BusinessDay 07 Jan 2019

usinessday market monitor
NSE
Bitcoin
Everdon Bureau De Change
FMDQ Close
Biggest Gainer
Okomuoil
Biggest Loser
Cap
N80 4.99 pc N31.5 -7.35 pc
30,638.90
Foreign Reserve
Cross Rates
- $43.05bn
- GBP-$:1.27 YUANY-N53.06
Commodities
Cocoa Gold Crude Oil
US$2,358.00 $1,286.60 $57.02
₦1,349,713.56 -0.74 pc
Powered by
$-N
£-N
€-N
BUY SELL
357.00 362.00
453.00 466.00
404.00 415.00
FOREIGN EXCHANGE
TREASURY BILLS
Market Spot ($/N) 3M 6M
I&E FX Window
CBN Official Rate
365.35 -0.21 0.00
306.95 12.41 13.35
5 Y
-0.13
15.13
FGN BONDS
10 Y
-0.13
15.54
20 Y
-0.30
15.24
Currency Futures NGUS MAR 27 2019 NGUS JUN 26 2019 NGUS DEC 24 2019
($/N)
364.89 365.34 366.24
NEWS YOU CAN TRUST I **MONDAY 07 JANUARY 2019 I VOL. 15, NO 218 I N300 g www.
g
@ g
MARKETS
Nigerian banks
not using equity
to create assets
BALA AUGIE
Nigeria’s problem with
leverage is the exact opposite
of what emerging
markets usually face. There’s too
little debt in the banking system,
and too much equity.
The average financial leverage-
which simply divides assets
by equity, - for 13 largest banks
that have released third quarter
results-is 6.18 times.
That compares with South
Africa; 12.60, Brazil; 11.20,
Malaysia; 10.70, Singapore;
11.30, Hong Kong; 11.70 and
China; 15.30.
The country’s lenders are
holding too much equity, which
Inside
Continues on page 42
A Fixed income guide for
Nigeria in 2019 Pull-out
BUA, CBMI sign agreement
to build new 3m
Kalambaina Cement II
Plant in Sokoto P. A8
OMS denies allegation of
underhand dealings in
Nigeria’s oil business P. A8
The curious case of
Nigeria’s missing voters
TEMITAYO AYETOTO
The first time Babatunde
Adebayo wittingly
exercised his
franchise, 27 February
1999, he was
a 31-year-old man laying his
hands on what he could to secure
his future.
INSIGHT
Then, Olusegun Obasanjo
the People’s Democratic Party
(PDP) flag bearer was in a cutthroat
race with Alliance for
Democracy’s (AD) Olu Falae for
the presidential seat.
The election which retains
its standing as one of the mostparticipated
polls garnered
30,280,052 votes in its entirety,
bringing voters turnout to 52.3
percent.
Before riding to power on
the back of 18,738,154 votes,
Obasanjo at a party convention
in the city of Jos made it clear
in his acceptance speech as the
presidential nominee, that Nigeria
had no business with poverty.
That with the vast potential in
human and material resources,
his administration would strive
to eradicate poverty. “Nigerians
should in the next four years,
be assured of, of least, the basic
Continues on page 42

2 BUSINESS DAY g
www.
g
@ g
Monday 07 January 2019
NEWS
Apapa: Tough times for businesses, residents as
rush to return empty containers heightens gridlock
AMAKA ANAGOR-EWUZIE
There are indications that the
coming weeks will be very
tough for residents and businesses
located in Apapa port
city, following the rush by importers
and their agents to return empty
containers after discharging their
imported goods.
Usually, the first few weeks into
the New Year is characterised by
surge in business activities at ports
following the rush by importers to
clear backlog of containers and other
spill over consignments from the
ones that were not cleared during
the festive period.
By implications, motorists, port
users and commuters are expected
to experience man-hour loss on
their daily transit to the port city as
the traffic gridlock persists.
Also, shippers may be forced to
pay more to shipping companies as
demurrage for the containers and
storage charges to terminal operators
for occupying space in the terminals
as their cargoes spend longer
time without clearing them from the
ports, and offloading to return empty
containers back to the ports.
This is coming few days after
businesses, residents and commuters
enjoyed relief during the one
week Christmas and New Year celebrations
period, where driving into
Apapa became fun and free of traffic.
A recent BusinessDay visit to
Apapa-Ijora-Wharf through Western
Avenue, revealed that few days after
the resumption of work from the
Christmas and New Year holidays,
that gridlock is returning to Apapa
roads gradually.
Tony Anakebe, managing director
of Gold-Link Investment Ltd, a
Lagos-based clearing and forwarding
company, who confirmed that
Apapa traffic situation is expected
to worsen in the coming weeks, said
that the number of trucks coming
to the ports is expected to increase,
thereby providing temporary inconveniences
to Apapa road users.
“The last quarter of every year
usually marks the peak of importation
activities at the ports. Judging
from past experiences, the 2018
importation peak season is over
but the importers and their agents
will continue to clear the spillover
while those, who were able to clear
their consignments during the
festive season, would have been
able to discharge the goods in their
warehouses, and ready to return the
empty containers,” Anakebe said.
According to Anakebe, the situation
means increased business
activities as a result of the spillover
from Christmas imports, before the
volume would be expected to drop
especially for the remaining part of
the first quarter of this year.
Jonathan Nicole, president, Shippers
Association of Lagos State, said
that the poor condition of the access
roads into Apapa and Tin-Can Island
ports, have been a major challenge to
doing business at the ports.
This, according to him, has been
pushing up the cost of doing business
for shippers and manufacturers,
whose goods and raw materials
spend days and weeks before getting
to their warehouses.
Emma Nwabunwanne, a Lagos
based importer said: “If traffic returns,
trucks coming to evacuate cargoes
will find it difficult to access the ports
because they will be trapped on
the road. This will be dangerous for
port business and for the economy
because the situation could lead to
port congestion. It could also compel
shipping companies to impose congestion
surcharge on Nigerian ports.”
Consumer firms to sidestep FX
losses from naira volatility in 2019
BALA AUGIE
Consumer firms are set to
sidestep any loss due to
naira volatility in 2019.
Also, experts added that
some of these firms had embarked
on backward integration to reduce
reliance on imported raw materials,
but there are downside
risks for those
that have not hedged
against financial risk.
“Not all firms have exposure to foreign
exchange risk. A lot of them have
reduced Foreign exchange borrowing
in the last two years. We may not
see the magnitude of the hit of 2016
that nearly crippled businesses,” said
Christian Orajekwe, equity research
analyst at Cordros Capital Ltd.
“Nestle has gone far in the area
of backward integration as it sources
material locally,” said Orajekwe.
Foreign exchange losses for the 10
largest consumer goods firms quoted
on the floor of the Nigerian Stock
Exchange (NSE) stood at N396.05
million as at September 2018, this
compares with N15.07 billion and
N39.88 billion incurred in the corresponding
period of 2017 and 2016.
The Naira traded at around
N364.41 per dollar in the Investors
and Exporters (I&E) window on Friday,
Data from FMDQ shows.
Firms have reduced burden on
operating profit as combined interest
expense fell by 49.08 percent to
FINANCE
N25.13 billion in September 2018
from N49.37 billion in 2017.
That compares with an 86.65
percent increase in finance cost
recorded in 2016 financial year.
Oil prices have slumped in recent
weeks, as concerns mount about a
glut of crude supply and fears that
global economic headwinds could
lessen demand.
After reaching a
high of more than
$86 a barrel in early October, which
prompted warnings that it would
climb further to $100, the oil price
has since plunged by more than
30 percent.
Analysts at Vetiva Capital Ltd forecast
a +50 basis points rise in benchmark
borrowing costs and upend in
money market rates in 2019 will dive
a modest rise in finance expenses.
“This comes in contrast to the
notable moderation recorded in
net finance costs in 2018, supported
by declining market rates for most
of the year and benefits from the
significant deleveraging exercises in
2017 to early 2018,” said analysts at
Vetiva Capital.
“In tune with this, most consumer
goods companies will continue to
enjoy relief from any debt burden
despite the mild uptick in rates on
borrowing,” summed analysts at
Vetiva Capital.
•Continues online at
www.businessday.ng
President Muhammadu Buhari (m), receives in audience Governor Ibikunle Amosun of Ogun State (r), and
Adekunle Akinlade, Ogun State governorship candidate of Allied People Movement (APM), at the State House.
Why Nigeria’s oil production
cost of $22 per barrel is no cheer
DIPO OLADEHINDE
The New Year day news of
Africa’s largest producing
country reducing its cost
of producing oil leaves
little to cheer as further
investigation shows it’s much cheaper
to produce crude oil in war torn Iraq,
Saudi Arabia and Iran than in Nigeria.
At first glance it all seems like good
news when group managing director
of Nigerian National Petroleum
Corporation (NNPC) Maikanti Baru
said in 2018 Nigeria has been able
to reduce production cost from $27
barrel to $22 barrel while listing milestones
achieved by his team in 2018.
However at second glance, Nigeria’s
cost of producing oil of $22 is
still far higher than Iran and Iraq and
OPEC’s kingpin Saudi Arabia.
According to data from energy
industry consultant Rystad Energy, on
average it cost Saudi Arabia less than $9
to produce a barrel of oil last year while
other OPEC countries like Iran and Iraq
can produce for around $10 per barrel.
Drilling down into what makes
Saudi oil so cheap; Rystad Energy
explained that Saudi Arabia only
spends $3.50 in capital to pull a barrel
of oil out of the ground. This amount
includes money invested in drilling
new wells as well as the associated
equipment while production cost
and administrative and transport cost
stood at $3 and $2.49 respectively.
Luqman Agboola, head of energy
and Infrastructure at Sofidam Capital
said after making much money
from crude oil in the past Nigeria got
carried away with corruption, inefficiency
and security challenges while
other countries were consciously
reducing cost of production.
“One major factor affecting Nigeria’s
situation is the Niger Delta security
condition which naturally increases
cost of producing a barrel by nothing
less than $5,” Agboola told Business-
Day by phone. “If we become very efficient
Nigeria should be having a cost
of production of between $12 and $15.”
Agboola explained that the second
factor affecting cost of production
is the Terrain.
“The likes of Iran, Saudi Arabia and
Iraq produce in the desert which is
naturally cheaper so they don’t need
elaborate preparations to drill a well.”
An oil expert who pleaded anonymity
told BusinessDay that the
main problem facing Nigeria are
issues concerning multiple taxes,
government policies and insecurity.
“Even Ghana and Tunisia are producing
at $15 and $10 respectively.”
“Government needs to put the
right fiscal policies in place and stop
playing politics with the implementation
just like the PIGB,” the expert
told BusinessDay. “Until we get this
out of the way we would not get a
favourable pricing mechanism.”
Rystad Energy explained that
Saudi Arabia also has low capital costs
due to the fact that the country’s oil is
located near the surface of the desert
and pooled in vast fields, so it doesn’t
need to invest that much in drawing it
out of the ground. Contrast this with
countries that have large offshore production
bases like Nigeria, Norway
and the United Kingdom, which incur
significantly higher CAPEX costs of
around $13.76 to $22.67, respectively,
due to the need to build large offshore
production platforms.
Agboola admitted that it’s a bit
complex when calculating cost of
production because factors such as
production per day or capacity to produce
per day are always considered,
while the size of a country’s oil reserves
cannot also be taken into isolation.
“This is why we can easily see that
a country with higher oil reserves
have cheaper production costs,”
Agboola said.
•Continues online at
www.businessday.ng
Cautious trading intensifies on Customs Street
IHEANYI NWACHUKWU
In the absence of near-term positive
catalysts that could entice
bulls on Customs Street, the now
amplified political worries ahead
of February general election occupies
topmost the mind of investors’.
Rising from varied degrees of stock
related bruises witnessed last year,
some investors are now approaching
the Nigerian Stock Exchange (NSE)
with their eyes on this near-term concern
while other discerning investors
are taking advantage of low valuation
of stocks and strong market fundamentals
to beef up their portfolio.
Analysts at Lagos-based Cordros
Capital said their outlook for equities in
the near-to-medium term is negative.
“We guide investors to trade cautiously,
amidst absence of a near term
positive catalyst and political jitters
ANALYSIS
… Stock investors lose N300bn in first trading week into 2019
… Early rally seen in J/Berger, Vitafoam, Union Bank, others
ahead of the upcoming 2019 elections.
However, macroeconomic fundamentals
remain stable and supportive of recovery
in the long term,” Cordros added.
From a year-open high of N11.721
trillion, the value of listed stocks
moved lower on Friday January 4,
2019 at N11.425trillion; it implies
investors have lost approximately
N300billion in three days.
Also, the NSE All Share Index has
declined by 2.52percent this year to
30,638.90 points. It opened the year
2019 at 31,430.50 points.
“In the year ahead, we expect a
subdued performance in the earlier
part of the year (pre-election period)
and depending on the outcome
of the election and smoothness
of transition period, we expect a
post-election equity recovery,” said
research analysts at United Capital
Plc in their January 2 note.
“With positive sentiment due to
end-of-year activities over, we anticipate
a resumption of investor apathy
and foresee this driving the market in
the coming weeks. Therefore, we expect
another relatively quiet session
on the NSE with continued negative
trading”, Vetiva analysts said in their
January 4 note to investors.
Despite analysts maintaining their
bearish short-term outlook for the
stock market this year, some stocks
still kicked-off the first trading week
on a positive note. Some of the stocks
that have achieved over 5 percent gain
in their share price this year are Julius
Berger Nigeria Plc (15.67percent);
Union Bank of Nigeria Plc (7.14percent);
Custodian Investment Plc
(7.96percent); Cutix Plc (6.71percent);
and Union Dicon Plc (8percent).
•Continues online at
www.businessday.ng

Monday 07 January 2019 C002D5556 BUSINESS DAY 3

4
BUSINESS DAY
C002D5556
Monday 07 January 2019

Monday 07 January 2019 C002D5556 BUSINESS DAY 5

6 BUSINESS DAY www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng Monday 07 January 2019
NEWS
2019: Ondo signage agency threatens to
remove illegal posters, billboards
YOMI AYELESO, Akure
Ondo State Signage
and Advertisement
Agency (OSSAA)
has threatened to
remove all illegal posters,
banners and billboards across
the 18 local government areas
of the state.
OSAA in a statement by
its chairman Akinwande Akinrodoye
notes that the law
establishing the agency prescribed
that corporate organisations,
political parties and
individuals to obtain permit
before erecting them.
Akinrodoye urges all affected
individuals or groups
concerned to remove all
the billboards, banners and
posters, adding that law enforcement
agencies would
be moving across the state
to ensure compliance.
The OSAA boss reveals
that the measure deployed is
not in any way to intimidate
political parties but to enhance
internally generated
revenue of the state.
he statement read in part:
“It has come to the atten-
EU seeks to extend
protective steel
tariffs to 2021
European Commission
on Friday
pressed ahead
with protective
steel tariffs aimed at
shielding European manufacturers
against a surge in
imports from around the
world, due in part to metals
tariffs imposed by the
United States.
According to the findings
of a commission investigation,
in 2018, President
Donald Trump imposed 25
percent tariffs on steel imports,
a move that has seen
global manufacturers divert
goods to the European
market instead.
“The EU’s steel manufacturing
industry, which
is still reeling from a global
glut that brought down
prices, has been faced with
an increase in imports in
recent years, a situation
that has been aggravated
by the U.S. decision to
raise tariffs,’’ the commission
found.
Following Trump’s decision,
the EU imposed
provisional 25-per-cent
tariffs on 23 categories of
steel products in July, to be
applied across the board
once overall imports exceed
the average of the
previous three years.
The commission has
now proposed extending
these measures for three
years, until mid-July 2021.
On Friday it notified the
World Trade Organisation
of the move, which still
requires the backing of EU
member states.
tion of the state government
that across the state there are
many outdoor advertisement
and signs without compliance
with the provisions of
the extant law on same, which
is, OSSAA law.
“The law empowers the
agency to enter into any property
or premises for the purposes
of carrying out inspection
necessary for the proper
administration of the law.
“Equally, owners and operators
of existing outdoor
structures are required to
regularise their signage and
advertisement structures
with the agency and if not
done, the agency shall with or
without notice as it deems fit,
direct the removal of same at
the expense of the owner.
“It is important to stress
here that any person who violates
any of the provisions of
the signage & advertisement
law or does anything in order
to stultify the application of
the law or continue to be in
breach of the law by displaying
or permitting the display
of unauthorised outdoor
structures”.
Nigeria internet users jumped 14% in year to November 2018
ENDURANCE OKAFOR
Nigeria internet
users rose 14
percent in the
year to November
2018, according
to figures available
from the Nigeria Communications
Commission (NCC),
regulator of the industry.
The number of internet
subscribers in the country
rose to 108.46 million last
November, from 94.82 million
a year earlier, according
to NCC figures.
Active subscribers for
data (internet) services on
each of the licensed service
providers utilising the different
technologies showed that
MTN reported 41.68 million
internet users, while Globacom
has 27.76 million subscribers.
Airtel and 9mobile
(formerly Etisalat) have 28.96
million and 10.6 million, respectively.
Among the mobile network
operators, MTN and
Airtel recorded the highest
month-on-month increases
in internet subscription with
1.7 percent and 1.5 percent
increase respectively. For
9mobile total internet subscription
of 10.1 million
in October remained unchanged
in November.
Omotola Abimbola, a research
analyst at Ecobank,
said the increase reflected
smartphone penetration in
the country. “Cheaper smartphones
from Asia have been
a boon to internet penetration
in Africa in general and
created a new and fast growing
income line for telecommunications
companies who
are now recording doubledigit
growth in data revenue,”
Abimbola said.
He said the increase in
the number of internet users
in Nigeria “could also be
positive for the economy as
internet penetration typically
aids productivity and ecommerce.”
FBNQuest, a subsidary
of the FBN group, said in its
GoodMorning Nigeria publication
on Thursday, January
3, 2019, that the increase in
Nigeria’s internet users could
ECOWAS Court filed 60 cases in 2018 - official
Over 60 cases were
filed with ECO-
WAS Community
Court of Justice in
2018, the highest number of
cases filed in a single year in
the Court’s history.
This was contained in a
statement by the President
of the Court, Justice Edward
Asante on Friday in Abuja.
Asante, who spoke in a New
Year message, said this was
compared to the 47 cases
filed in 2017 and 45 in 2016.
The court’s president
said that a total of 115 cases
were pending, by the end
of 2018, compared to 89 in
2017 and 63 in 2016.
He added that this represented
an increase in the
number of pending cases
before the court, saying
the number of judgments
delivered by the court also
increased to 31 in 2018,
higher than the 19 delivered
in 2017 and the 29 delivered
in 2016.
He also said there was an
improvement in the number
of court sessions held in
2018, which increased to 85
… analysts link subscription rate to phone penetration
from 79 in 2017.
“Although much lower
than the 105 held in 2016,
which was a historic high in
the court’s history.”
Asante further added
that the new threshold was
evidence of the “increasing
confidence in the court” by
citizens in addressing their
human rights violation.
He decried the decision
to reduce the number
of judges of the Court from
seven to five at a time of
increases in the number of
cases pending before the
have been due to the fact that
“subscribers usually patronise
dual-SIM mobile phones
and stay connected via separate
data packages on multiple
networks, in order to
“achieve uninterrupted internet
access.”
FBNQuest said the increase
in internet users “implies
a density of 58 percent
in a population estimated at
185 million, placing Nigeria
well above the African average
of around 16 percent as
indicated by McKinsey.”
Data compiled from the
NCC website show that the
contribution of the telecommunications
industry to
Nigeria’s Gross Domestic
Product (GDP) rose by 0.98
percentage points to 8.39
percent in Q3 2018, from7.41
percent in Q3 2017. However,
last year’s third-quarter contribution
was less than the
10.43 percent contribution to
the country’s GDP in the second
quarter of the same year.
Nigeria’s GDP grew by
1.81 percent (year-on-year)
court.
He, however, pledged
the commitment of the
judges, who assumed duty
in August 2018, to faithfully
discharge their responsibilities.
Asante added that they
would ensure that justice
was done in a timely manner
in spite of the reduction
as well as the insufficient
facilities.
“We have already lined
up a host of cases to deliver
judgments in January when
the judges return from their
in real terms in the third
quarter of 2018, driven by the
non- oil sector, the country’s
statistical agency said.
The non-oil sector contributed
98.62 percent of the
growth in that quarter, with
the oil sector contributing
the remaining 9.38 percent,
the National Bureau of Statistics
said in a report released
recently.
The number of active subscribers
for telephony services
on each of the licensed
service providers utilising
different technologies including
GSM, CDMA, Fixed
Wireless and landline, show
that MTN had 66.97 million
subscribers, which is 40 percent
of the total market share,
followed by Globacom with
43.27 million (26 percent)
and Airtel having 43.12 million
(25 percent).
9mobile, the telecommunication
company, which
has Teology as it highest bidder
has a market share of 9
percent with 15.36million active
customers.
Christmas vacation to demonstrate
the resolve to make
a difference,” he said.
He further assured of the
court’s determination to
work with member states to
resolve the issue of the enforcement
of its decisions.
He further said the court
was considering options
for engaging with member
states and the relevant authorities
to address the concerns
to enable the court’s
effectiveness towards regional
integration, peace
and security.

Monday 07 January 2019 C002D5556 BUSINESS DAY 7

8
BUSINESS DAY
C002D5556
Monday 07 January 2019

Monday 07 January 2019 C002D5556 BUSINESS DAY 9

Monday 07 January 2019
10 BUSINESS DAY
C002D5556
comment
Bashorun J.K Randle
Randle is Chairman/Chief
ExecutiveJK Randle Professional
Services Chartered Accountants
• Continued from last week
At the IMF/World Bank
meeting, the lingering
matter of the unpaid gratuity
and pension of retired
partners of KPMG
was listed under “AOB” (Any Other
Business). Unfortunately, there was
no time to do justice to the issue. It
was “The Punch” newspaper which
took the wind out of our sail with the
following front-page report:
“Nigeria servicing debt with
more than 50% revenue – IMF”
(Federal Government of Nigeria
proposes to borrow N1.5 Trillion
in 2019)
“The International Monetary
Fund on Thursday painted the
precarious situation of the nation’s
economy in particular and Sub-
Saharan Africa’s, in general, going
by how much the country and the
region spend on debt servicing.
According to the Breton Woods
financial institution, Nigeria spends
more than 50 per cent of its revenues
on servicing debts, a situation that
does not give room for other necessary
expenses.
Speaking at the presentation of
Benedict Elujoba
Elujoba is of the Centre for Promotion
of Enterprise and Business Best
Practices
Africa is a continent in dire
need of growth. The continent’s
GDP of $2.18trillion
in 2017 as estimated by
the International Monetary Fund
is less than the GDP of Germany
($3.677trillion), a country of fewer
than 83 million citizens and a land
mass that is only slightly larger than
one-third of Nigeria’s.
In the meantime, Africa’s output
is generated by 1.3billion inhabitants.
It can thus be easily averred
that the continent’s poor economic
state is a result of the extremely
low levels of productivity that are
pervasive in most African countries.
A major factor for Africa’s low
productivity and consequent deplorable
economic conditions is the
low level of industrialization across
the continent and a seeming lack
of urgency among African leaders,
which is evidenced by a slow pace of
adoption of technology and modern
industrial practices and systems.
In an op-ed published June 15,
2018 by The East African, a Kenyan
weekly journal, Mr Akinwunmi
Adesina, president of the African
Development Bank, opined that
Africa’s manufacturing sector is the
weakest link in its ongoing integration
into the global economy. He
stated that primary products or
comment is free
Send 800word comments to comment@businessdayonline.com
XKPMG (In English, Latin and Greek)
the Regional Economic Outlook
for Sub-Saharan Africa – Capital
Flows and the Future of Work in
Abuja on Thursday, Senior Resident
Representative and Mission Chief
for Nigeria, African Department,
Amine Mati, put Nigeria’s growth
rate for 2018 at 1.9 per cent.
Mati said that although Nigeria’s
debt to Gross Domestic Product
remained low at between 20 and 25
per cent, the country spent a high
proportion of its revenue on debt
servicing as a result of low revenue
generation.
For Nigeria, he added, the debt
servicing to revenue ratio was more
than 50 per cent while for sub-
Saharan Africa, the rate was about
10 per cent; a figure he said was too
high and reminiscent of what the
region went through in the period
following debt relief at the beginning
of the 21st century.
Mati said, “Security issues are
exacting a significant human toll in
a number of countries. Debt to GDP
ratio is increasing in the past five
years. Public debt is diverting more
resources towards debt servicing.
“The interest rate has gone up to
where they used to be around the
year 2000 before the debt relief. The
adjustment has relied on spending
compression rather than revenues
mobilisation. Meeting the Sustainable
Development Goals will
require stronger growth and more
financing.”
The IMF top-notch said that the
sub-region needed to create 20 million
jobs every year and added that
the situation was even more precarious
with the Fourth Industrial
Revolution lurking around.
“Policies are needed today to
create more jobs in the coming years.
Twenty million jobs are required every
year in Sub-Saharan Africa to meet
the SDGs. Job creation is complicated
by uncertainty to which technology
replaces labour,” he said.
Speaking at the event, Director
General of the Debt Management
Office, Patience Oniha, stated that it
was important for the government to
borrow especially given the nation’s
low revenue generating capacity.
She contended that without sufficient
revenue and with the recession
that the country found itself between
2016 and 2017, the government had
no option but to borrow and spend
the country out of recession.
Oniha said, “We are borrowing to
be able to increase forex availability.
The government needed to borrow
in order to spend the country out of
recession.”
She disclosed that the government
had proposed to borrow N1.5tn in
the 2019 fiscal year, adding that borrowing
had reduced as the nation
was now out of recession.
Justifying this viewpoint, Oniha
said that in 2016, the Federal Government
borrowed N2.5tn which was
approved by the National Assembly
while it proposed to borrow N1.64tn
in the current financial year.
In 2019, she added, the proposed
debt of N1.5tn had gone further
down. She added that the government
had taken steps to diversify the
economy and increase tax collection
which she said was lower than
in most countries of the Economic
Community of West African States.
The DMO boss differed with the
opinion of a questioner who argued
that the infrastructure in the country
had been decaying despite increased
borrowing in the last three years.
However, a Non-Governmental
Organisation, Social Action, has
berated the government for its inclination
towards borrowing.
In a statement made available
to our correspondent in Abuja on
Thursday, Head, National Advocacy
Centre, Social Action, Nigeria, Vivian
Bellonwu-Okafor, said that the inclination
to borrow by the government
showed cluelessness.
Bellonwu-Okafor said the recent
statement made by the Minister
of Works, Power and Housing, BabatundeFashola
that ‘those who
complain that we (FG) borrow too
much should tell us where else to
find funds’ was not only unfortunate
but also a glaring admission of
cluelessness.
She said, “While it is distressing
to watch the country’s debt profile
balloon into pre-2006 levels – before
Stemming Africa’s industrialisation gap
raw materials make up 62% of the
continent’s total exports.
According to him, it explains
(among other things) why a region
that produces about 75 per cent
of the world’s cocoa accounts for
just 5% per cent of the nearly $100
billion annual chocolate market.
According to the Economist
Intelligence Unit, a British research
group, Africa accounted for more
than 3% of global manufacturing
output in the 1970’s but this percentage
has since halved. This is a
clear indicator of the urgency the
continent needs to catch up with
the rest of the world.
The United Nations, as part of its
efforts to redress this situation set
aside 20 November of every year as
Africa Industrialisation Day.
The year 2018 theme, “Promoting
Regional Value Chain in Africa:
A Pathway for Accelerating Africa’s
Structural Transformation, Industrialisation
and Pharmaceutical
Production,’’ is very appropriate
considering the low level of integration
and economic cooperation
within Africa’s regions or among
its nations.
Take Nigeria, Africa’s largest
economy for instance, in 2017 only
two of its top 15 export destinations
were African countries (South Africa
and Togo accounting for 4.5%
and 2.4% of exports, respectively)
The low level of industrialization
is the reason much of Africa’s
exports are still commodities (raw
‘
Security issues are
exacting a significant
human toll in a number
of countries. Debt to GDP
ratio is increasing in the
past five years. Public
debt is diverting more
resources towards debt
servicing
’
materials) with very little value-add
as the continent is unable to compete
with other more established
economies on quality, cost and scale.
Consequently, Africa accounts for a
paltry 2.6% of total world exports and
exports account for only 7.3% of the
continent’s economic output.
Many economic experts agree
that a major reason for Africa’s slow
industrialization is that its leaders
have failed to pursue bold economic
policies out of fear of antagonizing
donors.
In spite of suboptimal policy direction
and implementation in many parts
of the continent, some multinationals
and other manufacturing concerns are
leading the charge for industrialization
and regional integration.
Taking another look at Nigeria that
has struggled to find ways to increase
non-oil revenues to counter the fall in
commodity prices in the near term
and achieve sustainable growth in
the long term, the annual report of
the nation’s central bank for 2017
revealed that the top three contributors
to Nigeria’s non-oil exports in
2017 were British American Tobacco
Nigeria (BATN), Olam and Indorama
Eleme Fertiliser Company.
While BATN led the top 100 companies
with $145.48million (about
N52.37B) worth of exports, it also
brings the added value of having
exported manufactured goods as a
result of its investments in processing
and manufacturing (across Africa
and particularly in Nigeria) and its
integration of local farmers into its
operations such that rather than
tobacco leaves, cigarettes were
exported to Liberia, Cameroon,
Ghana, Niger and Cote D’Ivoire.
Olam International was second
with $110.892 million (about
N39.92billion) worth of Sesame
seeds and fermented cocoa
beans while Indorama exported
$69.815million (about
N25.13billion) worth of granular
urea in bulk to Uruguay Brazil and
Argentina.
Other companies that contributed
to the volume of manufactured
exports include De-united
foods with $30.568million (about
N11billion) on indomie and mini
me exports as well as Dangote with
$21.496million (about N7.74billion)
from export of cement. Dangote
also continues to improve Africa’s
industrialization drive with the
establishment of manufacturing
plants in industries including flour,
sugar and cement across African
countries and notably the multibillion
dollar refinery in Lagos, Nigeria.
Data from the National Bureau of
Statistics put Nigeria’s total exports
for 2017 at N13.59trillion. Though
an improvement on 2016 figure
N8.53trillion, it still leaves a massive
and daunting industrialization and
productivity gap especially when it
is noted that crude oil exports accounted
for N11.03trillion (81.1%).
In commemoration of Africa
Industrialisation Day 2018, the
the debt buyback deal when the
Olusegun Obasanjo administration
paid $12bn to eliminate over
$30bn then owed to the Paris Club
of creditors – it is disheartening that
the Buhari government seems to
be bereft of ideas on what to do to
generate revenue without resorting
to excessive borrowing.”
Perhaps it was this precarious
state of affairs as a prelude to anarchy
and fragmentation that provoked
the late Apostle HayfordAlile the
pioneer Director-General and Chief
Executive Officer of the Nigerian
Stock Exchange to issue a “fatwah”
on his 80th birthday (24th April,
2018) interview which was published
on the front page of the “Vanguard”
newspaper of November 9, 2018.
Headline: “If I were God, I’d cut
Zimboda’s blessing”
“God says I can’t come from
heaven above to come and help you,
but if He identifies you as a good
instrument, He will pump his goodness
through you to others.”
It is always a huge task to ascertain
who is on the side of the angels.
A case in point is the fierce contest
between XKPMG and KPMG over the
sponsorship of “The Match”(Golf)
Tournament. KPMG outbid XKPMG
by depositing the princely sum of
U.S. $9 million. Alas, according to the
report by The Sunday Times, it was
money down the drain. It would have
been better spent on retired partners
of KPMG who are still awaiting their
gratuity and pension.
Send reactions to:
comment@businessdayonline.com
UN Secretary-General Antonio
Guterres, in a message, called for
inclusive and sustainable industrial
development in Africa, saying it is
critical for achieving the 2030 Agenda
for Sustainable Development.
Meanwhile in Lagos, Governor
Akinwunmi Ambode pledged to
continue formulating and implementing
policies and programmes
that would consolidate the state’s
position as the industrial and commercial
hub of Nigeria. In his address
delivered by Mrs Olayinka
Oladunjoye, the State Commissioner
for Commerce, Industry and
Cooperatives, Ambode said that
sundry projects in the areas of security,
environment, infrastructural
renewal and upgrade were designed
to create an enabling environment
that would promote industrialisation
and sustain the state’s status
as prime investment destination
in Africa.
His Edo State counterpart Governor
Godwin Obaseki said that his
administration’s commitment to
the development of an industrial
park, a modular refinery and the
Benin River Port in the state, will
help accelerate Africa’s industrialisation
drive. It is hoped that governments
at all levels across Africa will
improve on policy formulation and
implementation to urgently close
the gap in Africa’s industrialization.
Send reactions to:
comment@businessdayonline.com

Monday 07 January 2019
comment
Patrick Atuanya
Atuanya is the editor of
BusinessDay. Email: patrick.atuanya@businessday.ng
Twitter: @patrick_atuanya
It’s the start of the New Year,
Nigerian stock are still falling,
the feel good vibe around
this time of the year is yet to
ebb and yet I’m still thinking
about the announcement made late
last year about a merger between
Access Bank and Diamond bank,
with the potential to shake up Nigeria’s
financial services sector.
Whenever I think of the Nigerian
Banking sector one thought always
gets me excited.
This is the pre provision operating
profits levels for the industry.
The thinking goes that if only the
banks can clean up their books there
could be potential upside for investors
in financials.
However there is always the fear
of falling into a ‘value trap’, or by
definition a stock that appears to be
cheap because the stock has been
trading at low valuation metrics such
as earnings multiple, or book valuefor
an extended time period. The trap
springs when investors buy into the
company at low prices and the stock
continues to languish or drop further.
The recent Access Bank – Diamond
Bank merger has made the
new entity to emerge to become the
largest lender in Nigeria by assets and
other metrics. With its huge bad loan
portfolio which would need writing
off, there is some similarity the new
entity bears with FBN Holdings
which used to be the largest bank
by assets and is also dealing with
bad loans for which impairment
charges of N76.1 billion was taken
C002D5556
Investors should instead be asking
themselves what kind of Nigerian banking/
financial services sector will emerge from 2020
(just 1 year from now), and who will be in the
dominant position then to drive profitability
BUSINESS DAY
11
comment is free
Send 800word comments to comment@businessdayonline.com
Unlocking value in the Access Bank - Diamond merger
in Q3, 2018.
Naturally the question for investors
would be, is this new entity a
buy?
I decided to run some numbers
comparing all three banks (FBNH,
Access and Diamond), separately
and then the combined Access and
Diamond to see where they stood
as at Q3.
Basically plugging in the same
valuation for FBNH for the combined
Access and Diamond gives
a share price of N11.38 and market
value of N403.9 bn. Note that FBNH
bad loan portfolio (NPLs at 14%) is
probably much worse that what it
would be for the combined Access/
The table below tells the tale:
Fig 1
‘
Diamond entity.
Access Bank has signaled they
would write off all bad loans in Diamond
and no legacy NPLs will be
coming into the new entity.
Positives for the merged (Access/
’
Diamond) entity
Low valuation
If you believe that Nigerian banks
or at least the largest banks should
trade close to their book value then
you could argue that N20 per share
is closer to fair value for the combined
name. Currently Zenith Bank
(another bank which we believe
will be closer to the new combined
Access/Diamond) is trading at 0.92x
book value.
Scale
Total assets of over N6trillion,
and 29 million customers should
give the new Access – Diamond
entity enough levers to pull to drive
profitability.
Mobile money
The coming mobile money,
digital financial inclusion is an opportunity
for the new bank given
Access adoption of technology and
the CBNs mandate to Telcos to
partner with banks. Together, the
two companies will have 29 million
customers, including more than 13
million mobile customers, as well as
3,100 ATMs, 15.9 million cards and
around 32,000 PoS terminals. Given
how ambitious the Access Bank team
driving the merger is, a MTN/Access
Bank-Diamond Bank mobile money
roll out would not be out of place
and the impact on the bottom-line
could be huge.
Backward looking negative
Sentiment
Most of the negative sentiment
that has followed this merger announcement
is backwards looking
and in our opinion misses the point
completely. Investors should instead
be asking themselves what kind of
Nigerian banking/financial services
sector will emerge from 2020 (just 1
year from now), and who will be in
the dominant position then to drive
profitability. We think Access – Diamond
will be a major winner in the
evolving financial services landscape.
Nominal growth/unbanked
population
The Banking sector (assets) has
grown at circa 10% per annum on average
since 2010 in Naira terms. This
should provide steady lift to profits
assuming more financially excluded
are gradually being lifted into the
formal space using digital financial
services DFS.
Profit levers
Looking at the table above, the
combined Access/Diamond has a
lot of profit levers to pull including
operating expenses of N130 billion
and Personnel expenses of N58 billion.
We expect these to come down
with direct impact on topline.
Experience from Intercontinental
acquisition
We think the Access Bank team
has learnt a lot from the experience
of swallowing Intercontinental Bank.
One sign of this is reports that the
Diamond Bank LOGO will survive the
merger. This is a symbolic but effective
way to keep a lot of the Diamond
Bank customers from porting. Access
Bank has absorbed six institutions
in the past 15 years. According to
management, the same team who led
the past successful integration will be
responsible for delivering the merger
with Diamond Bank and overseeing
the transition to the enlarged entity.
Unknowns
We believe that any unknowns
from this deal (still awaiting more
clarity) will be an upside surprise for
Access Bank + Diamond Bank.
Risks
The major risk to our assumptions
are execution and possibility
of another recession in Nigeria.
Also interest expense should
increase in the near term as Access
plans a $250m Tier 2 capital raising
exercise.
Send reactions to:
comment@businessdayonline.com
Dapo Oguntade
I
watched with keen interest
the Vice Presidential candidates’
debate organised ahead
of the forthcoming elections
in Nigeria. Obviously, the current
government, to be candid, has not
performed to the level of my initial
expectations when it came into office.
This is not to say they have done
nothing worthy of commendation.
At least, some of our rail lines
are working again. There are many
other initiatives such as the N-power
and soft loan programmes as well as
the conscientious efforts to develop
other infrastructure projects to which
the government deserves some
credit. If anything, the level of waste
and profligacy of the penultimate
Vice presidential debate: Beyond the political rhetoric
government has been curtailed to
a great extent. However, as many
would agree, the process of change
is moving at snail pace and while
the good intentions of current actors
cannot be denied, the speed we
are running at is way too slow for
(i) where Nigeria currently stands
and where we want to be (ii) the
rate of expansion of our burgeoning
population now forecast to exceed
250 million by 2030 and (iii) the
speed at which the rest of the world
is moving at.
I am not a particularly strong
supporter of some of the government’s
policies including those on
infrastructure. I ask myself if the
government can really bankroll
the infrastructural needs of Nigeria
by taking on various loans from
international finance institutions.
The Vice President, Professor Yemi
Osinbajo recently estimated Nigeria
needs about $1 trillion to modernise
its energy infrastructure alone. The
country is estimated to require $450
trillion to execute on the National Integrated
Infrastructure Master Plan
(NIIMP). In my own estimations,
there is only so much government
can do and given the requirements,
Nigeria needs to be moving with
urgency. I am aware some measures
have been taken to create certain
structures through the Nigeria Infrastructure
Fund and the resuscitation
of the Infrastructure Bank. But these
measures are just not enough. If we
are looking to attract capital, we need
to create the right legal framework
and other measures necessary to
guarantee attractive returns on investment.
However what we truly need is
a holistic infrastructure development
strategy with creative policies as to
limit our dependence on foreign capital
to finance our infrastructure needs.
This is a long term plan which cannot
be done overnight.
Our policies on agriculture and
development of local industries are
not robust enough. Our agricultural
policies are at best disjointed and we
lack the necessary support industries
such as steel and petrochemical industries,
to mention a few, which are
the essential requirements to drive a
modern industrialised economy. It is
only when the essential industries are
in place, then the resulting multiplier
effects could lead to the creation of an
even larger service driven economy.
However, this is a matter for another
day.
There is a glaring absence, at this
time, of any holistic, strategic and
interconnected national development
plan which accounts for all
elements of monetary, fiscal, trade,
foreign exchange, industrial, and
capital formation and labour policies.
Not to forget the legal, regulatory,
constitutional and institutional
framework necessary to achieve our
aspirations. If those policies exist
today in some form – maybe the
national industrial revolution plan
- then execution is lacking. There is
need for joint concerted effort across
all sectors, government levels and the
private sector.
Why was I so keen on the debate?
I was interested in knowing if there
is truly an alternative in this election
cycle. While I am mindful that perfection
might just be a pipe dream or a
mirage, it is important to at least assess
and critically analyse our options
albeit from the limited scope of a time
bound debate. Given my doubts on
what difference Atiku Abubakar can
make as the President, I was more
interested in knowing what his running
mate, Peter Obi, could offer.
I could hear a lot of numbers and
statistics coming forth during the time
he presented. However, beyond the
numbers, which should be expected
ahead of such a debate. I felt the comments
shared were light on details
and short of any concrete plan in
place to make a change. It sounded
all too familiar – back to 2015 again
– the numbers game. The arguments
in my mind felt somewhat peripheral,
on-the-surface and lacking depth.
Further, I thought the comments
on fuel subsidy was being in some
ways economical with the truth and
maybe playing to the gallery. It is true
a more efficient system will provide
additional savings but that distracts
from the substance of the matter.
Can Nigerians really bear a situation
where subsidies are taken away?
Let’s be factual, our refineries are at
present not working.
Note: the rest of this article continues
in the online edition of Business Day
@https://businessdayonline.com/
Send reactions to:
comment@businessdayonline.com

