The Nation Newspaper

Category: CEO

  • Media Perspectives appoints Jude Odia COO

    Media Perspectives appoints Jude Odia COO

    Within two months of his elevation to the post of the General Manager of Media Perspectives, Jude Odia, regarded as one of Nigeria’s most promising media advertising executives, has been promoted Chief Operating Officer (COO) of the agency.

    The former General Manager has played key roles in the growth of the frontline media agency. His wealth of experience in communications planning and brand strategy has helped Media Perspectives create noteworthy campaigns for MTN, NB Plc, Samsung, Procter and Gamble, among others. With his new appointment, Odia will be overseeing the administrative activities and general management of the agency.

    Industry watchers are not surprised over this development; as feelers revealed that he has paid his dues in the industry having been part and parcel of the agency’s origin, growth and development. Besides, he is also believed to the best man for the job based on his reputation as an erudite strategist with core strength in brand strategy, integrated communications, planning and end-to-end accounts management. He has led and coordinated account management teams across West Africa that implemented many successful media advertising campaigns for leading multinational clients. He has also developed winning media strategies for multinational/local brands in Nigeria and across the West Africa markets.

    Odia, an associate member of the Advertising Practitioners Council of Nigeria (APCON), has a solid academic background. He bagged his B.A Honours English/ Literature from the prestigious University of Benin. In 2016, he earned his Masters of Business Administration (MBA) from the University of Bradford, UK. He is also a Lagos Business School alumnus.

    His professional sojourn began in 2001 as a presenter and producer with Minaj Broadcast International, now defunct. In 2003, he got his first agency job as a Media Executive, Research & Data Analyst at Initiative Media (now Sharemind Media).

    In March 2007, he was appointed as Head, Strategy & Planning at Capital Media. Barely one and half months after he joined the media agency, Odia called it quits and headed off to the banking industry. He was Group Head, Brand Management for FinBank Plc, between September 2008 and December 2010.

    He joined Media Perspectives in February 2011, and rose through the ranks from Group Head, Strategy and Planning; to Associate Media Director, Strategy; Media Director and General Manager. He occupied that position until his recent appointment as COO.

    In addition, Odia is an industry resource person that facilitates training for sectorial bodies like Media Independent Practitioners Association of Nigeria (MIPAN) and has championed mentorship within the Agency, currently runs a private and non-profit mentorship weekend program for young media executives.

  • ‘Recession will make us look inward’

    ‘Recession will make us look inward’

    To the Group Managing Director/Chief Executive Officer of UAC Nigeria PLC (UACN), Mr. Larry Ephraim Ettah, Nigeria’s recession is structural. So, to get out of it, he says, the government must encourage growth because recession means negative growth. Ettah, who presides over the Nigeria Employers Consultative Association (NECA), says foreign investors become lethargic when there is inconsistent policy. He speaks on the way forward with TOBA AGBOOLA.

    ow did the country get into recession?

    That we are in a recession shouldn’t be surprising because the evidence before us shows that power supply in the country has reduced since the last quarter significantly. We are mindful of what has happened in the Niger Delta; the colossal destruction and dislocation of the economic activities by the militants and the impact on the government revenue. Adding to that of course has been the confusion and lack of clarity in terms of the foreign exchange management.

    With all that put together was disaster foretold that this recession will happen. I think what we have to ask ourselves as Nigerians now that we are in this is: ‘How do we get out of it?’ We have gone beyond the period of lamentation. We are in it. Let us get out. We don’t get out of recession by digging ourselves out. When you find yourself in a hole, you come out; you don’t dig deeper.

    However, the economic situation we are is like a blessing for us. For instance, with the scarcity of dollars, which would make lots of imported goods out of the reach of many, Nigerians would be made to look inward and this would in turn boost local production.

    But the success of this strategy is hinged more on the government’s will and efforts to fix and improve power as well as infrastructure and other essentials for businesses to thrive.

    What is the way out?

    To get out of recession, Nigeria has two choices – to spend itself out of recession or tax itself out of recession. Our recession is structural and what we need to do is to try to encourage growth because recession itself actually means negative growth. Therefore, to get out of recession, it technically means you need to be positive and then do what will encourage growth in this country. I mean significant growth and what will make that happen is power. Why, for instance, do we have the situation we found ourselves in today?

    You recognise that power generation in this country has dropped significantly in the last two quarters. And if we are in a position to have more power generated, that would mean a significant amount of opportunity, which would encourage a lot of entrepreneurs to start businesses. It also means that businesses that are actually there will be able to have lower cost of doing business where they can grow and be able to employ many more people. So we have to invest a lot more in terms of ensuring that we step up and upgrade our power generation. Its a shame that a country like South Africa is talking of 40,000 megawatts in power and we are still talking about 3,000 megawatts. But the minimum we should be thinking in the next two years should be in the average of 15,000 to 20,000 megawatts. What it also means is that there must be a lot of spending around that space; so power is very critical.

    The other thing is also the type of policies we put in place; including certain policies which this government inherited. I think we inherited a mess and we turned it into a disaster because of some wrong policies and choices we made. Now, if we are now talking of deregulating the foreign exchange market, imagine if we have done this as far back as 15 months ago, or possibly even one year ago; the things we are asking about now, the foreign capital inflow, should have come.

    But why is this capital inflow not coming in?

    Today, the government’ss monthly revenue is about $1 billion. However, our requirement as a country in terms of import is $3 billion. Actually, there is a gap of $2 billion. Now, if we didn’t have the disruption in the Niger Delta, perhaps we would have had more oil being pumped, and then maybe added 800,000 barrels a day (bpd) into our revenue and may be that would have given us  $1.7 billion. But if you have a situation where your monthly demand for dollar is still $3 billion, then you still have a gap. It also means that you have a very huge import demand, which has to be financed with dollars. What we need to also do is to find out how to diversify the economy in such a way that some of those things we were importing, like rice, tomato puree, the drinks, the fashion accessories, clothes and all of those things can be produced locally to reduce that demand so that we are in a position where we are generating $2 billion that covers our demand. Remember, oil prices are no longer going to go up to $100 per barrel, which we used to enjoy.

    We must also have it in mind that in the next two to three years, oil prices will remain low; the days of $70, $80, $90 per barrel are gone. So we will have to be living in a restructured environment, in which case we will have to be looking at how to diversify our economy, how to have more of the goods we are importing being produced locally. I think it’s a good opportunity; though there won’t be a lot of choices, this is also an opportunity that we should not allow to go. It’s a good crisis to happen because it would make more Nigerians to look inward to see how we will encourage local production of most of these goods. However, that would happen if we have power and infrastructure to support diversification.

    The other one is the fact that the Central Bank of Nigeria (CBN) has not been very helpful. I must say that the signal out of the CBN has been very confusing. At one time we have ban on Bureau de Change, later nine banks were banned and before then we had a ban on 41 items; all those things have a way of confusing investors. It’s very important that the signal from the CBN remain consistent because investors want to see consistency. They are lethargic when they have inconsistencies in policies. So it’s very clear that we need to have a lot more coherence coming from the monitoring authority. For instance, at one time, they are reducing MPR and at the other time, they are increasing MPR. All these things are untactful.

