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Vanguard Markets features unbiased, in-depth coverage of corporate and market developments across a wide range of business sectors. Every week, Vanguard Markets delivers essential business analysis and commentary on Nigerian companies, regional economies, and global markets. Vanguard Markets is published by Vanguard Media Limited in association with Customs Street Advisors Limited, a specialist communications consultancy.
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Soft-spoken and person-able Uchenna Igwebuike has the canny art of putting peo-ple at ease on first encounter. At 6 feet 4” and weighing 250
pounds, this gentle giant has all it takes to have made a ca-reer in gladiatorial America football. Instead he chose the geek’s trade: coding. Six years
after returning to set up his company in Nigeria he looks back at the journey that has brought him to this point. In this interview, he talks about
his formative years, early in-terest in computers, career in Silicon Valley, and the bound-less opportunities that exist in serving companies in Nigeria
through first-class software applications delivered by first-class Nigerian programmers.
! Page 4
Vanguard Markets | Monday, July 14, 2014 | Issue 001
INTERVIEW
A cerebral approach to transactions at Olaniwun Ajayi LP
! Deal Engineer - page 3
C-SUITE
Fixed Income & Forex
Inside
Rickety Piketty
Jaywalker discusses Thomas Piketty’s best-selling book, Capital in the Twenty-First Century, and wonders aloud if it could strike a note on these shores
! Page 2
Striving to Stay No. 1
Leoplast is a plastics company that is rein-venting itself to retain its top position in a competitive industry with thinning mar-gins. Read how the company is doing so.
! Page 6
Time to move beyond rhetoric
If Nigerian compa-nies are serious about competing success-fully for global capital they need to adopt stricter governance standards that build market confidence.?
! Page 7
Meet Mr. Capital Markets Software
0B 10.00 1030/0627/06 30/0608/0707/07 08/0711/0710/07 11/0703/0702/07 03/07
80B 12.00 15
70B 11.75
60B 11.5014
40B 11.00
50B 11.25
30B 10.75
13
20B 10.50
12
10B 10.2511
NITTYFGN Bonds & TBills NIBOR1M2M
FGN BondsTreasury Bills
3M6M
9M12M
Source: FMDQ
O/N1M
3M6M
Uchenna Igwebuike, Zanibal LLC
162.030/06 08/07 11/0703/07
162.5
163.0
FX ($/N) BidAsk
Wolemi Esan
citizens, it is rare to find Ni-gerians begrudging their na-bobs of helping themselves to the finer things of life.
Reni Folawiyo, propri-etress of the Alara concept store and wife of Tunde Fo-lawiyo, one of Nigeria’s rich-est businessmen told the Wall Street Journal that ‘just because we live in a country that has problems does not mean we are excluded from the enjoyment of beautiful things.’
The interest these uber-rich Nigerians attract is mainly social and not aca-demic as evidenced by the number of glossy titles and blogs that peep into their gilded lives.
In a sense, it all depends on how one views widen-
ing income inequality or the perception of it. The optimist in most Nigerians sustains them in their belief that one day, one day, they too shall enter the magic circle. The zero-to-hero overnight men-tality is hard-coded into the national DNA.
Attitudes like these evade the question that Piketty sought answers for. In a country where most wealthy people are first-generation millionaires many retain the belief that one day the stars will shine on them too. Con-sidering this fluidity of class identities it is little wonder that Nigerians would take pity on his worries, or worse, think him petty for begrudg-ing the rich the fruits of their lucre. ;
of transcription; suboptimal averaging techniques; mul-tiple unexplained adjust-ments to the numbers; data entries with no sourcing, unexplained use of different
time periods and inconsist-ent uses of source data.’
Whether one agrees with Piketty or not, he has made the debate on inequality and growing concentration of wealth a fashionable topic.
This leads one to ask if his work, which is concerned with developed societies that have slowing growth and de-clining populations, bears any utility for countries like Nigeria. With official annual growth rates of 7 per cent can Nigeria escape the Piketty conundrum of rising income inequality?
Aviation sector statis-tics show that from 2007 to 2012 a total of 120 private jets worth $6.5 billion were bought by wealthy Nigeri-ans. In the same period, its private charter market grew to $3.5 billion. Despite the sharp contrast between the very wealthy and most of its
INSIGHT2
Lately, Capital in the 21st century, the 700-page pop-ular economics bestseller written by Thomas Piketty, has drawn scorn from those that question his objectivity in claiming that inequality is widening in advanced econo-mies. Not long ago, Chris Giles and Ferdinando Giug-liano wrote a withering cri-tique in the Financial Times dismissing the economist’s data as academic pretensions
fundamentally motivated by rhetoric, and not research.
First, a little bit of back-ground. Piketty, who earned his PhD at 22, has written a book that sets out to answer if: ‘The dynamics of private capital accumulation inevi-tably lead to the concentra-tion of wealth in ever fewer hands, or if the balancing forces of growth, competi-tion, and technological pro-gress lead to reduced ine-quality and greater harmony among the classes?’
He traces the evolution of inequality over three centu-ries to discover if wealth con-centration is receding or not. He finds that it is increasing. For a moment in time, after the major social-political upheavals wrought by the two World Wars, deliberate government policies helped to engender a broad upward mobility.
However, since the 1970s Keynesianism and similar interventionist policies have been eroded by the unbridled dominance of laissez faire. Fast forward to the 21st cen-tury, and inequality has reas-serted itself to a degree not seen since before the Great War.
Piketty cites a plethora of sobering statistics to back up his claims. In Europe up till 1914, 90 per cent of the ag-gregate wealth was held by 10 per cent of the citizens. More shocking is that 60 per cent was held by the top 1 per cent. In contrast, today about 60-70 per cent of the aggre-gate wealth is held by the top 10 per cent, and about 20-30 per cent is owned by the top 1 per cent. Looking downward, the bottom 50 per cent of the populace owns less than 5 per cent of aggregate wealth.
Piketty posits that because wealth tends to grow faster than economic output, a
condition he describes with the elegant formula r > g (where r is the rate of return to wealth and g is the eco-nomic growth rate), faster economic growth allows out-put to catch up, and close the income disparity gap. Conversely, slower economic growth will amplify it, and increase the returns accru-able to wealth.
The implication is clear. Only a leap in productivity or government intervention in developed countries can restore the balance between the very rich and those at the bottom of the pyramid. To fix this, Piketty solicits for a global wealth tax to amelio-rate the risk of social insta-bility from these appalling inequalities.
Giles and Giugliano are having none of this. They dismiss the book as ridden with ‘simple fat-finger errors
JAYWALKER
Picketing Piketty
Source: www.wijn.nu
Thomas Piketty, a French professor of economics has written a bestselling book, Capital in the Twenty-First about rising income inequality in developed countries.
Hardcover: 696 pagesPublisher: Belknap Press; First Edition edition
I got some stunna shades on, Prada on my back, Louis [Vuitton] on my feet, Gucci on my wristI’m a Big Boy, they hate on me cos I’m a Big Boy...
In Nigeria, inequality is fine so long as the citizens’ deep-seated consumerist culture is left untampered with.
Big Boy Tinz
The lyrics of Big Boy, a song by eLDee, an architect-turned-musi-cian, says it all about the likely reac-tion of Nigerians to such academic discourse:
eLDee
VM | Monday, July 14, 2014 | Issue 001
Our investigation found numer-ous mistakes in Piketty’s work: simple fat-finger errors of tran-scription; suboptimal averaging techniques; multiple unexplained adjust-ments to the numbers; data entries with no sourcing, un-explained use of different time periods and inconsistent uses of source data.
Follow the Latest Business News at http://www.vanguardngr.com/category/finance/a
0.5%
1.0%
1.5%
2.0%
2.5%
19891986 1992 1995 1998 2001 2004 2007 2010
Inco
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ld b
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t 10
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Inco
me
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ld b
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t 10
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20%
30%
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Source: World Bank, Development Research Group
lowest 10%highest 10%
Income Distribution in Nigeria
Obiora [email protected]
Champagne seller in open market store, Lagos.
of our lawyers as trusted advisors and enablers of transactions, not academics. We are known to take a commercial, business driven approach to law. If you look at the profiles of our lawyers, you will find that a number of our lawyers have MBAs, and one of our partners is currently pursuing a DBA. We are constantly at work thinking up new ways of solving clients’ problems.
What is OA’s client solving approach?
We believe our clients come to us for cutting-edge solutions to intricate legal problems. We also believe that each matter needs a mul-tifaceted approach to find the best solution. According-ly, whatever the nature of the instruction, we are insistent on a cross-functional, rigor-ous approach when explor-ing solutions for our clients. We discourage silo thinking here. For instance, if a bank-
ing client has a pending case we will pool resources from our litigation, and banking practices to brainstorm on the matter. Throughout the process we maintain open communications with the cli-ent. This helps in developing our case management strat-egy, which is compiled in a single document for easy ref-erence when needed by new team members.
In spite of the govern-ment’s efforts to draw in private sector partici-pation into power and infrastructure there is a
strong residue of public distrust and resentment over the privatization of common assets. What is your view?
One thing we can all agree on is that the govern-ment has no business being in business. That said, it is understandable that when people do not fully appreci-ate the constraints faced by the government in funding costly, large-scale socially beneficial projects like power and infrastructure all by it-self, and the attendant op-
portunity cost, there is a ten-dency to leap to wholesale condemnation of privatiza-tion. Knowing the magnitude of competing demands faced by state and federal govern-ments, I will say that privati-zations, PPPs, and similar arrangements ultimately serve the public good when properly structured. That the government and sponsors do not always do a good job of communicating the ration-
ale of these sales, cannot be an indictment of the ethos of these arrangements. Let us not forget that these same arrangements were the bat-tering rams used to disman-tle the inefficient monopolies enjoyed by state-sponsored companies in the past. The choices and convenience they have brought have been a great service. For example, we all remember the bu-reaucracy Nigerians suffered under NITEL until the GSM licenses were sold. When we take out sentiment, what we find is that, when properly executed, deregulation and
indeed, privatisation, has the potential to deliver benefits at lower costs to taxpayers and customers.
