Part B
2014 Q2-Q3 Outlook
Outline
What to Expect in Q2 & Q3
Sectors to watch
Political Risk Analysis
2
Financial Derivatives Company Limited
Q2 in Perspective
Currency will remain stable in Q2 until Sanusi leaves
2 MPC meetings
New CBN Governor: political considerations outweigh
economic credentials
Nationwide cashless policy
National Conference
Ekiti Governorship election
Cabinet reshuffle
3
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What to Expect in Q3
PDP convention
APC convention
Osun state election
Budget 2015
4
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Sectors to Watch





Hospitality
Real Estate
Aviation
Telecoms
Retail
Hospitality Sector - Structure
Growth of 13.66% year on year as at Q3’13
Branded hotel rooms in the Lagos metropolis are 2,200
Non-branded rooms are 3,000
Over $500m investments in less than a decade*
Hospitality industry – Big and small players
 9 of the world’s top 10 hotels have thriving businesses in
Nigeria  Sheraton, Protea, Southern Sun, Sofitel, Wheatbaker,
Oriental
*Businessday Online December 13, 2013
7
Financial Derivatives Company Limited
Hospitality Sector - Structure
 Several smaller hotels and restaurants that employ the
majority of the hospitality workforce
 Lagos holds 60% of the country’s total hotel room capacity
Concerns about work conditions and income levels
New projects include Marriot Courtyard, Hilton and
Meridian in Ikoyi
Occupancy rate in Ikoyi is down to 60%, while VI is up at
75%
Price war between Ikoyi and VI hotels
8
Financial Derivatives Company Limited
Hospitality Industry at a Glance
Nigeria is expected to be the fastest-growing African
market over the next five years*
 Exceeding SA and Mauritius
More international hotel brands are in the pipeline
 Sector will continue to be dominated by foreign brands
 Lagos is the most preferred destination
Some international brands expected in 2014
 Marriott Hotel (Lagos), Swiss International Hotels (Lagos and
Port Harcourt), Park Inn by Radisson (Abeokuta)
Source: *PWC
9
Financial Derivatives Company Limited
Hospitality Industry at a Glance
More hotel rooms already in the pipeline for 2015
 Signifying increased business confidence
 Transcorp Hilton Ikoyi’s 350-room hotel
Already intense competition in the sector is expected to
increase further
Marriott recently finalized a deal to buy Africa’s largest
hotel chain, the Protea group, for US$186m
Marriott International Inc. and Mali-based Groupe Azalai
Hotels are also adding rooms on the continent
 As demand for raw materials like oil, copper and gold fuel
economic growth
10
Financial Derivatives Company Limited
Hospitality Industry at a Glance
Acquisition will almost double Marriott’s hotel chains
globally
 Will give Marriott more than 23,000 rooms in Africa
Protea is an established brand in Africa
 Owns at least 11 hotels across Nigeria
 Investments in Nigeria valued at USD 70m
Poses significant competitive threats to big brands already
participating in the sector
 Intercontinental, Sofitel, Sheraton, Hilton, Radisson
Reduces the list of remaining potential takeover/ M&A
targets
 Tsogo Sun Holdings (Southern Sun), TPS Eastern Africa
(Serena)
11
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Lagos Declared Second Most Expensive
City
HRG Hotel Survey reveals Lagos as the 2nd most
expensive city for travellers
 With an average hotel room rate of £117 ( $176.5 or
N28,241)
 Moscow is the most expensive
Lagos enjoys high occupancy factor due to increased
demand
 Supported by presence of O&G industries and multinational
companies
 Big prize is “domestic and regional business travellers”
13
Financial Derivatives Company Limited
Top 5 Predicted Trends
Intercontinental Hotel and other new entrants boost
competition
Price competition will kick in and service quality should
improve
Human capital development: improved training for
customer service and hospitality to be a unique selling
point
F&B Differentiation will centre on creativity, quality of
food and experience
Growth of local / regional traveller will begin to
influence industry choices, e.g. local sourcing?
