />

is no need (for the allowances) But funny<br />

enough, if you are very active in the National<br />

Assembly in making laws and you don’t<br />

embark on projects in your constituency,<br />

you cannot in any way be appreciated by<br />

the people you are there to serve because<br />

the electorates in United States are different<br />

from the electorates in the United States<br />

and Africa.<br />

We live in an underdeveloped society<br />

with a lot of poverty, misery and wants.<br />

What people want is for you to address<br />

those basic fundamental issues that affects<br />

their lives.<br />

If we can be done with that, it would<br />

be okay. Now, you are talking of bogus<br />

salaries and bogus allowances – there are<br />

three steps you need to consider – the first<br />

has to do with the fact when you represent<br />

the people, expectations arose from your<br />

immediate and the larger constituencies.<br />

But I agree with you that the salaries<br />

and allowances of lawmakers should not<br />

be discreet, but what is discreet about<br />

it when you can write to Resource and<br />

Fiscal Mobilization Commission to get<br />

everything about what a senator earns?<br />

The only money you are not expected<br />

to account for is your salary and the salary<br />

of a senator is about N750, 000.00<br />

per month. The other one, the running<br />

cost of office must be accounted for. You<br />

must provide a receipt for every expense<br />

you make.”<br />

Senator Shehu Sani has added an<br />

addendum:<br />

“I decided to burst it open. It was a<br />

moral issue. The National Assembly is<br />

one of the most non-transparent organs<br />

of government. It pricked my conscience<br />

and I decided to burst the bubble and<br />

open the National Assembly to public<br />

scrutiny.”<br />

It was not until just before Independence<br />

that the “LEGCO Flats” were built on<br />

Victoria Island, Lagos to accommodate<br />

parliamentarians who would meet for<br />

only a few weeks in a year. Houses were<br />

built for Ministers in Ikoyi. The contractor<br />

was Cappa & DÁlberto and the houses<br />

have endured the test of time. They are<br />

iconic buildings.<br />

The parliamentarians from the North<br />

found it convenient to assemble in Kano<br />

for the three-day journey to Lagos by train.<br />

Occasionally, they came by car.<br />

The riots which erupted in Kano in<br />

1953 took the British government by<br />

surprise.<br />

Here is the account of Mr. John-<br />

Lyndon:<br />

“The Kano riot of 1953 refers to the<br />

riot, which broke out in the ancient city of<br />

Kano, located in Northern Nigeria, in May<br />

1953. The nature of the riot were clashes<br />

between Northerners who were opposed<br />

to Nigeria’s Independence and Southerners<br />

made up of mainly the Yorubas and<br />

the Igbos who supported immediate<br />

independence for Nigeria. The riot that<br />

lasted for four days claimed many lives<br />

of the Southerners and Northerners and<br />

many others were wounded.<br />

The remote cause of the riot was the<br />

strained relationship between the Northern<br />

and Southern political leaders over<br />

the issue of self-government in 1956. This<br />

strained relationship started with a 1953<br />

motion for self-government for Nigeria in<br />

1956 tabled in the House of Representatives<br />

by a member of the Action Group<br />

(AG), Chief Anthony Enahoro. The Northerners<br />

did not accept the motion. The<br />

leader of the Northern People’s Congress<br />

(NPC) and the Sardauna of Sokoto, Alhaji<br />

Ahmadu Bello, in a counter-motion, replaced<br />

“in the year 1956” with the phrase<br />

“as soon as practicable”. Another Northern<br />

member of the House moved a motion for<br />

adjournment, a motion which Southern<br />

members of AG and the National Council<br />

of Nigeria and the Cameroons (NCNC)<br />

viewed as delay tactics. All the AG and<br />

NCNC members in the house walked out<br />

as a result of the adjournment motion.<br />

When the Northern delegates left the<br />

House, they were confronted by hostile<br />

crowds in Lagos who insulted, jeered<br />

and called them all sorts of names.<br />

Members of the Northern delegation<br />

were embittered and in their “Eight Point<br />

Programme” in the Northern Regional<br />

Legislative House, they sought for secession.<br />

The last straw that broke the camel’s<br />

back was the tour by a delegation of<br />

the AG and NCNC led by Chief Samuel<br />

Akintola. That tour which was aimed at<br />

campaigning for self-government acted<br />

as the immediate cause of the Kano riot.<br />

It sparked off a chain of disorder that<br />

culminated in the riot. The riot took place<br />

at Sabon Gari an area predominantly occupied<br />

by southern Nigerians.<br />

Send reactions to:<br />

comment@businessdayonline.com<br />

AMAMCHUKWU OKAFOR<br />

Amamchukwu Okafor is of the research<br />

department, Lagos Business School and<br />

writes via amam.okafor@gmail.com<br />

I<br />

refer to Boyonomics as the<br />

ideas of Henry Boyo, a Nigerian<br />

who has persistently<br />

contested the monetary<br />

framework of the Central Bank<br />

of Nigeria (CBN) since the turn<br />

of the millennium. Boyo’s ideas<br />

build on the condition in the foreign<br />

exchange market where the<br />

CBN is the single monopolist. The<br />

CBN captures the dollar revenues<br />

of the state, converts at a unilateral<br />

rate against the Naira, before<br />

disbursing to the arms of governments,<br />

MDAs and Bureau De<br />

Change (BDC). This is equivalent<br />

to minting of naira notes (naira<br />

flood). Because the dollar revenue<br />

which has been captured by the<br />

CBN via its monopoly stance creates<br />

dollar scarcity, there is a constant<br />

devaluation pressure against<br />

the naira relative to the dollar. So<br />

to ease the pressure on the naira<br />

following the naira flood, the CBN<br />

intervenes – in the money market<br />

– with a ‘mop-stick’ by exchanging<br />

promises-to-repay in order to<br />

clean up some naira liquidity.This<br />

monotonous routine has been the<br />

operational framework of the CBN<br />

that Boyo vehemently criticizes.<br />

He has endured cursory attention<br />

– if not outright disregard – by the<br />

relevant authorities.He proposed<br />

a system that issues dollar certificate<br />

to the statutory beneficiaries<br />

with which they would offer to<br />

Fear of float: Boyonomics revisited<br />

buy Naira in the open market<br />

such that it would be dollars<br />

chasing naira – the currency in<br />

demand gains value. But does it<br />

translate to value for the naira?<br />

Weaknesses in the Logic<br />

Boyonomics may not translate<br />

to increased value for the<br />

naira, rather to correct valuation<br />

of the naira at higher exchange<br />

rate! For clarity, take the currency<br />

as a tradable goodpaid for<br />

with goods/services: offering a<br />

currency in the open market –<br />

to compete –implies that it has<br />

some values driving its demand.<br />

The naira is mostly backed (indirectly)<br />

by the extractive industry<br />

which is the major foreign<br />

exchange earner, but the sector<br />

is also the base of the global<br />

production value chain; and<br />

since naira is not the currency<br />

in trade, the value derives from<br />

the foreign reserves. It becomes<br />

glaring that the naira, beyond<br />

the territorial bound in which it<br />

is a legal tender, is not as worthy<br />

as the digitsinscribed on it. This<br />

implies that the statutory beneficiaries,<br />

who bear these dollar<br />

warrants, negotiating from a<br />

position of strength, would demand<br />

more naira for each dollar<br />

under the liberal framework, and<br />

the banks,tempted to increase<br />

their stock of valuable dollars,<br />

would comply! Hence, under<br />

the liberalized foreign exchange<br />

market, the correct naira valuation<br />

would go under at the mercy of<br />

the dollars; and the economic woes<br />

of devaluation – eroded purchasing<br />

power, deplete foreign reserves<br />

and stagflation – would lead to<br />

suicides and revolution.<br />

Again, assuming the representatives<br />

of the statutory beneficiaries<br />

are sincere, they would<br />

recognise that the critical short<br />

supply of infrastructures requires<br />

dollar expenditure to close: they<br />

would therefore develop preference<br />

for higher dollar balances.<br />

This implies that only the dollar<br />

sum enough to meet the naira<br />

denominated recurrent expenditures<br />

would be offered in the<br />

foreign exchange market. On the<br />

private sector side, major exports<br />

are extractive based, industries<br />

require foreign input – implying<br />

that we depend largely on imports<br />

for processed goods. Allthese,<br />

denominated by our population<br />

make up huge dollar import bills<br />

which take tolls on the naira value.<br />

Why the CBN may not float<br />

DollarDebts: generally, developing<br />

countries are not able to borrow<br />

in their domestic currencies;<br />

and infrastructural gaps imply that<br />

they require huge dollar borrowings<br />

to buy foreign technologies to<br />

minimize gaps. These liabilities are<br />

denominated in foreign currencies<br />

whereas assets are denominated<br />

in naira. In the event of shocks,<br />

a depreciation in local currency<br />

could have a devastating balance<br />

sheet effect that dwarfs the assets<br />

side (in naira) relative to the liability<br />

side (in dollars), crippling<br />

the entire financial system. Also,<br />

it becomes even more expensive<br />

in terms of naira to repay foreign<br />

debts.<br />

Credibilityof the CBN: ensuring<br />

price stability is a statutory responsibility<br />

of the CBN. A credible<br />

central banker would want to stick<br />

to announcements about inflation<br />

targets. Therefore, the CBN, in a<br />

given period, sets a target on inflation<br />

under a loss minimization<br />

program. But because economic<br />

agents are rational, they would<br />

form expectations and engage in<br />

contracts which make the initial<br />

policy announcements of the<br />

monetary institution sub-optimal.<br />

Therefore, thecentral authority,<br />

in order to increase welfare<br />

(employment) along the Philips<br />

curve, deviates from announcement,<br />

creating surpriseinflation.<br />

This means that the exchange rate<br />

volatility in a float system has a<br />

pass-through effect on inflation<br />

and interest rates which challenges<br />

the credibility of the CBN<br />

to stick to rules on inflation target.<br />

Dollarization: floating the<br />

exchange rate would lead to massive<br />

devaluation of the domestic<br />

currency as we saw in the last<br />

attempt by the CBN to liberalize<br />

the market in 2016/2017. Foreign<br />

goodswould become more<br />

expensive, inflation bolts in: as<br />

the naira loses value, importers<br />

would develop preference for (increasingly)<br />

scarce dollarsso as to<br />

reduce the transaction costs of exchanging<br />

currencies. This would<br />

weaken even more the naira fiat,<br />

making way for the dollar as the<br />

currency in trade, superior to the<br />

naira. If this is the case, it weakens<br />

the ability of the CBN to use<br />

monetary instruments. There is<br />

the argument about the counterbalancing<br />

effect of devaluation<br />

which increases exports revenues<br />

via the price and quantity effect<br />

such that devaluation means well<br />

if the <strong>Mar</strong>shall-Lerner condition<br />

holds. But are we a net exporter<br />

by balance of trade?<br />

In conclusion, initial devaluation<br />

and uncertainty in real<br />

exchange rate bear significant<br />

output costs via reduction in investments.<br />

However, the essence<br />

of this argument is not to discredit<br />

the efforts and ideas of the man in<br />

almost twenty years, but rather<br />

to glorify his persistence with an<br />

objective response based on the<br />

principles of economics. It is possible<br />

for the CBN to run simulations<br />

based on the idea, followed<br />

by a trial depending on the results<br />

of the simulation. He deserves<br />

recognition, if not an award.<br />

Send reactions to:<br />

comment@businessdayonline.com


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

COMMENT<br />

C002D5556<br />

BUSINESS DAY<br />

11<br />

comment is free<br />

Send 800word comments to comment@businessdayonline.com<br />

A warning from the IMF on borrowing for productive investment<br />

GREGORY KRONSTEN<br />

Gregory Kronsten<br />

Head, Macroeconomic & Fixed<br />

Income Research<br />

Rex Tillerson, the then<br />

US secretary of state,<br />

made some punchy<br />

criticisms of Chinese<br />

lending policy in Addis<br />

on 08 <strong>Mar</strong>ch. This was his<br />

first, and last official trip to Africa.<br />

Without offering any examples, he<br />

opined that a sovereign borrower<br />

in difficulties with its loans from<br />

China can “lose control of its own<br />

infrastructure or its own resources<br />

through default”. For good measure,<br />

he added that Chinese investments<br />

“do not bring significant job<br />

creation locally”.<br />

We have seen some historic<br />

loan drafts between China<br />

and governments but will not be<br />

tempted into this highly sensitive<br />

territory. We can comment,<br />

however, on financing costs on the<br />

basis of the quarterly data releases<br />

from Nigeria’s Debt Management<br />

Office.<br />

Our simple calculations are<br />

based upon the stock of external<br />

debt mid-2017 and the total debt<br />

service for the year including<br />

principal repayments and service<br />

fees. The average cost for the year<br />

was 3.1 per cent, and that for<br />

Eurobonds predictably the most<br />

expensive at 5.0 per cent. The<br />

ratio for China was 3.7 per cent,<br />

for the World Bank’s International<br />

Development Agency (IDA, its soft<br />

loan window) and the African Development<br />

Fund 2.0 per cent, and<br />

for the African Development Bank<br />

1.3 per cent. These are reasonable<br />

estimates we stress, and do not allow<br />

for the timing within the year<br />

of disbursements and repayments.<br />

There were no principal payments<br />

on Eurobonds in 2017 for example<br />

but US$87m paid to the IDA.<br />

The overall cost for Nigeria is<br />

rising because it has tapped international<br />

capital markets three<br />

times in less than 18 months, and<br />

is likely to return to them. The<br />

FGN’s thinking is that it has to<br />

invest heavily in the infrastructure<br />

if it is to replace the rent-seeking<br />

economy with a model based on<br />

production, that its own resources<br />

for the task are clearly inadequate<br />

and that it must therefore borrow.<br />

Its external development partners<br />

such as the IDA and Exim Bank<br />

of China have risen to this challenge<br />

yet the FBN wants additional<br />

financing for the infrastructure.<br />

There is another reason for the<br />

Eurobond issuance, which is to<br />

We have no quarrel therefore<br />

with the thinking. With<br />

some local variations, this is<br />

how the East Asian countries<br />

transformed their economies,<br />

and made the leap<br />

from low income to middle<br />

income status. Heavy<br />

spending on the infrastructure<br />

helps to attract direct<br />

investment<br />

reduce overall debt servicing costs,<br />

and these partners do not have a remit<br />

to support the FGN’s successful<br />

policy of debt externalization.<br />

We have no quarrel therefore<br />

with the thinking. With some local<br />

variations, this is how the East Asian<br />

countries transformed their economies,<br />

and made the leap from low<br />

income to middle income status.<br />

Heavy spending on the infrastructure<br />

helps to attract direct investment.<br />

Nigeria’s investment ratio of<br />

17 per cent of GDP in 2017 is at least<br />

ten percentage points too low to<br />

achieve the desired transformation<br />

of the economy.<br />

The external debt stock has<br />

further to rise because the gaps<br />

in the infrastructure remain huge.<br />

To support this point, we can all<br />

pull figures from the local media<br />

and official projections. To take<br />

just two: the federal transportation<br />

ministry is said to be negotiating a<br />

loan of about US$15bn for the Port<br />

Harcourt-Maiduguri rail project,<br />

and policymakers have identified<br />

a funding gap of US$10bn per year<br />

for five years for the power sector.<br />

We urge patience therefore for the<br />

rebuilding of the infrastructure.<br />

We also add the caveat that due to<br />

political culture or for whatever<br />

other reason (and we will deliberately<br />

avoid this hornet’s nest), the<br />

government is encountering more<br />

resistance from vested interests to<br />

its plans for transformation than its<br />

East Asian counterparts did in the<br />

1980s and 1990s.<br />

Driven probably by the normalization<br />

of US monetary policy,<br />

the financial press and think-tanks<br />

have become preoccupied with the<br />

mounting external debt burdens<br />

of developing countries, both<br />

emerging and frontier. So a paper<br />

recently published by the Jubilee<br />

Debt Campaign noted that their<br />

debt payments increased by 60<br />

per cent in the three years to 2017.<br />

Tellingly, IMF research shows that<br />

the median ratio for public debt/<br />

GDP in low income countries has<br />

risen from 34 per cent in 2013 to 47<br />

per cent in 2017. It also observed<br />

that in many cases the fiscal deficit<br />

widened and investment declined.<br />

As with all data and warnings<br />

for groups of countries, we have to<br />

drill down further. In Nigeria’s case,<br />

the debt stock is manageable, at between<br />

25 and 30 per cent of GDP in<br />

the worst scenario. Jubilee’s warning<br />

does apply however, which underpins<br />

the FGN’s agenda of debt<br />

externalization. The IMF’s warning<br />

is highly significant, too. The debt<br />

stock is set to increase across creditor<br />

categories (multilateral, China,<br />

other bilateral and commercial).<br />

The debt servicing bill should ease<br />

if the FGN successfully pursues its<br />

current strategy.<br />

As for what could go wrong,<br />

the oil price could crash again and<br />

the offshore portfolio community<br />

could exit en masse, triggering<br />

fresh pressure on the exchange rate<br />

and the balance of payments. Neither<br />

is our current expectation. The<br />

executive in the years ahead has to<br />

stick to its script: borrow because it<br />

has no choice if it is to pursue the<br />

stated agenda but spend productively.<br />

Failing which, it becomes<br />

another statistic for the Fund’s<br />

combination of wider deficits and<br />

lower investment.<br />

Send reactions to:<br />

comment@businessdayonline.com<br />

How Transparency International’s corruption perceptions fail<br />

DAN STEINBOCK<br />

Dr Dan Steinbock is the founder of<br />

Difference Group and has served as<br />

research director at the India, China<br />

and America Institute (USA) and visiting<br />

fellow at the Shanghai Institutes for<br />

International Studies (China) and the<br />

EU Center (Singapore). For more, see<br />

https://www.differencegroup.net/<br />

In the most recent Corruption<br />

Perceptions Index (CPI), the<br />

rankings are topped, as often<br />

before, by the tiny Nordic<br />

countries, Western Europe, the<br />

US and advanced Asia, including<br />

Singapore, Hong Kong and Japan.<br />

Yet, anomalies seem to abound.<br />

South Korea’s performance improved<br />

the most when the country<br />

suffered from bribery and corporate<br />

scandals associated with the<br />

now-impeached president Park<br />

Geun-hue. Despite more than<br />

100,000 anti-corruption indictments,<br />

China’s ranking has improved<br />

slowly and it is still ranked<br />

far behind Romania, Senegal, and<br />

Belarus, which may come as a<br />

great surprise to foreign multinationals<br />

and expats operating in<br />

these countries.<br />

The Philippines was seen as<br />

least corrupt when the drug trade<br />

thrived, corruption soared and US<br />

observers warned about the Philippines’<br />

plunge toward a “narco<br />

state.” When the Duterte government<br />

began its fight against corruption,<br />

the ranking fell to its<br />

worst in years. In turn, Myanmar<br />

has steadily improved its ranking,<br />

while more than half a million<br />

Rohingyas have fled persecution<br />

to neighboring Bangladesh.<br />

These anomalies and others<br />

cannot be easily explained away.<br />

They are systemic.<br />

Methodological bias<br />

While corruption may be too<br />

complex to be captured by a single<br />

score, CPI is often used precisely<br />

for that purpose. Also, no distinction<br />

is made in terms size. As a<br />

result, corruption and the ways<br />

to overcome it are seen as pretty<br />

much identical in both India and<br />

China, and in Suriname (560,000)<br />

and Solomon Islands (600,000).<br />

Moreover, the CPI does not<br />

measure actual corruption, due<br />

to challenges in measurement, but<br />

perceived corruption, which adds<br />

to bias. If history is written by the<br />

victors, then corruption perceptions<br />

are framed by the world’s<br />

leading media companies, most<br />

of which are headquartered in the<br />

US and Western Europe.<br />

Analysts and investors routinely<br />

use the CPI for longitudinal<br />

purposes. Yet, the methodology<br />

was changed only in 2012 to allow<br />

for comparison across time. And<br />

even these changes leave questions<br />

about such comparisons.<br />

In the case of Nigeria, the largest<br />

African economy, the CPI suggests<br />

that the country had some of its<br />

least corrupt years under President<br />

Jonathan Goodluck, even<br />

though that’s when illicit capital<br />

outflows soared.<br />

In theory, CPI tries to bypass<br />

the bias problem by including<br />

“different” perceptions. The problem<br />

is that the sources appear<br />

different but perceptions aren’t.<br />

In practice, most come from the US<br />

and few European countries, including<br />

the World Bank, the Economist<br />

Intelligence Unit, Freedom House,<br />

Global Insights, and Political and<br />

Economic Risk Consultancy. In the<br />

emerging world, these sources are<br />

often - and for a good reason - criticized<br />

for US and Western bias.<br />

Most problematically, the surveys<br />

focus largely on emerging<br />

countries, yet the latter are systematically<br />

excluded as sources,<br />

which do not include even a single<br />

think-tank or consultancy operating<br />

in emerging and developing economies.<br />

It is as if “diversity” would<br />

be redefined as different shades of<br />

white rather than as a rainbow.<br />

Internal divides<br />

The CPI was developed by the<br />

Transparency International (TI),<br />

an international non-governmental<br />

organization, which seeks to combat<br />

global corruption. Though based in<br />

Germany, TI’s key founders were<br />

not only Germans but represented<br />

the World Bank, US military intelligence,<br />

US multinationals and<br />

industrialists.<br />

Intriguingly, even TI lacks internal<br />

consensus, as evidenced by<br />

recent drift between TI and its US<br />

affiliate. In 2012, Transparency International<br />

USA gave Hillary Clinton<br />

its Integrity Award, even as the US<br />

State Department issued a subpoena<br />

to the Clinton Foundation, which<br />

had raised $2 billion in two decades.<br />

Since 2000s, the Foundation had<br />

been criticized for lack of transparency,<br />

odd deals with resource-rich<br />

oligarchs and the highly controversial<br />

Blackwater Worldwide. In the<br />

Clinton deals, billions of dollars<br />

exchanged hands, but only a fraction<br />

ended in the final destination.<br />

In 2013, TI members called for<br />

“Edward Snowden’s recognition as<br />

a whistleblower.” TI-USA rejected<br />

the idea. A year later, TI-USA honored<br />

Raytheon, a leading Pentagon<br />

defense contractor, for its “efforts<br />

to prevent corruption.” In 2015,<br />

Bechtel, a global nuclear-security<br />

giant, won TI-USA’s corporate<br />

leadership award. As questionable<br />

corporate capital soared in<br />

TI-USA, corruption perceptions<br />

increased around TI in both the<br />

US and Germany.<br />

By January 2017, the open conflict<br />

between TI and its US arm<br />

led TI to strip its US affiliate of its<br />

accreditation. Today, TI-USA has<br />

renamed itself as “Coalition for<br />

Integrity,” and its major funders include<br />

US defense contractor giants<br />

(Lockheed <strong>Mar</strong>tin, and Raytheon)<br />

and security-nuclear conglomerates<br />

(Bechtel), financial interests<br />

(Citigroup, Deloitte) and multinationals<br />

(GE, Google, Johnson &<br />

Johnson, PepsiCo, Pfizer).<br />

Private-sector corruption<br />

excluded<br />

Oddly enough, the CPI only<br />

measures “public-sector” corruption.<br />

That’s a striking limitation<br />

and one that is routinely ignored<br />

by most who rely on the Index. The<br />

implications are many.<br />

According to OECD, public<br />

sector employment is highest in<br />

Nordic countries (25%-35%), and<br />

countries with strong state (France<br />

and Russia 28%- 30%). In advanced<br />

economies, public sector has a lower<br />

role (15%-22% in UK, US and Germany).<br />

Conversely, private sector<br />

activities are significant in Nordic<br />

countries and state-led economies<br />

(60-75%), but higher in major advanced<br />

economies (over 80%).<br />

Since the private sector is excluded,<br />

Sweden had one of the best<br />

CPI scores in 2015, even though Telia-<br />

Sonera was facing serious bribery allegations.<br />

Despite the massive LIBOR<br />

scandal, the US and UK rankings did<br />

not take major hits. The same goes for<br />

corporate scandals from WorldCom<br />

and Enron to Lehman and AIG. Similarly,<br />

recent Volkswagen scandal failed<br />

to tarnish Germany’s high position.<br />

In 2015 Transparency International<br />

actually accepted millions of dollars<br />

from Siemens, which has paid some of<br />

the largest corporate corruption fines<br />

for international bribes, and other<br />

companies criticized for corruption.<br />

Illicit financial capital flows excluded<br />

The private-sector exclusion means<br />

that the activities of multinationals<br />

dominating developing economies<br />

are ignored, although they also involve<br />

huge illicit financial flows to and from<br />

developing countries. The magnitude<br />

of estimated illicit inflows in the latest<br />

year for available data (2014) ranged<br />

from $1.4 to $2.5 trillion.<br />

Yet, corruption indices typically<br />

rank developing countries, which suffer<br />

the most from these illicit flows, as<br />

the most corrupt, whereas advanced<br />

economies, which often benefit the<br />

most from such flows, are deemed the<br />

least corrupt.<br />

Transparency International operates<br />

in a very important area. There is<br />

a huge, pressing need for an effective<br />

multidimensional corruption indicator.<br />

But the current Index is too<br />

prejudiced for informed analysis,<br />

too biased in its exclusions and<br />

too hypocritical in its professed<br />

neutrality.<br />

•The original, slightly shorter<br />

commentary was released by<br />

South China Morning Post on<br />

<strong>Mar</strong>ch 16, <strong>2018</strong><br />

Send reactions to:<br />

comment@businessdayonline.com


12 BUSINESS DAY C002D5556 Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

EDITORIAL<br />

PUBLISHER/CEO<br />

Frank Aigbogun<br />

EDITOR-IN-CHIEF<br />

Prof. Onwuchekwa Jemie<br />

EDITOR<br />

Anthony Osae-Brown<br />

DEPUTY EDITORS<br />

John Osadolor, Abuja<br />

Bill Okonedo<br />

NEWS EDITOR<br />

Patrick Atuanya<br />

EXECUTIVE DIRECTOR,<br />

SALES AND MARKETING<br />

Kola Garuba<br />

EXECUTIVE DIRECTOR, OPERATIONS<br />

Fabian Akagha<br />

EXECUTIVE DIRECTOR, DIGITAL SERVICES<br />

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SUBSCRIPTIONS MANAGER<br />

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CIRCULATION MANAGER<br />

John Okpaire<br />

GM, BUSINESS DEVELOPMENT (North)<br />

Bashir Ibrahim Hassan<br />

GM, BUSINESS DEVELOPMENT (South)<br />

Ignatius Chukwu<br />

HEAD, HUMAN RESOURCES<br />

Adeola Obisesan<br />

Nigeria’s refusal to sign the AfCFTA<br />

Nigeria was, once<br />

again, absent on<br />

a momentous day<br />

in African history<br />

when 44 African<br />

countries signed the African<br />

Continental Free Trade Area<br />

(AfCFTA) at a summit of the African<br />

Union in Kigali, Rwanda.<br />

The AfCFTA seeks to remove<br />

import duties and non-tariff<br />

barriers among member countries<br />

and could bring together<br />

over 1.2 billion people into one<br />

market, boost intra-African<br />

trade, making it the biggest<br />

trade agreement since the<br />

formation of the World Trade<br />

Organisation in 1995.<br />

Unfortunately, 10 members<br />

of the African Union’s 55<br />

member states, including its<br />

two largest economies – Nigeria<br />

and South Africa - did not<br />

sign the agreement, taking<br />

the shine off the momentous<br />

event. South African president,<br />

Cyril Ramaphosa, unlike Nigeria’s<br />

president, was present<br />

at the summit and stated the<br />

commitment of his country<br />

to the agreement once the<br />

necessary legal processes were<br />

undertaken.<br />

Curiously, Nigeria’s reasons<br />

for refusing to sign the trade<br />

treaty, in which its international<br />

trade policy expert was the lead<br />

negotiator, was that it does not<br />

want to become a dumping<br />

ground for goods from African<br />

and European countries, who<br />

would use smaller countries to<br />

gain free entry into the Nigerian<br />

market. “We will not agree to<br />

anything that will undermine local<br />

manufacturers and entrepreneurs,<br />

or that may lead to Nigeria<br />

becoming a dumping ground for<br />

finished goods,” President Buhari<br />

tweeted on Wednesday. The<br />

special adviser to the president<br />

on Media and publicity, Femi<br />

Adesina added subsequently<br />

that the president said the country<br />

is yet to fully understand the<br />

economic and security implications<br />

of the agreement.<br />

This only brings to focus the<br />

embarrassing lack of coordination<br />

within the Federal Government<br />

and its agents. Does it mean<br />

that on such an important issue,<br />

policy papers and memoranda<br />

had not been previously read by<br />

the President and Vice President<br />

before the crucial FEC meeting<br />

that ratified the treaty? Does it<br />

mean that the Vice President<br />

did not consult the President to<br />

know his thoughts before leading<br />

the entire cabinet to ratify a<br />

treaty with which their Principal<br />

disagreed?<br />

What do we make of the fact<br />

that the globally-respected<br />

trade policy expert, Ambassador<br />

Chiedu Osakwe, who led Nigeria’s<br />

negotiations and played a<br />

very significant role in bringing<br />

African countries to achieve this<br />

momentous milestone, must<br />

now be extremely embarrassed<br />

by his President who is now making<br />

near-xenophobic statements<br />

about this African trade treaty.<br />

And what exactly are Nigerian<br />

manufacturers afraid of? What<br />

have we been for imports from<br />

China and South East Asia all<br />

these decades? Which African<br />

country has a greater manufacturing/trade<br />

capacity than<br />

Nigeria outside South Africa?<br />

What does South Africa “dump”<br />

in Nigeria that harms us? The<br />

treaty is also not merely about<br />

goods. What about services?<br />

What about intellectual property?<br />

These are areas in which<br />

Nigeria does enjoy significant<br />

advantages. However, with<br />

this refusal to ratify the African<br />

Trade Treaty, we have effectively<br />

ranged ourselves against all our<br />

major trading partners. This is almost<br />

like our own Brexit, except<br />

that the President’s decision to<br />

act against the advice of his entire<br />

cabinet lacks a credible basis.<br />

Does the president realise<br />

that in Africa, it has, perhaps,<br />

the largest number of its citizens<br />

living and doing business in<br />

other African countries? Does<br />

he realise that perhaps, beside<br />

South Africa, Nigeria has the<br />

largest number of its banks and<br />

companies pursuing internationalisation<br />

programmes in<br />

other African states? What will<br />

become the fate of Nigeria’s biggest<br />

industrialist, the Dangote<br />

group, now operating in over<br />

fourteen African countries and<br />

seeking to dominate the African<br />

market?<br />

Perhaps, the president needs<br />

to consider the benefit of the<br />

AfCFTA to Nigeria and Africa as<br />

a whole. The AfCFTA has the potentials<br />

to permanently change<br />

Africa’s fortune from dependence<br />

on assistance to increased<br />

trade. Intra-African trade, which<br />

currently stands at only 10 percent,<br />

is the lowest in the world<br />

and one of the chief reasons for<br />

Africa’s backwardness. Our salvation<br />

ultimately lies in trading<br />

amongst ourselves and consequently<br />

developing our economies<br />

and not in isolationism as<br />

Nigeria is tending towards.<br />

EDITORIAL ADVISORY BOARD<br />

Dick Kramer - Chairman<br />

Imo Itsueli<br />

Mohammed Hayatudeen<br />

Albert Alos<br />

Funke Osibodu<br />

Afolabi Oladele<br />

Dayo Lawuyi<br />

Vincent Maduka<br />

Wole Obayomi<br />

Maneesh Garg<br />

Keith Richards<br />

Opeyemi Agbaje<br />

Amina Oyagbola<br />

Bolanle Onagoruwa<br />

Fola Laoye<br />

Chuka Mordi<br />

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Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

BUSINESS DAY<br />

13


14 BUSINESS DAY C002D5556<br />

Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

In Association With<br />

Drug regulation<br />

Getting medicines to market faster<br />

The drug regulator in America is innovating rapidly. Good<br />

REGULATORS can be<br />

both a help and a hindrance<br />

to the medical<br />

industry. A strong regulator<br />

increases confidence in drugs<br />

and devices, reassuring payers<br />

and patients alike. That explains<br />

why the Chinese drugs<br />

regulator recently adopted<br />

tougher standards. Yet rules<br />

can also impose too great a<br />

burden on firms, slowing innovation<br />

and reducing competition.<br />

The head of America’s<br />

Food and Drug Administration<br />

(FDA), Scott Gottlieb,<br />

has spent his first year in office<br />

tilting the balance away<br />

from rulemaking and towards<br />

efficiency. Some criticise Mr<br />

Gottlieb, who once worked<br />

in the industry, for still being<br />

its accomplice. Instead, he<br />

should be applauded. Nobody<br />

expects the FDA to solve<br />

America’s messed-up healthcare<br />

system, but its goal—of<br />

making it cheaper and easier<br />

for promising drugs to reach<br />

patients—is a step in the right<br />

direction (see article).<br />

One thing Mr Gottlieb has<br />

been doing less of is issuing<br />

new regulations, which have<br />

dipped to a two-decade low.<br />

Instead, he has concentrated<br />

on two broad areas that will<br />

help the development of therapies<br />

and medicines. The first<br />

is to adapt the FDA to new<br />

technologies. There is a clinical<br />

revolution in such areas<br />

as gene therapy and printed<br />

organs. The FDA is keen to<br />

harness the potential of new<br />

technologies, whether that<br />

means using information from<br />

wearables in drug trials or enabling<br />

faster approval for new<br />

digital therapeutics.<br />

The second focus has been<br />

on getting more drugs to market.<br />

The agency has approved<br />

a record number of generic<br />

drugs in the past year. By increasing<br />

the amount of competition,<br />

the idea is to bring the<br />

price of copycat drugs down.<br />

The profits of Indian generics<br />

firms, which have been<br />

making hay in the American<br />

market, are expected to suffer<br />

as a result.<br />

Under Mr Gottlieb, the FDA<br />

is also doing its best to limit the<br />

extraordinary burden of introducing<br />

new drugs. The average<br />

cost of bringing a new medicine<br />

to market has jumped<br />

to $2bn, up from $1.2bn in<br />

2010. After repeated expensive<br />

failures, many firms have cut<br />

funding for treatments for neurodegenerative<br />

diseases such<br />

as Alzheimer’s. In response,<br />

the FDA wants to find ways<br />

to accelerate clinical trials. It<br />

is also looking at lowering the<br />

standard of efficacy, though<br />

not safety, which is required to<br />

approve certain treatments. Instead<br />

of having to demonstrate<br />

that long-term outcomes, such<br />

as cognitive function for dementia,<br />

are improved, a drugmaker<br />

might have to show only<br />

an improvement in a biological<br />

proxy for the disease, such as<br />

the presence of toxic proteins<br />

in the brain. This approach<br />

is already in place for cancer<br />

drugs. Its wider adoption ought<br />

to encourage innovation.<br />

Inevitably, accelerating the<br />

path to market for pharma<br />

firms involves a trade-off. It<br />

may well be better to give people<br />

the option of a treatment<br />

in five years whose efficacy<br />

is known with 80% certainty<br />

than to wait 20 years for one<br />

with 99% certainty. But the shift<br />

increases the risk that money<br />

will be spent on new drugs that<br />

end up being no more effective<br />

than existing ones. This risk is<br />

particularly high in America,<br />

where the idea of paying for<br />

medicines on the basis of their<br />

actual performance is seen as<br />

an affront to patient choice. To<br />

get the benefit of faster innovation<br />

while minimising the risk<br />

of unnecessary spending, that<br />

attitude has to change. The FDA<br />

is doing its bit to speed innovation.<br />

But buyers of drugs need<br />

to do more to tie payments to<br />

health outcomes. The reality of<br />

paying too much for any new<br />

medical technology that does<br />

not work well is that there is less<br />

to spend on the things that do.<br />

Of sanity and sanitation<br />

Bangladesh shows<br />

how to keep<br />

children alive<br />

First, dig pit latrines. Then persuade<br />

people to use them<br />

FOR adventurous travellers, it is<br />

merely an embarrassing nuisance.<br />

But among poor people<br />

diarrhoea is a killer. As many as half<br />

a million children are thought to die<br />

every year from enteric diseases,<br />

including cholera and dysentery.<br />

Repeated infections also weaken<br />

them, laying them open to attack<br />

from other killers such as pneumonia.<br />

Diarrhoea can even change a<br />

population’s appearance. One reason<br />

Indian children are shorter than<br />

sub-Saharan African children from<br />

families of similar means is that they<br />

fall sick more often.<br />

So it is delightful to report that one<br />

of Asia’s poorest countries, Bangladesh,<br />

is making huge progress against<br />

this scourge (see article). In one part<br />

of the country with particularly good<br />

data, deaths from diarrhoea and<br />

other enteric diseases have fallen by<br />

90% in the past two decades. Along<br />

with a far-reaching vaccination<br />

programme and steady economic<br />

growth, that has helped drive down<br />

the number of childhood deaths.<br />

In 1990 the under-five death rate in<br />

Bangladesh was 54% higher than the<br />

world average. Now it is 16% lower.<br />

In a country with more than 160m<br />

inhabitants, this represents a vast<br />

decline in human misery. And Bangladesh’s<br />

success holds lessons for<br />

other poor countries that are trying<br />

to beat back disease. The first is that<br />

cheap, simple, imperfect solutions<br />

are often good enough.<br />

In an ideal world, with limitless<br />

cash and universally good governance,<br />

everybody would drink chlorinated<br />

water out of taps and flush their<br />

sewage through pipes into treatment<br />

plants. In the real world, however, you<br />

can go a long way with half-measures.<br />

Bangladeshi villages are studded with<br />

small pit latrines and tubewells for<br />

water. Most are built by the house-<br />

Continues on page 15


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

C002D5556<br />

BUSINESS DAY<br />

15<br />

In Association With<br />

Russia under Putin<br />

The struggle for Russia is just beginning<br />

Although Vladimir Putin is at the height of his power, Russia’s elites are already jockeying for position<br />

THE ballot-stuffing, blatant<br />

and in full view<br />

of the cameras, only<br />

underlined Vladimir Putin’s<br />

impunity. The official result<br />

on <strong>Mar</strong>ch 18th gave him 77%<br />

of the vote, on a turnout of<br />

almost 70%. But the unofficial<br />

one would not have been very<br />

different. The election was not<br />

a genuine exercise of choice<br />

so much as a ritual acknowledgment<br />

of who holds power.<br />

After 18 years, Mr Putin is not<br />

just the president but the tsar.<br />

As important as last weekend’s<br />

vote, however, is the<br />

struggle to come. That will<br />

be over the future of Russia.<br />

And, as impregnable as Mr<br />

Putin looks, it begins today.<br />

Mr Putin cannot legally run<br />

again for president in 2024.<br />

Drawing on a mix of persuasion<br />

and brutal repression, he<br />

could force through changes<br />

to the constitution to let himself<br />

stand again, as Xi Jinping<br />

has just done in China. Or he<br />

may retire from his daily duties<br />

instead, as Deng Xiaoping<br />

did, in the hope of exerting<br />

power from behind the<br />

scenes. But then again, if Mr<br />

Putin starts to show a lack of<br />

resolve or cunning he could<br />

find himself pushed aside at<br />

the end of his term.<br />

Already the elites in Russia<br />

are jockeying for position. The<br />

outcome is highly uncertain.<br />

At worst, the country could<br />

yet embrace an even more extreme<br />

form of the nationalism<br />

that has defined the politics of<br />

Mr Putin. He portrays Russia<br />

as assailed by enemies, and<br />

argues that it has nothing<br />

to learn from foreign ideas<br />

like human rights and open<br />

democracy. That view has already<br />

fuelled a new cold war<br />

and led to rows over manipulated<br />

elections and political<br />

assassinations abroad. In<br />

Crimea, Ukraine and Syria it<br />

fuelled real wars.<br />

But there is an alternative.<br />

A rising elite in its 30s brought<br />

on, in part, by Mr Putin himself<br />

yearns for Russia to be a<br />

more “normal” country. For<br />

them much about his rule<br />

is archaic. They cringe at his<br />

conservative agenda, his traditional<br />

values, Orthodoxy<br />

and isolation.<br />

This new generation will<br />

play a central part in shaping<br />

what comes after Mr Putin’s<br />

next term. Our briefing this<br />

week describes its members,<br />

who range from regional gov-<br />

ernors and businesspeople to<br />

independent politicians. They<br />

have their differences and<br />

their rivalries, naturally, but<br />

they also have more in common<br />

with each other than<br />

they do with the elders who<br />

are their bosses. They tend to<br />

see the end of the cold war in<br />

the 1990s not as Russia’s loss,<br />

but as a victory for common<br />

sense. Well-travelled and<br />

informed, they do not suffer<br />

from the inferiority complex<br />

that led Mr Putin’s generation<br />

to copy the West and, later,<br />

lash out against it. Their parents<br />

grew up with shortages<br />

and measure success in terms<br />

of money. They take material<br />

comfort for granted. Having<br />

watched as public life has<br />

been corrupted by Mr Putin’s<br />

lies, propaganda and graft,<br />

they see the benefits of rules,<br />

laws and transparency.<br />

During the next six years<br />

of Mr Putin’s presidency, this<br />

elite will assert itself in every<br />

walk of life. Think-tanks and<br />

journalism increasingly reflect<br />

their ideas. Six of Russia’s<br />

85 governors are under 40.<br />

Mr Putin has started installing<br />

young technocrats in the<br />

Kremlin and government<br />

ministries.<br />

He may hope that the technocrats’<br />

loyalty will preserve<br />

his legacy. But Russia lacks<br />

the institutions that transfer<br />

power peacefully from one<br />

leader to the next. A departing<br />

leader cannot be confident<br />

that he and his family will<br />

be safe. A new leader cannot<br />

use the debased currency of<br />

elections to establish his legitimacy.<br />

Thus, even those Mr<br />

Putin favours may well end<br />

up rejecting him, rather as he<br />

consolidated his position by<br />

rejecting his predecessor, Boris<br />

Yeltsin, who first brought<br />

him to power.<br />

There is no guarantee that<br />

the coming generation will<br />

succeed in making Russia<br />

more normal. Russian history<br />

is shot through with failed<br />

attempts to find a settlement<br />

with the West—in which the<br />

country has veered between<br />

aspiration and hostility. The<br />

fortress mentality that Mr<br />

Putin has fostered has instilled<br />

feelings of jealousy,<br />

resentment and victimisation.<br />

The main opposition<br />

leader, Alexei Navalny, who<br />

was barred from last weekend’s<br />

election, has said that<br />

his biggest enemy is not Mr<br />

Putin and his cronies, but<br />

the debilitating conviction<br />

among ordinary Russians of<br />

their own powerlessness. If<br />

the security services attempt<br />

to exploit fear in order to cling<br />

to their privileges and their<br />

power, the Russian people<br />

may behave as their willing<br />

accomplices.<br />

It’s everyone’s business<br />

The struggle for Russia will<br />

be determined inside Russia.<br />

But the West has a part to<br />

play. It is worth remembering<br />

how the Soviet Union was<br />

undermined not just by the<br />

military might of the West, but<br />

also by its economic, cultural<br />

and moral appeal. It took<br />

decades for communism to<br />

crumble, but today’s Russia<br />

is economically weak and<br />

Mr Putin has a greater need<br />

to derive legitimacy from<br />

conflict at home and abroad.<br />

Even as the West targets<br />

him and his cronies with<br />

sanctions and protests at<br />

his aggressions, it therefore<br />

needs a counter-narrative for<br />

the Russian people. The aim<br />

should be to remain engaged<br />

with ordinary Russians while<br />

containing Mr Putin’s aggression,<br />

just as Western diplomats<br />

distinguished between<br />

the Soviet regime and its<br />

citizens. Even as the Kremlin<br />

restricts Russian contact with<br />

the West, the West should<br />

encourage it.<br />

That will not be easy. It<br />

is hard to punish Mr Putin<br />

without alienating all Russians.<br />

Cultivating the new<br />

elite could justify a purge by<br />

their enemies. And the West<br />

is less of a model than it was.<br />

Disillusion with the European<br />

Union and strife in America<br />

over the presidency of Donald<br />

Trump, which Mr Putin<br />

does his best to foment, have<br />

tarnished the West’s appeal.<br />

This week Mr Trump<br />

played into that weakness<br />

when he uncritically congratulated<br />

Mr Putin on his<br />

re-election, without raising<br />

Russia’s abuses at home and<br />

abroad. That was a mistake.<br />

The message that might is<br />

right only frustrates the rise<br />

of more open young Russians<br />

and justifies the repressive<br />

instincts of their opponents.<br />

This is bad not only for Russians<br />

but also for everyone<br />

else. Andrei Sakharov, a Russian<br />

Nobel prize-winning<br />

humanist and nuclear physicist,<br />

put it best. A country that<br />

violates the human rights of<br />

its own people, he argued,<br />

cannot be safe for the outside<br />

world.<br />

Bangladesh shows how to<br />

keep children alive...<br />

Continued from page 14<br />

holders themselves, or by labourers<br />

whom they pay out of their own<br />

pockets. Although the tubewells are<br />

often alarmingly close to the latrines,<br />

that seems to be fine. Researchers<br />

have found that germs do not travel<br />

far underground. What matters is<br />

having lots of water pumps and lots<br />

of toilets. The more convenient they<br />

are, the more people will use them.<br />

A second lesson is that hardware<br />

is not enough—the software of human<br />

behaviour is just as important.<br />

Bangladesh’s neighbour, India, has<br />

subsidised and built a great many<br />

latrines. Despite that effort (and although<br />

the country is roughly twice<br />

as wealthy as Bangladesh per head)<br />

many Indians continue to defecate in<br />

the open. Bangladesh’s government<br />

and charities have built latrines, too,<br />

but they have worked harder to stigmatise<br />

open defecation. Often they<br />

install latrines for the poor and then<br />

prod richer folk into following their<br />

example. A new, surprising, finding is<br />

that this works better than expecting<br />

people to copy their social superiors.<br />

Many lives have been saved by<br />

parents doing something simple.<br />

Beginning in the 1960s American<br />

military doctors and researchers<br />

in Dhaka developed a therapy for<br />

acute diarrhoea—a sweet, salty oral<br />

rehydration solution. This is now dirt<br />

cheap and widely available. At the<br />

last count, fully 84% of Bangladeshi<br />

parents with stricken children fed it<br />

to them (only a third saw a doctor).<br />

Thinly populated African countries<br />

are struggling to match that. One<br />

promising idea is to distribute the sachets<br />

along with Coca-Cola—which<br />

gets everywhere.<br />

Bog standard<br />

The simplest message is about<br />

the importance of basic hygiene.<br />

Bacteria often live on people’s hands,<br />

and multiply on food. A mother in a<br />

poor country who hand-feeds cool<br />

porridge to her infant can introduce<br />

many more germs than the nipper<br />

would get from drinking water from<br />

a tap. Randomised controlled trials<br />

in Bangladesh and elsewhere have<br />

shown that teaching mothers to wash<br />

their hands and reheat food can wipe<br />

out most bugs. The training is cheap.<br />

The benefits, in disease avoided and<br />

lives saved, are enormous.