    So, why are foreigners not bringing money?

    They are waiting to see whether we are consistent and if we don’t get those things right, we are simply just paying lip service to the issue. I think it’s important that the leadership at CBN recognises that and it jerks its credibility as it does. The sooner they begin to address that credibility deficit in terms of ensuring policy consistency, the faster they will address all the issues.

    What urgent steps do you think the government can take, especially steps that will reduce the pains of the average Nigerian?

    We need to create employment. When we’re talking about creating employment, the government must not be looking at itself as the only one to provide jobs. The government has to create the environment for employment to be generated. How many people can the government employ? The government has to create the enabling environment that allows industry to thrive. This must be an environment that allows industry to create employment. So it’s very critical that such environment is created and it is created too when you have monetary policy stability; when you have fiscal growth; when you have infrastructural facilities in the country. That environment is also created when there is improvement in security in the environment itself in which case people have more confidence to transact business. So those are the things we should be looking for.

    Things like what?

    The government has to recognise that we are in recession. Perhaps both the 2016 Budget and spending and the 2017 Budget exercise would have to address those kinds of indices of growth that I’ve just spoken of. I would also add a point about the mortality rate. I know lots of figures have been bandied by various bodies because NACCIMA has given its own statistics and so has MAN but one thing I would just like to say is that, whether we agree with the numbers or not, the signals are clear and the evidence before our eyes shows that unemployment is increasing. And from what we heard in the last release from Nigerian Bureau of Statistics (NBS), unemployment has actually increased by 1.1 million in one quarter and I think that is a significant increase. It just goes to show that there are lots of works to be done because even among those who are employed, some are underemployed. So there is a lot of work to be done. But that work cannot be done by government alone because it has a duty to create an environment that encourages private sector to become the engine of growth.

    From hindsight, do you think an early passage of the 2016 budget would have averted the economic situation?

    I am very encouraged by the work that the Minister of Budget and National Planning is doing. For once, we were told that the medium-term economic framework was being debated and had been approved by the Federal Executive Council. What that means is that some work is being done and hopefully, we believe that if our legislature exhibits the responsibility and the maturity required of them, they will be able to pass the 2017 budget when it comes to them in good time.

    It doesn’t help that we will be talking about the budget of one fiscal year when we are already in the middle of the year. It is a very difficult thing when that happens, because it is not just government budget, it is also a budget that sets the tone for economic direction. Even the people within the private sector want to understand the direction of the government because that budget sends signals about how much it is going to borrow; where its priorities are and sends signals about what it hopes to do in terms of addressing fundamental issues within the economy. That helps to mould everybody’s planning; helps to project what the future will be and gives a better visibility into the outlook. When that doesn’t happen, it is very unhelpful.

    What are your views on the 60 per cent allocation of forex to manufacturers?

    I am very allergic to a situation where I hear of allocation. I always like the market to allocate. In which case there should be free availability of forex and allocation is removed. This is because when we talk about allocation, it means that there is no deregulated market. The market should be able to allocate forex to those players within the market in the best way to encourage return. Remember, capital looks at income, stability and security. Once it has to do with allocation, it means somebody is using his or her discretion and the question becomes: ‘Is that the right thing to do?’ What the CBN should be interested in is empowering institutions like Bank of Industry (BoI), Bank of Agriculture (BoA) and other institutions through targeted developmental financing to address the needs of the industry because if you say to me, ‘I bought my forex at a certain price in the free market, I should also be willing to sell it to those who will buy it.’ Assuming you want to allocate it to 60 per cent and the people don’t have interest in it, what will happen? I don’t like the word allocation.

  • ‘How to bridge airports’ infrastructure gap’

    ‘How to bridge airports’ infrastructure gap’

    Federal Airports Authority of Nigeria ( FAAN) Managing Director Saleh Dunoma is for concessioning to address the problem of infrastructure. In this interview with KELVIN OSA-OKUNBOR, he insists that that is the only way to turn around the airports.

    There is growing disapproval by some stakeholders of the government’s plan to concession some international airports. What is your take on this?

    Many people do not know much  about airport concession. It is critical for players and stakeholders to understand clearly the motives of the government before kicking against the exercise. From a global point of view, airport concession has become fashionable because of the benefits accruable. Concession is a model adopted to address serious gaps in infrastructure at airports.

    Since governments do not have enough money to address infrastructure gaps, it considers concession an incentive to attract investors. It is a very good thing for the global aviation industry. The whole idea of adopting concession of airports is to get capital to develop infrastructure. This is the reason government is looking at airport concession.

    Airports concession is used to close gaps in terms of infrastructure. These gaps have arisen because of insufficient intervention through funding. This is the major attraction for introduction of concession.

    How does a typical concession arrangement work, given that previous ones ended in controversy?

    The model affords government the opportunity to share risks with private sector players who are interested in putting money into airport infrastructure to make them work more efficiently. It is a business arrangement that allows people who know how to do the business as stakeholders collaborate to share risks and possible profits in managing airport terminals. Under this arrangement, the facility remains the property of government, but managed by the private sector.

    That is all what concession is. Let’s come and close this gap and share the profit.  If concession is done properly and openly and transparently and all parameters, issues are properly considered, it is better.

    The shared risk in case of concession is important. I think we need to understand the difference between privatisation and concession. If all the parameters are gotten rightly at the beginning, I think concession is better. The challenge here is a matter of perception.

    How do you address the growing agitation for airport services by airlines and other users in Africa?

    From a continental point of view, airports in Africa were built to meet some demands at the time of their construction. But, as you have it in Nigeria, over the years , the volume of flight and other operations have reached a level that public funding has become inadequate to meet the needs of airlines and other airport users .

    Infrastructure requires renewal all the time. This renewal also requires a lot of capital investments. African governments are unable to fill the infrastructure gap. So what is the solution? That is why concession is becoming popular.

    How will you as the president, African Region of Airports Council International, improve air transport on the continent?

    Our concern mostly is to make sure that we continue to improve the environment for safe, secure aviation business. Because of the global challenges that we have, we need to make sure we improve our security in all our airports in Africa. The next important thing is commercials. We need revenue to sustain some of our operations. We need air services which are critical.

    We need connectivity because right now, we don’t have the connectivity that we require to cover the entire African continent and this is our immediate concern.

    We also need proper and improved air services. We need to collaborate with African airlines through African Airlines Association (AFRAA)  or IATA to make sure that African airlines are developed in such a way that they rate with other airports. We need to look at creating an environment so that these African airports get access to our airports. Whatever it means, if it means getting some incentives or encouragement or whatever it takes to bring our African airlines to cover all African airports that we have to improve connectivity in Africa.