14
Financial Derivatives Company Limited
Hospitality Sector – More Entrants to Africa
Louvre Hotels Group, a unit of Starwood Capital Group
LLC, will open as many as 16 hotels in Africa in 2014* *
 Including its first in French-speaking sub-Saharan countries
Sub-Saharan African economies are expected to outpace
every region except developing Asia in 2014*
 Improved business confidence is expected to fuel growth by
increasing business and leisure travel
 Sub-Saharan region has grown at an annual average of 5%
 56 million travellers visited Africa in 2013*


Up 6% from 2012
Projected to increase similarly in 2014
*IMF Regional Economic Outlook for SSA
** Bloomberg
15
Financial Derivatives Company Limited
2014 Outlook
The hospitality sector is expected to continue its rapid
growth
 Driven by favorable tax policies, cheap labor and expansion
drives
 Growth however will be tampered by security concerns
Rooms and occupancy rates are projected to increase
 As new operators arrive on the domestic scene
 Stiff competition and resulting promotional activities are also
expected
16
Financial Derivatives Company Limited
Hospitality Sector - Vulnerability to Risks
Exchange Rate Risk – Neutral
 Hotels receive some of their revenues in USD and also make
some payments in USD. The net effect is neutral
Interest Rate – High
 Increase in interest rates implies higher cost of borrowing and
increased finance costs. This will put downward pressures on
cash flows and profitability
Political Risk – High
 Political instability will give rise to security concerns and
consequently lead to decrease in business confidence
17
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Market in Disequilibrium
Asking rents are high
Affordability is low
Leaving a supply gap
Result is high vacancy, high delinquency and poor cash
flow
With inflation inching up and currency depreciation, real
estate is becoming an investors paradise
19
Financial Derivatives Company Limited
Where are the Hot Spots?
Type of Property
Rental Price
V. Island
Rental Price
Ikoyi
Rental Price
Lekki
Luxury Apartment- Per
Annum
N8m-N11m
N8m-N11m
N2.5m-N3m
Detached House/
Duplexes- Per Annum
N8m-N13m
N8m-N15m
N3m-N5m
Office Space - Per
Square Metre
N50,000- N70,000
Land- Per Square
Metre
N180,000- N250,000
N180,000- N250,000
N25,000-N35,000
N90,000- N130,000
Properties on major streets command higher prices
Ikoyi remains mostly a residential area
Commercial properties are mostly found in V.I
Some commercial properties found in Lekki are residential houses
converted for office use
20
Financial Derivatives Company Limited
FDC Survey in January 2014
Residential Vacancy Factor
Commercial
Vacancy Factor
Victoria Island
23%
7%
Ikoyi
3%
0%
Lekki
13%
0%
During the month, vacancy factor for residential properties remained
higher than for commercial properties
Commercial vacancy factor shows Lekki and Ikoyi are still
predominantly residential areas
Source: FDC Research
21
Financial Derivatives Company Limited
Victoria Island - Residential Vacancy Factor
higher than Commercial
Out of the 6 streets surveyed in Victoria Island, the vacancy factor for
houses and flats is highest in Sinari Daranijo
Commercial vacancy factor is highest in Saka Jojo
Street Name
No. of Houses
Vacancy
Factor
(Houses)
No. of Flats
Vacant
Factor
(Flats)
Average Vacant Factor
Residential (Commercial)
Vacancy
Factor
Saka Jojo
21
10%
0
0%
19%
Sinari Daranijo
31
13%
12
67%
0%
Ologun Agbaje
20
5%
6
33%
9%
Younis Bashorun
38
5%
13
0%
13%
Bishop Oluwole
70
7%
18
61%
6%
-
-
6
0%
8%
Victoria Island
Oyin Jolayemi
Average
8%
38%
Source: FDC Research
22
Financial Derivatives Company Limited
23%
7%
Ikoyi- Residential Vacancy Factor higher than
Commercial
Out of the 4 streets surveyed, the vacancy factor for flats is highest in Lugard
The vacancy factor for houses is highest in Thompson Avenue
Street Name
No. of Houses
Vacancy No. of Flats
Factor
(Houses)
Vacant
Factor
(Flats)
Average
Vacant
Residential
Factor
(Commercial)
Vacancy
Factor
Ikoyi
Cameron
45
4%
42
0%
0%
Thompson Avenue
9
33%
74
0%
0%
Lugard
38
3%
75
19%
0%
Glover
55
4%
412
0%
0%
Average
3%
2%
Source: FDC Research
23
Financial Derivatives Company Limited
3%
0%
Lekki - Residential Vacancy Factor higher
than Commercial
Out of the 4 streets surveyed, the vacancy factor for houses is highest in
Admiralty Way
The vacancy factor for commercial properties is highest in Bisola
Durosinmi Etti Drive
Street Name
No. of Houses
Vacancy No. of Flats
Factor
(Houses)
Vacant
Factor
(Flats)
Average
Vacant
Residential
Factor
Vacancy (Commercial)
Factor
Lekki
Admiralty Way
13
31%
Obafemi Anibaba
11
Prince Adelowo Adedeji
Bisola Durosinmi Etti Drive
Average
134
0%
0%
9%
0%
0%
30
7%
0%
0%
29
14%
0%
14%
13%
0%
Source: FDC Research
24
Financial Derivatives Company Limited
13%
1%
Constraints
Land Use Charge- Responsibility of Property Owner
or Occupier?