Monday 07 January 2019
12 BUSINESS DAY
C002D5556
Editorial
Publisher/CEO
Frank Aigbogun
editor
Patrick Atuanya
DEPUTY EDITORS
John Osadolor, Abuja
Bill Okonedo
EXECUTIVE DIRECTOR, OPERATIONS
Fabian Akagha
EXECUTIVE DIRECTOR, DIGITAL SERVICES
Oghenevwoke Ighure
GENERAL MANAGER, ADVERT
Adeola Ajewole
ADVERT MANAGER
Ijeoma Ude
FINANCE MANAGER
Emeka Ifeanyi
MANAGER, CONFERENCES & EVENTS
Obiora Onyeaso
SUBSCRIPTIONS MANAGER
Patrick Ijegbai
CIRCULATION MANAGER
John Okpaire
DIGITAL SALES MANAGER
Linda Ochugbua
GM, BUSINESS DEVELOPMENT (North)
Bashir Ibrahim Hassan
GM, BUSINESS DEVELOPMENT (South)
Ignatius Chukwu
HEAD, HUMAN RESOURCES
Adeola Obisesan
The illogic and irrationality of Operation Python Dance 3
Against the backdrop
of reported setbacks
in its war with terrorists
of Boko
Haram and Islamic
State West Africa, the Nigerian
Army on January 1 commenced
a nationwide troop deployment
ostensibly to tackle “observed
upsurge” in security challenges
ahead of the February 2019 elections.
Exercise Egwu Eke 111,
the codename for the operation
python dance, will supposedly
enable the Army to identify and
stop any attempts by groups and
individuals to cause problems
through stockpiling of arms
and similar infractions. On the
contrary, it is needless, illogical
and lacks rationality.
Chief of Army Staff, Lt General
Tukur Burutai, said Egwu
Eke 111 would run from January
1 to February 28. It seeks to stop
threats such as the formation
of ethnic militia and violence
induced by political activities.
The Army now claims there is a
proliferation of such activities
and groups that its deployment
would stop.
It sent out troops to the five
states of the South East in 2016
and 2017, claiming a multiplicity
of threats in the area during
the Yuletide. OhanezeNdigbo
and other groups in the region
dismiss claims of any unrest
or threats requiring military
intervention. There is only an
increase in population in the
Yuletide as indigenes return
home from all over the world to
celebrate with their kin. Instead,
the military invasion served as an
excuse to brutalise the populace.
The Nigerian Army now claims
the threats are nationwide. “These
challenges coupled with other
security threats across the country
such as terrorism, militancy,
kidnapping and banditry portend
that dissident group and criminal
elements could cash in on the
situation to perpetrate largescale
violence before, during and
after the 2019 general elections,”
the Army Chief stated through a
spokesman. He added, “Even in
the desert of Borno, don’t forget,
the Lake Chad basin is there,
python can also dance within the
desert.We have desert python.
So, python will dance all over the
country this time around.’’
What is the situation across the
country? Boko Haram and other
insurgencies have grown in intensity,
making Nigerialose men and
equipment on a weekly basis. Men
are refusing mobilisation, claiming
that the enemy has better ammo
and therefore too dangerous to
tackle. Expectedly, both the Nigerian
Army and the Nigeria Police
deny this. Despite the denial, the
Nigerian Police sacked more than
100 of its men for refusing mobilisation
to the warfront.
Furthermore, the governors
of Borno, Katsinaand Zamfara
have cried out about insecurity in
their domains. Gov Aminu Masari
of Katsina State lamented: “Our
state is currently under serious
siege by armed robbers, kidnappers
and armed bandits who
arrest rural people at the grassroots
at will and demand ransom
which, if not paid, they kill their
victims. Zamfara has been in a
state of siege for longer.”
Nationwide deployment of
soldiers such as Operation Python
Dance usually happens in a state
of emergency. The Governor of
Zamfara State has called for a
state of emergency in his state
given the terror of banditry and
low-intensity war by cattle rustlers.
Danger walks on both legs
in that part of the country.
Operation Python Dance 3
is troubling on many grounds.
It sends the wrong signals to
citizens. It was a colossal failure
in the South East, compelling the
Nigerian Army to effect social
responsibility actions that were
also misunderstood. Now it is going
nationwide.
First, the rationale for this action
defies logic and rationality.
Internal security is the primary responsibility
of the Nigerian Police,
not of the Army. Banditry, kidnapping
and cattle rustling are within
the province of police duties. Only
a busybody armed forces would
reduce itself to undertaking tasks
reserved for the Police and other
paramilitary forces.
While Section 217 c of the Constitution
empowers the President
to involve the Nigerian Army in
“suppressing insurrection and
acting in aid of civil authorities to
restore order when called upon
to do so by the President”, we are
not aware of the conditions “prescribed
by an Act of the National
Assembly” as the law also requires.
Nationwide deployment of soldiers
sends the signal of a state of
emergency or even a declaration
of war. The measure comes at a
time when the armed forces face
increasing questions about the
efficacy of their operations with
the many strikes of the allegedly
technically defeated Boko Haram.
Is it realistic to open many war
fronts simultaneously?
More importantly, Operation
Python Dance 3 continues the
militarization of civilian space in a
democracy. It is extremely disturbing
to have soldiers line the streets
and highways of Nigeria, starting
from the South East when the country
is not at war. The background
of a coming election makes it even
more curious and incongruous.
Nigeria does not need military
supervision of the elections. That
era ended as long ago as 1998.
There are enough structures, from
the Independent National Electoral
Commission through the
Nigerian Police and paramilitary
organs such as Civil Defence, to
handle elections. The insertion of
the military into a strictly civilian
matter such as elections is neither
logical nor warranted.
We will not join the conspiracy
theorists on the real intendment
of military deployment and the
expected beneficiaries. We call on
the Nigerian Army and the Government
to end Operation Python
Dance 3 immediately and send
the soldiers to where the nation
needs them. They have no role to
play in the forthcoming elections.
EDITORIAL ADVISORY BOARD
Dick Kramer - Chairman
Imo Itsueli
Mohammed Hayatudeen
Afolabi Oladele
Vincent Maduka
Keith Richards
Opeyemi Agbaje
Amina Oyagbola
Bolanle Onagoruwa
Fola Laoye
Chuka Mordi
Mezuo Nwuneli
Charles Anudu
Tunji Adegbesan
Eyo Ekpo
Enquiries
NEWS ROOM
08023165438
08169609331} Lagos
08033160837 Abuja
ADVERTISING
01-2799108
08034743892
08033225506
SUBSCRIPTIONS
01-2799101
07032496069
07054563299
DIGITAL SERVICES
08026011296
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

Monday 07 January 2019 C002D5556 BUSINESS DAY 13

14 BUSINESS DAY
24th, five new opposition parties
have been formed. They join an already
crowded field. The new party
leaders include disaffected ministers,
two former army commanders
and a rabble-rousing activist. All
speak of replacing Mr Netanyahu.
Not one of them has a real shot.
Under Mr Netanyahu, Likud has
never received more than a quarter
of the national vote. Yet it has dominated
Israeli politics with the help
of smaller nationalist and religious
parties. Moderates, meanwhile,
spread their votes more evenly and
widely. In this election they can
choose between no fewer than six
vaguely centrist parties, none of
which gets more than 13% in the
polls. Were they running as one they
would probably gather 40% of the
vote, overtaking Likud. But none of
the party leaders is prepared to serve
as number two.
That is the case even though the
leaders seem to have few discernible
differences over policy—or much of
an agenda at all. They offer no new
solutions to Israel’s intractable conwww.businessday.ng
https://www.facebook.com/businessdayng @Businessdayng
Monday 07 January 2019
In Association With
The Trump Show, season two
What to expect from the second half of Donald Trump’s first term
Thus far the president has been lucky. It may not last
DONALD TRUMP’S
nerve-jangling presidential
term began
its second half with a
federal-government
shut down, seesawing markets and
the ejection of reassuring cabinet
members like Generals John Kelly
and James Mattis. As Mr Trump’s opponents
called this a disaster, his supporters
lambasted their criticism as
hysterical—wasn’t everybody saying
a year ago that it was sinister to have
so many generals in the cabinet?
A calm assessment of the Trump
era requires those who admire America
to unplug themselves from the
news cycle for a minute. As the next
phase of the president’s four-year
term begins, three questions need
answering. How bad is it really? How
bad could it get? And how should
Americans, and foreign governments,
prepare for the Trump Show’s
second season?
Mr Trump is so polarising that his
critics brush off anything that might
count as an achievement. Shortly
before Christmas he signed a useful,
bipartisan criminal-justice reform
into law. Some of the regulatory
changes to schools and companies
have been helpful. In foreign affairs
the attempt to change the terms
of America’s economic relations
with China is welcome, too. But
any orthodox Republican president
enjoying the backing of both houses
of Congress might have achieved as
much—or more.
What marks out Mr Trump’s first
two years is his irrepressible instinct
to act as a wrecker. His destructive
tactics were supposed to topple a
self-serving Washington elite, but the
president’s bullying, lying and sleaze
have filled the swamp faster than it
has drained. Where he has been at his
most Trumpish—on immigration,
North Korea, NATO—the knocking
down has yet to lead to much renewal.
Mr Trump came to office with a
mandate to rewrite America’s immigration
rules and make them meritbased,
as in Canada. Yet because
he and his staff are ham-fisted with
Congress, that chance is now gone.
Kim Jong Un still has his weapons
programme and, having conceded
nothing, now demands a reward
from America. Europeans may pay
ing criticised by pundits for failing
to build a southern border-wall.
The Afghanistan withdrawal was
later walked back and the Syrian one
blurred, with the result that nobody
can say what America’s policy is
(though the harm will remain). Now
that his cabinet has lost its steadying
generals, expect even more such
destructive ambiguity.
Moreover, when Mr Trump acts,
he does not recognise boundaries,
legal or ethical. He has already been
implicated in two felonies and several
of his former advisers are in or
heading for prison. As his troubles
mount, he will become less bound by
institutional machinery. If Mr Mueller
indicts a member of Mr Trump’s
family, the president may instruct his
attorney-general to end the whole
thing and then make egregious use of
his pardon powers. House Democrats
might unearth documents suggesting
that the Trump Organisation was used
to launder Russian money. What then?
Confusion, chaos and normbreaking
are how Mr Trump operates.
If the federal government really
were a business, the turnover of senior
jobs in the White House would
have investors dumping the stock.
Mr Trump’s interventions often accomplish
the opposite of what he
intends. His criticism of the Federal
Reserve chairman, Jerome Powell,
for being too hawkish will, if anything,
only make an independentminded
Fed more hawkish still. His
own negotiators fear that he might
undermine them if the mood takes
him. Most of the senior staff who
more into their defence budgets at
the president’s urging. But America
has spent half a century and billions
of dollars building its relations with
Europe. In just two years Mr Trump
has taken a sledgehammer to them.
The next two years could be
worse. For a start, Mr Trump’s luck
may be about to turn. In the first half
of his term he has been fortunate.
He was not faced by any shock of
the sort his two predecessors had to
deal with: 9/11, Afghanistan, Iraq,
the financial crisis, Syria. Electoral
triumph, a roaring economy and
surging financial markets gave him
an air of invulnerability.
Even without a shock, the weather
has changed. Although the economy
is still fairly strong, the sugar-high
from the tax cut is fading and growth
is slowing in China and Europe.
Markets, which Mr Trump heralds
as a proxy for economic success, are
volatile (see article). Republicans
were trounced in the House in the
mid-terms. The new Democratic majority
will investigate the president’s
conduct, and at some point Robert
Mueller, the special counsel, will
complete his report on links between
Russia and the Trump campaign.
Over the past two years, Mr
Trump has shown that he reacts to
any adversity by lashing out without
regard to the consequences. Neither
the magnitude nor target of his
response need bear on the provocation.
In the past few weeks he has
announced troop withdrawals from
Syria and Afghanistan. Seemingly,
this was partly because he was behave
left the administration have said
that he is selfabsorbed, distracted and
ill-informed. He demands absolute
loyalty and, when he gets it, offers
none in return.
How should Congress and the
world prepare for what is coming?
Foreign allies should engage and
hedge; work with Mr Trump when
they can, but have a plan B in case he
lets them down. Democrats in control
of the House have a fine line to tread.
Some are calling for Mr Trump to
be impeached but, as of now, the
Republican-controlled Senate will
not convict him. As things stand, it
would be better if the verdict comes
at the ballot box. Instead, they must
hold him to account, but not play into
his desire that they serve as props in
his permanent campaign.
Many Republicans in the Senate
find themselves in a now familiar
dilemma. Speak out and risk losing
their seats in a primary; stay silent
and risk losing their party and their
consciences. More should follow Mitt
Romney, who marked his arrival in
the Senate this week by criticising
Mr Trump’s conduct. His return to
politics is welcome, as is the vibrant
opposition to Mr Trump by activists
and civil society evident in the midterms.
Assailed by his presidency,
American democracy is fighting back.
After two chaotic years, it is clear
that the Trump Show is something
to be endured. Perhaps the luck will
hold and America and the world will
muddle through. But luck is a slender
hope on which to build prosperity
and peace.
Too many challengers
Bruised, not broken
Israel’s opposition
could defeat Binyamin
Netanyahu—if they united
But nobody wants to be number two
ACCORDING TO POLLS, most
Israelis do not want Binyamin
Netanyahu, their prime minister,
to serve another term. Many are
fed up with the corruption allegations
that have been swirling around
him for months. He may soon be
indicted on charges of bribery and
breach of trust. Yet Mr Netanyahu’s
Likud party is still on track to win the
next election, which he has called for
April 9th (seven months earlier than
originally scheduled), in part to head
off the charges.
Mr Netanyahu can boast of peace
and prosperity on his watch, but if he
remains prime minister it will be in
large part because the opposition is
hopelessly divided. Since the election
was announced on December
Continues on page 15

Monday 07 January 2019
www.businessday.ng https://www.facebook.com/businessdayng @Businessdayng
BUSINESS DAY
15
In Association With
EUR not safe yet
The euro still needs fixing
How to make the single currency’s next 20 years better than the first 20
THE BIRTH of the
euro on January 1st
1999 was at once
unifying and divisive.
It united Europe’s
leaders, who hailed a
new era of tighter integration,
easier trade and faster growth,
thinking they were building a
currency to rival the dollar. But
the euro divided economists,
some of whom warned that
binding Europe’s disparate
economies to a single monetary
policy was an act of historic folly.
They preferred a comparison
with emerging markets, whose
dependence on distant central
banks fosters frequent crises.
Milton Friedman predicted
that a downturn in the global
economy could pull the new
currency apart.
For years the sovereign-debt
crisis that engulfed Europe after
2010 seemed close to fulfilling
Friedman’s prediction. But
the euro did not collapse. It
stumbled on, often thanks to
last-minute fixes by leaders
who, though deeply divided,
showed a steely commitment
to saving the single currency.
Public support for the project
remains strong. Over three in
five euro-zone residents say the
single currency is good for their
country. Three-quarters say it is
good for the EU.
However, that support does
not reflect economic or policy
success. Euro-zone countries
have never looked as if they all
belong in one currency union,
stripped of independent monetary
policies and the ability
to devalue their exchange
rates. Italy’s living standards are
barely higher than they were in
1999. Spain and Ireland have
recently enjoyed decent growth
following laudable structural
reforms, but their adjustments
have been long and hard, and
remain incomplete. In Spain
the youth unemployment rate
is 35%. Wage growth is slow
almost everywhere.
The euro’s history is littered
with errors by technocrats. The
worst was to fail to recognise
quickly in 2010 that Greece’s
debts were unpayable and that
its bondholders would have to
bear losses. Greece has endured
a prolonged depression and its
economy is almost a quarter
smaller than it was a decade ago.
The European Central Bank has
an ignominious history of setting
monetary policy that is too
restrictive for the euro zone as
a whole, let alone its depressed
areas. It was slow to react to the
financial crash in 2008, arrogantly
viewing it as an American
problem. In 2011 it helped to tip
Europe back into recession by
raising interest rates too early.
The ECB’s finest hour—Mario
Draghi’s promise in 2012 to do
“whatever it takes” to save the
euro—was an impromptu act.
Leaders may be committed to
the euro, but they cannot agree
on how to fix it (see Briefing).
The crisis exposed the depth of
the divide between creditor and
debtor countries: northern voters
simply will not pay for fecklessness
elsewhere. Economic
stagnation helped populists to
power in Greece and Italy. Because
reform has been slow, the
crisis could flare up again. If so,
Europe will have to withstand it
in a political environment that is
much more divided than it was
in 2010.
Technically, the path to a
stable euro is clear. The first
step is ensuring that banks and
sovereigns are less liable to drag
each other down in a crisis.
Europe’s banks are parochial,
preferring to hold the sovereign
debt of their respective home
countries. Instead, they should
be encouraged to hold a new
safe asset, composed of the debt
of many member states. Otherwise,
when a country gets into
debt trouble, its banks will face
a simultaneous crisis, damaging
the economy. Similarly, sovereigns
must be shielded from
banking crises. A central fund
to recapitalise distressed banks
is already being beefed up, but
deposit insurance should also
be pooled. This has been more
or less agreed on in principle,
but countries disagree over the
speed of the transition.
Other necessary reforms are
still more contentious. If the
euro zone’s disparate economies
are to see off local economic
shocks, like collapsing
housing bubbles, they need
a replacement for their lost
monetary independence. Were
countries to run a tight ship
during booms, in line with the
EU’s rules, they would have
more leeway for fiscal stimulus
in crunches. But that advice is of
no use to countries like Italy that
are hemmed in by decades-old
debts. Residents of indebted
states cannot be expected to
endure perpetual stagnation.
Instead, the euro zone
should have some centralised
counter-cyclical fiscal policy,
as Emmanuel Macron, France’s
president, has called for. This
does not mean letting countries
off reform; it should not mean
paying off their creditors. But it
might include targeted investment
spending, say, or shared
unemployment insurance, to
shield against deep economic
downturns. The aim should
be to avoid a repeat of the selfdefeating
fiscal contractions
after the latest crisis.
This degree of risk-sharing
may involve more transfers
than northern voters can bear.
But without it, the euro’s next
20 years will be little better than
the last 20. And when crisis
strikes, Europe’s leaders may
find that political will, however
substantial it was last time, is
not enough.
Israel’s opposition could
defeat Binyamin...
Continued from page 14
flict with the Palestinians. The most
popular new party, Israel Resilience,
is led by Benny Gantz (pictured), a
decorated former general. He has so
far refused interview requests, saying
his party’s aim is “to strengthen
the state of Israel as a Jewish and
democratic state in the spirit of the
Zionist vision”. Other party leaders
offer similar bromides on the need
for unity and re-ordering national
priorities.
The Labour Party has long dominated
Israeli politics, espousing a
socialist ideology. In recent years,
though, it has tacked towards the
centre and formed an alliance with
Hatnuah, another centrist party,
re-branding themselves the “Zionist
Union”. On January 1st the allies
split. Labour, which has had a series
of lacklustre leaders, has lost most of
its support. It has not led a government
since 2001 and now attracts
under 10% of the vote, according
to polls.
The other centrist parties are
younger and built around ambitious
leaders, such as Moshe Kahlon, the
finance minister, who heads the Kulanu
party, and Orly Levi-Abekasis,
a three-term Knesset member, who
leads the Gesher party. They hope to
create their own power base. Many
of Mr Netanyahu’s opponents seem
to be waiting, not for the election,
but for the legal system to bring
him down. In the coming months
the attorney-general is expected to
hold pre-trial hearings over whether
to charge the prime minister.
Mr Netanyahu says he will not
step down if indicted. An election
victory would give him some political
cover to stay on. But his opponents
believe this is the beginning of
the end of his time in office, which
in July would surpass the record set
by David Ben-Gurion, Israel’s first
prime minister. Some on the right
spy an opportunity. On December
29th Naftali Bennett and Ayelet
Shaked, the education and justice
ministers, announced the formation
of a new party, called the New
Right, which will field religious and
secular candidates. Mr Bennett, at
least, thinks that Mr Netanyahu’s job
is up for grabs.

16 BUSINESS DAY
www.businessday.ng https://www.facebook.com/businessdayng @Businessdayng
Monday 07 January 2019
In Association With
Blue Christmas
On January 7th, Egypt’s Copts celebrate a sad Christmas
The largest Christian community in the Arab world faces bombs, bullets and neglect
SOMETIMES, THE simplest
of gestures carries
weight. In 2015 Abdel-
Fattah al-Sisi became
the first president of
Egypt to attend a Christmas
mass. He has done so each year
since, and will probably do so
again on January 7th, the date on
which Egypt’s Coptic Christians
celebrate the birth of Jesus. The
long-persecuted Copts are glad
that the Muslim president of their
mostly Muslim homeland offers
them this token of respect. But Mr
Sisi has done little else to improve
their plight.
The Copts are the largest
Christian community in the Arab
world, numbering about 10m.
Successive governments have
ignored laws promising them
equality. Copts are frozen out
of senior government jobs, particularly
in the security services.
Textbooks gloss over the history
of the church, one of the oldest
branches of Christianity. After
Mr Sisi’s coup against Muhammad
Morsi, Egypt’s first elected
president, in 2013, Copts suffered
vicious attacks by Mr Morsi’s Islamist
supporters.
Even the Copts’ right to worship
is circumscribed. For most
of its modern history Egypt re-
stricted church-building under
decrees written by the Ottomans
and the short-lived monarchy of
1922-53. Security services had to
approve new houses of worship.
Permission was rarely granted.
In 2011, the last year for which
data are available, there was one
church for every 2,780 Christians.
Per person, Muslims had about
four times as many mosques,
which are not subject to onerous
restrictions.
In 2016, to great fanfare, Mr
Sisi’s government passed a law
to replace these antiquated regulations.
It established a formal
process for requesting construction
permits and a committee to
review them. If governors wish to
refuse a new church, they must
provide a written explanation
within four months. But the law
has done little to ease the burden,
in part because the intelligence
services still have an outsized role
in the process. Since the law was
passed just eight permits have
been issued for new churches,
a slower pace than before 2016.
The 2,500 Copts in Kom el-
Raheb, 200km south of Cairo,
must drive 40 minutes to the
nearest church. Since 2001 they
have sought permission to open
one in their village. In December
they celebrated mass in a building
owned by the archdiocese,
which they hope will soon receive
a licence. Muslim villagers attacked
them, pelting their homes
with stones. Police rarely bother
to investigate such cases. Instead
they round up both Christian
and Muslim villagers until local
leaders agree to a “reconciliation
session”. After one such meeting
in Kom el-Raheb, Copts agreed to
suspend further prayers.
The state views churches as a
security issue—because terrorists
attack them and the police fail
to stop the attacks. Seven Copts
were shot dead near a Minya
monastery in November, on the
same road where 28 Copts were
killed the previous year. The jihadists
of Islamic State claimed
responsibility for both attacks. In
December a policeman shot two
men outside a church in Minya.
The victims were not militants.
They were local Copts, a father
and son who had a dispute with
the cop over a parking space.
Even where Mr Sisi’s government
has deployed more church
guards, their presence may not
be a comfort.
Knocking Gnassingbé
Togo’s president suffers an electoral setback
Despite an opposition boycott, his party still lost seats
IT IS NO mean feat for a ruling
party to lose seats in an election
boycotted by 14 opposition parties.
Yet such is the depth of unhappiness
with Faure Gnassingbé, the
president of Togo, that his party’s
majority shrank in parliamentary
elections on December 20th, even
though almost no one was standing
against it.
The opposition coalition
shunned the vote, accusing the
government of rigging the voters’
register. It also complained that the
police and army shot at protesters.
On a video circulated on social
media in December, a uniformed
man in a pickup truck drove up to
demonstrators and pointed a rifle
at them. The gunman’s face was not
visible, and no shots were seen fired
on the video. But activists claimed
that two people (one a 12-year-old)
were shot dead by soldiers that day.
Provisional results showed the
ruling Union pour la République
losing three of its 62 seats. The loss
may be crucial. Mr Gnassingbé
(pictured), who has run the country
since 2005 following the death of
his father (who had been in charge
for 38 years) wants to be allowed to
run again in 2020. Under pressure
to stand down, he proposed a constitutional
amendment that would
limit presidents to only two terms,
but insisted that the count should
only start at the next election. That
could allow him to remain in power
until 2030.
A referendum on his constitutional
amendment was meant to be
held on December 16th. But it was
called off after a wave of opposition
protests by activists demanding
that the two-term limit be applied
retroactively, which would bar Mr
Gnassingbé from running again.
Without a referendum Mr Gnassingbé
may try to push his constitutional
amendments through parliament.
But to do so he would need to
muster the support of allied parties
to get a four-fifths majority (or 73 of
91 votes). If the changes are rammed
through parliament, or if another
referendum is called, the result
would probably be more protests.
Politically speaking, no one expects
to hear Faure’s requiem soon.

Monday 07 January 2019 g
www.
g
@ g
BUSINESS DAY 17
CITYFile
NSCDC official charged with
murder in Lagos
A
Nigeria Security and Civil Defence
Corps personnel, Kehinde Osho,
who allegedly shot and killed a
man, has been charged before an Ebute
Meta Chief Magistrates’ Court in Lagos.
Osho is facing a count charge of murder,
but he pleaded not guilty. He was
brought to the court on Friday.
The prosecutor, Oladele Adebayo, had
told the court that the accused committed
the offence on November 18, 2018,
at 9.00p.m., on Pipeline Way, Oke-Ado,
Lagos.
Adebayo said that the accused shot
Taofeek Andulqadir, 31, with a gun on
the head in contravention of Section 223
of the Criminal Law of Lagos State, 2015.
The chief magistrate O.O. Olatunji,
however, granted the accused bail in the
sum of N200,000 with two sureties in like
sum, and ordered that the case file should
be sent to the state Director of Public
Prosecutions (DPP) for advice.
He adjourned the case until February
7, for mention.
Obaseki settles medical
bills of patients at UBTH
Governor Godwin Obaseki of Edo
has paid the medical bills of some
patients at the University of Benin
Teaching Hospital (UBTH) and the Central
Hospital, in Benin, the state capital.
Charles Idahosa, a former commissioner
in the state, who disclosed this,
said the governor also recently flew three
patients from UBTH to Israel for Kidney
transplant and the operations were successful.
According to him, Obaseki delegated
some doctors who visited the various
hospitals in the state to recommend patients
suffering from severe ailments and
are unable to afford their medical bills for
consideration by the state government.
6 suspected cultists
docked in Ogun
Six suspected secret cult members are
standing trial before an Ota Chief
Magistrate Court in Ogun State.
The accused are Olanilekan Abass, 22;
Rasheed Nurudeen, 18; Rafiu Sholola,
37; Fatai Abiodun, 30; Lateef Abiodun,
30; and
Atiba Olarigbigbe, 30.
They are facing trial on a two-count
charge of membership of unlawful society
and conspiracy to which they pleaded
not guilty.
The accused, who were in court on
Friday, and others still at large, allegedly
committed the offences on December 26
at 11.30 pm. in Owode-Ijako area of Ota.
Police prosecutor, Abdulkareem Mustapha
told the court that the accused and
others belong to a society identified as
“Aiye Confraternity”.
The offences contravened Sections 3,
5 and 516 of the Criminal Code, Laws of
Ogun, 2006.
Chief magistrate, Mathew Akinyemi,
in his ruling, granted each of the accused
bail of N300, 000 with two sureties in like
sum and fixed further hearing on the case
for February 11. NAN
Where are the Trucks? The Ijora- Apapa Bridges in Lagos, dreaded for their notorious traffic jam look empty; sanity that motorists
and residents wish will continue when activities return in full swing in Apapa, Lagos.
Pic by Pius Okeosisi
FG to reclaim land, communities
ravaged by erosion
JOSHUA BASSEY
The Federal Government says it is
working to reclaim all land lost
to gully erosion and assist floodravaged
communities regain
their means of livelihood.
The assurance was contained in a
statement issued by the Federal Ministry
of Science and Technology (FMST) at the
weekend.
Abdul Aminu, head, public relations
unit of the ministry, in the statement
quoted the minister of science and technology,
Obgonnaya Onu, as giving the
assurance at the launch of gully erosion
control works at Okwohia, Obowo/Ihitte
Uboma local government area of Imo.
According to him, the intervention of
Federal Government would usher a huge
relief to the Okwohia community which
had for long been devastated by ecological
challenges.
Onu said: “The approval of the project
is a testimony to the present administration’s
resolve to ensure that no part of
the country will be allowed to suffer any
neglect due to geographical location.
“To further consolidate on the gains of
this stride, the Federal Government’s execution
of projects across the country also
demonstrates the sincerity of purpose of
APC-led administration toward promoting
equity and fair play to all and sundry.”
The minister believed that the project
would improve the standard of living of
the community and its environs. He said
that the project would additionally reduce
the danger posed to lives and property
associated with erosion and persistent
flooding experienced in recent times.
He affirmed that Federal Government
would continue to implement genuine
government policies, agreements and
contracts at both national and international
levels that were aimed at laying
solid foundation for virile and prosperous
nation.
The permanent secretary, Ecological
fund Office, Habiba Lawal, said that the
project was initiated through a request for
an urgent intervention forwarded to the
Ecological Fund Office.
She explained that the request was
forwarded by Benjamin Uwajumobi, who
represents the Imo North District at the
upper chamber of the National Assembly.
Lawal, who was represented by Mathias
Eluma, said that the launch and hand
over of the project to the benefiting community
would enable the people to take
over and ensure its maintenance and
sustainability.
A’Ibom procures N5bn equipment for specialist hospital
ANIEFIOK UDONQUAK, Uyo
Akwa Ibom government has
purchased medical equipment
worth N5 billion for Ibom Specialist
Hospital to boost healthcare
delivery in the state.
Dominic Ukpong, the commissioner
for health, disclosed this when members
of the Divine Mandate Campaign Team
visited the paramount ruler of Eket, Etim
Abia, on Friday in Eket.
According to him, the state has been
paying N400 million quarterly to offset
bills for the medical equipment in the
hospital. Ukpong, however, said that the
hospital was not completed before it was
inaugurated the previous administration.
“We are paying the money now and the
hospital had been inaugurated but not yet
completed. It was supposed to be ground
floor, first, second and third floors.
“The previous administration did the
ground and first floors and left the second
and third floors uncompleted. It is not yet
plastered but was inaugurated,” he said.
He noted that Ibom Specialist Hospital
was on August 8, 2018 given out to Clinotech
Turnkey to manage for the state,
adding that Governor Emmanuel was
passionate about improving healthcare
delivery in the state.
He said some other hospitals in the
state, such as Ituk Mbang, Immanuel
hospital, Etinan General Hospital, Ikono
Hospital and Awa Hospital had been
rehabilitated, upgraded and equipped.
“We are trying to train people who will
manage the hospitals. We have gotten ambulance
for emergency medical response
such that if you are sick and you cannot
leave your home, you will call a certain
number and an ambulance will come and
pick you up for treatment,” he said.

18 BUSINESS DAY www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng Monday 07 January 2019
Live @ The Exchanges
Top Gainers/Losers as at Friday 04 January 2019 Market Statistics as at Friday 04 January 2019
GAINERS
Company Opening Closing Change
OKOMUOIL N76.2 N80 3.8
NB N78.7 N79.5 0.8
GUARANTY N32.95 N33.5 0.55
STANBIC N46 N46.5 0.5
UPL N1.97 N2.14 0.17
LOSERS
Company Opening Closing Change
CAP N34 N31.5 -2.5
BETAGLAS N68.3 N67 -1.3
FO N30.7 N29.6 -1.1
ZENITHBANK N22.7 N21.7 -1
GLAXOSMITH N13.05 N12.2 -0.85
ASI (Points) 30,638.90
DEALS (Numbers) 4,082.00
VOLUME (Numbers) 334,316,959.00
VALUE (N billion) 1.771
MARKET CAP (N Trn 11.425
NSE-30 Index: Sterling Bank
replaces Beta Glass
Stories by
Iheanyi Nwachukwu
The Nigerian
Stock Exchange
(NSE) has reviewed
the
NSE-30 Index
and the eight sectoral indices
of the exchange, which
are NSE Consumer Goods,
NSE Banking, NSE Insurance,
NSE Industrial, NSE
Oil & Gas, NSE Pension,
NSE Lotus Islamic and
NSE Corporate Governance
Indices.
The composition of
these indices became effective
on January 1, 2019
after the completion of the
year-end review and index
rebalancing exercise.
This resulted to entry
of some major companies
and the exit of others from
the various indices. On
the NSE-30 Index, Sterling
Bank Plc has replaced Beta
Glass Company Plc. MRS
Oil Nig Plc has replaced
Eterna Plc in the NSE Oil/
Gas Index.
There were no changes
in the NSE Consumer
Goods Index and that of
NSE Industrial Index, but
in the NSE Banking Index,
Jaiz Bank Plc replaced Diamond
Bank Plc.
In the NSE Insurance
Index, Consolidated Hallmark
Insurance Plc, Sovereign
Trust Insurance
Plc, Regency Assurance
Plc replaced Continental
Reinsurance Plc, Staco Insurance
Plc, and Standard
Alliance Insurance Plc.
NSE Pension Index has
new entrants like CCNN
Plc, Beta Glass Co. Plc, Julius
Berger Plc while
Diamond Bank Plc, Continental
Reinsurance Plc,
Ecobank International Incorporated
have exited.
Jaiz Bank Plc has replaced
Nigeria Aviation
Handling Company Plc in
the Lotus Islamic Index.
Meanwhile, while there
were no new entrants into
the Corporate Governance
Index, the likes of NEM
Insurance Plc, Diamond
Bank Plc, and Continental
Reinsurance Plc have all
exited the Index.
The indices, which
were developed using
the market capitalization
methodology, are rebalanced
on a biannual basis,
the first business day
in January and in July. The
Stocks are selected based
on market capitalization
and liquidity.
The liquidity is based
on the number of days the
stock is traded during the
preceding two quarters. To
be included in the index,
the stock must have traded
Strong earnings put Vitafoam shares on high demand
Impressive corporate
earnings and expectation
of high return
on investment have
put shares of Vitafoam
Nigeria Plc on the league
of the most sought after
by discerning investors
on The Nigerian Stock Exchange
as they scramble
to beef up their portfolio
with the stock despite the
bearish trend.
Vitafoam’s impressive
performance in
the third quarter which
ended on September
30, 2018 indicated that
the its net profit stood at
N601.923million from a
loss of N127.690million in
the preceding year while
its basic Earnings Per
Share (EPS) hit N57 kobo
in the review period as
against a loss of N15 kobo
in the preceding year.
As a reward for its numerous
shareholders, the
company announced a
dividend of 25 kobo per
share. This is in addition
to declaration of bonus
share of one for five ordinary
shares.
The announcement of
Vitafoam’s strong earnings
prompted many investors
to place buy order
on the stock to take advantage
of its current low
price relative to the company’s
intrinsic value on
stock market.
On Monday, December
31st, 2018, the last
trading day for the year,
Vitafoam led the gainers’
chart on The Exchange,
followed by Stambic IBTC
as Vitafoam’s share price
appreciated by 10 percent,
from N4 to N4. 40,
following transaction of
2, 687,190 shares, worth
N11,823, 096 on the company’s
shares.
Market watchers were
quick to commend the
company’s performance,
saying demand for its
shares may continue despite
the general lull in the
market.
Network Capital’s
Managing Director and
Chief Executive Officer,
Oluropo Dada, promptly
ascribed the rally created
by Vitafoam’s result to the
associated value for both
existing and potential
shareholders:
“The Stock market is
information - driven. It
responds to every information
from quoted companies,
regardless of the
type of information. This
is the beauty of the market
in aggregating investors’
reaction to every bit of information
or market hearsay.
The 25k dividend and
one for five bonus is the
fundamental factor driving
Vitafoam’s share price.
This is real. Everyone
knows that the company’s
current performance is
far better than that of last
year”, Dada said.
Vitafoam’s Group
Managing Director and
Chief Executive Officer,
Vitafoam Nigeria Plc,
Taiwo Adeniyi attributed
the company’s recent opportunity
performance to
a range of factors including
access to finance and
availability of raw materials
and putting customers
at the center of all
the company’s activities
among others.
“ We are enjoying Improved
funding through
Bank of Industry’s (BOI’s)
intervention, deliberate
cost management, improved
efficiency, customer
centric approach
to selling, innnovative
thinking, market differentiation,
Government’s
deliberate policy on forex
trading and availability
which has helped in
sourcing of input materials
at cheaper rates and
for at least 70 percent of the
number of trading days in
the preceding two quarters.
The Nigerian bourse
began publishing the NSE
30 Index in February 2009
with index values available
from January 1, 2007.
On July 1, 2008, The
NSE developed four sectoral
indices and one index
in 2013, with a base value
of 1,000 points, designed
to provide investable
benchmarks to capture the
performance of specific
sectors. The Insurance and
Consumer Goods sector
index, comprises the
15 most capitalized and
liquid companies; Banking
and Industrial Goods
sector index, comprised
of 10 most capitalised and
liquid companies, while
the Oil & Gas sector index,
is composed of the seven
most capitalized and liquid
companies.
also planning”, Adeniyi
said.
As part of its Corporate
Social Responsibility
(CSR), annually, Vitafoam
donates its products to
Lagos Island Marternity
Hospital to ensue availability
of good equipment
and identify with the
Baby of the year. Speaking
at this year’s edition
in Lagos, Adeniyi said it
was consistent with the
company’s CSR policy as
its products cut across diverse
age groups and status.
“Vitafoam has been
known over the years for
good quality products. It
believes in being part of
the child’s life from cradle.
We have always been
known to provide for the
home, every age set you
find in the home. We have
products that meets the
needs of the baby up to
when it becomes a toddler
and then, when he eventually
grows up to become
an adult.
Continental
Reinsurance
incorporates CIMA
subsidiary, appoints
Oumar BA as its CEO
Continental Reinsurance
Plc has
completed the
incorporation
of a subsidiary office in
Douala, Cameroon. This
status is a key milestone
in its strategy of operating
through a network of wellcapitalized
subsidiaries
across Africa.
“This development reinforces
our commitment
to the CIMA region and
our valued partners,” said
Oyetunji, Group Managing
Director of Continental Reinsurance
Plc. “We already
have a strong local team on
the ground, and our goal is
to utilize our new status to
maximize value.”
The move is in line with
the new CIMA Code in
the Francophone region
which requires a reinsurance
company based
in a Member State to be
established as a limited
liability company and further
permits a reinsurance
company with its head office
in a Member State to
install a branch in another
Member State.
The Company started
its operations in Douala
in 2004 as a branch office
and later opened its Abidjan
office in 2012 to diversify
its activities in the
CIMA region.
Oyetunji added: “At the
same time, we are delighted
to announce that we
have appointed Oumar
BA as the Chief Executive
Officer of the newly established
subsidiary, effective
immediately. Given
our new status, we believe
he will be able to leverage
on his expertise and track
record to capitalize on the
current demand for localized
service and we look
forward to Oumar helping
us develop that further in
the CIMA region.”
Oumar brings over two
decades of experience
to the Company. Most
previously, he served at
Swiss Re as Regional Manager
(West Africa – Anglophone).
Prior to that, he
held roles as Senior Client
Manager (Swiss Re Africa /
Swiss Re Zurich), Property
Underwriter (Swiss Re Africa
/ Johannesburg) and
also worked with Salama
Assurances (Senegal).

