- The latest financial results from Q2 2016 point to another solid quarter for industry profitability and cash flow, although CFOs report that they no longer expect further improvement in profitability over the next 12 months;
- Global airline share prices fell by 1.6% in August, and remain well down on where they started the year;
- Brent crude oil prices rallied during much of August, but fell back to $47/bbl by the end of the month. The futures market and oil analysts continue to expect prices to remain below $55/bbl for the foreseeable future;
- Downward pressure on yields has intensified over the past six months or so, in line with the moderation in demand;
- Premium airfares have held up better than their economy counterparts on many of the key premium routes so far this year, and the segment continues to offer a buffer for overall airline financial performance;
- The global air passenger market showed resilience into the peak summer period, with lower fares helping to offset more negative influences on demand. The (SA) industry-wide load factor edged down in July, but remains high;
- Conditions for air freight have improved from the weak patch seen in early-2016, but there remain reasons to be cautious. Low freight loads are keeping downward pressure on cargo yields and revenues.
Global Airlines Financial Monitor: August 2016
FG, States, Experts Seek Growth Path for Economy
The National Council on Finance and Economic Development (NACOFED) 2016 conference, which opens in Abeokuta, Ogun State tomorrow will examine options available to government to improve its revenue streams especially in a period of low earnings from crude oil.
The conference, which is being hosted by the Minister of Finance, Mrs. Kemi Adeosun, has been themed: Enhancing Revenue Generation and Obtaining Best Value for Money in Expenditure.
According to the Federal Ministry of Finance, the event will attract a diverse group of participants including Ministers, Governors, Commissioners of Finance and Budget from the 36 states of the Federation, as well as captains of industry from the private sector.
NACOFED was created as a forum for members to discuss current socio-economic issues, and proffer a way forward for the Nigerian economy on fiscal and monetary policies.
The conference will be declared open by Ogun State Governor, Senator Ibikunle Amosun.
According to the Minister of Finance, Mrs. Kemi Adeosun, the policy thrust of the current administration informs the theme for this year’s conference. She said the Federal Ministry of Finance has continued to discharge its numerous functions through well-articulated initiatives and policies to improve revenue generation, blocking leakages, tackling wastage and obtaining best value for money in government expenditure.
Some of the topics to be treated at the all-important event include: “The non-oil sector as a sustainable alternative in enhancing revenue generation” to be delivered by the Minister for Mines and Steel Development, Dr. Kayode Fayemi.
Others include “Harnessing Customs and Excise Duties for Improved Revenue Generation”, to be delivered by the Comptroller General of Customs, Col. Hammed Ali (rtd); and “Tax as a Source of Improved Revenue to the Federation Account”, to be led by the Chairman of the Federal Inland Revenue Service, Mr. Babatunde Fowler.
Business executives and economic analysts expected at the event include Managing Director, Guaranty Trust Bank, Mr. Segun Agbaje, Group General Manager; Nigerian National Petroleum Corporation, Dr. M.K. Baru; Managing Director, Financial Derivatives Limited, Mr. Bismarck Rewane and former Director General, Budget Office, Mr. Bode Augusto, among others.
The forum serves as an avenue for sharing ideas that will lead to the streamlining of activities in the finance ministries at the federal and state levels as well as other financial institutions of relevance, including government parastatals.
It is expected to enhance the ability of states to align with the Federal Government on various issues of economic concern in order to ensure policy consistency and effective implementation.
Heritage Bank CEO: Non-Oil Export Key to Economic Future
Heritage Bank Limited has identified major commodities that can boost foreign exchange earnings for the country. This becomes necessary as the Federal Government intensifies efforts to boost non-oil export revenues.
Managing Director/ Chief Executive Officer, Heritage Bank Limited, Ifie Sekibo said some of the export potential products cocoa, cashew, groundnut, fish, horns, sesame seed, ginger, cassava and snails among others. He also listed tobacco, coffee, cotton lint, rubber, among others.
Sekibo urged farmers and exporters of agricultural produce to seek more knowledge in order to increase the quality and quantity of their products because export business involves dealings with other world players.
The bank chief who spoke at the 2016 Annual Conference organized by Finance Correspondents Association of Nigeria (FICAN) in Lekki, Lagos, said the 10-year tenor export stimulation facility provided by the Central Bank of Nigeria (CBN) at 9 per cent interest rate is a laudable incentive for exporters.
According to him, although the lenders would want the economy to grow by lending to farmers and other productive sectors of the economy, farmers/borrowers/exporters on their part should know that banks want their monies back and that “there is need for competence, commitment and confidence in the process.”
Speaking on the topic: “Providing Finance for Exports: Expectation & Experience,” Sekibo said Nigeria can also export such manufactured Goods as: Cocoa cakes, butter, powder & liquor, detergents, Malt drinks Palm kernel cakes & oil, baby clothes, confectioneries, leather. In the category of handicraft, Sekibo noted that Nigeria can export Talking drums, Calabash, Wood carvings, Raffia products among others, not forgetting the ever flourishing Nollywood which is even being watched by Militants (like Gendarme) in neighbouring countries.
Represented by Olugbenga Awe, Group Head, Agriculture Finance, Project & Development Finance Department of Heritage Bank, Sekibo regretted that exporters from Nigeria are not competitive enough, such that some Nigerian exporters go to Cameroun to bring in products, blend them to Nigerian products so that they can export. For instance, Yams that are consumed in London are from Ghana, not Nigeria.