16 BUSINESS DAY C002D5556<br />

Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

In Association With<br />

“<br />

Creating a continental market<br />

Forty-four African countries sign a free-trade deal<br />

But Nigeria is among the protectionist holdouts<br />

LET’S get together,” sang the<br />

choir to the rhythm of Bob<br />

<strong>Mar</strong>ley, as a succession of<br />

African leaders signed an ambitious,<br />

continent-wide free-trade<br />

agreement in Kigali on <strong>Mar</strong>ch<br />

21st. Although all 55 members of<br />

the African Union (AU) had been<br />

involved in negotiations around<br />

the grandly named Continental<br />

Free Trade Area (CFTA), not all<br />

were ready to sign as one. On the<br />

day, 44 put pen to paper. Among<br />

the holdouts was Nigeria, Africa’s<br />

largest economy. Paul Kagame,<br />

Rwanda’s president and the host<br />

of the AU summit, had no time<br />

for sceptics. “Some horses decided<br />

to drink the water. Others<br />

have excuses and they end up<br />

dying of thirst.”<br />

The logic of the deal is sound.<br />

Trade in Africa is still shaped by<br />

relationships and infrastructure<br />

dating back to the colonial era.<br />

Countries mostly sell primary<br />

commodities to other continents.<br />

Only 18% of their exports<br />

are traded within Africa, where<br />

they often face high tariffs. The<br />

CFTA is meant to change that<br />

by creating a “single continental<br />

market for goods and services”.<br />

UNCTAD, a UN agency, reckons<br />

that eliminating import taxes between<br />

African countries would<br />

increase regional trade by a<br />

third and lift African GDP by 1%<br />

over time. Currently, nearly half<br />

of this trade is in manufactured<br />

goods. Services would also be<br />

opened up.But not everyone<br />

is convinced. Muhammadu<br />

Buhari, Nigeria’s president, cancelled<br />

his flight to Kigali amid<br />

domestic pressure. An official<br />

says Nigeria was given just a<br />

few days to read the text, which<br />

he worries will hurt incumbent<br />

businesses.Some protectionists<br />

fret that importers will slap<br />

“Made in Africa” labels on goods<br />

from elsewhere. “It will kill our<br />

industry and kill our jobs,” says<br />

Ayuba Wabba of the Nigeria<br />

Labour Congress. Such instincts<br />

run deep in Nigeria. Its biggest<br />

company, Dangote Cement, was<br />

nurtured with import restrictions,<br />

which shielded it from<br />

foreign competition. Chiedu<br />

Osakwe, Nigeria’s chief negotiator,<br />

is nevertheless confident<br />

that his country will sign in due<br />

course. Big countries such as<br />

Nigeria stand to gain most from<br />

the deal, which will help their<br />

firms expand regionally.<br />

Many of the details of the accord<br />

are still to be agreed upon.<br />

Countries are supposed to eliminate<br />

tariffs on a list comprising<br />

90% of products (although they<br />

have not yet agreed what will go<br />

on this list). In practice, however,<br />

that could allow them to leave<br />

unchanged duties on most of<br />

their current imports, which are<br />

concentrated in a narrow range<br />

of goods.<br />

Tariffs are not the most important<br />

barrier to trade. A bigger<br />

obstacle is that standards and<br />

licences are different across Africa.<br />

Take the example of a large<br />

South African retailer with stores<br />

elsewhere on the continent.<br />

It has a big warehouse where<br />

employees take products such<br />

as tubes of toothpaste out of the<br />

cartons that are used in South<br />

Africa and repack them into<br />

ones that comply with labelling<br />

rules in other countries. Red<br />

tape also slows things down.<br />

The Trade Law Centre, a South<br />

African think-tank, looked at the<br />

time taken for customs and port<br />

handling in Africa and in Singapore,<br />

and then imagined closing<br />

the gap by a fifth. The economic<br />

gains would be roughly double<br />

those expected from eliminating<br />

tariffs. The CFTA will try to lower<br />

these hurdles to trade, though<br />

there is little sign of the EU-style<br />

machinery that makes Europe’s<br />

single market work.<br />

Big plans can go stale. A<br />

mooted free-trade area for the<br />

Americas is now defunct. This<br />

one will come into force only<br />

when it has been ratified by 22<br />

signatories. Trade patterns will<br />

not change until countries start<br />

making things that their neighbours<br />

want to buy. But some<br />

countries are galloping ahead,<br />

hopeful the rest will catch up.<br />

“<br />

Digital privacy<br />

The Facebook scandal could change politics as well as the internet<br />

Even used legitimately, it is a powerful, intrusive political tool<br />

MY GOAL was never really<br />

to make Facebook cool.<br />

I am not a cool person,”<br />

said <strong>Mar</strong>k Zuckerberg, the boss of<br />

the social-media giant, in 2014.<br />

That has never been more true. His<br />

company has spent the past year<br />

stumbling through controversies<br />

over the peddling of fake news and<br />

enabling Russian manipulation<br />

of American voters, with various<br />

degrees of ineptitude. Then, on<br />

<strong>Mar</strong>ch 17th, articles in the New<br />

York Times and Britain’s Observer<br />

newspaper suggested that a political<br />

consultancy, Cambridge<br />

Analytica, had obtained detailed<br />

data about some 50m Facebook<br />

users and shared this trove of information<br />

and analysis with third<br />

parties, including Donald Trump’s<br />

presidential campaign. The result<br />

is a corporate crisis—and a political<br />

reckoning.<br />

Republicans and Democrats<br />

alike have called on Mr Zuckerberg<br />

and the heads of other tech<br />

firms to testify before the Senate.<br />

America’s consumer watchdog,<br />

the Federal Trade Commission<br />

(FTC), has also reportedly<br />

launched an investigation into<br />

Facebook’s privacy policies and<br />

whether it violated a consent decree<br />

of 2011 requiring the social<br />

network to notify users about how<br />

their data are shared. British MPs<br />

have called for Mr Zuckerberg to<br />

come before a select committee.<br />

Even Facebook’s allies have<br />

unfriended it. On Twitter, Brian<br />

Acton, a co-founder of the popular<br />

messaging app WhatsApp (which<br />

Facebook bought for $22bn in<br />

2014), encouraged people to<br />

“#DeleteFacebook”. News of his<br />

post pinged around the internet,<br />

including on Facebook itself.<br />

Investors, who have forgiven<br />

months of bad headlines in light<br />

of Facebook’s strong financial<br />

performance, are growing jittery.<br />

Between <strong>Mar</strong>ch 16th and <strong>Mar</strong>ch<br />

21st the firm’s share price fell by<br />

8.5%, erasing $45bn in market<br />

value. Facebook is still the world’s<br />

eighth-most-valuable publicly<br />

listed firm, but shareholders worry<br />

that politicians in Europe and<br />

America may impose onerous<br />

restrictions on data, suppressing<br />

growth.<br />

The Cambridge Analytica scandal<br />

reveals Facebook’s morphing,<br />

porous privacy policies and the<br />

company’s cavalier approach to<br />

oversight. The data on Facebook<br />

users were obtained by Aleksandr<br />

Kogan, a researcher at Cambridge<br />

University, who enticed some<br />

270,000 people to take part in a<br />

survey in exchange for a small fee.<br />

When those users installed the<br />

survey app, they shared details<br />

about themselves and—unwittingly—their<br />

friends, around 50m<br />

Facebook users in all. Surprisingly,<br />

before 2015 Facebook’s<br />

rules allowed the mining of social<br />

connections without each user’s<br />

consent.<br />

What happened next was never<br />

permitted by Facebook. Mr Kogan<br />

provided these data to Cambridge<br />

Analytica, which then allegedly<br />

shared them with customers,<br />

including Mr Trump’s campaign.<br />

Cambridge Analytica is backed<br />

by Robert Mercer, a Republican<br />

donor; Steve Bannon, formerly a<br />

top adviser to Mr Trump, used to<br />

serve as an executive. (The Economist<br />

used Cambridge Analytica<br />

for a market-research project in<br />

the past.)<br />

Although news of Cambridge<br />

Analytica’s peddling of Facebook<br />

data was first reported in December<br />

2015, the social network<br />

reportedly did not respond until<br />

eight months later, with a letter<br />

asking the firm to delete the data.<br />

It seems not to have checked that<br />

this was done. The lax response<br />

is evidence of wider “systemic<br />

operational problems”, says Brian<br />

Wieser of Pivotal Research, who<br />

follows the firm.<br />

If reports are to be believed,<br />

Cambridge Analytica has a habit of<br />

pushing ethical and legal boundaries<br />

to gather data. On <strong>Mar</strong>ch<br />

20th Alexander Nix, its chief executive,<br />

was suspended after<br />

recordings were aired on British<br />

television that seem to capture<br />

him describing manipulating<br />

people for information. Britain’s<br />

data-protection regulator, the Information<br />

Commissioner’s Office,<br />

is expected to search Cambridge<br />

Analytica’s offices.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

BUSINESS DAY<br />

17


18 BUSINESS DAY<br />

C002D5556 Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

REAL SECTOR WATCH<br />

We are not against African<br />

free trade deal—MAN<br />

Stories by ODINAKA ANUDU<br />

The Manufacturers Association<br />

of Nigeria<br />

(MAN) says it is not<br />

against the African Continental<br />

Free Trade Area<br />

(AfCFTA) but that certain steps<br />

need to be taken by Nigeria before<br />

signing the deal.<br />

Frank Udemba Jacobs, president<br />

of MAN, said specific attention<br />

was not given to the cost and<br />

benefit analysis of the agreement<br />

and the the sectors/sub-sectors<br />

that would benefit or be worse off<br />

with the new deal.<br />

Jacobs questioned the justifications<br />

for agreeing to the proposed<br />

movement of 90 percent of tariff<br />

lines to zero duty, adding that the<br />

agreement would kill off manufacturing<br />

companies in Nigeria if<br />

issues like non-tariff charges, incentives,<br />

waivers and exemptions<br />

currently operational in Nigeria<br />

were not considered.<br />

“It is pertinent to mention here<br />

that MAN is not oblivious of the<br />

benefits inherent in installing a<br />

continental trade agreement like<br />

AfCFTA, as a continental free trade<br />

area could improve intra-African<br />

trade and enhance economic<br />

growth and sustainable development.<br />

However, we hasten to add<br />

that Nigeria’s national interest<br />

should be the primary consideration<br />

in the decision to sign-on to<br />

such an arrangement,” Jacob said.<br />

The negotiations on the free<br />

trade agreement started in 2012<br />

with an ambitious long-term goal<br />

of deepening trade among African<br />

Union countries, creating bigger<br />

and integrated regional markets<br />

for African products and achieving<br />

Unilever restates commitment to backward<br />

integration through ‘Partner to Win’ initiative<br />

JOSEPHINE OKOJIE<br />

Unilever Nigeria has restated<br />

its commitment<br />

to the Federal Government’s<br />

backward integration<br />

policy through its ‘Partner<br />

to Win’ initiative targeted at increasing<br />

the organisation’s local<br />

input sourcing.<br />

The Partner to Win project<br />

is Unilever’s initiative geared<br />

towards investing in capabilities<br />

of intermediary companies that<br />

are key strategic suppliers to the<br />

organisation. It is also aimed at<br />

enabling them to process farm<br />

produce to usable goods that will<br />

be sourced by the company as<br />

part of its raw materials, locally.<br />

Speaking at the Manufacturing<br />

and Equipment Expo/<br />

Nigerian Raw Materials Expo,<br />

Thomas Mwanza, procurement<br />

L-R: Abdullahi bashir, executive council member; Frank Jacob, president; Segun Ajayi-Kadir, director-general, and<br />

Ifeanyi Okoye, executive council member, all of Manufacturers Association of Nigeria (MAN), during a press conference<br />

on African Continental Free Trade Area by MAN in Lagos.<br />

Pic by Olawale Amoo<br />

economies of scale among African<br />

manufacturers.<br />

Forty out of 55 African leaders<br />

ratified the AfCFTA, which is easily<br />

the largest trade agreement since<br />

the World Trade Organisation<br />

(WTO) in 1994.<br />

Nigeria, the lead negotiator and<br />

biggest economy in the continent,<br />

was absent at Kigali, Rwanda.<br />

Nigeria’s President Muhammadu<br />

Buhari earlier scheduled to<br />

travel to Kigali to ratify the trade<br />

deal but backtracked on the opposition<br />

of the Organised Private<br />

Sector (OPS) who said they were<br />

not consulted.<br />

The trade deal is expected to<br />

director, Unilever-West Africa,<br />

gave examples of steps taken by<br />

the organisation to achieve this<br />

drive in packaging and agrobased<br />

materials.<br />

“Already, Unilever has<br />

achieved over 90 percent in local<br />

sourcing of packaging materials.<br />

The aim is to achieve 100percent<br />

by the end of 2019 and overcome<br />

the current challenges of local<br />

vendors’ capacity to meet up with<br />

global best standards.<br />

“In agro-allied sector, Unilever<br />

is partnering with intermediary<br />

companies for the supply of cassava<br />

and starch,” Mwanza said.<br />

Providing the motivation for<br />

this decision, the procurement<br />

director said the backward integration<br />

programme of the Federal<br />

Government was a sound policy<br />

and that Unilever was committed<br />

to it.<br />

open up Nigeria to a potential $3.4<br />

trillion opportunity and 1.2 billion<br />

consumers.<br />

Critics say Buhari’s action has<br />

dented Nigeria’s image in the<br />

international community and<br />

shows poor organisation among<br />

the president’s team.<br />

But MAN says it is only acting to<br />

protect Nigeria’s interest and ensure<br />

that Europe, which is pushing<br />

the Economic Partnership Agreement<br />

(EPA), does not have access<br />

to the African market through Morocco,<br />

which has already signed<br />

the EPA and is applying to join<br />

the Economic Community of West<br />

African States.<br />

“We have found strong connections<br />

between this policy<br />

and our business model. This has<br />

spurred us to enhance our local<br />

sourcing capabilities that we have<br />

embarked on for about a decade.”<br />

Speaking on the economic<br />

benefits of aligning with the<br />

government on this strategy,<br />

Mwanza said, “By working with<br />

the intermediary companies to<br />

source these materials, we are<br />

contributing to up-scaling the<br />

technical skills required for sustainable<br />

commercial farming in<br />

Nigeria.<br />

“We are also investing in the<br />

production of palm oil for use in<br />

BlueBand and soaps, and exploring<br />

local production of herbs and<br />

spice for our seasoning cubes.<br />

We believe that our partnership<br />

with these investors will not only<br />

create jobs within the agriculture<br />

He urged government to convene<br />

a special meeting of the<br />

relevant stakeholders, including<br />

experts on trade policy to reconsider<br />

the national position on EPA<br />

vis-a-vis the AfCFTA especially<br />

on tariff lines of products on the<br />

sensitive/exclusion list, with a view<br />

to ensuring that the EU-EPA is not<br />

reintroduced through the AfCFTA’s<br />

back door.<br />

Jacobs further said the free trade<br />

agreement allowed only 10 percent<br />

of tariff lines to be protected, which<br />

was a far cry from what was even<br />

obtainable in Common External<br />

Tariff, another free trade agreement<br />

in West Africa.<br />

sector but also provide support<br />

that will enhance their technical<br />

know-how and skills.”<br />

He noted that the ability of<br />

the local suppliers to meet international<br />

standards for such<br />

materials and the possibility of<br />

locally produced goods being<br />

more expensive than imported<br />

goods were key challenges the<br />

company was facing.<br />

He pointed out that it was not<br />

a deterrent factor but an opportunity<br />

to help the organisation<br />

scale up its skills and compete at<br />

the international level.<br />

“Our motivation and commitment<br />

to operate sustainably is<br />

far superior to these challenges.<br />

We are working with relevant<br />

authorities and local investors to<br />

ensure their produce meet the required<br />

standard for our products,”<br />

he added.<br />

‘New excise duties<br />

on alcohol will hurt<br />

local factories’<br />

Frank Jacobs, president<br />

of the Manufacturers<br />

Association of Nigeria<br />

(MAN), says the new<br />

excise duties imposed on alcoholic<br />

drinks and tobacco will<br />

kill local industries.<br />

Speaking at a press conference<br />

last Wednesday, Jacobs<br />

said the association was still<br />

engaging the government on<br />

the duties, but pointed out that<br />

factories would suffer great<br />

losses if nothing was done to<br />

reduce the charges.<br />

“MAN is still engaging the<br />

government on that. During<br />

the last presidential quarterly<br />

business forum, I said that<br />

if they go ahead and implement<br />

that policy, many of the<br />

companies producing these<br />

things must close shop. I am<br />

not saying ‘will’ but ‘must’,”<br />

Jacobs said.<br />

The Federal Government<br />

had, on <strong>Mar</strong>ch 11, introduced<br />

a new excise duty regime for local<br />

wine, alcohol and tobacco.<br />

Under the new regime, in<br />

addition to the 20 percent<br />

ad-valorem rate (tax based on<br />

value), each stick of cigarette<br />

will attract N1 and N20 per pack<br />

of 20 sticks in <strong>2018</strong>. In 2019, the<br />

rate will go up to N2 per stick<br />

and N40 per pack of 20 sticks.<br />

In 2020, N2.90k will be imposed<br />

on each stick of cigarette and<br />

N58 per pack of 20 sticks.<br />

Nigeria’s cumulative specific<br />

excise duty rate for tobacco<br />

was 23.2 per cent of the price of<br />

the most sold brand, as against<br />

38.14 per cent in Algeria, 36.52<br />

per cent in South Africa and<br />

30 per cent in The Gambia,<br />

said Kemi Adeosun, Nigeria’s<br />

finance minister.<br />

Similarly, under the new<br />

regime, beer and stout will attract<br />

N0.30k per centilitre in<br />

<strong>2018</strong> and N0.35k per centilitre<br />

in 2019 and 2020.<br />

Wines will attract N1.25k<br />

per centilitre in <strong>2018</strong> and<br />

N1.50k per centilitre in 2019<br />

and 2020. For spirits, N1.50k<br />

per centilitre will apply in<br />

<strong>2018</strong>, N1.75k per centilitre in<br />

2019, and N2.00k per centilitre<br />

in 2020.<br />

The government gave a<br />

grace period of 90 days to all<br />

local manufacturers before the<br />

commencement of the new<br />

excise duty regime.<br />

Beer makers say the duties<br />

will not have significant impact<br />

on prices but cigarette and<br />

wine makers foresee increases<br />

in the near future.<br />

Though this could hurt consumers<br />

and firms, governments<br />

often impose taxes on products<br />

considered to have inelastic<br />

demand; that is, products<br />

whose demand may not be<br />

significantly affected by price<br />

changes. Articles or products of<br />

habit fall within this category.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

C002D5556 BUSINESS DAY 19<br />

REAL SECTOR WATCH<br />

Okomu invests $50m to raise CPO production to 80,000MT<br />

IDRIS UMAR MOMOH, Benin<br />

Okomu Oil Palm Company<br />

Plc is investing<br />

$50 million to raise<br />

crude palm oil (CPO)<br />

production to 80,000<br />

metric tons (MT)) per annum in<br />

the next five years from the current<br />

40,000 MT.<br />

Gbenga Oyebode, chairman,<br />

Okomu Oil Palm Company Plc,<br />

said the company was investing in<br />

the installation of milling facilities<br />

with the capacity to process 30-tons<br />

per hour.<br />

At the commissioning of the extension<br />

2 plantation located in ten<br />

communities in Ovia North-East<br />

and Uhunmwode Local Government<br />

Areas of Edo State, Oyebode<br />

noted that the milling machines<br />

would be commissioned in 2020<br />

when they would be fully operational.<br />

“I am happy to announce that<br />

the shareholders have also agreed<br />

to commence the installation of<br />

the first of the two 30-ton per hour<br />

oil mills, which will be located on<br />

this plantation at a combined cost<br />

of about $50 million.<br />

“We expect that the first of the<br />

oil mills to be commissioned in<br />

2020 at the time of our first harvest<br />

while the second will be finalised<br />

soon thereinafter. Once both of<br />

these mills are up and running,<br />

they will effectively double our<br />

milling capacity, and we can expect<br />

to process around 80,000 metric<br />

tonnes of crude palm oil per annum<br />

up from the current 40,000<br />

within the next five years,” he said.<br />

French business delegation to<br />

visit Nigeria on trade mission<br />

With the incessant clash<br />

between farmers and<br />

herdsmen going into a<br />

threatening dimension<br />

due to open grazing on farmlands,<br />

the need to find permanent solution<br />

has become imperative.<br />

Promosalons Nigeria, the exclusive<br />

representative of Promosalons<br />

France here in Nigeria and organiser<br />

of Nigerian business delegation<br />

to SPACE <strong>2018</strong> for agriculture<br />

and animal production trade show<br />

in Rennes, France, is facilitating<br />

French business delegation to<br />

Nigeria.<br />

According to Akin Akinbola,<br />

managing director/CEO, Promosalons<br />

Nigeria, Cameroon and<br />

Gabon, “We are pleased to inform<br />

the general public of the visit of 17<br />

French companies to Nigeria on<br />

business trade mission from <strong>Mar</strong>ch<br />

27 to 29, <strong>2018</strong>.<br />

“These 17 French companies<br />

in conjunction with (French Association<br />

for the Development of<br />

International Trade in Agricultural<br />

and Food Processing Techniques<br />

(ADEPTA) will be in Nigeria to<br />

search for various partnerships,<br />

He explained that the certificate<br />

of occupancy for the acquisition of<br />

11,416 hectares of land, including<br />

660 hectares of cultivated oil palm,<br />

was signed by the immediate past<br />

governor of the state Adams Oshiomhole<br />

in 2014.<br />

He pointed out that 50 hectares<br />

of palm nursery were immediately<br />

developed on the land in 2015,<br />

… as French food companies plans new<br />

technology for Nigeria<br />

B2B meetings and also take part in<br />

Agrofood trade exhibition taking<br />

place at the Landmark Convention<br />

Centre, Lagos.<br />

“Interested Nigerian companies<br />

with the French business delegation<br />

are required to get in touch with<br />

Promosalons Nigeria to book an appointment<br />

with any of the delegates.<br />

“The following sectors would<br />

be represented during the trade<br />

mission: Agriculture and Livestock,<br />

Food, Beverage and Packaging<br />

Technology.”<br />

Some of the French companies<br />

include - GNIS , Kulker, Decopack,<br />

Eurogerm, Dagard, and BWC,<br />

among others. A statement from<br />

Embassy of France in Abuja says,<br />

“As Africa’s largest economy, Nigeria<br />

has a promising agricultural and<br />

food processing potential.<br />

Agrofood Nigeria <strong>2018</strong> is a<br />

perfect opportunity to meet with<br />

French leading manufacturers of<br />

machinery for agribusiness. The<br />

French Pavilion represents the best<br />

know-how and latest technologies<br />

in the crops production, livestock<br />

sector, conservation, food-processing,<br />

packaging industries.”<br />

making it the largest of its kind in<br />

Africa, adding that within three<br />

years, about 9,000 hectares of palm<br />

oil had already been planted.<br />

The Okomu chairman posited<br />

that the investments were the company’s<br />

commitment to the future<br />

growth of the establishment and<br />

Edo state ,disclosed that the company’s<br />

total of 33,000 hectares are<br />

Firms source more local inputs in H1 of 2017<br />

Nigerian manufacturers<br />

sourced more raw<br />

materials locally in the<br />

first six months of 2017<br />

(H1 of 2017) compared with the<br />

corresponding period of 2016.<br />

Local raw materials utilisation in<br />

the manufacturing sector increased<br />

to 60.72 percent in H1 of 2017, as<br />

against 46.3 percent recorded in<br />

the corresponding half of 2016,<br />

data from the Manufacturers<br />

Association of Nigeria (MAN) show.<br />

This indicates a 14.42 percentage<br />

point increase over the 2016 period.<br />

It also represents 0.74 percentage<br />

point rise when compared with<br />

59.98 percent of inputs sourced in<br />

the preceding half (H2 of 2016).<br />

“The rising local raw materials<br />

sourcing can be attributed to<br />

the effect of the resource-based<br />

industrialisation and backward<br />

integration campaigns as well as<br />

availability of forex in the economy,”<br />

MAN says.<br />

Across sectoral groups, local raw<br />

materials sourced in food, beverage<br />

& tobacco group increased to<br />

79.12 percent in H1 of 2017, from<br />

67.5 percent recorded in the<br />

corresponding period of 2016,<br />

representing 11.62 percentage<br />

point increase over the period.<br />

It also represents 14.49<br />

percentage point rise when<br />

compared with 64.63 percent<br />

all situated within Edo state.<br />

In his address of welcome, Graham<br />

Heifer, managing director of<br />

the company, said the company<br />

operated two 30 tons per hour oil<br />

mills and had commenced the<br />

construction of another two 30<br />

tons per hour mills which would<br />

be commissioned from 2020 on<br />

extension 2.<br />

reported in the preceding half.<br />

In the wood & furniture group,<br />

local input preference spiked<br />

to 68.61 percent in H1 of 2017,<br />

from 43.6 percent recorded in the<br />

corresponding period of 2016,<br />

indicating 25.01 percentage point<br />

increase over the period.<br />

This number represents 9.86<br />

percentage point rise when<br />

compared with 58.75 percent<br />

recorded in the preceding half.<br />

For basic metal, iron, steel, &<br />

fabricated metal group, local raw<br />

materials sourcing increased to<br />

70.84 percent, from 55.7 percent<br />

recorded in the corresponding half<br />

of 2016.<br />

Heifer, who disclosed that the<br />

company provided opportunity<br />

for more than 14,000 Nigerian<br />

shareholders to own a part of the<br />

establishment, added that its net<br />

income had increased four-fold in<br />

the company’s share price since<br />

2012 and the pay-out of annual<br />

dividends.<br />

The managing director said<br />

that the company ranked 10th<br />

among listed companies with the<br />

largest turnovers quoted on the<br />

Nigerian Stock Exchange (NSE),<br />

adding that over N250million was<br />

being spent annually on corporate<br />

social responsibility to assist 29<br />

communities.<br />

He added that the Okomu had<br />

provided more than 8,000 jobs,<br />

financing more than 60 bursaries<br />

and skills acquisition programmes<br />

annually as part of its corporate<br />

social responsibility programme.<br />

Godwin Obaseki, Edo State<br />

governor, who commissioned the<br />

oil palm plantation, assured that<br />

his administration would be pushing<br />

for further reforms to support<br />

the oil palm industry in Nigeria by<br />

collaborating with Ondo and Cross<br />

River state governors to work with<br />

the oil palm players, particularly<br />

the Plantation Owners Forum of<br />

Nigeria (POFON) and the federal<br />

govt to create an Oil Palm Council<br />

for Nigeria.<br />

He assured that Okomu oil<br />

palm company would be among<br />

industries producing major raw<br />

materials for some of the processing<br />

companies to be hosted in the<br />

state’s industrial park.<br />

Analysis based on industrial<br />

zones shows that the local raw<br />

material utilisation rose in Apapa,<br />

Anambra/Enugu, Kwara/Kogi,<br />

Kaduna and Kano Bompai, Ikeja,<br />

Apapa, Ogun, Bauchi/Benue/<br />

Plateau and Rivers zones. However,<br />

it fell in Edo/Delta, Imo/Abia, Oyo/<br />

Ondo/Osun/Ekiti and Bauchi/<br />

Benue/Plateau zones.<br />

In Apapa zone, local raw<br />

materials sourcing increased to<br />

68.3 percent in the period under<br />

review, from 42 percent recorded in<br />

the corresponding period of 2016,<br />

signifying <strong>26</strong>.3 percentage point<br />

increase over the period.<br />

This number represents 14.3<br />

percentage point jump when<br />

compared with 54.0 percent<br />

recorded in the preceding half.<br />

In Anambra/Enugu zone,<br />

local raw materials utilisation<br />

rose significantly to 70 percent<br />

in the period under review,<br />

from 19 percent recorded in the<br />

corresponding half of 2016.<br />

Ogun zone increased its local<br />

raw-materials utilisation in the<br />

period under review to 66.7 percent,<br />

from 50.2 percent recorded the<br />

corresponding period of 2016.<br />

This indicates 16.5 percentage<br />

point increase over the period. It,<br />

however, shows 1.3 percent drop<br />

when compared with 68.0 percent<br />

recorded in the preceding half.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

20 BUSINESS DAY<br />

Access Bank Rateswatch<br />

KEY MACROECONOMIC INDICATORS<br />

Indicators Current Figures Comments<br />

GDP Growth (%) 1.92 Q4 2017 — higher by 0.52% compared to 1.40% in Q3 2017<br />

Broad Money Supply (M2) (N’ trillion) 24.02 Increased by 0.79% in Feb’ <strong>2018</strong> from N23.83 trillion in Jan <strong>2018</strong><br />

Credit to Private Sector (N’ trillion) 22.62 Increased by 2.88% in Feb’ <strong>2018</strong> from N21.99 trillion in Jan <strong>2018</strong><br />

Currency in Circulation (N’ trillion) 1.94 Decreased by 0.42% in Feb’ <strong>2018</strong> from N1.95 trillion in Jan <strong>2018</strong><br />

Inflation rate (%) (y-o-y) 14.33 Declined to 14.33% in Feb’ <strong>2018</strong> from 15.13% in Jan’<strong>2018</strong><br />

Monetary Policy Rate (%) 14 Raised to 14% in July ’2016 from 12%<br />

Interest Rate (Asymmetrical Corridor) 14 (+2/-5) Lending rate changed to 16% & Deposit rate 9%<br />

External Reserves (US$ million) 45.36 <strong>Mar</strong>ch 21, <strong>2018</strong> figure — an increase of 6.40% from Feb start<br />

Oil Price (US$/Barrel) 69.1 <strong>Mar</strong>ch 23, <strong>2018</strong> figure - an increase of 5.03% from a prior week<br />

Oil Production mbpd (OPEC) 1.81 Feb’ <strong>2018</strong> figure — an increase of 1.40% from Jan’<strong>2018</strong> figure<br />

STOCK MARKET<br />

Indicators Friday Friday Change(%)<br />

23/03/18 16/03/18<br />

NSE ASI 41,472.10 41,935.90 (1.11)<br />

<strong>Mar</strong>ket Cap(N’tr) 14.98 15.00 (0.14)<br />

Volume (bn) 0.56 0.43 31.<strong>26</strong><br />

Value (N’bn) 6.76 7.10 (4.77)<br />

MONEY MARKET<br />

NIBOR<br />

Tenor Friday Rate Friday Rate Change<br />

(%) (%) (Basis Point)<br />

23/03/18 16/03/18<br />

OBB 14.0000 11.8300 217<br />

O/N 15.0800 12.9200 216<br />

CALL 8.6250 8.3125 31<br />

30 Days 14.1722 15.2319 (106)<br />

90 Days 15.4922 16.6040 (111)<br />

FOREIGN EXCHANGE MARKET<br />

<strong>Mar</strong>ket Friday Friday<br />

1 Month<br />

(N/$) (N/$) Rate (N/$)<br />

23/03/18 16/03/18 23/02/18<br />

Official (N) 305.70 305.75 305.95<br />

Inter-Bank (N) 336.40 335.81 334.81<br />

BDC (N) 360.00 360.00 360.87<br />

Parallel (N) 362.00 363.00 362.00<br />

BOND MARKET<br />

AVERAGE YIELDS<br />

Tenor Friday Friday<br />

Change<br />

(%) (%) (Basis Point)<br />

23/03/18 16/03/18<br />

3-Year 0.00 0.00 0<br />

5-Year 13.61 13.40 21<br />

7-Year 13.59 13.69 (10)<br />

10-Year 13.56 13.54 2<br />

20-Year 13.49 13.46 4<br />

Disclaimer<br />

This report is based on information obtained from various sources believed to be<br />

reliable and no representation is made that it is accurate or complete. Reasonable care<br />

has been taken in preparing this document. Access Bank Plc shall not take responsibility<br />

or liability for errors or fact or for any opinion expressed herein .This document is for<br />

information purposes and private circulation only and may not be reproduced,<br />

distributed or published by any recipient for any purpose without prior express consent<br />

of Access Bank Plc.<br />

Sources: CBN, Financial <strong>Mar</strong>ket Dealers Association of Nigeria, NSE and<br />

Access Bank Economic Intelligence Group computation.<br />

COMMODITIES MARKET<br />

Indicators 23/03/18 1-week YTD<br />

Change Change<br />

(%) (%)<br />

Energy<br />

Crude Oil $/bbl) 69.10 5.03 7.16<br />

Natural Gas ($/MMBtu) 2.61 (2.61) (14.59)<br />

Agriculture<br />

Cocoa ($/MT) 2,519.00 (0.51)<br />

30.11<br />

Coffee ($/lb.) 118.80 (0.08) (8.76)<br />

Cotton ($/lb.) 81.56 (1.69)<br />

5.24<br />

Sugar ($/lb.) 12.79 1.19 (16.57)<br />

Wheat ($/bu.) 449.25 (5.72)<br />

3.63<br />

Metals<br />

Gold ($/t oz.) 1,342.04 1.62 1.86<br />

Silver ($/t oz.) 16.53 0.24 (3.84)<br />

Copper ($/lb.) 300.05 (4.37) (8.47)<br />

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS<br />

Tenor Friday Friday Change<br />

(%) (%) (Basis Point)<br />

23/03/18 16/03/18<br />

1 Mnth 12.33 13.56 (123)<br />

3 Mnths 14.35 14.24 12<br />

6 Mnths 14.96 14.45 52<br />

9 Mnths 14.72 15.81 (109)<br />

12 Mnths 14.98 14.72 <strong>26</strong><br />

ACCESS BANK NIGERIAN GOV’T BOND INDEX<br />

Indicators Friday Friday Change<br />

(%) (%) (Basis Point)<br />

23/03/18 16/03/18<br />

Index 2,622.76 2,621.11 0.06<br />

Mkt Cap Gross (N'tr) 8.73 8.73 0.06<br />

Mkt Cap Net (N'tr) 5.72 5.73 (0.17)<br />

YTD return (%) 6.77 6.70 0.07<br />

YTD return (%)(US $) (48.41) (48.50)<br />

0.09<br />

TREASURY BILLS (MATURITIES)<br />

Tenor Amount Rate (%) Date<br />

(N' million)<br />

91 Day 5,395.70 11.95 22-<strong>Mar</strong>-<strong>2018</strong><br />

182 Day 8,385.20 13 22-<strong>Mar</strong>-<strong>2018</strong><br />

364 Day 40,176.06 13.15 22-<strong>Mar</strong>-<strong>2018</strong><br />

<strong>Mar</strong>ket Analysis and Outlook: <strong>Mar</strong>ch 23 - <strong>Mar</strong>ch 30, <strong>2018</strong><br />

Global Economy<br />

The Federal Reserve raised the target range<br />

for the federal funds rate by 25 basis points<br />

(bps) to 1.5% to 1.75% during its <strong>Mar</strong>ch<br />

meeting. According to the Federal Open<br />

<strong>Mar</strong>ket Committee (FOMC), the labour market<br />

has continued to strengthen and economic<br />

activity has been increasing at a moderate<br />

rate. Unemployment has stayed low as jobs<br />

have risen. The Committee also opines that<br />

further gradual adjustments in the monetary<br />

policy stance would drive the economy to<br />

expand at a moderate pace in the medium<br />

term. The Fed also raised its growth forecast<br />

for <strong>2018</strong> and 2019 to 2.7% and 2.4% from 2.5%<br />

and 2.1% respectively. Elsewhere in the<br />

United Kingdom, the Bank of England (BoE)<br />

kept its Bank rate at 0.5% during its <strong>Mar</strong>ch<br />

meeting. The Bank reiterated that tightening<br />

of the monetary policy over the forecast<br />

period (<strong>2018</strong> - 2020) would be needed to<br />

return inflation sustainably to its target (2%).<br />

The Bank observed that inflation fell to a<br />

seven-month low of 2.7% in February,<br />

however, steady increase in wage growth to<br />

2.8% in January meant that inflationary<br />

p r e s s u r e s w e r e b u i l d i n g . I n a n o t h e r<br />

development, Japan’s trade surplus narrowed<br />

by 99.6% in February to JPY 3 billion from JPY<br />

805 billion a year earlier. Imports climbed by<br />

16.5% to JPY 6.460 trillion in February from<br />

the previous month. Exports however, rose at<br />

a slower pace by 1.8% to JPY 6.463 from a<br />

month earlier. Exports rose to the European<br />

Union, the U.S. and South Korea but fell to<br />

China and Taiwan.<br />

Local Economy<br />

The Central Bank of Nigeria (CBN) introduced<br />

the Non-Oil Export Stimulation Facility (NESF)<br />

to engender growth in the non-oil sector of<br />

the economy and foreign reserve accretion.<br />

The objectives of the facility are to improve<br />

access of exporters to concessionary finance<br />

to expand and diversify the non-oil export<br />

baskets, attract new investments, shore up<br />

non-oil export sector productivity, support<br />

non-oil export-oriented companies and<br />

broaden the scope of export financing<br />

instruments. The participating financial<br />

institutions are Deposit Money Banks (DMBs)<br />

and Development Finance Institutions (DFIs).<br />

T h e C B N i n i t s r e c e n t c i r c u l a r<br />

FPR/DIR/GEN/CIR/06/032 informed all<br />

participating financial institutions that<br />

implementation of the NESF has commenced.<br />

Stock <strong>Mar</strong>ket<br />

Trading activities at the Nigerian Stock<br />

Exchange (NSE) closed on a bearish note for<br />

the second consecutive week despite the<br />

release of impressive earnings and dividend<br />

pay-outs by quoted companies. The All Share<br />

Index (ASI) extended losses by 1.1% or 463.80<br />

points to close at 41,472.10 points from<br />

41,935.90 points the previous week. Similarly,<br />

market capitalization fell by 0.1% to close at<br />

N14.98 trillion from N15 trillion the previous<br />

week. The market was dragged down by<br />

stocks in the consumer goods and industrial<br />

sectors. This week some bargain hunting may<br />

be witnessed as investors take position on low<br />

priced stocks.<br />

Money <strong>Mar</strong>ket<br />

The direction of money market rates trended<br />

upwards in the week ended <strong>Mar</strong>ch 23, <strong>2018</strong><br />

due to CBN mop up through Open <strong>Mar</strong>ket<br />

Operation (OMO) auction. Short-dated<br />

placements such as Open Buy Back (OBB) and<br />

Over Night (O/N) rates climbed to 14% and<br />

15.08% from 11.83% and 12.92% respectively<br />

the previous week. Longer dated placements<br />

however, trended downwards. The 30-day and<br />

90-day NIBOR closed lower at 14.17% and<br />

15.49% from 15.23% and 16.60% the prior<br />

week. This week, rates may trend lower due to<br />

expected Federal Accounts Allocation<br />

Committee (FAAC) and retail Secondary<br />

<strong>Mar</strong>ket Intervention Sales refund (SMIS).<br />

Foreign Exchange <strong>Mar</strong>ket<br />

The naira depreciated at the interbank window<br />

by 59kobo to close at N336.40/$ from<br />

N335.81/$ the previous week. The local<br />

currency however appreciated slightly at the<br />

official market to N305.70/$ from N305.75/$<br />

the previous week. At the parallel market, the<br />

local currency appreciated marginally to<br />

N362/$, from N363/$ the previous week. The<br />

relative stability reflects the Central Bank of<br />

Nigeria’s (CBN) continuous effort of providing<br />

foreign currency to market participants. This<br />

week, we envisage the naira remaining around<br />

current levels, sustained by the Central Bank<br />

of Nigeria (CBN).<br />

Bond <strong>Mar</strong>ket<br />

The direction of bond yields was mixed due to<br />

the bond auction that took place during the<br />

week. Bond yields on short dated placements<br />

declined while those on longer dated<br />

placements rose. Yields on the five-, seven-,<br />

ten- and twenty-year debt papers settled at<br />

13.61%, 13.59%, 13.56% and 13.49% from<br />

13.40%, 13.69%, 13.54% and 13.46%<br />

respectively the previous week. The Access<br />

Bank Bond index increased marginally by 1.65<br />

points or 0.06% to close at 2,622.76 points<br />

from 2,621.11 points the previous week. This<br />

week, the expected retail SMIS refund might<br />

provide liquidity in the system thus causing<br />

yields to drop.<br />

Commodities <strong>Mar</strong>ket<br />

Oil prices gained for the second consecutive<br />

week supported by tensions in the Middle East<br />

as well as global demand. The Organization of<br />

Petroleum Exporting Countries (OPEC)<br />

reference crude rose by 6.35% to $66.19 per<br />

barrel from $62.24 per barrel the previous<br />

week. Nigeria’s benchmark crude, Bonny light,<br />

rose to $69.1 per barrel from $65.79 per barrel<br />

the previous week. The prices of precious<br />

metals trended upwards for the second<br />

consecutive week after U.S. President Donald<br />

Trump signed a presidential memorandum<br />

that could impose tariffs on up to $60 billion of<br />

i m p o r t s f r o m C h i n a a f t e r a 3 0 - d a y<br />

consultation period. Gold price climbed by<br />

1.6% to $1,342.04 an ounce from $1,320.61 an<br />

ounce the previous week. Silver also rose by<br />

0.2% to $16.53 from $16.49 an ounce the<br />

previous week. Concerns on increasing global<br />

supply continues to limit gains on oil price. The<br />

possibility of a trade war would continue to<br />

support precious metals prices.<br />

MONTHLY MACRO ECONOMIC FORECASTS<br />

Variables <strong>Mar</strong>’18 Apr’18 May’18<br />

Exchange Rate<br />

(Official) (N/$) 335.85 336.02 337.50<br />

Inflation Rate (%) 14.14 13.96 13.74<br />

Crude Oil Price<br />

(US$/Barrel) 65 67 68<br />

For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

COMPANIES<br />

& MARKETS<br />

Company news analysis and insight<br />

BUSINESS DAY 21<br />

CBN sustains intervention<br />

in foreign exchange market<br />

with $339.89m<br />

Pg. 23<br />

EcoBank’s profit hits five<br />

year high of N70bn<br />

BALA AUGIE<br />

Ecobank Transnational<br />

Incorporated<br />

(ETI) Plc<br />

recorded net income<br />

of N70 billion<br />

to end financial year,<br />

the highest in 5 years as the<br />

African Pan African lender is<br />

relentlessly pursuing strategies<br />

that will help maximize<br />

the wealth of shareholders.<br />

An excellent risk management<br />

strategy, strong<br />

capital buffers, improved<br />

efficiency and the introduction<br />

of innovative products<br />

help the lender navigate the<br />

headwinds.<br />

For the year ended December<br />

2017, Ecobank’s recorded<br />

a profit after Tax of<br />

N70 billion from a loss position<br />

of N52.60 billion the<br />

previous year.<br />

The chart shows profits<br />

were lowest in 2015, a period<br />

that marked the beginning a<br />

precipitous drop in crude oil<br />

price as banks booked huge<br />

provisions due to delinquent<br />

customers.<br />

The storm is over for<br />

lenders in Africa’s largest<br />

economy as the introduction<br />

of a foreign exchange policy<br />

by the Central bank and<br />

rebound in oil production<br />

and price assuage the pains<br />

of firms as dollars became<br />

available.<br />

The gross domestic product<br />

of Africa’s largest oil<br />

producer expanded for three<br />

straight quarters last year after<br />

a 1.6 percent contraction<br />

in 2016, with year-on-year<br />

growth reaching 1.9 percent<br />

in the final three months of<br />

2017.<br />

The gradual economic<br />

recovery showed face in the<br />

numbers of Ecobank as interest<br />

income increased by<br />

12.15 percent to N480.94<br />

billion as at December 2017,<br />

underpinned by a 15.13<br />

percent rise in fees and commission<br />

income to N142.80<br />

billion. Gross earnings were<br />

up 15.01 percent to N763.63<br />

billion in December 2017,<br />

the highest in 5 years, based<br />

on data compiled by <strong>BusinessDay</strong>.<br />

“2017 marked 2 years<br />

into our 5-year ‘Roadmap<br />

to Leadership’ and digitisation<br />

strategy through which<br />

we have made real strides<br />

in fixing the foundations on<br />

which our businesses can<br />

grow,” said Ade Ayeyemi,<br />

Chief Executive Officer of<br />

the Ecobank.<br />

“Among other things, we<br />

have reorganised our businesses,<br />

overhauled our risk<br />

management, improved<br />

our controls and systems,<br />

adopted technology to drive<br />

efficiency, and we are addressing<br />

capital allocation,”<br />

said Ayeyemi.<br />

Ayeyemi said that the<br />

Pan African bank wills the<br />

resources at its disposal to<br />

run the business more efficiently<br />

and generate returns<br />

that exceed cost of equity.<br />

Ecobank’s loans and advances<br />

increased by a mere<br />

1.12 percent to N2.86 trillion<br />

as at December 2017 as<br />

lender remains cautious of<br />

high risk investment.<br />

Deposits to customers<br />

spiked by 13.<strong>26</strong> pecent to<br />

N4.65 trillion in December<br />

2017 as against N4.11 trillion<br />

the previous year as<br />

customers continue to show<br />

their confidence in the firm’s<br />

value proposition.<br />

If ETI were to be a Nigerian<br />

lender, its N6.84 trillion<br />

total assets would have been<br />

the largest.


22<br />

BUSINESS DAY<br />

COMPANIES & MARKETS<br />

NSE market capitalisation<br />

drops N59bn<br />

Activities on the Nigerian<br />

Stock Exchange<br />

(NSE) closed on a<br />

negative note on Friday<br />

with the market capitalisation<br />

shedding N59 billion.<br />

The market capitalisation<br />

lost N59 billion or 0.39 per<br />

cent to close at N14.981 trillion<br />

against N15.040 trillion<br />

on Thursday.<br />

Also, the All-Share Index<br />

dipped 161.69 points or 0.39<br />

per cent to close at 41,472.10<br />

compared with 41,633.79<br />

achieved on Thursday.<br />

Nestle topped the losers’<br />

chart, dropping by N13.30 to<br />

close at N1,317 per share.<br />

It was followed by Dangote<br />

Cement trailed with a loss of<br />

N9.90 to close at N255, while<br />

Presco was down by N3.30 to<br />

close at N68.70 per share.<br />

Nigeria Breweries depreciated<br />

by N1.40 to close at<br />

N1<strong>26</strong>.30, while PZ Industries<br />

fell by N0.95 kobo to close at<br />

N22.05<br />

On the other hand, Lafarge<br />

Africa led the gainers’ table<br />

growing by N2.50 to close at<br />

N50 per share.<br />

GT Bank followed with<br />

a gain of N1.95 to close at<br />

N46.90, while Zenith International<br />

Bank increased by<br />

N1.40 to N30.20 per share.<br />

Cadbury advanced by<br />

N1.30 kobo to N14.55, while<br />

GlaxosmithKline added N1.20<br />

to close at N25.50 per share.<br />

AIICO Insurance led the<br />

activity chart during the day,<br />

trading 139.34 million shares<br />

worth N94.83 million.<br />

Access Bank’s 39.06 million<br />

shares cost N105.39<br />

million, while FBN Holdings<br />

transacted 36.97 million<br />

shares valued at N452.<strong>26</strong><br />

million.<br />

However, GT Bank accounted<br />

for 34.31 million<br />

shares valued at N1.58 billion.<br />

Over all, the volume of<br />

shares traded appreciated by<br />

3.28 per cent with a total of<br />

560.12 million shares worth<br />

N6.76billion in 4,605 deals.<br />

This was against 542.35<br />

million shares worth N7.35<br />

billion achieved in 5,039 deals<br />

on Thursday.<br />

C002D5556<br />

Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

CBN sustains intervention in foreign<br />

exchange market with $339.89m<br />

The Central Bank<br />

of Nigeria (CBN)<br />

on Friday sustained<br />

its intervention<br />

in the<br />

Foreign Exchange market by<br />

injecting 339.89 million dollars<br />

in the Retail Secondary<br />

<strong>Mar</strong>ket Intervention Sales<br />

(SMIS) segment.<br />

The Acting Director, Corporate<br />

Communications<br />

Department, CBN, Isaac<br />

Okoroafor in a statement<br />

on Friday, said the continued<br />

interventions were in<br />

line with CBN’s pledge to<br />

sustain market liquidity in<br />

order to boost production<br />

and trade.<br />

Okoroafor said that the<br />

amount released was for<br />

requests in the agriculture,<br />

airlines, petroleum products<br />

and raw materials, and machinery<br />

sectors.<br />

According to Okoroafor,<br />

the feedback from<br />

the wholesale and retail<br />

segments of the Nigerian<br />

Foreign Exchange markets<br />

showed that customers are<br />

R-L: Huub Stokman , CEO, OVH Energy; Nneka Onyeiwu, dealer, Ojodu-Berger Service Station,<br />

and Lillian Ikokwu, head, Lubes, OVH Energy <strong>Mar</strong>keting, at the Oleum lubricants shop opening<br />

during the MOMTAN secretariat upgrade unveiling ceremony in Agidigbi Mechanic Village, Ikeja,<br />