Issues relating to land use charge also discourages buyers
The responsibility for payment of the Land Use Charge
resides primarily with the property owner
Lack of proper documentation for government authorities
to differentiate between occupier and property owner
Difficult for occupier who makes payment to get
reimbursement from the property owner
Also, problems with calculation of rate charged
25
Financial Derivatives Company Limited
Real Estate – Outlook & Risk
A lot of activities in the construction sector expected in
the first half of 2014
Supported by foreign investors who are attracted by the
Eko Atlantic project and the Lekki Free Trade Zone
We expect to see more properties available in the market
as electioneering activities pick up
The resulting buying and selling is expected to boost the
sector
There is a possible risk of an oversupply of properties,
which could likely to dampen prices
26
Financial Derivatives Company Limited
President Approves New Board For
Aviation Parastatals & Agencies
The parastatals and agencies are:
 Federal Airports Authority of Nigeria (FAAN)
 Nigerian Airspace Management Agency (NAMA)
 Nigerian Civil Aviation Authority (NCAA)
 Nigerian Meteorological Agency (NMA)
Dates for the formal inauguration are yet to be announced
Appointments appear to be politically driven
 Not based on efficiency or antecedents of the appointees
29
Financial Derivatives Company Limited
International Traffic – Dubai becoming an
increasingly attractive destination for Nigerians
Flights to Dubai account for a significant portion of total
international traffic
 Transit point for the Middle East, Far East, Europe and America
 Student travel

Increasing number of American-approved Universities in Dubai
 Medical and general tourism
30
Financial Derivatives Company Limited
International Traffic – Other Routes
North Atlantic and US Traffic
 Low inbound and outbound load factors
 Operators have been giving steep discounts

As much as 25%
 Several flights have been cancelled or rescheduled
Chinese Traffic
 Currently slow
 May pick up as shoppers and traders stock up for the Easter
celebrations
31
Financial Derivatives Company Limited
International Traffic – Other Routes
February is normally a slow-traffic month
 Operators enjoyed high load factors during the Christmas
celebrations
 Expected to pick up at the end of March to the beginning of
April

32
Ahead of the Easter holidays
Financial Derivatives Company Limited
Regional Aviation - Airlines bid for 30%
Stake in Senegalese National Carrier
The national carrier has received offers from a number of
operators including South African Airways (SAA), Africa’s
biggest carrier
 SAA has not turned a profit in years
The state has a 51% stake in the airline
 Was set up in 2009 after the collapse of Air Senegal
International
 The government increased its stake to prevent bankruptcy
Africa’s major operators are making moves to tap traffic
beyond their home markets
 IATA has forecasted that African carriers will be profitable this
year for the first time since 2010
33
Financial Derivatives Company Limited
Global Aviation - 2013, Safest year in a
decade for commercial air transport
The European Aviation Safety Agency (EASA) declared
2013 the safest year in a decade for commercial air
transport
There were17 fatal accidents worldwide involving large
commercial air transport aircraft
 Compared to a yearly average of 27
Fewer than any other year in the last decade
 As a result, there was also a significant decrease in the number
of fatalities worldwide

34
Down to 224 in 2013, compared to a yearly average of 703 between
2003 and 2012
Financial Derivatives Company Limited
2014 Global Outlook – IATA raises global
airline profit outlook for 2013 & 2014
Revised its outlook from its last forecast issued in
September 2013
 Based on a slight fall in oil prices and better industry business
practices
Global airline industry to generate net profits of $12.9bn
in 2013 and $19.7bn in 2014
 Representing $1.2bn and $3.3bn improvement in 2013 and
2014 respectively