As a country, Nigeria cannot afford to continue going backward in terms of non-oil export he reiterated. The banker therefore advised exporters to master the steps to getting funding for export. He said the first step is to know the difference between funds required for financing the business between the commencement of the manufacturing or procuring process and the dispatch of the goods, known as pre-shipment finance; and that of post-shipment finance, which are funds required for financing the exporter between the dispatch of goods and the receipt of payment.
It should be recalled that in recognition of Heritage Bank’s commitment to promoting non-oil export business, the African Export Import Bank (Afreximbank) recently provided a $150 million funding support for the lender.
Afreximbank, a frontline African financial institution believes in the uniqueness of the business strategy of Heritage Bank especially the Small Growing Business focus of the bank which aligns with the founding mission of Afreximbank.
According to the bank chief, exporters should also know that banks look for certain criteria for financing.
“There must be history of previous performance in terms of volume of export handled in the past; Frequency of Export; Payment methods; Payment Terms; how Products are sourced and how risk are mitigated,” he said.
Banks according to him also look at seasonality of the products; product destination; transaction cycle and buyer’s payment history.
The reason why banks look at these key aspects is because they face challenges of inadequate resources for export finance. They also face challenges of inadequate infrastructure to control products quality; lack of dependable source of local product prices and supplier information; too many players in the products supply chain and the challenge of fraudsters in the product supply chain.
Other challenges being faced by banks according to the top banker are: delay and risk of haulage due to bad roads; no exchange platform to facilitate product sourcing; reluctance of buyer to accept a secured payment terms and method like letter of credit; the incompetence and unprofessional behaviour of some inspection agents; Inadequate information on the possibility of exporting perishable commodities from Nigeria and reluctance of buyers to import from Nigeria due to bad reputation in the export market.
AfDB Lends $525m to Nigeria in 2016
Akinwumi Adesina, President of the African Development Bank (AfDB) will visit Nigeria from September 26–28, 2016, on his first official visit to the country since his appointment last year. Adesina will meet policy-makers, the private sector, and development partners to discuss the challenges facing Nigeria and highlight the AfDB’s commitment to further strengthen its partnership with Nigeria.
“I am very much looking forward to my first official visit to Nigeria as President of the AfDB. Nigeria is a vital shareholder and partner for the Bank. The Nigerian economy is in a critical phase, and in these difficult times, we have to make sure we all work together to tackle the challenges facing Africa’s largest economy,” Adesina said ahead of his trip.
The visit aims to advance co-operation across a wide range of areas, including how best Nigeria can respond to its current challenges.
In Abuja, Adesina will hold a series of meetings with the leadership of Nigeria, including President Muhammadu Buhari, Minister of Finance Kemi Adeosun, and Central Bank Governor Godwin Emefiele. The AfDB President will take part in a roundtable discussion with philanthropic leaders and hold discussions with the private sector, as well as development partners. Adesina will also receive an award by the Nigerian Economic Society.
The AfDB has a robust partnership with Nigeria, which is one of the Bank’s founders. Nigeria, the biggest shareholder, is also one of the largest beneficiaries of AfDB’s assistance.
In 2016, the Bank has so far lent US $524,969 million to Nigeria. As of September 2016, the Bank has invested about US $7 billion in the Nigerian economy since it began its operations in the country in 1967.
The Bank is working closely with the Government of Nigeria to support its various sectors, including agriculture, infrastructure, energy, transport, water and sanitation.
World Bank: Infections Could Cause Global Economic Damage by 2050
Drug-resistant infections have the potential to cause a level of economic damage similar to—and likely worse than—that caused by the 2008 financial crisis, according to a new report by the World Bank Group entitled “Drug Resistant Infections: A Threat to Our Economic Future.” The research shows that a high-case scenario of antimicrobial resistance (AMR)—where antibiotics and other antimicrobial dugs no longer treat infections the way they are supposed to—could cause low-income countries to lose more than 5% of their GDP and push up to 28 million people, mostly in developing countries, into poverty by 2050. And unlike the financial crisis of 2008, there would be no prospects for a cyclical recovery in the medium term, as the costly impact of AMR would persist.
“The scale and nature of this economic threat could wipe out hard-fought development gains and take us away from our goals of ending extreme poverty and boosting shared prosperity,” said Jim Yong Kim, President of the World Bank Group. “The cost of inaction is unaffordable—especially for the poorest countries. We must urgently change course to avert this potential crisis.”
Key findings of the report are based on World Bank Group projections of the world economy in 2017-2050.
They include:
- Impact on GDP:By 2050, annual global GDP would fall by 1.1% in the low-impact AMR scenario and 3.8% in the high-impact AMR scenario. Low-income countries would lose more every year leading up to 2050, with the loss exceeding 5% of GDP in 2050 in the latter scenario.
- Impact on global poverty:There would be a pronounced increase in extreme poverty because of AMR. Of the additional 28.3 million people falling into extreme poverty in 2050 in the high-impact AMR scenario, the vast majority (26.2 million) would live in low-income countries. Currently, the world is broadly on track to eliminate extreme poverty (at $1.90/day) by 2030, reaching close to the target of less than 3% of people living in extreme poverty. AMR risks putting this target out of reach.
- Impact on world trade:In 2050, the volume of global real exports would shrink by 1.1% in the low-case scenario, and by 3.8% in the high-case scenario.
- Impact on healthcare costs:Global increases in healthcare costs may range from $300 billion to more than $1 trillion per year by 2050.
- Impact on livestock output:By 2050, the decline in global livestock production could range from a low of 2.6% to a high of 7.5% per year.
