The Nation Newspaper

Category: CEO

  • Why Osun is organising economic, investment summit

    The State of Osun has slated its Economic and Investment Summit for next week. Governor Adegboyega Oyetola said the summit will open up investment opportunities that abound. He spoke during an interview at the weekend. SIMEON EBULU was there.

    Why the need for a summit?

    The summit is being organised because we are trying to expose Osun to the entire community of investors. This is because unless you have the opportunity of knowing what goes on, you will not know how much investment opportunities that are available in Osun. For instance, in the area of agriculture, Osun is the place to be. In the past, our state was the leading producer of cocoa, which used to be the major revenue earner for the Western Region and even Nigeria at that time. We are still the third largest producer of cocoa in the country today. We are blessed with abundant mineral resources. We have a lot of them in Osun. Although there has been a lot of illegal mining, what we are trying to do now is to regulate it and ensure that we provide the enabling environment required for investors to come around and invest their money.

    There are other opportunities in the environmental sector, for example, waste to wealth. There are opportunities ready for investors in information communication technology since we have about the largest number of tertiary institutions in Nigeria.

    For culture and tourism, it is on record that we have the UNESCO-designated Osun Groove through which we host people from virtually every part of the world who come to look at what we have there. We also have other interesting tourist sites such as the Olumirin water fall, Ayinkunugba and many others.

    My attitude to investment is that it is better it is better to have partners. I believe that government does not have any business doing business. The best concept is to drive all these investment through Private Public Partnerships. This is why we are creating the enabling environment for people to come and invest. We have a much secured environment. Our State is adjudged to be the most peaceful in Nigeria and we still maintain that rating.

    In addition to that, we have also beefed-up our security arrangement. We just acquired twenty additional vehicles, in conjunction with other Southwest states that we are launching any moment from now. We have also put helipad in place for the surveillance the entire state, in the event that any crime is committed.

    Then, in terms of ease of doing business, we have put in place everything that an investor needs to be able to have a smooth inroad into Osun. We also have the Certificate of Occupancy fast rack in place to enable people pick up their C of O within 90 days.

    When you look at the totality of what we have, we have created a good environment for businesses to thrive, in line with our State Development Plan, which is based on four pillars: economic development, infrastructure development, human capital development, and security and sustainable environment. All our programmes have been tuned to address these areas, and in doing that, we have created opportunities for investment.

    But, then, why should investors invest in Osun?

    Osun is a place to be for a number of reasons. We have a large expanse of land for agriculture. Our vegetation is very conducive for agriculture. We have abundant mineral resources – gold, fespar, granite, and many others, waiting for investors. What we have now are artisanal miners. We want to regulate them and encourage local and international investors to come in and invest.

    Again, we have a very secure environment. We place a lot of premium on security. We have not less than eighteen hours of electricity supply every day. Most of the companies that relocated to Ghana did not know what we have in Osun. Then, we have the political will to guarantee investment.

    I am from a private sector background. At least, I have spent thirty years of my postgraduate working experience in the private sector and I know what it means to allow businesses to thrive. It is the private sector that drives the economy, government should only provide the enabling environment to ensure that they have opportunity to drive the economy.

    With all these, we believe our State is the best for investment and that is why we are going all-out to showcase our potential to the world

    What kind of incentives are you offering to allow investors come into Osun?

    We have lots of incentives for interested investors. For instance, in agriculture, we have a Land Bank where we have made land available for investors, and saved them the trouble of going into the communities. Government is providing land to investors.

    We are also a State that believes so much in the rule of law. Once agreement is made, it is binding on the government. So, I don’t see any problem.

    Osun is blessed with abundant mineral resources, but they are still largely untapped. You talked about regulation; what are your plans and what are you doing to inculcate artisanal miners in the scheme of things?

    Talking about the miners, the Federal Government has set up the Presidential Artisanal Mining Initiative. Osun and Kebbi are the two pilot states. The intention is to encourage our youths to go into mining and find a way of accommodating them. Since Federal Government is diversifying from oil, mining is a key aspect of that plan. Even the Federal Government is working to ensure that artisanal miners are properly trained. That is why we talk of regulation. If you leave them entirely to what they are doing, there will be lots of damage to the environment. Again, you might end up discouraging major investors.

    The essence of this is to ensure that they are not left out of job and to support them by increasing their skills in mining. Osun, on its own, have nine Life Academies, which are actually technical and vocational schools, for which we are proposing to designate one of such in the mining area around Osu as fully equipped to support training in artisanal mining because of the alluvial deposit in Osun.

    As I speak, we are registering all miners in Osun. This is to ensure that we are able to flush out criminals that come under the guise of mining. We have commenced the process of capturing the data of all miners, artisanal or investor, so that we can at least know precisely that whoever comes to do business in Osun is safe. We are trying to map all the titles that we have and to try to do a proper enumeration of who is doing what and where. We have registered a few thousands already and we have given them a RFID-enabled card to enable us track them. We also have their landlords which we call Seriki who are guarantors and through which we can reach out to them.

    We are also trying to protect the environment. We are working hard to avoid the kind of situation we have seen in the Niger Delta and other resource-rich areas.

    In terms of readiness for investors, it would interest you to note that although mining is on the Exclusive List, Osun is one of the very first few states that proactively reached out to the Federal Government and bought its own mining titles, which is about the largest in the country currently. It would also interest you that one private sector company is currently in Osun and has put Osun in the global mining map as about the only gold mining state recognised in Nigeria. The reported size is about 1.5 million ounces of gold, which is worth over 2 billion dollars. We have about sixteen mining titles – about eight are in Osun while others are across Nigeria. That should also tell you that Osun is ready for business.

    What is the data on the mineral reserve in Osun?

    We are doing our resource estimates in partnership with the Nigerian Geological Agency. We already have tidbits of what is available. However, we are partnering with investors who will do proper exploration to determine the commercial quantities.

    On the ease of doing business, what more should investors expect? We have seen many states hold economic summits, but what we see is not impressive. Can you give any timelines as to when we expect to see some of these things come to fruition?

    We don’t have the luxury of time to run a talk show. What we want to do is to show Osun to the entire world. Ordinarily, we should have been asking you to come and see things for yourself, but if Muhammed does not go to the mountain, mountain must be prepared to go to Muhammed. That is why, through this summit, we are asking you to come around so we can show you what we have. Again, the abundance of mineral resources may not have been known to many people. The average supply of eighteen hours of electricity is enough incentive for everyone to come and invest, especially light manufacturing companies. These are opportunities not known to people. It is a question of trying to show what we have to the entire world, and we are serious about it.

    We already have an investor who is signing an MoU with us and has committed huge resources. People are already showing interest to invest in Osun because they are getting to know our potentials.

    We also have good relationships with many donor agencies and development partners such as the World Bank, DFID and the French Development Agency. We are doing a lot with World, for instance, on RAMP, SLOGOR, YESSO. They are supporting us because we are also doing so much. They are supporting us both technically and in terms of grant. Only recently, we won a grant in our health sector that has made it possible to revitalise 352 primary health centres across the state, and that makes it one health centre per ward. This is because we believe that health is wealth. These are some of the initiatives we have taken on our own. We have been given awards by most of these agencies. On the third day of the summit, we are holding a roundtable with donor agencies and develop partners in the state to be able to strengthen existing relationships and establish new ones.

    When you were talking about artisanal miners, my mind went to Itagunmodi. Itagunmodi is a place where there are many artisanal miners and their activities are already causing damage to the environment. What is the state of the Itagunmodi mines at the moment?

    Itagunmodi is one of the major mining sites that you have alot of artisanal miners, and I am sure it is part of the areas where investors are willing to invest in. That is why we believe that the first thing is to create that enabling environment for investors to be able to do their business without being molested. As I mentioned earlier, we have begun work with the artisanal miners to be able to regulate and put them in check for the benefit of all.

    Does Osun have business clusters you are hoping to project as targets for investors?

    Part of the things we are trying to achieve with the summit is to see if we can find people who willing to invest in Industrial Parks where you have opportunities for businesses to be sited with some degree of amenities. Another area is the Free Trade Zone, which we already have in place, for investors to come to use.

    Let me also mention that we recognise the need to have a value-chain for our raw materials. We are not just looking for people who will use our State as just a base for raw materials, but we are creating opportunities for value-chain development. For instance in cassava, we are already looking at ethanol and others, and that is part of what we are selling to the entire world. We recognise that having viable agro-allied industries in the State will boost revenue and provide lots of opportunities for our people, so that it is a win-win situation for all.

    In your quest for mineral exploration, how do you intend to interface with investors so that they don’t leave a challenge for you as they go about doing their businesses and run their businesses in an environment-friendly manner?

    For the new partners we are taking on board, we are ensuring that we are implementing the World Bank standard to contain environmental and social risks. Part of the things we are also doing is studying the livelihood sustainability around our mining areas to ensure that the social and environmental risks are considered and integrated in the agreements we sign with partners.

    Currently, we are speaking with the Solid Minerals Development Fund to support us in the area of looking at the damage done ecologically by the activities of artisanal miners. This is part of the recourse we are currently putting in place.

    What is the taxation regime like in the State of Osun and how do you want to remain friendly with investors?

    We believe that taxations have been so specified. In terms of taxes that people should pay ordinarily, for instance, when it comes to company tax, it is purely that of the Federal Government. What the states charge, perhaps, would be in the area of premises charge and so. I don’t see much of challenges in terms of taxation, except the taxation on policy and profit, which is beyond the control of the State.

    How are you addressing infrastructure to ensure that the cost incurred by investors is reduced to the barest minimum?

    The State of Osun has done much in the area of infrastructure. If you come to Osun of recent, you would notice that there has been so much improvement in that area. Additionally, the Federal government is working on rail lines which will pass across the State to the North. The quality of infrastructure in our State makes us very accessible.

    Now that you are exposing Osun to the world, are you going to continue with the Airport project in Ido Osun?

    The airport project was conceived before we came in about 10 years ago during Governor Oyinlola’s administration. It was supposed to be a partnership between the state and the Federal governments. It was supposed to be a 50/50 arrangement. Osun started but the Federal government was not forthcoming. But, realising the fact that if you want to encourage movement of produce, a cargo airport is desirable, we have taken it up. We are looking forward to investors that may want to take it over and we give them twenty five to thirty years lease on a Build, Operate and Transfer basis. Quite lot investors are already showing interest in the airport because they believe, it is viable. It is part of what are marketing to the entire world during the summit. It is a laudable project that would create employment opportunities and commerce for our state.

    Ars lease on a build operate and transfer basis. Quite lot investors are already showing interest in the airport because they believe, it is viable. It is part of what are marketing to the entire world during the summit. It is a laudable project that would create employment opportunities and commerce for our state.

  • Fidelity Bank eyes tier 1 category by 2022

    Nnamdi Okonkwo is the Managing Director of Fidelity Bank Plc. In this interview with EMEKA UGWUANYI, he speaks on how the bank is contributing to the growth of the economy through various interventions, its aspirations, achievements and other issues in the financial sector.

    A UITED Nations  report says Nigeria has the highest poverty rate despite the contributions of the Central Bank and commercial lenders, such as Fidelity. Where is the missing link?

    In general, several factors are responsible for high unemployment rate, which include poor infrastructure, misaligned government policies, excessive importation and dumping, as well as paucity of funds, especially to growing companies and start-ups, among others. Unemployment in Nigeria is about 23.1 per cent, which is considered very high. However, the Federal Government, through its agencies, is creating the right environment and policies to encourage job creation. The early signs of what these agencies are doing are impactful.

    According to World Bank, the ease of doing business in Nigeria has improved significantly in 2019. Also, the Central Bank of Nigeria (CBN) has created several intervention funds to increase the investment in agriculture and manufacturing and other key sectors that employ a large percentage of the  workforce.On the part of Fidelity Bank Plc, we have consistently supported the economy by providing funding to companies and help them grow their businesses. Few years ago, we set up small and medium enterprises (SME) advisory desk primarily to deepen our attractions with SMEs and understand how best to serve. We have, so far, sponsored several events as well as partnered with government agencies such as the CBN and Bank of Industries, to support the growth of SMEs. Just last month, precisely on August 7, 2019, we organised a funding event for the SMEs in Lagos which had a theme: Entrepreneurship meets capital. The event hosted over 2,000 SMEs and provided them with the opportunity of interacting with several fund providers, private equity firms and venture capitalists etc. After the event, three SMEs with compelling business proposals received prize awards to help them execute their plans. We plan to host the event in three other cities in the country. Beyond events, we have designed unique products to uplift SMEs in our economy.

