The Nation Newspaper

Category: CEO

  • ‘Fed Govt must tame spiralling inflation’

    Though inflation rate has continued to drop in the past 14 months, it is still high at 11.14 per cent. Institute of Chartered Accountants of Nigeria (ICAN) President Razak Jaiyeola believes the government must work harder to tame it. He told Charles Okonji in Lagos that members of the institute working in organisations which do not remit workers’tax are now obliged to report to the Inland Revenue.

    What is your take on accounting regulation in Nigeria?

    The Institute of Chartered Accountants of Nigeria (ICAN) came into being by the Act of Parliament in 1965. We are empowered by that Act to regulate the standard of accountants in the country. So, that is how we started establishing standards for the regulation of accounting. For this reason, we introduced a syllabus which we review from time to time. We also embarked on regular training for accountants, and we call it Mandatory Continuing Professional Education (MCPE). We recently reviewed the Code of Ethics of members whereby they are expected to comply with a law that mandates members to disclose any organisation where they are working or where they are acting as external or internal auditors cutting corners to relevant authorities.

    We have introduced whistle blowers policy for them to alert the relevant authorities about the shortfalls of those organisations that are not living up to their responsibilities, and the institute will support them, when they run into trouble. Members of our institute came together to form the International Federation of Accountants (IFAC), which today consist of three million chartered accountants all over the world, and we have representation in such body. We have over 45,000 accountants in Nigeria, and over 150,000 students. We also have about 20,000 accounting technicians, which are also called junior accountants, and they have over 250,000 students.

    What is your position on strict enforcement of standards in the accounting profession?

    We have Professional Practice Monitoring Committee, which the council has set up. Members of the committee pay monitoring visits to organisations and they write reports to council to tell us how the members are faring in the professional practice. They go there with the programme of what to look for, standard of employees, the type of working programmes they are using, the kind of training the staff are subjected to, because there is minimum requirement for every member, every year. Mandatorily, it is expected to preserve credit hours. We also look at the ethical standards. Recently, the institute bought into “NUCLAR” programme, which encourages our members to disclose any un-ethical behaviour by some organisations. For instance, if an organisation defaults in paying or remitting deductions from employees salary to the appropriate authorities over time, the accountant in such organisation is expected to report to such management that it is against government regulations. If they don’t do the right thing after the caution by remitting the deductions from employees’ salaries into government account, then our member would report to the relevant government authorities about such happenings, and make a report to them. But it is the business of relevant government authorities to take up the case. For instance, it is the business of Lagos State tax office to charge any of the defaulting companies within Lagos to court for prosecution.

    Do you prosecute erring members? If yes, how many have you prosecuted recently?

    As regard ethical behaviour, any of our member that is found wanting in whatever form, we expect the public to make a report to us. First, we would arraign such member to face an investigation panel, which will subject the member to interrogation, and when found guilty, would be taken to the tribunal, thereafter, appropriate measures would be taken against such a person. So, our members know that they are not free to behave anyhow. That is the way that we enforce standards in the profession. Every year, we always have cases that we treat and once a judgement is given, it is published on the dailies. They have not been too many of recent, because our members know that the tribunal is up and doing. At the tribunal, we ensure that we are very fair to all, without perversion of justice.

    Are you satisfied with the managment of the economy, especially its debt management strategy?

    First, the country must curtail its appetite for imported goods, diversify revenue sources, revive Ajaokuta Steel Mill, and tighten security measures, while the ease of doing business project must be continued with vigour. In every budget, the government sets aside a certain amount to repay what it owes. Today, what the country earn is not enough to service recurrent expenditure, capital expenditure, and to pay debt. So, we are running at deficit. If we take a look at our infrastructural deficit, we find out that it is huge. At the moment, the government spends about 30 per cent of its revenue to service debt. It is not an easy thing to do.  So, for the government to take us out of this problem, firstly, there are lots of assets lying idle all over the places. What exactly is Dodan Barracks doing at Ikoyi, a prime location? Look at the barracks in Maryland, the Ikoyi Prison, and the Federal Government Secretariat, all at prime locations, lying idle and wasting. They should sell them off, move the barracks away from prime locations. This is not done anywhere in the world, that the government would just be tying down resources. We have a lot of money in the economy that is wasting and we are talking about diversifying the economy. Look at Ajaokuta Steel Mill idling away. All these assets are the things that we should pay attention to. We have the Economic Recovery Growth Plan (ERGP) document which we should implement it faithfully. What about the ease of doing business? We still have a lot to learn and to improve on. Diversifying into agric means that we are diversifying our sources of revenue, we have been diversifying for years, but are they effective? We should be thinking of diversifying our sources of revenue to bring in forex, which is very important. A lot of us will say that Nigeria is very rich in oil. Look at the volume of oil we generate compared to Saudi Arabia, so we cannot say we are rich.

    The rate at which Nigeria population is growing is alarming. Around 1960, Nigeria’s population was 42 million, and UK’s population was 56 million, but by 2015, UK was 62 million and Nigeria is over 180 million, and by 2070, Nigeria would be about 550 million, and UK would still be under 80 million. What is mind boggling is that Nigeria’s population is growing at five million per annum and we are not doing anything about it. The problem is that now, we have over 180 million people sharing the amount of resources or revenue we shared 10 years ago. So, these are issues that we should confront squarely as a nation. We have to control inflation, we have to control price, and we have to manage our oil production. These are key areas that we should seriously looked into. As an institute, we are having stakeholders’ forum, where we would tackle the issue of corporate governance, we will tackle issues of tax policy of this country, how we can make contributions to the government. In the next stakeholder’s forum, we are going to handle the economy; we are going to tackle the global economic outlook, the regional, and the cyclical changes that take place. We are going to create awareness within our members, to drive home to them the indicators that are guiding this economy. We would pay a visit to the President, and the Minister of Finance along with all other stakeholders. We are developing a stakeholder’s package, such that within the next few months, you will see our institute coming frontally in advocacy, just like we used to have in those days.

    How would you describe the ongoing anti-graft war in the country?

    People believe, and I also believe till tomorrow that President Buhari is not a corrupt politician; he has tried using the instrumentality of the Economic and Financial Crimes Commission (EFCC), Indpendent Corrupt Practices and Other Offences Related Commission (ICPC), Directorate of State Security (DSS), Police and so on. But the level is far below our expectation. He tried to deal with the corrupt judges, though we didn’t record much success, but he has sent some signals that people should sit-up, and we have seen changes. Secondly, the introduction of special courts to try cases and to accelerate judgement is a good step in the right direction. He also tried to put in place, systems to avoid delays; he introduced a system for voluntary declaration of assets, and the government introduced some investigative techniques in order to get judgement. That is where the forensic department of ICAN would collaborate with government to ensure that we try as much as possible to give skills to the government agencies. We are going to train them on technology-assisted investigative skills to make sure that they are able to deliver on both the whistle blowing efforts of the government. There are other areas that are yielding dividends, the government should keep it up and make sure that they are very sustainable. The government should keep faith with the remuneration of people that blow whistle. With all these steps, we do hope that things would continue to take shape.

    Though the economy is said to be out of recession but not out of the woods, how did the country get into this mess?

    The real genesis of recession is our uncontrollable appetite for importation. The things that we cannot produce are what we like. When you look at our roads, what you see is Honda, Toyota, Nissan, Mercedes Benz, and all sorts of imported vehicles, and other items. Efforts by government to import Completely Knocked Down (CKD) vehicles are not intensified, except Innoson. What is the big deal? Look at our phones, everything is being imported. One of the most worrisome is the reckless import of apple. Look at rice. Today, rice import is no more, this is because there is a serious enforcement on rice policy, and in a few years from now, we would be earning forex on rice export. And that is the way to go. The government should diversify our economy into agric, solid minerals mining and value chain development, and into local sources of revenue.

    To what extent do your members in the financial institutions  use  local software?

    The issue of Local Content is very necessary to us, not only with respect to bankers, but to all technology consumers. The Nigerian Information Technology Development Agency (NITDA) is an agency of government that is supposed to enforce it, but we found out that those banks and government agencies, even the Central Bank of Nigeria (CBN) and other agencies of government prefer to use imported software. But thank God that the ‘Executive Order 5’ has addressed this problem, mandating that local technologies must be patronised and accorded preference. So, we expect the government to enforce Local Content. We have this local content in the oil and gas industry. There is the Nigeria Content Act and there is an arm of government that is enforcing the law in the industry.

    We are going to collaborate with the Institute of Software Practitioners of Nigeria (ISPON) to fight the violation of Local Content in the software use. This is an area that we are very much interested in, and by so doing, this will lead to creating more employments, and before you know it, we will start exporting software.

    What are your plans for ICAN?

    ICAN is carrying out an in-house upgrade of members that will usher in the dream accountants of tomorrow capable of competing anywhere in the world.

    ICAN is targeting at producing digital accountants in every sense of the word by making members embrace Information Technology (IT) and the opportunities that go with it. I see our members participating actively as world acclaimed digital accountants with the review of ICAN syllabus in this direction.

    Our intention is to see ICAN taking over the whole of Africa. There are lots of opportunities out there, and once we embrace IT. Within the next few weeks, we would be deploying tele-conference, and through that, we would be bringing down the cost of holding meetings such that people that have to travel from all over the places for the purpose of attending meetings would no longer do so. We are going to collaborate withAhmadu Bello University Business School. We would bring international speakers through the telecoms, thereby bringing the resources that were not ordinarily available. Capacities that are lying idle over there, and cutting-edge services

    I see our members practising with key accounting professional bodies in the world, we have signed agreement with England and Wales, and within the next few weeks, we will call all our members. We have reviewed our syllabus such that no other accounting professional body in the world would be a threat to us.

     

     

  • ‘Weak insurance firms should be allowed to die naturally ’

    The need for a tougher regulatory regime in the insurance industry can no longer be wished away. This is because of challenges, such as rate cutting, poor corporate governance and others, prevalent among operators. The sharp practices have clogged the industry’s growth path. Against this backdrop, the Managing Director, FBNInsurance Limited, Val Ojumah, says weak operators should be eased out. He speaks with Omobola Tolu-Kusimo.

    Insurance penetration in Nigeria has remained at 0.2 percent, gross premium income around N300 billion with 1.5 million insured. Do you see any change this year?

    I hope we all understand how insurance penetration is measured. It is not a reflection of the size of the population; it is more about total insurance spent on the Gross Domestic Product (GDP) and if you look at the distribution of our GDP, you will understand insurance penetration is not going to grow overnight. That does not mean the industry is not growing, otherwise it won’t be that attractive to investors from across the world. So, yes in 2018, you will see growth as we saw growth in 2017. Very clearly, we will all prefer a higher growth when you look at the opportunities in Nigeria. But that will not happen overnight; it will take a while for several reasons. You know what the financial services authority is doing in terms of financial inclusion and the level of unemployment in our economy. Several workers are not being paid their wages on time, yet insurance spent has to come from these sources. Many of the businesses are not doing very well, leading to retrenchment of workers in the economy. Many others working are not being paid well. So where should we expect the massive growth to come from? Yes, the industry has its own challenges which in my opinion are addressed more rapidly than the changes in the economy. You will see growth, increases in penetration but it is not going to happen overnight. The regulator is doing a lot to encourage both consumers and operators alike. All of these will manifest into an inclusive growth sometime in the future.

    Pension was carved out of the industy and despite its success, mortgage remains a big challenge. How can it0 be addressed?

    It is really important to compare apples to apples; even green apples are different from red apples. You are talking about the pension industry and looking at the insurance industry and you are talking about research. Many companies do research in Nigeria. I am also aware the Nigeria Insurance Association (NIA) also has a robust research department. There is a lot of information you can gather from the National Bureau of Statistics (NBS). The changes that culminated in the Pension Reform Act (PRA) cannot be attributed to any individual institution and that is because pension liability affects many more people than just a few people. It is a critical social function that when people work for several years and they leave service, that there should be some kind of protection for their survival until they die. It is an international thing. Our pension in those days was a non-contributory  at the government level. The private sector  had a non-compulsory or universal approach to pension. What the PRA did was to bring all this to bear and put it under one legislation. Many private employers were not obligated to provide some kind of end of service benefits. The government that had a contract with the employees to provide end of service benefits were not funding it, such that many people were leaving service and were not receiving their pension benefits. These are a few of the problems that the PRA tried to address. Yes, they had to study several end of service benefits across the world to come up with what they came up with. There is no universal approach to insurance as such. First of all, the aspect of insurance which are considered to be a necessity that are common across the world includes liability for road users across the world. Even in some states in the United States, third party liability is not compulsory. In Nigeria, the government has addressed the issue of liability to road users under the third party insurance Act. Two, liability for death in service for workers is considered a social function so they didn’t leave it for employers to decide whether or not to provide for it. Previously, when it was not compulsory, many employers were not buying group life insurance for their employees and so when there is a death of an employee while in service, it was left at the mercy of the employer. This has been addressed also by the PRA by making group life insurance compulsory. There was also the law of workers compensation which is a universal law. The idea behind that also was to protect employees, workers against injury and or death whilst working for their various employers. This had a universal approach but each country had different forms of legislation to address the problem. In Nigeria, we had Compulsory Workers Compensation Act, which as you are aware now that responsibility and liability has been transferred into the Nigeria Social Insurance Trust Fund (NSITF). So the areas of insurance that should be addressed in a global basis have been taken care of by one law or another. The issue of mortgage or mortgage funding is not an insurance issue. Mortgage protection which is protecting the mortgagor and mortgagee is addressed via insurance and it is not compulsory by law but by contract because everybody cannot go and borrow money to build a house. So you need to separate approaches to different businesses. Insurance is a business which is typically, a private sector business. It is however the responsibility of the industry to design appropriate products and distribute those products to target customers. There can’t be legislation and I don’t know of any legislation anywhere in the world that is attempting to force businesses to do things in a particular manner, I personally will not support such legislation.