Sector-wise, does the work-mix at the firm evolve with trends in the economy?
As a full service firm, we receive instructions in both contentious, that is, litigious, and non-contentious, that is, advisory, matters from our clients. Naturally, most of our advisory work, be-ing transaction-driven will
reflect the push-and-pull of economic forces. For exam-ple, during the banking con-solidation round of 2004-5, we worked with over 60% of the financial institutions. Again, in 2009, during the Central Bank’s banking sec-tor intervention we worked closely with the regulator to assure financial system sta-bility. As situations arise, we adapt and fit in, whilst retaining our core essence. It is the only way for a firm to remain relevant and indeed thrive.
What recent global M&A transaction would you have liked to work on?
That would have to be the aborted Pfizer-AstraZen-eca combination. The sheer scale of the two companies’ global operations, multiple regulatory jurisdictions, and the size of the offer gave it all the tantalizing features of a transformational deal on so many levels. In the end, AstraZeneca shrugged off the suitor’s offers, and Pfizer chose not to launch a hostile take−over for AstraZeneca. If it had gone on a full of-fensive, one would have liked to see the creative defensive structures that AstraZeneca’s lawyers would put in place. It would have been the stuff of case-study dreams for years to come. I would have liked to work on this deal advising the sell side. ;
What is your role at the firm?
Until recently, I was part of the Firm’s Specialized Trans-actions Practice. Essentially, the practice deals with the most innovative transactions in the market. Its respon-sibility is to craft bespoke solutions to situations that often have no precedent in market. For instance, on one occasion we had a client who needed financing to develop its upstream petroleum as-set. After we considered a number of options, we set-tled on a forward sale struc-ture, whereby we presold the crude reserves to raise the necessary funds needed to exploit its proven reserves. Putting together deals of this nature is what our Special-ized Transactions Practice is known for.
Then about two years ago, I moved to the Power & In-frastructure Practice, and as the name suggests, the practice focuses on two key sectors of the economy, in which we are privileged to frequently attract the top mandates. Only last year, during the privatization of the Power Holding Com-pany of Nigeria, Olaniwun Ajayi LP advised on 9 out of the 15 privatized assets. We have also been advising on the Azura-Edo Independ-ent Power Project, which is widely regarded as the tem-plate for future IPP develop-ment projects in these parts. On the infrastructure side, we are also working with a client on the development of a deep seaport to serve Ni-geria’s burgeoning maritime needs as well as a number of other major PPP deals.
What qualities charac-terise Olaniwun Ajayi?
I would say our bias for technical, intellectually demanding high-end work. Olaniwun Ajayi’s reputation is not built on the solicitation of vanilla-category briefs. We push the envelope of the law. We advised on the first Liquefied Natural Gas project, the first utility scale Independent Power Project, the first bond issuance by International Finance Corporation and so on. We do not see ourselves in the narrow sense of passive dispensers of legal opinion. Instead, we like to think
INTERVIEW 3
DEAL ENGINEER
Wolemi EsanPartner, Power & Infrastructure Practice, Olaniwun Ajayi LP
About the FirmD Founded: 19620 Number of Partners: 8
B Number of Associates: 65
EducationUniversity College, London (UCL)Master of Laws (LLM)
Lagos State UniversityBachelor of Laws (LL.B.), Law
Recent transactions• AdvisedontheUS$3.15 billion
financing of Dangote Industries Limited for the development of a 400,000bpd refinery
• AdvisingontheUS$1.5 billion financing of the development of a deep seaport in Lagos, Nigeria
• AdvisedontheUS$1.2 billion fi-nancing of the development of a fertilizer plant in Eleme, Rivers State
• Advisingontheon-going devel-opment of the greenfield Azura-Edo IPP, a c. 459MW open cycle gas-fired plant in Edo State
• AdvisedontheUS$500 million financing of an international ship-ping conglomerate for the expan-sion of its vessel portfolio
Wolemi Esan is a partner in Olaniwun Ajayi LP’s Power and Infrastructure Practice. He has done extensive work with private companies and public agencies in a variety of situations that cut across his core practice area, and other expert verticals. He has a strong background in financial matters, and is widely acknowledged as a leading authority in derivatives and securitization in the Nigerian securities market.
VM | Monday, July 14, 2014 | Issue 002
Olaniwun Ajayi law firm library
Our bias for technical, intellectually demanding high-end work sets Olaniwun Ajayi apart.
Our clients come to us for cutting-edge solutions to intricate legal problems.
sity. This unique course was one of the first to meld com-puter science, finance, opera-tions research, and business in a way that pushed engi-neers, broadly categorized, to appreciate the economic implications of their tinker-ing in the lab.
Being at the epicentre of Silicon Valley, Stanford is renowned for fostering a change-the-world philoso-phy among its students. I got infected by the bug, and
when the first dotcom bal-loon began to blow I took a study-leave to follow the road much travelled.
What happened next?
I joined i2 Technologies, a company that used to be the leader in supply chain soft-ware. My time there collided with the turbulence of the dotcom crash but my expe-rience there taught me two things.
One is that when a compa-ny’s business processes are fundamentally bad, the best software would help them do bad things a lot faster. The second major lesson I learnt is that a software company whose only value is product
expertise will sooner or later go out of business. A soft-ware vendor’s job is really to help clients figure out prob-lems.
These two lessons have stuck with me since.
After i2, I berthed at Se-quoia Capital, one of Silicon Valley’s storied venture capi-tal investors, as an entrepre-neur-in-residence. This gave me the chance to catch my breath, and filter my ideas. An advantage of the Sequoia
program is that you can be nominated to fill a manage-rial position in one of their portfolio companies.
By this time, my inter-est had shifted to enterprise search where I saw a big op-portunity to help companies find interconnected needles of valuable information in haystacks of big data. One company, MarkLogic, a Se-quoia investee, already had an advanced product in this category, and that is where I headed next.
At MarkLogic my respon-sibilities included the de-velopment of products that solved information discovery problems for traders in fi-nance. This was in 2007. My problem statement at Mark-
My professors at the fac-ulty were supportive of ambi-tious academic undertakings like these because we were trained to be and believe we were as good as other engi-neering undergraduates at the best universities around the world. After graduation, I went back to Mobil and worked for a year before I left for grad school.
I left Nigeria at 21 to pur-sue a master’s degree in Elec-trical and Electronic Engi-neering at the University of Illinois.
How come the leap from engineering to finance?
My father, Dr. Raphael Igwebuike, earned his PhD at Stanford in 1975 doing re-
search on the agricultural de-velopment problems faced by rice farmers in the Abakiliki area. At home, I would pick up his economics journals and ask him questions. That was how the interest was seeded.
Beyond this academic lay-er, there was a part of me that had an entrepreneurial incli-nation. This was not in the narrow sense of what to buy and sell at a profit. Rather, it had more to do with urge to understand how value is created and rewarded in the marketplace.
After I completed the course at Illinois, I was ad-mitted to the Engineering Economic Systems’ doctoral program at Stanford Univer-
Earliest MemoriesI wrote my first computer
programs in BASIC on an Atari computer my dad got me on my 9th birthday. He was a development econo-mist and my mum was a high school biology teacher. They encouraged us to read widely. I was regularly read-ing TIME and The Economist before I turned 10. It was not a monastic upbringing but it was an intellectually stimu-lating one.
Academic InterestsFrom an early age I was
drawn to the intersection of economics and computers. I first got admitted to univer-sity at the age of 14 but could not take up the offer because I was considered too young. I waited another year. At the University of Nigeria, Nsuk-ka’s Electrical & Electronic Engineering department, I was intrigued by Control Theory, and Reduced In-struction Set Computing, or RISC.
Now I think back I imagine that these interests were born from the fact that stripped to the bones, the first bridged the interdisciplinary divide between engineering and so-cial sciences, and the second, sought to simplify instruc-tions for large scale com-puting systems to achieve results more efficiently. In certain ways, these remain at the core of problems I try to solve for clients at Zanibal.
Career AffirmationI got good grades in school.
However, a shining academic performance does not always equate to the enjoyment of the career path it leads to. I was fortunate that in my third year at the university I got to spend a 6-month in-dustrial attachment at Mobil in Lagos. It was my first ex-perience working with these large scale computing sys-tems.
At Mobil I saw a real world need for what I had learnt at school and my extracurricu-lar interests. I enjoyed the work I did immensely which spurred the choice of my fi-nal year project. This was on neural sciences, blended fuzzy logic and artificial in-telligence algorithms to cre-ate an adaptive learning solu-tion. Essentially, it was about using the concept of neural networks to make a comput-er think like a human being by incorporating feedback to improve its operation.
BUSINESS4
C-SUITE
Silicon Valley Émigré From Coding to Complex Business Problem-Solving
My professors at the faculty were supportive of ambitious academic undertakings like these because we were trained to be and believe we were as good as other engineering undergraduates at the best universities around the world.
Beyond this academic layer, there was a part of me that had an entrepreneurial inclination. This was not in the narrow sense of what to buy and sell at a profit. Rather, it had more to do with urge to understand how value is created and rewarded in the marketplace.
Uchenna Igwebuike is a co-founder of Zanibal, an on-demand business solutions provider. He started the company with two friends in Silicon Valley, California more than a decade ago. Since he returned to Nigeria shortly before the global financial crisis, he has successfully built up Zanibal as a foremost enterprise software developer. Notably, the company has established its dominance in capital market service solutions that ease processing activities at firms, and improve the customer experience.
2 Important Lessons
1. When a company’s business processes are fundamentally bad, the best software would help them do bad things a lot faster.
