business journal newspaper vol. 14

Oil Theft: FG May Revoke Licence of Indicted Banks

L-R: Head, Enterprise Risk Management, AIICO Insurance, Daniel Adeniyi; Head, Brand and Corporate Communications, Elizabeth Agugoh; Company Secretary/Legal Adviser, Donald Kanu; Head Corporate Services, Phil Maduagwu during AIICO Staff Corporate Environmental Project, tagged; ‘AIICO Clean Community Project’ sweeping and cleaning of Adeyemo Alakija Street (Muri Okunola Park) in Lagos.

Umaru Danbatta: In the Footstep of Exemplary Regulatory Regime

Emmanuel Kachikwu: The Dawn of Transparent Reform in NNPC

Mohammed Kari: Berthing Leadership & Technical Expertise in NAICOM

How Nigerian Politics Rivals Nollywood for Drama

11 19

15 26

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NAICOM Slams Sanctions On IGI Over Financial StateThe National Insur-

ance Commission (NAICOM has slammed punitive

sanctions on IGI Plc over the uncertain financial state of the company.

The measure followed sus-tained apprehension in the

insurance industry over the rumored financial health of IGI Plc in recent past, espe-cially after the death of its founder, Mr. Remi Olowude.

Below is the official state-ment from NAICOM on IGI Plc:

Regulatory OrderConsequent upon the exam-ination and investigation of the activities of Industrial and General Insurance Company Limited (IG) and in the ex-ercise of the powers conferred on it by the enabling law, the National Insurance Commis-

sion (NAICOM) hereby issue this regulatory order and di-rects that IGI shall:

1. Within two weeks from the date of this Regulatory Order appoint any one of the underlisted auditing firms to conduct a comprehensive financial review of the com-

pany and submit the report to the commission:

a. KPMGb. PWCc. Delloitte2. Mandate the auditing

firm to, among others,:a. Undertake a comprehen-

Continues on Page 2

The Federal Govern-ment may revoke the licence of money de-posit banks indicted in warehousing proceeds from stolen crude oil in the country.

President Muhammadu Buhari had said in Abuja that the government has already identified banks and other fi-nancial institutions that took in depos-its from proceeds of oil theft.

A senior government official told Business Journal in Abuja that the federal government was seriously considering stern sanctions, includ-

ing revocation of operating licences, against banks and other institutions that are eventually indicted by the on-going investigation into the oil theft issue in the spirit of the anti-cor-ruption campaign of the Buhari ad-ministration.

He said from all indications so far in the investigation, a number of banks in the country deliberately took in deposits from those suspected of per-petrating the theft in the oil industry, mainly to shore up their deposit base. He said however that the final decision would be taken when all the material evidence are brought and examined

thoroughly.The said official hinted that those

indicted in the investigation would be invited to Abuja and given the oppor-tunity to explain their involvement in the affair before sanctions are meted out.

He said the government was work-ing assiduously with a number of in-ternational intelligence and financial bodies to fully determine the total amount involved and process of re-covery.

At a parley with a group of U.S., Congressmen led by Rep. Darrel Issa, the president had said:”

“We are getting cooperation from the international community, in-cluding information on ships that take crude oil from Nigeria and change direction, or pour their con-tents into other ships mid-stream. Some monies were paid to individ-ual accounts. We are identifying the financial institutions and countries that are involved. I have been as-sured that when we get all our doc-uments together, the United States and other countries will treat our case with sympathy.”

To address the issue, the government is also looking at two key reports: The

Thabo Mbeki High Level Panel on Il-licit Financial Flows from Africa and the Financial Global Integrity Report 2008-2012.

While the Thabo Mbeki stated that about N10.08 trillion was stolen in a period of 10 years, as much as N6.87 trillion of that amount was traced to illegal transfers from Nigeria (2001-2010).

On its own, the FGI Report stated that of the $1trillion allegedly stolen from developing countries, over-in-voicing of government contracts ac-counted for higher percentage of the amount.

Vol. 001. 14

$44.66 $49.52213.6303.6196

Monday August 10-16, 2015

BergerN9.97

May BakerN1.50

CadburyN33.30

NNFMN13.30

Business Journal July 27 -Aug 02, 2015

Continued from Page 1sive review of your company’s ac-counting system;

b. Conduct capital verification; and

c. Validate the financial position of the company as at 31st July, 2015.

3. Not incur any expenditure in

NAICOM

DHL, SOS Children Support 3,500 Youths in 5 Years of Partnership in Africa

Forte Oil Plans Recap-italisation for Market Growth

Emirates’ Pass Offers Opportunity To Explore The Americas

Emirates passengers look-ing to explore beyond the airline’s network of American destinations now have dozens of op-tions with the Americas

Pass.With one combined ticket, travellers

flying to any of Emirates’ 10 US des-tinations can connect to over 90 cities across the USA, Canada and Latin America through Emirates’ five part-ner airlines: Jet Blue, Alaska Airlines, Virgin America, WestJet Airlines and Porter Airlines.

The Americas Pass will allow cus-tomers to enjoy competitive fares starting from 99 USD per flight sec-tor within America. The pass will also come with a generous baggage allow-ance on all internal flights, adopting Emirates’ two-piece policy for flights in Canada, North or South America as well as no minimum stay requirement.

Thierry Antinori, Executive Vice President and Chief Commercial Of-ficer, Emirates explains:

“Emirates’ Americas Pass gives our passengers something we’ve never offered before: freedom to explore

Blessing Ikeme

Forte Oil Plc has said it hopes to turn around its financial fortunes through the injection of fresh capital, which it plans

to deploy for diversification into the upstream sector while deepening its downstream presence via expansion of its retail outlets.

The company said the planned fresh capital, in debt and equity, will significantly impact its declining working capital and boost its share-holders funds.

At the company’s Facts Behind the Figures of its 2015 half-year finan-cial results at the Nigerian Stock Ex-change, the Chief Executive Officer of Forte Oil, Akin Akinfemiwa said:

“On-going plans and commitments with potential investors to inject ad-ditional capital in debt and equity within the next few weeks will signif-icantly impact our negative working capital and shore up our shareholders funds.”

The CEO assured that the half-year 2015 result notwithstanding, and despite the daunting operating en-vironment, Forte Oil is set to utilise the fresh capital to improve its oper-ations as it continues to implement its 5-year growth and consolidation strategy, which includes a more ac-tive upstream participation as well as expansion of its retail footprint.

Some of its plans in the upstream market include upgrade of its mud plant facility, investments in chemical warehousing, acquisition of drilling equipment and services, marine sup-ply vessels, among others.

“We commenced our 5-year growth strategy, tagged the New Frontiers, for all our strategic busi-ness units, which include strategic retail business expansion, increased commercial customer base for fuel and lubricants, improved operational efficiency and logistics as well as tal-ent management and development.”

The unaudited half-year result re-leased by Forte Oil showed that reve-nue fell by 23% from N79,6 billion in H1 2014 to N61.2 billion in H1 2015. Operating profit declined by 39% to N2.8 billion from N4.5 billion while net income fell by 19%.

Deutsche Post DHL Group, the world’s leading logis-tics company, together with non-governmental

organization SOS Children’s Villag-es, have celebrated half a decade of a successful partnership that has helped to improve the employment pros-pects of disadvantaged young people from SOS Children’s villages across 11 countries in Africa.

The partnership between DPDHL Group and SOS Children’s Villages began in 2010 in South Africa and Madagascar and has since expand-

two continents with a single ticket in conjunction with a long-haul Emir-ates trip. From Vancouver, Canada to San Juan, Puerto Rico to San Diego, USA and hundreds of destinations in between, Emirates passengers can experience a range of cities, sights and events with ease and flexibility, as well as visiting friends and relatives. ”

Through Emirates local office or with the help of a travel agent, Emir-ates customers worldwide can now simply look at the destination list, browse a variety of options and select the best route to match their itinerar-

ent, but we also firmly believe that education and employability make an important contribution to stability and prosperity in the world, Through five years of partnership with SOS Children’s Villages, we have already seen first-hand the benefits and pos-itive impact that engagement between business and charities that create opportunities for young people can have.”

“Empowering youth and improv-ing their employment prospects is the objective of the international partner-ship between SOS Children’s Villages

and Deutsche Post DHL Group. The success of our partnership is rooted in the commitment of our employees who volunteer their time to mentor youths aged 15-25 and to help them get ready for their foray into the job market,” said Christoph Selig, Head of GoTeach Programme, Deutsche Post DHL Group.

“Employees mentor youths from both SOS Children’s Villages and SOS Family Strengthening Programmes, and organise a variety of tailored ca-reer development activities that deliv-er tangible results for the mentees,” he

ed to nine other African countries – Ethiopia, Ghana, Kenya, Morocco, Mauritius, Nigeria, Swaziland, Tanza-nia and Uganda.

“Education and employability are highly important topics for Deutsche Post DHL Group and, through our GoTeach programme, play a central role in our Corporate Responsibil-ity strategy,” said Christof Ehrhart, Executive Vice President, Corporate Communications and Responsibility, Deutsche Post DHL Group.

“We are keen to support the direct development of future logistics tal-

L-R: His Excellency, President of the Federal Republic of Zambia, Mr Edgar Chagwa Lungu; His Excellency, Vice President of the Federal Republic of Nigeria, Professor Yemi Osibanjo; President/CEO, Dangote Industries Limited, Mr. Aliko Dangote during the commissioning of Dangote Cement’s plant in Zambia.

ies.Emirates has been serving the US

since launching services to New York in 2004 and has carried over nine million passenger in the past decade. The airline currently flies to nine U.S. gateways – Chicago, Boston, San Fran-cisco, Los Angeles, Seattle, Dallas/Fort Worth, Houston, Washington and New York, and operates a trans-At-lantic route between JFK and Milan. Emirates runs a freighter service to Atlanta and will launch services to Or-lando (MCO) beginning September 1, 2015.

added.

excess of N250,000.00 (two hundred and fifty thousand naira) without the prior approval of NAICOM

4. Not carry out new investments or dispose any of its assets without the prior approval of NAICOM.

5. Make a monthly report on its activities to NAICOM effective from the month of August 2015.

This Regulatory Order takes effect

from 3rd August, 2015 and is for a period of six (6) months.

The Regulatory Order may be ex-tended until such period when the Commission is satisfied that there is full compliance with the provisions of the National Insurance Commis-sion Act 1997 and the Insurance Act 2003 and the method of transacting business is such that your policyhold-

ers and potential policyholders are adequately protected.

These directives are for immediate compliance.

Mohammed KariDeputy Commissioner (Technical)

NB: Kari is now the substantive Commissioner for Insurance

Business Journal August 10-16, 2015

Change of name

I, formerly known as MISS AYENI ABIMBOLA MARY now wish to be known and addressed as MRS ALAGBON AYODELE ABIMBOLA MARY. The General Public take note

•L-R: Customer Solutions Executive, Dell, Mr. Ololade Olotu; Channel Marketing Manager, Dell, Mrs. Annie Odo-Effiong; Chairman, Zinox Technologies Group, Mr. Leo Stan Ekeh; Distribution Account Manager, Mr. Samuel Ifejokwu and Country General Manager, Dell, Mr. Akin Banuso at Yudala Launch Event which took place at Yudala Store, Palms Shopping Mall,Lekki, Lagos

•L-R: A student of the University of Benin, Eloghosa Iyamu, former Adviser to the President on Petroleum, Dr Emmanuel Egbogah inspecting a car built by students of the institution for the Shell Eco-marathon competition at the 2015 conference and exhibition of the Society of Engineers in Lagos.

•L-R: Divisional Head and General Manager, MSMEs, Fidelity Bank, Ken Opara, Executive Director, Lagos & South West Bank, Ikemefuna Mbagwu and Executive Director, Shared Services, Chijioke Ugochukwu at a send forth party for Mbagwu who retired from the bank last month.

•L-R: Executive Director, Resources, United Bank for Africa(UBA) Plc, Ms Obi Ibekwe; Vice Chancellor, University of Lagos(UNILAG), Professor Rahamon Bello; GMD/CEO, UBA Plc, Mr Phillips Oduoza; and Deputy Vice Chancellor, UNILAG, Professor Duro Oni at the formal presentation of N52.9m endowment for the UBA Professorial Chair of Finance to the University of Lagos, held at the UNILAG campus, Akoka Lagos.

•L-R: Chairman ,Stanbic IBTC Holdings Plc, Mr. Atedo Peterside, Chief Executive Officer, Mrs Sola David-Borha and Non-Executive Director, Mr. Dominic Bruynseels during the extraordinary general meeting of Stanbic IBTC Holdings Plc in Abuja.

•L-R: Category Manager Nestle Nigeria Plc, Dr Rizwan Yousuf; Head of Nutrition Federal Ministry of Health, Dr Chris Isokpunwu, Executive External Stakeholders Mrs Marie Owoniyi ,and Immediate Past President Dietitians Association of Nigeria, Dr Chika Ndiokwelu, at the Maternal and Child Nutrition Symposium as part of activities to commemorate the annual World Breastfeeding Week Organized by Nestle Nigeria Plc in Lagos

•L-R: Executive Director, Enterprise Risk Management, Heritage Bank, Jude Monye (left); British Deputy High Commissioner, Ray Kyles; MD/CEO Heritage Bank, Ifie Sekibo and the Acting MD, Enterprise Bank, Mary Akpobome at the presentation of ISO/INEC 27001:2013 certification award to Heritage Bank by the British Deputy High Commissioner in Lagos.

•L-R: Chief Upstream Officer, Nigeria Agip Oil Company (NAOC), Mr Antonio Vella (left); CEO, Eni Spa (Agip), Mr Claudio Descalzi; Vice-President Yemi Osinbajo; President Muhammadu Buhari; Deputy Managing Director of NAOC, Mrs Olufumilayo Goka; Managing Director of NOAC, NAE & Aenr, Mr Massimo Insulla, and Vice President, Sub-Saharan Africa, Mr Ciro Pagano, after a meeting with President Buhari at the Presidential Villa in Abuja


VocusRight Ventures

Time to End the Confusion of JAMBThe Joint Admissions and Ma-

triculation Board (JAMB) was created with the best intention of ensuring seamless process of admission into universities in Nigeria by qualified candidates.

For many years, JAMB fulfilled this man-date with admiration and commendation, to the satisfaction of candidates and their parents.

Then, JAMB was synonymous with excel-lence in examination practice-the process was simple and forward. And those that failed to make the mark did not complain, they simply knew they did not measure up to the chal-lenge. They prepared for the following year.

Today, the situation is very critical.To gain admission into public universities

in Nigeria today is comparable to climbing Mount Everest-the highest mountain in the world.

JAMB and its management have effectively

turned the admission examination body into an image of confusion and extortion.

Every year, millions of Nigerian youths desirous of university education are milked like cow by JAMB through a criminal net-work of official and unofficial bottlenecks, whose primary objective is to extort as much money from the candidates and their parents as possible, without any guarantee of admission.

To create official cover for this endless confusion, JAMB created what it called the Unified Tertiary Matriculation Examination (UTME) and later imposed what it called ‘cut-off marks’ for post-UTME test by various universities.

And to make the situation more cumber-some, the sane JAMB again created what it also called ‘Paper-Based and Comput-er-Based’ examination modules, without making efforts to test-run these latter-day initiatives before unloading them on helpless

especially in the current era of technology. Again, nations that are desirous of moving

ahead and taking a lofty place in the comity of nations cannot toy with their education sector, especially, the universities.

In our candid opinion, JAMB has failed and should be scrapped immediately.

The nation’s quest for inclusion amongst the top 20 nations of the world by the year 2020 will continue to remain a day dream until we sort out the root of the crisis in our education sector.

Indeed, keeping JAMB alive to be milking millions of helpless candidates every year through a confused and discredited ad-mission examination process will not help Nigeria.

Those in authority should summon the needed courage and do the needful: sack JAMB and initiate a robust and transparent process to rework university admission in the country.

and innocent candidates.The result is confusion everywhere.JAMB is confused. The universities are

confused. And the candidates seeking admis-sion into universities through JAMB are even more confused.

The introduction of technology in the examination process is always a welcome development. The problem is not introducing technology. The challenge is preparing the candidates on the use of such technology before the date of the examination.

It is stating the obvious to say that major-ity of the candidates might just be seeing or working on computers and laptops for the very first time because our education system at the primary and secondary levels have not taught and equipped them with the knowl-edge and capacity to use same.

It is important to emphasise here that uni-versity education is the bedrock for sustaina-ble socio-economic growth and development,


5

PwC Report: Africa 2020 Projects $1tr Managed Assets in 12 Markets

New re-s e a r c h f r o m P w C projects that tra-ditional a s s e t s u n d e r

management in 12 markets across Africa will rise to around $1,098 billion by 2020, from a 2008 total of $293 billion.

This represents a Compound An-nual Growth Rate (CAGR) of nearly 9.6%. Traditional asset manage-ment, in particular the mutual fund industry, is expanding aggressively across Africa.

This will largely be driven by a number of factors: economic growth and the subsequent rise in wealth will boost the demand for pensions and life insurance products, the de-mand for retail investment funds

will consequently increase, and the widespread adoption of technology will make delivery of new products cheaper, bringing more consumers into the formal financial sector.

The report, Africa Asset Man-agement 2020, is an in-depth study which examines the asset man-agement industry across 12 Afri-can countries which have financial markets of varying levels of devel-opment. The countries, which rep-resent a sample from Northern, Eastern, Western and Southern Af-rica, were assessed by a range of rel-evant indicators in order to capture their true investment potential.

The countries were categorised into three groups: advancing mar-kets, promising markets, and nas-cent markets. In addition, the report outlines and analyses the future game changers for investment into Africa as a whole as well as address-ing the impacts for these specific

markets.Ilse French, PwC Africa Asset

Management Leader, says: “As Af-rica has entered the 21st century, economic growth has surpassed ex-pectations and stimulated investor interest across a broad range of asset classes. Although the fund industry in Africa is, in most countries, still developing and has much to prove, global and local asset managers are likely to become more active as the industry continues to flourish.”

PwC also predicts that:• The global rise in the volume of

investable assets which has taken place over the last two or three dec-ades is set to continue to increase in the future and investable assets are set to be significantly higher in 2020 than today.

•Recent research conducted by PwC projects that global AuM will rise to around $101.7 trillion by 2020. Although Africa is a small

part of the global industry it is a re-gion that is experiencing significant growth.

It is interesting to note that retail investors form a small proportion of investors in asset management in Africa.

However, the report suggests that the number of retail investors in these markets could be increased by way of education about products, encouragement of a savings and in-vestment culture, and overall eco-nomic growth.

Capital Markets in AfricaCapital market regulation varies

widely across Africa as legislation and regulatory structures differs between countries, reflecting both market and varied historical condi-tions.

In some countries, capital market regulations falls under the realm of the central bank, while in others they are under the auspices of the in-dependent regulatory commission.

Although the GDP growth rate in Africa is on the rise, the savings and investment culture has not yet caught up and for the most part, capital markets remain small and illiquid.

Regulations to boost the capital markets are under discussion in some countries, such as encourag-ing pension funds to invest in locally listed companies.

Investors and DistributorsAll parts of the financial servic-

es sectors are expected to continue to expand to 2020 and beyond, but bank assets will wane in the com-ing years as competition is fuelled

by new entrants and regulatory re-forms.

A number of banks have set up their own asset management sub-sidiaries in a bid to push their own proprietary products. Some of these banks are also seeking cooperation with foreign asset managers to pro-mote their African investment strat-egies in other parts of the world in exchange for promotion of other as-set managers’ investment strategies in Africa.

Banks have the best distribution network and they will likely remain the main distributors in the future. The pension fund sector in the 12 countries in this study has grown steadily from 2006 to 2014 and is expected to continue to grow con-siderably.

As these economies mature, pen-sions are becoming more significant as a part of the financial services sector, although many countries still have no private pension schemes.

However, change is underway with Mauritius and Ghana serving as examples of countries that have created three pillar pension schemes encompassing a third tier of volun-tary schemes for middle class work-ers.

The insurance industry is also growing but, Africa has a low aver-age penetration rate of about 3.5% of GDP, with the exception of South Africa which is over 15%. As with pension funds, insurance compa-nies outsource part of their asset management to third parties.

Private InvestmentCurrently private equity (PE) in-

vestment is the most interesting

6Business Journal August 10-16, 2015

The insurance industry is also growing but, Africa has a low average penetration rate of about 3.5% of GDP, with the exception of South Africa which is over 15%. As with pension funds, insurance companies outsource part of their asset management to third parties.

‘‘


Between 2010 and 2020, McKinsey Global Institute (MGI) estimates that Africa will add 122 million people to its labour force

form of investment for foreign in-vestors as a result of illiquidity in the capital markets. But the lack of availability of exit options remains a concern for potential private equity investors in Africa.

Infrastructure is also considered to be a major opportunity for invest-ment. The World Bank has estimat-ed that an annual spending of $93 billion would be required to achieve national development targets in Af-rica and close the infrastructure gap.

Many African countries have taken longer to catch up on infra-structure and the recent economic uncertainty further underscores the need for a massive need to overhaul Africa’s infrastructure.

Game Changers: Global

Megatrends“Significant global and continent

megatrends, we refer to as the ‘game changers’, will also help drive the market and create future opportuni-ties,” says French.

“Africa’s demographic dividend, its growing middle class, its increased use of technology, and its rapid ur-banisation will all have a part to play in the development of the asset man-agement industry in Africa.”

•Demographic DividendAfrica currently represents 15%

of the world’s population and 3% of the world’s GDP and less than 1% of the world’s stock market. But that is changing.

“There will be diverse opportu-nities and these will be different to those in the developed world,” adds French.

Africa’s population growth and the resulting demographic dividend could boost economic growth. In-vestment is necessary in some in-dustries in order to create labour productivity and economic diversi-fication, and reduce poverty rates.

If policies are implemented to create enough employment for the enlarged workforce, the falling de-pendency rates should increase both savings and investment and create a substantial demand for savings products.

•Growing Middle-classAfrica’s middle class has increased

substantially over the past decade. Standard Bank’s report on the mid-dle-class in Africa indicates that Nigeria will add 7.6 million mid-dle class households by 2030, while Ghana will add 1.6 million.

The middle classes are associated with a great emphasis on education and saving. This will increase de-mand for sophisticated financial ser-vices and investment products such as retail investment funds, thereby significantly boosting the asset man-agement industry.

•Increased Use of TechnologyTechnology is increasingly chang-

ing the face of Africa. Mobile finan-cial services have taken off as larger portions of the population access the web by way of mobile devices com-pared to fixed line internet. Mobile

technology is also enhancing finan-cial services across Africa by way of a non-banked model and a banking model.

However, data security may be-come a key concern in the future re-quiring closer collaboration between telecoms and financial regulators.

•Urbanisation and Infrastruc-

turePoor infrastructure in Africa is an

impediment to economic growth and improvements in this area are required.

PwC research suggests that infra-structure spending in sub-Saharan Africa will exceed $180bn by 2025.The shortfall in government fund-ing creates opportunities for pri-vate investors to get involved either through direct investment or pub-lic-private partnerships.

Currently Africa’s urban popu-lation is increasing by 1.1 percent annually and is expected to have a

major impact on real estate and in-frastructure by 2020. In addition, PE is growing across Africa.

Although the majority of deals are small in size, it seems likely that deal size will grow to be more in line with other emerging markets as their economies and regulatory frame-works develop.

Development of African

Financial Services IndustryThe 12 countries in this study vary

from those with extensive legislative frameworks, such as South Africa, to those in much earlier stages in the development of their regulatory frameworks, such as Angola.

Regulatory reform is likely to boost economic growth and stim-ulate investor appetite. Changes to regulations to pension funds in particular could have an effect on the asset management industry as public pensions are usually the larg-est institutional investors in many African countries.