Also forecasts that airlines will carry 3.91bn passengers
by 2017
 A 31.2% increase over the 2.98 billion passengers carried in
2012
 Average annual worldwide passenger growth of 5.4% for the
2013-2017 period
35
Financial Derivatives Company Limited
2014 Domestic Outlook
The aviation sector will follow the trend in the level of
disposable income
 Will also be affected by the direction of the currency
We expect increased traffic from April to July
 Due to the Easter and summer travelling
 Also due to pre-election exit
The currency is expected to depreciate after the exit of
the current CBN Governor
 Ticket prices will rise significantly
 Price wars may result
36
Financial Derivatives Company Limited
Aviation Sector - Vulnerability to Risks
No threats of new entrants
Intensity of rivalry to increase
Exchange Rate Risk – Neutral
 Cost of fuelling and operations are mostly in naira
Interest Rate – High
 Increase in interest rates implies higher cost of borrowing and
increased finance costs. This will put downward pressures on
cash flows and profitability
 Most airlines are already highly leveraged
37
Financial Derivatives Company Limited
Aviation Sector - Vulnerability to Risks
Political Risk – High
 Political instability will give rise to security concerns and
consequently lead to decrease in business confidence
 Leading to a reduction in both business and tourist travel
38
Financial Derivatives Company Limited
39
Financial Derivatives Company Limited
Economics of Sector
Fastest growing sector at 24.42%
 Outperforming national GDP by 17.55%
Contributes 7.84% to GDP with investments in excess of
$25b
Has direct and indirect linkages with other sectors in the
economy
Airline booking system
Payment system
Advertising
Entertainment and media e.g. TV broadcast, caller tunes, movies
and creative art
 One of the most attractive markets in Middle East & AfricaPyramid Research




41
Financial Derivatives Company Limited
Structure & Trends
Capital intensive and extremely competitive industry
Competition largely between 4 GSM providers
Major players not listed on the NSE
Licenses of GSM service providers due for renewal in
2016
Increased demand for broadband services
 47.45% of 122m active subscribers use internet data
 52.55% yet to use internet data as at October 2013
Increased penetration of mobile phone usage
Number portability launched
E-commerce growing with potential as Nigeria embraces
cashless
42
Financial Derivatives Company Limited
Vulnerabilities
Exchange rate neutral
High exposure to interest rate risks as cost of finance
increases
Political unrest
Inadequate power supply
 Increased costs with higher gas prices
Increase in fuel prices, reducing disposable income
Boko Haram crisis, a threat to e.g. base stations
43
Financial Derivatives Company Limited
Retail Industry
-Bain’s View
Nigerian economy with strong economic
fundamentals …
Nigeria is the 2nd largest economy in SSA
Nigerian GDP (PPP) expected to continue to grow at
6.8% CAGR over the next years
Inflation expected to flat out to ~7-8% in the coming
four years
Exchange rate to USD has been relatively stable
Nigeria is the most populous country in Africa with
~165M people, +2.5% p.a.
45
Financial Derivatives Company Limited
Nigerian economy with strong economic
fundamentals …
The population is and will remain young, ~76% under
the age of 35 in 2030
Share of private consumption is at 60% of GDP, in
line with other SSA countries
Private consumption growth driven by expanding top
of the pyramid
46
Financial Derivatives Company Limited
African retail trade is composed of three
segments
• Accounts for majority of African retail
Traditional
trade
• Consists of small retailers, specialty stores
• Highly fragmented and dispersed across urban
and rural areas
Formal
retail
• Similar to western modern trade
Modern trade
• Populated by local and multinational retailers
• More developed in South Africa; starting to grow
elsewhere but from small base
• Significant share of African retail market
Informal
retail
47
• Trading by unregistered sellers (e.g.