    Can you tell us something about the company?

    Fidelity Bank is a commercial bank operating in Nigeria. We started operation about 31 years ago as a merchant bank and gradually grew our brand to become one of the top 10 banks in Nigeria. Currently, we have about five million customers, 250 business offices, 816 automated teller machines (ATMs) and over 6,000 point of sale (POS). To understand how we became a force in the banking space, in 2014 when I was appointed the Chief Executive Officer (CEO), our profit before tax (PBT) was N9billion, net interest margin was one of the lowest in the industry at four per cent and we had about 2.4 million customers with digital banking penetration ratio of less than one per cent. At that time, Fidelity Bank was lagging behind some of the tier 2 banks. So, we set a four-year target to become the most profitable and the biggest Tier 2 bank in Nigeria and by December 2017, that feat was achieved through the concerted efforts of the Management Team and the Board of Fidelity Bank Plc.We were able to double our profit from N9 billion to N20 billion; our savings deposits doubled, growing from N83 billion to N179 billion and our customer base grew to 4.5 million; increased our digital penetration ratio from one per cent to 40 per cent. Digital income to total fee income increased from eight per cent to 25 per cent.More importantly, we were rated the third best Retail Bank in the KPMG Banking Industry Satisfaction Survey (BISS). Having achieved our 2014–2017 growth targets and fulfilled our promise to shareholders, our aspiration is now to become a Tier 1 Bank by 2022.

    CBN announced loan debits to be settled by deposits from other banks. What is your position on it?

    The Banking Industry in Nigeria has an NPL of about 10 per cent as at May 2019. These are funds the bank would have lent to other borrowers to improve their businesses and employ more workforce. So, clearly, NPL is a challenge and every effort geared towards reducing it will be encouraged. This is not to say the new policy has no blemishes or will not be implemented without some challenges. I am sure there will still be some modifications to the rule to ensure it is fair and effective. Do I support the policy? Yes – 100 per cnet. Do we have the capacity and infrastructure to implement it? Yes – 100 per cent.

    What are the efforts of the bank in tackling unemployment and food security through support to the agricultural sector?

    We have collaborated with NEPC and LBS on the Export Management Programme. We have trained over 475 budding and established exporters on techniques for increasing capacity and reaching new markets for agro-commodity exports. We have financed several agricultural companies in the country across different agricultural sectors stated below:

    • In the rice industry, we funded the expansion of the largest indigenous rice milling company in Nigeria. This has supported the drastic reduction of rice imports into the country resulting in direct and indirect employment of over 20,000 workers and farmers.
    • In the dairy industry, we funded the expansion of the biggest integrated dairy farms in Nigeria in addition to engagement of over 500 outgrowers.
    • Our intervention in the cocoa value chain has resulted in increased export volumes of our Nigerian cocoa products leading to direct and indirect employment of over 1,000 people.
    • We funded one of the largest producers of Palm Kernel Oil (PKO) in Nigeria
    • And we are one of the leading disbursement banks of the CBN Commercial Agric Credit Scheme (CACS). Over N20 billion has been disbursed to both the private sector and state governments resulting in employment generation in the affected locations.

    As a demonstration of our drive to support the agriculture and non-oil exports sector, we have provided finance in excess of N50 billion farm start-up, expansion and consolidation, among others.

    There is consolidation in the banking system with the merger between Diamond and Access Bank. Is there near term expectations of Fidelity acquiring a bank, especially ahead of Basel III?

    As noted earlier, our aspiration is to be a Tier 1 Bank by 2022 and we plan to achieve the feat by growing organically. However, we will not close our eyes to any acquisition opportunity in or outside Nigeria. If the transaction will add value to us and the price is good, we will buy.On the Basel III implementation, we have synthesised the impact and we have no doubt it will be minimal on our capital base. Currently, we have over $600 million (N215 billion) in equity and we are well above all the regulatory ratios, including liquidity ratio and capital adequacy ratio.

    How has Fidelity Bank demonstrated commitment to Environmental &Social Risk Management?

    Over the years, the bank has supported initiatives aimed at identifying and promoting the preservation, protection and beautification of the environment. We work in collaboration with public institutions, states and local governments – to create and maintain green parks in chosen locations. The beautification of the Falomo Roundabout in Lagos State, in partnership with the Lagos State government, is a typical example of what the bank seeks to achieve in this area.  We have successfully executed several beautification projects across the country. Some of these projects include Onikan, Eko Court, Burma Road. Apapa, BBA and Falomo Roundaboutall in Lagos; RSUT in Rivers State, Rangers Avenue junction in Enugu State, Mbaise Road in Imo State, Abia Towers in Umuahia, Secretariat junction, Ibadan, Oyo State; and Itam Peace Colon, AkwaIbom State, among others. The bank supports environmental advocacy groups like the Nigeria Conservation Foundation (NCF), a non-governmental organisation established and dedicated to the advocacy and practice of nature (Forest, Species and Habitat) conservation and good environmental practices. We participate in their advocacy programmes, one of which is the annual “Walk for nature”. We also undertake green initiatives that assist the environment. In this regard, we have become the first, and perhaps, the only bank in Nigeria that dispenses cash with recycled biodegradable cash bags instead of polyethylene bags used by others, which is destructive to the ecosystem. The bank also assents to relevant international Accords and Protocols aimed at promoting sustainability, like the Equator Principles. The Equator Principles (EPs) is a risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in projects. It is primarily intended to provide a minimum standard for due diligence and monitoring to support responsible risk decision-making.

    How active is Fidelity Bank participating in sector-wide efforts in promoting sustainable development?

    The Fidelity Bank Corporate Social Responsibility (CSR) strategy is hinged on Education, Environment, Health/Social Welfare and Youth Empowerment. However, we have an internal structure through which we achieve our CSR objective called the Fidelity Helping Hands Programme (FHHP), an all-inclusive staff voluntary initiative. The FHHP challenges the staff in every location where we do business to identify a project that is relevant to its community, contribute some funds while they get a 100 per cent counterpart fund from the Bank to support that project. Through the FHHP, several live changing and sustainable community development projects have been undertaken.

    How compliant is Fidelity Bank with providing accurate and timely information to the public regarding its lending, investment and advisory activities in accordance with corporate governance stance?

    Fidelity Bank is very strict on corporate governance. Interestingly, we have strong and reputed persons on the Board of Fidelity Bank. Our Chairman, Ernest Ebi, is a former Deputy Governor of Central Bank of Nigeria, a former DMD of another bank and has held several top positions in the economy. We also have former CEOs of other banks, a former CEO of Guinness Nigeria PLC and Coca Cola West Africa, among others. You can’t attract such calibre of people to your board without practising top-notch corporate governance. We have a robust Call Centre that operates 24/7. Our Call Centre service has toll-free lines, so that our customers can call to make enquiries for free. To ensure we regularly get feedbacks from customers, we integrated a short feedback mechanism on our electronic platforms that prompts customers to provide feedback after their transactions. Our branches have a display board that shows our deposits and lending rates by maturities as well as our foreign currency exchange rates.On our financial results, we are one of the only six banks in Nigeria that audit interim results. Our quarterly results are published in at least two national dailies and also hosted on our website for the public to view and download.In addition, I host a conference call after the release of each quarterly result. The call gives investors, analysts and anyone interested in Fidelity Bank, the opportunity to ask me questions on the performance of Fidelity Bank.

    Can you enumerate areas where Fidelity Bank has empowered and created opportunities for women?

    Our staff count is about 3,000, and 45 per cent of them are women. On the Executive Management Team, three executive directors are women. Fidelity Bank has the highest number of female Executive Directors amongst Nigerian banks. We have done a lot to ensure women are given their rightful positions in and outside Fidelity Bank. At our maiden Fidelity SME Funding Event, the three prize winners were women.

    Climate change is a serious global challenge that may impede economic and social well-being and development efforts. How has Fidelity Bank contributed to the greenhouse emissions reduction?

    Fidelity recognises that climate change is a serious global challenge and addressing it, therefore, is a strategic priority for the bank. In pursuit of greenhouse gas emissions reduction, we have implemented strategies at the bank to reduce local and overseas travels. Key components of these strategies include installation of online learning and conferencing facilities which have reduced official travels within the bank. Also, as a deliberate carbon emissions reduction strategy, we ensure that our over 734 ATMs are powered with inverters.

    SMEs are critical agents for economic development, job creation and poverty alleviation. How has Fidelity Bank supported the growth and development of SMEs in Nigeria?

    below are some of the measures we have implemented to support SMEs:

    • We are sponsoring the first SME radio programme in Nigeria called Fidelity SME Forum where successful entrepreneurs are invited to discuss their success stories to motivate others. The programme is running on several radio stations across three states and can be stream live.
    • Last month, we organised a funding event for the SMEs in Lagos which had a theme “Entrepreneurship Meets Capital”. The event hosted over 2,000 SMEs and provided them with the opportunity of interacting with several fund providers, private equity firms and venture capitalists etc. After the event, three SMEs with compelling business proposals received prize awards to help them executive their plans. We plan to host the event in three other cities in Nigeria.
    • We have partnered several DFIs like DBN and AfDB to provide cheaper funds to SMEs.
    • We have also helped our customers access intervention funds from CBN and BOI which are lent at a maximum of 9 per cent.

    Cybercrime has been a major threat to the banking sector. What mechanism has Fidelity Bank put in place to guard against this menace?

    Cybercrime is a major threat to the Banking sector and in Fidelity Bank, discussion on cybersecurity starts at the Board level.We have implemented international security best practices and standards such as information security management systems (ISMS) and Payment Card Industry Data Security Standards (PCIDSS). We are currently implementing the 2019 Nigeria Data Protection Regulation (NDPR). Information Security is constantly considered in our system/software development life cycle, project and change management. We know very well that the cybercriminals are not relenting and are using different simple to sophisticated techniques in carrying out the crimes. They can operate within and outside the Bank and from different geo-locations. In response to this, we have implemented fraud and security incident monitoring processes that operated on 24/7 basis.Despite the laudable security processes and technologies implemented, they must be driven by humans and we know for sure that humans are always the weakest link in security. As such we ensure that we have best brains within our security/fraud teams and assess risks before engaging third parties that provide solutions and services to us. The security responsibilities of the third parties to the bank are also codified in the contracts/service level agreement we execute with them. Moreover, we also provide periodic specialis ed security trainings to security professionals and security awareness/tips to Bank staff & customers generally. We are hopeful to continually win the war against cybercriminals and providing secure and user-friendly services to our customers. We are currently rejigging our defensive/preventive security apparatus and infrastructure to support our digitalisation vision.

  • ‘Overturning power sector privatisation is dangerous’

    Usman Gur Mohammed is the Managing Director of Transmission Company of Nigeria (TCN). In this interview with some energy editors in Abuja, he identified the issues in the power industry and what TCN is doing to address them. He says the generation and transmission segments of the power supply value chain don’t have much problem but the distribution arm, hence the need to recapitalise the electricity distribution companies (DisCos). He spoke on other aspects of the industry. EMEKA UGWUANYI was there.

    Some electricity distribution companies (DisCos) were suspended in recent weeks from market operation for non-compliance with the rules, how has their non-compliance with the rules affected the industry?

    Anywhere there is no rule, there will be anarchy. Any organisation or association where there is anarchy, there is no way the best can come out of such association. So complying with the rule is the most important thing . The market is said not to be at its best because people (operators) are not complying with the rules. They (DisCos) have signed an agreement that they are going to comply with the rules, so you cannot in the middle of the agreement say you cannot comply.

    That’s the reason we took a decision to enforce the rules. We would have taken that decision earlier than now but you know ‘he who goes to equity must go with clean hands.’ So we have to show some level of performance given the historical background of the Transmission Company of Nigeria (TCN) before we can enforce those rules. That’s why we started enforcement and it is yielding result. People are complying and working according to the rules. But don’t forget, it is not just that we started rules enforcement, in 2017 when we came in newly, Nigeria has never enforced the ‘Free Governor’ rule.

    What is ‘free governor’ rule?

    You know the industry is not like water where you can put tank and store it. You cannot store power.You can only generate what you can take. Even if your generation capacity is 20,000 megawatts (Mw), your transmission capacity is 20,000Mw and the distribution companies can only take 5000Mw, it is only the 5000Mw you can generate. You can’t generate more than that. Now, at any point in time, what is generated and what is demanded must be equal and that means demand and supply must balance.