    We will sit down and look at them critically and collaborate with stakeholders to make sure that we achieve proper connectivity, within the African airspace and African airport. It will go a long way in improving the growth of our airlines and services within the continent of Africa.

    There are the other things that we need to add, in addition to safety and security, that will make our aviation robust. It is a growing economy and there are so many potentials to make sure that we encourage investors into African aviation business.

    What are the incentives?

    We are working towards that. We are thinking seriously. We have discussed this and we asked all the members to go and think. Different issues for different countries. But I assure you, in our next meeting, we will bring the issues and we will discuss them, harmonise and work out the incentives we would like to provide for African airlines to achieve a better connectivity. We have committees and these committees are given some of the assignments that come up with the board and then we work on that.

    You talked about air connectivity in Africa and how ACI was trying to create a single sky. How can this be achieved without infrastructure?

    Many countries are making efforts in this direction. In the last meeting we had a lot of projects across Africa, airports are either in advanced stage or  just taking off.  The countries are providing adequate infrastructure for the kind of traffic they want to attract. It is not the size of the building that determines the traffic. Mostly, passengers and other airport users see only the terminal building. There are lots of things that you don’t see. The airlines are there; what about the runway, apron, ground services and others. These are the important things that airlines will require to come. What is important to attract traffic is whether we have adequate navigational equipment at the airport, runway, apron, ramp services, and fuel. Those are things that everybody would want to know if they are adequate. African airlines are trying to address all these.

    How can African airlines begin to work with global technology at major airports?

    Technology is very important because you cannot, for example, construct the runway without it. We are looking at that critically. In every meeting that we hold, we invite manufacturers from all over the world. And they come with the state of the art equipment. We give them this opportunity so that member states will look at the new technologies and then see how we can get access to such new technology. They also do presentations so that everybody understands what is there. We share experiences with other airports that have already started using these new technologies. We agree on way to go. We also talk to the manufacturers to assist individual airports that are ready to adopt these technologies on training.

    What legacy will you leave as ACI Africa President?

    I am working hard with the board. I have already discussed with them in my acceptance speech that we need just to convince our governments and our approving authorities in the various states. In order to take aviation to the next level in Africa we have identified some areas that we need to cover. They will collate all the issues and solutions and bring to us. We will now liaise. We want to bring the approving authorities close to us. If we bring them close to us and they understand the issue, that makes life easier for us in Africa. We intend to explore more and the relationship between African Union with ACI Africa through, of course the rightful channels. We have regional, ECOWAS and we have groupings. We will use the ECOWAS to get African Heads of State. We intend to improve that; so at the end of the day, there will be smooth and proper relationship between us and them and they will see reasons to approve us on all the issues we tend to bring out in the future. And we get the blessings of these governments as quickly as possible.

    In capacity building, what is on the table for Africa?

    Many capacity building initiatives have been designed to improve African aviation. The Human Resources Sub-committee team for African region met recently in Maputo and the members of the team have come up with suggestions on capacity development in Africa. Mostly, it is geared towards improvement of airport workers as far as airport in Africa is concerned. It is also geared towards knowledge that will enable them execute their responsibilities, bearing in mind the current issues of terrorism. We are talking about airport security but we place emphasis on land side security because people come from the land side to the airport and perpetrate whatever bad intentions that they have. So, we have a template of how to tackle security at the airports, especially the landside security. These are the kind of things we look at and we proffer solution to them. There are lots of improvements in the training programme. We are looking at: what are the threats; what do we do; what is on the table for ACI Africa. These trainings are geared towards addressing such issues and we are very flexible. We look at the requirements of various countries under ACI Africa. Then bring it to the board and then discuss and determine the people that require these training.  We try as much as possible to train more people. So we normally, take the training to the doorstep of those that need it so that we don’t have to pay much or spend much on the training.

  • ‘How to bridge airports’ infrastructure gap’

    ‘How to bridge airports’ infrastructure gap’

    Federal Airports Authority of Nigeria ( FAAN) Managing Director Saleh Dunoma is for concessioning to address the problem of infrastructure. In this interview with KELVIN OSA-OKUNBOR, he insists that, that is the only way to turn around the airports.

    There is growing disapproval by some stakeholders of the government’s plan to concession some international airports. What is your take on this?

    Many people do not know much  about airport concession. It is critical for players and stakeholders to understand clearly the motives of the government before kicking against the exercise. From a global point of view, airport concession has become fashionable because of the benefits accruable. Concession is a model adopted to address serious gaps in infrastructure at airports.

    Since governments do not have enough money to address infrastructure gaps, it considers concession an incentive to attract investors. It is a very good thing for the global aviation industry. The whole idea of adopting concession of airports is to get capital to develop infrastructure. This is the reason government is looking at airport concession.

    Airports concession is used to close gaps in terms of infrastructure. These gaps have arisen because of insufficient intervention through funding. This is the major attraction for introduction of concession.

    How does a typical concession arrangement work, given that previous ones ended in controversy?

    The model affords government the opportunity to share risks with private sector players who are interested in putting money into airport infrastructure to make them work more efficiently. It is a business arrangement that allows people who know how to do the business as stakeholders collaborate to share risks and possible profits in managing airport terminals. Under this arrangement, the facility remains the property of government, but managed by the private sector.

    That is all what concession is. Let’s come and close this gap and share the profit.  If concession is done properly and openly and transparently and all parameters, issues are properly considered, it is better.

    The shared risk in case of concession is important. I think we need to understand the difference between privatisation and concession. If all the parameters are gotten rightly at the beginning, I think concession is better. The challenge here is a matter of perception.

    How do you address the growing agitation for airport services by airlines and other users in Africa?

    From a continental point of view, airports in Africa were built to meet some demands at the time of their construction. But, as you have it in Nigeria, over the years , the volume of flight and other operations have reached a level that public funding has become inadequate to meet the needs of airlines and other airport users .

    Infrastructure requires renewal all the time. This renewal also requires a lot of capital investments. African governments are unable to fill the infrastructure gap. So what is the solution? That is why concession is becoming popular.

    How will you as the president, African Region of Airports Council International, improve air transport on the continent?

    Our concern mostly is to make sure that we continue to improve the environment for safe, secure aviation business. Because of the global challenges that we have, we need to make sure we improve our security in all our airports in Africa. The next important thing is commercials. We need revenue to sustain some of our operations. We need air services which are critical.

    We need connectivity because right now, we don’t have the connectivity that we require to cover the entire African continent and this is our immediate concern.

    We also need proper and improved air services. We need to collaborate with African airlines through African Airlines Association (AFRAA)  or IATA to make sure that African airlines are developed in such a way that they rate with other airports. We need to look at creating an environment so that these African airports get access to our airports. Whatever it means, if it means getting some incentives or encouragement or whatever it takes to bring our African airlines to cover all African airports that we have to improve connectivity in Africa.

    We will sit down and look at them critically and collaborate with stakeholders to make sure that we achieve proper connectivity, within the African airspace and African airport. It will go a long way in improving the growth of our airlines and services within the continent of Africa.