Lagos.<br />

satisfied with their level of<br />

access to foreign exchange.<br />

He also assured Nigerians<br />

that the recent<br />

confirmation of Deputy<br />

Governors and Monetary<br />

Policy Committee (MPC)<br />

nominees by the Senate<br />

would further spur the<br />

bank toward taking sound<br />

decisions needed for economic<br />

development.<br />

Recall that the apex bank<br />

had on 19 <strong>Mar</strong>ch, injected<br />

210 million dollars into the<br />

Wholesale segment of the<br />

foreign exchange market.<br />

Meanwhile, the naira<br />

exchanged at N362 to a dollar<br />

in the Bureau de Change<br />

segment of the market.<br />

Afreximbank opens $800m credit lines in<br />

55 banks to facilitate letters of credit<br />

The African Export-<br />

Import Bank (Afreximbank)<br />

says it has<br />

opened credit lines<br />

amounting to $800 million in<br />

55 banks across Africa to facilitate<br />

the confirmation of letters<br />

of credit to support intra-African<br />

trade.<br />

This is contained in a statement<br />

by Obi Emekekwue, the<br />

bank’s Director and Global<br />

Head, Communications and<br />

Events Management Department.<br />

The statement quoted<br />

the bank’s President, Benedict<br />

Oramah, as disclosing the strategy<br />

at the signing of African<br />

Continental Free Trade Area<br />

(AfCFTA) agreement in Kigali.<br />

Oramah said that under<br />

the strategy launched in 2016,<br />

about $25 billion would be<br />

disbursed in support of intra-<br />

African trade during the five<br />

years ending in 2021.<br />

He said that the bank’s goal<br />

was to extend such lines to at<br />

least 500 banks in all African<br />

countries by 2021 in order to<br />

significantly reduce the cost of<br />

intra-African trade finance.<br />

According to him, the aim is<br />

to counter the constraints posed<br />

by country risks associated with<br />

the confirmation of such letters<br />

of credit.<br />

Oramah said that Afreximbank<br />

was also on the verge<br />

of launching an intra-African<br />

trade platform that would facilitate<br />

the clearing and settlement<br />

of intra-African trade transactions<br />

in African currencies.<br />

He said the platform would<br />

significantly reduce the use of<br />

hard currencies in the settlement<br />

of such trade.<br />

He said that 44 African countries<br />

had so far signed the Agreement<br />

Establishing the AfCFTA,<br />

while 43 countries signed the<br />

Kigali declaration for the launch<br />

of the AfCFTA.<br />

He said 25 countries had<br />

also signed the protocol to the<br />

treaty establishing the African<br />

Economic Community relating<br />

to Free Movement of Persons,<br />

Right of Residence and Right of<br />

Establishment.<br />

Afreximbank is the foremost<br />

pan-African multilateral<br />

financial institution devoted to<br />

financing and promoting intraand<br />

extra-African trade.<br />

The bank was established<br />

in October 1993 by African<br />

governments, African private<br />

and institutional investors and<br />

non-African investors.<br />

Since 1994, it has approved<br />

more than $51 billion in credit<br />

facilities for African businesses,<br />

including about $10.3 billion<br />

in 2016.<br />

TAGEXPO <strong>2018</strong> partners Kreativ Management on property expo<br />

As part of effort to grow<br />

the Real Estate sector<br />

in Nigeria, TAGEXPO<br />

have partnered with<br />

“Kreativ Management Limited”<br />

– a financial advisory and solutions<br />

firm to host the <strong>2018</strong> edition<br />

of the Real Estate Exhibition and<br />

Trade Show.<br />

Speaking on the occasion,<br />

Ejoh, who is the convener of the<br />

TAGEXPO and chief marketing<br />

officer T. A. G Nigeria Limited,<br />

said the decision to partner with<br />

Kreativ Management Limited<br />

is in line with the TAGEXPO’s<br />

growth plan, following a successful<br />

two year run.<br />

Ejoh said TAGEXPO has positioned<br />

itself as the go-to source<br />

for Real Estate solutions for<br />

Diaspora Nigeria, and this year’s<br />

event in the UK and US, in June<br />

<strong>2018</strong>, will further establish that<br />

KREATIV FINANCE provides<br />

Financing Support, Business<br />

Advisory and Payday Finance<br />

services specifically designed<br />

to meet the unique needs and<br />

purposes of its clients.<br />

According to the organisers,<br />

the TAGEXPO is a 1-day Real<br />

Estate fair that gives real estate<br />

developers and stakeholders<br />

in Nigeria the opportunity to<br />

display their unique housing<br />

products and solutions to the<br />

vast crowd of already identified<br />

target market made up of successful<br />

Nigerian professionals<br />

in key positions within various<br />

industries in the host country,<br />

who either want to return home<br />

or are seeking investment opportunities<br />

back in Nigeria, with<br />

a focus on but not limited to<br />

Lagos and Abuja.<br />

The partnership agreement<br />

was signed on Tuesday <strong>Mar</strong>ch<br />

20, <strong>2018</strong> at a closed ceremony<br />

which was higlighted by the<br />

formal agreement presentation<br />

by the Principal partners of both<br />

organizations - Opeoluwa Osho<br />

of Kreativ Management Limited<br />

and Michael Ejoh for T. A. G Nigeria,<br />

the concept developers of<br />

the TAGEXPO.<br />

In a release sent to <strong>BusinessDay</strong>,<br />

Osho said his team<br />

had carefully considered the<br />

TAGEXPO as a viable solution to<br />

the challenges facing Nigerians<br />

in the Diaspora who needed real<br />

estate advice and a connection to<br />

credible developers from whom<br />

they can purchase property in<br />

Nigeria.<br />

Open Banking Nigeria debuts to offer<br />

banks opportunity for revenue growth<br />

HOPE MOSES-ASHIKE<br />

Open Banking Nigeria,<br />

an initiative designed<br />

to enhance<br />

and improve banking<br />

experience, officially debuts with<br />

opportunity for banks to grow<br />

more revenue from additional<br />

transactions powered by open<br />

banking and driven by Fintechs.<br />

The concept of Open Banking<br />

has been gathering waves<br />

over the years but reached a watershed<br />

with the pronouncement<br />

of the PSD2. Beyond Europe,<br />

countries such as Australia, Hong<br />

Kong, United Kingdom, and<br />

Nigeria are at various stages of<br />

review, design or implementation<br />

of Open Banking.<br />

Open Banking brings immense<br />

benefits to customers,<br />

banks and Fintechs.<br />

It would provide customers<br />

with innovative products such as<br />

single view banking apps, power<br />

services such as robo-advisory.<br />

Banks would see more revenue<br />

from additional transactions<br />

powered by Fintechs.<br />

The transformation that<br />

Open Banking would bring to<br />

the financial industry would be<br />

more impactful than the ATM<br />

and interbank transfer as it frees<br />

banks and Fintechs to expand<br />

their sphere of innovation tremendously.<br />

In his opening remarks at the<br />

official launch of Open Banking,<br />

Adedejo Olowe, Trustee Open<br />

Banking Nigeria, described the<br />

advent of Open Banking to the<br />

emergence of ATMs in Nigeria<br />

where all the banks came together<br />

and decided to adopt a<br />

single standard.<br />

He explained that they went<br />

as far as contributing into creating<br />

a shared platform in Interswitch.<br />

Consequently, for the<br />

first time, customers could visit<br />

any bank ATM and withdraw<br />

cash, transfer money and buy<br />

airtime, amongst other transactions<br />

they could do, without<br />

thinking if the terminal belongs<br />

to their bank or not.<br />

“Banks have subsequently<br />

worked together to standardize<br />

on POS, NUBAN accounts, BVN,<br />

watch-list, among others,” said<br />

Olowe. Among the panellists<br />

who spoke at the event are Ladi<br />

Asuni, Associate Director at<br />

KPMG (Moderator), Tobi Boshoro,<br />

Divisional Head of Ebanking,<br />

Stanbic IBTC, Ayowole Popoola,<br />

Group Head, Operational and IT<br />

Risk Management, Fidelity Bank<br />

Plc and Akin Sawyerr, Director,<br />

Kinexus Limited.<br />

They agreed that the benefits<br />

of open banking far outweigh<br />

its downside as it helps to drive<br />

financial inclusion, makes transaction<br />

seamless and cheaper.<br />

Opeyemi Ndukwe, Management<br />

Consultant, Blue Advisory,<br />

during her keynote presentation<br />

described the current challenges<br />

and opportunities within the<br />

financial industry and how collaboration<br />

and partnership will<br />

help take the industry to the<br />

Promised Land.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

BUSINESS DAY 23<br />

COMPANIES & MARKETS<br />

Business Event<br />

R-L: Huub Stokman , CEO, OVH Energy; Nneka Onyeiwu, dealer, Ojodu-Berger Service Station,<br />

and Lillian Ikokwu, head, Lubes, OVH Energy <strong>Mar</strong>keting, at the Oleum lubricants shop opening<br />

during the MOMTAN secretariat upgrade unveiling ceremony in Agidigbi Mechanic Village, Ikeja,<br />

Lagos.<br />

R-L: Simon Lalong, Plateau State governor, Ibrahim Idris, inspector general of Police, and others<br />

during the commissioning of 51 security vehicles donated by plateau state government to the Police<br />

Force in Shendam Jos, Plateau State.<br />

L-R: Group Head, Investor Services & Financial Institutions, Transactional Products & Services<br />

(TPS), Standard Bank, Charl Bruyns; Chief Executive, Nigerian Stock Exchange (NSE), Oscar<br />

Onyema; Head, Transactional Products, Standard Bank, Hassan Khan; Chief Executive, Stanbic<br />

IBTC Nominees Ltd, Akeem Oyewale; Executive Director, Stanbic IBTC Nominees Ltd, Babatunde<br />

Majiyagbe; and Head, TPS, Stanbic IBTC, Inwang Akpan; during the closing bell ringing ceremony<br />

at the Nigerian Stock Exchange on Wednesday <strong>Mar</strong>ch 21, <strong>2018</strong><br />

L-R: Chairman, Senate Committee on Industry, Senator Sam Egwu; Chairman, Senate Committee<br />

on Media and Public Affairs,Senator Sabiu Abdullahi and Minister of Trade and Investments,<br />

Okechukwu Enelamah at the commissioning of Sunti Golden Sugar Estates, an FMN Group<br />

company in Niger state recently


24 BUSINESS DAY C002D5556 Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

CEO<br />

INTERVIEW<br />

Interview with Private Sector Leaders<br />

Stakeholders keen for the national<br />

ERNEST DEBO AKINLOLA is the chief executive officer of Ntel. With vast knowledge in telecommunications, Akinlola<br />

for every player in the industry. In this interview with JUMOKE LAWANSON, he talks about the steady growth of N<br />

Why and how did you decide to<br />

join Ntel?<br />

When my predecessor<br />

left, the company<br />

started a search<br />

and because telecommunications<br />

is<br />

a very small world, I was contacted<br />

in August last year and came for a<br />

three days rigorous interview process<br />

and I was very happy to finally<br />

emerge as the chosen CEO. I take<br />

this as my own company and I am<br />

very keen to see growth. To me, it<br />

is more about the pride of Nitel, all<br />

of my colleagues from around the<br />

world have sent me messages on<br />

Linkedin saying that I am now running<br />

the BT (British Telecoms) of<br />

Nigeria and that is exactly what it is,<br />

it is the BT of Nigeria. We definitely<br />

have a mountain of challenges but<br />

we also have massive opportunities.<br />

It is not going to happen overnight<br />

but the opportunity to make it happen<br />

was irresistible to me. I actually<br />

said yes to the job before I asked for<br />

the package. I was keen to re-vitalise<br />

the business and put it in the right<br />

path before we then start talking<br />

about it, so that is what I have spent<br />

my time doing.<br />

What have you tried to do to<br />

grow Ntel, considering that the<br />

telecoms sector is currently<br />

swamped with challenges and<br />

what have you seen within the<br />

company that you are working<br />

to change?<br />

The macro telecoms environment<br />

has had a fair share of challenges but<br />

these challenges including the MTN<br />

fine and what is currently going on<br />

with 9mobile are not terminal. MTN<br />

was able to weather the storm. I talk<br />

to me peers, and there is one thing<br />

that is really clear, that is the fact<br />

that the eco-system has to survive.<br />

Nobody wants another player to fail.<br />

If MTN collapsed it would not be<br />

good for us, neither would it be good<br />

for 9mobile. We need confidence<br />

because as a body, we work very<br />

closely together. There is a high level<br />

of indebtedness across the whole<br />

industry but we also have a very good<br />

regulator as enabling body. Every<br />

single role I’ve had in my career, the<br />

company I work with is always the<br />

last one to come into the industry,<br />

so I am naturally drawn to problem<br />

cases and when I see challenges in<br />

the market, I also see opportunities.<br />

In the last five months I noticed that<br />

when Ntel launched into the market,<br />

we had the 4GLTE only preposition<br />

and my view was that this was the<br />

wrong strategy to have because if<br />

you have a 4G LTE service which is<br />

really high-end, how are you going<br />

to get the mass market when you<br />

are the fifth entrant, arguably the<br />

sixth entrant because a lot of people<br />

compare us to Smile Communications,<br />

although we should surpass<br />

Smile this year in terms of subscriber<br />

numbers. We launched with 4G LTE,<br />

with limited handsets into a market<br />

where there is a massive barrier to<br />

entry, so that was a concern to me<br />

and I made it very clear when I was<br />

discussing with the board of Ntel. Although<br />

I was challenged on it, I gave<br />

them the example of what Swaziland<br />

did with Swazimobile. They grew<br />

their customer base to about 100,000<br />

in about a month because they had<br />

2G and 3G. Ntel should have factored<br />

that in, and built a network that could<br />

have captured all subscribers. Even<br />

if it was just 4G, it would have been<br />

better than 4G LTE because 4G has<br />

a much wider range of compatible<br />

handsets, so we get a lot of customers<br />

complaining that their handsets<br />

don’t work with Ntel SIM cards<br />

because 4G LTE is a different band.<br />

I personally felt that this strategy was<br />

fundamentally flawed and too ahead<br />

of its time. However, we now have a<br />

number of OEMs bringing out LTE<br />

compatible handsets, so the market<br />

will definitely catch up but it might<br />

take another two to three years. How<br />

is a business then going to survive on<br />

a very narrow range? When I came<br />

on board, I saw that we had a very<br />

low subscriber base and an even<br />

lower active base of those subscribers<br />

and what I have done since I<br />

have joined is that I have sat down<br />

with the team and strengthened<br />

it with a commercial preposition.<br />

Lack of funding in the company<br />

meant that Ntel could not expand<br />

nationally but we are in the three<br />

key areas of the market where we<br />

have 40 percent of spend, so we are<br />

where we have to be as a minimum.<br />

Ntel has seen a 45 percent growth<br />

in the last five months. Right now,<br />

we are just under 120,000 subscribers<br />

and when I joined we had only<br />

about 82, 000 subscribers.<br />

What strategy are you taking on<br />

to refocus Ntel as a business?<br />

My predecessor laid more emphasis<br />

on the network so the commercial<br />

set up of this organisation in October<br />

when I joined was almost<br />

non-existent. We had branding and<br />

sales but we did not have any marketing<br />

strategy that we needed to<br />

do to grow the base, so I re-focused<br />

sales and drew up a budget to run<br />

some cluster campaigns. Now, we<br />

are using the little money we are<br />

generating more effectively, to the<br />

point that since I have arrived, we<br />

have now grown our customer base<br />

by 45 percent in five months; that is<br />

what we have done differently. It is<br />

the same team but with focus this<br />

time. I live on one mantra – what<br />

gets measured is what gets done.<br />

We measure sales every single day,<br />

and as we speak, we did the highest<br />

sales number in a day just yesterday,<br />

in the history of this business.<br />

Every month since October, we<br />

have been growing. In September<br />

2017, we grew about 10 percent,<br />

by November we grew 15 percent,<br />

as challenging as December was<br />

for us, we grew seven percent and<br />

in January <strong>2018</strong> we saw 52 percent<br />

growth in customer acquisitions. In<br />

February which has only 28 days,<br />

we grew 47 percent and this is fact.<br />

What would you say is the major<br />

contributory factor to growth recorded<br />

in the last few months?<br />

We focused sales and split them into<br />

their right structure – indirect sales<br />

channel and direct sales channel<br />

and the online sales channel which<br />

is coming up. We then launched<br />

propositions like the new ‘Wawu’<br />

offer. In addition, you can now buy<br />

our SIMS from anywhere, do a pre-<br />

KYC and then be directed through<br />

our below the line campaign management<br />

which didn’t exist before,<br />

to then go to your nearest store. By<br />

focusing every single team on their<br />

lanes and driving them with targets<br />

every single day, there is bound to<br />

be constant growth. The ideas are<br />

all from the team and I just enable<br />

them. If I had said in October that<br />

I needed the staff to give me a 300<br />

percent increase in their daily acquisitions,<br />

people would have just<br />

left, but now, we are almost on 400<br />

percent increase on daily acquisitions<br />

and we are still going for more.<br />

Last year, you announced a national<br />

roaming agreement with<br />

9mobile. Please give details of<br />

this deal and when is it expected<br />

to kick off?<br />

At the time when Etisalat, now<br />

9mobile encountered its debt crisis<br />

and management was taken over<br />

by the owed banks, I went to see Boye<br />

Olusanya, the new CEO of 9mobile<br />

because we were also interested in acquiring<br />

the company after it lost about<br />

seven million subscribers. On paper,<br />

9mobile was down to about 13 million<br />

subscribers from 21 million subscribers<br />

and I thought if 9mobile have lost over<br />

seven million subscribers and they have<br />

a network built for 21-22 million subscribers<br />

then they have enough capacity.<br />

I told Boye that Ntel needs 2G and 3G to


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

C002D5556<br />

ERNEST DEBO AKINLOLA<br />

The chief executive officer of Ntel<br />

BUSINESS DAY<br />

25<br />

roaming deal to happen<br />

explains the dynamics of telecoms in Nigeria today, saying that last mile is a major challenge<br />

tel, its hurdles and what consumers should expect from the company in future.<br />

build scale so that we can then use that<br />

to grow our base and then move them<br />

over to 4G. Instead of carrying the cost of<br />

22 million subscribers, I suggested that<br />

we do a national roaming deal and that<br />

was how we entered into the agreement<br />

which is approved by the NCC and we<br />

are currently at the stage of agreeing<br />

commercials. We are doing the commercial<br />

rates and we are going to get a<br />

good landing on it.<br />

How sure are you that the preferred<br />

bidder for 9mobile acquisition<br />

will be interested in<br />

holding up the national roaming<br />

deal?<br />

One of the concerns that the board<br />

on Ntel had was that; how would<br />

we be sure that the people that buy<br />

9mobile will be favourable to supporting<br />

the national roaming agreement?<br />

And there are certain parties<br />

that we will be more concerned<br />

about in the list of potential bidders.<br />

Some of the eco system players<br />

might not have been supportive,<br />

but I always believe that business<br />

is business. It is illogical for you to<br />

kill a deal especially when whoever<br />

buys 9mobile is inheriting a huge<br />

amount of debt from the banks. So<br />

the banks are the ones that will say<br />

that if this deal is bringing in revenue<br />

then why kill it. The revenue<br />

is passive because you don’t have<br />

to do anything to get the revenue.<br />

You are enabling the environment,<br />

enabling the eco system and you<br />

might even gain access to some of<br />

our own spectrum, so I can’t see<br />

Teleology, if they are the ones that<br />

have subsequently secured 9mobile,<br />

doing anything but support it.<br />

In fact, I have seen that everybody<br />

is now keen for this deal to happen,<br />

especially the people that have<br />

acquired it because it makes good<br />

business sense.<br />

How do you reconcile the fact<br />

that you have grown your revenue<br />

and subscriber base, when<br />

at the same time, there has<br />

been a lot of complaints about<br />

the sudden hike in Ntel’s data<br />

bundle prices?<br />

Ntel’s unlimited data bundle offer<br />

which sold for N12, 500 was increased<br />

to N17, 500. It was initially<br />

set at N12, 500 because the offer<br />

was very aggressive and we had to<br />

be competitive in the market at the<br />

time. However, to have completely<br />

unlimited internet access is not a<br />

sustainable proposition because<br />

what started to happen was that<br />

because people had completely<br />

unlimited data, there were situations<br />

where there were numerous<br />

users blowing that plan; people<br />

were using that plan to run their<br />

businesses and it was almost like<br />

reselling it because it was unlimited.<br />

We found that there were very few<br />

people on our network accounting<br />

for over 60 percent of the data<br />

capacity. No other network offers<br />

completely unlimited data; there is<br />

a fair usage policy. Although we lost<br />

some of our customers and we knew<br />

that there will be a fall-out so we<br />

gave customers a soft landing in the<br />

sense that, we carefully explained to<br />

them that we needed to move with<br />

the times and then we introduced<br />

an offer where they could pay the<br />

new price of 17,500 for two months<br />

and get the third month for free.<br />

Our weekly plans also became very<br />

popular and because we know what<br />

their behavior profile is, we send<br />

them messages specific to what<br />

their behavior is and we are beginning<br />

to automate the whole process<br />

to win customers back.<br />

What would you say about the<br />

fact that people believe Ntel;<br />

riding on the Nitel infrastructure<br />

should be able to offer cheaper<br />

data with the same quality of<br />

service?<br />

We have been able to<br />

grow our base by 45%<br />

in five months with<br />

no external funding<br />

and that is a testament<br />

to the team.<br />

So, this business will<br />

grow regardless of<br />

whether we get external<br />

funding or not,<br />

although it may be<br />

at a slower pace. We<br />

might not be able<br />

to expand without<br />

funding, but we will<br />

densify our coverage<br />

in the cities where we<br />

are currently present<br />

and we will be a sustainable<br />

business<br />

The former Nitel had a guided<br />

liquidation of assets and they had<br />

suffered from under investment<br />

for years. On that basis, what Ntel<br />

subsequently acquired had been<br />

encroached, we don’t have continuous<br />

cable, and we have even had our<br />

SAT-3 cable to Port Harcourt cut;<br />

even the roads have been dug up.<br />

You know in China, it is a criminal<br />

offence to dig up fibre but here it is<br />

rife. Last mile is a major challenge<br />

for every single player in this industry,<br />

so it is something that will<br />

be addressed as we start to plug<br />

those gaps – and we are looking at<br />

strategic acquisitions and partnering<br />

with people. Nobody, not even<br />

the mighty Nitel has continuous<br />

last mile access. All the eco-system<br />

players have to cooperate with each<br />

other and when it comes to last mile.<br />

Ntel is only present in three<br />

states across Nigeria – Lagos,<br />

Abuja and Port Harcourt, when<br />

do you plan to roll out services<br />

across other parts of the country?<br />

Once we launch national roaming<br />

by April <strong>2018</strong>, it would give us the<br />

opportunity to be across Nigeria<br />

because the customer would not<br />

know if their internet service is<br />

9mobile powered or powered by<br />

another player, because we are also<br />

talking to other eco-system players<br />

that are interested in doing national<br />

roaming with us. The message is<br />

going to get stronger because we<br />

would be everywhere; not with our<br />

4G LTE service, but wherever the<br />

host network is for 2G and 3G services<br />

and the 4G of the operators, so<br />

customers will be able to buy their<br />

Ntel SIMS in all these places in April.<br />

If we find that we suddenly have<br />

about 300, 000 subscribers through<br />

the national roaming in Oyo State,<br />

compare to another state where we<br />

have about 50,000 using our service,<br />

we automatically know that Oyo<br />

State is the next best place to roll out<br />

our 4G service. So national roaming<br />

is crucial from two points of views;<br />

it helps give us the right insight<br />

to where to roll out and gives us<br />

mass market, customer base which<br />

makes us a more credible player.<br />

What’s your take on the National<br />

Broadband Plan (NBP); do you<br />

think the 30 percent penetration<br />

target is achievable by the end<br />

of <strong>2018</strong>?<br />

We are currently at 21 percent mobile<br />

broadband penetration and I<br />

think the eco-system players have<br />

a very vital role to play in achieving<br />

this target. I know for a fact that<br />

once we get the funding that we are<br />

expecting, which is imminent, we<br />

would be able to beat our drum. So<br />

from a mobile point of view, I have<br />

no doubt that we would get to that<br />

30 percent target; because of what<br />

Ntel is doing and because of what<br />

other players including MTN will be<br />

doing. There is a real race because<br />

data is the future. With fixed lines<br />

for broadband, there are a lot more<br />

issues including the Right of Way<br />

(RoW) issues and it is much more<br />

capital intensive, so I think that the<br />

industry will give it a fair run for its<br />

money and once we get fully funded<br />

and we start to generate the cash<br />

flow that we know we can generate,<br />

we would then start to look into the<br />

fixed lines, but for now, it is mobile<br />

first.<br />

What are Ntel’s plans for funding<br />

and how do you intend to get<br />

new investors on board?<br />

We have been able to grow our base<br />

by 45 percent in five months with no<br />

external funding and that is a testament<br />

to the team. So, this business<br />

will grow regardless of whether we<br />

get external funding or not, although<br />

it may be at a slower pace.<br />

We might not be able to expand<br />

but we will densify our coverage in<br />

the cities where we are currently<br />

present and we will be a sustainable<br />

business. But what funding will do is<br />

that it will give us the ability to continue<br />

our roll out and to drive more<br />

above the line awareness, which is<br />

what we really need to support the<br />

sales team on ground. Prior to me<br />

joining Ntel, I was interviewed by<br />

investors both home and abroad.<br />

However, I noticed that around<br />

November/December when I kept<br />

on reporting continuous improvement<br />

from the low base that we had,<br />

we started to get a lot of requests<br />

to offer us funding. We have also<br />

developed a very good antenna to<br />

identify the serious investors. Ntel<br />

also has a substantial board and all<br />

the members are individually successful<br />

in their own right including<br />

our chairman and vice chairman,<br />

but they are all investors, and every<br />

investor looks at the progress of the<br />

business and management team.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

C002D5556<br />

BUSINESS DAY<br />

25<br />

24 BUSINESS DAY C002D5556 Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

CEO<br />

INTERVIEW<br />

ERNEST DEBO AKINLOLA<br />

The chief executive officer of Ntel<br />

Interview with Private Sector Leaders<br />

Stakeholders keen for the national roaming deal to happen<br />

ERNEST DEBO AKINLOLA is the chief executive officer of Ntel. With vast knowledge in telecommunications, Akinlola explains the dynamics of telecoms in Nigeria today, saying that last mile is a major challenge<br />

for every player in the industry. In this interview with JUMOKE LAWANSON, he talks about the steady growth of Ntel, its hurdles and what consumers should expect from the company in future.<br />

Why and how did you decide to<br />

join Ntel?<br />

When my predecessor<br />

left, the company<br />

started a search<br />

and because telecommunications<br />

is<br />

a very small world, I was contacted<br />

in August last year and came for a<br />

three days rigorous interview process<br />

and I was very happy to finally<br />

emerge as the chosen CEO. I take<br />

this as my own company and I am<br />

very keen to see growth. To me, it<br />

is more about the pride of Nitel, all<br />

of my colleagues from around the<br />

world have sent me messages on<br />

Linkedin saying that I am now running<br />

the BT (British Telecoms) of<br />

Nigeria and that is exactly what it is,<br />

it is the BT of Nigeria. We definitely<br />

have a mountain of challenges but<br />

we also have massive opportunities.<br />

It is not going to happen overnight<br />

but the opportunity to make it happen<br />

was irresistible to me. I actually<br />

said yes to the job before I asked for<br />

the package. I was keen to re-vitalise<br />

the business and put it in the right<br />

path before we then start talking<br />

about it, so that is what I have spent<br />

my time doing.<br />

What have you tried to do to<br />

grow Ntel, considering that the<br />

telecoms sector is currently<br />

swamped with challenges and<br />

what have you seen within the<br />

company that you are working<br />

to change?<br />

The macro telecoms environment<br />

has had a fair share of challenges but<br />

these challenges including the MTN<br />

fine and what is currently going on<br />

with 9mobile are not terminal. MTN<br />

was able to weather the storm. I talk<br />

to me peers, and there is one thing<br />

that is really clear, that is the fact<br />

that the eco-system has to survive.<br />

Nobody wants another player to fail.<br />

If MTN collapsed it would not be<br />

good for us, neither would it be good<br />

for 9mobile. We need confidence<br />

because as a body, we work very<br />

closely together. There is a high level<br />

of indebtedness across the whole<br />

industry but we also have a very good<br />

regulator as enabling body. Every<br />

single role I’ve had in my career, the<br />

company I work with is always the<br />

last one to come into the industry,<br />

so I am naturally drawn to problem<br />

cases and when I see challenges in<br />

the market, I also see opportunities.<br />

In the last five months I noticed that<br />

when Ntel launched into the market,<br />

we had the 4GLTE only preposition<br />

and my view was that this was the<br />

wrong strategy to have because if<br />

you have a 4G LTE service which is<br />

really high-end, how are you going<br />

to get the mass market when you<br />

are the fifth entrant, arguably the<br />

sixth entrant because a lot of people<br />

compare us to Smile Communications,<br />

although we should surpass<br />

Smile this year in terms of subscriber<br />

numbers. We launched with 4G LTE,<br />

with limited handsets into a market<br />

where there is a massive barrier to<br />

entry, so that was a concern to me<br />

and I made it very clear when I was<br />

discussing with the board of Ntel. Although<br />

I was challenged on it, I gave<br />

them the example of what Swaziland<br />

did with Swazimobile. They grew<br />

their customer base to about 100,000<br />

in about a month because they had<br />

2G and 3G. Ntel should have factored<br />

that in, and built a network that could<br />

have captured all subscribers. Even<br />

if it was just 4G, it would have been<br />

better than 4G LTE because 4G has<br />

a much wider range of compatible<br />

handsets, so we get a lot of customers<br />

complaining that their handsets<br />

don’t work with Ntel SIM cards<br />

because 4G LTE is a different band.<br />

I personally felt that this strategy was<br />

fundamentally flawed and too ahead<br />

of its time. However, we now have a<br />

number of OEMs bringing out LTE<br />

compatible handsets, so the market<br />

will definitely catch up but it might<br />

take another two to three years. How<br />

is a business then going to survive on<br />

a very narrow range? When I came<br />

on board, I saw that we had a very<br />

low subscriber base and an even<br />

lower active base of those subscribers<br />

and what I have done since I<br />

have joined is that I have sat down<br />

with the team and strengthened<br />

it with a commercial preposition.<br />

Lack of funding in the company<br />

meant that Ntel could not expand<br />

nationally but we are in the three<br />

key areas of the market where we<br />

have 40 percent of spend, so we are<br />

where we have to be as a minimum.<br />

Ntel has seen a 45 percent growth<br />

in the last five months. Right now,<br />

we are just under 120,000 subscribers<br />

and when I joined we had only<br />

about 82, 000 subscribers.<br />

What strategy are you taking on<br />

to refocus Ntel as a business?<br />

My predecessor laid more emphasis<br />

on the network so the commercial<br />

set up of this organisation in October<br />

when I joined was almost<br />

non-existent. We had branding and<br />

sales but we did not have any marketing<br />

strategy that we needed to<br />

do to grow the base, so I re-focused<br />

sales and drew up a budget to run<br />

some cluster campaigns. Now, we<br />

are using the little money we are<br />

generating more effectively, to the<br />

point that since I have arrived, we<br />

have now grown our customer base<br />

by 45 percent in five months; that is<br />

what we have done differently. It is<br />

the same team but with focus this<br />

time. I live on one mantra – what<br />

gets measured is what gets done.<br />

We measure sales every single day,<br />

and as we speak, we did the highest<br />

sales number in a day just yesterday,<br />

in the history of this business.<br />

Every month since October, we<br />

have been growing. In September<br />

2017, we grew about 10 percent,<br />

by November we grew 15 percent,<br />

as challenging as December was<br />

for us, we grew seven percent and<br />

in January <strong>2018</strong> we saw 52 percent<br />

growth in customer acquisitions. In<br />

February which has only 28 days,<br />

we grew 47 percent and this is fact.<br />

What would you say is the major<br />

contributory factor to growth recorded<br />

in the last few months?<br />

We focused sales and split them into<br />

their right structure – indirect sales<br />

channel and direct sales channel<br />

and the online sales channel which<br />

is coming up. We then launched<br />

propositions like the new ‘Wawu’<br />

offer. In addition, you can now buy<br />

our SIMS from anywhere, do a pre-<br />

KYC and then be directed through<br />

our below the line campaign management<br />

which didn’t exist before,<br />

to then go to your nearest store. By<br />

focusing every single team on their<br />

lanes and driving them with targets<br />

every single day, there is bound to<br />

be constant growth. The ideas are<br />

all from the team and I just enable<br />

them. If I had said in October that<br />

I needed the staff to give me a 300<br />

percent increase in their daily acquisitions,<br />

people would have just<br />

left, but now, we are almost on 400<br />

percent increase on daily acquisitions<br />

and we are still going for more.<br />

Last year, you announced a national<br />

roaming agreement with<br />

9mobile. Please give details of<br />

this deal and when is it expected<br />

to kick off?<br />

At the time when Etisalat, now<br />

9mobile encountered its debt crisis<br />

and management was taken over<br />

by the owed banks, I went to see Boye<br />

Olusanya, the new CEO of 9mobile<br />

because we were also interested in acquiring<br />

the company after it lost about<br />

seven million subscribers. On paper,<br />

9mobile was down to about 13 million<br />

subscribers from 21 million subscribers<br />

and I thought if 9mobile have lost over<br />

seven million subscribers and they have<br />

a network built for 21-22 million subscribers<br />

then they have enough capacity.<br />

I told Boye that Ntel needs 2G and 3G to<br />

build scale so that we can then use that<br />

to grow our base and then move them<br />

over to 4G. Instead of carrying the cost of<br />

22 million subscribers, I suggested that<br />

we do a national roaming deal and that<br />

was how we entered into the agreement<br />

which is approved by the NCC and we<br />

are currently at the stage of agreeing<br />

commercials. We are doing the commercial<br />

rates and we are going to get a<br />

good landing on it.<br />

How sure are you that the preferred<br />

bidder for 9mobile acquisition<br />

will be interested in<br />

holding up the national roaming<br />

deal?<br />

One of the concerns that the board<br />

on Ntel had was that; how would<br />

we be sure that the people that buy<br />

9mobile will be favourable to supporting<br />

the national roaming agreement?<br />

And there are certain parties<br />

that we will be more concerned<br />

about in the list of potential bidders.<br />

Some of the eco system players<br />

might not have been supportive,<br />

but I always believe that business<br />

is business. It is illogical for you to<br />

kill a deal especially when whoever<br />

buys 9mobile is inheriting a huge<br />

amount of debt from the banks. So<br />

the banks are the ones that will say<br />

that if this deal is bringing in revenue<br />

then why kill it. The revenue<br />

is passive because you don’t have<br />

to do anything to get the revenue.<br />

You are enabling the environment,<br />

enabling the eco system and you<br />

might even gain access to some of<br />

our own spectrum, so I can’t see<br />

Teleology, if they are the ones that<br />

have subsequently secured 9mobile,<br />

doing anything but support it.<br />

In fact, I have seen that everybody<br />

is now keen for this deal to happen,<br />

especially the people that have<br />

acquired it because it makes good<br />

business sense.<br />

How do you reconcile the fact<br />

that you have grown your revenue<br />

and subscriber base, when<br />

at the same time, there has<br />

been a lot of complaints about<br />

the sudden hike in Ntel’s data<br />

bundle prices?<br />

Ntel’s unlimited data bundle offer<br />

which sold for N12, 500 was increased<br />

to N17, 500. It was initially<br />

set at N12, 500 because the offer<br />

was very aggressive and we had to<br />

be competitive in the market at the<br />

time. However, to have completely<br />

unlimited internet access is not a<br />

sustainable proposition because<br />

what started to happen was that<br />

because people had completely<br />

unlimited data, there were situations<br />

where there were numerous<br />

users blowing that plan; people<br />

were using that plan to run their<br />

businesses and it was almost like<br />

reselling it because it was unlimited.<br />

We found that there were very few<br />

people on our network accounting<br />

for over 60 percent of the data<br />

capacity. No other network offers<br />

completely unlimited data; there is<br />

a fair usage policy. Although we lost<br />

some of our customers and we knew<br />

that there will be a fall-out so we<br />

gave customers a soft landing in the<br />

sense that, we carefully explained to<br />

them that we needed to move with<br />

the times and then we introduced<br />

an offer where they could pay the<br />

new price of 17,500 for two months<br />

and get the third month for free.<br />

Our weekly plans also became very<br />

popular and because we know what<br />

their behavior profile is, we send<br />

them messages specific to what<br />

their behavior is and we are beginning<br />

to automate the whole process<br />

to win customers back.<br />

What would you say about the<br />

fact that people believe Ntel;<br />

riding on the Nitel infrastructure<br />

should be able to offer cheaper<br />

data with the same quality of<br />

service?<br />

We have been able to<br />

grow our base by 45%<br />

in five months with<br />

no external funding<br />

and that is a testament<br />

to the team.<br />

So, this business will<br />

grow regardless of<br />

whether we get external<br />

funding or not,<br />

although it may be<br />

at a slower pace. We<br />

might not be able<br />

to expand without<br />

funding, but we will<br />

densify our coverage<br />

in the cities where we<br />

are currently present<br />

and we will be a sustainable<br />

business<br />

The former Nitel had a guided<br />

liquidation of assets and they had<br />

suffered from under investment<br />

for years. On that basis, what Ntel<br />

subsequently acquired had been<br />

encroached, we don’t have continuous<br />

cable, and we have even had our<br />

SAT-3 cable to Port Harcourt cut;<br />

even the roads have been dug up.<br />

You know in China, it is a criminal<br />

offence to dig up fibre but here it is<br />

rife. Last mile is a major challenge<br />

for every single player in this industry,<br />

so it is something that will<br />

be addressed as we start to plug<br />

those gaps – and we are looking at<br />

strategic acquisitions and partnering<br />

with people. Nobody, not even<br />

the mighty Nitel has continuous<br />

last mile access. All the eco-system<br />

players have to cooperate with each<br />

other and when it comes to last mile.<br />

Ntel is only present in three<br />

states across Nigeria – Lagos,<br />

Abuja and Port Harcourt, when<br />

do you plan to roll out services<br />

across other parts of the country?<br />

Once we launch national roaming<br />

by April <strong>2018</strong>, it would give us the<br />

opportunity to be across Nigeria<br />

because the customer would not<br />

know if their internet service is<br />

9mobile powered or powered by<br />

another player, because we are also<br />

talking to other eco-system players<br />

that are interested in doing national<br />

roaming with us. The message is<br />

going to get stronger because we<br />

would be everywhere; not with our<br />

4G LTE service, but wherever the<br />

host network is for 2G and 3G services<br />

and the 4G of the operators, so<br />

customers will be able to buy their<br />

Ntel SIMS in all these places in April.<br />

If we find that we suddenly have<br />

about 300, 000 subscribers through<br />

the national roaming in Oyo State,<br />

compare to another state where we<br />

have about 50,000 using our service,<br />

we automatically know that Oyo<br />

State is the next best place to roll out<br />

our 4G service. So national roaming<br />

is crucial from two points of views;<br />

it helps give us the right insight<br />

to where to roll out and gives us<br />

mass market, customer base which<br />

makes us a more credible player.<br />

What’s your take on the National<br />

Broadband Plan (NBP); do you<br />

think the 30 percent penetration<br />

target is achievable by the end<br />

of <strong>2018</strong>?<br />

We are currently at 21 percent mobile<br />

broadband penetration and I<br />

think the eco-system players have<br />

a very vital role to play in achieving<br />

this target. I know for a fact that<br />

once we get the funding that we are<br />

expecting, which is imminent, we<br />

would be able to beat our drum. So<br />

from a mobile point of view, I have<br />

no doubt that we would get to that<br />

30 percent target; because of what<br />

Ntel is doing and because of what<br />

other players including MTN will be<br />

doing. There is a real race because<br />

data is the future. With fixed lines<br />

for broadband, there are a lot more<br />

issues including the Right of Way<br />

(RoW) issues and it is much more<br />

capital intensive, so I think that the<br />

industry will give it a fair run for its<br />

money and once we get fully funded<br />

and we start to generate the cash<br />

flow that we know we can generate,<br />

we would then start to look into the<br />

fixed lines, but for now, it is mobile<br />

first.<br />

What are Ntel’s plans for funding<br />

and how do you intend to get<br />

new investors on board?<br />

We have been able to grow our base<br />

by 45 percent in five months with no<br />

external funding and that is a testament<br />

to the team. So, this business<br />

will grow regardless of whether we<br />

get external funding or not, although<br />

it may be at a slower pace.<br />

We might not be able to expand<br />

but we will densify our coverage in<br />

the cities where we are currently<br />

present and we will be a sustainable<br />

business. But what funding will do is<br />

that it will give us the ability to continue<br />

our roll out and to drive more<br />

above the line awareness, which is<br />

what we really need to support the<br />

sales team on ground. Prior to me<br />

joining Ntel, I was interviewed by<br />

investors both home and abroad.<br />

However, I noticed that around<br />

November/December when I kept<br />

on reporting continuous improvement<br />

from the low base that we had,<br />

we started to get a lot of requests<br />

to offer us funding. We have also<br />

developed a very good antenna to<br />

identify the serious investors. Ntel<br />

also has a substantial board and all<br />

the members are individually successful<br />

in their own right including<br />

our chairman and vice chairman,<br />

but they are all investors, and every<br />

investor looks at the progress of the<br />

business and management team.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

<strong>26</strong> BUSINESS DAY<br />

This is M NEY<br />

A daily guide to your Personal Finance<br />

• Savings<br />

• Travel<br />

• Debt & Borrowing<br />

• Utilities<br />

• Managing your Tax<br />

Are your children<br />

financially literate?<br />

tional about introducing<br />

this important subject to<br />

children from their earliest<br />

years.<br />

It is heartwarming to<br />

see the efforts being made<br />

by the Central Bank of Nigeria<br />

(CBN), the Nigerian<br />

Stock Exchange (NSE) as<br />

well a financial literacy<br />

steering committee including<br />

stakeholders in<br />

the capital markets, banking,<br />

insurance, and pensions<br />

industries in Nigeria,<br />

to drive for financial literacy<br />

among our youth.<br />

When should money<br />

lessons start?<br />

Parents have a primary<br />

role to play in encouraging<br />

financial literacy among<br />

their children as the most<br />

practical and profound<br />

lessons are taught at<br />

home. To raise money-<br />

Global Money<br />

Week (GMW)<br />

was celebrated<br />

last week.<br />

It is a Child<br />

& Youth annual financial<br />

awareness campaign<br />

built to inspire children<br />

and young people to learn<br />

about money matters, livelihoods<br />

and entrepreneurship.’<br />

“It is more important<br />

than ever for children and<br />

youth to be economically<br />

equipped and empowered<br />

to close inequality<br />

gaps and build a brighter<br />

future. Money Matters is<br />

important because children<br />

and youth need to<br />

receive the knowledge<br />

and develop skills to make<br />

smart financial decisions<br />

throughout life.”<br />

Our current educational<br />

system focuses almost<br />

entirely on academic subjects<br />

and very rarely is any<br />

aspect of money management<br />

taught in the school<br />

curriculum. Children thus<br />

leave school and university<br />

and step out into the<br />

world with little or no<br />

knowledge about how to<br />

manage money. Yet money<br />

matters impact every<br />

aspect of our lives.<br />

Until financial literacy<br />

is integrated into the Nigerian<br />

school curriculum<br />

to better equip students to<br />

manage their finances in<br />

adulthood, the responsibility<br />

largely falls on parents,<br />

grandparents, guardians,<br />

teachers and other<br />

stakeholders to be intensavvy<br />

children, start to<br />

teach your children from<br />

their earliest years and<br />

certainly from when they<br />

can count. Thereafter,<br />

regularly reinforce money<br />

lessons as they grow.<br />

Teach them the difference<br />

between wants and<br />

needs.<br />

Discuss with them<br />

where money is going and<br />

what your priorities are.<br />

They should also make<br />

their budget and prioritize<br />

between their wants,<br />

and needs. Sometimes it is<br />

difficult to explain things<br />

but practical exposure to<br />

paying utility and other<br />

bills can become powerful<br />

learning events. These<br />

will be long lasting lessons<br />

in how they manage their<br />

own money.<br />

Involve children in the<br />

family finances<br />

When it comes to earning,<br />

saving, spending and<br />

giving, try to involve your<br />

children as you plan your<br />

basic household budget.<br />

Take young children to the<br />

supermarket with you. Let<br />

them watch the process<br />

of selecting various items<br />

and how much they cost.<br />

Allow them to make some<br />

choices to learn what is<br />

expensive as compared to<br />

what is more affordable.<br />

Play board games<br />

Board games are a powerful<br />

tool for learning. The<br />

Monopoly Board Game<br />

and Cash Flow for Kids<br />

are engaging educational<br />

games that teach the basic<br />

concepts of money management<br />

through play.<br />

Turn this learning opportunity<br />

into quality face-toface<br />

family time, building<br />

long lasting relationships<br />

and learning at the same<br />

time.<br />

Should children be<br />

given an allowance?<br />

An allowance puts<br />

money in your childrens<br />

hands and presents an<br />

opportunity to introduce<br />

budgeting and prioritizing.<br />

Opinions vary as<br />

to whether or not they<br />

should be given an allowance.<br />

Some argue that it<br />

gives them unrealistic expectations<br />

and develops<br />

in them a sense of entitlement<br />

to be given money<br />

for doing nothing.<br />

When your children<br />

earn or are given an allowance,<br />

help them to divide<br />

it into four tiers: saving,<br />

investing, spending, and<br />

giving. By guiding them<br />

through these concepts,<br />

you are laying a foundation<br />

for their future financial<br />

security.<br />

Should you pay for<br />

chores?<br />

Some parents go as<br />

far as to introduce commission<br />

based work for<br />

chores. Certain tasks at<br />

home are thus assigned<br />

amounts and if the job is<br />

done very well, they are<br />

paid. If they don’t do the<br />

job well or display a bad<br />

attitude or are unhelpful,<br />

Good money habits,<br />

learning early in life can<br />

help to insulate children<br />

from making hard mistakes<br />

later in life<br />

payment is withheld. One<br />

wonders if the payment<br />

for chores wont make children<br />

tie monetary compensation<br />

to everything<br />

that they do. There should<br />

be roles and responsibilities<br />

in every home without<br />

monetary compensation.<br />

Learning to earn<br />

Children should learn<br />

the virtues of work from<br />

a young age. However, do<br />

ensure that the jobs that<br />

they do are age appropriate.<br />

Even the youngest<br />

children can do minor<br />

tasks that keep them engaged<br />

and provide useful<br />

learning opportunities.<br />

How are your children<br />

spending the Easter holidays?<br />

A holiday period<br />

presents one of the best<br />

opportunities to put some<br />

financial principles their<br />

way. Our children tend to<br />

imitate our money habits.<br />

They see you working<br />

hard so why not put them<br />

to work for at least part<br />

of the holiday. Of course<br />

they must get the required<br />

rest to prepare for an important<br />

term but vacation<br />

jobs provide valuable<br />

lessons that hard work<br />

of how money should be<br />

earned. There is also the<br />

added benefit that their<br />

work experience needs.<br />

As children get older,<br />

they are introduced to<br />

debit and credit cards.<br />

Indeed, as soon as they<br />

arrive at some university<br />

campuses, they become<br />

the target of financial institutions,<br />

some of who<br />

are keen to introduce debt<br />

very early in their banking<br />

relationships. They<br />

must be taught the pros<br />

and cons of both. If your<br />

children become prone to<br />

debt from an early age you<br />

can be certain that you will<br />

be spending much of your<br />

retirement years bailing<br />

them out of staggering financial<br />

difficulties.<br />

We all know how much<br />

better off we might have<br />

been if we had learned the<br />

basics of personal finance<br />

when we were much<br />

younger. Good money<br />

habits, learning early in<br />

life can help to insulate<br />

children from making<br />

hard mistakes later in life.<br />

This is your chance to give<br />

your children a head start<br />

by introducing some of the<br />

basic money principles to<br />

them now. They will be so<br />

much better for it. Financial<br />

knowledge is a gift that<br />

will be given throughout<br />

their lives.<br />

Instagram and Twitter: @<br />

mmwithnimi,<br />

Facebook and Google+:<br />

‘Money Matters with<br />

Nimi’.<br />

www.<br />

moneymatterswithnimi.<br />

com, or send us<br />

an email info@<br />

moneymatterswithnimi.<br />

com<br />

Nimi Akinkugbe has<br />

extensive experience<br />

in private wealth<br />

management. She seeks to<br />

empower people regarding<br />

their finances and offers<br />

frank, practical insights to<br />

create a greater awareness<br />

and understanding of<br />

personal finance.<br />

For more personal finance<br />

tips, contact Nimi:<br />

Email: info@<br />

moneymatterswithnimi<br />

Website: www.<br />

moneymatterswithnimi.<br />

com<br />

Twitter: @MMWITHNIMI<br />

Instagram: @<br />

MMWITHNIMI<br />

Facebook:<br />

MoneyMatterswithNimi


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

C002D5556<br />

BUSINESS DAY<br />

27


28<br />

BUSINESS DAY<br />

C002D5556<br />

Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

Mobile money in Nigeria’s peers to spur country’s financial inclusion<br />

ENDURANCE OKAFOR<br />

As Nigeria lingers on<br />

financial inclusion, Kenya<br />

and Ghana continues<br />

to show the rest of<br />

Africa the way through<br />

mobile banking.<br />

Nigeria can increase its financial<br />

inclusion rate if it follows in<br />

trend of its Africa peers in the use of<br />

mobile phones for banking, popularly<br />

referred to as mobile money.<br />

The mobile money initiative is<br />

a financial services platform that<br />

allows its users to use their mobile<br />

phone as a mobile bank account,<br />

meaning the individual does not<br />

need to open a bank transaction<br />

account with any financial institution<br />

before having access to<br />

financial service, like making payments,<br />

transfer, receiving money<br />

and loans grants.<br />

As long as a mobile telephone<br />

user registers for the service, the<br />

individual can open a mobile account<br />

and be able to make transactions<br />

using the same medium.<br />

This is made possible by the<br />

collaboration of the phone network<br />

service providers and the financial<br />

regulator in the country.<br />

“The growth in the use of phones<br />

for banking in Ghana comes as mobile<br />

money continues to expand<br />

across sub-Saharan African and<br />

has been a key tool in advancing<br />

financial inclusion,” GSMA Intelligence<br />

said in a report last year.<br />

Also in Kenya, M-Pesa, the mobile<br />

money system that is the pride<br />

and anchor of Kenya’s homegrown<br />

technology community, has had<br />

plenty of hype and excitement<br />

since its 2007 launch.<br />

The service, developed by Kenya’s<br />

largest phone operator Safaricom,<br />

enables almost 30 million<br />

people to pay for everyday goods<br />

and services, access loans, and<br />

send money all over the world.<br />

Around $28 billion flowed through<br />

it in 2015, equivalent to around 44<br />

percent of Kenya’s GDP that year.<br />

If Nigerian telephone service<br />

providers key into this, it could<br />

mean that every Nigeria that have<br />

access to a mobile phone and wish<br />

to tap from the service, regardless<br />

of their location in the country can<br />

have access to financial services, as<br />

they would not have to open a bank<br />

account. This could lead to more<br />

financial inclusion as people who<br />

are in the rural areas couple with<br />

those who do not have the financial<br />

resources to operate a basic bank<br />

account can be able to now have<br />

access to financial services.<br />

According to the telecom sector<br />

report from the National Bureau of<br />

Statistics (NBS), the Total Active<br />

Voice Subscription and Total Active<br />

Internet Subscription in the fourth<br />

quarter of 2017 was 145 million and<br />

98.699 million respectively.<br />

The service has spread to 10<br />

countries, including Albania,<br />

Egypt, Romania, Lesotho, and Tanzania.<br />

Its success at the forefront of<br />

the disruption of cash usage has<br />

helped support a local technology<br />

start up scene in Kenya and<br />

attracted international partners,<br />

making Nairobi one of Africa’s<br />

leading tech hubs.<br />

While in Ghana, the value of<br />

deposits and withdrawals by the<br />

use of mobile phones for banking<br />

almost doubled in 2017, according<br />

data published by the central bank.<br />

The value of mobile transactions<br />

rose to 155.8 billion cedis<br />

($34.6 billion) last year from 78.5<br />

billion cedis in 2016, Bank of Ghana<br />

said in a statement on its website.<br />

Meanwhile, the Central Bank<br />

of Nigeria (CBN) aims at attaining<br />

80 percent financial inclusion rate<br />

and 20 percent exclusion by the<br />

year 2020.<br />

This is however seen as ambitious<br />

by analyst as the inclusion<br />

rate in Africa’s largest economy<br />

reduces by 2.1 percent between<br />

2014 and 2016.<br />

BICS collaborates with Software Groups and NIPOST to drive financial inclusion in Nigeria<br />