    If there is disequilibrium, you will have system instability. Balancing supply and demand was done manually before. How do I mean? Somebody in a particular location will just call and say ‘run down or reduce your load,’ that’s what we were doing before now. But in 2017, we wrote to the generators and we insisted that they have to be on free governor. Free governor is what all generators have signed on and have agreed that they are going to comply with. It is a collective agreement signed between all generators and TCN. But it has never been applied.

    In free governor, all the machines will be put in a mode that if the DisCos reduce load, the generator can automatically reduce load by themselves without anybody calling them. In enforcing that, we have to shed some generators out of the grid. We restricted a particular generator to 200Mw for three months though its generation capacity is 600Mw, to force them to be on free governor. I am glad to tell you that largely all generators in Nigeria are now complying with the free governor policy. It is not easy, because they have to buy some equipment and install in their machine.

    We also insisted that the DisCos have to comply with the market rules. You know we cannot take up the fight at the same time. It has to be one after the other. Having enforced the free governor policy, we have to enforce some market discipline too, especially those within our control.

    Have you considered the effect of enforcing such rule on the people because when you suspend a DisCo from the market, people in its franchise will be in darkness?

    Where we enforce the market rule, especially where we suspend a DisCo, suspension comes with some level of explanation.  The market rule gives you power to disconnect the whole supply to that DisCo, we look at the feeder that supplies power to the offices of such a DisCo and we disconnect that feeder. We don’t disconnect everybody.

    We are also Nigerians and we are mindful of the fact that we don’t want people to feel bad about us. As we speak, no DisCo is under disconnection except Kano DisCo. All others have complied with the rule and we have reconnected them. None of them even lasted for one week except Kano DisCo. On Kano DisCo, we decided to reconnect it due to Sallah celebration but we disconnected them after the Sallah. The feeders we disconnected in Kano also feed other households, but the intention is to force them to comply with the market rule and do the right things.

    Some DisCos are of the opinion that your policy is having adverse effects on their business, what is your take on this?

    First of all, what we are doing in Nigeria is benefiting the market. All the DisCos have universal licence and not a restricted licence. It is not licence that says if you are in Lagos, leave Ajegunle out and serve only Apapa. No, they are supposed to serve everybody. Secondly, the aggregate technical collection and commercial (ATC&C) losses, based on the performance agreement they signed included poor people and rich people. To prioritise supply to some areas at the detriment of others does not make sense because their licence is not restrictive.

    We are not expanding grid based on hearsay. If DisCos tell you what we are doing is affecting their business model, also ask them which study they conducted that gave them that policy or model they are operating. We have conducted a credible study which is called 20-year DisCo-Transmission Expansion Plan. The plan looks at the needs of the distribution companies and come up with a report that says this is how you should expand.

    This is because most of the DisCos are not performing and are not even investing. To escape from their failure of lack of investment, they will say we are putting capacity where they don’t need it. We are not just putting capacity, we are also addressing redundancy for electricity to be stable. Electricity stability requires what we called redundancy which means any place where they need 60KvA, you will give them 60KvA x 2 and that is what we are doing under the programme.

    There is nothing like we are giving supply to where they don’t need it. What is happening is that some of them are gambling with the market. They refused to put prepaid meters in some places, supply them energy for few hours and charge them on estimation (estimated billing or crazy billing). All these claims that poor people don’t pay are all lies. The reality is that we have been gaming the market, people are frustrated and when they are frustrated, they can use several means to punish us including refusing to pay and tapping the meters. There is no relationship between poverty and payment of electricity bill. What the poor needs is adequate power supply, meter and give them the choice to switch on/off as they please.

    Has TCN done anything to make DisCos improve on their performance?

    We organised a workshop for DisCos across West Africa, eight DisCos from Nigeria participated and all others DisCos from West Africa were in Abuja. They all came with their KPIs (Key Performance Indexes). Their KPIs showed how much energy received and how much was converted to cash. Despite the fact that Nigeria is the only country that has liberalised its power sector, Nigerian DisCos were the worst performing DisCos in West Africa. Does this make sense?

    The best performing utility was SocieteNationaled’electricite (SONABEL) of Burkina Faso. They were the most efficient. After the training, I visited Burkina Faso to find out how they achieved this. What I realised is that they don’t connect a house unless there is a meter which means they have meters available at all times for anyone that wants to connect.

    Why is it that we don’t have meters here? If you look at Abuja, Maitama where the rich live is about 98 per cent metered while places where the poor live like Mararaba, you discover that fewer than 20 per cent are metered. If the salary of a poor man is N50,000 and for any reason, he must consume electricity and he consumes N30,000 for that month, I can assure you that he will switch it on and off at appropriate time to ensure that he doesn’t spend more than N10,000 for the next month and that’s what we are doing.

    What is your scorecard?

    We have installed over 40 power transformers in less than two years, we expanded the grid capacity from 5000Mw to 8100Mw as at December last year when we did the last simulation. You hear some associations say that we are lying, but tell them to bring their own evidence that we are lying. We don’t just announce any figure, even as the Managing Director, unless it is validated by the system planning unit with credible evidence to show that this is what is happening. But when we have several associations, there will be distortions.

    These associations are formed to create distortions and protect their own people who pay them.Under the normal rule, as a liberalised sector, we should have been seeing competition among them but you cannot hear that they are competing because the market is not at its best. Instead, they recruited some associations to defend them collectively. Does it make sense? No. We have removed 775 containers out of 830 containers that have been hanging in the ports for over 15 years.

    Some of them have been auctioned. We have expanded the grid by adding 3100Mw and we have achieved frequency control that has not been achieved in the history of Nigeria. Some mischief makers have said we invested $1.66 billion and there is nothing to show for it. Of course, there is evidence because system collapse is not as frequent as before. Abuja transmission project is the only one we have completed the procurement process which is $170million and it is supposed to put five new substations in Abuja and a new supply route from Lafia to Abuja.

    The contract has been signed, advance payment has been made, LT has been opened but I can tell you no payment has been made apart from the advance payment. So it is wrong to say we have invested, but we have attracted money from donors and we are implementing. But we have not invested. We have secured 280Mw into our spinning reserve which was the first time spinning reserve has been created. Have we deployed? No, but we have submitted it to the Nigeria Electricity Regulatory Commission (NERC) since December last year and till now, they have not approved it.

    Some stakeholders have been calling for the privatisation of the TCN. What is your take on this?

    There are different models of transmission ownership across the world. There are models that are government-owned and there are some that are privately-owned. All of them will perform if they are run properly and implemented properly. But in Nigeria, we have a peculiar problem that you have to take into account before you privatise TCN.

    The problem is that it is very difficult to get a right of way (RoW), for 330KvA, you need 25metres distance and for 132KvA you will need 15metres. If you privatise TCN today, the owner may not get RoW because this is very difficult in Nigeria. Because it is still under government control, we have been able to partner most of the state governments where we are doing projects. If it is privately owned, the state government may charge arbitrarily because private business is for profit making.

    It is left for us as Nigerians to judge whether it is the right thing to do. Some of the economies that are similar to Nigeria including the Power Grid of India are performing very well. Power Grid of India has capacity of 320gigawatts (Gw) as at now and it is still government owned. Eskom is government owned, Grid World of Ghana is government owned.

    The Grid of Cote d’Ivoire is still government owned. But if you put the right private sector people and you have the discipline to do the right thing, not that policymakers share the companies to themselves as we witnessed in the past, it is possible that it will work. But you have to look at those reasons that I mentioned.

    What measure are you putting in place to eliminate transmission losses in the system?

    Transmission loss is inevitable because if the loss is more than 8.05 per cent, we lose money, TCN loses money. It is our duty to ensure that we fix the transmission losses. Part of what we did to fix the transmission losses was that we restructured the grid metering department.

    Before now, the department was  controlled from the headquarters but we have now ceded the grid metering to the control of regional managers. Inspectors from the headquarters visit the regions from time to time to inspect them to ensure they are doing the right thing.We are also going to meter all our lines and all our substations and we are beginning with Lagos. This is to ensure that at any point in time, we will know who is contributing the highest losses to the system.

    We are starting with 200 meters for Lagos because Lagos has between 30 and 40 per cent of our transmission capacity. If we intervene in Lagos, we have intervened in about 30 to 40 per cent. We have started Automatic Meter Reading (AMR). Human interface created a lot of problems that will give us credible data to monitor our losses. As at now, we are far below 8.05 per cent.

    What are the options of funding available for your projects?

    The best option should be our Internally Generated Revenue (IGR) but unfortunately it is not so because of our tariff. When we came in 2017, we made a case for tariff review, and NERC agreed that our tariff was less than what we were supposed to get. Unfortunately, they could not review the tariff. Before now, we are getting less than 30 per cent of our tariff and this is not sustainable to raise money in the industry for investment. We don’t get appropriation for our operations.

    Appropriations are for those contracts included in the National Assembly budget which are mostly tied to constituencies of members of the National Assembly. We need sustainable money to finance the network. The only option that we have is to go  to multinational donors because they have long gestation period. Most times, they have five-year moratorium period and 20 years repayment period.

    That would give us enough time to be able to do other development activities that will make the TCN to be able to pay this money by itself. And that is why we have gone to the multinational donors and we have raised $1.66billion. Those monies include World Bank’s $496million to be used for existing substation lines, targeting brownfield projects.  In terms of implementation, we have completed pre-qualification for the projects 1 and 2, project 3 is still at prequalificatio level . We have not touched the money yet. The next project is Abuja scheme and it is the only one that we have signed the agreement for the contract. The contract is effective, it is $170million sponsored by  French Development Agency (AFD).

    System collapse is still a major  issue, what are you doing to address the challenge?

    We have never told anyone that system collapse will stop because there are things you have to put in place to stop the system collapse. The decision to stabilise the grid is a journey. It is a journey that we have started and it is better right now than before. For instance, we need to have the spinning reserve. This is a must to stabilise the grid. Up till now, we don’t have the spinning reserve. As at this stage, the spinning reserve that we are supposed to have is 10 per cent. If the average generation is 4000Mw, the spinning reserve supposed to be 400Mw. What we have procured is only 260Mw which is not adequate.

    Even the inadequate one has not been deployed. The second problem is that we need to have an international SCADA so that we have register of events that will show whoever misbehaves on the grid and can adequately be punished. Our SCADA cannot see the entire system as at now, it can see some parts but it cannot see the entire grid. We are working very hard to ensure that this time around we succeed in installing the SCADA. We don’t want to rush so that we won’t repeat the same mistake we made in the past. A

    ll the things that will make us not to fail, we are doing them. And the generation is low today because that is what the DisCos are demanding. We can only transmit what the DisCos are demanding.  During rainy season, the DisCos will drop load and it will be very difficult to tell the generators to drop load. There was a time I ordered the grid should be collapsed. As that time, if we didn’t collapse the grid and stayed for additional 10 minutes, we would have had fire outbreak all over the country.

    If we didn’t collapse it, we would have had  high voltage all over the place and terminal equipment that will be shut down  and when they shut down, they will cause fire which can touch some of the bushes causing   transformers to catch fire. All over the world, there is no grid like this. 421 injection substations , 139 hybrid of injection substations and 177 feeders (interfaces) with no single injection substation which means fault in someone’s house  can go to transmission and hit our substations. Investment in TCN is not sustainable unless there is corresponding investment in the distribution. That’s why we are preaching for recapitalisation of the DisCos. Government cannot be passive anymore. Government should bring their own 60 per cent and this money should be defined not just money that comes from commercial banks that are short term, they should be long term investment.We also need to have regulatory certainty. No investor will come in who cannot recover his money.

    You have stressed the need for DisCos to recapitalise and it doesn’t seem they have the capacity to do this. Do you think the Federal Government has what it takes to take back the assets from them?

    On whether the government should take over the DisCos, I disagree. If you implement right thing wrongly, you should right that wrong instead of cancelling it.This is  because when you cancel it, you get it wrong completely. What we implemented here is what Germany is using and it is working. What we need is to correct it and recapitalisation can correct it. Generation is not our problem, many people wanted to generate but we were not connecting them to the grid.

    The issue is that when you let them and the market cannot take, it becomes a liability on Nigeria. So, if we cancel privatisation, we are going to have a contingent liability which will send a signal to the whole world that Nigeria is not private sector friendly.

