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BusinessDay 12 Apr 2018

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Thursday 12 April 2018 10 BUSINESS DAY C002D5556 COMMENT comment is free Send 800word comments to comment@businessdayonline.com Who are those Nigerians desperate for Buhari to contest in 2019? Chris Akor, a First Class graduate of Political Science, holds an MSc in African Studies from the University of Oxford and is BusinessDay’s Op-Ed Editor christopher.akor@businessdayonline.com President Buhari, on Monday, officially announced that he will run again for 2019 election. That was not surprising. Anyone conversant with Nigeria’s political terrain will have seen the signs long ago. But what is interesting is the reason he gave for seeking a second term in office. Like others before him, he said he was only responding to the clamour by Nigerians for him to contest again in 2019. “People have been asking me to declare for re-election and some have been asking me when I am going to declare. I want to give the NEC the honour to be the first to hear it. I have decided to contest the 2019 elections,” Buhari told a closed door meeting of his party’s National Executive Council at the party’s secretariat in Abuja. Surprisingly, he may be quite sincere about the claim. Despite the heavy criticisms that has trailed the president and his administration’s handling of the economy, jobs and security of late, the president has enjoyed tremendous support from his party, state governors, ministers and special advisers under his. This is understandable. Most of the governors came to office in 2015 riding on the president’s popularity. And with their lacklustre performances in the past three years, they are now more desperate to ride on the back of his popularity and cult-like followership especially in the northern part of the country, to get re-elected for a second term or reappointed into key positions. And they have gone to ridiculous extents to push his candidacy. Since the beginning of 2017, they have been sending emissaries and going in numbers almost on a weekly basis to convince the president to run again. The other day, the Kano state governor, Abdullahi Ganduje said his government is ready to take legal action if Buhari refuses to seek re-election. “I am happy that it is not the President that said he wants to continue. It is the people that are saying continue. But Mr President has not made up his mind yet. Kano state government will take him to court any time he decides not to contest. We are waiting for him,” he told news men recently. His Kogi state counterpart, “We are politicians and those of us that you see here want the President to contest for a second term of office. So, everything is about 2019; there is no hiding that. We have no apologies for that” Yahaya Bello, went beyond the normal to restate his absolute loyalty to the president. “I am an ardent supporter of President Muhammadu Buhari...If Buhari asks me to jump into fire, I will not hesitate to jump into it.” Last week, a delegation made up of the governors of Kogi, Kano, Plateau, Niger, Yobe, Kaduna, and Adamawa states visited the president to impress on him to contest the 2019 elections. Speaking on their behalf the Kaduna state governor, Nasir el Rufai said bluntly: “We are politicians and those of us that you see here want the President to contest for a second term of office. So, everything is about 2019; there is no hiding that. We have no apologies for that. “We believe in the President, we want him to keep running the country in the right direction. So, people can speculate about 2019; we have no apologies.” Besides the governors, ministers, party members and special advisers who want to remain relevant in government, there is the kitchen cabinet or the powerful cabal who, exploiting the President’s ignorance, lack of understanding of economics and most complex issues of governance, as well as vulnerability due to old age and ill health, have completely taken over governance. What makes the takeover by this shadowy group more complete is the tendency of the President, a highly provincial man himself, to over-trust and over delegate authority to his close aides and associates – appointed or not – who are mostly his relatives and or people from his part of the country. Stories abound of these powerful individuals determining key appointments. It is an open secret in the country that what is needed for a job, a connection or contract with the government is to get to meet a member of this powerful group. Unfortunately, the President himself empowered this group early in his administration to be the clearing house and policy centre of his government. He even ordered that “all communications and appointments from you (ministers) to the Presidency should be routed through the office of the Chief of Staff as it is the normal (procedure) in this presidential system.” So complete is the takeover of the government by this shadowy group that even Buhari’s wife felt completely sidelined and left out of the scheme of things that she was forced to take the unprecedented step of going public with her discontent when she accused a powerful cabal of hijacking her husband’s government. Of course, the cabal, prominent among which are the President’s nephew, Mamman Daura; the Senior Special Assistant to the President on Domestic Affairs, Sarki Aba; The President’s Chief of Staff, Abba Kyari; and Personal Assistant to the President; Tunde Sabiu, have completely walled off the president and filters any communication the president has with the Nigerians and the outside world. Naturally, they determine what the president hears and knows and what he needs