Drug-resistant infections, in both humans and animals, are on the rise globally. If AMR spreads unchecked, many infectious diseases will again be untreatable, reversing a century of progress in public health. The United Nations has scheduled a day-long special session on AMR as part of the UN General Assembly in New York this week, only the fourth time that health is being highlighted in this way.
“We now know that—unless addressed swiftly and seriously and on a sustained basis—the growing global problem of antibiotic resistance will be disastrous for human and animal health, food production and global economies. The fact that, left unchecked, it would penalize the poor more than anyone, makes clear why this needs to be addressed as a critical issue for development. As heads of state come together at the UN General Assembly high-level meeting on antimicrobial resistance this week, this should be front of mind,” said Margaret Chan, Director-General of the World Health Organisation (WHO).
Several recent reports on AMR, including the most recent one by Lord Jim O’Neill’s independent policy review, have called for an urgent focus on this issue and highlighted the enormous global economic losses it can cause—it estimated about $100 trillion in total by 2050.
Lord Jim O’Neill, Chairman of the Review on Antimicrobial Resistance, said about the World Bank Group report: “This report provides another timely reminder that rising drug resistance is a looming threat to our prosperity and sustained economic development in all parts of the world. As global leaders meet at the UN this week, I hope that this report will help to harden their resolve to take proper, collaborative action on the many challenges of AMR.”
The report outlines the crises in the human and veterinary public health sectors and in the environment, where capacity for regulating antimicrobials is insufficient in many countries, where misuse and overuse of antibiotics is an issue for some while access remains difficult for many.
There is insufficient investment in building strong public health systems, including surveillance and monitoring, that can reduce risk at the interface between humans, animals and their environment.
The report recommends both AMR-sensitive and AMR-specific solutions to address the crisis. It says that one of the best opportunities in the short-term to mitigate the threat of AMR is to strengthen investments in health systems and overall preparedness to tackle infectious diseases, and to improve public and veterinary health systems while building surveillance for AMR into them as an integral component.
It strongly supports implementation and adequate financing of the WHO Action Plan on AMR, which was endorsed in 2015. It also recommends an urgent focus on innovative AMR-specific interventions that promote and incentivize better stewardship of antimicrobials both for humans and animals, including the appropriate use of antibiotics in animal husbandry.
Marriott Completes Starwood Acquisition, Creating World’s Largest Hotel Group
Marriott International, Inc. has completed its acquisition of Starwood Hotels & Resorts Worldwide, Inc., creating the world’s largest and best hotel company.
Marriott now offers the most comprehensive portfolio of brands including leading lifestyle brands, a significant global footprint, and leadership in the luxury and select-service tiers as well as the convention and resort segment.
Beginning today, Marriott will match member status across Marriott Rewards – which includes The Ritz-Carlton Rewards – and Starwood Preferred Guest (SPG), enabling members to transfer points between the programs for travel and exclusive experiences when they link their accounts later today.
“Throughout our nearly 90-year history we have never stopped searching for fresh ways to serve our guests. With the addition of Starwood’s strong brands, great properties, and talented people, we have dramatically expanded our ability to provide the best experiences to our customers. We also welcome the tremendous responsibility as the world’s largest hotel company to be a good global steward, providing new opportunities for our associates and building the economic strength of the communities we call home,” said J.W. Marriott, Jr., Executive Chairman and Chairman of the Board of Marriott International.
“We believe that Marriott now has the world’s best portfolio of hotel brands, the most comprehensive global footprint, and the most extensive loyalty programs, providing an unparalleled guest experience. Combining Starwood’s brands with ours better enables Marriott to reach our goal of having the right brand in the right place to serve our loyal guests and welcome new ones,” said Arne Sorenson, President and Chief Executive Officer of Marriott International.
“We can now provide a better range of choices for our guests, more opportunities for our associates, and greater financial benefits for our owners, franchisees, and shareholders.”
The new company will operate or franchise more than 5,700 properties and 1.1 million rooms, representing 30 leading brands from the moderate-tier to luxury in over 110 countries. With the completion of this acquisition, Marriott’s distribution has more than doubled in Asia and the Middle East.
Best-in-Class Loyalty Programs
Marriott Rewards – which includes the Ritz-Carlton Rewards – and SPG are the most recognized and awarded loyalty programs in hospitality. Together, these programs will offer members more benefits when they link their accounts, as well as new destinations such as Aruba, Tuscany’s Serchio Valley and Kruger National Park in South Africa for SPG members and the Maldives, Bora Bora and Santorini, Greece for Marriott Rewards and The Ritz-Carlton Rewards members.
“Marriott will draw upon the very best each program offers and we can’t wait to show the loyal members of these programs the power and benefits of Marriott and Starwood coming together,” said Stephanie Linnartz, Executive Vice President and Global Chief Commercial Officer.
New Board Members and Shares Listing
Effective today, Marriott’s Board of Directors has increased from 11 to 14 members, with the addition of Bruce Duncan, former Chairman of the Board of Starwood Hotels & Resorts Worldwide, Inc. and President, CEO and Director of First Industrial Real Estate Trust, Inc.; Eric Hippeau, Partner, Lerer Hippeau Ventures; and Aylwin Lewis, Chairman and CEO of Potbelly Corporation. Messrs. Hippeau and Lewis are also former Starwood board members..
Before market open today, Starwood’s shares will cease trading on the New York Stock Exchange. As previously announced, Starwood shareholders will receive $21.00 in cash and 0.80 shares of Marriott International, Inc. Class A common stock for each share of Starwood Hotels & Resorts Worldwide, Inc. common stock.