    Secondly, the government does not have sustainable money to invest in the power sector. When you cancel, you will return the money of the investor, and you are going to be paying 20 per cent for five years. It is time to tell the people the truth; we have to pay for electricity. All of us are paying more than what we are supposed to be paying because all of us has generator in our house. So if the money be increased by 20 to 30 per cent so that we have stable electricity, why not; we need to have tariff that can sustain investment.

     

  • Olatunji Oke Champions Development Journalism with ‘Lagos Indicator’

    Olatunji Oke Champions Development Journalism with ‘Lagos Indicator’

    For nearly two decades, Olatunji Oke has quietly redefined how government progress is recorded and communicated, spearheading a bold approach to development journalism through his long-standing leadership of Lagos Indicator, the official publication of the Lagos State Government. As Editor-in-Chief since 2007, Oke has not only chronicled the evolving socio-economic landscape of Nigeria’s commercial capital but also embedded a culture of transparency and public accountability through carefully curated storytelling and evidence-based reporting.

    “Development journalism isn’t about politics,” says Oke. “It’s about the people, the progress, and the policies that shape lives every day.”

    The Lagos Indicator is more than a glossy government newsletter. It is a living archive of the city-state’s journey, capturing the implementation and impact of policies ranging from health interventions to infrastructure expansion. Under Oke’s editorial leadership, the publication has covered key projects like the Lagos Light Rail, the Eko Atlantic City development, and education reforms such as EKOEXCEL, transforming often opaque public policies into accessible narratives.

    “Every edition is rooted in fact-checking, on-ground monitoring, and interviews with both beneficiaries and policymakers,” explains Bimpe Akinyele, a development communications associate who worked alongside Oke from 2008 to 2019. “He ensures that communication becomes part of the development process itself.”

    The journalistic integrity that Oke brings to the table, fused with his insider policy access, has made the Lagos Indicator a reference point not just for government stakeholders, but also for international development agencies, researchers, and civic actors seeking insight into urban governance and public service delivery in Lagos.

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    As a consultant for the Lagos State Ministry of Information and Strategy, Oke has helped institutionalize development communications as a core part of government transparency. His vision aligns closely with the UN Sustainable Development Goals (SDGs), especially Goal 16, which advocates for effective, accountable, and inclusive institutions at all levels.

    The publication also contributes to civic education. For instance, stories on the Lagos State Employment Trust Fund (LSETF) have not only showcased the government’s efforts in tackling unemployment but also served as a practical guide for citizens seeking to access the fund. Similarly, features on Lagos State’s COVID-19 response were instrumental in informing public behavior during the pandemic.

    “When you tell the real story of progress — without spin — you empower citizens,” Oke reflects. “You create a feedback loop that makes governance better.”

    Through Lagos Indicator, Oke has built not only a publication but a sustainable model for development-focused journalism. In an era where misinformation spreads rapidly and cynicism toward governance is high, this model stands as a vital counterweight. It offers a mirror to society, a record for history, and a bridge between the government and the governed. For other Nigerian states and emerging democracies, the Lagos Indicator offers a playbook on how to use storytelling to strengthen public institutions.

  • ‘Solid minerals devt: Pathway to economic prosperity’

    What are the benefits of the solid mineral sector to the economy?

    I firmly believe that strengthening ceramic and solid minerals entrepreneurship  is the golden highway to Nigeria’s economic democracy. Solid mineral processing industries offer ‘unparalleled perfect storm of business opportunities’ for industrialisation, economic development and growth of the country. For example, the solid minerals sector alone has the potential to rebuild the ailing economy, generate employment and wealth for millions of people, build human capital, and exploit new opportunities.

    The government seems to be more interested in the oil revenue rather than investing in more sustainable sectors. What is your take on this?

    One of the unfortunate things in this nation is that the Central Bank of Nigeria (CBN) seems not to understand the concept of the solid mineral sector, especially the ceramics subsector and its benefits to the country. This is also the same challenge with the governors who rather than sourcing for experts who can help them exploit the resources, prefer to go to Abuja monthly for allocation. We were preparing to sign a Memorandum of Understanding (MoU) with the Governors Forum before the change of government. We are waiting for them to settle down and hope that they will be more receptive to the development of the sector. Furthermore, we are hoping, too, that the National Assembly and her principal officers will settle down quickly to look at how to move the nation forward through this important sector. We have stretched our conviction and commitment with our partnership with the National Universities Commission (NUC), which is working on having a benchmark for universities to offer ceramics science, mineralogy and engineering technology. But, as we speak, no university has embraced it because of apprehension that they may not have lecturers. We have gone to Olabisi Onabanjo, Ago-Iwoye, Ogun State and advised them on how to get round it by not necessarily engaging expatriate lecturers but rather engaging them for a year or so while encouraging exchange programmes.

    Why should the sector be given attention?

    In our presentations we have been able to itemise the benefits of the sector by explaining that it has the capacity to grow the standard of living and confidence of our people’s renaissance, attract the establishment of various industries, and increase our nation’s competitiveness, support rapid infrastructural development, drive growth and wealth in communities. We have illustrated to them how it would tremendously increase internally generated revenue as the cash cow for the country, grow our technology and foreign direct investment (FDI) profile, balance profit maximisation with sustained economic options, create a profitable, safe and sustainable growth. Furthermore, it will impact on households economy, integrate communities and artisanal miners where possible into the mining ecosystem.

    How will you convince an investor to invest into the sector?

    Investors can only be interested when we do the needful and in this case it is taking audit of what we have, characterise them and itemise what it can be possibly used for.

    We need to encourage investors to show interest in the processing of our solid minerals for industrial manufacturing of allied products; and the fulfillment of our national priorities that include job creation, skills development, supporting developments in the second economy and creation of  Micros Small and Medium Enterprises (MSME’s), providing sustainable livelihoods for poor rural communities, preserving and realising value from indigenous knowledge systems and promoting the local benefits of solid minerals.

    Why are the huge coal deposits in various states not developed?

    Nigeria has coal in commercial quantity, yet it virtually lives in darkness; and businesses die due to lack of power. It is estimated that the mineral resource found in large quantities in Enugu, Ondo, Kogi, Gombe and Nassarawa states is enough to provide electricity to the country and for export. Coal is highly underutilised in Nigeria despite that it can grow the non-oil economy, if policy makers can understand the huge impact it can create in the economy. The country is estimated to lose huge revenue, about $132 billion yearly, through the neglect of the abundant solid mineral deposit. Coal is a major contributor to the United States’economy and it can do the same for Nigeria, if properly harnessed. Coal has played a crucial role in industrialisation since time immemorial and it has a significant impact on domestic economies in the world. It has been the key factor in shaping economies across the globe and determining the pace of development for several nations. The monumental amount of coal consumed by the world is used in a wide range of applications, such as generating electricity, the production of steel, iron, power, and several manufacturing and transportation industries, but this huge resource is wasting in Nigeria.

    What are the other resources seemingly neglected by the government that has retarded the growth of the economy?

    The government has totally neglected the solid mineral sector. For instance, the global market for clay, which is also in abundance in Nigeria but largely untapped in 2018, is is worth about $216.9 million. Other mineral resources are Feldspar found everywhere in Nigeria and is worth $3.2 billion; while Kaolin deposits across the nation  can fetch $5.2 billion, Silica Mica accounts for  $678.2 million, Phosphate is $83.11 billion and Silicate $600 million. All these are not tapped, but left to waste without exploitation mineral deposits are high employment and wealth generating agent, with a large capacity to halt rural urban drift and boost the economy. Let me give you an example. In one state that achieves N11.45 billion as Internally Generated Revenue  (IGR) and incidentally the same state is hosting 29 of 44 identified solid minerals in Nigeria. This state has a solid mineral resource known Feldspar and if it can develop the remaining mineral resource, from our estimation, it will earn over N485 billion. Feldspar is used for drug manufacturing, ceramics, paper, paint etc. Recently, we visited Katsina State, one of the states rich in solid mineral resources. We observed people digging out kaolin and packing it in bags that they sell at N900 per bag to paint manufacturers. Meanwhile, clay is an essential ingredient for manufacturing porclean, and is also widely used for making paper, rubber, paint and other products. However, if this product is processed by the government or registered as a Small Medium Enterprise (SME), it can fetch the miners over N3,000 per bag. Unfortunately, the companies buying the bags of kaolin from the local people through their agents are making good money, but the people are losing. Besides, l don’t believe these people can be justly called illegal miners in their own state; nature abhors a vacuum because the government has refused to do what it is supposed to do these poor miners are helping themselves rather than starving with their families. What the government should do is to organise them into a cluster and support them with simple technology that will aid them mine safely and pay taxes to the government. I went further to ask them why they were reluctant to develop the abundant solid minieral and negotiate with Abuja on how to share the profit instead of going cap in hand every month in Abuja for monthly allocation. However, from my investigations, l identified two major problems why they have not been able to do so. I discovered that it is impossible to negotiate from the point of ignorance, meaning they are not aware of the extent of the deposit, including charecterisation.

    How can skills be developed to exploit the mineral deposits?

    The government must know the volume of the mineral deposits and how long they will last, its characterisation, including physical and mechanical properties. It is only when the facts of the mineral deposits are known that a business profile could be prepared, listing what each mineral can be used for, so it is only then that investors could be wooed to come because we have made their decision easier by letting them know what we have and how best they can apply to get the right product. It is imperative that we know the physical and mechanical properties, once we have that, we prepare business profile proposal to woo investors itemising what each mineral resource can be used for. This is the only we can transform solid minerals into products. Besides, this can only transform into reality when we build technology that will enable us transform the solid minerals into various products, such as drugs and paper. Furthermore, in our quest to build skills, we have elected to train 500 youths per state on ceramics making pro bono, don’t forget that this sector can generate billions of naira yearly. Barriers to successful market mining in the solid mineral sector exist because of lack of quantification and characterisation data. The practice of roadshows where experts are not included in the teams to answer technical questions that may be asked by would-be investors is an exercise in futility. We discovered that our country does not have the skillset; secondly, the law that says that Federal Government owns all resources in each state is scaring the state government from developing their solid minerals and other natural resources. But l give some of them this illustration; if, for instance, I have  my house that is supposed to be cleared by the community and, it is not, nothing stops me from clearing the pathway that leads to my house. A proactive governor can put into action the process of developing the abundant resources in my state, what prevents me from doing it and working out  an agreeable arrangement with the Federal Government to have a sharing formula since that seems to be in the interest of both parties. Nothing can beat the development of solid minerals. Women are more involved in ceramics than their male counterpart, especially in packaging, decoration, glazing, quality control, laboratory and inspection and we ready to train them to be economically dependent.

    Can you set agenda for the incoming solid mineral minister?

    The first thing l would advise him is to ascertain how many Nigerians are experts in the solid mineral sector, invite them for a business discussion and form a small team that will come out with a road map for solid mineral development. In the proposed road map for the country l will ask the minister to work on the characterisation of the different mineral deposits in the country, their extent of deposits and business profile. It is with this knowledge that a serious minister can get to work. A minister needs that kind of document to attend investors’ fora or roadshows to woo investors. Prior to the roadshows, which have become prevalent, the minister should know that in Ebonyi, Imo, Delta, Kogi, Yobe, Sokoto and other states, solid minerals can pull them out of poverty and regular visits to Abuja to collect hand-outs are not worth it. For instance, state governments  have no business  not paying salaries or building infrastructure, but all these happen because of lack of knowledge of what to do with what God has deposited in their various states to prosper. As l said, initially the Central Bank of Nigeria has the least knowledge of how to encourage investment in the solid mineral sector and the least of the ceramics sector that have the capacity to drive the non oil sector.

    Why has the country remained undeveloped when no state is without at least a mineral resource?

    Nigeria has remained largely undeveloped and poor as a result of the neglect of the non-oil sector, in the first instance, the solid mineral sector, especially the ceramic sector that is all inclusive. As long as policy makers are not aware of the need to characterise our raw materials, that will let them know the mineralogical and chemical composition of resources because it is the only scientific way that will enable investors know what is available and what it can be used for. We have seen where some manufacturers use some minerals in ignorance because they actually do not know the composition of the minerals. Some of these people do not know either the characterisation or composition of them and end up producing poor quality products that may endanger lives.

