Category: CEO

Several government policies meant to help Nigerians desirous of owning homes have not yielded the desired result. This is why the 17 million housing deficit, to a large extent, has remained unchanged; a figure a government agency recently said has hit 22 million. Nigerian Institute of Quantity Surveyors (NIQS) President Obafemi Onashile blames it all on the government’s inability to have a “systematic plan to build houses”. Onashile, in this interview with TOBA AGBOOLA, speaks on issues affecting the industry, among others. Excerpts:

Building collapse cases  have been on the increase . What is your take on this and can this be curbed?

Building collapse is the product of the inefficiencies in the system. If you address those inefficiencies, there won’t be collapses any more.

There should be more emphasis on health and safety, which will bring the solution to building collapse. The industry is striving for the enactment of a Health and Safety Bill or regulations to address how constructions are executed, the quality and responsibilities of stakeholders. If that Bill is made a law, for sure, it will remove building collapse.

What are some of the provisions of the Bill?

The Bill stipulates obligations of building developers to ensure that they get competent designers and the Bill also says that the designer must be competent and have an obligation to brief the employer of his obligations on health and safety. The employer must also employ a consultant specifically on health and safety that will review the design to ensure safety, as well as highlight areas that will pose a potential danger from the drawing.

The contractor has an obligation to ask the employer if he has told the ministry in charge that a construction project is about starting on the site; having been notified, the government is also under obligation to send officials to go and inspect the site, irrespective of the fact that you have got a building permit.

Beyond that, the contractor  on site, has an obligation to ensure that there is a health and safety policy. As he is tendering the policy, he must also tender his health and safety plan for the execution of the contract. He will also have to maintain a health and safety record of the processes that government can always have access to any time. With all these in place, it will ensure that quality health is involved in construction

How does this ensure structural integrity?

Part of it is that because there is quality supervision, there will be due diligence because they have a liability. With all these in place, it will ensure that quality hands are involved in construction and the issue of building collapse will be a thing of the past.

Some firms in Lagos are presently carrying it out. But why make it an individual thing, rather than a national one? It is also part of quality control.

Part of it also is that because there is quality supervision, they will ensure quality control in the materials to be used. As of now, very few people are practicing it. But because our institution is so much focused on the need for reforms, we have already started it.

So far in my institution, we have zero tolerance for quackery. If you are not qualified and you are found dispensing the services of a QS and you are reported, maximum sanction will be meted to you. We are promoting quality.

What role is the construction industry playing  in revamping Nigeria’s economy? 

The construction industry, globally, has been known to be the barometer of a nation’s development and growth. It is therefore, not out of place to expect that the key to getting out of the woods for the country lies in a vibrant and healthy construction industry. The government must make concerted effort to invest in the construction industry to stimulate economic activity. This will have a multiplier effect on the economic activity of other sectors and will thus upscale employment and the integration of modern technologies in the economy.

Construction cost is very high in Nigeria. How can this be reduced?

Construction cost in Nigeria is still very high, however, it is the industry issue that is affecting the cost of construction. If the industry is focused on reforms, obviously the construction cost will come down.

In Nigeria, apart from cement, virtually all materials are imported. The cost of construction in Nigeria is determined by the cost of materials outside the country. It is also affected by the cost of transportation. If the shipping country decides to raise their shipping rate, it affects the importing country.

The Customs are saying their revenue has increased and that they have made so much money at the ports, it falls back on construction because the increment on duties and tariffs are ploughed back into construction cost.

There are complaints that Nigeria’s hotels are the most expensive all over the world. Yes, if you are in the United States, you probably have only one generator, if you must even have. But in Nigeria, you must have at least, three big sized generators. One of them working full time, another not working 24 hours, that is a standby; then another spare. You can see that the cost is already going high. When we start adding all these, they must affect construction cost. In United Kingdom, you don’t even see generators at all because they have regular supply. If our power is regular and we don’t need big generators, that cost will go. If we are producing materials, that cost will go.