These changes include allowing pension funds to invest in a wide range of assets or the establishment of a three tier pension system.

In addition, Sovereign Wealth Funds (SWFs) can fill existing fund-ing gaps until the legal frameworks of African countries develop suffi-ciently to make them appealing to other investors.

“As large institutional investors, SWFs could provide a considera-ble boost to the asset management industry in Africa, particularly because they are long-term inves-tors who seek stable returns,” adds French.

The fact that most of the funds use a proportion of their assets to make impact investments domestically or regionally suggests that they will be-come big players in local markets.

“As asset managers look for new investment channels and competi-tion becomes increasingly intense, understanding the characteristics of the local markets will be crucial to grasp the potential of this final fron-tier,” concludes French.

Technology Increasingly Shaping Africa’s Financial Sector

Regulations, Fiscal Incentives Could Speed Islamic Finance Dev in Africa


8

Sumesh Rahavendra, Vice President of Sales for DHL Express sub-Saharan Africa

The African financial services industry is rapidly evolving as a result of advancing technology which is fueling innovation and growth in the

sector. While the sector is mature in most

developed countries, it is less saturated in Africa, therefore offering many op-portunities for new market entrants to challenge the status quo of how busi-ness has traditionally been conducted.

This is according to Sumesh Rahav-endra, Vice President of Sales for DHL Express Sub-Saharan Africa who adds:

“The burgeoning middle class and abundance of SMEs in Africa pres-ent great opportunities for financial services companies to provide retail banking services to individuals, as well as trade finance to SMEs. We see SMEs as the engine for growth in Af-rica and the lack of access to finance can often hinder their development. With one of the fastest growing mid-dle classes in the world, there is a wave of consumerism for all types of goods and services such as FMCG, electron-ics and pharmaceuticals.”

The Future Shape of Financial Ser-vices in Africa 2015 report by PwC describes the sector as a marketplace without boundaries. It explains that compared to global markets – where

the outlook for financial services is more solid – the risk of disruption in traditional African financial services market has triggered the need for en-tities to reassess their strategies.

“While most international banks are moving towards e-commerce, in Afri-ca, a number of local banks still share information and conduct business with hard copy documentation,” adds Rahavendra.

An Accenture report titled Afri-can Financial Services Come of Age, suggests a promising future for the region’s banking sector. It reveals that the development of consumer pay-ment networks took years to become fully functional in mature economies,

while many countries in Africa are now beginning to expand their tra-ditional payments infrastructure to adapt to new international standards.

“The local retail banking sector is in-creasingly making use of new technol-ogy such as ‘Mobile Money’ platforms. Consumers have started to move away from physical cards, instead relying on their mobile phones to conduct day-to-day banking transactions.”

“In addition to mobile money solu-tions, most African countries have made a concerted effort to improve their transactional security by moving from the traditional ‘swipe card’ form of retail banking to chip and pin.”

“From a logistics point of view, while

banking sector documents continue to present significant shipment volumes intra-Africa, with the new technol-ogies available, there is an increased need for equipment such as servers, ATMs and supplies to be moved into and around the continent, as banks expand into new countries and rural areas. As technology and requirements change, so do our supply chains, and we work very closely with our custom-ers to ensure that we offer them the best possible solutions.”

“The financial sector fueled DHL’s

expansion into Africa in 1978 when global banks needed to get documen-tation to Africa, and it continues to help shape our service offerings on the continent as the sector matures.

As the only logistics company to be present in every country and territory in Africa, we not only have front row seats to witness the impressive growth of the sector, but are fortunate enough to work with some of the largest and emerging financial institutions on the continent and play our part in their growth story,” concludes Rahavendra.

The development of an Islamic finance in-dustry in Africa could help plug the regions large infrastructure

gaps over the coming decade, says Standard & Poor’s Ratings Service

However, a framework of regu-lation and fiscal adjustments will be necessary to foster African sukuk markets, provide wider investment options for potential Islamic investors, and attract a pool of Islamic liquidity, the report says.

To date, African sovereigns have issued about $1 billion of sukuk instruments, compared with global sukuk issuance of an average $100 billion per year over the past five years.

Meanwhile, widening fiscal deficits and large infrastructure gaps will likely require multi-bil-lion-dollar additional financing needs over the next decade.

Experience in South Africa and Senegal has shown that a significant amount of time can elapse between a government’s

Development of an Islamic finance industry could help Africa fund its significant infra-structure needs.

announcement of intent to issue sukuk and their effective issuance, as governments gauge market interests and try to ad-dress the legal hurdles and cost of issuance.

“We believe legislation gaps are the main causes of delay between a country’s intent to issue and its

effective issuance of sukuk,” said Standard & Poor’s Credit Analyst, Samira Mensah.

The success of Malaysia in South-East Asia as a hub for Islamic finance lies, among other things, in the strong regulatory framework to support the sector’s growth. Malaysia also moved

quickly in 2009 to address the standardisation of instruments and interpretation of Sharia law.

Tax regimes are equally impor-tant to consider when encourag-ing sukuk issuance. Sharia-com-pliant instruments require equal treatment with conventional instruments for investors to con-sider them. Malaysia introduced various tax incentives that made Islamic finance a cheaper eco-nomic alternative for institutions to raise funding.

However, increasing technical

assistance by the Islamic Devel-opment Bank (IDB) and Islamic Corporation for the Develop-ment of the Private Sector (ICD), are gradually facilitating also sovereign sukuk issues.

”We believe that a growing interest in Islamic finance could encourage some North African countries, as well as sub-Saharan countries Cote d’Ivoire, Nigeria, and Kenya, which have fairly well developed capital markets by regional standard, to issue sukuk in the future,” said Ms. Mensah.

PHATISA: 10 Years of Market Impact in Fund Management

Puerto Rico Facing Financial Collapse over Default


From the very start, the vision of pri-vate equity fund manager Phatisa has been to posi-tively impact Afri-ca. Ten years later its African Agri-culture and Pan

African Housing funds are doing just that, feeding and housing the continent. Investments range across sub-Saharan Africa, from the pro-duction of palm oil, eggs and fertil-isers, to affordable housing.

Founding Partner, Duncan Owen recalls the huge challenge of initial fundraising.

“We spent over two years travelling the world, passionately convincing investors to participate in this new form of private equity investment that we call development equity. It was challenging and we endured intense scrutiny from foreign funders. Some potential investors had never even invested in traditional private equity before, let alone something as unique as sector-focused development equity that changes daily lives and creates on-the-ground wealth and employment. We were also bringing together Amer-ican, European and African develop-ment finance institutions, something which was ground breaking in such a fund.”

With key investors finally signed up in late 2010, Phatisa could an-nounce the first close of its food fund. It was open for investments, and its first transaction was an abandoned palm oil business in post-conflict Sierra Leone.

Phatisa’s second fund, closing in late 2012 is the Pan African Hous-ing Fund, which partners with lo-cal developers to build affordable homes for middle-income earners.

The need to improve the supply of affordable housing in Africa is long overdue.

The company certainly walks its own talk. While Phatisa promotes re-sponsible environmental practices in its underlying portfolio companies, the fund manager itself is carbon neutral. It is funding the regeneration of more than 10 hectares of degraded miombo woodlands in central Zam-bia to offset the firm’s emissions.

Down to earth, innovative and free-thinking, Phatisa has developed a gratis private equity mobile app that carries the latest African private equity news and also calculates in-ternal rate of return on investments.

Co-founder, Stuart Bradley – who also heads fundraising – describes just how critical personal dynamics are in this business.

“Private equity teams are very much about close and trusted part-nerships. The industry can be excep-tionally demanding and this requires

Puerto Rico failed to meet a $58 million bond payment, placing the U.S. territory in default and deepening con-cerns over its ability to ser-

vice its $72 billion in debt. Here are a few key points about

Puerto Rico’s financial difficulties and what they might mean for investors and the economy.

working together as a team to tackle the challenges. At the core of Phatisa is a group of like-minded individ-uals who have been friends for two decades and there is tremendous re-spect and trust. This then permeates throughout the team. Truly success-ful private equity businesses are built upon solid personal relationships that have spanned decades.”

Also important are diverse but complementary talents. ‘Phatisa has a diverse team from various coun-tries and nationalities across Africa and globally, which is what makes our business unique’ says Stuart. ‘This specialised skill set adds enor-mous value to our investors and in-vestments across the company.’

Duncan emphasises that Phatisa’s funds are transparent investment vehicles that undoubtedly make a social difference, while providing re-warding financial returns.

“Unlike aid, which, with the best of intentions does not always have a per-

manent positive impact, our focused funding goes into re-sponsibly growing businesses that create sustainable wealth and employment for many stakeholders. As a portfolio, we have experienced good fi-nancial returns as well as de-velopment impacts that have been beyond expectations. This demonstrates that it is possible to optimise share-holder returns while making a notable impact on develop-ment.”

Investors in the current funds are encouraged, and talking about signing up to successor funds.

Moving into its second decade, Phatisa remains fo-cussed on the African conti-nent and may start to look at other sector-specific funds in healthcare, education and renewables.

Phatisa is an African private equity fund manager, operating across sub-Saharan Africa, with offices in Mauritius, South Africa, Zambia, Kenya, and Ghana, as well as London.

The firm has two sector-specific funds under management, totalling more than US$285 mil-lion, focused on food and affordable housing. Phatisa comprises a team with a significant track record of managing private equity funds and businesses throughout the continent.

Phatisa’s African Agriculture Fund has com-mitted investments in excess of US$123 million, from Sierra Leone in West Africa to Mauritius, East Africa and 12 other countries in between. This reflects a total of eight portfolio companies across diverse sectors: primary farming, palm oil, processing, inputs, mechanisation, fertiliser, protein production and FMCG beverages.

Phatisa also introduced an eastern and south-ern African investment initiative in response to the ever-increasing housing shortage – the Pan African Housing Fund (PAHF). The US$41.95 million Fund commenced operations during Q1 2013 and has concluded three investments to date.

At the heart of Phatisa is development equity, as embodied in the unique formula of DevEq = PAT * x + i 2 ™; a balanced blend of private eq-uity and development finance – striving to build sustainable assets on the ground; ensuring best possible returns for investors, including the com-munity in which these operate.

About PhAtisA

•Was this default a surprise?No, investors have been bracing

for a possible default for at least two years. Puerto Rico’s debt level has been building toward unsustainable levels for more than a decade.

Governor Alejandro Garcia Padil-la last month stated that the $72 bil-lion in public debt could not be paid back. Its bonds have traded at steep discounts to face value, signaling the market’s concern that a default or a debt restructuring would occur.

•How did Puerto Rico get here? Persistently weak economic perfor-

mance has eroded the tax base and the government and other agencies piled on debt from eager lenders to main-tain public spending.

Puerto Rico has more than three

times the debt per resident as the most heavily indebted U.S. states.

The territory suffers under certain structural disadvantages. The feder-al minimum wage applies there, and is probably too high for local pro-ductivity rates and prevailing wages. Able-bodied residents leave for the Mainland in large numbers.

Certain trade laws make it harder to compete in manufacturing without U.S. subsidies that were lifted several years ago. And it has lost market share in tourism to nearby islands such as the Dominican Republic.

•What does it mean for U.S. inves-tors?

Puerto Rican debt was popular among some municipal-bond inves-tors for its high relative yields and tax-

free status. Only a few mutual funds are heavily concentrated in the territo-ry’s paper, though, so a default or debt restructuring shouldn’t lead to broad investor losses.

•Might the U.S. government bail-out Puerto Rico?

A direct bailout is unlikely. There is speculation that the Puerto Rican government intentionally skipped the bond payment to get Washington’s attention, perhaps for the Treasury to back new Puerto Rican debt in a re-structuring.

And Congress could be moved to help in other ways, such as by altering bankruptcy laws to allow the territory to gain protection from creditors as it sorts out its finances.

•How is Puerto Rico like, or un-

like, Greece or Detroit? Similar to Greece, Puerto Rico is

linked to a larger economy with which it shares a currency and must accept fiscal direction. It therefore can’t ease debt burdens through a devalued cur-rency, as independent nations can.

Yet there is a difference, in that Puer-to Rican residents, as U.S. citizens, re-ceive automatic help from federal in-come-support programs and need not accept specific fiscal direction from another government.

Like Detroit, Puerto Rico suffers from too much debt, a weak economy and steady loss of working-age pop-ulation. But Detroit was able to seek protection under municipal-bank-ruptcy statutes. As of now, Puerto Rico does not enjoy that option.


Shelter Infrastructure

Africa50 Raises $830m for Infrastructure in Africa

Africa50, the new and innovative i n f r as t r u c tu re investment plat-form promoted by the African D e v e l o p m e n t

Bank held its Constitutive General Assembly on the 29th of July 2015 in Casablanca, Morocco.

Twenty (20) African countries and the African Development Bank have subscribed for an initial aggregate amount of $830 million in share capital.

These founding African countries are Benin, Cameroon, Congo, Dji-bouti, Egypt, Gabon, Ghana, Ivory Coast, Madagascar, Malawi, Mali, Mauritania, Morocco, Nigeria, Ni-ger, Senegal, Sierra Leone, Sudan, The Gambia and Togo.

While this first closing was avail-able only to African countries, it is anticipated that the second and sub-sequent closings will be available not only to African countries that are yet to invest in Africa50, but also non-sovereign investors both in Af-rica and outside Africa. The second closing is expected before the end of

2015. Speaking at this historic event, Dr.

Donald Kaberuka, President of Afri-can Development Bank and current Chairman of the Boards of Directors of Africa50, said “the large presence of African States and their financial commitments are a testimony to a shared vision to find new ways to ac-celerate the provision of infrastruc-ture. Africa50 will be a step change for infrastructure financing and de-velopment in Africa”.

Africa50’s raison d’être is to mo-bilise long-term savings within and outside Africa for the financing of commercially viable infrastructure projects across Africa. Through an integrated approach, Africa50 will invest in African infrastructure pro-jects at scale along the entire project finance value chain leveraging its in-novative Project Finance and Project Development windows.

The strong expression of commit-ment today by the African coun-tries is a necessary first step towards attracting institutional investors, including sovereign wealth funds, pension funds, insurance compa-nies and other sources of long-term

finance around the world. Africa50’s medium term capitalisation is pro-jected to reach $3billion.

During the Constitutive General Meeting, Africa50’s founding mem-bers signed the articles of incorpo-ration, which enshrine the highest standards of corporate governance.

Africa50 is headquartered in Casablanca, Morocco. A headquar-

Dubai’s property market looks like it has hit a peak.

Residential real-estate sales fell by 69% in the

first half of 2015 compared to the same period the year before, according to a report released by the country’s Land Department.

This after the IMF warned the Du-bai government that it could be fac-ing another property bubble due to “unsustainable price dynamics and an eventual correction” in May 2014.

What worried the IMF? Proper-ty prices climbed 32% from the first quarter of 2013 to the first quarter of 2014.

In response, the government tight-ened lending and doubled sales duties to discourage speculation.

Property prices have started to fall. Residential property prices have fall-en between 1% and 2%, according to

ters agreement was signed with the Kingdom of Morocco that confers upon Africa50 a range of privileges and immunities similar to those en-joyed by the African Development Bank. Other decisions taken at the meeting included the appointments of the members of the Boards of Di-rectors of the Project Finance and Project Development vehicles and also the appointment of KPMG as external auditors.

Mr. Mohamed Boussaid, the Min-

ister of Finance for the Kingdom of Morocco stated that Africa50 is an idea whose time has come and that the Constitutive General Assembly is an important first step towards making it a reality.

The newly elected Boards of Direc-tors met after the Constitutive Gen-eral Assembly and have launched the recruitment of the Chief Execu-tive Officer of Africa50 through an international competitive selection process.

Dubai: Another Property Bubble in the Making? reports by property developer JLL and surveyor/consultants Cavendish Max-well, respectively.

That is likely to just be the begin-ning. Standard & Poor’s wrote in a recent report that it’s only a matter of time before this drop off in sales takes a toll on price.

“Additional supply and lesser de-mand on the UAE property market this year is likely to result in a mod-erate 10% to 20% correction in Dubai residential real estate prices — much less than what led to the Dubai crisis in 2009,” it said.

“Retail and office commercial real estate should prove more resilient than hospitality given the sizable supply of hotel rooms expected in anticipation of Expo 2020.”

Dubai’s property market previ-ously peaked in 2009. The crash that followed led to a number of multibil-lion-dollar restructurings.

About Africa50 Africa50 is an innovative vehicle

promoted by the African Develop-ment Bank and designed to help ac-celerate infrastructure development in Africa. Africa50 has two main operating windows: Project Financ-ing and Project Development. Both are incorporated in Casablanca, Morocco and enjoy certain privi-leges and immunities. While adopt-ing a strong public private sector approach in the development of its business, Africa50 is founded on the highest corporate governance, eth-ical, financial, environmental and social responsibility frameworks.

Business Journal July 27 - Aug 02, 2015

Umaru Danbatta: In the Footstep of Exemplary Regulatory Regime

The exemplary reg-ulatory regime at the Nigerian Com-munications Com-mission (NCC) has received a further boost with the re-cent appointment

of Dr. Umaru Danbatta as the new Executive Vice-Chairman and Chief Executive of the NCC.

Over the years, the regulatory per-formance of the NCC has endeared it to international and local telecom bodies, especially after the 2001 launch of GSM services in Nigeria.

Danbatta, who holds a Doctorate Degree in Electronic Engineering, takes over from Eugene Juwah whose

Africa’s telecoms industry forms a vital component to the country’s economic growth, affecting all as-pects of the business and

social sphere. Dramatic expansion in the telecoms

sector has taken place over the past five years, with a 72% penetration on average in mobile subscriptions across the continent. Consequently, a huge amount of investment is happening to improve Africa’s infrastructure to man-age the rapid increase in data usage and the need for better connectivity, par-ticularly in rural areas.

For example, Millicom Ghana (Tigo) is to invest $24 million in the expansion of its 3G network in the country, ac-cording to local reports, with phase one of the expansion expected to include 114 cell sites installed in the Greater Accra, Ashanti and Western regions of Ghana over the next four months.

The international telecoms commu-nity regards Africa as an area of high value for new business.

In East Africa for example, the con-struction of a fibre ring connecting five East African countries (Kenya, Rwan-da, Tanzania, Uganda and Burundi) has just been completed by Liquid Tele-com, to ensure reliable and continuous connectivity. Ambassador Dr. Richard Sezibera, Secretary-General of the East African Community (EAC), the re-gional inter-governmental organisation

Global Investment Drives Africa Telecom Growth

11TechnologyBusiness Journal August 10-16, 2015

of the five countries, said of the deploy-ment:

“By providing our nations with a 21st-century broadband network that directly connects us to each other and the outside world, Liquid Telecom con-tinues to help the economic develop-ment of our region.”

Due to the size and scale of invest-ment opportunities in African tele-coms, wholesale telecoms carriers from across the globe meet annually at Ca-pacity Africa, the largest pan-African wholesale conference to network, de-velop business and hear industry lead-ers deliver future commercial strategy.

Taking place on 8 & 9 September in Dar es Salaam, 400+ senior telecoms executives from over 65 countries will take advantage of the entire African telecoms ecosystem being represented, all looking to secure new deals in the region’s lucrative telecoms market.

Discussing the event’s importance, Mike Last, Director, Marketing and International Business Development, WIOCC said:

“Capacity Africa is without a doubt the best networking event for the Af-rican wholesale telecoms industry.” He added that it attracts “a very strong set of African and international carriers and creates a great environment for do-ing business”.

Expanding networks means in-creased demand for infrastructure and competition amongst operators. Regu-

lators are playing a key role in providing stability to these operators active in the region ensuring a market driven indus-try.

Capacity Africa recognises this, of-

fering an agenda which brings together both the C-level executives of major telecoms organisations such as Seacom, Liquid Telecom and WIOCC, as well as the regulators such as the Nigeria

Communications Commission(NCC) to discuss the latest growth opportu-nities in front of an audience made up of the key decision makers in African telecoms.

tenure expired on July 29, 2015.The new NCC Chief Executive also

holds a Bachelors Degree in Electronic Engineering and Telecommunications as well as a Masters Degree in the same field. A Fellow of the Nigerian Society of Engineers (NSE), he is a Professor of Electrical Engineering and Elec-tronics at Bayero University, Kano, specialising in Telecommunications Engineering and Information and Communications Technology (ICT).

Danbatta was at various times, Head of Department, Dean of Faculty, Di-rector, Centre for Information Tech-nology, Chairman of the Nigerian Society of Engineers (Kano Branch), Deputy Vice Chancellor and Acting Vice Chancellor.

Headquarters of the Nigerian Communications Commission (NCC) Abuja

Umaru DanbattaExecutive Vice-ChairmanNigerian Communications Commission

Workforce For The Mobile AgeNo doubt, the growth of mobile

technology continues to rede-fine the concept of borders and the search for indigenous or foreign-based talent.

Africa’s working population is expected to double by 2020 and become the world’s largest working population by 2040. The majority of those new employees will have grown up with mobile devices and will expect to work in the highly flexible and always-on way that these devices enable.

As Africa’s most populous nation, Nigeria seats at the apex of this looming challenge (or opportunity). This makes it critical for Nigerian businesses to support initiatives aimed at closing skill gaps, particularly in mobile, cloud and the intersection of these technologies.

Businesses looking to bolster in-house app development teams should consider formal and informal training programmes, particularly to leverage the innate mobility of young, tech-savvy employees. Large corporations and small-sized firms cannot afford to take an ad-hoc approach to up-skilling and re-skilling for the mobile econ-omy. They should focus on rigorous methods that provide clear and practical training on how to use mobile to boost individuals’ productivity and innovation.

More than 10 universities in the Middle East and Africa region now offer a mobile develop-ment and strategy curriculum developed by IBM experts, graduating students who are armed with the not only the developer know-how, but also a deep understanding of how that expertise fits into wider business strategies.

Existing employees looking to round out their development skills also have access to the Africa Technical Academy – five-day training programmes that offer hands-on experience in not only mobile app development, but its rela-

tionships with Big Data, analytics and security intelligence.

Our nation’s largely young population is ex-pected to be an asset to our macro-economic goals and social re-engineering ambitions.

By catching these rising stars on the way up and offering meaningful, business-focused tal-ent development, organisations can ensure that employees have the skills needed to meet today’s business objectives, but also lay a solid pipeline for future growth.

Technology is a wheel that reinvents itself at each turn, and those turns are coming more quickly than ever. Businesses must also reinvent themselves to define or maintain their competi-tive edge. As for the mobile-focused regions of the Middle East and Africa, that edge is intrin-sically tied to application development, manage-ment and strategy.

Driven by the strategic human resource man-agement objectives of an organisation, workforce development and management for the mobile age will benefit from a global-minded, collabo-rative approach involving the Human Resource, Technology and other relevant sections of the enterprise.

When nurturing mobile development skills, businesses must think globally. In today’s con-nected society, developers are not creating apps solely for their business or country.

An application developed in Nigeria or Ghana may catch the attention of Silicon Valley, espe-cially as the increasing number of open data ini-tiatives fosters greater collaboration and integra-tion. In a growing number of cases, developers in one country are creating apps and solutions specifically for those in others.

To use a specific example, EME Internation-al, an Egyptian mobile solutions company, has worked with IBM to develop bespoke mobile solutions for customers in neighbouring coun-

tries, such as a banking app for Barwa Bank in Qatar.

Thinking beyond the code and utilising open-source platforms allows developers to have a hand in creating the future – offering the servic-es, run-times, and infrastructure needed to bring their ideas to life. A growing number of start-up groups are prioritising open-source mobile and cloud platforms to lay the foundations for fast, cross-border scalability.

Mobile start-up incubator, M-Lab East Africa, for example, encourages its members to use the open-source IBM Softlayer cloud platform: scal-ability is particularly relevant given the group’s members focus on large-scale challenges in agri-culture, health, and education.