    Quality is based on the composition of the materials; if you miss that important segment of information the final product will be poor. We are, therefore, pleading with state government to remove the fears they are entertaining. We have the skill set and every other thing needed for it to succeed. What we are asking from them is to reach an agreement with us since we are bringing the technical know-how. We propose to them to allow us take 50 per cent while they take the balance because we are providing the skill as our own contribution. We canvass that our skill set is quantified as our contribution, the government bring in money to run the project while we set up the business, run it and train skills to over from us. Our team will not be paid as consultants because if we take the option of serving as consultants the capital outlay will be huge.  We don’t only want to characterise and determine the extent of the deposit in Nigeria but want to go further to show you how to translate solid minerals into products that will grow the economy of this country we have the expertise.

    What is state of the ceramics industry?

    We have many of them, but unfortunately, only four are  producing. Sagamu, Benin and two in Ajaokuta, owned by an Indian and Chinese, but just learnt that there is one in Agbara, but I think it’s linked to one of those in Ajaokuta.

    Why is it difficult to sustain the ceramic industry in Nigeria, especially the Modern Ceramics in Abia State that has changed hands?

    We simply don’t have the skill-set besides insincerity of the operators. For instance, the one in Abia State, known as Modern Ceramics, is long dead, despite the funds pumped into it? The story is long. At a point, the liquidator called me to access how best to bring it back to life and l told him that there is nothing that can be done and nothing can be sold too. The whole place, when l visited, was overtaken by weeds. The Catholic Church, at a point, got a grant of N500 million to revitalise the erstwhile thriving factory. They travelled to Italy, thinking they could get it started, but they failed. They failed in the exercise, partly because if you design a machine in Europe to be used in Nigeria without any idea of the characterisation of the minerals in Nigeria, it will not work. The Katsina case is a bit different as it started with two processing plants in Dusinmi and Kakara Local Government Area and they never worked. The one in Kakarar didn’t operate for a day and was subsequently vandalised. The one in Dusinmi after producing for a short time was vandalised also. These are clear cases of what is called a white elephant project.

    Why is it so?

    In the Katsina case, the ‘investor’ just came in, put the two machines together and vanished. The one in Dusinmi ran for a certain time producing kaolin powder and within a short period stopped. They called us in, but we advised that the money to refurbish the two factories will be enough to start three new ones. In these scenarios, our advice has always been that the government or individuals should not enter into any a business they do not have the competence.

    What is the worth of the ceramics industry and can we be an exporter nation?

    According to reports from World Imports, we have N902 million yearly imports of ceramics. We have not started, it will take us years because we cannot export the bad quality w e are producing. As I stated initially, because most people don’t understand the characterisation of the minerals, the tendency to mix it wrongly and manufacture the wrong products is high. In 2009, we imported ceramics worth $319 million; 2012, we imported $416 million worth of ceramics while in 2014, we imported ceramics worth $600 million. When you do not have much about anything, you will not want to spend money on it. Unfortunately, the thing that can bail this country is solid minerals when we build the capacity for the development, but the government prefers to go to China and import or look for consultants.

    What about the roadshows the country has been involved in the name of wooing investors, are you suggesting that our country is not gaining?

    For those who attend, they must be gaining something, but have you asked how many experts are part of the them? How many experts in solid minerals follow them to China and Thailand? Those who go for the shows should answer these questions. We should think of how best to develop this nation. We have the Raw Materials Research and Development Council (RMRDC) and other agencies, but they are doing next to nothing. RMRDC’s mandate, for instance, is to show you where the raw materials are, but they do not do research to educate the public on how to manufacture from their research. Imagine if all the interlinked agencies in Nigeria are working together, the country will move forward unlike where the fiefdoms are carved out, each with a director-general almost doing the same thing. This is wasteful and not helping the nation in its quest for development.

    How do we grow the non-oil economy through the solid mineral sector?

    We can grow it if the government is committed to it. We have coal in Enugu, Kogi, Nassarawa, Ondo and other states. The market contribution to the economy of America is $21 billion and indirectly $132 billion. Evidently, we are losing so much. The global market for clay in 2018 was $216.9 million; all these are in our soil; one can only imagine if we convert these to Naira. Feldspar, another mineral that is like alliums in the global market in 2017, rose to $3.2 billion. Incidentally, it’s everywhere in Nigeria; kaolin is $5.2 billion and available in all local government areas. Silica mica is $678.2 million; phosphate is $83.11 billion, silicate is worth over $600 million, convert these millions to naira and note how much trillions we will we be talking about, yet we are poor. All these are high-employment generating activities, wealth creators and can stop rural-urban drift. If SMEs are encouraged to run micro businesses and industries in localities where people will be decently engaged and live a good life the allure of the city will be limited.

    How can you encourage the universities to take up the course?

    The NUC is encouraging the universities to offer mineral engineering, mineral economics and ceramics engineering. We are suggesting that universities should be encouraged to have foreign lecturers to come maybe for a year and leave. This will afford the students the opportunity to learn global best practice. These guest lecturers will not be in full-time employment; universities where these courses are offered should encourage exchange programmes where students can go for their industrial attachment (IT) for between three and six months. That way, the students will acquire skills that they will need to help the country. Indeed, we need to review our universities curricular every three years to get the latest from the international community. I make bold to suggest that the practical aspect of the course should not be less than 40 per cent. The best way we believe it can work is to say, for instance, in the six geo-political zones, let three universities offer ceramic engineering; the other three mineralogy. In that case, before the students graduate they will be able to set up industries for themselves. The government should have built clusters for them and created or encouraged SMEs in those areas to make them official and organised. They are doing what the government failed to do. We are asking each government to provide 500 youths for us to train in a week. From there, you eliminate restiveness, kidnapping and other opportunistic crimes that are prevalent in the country.

  • How NSIA is driving infrastructural development, projects

    The Nigeria Soverign Investment Agency (NSIA) is determined to explore investment opportunities in the country and beyond  to ensure that they benefit from its mandate. With investments spread across oil and gas, agriculture, power, among others, NSIA appears set to guarantee returns on investments for its subscribers. In this interview with reporters, NSIA’s Managing Director/CEO Uche Orji talks of the prospects and challenges of the Authority, saying while the agency is keen on investing, it is weary of making wrong investment decisions. Group Business Editor SIMEON EBULU was there.

    Can you take us through last year’s operations of the NSIA?

    We had a successful 2018 by some methods, but I think we could have done better in certain aspects. It was our sixth straight year of profitability, but it was the first year when we invested aggressively in things like the infrastructure fund and we have started to see some of the benefits of the infrastructure fund. That is important because Infrastructure Fund takes time before to yield returns. So, you are building the Lagos-Ibadan Expressway and the Second Niger Bridge, it would take a while before it starts yielding returns. As we start to make aggressive investments in infrastructure, you are going to see less capital available for us to invest in markets. So, it is important that we replenish that through further contributions, to maintain the pace of profitability in NSIA. Having said that, 2018 was our six straight year of profit. If you take out forex translation gains, we made profit of $87 million (or N28.45 billion), using an exchange rate of N325/$1 for 2018. The shift towards infrastructure and direct investments in Nigeria means it will take longer for returns to start incubating. But if you include forex translations, 2017-2018, went from $22 billion to $46 billion. So, generally, it was a positive year. By the end of the year, Assets Under Management was about $1.9 billion.

    In addition, we also had third party funds like the Presidential Infrastructure Development Fund (PIDF)- a fund created by the President with $650 million. It is not part of our assets. That fund is what we are using to drive the Lagos-Ibadan Expressway, Second Niger Bridge, Abuja-Kano highway and soon, the East-West Road and the Mambilla Power. So, that is exclusive of the N617 billion that we have. In 2018, the returns break down were as follows: We made 11.5 per cent in our Stabilisation Fund, the Future Generation Fund about 3.3 per cent, because the global market was down a lot in 2018 and it affected returns; and the Infrastructure Fund was up 13.8 per cent. For Infrastructure Fund, the 13.8 per cent is actually the investments we are making in markets, with the cash, not the actual infrastructure, because those ones have not started yielding returns yet.

    So, the three funds that we run are the Stabilisation Fund, the Future Generation Fund and the Infrastructure Fund. We have commenced construction on our three healthcare projects. Lagos University Teaching Hospital (LUTH) is completed and operational, for Kano and Umuahia, the construction has been done and we are hiring people soon.

    What was the performance of the Future Generation Fund (FGF) in 2018 and possibly since inception?

    For the FGF, last year we did 13 per cent and the year before it was 11.5 per cent. That is the growth rate of the FGF. But I can’t give you the annualised performance over the past five years. Not as aggressive as I would like it to be; I will explain why. We have a very conservative assets allocation strategy. If you look at our FGF, we only put 25 per cent in public equities. Our peers like the Norwegian Sovereign Fund put 65 per cent in public equities. So, if you want to be aggressive to make money, you put a lot more funds in public equities. Having said that, because of the volatility last year for example, we had a very bad year because the market was down and they ended up in dollar terms losing more because of their aggressive strategy. My biggest problem with the NSIA when we started was that I just couldn’t take the risk of losing money. So, we were a bit more conservative. If you lost money within the first two years of your existence, the National Assembly would raise some issues and may even tell you to give them back the money; so we were a bit more careful. But I think as we get more comfortable, we try to enhance our investment strategy and, hopefully by then, we would have built up enough means of returns and if we had a bad year, we can explain to Nigerians that we had a bad year. If you remember last year, the S & P 500 was done by an additional five per cent. It is not something I am very proud of and I wish we could have done better.

    Is the Presidential Fertiliser Initiative (PFI) a social programme?

    Fertiliser started as subsidy to support the government, with a view to not losing money and, if possible, to make money. Subsidies in fertilisers before the PFI started was as high as N60 billion a year. In the last two years, the subsidy has come down to N8.6 billion for two years. So, we have roughly N4.3 billion a year, from N60 billion a year and there were no shortages. Now, if you do that and it translates to money that eventually comes to the NSIA, it is value for us. Secondly, it is a programme that has a timeline. At a point, it is going to stop. But the real value addition here is that we have gone from importing 100 per cent fully blended fertiliser to importing only 35 per cent of the materials, while 65 per cent is  domestic. Blending plants that were dead or moribund are up and running, from four that were operational when we started, to 22 now, all hiring people. So, that has supported the economy and I am hoping that we would be in a position where we can earn some fees from the work that was done.

    Just think about the fact that it used to be N60 billion of subsidy, but it is about N4 billion. Even with the N60 billion, there were shortages in fertiliser, but today, local manufacturing has gone even higher. And today, the foreign exchange requirement has gone down by about $150 million yearly. These are all value to the country.

    How can more funds be committed to the Sovereign Wealth Fund (SWF?

    What worries me is that we need to get money into the fund. It is extremely important to us because if you end up investing all our infrastructure funds, which tends to takes about five years to earn a real return, you might run out of capital and you have your margins squeezed. That is because the cost of running infrastructure is very high. Recently, we started hiring for both Umuahia and Kano. Both places would hire at least 40 people; the  LUTH will also hire about 40 people. These are costs and it would still take time before they start earning revenue. The Norway story is one that I like to tell all the time. The reason is because in one of my earliest jobs in 1998, the team I worked for was one of those that managed the Norwegian SWF’s assets. They started in 1993 with $10 billion and to see them now at over $1 trillion speaks to the power of consistent contributions. In 2013, it was reported that the Norwegians were putting in $1 billion a week into that fund. So, it doesn’t really matter how much you start with, what matters is how consistent you are. So, I think if there is one thing we need to do as a people and if we need to be serious about this, there must be consistent contribution. But those who have watched us closely would have seen us move from being fought by the governors; being fought by various others, to now be working well together. We are working well with the governors and the National Assembly. I am hoping that the NSIA has become something that they have all come to accept that it is necessary, it is important and should be funded. I think the bigger question we have is whether we have enough revenue as a country to be able to fund an institution like this. I am hoping that we do if oil price continues to go up and we continue to invest in the oil sector and get our production up; get the right type of production, because all those factors are very important.

    For your infrastructure fund, beyond what government is doing are you looking at partnering private sector firms to get more funds to invest?

