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It would deepen the market because Nigerians are very skeptical when it comes to investments but the day the same foreign investors, with a newspaper like business a.m. notifying them that foreign companies are buying shares on this market, Nigerians will now wake up and start rushing, so it would deepen the market further. 6

News: 2 & 4 Comment: 6 & 7 Finance & Investment: 13 Industry: 27 Commodities & Agriculture: 31

WE OFTEN HEAR that running a large com-pany is one of the most complex jobs in the world. Business schools, strategic consultan-cies, headhunting firms, training providers, executive coaches all have a tendency to mystify the work of the CEO. Page 9

MAN fears closure of alcohol coys over new excise duties

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TODAY’S STRENGTHENING economic recovery has not overcome the understandable but devastating loss of trust in the financial system that followed the crisis a decade ago Back Page

Procurement fraud in Nigeria 38%

Nigeria accounts for 73% PE funds

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ENERGY, POWER & RENEWABLE

Lafarge allots N132bn shares

Retailers need mobile for earnings

Nigeria’s active rig count 16

PROCUREMENT FRAUD is the most prom-inent economic crime in Nigeria, accord-ing to respondents to a biannual survey of global economic crime produced by audit firm, PwC. Page 2

IN A PERIOD OF five years (2012-2017) the value of private equity funding in the West African sub-region rose to $10.7 billion with Nigeria accounting for 73 percent of the total

value Page 13

LAFARGE AFRICA Plc. has announced allotment of its rights issue of 3.098 billion ordinary shares on the basis of five new or-dinary shares for every nine ordinary shares held by shareholders. Page 20

COMMODITIES & AGRICULTURERice prices fail to yield groundSINCE THE RENEWED commitment to ex-plore robust revenue generation from the agricultural sector, the current administra-tion has heavily thrown its weight behind improving widespread cultivation of rice in the country. Page 28

THE GROWING PENETRATION of smart-phones and easy access to the Internet has influenced almost every aspect of consumer’s life, including shopping. Page 22

NIGERIA RECORDED its highest active rig count in two years in February with 16 rigs de-ployed for oil and drilling activities, according to data obtained by business a.m. from Baker Hughes, the American oil services company, which also captures data on activities in the oil and gas industy. Page 24

N250No 007

THE MANUFACTURERS ASSO-CIATION of Nigeria (MAN) says it fears the imminent closure of some cigarette and alcohol manu-facturing companies in the coun-

try if government eventually follows through its recently announced increment in excise duties on cigarettes and alcohol beverages.

Frank Jacobs, MAN’s president, told busi-ness a.m. in an interview that the body will be

L-R:Yinka Adekoya, managing director, Wapic Insurance Plc; Aliko Dangote, president/CE, Dangote Group; Aigboje Aig-Imokhuede, chairman, Wapic Insurance Plc, and Bode Oyeniyi, executive director, cutting Wapic Insurance 60th anniversary cake in Lagos on Wednesday

AJOSE SEHINDEMI planning to meet with government this week over the issue to express members’ concerns.

“The fear we have is not of people being laid off but of companies shutting down as the products they produce will never be com-petitive when compared with their imported counterparts. That is why we are taking it to government that if they go ahead to imple-ment it, some companies might be out of business,’” he said.

MAN believes that under the current harsh economic environment in which manufac-

turers operate, government should first think of making it conducive before embarking on any increment of any form of taxation, in-cluding excise duties.

Kemi Adeosun, Nigeria’s minister of fi-nance, announced the plan of government to raise excise duty on alcoholic beverages and tobacco, with effect from June 4, 2018.

Adeosun stated that the new excise duty rates were spread over a three-year period from 2018 to 2020 in order to moderate the

Page 2

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2 BUSINESS A.M. MARCH, MONDAY 19 - MARCH, SUNDAY 25, 2018

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L-R:Yinka Sanni, chief executive, Stanbic IBTC Holdings PLC,; Binta Max-Gbinije, chief executive, Stanbic IBTC Trustees Limited; Kola Lawal, head, credit, corporate and transactional banking, Stanbic IBTC Bank, and Demola Sogunle, chief executive, Stanbic IBTC Bank PLC, at the launch of Stanbic IBTC Blue Women Network magazine in Lagos

MAN fears...Page 1

Page 4

Procurement fraud most prevalent economic crime in Nigeria in past 2yrs – PwC

NEWS

Steve Omanufeme

B A R E LY T H R E E days after the high-est decision making body of the Nigerians government, the Fed-eral Executive Council

(FEC), gave President Muham-madu Buhari the approval to join other African countries to sign the Agreement Framework for the establishment of African Continen-tal Free Trade Area, AfCFTA, the president on Saturday withdrew from the meeting, which is to hold on Wednesday in Kigali, Rwanda, thereby raising speculation that Nigeria could be reconsidering its position.

President Buhari was billed to append his signature to the deal on behalf of Nigeria during an African leaders’ summit in Kigali, Rwanda in March 21, as he was said to have been scheduled to leave Nigeria on

Monday before the cancellation of the trip.

He would have during the trip signed the framework agreement for establishing the Africa Continental Free Trade Area. Some members of the president’s advance team were already in Kigali before the development.

Some others earlier billed to travel on Saturday were recalled from the Murtala Muhammed International Airport, Lagos, where they were scheduled to take off.

The federal government had ex-plained that signing the agreement will expand market access for Nige-ria’s exporters of goods and services spur growth and boost job creation. Besides, the government believes that the agreement will eliminate barriers against Nigeria’s products and provide a Dispute Settlement Mechanism for stopping the hos-tile and discriminatory treatment directed against Nigerian natural

and corporate business persons in other African countries.

Various interests groups in the Nigerian manufacturing space and labour had kicked against Nigeria agreeing to the deal, saying the in-dustries and economy are at danger of collapse if the agreement was signed by the government.

Just last week, Frank Jacobs, the president, Manufacturers Associa-tion of Nigeria (MAN), cautioned the federal government to deal with care in committing to the African Conti-nental Free Trade Area (AfCFTA).

He made the call at the 3rd edition of the Manufacturing Equipment Expo, co-hosted with the Nigerian Raw Materials Exposition in Lagos

Jacobs said in order not to reverse the gains made in the manufactur-ing sector over these years, Nigeria should not succumb to the pressure by the European Union to sign the EU-ECOWAS Economic Partner-ship Agreement (EPA) in the cur-

NEWS

Ajose Sehindemi

Globally, Asset misappropriation (45%) continues to lead in economic crime experi-enced by organisations in the last 24 months, cybercrime (31%), consumer fraud (29%) and business misconduct (28%) are close behind

rent form.He said the signing of the African

Continental Free Trade Area (Af-CFTA) should be done cautiously as it may have unintended conse-quence of opening up the economy to foreign products, through the back door and exposing the coun-try’s relatively disadvantaged pro-ductive sectors to unmanageable pressure.

He said, there is the need for proper and adequate consultations with critical stakeholders to mitigate this imminent onslaught ahead the of the implementation phase.

Ayuba Wabba, the national presi-dent of Nigeria Labour Congress (NLC), had in a statement last week said signing the agreement was “ex-tremely dangerous and radioactive neo-liberal policy initiative being driven by the Ministry of Trade and Investment that seeks to open our

PROCUREMENT FRAUD is the most prominent economic crime in Nigeria, ac-cording to respon-dents to a biannual

survey of global economic crime produced by audit firm, PwC.

The Global Economic Crime and Fraud Survey 2018, which examines over 7200 respondents from 123 countries including Nigeria, indicated that procure-ment fraud (38%) is the most prevalent economic crime in Ni-geria in the last 24 months, fol-lowed by bribery and corruption (33%), accounting fraud (32%) and business misconduct at 31 percent.

According to the survey, 49 percent of respondents globally said their companies had suffered fraud in the last two years, up from 36 percent in 2016. Regionally Af-rica (62% up from 57%), North America (54% up from 37%) and Latin America (53% up from 28%) reported the highest levels of eco-nomic crime.

The findings from Nigeria fol-low a similar pattern with more than half of respondents (57%) reporting that their organisations have been victims of economic crime in Nigeria within the last 2 years up from 26 percent in 2016.

Globally, Asset misappropria-tion (45%) continues to lead in economic crime experienced by organisations in the last 24 months, cybercrime (31%), con-sumer fraud (29%) and business misconduct (28%) are close be-hind.

This year’s survey also revealed a significant global increase (+6% to 52%) in the share of economic crimes committed by internal ac-tors, and that there was also a jump in the percentage of those crimes attributed to senior man-agement (from 16% in 2016 to 24% in 2018).

The survey report, however, stated that there are regional vari-ations in the share with Australia at 64 percent, the UK (55%), Can-ada (58%); Argentina (44%) and the US (48%), being places where most reported crimes were com-

mitted by external actors.“The results underline the

greater awareness and under-standing of the types of fraud, perpetrators, the role of technol-ogy, and fraud’s potential impacts and costs for a business,” said Cyril Azobu, PwC Nigeria’s consulting leader:

“We can’t equate higher levels of reported crime with higher lev-els of actual crime.

What the survey is showing us is that there is far more understand-ing of what fraud is and where it is taking place. It’s particularly true of cybercrime, where there’s a much greater understanding of the issues, investigations, analysis, and greater investment in controls and prevention.

“However, despite the progress in understanding and reporting, the fact that just over half (51%)

of respondents say they have not, or don’t know if they have experi-enced fraud in the past two years, suggests blind spots still exist in many organisations,” he noted.

Other key findings of the survey include: 18 countries reporting cybercrime to be more disruptive than the global average (15%), in-

cluding Ireland (39%), Belgium (38%), South Korea (31%), Canada (29%), the UK (25%), and the US (22%) all reporting higher than the global average; and employee mo-rale, business relations, damage to reputation and brand strength being the top three impacts of re-ported fraud.

Others are reports of disruption from consumer credit card and fi-nancial fraud adjudged to higher than the global average (29%) amongst regions including Africa (36%); Eastern Europe (36%); and North America (32%).

The report specifically noted that cybercrime would likely be the most disruptive economic crime in the next two years, with respondents saying it is twice as likely as any other fraud to be identified to potentially impact or-ganisations.

AfCFTA: Nigeria bows to pressure, cancels participation

impact on prices of the affected prod-ucts and under the newly approved excise duty rates for tobacco, in ad-dition to the 20 percent ad-valorem rate, each stick of cigarette will attract a N1 (N20 per pack of 20 sticks) in 2018, N2 specific rate per stick (N40 per pack of 20 sticks) in 2019 and N2.90k specific rate per stick (N58 per pack of 20 sticks) in 2020.

The new specific excise duty rates for alcoholic beverages cut across beer and stout, wines and spirits for the three years 2018 to 2020.

Under the new regime, beer and stout would attract N0.30k per cen-tiliter (Cl) in 2018 and N0.35k per Cl each in 2019 and 2020. Wines would attract N1.25k per Cl in 2018 and N1.50k per Cl each in 2019 and 2020, while N1.50k per Cl was approved for Spirits in 2018, N1.75k per Cl in 2019 and N2.00k per Cl in 2020.

But Jacobs said: “The bottom line of my members and the cost of their products are of concern to us. We are currently taking it up with the government to see what can be done so it won’t be too severe on the manufacturing firms and my advice to government is that this is not the time to increase excise duty because of the harsh environment under which manufacturers operate, lack of infrastructure, power, funds, lack of railway to move our goods. This is not the time and until some of these challenges are taken care of, this is not the time to increase excise du-ties”.

He said the meeting will be this week as it wants to discuss with its members before the body commu-nicates with the government through the letter.

Freddy Messanvi, British Ameri-can Tobacco West Africa legal and external affairs director, in a recent interview on the activities of the to-bacco regulatory body in Nigeria said: “Though the regulatory envi-ronment is conducive for our in-dustry, there is however a need to continually drive for a balance in the way it is implemented and commu-nicated to key stakeholders such as consumers, enforcers, agencies and the general public.

Kufre Ekanem, corporate affairs manager for Nigerian Breweries promised to call back as he was in an engagement when reached to com-ment on the recent increase.

Some other manufacturers com-mented on the issue under anonym-ity as they said their ecosystem is fragile and don’t want to be seen as opposing government.

They said the timing was wrong as most of them are just recover-ing from a negative profitability and revenue contraction as ideally, a counter cyclical policy direction that would ensure injections into the system would have been more ap-propriate and taxes are withdrawals, hence the increase in excise duty is likely to reduce margins and could prompt higher unemployment.

Industry operators cautioned gov-ernment to think the increment twice as he noted that apart from the impli-cations earlier mentioned, the move by the government will encourage the patronage of the informal tobacco and alcohol producers and operations of this unregulated industry are poised to be more detrimental to health and have been known to incite public nui-sance and abuse.

3BUSINESS A.M. MARCH, MONDAY 19 - MARCH, SUNDAY 25, 2018

THE COUNCIL OF THE Interna-tional Civil Avia-tion Organisation (ICAO) has reap-

pointed Fang Liu of China by acclamation as secretary general of the UN specialised agency for a second three-year term, beginning Aug. 1.

Liu was first appointed to the position on Aug. 1, 2015, becoming the first female sec-retary general for the UN spe-cialised agency’s secretariat.

A statement released by

4 NEWS

NEWS

NEWS

BUSINESS A.M. MARCH, MONDAY 19 - MARCH, SUNDAY 25, 2018

International Civil Aviation reappoints Fang Liu secretary general

ICAO on Saturday in Montreal stated this.

She said ICAO had made strides to improve the effi-ciency and effectiveness of the standard-making process over the past three years, in her ac-ceptance remark, saying the body had also seen an overall increase of Effective Implemen-tation for safety and for security.

Liu said the organisation has engaged in promoting the role of aviation and demonstrat-ing how air transport systems contribute to the achievement of the UN SDGs.

She said:“We have worked very hard to optimize ICAO’s

foremost challenge was the unprecedented traffic growth along with the rapid advance-ments in aviation technologies.

She added ICAO’s princi-pal standard-making function would need to keep pace with those changes, adding that the time had come to consider a strengthened role for ICAO in implementation support.

Liu’s career in civil aviation spans more than 30 years, she had served as Director of ICAO’s Bureau of Administration and Services for seven years following her tenure of over 20 years with the Civil Aviation Administration of China (CAAC).

operations and to reinforce the Organisation’s implementation support to States, by strength-ening the regional presence, enhancing coordination and partnerships, and streamlining technical assistance, coopera-tion and training.

“It is my great honour to ac-cept this re-appointment and to continue to drive the transfor-mational changes I have begun across ICAO and its Regional Offices in order to make this a more streamlined and efficient UN specialised agency leading such a dynamic sector”.

Liu, on the future prospects of the body, affirmed that ICAO’s

Ajose Sehindemi

L-R: Temitayo Ade-Peters, lead, corporate social responsibility (CSR), The Nigerian Stock Exchange (NSE); Bola Adeeko, head, shared services division, NSE; Abimbola Babalola, head, market surveillance and investigation, NSE; Simi Nwogugu, executive director, Junior Achievement Nigeria (JAN); Busola Ogundipe, segment manager, Access Bank Plc and Aju Joshua, president, AIESEC, during the NSE 2018 Global Money Week celebration at the Exchange.

EDIT RIAL O

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NEWS

Consumer complaints rise 669% after crypto prices decline

Quarantine body re-enforces packaging standards for imports and exports

Business a.m.

C O N S U M E R C O M P L A I N T S have risen 669 percent since cryptocurrency

prices started declining, ac-cording to a US-based con-sumer research group, Val-uepenguin.

The company, which did an analysis on complaints filed with the Consumer Financial Protection Bu-reau (CFPB) between June

1, 2017 and March 1, 2018 indicated that after the significant 50-60 percent downturn in cryptocur-rency values, consumer complaints surged by 669 percent.

C r y p t o c u r r e n c i e s reached all-time highs last year and BTC/USD markets touched $19,600 per coin on December 16th. Since then a lot has changed as most crypto-assets have lost at least half or more of their fiat value since that date.

THE NIGERIA Agricultural Quar-antine Service (NAQS) has dis-closed that it is re-

enforcing the use of Solid Wood Packaging Materials (SWPM), such as crates, boxes, dunnages for containerised cargoes im-ported into the country.

Gozie Nwodo, NPQS spokes-man, said in a statement that all SWPM must be accompanied

Some key takeaways from researcher David Asci-enzo’s Valuepenguin study include the fact that more than 40 percent of the files, showed dissatisfied cus-tomers who were unable to withdraw their funds; 32 percent of the issues de-rived from transaction is-sues and fraud complaints; and transaction problems included long wire transfer delays and a lot of gripes were directed at crypto-businesses and the lack of

customer service. “Money being unavailable

was the number one com-plaint and consumers strug-gled to transfer and trade their cryptocurrencies at a critical time — Complaints spiked to a climax during the week where price decline was steepest,” explains Asci-enzo’s findings.

Higher numbers of com-plaints rolled in just as pric-es started crashing, reach-ing a climax during the week of sharpest descent.

seaports, airports and other businesses to unbridled for-eign interference never be-fore witnessed in the history of the country.

“This policy initiative, for instance, will make it possible for a foreign airline to directly do local scheduled flights without employing Nigerians. Owing to the sensitivity of this policy or its possible fall-outs on our economy, those driv-ing it were directed to consult the Nigerian local business community and organised labour.”

Wabba said that based on information available to him, the relevant business commu-nity has not been consulted. He said “The drivers of this policy initiative, without consulting the relevant stake holders for possible impact assessment, have perfected a document for the signature of President Muhammadu Buhari at Kigali on the 21 of March.

But briefing State House correspondents after the weekly FEC meeting presided over by Yemi Osinbajo, Ni-geria’s Vice President, at the council chamber, Presiden-tial Villa, Abuja, Okechukwu Enelamah the minister of in-dustry, trade and investments said Nigeria was even bidding to host the Headquarters/Secretariat of the AfCFTA.

E n e l a m a h d i s c l o s e d though that Geoffrey On-yeama, his foreign affairs counterpart, had been man-dated to widen consultations with stakeholders, includ-ing National Association of Chambers of Commerce, In-dustry, Mines and Agriculture (NACCIMA) and MAN.

He said: “The CFTA is the first step in the implementa-

AfCFTA. . .Page 2

tion of African Union’s Agen-da 2063, for an integrated, prosperous and peaceful Africa, and when in force, the CFTA shall be the largest Free Trade Area (FTA) in the global economy, by number.

“Establish rules-based trade governance in intra-African trade to invoke trade remedies, such as safeguards, anti-dumping, and counter-vailing duties against unfair trade practices, including dumping, trans-shipment of concealed origin of products;

“Support the industrial policy of Nigeria through the negotiated and agreed “Exclusion and Sensitive cat-egory lists” to provide space for Nigeria’s infant industries; “Improve competitiveness, the enabling environment for business, consolidate and expand Nigeria’s position as the number one economy in Africa.

“Stimulate, specifically, an estimated 8.18 percent increase in Nigeria’s total ex-ports, with a small structural shift in Nigeria’s economy towards manufacturing and services. This is expected to lead to a total increase in Nigerian economic welfare by 0.62 per cent – equivalent to around US$2.9 billion in 2018 terms. Changes would result from tariff reduction, ease of doing business and, trade facilitation.

However, President Buhari, appears to have succumbed to pressure from the private sector and the labour move-ment and cancelled attend-ing the summit for the signing of Agreement framework.

No official communication from the presidency on the reason for the cancellation as at the time of going to press. It is not yet clear if someone else will represent the presi-dent at the event.

with import permit from the Ser-vice.

He said the quarantine body came up with SWPM following several queries and complaints from importers, exporters and other stakeholders regarding the issue of packaging materials for shipping.

His words: “NAQS came up with SWPM because of the po-tential of serving as pathways for pests and diseases that can en-

danger the nation’s agricultural economy and henceforth all im-portation of SWPM must be ac-companied with import permit from NAQS or must have been treated and the treatment given stated on the International Plant Protection Convention (IPPC) markings and logo ”.

Nwodo said all treated SWPM imported into Nigeria should carry IPPC marking or logo, stating the type of treat-

ment administered (Methyl Bromide or Heat Treatment) and already imported SWPM should be re-treated if to be ei-ther reused or recycled.

It should be recalled that Ni-geria’s government had relaxed the rule on palletisation policy in February 2018 but urged import-ers to comply with international standards and stacking prescrip-tion by original manufacturers of products.

5

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6

Government, citizens have shared responsibilities

Sustainability isn’t expensive; it’s profitable!

IN THE NEXT 12 days, the first quarter of 2018 will draw to a close. The Federal Government’s spending plans are still being debated at the National Assembly. If you are as concerned as we are, then be rest assured that we are alone in our state of worry.

And this is so because nothing worries government officials, politicians and bureaucrats alike; except it is something closer home and one that hurts directly. We are of the view that were the Nigerian budget to operate in a way that makes non passage of it before the commencement of the budgeting implementation cycle SHUT DOWN government, then the behaviour would be different. We think this be-haviour is irresponsible.

We believe that Nigerians and the rest of the world that keeps an eye on happenings in this country are learning new lessons in governance under this government and the lessons unfold as frequently as we are able to expose ourselves to the lessons being taught by this government.

First, we are being taught that we have no right to have governance expectations from our government. Second, we are being taught gov-ernance and expectation, two important words in the social contract between elected officials and electorates, no longer matter.

But we do know, surely, that they matter and that officials are elected to government on the basis of strong expectations by citizens and on the basis that the social contract will be delivered based on sound governance principles.

For government to carry on seemingly unperturbed by the issue of the non-passage of the budget shows that there are things we think should matter, but which this government would rather think should not bother us.

Oftentimes, Nigerian officials get so easily carried away due to a total lack of fidelity, which tends to lead to corruptive tendencies that short-change the people in favour of officials. For whom, indeed, are Nigerian politicians answerable to? Why do they treat citizens with such contempt as if they and electorates do not share equal citizenship? Why do they glory in this behaviour without a care in the world?

We find it awfully amazing the contempt for electorates, the short memory mode that elected officials get into once victory is attained. For we believe that it is this contempt that makes government not to bother engaging with citizens over most things relating to their wellbe-ing, preferring instead to confer with family, friends and members of their inner caucus.

While we are at a loss over the continuous delay in the passage of the budget and how we think it could drag on until May, we wish to draw attention to another matter of concern. This government came in under a blaze of glory. That blaze of glory has since disappeared.

We feel that the government is still unleashing the psychological hoodwinking that brought it into power on the citizens. The difference is that while before election it used it to win votes, this time it is using it to torment and harass citizens and business.

There is no government in the history of Nigeria that has ridden on the back of such amazing political goodwill to get into power as the current government has done. Having done so and understanding how disappointed a good number of citizens have become, citizens are now being subject to the torture of harassment brought about by different forms of taxes and charges that are being levied from different fronts.

We think the seed for the licence that is feeding this behaviour have been sown by stories about how broke the country is, and this was well developed and has been orchestrated by government since it got to power. We have been told we are broke almost beyond recovery, which should mean that we should have no higher expectations and must think like pauperised citizens.

In our pauperised state of mind, we must see government as broke and we must accept any taxes they unleash on us, even while we are down and in need of a hand to stand on our feet. That hand we must not expect from government because they have been able to sell the dummy that we, not them, are responsible for this so-called predica-ment that we are in. This false notion of poverty, oil prices being down (they have been in the 50+ dollars range for a long time, but we are still broke) and with revenues being short, this has allowed the government to harass citizens with levies; and verbally threatening citizens with mayhem, imprisonment, as if this behaviour is the New Normal in the relationship between government and the governed.

All of this represents a psychological militarisation of this relation-ship. The number of threats that one hears from government officials, especially those with pro-Western democracy experiences, makes you wonder if we are not really back to a Gestapo state.

We are of the view that there is a need to tone down the rhetoric of threats and adapt a much better detente with citizens about the obli-gations expected of them. We also think that as much as government is expecting, it should on its part be delivering, because it has a much higher responsibility to so do.

businessa.m.

The broad view of sustainability goes beyond resilience and longevity and emphasises the need to balance environmental, social, and economic considerations in decisions

COMMENT

EDITORIAL IM A G I N E A B A N K w i t h 6 0 0 branches and N1 million month-ly spend on diesel per branch. In a month, it spends N600 million on diesel only. This year alone,

it is likely to spend up to N7.2 billion on diesel. All things being equal, and if this trend is sustained, it will spend about N72 billion on diesel in a decade. Imagine the implications for telecom firms with diesel-powered masts in different locations across the country.

Think of a public sector organisa-tion with 200 service outlets in the country. An outlet uses five reams of paper per week. That’s 1,000 reams of paper in a week, 4,000 in a month, and 48,000 in a year. Assuming a ream costs N2,500, that’s already N120 million in a year and N12 billion in a decade.

On one hand, the question then is : are there alternatives to diesel? Beyond its f inancial implications, diesel power is also not good for the environment, climate, and air quality. In other words, can renewable energy (e.g. solar power), which is cleaner and in some cases cheaper than diesel power, help? On the other hand, can information technology (i.e. paperless office), which is cleaner and cheaper, help the public sector organisation?

These scenarios are eloquent testi-monies to the benefits of sustainabil-ity. The same logic can apply to travel expenses in the presence of possible alternatives such as video-conferenc-ing. Preventable human right issues, as well as health and safety risks, can save an organisation significant amount of money, and may even lead to innova-tive opportunities. These are only re-alisable with a sustainability mindset and culture.

Sustainability has become a new mantra, a philosophy of sorts. It how-ever means different things to differ-ent people. If one takes the literary meaning of the word, it simply suggests longevity or the ability to continue to be in existence irrespective of counter-acting pressures. Another word often used in this regard is resilience. While longevity and resilience are integral to sustainability, they tend to, somewhat, present a narrow and limited view of sustainability.

The broad view of sustainability goes beyond resilience and longevity and emphasises the need to balance environmental, social, and economic considerations in decisions. It is di-rectly linked to the quest for sustain-able development – a development that does not inhibit future genera-tions in their quest for development. It recognises the nested interdepen-dency amongst the economy, society, and environment.

In other words, the success of the economy is dependent on the viability of society, and the success of society is linked to the viability of the environ-ment. As such, without the environment there will be no society, and without society, there will be no economy. The three are interwoven. Sustainability thus strives to ensure the integrity of this nested interdependency. This is very much at the heart of the Sustainable Development Goals (SDGs).