to do or say. It was the same cabal perhaps, that ensured the president did not know that the Inspector General of Police, whom the president ordered to relocate to Benue until the killings in the state is brought to an end, spent only one day in Benue and absconded. Even when he was told when he eventually visited Benue, it is the same cabal that has ensured that no disciplinary action was taken against the IGP. It is only natural that this cabal will be loath to losing all their powers and privileges and they have carefully ensured the president heard only the voices of only those calling on him to run again and not the voices of disgruntled Nigerians. Send reactions to: comment@businessdayonline.com TUNJI ANDREWS Andrews is lead economist at Time, Trade and Commodities (TTAC). The year 2012 was very significant for e-commerce in Nigeria for at least two reasons. Firstly, the government, through the Central Bank of Nigeria (CBN), had set up a policy it hoped would curb excesses in the handling of cash in Nigeria. The second thing that happened was that, just a few weeks to the rollout of cashless Lagos, the CBN made two key tweaks to the policy that at the time seemed bold but in retrospect, now seem not well thought-out decisions. The first tweak was the Over-The-Counter limits, having prescribed cash handling charges on daily withdrawals above five hundred thousand naira (N500,000.00) as against Mobile money in Nigeria – good, can be better the initial one hundred and fifty thousand naira (N150,000.00) for individuals and three million naira (N3,000,000.00) for corporate bodies as against the initial two million naira (N2,000,000.00). While a few of us pointed out how this might make the policy redundant to curbing cash use, especially since the number of people who actually go to take N500,000 and above over the counter was really not that much, compared to those who fall between the N50,000- N250,000 bracket (CBN’s own analysis showed that only 10 percent of daily banking transactions are above N150,000), the CBN decided to engage in a needless campaign, trying to explain that the CASH- LESS in the policy actually meant LESS CASH. The apex bank spent an awful amount of time on PR campaigns, with little time evaluating the efficiency of the policy. The other tweak was in insisting that the mobile money operations be bank-led (which wasn’t a problem), but to emphasize this, no telco was given a mobile money licence. I asked the crucial “WHY” question at the time and the usual answer was “how it could be a threat to retail banking”, as it has been seen in other parts of Africa. It even echoed around West Africa that in 2016, Kumangkem Kennedy Kubuga wrote a rebuttal paper titled “Mobile Money – A Potential Threat to Banks?” The long story short is that central banks across Africa chose to see the success of MPesa in Kenya as a loss for retail banking, rather than a win for financial inclusion. To be honest, though, I wasn’t too worried at the time, as looking at the list of 21 mobile money licences issued, I believed we had enough within them to drive financial inclusion into the rural areas and strengthen e-commerce in the urban areas. What has, however, happened is that banks have basically made it an add-on service to already existing customers, while the real heavy-lifting of using it as a tool for financial inclusion has been left to the likes of PagaTech (Paga), who now have over 5 million subscribers but are now faced with new regulation, with CBN rules, effective from the end of December 2017, stating that operators must have NGN1 billion ($2.8 million) in their reserves to operate, a sum which is expected to rise to NGN2 billion on 1 July, 2018. Surely now, we must return to this table to reevaluate the successes and the failures of the cashless policy and its offspring. While we stand afraid of what happened in Kenya, let us remember that Kenya leads the world in developing mobile money payment systems and in widespread usage, despite Kenya’s extreme poverty, ranking 187 in per-capita GDP. Of the country’s 47 million people, seven in 10 adults (69 percent) have financial accounts (as against 41.1 percent in Nigeria). In addition to mobile money, financial services are available through a diverse group of providers, including banks, nonbank financial institutions and informal financial groups. Nearly two-thirds of the country is rural, and three-quarters of adults earn at least part of their incomes from agriculture. Nigeria, really, should be taking huge strides in financial inclusion using mobile money but we are still handling teething issues where talk has begun to emerge that the CBN may revoke the licences of at least 15 struggling mobile money operators under new minimum finance rules. To drive the nation’s (CBN’s) vision of 80 percent financial inclusion as stipulated in its National Financial Inclusion Strategy, we must push through with CBN governor, Godwin Emefiele’s remarks on eventually giving licences to telecommunication companies (telcos) to provide mobile money services. I believe they are better suited to offer products that would see a massive rolling-out of agent networks and creating awareness to increase adoption, and adoption of digital financial services as simple, flexible and easy alternative channels for reaching remote areas and rural hinterlands. Send reactions to: comment@businessdayonline.com