Monday 07 January 2019
www.businessday.ng
COMPANIES
& MARKETS
COMPANY NEWS ANALYSIS AND INSIGHT
facebook.com/businessdayng
@Businessdayng
@Businessdayng
BUSINESS DAY
19
Equity funds count losses as
stock market rout takes toll
Pg. 20
ANALYSIS
Companies face higher borrowing costs in 2019
LOLADE AKINMURELE
Again, the private
sector is at risk
of being crowded
out by government
borrowing in 2019 in
bad news for an economy
still sruggling to find its
feet after a scathing recession.
Expectations for a
higher yield environment
this year implies higher
borrowing costs for corporates.
The yield expectations
are being driven by rising
interest rates in developed
markets which could force
the hand of the Central
Bank of Nigeria (CBN) to
raise interest rates in order
to compete favourably
for capital.
Yields are also tipped to
rise if the federal government
fails to meet its revenue
target for the third
straight year as that will
widen the budget financing
gap which would in
turn boost local bond supply
and bid yields higher.
The Federal government’s
2019 budget has a
N2.3 trillion deficit and is
predicated on revenues of
N7 trillion.
Both scenarios are
threatened by disappointing
revenues which naturally
feeds into a wider
deficit that will leave the
government with limited
options than to borrow.
Capital expenditure
bore the brunt of disappointing
revenues in the
past two years but 2019
will give the government
less wriggle room given
L-R: Aniekan Joseph, Area Sales Manager, Lagos; Dr. Soji Adetona, Consultant Pathologist; Olanrewaju Bolawe, Medical Scientist, all of SYNLAB
Nigeria (formerly PathCare) at the recently held Health Writers Association of Nigeria (HEWAN) Awards and Symposium, where SYNLAB Nigeria
was awarded “Best Laboratory of the Year”.
the spike in recurrent expenditure
which cannot
be easily made away with
like capital spending.
Non-debt recurrent expenditure
alone will hit
N4 trillion this year. If
government revenue is to
perform as it did in 2017
or 2018 where only 50 percent
of the target was met,
then worker salaries, overhead
costs and statutory
transfers will be higher
than total revenue, before
considering capital expenditure
and debt servicing.
The total non-debt recurrent
expenditure will
equate to 128 percent of
the government’s projected
N3.5 trillion revenue
for the year. N3.5 trillion is
half of the N7 trillion 2019
revenue projection.
What that implies
is that the government
would have to borrow
just to maintain an over
bloated bureaucracy. Add
capital expenditure as well
as debt servicing obligations
and the government
will need to borrow even
more, thereby crowding
out the private sector.
After a record breaking
2017 for government
bond yields which peaked
at 18 percent, 2018 saw
yields fall to 14 percent
on average amid lower
inflation rate and reduced
bond supply from the federal
government which
tweaked its debt strategy
to borrow less domestically
in favour of external
debt.
However, there are
signs of a higher yield
environment in 2019 and
those signs started flashing
as early as late 2018.
Rising global interest
rates which sparked selloffs
in emerging markets
and political uncertainty
that coloured the second
half of the year, saw the
Central Bank of Nigeria
push yields higher in the
fourth quarter of 2018 using
Open Market Operations
(OMO) auctions, to
attract foreign portfolio
investors and tame inflation
ahead of the system
liquidity that accompanies
campaign spending
in an election year.
The OMO auctions
laid down a marker for
fixed income yields, with
one-year government
Treasury Bills rising as
high as 17 percent while
average bond yields rose
nearly 200 basis points to
15 percent.
The aggressive monetary
tightening adopted
by the CBN is expected to
continue this year on the
back of higher inflation
expectations and rising
interest rates in the
United States and other
developed markets.
The price stability
mandate of the CBN
means if inflation rises,
interest rates are likely
to be raised. The apex
bank relied heavily on
raising interest rates in
the latter part of 2016
when inflation soared to
a high of 18 percent. The
CBN hiked benchmark
rates to 14 percent from
11 percent over that period
and that’s where it
has stayed for nearly two
years now.
The outlook for higher
interest rates in the United
States and sustained
foreign capital outflow
this year will only pile
more pressure to the CBN
to tighten even further.
The consensus forecast
for interest rates in
2019 is a 50-basis hike to
14.5 percent. The Monetary
Policy Committee
is scheduled to hold their
first meeting of 2019 this
January.
The IMF tips the Nigerian
economy to expand
2.3 percent this year.
Although still in a
tepid posture, the economy
is gradually recovering
from recession. The
economy expanded by
1.81 percent in the third
quarter of 2018, up from
1.5 percent in previous
quarter, but still below
1.91 percent recorded
in the first quarter. The
country’s growth rate still
falls short of population
growth rate of 2.6 percent,
implying that the economy
needs stimulus policies to
make growth sustainable
and inclusive.
MARKETS
Vitafoam recommends N260.51m dividend, approves bonus issues for shareholders
OLUWASEGUN OLAKOYENIKAN
The Board of Vitafoam
Nigeria Plc,
one of Nigeria’s
leading manufacturers
of foam and
flexible/rigid polyurethane
products, has recommended
a dividend of N260.51 million
to the company’s shareholders.
In a notice filed at the Nigerian
Stock Exchange (NSE)
Friday by the foam maker, the
recommendation was made
at a meeting of its Board of
Directors held on December
18, 2018.
The dividend represents
25 kobo per share for the
financial year ended September
30, 2018 and it is subject
to shareholders’ approval at
Vitafoam’s Annual General
Meeting scheduled to hold on
March 7, 2019 in Lagos, and
withholding tax, according to
the firm.
“If approved at the Annual
General Meeting, the
dividend will be paid on 8th
March, 2019, to members
whose names appear in the
Register of members at the
close of business on Friday,
15th February, 2019,” Vitafoam
said.
Besides, the Board also
approved a bonus issue of 1
new share for every 5 existing
ordinary shares to shareholders
whose names appear on
the register of members at the
close of business on Friday,
February 15, 2018.
Vitafoam explained that
“the new shares shall rank
equally in all respects with
the existing ordinary shares
except that they shall not rank
for the dividend recommendation
of the year ended 30th
September, 2018.”
This implies Vitafoam’s
outstanding shares in the
market would increase from
its current 1.04 billion shares,
a development that would
have resultant effect on the
firm’s earnings per share
which stood at 57 kobo in
2018, according to Aluko Paul,
a research analyst at MBC
Securities Limited.
Vitafoam posted 46.67
percent return to emerge
the seventh-best performing
stock on the floor of NSE in
2018. This was triggered by
a 10 percent gain to N4.40
recorded by the consumer
goods firm on Monday,
December 31, 2018 after it
declared a whooping profit of
N601.92 million for the year
ended September 30, 2018.
The stock rallied to N4.99
on Thursday, January 3, it
highest in over two years. Part
of the gains was however reversed
Friday, January 4 after it
shed 9.82 percent to N4.50 per
share on profit-taking activity.
In spite of this, Paul said
“in the coming days, we
might see more activities on
the stock as it has not been
very liquid in the past and we
expect long-term investors to
key into it at this price which
Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA
might likely push up.”
BusinessDay check shows
that Vitafoam recorded
unimpressive financial performance
in 2016 and 2017,
posting a loss of N127.69
million in 2017 down from a
loss after tax of N32.03 million
in 2016.
However, the company
bounced back in 2018 with a
ballooned profit of N601.92
million despite paying
N191.03 million as tax. Also,
revenue surged 10.38 percent
to N19.53 billion as against
N17.69 billion recorded in the
previous year.

20
MARKETS
BUSINESS DAY
COMPANIES & MARKETS
Equity funds count losses as stock market rout takes toll
ENDURANCE OKAFOR
BusinessDay yearto-date
analysis of
the performance
of 10 equity funds
in Nigeria between January
and November 2nd 2018,
shows United Capital Equity
Fund topping the losers
chart with - 26.04 percent
decrease in its unit price, for
the period, according to SEC
Nigeria data.
Other top losers include;
Meristem Equity Market
Fund (- 25.96%), AXA Mansard
Equity Income Fund
(14.85%), Stanbic IBTC Aggressive
Fund (Sub Fund)
with -14.14 percent return
and Stanbic IBTC Nigerian
Equity Fund (12.94 percent).
Meanwhile the benchmark
of the Nigerian Stock
Exchange (NSE) All Share
Index return for the period
stood at – 17.47 percent.
Responding to the analysis,
Johnson Chuckwu, MD
of Cowry Asset said the
stocks that the mutual funds
invested in suffered losses
beyond the market return.
”The stocks that gained
in 2018 are those that are
not qualified as investment
instruments by mutual funds
and this stocks are called
outliners and they moderated
the loss in the All Share
Index and also because the
stocks the mutual funds
invested in recorded losses,
the return on investments
therefore is definitely going
to be worst that the bench-
mark NSE return,” Chuckwu
told BusinessDay.
In 2018, Nigeria equities
lost 18 percent as foreign
capital fled emerging markets
on the back of rising
interest rates in the United
States and slower global
growth concerns.
Other equity funds that
outperformed the benchmark
although reported
negative return include;
FBN Nigeria Smart Beta
Equity Fund (-12.64%) ARM
Aggressive Growth Fund
(-11.42%), Legacy Equity
Fund (-7.46%), Paramount
Equity Fund (-7.24%) and
Frontier Fund (-6.61%).
Omotola Abimbola, a
research analyst at Ecobank,
said “delivering a positive
return in an equity portfolio
in a year the market was
down double digits would
have meant outperforming
the benchmark by over 15
percentage point, and that’s
a tall order.”
Another analyst who
spoke to BusinessDay on
the condition of anonymity
said any fund manager
that underperforms the entire
market index can be
rated as being very weak
because there is no fund
that includes all stocks on
the exchange in its funds or
investment portfolio.
“Ordinarily, any good
fund manager should outperform
the market index
because it is a basket of
good performers and the
lagers will weigh down the
entire market index because
C002D5556
a portfolio investor will first
identify the instrument that
qualifies for investment in
their portfolio, that is those
instruments that have very
good fundamentals,” the
stock market expert said.
From a high position of
third best performing market
in 2017 with 42 percent rally,
Nigeria bourse All Share
Index dropped 0.24 percent
in December 2018 pushing
year to day return to -20.07
percent. This earned the
NSE the sixth worst performing
market in the world.
Rafiq Raji, chief economist
at Macroafricaintel said
“equities performed poorly
both globally and domestically
in 2018.”
As at the close of the
market yesterday, Nigerian
equities fell by 1.15 percent
led by declines in cement,
banks and brewers.
An equity fund is a mutual
fund that invests principally
in stocks. It can be
actively or passively (index
fund) managed. Equity
funds are also known
as stock funds. Stock mutual
funds are principally categorized
according to company
size, the investment style of
the holdings in the portfolio
and geography.
The sizes of an equity
fund is determined by a market
capitalization, while the
investment style, reflected
in the fund’s stock holdings,
is also used to categorize
equity mutual funds.
A further analysis by
BusinessDay revealed that
Monday 07 January 2019
L-R: Mo Abudu, CEO EbonyLife Tv / executive producer the movie ‘Chief Daddy’; Jimi Agbaje, Peoples Democratic Party, Lagos State Governorship
Candidate, his wife, Abiola, during the Grand Premiere of the Movie ‘’Chief Daddy’’ held at Oriental Hotel, Lekki, Lagos
the Net Asset Value (NAV)
of the Equity Based Funds
declined by 14.66 percent
from 14.32 billion in January
5th 2018 to 12.22 billion
in November 2 2018, data
on available on SEC website
showed.
“Valuations during the
period were not really reflective
of fundamentals
as a significant number of
listed firms actually produced
decent earnings, Raji
mentioned.
COMPANY RELEASE BANKING BANKING
MRS Oil gets Directors’
approval for
relocation of corporate
headquarters to Apapa
ADAMS SEGUN
MRS, an indigenous
downstream
oil
company has
notified investors
and the general public of
its Board’s approval to relocate
its corporate headquarters.
The statement which
was signed by the company
secretary, advised the Nigerian
stock Exchange that it has
received the green light to
move its base from the current
address at Onikan in Lagos, to
Apapa, which is located close
to the city’s lagoon and famous
for its sea ports and terminals.
‘’MRS Oil Nigeria Plc.
hereby notifies The Nigerian
Stock Exchange that its Board
of Directors has approved the
relocation of the Company’s
Head Office from No. 8,Macarthy
Street, Onikan, Lagos to
No. 2, Tin Can Island, Apapa,
Lagos. Dealing Members and
the general public are hereby
notified’’ the statement read.
Afemai MFB raises share capital to N500m
IDRIS UMAR MOMOH, Benin
Afemai Microfinance
Bank’s shareholders
have approved
a fivefold increase
of the mortgage bank’s share
capital to N500 million from
N100 million.
The shareholders gave
the approval during the
bank’s 23rd annual general
meeting which took place at
its corporate headquarters
in Jattu-Uzuaire in Etsako
West local government area.
The capital raise comes
on the heels of the new Central
Bank of Nigeria (CBN)
newly revised recapitalization’s
guidelines.
Under the new guidelines
state Microfinance banks
require a minimum capital
of N1 billion, N200 million
for Unit Microfinance banks
and N5 billion for National
Microfinance banks.
Pius Akpaibor, chairman,
board of directors of the
financial institution, in his
welcome address said, the
bank needed to inject fresh
fund of N900 million to be
able to sustain the bank’s
current status as a State
Microfinance Bank latest by
April 1, 2019.
“As a first step we intend
to raise the authorized
capital from N100 million
to N500 million. To sustain
your bank’s current status
as a State Microfinance
bank, fresh funds to the
tune of N900 million will be
injected into it. This is no
mean requirement which
should be met in the next 16
months- latest April 1, 2019”,
he said.
Afemai’s total assets
increased 4.9 percent
to N562.11 million from
N535.74 million in 2017.
The bank’s gross earnings
grew from N150.79
million to N162. 10million,
representing a 7.50 percent
increase.
However, profit before
tax decreased from N28.66
million to N8.84 million
representing 69.16 percent
while profit after tax also
decreased from N27.74 million
in 2016 to N7.74 million
in 2017, representing a 73.07
percent decline.
Akpaibor said that clients’
deposit increased by
6.98 percent from N295.53
million to N316.15 million in
the year under review.
The board chairman also
explained that the shareholders’
funds grew from
N224.79 million to N232.25
million, representing a
growth of 3.32 percent, capital
adequacy ratio was 50.43
percent while the liquidity
ratio was 44.12 percent,
which are both above the
statutory minimum of 10
percent and 20 percent respectively.
He posited that the
bank’s loans and advances
decreased 2 percent from
N385.23 million to N377.14
million.
Akpaibor said that the
bank plans to establish a
branch in Benin-City in
addition to those already
established in Afuze, Igarra
and Okpilla.
GTB announces closed period ahead
audited financial statement release
SEGUN ADAMS
In two news releases sent
to the Nigerian Stock Exchange
January 4, 2019,
Guaranty Trust Bank Plc.
(GTB) a tier- one lender announced
its closed period
ahead of the release of its full
year audited financial report.
‘’Pursuant to the postlisting
requirements of the
Nigerian Stock Exchange for
quoted companies, we hereby
inform you of the scheduled
commencement of the
closed period for trading in
the Bank’s shares on January
8, 2019 in respect of the
Audited Financial Statement
for the year ended December
31, 2018’’
The tier-one bank also
notified the public of its Board
Meeting to consider the financial
reports ahead its release.
‘’The Board of Directors
of our Bank is scheduled to
meet on Wednesday, January
30, 2019, to consider the
Audited Financial Statements
for the year ended December
31, 2018. Issues relating to full
year dividend may also be discussed
at the meeting’’
The Bank gave the assurance
that conclusions reached
would be related to the public
in due course.
‘’We shall notify you of the
decisions reached after the approval
of the CBN is obtained.’’
the statement read.
GTB closed 1.67 percent
higher, gaining 55k to close at
N33.50 per share at the end of
the first trading week in 2019.
The performance is against
the backdrop of a bearish run
in 2018, which saw the bank’s
share price alongside many
other stocks shed value as
the market fell 18 percent in
the year.
Experts expect the performance
of GTB to surpass its
previous earnings guidance
on PAT as N189.6 billion has
been estimated to be reported
for full year 2018 compared
to N174.3 billion, it’s most
recent.

Monday 07 January 2019 www.businessday.ng facebook.com/businessdayng @Businessdayng @Businessdayng
BUSINESS DAY 21
COMPANIES & MARKETS
Business Event
L-R: Tobi Oyewole, corporate social responsibility analyst, The Nigerian Stock Exchange (NSE); Temitayo
Ade-Peters, team lead, CSR, NSE, presenting Cheque and Food items donated by Employees of The NSE to
Chioma Ohakwe representing the Staff and students of Bethesda Home for the Blind as part of NSE Employee
Give-Back Initiative aimed at extending a hand of care to the less privileged during festive seasons in Lagos
L-R: Sunday Okereke, regional sales manager, East, PZ Cussons Consumer; Mercy Johnson-Okojie, celebrity
brand influencer; P. O. Konyeha, active distributor, Port Harcourt Territory; Ahusimere Ejiroghene, brand manager,
Morning Fresh, PZ Cussons Consumer, and Sunday Ekpo, area sales manager, PZ Cussons Consumer, at the
official Morning Fresh trade launch in Port Harcourt, recently.
L-R: Elizabeth Omolade, Ibe New President of the Club; Tajudeen Adegboyega Akande, Chairman of the
occasion and President Lagos Country Club; Dupe Dada District Governor of the Association of Lions Clubs
International, 404B2, Nigeria, and Asiwaju Olasunkade Azeez, a one time President of llupeju Lions Club under
the district and the Vice Chairman, Badminton Section, during the formal presentation of new President and
other Officers of Ikeja Metro Lions Club at Ikeja recently.
L-R: Chuks Enwereji, Vice-chairman IADC Nigeria; Marvelyn Ehika, Treasurer IADC Nigeria; Juliet Adesunloye,
Administrator IADC Nigeria; Ote Enaibe, chairman IADC Nigeria, at the Annual General Meeting held on the
7th of December 2018 at VCP hotel, Victoria Island Lagos.

22
BUSINESS DAY
C002D5556
Monday 07 January 2019

Monday 07 January 2019
www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng
BUSINESS DAY
23
Access Bank Rateswatch
KEY MACROECONOMIC INDICATORS
Indicators Current Figures Comments
GDP Growth (%) 1.81 Q3 2018 — Higher by 0.31% compared to 1.50% in Q2 2018
Broad Money Supply (M2) (N’ trillion) 31.79 Decreased by 0.007% in Nov’ 2018 from N32.03 trillion in Oct’ 2018
Credit to Private Sector (N’ trillion) 23.08 Decreased by 0.002% in Nov’ 2018 from N23.14 trillion in Oct’ 2018
Currency in Circulation (N’ trillion) 2.1 Increased by 0.074% in Nov’ 2018 from N1.93 trillion in Oct’ 2018
Inflation rate (%) (y-o-y) 11.28 Increased to 11.28% in November 2018 from 11.26% in October’ 2018
Monetary Policy Rate (%) 14 Raised to 14% in July ’2016 from 12%
Interest Rate (Asymmetrical Corridor) 14 (+2/-5) Lending rate changed to 16% & Deposit rate 9%
External Reserves (US$ million) 43.08 January 2, 2018 figure — an increase of 1.76% from December start
Oil Price (US$/Barrel) 52.42 January 4, 2019 figure— no change from the prior week
Oil Production mbpd (OPEC) 1.736 November 2018 figure — a decrease of 1.64% from October 2018 figure
STOCK MARKET
Indicators Friday Friday Change(%)
04/01/19 28/12/18
NSE ASI 30,638.90 31,037.72 (1.28)
Market Cap(N’tr) 11.43 11.34 0.78
Volume (bn) 0.33 0.20 70.39
Value (N’bn) 1.77 6.54 (72.94)
MONEY MARKET
NIBOR
Tenor Friday Rate Friday Rate Change
(%) (%) (Basis Point)
04/01/19 28/12/18
OBB 20.0000 17.1667 283
O/N 23.7500 18.4167 533
CALL 15.2857 15.0000 29
30 Days 15.8389 12.7500 309
90 Days 13.8439 12.6250 122
FOREIGN EXCHANGE MARKET
Market Friday Friday
1 Month
(N/$) (N/$) Rate (N/$)
04/01/18 28/12/18 04/12/18
Official (N) 306.95 307.00 306.85
Inter-Bank (N) 364.50 364.33 359.47
BDC (N) 364.50 364.50 364.50
Parallel (N) 361.00 364.00 370.00
BOND MARKET
AVERAGE YIELDS
Tenor Friday Friday
Change
(%) (%) (Basis Point)
04/01/18 28/12/18
3-Year 0.00 0.00 0
5-Year 15.40 15.32 8
7-Year 15.54 15.58 (4)
10-Year 15.39 15.19 21
20-Year 15.49 15.34 15
Disclaimer
This report is based on information obtained from various sources believed to be
reliable and no representation is made that it is accurate or complete. Reasonable care
has been taken in preparing this document. Access Bank Plc shall not take responsibility
or liability for errors or fact or for any opinion expressed herein .This document is for
information purposes and private circulation only and may not be reproduced,
distributed or published by any recipient for any purpose without prior express consent
of Access Bank Plc.
Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and
Access Bank Economic Intelligence Group computation.
COMMODITIES MARKET
Indicators 04/01/19 1-week YTD
Change Change
(%) (%)
Energy
Crude Oil $/bbl) 52.42 0.00 (18.68)
Natural Gas ($/MMBtu) 3.01 (9.88) (1.51)
Agriculture
Cocoa ($/MT) 2,378.00 (0.71)
22.83
Coffee ($/lb.) 102.55 0.98 (21.24)
Cotton ($/lb.) 71.48 (1.01) (7.77)
Sugar ($/lb.) 11.83 (3.19) (22.83)
Wheat ($/bu.) 518.00 1.07 19.49
Metals
Gold ($/t oz.) 1,291.10 1.00 (2.01)
Silver ($/t oz.) 15.71 2.35 (8.61)
Copper ($/lb.) 262.15 (2.18) (20.03)
NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS
Tenor Friday Friday Change
(%) (%) (Basis Point)
04/01/19 28/12/18
1 Mnth 14.94 14.95 (1)
3 Mnths 12.62 14.49 (187)
6 Mnths 13.52 13.46 7
9 Mnths 16.54 16.55 (1)
12 Mnths 17.29 17.31 (3)
ACCESS BANK NIGERIAN GOV’T BOND INDEX
Indicators Friday Friday Change
(%) (%) (Basis Point)
04/01/19 28/12/18
Index 2,704.19 2,716.56 (0.46)
Mkt Cap Gross (N'tr) 8.49 8.52 (0.46)
Mkt Cap Net (N'tr) 5.27 5.29 (0.52)
YTD return (%) 10.09 10.59 (0.50)
YTD return (%)(US $) -45.73 -45.25 (0.48)
TREASURY BILLS (MATURITIES)
Tenor Amount Rate (%) Date
(N' million)
91 Day 10,000.00 11.1939 2-Jan-2019
182 Day 20,000.00 14.0155 2-Jan-2019
364 Day 44,837.72 16.9512 2-Jan-2019
Market Analysis and Outlook: January 4th – January 11th, 2019
Global Economy
In the US, the Purchasing Managers Index (PMI)
came in 53.8 in December 2018, a decline from
55.3 reported the previous month. IHS Markit
which measures this index reported that it is the
weakest pace of expansion in the manufacturing
sector since September 2017. This came on the
back of weaker overall rise in new orders which led
to a drop in business confidence among
manufacturing firms in December. The level of
optimism was strong, but well below the long-run
series average. Positive sentiment was
diminished by concerns surrounding the
longevity of new business growth. In a separate
development, the Ministry of Development,
Industry and Foreign trade revealed that Brazil
trade surplus expanded to $6.64 billion in
December 2018 from $5 billion in December
2017. It is the largest trade surplus since June
2017. Exports jumped to 11.1% from a year ago
to $19.56 billion in December, while imports
advanced at a softer pace of 2.5% to $12.92
billion. Among major trading partners, exports
rose to China (46.5%), ASEAN countries (43.3%),
the EU (18.2%) and the US (6.2%), but fell to
Argentina (-55.2 %). Imports increased from the
US (27%) and Argentina (29.3%), but fell from
China (-3.6%), ASEAN countries (-17.1%) and the
EU (-16%).
Local Economy
In a recent circular published, the Central Bank of
Nigeria announced the development of the
Consumer Complaints Management System
(CCMS). The apex bank stated that this is an
automated system aimed at easing complaints
management and thus bolster public confidence
in the financial system. Banks and other financial
institutions have been instructed to assign
tracking numbers for every complaints received
from customers, issue an acknowledgement
which shall contain the assigned tracking number
to the customer and commence upload of
complaints to the CCMS on a daily basis. This will
take effect from 2nd of January 2019. Failure to
comply, it said, will attract sanctions on the erring
institution. In a separate development, the
Manufacturing Purchasing Managers' Index
stood at 61.1 index points in December 2018, the
latest PMI report of the Central Bank of Nigeria
(CBN) showed. This indicates an expansion in the
manufacturing sector for the twenty-first
consecutive month. The index grew at a slightly
slower pace when compared to the previous
month (57.9 points). Thirteen of the fourteen
sub-sectors surveyed reported growth during
the month. However, the Primary metal
subsectors declined in the month under review.
Elsewhere, recently published data by the
National Bureau of Statistics (NBS), revealed that
the Federation Accounts Allocation Committee
(FAAC) disbursed the sum of N788.14 billion
among Federal, States and Local Governments in
November 2018 from the revenue generated in
October 2018. The amount distributed was from
the statutory account, value added tax (VAT) and
exchange gain allocation, comprising of
N682.16billion, N105.17 billion and N806.39
billion, respectively. A breakdown of the sum
disbursed among the three tiers, revealed that
the Federal Government received N299.19
billion, states received N194.92 billion and the
local governments received N146.69 billion. The
oil producing states received N58.19 billion as the
13% derivation fund and N70 billion was
transferred to Excess Crude Account (ECA).
Revenue generating agencies such as Nigeria
Customs Service (NCS), Federal Inland Revenue
Service (FIRS) and Department of Petroleum
Resources (DPR) received N4.99 billion, N7.59
billion and N5.82 billion respectively as cost of
revenue collections.
Stock Market
Indicators at the stock market sustained the
bullish momentum seen at the close of last year in
the fist week of the New Year. Market
capitalization increased by N90 billion to end the
week at N11.43 trillion as investors took position
in bellwether counters. This week, we expect
market volatility to continue as investors and
fund managers rebalance their portfolios, while
watching the political space and ahead of full year
company earnings position and post-election
market dynamics.
Money Market
Money market rates ticked up across all
placement tenors following retail Secondary
Market Intervention Sales (SMIS) auction by the
Central Bank of Nigeria CBN. Short-dated
placements such as Open Buy Back (OBB) and
Over Night (O/N) rates rose to 20% and 23.75%
from 17.17% and 18.42% respectively the
previous week. The 30-day and 90-day NIBOR
edged up to 15.84% and 13.84% the prior week
from 12.75% and 12.63% respectively. This
week, we expect rates to taper on the back of
Open Market Operation (OMO) maturity of N375
billion hitting the system.
Foreign Exchange Market
Last week, the local unit strengthened slightly
against the green back in most segments
supported by intervention of the Central Bank of
Nigeria (CBN). At the Official market, the naira
appreciated by 0.02% to close at N306.95/$.
Also, the naira strengthened at the parallel
market segment by 0.82% to close N361 to a
dollar last week from N364 the week earlier. This
week, we expect the naira to continue trading
within current rates in all markets as the CBN
continues to supply FX.
Bond Market
Bond yields inched higher across most maturities
owing to sell-off on the MAR 2024 and FEB 2028
maturities. Specifically, yields on the 5-, 10- and
20-year bonds finished at 15.40%, 15.39%, and
15.49% respectively from 15.32%, 15.19% and
15.34% in that order the previous week. The
Access Bank bond index fell by 12.37points to
close at 2,704.19 points from 2,716.56 in the prior
week. This week, the bond space may see similar
sentiments should weak demand persist at the
long end of the curve.
Commodities Market
Oil prices dipped last week on concerns that an
economic slowdown in 2019 will cut into fuel
demand just as crude supplies are surging. U.S.
crude production stood at a record 11.7 million
barrels per day (bpd) in late 2018, making America
t h e w o r l d ’ s b i g g e s t o i l p r o d u c e r . T h e
Organization of Petroleum Exporting Countries
(OPEC) basket price, lost 97 cents to close at
$52.95 a barrel, a 2% loss from the previous week.
In contrast, precious metals continued its upward
trajectory as prices increased for the third
consecutive week. Worries about a global
economic slowdown and volatility in equities
boosted safe-haven buying. Gold prices notched
up 1% to $1,291.10 per ounce last week, while
silver prices closed 36 cents, or 2.3%, higher at
$15.71 per ounce. This week, oil prices might
likely go upwards boosted by optimism over trade
talks between the U.S.A and China expected to
hold during the week. We expect precious metals
prices to remain supported by safe-haven
demand as the US government shutdown
persists.
MONTHLY MACRO ECONOMIC FORECASTS
Variables Jan’19 Feb’19 Mar’19
Exchange Rate
(NAFEX) (N/$) 364 364 365
Inflation Rate (%) 11.30 11.61 11.45
Crude Oil Price
(US$/Barrel) 57 58.00 62.00
For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

24
BUSINESS DAY
C002D5556
Monday 07 January 2019

Monday 07 January 2019 C002D5556 BUSINESS DAY 25

26 BUSINESS DAY
C002D5556 Monday 07 January 2019
real sector watch
Key issues facing manufacturers in 2019
ODINAKA ANUDU
Every year has
its own package
and 2019 is no
exception. This
year, like other
years, will likely see Nigerian
manufacturers battling with
policy to infrastructure challenges.
One major issue that confronts
Nigerian manufacturers
this year is election. The
Manufacturers Association
of Nigeria (MAN) has recognised
this point by tying the
performance of the economy
in 2019 to the conduct of
the election.
“Being an election year,
performance of the economy
in 2019 would to a
large extent depend on the
transparency and credibility
of the election,” MAN said
while analysing the 2019
budget.
More than this, there will
be implications no matter
who wins the presidential
election. If the incumbent
President Muhammadu Buhari
wins a second term,
there will likely be policy
consistency. However, there
may also be lethargy that
follows politicians that win
their second term. Again,
there may not be significant
changes in the sector because
there is currently more
attention to agriculture than
the value chain where light
manufacturing belongs.
Should the opposition
win, there will likely be policy
inconsistency, as the
new government will do
away with certain policies
they are not comfortable
with. This has consistently
been a challenge over the
years and remains one big
reason why manufacturing
is always a troubled sector.
Two, constituting a government
and appointment of
ministers may take time. The
new appointees will spend
some time to get themselves
attuned to the new realities
in their ministries.
Analysts expect that challenges
will continue to hit
the automotive industry
because the current National
Automotive Policy is encouraging
the importation
of rickety cars.
The 2013 National Automotive
Policy imposes 35
percent levy and 35 percent
duty on imported vehicles,
amounting to a total of 70
percent.
Even with 70 percent fees
paid on imported vehicles,
importers of damaged or ‘accidented’
vehicles officially
enjoy a rebate of 30 percent.
What this has done is to encourage
the importation of
rickety vehicles, which make
up 70 percent of imported
cars today.
Today, the age of most
imported used cars in Nigeria
is 15 years, whereas that
of Algeria, Angola, Chad,
Mauritius and Seychelles
is three, according to a research
done by PwC.
The prohibitive levy and
duty paid on imported cars
have encouraged smuggling
of vehicles into Nigeria. Officially,
market for cars in
the country is just 6,999 as
against 555,716 in South
Africa; 181,001 in Egypt;
168,913 in Morocco, and
94,408 in Algeria.
“There is no market for
even the investors,” said
Thomas Pelletier Thomas
Pelletier, managing director,
CFAO Nigeria.
Next is cost of production,
which will continue
to rise. New state governors
could come up with
their revenue strategies
to increase the Internally
Generated Revenue (IGR),
and they may impose more
taxes, levies and fees on
businesses.
Tax experts told BusinessDay
that the number of
taxes payable by businesses
across the country is now 54
as against 37 in 2014.
They project that this may
rise further, considering that
oil price is trending around
$55 and may fall more, thereby
reducing federal allocations
to states and pushing
states into desperate revenue
drive. This is not an alarm
but a possibility.
Vivian Chigozie-Nmonwu,
tax expert and lead partner
at Vi-M Professional
Solution, said these taxes
need to be amalgamated into
one or a few, since the whole
tax cycle is a multiple chain
of taxes on the same income
stream.
Forty percent of manufacturing
expenditure goes
to alternative energy. Manufacturers
have spent N212.85
billion on alternative energy
sources between the second
half of 2016 and the first half
of 2018. This is over 100 percent
higher than what was
incurred in the previous four
halves.
There is no possibility that
power supply will be readily
available for manufacturers
no matter who wins. This
means that production costs
will continue to remain the
way they are or rise.
Firms bringing in raw materials
into Apapa ports and
those exporting commodities
abroad may continue to
battle with rising dwell time,
which results in high demurrage
charges except a new
government does something
meaningful.Only 10 percent
of cargoes are cleared within
the set timeline of 48 hours
now while the majority of
cargoes take between five
and 14 days to clear, according
to a maritime report
conducted by the Lagos
Chamber of Commerce and
Industry (LCCI).The report
notes that some cargoes
take as many as 20 days to
be cleared at the ports.
Manufacturers could also
embark on job cut in order
to protect slim margins as
they can no longer pass cost
onto consumers already distressed
following constantly
falling disposable income.
“We will see some layoffs
but it will be worse for companies
at the lower segment
that do not have a large
market share or competitive
advantage,” said Christian
Orajekwe, equity research
analyst at Cordros Capital
Ltd.
Manufacturers were unable
to sell goods worth
N149.23 billion in the first
half of 2018 after producing
goods worth N4.6 trillion.
Incidentally, they are
selling to a population
whose disposable income
and spending are shrinking.
Real household consumption
and government
consumption expenditures
declined in 2017 (at –0.99
percent) while national disposable
income fell by 1.52
percent, according to the
National Bureau of Statistics
(NBS).
According to a recent
World Bank data, 92.10 percent
of Nigerians live at below
$5.50 a day. Nigeria, with
a population of 180 million
people, has 87 million people,
nearly half its population,
in extreme poverty as
high inflation environment
continues to erode discretionary
income.
Job layoffs due to mounting
wage bills and macroeconomic
headwinds are a
double whammy for a country
where the vast majority
of people are wallowing in
abject poverty.
More so, the country’s
manufacturers will likely
continue to face high logistics
costs as roads remain
in decrepit conditions and
railways are still work in
progress.
Manufacturers told BusinessDay
that logistics costs
have risen by 50 to 100 percent
in the last two years,
owing to poor state of roads
and lack of a good transport
system.
There is yet no respite in
sight for low-cost-seeking
manufacturers who would
have seen their logistics
costs fall, had GE not exited
a railway contract linking
Apapa ports to Lagos mainland.
Manufacturers may not
finding borrowing easy as
interest rate charged them
by banks in the first half
of 2018 stood at 22.9 percent,
0.25 percentage point
higher than 22.65 percent
recorded in the same half
of 2017.
Nigeria’s monetary policy
rate (MPR), which is a
benchmark interest rate in
the country, is 14 percent.
Deposit money banks lend
as high as 30 to 35 percent,
according to BusinessDay
checks.
The monetary policy
committee (MPC) of the
South Africa’s Reserve Bank
met in March this year and
cut interest rates by 25 basis
points.
The current repo rate
(central bank lending rate to
commercial banks) in South
Africa is now 6.5 percent,
and the prime lending rate
(lending rate to customers)
is 10 percent.
The Reserve Bank’s MPC
had earlier cut the repo
rate in July 2017 by 25 basis
points from 7 percent to 6.75
percent.
Similarly, Kenya Central
Bank’s monetary policy
committee cut the determining
bank rate in late
July to 9 per cent from 9.5
per cent.
BusinessDay gathered
that Kenyans now borrow
at an interest of 13 per cent
(as against from 13.5 percent
earlier) in line with the
interest rate capping rule
that limits lending rates to
4 percentage points above
the CBR.
Zambia is one of the
emerging countries in SSA
and its central bank cut
benchmark lending rate
by 50 basis points to 9.75
percent in February this
year, citing lower consumer
inflation and weaker economic
growth, according to
Reuters.
In October 2017, the central
of Ethiopia raised its
benchmark interest rate to
7 percent from 5 percent.
But these things are not
happening in Africa’s most
populous country, with 37
million small and medium
businesses.
Babatunde Paul Ruwase,
president of the LCCI, said
the current state of the economy
shows the government
must prioritise stimulation
of investment and growth.
“The proposition is that
low interest rate will stimulate
investment, impact
positively on growth, create
more jobs, increase income,
and boost output.
This would ultimately have
a moderating effect on inflation,”
Ruwase said.

Monday 07 January 2019 BUSINESS DAY 27
C002D5556
real sector watch
No new grounds were explored
in 2019 budget—MAN
ODINAKA ANUDU
The proposed 2019
budget appears
to be an extension
of 2018, as
no new grounds
were explored, the Manufacturers
Association of Nigeria
(MAN) has said.
The body said there is a
need to properly align the
assumptions of the budget
with economic realities.
It, however, said some of
the provisions of the budget
would be very important in
supporting economic activities
in the coming year, adding
that huge emphasis on
infrastructure development,
especially power, road and
rail, is encouraging.
“As the budget stands,
MAN opines that a lot of
work still needs to be done
while hoping that it will be
passed with dispatch,” MAN
said, in its analysis of the
2019 budget.
“In broad terms, the
manufacturing sector could
be in for a tough operating
environment in 2019, seeing
that the needed supporting
policies and infrastructure
have not been given sufficient
priority. MAN is, however,
hopeful that the capital
expenditure component of
the budget will be conscientiously
implemented.”
The body said the N80.29
billion allocation to agriculture
and rural development,
Oluwatoyin Akomolafe, national president, Nigerian-American Chamber of Commerce (2nd L); Oba Otudeko, chairman, Honeywell
Group (R); W. Stuart Symington, U.S. ambassador to Nigeria (L); Olusegun Osunkeye, former chairman, Nestle Nigeria Plc at the
NACC 2018 Annual Dinner & Presidential Inauguration held in Lagos recently
which is 32.5 percent lower
than N118.98 billion allocation
of 2018, should have
been higher.
“Agriculture development
is very critical to the
growth and development
of any country. Agriculture
is critical to industry rawmaterials
supply and food
security in the country. It is,
therefore, important to pay
significant attention to the
agricultural development
through better budget allocation
while leveraging on
backward integration.”
MAN said without a
better agriculture performance,
it will be very difficult
to achieve the economic
growth and inflationary assumptions
made in the 2019
budget.
It, however, commended
the N15.66 billion allocation
for the promotion and
development of agriculture
value chain across more
than 30 different commodities
and N2.69 billion for extension
services, including
other projects identified in
the budget, as commendable.
The body said the N80.22
billion allocation for counterpart
funding for railway
projects (Lagos-Kano; Calabar-Lagos;
Ajaokuta-Itakpe-
Aladja; Port Harcourt-Maiduguri,
among others) and
the N27.12 billion allocation
for rehabilitation of rail
tracts and general maintenance/running
of the rails
system are critical.
“Global evidence has
shown that no country in
the world had ever fully
industrialised without a robust
railway system. However,
no mention is made
of the need to dredge the
various ports outside Lagos
State to decongest Tin Can
and Wharf ports and reduce
the cost of moving goods
from ports to the factories.”
MAN said while recognising
and deeply appreciating
government’s efforts at
carrying the private sector
along on the issue of African
Continental Free Trade
Area (AfCTA), it is important
to pay adequate and
unwavering attention to the
emerging issues on AfCFTA
in 2019 and ensure that Nigeria’s
economic interests,
especially the private sector,
are not only projected.
“As a necessary part of
the readiness assessment
and the resulting action
plan, government should
put in place the necessary
framework to protect and
boost the capacity of the
manufacturing sector to
thrive in the continental
free trade area.”
While also acknowledging
government’s recognition
of the need to develop
a digital economy and 4th
Industrial Revolution in order
to enhance productivity,
MAN said safety nets were
not captured in the budget
and neither was a statement
directed at it during the
president’s budget speech.
“Nigeria’s production
base faces future risks due
to its weak performance
in developing productivity
drivers such as innovation
and human capital, and this
calls for closer examination
and immediate action,”
MAN added.
“As articulated in a World
Bank report on innovation
policy, governments should
instead be like a good gardener
— one that prepares
the ground by building up
human resources, fertilises
the soil by boosting R&D,
waters the plants through
providing financial support
for innovation, and removes
weeds and pests by removing
obstacles to innovation,”
MAN stated.
Why manufacturing sector needs policy consistency
ODINAKA ANUDU
Nigeria’s manufacturing
sector
needs an urgent
attention from
whoever will become the
next president. The reasons
are obvious.
First, former President
Goodluck Jonathan introduced
Automotive Policy in
2013 with a target to produce
50,000 cars annually at N1.5
million each, while creating
700,000 jobs.
Five years down the line,
prices of new cars have risen
by over 200 percent as nairadollar
exchange rate doubles
by more than 100 percent
since 2013.
The federal government
imposed 35 percent levy and
another 35 percent duty on
imported cars, hiking cost of
imported cars.
While the National Automotive
Design and Development
Council (NADDC),
the body responsible for
implementation of the auto
policy, has issued 54 licenses
to intending car assemblers,
the policy seems to have
raised car smuggling from
Benin Republic into Nigeria.
The combined capacity
of the 54 assembly plants is
410,000 vehicles, while annual
car importation into the
country is between 250,000
and 300,000 vehicles.
“We are driving a policy
that is encouraging companies
to continue assembling
combustion engine
cars when the Original
equipment manufacturers
(OEMs), who own these combustion
engines themselves,
have already announced
they will phase them out.
Are we sure we are not setting
ourselves up to being a
dumping ground?” Bambo
Adebowale, chairman, Lagos
Chamber of Commerce and
Industry (LCCI) Automobile
and Allied Products Sectoral
Group, asked.
Adebowale explained that
even with Automotive Policy,
car import has not slowed
down, wondering how the
car assemblers will be able to
compete with up to 300,000
cheap vehicles imported into
the country.
“If we want to develop a
market for these 410,000 capacity
plants and we import
about 250,000 and 300,000
used vehicles, how are they
going to support vehicles being
assembled, since the ones
being assembled will be more
expensive?” he asked.
Also, the president is expected
to proffer solutions
to Ajaokuta Steel, which has
gulped $8 billion public funds,
according to government
records. The Senate has approved
$1 billion for the revivification
of the plant but this
remains a waste of resources,
according to analysts.
Since 1994, successive
governments have claimed
that the complex is 98 percent
completed. Muhammadu
Buhari’s government
budgeted N3.9 billion in
2016 and N4.27 billion in
2017 for the resuscitation of
the steel, despite an earlier
business case in the last administration
showing that
the complex could only work
if properly privatised.
BusinessDay checks show
that Ajaokuta Complex has
the capacity to produce one
million metric tonnes of steel,
one million metric tonnes of
coal , manganese and limestone,
among others.
Due to lack of operations
at Ajaokuta Steel, Nigeria
today imports steel valued at
$3.3 billion every year.
Frank Udemba Jacobs,
immediate past president of
the Manufacturers Association
of Nigeria (MAN), said
recently that over 50 percent
of raw materials used in the
sector would have been locally
available had Ajaokuta
been working.
Up till now, the Aluminium
Smelter Company, located in
Akwa Ibom State, is not in
operation due to the tussle
between Bancorp Financial
Investment Group Divino
Corporation (BFIG), a consortium
of U.S.-based Nigerian
investors led by Reuben Jaja,
and the United Company
RUSAL, a Russian firm.
Kayode Fayemi, former
minister of solid minerals
development, had stated
that the government was
resolving this crisis, but long
after his departure, the plant
is still under lock and key.
“We need that resolved.
Aluminium Smelter Company
needs to be re-started
so that we can get ingots for
local roofing sheets manufacturers,”
Oluyinka Kufile,
chairman, Basic Metal, Iron
and Steel Group of the Manufacturers
Association of Nigeria
(MAN), told Business-
Day earlier in an interview.