Unfortunately, sustainability is of-ten and erroneously associated with high cost. It is also often assumed that sustainability is always expensive. This is a long-standing myth, which tends to constrain and stifle managerial and organisational innovation.

The other disappointing approach

to sustainability is to view it as what or-ganisations should do once they have started making money. In that regard, sustainability becomes a luxury good and not a contributor to organisational survival. This view is often peddled by small and medium sized enterprises as well as nascent entrepreneurs. What they often miss is the fact that sustain-ability thinking and culture can be an efficient way of utilising and maximis-ing organisational resources for both short and long term profitability.

Sustainability has also been seen and described as Western concept and practice. This is not far from the view of sustainability as a luxury practice, given that the West is seen to have de-veloped and can now worry about the exotic tastes often wrongly associated with sustainability. As much as sus-tainability is a quest for a higher quali-ty of life, it is not a concept and practice restricted to the West. It applies to all. Some people in the developing world now see China as a role model. In their view, if China is able to lift more than 500 million people out of poverty through massive industrialisation and aggressive international trade, without taking cognisance of the implications of that on sustainability, then it makes sense for other developing economies to do the same. What is often not con-sidered are the untold environmental and health hazards many Chinese are currently burdened with. They also tend to miss the current efforts the Chinese government is making to cur-tail and contain these negative societal and environmental impacts at huge fiscal and human costs.

The often missing link in the sus-tainability discourse is the fact that economic growth can be greener and cleaner. Most developing economies, especially those in Africa starting from almost a clean slate, have a chance to embrace this way of thinking and work-ing. Sustainability, as a way of life, is a hygiene factor, and doesn’t hurt. How-ever, the absence of it definitely hurts, as has been shown through recent and rapid industrialisation and globalisa-tion strategies.

African economies may be late com-ers to capitalism; however, they have the opportunity to redefine capitalism in the continent for the world. African entrepreneurs and entrepreneurs in Africa can definitely take advantage of this opportunity to build competitive capabilities and excel. Such capabili-ties will not only contribute to positive bottom line, they will also have signifi-cant positive societal and environmen-tal impacts – thereby promoting the triple bottom line in practice.

Sustainability is about efficiency. It requires a different mind-set to ap-preciate. Entrepreneurs and organisa-tions, who are able to break away from the old frame of reference and embrace sustainability thinking as a new way of life stand to gain enormously. The view that sustainability is expensive is a gross and misleading myth. It can actually save your organisation money, promote innovation, create stakeholder goodwill, and translate to meaningful profit.

In other words, the opportunities inherent in sustainability thinking and practice outweigh any possible misconceptions of sustainability as an expensive endeavour. The cost of doing nothing and sticking with the status quo is even worse, as previous scenarios above have shown.

87, Oduduwa Crescent, GRA Ikeja, Lagos, Nigeria.Tel.: +234 907 986 3875Email: [email protected]: www.businessamlive.com


TOWARDS MORE EFFICIENT MARKETS

KENNETH AMAESHI

Amaeshi is professor of

business and sustainable

development at the University of Edinburgh,

United Kingdom and a Senior

Advisor at ESG Advisory (a

sustainability consulting firm).

He tweets @kenamaeshi

“We believe in paying our employees as much as they need.Since you’ll be at your desk 90 hours a week,

you won’t need much.”

7

My takeaways from Lagos Means Business forum

he Governor is working on the John F. Kennedy Model; “Ask not want your Country (State) can do for you, but what you can do for your Country (State)

THE TEAM

EXECUTIVE EDITORPhillip Isakpa

Tel.: 0809 400 [email protected]

MANAGING EDITORSteve OmanufemeTel.: 0802 501 3059

[email protected]

REPORTERSKayode OgunwaleAjose SehindemiBukola Odufade

Temitayo Ayetoto

ONLINEGoddey Odin

GRAPHICSChristopher Ikosa

_____________________________

Businessnewscorp LimitedPhillip Isakpa

Steve OmanufemeAmadi Iheukwumere

Adedotun Akande

Tiamiyu AdioIsaac Jayeola

COMMENT

87, Oduduwa Crescent, GRA Ikeja, Lagos, Nigeria.Tel.: +234 907 986 3875Email: [email protected]: www.businessamlive.com


AJIBOLA EDWARDS

Ajibola Edwards is a

Lagos based legal practitioner

MY FIRST IMPRESSION was that the Governor is very passionate about development, uplifting the lives of the ordinary citizen and he is in a hurry to move Lagos to

the next level of development.Take away number 1:The Governor is very worried about security,

he is not looking just at the physical security in-frastructure he is looking at the fabric of society. Speaking candidly he used the phrase Arabian Spring. His thinking is that if something is not done now, the middle class may wake up one morning with the hungry masses siting at their breakfast table waiting to be served. We all know the rules of etiquette will not be observed if that happens.

Take away number 2:Education, education education. The Gov-

ernor wants to increase the investment in edu-cation. By my calculation he needs at least N6 Trillion a year to fund public education at about the same way private sector educational institu-tions are funded. This estimate is based on 6 mil-lion enrollment in primary through to secondary schools with a N1 Million spend per child per year. This is the rough average cost per year to train one child in a good quality private school. If we intend not to just have functional literates, the Governor would have to spend as close to the Private sector as he can. The Governor is of the strong belief that if he doesn’t make this investment now we make no progress as a society.

Take away number 3:The Governor is working on the John F. Kenne-

dy Model; “Ask not want your Country (State) can do for you, but what you can do for your Country (State)” He wants the middle and upper middle class to make sacrifices for the greater good.

Take away number 4:The middle class, upper class and OPS believe

they cannot make that sacrifice now because we have barely come out of a recession and that de-velopment should be postponed. The Governor on the other hand believes that the investment in infrastructure ultimately benefits the Middle, Upper Class and OPS. His theory is based on the

bottom of the pyramid approach. In his words if construction is going on, the average artisan has a job to take care of his family. If you go a rung up the pyramid it actually means more factories are oper-ating at full capacity because those at the bottom will consume more and then this affects the middle class who service the manufacturing companies. So its a ripple effect which benefits OPS primarily.

Take away number 5:Middle and Upper class home owners who have

homes in the UK and USA have no problem paying property tax in the countries where they have these homes, primarily because they can already see the development; parks, sidewalks, trains, etc. But since these creature comforts are underdeveloped in La-gos , they do not see the reason why they have to pay for them to be created in the future. So which comes first? The chicken or the egg.

Take away number 6:Logic will not sell the Land Use Charge, those

kicking against it are finding it more difficult to pay school fees and see their middle class lifestyle dis-appearing before their eyes. There is genuine fear of the future. They want the Governor to also realise that they are struggling and all those palatial houses are not what they seem.

Conclusion:I am worried about Take away number 1 and 2. If

we do not do something now those at the bottom of the pyramid will over run those at the top. If the in-vestment in the social fabric of the State is not made now, the population will be uncontrollable if there is an uprising. We should all realise that the Gover-nor as the Chief Security officer of the State without stating the obvious is warning us of an impending catastrophe if the middle and upper middle class do not make the sacrifice now.

It is the same sacrifice most middle class and upper middle class parents are making when they invest in their children’s education.

Suggestions:The Governor should increase the advocacy

on tax, and create a system that rewards tax pay-ers for paying on time and gives them a cash back at a future date, tax credits, bursaries for their children etc.

8

Unilever is a socially responsible and responsive organization, delivering significant social and brand investments that are helping to create a brighter future for numerous Nigerians. Unilever Nigeria is delivering key interventions that advance our corporate purpose ‘to make sustainable living commonplace’. In driving these interventions, we are guided by the Unilever Sustainable Living Plan (USLP), our blue print for achieving our vision of doubling the size of our business whilst reducing our environmental footprint and increasing our positive social impact. Our USLP is focused on three main pillars:

- Improving Health & Wellbeing

- Enhancing Livelihoods

- Decoupling growth from environmental impact

Unilever believes in taking small everyday actions that can make a big difference for consumers, the communities in which it operates and the environment. Unilever has confidence in the Nigerian economy and will remain a major player in the country by continually investing, developing capabilities and growing brands that most suit the consumers’ needs.

HELPING TO CREATE ABRIGHTER FUTURe


which comes from the idea of “walking the talk”. We just call it personification of vision. In other words, the CEO be-comes a living representation of what her vision is about. If it’s about excellence, the CEO strives to excel in everything she does. If it’s about collabo-ration, she makes collabora-tion her way of work. Diego Bolzonello sums it up: “You must be an example to others and understand the meaning of your actions [for them]”.

The second practice is sometimes called a “talking parrot”. But it simply boils down to reiteration of vision. Good CEOs use every oppor-tunity to articulate their vision: regular management team meetings, corporate confer-ences, shop-floor walkabouts and occasional encounters in the office corridors. They may use different words each time, but they keep sending the same message about where the company is going and what it stands for.

The third practice is op-erationalisation of vision. Ac-cording to Richard Rushton of Distell Group (South Africa), the CEO is “fundamentally required to shape the future” and part of this future is in-ternal. Corporate rules, poli-cies and procedures, working methods and products… they all speak without having a mouth – and effective CEOs make good use of them to pro-

Stanislav Shekshnia, et al.

WE OFTEN HEAR that running a large com-p a n y i s

one of the most complex jobs in the world. Business schools, strategic consultancies, head-hunting firms, training pro-viders, executive coaches all have a tendency to mystify the work of the CEO. However, effective CEOs see their jobs in much simpler terms and consider this simplification an important element of their effectiveness.

That was one of the sur-prising findings of a research project we undertook over the last five years. In order to understand how the CEOs themselves see their work and which factors make them successful, we interviewed a carefully assembled selection of truly international CEOs from the world’s twenty big-gest economies (other find-ings are reported in our book CEO School: Insights From 20 Global Business Leaders).

Although our respondents come from different conti-nents, countries, industries and types of companies, they all emphasised four essential roles of a CEO: envisioning; nominating; enabling and managing crisis. They also shared specific practices – it-erative behaviour strategies – that help them play these

EXECUTIVE KNOWLEDGE SERIES


roles. Across a series of four articles, we will expand on each of these roles and how these CEOs carry them out. We start in this article with envisioning.

EnvisioningOur 20 CEO-experts need-

ed no prompting to talk about “vision”. It’s a topic nearly all of them raised spontaneously. “The ability to define an accu-rate vision is very important,” says Jean Sentenac of Axens (France). For Abdel F. Badwi, formerly of Bankers Petroleum (Canada), the “role of the CEO is mainly about vision”.

Contrary to the widespread view of a corporate vision as a picture of the future set in stone, our CEOs consider vi-sion a work in progress. Fine-tuning and updating the vision is a never-ending process of unravelling a paradox. It en-tails a number of elements.

First, good vision is always crystal clear, yet it is also evolv-ing along with the company and the macro- and micro-environment in which it op-erates. As Diego Bolzonello, formerly of Geox (Italy) says, “Direction is made by a long-term vision…and you modify it continuously, because in this environment you need to understand what is happening all around the world.”

Second, good vision is grounded in rational evalua-tion of the market and busi-ness potentials, yet it must also be inspirational and emo-

tional. Renato Bertani of Barra Energia (Brazil) explains: “It’s not about sending orders out; it’s really about making people believe you know the right way and providing the right vision.”

Third, good vision provides direction and establishes fun-damental working principles, yet it leaves plenty of room for creative expression from every individual. As Lee Chul Kyoon of Daelim (South Korea) says, “Once a system is set up, it will function. But if we don’t all share the same future perspec-tive, it won’t work. The CEO provides that.”

A CEO’s storyWe would like to illustrate

how dynamic envisioning works with the story of a CEO – let’s call him Alex – with whom we have worked closely for many years. Alex was a man-agement consultant when the founders of a privately owned conglomerate offered him a senior executive role. After a series of acquisitions, they de-cided to create a stand-alone energy company and Alex was the natural choice for CEO.

The young CEO’s brief was simple: Turn this collection of assets into a business, without any extra capital. But Alex was more ambitious than that. His vision was to create the country’s best-run company in terms of performance, sys-tems, management, talent and reputation… within five years. He wanted the business to be

an employer of choice, a sup-plier of choice and (given his brief from the owners) a bor-rower of choice. He shared all this with the organisation.

On a more personal level, his ambition was to prove himself as a CEO and make his family proud of him. The com-pany’s HQ was in the region he came from, not the nation’s capital. He wanted to build his hometown’s economy and prove that it could be home to a great company and attract executives of top international calibre.

In his first year, attracting top executives is exactly what he set about doing. At the same time, he put in place a transparent system of report-ing and improved the perfor-mance of the company’s vari-ous components by reducing waste and cutting costs.

In his second year, Alex concentrated on building the newly recruited talent into a team, consulting them on all key decisions. He also reached out to people in all parts of the organisation, invested in new technology and introduced modern policies, procedures and governance practices. Along the journey, he also saw some of his own limitations, notably in image and public speaking. So he got himself a coach, some new suits and attended courses at INSEAD and Harvard.

By the third year, all the basics were in place. Alex was able to refine his vision and

focus on more sophisticated practices, such as company-wide talent development as well as health, safety and en-vironmental (HSE) manage-ment.

By the fourth year, the company had adopted some world-class practices. There was a corporate university, a bottom-up innovation pro-gramme and a new compen-sation system for managers, based on both performance and development. Alex was not only investing in the train-ing of his people but of his sup-pliers and customers. Based on his recommendations, the board also reorganised the corporate governance system.

By the beginning of the fifth year, Alex had received several awards for being the country’s best CEO and the company had been ranked the nation’s top employer for two years in a row. The management team had also won an award for be-ing number one in the coun-try. The shareholders were making 30 percent annual re-turn on their investment. The vision had become a reality a year ahead of schedule.

Walking the talkOur respondents shared

specific practices that help business leaders to develop and keep updating organisa-tional vision. We would like to describe just four of them.

One of our clients calls the first practice a “walking vision”,

The four essential roles of a CEO

p. 10

LEADERSHIP & ORGANISATIONS

together. This fundamen-tal alignment cannot occur when the nature of the proj-ect – information services – is unrelated to the core busi-ness. Tech companies such as Google and Microsoft, on the other hand, would have stronger reasons to consider single-sourcing as a hedge against the risk of vendor free riding.

However, we believe our conclusions apply beyond IT. Companies of all sizes and industries are increasingly finding they cannot do it all and are investing heavily in partnerships. In addition to whatever internal contingen-cies may be shaping their sourcing strategies, they may also want to weigh the factors covered in our research – task modularity and output verifiability.

Sameer Hasija is an Asso-ciate Professor of Technology and Operations Management as well as the Shell Fellow in Business and the Environ-ment at INSEAD.


Devising an optimal sourcing strategy

10

When the metric and revenue are well-aligned, however, single-sourcing performs just as well as multi-sourcing


OPERATIONS

“This article is repub-lished courtesy of INSEAD Knowledge(http://knowl-edge.insead.edu). Copyright INSEAD 2018

LE T ’ S A S S U M E you’re a company scouting for ven-dors for a variety of business-critical

IT projects. Every candidate you approach wants to scoop up as much of your business as possible. Should you try to find the best partner for each task, or look for a one-stop shop?

The theoretical advan-tages of relying on one com-pany, rather than several, are clear: less time lost in juggling multiple contacts; greater leverage resulting from being a more impor-tant client ; lowered risk, assuming your partner is trustworthy, etc. Conversely, throwing your entire lot in with a single vendor seems inherently risky as well.

For many years now, multi-sourcing has been a rising trend, representing US$7.2 billion in global IT and IT-enabled services con-tracts in 2007 alone. Firms are increasingly choosing the flexibility and in-built competition between ven-dors that are part and parcel of multi-sourcing.

My recent paper for Man-agement Information Sys-tems Quarterly (co-authored by Shantanu Bhattacharya of Lee Kong Chian School of Business and Alok Gupta of Carlson School of Manage-ment) explores how firms can make informed, proj-ect-based choices between single- and multi-sourcing. Our research is the first on this topic to take into account

Sameer Hasija how incentive structures commonly used in informa-tion-services outsourcing contracts are often out of step with outcomes (i.e. rev-enues). Moreover, we shed light on how the relation-ship between project tasks provides clues to the optimal sourcing strategy.

Performance metrics vs. revenue

Conventional linear con-tracts, which combine vari-able rates tied to perfor-mance metrics with fixed fees, often may not generate perfectly aligned incentives. To illustrate this point, let’s take the example of a firm that employed the same vendor both to manage its call centre and to redesign its website. The vendor’s pay was partly pegged to the volume of phone calls fielded at the call centre, a relatively easy-to-gauge metric that no doubt drove revenue. By contrast, the website rede-sign, though also significant from a revenue perspective, was not assigned a perfor-mance metric, because the user experience of a website is largely intangible. So we see that for this project, not all the levers affecting rev-enue could be manipulated through the contract. In that case, we can assume that in order to maximise revenues for a project whose out-comes were already difficult to measure, the company should have contracted with multiple vendors – so that there would be more levers of control.

Our theoretical model bears out the hypothesis that

when the performance met-ric and project revenue are imperfectly aligned on the vendor side (as in the above example), multi-sourcing indeed should be the de-fault – provided the tasks concerned are modular, i.e. fairly discrete and separable from one another.

When the metric and rev-enue are well-aligned, how-ever, single-sourcing per-forms just as well as multi-sourcing – again, for modular tasks only.

For modular tasks, the client’s objective is simply to extract the maximum pos-sible effort from the vendor. The client exerts little to no effort at this stage of project execution, because modu-lar outputs snap together easily. One plus one equals two. So multi-sourcing and single-sourcing diverge only when the aforementioned misaligned incentives jeop-ardise the outcome. In that case, clients can address the problem by drawing up separate contracts for each vendor. Obviously, that so-lution is unavailable when there is only one vendor on the project.

Integrated tasksWhen the various tasks

involved cannot be sepa-rated quite so easily, i.e. are integrated rather than modular, things get a bit more complicated.

Here, single-sourcing is advantageous when perfor-mance metrics and revenues are well-aligned. Integrated tasks are not wholly depen-dent on vendor effort – the client has to be involved as well, because getting to two

is not as simple as adding one and one. When perfor-mance and thus compensa-tion hinges on joint work, there is increased temptation for any one vendor to put in less effort and let part-ners (the client and other vendors) take up the slack. It follows that under condi-tions of perfect alignment, working with one vendor entails less risk of this nature than does employing several. Therefore, single-sourcing is advisable.

Imperfect al ignment, however, requires a trade-off between the above-men-tioned risk and the poten-tially negative effect of par-tial alignment. Companies should consider which is the greater issue for them: im-paired visibility of outcomes, or the free riding that can occur when multiple ven-dors tackle integrated tasks. The answer will depend on each company’s individual circumstances. For example, a massive Fortune 500 com-pany will have a very hard time tracking performance on any one project. In such cases, it may be wise to use multi-sourcing as a default option.

Multi-sourcing’s biggest fans

There is anecdotal evi-dence that the banking and manufacturing sectors are the leading devotees of multi-sourcing for IT proj-ects. Our findings suggest why that might be so. For single-sourcing to match or outperform multi-sourcing, vendor performance and revenue must be tracked

The four...

p. 9

“This article is repub-lished courtesy of INSEAD Knowledge(http://knowl-edge.insead.edu). Copyright INSEAD 2018

mote the vision. If your vision is “to be number one in the world in the shoe business”, as Diego Bolzonello claims for Geox, you have to make sure that you reward excellence rather than mediocrity. And you must recruit and promote ambitious people, giving them freedom to create and in-novate.

The fourth practice is in-strumentalisation of vision. Nishi Vasudeva of Hindustan Petroleum (India) describes it as follows: “a broader vi-sion and a feeling for external factors, so that you can fix difficulties as they arise”. To explain this more fully, good CEOs encourage their people to use the corporate vision as a benchmark for all kinds of decision making. When a VP of marketing asks for advice about who to hire as head of marketing for the Northern European region – an IN-SEAD MBA with two years’ experience working for the company’s main competitor or an industry veteran – the CEO’s first question should be: “Who would fit our vision bet-ter?” The same logic applies to investment projects, acquisi-tions or divestitures, as well as new products or services.

Setting, communicating and updating a vision for the business is the first and fore-most role of the CEO. This vision provides the rest of the organisation with direction, meaning and culture – and becomes a decision-making benchmark for all managers. It may evolve but needs to be deeply embedded in the entire organisation at all times.

Stanislav Shekshnia is Se-nior Affiliate Professor of En-trepreneurship and Family Enterprise at INSEAD. He is also the Co-Programme Direc-tor of Leading from the Chair, one of INSEAD’s Board Devel-opment Programmes and a contributing faculty member at the INSEAD Corporate Gov-ernance Centre.

Kirill Kravchenko is the Deputy Director General in charge of Administrative Af-fairs at Gazprom Neft and is on the board of directors of NIS Gazprom Neft, Serbia.

Elin Williams is a writer specialising in business, careers and higher education. She holds a BA and doctorate from the University of Oxford.

Shekshnia, Kravchenko and Williams are the co-authors of CEO School: Insights From 20 Global Business Leaders.

FARFETCH IS ON the cusp of accom-plishing something rare in the world of luxury retail: It po-

tentially could become one of the few luxury tech “unicorns” with an upcoming $5 billion IPO. The lofty valuation marks a remarkable turn for an indus-try that had long been resistant to selling online, fearful that the internet’s mass access would damage luxury brands’ exclusivity. But now luxury fashion houses from Louis Vuitton to Chanel and Gucci have been racing to embrace digital, whether it is partner-ing with multi-brand sites like Farfetch, developing their own platforms or both.

The pivot to digital makes sense: Online sales are expect-ed to drive future growth in the luxury goods market, making up 25% of the market by 2025 up from an estimated 9% last year, according to a 2017 report from Bain & Co. That means sales from offline stores will shrink to 75% of the total from 91%. Such projections serve as a wake-up call to luxury brands that have long relied on partners such as depart-ment stores — and their own boutiques — to sell products. But traditional retailers are struggling and more custom-ers are becoming comfortable buying luxury goods online.

“It used to be enough to just have the very best luxury product,” said Barbara Kahn, Wharton marketing professor and author of the upcoming book, The Shopping Revolu-tion: How Successful Retailers Win Customers in an Era of Endless Disruption. “But in today’s very, very competitive retailing environment, it’s not OK to just be good at one thing. You have to be good at least


Why luxury brands are racing To embrace e-commerce

11

Millennials are maturing into their prime earning years and becoming the focal luxury consumer

p. 12


Louis Vuitton & Gucci two different things and good enough in everything else.”

The new skill that makes sense for them to master? E-commerce.

However, many brands didn’t have the digital exper-tise to replicate a white-glove experience online by them-selves, said Denise Dahlhoff, research director at Whar-ton’s Baker Retailing Center. That’s why they are partner-ing with multi-brand portals such as Yoox Net-A-Porter, MatchesFashion and Farfetch to run their online stores for them. With their digital savvy and understanding of the luxury market, these e-tailers know how to provide an “excellent” online shop-ping experience appropriate for a luxury brand, and they also have global reach, she said.

“It used to be enough to just have the very best luxury product. But in today’s very, very competitive retailing environment, it’s not OK to just be good at one thing.”–Barbara Kahn

‘Extremely Important People’

For example, Farfetch pro-vides an online marketplace for 500 independent luxury boutiques and 200 brands so a shopper can use her phone to order that one-of-a-kind Alexander McQueen party dress — in her preferred cur-rency. Farfetch handles cus-tomer service and arranges for express global delivery — including same-day service in London, New York, Paris and other major cities. In the U.S., customers get free shipping and returns.

The other big luxury e-tailer, Yoox Net-a-Porter, through its Net-a-Porter site offers two-hour delivery win-dows, fashion consultants who are available 24/7 and a new premier service in se-

lect areas for its “Extremely Important People” or EIPs. Called the “You Try, We Wait” service, customers can get an item they ordered delivered on the same day, and the e-tailer’s agent will wait for them to try it on to see if they like it. If not, the agent will immediately collect the item to be returned.

Luxury brands also be-came comfortable with these websites — as opposed to eBay or Amazon, for example — because these e-tailers are careful to maintain an up-scale image. Not only won’t they sell counterfeit products, but also they publish content that replicates the feel of a posh fashion magazine, ac-cording to Dahlhoff. For ex-ample, Farfetch writes about wardrobe tips and dishes on the latest runway trends. Net-a-Porter has an editorial section with a recent cover story on actress Lisa Bonet, plus how-to articles on up-grading eveningwear or using lip oil.

This approach has fared well for luxury e-tailers, which made high-end goods widely accessible to people globally. According to the latest data available, London-based Far-fetch grew revenue by 74% in 2016 to 151.3 million pounds, according to Reuters. Yoox Net-a-Porter, based in Milan, said sales last year rose by 17% to 2.1 billion euros, from online stores open in both 2016 and 2017 and excluding currency fluctuations. Also, Yoox said 2017 was the first year that sales from mobile devices took up more than 50% of the total. In contrast, global retail sales overall rose by a much slower 5.8% last year to $22.6 trillion, accord-ing to eMarketer.

Keith Niedermeier, Whar-ton adjunct marketing profes-sor, cited three reasons why

online luxury sales are grow-ing fast. One, an improved economy boosts sales of high-end brands. Second, “luxury has been slow to move online, with many brands very reluc-tant to embrace the trend for fear of reducing exclusivity and commoditizing their of-ferings. They now see that it is an omni-channel world and they are quickly embracing the opportunity” provided from serving all these chan-nels, he said.

More importantly, “mil-lennials are maturing into their prime earning years and becoming the focal luxury consumer,” Niedermeier said. Millennials now account for 13% of high-net-worth households, he said, and they grew up shopping online. While the rich have always propped up sales of luxury goods, young shoppers are key to future growth, said Ludovica Cesareo, Wharton post-doctoral research fellow in marketing. “We have seen an incredible rise in millen-nials and Gen Zs purchasing luxury, and these digital na-tive consumers want to pur-chase luxury goods online. That is why luxury e-tailers are on the rise.”

“Millennials are matur-ing into their prime earning years and becoming the fo-cal luxury consumer.”–Keith Niedermeier

According to the Bain re-port, millennials and Genera-tion Z shoppers accounted for about 85% of 2017’s growth in luxury goods sales. “They represent the new aspira-tional class,” Cesareo said. “Millennials and Gen Zs who purchase luxury want much more than just a brand name and a status symbol. They want an experience, which for them has to encompass some form of digital interaction, [and] has to be inspirational.”