2. A software company whose only value is product expertise will sooner or later go out of business. A software vendor’s job is really to help clients figure out problems.
VM | Monday, July 14, 2014 | Issue 001
One trick pony?
By no means have we limit-ed our services to the capital markets and financial servic-es alone. We have launched products that also serve com-panies in need of customer relationship, accounting, and data management solutions.
When we started there were already entrenched players in this space. What set us apart was our ap-proach to bringing value be-yond software to the client’s business. This is really what it is about.
RatingThe securities industry reg-
ulators have been to our office to vet us, and they came away impressed what they found. I can confidently say that in terms of our security infra-structure, and backup capac-ity we are at the highest level with the best in the world. Za-nibal has never compromised on these things.
What I’d do differently
It is tempting for entre-preneurs to spend inordinate amounts of time carrying out mental edits of the past instead of drawing the use-ful lessons. No-one has carte blanche to remake the past. But going forward we can avoid past mistakes. This is not so much about bad deci-sions made, but about deci-sions that could have been tuned better.
Three things I would do differently are timing, foot-print, and co-envisioning. On timing, we underestimated the duration to market re-covery when we believed it would occur sooner and made significant investments based on that optimism.
Footprint-wise, Zanibal should have moved faster with our pan-African expan-sion strategy. Right now, we have are present in Ghana, Uganda, and Kenya. On co-envisioning, we have fixed that by spending more time with executives to tell them what is possible with their businesses.
OutlookI do not think that we’ve
tapped up to 5% of the oppor-tunities in the area of local software needs as a fulcrum to boost national productiv-ity. As the growth story un-folds, Zanibal will be riding the crest of that wave. ;
Logic could be boiled down to this: how do you build sit-uationally aware intelligent information-driven trading systems?
Surprising as it sounds, no one else was going head-on at the problem. Not Bloomb-erg, not Reuters, not anyone else.
The company already had a good lead in performing analytics on vast amounts of data, and we felt that we could propagate this exper-tise into the finance area.
For example, how do we know or show that there is a relationship between a pipe-line explosion in the Niger Delta and a spike in the price stocks of an oil company listed on the London Stock Exchange? The skill to take unstructured content– video, voice, text – put it into a re-pository, dissect it, and in a split second and spit out re-
sults is a valid problem solv-ing endeavour.
Next stop, NigeriaIt was a little turn from
what I was doing at Mark-Logic to cast my eye at what was happening on the Nige-rian Stock Exchange, which was still in boom mode, and the revolutionary adoption of online banking by Nigerian banks.
I remember thinking that big opportunities may lie here. I took a look at the number of CSCS accounts and was convinced that there was a big retail investor story here. I then went about con-vincing my partners in Za-nibal, a company we had set up in 2002 to do consulting work that we needed to take a closer look at Nigeria. The pulse was here.
Following on this discov-ery, I visited a good num-
ber of stock broking firms to gauge their capacity at handling the back office de-mands of this growth. What I saw convinced me that, as far as technology, was con-cerned they were outpaced by the market. Everything was done manually. It was a chore from hell.
I begun to push for the au-tomation of the entire trade-to-settlement and cash set-tlement cycle. I got down to work right away to build a service oriented architecture that matched the custom needs of each house based on internal business processes, and client service require-ments.
Moreover it was clear to me that while a few brokers perceived the tectonic shift that was going on, from an opaque market where only those with a seat on the NSE had access to prices and oth-er sensitive information, to one where such exclusivity was unsustainable.
With trading itself becom-ing commoditized it made sense for brokers to explore other value additive services that they could offer clients. And this is where we fit in grand scheme. Zanibal could help brokers to improve the efficiency in their back office operations, and brings costs down too, as well as empow-er them to offer clients value-added services that earn in-come beyond the provision of liquidity.
RecognitionMeristem Securities were
our first client. Wole Abe-gunde, the chief executive, gets technology and its ben-efits. He is on a constant search for ways to disrupt the market. He took a risk and bought into what we were selling early on.
As we speak, Meristem controls more than two-thirds share of the online trading in Nigeria. We made that possible. Today, we’ve grown to the point where 6 of the top ten liquidity pro-viders on the NSE are our clients.
Technology-driven changes in the market he foresaw in 2008Stock brokers would need to:= Upgrade their Order Management
Systems= Adopt the Financial Information
Exchange protocol (FIX)= Implement minimum technology
standards= Reduce costs by scaling up= Enhance simplicity and
transparency of access by clients= Develop new business strategies= Commence use of high volume/ low
latency trading platforms= Upskill their competence on new
products and trading techniques
Investors would demand:= Mobile and flexible access to trade
securities= Online/Real time price transparency= Online stock portfolio management
and valuation tools= Out-of-hours order submission = Reach of the market regardless of
location
C-SUITE VOX
BUSINESS 5
With trading itself becoming commoditized it made sense for brokers to explore other value additive services that they could offer clients. ‘The consumption of ce-
ment per capita in this coun-try is very low, about 150 ki-los per person per year; while if you look at South Africa it is about 350 kilos, and in
Egypt it is around 600 kilos. The reason for this difference is capacity, but also not hav-ing found applications.
With a population close to 170 million in Nigeria and growing at around 3% a year, there is a lot of poten-tial for growth if you look at that gap. The real size of the market would require 50 or 60 million tons of cement, and the figure currently is 25 million. So we still see a lot of needs to build facto-ries, and not only ourselves but also the competitors.’
Joseph Hudson, CEO, Lafarge WAPCO
Cement Manufacturing & Consumption in Nigeria
Source: Cement Manufacturers Association of Nigeria
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Total Capacity - MTPAConsumption - MT
2002 2011 2013 2015 2017 2019 2021
VM | Monday, July 14, 2014 | Issue 001
Joseph Hudson
17m Nigeria’s Housing Deficit
M
agic Number
VERBATIM
How has the insurgency in the north-eastern parts of Nigeria affected business?
A lot of out raw materials (sorghum) comes from the north and that worries us. So Heineken does not ignore the challenges but we certainly don’t get sucked up by them
also. As a company we continue to concentrate on the promises, look at the promises whilst re-ally taking into account that there are challenges.
Siep Hiemstra, President for Africa &
Middle East, Heineken International B.V.
Siep Hiemstra
In Nigeria, Heineken has about 50,000
farmers already working to
produce 100,000 tons of sorghum that make up half
of its supply.
Magic Number
BUSINESS6
THE EDGE
Each plant specializes in particular product lines. The Lagos plant is specialized in the production of furniture, coolers, buckets, and similar big items. The other plants focus on the other end of the spectrum, that is, packaging, bottles, casseroles, food packs, shaving sticks, and tops. Alto-gether, they have a production capacity of 80 metric tonnes per day, and a total built up area of 500,000 sq. ft. In ad-dition to the plant in Kano, Leoplast has a sister company there. Rasa Beverage Indus-tries produces C’est Bon bot-tled table water, and fruit drinks such as 2Cool juice flavours, and Smarty kiddies drink.
There are six brands in its portfolio: Leoplast Furni-ture, Leoplast Ballpoint Pens, Papilon Houseware, Power-cool Coolers, Powerfit Paint Buckets, and Powerpack Food and Drinks Packaging.
After successfully piloting the affairs of the company for 3 decades, the founder took a well-deserved retirement in 2006. His son, Rohit, who was groomed for the role, has run the company since. Modest, and a self-confessed wizard of all things plastic, the boyish-looking old Harrovian, and Wharton alumnus knows the business of plastics like the back of his palm. After all, he was born into this. But looks can be deceiving. Behind the self-effacing exterior is a driven businessman adept at parrying his competitors’ punches.
For how long he will re-tain the champion’s title is what keeps him up at night. In recent years, the influx of cheaper, albeit less durable products, has gnawed at the company’s dominant market position. The entry of non-un-ionized companies that pro-duce at far lower costs, cou-pled with the biting economic times that push customers to patronise lower quality prod-ucts, have led the company to embark on a 360° review of its business. Everything is be-ing rethought: management practices, operations, inven-tory management, the supply chain, human capital deploy-ment, financing options, and the product portfolio mix.
In March, Jerry Jallores, a process improvement and resource optimization expert, was brought on board. He brings over twenty years of ex-perience to his new role, and is charged with transforming the company to a more agile one. A native of the Philippines, his boyish charm and infectious enthusiasm, is immediately
Leoplast of the JungleThe head office of Leoplast Industry Limited is located opposite the popular Aswani Market in Isolo. Established in 1978 as Papilon Industry, it is the oldest and biggest manufacturer of plastics in Nigeria. The company was founded by Rajendra Kumar Daswani, an enterprising businessman, who arrived Lagos in 1965 with a single suitcase and big dreams. Fifty-five years later, the company he started has grown to be a market leader with plants in Lagos, Sango-Otta, and Kano.
evident from the first meeting. The graduate of psychology from his country’s prestigious Ateneo de Manila University has built his career on jump-ing into the deep end in turna-round situations. Jerry is a
strong believer that people are the bedrock of successful com-panies.
Since he resumed, Jerry, who enjoys an intense game on the basketball court, has identified those areas where
keting campaigns, improve market research, and provide better training for employees. It is a tall list. Fortunately, un-like in most closely-held com-panies initiating a compre-hensive reinvention pushed by a hired manager, the Das-wani family are fully behind the plan. True to his profes-sional antecedents, the HR practitioner is implementing his strategy on people-driven tactics.
Leoplast employs over 2000 people. Underlying the owners’ belief in fair terms of labour, the company main-tains cordial relations with the National Union of Chemical Footwear, Rubber, Leather and Non-Metallic Products’ Employees (NUCFRLNM-PE), the main sector union. Through its nationwide net-work of distributors, it gener-ates a further 35,000 jobs in the economy.