However, there is no empirical data to suggest or  indicate that construction cost in Nigeria is the highest in the world. But it is safe and true to say that cost of construction in Nigeria ranks among the highest in the world. Some of the causes are high interest rate, inaccessibility to cheap affordable funds, lack of skilled manpower and marked dependence on imported construction materials. And of great concern is the endemic high corruption in the industry.

The way out lies in creating a good enabling environment that can warehouse cheap, faster and economic design. Our taste must match our pocket. Due process must not just be in place, but must be seen to be operational. Don’t leave out professionals in the execution and planning of capital projects. Finally, infuse affordable, loanable, cheap and long-term funds into the system.

How do you think cost can be reduced?

To reduce cost, part of the panacea is to increase construction supply by the government building more houses for the masses. The government must consciously provide social housing. The UK and US today still provide social housing. But in Nigeria, they say, ah! we are told to keep off social housing, that we should cede it to the private sector or do Pubic Private Partnership (PPP) with the private sector. The private sector that is driven by profit!  For your staff to serve you for 35 years, where do you want them to retire to and you say you don’t want corruption. The man must plan ahead for his future too.

To curb corruption, provide social housing for these guys, and corruption will reduce. When the government is building social housing and the private sector is also building, and the government is doing infrastructure that it needs to do, industries will spring up; and we will now be in control of cost as we won’t be bothered about the shipping cost. We won’t be bothered about ethics because we are producing here.

There is a deficiency of housing in Nigeria. Beyond finance, we have clamoured for mortgage rates to come down; the government is pumping money, but as the government is pumping the money, it is disappearing and houses are not coming up.

We said, let’s reduce the financial aspect to improve housing; let’s look at the fiscal aspect; can we use some fiscal policies to enhance housing; the blue chip companies pay billions of naira on taxes, we collect them and we don’t know where they are going. Instead of collecting those taxes, let them build social houses on behalf of the government.

We must create the supply. If there is abundance of supply, cost will come down. Tell them if they provide 100 housing units in a year, they will be given tax rebate. It is a win, win situation.

You mentioned so many processes in the course of ensuring safety and good health in the industry, don’t you think that will as well add to the already high cost of construction?

There is no cost or price that can be attached to human life. I am fortunate to have been involved in so many projects. In any project over N5billion, a worker must die during construction. Are we saying Nigerian lives are that cheap? Now what the law says is that should there be an injury or death of your worker, you as the employer must provide the coffin, and take that corpse to the village in addition to giving the family N250,000.

Are you saying that is the worth of a Nigerian life? So, no matter the cost to health and safety, you must have to abide by those safety rules. In the oil and gas industry, they don’t joke with health and safety.

What are the reforms you think will transform the construction industry?

There are lots, but permit me to just list a few. We need urgent formation of the Construction Industry Development Board (CIDB) or Construction Industry Development Council (CIDC); a leadership body of the industry. There is need for a partnership between the government and the construction industry to get the industry producing and exporting, thus consciously improving our GDP.

Another is the adoption of modern procurement systems, procedures and processes, to run the industry more efficiently, e.g. apart from the traditional procurement system, the adoption of other formal procurement systems such as Design and Build Systems, Construction Management Systems and Project Management Systems.

Also, there should be an urgent formation of the Construction Industry Training Board (CITB) or Construction Industry Training Council (CITC); a body of government and industry collaborators to actively promote and manage technical / vocational training of skills for the industry. This may involve subsidised or attractively sponsored training programmes.

In addition, we are calling for a greater promotion of health and safety in construction processes to make it more attractive.

Finally, there is a need for an urgent creation of purpose-fit judical systems for the Industry as well as enactment of laws recognising and promoting faster dispute resolution mechanisms such as adjudication and mediation.

How do we address the issue of housing deficit and is housing for all Nigerians realistic?