Thursday 12 April 2018 COMMENT C002D5556 BUSINESS DAY 11 comment is free Send 800word comments to comment@businessdayonline.com Women entrepreneurs in an emerging economy running a bankable business (I) OYINKAN ADEWALE Mrs. Adewale is Executive Director, Chief Financial Officer, Union Bank. Introduction In 2017, Nigeria’s Gross Domestic Product (GDP) growth was 0.83% (compared to a decline of 1.58% in 2016). In the second quarter of 2017, the country officially emerged from arecession which had lasted about a year. The Services sector grew by 0.1% in the fourth quarter of 2017, marking the first time the sector had grown since early 2016. Despite emerging from the recession last year, Nigeria continues to struggle with high unemployment rates. In the third quarter of 2017, the country’s unemployment rate climbed to 40% (combining unemployment and underemployment rates), from 37% in the second quarter of 2017 and 35.2% at the end of 2016. Women make up the majority of the unemployed in Nigeria. In the third quarter of 2017, female unemployment recorded 43% in comparison to 37.0% for male. These statistics are sobering: for women in Nigeria, although underemployment improved from 24.2% to 21.8%, unemployment worsened rather sharply from 16.3% to 21.2% in 9 months (from the fourth quarter of 2016 to the third quarter of 2017). To give some context to these figures, for women in the UK, unemployment rate was 4.2% and in the US, 4.1% in the third quarter of 2017. The Nigerian statistics are plainly far worse. The case for job creation for Nigerian women Clearly, there is the urgent need to reduce women unemployment rates in Nigeria. In order to match the unemployment rates in the UK, we would need to create 7.1 million jobs. The question however remains-“Who is responsible for creating these jobs - the Government or the people themselves?” Nigeria is the 7thmost populous country in the world and has a population estimated to be in excess of 180 million people with a growth rate of 2.6%. The World Economic Forum estimates that by 2060, Nigeria will be the third most populous country in the world, behind India and China. This paints a clear picture of the scale of work that needs to be done to ensure that there are sufficient jobs for the working class. Considering these figures, we would be mistaken to assume that World Bank records state that at the end of 2017, self-employed individuals made up 62.2% of the entire population of Sub- Saharan Africa, in contrast to 15.8% in the European Union and 10.5% in North America. the Government is capable of providing enough jobs to cater to our ever growing population. However, there seems to be a way out of this quagmire. It is often said that SMEs are “the engine of growth” in the economy; indicating that job creation is best achieved by delving into the world of entrepreneurship. World Bank records state that at the end of 2017, self-employed individuals made up 62.2% of the entire population of Sub- Saharan Africa, in contrast to 15.8% in the European Union and 10.5% in North America. Becoming an entrepreneur According to Diane Hendricks, Co-founder of ABC Supply, “ ‘Entrepreneur’ is a word that means you’re going to work, take risks and be disappointed. It’s a big commitment.” The amount of work required to start a business should not be underestimated. Starting up a business requires a lot of determination and often, only pays in the long term. Another major ingredient for success is stamina to remain in the business despite any issues encountered. Starting a business also requires managerial skills. As one begins to build up a workforce, it is important to pull together a high performing team that will positively contribute to the business. Furthermore, when starting a business, there is the need to acquire the necessary qualifications. And it doesn’t end there! You need to keep attending trainings to keep abreast of changes in the industry and constantly building on this knowledge, to stay relevant. Choosing your niche: Deciding on the business to venture into If you decide that entrepreneurship is for you, you should start by identifying what you have a passion for and whether or not there is a demand for that product or service. An entrepreneur who is impassionate about his product or service will not be able to defend it effectively before a potential financier. At the first sign of stress or adverse wind, he or she is likely to give up. The next step would be to carry out proper research. Projects can be thoroughly researched on the internet and by attending conferences/seminars to ensure you broaden and deepen your knowledge. Questions that your research should answer include: Who else is offering this product or service? What is the gap in the market? Who needs the commodity? Is this a saturated market or greenfield? How profitable is it? The scope of the research is vast but the importance of carrying it out cannot be overemphasized. Potential financiers are be unlikely to give financial backing to an ill-informed promoter. After considering whether your passion is aligned with the gap in the market, a top-down analysis (reviewing from the economy to the industry and then the business) is helpful to assess and consider whether there is potential for further growth in the industry as a whole. Lastly, it is important to decide on the target market and to clearly define a niche. This should be followed by a review of the market dynamics. A useful tool in determining the competitive landscape is the Five Forces Analysis which explores concepts such as: the barriers to market entry, the level of threat of substitutes, the bargaining power of suppliers and customers and the extent of competitive rivalry and how these affect the market. Send reactions to: comment@businessdayonline.com SOLA ONI Oni, Financial Journalist and Chartered Stockbroker is the CEO, Sofunix Investment and Communications Views expressed and positions taken on any economic policy by Financial