    There are the other things that we need to add, in addition to safety and security, that will make our aviation robust. It is a growing economy and there are so many potentials to make sure that we encourage investors into African aviation business.

    What are the incentives?

    We are working towards that. We are thinking seriously. We have discussed this and we asked all the members to go and think. Different issues for different countries. But I assure you, in our next meeting, we will bring the issues and we will discuss them, harmonise and work out the incentives we would like to provide for African airlines to achieve a better connectivity. We have committees and these committees are given some of the assignments that come up with the board and then we work on that.

    You talked about air connectivity in Africa and how ACI was trying to create a single sky. How can this be achieved without infrastructure?

    Many countries are making efforts in this direction. In the last meeting we had a lot of projects across Africa, airports are either in advanced stage or  just taking off.  The countries are providing adequate infrastructure for the kind of traffic they want to attract. It is not the size of the building that determines the traffic. Mostly, passengers and other airport users see only the terminal building. There are lots of things that you don’t see. The airlines are there; what about the runway, apron, ground services and others. These are the important things that airlines will require to come. What is important to attract traffic is whether we have adequate navigational equipment at the airport, runway, apron, ramp services, and fuel. Those are things that everybody would want to know if they are adequate. African airlines are trying to address all these.

    How can African airlines begin to work with global technology at major airports?

    Technology is very important because you cannot, for example, construct the runway without it. We are looking at that critically. In every meeting that we hold, we invite manufacturers from all over the world. And they come with the state of the art equipment. We give them this opportunity so that member states will look at the new technologies and then see how we can get access to such new technology. They also do presentations so that everybody understands what is there. We share experiences with other airports that have already started using these new technologies. We agree on way to go. We also talk to the manufacturers to assist individual airports that are ready to adopt these technologies on training.

    What legacy will you leave as ACI Africa President?

    I am working hard with the board. I have already discussed with them in my acceptance speech that we need just to convince our governments and our approving authorities in the various states. In order to take aviation to the next level in Africa we have identified some areas that we need to cover. They will collate all the issues and solutions and bring to us. We will now liaise. We want to bring the approving authorities close to us. If we bring them close to us and they understand the issue, that makes life easier for us in Africa. We intend to explore more and the relationship between African Union with ACI Africa through, of course the rightful channels. We have regional, ECOWAS and we have groupings. We will use the ECOWAS to get African Heads of State. We intend to improve that; so at the end of the day, there will be smooth and proper relationship between us and them and they will see reasons to approve us on all the issues we tend to bring out in the future. And we get the blessings of these governments as quickly as possible.

    In capacity building, what is on the table for Africa?

    Many capacity building initiatives have been designed to improve African aviation. The Human Resources Sub-committee team for African region met recently in Maputo and the members of the team have come up with suggestions on capacity development in Africa. Mostly, it is geared towards improvement of airport workers as far as airport in Africa is concerned. It is also geared towards knowledge that will enable them execute their responsibilities, bearing in mind the current issues of terrorism. We are talking about airport security but we place emphasis on land side security because people come from the land side to the airport and perpetrate whatever bad intentions that they have. So, we have a template of how to tackle security at the airports, especially the landside security. These are the kind of things we look at and we proffer solution to them. There are lots of improvements in the training programme. We are looking at: what are the threats; what do we do; what is on the table for ACI Africa. These trainings are geared towards addressing such issues and we are very flexible. We look at the requirements of various countries under ACI Africa. Then bring it to the board and then discuss and determine the people that require these training.  We try as much as possible to train more people. So we normally, take the training to the doorstep of those that need it so that we don’t have to pay much or spend much on the training.

  • ‘There’s need for articulated manufacturing policy’

    ‘There’s need for articulated manufacturing policy’

    The recession is biting harder. Several industries are closing shop, leading to an increase in the number of the unemployed. Manufacturers Association of Nigeria (MAN) Vice President, Princess Stella Okoli, takes a look at the development and submits that steps need to be taken to help the remaining operators in the real sector who are managing to survive. In this interview with MUYIWA LUCAS, Princess Okoli, also Chairman, Emzor Pharmaceutical Group, says the sector’s future is bright.

    The Central Bank of Nigeria (CBN) forex policy pegged the naira at N282 to a dollar. This presupposes a ‘devaluation’ of the naira. How has this affected the manufacturing sector?

    We were told that the naira must be floated and pegged. But there are quite a lot of things that I believe the CBN and Federal Government needed to sort out before this because there is no clarity to us yet as manufacturers. If you say that the dollar is pegged at N282, does it mean that if manufacturers submit their bids, that they are going to get forex at N282? When the floating started, we were all asked to submit our bids and there were all sorts of guidelines as to what rate it will be because that was the first time, and those that bidded about N280 got all their foreign exchange, while those that bidded less than N280 got forward rate of two months.

    So, your money will be taken from you, and you now wait for the bid to have value, that is, they will confirm it after it is 30 days, whereas the money has already been taken off you. We (manufacturers) had a window known as “import finance facility.” It is a short-term loan that enables us to buy or import goods; the import circle is not more than three months, and it keeps revolving. We understand that the CBN has disallowed the use of such funds. There is need for articulated policy on how manufacturers should be encouraged; it has to be coordinated, and it needs a lot more effort and coordination. The government, including all the parastatals and regulatory agencies, should be thinking at the same time on how to move the country and manufacturing industry forward; this is so vital at this time.

    Some experts say we are experiencing forex scarcity because the “future market” is a new concept here. Do you agree?

    Everybody looks forward to a silver lining. However, you have to understand the future market takes six months before maturity. So, you wonder what happens to businesses during this waiting period. How do we get our raw materials; how do we pay the suppliers? Don’t forget that there are lots of foreign exchange pile-up for collection that have not been honoured; this is not right for business. There is need to involve a lot of expert around the world that can actually develop our country. We cannot argue that we do not need a lot of dollars in Nigeria and we can attract those dollars by using the expert that knows how to attract the dollars because we cannot afford to be starved of foreign exchange.

    How has the real sector been surviving?

    Industry is very difficult in third world countries because industries are not sometimes understood; it is the job of the government to make sure that the industries survive. There are so many ways to help manufacturers, including through government patronage and paying them. Right now, in the last three years, several industries have become cash strapped. For instance, three years ago when the government had no single anti-retroviral drug, they appealed to us to help produce these drugs for HIV/AIDS. We imported the materials and met the deadline; but till today, they have not paid us for the drugs. The government owes pharmaceutical industry billions of naira in the last three years. So, it is affecting us greatly as manufacturers. Some people have close shop; we need the government to help manufacturers; the government and regulatory bodies should work together; there should be no boundaries; we should work together for our common good.The regulatory body should make sure that the industry is competitive to compete abroad and make sure that export is smooth.

    From what you have said so far, manufacturers are facing alot of challenges. What efforts have you made to reach out to the government on these?