First of all, there is the need for the government to evolve an effective housing policy, which will guarantee more affordable houses to the low-income earners and the masses. Nigeria, with a growing economy, needs more affordable housing units.

The government’s housing policy had failed because there was no systematic plan to build houses. The government needs to bring the interest rates on mortgage loans to one digit, because a two-digit mortgage loan regime will take a long time to pay back.

Mortgage loans should not attract more than five or six per cent interest, having such loans at 19 per cent is quite high. There is the need for the government at the state and Federal levels to build affordable housing units that low-income earner can have.

Why is the government not acceding to the composition of the construction industry board, 20 years after it was first muted?

There is a lack of cohesion in the industry. There is domination by one or two disciplines. Maybe before now, we really do not understand the vehicle we are in. Maybe some professions felt they were doing better. But today, Quantity Surveyors (QS) are doing well, at least, we have been able to keep away foreign incursion. So, they are losing more now. But we are just saying, let’s come together. And to be fair, in the industry today, we are beginning to come together.

If the professional institutions are coming together, we only need the government to also understand. We are saying to them, we know what you are going through, why not let’s come together as good patrons and address the issues. Construction can also make money for the growth of the economy; it is not only oil and gas.

The government should realise this. We are clamouring for collaboration to move the industry forward.

This construction industry board/council, how will it work?

I mentioned two boards, one is the development board, the other is the training board. Development board is going to be a combination of government and the industry professionals that would come together to create roadmaps and development strategies for the industry, just like what happens in the banking sector, where the banks and the CBN come together to form a board.

As of now, the professional bodies are already coming together. We have kick-started the  collaboration among professions; we are now meeting the seven professionals in the industry coming together and we are also using that platform to approach the government to find successful roadmaps for the industry in other to grow the Nigerian economy.

We are proud to say that in Quantity Surveying, we are now exporting QS and that our products are so much in high demand. Nigerian QS are being sought after in Africa; Europe, most especially in Ireland; they are being sought after in the Middle East, Bahrain and Dubai, if you take your NIQS certificate there that you are looking for a job, you will be quickly engaged.

But why limit it to our profession, why not make it an industry affairs, as our consultancy services can operate outside the country, our contractors can also operate outside the country?

Earlier this year, we were in Gambia for the Africa Association of Quantity Surveyors meeting and they were asking for Nigerian contractors to even come over there to help in their development. As you know, the bankers are already exporting their products. You have First Bank and GTBank all over Africa.

So, we should be looking at the construction industry, how we can develop the industry to also export. By the time you are exporting, it is then you will be able to bring foreign exchange back to the country. There should be an industry strategy to push that, so that we can use it to help our economy. It’s no more what is the government doing for us; we are now asking the government to come together with us in the industry.

How do you intend to make quantity surveying more visible and what is your assessment of surveying in Nigeria?

The immediate past President did a lot to promote the awareness of quantity surveying in Nigeria in an unprecedented manner. Starting from the parliament, she engaged the House of Representatives and the Senate that nearly every of their members know about quantity surveying. She utilised every available opportunity to make representations in the House, which is strategic because they determine how the economy should go and the kind of policies to be put in place; and if they don’t know about quantity surveying, then there is a problem. She worked hard to improve the awareness over there.

To the public, she also adopted a style I intend to continue with, and that is the decentralisation of quantity surveying promotion. In times past, promotion was seen as the responsibility of the national executive; at the state level, they were prevented from making some pronouncements without clearance from the national body; but now, she decentralised it and allowed the state chapters to openly create greater awareness about what they do. So, we now have many state chapters doing awareness programmes at the same time and it has enhanced the visibility of the profession and I intend to encourage that to continue.

The state chapters have been propelled to do more of career counselling in  secondary schools; that healthy competition among states has helped to promote awareness. We also intend to undertake sponsorship of relevant public awareness activities about quantity surveying like road walks and to be partakers in sporting activities and talk about the profession on that platform.

How does the institute intend to engage the government and help it maximise investment in capital projects?