Transaction Benefits
Marriott’s acquisition of Starwood enables the combined company to expand the scope of its distribution and portfolio while deploying its larger scale to realize cost efficiencies in its corporate and property operations.
As previously stated, Marriott is confident the company can achieve $250 million in annual cost synergies. Other synergies should come in the form of leveraging operations and sharing best practices. Combined sales expertise and improved account coverage are expected to provide both enhanced efficiencies and increased revenue opportunities.
“These enhanced efficiencies and revenue opportunities should drive improved property-level profitability as well as greater owner and franchisee preference for the combined company’s brands, which will encourage new hotel development,” Sorenson said. “As new travel destinations emerge, Marriott can be counted on to be there.”
One-time transaction costs for the merger are expected to total approximately $140 million. Marriott intends to take the steps necessary to cause Starwood’s outstanding public debt to be pari passu with the outstanding public debt of Marriott International by the end of 2016. Marriott remains committed to maintaining an investment grade credit rating and to continue managing the balance sheet prudently after the merger.
Arne Sorenson remains President and Chief Executive Officer of Marriott International, and Marriott’s headquarters continues to be located in Bethesda, Maryland.
Africa, ME Wearables Market Grow 66% in 2nd Qtr
The Middle East and Africa (MEA) wearables growth story continues unabated, with the latest figures from International Data Corporation (IDC) showing that the market grew 66.0% year on year in Q2 2016 to total approximately 482,000 units for the quarter.
The global technology research and consulting firm’s findings indicate that shipments of basic wearables (i.e., devices that do not support third-party applications) increased 79.8% year on year in Q2 2016, while shipments of smart wearables (i.e., devices that do support third-party applications) increased 40.5% over the same period.
“Fitness trackers continue to make up much of the market’s volume and are proving popular for the value for money they offer,” says Nakul Dogra, a Senior Research Analyst for Personal Computing, Systems, and Infrastructure Solutions at IDC Middle East, Africa, and Turkey.
“Price points continue to fall, which is further fueling the growth of these devices, with basic wearables accounting for 70.3% of overall MEA shipments in Q2 2016. Smart wearables are also gaining traction in the region, but uptake is not so strong as consumers don’t yet perceive much added value in opting for more expensive smart devices.”
A splurge by early adopters helped drive the initial growth for smart wearables, but IDC expects the next wave of adoption for these devices to come from value-seeking consumers or those looking to upgrade from basic wearables.
“Vendors are currently undertaking efforts to improve the form factor of these devices and make them more appealing to the mass market,” says Dogra. “But there is still considerable ground to be made up in convincing more price-conscious consumers that these products have a valuable role to play in everyday life beyond fitness.”
“As with smartphones, there are numerous vendors present in the market but there is little differentiation between their products other than price,” continues Dogra.
“As such, it is important for vendors to develop compelling new applications and designs for their products. For example, the launch of new products incorporated within clothing, earwear, and footwear, will help to further boost the appeal of wearables to a wider audience.”
Looking at 2016 as a whole, IDC expects the MEA wearables market to grow 33.9% year on year in unit terms. This growth will be driven by a 42.5% increase in shipments of basic wearables, while the growth for smart wearables will be a more modest 16.7%.
“There is still plenty of room for the MEA wearables market to grow as penetration remains on the low side,” says Dogra.
“The market has almost reached a stage where the further miniaturization of devices will become a major challenge, so the onus lies on vendors to develop new applications, increase the use of historical data to simplify the user experience, and enable interaction between multiple gadgets in order to push the market’s growth potential further.”
These are exciting times for the wearables market, with niche and mass-market introductions set to change the way we interact with technology in our day-to-day lives. To keep pace with the changes taking place in this fast-moving market, IDC has launched its Worldwide Quarterly Wearable Device Tracker, which assists vendors that are looking to enter this market, promote new product developments, or accelerate the growth of their wearables divisions.
The tracker includes details on products, vendors, and technology trends at both global and country levels, as well as historical market data and five-year forecasts. The report also provides valuable insights into the adoption of core wearable features, such as form factor, connectivity, sensors, operating systems, and applications, and offers invaluable assistance to tech firms looking to develop successful long-term business strategies for wearable devices.
MTN Nigeria Refutes Bribery Allegation Over NCC Fine
MTN Nigeria has denied a bribery allegation over its now settled fine issue with the Nigerian Communications Commission [NCC}.
An online report indeed alleged that a top official at the Presidency in Abuja collected bribe from MTN Nigeria to reduce the fine.
In a statement today, MTN Nigeria said:
MTN’s attention has been drawn to an online report alleging that a top official in the Presidency took a payment ‘from operators of MTN’ towards reducing the fine.
According to MTN Nigeria CEO, Ferdi Moolman, MTN Nigeria has no knowledge of this and the allegation is therefore denied.
The MTN Nigeria fine was ultimately settled with the NCC.
‘FG Should Support SMEs to Ease Recession’
With the Nigerian economy in recession, support for small & medium businesses could be one of the key ingredients to carrying the country through these tough times. Assisting them should become a priority for big business and government.
That’s according to Magnus Nmonwu, Regional Director for Sage in West Africa, who says that small & medium businesses in Nigeria face challenging times, even as the economy slides. In addition to the country entering a recession – defined as a decline in GDP over two consecutive quarters – the upcoming Communication Service Tax Bill could also affect Nigerian businesses.