EME International’s client engagement app is also hosted on Softlayer, helping it to offer the app to global firms including one leading auto-motive brand.

An agile, experimental environment speeds up the development process and enables application developers to test new capabilities efficiently. This enables a cycle of continuous learning that drives exponential innovation and growth.

African enterprises and developers must re-member that once their projects reach an app store, they’re competing on the world stage – and have the necessary skills and infrastructure to manage potentially global demand.

Staying ahead of the curve requires continuous learning – and even if you’re on top of mobile ex-perience or learning curve now, your stay may be short-lived without it.

Developers and enterprises must embrace this learning process, and begin exploring the en-twined relationship between mobile and other critical domains including Big Data, analytics, security and Cloud.

•Lere Olabiran is HR Partner, IBM West Af-rica

Intel Flags-Off App Developer Zone at IDDN 2015

12 TechnologyBusiness Journal August 10-16, 2015

Lere Olabiran

Intel Corporation has flagged off the Intel Developer Zone (IDZ) programme in Nigeria to local de-velopers at its just concluded Intel Developer Day Nigeria (IDDN)

2015, which took place in Lagos.The well attended event provided

a platform for software developers to interact with Intel software experts and enjoy live training on how to use var-ious Intel software tools on the Intel Developer Zone (IDZ) platform which supports Independent Software Ven-dors (ISV), app developers and maker communities with information and tools.

Welcoming participants to the event, Country Manager for Nigeria, of Intel Corporation, Mr. Olubunmi Ekun-dare said that Intel was trying to help local developers achieve their best. Mr. Ekundare added, “We want to create the right type of technology and also provide appropriate training to get the best out of this technology.”

Software and Services Lead, East Af-rica, Agatha Gikunda thereafter intro-duced Intel’s developer offerings to the participants, and offered them advice on how to monetize their software ap-plications.

The event also saw the launch of the Intel Student Partnership Program which confers the status of on-campus ambassadors on the student partners and also help the budding developers acquire knowledge about Intel technol-ogies.

According to Intel, the programme would run in three Nigerian universi-ties including, the Obafemi Awolowo University, Ile-Ife; Rivers State Uni-versity of Science and Technology, Port-Harcourt and the Federal Univer-sity of Technology, Akure.

Speaking on the event, the Regional Director, South and Sub-Saharan Afri-ca, Intel Corporation, Sven Beckmann said:

“It is good to come to Nigeria and see how interested these young developers are in our programs, and we are open to partnering with them. We want to see the next Einstein coming from Africa. Students need to be mentored and we want to help guide them, so that they can better tap into their innovative ide-as.”

The event which also had Director of Innovation, Sub-Saharan Africa, Intel Corporation Hitendra Naik in at-tendance peaked with the pitch session

where participants were asked to pro-pose their software app ideas to a panel of Judges.

Adetunji Adelakun, 30- year old software engineer, emerged as the first prize winner and was awarded with $5, 000 worth of marketing from Intel with his software idea; ‘Scantranx POS, an Android Cloud based POS system that supports multi-sale channels.’ The second place winner won a Samsung Galaxy Tab, while the third prize win-ner received encouraging remarks.

An elated Adelakun said: “I know I created a good solution and I put in a lot of hard work. I am happy that Intel recognized my potential and even de-cided to invest my idea with $5, 000, which is a good beginning that will help me scale my business.”

Intel Developer Zone is expected to offer Nigerian developers a place in the ecosystem of global technologies, tools, developers and partners.

It will also offer Nigerian develop-ers the opportunity to explore Intel’s cross-platform productivity suites for creating applications targeting Android and Microsoft Windows devices with native performance and exposure to unique platform capabilities.

Microsoft Im-agine Cup has been dubbed as the world’s p r e m i e r technology

competition that provides opportuni-ties for students across all disciplines to team up and use their creativity, passion, and knowledge of technology to create applications, games and inte-grated solutions that can change the way we live, work and play.

Although health and gaming solu-tions topped inventions on showcase at the on-going Microsoft Imagine Cup in Seattle, Washington, there are positive signals that Team LifeWatch would advance to the next phase of the competition, having taken their turn in presenting their solution to the panel of judges.

During Team LifeWatch’s presenta-tion earlier, there were convincing

2015 Microsoft Imagine Cup: Optimism after Live Presentation by Team LifeWatch

Samsung Positively Impacts Community in Kinshasa

Microsoft Employability Platforms Target 100,000 Job by end 2015

evidence to show the team’s likelihood of advancing to the next stage of the competition. The team is comprised of four students from the Afe Babalo-la University, Ado Ekiti (ABUAD); Adeyemo Oluwaseun, Kevin Ahwin, Sobola David and Raymond Obinaju, who are currently flying the Nigerian flag in the competition and who are poised to advance to the next phase of the competition.

Speaking after their presentation, Communications Lead, Microsoft Ni-geria, Yemi Orimolade noted with op-timism that the team’s session was apt, informative, educative, and of course mind blowing. In his words “I think their solution is definitely a contender for the converted title”.

According to him, the team’s pres-entation was captivating, instructive and gives a step-by-step procedure to solve asthmatic issues especially in Nigeria.

For Adebayo Ogundipe, Chief Men-

tor of the Team, he said with optimism that Team LifeWatch representing Ni-geria will take the Imagine Cup home. In his words “We will win. We will ad-vance to the final stage tomorrow, the

What could 30 Samsung Electronics employ-ees, 31 computers and Computer Classes,

accomplish? If taken in isolation, not much. But combined together, it could uplift a community in need. This is what a team of Samsung Elec-tronics employees hopes to achieve as it marks its annual Employee Volun-teer Programme in Kinshasa, Demo-cratic Republic of Congo.

The team of volunteers from Sam-sung Electronics’ South Korean head-quarters arrived in Kinshasa to help refurbish classrooms at the Dibua Dia Ditumba Primary School and con-duct trainings for 30 teachers and up to 50 learners. The week-long initia-tive (27- 30 July) focused on provid-ing access to technology by installing computers at the school, giving the learners and teachers basic computer skills, and painting the classrooms, to

team’s presentation was convincing enough for them to win. There were positive signals during their session”, he said.

Also speaking with optimism, the

spokesperson of Team LifeWatch, Raymond Obinaju, said “We are re-ally optimistic about this. And the judge’s comments seem to be really promising. With AsthmaVisor, Team LifeWatch seeks to save an estimated 25million people living with asthma in Nigeria, and about 334million peo-ple globally. So I think we have a good case”

The solution, according to the team’s spokesperson will reduce the morbid-ity rate of asthma, and consequently reduce the death toll due to asthma by providing adequate environmental and physiological supervision for pa-tients. Nigeria, China, South Korea,, Nepal, Netherlands, Poland, Russia, South Africa, Tunisia, Brazil, Canada, Hungary, Japan, New Zealand, United Kingdom, United States, Cyprus, Ger-many, Indonesia, Italy, Mexico, Ro-mania Taiwan, among others are the countries currently participating in the global showcase in Seattle, Wash-ington.

TechnologyBusiness Journal August 10-16, 2015

give it a fresh-new look. These activities will be carried out

in partnership with Action de De-velopment Communautaire Dibua (ADCD) and Better World. It forms part of Samsung’s Employee Vol-unteer Programme (EVP), which encourages employees to use their work-time to contribute towards the well-being and the socio-economic development of our communities

Bill Kim, managing director of the DRC branch, Samsung Electronics East Africa, said: “The engagement model has been warmly welcomed in communities across Africa. Because programmes are implemented in consultation with communities and are designed to meet their felt needs, they develop a sense of ownership of the projects.”

Abey Tau, Public Affairs & Corpo-rate Citizenship Manager for Sam-sung Electronics Africa, said com-

Microsoft is aiming to create over 100,000 job opportunities and reach over seven million peo-

ple across the Middle East and Africa by the end of the year through its Em-ployability Platforms, in partnership with organisations from public and private sectors, as well as NGOs.

Launched in 2012, the YouthSpark Employability Platform for the first time provides job-seekers with end-to-end career guidance, up-skilling, job-matching and mentorship – all centred on a free online hub that brings the best resources together in a bold attempt to address unemploy-ment and underemployment.

In the MENA region the platform is called Ta3mal (“works” in Arabic) and is a partnership between Microsoft and Silatech, a non-profit organisation supporting youth access to employ-ment across the Arab world.

“Unemployment in Africa and the Middle East is not a new issue, but its scope is growing with the youth bulge and economic downturn worldwide and we need to find new solutions to address this problem,” says Ali Far-amawy, Corporate Vice President of Microsoft Middle East Africa (MEA).

Microsoft’s solution, in the form of its Employability Platforms, has landed in markets including Egypt, Morocco,

About Samsung Electronics

Samsung Electronics Compa-ny Limited inspires the world and shapes the future with transforma-tive ideas and technologies, redefin-ing the worlds of TVs, smartphones, wearable devices, tablets, cameras, digital appliances, printers, medical equipment, network systems, and semiconductor and LED solutions. We are also leading in the Internet of Things space through, among others, our Smart Home and Dig-ital Health initiatives. We employ 307,000 people across 84 countries with annual sales of US $196 bil-lion.

munity upliftment forms an integral part of Samsung’s conscience.

“Samsung is committed to creating positive change for people every-where so that they may live better lives through new experiences in-fused with technology.”

Tunisia, Iraq, Qatar, Côte d’Ivoire, Ni-geria, Kenya, South Africa, Botswana, Algeria, Ghana, Palestine and Turkey and will expand to 21 countries across MEA including Tanzania, Pakistan, Mozambique, Angola, Zimbabwe, Madagascar and Mauritius.

To date, the YouthSpark employa-bility platform has reached 5.8 million youth with a target of reaching 7 mil-lion by the end of FY15. In addition, 69,000 job opportunities have been posted on the job search tool against 100,000 job openings goal to be reached by the end of the year.

Silatech Chief Programmes Officer, Martin Roeske commented on the partnership: “The Ta3mal network of Employability Platforms across MENA shows what we can do when NGOs and the private sector join strengths and resources together to achieve real impact.”

“Part of the unemployment prob-lem is caused by a lack of economic opportunity, as well as the fact that graduates from secondary and tertiary institutions lack the skills required by employers,” says Faramawy. “But there is no shortage of determination and even in a country like Iraq that has been faced with some dire situ-ations, our platform has helped put 30 000 youths into jobs in the past 14 months.”

Saudi Arabia continues to boast the largest telecoms and enterprise IT market in the Middle East and Africa region (MEA), al-though total mobile and fixed services revenues

declined in 2014 for the first time in a decade.

According to a new report by Pyra-mid Research, total mobile and fixed services revenues in the consumer and enterprise segment in Saudi Arabia fell by one per cent to $16.2 billion (€15 billion) in 2014. The drop was attribut-ed to aggressive promotional activity and Mobily’s restatement of financial results: the country’s second-largest operator saw revenue decline by 20 per cent in 2014.

Nonetheless, Pyramid Research said the Saudi Arabian telecoms market remained the largest in terms of total service revenue in the MEA region in 2014, followed by South Africa ($13.4 billion) and Turkey ($13 billion).

The research company also expects to see further growth ahead: it fore-

Business Connexion Positive on Untapped Opportunities in Tanzania

Report: Saudi Arabia Remains Largest Telecoms Market in MEA

casts that over the next five years, annual growth of the Saudi telecoms market will average 3 per cent per year, reaching $18.7 billion by 2019.

“Operators have invested in up-grading network infrastructure and systems to handle growing data traffic volumes. The need in the short-term is for swift deployment of fibre con-nectivity in high demand areas such as Riyadh, Jeddah, Mecca, Medina and Al-Ahsa. This will improve the com-petitive landscape in the fixed Broad-band services segment, where histor-ically the incumbent operator, STC, has led,” said Hussein Ahmed, Analyst at Pyramid Research.

In the mobile market, the arrival of mobile virtual network operators (MVNOs) such as Virgin Mobile and Lebara is also expected to add fresh impetus with new promotions for data and voice services.

“Towards 2019 we will see the po-tential for improvements in the com-petitive landscape, while operators remain persistent in identifying new revenue streams,” Ahmed added.

IBM, RTI International Partner on Data-driven DevelopmentTanzania has tremendous

untapped potential. According to the World

Bank, the economy is set to grow by an estimated

7.2% this year and the government’s significant investment in the national fibre optic cable increases business and citizen access to technology creating opportunities to leapfrog technolo-gies. Together with the emergence of disruptive technologies, the stage is set for tremendous growth opportunities.

This is the view of Jane Canny, Chief Operating Officer at Business Con-nexion Group.

Business Connexion Tanzania has been in operation since 2000, with a strong focus on financial services, telecoms, energy and mining and the public sector.

“Through the creative use of tech-nology and our partnership with the UmojaSwitch Consortium, we pro-vide 28 banks and 200 automated teller machines in Tanzania access to a secure, shared payment infrastruc-ture. The infrastructure is integrated with five payment switches within in East Africa to allow for internation-al transactions, three major mobile operators to enable mobile payments and various government institutions to facilitate electronic payment col-lections.”

“The Internet of Things is changing the way businesses operate at a rapid pace,” says Canny. “As customers be-come more connected, their demands are changing and organisations simply have to evolve as the technology and how we use it changes, or face being left behind by their competitors.”

She adds that there are also several on-going projects to integrate mu-

14 TechnologyBusiness Journal August 9-16, 2015

nicipals and hospitals throughout the country to enable electronic payment collections.

“This is a great example where tech-nology is being used to make con-sumers’ lives easier,” says Canny. “And as technology continues to evolve, so will the way in which customers inter-act with their service providers. In the next five years, for example, near field communication or NFC technology will be used throughout the country to enable mobile retail and bill pay-ments. We are also implementing a core banking application in the cloud, which will be hosted in our local data centre.”

Canny says the proposed merger with Telkom is not expected to have

any impact on their local operations and the company remains committed the Tanzanian market.

“Regardless of the outcome of the proposed merger, it’s business as usual for us. Our biggest concern lies with ensuring we continue to deliver in-novative solutions to our clients. We will continue to invest in our Financial Services Exchange infrastructure so-lidifying our position in the financial services market,” she says.

“Our local data centre, which hosts one of the largest telecoms solutions, and data recovery services also con-tinues to grow.” Canny believes the proposed merger is in line with global trends where telecommunications and IT services are converging.

RTI International- a leading non-profit research institute - and IBM have announced a partnership to deploy big

data analytics and cognitive technol-ogies to help transform development approaches in Africa and around the world.

In one of the first projects, IBM and RTI are developing and testing intel-ligent systems to capture data about schools in Mombasa County, Kenya.

Through the partnership, RTI and IBM Research – Africa will explore ways of using advanced technologies to capture accurate data about chal-lenges in areas such as healthcare, ag-riculture, water and education.

Drawing on the power of big data analytics, researchers will provide in-sight to governments, aid agencies and other organisations who are looking to make more informed decisions about investment and development while having greater visibility of results.

“A dearth of data on Africa in the past has led to misunderstandings or misrepresentations of the continent’s history, economic performance and potential. Over the past few decades, even simple facts have been misrepre-sented - the size of a country, its eco-nomic performance, the amount of poor people, the volume of exploitable resources,” said Dr. Kamal Bhattacha-rya, Vice President IBM Research –

Africa. “The latest advances in mobile, big data and Internet of Things tech-nologies have the potential to change that so that we have an accurate and dynamic understanding of Africa’s challenges, rising opportunities and incredible potential.”

The partnership comes as a rapid rise in mobile and Internet of Things technologies are producing unprece-dented amounts of data. In developing countries, mobile phones, digital de-vices and low-cost sensors connected to improving cellular networks are reaching previously disconnected communities with the potential to produce new insight about how peo-ple live and the challenges they face.

“Rapid advancements in technology and open data initiatives mean more data is available now than ever before, offering significantly greater insights to improve lives through smarter de-velopment programmes,” said Aaron Williams, Executive Vice President at RTI.

“By combining our expertise in data science and development, RTI and IBM will apply the information newly at our fingertips to accelerate improve-ments in literacy, respond rapidly to the spread of infectious diseases, and discover and apply new innovations for improving the human condition in the developing world.”

Mohammed Kari: Berthing Leadership & Technical Expertise in NAICOM

President Muham-madu Buhari recently approved the appoint-ment of Alhaji Mo-hammed Kari as the new Commissioner for Insurance and

Chief Executive of the National In-surance Commission (NAICOM).

His appointment was conveyed vide a letter signed by the Head of the Civil Service of the Federation, Danladi Kifasi.

He succeeds Mr. Fola Daniel whose second and final tenure as Commissioner for Insurance lapsed on Friday, July 31, 2015.

Until his current appointment, Alhaji Kari was the Deputy Com-missioner for Insurance (Technical) in the Commission. The appoint-ment is with immediate effect.

From industry standpoint, Kari is bringing to NAICOM, a strate-gic combination of leadership and technical expertise and competence to drive sustainable growth of the insurance market in Nigeria.

Mohammed is a Chartered Insur-ance Practitioner with over 35 years Local and International Insurance and Management experience. His experience stretches from the private to the public sector where he has managed the biggest companies in those sectors.

He started his career with Royal Exchange Assurance Nigeria, Kano Branch, in 1979 after completing a Diploma in Insurance programme.

Two years later, he proceeded to the Caledonian University, Glasgow, Scotland to study on full-time basis; the Associateship of the Chartered Insurance Institute (ACII).

On return in 1984, he joined Yankari Insurance Company where he worked until 1989, when he was appointed as Executive Director in Niger Insurance Plc.

In January 1992, he was appoint-ed to the position of Managing Director/Chief Executive of Nigeria Reinsurance Corporation, a posi-tion he held until March 1993 when he was assigned to take over the Chief Executiveship of NICON In-surance Corporation, a then leading company in the financial sector and the insurance industry.

He served in that capacity until January 2000 when he resigned his appointment to set-up Arit Solu-tions Limited.

Kari returned to Insurance management in 2007 as the Man-aging Director/Chief Executive of UnityKapital Assurance Plc, after consulting in the acquisition and

15

Mohammed KariCommissioner for Insurance/Chief ExecutiveNational Insurance Commission (NAICOM)

merger of the three companies that formed the entity (UnityKapital Assurance Plc.)

He completed his four year tenure and went back to full-time consult-ing.

At the Professional level, he has been exposed to various roles in the

TAD): •Financial Services Committee

(Vice Chairman for two consecutive sessions), African Insurance Organ-isation (AIO)

•(Governing Council Member), Council of the Bureaux of the

ECOWAS Brown Card Scheme •(Member, Chairman, two con-

secutive sessions), Nigeria Insurers Association (NIA)

•(Governing Council Member), Chartered Insurance Institute of Nigeria (CIIN)

In September 2001, he proceeded to the University of Central England in Birmingham, UK to undertake an MBA programme. He has since graduated with a Masters Degree in Information Management.

This is further enhanced by the obtainment of Professional Cer-tification from the Learning Tree Centre in the United Kingdom for IT Management.

Mohammed started and ran Arit Solutions Limited; Information and Communication Solutions Compa-ny and was the Lead Consultant in Arit Consult Limited, Insurance, IT and Management Consultancy.

Mohammed was a member of the Nigerian Vision 2010, a member of the 20:2020 Committee and a recip-ient of the much-coveted African Insurance Organisation’s gold medal for excellence.

Mohammed is a Chartered Insurance Practitioner with over 35 years Local and International Insurance and Management experience. His experience stretches from the private to the public sector where he has managed the biggest companies in those sectors.

‘

‘

NAICOM Headquarters, Abuja

insurance industry thus: - •West Africa Insurance Compa-

nies Association (WAICA)•(Member, President and Chair-

man of Council for two consecutive terms),

•United Nations Committee on Trade and Development (UNC-


Mutual Benefits Assurance Grows Asset to N42.4bn

The Mutual Ben-efits Assurance Group has effec-tively grown its asset base to N42.4 billion in the fi-

nancial year ended December 31, 2014 as against N32.2 billion in the preceding year, representing an increase of 31 percent.

Mr. Akin Opeodu, Chairman, Mutual Benefits Assurance Plc, told shareholders at the 19th An-nual General Meeting (AGM) of the company that the shareholders funds also rose by 190 percent to N6.2 billion in the same year un-der review from N2.1 billion in 2013.

“2014 was a year of commend-able increase in all areas of oper-ating results. The Group reported Profit Before Tax of N4.5 billion from a position of N911 million in 2013 which represents a 397 percent increase. This growth was made possible by the immense commitment and hardwork of the staff and management of the com-pany,” the chairman said.

“Our improving financial position created room to attract more busi-nesses both in the private and public sectors. Policies in force increased by 45 percent over 2013, resulting in Gross Premium Written growth of 90 percent from N8.1 billion achieved in 2013 to N15.4 billion in 2014. Underwriting profit for 2014


Akin Opeodu, Chairman, Mutual Benefits Assurance Plc

Akin Ogunbiyi, GMD, Mutual Benefits Assurance Plc

was N5.5 billion representing a 114 percent rise against the 2013 result of N2.6 billion. The company closed the year with a Profit After Tax of N4.1 billion, a whopping increase of 638 percent over the N555 million reported in 2013.”

Opeodu promised that share-

holders will reap dividends given the positive half-year result of the company.

“Whilst ensuring that funds are retained to support further business growth, the Board also recognizes the need to provide a return to shareholders. We are

rebuilding our reserves through outstanding business perfor-mance.”

The Mutual Benefits Assurance chairman expressed regret that the insurance industry contin-ues to face challenges in the 2015 business year. He listed such chal-

lenges to include:•Lull in the business environ-

ment in the first half of the ear due to the general elections

•Pressure on the exchange rate as a result of the lower oil prices

•High consumer price inflation and high lending rates

•Generally lower purchasing powers of the consumers

•Tougher competitive environ-ment

•More regulatory requirementsHe however assured sharehold-

ers of the company that adequate efforts already are being made to make improvements on its under-writing performance, business pro-cesses and decision support system, rates and products to favourably position Mutual Benefits Assurance Plc for these challenges.

“We are encouraged both by our business opportunities and the start we made to 2015 and are confident that with the group’s well-defined strategy aimed to-wards offering superior financial services, the company is set for further growth in the current year.” It would be recalled that Mutual Benefits Assurance Plc recently won the Most Innovative Company of Year at the 2015 AIO Conference/General Assembly in Tunis, Tunisia.

“The success of the company is attributable to the continuing hardwork, passion and dedication of our people in delivering our strategy despite challenging mar-ket conditions.”

Aret Adams HouseHead Office Complex of Mutual Benefits Assurance Plc

Royal Exchange Group Reports N9.4bn Earnings in 2014

The Royal Ex-change Group achieved gross revenue of N9.43 billion in the 2014 business year and net premi-

um income of N4.7 billion, 21 per-cent higher than the figure record-ed in 2013. The company also paid claims of N2.4 billion in the same year under review in accordance with its corporate commitment to its clients.

Mr. Chike Mokwunye, Group Managing Director/CEO of Royal Exchange Plc, said the performance of the Group in 2014 was a show of resilience.

“At group level, we ran a two-prong business growth approach focused on sustaining old busi-nesses and at the same time ac-quiring new direct businesses. We also diversified our revenue base by deepening our tenta-cles in traditional financial ser-vices markets and concurrently branching out into frontier mar-ket segments.”

Mokwunye said the Board re-mains focused on achieving the long-term strategic objectives of the Group through continued im-plementation of its corporate stra-tegic plan dubbed: :Road to 25, to increase its level of competitiveness and reposition the company to-wards regaining market leadership in the medium-term.

“We also recognise the fact that the speed of implementation of our strategic initiatives has been constrained by the current levels of our company’s capitalisation. There is therefore an urgent need for the company to be recapitalized to be able to face the challenges of the future and take its pride of place in the market. The Board and man-agement are working assiduously to bring this to fruition.”