    We have gone to the various levels of government. If I take MAN pharmaceutical manufacturers group for example, we have gone to the Minister of Health, Minister of Industry and also the legislators. 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 that are studying pharmacy, or drug manufacturing in Nigeria? We should be talking of research, now is the time we need to move and get going.

    More than N300 billion is said to have been lost to the distress in the economy by local manufacturers. How did this happen?

    I have not seen the statistics that led to this figure, but I want to say that the N300 billion is an understatement. When you really look at it, you find out that more have been lost because we bought forex last year between N170 and N200; but now, technically, we are buying it for an average of N350, because it is no more a future market. So, you buy something at between N170 and N200, and now going to repay at a higher value because the money is not coming and you may even go to a private market. So, we have lost much and people have scaled down. But generally, some people have closed shop. So, we lost through forex, interest rate and manpower. Even though it causes us so much to produce, we can’t pass it on because customers would complain.

    What is the future of the manufacturing sector?

    The future is bright because there is a government that is not going to neglect the manufacturing industry. The government has made it clear that they are going to support manufacturing and we believe them. It’s just that maybe they need more time, but I am sure that our situation cannot get worse than where we are now. So, the future is very bright because without manufacturing, we are dead. We have to feed our people and fix our country, and I am very confident this will happen. Olusegun Obasanjo took over power in 1999 and the manufacturing sector contributed three percent to the gross domestic product (GDP) then. At the time he left in 2007, he had moved it to between 10 and 20 percent. The same thing happened when Muhammadu Buhari took over power in 2015, and I am sure Buhari is going to surpass that. The only thing is that there must be continuity, no matter what; if somebody has done something that works, then let’s build on it.

    What is the most important strategy for businesses to survive?

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

    You have mentioned patriotism about four times in this interview. How far can it last and at what point would you say I can’t go further in the face of all these challenges?

    God will not make that day to happen, and being a strong Christian, I believe in God absolutely. I told you that Nigeria is God’s own country and it is loved by God otherwise there won’t be any Nigerian today. So, patriotism is what has kept us going and it is something that we should learn in Nigeria now. Patriotism is what we have been doing by God’s grace throughout my life, and that is why God has kept me. This is something that is very important, love your country please.

    In this challenging economy, how have you been able to steer the ship of your firm? What succession plans have you put in place to ensure that Emzor Pharmaceuticals succeed after your exit?

    We are weathering the storm of manufacturing because there is no place for us to go; this is our last bus stop, so we are very passionate about what we do, and what we teach people is passion. We like people to sing on their way to work and immediately you come, you will learn that there is dignity in labour; this is one of our daily practices. Performance management has become so very important and we are also talking to the banks, writing letters to see what they have. I learnt from my father that hard work does not kill, the only thing that kills is laziness. Succession planning is very difficult because all these young people are very wonderful. That is why it is very important that when you are running a company, everybody must be in line and also you should endeavour to teach people everything you are doing and run the company in a transparent manner. If we are talking about handing over to a family member, that is why we make sure that in a company people should believe in what you are doing. Trust people that are working for you and know what to do, whether you are there or not. I believe that’s how we are managing our own.

    On global health funds, what has changed in the last 365 days?

    Global health fund is a fund that Nigeria is participating in, which unfortunately, Nigerian manufacturers have not benefited from. It goes to India because of the World Health Organisation (WHO) qualification of products. It is something that even those that were told are pre-qualified get promises; so, I think they still need to qualify the product and it is more or less a very long road to attainment. This is another thing the government can do to help the sector. Actually, in India it is not WHO Geneva that qualifies drugs; they are using their own WHO, which is like our NAFDAC. But here, there is confusion about WHO Geneva from NAFDAC, and even those that are in charge sometimes get confused. But through the advocacy group which I belong to, we try to correct it. If you are not strong anything can happen; that is why I love the gift of patriotism the Lord gave me because who you are, where you are and who your friends are matters. Our money has been tied down for doing good; for over three years, they have not paid us the billions of naira they owe us.

    Is Emzor into drug research? When will your firm be quoted on the Stock Exchange?

    We are not researching now but aspiring to do so. However, the government has to have a research fund and fund it very well because that is where the future lies. For now, we do product development but not into core research; it will be good to have Phd holders in the factories. Quoting on the Stock Exchange is a step every company must take but the time must be right. If the company is not doing well and you are in Stock Exchange, somebody will just come and say this car you are driving was bought with our money, so I want it please.

    If you meet President Buhari, what pieces of advice will give him?

    The first thing I will say is: “It’s good to meet you again, I met you during the PetroleumTrust Fund (PTF) when I was introduced to you as the chairman, Pharmaceutical Manufacturers Group.” I will also congratulate him on having so many women in his cabinet, and also his wife on being a wonderful PR officer for him. I will tell him that the economy and manufacturing need a high level of coordination from all the parastatals, that his ministers have to face the economy, that it can be fixed and the time to do so is now.

    What is Emzor Pharmaceutical doing to assist internally displaced persons (IDPs)?

    Emzor’s corporate social responsibility is to ensure that there is total awareness. We have donated a lot of drugs through NAFDAC to the internally displaced persons. Apart from drugs, we have donated some clothes because we have some friends that are linked to those camps and we can still do more and I make a note of it.

  • ‘Explore cashew as revenue spinner’

    The Managing Director/CEO, African Cashew Alliance (ACA), Dr. Babafemi Oyewole, in this interview with DANIEL ESSIET, says investment in cashew farming can help Nigeria in its diversification efforts from a mono product economy. Cashew, he explains, has high prospects of attracting foreign direct investments if the right things are done.

    What, in your view, are some of the most pressing economic issues facing Africa?

    In my view, some of the most pressing economic issues facing Africa at the moment include overcoming the infrastructural deficits that have negatively impacted on the development of the private sector. There is the need to diversify African economies from dependence on natural resources that have low development impact in terms of employment generation, and in relation to the development of the vast and neglected agricultural resources that can provide jobs for the teeming young people in Africa.

    In 2015, Africa’s youth accounted for 19 per cent of global youth population; the number of youths in Africa is estimated to increase by 42 per cent by 2030. The economic problems of the inability to provide jobs for these youths in Africa will be unimaginable and investment in agriculture and agro-based industrialisation will be the most urgent option to engage the youths in profitable economic activities that will enhance the development of Africa.

    Current global trends in agriculture point to a shift towards creativity and innovation. Why is this of great importance?

    Creativity and innovation have become indispensable in agriculture because of the recent challenges of feeding the over 1.2 and 7 billion people that are estimated to be currently living in Africa and the in the World. Conventional approaches to agriculture based on outdated agricultural practices and equipment will not be able to guarantee food security for the growing population. This is the reason substantial amount of resources are devoted to agricultural research in the developed world to innovate new and improved varieties of seedlings that can increase yield per hectare within a very short period of time. Another dimension to this is the issue of climate change  affecting the growing of some agricultural products in their traditional environment. To combat the negative effects of climate change on agricultural production and by extension, global food security, there is the need to adopt creative and innovative agricultural practices and equipment.

