Note from Nairametrics: Our editors understand a previous version of this article include portions that were factually incorrect. We have reached out to the authors and they have sent in an updated article which is now published below.
Revised Opinion Article: France’s largest Telco, Orange is reportedly making a play to enter two of Africa’s biggest markets, Nigeria and South Africa. Reports say Orange CEO, Stephane Richard said the company is looking to widen its footprint in Africa by establishing a presence in these countries, but this might take a few months.
This reports begs the question…
What could this mean For Nigeria’s Resident Telcos?
- Competition – when this happens, they will be joining as a 5th major Telco company. This brings license revenue for the Nigerian government, increases product offering for consumers, and potentially drives prices down for consumers.
- Customers – if well-positioned, they could go after a new set of customers by offering new packages that are more attractive in terms of pricing and other value proposition.
- Consolidation- the entrance may bring out new M&A activities in the space, as it may decide to acquire an existing player in the market. It is common knowledge that a few of the existing players have had their fair share of financial trouble in the past few years
With over 266 million customers and about 150,000 employees worldwide, Orange has the financial muscle and manpower to be a major player in the Nigerian market. This potential move could result in the creation of new jobs or resulting in employees of existing Telcos moving from their current positions to work with Orange depending on the proposed value
Nonetheless, with this move into the country, Orange will definitely bring in fresh and much-needed competition to the Nigerian telecom sector. Also, the payment space could also see a significant impact on mobile money users in every nook and cranny of the country. Everyone knows Nigeria has a consistently growing payments market space and this expansion plans maybe with that in focus.
Also, Orange has a payment system- Orange Pay that seems to have gained significant traction. No doubt they will easily fit right into the growing payments space in Nigeria; existing players may also need to step up their offerings to secure their place in the market.
Imposters, uniforms and our collective awe
The uniform of the Nigerian Armed Forces, Police, and other Government Security Agencies have become so powerful, that they serve as a form of identification.
On a bright, sunny Tuesday morning in Lagos, Col. Saki Abdullahi (not real name), got into his personal car and hurried to the bank to sort out some issues with his account and perform some transactions. He was dressed immaculately in his well ironed and starched uniform and you could see your reflection in his well-polished shoes.
As he approached the gate of the New Generation Bank in Victoria Island, one of the Security Guards beckoned on him to open his boot for the usual search. Col. Saki knew the drill and with one touch of a knob near the seat, he flicked open the boot just as the guard walking past him noticed his uniform and rank.
The Guard immediately closed the boot with the briefest of glimpses into it and signaled for his colleague to open the gate. Col. Saki found this rather curious because, on previous visits to the same bank branch, he had been subjected to more scrutiny by the guards on duty.
He parked his car and walked towards the security doors that granted access into the banking hall. He was briskly saluted by the guard and when the door appeared to disallow him entry (on account of his car keys and belt), he was still given swift access. Generally, the Staff was all super courteous and helpful and he left the bank in next to no time.
On the drive back to his office, he had a call and he hesitated as he could not find his hands-free device, but the person on the other line was not someone he could ignore his call. So, he picked and put the phone to his ears and began a conversation. He got to a point and had to slow down in traffic. A Lagos State Traffic Official (LASTMA) who got in front of his car and attempted to stop him because he was on the phone and driving, took one look at him and moved on.
Then it dawned on him that the reason the LASTMA Official did not bother to approach him was the same reason the guards and bank staff were so nice to him. He was in his Army uniform and in Nigeria that confers a special status and privilege on the wearer.
All over the World, members of the Armed Forces, Police, and other Uniformed Government Security are accorded some form of respect and privilege. It is an unwritten rule borne out of respect for the sacrifices that they make daily for the rest of the citizenry to enjoy the most basic freedoms and security. These privileges however do not in any way place uniformed personnel above the laws of the land or above the rest of the civil populace.
The unbridled privileges and rights that years of Military rule have inadvertently conferred on Uniformed Personnel have created a class of citizens that cannot be questioned and led to a growing army of Impostors, fakes, and impersonating Uniformed Officers of the Law.