hawkers) or reporting evasion in
modern economy
• Prevalent in rural areas and fringes of urban
sectors
Financial Derivatives Company Limited
Apple Store in New York
Oshodi
Apple Store at Ikeja Mall
Computer Village
Modern trade with strong impact in
emerging markets
Greater variety and better quality of food and non-food
products
Market transparency and decrease in food prices
Increase of employment (direct and indirect)
Benefit for farmers by being integrated into the food
supply chain
Investments in technology
Decrease of tax evasion (e.g.VAT, income tax)
Increase of local consumer goods production
96
Financial Derivatives Company Limited
Retailers identify 5 key challenges to
operating in Nigeria
1
2
Regulatory
and trading barriers
3
Underdeveloped
infrastructure
4
5
Limited talent
pipeline
98
Limited access to
retail real estate
Scant consumer &
trade insights
Financial Derivatives Company Limited
Retailers identify 5 key challenges to
operating in Nigeria
1
Regulatory
and trading barriers
99
• Opaque government processes with high bureaucracy
• Ever-changing regulations due to lobbying and favoritism
• Specific local market regulations and subsequent high import costs
Financial Derivatives Company Limited
Low “ease of doing business” in Africa, but this
is comparable to many other emerging markets
World Ease of Doing
Business Index
1st Quartile
2nd Quartile
3rd Quartile
4th Quartile
Note: Ranking takes into account factors such as time and cost to start a business, ease of employing workers, getting credit, paying taxes,
investor protection policies etc (detailed definition in back-up)
Source: Ease of Doing Business Rankings, World Bank
100
Financial Derivatives Company Limited
Bureaucracy in SSA creates burden for
CPGs and retailers
Bureaucratic And Opaque
Government Regulations
Corruption And
Political Instability
• “Importing regulations are complex and have costly
tariffs”
• “Degree of corruption varies hugely by country... For
example Ghana offers normal business conditions”
• “Slow port clearance and a complicated tariff
and duty structure cause constant difficulties”
• “Whereas Western companies may be protected by
their local embassy, we are really exposed to
governments”
• “One of the biggest difficulties is the
political instability and the business
environment, from complicated duties
to harsh regulations”
• “There are countries in which we
cannot operate locally because of
challenging ethical
environments... in these instances,
we must remain off-shore”
Source: Company interviews
101
Financial Derivatives Company Limited
Retailers identify 5 key challenges to
operating in Nigeria
1
2
Regulatory
and trading barriers
• Opaque government processes with high bureaucracy
• Ever-changing regulations due to lobbying, favoritism
• Specific local market regulations and subsequent high import costs
Underdeveloped
infrastructure
• Road, power and other infrastructure provisioning lag BRICs
• 50% of infrastructure funding needs remain unmet
55
Financial Derivatives Company Limited
Under-developed infrastructure in key African
markets identified as major challenge by CPGs
“Poor infrastructure causes manufacturing of Guinness in Nigeria to be
more expensive than in Ireland and transportation of goods to Lagos from
Abidjan to take longer than from China”
Diageo
“Potential expansion should take into account… infrastructure
difficulties. For example, Angola is under water for a substantial part of the
year”
“Intermittent access to power and water have disrupted our operations
significantly in the past year”
“Although we can make our factories’ water and
electricity sufficient, the killer blow is the logistics of
road, rail and ports; it takes months to take materials
through countries”
“Poor infrastructure increases our costs and requires
integrating larger time buffers in supply-chain
planning”
Source: Company interviews
56
Financial Derivatives Company Limited
Retailers identify 5 key challenges to
operating in Nigeria
1
Regulatory
and trading barriers
2
Underdeveloped
infrastructure
3
Limited access to
retail real estate
57
• Opaque government processes with high bureaucracy
• Ever-changing regulations due to lobbying, favoritism
• Specific local market regulations and subsequent high import costs
• Road, power and other infrastructure provisioning lag BRICs
• 50% of infrastructure funding needs remain unmet
• Limited availability of real estate in high footfall locations
• Malls drive much of the progress in organized retail
• They also provide local, urban, and regional attractions for
shoppers
Financial Derivatives Company Limited
Biggest cities will play critical role in driving
modern retail