Yet Nigerian businesses and entrepreneurs are creative and resilient – and might play an instrumental role in lifting the economy out of recession, given the right support and business environment. “Nigerian entrepreneurs and business owners are the engines that drive the country’s economy,” says Nmonwu.
“During recessions, big companies are able to adjust by downsizing and cutting costs. Small businesses, however, keep going and carry the losses. They need our support, as they can contribute to turning the economy around, far more quickly.
“It is important that government and other stakeholders listen to entrepreneurs’ concerns as they seek to grow and contribute to the economy. We have embraced the responsibility of helping to amplify the voice of small business, because we also started small and understand the challenges entrepreneurs of small face in such times.”
With the recession biting, Small & Medium Businesses face the reality that consumers won’t have as much money to spend and that investors and business partners will taper down investment. Given that Nigeria has an estimated 37 million micro, small, and medium-size enterprises making a significant contribution to GDP and employment, this sector should be treated as an economic priority, Nmonwu says.
Communication Service Tax
Another concern on the horizon is the looming Communication Service Tax Bill 2015, which is currently with the National Assembly. If passed into law, the law will require that consumers of voice, data, SMS, MMS and pay TV services pay a 9% tax on their tariffs for using these services.
This is in addition to other taxes people already pay for mobile and Internet access – 5% VAT, 12% import duties on ICT devices, and 20% tax levied on SIM cards, amongst the series of taxes. The Alliance for Affordable Internet, Nigeria Coalition, estimates that the tax could prevent more than 50 million Nigerians from affording a basic broadband connection.
“Nigerian entrepreneurs depend on their mobile phones and the Internet to run their businesses,” says Nmonwu. “The tax could potentially raise the cost of doing business and hold back Nigeria’s integration into the global digital economy by excluding people from broadband access.”
Nmonwu says that it is understandable that the government needs to raise new tax revenues in the wake of falling commodity prices. However, this should ideally be done in a way that nurtures the growth of the Small & Medium Business, technology and services sectors – especially at a time Nigeria needs to diversify its economy beyond oil
Emphasis should be placed on creating new tax revenues. For example, a conditional tax amnesty could encourage smaller businesses who have not compiled with tax laws to fall into the tax net. By making short-term sacrifice of potential tax revenues, government could bring more businesses into the formal economy and help them grow into enterprises able to employ more people, approach banks for financing and pay taxes.
Financing Small Businesses
“In this regard, we are encouraged to see some of the moves that government, multilateral financing institutions and other stakeholders are making to support entrepreneurs,” Nmonwu adds.
In particular, he welcomes the Central Bank’s launch in May 2016 of a modern online collateral registry, supported by the World Bank. The registry will enable low-income earners and micro-entrepreneurs to secure loans against movable assets such as machinery, livestock, and inventory.
Other bodies providing small businesses with financial support include:
- Bank of Industry, which supports new or existing companies, seeking expansion, modernization or diversification;
- The National Economic Reconstruction Fund (NERFUND), which provides medium-to-long-term financing for viable small and medium enterprise; and
- Bank of Agriculture (BoA), which provides financial support for all agricultural in addition to rural micro enterprises.
“Funding is one of the major challenges entrepreneurs face in Nigeria, so these are great initiatives,” Nmonwu says. “We would welcome similarly innovative interventions to address some of the other challenges small businesses face such as complex tax and remove regulations and general business red-tape.”
The Nigerian government is also to be commended for establishing a range of organisations and initiatives to support Small & Medium Businesses.
For example, the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) identifies Nigerians who are interested in entrepreneurship and provides them with training in entrepreneurship and vocational skills. Entrepreneurs meet regularly to share ideas about growing their businesses under the umbrella of SMEDAN.
Nmonwu says: “Entrepreneurs make life-sacrifices. They are dreamers and innovators. They take risks to pursue their passions and, on this, Nigeria’s prosperity can or should be built /developed. They deserve a bigger voice and we will always work hard to champion this noble cause.”
Royal Exchange Reports N10.79bn Premium in 2015
Royal Exchange Plc has reported premium income of N10.79 billion in the financial year ended December 31, 2015. The result marks a 14 percent rise in premium compared to the figure of N9.43 billion in the same period of 2014.
Mr. Kenneth Odogwu, Chairman, Royal Exchange Plc, told shareholders at the company’s 47th Annual general meeting [AGM} in Lagos that the Group is presently streamlining major components of its businesses, service delivery, processes and operations in order to deliver superior returns to shareholders.
“This we believe will reposition our great company as not only a major industry player but as a potential game changer. The future of our company and our plans for 2016 are well on course notwithstanding the current downturn in our domestic economy.”
Odogwu predicted the clamour for greater government’s participation as well as the enforcement of compulsory insurance regulations as provided by the Market Development and Restructuring Initiative [MDRI] are expected to be a top priority of the National Insurance Commission [NAICOM] in 2016.
“As always, Royal Exchange stays abreast with many of the initiatives mentioned above in our quest to grow market share and attain market leadership position.”
Mr. Auwalu Muktari, Group Managing Director/CEO of Royal Exchange Plc, said the Group remains focused on achieving its strategic plan of steering the company towards market leadership.
“We invested in digital solutions that would improve front-end sales, distribution and customer services, as well as enhance back-end operating efficiency and expenses management.”
Muktari said the performance of the company in 2015 was a good show of spirit and tenacity, just as its revenue diversification drive away from traditional markets recorded good progress in deepening its tentacles in some frontier markets, most especially retail and agribusiness.