At its Aswani plant, ware-houses are filled with plastic goods neatly stacked to the ceiling stretch as far as the eye can see. The burly store man-ager explains that the batches here will be gone in three days. The demand is insatia-ble. Outside, lorries with plate numbers from as far as Soko-to, and Bayelsa wait patiently to be called to the loading bay. Porters move about quickly loading trucks, and hurrying back to pile up more. It is a beehive of activity. Inside, the distributors, who are mainly women, form a queue in the pay office, and enquire in ear-nest if they will receive their full orders. The showroom located beside there is a veri-table Ali Baba’s cave. On dis-play are hundreds of different plastics products that range in size from cupboards to medicine bottles. The bustling energy of this nerve centre of commerce and productivity is unmistakeable.
In an industry cutthroat competition, and rapid obso-lescence of designs, Leoplast leads by a margin it cannot take for granted. Since the company is privately held it does not break out its finan-cial performance. Yet, it is safe to say that it earns a decent return on invested capital. As
proof of their international appeal, Leoplast products en-joy strong market positions in neighbouring countries too.
The prudence of its man-agement team, and the prof-itability of its portfolio, not-withstanding, these are little comfort in a business that requires the reinvestment of significant amounts to main-tain its lead. The challenges of running a manufacturing con-cern in Nigeria, namely taxes, bribes, imitation, and power supply, are taking their toll on business confidence and fuelling scepticism over the government’s commitment to help local industries. How else would one explain the inces-sant levies and arbitrary taxes imposed on industrial con-cerns in Lagos state, frequent even if subtle demands for the euphemistically labelled ‘settlement’, the brazenness with which copycat produc-ers openly sell counterfeit products, thereby damaging the brand and undercutting prices, and the government’s tardiness in fixing the power situation in the country? These four horsemen of the apocalypse negate the coun-try’s development aspirations as much as they do harm to the industrialist’s net profits.
An economics lecturer at the University of Lagos, who spoke on condition of anonymity, articulated the frustration of industrialists like Leoplast: ‘It is not hard to question the sincerity of a state government in attracting investment when its policies decapitate companies with punitive and multiple taxes. Companies are damned when they do things, and damned if they don’t.’
Leoplast gives the federal government kudos for ban-ning the importation of plas-tic products to protect the industry from dumping. But a high score in tariff defence is dampened by an inability to guarantee stable power sup-ply. Each year, the company spends several tens of mil-lions to buy diesel to operate its generating sets pushing up its overheads and raising the price of its products in the marketplace.
Leoplast can cement its his-toric leadership of the sector. He and Rohit have their work cut out for them. To innovate faster, fortify the brand, cull unprofitable products, launch aggressive value-based mar-
Plastic takeaway packs
45%
Ballpoint pens
25%
Domestic housewares
15%
Tables and chairs
15%
Coolers and other insulated products
20%
Leoplast Market Share
It is not hard to question the sincerity of a state government in attracting investment when its policies decapitate companies with punitive and multiple taxes. Companies are damned when they do things, and damned if they don’t.
Jerry Jallores, General Manager, Corporate HR
VM | Monday, July 14, 2014 | Issue 001
Soji Apampais the co-founder of The Con-vention on Business Integrity, which sponsors the Corporate Governance Rating System in partnership with the Nigerian Stock [email protected]
Corporate governance is at the heart of how businesses are run. According to the Organization for Economic Cooperative Development
(OECD), ‘corporate govern-ance involves a set of rela-tionships between a compa-ny’s management, its board, its shareholders and other stakeholders’. Corporate gov-ernance, broadly speaking, includes board efficiency, transparency, reporting re-quirements, investor commu-nications and sustainability.
Corporate governance standards in an organization are typically based on macro factors at play in the country where it operates. These include the country’s legal and financial system, ownership structures, and cultural, economic and political realities. In Nigeria, where corruption is rife and endemic, corporate governance practices are usually lax. However, current economic realities like the globalization of capital
flows has rendered ethical relativism, the doctrine that morality exists in relation to culture or society, an unsound basis for setting corporate governance standards. Nigerian companies must decide if they want corporate governance standards that lie in the eye of the beholder or those that lie in the eye of any beholder?
There are a good number of reasons why Nigerian compa-nies need to upgrade the ba-sis of their corporate govern-ance standards to match good international practice.
First, because of the high cost of capital in Nigeria, companies that seek to com-pete on a larger scale are seeking capital from foreign capital markets or through the participation of interna-tional investors in local mar-
kets. Given the mainstream-ing of corporate governance issues, financial markets all over the world have instituted either mandatory or recom-mended codes to guide the conduct of publicly quoted companies.
Till date, there are 7 Ni-gerian companies listed on the London Stock Exchange. Although some are on the Al-ternative Investment Market (AIM), the LSE’s growth mar-ket, which has fewer guide-lines, those companies who wish to be listed on the Main
Market, must comply with stricter admission and disclo-sure standards. Seplat, the oil company, which went public in May has successfully done so. Companies with aspira-tions to list there are also re-quired to comply with the UK Corporate Governance Code or explain why they do not. Failure to do so invites vari-ous sanctions. Therefore, to compete globally and attract the quantity and quality of capital they require to operate at that level of market access, Nigerian companies need to adopt more stringent stand-ards of corporate governance than the domestic environ-ment necessitates. Good cor-porate governance practices demonstrates to global inves-tors that their investments will be safe and managed in their best interest.
It is not only the big com-panies that can benefit from adopting good and interna-tionally acceptable corpo-rate governance practices. Small- and medium-sized enterprises (SMEs) stand to benefit as well. For example, it can win them entry to the value chain of multinational companies or even big local companies that demand simi-lar standards from their busi-ness partners. For example, it will constitute a reputational risk for a big international brand like Shoprite, which
just opened its 1oth Nigerian store in Ibadan, to associate with suppliers that do not have clear reporting and good management practices. Sup-pliers that pose reputational risks to their brands and eth-ics are unwelcome. In an age when the Internet and social media rule, the reverbera-tions from one critical tweet or negative online review in Lagos or Lusaka can be felt in London.
Furthermore, organiza-tions need to practice good corporate governance to guard against other risks that threaten the going concern of the organization. Such risks include the liability or as-set damage that may occur if managers enter into transac-tions that are self-serving and destroy the value of share-holders’ equity. In extreme
cases, it could lead to a loss of trust from customers that may lead to product boycotts and in the case of a bank, a run. Setting high governance standards is a business sus-tainability necessity because even codified global corpo-rate standards usually consti-tute the minimum acceptable standard and may be insuf-ficient.
In sum, good corporate governance is germane to the going concern of an organi-zation because it determines the strategic direction of the firm in terms of the mis-sion and values, culture, risk management and processes. Businesses in Nigeria have to move beyond mouthing the buzzword of corporate gov-ernance to adopting sound corporate governance prac-tices. It makes good business sense to do so. ;
The debilitating effect of bribes is an accepted fact. When officials make lightly-disguised requests for gratifi-cation to permit smooth cor-porate activity it hampers new investment, and raises the cost of doing business.
Not only these, it wreaks havoc on the company’s cash flow. It is a trite fact that there is no place in the budget of an ethical company for lubricants to grease the palms of corrupt bureaucrats.
As early as 2008, the chief executive was raising the alarm on the damage that counterfeited products were causing the consumer and economy as a whole. He con-demned the black market importation of substandard plastics products that cloned the iconic designs of success-ful brands like Leoplast’s. The company’s popular Papilon ballpoint pens appear to be a favourite of the imitators.
‘Regrettably, most of these ballpoint pens are faked by some people and even though they have almost the same packaging features as if they are the ones made in Nige-ria, they are substandard and sorely lack the quality that those made in Nigeria by rep-utable companies have.’ He
has led the call for stiff pen-alties for makers and import-ers of these imitated products comparable to what the Na-tional Agency for Food and Drug Administration Control (NAFDAC) has done for pack-aged foods, beverages, and medicines.
Privately-owned, big, suc-cessful companies are regu-larly asked when they plan to go public. Leoplast is no exception. On this subject, Rohit is silent. According to
one analyst, who follows the industrial sector closely, com-panies list their shares when they seek to raise funds, lique-fy owner’s holdings, or diver-sify perceived regulatory risks of concentrated ownership. He opines that Leoplast is not faced with any of these sce-narios, so the question does not arise with any urgency.
While he is reticent on be-ing drawn into a conversation about the future of Leoplast’s capital structure, Rohit is more than happy to give an answer to why the company has been so successful. Sim-ple, he says. We stick with what we know. Plastics. You can’t fault him on that. Thirty-six years as the industry leader is all the proof one needs. ;
YEAR PRODUCT
2014 Leoplast Shave Smart
2010 Powerpack foampack
2008 Powerpack takeaway boxes
2006 Leosmart ballpoint pens
2005 Papilon Honey 3000 food warmer with steel
2000 Powercool sunflower coolers
2000 Powercool PC45 cooler
2000 Leoplast Children table with 2 chairs
2000 Leoplast super student table
2000 Leoplast Unity folding chair
2000 Powercool sunflower coolers
2000 Powercool PC45 cooler
2000 Leoplast Children table with 2 chairs
2000 Leoplast Super Student table
2000 Leoplast Unity folding chair
1999 Leoplast President chair
1998 Leoplast Excel Cabinet
1998 Papilon Dish Rack
1998 Papilon vegetable trolley
1998 Papilon Deluxe Baby Bath Set
Product Launch Dates
BUSINESS 7
THE EDGE GOVERNANCE
Regrettably, most of these ball-point pens are faked by some people and even though they have almost the same packaging features as if they are the ones made in Nigeria, they are sub-standard and sorely lack the qual-ity that those made in Nigeria by reputable companies have.
Businesses in Nigeria have to move beyond mouthing the buzzword of corporate governance to adopting sound corporate governance practices. It makes good business sense to do so.
The Corporate Governance Imperative
Next question please. Alhaji Aliko Dangote beckons for questions at the 8th AGM of Dangote Sugar Company Plc.