Population By State In M, 2012
4
2
9
4
8
3
5
1
6
2 – 4M
5 – 7M
8 – 10M
10M and higher
7
10
City
Popu-lation
% Of
National
Disposable
Income
1
Lagos(1)
9.6M
5.8%
$1,938
11.1%
2
Kano
3.4M
2.0%
$1,663
3.4%
3
Ibadan
3.1M
1.9%
$1,448
2.7%
4
Abuja
2.3M
1.4%
$1,280
1.3%
5
Benin City
1.2M
0.7%
$1,277
0.9%
6
Port Harcourt
1.2M
0.7%
$1,319
0.9%
7
Aba
1.2M
0.7%
$1,276
0.9%
8
Ilorin
0.9M
0.6%
$1,254
0.7%
9
Kaduna
0.9M
0.5%
$1,260
0.7%
Maiduguri
0.9M
0.5%
$1,287
0.7%
TOTAL
24.8M
14.9%
10
(1) Lagos numbers show population and disposable income of Lagos city, not of Lagos metropolitan area
Note: Year-on-Year exchange rates
Source: UN Population Data, IMF World Economic Outlook 2013, Euromonitor
58
% Of
National Disposable Income
Population
Per Capita
Financial Derivatives Company Limited
23.4%
Retailers identify 5 key challenges to
operating in Nigeria
1
Regulatory
and trading barriers
2
Underdeveloped
infrastructure
3
Limited access to retail
real estate
4
Scant consumer
& trade insights
59
• Opaque government processes with high bureaucracy
• Ever-changing regulations due to lobbying, favoritism
• Specific local market regulations and subsequent high import costs
• Road, power and other infrastructure provisioning lag BRICs
• 50% of infrastructure funding needs remain unmet
• Limited availability of real estate in high footfall locations
• Malls drive much of the progress in organized retail
• They also provide local, urban, and regional attractions for
shoppers
• Limited data on consumer insights, needs and behaviors
• Lack of market data on trade and POS activity
• Particularly challenging given diversity of consumers and markets
Financial Derivatives Company Limited
Very limited availability of consumer and
trade data
Consumer Research
Trade Research
“In Europe, we are used to Nielsen, and other quantitative market data
sources as well as detailed consumer insights, but there is limited
reliable market information like that here”
“The lack of data on Nigeria represents a challenge; we have no sources
on the profitability, size, and strategic importance of different retail outlets [...]
“We would love to know more about the route-to-market; especially the units
at the last mile – the information just isn’t out there”
“For fairly informal and fluid markets that are often cash-based, a
different picture emerges than what private research firms can
gather”
“We are in constant discussions with [research firm] as the numbers they
supply us do not triangulate”
“There is almost no information out there on consumer preferences
and behaviors”
“The data available, even from companies like [research firm], is very poor,
inconsistent, fluctuates between time periods and regions, and is not a good
measure of the market”
Source: Company interviews
61
Financial Derivatives Company Limited
Scarce coverage by research firms of key
African markets
A.C. NIELSEN
South Africa
PLANET RETAIL
(some business presence)
(trend report)
2
5
%
Egypt
Algeria
EUROMONITOR
(consumer profiles)
(full market data)
(key characteristics)
(basic consumer data)
(basic market data)
(no consumption data)
Nigeria
Morocco
Angola
(no local presence)
Sudan
Libya
Tunisia
Kenya
62
2
5
%
Financial Derivatives Company Limited
Retailers identify 5 key challenges to
operating in Nigeria
1
Regulatory
and trading barriers
2
Underdeveloped
infrastructure
3
Limited access to retail
real estate
4
5
• Opaque government processes with high bureaucracy
• Ever-changing regulations due to lobbying, favoritism
• Specific local market regulations and subsequent high import costs
• Road, power and other infrastructure provisioning lag BRICs
• 50% of infrastructure funding needs remain unmet
• Limited availability of real estate in high footfall locations
• Malls drive much of the progress in organized retail
• They also provide local, urban, and regional attractions for
shoppers
Scant consumer
& trade insights
• Limited data on consumer insights, needs and behaviors
• Lack of market data on trade and POS activity
• Particularly challenging given diversity of consumers and markets
Limited talent
pipeline
• Limited pool of mid/top level management due to low tertiary
education and diaspora
63
Financial Derivatives Company Limited
Summary: Many challenges in Nigeria similar
to other emerging markets, but some are more
pronounced
RELATIVE TO OTHER
EMERGING MARKETS
Smaller
1
Regulatory
and trading barriers
2
Underdeveloped
infrastructure
3
Limited access to retail
real estate
Similar
RATIONALE
Greater
Bureaucracy and opaque processes in Nigeria similar to
other emerging markets
Less developed than in most emerging markets,
although types of problems in supply chain management