In Nigeria, it is a normal sight to see men of the Armed Forces beating up and molesting citizens for daring to wear camouflage clothing on the Streets, as this is deemed as an attempt to impersonate a member of the Armed Forces. Curiously, these outfits are readily available online, and wearing them in other parts of the developed world is not considered a crime or impersonation.
Section 110 (1) of the Criminal Code makes it unlawful for any person who is not serving in any of the Armed Forces in Nigeria to wear the uniform of the Armed Forces or any part of the uniform of such Forces, or any dress having the appearance or bearing any of the Regimental or other distinctive marks of such uniforms. Camouflage is a part of the military uniform and so it falls under this law.
So, the basic reason for outlawing the wearing of camouflage amongst civilians is security, but if we look at countries with the strongest armies in the world and the prevalence of citizens being allowed to wear camouflage and other dress articles associated with the military, we also notice crimes committed do not have a correlation with the wearing of uniforms. So, the real issue is not the uniform itself, but the access, privilege, power, and rights it confers on the wearer.
Just this past week, it was widely reported that 2 suspects were nabbed by the Oyo State western Security Network codenamed, Amotekun for producing and selling fake Amotekun uniforms. This was after 6 persons were arrested while posing as members of the Corps. Amotekun has launched just over a year ago on January 9, 2020, and already criminal groups are making counterfeit versions of its uniforms. So, you ask yourself, why would anyone want to buy counterfeit versions of Amotekun uniforms if not that they believe it’s a means to access power and riches that they would otherwise not be able to get if they were in civilian dress.
While growing up in Lagos in the early ’80s, uniformed personnel boarded public transportation and were exempted from paying fares. This was done as a form of respect and appreciation (especially after the Civil War), but the sight of uniformed personnel wearing just an article of clothing in the uniform e.g., the Cap, T-Shirt or Pants on a weekend private outing just to avoid paying their fare has become embarrassing. Once Commercial Drivers put uniformed personnel in the front seat of their vehicle, they are emboldened to break all the traffic rules including driving against traffic (One Way Driving).
The uniform of the Nigerian Armed Forces, Police, and other Government Security Agencies have become so powerful, that they serve as a form of identification. You are not allowed to request to see the identification card of anyone in uniform, to do so can lead to physical intimidation.
The Military High Command has done its best in recent years to improve military and civilian interaction and to create lines of communication for the civil populace to report incidents of misconduct. These actions have led to a manifest improvement in the civility of interactions between the two sides.
During the last nationwide #EndSARS protests, an Airforce Officer was lauded by all for the manner he was able to calm down the protesters and ensured there was no destruction of property and no loss of lives.
As we continue on the journey of nationhood, we have to decide as a people what form our respect and the privileges, we accord our men and women in uniform should take.
As we mark Armed Forces Remembrance Day and the sacrifices of our Fallen Heroes, we owe it a duty to discuss how we honor them, while maintaining the rule of law across the board and the dignity of the rest of the civil populace.
‘Long live the Armed Forces, Long Live The Federal Republic of Nigeria’
A Joe Biden presidency and its impact on Nigeria’s oil
With Joe Biden’s imminent inauguration as the President of the US, his policy on energy and renewables could very well determine Nigeria´s prosperity for the next 4 years.
A couple of months ago, I wrote on the impact of the Joe Biden Presidency on the oil markets. Now that he is President of the United States with his inauguration on the 20th of January, every country would go back to their political and foreign drawing boards to analyse the impact of his swearing-in on their respective economies or governments.
While some countries would face pressure from Biden in respect to their human rights issues, climate change policies and other diplomatic matters, countries like Nigeria will be analyzing the impact of Biden’s policies on the fate of Oil.
Three standpoints are crucial here;
- Will shale oil, which has been the albatross on the neck of oil prices for years, weaken in respect to Joe Biden and notably Kamala Harris’ views on fracking?