    What about compulsory insurances in the country?

    Yes but like I explained, there are compulsory insurances and I have described some of those compulsory insurances and why they exist. If you look at the history of motor insurances anywhere in the world, only the few rich people were able to afford a motor vehicle. But many more people had to share the road and typically, the rich that had the motor vehicle were injuring and killing innocent road users that they had to share the roads with. If there was no motor insurance third party liability, they will injure those people and nothing will happen. So the third party liability is primarily designed to protect road users not necessarily the owners of the vehicles. Again, you can see the social function in that principle. What kind of compulsory insurance do you want the Nigerian government to do? Force you to insure your house? We even have some legislation that is difficult to enforce. Why don’t you ask the government to insure the State House or the federal secretariat because under the law, that is supposed to be insured? But they are not insured. There are certain things you force people to do that won’t make sense so they won’t do it and enforcement will be difficult.  To me, we have enough compulsory insurance and we don’t need any more.

    What are the problems hindering insurers from getting good returns from compulsory insurances?

    Motor insurance and third party liability has been compulsory for years but in every society, there will be people that will not obey the law. It so happens in our own society; many people don’t obey the law. So you can either attach it to the way it is enforced or the culture of the people.

    Rate cutting has remained a major problem in the industry. NAICOM came up with a guideline decreeing a particular rate for compulsory insurances. What is your view on this?

    I expect that many people support it; I also think that many people will go against it.

    Some will say that it is a free market economy so you should not legislate on pricing and they are right. Others will say in order to protect the consumers and all the operators from extreme negative behaviour and in order to protect the market from collapse, there should be some form of control on pricing. So it depends on your take. For example, do you believe that petrol price should be controlled by the Federal Government? Can you see all the problem price control costs? One side will say they should not control the price because it is a business, let those who can afford it buy it. On other side, you want to protect a section of the economy that must move around but don’t have enough income to cover cost of transportation. So there has to be some kind of balancing.

    Some operators are not happy with the micro-insurance guideline released by NAICOM? What do you think about it?

    I have not seen any comment on micro insurance; I don’t understand why anyone would be against that. For instance, some that are already offering micro-insurance as a window in their company are opposed to opening up a new licensed office for microfinance. The clarification I got was that each case will be treated on its own merit. So if you are already practising some form of micro-insurance, I guess all you need to do is to present your case to the regulator and they would adjudicate on your case. I can’t remember the regulator making a clear pronouncement that if you are running a micro insurance, you will still take a licence. Previously, yes but now I think he is looking at it more closely. Some of these things are just evolving and that is why it is called an exposure draft to the industry and to the public. It is not yet a law or regulation. I think what people should do is sit down, go through the details, bring out informed opinion and send it to the regulator before the final draft is done. Anyone complaining about an exposure draft is not helping his or her cause. You should be more articulate.

    What impact will the new micro-insurance guideline have on your company?

    If you want to be specific on my company, I would say it would benefit from the legislation. Some people have said the problem with these guidelines and regulations that we have in the industry are results of enforcement, I think we have addressed a little bit but to a reasonable extent.

    Enforcing the laws on operators has been an issue unlike what obtains in the banking sector. What is your take on this?

    You know what they say about good or bad government. The saying is that the people get the government they deserve. I agree that enforcement is not where it should be. The question is: ‘Is it getting better?’ What happens when the regulator wants to do certain things in a certain manner and he wants to enforce it? The operators would say the Commission is overbearing and lots more. I recall when the issue of ‘No premium No cover’ policy came up. The operators that the regulator was trying to protect were the first to go out to the public and say it was a useless regulation. They said it is not enforceable. Today, that policy is one of the best things that have happened to the industry. So in terms of enforcement, I think the current regulator know the challenges and that is one thing he wants to get right. When a regulator says I am going to do this in this way, most of the people that don’t want to comply with the regulation go against it. You will see all sorts of solicitous movements trying to make sure that the regulation is not enforced. If the operators and regulator stay together and come up with one voice, enforcement will be easier.  Talk about this price thing, there are insurance companies that sells third party liability at N1,000, N1,500, N2,000. They are not small insurance companies. It has always been fixed at N5,000 for many years but because of competition, which is what they call it, the rates are reduced. Some operators that are doing what I call cash flow underwriting are prepared to take any amount just to remain afloat. And these are the same people that would come and complain against enforcement that are regulations. This is the case in a market with so many players and very few strong players. When people compare banking industry with the insurance industry, I say to myself: they are not comparing apple to apple. Few of the old banks survived. Some of them are strong; others are weak even with interventions. I think what we need to do more in insurance industry is to actually allow the weak companies to go out of business. The only way they close insurance companies in Nigeria so far has been via capitalisation. Only those that could not capitalise were allowed to get out of business. Ever since it was done between 2003 and 2007, many more weak companies have emerged and all you have seen is regulatory action and regulatory intervention at the board and management level. So far, since 2007, no company has lost its licence. What has happened, because of that situation is that some companies that were weak have grown weaker over time and are doing just anything to survive; and that cannot be an ideal situation. It can’t be a situation that you allow to continue. Now, if today, the regulator comes and say: ‘I am shutting this insurance company down,’ you will hear all sorts of opinions expressed in the public space.

    NAICOM has said enforcement will get very tough this year. Are you looking forward to that?

    I think for any business in the industry to survive today, one of the number one challenge would be compliance and risk management. If you don’t get compliance and risk management togetherthis year, you will be in danger.

    So, are you prepared against any danger?

    At FBN Insurance, we pride ourselves to be 100 per cent compliant with all regulations. We are ahead of the industry in risk management and corporate governance and sometimes we are alone there. We really take those issues seriously and that is why we have never been fined. We are probably one of the few companies and I don’t know of any other that did not receive any regulatory fine in 2017. We are probably the only one without a regulatory fine in 2017.

    Does it mean you do everything they ask you to do?

    We strive to be ahead. We don’t only comply but we know the direction. We know what is good for the business and we try to do it right at all times.

    The economy seems to be improving. What is the effect of this on insurance business?

    The businesses we capture are doing better. Insurance companies are benefitting at least from compulsory insurances. We received their premiums because one of the greatest challenges we had in the past was how we will receive our premium as at when due, both from corporate and individual world. If the businesses are doing better, companies will also do better. Many more people and business will buy insurance. The reality is insurance premium is probably the first one to be cut when the business is not doing well or when an individual loses his job. People would rather take the benefits of insurance without paying for it. But overall I think this year will bring out the best in insurance companies particularly if they are able to align regulations with the opportunities in the market.

    FBN Insurance is about eight years old and it has since come through the performance chart of the industry, in the first five life insurance companies in almost all the indices. How did you achieve this as the pioneer CEO?

    God has been merciful; we have lived more by his grace and when you are under God’s grace, good things happen to you. We have a great team, our directors are excellent, and our shareholders encourage us to do the right things only. We have a good strategy, and our executions are perfect. These are things that are keeping us going and we are making sure that we keep the resources while we acquire those that we don’t have.

    Give us examples. I am aware of your belief in the agency system as a way to reach the grassroots?

    I will give you a bit of a hint. In life insurance, you are either selling to a group or selling to an individual. You are either selling a product by legislation or by your own design. So you have the group life which is legislated. This is sold to employers of labor which is controlled by insurance brokers where the issue of rating cutting remains a big challenge. This is also why the regulator is intervening and that is on one side. There is what is called group business on the other hand. So there is group life, group business and individual life. I think every company should know their strength and use what they have to get what they want. There are these opportunities out there and you know your personal characteristics. There is what is called a misfit and I have described what a misfit is for you in my own perspective. So we have full corporate governance company, we believe we are ethical in our business practices. We think we should take all stakeholders interest together in doing our business. There is an opportunity in group life market even made easier by law that made it compulsory. In between an insurance broker, there are professional advisers to employers of labor on group life. So often times we see that during the interface of insurance brokers to the consumers, that the practice got its own challenges. You need to understand why and how insurance brokers behave in other to survive. It is a very big competitive space and many of them are owned by individuals or families. How much ethical practice and corporate governance is applicable there?  I leave it for you to judge. But we have found it very challenging to do business ethically through that channel to reach the consumers. We also found out that the pricing of those products are so low that we may not meet our cost.  So we found out that we are small in corporate space because we have looked at who we are and what we can do. We concluded that we don’t have the strength that other insurance companies have and we will be a weak competitor there. What we decided to do was to create our own market and we are exciting and giving our market what they want. We are creating value and making it resonate in the life of our consumers. We are not able to do that in a corporate world but we are able to redesign the space which brings the kind of customers we need. This is our story in a nutshell.

    Can you provide an insight into your 2017 audited results?

    We have continued to grow our balance sheet. Our financial statements showed a general growth across various measurement indices. The company’s profit before tax (PBT) grew by 37 per cent from N3.11 billion in 2016 to N4.26 billion in 2017; while the gross premium written (GPW) grew from N9.9 billion in 2016 to N19.6 billion in 2017, a massive 98 per cent increase. I credit our strong performance to a combination of factors including continued penetration of the retail insurance space, strong cost optimisation culture, consistent and efficient service delivery across available touch point, exploitation of new service channels, disciplined risk management, and a well-motivated staff. Our overall performance once again reinforces our strong earning capacity and robust capital base which have put us in better stead to accommodate and sustain future growth. Our Return on Equity (RoE) rose to 34 per cent (up from 29 per cent in 2016) and we achieved a post-tax Return on Assets (RoA) of six per cent. In a life insurance space, we have since considered ourselves the company to beat and it is manifested in anything we do.

    How would you rate your regulator, NAICOM?

    Realistically, I must give it to NAICOM and the commissioner for insurance, Mohammed Kari as an individual, including all the people before him. They worked under very difficult conditions. The commissioner’s job is the type that will make or mar a man. If you check the history of those before Kari and do a comparison; you will see what I am talking about. This is not a piece of cake. In that position, the more you want to do, the more challenges you get.

  • ‘Cement is less than 20% of building cost’

    ‘Cement is less than 20% of building cost’

    The high cost of cement remains a huge problem, which seems to have defied solution. Reason: the country’s cement production capacity outweighs its demand. “I wouldn’t want to go into that…there is an emotional part of it and we tend to be emotional,” says the Chief Executive Officer of AshakaCem Plc, Rabiu Umar, in an interview with reporters during a tour of the company in Gombe State. He speaks on other issues, including the task of keeping the company afloat and its corporate social responsibility cases. MUYIWA LUCAS was there.

    Many people think the price of cement is high, considering that Nigeria produces more of the product than it needs. What’s your take on this?

    I wouldn’t want to go into that. It is very controversial because there is an emotional part of it and the real part of it. And typically, we tend to be more emotional. I don’t want to go into details but it is not quite true that all our raw materials are locally sourced. You can find out how much cement is in Chad and Niger in dollar and make the comparison.

    The price of cement is usually blamed for the prohibitive cost of housing. To what extent will you say cement influences housing affordability?

    Cement is less than 20 per cent of the total cost of building construction. So, you may want to ask what is the correlation between cement and the cost of building. The global average is six per cent; this is a verifiable and scientific information. Depending on the building practices, for instance, not everyone uses hollow blocks, some use the formwork. That way, there is a lot of saving. So, there are a lot of building practices that help to bring down price but when you look at the price of blocks and cement, the global average is six per cent. In Nigeria, it may be seven per cent but I don’t think it is up to eight per cent. Typically, people think if the price of cement is half of what it is today, it increases affordability or the number of people that can afford to build their own homes. In a sense, you can say yes, but it is only six per cent. The rest of the 94 per cent is in the finishing. You can build and finish the carcass of your building and you are just 30 per cent of the way including the concrete, beam and all. You find out that the cost of one door will probably build the walls. That is where most of the cost goes.

    How are government policies impacting on your business?