Added Dahlhoff: “When your customer base is aging, you have to think about bringing in new customers, younger customers.”

Luxury Brands Are Lis-tening

Some luxury brands are jumping in wholeheartedly. Last summer, Louis Vuitton parent LVMH launched 24 Sevres, a high-end online shopping site that offers not only its own brands but, in a rarity, also those of competi-tors. The site offers live, one-on-one video consultations with Parisian stylists, a “Style Bot” on Facebook Messenger to engage fans and delivery to 75 countries. “We felt it was time to take our exper-tise in visual merchandising, which our Maisons have long brought to their stores, and transform it online,” said Ian Rogers, LVMH’s chief digital officer and former Apple music executive, in a state-ment.

Gucci has streamed fash-ion shows on Facebook Live, revamped its website to of-fer more attractive visuals, posts content on social me-dia constantly to keep fans engaged and collaborates with contemporary artists on marketing campaigns. Embracing digital has turned its fortunes around. In 2017, Gucci’s revenue rose by 42% to 6.2 billion euros, according to parent Kering. CNBC calls Gucci one of the industry’s star performers.

Chanel has more than 57 million social media follow-ers worldwide, the most for any luxury brand, according to Luxury Society. One reason for its success: It has posted more than double the indus-try average of high-quality videos to YouTube as well as 47% more Facebook videos.

p. 12

MARKETING

EXECUTIVE KNOWLEDGE SERIES12

“Chanel, despite being a century-old brand, has radically modernized its brand status through social and has ultimately become a master of online video,” the site said. “Chanel posts regularly and consistently, cross-platform.”

“Millennials and Gen Zs who purchase luxury want much more than just a brand name and a status symbol. They want an experience.”–Ludovica Cesareo

Two of China’s biggest e-tailers — Alibaba and JD.com — are also trying to get into the luxury retail market, especially since the Chi-nese account for a third of luxury goods sales, according to the Bain report. Alibaba launched “Luxury Pavilion,” an invitation-only shop-ping site featuring Burberry, Guer-lain and other brands. JD.com, which already invested $389 mil-lion into Farfetch, unveiled luxury site “Toplife” with fashions from Saint Laurent, Emporio Armani and others. It also debuted a white-glove ser vice where specially trained couriers in suits and gloves hand deliver luxury items like a $2,000 designer handbag.

The big fashion houses have also changed in another way: They are taking design ideas from the youthful masses. “It used to be that traditional luxury companies had designer items they would bring to market and more mass-oriented brands would copy them. Now, sometimes it’s the other way around,” Dahlhoff said. “Luxury is taking inspiration from street wear brands” for the younger set such as T-shirts, sneakers, denim and other goods. According to the Bain report, sales of luxury T-shirts rose by 25% in 2017, sneakers by 10%, flip-flops by 50%, down jackets by 15%, denim by 6% and parkas by 8% — for a total of 13.1 billion euros in sales out of an estimated 262 billion euros for all luxury goods.

Brands are also enabling some personalization through a limited choice of designs or colors so they can offer different options but still retain quality control. Young shop-pers “want to be able to express their own identities through the luxury products they purchase,” Cesareo said. Young luxury con-sumers also mix and match items — buying a few pieces of luxury items or “affordable” luxury such as a key chain, a wallet or scarf to go with everyday apparel — not only to create their own individual outfits, but also because on aver-age these customers don’t have unlimited disposable income, Dahlhoff said.

With luxury e-commerce taking off, will offline stores still play an important role? “Luxury brands must still be committed to physi-cal retail stores because the bulk of sales still occur there,” Nieder-meier said. “Furthermore, show-rooming [visiting a store to see a product before buying it online] is a key part of the shopping journey that smart retailers understand and embrace. Pure online play-ers will have to provide unique services or exclusive offerings to be competitive in the long run.”

Why luxury...


p. 11

Loneliness on the Job: Why No Employee Is an IslandSigal Barsade & Hakan Ozcelik

THE WORKPLACE CAN be a curious environ-ment. Dozens or even hundreds of employees can labor side by side

for hours, spending more time with each other than with anyone else, yet they don’t feel connected. New research shows that loneliness isn’t just damaging to mental health; it can also lower job performance. Wharton management professor Sigal Barsade and Hakan Ozcelik, management professor at California State University, Sacramento, joined the Knowledge@Wharton show on SiriusXM channel 111 to talk about their study of loneliness in the work-place and what managers can do to help. Their new paper, which was published in the Academy of Man-agement Journal, is titled, “No Em-ployee an Island: Workplace Loneli-ness and Job Performance.”

An edited transcript of the con-versation follows.

Knowledge@Wharton: There has not been much research on lone-liness in the workplace. Why?

Sigal Barsade: It’s really left us mystified because there has been a ton of research looking at lone-liness in other domains. That re-search has found really negative results on mental health, cognitive functioning, physical health, even longevity. People tend to think that if you’re lonely, you’re lonely ev-erywhere. But that’s not true. What research has shown is that you can be lonely in your private life, in your family life, in your romantic life — it depends on the place. Hakan and I were shocked when we saw that all the research had been done in non-worklife; [despite] how much time we spend at work, virtually none had been done at work. We said, “Let’s look into that.”

Knowledge@Wharton: In the paper, you wrote that loneliness has been referred to by experts as an epidemic. That’s interesting.

Hakan Ozcelik: Yes, I find that interesting, too. I find that a bit con-cerning as a human being, but I’m also excited as a researcher. In the United Kingdom, Prime Minister Theresa May recently announced the creation of a minister of lone-liness. After doing extensive re-search, they realized that a signifi-cant portion of the population feels lonely. Now they have a minister of loneliness in the country, which I think is the first in human history.

Knowledge@Wharton: Part of your research looks at how co-workers treat each other, correct?

Barsade: Loneliness is a very subjective feeling, and the word “subjective” is critical here, mean-ing it’s how I feel about it — wheth-er my emotional or social needs are being met, and feeling badly when they’re not met. The reason “sub-jective” is so important is that you could have the same two employ-ees in exactly the same environ-ment, but if they have different lev-els of need for closeness, then one could be lonely and the other could

not. A work team isn’t a panacea for it. While it will help in the sense of giving more opportunity for con-tact, there are many other factors that are going to depend on what people are looking for and what they’re getting back.

“What research has shown is that you can be lonely in your pri-vate life, in your family life, in your romantic life — it depends on the place.”–Sigal Barsade

Knowledge@Wharton: How do you define loneliness at work?

Barsade: People sometimes get confused about what is meant by loneliness. It’s things like: Do I have somebody to turn to here? Do I feel like I’m in touch with the people around me? It’s not solitude. A lot of times, people will think, “Does that mean if I’m alone or I’m a virtual worker, I’m automatically lonely?” No, it’s about your desire on that front. Workplaces need to be think-ing about what their employees need and go accordingly from that. That’s why we started to do the study, to see if [loneliness] really influences anything. It certainly in-fluences how people feel, and that’s important in its own right. But from a business perspective, from an organizational perspective, is this just the employee’s problem, or is it also the organization’s problem in the sense of performance and outcomes? We looked at it stan-dardized over many occupations and jobs across two types of orga-nizations, so we used manager per-formance ratings for that. What we found is that resoundingly, it did. Greater workplace loneliness on the part of employees led to lower performance.

Knowledge@Wharton: Is this an issue to address at the individu-al level, or should the company be concerned as well?

Ozcelik: I think both, but defi-nitely on the side of the manager because they are getting the ex-tra salary to take care of the work environment and to make sure that things are running smoothly. Given that people can feel lonely at work but not in another domain indicates there might be some-thing happening in the workplace that makes that employee lonely. There are many different factors at the managerial level that can be taken into account to prevent that. As Sigal mentioned, you can have exactly the same working environ-ment, yet two different employees might respond in very different ways because they might have dif-ferent levels for loneliness. One of them might be far away from being lonely, and the other one might as well be standing on the cliff.

What we are also finding in our research is that there might be a loop that people get into. Once you start getting that feeling of loneli-ness, it doesn’t stop there. Once employees start giving signs that they might feel lonely, they also start behaving differently. If man-agers spot it early on and find a way to bring the employee back in, then I think the problems will be [fewer] than just leaving the employee on

their own. It’s the manager’s job, in a way, to take care of them. It’s not the employee’s private business.

Knowledge@Wharton: There is also the aspect of how other em-ployees feel towards that lonely person and whether that has an emotional impact on the work space.

Ozcelik: I think that brings in the contagious aspect of loneliness. Although we didn’t look at it in our study, we know from the social side and neuroscience research that loneliness can be contagious. Other people’s loneliness can eas-ily become our own because it’s relational. Once the relational network gets infected, suddenly you’ve got these employees behav-ing strangely. In that sense, it’s not an altruistic choice for a manager or a co-worker to help out a lonely employee. It’s almost a managerial need that they need to take care of, a relational need. As a colleague, they need to reach out to an em-ployee who feels lonely.

“Loneliness is almost like a pris-on. Once you are in there, the para-digm’s totally different.”–Hakan Ozcelik

Barsade: As researchers, we want to understand why greater loneliness leads to lower work per-formance. The psychology litera-ture has shown this very powerful but very odd result, which is that loneliness, in theory, should be there to signal to us that our needs aren’t being met. It’s a motivational state, not a trait. You’re not disposi-tionally lonely. You can be chroni-cally lonely, but it’s not something you’re born with. We, as humans, have a need to connect. You would think that if you’re lonely, that’s a signal to connect. In the beginning, it is. If you’re in a new city or a new workplace, it gets you moving.

But what the psychology litera-ture has shown is that once loneli-ness is an established sentiment — you’ve decided you’re lonely — you actually become less approach-able. You don’t listen as well. You become more self-focused. All sorts of things happen that make you less of a desirable interaction partner to other people. We found that was one of the things that ex-plained the lower performance. The co-workers of lonely people found them less approachable. Because of that, they didn’t share things and didn’t get the resources they needed. By the way, the lit-erature showed it’s not that they have lower social skills. Loneliness makes it happen.

Knowledge@Wharton: What sectors of employment did you re-search for this study?

Barsade: We looked at a public municipality, which was really in-teresting because we have clerks and truck drivers and managers and engineers and police. We also looked at a private company that was an outsourcer…. We had over 41 different positions there, and 44 in the other one. One of the strengths of the study is that there was no significant difference in the amount of loneliness in the public

municipality compared to the pri-vate company. There also was no difference in loneliness based on age, sex, education or tenure.

Knowledge@Wharton: There’s no pattern to loneliness?

Ozcelik: It’s an emotion, and emotions are functional. If you are early on the road, like you’re a new-comer to a company, it’s great that you feel lonely because that way you take some of the interpersonal risks to reach out to people, to make acquaintances, to make friends. But if you stay lonely for some time and start getting into the psycho-logical processes that are influenc-ing your perception and thinking about how your social world is, then it becomes a cycle. It’s almost like a prison. Once you are in there, the paradigm’s totally different. You are not yourself anymore. It’s kind of a psychological prison that people create. Management should find a way to bail them out as soon as possible because anybody can get lonely at any time. It’s a very powerful situation to be in. With the help of other people, those distorted perceptions can be fixed pretty easily with communication, with some relationship building. But if lonely employees are left to their own devices for some time, things might get even worse.

Barsade: My colleague Mandy O’Neill (management professor, George Mason University) and I have done some work in emotional culture — the norms around what emotions you’re allowed to express at work and what you’re better off suppressing. We looked at the emotional culture of the teams and found that in emotional cultures of companionate love [that include] care, compassion and tenderness, even lonely employees were more likely to be perceived as approach-able and committed to the orga-nization — which was the other explanatory variable about why performance went down.

We also looked at an emotional culture of anger. Not surprisingly, anger amped up the relationship between loneliness and lack of ap-proachability. If you think about, lonely people are very sensitive to social rejection and social cues. Anything that a manager can do in terms of creating a culture that sends out cues that are supportive is helpful.

“Greater workplace loneliness on the part of employees led to lower performance.”–Sigal Barsade

We also looked to see whether it’s better to be surrounded by other lonely people. If you’re lonely and the people around you are lonely, then you can [all] get together. That was totally not the case. The lone-lier the co-workers were, the worse the approachability behavior. So, all these lonely people are just bouncing off each other. We’re not the first to find that. There’s other research showing that if you just put lonely people together and tell them to talk to each other, it doesn’t work.

MANAGEMENT

Contd. on next edition

THE IMPRES-SIVE perfor-mance witnessed in the Nigerian

stock market in 2017 has been adduced as reason for the return of retail investors to the market.

Kurfi Kasimu, the man-aging director and chief ex-ecutive officer of APT Secu-rities and Funds Limited, in an exclusive interview with business a.m., disclosed that the share of retail in-

‘2017 stock performance attracted retails investors into the market’

13FINANCE & INVESTMENTBUSINESS A.M. MARCH, MONDAY 19 - MARCH, SUNDAY 25, 2018

Kayode Ogunwale

Kayode Ogunwale

IN A PERIOD OF five years (2012-2017) the value of private

equity funding in the West Af-rican sub-region rose to $10.7 billion with Nigeria account-ing for 73 percent of the total value, according to the 2017 Annual African Private Equity Data tracker published by the African Private Equity and Venture Capital Association (AVCA).

The data tracker seen by businessamlive indicates that the West African region wit-nessed 267 private equity (PE) deals with Nigeria accounting for 42 percent of the volume of the deals within the period. The country thus leads the region in both volume and value.

Ghana came behind close-ly, accounting for 27 percent of deals volume and 20 per-cent of deals value in the sub-region.

Specifically, West Africa’s $10.7 billion PE value repre-sents 43 percent of the $24.4 billion PE value on the African continent.

According to analysts, the numbers are not surprising given the recent $350 million private equity investment in Japaul Oil Plc, the flurry of PE firms that participated in the bid for 9mobile and the entry of Arkana Partners in 2017,

Nigeria accounts for 73% of West Africa’s $10.7bn private equity funds

which is proposing a $100 mil-lion investment into Nigerian mid-cap companies.

Equally, concerted efforts have been made by the gov-ernment to improve doing business in Nigeria and con-sequently increase foreign direct investment (FDI) into the country. To that effect, FDI to key sectors of the economy stood at US$4.145bn at the end of the third quarter in 2017 vs. US$3.574bn for the same period in

2016.The outlook for PE fund-

ing into the Nigerian market is also seen bright in 2018 as the country continues to offer a large untapped potential for PE firms amid prohibitive cost of borrowing and the increas-ingly challenging operating environment.

“This challenge offers PE firms the opportunity to inter-vene by using their technical competence,” an analyst said.

On the continent, the tracker indicated that PE deal activity remained steady in 2017, despite the total value of African PE fundraising de-creasing to US$2.3 billion in 2017 from US$3.4 billion in 2016 as a result of a number of big funds having achieved final closes in prior years.

The report said though consumer discretionary and information technology were the most active sectors for PE deals in Africa in 2016, recent trend of rising PE investments

INVESTORS IN Guaranty Trust Bank Plc and Ze-

nith Bank Plc. lost N104.586 billion of their investment value days after the two re-leased 2017 financial results.

The share prices of the two leading lenders in the country witnessed downward trend despite impressive results re-leased last week, indicating earnings report did not meet investors’ expectations.

To this end, the market reacted to the development by adjusting the firm’s stock price, which could be traced majorly to noise traders who do not analyze the funda-

Investors lose N105bn in GTB, Zenith Bank despite impressive earnings releaseKayode Ogunwale mentals of a prospective in-

vestment but follow trend and sell his or her shares in bandwagon.

Earnings are a significant underlying evaluation fac-tor when determining the price of a stock; they are also a factor that could change a stock’s price very quickly.

Guaranty Trust Bank share price dropped form N46 per share on Wednesday it re-leased results to N44.90 per share at the close of last week trading.

Also, Zenith Bank share price declined from N29.90 on Monday last week to N27.60 per share on Friday.

However both banks re-warded their shareholders with a combined final divi-

dend payout of N147.556 bil-lion, as Guaranty Trust Bank declared N2.40 kobo per share, amounted to N70.635 billion and Zenith Bank de-clared N2.45 kobo per share, totaled N76.921 billion.

Guaranty Trust Bank re-coded 1.1 percent increase in gross earnings (N4.6 bil-lion) to N419.2 billion from N414.6 billion reported in the December 2016, which was driven primarily by growth in

interest income as well as e-payment revenues.

Further review of the re-sults shows that its profit be-fore tax stood at N200.2 bil-lion, representing a growth of 21.3 percent over N165.1 billion recorded in the corre-sponding year ended Decem-ber 2016, while profit after tax grew from N132.3 billion to N170.5 billion, added 28.9 percent.

The bank’s balance sheet

remained strong with a 3.9 percent growth in total assets and contingents as the bank closed the year ended De-cember 2017 with total assets and contingents of N3.845 trillion and shareholders’ funds of N625.2Billion.

In terms of assets qual-ity, NPL ratio increased to 7.7 percent in December 2017 from 3.7 percent in Decem-ber 2016 largely as a result of classification of a single expo-sure within the Nigerian tele-communications industry.

On the other hands, Zenith Bank Plc. recorded profit af-ter tax of N177.933 billion. The bank after tax profit rose by N48.281 billion (37.24 per-cent), from N129.652 billion made during the same period

of 2016.The lender profit before

tax grew by N46.713 billion, representing 29.8 percent increase when compared to N156.748 billion recorded in 2016.

Gross earnings for the pe-riod jumped to N745.189 billion, up by N237.192 bil-lion or 46.69 percent from N507.997 billion in the cor-responding period of 2016; the bulk of which was the N474.628 billion interest and similar income, which rose from N384.557 billion; while interest and similar expenses jumped to N216.637 billion from N144.378 billion; result-ing in net interest income of N257.991 billion, as against the N240.179 billion of 2016.

in Africa’s education sector continued in 2017.

It cited Actis’ launch of Honoris United Universities, a pan-African private higher education network as an example.

Nonetheless, the share of PE deals in

the information technology sector rose to 15 percent of total PE deals in 2017, from 8 percent in 2015, an increase mainly driv-en by investments in technology-enabled platforms serving different industries and regions across Africa.

In terms of deal values, materials in-creased to 17 percent in 2017, from 3 per-cent in 2016. That was partly the result of a handful of large-sized investments in Africa’s mining sector coming from PE firms outside Africa.

vestors in the market rose to 52 percent at year-end 2017 ahead of institutional investors.

According to him, the market closed with 44 per-cent gain, with some stocks gaining as high as 200 per-cent, particularly the bank-ing sector where majority of retail investors have hold-ings.

He noted that, stocks like Guaranty Trust Bank, Nes-tle Nigeria and many others attained their highest price ever during the year.

“What this means to the market is that the life circle of retail investors is gradu-ally coming back,” he said.

However, momentum in the market slowed in Janu-ary 2018 when total domes-tic transactions decreased by 16.87 percent from N274.32 billion to N228.05 billion.

The trend is same retail investors’ composition of the market dipping to 47 percent from 52 percent as at the end of the fourth quarter of 2017

For the month, institu-

tional investors’ composi-tion of the domestic market accounted for 53 percent while retail composition accounted for 47 percent for the month under re-view, indicating a higher participation by institu-tional investors over their retail counterparts.

In prior years of 2016 and 2017, domestic transac-tions outperformed foreign transactions. In 2017 alone domestic transactions ac-counted for 52 percent of total transaction value.

FINANCIAL ANA-LYSTS EXPECT the bull-ish trend in the treasury bills market to continue

this week, saying they see investors aggressively positioning themselves in the secondary market in anticipa-tion of slowdown in primary market auctions as well as in anticipation of N227.5 billion open market opera-tion (OMO) bills maturity this week.

Last week the bills market was largely bullish as rates across bench-mark tenors trended lower on three of five trading days. The trading week started on a bullish note as av-erage rate across benchmark tenors fell 5bps to 13.8 percent despite the OMO auction by the CBN. The bull-ish sentiment extended till Tuesday as average rate across benchmark tenors declined 6bps following buying interest in medium tenured instruments (down 24bps) as inves-tors reacted to a 50 percent cut bor-rowings in the second quarter PMA calendar released by the CBN.

Midweek, the bullish sentiment persisted as average rates further moderated 45bps, on account of significant buying interest across medium (-21bps) and short term (-27bps) instruments, to close at 13.3 percent.

The CBN conducted a PMA on Wednesday where the 91-day in-struments (Offered: N9.6 billion, subscription: N 6.2 billion, allot-ment: N6.2 billion), 182-day instru-ments (offered: N 47.9 billion, Sub-scription: N 12.5 billion, allotment: N 4.0 billion) and 364-day instru-ments (offered: N 38.3 billion, sub-scription: N154.6 billion, allotment: N85.5 billion) treasury were offered at stop rates of 11.75 percent, 13.00 percent and 13.19 percent respec-tively.

Following the auction, the bull-ish trend in the market was bucked on Thursday as rates rose 20bps on benchmark tenors on account of sizeable OMO sale by the CBN in which N446.5 billion was mopped up.

THE CENTRAL BANK of Nigeria (CBN) is expected to issue more open market oper-

ation (OMO) bills this week to mop up excess liquidity in the system, which would help stabilize rate in the money market segment.

Last week, interbank rates - open buy back (OBB) and over-night (OVN) rates - fluctuated, ris-ing at the start of the week on the back of CBN OMO and FX auctions before moderating mid-week due to impact of maturing T-bills and SMIS sales refund.

Specifically, at start of last week, OBB and OVN rates inched 5.2 and 5.5 ppts higher to close at 13.7 per-cent and 14.7 percent respectively against the 8.5 percent and 9.2 per-cent recorded the prior Friday as the CBN’s routine OMO mop-up in which the 87-day (offered: N30.0 billion, sold: N51.0 billion, rate: 12.6 percent) and 227-day instru-ments (offered: N70.0 billion, sold:

THE FOREIGN EX-CHANGE market is likely to remain stable this week, with the naira trad-

ing within current bands, as oil rev-enue supported by stable oil prices and production continues to shore up the foreign reserves.

In line with trend, the CBN con-tinued its weekly intervention in the foreign exchange market, in-jecting $210.0 million across seg-

WITH THE CON-TINUED slow pace of inflation in the past 13 months to a low of

14.33 in 22 months and the sta-bilizing external sector variables, outlook for the domestic bond market is bullish, according to fi-nancial analysts.

The consensus opinion among analysts is that the encouraging inflation figures and government looking external to fund bud-gets may stimulate a push in the bonds market, especially with in-creased demand for long-tenured bonds last week.

Indeed, the bond market has of recent favoured lower yields, driven by investors’ reaction to sustained moderation in infla-tion rate, which further dropped to 14.33 percent in February as against 15.13 percent in January.

Investors are also expecting policy easing, which would, in their views, drive quite a flurry of activity in all market segments.

Previously, the domestic bond market was bullish as average yield declined 20bps week on week to 13.6 percent following the reduction in the amount of treasury bills to be rolled over in

FINANCE & INVESTMENTFIXED INCOME & MONEY MARKETS

14

Analysts fore-see continuous bullish trend in T-bill’s market

Disinflation, govt debt management strategy to drive bond market higher

Stories: Kayode Ogunwale


the second quarter. Yields trend-ed lower till midweek, falling to an average of 13.5 percent before profit taking took yields up 10bps on Friday.

Debt Management Office (DMO) is equally expecting to re-open 14.5 percent JULY 2021 and FEB 2028 instruments and offer a new 10-year bond - FGN FEB 2028 this week.

In the Eurobond market, pri-mary market issuances are ex-

pected to increase on the back of increasing tail risk of protec-tionism in developed market and gradual normalization of mon-etary policy anchoring yield ex-pectations upward, despite yields across 11 of 22 Sub-Saharan Afri-ca Sovereign Eurobonds trending lower last week.

Ghana, Côte d’Ivoire and South Africa’s governments are looking to join other SSA sov-ereigns, which have tapped the

market this year - Nigeria, Kenya and Senegal.

Specifically, Ghana raised its issuance target to $2.5 billion last Thursday while Ivory Coast is set to seek € 4.7 billion from the mar-ket.

In line with trend, analysts ex-pect the issuances to be largely successful due to high demand for high yield FCY debts instru-ments. South Africa will also be approaching the Eurobond mar-ket to raise $3.0 billion in April.

In the corporate Eurobond space, appetite for issuances is increasing as independent up-stream focused oil & gas com-pany, SEPLAT, became the first Nigerian company to issue an Eurobond in 2018 with a debut 5-year $350.0 million issuance, priced at 9.25 percent.

In the secondary market, sen-timent was broadly positive as yields fell on 7 of 12 instruments. FBN 2020 was the most bullish as year-to-month fell 25bps to 8.8 percent. On the flipside, FIDEL-ITY 2022 was the most bearish (YTM up 7bps to 9.3 percent). Year to date, the best performing instruments are DIAMOND 2019 and FBNH 2021 with year to date returns of 4.0 percent and 3.6 per-cent respectively.

More OMO bills likely to stabilize system liquidity

Stable oil price, strong foreign reserve to stabilize fx market

N88.8 billion, rate: 14.4 percent) were offered. Also, FX sale of $210.0 million squeezed liquidity, hence the increase in rates.

On Tuesday, rates was reversed as OBB and OVN rates moderated 4.2ppts and 4.6ppts to close at 9.5 percent and 10.1 percent respec-tively consequent on reduced pres-sure on system liquidity which stood at N221.8 billion.

The midweek trading shows that, rates further declined with the OBB and OVN closing at 5.8 per-cent and 6.3 percent respectively as liquidity improved to N338.7 bil-lion on the back of Retail FX auc-tion refunds which hit the system. On Thursday, OBB and OVN rates inched slightly higher (up 0.8ppts and 1.3ppts) to close at 6.7 per-cent and 7.5 percent respectively as system liquidity tightened due to settlement of T-bills PMA held on Wednesday and CBN’s OMO auction which partly offset T-bills maturity (N261.9 billion). The 105-

day instruments (Offered: N100.0 billion, sold: N2.7 billion, Rate: 12.6 percent) and the 259-day in-struments (Offered: N300.0 billion, Sale: N443.8 billion, Rate: 14.4 per-

cent) instruments were issued at the auction. Rates trended higher on Friday to close at 11.8 percent and 12.9 percent, up 3.3ppts and 3.8ppts week on week respectively.

ments in the FX market - wholesale secondary market intervention scheme (SMIS) window and spe-cial auction for Retail Invisibles. Against this backdrop, rates re-mained stable, trading within a tight band all week.