… over 4,000 postal centres to serve as transaction centres<br />

KELVIN UMWENI<br />

As part of initiative to<br />

reduce the large population<br />

of unbanked and<br />

the underbanked in the<br />

country, Basic Information and<br />

Communication Systems (BICS)<br />

Limited in collaboration with<br />

Software Group and the Nigerian<br />

Postal Service (NIPOST) held a<br />

workshop on digital services and<br />

financial inclusion on Wednesday<br />

28th, <strong>2018</strong> at the Lagos Oriental<br />

Hotel, Victoria Island, Lagos state.<br />

The workshop which was titled<br />

“Digital Financial Services and<br />

Financial Inclusion Using Alternative<br />

Delivery Channels” forms<br />

part of efforts towards achieving<br />

the Central Bank of Nigeria (CBN)<br />

National Financial Inclusion Strategy<br />

(NFIS) goal of reducing the<br />

percentage of those with little or<br />

no access to financial services (the<br />

underbanked and the unbanked)<br />

to 20 per cent by 2020.<br />

In a chat with correspondents,<br />

Mr Greg Nwamadi the Director<br />

of Corporate Services, BICS (a<br />

Nigerian enterprise solution firm<br />

devoted to providing diverse delivery<br />

channels of financial services<br />

to remote areas) averred that the<br />

partnership which is anchored<br />

on leveraging agent distribution<br />

networks using NIPOST centres<br />

and propelled by technologies<br />

provided by Software Groups will<br />

also provide 10,000 jobs for the<br />

population in the short term.<br />

Nwamadi said that BICS is<br />

already building a training facility<br />

in Edo state to train up to<br />

1000 - 2000 youths annually and<br />

the graduants will form the bulk<br />

of agents that will market the offtakers<br />

products.<br />

“We are going to activate the<br />

over 4,000 NIPOST location centres<br />

nationwide which will become<br />

transaction centres with a<br />

specific mandate for each of these<br />

offtakers. Our focus is to on-board<br />

Commercial banks, Microfinance<br />

Banks (MFBs) and Non-financial<br />

Institutions into a NIPOST sharedplatform<br />

for transactions and<br />

other services thereby creating<br />

efficiency in customer acquisition<br />

and transaction processing”<br />

Nwamadi said.<br />

“Agents will be properly empowered<br />

with motorbikes, handheld<br />

devices and other vital items<br />

to go to the last man in every nook<br />

and cranny of the country to carry<br />

out financial services because that<br />

is the essence of financial inclusion”<br />

he added.<br />

Mallam Mukhtar Baba, General<br />

Manager, Financial Services,<br />

NIPOST on his part observed that<br />

about 60 per cent of adult population<br />

living in the rural areas have<br />

little or no access to financial services.<br />

More so, close to 70 per cent<br />

of postal outlets are located in the<br />

rural areas devoid of any form of<br />

bank presence.<br />

It is in this that the relevance<br />

of NIPOST in driving financial<br />

inclusion becomes pertinent. To<br />

the financial players, it is a strategy<br />

to widen their outreach and<br />

cut cost as the over 4,000 postal<br />

centres scattered across the length<br />

and breadth of the country will<br />

automatically serve as extension<br />

of bank branches” Mukhtar said.<br />

Joseph Agyeman-Badu, Software<br />

Groups’ Sales Manager for<br />

Africa stated that the tripartite<br />

collaboration entails Software<br />

Groups, a Bulgarian-based information<br />

technology multinational<br />

company, providing the technology<br />

to drive the entire process.<br />

BICS Limited being SG’s exclusive<br />

partner for Nigeria remains the<br />

business front for the NIPOST platform<br />

while the different locations<br />

of NIPOST we serve as transaction.<br />

NIPOST, a core member of the<br />

National Financial Inclusion Strategy<br />

Committee plays a strategic<br />

role of providing a financial supermarket<br />

for customers of every<br />

financial service provider to access<br />

services without necessarily going<br />

to his/her bank branch.<br />

“With BICS driving the process,<br />

we are deploying the technology<br />

for a nationwide agency banking<br />

network where anyone, regardless<br />

of the bank a customer has an account,<br />

he can walk into any offices<br />

of NIPOST to carry out regular<br />

banking transactions ranging<br />

from deposits, withdrawals, bill<br />

payments, remittances, electronic<br />

fund transfer among others.”<br />

Agyeman-Badu said.<br />

“For now our market segment<br />

covers banks, microfinance institutions<br />

while insurance, financial<br />

technology companies and credit<br />

unions will be added later.”<br />

Speaking on the extent of coverage<br />

of the strategy, Agyeman-Badu<br />

noted that they are flagging off<br />

the initiative with NIPOST for the<br />

meantime while subsequently, any<br />

established agency that is interested<br />

can actually come on-board.<br />

“NIPOST is our official national off<br />

taker and since it’s an agency banking,<br />

any established third party<br />

agent network can actually also<br />

sign up on the platform” he said.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

BUSINESS DAY<br />

29


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

30 BUSINESS DAY


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

BUSINESS DAY<br />

31


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

32 BUSINESS DAY<br />

C002D5556<br />

INSIGHT<br />

Full speech by Bill Gates at the Special<br />

Bill Gates, Co-Chair of Bill & Melinda Gates Foundation, spoke at the National<br />

Economic Council, Aso Rock Presidential Villa, Abuja on Thursday <strong>Mar</strong>ch 22, <strong>2018</strong>.<br />

Your Excellency Muhamadu Buhari, President of<br />

the Federal Republic of Nigeria; Professor Yemi<br />

Osinbajo, Vice President of the Federal Republic of<br />

Nigeria; Senator Bukola Saraki, Senate President;<br />

Honorable Yakubu Dogara, Speaker of the House;<br />

Your Excellencies, executive governors of the Federal Republic<br />

of Nigeria; Royal fathers; Distinguished ladies and gentlemen;<br />

and as you say in Nigeria, all other protocols observed.<br />

Thank you for welcoming me to Nigeria. I’ve been coming<br />

here regularly since 2006, and I’ve always felt welcome.<br />

Nigerians usually greet me warmly. The first time I met the<br />

“Nigeria is one of the most dangerous<br />

places in the world to give birth, with the<br />

fourth worst maternal mortality rate in<br />

the world, ahead of only Sierra Leone,<br />

Central African Republic, and Chad. One<br />

in three Nigerian children is chronically<br />

malnourished.”<br />

dation’s biggest office in Africa is here. We have committed<br />

over $1.6 billion in Nigeria so far, and we plan to increase our<br />

commitment. We have strong relationships with the federal<br />

government, state governments, businesses, NGOs, and civil<br />

society organizations. We are eager to support you as you work<br />

to make Nigeria a global economic powerhouse that provides<br />

opportunity for all its citizens—as you strive fulfill this country’s<br />

immense promise.<br />

I’m blown away by how much Nigeria has changed in the<br />

past decade. Consider the technology sector. That energy I<br />

talked about during the early days of Microsoft, our passion<br />

and our eagerness to take risks…. That’s the same energy that<br />

powers technology hubs across Nigeria like Co-Creation and<br />

Enspire.<br />

The novelist Chimamanda Adichie, who my wife especially<br />

admires, captured the country’s spirit when she said her fellow<br />

Nigerians have “big dreams and big ambitions.”<br />

This line graph of Nigeria’s per capita GDP shows where<br />

those dreams and ambitions can lead. With the exception of the<br />

recent recession, the slope goes straight up. As a result of this<br />

growth, Nigeria is now the biggest economy on the continent.<br />

You are rapidly approaching upper middle-income status, like<br />

Brazil, China, and Mexico.<br />

But growth is not inevitable. Nigeria has unmatched economic<br />

potential, but what becomes of that potential depends<br />

on the choices you make as Nigeria’s leaders.<br />

The most important choice you can make is to maximize<br />

your greatest resource, the Nigerian people. Nigeria will thrive<br />

when every Nigerian is able to thrive.<br />

If you invest in their health, education, and opportunities—<br />

the “human capital” we are talking about today—then they<br />

will lay the foundation for sustained prosperity. If you don’t,<br />

however, then it is very important to recognize that there will<br />

be a sharp limit on how much the country can grow.<br />

You see this risk in the data. From the point of view of the<br />

quality of life, much of Nigeria still looks like a low-income<br />

country. Let me give a few examples.<br />

1. In upper middle-income countries, the average life<br />

expectancy is 75 years. In lower middle-income countries,<br />

it’s 68. In low-income countries, it’s 62. In Nigeria, it is lower<br />

still: just 53 years.<br />

2. Nigeria is one of the most dangerous places in the world<br />

to give birth, with the fourth worst maternal mortality rate in<br />

the world, ahead of only Sierra Leone, Central African Republic,<br />

and Chad.<br />

3. One in three Nigerian children is chronically malnourished.<br />

I do not enjoy speaking to you this bluntly when you have<br />

been gracious enough to invite me here. But I am applying an<br />

important lesson I learned from Alhaji Aliko Dangote.<br />

Recently, Aliko and I were having a conversation with several<br />

governors about their states’ official immunization rates. Aliko’s<br />

way of stressing the importance of accurate data was to tell us, “I<br />

didn’t get rich by pretending to sell bags of cement I didn’t have.”<br />

I took from that that while it may be easier to be polite, it’s more<br />

important to face facts so that you can make progress.<br />

On immunization, you are already living that lesson: last year<br />

Nigeria revised its immunization coverage numbers downward to<br />

reflect more accurate sources, and I applaud you for those lower<br />

numbers. They may look worse, but they are more real, which is the<br />

first step toward saving and improving more lives.<br />

I urge you to apply this thinking to all your investments in your<br />

people. The Nigerian government’s Economic Recovery and Growth<br />

Plan identifies “investing in our people” as one of three “strategic<br />

“The Nigerian government’s Economic<br />

Recovery and Growth Plan identifies “investing<br />

in our people” as one of three “strategic<br />

objectives.” But the “execution priorities”<br />

don’t fully reflect people’s needs, prioritizing<br />

physical capital over human capital.”<br />

Sultan of Sokoto, I was honored that he greeted me with the<br />

gift of a white horse.<br />

At some point during every visit, though, some brave person<br />

eventually asks me—very politely—“Why are you actually<br />

here?” It’s an understandable question. Most American technology<br />

guys don’t wander around Nigeria learning about its<br />

health system. But I think I have a good answer.<br />

When we started Microsoft 40 years ago, we wanted to build<br />

a successful business, but we also wanted to make people’s<br />

lives better. We believed computers could revolutionize the<br />

way people lived and worked. But back then only big companies<br />

could afford them. We wanted to give everybody access.<br />

As I got older, travelled more, and learned more about the<br />

world, I realized that billions of people had a problem that<br />

computers couldn’t solve. They lacked the basics of a good life:<br />

food, shelter, health, education, and opportunity.<br />

And so I started my second career with my wife Melinda.<br />

With the money I’d been lucky enough to earn at Microsoft, we<br />

started working toward a different goal: a healthy and productive<br />

life for everyone.<br />

That’s why I come to Nigeria, and that’s why Melinda and<br />

I will continue coming for as long as we are able. Our founobjectives.”<br />

But the “execution priorities” don’t fully reflect people’s<br />

needs, prioritizing physical capital over human capital.<br />

To anchor the economy over the long term, investments in infrastructure<br />

and competitiveness must go hand in hand with investments<br />

in people. People without roads, ports, and factories can’t<br />

flourish. And roads, ports, and factories without skilled workers to<br />

build and manage them can’t sustain an economy.<br />

In preparation for my visit, I asked a research institute at the<br />

University of Washington to model Nigeria’s economic growth<br />

under three scenarios related to health and education, the core of<br />

how economists define human capital.<br />

Here you can see Nigeria’s per capita GDP growth from 2000<br />

until today. If current education and health trends continue—if you<br />

spend the same amount in these areas and get the same results—per<br />

capita GDP flatlines, with economic growth just barely keeping up<br />

with population growth.<br />

If things get worse, it will decline. Unfortunately, this scenario<br />

is a very real possibility unless you intervene at both the federal<br />

and state levels.<br />

Because even in the worst-case scenario, your national income


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

C002D5556<br />

BUSINESS DAY 33<br />

INSIGHT<br />

session of the National Economic<br />

level is about to make you ineligible for certain kinds of development<br />

assistance and loans that you’ve been relying on to fund your health<br />

system and other priorities. Without more and better spent domestic<br />

money, investment in your people will decline by default as donor<br />

money shrinks—a lose-lose scenario for everyone.<br />

However, if you commit to getting better results in health and<br />

education—if you spend more and more effectively—per capita GDP<br />

will stay on its remarkable pre-recession trajectory.<br />

This is the scenario we all want: Nigeria thrives because every Nigerian<br />

is able to thrive. And the data makes it clear that this scenario<br />

is entirely within your reach.<br />

What do I mean by investing in your people? I mean prioritizing<br />

health and education, the factors included in the model I just showed<br />

you. I also mean continuing to open up opportunities in the agriculture<br />

and microenterprise sectors, as the government has proposed in<br />

the ERGP. I mean creating the conditions where Nigerians can reach<br />

their goals while adding value to the economy—the win-win scenario.<br />

Our foundation doesn’t invest directly in education here, but the<br />

World Bank World Development Report that just came out makes<br />

“Here you can see Nigeria’s per capita<br />

GDP growth from 2000 until today. If current<br />

education and health trends continue—if you<br />

spend the same amount in these areas and<br />

get the same results—per capita GDP flatlines,<br />

with economic growth just barely keeping<br />

up with population growth.”<br />

it clear that education leads to improvements in employment, productivity,<br />

and wages. Today, though, more than half of rural Nigerian<br />

children can’t read and write. The conclusion is inescapable: Nigeria’s<br />

economy tomorrow depends on improving its schools today.<br />

The same is true of health, our foundation’s primary focus area.<br />

In 1978, Dr. Olikoye Ransome-Kuti, who later became the Nigerian<br />

minister of health, helped establish primary health care as the global<br />

standard. We now know that a strong primary care system takes care<br />

of 90 percent of people’s health needs.<br />

Tragically, 40 years after Dr. Ransome-Kuti helped other countries<br />

set a course for the future, the Nigerian primary health care system is<br />

broken. The evidence for this can be found in the epidemic of chronic<br />

malnutrition, or stunting. As the name suggests, chronic malnutrition<br />

is not a disease children catch. It is a condition that develops over time<br />

because they are deprived of a diverse diet and the services a strong<br />

primary health care system provides.<br />

The consequences of stunting are devastating. Though stunted<br />

children are defined as shorter than average, we’re not particularly<br />

concerned about their height. What we’re concerned about is their<br />

brains, or what Akin Adesina calls “gray matter infrastructure.”<br />

This is a picture of the brain of a single normally developing<br />

infant. And next to it is a picture of the brain of a single chronically<br />

malnourished infant. Every brain and every child are different, but<br />

you can clearly see the difference in the number of neural connections<br />

in these two brains. And once this kind of damage is done, it’s<br />

very hard to repair.<br />

In Nigeria, one in three children is chronically malnourished and<br />

could therefore be at risk. This is a tragedy for each one of these children;<br />

it is also a huge blow to the economy. According to the World<br />

Bank, addressing the stunting crisis in Nigeria would add almost $30<br />

billion to the GDP. So what will it take to solve stunting? It will take a<br />

focus on agricultural development, nutrition, and primary health care.<br />

A functioning primary health system has six features.<br />

1. Adequate funding.<br />

2. Good facilities located in the right places.<br />

3. Skilled and dedicated health workers.<br />

4. Ample stocks of essential equipment and medicines.<br />

5. Patients who know about the system and want to use it.<br />

6. And a mechanism for collecting the data needed to improve<br />

quality.<br />

I believe the Nigerian primary health care system is not adequately<br />

funded. But it also doesn’t get the most out of its current funding. I<br />

want to re-emphasize that last point about data. More transparency<br />

would lead to more accountability, which would strengthen govern-<br />

ance, leadership, and management, which would improve<br />

quality across the board.<br />

I visited a health clinic in Bodinga LGA in Sokoto yesterday,<br />

and it reminded me why I do this work. I’d like to ask all of you<br />

to spend one hour at a health center in the next month. I think<br />

you’ll see how the system can be improved—and how much<br />

good it will do when it is.<br />

I know Nigeria can build up its primary care system, because<br />

I’ve seen what you accomplish when you meet health<br />

challenges head on.<br />

As many of you know, we’ve been very close partners in<br />

your fight against polio. As you can see on this graph, the<br />

hard work of hundreds of thousands of local leaders and<br />

health workers since the turn of the millennium has paid off.<br />

Nigeria has not had a case of wild polio virus in more than a<br />

year. But the graph also shows that you’ve reported zero cases<br />

before, only to learn that the disease was still circulating in<br />

tiny pockets hidden by insecurity. It would be catastrophic to<br />

let your guard down when you’re on the verge of eliminating<br />

the disease once and for all.<br />

I believe—because I have seen your work in the field as<br />

recently as yesterday—that you will do what it takes to end<br />

polio in Nigeria. We will be here, working side by side with<br />

you, until you do.<br />

Though health is our foundation’s primary area of expertise,<br />

it’s not the only thing we do, and it’s not the only thing I<br />

mean when I say Nigeria should invest in its people. Healthy<br />

people need opportunities to thrive.<br />

One of the most important of these opportunities is agriculture,<br />

the sector that nourishes Nigerians and supports<br />

half the population, especially the poorest.<br />

The agricultural sector is a pillar of the Nigerian economy.<br />

It accounts for a large proportion of your GDP, and during<br />

the oil price collapse and recession, it helped cushion<br />

the economy. But it still has a lot of potential to grow. The<br />

majority of Nigerian smallholder farmers lack access to the<br />

seeds, fertilizer, and training they need to be more productive,<br />

and they lack access to the markets they need to profit<br />

from their labor.<br />

The government has taken important steps to fill these gaps,<br />

with both more investment and a series of smart policies to<br />

encourage private sector investment. These reforms lay the<br />

foundation for a booming agricultural sector that feeds the<br />

country, helps end chronic malnutrition, and lifts up tens of<br />

millions of smallholder farmers. I urge you to build on this<br />

good work.<br />

One of the barriers that continues to prevent smallholders<br />

from thriving is their lack of access to finance. Like good roads,<br />

finance connects farmers to opportunity, yet only 4 percent of<br />

Nigerian farmers currently have a loan to grow their business.<br />

In a country where three quarters of people have mobile<br />

phones, digital financial services provide a solution to this<br />

problem. In fact, digital finance offers the potential to boost<br />

the economy from top to bottom.<br />

Right now, more than 50 million Nigerian adults are at the<br />

whim of chance and the informal economy. With access to<br />

digital financial tools, they can cope better with disasters that<br />

threaten to wipe them out, build assets and a credit history,<br />

and gradually lift themselves out of poverty.<br />

Consider the impact this would have on businesses. Of the<br />

“In 1978, Dr. Olikoye Ransome-Kuti,<br />

who later became the Nigerian minister<br />

of health, helped establish primary health<br />

care as the global standard. Tragically,<br />

40 years after Dr. Ransome-Kuti helped<br />

other countries set a course for the future,<br />

the Nigerian primary health care system<br />

is broken. The evidence for this can be<br />

found in the epidemic of chronic malnutrition,<br />

or stunting.”<br />

“Right now, Nigeria’s fiscal situation is<br />

at what you might call a low equilibrium.<br />

In return for low levels of service, people<br />

pay low levels of tax. We hope to help<br />

you reach a higher equilibrium rooted in<br />

effective and transparent investments in<br />

people. This equilibrium would trigger a<br />

virtuous cycle.”<br />

37 million micro, small, and medium enterprises in Nigeria,<br />

more than 99 percent are micro. Their lack of access to finance<br />

is a leading reason why these businesses can’t grow. With<br />

digital payments, savings, and credit, they will finally have the<br />

resources to plan for the future.<br />

According to the best estimates, digital financial services<br />

will create a 12.4 percent increase in Nigeria’s GDP by 2025.<br />

Meanwhile, oil accounts for about 10 percent of Nigeria’s<br />

GDP. Imagine adding another oil sector and then some to the<br />

economy, but one whose benefits spread far and wide and<br />

reach almost every single Nigerian.<br />

There is another benefit to digital financial services that will<br />

make everything I’m urging you to do much easier: it will vastly<br />

improve the government’s ability to tax and spend efficiently.<br />

Let me pause for a moment to say, I am confident that one<br />

thing you’ve been thinking as I’ve been talking is that, while<br />

you would like to spend more on health and nutrition and<br />

education and agriculture, you don’t have the money to do<br />

everything. I appreciate the fact that what you can spend is a<br />

function of what you raise.<br />

Nigeria’s government revenue as a percentage of its GDP<br />

is by far the lowest in the world, at 6 percent. That makes<br />

investing in your people difficult. The next lowest country,<br />

Bangladesh, collects 10 percent of its GDP. If you got yourself<br />

up to second-to-last in the world, you would have an extra $18<br />

billion to budget. Obviously, you’re aiming higher than that,<br />

but it gives you some idea about the scale we’re talking about.<br />

We want to support you in your work to mobilize more<br />

resources to invest in your country. That’s why our foundation<br />

is working with the Nigeria Governors’ Forum to help states<br />

track internally generated revenue.<br />

Ultimately, raising revenue to invest in growth will require<br />

delivering on the government’s commitments to the Nigerian<br />

people, and convincing them that they will get a return on<br />

their taxes.<br />

Right now, Nigeria’s fiscal situation is at what you might<br />

call a low equilibrium. In return for low levels of service, people<br />

pay low levels of tax. We hope to help you reach a higher<br />

equilibrium rooted in effective and transparent investments<br />

in people. This equilibrium would trigger a virtuous cycle.<br />

More government revenue would lead to more money to<br />

spend on health and education. Better health and education,<br />

and investment in sectors like agriculture, would lead to more<br />

productive farms and factories. More productive farms would<br />

lead to more prosperous farmers who could expand their farms<br />

or invest in other businesses, especially if they had access to<br />

credit and other financial tools. These thriving farms, factories,<br />

and new businesses would lead to more government revenue.<br />

And the cycle would start again.<br />

Triggering that cycle will require bolder action—action you<br />

have the power to take as leaders, governors, and ministers<br />

focused on Nigeria’s future.<br />

Nigerians are known around the world for their big dreams<br />

and big ambitions. Together with the Dangote Foundation, we<br />

will be here to help you achieve your dreams and ambitions.<br />

You have the support of the international community. The<br />

Nigerian private sector will continue to invest. We are eager<br />

to help, but we know we can’t lead. You must lead.<br />

I believe in the grand vision of Nigeria’s future. I believe in<br />

it because I’ve seen it. It’s represented by this line—the line<br />

that depends on healthy, educated people and the surge of<br />

economic activity they will unleash.<br />

And that means that the future depends on all of you—and<br />

your leadership in the years to come. Thank you.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

34 BUSINESS DAY<br />

C002D5556<br />

Cowry Weekly Financial <strong>Mar</strong>kets Review & Outlook<br />

ECONOMY: Debt Profiles of 18 States in Nigeria Exceed<br />

200% of Gross Revenues as at Dec. 2016…<br />

The Fiscal Responsibility Commission (FRC), in its 2016 Annual Report made<br />

available on Monday, <strong>Mar</strong>ch 19, <strong>2018</strong> revealed that debt profiles of 18 states in<br />

Nigeria exceeded 200% of their gross revenues as at December 31, 2016. However,<br />

the FRC did not include the Internally Generated Revenue (IGR) in its computation<br />

of the states’ revenues. The states’ debt to gross revenue ratios were in contrary to the<br />

guidelines of the Debt Management Office (DMO) on debt sustainability, that stated<br />

that the debt to income ratio of states should not exceed 50% of the statutory revenue<br />

for the preceeding 12 months. The report further showed that seven states had their<br />

debt to gross revenue exceed 300% in the year under review: Lagos (670.42%), Osun<br />

(535.25%), Cross River (486.49%), Plateau (342.01%), Oyo (339.56%), Ekiti (339.34%)<br />

and Ogun (329.47%). However, states such as Anambra, Borno, Jigawa, Kebbi, Sokoto,<br />

Yobe and the Federal Capital Territory (FCT) had their debt to revenue ratios under<br />

50% threshold, according to the report. We opine that high debt to gross revenue<br />

ratios of the states could hamper further worsen the prospects of investment in<br />

infrastructure by some of the affected state governments as debt servicing costs<br />

increase and given that most of the borrowed fund would have gone into recurrent<br />

expenses such as payment of salaries. In a related development, the Minister of<br />

Finance, Mrs. Kemi Adeosun stated that Nigeria had the capacity to repay its debt<br />

which stood at N21.725 trillion as at December 31, 2017, representing 18.20% of the<br />

country’s Gross Domestic Product (GDP). This was an improvement over its 2016<br />

ratio of 18.60% which paled in comparison to the debt to GDP ratios of most of the five<br />

major emerging national economies (BRICS): Brazil, India, China and South Africa<br />

(BRICS) stood at 74.04%, 69.50%, 46.20% and 51.60% respectively as at December<br />

31, 2016. The Minister justified the current debt level on the basis of its expansionary<br />

policy drive of stimulating economic activities by making significant investments in<br />

infrastructure which it expects to generate revenue to pay back the debt. Nigeria’s<br />

public debt figures as at December 31, 2017, released by the DMO on Wednesday,<br />

<strong>Mar</strong>ch 14, <strong>2018</strong>, showed external debt comprised <strong>26</strong>.64% of total debt portfolio (up<br />

FOREX MARKET: Naira Appreciates against USD amid<br />

USD306 million Increase in External Reserves…<br />

In the week under review, the local currency appreciated week-on-week (w-o-w)<br />

against the U.S. dollar at the Investors & Exporters Forex Window (I&E FXW) and<br />

the parallel (‘black’) market segments by 0.16% and 0.28% to close at N360.00 and<br />

N362.00 amid USD306 million accretion to the external reserves last week and weekly<br />

injections by the Central Bank of Nigeria (CBN) worth USD210 million into the foreign<br />

exchange market; of which USD100 million was allocated to Wholesale (SMIS),<br />

USD55 million was allocated to Small and Medium Scale Enterprises and USD55<br />

million was sold for invisibles. Elsewhere, the Naira/USD rate remained unchanged<br />

at the interbank foreign exchange market and the Bureau De Change segments at<br />

N330.00/USD and N360/USD respectively. Meanwhile, all dated forward contracts<br />

at the interbank over-the-counter (OTC) segment appreciated – spot rate, 1 month,<br />

2 months, 3 months and 6 months contracts rose by 0.02%, 0.27%, 0.33%, 0.36% and<br />

0.59% to close at N305.70, N363.60/USD, N367.59/USD, N371.80/USD and N386.05/<br />

USD respectively. This week, we expect stability in the Naira as global crude oil prices<br />

remain relatively high which should result in further build-up in foreign reserve.<br />

MONEY MARKET: NIBOR Moderates for Most Tenor<br />

Buckets on Liquidity Ease…<br />

In the week under review, Central Bank of Nigeria (CBN) auctioned treasury<br />

bills worth N53.96 billion via the primary market; viz: 91-day bills worth N5.40<br />

billion, 182-day bills worth N8.39 billion and 364-day bills worth N40.18 billion.<br />

The spot rate for 91-day bills rose to 11.95% (from 11.75%) while spot rate for the<br />

182-day was flattish at 13.00%; however, spot rate for 365-day fell to 13.15% (from<br />

13.185%). The outflows were overly offset by inflows worth N234.32 billion in<br />

matured treasury bills. Consequently, NIBOR for 1 month, 3 months and 6 months<br />

tenor buckets fell w-o-w to 14.10% (from 15.37%), 15.69% (from 16.41%) and<br />

17.33% (from 18.18%) respectively; however, NIBOR for overnight tenor bucket<br />

rose to 27.10% (from 13.30%). Elsewhere, NITTY rose for most maturities tracked<br />

on sell pressure: yields on the 3 months, 6 months and 12 months maturities<br />

rose to 14.27% (from 14.19%), 14.91% (from 14.41%) and 14.99% (from 14.76%)<br />

respectively; however, yield on 1 month maturity fell to 12.35% (from 13.44%).<br />

BOND MARKET: FGN Bond Prices Move in Mixed<br />

Directions Across Maturities Tracked…<br />

In the week under review , FGN bonds traded at the over-the-counter (OTC)<br />

segment moved in mixed directions across maturities tracked. The 20-year, 10%<br />

FGN JULY 2030 debt and the 5-year, 14.50% FGN JUL 2021 debt depreciated<br />

in value by N0.15 and N0.55 respectively; their corresponding yields rose to<br />

13.54% (from 13.50%) and 13.62% (from 13.42%) respectively. However, the<br />

10-year 16.39% FGN JAN 2022 debt and the 7-year 16.00% FGN JUN 2019 debt<br />

appreciated in value by N0.10 and N0.08 respectively; their corresponding yields<br />

fell to 13.57% (from 13.61%) and 13.59% (from 13.70%) respectively. Meanwhile,<br />

FGN Eurobonds traded on the London Stock Exchange depreciated in value for<br />

all maturities tracked – the 10-year, 6.75% JAN 28, 2021, the 5-year, 5.13% JUL<br />

12, <strong>2018</strong> and the 10-year, 6.38% JUL 12, 2023 decreased in value by N0.35, N0.10<br />

and N0.42 respectively; their corresponding yields rose to 5.03% (from 4.91%),<br />

4.39% (from 4.69%) and 5.31% (from 5.40%) respectively. At the OTC market,<br />

we anticipate bargain hunting with resultant price increase amid expectation<br />

of boost in liquidity.<br />

from 20.04% in December 2016) while domestic debt was 73.36% (down from 79.96%<br />

in December 2016). This is in line with the nation’s debt management strategy of<br />

reducing the ratio of domestic debt in the portfolio to 60% and the external debt<br />

increased to 40%. Also, the figures showed that total public debt as at December 31,<br />

2017 was N21.725 trillion, domestic debt for the Federal Government was N12.589<br />

trillion, while the domestic debt of States and the FCT was N3.348 trillion. The<br />

external debt of the Federal Government, States and the FCT also stood at N5.787<br />

trillion. We agree that restructuring of the debt portfolio to increase foreign debt and<br />

lower domestic debt would further reduce government’s debt service costs, lower<br />

interest rates in the domestic market and improve availability of credit facilities to<br />

the private sector. Elsewhere, Nigeria external reserves grew year-to-date by 14.62%<br />

to USD44.60 billion in <strong>Mar</strong>ch 16, <strong>2018</strong> from USD38.91billion at the beginning of<br />

the year. Contributory factors to the increased external reserves remain increased<br />

crude oil production volume on account of relative peace in the Niger Delta region<br />

coupled with current high crude oil price (bonny light at around USD67 per barrel<br />

since the inception of the year). This is expected to give the Apex bank sufficient fire<br />

power to defend the Naira going forward and ease re-payment of the foreign debt.<br />

This week, treasury bills worth N177.31 billion will mature via the secondary<br />

market, hence, we expect moderation in interbank lending rates amid expected<br />

ease in financial system liquidity.<br />

Cowry Weekly Stock Recommendations As At Friday 23 <strong>Mar</strong>ch <strong>2018</strong><br />

EQUITIES MARKET: The Nigerian Equities <strong>Mar</strong>ket Falls by<br />

111 Bps on Sustained Profit Taking…<br />

In the just concluded week, the Nigerian Stock <strong>Mar</strong>ket fell by 1.11% on the<br />

back of profit taking activity; hence, the twin market performance measures, NSE<br />

ASI and market capitalisation which closed lower at 41,472.10 points and N14.98<br />

trillion respectively. Most sectored guages closed in the red territory: NSE Consumer<br />

Goods Index, NSE Oil/Gas Index, NSE Industrial Index and NSE Insurance index fell<br />

by 2.19%, 2.06%, 2.84% and 3.06% to close at 961.54 points, 360.43 points, 2,283.04<br />

points and 152.90 respectively. However, NSE Banking Index rose by 3.31% to close<br />

at 537.16 points. Elsewhere, Naira votes and transacted volumes decreased w-o-w<br />

by 21.13% and 4.81% to N28.93 billion and 2.33 billion shares respectively. On the<br />

sidelines of trading activities, Custodian and Allied Plc (FY Dec 31, 2017) recorded<br />

a 11.67% increase in gross earnings to N43.05 billion as well as a 37.25% increase<br />

in profit after tax to N7.3 billion. The company also proposed a cash dividend per<br />

share of N0.32 which translated to a dividend yield of 7.80% based on Friday’s closing<br />

share price of N4.10. This week, we expect bullish activity in the market as investors<br />

re-position to take advantage of the lower prices amid good corporate results released<br />

in the just concluded week.<br />

POLITICS: Benue State Governor Gets Backing of the US<br />

Ambassador on Ranching…<br />

In the just concluded week, Benue State Governor, Mr. Samuel Ortom, got the<br />

backing of the United States Ambassador to Nigeria, Mr. Stuart Symington, on the<br />

former’s position on ranching of livestock by pastoralist as against current practice<br />

of allowing cattle to roam about or graze, sometimes indiscriminately, for pasture<br />

which have led to deadly clashes between herdsmen and owners of farmlands.<br />

The US diplomat, who also hails from a family of ranchers, gave his support and<br />

stated the benefits of ranching when he visited the state, on Monday, <strong>Mar</strong>ch 19,<br />

<strong>2018</strong>, to commiserate with the Governor over the incessant killings in the state by<br />

suspected herdsmen. According to Mr. Stuart, based on his analysis, rearing cattle<br />

in ranches, could increase the economic fortunes of Nigeria as one of the highest<br />

income earners from milk production. The Benue State Governor therefore sought<br />

the assistance of the US towards establishing the practice of ranching across the<br />

Nigeria. We opine that, economic woes and social ills that have resulted from the<br />

practice of open grazing of livestock far outweighs its benefits to society as it could<br />

be precipitant to civil war in the country if treated with kids gloves. We believe it<br />

is time to embrace modern and potentially-more-profitable business practices<br />

rather than sticking to outdated cultural practices that contribute so little to<br />

human capital development and institutional building. In another development,<br />

the Speaker of the House of Representatives, Yakubu Dogara, voiced support<br />

for the restructuring of Nigeria’s current Federal structure at the third Annual<br />

National Summit organized by Save Democracy Africa held in Abuja on Monday,<br />

<strong>Mar</strong>ch 19, <strong>2018</strong>. According to him, the communities where the resources are<br />

found should be adequately compensated while calls for resource control may<br />

by implication have a semblance of territorial devolution. He also emphasized<br />

the urgency to have Nigeria restructured given the spate of internal insurgencies,<br />

divisiveness, ethnic and religious split witnessed in several parts of the country.<br />

Disclaimer<br />

This report is produced by the Research Desk of Cowry Asset Management<br />

Limited (COWRY) as a guideline for Clients that intend to invest in<br />

securities on the basis of their own investment decision without relying<br />

completely on the information contained herein. The opinion contained<br />

herein is for information purposes only and does not constitute any offer<br />

or solicitation to enter into any trading transaction. While care has been<br />

taken in preparing this document, no responsibility or liability whatsoever<br />

is accepted by any member of COWRY for errors, omission of facts, and any<br />

direct or consequential loss arising from the use of this report or its contents.<br />

Cowry Asset Management Limited (Member of the Nigeria Stock Exchange)<br />

Plot 1319 Karimu Kotun, Victoria Island Lagos Tel: +234-1-2715008-9; +234-1-2716614-5 www.cowryasset.com


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

C002D5556<br />

BUSINESS DAY 35<br />

Stocks Currencies Commodities Rates + Bonds Economics Funds Week Ahead Watchlist P.E<br />

Nigerian firms can tap into domestic<br />

debt market on lower rates Page 36<br />

ECONOMY<br />

Investors’ swoop on GSK, driven by<br />

high yield from special dividend<br />

MICHEAL ANI<br />

Investors have been<br />

lunging for GlaxoSmithKline<br />

PLC’s stock<br />

price, immediately the<br />

company announced<br />

a special dividend of N7.10k<br />

plus a final dividend of 40k.<br />

The above proposed payout<br />

sent dividend yields to as high<br />

as 30 percent, which means<br />

that investors expects a higher<br />

return on their investment?<br />

The consumer goods<br />

company said the special<br />

dividend would be paid from<br />

retained earnings brought<br />

forward as at year ended 31st<br />

December 2017, including<br />

profit sales of drinks as at 31<br />

December 2016.<br />

Stock price has rallied<br />

some 18 percent year to date,<br />

outperforming the market all<br />

share indexes at 8.4 percent,<br />

and closing at 25.50 the previous<br />

week.<br />

One would have expected<br />

the market to react to Glaxo-<br />

SmithKline giving its disappointing<br />

fourth quarter<br />

performance.<br />

The fast moving consumer<br />

goods (FMCG) industry and<br />

health care firm recorded a<br />

88.41 percent in full year 2017<br />

net income to N486.43 million<br />

while sales increased by<br />

11.90 percent to N16 billion.<br />

The company was beleaguered<br />

by rising material<br />

costs as production cost<br />

surged 114.3 percent from<br />

N5.4 billion in 2016 to N11.6<br />

BALA AUGIE<br />

Twenty Nigerian<br />

firms have declared<br />

a total of N412.96<br />

billion so far in 2017 as<br />

shareholders await more<br />

declarations.<br />

billion in 2017.<br />

GlaxoSmithKline Consumer<br />

Nigeria Plc., one of Africa’s<br />

largest consumer healthcare<br />

companies, producing leading<br />

brands such as Panadol with<br />

a market cap of N30.5 billion,<br />

according to data from the<br />

Bloomberg Terminal.<br />

The company like other<br />

top pharmaceutical players<br />

suffered a great challenge<br />

on the back of the lengthy<br />

recession that hammered the<br />

Nigerian economy in 2016,<br />

making the country go into<br />

its first full-year contraction<br />

in 25 years, and thus triggered<br />

acute dollar shortage that<br />

stifled the non-oil sector, as<br />

Africa most populous nation<br />

contracted 0.5 percent to<br />

record its worst performance<br />

since 1991.<br />

The sector was fraught<br />

with shortage of naira liquidity<br />

as an increase in government<br />

borrowing at that time<br />

spurred banks to invest in the<br />

safety of sovereign debt rather<br />

than lending to businesses<br />

or consumers, a situation that<br />

Lists of dividend declared so far in 2017<br />

drained cash out of the system,<br />

as the sector witnessed<br />

high operating cost since<br />

most of the raw materials are<br />

mainly imported.<br />

However, the economy<br />

managed to limp off the recession<br />

in the second quarter<br />

of 2017 after expanding 0.55<br />

percent, on the back of a<br />

rebound in oil prices, following<br />

an agreement reached<br />

by OPEC members in 2016<br />

to shave some 1.2 mbpd off<br />

the market to nip a growing<br />

supply glut in the bud<br />

and relaxed hostilities in the<br />

Niger-Delta.<br />

In addition, the non-oil<br />

sector recorded a positive<br />

growth for the second consecutive<br />

quarter, spurred<br />

by on-going recovery in the<br />

manufacturing sector due to<br />

improved Foreign Exchange<br />

(FX) liquidity.<br />

Pharmaceutical firms like<br />

GSK saw a rebound in profit<br />

and economic activities,<br />

which attracted investors’<br />

appetite and interest to its<br />

stocks.<br />

If you are an investor or<br />

shareholder, please pay attention<br />

to the data gleaned<br />

by <strong>BusinessDay</strong> <strong>Mar</strong>kets<br />

and Intelligence.<br />

Zenith Bank, United<br />

Bank for Africa (UBA),<br />

Access Bank, GTBank and<br />

Stabic IBTC has a combined<br />

dividend of N186.68<br />

billion, which is 45.31 percent<br />

of the total figure of<br />

N412.96 billion.<br />

The above figure that is<br />

unsurprising since lenders<br />

have robust earnings,<br />

free cash flow and strong<br />

retained earnings or accumulated<br />

reserve.<br />

A breakdown of the figure<br />

shows Zenith Bank<br />

declared a final dividend<br />

of N2.45 for every share of<br />

N0.50 for the year ended<br />

December 2017, which<br />

translates to N76.43 billion.<br />

The lender’s profit before<br />

tax rose by 29.80 percent<br />

to N203.46 billion in<br />

the period under review<br />

Continues on page 36<br />

SHORT TAKES<br />

105.<strong>26</strong> billion<br />

United Bank For Africa<br />

Posts full year group Pre-tax<br />

Profit before of N105.<strong>26</strong><br />

billion naira versus 90.64<br />

billion year ago . While the<br />

full year group total comprehensive<br />

income N106.36<br />

billion naira versus 138.15<br />

billion naira year ago.<br />

It however propose final<br />

dividend of 0.65 naira per<br />

share.<br />

2.5 million tons<br />

Nigeria grew 3.7 million<br />

metric tons of rice in 2017,<br />

a 4 percent increase from<br />

a year earlier, according to<br />

the U.S. Department of Agriculture.<br />

At the same time,<br />

imports rose 19 percent to<br />

2.5 million tons, the USDA<br />

said.<br />

Many imports are smuggled<br />

in from Benin, which<br />

despite a population of 11<br />

million -- barely 5 percent<br />

of Nigeria’s population<br />

-- is now the world’s biggest<br />

buyer of rice from<br />

Thailand, the number two<br />

exporter globally.<br />

N931.23billion<br />

The full year 2017 state<br />

IGR figure hits N931.23bn<br />

compared to N831.19bn<br />

recorded in 2016. This<br />

indicates a growth of 12.03<br />

percent year on year.<br />

At the end of full-year<br />

2017, total revenue generated<br />

by states was put at<br />

N432.65billion as against<br />

N409.09billion in half year of<br />

the same period.<br />

The net revenue allocation<br />

in year 2017 is put at N1.73<br />

trillion while the total revenue<br />

available to the states is<br />

put at N2.67 trillion.<br />

However, the value of foreign<br />

debt stands at $19.9bn while<br />

domestic debt hits N3.35<br />

trillion at the end of 2017 full<br />

year respectively.<br />

<strong>BusinessDay</strong> MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: DIPO OLADEHINDE, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: DAVID OGAR )<br />