28 BUSINESS DAY C002D5556 Monday 07 January 2019
Kingsley Moghalu has most coherent economic
vision for Nigeria — PwC chief economist
DIPO OLADEHINDE
Ahead of 2019 elections,
Andrew
Nevin, Nigeria’s
chief economist for
Pricewaterhouse-
Coopers (PwC), has chosen
Young Progressive Party (YPP)
presidential candidate Kingsley
Moghalu as the candidate with
the most credible economic
plan.
Nevin said the economic
manifesto of YPP presidential
candidate Kingsley Moghalu is
superior because of its detailed
look at the range of capitalist
models, arguing precisely what
will work in Nigeria.
“Dr K (referring to Kingsley
Moghalu) has the most incisive
analysis of the unsustainable fiscal
regime and is willing to face
up to our looming debt crisis,”
Nevin said on his LinkedIn page.
The chief economist at PwC
noted that Moghalu rightly
recognises that there is a need
for rural Nigeria to prosper if
the country is going to succeed.
“Fifty-three percent of Nigerians
live in rural areas and it is not
sufficient for just Lagos do to
well or even Lagos, Kano, Port
Harcourt, and Kaduna we need
all of Nigeria to do well.”
“Dr K faces up squarely to
the federal/state restructuring
issue - he is courageous enough
to say not only do we need restructuring,
but also that at least
30 of 36 states are economically
unviable, so only a restructuring
JOSHUA BASSEY
Olusegun Oshinowo,
former director-general
of the Nigeria
Employers’ Consultative
Association (NECA), says
whoever becomes the next president
must pay a closer attention
to infrastructure in order to attract
new investments.
Oshinowo pointed out that the
Nigerian economy is bleeding
from over-regulation, as multiple
regulatory agencies created by
the government— most of which
have duplicated functions— see
themselves as existing only for
revenue drive.
He said rather than support
and aide enterprise, the agencies
have become a cog in the
Kingsley Moghalu
that reduces the economic units
(back to 6 in Dr K’s case) can
work for us,” Nevin said.
Nevin noted that the five
critical policies from the YPP
manifesto that will have a particularly
positive impact on
reversing the country’s decline
include: Partial privatisation
of the NNPC, with a listing on
the NSE, abolition of the Land
Use Act, elimination of the fuel
subsidy, engagement of the Diaspora,
and real restructuring.
Before arriving at the conclusion,
Andrew Nevin reviewed
the economic plans of four
presidential candidates comprising
of ruling All Progressives
Congress (APC) by incumbent,
President Muhammed Buhari
using Economic, Recovery and
Growth (ERGP), People’s Democratic
Party (PDP) by former
vice president Atiku Abubakar
using Let’s Get Nigeria Working
Again, Allied Congress Party
of Nigeria (ACPN) under Obi
Ezekwesili using Project Rescue
Nigeria plan and Young Progressive
Party (YPP) by its presidential
candidate Kingsley Moghalu
using Build, Innovate, and Grow
- My Vision for our Country.
“So of the manifestos of the
APC, PDP, ACPN, and YPP, only
the YPP’s Manifesto has the coherence
and boldness to reverse
our current economic path,”
Nevin said.
Nevin noted that the analysis
was purely from a purely
economic perspective (not a
political perspective) and do
not consider other critical issues
Nigeria faces (corruption and
security being the most important),
noting that the views he
expressed do not represent the
views of any organisation associated
with him.
“Let me say on a positive note
that all candidates recognise
that we cannot continue to get
poorer and poorer, as they have
put considerable effort in their
economic policies. All at least
state that we need to have a vibrant
private sector if we are to
succeed, ” Nevin said.
Nevin urged all Nigerians to
exercise their hard-won democratic
rights, noting that what
the nation has accomplished
during the short time since the
military rule has been astonishing
and wonderful.
“Let me re-iterate again that
these are my personal views
and do not represent any of the
organisation with which I am
affiliated,” Nevin said.
Next president must focus on infrastructure to attract investments— Oshinowo
wheel of economic growth, as
businesses in many respects are
hounded, thereby discouraging
investments.
The consequence of this, according
to Oshinowo, is that
business expansion is hampered
by negative impact on employment
generation.
The DG spoke during a valedictory
press conference, saying
in other climes regulatory
agencies play critical roles in the
encouragement of growth and
sustenance of enterprise. Oshinowo
retired from NECA last
month after 19 years of service in
the association.
“Unlike in other environment
where regulation is used to encourage
and aide the growth of
enterprise, regulatory agencies
in Nigeria have actually become
killers of businesses” said Oshinowo.
The former DG also made
a case for the restructuring of
Nigeria to allow states take full
responsibility for their resources
and manage same to create
wealth for their citizens.
According to him, the continued
dependence of the federating
states on the monthly federal
allocations makes nonsense of
the idea of a federal structure
that Nigeria had set out to operate.
“Nigeria must restructure to
allow states take responsibility
for certain aspects of this
economy. Even if you have zerolevel
corruption, best economic
policies, if you don’t restructure
to allow state create wealth for
the people, those policies won’t
work.”
Oshinowo said that a situation
where only Lagos and Abuja are
the centres of attraction is not
good for the country.
“Today, it is only Lagos and
Abuja that things seem to be happening.
There are no economic
opportunities for the citizens in
other states. So, what you find is
a situation where Nigerians are
moving out of those states to Lagos
to find means of livelihood.
This is not good for the economy.
The federating states must be
able to create opportunities to
engage their citizens and fight
poverty.”
Citing the gridlock around
the ports and Apapa, Oshinowo
said there was the strong need
for government to take the issue
of infrastructure more seriously.
“Any president in the 2019
must focus on infrastructure
development to attract new investments
and strengthen the
economy,” said Oshinowo.
Timothy Olawale, the DG
designate who takes over from
January 2019, said he would
build on the successes recorded
by his predecessor.
Olawale said the association
under his leadership would continue
to pursue his core mandate
of protecting the interests and
rights of member companies as
well as sustain its human capacity
building programme, weaved
into a five-year strategic plan
which starts from 2019 to 2023.

Monday 07 January 2019
g
www.
g
@
g
BUSINESS DAY
29
Why the electorate need to turn
out and vote with conscience
AMAKA ANAGOR-EWUZIE
Repeated tales of pain
about the state of the
nation have become
the order of day with
Nigerians. This indicates
that many Nigerians are hard
hit by the poor state of the economy
and lack of respite in sight.
For them, the government of
the day has done little or nothing
to improve the standard of living
of the poor masses. The economic
hardship is characterised by
prevailing national poverty and
a high rate of unemployment. As
companies’ profit margins continue
to shrink, majority resort
to staff lay-offs to cut cost and
manage margins.
Basic necessities are beyond
the reach of many Nigerians
as the cost of foreign exchange,
especially the rate of the naira
to the dollar skyrocketed from
N200 per dollar in 2015 to over
N360 per dollar in 2018. This not
only fueled inflation, but also
reduced the purchasing power
of Nigerians, whose monthly
expenditure increased without
corresponding increase in income
earned.
In all of this, one thing is certain,
and this is the fact that the
electorate are the real kingmakers
because they are the people
that choose who will lead them
at different levels of government.
Therefore, if an elected government
fails to enthrone good governance
while in power, it means
that the electorate also failed to
choose the right leader.
Abraham Lincoln, former
American President, who
preached the importance of
government of, for, and by the
people, said that voters played
the most important role in making
sure the government reflects
their desires and function according
to the guidelines of the
constitution.
This is why the right to vote
should not by any means be
taken for granted. The outcome
of elections plays a very important
role in the voters’ personal
freedoms, taxes, and other aspects
of daily life that people
take for granted. Because of the
far reaching impact election can
have, it is the civic responsibility
of citizens to not only cast their
votes if they want a say in how
their futures play out, but to also
vote in the right person.
According to the Electoral
Act 2010, the most important responsibility
as citizens involves
registering to vote and voting
during elections. “A person shall
be qualified to be registered as
a voter if such a person – (a) is
a citizen of Nigeria; (b) has attained
the age of 18 years; (c)
is ordinarily resident, works
in, originates from the Local
Government Area Council, or
Ward, covered by the registration
centre; (d) presents himself
to the Registration Officer of the
Commission for registration as
a voter; and (e) is not subject to
any legal incapacity to vote under
any law, rule or regulation in
force in Nigeria.”
Alarmingly, many Nigerians
today have failed to acknowledge
their role in shaping the
government. Many dismiss the
responsibility of voting during
elections by not caring about the
issues on the ballot.
However, by failing to use
their privilege to vote, people
essentially allow other voters to
make decisions for them, to let
their voices be heard over voters
who make no effort to go to the
polls. This is why the electorate
need to vote.
Meanwhile, some Nigerians
go to the polling centre without
a clear decision of whom to vote
for. This group of people ends
up mortgaging their future by
collecting inducement such as
money and gift items from politicians
in order to vote.
As Nigeria moves closer to the
next general elections slated for
the first quarter of 2019, there is
need for every Nigerian up to the
eligible voting age, to note that
exercising their right to vote is
essential to being a good citizen.
The past four years in Nigeria
have been lived in lamentation
but to put an end to this and avoid
reoccurrence, Nigerians must join
forces to enthrone ‘real change’.
They must show interest in the
electoral process starting from
party primaries, through campaigns
and voting at the elections.
In doing this, there is need to
get it right by coming out enmass
to vote for the right candidates
with the pedigree required to turn
Nigerian economy in the right
direction. We need to enthrone
the right economic managers in
accordance to their competences
and capabilities, if Nigeria will
grow in the next four years.
NEWS
Police Recruitment: 232,000 excess applicants
underscore Nigeria’s unemployment problem
MICHEAL ANI
The recent announcement
by the Nigeria Police on the
excessive turn out of people
applying for recruitment
into the law enforcement agency, affirms
the critical state of the nation’s
unemployment crisis, analysts say.
As at 1:00pm, 2nd Jan 2018, the
Police Service Commission (PSC)
said it had received applications
from 242,455 persons in its on-going
recruitment exercise, even though it
plans to enlist only 10,000 of these
numbers into the Nigeria Police
Force.
This figure shows an excess of
more than 232,000 applicants vowing
for the positions, a number
analysts say is a tip of an iceberg
of how Nigerians jostle for jobs as
falling infrastructural development
and slowdown in economic activities
have forced companies turn off the
tap of recruitment.
This number of applications that
the police received as at that date
implies that for each successful applicant,
24 others will be rejected.
That is, assuming that the applications
stop at this number, which is
unlikely.
Data from the National Bureau of
Statistics (NBS) has shown that the
rate of unemployment has been on
a consistent increase in the past three
years, settling as high as 23.1 percent
in the third quarter of 2018 from 18.8
percent recorded in the same quarter
of the previous year.
In nominal terms, a total of 20.9
million Nigerians are unemployed,
signalling that about 3.1 million
people have entered into the unemployment
trap in less than a year. The
NBS had earlier in Q4 2017 reported
the number to be 17.8 million.
“I am not surprised at the statistics
released by the Nigerian police
with regards to the number of
participants that signified interest
as against those that are required
as it is an indication of the massive
unemployment in the society,” says
Timothy Olawale, Director-General,
Nigerian Employers Consultative
association.
“There is no way that the government
despite all its efforts in creating
jobs, is going to succeed if the focus
is on white-collar job creation alone,
which is what they are throwing up,”
Olawale said.
An average university student in
Nigeria spends about 4 years in the
university, if and only if the Academic
Staff Union of Universities and /
or the Non Academic staff union
does not embark upon any strike
whatsoever.
For about two months now,
teachers in public universities in
Nigeria have been on an indefinite
strike designed to compel the
federal government to meet their
complaints on issues including poor
funding, poor remuneration and
low infrastructural developments
in school.
“It is not as if there are no jobs in
the country, but the skills required to
match these jobs are not there. That
is why we say the government should
identify what those skills are and
make concerted efforts to develop
capacity in those skills; that way our
youth will fit into those jobs that are
available,” Olawale said.
“Furthermore, there is the need
to imbibe in our youths the entrepreneurial
spirit so that they can be
self-employed,” he added.
President Muhammadu Buhari,
in November last year, announced
the approval of a new salary package
for police personnel “with a view
to restoring its lost primacy in the
internal security framework of the
country”.
A statement by the PSC’s acting
Head, Press and Public Relations,
Aaron Kaase, shows that of the total
applicants, Niger State led with 15,
633 applications, followed by Kano
State with 15, 079, Katsina State, 14,
582, Bauchi State, 12, 652, Kaduna
State, 13, 882 and Adamawa State
with 11, 449 applicants.
Bayelsa State had the lowest applications
of 1, 258, followed by Lagos
State, 1, 358, Ebonyi State, 1, 659 and
Anambra State, 1,618.
CBN makes first New Year entry
into forex market with $210m
... as external reserves decline to $43.05bn
HOPE MOSES-ASHIKE
The Central Bank of Nigeria
(CBN) on Friday, January 4,
2019, made its first intervention
in the inter-bank sector
of the foreign exchange market for
2019 with a total sum of $210 million
injected into the wholesale segment
and other sectors of the market.
A breakdown of the figures obtained
from the CBN on Friday
showed that customers in the Wholesale
sector of the market received the
sum of $100 million with the Small
and Medium Enterprises (SMEs) and
invisibles sectors each getting $55 million
to meet the needs of customers.
The dollar supply has helped
to boost liquidity in the market
strengthened the value of the local
currency. Consequently, naira
gained N1.00k on Friday to close at
N361 per dollar at the parallel market
from N362 traded the previous day.
However, naira depreciated marginally
by N0.05k to close at N365.35k
on Friday from N365.30k per dollar
traded on Thursday, data from
FMDQ indicated.
External reserves last week declined
to $43.0 billion as at Friday, January 4,
2019 from $43.28 billion as at December
24, 2018, data from CBN revealed.
Isaac Okorafor, CBN’s director in
charge of corporate communications,
said the CBN continued from where it
stopped in 2018 in order to maintain the
stability being enjoyed in the market.
While noting that the Bank had
made commendable effort in keeping
the exchange rates at the current
levels, Okorafor re-echoed the
Bank’s Governor, Godwin Emefiele
saying that the current capital flow
reversals from the emerging markets
were expected to bring out pressures
on the market rates.
He, however, assured that, in spite
of the anticipated pressures, coupled
with the forthcoming elections, the
Bank was committed to maintaining
the current exchange rate policy,
given the level of reserves.
Quoting the Governor, Okorafor
said that the CBN was determined to
sustain a stable exchange rate as it continues
to put in place relevant measures
to shore up the country’s reserves.
Meanwhile, one United States
Dollar (US$1) exchanged for N357
in the Bureau De Change (BDC)
segment of the market on Friday,
January 4, 2019.
“We expect activity level to improve
as Christmas festivities wrap
up; and further anticipate that the
central bank will continue in its
pursuit to stabilize the value of the
Naira should any market volatility
occur, possibly owing to pre-election
uncertainties”, analysts at Afrinvest
Securities limited said.

www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng Monday 07 January 2019
30 BUSINESS DAY
This is M NEY
• Savings
• Travel
• Debt & Borrowing
• Utilities
A daily guide to your Personal Finance
• Managing your Tax
The Solid
Wealth
Messenger
Grace Agada
To the average
Nigerian, the
problems of
wealthy children
are unimaginable.
A wealthy child’s life is
supposed to be perfect. But
within the quiet, peaceful,
luxurious and rich neighborhood
of the wealthy
are children who suffer the
most from the two most
common stigma of wealth;
Anxiety and depression.
Although these children
are surrounded with wealth
and the good things of life,
they often fight many internal
battles, one of which is
the unreasonable expectation
they are made to live
up to. Not only do regular
people expect so much
from them, their own parents
and extended family
members also do so. They
are, thus, under immense
pressure to make decisions
that make the family name
‘look good’. A closer look
at these wealthy children
will reveal the pain, confusion,
internal struggles and
doubt they deal with on a
day-to-day basis. They usually
cannot disclose these
internal battles to their parents
or friends because no
one expects them to have
Objectives
• Solid wealth
• Groomed Heirs
• Undying legacy and
Name
• Rich relationships
• Personal
development
• Healthcare Planning
• Giving.
The internal battles wealthy children fight
that their parents don’t know about
any cause to worry – especially
after being given so
much.
However, the worries
of these wealthy children
have nothing to do with
having a roof over their
heads or worrying about
the source of their next
meals. Their worries are
emotional and because
they belong to a world
that is supposed to be perfect,
they deny themselves
peace and happiness in order
to please everyone.
Three things have been
found to be major contributors
to the stress and
internal struggles of the
wealthy child:
The first is their expectation
of themselves.
Being born into wealth
places a natural demand
on you to do more than
others. This demand requires
that you use the
resources at your disposal
to better yourself and
do greater things in the
world. Unfortunately, the
capacity to be better, successful
and attain wealth
does not come naturally
to an individual who is
born into wealth. These
children go to the most
prestigious schools where
they are taught everything
but wealth, money
and how to succeed.
Their parents who should
also help sometimes have
no idea how to go about it
or are preoccupied with
making more money. The
discussion about money
and wealth in most
wealthy homes has become
a taboo almost as
much as the topic of sex.
As such, the weight of
wanting to succeed without
the corresponding
help and education weigh
these children down and
reduces their overall selfesteem.
The children of the
wealthy suffer in their
own ways. They might not
be in need of money, but
they are burdened from
the weight of their internal
mind battles.
The second cause of
internal battle for wealthy
children is their parent’s
expectations. The pressure
to make their parents
proud of them, the
constant war and emotional
divide over family
business succession, the
conditional inheritance
hinging on special kind
of relationships, parental
approval over certain key
life decisions and having
to constantly live in the
shadow of their successful
parents are all borne out of
this same heavy parental
expectation. Worse of all
is that these expectations
show up late in their lives
when the cost of changing
their life’s direction becomes
too disruptive and
painful. Below are some of
the raw feedbacks we got
from children born into
wealthy homes;
“When you are born into
a wealthy family, your parents
will forever lord over
you. However, if you could
prove yourself, by succeeding
outside the family
business, you will be able
to call the shots. My dad
uses his money to manipulate
us. He has the money;
he makes the rules and he
‘
When you are born into a
wealthy family, your parents
will forever lord over you.
However, if you could prove
yourself, by succeeding outside
the family business, you will be
able to call the shots
made that very clear.”
“I think my parents
genuinely view me as an
investment and it’s pretty
flawed. I have to be who
my father wants me to be,
‘
because he’s put so much
money towards crafting me
into that person. I might as
well be broke and free“
“I desperately want the
label of my family name to
come off. I do not want my
family labels to define who
I am. I want to live life on
my own terms. I think that
one of the ways to find happiness
in life is to figure out
your own goals, and forget
about the goals your parents
set for you“
The third source of
stress for wealthy children
comes from the society at
large. It is almost like being
wealthy attracts a lot of
hate from the society. People
are constantly trying to
get at you and take advantage
of you.
“You are hated by the
media. Somehow, you
don’t deserve your money;
you didn’t work hard for it,
you need to give more, or
you are to be blamed for
income inequality. If you
post anything you have on
social media, you are bragging.
They have never been
such an organized attempt
to vilify and defame the
wealthy kid like it is today.
The key question for
parents is, ‘what are your
children not telling you
that they are telling a total
stranger?’ This is where
the need for a wealth advisor
comes in. Perhaps the
most important role of a
wealth advisor is to serve
as a catalyst for starting
these very vital conversations
about you, money,
your wealth and how your
children feel about it. The
focus is to address the fundamental
issues and not
the symptoms. Your children
need help and you
should get them the help
that they need because
the preservation of your
wealth depends on it.
We have compiled 38 of
the most insightful feedback
we have gotten from
children born into wealthy
homes concerning their
fears, concerns and the internal
battles.
If you are interested in
getting a free copy, kindly
send an SMS “Send me the
Wealthy kid Infographic”
to 08101860042.
Keep preparing your
children for success.
Grace Agada is a Senior
Wealth Advisor and
Author with extensive
experience in wealth
creation, wealth
preservation and wealth
transfer.

Monday 07 January 2018 www.businessday.ng https://www.facebook.com/businessdayng @Businessdayng
BUSINESS DAY 31
Stocks Currencies Commodities Rates + Bonds Economics Funds Week Ahead Watchlist P.E
economy
Consumer firms to maintain dividend
payment momentum despite tough 2018
… Paid N78.33 billion in 2017
….Dangote Sugar, Nascon records higher yields compared to peers
BALA AUGIE
Investors in consumer
goods firms shouldn’t
fret as the companies are
set to maintain dividend
payment momentum
even as tough and unpredictable
environment undermined
profit while share prices were
beaten down last year.
Eight largest consumer
good firms quoted on the floor
of the bourse paid N78.33 billion
for the year financial year
ended December 2017.
Analysts are of the view
that payout ratio will not reduce
even though some have
embarked on aggressive expansion
plans with a view to
increasing the share of the
market.
“It was a tough year for
firms but not significant as to
force them to reduce payout.
I don’t think the numbers are
that bad,” said Christian Orajekwe,
equity research analyst
at Cordros Capital.
“In 2016 we saw a reduction
in payout ratio of Unilever
but 2018 is not as tough for
them like the recession period.
This is because a lot them have
reduced dollar denominated
debts and foreign exchange
losses,” said Orajekwe.
Nigerian Breweries, with
a track record of 100 percent
payout, paid total dividend of
Analysts forecast top 10 NSE companies to earn N1 trn in profits this year
IFEANYI JOHN
The top 10 largest companies
by market capitalization
listed on the
Nigerian Stock Exchange
are set to earn a combined
N1.021 trillion in profits by
year end 2018 according to
data compiled by Business-
Day.
“The outlook for business
is more positive this year
than in previous years. This
year, the economy is going to
grow at its fastest rate since
2015 so it’s not such a big sur-
N29.89 billion for 2017 financial
year. Nestle Nigeria Plc
paid a final dividend of N21.79
billion for 2017 financial year.
Dangote Sugar Refinery
paid total dividend of N15
billion for 2017 financial year.
Dwindling purchasing
power among consumers,
insecurity in the northern
part of the country, decrepit
infrastructure, high incidence
of smuggling, counterfeiting locally
manufactured products,
and the menacing grid lock at
the Apapa Ports have made it
difficult for manufacturers to
bolster margins.
Nigeria’s economy remains
fragile as GDP grew by 1.80
percent in the third quarter
of 2018, a downturn from 1.95
percent and 2.10 percent in the
first quarter and fourth quarter
of 2018 and 2017.
While inflation for month
of November 2018 is in double
digits, below the central bank’s
target range of 6 percent and 9
percent.
“Some of the firms that are
still investing heavily on new
projects will maintain a 50 percent
and 60 percent pay-out.
For instance Dangote Sugar
is investing in the Sugar for
Nigeria Master Plan,” said Ifedayo
Olowoporoku, consumer
goods analysts with Vetiva
Capital Management Ltd.
Nacon Allied’s and Danogte
Sugar’s dividend yields of 8.33
percent and 12 percent are the
highest among peers. This is
because their stocks are trading
below intrinsic value, which
makes it very attractive to investors.
Nascon and Dangote
Sugar are trading at a price to
earnings ratio of 9.39 times and
5.83 times, which is lower than
the consumer goods index P/E
ratio of 19.58 times.
Analysts at Vetiva Capital
Management Ltd see Investors
remaining wary of downside
factors affecting Nigerian
Breweries and Guinness in
2019; albeit they do not expect
the stocks, particularly Nigeria
Breweries, to fall below multi-
prise that we are seeing these
companies hit the N1 trillion
mark in profits. The economic
recovery has remained fragile
but with oil prices recovering
from its lows, exchange rate
becoming stable and treasury
yields rising, it is only
expected that companies
will have a strong financial
performance this year,” said
Tochukwu Okafor, lecturer in
Banking and Finance department
at Covenant University.
BusinessDay analysis of
the consensus projected profits
to be earned after taxes by
year lows seen in 2018.
“Taking from our 2.5% point
estimate return for the NSE in
2019, we predict a -5% to 0%
return for the CNS sector. The
Consumer Goods sector currently
trades at a P/E of 19.58
(ASI: 9.27x) with dividend
yield of 3.5% (ASI: 5.4%),” said
at Vetiva
the ten companies showed
Dangote Cement (N158b as at
Q3) leading the pack in terms
of profits.
Africa’s largest cement
maker was closely followed
by the usual suspects, Zenith
Bank (N144b as at Q3)
and GTBank (N142b as at
Q3). These three firms accounted
for 56 percent of the
total profits earned by the
ten largest companies on the
local bourse as at Q3 with a
combined profit of N444.63
Continues on page 32
SHORT TAKES
N22.429 Trillion
Nigeria’s total public
debt stock comprising
external and domestic
debts of the Federal
Government, 36 States
and the Federal Capital
Territory (FCT) stood
at N22.429 trillion (or
US$ 73.213 billion) in
the third quarter of
2018, up from N22.38
trillion (or US$ 73.208
billion) recorded in the
previous quarter.
BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: samuel iduh )
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
Email the BMI team patrick.atuanya@businessdayonline.com
0.52%
Nigeria’s all-product
terms of trade
for the third quarter
of 2018 grew
slightly by 0.52% as
the index averaged
99.92 in the quarter.
All-product
terms of trade
settled at 98.85,
99.64 and 99.37 in
July, August and
September of the
quarter respectively.
2.54%
Value-added tax
(VAT) generated in
the third quarter of
2018 expanded by
2.54% to N273.50
billion compared
to N266.73 billion
recorded in previous
quarter. Other manufacturing
generated
the highest amount
for the quarter with
N31.483 billion,
while the mining
sector generated the
lowest amount of
VAT at N52.701 million.

www.businessday.ng Monday 07 January 2018
32 BUSINESS DAY
https://www.facebook.com/businessdayng @Businessdayng
IFEANYI JOHN
On a recent Monday, Nigeria
woke up to the news that
Access Bank had agreed to
acquire all issued share capital of
Diamond Bank in a deal that will
see Diamond bank shareholders a
consideration of N3.13 per share and
puts the total value on the acquisition
at around N72 billion.
Significant as it seems, the entire
value of the transaction is less than the
annualized 2018 profit of Access Bank
which analysts expect to be around
N83.9 billion. This puts the Diamond
bank acquisition cost at only about
85.8 percent of the annualized 2018
profit for the year.
At completion of the merger between
the two banks, Access bank will
snatch the crown from Zenith bank
as the largest bank in Nigeria by asset
in 2019 but will likely (for now) fail to
steal the pride from Zenith bank as the
most profitable bank in Nigeria based
on analyst’s expectation.
The average return on asset for
Access Bank between 2013 and 2017
was 2.03 percent. Assuming the acquisition
of Diamond bank and the
expected write-offs in bad debt from
the legacy bank does not hurt their
ROA performance in 2019, the expected
profit for the year in 2019 may
likely be around N121.8 billion on an
asset base of N6 trillion which is a 97
percent increase from the reported
2017 profit after tax but will be around
N56 billion lower than the expected
The percentage share of capital
expenditure to Nigeria’s total
budget has been increasing
at a faster pace than recurrent expenditure
since the inception of the
present administration, but in the
proposed 2019 budget, the trend
was reversed.
President Muhammadu Buhari
presented a N8.83 trillion budget
estimates for the 2019 fiscal year
before a joint session of the National
Assembly on December 19,
with N4.04 trillion proposed for recurrent
expenditure and N2.03 trillion
earmarked for capital projects.
Capital expenditure (CAPEX)
as a percentage of total budgets
increased to 26.29 percent in 2016
from 15.61 percent in 2015; It
moved to 29.17 percent in 2017 and
31.47 percent in 2018, but fell to 23
percent in 2019.
Recurrent expenditure as a
percent to total budget fell to 43.73
percent in 2016 from 57.46 percent
in 2015 while dipped to 40.19 and
and 38.49 percent in 2018, but
increased to 45.70 percent in 2019.
Should federal government capitulate
to Labour demand kick in
soon, personnel cost will be spike,
further raising concerns whether
policy holders can sustain the new
wage bill amid falling oil prices.
The planned spending for the
2019 budget is N294 billion lower
than N9.12 trillion approved by the
lawmakers in the 2018 budget. This
may not be unconnected to falling
government revenue largely driven
by low production and prices of
Markets Intelligence
Bank size wars: Zenith, GTB to remain more profitable than Access in 2019
… Access set to amass almost twice total assets of GTB after Diamond bank merger
… Analysts predict Access will be third most profitable bank next year behind Zenith, GTBank
This chart show capex to budget ratio is rising
OLUWASEGUN OLAKOYENIKAN
2018 profit after tax of Zenith Bank
and GTBank who are both expected
to deliver PAT around N192.2 billion
and N189.6 billion respectively.
The ability for these two banks to
remain significantly more profitable
than Access bank despite a smaller
asset base is down to “cost efficiency”.
The cost to income ratio for GTBank
and Zenith bank last year was 38.1
percent and 52.7 percent respectively
versus Access bank who reported cost
to income ratio of 62.1 percent.
“It is very unlikely that the synergy
from the merger will start to show in
2019 immediately after the merger, to
think that you can benefit from cost
management so early on is far too
optimistic,” said Maju Eldad, Lecturer
in Economics department at Federal
University of Kashere, Gombe.
“I believe Access bank took the
right decision to acquire Diamond
crude oil which accounts for more
than 90 percent of Nigerian government
earnings.
BusinessDay analysis reveals
that despite a 3.18 percent reduction
in the total expenditure
for the next fiscal year, recurrent
expenditure was raised by 15 percent
from N3.51 trillion in 2018
even as capital expenditure was
cut down by 29.27 percent from
N2.87 trillion.
Prior to this present dispensation
of government, the administration
of former President Goodluck
Jonathan budgeted a paltry
sum of N701 billion for capital
expenditure in the 2015 budget,
this accounted for 15.61 percent
of the entire N4.49 trillion budget
estimates for the year, according to
data from the Budget Office of the
Federation.
Recurrent expenditure however
bank. It was significantly undervalued
and presented a big growth opportunity
for Access bank who will
now become Nigeria’s largest bank.
I think this merger will help produce
significant gains for their shareholders
in terms of profitability and cost
efficiency over time. It won’t be unlikely
that other Tier 1 banks will be
looking to acquire either a struggling
Tier 3 bank or a significantly undervalued
Tier 2 bank now that Access
has shown the easy road to growth,”
Eldad added.
By this acquisition Access bank
will become the largest bank in Nigeria
with an asset base of N6 trillion.
Behind them will be Zenith bank
(N5.6 trillion), First bank (N5.3 trillion),
UBA (N4.5 trillion) and GTBank
(N3.4 trillion). Each of these banks is
expected to earn above N56 billion in
2018 full year profit after tax.
got N2.58 trillion, this represented
57.46 percent of the total budget.
This development was reversed
in 2016 upon the emergence of
President Buhari-led government
that pledged to focus on security,
while it would implement policies
to attract investment and spur
competition in critical sectors of
the economy for growth and job
creation.
In achieving this, the 2016 Budget
tagged “Budget of Change”
allocated N1.59 trillion for capital
expenditure, about 126.82 percent
increase when compared with the
previous year, while recurrent expenditure
was elevated slightly by
2.71 percent to N2.65 trillion.
This brings the percentage share
of capital expenditure and recurrent
expenditure to the aggregate
budget in 2016 to 26.24 percent and
43.73 percent respectively.
Powell stokes market rally with
promise of ‘patience’ on rate rises
Fed chair signals cautious approach to tightening despite very strong US jobs
Federal Reserve chair Jay Powell
offered an upbeat assessment of
US economic prospects following
a strong jobs report on Friday, easing
fears of a 2019 downturn that had
spooked investors in recent weeks.
Mr Powell said markets had moved
“well ahead of the data” in pricing in
risks to the US economy, following a
sharp sell-off on Thursday and deep
losses for equity investors during
December.
“US data seem to be on track to
sustain good momentum into the
new year,” the Fed chairman told a
conference in Atlanta. Along with his
comforting words about the health of
the world’s largest economy, Mr Powell
said the Fed would take a “patient”
approach to monetary policy tightening,
contributing to a rally which sent
the S&P 500 up by more than 3 per
cent in New York.
Mr Powell’s reassurance countered
fears about the impact of US-China
trade tensions and waning corporate
profits on the American outlook, highlighted
by a shock profit warning by
Apple on Wednesday. Markets have
also been hit by signs that the global
economy is set for a slowdown.
The comments also offered some
breathing room to the Trump administration
as it grapples with new
Democratic opposition in the House
of Representatives, a government
shutdown and internal turmoil that
included the departure of John Kelly
as chief of staff and Jim Mattis as defence
secretary.
On Thursday, Kevin Hassett, chairman
of the White House council of
economic advisers, stoked fears of a
slowdown when he warned that “a
heck of a lot” of US companies with
sales in China were on track to see
lower profits. But speaking on Bloomberg
TV, Larry Kudlow, Mr Trump’s
economic aide, dismissed that view.
“It’s a little easy and inaccurate to
say all of these American companies
are going to crash,” Mr Kudlow said,
adding that there was “a much better,
more optimistic picture”, with “no
recession in sight”.
As markets have soured in recent
weeks, Mr Trump has lashed out at Mr
Powell over the Fed’s plans to increase
interest rates. On Friday, Mr Powell
brusquely asserted his independence.
Asked if he would quit if asked to by
Mr Trump, he replied: “No.”
Crucially for markets, Mr Powell
also backtracked on previous comments
about the Fed’s operation to
reduce its balance sheet as part of the
unwinding of post-crisis quantitative
easing.
Mr Powell last month said the
shrinking of the Fed’s balance sheet
was on autopilot, remarks that helped
trigger a sharp downturn in US markets
afraid the programme would
depress asset prices. But on Friday he
said that while he did not think that
the turbulence had been caused by
concerns over the shrinkage, the Fed
“wouldn’t hesitate” to change balance
sheet policy if needed.
Earlier on Friday, data showed the
US economy last month had its strongest
job growth since February while
wages accelerated at a quicker pace.
Non-farm payrolls climbed 312,000
in December, the US labour department
said, beating by a wide margin economists’
expectations for a gain of 177,000
jobs, as employment rose sharply in
healthcare, food and drinking establishments
and manufacturing.
Meanwhile, wage growth heated
up last month with average hourly
earnings up 3.2 per cent year-on-year
— the quickest pace since 2009 — and
up 0.4 per cent month-on-month,
ahead of economists’ expectations.
In addition to the jump in the
S&P index, the tech-heavy Nasdaq
Composite index jumped 3.9 per cent,
while the Dow Jones Industrial Average
climbed 2.8 per cent. Treasuries
sold off as investor nervousness eased,
pushing the 10-year US government
bond yield up by 9 basis points to
2.65 per cent.
“The American economy is booming
based on today’s reading of the
employment situation, which should
go a long way to reassuring nervous
nellies in financial markets that the
2019 economic outlook skies will not
be turning dark and grey,” said Chris
Rupkey, chief financial economist at
MUFG.
Some investors and analysts had
even thought the Fed might be forced
to cut rates this year, but those expectations
faded on Friday.
Analysts forecast top 10 NSE...
Continued from page 31
billion.
The trend was projected to continue
by the end of the year with an
additional N146.7 billion expected
to be added to the bottom-line of
these companies in the last quarter
of the year.
Banks made up six of the 10
largest companies on the Exchange
showing how strong and profitable
the banking sector is in Nigeria.
The financial sector will contribute
70.3 percent of the N1 trillion at the
end of the year with six companies
projected to lead the industry with
combined earnings of over N734
billion.
Ecobank, UBA, Stanbic IBTC
Holdings and First Bank are the
banks that complete the list with
projected earnings of N101 billion,
N81 billion, N79 billion and N59
billion respectively.
“Banks have enjoyed the high
yield environment especially this
year. With deposit interest rates
remaining flat and risk-free rate rising,
banks are making large spreads
without needing to take the risk of
lending to the real sector in a slow
growth economy. It is very possible
that we will see a similar strong performance
for banks next year since
we expect very little to change in
the economic performance,” Okafor
added.
In 2017, the combined earnings
of these companies was N70 billion
short of hitting the trillion naira
mark.
Analysts are of the view that the
top ten firms are to grow by 9 percent
to make up for the needed funds to
hit the mark. Ecobank, First Bank
and Stanbic IBTC Holdings are the
companies poised to champion the
9 percent increase with the three
firms projected to grow earnings by
an average of 50 percent.
With the N1 trillion projected
earnings and current price of these
companies, we arrived at a forward
price to earnings multiple of 8.13x as
opposed to the market P/E of 10.67
at the end of 2018.