    I think there are two levels to it. Government policies in a sense have helped us to operate because without a framework, you cannot run. But is there room for improvement? Of course, there is. One of the key things that are really confusing is multiple taxation. There is the federal, state and local government tax regimes. And sometimes, when you stack up everything, it is a bit confusing to understand at what level it stops. Multiple taxation is one of the key drivers of business that every business owner talks about in the country. It also brings about uncertainty; you plan something you want to do this year and suddenly, something comes up that is not in your plan but can have an impact on your planning and result.

    What does the cement industry contribute to GDP?

    It depends on the level you take it from but between N18 and N20 billion a year, depends on the demand. It was a little higher the previous years but it dropped.

    How did the lull in the property market affect cement sales during recession?

    First of all, Nigeria went into recession and anybody who lives in Nigeria knows the impact. The cost of anything that has any correlation with foreign exchange has doubled. That is a reality. The income left after taking care of basic needs has gone down, and naturally, there is no way it won’t have an impact on certain sectors that are not immediate, like food. And then of course, the economic situation means that the market is not growing as fast as expected and I think that’s a publicly available information.

    How do you control your operations so that it doesn’t impact negatively on the environment?

    Cement business involves extracting things from the ground, but at the same time, we have a standard. LafargeHolcim has the largest building materials business in the world. Our policy is that if a country we are operating in has a lower operating standard than the one set by the company, then our company standard becomes what we use, and vice versa. So at any point in time, we make sure we are well within the standard that each location has. We have a very high standard; there are different regulatory agencies that we work with- the Ministry of the Environment, National Environmental Standards and Regulations Enforcement Agency (NESREA) and several others. The key concern here is the dust emissions and when it comes to coal, there is the acidity issue. And of course, before you even get licence to operate there must be an environmental management plan in place.  But beyond that we make sure we have an improvement plan. For instance, a few years ago, you know you are approaching AshakaCem when you find dusts on vehicles along the way, but today, that is not the case. It has reduced and we have the number to show for it. We hosted the former minister of environment sometimes ago to see what we are doing. Of course, there is always room for improvement but the most important thing is to ensure that the dust emission is lower than the limits set by the environmental plan.

    Lafarge has some affordable housing interventions in the Southern part of the country. What similar initiative do you have in the north?

    It is a national programme, not specific to any region. We are in the process of developing one in this region. Affordable housing comes in different shapes and forms. For instance, you may want to build houses in large scale. So, there is affordable housing and there is mass housing. So mass housing may not be the bottom of the pyramid but it allows more people to really have access to housing. And how does it work? You’re building this same structure in a thousand places and instead of using blocks you can use what we call the form work which is one of the things we are working on. We have done one in Ogun State, and we are taking people from the north to see how it works because the idea is to copy the model and ensure we can do it quickly and in a cost-efficient way.

    How are you coping with competition in the industry?

    The main thing we do is to focus on the customer and make sure we give them what they want. At the end of the day, cement goes everywhere. In reality, there is more than the demand but we are focused on making sure that our product does what it says it does. It is not about the technical aspect because at the end of the day, the customer can measure what he got from the product. Our focus is on making sure we are close to the customer and that we are giving him what he really needs. For instance, a blockmaker wants to work quickly and in as little time as possible, take the block and reuse the same wooden palette. So today, we have a particular product designed for that, it is called Superset; it is the fastest setting cement in the country and it means that segment will have preference. If you meet the big contractors, their needs are different from the regular trader who buys cement and resells. So, what we try to do is make sure we work with them from the beginning of a project to know what their needs are and I think that has worked for us thus far.

    How were you able to continue running your business at the height of Boko Haram hostilities in the North East?

    On November 4, 2014, our plant was attacked by the insurgents. Obviously, they were trying to find explosives. Exactly one month after that, there was another attack. Of course the default thinking was for the company to shut down during that period until things calmed down, but the management of LafargeHolcim took a decision to keep it open because as you may know, stopping and starting an operation of this magnitude is not really a day’s job. We have staff of 700 people working here and we live in a place that is more or less like an island. So, even if we shut down the operations, the staff are still here; you can’t have 700 people suddenly pack their bags to go somewhere.  Therefore, a decision was reached at a significant financial expense to keep the plant running and I think it was the right decision. It has shown that we have the resilience when it comes to keeping our operations running.

    Looking at the post-insurgent era, how are you contributing to the redevelopment of the Northeast region?

    To start with, we make cement and most of the destructions in the area were civil in nature- if you take out the psychological and socio-economic aspects. So, naturally, we are contributing in that regard. If you remember, there were more than two million people who were displaced by the insurgency and by virtue of keeping this operation running, we are helping to make sure there is enough economic activity in the area. Like I said, there are 700 people working here directly and probably another 2,000 people who do supply and other things. The average household in this part of the country is 10; so you can imagine what the company has done. A more direct approach is helping the communities acquire skills that can be useful in terms of social services and healthcare as well as education.

    In specific terms, how have you impacted on this community?

    We have an artisanship scheme, for example, that has intakes from the communities around here, and it is strictly created for them. Graduates of this scheme go on to set up their businesses. If you are a carpenter or a mason, we train you and you get the tools of the trade and can go into the community to start. At the same time, we absorb some of them into our firm. For instance, the second most senior person here on the industrial side, after the plant manager, is an indigene of Bajoga, (our host local government), who came through the artisanship programme- we took him to South Africa and also our sister plant in Calabar, Cross-River state, as the second most senior person there.  Let me clarify that we look at our contribution from the perspective of our operations rather than direct interventions. We have built classrooms, boreholes and a lot of things but we call those “business as usual” because they are basic things that we do. Building classrooms doesn’t mean that education will happen, so we do more sustainable activities in that regard.

    How else do you give back to the community?

    Giving back to the community comes in different forms and sizes. For instance, the focus we have as a company worldwide is healthcare, youth empowerment and education. These are things that everywhere you go in the LafargeHolcim world, though the style of implementation may differ, but these are the three core things. When it comes to healthcare, for instance, I can say directly, today on a daily basis we have a clinic that treats over 200 people from this community, every single day. Both consultation and drugs are free; it is one of the things we believe is important. In terms of youth empowerment and employment, we have in excess of 2,000 graduates since the beginning of the artisanship programme and every year, we keep taking them and we pay them for the two years that they are here on the programme. Over 90 per cent of the beneficiaries are of northern stock- 70 per cent are from the Northeast region. Gombe state indigenes account for 56 per cent of our staff strength, while most of the others are from communities around us. And when you look at education, we have two schools right inside AshakaCem premises and they have over 1000 students and 60 per cent of them are from the community and they don’t pay school fees. I think also beyond how much money we give the youths, there are also other exchange programmes that we have. A Polytechnic is about to start at Bajoga, the reason for citing the school there is because AshakaCem exists here. Polytechnics produce hands-on people, the plan is that we will partner with the school to do a lot of exchange programmes.

    Sometime last year, you singed MoU with some communities. How far have you gone with the implementation of that agreement?

    The implementation is ongoing. We ran into some misunderstanding. Everywhere you operate a mining activity, you must have a community development agreement which defines the basics of what you must do; but you don’t limit yourself to only what is in the agreement. We ran into some hitches but the agreement is being implemented while we are trying to do more. It is not everything we do that is in black and white. The medical thing I talked about earlier is not part of the plan but we do it. The MoU contains a five-year programme, but what we try to do is make sure that whatever we want to do within a year, we do it before the year runs out so that the community can start enjoying the benefit.

    This community is largely agrarian. Do you have plans to empower the community through farming as some sort of CSR?

    Absolutely! This is one project that we are doing; it is at the starting phase. We are starting an agricultural programme called Agri-ecology; it is all about mixed breeding- where one crop fights the pest of the other, for instance, leading to the creation of a high yield. It is also about taking the ecology of agric process back to its natural way. So, we are going to roll that out to empower our communities and help increase their yield by up to 30 or 40 per cent. It means they can generate more revenue from one piece of land. The other side of it is that it will help them to organise better distribution in terms of what they get from the produce. There has always been the issue of farmers not getting value for their labour, so, we are doing this to help them to get more value from their farming activities and turn it to an all year round thing. We are starting the pilot scheme this year with tomatoes because we hope to start with cash crops. The farmers won’t have to just wait for the rain. That’s what we are working on. The second part of  this scheme is linked to how we help control our carbon dioxide (CO2) emission. The Federal Government tries to encourage rice farming everywhere, so the rice husk, a by-product of rice processing can be used in our kiln. We call it geo-cycle. The idea is to take corn cubs and the rice husks to produce clean energy and at the same time clean the environment. The producer doesn’t go to the farm to produce rice husks or corn cubs but at the end of the day he makes more money in addition to what he makes from the produce because we buy it off him.

    What short term plans do you have to keep your customers in business?

    It goes back to what I said, it is basically the promise that the products will deliver. We get feedback from our consumers and work on that. That is what we do everyday; making sure they remain in business because that also helps us to remain in business.

    Five years from now where do you see Ashaka Cement Plc in terms of expansion?

    Where we see AshakaCem is as a more efficient business in the next five years and one of which is from the cost perspective. There is currently a project ongoing, we are building a power plant to be able to generate our own electricity. Today, we are relying on generators, and as you know, the cost of fuel whether low pour fuel oil (LPFO) or diesel is very high and has a high correlation to foreign exchange. We are building an N11billion, 16-megawatt coal-fired power plant to cater for our needs. That is one of the biggest plan that we have in terms of being able to reduce our costs because one of the biggest cost in cement production is the cost of energy. Inside the kiln, we have temperature running up to 1,400 degrees which is heat temperature required to melt steel. You can imagine the kind of heat we are talking about here and to generate that kind of heat, we need fuel.  The second is to unlock some of the existing potential in terms of capacity, over the years, you lose some efficiency and we are trying to gain back that efficiency. The other is, depending on how things go, we intend to increase the capacity of the plant by building new capacity.

  • ‘Capital expenditure should go up to drive growth’

    ‘Capital expenditure should go up to drive growth’

    Managing Director, Jaiz Bank Plc, Mr. Hassan Usman, is a fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and a first-class financier. In this interview with Capital Market Editor Taofik Salako, Usman, who heads Nigeria’s first and only full-fledged non-interest commercial bank, speaks on the national budget, macro economy, banking and other issues.

    If you look at the operating environment for banking sector generally, is there any improvement in recent period?

    Well, you can say over the period of 2016. You know we went into a recession in 2016 and there is no doubt banks have been affected and the impact of that will not have gone by the beginning of 2017, so it was still around as things were being sorted out. I think with the small growth that the economy is witnessing, we will see an easing of some of the problems witnessed during last year and some part of this year. I don’t expect significant improvement in the performance of the financial sector in 2017 but if the government implements the 2018 budget that is being proposed, I am assuming that  the Senate will not make significant changes to the budget, I see a situation where economic activity will pick up in 2018. I, therefore, expect that some of the issues that had hindered performance in the past would probably be sorted out during 2018 and then you will see, most likely, banks doing better by the end of 2018.

    Banking is about risk management; what structure, especially with Islamic banking, have you put in place to ensure that you have a water-tight risk management system. Secondly, there are concerns that competition may make Jaiz Bank to compromise and try to find a middle way between conventional and Islamic banking, what processes have you put in place to ensure to its core values?

    Risk management is of great importance in finance. The regulators have given a lot of attention to risk management in the last four to five years. Each organisation is ensuring that it puts a strong structure to efficiently manage not just credit risk, but also operational risk, market risk, liquidity risk; and these are fundamental to the operations of any financial institution and Jaiz Bank is not an exception. We are working hard to ensure that the structures, systems and controls, and all the tools that are required to ensure that the operations of the bank is safe and sound are adequate and dynamic enough to cope with everyday operation because that ensures sustainability, it is not about our operations today or tomorrow but operations that are sustainable and safe and sound. That is a key commitment of Jaiz Bank and we are working hard to ensure that these tools are in place. Also, we have our core values, we have engraved them in our governance structure in such a way that they are being monitored every time to avoid any possibility for us not to meet our core mandate of running Islamic banking whatever the pressure may be. You have to know that in our internal control system, we have embedded an audit function to ensure that every transaction we are doing conforms to what has been agreed as our core mandate. Our products and services are also tailored towards these core values and the contracts of engagements we do are also wrapped up around this core mandate. Besides, we have the Sharia Committee that goes through our operations periodically to see that we conform with our core mandate and where there is any deviation, that is also treated so that income arising from deviation is not also mixed up with the income that are expected to be seen in our operations. So our structure is good enough and in line with best practice worldwide. Even as the only full-fledged non-interest commercial bank in Nigeria, it is important we benchmarked ourselves to global best practice to avoid any situation where you go overboard and to ensure that we are in line with the franchise of the market.

    Let’s go back to the budget, what are those suggestions that you will want to pass across?