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making<br />

Email the BMI team patrick.atuanya@businessdayonline.com


36 BUSINESS DAY C002D5556 Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

ECONOMY<br />

<strong>Mar</strong>kets Intelligence<br />

Nigerian firms can tap into domestic debt market on lower rates<br />

ENDURANCE OKAFOR<br />

Domestic Debt issuances since the start of 2017<br />

Corporate firms in<br />

Nigeria may have<br />

to consider borrowing<br />

at this time, as<br />

treasury bills yields<br />

are falling and government is<br />

cutting down on it domestic<br />

borrowing to tap in the foreign<br />

market, thereby giving room<br />

for Nigeria firms to borrow<br />

through bond issuance.<br />

The Federal Government<br />

usually issue domestic bonds<br />

at a more attractive rates than<br />

the firms in the country can<br />

beat, and as such it was a challenge<br />

for most firms to tap in<br />

the market as investors would<br />

prefer to subscribe to the government<br />

bond with ‘no risk’ to<br />

corporate firms.<br />

Analysts are however of the<br />

opinion that firms will tap into<br />

the bond market as rates which<br />

were up 15- 16 percent last year<br />

are now as low as 13 percent.<br />

The 13th consecutive decline<br />

in inflation rate, increase<br />

Source: FMDQ<br />

in FX liquidity and government<br />

repayment of domestic<br />

debt which has resulted in a<br />

precipitous drop in yields on<br />

treasury bills, were the reasons<br />

for the forecast by the analysts.<br />

In order to lower costs, government<br />

repaid N198 billion<br />

worth of treasury bills in December<br />

2017, instead of rolling<br />

them over,<br />

The Director General of<br />

Debt Management Office<br />

(DMO) said there is money on<br />

the table; rates are lower and<br />

as such stressed on the need<br />

to encourage corporate bonds,<br />

and was also of the opinion<br />

that the reason there were<br />

no many corporate bonds in<br />

Nigeria was because interest<br />

rates were too high.<br />

However, firms like Mixta,<br />

Dufil, Lapo and Viathan Funding<br />

Plc issued corporate bonds in 2017.<br />

Mixta issued on January 17<br />

with a 17 percent coupon, outstanding<br />

value of N4.5 billion<br />

and yield valuation of 14.59<br />

percent, which is to mature in<br />

January of 2022.<br />

While Dufil which issued<br />

in August of the same year<br />

is expecting yield valuation<br />

of 15.32 percent to mature in<br />

September 2022 and has an<br />

outstanding value of N10 billion,<br />

while Lapo and Viathan<br />

both issued in December of<br />

last with outstanding values<br />

of N3.15billion and N10 billion<br />

respectively. They both are to<br />

mature in December of 2022.<br />

Meanwhile, Dangote Cement<br />

Plc said it got approval<br />

from Nigerian regulators to issue<br />

300 billion naira ($833 million)<br />

in local-currency bonds as<br />

it seeks to fund expansion and<br />

refinance debt.<br />

Africa’s largest producer of<br />

building material plans to issue<br />

the debt over three years,<br />

Chief Financial Officer Brian<br />

Egan said during an investor<br />

conference call on Tuesday.<br />

The bond will be issued in<br />

tranches of 50 billion naira at<br />

a time whenever interest rates<br />

are favourable.<br />

Lists of dividend<br />

declared so far...<br />

Continued from page 35<br />

from N156.74 billion as at December<br />

2016.<br />

Profit after tax was up 37.20<br />

percent to N177.93 billion in<br />

December 2017 from N129.65<br />

billion as at December 2016.<br />

GTBank, the largest lender by<br />

market capitalization in Africa’s<br />

largest economy declared a final<br />

dividend of N2.40 per ordinary<br />

share of N0.50, which translates<br />

to N70.63 billion in absolute<br />

figure.<br />

The lender’s pre-tax profit<br />

grew by 21.25 percent to N200.24<br />

billion in December 2017 from<br />

N165.13 billion as at December<br />

2016. Profit after tax followed the<br />

same growth trajectory as it grew<br />

by 28.86 percent to N170.47 billion<br />

in the period under review.<br />

Access Bank declared a final<br />

dividend of N0.40 for every share<br />

of N0.50, which translates to an<br />

absolute figure of N11.53 billion.<br />

An increase in interest expense<br />

by 44.64 percent to N156.40 billion,<br />

a 57.15 percent increase in<br />

impairment charge to N34.46<br />

billion and a loss on investment<br />

securities of N33.40 billion<br />

undermined the lender’s bottom<br />

line (profit) as net income<br />

slumped by 13.32 percent to N62<br />

billion as at December 2017.<br />

Nestle Nigeria declared a<br />

final dividend of N27.50 per<br />

N0.5, which translates to N21.79<br />

billion after multiplying total<br />

number of ordinary shares by<br />

dividend per share.<br />

Nestle Nigeria Plc generated<br />

Naira earnings well above the<br />

levels of the past five years as<br />

the company continues to surmount<br />

the headwinds brought<br />

on by weak consumer spending,<br />

rising input costs and currency<br />

volatility.<br />

According to the company’s<br />

2017 audited financial statement,<br />

net income hit N33.72 billion,<br />

which represents a 325.25<br />

surge from N7.92 billion figures<br />

recorded in the corresponding<br />

period of 2016, which is still<br />

higher than the 5.50 percent<br />

growth recorded in 2013, when<br />

profit was N22.25 billion, as the<br />

chart shows.<br />

Banks have always reward<br />

owners with bumper dividend<br />

more than companies in other<br />

sector as they continue to grow<br />

earnings amid a tough and<br />

unpredictable macroeconomic<br />

environment.<br />

The recent liquidity ease in<br />

the foreign exchange market<br />

since the introduction of a new<br />

foreign exchange policy by the<br />

central bank made dollars available<br />

for lenders and their customers.<br />

This means customers can<br />

now pay back interest on loans<br />

borrowed from bank.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

Start-Up Digest<br />

In<br />

association with<br />

BUSINESS DAY<br />

37<br />

Austin Okere’s blueprint for raising<br />

superpreneurs at Ausso Leadership Academy<br />

ODINAKA ANUDU<br />

Austin Okere is not a<br />

new name in Nigeria’s<br />

entrepreneurship<br />

space. He is widely<br />

known in the technology<br />

industry, having built<br />

the Computer Warehouse Group<br />

(CWG), which is today the largest<br />

computer security firm in the<br />

Nigerian Stock Exchange.<br />

The CWG has blossomed into<br />

a pan-African systems integrator<br />

with operations in Nigeria,<br />

Ghana, Uganda and Cameroon.<br />

It has an annual turnover of over<br />

$100 million and 600 employees<br />

across the group.<br />

Okere has mentored entrepreneurs<br />

at Columbia Business<br />

School, New York, which is why<br />

he is an Entrepreneur in Residence<br />

at the prestigious school.<br />

He teaches at the Lagos Business<br />

School and Fate Foundation.<br />

Having criss-crossed the<br />

length and breadth of the Nigerian<br />

business world, Okere, early<br />

this year, set up the Ausso Leadership<br />

Academy (ALA) to mentor<br />

entrepreneurs to institutionalise<br />

and scale their businesses geometrically.<br />

The rationale behind the academy<br />

is simple: There are many<br />

institutions catering for small and<br />

medium scale business, but there<br />

is none looking after executives in<br />

large enterprises, multinationals<br />

and conglomerates as well as<br />

founders of big businesses.<br />

He is interested in seeing small<br />

and medium businesses transform<br />

into conglomerates. <strong>Mar</strong>ket<br />

capitalisation of Apple, American<br />

multinational technology company,<br />

is over $900 billion, twice<br />

the size of the Nigerian economy.<br />

<strong>Mar</strong>ket cap of Johnson & Johnson,<br />

a healthcare company, is $356.89<br />

billion, slightly below Nigeria’s<br />

GDP.<br />

Okere’s plan is to create businesses<br />

that can compete with<br />

these firms globally.<br />

Being a super entrepreneur<br />

himself, his plan is to replicate<br />

his success on others and raise<br />

superpreneurs who will build<br />

more CWGs.<br />

He was inspired to set up the<br />

leadership academy for three<br />

reasons.<br />

“I wanted to advise others the<br />

same way I would have advised<br />

my younger self. If I had that kind<br />

of advice at the time I was starting<br />

my business, I would probably<br />

have avoided some of the mistakes<br />

I made,” he says.<br />

“The second inspiration was<br />

that I wanted to be the mentor I<br />

wished I had,” he says.<br />

“The third reason, which is<br />

personal, is that we need to create<br />

something that will bring back<br />

our children who are abroad.<br />

They need to see what they are<br />

coming back for,” he adds.<br />

The academy caters for the<br />

people Okere classifies as ‘intra-<br />

Adeola Abdulrasheed<br />

Austin Okere<br />

preneurs’. These are people who<br />

work in various organisations<br />

but have high level of innovative<br />

thinking capacity. The academy<br />

also caters for the entrepreneurs<br />

who have gone out to set up their<br />

businesses.<br />

The model run by this academy<br />

is experiential. It does not pretend<br />

to be a traditional business<br />

school, but it is complementary<br />

to it. Rather than have a professor<br />

who has not run a business<br />

before teach people about business<br />

skills, this academy allows<br />

those who are already successful<br />

in their businesses to mentor<br />

participants directly.<br />

“We look at the most successful<br />

people and, every day, one<br />

of them will come and share his<br />

story. People can relate better to<br />

them than Elon Musk and Bill<br />

Gates, which do not connect.<br />

But if you say Frank Aigbogun,<br />

Tony Elumelu and Austin Okere,<br />

people begin to connect because<br />

they feel these people have something<br />

helpful to tell them. They<br />

come to the class with an open<br />

mind of absorbing rather than an<br />

educational mind just to learn,”<br />

Okere explains.<br />

“So you learn why he didn’t<br />

give up, what he did and the challenges<br />

he faced. So, the first week<br />

of the academy will be about the<br />

theory of setting one’s goals and<br />

milestones. The entrepreneurs we<br />

are talking about should be able<br />

to grow double-digits after one<br />

year of coming. And we say that<br />

the measure of success for us is<br />

that they should have imbibed the<br />

culture of corporate governance,”<br />

he says.<br />

One of the key advantages<br />

which participating entrepreneurs<br />

have is that they will have<br />

the opportunity of visiting champions<br />

in their offices.<br />

“When you get there, you see<br />

what you should be aiming at and<br />

begin to even dream. You can discuss<br />

issues with the like-minded<br />

mentor over there,” he explains.<br />

“Most importantly, we are going<br />

to expose the entrepreneurs to<br />

investment opportunities. We are<br />

looking for where to put money,<br />

but we want to be sure that the<br />

money is going to the right direction.<br />

The people that want to<br />

attract capital will pitch to these<br />

investors through the methodology<br />

that the investor wants. What<br />

we promise is exposure, but to<br />

attract capital, you have to do the<br />

due diligence,” he discloses.<br />

Small and medium businesses<br />

are not left out completely. Specialised<br />

programmes will be organised<br />

for operators. Secondly,<br />

they will feel the impact which<br />

ALA will have on executives and<br />

large enterprises.<br />

“When big businesses do well,<br />

they lift up small businesses. If<br />

you look at CWG that I founded,<br />

as a big business, we are doing<br />

businesses with about 200 SMEs<br />

that are into supplies. The big<br />

business makes the small business<br />

survive. Small businesses<br />

will not get government contracts,<br />

but they get businesses from big<br />

businesses. Two, they serve as<br />

beacons. If the high-achieving are<br />

not in a company, what happens<br />

to the company with the lowachieving?”<br />

he asks.<br />

If corporate organisations<br />

send business executives to Ausso<br />

Leadership Academy, will they<br />

not be preparing them to leave<br />

their companies to start on their<br />

own when they are needed?<br />

The super entrepreneur says<br />

it is a matter of choice.<br />

“Even when I was running<br />

CWG, people used to ask me why<br />

I was sending people to overseas<br />

to get bigger certificates.<br />

But there are always choices.<br />

I choose to give the best to my<br />

staff so that they will bring the<br />

best output that will make me<br />

stand out.<br />

“I can choose not to, but the<br />

output will be suboptimal, and<br />

when this is the situation, the<br />

other company that has put<br />

the best in its staff will lead.<br />

Businesses are about people.<br />

Not everybody wants to set up<br />

businesses; otherwise nobody<br />

will work for someone else. A lot<br />

of people have entrepreneurial<br />

minds but work for others. We<br />

call them intrapreneurs. They<br />

can do all these things but they<br />

don’t want the risk of starting on<br />

their own. If you do not invest in<br />

one of such people and he sees<br />

another fellow who is developing<br />

and making progress, he<br />

may jump out and become an<br />

entrepreneur even though that<br />

is not in his own nature. Take<br />

Satya Nadella of Microsoft. He<br />

didn’t start Microsoft but is one<br />

of the best CEOs of the company.<br />

This is the case with Google and<br />

LinkedIn. They are intrapreneurs<br />

and we need to recognise them<br />

so that we don’t lose their entrepreneurial<br />

skills. The other one is<br />

to bring them to the table so that<br />

they share their ideas. So, don’t<br />

be scared that they will move if<br />

you train them. That is a risk, but<br />

the risk of not training them is<br />

even bigger.”<br />

Okere tells Start-Up Digest<br />

that he went into entrepreneurship<br />

out of frustration.<br />

“I was upwardly mobile, I was<br />

doing well. I remember I told my<br />

then fiancée (my wife now) that<br />

I was leaving my job and she felt<br />

I was mad.<br />

“I used to sell technology and<br />

people would buy from me. A<br />

company bought from me and<br />

paid 85 percent. Yet, every day, I<br />

was avoiding the person because<br />

the boss had used the money for<br />

something else,” he discloses.<br />

He saw this as an injustice and<br />

bad business practice. He then<br />

decided to go into the business<br />

but met the shock of his life.<br />

“I was walking into organisations<br />

and collecting cheques<br />

before then, but when I started<br />

my own, they gave me excuses<br />

and told me they didn’t know me.<br />

I was disappointed but didn’t<br />

go back.”<br />

By dint of hard work, Okere<br />

started buying directly from<br />

large-scale sources.<br />

But why did his growth happen?<br />

Growth happened owing to<br />

his understanding of five letters<br />

of alphabet: Trust.<br />

“It is taken for granted in a<br />

place where the rule of law is<br />

strong. Where the rule of law is<br />

weak, trust is a competitive advantage,”<br />

he says.<br />

“So, I went into partnership<br />

with Dell; Dell introduced me<br />

to Oracle; Oracle introduced me<br />

to another firm, just because of<br />

trust.”<br />

Okere was faithful to his customers.<br />

At the time computer<br />

mouse was coming into the<br />

market, he got a contract to<br />

supply computers to Chevron<br />

Corporation.<br />

He supplied the systems<br />

alongside their mouses. The then<br />

boss at Chevron said, “I did not<br />

order the mouses.”<br />

The boss was obviously trying<br />

to avoid extra charges for the<br />

mouses. But Okere explained to<br />

him that computers came together<br />

with mouses. Other suppliers<br />

had deceived the boss, collecting<br />

extra charges for the mouses but<br />

Okere was different.<br />

“Trust is very important and<br />

takes you to the height you never<br />

expect,” Okere admonishes.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

38 BUSINESS DAY<br />

C002D5556<br />

Start-Up Digest<br />

How two former bankers set up renewable<br />

energy firm to power businesses<br />

Stories by ODINAKA ANUDU<br />

Nigeria is the most<br />

populous country in<br />

Africa with an estimated<br />

186 million<br />

people. These people<br />

need power in their homes, offices<br />

and businesses. With power generation<br />

capacity in the country hovering<br />

between 4,000 megawatts (MW)<br />

and 7,000 MW, and distribution still<br />

below 5,000MW, nobody needs a<br />

prophet to learn that the country is<br />

highly underpowered.<br />

Nigeria’s low hanging fruit, however,<br />

is renewable energy, which<br />

is proving to be affordable and<br />

reliable. Ovoke Ekrebe and Peter<br />

Ejimudo have tapped into this<br />

sector, powering more than 1,500<br />

homes and 45 businesses through<br />

solar energy.<br />

In 2011, the two former bankers<br />

set up Vanpeux Global Synergy at<br />

Kalejaiye Street, Shomolu, in Lagos,<br />

as a general technology outfit.<br />

One and a half later, these entrepreneurs<br />

lost every penny they<br />

invested in the business. But this<br />

was part of the learning curve.<br />

“We were like living beings that<br />

died and resurrected. We lost all<br />

we had and started afresh,” Ovoke<br />

Ekrebe, co-founder of Vanpeux, tells<br />

Start-Up Digest.<br />

“It is true when they say that<br />

small businesses fail in the first one<br />

or two years. We have done our failing<br />

and have resurrected, never to<br />

fail again,” Ovoke says confidently.<br />

Four to five years later, this firm<br />

has risen to become one of the<br />

most sought-after in Nigeria. Apart<br />

from serving numerous customers,<br />

Vanpeux has become one of the 45<br />

renewable energy firms certified<br />

to do solar business in Nigeria by<br />

the United States Agency for International<br />

Development (USAID)<br />

and the Deutsche Gesellschaft für<br />

Internationale Zusammenarbeit<br />

(GIZ), American and German development<br />

agencies respectively.<br />

This is a lesson for the upcoming entrepreneurs<br />

or those going through<br />

trying times that tough times do not<br />

last but tough people do. One of the<br />

The United States consulate<br />

in Nigeria has<br />

sponsored a series of<br />

seminars and trainings<br />

for leading women technology<br />

leaders on Science, Technology,<br />

Engineering and Mathematics<br />

(STEM).<br />

The consulate brought a<br />

16-member delegation of senior<br />

tech executives and professionals<br />

from the Silicon Valley to mentor<br />

the Nigerian women.<br />

These women tech leaders<br />

are expected to inspire younger<br />

generation to take up careers in<br />

STEM.<br />

The delegation members<br />

who came to Nigeria represented<br />

organisations as diverse as<br />

Peter Ejimudo<br />

factors that helped the business was<br />

its proactive, rather than reactive,<br />

response to challenges.<br />

“It is a fantastic seal of performance.<br />

There are so many businesses<br />

in Lagos. There are over<br />

1,500 renewable energy firms in<br />

Lagos alone that claim to proffer<br />

renewable energy solutions. There<br />

was a project that USAID ran, which<br />

was a renewable energy efficiency<br />

programme that supported private<br />

companies. At the end of their programme,<br />

they did some form of audit<br />

in Nigeria and found 45 worthy.<br />

“Twenty-five or 30 are located<br />

in Nigeria. We are among the 45<br />

recommended to undertake renewable<br />

energy all over the world. That<br />

means we have passed capacity<br />

tests and have the ability to take<br />

up renewable energy projects from<br />

start to finish. Our customers should<br />

be very proud to know that reputable<br />

international organisations<br />

have recognised our work. They<br />

can have confidence that we are<br />

Ovoke Ekrebe<br />

providing reliable renewable energy<br />

solutions,” Ovoke says.<br />

The firm provides solar-to-water<br />

generation solutions. This means<br />

that a farmer does not need to wait<br />

till the next rainy reason to plant,<br />

which is one practice threatening<br />

Nigeria’s food security.<br />

The company provides solar<br />

water heaters, which can be used<br />

at homes, hospitals and factories. It<br />

also provides solar PVs for electricity<br />

generation. Start-Up Digest understands<br />

that the firm has solarity<br />

power box of 1.0 to 3.0, and solar<br />

panels between 100 watts to 300<br />

watts, among others.<br />

One of the major complaints<br />

against renewable energy is its cost.<br />

Many farmers, small and medium<br />

businesses and households say it is<br />

highly priced. But Ovoke disagrees.<br />

According to him, renewable energy<br />

can only be seen as expensive<br />

when compared with immediate<br />

needs.<br />

“Sometimes, people compare<br />

the price of diesel or fuel with the<br />

total cost of renewable energy. If you<br />

compare renewable energy that can<br />

last up to 15 to 20 years with buying<br />

a diesel, it is a mismatch. It is like<br />

comparing the cost of building a<br />

house with the cost of paying rent.<br />

Won’t you rather build a house,<br />

even if it means borrowing some<br />

money and pay over time?” he asks.<br />

He points out with N500, 000,<br />

a farmer can set up an irrigation<br />

solution, explaining that renewable<br />

energy is replenish-able by nature<br />

and does not get exhausted.<br />

He cautions that some solar water<br />

systems can go as high as N2.5<br />

million, but adds that solar water<br />

heaters with a capacity to produce<br />

50 to 300 litres per day go as low as<br />

N150,000 to N350,000.<br />

“For solar for power generation,<br />

there is a wide range, from as low as<br />

500 watts to as high as 100 kilowatts<br />

or more.<br />

“For five kilowatts to 500 kilowatts,<br />

it is between N250, 000 to<br />

US empowers Nigerian women techpreneurs<br />

Twitter, LinkedIn, Netflix, and<br />

Mozilla. Among them were also<br />

representatives of Autodesk,<br />

WomenCollege Tech, Stanford<br />

Graduate School of Business,<br />

Juniper Networks, Fairrer Samani<br />

Group, Northgate Environmental<br />

Management, Jessica Dickinson<br />

Goodman Consulting, and the Institute<br />

of International Education.<br />

“Sadly, many young women<br />

who pursue studies in STEM at<br />

tertiary institutions share stories<br />

of being grossly outnumbered<br />

by men. In workplaces, women<br />

in STEM fields face discriminatory<br />

practices and behaviours<br />

from colleagues and supervisors<br />

including compensation at lower<br />

levels than male counterparts for<br />

their labour. They also generally<br />

lack opportunities for coaching,<br />

mentoring, and growth compared<br />

to their male colleagues,”said U.S.<br />

Consul General F. John Bray.<br />

Bray said when Ambassador<br />

Symington opened the American<br />

Space in Yaba in 2017, co-hosted<br />

by Co-Creation Hub (CCHUB),<br />

he pledged the U.S. government’s<br />

support for additional projects<br />

that might expand the use of<br />

technology in Nigeria.<br />

He stated that the consulate<br />

had since funded a number<br />

of projects to increase STEM<br />

education in different parts of<br />

the country.<br />

“In October 2017, we hosted<br />

RoboRAVE, a robotics education<br />

N5 million, depending on some<br />

issues. Some systems can have<br />

more batteries or solar panels, so<br />

the actual quotation will depend<br />

on some things. But it ranges from<br />

N300, 000 to as high as N5 million<br />

or even higher,” the entrepreneur<br />

explains.<br />

He says that Vanpeux’s services<br />

are affordable and competitive as<br />

it allows customers to do spread<br />

payment.<br />

But what motivated the two former<br />

bankers to establish this firm?<br />

“We saw in advance that power<br />

was an issue. It was clear that power<br />

was an issue and the easiest way of<br />

getting power to the underserved<br />

was through renewable energy,”<br />

Ovoke says.<br />

“There is a huge need for power.<br />

So many places are off the grid, on<br />

the grid but under-electrified (they<br />

have high tension wires and low<br />

voltage wires but are not powered)<br />

and off the grid,” he explains, urging<br />

communities to embrace this technology.<br />

He says that Nigeria has an<br />

advantage of exploiting opportunities<br />

in renewable energy being in<br />

the Equator.<br />

He notes that renewable energy<br />

power storage does not get<br />

exhausted during rainy season as<br />

many people think.<br />

“During rainy season, what we<br />

have is reduction in power generation,<br />

but this does not mean absence<br />

of power. Even in rainy days,<br />

what we have is less power generation,<br />

which is always a few days.<br />

“It is not a challenge. If Germany<br />

that has winter and other parts of<br />

the world with terrible conditions<br />

use renewable energy; if Islands<br />

of the Pacific can set up solar<br />

farms, why not Nigeria which is in<br />

the Equator?” he asks.<br />

However, one big challenge facing<br />

this firm is funding. The firm<br />

plans to power hundreds of thousands<br />

of homes, offices, factories<br />

and hospitals, but it is hampered<br />

by funding.<br />

The firm needs over N150 million<br />

or much more to fund several<br />

projects on the pipeline. It is also interested<br />

in investors who are willing<br />

to pump in money for expansion.<br />

program in Lagos and Abeokuta.<br />

Last December, we funded the<br />

establishment of a technology hub<br />

in Lagos that will host training and<br />

mentoring sessions for persons<br />

living with disabilities in various<br />

technology-based skills,” he said.<br />

He explained that the United<br />

States had invested millions of<br />

dollars to directly advance gender<br />

equality across sub-Saharan<br />

Africa, through activities that<br />

promoted political and economic<br />

opportunities for women, access<br />

to health and education services,<br />

and efforts to prevent and respond<br />

to gender-based violence.<br />

“In 2011, the U.S. government<br />

introduced the TechWomen program<br />

to empower the next generation<br />

of women leaders in the<br />

technology field. This exchange<br />

program brings together women<br />

in Northern California with their<br />

counterparts in the Middle East,<br />

Central Asia, North Africa, and<br />

sub-Saharan Africa including<br />

Nigeria for a professional mentorship<br />

at leading technology<br />

companies in the U.S,” he stated.<br />

He said that the U.S. government<br />

was convinced that when<br />

barriers to women’s full participation<br />

in STEM fields were<br />

removed, women, families and<br />

countries would do better.<br />

“Whether at home or abroad,<br />

promoting women in STEM fields<br />

is a top priority of the U.S. government,”<br />

he added.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

BUSINESS DAY<br />

39<br />

Start-Up Digest<br />

‘We have supported 8,000 SMEs that<br />

created 80,000 additional jobs’<br />

Felix Adahi Bikpo is the chief executive officer of African Guarantee Fund (AGF), an<br />

organisation that assists financial institutions increase their financing to small and<br />

medium sized enterprises (SMEs) through the provision of loan, fundraising and equity<br />

guarantees. In this interview with JOSEPHINE OKOJIE, he speaks about AGF’s funding<br />

support for Africa’s small and medium scale businesses.<br />

Felix Adahi Bikpo<br />

tainability of our infrastructure is<br />

highly linked to the sustainability<br />

of SMEs working along the entire<br />

value chain to ensure the overall<br />

quality.<br />

African countries like Nigeria<br />

and Angola are looking at diversifying<br />

their economies through<br />

agriculture. What is AGF doing to<br />

assist these countries in terms of<br />

infrastructure?<br />

AGF has seen the uptake of its<br />

guarantee products grow spontaneously<br />

in Nigeria over the last<br />

Funding has remained<br />

one of the major challenges<br />

facing entrepreneurship<br />

in Africa.<br />

How can the AGF ensure<br />

entrepreneurs across Africa get<br />

adequate funding for their businesses?<br />

In order for entrepreneurs to<br />

have increased access to financing,<br />

we focus on two lines of activity.<br />

Our guarantee facility which assists<br />

financial institutions in partially<br />

covering the risks associated with<br />

SME funding, and our capacity<br />

development facility which assists<br />

financial institutions by enhancing<br />

their SME financing capabilities<br />

in order to be able to execute their<br />

SME growth strategies with ease.<br />

How much has AGF invested<br />

so far in African SMEs, and how<br />

many entrepreneurs have benefitted<br />

from its funding initiative<br />

so far?<br />

Over the past six years, AGF has<br />

led the guarantee market in Africa<br />

by issuing financial guarantees to<br />

the tune of $700 million. This has<br />

enabled our Partner Financial<br />

Institutions (PFIs) to issue loans<br />

estimated at $800 million while still<br />

making available financing of $1<br />

billion for SMEs.<br />

Through the loans issued by our<br />

PFIs, about 8,000 SMEs have been<br />

supported and, in turn, these SMEs<br />

have been pivotal in the creation of<br />

more than 80,000 additional jobs.<br />

We also encourage active participation<br />

of women and youths<br />

in ownership and management of<br />

SMEs. At the end of 2016, 30 percent<br />

of the SMEs that we supported were<br />

owned or led by women, while 60<br />

percent were owned or led by youth.<br />

Africa has huge infrastructure<br />

gap, and inadequate storage facility<br />

has continued to limit the<br />

continent’s agricultural potential.<br />

What is AGF doing to bridge<br />

the huge gap?<br />

The development of our continent<br />

relies a lot on infrastructure<br />

as well as other sectors such agroindustry.<br />

It is for this reason that<br />

AGF approved infrastructure as<br />

a priority sector in our strategic<br />

plan. This implies that we work very<br />

closely with our financial institutions<br />

to see how we can increase<br />

their loan issuance to SMEs in this<br />

specific sector.<br />

SMEs in infrastructure have<br />

high financing needs and this<br />

requires a specific structuring to<br />

be able to handle them. That is the<br />

reason we are working with strategic<br />

partners such as GuarantCo to<br />

increase the size of our support to<br />

individual SMEs.<br />

We are also structuring our<br />

support to the entire value chain<br />

around infrastructure. The susfour<br />

to five years. The potential<br />

still remains to expand our business<br />

partnership from the current<br />

four partner financial institutions<br />

to at least 10 in the next five years.<br />

We are also very keen to engage in<br />

infrastructure, agro-industry and<br />

energy, which are among the leading<br />

sectors for Africa’s economic<br />

development.<br />

We are yet to penetrate the Angolan<br />

market and we look forward<br />

to partnering with their financial<br />

institutions in the very near future.<br />

The development of our continent<br />

relies a lot on infrastructure<br />

as well as other sectors such<br />

agro-industry.<br />

There has been so much talk<br />

about smart city and it has to do<br />

with building the skills of incubations<br />

and accelerators. What is<br />

AGF doing in this regard?<br />

Green Economy is the pathway<br />

to achieving sustainable development<br />

in contemporary times. AGF’s<br />

Green Guarantee Facility, with the<br />

support of our shareholders and<br />

particularly Nordic Development<br />

Fund, introduced a specialised<br />

green finance instrument designed<br />

to unlock finance for SMEs investing<br />

in low carbon, green growth and<br />

climate resilient development.<br />

Why is it still difficult for SME<br />

operators in Africa to get funding<br />

for their businesses despite all the<br />

various financial institutions on<br />

the continent?<br />

Despite the internationally recognised<br />

importance of SMEs, SME<br />

financing is often perceived by<br />

many financial sector players in<br />

Africa to be a risky activity as promoters<br />

quite more often than not<br />

fail to come up with the collateral<br />

levels required to secure bank facilities.<br />

It is in response to this that AGF<br />

was created.<br />

With the current challenges<br />

facing most economies in Africa,<br />

what is the outlook of entrepreneurship’<br />

in Africa?<br />

Africa has indeed had a challenging<br />

past as far as its economy is<br />

concerned. The outlook is however<br />

projected to improve with positive<br />

growth in output. The economic<br />

recovery is expected to be driven<br />

by a gradual improvement in the<br />

continent’s largest economies and<br />

commodity prices stabilisation.<br />

A good performance is expected<br />

in 2020, but at 3.2 percent a year,<br />

growth will be below the level needed<br />

to propel average incomes and<br />

living standards rapidly. Indeed, by<br />

2020, GDP per head at purchasing<br />

power parity exchange rates will<br />

have barely improved from 2015<br />

levels in many countries. A possible<br />

global recovery at the turn of the<br />

next decade driven by domestic<br />

demand will certainly boost African<br />

economic growth, but with probably<br />

less intense scale than during<br />

the previous decade.<br />

In this environment, the role<br />

of the AGF becomes more than<br />

crucial. Since our incorporation,<br />

our purpose has been clear. We<br />

are here to help the private sector,<br />

mainly the SMEs, to really play the<br />

role of engine drivers of sustainable<br />

growth and to be a source<br />

of employment, skills and wealth<br />

creation. In turn, this will help to<br />

reduce poverty throughout the<br />

continent. We are confident that<br />

properly funded SMEs can help<br />

drive the economies of African<br />

countries to greater heights.<br />

Mastercard Foundation<br />

announces commitment<br />

to address Africa’s youth<br />

unemployment<br />

JOSEPHINE OKOJIE<br />

The Mastercard Foundation<br />

has announced its<br />

commitment to help<br />

address Africa’s unemployment<br />

by enabling 30 million<br />

youths, especially young women,<br />

secure dignified and fulfilling<br />

work by 2030.<br />

The announcement is part of<br />

the foundation’s strategy ‘Young<br />

Africa Works’, which aims to reduce<br />

poverty on the continent<br />

by tackling the high rate of youth<br />

unemployment.<br />

According to a statement<br />

made available to <strong>BusinessDay</strong>,<br />

the strategy is the result of extensive<br />

consultations with leaders of<br />

African governments, the private<br />

sector, educational institutions,<br />

civil society, and young people.<br />

“Youth unemployment in<br />

Africa is the issue of our time. Together,<br />

we have an extraordinary<br />

opportunity to shape the future<br />

and increase prosperity for all,”<br />

Reeta Roy, president and CEO,<br />

Mastercard Foundation said.<br />

“In fact, young people are<br />

leading the way. Let’s support<br />

their aspirations for their communities<br />

and their countries,”<br />

Roy said.<br />

Africa has one of the highest<br />

unemployment rates in the<br />

world, particularly for young<br />

people. By 2030, there will be<br />

more than 375 million people<br />

under the age of 35 in the labour<br />

market.<br />

Population growth on the<br />

continent means that by 2035,<br />

there will be more young people<br />

entering Africa’s workforce each<br />

year than the rest of the globe<br />

combined. In 2050, one quarter<br />

of the world’s working age population<br />

will be African, making<br />

it the largest workforce in the<br />

world.<br />

“Every day I see young Africans<br />

whose potential is going<br />

untapped,” said Angela Nzioki,<br />

co-founder and manager of Pluspeople<br />

Kenya Limited.<br />

“They are innovative, passionate,<br />

and talented, and they<br />

want a chance to prove themselves.<br />

For Africa to prosper,<br />

young people need to be at the<br />

heart of the policies and strategies<br />

of governments, universities,<br />

employers, and donors.”<br />

The new strategy puts an emphasis<br />

on working with African<br />

organisations and designing<br />

solutions specific to a country’s<br />

economic needs and goals. Collaborating<br />

with governments<br />

and the private sector to identify<br />

priority areas for growth, the<br />

foundation’s programmes will<br />

prepare young people with the<br />

skills they need for employment<br />

through relevant training and<br />

education, use technology to<br />

connect employers and job seekers,<br />

and enable entrepreneurs<br />

and small businesses to expand<br />

through access to financial services.


40 BUSINESS DAY<br />

C002D5556 Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

MondayMorning<br />

In association with<br />

Harvard<br />

Business<br />

Review<br />

What breaking the 4-minute mile taught us<br />

BILL TAYLOR<br />

The sad news<br />

of the passing<br />

of Roger<br />

Bannister,<br />

the first human<br />

to run a four-minute<br />

mile, got me thinking<br />

about his legacy, not just<br />

as one of the great athletes<br />

of the past century, but<br />

as an innovator, a change<br />

agent and an icon of success.<br />

Most people know the<br />

basic story of Bannister,<br />

who, on May 6, 1954, busted<br />

through the four-minute<br />

barrier with a time of 3<br />

minutes, 59.4 seconds. But<br />

it was not until I decided to<br />

write about him, and read<br />

a remarkable account of<br />

his exploits by the British<br />

journalist and runner John<br />

Bryant, that I understood<br />

the story behind the story.<br />

Bryant reminds us that<br />

runners had been chasing<br />

the goal seriously since<br />

at least 1886, and that the<br />

challenge involved the<br />

most brilliant coaches and<br />

gifted athletes in North<br />

America, Europe and Australia.<br />

“It had become as<br />

much a psychological barrier<br />

as a physical one,” he<br />

notes. “And like an unconquerable<br />

mountain, the<br />

closer it was approached,<br />

the more daunting it<br />

seemed.”<br />

So the four-minute barrier<br />

stood for decades, and<br />

when it fell, the circumstances<br />

defied the confident<br />

predictions of the<br />

best minds in the sport.<br />

The experts believed they<br />

knew the precise conditions<br />

under which the<br />

mark would fall. But Bannister<br />

did it on a cold day,<br />

on a wet track, at a small<br />

meet in Oxford, England,<br />

before a crowd of just a few<br />

thousand people.<br />

Just 46 days after Bannister’s<br />

feat, John Landy,<br />

an Australian runner,<br />

broke the barrier again,<br />

with a time of 3 minutes 58<br />

seconds. Then, just a year<br />

later, three runners broke<br />

the four-minute barrier in<br />

a single race. Over the last<br />

half-century, more than<br />

a thousand runners have<br />

conquered a barrier that<br />

had once been considered<br />

hopelessly out of reach.<br />

Well, what goes for<br />

runners goes for leaders<br />

running organizations. In<br />

business, progress does<br />

not move in straight lines.<br />

Whether it’s an executive,<br />

an entrepreneur or a technologist,<br />

some innovator<br />

changes the game, and<br />

that which was thought to<br />

be unreachable becomes<br />

a benchmark. That’s Bannister’s<br />

true legacy and a<br />

lesson for all of us who see<br />

the role of leadership as<br />

doing things that haven’t<br />

been done before.<br />

In other words, great<br />

leaders don’t just outperform<br />

their rivals. They<br />

transform the sense of<br />

what’s possible in their<br />

fields.<br />

(Bill Taylor is the co-founder<br />

of Fast Company.)<br />

How volvo reinvented itself through hiring<br />

RAM CHARAN, DOMINIC<br />

BARTON AND DENNIS<br />

For years, Volvo was a<br />

brand stuck between a<br />

rock and a hard place.<br />

Its cars didn’t match up well<br />

with those of top luxury<br />

brands like Mercedes-Benz,<br />

BMW and Audi, yet the<br />

company lacked the capacity<br />

to compete with massmarket<br />

leaders like Toyota<br />

and General Motors. Under<br />

new ownership, the Swedish<br />

automaker decided to<br />

transform its product line by<br />

becoming a premium player.<br />

CEO Stefan Jacoby and Björn<br />

Sällström, the company’s<br />

chief human resources officer,<br />

rigorously examined<br />

Volvo’s existing workforce.<br />

The result was clear: Volvo<br />

needed new people with different<br />

skills.<br />

Volvo took three criti-<br />

cal steps to ensure that its<br />

outside-in transformation<br />

would work. The first was<br />

to put Sällström at the heart<br />

of the initiative. The CHRO<br />

needs to be at the center<br />

of any acquisition of talent<br />

from the outside. While Volvo<br />

didn’t acquire companies<br />

as it went looking for outside<br />

talent, Jacoby, and his successor<br />

Håkan Samuelsson,<br />

counted on Sällström to figure<br />

out what the company<br />

needed in places it had never<br />

explored before.<br />

That brings us to the<br />

second step: expanding the<br />

company’s peripheral vision.<br />

To get the skills and change<br />

agents it needed, Volvo<br />

looked outside the automotive<br />

industry. Between 2011<br />

and 2015, the company added<br />

3,000 new people in engineering<br />

and development.<br />

Third, the company developed<br />

a strong system for<br />

integrating that new talent.<br />

Communication was vital:<br />

Jacoby first described the<br />

strategy shift to Volvo’s key<br />

300 employees, while Samuelsson,<br />

following his predecessor’s<br />

lead, holds regular<br />

sonal coach.<br />

It’s too early to say whether<br />

Volvo has definitely turned<br />

itself around. Says Sällström:<br />

“Even with all this outside<br />

DNA, it’s a long journey to<br />

change the mindset of an organization.<br />

It’s still a work in<br />

progress.” Financial signs are<br />

live chats with employees.<br />

Training was also essential:<br />

Jacoby and Sällström implemented<br />

a range of initiatives<br />

designed to shift Volvo’s staff<br />

into a more entrepreneurial<br />

mindset, and each of the 300<br />

key leaders was given a percertainly<br />

pointing in the right<br />

direction. Net revenue hit an<br />

all-time high in 2017, and<br />

profits rose for the third consecutive<br />

year. The company<br />

sold 571,000 cars last year, up<br />

from 373,000 in 2010.<br />

Reaching outside to<br />

transform your company is<br />

sometimes necessary, but<br />

it’s always complicated. Volvo<br />

offers a road map for how<br />

to pull it off.<br />

(Ram Charan has been<br />

an adviser to the CEOs of<br />

some of the world’s biggest<br />

corporations and their<br />

boards. Dominic Barton is<br />

the global managing partner<br />

of McKinsey & Co. Dennis<br />

Carey is the vice chairman<br />

of Korn Ferry.)<br />

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

BUSINESS DAY<br />

41


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

42 BUSINESS DAY<br />

Live @ The Stock Exchange<br />

Stock market liquidity<br />

indicators wane<br />

…Year-to-Date returns currently stands at 8.44%<br />

Stories by<br />

Iheanyi Nwachukwu<br />

After impressive<br />

run in January<br />

<strong>2018</strong>, equities<br />

market performance<br />

globally<br />

slid into correction territory<br />

in February <strong>2018</strong> driven by<br />

sell pressure from profit<br />

taking as well as uncertainty<br />

around inflation and<br />

interest rates.<br />

At the Nigerian stock<br />

market, total turnover<br />

declined by circa 46percent<br />

month-on-month<br />

(MoM), while liquidity indicators<br />

(market depth and<br />

breadth) also waned within<br />

the period with a Daily Average<br />

Value Traded (DAVT)<br />

of N5.3billion.<br />

In the trading week<br />

to <strong>Mar</strong>ch 23, Nigerian<br />

stock market recorded<br />

a decline of 1.11percent<br />

week-on-week (WoW).<br />

Stock investors lost<br />

N21billion as the value of<br />

listed equities declined<br />

to N14.981trillion from<br />

a high of N15.002trillion<br />

the preceding week. Also,<br />

the Nigerian Stock Exchange<br />

(NSE) All Share<br />

Index (ASI) closed from a<br />

NASD sponsors investment<br />

readiness series<br />

In continuing its efforts<br />

to deepen the reach<br />

and impact of the capital<br />

market in the “real”<br />

economy, NASD sponsored<br />

an Investment Readiness<br />

Series organised by the Entrepreneurship<br />

Development<br />

Centre (EDC).<br />

The session, which<br />

was well attended by<br />

alumni of EDC and other<br />

growth focused enterprises,<br />

featured presentations<br />

on preparing<br />

growth enterprises for<br />

investments, a panel session<br />

focused on What Investors<br />

and Funders look<br />

out for, and a presentation<br />

by NASD OTC on the<br />

benefits and framework<br />

of the NASD Enterprise<br />

Portal (NASDeP).<br />

Participants also had<br />

the opportunity to listen to<br />

some registered NASDeP<br />

members such as PwC, on<br />

their role on the portal and<br />

the value they bring growth<br />

enterprises in packaging<br />

their businesses and refining<br />

strategic initiatives for<br />

growth<br />

Key takeaways from<br />

the session include: to attract<br />

the right funding to<br />

your enterprise; ensure<br />

that entrepreneurs keep<br />

proper financial records;<br />

have a good team and a<br />

strong business or investment<br />

case; adhere to good<br />

corporate governance and<br />

high of 41,935.93 points<br />

to 41,472.10 points. The<br />

market’s Year-to-Date<br />

(YtD) returns currently<br />

stands at +8.44percent.<br />

Despite the renewed investor<br />

interest in the Nigerian<br />

Equities <strong>Mar</strong>ket in the<br />

last trading week in February-<br />

following expectations<br />

of positive results<br />

which led to positioning in<br />

fundamentally sound dividend<br />

paying stocks, the<br />

NSE ASI closed the month<br />

down 2.28percent.<br />

Amongst markets under<br />

review, the NSE ranked<br />

as one of the least performing<br />

markets in the<br />

month under review on<br />

the back of contagion effects<br />

of downturn in global<br />

markets. Insurance sector<br />

proved to be the only one<br />

in positive region and this<br />

may be attributed to the<br />

impact of revised price<br />

floor.<br />

The news of an economic<br />

expansion of<br />

1.92percent in Gross Domestic<br />

Product (GDP) and<br />

a positive Purchasers Managers<br />

Index (PMI) further<br />

upheld positive investor<br />

sentiments at month end.<br />

Domestic participation<br />

continued to lead market<br />

activities marginally accounting<br />

for 51.4percent of<br />

market transactions with<br />

the period. Retail (mainly<br />

high networth investors<br />

(HNIs) and Institutional<br />

investors including PFAs<br />

largely drove trades in the<br />

domestic space. However,<br />

foreign investor participation<br />

increased from<br />

32.4percent in January to<br />

48.6percent in February<br />

<strong>2018</strong>.<br />

The prominent sectors<br />

within the month include<br />

Financial Services, Consumer<br />

Goods and Industrial<br />

Goods, with most trading<br />

activity in Guaranty Trust<br />

Bank (GTB), Zenith Bank<br />

and FBN Holdings. Top ten<br />

brokers drove 61.79% of total<br />

transaction value and<br />

50.92% of total volumes<br />

traded in February <strong>2018</strong><br />

The month of February<br />

witnessed unstable crude<br />

oil prices. However, the nation’s<br />

FX reserves continued<br />

to rise steadily within<br />

theperiod, signifying that<br />

the FX market will remain<br />

liquid to support Foreign<br />

Portfolio Investors (FPI)<br />

flows. Reduced transaction<br />

levels in IEFX window could<br />

be attributed to slowed momentum<br />

in FPI activities as<br />

they chose to stay on the<br />

sidelines in early February.<br />

transparency standards;<br />

and pay attention to the legal<br />

and regulatory matters<br />

that affect their business.<br />

NASDeP plays a leading<br />

role in easing the funding<br />

challenges of enterprises,<br />

reducing reliance on expensive<br />

debt, and providing access<br />

to SEC licensed capital<br />

market professionals who<br />

are able to provide financial<br />

capital, and strategic and<br />

managerial synergies.<br />

NASDeP also aligns<br />

with the Economic Recovery<br />

& Growth Plan (ERGP)<br />

to reinvigorate the Nigerian<br />

economy and restore<br />

growth by attracting sustainable<br />

investments into<br />

our indigenous enterprises.<br />

Development Bank of Nigeria, NIRSAL<br />

signs MOU to promote agric lending<br />

The Development<br />

Bank of<br />

Nigeria Plc<br />

(DBN) and the<br />

Nigeria Incentive-Based<br />

Risk Sharing System for<br />

Agricultural Lending<br />

(NIRSAL) have signed a<br />

memorandum of understanding<br />

aimed at promoting<br />

lending to the<br />

Agricultural sub-sector<br />

of the economy and its<br />

value chain.<br />

The signing ceremony<br />

which took place yesterday<br />

at the NIRSAL Headquarters<br />

in Maitama,<br />

Abuja is a strategic collaboration<br />

that will impact<br />

positively on Agriculture<br />

and all the value<br />

chain players and thus;<br />

address the concerns of<br />

financial institutions on<br />

the high risk of lending to<br />

the sector.<br />

“The Micro Small and<br />

Medium Scale Enterprises<br />

(MSMEs) if well managed<br />

have the potential<br />

to achieve key macro-<br />

economic objectives of<br />

the Federal Government<br />

which include, but are not<br />

limited to job creation,<br />

poverty alleviation, financial<br />

inclusion, development<br />

of technology and<br />

so on”, said Tony Okpanachi,<br />

Managing Director<br />

of DBN.<br />

He went further to state<br />

that the core mandate of<br />

Development Bank of Nigeria<br />

(DBN) is to alleviate<br />

financing constraints<br />

faced by the MSMEs and<br />

small corporates in Nigeria<br />

through the provision<br />

of financing and partial<br />

credit guarantees to eligible<br />

financial intermediaries<br />

on a market -conforming<br />

and on a sustainable<br />

basis’’.<br />

On his part, Aliyu Abdulhameed,<br />

Managing Director<br />

of NIRSAL informed<br />

that ‘’NIRSAL’s primary<br />

mandate is to facilitate the<br />

flow of credit, finance and<br />

investments into Agriculture<br />

and Agribusiness.’’<br />

According to him,<br />

‘’NIRSAL believes strategic<br />

collaborations with<br />

major stakeholders in<br />

the industry is pivotal to<br />

achieving defined and<br />

well-tailored objectives<br />

and results. It is in line<br />

with this view, that the<br />

partnership with Development<br />

Bank of Nigeria<br />

(DBN) is structured.<br />

As Development Finance<br />

Institutions, NIR-<br />

SAL and DBN share a<br />

common goal of supporting<br />

investments that<br />

will catalyse sustainable<br />

economic growth, create<br />

more jobs and equip<br />

farmers with the capital<br />

needed to thrive in the Agricultural<br />

sector’’.<br />

Under this partnership,<br />

NIRSAL is expected<br />

to provide risk mitigating<br />

credit guarantees while<br />

DBN is expected to provide<br />

the funds for on lending<br />

to MSMEs in the agricultural<br />

sub-sector and its<br />

value chain.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

‘Bill Gates’ comments vindicate<br />

Nigerians resolve to kick out Buhari’<br />

OWEDE AGBAJILEKE, Abuja<br />

People’s Democratic<br />

Party (PDP) says the<br />

verdict by American<br />

business magnate,<br />

investor and principal<br />

founder of the Microsoft<br />

Corporation, Bill Gates,<br />

that President Muhammadu<br />

Buhari’s economic policies<br />

are anti-people has justified<br />

the resolution by Nigerians to<br />

kick out the dysfunctional All<br />

Progressives Congress (APC)<br />

and its Federal Government<br />

come 2019.<br />

The PDP says the verdict<br />

has also vindicated its stand<br />

that the Buhari administration<br />

is the worst in the history<br />

of our nation; that it never<br />

had the interest of the people<br />

at heart, and has been<br />

lying to Nigerians with false<br />

performance indices and<br />

cosmetic appearances, while<br />

its agents continue to siphon<br />

funds meant for the welfare<br />

Business model for airports under threat globally<br />

Changes in passenger<br />

behaviour will<br />

require skilful management<br />

by airports<br />

worldwide, as airports are facing<br />

a significant challenge to<br />

their current business models,<br />

S&P Global infrastructure<br />

ratings senior director, <strong>Mar</strong><br />

Beltran, has warned.<br />

The challenge comes<br />

from important changes in<br />

the behaviour of passengers<br />

using their facilities.<br />

Airports have benefitted<br />

from a boom in air travel over<br />

the past 30 years. This has<br />

been driven by airlines cutting<br />

costs and reducing prices.<br />

Airports have expanded<br />

to meet the demand, cut their<br />

rates to airlines to attract more<br />

carriers, and made up the difference<br />

with commercial activities<br />

in their terminals.<br />

Low cost carriers, also<br />

of the people.<br />

PDP national publicity<br />

secretary, Kola Ologbondiyan,<br />

in a statement on Friday,<br />

said President Buhari and<br />

the APC could now see that<br />

the entire world was fully<br />

aware of their misrule and as<br />

such should stop wasting the<br />

nation’s resources on pointless<br />

image laundering and<br />

desperate quest for international<br />

endorsements.<br />

The PDP noted that Gates<br />

was just being polite to his<br />

host, President Buhari, when<br />

he said the policy of his government<br />

was not reflecting<br />

the needs of the people.<br />

“What Gates did not tell<br />

President Buhari and his<br />

team was that their administration<br />

is so incompetent,<br />

disorganised and confused<br />

that it could not develop any<br />

functional economic policy<br />

direction and that this has<br />

caused our nation her current<br />

economic woes.<br />

“Bill Gates comments on<br />

known as budget airlines,<br />

have played a key role in<br />

these developments. Today,<br />

in Europe, for example, low<br />

cost carriers account for 40<br />

percent of the short-haul air<br />

traffic market. And they are<br />

now moving into long-range<br />

sectors, particularly routes<br />

across the North Atlantic.<br />

While these developments<br />

have brought much<br />

more business to airports,<br />

the past two years have seen<br />

passengers changing their<br />

behaviour at the terminals.<br />

They are spending less.<br />

Around the world, sales<br />

of duty free and travel retail<br />

outlets declined in 2015 and<br />

then stabilised at the lower<br />

levels in 2016.<br />

“This figure is worrisome<br />

if we take into account that<br />

in the face of this stagnation,<br />

the volume of passengers<br />

continued on the rise,” he<br />

pointed out.<br />

the Federal Government’s<br />

empty, deceptive and discredited<br />

Economic Recovery<br />

and Growth Plan (ERGP),<br />

right in the Presidential Villa<br />

and in the presence of Vice<br />

President Yemi Osinbajo,<br />

came to President Buhari<br />

and the APC as stunt gone<br />

awry as they had planned to<br />

use the world figure to earn<br />

an undue international endorsement<br />

ahead of 2019<br />

elections.<br />

“More disheartening<br />

is that instead of being remorseful,<br />

officials of the APC<br />

administration, including<br />

Osinbajo, are attempting to<br />

put up a lame defence, despite<br />

the indicting facts.<br />

“The whole world is sad<br />

that under President Buhari<br />

and the APC, our dear nation,<br />

which was hitherto one<br />

of the most vibrant economies,<br />

has now become one<br />

of the most dangerous places<br />

to give birth, with the fourth<br />

worst maternal mortality rate<br />

Another important source<br />

of income for airports is the<br />

car parks they provide. But<br />

improved public transport<br />

links to airports, and the rise<br />

of services like Uber, have<br />

reduced the number of passengers<br />

driving themselves<br />

to airports and parking their<br />

cars at the terminals.<br />

On top of this, the medium<br />

to long-term increase<br />

in the number of electric and<br />

self-driving cars will add to<br />

the challenges. Airports will<br />

have to make investments<br />

in their parking facilities to<br />

meet the requirements of<br />

these vehicles (such as battery<br />

recharge points).<br />

“We are therefore facing a<br />

situation that seems to threaten<br />

the [airports’] current business<br />

model,” observed Beltran.<br />

S&P Global expects the<br />

returns of airports around the<br />

world to remain stable over<br />

the next two years.<br />

in the world.<br />

“This administration, in<br />

the last three years, has not<br />

been able to initiate any functional<br />

policy on health, education,<br />

housing, agriculture,<br />

electricity, industrial growth,<br />

effective economic empowerment<br />

and gainful employment,<br />

or any deliberate plan<br />

to grow a sustainable middle<br />

class in the country.<br />

“Instead, what Nigerians<br />

get is a sinking economy<br />

resulting from anti-people<br />

policies; multiple taxations,<br />

increased tariffs on essential<br />

commodities and services,<br />

increase in food prices, fuel<br />

price hike, huge foreign debts,<br />

a weakened currency and<br />

massive job loss while APC<br />

interests continue to fritter<br />

away trillions of naira for their<br />

selfish gains.<br />

“It is obvious that this Buhari<br />

administration derives<br />

joy in seeing Nigerians suffer<br />

hunger and starvation even in<br />

L-R: Oluwatoyin Sanni, group CEO, United Capital plc; Chika Mordi, chairman, United Capital plc; and Leo Okafor, company<br />

secretary, United Capital plc at the <strong>2018</strong> annual general meeting, held on Friday, in Lagos.<br />

MIKE OCHONMA<br />

C002D5556<br />

BUSINESS DAY<br />

43<br />

NEWS<br />

National Assembly holds public hearing<br />

on <strong>2018</strong> budget estimates, Monday<br />

Light rail: Ambode holds talk with Japanese investors<br />

JOSHUA BASSEY<br />

Lagos State is seen in<br />

frantic efforts to secure<br />

investors for its long<br />

delayed ‘blue line’ rail<br />

project, as Akinwunmi Ambode,<br />

the governor, held talks<br />

with Japanese investors in Tokyo,<br />

Japan, where he has been<br />

the last one week.<br />

With a fast growing population<br />

estimated at over 21 million<br />

people, which confers a<br />

megacity status on Lagos, the<br />

need for an effective public<br />

transportation system in the<br />

state had never been more<br />

compelling. The 27.5 kilometres<br />

light rail designed to run<br />

from the <strong>Mar</strong>ina Waterfront, on<br />

the Island, to Okokomaiko, on<br />

the Mainland, and started under<br />

the former administration<br />

of Babatunde Fashola, in 2009,<br />

has not gone halfway, as the<br />

state is still on the phase one -<br />

between Mile 2 and <strong>Mar</strong>ina.<br />

KEHINDE AKINTOLA, Abuja<br />

Top government<br />

functionaries, policy<br />

makers including<br />

federal lawmakers<br />

and other stakeholders<br />

are expected to converge at<br />

the National Assembly today<br />

for the second edition<br />

of public hearing on <strong>2018</strong><br />

budget estimate.<br />

The public hearing is<br />

co-organised by the joint<br />

Committee of the Senate<br />

and House of Representatives<br />

on Appropriations,<br />

and is scheduled to hold at<br />

the Conference Room 0.22<br />

Senate Wing, National Assembly<br />

complex, Abuja.<br />

Some of the dignitaries<br />

expected to make presentation<br />

are: Senate President<br />

Bukola Saraki; Speaker<br />

Yakubu Dogara; Kemi Adeosun,<br />

minister of finance;<br />

Udoma Udo Udoma, minister<br />

of budget and national<br />

planning, as well as Ben<br />

Nwabueze, director-general,<br />

Budget Office of the Federation.<br />

Others include: Civil Society<br />

Organisations (CSOs)<br />

and Non-Government Organisations<br />

(NGOs).<br />

Dogara had during<br />

Wednesday plenary session<br />

directed all the standing<br />

committees to conclude<br />

consultations with the ministers<br />

and heads of various<br />

Ministries Departments<br />

and Agencies (MDAs) and<br />

submit their reports to the<br />

Appropriations Committee.<br />

Dogara, who noted that<br />

harmonised copy of the<br />

<strong>2018</strong> budget would be laid<br />

before both chambers on<br />

April 19, assured Nigerians<br />

that the <strong>2018</strong> budget would<br />

be passed by April 24, <strong>2018</strong>.<br />

In the same vein, Saraki<br />

had on <strong>Mar</strong>ch 22, mandated<br />

all the Sub-Committee on<br />

Appropriations to submit<br />

their reports on the <strong>2018</strong><br />

budget between 12 noon<br />

On assumption of office in<br />

2015, Ambode had projected<br />

to complete the project in 2016.<br />

However, in <strong>2018</strong>, the state<br />

government is now uncertain<br />

when the project to which N50<br />

billion had so far been committed,<br />

would be completed and<br />

open to public use.<br />

In spite of its huge population,<br />

Lagos, West Africa’s economic<br />

hub, relies mostly on<br />

road transportation. Unlike<br />

other megacities around the<br />

world, the state lacks intra- and<br />

inter-city light rail connections<br />

while its water transportation<br />

system is yet to gain the confidence<br />

of residents due to intermittent<br />

boat mishaps and poor<br />

navigational infrastructure.<br />

As a result, the roads are<br />

mostly jammed, causing the<br />

state economy a whopping<br />

N42 billion monthly and addition<br />

to valued man-hours<br />

lost in transit daily.<br />

The state government has<br />

and 6pm as from: Thursday,<br />

<strong>Mar</strong>ch 22, to Monday,<br />

<strong>Mar</strong>ch <strong>26</strong>, <strong>2018</strong> to Meeting<br />

Room 224, Senate building.<br />

Recall that President<br />

Muhammadu Buhari had<br />

a closed door meeting with<br />

Senate President Bukola<br />

Saraki and Speaker Dogara<br />

with the view to resolve the<br />

impasse.<br />

Following the President’s<br />

intervention, all the<br />

concerned Ministers were<br />

directed to resume the defence<br />

of their budget.<br />

The Appropriations<br />

Committee of both chambers<br />

are also expected to<br />

include the breakdown of<br />

the lump-sum of N100 billion<br />

approved for Zonal<br />

Intervention/Constituency<br />

Projects in the <strong>2018</strong> budget.<br />

The projects are to be<br />

implemented in the 109<br />

senatorial districts and<br />

360 federal constituencies<br />

across the country.<br />

One of the Legislative<br />

Aides privy to the workings<br />

of the House Committee on<br />

Appropriations informed<br />

<strong>BusinessDay</strong> that the joint<br />

Committee on Appropriations<br />

comprising of Loans,<br />

Aids and Debt Management;<br />

Finance, Appropriations<br />

and Budget Research<br />

Office are expected to convey<br />

next Wednesday to fine<br />

tune the budget proposals<br />

submitted by various<br />

MDAs.<br />

According to the documents<br />

presented by Debt<br />

Management Office (DMO)<br />

to the National Assembly,<br />

total new domestic borrowing<br />

was pegged at N849.674<br />

billion for <strong>2018</strong>.<br />

From the total sum of<br />

N2,013,835,365,699 proposed<br />

for utilisation of<br />

the public debt charges<br />

in <strong>2018</strong>, the sum of<br />

N1,759,755,709,708 is for<br />

servicing of domestic debt<br />

while N254,079,655,991<br />

is for servicing of external<br />

debt.<br />

identified funding as a major<br />

constraint to the early completion<br />

of the light rail project<br />

and other transportation infrastructure.<br />

The government believes<br />

the challenge can be addressed<br />

through Public Private<br />

Partnership (PPP) as it continues<br />

to seek local and foreign<br />

investors to complete some<br />

ongoing projects, including<br />

the ongoing expansion of the<br />

Lagos-Badagry expressway.<br />

Governor Ambode, in a<br />

meeting with the Japan-African<br />

Union Parliamentary<br />

Friendship Committee in Tokyo,<br />

said Lagos was ready for<br />

such partnership.<br />

“As a government, the renewal<br />

of infrastructure in Lagos<br />

State is of paramount interest<br />

to us. We cannot afford to miss<br />

the train of regeneration going<br />

around the world. We must continue<br />

to seek comprehensive<br />

and holistic solution to the various<br />

challenges confronting us.