Monday 07 January 2019
Start-Up Digest
In
association with
BUSINESS DAY
33
Top 5 business ideas featured in 2018
ODINAKA ANUDU and JOSEPHINE OKOJIE
Start-Up-Digest has ranked
entrepreneurs’ interview
in 2018 on our weekly
section and here are some
ideas that we think were
outstanding in 2018.
Bathkandy
Bathkandy was founded by
Blondie Okpuzor. Her business idea
was unique because she creates
soaps, lotions and other beauty, skin
care and household products using
unconventional raw materials such
as jollof rice, goat milk, garri, coffee,
and chocolate.
Blondie set up the company in
December 2014.
Her candles are unconventional
and look like desserts. The soaps,
candles, lotions are regular products
but they look differently, like ice
cream soups.
“We have over 50 different types
of soap. We infuse different things.
We never had the same soap design
twice. Every time you come, things
look different. It is the same thing,
but it looks different,” she explained
to Start-Up Digest in May last year.
“We have goat milk lotions,
made from goat milk. We have
scrubs made from garri, coffee, and
chocolate,” she discloses.
“They are all manufactured here
in Nigeria. I make them by hand and
we infuse delicious things like oils,
tea, chocolates.
“Recently we just made soap
from jollof rice. We are using local
ingredients to make them. We have
found that there are a lot of natural
things that are there for you, but if
you don’t know or use them, then
you don’t get the benefits. So, we
merge science with arts,” she asserted.
Her products make the skin look
better and her packaging products
come from locally recycled materials.
As a mark of expansion, she set
up a second store in Abuja in 2016.
She is looking more internationally—to
Ghana, Kenya and South
Africa, because these are the biggest
beauty markets in Africa.
Blondie mentors younger entrepreneurs
through her Bathkandy
University.
“We teach people how to make
skin care products and start their
own business. What we have found
is that even though it is easy to start
a skin care business, there are so
many details that people do not
have. Social media is a great thing.
I have people who want me to mentor
them and I do that. Everything I
learnt was literally trial and error,
so I won’t like others to go through
that.”
Madame Coquette/Fula Farms
The 35-year-old Bello produces
what she calls Madame Coquette
(MC), which is a line of handbags
and small leather goods. She set up
this business 10 years ago.
She uses local raw materials like
snakes and crocodiles in making
these bags. She buys snakes and
crocodiles and uses them as raw
materials. The entrepreneur also
uses locally available leather in
Hoawa Bello Abioye Tunde-Anjous Blondie Okpuzor
making bags, importing some from
other countries.
“We use indigenous snake and
crocodile skins from Kano and
Kaduna. We hand- dye and colour
the skins we use in making these
products,” she told Start-up Digest
in July 2018.
Her products have been sold in
North America and Europe.
“I didn’t start with a lot of capital.
I got a N30, 000 loan from my sister
to start my business,” she said.
She also founded Fula Farms
in early 2015. This farm, located in
Lekki part of Lagos, boasts of over 50
cows. Hoawa produces milk, cheese
and the local ‘fura’. A number of
women make both ends meet from
Fula Farms.
“Most of the women were home
makers and their primary objective
was to take care of their children.
They didn’t have a source of income
and most of their time was spent
in their homes. A majority of them
were nursing mothers. I decided
to change the scope of the business
and tailor it to empower the
women in the community we work
in,” she said.
“We have 90 percent female
workforce. The farm stands as one
of the few dairy farms in Lagos and
it supplies small businesses and
individuals with raw (fresh) milk
and locally produced cheese,” she
disclosed.
X3M Group
This business was founded by
Steve Babaeko, who is the CEO of
X3M Group, made up of X3M Ideas,
X3M Music, and Zero Degrees,
among others. His business is waxing
strong at a time when many of
its peers are struggling and going
out of business.
Babeko is an advertising/ branding/
marketing guru who has also
delved into audio-visual production
and record label, with clearcut
plans to diversify into other
countries.
Within few years of starting, he
has set up offices in Accra, Johannesburg
and Lusaka, among others,
winning a couple of pan-African
awards.
“I am really excited because
we are the only local agency in the
country today operating at that
regional level. We are like trailblazers,
if you like. We are sort of
experimenting and paving the way
for other agencies on the continent
to be able to go this route,” he told
Start-Up Digest last month.
Keexs
Jide Ipaye is the founder of Keexs
Footwear, an African- inspired
range of casual footwear such as
sneakers and smart shoes. Jide’s Keexs
is the first innovative and social
footwear brand in Nigeria and the
African continent.
He is focused on building a
world-class footwear brand with
manufacturing set-up in Nigeria,
with a sole aim of creating economic
empowerment opportunities for
thousands of Africans, especially
Nigerians.
A Microbiology graduate of the
University of Lagos, Jide was inspired
to set-up Keexs by a personal
challenge. He hardly found his size
of shoes in the market and rarely got
the designs he loved.
As a result, he thought of making
his own shoes to address this challenge
and help others facing the
same problem. He saw it as an opportunity
to make a change rather
than a perennial problem without
a solution.
“Keexs started out as a personal
challenge for me. Being a size 48, I
hardly got my size and when I eventually
did, they were not exactly the
style I liked. I have been dealing with
this problem for almost 40 years, so
I said to myself, ‘Why don’t I start
making my own shoes and also
helping others?”
“I took the first step in conducting
a research and went to a school
in the Netherlands to learn how to
design and manufacture sneakers.
I did not want to focus on regular
shoes.”
After his studies in the Netherlands,
he came back to Nigeria and
established Keexs in December
2015. Finance was a major challenge
for Jide, but he was able to successfully
jump the hurdle when he
found a website called Kick Starter,
a online-based US funding platform
for creative projects.
Jide put up a video with a writeup
that told a story of his challenges,
looking at the Nigerian context, saying
what the challenges were and
how the problem of unemployment
in the economy could be solved
by looking internally and creating
value through manufacturing.
And in forty days, Jide was able
to raise $20,000 from the website to
start his business. “Over a period
of 40 days from November 2015 to
December, we raised $20,000. The
money was paid to the manufacturer
to produce the first batch of
the sneakers,” he said.
When asked if there was any time
he wanted to give up on his dreams,
Jide said there were lots of time he
wanted to give up but the enormous
support he got from his wife encouraged
him to ride on.
When asked what he has done
differently to ensure sustainability
of the business, Jide stated that he
has done a lot of research on the
country’s shoe sector and understood
why the likes of Bata Shoes,
who was producing 10.4 million
shoes per annum in the 1990’s
failed.
Currently, Keexs signed up for a
World Bank grant to raise funds to
set up the manufacturing arm of the
business. Jide is an award-winning
entrepreneur. In 2016, he won the
Tony Elumelu Young Entrepreneur
of the Year award.
Abioye and Ladi
For Abioye Tunde-Anjous and
Ladi Oshinaike, co-founders of
SirChefs Food and Beverage, their
food inspiration came directly from
the personal stories of the employees
they found around them.
SirChefs Food and Beverage is
a real celebration of Nigeria’s food
industry, with its essence created
from local and traditional ingredients
that are unique.
Through its Breakfast King
brand, Abioye and Ladi provide
Nigeria’s Pap (popularly called Ogi
or akamu) and Akara (bean cake) in
cups. The pack enables employees
and people with busy schedules to
take breakfast quickly and regularly.
“The idea behind our business
came when we were both working
with the health insurance industry.
As a pharmacist, one of my roles in
my former organisation was to talk
to employees about their health and
each time I asked if they had taken
breakfast, I got a ‘no’ response from
most of them,” Abioye said.
“Living a fast-paced lifestyle is
often why workers often skip their
breakfast. Knowing that breakfast
is the most important meal of the
day and how it can make workers
productive, I decided to fill the gap
by providing them the right meal for
breakfast,” Abioye stated.
After doing some research on
what the ideal breakfast could be,
Abioye shared his idea with Ladi,
his friend and colleague then,
who bought into it and in 2017
they established SirChef Food and
Beverage.
“We identified that even if there
were options available for breakfast,
they were not very healthy, and the
ones that were healthy, you find
them very expensive. So we felt we
could make the food available and
affordable,” Ladi disclosed.
Abioye and Ladi started their
business with the money they raised
from their personal savings while
they were working and also sourced
additional capital from family and
friends.
SirChef Food and Beverage currently
has 26 full-time and part-time
employees.
Start-Up Digest Team
Odinaka Anudu
Editor
odinaka.anudu@businessdayonline.com
08067478413
Reporters
Josephine Okojie
Bummi Bailey
Gbemi Faminu
Joel Samson
Graphics

Monday 07 January 2019
34 BUSINESS DAY
C002D5556
Start-Up Digest
Owolabi Mercy: Baker, caterer, mixologist
Gbemi Faminu
Owolabi Mercy is
one of Nigeria’s energetic
and hardworking
young entrepreneurs.
She is a
baker, caterer, mixologist and chief
executive officer (CEO) of Florry
Cakes and More. Her business is
to bake and cook exquisite meals
for events.
Although she is a graduate of
Yaba College of Technology, also
known as YABATECH, she started
her business on a part-time basis
in August 2012 while undergoing
her National Diploma (ND)
programme, baking cakes and
snacks for her colleagues and those
around her. Six years down the line,
she has been able to expand her
business to event management,
catering and making of drinks such
as Chapman and Punch.
She started this business with
N15, 000, which she proudly explains
was entirely her savings. She
says, “I am proud to have started
my business with the sum of N15,
000 which I saved on my own.”
Mercy was encouraged to start
this business owing to her passion
for cooking, baking and planning
of events, which she always enjoys
doing.
“Right from my childhood, my
favourite place has always been the
kitchen. I have always loved baking,
cooking and planning events too.
“While growing up, I took it
upon myself to always decorate
the house during festive seasons
and I am grateful that my family
encouraged me all the way, which
helped me when I wanted to start
my business. Now, I am so grateful
because I do not have to look for a
job anymore.”
Owolabi says that she is able to
StartupSouth partners Wish FM on
business roundtable discussion
StartupSouth, an entrepreneurship
ecosystem
development project
focused on the South-
South and South-East region, has
partnered Wish FM in Port Harcourt
for a roundtable entrepreneurship
education programme.
The business roundtable radio
show is a 30-minute entrepreneurship
education programme.
Experts in micro, small
and medium enterprises from
across Nigeria will be invited
weekly to discuss Nigeria’s entrepreneurship.
Tomi Davies president of
ABAN and co-founder, Lagos
Angel Network, will be teaching
different aspects of starting and
running a business on the show.
Part of the show will be used
to showcase and promote businesses
from the StartupSouth
network in the forms of quick
Owolabi Mercy
remain different from other bakers
by using only the best ingredients,
establishing a friendly relationship
with her clients, with a conscious,
continuous effort of self-development,
all of which have proved to
work well.
Speaking on some of the major
challenges confronting her business,
she complains about poor
electricity supply, high cost of ingredients
and transport problems,
especially in terms of deliveries.
She states that although she has
been able to manage these issues,
there is still a need for the government
to intervene and help ease
interviews.
Uche Aniche, convener, StartupSouth
and founder Havilah
&Hills, said the aim of the partnership
is to ensure that people
learn how to start and grow
their businesses as well as be
informed on available financing
options.
Aniche stated that a dedicated
portal will be provided for listeners
to ask questions and get
feedbacks.
He noted that the roundtable
discussion will focus on issues
and topics which include Introduction
to Innovation and Entrepreneurship,
Validating Ideas,
Team Building, Introduction to
Selling, Introduction to Finance
and Accounting Tools, Unit Economics
and Access to Finance as
well as Pitching, among others.
The show will initially run for a
year and would be aired 9am daily.
the business environment, especially
for start-ups.
“I usually get my ingredients in
Lagos major markets. I get them
from wholesalers, and some other
times I buy in groups with other
bakers from wholesalers. Doing
this reduces the cost price, and I
always ensure that my ingredients
are sourced from first-class producers.”
The entrepreneur believes her
products are always unique because
of the way she uses special
ingredients.
“I also operate under a very
clean environment to avoid the risk
Africa needs to emulate Nigeria’s
entrepreneurial drive – Lumumba
Temitayo Ayetoto
Patrick Lumumba, a professor,
who is also a Kenyan
activist and public
speaker, has said the African
continent looks to Nigeria for
direction and inspiration regarding
the enterprising drive of the
average Nigerian.
Lumumba, who was speaking
at the event marking this year’s
Face of Okija Cultural Festival in
Anambra, called for the celebration
of serial entrepreneurs like
Ernest Azudialu-Obiejesi who
built a conglomerate of companies
from scratch and employed
thousands of people. He said the
entrepreneur was much better
than politicians who contribute
little to the society.
Lumumba said companies
such as Nestoil, Neconde, White
of making harmful products, given
that my goods are consumables.”
When asked about plans to
expand her business, the entrepreneur
states that she has strong
plans in this respect.
“Over the last six years, I have
been encouraged by the business
so far. My clients’ database has
grown tremendously, so has my
profit margin. I have learnt lessons,
and all these have encouraged me
greatly. I am working on becoming
a strong lady in the catering and
event management world, and
even establish my own restaurant,”
she says.
Dove, B&Q and others that make
up the Obijackson Group, would
not have sprouted without the
daring spirit of Azudialu-obiejesi.
Lumumba, once the chairman
of Kenya’s anti-corruption commission,
said key to Africa’s growth
lies in the sustainable support for
entrepreneurs through creation of
enabling environment for private
enterprise to thrive throughout the
continent.
Patrick Lumumba
“Although I have been able to
acquire certificates from trainings
and seminars, I am still hunting
for more certificates and trainings
to gain more knowledge and
expertise that will help my business
grow.”
The entrepreneur has an employee,
but is working on growing
her business to bring in more
workers. She is also trying to get
an official place for her business.
“I am sure I will achieve all these
in due time, though it will require
extra funds and resources. But,
hopefully, I can achieve it through
financial aids from the government,
consumer organisations or
financial institutions.”
Speaking on the effect of the
economic downturn, she says that
human beings have the ability to
adapt to any situation, meaning
that businesses still fare well in
such period, though not as fast as
before.
“My role models are business
moguls that started small but have
gone far today,” she says.
“I try to emulate them while
working with my values, which
include being hardworking, remaining
committed and consistent
with high level of patience and
tolerance,” she tells Start-Up Digest.
She urges the government to
ease the business environment,
especially for small and medium
scale enterprises. Owolabi also
wants the authorities to make
policies that will aid start-ups,
while calling on the government to
provide stable electricity and necessary
infrastructure for effective
and easy production and mobility.
On advice to other entrepreneurs,
she says, “Remain hard
working, make a conscious effort to
develop yourself regularly, ensure
you grow your people-network and
always believe in yourself.”
On democracy, he said Africa
will get it right the day Nigeria gets
it right, noting that Nigeria stands
in a very unique position to resolve
the challenges of the continent.
He further urged Africa to focus
on the things that matter; things
that build and grow the continent
and things that impact the people.
“By February 2019, Nigerians
will go to the polls to elect their
leaders. And I must state that the
day Nigeria gets it right, Africa gets
it right,” he said.
“Young people in Nigeria and
across Africa must identify what
is in their best interest and actively
participate in the electoral
process. They must understand
the significance and power of their
votes. What are the policies on the
table? Are we voting people for
what they have done, for what they
can do or for the hand-outs they
offer before the elections?”

Monday 07 January 2019
BUSINESS DAY
35
Start-Up Digest
Top 5 funding options available for
Nigerian entrepreneurs in 2019
ODINAKA ANUDU
Happy New Year to
readers of Start-Up
Digest in Nigeria
and other parts of
the world. As our
manner is, we usually let entrepreneurs
know some of the funding
options available for them every
new year. This year will not be an
exception. Today, we will look at
some of these funds and criteria
for accessing them.
General criteria
The general criterion for accessing
these funds is to have a business.
These firms rarely fund ideas
because ideas are untested and
untried. You must have a business
and ensure that it is providing a
solution to a problem in society.
Next is to have a bankable and
viable business plan. More so,
the entrepreneur should be clear
on where he/she wants to be in
the near future and be able to
describe the market he/she plays.
The entrepreneur should have
good book-keeping in order to
accurately know his/her revenue
and the expenditure.
Tony Elumelu Foundation
Tony Elumelu Foundation has
$100 million for 10,000 African
entrepreneurs. If you are in agriculture,
fashion and design,
light manufacturing, ICT, and
solid minerals, among others,
then apply for the on-going Tony
Elumemu fund. You can be lucky
to be one of 1,000 entrepreneurs
to be shortlisted.
More than 150,000 Africans
from 114 countries worldwide
applied to join the 4th cycle of the
programme in 2018.
The 2018 class, however, included
an additional 250 entrepreneurs
to the standard selection of
1,000. This was made possible by
$1 million partnership with the
International Committee of the
Red Cross (ICRC), which pledged
to support 200 entrepreneurs in
conflict and fragile zones of Nigeria,
particularly in the North-East
where Boko Haram insurgency
is rife and the Niger Delta region
hard hit by environmental degradation
from oil spillage. There was
also a $200,000 agreement with
the United Nations Development
Programme (UNDP) to support
40 pan-African entrepreneurs
and a $50,000 partnership with
Indorama to support 10 Nigerians.
Many entrepreneurs will get
$5,000 or more as grants or loans.
BoI Funds
The Bank of Industry (BoI) provides
a number of funds for entrepreneurs
at single digit.
Olukayode Pitan
Tony Elumelu
This development finance institution
(DFI) has been rated
by many local and international
agencies as one of the best managed
banks in the world.
The BoI has a number of funds
that entrepreneurs of all levels
can access. First is the Graduate
Entrepreneurship Fund (GEF),
which is meant for serving members
of the National Youth Service
Corps (NYSC). Candidates are
allowed to submit their business
ideas, which are then reviewed by
a team of experts. The NYSC members
whose ideas are marketable
and bankable are then selected,
trained for four weeks and then
given between N500, 000 and N2
million.
There are also the Cottage
Agro Processing (CAP) Fund for
small and medium agro processors;
Nolly Fund for players in the
Nollywood industry, as well as
Fashion Fund for designers and
other players in the value chain.
In fact, the bank has other
Akintunde Oyebode
matching and managed funds, including
a fund for the automotive
industry. Through 122 business
development experts, the bank
makes it easy for entrepreneurs to
undergo the process of de-risking
before approaching the bank for
funds.
The bank has a N5 billion fund
from Africa’s richest man Aliko
Dangote to finance SMEs at a
single digit rate.
In November 2018, Olukayode
Pitan, managing director, BoI, said
at a meeting with Fahad Obaid Al-
Taffag, ambassador of the United
Arab Emirates to Nigeria, that the
bank was ready to support genuine
foreign businesses willing to
invest in Africa’s biggest market.
“We cover the whole industrial
sector to ensure that Nigerian
companies become competitive.
We know that borrowing money
between 20 and 30 per cent is a
big drag on companies and most
of the banks in Nigeria are not able
to give long term facilities. We are
able to grant loans between seven
and 10 per cent per annum for 10
years,” he said during the meeting.
AYEEN Financial Grants
Africa’s Young Entrepreneurs
Empowerment Nigeria (AYEEN)
allows entrepreneurs to pitch their
business ideas before a panel. The
panel assesses each entrepreneur
and decides whether to provide
financing for the business.
Hundreds of entrepreneurs
walk away annually with various
degrees of business funding and
other forms of empowerment from
various types of investors.
Summy Smart Francis, CEO, AYEEN
LSETF Loans
The Lagos State Employment Trust
Fund (LSETF) has N25 billion to
support SMEs. Though this was
started by Akinwumi Ambode,
the outgoing Lagos State governor,
authorities have assured that the
scheme will continue owing to the
impact it has made on the people
of the state.
The fund is divided into two
categories; micro and small businesses.
Under the micro, businesses
can access up to N500, 000
loans with an interest rate of five
percent and a tenor of one year.
For the small business category,
businesses can get up to N5 million
for a tenor of three years. The
criteria for accessing the funds
include: membership of a business
organisation, which will
recommend the business for the
loan; Lagos State tax receipt for at
least six months, and Lagos state
residency card. This takes three
weeks for processing.
“It is incredibly fulfilling for me
to see small businesses get access
to funding without bias, without
nepotism, without nepotism,”
Akintunde Oyebode, chief executive
officer and executive secretary
of LSETF, told BusinessDay in an
exclusive interview recently.
“It has been superb and exciting.
We have been able to support
thousands of businesses, so it is
rewarding and fulfilling to see a lot
of our work starting to show signs
of delivering some value,” he said.
So far, up to 8,000 businesses
have got over N6 billion from
LSETF.
World Bank Grants
The World Bank provides millions
of dollars for SMEs.
The bank has a $160 million
Growth and Employment in States
(GEMS) funds for small businesses
in Nigeria, which is yet to be fully
disbursed. As of September 2018,
only N3.7 billion of this money had
been disbursed.
GroFin Fund
GroFin, a development financier,
has committed over $500 million
to funding Nigerian micro, small
and medium business (MSMEs)
across the country.
The firm has five different types
of fund: the Aspire Nigeria Fund,
the Growth Africa Fund, the Small
Growing Business Fund, the Aspire
Small Business Fund and the
Aspire Growth Fund.
The Aspire Nigeria Fund, the
Growth Africa Fund and the Small
Growing Business Fund cater
for all parts of Nigeria except the
Niger Delta.
The Aspire Small Business
Fund provides a minimum of
$100,000 and a maximum of $1.5
million to SMEs in Nigeria.
The Aspire Small Business
Fund and the Aspire Growth Fund
cater for the Niger Delta.
The Aspire Small Business
Fund provides between $10,000
and $100,000 to small business
owners in the oil-rich region,
while the Aspire Growth Fund
frees between $100,000 and $3
million to businesses to stimulate
growth in the area. GroFin
provides its funds mostly for a
maximum of six years.

www.businessday.ng Monday 07 January 2019
36 BUSINESS DAY
https://www.facebook.com/businessdayng @Businessdayng
Harvard
Business
Review
MondayMorning
In association with
Learn to ask better questions
John Baldoni
All the leaders
I know have
at least one
need in common:
to connect
honestly with others.
One way to foster stronger
connections is by asking
good questions. Leaders
who excel at this are
able to cut to the heart of
the matter in a way that
disarms the other person
and facilitates genuine
conversation. Let’s look at
several ways to ask better
questions:
— BE CURIOUS. Executives
who do all the talking
are deaf to the needs
of others. Sadly, some
managers think that being
the first and last person to
speak is a sign of strength.
In reality, though, it’s the
Engaging the ‘pole vaulters’ on your staff
Katie Bailey and Emma Soane
You may know the five
principles for increasing
employee engagement,
but firms should also
tailor engagement programs
to reach different types of
workers. After studying
eight companies with a total
of 180,000 employees, we
classified workers into four
groups and identified effective
ways firms have customized
programs. Our findings
suggest that such efforts lead
to more-engaged employees,
who in turn perform
better, are more loyal and
enjoy better health and personal
well-being. See if you
recognize the types from our
study.
GRAND PRIX DRIVERS
Nearly always strongly
engaged with their work,
they’re ideal employees
much of the time — but
they’re also at risk of burn-
ing out.
The Challenge: Prevent
them from carrying too
much of the load, especially
in projects they’ve initiated.
Best Practice: South Africa-based
Nampak Plastics
Europe made a conscious
effort to spread work equitably
among team members
opposite.
— BE OPEN-ENDED.
Leaders should ask questions
that encourage people
to reveal not simply
what happened, but also
what they were thinking.
Open-ended questions
prevent you from making
snap judgments and can
elicit some surprising answers.
— BE ENGAGED. When
you ask questions, act like
you care. Yes, act; use affirmative
facial expressions
and engaged body
language to demonstrate
interest. This sets up further
conversation and
gets the individual to reveal
potentially important
information.
— DIG DEEPER. Executives
frequently assume
all is well if they have not
and established delivery
timetables only with input
from the people who have
to meet the deadlines. A
few years ago U.K. supportservices
firm Amey began
offering workers stress-management
workshops, holding
sports tournaments and
running health campaigns.
About a year later, sick leave
fell from 9.6 days to 7.1 (below
the national average), attrition
dropped from 13 to 7% and
new hires referred by employees
jumped from 5 to 10%.
heard bad news. Big mistake.
It may mean employees
are afraid to offer
up anything but good
news, even if it means
stonewalling. So when
revealing information
surfaces in your dialogue,
dig for details without
straying into recrimination.
Get the whole story.
Remember, problems on
your team are, first and
foremost, your problems.
Asking good questions
in the spirit of honest information
gathering and
eventual collaboration is
good practice for leaders.
It cultivates an environment
where employees
feel comfortable discussing
issues that affect both
their performance and
that of the team. And that,
in turn, creates a foundation
for deepening levels
points these workers to its
Engagement Champions
network of more than 150
employees. Participation
in the network, which promotes
engagement companywide,
encourages Pole
Vaulters to deepen and
broaden their involvement
with all company initiatives.
LONG-DISTANCE RUN-
NERS
They’re reliable and
consistent, but they’re less
engaged than Grand Prix
Drivers and Pole Vaulters
(when the Pole Vaulters are
engaged).
The Challenge: Keep
them involved, and increase
engagement.
Best Practice: U.K.-based
consulting and construction
firm Mace Group focused
on the creation of interesting,
challenging and varied
projects for staff members.
Mace has also stepped up
its corporate social responsibility
activities in response
of trust.
(John Baldoni is a leadership
keynote speaker,
executive coach and executive
educator.)
POLE VAULTERS
They’re strongly engaged,
but their episodes of engagement
are less frequent than
those of Grand Prix Drivers.
Pole Vaulters tend to be
energized only by certain
aspects of their work — cutting
the important deal, for
example.
The Challenge: Get the
most out of their on-again,
off-again enthusiasm.
Best Practice: Amey apto
employee concerns that
the company wasn’t doing
enough for the community.
FLATLINERS
They’re rarely engaged,
and never strongly so. In
fact, they can easily become
actively disengaged and
have a demotivating effect
on colleagues.
The Challenge: Reverse
their negative feelings and
foster engagement.
Best Practice: Nampak
implemented several programs
(such as visible recognition
systems) to engage
this group. Having compared
its own survey data
with ours, the company believed
it reduced its Flatliners
from 13 to 7% of its workforce.
(Katie Bailey is a professor
at King’s College London.
Emma Soane is a professor
at the London School of
Economics.)
(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate
We stand behind
YOU
from your FIRST
step to your
big break
Putting YOU FIRST means you can
trust us to be there when you need
us most.
Talk to us today on 01-4485500 or
visit www.firstbanknigeria.com to
learn more
Contact us: 01-4485500, 0700-34778-2668228
firstcontact@firstbanknigeria.com I www.firstbanknigeria.com
Connect with us:

Tuesday 08 January 2019
www.businessday.ng https://www.facebook.com/businessdayng @Businessdayng
LegalPerspectives With Odunayo Oyasiji
BUSINESS DAY
37
Case Review
Gerhard Huebner V. Aeronautical Industrial Engineering and Project Management Company LTD (2017) LPELR-SC.198/2006
What to note: This
is a matter that
was decided at
the Supreme
Court of Nigeria
in 2017. It addresses the issue
of trust extensively i.e. meaning
and nature of trust, elements of
trust, nature of resulting or implied
trust and what the doctrine
of constructive trust entails.
Fact
The District Head of Kajuru
District in Kachia Local Government
Area of Kaduna State
(acting on the instruction of the
Emir of Zaria) granted permission
to the Appellant to build a
temporary weekend hospitality
resort on a hilltop in Kajuru
Village sometimes in 1975. The
Appellant built a temporary
structure. He later built permanent
structure and named it
“The Kajuru Castle”.
In order to expand the business,
the Appellant in 1981
started negotiating through the
agency of the District Head to
purchase the 70 hectares of land
surrounding the hill. He was in
the final stage of the negotiation
when he was appointed as
the Managing Director of the
Respondent. The Appellant
was advised to to buy the land
in the name of the Respondent
because it was unlawful for him
to hold a legal estate in Kaduna
State being a German. He took
the advice and purchased the
lan in the name of the Respondent.
The receipt that serves as
the evidence of the purchase
was issued in the name of the
Appellant and the Respondent.
A certificate of occupancy
dated January 1, 1997 was issued
to the Appellant by Kachia Local
Government. The certificate
was used to apply for a statutory
certificate of occupancy from
the Kaduna State Government.
The application was successful
and a certificate of occupancy
dated March 6, 1999 was issued
by Kaduna State Government.
The two certificates were issued
in the name of the Respondent.
The issue of the ownership of
the property arose between the
Appellant and the Respondent.
The Appellant being the plaintiff
at the High Court instituted the
action claiming the ownership
of the property and that same
was held by the defendant/
respondent upon a resultant
trust to the benefit of the plaintiff.
The Appellant’s case was
dismissed by the trial court. The
Court of Appeal also dismissed
the appeal that was filed by the
Appellant. The Appellant being
dissatisfied then appealed to the
Supreme Court.
Issues for determination
The counsel to the Appellant
formulated two issues for determination
of the Appeal. The issues
are – “1. Whether the Court
of Appeal was right to confirm
the trial Court’s exclusion of
documentary and oral evidence
which were adduced by the Appellant
before the trial Court
to establish circumstances by
which it may be implied that
the Respondent held the legal
estate in the subject property
upon a resultant constructive
trust in his favour. 2. Whether
the Court of Appeal was right
to hold that the Appellant was
obliged to prove an implied
resultant constructive trust by
“credible and reliable evidence”
showing the “grant” by him and
“acceptance” by the defendant
of the trust.”
Counsel to the Respondent
also formulated two issues.
The issues are-“1. Whether the
Court of Appeal was right to
confirm the trial Court’s finding
at law and upon the facts
and circumstance of the case
before the trial Court that the
documentary evidence before
it (i.e trial Court) as borne out
by Exhibits A1, A2 and A3 being
the Kachia local Government
Certificate of Occupancy and
the Kaduna State certificate of
Occupancy respectively cannot
be varied or altered by oral
or extrinsic evidence as sought
by the plaintiff/appellant to establish
a resultant or implied or
constructive trust in his favour.
2. Whether the Court of Appeal
was right to hold that the Appellant
has the onus of proof
as required by law (i.e standard
of proof in civil proceedings)
to prove an implied resultant/
constructive trust by credible
and reliable evidence.”
The court adopted only one
issue for the purpose of determining
the matter i.e. “whether
the lower court was right when
it dismissed the Appellant’s
appeal for failure to adduce
sufficient evidence in proof of
his claim that the Respondent
is holding the legal estate upon
an implied trust in respect of the
disputed property for his benefit
by implication of law.”
Arguments/Submissions
The counsel for the Appellant
submitted that the evidence
before the court clearly shows
that the land in dispute was purchased
and developed with the
Appellant’s private resources
and that the certificate of occupancy
issued by the state
and the local government in
the name of the Respondent
were meant to establish that
the Respondent is just an implied
trustee for the benefit of
the Appellant. He stated that
implied trust is an equitable
conversion of the holder of the
property into a trustee by operation
of law, as such the question
of leading evidence to prove a
grant and acceptance does not
arise.
The Respondent’s counsel on
the other hand argued that the
oral testimony of the Appellant
cannot vary the content of the
two certificate of occupancy
issued in favour of the Respondent.
He also argued that the
Appellant failed to establish
before the lower court the existence
of any legal relationship
between him and the Respondent.
Judgement
The Supreme Court dismissed
the appeal. The court held on
the issue of implied trust that
“the nagging issue of whether
implied trust on the basis of
equity crops up in favour of the
appellant. In considering it, the
acts of the appellant come into
question, firstly assuming he
knew he was not qualified to
own land in Northern Nigeria,
he acted in going ahead to make
the purchase wrongfully and
illegally and therefore without
clean hand which equity cannot
encourage or assist. The flip side
would be if he made the payments
with his funds not being
aware that he could not have
such ownership, then his action
would be caught up by the
principle that, ignorance of the
law is not an excuse. Therefore,
either way, he lacked the capacity
to enter into the purchasing
transaction for land being a
foreign national. It follows that
whether in law or equity he lost
out.”
With regards to nature of
trust, the court held that “In
its legal sense, “a trust” is the
relationship, which arises wherever
a person called the trustee
is compelled in equity to hold
property, whether real or personal,
and whether by legal or
equitable title, for the benefit of
some persons (of whom he may
be one and who are termed cestuis
que trust) or for some object
permitted by law, in such a way
that the real benefit of the property
accrues, not to the trustee
but, to the beneficiaries or other
object of the trust. To this end,
there are Express Trusts, Implied
or Resulting Trusts and
Constructive Trusts. Express
Trusts arise when the owner
declares himself a trustee of the
property for the benefit of another
person or vests property
in another person as trustee for
the benefit of another person.
Implied or Resulting Trust arise
from the presumed intention of
the owner, and the presumed
intention arises by operation of
law not by agreement of parties.
Constructive Trusts are trusts
imposed by equity regardless
of the intention of the owner
of the property, where it will
be unconscionable for the “apparent
beneficial owner” or
trustee to hold the property for
his benefit-We are concerned
with implied or resulting trusts,
which may arise in the following
circumstances (i) Where an
express trusts fails (ii) Where
the beneficial interest under an
express trust is not fully disposed
of or exhausted.(iii) Where there
is a purchase in the name of another
or where a person makes
a voluntary conveyance of his
property to another.
Conclusion
I will conclude with the words of Muhammad JSC in the
case of Madu V Madu (2008) 6 NWLR (Pt. 1083) 296
where he stated that “Before I drop my pen, I think
I should observe that this case, as I see it, should
be an eye-opener to many people. Although, it is
not illegal or prohibited to make use of another
person’s name in transactions that are solely
meant to be in favour of a particular individual,
I think it carries a lot of risks where there is a
failure in achieving goals for which the transaction
is meant. I fail to appreciate the wisdom
behind the concealment of name or identity of
a person, who in actual sense, is the owner of a
thing but would prefer to use the name of another
person. The presumption is always that if
a document for instance, bears the name of Mr.
“X” it in law; belongs to Mr. “X” except where
same is accompanied by conditions and exceptions.
A good example is where a university
certificate or a West African School Certificate
(WASC) is issued in the name of “X”. The presumption
is that it is “X” that is the rightful
owner of that certificate. So it is a dangerous
practice where people prefer to hide their identities
and resort to using the identities of others
in transactions, which are from the bottom
of their minds. If such transactions are meant
to be held in such resulting trust, I think they
should be qualified by explanations, exceptions
or conditions attached ...”

38
BUSINESS DAY
C002D5556
Monday 07 January 2019

Monday 07 January 2019 C002D5556 BUSINESS DAY 39

40 BUSINESS DAY www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng Monday 07 January 2019
NEWS
Operators say oil, gas industry faces uncertainties in 2019
OLUSOLA BELLO
Operators in the
oil and gas industry
say 2019
will be uncertain
in many dimensions,
both for country
and industry, and that this
year’s election results have
the potential for disruption
of oil and gas facilities.
They say prospects this
year will depend on how the
actors manage the unfolding
uncertainties against emerging
global realities, as deficit
in refining will continue to
hurt Nigeria in 2019.
According to them, there
will be an election in the
country, and for a new government
it usually takes
time to settle down.
The uncertainties over the
Petroleum Industry Bill (PIB)
will persist, as nobody knows
how long it would take. This
indicator provides an important
signal to investors.
The PIB, which would
ensure the government
could move forward with
new fiscals and make oil and
gas attractive for companies
to invest, was stalled in November
2018 when President
Muhammadu Buhari
withheld assent. They hope
that the document would be
signed after the elections.
Victor Eromosele, CEO of
ME Consulting Limited, says
prospects in 2019 in oil and
gas industry is really anybody’s
guess even though
the 200,000 barrels of crude
from Egina field and Dangote
Refinery would remain
the industry’s bright spots.
Bank-Anthony Okorafor,
president, Petroleum Technology
Association of Nigeria
(PETAN), says oil price
will hover around $60-70 per
barrel in 2019, as top three
producers, US, Russia and
Saudi Arabia will continue
to pump more. “Higher US
crude supply to 12 million
barrels per day, high production
from Russia and
Saudi would weaken the
market.
“American high production
has hurt demand for
Nigeria crude oil. Saudi
will not want to lose market
share to other countries,” he
states. He says OPEC will not
be able to maintain output
cut in production as American
production will make
OPEC look weak.
“Slowing growth in China,
India and Europe will
slow down the demand for
crude oil. China presently
consumes 12% of global oil
production. So any slow
growth in China will impact
global crude oil demand.
Intensification of US-China
trade war will affect china
demand for crude oil.
“The heightened tension
has diminished hopes of a
near term resolution to the
trade war. This is negative
for global oil demand. The
10% us tariff on $200 billion
of Chinese goods jumps to
25% at the start of 2019. US
intend to slap tariffs on an
additional $260 billion of
Chinese exports if anticipated
meeting in Jan 2019 does
not go well. Generally, slower
economic growth reduces
the outlook for oil demand,”
he says.
Abiodun Adesanya, former
president of Nigerian
Association of Petroleum
Explorationists (NAPE), says
there will be carry over of
the 2018 challenges, which
have created a lot of volatility
in the oil and gas industry
worldwide.
He states that this year’s
election results have the potential
for disruption of oil
and gas facilities, especially if
the Niger Delta militants did
not see it favouring them.
He also notes that some
level of drilling for oil in
the North around Gombe
and Bauchi trough may
take place in the course of
the year.
L-R: Adebode Adefioye, member, Governing Council Bank Directors’ Association of Nigeria (BDAN); Ken Opara, 2nd vice
president, Chartered Institute of Bankers (CIBN); Osaretin Demuren, president, governing council, BDAN; Uche Olowu,
president/chairman of Council, CIBN; Jude Monye, secretary, governing council, BDAN; Segun Ajibola, past president, CIBN,
and Olawale Oyeleke, member, governing council, BDAN, at BDAN’s courtesy visit to CIBN in Lagos, recently.
FG orders CCECC to deliver Lagos-Ibadan rail project in 2 weeks
MIKE OCHONMA & STELLA ENENCHE
Worried by the
slow pace of
work on the
Lagos-Ibadan
standard gauge rail project,
the Federal Government
has handed down
a two-week ultimatum to
the contractor - China Civil
Engineering Construction
Company (CCECC), within
which to complete the job.
Minister of transportation,
Rotimi Amaechi, gave
the order in Abeokuta,
the Ogun State capital on
Thursday, during an inspection
of the multi-billion-naira
project.
Amaechi expressed dissatisfaction
over the section
between Iju, Lagos and Agbado
in Abeokuta. This was
even as he explained that it
... as deficit in refining will continue to hurt Nigeria
was his passion to get the
project done, necessitated
the ultimatum.
According to Amaechi,
“I want the project delivered.
Though, we cannot
say that CCECC isn’t trying
but, for commercial purposes,
they have to complete
the section so that,
passengers can board train
to Abeokuta.”
He noted: “Getting to
Abeokuta you will see that
there’s an improvement but
the problem they have now
is the civil work between Agbado
and Iju which is critical
to me because I don’t think
passengers will go to Agbado
to join the train.
“I believe that the closer
we are to Lagos the better
for the rail and that is why
I had to tell them to tell me
what they will do about this
before the next two weeks,
although there’s a huge improvement
up to this point.
I want them to speed up the
construction from Iju to Agbado.”
Meanwhile, the minister
was not comfortable with
the fact that very critical
equipment had yet to be
brought into the country the
facilitate the project.
According to him, the excuse
the firm gave, was that
the equipment were not offthe-shelf
items that could
be ferried in easily.
In his submission, part
of the solution to the congestion
around Lagos seaport
is an efficient rail line.
“You can argue that the narrow
gauge is there, but it is
not efficient. But the moment
you fix this then those
goods will be transferred to
the rail and then the logjam
will disappear.
“The moment we do the
section from Iju to the sea
port, then most of those
goods, especially the ones
going to Ibadan will be on
the rail lines.”
Asked if the government
was under pressure to get
the project completed, he
replied: “Of course, and it
is also because of the speed,
for it takes you about 30
minutes by rail from Lagos
to Ibadan as against over
one hour by road. And this
is subsidised.”
The minister further
disclosed, “Though, the
focus now is the completion
of the project but, we
are expecting the deployment
of about 30 passenger
coaches, 300 wagons and
then, two sets of coaches
from Agbor, Delta State, for
test running of this ongoing
project.”
CBN makes first New Year entry
into forex market with $210m
… as external reserves decline to $43.05bn
HOPE MOSES-ASHIKE
Central Bank of Nigeria
(CBN) weekend,
made its first intervention
in the interbank
sector of the foreign exchange
market for 2019 with
$210 million injected into the
wholesale segment and other
sectors of the market.
A breakdown of the figures
obtained from the CBN weekend
showed that customers
in the Wholesale sector of the
market received $100 million
with the Small and Medium
Enterprises (SMEs) and invisibles
sectors each getting
$55 million to meet the needs
of customers.
The dollar supply has
helped to boost liquidity in
the market and strengthen the
value of the local currency.
Consequently, naira gained
N1.00k on Friday to close at
N361 per dollar at the parallel
market from N362 traded the
previous day.
However, naira depreciated
marginally by N0.05k
to close at N365.35k on Friday
from N365.30k per dollar
traded on Thursday, data
from FMDQ indicated.
External reserves last week
declined to $43.0 billion as of
Friday, January 4, 2019, from
$43.28 billion as of Decem-
JAMES KWEN, Abuja
ber 24, 2018, data from CBN
revealed.
Isaac Okorafor, CBN’s director
of corporate communications,
said the CBN continued
from where it stopped in
2018 in order to maintain the
stability being enjoyed in the
market.
While noting that the
bank had made commendable
effort in keeping the exchange
rates at the current
levels, Okorafor re-echoed
the Bank’s Governor, Godwin
Emefiele saying that the
current capital flow reversals
from the emerging markets
were expected to bring out
pressures on the market rates.
He, however, assured
that, in spite of the anticipated
pressures, coupled with
the forthcoming elections,
the bank was committed to
maintaining the current exchange
rate policy, given the
level of reserves. Quoting the
Governor, Okorafor said that
the CBN was determined to
sustain a stable exchange rate
as it continues to put in place
relevant measures to shore up
the country’s reserves.
Meanwhile, one United
States dollar ($1) exchanged
for N357 in the Bureau De
Change (BDC) segment of the
market on Friday, January 4,
2019.
Manpower threat to 2019 elections tackled as
ASUU agrees to work as INEC ad hoc staff
The threat of manpower
to the conduct
of the 2019
general elections
due to ongoing strike by
the Academic Staff Union
of Universities (ASUU) has
been tackled as the Union
agrees to work as ad hoc staff
in the elections.
Biodum Ogunyemi,
ASUU national president,
made this known at the end
of the consultative meeting
between the leadership of
the Independent National
Electoral Commission
(INEC) and the Union in
Abuja.
Ogunyemi stated that
ASUU had taken the appeal
by INEC to allow its members
participate as Collation
and Returning Officers for
the 2019 general elections,
hence the Union could not
restrict its members from
working as ad hoc staff for
the Commission.
“We had a good meeting
with the INEC team. We
placed on record that our relationship
with INEC dated
back to 2010, when the former
president Attahiru Jega
was chairman. Even though
we are not in the position
now to do everything we
were doing that time, we
have assured them that we
will not stand on the way of
our members participating
in the election as ad-hoc
staff.
“The decision of our union
as at the last time we met was
that our members are free as
citizens to participate in the
electoral process as ad-hoc
staff and we have restated that
today that we are not going to
stop any of our members who
wishes to serve in that capacity,”
he said.
Mahmood Yakubu, INEC
chairman, had at the beginning
of the meeting appealed
to ASUU to continue
with the existing collaboration
with the Commission
to enhance the credibility of
this year’s polls.
Yakubu said, “Allow your
members to participate as
Collation and Returning Officers
for the 2019 general
elections as doing so will not
derogate from the Union’s
withdrawal of service in respect
of university-based
activities such as teaching,
supervision and statutory
meetings.”
He added, “For sometimes
now, INEC has relied
on the universities for the
critical mass of election duty
staff. ASUU has collaborated
with the Commission in vetting
the list of its members
engaged as Collation and
Returning Officers.