The Royal Exchange Group MD said the challenge before the Group’s subsidiaries is to expand the market share of the core insur-ance subsidiaries and ensure sus-tained increase in the contributions of non-core businesses such as asset management and micro-finance banking divisions to the pool.

He listed the Group’s subsidiaries and performances as follows:

•Royal Exchange General Insurance Company Limit-ed

The Royal Exchange Gener-al Insurance Company Limited (REGIC) remained the major in-come earner for the Group, con-

tributing 71 percent of the gross earnings of the Group. The compa-ny recorded Gross Written Premi-um (GWP) of N6.72billion in 2014 while earned premium income of N.92 billion was 22 per cent above that of the corresponding year.

The company recorded under-writing profit of N1.38 billion in 2014 as against N0.64 billion in 2013.

•Royal Exchange Pruden-tial Life Plc

In 2014, Royal Exchange Pruden-tial Life Plc continued to demon-strate strong growth potential within the Group. Its Gross Written Premium (GWP) of N2.37 billion was approximately 11 percent high-er than that of 2013 just as earned premium of N2.64 billion was 94 percent above 2013 level.

The company realised Profit After Tax of N163 million in 2014 com-pared to N130 million in 2013.

•Royal Exchange Finance & Asset Management Lim-ited

The company achieved gross earnings of N303 million as against N259 million in 2013, an increase of 17 percent. Its net margin also


appreciated by 17 percent from N122 million in 2012 to N143 mil-lion in 2013.

During the year, the company bolstered its credit generation drive via aggressive liabilities mobiliza-tion strategy, thereby boosting its income earning capacity.

•Royal Exchange Health-care Limited

The company’s Gross Written Premium (GWP) rose by 17 per-cent to N340 million in 2013 from N207 million in 2012 while earned premium increased from N181 million in 2013 toN307 million in 2014.

The company continues to show promise through aggressive mar-keting which has impacted posi-tively on its top-line.

A profit before tax of N110 mil-lion is reported for 2014 compared to N67 million in 2013.

•Royal Exchange Microfi-nance Bank Limited

The audited account shows gross interest income of N55 million in 2014 as against N48 million gen-erated in 2013. The net interest in-come also grew by 31 percent year-on-year to N52 million in 2014

Richard BorokiniManaging DirectorRoyal Exchange General

Wale BanmoreManaging DirectorRoyal Exchange Prudential Life

from the 2013 result of N40 million.The Profit Before Tax stood at

N13 million in 2014 as against N6 million in 2013.

Commitment to Corpo-rate Social Responsibility

In the course of the year, Royal Exchange Plc kept to its promise of being a socially responsible corpo-

rate citizen by championing insur-ance education and advocacy.

Reflecting on the importance of giving back to the society, Mok-wunye said:

“Our initiatives included part-nerships and sponsorships of pro-grammes targeted at improving insurance literacy among second-ary school students and deepening our foot-prints in the lower and informal segment of the insurance market. A typical example was our sponsored radio programme called ‘Wetin Insurance Dey Do Sef ’ on Naija 102.7 FM.”

He said the Group also made sig-nificant donations to Pacelli School for the Blind and partially sighted as its contributions towards assist-ing physically challenged persons in our society.

Future Outlook“Looking ahead, our goal is to

continuously redefine, reinvent and differentiate ourselves in the market-place. The focus would be on achieving long-term sustainable growth for our company through the broadening of our revenue base, improving service delivery support systems and at the same time, keep-ing a lid on our group-wide costs.”

Mokwunye continued:“We believe that the Group is

now well positioned to drive busi-nesses and extract value across the diverse product lines supported by our superior human capital and ex-tensive distribution network. With the on-going implementation of our strategic plan, we are confident of the prospects of regaining indus-try leadership and market domi-nance in the coming years.”

Chike Mokwunye, GMD/CEO of Royal Exchange Plc

Insurers and reinsurers are apply-ing underwriting and risk man-agement expertise to support an environmentally sustainable future, but the question of ex-actly how they’ll use investment dollars toward that goal stirred up debate at a recent conference.

“The idea that we’re going to divest in carbon is nonsense,” said Mike McGav-ick, CEO of XL Catlin during a session at the Global Insurance Forum of the International Insurance Society in June.

McGavick was responded to an exec-utive in the audience who challenged a panel of reinsurance executives on stage to defend the makeup of investment portfolios which he said reach into the trillions of dollars across the insurance and pension spaces.

“This amount should go toward long-term investments that will guarantee the growth of the world—that means…to invest only in environmental and soci-etal projects that will increase the out-put while still maintaining sustainable growth.”

McGavick was the only executive on the panel to respond. “It’s just nonsense. It’s too large a part of the economy,” he said. It’s too many of the investible op-portunities out there and the reality is that we would be failing our sharehold-ers if we weren’t investing in a prudent way.”

“That’s our responsibility to our share-holders. It is unavoidable and you can-not by wishing it away make it not so.”

He went on to explain how the indus-try is—and should be—devoting invest-ment dollars and underwriting resourc-es to support alternative energy projects as he addressed a comment from an executive in the audience.

The exchange came on the second day of the conference, following a special address by McGavick who enumerated reasons why the industry is becoming more relevant to society, and in fact “on the precipice of a renaissance” led by un-derwriters.

On the first day of the conference, Pro-fessor Jeffrey Sachs, Director of the Earth Institute at Columbia University, teed up the debate during a special address titled, “Insurance and the Future of Sustainable Development.”

After talking about how policymakers around the globe need and value insur-ance industry expertise in modeling, es-timating and mitigating risk.

Sachs told insurers: “You have trillions and trillions of dol-

lars under management and therefore a unique ability and responsibility also to invest in a sustainable way.”

Sachs continued: “We don’t need more coal, oil and gas reserves in this world because the proof is reserves are already far larger than can be safely uti-lised within the climate carbon budget.

“Your industry is led on principles of risk diversification and mitigation. It’s led fundamentally on principles of sus-tainability. The world needs you.”

Professor Jeffrey Sachs, Direc-tor, Earth Institute at Columbia University

“There is no case for arctic drilling. There is no case for deep sea drilling. There is no case further coal develop-ment. There is no case for a Keystone pipeline to carry the oil [tar] sands from Alberta to U.S. refineries because the oil sands do not fit within the two degree

Global Warming Debate: Should Insurers Ditch Carbon Investments?

Celsius upper limit on climate warm-ing,” he said. Earlier in his talk, Sachs had identified the two-degree Celsius limit as the figure that governments around the world agree is “the absolute guardrail of safety on the planet,” although they have yet to take concerted action to make sure the limit is not exceeded.

Sachs, who is also a special advisor to United Nations Secretary-General Ban Ki-moon on the Millennium Develop-

ment Goals, suggested that insurers take a cue from Norway’s nearly $900 billion government pension fund, considered the largest sovereign wealth fund in the world, which reported in May that it would divest from coal, “placing of all energy sector investments under an eth-ical set of guidelines.”

Inside the United Nations building in New York City on the last day of the in-surance conference, Ban Ki-moon him-self called out AXA as a shining example within the insurance industry for others to follow. “AXA recently pledged to de-carbonise its assets, increase investments in resilient low–carbon infrastructure and create the innovative financial tools that will make financial markets work for a safer climate,” the Secretary-Gener-al reported.

“The insurance sector is well placed to be a leader in risk-sensitive investment” the Secretary-General said, also stress-ing that governments around the world need to send a “clear signal” to business-es about their commitment to lower car-bon levels.

Both Sachs and the U.N. Secre-tary-General said 2015 is a pivotal year for signals to be delivered, with four major summits on disaster risk reduc-tion and climate change scheduled. In particular, they highlighted a gathering heads of state from governments around the world in September where 17 sus-tainable development goals will be on the agenda for potential adoption, and the 21st meeting of the Conference of the Parties of the U.N. Framework Con-vention on Climate Change (COP21) in December.

“In the United Nations, the jargon ‘sustainable development’ means a ho-listic vision of society that combines economic development, more social inclusion and environmental sustaina-bility,” Sachs said, as he (and the Secre-tary-General, a day later) spoke about how natural disasters affect the poorest economies disproportionately.

“I hope that as you hear of this agenda, this will resonate with the insurance in-dustry. To my mind, it is core to your su-premely important economic function and to the mechanisms and institutional means that this industry knows how to accomplish, that no other industry knows how to accomplish,” Sachs said,

outlining three key insurance activi-ties—modeling, risk management, and investment—where insurers can make a difference.

During his speech, the Secretary-Gen-eral said that “the insurance industry rose to the challenge in last year’s [U.N.] Climate Summit by announcing a com-mitment to double its climate-smart investment by the end of 2015,” refer-ring to a pledge that has the industry committing to put $84 billion in green investments by year-end and to a 10-fold increase in climate-smart invest-ments by 2020. (“2014 Climate Change Summary–Chair’s Summary. We must ensure that commitments made at the Summit are now implemented,” he said.

More broadly, the Secretary-General shared a key economic insight from last year’s Summit about investors generally.

“Investors today do not know wheth-er countries are serious about tackling climate change, or if they are content to allow a high-carbon business with all the risks that climate change imposes on assets and financial instruments. That is one reason why reaching an ambitious climate change agreement in Paris is so important,” he said.

“Government leaders should give correct vision, right direction that this is the place we are going. That is what I am doing as Secretary-General because the United Nations should give clear vision based on science, based on [a] lot of re-search that climate change is happening and there will be a lot of disaster occur-ring.”

“Therefore, we should mitigate and we should adapt …I would invite you to do whatever may be necessary in your business,” he said, adding that he was not expecting any executives to change their business priorities. “We are not forcing you, urging you to do business other-wise … I am asking you to invest wisely in the interest of humanity, in the interest of whole world—our nature, our planet

earth. This is what I am asking you.”“I am giving you clear signals that

the private sector needs to allocate cap-ital to build a low-carbon economy. The insurance industry can be essential in building a more resilient, climate smart economy.”

Saying that insurers and reinsurers won’t divest “is not the same as saying that we can’t make an impact,” McGav-ick said.

“No investment portfolio will be solely in carbon either. These portfolios will be widely diversified across investable sec-tors.

“The critical thing is not to ask are you trying to starve the carbon indus-try of investors—because they will find the other investor quite easily [and] be-cause that’s putting yourself at risk. The question is: are you also investing in other technologies and other pathways so there really are opportunities for the society to change its dependence [on coal, oil, and gas]. That is a much more interesting question, I think, worthy of the industry.”

McGavick advocates a focus on a second question as well. “What are we doing to enable alternative [energy] technologies, to advance on our creation of insurance products that make these technologies more resilient?”

“This is a very interesting path” and XL Catlin and other insurers at the Forum are “certainly investing in the intellectual capital to make these technologies more resilient and affordable and [able to] win their own economic competition with carbon rather than somehow artificially regulating how the industry will invest its assets.” (See related article, “Innova-tion in Bloom at Catlin.)

Contributing to the goal of environ-mental sustainability in a third way, insurers and reinsurers are reducing their own carbon footprints and “also bending our products towards resilience when there is loss,” he said, offering the replacement on fire-damaged non-LEED buildings with LEED construc-tion as an example, referring to a green building certification (Leadership in En-ergy & Environmental Design).

“There are a number of things this in-surance and reinsurance industry can do to move faster towards a less carbon-de-pendent world. But the idea of artificial, self-imposed investment boundaries without government requirement—it just won’t happen. And it would be lit-erally a fiduciary failure of the leadership that did so,” McGavick concluded.

Sachs had other ideas about the indus-try’s potential contributions to a global sustainable development agenda.

“This is the industry that practices the science of risk identification. You mod-el risk. You’ve been there for hundreds of years creating much of the science of probability itself in service of insur-ance. We have growing risks and shift-ing probability distributions of extreme events on the planet.

We have an interaction of technolog-ical and climatological risks. We need the knowledge of this industry to help map these risks, to help them be better known [and] for the industry to speak out, which I haven’t heard very much or certainly not sufficiently on the chang-ing risk patterns coming from anthro-pogenic change, that is human induced change.

He implored insurers: “Explain to the legislature of North Carolina that indeed their sea level is going to rise. That’s going to mean more floods, more storm surg-es, and loss of property values. Explain to the people of the Southwest and the Midwest that indeed mega droughts are on the horizon [that will produce] ca-lamitous losses in agriculture.”

Turning to the industry’s risk manage-ment function, Sachs noted that a core function of the insurance is “to press for good behavior of those who appeal for financial assistance.”

18

“There are a number of things this insurance and reinsurance industry can do to move faster towards a less carbon-dependent world. But the idea of artificial, self-imposed investment boundaries without government re-quirement—it just won’t happen. And it would be literally a fiduciary fail-ure of the leadership that did so.” Michael McGavick, XL Catlin

“I am giving you clear signals that the private sector needs to allocate capital to build a low-carbon economy.

The insurance industry can be essential in building a more resilient, climate smart economy.”Ban Ki-moon, U.N. Secretary-General

Ban Ki-moon

Mike McGavick, XL Catlin



Emmanuel Ibe Kachikwu: The Dawn of Transparent Reform in NNPC

The above inspirational tune by Dr. Emmanuel Ibe Kachikwu, Group Managing Director (GMD), Nigerian Na-tional Petroleum Cor-poration (NNPC) min-

utes after he took over the reins clearly underscores the key importance of his mission and desire to change the story of NNPC along the path of transpar-ency and sustainable contribution to national economic growth.

The appointment of Kachikwu as GMD of NNPC by President Muham-madu Buhari was seen as part of the cleansing process by the new adminis-tration to reform the leadership and op-erations of the Corporation in line with the anti-corruption policy of the federal government.

Analysts and operators in the oil & gas sector believe the move was largely expected given the spate of allegations against NNPC in recent times from various quarters.

Announcing the appointment, Mr. Femi Adesina, Presidential Spokesman

said: “He (Buhari) said he was going to clean up the oil industry. There’s no way he could proceed with the same Board in place.”

Also, the NNPC said in a statement: “This appointment marks the begin-ning of the reforms which will establish the NNPC as corporation which fights corruption and drives growth in the Ni-gerian economy.”

Prior to his appointment, Kachikwu was the Executive Vice Chairman and General Counsel of Exxon-Mobil (Af-rica).

He holds a first class degree in Law from the University of Nigeria, Nsukka (UNN), and the Nigerian Law School. This is in addition to a Masters and Doctorate Degrees in Law from the Harvard Law School, United States.

Kachikwu started his career at the Nigerian/American Merchant Bank and later on to Texaco Nigeria Limited from where he joined Exxon-Mobil. He has over 30 years experience in the en-ergy sector.

Kachikwu hails from Onicha-Ugbo in Delta State.

Emmanuel Ibe KachikwuGroup Managing Director (GMD)Nigerian National Petroleum Corporation

NNPC Towers, Abuja

THE HANDOVER:Dr. Emmanuel Ibe Kachikwu, new Group Managing Director (GMD) of NNPC (R) taking over the reins of office from his predecessor, Dr. Joseph Dawha at NNPC Towers, Abuja.

“I am excited to be taking up this challenge. Being in a position to manage the most important natural resource in Nigeria is a source of pride and responsibility for the NNPC and I am committed to taking this forward and helping the NNPC achieve its potential as a globally competitive national oil company.”


Extended Oil Slump Takes Toll on Global Industry, Economy

As drivers, ship-pers and airlines continue to enjoy lower fuel prices, the oil industry is responding to much lower profits

with sharp cuts in spending and em-ployment that are hurting economic growth.

Low oil and gas prices are good for the overall economy because they reduce costs for consumers and busi-ness. U.S. economic growth was higher in the second quarter, and economists say that was partly fueled by consum-ers spending some of their savings on gasoline at stores and restaurants.

But with oil prices down around 50 percent from last year, major oil companies are cutting back, offsetting some of this good news.

For instance, Exxon Mobil said it cut spending by $1.54 billion in the second quarter, while Chevron an-nounced it is laying off 1,500 workers.

Until about six months ago, boom-ing U.S. oil and gas production was helping the country’s economy grow during a time of economic sluggish-ness.

David Kelly, Chief Global Strategist at J.P. Morgan Asset Management, said this week that a $29 billion decline in oil exploration and mining activity in the U.S. cut economic growth by 0.7 percent in the second quarter, a sizable chunk for an economy that grew 2.3 percent.

Investors also feel the pain. Lower oil profits have an outsized effect on stock markets because the companies are so enormous. Analysts at RBC Capital Markets wrote that when oil prices drop by 10 percent, earnings for the

overall S&P 500 fall by 1 percent.Industry layoffs seem to be accel-

erating. Royal Dutch Shell, while an-nouncing that profits fell 25 percent in the second quarter, said it would cut its global workforce by 6,500. Chevron’s quarterly profit fell 90 percent and CEO John Watson said the company is reducing its workforce “to reflect lower activity levels going forward.”

Layoffs at three of the big oil and gas

Overall, activity in the oil & gas in-dustry across the African continent has slowed in the wake of the declin-

ing oil price in late 2014. “While the oil price has caused

activity to drop, it has also served as a wake-up call to many African governments, which are work-ing hard to pass favourable oil & gas legislation in order to attract investment into the sector,” says Chris Bredenhann, PwC Africa Oil & Gas Advisory Leader.

Countries such as Kenya, South Africa and Tanzania have been taking a serious look at legislation currently in place with a view to making it more investor-friendly.

PwC’s ‘Africa Oil & Gas Review, 2015’ analyses what has happened in the last 12 months in the oil & gas industry within the major and emerging African markets.

As oil prices declined in 2014, the industry response has been

African Oil & Gas Firms Plan for Upturn in Oil Price: PwC Surveyfar-reaching with significant reduc-tion in headcount and other cost cutting measures. Capital budgets have also been cut, and frontier ex-ploration activity has decreased.

“While response to such a drastic decline is necessary, we have seen the most successful organisations are taking time to re-set, re-strate-gise and plan for the upturn in pric-es, which will inevitably come. Afri-ca should be no exception as many of the frontier exploration plays lie on the continent,” adds Bredenhann.

As at the end of 2014, Africa has proven natural gas reserves of just under 500 trillion cubic feet (Tcf) with 90% of the continent’s annual natural gas production still coming from Nigeria, Libya, Algeria and Egypt.

Growth and DevelopmentThe main challenges identified

by organisations in the oil & gas industry have remained largely un-changed with the top three issues of uncertain regulatory framework,

corruption and poor physical infra-structure also identified as the big-gest challenges in 2014.

Uncertain regulatory frameworks remain a concern across the indus-try, with more than 80% of Tanzani-an respondents regarding regulato-ry uncertainty as the top challenge facing the business. Other countries where respondents cited concern about regulatory uncertainty in-clude Nigeria, Kenya and Angola.

The inadequacy of basic infra-structure ranked much higher in the current review than in 2013. Areas in which infrastructure remains lim-ited are likely to see the development of existing discoveries stalled unless there is a domestic need for the re-source.

Organisations identified the price of oil and natural gas as the most significant factor that would affect their companies’ businesses over the next three years. “This is not surpris-ing given the current uncertainty around the market,” says Brenden-hann.

He adds: “Fortunately industry players are looking beyond current prices when planning for the longer term.” The results of the report show that a high 90% of respondents ex-pect the oil price to increase gradu-ally over the next three years.

People skills and skills retention is rated the second most likely fac-tor to impact business over the next three years. Community/social ac-tivism, instability and unstoppable political events, ranked fourth, are a noteworthy concern in the oil & gas industry.

Organisations from South Africa, Mozambique, Nigeria and Kenya, in particular, expected community/social activism/instability and un-stoppable political events to have a significant impact on their business.

Asset management and optimisa-tion also remains a top strategic fo-cus area for oil & gas companies over the next three years.

Financing and InvestingAfter a rush of bidding rounds

in 2014, 2015 and 2016 appear to be comparatively quiet with only a handful of bidding rounds expect-ed. This is partly due to the flurry of bidding rounds in the previous couple of years and a consolidation of these agreements together with the lower oil price and lower inter-est to invest. While it seems that the temporary meltdown is receding, African governments have shifted into gear to promulgate and ratify oil & gas regulations that are intended to encourage the monetisation of assets, while doing away with policy uncertainties.

Although merger and acquisition (M&A) activity was low in 2014/15, around one-fifth of respondents have been targeted, and a third of respondents has targeted or intends targeting companies for acquisition. This suggests that an increase in M&A activity can be expected in the near future.

Forty-one percent of E&P compa-nies said that they would be invest-ing in the development of drilling

Exxon Mobil’s profit fell by half, to its lowest level since the recession of 2009, the company said . Its operations in the U.S. — the centre of the global oil and gas boom — posted its second straight quarterly loss.

“The surprise really was here in the U.S.,” said Brian Youngberg, an Ana-lyst at Edward Jones.

Shares of Exxon and Chevron, both components of the 20-member Dow

Jones Industrial Average, fell 4 percent after they announced results.

The companies are in some ways victims of their own success. A surge in oil and gas production brought on by technological advances and high prices in recent years has flooded the market, sending global prices sharply lower.

But geopolitical forces have also increased the pressure on prices. Ira-nian oil is poised to return the world market after years of sanctions, the Greek debt crisis is reducing econom-ic growth in Europe and a shake-up in Chinese financial markets is reducing demand growth in the world’s second largest oil consumer.

After nearly four years near $100 a barrel, the price of oil began slumping a year ago, falling to $43 by March. It surged briefly all the way to $61 in June, but then fell again. Oil traded just above $47 a barrel on Friday.

That has translated to sharply low-er fuel prices. The U.S. average retail price of gasoline through the first half of the year was 30 percent lower than during the same period last year. The national average was $2.67 a gallon, 85 cents lower than last year at this time, according to AAA.

Retail prices for diesel and heating oil have averaged 27 percent lower than last year, and airlines have posted some of their highest profits in years thanks to lower jet fuel prices.

These low prices, along with the pain for the oil industry and pleasure for consumers, are likely to continue for a while, analysts say. There is plenty of oil in storage tanks and the global oil industry has the capacity to produce more if demand picks up.

service companies are near 60,000 af-ter two of them, Halliburton and Bak-er Hughes, revealed further layoffs in quarterly filings last week.

BP CFO, Brian Gilvary told in-vestors that the company has been cutting workers “and I think you’ll see more of that before we get to the end of the year.” BP’s oil and gas profit dropped 64 percent from April through June.


21

More Light with Less Energy: How Energy Efficiency Can Fast-Track Energy Access Goals

African Oil & Gas Firms Plan for Upturn in Oil Price: PwC Survey

Nothing helped solar electricity kits for homes succeed in Bangladesh as much as the light emitting diodes (LEDs) peo-

ple used with them.The more energy efficient lighting

source coupled with the easy-to-use solar kits led to longer, more relia-ble periods of electricity supply at a much lower cost. That meant 18.5 mil-lion Bangladeshis have been able to adopt the combination to power their homes.

The programme also serves as an example of how factoring energy ef-ficiency considerations into develop-ment projects can help accelerate ef-forts to make modern energy services available to those who need it most.

A new report entitled “EA + EE: Enhancing the World Bank’s Energy Access Investments Through Energy Efficiency,” identifies this nexus be-tween energy efficiency and energy access. The report, which examined eight recent World Bank energy access projects, also recommends ways in which energy efficiency measures can amplify the impact of future projects that aim to achieve universal energy access. That boost could be critical to achieving Sustainable Energy for All’s (SE4All) objective of making re-liable, affordable electricity available to everyone in the world by 2030.

Currently, about 1.1 billion people globally don’t have access to electricity. That puts them at a significant eco-nomic and social disadvantage. Lack

or exploration programmes, which is significantly lower than in 2014 when 70% reported this as a key strategic focus.