Derivatives Company’s Managing Director, Mr Bismark Rewana cannot be ignored. He has paid his due. Prior to the much-delayed first meeting in the year of the nine wise men of the Monetary policy Committee (MPC) of Central Bank of Nigeria(CBN), Rewane had intuitively expected a one per cent reduction in the interest rate which currently stands at 14 per cent and stated that he did expect any change in the other key economic indicators . His intuitive expectation on the need for a reduction in interest rate is obviously understandable. Mr. Godwin Emefiele – led CBN has been working had to fix the economy that exited recession at the first quarter of last year. The Monetary Policy Rate (MPR) had peaked at 18.7 per cent on downward trend for almost eleven months to 15.4 per cent. The Apex Bank’s target is within a range of six to nine per cent. Since November last year, MPR has stood at 14 per cent, Cash Reserve Ratio (CRR), 22.5 per cent, and Asymmetric window, +200 CBN’S unconventional silence on interest rate basis point and -500 basis point of MPR. Every quantum of change in interest rate has implication particularly on the financial market and economy in general. The apex bank worldwide changes interest rate upward or downward to ensure maximum employment, price stability and steady economic growth. When the interest rate is lower, companies can borrow at cheaper rate, grow businesses and employ more labour. Conversely, a high interest rate with low inflation regime constraints companies from borrowing for expansion. Many of them may embark on high cost control which may lead to spinning off of some businesses with attendant effect of downsizing labour. There is an inverse relationship between the money market and capita; market. A rise in interest rate spurs activities in the money market instruments as speculators take advantage of higher interest rate by moving their fund from the stock market to money market to invest in instruments such as Treasury Bills and Government Bond. The same speculators would embark on flight for safety by withdrawing their fund at a click of button from fixed deposits or fixed income securities to the stock market once the market is bullish. Speculators are high risk takers as they can win all or lose all. Nonetheless, they are key drivers in the capital market as they provide liquidity. But they need policy direction for enhanced calculated risk. Therefore, every change in the Minimum Rediscount Rate (MRR) has spill over effects on investment decision for both domestic and foreign portfolio investors. The current MRR at 14 per cent while inflation is at 14.33 does not send comfortable signal. This perhaps explains why Rewane’s expectation was the need for the CBN to reduce the interest rate by one per cent ahead of the historic MPC’s recent meeting. The Apex Bank is basking in euphoria that its tight monetary policy is designed to keep macro economic key indicators at comfortable zone, encourage saving and de—risk bank lending to the private sector to boost economic expansion. Governor Emefiele had technically defended the decision of the MPC to hold the monetary policy rate (MPR) at 14 per cent in the last 18 months. He has an answer to why other variables also remain fixed, saying: “On the argument to hold, the committee believes that key macroeconomic variables have continued to evolve in a positive direction in line with the current stance of macroeconomic policy and should be allowed more time to fully manifest.” Perhaps, this largely accounts for the decision of the nine wise men to retain the MRR and indeed other indicators at the 2017 level. Prior to the MPC’s meeting, the President, Chartered Institute of Stockbrokers (CIS), Mr Oluwaseyi Abe had lamented the effect of prolonged delay of the meeting on the financial market. According to him, it has made foreign and domestic investors to rely on guess work about the government’s direction on the interest rate. Abe’s position which is corroborated by one of his colleagues on the Institute’s Council is justifiable. Interest rate affects our daily lives and the health of any economy. It is a crucial macro- economic variable for growth and development. Interest rate affects our personal lives by guiding us whether to consume or save. Investors in the financial market have waited since late last year for the CBN’s position on the interest rate to enable them adjust their asset allocation. Every announcement by the MPC has therefore become significant as absence of policy direction on interest rate enthrones speculative decision. Against all expec- tation and permutations, the nine wise men of MPC rose from the recent meeting only to announce that the interest rate and other key indicators had been retained. Unconventional silence on the interest rate will have dire consequences on corporate growth. The Apex Bank can keep a high interest rate when an economy is doing well. But Nigeria’s economy is beginning to slow down, hence, lower interest rate becomes an option to stimulate business and employment. At the moment, Nigeria is playing golf with high interest rate and slow growth. This can impede economic growth. On the stock market, the impact of high interest rate is obvious. Investors who love short time horizon sometimes move their funds to bonds in order have better yield. At a period like this, silence of the MPC members on the need for downward review of interest is not golden. The financial market is awaiting the Apex Bank’s immediate intervention. Unconventional silence of the Apex Bank and its MPC’s nine wise may be a costly gamble. Send reactions to: comment@businessdayonline.com

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