W Continued from Page 6
VM | Monday, July 14, 2014 | Issue 001
MARKET DATA8
MARKET SNAPSHOT
VM | Monday, July 14, 2014 | Issue 001
3-MONTH PRICE TREND OF BELLWETHER STOCKS
LEGEND
ACCESS 9.8011.317.22 PE 6.01
0.09
April May June M
07/07 11/07
T W T F
CADBURY 74.2598.3558.27 PE 24.50
0.25
April May June M
07/07 11/07
T W T F
DANGCEM 241.00250.02185.00 PE 20.34
9.00
April May June M
07/07 11/07
T W T F
DANGSUGAR 9.1012.458.67 PE 10.11
0.20
April May June M
07/07 11/07
T W T F
FLOURMILL 78.0091.8563.91 PE 26.80
0.00
April May June M
07/07 11/07
T W T F
FO 234.06259.9420.34 PE 54.18
33.98
April May June M
07/07 11/07
T W T F
GLAXOSMITH 69.0071.4453.06 PE 22.62
1.00
April May June M
07/07 11/07
T W T F
GUARANTY 29.9731.8022.67 PE 9.33
0.37
April May June M
07/07 11/07
T W T F
NASCON 11.4015.1010.30 PE 10.92
0.29
April May June M
07/07 11/07
T W T F
NB 174.43189.00140.00 PE 30.18
0.93
April May June M
07/07 11/07
T W T F
NESTLE 1110.001250.00916.00 PE 39.53
20.00
April May June M
07/07 11/07
T W T F
OANDO 27.9936.899.32 PE 6.11
0.51
April May June M
07/07 11/07
T W T F
TOTAL 171.05187.99146.26 PE 10.89
0.06
April May June M
07/07 11/07
T W T F
TRANSCORP 5.805.951.17 PE 47.66
0.56
April May June M
07/07 11/07
T W T F
UACN 61.5971.2053.23 PE 21.14
4.41
April May June M
07/07 11/07
T W T F
UBA 7.859.586.65 PE 5.23
0.05
April May June M
07/07 11/07
T W T F
DIAMONDBNK 6.248.005.86 PE 3.16
0.16
April May June M
07/07 11/07
T W T F
FBNH 16.2318.9311.50 PE 7.87
0.43
April May June M
07/07 11/07
T W T F
FCMB 4.155.023.01 PE 5.03
0.21
April May June M
07/07 11/07
T W T F
FIDELITYBK 2.003.101.85 PE 7.51
0.00
April May June M
07/07 11/07
T W T F
GUINNESS 205.00266.70162.00 PE 25.84
10.77
April May June M
07/07 11/07
T W T F
INTBREW 29.5031.0018.00 PE 32.80
0.10
April May June M
07/07 11/07
T W T F
JBERGER 68.0576.4559.18 PE 11.14
0.95
April May June M
07/07 11/07
T W T F
MANSARD 2.522.731.95 PE 13.26
0.18
April May June M
07/07 11/07
T W T F
PZ 36.7547.0630.08 PE 29.93
0.20
April May June M
07/07 11/07
T W T F
SKYEBANK 3.274.903.19 PE 2.70
0.07
April May June M
07/07 11/07
T W T F
STANBIC 27.0527.2015.30 PE 14.54
0.32
April May June M
07/07 11/07
T W T F
STERLNBANK 2.312.922.09 PE 4.44
0.01
April May June M
07/07 11/07
T W T F
UBN 9.6512.808.10 PE 21.39
0.05
April May June M
07/07 11/07
T W T F
UNILEVER 51.5065.0043.32 PE 40.55
3.50
April May June M
07/07 11/07
T W T F
WAPCO 112.03136.7387.50 PE 11.89
1.03
April May June M
07/07 11/07
T W T F
ZENITHBANK 25.0127.4019.23 PE 8.64
0.09
April May June M
07/07 11/07
T W T F April May June M
16/06 20/06
T W T F
TICKER 9.8011.797.22 PE 6.24
0.05
1 3
4
9
10
5 6 8
11
7
2
1. 52-week low price2. Year Low Price3. Current price4. Year High Price5. 52-week high price6. Current price7. 5-Day Price Change 8. PE Ratio9. Daily Prive Movement over 3 months.10. 30-Day Moving Average11. Daily Price Movement over Last Week
FO
NPFMCRFBK
ASHAKACEM
TRANSCORP
DNMEYER
NIGERINS
ROYALEX
LEARNAFRCA
VITAFOAM
RTBRISCOE
AIRSERVICE
CUTIX
NEIMETH
CUSTODYINS
FIDSON
UBCAP
UACN
MANSARD
UNILEVER
UPL
MOST GAINED & DECLINED
16.98%
16.67%
12.24%
10.69%
8.62%
8.00%
8.00%
7.10%
6.83%
6.54%
-8.98%
-8.63%
-8.33%
-7.94%
-7.69%
-7.66%
-6.68%
-6.67%
-6.36%
-5.16%
INDEX DAILY MOVEMENT
MoFr42.70
42.80
43.00
42.90
43.1042,832.82
Tu We Th Fr
NSEASI
MoFr0.436
0.437
0.439
0.438
0.440438.08
Tu We Th Fr
NSEBNK
MoFr10.44
10.47
10.53
10.50
10.561,053.69
Tu We Th Fr
NSECNSMRGDS
MoFr0.447
0.455
0.471
0.463
0.479477.63
Tu We Th Fr
NSEOILGAS
MARKET SNAPSHOT
MARKET DATA 9VM | Monday, July 14, 2014 | Issue 001
CURRENCY CROSS RATES
Currency codes/names
United Kingdom
Pound Euro Japanese
Yen Swiss Franc US Dollar CFA Franc
BCEAO CFA Franc
BEAC
Chinese Yuan
Renminbi
Ghanaian New Cedi
Hong Kong Dollar
Nigerian Naira
Saudi Riyal
South African Rand
US Dollar Utd. Arab
Emir. Dirham
GBP 1 0.7952 0.005754 0.6546 0.5836 0.001213 0.001213 0.09463 0.1769 0.0753 0.003633 0.1556 0.05457 0.5836 0.1589
EUR 1.2578 1 0.007237 0.8232 0.734 0.001524 0.001524 0.119 0.2225 0.09471 0.00457 0.1957 0.06864 0.734 0.1999
JPY 173.811 138.193 1 113.763 101.426 0.2108 0.2108 16.4468 30.7459 13.0874 0.6315 27.0464 9.4848 101.426 27.6198
CHF 1.528 1.2149 0.008792 1 0.8917 0.001853 0.001853 0.1446 0.2703 0.1151 0.005552 0.2378 0.08339 0.8917 0.2428
USD 1.7137 1.3625 0.009861 1.1217 1 0.002078 0.002078 0.1622 0.3031 0.129 0.006226 0.2667 0.09351 1 0.2723
XOF 824.727 655.957 4.7454 539.811 481.247 1 1 78.037 145.884 62.0972 2.9963 128.33 45.0037 481.247 131.051
XAF 824.735 655.957 4.7454 539.816 481.251 1 1 78.0378 145.885 62.0978 2.9964 128.332 45.0042 481.251 131.052
CNY 10.5773 8.4098 0.06086 6.9232 6.1721 0.01283 0.01283 1 1.871 0.7964 0.03843 1.6459 0.5772 6.1721 1.6808
GHS 5.7126 4.542 0.03287 3.7391 3.3334 0.006927 0.006927 0.5405 1 0.4301 0.02075 0.8889 0.3117 3.3334 0.9077
HKD 13.2818 10.5609 0.07642 8.6934 7.7502 0.0161 0.0161 1.2567 2.3494 1 0.04825 2.0667 0.7248 7.7502 2.1105
NGN 280.558 223.065 1.6143 183.634 163.712 0.3402 0.3402 26.5468 49.6271 21.1244 1 43.6558 15.3095 163.712 44.5812
SAR 6.4278 5.1106 0.03699 4.2072 3.7508 0.007794 0.007794 0.6082 1.137 0.484 0.02335 1 0.3508 3.7508 1.0214
ZAR 18.3434 14.5856 0.1055 12.0064 10.7038 0.02224 0.02224 1.7357 3.2447 1.3812 0.06664 2.8543 1 10.7038 2.9148
USD 1.7137 1.3625 0.009861 1.1217 1 0.002078 0.002078 0.1622 0.3031 0.129 0.006226 0.2667 0.09351 1 0.2723
AED 6.2958 5.0057 0.03623 4.1208 3.6738 0.007634 0.007634 0.5957 1.1137 0.474 0.02287 0.9797 0.3436 3.6738 1
INDEX PERFORMANCE
Date Week Opening
Week Close Change WtD MtD QtD YtD
1 All Shares Index 43,031.81 42,832.82 -198.99 -0.46 0.82 0.82 3.64
2 NSE 30 Index 1,945.15 1,945.69 0.54 0.03 0.72 0.72 2.02
3 NSE Banking Index 437.35 438.08 0.73 0.17 1.2 1.2 -2.18
4 NSE Insurance Index 149.01 148.19 -0.82 -0.55 0.93 0.93 -3.06
5 NSE Consumer Goods Index 1,046.03 1,053.69 7.66 0.73 -0.43 -0.43 -4.23
6 NSE Oil/Gas Index 454.93 477.63 22.7 4.99 2.01 2.01 40.53
7 NSE Lotus Islamic Index 2,857.30 2,836.03 -21.27 -0.74 -1.34 -1.34 -0.95
8 NSE Industrial Index 2,724.03 2,705.31 -18.72 -0.69 1.45 1.45 6.23
MARKET SNAPSHOT
Date Deals Turnover Volume Turnover Value Traded
StocksAdvanced
StocksDeclined Stocks
Unchanged Stocks
All Shares Index Value
1 07.07.2014 5,215 460,229,850 4,509,326,656.54 132 \ 111 23 \ 23 30 \ 36 79 \ 65 42,758.02
2 08.07.2014 5,363 523,328,904 5,129,645,266.31 117 \ 115 27 \ 28 32 \ 25 58 \ 44 42,861.78
3 09.07.2014 5,153 209,763,256 2,284,962,429.74 122 \ 118 29 \ 35 18 \ 29 75 \ 58 43,039.42
4 10.07.2014 5,568 310,014,925 3,614,064,973.97 124 \ 121 28 \ 23 20 \ 34 76 \ 72 43,004.38
5 11.07.2014 5,222 328,421,273 3,855,454,115.47 122 \ 116 24 \ 33 31 \ 21 67 \ 57 42,832.82
DATA PARTNERDATA VIZUALIZATION
TRADING BREAKDOWN BY SECTOR
Sector %
Financial Services 72 \ 77
Conglomerates 13 \ 8
Oil & Gas 6 \ 7
Others 9 \ 8
WEEK-TO-DATE RETURN-10%
-40%
-20%
-30%
-10%
0%
+10%
+20%
+30%
+40%
+50%
+60%
+70%
+80%
+100%
+90%
+120%
+130%
+140%
+110%
+150%
-5% 0% +15%+10%+5% +20%
YEA
R-TO
-DAT
E RE
TURN
LAGGING
SLIPPING LEADING
IMPROVING
1
12
4142
43
44
45
47
48
23
456
7
8
9
10
11
13
14
15
16
17
18
1
1
19
55
111 12021
22
1123
24
25
26
27
5528
29
30
31
32
33
111034
35
36
3738
39
40
46
# TICKER WTD YTD
1 DANGCEM -3.60 10.05
2 NB 0.54 3.89
3 GUARANTY 1.25 10.92
4 NESTLE 1.84 -7.50
5 ZENITHBANK -0.36 -8.72
6 FBNH 2.72 -0.43
7 WAPCO 0.93 -2.58
8 GUINNESS 5.55 -13.14
9 ETI -0.58 6.30
10 STANBIC 1.20 26.70
11 UBA -0.63 -11.80
12 FO 16.98 139.40
13 OANDO -1.79 15.42
14 TRANSCORP 10.69 33.33
15 ACCESS 0.93 2.08
16 UNILEVER -6.36 -4.28