In many ways, we intend to engage the government. In the recent past, we have been putting our house in order by promoting greater skills acquisition by our members so that we have more to offer. Having done that, we are more than ready to sell more services to the government. We are going to be engaging the government starting from offering professional cost estimation and budgeting. Hitherto, we had accountants deciding on budgets for developmental projects; yes, they do accounting. But when we talk about capital projects, what is the basis of your budget? Because the accountant signed off a cheque 20 years ago or saw the accounts of a project, he can’t use the cost of 20 years ago to determine a current project.

We quantity surveyors participate in capital project costing and management. So, we will want to engage the government in this, especially the Ministry of Budget and Planning, so that we can help in putting budgets together for capital expenditure at Federal and state levels.

Having put up good budget and after awarding projects, there is usually little monitoring of how the awarded projects end up. In Nigeria, we don’t put too much emphasis on that. In the US even after a project is completed, there is what we call forensic audit two to three years after. Someone picks the report and ensures everything is in order, but nobody does that in Nigeria.

In fact, sometimes projects are hurriedly put together and inaugurated and that is the end of it, but that way we are not helping our government in saving money. When everyone involved in a project knows that there is a possibility of a forensic audit, they will be careful because they don’t know who the government will appoint to audit the project.

So, that aspect, we want to encourage the government to consider. Now, the Federal Ministry of Finance disburses funds, but how are they utilised, especially those for capital projects? If they say they want to construct 400 kilometres of road and later the funds are diverted, who is checking? We want to encourage the government to also make this independent auditing to be given to the private sector such that they are liable for a wrong report; that way, they will always ensure the right report.

What are professionals not doing right in the quest for collaboration with government?

Collaboration is a form of marriage; we must come together, understand each other and work together. But if one party doesn’t like the other or has an agenda and doesn’t make it known, then the collaboration will not work. That has been the problem. However, if we have the same objective of uplifting our economy and moving the country from an underdeveloped situation to a developing country status, then I believe we should be able to collaborate; we are more than willing to help the government to save scarce funds to do other things and ensure that developments are up to international standards and not shafted.

What are your plans for the NIQS?

First and foremost is the growth in the number of members; as you know, the Nigerian population is increasing, human population is increasing, so our membership must increase. For relevance in the industry, we need to make up with more members and be able to provide adequate services in the country. As of now, we are barely 6,000 qualified members; if you add students and probationers, maybe up to 10,000. We are talking about a population of over 180 million people to 6,000 professionals; so we have to increase that number fast.

Part of my focus will be how to improve on the number of qualified members. We are going to be reviewing the process of qualifying albeit still maintaining quality, but attracting other brilliant minds, not necessarily from the quantity surveying profession, but from other professionals in the built environment, who are interested in quantity surveying. We can find quicker routes for their qualifications. Some engineering, building and surveying graduates, among others, who may be interested in quantity surveying, are part of the building industry and must have learnt one or two things about construction while at school. So, yes, we will seek how to improve membership.

In improving membership, we will also try to increase our income capacity so as to attract more members to the profession. As of now, we believe remuneration of quantity surveyors in this country is very low and for the capacity and the merits that we can bring to the economy, the profession must be enhanced and new competent members encouraged to practice.

We are also going to be doing market surveys to benchmark the remuneration of quantity surveying graduates compared to other professions and see how we can put it up. We will also open up more vistas of income-making opportunities by equipping our members with more skills so that avenues of making money is broadened for our members.

I will also modernise the institute’s membership structure to be befitting of a large congregation if we are looking at increasing our membership to between 15,000 and 20,000 before the end of my tenure. The structure we have is the same as we had 20 years ago when we were barely 1,000. We should be looking at putting the institute under some special interest groups or cell structures in order to be able to administer larger number of members. We will also grow the hard and soft infrastructure of the institute; we need to have a new structure for our headquarters in Abuja. We also plan to put a liaison office in Lagos to represent the national body in the state.