    Well, clearly we are running a very difficult situation today, because you have a budget of about N8 trillion, only about N2 trillion, may be about 25% will go for capital, the rest is going to recurrent expenditure and debts. So this is a big problem and I think that the government has to do something about it. I know it is something that cannot be done immediately; it is something that is needed to be looked at continuously to address this unsustainable recurrent expenditure budget. I think that is fundamental but that is not something that can be done in one year, it is something that needed to be looked at and it is going to be very painful, it is not something that you do when you are in a recession, it would create more problems. I think it is an area we need to look at to see how we can make our government better; we will be able to put more resources into productive capital expenditure that is needed for growth. Secondly, I think we need to have a disciplined implementation and possibly a committee that will monitor the implementation, which will give value to the intention therein stated. Because, budget is an open contract and economic agents are going to work with it. So, if the implementation is wrong, it will seriously affect others because they would have moved in the direction that the government initially stated in the budget. So, disciplined implementation is significant. These are the few things one can easily say without going deep into the budget.

    You expressed optimism that Sukuk bonds will grow in West Africa, what gives that optimism?

    Well, Nigeria is about 50 per cent of West Africa and if there is a need for anything in Nigeria, then that need transcends beyond the country. Besides, Nigeria is a late comer in issuance of the Sukuk, Senegal had issued, Cote D’Ivoire had also issued. These are countries that have issued and more are going to come because the infrastructure need in West Africa is huge. When you look at Nigeria, there is none of this infrastructure need that is not looking for intervention. If it is power, oil, health, education, all of these require massive funding, the 2018 draft budget indicates capital expenditure of about N2.4 billion, now the deficit of the government is N2 billion which means almost every capital expenditure is going to be financed by the deficit so you have to have a process or way to get this money. Sukuk is an excellent way to deal with this in a disciplined manner, funding that will be directed to specific project and the system ensures that there is accountability in the end.

    But if you look at the Sukuk that was issued, the over subscription was just like N5 billion. Do you think there is enough depth that will take a recurring issuance or higher value of Sukuk issuance?

    You see, Sukuk does not ha

    ve to be only in Naira, you can have Sukuk issued in Dollar just like you have Eurobonds and Dollar-denominated Nigerian bonds. In any case, you need government to move away gradually from the Naira debt. Government has a target of refinancing Naira debts, so instead of borrowing more, some of the funding needs can be directed to Sukuk.

    If you look generally at the issue of non-performing portfolios, why do we have non performing portfolios in banks and what is Jaiz Bank doing to ensure that it keeps such occurrence at the barest minimum?

    You know once you are in the business of financing you will definitely have to cope with the challenge of non-performing portfolio because one of the basic assumptions that you cannot ignore is that not all of these funds will come back on time or come back at all. The important thing is to minimise the level of non-performing facilities. In Nigeria’s case, in addition to the normal risks, Nigeria went into a recession and when you have a recession, the economy agents are not going to be doing well. Now, these economic factors will have effect on their obligations, even government may struggle to service their obligations. So, these are things that most financial institutions are meant to cope with, but it is not always the case that you would see the same magnitude of impact on the various economic agents; depending on the type of areas you are exposed. In Nigeria, there are additional complications by the ways and manners of some of these traders-like the petroleum traders, expose the banks to significant risks, because they have no way of controlling many risks.

    What is Jaiz Bank doing to ensure that you do not have burgeoning non-performing assets?

    Again, you see Islamic banking is a little bit different because first we do not lend money, we sell, so there is always an underlying transaction and as such there is less likelihood for diversion because diversion is one factor in deterioration of facilities. Similarly, we tend not to continue to take income when there is difficulty with the facility. For example, if I sell to you as a customer, I am only entitled to the selling price, so if there is any real difficulty, I can only insist on recovering the exact amount of sale, whatever penalty I charge to avoid moral hazards does not come to the bank. So, the bank does not see such charge as an income and it does not go to bloat the profit and loss account of bank unlike in the case of conventional banking that when you take an overdraft and you are not settling it, it continues to generate compound interest on the account. So if I sell to you, I will only recover the sale price so you can see I may not be that profitable in the short run, but in the long run it will be more real than conventional situation.

    Sir, if you look at the third quarter 2017 result of Jaiz Bank, the profit grew by more than 200 per cent, what is driving this growth?

    A lot of things is driving this positive development. Islamic banking or non-interest banking is new in Nigeria but it has values and the value-addition is what people have seen, otherwise, you won’t see the trajectory of growth you are seeing. More and more people in the banking industry are now coming in to open accounts with us because they have the notion of the benefits of non-interest banking system.

    Secondly, we have people who are ready to sign in, not necessarily Muslims, people who can see the value addition; the type of services we provide and the nature of our investments; we engage  with our customers as partners, we insure the profit and the losses, we also try to understand specific situations where there are difficulties, we tend to be more listening than otherwise if we were to be more conventional so these are some of the value additions you see and with our type of banking, this growth is expected. All over, Islamic banking is growing about 10 per cent; we are growing at higher rate because this is ultimately the phase we want in Nigeria.

    So sir, if you look at your projections in the medium to long term, where do you see Jaiz Bank?

    Well, if you look at the way we are, the need and the fact that the industry is becoming expansive, we can look forward with hope to a bright prospect. With the introduction of the Sukuk, the field is being leveled gradually, because now non-interest banks can now have liquidity instrument to invest their surplus liquidity or to invest their liquidity before they engage their customers, which means they will not be losing as we’ve been losing for the last five years. And also with the huge gap of funding required for infrastructure in Nigeria, I see that this sector is going to be very strong, we as a player see ourselves as one of the serious players in the financial system in non-interest banking subsector.

    We know Jaiz Bank wanted to do initial public offering, what is delaying this?

    No, we didn’t say we want to do an initial public offering. The first public offer we did was in 2004 and that was Jaiz International, subsequently we have gone to the market through private placement and rights issue. Now, of course being small, there is need for more capital but we are taking our time, we are planning it in such a way that we don’t take more capital than we require at any given time. Obviously, we need capital as we grow but we have not put a definite timing for that.

    What are you doing to enhance financial inclusion and financial literacy?

    By our mere coming into the banking landscape, we have had several people coming into the system, with ease of mind knowing they are doing the right thing, their ethical values are being taken into consideration. So, that has increased financial inclusion and also in terms of utilisation of banking facilities. Part of what we have in our plans is that once the bank settles down, we will focus deeply on financial inclusion because in some places there are no investments and it is not as profitable in the beginning. So, we have come to the point now that we will put our plan for that phase into operation, part of what we promised ourselves is that after sustainable operations, we will go down the ladder into the micro level and see how we can provide education and facilities to boost financial inclusion. We are in the process of doing that now, through technology and others.

    One of the concerns is that Jaiz Bank does not have a strong nationwide presence. How are you addressing this and what facilities are available in terms of technology.

    We started with only three branches and we are only a regional bank, we eventually got a national licence and we now have 30 branches. We are certain before the end of next year, we are adding new branches, we were only in the northern part of the country; today we are in Port-Harcourt, Ibadan, Lagos, Ilorin and so on. So, we are developing a network of branches across the country. But the issue is not even about many branches because technology now has provided for cheaper means of reaching your customers, you can pull customers with technology just like mobile banking, internet banking and all these financial technologies. We are on all these and also through the ATM network, POS and so on, we use all of these and they allow customers to do banking without entering their branches. We will move more in that direction, to deploy more channels that allow banking to be quite near, to make it sustainable and affordable.

  • Tourism is untapped goldmine

    Tourism is untapped goldmine

    The Director-General, Nigerian Tourism Development Corporation (NTDC), Folorunsho Folarin-Coker, says the tourism sector can become another goldmine if the structures and facilities in the industry are optimised. In this interview with select business editors in Lagos, he speaks on strategies to rejuvenate the sector and other issues. LUCAS AJANAKU was there.

    What is your assessment of the tourism industry in Nigeria?

    In Nigeria, we have some traditional forms of tourism that have not been invested in; therefore, the returns from them are constantly dwindling. They are also seen as leisure community activities that are not income-generating or taxable. That’s why the business aspect of it needs to be refocused. In Nigeria, we are also lucky, apart from having this cultural heritage- destination tourism, we also have over the years been able to develop new medium of cultural expression that has come to even dominate in the world. If you look at our music- a few days ago I was in Toronto, there was a protest march and they were playing Korede Bello’s ‘Godwin’ and singing to it. I had to come out of the car. It was unbelievable. Our fashion is very strong. Our film is number two in the world. I went to Toronto International Film Festival- it is a business. Film production is a big business globally. The film festival is a business on its own and that is where tourism again needs to look at all these new mediums of cultural expression and start to define them as businesses. The Zuma Film Festival in Abuja needs to be like the largest film festival in Africa since the largest business in Africa resides in Nigeria. We are number two in the world, but we don’t even have the number largest film festival in Africa. Something is seriously wrong in terms of how we define our tourism assets and how we use them for business. If you look at sports, we are a sports-loving nation, particularly football. I challenge you to turn on your TV set on Saturday in Nigeria, you can watch La Liga, you can watch EPL, South African football and all that but you cannot watch Kano Pillars; Iwuanyanwu National play or any local league for that matter. And we have a 20 strong league. Again, if you look at tourism as a business, it will compel us to look at certain things. Why is there so much money in EPL and how many people are watching this EPL in England? How many people are in Europe and are watching La Liga? How many South Africans are there? Why are their leagues so globally strong? Television! People want to watch it on television. Television focuses on them and as television focuses on them, advertising becomes a very significant thing. Television focusing on sports allows advertising to come in; allows the revenues that we need and the sports stories to also grow.

    What is the place of branding in tourism business?

    One of the areas we have problem in Nigeria is: even when we get something right, we don’t know how to sustain it. Even where Chief X makes money, he doesn’t know how to transfer it to the next generation. How many millionaires of my father’s days were able to manage the money to successfully transfer it to the next generation? This has to do with branding. It is about branding and consistency in improving consumption. CocaCola is sugar, water and colouring, we all know it. We can make drums of it. But we buy CocaCola because it is a brand. At a point when CocaCola discovered that people were no longer buying the product the way they were doing before; they started branding it, using people’s names on the bottle of the drink – Lola, Yemi, Kola, etc – to make us buy more, and if you didn’t buy, somebody would buy it for you. Somebody would say, ‘see your CocaCola’. That’s the power of branding. Branding drives consumption. It focuses attention and creates an emotional connection to a product that allows you to consume more of what you know you shouldn’t probably be consuming, but you continue to do it.

    Now, if you look at the logo of NTDC, it looks like a military detachment regiment somewhere, but look at the rest of the world- South Africa, Singapore, Croatia, Bangladesh, Malaysia – you can see how friendly, warm and engaging they are. So, one of the first things I did was to look at the brand NTDC as a master brand and created a sub-brand called TOUR NIGERIA, simply in line with the CocaCola principle that for me to create an emotional connection with our Nigeria, by a Nigerian and for a Nigeria, I needed to create something that was simple and fun.

    Why ‘Tour Nigeria’?

    First of all, the focus of NTDC is on domestic tourism. Domestic tourism is simply the only sustainable form of tourism that you can ever get. It entails using what you have best in your home, locality, region and in your country. It is the only form of tourism that can withstand shock. For instance, when they blew up an aircraft coming out from Egypt, people still go to Egypt. When they shut up a shopping mall and killed people recklessly in Kenya, people still go to Kenya. It is because they have a strong domestic tourism industry that the international tourism can set up. One is a shock absorber, but allows the growth of the international. Domestic tourism, because it is local, strengthens our establishments- our hotels, if we consume more of our hotels, our restaurants, tourism heritage sites, and our tourism events here, you find out that it will become stronger. It is when it is stronger that it also strengthens the institution- the government, the agencies, the taxation that come off it. It is only within that structure that eventually the international bodies will be looking and say this is the ultimate; we want to generate billions of dollars. But if we don’t take it as a business, if we don’t invest in it; if we don’t set the right policies to drive it, we cannot expect to reap the yield that we are looking for, and the rest of the world being able to partake in.

    What is the relationship between a country with youthful population and a successful tourism industry?

    Our population is over 180 million. It is the densest concentration of black people in the world. It is the most populous country in Africa. If you look our demographics, we are also fat in the middle because we have the age bracket 18-35 that makes up the bulk of our population. This group is digitally connected; they are the socially mobile and they are a productive workforce. Add that to whatever infrastructure we have, to Arts and culture as we have it; to entertainment as we have it; we have an opportunity to accelerate the development of tourism because all our needs and assets are already existing. It is not like manufacturing where you have to go and get the machine, the labour and all those things to start to build. It is not like agriculture where you will need to go and get the land, till the land, plant your seed, wait for it to grown and harvest and take to the market.  All we need is already in existence in group of manageable structure for tourism to become a serious income earner for Nigeria. So, after rebranding, we “Tour Nigeria”. “Tour Nigeria” is a very simple brand that we created to focus on our domestic tourism agenda. We also created the acronym called ‘CHIEF’. It is a five-point action plan. C- Stands for corporate governance and regulation; H – for human capital development; I – for Infrastructure development; E- for events and marketing, and F- for finance and investment.