The CBN peg remained un-changed at N305.75/$1.00 - N305.80/$1.00. At the parallel market, rate opened the week at N362.00/$1.00 on Monday and

maintained same level till mid-week before marginally depreciat-ing 1kobo on Thursday to close at N 363.00/$1.00 and stayed flat on Friday, indicative of a 1kobo appre-ciation week on week.

At the I & E Window, the NA-FEX rate opened the week at N 360.03/$1.00, appreciating 5 kobo from the previous Friday. How-ever, this was reversed by Tuesday as it depreciated 13 kobo to close

at N360.16/$1.00 and remained flat till Thursday before closing the week at similar levels, indicating an 8 Kobo week on week depreciation.

Meanwhile, activity level in the I& E window improved as total turnover on Thursday stood at US$1.4 billion, up 162.3 percent ($876.1 million) from $540.0m recorded the same pe-riod previously.

In the FMDQ OTC futures mar-ket, the total value of open contracts

of the Naira settled OTC futures im-proved by $167.9m indicative of a 5.0 percent week on week expansion to $ 3.5 billion relative to US$3.3 billion recorded the previously. The APR-2018 instrument remained the most subscribed with a total market value of $659.9 million (contract price: N360.59) while the JAN-2019 instru-ment was the least subscribed with a total value of US$47.5m (contract price: N362.27).

MICROCRED MI-CROFINANCE bank has changed its name to Bao-bab Microfinance Bank

as its new identity in Nigeria and across its operations in eight other African countries. in a brand name unveiling event on Saturday in Lagos.

Ben Zwinkels, Baobab group chairman, who disclosed this at a brand unveiling event in Lagos Sat-urday, said the name was inspired by the famous Baobab African tree which had great cultural significance in the continent.

15FINANCE & INVESTMENTBUSINESS A.M. MARCH, MONDAY 19 - MARCH, SUNDAY 25, 2018

Microcred micro finance bank changes name to BaobabZwinkels said: “13 years after our

creation, the name Microcred no longer fits – it doesn’t describe who we are or what we do. This is why we’re changing our identity to reflect this evolution”.

He said Baobab has over 650,000 customers and 3, 800 employees in Nigeria, Madagascar, Senegal, Ivory Coast, Mali, Tunisia, Zimbabwe, Burkina Faso, Democratic Republic of Congo as well as China.

Kazeem Olanrewaju, Baobab Mi-crofinance chief executive in Nige-ria, said the bank has 11 and seven

branches in Lagos and Kaduna, re-spectively.

Olanrewaju said the microfi-nance bank has granted over N32 billion credit facility to 65, 000 micro

entrepreneurs since its take off in Ni-geria in 2016.

He said: “Over 112, 000 Nigerians that were financially excluded had also been captured into the banking sector and now banked with Bao-bab.”

The MFB boss said the bank has introduced digitized services to make more credit facilities accessible to you thy entrepreneurs

The bank was established by French investors in 2005 and was granted national licence in 2015 in the country.

Activities at the Nige-rian stock market have been on upward swing for a considerable period

of time until few weeks ago, what is your assessment to the current situation?

Stock market performance dur-ing the year 2017 was impressive; it gained about 44 percent ahead of all economic indices. If you look at treasury bills, federal government bonds and even money market, in terms of return, stock market did better. With that performance, Janu-ary also closed with 15 percent gain, this has not been achieved for the last five years. Some stocks gained as high as 100 percent and above in the last two months. That sudden, rise couple with the performance of the market in year 2017 forced investors to take advantage of risen in stock prices, that mount more pressure on March activities. However, the trend may completely different before the end of this month, especially banking stocks and some blue chip companies, which they may likely declare impressive results that will upturn market activities.

What impact do you think the new CBN dividend policy will have on the banking sector especially on loan books of banks?

For me it is not a new policy, probably the way people perceived it. That policy has been there, as far back as 2014, and the banking sector knew about it. We had banks that declared profit for the year ended 2016 but they couldn’t pay divi-dend because of existence of that policy. The policy makes it difficult for affected banks to pay dividend until they wipe off loses in their re-serves. If you look at it, some banks have heavy losses in their reserves, therefore what can they do? Banks paid generous dividend for the year ended 2016, most of the banks that paid generous dividend are likely to repeat the same for the year ended 2017 because they are not affected by the CBN policy. The CBN policy

Banks earning may drop in 2018 - Kurfi Kasimu

The name was inspired by the famous Baobab African tree which had great cultural significance in the continent

is for the good of the banks and for the good of future shareholders because bank must exist before it declare dividend. The moment the bank cash liquidity is challenged, the existence of that bank is chal-lenged and if there is no bank, there would be no shareholders talk less of giving dividend.

To which extent has the intro-duction of TSA impacted on the deposit and liquidity in the finan-cial institutions?

TSA came as far back as 2015, I believe it won’t make any difference to the banks because they have al-ready experienced it in the last quar-ter of 2016. Today, most of the banks do not hold money that belongs to

the federal government. States and local governments funds are still with the banks. It means 40 to 45 percent of total allocation is still within the banking system, therefore is not a total loss. In addition to that, the banks were rewarded by treasury bills and treasury bills was trading as high as 21 percent last year, most of the banks declared huge profit because they decided buying trea-sury bills rather than lending. This gives them better returns without impairment, without incurring any loses because they stopped lending. To me, TSA will not have much effect on banks result for the year ended 2017 when they release their results.

Don’t you think banks investing

in Treasury bills will have negative impact on economy?

To some extent, it will have but I think the CBN may likely adjust the MPC policy and once it go down, banks have no choice than to look somewhere else to make their money. This is the challenge most banks would face in 2018 and that is why some analysts predicted that, banks in 2018 may not earn what they earned in 2017 except banks that go extra mile.

How do you see retail investors’ performance in Nigeria?

So far so good, by the year ended 2017, retail investors have 52 per-cent ahead of institutional inves-tors. What restored retail investors

INTERVIEW

Kurfi Kasimu, the managing director and chief executive officer of APT Securities and Funds Limited, spoke with Kayoed Ogunwale, on banks earnings in 2018 and implica-tions of CBN policy on dividend payment by banks amongst others. Excerpts:

confidence back into the market is the good performance witnessed in 2017. The market closed with 44 percent gain, some stocks gained as high as 200 percent particularly the banking sector where majority of retail investors have holdings. Some stocks attained their highest price ever. Stocks like GTB with N54, Nestle with N1,500 per share and many more. What this mean to the market is that life circle of retail investors are gradually coming back because some stocks are getting to their high price.

What is your view on the pro-posed MTN listing on the floor of the Nigerian Stock Exchange?

No doubt, market is waiting the listing. MTN opt to be listed in 2017 they latter move it to 2018. If MTN did not take advantage of market other companies are there to take it but I believe they will come this year as they promise. For so many years, we’ve not experienced primary is-sues, today many primary issues are ongoing and many of them are over subscribed. This shows that the mar-ket is ripe for the new companies for be listed. We are also expecting Airtel and Glo to get listed and other blues-chip companies may likely come for listing. Take for instance, in Ghana, there is policy stated that for telecom companies to go into 4G, it has to be listed, that make it com-pulsory for MTN to list in Ghana on its own because of existing policy. We are not only expecting MTN to be listed in Nigeria, we are also expect other telecom companies to be listed or else federal government should learn from Ghana to make sure that certain privileges should only be restricted to public compa-nies that listed.

As a member of Investment Securities Tribunal (IST) board, what is your board doing to boost investors’ confidence in Nigeria?

Appointing board for Investment Securities Tribunal alone is enough to restore investors’ confidence because for two years there was no board, which mean there was no judgement from the tribunal. The board started delivering judgements late last year and more judgement are coming which I believe will bring back investors confidence into the market in totality because from time to time we release judgement with fearless. There are many things on ground that is improving inves-tors confidence in capital market aside from IST. Not only that, take for instance, CBN’s Investors & Ex-ports policy on foreign exchange is helping investors. It gives freedom to foreign investors to work into capital market and go out without

Olarewaju Kazeem, MD, Baoban Microfinance Bank

Q&ATHE MONDAY INTER V IEW16

New vista of fresh foreign investment flows with demutualisation of NSE

INSIGHTS FROM NIGERIAN AND INTERNATIONAL BUSINESS & CORPORATE LEADERS

Let us start by asking; what is your take on the state of the Nigerian economy today?

As a Nigerian, I would say it is not so good; it ought to be better, if the right people have been put in the right positions. A president can’t do everything him-self. He is far from being an economist or money or capital markets person, he has absolutely no idea

about the economy, even though he has been president before. He relies on people he chose to move the economy forward. In any country, if you don’t get the economy right, then you are still flexible, and as any Nigerian would agree, our economy has not been fixed as it ought to be. I think that he has a cabinet that is not quite appropriate for the Nigeria of today, because Nigeria has gotten complicated. We have a lot of people that have both intellectual and most importantly, technical know-how, and there are very few people in this cabinet that have the technical know-how, and I’m not going to call out names. If you don’t get the economy right, this is the result you get. The international community is scoring us zero on everything, Nigerians them-selves have already scored the Nigerian economy zero. A lot of people have gotten into bad things because they believe there is no hope. And a lot of quality people have left Nigeria.

I have a consulting partnership in the US, but I decided to stay in Nigeria. I stayed in Nigeria to do the work and since I’m trusted to do the work, I don’t have to stay there, because I believe in Nigeria. I want to die for Nigeria, so concerning our economy, we can do better. We have people that have been ex-posed for effective results.

You see that young man called Macron (Emmanuel, French President), he is not an intellectual wizard, but he was able to assembly quality people that know what to do with France, and he has fair knowledge of everything and he has strong leader-ship qualities. Why can’t people in their late 40s and 50s copy that and be like him, people in my generation and the younger generation, like people in their 30s and 40s, be in economic re-lated systems in Nigeria. The young people should open their eyes, because there is a difference between a 40 year-old and 60 year-old working. There is what we call factor of diminishing re-turns. The director-general of NSE that I was at 40-50, if you ask me to run The Stock Exchange, I won’t be the same person, the same effect would not happen. I used to sleep three hours in a day, my ears were wide opened, I used to talk to 40 people in five minutes to sell Nigeria. There was no part of this globe that I didn’t go with my stockbrokers and bankers to sell Nigeria and it worked. Can a 75 year-old or 80 year-old man do the work? No. Most of the people there have been tested and didn’t excel. Take someone like Fashola (Babatunde, minister of power, works and housing), that excelled in Lagos State, why is he not excelling now? It’s because the cabinet are not at the same pace, in the same realm as Fashola. I just used Fashola as an example, there are a few others. When I came into The Stock Exchange, for the first five years, I made emphasis to train my staff and stockbro-kers, I took them all over the world, I didn’t spend The Stock Ex-change’s money. Foreign investors that I had worked with when I was in New York Stock Exchange financed our trips, most of the time; they were eager, they know Nigeria has potentials. We have to teach the young people how to think again, and say to them, the people ruling us have done it one million times over and it is not working and there has to be a dramatic change. I don’t criti-cize, what I do at any opportunity I have is to proffer solutions.

We have played our own part, we are here to advice. Why would a 65 year-old or 70 year-old man want to be ruling, and then you fill your cabinet with people that have also expired? It is not easy to start a paper like this, business a.m., I would read it and recommend it to people.

In the UK, for instance, they say the cabinet office is the

engine room of the government, why do you think this cabi-net is not the engine room of this government and moving things forward?

Honestly, I have not found out why, but I know it is not work-ing, because from my own perspective, everyone is working at crossroads. To the people of my own level, it doesn’t seem that there is serious coordination. You see, when you follow a one man track, it doesn’t work; I’ve also been a leader and there is nothing I did at The Nigerian Stock Exchange that I didn’t in-volve my stockbrokers and bankers, insurance people and even the corporate world; it may be something financial, but the peo-ple at John Holt, Dangote Industries and in oil sector, it affects them too. It is not only the brokers, in fact they are the ones that generate what we work on in the financial district, so when talk-ing about the economy it is encompassing, not just the financial sector and government ministries that are associated with man-ufacturing, industry, it is everyone. The more you discuss with people that are not experts in your field, the better they would respond in the cabinet when you propose what to do, because they already understand it. But if they don’t understand, they wouldn’t and no man can be an island unto himself (so); there has to be cohesion, you have to explain the value whatever you are pushing to other cabinet members, and then it would trickle down. That is the problem with Nigeria, it doesn’t trickle down, decisions are taken, and they should come back and explain, up to the messenger. They should hold staff meetings, I used to do that, my messenger in the stock exchange can tell you what is

happening in that market. He didn’t go to school and reach cer-tain levels, but knows at least the periphery of what is right in the market and why certain decisions have been taken. That is what I mean by trickling down, because it is not every cabinet mem-ber that knows about every aspect of Nigeria, but that is what I’m saying, there is no cohesion, because if you are a minister of Nigeria, and you go to gathering where they are castigating the minister of finance, or agriculture, then you should be able to defend them, their actions and explain it to the people because you know it, you have asked questions and you know the rea-sons for the decisions, and how it would be implemented.

It is your duty to learn it, you are part and parcel of that cabi-net. But I see there is no cohesion, everybody faces their own, and they are experts in them. When you choose a cabinet, you make sure they understand every aspect; they may not be ex-perts but every decision you take and every project you take on, every member of the cabinet should be able to explain why they are taking a particular route. I came back to Nigeria in 1983 and have lived in Lagos since then. When Lagos was broke, I called the former governor, Bola Tinubu, and asked him what they were planning to do, we could not raise money on the capital market so I advised him to do Lagos bond. I said that there is no one that would not buy Lagos bond. He went to ask for budget from his commissioner of finance, and they were in my house the next day and we did Lagos bond. It was so sweet that he came back the second time and the third time.

When Fashola came, I was making a delivery at Abuja and

There was no part of this globe that I didn’t go with my stock-brokers and bankers to sell Nigeria and it worked

Profile:Former Director-General/CEO, The Nigerian Stock Exchange

Age:67

Education: PhD, Finance and Securities Market, City University of New York MBA, Finance & Com-puter Science, City University of New York

NDI OKEREKE-ONYUIKE


In her time as Director-General of The Nigerian Stock Exchange, the personality of Ndi Okereke-Onyiuke, who had joined the bourse upon her return to Nigeria from New York, United States of America in 1983, as manager and head of research and information services department, bestrode the Nigerian capital market and Corporate Nigeria like a colossus. There was some activism about the way she went about leading the bourse, almost as if she had an urgency, especially with this conscious desire to make The Nigerian Stock Exchange and the capital market come alive in most Nigerian homes. She travelled round the country and the world and you could tell she was a woman in a hurry to deliver an active bourse to investors. But it was a much more relaxed Ndi Okereke-Onyuike that business a.m.’s PHILLIP ISAKPA and STEVE OMANUFEME met when she welcomed us for this interview. You will find the following excerpts, illuminating. PHOTO CREDIT: JAYEOLA ISAAC

Q&A

“ “

It is your duty to learn it, you are part and parcel of that cabinet. But I see there is no cohesion, everybody faces their own, and they are experts in them

New vista of fresh foreign investment flows with demutualisation of NSE


THE MONDAY INTER V IEW 17

he came up to the podium and whispered in my ear, I then told him that he had my number and should come and see me at home. I left early because Lagos State was in trouble, and made a bond again. That is what I call a governor. He knows where to get solution, he came and we did the first bond and he used the money wisely, because stock exchange talks. You can’t just do a bond and say, bye, bye. He came back and did the second one.

He carried his cabinet along and that is exactly what our cur-rent governor, (Akinwunmi) Ambode is doing and that is why he is succeeding. So, we all have to rally around the people that are performing. This cabinet is not performing; we are talking generally, but I can single out three or four ministers that are performing. So the ministers have to look inward and the presi-dent and the team he consults have to look inwards and make changes. There are so many Nigerians that are highly qualified and do have the technical expertise in every sphere, and if I were him, I would not care whether the person is from his lo-cal government or whatever part of Nigeria he is from. The goal is to be able to say when I was the president, it worked. I can raise my head high and say while I was CEO of NSE, the capital market worked; yes, we made one or two mistakes, but the good work overshadows the untidy work. Will I say I did it all alone? Of course not. But I had the sense to assemble human beings that are Nigerians without looking at where they came from? I’m a detribalized person; you can see the quality of stockbrokers I gave license to. It is the performance that matters. Unless we do that, Nigeria will never move forward.

Let’s look at the financial district of which you played a major role and, perhaps, you still play a major role, as a con-sultant, like you said. What do you think the financial district should be doing to help this economy to make progress?

The stock market and the money market now are not work-ing in cohesion the way it used to be. I see it and I ask about it from the appropriate people. Practically, all banks are listed on The Stock Exchange, at least 90 percent of Nigerian commercial banks are listed. From time to time, I used to call the CEOs for meetings, at the stock exchange, and I used to tell them that the wrong things they were doing would not be tolerated in the

market. I then tell them the right ways to do it and show them the benefits of doing the right things to the investors and com-mercial customers. And when your company is doing well in the stock market, you declare dividend and reward them for sup-porting you; so they can convince someone else to go to your bank that is quoted on the stock exchange. So they have to be carried along, they don’t see it as interfering in their work be-cause their company is quoted on NSE, the same way I would do to John Holt or UAC, advice have to be given not because we know better but because we oversee all these companies, and we get their information and their reasoning for taking certain decisions. So we are able to apply the reasoning of one company to another.

How do we revive the market as someone who is locally and internationally steep in the knowledge of how these markets work?

See, the capital market is information driven. The way I used to give information to the public appears not to be done as much now because if you are asking the public to invest in the market they don’t know much about, then the staff of CSCS and stockbrokers should disseminate information, they should ex-plain what is happening in the market. It is a collective intellec-tual work, you can’t know everything, and the journalists I invite when I was NSE director-general have a feel of the people, those people that are buying and selling the shares, you see them more, and in the gallery; there is also a section for investors to come and watch the market, what is happening on the floor, it is an open market. The journalists don’t have much access now, so how would they disseminate information? The public don’t have the gallery to hear and see what is going on. Why does the New York Stock Exchange, the most computerized stock mar-ket in the world, have a trading floor? It’s because they want the people to see and hear what is going on, to see a stockbroker. We had a stock exchange shop, it is not for money making; people get up and come to the hall I created, people can buy pens and others, so they can have a souvenir from stock exchange. Little things like that make a difference, it is part of getting people’s interests piqued to buy shares. So the stock market is informa-tion driven.

I went to every corner of Nigeria, and met with market wom-en, traditional rulers, governors and their staff and I went with my brokers so that they can buy the shares, that is why stock market doesn’t need branches. But I opened branches in every state, working branches and connected them with Lagos in real time so that no one in Kano or Port Harcourt can say they bought shares of any company at N2 while the person in Lagos bought at N1.50, there is no such thing. So, those branches don’t make money, it is not a money making venture, it was when we started talking about demutualization, demutualization will still be that stock exchange will still make some money, but not money that you can say is real money. Now, it is not profit making but de-mutualization will make it profit making, earning minute profits to be able to catch up with innovations.

Talking about demutualization, it is taking so long, what do you think is causing the delay?

Honestly, I don’t know. I have spoken to the new managers of the NSE, the CEO and certain council members came and we talked at length, and I have offered my services free of charge, because like I said, when they called me at the National Assem-bly, when there was an unusual problem created by a woman, in SEC, not understanding that the Stock Exchange is not under government and came and scattered stock exchange with po-lice.

For me, the Stock Exchange is like my baby. You can’t call me and say that I should castigate the Stock Exchange, created by me, with my sweat. I can’t destroy the market by telling what is wrong. I can only tell you what will make it better now that I have left. I’m in touch with them, I have spoken to people who took over from me, but I can’t force them. I’m doing big time con-sulting abroad for the people that know value, unfortunately we don’t understand and value consulting work in Nigeria.

What about the fact that the National Assembly appears to be involved in it?

Demutualization will help the market a lot because the first


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18 BUSINESS A.M. MARCH, MONDAY 19 - MARCH, SUNDAY 25, 2018

leg of it I completed, that is throwing the market open, foreign investors to come and invest, foreign investors to buy, and for that I went for a collaboration with the Central Bank of Nigeria under the Emir of Kano Sanusi, his number two man in charge of banking supervision, with the young man that wants to come out as president, Kingsley Moghalu; I enlightened them, edu-cate them, about the workings of the market, because we used to have what we called financial services regulation coordinating committee. I don’t know whether they are still holding it now. It comprised the CBN, Stock Exchange, the insurance regulator (NAICOM), the SEC, Securities and Exchange Commission, all the regulators of the financial market were members; their chief executives were all members. Because everything we do are interrelated, the money market within the bank cannot be run-ning a parallel market against the stock market, the stock market cannot be making decisions that will affect the pension market and so on. That was why we formed that fsrcc (financial services regulation coordinating committee) and I hope and pray that it is still working now.

I was completely flabbergasted when I saw The Stock Ex-change on television at the National Assembly. If they had con-sulted me, I would have told them: “You don’t need permission. What you should do is enlightenment; just say your decision will be done on a particular date, maybe a month to the time or two weeks to the time you write National Assembly saying you are planning to do this in the market. Your board has decided to do this; your market will be stockbrokers’ because the stock alone will not lead to what the stockbrokers would implement it. The stock exchange and its dealing members have decided to de- mutualise. We have done it in the past house and senate, the president was asked the meaning g of de-mutualisation, what will be the effect on our market? It’s positive and there is no negative. And it will bring more foreign investors; it took us a long time to get foreign investors to invest in this economy, not only in the stock market and also in the money market, because there was a time that I went to foreign investors and I take some bankers with me. When I went to London Stock Exchange, New York Stock Exchange, anywhere, we took bankers everywhere we went. We take bankers so that they will understand so, we have done all the consulting, and we have gone to all branches of stock-brokers. We have talked to market women; everybody and now we are come to you to explain what is de –mutualisation and why it is good for the Nigeria economy and good for the stock market. When the market is de–mutualised, foreign companies can list on the stock exchange of this country and our own companies that are very buoyant and good can also list on London, New York or South Africa stock exchanges. We have announced to the World Federa-tion of Stock Exchanges meeting; we have also announced it to Af-rica Stock Exchanges Association, of which I was the chairman, and explained it to other African stock exchanges and encouraged them that we are ready to help them, most of them will set them up free of charge, we brought them here to Nigeria to also see what we have, how we do it.

As the former DG of the NSE, what is your relationship with the current management and council of The Nigerian Stock Exchange, in view of the fact that there should be col-laboration between past and present administrations?

It is very cordial, as I told you, I have no problem, my man-agement has no problem with the NSE, the NSE never sued me and I never sued the NSE, there was no quarrel, and I gave my letter of resignation on July 18 because I had worked all my life; as a student, I started working and haven’t stopped since then so I needed to retire at 60. Throughout my trips as DG, I lived in ho-tels, and didn’t see places in all the countries I travelled to except U.S when I was working there. So I decided that between 60-70 when I still have the strength to walk on the stairs of a plane to do consulting work, travel and sightsee.

The Stock Exchange didn’t do anything to me and I didn’t do anything to The Stock Exchange; just because I started this demutualization, a group of people, whom I would name later on, but people in the market know them, wanted to seek the op-portunity of the demutualization to hijack the market. And I said not while I am here, and so they took the opportunity to say that I was voluntarily retiring, because I was to retire in July, but my Council said I should wait till December because the stockbro-kers said that they would not be ready to pull me out and do a ceremony for pulling me out and The Stock Exchange wanted me to work through the succession plan I had put in place, they wanted to see those people do the work without me, I could be here but hands off. So, they said I should wait till December instead of July 18. They approved it, but said I stay till Decem-ber then they would announce the next person in the succes-sion plan which I had given them and they approved it. So the people that heard that I said that nobody can buy the controlling shares of The Stock Exchange, because nobody should control the stock exchange; no stock exchange in the world would al-low a group of individuals to control the stock exchange. It is the dealing members, because they’re the members, it is the stock

Q&ATHE MONDAY INTER V IEW


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broking firms, they have the stake in the stock exchange; if the stock exchange goes down, they lose before any other person, before shareholders, or quoted companies, because they are the members they own the stock exchange, so they must be the core group in determining who is chairman of the board, who is CEO of NSE and which rules would apply in the NSE. These mem-bers are the owners of stock broking firms who are also trad-ing. Because you can’t be CEO of a stock broking firm without being a stock broker. I then made the chart, which my council approved, that it’s the dealing members firms, not the stock-brokers but the owners of the stockbroking firms, who are also stockbrokers, that will be the ones to own the controlling shares of the demutualized stock exchange, which is 30 percent. Once you own 30 percent, you are in control. So we then put the chart out, 30 percent for the dealing members firms collectively, then any dealing stockbrokers just like me or you would buy shares that are for the public, both Nigerians and foreigners 40 percent, quoted companies are part of the companies too, so they can buy from the 40 percent. Then the issuing houses which are the banks will own only five percent because the banks can buy up the whole shares, and be controlling the market, and their shares are quoted on the market, that is insider dealing, we can’t do insider dealing. Then the Nigerian registrars and issuing houses will own 5 percent, and then corporate entities will be 5 percent. So the controlling member will be the stock broking firms because they own the market. So we called a meeting and my board agreed, the stock broking firms also agreed and we went around Nigeria, explaining and opening branches, telling them they don’t have to come to Lagos. We went to all branches of the NSE and explained what we were doing and what demu-tualization is.

Let’s look at the market and talk about instruments. What is your take in terms of what you see now, how deep is the market, how vast are the instruments that are on the market and how better?

The Stock Exchange today and the stock market, has reached its peak, the only way we can move forward is to com-plete the demutualization process. The reason is because we have gone round every state in Nigeria, and we have talked to business men and women, market women, and they are buy-ing shares, it takes a lot, to get them to list their companies, and stock exchange is still trying to get them to come and list their companies and we are taking a long time to get the buy-in for this demutualization, approval is only from our board, and notification to SEC, public and different institutions. Then we went abroad to notify and ask for encouragement, collaboration, with London and New York and Johannesburg stock exchanges and so on and they are happy and waiting for us. We were able to get the Francophone stock exchanges and we did a simultaneous translation whereby someone in Abidjan or any French speaking countries put in their bids in French, the Nigerian stockbroker will see it in English and the Nigerian stockbroker will reply in English and they would see it in French, we have gone far, it is just to demutualize.