    What kind of agribusiness activities can be most profitable and beneficial to Africans?

    Africa is naturally endowed with agricultural resources and in fact, the comparative advantage of Africa lies in this endowment. Since the adoption of the policy of liberalisation of economic activities by most African countries, the agricultural sector has been opened to private sector investment. There is no agribusiness activity that will not be profitable and beneficial to the people of Africa. What governments in Africa need to do is to create the enabling environment for the private sector through appropriate fiscal incentives, policies, access to finance and supporting infrastructure. Africans are very enterprising people if they get the needed support and this has been proven in some economic sectors such as telecommunications. If the government provides the necessary enabling environment and reduce the cost of doing business, the private sector will respond by investing in profitable agribusiness projects in Africa.

    What do you see as the role for Western-based agribusinesses in Africa?

    Africa can learn a lot from the Western-based agribusiness model, which is to run agriculture as a business enterprise. This is because, agriculture in Africa has not been developed or seen as a business activity and this explains why the educated elite are shying from going into it. Agriculture is still largely practiced for subsistence living and this explains the large scale poverty in agricultural communities in Africa. This is also where the government has a lot to do in sensitising the population, particularly the youth, that they can become millionaires and billionaires if they engage in agribusiness. However, given that Africa has a large population, mechanisation of agribusiness will have to be gradual. This is what we are seeing in the cashew industry where labour is still being employed for shelling and peeling of cashew nut.

    Is the cashew industry open to foreign direct investment and/or partnerships between local and foreign companies in its agribusi-ness market?

    Like any other industry, the cashew industry is open to foreign direct investment and partnerships between local and foreign companies. Due to the enormous opportunities in the cashew industry in Africa, a lot of foreign investors have partnered local entrepreneurs to set up plantations and processing factories that are adding value to the crop in the continent. Cashew processing, for example, is a capital and technology intensive business that are often beyond most local investors, foreign investment has complemented local investors in the industry. Actually, the modest improvement in cashew processing in Africa from three prer cent in 2006 to about 15 per cent in 2015 has been made possible by foreign investors such as Olam, Fludor, etc, with cashew processing factories in countries, such as Cote d’Ivoire, Nigeria and Benin Republic.

    It has been argued that banks needed to look beyond conventional sources of financing and risks of lending to agriculture, including developing new and more appropriate public and private sector financial products. What is your take on this?

    I tend to agree with such views, but the main issue in financing agriculture in Africa are the risks involved, given that it has not yet evolved into agribusiness as being practiced in the developed world. Moreover, financial institutions in Africa do not fully understand the whole agricultural value chain and therefore, are not able to develop financial products that are tailored and appropriate to the various segments of the value chain. Agribusinesses are sometimes a long term investment, which commercial banks may not be able to support without adequate guarantee, in view of regulatory requirements and the nature of their resources. To support commercial banks, agricultural insurance and government incentives are very critical and indispensable.

    How is the thinking of the African Cashew Alliance (ACA) evolving with regards to the role of smallholder farmers?

    Actually, the African Cashew Alliance (ACA) started with the vision of creating a globally sustainable cashew industry from farmer to consumer. Therefore, ACA has always recognised the strategic role of the smallholder farmers in the development of the cashew industry by providing technical assistance and information services tailored to their needs. The Alliance is implementing projects that are linking the smallholder farmers with processing factories in Africa to ensure improved pricing and income for the farmers. The importance of the smallholder farmers can be seen in the fact that two million African farmers grow about 48 per cent of the world’s cashews and through the contributions of the ACA, African smallholder farmers have more than double production. The support of the ACA projects and technical assistance has contributed to increasing the income of the smallholder farmers in the cashew sector in Africa.

    What is your impression about Nigeria’s cashew industry from the perspective of a CEO of the biggest cashew alliance on the continent?

    Nigeria’s cashew industry is witnessing concerted efforts by all the stakeholders to increase production and processing in the country. With an estimated yearly output of 170,000 metric tonnes, Nigeria is the third largest producer of cashew in Africa and the fifth in the World. This shows that the country is a key player in the African and global cashew industry. However, with only 20 per cent of available land under cultivation, there are still vast, unexploited opportunities to match the production of Cote d’Ivoire, which produces 700,000 metric tonnes and is the largest producer in Africa and the world. This is why I am very excited that cashew is one of the 13 strategic crops that the government has identified to diversify the economy of Nigeria from oil. Taking advantage of the renewed government interest in cashew, the National Cashew Association of Nigeria (NCAN) is implementing a programme for the rejuvenation of cashew plantations and increasing the area of land under cashew production.  This programme is being actively supported by the Nigerian Export Promotion Council (NEPC), a member of the Advisory Board of the ACA. If the current efforts are sustained and the strategies implemented, within the next few years Nigeria can become the world’s largest producer of cashew with enormous opportunities for job creation and foreign exchange earnings.

    How important is it to tap into the cashew industry?

    My experience representing Nigeria as the Executive Director/CEO of the African Petroleum Producers Association Fund for Technical Cooperation for six years has been very tremendous and useful in this present assignment. Nigeria is a member of the African Cashew Alliance and the country also produces one of the two Vice Presidents of the Alliance. My assignment is important for Nigeria because it gives visibility to the country in the continental and global cashew industry. It will also enable me to provide the necessary support to the efforts of the Nigerian government at promoting the cashew industry and engage all cashew stakeholders in the country for the development of the industry.

    What do you think are ACA’s greatest impacts on the industry?

    The ACA was established in 2006 as an association of African and international businesses with a vision of promoting a globally competitive African cashew industry that benefits all the value chain from farmer to consumer. Its objectives are to increase processing within Africa, improve competitiveness and sustainability of the African cashew industry and facilitate public-private cooperation for the development of the industry.

    To achieve the objectives, ACA provides technical assistance and facilitates investments, promote market linkages and international standards through information sharing and best practices.  Today, nearly 130 member companies in about 30 countries, 17 of which are in Africa, work under the ACA banner and represent all aspects of the cashew value chain, including producers, processors, traders and international buyers. Over the last 10 years, ACA’s commitment to its mission has led to significant achievements with over 27,000 jobs supported, 18 processing factories certified through the ACA Quality and Sustainability Seal, over $1.2 million new investment facilitated, technical support given to over 22 companies and about $100 million of kernel exports facilitated.

    ACA has also contributed to the quadrupling of cashew processing in Africa from 35,000 metric tonnes in 2006 to over 140,000 metric tonnes in 2015, representing 300 per cent increase. Furthermore, the Alliance has contributed to the organisation of the sector in the producing countries and created the awareness of the economic value of cashew through advocacy for the support of the cashew industry.

    Which organisations have you partnered in your work to grow the industry?

    The Alliance has been partnering the United States Agency for International Development (USAID), which has been providing funding and technical support for some of the projects we are currently implementing. We are also in partnership with Wal-Mart, a large American Supermarket chain for the implementation of projects in some of the producing countries. The African Development Bank is also supporting with the implementation of our projects.