Combatting Fraud and

CorruptionOver 98% of organisations indicat-

ed that they have an anti-fraud and anti-corruption programme in place – of these, more than 60% believe that the programme is very effec-tive at preventing and/or detecting fraud. Only 8% of respondents indi-cated that they did not have a com-pliance programme.

Over 43% of respondents indicat-ed that fraud and corruption would have a severe effect on their busi-nesses. Government officials con-tinue to be implicated in a number of fraudulent activities across the continent.

Recent research conducted by PwC shows that bribery and pro-curement fraud remain some of the top types of economic crimes in the broader energy, mining and utilities

sectors. Despite pervasive fraud, some

governments around the continent have made significant efforts to in-crease transparency in the industry.

SustainabilityUnder the current economic

climate, oil & gas companies are looking to increasing production potential through improving effi-ciencies and operational excellence. In addition, they are also looking to-wards exploration and finding new resources as an alternative for sus-tainability.

A vast majority of respondents (71%) reported that they will be looking at formal cost reduction measures in the next three years. In as much as businesses are consider-ing other measures to ensure their sustainability over and above mon-etising natural resources, they are also expecting the commodity price to increase in the future.

And despite development in re-newable and alternative sources of

energy across Africa, respondents do not expect demand for these to have a significant impact on oil & gas businesses over the next three years.

Regulatory FrameworkThe presence of an uncertain reg-

ulatory framework is one of the big-gest issues in developing the oil & gas business in Africa. South Africa’s uncertain regulatory framework for the oil & gas industry is mainly due to unclear and overlapping mandates between the Government and state-owned companies. Furthermore, the enforcement of the Minerals and Petroleum Resources Development Act (MPRDA) has raised a number of compliance challenges in the in-dustry, primarily resulting from new requirements directly introduced by the Act.

Fit for $50 Organisations expect the Brent

crude price spread to shift up over the three-year period, although, if

it remains within a US$30 band, it will be reasonably consistent. A high 93% of respondents expect a price range of US$50 – 80 in 2015; 90% of the respondents expect a price range of US$60 – 90 in 2016; and 87% of the respondents expect a price range of US$60 – 90 in 2017.

The volatility and, in particular, low oil price have been highlighted as the most important factors af-fecting the industry, with more than 50% of E&P and non E&P compa-nies expecting price fluctuations to have a high or very severe impact on their businesses.

Respondents are also uncertain about what to expect with acreage/licence acquisition costs. Just over a third (36%) believes acreage costs will increase, especially in Kenya and Mozambique. Respondents in developed markets such as Nigeria and Angola expect acreage costs to decrease as potential reserves valua-tions are affected by the oil price.

Furthermore, the results of the survey show that there is an expecta-

tion that the competitive landscape is likely to undergo change, with more than 50% of respondents sharing this view.

“The oil price decline, skills shortages and uncertain regulatory frameworks have put the oil & gas industry on the African continent in dire straits. The combined effect of these challenges places an in-creased burden on exploration ac-tivity and economies heavily reliant on oil & gas revenue, which may have far-reaching socio-economic impacts as a result.”

“With activity reduced, this is an ideal time for companies to address the challenges related to doing business in Africa. Strategic planning is required for continued, profitable presence on the conti-nent. The players that emerge when the oil price rebounds are going to be agile engines that are ready to take on the market,” concludes Bre-denhann.

of electricity means children cannot study at home, productive hours for adults are cut short and women and children often cannot go out inde-pendently at night where there are no street lights.

Technology like solar home systems, small wind turbine systems and re-newable mini- and micro-grids can help change that. On the supply side, greater energy efficiency means there is more electricity to deliver to a larger number of households and businesses.

Besides being considerably more energy efficient than traditional fuels, it is also one of the best ways to take electricity supply to people who are not serviced by traditional grid supply.

Such “off-grid” solutions can be cost-effective and reliable and serve as an intermediate solution for those waiting for grid-based electricity sup-ply. The report recommends ways for the World Bank to maximise the im-pact of future energy access projects.

Those include making energy effi-ciency a cornerstone of projects, com-municating the benefits of the nexus between energy efficiency and energy access and setting tangible project in-dicators and targets and developing tools to help countries procure more energy efficient products.

The report also recommends re-thinking subsidised energy tariffs, ed-ucating consumers on energy efficient behaviour and prioritising markets where market structure does not cur-rently exist to take advantage of ener-gy efficiency as part of energy access work.


R. David Ranson

The collapse of crude oil prices in 2014 was a big surprise, but popular expla-nations quickly cir-culated. Most attrib-uted the collapse to

changes in supply and/or demand.It is true that a shift in supply

or demand will change prices in any market; however, not all mar-ket-price movements are necessarily due to a change in market supply or demand — especially in the case of prices for commodities as highly po-litical as crude oil.

Public policy-makers may in-tervene in oil markets in pursuit of national economic or security goals. Although most economies are “price-takers” in world commodity markets, major economic powers like the United States can dramat-ically influence world prices when

Special Report: The Changing Price of Oil Relative to Gold

Trend-reversion in Oil Prices

The long historical tendency for the price of crude oil to parallel the price of gold and other precious metals is well known. Historically, an equally weighted index of gold, silver and platinum has worked as a valuation indicator for oil.

However, silver and platinum pric-es plunged during the 2008 reces-sion, making gold a better long-term

benchmark.

Law of Diminishing Returns

Figure I shows that oil prices have increased more rapidly than gold over time. Since 1946, the cu-mulative difference in annual price growth was only 0.4 percent, includ-ing the 2014 collapse in prices. As a whole, the trend is toward an aver-age annual increase in the oil-gold price ratio through 2014 of 1.1 per-cent (compounded).

The long-term increase is attribut-able to the slowly increasing scarcity of crude oil according to the Law of Diminishing Returns.

In this sense, “scarcity” refers to the fact that the marginal cost of bring-ing to market deposits of raw ma-terials in the earth’s crust naturally rises as the most accessible reserves are used up first. But as a measure of scarcity, the oil-gold ratio is a relative matter; the cost of exploiting crude oil reserves has risen faster than the cost of exploiting gold reserves.

Market forces also govern the rel-ative flow of capital into the oil and gold mining industries. When the price of oil is high relative to gold, it is more profitable for capital to flow toward the oil industry than gold mining, increasing its relative supply and putting downward pressure on its relative price.

So the oil-gold price ratio should be expected to converge over time, as indeed the table shows it does. However, movement back to equi-librium appears to be asymptotic and not very fast. It takes about two years to half-close the gap between the actual price-ratio and the norm toward which it converges.

Current Outlook for the Price of Oil

The long-term tendency for the oil-gold price ratio to increase can be seen clearly in the monthly histo-ry shown in Figure II

A best-fit upward-sloping straight line indicating the trajectory toward which the price ratio between West Texas crude and gold tends to con-verge gives us an estimate of 0.075 for the equilibrium oil-gold price ratio as of mid-2015, compared with an actual ratio of 0.045 given a cur-rent crude oil price around $49 and gold around $1,100. That implies an equilibrium price of $82 for West Texas crude, or a discount of about 40 percent.

ConclusionIf it takes two years to half-close

the gap in current oil prices com-pared to the equilibrium price sug-gested by the table, it would be rea-sonable to expect the price of crude to rise at an annual rate of about eight dollars a barrel over the next 12 months.

•R. David Ranson is a Senior Fel-low with the National Center for Policy Analysis and President of HCWE Inc.

they have a compelling reason to intervene.

Infact, the more volatile the mar-ket, the more public policy initia-tives are likely to be at work, whereas shifts in supply or demand tend to take place more gradually.

Longer term trends in the price of oil also reflect cumulative changes in the purchasing power of the dollar. Looking at oil prices relative to gold prices instead of U.S. dollars takes account of the long-term decline in the value of the dollar and allows us to recognise more clearly the effect of supply, demand and public-poli-cy factors that influence the price of petroleum.

Declining Oil PricesThe 2014 price decline was unu-

sually deep, as Figure I illustrates. Although oil prices jumped by well over 100 percent within a few months in both 1973 and 1979, ex-treme price declines are less usual.

As shown in Figure I, however, the picture is fairly symmetrical when it is plotted on a ratio scale.

•It took a major world recession to cut the price of oil in half in 2008.

•Prices took time to rebound as the world economy recovered.

•It took two-and-a-half years for West Texas crude to recover its preplunge price level of September 2008.

Capital Marketwww.businessjournalng.com

Business Journal April 27 - May 03, Business Journal August 10-16, 2015

23

158 Investors to Receive N42.2m Compensation from NSE

The Board of Trus-tees of the Investors’ Protection Fund (IPF or Fund) of The Nigerian Stock Ex-change (NSE or The Exchange) has an-

nounced that it will, pursuant to Part XIV of the Investment and Securities Act 2007 (ISA), compensate a total of 158 claimants for pecuniary losses suf-fered by them as a result of wrong do-ing by certain dealing member firms of The Exchange.

The IPF is a statutory fund estab-lished pursuant to Section 197 of the ISA to compensate investors who suf-fer pecuniary loss arising from:

•The revocation or cancellation of the registration of a dealing member firm by the

Securities and Exchange Commis-sion (SEC)

•The insolvency, bankruptcy or neg-ligence of a dealing member firm of The Exchange;

•Defalcation committed by a deal-ing member firm or any of its direc-tors, officers,

•Employees or representatives in relation to securities, money or any property entrusted to, or received or deemed received by the dealing mem-ber firm in the course of its business as a dealing member firm.

These 158 claimants due to be com-

NSE Wins 2015 Financial Institution of the Year Award

The Nigerian Stock Ex-change (NSE) has re-ceived the 2015 Finan-cial Institution Award from The Oil & Gas Year (TOGY) Nigeria.

The award was presented to The Ex-change at The Oil & Gas Year Nigeria Award ceremony, an annual event held to celebrate individuals and institutions

Oscar OnyemaCEO, Nigerian Stock Exchange

who have distinguished themselves in their areas of specialisation.

According to the organisers of the event, this award is being conferred on the NSE in recognition of its first-ever dual listing with the London Stock Ex-change through the $500 million Initial Public Offering (IPO) of Nigerian inde-pendent hydrocarbons company, Seplat Petroleum Plc.

The listing was the largest European IPO of an exploration and production company since the 2008 financial crisis.

With almost 50 per cent of locally sourced capital and more than 65 per-cent of trading volumes done on the Exchange, the role of capital markets in advancing local oil and gas firms is clear.

“We at The Oil & Gas Year Nigeria 2015 (TOGY), recognise your relentless

efforts to support Nigeria’s indigenous companies and your involvement in some of the most prominent deals, it is an honour to give you the Financial In-stitution of the Year award”, the organis-ers added.

Commenting on the award, Mr. Oscar N. Onyema, the Chief Executive Officer, NSE, said:

“We are delighted and humbled to

receive this important recognition for the ground-breaking transaction. This award affirms that Lagos and London capital markets are truly in partnership to facilitate more dual listing in both markets. I am confident that this award will encourage more listed companies to leverage our partnership to access cap-ital. The award is a tribute to the effort and passion of the great teams at Seplat, The Nigerian Stock Exchange and Lon-don Stock Exchange who collaborated to make the transaction a reality”.

On November 18, 2014, The Nigerian Stock Exchange (NSE) signed a capi-tal market agreement with the London Stock Exchange Group (LSEG) to jointly promote the development of the Lagos and London capital markets.

The agreement supports African com-panies seeking dual listings in both mar-kets and follows the implementation of a new settlement process between the United Kingdom and Nigeria.

Subsequently, the two exchanges co-hosted a one day capital market di-alogue themed Lagos: Capital Markets in Partnership, on June 22, 2015 at the London Stock Exchange.

The NSE led a strong team of cor-porate finance experts, lawyers, capital market operators, regulators and com-panies keen to explore a London/Lagos dual listing to the event.

pensated are investors whose claims were verified by The Exchange, ap-proved by the Board of Trustees of the IPF, and whose identities were verified by an identity verification consultant engaged by the IPF.

The claimants were found to be eli-gible for compensation in accordance with the relevant provisions of the ISA and the Investors’ Protection Fund Rules (the Rules).

The Board of Trustees, in accord-ance with the Rules of the Fund set a maximum compensation amount of N400, 000.00 (Four Hundred Thou-sand Naira) per claimant.

The total amount approved by the Board of Trustees as compensa-tion payment to the 158 investors is N42,227,397 (Forty Two Million, Two Hundred and Twenty Seven Thou-sand, Three Hundred and Ninety Sev-en Naira).

These 158 investors are being com-pensated for defalcation committed by 29 dealing member firms of The Exchange who are either inactive or have been expelled as members of The Exchange.

Mr. L. Fubara Anga, the Vice Chair-person of the Board of Trustees said: “it has been a long, rigorous and trans-parent process getting to this stage. We researched global best practices and based on our findings, we took deci-sions on various issues regarding the

IPF, benchmarking our processes and procedures against other international investors’ protection funds. First of all, we put in place an appropriate corpo-rate governance structure for the Fund; we adopted Rules for the IPF and then following transparent and auditable selection processes, we appointed au-ditors as well as identity verification consultants. We then commenced the process of identifying claimants and verifying their claims. We must thank the claimants for their patience.”

Mr. Oscar Onyema, Chief Executive Officer of the NSE, who is also a Trus-tee of the IPF said: “This milestone gives me great pleasure as it affirms our commitment to the continuous development of initiatives that will bolster confidence in the capital mar-ket. Though the compensation pay-ment may not be a complete restora-tion, it is a show of good faith on our part to investors. I thank the Board of Trustees for their guidance and com-mitment, the claimants for their valu-able patience, and all other stakehold-ers for their contributions towards the success of this exercise.”

Ms. Tinuade Awe, the Head of Legal and Regulation at The Exchange and Acting Secretary to the Board of Trus-tees, explained that “the IPF will duly advise all 158 claimants about the pro-cesses to receive their compensation payments.”

24

Diani Beach

Less than a year after opening terminal 1D, Jomo Kenyatta Interna-tional Airport (JKIA) unveiled its gleaming new International terminal 1A in February

of this year. It marked the completion of a sig-

nificant project which has increased the capacity of the airport by around 2.5 million passengers annually. The recent investments are expected to boost the airport to handle seven mil-lion passengers this year compared to 6.5 million last year, making one of Africa’s ten largest airports.

JKIA is key to Kenya’s growth as an economic hub, helping to support the rising foreign investment into the country and the millions of tourists that visit annually. The new terminal has been redesigned to cope with increased traffic from additional in-ternational flights that are due to start later this year.

June saw the announcement of new connections to China and Europe,

Magical Kenya: The Gateway to East Africa

with Lufthansa announcing four new flights a week from Frankfurt to Nai-robi due to begin in October of this year, increasing to five flights a week from December, and China Southern scheduled to add three flights a week to the Nairobi-Ghangzouh route, which is currently served by Kenya Airways.

The new terminal includes new international lounges for Kenya Airways, both fully modernised and ready to accommodate the growing number of business travellers, but this is by no means the end of the planned growth and redevelopment for JKIA.

The region is seeing steady increas-es in its demand for traffic, and the Kenyan Government has commit-ted to the construction of a further terminal - Terminal 3 - which is on target for completion in 2018. This is an even larger project, and is set to increase capacity by up to 20 million passengers per year, bringing the total capacity to around 27.5million passengers by 2019.

This sharp increase in capacity

growth at JKIA is also sparking growth in demand for domestic flight capacity. As a result, Kenya’s govern-ment is also investing in Kisumu Air-port on the shores of Lake Victoria, the island destination of Lamu, and Ukunda on Kenya’s Indian Ocean coastline, to ensure that these airports are also ready to accommodate the expected traffic increases.

Migration: The Greatest Show on Earth

Around 208,000 tons of migrating wildebeest have begun their long march north heading for the rich and fertile plains of Kenya’s Masai Mara.

Billed as the World’s Seventh Natu-ral Wonder, the wildebeest migration is made up over 2 million wild ani-mals with around 1.3 million wilde-beest and other herbivores including gazelles and zebras who are all closely followed by predators - lions, hyenas, leopards, jackals — as they make the long and dangerous trek from drier lands in Tanzania, northwards to the Masai Mara.

Currently heading north towards Kenya’s border as a number of sepa-rate herds, the mass will congregate on the banks of the Mara River providing visitors with the most spectacular show on earth.

As the river gushes from Kenya’s Masai Mara Game Reserve into the northern Serengeti, the frantic herds dither undecided at the edge of the river, which is teaming with hungry crocodile. Finally the weight of the herd becomes too great and the leap of faith begins.

Nowhere in the world is there a movement of animals as immense as

the wildebeest migration. While it has no official start date it is influenced by the weather cycles of the seasons, and is generally agreed to begin with the birth of 300,000 baby wildebeest with-in a two to three week period. The massive herd then moves around the Serengeti-Mara ecosystem in constant search for grazing and water.

The migration moves through a number of Kenya’s wildlife reserves, notable Enonkishu, Mara Naibosho, Mara North, Ol Kinyei and Olare Motorog.

For those keen to see this spectacle, these reserves offer top class facilities


Best of Beach

Watamu Beach

Che Chale Beach

White Rhino

Travel•TourismBusiness Journal August 10-16, 2015

25

from which to witness the migration, and travellers can rest assured that their visit will help to support the protection of the animals that pass through on their journey to the Masai Mara.

On the brink of extinction, their custodians in conjunction with the Kenya Wildlife Services (KWS) are working hard to reverse the clock for these gentle giants and do everything in their power to save the Northern White Rhino through a rhino-breed-ing project.

Sudan, Najin and Fatu were trans-located to Ol Pejeta Conservancy from Dvur Kralove Zoo, in the Czech Republic in December, 2009 in an attempt to save the species.

The conservancy is undertaking the Northern White Rhino’s breeding project as part of a global effort with experts involved from around the world. It is no straight forward task. Fatu, the youngest rhino cannot bear calves.

And although there is hope that her mother, Najin, may be able to conceive, sadly her weak hind legs would make it difficult to carry the pregnancy. As a result, the breeding project is working on an In Vitro Fertilisation (IVF) solution using a Southern White Rhino as a surrogate mother.

The only way now to ensure the survival of the northern white rhino subspecies is to raise funds to support these assisted reproduction methods, which are extremely expensive. A number of fundraising initiatives have been initiated to support the IVF treatment including the GoFundMe, which has raised over £70,000.

Companies in Kenya and beyond have also stepped up to support the ongoing efforts with the latest being the national airline Kenya Airways and Serena Hotels. Their efforts include boosting tourist numbers vis-iting the conservancy to raise aware-ness of the animal’s plight and support driving awareness of the cause.

Ol Pejeta Conservancy also plays a huge role in the preservation of other rhino species. Visitors do not only have the opportunity to support Sudan, Najin and Fatu - the Conserv-ancy is also East Africa’s Largest Black Rhino Sanctuary, home to 106 black rhinos and also to 23 Southern White Rhinos.

The Best of BeachesDreaming of endless white beaches

and crystal blue Indian Ocean waters? Looking for some space to relax and be inspired by nature? Kenya might not have been the first thought that comes to mind, but its Indian Ocean coastline provides just that experi-ence.

Diani BeachVoted one of Africa’s most idyllic

beaches and the world’s 22nd best beach according to tripadvisor.com, Kenya’s Diani beach, situated on the south coast of Kenya, is a tropical paradise. Located 30 kilometers from Mombasa, Diani offers resorts, spas and hotels that pride themselves on delivering Kenya’s world famous hospitality.

The pearly-white sands of Diani, blend into the turquoise warm waters of the Indian Ocean with beautiful sand bar islands appearing at low-tide to escape to by traditional dow boat; a perfect backdrop of tranquility.

Watamu BeachNorth of Mombasa are the similarly

enticing serene white beaches of Wat-amu, whose unique coral formation coastline slides gently into the shallow, turquoise water, that form part of the protected Malindi Marine Reserve Park.

The marine park is an important breeding ground for green and hawksbill turtles and is considered one of the East Africa coast’s best diving areas. The distinct white sand on these beaches is due to the unique protection of the coastline provided by the coral reef. It keeps seaweed at bay and the basis for the variety of sea life required to produce the clean fine ‘flour’ sand and sparkling clear water.

Che Shale BeachFor those that are looking for a

more active holiday experience then the strong coastal winds and low tides at Che Shale provide excellent Kite and Windsurfing conditions.

With an average of 300 days of wind a year, Che Shale offers kite surfers of all levels well established courses to improve their skills. But the location doesn’t only cater for thrill seekers.

The Che Shale hotel is the only ho-tel catering for a 5km stretch of beach, so those seeking a secluded and quiet location are also drawn to the area.

Saving the White RhinoNajin, Fatu and Sudan are three of

the last four Northern White Rhinos left in the world.

Sudan is the only remaining male and at the age of 42, Sudan’s clock is ticking - the life expectancy of a rhino is 40.

Sudan, Najin and Fatu reside with 24-hour protection at Ol Pejeta Conservancy, which is East Africa’s largest rhino sanctuary, located on the Kenyan equator.

Political Economywww.businessjournalng.com

Business Journal April 27 - May 03,

26

How Nigerian Politics Rivals Nollywood for Drama

In our series of letters from African journalists, novelist and writer, Adaobi Tricia Nwaubani looks at why Nigerians are hoping to be entertained by a crackdown on corruption.

Two major industries in Nigeria share similar elements of melodra-ma and wildly implausible plots - films and politics.

Films produced by Nollywood, Nigeria’s version of Hollywood, have uncomplicated titles and themes that tell all you need to know, such as Love Me or I Die, Festival of Blood and Mother-in-law Attack.

But if you want thrill and sus-pense or intrigue, the place to turn to is the equally lucrative political industry.

In January 2012, for example, the Nigerian National Assembly set the stage for a new blockbuster that kept viewers riveted for months.

Nigerians had never before heard anything as brazen. Between 2009 and 2011, we were told, a number of local oil and gas companies had obtained government subsidies totalling $6.8 billion (£4.3bn) for fuel they never delivered.

Daily on live television, the investigating committee headed by MP Farouk Lawan did more than expose the scam. The committee named names.

At the conclusion of the pro-ceedings, Mr. Lawan received an ovation from his fellow legislators for such excellent and thorough work.

“The late Obafemi Awolowo, a statesman who played a key role in Nigeria’s independence movement, once described government in the West African state as a ‘few holding the cow for the strongest and most cunning to milk’”

Enter billionaire oil magnate, Femi Otedola. His two companies had been named by the committee.

Publicly, Mr. Otedola denied the allegations. He accused Mr. Lawan of having included the names of his companies on the list solely for the purpose of soliciting a bribe from him - alleging the MP would have erased the names from the list once he received payment.

The price for such consideration on Mr Lawan’s behalf? $3m.

Mr Otedola revealed that he had

already paid about $500,000 of the total bribe demanded. He had also, he said, videotaped the entire transaction secretly.

Nollywood 2.0In one alleged scene described by

Reuters news agency, Mr Lawan, dressed in a traditional long “agba-da” shirt and cap, is seated beside Mr Otedola, sorting through a huge pile of dollar bills. After-wards, he fills his pockets until they overflow, and then stuffs the rest of the money into his cap.

It all seemed very Nollywood 2.0.Mr Lawan was then charged in

court with soliciting from the oil tycoon. He denied the charges and calmly maintained the same righteous poise.

“I believe in the end,” he said, “Nigerians will come to believe and see that for the 13 years I have invested in championing good gov-ernance, responsibility and probity in this country, that this last trial is a trial from God, and I believe in the end we shall prevail.”

He did - completing his tenure in the House in June 2015. The issue soon vanished into the Bermuda Triangle of Nigeria’s many highly publicised corruption scandals.

Adaobi Tricia Nwaubani

Femi Otedola

Nollywood films are a big hit in many African countries

Mr. Otedola is still supplying fuel and the alleged $500,000 paid to Mr. Lawan has also not been retrieved.