44 BUSINESS DAY C002D5556<br />

NEWS<br />

Investment One releases report on<br />

10 investment options in Nigeria<br />

Investment One, a leading<br />

financial services<br />

group in Nigeria, has released<br />

a detailed list of 10<br />

profitable investment vehicles<br />

for discerning investors<br />

planning to invest in Nigeria.<br />

The 10 investment opportunities<br />

that are profiled in<br />

the report are treasury bills,<br />

commercial papers, sovereign<br />

bonds, state bonds, corporate<br />

bonds, Eurobonds,<br />

and equities. Others are mutual<br />

funds, real estate and<br />

venture capital.<br />

In the report, the investment<br />

firm also highlighted<br />

financial trends in the Nigerian<br />

economy, noting, “2017<br />

was reflective of a significant<br />

improvement in Nigeria’s oil<br />

sector. This led to the country’s<br />

exit from a recession, a<br />

boost in foreign exchange<br />

(FX) availability and an increase<br />

in foreign investor<br />

participation in the nation’s<br />

capital markets.”<br />

Speaking on the report,<br />

Nicholas Nyamali, managing<br />

director of Investment<br />

One, said, “In Nigeria, there<br />

are lots of investment opportunities<br />

to benefit from.<br />

I believe that knowledge<br />

about investing should not<br />

be limited to a select few.<br />

Everyone deserves to know<br />

about investment opportunities<br />

that exist in this day<br />

and age.”<br />

In reference to equities,<br />

the investment firm stated<br />

FBNQuest Asset Management supports<br />

world fellowship initiative<br />

Duke of Edinburgh’s<br />

International<br />

Award Foundation,<br />

London, in<br />

collaboration with The International<br />

Award for Young<br />

People, Nigeria held a 30-4-<br />

30 event at the Lagos Polo<br />

Club, Ikoyi in February, <strong>2018</strong>.<br />

The event, which was held<br />

in celebration of the 30th Anniversary<br />

of the World Fellowship<br />

and the 30th Anniversary<br />

of The Duke of Edinburgh’s<br />

International Award Foundation<br />

took the form of a Polo<br />

charity match played between<br />

Lagos STL and Lagos<br />

Caverton Sao Polo teams.<br />

The event was aimed at<br />

raising funds to celebrate the<br />

30-year anniversary of the<br />

World Fellowship and to help<br />

more young people in Nigeria<br />

undertake the Award. The<br />

funds from the event will be<br />

used to help grow, develop<br />

and improve the Award so<br />

that they can fulfil their longterm<br />

ambition of creating<br />

opportunities for young people<br />

across the globe.<br />

Commenting on the initiative,<br />

the managing director<br />

of FBNQuest Asset Management,<br />

Ike Onyia, stated,<br />

“We are committed supporting<br />

initiatives that inspire<br />

resourcefulness in young<br />

people.”<br />

He commended the Duke<br />

of Edinburgh’s International<br />

Award Foundation and the<br />

that equity markets were<br />

subject to volatilities in the<br />

short term and therefore<br />

advised investors to take a<br />

long-term view to investing<br />

in equities with a preference<br />

for fundamentally<br />

sound quality names.<br />

The report also advised<br />

small-scale investors to<br />

look toward the potential<br />

in the government bonds.<br />

However, in the section on<br />

sovereign bonds, the report<br />

cautioned that, “Given<br />

the backing of the Federal<br />

Government, fixed income<br />

instruments are default<br />

risk-free but are subject to<br />

interest rate risk.”<br />

Besides, the report listed<br />

a step-by-step process of<br />

how a potential investor can<br />

open an investment account,<br />

to take advantage of the opportunities<br />

listed therein,<br />

remarking that intending investors<br />

are not only advised<br />

on what to invest in, but also<br />

how to practically do so.<br />

Investment One Financial<br />

Services was founded<br />

in 2007 as GTB Asset Management<br />

Limited, a subsidiary<br />

of Guaranty Trust Bank<br />

(GTBank). Following a management<br />

buy-out in 2011,<br />

the company’s name was<br />

changed to Investment One<br />

Financial Services. Investment<br />

One provides market<br />

insight and financial solutions<br />

to help clients achieve<br />

their investment goals.<br />

World Fellowship for creating<br />

a platform that provided<br />

the opportunity.<br />

The Duke of Edinburgh’s<br />

International award is<br />

the world’s leading youth<br />

achievement award available<br />

to all young people aged<br />

14 to 24. It garners practical<br />

experiences and life skills to<br />

equip young people to succeed<br />

in life. The award, which<br />

operates in over 140 countries<br />

and territories is run<br />

in Nigeria under the name<br />

The International Award for<br />

Young People Nigeria. The<br />

Duke of Edinburgh Award is<br />

supported by The World Fellowship,<br />

a prestigious global<br />

network that brings together<br />

generous individuals with a<br />

shared interest in the development<br />

of young people.<br />

The event was hosted by<br />

Olawale Edun, a World fellow,<br />

International Trustee of<br />

The Duke of Edinburgh’s International<br />

Award Foundation<br />

and Chair of the Board of<br />

Trustees of The International<br />

Award for Young People Nigeria.<br />

It was attended by representatives<br />

from proud sponsor<br />

such as the FBNQuest<br />

Asset Management, EFG International,<br />

Guaranty Trust<br />

Bank Plc, PW Nigeria Limited,<br />

Access Bank Plc and<br />

Prudent Energy and Services<br />

Limited as well as by invited<br />

guests and polo enthusiasts.<br />

Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

Managing director/CEO, Asset Management Corporation of Nigeria (AMCON), Ahmed Kuru (standing 3rd in front row); chairman of<br />

House of Representatives Committee on Banking and Currency, Jones Chukwudi Onyereri (standing 4th in front row); Eberechukwu<br />

Uneze, executive director, AMCON (standing 2nd in front row); members of the Committee on Banking and Currency and other<br />

participants at the technical session held by the National Assembly Committee on the Amendment of AMCON Act in Abuja at<br />

the weekend.<br />

UBA reports PBT of N105.3bn in 2017<br />

with growing contribution from Africa<br />

...recommends N0.85 final dividend for the year<br />

DIPO OLADEHINDE<br />

United Bank for<br />

Africa Plc has<br />

announced its<br />

audited results<br />

for the financial<br />

year ended December<br />

31, 2017, showing significant<br />

growth in the contribution<br />

and market share from its<br />

pan-African subsidiaries,<br />

among other positive trends<br />

in the financial performance.<br />

The pan-African financial<br />

institution’s audited results<br />

showed that gross earnings<br />

grew substantially to N462<br />

billion, up by 20 percent from<br />

N314 billion recorded in the<br />

corresponding period of 2017.<br />

According to the report<br />

released to the Nigerian Stock<br />

Exchange on Friday, the<br />

Group delivered a strong 16<br />

percent year-on-year growth<br />

in profit before tax of N105<br />

billion, compared to N90.6<br />

billion in the 2016 financial<br />

year. The Profit after Tax also<br />

leaped to N78.6 billion, an 8.8<br />

percent year-on-year growth<br />

compared to N72.3billion in<br />

2016.<br />

The Bank’s subsidiaries<br />

outside Nigeria contributed a<br />

third of the Group’s top-line<br />

and 45 percent of the profit<br />

for the year, a remarkable improvement<br />

from 31 percent<br />

contribution made by the ex-<br />

Nigeria offices in 2016. This,<br />

according to market analysts<br />

affirms the success of the<br />

Bank’s expansion strategy,<br />

with target of 50 percent contributions<br />

by 2020.<br />

The Bank’s Operating<br />

Income grew to N3<strong>26</strong>.6 billion,<br />

a 20.6 percent increase<br />

compared to N270.9 billion<br />

recorded in 2016. This, according<br />

to analysts, affirms<br />

the capacity of the Group to<br />

deliver strong performance<br />

through varying economic<br />

cycles and challenging business<br />

environment.<br />

The audited results also<br />

showed that the Bank’s Total<br />

Assets peaked at N4.07<br />

trillion, translating into 16.1<br />

percent year-on-year growth<br />

from the figure of N3.50 trillion<br />

recorded as at 2016 financial<br />

year.<br />

In the 2017 financial year,<br />

the Bank’s Net loans achieved<br />

a prudent 9.7 percent growth<br />

at N1.65 trillion, while the<br />

customer deposits grew to<br />

N2.73 trillion, representing 10<br />

percent YoY growth on N2.49<br />

trillion recorded in the 2016<br />

financial year. Reflecting a<br />

strong internal capital generation,<br />

the Bank’s shareholders’<br />

fund also soared 18.2 percent<br />

to N529.4 billion in the 2017<br />

financial year.<br />

Subject to the approvals<br />

of the shareholders, the<br />

Board of UBA Plc proposed a<br />

final dividend of 65 kobo per<br />

every share of 50 kobo each.<br />

This final dividend proposal<br />

is in addition to the 20 kobo<br />

per share interim dividend<br />

paid after the audit of the 2017<br />

half year financial statements,<br />

thus putting the total dividend<br />

for 2017 financial year at<br />

85 kobo per share.<br />

Commenting on the result,<br />

Kennedy Uzoka, the<br />

GMD/CEO, said: “the results,<br />

underlines the success of our<br />

strategy of expanding across<br />

Africa, diversifying revenues<br />

and capturing the broader<br />

business opportunities inherent<br />

in Africa’s growth.<br />

Cole shares road map for Nigerian economy at Africa CEO Forum<br />

Sahara Group co-founder/executive<br />

director,<br />

Tonye Cole, will draw<br />

global attention to the<br />

need for diversification and<br />

collaboration in the quest for<br />

sustaining Nigeria’s economic<br />

growth at the Africa CEO Forum,<br />

which starts today in<br />

Abidjan, Cote d’Ivoire.<br />

The Africa CEO Forum is<br />

an annual gathering of the influential<br />

African and international<br />

CEOs, bankers and investors<br />

united by the mission<br />

of shaping an effective and<br />

sustainable course for Africa’s<br />

corporate agenda. It has enlisted<br />

over 3000 participating<br />

companies since its maiden<br />

event was staged and attracts<br />

over a thousand participants<br />

over its two day run.<br />

Cole will join a panel discussion<br />

on “The New Nigerian<br />

Economy”, which is expected<br />

to focus on some of the milestones<br />

achieved by the oil-rich<br />

nation as well as the recurring<br />

challenges associated with 50<br />

years of oil wealth dependency.<br />

Speaking ahead of the<br />

event, Cole said, “The architecture<br />

for diversification in any<br />

sector must include a design<br />

for diversification and production<br />

in volumes that satisfy<br />

domestic and international<br />

buyer appetite. We still do not<br />

have a solid blueprint for this.<br />

What we have is a strong opportunity<br />

to repurpose and<br />

reposition Nigeria as a globally<br />

recognized economic powerhouse.<br />

”<br />

The Nigerian government<br />

has been very vocal about<br />

its ambitions to move away<br />

from petroleum dependency<br />

although oil still accounts for<br />

over 90% of the country’s exports.<br />

But the medium-, longterm<br />

outlook is promising<br />

due to the new crop of talent<br />

and capital injections in the finance,<br />

technology, agriculture<br />

and entertainment sectors.<br />

Cole said, “If we are going<br />

to sustain the momentum, the<br />

political class should end its<br />

suspicion of the private sector<br />

players and instead seek<br />

opportunities for developing<br />

shared values and interests.<br />

We need continuing collaboration<br />

between the government<br />

and business community<br />

to achieve sustained<br />

economic growth.”<br />

He listed a number of factors,<br />

which bode well for diversification<br />

not just in Nigeria<br />

but Africa at large including,<br />

economic reforms, dynamic<br />

and youthful entrepreneurial<br />

spirit and the sheer size of the<br />

population.<br />

“We are a nation of people<br />

blessed with creative energy<br />

and we are beginning to rank<br />

with the world’s most promising<br />

and talked about stars in<br />

the culinary, music, fashion,<br />

cinematic and literary worlds.”<br />

Easter treat for subscribers<br />

as Glo unveils LTE<br />

Smartphone bundle<br />

Subscribers to Globacom,<br />

Nigeria’s data<br />

grandmasters have<br />

been primed for a<br />

beautiful Easter celebrations<br />

following the unveiling of an<br />

LTE Smartphone Bundle offer<br />

by the network.<br />

The offer gives new<br />

and existing Glo subscribers<br />

the opportunity to buy<br />

LTE Smartphones at superdiscounted<br />

rates between<br />

<strong>Mar</strong>ch 17 and April 16, <strong>2018</strong>.<br />

The phones also come<br />

with unbeatable data for four<br />

months. Globacom said in<br />

a press statement issued in<br />

Lagos on Friday that its subscribers<br />

could buy Huawei<br />

Y3 Smartphone at N25,000<br />

instead of N37,000, while the<br />

cost of Huawei Y5 has also<br />

been slashed from N45,000<br />

to N37,500.<br />

The Company explained<br />

that subscribers who buy the<br />

Y3 handset will enjoy 12.5GB<br />

over four months, while<br />

those who purchase Huawei<br />

Y5 would enjoy 18GB<br />

data, also available over four<br />

months.<br />

“The bundle will provide<br />

unlimited browsing opportunity<br />

for millions of Glo subscribers<br />

especially during the<br />

Easter celebration”, the statement<br />

added.<br />

Globacom’s Regional<br />

Chief <strong>Mar</strong>keting Officer,<br />

Ashok Israni, said the Easter<br />

Bundle was designed to offer<br />

more value to customers,<br />

adding that Globacom would<br />

continue to give more for less<br />

to its subscribers in order to<br />

keep them connected on the<br />

internet.<br />

On the monthly data, he<br />

stated that subscribers do<br />

not require any code to get<br />

the data over four months,<br />

explaining that the plan will<br />

automatically be activated on<br />

their lines without any action<br />

from them so long as the line<br />

is registered and activated.<br />

He emphasised the company’s<br />

commitment to exceeding<br />

the expectations of<br />

its millions of subscribers,<br />

and urged them to make<br />

maximum use of the Easter<br />

Bundle by visiting the nearest<br />

Gloworld shop to enjoy<br />

the benefits of the offer.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

CBN, finance ministry disagree<br />

over capital expenditure since 2015<br />

... Adeosun says N2.5trn spent, CBN claims it is N1.5trn<br />

BUNMI BAILEY & MICHEAL ANI<br />

Kemi Adeosun, minister<br />

of finance, in<br />

a statement at the<br />

Ogun state investors<br />

forum said that Nigeria<br />

has spent N2.5 trillion on<br />

capital expenditure since the Buhari-led<br />

government came into<br />

office in 2015 but data from the<br />

Central Bank of Nigeria (CBN)<br />

which puts total expenditure at<br />

N1.5 trillion disputes this claims.<br />

“We have invested over N2.5<br />

trillion in infrastructure between<br />

2015 and 2017. If you move<br />

round the country, you will<br />

see on-going works in roads,<br />

power, bridges, railway lines<br />

and so on. These are important<br />

building blocks for the Nigerian<br />

economy,” Adeosun said in a<br />

post on her Twitter page which<br />

she repeated at the summit in<br />

Ogun state.<br />

Adeosun further said, “When<br />

the Buhari’s government took office<br />

in 2015, the total amount invested<br />

in roads was N19 billion.<br />

In 2016 we raised that to N307.4<br />

billion & N208 billion in 2017.<br />

Investment in the Transport<br />

Sector went from N6.49 billion in<br />

2015, to N143.1 billion in 2016, &<br />

N133.9 billion in 2017.”<br />

Meanwhile the CBN quarterly<br />

report puts the total value of<br />

capital expenditure N1.5 trillion.<br />

Between the third and fourth<br />

quarter of 2015, capital expenditure<br />

stood at N424.2 billion. In<br />

2016 and 2017, total expenditure<br />

was at N734.4 billion and N147.1<br />

billion respectively. Buhari came<br />

into office on May 29, 2015.<br />

Clearly the optics is not good<br />

as it indicates a government that<br />

appears uncoordinated.<br />

“The only thing I can say<br />

is contingent liability, maybe<br />

she factored that into the total<br />

number,” Wolemi Esan, Partner,<br />

Energy and Infrastructure at<br />

Olaniwun Ajayi LP said in an attempt<br />

to provide an explanation<br />

for the variance.<br />

A text message sent by our<br />

correspondent to Adeosun’s<br />

official Twitter account seeking<br />

comment from the finance ministry<br />

was yet to be replied.<br />

“I would align with the CBN<br />

figures, because they are the<br />

custodian of the disbursement<br />

of the funds to the MDAs and<br />

they have more reliable and<br />

accurate figures. The bank is in<br />

the best position to track and<br />

trap disbursement of funds,” an<br />

analyst who preferred to remain<br />

anonymous because of the sensitivity<br />

of the matter said.<br />

A senior analyst at BudgiT<br />

corroborated this view saying<br />

the CBN figures are reliable and<br />

valid and that they have been<br />

using it for their research.<br />

Beyond the variance in figures,<br />

the key challenge is that<br />

Nigeria’s infrastructure spend is<br />

still too low.<br />

“The value of Nigeria’s infrastructure<br />

is just about 30%<br />

of GDP and these pales significantly<br />

beside other economies<br />

which have infrastructure stock<br />

of about 70 percent of GDP,”<br />

Esan said.<br />

Pressed to spend its way out<br />

of economic recession, Nigeria<br />

resorted to expansionary budgets<br />

in 2016 and 2017, the latter<br />

hitting a record high (in naira<br />

terms) of N7.4 trillion.<br />

While the country may have<br />

narrowly exited recession following<br />

two quarters of consecutive<br />

growth in the second<br />

and third quarters of 2017, the<br />

rebound is not significantly<br />

down to the government’s fiscal<br />

C002D5556<br />

policies, but to recovering oil<br />

prices and production.<br />

Nigeria is moving ahead with<br />

an expansionary fiscal policy<br />

in <strong>2018</strong> despite the failings of<br />

the 2016 and 2017 budgets. The<br />

FG’s actual spending in 2016 was<br />

N4.396 trillion, which is only 72.5<br />

percent of its expenditure plan<br />

of N6.06 trillion for the financial<br />

year under review.<br />

In 2017, the government<br />

planned to spend N7.44 trillion,<br />

a 69.2 percent increase over<br />

2016 expenditure. As at the end<br />

of the second half of 2017, only<br />

N1.27trn was spent. This amount<br />

was for debt servicing and recurrent<br />

expenditure as there were<br />

no capital releases in the period.<br />

The FG is looking at a total<br />

spending of N8.612 trillion in<br />

<strong>2018</strong>, the largest thus far, in<br />

nominal terms, with significant<br />

resources allocated to infrastructure<br />

and other capital projects.<br />

The budget devotes N2.65 trillion<br />

or 30.8 percent of its total<br />

spend on capital items, while the<br />

remaining amount will be spent<br />

on recurrent items, if the budget<br />

is implemented as proposed by<br />

the executive. The deficit size for<br />

<strong>2018</strong> is N2.005 trillion.<br />

BUSINESS DAY<br />

NSIA mulls<br />

commodity<br />

exchange to address<br />

pricing flaws<br />

... signs $5m agro loan<br />

with Babban Gona<br />

JOSEPHINE OKOJIE<br />

45<br />

NEWS<br />

To support the current diversification<br />

drive and address<br />

pricing flaws in the<br />

agricultural sector, the Nigeria<br />

Sovereign Investment Authority<br />

(NSIA) is considering taking over<br />

the Abuja commodity exchange<br />

in <strong>2018</strong>.<br />

Uche Orji, managing director<br />

and chief executive officer, NSIA<br />

told <strong>BusinessDay</strong> during the<br />

signing of a $5 million agro loan<br />

with Babban Gona in Lagos over<br />

the weekend.<br />

“The NSIA has indicated interest<br />

to take over the Abuja<br />

exchange and operate it and<br />

we are in advance negotiation<br />

with the Bureau of Enterprise,<br />

Ministry of Agriculture and the<br />

Central Bank of Nigeria who are<br />

the owners of the warehouses,”<br />

Orji said.<br />

“The objective of the exchange<br />

is not about storage but<br />

about price transparency. It is<br />

a mechanism for pricing to address<br />

the pricing flaws,” he said.<br />

Orji stated that as soon as the<br />

Continues on page 46<br />

Milost sued in New York for fraud, violating...<br />

Continued from page 1<br />

the latest being that the defendants’<br />

(Milost et al) motion to<br />

stay discovery in the matter was<br />

DENIED. Fact Discovery is due by<br />

Sep/28/<strong>2018</strong>. Status Conference<br />

is set for May/1/<strong>2018</strong> at 10.45<br />

AM in courtroom 17D, 500 Pearl<br />

Street, New York, NY 10007 before<br />

Magistrate Judge Katharine H.<br />

Parker, as ordered and signed by<br />

the judge on <strong>Mar</strong>ch/1/<strong>2018</strong>.<br />

MacGregor, the President<br />

and CEO of Canada-based KGIC<br />

Inc., (a publicly traded company<br />

on the Toronto Venture<br />

Exchange), seeks the refund of<br />

some $560,000 (N201 million)<br />

paid to Milost under the deceit<br />

of a financing deal worth $25 million.<br />

The Plaintiff is also seeking<br />

punitive damages against Milost,<br />

and all reasonable attorney’s fees,<br />

litigation expenses, and costs.<br />

Two phone calls to a number<br />

on Milost’s website and an<br />

email seeking comment went<br />

unreplied.<br />

MacGregor’s company, KGIC,<br />

had been experiencing significant<br />

liquidity problems and<br />

needed to raise funds to recapitalize<br />

its operations.<br />

After a plan to raise some<br />

USD$20.2 million from Canadian<br />

lenders in August 2016 failed, the<br />

company got commitment from<br />

Milost, which contacted Mac-<br />

Gregor with a proposal to provide<br />

funding through a friendly takeover<br />

bid worth $25 million.<br />

Milost proposed a buy-out<br />

using a U.S. OTC publicly traded<br />

company called PHI Global.<br />

To execute the transaction, an<br />

agreement, called “Milost Equity<br />

and Subscription Agreement”<br />

(“MESA”) was entered into between<br />

both parties on October<br />

30 2016.<br />

After execution of the MESA,<br />

Milost requested that MacGregor<br />

form a special purpose private<br />

company to acquire the assets<br />

as well as to purchase an existing<br />

U.S. OTC Form-10 Company<br />

identified by Milost as KMRB II<br />

Acquisition Corp, owned by one<br />

Florida-based Brian Kistler.<br />

In this regard, Milost requested<br />

that MacGregor pay a retainer<br />

of $80,000 for its services in locating<br />

KMRB and facilitating the<br />

transactions.<br />

MacGregor paid Milost the<br />

retainer of $80,000 and would<br />

go on to pay a total $250,000 in<br />

two separate payments for the<br />

acquisition of KMRB.<br />

He also coughed up $70,000<br />

as payment to complete the<br />

financial audit of the company<br />

(KMRB) as directed by Milost.<br />

The total amount received by<br />

Milost from MacGregor, excluding<br />

any sums received pursuant<br />

to the earlier KGIC–Milost agreements,<br />

was $560,000, the court<br />

document showed.<br />

MacGregor then got what<br />

appeared to be stock certificates<br />

issued by KMRB’s owner- Kistlerthrough<br />

an email sent by Milost,<br />

but they turned out to be fraudulent<br />

and were not reflected in any<br />

of the US Securities Exchange<br />

L-R: Victor Onyenkpa, partner/COO, KPMG Nigeria; Tola Adeyemi, partner and head, audit services, KPMG Nigeria;<br />

Yimika Adeboye, finance and strategy director, Cadbury Nigeria plc; Babatunde Fowler, executive chairman, Federal<br />

Inland Revenue Service (FIRS); Nike James, partner, tax services, KPMG Nigeria; Ayodele Subair, executive chairman,<br />

Lagos Internal Revenue Service (LIRS), and Kunle Elebute, senior partner, KPMG in Nigeria/chairman, KPMG Africa ,<br />

during the KPMG’s CFO forum and CFO outlook survey report and presentation with the theme ‘Outlook for tax administration<br />

in Nigeria and opportunities for enhanced collaboration with the private sector’ in Lagos. Pic by Pius Okeosisi<br />

Commission (SEC)’s filings.<br />

MacGregor has since requested<br />

a full refund of all monies paid<br />

to Milost, but is yet to receive any<br />

refund to date.<br />

One Nigerian company confirmed<br />

to <strong>BusinessDay</strong> that Milost<br />

made a similar proposal<br />

as was made to MacGregor, as<br />

criteria to invest in his company.<br />

The company’s CEO said on<br />

condition of anonymity that he<br />

pulled out from the deal when<br />

Milost asked he paid “about 20<br />

percent of an unstated amount<br />

Milost was to provide his company.”<br />

He said he got confused when<br />

the proposal stated that his company<br />

was liable to a “huge penalty<br />

fee” if the company’s share price<br />

did not jump to an agreed higher<br />

price.<br />

“Share price movement is<br />

down to market forces and is<br />

not something a company can<br />

control,” the person said. “That<br />

penalty, as well as some ludicrous<br />

fees Milost asked of us, made me<br />

question the ingenuity of the deal<br />

and eventually opt out.”<br />

<strong>BusinessDay</strong>, in a <strong>Mar</strong>ch 12<br />

article titled “The Math does not<br />

add up with Milost,” laid bare<br />

the incongruity of some of the<br />

proposed investments by Milost.<br />

While Milost’s propositions<br />

are impacting the stocks of target<br />

companies and causing investors<br />

to lose money in some cases,<br />

Continues on page 47


46 BUSINESS DAY<br />

C002D5556<br />

Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

NEWS<br />

Shareholders smile as dividends surge 36%...<br />

Continued from page 1<br />

lion in 2017, a 36.50 percent increase<br />

from the N303.50 billion<br />

paid in 2016.<br />

This is just a tip of the iceberg<br />

as more dividend announcement<br />

will be made this year as<br />

more firms are expected to publish<br />

their financial statements<br />

on the website of the Nigerian<br />

Stock Exchange (NSE).<br />

The firms under our coverage<br />

include Oil and gas, Financial<br />

Services and consumer goods<br />

and industrials goods.<br />

Dangote Cement’s N178.15<br />

billion final dividend payments<br />

to shareholders for the year 2017<br />

make up 43.32 percent of the total<br />

figure of N412.96 billion, based<br />

on <strong>BusinessDay</strong> calculations.<br />

The largest producer of the<br />

building material has increased<br />

payment by 23.52 percent as full<br />

year net income increased by<br />

31 percent while sales were up<br />

7 percent.<br />

LR: Uche Orji, MD/CEO, Nigeria Sovereign Investment Authority (NSIA); Jide Zeitlin, chairman of the board, NSIA; Sanusi<br />

Lamido Sanusi, Emir of Kano/chairman, Babban Gona, and Kola Masha, managing director, Doreo Partners, at the Agreement<br />

Signing for NSIA’s $5 million investment in Babban Gona Agriculture Scheme, Lagos.<br />

Debt recovery: National Assembly to give...<br />

Continued from page 1<br />

Representatives of the Federal<br />

Republic of Nigeria is currently<br />

working at amending the Act establishing<br />

the Asset Management<br />

Corporation of Nigeria (AMCON).<br />

He said the proposed amendment<br />

would further empower<br />

and embolden AMCON to go<br />

after its debtors especially those<br />

who hitherto think they can ride<br />

on some loopholes in the Act as<br />

is to perpetually engage AMCON<br />

in court.<br />

Onyereri made the disclosure<br />

in Abuja at a one-day technical<br />

session with stakeholders such<br />

as the Central Bank of Nigeria<br />

(CBN); Nigeria Insurance Deposit<br />

Corporation (NDIC) and members<br />

of the House Committee on<br />

Banking and Currency; AMCON<br />

management among others where<br />

the challenges inhibiting AMCON<br />

from recovering were extensively<br />

“I think the major thing is that<br />

they had stronger earnings last<br />

year and they stick to progressive<br />

dividend payment which<br />

is positive for the stock market,”<br />

said Tajudeen Ibrahim, head of<br />

research at Chapel Hill Denham<br />

Limited.<br />

“It reflects some incentives<br />

for potential investors to pick up<br />

stocks of some of the companies<br />

that have announced robust dividend<br />

payment,” said Ibrahim.<br />

Ibrahim said Zenith Bank has<br />

made more returns to shareholders<br />

than most banks as the<br />

lender has the strongest dividend<br />

yield (DY).<br />

Zenith Bank, United Bank<br />

for Africa (UBA), Access Bank,<br />

GTBank and Stabic IBTC have<br />

announced a combined final<br />

dividend of N186.68 billion,<br />

which is 45.31 percent of the<br />

total figure of N412.96 billion.<br />

Nestle Nigeria Plc’s increased<br />

dividend payment by 175.12<br />

discussed.<br />

The committee also used the<br />

occasion to listen to presentations<br />

from the representatives of the<br />

CBN, NDIC and legal luminaries<br />

among others on how AMCON<br />

could function optimally as well<br />

as meet its mandate before sunset.<br />

Speaking at the forum, Managing<br />

Director/Chief Executive Officer<br />

of AMCON, Ahmed Kuru who was<br />

frank and blunt at the technical<br />

session described his assignment<br />

at AMCON as “very difficult,” but<br />

said there was need to change<br />

the recovery approach at the Corporation<br />

with the backing of the<br />

National Assembly especially since<br />

the remaining crop of AMCON<br />

debtors are defiant, recalcitrant and<br />

business heavyweights who have<br />

the financial wherewithal to repay<br />

their debts but have refused to pay<br />

by going to court to tie AMCON up.<br />

Kuru said, “We have been doing<br />

this for the past seven years and we<br />

have realised that what we need<br />

now at this time in the life of AM-<br />

CON is legislative help that would<br />

make it possible to recover these<br />

debts effectively and efficiently. At<br />

AMCON, we believe that the Act<br />

establishing the Corporation can<br />

be amended as many times as possible<br />

by the National Assembly as<br />

long as they think it is appropriate<br />

to do so in the interest of the Nigerian<br />

economy. Given the difficulties<br />

we are facing presently, we are of<br />

the opinion that the Act establishing<br />

AMCON should be amended<br />

to reflect our sunset period.<br />

“We are making this suggestion<br />

because we have over the years<br />

realised that some of our obligors<br />

have since established another<br />

lifestyle that are different from<br />

what brought them to AMCON so<br />

the best we can do as a law abiding<br />

agency of the government is take<br />

them to court. But the wheel of<br />

justice grinds slowly in the country<br />

so something drastic must be<br />

percent to N21.79 billion in<br />

the period under review as the<br />

consumer goods giant’s full year<br />

earnings 2017 surged by 325.53<br />

percent to N33.72 billion.<br />

Analysts are of the view that<br />

the increased dividend payment<br />

by corporates is a reflection of<br />

an improved economy since<br />

they operate within the same<br />

environment.<br />

“All parameters are indicating<br />

an improvement in the economy,<br />

that is, Gross Domestic Product<br />

(GDP), Purchasing Managers Index<br />

(PMI).These parameters are<br />

expected to impact positively on<br />

the performance of firms,” said<br />

Johnson Chukwu, managing director<br />

and CEO of Cowry Assets<br />

Management Limited.<br />

“As the economy improves<br />

further one should expect that it<br />

impacts on the fortunes of firms,”<br />

said Chukwu.<br />

The gross domestic product<br />

of Africa’s largest oil producer<br />

expanded for three straight<br />

quarters last year after a 1.6 percent<br />

contraction in 2016, with<br />

year-on-year growth reaching<br />

1.9 percent in the final three<br />

months of 2017.<br />

An increase in crude prices<br />

and the introduction of a new<br />

foreign-exchange system that<br />

ended a crippling shortage of<br />

dollars helped attract more investment<br />

flows into the country,<br />

while improving liquidity for the<br />

nation’s companies.<br />

GlaxoSmithKline Nigeria Plc<br />

has declared a special dividend<br />

of N7.10 in addition to a final<br />

NSIA mulls commodity exchange to address...<br />

Continued from page 45<br />

exchange commences its operations,<br />

NSIA will create a futures<br />

market on the exchange to help<br />

farmers get funds for expanding<br />

their farming areas.<br />

Despite off-taking agreements<br />

on pricing between manufacturers<br />

and farmers, farmers<br />

however, sell their produce in<br />

the open market whenever prices<br />

are high and to manufacturers<br />

when prices are low.<br />

Similarly, manufacturers always<br />

refuse price reviews with<br />

farmers when cost of production<br />

rises, forcing farmers to operate<br />

at a loss.<br />

“The exchange will address<br />

the pricing issues so that we do<br />

not have big corporations going<br />

into farms to buy from farmers<br />

and pay whatever price they<br />

want. The exchange will create<br />

a transparent mechanism for<br />

pricing,” he said.<br />

He noted that agriculture is<br />

one of the main sectors NSIA<br />

is focused on, as well as health,<br />

road and power sectors.<br />

Speaking on the $5o million<br />

agro loan to Babban Gona, Orji<br />

said that the investments will<br />

help 50,000 farmers farm in a<br />

better way, improve their production<br />

and help them get the<br />

right pricing for their produce,<br />

while improving their living<br />

standards which impacts their<br />

nutrition.<br />

Sanusi Lamido Sanusi, chairman,<br />

Babban Gona said that<br />

the $5 million loan is a five year<br />

medium term loan with a two<br />

done if we all want AMCON to<br />

meet its mandate at sunset. So we<br />

suggest that the National Assembly<br />

amends the Act establishing AM-<br />

CON in such a way that the assets<br />

of the obligor(s) are automatically<br />

transferred to AMCON. From what<br />

we know, some of the obligors are<br />

working hard to ensure that the<br />

cases they have with AMCON in<br />

different courts outlive the lifespan<br />

of AMCON.”<br />

AMCONs most recent results<br />

those for Full Year 2016, shows<br />

the company improved its performance,<br />

growing funds from<br />

its resolution sinking fund (RFF)<br />

by 77.8 per cent to N186.3 billion<br />

within the year under review;<br />

credit losses also improved by 69.8<br />

percent to N19.7 billion.<br />

Similarly, liquidity ratio, defined<br />

as the proportion of AMCON’s<br />

liquid assets to its total assets, rose<br />

by 1.5 percentage points, from 7<br />

per cent in 2015 to 8.5 per cent in<br />

2016. The company’s net operating<br />

loss moderated 13.2 per cent<br />

dividend of N0.40, which sent<br />

dividend yields to around 30<br />

percent as investors scramble<br />

for the company’s stocks.<br />

The healthcare and consumer<br />

goods giant says the special dividend<br />

will be paid from retained<br />

earnings brought forward as<br />

at year ended December 2016,<br />

including the profit from sale of<br />

drinks business as at December<br />

2016.<br />

“Everybody has been trying<br />

to buy the stock since the announcements,”<br />

said Ibrahim.<br />

year moratorium.<br />

“This shows the commitment<br />

of the Nigerian government and<br />

its institutions to agriculture. We<br />

all understand the importance<br />

of the sector and we have been<br />

committed to it for years.”<br />

“This investment is not just<br />

about diversifying our GDP, or<br />

making farmers rich but it is<br />

about saving lives. It is about<br />

the human capital of the society.<br />

We cannot grow as a nation long<br />

term if half of the next generation<br />

is already mentally deformed<br />

from childhood because of malnutrition,”<br />

Sanusi said.<br />

The Emir noted that his organisation<br />

is not focused on<br />

making profits but to address<br />

the issues of malnutrition in the<br />

country, while calling for the<br />

creation of Nutrition Ministry in<br />

each state of the federation.<br />

Speaking also during the<br />

signing ceremony, Kola Masha,<br />

managing director, Babban<br />

Gona said the investment would<br />

directly be impacting over 6,000<br />

smallholder farmers which will<br />

translate in impacting about<br />

50,000 individuals and families.<br />

“This investment will help<br />

Babban Gona be on its path to<br />

catalysing additional capital to<br />

enable it reach its goal of supporting<br />

a million farmers by<br />

2025. We are very excited to<br />

take this loan push forward to<br />

the next level.”<br />

Currently, Babban Gona is<br />

working with 40,000 maize and<br />

soybeans farmers in Kano, Kaduna<br />

and Kastina.<br />

from N234 billion in 2015 to N203<br />

billion in 2016.<br />

The National Assembly, which<br />

in the first place created AMCON in<br />

2010, Kuru argued must do everything<br />

within its constitutional powers<br />

to protect the Corporation and pay<br />

more attention to AMCON sunset<br />

to enable AMCON fully recover the<br />

debts from the hard-core obligors<br />

who would stop at nothing to frustrate<br />

both AMCON, the National Assembly<br />

and the Nigerian populace.<br />

Kuru added, “Our recovery<br />

assignment is a difficult one and<br />

in recent years business has been<br />

quite challenging in the country.<br />

For that reason, we are sitting on a<br />

lot of assets because of the unstable<br />

liquidity situation and as you know<br />

most of our assets are challenged<br />

one way or the other. But we are<br />

hopeful that things look up in <strong>2018</strong>,<br />

meaning that AMCON’s projections<br />

too look positive.<br />

•Continues online at www.businessdayonline.com


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

C002D5556<br />

BUSINESS DAY<br />

47<br />

NEWS<br />

Milost sued in New York for fraud, violating...<br />

Continued from page 45<br />

critics lay the blame at the feet of<br />

the Nigerian Stock Exchange and<br />

Securities Exchange Commission<br />

(SEC), who they say are failing<br />

in their role to protect equity<br />

investors.<br />

Questions are also now being<br />

raised over the role played by<br />

faceless insiders in the companies<br />

which Milost targeted.<br />

“The regulatory inertia in the<br />

capital market has made the SEC<br />

and NSE unable to recognise that<br />

Milost is a Teflon entity which<br />

has no substance and genuine<br />

origin,” an informed source at the<br />

Securities Exchange Commission<br />

(SEC) told <strong>BusinessDay</strong>.<br />

“The SEC and NSE should<br />

have easily spotted Milost before<br />

they started making the noise that<br />

triggered a bubble and deceived<br />

investors,” said the source, who<br />

lays the blame on “leadership<br />

incompetence” at both organisations.<br />

<strong>BusinessDay</strong> contacted the Nigerian<br />

Stock Exchange (NSE) for<br />

comment but no response was<br />

given at time of filing this report,<br />

and several calls and emails went<br />

unanswered and unreplied.<br />

When contacted, Olumide<br />

Orojimi, head of corporate communications<br />

said he was on leave,<br />

directing <strong>BusinessDay</strong> to contact<br />

one Temitayo Ade-Peters who<br />

neither picked calls nor replied<br />

an email.<br />

Joseph Kadiri, media relations<br />

officer of NSE was also contacted<br />

but he referred <strong>BusinessDay</strong> to<br />

Orojimi, who is on leave.<br />

Clifford Akpolo, the Brand<br />

and Digital <strong>Mar</strong>keting Manager<br />

at the NSE, is acclaimed to also<br />

be on leave.<br />

Meanwhile, other sources at<br />

SEC said, “the Milost bubble is<br />

another manifestation of leadership<br />

failure at the Commission,<br />

which was not proactive to correct<br />

and neutralize such deceitful<br />

investment proposals.<br />

The critical role of SEC in<br />

building confidence just exists on<br />

the bridge, as regulatory oversight<br />

has been thrown aside.<br />

“How can SEC know what is<br />

going on when you hardly find<br />

their representatives in critical<br />

summits where knowledge and<br />

information sharing applies.<br />

Nepotism reigns in at the SEC.<br />

It is harmful to our market,” one<br />

person familiar with the matter<br />

said.<br />

Bloomberg reported on <strong>Mar</strong>ch<br />

19, <strong>2018</strong> that the same Milost is<br />

looking to inject as much as $1<br />

billion (about N360 billion) to<br />

recapitalise Nigeria’s Unity Bank<br />

Plc, which is also down financially<br />

after a slowdown in Africa’s<br />

biggest economy.<br />

Interestingly, on <strong>Mar</strong>ch 21,<br />

Unity Bank Plc in a letter to the<br />

Nigerian Stock Exchange (NSE)<br />

notified shareholders and other<br />

stakeholders of the bank that<br />

it has not reached any agreement<br />

with Milost to warrant such<br />

speculation.<br />

“Unity Bank is in talk with<br />

a number of potential investors<br />

and has not concluded any<br />

investment transactions at the<br />

moment,” according to the letter<br />

filed at the NSE and signed by<br />

Mohammed Shehu, company<br />

secretary at Unity Bank Plc.<br />

The common investment<br />

strategies in private equity include:<br />

leveraged buyouts, venture<br />

capital, growth capital, distressed<br />

investments and mezzanine<br />

capital; but all private equity investors<br />

are number-driven.<br />

From a 52-week low of 50kobo<br />

per share, the bank’s share rose to<br />

N1.92 per share before declining<br />

to N1.2.<br />

Unity’s share price gained 1.67<br />

percent to trade at N1.2 Friday,<br />

according to Bloomberg data.<br />

In all, the market value of<br />

Unity Bank Plc is just N14.027<br />

billion with 11.689 billion shares<br />

outstanding.<br />

Japaul Oil & <strong>Mar</strong>itime Services<br />

Plc, a Nigerian oil-services<br />

company said it signed an agreement<br />

with Milost for $350 million<br />

(N1<strong>26</strong>billion) in shares and loans<br />

for business expansion.<br />

Japaul said Milost will invest<br />

$250 million (N90billion) in equity<br />

and add another $100 million<br />

(N36billion) in convertible loans.<br />

After hitting a 52-week high<br />

of N1.06, Japaul Oil has been the<br />

worst performing stock for two<br />

straight weeks.<br />

As at Friday <strong>Mar</strong>ch 23, the<br />

stock tumbled further by 30.9percent<br />

to 63kobo.<br />

Japaul Oil Plc is valued at<br />

N3.945billion on the stock exchange<br />

and has 6.<strong>26</strong>2 billion<br />

shares outstanding.<br />

“We informed the Regulatory<br />

Authorities that we have signed<br />

Milost Equity Subscription<br />

Agreement (MESA 1) and Milost<br />

has not asked for any upfront fees<br />

from us until disbursement takes<br />

place, even the facilitation fees<br />

to Palewater who are advisers<br />

to the transaction is technically<br />

agreed to be paid when we start to<br />

drawdown on the facility despite<br />

agreement signed”, said Japaul Oil<br />

chairman, Jegede Paul.<br />

According to Paul, “An escrow<br />

account agreement is being<br />

worked upon to trigger the drawdown<br />

on the facility. We don’t<br />

really know where the dailies got<br />

their variables that do not add<br />

up mathematically about Milost<br />

math. They should have watched<br />

and see what happens about the<br />

issue of performance.”<br />

He faulted <strong>BusinessDay</strong> report<br />

against Milost saying that it has<br />

been wrongly perceived by the investing<br />

public “and this is terribly<br />

affecting our share price on the<br />

stock market. This is simply sad.”<br />

Japaul’s oil and gas operations<br />

suffered a setback with the 2014<br />

plunge in crude prices, which<br />

forced exploration and production<br />

companies to scale back<br />

their activities. The company has<br />

not been able to fix its grounded<br />

vessels and finance new contracts.<br />

The unaudited management<br />

account of Japaul Oil and <strong>Mar</strong>itime<br />

Services Plc for the thirdquarter<br />

period ended September<br />

30, 2017 shows a paltry turnover<br />

of N472.418 million, a 115 percent<br />

decline from N1.016 billion<br />

turnover in same period of 2016.<br />

A $250 million (N90 billion)<br />

equity investment in Japaul Oil<br />

imply valuing each share at N14,<br />

a huge premium by any standard.<br />

L-R: Akinola Sawyer, director, Kinexus Data Services; Oluwatobi Boshoro, head, digital marketing, issuing and service management,<br />

Stanbic IBTC; Ayoola Popoola, group head, operational and IT, Fidelity Bank; Opeyemi Ndukwe, managing partner,<br />

Blue Advisory, and Adedeji Olowe, trustee, Open Technology Foundation, at the official launch of Open Banking Nigeria, Lagos.<br />

And for what?<br />

The company made a total<br />

comprehensive loss of N1.8 billion<br />

in the period, from N5.28 billion<br />

in the third quarter of 2016.<br />

Japaul’s consolidated statement<br />

of profit or loss and other<br />

comprehensive income for the<br />

year ended December 31, 2016<br />

shows the group loss nearly<br />

tripled to N22.010 billion from<br />

N8.036 billion in 2015.<br />

There are four subsidiaries under<br />

the group - Japaul Shipping &<br />

Offshore Services Limited, Japaul<br />

Mines & Products Limited, Japaul<br />

Dredging Services Limited, and<br />

Japaul Gulf Electro Mechanical<br />

LLC Dubai UAE.<br />

The group revenue in 2016<br />

slumped by 62 percent to N3.078<br />

billion from N8.148billion in<br />

2015, according to a financial<br />

statement filed at the NSE.<br />

Resort Savings and Loans is<br />

another company to be linked<br />

with Milost over a deal worth<br />

$250 million.<br />

At the NSE, the mortgage<br />

provider is a delinquent filer of<br />

audited accounts with a raft of<br />

MFR (Missed Regulatory Fillings)<br />

for non-rendition of audited<br />

financial statements for 2015 and<br />

2016, according to X-Compliance<br />

report of the NSE.<br />

The financing agreement with<br />

Milost Global is that it will invest<br />

$250 million in the bank comprising<br />

$100 million (N36billion) as<br />

equity capital and $150 million<br />

(N54 billion) as debt.<br />

Resort Savings said the transaction<br />

will take place through a<br />

private placement, subject to the<br />

approval of the NSE, SEC and the<br />

Central Bank of Nigeria (CBN).<br />

Resort Savings, last December,<br />

had notified stakeholders that it was<br />

in talks with a local investor to attract<br />

investment worth N8 billion.<br />

The talks are yet to be concluded.<br />

Olayemi Rabiu the chief executive<br />

officer of Resort Savings<br />

& Loans Plc, said, “The investment<br />

will enable the company<br />

to assume the leadership role in<br />

the mortgage banking business<br />

in Nigeria, the West African subregion<br />

and Africa as a whole as<br />

well as contribute excellently to<br />

the growth in African economies.”<br />

Sunday Fajinmi, the chairman<br />

of the mortgage bank also<br />

took his turn at calling out <strong>BusinessDay</strong>’s<br />

effort to expose the<br />

fragilities in Milost’s dealings<br />

that would ensure investors and<br />

affected companies are well<br />

informed.<br />

“It is sad to realise that a few<br />

grumbling, half educated individuals<br />

are against the recovery<br />

of the Nigerian economy through<br />

resuscitation of dying businesses,”<br />

Fajinmi said.<br />

However, the mortgage bank’s<br />

market capitalisation is just N5.6<br />

billion, according to data on the<br />

Nigerian Stock Exchange (NSE).<br />

Resort Savings and Loans has<br />

not published financial statements<br />

since the third-quarter<br />

(Q3) of 2015 when it reported<br />

net profits of N34.2 million on<br />

revenues of N1 billion and shareholder<br />

funds of N2.92 billion.<br />

Total assets for the mortgage<br />

provider for the period came in<br />

at just N10.1billion.<br />

Given that Resort’s share price<br />

is only 50 kobo and it has 11 billion<br />

outstanding shares, Milost’s<br />

N36 billion equity injection values<br />

each stock at N3, six times<br />

more than the current price.<br />

According to Fajinmi, Milost<br />

Global Incorporated of USA “has<br />

been verified to be a very credible<br />

investor in developing economies<br />

like Nigeria. Their track record<br />

which speaks for itself, attest<br />

only to their credibility. Their understanding<br />

of the peculiarity of<br />

developing economies in Private<br />

Equity financing is amazing when<br />

compared to others who are the<br />

paymasters of the journalist, the<br />

author of the fake news.”<br />

Fajinmi is probably unaware<br />

of Milost’s fraud charges in the<br />

US, or if he is aware, whether he is<br />

still knowingly entering an agreement<br />

with an unknown company<br />

charged with fraud in the US.<br />

“The ingenuity and financial<br />

engineering behind our Milost<br />

Equity Subscription Fund<br />

(MESA), as well as the Milost<br />

structure of engagement makes<br />

it easy for us to invest heavily in<br />

companies with high growth potential,<br />

whilst reducing our risk of<br />

investments through the checks<br />

and balances that are part and<br />

parcel of our framework of engagement”,<br />

Solly S. Asibey, Senior<br />

Partner & CIO of Milost, stated.<br />

“Our aim is to make investments<br />

in companies that will<br />

have a high impact within the<br />

vertical industry in which they<br />

operate, thus increasing the<br />

potential for the companies to<br />

be counted amongst the best<br />

in their industries globally. Our<br />

modus operandi has always<br />

been to invest in companies<br />

that will add value to the country<br />

and its citizens in terms<br />

of wealth and job creation, as<br />

well as the ability to contribute<br />

positively towards stepping up<br />

the economic transformation<br />

of the country. Our success is<br />

intertwined with the success of<br />

our investee companies; and<br />

from a corporate governance<br />

perspective, we subscribe to the<br />

rules and regulations of the Stock<br />

Exchange, Federal Reserve Bank,<br />

and the SEC in terms of all our<br />

engagements,” Asibey said.<br />

Asibey was hired as Chief Investment<br />

Officer on February 1,<br />

<strong>2018</strong>, following the retirement of<br />

James S. Kuo last year. This may not<br />

be unlinked with the suit against<br />

Kuo and his Milost partners.<br />

“Kuo participated in numerous<br />

conversations with Mac-<br />

Gregor wherein he and/or the<br />

other individual Defendants<br />

demanded money on behalf of<br />

Milost Acquisition Corporation”,<br />

the court document in the fraud<br />

case against Milost shows.<br />

Other individual defendants<br />

in the suit against Milost are<br />

Mandla Gwadiso, Jerry Choate,<br />

Egerton Forster, Brian K. Kistler,<br />

and Harold <strong>Mar</strong>tin.<br />

Mandla J. Gwadiso, also<br />

known as MJ, founded Milost<br />

Global Incorporated in 2015 and<br />

serves as its Managing Partner.<br />

Previously, he served as the Chief<br />

Executive Officer and Chief Investment<br />

Officer at the firm.<br />

Gwadiso serves as the Chief<br />

Executive Officer and Chairman<br />

of the Board of Directors of Precise<br />

Acquisition, Incorporated.<br />

Forster resides in California<br />

and was Chief Executive Officer<br />

of Milost Global. He is currently<br />

the senior partner and chairman<br />

of the Milost Board of Directors.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