Since your election as the President, how well has the NIQS engaged the government?

In the last one year, to be honest with you, interface with the government has been just through Quantity Surveyors Registration Board of Nigeria (QSRBN), which as you know is still filled with Quantity Surveyors, but it is an arm of the Federal Ministry of Works.

But beyond NIQS, we are talking of all the professions, we want to meet with the government and fine-tune a growth plans for this sector. It’s high time we took the bull by the horn; it’s high time we decided our future by ourselves.

How do you intend to form the synergy among key operators in the industry?

We need to understand that the main objective for everyone of us is the betterment of our nation. When we both agree on that, then we can both strategise in enhancing the income of our profession and the income of our economy, the GDP of our country; thereby promoting our industry to be relevant in the country.

We are not talking about being absorbed, but going into partnership, coming and working together for a common goal. We are bothered about development of this nation. We are ready to come and sit with government and find common solutions. Solutions that they thought about, but that we have seen from our practice outside and from all over the world, we want to bring in to share with the government.  We want to maintain our independence; we want to bring professionalism to bear in the operation of the industry.

Leaving the government out of it, do you see the QS and the engineers coming together, is it possible?

We have to come together, we are already coming together. We have had a formal meeting of all the institutions sometime around April. We have all seen the need to come together to arrest this adversarial situation. It can’t help us. Yes, they are dominant, no doubt, but you may also have some pockets of resistance, which do not augur well. Why not let’s all work together for the interest of our nation and the upcoming generation, else the children coming will leave the industry to go and look for jobs elsewhere?

If we make our nation efficient and productive, there will be something to leave behind for the coming generation and posterity will judge us rightly. So, it is not a question of adversity any more, but rather, let’s use our diversity right now to strengthen our economy

Bola Ajomale, Managing Director, NASD OTC Securities Exchange, is leading a ground-breaking initiative to deepen domestic capital formation and provide alternatives for fund raisers and investors. A versatile financial expert of more than two decades, Ajomale, in this interview with Capital Market Editor Taofik Salako, speaks on the outlook for the financial services sector and the economy, among others.

What’s your assessment of the macroeconomic performance so far?

This year has been healthier than 2017 but the level of increased activities is not much. We anticipated a lot more in 2018 than we are actually seeing. There has been a slowdown and I think it’s going to continue slowing down for the rest of the year. I also think that there is a bit of a waiting attitude now ahead of the period of the election. A lot of people have been saying the elections are going to be difficult, things are going to slowdown and will probably lead to a run on the market and so on. I’m beginning to take a bit of a contrarian view. Few years back, we had elections, very successful one that I think surprised people more than their expectations. I don’t think people expected that it would work out that smoothly. The same kind of pessimism is being expressed now that things are going to be difficult, it’s going to be a hard time, it’s going to be chaotic and so on and so forth. Who says that we cannot do it again? We have done it once before. I don’t anticipate nor do I expect there would be a particularly disruptive political process. And I think the more people start thinking in that manner, the better prepared to at least support the system running well. What I mean is that if largest percentage of the country is saying it is going to be bad then certainly it will be. But if 40 per cent of the country or the people are saying you know we can make things work like we did the last time, the chances of us having a successful elections are higher.

Then in which case, the level of disruption to the economy, to the market and to the day-to-day business, to security, safety of lives and property and so on would be significantly less. So I’m looking forward to a good process, I’m looking forward to a quick resolution for the country to resume along its growth trajectory. We have a lot of work to do as a country in terms of moving the country forward so we shouldn’t let the politicians slow us down. That’s my own way of looking at things, and that’s my own expectations. So again, if anyone wants to try to give a prognosis right now or based on any form of foresight as to what will happen, it’s almost as close as predicting who is going to win the next World Cup. Because really, I think it’s not in the air. I think a lot of analysts have come up with three scenarios: the best case scenario where there is a successful handover or where the status quo is maintained for a bit longer and a worse case scenario where it ends up in court or worst still, where it ends up with a military coup. If you take any of these scenarios, you find out that the prognosis is significantly different for each one of them.