“In future, we intend to be more active in micro-insurance to bridge the insurance needs of the yearning public, including the upcoming millenials. 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 shareholders through the broadening of our revenue base, improving service delivery support systems and at the same time, keeping a lid on our group costs.”
Africa Nominates Zimbabwe’s Tourism Minister, Mzembi, for UN – WTO Secretary-General
African nations have nominated a Zimbabwean, Dr. Walter Mzembi, as their candidate to become the new head of the United Nations World Tourism Organisation (UN – WTO) Should Mzembi get this post, it will be the first time in the organisation’s 43-year history that an African would head the organisation.
Speaking during the UN General Assembly in New York, Africa’s longest-serving tourism minister said that he was humbled and privileged to have been chosen by the Government of Zimbabwe, the Southern African Development Community (SADC) and the African Union (AU) as the continent’s candidate.
“Since the establishment of the UN -WTO in 1974, no African has ever become its Secretary General. Almost all the geographical areas of the world have produced a secretary-general, except Africa. In fact in 42 years, three secretaries-general have come from Europe, while one each has come from the Americas and Asia. I am therefore delighted to be representing my region as the continent’s united candidate”.
If elected, Mzembi will come on board in 2017, during the “International Year of Sustainable Tourism for Development”. Globally, his said that his plan would be to align the three tourism-specific Sustainable Development Goals on ‘decent work and economic growth’; ‘responsible consumption and production’; and ‘life below water’. Regionally, he said that he would further embed tourism’s intervention in the African Union’s Agenda 2063.
A former member of the UN-WTO’s Executive Council, and current chairman of the UN-WTO’s Commission for Africa, Mzembi was instrumental in convening the 20th UN-WTO General Assembly in 2013.
This global conference, which was hosted jointly by Zimbabwe and Zambia, was described by the current Secretary General, Dr Taleb Rifai, as “the best attended ever” in the history of the organisation. Rifai, a Jordanian national, retires next year.
Membership of the Madrid-based UN-WTO, one of the 17 specialised agencies of the United Nations, covers 157 countries, 6 territories, and 480 affiliate groups representing the private sector, educational institutions, tourism associations, and local tourism authorities. The organisation promotes responsible, sustainable and universally accessible tourism and works to make tourism an effective tool for development.
“The UN-WTO is the world’s leading international organisation promoting tourism as a driver of economic growth, environmental sustainability and inclusive development. My vision has always been to use tourism to promote peace, security and social harmony and, if I am appointed, I hope to be able to steer tourism development towards climate change adaptation and mitigation, and ultimately reduce poverty among communities”, concluded Mzembi.
Tourism remains one of Africa’s most important strategic sectors, both in terms of employment, foreign exchange revenues as well as opening up the continent and its opportunities to the world.
GE Restates Commitment to Africa at 2016 U.S.-Africa Business Forum
Two years ago, the first U.S.-Africa Business Forum drew the attention of the world to the promise of Africa. Governments and organisations discussed and debated opportunities in infrastructure, innovation, and workforce development, and together committed more than $33 billion in deals, investments, and financing to accelerate African growth.
GE, which has operated in Africa for over 100 years, committed at the 2014 event to invest $2 billion in facility development, skills training, and sustainability initiatives across Africa by 2018. Today, ahead of the second U.S.-Africa Business Forum, GE is proud to announce significant progress against these commitments, as well as several new initiatives.
Jay Ireland, president and CEO of GE Africa, said: “Meeting Africa’s needs takes leadership and cooperation This week’s U.S.-Africa Business Forum signals the strong commitment by both African and U.S. companies and governments to collaborate for economic growth. GE is proud to remain a steadfast partner in Africa’s sustainable growth and will continue to invest in people and infrastructure across Africa.”
Nabil Habayeb, president and CEO of GE Middle East, North Africa, and Turkey said: “Building on our decades of presence in the region, we have specifically focused on supporting North African nations to strengthen their energy, healthcare and transportation infrastructure – sectors that are mission-critical for sustained growth.
In addition to delivering advanced digital industrial technologies that enhance productivity and efficiency, our emphasis has been to create thriving innovation ecosystems and promote local capacity building. Led by the success of these initiatives, we are taking our partnerships to the next level to accelerate growth and progress.”
Building Infrastructure
Africa is home to 12 of the world’s 20 fastest-growing economies, and its manufacturing, services and technology sectors are fueling markets around the globe. Improving access to core infrastructure will equip more Africans to tap its vast potential.
1. GE’s installed base across Africa totals more than 93 gigawatts of power. We have added approximately 11 gigawatts to the grid since 2014, and 2.74 gigawatts are currently under development by GE in Power Africa projects
2. GE has spent $15m over the past two years on projects representing roughly 2GW of power in Nigeria and Ghana. Today, we are excited to announce the signing of the PPA and related agreements for the Ghana 300 Bridge Project, which will power the equivalent of 700,000 homes in Ghana.
3. In Egypt, the government needed help to avoid outages during Ramadan in 2015. GE delivered 2.6 gigawatts enough emergency power to supply 2.5 million homes — in 9 months, the fastest project of that size we have ever done.
4. In Algeria, GE has created 3 joint ventures across the energy spectrum. Webroke ground in 2015 at GE Algeria Turbines (GEAT) and are preparing the site; we expect it to be operational by 2018.
5. In Nigeria, we launched a $20M Healthymagination Mother & Child initiative in 2016 with USAID, the Nigerian Federal Ministry of Health, and the National Primary Health Care Development Agency. Two million expectant Nigerian mothers are set to benefit from the program by 2020.