So Nigerians still do not know

whether Mr. Otedola was guilty of fuel subsidy scamming or if he was the victim of extortion. Perhaps, this shall be revealed in a Part Two.

This is just a snippet of corrup-tion in Nigeria. During her tenure as US Secretary of State, Hillary Clinton, in a report on global human rights in Nigeria presented to the US Congress, expressed utter astonishment at the depth and

breadth of corruption in Africa’s main oil producer.

She described the three tiers of the Nigerian government as riddled with “massive, widespread and pervasive corruption”.

The late Nigerian Obafemi Awolowo, a statesman who played a key role in Nigeria’s independ-ence movement, once described government in the West African state as a “few holding the cow for the strongest and most cunning to milk”.

Femi Otedola is a wealthy oil deal-er and denied the allegations made by Farouk Lawan

Many Nigerians, and concerned observers around the world, have now placed their hopes for an end to all these shenanigans on Muhammadu Buhari, Nigeria’s new president.

They insist that his reputation as a disciplinarian and his austere lifestyle will do the trick. They believe that his historic election in March marks the beginning of a revolution that will sweep corrup-tion away from Nigeria.

The media has already begun tantalising viewers with teasers with headlines such as “Buhari to Revisit $182m Halliburton Bribery Case”, “Buhari Vows to Probe ‘Missing’ NNPC $20bn” and “Buhari Tracks Stolen Funds to US, UK, Switzerland”.

If indeed President Buhari goes ahead to conduct these investiga-tions, the country may very well be on the verge of cementing its star on the walkway of global entertain-ment.

Nigerians at home and abroad can hardly wait for the cameras to begin to roll.

Letterfrom

“The late Obafemi Awolowo, a statesman

who played a key role in Nigeria’s independence

movement, once described government in the West African state as a ‘few holding the cow for

the strongest and most cunning to milk’”


27

China Unveils $50m Trust Fund to End Poverty, Promote Dev

World Bank G r o u p President, Jim Yong Kim has p r a i s e d China for

its growing role in global development in meetings with Premier Li Keqiang and other senior leaders including Finance Minister Lou Jiwei and Gov-ernor Zhou Xiaochuan of the People’s Bank of China.

President Kim who visited China recently had a far reaching discussion with Premier Li Keqiang on the global economy, development finance and China’s health reforms.

In a separate meeting, Kim and Finance Minister, Lou Jiwei signed an agreement to establish a $50 mil-lion fund to help reduce poverty. The World Bank President also met with leaders of the Multilateral Interim Sec-retariat for Establishing the Asia Infra-structure Investment Bank (AIIB) to discuss closer collaboration.

These initiatives reinforce the grow-ing partnership with China, which al-ready is the Bank’s third-largest share-holder and an important contributor to IDA, the institution’s fund for the poorest, as well as the Global Infra-structure Facility.

“China is a strong partner in develop-ment and a strong partner for the World Bank Group, and we share the commit-ment to ending poverty and boosting shared prosperity,” said President Kim. “I look forward to a continued strong, cooperative, and productive relation-ship, which will benefit developing countries around the world.”

The trust fund, which is expected to start later this year, aims to enhance the co-operation between China and the World Bank Group and leverage financial and knowledge-based re-sources to help developing countries

achieve inclusive and sustainable de-velopment.

It will finance investment projects, operations, knowledge development and human-resource cooperation at both global and regional levels.

“The establishment of this trust fund signals that our partnership with exist-ing multilateral development banks is growing, even as we support new ones. We will continue to partner with the World Bank in fighting poverty and promoting development around the world,’ said Minister Lou.

During his two-day trip to China, President Kim also met with Secre-tary General Jin Liqun of the AIIB Multilateral Interim Secretariat, who has been nominated by the Chinese government to be the bank’s Presi-dent-designate. Both agreed to ex-pand their cooperation and explore opportunities for joint financing of projects in the coming months. The prospective founding members of the AIIB signed the Articles of Agreement last month and the bank is expected to be operational by the end of the year.

“I congratulate Secretary General Jin Liqun and all prospective founding members on the great progress made in establishing the AIIB,” said Presi-dent Kim. “More funding for infra-structure will help the poor, and we are pleased to be working with China and others to help the AIIB hit the ground running.”

Secretary General Jin said: “Since

the establishment of the Multilateral Interim Secretariat last November, the World Bank has been very generous in sharing its expertise, lessons of experi-ence and global good practice knowl-edge with the Secretariat. We plan to identify projects for possible co-fi-nancing in the fall. Based on my time at the World Bank as an Alternate Ex-ecutive Director, I am fully confident that such close cooperation between the Banks will lead to improved lives for citizens of our Member countries.”

The AIIB Multilateral Interim Secre-tariat and the World Bank are already working together, having exchanged views on matters such as institutional governance, organisational structure, social and environmental safeguards and procurement procedures.

While many global companies are ex-panding, or seeking to expand in Africa,

the availability and retention of tal-ent is proving to be one of the main challenges facing growth and ex-pansion on the continent.

According to Lebo Tseladimitlwa, VP of Human Resources at DHL Express Sub-Saharan Africa, talent is perceived to be one of the major challenges facing business leaders in the region, with 83% of African CEOs admitting that they are espe-cially worried about availability of key skills on the continent.

Tseladimitlwa says that in addi-tion to this statistic, the PwC Africa Business Agenda report also reveals that most CEOs expect to increase

Employers Responsible for Developing Talent in Africa

World Bank Group, President Jim Yong Kim (L) and China’s Finance Minister, Lou Jiwei

and maintain staff head-count in the next year.

“In Africa’s competitive labour environment, these statistics high-light that attracting and developing the right skills is crucial.”

Tseladimitlwa adds that it is therefore important to adopt lead-ership styles which will support and nurture the skills and talent need-ed for growth. “Essentially, talent will no longer be the main concern when it comes to employees’ skill-sets, but rather the leader’s ability and responsibility to teach and de-velop these skills.”

She adds that a recent EY survey reported that while managers in Africa are perceived to be perform-ing well at day-to-day operational activities, they are considered to be

less capable when it comes to peo-ple management, especially in rela-tion to retention, productivity and engagement.

“Globally, it is reported that only one in five companies are providing additional training and develop-ment to existing staff, proving that employers are not doing enough to address talent shortages. In Africa, these efforts are likely to be signif-icantly less when compared to the rest of the world, and therefore in-tensifies the need for programmes to be implemented.”

“‘Motivated People’ forms part of our global FOCUS strategy pillars, ensuring that we provide great service quality which results in loyal customers and ultimately a profitable network. We consider

our Employee Engagement pro-grammes to be critical to our busi-ness success.

Understanding the need to drive a common culture across 220 coun-tries and territories, we launched a Certified International Specialists (CIS) learning and development programme for all 3,500 staff in DHL Express Sub Saharan Africa. Everyone from the Global CEO to a Courier in any country has gone through this training programme reinforcing our core competencies as an organisation.

CIS training has been central to our staff retention and development globally. Certified International Manager (CIM) is an extension of CIS, and is focused on ensuring that we have leaders with the cor-

rect balance between IQ and EQ to lead tomorrow’s workforce. Each module targets various behaviours and leadership practices; for ex-ample, CIM1 is centred around respect-focused behaviours and getting results without comprising respect.”

“In addition to our employee recognition programmes, we also have an internal development pro-gramme called Made in Africa, that produces a sustainable and dy-namic list of future leaders that can succeed Africa Management Board positions, Country management positions and senior functional roles. The programme reduces the historical dependency on expatriate imports, and improves skills of the talent pool.”


28Business Journal August 10 - 16, 2015

Inside the $12bn Global Initiative to End Maternal, Child Mortality by 2030

The United Nations, the World Bank Group, and the Governments of Canada, Norway and the United States joined country and

global health leaders have launched the Global Financing Facility (GFF) in support of Every Woman Every Child.

They also announced that $12 bil-lion in domestic and international, private and public funding has already been aligned to country-led five-year investment plans for women’s, chil-dren’s and adolescents’ health in the four GFF front-runner countries of the Democratic Republic of the Con-go, Ethiopia, Kenya and Tanzania.

Launched at the Third International Financing for Development Confer-ence, the GFF is a key financing plat-form in support of the United Nations Secretary-General’s Global Strategy for Women’s, Children’s and Adoles-cents’ Health and the Sustainable De-velopment Goals.

At the launch, the World Bank Group announced a new GFF part-nership with its International Bank for Reconstruction and Development (IBRD) to raise funds from capital markets for countries with signifi-cant funding gaps for reproductive, maternal, newborn, child and ad-olescent health (RMNCAH). This ground-breaking partnership expects to mobilise between $3 to $5 dol-lars from the private capital markets for every $1 dollar invested into the GFF. The Government of Canada is jumpstarting this initiative with a $40 million investment towards two focus areas: one that prioritises strengthen-ing front-line health systems and scal-ing-up of community health workers, and another that focuses on the con-trol of malaria to reduce child mortal-ity.

The Bill & Melinda Gates Founda-tion, Canada, Japan, and the United States announced new financing com-mitments totalling $214 million. This is in addition to commitments previ-ously made by Norway and Canada of $600 million and $200 million, respec-tively, to the World Bank Group-man-aged GFF Trust Fund.

The GFF has set in motion an un-precedented movement among coun-tries, United Nations agencies and multi-lateral agencies including the World Bank Group, the Global Fund to Fight HIV/AIDS, Tuberculosis and Malaria, and Gavi, the Vaccine Alliance, as well as public and pri-vate sector financiers and civil society organisations, to increase and align funding in support of countries’ health priorities and plans, to drive trans-formative improvements in the health of women, children and adolescents everywhere. The announcement is a first step to help close the $33.3 billion annual funding gap for RMNCAH.

The GFF partners also announced the next group of eight countries to benefit from the GFF, with the goal of supporting 62 high-burden low- and lower-middle income countries with-in five years. The GFF is adding Bang-ladesh, Cameroon, India, Liberia, Mozambique, Nigeria, Senegal and Uganda as the second wave of GFF countries.

New GFF-IBRD Partnership to Leverage Private Sector In-vestments for Maternal, Child and Adolescent Health

A key aim of the GFF is to mobilize private sector resources that, in addi-tion to public sector resources, help close gaps in the financing of essential interventions required to improve the health of women, children and ado-lescents. To this end, the GFF is part-nering with the World Bank Group’s IBRD to raise funds from capital markets for countries with significant funding gaps for RMNCAH.

The IBRD finances its lending ac-tivities by issuing bonds in the capital markets, leveraging its equity to bring in private sector financing for sus-tainable development. The new GFF-IBRD partnership will mobilise the capital markets for better outcomes for maternal child and adolescent health, by using the overall IBRD funding platform, issuing Sustainable Devel-opment Bonds with a health focus, and designing innovative risk-sharing structures.

The Government of Canada’s $40 million investment to jumpstart this partnership and leverage fund-ing from private capital markets will be directed toward investments in two focus areas: one that prioritizes strengthening front-line health sys-tems and scaling-up of communi-ty health workers, and another that focuses on the control of malaria to reduce child mortality. These monies will be used as performance payments to countries, due upon the achieve-ment of agreed-to outcomes, signifi-cantly reducing countries’ borrowing

costs while incentivizing performance. Further investments in this partner-ship will unlock significantly more resources from the private sector, with an objective of raising up to $1 billion in private capital.

In support of Every Woman Every Child, the Bill & Melinda Gates Foun-dation is planning to commit $75 mil-lion over five years to the GFF Trust Fund to advance the Global Strategy for Women’s, Children’s and Adoles-cents’ Health.

The GFF Trust Fund is catalyzing the work of the broader facility by providing grants to countries linked to World Bank Group loans for health and supporting countries to prepare health financing strategies that antic-ipate the transition of countries from low- to middle-income status.

The GFF Trust Fund aims to secure universal access to essential services for every mother and every child by ensuring that official development assistance does not displace domestic resources for the sector and charting a path to sustainable domestic financing for health.

Other GFF partners are making commitments through in-country fi-nancing for country-led maternal and child health investment plans. This includes a $50 million commitment to the GFF from the U.S. Agency for International Development.

This funding will support the Dem-ocratic Republic of the Congo, Ethi-opia, Kenya and Tanzania to scale up national strategies and efforts to end preventable child and maternal deaths. The Government of Japan pledges $33 million to support maternal and child health initiatives in Kenya.

In addition, Canada commits $16 million for the start-up and establish-ment of a global Centre of Excellence for strengthening civil registration and vital statistics, in support of the GFF’s efforts to contribute to universal regis-tration by 2030.

By improving the quality and availability of data on every birth, death, cause of death and marriage, GFF-supported countries will be able to better monitor and track their in-vestments in maternal, newborn and child health.

GBCHealth, a coalition of compa-nies and organisations investing their resources to make a healthier world, is committing to raise capital for the GFF from its network of companies through its Health Credit Exchange, a new performance-based funding initiative.

About the Global Financing Facility in Support of Every Woman Every Child

The GFF is a key financing platform of the United Nations Secretary-Gen-eral’s Global Strategy for Women’s, Children’s and Adolescents’ Health. It is a country-driven financing part-nership that brings RMNCAH stake-holders together, under national gov-ernment leadership and ownership, to provide smart, scaled and sustainable financing to accelerate efforts to end preventable maternal, newborn, child and adolescent deaths by 2030.

The child mortality rate in low-in-come countries is more than 15 times higher than in high-income countries. And maternal mortality is nearly 30 times higher. Yet, with over 100 mil-lion children’s lives saved since 1990, the Lancet Commission on Invest-ment and Health documented the feasibility of a grand convergence in mortality between low-income coun-tries and the best-performing mid-dle-income countries, with a return of nine to 20 per dollar invested.

The GFF will be a key driver of this

convergence. Its results framework will be aligned with the Global Strat-egy’s results frameworks and with the new Sustainable Development Goals.

The GFF is an essential part of the paradigm shift in development fi-nancing, emphasising the essential but changing role of official development assistance in unlocking domestic re-sources and private flows and focusing on results. It has the potential to act as a pathfinder for financing the SDGs in the post-2015 era.

The United Nations“Our vision is clear: to end all pre-

ventable maternal, child and adoles-cent deaths within a generation and ensure that women, children and adolescents thrive,” said Mr. Ban Ki-moon, United Nations Secretary-Gen-eral. “We need innovative financing at scale and game-changing partnerships to support the updated Global Strate-gy for Women’s, Children’s and Ado-lescents’ Health and subsequent Every Woman Every Childmovement. I formally launch the Global Financing Facility in support of Every Woman Every Child, a key financing platform for this updated Global Strategy.”

The World Bank Group“Achieving our goal of ending pre-

ventable maternal and child deaths by 2030 will help provide what we all want—health for all,” said Jim Yong Kim, World Bank Group President. “This is why the World Bank Group is proud to launch with its partners the Global Financing Facility in Sup-port of Every Woman Every Child—a funding partnership that can help move us from the billions to the tril-lions of dollars required to secure uni-versal access to essential, quality health services for all women and children, no matter where they live. I want to thank the UN Secretary-General for his extraordinary leadership and all of the GFF partners for joining forc-es to make the promise of the GFF a reality. The GFF will provide smarter, scaled and sustainable financing from developing country governments, international donors, and the private sector to support national strategies for women’s and children’s health—a critical investment toward ending ex-treme poverty.”

Healthcare

Bank Ki-moonUN Secretary-General

Business Journal August 10-16, 2015Business Journal July 27 - Aug 02,

30 Entrepreneurwww.businessjournalng.com


Myths about Doing Business in Sub-Saharan Africa

Justin Probyn

Despite sub-Saha-ran Africa being higher on the agenda for west-ern executives, there remains many misconcep-

tions about operating in the region. So argues Anna Rosenberg, Head of Frontier Strategy Group’s Sub-Saharan Africa Research practice. In a recent webcast, she discussed seven of the most powerful myths that skew com-panies’ perceptions of doing business in sub-Saharan Africa. Below are the main takeaways.

1. There is no competitive urgency to build a presence in sub-Saharan Africa

Many executives still believe they can secure first-mover advantage in African countries. This is incorrect, according to Rosenberg: “There is al-ready very tough competition from western companies, as well as from emerging markets players and African companies.”

She says companies can’t afford to wait any longer with their expansion strategies.

“Executives have to overcome cor-porate objections by educating their home offices on the opportunities within sub-Saharan Africa, and most importantly the long-term drivers of growth. And they have to emphasise the success stories of other interna-tional and local companies…”

2. Sub-Saharan Africa’s growth is all about consumers and commodities

Sub-Saharan Africa’s econom-ic drivers are evolving and creating strong demand for new products and services across economic sectors. Rosenberg highlights consumer and government spending, foreign invest-ment, infrastructure growth and tech-nological advancements as some of the main drivers shaping the region’s economies.

“Every country is going to follow a different path… And what it means is that each country will have a differ-ent set of demands and needs. So for example, let’s look at Ethiopia. That country benefits from a lot of pow-er and a very cheap labour force. So eventually, that country is going to become a manufacturing hub and that means that industrial companies will probably be quite successful selling there.”

3. Fast economic growth equals quick returns

“What is often under-estimated is

that Africa’s growth story is a long term game, it stretches over many years… Generating immediate re-turns is difficult because of the costs of operating locally.”

Rosenberg advises companies to hire staff locally and have managers on the ground. And to eventually start manufacturing domestically to reduce costs and address supply chain issues.

She highlights General Electric as a company with a long-term investment horizon that is today reaping the re-wards.

“They advise governments at very early stages of development to shape their development strategies as these governments design master plans for infrastructure and healthcare. And this then leads to demand for their products. For example, they advise

them on railway infrastructure – that then leads to demand for GE trains. They advise them on healthcare infra-structure – that leads to demand for medical devices. So that strategy has really already proven successful for the company, but of course it requires up-front investment.”

4. Sub-Saharan Africa is too volatile and unpredictable for my business

African countries are not necessarily less stable than other emerging mar-kets, according to Rosenberg. There are also large variations between mar-kets within the region – some are sta-ble while others are more volatile.

However, “it’s critical that compa-nies differentiate between real and per-ceived risks – and don’t let perceived risks or short-term issues derail their

long-term investment strategies”.She urges companies to be less re-

active to negative events (such as the Ebola crisis or terror attacks) that may not impact their business directly.

There will always be instances of vol-atility and unpredictability, but instead of overhauling the company’s long-term strategies, management should rather adjust their short-term plans to deal with these disruptions.

5. A standard approach to market prioritisation will suf-fice in sub-Saharan Africa

Many types of industry-specific data don’t really exist in sub-Saharan Afri-ca, making it difficult for companies to pick the right markets to invest in.

“Let’s assume you want to sell tooth-brushes in a market. Even if you would have data that shows you how many

toothbrushes are currently being sold… this data wouldn’t give you an indication of how many more people will start to use toothbrushes as con-sumers get more health aware and start to use toothbrushes more regu-larly,” explains Rosenberg.

“So the market size in sub-Saharan Africa is not only about what is cur-rently being sold, but about the market potential that you can create for your business. So as a result it is critical that companies combine macro-economic indicators with proxy data… and most importantly, and I can’t stress this enough, qualitative insights.”

6. Relying solely on distrib-utors is a sustainable Africa strategy

For many executives it is common practice to first test the market po-tential through a distributor before committing significant resources. But the problem with this strategy, accord-ing to Rosenberg, is that it can only be effective for a short period because when it comes to opaque markets, lo-cal insights could make the difference between success and failure.

Companies need to have feet on the ground in their most critical African markets. Local representatives need to foster and manage close relationships with distributors, which can lead to better treatment of a company’s prod-ucts and more effective service from them overall.

Another benefit from having local representatives is that it demonstrates market commitment, and as a result the company gains customer loyalty. Having local teams in sub-Saharan Africa also means companies can re-spond more rapidly to changing mar-ket realities.

7. South Africa is the natural hub from which to manage a sub-Saharan Africa business

Many multinationals base their Af-rican head office in South Africa. But Rosenberg says this is not always the best strategy as South Africa is rel-atively far from the most important markets in sub-Saharan Africa. In terms of kilometres, London is nearly as far away from Nigeria, as Nigeria is from South Africa.

She suggests, instead of default-ing to South Africa as a sub-Saharan business hub, companies must ask themselves: ‘Where do we need to be local’.

“And generally companies need to be much closer to their priority mar-kets if they want to sell locally. So if you want to sell into Nigeria, forget about South Africa, you need to be there. If you want to be in Kenya, you need to be there, you can’t do that via South Africa.”

77

Johannesburg, South Africa

Lagos, Nigeria

With a new r e p o r t predicting that Brit-ish man-ufacturers are set to

increase their productivity by 15.5% over the next five years, boosting ex-ports by 35%, the UK is holding its own on the global stage. Such is the strength of the industry, that manu-facturing is projected to deliver 40% of Britain’s productivity gains over the next decade.

According to EEF, the manufactur-ers’ organisation, UK manufacturers were increasing rates of productivity growth in line with the best in the world in the run up to the global fi-nancial crisis, and since 2007, the in-dustry has remained ahead of most EU competitors, including Germany. So against this track record, these fig-ures appear achievable.

But the industry’s ability to fulfil these predictions, and set the bar for best practice productivity globally, rests in its ability to embrace techno-logical advances.

Two thirds of manufacturers polled in a survey by EEF say that UK man-ufacturing’s ability to compete glob-ally will depend on keeping up with technology, and that rapid advances in technology will play to Britain’s strength as a high value manufactur-er.

Specific benefits will be realised through the ability to produce more

Manufacturers Need to Embrace New Technology to Become Globally Competitive

SMEDAN Partners CAWAN on Youth, Women Empowerment


31

bespoke products according to 56%, and more rapid and cheaper prototyp-ing (52%). And half of manufacturers hold the view that rapid advances in technology will enable more reshoring of production to the UK. But despite this sentiment, 58% claim keeping up with technological advances is a major challenge.

Technology has become a key driver of growth and competitive advantage, in the same way that new skills or new production equipment might be.

Every business decision now in-cludes IT as a critical component – whether it is a new plant in China, managing a global supply chain, in-troducing a new service for customers or even contemplating a merger or ac-quisition.

And this trend is set to accelerate as a result of a new technological revo-lution, Industry 4.0, which provides manufacturers with a framework from which to deliver high levels of produc-tivity, while at the same time driving innovation and enhancing service levels.

The Internet of Things combined with powerful analytics and con-nected systems facilitate a super-rich repository of information which en-ables a level of insight which would previously have been impossible. This in turn brings far greater speed and intelligence to operational decision making, establishing sufficient agility to boost productivity while delivering innovation and service.

Connected, contextualised infor-

mation, driven by Industry 4.0 and underpinned by effective IT strategies, facilitates better, faster decision-mak-ing which in turn, enables manufac-turers to achieve predicted levels of productivity and beyond, as well as differentiate their service offerings to drive growth.

In the past the level of investment and commitment involved in extract-ing this kind of intelligence was pro-hibitive to all but the largest players.

However the prevalence of Cloud

Abigail Phillips

US-based Boeing Co. and Tata Advanced Systems Limited have agreed to jointly develop products and platforms in aero-

space and defence manufacturing, and access new markets together.

The agreement was signed by Shel-ley Lavender, President of Boeing Military Aircraft, and Sukaran Singh, Managing Director and Chief Exec-utive Officer of Tata Advanced Sys-tems.

“This agreement with TASL (Tata Advanced Systems) is significant be-cause it demonstrates Boeing’s com-mitment to expand its aerospace manufacturing footprint in India,” Lavender said.

“As we step into our 100th year in business, a new aerospace partnership with India is the perfect milestone to accelerate the momentum we have generated for making in India,” said Pratyush Kumar, President for Boe-ing India. To be sure, Tata Advanced Systems already manufactures ae-ro-structures for Boeing’s CH-47 Chi-nook and AH-61 choppers.

represents a major game changer, enabling manufacturers of all sizes to access this kind of revolutionary technology, on demand. Smaller manufacturers can now have access to the same sort of technologies as their larger competitors. This means they can rapidly grow their businesses without growing their headcount and cost base.