If we have a successful electoral process, that’s the best case scenario. In which case, I will expect that we can hit about three to four per cent growth rate next year if we have a smooth transition in an election that is free and fair with no hassles whatsoever and we get the right ministers and the right calibre of people in the right places and we get to work immediately. On the other hand of the spectrum, and I’m not talking of probability here, I’m just saying that on the other hand, so what if it ends up in the court? Or worse still, what if we end up having a military intervention? It will be very bad for the country and that can lead to immediate depression, not even a recession; a depression in the economy and the economy may collapse. So, I’m obviously hoping for the best. Yes, we can hit four per cent and on the other hand, we can destroy the economy.

Besides politics, all other things being equal, if the government continues its trajectory as we’re going, what should we expect by way of outlook in the medium term?

There is still quite a lot of work to do in the area of power sector because if we don’t get our power sector working, then industry is impeded. So I would say that once we get our power working, then a lot of industries can follow. In terms of our fiscal policy, I have one scenario about how government is crowding out private industries and I think at some event I heard the Director General of the Debts Management Office, saying that government scaled back so that private enterprise can actually go ahead and seek the funding that they need because they realised that people are sucking out all the investable funds from the economy. I think that’s really laudable and is the right way to go. The only challenge to that is however that Nigeria has now swapped its local debts for foreign debts. Which means that when you’re paying back, you’re paying back in dollars; it means that all your interest payments are going to be in dollars,  in which case you must really try very hard to generate  foreign exchange so that you can afford those loans.

So there might be a lower coupon but by the time you factor in devaluation, there’s a possibility that it becomes extremely expensive. So it must be complementary that as we’re raising foreign debts, we’re also raising our capacity to generate an income, which means that you need to improve local industries in generating exportable products; which means that there must be value addition into everything we’re doing. The time has passed that we would be selling raw materials and all that and be buying back the finished products. We really must encourage local production. Again, it goes back to power; it goes back to infrastructure; it goes back to roads, it goes back to supply chains, to efficiency in the production process. It goes back to even human capacity. So these are all things that to varying degrees I think the government has formed plans on. Again, the government has focused a lot on the Economic Recovery and Growth Plan (ERGP) and we’re actually working somewhere in that spectrum as well and I think that’s a really good focus to have.  I think the ERGP is a very good strategy for government to follow in that, that growth and recovery plan would at least focus everybody’s mind on the fact that we need to  put our heads together and develop these particular areas and they have identified six major areas where attention should be paid. And I think the ERGP shows a structure and a direction. Besides, I think however that government needs to get more people involved in it and I really do think they need to hammer it into people’s consciousness so that it can collectively work. If we can do, then I would say yes we’re in the right direction on that one.

What is your view on budget preparation, passage and implementation?

You know I have said in one or two discussions we’ve had in the past especially on budget passed in previous years I always say that the plans and policies of the budget are one thing; implementation is really what matters.  You can argue over a figure of N2-3 billion or N1.5 trillion, but if you don’t get it approved by the September, if you’ve not started working with that budget by third quarter of the year then I stand to doubt the veracity of those numbers. I start to wonder whether we’re really working with those numbers or whether these are some collections of figures that we’re presenting in order to make a certain statement about our policies. If we’re going to have a budget and if a budget is really driving our actions, if it has not been passed by the third quarter, then what it means is that no work has been done up till then. I don’t work in government so I’m not an authority on it. But to my understanding if it has not been approved, then what have you been spending? I don’t know how it works.  The way it works in our system is that you pass a budget before you can start to work with it. So if you have not passed it, then what do you then do? I don’t know why signing a budget becomes such a problem. The implementation also matters, not the numbers alone.  The question to ask is, are we really working with the budget in this country? I really don’t know. I find it very difficult to talk about budget in this country. The other way to look at it, how many times has Nigeria passed its budget in the first quarter of the year in our history as a country? I don’t know. I’m not sure it’s very high. So again, I think we’re putting too much attention to what the budgetary process is saying. But the question again is, are we really working with it? Or should we not be more disciplined in working with it? That’s probably the discussion we should be having rather than what’s inside the budget itself.