- Will Joe Biden’s soft foreign policy on Iran enable Iranian oil to return to the market?
- Will Joe Biden emulate Trump in meddling with OPEC+ affairs?
The answers to these three questions would give an outlook on the fate of Nigeria’s black gold.
Over the years, the investment in the Shale industry in America has seen the United States increase oil production significantly. In understanding market dynamics, increased production of oil has a negative effect on oil prices. This is why we have not seen $100 oil in many years now.
An increase in US oil has significantly reduced OPEC+ market share and dominance in the oil markets. Historically OPEC could influence prices with their policies, but nowadays, US oil appears as a barrier in the oil markets.
The dominance of shale is enabled by a few factors. Firstly, Fracking. Fracking is the process of drilling down into the earth before a high-pressure water mixture is directed at the rock to release the gas inside. It is highly controversial as it threatens to cause pollution and is detrimental to climate change.
Now, climate change is at the forefront of Joe Biden’s energy policy. Inadvertently, it will hamper the production of fossil fuels in the long-run.
Additionally, Wall Street would be wary of investing in the oil and gas sector as the future looks more into renewable energy.
Joe Biden’s relations with Iran would differ from Trump’s relationship with Tehran. While Donald Trump gave tough sanctions during his tenure, Biden would seek to pamper Iran just like Obama did and this will mean Iranian oil can come back to the market. Although private intelligence shows Iranian oil is still exchanged in the markets, this diplomatic relation would still be significant especially with Iran accounting for about 9.5% of the world’s total oil reserves.
Meddling with OPEC+
During Trump’s tenure, OPEC+ was rattled several times. Trump has never hidden his mistrust in OPEC. He has previously labeled them a cartel in the past. When oil prices go high and affect the cost of gasoline on American consumers, Trump calls out OPEC to find ways to reduce the prices.
However, when prices are so low and energy companies in America can’t break even, Trump, like he did in April 2020, interferes and calls out OPEC to intervene. Interestingly, according to trumptwitterarchive.com, Donald Trump tweeted 271 times about “oil”; 70 about “OPEC”; 351 about “gas” (gasoline and natural gas); 68 about “Saudi Arabia”. It would be rare for Joe Biden to do the same thing as his style of governance will be seemingly different from Trump´s.
Additionally, America as one of the largest consumers of oil will need to improve its demand overtime before supply outweighs demand as a result of the pandemic. How Joe Biden handles the pandemic would be significant in American demand. Would he endure lockdowns or not? That’s very important in the conversation on his impact on gasoline prices and demand.
Nigeria’s black gold – Oil, would be dependent on the future outlook of the oil market and Biden’s policies. It would be interesting to see if Biden would allow OPEC to seize market share from American oil. The first few years would be very important.
How Access Bank got Japaul to pay up N37 billion loan that had gone bad
Brute force, Courts, quid quo pro are hallmarks of Access Bank’s debt recovery schemes.
In 2018 when Access Bank took over Diamond Bank, in what is the largest merger in Nigeria’s banking history, they knew it was not a match made in heaven like their PR agencies will make you believe.
In merging with Diamond Bank and taking over their juicy assets, they had also taken over the lemons that had for years bedeviled the bank who had pioneered mobile banking applications well ahead of its time.
When Access Bank merged with Diamond Bank, the latter had total loans and advances of N787.8 billion out of which N219.9 billion in loans were impaired. Oil and gas-related loans made up a significant chunk of the loans and were estimated at about N302.6 billion, most of them distressed.
Included in the oil and gas loans was a $66.4 million in loans owed to the bank by Japaul Oil and Maritime, as they were referred to at the time. The loans had gone bad accumulating unpaid interest of about $11.2 million. By the time Access Bank took over the loans, Japaul agreed to a restructuring rolling over both the principal and interest.