How would that deepen the market?It would deepen the market because Nigerians are very

skeptical when it comes to investments but the day the same foreign investors, with a newspaper like business a.m. notify-ing them that they are buying, foreign companies are buying shares on this market, and Nigerians will now wake up and start rushing, so it would deepen the market further. We want our market to compete at least if not New York and London, come into the mid stage like Israel and some of the other mid-sized stock exchanges and even Canada. So that we leave the emerging market and become a mature market, because the foreign investors have tasted our economy, they are partici-pating in our money market, they are also participating in our capital markets but on the portfolio level, so when the market is open and demutualized, they know they can stay in London or Australia and call a stock broker and tell him to sell or buy. There would be no difference between our market and London or New York. It would now be the instruments not the institution or currency, it would only be is it available,

is it good, and because it is fully demutualized, the stock ex-change is bound to sell its reputation across the world, be-cause the person that bought shares in Toronto doesn’t need to come here, or have a friend here or call a bank here to give him information, it would be online real time, anywhere in the world, they would see your trading, and would be able to participate. So that is the value of demutualization.

Are they creating enough instruments today as it were be-fore?

Once you have the full interests of the foreign people, it is au-tomatic, the instruments would create themselves. It happened with the banks, once the banks got quoted, and we put in a lot of work in the financial regulators meeting, and even before the government accepted, we had to keep explaining, Charles Soludo and I. Now, we are enjoying it but it would flow more because foreigners buy more of shares and invest in the money market, they are there in the money market but they can make more money in the capital market, so if our market is open, they would see it on their computer. They can also put their bid di-rectly and all they need is their stockbrokers code, just like they are doing now, but they are not doing it right because we are not demutualized. So the market will open up, more money will come into the system, no more reselling of oil, they can borrow from the capital market. There is no difference between money that you get in New York and money that you get in Lagos be-cause the market will be open so it is a good thing for Nigeria, it has been approved, and I left the implementation document there, I don’t even have a copy.

I’ve noticed voluntary delistings from the market for the past one or two years, what could be the cause, are the requirements too difficult and how can listing become simpler?

It is actually simple, it is just the apathy of our Nigerian busi-nessmen, and when they come, they see that it is not really dif-ficult. But our businessmen are used to saying if they make N100 million, they tell you they made N60 million, and no one knows that they did with the other N40 million. They have apathy about opening up to the public, and I keep saying, as a publicly traded company, if your company makes N100 million, nobody is say-ing you can’t spend the N100 million, but the public will want to know what you spent it on. If in your company, you make your budget and allocate 30 percent of profit is for the chairman and board to do whatever with and you announce it at your annual general meeting, nobody is going to tell no, do whatever you like in your board ,with that 30%, it is your company.

You have met the listing requirement of stock exchange, this is how much you made, and this is how much you want to pay out to shareholders; this is how much you want to put in re-serves. So I don’t understand the apathy because it is informa-tion driven, give the information, it is your company, nobody is going to tell you no, you can’t do it. The market is already demu-tualized, so if the majority shareholders decide how much is for dividend so why is it difficult for them to such the money to do whatever else they need, if they said they are going to buy so and so equipment, I won’t go and inspect the equipment.

We have seen portfolio investors come in and look for op-portunities but Nigeria needs FDI. What do you make of the climate for investments in Nigeria today?

You see the FDI will come if the stock market is strong. In most parts of the world, it is the stock market that determines where the economy goes, not the money market, because money mar-ket is frivolous. You can put your money in the bank today and remove it tomorrow, but when you buy stocks, you wait until the company makes money and pays you dividend or you wait for a little while for the share prices to appreciate so that you can sell it for a good return. If you have an emergency, you can sell at any price, and take your money, so it will happen. And the only way it would happen is demutualization, because those FDI that was coming in was when we opened the stock market to the world, that foreign investors started having faith in our banking system. We demutualized the banks by getting them to quote on the stock exchange, so their annual report became public informa-tion, a lot of things they were doing became public information, they got more correspondent banks, it helps and that is the only way the economy can grow. Now, if we do the same thing, and if it had taken place in 2010 like I wanted it to, we were planning to do in November and I leave in December, my council said that if the brokers said they would be ready by November and I go, they may not do it again because they think that I’m like a moth-er to the stockbrokers, and they think they love to please me and they think I’m correct. So they didn’t want to be shocked, for me to go and the stockbrokers start to make some trouble for the new people that would take over. So I stayed and then some wise people who thought that they could hijack it and scatter the stock exchange. That is one thing I keep telling Nigerians, that if you remove me, the people I have trained, they don’t need me to actualize it; if they removed only me and didn’t touch my man-agement team, that demutualization would have gone through. The way I ran the exchange, there was nothing I was doing that my immediate staff can’t do or don’t know. So, they could easily do it but, because they disorganize the entire system, that is why it is limping.

THE BEAR-ISH TREND that dominated trade last week may be

upturned this week as inves-tors look to fundamentally sound caps to take position and rebalance their portfolios, according to market analysts and brokers.

“Weak and dwindled stock prices across sectors will pres-ent a good time for investors to buy, which may upturn last week bearish trade,” an ana-lyst told business a.m.

This prognosis is coming on the heels of market going against many an analyst call last week. Many analysts had projected a market rebound on grounds of positive earn-ings release in the week. But the market disappointed as trade were bearish with most indices trending low save the insurance index

Kayode Ogunwale

Investors’ buy position on declined sound caps seen upturning market bearish trend

Despite the market disap-pointment, analysts still be-lieve that the equities market would offer bargain-hunting opportunities this week. They expect a rebound in the mar-ket as investors take posi-tion in fundamentally sound stocks that declined.

The market indeed halted a 2-week long bullish perfor-mance last week as bench-mark index, the NSEASI plunged 2.9 percent week-on-week to settle at 41,935.90 points while year till date re-turn retreated to 9.7 percent.

The bearish performance was largely due to sell pres-sures in bellwethers in the banking and consumer goods sectors – Zenith Bank, Nestle Nigeria and Guaranty Trust Bank, which all released im-pressive results for financial year 2017.

As a result, market capital-ization lost N506 billion to set-tle at N15.0 trillion. Similarly, activity level softened as aver-age daily volume and value

traded declined 26.2 percent and 20.5 percent week-on-week to 408.5 million units and N6.3 billion respectively.

Zenith Bank (252.7 mil-lion), FBN Holdings (161.2 million) and Regency Alliance Insurance (102.4 million) were the most traded stocks by volume, while Zenith Bank (N7.7 billion), Nigerian Brew-eries (N3.9 billion) and Guar-anty Trust Bank (N2.9 billion) led the list of stocks with the highest value traded during the week.

Activities in the market during the week witnessed southwards trading on all days but Tuesday when it closed the day flattish (ASI rose 4 ba-sis points). The market began the week bearish, shedding 26 points largely due to sell offs in UBA, Union Bank of Nigeria and Unilever Nigeria.

Analysts’ optimism for a positive performance on Tuesday strengthened follow-ing a marginal rebound in the ASI, driven broadly by price

F INANCE & INVESTMENTCAPITAL MARKET

BondsA total of 40,566 units of Federal Government Bonds valued at N44.313 million were traded last week in 29 deals, compared with a total of 6,574 units valued at N6.332 million transacted previously in 31 deals. Outlook for this week remains bullish on positive inflation figures and external sector developments.

Summary of price changesTwenty-five equities appreciated in price during the week, lower than forty-five of the previ-ous week. Sixty equities depreciated in price, higher than forty equities of the previous week, while eighty-six equities remained unchanged lower than eighty-seven equities recorded in the preceding week.

Exchange Traded Products (ETPs)Also traded during the week were a total of 1.889 million units of Exchange Traded Products (ETPs) valued at N10.512 million executed in 4 deals, compared with a total of 50,547 units valued at N4.593 million that was transacted previous week in 12 deals.

Price adjustment

Delisting

Other market news

The price of Africa Prudential Plc. was adjusted on the 13th of March, 2018 for a dividend of N0.40 as declared by the board of directors. The last close price was N4.99 hence the ex-div price N4.59.

Seven-Up Bottling Company Plc: The entire share capital of Seven-Up Bottling Company Plc (“SBC”) were delisted from The Daily Official List of The Nigerian Stock Exchange on Monday, 12th of March 2018. The delisting of the entire issued share capital of SBC followed its shareholders’ ap-proval of a Scheme of Arrangement to restructure and delist from The Exchange.

STANBIC IBTC HOLDINGS PLC: Closure of register for the year ended December 31, 2017 has been fixed for March 29, 2018 with proposed dividend of N0.50kobo per share. No bonus was pro-posed and AGM date is scheduled for June 19, 2018 in Lagos

GUARANTY TRUST BANK PLC: Closure of register for the ended December 31, 2017 is fixed for March 28, 2018 with proposed dividend at N2.40 kobo per share per share. No proposed bonus as AGM date is scheduled for April 10, 2018 in Lagos.

MCNICHOLS CONSOLIDTED PLC: Closure of register for year ended December 31, 2017 has been fixed for March 23, 2018 with proposed dividend of N0.03 kobo per share. AGM is scheduled for April 19, 2018 and payment date April 24, 2018.

ZENITH BANK PLC: Closure of register for year ended December 31, 2017 fixed for April 9, 2018 with a proposed dividend of N2.45 kobo per share. AGM Date: April 13, 2018 in Abuja and payment date: April 13, 2018,

NASCON ALLIED INDUSTRIES PLC: Closure of register for year ended December 31, 2017 fixed for April 23, 2018 with a proposed dividend of N1.50 kobo per share, Proposed Bonus: Nil, Qualifica-tion Date: 19th April 2018, Closure Date: 20th – 23rd April 2018, AGM Date: May 3, 2018 and payment date: May 8, 2018.


appreciation in Dangote Ce-ment and the release of an impressive financial year 2017 result by Zenith Bank.

Surprisingly, there was a lag in expected reaction as the NSEASI fell 0.5 percent, 1.5 percent and 0.6 percent in the remaining days of the week, dragged by losses in banking and consumer goods coun-ters – Zenith Bank, Guaranty Trust Bank, Nestle Nigeria and Dangote Sugar.

Precisely, performance across sectors was largely negative as all indices closed in the red save the Insurance index, which inched 0.3 per-cent higher on the back gains in NEM Insurance (+11.6 per-cent), and Mansard Insurance (+3.8 percent).

The banking index led

laggards, down 8.4 percent dragged by profit taking in UBA (-13.6 percent), Zenith Bank (-10.7 percent) and Ac-cess Bank (-10.4 percent). The oil & gas and consumer goods indices trailed, shedding 1.6 percent apiece as investors sold off positions in Conoil (-5.1 percent), Seplat Petro-leum Development Company (-3.2 percent) Unilever Nige-ria (-14.5 percent) and Dan-gote Sugar (-7.1 percent).

Similarly, sell-offs in Ce-ment Company of Northern Nigeria (-4.9 percent) and Dangote Cement (-0.4 per-cent) drove the negative per-formance of the Industrial goods index week on week (-0.2 percent).

Investor sentiment mea-sured by market breath (ad-

vance/decline) ratio weakened to 0.4x from 1.1x recorded the prior week as 25 stocks ad-vanced relative to 57 stocks that declined. ABC Transport (+14.3 percent), John Holt (+12.5 percent) and NEM Insurance (+11.6 percent) were the top performing stocks for the week while Japaul Oil (-30.9 percent) Fidelity Bank (-22.5 percent) and Unity Bank (-21.5 per-cent) were the least performing stocks.

Consequently, a total turn-over of 2.444 billion shares worth N36.665 billion in 26,712 deals were traded this week by investors on the floor of the exchange in contrast to a total of 3.079 billion shares valued at N39.990 billion that exchanged hands last week in 23,086 deals.

LA FA R G E A F R I-CA Plc. has an-nounced allotment of its rights issue of 3.098 billion or-

dinary shares on the basis of five new ordinary shares for every nine ordinary shares held by shareholders.

According to allotment paper sited by business a.m., a total of 3,577 acceptances for 3.098 billion ordinary shares valued at N131.650 were received and processed in connection with the rights issue having been confirmed

Ajose Sehindemi

Kayode Ogunwale

Kayode Ogunwale

ing habits and to become fi-nancially savvy”.

Since celebrating the Global Money Week in 2014, Adeeko stated that, the ex-change has been able to reach over 12,507 students from 118 schools.

This year alone, NSE im-pacted 5,337 students from over 25 secondary schools and institutions of higher learning, through various fi-nancial literacy programmes during the week, he said.

“Other financial literacy initiatives we carry out in-clude, school excursions to the exchange, NSE Adopt-A- School initiative, school outreach programmes, and financial literacy workshops. Through these initiatives, we have been able to promote fi-nancial literacy among young Nigerians, by encouraging them to learn how good fi-nancial decisions can better their lives now and in the fu-ture, and ultimately grow the economy”, he added.

The Global Money Week is an annual global celebra-tion, initiated by Child & Youth Finance International (CYFI), with local and re-gional events and activities aimed at inspiring children and youths to learn about money, saving, creating live-lihoods, gaining employ-ment and becoming entre-preneurs. It is also aimed at empowering the next generation to be confident, responsible and skilled eco-nomic citizens.

IN ITS EFFORT to pro-mote financial literacy among the youths in Nigeria, the Nigerian Stock Exchange (NSE)

last week joined 2018 Global Money Week themed, “Mon-ey Matters Matter” with a se-ries of educational programs aimed at teaching children and youths about the impor-tance of financial literacy.

The week-long event, organized in collaboration with Access Bank Plc and AIESEC Nigeria, included interactive sessions with the executive management of NSE, school outreach pro-grammes in Lagos, Ibadan, Kano, Abuja, Onitsha and Port Harcourt, and excur-sions to the trading floor.

The exchange also joined other stock exchanges around the globe in the “Ring Around the World” initiative, using its closing gong ceremony to fur-ther draw attention to the im-portance of financial literacy among youths.

Bola Adeeko, head, shared services division of NSE in his welcome remarks noted that, “As a sustainable Exchange championing Afri-ca’s growth, NSE takes the is-sue of providing young peo-ple with the tools they need to make sound financial decisions very seriously. We are constantly implementing and supporting initiatives that encourage our youths to develop sustainable spend-

NSE takes financial literacy to youths

Julius Berger returns to profitability, records N2.6bn

as valid.The allotment paper re-

vealed that five applications for 14,375 units were not funded and were subsequent-ly rejected.

A summary of the rights issue indicates that, all 3,577 acceptance forms received for the 3.098 billion ordinary shares were found to be valid under the terms of the rights issue and processed accord-ingly.

The al lotment pap e r shows that the rights issue was 100 percent subscribed.

Breakdown of the offer shows that, 3,313 sharehold-ers accepted their provisional

allotment in full, a total of 1.217 billion ordinary shares.

Also, 154 shareholders with a provisional allotment of 138.6 million ordinary sharpeners partially accepted their rights for 88.246 million ordinary shares. The balance of 50.356 million ordinary shares was renounced.

Meanwhile, 386.589 mil-lion ordinary shares were fully renounced thus a to-tal 436.946 million ordinary shares were renounced by shareholders.

Accordingly, there were 110 subscribers who bought traded rights on the Nigeria Stock Exchange, involving

1.356 billion ordinary shares.Of the 3,313 sharehold-

ers who took up their rights in full, 1,154 shareholders applied for an additional 436.946 million ordinary shares and additional share were allotted in full from the renounced rights.

Lafarge Africa Plc. had in November 2017, applied to the Nigerian Stock Exchange (NSE) to raise N132 billion fresh capital from existing in-vestors through a rights issue.

Shareholders of the ce-ment manufacturing firm had in June 2017, approved the proposal by the company to raise about N140 billion.

20 COMPANYBUSINESS A.M. MARCH, MONDAY 19 - MARCH, SUNDAY 25, 2018

Morison Industries gets N502.2 million new equity funds from shareholders

Lafarge Africa allots N132bn worth of shares to shareholders

Business a.m.

The allotment results for the rights issue approved by the Securities and Exchange Commission (SEC)

Timothy Olawale, director of membership, Nigerian Employers’ Consultative Association (NECA), Olayinka Oladunjoye; commissioner for lndustry, commerce and cooperatives, Lagos State; Babatunde Ruwase,President, Lagos Chamber of Commerce and Industry (LCCI); Akinyemi Ashade, commissioner for finance, Lagos State and Fola Lasisi, special adviser to Lagos State Governor on taxation and revenue matters,during a Stakeholders’ Dialogue on the New Lagos Land Use Charge Law held at the Commerce House, Victoria Island, Lagos

MO R I S O N I N D U S -TRIES Plc. has suc-c e s s f u l l y

raised N502.2 million in new equity funds, providing the healthcare company with the much-needed boost to reposition its operations.

Morison Industries had late last year launched a new capital raising for about N502.2 million in new equity funds through new share sale to existing shareholders. Morison Industries offered a rights issue of 836.98 million ordinary shares of 50 Kobo each at 60 Kobo per share on the basis of 11 new ordinary shares for every two ordinary shares of 50 Kobo held as at August 25, 2017.

GTI Securities Limited acted as the stockbroker to

the supplementary share issuance while GTI Capi-tal Limited was the issuing house. Both GTI Securities and GTI Capital are mem-bers of the GTI Group-a leading financial services group that owns the largest private trading floor in Sub Saharan Africa (SSA).

The allotment results for the rights issue approved by the Securities and Ex-change Commission (SEC) showed that the rights issue was oversubscribed by 1.12 million ordinary shares as shareholders took up their rights and demanded for ad-ditional shares. As against 836.98 million shares placed on offer, shareholders placed orders for 838.11 million or-dinary shares.

Commenting on success-ful capital raising, Nwabueze Oputa, managing director, Morison Industries Plc., said

the new equity funds would be deployed to improve working capital and finance the restructuring of the com-pany.

He noted that with the new equity funds, sharehold-ers can be well assured of a new era of growth for Mori-son Industries adding that the directors of the company will work with all stakeholders to achieve its growth targets.

In his own, Kehinde Has-san, chief operating officer, GTI Capital, said the suc-cess of the rights issue has

further confirmed GTI Capi-tal’s pedigree of packaging companies to raise capital, irrespective of the macro-economic and market con-ditions.

According to him, GTI Capital worked with the di-rectors and management of Morison Industries to con-vince shareholders on the prospects of the 63 year old healthcare company.

“We were able to get many shareholders to sub-scribe to the shares due to our extensive research on the prospects of the company. Many subscribers were also impressed by the fact that all offers that we had handled in the past usually turned into goldmines, and the facts are out there. So the trust in GTI Capital positively rubs off on the exciting prospects of a recapitalised Morison Industries,” Hassan said.

AFTER RECORD-ED N2.399 bil-lion loss in after tax for the year 2016, construc-

tion giant, Julius Berger Ni-geria Plc. has returned back to profit during its last finan-cial year 2017 with N2.572 billion after tax gain.

The company in the re-sults released last week, also recorded improvement in its profit before tax from loss before tax made during the same period of 2016. In 2017, Julius Berger erased N1.498 billion loss recorded in 2016 as it retained N3.739 billion

profit after tax.The German construction

company manage it foreign exchange acquisition loss better in 2017, as it spent only N3.249 billion during the current financial year as against N14.234 billion spent on the same purpose in 2016.

Although, it expended N6.900 billion on financial cost in the year 2017, higher than N5.784 billion spent to service the cost in 2016.

Julius Berger’s revenue in-creased by 2.08 percent dur-ing the year under review, from N138.994 billion in 2016 to N141.890 billion in 2017. Its gross profit decreased from N54.226 billion in 2016 to N44.299 billion in 2017.


21

JAMB taps technology to ease exam processGoddey Odin

STUDENTS WHO ARE as-piring to gain admission into tertiary institutions in Nigeria may soon be writ-ing their Unified Tertiary

Matriculation Examination (UTME) from the comfort of their homes as Joint Admission Matriculation Board, the body responsible for the examination is leveraging improved technology for its activities.

Fabian Benjamin, the examina-tion body’s head of media said this on Saturday in the country’s capital, Abuja, while addressing pressmen over the just concluded 2018 UTME.

Using the medium in urging the

candidates of the just concluded ex-amination to patiently await the re-sults of their examination, Benjamin revealed that the body plans to use advanced technology to improve how students write the UTME, and this might include allowing students to take the examination from any-where in the country.

The effort according to the spokesman is expected to reduce the congestions faced at Computer Base Test (CBT) centres, which is one of the major challenges faced by more than 1.4 million candidates each year.

He also said JAMB leverages technology to detect malpractice even after exams. This he claimed is the reason for the delay in results as

TECHNOLOGY&INNOVATION

Succour for patients as first-of-its-kind ‘ATM pharmacy’ launched in AfricaGoddey Odin

critical preview is done on them be-fore they are released on the board’s website soonest and free of error.

According to him, some of the results would be ready by Monday, March 19.

He also assured that all tech-nical difficulties encountered in accessing the website were being addressed.

Number of candidates who sat for the recent examination, according to NAN didn’t receive their results at the same time when some got theirs immediately after the exams

the examination body’s head of media said this on Satur-day in the country’s capital, Abuja, while addressing pressmen over the just conclud-ed 2018 UTME

The PDU, which works like an ATM for medication, with a Skype-like audio-visual interaction between patient and tele-pharmacists

according to how the system was

programmed.Some of the candidates said

that they received the reply of “your results are not ready yet”, others complained that the site re-sponded with “you did not register for this examination.’’

However, JAMB’s transition from paper-based tests (PBT) to the CBT has received several criticisms and commendations, and some of the later may have influenced the intended creation of flexible UTME exam modes, according to techpoint.

PATIENTS WITH chronic illnesses in Africa will no longer need to stand in long

queues to get their medica-tion as the Gauteng Health Department launched the continent’s first ‘ATM phar-macy’ in South Africa.

The Pharmacy Dispens-ing Unit (PDU), which tends to give patients their repeat medication was launched in Alexandra, a township in Johannesburg, South Africa Thursday.

The PDU, which works like an ATM for medication, with a Skype-like audio-vi-sual interaction between pa-tient and tele-pharmacists, cloud-based electronic soft-ware and robotic technol-ogy to dispense and label medication, according to Gauteng Health, was devel-oped by a team comprising experts from Right to Care and Right ePharmacy in col-laboration with the Gauteng Department of Health.

According to Gauteng Health Twitter handle, “The innovative Pharmacy Dis-pensing Unit (PDU) which is being launched in Alexan-dra this morning is the first of its kind in Africa and was developed by a team of ex-perts from Gauteng Health, @rightepharmacy & @right-tocaresa #epharmacy @HealthZA.”

Ian Sanne, a professor of internal medicine and infec-tious diseases, University of the Witwatersrand and CEO, Right to Care, at the launch-ing said “our partnerships

made this innovation pos-sible and we are grateful to the Gauteng Provincial Health Department and for the contributions of USAID, GIZ who are implementing on behalf of the German Government and Mach4.”

The PDUTM, according to the professor was devel-oped to ensure accurate dispensing and quick collec-tion. A clinically stable pa-tient on chronic medication can be given the option to collect chronic prescriptions from the PDUTM pharmacy.

While driven by sophisti-cated technology, patients’ concerns and information needs are still handled one-on-one by tele-pharmacists, he assured.

Gwen Ramokgopa, Gauteng Health MEC said, “This is a great step forward for patients in our city as it dramatically reduces wait-ing times and congestion in public healthcare facilities. In Alex, there are eight pri-mary healthcare clinics in the vicinity, which refer pa-

tients.“The system is run by

qualified pharmacists and pharmacy assistants and integrates with the clini-cal management of patients with chronic conditions at public facilities. It also sup-ports adherence. The date for the next collection is shown on the receipt the patient receives when col-lecting medication and pre-scription collection remind-ers are sent by SMS. Late collections are immediately flagged for follow up.

It also offers patients ser-vice in all eleven languages and there is support at the site to help patients deal with the technology,” he said.

Jessica Lapenn, US Charge d’Affaires explained that “This ATM-like approach to dis-pensing medication demon-strates innovative thinking to overcome challenges we encounter in ensuring peo-ple stay on HIV treatment or treatment for other chronic illnesses. We are pleased to have partnered with Right to Care on this and other inno-vations for people living with HIV.

The Pharmacy Dispens-ing Unit is a unique solution that uses technology to move beyond traditional health-care delivery. It is a wonder-ful example of commitment by the United States Govern-ment to the people of South Africa through PEPFAR to

help create a safer, healthier, and brighter future for South Africans.”

“Improving access to medication is key,” said Klaus Streicher, Deputy Head of Mission at the Ger-man Embassy in Pretoria.

“The PDU promises to significantly improve peo-ple’s ability to deal with their illnesses. The German gov-ernment is pleased to be a part of this multi-stakehold-er partnership which brings together government, inter-national donors and the pri-vate sector.”

“The innovation will be seen spread across other Af-rian countries over time,” he said.

The machine is said to dispense medicine in a sim-ple 5-step process, including “patient scans barcode ID book, ID card or pharmacy card and enters PIN, talks to a remote pharmacist, after which the prescription and or items are selected, then the medicine is robotically dispensed and labeled and drops in the collection slot and patient finally takes re-ceipt, which indicates next collection date.

Fanie Hendriksz, manag-ing director of Right ePhar-macy stated that “This phar-macy enhances access to quality pharmaceutical ser-vices and improves patient convenience.

The early benefits have shown valuable patient and community data trends that are needed to improve pa-tient outcomes. The tech-nology is making it easier for people with various illnesses to have access to medica-tion, ultimately improving adherence,” he said.

22

Retailers need mobile strategy to leverage earnings

love e-commerce and they love m-commerce even more. At this stage, you better have a very strong mobile strategy if you are in retail.”

Schmitt’s statement can be re-flected in Nigeria, where the e-commerce market worth has risen to $13 billion in January 2018, accord-ing to Jumia’s Nigeria mobile report released Friday.