What priorities should the government must focus on?

I like the fact that the government is focusing on tax. That’s fantastic. The reason is that a taxpayer tends to pay attention on how his tax is being spent and all that. Unfortunately not a lot of people are on the tax net. I wish they could say taxpayers only should vote; you will see a difference in how many people pay their taxes. And that’s just tying the economic and political side to start with. The other thing I think they would probably want to do is to look at our health system. We started doing something on the pension side on how to make the old people when they stop to work. I think we should do a lot more in that regard. I think our education system is critical to the survival of this country. And why do I say that? The numbers that have been touted around about those not in schools is alarming. But again, I say we do have more young people in this country and young people are only an asset to a country if they are engaged; if they educated and if they are enthusiastic. If they are not enthusiastic about the country, or they are not educated then they can’t think for themselves, they can’t create anything; they would continue importing. So again, it creates a problem for the country. So education is critical, health and all. We talked about foreign exchange a while ago. These are some of the ways by which we can manage our foreign exchange if we can afford to take care of our health and not have to go abroad for medical tourism as it were thereby draining our forex. Let’s put the money into creating sustainable services that would actually carry the country and allow it to stand on its feet.  Those should be the priorities.

We have seen sustained decline in the stock and equities markets  this year. What do you think is responsible for this?

NASD hasn’t had a sustained decline. And that’s probably because trades on the NASD tend to be bulkier, they tend to be fewer and most of the investors tend to be investors who are taking a stake in the company rather those who are just trading in a portfolio. So we don’t have steep downward movement of prices as experienced in other segments of the market. We tend to see a bit more stability in the activity by some strategic investors.

Having said that, various reasons have been given for price decline in the capital market. Maybe profit taking, reduction in interest in Nigeria and all sorts of thing. There are so many other different things that have impact on the market. But I think we also need to keep in mind that investors generally would compare the price of the market to what you are paying. So if you are dealing with almost 50 per cent of the market that are foreign, it means that these are people that can flee very easily around the world because at anytime they are looking for opportunities. So when we have better opportunities they would be back. I think this is just the time for Nigerians to look into investing in equities. If they lock in now, then if foreign investors get back to the country, they would be forced to buy from them. What tends to happen is, foreign investors just go in and out of this market which I don’t think is right. I think this is the time Nigeria should lock into the equities market. If they lock on now by the time the foreign investors come back, they will buy it from them.

You have talked about the impact of portfolio investors on our capital market. What can be done to deepen domestic savings and investments?

That’s an age-old challenge. In some parts of the world, for every naira that you put aside, the government adds maybe 20 kobo. In some parts of the world if you start your child’s education fund early, for example let’s say you start your child’s education tax fund when your child is born, for every naira you put aside, the government would add a certain amount. So if you put aside N100,000 yearly, the government will join you in putting N3,000 or N5,000 for the education of the child provided you don’t touch that money until the child is 18 years old when he is due to go to the university. What that does is that it creates a big education savings fund for the whole country and the country would be able to educate its young. It also forces people to save money. And because the government is giving an incentive as well, it is also creating a tax shelter for the savers as well. You can think of a thousand and one different schemes to encourage savings. But sometimes, the problem is not with the schemes, the problem is with the number of people who have the funds available to save. Government must also create job opportunities for people to earn incomes and make savings.

What can be done to actually incentivise companies to list on the stock market?

Companies need to see the advantage in doing anything. Some people have said let’s do it by fiat and so on. But if you try and force companies what is going to happen is that that company would decide that it wants to remain a private. So maybe that‘s not the right way to go. The best way to go, you’re right, is to create incentives that have very clear-cut advantages that the company can see that if I list on NASD, then I can get this advantage. I think that’s what needs to be done absolutely.