    There are three pillars of our strategy for infrastructure. The first is, we invest our funds directly; the second is, the co-investment strategy; and there is a lot going on there. An example is the co-investment fund we set up with UFF and Old Mutual and it started with $200 million. For that, our full commitment would be not more than $50 million. They would bring their money while we bring other people’s money. The same thing was what happened with InfraCredit, where we put $25 million and brought in other people’s money to make it about $200 million. So, we continue to have co-investment as a strategy. If you look at the PIDF, there is government money, there is NSIA money and there is the third party fund we are going to raise. It is a combination of debt and equity to complete the PIDF project, the Second Niger Bridge and the Lagos-Ibadan expressway. So, we have a strategy to raise funds from other people to co-invest with us in our projects. Now, it is not so easy to develop this co-investment strategy.

    If you remember we announced one for real estate, which hasn’t happened. Soon after we announced that fund, the forex crisis in Nigeria started, when we went from N196/$ to N306/$ and at a point even fell much lower than that. So, that affects that fund’s take-off. So, we are balancing the risk of convincing people that Nigeria is investible. So far, we have had two successes and one failure and I am hoping that we learn from the successes and build on the failure to do more of this. So, the strategy we have set up is that we would have other people co-invest with us. For instance, the three healthcare projects we have done, we put our own money. As I speak, I am very confident because we have another pipeline of about 11 more projects in healthcare, we have had commitments totalling over $200 million of people that want to invest in us. So, we can’t solve all of these by ourselves. The strategy we have is that for every $1 we invest in infrastructure, we attract $4 from external parties. But for the NSIA to do that successfully, the NSIA needs to be consistent in its performance and Nigerians, including the National Assembly need to have confidence in the NSIA. I think we are on the way to doing that and we continue to work to build that confidence.

    One of the most consistent supporters who have been on the standby to invest in the Second Niger Bridge is the Islamic Development Bank. Same time, we are engaged with the EU Commission, the DFID, and all of these people. So, we have built a significant platform and level of interest and support from various people that makes us very comfortable and happy. We did make an investment in gas, in conjunction with the IFC and Seven Energy to do gas infrastructure and help them get Calabar to operate. So, power in that area has improved significantly. That investment also fell on hard times. It fell on hard times because as we speak, not one bill has been paid for. So, there are funding issues in the power sector that needs to be addressed fundamentally. We have invested in renewable energy and solar. Mambilla would start, at the moment it is a $5.7 billion project. The due diligence required is going to take a lot of time and we are actively doing the due diligence. But don’t forget that Mambilla is primarily a project of the Ministry of Power; we are there as financing partners of the project, but for us to invest in it we have to be very comfortable that we would get our returns.

    We have invested in gas-to-power, renewables, solar and hydro, but there is still a fundamental issue in the power sector which we are all aware of, that needs to be addressed if we are going to attract more investments into that sector. If we actually aggregate all the power generating sources in this country, put them in a proper distribution metrics, you will have enough power. So, the real challenge is in getting transmission and distribution to work effectively in this country and getting other things working.

    Are you involved in gas capturing projects?

    We are involved in gas capturing; we are at very advanced stages of due diligence on a gas flare capturing project. From my last count, there are more than 300 major gas flare sites in Nigeria. For instance, those from Rivers State, at night if you drive towards Yenegoa, the night light are lit with flaring gas. These things have been flaring for decades. The economic waste is incredible. So, the project we are about to do, which we would probably announce before the end of this year, is one we are working with other partners and we are taking one of the largest onshore gas flare sites and turning it into LPG capture. What is fascinating about the project is that the LPG and the power sales would give you about 19 per cent internal rate of return (IRR). But there is a big element involved, which is carbon credit. You can actually go to Switzerland and sell the carbon credit and we are glad to do that.

    Why is the NSIA not investing in petroleum refinery projects?

    Refining is an area of interest for us. We have looked at investing in NNPC or the rehabilitation; it (the Federal Government) hasn’t moved for that, so we are waiting. We looked at modular refineries; we did a lot of work on that and the truth is that we have not done any investment for a number of reasons. So, you will see us in refining because it is an area of interest.

    What is your outlook for 2019?

    2019 started off very volatile with trade wars as the single most important challenge that we have. It is important to us because our FGF largely invests outside the country. So, when you see movements in the Dow Jones or S &P 500, they tend to affect the performance of this fund. We expect that even though we have seen a rebound in our performance because the global markets have risen, it would remain a very volatile 2019, for as long as the US uses tariff to drive global trade, you are going to see this affect global markets. So, for the rest of the year, I anticipate that the market remains very volatile as long as President Donald Trump continues to tweet and drive foreign policy. I still struggle to understand the correlation between tariff and immigration. However, we are optimistic that our asset allocation strategy will withstand downside risks and optimise market gains. Within the last 12 months, we committed and deployed over N100 billion across the priority three road projects under the PIDF. We have also commenced due diligence on the Mambilla Power Project. We are within the target project milestone on all these projects. Throughout 2019, we shall continue to focus on executing our infrastructure investment strategy in our core focus areas of power, toll roads, agriculture, healthcare and most recently gas industrialisation.

  • Fashion is lifestyle – Brand Influencer, Sophia Egbueje

    Fashion is lifestyle – Brand Influencer, Sophia Egbueje

    A popular fashion and lifestyle influencer, Sophia Chinwe Ogbueje, who is also a travel influencer, has given her perspective on fashion and lifestyle.

    She asserted that fashion is actually lifestyle, while explaining why the mix of the two essentials affect personality and style.
    “Fashion is lifestyle” she declares. “Lifestyle shapes fashion and fashion shapes lifestyle, one cannot exist without the other once a person has achieved fashion consciousness. For instance, no one is wearing dinner dresses to the pool to swim, uniforms cannot have too many accessories and I will never wear simple jeans to a red carpet; the event will determine the fashion lane, lifestyle shapes fashion.”

    She holds that a fashionable person will always look stylish but a stylish person will look good while not necessarily following or conforming with the trends.

    “Fashion is putting forward a particular style in a particular manner; style is taste,” she explains. “Fashion trends are heavily affected by lifestyle and culture. That is why the trends differ from place to place and that is why when it comes to what is acceptable or not, the location where the outfit is worn is of utmost importance.

    “Also, the person wearing the ensemble matters a lot, your own style should be put before fashion trends. You must feel comfortable in your own skin or your confidence will suffer. Trends are good if you have your own taste.
    “Fashion is a means to express yourself through the clothes you wear on your body and the accessories you decide to pair with them. No two humans can be exactly the same, fashion is how you show that you’re different, the same or just simply you, it is a means to let us know more about you and a venue to develop your personality,” she avers.

    Ogbueje, who hails from Idemili North in Anambra State and has a Bsc Accounting degree from Covenant University, has written her name in gold in the area of brand influencing having pushed the image of some top brands with her style and clout.

    She’s an introvert that is extroverted in an unusual manner.

    “In business I prefer to be a leader than to be a boss. I will be the first person to carry out the given order so that the underlines can see and follow suit. I feel responsible for the people that answer to me and I value them as well as my respect so I endeavour to always be worthy of the respect that I command.

    “In private, I am almost anti-social, keeping to myself and not wanting to share my private life with the public. At play, I am the happiest. This is the time when I kick-back, relax, let my hair down and release the compiled stress. I love to be the life of the party and the party loves to have me,” she reveals.

  • ‘Why we advocate continental trade, infrastructure growth’

    Nigerian Export-Import Bank (NEXIM) Managing Director, Abubakar Abba Bello, in this interview conducted in Cairo, Egypt at the Intra-African Trade Fair, explains why the bank and Africa Export Import Bank (Afreximbank) are spearheading the drive for sustainable growth in sub-regional trade and infrastructure development, saying Africa can only maximise value when its exports are processed. Group Business Editor Simeon Ebulu was there.

    What is the nature of the agreement NEXIM signed with Afreximbank?

    Two signings were done. Ours was a $Ibillion facility between Nexim and Afreximbank and the other was between Afrexim and the Federal Ministry of Industry, Trade and Investment for $1.3 billion.

    The $1.3 billion was strictly for infrastructure development and , business and industrial parks. Ours is for trade financing and development within Africa.

    So these have two different purposes. But the $25 billion they are referring to includes the total deals they are planning to finance during this fair, including those others that do not concern Nigeria but other African countries. It is the sum total of trade finance they are targeting to provide for African businesses in various countries.

    What is the extent of NEXIM’s  involvement in processing goods for export. 

    Any export involves all regulatory bodies, NAFDAC, Standards Organisation of Nigeria (SON) or quarantine, if you are exporting agricultural produce. Some people said those are some of the challenges. You must have to comply with their regulations. But for us in NEXIM, our mandate is basically trade facilitation because we are not the owners of the business.

    So when we have challenges, be it with non-tariffs or regulatory barriers  in the process of export, what we do is to continue to advocate for ways of making it work better. But as an exporter, you cannot do it without meeting the regulatory demand.

    Now, one of the things that the Vice President is doing with the Micro, Small and Medium Enterprise (MSME) clinics, is that we have what we call One-Stop Shop; that is, any exporter who needs the NAFDAC or SON approval can get it from the one -stop-shop and once you get this, export becomes easy.

    Today, you have Multitrex and Plantation Industries, all financed by the NEXIM facilities. Some of them were financed under this scheme, but some of them have been taken over by other bodies. The plantation industries has been taken over by LadGroup. What caused their failure were a combination of mismanagement and the international economics market of cocoa that made it difficult to export cocoa. The buyers in Europe and America attempted to knock Nigerian cocoa producers off by introducing ad valorem taxes and duties on processed cocoa while taxes on raw beans was zero.

    So, it became more profitable for them to export raw cocoa beans than to process it. But while this phase was going on, some of them that also had loans that needed to be repaid to creditors stopped servicing them.

    Also, some of them were taken over by other managers but could not utilise the excess capacity they had or even service the loan they acquired before the market dynamics changed.

    But now what NEXIM is trying to do is to identify the problem confronting them, fix the problem and perhaps restructure their loans and pay them over a certain period of time. After that we can inject fresh funds into those industries to enable them resume production.

    Recently, a colleague has been reminding me that if we don’t process cocoa and continue to export it raw to other countries, we would only have succeeded in handing over the processing of our own products to other countries and they are going to be making more money than us. This, invariably, means that we are exporting jobs to other countries and they will be employing more people and making money than us from the raw products we sold to them.

    So, despite the protectionism in Europe, we believe it is still better for us to export processed products, be it cocoa or any other products.

    Currently, Nigeria has about 200 metric tonnes of processing capacity for cocoa lying idle because our total production for now is between 20 and 30 metric tonnes.

    But, we have capacity to do about 200 metric tonnes.

    Multitrex alone has capacity for 65 metric tonnes. So, if we can begin to process all of our cocoa production estimated at over 250,000 metric tonnes, you can imagine how much we are likely to make in one year.

    Imagine other indirect products we can get in the process. One of the by-products of the Plantation Industry is butter. We also want to go there. For its part, Multitrex can produce chocolate and cocoa drinks  that is just wasting. So, NEXIM is determined to bring them back, including other businesses in other sectors of the economy outside agriculture. We are still working on how to add more value to cashew, sesame seed or ginger because we have observed that processing these products is not rocket science.

    What options are there to resolve  the debt challenge?

    For Multitrex, we are working with AMCON to resolve the debt issue, although its huge. Their own is even easy because it involves the government. The ones that are still with the banks are rather more difficult to handle because when the assets of such organisations like their factories crystalise, you cannot even sell except you want them sold as junks for ridiculously low prices. Apart from the owners, who do you think would want to come and buy a cocoa factory when those that have been in the business for over 30 years have failed? Nobody would buy. What I have been telling the banks is that it’s better we restructure these loans and allow the companies to resume production than to liquidate these companies because even selling their assets is a problem.

    The banks are not better off by liquidating these companies, but would be better off by getting to restructure their loans and resuming production. In that case, they would be earning some money to service the debt and retain or create new jobs that will bring deposits for the banks.

    So, for all the cocoa plants, apart from settling the debt overhang, they also need to retool because some of them are obsolete. Some may need additional working capital and that is why we would need to assess them on a case by case basis.

    However, the Plantation Industries we financed with African Development Bank is still working, although there may be need to get more of the state of the art equipment.

    Are there constraints? 

    Not necessarily.At some points, we were but the Central Bank of Nigeria through the Export Finance Facility is there to support us. At the bankers’ retreat recently, the governor of the Central Bank of Nigeria still re-echoed it again.

    What would you identify as major challenges in NEXIM 

    Like every other development bank, there is the issue of funding and erosion of availability from inception. As long as people take loans from a development bank and see it as a national cake, the the problem of having enough working capital to support the business would always arise.