But according to EEF’s research, the UK is in danger of lagging behind in embracing this revolution. While

Chris Onwuka, Abuja

For the Nigerian youth and women to become econom-ically self-reliant and escape the challenge of unemploy-

ment, civil unrest and poverty, the Micro, Small and Medium Enterprises (MSMEs) sub-sector must be revived as a matter of urgency.

Alhaji Bature Masari, Director-Gen-eral, Small and Medium Enterpris-es Development Agency of Nigeria (SMEDAN), made the assertion at a forum with the Community Aware-ness and Development Network (CAWAN) in Abuja.

Mr. Chike Adaka, the National Co-ordinator of CAWAN, said the MoU signed with SMEDAN is for a two-week training programe for women and youth to capture young Nigerians and expose them to career building skills that would eventually shift them from job seekers to employ-ers of labour.

“During this training, participants

eight in ten manufacturers believe it will become a reality by 2025, six in ten are concerned of the risks of being left behind.

Against a backdrop of solid produc-tivity growth and faced with the op-portunity and the right tools to exploit new capabilities, UK manufacturers cannot afford to wait. With productiv-ity growth predictions well into double figures for the next five years, waiting until 2025 to capitalise on this oppor-tunity might well be too late.

would be trained in vocations such as shoe-making, Ankara handbags, soap-making, ICT, metal works, fab-rication of doors and windows, over-head tanks and installation of solar panels. Others include solar street light and traffic light installations, general hair-care, make-up design, eye-browning among others.”

He added that trainees will also be trained on how to write a bankable business plan by technocrats from SMEDAN and other micro-finance banks. They shall also be enabled to key into the N220 billion MSMEs fund domiciled with the CBN and the Federal Government National Enterprise Development Programme (NEDEP) programmes aimed at em-powering MSMEs.

“There are several windows aimed at empowering MSMEs in Nigeria to-day, but what is lacking is information. We believe that our partnership with SMRDAN will avail our youth and women the basic knowledge on how to access funds.”

Mahindra Defence Naval Systems Limited, a unit of the $16.9 billion Ma-hindra Group, said it has tied up with the UK’s Ultra Electronics to build equipment for underwater warfare.

Earlier this month, Mahindra De-fence Systems Limited, the defence division of the Mahindra Group, had signed an in-principle agreement with Europe’s Airbus Helicopters to set up a joint venture to manufacture helicop-ters in India, in a bid to tap a market expected to be worth $41 billion in seven years.

Currently, 14 Tata companies are engaged in providing support to the country’s defence and aerospace sec-

tor. These are the Tata Power Strategic

Electronics Division, Tata Advanced Systems, TAL Manufacturing Solu-tions, Tata Technologies, Tata Motors, Tata Advanced Materials, Tata Con-sultancy Services Limited, Tata Steel UK, Tata Elxsi, Titan Company (Pre-cision Engineering Division), Avana Integrated Systems Limited, Nova In-tegrated Systems Limited, CMC Lim-ited and Tata Industrial Services.

The current order book size of the Tata group in the sector is above Rs.10,000 crore. Other Tata group companies—Tata Advanced Materi-als (TAML) and TAL Manufacturing (TAL)—are also supplying important components to Boeing.

TAML has delivered power and mission equipment cabinets and aux-iliary power unit door fairings for the P-8I long-range maritime surveillance and anti-submarine warfare aircraft.

TAL is manufacturing complex floor beams out of composite mate-rials for the Boeing 787-9, a modern aircraft with exceptional environmen-tal and fuel efficient capabilities. It has also provided ground support equip-ment for the C-17 Globemaster III strategic airlifter.

Boeing, Tata Partner to Tap Growing Indian Market

Why Should Your Customers Report to Your Processes?Mark Di Somma

Rethinking how brands in-teract with customers.

We shouldn’t even think of the term “c u s t o m -er service” as being about some-

thing that is valuable to customers. In fact, customer service is worth next to nothing. The reasons are simple. We live in a service-focused age, and the people who buy from you know they’re customers. So the term “cus-tomer service” does not describe an-ything customers don’t expect and it certainly doesn’t envelope anything of particular value to them.

Every business is a service business in some sense these days.

Secondly, and more importantly, customer service is actually the means to the real goal: sustained and profita-ble customer relationships. Please note that distinction. Customer service is how brands deliver customer experi-ences. It is the process and the frame-work whereby a brand looks to engage with prospects and buyers. It’s how a proudly distinctive and likeable brand forges relationships with customers through actions that mirror its core values and set it apart from its compet-itors. And it’s those experiences that count. Not the process itself.

You’d think we’d all agree on that. You’d think everyone could see that experiences are everything these days given how similar products are, and that developing and delivering unique experiences is the logical basis for pref-erence. Yet so often, too often, distinc-tiveness and experiences are the last things that customers get.

And I suspect that’s because, for many brands, what customers do get continues to be organised as a num-bers game internally, oriented around technical and operational capability.

There’s nothing wrong with num-bers of course. They make the process efficient. They allow things to be meas-ured. But while customer relationships based on best practice metrics might be technically correct, they’re often de-void of personality.

And because everybody’s serving by the book rather than from the heart, what customers are really getting is efficient variations on the same tedi-um. That doesn’t make for a likeable or memorable brand. In fact, cut out the brand name, and they could be dealing with anybody.

This is why that matters. Products for the most part come with a mon-ey-back guarantee. People don’t. If a product is wrong, it can usually go back. But if you get it wrong with cus-tomers, or not even very right, chances are they won’t.

That doesn’t necessarily mean that customers have received bad service. It simply means that the encounter was not enough to distinguish the ex-perience from others, to excite them and therefore to secure their contin-

ued loyalty. The process can be right technically. It can tick all the boxes in terms of what had to happen. It can achieve all the digits. And yet it won’t necessarily lead to the vital and elusive outcome.

Enduring relationships with a brand pivot these days on customer encounters that really do need to be experienced to be believed. They are astonishing - at a human level, not a metrics level. Forming and sustain-ing relationships with people is not about world-class customer service or carrier-level or benchmarks or any of the other abstract qualitatives that are freely bandied about.

Because, when you think about it, customers do not go around congrat-ulating themselves on having received a best-practice anything. That’s an in-ternal measure. And it’s not about per-centages of good either for the same reason.

Again, people don’t make buying funny pictures decisions based on 85% satisfaction, or any other number. An-other internal metric. They are loyal to a brand because they really liked what happened. Loyalty is not a percentage decision, it’s a personal decision made by each customer one action at a time.

When their expectations are exceed-ed, they respond enthusiastically and in marked contrast to how they greet generic customer service: the preva-lent, boring and forgettable catch-all that too many brands expect their cus-tomers to settle for.

If any of this sounds like a beat-up on process and the operations teams, it’s not. Processes and systems provide order and structure - and both con-sistency and the ability to deliver what you undertook to deliver are manda-tory for brands in every sector today. Without the right customer processes, there would be chaos. Without the left-brained attention to detail that logistics, supply chain, ops and front-

line people deliver, there would be no brand because there would be nothing for customers to depend on. Without someone paying attention to legal ob-ligations, the court system would be clogged with commercial litigation. jokesfunny images funny photos

But, at the same time, you can’t allow the tail to wag the dog. In the tradi-tional marketing environment, brands allowed process and promise to devel-op separately. Today your marketing plan and your operational plan must be much more closely aligned because your target audience see themselves as having relationships with who they think you are, not how you choose to see and organise yourselves.

“What sort of customers do we want?”

A pivotal issue is that experiences and customers have become separat-ed as cause and effect. If you ask most brands which customers they want, they’ll say “as many as possible” or “people who spend a lot” – but that may not be who they really want at all. It’s likely they have no idea who they want as customers. They’ll take any-one whose buying. And that’s fine at a transactional level. But if you want to form and build relationships that work for all parties, you need to know and to define who constitutes a successful customer for you. And therefore you also need to be able to clearly define who you don’t want to do business with. You also need to know what experiences they will require to keep them returning and generating mar-gin.

That’s the telling difference between a top-line decision (turnover) about customers and a bottom-line decision (worth).

Counter-intuitively, that decision doesn’t necessarily revolve around volume. As Professor Robert Kozinets rightly points out, customers can be

very loyal and buy little or buy lots and not be loyal at all. It depends entirely on the function of the product, and therefore how often it needs to be pur-chased, as well as whether customers view what they are buying as a trans-action or as an exchange of money for pleasure. Different dynamics will work to varying degrees of success for different customers in different situations. What brings one customer back for one product may or may not be enough to bring another back for another product. And that mix will change across all the brands people buy, depending on how important each brand is to an individual.

Offer any kind of customer relation-ship you like. Conditions apply.

Success doesn’t necessarily revolve around quality or luxury either. In fact, what you offer your customers can be as rudimentary or as sophisticated as you like. As long as:

1. What you deliver aligns directly with how you are structured (physi-cally, operationally and financially) so that you can afford to operate that way and you have a competitive reason for choosing to pursue that course.

2. It aligns with who you are as a brand and the core values you repre-sent.

3. You explain those terms of busi-ness to your customers very clearly, so that they really understand what they are getting.

So surprise, surprise – experiences should vary, just as brands should vary, because price points and expectations around those price points should vary. People’s motivations, expectations and priorities are different. You just need to be very clear with customers about what they can expect, why that’s mo-tivating and how it aligns with their priorities.

That happens surprisingly seldom. Because, as above, the cause and effect equation of experiences and custom-ers has been lost in translation.

The relentless hunt for quar-ter-by-quarter revenue seems to me to have pushed the pursuit of sustained customer loyalty down the corporate priority ladder. In such circumstances, the time and money required to keep customers engaged is perceived as another process that interrupts short-term profitability. Efficiency dicates that companies do enough to meet their obligations, but no more. Today many laugh smugly at the “stupidity” of the dot.com era – and yet, the same people-proof philosophies that pow-ered that era are still alive and well. The only difference is that “build it – and they will come” has been replaced by “deliver it – and that will do”.

That’s how customer service be-comes enough. And how customer service becomes a formula. A formu-la replete with short-term numbers and limits. For too many organisa-tions “customer” is now an adjective for by-the-books service. It’s a way of thinking about the target audience that has little or nothing to do with people, never mind customers, noth-ing to do with experiential events,

and everything to do with only doing what has to be done. Funny isn’t it? No customer wants to feel resented, and yet so many organisations deliver resentful customer service – only up to a point, only in certain conditions, only as it suits them, only with the in-formation they have at hand ... only, only, only.

What have customers done to de-serve being looked upon as the obsta-cle to the delivery of an efficient ser-vice, as opposed to the focus for that service? They haven’t done anything. What the brand has done is talk it-self into believing it can’t afford to be nice – and, by extension, that perhaps given its margins or other pressures, it shouldn’t have to be.

That isn’t a relationship. In fact, in some sectors, it’s closer to a legal en-counter. It’s a situation where policies, systems and terms and conditions can be used not as a means to define what is being delivered but rather to not de-liver or to extract cash through fees for anything that steps outside that strict framework. Process in this context has become the new bait and switch. The terms and conditions are not there to clarify the offer. They are there to cap-italise on a situation or to close down discussion. “I’m sorry Sir, our policy is …”

Moments of truth in this context quickly become moments of disap-pointment. Brands in this context apply “turnover” in both senses: they churn customers to make their num-bers; and hope that scale is enough to keep filling the top of the sales funnel.

Tapping the power of habitSo if enduring customer relation-

ships are not based on volume and they’re not based on a single level of quality, what should they be based on? The clue is in the word itself. The root word in ‘customer’ is custom – which on one level refers to trade and on another refers to habit forming. Both apply here. On that basis, the people you should be working towards hav-ing a commercial relationship with are those who are going to want to come back, and customer service should be a service process that is good enough to generate such a habit, whether it’s hours, days or years between occa-sions. The problems are that many brands do not have an active retention approach to bridge those gaps, and therefore the process that feeds that, their customer service, is not specifi-cally designed to be habit-forming.

Part of the reason why customer relationships continue to be so deper-sonalised I suspect is because buyers have been reduced to “the customer” – an amorphous form, referenced fre-quently inside bigger companies. By contrast, likeable brands take owner-ship of the people who buy from them. Even though they may not know the people who buy from them specifi-cally, they do their best to get to know about them. There is a palpable sense of interaction. And that’s why likeable brands engage with their target audi-ence in ways that are interesting, rele-vant and that bring a very human as-

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32

•Study shows customer experience will overtake product and price as a key brand differentiator by 2020

In an ever changing and fast paced world where alter-natives are rife, customer experience is rapidly becom-ing one of the most important

elements of a business’ success. According to the Institute of Cus-

tomer Service(1), the driving factor

What Do Customers Really Want?

that will determine decisions going forward will be the level of a cus-tomer’s intellectual and emotional engagement with the purchase.

Fatima Sullivan, Vice President of Customer Services for DHL Express Sub-Saharan Africa, says:

“If the customer is not the key

focus in all activities, whether it is improvements in delivery times or query resolution processes, efforts are wasted. Customers know what they want, and how they want it. You just need to listen to them.”

She points to the recently released Walker report titled Customers

2020(2), which reveals that by 2020, customer experience will overtake product and price as the key brand differentiator, and therefore more emphasis will need to be placed on the experience a company delivers to create a competitive advantage.

“The voice of the customer is therefore an important element to consider when planning your strate-gies. Customers want to engage with companies who can not only provide a service, but are able to tailor-make solutions and respond quickly to changing demands. In the logistics industry, where unforeseen delays may arise, it’s important to be able to react quickly and proactively communicate with your customers. Engaged customers understand that things go wrong sometimes, but they need to trust that you are able to recover from it in a fast and professional manner,” added Sullivan.

It’s not just about problem reso-lution, but more importantly, about determining the root-cause, and to ensure that the problem does not occur again.

“Customers should also be able to access various escalation channels easily – there’s nothing worse than situations where frustration levels are high and you cannot track down the right person to assist

you. In DHL’s case, we introduced a best-in-class feature to our website which we refer to as Straight to the Top (STTT). This allows customers to have access to the DHL Express Senior management team, including the Africa Management Board. It’s all about accessibility and speed of query resolutions.”

“We need to make sure that every individual in the business under-stands the impact they can have on the customer experience, and focus on the smaller details that drive quality. An insanely customer-cen-tric culture can only be achieved if all employees have the same goal in mind – to delight the customer at every opportunity.”

“We service over 40,000 custom-ers across Sub-Saharan Africa and the only way we are able to provide the service quality that our custom-ers have been accustomed to is by having a team of 3500+ Certified International Specialists, all focused on the same thing. Your people are the golden thread that keeps it all together. You can have the best customer feedback tools and CRM systems, but if you don’t have the right people analysing the data and implementing the solutions, your business cannot move forward,” concludes Sullivan.


pect to the brand’s core values. They’re liked, and they continue to be liked long after the transaction is over, be-cause what they deliver aligns with the impressions that people have in their minds about that brand. Good memo-ries linger. Good memories are shared.

And here’s the interesting part. I have yet to see a cost of service mod-el that shows it costs a brand more to employ people who smile, are help-ful and clear, and who believe in the brand-customer relationship. I have yet to see a cost-per-serve model that proves friendliness is not worth it. In fact, I’ll go so far as to suggest that the downside economics of human inter-action in this context are non-existent; it’s the mindset driving and measuring those interactions that is at fault.

When process drives the culture, process becomes the culture. People become operational in their view of everything because that’s where the emphasis and the measurements and the training lean. By contrast, as Zap-pos have shown, if you build a high-EQ business from the inside out, you build a company that is powerful-ly and distinctly customer-focused where humanity leads and guides pro-cesses. As Rebecca Ratner, the com-pany’s director of human resources, pointed out in an article in Business Week, “We can’t ask anyone to wow a customer if they haven’t been wowed by us.”

I like to remind people that when you have a strong relationship with a customer, it should feel like the most natural thing in the world – because increasingly what’s at play is a meet-ing of minds that takes place over a transaction. Customers buy from you and continue to buy from you because it feels like you share a philosophy. It feels like you understand each other. And that’s habit-forming. It’s a bond worth coming back for.

Most relationships don’t get better with time – but they should. Often the sales process, if there actually is

one, doesn’t help. And that’s because most organisations think about how they want to sell their products, not about how their customers would like to buy them. They have processes that give them comfort and reassurance, not ways of working that relate to, and align with, how people purchase. My advice: learn to sell the way your cus-tomers would like to buy … and keep buying.

Three questions from McK-insey

In a McKinsey article titled “The hu-man factor in service design”, authors John DeVine, Shyam Lal, and Michael Zea set out to establish what it takes to effectively balance the trade-offs between the cost of services and en-during and profitable customer rela-tionships. “Many companies,” they say, “lose sight of what makes human be-ings tick.” The authors distil their find-ings down to three interrelated ques-tions that they say senior executives should always be asking themselves.

1. How human is our service?2. How economic is our service?3. Can our people scale it up?Companies, they say, should apply

principles of psychology and behav-ioural science to service designs in order to really get to grips with what motivates and irritates customers as people.

Their key findings include:•Get the awkward stuff out of the

way early•Help customers feel more in con-

trol, by adding simple choices to the conversation rather than issuing in-structions or directives.

•End the experience on a high note, with a nice surprise or an incentive.

•Avoid unexpected changes and let people stick with habits during inter-actions that they feel comfortable with.

•Look for opportunities to add de-light by listening carefully to feedback.

They go on to point out that mas-tering the trade-offs between service

levels, revenues, and costs is complex. Companies need to develop an inte-grated view of the economics across a range of customer touch points and use tools such as breakpoint analysis to determine cost and margin against receptivity.

Their findings parallel my own in that they found surprisingly wide vari-ations in service levels were acceptable if they were clearly framed. Simple en-quiries and orders, for example, were expected to be processed instantly, but people would wait for a more complex or more comprehensive answer, pro-viding they were told there would be a delay and the reason for the delay was clearly explained.

Equally, there is a distinctive sweet spot in customer interactions that

satisfies criteria for efficiency and for generating goodwill from customers.

Optimising for service better than that wasn’t worth the additional cost. So yes, just as brands can lack a com-mitment to delivering experiences, they can also go too far the other way and deliver experiences that are literal-ly not worth the effort.

Thoughtbreaks: Transforming by-the-book customer service into profit-able customer relationships

If customers are going to form strong, habit-forming relationships with you, what you say, what you of-fer and what you do needs to align. If your brand and your processes are not on the same page, chances are you are foreshortening your customer experi-ence. And ironically, that will probably

kill the very relationship operational people are tasked with servicing. That may make you more efficient – but there’s a good chance it will in time shutter your brand. Your customers should not report to your processes, because your processes are not their business. They’re part of your busi-ness. Here are 7 ways I suggest to look to fix that.

Ask:1. What did you say as a brand that

you would do? Are you as good as your word?

2. What can you afford to deliver and what can you afford not to deliver? In other words, are you cultivating rela-tionships with your customers that are financially viable? If you can’t afford your cost per serve, change your mod-el and reshape the promise. There’s no point in efficiently losing money or inefficiently losing customers!

3. Does everyone in your organi-sation know who your most valuable customers are, and what they expect to receive? How loyal are your people to the people who are loyal to you? Are customers people or a funding source?

4. Does the service you offer your customers make sense emotionally to them as well as logistically? Is it in keeping with their understanding of your core values?

5. How do you know you’re doing right by your customers – what have you been asking them? Not about whether they’re “satisfied” but whether they actually “like” what they receive.

6. Who manages the overall de-velopment of relationships (in other words how you expect your brand to interact and engage with customers into the future) on an ongoing basis? Anyone?

7. When was the last time you up-dated your infrastructure to make the relationship better for your customers as opposed to just making it more ef-ficient for you? Did your update result in a tangible experience upgrade as well as cost savings? – because that’s the Holy Grail.

Mark Di Somma

“From policy makers to distributers, there are several

actors that play a vital role in the long chain of textbook production

to make textbooks available to children in their classrooms. In this workshop we have brought together

policy makers, academicians, development partners, and

representatives from the publishing sector for effective deliberation and dialogue that would help

identify solutions to the problem of high cost and low availability of

textbooks in the region.”

School Enrollment

Every child in sub-Sa-haran Africa can have access to affordable and good quality textbooks if policy measures are taken to reduce the cost

of textbooks and sustainable financing is ensured says a new World Bank re-port launched recently at a workshop hosted by the African Development Bank.

The study, titled Getting Textbooks to Every Child in Sub-Saharan Africa: Strategies for Addressing the High Cost and Low Availability Problem takes an in-depth look at textbook scarcity in the region and finds that the primary bottleneck is not lack of funding but the high cost of text-books.

The study also identifies the factors that impact costs of textbook pro-duction and based on insights from India, the Philippines, and Vietnam, recommends policy options to reduce these production costs.

“Countries in sub-Saharan Africa have made commendable progress in access to education, but the progress has not been matched with improve-ment in the quality of education,” says Amit Dar, Director of the Education Global Practice at the World Bank.

“Access to good quality and afforda-ble books can have a long lasting im-pact on a child’s learning capabilities.”

Most countries in sub-Saharan Africa suffer from a chronic shortage of textbooks, even in core subjects. A 2010 survey of 22 countries showed that in some places up to 13 children share one textbook and in others these ratios can be as high as 1 book to 15 children.

Speaking at the event, Peter Materu,

Special Reportwww.businessjournalng.com

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Getting Textbooks to Every Child in Sub-Saharan Africa

World Bank Practice Manager for Education in Central and West Africa said:

“From policy makers to distribut-ers, there are several actors that play a vital role in the long chain of textbook production to make textbooks avail-able to children in their classrooms. In this workshop we have brought together policy makers, academicians, development partners, and represent-atives from the publishing sector for effective deliberation and dialogue that would help identify solutions to the problem of high cost and low availability of textbooks in the region.”

The study compares textbook policies from countries like India, the Philippines and Vietnam that are diverse in size, have varying political and administrative systems but have succeeded in providing textbooks for all children by adopting policies that have resulted in keeping textbook costs manageable.

The report recommends that sub-Saharan African countries revisit their textbook policies to explore options that can lead to lowering costs in the immediate, medium, and long

term. The countries and development partners must join together to build capacity, forge effective private-public partnerships and ensure reliable and sustainable funding.

Finally, the onus of making sure that children use the textbooks lies with school managements that must ensure that textbooks are well managed and effectively used in the classrooms.

With long-term policy options and systemic reforms, getting textbooks to all children in sub-Saharan Africa is possible.

We cannot afford to neglect this problem anymore.

36 Economywww.businessjournalng.

Business Journal August 10 - 16, 2015

Integrating West African Economies PPP-wiseFrancois Bergere

What do Benin, Niger, Guin-ea-Bissau, Togo and Mali have in common? Apart from

being members of the eight-country strong West African Economic and Monetary Union (UEMOA), they share a common status as low-income countries, faced with huge infrastruc-ture needs and financing challenges.

Furthermore, they have decided that one way to address these challenges and sustain their economic growth was to promote public-private part-nerships (PPPs) through a regional framework and strategy. This initiative is supported by the Public-Private In-frastructure Advisory Facility (PPIAF) for the World Bank, and Agence Française de Développement (AFD) and Expertise France on the French co-operation side.

Which is why — on July 2-3 in the midst of sweltering weather in the leafy suburbs of Ouagadougou, the capital of Burkina Faso, which is also home to UEMOA headquarters — 20 or so experts and decision-makers at-

Evans KamauAdd Comment

Many university stu-dents learn Newton’s third law: for every action, there is an equal and opposite

reaction. At one Kenyan university, two very

positive actions – narrowing the back-log of students admitted after high school graduation, and a 2002 gov-ernment bill declaring free primary education for all – led to the nation’s first public-private partnership (PPP), a most unexpected reaction.