    Now, what I am trying to do in NTDC is to put NTDC through this 5-point action plan. In terms of corporate governance and regulation, we’ve been through first and second reading at the public hearing to try and repeal the old bill which was set up in 1992 and enact a new bill so that we can bring the policies that govern tourism into 2017 and the next 10 years. If we don’t change the regulatory framework or the legal backing, we cannot hope to grow tourism the way we want do it; and some of the things relating to that- there’s tourism levy that will populate a tourism funds, and that is already a tax that is existing; it is just for us to be given the money for tourism.

    In terms of regulation, right now 36 states are setting 36 different standards in terms of hotels, in terms of grading, etc. So, the international community that we want to attract cannot take the grading standard of a hotel in Zamfara and a hotel in Lagos and say this is an internationally acceptable standard. Nations, national agencies set standards and grade hotels that are internationally recognisable not individual states within a federation of state.

    Human capital development – Tourism is driven by a digital medium. Today, most businesses are driven by digital medium. Now, with a large population of digitally-connected individuals; we must embrace technology. If we don’t embrace technology, we cannot hope to, for example, take the message out and potentially reach two million people on Facebook or several millions on Instagram.

    Capital development on appropriate training, not just training like we have been used to, but training in the new mediums and new technologies that help you market with the same prowess as Jumia or Wakanow or Konga.

    Infrastructure development – I’m glad to say that Nigeria has the infrastructure but they need to be developed; especially in the tourism industry, infrastructure is either not in the right hand, not being driven properly or moribund and we need to look at it holistically.

    What do we have and as a business how can we use this better? How can we use the Tafawa Balewa Square (IBS) better? How can we use National Theatre, Abuja Stadium, National Stadium in Lagos; Football stadium in Akwa Ibom – how  can we use all these better? What do we need to put around Abuja stadium to make it work- a hotel? Do we allow all league matches to be played free of charge there? What will happen if we do that? Will the population of the North Central of Nigeria collapse temporarily into Abuja for certain things, thereby countering the population imbalance we have between the Southwest, the North central to the axis of the Northeast?

    Events and marketing – we need to look at what events we have. At NTDC, we have created a January to December calendar of events that allows people to plan. If you look at the football league in England- you know that Manchester United is going to play with Chelsea on June 4 next year at Chelsea’s ground. It is fixed. It allows hotels, transporters to plan, and it is in that planning that you get the acceleration of wealth creation. Again, it is a business. Then we will have one platform anchoring other events.

    Again in marketing, the promotion has to be digital.Today, nobody leaves home without their phones. So, it is the medium we reach maximum number of people. If you look at your Whattsapp messages, the stories we all share among ourselves on a daily or weekly basis – it tells you what people are interested in. It is either about fashion, food, religion, music, film or politics. If you look at your last 20 messages you will see that they fall into the above mentioned categories. That tells you that these are the Medium of expression through which people are consuming whatever information today.

    What are some of your projections in the short and long terms?

    We have mapped out some of the things we are doing at NTDC in the short to medium and long terms. In terms of corporate governance, we are continuously interacting with stakeholders in the tourism industry. Change is here and tourism is not going to be excluded from that agenda. Whether we like it or not, certain things must change for us to move forward. We can grow money or we can earn money. If we treat tourism like a leisure activity we will continue to earn money. If we treat tourism as a business we grow money. If we invest in infrastructure specific to tourism that grows tourism, we will reap multiple benefits from it.

    Whether government is APC or any other; whether I am the DG NTDC or any other person else, it continues to flow. We are also using the digital platforms – social media, the internet, to make the presence of NTDC known. We have ‘Tour Nigeria’, which is the hash tag and is on Instagram, Facebook and Twitter, We have our website – tournigeria.org.ng where we are hoping to put a lot of positive images about our country to reverse the negative conversations about Nigeria. There have been lots of challenges simply because people would always want to resist change. Again, some people have not just taken the time to understand the law. One of the things that people are agitating the most about is about the registration and regulation and grading of hotels. In any country in the world where tourism is treated as a business and the values they get from it are real, there’s an external body responsible for it, but because of the Supreme Court’s ruling, states have been granted the power to so do, but those states will never get international recognition for it because they recognise countries, they don’t recognise the components of countries.

    The President’s order on ease of doing business in Nigeria has benefitted us in being able to get visas and access to some other things. It is not perfect yet, but it has started to yield good fruit; it will continue to get better. We are hoping that NTDC will be the steering agency for all tourism-related activities. We must take tourism seriously as a business, if we treat it otherwise, we cannot get the revenues we are hoping to get from it.

    What specific practices or perceptions do you believe may positively impact the tourism industry in the country?

    I do not believe in world tourism market just yet, I believe in a Nigerian domestic-focused tourism market. Let me be clear on this: I don’t see the need to go and market what (products) I know that are not as strong as I want them. I don’t believe in going to London to say, I want to do London travel market to go and market products that are not as strong as I want them to be. I will like to focus inward and strengthen those products here first, then maybe in a year or two you can take them to the London travel market. There are some market functions, they call travel market in Nigeria today – the individuals that pushed us to be promoting Nigeria’s cultural heritage are being sponsored by foreign airlines, foreign hotels and all that they are promoting is sale of foreign holidays to Nigerian citizens. I don’t stand behind such misconception. People are misled to believe that this is promoting the Nigerian culture when foreign airlines, foreign hotels come into a Nigerian hotel to put together a programme to show Nigerians the beauty of South Africa or Dubai or Rwanda; it is not promoting Nigeria, it is promoting African culture but not Nigerian culture. My business is not to promote the culture of any other country apart from that of the Federal Republic of Nigeria.

    Looking at the state of tourism industry in the country, do you have some recommendations?

    We recommend that tourism be included in the curriculum of educational institutions. If people don’t start to learn it from an early age that this thing exists and that if you treat it like a business you can earn money, they may not show interest in it. If you look at how many people that take Chemical Engineering; Mechanical Engineering, Architecture and look at what they feed into, we have got to look at other side of our inflow of human capital which is developing tourism as a curriculum from schools to university. We are not just saying go and start it now, but let’s look at how we can inject it into the existing curriculum in schools. Most of the people you find in the tourism industry did not really study tourism; they studied something else; but tourism became what they can do or something they just like to do. It is good to get core professionals within the industry.

    The issue of security is of a serious concern if tourism must thrive in any country. With the rate of kidnapping, and other social crimes in society, don’t you think such may negatively impact the business aspect of tourism?

    I disagree with you. Let me tell you why. Is Nigeria the murder capital of the world? No. Is Nigeria the rape or kidnapping capital of the world? No. I don’t want to name those countries. Every country has security issue. America, Britain, France all have security issue. Look at the attacks that have happened in Britain this year, still people still go there. I am not saying that we don’t have some of these issues, but they are not issues that should stop people from coming here. You and I live here. The security situation has improved tremendously over a year and half now. There are still some new things that are popping up; did we know that terrorists could turn an aircraft into a weapon against people? Did we know that a terrorist could turn a car into a weapon against people? Would people stop going to France, for instance, because a terrorist drove a truck over people on the sidewalk? They kidnap in France; they kidnap in England. But you know what, those countries have very, very sophisticated system of not reporting so much of the negative about them, unless it is something they cannot cover. Do you know how many people that are killed in those countries in a day? I understand the security concern, but they are not things that will stop people from coming to Nigeria. Look, some of these crimes are reactions to poverty; if we grow our domestic industry, some of these things would stop. If a man can wake up every morning to a place he can earn a decent day’s work and get a decent wage for it, robbery is not the first option for our people. Security concerns should not stop the development of our tourism.

    How much does tourism generate for the country at the moment?

    If over the next three years tourism moves from about 1.4 percent of the gross domestic product (GDP) to close to 10 per cent, I think we would have got ourselves on a remarkable track. But certain things need to be done. There is a need to invest in our tourism assets. There’s need for a change in our policy; there’s the need to support the tourism function to rearrange things in the way it can generate income. Also, we need to capture data; we need to open the tourism satellite account that allows us to count- how many foreigners are coming into the country; where are they staying, what are doing, how much are we making from them? If you don’t count that, it will be very difficult for us to know what exactly our revenue is.

    How would you ensure that the programmes you are putting in place now would continue after your exit from the seat, given that one of the major problems of Nigeria is lack of sustainability?

    You see, this is the year of sustainable tourism globally. It is the type of tourism you grow internally, domestically. Now, what are the hallmarks? Support your own domestic tourism industry; pay a fair price for your domestic products; engage with your domestic stakeholders, create advantages for your domestic stakeholders against foreign attractions. Let me give you an instance. You know what Ghana did? Ghana gives a tax holiday at the weekend for tourism activities. So, the cheapest place now for you to have a conference is Ghana. You know what that means?

    Nigeria was recently recognised on the global tourism scene; may we have your comment on that beautiful development? `

    I am so happy that my boss, Alhaji Lai Mohammed, minister of Information and Culture, has been appointed the Vice President of the United Nations World Tourism Organisation. It is a reflection of the commitment and tenacity of the man. To have attained this laudable position in tourism, I believe this supports the functions of NTDC immensely. And I believe that with his support, tourism as a business is here to stay.

  • ‘Mining is Nigeria’s next oil’

    ‘Mining is Nigeria’s next oil’

    Mining looks good to replace oil as Nigeria’s main revenue earner in the next five years. Achieving this, according to Partner/Mining Industry Leader, PwC Nigeria, Mr. Cyril Azobu, requires managing the implementation of last year’s ‘Roadmap for the Development of the Solid Minerals Sector’ in a professional, actionable manner that can track achievements of its set objectives. In this interview with CHIKODI OKEREOCHA and AMBROSE NNAJI, Azobu insists that the private sector must drive the reforms in the sector. He also speaks on other economic issues.

    Is Nigeria exploiting the opportunities in the mining sector?

    First of all, you need to understand that mining is not a sector that you expect that something will happen quickly. The typical life cycle in any mining is long, the gestation period is also long. Take, for example, the entire value chain – from exploration down to processing, the exploration, which is the riskiest part of it – takes quite a long time. Take, a typical resource like iron ore for example, it takes a long time to do exploration. And you have a lot of other players in the sector that are actually investing in exploration. Number one, you are not going to have people who will invest in exploration as a result of the level of uncertainties. Two, you don’t know how much you are going to get. So, to do that, you need time, sometimes between three and five years or even more, to do exploration. When you do exploration, you have to begin to develop that area, construct, build plants to carry out operations there, you move to some level of processing. Even when you are exporting, you need to have some degree of processing, and have your export channels. But even at that, because you are exporting, that is still subject to global commodity pricing, which is only just improving at the global level.

    There are also shocks that could affect your pricing. Iron ore, for example, is generally low globally. Gold is fairly okay. You also need to consider that there are other factors in the value chain. Steel, for example, how do you move from iron ore extraction to processing, and then to steel development?  Those are the things that stimulate the economy because you are creating activities that actually have other people that are linked into it. That doesn’t take only one year; it doesn’t take two years or three years. What I have seen that has happened in the last few years or two is that we seem to be getting clearly our policy framework, how these things work. You know there are some things that you will need to see by now that will make other players come in. So, we need that storytelling; we need that one or two projects that will actually kick off and everybody sees it and then begin to run on it.

    How far have we gone in implementing the policy framework?

    There was an excitement we got when the new government came in; we would like to see that go to the next level. We have the roadmap, for example. The roadmap articulates how we intend to grow the sector. It’s actually different from the one in 2012, which, for me, was very ambitious; we wanted to grow by 10 per cent by 2020. Currently, we are still hovering around .5 per cent. We are putting the cart before the horse. You can’t just have such growth objectives without having a clear strategy on how you intend to get there. So, the roadmap in 2016, when the government approved it, seems to be a bit more articulating. It clearly determines what particular strategy we need to deploy in achieving that roadmap. So, it looks at across a chain from institution building to stakeholder management to management of players in the sector, funding etc.

    There is a whole gamut of things you need to deploy. So, while the objectives have been defined, and the direction has been defined on how to achieve, say three per cent by 2025, which is modest and even better than moving from 0.5 to three per cent, there is a lot you have to do. And while some of them would be low-hanging fruits, the others could be big stimulation. And it is one thing to have a roadmap, and another thing to implement that roadmap. That is where I am saying that there could be a bit more work, there could be more action. It could be faster and going by things that are driven by public sector once you get into another round of elections; the general belief is that things will slow down. So, I think that to get this done, it is not just a government action alone, it has to be concerted, and it should be private sector driven. And the reason I see that the roadmap kind of encapsulates what should be done is that there is a Mining Implementation and Strategy Team that has been suggested in the roadmap. That team has been constituted. The responsibility of that team is now to take the roadmap and have a clear implementation plan, who takes responsibility for what. Why I like the composition of the team is that they include private players mostly and other stakeholders within the entire sector and these people can take ownership. So, to your question: it will take time, but there are expectations as to what should have happened now which has not fully taken off.