BUSINESS DAY<br />

A1


A2<br />

NEWS<br />

Nigerian states internally generated<br />

revenue hits 8-year high<br />

MICHEA ANI<br />

Internally generated<br />

revenue (IGR) by Nigerian<br />

states in 2017<br />

touched N931.23 billion,<br />

the highest so far<br />

since 2010, according to data<br />

from National Bureau of Statistics<br />

(NBS).<br />

This figure represents a<br />

12.04 percent increase from<br />

the N831.19 billion generated<br />

in 2016 (year-on year).<br />

Analysts are of the view<br />

that the reason for this hike<br />

in IGR can be attributed to<br />

a cut by the Federal Government<br />

on allocations to<br />

states, as they have to find<br />

rigorous means to generate<br />

revenue themselves.<br />

“The reason for this<br />

hike in states IGR is not farfetched.<br />

FAAC allocation has<br />

been going down since 2015,<br />

Good environment health coming as Visionscape assures on cleaner city by April<br />

CHUKA UROKO<br />

BUSINESS DAY<br />

C002D5556<br />

The challenge to<br />

good environmental<br />

health posed by<br />

mounting refuse<br />

dumps in Lagos city will be<br />

a thing of the past soon, if<br />

assurances by the authorities<br />

of the new waste management<br />

firm, Visionscape<br />

Sanitation Solutions, are<br />

anything to go by.<br />

Lagos, in the last eight<br />

months of the coming of<br />

the new waste collector, has<br />

surreptitiously slipped from<br />

its status as a mega city to a<br />

‘mega refuse dump’ where<br />

every street and some major<br />

roads have been taken<br />

over by both residential and<br />

commercial wastes generated<br />

in substantial quantities<br />

by homes and industries.<br />

Vissionscape, a foreign<br />

firm, employed by the authorities<br />

of the state as a<br />

substitute to the homegrown<br />

Lagos Waste Management<br />

Agency (LAWMA),<br />

which, in its imperfections,<br />

tried to manage waste in<br />

A<br />

legislation that seeks<br />

to inject $1 billion<br />

for the completion<br />

of Ajaokuta Steel<br />

Company Limited from the<br />

Excess Crude Account (ECA)<br />

has scaled second reading on<br />

the floor of the House of Representatives.<br />

The $1 billion, according<br />

to Section 2(a-c) of the<br />

proposed bill, is to be drawn<br />

from “Excess Crude Revenue<br />

and “all monies from<br />

time to time appropriated<br />

and authorised to be paid<br />

into the Fund,” as well as “all<br />

loans or grants from time to<br />

time made to Nigeria for the<br />

purposes of completing the<br />

Ajaokuta Steel company.”<br />

According to one of the<br />

experts who spoke at the<br />

sectoral debate on Ajaokuta<br />

Steel project, Anthony<br />

Madagua, Nigeria has the<br />

capacity to produce 12.2mt/<br />

year of steel by year 2020 out<br />

of which Ajaokuta Steel is to<br />

produce 5.2mt yearly, as encapsulated<br />

in the Vision 2020<br />

economic blueprint, which<br />

projects that Nigeria will join<br />

the league of industrialised<br />

nations by 2020 and reduce<br />

importation of $4 billion<br />

worth of steel on yearly basis.<br />

Madagua also said about<br />

$1.4 billion was required for<br />

the completion of the first<br />

phase of Ajaokuta plant of<br />

1.3 million tons of liquid<br />

steel per year, adding that<br />

the thermal power plant had<br />

the capacity of generating<br />

110mw of electricity.<br />

On his part, Hussaini Abthe<br />

state well, is perceived<br />

by many Lagosians as being<br />

incapable of handling the<br />

enormous waste Lagos generates<br />

on daily basis.<br />

But the authorities of the<br />

new firm, which prides itself<br />

as technology-driven waste<br />

collector, assure that before<br />

the end of April, about 30<br />

days from now, “Lagosians<br />

will see a marked difference<br />

in their environment,”<br />

which at the moment poses<br />

serious threat to their health<br />

condition.<br />

John Irvine, the company’s<br />

CEO, explained<br />

that they effectively started<br />

collecting residential<br />

refuse in the state in January<br />

this year, as they used<br />

their first five months in<br />

the state (July to December)<br />

dealing with the over<br />

2,000 identified black<br />

spots (illegal dumpsites).<br />

Specifically, Irvine assured<br />

that in addition to<br />

increasing their capacity<br />

by engaging about 100<br />

waste collection organisations<br />

(WCOs), otherwise<br />

called PSP operators, they<br />

creating a short fall in the income<br />

of states hence most of<br />

them had to look internally<br />

to generate money to meet<br />

the shortfalls in income like<br />

going into aggressive taxation,”<br />

Dolapo Ashiru CEO at<br />

Lagos-based Mega Financial<br />

Capital, said.<br />

Total disbursements to<br />

states fell by 30.5 percent<br />

from N1.009 trillion in the<br />

first half of 2015 to N701 billion<br />

in the first half of 2016.<br />

For local governments, allocations<br />

from FAAC dropped<br />

by <strong>26</strong> percent from the<br />

N580.63 billion of the first<br />

half of 2015 to N429.43 billion<br />

of the first half of 2016.<br />

The reason for this fall<br />

was as a result of a fall in<br />

crude prices coupled with<br />

disturbance associated with<br />

the Niger Delta militant that<br />

sent oil production to a decade<br />

low of 1.2 million barrel<br />

as the economy went to its<br />

first recession in 25 years.<br />

The Federal Government<br />

was also not left behind in<br />

the heat as total disbursements<br />

to the Federal Government<br />

fell from N1.23 trillion<br />

in the first half of 2015 to<br />

N854 billion in the first half<br />

of 2016. This represents a<br />

30.9 percent decline<br />

According to the NBS, 31<br />

states recorded growth in<br />

IGR while five states - Akwa<br />

Ibom, Anambra, Bauchi,<br />

Osun and Taraba recorded<br />

a decline at the end of 2017<br />

fiscal year.<br />

Lagos, Rivers, Ogun, Delta<br />

and Kano generated the<br />

highest revenue with an IGR<br />

of N333.97 billion, N89.48<br />

billion, N74.83 billion,<br />

N51.89 billion and N42.4<br />

billion, respectively. While<br />

would be taking delivery<br />

of more vehicles and<br />

waste bins to be distributed<br />

to every part of the<br />

state, especially the suburbs.<br />

With these, he emphasised<br />

they would be more<br />

aggressive, intensive and<br />

extensive in waste collection,<br />

moving from local<br />

government to local government,<br />

street to street and<br />

household to household.<br />

Recently, the Lagos<br />

House of Assembly took<br />

out time to look into the<br />

operations of Visionscape,<br />

raising concerns<br />

among residents that the<br />

action might affect the operations<br />

of the company.<br />

But Visionscape has assured<br />

Lagosians that there<br />

is no cause for alarm over<br />

the resolution of the House<br />

of Assembly, saying that<br />

the parliamentarians were<br />

performing their statutory<br />

function.<br />

The House of Assembly<br />

had in a resolution invited<br />

the Accountant-General of<br />

the state, Abimbola Umar,<br />

Unions to shut down airspace over delayed payment<br />

of ex-Nigeria Airways workers severance packages<br />

IFEOMA OKEKE<br />

Failure of the Federal<br />

Government to pay<br />

the N45 billion final<br />

severance packages<br />

to the almost 6,000 workers of<br />

the former workers of Nigeria<br />

Airways Limited (NAL) may<br />

spell doom for it as the industry<br />

unions have threatened<br />

to shut down airspace in the<br />

next two weeks.<br />

The industry unions are<br />

also peeved by the insensitivity<br />

of the Ministry of Finance to pay<br />

the workers over 10 months after<br />

the approval by the Federal<br />

Executive Council (FEC).<br />

The unions, National Association<br />

of Aircraft Pilots and Engineers<br />

(NAAPE), the National<br />

Union of Air Transport Employees<br />

(NUATE) and the Air Transport<br />

Senior Staff Services Association<br />

of Nigeria (ATSSSAN),<br />

said they would not wait until<br />

the entire workers of the former<br />

national carriers die before taking<br />

step to ensure that they were<br />

paid their benefits.<br />

The petition, dated <strong>Mar</strong>ch<br />

19, <strong>2018</strong>, and made available<br />

to journalists, was signed<br />

by Ocheme Aba for NAAPE,<br />

Frances Akinjole, ATSSSAN,<br />

and Alayinka Abioye for NU-<br />

ATE, and addressed to Hadi Siri-<br />

ka, minister of state for aviation.<br />

The petitioners also copied the<br />

ministers of labour and employment<br />

and finance. It would be<br />

recalled that the ex-workers had<br />

accused Kemi Adeosun, finance<br />

minister of wilfully delaying the<br />

payment of the severance packages<br />

despite approval by the<br />

government.<br />

The unions also pointed<br />

out that they had commenced<br />

the mobilisation<br />

of the Nigeria Labour Congress<br />

(NLC), Trade Union<br />

Congress (TUC) and United<br />

Labour Congress (ULC) in a<br />

bid to gather wider support<br />

for the action.<br />

Yobe, Bauchi, Kebbi, Ekiti<br />

and Ebony generated the<br />

least with an IGR of 3.6, 4.37,<br />

4.39, 4.97 and 5.1 billions in<br />

naira. In 2015, IGR shrunk<br />

3.4 percent to N683.6 billion<br />

from the N707.8 billion state<br />

recorded in 2014.<br />

At the end of half year<br />

2017, total revenue generated<br />

by states was put at<br />

N432.65 billion as against<br />

N409.09 billion that was<br />

generated in the first half<br />

(H1) of 2017.<br />

The net Federation Account<br />

Allocation Committee<br />

(FAAC) in year 2017 was put<br />

at N1.73 trillion while the total<br />

revenue available to the<br />

states was N2.67 trillion.<br />

However, the value of foreign<br />

debt stands at $19.9 billion<br />

while domestic debt hits<br />

N3.35 trillion at the end of<br />

2017 full year, respectively.<br />

and three members of the<br />

State Executive Council to<br />

brief its ad hoc committee<br />

on all issues surrounding<br />

waste management and the<br />

role and status of Visionscape.<br />

The invited commissioners<br />

are attorney-general and<br />

commissioner of justice,<br />

Adeniji Kazeem; commissioner<br />

for finance, Akinyemi<br />

Ashade, and commissioner<br />

for environment,<br />

Babatunde Durosinmi-Etti.<br />

ECA: Reps mull legislation for injection<br />

of $1bn into Ajaokuta Steel<br />

KEHINDE AKINTOLA, Abuja<br />

Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

dulrahaman, chairman, Total<br />

Steel Limited, expressed<br />

concerned over the $5.7<br />

billion assets tied down for<br />

over 30 years.<br />

According to Abdulrahaman,<br />

“The opportunity cost<br />

of the non performance of<br />

Ajaokuta Steel company is<br />

best imagined of we judge<br />

it against a similar plant<br />

that was commissioned<br />

in time, had a project cost<br />

and investment payback of<br />

10 years and subsequently<br />

earned profits of 10% of investment<br />

every year for 20<br />

years, for the investor (in our<br />

own case Federal Government<br />

of Nigeria) and cumulative<br />

and investible profits<br />

of $11.4 billion (enough to<br />

build 20 more steel plants of<br />

1.5m TPA).”<br />

The experts’ presentations<br />

and recent working visit of<br />

speaker Yakubu Dogara led to<br />

the House resolve to initiate<br />

the “bill for an Act to provide<br />

for the Ajaokuta steel company<br />

completion fund for the<br />

speedy completion of the project<br />

and for other related matters,”<br />

sponsored by Uzoma<br />

Nkem-Abonta and 300 other<br />

lawmakers.<br />

Section 3 of the bill also<br />

provides that the monies in<br />

the Fund shall be applied<br />

by the Minister only for the<br />

purpose of: construction,<br />

improvement, extension, enlargement<br />

and replacement<br />

of infrastructure and works,<br />

including the provision, acquisition,<br />

improvement and<br />

replacement of other capital<br />

assets (like vehicles, vessels,<br />

machinery, instruments.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

BUSINESS DAY<br />

A3


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

A4 BUSINESS DAY


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

Port Harcourt Refinery on a faulty start<br />

after shutting down for two months<br />

OLUSOLA BELLO<br />

After shutting down<br />

for almost two<br />

and half months,<br />

the 210,000 barrels<br />

per day Port<br />

Harcourt Refinery, the most<br />

viable of the three refineries in<br />

Nigeria, had a faulty start up at<br />

the weekend.<br />

There is however little to<br />

cheer about, as there are still<br />

other minor problems that<br />

could make the plant to relapse<br />

if they are not promptly<br />

attended to.<br />

Sustainability of supply<br />

of feedstock is one of the<br />

problems the plant is facing<br />

currently, as what it has<br />

to operate with is said to be<br />

very little. This coupled with<br />

the uncertainty surrounding<br />

the functionality of the vacuum<br />

distillation unit (VDU)<br />

and crude distillation units<br />

(CDU), two very critical<br />

components of the plants.<br />

If the VDU and CDU are<br />

not functioning the fluid catalytic<br />

cracking unit (FCCU)<br />

that produces gasoline,<br />

which it feeds from will remain<br />

dormant.<br />

A source told <strong>BusinessDay</strong><br />

that the plant may never have<br />

enough feedstock to sustain<br />

it operations, except prompts<br />

actions are taking by the management<br />

of the Nigerian National<br />

Petroleum Corporation<br />

(NNPC), which supervises<br />

the management of Port Harcourt<br />

Refinery. The source<br />

however bemoans the manner<br />

of NNPC management<br />

towards fixing the refinery in<br />

terms of making cash available<br />

for the repairs.<br />

Despite it faulty start up,<br />

some industry operators say<br />

there is still hope that it can<br />

still function to continue it<br />

production of about 5 million<br />

litres of petrol a day that<br />

will take care of it operating<br />

environment when it is finally<br />

stabilises. The country has<br />

completely relied on importation<br />

of petrol since it was shut<br />

down mid January this year.<br />

Maikanti Baru, group<br />

managing director of NNPC,<br />

recently said the corporation<br />

would not relent in its quest to<br />

get the nation’s four refineries<br />

back to their optimal, nameplate<br />

capacities.<br />

Baru said this shortly after<br />

receiving this year’s Man<br />

of the Year Award from Nigerian<br />

NewsDirect, a Lagosbased<br />

daily publication, in<br />

Lagos. He said as part of<br />

the ongoing reforms in the<br />

NNPC, the corporation had<br />

been holding far-reaching<br />

discussions with some consortia<br />

to get the best funding<br />

options towards the refineries’<br />

overhaul.<br />

He added that the corporation,<br />

under his watch, had<br />

recorded remarkable progress<br />

in resuscitating some<br />

of the nation’s critical downstream<br />

infrastructure, a development<br />

that had ensured<br />

seamless supply of products<br />

nationwide, until the recent<br />

past hiccups which is now<br />

under control.<br />

The 210,000 barrel per<br />

day refining plant suffered<br />

a break down when it rotor<br />

got damaged and this<br />

subsequently affected its<br />

Vacuum Distillation Unit<br />

(VDU), Crude Distillation<br />

Unit (CDU) the fluid catalytic<br />

cracking unit (FCCU).<br />

The nation’s three refineries<br />

produced between five<br />

and six million litres of Premium<br />

Motor Spirit (PMS),<br />

also known as petrol, per day<br />

in June last year with Port<br />

Harcourt Refinery producing<br />

the highest volume of about 5<br />

million litres.<br />

The other refineries are<br />

Warri Refining and Petrochemical<br />

Company located in<br />

Delta State, and the Kaduna<br />

Refining and Petrochemical<br />

Company in Kaduna State.<br />

CBN, NIBSS create sandbox for start-up Fintechs<br />

HOPE MOSES-ASHIKE<br />

As part of its financial<br />

inclusion drive, the<br />

Central Bank of Nigeria<br />

(CBN) in collaboration<br />

with the Nigeria<br />

Inter-Bank Settlement System<br />

(NIBSS) is creating a regulatory<br />

sandbox that allows startups<br />

Financial Technology<br />

(FinTechs) companies test<br />

their solutions in a controlled<br />

environment.<br />

The regulator is working<br />

in partnership with the Bill<br />

and Melinda Gates Foundation<br />

for technical assistance<br />

in achieving this.<br />

It is expected that by July<br />

this year the CBN will come<br />

up with the draft regulatory<br />

framework of the sandbox for<br />

the public to see. Regulatory<br />

sandboxes are gaining popularity,<br />

mostly in developed<br />

financial markets.<br />

“With the regulatory sandbox<br />

that we are bringing up,<br />

they will be able to taste their<br />

solutions with the banks and<br />

other financial services providers<br />

to see that those things<br />

are working and they can go<br />

commercial,” Musa Jimoh,<br />

deputy director, banking and<br />

payment supervision department,<br />

CBN, said at the weekend<br />

at the official launch of<br />

Financial Service Innovators<br />

(FSI) in Lagos.<br />

Responding to journalists<br />

on what the FSI is all about,<br />

Jimoh said, “The objective is<br />

C002D5556<br />

to empower small companies<br />

which we refer to as start-ups<br />

innovators, technologies,<br />

young people that have very<br />

fantastic ideas but they don’t<br />

have the financial capacity<br />

to bring out their products or<br />

even integrate with some<br />

banks or have the money to<br />

take a licence from CBN and<br />

we don’t want those ideas to<br />

just die off.<br />

“So, what CBN basically<br />

did was to bring all these<br />

start-ups together and try<br />

to understand their pains,<br />

their constraints and see<br />

how it can give them helping<br />

hands to grow.<br />

Our believe is that these<br />

youth will eventually be the<br />

leaders of tomorrow and if<br />

we give them helping hands<br />

we are basically building<br />

the entire economy.”<br />

Ade Shonubi, managing<br />

director/CEO, NIBSS, said<br />

NIBSS offered to support<br />

the association for the first<br />

year in addition to the creation<br />

of the sandbox.<br />

He said the bank verification<br />

number (BVN) would be<br />

required to guard against manipulation<br />

of the platform.<br />

“We are also conscious of<br />

the fact that if we do not manage<br />

the people who could do<br />

that we may find people in<br />

Ukraine or Russia taking our<br />

knowledge building solution<br />

and coming to sell it to us. So,<br />

we wanted to limit it to any<br />

Nigeria,” Shonubi said.<br />

BUSINESS DAY<br />

CBN’s Joseph Nnanna<br />

becomes NEXIM chairman<br />

HOPE MOSES-ASHIKE<br />

A5<br />

NEWS<br />

Minister of finance,<br />

Kemi Adeosun,<br />

has inaugurated<br />

the Board of<br />

Directors of the Nigerian Export-Import<br />

Bank (NEXIM)<br />

with Joseph Nnanna, deputy<br />

governor, Economic Policy of<br />

the Central Bank of Nigeria<br />

(CBN), as the new chairman.<br />

This is in line with the<br />

constitution of the Governing<br />

Boards of Government<br />

Agencies by the President and<br />

Commander-in-Chief of the<br />

Federal Republic of Nigeria.<br />

Other directors include<br />

Mudashiru Olaitan, Olubunmi<br />

Siyanbola, Ochapa<br />

Ogenyi, Adesina Adegbenro,<br />

and Hajiya Ramatu<br />

Ahmed. The newly appointed<br />

directors join the<br />

executive management<br />

team of the bank headed by<br />

Abba Bello, the managing<br />

director/chief executive,<br />

who is assisted by Bala Bello,<br />

executive director, corporate<br />

services, and Stella<br />

Okotete, executive director,<br />

business development.<br />

The new chairman,<br />

Nnanna, brings to bear his<br />

experience as an economist<br />

and banker over the last<br />

three decades, during which<br />

he has been involved in policy<br />

formulation and development<br />

of financial markets.


A6<br />

NEWS<br />

BUSINESS DAY<br />

C002D5556<br />

Danjuma’s call, a weighty evidence<br />

of Buhari, APC’s failure - PDP<br />

OWEDE AGBAJILEKE, Abuja<br />

The People’s Democratic<br />

Party (PDP)<br />

says the call by the<br />

former minister of<br />

defence, Theophilus<br />

Danjuma, that Nigerians<br />

should defend themselves<br />

against killers, is yet another<br />

testimony of the tragic situation<br />

the Buhari Presidency<br />

and the All Progressives Congress<br />

(APC) have dragged the<br />

nation.<br />

The party says the retired<br />

general’s statement justifies<br />

its stand that the Buhari Presidency<br />

and the governing APC<br />

must be held responsible for<br />

our agonising state, adding<br />

that, Nigerians are now daily<br />

paying the supreme price because<br />

of the failures of a grossly<br />

incompetent leadership.<br />

The PDP, in a statement<br />

issued by its national publicity<br />

secretary, Kola Ologbondiyan,<br />

on Sunday, said the pronouncement,<br />

coming from an<br />

army general, a former chief of<br />

army staff and former defence<br />

minister of Danjuma’s status,<br />

was weighty and directly reflected<br />

the ugly situation in the<br />

country under the APC.<br />

It said the fact that citizens<br />

and communities across the<br />

country were now resorting<br />

to self-defence was also<br />

a clear demonstration that<br />

Nigerians, across board, had<br />

completely lost confidence<br />

in President Buhari and the<br />

APC.<br />

“It is instructive to recall<br />

that former presidents Olusegun<br />

Obasanjo and Ibrahim<br />

Babangida, both former<br />

military leaders, army generals<br />

and patriots, had earlier<br />

raised the issue of unabating<br />

bloodletting and pogrom in<br />

our country under the APC<br />

and the Buhari Presidency.<br />

“Painfully, the APC-controlled<br />

Federal Government<br />

has not only failed in finding<br />

solution but is also contending<br />

with allegations of<br />

conspiracy and acts that are<br />

believed to have emboldened<br />

attacks against innocent Nigerians.<br />

“Unfortunately, the Buhari-led<br />

APC Federal Government<br />

remains aloof and<br />

has failed to take decisive<br />

steps that will apprehend<br />

the masterminds of the carnage,”<br />

the statement read.<br />

The main opposition<br />

party said Nigerians are<br />

no longer feeling secured<br />

in their land, pointing out<br />

the country has assumed a<br />

status of killing field where<br />

defenceless citizens are despoiled,<br />

raped and mowed<br />

by insurgents and marauders<br />

in Benue, Taraba, Yobe,<br />

Gombe, Kaduna, Adamawa,<br />

Borno, Plateau, Nasarawa,<br />

Rivers, Enugu, Kogi among<br />

other states.<br />

It expressed worry over<br />

what it called the ‘loud silence’<br />

of the Federal Government<br />

on the alleged<br />

importation of military<br />

equipment by APC interests<br />

in Kogi State.<br />

“Instead, what we are<br />

witnessing are complete<br />

government insensitivity,<br />

allegations of complicity<br />

and compromise of security<br />

around soft targets and dishing<br />

out of false information,<br />

as was the case in Benue,<br />

Yobe, Taraba and other<br />

states where Nigerians have<br />

come under heavy attacks<br />

from marauders.<br />

“More intriguing is that<br />

the Presidency and the APC<br />

Federal Government have<br />

refused to come out clear on<br />

their roles in the alleged compromising<br />

of security in troubled<br />

areas, particularly the<br />

reported withdrawal of troops<br />

from Dapchi prior to the abduction<br />

of the schoolgirls.<br />

“Nigerians are also yet<br />

to see the action taken by<br />

President Buhari against the<br />

Inspector General of Police,<br />

IGP Ibrahim Idris, for flouting<br />

the presidential orders<br />

that he should relocate to<br />

troubled Benue in the heat<br />

of attacks on the state.<br />

Exchange rate strong as CBN boosts<br />

liquidity with $339.89m forex market<br />

HOPE MOSES-ASHIKE<br />

Exchange rate remained<br />

strong as<br />

naira traded around<br />

N360 and N362<br />

against the dollar at the investors<br />

and exporters forex window<br />

(I&E) and black market.<br />

The Central Bank of Nigeria<br />

(CBN) on Friday sustained<br />

its intervention in the forex<br />

market by injecting $339.89<br />

million into the Retail Secondary<br />

<strong>Mar</strong>ket Intervention<br />

Sales (SMIS).<br />

The CBN spot rate opened<br />

the week at N305.70/$ and remained<br />

unchanged throughout<br />

the week. At the parallel<br />

market, the naira appreciated<br />

N1 at the start of the week to<br />

close at N362.00/$ and traded<br />

at similar level all week.<br />

Disclosing the development<br />

to newsmen in Abuja,<br />

Isaac Okorafor, CBN’s acting<br />

director, corporate communications,<br />

noted that the continued<br />

interventions were in line<br />

with the pledge made by the<br />

governor, Godwin Emefiele,<br />

to sustain market liquidity in<br />

order to boost production and<br />

trade.<br />

The Nigeria Autonomous<br />

Foreign Exchange (NAFEX)<br />

rate opened the week at<br />

(N360.16/$) and traded flat<br />

till mid-week before appreciating<br />

13 kobo on Thursday,<br />

to close at N360.03/$. The<br />

rate depreciated 5 kobo on<br />

Friday and closed the week at<br />

N360.08/$, up 8 kobo weekon-week.<br />

Activity level in the I&E<br />

window weakened as cumulative<br />

weekly turnover<br />

measured on Thursday stood<br />

at $839.3 million, down 40.7<br />

percent ($576.7m) from $1.4<br />

billion recorded the same period<br />

of the prior week.<br />

According to Okorafor, the<br />

feedback from the wholesale<br />

and retail segments of the Nigerian<br />

forex markets showed<br />

that customers were satisfied<br />

with their level of access<br />

to foreign exchange. He also<br />

assured Nigerians that the<br />

recent confirmation of deputy<br />

governors and Monetary<br />

Policy Committee (MPC)<br />

nominees by the Senate<br />

would further spur the bank<br />

towards taking sound decisions<br />

needed for economic<br />

development.<br />

Details obtained from<br />

the bank indicate that the<br />

amount released was for requests<br />

in the agricultural,<br />

airlines, petroleum products<br />

and raw materials and machinery<br />

sectors.<br />

It would be recalled that<br />

on <strong>Mar</strong>ch 19, the bank injected<br />

$210 million into the<br />

Wholesale segment of the forex<br />

market.<br />

Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

‘CPC is not usurping<br />

NCAA’s functions on<br />

passengers’ rights’<br />

IFEOMA OKEKE & MICHEAL ANI<br />

Consumer Protection<br />

Council (CPC) has<br />

stated it is not usurping<br />

the functions of<br />

the Nigerian Civil Aviation<br />

Authority (NCAA) with its protection<br />

of air travellers in the<br />

country. This is as the Nigerian<br />

aviation industry is among the<br />

three sectors that received the<br />

highest complaints from the<br />

public in the preceding year in<br />

the council.<br />

Babatunde Irukera, director-general<br />

of CPC, stated this<br />

Friday in Lagos in an interaction<br />

with aviation journalists.<br />

According to Irukera, there<br />

wis no confusion in the laws<br />

setting up the two organisations<br />

- NCAA and CPC, insisting that<br />

his agency is not overlapping<br />

on the activities of the aviation<br />

industry regulatory body, rather<br />

ensuring that the rights of consumers<br />

are always protected.<br />

He explained that the statutory<br />

role of CPC was to protect<br />

the consumers in all sectors of<br />

the economy, including the aviation<br />

industry and wondered<br />

why some sections of players<br />

in the sector expressed worry<br />

in its attempts to protect the flying<br />

public especially when their<br />

rights were trampled upon by<br />

the airlines and other organisations<br />

in the sector.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

BUSINESS DAY<br />

A7


A8 BUSINESS DAY<br />

C002D5556<br />

NEWS<br />

NPA, OGFZA set to resolve double<br />

charges, insecurity at Onne Ports<br />

BEN EGUZOZIE, Port Harcourt<br />

Operators at the<br />

Onne Ports<br />

complex and<br />

Oil and Gas Free<br />

Zone, Onne, last<br />

week reeled out a barrage of<br />

challenges they face using<br />

the seaports, coupled with<br />

double charges imposed on<br />

them by both the Nigerian<br />

Ports Authority (NPA) and<br />

the Oil and Gas Free Zones<br />

Authority (OGFZA).<br />

Onne Ports complex occupies<br />

a total of 2,500 square<br />

metres, of which only about<br />

30 percent of the area is taken<br />

up by users.<br />

At a stakeholders’ interactive<br />

session between ports<br />

operators and the managing<br />

director of NPA, Hadiza Bala<br />

Usman, at the NPA Onne,<br />

most of the operators complained<br />

of increasing cost of<br />

doing business at the ports,<br />

mounting insecurity along<br />

the Onne sea channel in-<br />

WIMBIZ sees women participation in politics as catalyst for growth<br />

SEYI JOHN SALAU<br />

Women in Management,<br />

Business<br />

and Public<br />

Service (WIM-<br />

BIZ), a non-governmental organisation<br />

with a vision to be<br />

the catalyst that elevates the<br />

status and influence of women<br />

and their contribution to<br />

nation building, has called for<br />

more women participation<br />

in the day-to-day running of<br />

government in Nigeria.<br />

WIMBIZ believes that<br />

more women participation in<br />

politics and governance will<br />

be a catalyst for Nigeria’s economic<br />

growth. This position<br />

was based on the believe that<br />

women are better managers<br />

of economic resources, and<br />

that having more women in<br />

active politics reduces the rate<br />

of corruption and changes the<br />

negative perspective of politics<br />

being a dirty game.<br />

… as operators reel out barrage of challenges<br />

let, marked by heightening<br />

piracy, dilapidated or nonavailability<br />

of key equipment<br />

such as tugboats, pilotcutters,<br />

gunboats and patrol<br />

boats, required for good port<br />

operations.<br />

Other challenges faced by<br />

the port operators include:<br />

shallow channel for bigger<br />

ocean vessels, lack of routine<br />

dredging of the ports, need to<br />

review the GMT and concession,<br />

presence of wrecks along<br />

the channel, poor electricity<br />

supply and non-illumination<br />

in and around the ports.<br />

The insecurity issue was<br />

confirmed when the <strong>Mar</strong>ine<br />

Police officer at Onne told<br />

the NPA boss that his team<br />

covered 12 nautical miles<br />

from baseline to anchorage<br />

of Onne Ports, “but sadly<br />

does not have any gunboat<br />

or patrol boat to face the<br />

sea pirates who often operate<br />

from sophisticated boats<br />

The WIMBIZ Women in<br />

Politics (WIMPol) was held<br />

recently in Lagos as a platform<br />

and vehicle for inspiring more<br />

women for nation building.<br />

The workshop brought together<br />

women with zeal and<br />

passion for the development<br />

sectors to discuss topical issues<br />

and share strategies for<br />

success in the light of a rapidly<br />

changing global, economic<br />

and socio-political landscape.<br />

The afternoon section of<br />

the workshop themed ‘Politics<br />

101: the Winning Formula,’<br />

had as panellists Folake<br />

<strong>Mar</strong>cus Bello, a former Nigerian<br />

ambassador to Zambia,<br />

Ibim Semenitari, a former<br />

commissioner for information,<br />

Rivers State, and Nnenna<br />

Ukeje, a serving member<br />

of the House of Representative,<br />

and was moderated by<br />

Hafsat Abiola-Costello.<br />

According to the panellists,<br />

there has been a signifi-<br />

and attack weapons.”<br />

However, Usman and<br />

OGFZA managing director,<br />

Umanah Okon Umanah,<br />

agreed to urgently tackle the<br />

issues raised by the ports operators,<br />

especially that of double<br />

land rent charges.<br />

On security issues, she<br />

announced the NPA was currently<br />

collaborating with all<br />

security agencies to up the<br />

security narrative at the ports.<br />

She also informed that<br />

the NPA was procuring two<br />

17m offshore patrol boat that<br />

would greatly increase the<br />

patrol capacity of the ports;<br />

six tugboats, which would be<br />

deployed to Onne.<br />

She also said a committee<br />

that would holistically<br />

consider the magnitude<br />

of wrecks in and around<br />

the ports, with the view to<br />

removing them to make<br />

the ports safe for vessels<br />

smooth sailing.<br />

cant reduction of women in<br />

parliament, evident by the<br />

drop from 9.6 percent female<br />

representation in the seventh<br />

Republic to 4.9 percent<br />

female representation in the<br />

eighth republic.<br />

The panellists said research<br />

on female political<br />

representation in Nigeria<br />

clearly showed that proactive<br />

measures need to be put in<br />

place to encourage increased<br />

female participation in politics,<br />

and that WIMPol was<br />

borne to help meet this need.<br />

“Women are not yet fully<br />

represented in the leadership<br />

of the political and governance<br />

structure in Nigeria. This is because<br />

of a strong adherence<br />

to patriarchal beliefs, cultural<br />

perceptions about the role of a<br />

woman, and the nature of the<br />

political arena in Nigeria and<br />

the steep financial barriers to<br />

entry into the political game,”<br />

Semenitari said.<br />

There would be a review<br />

of the GMT and concession<br />

of the terminal operators to<br />

make it more workable to<br />

operators.<br />

Meanwhile, the NPA boss<br />

has said the authority would<br />

be seeking an amendment of<br />

its extant law, to make it easier<br />

for it (NPA) to undertake<br />

its equipment procurements<br />

like the NNPC and Ministry<br />

of Defence, without having<br />

to go through the long hassle<br />

of Bureau of Public Procurement<br />

(BPP) or Due Process<br />

approvals.<br />

According to her, it takes<br />

at least five months to achieve<br />

the quickest procurement<br />

by any federal government<br />

agency; adding that NPA<br />

equipment are not bought<br />

off the shelf, but are purposebuilt.<br />

Some equipment may<br />

take up to 18 months for the<br />

manufacturer to construct<br />

before delivering to the buyer.<br />

L-R:Kayode Thomas, Rifugio Samsung Partner, Samsung Electronics Store, Ikeja City Mall; Olumide Ojo, director, information<br />

technology and mobile, Samsung Electronics West Africa; John Park, president, Samsung Central Africa; Bankole Wellington (Banky<br />

W), Samsung Ambassador, and Hung-Bae Kim, manager, information technology and mobile, Samsung Electronics West Africa, during<br />

the launch of the Samsung S9 and S9+ smartphones at Samsung Experience Centre, Ikeja City Mall, Lagos. Pic by Pius Okeosisi<br />

NCC commits to making Edo a smart city<br />

JUMOKE AKIYODE-LAWANSON<br />

Nigerian Communications<br />

Commission<br />

(NCC)<br />

has reaffirmed its<br />

commitment to work with the<br />

Edo State government for an<br />

opportunity to transform the<br />

state into a smart city by significantly<br />

improving access<br />

to telecoms infrastructure<br />

and providing world-class Information<br />

Communications<br />

Technology (ICT) facilities.<br />

Both parties agreed to<br />

work together to achieve<br />

ICT advancement for the<br />

citizens of Edo State during<br />

a meeting between Godwin<br />

Obaseki, governor of Edo<br />

State, and executives of the<br />

NCC led by Sunday Dare,<br />

the Commission’s executive<br />

commissioner for stakeholder<br />

management, held<br />

at the NCC headquarters in<br />

Abuja, last week.<br />

Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

FG to publish lists of items<br />

exempt from tax month end<br />

HOPE MOSES-ASHIKE<br />

Federal Government<br />

through the Ministry<br />

of Finance will by the<br />

end this month come<br />

up with a regulation that<br />

shows additional list of items<br />

exempt from Value Added<br />

Tax (VAT). This comes as the<br />

national taxpayer data have<br />

grown to about 17 million as<br />

of December 2017.<br />

Babatunde Fowler, executive<br />

chairman, Federal Inland<br />

Revenue Service (IFRS), disclosed<br />

this at the weekend<br />

while responding to questions<br />

of chief finance officers<br />

at the <strong>2018</strong> KPMG CFO forum<br />

and CFO outlook survey report<br />

presentation in Lagos.<br />

“VAT process has been<br />

very simple. If we give you<br />

items to exempt that means<br />

everything else is VATable.<br />

We also looked deeper,<br />

there are certain items that<br />

should be VAT exempt and<br />

the minister of finance is<br />

quite aware and we should<br />

be getting out our regulation<br />

before the end of this month<br />

that will show you additional<br />

items that will be exempt<br />

from VAT,” Fowler said.<br />

One of the questioned<br />

raised was on extension of the<br />

Voluntary Asset and Income<br />

Declaration Scheme (VAIDS),<br />

which Fowler responded to<br />

by saying that the issue of the<br />

extension would be decided<br />

by the President.<br />

“This programme was<br />

approved by the Federal Executive<br />

Council, Senate and<br />

House of Representatives. It<br />

is beyond me as chairman<br />

or minister of finance to<br />

extend. Put in application,<br />

because the application will<br />

show that you have started<br />

the process,” he said.<br />

The scheme is expected<br />

to help expand Nigeria’s tax<br />

base and improve the low tax<br />

to Gross Domestic Product<br />

(GDP) ratio from the current<br />

6 percent to between 12 per-<br />

Speaking at the meeting,<br />

Dare commended the forward-looking<br />

policies of the<br />

state governor and assured<br />

him of the NCC’s readiness<br />

to support the achievement<br />

of the ICT aspirations of the<br />

state through the deployment<br />

of fibre infrastructure under<br />

the Commission’s InfraCo<br />

project and interventions by<br />

the Universal Service Provision<br />

Fund (USPF).<br />

According to Dare, the<br />

NCC is aggressively driving<br />

accessibility of telecoms<br />

networks to all areas of the<br />

Federation. He however regretted<br />

that the situation<br />

with multiple taxation and<br />

regulation in some states was<br />

counter-productive for the<br />

states – because they end up<br />

losing substantial revenues<br />

and developmental opportunities,<br />

which could have been<br />

stimulated with the presence<br />

of telecoms infrastructure.<br />

cent and 15 percent in the first<br />

instance.<br />

Responding to issue<br />

on tax laws, the executive<br />

chairman of FIRS said, “We<br />

are in the process of changing<br />

the tax laws. In the <strong>2018</strong><br />

budget, we have presented<br />

amendment to tax laws.”<br />

The tax amnesty will end by<br />

the end of this month.<br />

Ayodele Subair, executive<br />

chairman, Lagos Internal<br />

Revenue Service (ILRS), responded<br />

to issues raised on<br />

capturing the informal sector<br />

in tax administration.<br />

According to Subair, Lagos<br />

accounts for 24 million<br />

residents but only 5 million<br />

registered as taxpayers. He<br />

was worried that it was a<br />

difficult task to broaden the<br />

tax net to capture the informal<br />

sector because the people<br />

in this sector were very<br />

mobile and could change<br />

address at any time.<br />

Subair, however, said the<br />

state was collaborating with<br />

consultants to increase level<br />

of awareness and registration,<br />

but was concerned that the<br />

challenge was lack of credible<br />

data. “Credible census will<br />

help to do sectoral analysis.<br />

“The LIRS will continue<br />

to create avenues in ensuring<br />

that residents are able to access<br />

information necessary to<br />

make tax payment seamless.”<br />

Other speakers at the forum<br />

include Kunle Elebute,<br />

senior partner, KPMG in Nigeria<br />

and chairman, KPMG<br />

Africa, who welcomed the<br />

participants; Yimika Adeboye,<br />

finance/strategy director, Cadbury<br />

Nigeria plc, and Wole<br />

Obayomi, partner/head, Tax,<br />

Regulatory and People Services,<br />

KPMG in Nigeria.<br />

KPMG at the forum<br />

launched the CFO outlook<br />

survey, which indicated<br />

a 10 percent increase in<br />

overall confidence sentiments<br />

among CFOs on the<br />

prospects for growth in the<br />

Nigerian economy.<br />

He assured the governor<br />

NCC was keen to partner Edo<br />

State to achieve win-win solutions<br />

in the overall interests of<br />

the people of the state.<br />

Responding, Governor<br />

Obaseki noted that the state<br />

was focused on exploring<br />

non-oil resources and had<br />

therefore articulated developmental<br />

priorities focusing<br />

on creating a sense of order<br />

(participative, accountable<br />

and open governance), and<br />

a sense of security, safety and<br />

stability necessary to attract<br />

requisite investments to develop<br />

the state.<br />

“Since its developmental<br />

goals rely on the seamless<br />

availability of telecoms/ICT<br />

infrastructure, Edo State is<br />

passionate about the need<br />

to attract robust telecoms<br />

infrastructure to drive manufacturing,<br />

education and<br />

other socio-economic activities,”<br />

he said.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

FT FINANCIAL TIMES<br />

C002D5556<br />

BUSINESS DAY<br />

A9<br />

World Business Newspaper<br />

China counts on restrained<br />

riposte taking sting<br />

from US trade clash<br />

Xi keeps keeps focus on long-term strategy with studied response to Trump tariffs<br />

TOM MITCHELL AND LUCY HORNBY<br />

Chinese government officials are<br />

confident that a carefully calibrated<br />

response to punitive tariffs<br />

outlined last week by President Donald<br />

Trump will help contain the fallout from<br />

a Sino-US trade dispute, as they focus<br />

instead on longer-term strategic goals<br />

outlined by Xi Jinping.<br />

China’s president in October spelled<br />

out his vision of the country becoming<br />

one of the world’s strongest and most<br />

prosperous nations by the middle of<br />

the century. This month China’s rubberstamp<br />

parliament formally abolished a<br />

two-term limit on the presidency, paving<br />

the way for Mr Xi to lead the country for<br />

life if he chooses.<br />

In private conversations, Chinese<br />

officials say they will respond to US trade<br />

sanctions in kind, but also hope not to<br />

escalate the situation.<br />

“Xi and China as a whole have a bigger<br />

agenda than trade in dealing with the<br />

US. It is a small potato,” said one senior<br />

Chinese government adviser. “It is not<br />

in China’s interest to launch a massive<br />

trade war.”<br />

According to the adviser, Beijing is<br />

confident that it can reduce its $375bn<br />

surplus in manufactured goods with the<br />

US and announce new market opening<br />

measures within six months, allowing<br />

Mr Trump to claim victory before<br />

November’s mid-term congressional<br />

elections. “When two parties negotiate<br />

you have to bluff, and Trump is a businessman,”<br />

the adviser added.<br />

China’s commerce ministry outlined<br />

on Friday its response to Mr Trump’s decision<br />

to impose tariffs that would affect<br />

$3bn of Chinese steel exports, targeting<br />

an equal amount of US exports. Analysts<br />

said Beijing’s response was meant to<br />

signal its intent to respond in kind if Mr<br />

Trump follows through on his threat<br />

to penalize $60bn worth of Chinese<br />

Parliamentary dynamics are crucial as populists make up 60 per cent of MPs and senators<br />

Italy is not the only potential<br />

source of future economic instability<br />

for the eurozone, but it is<br />

the most foreseeable. Other possible<br />

triggers are a trade war and a global<br />

economic downturn — or more<br />

likely both.<br />

A trade war remains a clear and<br />

present danger. The EU has secured<br />

a reprieve from US steel and aluminium<br />

tariffs. But the European trading<br />

bloc is dangerously dependent on<br />

the export of manufactured goods.<br />

And we should be careful not to<br />

misinterpret the announcement of a<br />

short delay as a sign of appeasement<br />

by Donald Trump.<br />

The US president took a tactical<br />

decision not to fight the EU and<br />

China at the same time. So the threat<br />

to the EU has not gone away and the<br />

concessions that he will extract for a<br />

Heat rises on Zuckerberg<br />

to testify over<br />

Facebook data leak<br />

to be used in public schools. That coincided<br />

with the start of a prolonged<br />

period of decline for overall iPad sales,<br />

which lasted until 2017.<br />

By early 2016, sales of Chromebooks<br />

were topping those of Mac<br />

laptops in US schools, according to researchers<br />

at IDC, who have also previously<br />

noted that in 2017 Chromebooks<br />

bucked the PC market’s sluggish trend<br />

in the third quarter when “back to<br />

school” sales are strongest.<br />

Apple’s biggest problem in education,<br />

according to analysts at Futuresource<br />

Consulting, is that Chromebooks<br />

often cost as little as $150 per<br />

PC when sold in bulk to schools, half<br />

as much as Apple’s cheapest iPads and<br />

far below its Macs.<br />

“Anybody familiar with Apple’s<br />

product line will know it is famed for<br />

its premium solutions and associated<br />

price points,” Futuresource said in a<br />

recent research note. “Anybody familiar<br />

with the education sector will know<br />

budgets are an ongoing concern and<br />

increasingly pressured.”<br />

So-called convertible Chromeindustrial<br />

exports.<br />

The Trump administration has<br />

argued that the measure is a justified<br />

response to China’s alleged theft of US<br />

intellectual property by forcing American<br />

companies to form joint ventures<br />

and transfer technology in a range of<br />

industrial sectors.<br />

US officials have also been frustrated<br />

at the lack of a results from a “100-day”<br />

trade negotiation launched a year ago,<br />

just after Mr Trump and Mr Xi met in<br />

person for the first time.<br />

The Chinese government subsequently<br />

announced it would open, after<br />

years of delay, its domestic market to US<br />

beef producers and electronic payment<br />

firms. “China spent years stalling the US<br />

on beef,” said one person close to last<br />

year’s discussions. “It was really stupid.<br />

Opening the market earlier was an easy<br />

thing to do and would have generated a<br />

lot of good will.”<br />

Speaking at a briefing in Beijing on<br />

Friday a senior US official added: “The<br />

ball has always been in China’s court.<br />

We have been having conversations for<br />

way too long. Negotiations need to be<br />

based on actually doing something, not<br />

just talking all the time.”<br />

But even if Mr Trump follows<br />

through on his threat to tax up to $60bn<br />

worth or Chinese exports at rates as<br />

high as 25 per cent, Chinese officials are<br />

confident that the economic impact will<br />

be relatively small. The exports targeted<br />

by the Trump administration in its latest<br />

action represent less than three per cent<br />

of China’s total exports.<br />

While Mr Trump has announced<br />

tariffs affecting $3bn worth of Chinese<br />

steel, Beijing’s response — also targeting<br />

$3bn worth of goods — was spread<br />

across more than 120 products including<br />

fruit, nuts, wine, pork, steel pipes and<br />

recycled aluminium. As a result, it would<br />

affect a diverse group of businesses and<br />

workers across the US.<br />

Financial markets fail to reflect the<br />

eurozone time-bomb in Italy<br />

WOLFGANG MÜNCHAU<br />

Page A11<br />

permanent exemption are going to<br />

be formidable.<br />

A trade war or another geopolitical<br />

accident have become more<br />

probable. Both have the potential<br />

to end the current trend of global<br />

economic expansion. A downturn,<br />

even one short of a recession, would<br />

be poisonous for the eurozone —<br />

and for Italy.<br />

The eurozone crisis left Italy<br />

with only one improbable pathway<br />

to put itself on a sustainable footing:<br />

permanent fiscal restraint and<br />

economic reform (coupled with a<br />

prayer that this dream combination<br />

from conservative economics would<br />

ensure everlasting debt sustainability).<br />

Back in the real world, no<br />

Italian political parties have promised<br />

serious reforms, and the two<br />

winning parties in the recent general<br />

election, Five Star Movement and<br />

Continues on page A10<br />

Apple fights back against Google’s classroom success<br />

Lower-cost iPads and new education platform set to launch this week<br />

The classroom is set to become<br />

a new battleground between<br />

Apple and Google this week as<br />

the iPhone maker launches a fightback<br />

against the success of its rival’s<br />

Chromebooks in schools.<br />

Apple is expected to launch lowercost<br />

iPads and a new software platform<br />

aimed at the education market<br />

at a Chicago high school on Tuesday.<br />

It has been six years since the last<br />

Apple event to focus on education and<br />

analysts say that since then, the maker<br />

of iPads and Macs has been unseated<br />

by Google as the dominant player in<br />

school computing.<br />

Apple’s 2012 education launch<br />

came at a time when iPad sales were<br />

surging and Apple hoped to sustain<br />

that by building a new platform<br />

for touchscreen textbook apps and<br />

ebooks.<br />

However just two years later New<br />

York City’s department of education<br />

gave its approval for Chromebooks<br />

and Google’s free cloud-based apps<br />

Trade wars and the prisoners’ dilemma<br />

China’s response to US tariffs has been measured but the end game is uncertain<br />

GAVYN DAVIES<br />

President Trump’s announcement<br />

on Thursday about trade<br />

and investment interventions<br />

against China were a little less hawkish<br />

than expected, and the Chinese<br />

response was at the dovish end of the<br />

spectrum of possible retaliatory actions.<br />

If we have seen the first shots in<br />

a global trade war, then there are many<br />

rounds of escalation still to come,<br />

probably taking years to play out.<br />

Nevertheless, markets are — justifiably<br />

— taking this long-term risk far<br />

more seriously than other geopolitical<br />

problems in recent years. Investors<br />

need to judge the probability of a<br />

full-scale global trade war and the economic<br />

damage from such an outcome.<br />

Asset prices will be volatile as assessments<br />

of these two variables change.<br />

This column will discuss the second<br />

of these variables — the scale of<br />

the economic damage from a large in-<br />

Ex-Catalan leader<br />

Puigdemont arrested<br />

in Germany<br />

Xi Jinping has refrained from expressing an intemperate response to the trade tariffs imposed by Donald Trump © AFP<br />

TIM BRADSHAW<br />

Page A12<br />

crease in tariffs in the global economy.<br />

Last week, I discussed the impact<br />

of generalised tariffs on US imports,<br />

assuming no retaliation from other<br />

trading nations. The conclusion was<br />

that a 20 per cent US tariff, imposed on<br />

imported goods from east Asia, would<br />

reduce US real gross domestic product<br />

by about 0.6 per cent.<br />

That might seem manageable, but<br />

what would happen after retaliation<br />

against US exports? And is such retaliation<br />

a rational response to President<br />

Trump’s action?<br />

The first question is how the rest<br />

of the world will be affected by the<br />

initial impact of US tariffs. The IMF<br />

has published simulations on its<br />

global economic model, showing the<br />

impact of a 10 per cent extra US tariff<br />

on all imports of goods from the rest of<br />

the world. This cuts US GDP by about<br />

1 percentage point in the long term,<br />

and it also reduces GDP in the rest of<br />

the world by 0.3 per cent. There is no<br />

books which can be used as both<br />

touchscreen tablets and regular laptops<br />

have also increased competition<br />

for the iPad.<br />

However despite its disadvantage<br />

on price, Apple could employ another<br />

competitive weapon against Google:<br />

privacy. Business models such as<br />

Google’s that are based on highly<br />

targeted advertising fuelled by users’<br />

personal data have come under<br />

renewed scrutiny over the past week.<br />

The Electronic Frontier Foundation,<br />

which campaigns for digital<br />

rights, has criticised schools for forcing<br />

children to sign up for the Google<br />

accounts necessary to use many of its<br />

services.<br />

“As the largest provider of cloudbased<br />

educational software, Google<br />

necessarily has access to a broad array<br />

of students’ online behaviour,” EFF<br />

wrote in a report last year. “Unfortunately,<br />

despite seeming to promise not<br />

to track students, the only categorical<br />

commitment Google makes is to only<br />

refrain from displaying targeted ads to<br />

students on Google properties.”<br />

transfer of output from one region to<br />

another: everyone loses.<br />

Inevitably, the economic damage<br />

in China, the EU and other countries<br />

would result in political pressures to<br />

retaliate by imposing tariffs on US<br />

exports. These tariffs will hit some US<br />

sectors, like agriculture, very hard, inviting<br />

successive rounds of retaliation.<br />

This raises an interesting issue.<br />

Assume that the economic impact of<br />

tariffs by other countries is basically<br />

symmetrical to the original US tariffs.<br />

Under these circumstances, the US<br />

will clearly suffer output losses from<br />

retaliation by other countries, but so<br />

too will those imposing the tariffs.<br />

Why would countries make a policy<br />

choice from which they themselves<br />

suffer economic losses?<br />

Perhaps those affected by the<br />

US tariffs, especially China, will not<br />

make a self-damaging choice, and<br />

will instead simply make the best of<br />

the new situation.