17 FLOURMILL 0.00 -10.34
18 UBN 0.52 0.21
19 PZ 0.55 2.84
20 CADBURY -0.34 -9.80
21 UACN -6.68 -8.08
22 DANGSUGAR -2.15 -22.22
23 INTBREW 0.34 2.79
24 DIAMONDBNK -2.50 -15.10
25 JBERGER -1.38 3.55
26 FCMB -4.82 12.47
27 ASHAKACEM 12.24 55.07
28 GLAXOSMITH 1.47 1.47
29 7UP 0.00 43.60
30 TOTAL -0.04 0.62
31 FIDELITYBK 0.00 -25.65
32 STERLNBANK 0.43 -7.60
33 MOBIL -0.04 13.83
34 CONOIL 0.31 -3.43
35 SKYEBANK -2.10 -25.68
36 PRESCO 2.87 -1.14
37 OKOMUOIL 0.00 -25.00
38 CAP 1.30 -19.50
39 NEIMETH -8.33 -3.97
40 MAYBAKER 5.99 -27.76
41 All Shares Index -0.46 3.64
42 NSE 30 Index 0.03 2.02
43 NSE Lotus Islamic Index -0.74 -0.95
44 NSE Industrial Index -0.69 6.23
45 NSE Consumer Goods Index 0.73 -4.23
46 NSE Banking Index 0.17 -2.18
47 NSE Oil/Gas Index 4.99 40.53
48 NSE Insurance Index -0.55 -3.06
The relative size of each individual stock’s bubble chart is determined by its market capitalization. For indices, the relative size of each bubble chart is the total value of the capitalization modified values of each constituent stock.Pink bubbles represent individual stocks, and grey bubbles represent indexes.
The \ arrow signifies week-on-week change in value. This week’s value is shown on the left of the \ sign, and last week’s value on the right.
2820
2825
2830
2835
2840
07/07 11/0709/0611.5
11.6
11.7
11.8
11.9
FGN Bond Index Market Value YTD Return
www.afrinvest.comwww.customsstreet.com
AGENDA 10
RESEARCH
VM | Monday, July 14, 2014 | Issue 001
The last has not been heard from disruptions caused by the rebasing of the coun-try’s gross domestic product (GDP). In a recent speech he delivered at the Capital Mar-ket Committee’s second quar-ter meeting, Oscar Onyeama, chief executive of the Nigeri-an Stock Exchange, lamented that the revision has caused a drop in the bourse’s contribu-tion to GDP.
Onyeama explained further that the rebasing has made it necessary for the NSE to review the sectoral spread of its listings to reflect the real economy.
Recently, McKinsey Global Institute published its analy-sis on the prospects for pack-aged beverages such as juices and instant drinks excluding soft drinks and beer. Accord-ing to the consulting firm, 10 Nigerian cities are on the threshold of the ‘hot zone’, where the sales of packaged drinks will grow by 1.84 per cent for every 1 per cent rise in GDP per capita.
It would be illuminating if the consultants at McKinsey had carried out a similar study on Nigeria’s pasta and noodles’ food segment. While not calling the top of consumer demand, it is not altogether unthinkable that the rapid growth and margins observed in recent years may come under review. Acute competition, and overcapacity in the flour milling sector have driven Dangote Flour to cut flour prices in a bid to sustain volumes according to Oyakhilome Ibhagui of Dunn Loren Merrifield.
The analyst notes that ‘a depleted brand equity and tighter distributor credit control measure’ may be
responsible for up to 26.3 per cent year-on-year decline in the company’s pasta and noodles’ business justifying
a new target price N8.67, and an upwardly revised recommendation to HOLD from BUY issued in February.
13.8 7.7
6.4 7.02
8.1
2.6
7.7
6.6
6.9
4.5
5.4
14.6
13.0
18.6
2.2
23.1
9.4
20.1
10.4
8.2
2.5
2.6
7.2
14.3
7.5
5.1
8.7
3.7
Compound annual growth rate ( CAGR ), 2010 –13, real %
GDP growth, 2010 –13 %
CAGR, 2010 –13 %
Nominal
Real
Resources 1
Trade
Agriculture
Telecommunications and ICT
Real estate
Manufacturing
Public administration
Finance and insurance
Professional and technical services
Construction
Entertainment, music
Other services
510
7
74
85
49
112
18
41
40
270
35
16
16
17
Pre -rebasing Rebased
88
94
48
10 4 1 4 2 5 12
2
1 Resources do not include oil re�ning, which is included in manufacturing.2 For pre-rebased real CAGR, we use 2010–12, as real 2013 was unavailable.NOTE: Numbers may not sum due to rounding.
Source: Nigerian National Bureau of Statistics; McKinsey Global Institute analysis
Sectoral Contribution to Nigerian GDP
The Effects in GDP Rebasing on NSE Sectoral Weighting and Consumer Demand
It is not often that sea-soned analysts use gushing adjectives to describe com-panies. But that is just what the analysts at Cardinal-Stone Partners have done. They describe Transcorp’s
investment case as ‘very compelling as it presents an excellent opportunity into Nigeria’s emerging utilities sector.’ They rate the stock a BUY with a 2014 target price of N6.62.
Unilever sees a silver lin-ing on the cloudy sky of soft consumer spending. Yaw Nsarkoh, the chief executive, is waxing bullish. ‘We will see some growth in consumer spending this year, in spite of the turbulence in the market and a certain degree of sales depression in some regions.’ The boyish-looking Nsarkoh, who was appointed to his posi-tion in February joined Unile-
ver 20 years ago, and is widely seen as a miracle worker. He will be needing all of his Midas touch to drive growth in Ni-geria. Analysts at Chapel Hill Denham are not so sanguine. Their profitability outlook is weak, and they are doubtful whether the company can grow revenue without ‘giving away profit margins.’ They place a SELL rating on the stock with a target price of N41.33.
NestlÓ Product Portfolio Comtributions (2013)
Nido, 3%Nescafe, 4%
Pure Life, 9%
Golden Morn, 12%
Baby Food, 14%
Milo, 22%
Maggi, 36%
CONSUMER GOODS
CONGLOMERATES
Nestlé’s revenues took a hit as a result of the security situation in northeast Nige-ria write analysts at Chapel Hill Denham. Weaker con-sumer spending took its toll as households made do with cheaper alternatives. The ana-lysts are more optimistic about the company’s beverage busi-
ness, which achieved a robust compound annual growth rate (CAGR) of 22.6 per cent against 12.7 per cent for the food seg-ment in the three year period (2011-13). CHD maintained its HOLD recommendation on the stock but cut its 12-month target price to N1,091.19 from N1,202.56.
BANKSUnity Bank has a lot of
catching up to do if its board wants the financial institu-tion to stay relevant on the Nigerian banking scene. Long gone are the days when some banking franchises had a stranglehold on particular regions. Free-for-all is the way they swing these days. Kayode Omosebi of UBA Capital is not convinced that its muted loan growth of 5.25 per cent in 2013 will lead the bank to where it aspires to be. He rates the bank a HOLD with a target price of N0.55.
At first glance, FBN Holdings’ Q1 results had little in it to cheer investors but Ikechukwu Ihenacho, and Muhammad Mamman-Daura, analysts at Chapel Hill Denham, are dismissing the gloom. It is true that earnings per share (EPS) dropped by 13.3%, no doubt helped along the downward slope by the removal of cost of transfer (COT) charges and cancellation of ATM charges. Nonetheless, they see bright spots on the trusty elephant. They forecast that loans growth by up to 15 per cent, a reliable pump of cheap deposits, and an improved asset quality will buoy performance in the rest of the year. Consequently, they have upgraded the stock’s rating to a BUY, but reduced its target price from N21.25 to N19.57. The CDH analysts downgraded their rating of Stanbic IBTC to a HOLD from a BUY in November 2013 due to concerns that the current valuation is ‘rich’ at a PE ratio of 10x forward earnings for 2014. The drop in cost to income ratio (CIR) at the bank’s Personal
& Business Banking as well as Wealth division has impressed investors. They are confident Stanbic will sustain the efficiency drive for the rest of the year.