    What are they?

    I expect, for example, that the implementation team would have started. I expect that they take those roadmap objectives and start determining who is responsible for what. So, they take each of those strategic objectives in the road-map, how do we ensure or monitor that those actions have been implemented, who is giving feedback, who is responsible for ensuring that this aspect of the roadmap is implemented. Everybody is looking to the government, but where are the other stakeholders that are responsible for ensuring that this aspect of the roadmap is implemented, as to what the key objectives are and how these things impact the achievements of the roadmap. So, those are the kind of things I expect to see. I expect to see at least some story telling projects. For example, we know how the story of cement changed, from the production side, but we don’t tell the story from the mining side. If there was no limestone and gypsum, which are input to cement production it could not have happened.

    But we opened up that space and we see from the downstream side how this thing actually paid off. It actually explored the entire value chain and then you see the end product. So, we want to see a steel industry, for example, that is not heavily dependent on the importation of billets; a steel industry that is not dependent on use of scraps that are here and there. We still import a big chunk of our steel. So, yes, we have a steel rolling complex, we should be able to move past the legal issues around the Ajaokuta Steel Complex. We also have an iron ore mining company, a national asset. The deposits are there, if we remove and address those which are still in government’s hand; and I am aware that there are on-going efforts, which are commendable.

    But that has been done already, particularly for Ajaokuta?

    It’s still in the process. They are discussing with the parties involved. Once we sort out these things, we get them working, get National Iron Ore Mining Company (NIOMCO) working, and get Ajaokuta working, then we are getting somewhere.

    How do you propose we do that, through privatisation or conces-sioning?

    You know that these things were privatised at some point.

    Which never worked?

    But they are still there. Again, don’t forget that when you get into an arrangement, there are contracts that you honour. So, if you understand the story around this Ajaokuta you can’t just as a nation sign a contract and then you backtrack. These things have legal implications and that is what has resulted in the tussle so far, to the extent that the government is trying to honour those contracts and find ways to sort these things out, because there are disputes, because you sign contract, so whether you have them or not is a different ball game. But I know that the government is making efforts to sort these things out. Whoever it is, but I think that for such assets, they are best run from the private sector perspective, whether you are concessioning them or not. I think that there is a way you can run those assets and make them productive. We have invested a lot in the Ajokuta Steel Complex. So, once we are able to sort that, I am hoping we do that quickly, because if we do, you are actually reopening operations in iron ore mining, you are opening up operations in steel production. And then you are actually now opening a bigger ecosystem.

    How much can Nigeria realise from the mining sector if these issues are sorted out?

    I will not put a figure to it, because I don’t know what the figure is. But I am a believer that a three per cent contribution to Gross Domestic Product (GDP) by 2025, according to the roadmap, is modest. We haven’t done any particular survey. I can’t quote a number that I don’t have the statistical facts to back up. We haven’t done the survey, but these are projections. When I say there are low hanging fruits, what has simply moved us from about 0.3 per cent to .5 per cent is not because we added new resources or new developments or increased mining activities. It’s just because we are just sorting out things around the framework, things that are happening. Even now you probably find a lot of mining activities going on, people are paying royalties, there is illegal mining going on. But just by fixing one or two things, we suddenly just went up. And I know that if we actually take care of a few more things, without actually adding or increasing production levels, we fix things around illegal mining, fix things around building institutions and all that, we can just easily raise these things, because I am not sure everything is imported, but I think that we can actually take advantage by fixing loopholes around illegal mining, which I believe the government is also making efforts. I think moving from .3 per cent to .5 per cent is a lot of work.

    Why is the roadmap not being implemented fully?

    When I say not implemented, I am talking about a concerted effort to activate them, start working. I want to see clear action plans. I want to see people monitoring and evaluating the extent of implementation. That is the active programme that I want to see run. But having said that, I am aware that there are certain aspects of the roadmap that the government is implementing here and there. For example, stakeholder engagement. States, for example. They came up and said now we have means of diversifying our economy, we can have ways of increasing our Internally Generated Revenue (IGR). The first that comes to mind is, let us control it, because the immediate gain is that if we issue licenses we will get royalties. So, the states were really keen to own it. You don’t forget that mining is in the exclusive list, the Federal Government owns the resources, either from the constitution or the Mineral Mining Act of 2007. So, they had that expectation but I think what has now happened is that you don’t need to really own or be in control of solid mineral resources, there are other ways you can earn royalties. I think what has happened is that the level of engagement at the federal level is now beginning to have those things and they are beginning to think of how to take their resources. For example, Edo State recently had its Mining Strategy Retreat, and they are beginning to think of their resources, how can we take advantage of them? So, there are other ways you can actually have interest in mining your resources.

    The mere fact that activities are going on, investors are in the place; they employ people, and the people who are employed pay taxes; state taxes will belong to states. It’s the same thing when you had the 13 per cent derivation applicable to every state. So, states can actually engage, partner or have Joint Ventures (JVs). Some states are being very creative and innovative on how to get this done, yet some of the operatives are complaining about double taxes and all that. But that can be fixed. The point is that because there is more engagements and use of the instrumentality of the Mineral Resources Environmental Management Committee (MIREMCO), domiciled in the states. We actually have a say in what is happening. More people are becoming aware as to how these can be set up and put to use these resources they have at the backyard. So, that is one aspect I see that the government is taking steps to address. In terms of checking illegal mining, again I was in the state and I saw how the police were being deployed to monitor these things. So, there are some things at the government level. Data gathering is another area.

    There is an intervention fund that the Federal Government has opened and a big chunk of it is invested in data. So, all these are things that will continue to drive the economy. But you can’t expect the ministry to drive these, because, if the ministry continues to drive it, you won’t see the expected result as quickly as you want it; you need everyone engaged, everyone switched on, which was why I said this Mining Roadmap Implementation and Strategy Team needs to get working and monitor the achievement of these things. I would like to see that we have the plan B; don’t keep it in the books, bring it out and say yes. This is what we said we will do. By week one, have we done it? By week two, have we done it? To what extent have we done it? What are we learning from these things? What benefits are we getting? For me, that is a balanced score card. That’s your measurement of your level of achievements, because you can have a reference point, and you have a delivery mandate? So, when I talk about implementation, it is fully implementing it in full ground management. Manage the programme of the implementation in a professional manner, in a way that you can track achievements of those objectives. For me, that’s what matters. And it’s not peculiar to mining, its everywhere. It is always implementation of policies. If you talk about policies, we have very good policies. We’ve got policies, we’ve got regulations. The regulatory and legal framework is actually tight, but move beyond policies, move beyond thoughts to execution and find a very good communication strategy that showcases that this is happening. So, even if it is going to take a long time, we can actually track progress. And because you are tracking progress there is continuity, and the new government that will come in can actually pick up from where the previous government stopped.

    Is the government doing enough collaboration with the private sector? 

    Yes, they are. There are several fora. In fact, one of the things that brought us PwC to get involved to this extent was, as far back as 2011 or so, just before the 2012 Roadmap was launched, we were talking to private players and it seemed like many of them hadn’t any clue of what the government was doing. That was what initiated PwC’s first roundtable in mining in 2014. We had the very first roundtable in Lagos. You will be amazed how much people have interest in this sector, including people who are not even active miners (the ecosystem is large)-lawyers, bankers everybody was just interested and they were coming in. That metamorphosed into what we call the Nigeria Mining Week in collaboration with the Miners Association of Nigeria. Now there is a bigger collaboration; there is more engagement with the private sector. The recently inaugurated Mining Development Board; that wasn’t the first one anyway, but if you look at the composition, it’s all private sector people – there is a chairman, a Secretary to the Board, a representative of the Central bank of Nigeria (CBN0, Bankers’ Committee, and there were three miners. So, these are private sector people. What is their role? Manage the fund. There is actually a fund because funding is one of the biggest areas of concern in the sector. So, they manage this fund. There is an intervention fund; there is a statutory allocation, and a percentage of the budget that flows into the fund.

    How much is the fund?

    I know there is N30billion Intervention Fund that the government approved. Most of it has been used to do data. That was before this new board was constituted. And then there is a requirement for a percentage of the budget to go to the sector. There is an appropriation from the yearly budget that actually goes to that fund. And then, of course, the Board is supposed to think of alternative ways of raising fund. Part of it is doing things around data, capacity building for miners, and generally, helping the sector to grow. So, all that are the initiatives that I think the government is taking steps in engaging the private sector. I think the industry still sees the government as the biggest player; government should drive. But my view is: the private sector should drive.

    Are you involving associations in the mining sector?

    The event is actually the Miners Association of Nigeria in conjunction with PwC Business Intelligence. When it started, it started as PwC. This time around, we are saying let’s begin to allow the players to drive these things, which is where the Miners Association of Nigeria come in. We give it our credibility, backing and technical support, such that the miners themselves, in fact, the young the miners within the ecosystem, own and drive these things. So, the Miners Association of Nigeria is there; the President of Geological Society of Nigeria is also a part of us. The point is that any one of the stakeholders we want them to get involved. We don’t just call miners and the associations; we want to get as many people as possible. In fact, the last one we invited – the President of Manufacturers Association of Nigeria (MAN) –  gave his talk as well. So, from upstream to downstream, processing, manufacturing, banks, financiers, everybody is switched on. We want to get them to work concertedly towards that sector, showcase where there are good practices, bring in our network, show how it’s done elsewhere, and then support them. At some point, we will allow these things to run on auto-pilot.

    Where do you see the mining sector in the next five years?

    Looking at five years’ time, even before 2025, I see a sector that is driven by the private sector. I see a sector that is gone beyond the rudiments of artisanal mining or dominated by informal players to a sector that is dominated by, at least, juniors; where you have a lot of junior players doing exploration. I see a sector where you have, at least, one or two strategic minerals being explored beyond exploration, even producing. I see a sector where there is contribution from production to industrialisation. I see a sector where there will be investors mining bitumen for road construction. I see an industry where we are looking inward for steel production. I see a bit of investors coming in, may be not majors. I don’t foresee any majors coming in, because a major will come in where a junior has taken projects through exploration and then the majors will come in during production; that’s when they come in. From a global perspective, what are we going to see and how will that impact Nigeria? We’ve had years of lull in global investment, commodity prices went down, the years of super cycles in South Africa and China industrialisation are gone. The industry globally is looking a lot more promising. What, then, will happen is that, they will start looking for where opportunities are. If you look at all these global economies, their reserves are hitting zero. What I mean by hitting zero is that they have mined and over-mined those areas. You know in South Africa, for example, they have reached the matured stage. So, where are they going to? Where there are new markets. But I don’t think our focus should be because we want to attract foreign investments; we should be doing it because we want to develop our economy; we should be doing it because we want to industrialise. We should be thinking of exploring the entire value chain. To my mind, I think mining is the next oil. In five years from now, we can begin to think of mining as the next oil. If we get the right thing done and that’s why I keep saying have a clear action, let’s see the implementation working to the later, not in bits and pieces.

  • ‘We ’ll fund bankable agric projects’

    ‘We ’ll fund bankable agric projects’

    Fidelity Bank Plc Managing Director/CEO, Nnamdi Okonkwo had an interactive session with Business Editors on various issues including the state of the economy and the bank’s impressive half-year (which ended on June 30) performance. SIMEON EBULU was there.

    The Nigeria Bureau of Statistics has said Nigeria is now out of recession, as a banker, can you tell us some of the damages recession caused the economy?

    Recession simply means negative growth in an economy over a specific period of time. I am not in a position to quantify the damages, but I am in a position to know that a lot of things slowed down in line with the slowing economic growth, because the banking industry is a melting point of what goes on in the economy.

    For instance, if my bank has a customer at Idumota in Lagos, who normally lodge in N1 million into his account daily and now he is lodging in N200,000 it is because something or the engine of what was responsible for generating those revenues, is no longer firing as before.

    Also, if a bank gives out a consumer loan and it is not performing, it is probably because that consumer, that government employee or corporate employee – is not getting his salary on time in line with the situation in the economy. The same goes for when a bank financed a factory that was expanding its production line to increase output and suddenly that factory realised that it could not kick off that line because there was no longer demand for its products because of general slowdown in demand. So, I will not be able to calculate the quantum, but in terms of everyday impact on business, it was a thing everybody felt.

    Having said that, let us take the news of being out of recession with caution and not celebrate yet. The Federal Government started the economic recovery and growth plan. It is the disciplined execution of that plan that matters for now.