A10 BUSINESS DAY<br />

C002D5556 Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

FT<br />

Financial markets fail to<br />

reflect the eurozone...<br />

NATIONAL<br />

US gun control marches met with Republican silence<br />

Democrats use protests to raise pressure on Donald Trump to take action<br />

KADHIM SHUBBER AND<br />

BARNEY JOPSON<br />

Continued from page A9<br />

the anti-immigrant League, have<br />

threatened to unleash the very opposite<br />

of fiscal restraint. So if the<br />

global economy turns down, it will<br />

take Italy with it.<br />

A critical moment to watch is<br />

the 2019 budget, which will have<br />

to be passed by this autumn. Italy<br />

may well have a new government<br />

by then. But the political dynamics<br />

of the parliament will be more<br />

important. Populist parties account<br />

for some 60 per cent of Italian MPs<br />

and senators. Their priority will not<br />

be to follow the fiscal rules of the EU.<br />

When governments are weak, parliaments<br />

are strong. The majority in the<br />

Italian parliament does not look as<br />

though it will approve yet another<br />

austerity budget.<br />

So why are financial markets so<br />

calm? I think they are making two<br />

misjudgments. The first is that <strong>Mar</strong>io<br />

Draghi is a guarantor of stability until<br />

his term ends in October next year.<br />

I would not bet that the president of<br />

the European Central Bank would<br />

come to the aid of a member state<br />

that deliberately flouts the fiscal rules.<br />

When he gave his whatever-ittakes<br />

pledge in 2012, Italy was led<br />

by <strong>Mar</strong>io Monti, a Europhile prime<br />

minister in charge of a government<br />

of technocrats. Naturally, Mr Monti<br />

stuck to the rules.<br />

The second misjudgment is that<br />

the Italian establishment will always<br />

find a way to keep extremists away<br />

from power. I have lost count of the<br />

number of times I have been assured<br />

that electoral reforms would guarantee<br />

the victory of centrist parties.<br />

Electoral systems matter, of course,<br />

but they cannot miraculously produce<br />

majorities where none exist.<br />

What we see in Italy now is the<br />

predictable response to two decades<br />

of economic policy that failed to<br />

produce jobs for young people.<br />

Many of the victims of this policy are<br />

now the backbone of support for the<br />

two triumphant populist parties. No<br />

country, not even a paternalistic one<br />

such as Italy, can maintain a pro-<br />

European consensus in the presence<br />

of permanent economic calamity.<br />

Unless Five Star or the League<br />

agree to self-destruct, they cannot<br />

afford to let go of their election promises.<br />

Five Star promised a universal<br />

basic income; the League wants a flat<br />

income tax. Both intend to reverse<br />

pension reforms. These promises are<br />

simply inconsistent with adherence<br />

to the EU’s fiscal rules.<br />

New elections would not solve<br />

the problem. They might produce<br />

the same result or an even larger<br />

share of the vote for extreme parties.<br />

There will still be no majority<br />

for economic reform and fiscal<br />

restraint. In other words: of all the<br />

feasible constellations it is hard to<br />

see one that offers compliance with<br />

the fiscal rules of the EU.<br />

Hundreds of thousands of Americans<br />

took to the streets to<br />

call for stricter gun control in<br />

weekend protests that highlighted the<br />

strength of a movement led by school<br />

shooting survivors but which were<br />

met with silence from most senior<br />

Republicans.<br />

The <strong>Mar</strong>ch for Our Lives demonstrations<br />

were prompted by a mass shooting<br />

last month at a Florida school whose<br />

student survivors have inspired an<br />

outpouring of calls from young people<br />

for tighter firearms restrictions.<br />

Democrats sought to use the protests<br />

to raise pressure on President<br />

Donald Trump to take action, but<br />

Mr Trump did not acknowledge the<br />

gatherings in his weekend tweets and<br />

Republican congressional leaders<br />

stayed silent.<br />

In Washington, survivors of the<br />

shooting at <strong>Mar</strong>jory Stoneman Douglas<br />

High School gave speeches warning that<br />

lawmakers who did not pass new gun<br />

control laws would be voted out of office.<br />

“We’re not here for breadcrumbs,<br />

we’re here for real change,” said Delaney<br />

Tarr, a 17-year-old student at the<br />

school.<br />

The Saturday protests came a day<br />

after Mr Trump approved modest gun<br />

safety measures in a sprawling $1.3tn<br />

congressional spending bill, which<br />

is likely to be the last major piece of<br />

legislation passed before November<br />

midterm elections.<br />

Everytown for Gun Safety, a campaign<br />

group, called the measures<br />

“baby steps forward”. They comprised<br />

improvements to a database used for<br />

background checks on some gun buyers<br />

and a clarification that the Centers<br />

for Disease Control has the authority to<br />

research gun violence.<br />

Shinzo Abe apologised for the Moritomo Gakuen school scandal at the annual meeting of the ruling Liberal Democratic<br />

Party © Bloomberg<br />

Shinzo Abe persists with plan to amend Japan’s ‘peace clause’<br />

PM sticks to mission despite cronyism scandal at home and US-China trade war fallout<br />

LEO LEWIS<br />

Prime Minister Shinzo Abe, battling<br />

scandal at home and facing<br />

collateral damage from a possible<br />

US-China trade war, has pledged<br />

to push ahead with his divisive plan<br />

to revise the “peace clause” of Japan’s<br />

constitution.<br />

His speech on Sunday to the annual<br />

meeting of the ruling Liberal<br />

Democratic Party came with an apology<br />

for a cronyism scandal that has<br />

exposed document falsification at the<br />

finance ministry, dragged Mr Abe’s<br />

approval ratings to their lowest level<br />

since 2012 and threatened his hopes<br />

of becoming the country’s longest<br />

serving postwar prime minister.<br />

Nevertheless, Mr Abe told the<br />

convention that “now is the time” to<br />

amend the constitution, a mission<br />

upon which the LDP was founded in<br />

1955 and in which Mr Abe himself is<br />

a devoted believer.<br />

Theresa May is leading lastditch<br />

efforts to stop an “outrageous”<br />

EU move to freeze Britain<br />

out of Europe’s €10bn Galileo<br />

satellite project, as space becomes a<br />

new frontier in Brexit negotiations.<br />

The British prime minister has<br />

been warned that hundreds of<br />

millions of pounds of contracts are<br />

at stake in the coming months, as<br />

Brussels prepares to lock Britain’s<br />

space industry out to protect security<br />

elements of the satellite programme<br />

from being “irretrievably<br />

compromised” after Brexit.<br />

Gavin Williamson, defence secretary,<br />

was said by allies to have “hit<br />

The attempt at revision, which will<br />

require significant reserves of political<br />

capital and the momentum to swing<br />

a public referendum, is focused on a<br />

wording change that would formally<br />

acknowledge the constitutionality of<br />

Japan’s military — the “self-defence”<br />

force whose annual budget is among<br />

the top 10 largest in the world.<br />

While even some opponents may<br />

agree with the proposed change, widespread<br />

objection arises from a fear that<br />

it would provide a gateway for more<br />

radical changes to the constitution’s<br />

war-renouncing Article Nine.<br />

Through its coalition, the LDP has,<br />

in theory, a majority large enough to<br />

push an amendment through parliament.<br />

But the recently revived cronyism<br />

scandal has substantially thinned<br />

Mr Abe’s esteem with the general<br />

public and produced what analysts<br />

describe as a huge “trust deficit”.<br />

In his speech on Sunday, Mr Abe<br />

admitted that the scandal, which<br />

the roof” when told about the EU’s<br />

strict approach to sharing confidential<br />

information, even though<br />

the UK has offered “unconditional”<br />

security co-operation after Brexit.<br />

“What is being proposed [by<br />

Brussels] is outrageous,” said one<br />

senior UK official.<br />

The exclusion of Britain from<br />

Galileo’s sensitive “public regulated<br />

service”, an encrypted navigation<br />

system for government users,<br />

would also see the British armed<br />

forces cut off from the sophisticated<br />

new programme, a rival to<br />

the US’s GPS.<br />

The UK defence department<br />

is having “early discussions” on<br />

whether Britain could launch its<br />

own satellite system to break its dependence<br />

on the US system and its<br />

centres on a cut-price sale of state<br />

land to a nationalist school called<br />

Moritomo Gakuen, had rocked public<br />

confidence in his administration. “As<br />

the head of the government, I strongly<br />

feel my responsibility and would like<br />

to apologise deeply to the public,” he<br />

said, with a one-second bow of the<br />

head.<br />

Attendees at the speech said that Mr<br />

Abe’s apology was clearly designed to<br />

scotch speculation that either he or Taro<br />

Aso, the finance minister, might yield to<br />

pressure and resign over the Moritomo<br />

affair, or that his falling support in the<br />

polls would deter him from the longheld<br />

dream of constitutional revision.<br />

On Tuesday, the most senior finance<br />

ministry official to resign over<br />

the scandal, Nobuhisa Sagawa, is due<br />

to give testimony to parliament. Political<br />

analysts believe the testimony<br />

could prove damaging, but suspect<br />

Sunday’s apology was a signal that Mr<br />

Abe knows he can survive it.<br />

May scrambles to avoid UK being frozen out of EU satellite project<br />

Galileo contracts at risk as Brussels seeks to protect systems being compromised by Brexit<br />

GEORGE PARKER, PEGGY<br />

HOLLINGER AND ALEX BARKER<br />

possible exclusion from the Galileo<br />

military application. “It would be<br />

hugely expensive — our priority<br />

is to sort this out with Brussels,”<br />

the official added.<br />

The European Commission<br />

wrote to the UK in January to<br />

explain that it would be inappropriate<br />

to divulge highly sensitive<br />

information about post-2019 PRS<br />

plans to a departing member<br />

state.<br />

“If the commission shared this<br />

information with the UK (which<br />

will become a third country) it<br />

would irretrievably compromise<br />

the integrity of certain elements<br />

of these systems for many years<br />

after the withdrawal of the UK,” the<br />

commission said, according to an<br />

official who had seen the letter.<br />

The protesters in Washington chanted<br />

“vote them out” and held placards<br />

criticising politicians who had taken<br />

money from the National Rifle Association.<br />

Natalie Kalitsi, a 18-year-old student<br />

from Washington, said lawmakers had<br />

not done enough to protect young<br />

people. “I want the government to do<br />

more than just give its thoughts and<br />

prayers when kids’ lives are at stake,”<br />

she said.<br />

Pressure builds over<br />

whistleblower’s Brexit<br />

spending claims<br />

Vote Leave group paid data analysts<br />

via BeLeave to skirt limits, alleges<br />

ex-campaigner<br />

ALIYA RAM, CYNTHIA<br />

O’MURCHU AND HENRY MANCE<br />

Political pressure was building<br />

on Sunday against members<br />

of the British cabinet after a<br />

whistleblower claimed that the official<br />

Leave campaign in the EU referendum<br />

sidestepped election spending rules to<br />

pay a data company with alleged links<br />

to Cambridge Analytica.<br />

Opposition parties have called for<br />

an inquiry into allegations that Vote<br />

Leave, the Brexit campaign group<br />

fronted by Boris Johnson, foreign<br />

secretary, and Michael Gove, environment<br />

secretary, broke rules that<br />

restricted spending in the 2016 referendum<br />

to £7m per entity.<br />

Shahmir Sanni, former treasurer<br />

of BeLeave, another Brexit campaign<br />

group, told the Observer and Channel<br />

4 News at the weekend that Vote<br />

Leave campaigners including Stephen<br />

Parkinson — now an adviser to Theresa<br />

May, prime minister — signed off on<br />

decisions made by the smaller group.<br />

Vote Leave gave the smaller campaign<br />

group £625,000.<br />

Mr Sanni said Vote Leave “didn’t really<br />

give us that money. They just pretended<br />

to. We had no control over it.”<br />

Mr Parkinson said he did not direct<br />

any separate campaign groups<br />

and “stayed within the law and strict<br />

spending rules at all times”.<br />

Tom Watson, Labour’s deputy<br />

leader, told the BBC’s Andrew <strong>Mar</strong>r<br />

show that the allegations against Leave<br />

were “very significant” and that the<br />

police might need to investigate. “The<br />

people that led these campaigns are<br />

now senior cabinet members, and<br />

I think we need to make sure they<br />

were not aware of what was going<br />

on,” he said.<br />

The Liberal Democrats, which<br />

have campaigned for a second EU<br />

referendum, said the “stunning” allegations<br />

“touch directly on one of<br />

Theresa May’s closest advisers” and<br />

should be examined by the police.<br />

Caroline Lucas, co-leader of the<br />

Green Party, said there were “big, big<br />

questions” to be asked in the wake<br />

of the allegations and called for an<br />

inquiry.<br />

The Electoral Commission is<br />

investigating whether Vote Leave<br />

flouted rules by co-ordinating the way<br />

donations to BeLeave were used to<br />

pay AggregateIQ, the Canadian data<br />

company that also received millions<br />

of pounds from Vote Leave during the<br />

campaign.<br />

Mr Johnson and Mr Gove took to<br />

Twitter over the weekend. The foreign<br />

secretary tweeted “Observer/C4 story<br />

utterly ludicrous, #VoteLeave won fair<br />

& square — and legally”, while the environment<br />

secretary tweeted that the<br />

referendum result “must be respected”.


Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

COMPANIES & MARKETS<br />

@ FINANCIAL TIMES LIMITED<br />

Heat rises on Zuckerberg to<br />

testify over Facebook data leak<br />

Leading Senate Democrat says founder needs to explain to lawmakers and US public<br />

BARNEY JOPSON AND<br />

RICHARD WATERS<br />

<strong>Mar</strong>k Zuckerberg, the<br />

founder of Facebook, is<br />

under growing pressure<br />

to make a pledge to testify to US<br />

lawmakers about the scandal over<br />

the Cambridge Analytica data leak<br />

engulfing his company.<br />

<strong>Mar</strong>k Warner, a Democratic<br />

senator playing a leading role<br />

in Congress’s scrutiny of social<br />

media, said on Sunday that Mr<br />

Zuckerberg’s pledge to testify<br />

only if he were the most qualified<br />

expert was “not going to cut it”.<br />

It took Mr Zuckerberg five days<br />

to publicly respond to reports that<br />

data from 50m users had been<br />

leaked to Cambridge Analytica,<br />

an analytics company that worked<br />

for the Trump election campaign.<br />

Mr Zuckerberg’s less than<br />

eager responses to calls from<br />

lawmakers have compounded a<br />

crisis of trust for the social network<br />

that has wiped 14 per cent off its<br />

market value.<br />

“Frankly, Mr Zuckerberg needs<br />

to come and testify,” Mr Warner told<br />

NBC. “He says he will do it if he’s<br />

the right person. Well listen, I’ve<br />

got experts on my staff …But you<br />

don’t want my staff here. You want<br />

me here. He is the face of Facebook.”<br />

After breaking his silence, Mr<br />

Zuckerberg told Wired magazine he<br />

was not sure whether he would be<br />

the best person to address Congress.<br />

“If it is ever the case that I am the<br />

most informed person at Facebook<br />

in the best position to testify, I will<br />

happily do that,” he said.<br />

“But the reason why we haven’t<br />

Monopoly power is and remains<br />

a huge problem in the global<br />

economy. But the news of the<br />

last week has me wondering whether we<br />

have reached what might be called “Peak<br />

Big”: a new limit to the advantages of size.<br />

If you think about recent news stories,<br />

from Donald Trump’s China tariffs, to<br />

the Facebook privacy scandal, to recent<br />

market volatility, the common thread<br />

is that all things large are under threat.<br />

Big countries and regions, such as<br />

the US, China and the EU, are most at<br />

risk from a trade war. Should there be<br />

more extensive tariffs, companies with<br />

the biggest market capitalisation would<br />

most likely be hit hardest.<br />

Manufacturing brands — Boeing,<br />

Caterpillar, 3M — have already suffered<br />

large share price dips and the Dow Jones<br />

Industrial Average, which includes the<br />

biggest stocks, fell 6 per cent on the<br />

Trump tariff news.<br />

Meanwhile, the biggest US tech<br />

companies are squarely in the sights of<br />

regulators on both sides of the Atlantic.<br />

Even big corporate pay packages are being<br />

challenged by US rules around wage<br />

disclosures that will make the largesse<br />

of executive salaries ever more visible.<br />

The assets that seem undervalued<br />

and safer are all smaller things. Southeast<br />

Asian “countries, as well as Southdone<br />

that so far is because there are<br />

people at the company whose full<br />

jobs are to deal with legal compliance<br />

or some of these different<br />

things, and they’re just fundamentally<br />

more in the details on those<br />

things.”<br />

Mr Warner, the top Democrat<br />

on the Senate intelligence committee,<br />

said: “That’s not going to cut it.<br />

He needs to come out. He created<br />

this entity …he in fact created this<br />

industry, and he needs to come explain<br />

to the American public and to<br />

policymakers.”<br />

Republicans have been more<br />

reluctant than Democrats to heap<br />

scorn on Facebook, but the Republican<br />

chair of the House energy<br />

and commerce committee said last<br />

week he would formally summon Mr<br />

Zuckerberg to testify.<br />

Facebook said on Sunday: “We<br />

have received the requests and we<br />

are reviewing them.”<br />

For lawmakers, the act of calling<br />

chief executives to testify is as much<br />

about being seen to be holding powerful<br />

leaders to account as it is about<br />

extracting technical information<br />

about what went wrong.<br />

Congress has enough legal powers<br />

to make it difficult for a reluctant<br />

chief executive to avoid testifying<br />

indefinitely.<br />

Mr Zuckerberg has already faced<br />

intense personal criticism of his handling<br />

of a situation that has blown up<br />

into the biggest crisis in Facebook’s<br />

14-year history.<br />

He did not appear at an internal<br />

staff meeting on the issue early last<br />

week, at a time when the revelations<br />

about Cambridge Analytica were<br />

causing deep unhappiness inside<br />

the company.<br />

Investors should bet on smaller<br />

nimbler companies and countries<br />

In a time of turmoil and conflict, the best strategy is to go south and nimble<br />

RANA FOROOHAR<br />

ern Europe and parts of Latin America<br />

have lots of slack relative in particular<br />

to the US, but also core Europe and<br />

even China”, says Jay Pelosky, head of<br />

the investment advisory firm Pelosky<br />

Global Strategies. “They have more room<br />

for growth, profit expansion, investment,<br />

and a lot more political breathing space.”<br />

Mr Pelosky, who is based in New<br />

York, believes regionalism is the new<br />

globalism and espouses a “tri-polar”<br />

world theory, in which the Americas,<br />

Europe and Asia go their own ways and<br />

the south of each region in particular<br />

prospers.<br />

He has a good point. Start with the<br />

geopolitics. Much of Latin America is<br />

coming out of decades of populism<br />

and protectionism while the rest of the<br />

world seems to be plunging headlong<br />

into it. While the US is at the end of a<br />

recovery cycle, many analysts believe<br />

Latin American markets have plenty of<br />

room to run.<br />

The same goes in Europe, where<br />

the German DAX and the FTSE 100 are<br />

down 7 and 9 per cent since the start of<br />

the year. If you assume the EU will hold<br />

together, then you also have to assume<br />

that most of the potential growth upside<br />

is in the periphery, rather than the core<br />

(with the exception of France). Indeed,<br />

Italy’s main index is one of the few in<br />

the EU that is up for <strong>2018</strong>. It seems that<br />

many in the market buy this story, with<br />

bond yields shrinking in countries such<br />

as Spain and Portugal.<br />

FINANCIAL TIMES<br />

RICHARD WATERS<br />

The US has quietly passed<br />

legislation that could make it<br />

easier for many countries to<br />

seize email and other personal information<br />

stored beyond their own<br />

borders, sparking claims from civil<br />

liberties groups that it will weaken<br />

the rights of internet users.<br />

The legal change was, at the last<br />

minute, slipped into the US spending<br />

bill signed into law by President<br />

Donald Trump on Friday.<br />

The provisions, which have<br />

strong backing from US law enforcement<br />

agencies and the tech<br />

industry, are designed to help<br />

investigators dealing with online<br />

communications and cloud computing.<br />

Electronic communications<br />

are often stored on servers<br />

abroad, putting them out of reach<br />

of domestic investigations and<br />

leading to lengthy bureaucratic<br />

C002D5556<br />

procedures to force disclosure.<br />

The problem has already led to<br />

conflict between the US and Microsoft,<br />

after the software company<br />

challenged a New York court’s<br />

demand that it hand over information<br />

from one of its servers in<br />

Ireland to aid a US investigation.<br />

At a Supreme Court hearing on<br />

the case last month, lawyers for<br />

Microsoft and the US government<br />

backed the legal change. It has also<br />

had support from Google, Facebook<br />

and Apple. The tech industry hopes<br />

that if investigators can reach information<br />

stored abroad, countries<br />

will be less likely to require data<br />

about their citizens to be held on<br />

servers within their own borders —<br />

something that would threaten the<br />

free flow of information on which<br />

the internet and cloud computing<br />

companies depend.<br />

“Data is moving all over the<br />

world, it’s stored all over the world,<br />

BUSINESS DAY<br />

<strong>Mar</strong>k Zuckerberg: ‘We need to make sure there aren’t other Cambridge Analyticas out there’<br />

Melrose sparks intense divisions in swoop for GKN<br />

Some praise group for turnround record while critics accuse it of ‘asset stripping’<br />

A11<br />

US legislation opens door to overseas data access<br />

Civil liberties groups fear legislation will weaken internet users’ rights<br />

MICHAEL POOLER<br />

Of all the slings and arrows<br />

hurled at Melrose Industries<br />

since it launched a £7bn<br />

hostile takeover bid for the venerable<br />

British engineering company GKN,<br />

one sticks out.<br />

Critics of the turnround specialist<br />

have labelled it an “asset stripper”<br />

— a pejorative term that harks back<br />

to maverick financiers of the 1970s<br />

and 1980s who bought up companies,<br />

broke them up and sold off<br />

the pieces.<br />

As the clock ticks down on what<br />

has become the biggest hostile<br />

battle in the City of London since<br />

Kraft swooped for Cadbury in 2009,<br />

Melrose denies the charge. GKN’s<br />

shareholders must decide on the<br />

cash-and-shares offer by Thursday.<br />

“We have no other intention than<br />

making those [GKN] businesses<br />

better,” says chief executive Simon<br />

Peckham.<br />

The perception has nevertheless<br />

raised concerns about what will<br />

happen to jobs and investment at<br />

and we don’t have an international<br />

consensus on how that data is<br />

treated,” said Victoria Espinel,<br />

president of the Business Software<br />

Association, which represents US<br />

software companies. The new US<br />

law would be one part of the international<br />

legal framework that is<br />

needed, though privacy rules will<br />

also need to be adapted, she said.<br />

Civil liberties groups have attacked<br />

the law, which was known<br />

as the Cloud Act before being folded<br />

into the spending bill. It would<br />

leave foreign activists exposed,<br />

since their home governments<br />

would find it easier to seize information<br />

about them that is held<br />

abroad, according to the American<br />

Civil Liberties Union. Critics also<br />

warn that when investigating their<br />

own citizens, foreign governments<br />

could indirectly sweep up data<br />

about Americans they have been<br />

in contact with.<br />

the world-leading automotive and<br />

aerospace components supplier,<br />

which has a 259-year heritage and<br />

employs 58,000 people across 30<br />

countries.<br />

It has stirred up a reaction in the<br />

UK parliament that has rarely been<br />

seen before over a takeover bid, as<br />

emotions run high among politicians<br />

from across the spectrum.<br />

Opponents have urged the government<br />

to block the deal to defend<br />

against what they see as a risk to<br />

GKN’s UK industrial footprint.<br />

“We would more rightly define<br />

it [Melrose’s record] as assetstripping,”<br />

Steve Turner, assistant<br />

general secretary of the Unite trade<br />

union, recently told lawmakers on a<br />

parliamentary committee.<br />

“It takes over businesses, breaks<br />

those businesses up, compartmentalises<br />

them and flogs them off to the<br />

highest bidder, in order to maximise<br />

shareholder value.”<br />

But the evidence suggests the<br />

true picture on Melrose’s record is<br />

not as black and white as union leaders<br />

and some politicians make out.<br />

“I do not think they are asset strippers,”<br />

says Terry Scuoler, the former<br />

chief executive of EEF, the UK manufacturers’<br />

association. “But the very<br />

nature of the business model is not<br />

compatible with the long investment<br />

timescales required by companies<br />

such as GKN.”<br />

In the City, however, Melrose has<br />

built up a fan club due to its strong<br />

record of delivering shareholder<br />

returns.<br />

A listed acquisition vehicle, its<br />

operating model involves purchasing<br />

underperforming manufacturing<br />

businesses, with the aim of increasing<br />

margins and then selling on at<br />

a profit.<br />

Although the company usually<br />

looks to reduce overheads as<br />

a key element of its turnrounds, it<br />

rejects comparisons with private<br />

equity firms, which are associated<br />

with slash-and-burn strategies and<br />

high levels of debt.<br />

Detractors say Melrose’s goal of<br />

selling on within three to five years<br />

means it has no stake in a company’s<br />

long-term health. The group’s only<br />

foray into aerospace lasted just two<br />

years before it offloaded the business.


A12 BUSINESS DAY<br />

C002D5556 Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong><br />

FT<br />

ANALYSIS<br />

World’s biggest pension scheme<br />

overhauls fee structure<br />

GPIF will pay active asset managers according to excess returns — or alpha<br />

Carles Puigdemont fled Spain in October after the independence bid failed and has since been living in Belgium © AP<br />

Ex-Catalan leader Puigdemont arrested in Germany<br />

Thousands of demonstrators gather in Barcelona to protest at arrest of politician<br />

MICHAEL STOTHARD AND<br />

TOBIAS BUCK<br />

Former Catalan leader Carles<br />

Puigdemont has been arrested<br />

by police in Germany, from<br />

where he risks being extradited to<br />

Spain to face charges of sedition and<br />

rebellion.<br />

The supreme court in Madrid on<br />

Friday formally charged and issued<br />

an international arrest warrant for<br />

Mr Puigdemont for his role in spearheading<br />

an independence campaign<br />

in the Spanish region last year.<br />

Mr Puigdemont, who faces up to<br />

30 years in prison if convicted, fled<br />

Spain in October after the independence<br />

bid failed and has since been<br />

living in Belgium.<br />

The detention threatens to escalate<br />

already fierce tensions in Catalonia.<br />

Thousands of demonstrators<br />

gathered in Barcelona on Sunday<br />

to protest against Mr Puigdemont’s<br />

arrest, leading to clashes with riot<br />

police. There were similar protests<br />

in the northern city of Girona, where<br />

Mr Puigdemont was once mayor.<br />

Elsa Artadi, a member of the Catalan<br />

parliament and ally of Mr Puigdemont<br />

slammed Spain for wanting<br />

“revenge and repression” and said<br />

that he would never get a fair trial.<br />

One far-left group in the parliament<br />

called for civil disobedience and for<br />

people to “burn injustice”.<br />

Many in Spain celebrated the detention<br />

of Mr Puigdemont, however.<br />

Albert Rivera, the head of the fiercely<br />

anti-independence Ciudadanos<br />

party, said that “justice has been<br />

done”. He said Mr Puigdemont was<br />

“trying to destroy a European democracy,<br />

ignore the laws of democracy<br />

[and] shatter our harmonious<br />

Animation gets a boost as USP announces plans for LIFANIMA <strong>2018</strong><br />

The Second Edition of the USP<br />

Brand Management Lagos<br />

International Festival of Animation,<br />

LIFANIMA is set to hold on<br />

Thursday June 7, at Freedom Park,<br />

Lagos, as it has open calls for entries.<br />

The Animation industry is just<br />

beginning to blossom in Nigeria<br />

and across Africa with lots of young<br />

animators, hugely talented but<br />

without a common platform to sell<br />

their skills.<br />

Muyiwa Kayode, CEO USP and<br />

Creator, TURTLE TAIDO animation<br />

series said LIFANIMA will provide<br />

a platform for animators to interact<br />

with other stakeholders for optimum<br />

value creation and rapid growth of<br />

coexistence.”<br />

Jaume Alonso-Cuevillas, Mr<br />

Puigdemont’s lawyer, confirmed on<br />

Sunday that the ex-Catalan leader<br />

was picked up by German police<br />

while in a car coming from Denmark<br />

on his way back to Belgium.<br />

The federal police authority in<br />

Kiel, northern Germany, said Mr<br />

Puigdemont was detained while<br />

travelling on the A7 motorway,<br />

which runs south from Denmark<br />

towards the city of Hamburg. “He<br />

was detained based on a European<br />

arrest warrant,” a spokesman said.<br />

Mr Puigdemont’s legal fate is now<br />

in the hands of prosecutors at the<br />

higher regional court in Schleswig,<br />

where judges will have 60 days to decide<br />

whether or not to extradite him<br />

to Spain. He is due to appear in court<br />

in Germany on Monday morning.<br />

One question facing the German<br />

court, according to lawyers, is<br />

whether the alleged crimes of rebellion<br />

and sedition committed by the<br />

former regional leader under Spanish<br />

law are also punishable in Germany.<br />

Unlike Spain, the German criminal<br />

code does not punish “rebellion”.<br />

However, it does include the crime of<br />

“high treason”, which is defined as<br />

an undertaking “by force or through<br />

threat of force” to “undermine the<br />

continued existence of the Federal<br />

Republic of Germany” or “to change<br />

the constitutional order”.<br />

Regardless of the next legal<br />

moves, the Catalan leader is unlikely<br />

to find political support from<br />

the German government, which<br />

has long supported Madrid in its<br />

long-running clash with the regional<br />

independence movement.<br />

There was no response from the<br />

Germany government on Sunday,<br />

the animation industry.<br />

According to Kayode, LIFANIMA<br />

aim to promote the rapid development<br />

of the animation industry<br />

in Nigeria and across Africa, as it<br />

seek to improve the movie industry<br />

through increased inclusion of<br />

animation content.<br />

“LIFANIMA will provide a platform<br />

for the promotion of local<br />

animators and development of the<br />

quality of animation, and expose<br />

animators to the latest technologies<br />

in animation hardware and<br />

software,” said Kayode.<br />

This edition will feature<br />

Screening of Selected Works,<br />

Award Presentations, Networking<br />

though some opposition politicians<br />

voiced criticism of the arrest.<br />

The leftwing party Die Linke<br />

called for the immediate release of<br />

Mr Puigdemont, calling his arrest a<br />

“disgrace”. Andrej Hunko, the party’s<br />

European affairs spokesman said:<br />

“The criminal case is clearly politically<br />

motivated.”<br />

The crisis between Madrid and<br />

Catalonia erupted in October when<br />

the regional government staged an<br />

illegal referendum on secession and<br />

said the outcome gave it a mandate<br />

to declare independence.<br />

In response, <strong>Mar</strong>iano Rajoy’s national<br />

government invoked constitutional<br />

powers to withdraw Catalan<br />

regional autonomy and called new<br />

elections in the region. This vote<br />

led to pro-independence parties<br />

regaining their majority in parliament,<br />

which they said gave them a<br />

democratic mandate to continue to<br />

push for independence.<br />

But despite this victory the separatists<br />

have not been able to form<br />

a government, because they have<br />

chosen leadership candidates with<br />

legal problems who are either in<br />

exile or in pre-trial detention.<br />

A Spanish supreme court judge<br />

on Friday said that a total of 25<br />

Catalan leaders would face trial for<br />

their attempt to break away from<br />

Spain, with a range of charges from<br />

rebellion to embezzlement and<br />

disobedience.<br />

Mr Puigdemont and other separatists<br />

have all denied wrongdoing,<br />

saying their declaration of independence<br />

was simply fulfilling a democratic<br />

mandate.<br />

If a new president is not elected<br />

by May, fresh elections would be<br />

triggered.<br />

and Entertainment. The 2-day<br />

event will equally attract Animators<br />

both local and foreign, Film<br />

makers, Investors, Financial Institutions,<br />

Advertising agencies,<br />

Musical Video Producers, Media<br />

Practitioners, Digital <strong>Mar</strong>keting<br />

professionals, Government agencies,<br />

Information Technology<br />

companies/manufacturers and<br />

the general public.<br />

Interested animators and producers<br />

are to submit their works<br />

in various categories on or before<br />

April 30, <strong>2018</strong>. Selected works will<br />

be screened at the festival and<br />

participants will be informed on or<br />

before May 30.<br />

ATTRACTA MOONEY<br />

Japan’s Government Pension<br />

Investment Fund has accused<br />

active asset managers of being<br />

too focused on gathering new assets<br />

rather than generating returns for<br />

clients, as the world’s largest retirement<br />

pot gears up to overhaul how<br />

it pays investment houses.<br />

Under plans due to come into<br />

place in April, the $1.4tn pension<br />

fund will pay its active asset managers<br />

a fee that is based on the excess<br />

returns — or alpha — they generate.<br />

“Without excess returns, their fee<br />

must be equal to that of passive managers<br />

with the same amount of asset<br />

size,” GPIF said. The new regime will<br />

apply to new and existing managers.<br />

The move by the pension fund<br />

comes at a time of growing questions<br />

over the value stockpickers add. Active<br />

fund managers have repeatedly<br />

been accused of charging high fees<br />

for disappointing performance in<br />

recent years.<br />

GPIF said its current fee structure,<br />

where investment houses<br />

were paid higher flat fees, did “not<br />

motivate asset managers to achieve<br />

alignment of interest between GPIF<br />

and external asset managers”.<br />

The fund added: “Our external<br />

asset managers have tended to<br />

focus on getting more [assets] from<br />

GPIF and to avoid taking appropriate<br />

risks required to achieve their<br />

target alpha.<br />

“By introducing the new fee<br />

structure, we would like to build a<br />

win-win relationship between GPIF<br />

and external asset managers.”<br />

Active fund managers are under<br />

intense pressure to change fee<br />

structures that many clients believe<br />

are unfair.<br />

Mercer, the influential adviser to<br />

pension funds, recently proposed<br />

that asset managers should pay<br />

investors to run their portfolios and<br />

provide performance guarantees<br />

House of Fraser, the struggling<br />

department store group, has<br />

held refinancing talks with Alteri<br />

Investors, the London-based turnround<br />

specialist, in the latest sign of financial<br />

stress at the 169-year company.<br />

The talks, first reported in the<br />

Sunday Times, have ended but they<br />

come as the company seeks to refinance<br />

or extend the terms of £224m<br />

of debt that matures in July 2019, four<br />

months after the UK leaves the EU.<br />

The retailer which was bought<br />

by China’s Sanpower in 2014 on the<br />

promise of expanding the brand in<br />

that country, sought to allay concerns<br />

on Sunday, saying: “House of<br />

Fraser is a privately owned business<br />

and we have the full financial support<br />

of our shareholders.”<br />

British retailers have had a dismal<br />

start to the year — the worst since<br />

2013 — as they grapple with rising<br />

business rates and other costs,<br />

while struggling to fill their stores<br />

with customers who are increasingly<br />

buying online.<br />

Maplin, the electronics retailer<br />

and the UK arm of Toys R Us, both<br />

fell into administration while Mothercare,<br />

Carpetright and New Look<br />

have all been renegotiating terms<br />

with landlords or lenders.<br />

instead of earning fees regardless of<br />

the returns delivered to their clients.<br />

Some active fund managers,<br />

including Fidelity International and<br />

Allianz Global Investors, have put<br />

forward new structures that would<br />

include lower flat fees, with the addition<br />

of a performance fee.<br />

“[This move by GPIF is] the latest<br />

and most publicised example of how<br />

the old heads-I-win, tails-you-lose fee<br />

structure is withering on the vine,”<br />

said Amin Rajan, chief executive of<br />

Create Research, an asset management<br />

consultancy.<br />

But he warned that many asset<br />

managers would be unhappy with<br />

the move, because a shift away from<br />

fees related solely to assets under<br />

management “can introduce extreme<br />

volatility into fund managers’ revenue<br />

stream”.<br />

Active asset managers that run<br />

money for GPIF include Amundi,<br />

Schroders, Invesco, Eastspring, Nomura,<br />

Fidelity International, JPMorgan<br />

Asset Management and UBS.<br />

According to GPIF’s own data, its<br />

actively managed Japanese bonds<br />

and equities holdings, as well as its<br />

foreign equities funds, generated<br />

negative alpha — the returns above<br />

benchmark — over 10 years.<br />

Andrew McNally, chief executive<br />

of Equitile, an asset manager that<br />

charges a fee related to returns, said<br />

the fund industry is being forced to<br />

reconsider how it charges investors.<br />

“It seems unrealistic for the financial<br />

outcome for the fund management<br />

industry to be unrelated to<br />

the financial outcome for investors,<br />

especially pension funds as large<br />

as GPIF,” he added. “We think this<br />

[move by GPIF] is the start of a long<br />

trend which will see fees for active<br />

managers increasingly dependent on<br />

performance.”<br />

About 20 per cent of its GPIF’s<br />

assets were actively managed at the<br />

end of financial year 2016, the latest<br />

year data are available for.<br />

House of Fraser on hunt for financing<br />

Struggling department store chain says so far no talks have progressed<br />

SCHEHERAZADE DANESHKHU<br />

House of Fraser also had a tough<br />

Christmas trading period with sales<br />

2.9 per cent lower in the six weeks to<br />

December 23 than the same period<br />

in 2016. It promised £16m of cost<br />

cuts this year on top of last year’s<br />

£10m. The group has also been seeking<br />

rent reductions from some of its<br />

landlords.<br />

Alteri, which is backed by US<br />

buyout giant Apollo Global Management,<br />

was involved in the sale<br />

of struggling Jones Bootmaker to<br />

Endless in 2017 and in the acquisition<br />

of CBR Fashion Group from EQT<br />

earlier this year.<br />

House of Fraser said: “As you’d<br />

expect in the current market, finance<br />

providers are keen to talk to retailers,”<br />

but added that “under the terms<br />

of the current banking facilities, the<br />

talks did not progress”.<br />

The stumbling block appears to<br />

have been that most of House of<br />

Fraser’s assets are already held as<br />

security by its existing lenders, led<br />

by HSBC bank.<br />

The lenders recently hired EY,<br />

the professional services group, as<br />

an adviser, according to Sky News<br />

on Friday. The group was brought<br />

in to assess whether the lenders’<br />

investment in the business is safe,<br />

according to one person familiar<br />

with the situation.


BUSINESS DAY<br />

Insight<br />

NEWS YOU CAN TRUST I MONDAY <strong>26</strong> MARCH <strong>2018</strong><br />

Is the African free trade area any more credible than<br />

the single currency plans for west or east Africa?<br />

C002D5556<br />

fivethings<br />

for your new week<br />

Fascinating business facts<br />

$51bn<br />

Tencent Holdings Ltd’s shares fell more than 4 percent on<br />

Friday, wiping out around $23bn of market value, after<br />

the Chinese internet firm’s largest shareholder, Naspers of<br />

South Africa, lowered its stake for the first time in 17 years.<br />

Tencent has now lost more than $51 billion in market<br />

value in two days, having fallen 5 percent on Thursday<br />

- its steepest in over six weeks. With a current market<br />

capitalisation of $508 billion, Tencent is still Asia’s most<br />

valuable listed firm.<br />

Source: Renaissance Capital, IMF, Twitter<br />

This should have<br />

been the title<br />

and focus of the<br />

attached piece, if<br />

I had any skill at<br />

all in catching the current<br />

zeitgeist. #BigFail<br />

But it is hard to write<br />

much on the new Africa<br />

Free Trade Deal, when what<br />

was signed yesterday is not<br />

yet on the African Union<br />

website. For who signed<br />

what – see this on twitter<br />

So 47 countries signed<br />

the Kigali Declaration –<br />

which is a statement of<br />

intent, including Africa’s<br />

biggest economy, South Africa.<br />

But not Egypt (Africa’s<br />

third largest economy), nor<br />

Nigeria (2nd largest), nor<br />

Morocco (7th largest).<br />

But 44 countries did sign<br />

the African Continental<br />

Free Trade Area consolidated<br />

text – including Egypt<br />

and Morocco, but not South<br />

Africa or Nigeria. As far I<br />

understand, a couple of<br />

ministries need to check<br />

the text before SA can sign,<br />

while Nigeria is not signing<br />

yet perhaps because labour<br />

groups are opposed to this.<br />

Why would Egypt and<br />

Morocco sign the Free<br />

Trade Area, but not the<br />

statement of intent ? I have<br />

no idea.<br />

Just five countries, (Nigeria,<br />

Sierra Leone, Guineabissau,<br />

Burundi, Eritrea)<br />

signed neither.<br />

So …. If Africa’s GDP was<br />

$2.242 trillion in 2017 (using<br />

the Nafex rate for Nigeria),<br />

then $1.457 trillion of Africa’s<br />

GDP signed up to the<br />

African Continental Free<br />

Trade Area. So far. Note the<br />

Source: IMF<br />

ons getting rid of the average<br />

6% tariff across Africa<br />

will boost intra-African<br />

trade by over 50%. They say<br />

this would double to over<br />

100% if non-tariff barriers<br />

were included.<br />

We’re not going to try<br />

AU says Africa’s GDP is $2.5<br />

trillion. That is incorrect.<br />

Roughly 60% of Africa’s<br />

GDP has signed up to the<br />

deal, this would rise to 80%<br />

when SA signs the deal and<br />

95% if Nigeria joined it too.<br />

The African Union reckand<br />

second guess that. We<br />

do however note that intra-<br />

African trade has already<br />

risen 11 fold since 1990,<br />

even as total African exports<br />

have risen only 4-fold since<br />

1990.<br />

The collapse of com-<br />

modity prices has hit trade<br />

with the rest of the world,<br />

but trade within Africa has<br />

been hurt much less significantly.<br />

Intra-African trade has<br />

risen from just 7% in 1990<br />

to 20% of all trade in 2016.<br />

African trade deals have been more successful<br />

than African currency union plans.<br />

From ECOWAS to SADC and the EAC,<br />

regional trade deals are up and running.<br />

Single currency unions are not and suffer<br />

constant delay. The ECOWAS single currency<br />

will not happen by 2020 despite the<br />

promise made last month.<br />

Note .. I think the AU is saying<br />

intra-African trade is<br />

around 16-17% .. which is<br />

out of date .. but I can’t find<br />

where they said that. I trust<br />

our data more.<br />

What don’t we know.<br />

Lots I’m afraid. The treaty<br />

cannot come into effect<br />

until something like 15-22<br />

countries have ratified it.<br />

We don’t have a timeline<br />

for that.<br />

So … is there any connection<br />

between this and<br />

the attached pdf. No, not<br />

really. African trade deals<br />

have been more successful<br />

than African currency<br />

union plans. From ECO-<br />

WAS to SADC and the EAC,<br />

regional trade deals are up<br />

and running. Single currency<br />

unions are not and<br />

suffer constant delay. The<br />

ECOWAS single currency<br />

will not happen by 2020<br />

despite the promise made<br />

last month.<br />

Source: Renaissance Capital<br />

7.2%<br />

Rwanda’s economy will expand by 7.2 percent this year,<br />

boosted by the services sector and a rebound in construction,<br />

the finance minister said on Friday. The International<br />

Monetary Fund, which held a joint press conference with<br />

the minister, Claver Gatete, said it expects growth of 7-8<br />

percent. The East African economy, which relies on farming,<br />

grew 6.1 percent last year.<br />

$15.1bn<br />

Uganda’s national debt has nearly trebled in the last three<br />

years to more than 50 percent of GDP, posing a huge risk<br />

since nearly two thirds of that borrowing was external,<br />

the central bank said. Three years ago, Uganda’s debt was<br />

around $6bn. In a report titled “State of the Economy”, the<br />

Bank of Uganda (BoU) said the rising costs of servicing the<br />

landlocked East African nation’s $15.1 billion debt pile could<br />

hit economic growth because of reduced public investment.<br />

Over the last decade the government of long-ruling<br />

President Yoweri Museveni has ramped up borrowing,<br />

mostly from China.<br />

1.8%<br />

Grain and soyabean prices declined on Beijing’s threats to<br />

impose tariffs on a list of US imports including agricultural<br />

products such as pork, nuts, fresh fruits and wine in retaliation<br />

to the Trump administration’s steel and aluminium<br />

duties. Soyabeans, a key US farm export to China, were not<br />

included, although traders are worried that Beijing may<br />

still add the oilseed to the list. Corn was down 1.3 per cent<br />

to $3.7125 a bushel while soyabeans declined 1 per cent to<br />

$10.1975. Wheat retreated 1.8 per cent to $4.4775 a bushel.<br />

40%<br />

Since Cyril Ramaphosa became president of South<br />

Africa, assets have rallied, business confidence is<br />

soaring and economic growth is accelerating with<br />

inflation slowing. However, it seems it will take more<br />

than “Ramaphoria”, as it’s been called in SA, to spur<br />

the country’s corporate debt issuers into action. Bond<br />

sales by South African companies are off to the slowest<br />

start to a year since 2014 following record issuance<br />

last year, according to data compiled by Bloomberg.<br />

Last year, issuance reached a record R142bn, a jump of<br />

about 40% from the previous year, according to Zoya<br />

Sisulu, the Johannesburg-based head of debt capital<br />

markets at Standard Bank Group.<br />

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana.<br />

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