may be different
Slightly greater in Nigeria due to high cost in property
development, though challenges exist elsewhere as well
4
Scant consumer
& trade insights
More pronounced in Africa as public research more
readily available in BRICs and many other emerging markets
5
Limited talent pipeline
64
Much more acute in Africa due to diaspora and high
talent turnover, as well as lower skill
Financial Derivatives Company Limited
65
Financial Derivatives Company Limited
Political Update
Introspection in the PDP
The dominant political party in Nigeria since 1999
PDP has lost its nationwide grip
Becoming the leading political association under Yar’adua
And now a Primus inter pares (first amongst equals)
The opposition APC has become another agglomeration
of political Jobbers
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Political Update
From controlling only one state five years ago, the APC
now has 18 Governors with a few more leaning towards
it
The PDP has an opportunity to clean its house
To either become an efficient and well-managed
institution
OR
Continue to atrophy and wither away
Chances are that under the Muazu leadership
 The party may find a new direction
 With young and energetic leadership across the states
 Failure to reinvent itself soon will mean being swept away into
political irrelevance
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How does it plan to seize the political
initiative?
Use incumbency effectively in appeasing the North West
With juicy appointments and patronage in defense,
security and oil concessions
Power privatization and other waivers
Split the North East using the Muazu factor and Atiku
renegades
Reshuffle the cabinet and reward the North mainly
Lure all the former APC leaders who feel marginalized
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The Challenge
Can Jonathan’s team trust the Northern leadership?
Will he be double crossed at the last minute?
The firing of top military officers and changing of the
guards means more changes to come
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The Game Plan
Split the South West, between Afenifere, APC and the
Obasanjo followers
Offer some appointments to entice the elite
Take Ekiti state by all means possible; Fayose is the PDP
man
Fayemi and Bamidele are expected to split the APC votes
Crush any uprising or electoral protests
This will be the litmus test for the PDP new aggression
The APC will be branded as an Islamic party by the PDP
Contrived threats of Boko Haram attacks in Lagos
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The Game Plan
Expected to heighten anxiety among Christian Southern
voters
Deja vu Abacha style NADECO bomb blasts of 1990s
Difficult to use that strategy in 2014
In a social media world the opposition will counter
strongly
Labour party and APGA will join the PDP
A third party of PDP and APC renegades will emerge
A first round victory by any party is becoming more
unlikely
The electoral management agencies INEC, Police,
Judiciary need to appear as impartial as possible
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The Game Plan
In 2011, the outcome was more important than the
process
In 2015 the process is more important than the outcome
A massively rigged election will threaten national stability
Possible Outcomes
Deadlock
Undesirable
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Smooth
Change
Status Quo
Good for business
Financial Derivatives Company Limited
Corporate Humour
Adam was the luckiest man in the world, he had no
mother-in-law.
Unknown Author
What is right is often forgotten by what is
convenient.
- Bodie Thoene
Faith is jumping into nothing and landing on something.
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Unknown Author
Corporate Humour
It is not the load that breaks you down but the way
you carry it.
Raymond Smith
There are only 3 things women need in life –
food, water and compliments.
- Unknown Author
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Corporate Humour
It is not a lack of numbers but a lack of
holiness that hinders the church.
Unknown Aurthor
Faith sees the invisible, believes the
unbelievable and receives the
impossible.
- Unknown Author
Do not use a hatchet to remove a fly
from your friends forehead.
Chinese Proverb
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Corporate Humour
A friend to everybody and to nobody is the same
thing.
Unknown Author
1 cross + 3 nails = 4 given
If you think no one cares if you are alive, try
missing a couple of loan payments.
- Unknown Author
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Bismarck J. Rewane, MD/CEO
Financial Derivatives Company Ltd.
Lagos, Nigeria
01-7739889