    On the monetary side, I want to commend the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele and his team because they were under intense pressure to devalue the naira, but they stayed focused to address the issue from the retail end of the market by opening up a window where banks were given $2 million weekly to enable individuals buy foreign exchange to pay the tuition fees of their children in foreign higher institutions and before you know it, the exchange rate dropped from N520 per dollar to about N370 presently.

    Besides tuition fees, the apex bank also allowed SMEs and operators in the aviation industry to access foreign exchange, but perhaps the most significant move by the CBN in stabilising the currency was the introduction of Investor/Exporter FX window, which has resulted in major inflows by portfolio foreign investors.

    Why are banks reluctant to lend to agric and the real sector of the economy?

    There has been so much talk about banks not willing to fund agricultural sector of the economy and I have asked repeatedly why would a bank that is set up to buy and sell money see an opportunity to sell money that it has bought and would not be willing to sell.

    The answer is if a bank sees a bankable agricultural project it will fund it. For instance, if a person has personal money to lend as a money lender, I don’t think such a person will like to go to a village and lend the money to a farmer, who does subsistence farming, who does not know how to use herbicides, who does not understand book keeping and who does not know that the money the lender gives to him is a debt that needs to be paid back.

    Thankfully, we now have an avenue to fund such local farmers through Anchor Borrower Scheme where their products are guaranteed off take by bigger companies such as rice mills. And guess what, the scheme is producing great quantities of rice in the country. So, if subsistence farmers in the villages could be put together by professional private sector operators under cooperative societies and extension services are being used like what obtains in the CBN’s Anchor Borrower Scheme, banks will be willing to fund such farmers because their produce have guaranteed off take and there is some organised structure under which they operate.

    Having said there are lots of bankable agricultural projects that banks had and are still funding across the country. For instance, Fidelity Bank has a huge portfolio of agricultural projects it has supported over the years. One of the best rice mills in the country today, based in Kano, was funded by the bank and I am not talking about now when everybody is talking about agric. I am talking about as far back as 2010. If you go there today it is a very solid company that we are proud of.

    Despite the bank’s remarkable performance in the first half of the year, there was a slight decline in the deposit base what was responsible for this?

    We had a slight drop in deposits because of the high yield in treasury bills and bonds, which attracted depositors to migrate to such instruments. Secondly, we deliberately took a decision to optimise our balance sheet because we do not want to be known as a bank with a big balance sheet without efficient returns. Therefore, though we could grow our deposit by say N20 billion, using expensive deposits, but profit and returns will suffer.The half-year result showed that we are producing more revenue with less assets and we are springing out more revenue with a more efficient Balance Sheet. Finally, our numbers depicted a substitution situation where the major area of growth is now in low cost deposits, which currently account for 75 per cent of our total deposit base.

    Fidelity Bank’s outlook for the end of the year…

    Well, our half year audited accounts made us happy, but we are not relenting in our quest to deliver even better returns. Therefore, we will stay focused on executing our strategies so that full year will meet expectations.

    How is the bank handling its investment in 9 Mobile?

    As you are aware, the creditor banks came together to appoint a new Board and Management for the company with the Deputy Governor of the CBN as chairman of the board. The company has good fundamentals, with about 22 million subscribers and it also very strong in data. Our interest is to ensure the company remains as a going concern so that it can attract interested buyers. The banks are working collectively on this.

    What are your plans for your Eurobonds maturing next year?

    On Eurobond, we have $300 million Eurobonds maturing in May 2018 and we advised the market that we are considering options: Should we refinance? Should we issue another one or should we pay off the one that is maturing? We have informed the market that come September 30, we would make announcement on the options we have chosen.

    Why are you not giving out loans to operators in the oil and gas industry?

    That is not correct, Oil and Gas is about 27 per cent of our loan book mainly in the upstream sector.

     

  • Hair is the soul of a woman – Nkem Tonweh

    Hair is the soul of a woman – Nkem Tonweh

    Agency Reporter

     

    A woman’s hair is her soul, so says Nkem Ngbeken Tonweh, the Chief Executive Officer of Natty Cole Beauty Studio, one of the leading beauty brands in Italy.

    According to her, looking good is good business.

    “Hair is the soul of a woman. A good hair brings out in a Lady that self confidence locked within. It gives us a different vibe.

    A different personality which we always forget we have. Hair is life. Hair is everything in beauty. With a good hair we man move mountains,” she asserts

    According to Wikipedia, hair is a subject that is very important to women and their self-esteem. The positive or negative view of one’s hair can greatly affect a woman, especially if she’s of colour.

    Hair, its length, texture and colour, all affect how a person looks and how they will be perceived.

    “Every woman has their own choice of hairstyle, it’s their identity, their way of expression, depending on what they feel comfortable in. Every woman’s hair must be well kept regardless of the style. So, I really don’t think a choice of hair can determine if one is ugly or not, “ she said.

    Talking about a woman’s beauty and her hair, she added, “Beauty is a personal perspective. Beauty is in the eye of the beholder. It’s the feeling you get when you know it’s all perfect. I just know it. You feel it. The moment where you have that feeling you are good to go. No one can define your beauty except you.

    Nkem Ngbeken Tonweh began her entrepreneurial journey by establishing Afro Hair School by Mimi in Bergamo, Italy. She found another vista to life when she founded her popular brand, Natty Cole Beauty Studio founded in 2014.

    “We specialize in hair extensions, Wigs, Braids and dreadlocks. The particularity of our Salon is that we do training courses where we have people interested in learning about braids, hair extensions and dreadlocks. It’s been quite a challenge but it was worth it,” she says.

    Nkem Ngbeken Tonweh is from Delta State but born in Benin City, Edo State.

    She attended Lydia Primary School and Presentation National High School ( all girls Catholic boarding school) in Benin.

    She relocated to Rome, Italy immediately after her secondary school.

  • ‘Multiple taxes, policy inconsistency bane of private sector’

    ‘Multiple taxes, policy inconsistency bane of private sector’

    For the economy to move forward there is a need for policy consistency and the need to see governance as a continuum. Such policies need to be tailored to support industries to achieve economic growth, curb youth restiveness through massive employment generation, and promote social welfare for the overall well-being of Nigerians. The Founder and Chief Executive Officer, Emzor Pharmaceutical Industries Limited, Dr Stella Okoli, also wants government to look into the problem of multiple taxation in the manufacturing sector. Okoli, a member of the 42-man Nigerian Industrial Policy and Competitiveness Advisory Council, speaks on how to make the manufacturing sector a catalyst for economic growth and recovery. MUYIWA LUCAS was there.

    You are a member of the Ni-gerian Industrial Policy and Competitiveness Advisory Council. How does it feel being offered such a platform to serve  the nation?

    I’m happy to be given the chance to continue to contribute my quota; you would recall I’ve played similar role in the past. It’s an opportunity to continue the dialogue, advocacy and ensure that the government does something about the industrial sector.  It is the expectation of Nigerians that the objective of the advisory council, which is to speed up Nigeria’s industrialisation effort, will be realised during the tenure of this administration. The government is a continuum, but, unfortunately, politics and governance in the country has been characterised by policy somersault, inconsistencies and lack of continuity. When a new government comes into power, it reverses the policies of the previous administration. We’ve had beautiful programmes and policies in the past. If successive administrations had reviewed them and adopted the good aspects, we would have made a quantum leap in industrialisation. However, we are happy the right things are being done now to put in place mechanisms to jump-start a lot of industrial processes that would dovetail into an industrial revolution in the country.

    What do you think are the key burning issues that require urgent attention in the country’s renewed drive towards industrialisation and economic growth?

    We should embrace speed, whether we are in the private or public sector, because we have lost time. There are so many things that should have been done before now that were left undone, like having and implementing effective industrial policy. Now we have ease of doing business initiatives by the present regime designed to bolster the country’s business climate. For the civil servants/public officials and all those saddled with implementing these initiatives, can they match the speed required to produce good result? Are they determined to show more commitment to implementing government policies? These are things they have to do and with speed for us to make progress. Apart from these, we need to quickly set up industrial parks to boost manufacturing. The Asian countries have adopted this strategy successfully a long time ago and it has helped to boost their industrial capacity. Now they dominate markets around the world with their products. We can also have Information and Communications Technology (ICT) parks in different localities to enable our young people who are skilled in ICT to leverage on that to make something positive for our country; we need to encourage the youth to innovate. A lot of efforts should go into creating employment opportunities for our youth so as to curb restiveness and other negative tendencies among them. It is sad that many of our university graduates are unemployable but they can be retrained or assisted to acquire skills to meet the requirements of employers.    There is also the need to address our infrastructural deficit and create a favourable climate that will attract foreign direct investment. We cannot continue to have a mono-economy and make progress; we have to diversify our economy away from oil. That is why it is important for government to support the productive sector – agriculture, industry, and the Small & Medium-scale Enterprises (SMEs), which are the engine of economic growth and employment generation.

    Sometime ago, you were bitter about manufacturers’ inability to access foreign exchange to import raw materials for their operations, despite a directive by the Central Bank of Nigeria to banks to allocate 60 per cent of foreign exchange sales to the manufacturing sector. Has the situation improved now?

    Not much has changed; getting foreign exchange (forex) is still a major problem.Manufacturers should be given preference in the allocation of foreign exchange but the banks keep saying they don’t have forex. We expect government to go beyond this and provide us with intervention funds that was promised about four or five years ago, so that we can buy equipment, machinery and raw materials to sustain our operations. You are aware that most industries got theirs; we were not given, especially those of us that were trying to attain World Health Organisation (WHO) pre-qualification for our pharmaceutical products and production processes, which is a huge expense. The pharmaceutical industry requires about N30 billion intervention funds at single digit interest rate to boost the sector. It is important that we are assisted to be able to compete favourably.

    What efforts have you, as manufacturers,particularly through MAN, made to reach out to the government the challenges you are going through?

    As a young graduate you leave the university and walk to the bank in England because you have gone through the university, you can get a loan, but here everybody must have collateral.

    We have gone to various levels of government. For instance, the Pharmaceutical manufacturers group of MAN has gone to the minister of Health, minister of Industry and also the legislators for appeal, but nothing is happening. The energy that was put in was much, but because we are patriotic Nigerians, if we take a bad step, what will be the future of pharmaceutical manufacturing and those studying pharmacy and drug manufacturing in Nigeria? We should be talking of research, now is the time we need to move and get going.

    Last May, the Fderal Government signed three executive orders, one of which is to promote transparency and efficiency in the business environment to facilitate the ease of doing business in Nigeria. Would you say this particular order has created a better business environment for manufacturers, especially as it concerns imports?

    No, we are yet to see an improvement in the business environment relating to exports and imports. Look at Apapa ports, for instance. The roads are in deplorable condition and there are so many hurdles in the way of doing business. Executive orders are good, but they have to be implemented by human beings. Policies and programmes of government are implemented by civil servants. Those in the ministries and government agencies need to be “born again”; they need to have a new orientation and understand that we are all working towards one goal. I’m sure that with time these executive orders will begin to yield good result. But we need more executive orders because there are so many things that need to be fixed.

    What are some of these executive orders that you would have loved government to give?

    I wish they could come up with an executive order to facilitate payment for goods and services procured by government. When they buy goods from you, they should pay. Government indebtedness has crippled many contractors, suppliers and consultants. For instance, they are owing us for five years; it is not right. There should also be an executive order to curb medical tourism, which has been a major drain on the nation’s economy. How can we sit here as giants of Africa and our people are dying on their way to India and other countries in search of quality healthcare? Why can’t they make sure our hospitals are up to standard and new ones are built so that our people can have access to quality healthcare here in the country? People are dying of wrong diagnosis due to poor facilities and unqualified personnel. To worsen the situation, there is corruption in the system. How can you bribe a doctor to refer a patient to India or other countries? Oh yes, this is happening.

    Governor Akinwumi Ambode of Lagos State has been working to set Lagos as a model of governance. What impact is this having on private sector operators like you in the Lagos environment?

    I must commend Governor Akinwunmi Ambode for the great work he is doing. Lagos is a place that other states should emulate in terms of continuity in governance. Babatunde Fashola, who succeeded Bola Tinubu, continued from where he stopped and this governor is doing the same. They did not discard the policies and programmes of their predecessors, but built upon them, all in a bid to make Lagos the centre of excellence. However, the business environment is not friendly because of the crippling tax regime. Multiple taxation is a huge burden on business owners. Even when they are not making profit, they are being harassed to pay all kind of taxes. This is the area that I fault the government because we spend what we are not earning in paying taxes. The state government should look into this problem. The fact is that multiple taxation is a major problem across the country, not in Lagos alone, and this has remained a major burden on industries and other private sector operations. For us to make a headway, the government must address this issue as a matter of urgency.

    What is your view on the current efforts to boost patronage of locally produced goods as part of government’s diversification agenda?