    Naturally, over a period of time the bank’s liquidity was heavily eroded leaving it crippled for some time. But right now, we are very liquid to the extent that just while we were still at the Intra-Africa Trade in Cairo, Egypt, I signed off a deal for an exporter to the tune of N3.5billion. I can confirm to you that business is picking up.

    What is the nature of the MoU?

    It was an MoU between Afrexim and NEXIM to facilitate the export of Nigerian produce, manufactured goods and other exports into African market.  It is specifically for export  Nigerian goods to other African countries. That is why it is called the  Nigeria-Africa  Trade Promotion programme where Afreximbank is making available $1billion line of credit to support the programme.

    Now, how is this going to work? We have a list of eligible transactions that can come into the conditions for financing. The list is long but typically any business that ultimately supports Afreximbank’s  current drive to grow intra Africa trade.

    If you recall, South Africa signed their own about three months ago, so it’s the same programme signed with South Africa that we signed with Afreximbank during this programme.

    There is some irony in Africa. Most of the products we sell to other countries in Africa are mainly manufactured goods, FMCG, cosmetics, plastics.Our formal exports are mainly primary goods. But we cannot trade the same primary products among the African countries because they have the same primary products and we have same structure. Benin Republic, for instance, may not need our raw cocoa because they have the same. So, the only market we have for cocoa is across the seas.

    So, what we want to do is to bring back the regional value chain. We want to bring back the cocoa processing companies to life.

    So, we need to bring back our regional value chain, such that we can restream  cocoa trade between Nigeria and other neighbouring countries. When regional value chains are reopened, we can start supplying raw materials to African countries that are into processing.

    This facility does not stop our exporting outside Africa, but what it is trying to emphasise, which is also happening in every continent, is that we should begin to trade more with our neighbours. In other continents the larger percentage of their trade is done with their neighbours. In Europe the trading is about 70 per cent among themselves. In Asia it’s about 50 per cent, America is over 70 per cent. It is only in Africa that our trade is always over the seas and we are not trading with ourselves. Now what we want to achieve, which NEXIM and Afreximbank are trying to do with this facility is to increase Africa to Africa trade, which now stands at about 15 per cent and take it to a level where we will be comfortable trading among ourselves over the next five years.

    How do we do that?

    We are all aware of the challenges that have inhibited African trade over the years – tariffs and non tariffs barriers, and logistics constraints. But above all, I love what the President of the Intra- Africa Trade initiative said in one of the sessions here. She said in spite of the constraints, trade between African countries was still going on whether they were informal or formally captured. So, while we know there are challenges, we should not be discouraged by them. We should rather continue to navigate through the challenges to continue to trade while effort is being made to fix the infrastructure impediments.

    How will you dentify the market?

    I think one of the ways of getting this information is why we are here. I believe this Fair is a very wonderful initiative. This continent  before this Fair would never have imagined  that some of the wonderful products we are seeing are coming out of Africa. In fact, before we started this discussions, I was talking with somebody from Tunisia, and we just discovered that we were doing the same thing to promote business in our various countries. All the products we have here are coming from our countries and it is no longer a question of getting them from somewhere. People are seeing the producers and the goods live and it’s no more a question of reading them somewhere. In addition to that a lot of interests are being expressed on both sides.

    But we can’t say that the only way of getting information is through trade fairs. The best way is to  leverage technology after this meeting. So, one of the things that is coming out of this Fair and from the interactions we have had with businesses from across the continent is that we need to provide the platform in each country in addition to the continental platform that this Fair has created.

    This platform is where market information about what is available in Africa and the countries can be uploaded so that people who are interested can go to the platform and get information.

    That is why we all know that one of the key challenges frustrating trading in Africa is the lack of information. Even when you go to some of our embassies they don’t know much about what is happening in the area of trade and business opportunities.

    So that platform that makes businesses leverage technology is a powerful toll.

    What are the issues with transportation? 

    There is no doubt we have challenges, especially transportation logistics in West Africa and international; that is, continental moving of goods from one location to the other and we all know the obstacles we have today at the border posts and even in the country.

    So, seven years ago, NEXIM recognised this challenge, which is a major obstacle to trade facilitation within the continent. So, between us and the West African Chamber of Commerce and Industry we decided to set up the Sealink Project within the region and Central Africa. It has also gone through its own challenges largely due to the difficulty of getting investors because of the way we started it. We wanted to bring it to investors to come on board. But most investors wanted to see something on ground before they could invest. So, within the last one and half years, what we decided is to promote it by setting up interested shipping charter coming on by giving their vessels. As we speak, we have 12 vessels that have already come on board to start operations from the ports of West and Central Africa.

    We have three bulk cargoes, two vessels and the rest are barges.

    We have also, while trying to set up Sealink, discovered we may have problems shipping from traditional ports so we are trying to divert traffic away from Apapa to some inland ports .

    So, we have had extensive discussions with NIWA and Ajaokuta Steel for the use of Ikorodu Inland port and Barro, Ajaokuta jetty for movement of bulk exportable goods on Sealink, which is why we have barges. We have also held discussions with NIWA on charting the sea routes for the vessels.

    So, we have gone very far. My colleague would say he wants it to start in January but I don’t want to be too aggressive and raise people’s expectations. I look at it that before the end of the first quarter of 2019, we will sail the first vessel on Sealink from Nigeria.

    Incidentally, one of the key challenges on Sealink is getting assured cargo. Who is going to put cargo into the Sealink? But one of the major exporters, Dangote Group, has already agreed to come on board. They are excited about it because it would help them move their products across Africa. We also have the Manufacturers Association of Nigeria Export Group on board. NEXIM is also partnering Nigerian Export Promotion Council (NEPC) in what we call Exportrade to set up export warehouses in Nigeria and other West African countries, which would be ordering nigeria products. They would have started since but what had constrained them was lack of logistics. So they have bought into Sealink to make it profitable for the ship owners.

    With all these arrangements, we believe Sealink will have the cargoes that would make it profitable.

    Have other ECOWAS states subscribed?

    Yes, one of the first things we did was to get the  ECOWAS Enterprise status.

     

  • Nigeria needs to grow domestic gas consumption for economic devt

    Mrs Audrey Joe-Ezigbo is the president of the Nigerian Gas Association (NGA) and the first woman to hold the office. She is also the co-founder/Executive Director Falcon Corporation, an indigenous oil and gas firm. In this interview with EMEKA UGWUANYI, she says the Federal Government needs to fast-track investments in gas infrastructure, to support increased power generation as stable power is the bedrock of economic and industrialisation growth. She also proffers solutions to some oil and gas issues and unveils her plans for NGA.

    What is your assessment of Nigeria’s gas policy and infrastructure?

    Infrastructure, or I should say the inadequacy thereof, is one of the key constraints mitigating against the growth of the gas industry. We know that gas is a key propellant for industrialisation of any economy. We have been more focused on our export gas market over the years and this is a contributory factor to the infrastructure dearth. When we export gas, it really goes out to support the industrialisation of other economies at our expense. At this time, therefore, we need to aggressively grow our domestic gas consumption, as there is a correlation between the level of gas consumption and that of economic development, with an estimation that for every $1 invested in gas, there is a resultant $3 increase in GDP. We must, as a country, work in a determined manner to bring more gas-to-power projects, gas-based industries, such as fertiliser plants, methanol and other petrochemical plants, and other heavy industries that require gas as feedstock, to the fore. We cannot, however, achieve this without a robust gas infrastructure backbone.

    A close examination of our the Economic Recovery and Growth Plan (ERGP) priorities, which speak of expanding power sector infrastructure,driving industrialisation through small and medium enterprises (SMEs), acceleration of non-oil revenue, achieving agriculture and food security; ensuring energy sufficiency in power and petroleum products, and others makes it clear that power underpins the objectives. Given how bad the power situation is, it i becomes imperative to fast-track investments in gas infrastructure to support increased power generation.

    The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, has spoken severally of an infrastructure gap which he estimates requires an investment of over $50 billion over the next five years. We need to develop central processing facilities, pipelines for transmission and distribution of gas, power plants, pipe mills, fabrication yards, virtual pipeline technologies, etc. We must also not lose sight of the fact that we have a critical need to see more direct gas exploration and production projects materialise.  Data from NNPC says we have 202 Trillion standard cubic feet (Tscf) of proven gas reserves. We, however, need to deliberately invest in exploration, production and monetisation of our estimated 600Tscf of unproven reserves.

    From a policy viewpoint, there is a clear infrastructure focus, yes. The Gas Revolution agenda as embedded with the 7Big Wins speak to gas infrastructure development, gas revolution projects, deepening domestic utilisation of liquefied petroleum gas (LPG) & compressed natural gas (CNG), reduction of gas flaring, and gas-to-power as focal areas. This is clearly in alignment with the vision of our National Gas Policy to grow Nigeria into an attractive gas-based industrial nation with strong focus on domestic gas demand and consumption, while developing a significant presence in international markets.

    The recognition of gas as a stand-alone product and industry as distinct from oil, and the intention to create a distinct midstream sector of industry speaks to an infrastructure focus so policy-wise, we are on the right track. Our gas revolution will be greatly enabled by profitable stand-alone dry gas projects with supporting processing and transportation infrastructure in place.

    Let me say also that we must give kudos where it is due. The government, through the NNPC, is gaining traction on the seven critical gas projects identified as being imperative to gas development and industrialisation in Nigeria. We are seeing progress on the AKK project, the ELPS II expansion pipeline, the OB3 East-West interconnect pipeline, the Assa North-Ohaji South project, the Odidi-Warri Gas Pipeline Expansion Project, among others. That said, there are other critical projects from gas supply and gas off-take perspectives that need to commence, and it is clear that only the private sector can deliver on these directly or through PPP arrangements. Therefore, we are very disappointed that the President refused to assent to the PIGB. As an association we were pushing not only for the PIGB, as well as the Petroleum Industry Fiscal Bill, which we consider the most critical in the sense that it will determine whether lenders have a clearer line of sight on the economics of any proposed gas development projects in Nigeria, enough so as to finance such projects.

    What are the major challenges of investors in the gas subsector?

    Unfortunately, there are too many challenges and uncertainties facing existing and would be investors in the gas industry. There are issues surrounding pricing and appropriate tariff structures to incentivise investments along the value chain; regulatory inconsistencies relating to foreign exchange (forex) in terms of the investment/income currency mismatch; there are constraints around the timing and quantum of payments of invoices; issues of sanctity of contracts which has been a long-standing challenge, among others.

    It has been over 14 years and we have still not been able to pass any part of the Petroleum Industry Bill. There are uncertainties around the proposed fiscal policy which impinge on the potential for aggressive development of gas infrastructure. Financing is a key challenge investors face because of the structure of funding available within our domestic financial markets, and the fact that global investors are looking at more investor-friendly and less risky climes to channel their funds. Bankability of projects is a concern and admittedly the quality of guarantees available in the export markets is much stronger than for the domestic market. There are issues of securitisation and payment assurance, security of assets and so many other factors impact on ability to raise funds.

    What other challenges exist?

    There are challenges with bureaucratic delays and extended procurement processes, corruption and rent-seeking, multiplicity of agencies and attendant costs and approval overlaps. There are also very significant security budgets that have to be attached to projects in the industry. These and many more serve to increase the cost profiles of projects. Time is lost trying to get projects past the approval stage, off the ground during the construction phase, as well as once operationalised. All these add up to significant time lost and value erosion. It is difficult terrain indeed, so the operating philosophy of the investor is centred around strategies for hedging, de-risking, efficiencies, optimisation, and the like. We are very pleased that a lot of the industry restructuring is looking at the reduction of contracting cycles, removing bureaucratic bottlenecks, streamlining agencies and driving efficiencies within the public sector.

    NGA has been in the vanguard of willing buyer-seller system. How would this improve the gas subsector?

    We are interested in seeing the evolution of a fully deregulated gas market, where commercial transactions are market-driven. We will not see the kind of levels of investments we need to see if the economics do not pan out for every investor along the value chain who must be able to make appreciable returns on his investments. We understand the anxieties of the government and the concern that a willing buyer-willing seller market will lead to increased prices of gas-dependent production output, including and, especially, power. The reality however, is that in a market-driven environment, whilst there may be a short-term spike in prices, as more investors come in and the competitive landscape heats up, competition will necessarily drive down the margins and the market will become more focused on cost-competitiveness, differentiation and efficiencies which ultimately benefit the end consumers. We constrain our gas development by over-regulation in a situation where we do not have a robust enough gas infrastructure backbone.