Monday 07 January 2019
www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng
Police recruitment: 232,000 excess applicants
underscore Nigeria’s unemployment problem
MICHEAL ANI
The recent announcement
by
the Nigeria Police
on the excessive
turn out of people
applying for recruitment
into the law enforcement
agency, affirms the critical
state of the nation’s unemployment
crisis, analysts say.
As at 1:00pm, 2nd Jan
2018, the Police Service
Commission (PSC) said it
had received applications
from 242,455 persons in its
on-going recruitment exercise,
even though it plans to
enlist only 10,000 of these
numbers into the Nigeria
Police Force.
This figure shows an excess
of more than 232,000
applicants vowing for the
positions, a number analysts
say is a tip of an iceberg of
how Nigerians jostle for jobs
as falling infrastructural de-
velopment and slowdown
in economic activities have
forced companies turn off
the tap of recruitment.
This number of applications
that the police received
as at that date implies that
for each successful applicant,
23 others will be rejected.
That is, assuming that
the applications stop at this
number, which is unlikely.
Data from the National
Bureau of Statistics (NBS)
has shown that the rate of
unemployment has been on
a consistent increase in the
past three years, settling as
high as 23.1 percent in the
third quarter of 2018 from
18.8 percent recorded in the
same quarter of the previous
year.
In nominal terms, a total
of 20.9 million Nigerians are
unemployed, signalling that
about 3.1 million people
have entered into the unemployment
trap in less than a
year. The NBS had earlier in
Q4 2017 reported the number
to be 17.8 million.
“I am not surprised at
the statistics released by the
Nigerian police with regards
to the number of participants
that signified interest
as against those that are required
as it is an indication
of the massive unemployment
in the society,” says
Timothy Olawale, Director-
General, Nigerian Employers
Consultative association.
“There is no way that the
government despite all its
efforts in creating jobs, is going
to succeed if the focus is
on white-collar job creation
alone, which is what they are
throwing up,” Olawale said.
An average university
student in Nigeria spends
about 4 years in the university,
if and only if the Academic
Staff Union of Universities
and /or the Non Academic
staff union does not embark
upon any strike whatsoever.
For about two months
now, teachers in public
universities in Nigeria
have been on an indefinite
strike designed to compel
the Federal Government to
meet their complaints on
issues including poor funding,
poor remuneration and
low infrastructural developments
in school.
“It is not as if there are
no jobs in the country, but
the skills required to match
these jobs are not there. That
is why we say the government
should identify what
those skills are and make
concerted efforts to develop
capacity in those skills; that
way our youth will fit into
those jobs that are available,”
Olawale said.
“Furthermore, there is
the need to imbibe in our
youths the entrepreneurial
spirit so that they can be selfemployed,”
he added.
L-R: Segun Agbekeye, group head, internal control, risks/compliance, Odu’a Investment Company Limited; Adewale Raji, Odu’a GMD/
CEO; Kayode Fayemi, Ekiti State governor; Tope Arowolo, Odu’a group head, property development and management, and Yinka
Tunji-Ojo, Odu’a general manager finance, during Odu’a team’s business meeting with the governor in Ado Ekiti.
Nigeria’s e-payment transactions hit N56.85trn – reports
Reports from the Nigerian
Interbank
Settlement System
(NIBSS) have indicated
that Nigeria’s electronic
payment (e-payment) services
recorded transactions
worth N56.85 trillion from
January to September 2018.
The report, obtained by
the News Agency of Nigeria
on Sunday, showed an increase
of N16.4 trillion when
compared with the N40.45
trillion that was recorded in
the corresponding period of
2017.
The report showed that
most of the electronic transactions
were done through
the NIBSS Instant Payment
(NIP), Point of Sale (PoS),
Automated Transfer Machines
(ATMs), Mobile Money,
Electronic Bills Payment
(E-Bills) and Web payments.
A breakdown of the report
showed that ATMs transactions
grew from N4.61 trillion
in 2017 to N4.76 trillion at the
end of the third quarter of
2018.
Also, the volume of transactions
on ATMs under the
period in review grew from
560.86 million in 2017, to
650.06 million in 2018. The
report showed a rise of about
N635 billion in the use of POS
machines to carry out payments
by Nigerians.
Under the review period,
98.73 million transactions
worth N975 billion were carried
out using POS in 2017,
while in 2018, the volume
grew to 196.83 million, valued
at N1.61 trillion.
Similarly, the volume
of transactions carried out
by Nigerians, using mobile
money rose from N795.18
billion in 2017, to N1.22 trillion
as at September 2018.
Also, using the web payment
channel, the total
value of transactions under
the review period rose from
N129.24 billion in 2017, to
N183.07 billion in 2018.
However, the value of
such transactions on e-bill
payments, which allowed
customers to pay utility bills
such as power, cable and
so on online, declined from
N420.73 billion in 2017 to
N370 billion in 2018.
Meanwhile a financial
analyst, Patricia Auta, has
said that the NIBSS report
showed an increased awareness
and use of technology
by individuals and businesses
in the country.
Auta urged the Central
Bank of Nigeria (CBN), to
intensify efforts on cashless
economy, especially in states,
to further grow the electronic
payment space.
BUSINESS DAY
NEWS
41
‘Adamu Adamu current attention
to education, not enough’
KELECHI EWUZIE
Concerned industry
professionals in education
sector have
described the performance
of Adamu Adamu, the
minister of education, in the
last three years as being pedestrian.
They observe that his approach
to issues concerning
the education sector since his
appointment to office leaves
much to be desired, as the
minister should think deep
for solutions to the decay in
the sector.
In a interview with BusinessDay
they feel the minister
should recognise the need
to strengthen proactive programmes
and activities that
enhance quality education
and offer knowledge, skill and
values for Nigerian citizens to
enable them compete with
any economy in the world.
Maurice Onyiriuka says
the education sector still
struggles with policy gaps
and implementation backlog,
adding that this issue remains
unresolved not because the
education minister don’t have
ideas as to how to approach
the outstanding issues, but
because there have not been
consensus, the realism and
even the courage to confront
the challenges.
Onyiriuka expects the
minister to address the situation
in the education sector
with gravity instead of the kid
gloves he has used to attend to
the mountainous problems.
Odion and Omofonwan
say in their study, ‘Educational
System in Nigeria Problems
and Prospects’ that the gross
under funding of the educational
sector in the country in
general and the neglect of the
maintenance of the physical
facilities and instructional and
living conditions have deteriorated
in many of these schools,
classrooms, libraries and labo-
Nigerian states budget for 2019 so far
ISRAEL ODUBOLA
As it is now, 33 out
of the 36 states
of the Federation
have presented
their budgets to their respective
State Houses of
Assembly. The states that
are yet to present theirs are
Adamawa, Cross River and
Zamfara.
Lagos State, the commercial
and financial
nerve centre of Nigeria,
presented a budget of
N852.317 billion, N548 billion
lower than the N1.4
trillion presented for 2018.
The proposed budget of
Lagos State for 2019 is
the highest nationwide,
though this is not surprising,
as the state has the
largest internally generated
revenue in Nigeria.
The states with the second
and third highest proposed
budget for 2019 are
Akwa Ibom and Rivers.
The two south-southern
states earmarked N670.7
billion and N480 billion,
respectively.
Nasarawa, a state in
the North-central zone,
presented a budget worth
N86.4 billion, the least
across the federation. The
state has endowment in
agriculture, tourism and
solid minerals like coal
and iron ore.
Apart from Nasarawa,
eight states proposed a
budget less than N150 billion
are Abia (N139.5bn),
Borno (N125.82bn), Enugu
(N109bn), Ekiti (N129.9bn),
Gombe (N118.7bn), Kogi
(N146.7bn), Plateau
(N148bn) and Taraba
(N146.7bn).
Regional analysis of
ratories are nothing to write
home about, all leading to decline
in academic standards.
It is the view of stakeholders
that the minister must begin
to look at ways to source
for funds to focus attention on
these areas if these educational
institutions are to get out of
the woods.
Comfort Uyo, a university
lecturer, is of the opinion that
Adamu Adamu can achieve
success if he is to implement
the correct policies, but
doubts the possibility since
he is not solely in charge of
key decision when it concerns
funding.
For example, since the introduction
of the Universal
Basic Education (UBE), the
education sector at primary
school is still characterised
by poor performance and an
increasing number of out-of
–school children and one of
the major explanations for
this is the crisis of funding occasioned
by inadequate preparation
of the extent to which
available resources could last.
Again, widespread cases
of arrears of unpaid teachers’
salaries - of up to six months
in many cases, frequent industrial
disputes and strike
actions by university teachers
as well as shameful cases
of primary and secondary
school pupils using tree
shades as their classrooms are
some of the manifestations
of poor funding of Nigeria’s
education. For Babatunde
Oguntona, an educationist
the greatest investment education
the minister can give
Nigerians during his term as
minister is to encourage human
capital development.
According to Oguntona,
“I strongly believe that only
what is required from government
and the minister of
education is to make available
resources that can be used for
the development of human
capital so we can have good
the budget of the 33 states
shows that the South-West
region has the highest cumulative
budget of N2.011
trillion, higher than that
of South-South, which
currently stood at N1.793
trillion, but could be overtaken
if Cross River State
present a budget of at least
N219 billion.
The combined budget
of South-East, North-
Central and North-West
currently stand at N878
billion, N894.34 billion
and N1.053 trillion, respectively.
The North-East region
has the lowest cumulative
budget of N676 billion,
although can only
exceed that of the South-
East region if Zamfara
State proposes at least
N202 budget for 2019.

g
www.
42 BUSINESS DAY g
@ g
Monday 07 January 2019
NEWS
The curious case of Nigeria’s missing voters...
Continued from page 1
necessities of life,” pledged the
former president.
But Adebayo had become used
to that cliché of promises, even at
that time.
Nothing around his vicinity instilled
the sense of belonging that
he had a government to alleviate
his standard of living or one that at
least, expressed its commitment in
the provision of access to good road
networks, stable electricity supply,
qualitative education, potable water
system and wholesome sanitary
conditions to begin with.
With Nigeria’s GDP at a mere
$57.4 billion in 1999, the economy
barely expanding, and GDP per
capita at $496, his deflated confidence
was further exhausted by
the scarcity of job opportunities in
town. He began clearing his path to
London for ‘greener pastures’.
As a result, participating in that
election was a sheer adventure for him.
He didn’t believe in the potency
of that vote, especially as elections
in that era was sullied in manipulations
and conflicts. He only found
it fascinating to join the excitement
that brewed while maintaining long
queues to cast a vote.
By the next election in 2003,
Adebayo was still in town. He simply
went for accreditation but did not
return to vote.
Continued from page 1
they can get away with because
they earn exorbitant net interest
margins to meet investors’ return
expectations. That hurts both savers
and borrowers.
Banks benefit from the spread
between the risk free rate (Treasury
Bills) and interest on deposits, unlike
their counterpart in South Africa, Europe,
Asia, and the United States that operate in
largely low risk environments.
Johnson Chukwu, CEO and
managing director of Cowry Asset
Management Ltd said the economy
is not as structured as emerging and
advanced markets where customers
have excellent credit history.
For instance U.S banks will not
lend to customers that have history
of bad loans.
Of course Nigerian banks have
been stung in the past, as they are
still grappling with Non-Performing
Loans (NPLs) and impairment on
financial assets brought on by the
sudden drop in crude oil prices of
mid-2014 that helped throw the
economy into recession.
“I didn’t go back because I was
playing scrabble. Yes, I counted that
as more important than going back
to waste my time,” he said. “That I
have a permanent voter’s card (PVC)
does not mean I have a say in the
country. The only thing that counts
is my family and I. I will only get my
PVC because it’s my right. I’ll get my
tax identification number (TIN),
international passport and driver’s license.
Nigeria has a cracked system.”
Twenty years later, more Nigerians
have increasingly become
disenchanted in the affairs of the
country like Adebayo and that mien
is expressed in their indifference to
showing up at polling centres.
Perhaps, those in and around the
metropolis can point to a thing or two
in terms of physical development,
most in rural settlements can easily say
things have remained the same despite
the interrupted experience under
democratic dispensations since 1999.
In urban hubs, well-heeled citizens
express minor interest in rowdy
election, since they command individual
economies in which government’s
impact is next to nothing.
Of the 67,422,005 registered voters
in Nigeria during the last election
(2015), only 31,746,490 (47.08 percent)
were accredited. Among that
were 29,432,083 of votes cast, of which
28,587,564 (97 percent) were valid.
Statistics by the Centre for Public
“Net interest Margin is tiny in most
advanced countries and you need
to ensure that the spread can cover
operating cost. To ensure the spread
covers cost, you have to create loans.
Difference between Treasury Bills
(T-bills) and deposit is small; hence
you cannot set up a bank in developed
economies to trade on T-Bills,” Wale
Okunrinboye, Head of research Sigma
pensions told BusinessDay on phone.
“For Ivorian banks’ leverage is
high because interest rates and inflation
rates are lower. If interest rates
are lower you have to take on more
risks to survive,” Okunrinboye said.
Indeed the country’s macro environment
is fraught with risk as
economy has been growing sluggishly
since the start of last year and
inflation remains in double digits.
The economy grew by 1.80 in the
third quarter of 2018, lower than 1.95
percent and 2.10 percent in the first
and fourth quarter of 2018 and 2017.
Kayode Tinuoye, Fund Manager at
United Capital Asset Management Ltd,
is of the view that Nigerian banks are
financed by deposits, and that most of
Policy Alternatives (CPPA) show that
the election was particularly different
from the 2011 edition as it reflected
more than ever, a population with
enfeebled trust in the process electing
its representatives.
Voter turnout significantly dwindled
by 25 percent from a total votes
of 38,209,978 in 2011 to 28,587,564
in 2015, despite an increase in the
voting age population to 87,784,373.
Turnout, derived from the number
of registered voters divided by the
number of total votes cast was 43.65
percent, marking the lowest in Nigeria’s
democratic history since 1999. It
moved from 52 percent in 1999 to 69
in 2003, 57 in 2007 and 54 in 2011.
In juxtaposition with the 2011
outcome, turnout for the 2015 presidential
election dived in all the
geopolitical zones, except in the
south-west where it appreciated by
approximately eight percent, from
32 percent to 40 percent.
Going by a state by state breakdown,
only 13 states had 50 percent or more
voter turnout. Almost all the Northern
states, including those affected by insurgency
had turnout of at least 40 percent,
except Borno with 30 percent.
Surprisingly, Lagos, a metropolis
considered relatively non-violent
in terms of pre or post-election
violence, had the lowest turnout at
29 percent. In contrast, Rivers state
had the highest turnout at 71 percent
amid a slew of controversies around
electoral malpractice.
L-R: Adedayo Pratt, HNC account officer, Leadway Pensure PFA; Tunde Mumuni, executive director, operations, Nigerian Investigation
and Safety Company; Aderonke Adedeji, MD/CEO, Leadway Pensure PFA, and Ogechi Ekwosimba, benefits processing representative,
LeadwayPensure PFA, at the opening of the Victoria Island branch office of Leadway Pensure PFA in Lagos, recently.
Nigerian banks not using equity to create...
the capital in the country are Tier 1 and
not Tier 2, which is why they do not have
the capacity to fund longer term projects
because their funding is short term.
“That is why most of them issue
Eurobonds to fund long term
projects just to match assets with
liability,” said Tinuoye.
Nigerian banks have some $1.3
billion out of a total of $3.72 billion
in outstanding Euro bonds due next
year and a rising global interest rate
environment expected for the period
may lead to higher refinancing costs.
A breakdown of financial leverage
shows Zenith Banks assets to equity ratio
increased to 7.22 times in September
2018 from 6.68 times the previous year.
Guaranty Trust Bank (GTBank)
Plc’s leverage ratio moved to 6.42
times in the period under review
from 5.36 times the previous year.
Access Bank’s leverage increased
to 9.63 times in September 2018 from
7.95 times the previous year.
First Bank’s holdings’ asset to equity
ratio rose to 7.68 times in the period
under review, this compares with 7.72
times recorded the previous year.
•Continues online at
www.businessday.ng
Adebayo’s lack of faith in the
system of governance is an issue analysts
agree is rooted in the rife belief
that votes don’t count and that election
outcomes are predetermined by
a minority of elite.
Wale Ogunade, a constitutional
lawyer and President, Voters Awareness
Initiative describes this as the
adverse effects of unfulfilled promises.
“People are tired of empty of
politicians in this country,” Ogunade
said. “They would rather be indifferent
than expend effort in futility.”
Moreover, voters in recent times
distance themselves from voting for a
pocket of other reasons including the
seeming recycling of leaders.
There is a global wave of taste for
youthful presidents and Nigerians
youths desire same. But with slim
chances for their preferred candidates,
some rather duck the polls.
Another major factor responsible for
voters apathy remain electoral violence
since election statistics now hardly go
without being marred by death tolls.
With issue-centred campaigning
undermined by politicking, and
supporters divided along religious,
ethnic and sectional bias, over 160
people across the country had lost
their lives already to election related
violence as at January 2015 (a few
months before the last polls).
At least 30 people were killed
largely from inter-party conflicts
and attacks on election sites, with
problems being most pronounced in
Rivers and Akwa Ibom states.
There might not be significant
changes in the narrative, which
will no doubt likely bruise voters
turnout in 2019.
The United States Institute of
Peace observed in a report dubbed
‘Nigeria’s 2019 Elections: Change,
Continuity and the Risks to Peace,’
that the conflict between farmers
and herdsmen within the northern,
central, middle-belt states and the
apparent failure of government to nip
the Boko-Haram insurgency in the
bud also strengthens the perception
that security remains a challenge.
The case of the missing voters
also poses a risk to integrity of the
votes cast.
Cases where people register and
fail to turn up created huge opportunity
for rigging and manipulations
before the introduction of biometric
card readers, according to Ade Adebambo,
an All Progressive Congress
(APC) party agent.
When a party with the upper-hand
in an area is on the verge of losing an
election due to poor turnout, it would
begin to mobilise supporters to vote
and ensure that the numbers tally in
a way that won’t elicit suspicion.
To facilitate that, Adebambo says
party agents are either bought to look
the other way or threatened to succumb.
“If for instance 2,000 people
registered to vote but during the election,
they got 200 where they need 500,
the incumbent can mobilise people
from another area to close the margin.
These were things that happened. This
time, things have changed.”
Assuring that containment of
manipulations would be further
deepened in 2019, Femi Adebiyi,
the public relations officer at INEC
said the commission will adopt simultaneous
accreditation and voting
to reduce incidence of low turnout.
The method, he said, was experimented
successfully in the recent
gubernatorial elections in Anambra,
Ekiti, and Osun, although observers
believe those elections were characterised
by irregularities.
“We understand that this is a
machine (card reader) and wherever
there is going to be failure, we have
back up,” said Akinbiyi who feels the
commission (INEC) is being unfairly
hammered by critics. “We expect that
machines will fail. It fails but what is
the percentage? If of all the process
we have just about five percent failure,
people will begin to hold on to that.”
Going forward, observers appear
positive that the 2019 election could be
on track for improvement in turnout as
enlightenment of voters has increased
as to the dangers of leaving voting decisions
in incompetent hands.
Through the social media, more
youths have been educated about
government policies, actions and
inactions and “will keep trying their
luck because they know how important
it is for them to vote,” according
to Chidi Okereke a social media influencer
with over 68, 000 followers.
However, the concern for other
observers is that while voter turnout
may nudge higher, it will be mostly
induced by monetary enticement
from politicians, casting shadows on
the integrity of elections.
That was exemplified in the last
election where contending parties
dished out money to voters upon
proof of voting in their favour.
Balarebe Musa, a former Governor
of Kaduna state and National
Chairman of the Peoples Redemption
Party shares this sentiment and
believes turnout may increase, not
because of voters’ conviction that the
candidates can perform but because
they need the monies and hand-outs
to be offered. He said: “the fate of
the election in Nigeria is decided by
money. You can see what happened
in the party primaries. This will
continue even at the national election,
people will be bought to vote
because they are so poor,” he said.
In Nigeria, voting is both a right
and obligation once age 18 is attained.
But it has not become compulsory
like in 22 other countries mostly
in Latin America.
A citizen can face a fine of $20 (N7,
200) for failing to vote in Australia,
while eligible voters who duck the polls
for three consecutive elections in Brazil
may have their voter identity cancelled.
It doesn’t end there. They can
be restricted from borrowing from
government financial institutions,
obtaining a passport or taking public
office if approved in a civil service test.
Under compulsory voting, democratic
election of leaders is treated as
the responsibility of citizens, rather
than a constitutional right.
Just like civil responsibilities such
as tax payment, voting in these democracies
is regarded as one of the
obligations to community noted in
the United Nations Universal Declaration
of Human Rights.
In effect, research says the
method appears to have produced
governments with more stability,
legitimacy and a genuine mandate
to govern, a situation which in turn
benefits all individuals.
The idea that compulsory voting results
in a higher degree of political legitimacy
is based on higher voter turnout.
Voluntary voting, for instance, prior to
1924 accounted for between 47 percent
and 78 percent turnout of eligible voters
in Australia. But with the introduction
of compulsory federal voting in 1924,
this figure soared to between 91 and 96
percent, with only 5 percent of eligible
voters accounted as not enrolled.
In contrast, Venezuela and the
Netherlands in 1967 shifted from
compulsory voting to voluntary participation
and turnout in the subsequent
national Dutch poll trimmed by
about 20 percent while Venezuela saw
a drop in attendance of 30 percent in
1993 once compulsion was discarded.
Until something similar happens,
“People will come out to vote when
the dividends of democracy become
noticeable; when promises are fulfilled
and perhaps when the Lagos-
Ibadan expressway, a route that
connects the economic nerve of the
country to other states is completed,”
said Adebambo, the APC party agent.

Monday 07 January 2019 C002D5556 BUSINESS DAY 43

44
BUSINESS DAY
C002D5556
Monday 07 January 2019

Monday 07 January 2019 C002D5556 BUSINESS DAY 45

46
BUSINESS DAY
C002D5556
Monday 07 January 2019

Monday 07 January 2019 C002D5556 BUSINESS DAY 47

48
BUSINESS DAY
C002D5556
Monday 07 January 2019

Monday 07 January 2019
Stakeholders in the
oil and gas industry
say total deregulation
of the downstream
sector will
unlock huge private investment
potential in the sector.
The stakeholders, who
made the assertion while
speaking with the News
Agency of Nigeria on Sunday
in Lagos, said deregulation
would stimulate sustainable
growth in the oil sector.
They expressed worry
over the huge amount of
money annually spent by
the Federal Government
on subsidy payment, saying
such sum could be used to
develop other sectors of the
economy.
They urged the Federal
Government to liberalise
the downstream sector to attract
investors and boost the
country’s economy.
The minster of state,
Petroleum Resources, Ibe
Kachikwu, had said that
subsidy on Premium Motor
Spirit (PMS), otherwise
known as petrol, stood at
over N1.4 trillion.
The stakeholders said
that became imperative for
government to embark on
total deregulation of the
downstream sector to attract
www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng
Deregulation will unlock investment potential
in downstream sector - stakeholders
investors, while the country
saved funds.
Muda Yusuf, directorgeneral,
Lagos State Chambers
of Commerce and
Industry (LCCI), said the
biggest burden on the economy
might be regarded as
the petroleum subsidy regime.
Yusuf said government
should encourage private
sector players to take over
the downstream sector of
the petroleum business,
saying, “When this is done,
most of the challenges we
see as regard subsidy, refineries
and others will be adequately
addressed.
“The government should
only play the regulator and
not an operational role. Government
has no business refining
petroleum products,
retailing or distributing fuel
as well as the marketing of
these products. We cannot
continue to carry that kind of
burden in the oil sector.”
Yusuf also said subsidy
remained a big hole in the
finances of government and
puts pressure on the foreign
exchange market.
According to Yusuf, it has
downward impact on the foreign
reserves, just as it exerts
immense stress on the na-
tion’s treasury.
He said one of the critical
elements of the oil and gas
sector reform, particularly
the downstream sector, was
the complete deregulation of
the sector.
An energy expert, Felix
Andrew, said that continuous
payment of subsidy would
not be sustainable and urged
government to liberalise the
market and encourage “free
entry, free exit’ to attract investors
in the sector.
Andrew, who is also the
executive director, Blue-Sea
Energy Limited, said that
currently, Nigeria spent
about N1.7’trillion on fuel
subsidy annually, while its
education and health sector
could only access a paltry
budget of N300 million and
N400 million, respectively.
According to Andrew, it is
obvious that the fuel subsidy
programme is placing a huge
financial burden on the nation’s
resources.
“Hence, there is no better
time to deregulate as this initiative
is an enabler in freeing
up scarce resources. This is to
address the concerns clearly
expressed by the citizens for
which political leadership is
unable to find the resources
to satisfy.
How Nigeria attains 31% broadband penetration target – NCC
Nigerian Communications
Commission
(NCC) has
confirmed that,
based on empirical indices,
Nigeria attained 31 percent
broadband penetration.
NCC management said in
a statement on Sunday that
this was contrary to insinuations
in some quarters that
the country was far away from
the 30 percent target.
NCC said by the five-year
National Broadband Plan
(NBP), 2013 -2018, it was targeted
that the country should
be able to attain a minimum
of 30 percent from the 5 percent
it had in 2013.
It said expectedly, based
on the population of Nigeria,
estimate at 190 million, and
connected lines of 169 million,
those who had access to
broadband at a speed of 1.5
megabytes per second cover
over 30 percent of the population.
NCC said that to realise
that, the Federal Government
set up the NBP (2013-2018)
with a target of 30 per cent
by 2018, of which the figures
doubled between 21 and 22
percent in the months before
November 2018.
According to NCC, broadband
penetration is typically
measured by the percentage
of total population with access
to broadband networks
out of each hundred.
”According to NCC
data, there were a total of
168,729,005 mobile ”GSM”
mobile subscribers in Nigeria
as at November 2018. Of these
108,457,051 were subscribed
to internet access services
provided by the major operators.
“In terms of broadband
services, a total of 58,965,478
connected to the internet
through 3G and 4G networks
(including those provided
by the Long Term Evolution
(LTE) only service providers
such as Smile and nTel).
“This distinction is critical
because Nigerians predominantly
rely on mobile networks
to access the internet,
including broadband networks.
“The commission said was
made possible since the fixed
broadband access which was
to have been led by the erstwhile
State incumbent – NI-
TEL –” is now literally nonexisting.”
“So, if we take the total active
broadband subscription
figure of 58,965,478 and divide
by the population figure
of 190,886,311 (using the UN’s
projection as at December
2017), we come to a penetration
percentage of 30.9 percent.”
The regulatory body
said it used the UN’s figure
because of consistency, adding
that it appeared to be the
BUSINESS DAY
49
NEWS
baseline used by the International
Telecommunication
Union (ITU) in earlier studies.
“For instance, if we use the
Nigerian Population Commission’s
2006 figure of 140
million, we come to a broadband
penetration rate of 42.1
percent.
“Also, looking through the
ITU Broadband Commission
September 2018 Report,
one would see that Nigeria’s
broadband penetration rate
is set at an abysmal 19.9 percent.
“This cannot be the case,
since that report is based on
industry statistics of December
2017, which was clearly
outdated as at September
2018 when the report was
published.
“Clearly therefore, the
NCC assertion that Nigeria
has attained 30.9 per cent
broadband penetration is
logical and supported by
available data in the commission’s
custody. “There are
lessons to be learnt from the
needless controversy on this
matter. To its credit, NCC has
been rather transparent with
industry data.”
It said NCC website was
being updated on a monthly
basis with data of the subscription,
tariff and other industry
performance which
enabled stakeholders to see a
fair picture of overall industry
performance.

50 BUSINESS DAY www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng Monday 07 January 2019
NEWS
Labour insists on strike as meeting
with FG continues today
JOSHUA BASSEY & KEHINDE AKINTOLA
SERAP writes Fashola to name contractors that disappeared with power projects funds
MICHEAL ANI, with agency report
Socio-Economic Rights
and Accountability
Project (SERAP) says
it has sent a Freedom
of Information (FOI) request
to Babatunde Fashola, minister
of power, works and
housing, urging him to use
his good offices to “urgently
provide information on specific
names and details of
contractors and companies
that allegedly collected money
for electricity projects but
failed to execute any projects,
starting from the return of
democracy in 1999 to 2018.”
According to SERAP, former
Nigeria’s Vice President
and Presidential candidate
of the People’s Democratic
Federal Government
and organised labour
are expected to meet
again today in their
continuation of effort
to resolve the lingering minimum
wage crisis and avert the
proposed nationwide strike
billed to commence tomorrow.
A similar meeting held on
Friday, January 4, to address
the issue was inconclusive and
both agreed to continue today.
Labour had since commenced
mobilisation of members
and its civil society allies
for what they said would be
a long drawn nationwide industrial
action to demand for
the implementation of the
N30,000 new minimum wage
recommended by the Ama
Pepple-led tripartite National
Minimum Wage Committee.
Chris Ngige, minister of labour
and employment, during
the meeting on Friday, said the
high level Technical Committee
announced by President
Muhammadu Buhari would
work on the fiscal issues to
ensure sustainable payment
of the N30,000 new national
minimum wage.
Labour had insisted there
was no need setting up a technical
committee and urged the
federal government to transmit
a draft bill of the N30,000
recommended by the wage
committee to the National Assembly.
But Ngige said the technical
committee when constituted
would also advise state
governments who have been
complaining and groaning
under heavy wage bill on how
they should source funds to
meet the financial obligations
arising from the new minimum
wage.
According to Ngige, Federal
Government and labour
negotiating teams would meet
again today by 5:00pm to fine
tune fiscal issues on the new
national minimum wage.
“The meeting was not
deadlock. We are making progress
or we have made substantial
progress in terms of the
transmission of the national
minimum wage bill,” the minister
explained.
When informed that the
National Assembly was presently
on recess and expected
to resume on Wednesday,
January 16, 2019, Ngige said:
“Very good that’s the issue we
are looking at, they (National
Assembly) are on recess as you
can see it is a new bill on the
National Minimum Wage Act
2019.”
Party (PDP), Atiku Abubakar,
reportedly blew the
whistle on Channels TV
when he said, “Contractors
were given some contracts
for power projects and were
paid 100 percent upfront yet
the money went down the
drain. Up till now, we are
not holding the contractors
responsible. People have
collected money upfront
100 percent and have disappeared;
and have not even
done any work.”
SERAP said: “The revelation
by Atiku is entirely consistent
with SERAP’s recent
report titled: From Darkness
to Darkness: How Nigerians
are Paying the Price for
Corruption in the Electricity
Sector, which also revealed
When asked about the hard
stance of the state governors
on the agreement reached
during the tripartite committee
meeting, Ngige said: “the
issue of the national minimum
wage is n the exclusive list,” as
stipulated by the 1999 Constitution
(as amended).
He maintained that if Mr.
President is not committed to
the implementation of the new
minimum wage, he would not
have provided the resources
for the tripartite committee
which worked for one year.
“He (Buhari) is ready for
it and received the report too.
We are now working on the
report. The report is in a raw
form. It is the milling that we
are doing. Now with labour
discussing.
“The high level technical
committee is not a committee
that to review the Minimum
wage report. It is a committee
that is economic. It is about
budget and planning and advises
Federal Government and
even the state governments on
sustainable implementation
and how we can get the funds.
Not a one and off thing not that
we can pay in 2019 and cannot
pay again. It will advise state
governments that have been
complaining and groaning under
heavy wage bill on certain
things they should do.”
Ibom Air acquires three aircraft for operations
IFEOMA OKEKE
Akwa Ibom State
government-owned
Ibom Airline Company
is gearing up
to commence operations after
acquiring three aircraft into its
fleet, and concluding a recruitment
process with 400 direct
and indirect jobs for Akwa
Ibom unemployed indigenes.
The state government says
the airline will for the moment
operate within Uyo-Lagos-Abuja
routes, adding that
it ventured into airline operations
to add to the capacity of
existing airlines.
Akan Okon, the state commissioner
for special duties
how over N11 trillion meant
to provide regular electricity
supply was allegedly squandered
by politicians and
contractors under successive
governments.”
In the FOI request dated
January, 4, 2019 and signed
by SERAP senior legal adviser
Bamisope Adeyanju, the
organisation said, “By publishing
the names of the contractors
and their registration
details, if any, Nigerians will
be better able to hold them
to account for allegedly absconding
with public funds
meant for electricity projects,
thereby throwing the country
into perpetual darkness and
socio-economic stagnation
as well as denying people
their human rights.”
and aviation development, said
in Uyo, the state capital, that the
recruitment process had been
concluded with an Akwa Ibom
son as chief pilot. He explained
that the heavy traffic witnessed
at the Akwa Ibom airport made
it imperative for the state government
to join the few airlines
operating there.
“Ibom Air has come to stay.
Three aircraft are secured and
are ready for commencement
of operation. It is completely
owned and operated by Akwa
Ibom State government and it
will provide 400 direct and indirect
jobs,” Okon said
Okon said though the airline
was exclusively owned by
the Akwa Ibom State government,
its management and
operations would be benchmarked
against international
best practices.
Staff of the new airline, recruited
strictly on merit, are
currently undergoing training
in their various areas of
specialties, and getting set to
start operations as soon as
required formalities are concluded,
he said.
On the state of the Victor Attah
International Airport, he said
was at the moment undergoing
work to improve the standard
of the airport with the ongoing
work on the second runway, new
taxiway, a power sub-station,
new commercial building and
other unique features.
SHIN achieves first oil on 200,000bpd Egina FPSO
KELECHI EWUZIE
Samsung Heavy Industries
Nigeria Limited
(SHIN) says it has
successful achieved
the first oil on the 200,000
barrels per day-capacity Egina
Floating Production Storage
Offloading (FPSO) unit.
The FPSO achieved first
Oil on December 29, 2018,
after the global shipbuilding
firm successfully completed
the mooring, hook-up and
required offshore commissioning
of the floating vessel.
In a statement by the
company, this volume of onshore
and offshore work had
never been accomplished in
Nigeria before now.
According to the company,
“With all these accomplished,
the high-risk portion of the
Egina project has now been
completed. This achievement
have been followed by very
good response from Nigerian
authorities, international clients
and earned major headlines
in the press. This leads
SHI to gain competitive edge
in future offshore project orders
in West Africa, of course
including Nigeria.”
The Egina FPSO, one of
the world’s largest FPSO,
and indeed the largest FPSO
ever deployed by the Total
Group, was built for the
French oil giant by SHIN.
Production from Egina
field of 200,000 barrels per
day at peak will increase
Nigerian current crude oil
production by 10 percent.
Since Egina FPSO arrived
at its offshore location on
August 29 from the fabrication
and integration yard in
Lagos, SHIN has worked towards
successfully achieving
this challenging goal of
achieving First Oil in 2018,
as agreed by all parties.
The Korean giant also
completed the FPSO
mooring well in advance
- completed on September
17,2018 against target
date of September 23, 2018,
riser hook-up activities and
required offshore commissioning,
putting an exemplary
effort in achieving
First Oil in 2018.
The company had also
successfully completed the
FPSO work in SHI-MCI yard
before it continued its work
offshore under strict Nigerian
local content regulations
with similar safety and
quality standards applicable
in the company’s Geoje
shipyard in Korea.
The statement says “We
are very proud to announce
the successful achievement
of First oil in 2018, which is
adding another feather in
our cap, subsequent to our
completion of the first ever
Nigerian Onshore Integration
works for EGINA FPSO
with thorough preparation
in compliance with Nigeria
Local Content.”
“Samsung is confident of
successfully completing the
remaining offshore commissioning
works and handover
of Egina FPSO to our client
Total along with its partners
(NNPC, CNOOC, SAPETRO
and PETROBRAS on schedule,
through close co-operation
and support from all relevant
Nigerian Government
Agencies including NNPC,
NAPIMS, NCDMB, NPA,
NEPZA, NIMASA, NIS, DPR,
etc., with Highest levels of
Safety and quality control.”
SHIN won the order to
build the Egina FPSO in
2013 and the facility is currently
installed on the offshore
field, located 150 km
off the coast of Nigeria.
The mega facility is 330
metres in length, 61metres
in breadth, and 34metres in
height. It boasts 200,000 barrels
of production per day at
the peak and 2.3 million barrels
storage capacity with topsides
weighing 60,000 tonnes.
The new-build FPSO contract
was a turnkey project in
which SAMSUNG covered
the entire engineering, design,
procurement, construction,
transportation and commissioning.

Monday 07 January 2019 C002D5556 BUSINESS DAY 51

52 BUSINESS DAY www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng Monday 07 January 2019
NEWS
L-R:
Usman Gur
Muhammed,
managing director/CEO,
Transmission
Company of
Nigeria (TCN);
Gboyega Oyetola,
governor
Osun State,
and his deputy
Benedict
Olugboyega
Alabi, during
the courtesy
visit by
the management
of TCN to
the governor in
Osogbo.
BUA, CBMI sign agreement to build New 3million Kalambaina Cement II Plant in Sokoto
ENDURANCE OKAFOR
Less than one week
after the listing of
shares from the
almost $1 billion
Merger between
BUA Kalambaina Cement
Company and Cement Company
of Northern Nigeria
where it also assumed majority
stakes in the enlarged
company, BUA Group has
announced that it has signed
another contract with world’s
renowned cement manufacturing
company, CBMI, for
the construction of a new
3million metric tonnes per
annum Kalambaina Cement
Line 2 in Sokoto State, North
West Nigeria.
This comes barely 90
days after the completion
of another 3million MTPA
BUA Obu Cement line 2 in
Okpella, Edo State, Southern
Nigeria and 7 months
after the commissioning of
its 1.5million MTPA Kalambaina
Cement Plant line 1 in
Sokoto state thus bringing
BUA Cement’s total installed
capacity to 11million MTPA
by the time the new project Is
completed.
Speaking at the contract
signing ceremony for the
plant in Sokoto State, Abdul
Samad Rabiu, Executive
Chairman/CEO, BUA Group
and Chairman of CCNN, disclosed
that the construction
of the new 3million mtpa kalambaina
line was in line with
BUA Cement’s strategic midterm
expansion programme.
According to Abdul Samad,
the Nigerian market is still
greatly underserved and with
the projected growth in major
infrastructure projects and
spending over the next few
years, it is important that local
manufacturers are able to
scale effectively to meet current
and projected demand.
Rabiu also added that this
partnership between BUA
and Sinoma CBMI is not the
first as they were responsible
for constructing the first BUA
Kalambaina plant in Sokoto
State. “We are very confident
that Sinoma CBMI possesses
the necessary technical expertise
given their track records
in deploying cement
plants across the world. ”
Mr. Tong Laigou, Chairman
of CBMI, signed on behalf of
CBMI construction.
On BUA becoming Nigeria’s
second largest cement
producer by volume, Rabiu
said that BUA’s strategic cement
expansion programme
which focused on key regional
and export markets
has seen it become the second
largest producer of cement
by volume in Nigeria
this year whilst solidifying
BUA Cement’s leadership
positions in the North West,
South South and South East
Markets of Nigeria. “We will
continue to deliver quality
products which has earned
us the ‘King of Strength and
King of Cement’ moniker
amongst block makers who
form the largest users of cement
in Nigeria”
It would be recalled that
the Security and Exchange
Commission had recently
approved the merger of
the Cement Company of
OMS denies allegation of underhand dealings in Nigeria’s oil business
Ocean Marine Solutions
(OMS)
Limited, a leading
asset protection
companies in Nigeria, has
denied the alleged allegation
of its underhand dealing
in the nation’s oil business.
The company said in a
document seen by BusinessDay
that the allegation
came after NNPC approached
OMS to replicate
the achievement it had accomplished
on the Bonny-
Port Harcourt pipeline. OMS
said its efforts led to the formal
re-commissioning of
pipeline in April 22 and 23,
2016 by the minister of state,
petroleum resources and the
immediate past group managing
director, NNPC.
“Fearful that we will put
an end to their illegal racketeering,
vested interested
in the Trans Forcados Pipeline
(TFP) have engaged in a
clumsy smear campaign in
an effort to harm us and preserve
the status quo,” OMS
said in the statement.
OMS lashed the alleged
accusers and it said, “We
hold Kola Karim, Shoreline
Natural Resources Limited
and Eraskorp Limited accountable
for spreading
these pathetic and malicious
falsehoods.”
The Marine Company
further explained in the document,
“if we accept NNPC’s
invitation to take over responsibility
for the security
of the TFP, we will gladly put
an end to the criminal abuse
of another key part of our
strategic national infrastructure.
“The decision to assign
the TFP surveillance package
to OMS was reached
after consideration of huge
losses on TFP and rigorous
appraisal of the company’s
impressive record of performance
on the Bonny-Port
Harcourt and Warri-Escra-
vos Crude Oil evacuation
lines,” OMS quoted NNPC to
have said.
On that basis, OMS said,
“The suggestions put in the
press that OMS involvement
in the TFP is untoward is
outrageous.”
The company cited that
“since April 2016 we have
delivered 60.17 million barrels
of oil (and counting) to
both refineries without any
loss to the nation.”
It further explained,
“OMS did not seek out the
TFP security and surveillance
contract from NNPC.
We were approached and invited
to render our services
because of the dire security
situation and because we
have reputation for delivering
results.”
OMS threatened to take
legal step to resolving the accusations.
“We will take the
necessary legal and other
steps to protect our reputation
and expose the truth.”
Northern Nigeria Plc with
BUA’s Kalambaina Cement
Company Limited of Nigeria
that saw the enlarged
CCNN become Nigeria’s
12th largest company by
market capitalisation.
BUA Group’s current
cement assets include
the 6million MTPA Obu
Cement I & II plants in
Okpella, Edo State, the
500,000mtpa Edo Cement
Plant, the 1.5million MTPA
Kalambaina Cement Plant
and the 500,000 Sokoto Cement
Plant. The Group also
owns over 90 percent stake
in the publicly listed Cement
Company of Northern
Nigeria Plc and is widely acclaimed
for its high capacity
utilisation, efficiency and
quality of its products.
‘Amaechi’s leaked audio
tape reveals deceit in APC’
OWEDE AGBAJILEKE, Abuja
People’s Democratic
Party
(PDP) has reacted
to the
leaked audio tape by the
director-general of APC
Presidential Campaign
Council, Rotimi Amaechi.
Fielding questions
from journalists at a
press conference on
Sunday in Abuja, Kola
Ologbondiyan, director,
media and publicity,
PDP Presidential Campaign
Organisation, said
the audio tape by the
minister of transportation
revealed the deceit
in the governing party.
Amaechi was reported
to have been caught
on tape criticising President
Muhammadu Buhari.
The audio clip posted
by Reno Omokri, an
aide to former President
Goodluck Jonathan, on
his Twitter handle, echoes
a voice he attributed
to Amaechi purportedly
saying, “Buhari neither
reads nor listens to anyone.”
However, Business-
Day could not authenticate
the voice.
In the said audio allegedly
attributed to
Amaechi was a voice
saying, “The President
is not listening to anybody.
He doesn’t care.
You can write anything
you want. The President
doesn’t care. Does he
read?”
Reacting to the development,
Ologbondiyan
said the tape revealed
the lies and deceits the
governing party employed
in winning the
2015 elections.
He said: “PDP’s comments
on audio tape of
Amaechi talking of the
audio tape making the
rounds in social media
concerning the Minister
of Transportation, Rotimi
Amaechi, I think he
has a huge responsibility
to defend himself.
“But if his principal,
President Buhari, feels
that the tape is normal,
it is not our business
in the PDP. What is out
in the public domain is
just a demonstration to
Nigerians about the lies,
deceptions, contrivances
and beguilement that
APC deployed to win the
2015 election. It shows
that they have no plans,
no agenda, no vision
in whatever form as far
as governance is concerned
for Nigerians.
“And if one member
of their own inner Caucus
has come out to admit
that, it is not within
the purview of the PDP.”