6. GE is supporting Kenya’s Managed Equipment Services (MES) project in line with the country’s transformation strategy. One of the largest healthcare modernization programs to date in Africa, we have so far upgraded radiology departments at 96 Ministry of Health hospitals. Early results are positive; access to radiology services improved by 50 percent across three pilot hospitals in the first five months after the new equipment was installed.
7. Through partnership agreements in Nigeria, Kenya, Ethiopia, Ghana, and Angola, we support their development agendas in power generation, healthcare, and transportation. We were even named one of Nigeria’s most strategic investors this year.
Localised Solutions
GE is working with partners in Africa to drive sustainable development and solve local challenges by investing in technology, building capital markets and developing technical skills within communities:
1. GE launched its first Africa-based innovation center in South Africa in 2016. The Africa Innovation Centre, according to GE Africa president Jay Ireland, will be a “collaborative work space” aimed at “driving innovation in Africa for Africa.”
2. The Centre, which serves as the Africa HQ for GE’s growing Healthcare business, also houses the first Healthcare Customer Experience Centre in Africa, which is designed to mimic different care areas in a hospital environment.
3. GE inaugurated the brand new $13 million GE Healthcare Skills and Training Institute, an education facility for healthcare professionals, in Kenya in 2016, as part of its MES commitment. Through the new facility, GE has committed to training over 10,000 healthcare professionals from across Kenya and East Africa by 2020.
4. The $19M supplier development fund we outlined in 2014 is operational, and 18 small- and medium-sized businesses are now receiving business and technical services.
5. In collaboration with the U.S. Africa Development Foundation and USAID, today GE continues its commitment to the “Power Africa Off-Grid Energy Challenge”. The initiative has awarded 50 grants of up to $100,000 each to local enterprises to develop and expand off-grid solutions in Ethiopia, Ghana, Kenya, Liberia, Nigeria, Tanzania, Rwanda, Uganda and Zambia.
6. In 2016, GE’s and the Miller Center for Social Entrepreneurship launched a program to train and mentor African social entrepreneurs addressing maternal and/or child health. The program selected its first cohort of 17 social entrepreneurs, who will gain support in strengthening their business models, refining business plans, reinforcing organizational development, managing talent, and learning how to scale sustainably.
7. In Egypt, GE and the Ministry of Communications and IT launched the GE Egypt Digital Innovation Challenge in September 2016. Entrepreneurs can submit digital solutions for industrial challenges in healthcare, transportation, and energy until November 30, and winners will receive a cash award of EGP 100,000, as well as an opportunity to receive training to develop their software solution on Predix.
Capacity building
GE investing in capacity building that will ensure sustained growth by providing skills training and developing leaders through partnerships with local governments, schools, and hospitals:
1. GE employs more than ~4100 workers across 35 countries in Africa. Since the U.S.-Africa Business Forum in 2014, GE has received over $11B in orders. In 2015, GE saw $6.4B in revenue across the continent.
2. Since 2014 GE upgraded GE facilities in South Africa and Nigeria; opened new facilities in Kenya and Ghana; and launched offices in Ethiopia, Mozambique, andCote d’Ivoire.
3. In 2014, the GE Foundation announced a $20M commitment to advance maternal and child health in Africa, through the extension of programs supporting the Sustainable Development Goals to eradicate preventable maternal and infant mortality. Nearly 800 health workers have been trained so far through biomedical equipment technician and nurse anesthetist programs.
4. The GE Foundation further committed in 2015 to its Safe Surgery 2020 Initiative, a $25 million-dollar, 3-year commitment to accelerate access to safe surgery in low- and middle-income countries. The Initiative launched in Ethiopia and will expand to Tanzania next.
5. GE and the GE Foundation’s 2014 investment in Pink Ribbon Red Ribbon has trained 30 technicians in equipment repair and maintenance in Ethiopia. The program is launching a biomedical center of excellence there.
6. GE has facilitated leadership development and helped develop curricula at Regional Leadership Centres for President Obama’s Young African Leaders Initiative (YALI). GE staff members also serve as mentors to youth in the program.
7. GE expanded its GE Garages program into Kenya in 2015, collaborating with Gearbox and Seven Seas Technologies help build a skilled workforce and drive entrepreneurial development in the country.
US Approves Airbus, Boeing Aircraft Export to Iran
The US Treasury Department’s Office of Foreign Asset Control (OFAC) has issued licenses to Airbus and Boeing for export of their aircraft to Iran. Both aircraft manufacturers confirmed the decision on September 21, 2016.
Tehran, Airbus and Boeing were awaiting the US decision on the export license for the aircraft. The latest news said that the US allowed Airbus to start exporting aircraft to Iran, and a license to Boeing will be granted in the following days.
Airbus was granted the license for early deliveries of 17 A320s and A330s to Iran Air. At the same time, Boeing will be allowed to complete negotiations under a Memorandum of Agreement (MoA) with Iran Air for 80 aircraft of various models: 737, 777 and 787.
The US-based company will also arrange the lease of 29 additional airplanes to Iran Air. Airbus‘ transaction also required the US Treasury’s export license due to Airbus jets having 10% US content.
Tehran and Boeing previously agreed on the purchase of 80 aircraft and on the lease of additional 29, but later Iran trimmed the order to 108 aircraft.
Airbus was the first company which signed an agreement with Iran Air under the Joint Comprehensive Plan of Action (JCPOA), in January 2016. The agreement featured an order covering 118 aircraft of various models, valued $27 billion: A320 family, A320neo-family, A330 family, A330-900s, A350-1000s and A380s. Iran still has not decided on the A380 aircraft, and recently Iran trimmed the order to 112.