    Our international members and partners have also been working with us to support the development of the industry. We continue to explore new partnership opportunities in our efforts to increase the volume of production and processing in Africa.

    Challenges abound in Africa’s farming. What do you think are the key challenges that face the agric industry?

    The key challenges include low productivity of farming in Africa which is a product of low technology and skills in the sector. Other challenges include access to finance, poor post-harvest handling of agricultural products, lack of storage and processing facilities, poor sector organisation and inadequate support from the government through incentives and enabling environment. These are some of the challenges that account for the low level of value addition to agricultural commodities in Africa. Most countries in Africa are working with technical implementing partners like the ACA to overcome these challenges and thereby, increase the interest of the population in Africa’s farming.

    How do you think some of these challenges can be sorted out? Are there some policy issues you think Government can rectify?

    The government will need to play a very important role in mitigating the effects of these various challenges. Agricultural activities are usually supported by the government all over the world through incentives that will encourage private sector participation. Government should not go into agribusiness on its own but provide enabling incentives to the private sector to do so. As I mentioned earlier, with current dwindling revenues from commodity exports, most governments in Africa are now focusing attention on the development of Agribusiness. For the cashew industry, producing countries are implementing policy reforms and targeted incentives that will increase production and local processing for value addition. Some countries are developing national cashew development strategies to promote the crop and take advantage of the enormous opportunities for the diversification of their economies, earn foreign exchange and create employment for the teeming young populations.

    Does Nigeria have the potential to be the highest supplier of cashew in the world and how can that be achieved? 

    Yes – Africa grows approximately 57 per cent of the world’s cashew and Nigeria is the third largest producer in Africa with an estimated output of about 170,000 MT annually. A 2001 survey of cashew producing areas in Nigeria revealed that less than 20 per cent of available lands are under cultivation. By increasing land area with high yielding and good quality cashew trees, Nigeria has the potential to become the world’s largest producer of raw cashew nuts (RCN). NCAN is implementing a programme for rejuvenating cashew plantations and increasing the area of land under cashew production in Nigeria, particularly as Nigerian cashew trees are aging.

    Processors are struggling to procure RCN and the government should actively support their efforts through potential tax/export policies and increased access to finance – but also, Nigeria should look to long-term strategies to increase production so that all RCN demand is met (both foreign and domestic).

    In conclusion, as Nigeria seeks to diversify its economy away from the mono product of petroleum, cashew production and processing offers one of the opportunities to earn the much needed foreign exchange and government revenues to support economic and social development in the country. This is particularly given the strong current and projected global demand for cashew and the vast opportunities for the consumption of the product in Nigeria and Africa. Therefore, the Nigerian government should sustain the current efforts to increase the production and processing of cashew in the country. The African Cashew Alliance is well positioned and adequately prepared to provide the technical and business support that is needed to enable Nigeria achieve all the objectives outlined in the National Cashew Development Strategy document

    What’s your vision for the future?

    My vision is to see Africa take its rightful position as the ‘food basket’ of the world by taking advantage of its vast agricultural resources. This will enable the continent be self sufficient in food production, guarantee food security to its population and become a net exporter of agricultural products to the rest of the world.  For the African Cashew Alliance, my vision is to see Africa sustain its first position as the largest cashew producer in the world, increase cashew processing in Africa to 60% over the next ten years, increase Africa’s cashew consumption to 15% during the same period and develop an effective intra-regional cashew market.  In sum, I will like the vision of the founding fathers of the ACA to promote a globally competitive African cashew industry that benefits the whole value chain materialise. ACA is determined and well positioned to support this vision through sustained provision of technical assistance, investment facilitation, market linkages, international standards, best practices and public-private partnership for the development of the African cashew industry.

     

     

     

  • ‘We’re using NSIA capital to catalyse other investors’

    ‘We’re using NSIA capital to catalyse other investors’

    Two weeks ago, the Nigeria Sovereign Investment Authority (NSIA) entered into partnership with Old Mutual Investment Group and UFF African Agri Investments, two foreign companies, in a $700million joint venture in agriculture and real estate development, that NSIA’s Managing Director Uche Orji views as catalyst to opening up the untapped potential in those sectors as never before. He spoke with Group Business Editor, SIMEON EBULU.

    It’s not quite easy to strike this kind of deal in a recession. How were you able to pull this through?

    It’s not recent, the discussions have been going on for some time. The timing is largely by design and also by coincidence. There are two ways you view every recession, it’s either you run away or you take advantage of the opportunity. For investors of like minds, who can see through the cyclical downturn, it’s a cycle. Things go up, they come down, almost every economy is in cycles. And we are going through a cycle. As the government has admitted, we are in a recession, there are challenges in the economy, but that is also a buying opportunity for people. It’s an opportunity to come in and invest, and take advantage of the relatively lower prices for assets. Frankly, I see this as an opportunity that its time has come. And we will move very quickly in terms of the deployment of the capital.

    And, if I may use a football parlance, form is temporary, class is permanent, and it very much applies here. The cyclical downturn is temporary and smart investors use that as an opportunity to buy into the market and buy into assets.

    There are two classes of investors, there are real investors and there are momentum traders – people who come in and when things are moving, they just buy something. Those are hot money investors, those are not the kind of investors we are looking for. So, if you believe the economic potential that brought people into this country is past, if you believe that in this one cycle (the recession) it is  completely reversed, then you can leave, but if you believe – longer-term that this is just a temporary patch, that there is longer term opportunity and if you have liquidity, then you invest. And that’s what we have done with this.

    The NSIA thus have the liquidity and our partners have liquidity, and we both believe that this is a great opportunity to buy into assets in the country.

    So, I’m happy that this happened, and as I’ve said before, we are using NSIA capital to catalyse other investors.

    This is agriculture, real estate, and you’ll see next, hopefully before September is out, you will see us announce a Social Impact Fund – similar catalytic fund that will raise huge amount of capital, with NSIA providing some catalyst.

    We have spoken about doing something in power, healthcare. We will commence our healthcare projects this year.

    There will be groundbreaking of the projects and we will start to build in Kano, and Umuahia. Our LUTH project is also starting.

    There is a remarkable opportunity for us now to invest, and I think other investors we are planning to work with, see it the same and that is why this is quite groundbreaking.

    What informed your decision to invest in real estate and agriculture?                           

    For real estate, it took us a period of working together – people don’t know this, but we’ve been working together with the Old Mutual Investment Group  since February, 2014. And most of it, we’ve been looking through assets. And over time, we’ve learned how to work together and through the process, we said, why don’t we form a joint company, we put capital in, you put capital in and we form a team, and we start investing.

    The same thing with agriculture. The first meeting with the Agriculture Team was in early last year. And that has now evolved. We saw what they did in South Africa. They came to Nigeria – two, three times. We saw the opportunity in the country. We surveyed a few things and built up a reasonable pipeline of what we can do together, and then we said, why don’t we do it as a joint venture, a joint company. So, these things didn’t just happen.