Kenyatta University (KU) has 50,000 students, and because of the national momentum on education, enrollment is expected to increase to 70,000 in the next two years.

The only problem with this huge step forward has been housing all of these new students; currently, the uni-versity’s 22 hostels house only about 10,000 undergraduate students. KU’s status quo-shattering PPP will result in housing for 10,000 more students, at the same time marking it as the first public institution to deliver a PPP pro-ject under Kenya’s Public Private Part-nership Act of 2013.

For the 10,000 graduate and un-dergraduate students who will now

tended a two-day seminar to discuss the framework and strategy.

Beyond PPIAF and AFD, regional participants included representatives from the UEMOA Commission, the Regional PPP unit at the West African Development Bank (BOAD), the Af-rican Development Bank (AfDB), the African Legal Support Facility (ALSF), the Organisation for Harmonisation of Business Law in Africa (OHADA),

and the Central Bank of West African States (BCEAO).

The issues we covered in-

cluded the need to:•Define the scope and main features

of the future PPP legal framework (such as typology of PPPs, inclusion/exclusion of certain sectors or public players);

•Determine the overall institutional

Existing student hostel at Kenyatta University

arrangement, in particular through the establishment of a central regional PPP unit with BOAD, and agree on its missions at the regional and national levels, and navigate conflicts of inter-est; and

•Outline the types of procurement processes to be pursued (e.g. two-stage procurement bidding process or “competitive dialogue”) and how to manage procurement of unsolicited

proposals. Regional integration and harmo-

nisation is not easy to achieve, even within a common economic and monetary zone — see, for example, current challenges in the Euro-zone — and more-advanced economies like Cote d’Ivoire or Senegal may have different views and expectations from other member countries. But it is the only way that relatively small, mostly land-locked economies can hope to attract significant international inter-est and investment flows.

Regional integration is also one of PPIAF’s thematic priorities as adopted in our 2014 strategy. Despite current limitations — such as an existing 2004 concession directive that hasn’t had much impact to date in the region — and future challenges, UEMOA still appears to be ahead of similar initi-atives by other regional groupings in West Africa.

As a result, the roadmap validated in July at UEMOA might be extend-ed or replicated at a later stage at the CEDEAO level… which makes the current programme a particularly in-teresting one to follow.

Housing Next Generation of Kenya’s Leaders: A PPP that Makes the Grade

be able to live on campus, this PPP earns an “A” for a different reason – it’s the first time these students will have access to regulated, fairly priced ac-commodations with no commute or accompanying transportation charges to class.

And by living on campus, these stu-dents can safely study long into the night at the library and other univer-sity facilities – which is critical to the intellectual development of this next generation.

The Right Time + the Right

Partner + the Right Place = the Right PPP

Until recently, Kenyan students graduating from high school were typically forced to wait two years be-fore registering at universities, due to backlogs created in the late 1990s as a result of student unrests and lecturer strikes that led to long closures of ed-ucational institutions.

In the past few years, however, the University Joint Admission Board, working through government, decid-ed to reduce the backlog by one year. Numbers tell the rest of the story: nationwide, university student enroll-ments grew from 96,000 to 160,000 in 2015.

In addition, the free primary ed-ucation introduced in 2002 tripled

the number of students in primary schools, which also energised enroll-ment. Predictably, these two positive developments stressed the capacity of university facilities, and Kenyatta Uni-versity has been struggling to meet the need for students’ accommodation.

KU’s strategic plan commits it to in-creasing access to higher education as well as improving the welfare of both the undergraduate and postgraduate students, by partly improving associ-ated physical infrastructure.

This element of the plan depends on the private sector to deliver some services and withdrawal of KU from direct development of physical infra-

structure in non-core areas, such as student accommodation. Working through Kenya’s new PPP Unit of the National Treasury KU turned to IFC in 2011 for guidance in implementing an accommodation project on a PPP basis.

A Strong PPP ChampionIFC was engaged to provide trans-

action advisory services to establish student hostels through PPPs at KU’s main campus.

Coincidentally, IFC’s PPP advisory department opened an office in Nai-robi the year before, which made close coordination possible. Another crit-

ical element in building this PPP was the support of KU’s Vice Chancellor, Professor Olive Mugenda, a firm be-liever in the benefits of the project despite the many challenges along the way.

She led a strong implementation team, and under her leadership, the project went to market in 2012; those involved were unsure whether the project would attract bidders with the capabilities that were needed. (Be-cause 2012 was an election year, and the previous elections in 2007 were marked by political unrest, success was especially uncertain.)

But at the tender stage, nine consor-tiums made up of local and interna-tional firms expressed interest and six were invited to bid. Four out of the six presented their bids. After evaluation, the bid was awarded and a solid team was appointed.

Under other circumstances, KU would have “graduated” its PPP at this point. However, when Kenya’s new government was put in place, the suc-cessful bidder’s consortium lead inves-tor was appointed KU’s Chancellor.

He was concerned about the per-ception of impropriety, and although Kenya’s attorney general ruled that there was no conflict of interest or im-proper influence, the new Chancellor opted out of the bid.

37

Nader Hashemi

Is the Iran nuclear accord a groundbreaking agreement or a historic mistake?

As the world’s attention shifts from Vienna to Wash-ington, where Congress is set to debate this very question,

it’s worth taking a step back to get a better understanding of what’s really going on.

That is especially true for the deal’s skeptics, because if they looked at what has transpired from Iran’s point of view, it would be clear to them that this nuclear agreement marks a colossal defeat -- for Tehran.

Why? For a start, the deal is a repudiation of the nuclear strategy of Iran’s Supreme Leader, embodied in his “resistance” approach to interna-tional relations.

Indeed, whatever gloss official statements from President Hassan Rouhani try to put on the deal, Iran has effectively capitulated to the demands of the West.

Over the past 15 years, the Islamic Republic had invested heavily in its nuclear programme, establishing an extensive multi-billion dollar infra-structure, the exact cost of which has never been made public. As a result, Iran was subjected to unprecedented sanctions and economic hardship -- a price the regime was seemingly willing to pay to retain the option of pursuing a nuclear weapon.

But this agreement, with its provisions for rolling back key parts of Iran’s nuclear programme and subjecting it to unprecedented inter-national inspection, now makes this option much more difficult. In fact, it cuts off Iran’s pathway to a bomb and effectively paralyses Tehran’s nuclear ambitions for at least the next decade, while also sending Iran

Why Nuclear Deal Could Transform Iran

down a path of further concessions in exchange for gradual sanctions relief.

That Iran was forced to accept terms it had steadfastly rejected in the past suggests that Iran’s nuclear strategy has hit a brick wall. Mo-hammad Ali Jaafari, the commander of the Islamic Revolutionary Guard Corps, admitted in 2013 that with the deal as it stood then, Iran had “given the maximum and received the minimum.” Other hard-liners weighed in suggesting that Iran “gave away the crown jewel for a lollipop.”

While the validity of this interpre-tation of the agreement cannot be publicly debated in Iran because of political censorship, there is obvious frustration among Iranian members

of the public that they have had to wait so long for some sort of deal. As Iranians began to digest the news of the 2013 plan, The New York Times Tehran Bureau Chief said one man had commented:

‘I am now 30 years-old. When Ahmadinejad came to power I was 22. Why were those eight years of my life wasted? Why am I still without a job? Why do I hold a university degree but don’t have a future in this country?”

Such views underscore another reason criticism of the deal is mis-placed: The agreement is good for the Iranian people.

The easing of sanctions will benefit the Iranian middle class and civil society, which comprises the core support base for Iran’s pro-democ-racy movement. Under the existing sanctions regime, it was average Iranians, not the ruling clerical elite,

who were most adversely affected. Indeed, according to a report by

the International Campaign for Hu-man Rights in Iran, sanctions have led to a “severe deterioration in the ability of the Iranian people to pursue their economic and social rights.”

Essentially, a basic struggle for survival had taken precedence over political organizing and pro-democ-racy activism. Now, freed from the economic devastation of sanctions, pro-democracy activists will find they are actually the biggest benefi-ciaries of a nuclear deal.

Keeping Iran’s pro-democracy movement in mind is critical as the West looks to de-escalate tensions with Iran, because while a nuclear agreement is a vital first step, it won’t by itself resolve the challenge that Iran poses to stability in the Middle East.

The reality is that the Iranian regime will only truly change its be-haviour after a democratic transition, where more accountable Iranian leaders will assume power and play a more constructive role among the community of nations.

This is where the United States can play a role, albeit an indirect one. As we have learned from other democratic revolutions, there is no exact formula to predict when a dictatorial regime may crumble, but in the medium term, the prospects for change look good in Iran. What has been missing in Iran, though, is an international context conducive to a democratic transition.

To date, the existing sanction regime and foreign military threats have actually strengthened the clerics and the Revolutionary Guards. A shift in U.S. policy toward Iran could change that.

What should such a policy shift involve?

For a start, it would now elevate the question of democracy and human rights, and place it at the center of any future engagement with Tehran.

Yes, the clerics will protest and point to Western double standards, but the Iranian regime is most vulnerable in the eyes of its own youthful population where it faces a sustained challenge to its legitimacy.

Ultimately, as the U.S. Congress and the American people get ready to debate the nuclear deal, a more nuanced perspective is needed.

And that means realising that this nuclear deal represents a historic de-feat for Iranian foreign policy -- and that it potentially opens the door for the revival of Iran’s pro-democracy movement.

•Nader Hashemi is the Director for the Center for Middle East Studies at Josef Korbel School at the University of Denver.


Hassan RouhaniPresident of Iran

Nader Hashemi

doping, they do raise serious ques-tions for the IOC, the IAAF and the World Anti-Doping Agency (WADA).

“WADA is very disturbed by these new allegations that have

been raised by ARD, which will, once again, shake the foundation of clean athletes worldwide,” the agen-cy’s president, Craig Reedie, said in a statement on its official website.

“Given the nature of these alle-

gations, which are an extension to those that were raised by ARD’s December 2014 documentary, they will immediately be handed over to WADA’s Independent Commission for further investigation,” he added.

Leaked Doping Files: IOC Makes Zero Tolerance Pledge

Sportswww.businessjournalng.

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Premier League Transfer Spending Hits £500m

Transfer spending in the Premier League has reached £500 million this summer, £335 million short of last summer’s total

with four weeks until the transfer deadline.

Raheem Sterling’s move to Man-chester City for an initial fee of £44 million has been the highest so far.

Manchester United boss, Louis van Gaal has hinted at a “surprise” signing despite spending £83 mil-lion already.

“A new record is likely as clubs look to benefit from the new TV deal,” said football finance expert

Rob Wilson.The transfer window shuts at

18:00 BST on Tuesday, 1 September.Starting from 2016-17 the Pre-

mier League TV rights deal increas-es from £3.018bn to £5.136 billion for three seasons.

The bottom club will pocket £99m per season with the champi-ons earning more than £150 million in prize money, even before extra money is paid for featuring in a TV match.

Financial analysts Deloitte said the £500 million milestone had been reached last Friday.

In addition to Van Gaal’s “sur-prise”, Premier League champions

Chelsea are reportedly interested in Everton’s John Stones with a £26 million bid turned down, while Manchester City have been linked with Wolfsburg’s Kevin De Bruyne - all deals which could substantially increase the current figure.

Former Liverpool defender Mark Lawrenson told BBC Radio 5 live: “I think Manchester United are going to go massive on someone again, they need a centre-forward.”

The 2014-15 season saw £965 million spent across the summer and January transfer windows - but Sheffield Hallam University lectur-er Wilson believes there is potential for a record spend across the sea-

son.He also thinks that the new BT

Champions League deal worth £897 million starting this season has been a factor behind the sum-mer spending.

“What’s driven clubs to spend is not necessarily just Premier League money, but BT entering the Cham-pions League market,” added Wil-son.

Reports put earnings at £9 mil-lion for clubs reaching the group stages, with the winners receiving £70 million.

Wilson says that although a new record looks set to be broken this summer, he thinks that clubs’ net spend might be down as they seek to stay within Financial Fair Play (FFP) rules.

“Manchester United have spent

Paul Gittings

The head of the Interna-tional Olympic Com-mittee (IOC) has prom-ised the organisation will pursue a policy of

“zero tolerance” if allegations of widespread doping by track and field athletes at the Olympics are proven. Allegations published in the Sunday Times and aired in a documentary by German broad-caster ARD, claim that a third of medals awarded in the Olympic Games and world championships between 2001 and 2012 were won by athletes who recorded suspi-cious doping tests.

The news organisations have based their reports on a leaked da-tabase, held by the International Association of Athletic Federations (IAAF), which holds the results of 12,000 blood tests on 5,000 athletes.

£83 million this summer, which is fairly reasonable after spending £59.7 million on Angel Di Maria last season,” said Wilson.

“If they recoup about £45 million for selling Di Maria to Paris St-Ger-main, they could sign Pedro from Barcelona and their net transfer spend would still be pretty modest.”

Liverpool have spent £32.5 mil-lion on Christian Benteke, but wait-ed until they received funds from Sterling’s record-breaking sale.

“We are seeing clubs being sensi-ble, partially because of FFP,” Wil-son added. “Fiscal responsibility is becoming routine, and although clubs were resistant before, now they are seeing the benefit of being more frugal.

“It’s a good move for football in general.”

“At this time we’ve nothing more than allegations, and we have to respect the presumption of inno-cence,” IOC president Thomas Bach told reporters. “If there should be cases involving results at Olympic Games, the IOC will act with zero tolerance with our usual policy.”

The tests were scrutinized by Australian doping experts Michael Ashenden and Robin Parisotto, who concluded that 800 athletes, in a range of disciplines, mostly cover-ing endurance events from the 800 meters to the marathon, had pro-duced “suspicious” results.

At the major competitions, this equated to nearly 150 medalists, in-cluding 55 gold medal winners.

It is claimed no action has been taken against these athletes.

“Never have I seen such an alarm-ingly abnormal set of blood values,” Parisotto told the Sunday Times.

While the results do not prove

Drug Scandals in Sports – New York Yankees star Alex Rodriguez was suspended in August 2013 after he was ac-cused of having ties to Biogenesis, a now-defunct anti-aging clinic, and taking performance-enhancing drugs. The suspension covers 211 regular-season games through the 2014 season. Rodriguez denied the accusations and said he intends to appeal. Twelve other Major League Baseball players received 50-game suspensions without pay in the Biogenesis probe, and In July, Milwaukee Brewers star outfielder Ryan Braun was suspended for the rest of the season for violating the league’s drug policy.


Toyota Profit Jumps 10% in 1st Qtr on Cost Cuts, Currency Gains

New Steels Will Save Weight, Execs Say

Toyota Motor Corpo-ration posted a third straight year of record profit for its first quar-ter as cost cuts and cur-rency gains made up

for slightly weaker vehicle sales.April-June net profit jumped 10

percent to 646.39 billion Yen ($5.22 billion). Operating profit rose 9.1 percent to 756 billion Yen on revenue that grew 9.3 percent, Toyota said in an earnings release.

Toyota’s sales growth continued to be held back by a self-imposed halt on increasing production ca-pacity aimed at preventing quality problems. Toyota’s global retail sales slipped 0.4 percent to 2.502 million vehicles during the quarter.

Sales in China, the world’s biggest auto market, have been hit by intensi-fying price competition, especially for the RAV4 SUV as automakers seek to capitalise on a vogue for SUVs. Toyota’s sales with its Chinese joint ventures declined 0.1 percent in Jan-uary-March.

That featured in earnings as Toyota reports Chinese income one quarter later, and books them at net level un-

der U.S. accounting rules.The Japanese automaker left its

net profit forecast for the year end-ing March unchanged at 2.25 trillion yen, and raised its revenue guidance slightly to reflect higher-than-expect-ed currency gains.

With its sizable production base in Japan, Toyota benefited from a yen that is 17 percent lower against the dollar a year earlier. That boosts the value of models exported from home and softens the blow from weak de-mand in Japan and Southeast Asia.

Slumping sales in those markets led to Volkswagen AG’s global deliveries inching ahead of Toyota’s in the first six months. The automaker said last week that it sold 5.02 million vehicles in the six months through June, trail-ing the 5.04 million that Volkswagen reported. Deliveries declined 1.5 per-cent for Toyota and 0.5 percent for Volkswagen.

Toyota cut its full-year volume sales forecast to 10.12 million units from 10.15 million. The company told workers in Japan in June that it would be “very difficult” to meet its annual sales target due to weak demand in emerging markets.

Jody Hall: “This is the biggest battleground but we have not given up.”

Audi and BMW officials detailed a mixed-materials ap-proach to lightweight-ing automobile bodies

at the seminars, saying they will use

39


In a union newsletter, Manag-ing Officer, Yoichi Miyazaki said the company must make up for the shortfall by boosting sales in devel-oped markets.

While Volkswagen may have sur-passed Toyota by sales during the first

half, the Japanese carmaker still leads the industry in profits.

Analysts project the company may earn about $26 billion in operating profit for this financial year, almost double the $14.8 billion estimated for Volkswagen.

Toyota has lifted the three-year freeze on new factories. The compa-ny said earlier this year it will spend about $1.4 billion to build factories in Mexico and China, adding about 300,000 vehicles of production ca-pacity by 2019.

a combination of steel, aluminum and carbon fiber to save weight.

But steel industry officials say that isn’t necessary, that steel alone can get the job done for less material and manufacturing costs than

adding aluminum and carbon fiber to automobile bodies.

Automaker officials detailed how they shaved significant weight off the next versions of the BMW 7-series sports sedan and the Audi

R8 sports car by using a combina-tion of steel, aluminum and carbon fiber. And Audi’s Q7 crossover, which features an aluminum-inten-sive body will weigh 15 percent less than the current model, Manfred Sindel, Quality Manager for Audi, said.

“The disadvantage is the cost figure. Aluminum and carbon fiber are still more expensive than steel, and we are working in this for the future,” Sindel said. Audi has taken 95 kilograms (209 pounds) out of the next Q7, which has already been launched in Europe.

Jody Hall, Vice President of the Automotive Market at the Steel Market Development Institute, said the grades of steel now in produc-tion give automakers all they need to reduce weight. In 1960, she said, automakers had just two grades of steel from which to choose. Today, they have more than 200 grades. And several new grades of high-strength steel will be available in 2017, said Eric Petersen, Vice President of Research and Innova-tion for AK Steel.

Petersen said automakers could

use the latest ultra-high strength steel to develop lightweight vehicles and save the cost of converting factories from spot welding to riveting and bonding, which is used to assemble some aluminum body components. “As we bring on new steels, how you join them is not a barrier,” he said. Ford Motor spent nearly $1 billion converting two plants to assemble the redesigned 2015 aluminum bodied F-150 pick-up.

The newest grades of high-strength steel will be more form-able, Hall said. Trucks and SUVs, she predicted, would remain steel, but there will be a battle with aluminum over hang-on parts such as doors, trunk lids, fenders and hoods.

Said Hall: “This is the biggest battleground but we have not given up,” she said

She said steel makers’ collabo-rating with automakers is at an all-time high. Manufacturers are struggling to reduce vehicle weight and increase fuel economy in order to meet the government’s stringent 2025 fleet average of 54.5 mpg.

Yesterday, Today & Tomorrow!

The Niger Delta Am-nesty Programme is still on course! That was the good news every citizen of the Niger Delta region, concerned Nigeri-

ans and multinationals in the oil & gas sector wanted to hear from the Seat of Power in Abuja.

That good news came via presi-dential statement announcing re-tired Brigadier-General Paul Boroh as the New Co-ordinator of the Ni-ger Delta Amnesty Programme. He replaced Kingsley Kuku.

Before that announcement, there was understandable concern and uncertainty over the fate of the pro-gramme under the Buhari adminis-tration following the conclusion of the 2015 general elections in which the Niger Delta voted enmasse for former President Goodluck Jona-than, an indigene of the Niger Delta region.

YesterdayLooking back, one would natu-

rally commend former President Umaru Musa Yar’Adua for taking the right decision on June 25, 2009

to proclaim a 60-day unconditional amnesty period for militants in the Niger Delta region, in an attempt to resolve peacefully, the militancy cri-sis in the region.

The terms of the programme was for the militants to renounce vio-lence, lay down their arms and sur-render such arms to the authorities unconditionally.

In return, the federal government agreed to initiate an amnesty pro-gramme to rehabilitate and train the ex-militants on various vocational/career modules in Nigeria and other selected countries abroad.

At the beginning of the amnesty programme, an estimated 30, 000 ex-militants signed on for the reha-bilitation and training scheme, while the life-span of the programme was pegged at five years.

Again, looking back, the amnesty programme did not come as a form of Corporate Social Responsibility (CSR) by the federal government.

Rather, the government was forced to initiate it when it became obvious that Military Might by the federal authorities was not stemming the daily bloodshed, criminal acts of kidnappings and attendant ransoms,

but more importantly, loss of vital revenue from declining oil produc-tion and export as a result of the mil-itancy in the region.

Thankfully, both the militants and federal government duly accepted the programme, leading to disarma-ment and surrender of weapons by the ex-militants, and eventual com-mencement of their rehabilitation, integration and training on various areas of career.

Niger Delta Amnesty Programme:

August 10-16, 2015

TodayNow, what is the situation today?Before the advent of the Buhari

administration, the amnesty pro-gramme itself was winding up gradually, counting in its successes, thousand of ex-militants that bene-fitted from the programme in sev-eral ways, both in cash and training.

But during the same period, the programme itself was also gener-ating heated debate in the polity in respect of one crucial element: pay-ment of billions of Naira to certain militant warlords to allegedly pro-tect oil pipelines from vandalisation on the premise that the ex-militants were better suited to protect oil pipe-lines running through the creeks.

As various figures allegedly paid to the militant warlords in Naira and Dollars for the pipeline protection contract became public knowledge, issues were being raised as follows: why should the federal government hand over the security of oil pipe-lines to ex-militants for protection, rather than security agencies? Who protected the pipelines before the advent of militancy in the Niger Del-ta? How long will this contract last? Was the protection contract not an admission of failure of security by the federal government?

Expectedly, the pipeline protec-tion contract became a controversial issue.

It was therefore not surprising when on assumption of office on May 29, 2015, President Muham-madu Buhari quickly cancelled the entire pipeline protection contract regime.

The cancellation then gave the impression that Buhari was about to cancel the entire amnesty pro-gramme in totality.

However, the appointment of Boroh has soothed frayed nerves in that regard.

TomorrowWhat would be the fate of the am-

nesty programme going forward?Tomorrow, they’d say, is preg-

nant-it could produce anything.For now, the first game plan should

be for the ex-militants to benefit as much as possible from the amnesty programme while it lasts.

The second part is the issue of in-frastructural development of the Ni-ger Delta region as Phase 11 of the amnesty programme.

It is not in doubt that oil produc-tion has wrecked havoc on Niger Delta lands in form of environmen-tal degradation, lost earnings by fishermen and farmers as a result of oil spill on rivers and waterways and health hazards on the citizens.

Tackling these challenges as Phase 11 of the Niger Delta Amnesty Pro-gramme will generate more good-will for the federal government in the region, ensure sustainable peace and stability, and create an enabling environment for oil multinationals to operate seamlessly in the region.

At the end, the federal government will reap more revenue from oil and gas production and export as divi-dend.

For the Niger Delta Amnesty Pro-gramme, we wait for tomorrow with bated breath!

“For a long time, we have relied on external financing to fund our infrastructure. Now is the time to mobilise sovereign African savings to build the Africa of tomorrow”Donald Kaberuka, President of AfDB and Chairman of Africa50

Umaru Yar’AduaInitiator of Amnesty Programme Muhammadu Buhari

Paul BorohNew Co-ordinatorNiger Delta Amnesty Programme

Disarmament

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