Thursday 12 April 2018 12 BUSINESS DAY C002D5556 Editorial PUBLISHER/CEO Frank Aigbogun EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi HEAD OF SALES, CONFERENCES Rerhe Idonije SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North) Bashir Ibrahim Hassan GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan Nigeria and ECOWAS Perhaps, one of the revolutionary actions taken by Economic Community of West African States (ECO- WAS) since its formation in 1975 to foster regional integration is the ECOWAS protocol on the Free Movement of People and Goods. The very first of its kind in the continent, the free movement of goods, capital and people was meant principally to boost regional trade and economic development among member states while allowing people of the region to enter and reside in the territory of any member state for 90 days at a go, provided they have valid travel documents and international health certificate. Although the implementation of the protocol hasn’t been hassle-free, it has provided the peoples and governments of the sub-region the opportunity to travel and trade across their borders with little hindrance. For Nigerian entrepreneurs and businesses, the protocol avails them the opportunity to explore the markets of fourteen other countries. For the other member countries, Nigeria, with its 185 million population (bigger than those of the fourteen other ECOWAS members), provides a huge market for them. Perhaps, that is the major reason why Morocco, a North African Arab country, is applying to join ECOWAS. With its fairly developed manufacturing sector, Morocco stands to gain disproportionately from free trade with the mainly import-dependent West African region. But much more important to Morocco is the benefits of trading freely with the over 185 million Nigerian market. One draw-back of the protocol on the Free Movement of people, capital and goods across the region is the predatory actions of Nigerian neighbours, who, in wanting to access the huge Nigerian market, import goods far beyond their capacities and engage in smuggling across Nigerian porous borders. One good example is the problem of importation and smuggling of rice into the Nigerian market. The Nigerian government, in its bid to ensure selfsufficiency in rice production, banned the importation of rice across the land borders. However, as legal importation to Nigeria drops drastically, importation of parboiled rice (consumed mainly by Nigerians) increased exponentially in the neighbouring countries of Benin, Cameroun, Niger and others. For example, data gathered by BusinessDay show that Benin Republic with an estimated population of 11 million people imported 609,893 metric tonnes of parboiled rice from India in 2017, while Niger, with an estimated population of 21 million people, imported 98,179 metric tonnes, and curiously, Nigeria, with a population of 186 million imported only 8,726 metric tonnes. Also, data by the Thai Rice Exporters Association shows that Benin Republic’s imports from Thailand from January to November 2017 stood at 1.64 million metric tonnes, a 32 percent increase from 1.24 million metric tonnes within the same period in 2016, and an increment of 104.45 percent from 805,765 metric tonnes exported to Benin republic in 2015. Cameroun also imported 663, 667 metric tonnes of parboiled rice from Thailand between January and November 2017, a 47.64 percent increase from 449, 513 within the same period in 2016, and 449, 297 metric tonnes in 2015. Of course, from investigation and other studies carried out, these imported parboiled rice all find their way into the Nigerian market illegally regardless of Nigerian government position on importation of rice along the land borders. While not advocating for the termination of the ECOW- AS protocol on free movement of people, capital and goods across the sub-region, we call on Nigeria to do more to protect its borders to ensure that only legitimate goods, services and capital flow into the country from its neighbours. Nigerian businesses, farmers and entrepreneurs must also do more to plug the huge hole in demand that always necessitates smuggling and dumping of goods from its neighbours. They have an unusually huge market – the dream of many businesses and entrepreneurs in other countries – waiting to be captured. They must intensify their efforts to ensure that they produce goods and services to satisfy local demand. That alone will give them the economy of scale to capture not only the West African market, but the African market and become global players. EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Wole Obayomi Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo ENQUIRIES NEWS ROOM 08022238495 08034009034 }Lagos 08033160837 Abuja ADVERTISING 01-2799110 08116759801 08082496194 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 www.businessdayonline.com The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 LEGAL ADVISERS The Law Union MISSION STATEMENT To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world. OUR CORE VALUES BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven. • The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests. • Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessdayonline.com