Zenith Bank’s liquid-ity places it in an unassail-able position as regulatory changes push up competition among banks write analysts at CardinalStone Part-ners who maintain a BUY rating on the stock, and raise its target price from N24.79 to N28.78. The expectations are that over the medium term (2014-16), the bank will tap opportunities in power, real estate, and agriculture as well as continue to build on its reputation as a creator of high quality risk assets.
Is a change in Zenith Bank’s strategy on the ho-rizon? Analysts at Chapel Hill Denham think that with the resumption of a new CEO nothing of off the table. They reason that a flat net interest income in Q1 may induce the bank to ‘relax its exclusive focus on corporate lending in a bid to improve yields.’ They also picked up that the bank’s cost of risk over the last two years has been higher than the average for its tier-1 peers, ‘despite the bank’s conservative ap-proach to lending.’ It is not unthinkable that this may be the canary in the coalmine that Zenith Bank’s histori-cally vaunted kosher lend-ing standards may be slip-ping. The analysts raise their target price on the bank by 3.2 per cent to N25.17 from N24.38 and downgrade their rating to a HOLD from a previous BUY rating issued in March.
CORPORATES
FCMB Group has dis-closed that it plans to raise up to $300 million of funding this year to boost consumer lending by about 20 per cent to N540 billion. Ladi Balogun, the chief executive officer, ex-pressed a strong bias for tap-ping ‘the loan markets as op-posed to bond markets due to more stable pricing.’
After announcing that it would merge its Nigerian and South African businesses, Lafarge has received its shareholders’ approval to raise N100 billion through a
public offer of debt or equity in local and international markets. Guillaume Roux, the Country CEO for Lafarge in Nigeria and Bénin Republic said that ‘the consolidation will enable the enlarged entity to accelerate growth on the continent and expand its product offering in South Africa across the region.’ The merger was advised by Standard Chartered Bank, whose South African origins have been a plus in the transcontinental deal, Chapel Hill Denham, whose CEO, Mobolaji Balogun, has been on the board of the cement company since March 1, 2005.
Like its Tier-2 peers, Dia-mond Bank is seeking new capital. The bank hopes that at the conclusion of its capital raising efforts, its capital ade-quacy ratio will increase by up to 3 percent from its current 17 per cent level. Alex Otti, the bank’s CEO, stated that its promotion from 11th to 6th
place among Nigerian lenders in the space of 3 years, is proof that it is on ‘the right path.’
Ladi Balogun, Group CEO, FCMB Group
Unilever-sponsored world-record breaking Teeth brushing Challenge
Source: Company Filings and Greenwich Trust Limited
The Quotations Committee of the Council of the Nigerian Stock Exchange has approved the delisting of 21 companies for failure to file quarterly and annual returns, as well as regularize their listing status. The NSE stated that its action had become necessary ‘to pro-tect the investing public from trading in the securities of entities that have provided no current information re-garding their financial sta-tus.’ The affected companies are Investment and Allied Insurance Plc, Goldlink Insurance Plc, Pinnacle Point Group Plc, Adswitch Plc, Afroil Plc, Rokanna
Industry Plc, IPWA Plc, West African Glass In-dustry Plc, Nigeria Wire & Cable Plc, Starcomms Plc, Daar Communication Plc, Mtech Plc, Big Treat Plc, G. Cappa Plc, FTN Co-coa Processing Plc, UTC Plc, Stockvis Plc, Nigeria Sewing Machine Plc, Jos International Breweries Plc, Capital Oil Plc, and Golden Guinea Plc. It re-mains to be seen if the matter dies there. Shareholder asso-ciations have announced that they will not take the matter lying down.
Godwin Emefiele has settled in nicely as governor of the Central Bank of Ni-geria. Maybe this is the pe-riod of grace, but investors would like to know exactly how he plans to juggle stable interest rates, with lower in-terest rates, and free capital flow. Together, those 3 items must constitute the longest shopping list in Nigeria’s cen-tral banking history.
Since 2011, the apex bank has maintained rates at 12 per cent. He also hinted at a review of the Cash Reserve Ratio (CRR), which was raised to 50 per cent in July 2013 and later to 75 per cent in March 2014.
Emefiele indicated that he would proceed with caution because ‘reducing interest rates and maintaining ex-change rates are very daunt-ing twin goals but that the central bank will work as-siduously to ensure that these goals are mutually achieved.’
In the June edition of its Middle Africa Briefing Note, analysts at Ecobank are scep-tical that Emefiele can juggle all three aspirations with suc-cess. In their view, he would need to settle on two out of the Impossible Trinity.
He can choose a fixed ex-change rate and free capital flow, in which case he would ‘forgo the ability to set inter-est rates independently and surrender an independent monetary policy.’ A second option would be to put in place a fixed exchange rate and independent monetary policy, in effect, restricting the free movement of capi-tal out of Nigeria. His third choice would be to have an independent monetary policy and free capital flow with the understanding that there will be a floating exchange rate. Tough choices. Welcome to the real world of central bank policy making Mr. Emefiele.
President Goodluck Jona-than has signed the Pension Reform Act 2014 into law. The new law addresses many of the shortcomings of its pre-decessor, which served for 10 years. Some highlights of the new bill include the upward review of minimum contribu-tions from 7.5 per cent to 8 per cent for employees, and 10 per cent, from 7.5 per cent for employers. The new law seeks to pull in employers in the informal sector by making it mandatory for companies with up to 3 employees to belong to the Contributory Pension Scheme. It is gladdening to note that the reform act allows more flexibility for investment in infrastructure and real estate assets. Of course, the most heartening for retirees is that they will now be able to access their savings with less hassle. In recognition of her tireless efforts in pushing the reforms, President Jonathan has submitted the name of the acting director-general of the National Pension Commis-sion, Ms. Chinelo Anohu-Amazu, to the Senate for confirmation.
AGENDA 11
REGULATION
ATreasure Bill
Rate
BLanding Rate
CInflation
A-CReal Rates
B-CReal Rates
MPR
South AficaTurkeyMalaysiaIndiaBrazilChinaNigeria
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Average interest Rates for 2014
Source: Central Bank of Nigeria
VM | Monday, July 14, 2014 | Issue 001
Who is in, who is out, who is up, and who is down? It is that time of the year again when the Nigerian Stock Exchange reviews member-ships of its market indices. The big surprise here is Skye Bank, which leaves the NSE 30 Index. In May, Timothy Oguntayo, the group chief executive officer, had indi-cated that the bank was inter-ested in acquiring Enterprise Bank, which has been put up for sale by the Asset Manage-ment Corporation of Nigeria. If the bank’s bid is successful, it is likely to make a return to the index. Elsewhere, the bank has stated its ambition
to grow its loan book by 15% in 2014.
ARM Pension Managers disclosed that funds advised by Helios Investment Partners will take a minority stake in
the company. With over $2.2 billion of assets under man-agement (AUM), ARM Pen-sion Managers is the country’s largest independent pension fund manager. In the eight
year period since the country launched its pension reforms, the industry has grown by over 30 per cent annually, although more than 90 per cent of its 70 million-strong work force remains outside its mandatory contributory pension scheme. ARM Pension Funds’ 2013 results show that its revenue grew by 43 per cent, and profit after tax leaped by 86 per cent.
FBN Holdings is finally dipping its toes in continental waters. Last month, the bank notified the NSE that First Bank of Nigeria, its commer-cial banking subsidiary, has completed the acquisition of 100 per cent of the equity in the West African operations of International Commer-cial Bank. With 28 branch-es, 17 ATMs, and total depos-its barely above $171 million, to the casual observer this is not a game-changing deal for First Bank.
The bank itself recognizes this as much. Well, sort of. A document it released admits that ‘ICB operations in the
respective markets are small sized.’ It goes on to justify the deal anyway because it ‘pre-sents an expanded capacity for growth with further capi-tal injection and synergies ex-traction. ICB is present across Anglophone West Africa (Ghana, the Gambia, Guinea and Sierra Leone). The moral of the story is that no strategy is permanent. First Bank has long held out on jumping into the cross-border fray. Now that it has, perhaps, the last shall become the first.
Stanbic IBTC has se-cured a $100 million loan from the Tunis-based African Development Bank (AfDB) for lending to the country’s small- and medium-scale enterprises as well as clean energy ventures in the ratio of 3 to 1. In a recent inter-view, Akin Oyebode, head of SME at the bank said that speedy approval and properly priced loans were the two big hurdles faced by borrowers in the segment.
CORPORATES
INDEX CONSTITUENTS’ CHANGES
Index Entrant Exiting
NSE 30 Index Ashaka Cement Plc Skye Bank Plc
NSE Lotus Islamic Index UACN Plc NAHCO Plc
NSE Consumer Goods Index Champion Breweries Plc DN Tyre & Rubber Plc
NSE Banking Index Sterling Bank Plc Wema Bank Plc
NSE Insurance Index Staco Insurance Plc
Unity Kapital Assurance PlcConsolidated Hallmark Ins. Plc
Prestige Assurance Plc
People always talk about loan growth. I think loan growth in Nigeria is muted. I think loan growth should be higher than it is now. It is muted because of the CBN tight monetary policy on lending typified by the hike in cash reserve requirement for deposit money banks (CRR) for both public sector funds and private funds. That has damp-ened loan growth.