Monday 07 January 2019 C002D5556 BUSINESS DAY 53

54
BUSINESS DAY
C002D5556
Monday 07 January 2019

Monday 07 January 2019 C002D5556 BUSINESS DAY 55

56 BUSINESS DAY www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng
NEWS
Nigeria suffered high rate of cholera,
cerebrospinal meningitis outbreak in 2018
ANTHONIA OBOKOH
Despite the dramatic
gains in
disease outbreak
made by
Nigeria, major
diseases still persist within
states across the country, the
monitoring the disease surveillance
with weekly Epidemiological
report of the Nigeria
Centre for Disease Control
(NCDC) states.
Cholera and cerebrospinal
meningitis outbreaks recorded
the highest death rate
in the country follow by Lassa
fever, measles and yellow fever
in 2018, the report states.
“Between the first week and
49 weeks of 2018, cholera outbreak
confirmed deaths was
1,135 and 50,500 suspected
cases with 934 laboratory confirmed
from 244 local government
areas in 30 states were
reported compared with 3,695
suspected cases and 84 deaths
from 73 LGAs of 19 states during
the same period in 2017.
L-R: Christopher
Adesotu,
Commissioner
for Science and
Technology;
Muhammad
I. Choudhary,
Professor
of Organic
Chemistry, and
Abiodun Falodun,
rector, Edo State
Polytechnic,
Usen, during
the Maiden
International
Symposium of
the institution
and unveiling of
the Muhammad
Iqbal Choudhary
Centre for
Natural Product
Research (ICC-
NPR), at the
polytechnic, in
Usen, near Benin
City.
African Leadership
University, the Mauritius-based
institution
with an ambitious
goal to train the continent’s future
leaders, has raised $30 million
in a Series B round led by
Danish retail billionaire Anders
Holch Povlsen.
The new funds will be focused
on rolling out the organization’s
lifelong learning
centers program, ALX, which
opened in Nairobi last year
and is set to open in Johannesburg,
Lagos, Cape Town, and
Casablanca later this year.
The ALX program includes
six-month courses designed
for university graduates and
other experienced workers
interested in acquiring important
leadership and technical
skills from data science
to operational management
with the goal of making the
“Cerebrospinal meningitis
confirmed that between
weeks 1 and 49 in 2018, 4,464
suspected meningitis cases
with 318 laboratory confirmed
and 360 deaths from 299 LGAs
of 35 states were reported
compared with 9,939 suspected
cases and 607 deaths from
326 LGAs in 34 states during
the same period in 2017,” according
to the report.
The continued spread of
these outbreaks across the
country is due to suboptimal
vaccination coverage in many
Nigerian states of all cases reported
with known vaccination
status, experts say.
However, vaccination coverage
is still too low in some
states in the country to reach
elimination, with the latest
available figures on coverage,
especially for cholera outbreak.
Nigeria is currently the
most impacted country with
some 90 percent of cholera
cases, the United Nations Children’s
Fund (UNICEF) says.
Cholera is a serious bacterial
ogy and human resource to
reduce outbreaks.
Muntaqa Umar-Sadiq, CEO,
Private Sector Health Alliance
of Nigeria (PHN), said Nigeria’s
epidemic preparedness and response
capacity highlight six priority
gaps required to enhance
detection, prevention and management
of an outbreak.
“Priority gaps include infrastructure,
logistics, commodities,
technology, human
resource and communication.
“With more outbreaks
on the horizon, Nigeria cannot
afford to repeat this cycle
of uncertain priorities, wasted
time and investments. We
need strong and clear leadership;
effective deployment of
new innovations,” he said.
Doyin Odubanjo, chairman,
Association of Public Health
Physicians of Nigeria, Lagos
chapter, lamented that despite
the long experience with outbreaks
in Nigeria, an understanding
of the mechanism aiding
its persistence in occurrence
situations is still lacking.
African Leadership University raises $30m in bid to reinvent graduate education
participants “highly employable,”
says co-founder Fred
Swaniker.
Unlike traditional graduate
programs the centers can
operate out of fairly low-cost
set-ups such as co-working
spaces and includes career
placements and incubator
programs for entrepreneurs.
“We’ve been moving away
from the conventional university
programs and focused on
unlocking Africa’s leadership
talent,” he says.
Right from its inception, the
African Leadership programs
have been focused on reinventing
African high school,
university and graduate education
while attempting to
overcome the continent’s
many resource limitations.
African higher education
faces systemic, qualitative and
quantitative challenges with
too few universities to absorb
the tens of millions of young
applicants. This problem is
compounded by financial and
infrastructure constraints. A
2016 survey also showed only
10 universities in Africa were
among the top 1000 schools in
the world.
But ALU’s disruptive approach
has at times been quite
radical even for some of its
own staff, a few of whom quit
last year as it became more
clear it was not a traditional
academic institution, according
to a report by Times Higher
Education.
The latest funding round
was originally agreed back in
July, according to a SEC filing.
It consists of about $28.2
million in new cash and, according
to Swaniker, there’s an
additional $2.5 million in convertible
debt.
In just over three years,
ALU has raised $80 million,
says Swaniker. Its long term
backers including the Omidyar
Network and Silicon Valley
investors including Bob
King. That total is now made
up of $50 million in venture
funding to run its education
operations, $20 million for its
real estate arm to build campus
properties (which it leases
to the school) and another $10
million for its student finance
programme.
The student finance program
is designed to fund students
by “taking an equity
stake in their future”. After a
student graduates ALU receives
a fixed percentage of
their income over a five to
ten-year period. “Unlike a traditional
loan, if they don’t get
employed there’s nothing to
pay,” says Swaniker.
Explainer:
These are the options NERC is
proposing to check estimated billings
ISAAC ANYAOGU
Due to incessant
complaints from
members of the
public regarding
estimated billing, the
Nigerian Electricity Regulatory
Commission (NERC)
has proposed options cap
estimated bills for electricity
customers with the overriding
objective of assigning
maximum energy consumption
based on the customer’s
property size and usage;
dwelling or commercial.
In the first option being
considered, the Commission
is considering a cap on estimated
billing based on the
projected average monthly
consumption of each tariff
class in the MYTO model.
The Multi Year Tariff Order
(MYTO) model and the
tariff design by the distribution
licensees are based on
the recovery of the approved
revenue requirement from all
classes of consumers in accordance
with the estimated
annual energy consumption
for the tariff class. In this respect,
taking into consideration
the customer population
and customer mix for a distribution
licensee, the projected
average consumption per tariff
class may be computed.
It presents a hypothetical
example: a distribution
licensee with a total load of
400MWhr/hr, 30% of consumption
by R2 as per tariff
design and comprised of
250,000 R2 customers.
Monthly energy off-take:
288 million kWHr
Consumption by all R2
customers per tariff design @
30% = 86.4 million kWhr
Average consumption for
R2: = 86,400,000/250,000 =
345.60kWhr per customer
per month Proposed cap on
estimated billing: 345.60units
x applicable R2 tariff for the
DisCo NERC says this approach
is strictly based on
projections in the tariff design
for the utility and does
not take into account the actual
level of supply during the
period under consideration.
However, the computed
cap on estimated billing remains
constant until a review
that alters the structure of the
cost recovery model.
In the second method, the
Commission is considering
Governor of Edo
State, Godwin
Obaseki, has vowed
to prosecute any
contractor who delivers substandard
work on the 230
public primary schools being
refurbished by the state government
through the State
Universal Basic Education
Board (SUBEB).
Monday 07 January 2019
infection that causes severe
watery diarrhoea and stomach
cramps, which can lead to dehydration
and even death.
Chikwe Ihekweazu, CEO,
NCDC said, “Cholera cases
are being treated at designated
treatment centres in affected
states. We have ramped up our
risk communications campaign
so that people are better aware
of the risk factors and ways to
prevent cholera outbreaks.
“We are also strengthening
the disease surveillance and
laboratory systems so that
cases are reported early, detected
in time and response
measures initiated.”
Recently, Nigeria was
among the countries that
benefitted from Gavi’s vaccine
alliance against cholera
on the continent.
Health experts have
harped on the need to check
and invest heavily in tackling
disease outbreaks, stressing
that Nigeria must do more to
improve the country’s infrastructure,
invest in technolthe
application of the average
consumption of each tariff
class within a franchise area
as the cap for estimated billing
of unmetered customers.
The justification is that all
distribution licensees have
aggregated data on the average
energy consumption for
each tariff class within the
franchise area of the utility
based on information from
prepaid vending platforms.
A hypothetical example: a
distribution licensee with the
following average vending
data for its franchise area and
extracted over a preceding
period of three (3) months:
R2 – 250kWhr per month
R3 – 780kWHr per month
The proposed cap on
estimated bills would be
250units x applicable R2 tariff
and 780units x applicable R3
tariff, respectively.
According to NERC, the
third method, it is proposing
to consider the option of
capping the estimated bill of
consumers within a Business
Unit to the average vending
of the same tariff class within
the area.
In developing the guidelines
for capping estimated
billing, the Commission said
it is imperative of taking into
account the disparity in the
availability of supply within
franchise area and the customer
profile.
The third method is presented
in an hypothetical
example: the vending data
on average energy purchase
within the Business Unit of a
distribution licensee over the
preceding three (3) months is
as follows:
Business Unit A: R2 –
350kWhr per month
Business Unit B: R2 –
157kWhr per month
The Commission propose,
under this model, that
Business Unit A will apply a
cap of 350kWhr per month
while Business Unit B will
apply a cap of 157kWhr for
unmetered customers within
the same tariff class
While these options are
still proposals, it is calling on
the public to provide comment
on these options even
though many customers argue
that the priority should
have been to compel DisCos
to provide meters for their
customers according to their
performance agreement.
Obaseki meets contractors on revamp of 230 schools,
threatens prosecution over sub-standard job
The governor gave the
warning when he held a
meeting with the contractors
handling the school renovation
project at Government
House in Benin City, on
Thursday.
He said, “Ordinary, I will
not interact with contractors
but because of the priority we
place on basic education.

FT
BUSINESS DAY
FINANCIAL TIMES
Monday 07 January 2019 www.businessday.ng https://www.facebook.com/businessdayng @Businessdayng
57
World Business Newspaper
May warns of ‘uncharted territory’ if MPs reject her deal
Prime minister refuses to rule out taking Brexit decision to Parliament multiple times
Laura Hughes
Theresa May has said
the UK would be in
“uncharted territory”
if MPs reject her Brexit
deal next week, as she
refused to rule out bringing the
deal back to Parliament multiple
times.
A vote on the deal is now
earmarked for the week starting
January 14, after the prime minister
postponed it in December
because she risked almost guaranteed
defeat.
Speaking on Sunday, she was
adamant that the Commons vote
on her Brexit deal would “definitely”
go ahead next week.
Questioned on whether she
would continue to put the deal
back to MPs if it is rejected, Mrs
May told the BBC’s Andrew Marr
Show: “If the deal is not voted
on at this vote that’s coming up,
then actually we’re going to be in
uncharted territory.”
“I don’t think anybody can
say exactly what will happen in
terms of the reaction we will see
in Parliament.”
Mrs May said she would seek
to avert defeat in the vote by
securing new reassurances for
Northern Ireland, a greater role
for UK parliamentarians in forging
the future relationship with
the EU and further pledges from
Brussels.
Mrs May is seeking legally
binding assurances that a socalled
backstop plan — intended
to avoid a hard Irish border, based
on proposals for a temporary
UK-EU customs union — will be
time-limited.
She acknowledged on Sunday
that “we are still working on”
securing these assurances from
the EU.
Downing Street will seek to
win over critics who have vowed
to rebel against Mrs May’s deal
this week, by highlighting the
dangers posed by a no-deal Brexit
or a second referendum.
Asked to rule out a second
referendum, Mrs appeared to
soften her stance, saying it was
her personal view that a second
Top congressional Democrats Steny Hoyer, Chuck Schumer and Nancy Pelosi met Donald Trump at the White House on Wednesday
to discuss the president’s demand for border wall funding © EPA
vote would divide the country.
“In my view there should not be
a second referendum”, she told
the BBC.
In a message to Labour MPs
and Conservative Eurosceptics
who have vowed to vote down
her deal, Mrs May said: “We have
got people who are promoting
a second referendum in order
to stop Brexit, and we have got
people who want to see their
perfect Brexit.”
“I would say don’t let the
search for the perfect become
the enemy of the good because
the danger there is that we end
up with no Brexit at all.”
World unprepared for slowdown,
says IMF’s Lipton
Fund official warns on trade tensions, policy flaws and weakness in China
Colby Smith and Brendan Greeley
The leaders of the world’s largest
countries are dangerously unprepared
for the consequences
of a serious global slowdown, a
senior executive at the International
Monetary Fund has warned.
In particular, governments will
find it hard to use fiscal or monetary
measures to offset the next recession,
while the system of cross-border support
mechanisms — such as central
bank swap lines — has been undermined,
warns David Lipton, the first
deputy managing director of the IMF.
“The next recession is somewhere
over the horizon, and we are less
prepared to deal with that than we
should be . . . [and] less prepared than
in the last [crisis in 2008],” Mr Lipton
told the Financial Times on the
sidelines of the American Economic
Association annual meeting in Atlanta.
“Given this, countries should
be paying attention to keeping their
economy on a level trajectory, building
buffers and not fighting with
each other.”
In its most recent forecasts, in
October, the IMF projected 3.7 per
cent growth in the global economy
this year. However, with the IMF set
to release updated forecasts later this
month, Mr Lipton admitted that the
growth outlook is being undermined
by trade tensions, policy flaws and
weakness in Asia.
“China is clearly slowing down
— we think China’s growth has to
slow, but keeping it from slowing
in a dangerous way is an important
objective,” he said, noting that a
downshift would be “material very
broadly, not just in Asia.”
Concern about the faltering
growth outlook, coupled with rising
interest rates, has prompted sharp
falls in equity markets in recent
weeks. Jay Powell, chairman of the
Federal Reserve, tried to offset this
on Friday at the Atlanta conference
by saying that “US data seem to be
on track to sustain good momentum
into the new year”. He pledged
that the Fed would take a “patient”
approach to monetary policy tightening.
Separately Larry Kudlow, White
House economic adviser, told the
conference — which brings together
around 13,000 economists — that
“there’s no recession in sight.” He
urged economists to ignore the
swings on Wall Street.
However, some leading economists
pointed out that the new
gloomy investor “narrative” could
become self-reinforcing. “Suddenly,
the markets are reacting as if there’s
a crisis of interest rate increases,” argued
Robert Shiller, the Yale professor
and Nobel laureate. He pointed
out that, although the Fed had been
raising rates for several years, investors
were only reacting to this now.
“This doesn’t look rational,” he
says, drawing parallels with the
1920s in terms of the sudden shift
in psychology. “[Then] the earnings
were high, the economy was moving
well, but suddenly it crashed — and
again it was talk, I think. There was
a new narrative that developed in
1929, just as there is a new narrative
developing today.”
The debates in Atlanta revealed
widespread pessimism among economists
about the chance of any rapid
resolution to the current trade wars.
“It is always possible that President
Trump can wake up one day, reach
out to his friend President Xi and
decide to take yes for an answer”,
said Adam Posen, president of the
Peterson Institute for International
Economics.
Trump tries to sell border ‘barrier’ to Democrats
Government drops demand for concrete wall as shutdown heads into third week
Kadhim Shubber
Donald Trump said a steel
barrier would satisfy his
demand for a wall along
the US-Mexico border on Sunday,
as the partial shutdown of the government
look set to continue into
its third week.
The US president, and his acting
chief of staff, reiterated comments
that a concrete wall was
not strictly necessary as they attempted
to reframe Mr Trump’s
demands as a call for the sort of
border fencing constructed under
previous US presidents.
“We have to build the wall or
we have to build a barrier,” said Mr
Trump to reporters before he left
the White House for Camp David.
“The barrier or the wall can be of
steel instead of concrete if that
works better,” he added.
Mick Mulvaney, the White
House acting chief of staff, said
on NBC’s Meet the Press that Mr
Trump was willing to “take a concrete
wall off the table”.
“If he has to give up a concrete
wall, replace it with a steel fence in
order to do that so that Democrats
can say, “See? He’s not building a
wall any more,” that should help us
move in the right direction,” said
Mr Mulvaney in comments aired
on Sunday morning.
Talks between Democrats and
the White House to end the shutdown
ended on Saturday without
visible progress. The two sides are
set to continue negotiations on
Sunday afternoon, but Mr Trump
said he did not expect a breakthrough.
“I don’t expect to have anything
happen at that meeting . . . but I
think we’re going to have some
very serious talks come Monday,
Tuesday, Wednesday,” he told
reporters.
Hundreds of thousands of federal
employees have been on leave
or working without pay since December
22 after the White House
and Congress failed to agree a
funding bill to keep the entire government
open. Roughly a quarter
of federal agencies, including the
Department of Justice and Department
of Homeland Security, are
affected.
Mr Trump has demanded
$5.6bn in funding for a border wall
and has said he would continue
the partial shutdown for months,
or even years, if his demand was
not met. A border wall was Mr
Trump’s signature promise during
the 2016 presidential campaign.
He insisted Mexico would pay
for the wall, which the southern
neighbour has refused to do.
Some 650 miles of the almost
2,000-mile US-Mexico border is
already covered by various forms
of fencing, much of it built as a
result of the Secure Fencing Act of
2006, which was signed by George
W Bush.
Nancy Pelosi, the Democratic
leader in the House, has refused
to offer any money for a wall.
On Thursday, Democrats, who
recently regained control of the
lower chamber, passed a bill that
would fund the government but
not a wall.
Chuck Schumer, the top
Democrat in the Senate, has offered
funding for border security
measures but no money for Mr
Trump’s wall, which Democrats
regard as an ineffective waste of
money.
The idea has also been criticised
by Republicans. In 2015, Mr
Mulvaney dismissed Mr Trump’s
calls for a barrier on the US-Mexico
border as too simplistic, calling
the demand “absurd and almost
childish”. He said on Sunday that
circumstances on the ground had
changed and so had his view.
In December, the Republicancontrolled
Senate passed a shortterm
funding bill that would have
kept the government open. The bill
did not include money for a wall.
Mitch McConnell, the Republican
majority leader in the Senate,
has said he will not bring another
funding bill for a vote until the
White House and Democrats have
come to an agreement.
Mr Trump has said he may
announce a national emergency
to build the wall if Congress did
not grant money for the project, a
dramatic step that would probably
be challenged in the courts.
“Presidents have authority to
defend the nation,” said Mr Mulvaney
on CNN’s State of the Union
on Sunday. The acting chief of
staff said Mr Trump had asked his
cabinet secretaries “to try and find
money that we can legally use to
defend the southern border”.

www.businessday.ng https://www.facebook.com/businessdayng @Businessdayng Monday 07 January 2019
58 BUSINESS DAY
FT
US trade negotiators
head to China against
gloomy backdrop
Market volatility and global slowdown
concerns raise pressure on
both sides to do deal
James Politi and Lucy Hornby
US and Chinese negotiators
are under mounting pressure
to compromise in a new
round of trade talks this week, as
growing financial market volatility
and fears of a bruising slowdown hit
the global economy.
A delegation of American officials
will meet Chinese counterparts
on Monday in Beijing for two days of
discussions — the first face-to-face
talks since President Donald Trump
and President Xi Jinping agreed
a trade truce at the G20 summit
in Argentina last month — with a
looming March 2 deadline to strike
an agreement or see an escalation
in tariffs.
The mission, led by Jeff Gerrish,
the US deputy trade representative,
follows a torrid month for global
markets, which have been convulsed
by concerns of a looming
downturn in the world’s two biggest
economies. The S&P 500 has fallen
13 per cent since the start of October.
Mr Gerrish will be joined by
high-ranking officials from the
agriculture department, energy department
and treasury department
in a sign that the talks are becoming
more specific than they were when
Mr Trump and Mr Xi met in Buenos
Aires.
For the US, success will hinge
on how far China is prepared to go
to purchase more American goods
in agriculture, manufacturing and
energy, as well as curbing intellectual
property theft and the forced
transfer of technology.
“Mutually assured destruction
is too strong but the incentives for
both China and the US are to work
towards some kind of agreement,”
said Stephanie Segal, a senior fellow
at the Center for Strategic and International
Studies, a Washingtonbased
think-tank. “They are going
to be looking for an outright victory,
and if not they will want to declare
sufficient progress to kick the can
down the road.”
“If I were them, I would be looking
at the list of US demands that the
Chinese said they would be willing
to accept, and clarifying those so I
can declare victory and it doesn’t
look like I capitulated,” said one
former US trade official.
The Chinese want Washington to
commit to not raising tariffs further
and removing levies on some items,
as it hopes to chip away at the US
approach.
Senior US officials were comforted
by a strong jobs report for
December, including a significant
jump in manufacturing employment
which allayed some concerns about
a weakening outlook.
They have interpreted last week’s
revenue warning from Apple, which
the iPhone maker largely blamed on
the economic slowdown in China,
as a symptom of Beijing’s weakness
rather than a worrying sign of
spreading economic pain from their
trade war.
China is grappling with sharply
weakening growth, led by lower
domestic demand and the trade
war, prompting the government to
resort to stimulus measures, such
as injecting $117bn into the banking
system, investing in infrastructure
and urging banks to increase lending
to small businesses.
NATIONAL NEWS
A demonstration in Paris on Saturday started peacefully but ended in violence © AFP
Macron condemns ‘extreme violence’ as French protests continue
Activists smash through ministry door in eighth weekend of demonstrations
Victor Mallet
The latest round of anti-government
protests across France at
the weekend degenerated in
Paris into violent clashes between
protesters and the security forces,
prompting the beleaguered President
Emmanuel Macron to condemn “extreme
violence”.
For the eighth Saturday in a row,
“gilets jaunes” demonstrators —
sporting the yellow reflective jackets
that French motorists are obliged to
carry in their cars — massed in cities
around the country to protest against
the cost of living and to call for Mr
Macron’s resignation, underlining
the challenge to the once-popular
president’s authority after more than
two months of disruption.
The interior ministry said there
were some 50,000 demonstrators
nationwide, compared with 32,000
the previous Saturday during the
Christmas-New Year holiday period.
There were also clashes in Bordeaux,
Caen and other cities.
In recent days Mr Macron and
his government, sensing that urban
shopkeepers and residents are dismayed
by the economic impact of
the prolonged unrest, as well as by
the burning of cars and smashing of
shop windows, have decided to take a
tough line against the demonstrators,
and have suggested that those who
continue to protest are extremists
Tension mounts over Congo poll results delay
US warns electoral authorities not to distort outcome
Tom Wilson and David Pilling
The Democratic Republic of
Congo was edging towards
crisis on Sunday as the electoral
commission postponed the announcement
of presidential results
and the international community
stepped up pressure on Joseph Kabila,
the incumbent, to cede power.
Tension has increased after the
respected Catholic Church said
there had been a clear winner of the
presidential poll a week ago, in what
diplomats said referred to a likely
victory for opposition candidate
Martin Fayulu.
Speaking to the Financial Times,
Mr Fayulu warned the electoral
commission to publish accurate
results, saying “nobody denies that
I am leading the polls”. The former
ExxonMobil executive, a relative
unknown before campaigning began
last November, said he backed the
call by the Catholic bishops’ conference,
known as Cenco.
“We completely agree with Cenwho
deserve no mercy.
A march of an estimated 4,000
people from the Paris town hall to
the national assembly began peacefully,
but ended in violence and failed
to reach its destination when some
of the demonstrators — including
a man identified by police as a former
professional boxer — attacked
a group of gendarmes in riot gear
blocking a pedestrian bridge across
the River Seine. A riverboat restaurant
was set on fire.
Nearby, a small group stole a forklift
truck from a construction site and
smashed down the door to a ministry
building containing the office of
Benjamin Griveaux, the government
spokesman, who was forced to flee
under escort.
“Once again, extreme violence
has come to attack the republic — its
security forces, its representatives, its
symbols,” Mr Macron said on Twitter.
“Those who commit these acts forget
the core of our civil pact. Justice will
be done. Everyone must pull themselves
together to prepare for debate
and dialogue.”
Christophe Castaner, the interior
minister, played down the
significance of Saturday’s protests
and said that 56,500 members of
the security forces, more than one
per demonstrator according to the
official figures, had been mobilised
to quell unrest.
“You can see that this movement
is not representative of France,” he
co’s statement because everybody
knows the results,” he said.
Mr Fayulu also welcomed what
he implied was growing international
pressure on Mr Kabila to accept that
his chosen successor, Emmanuel
Shadary, had lost. “It is very encouraging
that all over the world they are
following closely what is going on
in Congo and making some strong
statements so that the truth will come
out,” he said.
Last Thursday, the US state
department warned the electoral
commission, widely believed to be
aligned with the government, not to
distort results. “There are moments in
every nation’s history when individuals
and political leaders step forward
and do the right thing. This is one of
those moments,” it said.
Washington hinted strongly that
it accepted Cenco’s verdict that Mr
Shadary, known as Mr Kabila’s “dauphin”,
had been defeated.
Peter Pham, US special envoy for
the African Great Lakes region, said:
“There is an old dictum that posits
told LCI television. Although most
of the demonstrations had passed off
peacefully, he said, “at the end there
were numerous provocations and
attacks. Town halls were attacked —
those in Rennes and Rouen — and
institutions like the high court in
Perpignan, and gendarmeries.”
Bruno Le Maire, finance minister,
said in a television interview on Sunday
that he wanted citizens who believed
in representative democracy to
declare “enough is enough”. He said:
“There are forces today that want to
bring down democracy.”
The “gilets jaunes” protests were
triggered by motorists’ anger over
fuel prices that have risen as a result
of green taxes introduced by
the Macron government to reduce
emissions, but the movement has
since developed into an inchoate
series of anti-government and antiestablishment
demonstrations.
Mr Macron’s U-turn on the taxes
and the promise of €10bn of extra
government spending to help the
poor have not mollified the hardline
protesters who continue to take to the
streets on Saturdays.
Those marching in Paris on Saturday
were critical of Mr Macron,
a former Rothschild banker, who is
seen as a “president of the rich” and
has so far failed to convince the majority
of the benefits of his economic
reforms. But few demonstrators were
supportive of any other established
French politicians either.
that the voice of the people is the
voice of God; here rather we have a
case where the ‘vox Dei’ points the
way to the true ‘vox populi’.”
In expectation of possible popular
unrest should Mr Shadary be declared
the winner regardless of the
true count, both the US and the Congolese
government have deployed
troops in the past few days.
Donald Trump, US president,
said he had dispatched 80 soldiers
to nearby Gabon to protect US citizens
and property should violence
break out.
In a letter to Congress, Mr Trump
said he might deploy additional
forces to Gabon or to Congo itself.
The Congolese government has
also been sending thousands of
troops around the country, particularly
to opposition strongholds, in
what observers say could be a preparation
to quash anti-government
protests. Last week, the government
shut down internet services, ostensibly
to prevent the dissemination of
false results.
Egypt tries to block
airing of Sisi’s ‘60
Minutes’ interview
CBS refuses to stop broadcast, in which
president confirms closest
ever co-operation with Israel
Heba Saleh
An interview with US television
channel CBS in which Abdel
Fattah al-Sisi, Egypt’s president,
spoke of his country’s close
co-operation with Israel in fighting
Isis militants, has stirred controversy
after the broadcaster said Cairo tried
to stop it from being aired.
The interview on the 60 Minutes
news programme was due to air on
Sunday evening after CBS said it
had refused Egyptian government
demands to refrain from broadcasting
it. In an excerpt provided by CBS,
Mr Sisi is quoted as having said: “That
is correct . . . we have a wide range of
co-operation with the Israelis,” in
response to a question asking him
if co-operation with Israel was now
the closest ever between the two
countries.
Egypt has had a peace treaty
with Israel since 1978 and the two
countries have diplomatic relations,
but Egyptian public opinion still
regards the Jewish state as an enemy
and occupier of Arab lands. Mr Sisi’s
unprecedented admission could
hand his critics further ammunition
to attack him.
News of co-operation with Israel
against Isis militants in the Sinai has
been widely circulated in the past
year. A New York Times story in February
2018 cited US officials saying
Israel had conducted a covert air campaign
including some 100 air strikes
against Isis militants in the North Sinai
with Cairo’s permission. Egypt denied
the story at the time. Egypt has fought
four wars against Israel since 1948, the
last of which in 1973 was aimed at winning
back sovereignty over the Sinai.
Cairo has not responded to CBS’s
claim that it asked the channel to pull
the episode in which Mr Sisi is interviewed
by Scott Pelley, the program’s
anchor and journalist.
CBS has promoted the programme
as “the interview Egypt’s government
doesn’t want on TV”. CBS said it was
contacted by the Egyptian ambassador
shortly after the interview was recorded
in the US and asked to refrain
from airing it, but the broadcaster
has not specified what the Egyptians
found objectionable.
The channel has not said why it
has held the broadcasting of the interview
since September, when it was
recorded during a visit by Mr Sisi to
New York to attend the UN General
Assembly.
Other excerpts of the interview
made public by CBS include a denial
by Mr Sisi of assertions by Human
Rights Watch that the country is
holding 60,000 political prisoners.
Egypt’s official line is that there are
no political detainees in the country
and that everyone in prison is there
for breaking the law.
Mr Sisi, a former defence minister,
led a popularly backed coup
in 2013 against his elected Islamist
predecessor. He has presided over
one of the harshest crackdowns in
Egypt’s modern history, targeting
mainly Islamists but extending to
secular critics, bloggers and journalists.
“I don’t know where they got this
figure [of 60,000 prisoners],” Mr Sisi
told CBS. “I said there are no political
prisoners in Egypt. Whenever there
is a minority trying to impose an extremist
ideology we have to intervene
regardless of their numbers.”

Monday 07 January 2019 www.businessday.ng https://www.facebook.com/businessdayng @Businessdayng
@ FINANCIAL TIMES LIMITED
Former Barclays executives
prepare to face fraud trial
John Varley, former chief, and 3 others pursued in SFO prosecution
Caroline Binham
The UK Serious Fraud Office has
made a last-minute personnel
change to ensure its flagship
case against four former Barclays top
brass is properly overseen as one of
the biggest tests in its 30-year history
comes to trial.
Barclays’ former chief executive,
John Varley, is one of four defendants
whose long-anticipated trial begins
this week. They face charges over
the bank’s emergency refinancing
arrangements with Qatar in 2008, as
Barclays struggled to avoid the fate of
other high-street rivals bailed out by
the UK taxpayer.
It is the first jury trial in the world
of a major bank’s chief executive over
actions taken during the financial
crisis more than a decade ago and
is scheduled to take at least four
months at London’s Southwark
Crown Court.
The question of who at the SFO is
accountable for the case has been in
doubt since its general counsel quit
for a law firm. The stakes for the SFO,
which has spent millions of pounds
in ringfenced money from the Treasury
investigating the case over more
than six years, are high after bloody
noses in other trials recently, including
the collapse of the retrial of two
former Tesco executives late last year.
SFO charges against Barclays
itself and its operating subsidiary
over the Qatari arrangements were
also scrubbed in October, sparing the
bank from trial.
The anti-fraud agency has now
named Mark Thompson, its chief
operating officer, as the official accountable
for the case.
The agency’s director, Lisa Osofsky,
had to recuse herself from the
Barclays case following her arrival at
the SFO in late August from private
practice, where she was a monitor
to banks trying to overhaul their
compliance.
Alun Milford, the SFO’s former
general counsel who had taken the
Neil Hume
Investors are warming to gold
as markets are whipsawed by
concerns about slowing global
growth.
As US equities tumbled in
December, the holdings of goldbacked
exchange traded funds
rose by 2.25m ounces, according
to Scotiabank, helping to drive
the price of the metal to six-month
highs of more than $1,290 a troy
ounce.
That forced funds that had
placed speculative wagers against
gold in the US futures market to
cover their positions, sending the
market from a net short to a net
long position — where bullish wagers
outnumber bearish bets — for
the first time since June last year.
Analysts believe there has been
a further increase in bullish bets as
well as short covering, although
this has yet to be reflected in official
data. Weekly reports compiled
by the US Commodity Futures
Trading Commission are not being
published because of the partial
government shutdown.
COMPANIES & MARKETS
lead role in the case, has recently left
for Kingsley Napley, the law firm.
While the firm’s instruction precedes
his arrival by many months and he
will not be involved, Kingsley Napley
has a role acting for some of the witnesses
in the case.
Mr Thompson is viewed as a safe
pair of hands at the agency and also
stood in as acting director after the
previous director, Sir David Green,
left in April and before Ms Osofsky
took up the role.
But while Mr Thompson is an
experienced investigator, he is an
accountant by background and not
a lawyer.
The SFO has shrugged off concerns
that there is no senior lawyer
acting as a “second pair of eyes” as
the landmark case proceeds to trial.
Mr Thompson is expected to
make any decisions in conjunction
with Hannah von Dadelszen, a
senior lawyer who jointly heads its
fraud team, while the case controller,
Rakesh Somaia, has been in place
throughout the probe.
The agency declined to comment.
After six years and interviews with
at least 40 individuals, the case is
finally heading to trial.
As well as Mr Varley, in the dock at
Southwark Crown Court will be Roger
Jenkins, the rainmaker who negotiated
the two 2008 capital raisings; Tom
Kalaris, who was a trusted lieutenant
in Barclays’ investment banking unit,
and Richard Boath, the former European
head of the investment bank’s
financial institutions group.
The case involves issues over what
the bankers told the market when Barclays
twice turned to Middle Eastern
investors in 2008 as part of emergency
cash calls worth £11.8bn at the height
of the financial crisis.
Qatari investors ploughed a total
of £6.1bn into Barclays over the two
capital raisings. The SFO alleges that
the bankers induced the Qataris to
invest through side deals worth more
than £300m not fully disclosed to the
market nor to other investors.
Gold lures investors as gyrating markets take shine off stocks
An eruption of volatility has seen the metal re-establish its haven status
“A combination of rising open
interest on Comex and the gold
price going up tells me that new
longs are coming into the market,”
said John Reade, chief market
strategist at the World Gold
Council.
For much of 2018 gold was out
of favour, hit by the strength of the
dollar and interest rate rises in the
US, which dented the appeal of
assets such as the precious metal
that offer no yield. That saw gold
trade as low as $1,174 in August in
spite of rising geopolitical tensions
and the fallout from US-China
trade war.
Sentiment towards gold began
to improve towards the end of the
year as US stock markets fell and
volatility increased. That has continued
into 2019 amid speculation
a slowing US economy will ultimately
force the Federal Reserve
to stop raising interest rates.
Analysts say gold can continue
to shine as long as markets remain
volatile — a fact underlined late
last week after a better than expected
US jobs report saw equity
markets bounce.
FINANCIAL TIMES
John Varley, Barclays’ former chief executive, is one of four defendants facing charges over the bank’s emergency refinancing arrangements
with Qatar in 2008 © Getty
RBS admits misleading court to repossess customer’s home
Case highlights concerns that banks are struggling to change scandal-hit culture
Nicholas Megaw
Lawyers representing Royal
Bank of Scotland falsely denied
the existence of a customer
complaint in a court hearing to repossess
a borrower’s home.
The case will fuel concerns that
banks continue to mistreat customers
despite claiming to have transformed
their culture after a series
of scandals.
Richard, a longtime RBS customer
who did not wish to give his
full name, initially fell into arrears
on a NatWest-branded mortgage
when the bank paid some property
management fees levied by a third
party that he thought were unfair.
He complained about his treatment
to the Financial Ombudsman
Service in May. However the bank
initiated court proceedings to repossess
the property in June, and
its lawyers said on August 15 that
it had “no knowledge” of any FOS
complaint, according to a witness
statement prepared for the hearing.
“Consequently, the claimant
[RBS] asks that the court will refuse
the defendant’s request to dismiss
[or] adjourn the hearing”, added the
lawyers.
Airbus faces a test of its credibility
this week when it reveals whether
it met its target to deliver around
800 aircraft last year, as the plane maker
races to narrow an orders gap with archrival
Boeing.
The European group’s factories
worked overtime during the Christmas
holidays to make up for delays because
of supplier issues.
Guillaume Faury, head of Airbus’s
commercial arm, had made sorting out
the company’s supply chain a key focus.
Mr Faury, who takes the helm from
chief executive Tom Enders in April, is
understood to have launched a review
looking at Airbus’s ways of working,
industry executives with knowledge of
the move confirmed.
The group said in October that it
would deliver about 20 fewer aircraft but
still hoped to meet its target by including
18 A220 jets, the model acquired
through its purchase of the Bombardier
C series. Deliveries are watched by investors
as a key indicator for cash flow.
Airbus had delivered 673 aircraft to
the end of November, leaving it 127 jets
short of its target.
Analysts at Vertical Research Partners
are forecasting 797 deliveries for
2018. Industry sources pointed out that
Airbus was in a similar position in 2017
but still managed to close that year with
a record 718 deliveries.
A spokesman declined to comment
on the final tally, which will be announced
on Friday, but said “the Airbus
team worked flat out until the very last
hours of December 31”.
Boeing, which will unveil its numbers
on Tuesday, had been targeting
between 810 and 815 deliveries in 2018,
up from 763 in 2017. It had delivered 704
planes by the end of November.
In terms of the annual orders race,
Boeing was far ahead of its European
rival by the end of November with 690
net firm orders, fuelling speculation
that it would break Airbus’s five-year
winning streak.
Airbus had reported 380 net firm
orders in the same period but last week
said it had firmed up two more deals
for another 120 aircraft. In 2017, Airbus
secured 1,109 net orders while Boeing
netted 912.
The court agreed and ordered
Richard to hand back his property
to NatWest.
However, the FOS had told Nat-
West about the complaint by at least
early July, according to correspondence
seen by the Financial Times.
The bank’s claim to have no
knowledge of the issue was also
directly contradicted by the office
of chief executive Ross McEwan one
week after the court hearing. A representative
from his office told the
customer’s local MP that RBS could
not discuss his case because of an
“ongoing complaint” with the FOS.
After being contacted by the
FT, RBS acknowledged that there
had been an error in its witness
statement.
“We are aware of [Richard’s]
situation, and understand that the
Financial Ombudsman Service
have reopened their investigation.
We will not take any further action
against [Richard] at this time
and await the outcome of their
independent investigation,” said a
spokesperson.
The case comes as the taxpayerowned
bank is battling to improve
customers’ perceptions after largely
completing its decade-long restructuring.
RBS was ranked the country’s
least popular bank brand in an
official ranking published by competition
regulators this year, while
NatWest was tenth of 16. Executives
have made customer satisfaction
a priority after admitting the bank
had been “distracted” with internal
problems in recent years.
It came under particular fire for
the behaviour of its Global Restructuring
Group, which was accused
of “widespread and systematic”
mistreatment of struggling small
businesses after the financial crisis.
RBS has pledged changes to
ensure “past mistakes cannot be
repeated”, but has nonetheless faced
accusations of being overly aggressive
towards individual customers.
This month, for example, the BBC reported
that RBS refused to compensate
a customer who was defrauded
of £20,000 after a violent mugging
until it was contacted by reporters.
In addition to the witness statement,
Richard said RBS had repeatedly
refused to engage with his efforts
to arrange a way to repay his arrears,
and pushed him into further debt by
reneging on agreements to renew the
fixed rate on the rest of his mortgage.
Airbus under spotlight with race to hit delivery target
European aircraft maker struggling to close orders gap with US rival Boeing
Sylvia Pfeifer and Patti Waldmeir
BUSINESS DAY
59
“Boeing will end up ahead in 2018
in terms of deliveries and orders, on
the back of their wide-body strength,
and that’s confirming a trend we saw
in 2017,” forecasts Chris Higgins, aerospace
analyst at Morningstar Securities.
He estimates that Boeing secured
around 200 wide-body orders in 2018,
nearly four times as many as Airbus.
“It’s a structural issue, it’s not a
one-year issue, and that has potential
implications for Airbus, they may have
to refresh their wide-body line-up much
sooner than they expected.”
Richard Aboulafia, analyst at the
Teal Group, said what mattered most
was the “book-to-bill ratio”. Based on
the end of November figures, Boeing
could achieve a ratio of 1.0 — meaning
new orders would match the number of
aircraft deliveries.
Mr Higgins forecasts that the current
year could be challenging for both
aircraft manufacturers. “Given the
economic backdrop, which is to say
cautiously pessimistic, there are going to
be a lot of airlines sitting on their hands
in terms of orders this year. I’d not be
surprised if 2019 comes in flat or maybe
even down a bit in terms of orders”.