This is typical of most Nigerian companies burdened with debts they cannot pay. To avoid being run over by the bank, the debtors will negotiate a restructuring, extending the loans by one to three years and if lucky, reducing the interest rates. In return, the bank books new fees (which are often paid in advance of the restructuring) and then gets to avoid huge provisioning mandated by the central bank.
It is often a ‘win-win’ situation that essentially kicks the can down the road until, like in the case of Diamond Bank, the chicken comes home to roost. But Access Bank is not new to slugging it out with debtors, particularly those who do not pay up. Upon takeover in 2019, Herbert Wigwe, the CEO of Access Bank announced that his bank was going to go after Diamond Bank debtors. In an interview in 2019 he maintained that “we recovered N2.2 billion bad debt in the year under review. Access Bank will intensify effort to ensure that it recovers the debt owed to Diamond Bank. We will go out for Diamond Bank’ debtors and if they are not ready to redeem their debt we will publish their names in the newspapers.”
In 2019, Access Bank swooped on Japaul Plc seeking repayment of their Diamond Bank loans which was now about N37 billion. The bank took over Japaul’s trading assets and integral to the going concern status of the company. Before now, Japaul made money rendering marine services, dredging, mining and construction mostly for the oil and gas companies.
But business has been bad for years now leading the company into net accumulated losses of over N50 billion as of 2018. For the 5 years leading to 2018, the company posted back to back losses with revenues going from N5.3 billion in 2015 to about N85.8 million in 2019. External loans had also ballooned from about N18.8 billion to about N38.8 billion. Its share price had also fallen to about 20 kobo per share by the end of 2019. It was nearing bankruptcy and something had to give.
They began a court battle with Access Bank over the loans and the threat of a liquidation eventually settling for a deal. Sources inform Nairametrics that Access Bank is one of the most aggressive banks in the business when it comes to playing dirty with debtors. Unlike Diamond Bank, Access Bank is ready to battle in the courts and is ready to deploy any legal means necessary to recover their loans even if their actions are viewed as uncanny.
Recently, the bank obtained a Mareva injunction sealing the offices and taking over the assets of Seplat due to a related party loan owed by the latter’s Chairman, ABC Orjiakor. Just like Japaul, the loans owed by ABC Orjiakor were also obtained from Diamond Bank. According to sources, when Access Bank swoops in for their loan recoveries, they deploy all tactics in the books to ensure all or most parts of the loans are recovered from chronic debtors.
Eventually, Access Bank and Japaul agreed to settle the matter outside the court. In exchange for repaying the N38 billion loan, Access Bank settled for a repayment of N30.9 billion. The deal involves Access Bank taking over two of Japaul’ s Dredgers (12& 13) for N5 billion and a Barge (Beau Geste) for N25.9 billion. Japaul also gave up its land in exchange for working capital of N1.5 billion from the bank.
In return, Japaul gets to clean up its balance sheet erasing what is left of its debt, booking a profit of about N40 billion and wiping off its negative equity of N35.5 billion. However, in one fell swoop. From negative equity of N35.5 billion, the company’s net assets are now N4.69 billion. A win-win for everyone.
We are not exactly sure what Access Bank plans to do with dredgers and barges it took over from Japaul. Interestingly, in the deal, Japaul also gets to lease back the two dredgers for a period of 6 years from Access Bank for a sum of N1 billion paid annually from 2021 – 2026. Japaul got a one-year moratorium on repayment expiring in December 2020.
Japaul has since changed its name to Japaul Gold and Ventures citing the dwindling oil and gas sector for its reasons. The company believes gold mining and technology are the future and is seeking to raise N25 billion in equity to pursue this course. Its share price has ostensibly risen by 150% since the turn of the new year, the best performing on the stock exchange.
For Access Bank, aggressively going after bad loans have paid off immensely. In 2019 the bank recovered N38.9 billion in bad loans barely a year after taking over Diamond Bank. In the first 9 months of 2019, a total of N24.7 billion was captured in bad debts recovered. It is a strategy that is working and there is no betting against Access Bank doubling down on aggressive recovery this year.