The report indicates a gradual adoption of online marketplace by consumers, where the country remains the largest mobile market in Africa, with about 162 million subscribers and a penetration rate of 84 percent. This according to Ju-liet Anammah, the chief executive officer, Jumia Nigeria, speaking at the launch of the Mobile Report in Lagos, is the multiplicity of affordable smartphones and a growing market for second-hand devices.

She also said, “the multiplication of easy payment options such as credit or debit cards payment, or even cash on delivery; and the increasing use of social media sites (active social media users) are playing major roles in driving the e-commerce sector in Nigeria, or Africa at large.

The Jumia report revealed an 11 percent increase in the number of Nigerians who visited the Jumia

THE GROWING PEN-ETRATION of smart-phones and easy access to the Internet has in-fluenced almost every

aspect of consumer’s life, including shopping.

Big companies in the world are obviously taking advantage of the fact that consumers are doing more than just searching for product informa-tion on the web, but turning to online portals for making a final purchase. According to a study, overall 67 per-cent of millennials and 56 percent of Gen Xers prefer to shop online rather than in-store.

Electronic (e-) commerce, a way of doing business over large elec-tronic networks such as the Internet, should be leveraged by retailers who are out to earn more, Bertrand Schmitt, App Annie CEO, said in an interview, stating that retailers with a clear mobile strategy are see-ing this reflected in their earnings whereas those which don’t, are “in big trouble”.

Schmitt, pointing to Amazon and Alibaba as examples of suc-cess stories stated that “Consumers

Goddey Odin

TECHNOLOGY&INNOVATION

website via their mobile phones - 79 percent in 2017 versus 71 percent in 2016. Meanwhile, those who used their desktop computers or laptops dipped to 18 per cent in 2017 com-pared with 29 per cent in 2016.

This upward shift from desktop to mobile, seen as a positive develop-ment, is attributed to the increase in the number of mobile phone users as a result of the multiplicity of af-fordable smartphones, particularly the Asian mobile brands which con-tinue to build on their Africa-specific strategy by introducing lower price points’ smartphones adapted to the profiles of African users.

Taking a cue from the Jumia’s report, it is revealing that customers demand a more seamless experi-ence in getting whatever they need


10 oil and gas technology start-ups to win fundingGoddey Odin

PIPELINES THAT are “zipped” together and a safer, greener and cheap-er alternative to LNG could result from a tech-

nology accelerator program under-way at the Oil and Gas Technology Centre in Scotland.

Up to £100,000 will be given to each of 10 companies through the TechX pioneer technology accelera-tor program, with no equity taken or payback required. Each company will initially receive £25,000 seed funding to help develop their business and en-hance their technology through an in-tense 16-week program, which starts in June 2018. Up to £75,000 in addi-tional funding is available during the

16 weeks. Two companies with the most exciting potential could receive a further £100,000 from BP.

The 10 companies are: Blue Gen-too: Helping mitigate and manage the formation of gas hydrates and en-sure the efficient dosing of anti-freeze chemicals, saving millions of pounds.

Envio: Adapting its technology from the retail sector to track and

verify equipment offshore. Intelligent equipment cases can remotely verify contents, location and usage.

Immaterial: Manufacturing super-adsorbent nanomaterials which could dramatically reduce the cost of separat-ing, storing, and transporting gases.

Paragon Inspection Limited: Developing an integrated digital in-

E-commerce, including mobile app, allows consumers to be more interactive with brand, as seen in Jumia’s

spection technology to improve the inspection of small bore tubing and reduce hydrocarbon leaks.

RAB Microfluidics: Pioneering ‘lab-on-a-chip’ technology to provide real time condition monitoring and predictive failure analysis for rotating equipment.

Sensalytx: An artificially intelli-

and for many businesses, customer experience is the new battlefield—a competitive advantage that attracts and keeps customers.

For instance, when wholesale manufacturers sell through retail distributors, they have very little say in how the product is sold. They’re at the mercy of the distributor to ensure that the customer leaves the store happy and satisfied. By selling di-rectly to consumers, companies can envision how the customer journey should take place and execute the tactics required to make that vision a reality, according to Claire Hopwood in an article dated April 6, 2016.

Selling directly to customers, however, doesn’t necessarily trans-late to better customer experience. If companies don’t have the necessary insight, processes, and culture in place, they won’t be able to provide a seamless customer experience. An understanding of the end consumer is required to ensure that any direct sales effort improves the customer experience.

E-commerce, including mobile app, allows consumers to be more interactive with brand, as seen in Jumia’s.

Investing in enhanced mobile apps can help retailers retain control

of the customer experience and pro-actively support what information consumers need at each stage of the shopping process. This helps insulate the customers from outside influ-ences and can significantly boost retailers in-store conversion rates. An ABI Research survey, shows that 40 percent of US respondents who had downloaded a retailer app said they bought more of that brand’s products. 46 percent also said the app caused them to visit the store more often. Walmart customers who use its app spend 40 percent more than customers who don’t.

According to study, the conver-sion rate in the store for shoppers who use a retailer’s dedicated app is far higher than those who don’t, most likely because such apps can provide a more relevant and tailored shopping experience that helps people make an immediate buying decision.

A mobile app can use push noti-fications to immediately inform us-ers of information, updates or other relevant news, as this get customers informed the available products in your store, as a retailer, aside the fact that an app can utilise the smart-phone’s inbuilt technology (camera, ibeacon, NFC) to make in-store pay-ments a breeze. Forget contactless payment, imagine not even needing a card at all.

Consumers spent more time in retailer apps than apps in any other shopping category, according to Schmitt, who touted UK retailer Asos’ mobile strategy: the company’s mobile app is number three in App Annie’s ranking of the country’s retail apps.

“They have done a great job of creating a great consumer experience and are being rewarded for it through a significant increase in revenue year-over-year,” Schmitt said.

Schmitt also gave a sneak peek into an app monetisation report the company will publish in April, reveal-ing consumers spent $86 billion in app stores during 2017, a 100 percent rise in spending in 2015.

Olubayo Adekambi, the chief trans-formation officer of MTN Nigeria said, at the unveiling of the Jumia report that “the expansion of E-commerce into a dual business model that blends the physical and the digital to create an ecosystem between brands and consumers across the two worlds”, as among the major factors fueling the increase in adoption of smartphones, which retailers have leverage to expand their income.

gence platform that analyses and vi-sualizes fluid movement across mul-tiple elements of an oil and gas well.

Specialist Safety Systems: Devel-oping intelligent offshore solutions for safer and more efficient crane op-eration.

Tenzor Geo: Using unique inter-pretation software and autonomous ocean bottom seismometers to de-liver an unprecedented accuracy in oil and gas deposit location.

test 1 srl: Developing a sponge-like material that can soak up spilled oil in the ocean. The product can be reused multiple times and allows for the oil to be recovered for processing.

Tubular Sciences: Sealing tech-nology that “zips” pipelines together and can be used across the full range of pipe-lay environments including challenging and deep water.

Bukola Odufade

Bukola Odufade


ENERGY, POWER & RENEWABLES

NERC turns to MAPs to solve supply gap

Waste to power: Gas still economic, environmental menace

Consumers need meters and DisCos are not providing meters. Manufacturers have meters but they can’t sell to the consumers. So there is a big gap

In order to address the gas flaring problem, the federal government had earlier embarked on an ambitious

Metering crisis

Up in flames

THE NIGERIAN ELEC-TRICITY Regulatory Commission (NERC) has decided to bridge the country’s huge metering

supply gap by allowing other firms to become meter asset providers (MAPs). It defines MAPs as persons granted permit by it to provide me-tering services which may include meter financing, procurement, sup-ply, installation, maintenance and replacement.

The new arrangement will re-move from electricity distribution companies, popularly referred to as DisCos, the exclusive responsibility of providing consumers with meters that they had earlier been assigned.

Dafe Akpeneye, commissioner, legal, licensing and compliance, said that NERC decided to solve the me-tering problem by introducing a new industry class called MAPs, which would also provide the customers with other options.

These new regulations will make metering easier and faster because as DisCos have always attributed the slowness in the supply of meters to their customers with prepaid meters to lack of a cost reflective power tariff.

MAPs will solely concentrate on provision of meters and will not bother with providing electricity thereby focusing their attention on the task. Many say they expect the

NIGERIA’S 2020 goal of achieving zero gas flaring appears to have gone up in flames. The Trans-Sa-

haran Gas Pipeline Project (TSGP), upon which the country hoped to turn this goal into reality is seri-ously running behind schedule. It had earlier been due for comple-tion this year.

A number of factors are respon-sible for what now seem an un-achievable completion time table. Security concerns along the pro-posed 4,400 kilometres pipeline route, increasing costs and ongoing uncertainty in Nigeria have plagued the construction of the pipeline de-

four million and growing number of customers without meters to reduce as a result o this new approach.

DisCos and their customers have for long been at daggers drawn over the issue of meter supply, and the coming of MAPs is already been seen as potentially helping to reduce the mistrust and mend cracked soured.

“MAPs coming in to meter will give a certain degree of transparency and also, since customers can either self-finance and get their meters or have the metering cost spread over a period of ten years and also get their meters, more customers will have meters and they would have no choice but to recharge, leading to less electricity theft which is a major drawback for DisCos,” said an ana-lyst.

According to NERC, the amount payable for the meter upfront will be the efficient cost of the meter itself and the installation cost, determined by the procurement process for the MAPs conducted by the DisCos.

Also, the MAPs are expected to source a minimum of 30 percent of

their contracted metering volumes from local meter manufacturing companies in the country, the regu-lator revealed that the new regula-tions will attract over ₦200 million of investments into the country through meter production.

The MAPs are also saddled with the responsibility of fixing or replac-ing faulty meters within two days of receiving notifications of the faults, and in the event of a prolonged delay in fixing or replacing a faulty meter, the DisCos and MAP will agree on

an appropriate compensation to the DisCos for loss of revenue.

However, Sunday Oduntan, exec-utive director, research and advoca-cy, Association of Nigerian Electric-ity Distributors (ANED), is quoted to have said the DisCos currently have no comments on the new regula-tions.

“Let’s wait and see; if it works for the nation, we will be happy,” he in-sisted.

He, however, blamed the lack of a cost-reflective tariff for the slow me-tering process, saying: “The moment you don’t get it right on the tariff side, every other thing will be wrong. You cannot build something on nothing. What they promised then was that they would give us a cost-reflective tariff.”

Muideen Ibrahim, the executive secretary, Electricity Meters Manu-facturers Association of Nigerian, commended NERC for the new reg-ulations and he described the new regulations as a step in the right di-rection.

“Consumers need meters and DisCos are not providing meters. Manufacturers have meters but they can’t sell to the consumers. So there is a big gap.

Now that MAP has come up, it is another scheme that can be explored so that consumers will be metered as and when due,” he said.

Other industry players are hope-ful that the implementation will be as effective because the policy might be the right one but with no backing.

spite interests from domestic and international companies.

Nigeria currently loses N868 million daily to this environmental menace and oil and gas firms op-erating in the country are currently flaring 700 million standard cubic feet of associated gas per day, the Nigerian National Petroleum Cor-poration, (NNPC) disclosed.

In order to address the gas flar-ing problem, the federal govern-ment had earlier embarked on an ambitious ‘Gas Master Plan’ aimed at boosting the country’s gas sec-tor and to achieve a wholly com-petitive market-driven domestic gas sector. An objective of the plan was to have the country’s electric-ity generation grow with improved gas supplies to gas-fired generating plants, which make up about 80 per cent of Nigeria’s power generation capacity. The effects of this plan are yet to be seen as power generat-ing plants in the country still suffer supply shortages.

Natural gas is still the major con-straint of power generation in the country and Maikanti Baru, group managing director of the NNPC said that the amount of flared gas is able to generate 5,000 megawatts of electricity daily. But it remains to be seen how he hopes to make this

happen beyond just saying it.Experts continue to advocate for

stiffer measures against gas flar-ing, and even the finance minister, Kemi Adeosun, had earlier said that the Associated Gas Reinjection Act of 1979 needs to be changed in order to eradicate gas flaring com-pletely. It has been illegal to flare gas in Nigeria since 1984 without the written permission of the min-ister of petroleum resources, but the current ‘charges’ for gas flaring in Nigeria officially stand at $0.60 per ‘000 ft3 of associated gas flared.

A change will come in the form of the Petroleum Industry Bill (PIB) which raises penalties to $3.5 per mcf of associated gas flared, law-makers are hopeful this would be signed into law by this month end.

However, the low charge for gas

flaring means that some companies still prefer to flare rather than re-in-ject or market the gas, because they can get tax breaks on the charges they pay for gas flaring.

Another reason why companies prefer to flare gas is because some of the country’s oil fields lack the infrastructure needed to capture the natural gas produced with oil.

U.S State Energy Information Administration (EIA) had ex-plained that progress is still lim-ited because security risks in the Niger Delta have made it difficult for international oil companies to construct infrastructure that would support gas commercial-ization.

Yet, Baru said that the NNPC has helped to reduce gas flaring and to improve gas supply to critical sec-

tors of the economy by revamping of the country’s pipeline network. According to him, within 8 years, almost 500 kilometers of pipelines had been completed, commis-sioned and were now delivering gas.

“We have embarked on one of the most aggressive gas reforms and implementation. Accelerated implementation of gas pipeline infrastructure development, with specific focus on critical pipeline infrastructure to power plants is being put in place,” Baru said.

Some of the completed pipe-lines he listed include the Oben-Geregu pipeline, Escravos-War-ri-Oben pipeline, Emuren-Itoki pipeline, Itoki-Olorunshogo pipe-line, Imo River-Alaoji pipeline and Ukanafun-Calabar pipeline.


ENERGY, POWER & RENEWABLES

April is Spring of life for aged, deadpan refineries

According to PwC, the Dangote refinery is capable of meeting the country’s demand

We are working along side with them to ensure safety of our pipelines because we still have some areas in which vandals still disrupt our pipelines

Bukola Odufade

NIGERIA’S OUTLOOK for refining appears to be less gloomy as the state owned pe-troleum corporation

has revealed its plans of a major overhaul of its existing refining ca-pacity.

Anibor Kragha, chief executive of Nigerian National Petroleum Corporation’s (NNPC) Refineries Division said that he expects to sign a deal with two consortiums in April 2018, which will help increase the country’s domestic refinery uti-lization rates to 90 percent from the current 10-20 percent and reduce its hefty fuel import bill.

According to Kragha at Cape Town last week, investors have expressed interests to finance the rehabilitation of the dilapidated refineries (Warri, Kaduna and Port Harcourt), and the procure-ment of equipment will begin after the financial close by next month. The nation’s refining ex-istence has long been tainted by uncertainty due to the adverse effects of subsidies, poor mainte-nance, general operational failure and inconsistent supply of crude and as a result, the largest Afri-can crude producer’s per capital refining capacity is at 0.002 barre per day, really low even by Afri-can standards and in compari-son with its other African coun-terparts, like Libya at 0.06 bpd/capita, and South Africa 0.01 bpd/capita, it is an eyesore.

The potentials for refining in Ni-geria is huge and cannot be over-

emphasized because the country is currently home to almost 200 mil-lion people and yet imports over 80 percent of its refined products’ need.

According to the country’s Bu-reau of Statistics (NBS), importa-tion of petrol alone stood at 17 billion litres (106 million barrels) in 2017, and the import bill for this stood at ₦2.34 trillion which is enough to build quite a num-ber of modular refineries spread across the country at various ca-pacities.

The demand of petroleum prod-ucts especially petrol and diesel is not easing anytime soon, but rather it is increasing daily and major driv-ers of the increasing demand are power and transportation. Because the country is an emerging market, the middle class is thriving mostly due to a “young population” who are well-educated and internet

savvy, increasing level of urbaniza-tion and a strong informal sector which makes up more than half of the Nigerian economy. More Nige-rians can now afford cars and buy generator sets which come in dif-ferent sizes, meaning the burgeon-ing middle class comes at a price and the recurring long queues at fuel stations by private cars, public buses and individuals with kegs is a testament to it.

Also, the potentials for refining in Nigeria is not limited to con-

sumption in Nigeria alone because across the African continent espe-cially in west Africa, as the region’s refined products consumption is estimated at 39 billion litres (245 million barrels) annually, and im-ports 90 percent of its consump-tion. Refineries such as SIR (Ivory Coast), SOGARA (Gabon) and SAR (Senegal) cannot meet cur-rent demand and so there is an op-portunity for Nigeria to become an exporting refined products hub if the commitments concerning the rehabilitation of the three refiner-ies namely Warri, Kaduna and Port Harcourt are met because despite the ongoing construction of Dan-gote refinery whose capacity is 650,000 barrels per day and other modular refineries like Azikel re-finery where construction has also commenced, the rehabilitation of the government owned refineries has to take place in order to move Nigeria from a net importing econ-omy to a net exporting one in terms of refined products.

According to PwC, the Dan-gote refinery is capable of meeting the country’s demand, however a major headwind to achieving a fully optimized run, is availability of crude feedstock. At full capac-ity, the refinery will require about 1 million barrel of crude monthly, and for the initial years of opera-tion, this may be a significant chal-lenge.

The current supply gap within the country and region can only be filled by conventional refineries such as the Dangote refinery and the existing refineries but also for modular refineries which will be set up primarily to meet domestic demand.

However, analysts had warned unless these refineries can com-pete globally, the construction of new refining capacity could be unprofitable as other parts of the world like Asia and Middle East have made large refinery additions in the past few years.

Nigeria records 16 active rig count, highest since 2015

NIGERIA RECORDED its highest active rig counts in two years in February with 16 rigs deployed for oil and

drilling activities, according to data obtained by business a.m. from Baker Hughes, the American oil services company, which also captures data on activities in the oil and gas industy.

Four additional rigs were de-ployed compared to 12 rigs that were deployed in the previous month of January, the data show, an indication of the rising level of oil drilling activi-ties in Nigeria.

As active drilling rigs depict the level of exploration, development and production activities in the oil and gas industry, the boost in activity and confidence in the Nigerian oil and gas industry was hinged largely on the “stable” trading price of the Brent crude as it averaged in the $60 range for the period under review and also the relative peace in the Niger Delta region.

This four rigs increase was reflect-ed in the country’s crude production as output stood at 1.9 million barrels

Bukola Odufade

per day in February, showing an increase from 1.8 million barrels per day in January. The country is on course as it wants to increase its crude production plus condensates to between 2.2 million and 2.5 mil-lion barrels per day.

The data released by Baker-Hughes also showed that the total of world active rigs stood at 2,246, an increase of 71 from 2,175 rigs in January. Analysts say that this shows that oil producers, having earlier suspended investments and projects due to the downturn, are now picking

up as they reshape their portfolios in order to make enough at $60/per bar-rel as they were making when oil was $100/per barrel. Major oil producers have announced huge cost reduc-tions, especially in offshore projects.

Analysts at Bernstein had earlier said that a significant number of proj-ects could be approved this year, put-ting the figure at around 40 projects.

OPEC members had a total of 420 active rigs in the month under review, with a growth of 21 from 399 in January 2018 with the exception of Iran as data on the OPEC member

Baru says fuel scarcity gone for good

Maikanti Baru, the group managing director (GMD) of Nigeria’s state oil company, Nigerian

National Petroleum Corporation (NNPC), weekend assured Nigerians that the era of fuel scarcity is gone for good.

Receiving the Man of the Year Award given to him by a newspaper in the country, the NNPC GMD said the corporation had learnt a great lesson during the recent fuel scarcity in the country.

He said: “We have actualized the lessons learnt, part of which is to ensure that at any point in time, there should be sufficient products available for distribution across the country.

“Most of our PPMC depots in Ejigbo, Mosinmi, Ibadan and other parts of the nation have sufficient product for distribution now.

‘NNPC is discussing with secu-rity operatives to stop smuggling of petrol products across our borders.

“We are working along side with them to ensure safety of our pipe-lines because we still have some areas in which vandals still disrupt our pipelines”.

Baru said he dedicated the Man of the Year award to all staff of the corporation.

Also speaking, Diran Fawibe, chairman, International Energy Services, urged NNPC to ensure that the nation’s refineries worked to full capacity.

According to Fawibe, the oil and gas sector is a major sustainer of the nation’s economy.

Bukola Odufade

Fuel scarcity

was unavailable. The member nations with the

highest number of additional rigs are Saudi Arabia, at 117 rigs from 112 rigs, showing an increment of five. Nigeria followed Saudi Arabia with 4 ad-ditional rigs in February. Qatar and Angola both came in at third position with three additional rigs deployed in February. Also, three member nations namely Iraq, Ecuador and Algeria deployed two additional rigs in February making their total stand at 58, 6 and 52 respectively.

However, two member nations, Venezuela and United Arab Emirates, both recorded declines in their rig counts. Venezuela still embroiled in its crisis recorded a loss of one as its rig count slipped from 48 to 47 and U.A.E rig counts also dipped by one as it fell to 53 from 54 in January. Lib-ya’s rig counts are unchanged, at 1.

On the other hand, non-OPEC members like U.S., whose crude inventories have been increasing, recorded 978 active rigs for the pe-riod under review. It had previously recorded 937 for January, but Febru-ary saw a growth of 41. Canada was also up to 288 from 278 in January and India shed eight to land at 111 from 119.

RUSSIA’S CENTRAL BANK is consider-ing pumping more than 1 trillion rubles ($17 billion) into two

banks it first bailed out last year to shore up their balance sheets, three sources familiar with the discus-sion told Reuters.

Russian banks have been hard hit by the fallout from Western sanctions over Russia’s annexation of Crimea in 2014 and the econom-ic impact of a sharp fall in oil prices on the country’s foreign currency earnings.

The central bank bailed out pri-vate banks Otkritie, B&N Bank and Promsvyazbank in 2017 and shut dozens of smaller lenders as part of a broader clean-up of a sector weakened by mounting bad loans and deposit outflows.

By the end of 2017, the central bank had provided more than 1.5

FACEBOOK INC FACED new calls for regulation from within U.S. Congress and was hit with ques-tions about personal data

safeguards on Saturday after reports a political consultant gained inap-propriate access to 50 million users’ data starting in 2014.

Facebook disclosed the issue in a blog post on Friday, hours before media reports that conservative-leaning Cambridge Analytica, a data company known for its work on Donald Trump’s 2016 presidential campaign, was given access to the data and may not have deleted it.

The scrutiny presented a new threat to Facebook’s reputation, which was already under attack over Russians’ alleged use of Facebook tools to sway American voters before and after the 2016 U.S. elections.

“It’s clear these platforms can’t police themselves,” Democratic U.S. Senator Amy Klobuchar tweeted.

“They say ‘trust us.’ Mark Zucker-berg needs to testify before Senate Judiciary,” she added, referring to Facebook’s CEO and a committee she sits on.

Facebook said the root of the problem was that researchers and Cambridge Analytica lied to it and abused its policies, but critics on Saturday threw blame at Facebook as well, demanding answers on behalf of users and calling for new regulation.

Facebook insisted the data was misused but not stolen, because users gave permission, sparking a debate about what constitutes a hack that must be disclosed to customers.

“The lid is being opened on the black box of Facebook’s data prac-tices, and the picture is not pretty,” said Frank Pasquale, a University of Maryland law professor who has written about Silicon Valley’s use of data.

Pasquale said Facebook’s re-sponse that data had not technically

Business a.m.

been stolen seemed to obfuscate the central issue that data was appar-ently used in a way contrary to the expectations of users.

“It amazes me that they are trying to make this about nomenclature. I guess that’s all they have left,” he said.

Democratic U.S. Senator Mark Warner said the episode bolstered the need for new regulations about internet advertising, describing the industry as the “Wild West.”

“Whether it’s allowing Russians to purchase political ads, or exten-sive micro-targeting based on ill-gotten user data, it’s clear that, left unregulated, this market will con-tinue to be prone to deception and lacking in transparency,” he said.

With Republicans controlling the Senate’s majority, though, it was not clear if Klobuchar and Warner would prevail.

The New York Times and Lon-don’s Observer reported on Satur-day that private information from more than 50 million Facebook users improperly ended up in the hands of Cambridge Analytica, and the information has not been de-leted despite Facebook’s demands beginning in 2015.

Some 270,000 people allowed use of their data by a researcher, who scraped the data of all their friends as well, a move allowed by Facebook until 2015. The researcher sold the data to Cambridge, which was against Facebook rules, the newspapers said.

Cambridge Analytica worked on Trump’s 2016 campaign. A Trump campaign official said, though, that it used Republican data sources, not Cambridge Analytica, for its voter information.

Facebook, in a series of written statements beginning late on Friday, said its policies had been broken by Cambridge Analytica and research-ers and that it was exploring legal action.

Cambridge Analytica in turn said it had deleted all the data and that the company supplying it had been responsible for obtaining it.

Russia considers extra $17bn bailout for two rescued banks - sources

Facebook faces regulation, investigation after data misuse

trillion rubles to improve the li-quidity and capital of the three banks. Some of that money has been reimbursed but Otkritie has already said it needs more.

The 1 trillion rouble capital injection now under discussion is for Otkritie’s Trust and B&N’s Rost subsidiaries and would come on top of the money already dis-bursed, a source close to one of the

banks said.On Thursday, Otkritie said Trust

and Rost - both burdened by a large amount of toxic loans - were set to be recapitalized soon as a part of a process to merge them into a single entity grouping the bad loans from both lenders.

Two other sources at rival lend-ers confirmed the central bank was considering providing the ad-

Coca-Cola, U.S. State Dept to use blockchain to combat forced labor

Business a.m.

Business a.m.

COCA-COLA COMPA-NY and the U.S. State Department along with two other companies said they are launching

a project using blockchain’s digital ledger technology to create a secure registry for workers that will help fight the use of forced labor world-wide.

The State Department said this is the government agency’s first major project on this issue using blockchain, reinforcing the technol-ogy’s growing application for social causes.

According to the International La-bor Organization, nearly 25 million people work in forced-labor condi-tions worldwide, with 47 percent of them in the Asia-Pacific region.

Food and beverage companies are under pressure to address the risk of forced labor in countries where they obtain sugarcane. A study released last year by KnowThe-Chain (KTC), a partnership founded by U.S.-based Humanity United, showed that most food and beverage companies fall short in their efforts to solve the problem.

The study said Coca-Cola, one of 10 global companies looked at by KTC, has committed to conduct 28 country-level studies on child labor,

forced labor, and land rights for its sugar supply chains by 2020.