Thursday 12 April 2018 COMPANIES & MARKETS Company news analysis and insight BUSINESS DAY 13 Dangote Flour Mills, others donate N70m threshers to wheat farmers Pg. 14 Wapic delivers stronger financial performance compares to peers BALA AUGIE Wapic Insurance Plc, the top underwriter in the country, has delivered stronger financial performance compares to peers as it recorded double digit growth in premium income and profit. Wapic Insurance has recorded impressive growth across key performance indicators for the year ended December 2017. An efficient underwriting capacity, the introduction of market penetration product, channel utilization, and capacity building help propel the company’s earnings. For the year ended December 2017, Wapic insurance’s net income surged by 161.08 percent to N1.53 billion, the strongest year on year growth among insurers that have released full year results on the web site of the Nigerian Stock Exchange (NSE). Underwriting profit surged by 301.91 percent to N1.53 billion in the period under review as against N380.67 million the previous year, which means there is enough income after settling claims to pay for operating expenses and other exceptional items. Wapic insurance’s solvency ratio stood at 285 percent or 2.85 times in the period under review, from 266 percent or 2.66 times the previous year. This means that the Nigerian insurer’s assets is 2.85 times the liabilities that it holders, which puts it in a position to pay claims that might be made by customers. Different countries use different methodologies to calculate the solvency ratio, and have different require- ments. For example, in India insurers are required to maintain a minimum ratio of 1.5. Wapic Insurance is good financial health and if it is paying less claims than it receives in revenue as combined ratio (CR) fell to 84.09 percent in the period under review from 106.05 percent the previous year. The combined ratio (CR) after policyholder dividends ratio,” is a measure of profitability used by an insurance company to gauge how well it is performing in its daily operations. The combined ratio is calculated by taking the sum of incurred losses and expenses and then dividing them. A ratio below 100 percent indicates that the company is making underwriting profit, while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums. Wapic Insurance is among the NEXT Big 10 insurers (Zenith, African Alliance, FBN Insurance, Royal Exchange, Niger, Cornerstone, Linkage, and NEM) by total assets and premium written, which makes it a target for big global players in the insurance market. “We highlight that the NEXT 10 account for 25 percent of the market and a consolidation of the 1st 6 (Zenith, African Alliance, FBN Insurance, Royal Exchange, WAPIC, and Niger) of them could lead to the emergence of the largest insurance company in Nigeria by total assets and gross premium income, overtaking Leadway Assurance,” said analysts at Chapel Hill Denham in a report. Consolidation is increasingly becoming inevitable because most insurers have a very weak capital base that has prevented them from taking on more risk and become competitive on a global arena. Some foreign investors have shown interest in some Nigerian firms as they continue to hunt for attractive assets and stamp their footprint across Africa. Some of the investors, according to him, are AXA, Prudential, Liberty, Swiss Re, Sunu Group, Saham and Allianz, among others. Further analysis of Wapic Insurance’s financial statement shows gross premium written, gross premium income and net premium income spiked by 23.12 percent, 26.24 percent and 32.02 percent to N9.80 billion, N9.58 billion and N5.65 billion in the period under review. Oando shareholders seek FG’s intervention on technical suspension placed on its shares Concerned Shareholders of Oando Plc on Tuesday urged Federal Government to prevail on the Nigerian Stock Exchange (NSE) and the Securities & Exchange Commission (SEC) to lift the technical suspension placed on the shares of the company without any further delay. The shareholders at a news briefing in Lagos said the continued suspension of Oando shares was sending wrong signals to the global community about the seriousness of the Federal Government in attracting foreign direct investments to bolster the economy. The News Agency of Nigeria (NAN) reports that NSE, on Oct. 18, 2017, announced that it had placed the shares of OANDO, a public quoted energy company trading on the floor of the NSE, on ‘full suspension for 48 hours.’ The exchange, thereafter on Oct. 23, 2017, further announced that it had placed the shares of the company on ‘Technical Suspension’. The NSE in a letter dated Oct. 18, 2017 informed the company that the suspension of its shares by the NSE was done in compliance with a directive issued to it by SEC. Mr Patrick Ajudua, Head, Concerned Shareholders of Oando, speaking on reasons for the immediate lifting of the technical suspension, said that the continued suspension of the company’s shares could also send wrong signals about the prevailing operating environment in the country. Ajudua said that the Federal Government must protect a prosperous company like Oando from going down if it wanted to demonstrate to the investing world about its seriousness to attract investors to the country. “The continued suspension of OANDO PLC is a wrong signal to the global market about the prevailing harsh operating environment in Nigeria, and this is at variance with the Federal Government’s initiatives to diversify the economy through increased Foreign Direct Investment. ”We appeal to the Federal Government to intervene in our travails because the international investment community is keenly watching. ”The value of the investment we as shareholders of Oando have made is being eroded because of this continued suspension of trading. We appeal that this suspension order must be lifted now. ”We, therefore, call on President Muhammadu Buhari, GCFR; Vice President Yemi Osinbajo, GCFR; Senate President, Dr. Bukola Saraki, CON; Speaker, House of Representatives, Rt. Hon. Yakubu Dogara, and other well-meaning Nigerians to, as a matter of urgency, prevail on the NSE and SEC to review their position”, he said. According to him, the continued suspension of Oando stock price is not in the best interest of the shareholders of the Company and investors in the capital market. Ajudua said that in spite of the troubles which the joint action of the NSE and SEC had subjected Oando, the management had continued to show the willingness and commitment to resolving the issues that gave rise to the technical suspension of the shares. “Management of Oando in the spirit of respect and compliance with regulatory guidelines voluntarily withdrew all legal proceedings brought against the SEC and the NSE in defending its position. ”This action was taken in the best interest of the company’s numerous shareholders and the nation in particular. Even the legal action we as shareholders instituted against SEC, we have equally withdrawn.