Iran’s government is reported to have also ordered up to 40 ATR turboprop planes, which also need export approval from the US.
2bn People Without Bank Accounts: Leveraging Financial Technology for the Under-banked
More than two billion people worldwide are without bank accounts. Most are poor and only a third of adults in sub-Saharan Africa have access to any kind of basic financial services. IMF Deputy Managing Director, Mitsuhiro Furusawa, says the region is running the development race weighed down by exclusion.
“Access to financial services allows families to smooth out consumption and invest in their futures through education and health. And access to credit enables businesses to expand, creating jobs and reducing inequality,” Furusawa added.
Furusawa is in Dakar, Senegal to attend a conference designed to promote financial inclusion in West Africa. With less demand for African products, the slower global economy has put added pressure on many African economies, particularly the natural resource exporters, to find ways to reinvigorate growth. Furusawa said financial inclusion is one key for promoting strong and stable economic growth.
There are many reasons for the lack of access to traditional financial services, but Roger Nord, Deputy Director of the IMF’s African Department, says technological innovation within the financial sector, commonly known as Fintech, is perhaps the most promising way to advance financial inclusion.
“Access to formal financial services is often difficult in low-income countries: bank branches are concentrated in urban areas, and costs and fees can be high. Financial technology can tackle both problems at once: suddenly financial services are available to anyone with a mobile phone at a fraction of the cost,” Nord said.
And the rapid spread of technology is proving its worth. Sub-Saharan Africa leads in the adoption of mobile banking around the world.
Simple Payments to Simple Savings
In Kenya, for example, the mobile banking system known as M-Pesa that started as a way for mobile phone users to transfer unused air minutes to each other, quickly turned into a cash payment platform. Rather than spending several days traveling by bus to deliver cash to family members in rural villages, one could send money via text message, at a minimal cost.
Local banks have since teamed up with M-Pesa, and started offering users a savings option for unused balances in their M-Pesa accounts—paying interest, regardless of how small the account balance. Meanwhile, user data enables the issuance of micro-loans to those deemed creditworthy.
As a result, more Kenyans are saving and borrowing, and the proportion of the population excluded from financial services has fallen below 17 percent. Kenya is now third in sub-Saharan Africa for financial access, behind South Africa and Mauritius.
Other East African countries such as Tanzania, Uganda, and Rwanda are following Kenya’s example, using financial technology to leapfrog traditional banking systems and provide financial services to all levels of society.
The Promise of Fintech
Another promising application of Fintech for low-income countries could be to lower the cost of cross-border transfers, thereby addressing the worrisome loss of correspondent banking relationships that many low-income countries have seen in recent years as commercial banks cut back in the face of rising compliance costs. This could provide a significant boost to low-income countries that receive significant remittances from overseas.
The power of financial technology to lower transaction costs and expand access to financial services is not limited to low-income countries in Africa.
A recent conference co-organised by the IMF and Singapore Management University illustrated the global potential of Fintech.
In China, the financial services arm of online retailer Alibaba has grown so rapidly that it now surpasses the largest Chinese commercial banks in transaction volumes. India’s biometric identification system, Aardhar, has started to open up low-cost financial services to previously underserved populations.
And, in advanced economies, there are a multitude of technology start-ups aiming to revolutionise global payment and settlement systems through the use of digital currencies and block-chain technology.
Meanwhile, regulators are carefully considering the impact of new technology on the stability of the financial system, including on money laundering and the financing of terrorism. The financial technology revolution is likely still some way off, but for low-income countries the benefits are tangible and, as in the case of Kenya’s M-Pesa, already evident. Financial institutions are quickly adapting to Fintech innovations that will ultimately bring more unbanked into the banking fold, which Furusawa says is essential for the economic development of the region.
The conference in Dakar is co-hosted by The Bank of West African States (BCEAO) and the IMF, and will examine the prospects and policy options for promoting financial inclusion in West Africa.
By Rodolfo Maino
IMF African Department
Lufthansa Group, Air China in Strategic Partnership
Lufthansa Group and Air China signed a partnership agreement in Beijing on September 20, 2016 which will enable the two companies to jointly operate all connections between Europe and China as part of a commercial joint venture. The co-operation is scheduled to commence at the start of the 2017 summer flight timetable.
The joint venture aims to significantly expand their mutual code-sharing connections and enhance their commercial partnership. This will allow the Lufthansa Group to continue pursuing its partnership-driven Asia strategy.
Carsten Spohr, Chairman of the Executive Board and CEO of Deutsche Lufthansa AG, said: “The Chinese aviation market is one of the most important growth markets worldwide. We want to profit from this growth together with our Star Alliance partner, Air China.”
Cai Jianjiang, Chairman of Air China, stated: “Under the Joint Venture framework, we will further expand network coverage in China and Europe, enhance the flight connections in beyond markets and optimise flight schedules, enabling us to bring more and flexible flight choices, favorable fare products and seamless travel experiences.”
The expanded code-sharing connections will enable Air China’s customers to conveniently travel on more code-sharing routes to/from various destinations in Austria, Belgium, Germany and Switzerland via the Frankfurt, Munich, Zurich and Vienna hubs.
In turn, Lufthansa, Swiss and Austrian Airlines will gain access via Air China to additional routes in China, the second-biggest aviation market in the world. Further destinations are set to be added soon as part of code-sharing.