Mustafa Chike Obi, Managing Director of the
Asset Management Cor-poration of Nigeria
Mustafa Chike Obi
IN CONTEXT
+25% +20% +15-20%
GTBank
+15%
Skye Bank FCMB Sterling Bank
2014 Loan Growth Aspirations among Nigerian Banks
Godwin Emefiele (left), with his predecessors in office, Sanusi Lamido Sanusi (centre), and Dr. Sarah Alade (right) at a function in US in 2013
Who could have foretold?
2012, he was the newest bright young thing in a long line of European business school im-ports to bring value-adding in-novation to these shores. In his own case, the mission to save us from the stress of grocery shopping. Unlike many others who arrive with fixed ideas and proceed to impose them on customers with dismal results, he had taken the time to under-stand the Nigerian culture and
sensibility, which is so crucial to any service-related indus-try, e-commerce or otherwise. His grasp on what would sell in Gidi is refreshing coming from an oyibo man. I am impressed.
The menu at Sky is impres-sive. Its Asian fusion cuisine
excels, and understandably so as Lalu Sudirham, the award-winning head chef, is Indo-nesian with a background in French techniques. Being a creature of habit I order the duck – medium – with a side of noodles. Friday nights are busy at Sky with the usual schedule of birthday crowds and romantic twosomes, so it takes around forty minutes for the plates to arrive. There are several birthday parties so the light goes off for the perfunc-tory birthday song and cake display. This happened a few times that night and despite it being terribly inconvenient, it gave all the dinners a chance to really take in the view of Lagos in. Quelle vue - What a sight! It will be hard to find better views of Lagos.
Food has arrived – The duck is in thin slices stacked on a clear glass plate. The ar-rangement is simple with a chiffonade of pickled slaw and a refined take on a York-shire pudding as accompani-ments to my favourite dish there. The duck is flavourful, and I suspect that they are Rouen ducks. My generous side of noodles also arrives and speaks to the heritage of
the head chef Lalu. It is simply delicious. It is a combination of bok choi, prawns, and seasonal julienned vegetables. Dare I say this is value for money in this notoriously high priced restaurant? Other dishes that worth trying are the lamb, sea bass and salmon. If you are looking to have small chops or appetizers for business drinks, you may want to invest in their appetizer platter. The steamed dim sum in the platter are little bursts of intense flavour.
One point to remember though is to take enough cash. The restaurant’s POS is not a friendly one. Oftentimes cus-tomers have to walk the full length of the hall sized restau-rant to make payments. Nev-ertheless tonight’s experience is one of my most memorable in Lagos. ;
Table for Ten
10 Chart Topping Art Pieces
ARENA12
HIGH TABLE
ART AS AN ALTERNATIVE INVESTMENT
Even though I was an hour late, I was the first of the in-vited guests to arrive. As the guests troop in I notice we are a motley crew of returnees, uber -creatives and technology darlings. A successful curator at a thriving art gallery, a pe-tite sultry modern jazz singer-songwriter who was named after the Queen of Sheba (so beautiful she could have well
been from Axum), and an Old Etonian, who runs a
nightclub in Abuja, spot-ting a curious Charlie Chaplin moustache that covered half of his upper lip.
We are a warm and friendly bunch. It does no harm that our crisp white clothed table is soon dotted with glasses of the house red and white. Tonight is reminiscent of dinner parties I hosted or attended as a student in Bristol. This time, however, it was not in my modest apart-ment in Redland. Neither are we gathered for a meal of jerk chicken brochettes à la Bristol Park Road Sainsbury’s 2-for-1 special. We were at the pent-house restaurant of Eko Hotel in Victoria Island and about to order from the menu of what is arguably the swankiest restau-rant in Lagos. The panoramic views of the city are breath-taking. I am in for a good time.
Sitting directly opposite me is the dynamic yet unassum-ing founder of Easy Taxi, the definitive taxi app in Nigeria. Amidst his numerous laud-
able achievements - Forbes magazine mention, CNN Af-rica Startup feature, largest database for taxi drivers in Africa, strategic partnership with Samsung) he beams with a pride over the victory of his company against one of the e-
commerce giants in a recent football tournament.
On my left is the managing director of the biggest food de-livery portal in Nigeria, whose model has been replicated all over Africa. At the time he launched the online service in
Welcome to my column, Art as an Alternative Investment. Here you will find the latest news and insider intelligence on the African art market in-cluding auction reports and art transaction prices. I will also be investigating major trends and showcasing the artists and key professionals who drive the industry, as art from the continent continues to gain increased global atten-tion and command staggering fees on the international mar-ket. For the serious collector, informed investor, and fidu-ciaries in wealth management and family offices this column
aims to provide an overview on art as a credible store of value. I will give readers a how-to guide on integrating art collection as a viable part of a wealth building strategy. It is no secret that savvy inves-tors are allocating a growing part of their portfolios to art. This column will give a step-by-step tour on art as an alter-native asset class.
There is no better way to be-gin than with the top 10 sales of artworks sold on the do-mestic market in Nigeria.
The secondary art market in Nigeria has experienced sig-nificant growth since the first art auction, Before the Ham-mer Falls organized by Nim-bus Gallery in December, 1999 at MUSON Centre in Lagos. From then on, there have been other successful sales by sev-eral auction houses in Nigeria.
Founded in 2007, market leader, Arthouse Contempo-rary holds the record price of N30.8 million ($192,500) buyer’s premium inclusive for the highest sold work in Nige-ria in its November, 2011. The sum was achieved for Ben En-wonwu’s iconic bronze sculp-ture, Anyanwu (142.2cm) cre-ated between 1954 and 1955.
Indeed, the artist holds the top four spots for art sales in Nigeria. His 1957 fiberglass sculpture, Fulani Girl (78cm) is at second place with N17.1 ($106,563) against its previ-ous estimate of N12,000,000 to 15,000,000 ($75,000-$93,750). The sale took place at Arthouse in November 2013. Third is Enwonwu’s The Drummer (89cm). Made in fiberglass, it sold at N14.3 million ($89,375) against its previous estimate of N12 mil-lion - N15 million ($75,000-$93,750) at the same sale.
The fourth spot is occupied by Ben Enwonwu’s Untitled (37.5 x 32cm) 1980, ink on paper painting with the ham-mer price of N13.5 million ($84,375). It was sold in May, 2011 at Terra Kulture’s art auction against its previous estimate of N8 million to N9 million ($50,000 –$56,250).
El Anatsui takes the fifth and sixth slots. His 2013 wood and aluminium panels, Ends and Means Committee (217x106cm) sold in Novem-ber, 2013 for N13.2 million ($82,500) at Arthouse. It was estimated to go under the hammer at between N12 mil-lion to N15 million ($75,000-
$93,750) while his 1992 wooden panels, Grandma’s Cloth Series VI (132 x 262 cm) estimated between N8 million to N10 million ($ 50,000-$62,500) achieved the sum of N12.54 million ($78,375) at Arthouse in November of 2012.
Next is Greater Nigeria, a 2007 bronze foil (208.5 x 442.5 cm) by Bruce Ono-brakpeya, estimated between N4.4 million – N5.5 million ($37,200-$46,500). It sold at N10.12 million ($63,104.5), at Arthouse in April, 2008.
Demas Nwoko breaks into the top 10 at 8th place. His wooden sculpture, The Wise Man, (72.4 cm) fetched a sum of N9.9 million ($61,732) against its previous estimate of N5 million– N6 million ($32,258-$38,710) at Arthouse’s November, 2010 sale.
Tying in at 9th place with N8.8 million ($55,000) buy-er’s premium inclusive, are; Ben Enwonwu’s 1980 bronze sculpture, Africa Dances (102.9cm); his 1960 paint-ing, Untitled, (109.2 x 43.2 cm); and Yusuf Grillo’s 1966 oil, Blue Moon, (60 x 60cm). The works were previously es-timated at N6 million to N7.8
million ($40,000-$52,000); N8 million to N9 million; and N7.5 million to N8.5 million ($62,500-$70,830) respec-tively. They sold at Arthouse’s sales of May, 2011; November, 2011; and November, 2008 in that order.
El Anatsui rounds up the top 10 with his clay sculpture, Nsukka Shrine, (57 x 44 x 5cm) which achieved a sum of N8.58 million, ($53,625), at Arthouse May, 2014 sale, against its previous estimate of N 7 million - N9 million ($43,750-$56,250).
These results are compiled from auctions held in Nigeria over 6 years. In this period, positive interest in the market has been sustained and it ap-pears that buyers are willing to compete strongly for clas-sic examples of works by the older and established artists. The recent successes recorded on the domestic scene are al-ready influencing prices for Nigerian art on the interna-tional market. For example, in May last year, Bonhams, the international auction house, sold Enwonwu’s The Mir-ror Sculptures in wood, for £361,000 ($560,000) at its Af-rica Now sale. It is undeniable
that among the cognoscenti, authentic art pieces by recog-nized Nigerian artists are com-manding a higher premium for both their critically acclaimed aesthetic value, and as an en-during store of value. ;
*All prices quoted for sold pieces are buyer’s premium inclusive.
Anyanwu by Prof Ben Enwonwu MBE
Bronze1956 Height: 142.2cm
Ify Ojiis a lawyer, writer and food lover. She is the creator of the GidiTang.com (synonym: Lagos Flavour) blog on food and drink in Lagos. [email protected]
Oliver Enwonwuis the director of leading Lagos gallery, Omenka and president of the Society of Nigerian [email protected]
Sky Lounge and Restaurant
Plot 1415, Adetokunbo Ademola Street, Eko Hotels &
Suites, Victoria IslandTel: 01-2772700
Ext. 6303
VM | Monday, July 14, 2014 | Issue 001
EDITOR: MIDENO BAYAGBON
GROUP BUSINESS EDITOR: OMOH GABRIEL
CONTENT DIRECTION: OBIORA TABANSI ONYEASO
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