The U.S. beverage giant said it has been exploring multiple blockchain projects for more than a year.

Brent Wilton, the company’s global head of workplace rights, said in an email to Reuters, “We are part-nering with the pilot of this project to further increase transparency and efficiency of the verification process related to labor policies within our supply chain.”

The new venture is intended to create a secure registry for work-ers and their contracts using block-chain’s validation and digital notary capabilities, said Blockchain Trust Accelerator (BTA), a non-profit orga-nization involved in the project.

“The Department of State is ex-cited to work on this innovative blockchain-based pilot,” Deputy As-sistant Secretary Scott Busby said in an email to Reuters, noting that while blockchain cannot compel compa-nies or those in authority to abide by the labor contracts, it can create a validated chain of evidence that will encourage compliance with those contracts.

The Bitfury Group, a U.S. tech company, will build the blockchain platform for this project, while Emer-coin will provide blockchain ser-vices as well, Bitfury Chief Executive Valery Vavilov and Emercoin Chief Technology Officer Oleg Khovayko said on Friday.

They say ‘trust us.’ Mark Zuckerberg needs to testify before Senate Judiciary,

25WORLD BUSINESS & ECONOMYBUSINESS A.M. MARCH, MONDAY 19 - MARCH, SUNDAY 25, 2018

ditional funds - equivalent to 11 percent of the Russian banking sec-tor’s capital.

All three sources said discus-sions were still underway and a final decision on the size of the capital injection had not yet been taken. The central bank and Otkri-tie did not respond to requests for comment. B&N declined to com-ment.

The governor of Russia’s central bank, Elvira Nabiullina, is a close ally of President Vladimir Putin, who is on track to be re-elected in an election on Sunday.

Since she took up her post in 2013, Nabiullina has implemented stricter banking regulation and cracked down on poorly managed and undercapitalized banks.

Nearly 350 banks have lost their licenses and 35 lenders have been rescued, according to a report pub-lished in October by ratings agency Fitch.

Nabiullina has said bad loans in

the banking sector amount to 5.3 trillion rubles, or less than 10 per-cent of outstanding loans, and do not pose a systemic risk.

The extra money for Otkritie and B&N is likely to come from a new central bank rescue fund set up last year called the Banking Sector Consolidation Fund.

It is financed from the central bank’s own funds, which come ei-ther from printing new money or, to a far lesser extent, from profit the regulator makes on its financial op-erations.

Some banking sources have said a large injection of cash into the banks could distort Russia’s money supply and inflation rate, potential-ly having an impact on the central bank’s key policy rates.

The central bank has repeatedly said bailouts from the rescue fund will not add new money to the mar-ket because the money would only circulate between the fund and res-cued lenders.


MANUFACTURING & INDUSTRY

Manufacturers’ embrace needs support

RAW MATERIALS are the soul and lifeblood of most manufacturers. They constitute an

integral part of the industrial base of developed countries. The absence or availability of raw materials necessary for production has been the de-ciding factor between a suc-cessful manufacturing com-pany and one about to close down. Many manufacturers are known to have closed down their businesses due to chal-lenges faced in the acquisition of raw materials.

Manufacturers in Nigeria with low funding are harder hit by the issue of availability of raw materials. This has seen manufacturing in the country presenting a monopolistic ar-chitecture as those with deep financial pockets tend to hold sway. A broad sweep of the sector shows that the issues faced by manufacturers are the same. From the cement indus-try to FMCGs, to chemicals, to agro-allied industries, the is-sues have always been poor lo-cal capacity and dearth of raw materials that can be sourced and processed locally. Local sourcing of raw materials is an issue because of the dearth of foreign exchange in the coun-try. Decades upon decades of relying on imports to meet most of its needs, Nigeria took its eyes off the ball and failed to make adequate preparation for the journey of diversification that it is now embarking on. The foreign exchange crisis witnessed in 2015, 2016 and 2017 ruined many businesses and led to loss of thousands of jobs.

It has been estimated that the sourcing and procure-ment of raw materials locally by manufacturers will save the country billions in foreign exchange expended on the importation of such manu-facturing inputs. Most manu-facturing companies in the country already face scarcity of raw materials in their produc-tion processes. Now, backward integration and import substi-tution are being touted as the master key to making the Nige-rian economy self-sustaining.

But it is not only the non-availability of raw materials that poses a challenge. Where some raw materials are known to be available, the lack of local capacity to add value to them makes the effective utilisation of such local raw materials a challenge; hence the penchant to resort to foreign capacity.

Data from a report by the Lagos Chamber of Commerce and Industry (LCCI) show that

despite Nigeria being glob-ally acknowledged as a deep reservoir of rich raw materials for manufacturers’ use, only 46.71 percent of the needs of manufacturing companies is sourced from within the country. The report also stated that manufacturers source raw materials from other Af-rican countries which create a displacement that directly affects workers in the inter-mediate segments of the local economy.

The poor local capacity to process raw materials has seen the country incur losses in dif-ferent sectors of the economy. For instance, about $10 bil-lion exits the country’s purse annually for the purpose of importation of agricultural products. In the textile sector, about $4 billion is spent an-nually importing textiles into the country.

Aminu Jalal, the former di-rector-general, National Auto-motive Council (NAC), in 2016 estimated that Nigerians spend about N600 billion annually on importations of automobiles. In 2015, Aisha Abubakar, the minister of state for industry, trade and investment, said N7 trillion was spent on the importation of consumables and household items into the country.

Godwin Emefiele, governor of the Central Bank of Nigeria disclosed at the launch of the apex bank’s Anchor Borrowers’ Programme that the country spends the equivalent of N1 trillion in foreign exchange annually to import rice and wheat.

Just last week, Olowasina Olabanji, the executive di-rector, Lake Chad Research Institute (LCRI), said Nigeria spends about $4.2 billion an-nually on wheat importation as the national consumption of wheat is about 4.7 million metric tonnes, while the pro-duction is less than what is being consumed, despite the country having the capacity to meet the local demands and even go into the export of the

Backwards Integration

Our nation is well endowed with the resources in terms of land

Nigeria hopes that its ambitious Economic Recovery and Growth Plan (ERGP), will help it achieve its economic diversification agenda. It wants to see manufacturers source their raw materials locally, which it sees as a panacea to myriads of issues faced by manufacturers. Manufacturers are being asked to, therefore, embrace backwards integration, with hopes that this would help Nigeria conserve scarce foreign exchange. But there are a number of hurdles to be crossed local manufacturers and multinationals looking to pursue this route. AJOSE SEHINDEMI examines the challenges and how some manufacturers are trying to work round it.

commodity.In Calabar recently, Heze-

kiah Kolawole, director, policy, planning, research and statis-tics, National Sugar Develop-ment Council (NSDC) said at a Sugar Sensitisation Workshop on the implementation of the national sugar master plan, Nigeria also spends at least $600 million foreign exchange annually on the importation of sugar for domestic consump-tion.

“Our nation is well en-dowed with the resources in terms of land, water, and hu-man capital that are required to produce sugar in large quanti-ties to not only satisfy her do-mestic and industrial require-ments but also for export to earn foreign exchange. Sadly, however, Nigeria has negative balance of trade in this prom-ising sub-sector as it incurs a huge annual import bill of about $600 million to $650 million on sugar for her local requirements,” Kolawole said.

H o w m a n u f a c t u r e r s source raw materials locally

The Backwards Integration Policy (BIP) introduced by the government was happily embraced by manufacturers in the country, who saw in it an opportunity to cut their losses arising from huge foreign ex-change cost. They also saw it as an opportunity to contribute to the development of the local economy through the provi-sion of employment and also, helping to grow the country’s gross domestic products.

For Unilever Nigeria, back-wards integration issues ap-pear to have been solved. In 2011 it launched what it calls,

“Partner to Win”, an initiative of investing in capabilities of intermediary companies to enable them convert farm pro-duce to usable goods that will be sourced by the company as part of its raw materials locally. In following this path, Unile-ver believes this will enable it achieve a significant reduc-tion in the importation of raw materials by working with local partners including vendors, farmers and suppliers.

Unilever’s backward inte-gration policy is to also quickly see to the diversification of the economy to promote quality growth, economic transforma-tion and employment by the development of value chains that facilitate higher-value add-ed processing and manufac-turing activities within Nigeria and make greater use of locally produced inputs and services in production through the creation of backward linkages.

According to the company, the effects of its backwards integration are to stimulate economic development; pro-mote the development of local industries; creating economic linkages; building local capac-ity, capabilities and technolo-gies; developing skills within the workforce; boosting em-ployment; and minimising capital flight.

Thomas Nwanza, cluster procurement director, Unilever West Africa, said at the recently held third annual Nigeria Man-ufacturing and Equipment Exposition in Lagos, that the multinational is ready to pump in 40 million Euros over a three year cycle to further deepen backwards integration in Nige-ria and position the country’s economy towards the path of growth and development through diversification as be-ing championed by the federal government.

Nwanza said the company has achieved 90 per cent in local sourcing of packaging materials with the aim to be at 100 per cent by year 2019 and overcome the current challenges of local vendors’

capacity to meet up with global best standard.

It is as a result of the drive to build capacity and source raw materials locally that expos such as the Nigeria Manufac-turing and Equipment (NME) and Raw Materials (NIRAM) expo was held in Lagos, the third in the series. It is aimed at achieving the objective of reduction in the importation of raw materials for local produc-tion, as well as deepening ac-cess to plants and machineries necessary for value addition.

Frank Jacobs, president, Manufacturers Association of Nigeria (MAN), said the expo availed top stakeholders in the private and public sectors opportunity to appraise de-velopments in manufacturing and industry to jointly propose quick-win solutions that will help Nigeria revive its manu-facturing sector.

Nigerian Breweries Plc, also keying into the backward integration programme, has reaffirmed its commitment to it. In the process, it has mapped out strategic plans to achieve this through consolidation of its local sourcing of inputs for its operations, while also fast-tracking its plan to attain 60 percent local input sourcing from its initial 2020 target date to 2018.

Patrick Olowokere, NB’s corporate communications and brand public relations manager revealed that the company has also made prog-ress in increasing the supply of sorghum used for some of its beverages as more than 100,000 metric tonnes of the cereal is annually sourced lo-cally. “Over 250,000 farmers spread across several agro-nomic zones in the north have been impacted by our sor-ghum value chain programme as at 2013,” he said.

Currently the company’s brands are packaged using locally sourced packaging ma-terials such as bottles, cans, crates, cartons, crown corks, and labels among others. As at 2016, 99 percent of these packaging materials were lo-cally sourced, opening wide opportunity to clusters of local entrepreneurs.

Nestle Nigeria, Guinness (Diageo), Promasidor, Procter and Gamble (P &G) and many others are on the backward in-tegration route, drawing huge value chains in terms of job creation, social transformation and foreign exchange conser-vation, all in a bid to position the country’s economy into the path of sustainability and development.

Hurdles in the way of

backwards integrationAll the efforts being made

to get the raw materials are not going smoothly as envisioned by the manufacturers. The challenges in the way include those that can be solved by government; renewing of strat-egy and the need for paradigm shift.

Nwanza, at the expo, cited weak responses to glaring op-portunities by the local farmers as there exists a huge gap be-tween raw-materials produced and conversion into usable products for industry.

On the part of the cottage industry, he said: “The cottage industries are unable to come together to pull big manufac-turers to invest and, though research organisations exist, research outputs are not read-ily accessible to all.”

He called for the creation of support industries as primary and secondary industries that support FMCG businesses are at infancy stages, hence the reason why local raw materials sourcing is an expensive pro-cess. Regarding infrastructure, he said the cost of conversion is higher in Nigeria than Amer-ica, Europe, Asia and even a lot of African countries.

Other manufacturers men-tioned the harsh economic climate in the country, which forces frequent adjustments by them; but even then, the chal-lenges are too enormous for them to cope with, they said.

One of those directly af-fected is the N4 billion Dangote tomato processing plant in Kano that was shut down due to lack of governmental sup-port for tomato farmers, said Abdulkareem Kaita, manag-ing director of Dangote Farms Limited.

Kaita said the federal gov-ernment’s importation policy was frustrated by tomato smug-glers and the factory was closed down because of inconsistent supply of tomatoes by farmers owing to short fall in prices of the produce which later went very high because farmers were not getting support or incentive from government to produce more tomatoes.

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Osadolor Helen Stella

Otabor Helen Odion

CHANGE OF NAME

I, formerly known and addressed as Olabisi Lawal now wish to be known and addressed as

. All former documents remain valid. General Public please take note.

Aminat

Aminat Olabisi Lawal Olasunkanmi

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Osadolor Helen Stella

Otabor Helen Odion

CI G A R E T T E S A N D A L C O -H O L e l i c i t s fierce positions from opponents

and supporters. One group against their intake for the danger they pose to human health would like to see them totally banned. The other group comprising of those who manufacture them and those who consume them would like to see any obstacle placed in their way removed. The announcement of a new excise duty on both products expected to take effect from June is the opportunity for a those strongly held positions to come to the fore once again.

Kemi Adeosun, Nigeria’s minister of finance, an-nounced the plan of govern-ment to raise excise duty on alcoholic beverages and tobacco, with effect from June 4, 2018.

Adeosun stated that the new excise duty rates were spread over a three-year pe-riod from 2018 to 2020 in order to moderate the im-pact on prices of the affected products and under the newly approved excise duty rates for tobacco, in addition to the 20 percent ad-valorem rate, each stick of cigarette will attract a N1 (N20 per pack of 20 sticks) in 2018, N2 specific rate per stick (N40 per pack of 20 sticks) in 2019 and N2.90k specific rate per stick (N58 per pack of 20 sticks) in 2020.

The new specific excise duty rates for alcoholic bev-erages cut across beer and stout, wines and spirits for the three years 2018 to 2020.

Under the new regime, beer and stout would attract N0.30k per centiliter (Cl) in 2018 and N0.35k per Cl each in 2019 and 2020. Wines would attract N1.25k per Cl in 2018 and N1.50k per Cl each in 2019 and 2020, while N1.50k per Cl was approved for Spirits in 2018, N1.75k per

The fear we have is not of people being laid off but the companies may close down as the products they produce will never be competitive when you compare them to their imported counterparts

THE NIGERIAN As-sociation of Cham-bers of Commerce, Industry, Mines and Agriculture

(NACCIMA) has called on government across all levels in Nigeria to ensure that facili-ties, infrastructure and struc-tures required to entrench quality standards of products

Two differing voices from manufacturers, CSOs

NACCIMA calls on govt to provide infrastructure to entrench standards

Excise duty

27MANUFACTURING & INDUSTRYBUSINESS A.M. MARCH, MONDAY 19 - MARCH, SUNDAY 25, 2018

Ajose Sehindemi

Ajose Sehindemi

Cl in 2019 and N2.00k per Cl in 2020.

Manufacturers under the umbrella group of Manufac-turers Association of Nigeria (MAN), is already talking of the danger that is posed by the tariff to the survival of producers of both products in the country. The talk about imminent closure of factories.

Civil society organisations (CSOs) on the other hand welcome the increase in du-ties. The Consumer Protec-tion Council said it is on the side of government on this. And so the debate goes on and on.

“The fear we have is not of people being laid off but the companies may close down as the products they produce will never be competitive when you compare them to their imported counterparts. That is why we are taking it to government that if they go ahead to implement it, some companies might be out of business,’” Frank Ja-cobs, MAN’s president said.

MAN believes that under the current harsh economic environment in which manu-facturers operate, govern-ment should first think of making it conducive before embarking on any increment of any form of taxation, in-cluding excise duties.

But Jacobs said: “The bot-tom line of my members and the cost of their products are of concern to us. We are currently taking it up with the government to see what

can be done so it won’t be too severe on the manufac-turing firms and my advice to government is that this is not the time to increase excise duty because of the harsh environment under which manufacturers oper-ate, lack of infrastructure, power, funds, lack of railway to move our goods. This is not the time and until some of these challenges are taken care of, this is not the time to increase excise duties”.

He said the meeting will be this week as it wants to discuss with its members be-fore the body communicates with the government through the letter.

Freddy Messanvi, British American Tobacco West Af-rica legal and external affairs director, in a recent interview on the activities of the tobac-co regulatory body in Nigeria said: “Though the regulatory environment is conducive for our industry, there is however a need to continually drive for a balance in the way it is

implemented and commu-nicated to key stakeholders such as consumers, enforc-ers, agencies and the general public.

Kufre Ekanem, corporate affairs manager for Nigerian Breweries promised to call back as he was in an engage-ment when reached to com-ment on the recent increase.

Some other manufactur-ers commented on the issue under anonymity as they said their ecosystem is fragile and don’t want to be seen as op-posing government.

They said the timing was wrong as most of them are just recovering from a nega-tive profitability and revenue contraction as ideally, a coun-ter cyclical policy direction that would ensure injections into the system would have been more appropriate and taxes are withdrawals, hence the increase in excise duty is likely to reduce margins and could prompt higher unem-ployment.

A manager with one of the beverage firms, under anonymity said most of them will be the biggest losers, as most have embarked on aggressive expansion plans in anticipation of a pickup in demand and this would intensify competitive rivalry among the players and fur-ther erode margins.

He said considering that the tax imposed on alcoholic beverages is a regressive tax, as opposed to the previous ad valorem regime, value brands

such as Trophy, Goldberg, 33, Hero will be hit the most, due to their lower price mecha-nism caused by competition and either way, the industry is likely to face a most challeng-ing period in the next three to four quarters.

“The industry is battling with declining volumes and contracting margins. Hence, the impact of absorbing the cost of the tax might be over-whelming on current players in the industry and to im-prove operational efficiency, brewers may adopt aggressive cost optimization measures, such as layoffs or even delay impending expansion plans which will reverse some of the growth recorded by the food, beverage and tobacco sub-sector as in 2017, the sector improved by 8.62 per cent over 2016, recording a growth of 2.35per cent and outperforming GDP growth”, he asserted.

He cautioned govern-ment to think the increment twice as he noted that apart from the implications earlier mentioned, the move by the government will encourage the patronage of the informal tobacco and alcohol produc-ers and operations of this un-regulated industry are poised to be more detrimental to health and have been known to incite public nuisance and abuse.

CSO’s welcome the incre-ment

Not minding the effect on the economy of the country due to the fallouts of the proposed increment, civil society organ-isations in the country have applauded the government on the initiative, saying it will serve as a measure to reduce the risks of abuse and disease.

The Consumer Protection Council (CPC) said it identi-fied with the Federal Gov-ernment’s recent increase in excise duty on alcoholic beverages and tobacco prod-ucts, stressing that similarly, the Council also applauded the Buhari administration’s consideration for consumers in “granting a 90-day mora-torium, and periodic incre-mental adjustments to ensure appropriate balance between personal consumer choices and the public interest”.

Babatunde Irukera, the Council’s director general, who made these assertions in a statement issued in Abuja, commended “President Mu-hammadu Buhari for his strong leadership in address-ing this vital consumer issue

in a manner that is consistent with prevailing global prac-tices”.

Irukera stated that though “CPC protects the rights of all consumers, and their pre-rogative to make personal lifestyle choices”, it however “encourages responsible con-sumption in all circumstanc-es, particularly of products that may potentially have adverse effects or possibly modify behaviour in a fashion that may be harmful or in-convenient to the consumer, or others.

“The Council noted that this policy was the product of consensus pursuant to broad stakeholder engagement and is motivated in large part by the Federal Government’s desire to reduce the risks of abuse and disease that may be associated with consump-tion of these products”, he submitted.

According to him, the fed-eral government’s approach would foster consumer con-fidence, provide regulatory clarity and prioritize safety, all of which, he said, reinforce the mandate of the Council.

Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN), a non-profit organization, also com-mended the government on the increase of excise duty on tobacco products in the newly- approved amend-ment of excise duty rates on tobacco and alcohol.

ERA/FoEN described the decision to increase excise duty on tobacco as praise-worthy, as it urged the gov-ernment to match the rates in Nigeria with that of other countries across Africa if the aims are to be achieved in record time.

Akinbode Oluwafemi, ERA/FoEN deputy executive director, said: “We applaud the Federal Government for acceding to the popular wish-es of Nigerians for tobacco products to be priced beyond the reach of our kids and the poor who are unfortunately targeted by the tobacco in-dustry through their cheap but lethal products.”

Oluwafemi noted that while the rates are a good start, they still fall short of the more aggressive but very effective recommendations of the World Health Organi-zation (WHO) in Article 6 of the Framework Convention on Tobacco Control (FCTC) which is 70 per cent excise on tobacco products.

are provided and maintained in the country

NACCIMA said this will bring about significant im-provement to all sectors of the economy, especially the ag-riculture and manufacturing sectors.

Alaba Lawson, the national president of NACCIMA made the call in a goodwill message to the ongoing 29th Enugu In-ternational Trade Fair.

The chamber also lauded

the federal government for supporting initiatives meant to promote standards of goods and services in the country.

Lawson, represented by John Udeagbal, the second deputy national president of NACCIMA, said the govern-ment had ensured that the right measures and initia-tives were put in place to en-sure quality standards were met.

“As we may already be aware, the National Quality Infrastructure Project (NQIP), implemented by the United Nations Industrial Develop-ment Organisation (UNIDO), is funded by European Union (EU) and proudly supported by the Federal Government of Nigeria and this project aims to create and engender distinct quality standards in products made in nigeria to ensure that our goods and

services compete favourably in the local and international markets.

“I, therefore, implore all manufacturers, producers, farmers, exporters and rel-evant stakeholders present at this fair, from different sectors of the economy and works of life, to key into this initiative to maintain quality standards in our individual organisations and business-es’’.

The NACCIMA chief con-gratulated the Enugu Cham-ber of Commerce, Industry, Mines and Agriculture (EC-CIMA) and Gov. Ifeanyi Ug-wuanyi for supporting the chamber’s movement and trade fair proper, which pro-motes private sector growth.

The fair, organised by EC-CIMA is holding from March 16 to March 26 at the fair com-plex, beside Golf Estate, GRA, Enugu.

COMMODITIES & AGRICULTUREBUSINESS A.M. MARCH, MONDAY 12 - MARCH, SUNDAY 18, 2018

28Rice! Rice! Rice!

Production upsurge, but price fails to yield ground

SI N C E T H E R E -NEWED commit-ment to explore ro b u s t re v e n u e generation from

the agricultural sector, the President Mohammadu Bu-hari’s administration has heavily thrown its weight behind improving wide-spread cultivation of rice in the country.

In the last few years, an ap-preciable chunk of investment from both public and private pockets has flown in the di-rection of supporting farmers across states for increased productivity, establishment of rice mills, bridging knowl-edge and technicalities gaps of cultivation and provision of access to financing, par-ticularly for improved farm implements.

Buhari touted ensuring annual construction of four rice mills last Tuesday, during a stakeholders meeting on the Rice Value Chain at Aso Rock Villa, where he commended them their investments in rice mills cited in rural parts of the country.

In the last quarter of 2017, a state of the art rice mill fac-

Temitayo Ayetoto

Temitayo Ayetoto

tory with about 288 metric tonnes of daily capacity of par-boiled rice was inaugurated in Gezewa local government area of Kano state. Eight rice mills were built between 2015 and 2018 with the president flagging off the CBN Anchors Borrowers scheme in Birnin Kebbi, in Kebbi State in No-vember 2015.

Two additional rice mills including the 120,000 metric tonnes WACOT Mill in Kebbi and the one million tonnes Dangote Rice Mill equally came on stream.

Similarly, Atiku Bagudu, the governor of one of the country’s leading rice pro-ducing states, Kebbi , at a parley with the president said Nigeria’s production had ad-vanced from 5.7million tonnes to 17million metric tonnes as a result of increased milling

capacity of eight additional mills established last year.

These initiatives affirm the government’s acknowl-edgment the fact that unlike any other cash crop in Nige-ria, rice is the most devoured staples with consumption per capita of 32kg. Its con-sumption, according to data, grew over time from 4.7% to a towering 6.4 million tonnes in 2017 while it accounted for about 10% of household food spending and 6.6% of total household spending in 2011.

Also crop production, ac-cording to 2017 GDP report, significantly drove the agri-cultural sector, accounting for 91.79% of overall nominal growth while agriculture as a whole made an annual contri-bution of 21.06% to the Gross domestic Product, recording a growth rate of 11.29% higher than 9.61% in 2016.

Unfortunately, these re-flections of surge in local rice production have not effec-tively translated to price re-duction for many end users of the commodity and in spite of the anti-smuggling campaign of the government; local rice is still having a difficult time with market dominance.

According to the National

Flour Mills’ N50bn sugar estate commitment could raise output by 100,00mts

Bureau of Statistics (NBS) report on Selected Food Price Watch, local Ofada variant, for instance was at its highest cost at N770 per kilogramme in Oyo state, agric rice sold loose at N485 in Bayelsa and medium grained rice highest at N460 in Bayelsa.

Whereas popular imported brands such as the Stallion goes for about N15,320 per 50kg bag, its premium long grain rice for N22,500, Caprice currently sold for N14 ,500 per 50 kg bag, Mama gold sold for N15,000/50kg and Royal Stal-lion sold at N14,500/50kg.

Reacting to the question of price, president Buhari defended the situation say-ing: “The narrative out there is wrong. Other countries are undertaking economic war-fare on us. There is no nation in the world that can produce and sell to Nigeria freshly grown rice equivalent to what is produced in Nigeria at the prices that Nigerian farmers are selling.” Buhari said.

Recently, Aminu Goro-nyo, the chairman of the Rice Farmers Association of Ni-geria (RIFAN) at a meeting with the Rice Processors As-sociation of Nigeria (RIPAN) also stated that a bag of rice would be crashed lower than

N10,000 with increased pro-ductivity.

But Agricultural analysts believe the prices could con-tinue on the high side un-til the factors influencing production are sincerely ad-dressed.

Apart from the giant mill-ing firms with the required wherewithal, many individual farmers who mainly drive the local production agenda are yet to integrate mechani-zation in their operations, despite the finance bridg-ing Anchors Borrower’s Pro-gramme.

The criticisms which have trailed the scheme range from the exploitative nature of fund disbursement to existing is-sues of soaring pump prices among others.

The intermediary between the government and the main farmers, business a.m. learnt might be derailing the scheme’s intention to support farmers through access to af-fordable farming implement as the implements were alleg-edly distributed at rates higher than the market prices.