    It is very important to promote Made-in-Nigeria goods for obvious reasons. We have been advocating for that for a long time because it is what we have to do to get our economy on track. But there must be proper policies put in place to back up the campaign. Of course, if locally produced goods are patronised, industries will thrive, employment will be generated and the poverty level in the country will be reduced.

    What do you think can be very important survival strategy that businesses should employ now leveraging upon it to survive in the economy?

    The strategy is obviously that of cost cutting- streamlining the products line and engaging with the government at all levels to ensure that companies and manufacturers are sustained and also plead with everybody come on board because coordination of the ministries and parastatals must be together and understand the stakes are very high and work together.

    What is the Emzor Wellocracy Initiative about? How well is this doing especially in this period of recession?

    A healthy nation is a wealthy nation. So in Emzor, we are committed to affordable wellness for all, irrespective of your location or social status. With Wellocracy, we can spread wellness to every part of Nigeria and Africa. It is like our mantra, our vision; it’s like an oath that we have taken to make sure that the health of Nigerians and, indeed, Africans does not suffer. Under this initiative, we will continue to produce quality pharmaceuticals even if we are not making money. We have refused to allow such factors as recession or high exchange and interest rates to kill our vision. It is like what we have agreed to do as a company and we owe it to Nigerians, to ourselves and to our God that come rain or shine, we have to continue. Wellocracy is for all of us and it has come to stay.

  • ‘Seamless transport system ‘ll boost economy’

    ‘Seamless transport system ‘ll boost economy’

    As the brain behind the proposed Truck Transit Parks (TTPs), Hassan Bello,the Nigerian Shippers Council Executive, believes that they will aid economic development.The council has appointed a transaction adviser and started talking with investors and financial institutions to facilitate the parks’ coming. In this interview with OLUWAKEMI DAUDA,Bello says the parks and the inland ports development will aid diversification of the economy.

    What is the aim of the proposed truck transit parks?

    The rationale behind the parks is to provide modern transport infrastructure. A truck transit park is a public rest area located off the road, designed to provide temporary place to rest for truck drivers. It is primarily intended for short-term safety breaks and also longer-term parking services in high-use transport corridors. So, we have to upgrade our infrastructure and make them modern. We also have to humanise truck drivers because they carry all the burden of the economy. So, we want an off-the-road area that would be modern with brothels, garages, repair yards, restaurants, and police station, among others. The council will facilitate the TTPs because of the crucial role they are expected to play in the growth and development of the national economy, especially in terms of trade facilitation. This is essential because of the importance of road haulage in the country, without which the national economy will suffer, especially given the state of the rail system. What we want is a seamless transport system for the benefit of the nation’s economy.

    What prompted this initiative?

    It was based on the realisation that transportation is a critical determinant in the conduct of international trade and impacts on national economies. The availability, quality, cost and efficiency of transport services influence the trading environment and the competitiveness of export goods on the international market as well as the cost of imported goods.

    How do you intend to achieve this?

    The project would be done on a Public Private Partnership (PPP) basis. We have appointed transaction advisers for the projects. We are talking with fleet owners, investors and financial institutions. We are meeting with investors and lending institutions, and we are also inviting certain financial institutions like the Stock Exchange, Pension Commission, Sovereign Fund, the ECOWAS Bank, the CBN and many others, so that we can get financial commitment from them.

    How many locations do you have for the projects?

    We have identified eight locations. They have been assessed to be economically viable for the construction of transit parks. They are: Port Novo Creek, Lagos State; Ogere, Ogun State; Onitsha, Anambra State; Jebba, Kwara State; Lokoja, Kogi State; Ore, Ondo State; Obollo-Afor, Enugu State.

    How many jobs do you intend to create with this initiatives?

    About 15,000 jobs will be created when the project becomes operational.

    What is the relationship between the council and the host states?

    As part of our ports economic regulatory duties, the NSC is to liaise with the host state governments of the parks to ensure the provision of infrastructure and other facilities on the sites.

    Are they showing interest?

    So far, Kogi State government has allocated about 45 hectares of land at Ohono Village on Lokoja-Abuja Highway for the project, while Enugu State government has allocated about 50 acres of land at Obollo-Afor in Udenu Local Government Area. Kaduna State government is developing such parks at Mararaban Jos, Tafa and Buruku. Two locations have been procured while the third one is expected soon. It is the responsibility of the host state government to identify and allocate suitable land free of all encumbrances, provide basic infrastructure such as electricity, water, access road and security.

    What are the benefits?

    TTP project is one of the strategies to fast-track the bridging of infrastructure deficit particularly in the transport sector. It will help us protect import and export cargo on haulage vehicles and general road safety; it will reduce accidents and damage to cargo caused by fatigue and associated risk costs; it will reduce pilferage and theft of cargo in transit due to enhanced security; it will afford cargo owners the means to monitor the movement of the cargo through a tracking system in TTP network; it will improve transit to hinterland locations as well as transit cargoes to landlocked countries; the TTPs will also bring about increased Internally Generated Revenue(IGR), employment opportunities, wealth creation and boost local economies of the states, among others.

    How do you regulate the movement of the truck drivers?

    There has to be a tracking of the movement of the trucks from the seaport to the final location. There is therefore need to spell out the number of kilometres or distance for which the truck driver will run from his place of departure and the particular TTPs to make a stopover to rest before continuing with the journey. These  factors would be given due consideration in the construction of the TTPs so that the trucks do not go such a long distance before parking for rest, which might defeat the whole essence of the project. There is need to introduce a deliberate policy to regulate and checkmate the proliferation of TTPs with a view to maintaining internationally acceptable standards for the truck terminals. Strong enforcement of these standards are imperative so that trucks do not just park anywhere outside the approved TTPs, which will defeat the purpose of the project.

    The private sector operators are to provide instruments of enforcement of the TTP objectives, like investments in the acquisition of towing vans to ensure that broken down trucks do not litter the highways and constitute a menace to other road users. We will also time the trucks so that a driver cannot drive more than eight hours without a rest. And there is no place he can rest except a brothel. So, we are also going to look at the regulatory framework. Legal and institutional framework.  We will also find the best way investors will run the Transit Parks to recoup their capital. We are going to guarantee profit return of investment. But the truth is that the parks are going to be modern.

    Are you also planning to regulate the activities of luxury buses?

    Yes, we are even talking to owners of luxury buses and their drivers because they also need a terminal. They perform very important economic functions. At times, they are used as couriers. But what is happening now is that the land transport system in Nigeria is hardly regulated.

    How are you going to address that?

    We have just commissioned a law firm to look at the issue holistically.

    Which of the firms is that?

    I won’t disclose that for now. What we have for now is just the common law pronounced on carriage of goods which is not the modern way of doing business. You need to limit the liabilities of the transporters; they have to know what their responsibilities are, and the areas of their responsibilities.

    How do you hope to achieve a seamless transportation system in the country?

    The dry ports are going to be linked with value additions like export free zones. If we have dry port in Funtua, a lot of factories will spring up to process agricultural products. If we have another dry port in Kano, you can imagine the high level of export we would witness in that area. Nigeria needs to diversify her economy. We cannot continue to be an import dependent nation. We have to start exporting and you have seen the rise in the non-export in Nigeria, so we need terminals to support that. Kaduna is the largest producer of ginger. The ginger in Kaduna is unique. You cannot get it anywhere except in Kaduna and its environs. The state cannot even meet the ginger demands of  the people. Why people have not discussed exporting it is because you have to take it by truck or by rail to Lagos and start the process again, while you can export it from Kaduna. So, shipping is becoming a big business. We are bringing shipping to the door step of people right there. We are cleaning the frontier and stimulating the economy and that is extremely important. Based on the interconnectivity of the transport system, you can send cargo from Perkin in China to Kaduna with a bill of laden to Liverpool, Kaduna without reaching Liverpool, Apapa because Kaduna is a port of origin, and a port of destination.

    How much do you think it will cost to have a transit park?

    It depends on the size and many things. I have mentioned that we are appointing transaction advisers. It is really premature to talk about the cost. The transaction advisers will guide us; but we need state-of-the-art infrastructure. There is no compromise on that. The shippers’ council has reached advanced stage talking with the ECOWAS Bank in Lome, Togo. This kind of fund we think we will get would be cheaper than that of the commercial banks.

    What is the collaboration between you and other agencies on the park?

    We are collaborating very well with the NPA as the landlord of the ports. We cannot but collaborate, we are working with the Customs, we have had a very successful meeting. We are cooperating with NIMASA on so many other issues.

    How do you plan to ensure security at the transit parks?

    Again, we are collaborating with the Nigeria Police Force; it has to be a secured place- security of cargo, security of individuals and of course, all the business interests therein. We are not going to joke with security, even the fence will be state-of-the-art. Entrance into the facility will be restricted. Even more importantly is the enforcement. This is why we have signed an MoU with Federal Road Safety Corps.

    One of the objectives of the TTPs is to boost ease of doing business by moving cargoes from sea ports to inland container terminals.  What are you doing to partner with NPA in realising the Executive Order of the government?

    We are partnering with the NPA; they have already done a lot of work, but what we studied was that there is need for a lot of infrastructure, security, attitudinal change and there is need for other institutions like the Customs to key into the directive. In terms of infrastructure, we need port lighting, the roads and security, there is no reason why our ports should not work 24hours; the terminals are ready, the Customs are also ready; they have now devised shifting. If the airports can work 24 hours, why won’t Nigerian ports work 24 hours? So the Ministry of Transportation is coordinating this; the NPA is looking at issues at the port, while Shippers’ Council is looking at the overall issues. Twenty four hours port operations have come to stay at our ports. More importantly, the ports would be connected with the port master plan, the railway and the Inland waterways (NIWA) is also working; we are also working with the Department of Petroleum Resources (DPR) to look into the issues of the tank farms.

    Are you considering the relocation of the tank farms from Apapa?

    The question is not about moving the tank farms, but the mode of transporting petroleum products. The pipeline is a mode of transportation; if the tank farms have pipelines which would take petroleum products outside Lagos, then that takes tankers off the road. However, we have the solution now, the International Finance Corporation (IFC), an arm of the World Bank, did a study for Nigerian Shippers’ Council on the management of traffic on the Lagos port corridor. It discovered that about 5,000 trailers and tankers are always on the road, while what only 1,000 are needed. The project is in collaboration with the NPA. We are going to have modern traffic management, electronic gates, parking bays, and staging areas, among others. So only trucks that have business to do at the ports are allowed in. This is already within the procurement process; it is going to be advertised and when it is done, we would solve the problem of traffic in Apapa, I hope this would also be duplicated where we have proposed ports in Lekki and Badagry.

    How is the connectivity between Kaduna Inland Container Depot (ICD) and the rail lines?

    They are well connected. The rails are working. Containers are being dropped there from Apapa port; they are carrying out operations already. Customs is there and other agencies are also there at the Kaduna ICD. It is now a port of origin and destination. And this means that you can consign cargo from anywhere to that place and also export goods from there to any port in the world.

    Have you resolved the court case between the NSC and the terminal operators to make them key into the TTP project?

    Yes. The series of court cases between the Nigerian Shippers’ Council and the operators is not adversarial, we are seeking for interpretation. An investor like the terminal operators and shipping companies need clear regulatory framework for them to operate. Sometimes I am inclined to think that the sector is over-regulated, so it is within their right to go to court and find out what is happening. It is also wrong for us to reduce the court case to the fact that somebody won and somebody has lost, we should stop looking at the maritime industry in such light, we should always look at its economic potential and how we are going to harvest all the potentials in the maritime industry. Out-of-court settlement has been on-going for a very long time and despite what the court says, we consider the terminals and shipping companies as our critical partners. Our own is to provide the atmosphere where they can operate and make profit; when they don’t make profit then it becomes our failure as the Shippers’ Council.

    Why the failure?

    Because, we as regulators, we are the umpire, we are neutral, sometimes you see us criticising even the government for not providing the environment for them to operate, it is important that we guarantee their investment because it would translate into the contribution of the transport sector to the GDP in terms of new infrastructure.

    Since they were appointed in 2006, what has been their contribution to port development?

    If you go to the port now, they are not as they were 20 years ago; we are also considering the employment content of what they can offer to our people. Now we are gearing the ports to be competitive in export, we are opening some inland ports; all these are economic activities that have multiplier effects and profound impact on the economies of these locations where they are sited. I can imagine that about five to six industries would spring up in Kaduna because of the dry port. If you translate this into employment, distribution of wealth, infrastructure, you will see that the economy would gain a boost. The same thing in Jos, the ICD in Jos is 65 per cent completed but the operators have already got a long term contract with some investors to carry goods from Jos to other locations. We should forget about trivial issues and begin to talk about economic issues. The other day, there was a breach on the APMT systems and the next day we were already there to look at their operations to see how they are coping, we also negotiated that this should not translate into demurrage, this is the way to play because the world is global.