So what are those incentives you think would probably encourage these companies to come to the market?

Of course if there is a tax advantage and they are in a lower tax bracket. I always start from the position of tax. If there is a lower tax bracket for companies that are listed on the NASD then it would help a big deal. If the companies that are listed on the NASD are able to get a procurement benefit that would help also. For instance, you know when you go through public procurement if you are given prior consideration because you are owned by Nigerians rather than you being a foreign private company then it makes sense for small private companies to allow more Nigerians in and register themselves as public so that they can get the advantage. Again, maybe the market should make it cheap and easy as possible for companies to come and list. Of course, they should be able to adhere to the rules of the market.  If it’s easy for them to come in with these incentives they can come in. You can see the reasons why they are coming into the market. Again, the incentive, especially the way we are going about it, is that we are encouraging the small companies to come into the market. What had happened a lot in the past was that companies would start off by way of getting bank loans and then they ran into difficulty in paying the bank loan and interest and they now approach the capital market in order to be able to pay up that debt. I think that is the wrong way of coming into the capital market. I think the best way of encouraging companies coming into the market is to get them to raise their funding initially right from the scratch. And gradually they would be listed and they are the patient capital that we are waiting for. That’s what we are doing with NASD portal by allowing such companies to grow. So we are actually growing them rather than saying that we would force them.

Specifically, what are the advantages of listing on NASD platform rather than others?

If you list on NASD, you will get publicity that you exist first and foremost. Already, we have about 38 companies on the NASD. We categorised them into blue, pink and red. Blue means those who are up to date in their financial reporting. Red means there is some kind of caveat on the companies and so on. With the NASD portal, shareholders get a price quote, so they don’t need to go to the company secretary each time they need to know about share prices and all. It is a channel by which you can send information to your shareholders. So people tend to invest in companies with liquidity in the shares. Before we came into the market, there was  opacity in the market, many people don’t know what is happening. Again, it is very easy to enter the OTC market. The rules are lighter and less stringent to a large extent and easy for companies to comply with and it allows companies to grow their capital. The requirements are fairly similar to listing as per the rules by Securities and Exchange Commission (SEC), so it is not a very heavy burden on the companies. Our focus is on the companies; our focus is on the shareholders and ensuring that the companies are responsible to their shareholders. So that’s where our focus is on and that’s why it makes sense for companies to come and list on the NASD.

What are your plans to deepen the OTC equities market?

First is to invest on our plans. More portals are coming. We encourage growth in the country, because we are focused a lot on the growth side of the market rather than the big company side of the market. We had an initiative with the football clubs but we put that on hold until the end of the political process because political decisions have to be made in some instances. All of these will deepen and broaden the number of people participating and the number of companies as well that are trading in the market.

 We are using a purely home-developed trading platform. I think the way we are going to continue growing is to internally upgrading and improving on that system as a homegrown technology. Again, knowing that we have a very dynamic fintech industry in Nigeria, we are interested in working closely with them as well, especially companies that are trading, to use and deepen their products.

NASD is owned largely by brokers who are also traders on the platform too, so how do you forestall conflict of interests?

We are governed by an extremely professional body. It comprises six to eight committees, which deal with audit, rules of membership, technology, finance and investment; and we have the loans committee as well. We have a standard we want to maintain as a market. We are not the first market that will be owned by its constituents. Even if you look at FMDQ, it is owned by its constituents. In fact, most Exchanges are owned by the people who trade on that Exchange at least initially until they decide to sell their shares to outsiders. We actually do have non-brokers who are partners and who are part of our shareholders base as well. When you want to have a good market, you must have a good governance process. So really the conflict of interest is extremely limited because shareholders are not going to come and say because I’m a shareholder, I want certain things. It doesn’t happen, we have rules. We are governed by rules, processes and procedures. So it’s almost non-existent.