According to Zainab Abbah-Aliyu, a farmer in Gadau Local government area of Bauchi state, price reduction may not be as feasible as the govern-ment has claimed if the cost of production exceeds projected output for farmers.

“Zaria people have pulled ou t o f t h e g ove r n m e nt scheme of rice production. Most people are pulling out because it is very exploit-ative. The consultants they get for the anchors bor-rower’s scheme turn around and reap the farmers off. They get machines obtain-able at the market for about N35,000 and resell for close to N60,000. The seed we can get from the market at about N4,000 is sold at N7,000. They sell chemicals of N1000 at N3,000. Has the govern-ment helped the farmer?” Abbah-Aliyu asked rhetori-cally.

About three years ago, she sold local rice of 100kg at N4600 before it abruptly doubled on the nerve of in-creased fuel price. According to her, “the raining season is usually tedious since the price of fuel to run our machines has tripled. In some cases, farmers entire production would not match the cost of what has been collected from

the government.”The panacea, for Abbah is

not just reviewing the struc-ture of the loan, substantial ef-fort should be channelled into mechanised harvesting.

“Another pain of rice farm-ers is harvesting which needs to be mechanised. We are not asking for British style mecha-nization or American style but simple handheld implement. If you go to Alli baba, one will get some of these things for $100 but the government people will buy it for millions. It is simply the will to do right,” Abbah-Aliyu said.

According to a Price Water-house Cooper (PWC) study of potentials in the Nigerian rice production chain, the country could raise productivity, raise yields, cut post-harvest losses and shore up farmer’s income generation if mechanization is adequately adopted.

Sadly, Nigeria’s mecha-nisation has remained low at 0.3 horsepower per hectare (hp/ha) against the trend of robustly mechanised agricul-tural systems such as India with 2.6hp/ha and China with 8 hp/ha.

The country currently pos-sesses an estimated 22,000 agricultural tractors, relative to one million and 2.5 million in China and India respec-tively, according to the PwC report titled, “Boosting rice production through increased mechanisation.”

Yields have also remained at 2 tonne per hectare, which is about half of the average achieved in Asia.

However, the mechanisa-tion gap the report avers could be viewed as laced with numerous opportunities for investment across the agricul-tural value chain by sustaining an enabling environment that ensures mechanisation is profitable.

The government, accord-ing to the study should reorder its priorities to address chal-lenges around land tenure and ownership, provide rural infrastructure and extension services and ensure trans-parency and accessibility of incentives to all investors.

But for Abbah Aliyu, the government should push be-yond mapping out the rice producing areas for distribu-tion of farming implements to monitoring the implementa-tion processes undertaken on its behalf.

the raining season is usually tedious since the price of fuel to run our machines has tripled

The Flour Mills Group’s invest-ment of N50 billion in Sunti Golden Sugar Estates Ltd.,

Mokwa, Niger State is set to raise Nigeria’s sugar output by 100,000metrics, according to the group.

The estate commissioned by president Mohammadu Buhari is expected to convert

one million tons of sugarcane into 100,000 metric tons of sugar annually, create about 10,000 direct jobs and 50,000 indirectly with 3,000 small-scale out growers sugarcane to supply the mill sugarcane.

The investment, it said, would realise the Nigerian Government’s Sugar Master Plan (NSMP) built on a back-ward integration programme to place the country on the path to self-sufficiency in sug-ar production.

The subsidiary of FMG,

one of the largest agro-allied investments in Nigeria has 17,000 hectares of arable farmland and a sugar mill with a capacity to process 4,500 metric tonnes of sugar-cane daily.

Buhari, accompanied by the governor of Niger State, Abubakar Sani Bello and the minister of industry, trade and investment, Okechukwu Enelamah, commended in-vestor’s display of confidence in the country’s development policies through their various

investments.“The world over, Sugar

has been identified as a key commodity that is critical to national food security. Other than the development of local communities, an investment of this size in the sugar value chain will not only stem the tide of importation of sugar and save foreign exchange, but enhance rural industri-alization, create wealth and alleviate poverty. For this, I must commend Flour Mills of Nigeria – Your mantra, “Feed-

ing the Nation, Everyday”, is truly an inspiration to us all,” he said.

Abubakar Sani Bello, Niger state governor, described the project as another milestone in the drive to make agriculture at-tractive to Nigerian youth.

Yahaya Abubakar, the Etsu of Nupe said: “Nupeland is home to agriculture. Our peo-ple have for many years culti-vated the lands to grow cash crops like rice, sorghum, mil-let, yam, maize and of course sugarcane. So, it is quite fitting

that a project of this size and relevance to the economy of our country is located here in Mokwa. It gladdens my heart that the Sunti Golden Sugar Estates will provide jobs, im-prove trade and commerce and considerably uplift the standards of living of our peo-ple and the community”.

John Coumantaros, the group chairman said food im-portation should be jettisoned as it was time to turn the econ-omy around with production of locally consumed items.

29COMMODITIES & AGRICULTUREBUSINESS A.M. MARCH, MONDAY 12 - MARCH, SUNDAY 18, 2018

Nigeria’s gold rush

Sugar booms on India, Thailand record harvests hit raw sugar futures

U.S. to accept metals tariffs exclusion requests from today

Soybean futures extend gains amid drought concerns

Majority goes missing with the dust

Temitayo Ayetoto

Temitayo Ayetoto

Temitayo Ayetoto

THE U.S. Com-merce Depart-ment said it will begin accepting requests today,

Monday, March 19, 2018 for product exclusions from President Donald Trump’s new steel and aluminum im-port tariffs, but it could take up to 90 days for the agency to make determinations.

In a notice published on Saturday on the Federal Reg-ister website, the Commerce Department said the effec-tive date would be March 19 for its rules and procedures for the requests.

The agency said it an-ticipates that it will receive some 4,500 requests from U.S. businesses seeking ex-clusions for imported steel

SOYBEAN FUTURES for November ex-tended gains by 0.4 percent to $10.38 per bushel on the

nerve of undermined impact of Argentina’s drought.

Adecoagro, Europe and New York-listed dairy farming company, downplayed the impact of Argentina’s drought on its own crops, despite Ar-gentine’s Rosario grains ex-change slashing its forecasts for the country’s soybean out-put from 6.5m-tonne cut to 40.0m tonnes forecast.

The New York-listed group, which has the Qatar Invest-ment Authority as its top shareholder, acknowledged that “Argentina has been ex-periencing a drought with rain levels below historical averages.

However, Adecoagro said that the impact of the dryness had been “partially mitigated by geographic diversification strategy and no-till produc-tion” with cultivation meth-

SUPPLIES HAVE begun to boom on the strength of post harvests record outlook in India

and Thailand, the world’s No. 2 exporter.

The glut has already sent futures in New York to the lowest since September 2015, and hedge funds are gearing up for more losses.

Investors are also holding the biggest net-short posi-tion on declining prices, in six weeks.

Citigroup Inc. expects a global surplus of 11.1 mil-lion metric tons this season, Aakash Doshi, a New York-based analyst, said in a re-port. The bank raised its out-look about 2.8 per cent from a February projection, citing gains in Asian production.

The excess would be big enough to almost satisfy a full year’s worth of demand in the US, government data show.

Given the current fun-damentals, the price “is not going to improve right back,”

A VAST MAJORITY of gold transac-tions in Nigeria have been under-taken without re-

cord of financial accrual to the government, Kayode Fayemi, the minister of mines and steel development has said.

This has prompted the government to pursue a Gold Purchase Scheme aimed at increasing revenue accruable from the country’s abundant gold deposit.

Fayemi, who spoke at the 2017 end of the year ministe-rial briefing in Abuja, said the scheme would include equip-ping of the artisanal miners, provision of extension ser-vices and off-take of all gold produced by participants in the scheme.

Kebbi and Osun States would pilot the scheme pro-jected to facilitate employ-ment, reduce poverty and increase revenue to the gov-ernment’s account.

of our journey to economic

recovery and consolidation; the GDP figures for second quarter 2017, the Nigerian Bureau of Statistics indicated that the economy grew by 0.55 per cent. The improved per-formance was not only the oil and gas sector, but other eco-nomic activities like mining; sector grew by 2.24 per cent in that quarter. The mining sector remains a critical fac-tor in the implementation of the Economic Recovery and Growth Plan,” he said.

In line with the ‘Roadmap’ for the sector approved in Au-gust 2016, the ministry’s aspi-ration, he added, remained to “build a world class minerals and mining ecosystem de-signed to serve a targeted do-mestic and export market for Nigeria minerals and ores.

He said the ministry had es-tablished a new department to monitor and control the local mineral trade chain comprising purchasing, sales and export.

The department has come up with a roadmap for the development of a sustainable framework for mineral trade and export ecosystem.

said Donald Selkin, the New York-based chief market strategist at Newbridge Se-curities Corp., which has $2 billion under management.

Without a big shift in de-mand or unexpected weath-er issues for crops, the over-supply probably will linger, he said. Raw-sugar futures in New York are down 17 per cent this year to 12.65 cents a pound.

That’s the biggest loss among the 22 components of the Bloomberg Commod-ity Index.

Funds are positioning for more losses. As at March 13, money managers increased

net-bearish holdings by 33 per cent to 141,659 futures and options, Commodity Fu-tures Trading Commission data indicated on Friday.

The figure measures the difference between bets on a price decline and wagers on a rise.

Some oversupply stems from government subsidies to farmers in key producing countries, James Cassidy, global head of sugar deriva-tives for Societe Generale SA in New York, said in a tele-phone interview.

In India, a government-price setting program is sparking overproduction

as Uttar Pradesh and Ma-harashtra, the largest cane-growing states, announced higher prices for the crop, M. Manickam, chairman of pro-cessor Sakthi Sugars Ltd. told the news service this month.

In the current supply en-vironment, “it’s not incon-ceivable” for prices to drop to 10 cents, SocGen’s Cassidy said. That would be a decline of 21 per cent from Friday’s close. Lower production in Brazil is tempering the glut prospects for next year. With soaring ethanol prices amid strong demand, the coun-try’s mills are diverting more cane to make the biofuel.

and aluminum products that are not available in sufficient quantity or quality from U.S. manufacturers.

But even if these are granted, companies could be forced to pay higher costs due to tariffs on their import-ed products for up to three months. U.S. Customs and Border Protection has been directed to begin collecting the 25 percent tariffs on steel and 10 percent tariffs on alu-minum at 12:01 a.m. (0401 GMT) on March 23.

Reuters first reported on the Commerce Department rules and procedures from a draft document seen on Friday. The published notice matches the draft, with the effective date filled in.

ods that do not affect the soil enhancing moisture reten-tion.

While the Buenos Ai-res grains exchange left its forecast unchanged at 42m tonnes, Terry Reilly at Futures International said “the crop could fall below 40m tonnes.”

Separate data, on Thurs-day, on US export sales and soybean crush last month, seem upbeat for soybean prices with export of the feed ingredient threading below January levels.

However, soymeal futures have been more spritely in this session than the last, add-ing 0.9 percent to 374.50 a short ton for May delivery.

Soyoil data from the Nopa crush report were mixed, with stocks of 1.86bn pounds well above the market forecast of 1.77bn pounds.

Soyoil futures for May stood down 0.5 percent at 31.91 cents a pound, with rival palm oil exerting a downward pull, and Kuala Lumpur palm futures losing 0.6 percent to 2,426 ringgit a tonne.

COMMODITIES DATABUSINESS A.M. MARCH, MONDAY 19 - MARCH, SUNDAY 25, 2018

30Futures prices as of March 18th, 2018

Contract Month Open High Low Last Change TimeGrainsWheat May 18 478-6 482-2 467-0 467-6s -11-0 03/16/18Corn May 18 386-2 387-4 382-4 382-6s -4-0 03/16/18Soybeans May 18 1042-0 1050-0 1040-6 1049-4s +8-6 03/16/18Soybean Meal May 18 372.2 374.9 371.1 372.9s +1.9 03/16/18Soybean Oil May 18 32.08 32.28 31.85 31.98s -0.08 03/16/18Oats May 18 253-4 253-4 241-6 242-2s -8-6 03/16/18Rough Rice May 18 12.410 12.500 12.310 12.460s +0.050 03/16/18Hard Red Wheat May 18 512-2 515-4 498-6 499-4s -14-0 03/16/18Spring Wheat May 18 615-4 618-4 610-4 611-6s -3-6 03/16/18SoftsCotton #2 May 18 83.70 83.70 82.42 82.85s -0.68 03/16/18Orange Juice May 18 138.90 139.95 137.40 138.30s -0.50 03/16/18Coffee May 18 119.05 119.20 116.90 118.05s -0.70 03/16/18Sugar #11 May 18 12.73 12.74 12.60 12.65s -0.09 03/16/18Cocoa May 18 2536 2546 2514 2522s -14 03/16/18Lumber May 18 493.30 496.00 487.50 489.10s -5.30 03/16/18Sugar #16 May 18 24.51 24.87 24.50 24.60s -0.02 03/16/18MeatsLive Cattle Apr 18 121.925 122.150 120.875 121.250s -0.600 03/16/18Feeder Cattle Apr 18 140.825 141.175 139.600 140.200s -0.625 03/16/18Lean Hogs Apr 18 65.700 66.525 65.375 65.450s -0.275 03/16/18Class III Milk Apr 18 14.16 14.34 14.06 14.33s +0.21 03/16/18EnergiesCrude Oil WTI May 18 61.24 62.60 61.14 62.41s +1.16 03/16/18ULSD NY Harbor Apr 18 1.8929 1.9190 1.8835 1.9118s +0.0189 03/16/18Gasoline RBOB Apr 18 1.9196 1.9542 1.9081 1.9459s +0.0211 03/16/18Natural Gas Apr 18 2.685 2.701 2.667 2.688s +0.007 03/16/18Crude Oil Brent (F) May 18 65.05 66.42 64.89 66.21s +1.09 03/16/18Ethanol Futures Apr 18 1.519 1.519 1.492 1.493s -0.021 03/16/18MetalsGold Apr 18 1316.8 1321.8 1309.5 1312.3s -5.5 03/16/18Silver May 18 16.385 16.495 16.205 16.272s -0.150 03/16/18High Grade Copper May 18 3.1265 3.1495 3.0900 3.1075s -0.0200 03/16/18Platinum Apr 18 955.0 960.0 945.8 950.2s -6.7 03/16/18Palladium Jun 18 983.00 992.75 976.75 988.55s +7.55 03/16/18IndicesS&P 500 E-Mini Jun 18 2757.50 2766.25 2750.25 2756.00s +0.50 03/16/18Nasdaq 100 E-Mini Jun 18 7072.75 7084.75 7033.00 7044.00s -26.50 03/16/18Dow Indu 30 E-Mini Jun 18 24944 25050 24848 24965s +41 03/16/18Russell 2000 E-Mini Jun 18 1584.60 1594.80 1579.00 1591.10s +8.10 03/16/18S&P Midcap E-Mini Jun 18 1930.90 1944.90 1924.80 1939.40s +12.70 03/16/18S&P 500 VIX Apr 18 16.700 16.950 16.050 16.475s -0.250 03/16/18S&P GSCI Apr 18 440.60 445.15 439.95 444.30s +3.05 03/16/18FinancialsT-Bond Jun 18 144-27 145-11 144-08 144-14s -0-12 03/16/18Ultra T-Bond Jun 18 158-01 158-21 157-05 157-12s -0-17 03/16/1810-Year T-Note Jun 18 120-145 120-195 120-085 120-

110s-0-050 03/16/18

Ultra 10-Year T-Note Jun 18 128-240 129-000 128-145 128-185s

-0-065 03/16/18

5-Year T-Note Jun 18 114-035 114-057 113-315 114-005s

-0-037 03/16/18

2-Year T-Note Jun 18 106-075 106-087 106-070 106-072 -0-005 03/16/1830-Day Fed Funds Jun 18 98.2250 98.2250 98.2150 98.2250s unch 03/16/18Eurodollar Jun 18 97.6900 97.7000 97.6650 97.6700s -0.0300 03/16/18CurrenciesU.S. Dollar Index Jun 18 89.685 89.950 89.450 89.797s +0.116 03/16/18Bitcoin Cboe Futures Apr 18 8350 8660 7910 8585s +295 03/16/18Bitcoin CME Futures Apr 18 8275 8650 7910 8580s +325 03/16/18British Pound Jun 18 1.3999 1.4040 1.3945 1.3996s +0.0004 03/16/18Canadian Dollar Jun 18 0.76775 0.76800 0.76450 0.76500s -0.00235 03/16/18Japanese Yen Jun 18 0.946750 0.953050 0.946300 03/16/18Swiss Franc Jun 18 1.05950 1.06280 1.05580 1.05810s -0.00130 03/16/18Euro FX Jun 18 1.23920 1.24240 1.23470 1.23710s -0.00225 03/16/18Australian Dollar Jun 18 0.78010 0.78070 0.77120 0.77160s -0.00850 03/16/18Mexican Peso Jun 18 0.052810 0.052550 03/16/18New Zealand Dollar Jun 18 0.72750 0.72760 0.72060 -0.00600 03/16/18South African Rand Jun 18 0.083100 0.082300 03/16/18Brazilian Real Jun 18 0.30405 0.30405 0.30085 +0.00100 03/16/18Russian Ruble Jun 18 0.017255 0.017135 03/16/18


MARKET DATA

The Nigerian Stock ExchangeOfficial Price List March 16, 2018

Company Previous Closing Price

Opening Price

High Low Close Change% Trades Volume Value

ABBEYBDS 1.3 - - - 1.3 0 - -

ABCTRANS 0.48 - - - 0.48 4 140,000 64,400.00

ACADEMY [MRF] 0.5 - - - 0.5 0 - -

ACCESS 11.8 11.65 11.7 11.35 11.65 -0.15 227 37,237,187 430,488,507.85

AFRIK [DIP] 0.5 - - - 0.5 0 - -

AFRINSURE 0.28 0.27 0.27 0.27 0.27 -0.01 4 251,520 68,040.40

AFRIPRUD 3.96 3.8 3.99 3.99 3.99 0.03 44 807,965 3,221,876.55

AFROMEDIA [MRF] 0.5 - - - 0.5 0 - -

AFRPAINTS [DIP] 2.35 - - - 2.35 0 - -

AGLEVENT [BMF] 0.64 0.67 - - 0.64 9 95,037 64,250.99

AIICO 0.7 0.67 0.7 0.67 0.69 -0.01 37 3,417,831 2,314,471.44

AIRSERVICE 4.9 - - - 4.9 1 1,000 4,700.00

ALEX 9.2 - - - 9.2 0 - -

ANINO [MRS] 0.25 - - - 0.25 0 - -

ARBICO 4.79 - - - 4.79 0 - -

ASOSAVINGS [DIP] 0.5 - - - 0.5 0 - -

AUSTINLAZ [MRF] 2.09 - - - 2.09 0 - -

BERGER 10.35 - - - 10.35 7 61,332 604,120.20

BETAGLAS 75.7 - - - 75.7 0 - -

BOCGAS 4.58 - - - 4.58 3 3,001 13,084.36

CADBURY 17.1 - - - 17.1 8 24,066 391,072.50

CAP 38.75 - - - 38.75 5 2,367 88,338.65

CAPHOTEL [BLS] 3.15 - - - 3.15 0 - -

CAPOIL [RST] 0.4 - - - 0.4 4 12,500 5,250.00

CAVERTON [BLS] 2.48 2.49 2.5 2.49 2.49 0.01 14 832,100 2,067,529.00

CCNN 18.25 - - - 18.25 14 53,200 923,020.00

CHAMPION 2.85 - - - 2.85 9 180,920 493,715.00

CHAMS 0.48 - - - 0.48 0 - -

CHELLARAM [BLS] 3.08 - - - 3.08 0 - -

CILEASING 1.9 1.81 1.81 1.81 1.81 -0.09 14 973,600 1,762,316.00

CONOIL 33.45 34.9 - - 33.45 11 11,560 389,402.00

CONTINSURE 1.71 1.7 1.71 1.7 1.71 0 5 688,264 1,171,931.44

CORNERST 0.39 - - - 0.39 3 1,770 672.60

COURTVILLE 0.29 0.29 0.3 0.29 0.3 0.01 12 1,292,000 384,245.60

CUSTODIAN 4.1 4.1 4.1 4.1 4.1 0 19 1,123,686 4,611,582.80

CUTIX 2.57 2.68 2.69 2.68 2.69 0.12 8 489,000 1,314,205.00

CWG 2.54 - - - 2.54 0 - -

DAARCOMM [MRS] 0.48 - - - 0.48 0 - -

DANGCEM 262.6 262.5 264 262.5 264 1.4 62 947,313 248,973,713.00

DANGFLOUR 16 15.8 15.7 15.5 15.5 -0.5 111 1,621,146 25,136,982.40

DANGSUGAR 22 20.9 20.9 20.9 20.9 -1.1 68 782,215 16,455,564.00

DEAPCAP [DIP] 0.48 - - - 0.48 0 - -

DIAMONDBNK 1.92 1.83 1.92 1.74 1.92 0 190 21,707,493 40,626,142.85

DUNLOP [DIP] 0.36 - - - 0.36 1 2,469 864.15

EKOCORP [BMF] 3.37 - - - 3.37 0 - -

ELLAHLAKES 4.26 - - - 4.26 0 - -

ENAMELWA 22.1 - - - 22.1 0 - -

EQUITYASUR 0.36 - - - 0.36 1 24,444 8,555.40

ETERNA 6 5.7 5.7 5.7 5.7 -0.3 20 357,323 2,039,051.60

ETI 19.8 - - - 19.8 30 78,969 1,488,576.75

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TOWARDS MORE EFFICIENT MARKETS

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The next phase of finance

BERTRAND BADRÉ

Finance must be made genuinely useful, balancing progress toward agreed goals – guided by existing global targets – with the need to generate sufficient financial returns to ensure that progress is sustainable

TO D A Y ’ S STRENGTHEN-I N G e conom i c recovery has not overcome the un-

derstandable but devastating loss of trust in the financial system that followed the crisis a decade ago. Restoring trust will require reasserting con-trol over the financial sector, to ensure that it is serving the economy, not the other way around.

The decade since the global financial crisis has been tumultuous, to say the least. True, no great war has erupted, and we have more or less avoided the mistakes of the Great Depression, which led in the 1930s to greater protectionism, bank failures, severe austerity, and a de-flationary environment. But renewed market tensions indicate that these risks have not been eradicated so much as papered over.

In a sense, the story of the 2008 financial crisis begins when the global order was created from the ashes of World War II. Initiatives like the Bretton Woods institu-tions (the World Bank and the International Monetary Fund), the Marshall Plan, and the European Economic Community supported the reconstruction of significant portions of the world econo-

Bertrand Badré, a former

managing director of the World Bank, is CEO and

Founder of Blue like an Orange

Sustainable Capital and

author of Can Finance Save the

World?

my. Despite the Cold War (or perhaps because of it), they also re-started the globaliza-tion that WWII had brought to a halt.

This globalization process was interrupted during the late 1960s and early 1970s, owing to the Vietnam War, the suspension of the US dollar’s convertibility into gold, the 1973 oil price shock, and the great stagflation. But the United States and the United Kingdom then under-went a kind of conservative revolution and a revival of neoliberal economic poli-cies, including widespread deregulation, trade liberal-ization, and unprecedented capital-account openness.

While this redesigned glo-balization process helped to fuel growth and develop-ment, its effects were un-even, and the financial and economic changes it wrought outpaced legal and ethical adaptation. Particularly con-sequential, innovative finan-cial instruments were used with abandon, subject to only loose supervision and weak regulation. As a result, fi-nance eventually became the master of the world economy, rather than its servant.

Given all of this, when the crisis struck, it was deep and far-reaching, and today’s strengthening economic re-

covery has not overcome the understandable but devastat-ing loss of trust in the finan-cial system that followed. This has been made apparent by political developments in the US and Europe. US President Donald Trump’s administration continues to tout an “America First” policy approach, reflected, most recently, in the imposition of large tariffs on steel and alu-minum imports. The United Kingdom’s vote for Brexit reflects a similar backlash. Meanwhile, state-led capital-ism offers China’s economy its own protections.

But polarizing new models of competition and resistance to trade are not the way to restore trust. Instead, we need to reassert control over the financial sector, to ensure that it is serving the economy, not vice versa, by advancing a set of goals upon which the world agrees – beginning with those established at three momen-tous conferences in 2015.

At the Third International Conference on Financing for Development, held in Addis Ababa, Ethiopia, participants set economic, social, and environmental priorities with which financing flows and policies for sustainable devel-opment should be aligned. At the United Nations Sustain-able Development Summit in

New York, UN member coun-tries formally adopted an ambitious new global agen-da. And at the UN Climate Change Conference (COP 21) in Paris, countries agreed to hold global warming well below 2° Celsius above pre-industrial levels.

Articulating these goals was an important first step. But if the world is serious about achieving these shared goals, an effective mecha-nism for financing them must be established, supported by well-designed regulations that create the right incen-tives. And, so far, the world has not made nearly enough progress on this front, as the continued misallocation of capital shows.

Stakeholders must take a longer-term view of busi-ness operations and invest-ment strategies. Finance must be made genuinely useful, balancing progress toward agreed goals – guided by ex-isting global targets – with the need to generate sufficient financial returns to ensure that progress is sustainable. We must keep saying it, and keep doing it. There is no other option.

In some quarters, com-mitment to global goals has so far been too weak. In the case of the US and the Paris climate agreement, that com-

mitment has been rescinded outright. But, to succeed, everyone must be on board. This includes multilateral lenders, which need to revise old tools and rapidly develop new ones, in order to mobi-lize private-sector capital. The private sector, for its part, must be open to an updated approach to public-private partnerships. Simply paying lip service to change, while clinging to outdated modes of working, is not an option.

More broadly, we need to work to ensure that the benefits of technology are shared by all. To that end, we should follow the advice of David Lipton, the IMF’s first deputy managing director, and move beyond the fash-ionable “OHIO” approach, focused on getting one’s “own house in order,” to the more demanding California – or “CA” – strategy of “collective action.”

The path ahead will not be easy. But this is no excuse for apathy. As investors, con-sumers, voters, and citizens, we must make our voices heard, in order to ensure that finance is used to promote shared values and the com-mon good. Only then can we go beyond merely avoiding another devastating crisis and build a better future.

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