Monday 07 January 2019
www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng
BUSINESS DAY
BD Money
Analysis
Gainers & Losers: A
review of mutual
funds in 2018
A review of the performance
of mutual funds between
January and November
2018 showed that Abacus
Money Market Fund, Nigeria
International Debt Fund
and SFS Fixed Income Fund,
rewarded investors with the
most superior returns.
Page 61
OPINION
The perilous art of
state intervention
It must feel good to be a
farmer in Nigeria today,
or textile factory owner,
airlines operator, power
generator or distributor,
real
sector
operator
or maybe
a small
business
Page 62 owner.
Cover Story
A Fixed income guide for
Nigeria in 2019
Fixed income investors,
from retail to institutional
buyers like the banks and
pension funds, can look
forward to a rewarding year
in 2019.
Pages 63-64
Investing
What you need to know about
bank penny stocks in 2019
A 16 percent depreciation in banking
stocks on the floor of the Nigerian
Stock Exchange (NSE) in 2018 puts
investors on the edge, especially new
stockholders seeking to take positions
in penny stocks in 2019 as analysts
see performance driven by banking
blue-chips.
Page 65
Commodities
Cocoa investors cheery as
2018 gains lift earnings
by 30%
Cocoa rounded off 2018 as a
resilient and top performing
major commodity on the
global scene, gaining about
28 percent in the first
month of the 2018/2019
season and investors in local
cocoa market are cheery
as the price appreciation
promises at least 30 percent
in earnings.
Page 67

Monday 07 January 2019
www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng
BUSINESS DAY
61
Gainers & Losers: A review of mutual funds in 2018
Analysis
Endurance Okafor &
Oluwasegun Olakoyenikan
A
review of the performance
of mutual
funds between January
and November
2018 showed that
Abacus Money Market Fund,
Nigeria International Debt
Fund and SFS Fixed Income
Fund, rewarded investors with
the most superior returns.
A mutual fund is an investment
vehicle that is made up of
a pool of funds collected from
many investors for the purpose
of investing in securities such
as stocks, bonds, money market
instruments and similar assets.
Mutual funds therefore afford
investors to invest in a portfolio
of different forms securities
which could help mitigate
risks. Investment in mutual
funds could be done with any of
the licensed mutual fund managers
available of NSE website,
of which some are owned by
banks.
BusinessDay did a survey
on seventy-four (74) funds dis-
‘
The fixed-income
asset class is probably
the only one where
smart money
can demonstrate
differential value
at this time.
Positioning by local
portfolio managers
ahead of when hot
money returns after
hopefully peaceful
polls might be one
strategy
’
tributed over six broad portfolio
classes traded on the Security
and Exchange Commission
(SEC). The survey revealed that
majority of the funds suffered
losses while a few others reported
the same unit price as
the year before.
The returns posted by some
of the mutual funds in 2018 reflect
their abilities to withstand
the economic headwinds in the
global market which negatively
impacted emerging economies
including Nigeria.
Abacus Money Market, a
Fund managed by Investment
One Fund Management Limited,
took the lead among money
market funds, posting 9900
percent return in 2018, and its
Net Asset Value, which opened
the year at N4.1 billion, rose to
N8.59 billion. The average return
of the class however stood
at -0.22 percent.
This placed the fund over
thirteen others in the asset class
with unchanged prices, United
Capital Money Market Fund
shed 9.50 percent and Kedari
Investment Fund grew its return
by 6.25 percent.
Rafiq Raji, chief economist
at Macroafricaintel, said asset
management is very difficult in
these parts, and as such advised
that fund managers should look
in direction of fixed-income,
blue-chips stocks, and flowspositioning.
“The fixed-income asset
class is probably the only one
where smart money can demonstrate
differential value at
this time. Positioning by local
portfolio managers ahead of
when hot money returns after
hopefully peaceful polls might
be one strategy,” Raji recommended.
Omotola Abimbola, a research
analyst at Ecobank said
“multi assets or balanced funds
are likely going to continue to
overweight fixed income over
equities.”
He however explained that
“for fixed income, tightening
external financing conditions
and CBN policy tightening will
keep interest rates elevated and
sustain investor apathy for duration.”
Unlike the money market
funds, bond funds recorded an
impressive performance for the
year as the funds in the class
grew their returns. In all, Nigeria
International Debt Fund,
managed by Afrinvest Asset
Management Limited, was the
best performing fund in the category
with 15.20 percent gain.
The fund’s performance was
significant when compared to
Kedari Investment Fund, its
closest rival that grew return by
5.85 percent.
Johnson Chukwu, MD of
Cowry Assets Limited said ordinarily,
any good fund manager
should have a good performance,
because a portfolio
investor will first identify the
instrument that qualify for investment
in their portfolio, that
is those instruments that have
very good fundamentals.
“The selectiveness of investors
in picking instruments into
their portfolio is such that any
good portfolio or fund manager
should ordinarily outperform
the market index, because
their choices will largely be on
the good performers,” Chukwu
said.
On the way to go for fund
managers in 2019, Abimbola
said “for equities, due to the fragility
of the economic recovery
and external sector pressures
styming portfolio capital flows,
investors will likely continue to
prefer value stocks with strong
fundamentals and stable cash
flow over cheaply priced speculative
stocks.”
Data by the stats bureau
revealed that Nigeria’s economic
expansion remained
sluggish in Q3, as it was below
analysts’ expectation at 1.81
percent growth rate from 1.50
percent recorded for the previous
quarter.
In 2018, Nigeria equities lost
18 percent as foreign capital
fled emerging markets on the
back of rising interest rates in
the United States and slower
global growth concerns.
“Unless we have exciting
IPOs like MTN’s during the
course of the year, we might
have another boring year on the
NSE,” Raji mentioned.
A further analysis of the asset
classes revealed that the performance
of the fixed income
funds was less impressive compared
to the bond funds. However,
the fixed income asset
class was very competitive in
2018. In spite of the tussle, SFS
Fixed Income Fund, managed
by SFS Capital Nigeria Limited,
emerged the best performer
in the class, recording 12.84
percent growth in return from
N1.48 per unit to N1.67 per unit
as at November 2nd.
Just as the names implies,
the performance of mixed
funds in the year under review
reported mixed returns; losses
and unchanged prices. Coronation
Balanced Fund, under
the management of Coronation
Asset Management, gained the
most in 2018; this is after posting
12.09 percent return to hit
N1.20 per unit.
Ayo Akinwunmi, Head of Research
at FSDH Merchant Bank
said the investment strategy
and the investment time of the
fund manager are important
determinants of their return.
“The ability of the fund manager
to select stocks of investment
instrument is an important
factor in determining the
return on that fund. Some fund
managers are aggressive while
some are a little bit conservative,”
Akinwunmi said.
Ethical funds did not have
a great year as performance of
funds was generally poor just
like the equity based funds.
All funds in this asset class declined
in 2018 but ARM Ethical
Fund, a fund managed by Asset
& Resources Management
Company Limited, posted the
lowest lost, making the fund
the best performer for the year.
The fund lost marginally by 0.67
percent to N28.20 per unit from
N28.39 per unit it opened with
at the beginning of the year.
“Although stocks are cheap
with market valuation multiples
at multi year lows and dividend
yield at a record high, investor
sentiment is likely to remain
weak in the short term due to
elevated domestic and external
sector risks,” Abimbola said.
From a high position of third
best performing market in 2017
with 42 percent rally, the Nigerian
stock market dropped
17.47 percent in 2018 and 0.43
percent as at the close for the
week Friday, 04 January 2019,
pushing year to date return to
-2.52 percent.

www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng Monday 07 January 2019
62 BUSINESS DAY
The perilous art of state intervention
Opinion
PATRICK ATUANYA
Patrick Atuanya is the Editor
BusinessDay Media Limited
Email : patrick.atuanya@businessday.ng
Twitter : @patrick_atuanya
It must feel good to be a
farmer in Nigeria today,
or textile factory owner,
airlines operator, power
generator or distributor,
real sector operator or maybe a
small business owner.
The list is endless, as at last
count the Federal Government
through the Central Bank of Nigeria
(CBN), has at least 18 Development
Finance Operations
across various sectors of the Nigerian
economy.
These include the Agricultural
Credit Guarantee Scheme
(ACGS), Interest Drawback
Programme (IDP), Commercial
Agriculture Credit Scheme
(CACS), Paddy Aggregation
Scheme (PAS), Micro, Small
and Medium Enterprises Development
Fund (MSMEDF),
Anchor Borrowers’ Programme
(ABP), Presidential Fertilizer
Initiative (PFI), National Food
Security Programme (NFSP),
National Collateral Registry
(NCR), SME Credit Guarantee
Scheme (SMECGS), Small and
Medium Enterprises Restructuring
and Refinancing Facility
(SMERRF), Real Sector Support
Facility (RSSF), Textile Sector
Intervention Fund (TSIF),
Power and Airline Intervention
Fund (PAIF), Nigeria Electricity
Market Stabilisation Facility
(NEMSF), Nigeria Bulk Electricity
Trading Payment Assurance
Facility (NBET-PAF), Non-oil
Export Stimulation Facility
(NESF), and Export Development
Facility (EDF).
Sadly, the problem with
these myriad schemes goes
beyond the funny names and
weird acronyms.
Here are some data from
the CBN.
In the first half of 2018, a total
of 10,420 loans valued at N1.75
billion were guaranteed under
the ACGS, a total of 5,929 IDP
rebate claims valued at N89.31
million were settled, the sum
of N39.34 billion was disbursed
to 16 projects for the CACS,
‘
Nigeria seems to
have mastered
the art of state
interventions. It
may be time to
begin unwinding
these good
intention-ed but
perilous outlays
’
N4.25 billion was released to
three banks for disbursement
to three projects under the PAS,
N4.77 billion was disbursed under
MSMEDF, the ABP saw disbursement
of N36.37 billion to
155,732 farmers, a total of N20.0
billion was released to a single
obligor under the PFI, through
the Nigeria Sovereign Investment
Authority (NSIA), the sum
of N4.04 billion was disbursed
under the NFSP, the sum of
N23.91 billion was disbursed
to five (5) projects under RSSF,
the sum of N19.1 billion was
released for two (2) projects
under the TSIF, a sum of N18.74
billion was disbursed to four (4)
power projects under the PAIF,
the sum of N38.53 billion was
disbursed to one (1) distribution
company (DisCo), seventeen
(17) generation companies
(GenCos), six (6) gas companies
(GasCos) and five (5) service
providers, under NEMSF,
the sum of N248.4 billion was
disbursed to the NBET Plc under
NBET – PAF, N19.04 billion
to finance six (6) projects under
NESF, and a N50.0 billion debenture
under the EDF.
This all came to a tidy sum of
N529 billion just in the first six
months of 2018.
Beyond the stress this imposes
on the CBN balance sheet
and distortions to the wider
economy, no one seems to be
concerned about the inefficiency
being encouraged as growth
in most of the sectors government
is pumping money into
remains lacklustre.
According to the National
Bureau of Statistics (NBS), in
the third quarter of 2018, the
agricultural sector grew by
1.91 percent (year-on-year) in
real terms, a decrease by –1.16
percent points from the corresponding
period of 2017, Real
GDP growth in the manufacturing
sector (often a target of these
interventions) in Q3 2018 was
1.92 percent, Textile, Apparel
and Footwear under Manufacturing
sector grew by a measly
1.04 percent in Q3 2018, down
from 2.73 percent in Q2 2018
and 1.85 percent in Q1 2018.
With growth in the targeted
sectors still this tepid and unemployment
rising, it is fair to
assume that the spending has
created little jobs, meaning it
has been largely inefficient and
unproductive.
Indeed a member of the
monetary policy committee
(MPC) of the CBN, Obadan,
Mike Idiah, in his personal
statements following the 121
MPC meeting of Nov 21-22,
2018, flagged the lacklustre
growth in one of the targeted
sectors, saying: “Although agriculture
was one of the three
major drivers of growth during
the period, its contribution to
growth at 0.27 percent showed
highly reduced significance in
relation to previous quarters.
The sector thus needs to be further
stimulated beyond what
the Central Bank of Nigeria
(CBN) is currently doing.”
Obadan also alluded to the
Central Bank’s use of non-conventional
monetary policy tools
being ‘overburdened.’
Nigeria seems to have mastered
the art of state interventions.
It may be time to begin
unwinding these good intention-ed
but perilous outlays.
About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.
Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola

Monday 07 January 2019
www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng
BUSINESS DAY
63
www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng Monday 07 January 2019
64 BUSINESS DAY
Cover Story
Cover Story
A Fixed income guide for Nigeria in 2019
YOUR QUESTIONS
LOLADE AKINMURELE
Fixed income investors,
from retail to
institutional buyers
like the banks and
pension funds, can
look forward to a rewarding
year in 2019.
After a record breaking 2017
for government bond yields
which peaked at 18 percent,
2018 saw yields fall to 14 percent
on average amid lower inflation
rate and reduced bond supply
from the federal government
which tweaked its debt strategy
to borrow less domestically in
favour of external debt.
However, there are signs of
a higher yield environment in
2019 and those signs started
flashing as early as late 2018.
Rising global interest rates
which sparked sell-offs in
emerging markets and political
uncertainty that coloured
the second half of the year, saw the
Central Bank of Nigeria push yields
higher in the fourth quarter of 2018
using Open Market Operations
(OMO) auctions, to attract foreign
portfolio investors and tame inflation
ahead of the system liquidity
that accompanies campaign
spending in an election year.
The OMO auctions laid down
a marker for fixed income yields,
with one-year government Treasury
Bills rising as high as 17 percent
while average bond yields
rose nearly 200 basis points to 15
percent.
Enter 2019 and there are atleast
three key reasons why fixed income
yields will sustain the upward momentum
that started late last year.
First is the expectation for higher
inflation this year. Consensus
forecasts point to an uptick in inflation
to 12.8 percent from 12.2 percent
average in 2018. The factors
that will drive inflation higher in
2019 include the implementation
of a minimum wage hike; expectations
for pre-election spending,
which will trigger increased system
liquidity, and a likely increase in
food prices as the lasting effects of
flooding and violence in the middle
belt take a toll on prices.
Yields typically need to stay
above inflation if investors must
make real returns. Therefore, the
higher inflation rate goes the higher
fixed income yields climb and
vice versa.
The second reason why bond
investors can expect higher yields
this year rides on the back of increased
CBN monetary tightening.
The price stability mandate of the
CBN means if inflation rises, interest
rates are likely to be raised. The
apex bank relied heavily on raising
interest rates in the latter part
of 2016 when inflation soared to a
high of 18 percent. The CBN hiked
benchmark rates to 14 percent
from 11 percent over that period
and that’s where it has stayed for
nearly two years now.
The outlook for higher interest
rates in the United States
and sustained foreign capital
outflow this year will only pile
more pressure to the CBN to
tighten even further.
The consensus forecast for
interest rates in 2019 is a 50-basis
hike to 14.5 percent. The
Monetary Policy Committee
is scheduled to hold their first
meeting of 2019 this January.
The last reason why yields
look set to jump in 2019 is the
Federal government’s widening
budget financing gap which
would only boost local bond
supply and bid yields higher.
The Federal government’s
2019 budget has a N2.3 trillion
deficit and is predicated on revenues
of N7 trillion.
Both scenarios are threatened
by disappointing revenues
which naturally feeds into a
wider deficit that will leave the
government with limited options
than to borrow.
Capital expenditure bore
the brunt of disappointing
revenues in the past two years
but 2019 will give the government
less wriggle room given
the spike in recurrent expenditure
which cannot be easily
made away with like capital
spending.
Non-debt recurrent expenditure
alone will hit N4 trillion
this year. If government revenue
is to perform as it did in
2017 or 2018 where only 50 percent
of the target was met, then
worker salaries, overhead costs
and statutory transfers will be
higher than total revenue, before
considering capital expenditure
and debt servicing.
The total non-debt recurrent
expenditure will equate to 128
percent of the government’s
projected N3.5 trillion revenue
for the year. N3.5 trillion is half
of the N7 trillion 2019 revenue
projection.
What that implies is that
the government would have
to borrow just to maintain an
over bloated bureaucracy. Add
capital expenditure as well as
debt servicing obligations and
there could be a fiscal crisis on
the cards for the government in
2019.
The fear of a fiscal crisis is
why the government will be
keeping a keen eye on oil prices
which has recently slumped to
$55 per barrel, $5 higher than
the budget predication of $60
per barrel. Although most oil
price forecasts, as off the mark
as they have been over the years,
point to an average of $70 per
barrel, if prices remain sticky at
$55 then there is a fair chance of
the government missing the oil
revenue target.
The oil production benchmark
gives even more cause for
worry.
The budget benchmark is
N2.3 trillion, but an OPEC-induced
cut threatens to restrict
production to 1.6 million barrels
daily, 30 percent lower than
the target. This implies that the
expected revenue from oil could
be 30 percent lower only from a
production perspective. Nonoil
revenue will rely largely on
company profitability at a time
when economic growth has
stalled and average incomes are
shrinking.
When revenues failed to
meet up to expectations, the
government turned to borrowing,
with the debt stock more
than doubling since 2014 to N24
trillion as of the end of 2018, according
to the Debt Management
Office (DMO).
Rising debt service cost as a
percentage of revenue, which
hit a high of 66 percent in 2018,
didn’t deter the government,
with bond investors emerging
big beneficiaries of attractive
yields on money lent to the government.
Is my car an asset or liability?
I
get often confused whether
my car is really an asset
or just another liability given
how much it costs me to
maintain it.
While some argue that cars are
assets because they can put a decent
amount of money back into
your pocket once sold, others say
the hidden costs of owning a car
makes it a liability despite it being
a liquefiable investment.
These expenses include fuel
costs, repair and maintenance,
registration, sales tax, insurance
and toll fees.
I am torn between both arguments
and would like a logical
advice on whether to consider
my car an asset and if it features
in my net worth. I would also
like to know how to calculate
the worth of my car if I eventually
deem it fit to be an asset.
Should I have a joint account with my husband?
One of the main conversations
I have avoided so
far with my husband is
whether as a couple we should
have a joint account.
While some couples feel
that marriage is a partnership
in which everything should
be shared, including bank accounts,
others value autonomy
more highly.
What are the advantages
and disadvantages of having
joint accounts, and there are
any fast rules about the best
type of account?
My main fear has always
been that if things turn bad in
our relationship, my spouse has
the ability to clean out the account
and take all the money,
even if it was deposited by me.
I would like to know the
thoughts of financial experts.

Monday 07 January 2019
www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng
BUSINESS DAY
65
Investing
What you need to know about bank penny stocks in 2019
OLUWASEGUN OLAKOYENIKAN
& SEGUN ADAMS
A
16 percent depreciation
in banking
stocks on the floor
of the Nigerian Stock
Exchange (NSE) in
2018 puts investors on the edge,
especially new stockholders
seeking to take positions in penny
stocks in 2019 as analysts see
performance driven by banking
blue-chips.
Although, the sector outperformed
the Nigerian Stock Exchange
(NSE) All Share Index
which shed 17.81 percent in 2018,
the suspension of trading in the
shares of Skye Bank over inability
of its shareholders to recapitalise
the lender which eventually collapsed,
and the proposed merger
and acquisition deal between
Access Bank and Diamond Bank
undermined investor sentiment
in the banking stocks.
Unity Bank, one of the three
penny stocks in the banking sector,
was able withstand the rout
in the market by gaining 101.89
percent to emerge the secondbest
performing stock in 2018,
while the other – Wema Bank
and Jaiz Bank – had negative returns.
This is despite the negative
sentiment of investors in the
major banking stocks and low
patronage of penny stocks in the
market.
Penny stocks get their name
from the fact that they are cheap
and a lot of people when starting
out on investment tend to
go in for cheaper stocks as their
first investment. They do this because
they are deemed to have
higher returns when things go
according to plan.
“Penny stocks are like a surgical
knife. If used by a doctor
(experienced), it could save
lives (make money). On the
other hand, if used by a goon
(amateur) it could kill (make you
bankrupt). In my opinion, penny
stocks can only be a good lesson
rather than a potential earning
source,” said Rohit Dalal, a New
Delhi-based finance analyst.
Meanwhile, some other analysts
believe that penny bank
stocks could rise on the back of
improved financial performance
of major stocks in the sector.
“Low operational efficiency,
poor quality of asset, and lack of
capital buffers are some of the
unattractive characteristics of
bank penny stocks,” said Gbolahan
Ologunro, Research Analyst
at CSL Stockbrokers.
Gbolahan explained that the
period following the elections
which coincides with release
companies’ full year reports
would likely stretch the valuation
of big banks that are expected to
make profits, causing investors
to revalue and buy into penny
stocks.
Aluko Paul, a Research Analyst
at MBC Securities Limited
said bank penny stocks in 2019
might be affected by trickledown
effect of investor negative sentiment
on major stocks in the sector
after a gloomy 2018.
“The Apex Bank should be
ready to rescue dying banks as
further collapse of any bank will
affect the financial system of the
economy,” Paul said.
ANALYSIS
Where are interest rates headed?
Israel Odubola
After taking into account
many factors which
includes economic
developments in domestic
and global markets, the
Monetary Policy Committee
of the Central Bank of Nigeria
maintained the Monetary Policy
Rate (MPR) at 14 percent, with
the asymmetric corridor at +200
and -500 basis points around the
MPR in 2018.
Furthermore, deposit money
banks are required to keep 30
percent of their funds with the
CBN and liquidity ratio was
retained at 30%. The last time
MPC changed rate was in July
2016 when the MPR was lifted by
200bps.
In the communiqué released
at the end of the two-day meeting
that ended on November 22
2018, the MPR was retained so as
to sustain the gradual improvement
in both output growth and
price stability. The committee
noted that keeping the MPR at
current level reflects the confidence
in the various policies
implemented by CBN which
have moderated domestic price
level and stabilized the foreign
exchange rate.
Although still in a tepid posture,
the economy is gradually
recovering from recession. The
economy expanded by 1.81 percent
in the third quarter of 2018,
up from 1.5 percent in previous
quarter, but still below 1.91 percent
recorded in the first quarter.
Analysts at Financial Derivatives
forecast a growth rate of
1.8 percent in Q1 2019. However,
growth rate still falls short
of population growth rate of 2.6
percent, implying that the economy
needs stimulus policies to
make growth sustainable and
inclusive.
The manufacturing purchasing
managers’ index has been on
the upward trend for twenty-one
consecutive months, and moved
to 61.1% in December 2018 compared
to 56.8% and 57.1% in the
July and August 2018 respectively,
indicating an improvement
in economic activities in
the last quarter of 2018. Furthermore,
the overall consumer confidence
index improved in the
last quarter of 2018 to 9.7 points
compared in 1.5 points in the
preceding quarter, reflecting betterment
in family income, financial
and economic situations.
Inflation rate is still in doubledigits,
standing at 11.28 percent
in November 2018 up from 11.26
percent in the preceding month,
and 1.30 percent higher than 9.98
percent benchmark for 2019.
However, the rate would rise
marginally to 13 percent owing
to increased liquidity and higher
imported inflation according to
analysts at Financial Derivatives
Limited, but analysts at FSDH
Research pegged inflation rate at
the close of 2018 to 11.7 percent
because of increased food prices,
electioneering spending and implementation
of new minimum
wage.
The year 2019 comes with a
lot of expectations and uncertainties
as investors and entrepreneurs
are of mixed feelings
how political conditions and
economic activities would affect
them.
If the MPC decides to raise or
cut the rate at its next meeting
in January 2019 (probably) will
have positive and negative implications
on the economy. Loosening
the MPR (cut rate) would
create more credit for the real
sector and boost economic recovery
through increased business
investments, higher purchasing
power and employment
generation, which are the hallmark
of the Economic Growth
and Recovery Plan (ERGP) but
this, would aggravate inflationary
pressure in the economy.
On the other hand, raising
the rate can help to mitigate
inflationary pressures and stabilize
the foreign exchange
market but might slow down
growth because higher interest
rate would increase the cost of
borrowing, thereby discouraging
investment as well as consumer
spending.
Raji Rafiq, chief economist at
Macroafricanintel, strongly believed
that MPR will most likely
be held at 14 percent as inflationary
pressures remain heightened
despite downward trends.
“Inflation expectations are my
only consideration. Besides if the
minimum wage proposal goes
through, there would probably
be additional inflationary pressure”
Raji added.
A research analyst at CSL
StockBrokers, Gbolahan Ologunro,
opined that MPC would
retain the rate at 14% throughout
this year.
“This is because of heightening
in global financing conditions
and this is because United
States has provided guidance
for at least 75 basis points increase
in interest rate and we
might see the European Central
Bank also ending its quantitative
easing program. The outcome
of these might lead to capital
outflow reversal from emerging
economies, so the CBN in
response to alleviate this impact
which would affect exchange
rate stability might come under
pressure to hike rate” Ologunro
explained, adding CBN would
continue to use the reserves to
ensure stability in the foreign exchange
market.
In a report released by FSDH
Research, a similar position was
held that MPC will vote to maintain
interest rate at current levels.
With inflationary pressure in
the economy driven majorly by
campaign-related spending and
implementation of new minimum
wage effective this year,
analysts forecast that MPR will
be retained at 14%.

www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng Monday 07 January 2019
66 BUSINESS DAY
Data
Week Ahead
(January 7 – 11, 2019)
BONDS
Next week, Open Market Operations (OMO) maturities worth N375.4bn will hit
the banking system.
The Central Bank of Nigeria (CBN) will continue with its weekly Open Market Operations
(OMO) mop ups to keep liquidity levels in check.
Yields on corporate Eurobonds are expected to pare in the coming weeks as flight
to safety imperative becomes stronger in the face of the impending elections.
NAIRA
The naira appreciated last week to close at N357 per dollar in the parallel market.
Analysts expect the naira to trade fairly stable this week as the CBN continues its
usual intervention in the Foreign Exchange market.
EQUITIES MARKET
Analysts expect that a bearish performance will dominate the capital market this
week, following the poor performance of the All Share index which shed 1.28 percent
last week, as sell pressures persist due to pre-election jitters.
COMMODITIES
Forecasts of increased global wheat supply in the 2018/2019 season would put
pressure on prices.
Weakening demand coupled with a supply glut would continue to push SUGAR
prices down.
EVENTS
Chartered Institute of Tax of Nigeria (CITN) holds its Annual tax week program at
Oriental hotel, Victoria Island Lagos on the 9th to 11th.

Monday 07 January 2019
www.businessday.ng www.facebook.com/businessdayng @businessDayNG @Businessdayng
BUSINESS DAY
Cocoa investors cheery as 2018 gains lift earnings by 30%
Temitayo Ayetoto
Commodities
Cocoa rounded off
2018 as a resilient
and top performing
major commodity
on the global scene,
gaining about 28 percent in the
first month of the 2018/2019
season and investors in local
cocoa market are cheery as the
price appreciation promises at
least 30 percent in earnings. The
international boon may ignore
some farmers but not investors
in contracts, as they are poised
to gain more than triple the local
price of N750.
“Considering the price we
bought, and the price in the
international market, we are
looking at a gain of almost 30
percent from what we aggregated
over the Q4 2018 period,”
said Obianujwu Okafor,
communications executive at
AFEX Commodities Exchange
limited. “The same will be true
of most operators in Nigeria’s
cocoa market considering that
the crop is mostly cultivated for
export.”
The local market in 2018 saw
a sharp turn from a trend that
saw farmers preferring to selloff
to international buyers during
year end, stirring price fall.
For every week in Q4 2018, after
AFEX expanded its transactions
in cocoa, prices began to appreciate,
in the two main producing
states: Edo and Ondo. Prices
were mostly stable on higher
production and better quality of
harvest.
The fourth quarter started
at N550 per kilogramme before
rising to N750 on a demand
pressure created by farmers bid
to redeem contract pledges. At
the beginning of the season,
buyers made upfront payment
on contract prices but some
farmers made some side sales,
leading supply shortage.
On a broader spectrum however,
cocoa ended on a poor
note owing to the negative impact
of flooding on low lands
yield. Initial projections were
quite bright due to early rain
but at the tail end of the year
when farmers expected bumper
harvest, the fruiting failed
to blossom, leading to a cut in
the estimate from 320,000 to
260,000.
The bullish position on international
prices during the beginning
of December came as
a new lease of life for prices as
front-month cocoa contract had
earlier plunged on news that
ample arrivals and purchases of
cocoa beans were recorded in
Côte d’Ivoire and Ghana.
Compared to values displayed
at the beginning of November,
the nearby contract
prices weakened by 8 percent
from $2,200 to $2,025 per tonne
on London futures markets
which prices at par African origins,
by the end of the month.
Concurrently, prices dipped
by 7 percent in New York from
$2,264 to $2,106 per tonne during
the last trading day of November.
Before dropping, the
front-month contract traded
on a positive note in the course
of the first trading week of the
period and reached its highest
level of the month to settle at
$2,254 per tonne in London. At
the same time, they firmed by 5
percent and reached $2,381 per
‘
One of the issues
on the front burner
of our plan is
to increase local
consumption. If 20
percent of production
is consumed, cocoa
prices will go up,
farmers will grow
more and we will
now know that we
can never have a glut
for prices to crash on
our head
’
tonne in New York.
According to the International
Cocoa Organisation,
the 2018/19 crop year harvest
started strongly in Côte d’Ivoire,
with cumulative cocoa arrivals
recorded at ports reached
689,000 tonnes, up by 35 percent
from 510,000 tonnes seen
in the same period last season.
On the demand side, ICCO
estimates an increase in world
grindings of 3.9 percent during
the last crop season. Grindings
reached a record 4.570 million
tonnes, up by 173,000 tonnes.
This estimate reflects the continuous
increase in demand
which is especially reflected
in the steady cocoa processing
growth in origin countries.
Processing activities grew of 5.1
percent to 1.711 million tonnes
in Europe and by 4.3 percent
to 1.031 million tonnes in Asia
and Oceania whereas Africa’s
increase was by 5.7 percent to
951,000 tonnes. In contrast,
grindings in the Americas
slightly regressed by 0.3 percent
from the previous season to
877,000 tonnes.
It might take Nigeria 10 years
for Nigeria to land itself in the
league of these nations, with
500,000 metric tonnes of production
under modest estimate,
says Sayina Riman president
Cocoa Association of Nigeria
(CAN). The country had about
27 cocoa processing plant but
is only left with five, producing
less than 20 percent capacity.
CAN is hoping to lean on the
proper implementation of a 10-
year cocoa plan for a revival in
the industry. It is particularly
looking to anchor growth on a
government-driven increase
in consumption rate which
is at two percent of production.
If Nigerians consume 250
grammes of cocoa every two
weeks for instance, the country
might be importing 50 percent
to augment local output to service
demand, says Riman.
“One of the issues on the
front burner of our plan is to
increase local consumption. If
20 percent of production is consumed,
cocoa prices will go up,
farmers will grow more and we
will now know that we can never
have a glut for prices to crash
on our head. Anytime there is a
glut, we will consume it locally,”
he said. “That’s why we are advocating
that all the beverage
industries like Cadbury and
Nestle should increase the cocoa
content in their beverages
because of the health benefits.
These companies have five percent
cocoa content in their beverage
chain.”

BUSINESS DAY
Insight
NEWS YOU CAN TRUST I MONDAY 07 JANUARY 2019
2019 polls: Atiku has the vision but lacks momentum. Why?
GLOBAL PERSPECTIVES
OLU FASAN
Dr. Fasan, a London-based
lawyer and political economist,
is a Visiting Fellow at the London
School of Economics.
e-mail: o.fasan@lse.ac.uk,
twitter account: @olu_fasan
At every election,
newspapers and
commentators advocate
“issue-based
campaign”. They call
for messages containing ideas
that the candidates want the
voters to support. Yet, just about
40 days before Nigeria’s presidential
election, the ideas of the
two main candidates, President
Muhammadu Buhari and former
Vice President Atiku Abubakar,
are hardly the subject of media
analysis or public discussion,
despite sharp differences in their
messages. For instance, while
Buhari focuses his campaign on
the narrow issues of corruption,
security and the economy, Atiku
sets out wide-ranging talking
points about political, economic
and institutional reforms. Yet,
Buhari is getting most of the
attention, while Atiku appears
to be lacking momentum in the
campaign. Why?
Let’s start with the contrasts
between their ideas. Buhari’s
manifesto is essentially
promising more of the same.
If re-elected, President Buhari
would do nothing differently,
but instead intensify his current
policies, including throwing more
government money at tackling
poverty and unemployment
through the social intervention
programmes. To be honest,
Buhari’smanifesto simply lacks
intellectual depth or “the vision
thing”. But not so Atiku’s plan.
His economic visionis truly
radical, underpinned by extensive
programme of deregulation and
liberalisation. Equally radical are
his proposed political reforms
and anti-corruption strategy.
Take political reforms. Along
standing advocate of political
restructuring, Atiku recalls in his
manifesto that: “At independence,
the various regions were
growing at their own pace with
the political and economic strategies
that suited their individual
peculiarities”. But now, he says,
“the centre has a pervasive
and over-bearing presence and
influence on the other tiers of
government”, adding that “Nigerian
states have been reduced
to parastatals of the federal
government”. So, what would
he do if elected? Well, he would,
among other things, “decongest
the exclusive and concurrent list
in the Constitution”, to devolve
powers, responsibilities and
resources to Nigeria’s sub-units.
What about Atiku’s anticorruption
strategy? Well, this
is far-reaching too. He outlines
an elaborate set of “immediate
actions”that he would take,
if elected. For instance, Atiku
promises that, within his administration’s
“first 100 days in
office”, he would: expeditiously
pass critical legislation “relating
to whistle-blowing, cybercrime,
witness protection, electronic
evidence, and asset forfeiture”;
set up Major Corruption Case
Monitoring and Review Committee
that would include “NGOs,
civil society organisations and
media as observers”; and review
and expedite action on the passage
of all existing and pending
new laws or amendments to all
anti-corruption laws currently in
the National Assembly. Theseare
in addition to medium-term
commitments on detection of
corruption, sanctioning corrupt
practices, institutional strengthening
and reward system.
Which brings me back to my
questions. If everyone wants an
issue-based campaign, why is the
ongoing presidential campaign
not about issues? Why are Atiku’s
elaborate programmes of economic,
political and governance
reforms not being discussed and
scrutinised? Why are comparisons
not being made between
Atiku’s and Buhari’s campaign
promises? And why does Atiku
seem to be struggling in this
campaign, lacking momentum,
despite the intellectual depth and
radical nature of his plans?
Last week, one of Buhari’s
strong supporters mockingly
asked Atiku to throw in the
towel now as his campaign was
going nowhere. Another tweeted
that “Right now @atiku and his
running mate @PeterObi are
more of a liability 43 days to
Presidential election in Nigeria”.
But how could a challenger
who promises to transform
Nigeria politically, economically
and institutionally be more of a
liability than an incumbent who is
focusing his campaign on narrow
issues of corruption, security and
the economy, in spite of his poor
recordon these issues?
Well, there are several reasons
why Atiku appears to be
struggling. The first is that next
month’s presidential election
will not be about issues. It’s
about who has and can inspire
a passionately enthusiastic base.
Unfortunately, Atiku doesn’t have
the fanatical followings that Buhari,
a cult figure, has. Despite the
fact that youth unemployment
rose from 3m in 2015 to 13m
in 2018 (a 263% increase over
3½ years) under Buhari, most
of the poor still prefer him to
Atiku. They see Atiku, a multibillionaire
(allegedly), as part of the
problem, and Buhari, a “sandalwearing
ascetic”, as the solution.
In this regard, the 2016 US
presidential election holds many
lessons for the Nigerian election.
Donald Trump, who could
wow a strong base, the poor
working-class White, most of
who could literally die for him,
beat Hillary Clinton, who, despite
having positive ideas and vision,
inspired little passion or enthusiasm
among her middle-class and
college-educated supporters.
Truth is, Atiku’s support base is
threadbare, compared with the
rural and urban poor who, as
someone puts it, “would die for
Buhari before they knew why”!
Another reason is the integrity
or character factor, and
here, again, we can learn from
America. In the 2016 election,
Donald Trump ceaselessly attacked
the integrity of Hillary
Clinton, repeatedly calling her
“Crooked Hillary”. That fired up
Trump’s base, who truly believed
Clinton was a “criminal”, but
‘ Despite the fact
that youth unemployment
rose
from 3m in 2015
to 13m in 2018
(a 263% increase
over 3½ years)
under Buhari,
most of the poor
still prefer him to
Atiku. They see
Atiku, a multibillionaire
(allegedly),
as part of
the problem, and
Buhari, a “sandalwearing
ascetic”,
as the solution.
,
also dampened the enthusiasm
of Clinton supporters. Scholars
have shown that an incumbent
with a poor record can divert
voters’ attention and shape the
debate in a more advantageous
way. To be sure, the APC cannot
win on its record, on corruption,
security and the economy. But it
is relentlessly playing the integrity
card, painting Atiku and the
PDP as corrupt. That, of course,
is what Buhari’s supporters
believe and want to hear, and it
is energising them. By contrast,
Atiku lacks passionate supporters
who believe enough in him to
counterbalance Buhari’s fanatical
supporters.
The truth is that the perception
issue is working, or might
work, against Atiku in this election.
AzuIshiekwene, a Vanguard
columnist, wrote last week in the
paper that “the indescribable fear
of who the real Atiku in power
could be – that unknowable
quality – makes it a bit easier to
forgive Buhari’s shortcomings”.
He is right. Atiku, as I wrote
recently,“carries a baggage of
negative perceptions and is running
under a party that still has a
serious image problem, a legacy
of PDP’s 16 years in power”. And,
of course, the APC, despite having
its own serious integrity or
character issues, with allegations
of corruption swirling around
the party and the Buhari government,
is successfully defining
the debate about the issue to its
advantage.
Now, another reason for
Atiku’s seeming lack of momentum
is his lukewarm support in
the North. The truth is that Atiku
can’t win the election unless he
can beat Buhari in the North.
Yet, he doesn’t seem to have
enthused the North with his
radical proposals. For instance,
unlike the South, the North is
not enthusiastic about political
www.businessday.ng
restructuring, some are even
hostile to it. Cleverly, if also
opportunistically, Buhari has positioned
himself as anti-restructuring
to appeal to those parts
of the North that are hostile
to the issue. Of course, Buhari
has also warmed himself to the
hearts of most of the poor in the
North the way that Atiku hasn’t.
What’s more, over the past 3½
years, Buhari has cynically, with
elections in mind, courted the
Fulani herdsmen by refusing to
condemn their rampaging and
killing of farmers in the Middle
Belt and elsewhere in Nigeria.
The recent endorsement of
Buhari for re-election by Miyetti
Allah, the herders’ association,
was clearly a reward for his
sympathy towards their cause.
But, sadly, it bears a similarity
tothe endorsement of Donald
Trump in the 2016 presidential
election by the racist Ku Klux
Klan (KKK)!
The US example brings us
to another reason why Atiku
appears to be struggling in this
campaign: lack of party unity.
Following the bitter presidential
primaries between Hillary Clinton
and Bernie Sanders, which
Sanders’ supporters believed
Clinton won with some skulduggery,
there was schism in
the Democratic Party. Sanders’
supporters refused to campaign
wholeheartedly for Clinton
and some even probably didn’t
vote for her. Some believe that
had Clinton made Sanders her
running mate, just as Barrack
Obama did with Joe Biden, a
fellow primaries contestant, she
might have won the election.
That example has some
salience in Atiku’s case. Although
he won the PDP’s presidential
primaries overwhelmingly, there
are many in the party, including
influential state governors, who
are not enthusiastically supporting
him. A recent report in
Premier Times in which a PDP
governor said Atiku might lose if
“he fails to address the concerns
of party leaders over a plethora
of issues”, including his controversial
choice of Peter Obi
as his running mate, is enough
to dampen enthusiasm of PDP
supporters. Atiku certainly can’t
gain momentum, let alone win
the election, if his party is not
solidly behind him.
Then, finally, there are doubts
about the credibility of Atiku’s
manifesto commitments. Few
believe he can deliver on his
radical manifesto promises. Atiku
certainly needs a landslide victory
to be able to push through
his proposed political, economic
and institutional reforms, including
large-scale privatisation and
political restructuring. Without
a landslide, which is near-impossible,
or a unity government,
which is desirable but unlikely,
Atiku’s promises are seen as pies
in the sky.
So, yes, Atiku has the vision;
he also, apparently, has the competence.
But he is dogged by
several factors undermining his
campaign, some created by his
desperate opponents, the APC,
others by his own party, and yet
others by his own controversial
personality. But can he turn all
these around? Well, we have to
wait and see!
facebook.com/businessdayng
@Businessdayng
fivethings
for your new week
Fascinating business facts
20%
Expectedly, alarm bells are ringing at OPEC capitals
around the world as treasury managers of countries
making up the cartel watch, almost helplessly, the
unstoppable plunge in global oil prices that will have far
reaching consequences for social cohesion and peace in
especially countries like Nigeria which depend heavily on
oil revenues.
The price of the global benchmark grade, Brent has fallen
from $86 per barrel which it attained on October 3, to
below $55 Friday. Analysts say this could wipe out almost
20% from Nigeria’s expected oil revenues which could fall
to a mere $49bn in 2019 when the country holds crucial
elections.
0.8%
There is more than a week left until the new year, but at
this point, it’s almost certain European stocks will post
the worst year since 2008. The Stoxx Europe 600 dropped
0.8 percent on Friday in London, taking this year’s loss
to 14 percent. Meanwhile, the blue-chip Euro Stoxx 50
is less than 1 percent away from entering a bear market
after hitting the threshold earlier.It’s a testimony to how
fragile sentiment is that even news of Chinese stimulus
couldn’t lift the gloom, with U.S. futures pointing to a
third day in the red on Wall Street. Tensions between
America and China are simmering again after China
demanded that the U.S. withdraw espionage charges
against Beijing officials. A government shutdown also
looms in the U.S.
2%
Embattled South African President Cyril Ramaphosa has
asked his finance minister to begin the process to set
up a council of economic advisers. South Africa which
has just emerged from recession is asking itself if it is “not
stuck in a thinking mode which is not relevant to the actual
conditions in South Africa?” the finance minister said. Government
officials are meeting in Pretoria to present policy
proposals to raise the level of economic growth in South
Africa’s where annual expansion hasn’t exceeded 2 percent
since 2013.
85%
@Businessdayng
Global battery prices have fallen 85 percent since 2010,
BloombergNEF reports in its annual Lithium-Ion Battery
Price Survey, and with storage forecast to grow
to 14 times its current level by 2030 as millions of electric
vehicles hit the roads.
BNEF predicts demand will total 1,851 gigawatt-hours in
2030, up from the current 132. EV batteries are expected to
account for 84 percent of that.
$11.7bn
Africa’s troubled aviation sector is on the verge of a massive
make over after it was announced that Boeing Co and
Nigeria based Green Africa Airways have committed for up
to 100 737 MAX 8 aircraft, in a deal that carries a list price of $11.7
billion. The deal is the largest aircraft agreement from Africa the
commitment is evenly split into 50 firm aircraft and 50 options,
it added. The 737 MAX 8 is the fastest-selling airplane in the
Boeing fleet, accumulating more than 4,800 orders from over
100 customers worldwide. It is estimated that airlines in Africa
will require 1,190 new airplanes as the continent boosts both
intra-continental and intercontinental connectivity over the next
couple of decades, Boeing said, citing its 20-year Commercial
Market Outlook.
Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331
Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.