    There is a drive to attain parity of domestic gas price to export as a means of encouraging investors to come into the gas sector. Our concern, however, is that export parity pricing to NLNG is for unprocessed gas, whereas the requirement for domestic gas supply is for processed gas which requires significant additional capital investment.This must be factored into any domestic gas pricing framework since it is investments on the domestic front that the nation seeks. This is the space that must be attractive to investment capital.

    Poor gas supply has been the major challenge to Nigeria’s power sector efficiency. How would this problem be solved and what is NGA doing about it?

    I don’t agree that gas supply is the greatest challenge, it is one but certainly not the greatest. The biggest issue plaguing the gas-to-power sector is the illiquidity problem. Indeed, the gas producers and suppliers should rather be commended for continuing to make gas available despite the huge debts which they are owed. There is just not enough cash flowing along the gas-to-power value chain and the issues surrounding this, which we are familiar with, go beyond gas supply. We are talking today of a debt profile of over a trillion Naira, and it is the gas producers who are the last mile in terms of payment backflows, who are owed the bulk of this money. So, ultimately, we are approaching a situation where the ability of gas producers and suppliers to continue to supply the power sector is challenged and the chain may breakdown.

    In addition to the illiquidity issue, there are infrastructure limitations that create redundancies and wastages from generation to transmission and distribution. There are issues around tariffs that are not market-reflective. Collection efficiency on the part of the Discos is lower today than ever before and this has liquidity implications for the value chain. Considering that the power sector accounts for about 80 per cent of domestic gas offtake, we can then see how this impacts on the gas supply end. This is one sector where we see the full effect of challenges with bankability, securitisation of gas supply agreements, and investment value erosion issues arising from the mismatch between the currencies mismatch situation. Insecurity is a factor that comes with its own significant cost profiles.

    That said, we are facing an energy crisis and we really need our government to declare a state of emergency in our power sector. We need to see specific new interventions by the government targeted at significantly de-risking the power sector. It would be good to know for instance what the government plans to do regarding the N701billion Payment Assurance Guarantee scheme, which ends this December. We are aware that even as of today, about four months’worth of invoices under this scheme are yet to be paid. What is in place to address the debts in the power sector from January 2019?

    It is our strong position that government’s intervention to resolve the illiquidity issue, including providing additional payment guarantees, is required. This will help to minimise this risk and re-establish the viability of the gas to power value chain. I need to reemphasise that power is an imperative for Nigeria if we are to achieve our aspirations for rapid industrialisation, and our reality is that gas-to-power presents the vehicle through which we can attain quantum leaps in our power generation capacity at this time. We produce less than five gigawatts (GW) of power in a nation of about 200million people. Working with the United Nations rule of thumb of generating 1GW of power for every one million people, Nigeria should be generating at least 200GW. The gap is huge gap and we must urgently take steps to ensure we see it beginning to close.  We must address the pricing issue and establish market-reflective tariffs. We must put payment assurances in place, and we must deal with identified structural, regulatory and legislative issues that deter investors from the sector.

    We have a specific statement in our National Gas Policy that speaks to ensuring gas supply to the country’s power sector is a number one priority. This will be very hard to achieve if it is premised on what is currently a very dysfunctional power value chain with less than 20 per cent of the revenues flowing across the value chain.

    Nigeria reportedly is one of the lowest LPG consuming nations, despite its huge gas resources. How can LPG consumption be enhanced?

    For a country that has the kind of volumes of gas reserves that we have, Nigeria indeed has not done well with LPG consumption. Again, a major bottleneck has been infrastructure. It makes no sense that we produce a product in the Niger Delta region, move it to Lagos on vessels and then truck it right back to the region from which it was sourced in the first place, and this has been the situation for years. We have come full circle to where we have distinct policy provisions targeted at deepening LPG penetration and utilisation in the country and this is a very welcome development. Nigeria has the potential to consume significantly more than current levels which are in the region of about 450,000 metric tons a year, most of which is supplied by NLNG. Enhancing consumption will need us to expand our storage capabilities and we see this is already happening with investments by companies like Falcon, Dozzy, Techno and some other newcomers. We are seeing added investments in LPG vessels to increase shipping capacity. We must necessarily also make investments in LPG cylinder production and look at the use of our rail lines to transport LPG across the nation. There is also a need for massive education, orientation and re-orientation of Nigerians to increase the adoption of LPG. Given our teeming population, rapid adoption of LPG utilisation will ramp up domestic consumption significantly. That said, we must also encourage the use of LPG for various industrial and commercial applications, as well as applications in the transportation sector, all of which will combine to deepen the offtake levels within our domestic market. Lastly, government must make good on its commitment to address the removal of VAT on LPG which is produced domestically, whereas imported LPG does not attract VAT. It is a gross disincentive to the growth of the domestic LPG market when imported products are cheaper than those produced locally.

    Gas flaring is a challenge in Nigeria. How can it be stopped or reduced to barest minimum?

    I believe we have to first and foremost acknowledge that we have done quite well in bringing down the volume of gas being flared in Nigeria from about 2Bscf/d ten years ago to its current levels of about 0.7Bscf/d. The reduction has been on the back of several policy interventions such as AGFA/NAGFA, the DSO, the NLNG Act, among others. That said, 700mscf/d of flare gas is still a colossal waste of resources, translating to over a loss of N860million per day of gas which could otherwise have been channeled towards the production of approximately 5GW of electricity per day. I believe however that we are very much on the right track in terms of our flares out initiatives. The government is on the right track with the National Gas Flare Commercialisation Programme which seeks to create an avenue for interested investors to take on flare sites and deploy various technologies to monetise the flares. This has been given legal backing with the presidential assent and gazetting of the Flare Gas (Prevention of Waste and Pollution) Regulations 2018, which also addresses the issue of penalties for gas flaring. As an industry we have our own sets of concerns about the workability of some of the provisions of this piece of regulation, and we are engaging with government in this regard in hope of getting these addressed from a practical standpoint. Again, we also feel a consideration, by way of fiscal incentives, could be given on measured flare gas that has been monetised, as this could serve to further stimulate investments in various flare-elimination projects.

    Do you have a programmefor deepening domestic gas utilisation?

    As an association, NGA’s role in this regard is to facilitate the conversations, interactions, interfaces, and shaping of policy thrusts that serve to encourage our members to expand their footprints, as well as to attract new investors into the sector. Among other things, we have an NGA Investment Promotions and Export Relations committee that works with other regional and global gas associations, embassies, trade missions and chambers of commerce to facilitate access to information, conversations and partnerships around investment opportunities in the Nigerian gas sector. We were in Washington in June of this year to showcase achievements in gas in Nigeria as well as available opportunities for investment. At that outing we had several high-level meetings with different groups who are now looking at Nigeria with keen interest. As an association, we are also very mindful of the important of capacity-building in an industry that needs to constantly upskill itself in the face of various emergent technologies and the evolving dynamics of new gas projects and markets. We do this through our trademarked Learning Solutions programs which we hold up as a model for competency development in the gas industry.

    What is your advice to the government on effective gas pricing?

    As I said earlier, pricing will play a significant role in our ability to draw in and lock down investments within the gas industry, particularly regarding gas exploration and production, as well as infrastructure development within the midstream and downstream segments of the industry. As the NGA, we have been speaking consistently to the fact that there is need for a market-reflective pricing structure, underpinned by a Willing Buyer-Willing- Seller framework that allows investors to put their money down and be certain of reasonable returns for their investments. The government needs to step out of the pricing mechanisms and allow investments to flow, so that over the medium to long term, various economies of scale as well as enhanced competition mechanics will lead to benefits along the entire value chain, up to and in particular for the ultimate end beneficiaries – the man on the street. The government also needs to articulate a clear and consistent position regarding the currency of investments, investments flows, as well as any exchange windows that might be needed to be put in place to address currency mismatch issues as exist today. No investor wants to put dollars down and have to be paid in Naira at a differential rate which is less than that at which they are able to recover and/or repatriate their investment capital.

    Indeed, this brings us to the issue of incentivising the gas sector. As NGA we have continued to push the position that the government needs to look at gas as an enabling resource from which it will achieve twin objectives. First, we need to put in place the much-needed infrastructure and enablement for industries to grow and thrive.  This will then ultimately create a multiplier effect that addresses unemployment and social welfare, as well as internally generated revenues by way of the significant taxes government will then earn from such enabled industries. As a nation, the weight of our infrastructure gap and the necessary investment that must come in to bridge that gap must underpin the decisions we take if we are to move forward. Regarding gas, government must see it first as a resource platform for industrial development before it begins to look at gas as a resource for direct revenue generation.

    In light of the above also and as I said earlier, the time is beyond ripe for the government to begin to solicit actively for private investors to come into gas exploration and production. We have been too dependent and focused on our Associated Gas reserves and export markets over the past few decades. We are well behind in terms of active E&P of our NAG reserves, whereas we must do this if we are to utilize gas effectively to transform the industrial landscape of our economy. Again, this will call for the kind of investment capital that the government does not have at its disposal and private sector investments are key.

    As the first woman president, what do you plan to do for the association to leave your name in the hall of fame?

    I said at my inaugural speech at our recently-concluded flagship event, the 11th NGA Biennial International Conference and Exhibition, that there has justifiably been a lot of excitement about the fact that the NGA has a female President for the first time in its near 20 years of existence; and that I choose to own that narrative. It has not been an easy feat, and it has been a long journey on my part of tenacity, consistency and unwavering commitment to the very ideals for which the NGA was formed. I have been a very active member of the NGA for over 13 years, and a member of the NGA Executive Council for 11 years serving in various capacities on different committees, moving over the years from an Ex-Officio position to second Vice President, first Vice President, and now President. It has been a lot of hard work and sacrifice, but certainly a very rewarding and enriching journey of working with various Councils to bring the NGA fully into its own as voice of the gas industry in Nigeria, and the premier non-partisan interface between the government and participants within the gas industry.

    NGA has a robust framework of continuity and we are clear that changes in our leadership must not translate to a deviation from our ideals. As an Association, our four core pillars are Advocacy – the anticipation and driving of policy and legislation; investment promotions – being the leading promoter of investment opportunities in the Nigerian gas industry to both local and international investors; standing as the authoritative resource for industry data; and encouraging industry best practices/standards for safety and quality.

    My primary goal is to elevate our engagement with the various arms of government and our members, enhancing the platform NGA provides for alignment of the expectations and objectives of these two key stakeholders.

  • Stock Exchange lauds PEARL Awards

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr  Oscar Onyema has commended the PEARL Awards Nigeria for upholding the standard of the project for 22 years to become a reference point in the capital market.

    Onyema expressed this view when the Board of Governors of PEARL Awards Nigeria paid a courtesy visit to the management of the Exchange in Lagos. The Board of Governors of the Awards was led by Dr Farouk Umar.

    The Board was at the Exchange to brief the Self Regulatory Organisation of arrangements towards the hosting of this year’s PEARL Awards as well as plans by the Awards to go continental in due course.

    “We are proud of the composition of your team and the consistency with which the Awards has been organised in over two decades; and we are particularly happy that it plays the role of an independent arbiter for this sensitive part of the Nigerian financial institution,” Onyema said.

    According to him, the Exchange’s endorsement of the Award is the least level of recognition it can give and the Exchange looks forward to becoming a strategic partner of the PEARL Awards in the nearest future.

    “We are hoping we would be able to sign a Memorandum of Understanding with the Board of the Awards soonest as a way of seeking deeper strategic working relationship that would ensure a stronger Exchange, and also for us to contribute to the vision of PEARL Awards as a respected reward for excellent performance on the Nigerian Stock Exchange,” Onyema said.

    Umar said that the Board appreciated the support of the Exchange expressing readiness to work with the Exchange to strengthen the capital market through the Awards and other innovative initiatives including expanding the frontiers of the Awards to the African continent.

    This year’s PEARL Awards is scheduled to hold at the Eko Hotel and Suites in Lagos on Sunday November 25, 2018. According to the President of the Awards, Mr Tayo Orekoya not less than ninety percent of the companies listed on the secondary market were x-rayed by the Awards technical team before the list of the nominees were released.

    “Our process is a very meticulous process and we have professionals whose duty is to examine these figures from the Nigeria stock Exchange year-in, year-out. The criteria for these processes are open source and that is why the award is well respected,” Orekoya said.