    You know raising money is not an easy thing. People need to get to know you, trust you and be comfortable with your processes. We did due diligence with each other, we had to be comfortable with their processes. We went to see them, they came here, back and forth, and then we had to go through the documentation process.

      What are the terms of engagement?

    For each of these partnerships, there are three agreements signed.

    One is an investment company which is registered in Mauritius, because their jurisdiction is amenable for foreign investors. That investment company structure is mirrored in Nigeria. The reason it is in Mauritius is just to receive the capital, but the management company that does the actual investment is in Nigeria. So, it’s money for Nigeria. We replicated an investment company agreement and a management company agreement for Mauritius as well. All of that was done so as to receive the capital and bring it here to invest. We did that also for the agriculture side. The management company is 50/50 owned by NSIA and Old Mutual Investment Group.

    And what follows?

    The next stage of work after we made the first phase of investment is to put the money to work, and now go to bring the other third party investors to join. And we have enough expression of  interest to be very comfortable to say we can do $500 million and $200 million in real estate and agric apiece.

    Agric practice in Nigeria does not have a good history of success. What gives you the confidence you’ll succeed?

    Our partners have a very good track record of success. They said they have invested over $200 million in agriculture in various countries and they said they have made returns in dollars ranging from 14 per cent to 20 per cent. There are three, or four things we need to note with agricultural investment in Nigeria. The first thing missing obviously, is the skills in farm management, the second is equity. Most people go and borrow money (debts) and they fund it and they can’t withstand any hiccups, and from day one, your debts starts clocking 22 – 23 per cent and even with the intervention fund, it’s still nine per cent. It’s the wrong kind of capital. Agriculture needs patient capital.

    And then there is the infrastructure problem. You grow something  -and you can’t store it in good enough condition that you can then sell it in the future!  We lack cold storage. Those are the three challenges we have in agriculture.

    Skills is one of the most important thing they are bringing. Collectively we are putting together the right capital now. The infrastructure aspect, we are still going to invest in at the NSIA.

    How will you go about it?

    We have expressed interest to take the Commodity Exchange and that process is ongoing. The Commodity Exchange is just a trading platform, but it’s really going to help us now to create all the necessary platform for storage necessary to make all these things work.

    Very recently, the Vice President inaugurated a committee to steer the privatisation of the rail network, and most of it is aimed at freight-carrying goods. The infrastructure is being put in place, but there are three ways we are going to play.

    This investment we’ve made with Old Mutual and UFF African Agri Investments, (which are actually the specialist farm managers), is going to be in direct agriculture, agric processing, animal husbandry… I’ve seen what they’ve done and I feel comfortable that we can replicate that in Nigeria.

    Two, we will invest in the infrastructure  –  in the. And if you’ve noticed, we have signed a Memorandum of Understanding with the River Basin Authorities to look at their sites with a view to taking the land they have by the rivers which they have not developed, to now do proper farming. So, I believe that we have the right skills and the right capital to do the right thing and we will succeed.

    A lot of the things we make in Nigeria are good for exports, we just need to get it right, build the right skills, build the right extension services that are consistent, make sure the farmers have the right seeds and extension services that will enable the knowhow to use the fertiliser, so it doesn’t become toxic, make sure the processing is done properly with the rice milts, so it’s a lot. And I’m quite excited about the lots of opportunities that this presents.

    Will you be directly involved in this, or NSIA is just going to put money there ?

    It’s a joint company and we are going to put some people there. It’s going to be a skill transfer, to be honest. We are going to have some people there who’ll have the necessary skills, but as I have said, these are the experts who have done it successfully.  And most of what they have done is taking failing farms and turning them around.

    Are you looking at specifics, in terms of crops?

    Everything. It’s a whole process of deal selection, deal origination and they’ll look at the right opportunities, the right infrastructure. That is what they are bringing to the table.

    If I understand you very well, you are not just going to put money there, you are also going to be involved?

    This is a joint company, so obviously we are going to put some people there. This is just a skill transfer to be honest, we are going to have people who are reasonably skilled. But these are the experts who have done it successfully. Like I said, they’ve invested $200 million with equally high returns and most of what we have done is stake some funds and turn them around.

    We are looking at everything. So, there is a whole process of selection going on right now and then we look at whether it is the right opportunity, whether we have the right infrastructure. So that is what we are bringing to the table.

    Let’s talk about the housing aspect.

    It’s real estate, not housing.

    Real estate.

    Yes, housing is a subset of real estate. We will look at office towers, we will look at logistics. Logistics are very important and that is like warehouses. Warehouses are very important, they are like distribution centres with the right infrastructure- power, properly conditioned warehouses where NAFDAC can come and check and certify products with respect to quality and expiry dates, and so on. This is not just renting a shop and stuffs like that. We are looking also at hospitality.

    It’s like you want to tie products from your prospective farms to this warehousing idea?

    Yes, yes, but not just that. There are products being made already in the country that are not being properly handled. The issue really is, we have not really seen a proper logistics centre. Lagos has a few in Agbara and all those areas, but these are the kind of investments we need to make across the country. Also there are a lot of states assets that are abandoned. We are willing to talk to the states.

    The joy of Nigeria is that it’s a big country, the opportunities are incredible. People shouldn’t look at this as the only solution. This is just one of several solutions.

    Agriculture in Nigeria needs billions of dollars in investment. This is just a $200 million fund. There’s the tendency for everyone to gravitate towards one solution. This is just one of many solutions out there.

    How much bigger is the NSIA willing to play in the agricultural sector?

    At NSIA a lot depends on how much capital we receive. We are watching the space, but if we catalyse it, and we deploy the $200 million successfully, my sense is that we would have provided the platform for fresh investors to come in, and we might just want to see our role as catalytic, help people get started. But if we get more capital, we will expand. There are 15 possible areas of investment in NSIA. We have just started with five. The reason we just started with five is because of limited pull of capital, but as we use them to sow seeds to get other people to bring in capital, then we’ll expand.

    In what sense will the ordinary Nigerian benefit from these investments?

    You know when these investments are made, everybody is going to work. If you build an Office Tower, Logistics Centre, bricklayers will be employed, electricians and several others will be employed. Nothing creates jobs more than real estate. You can’t strengthen the weak by weakening the strong. We’ve got to get that philosophy right. For some of these people we are inviting into this country to invest, it will take all of us to support them. We’ve come to the conclusion that for every $1 billion you invest in infrastructure, you empower about 240, 000 people.

    What’s in this initiative for small-holder farmers?

    If you build an agro- processing plant, which is one of the investments the Agro- investment fund will be meeting, a lot of the suppliers will come from small stakeholder farmers. Your job will be to ensure they have the right seeds and that they produce consistently for you. One of the things we hear from these guys is that they have improved the quality of life of farmers in their own network.

    Today the farmer has three issues- even when he has the seeds, he is not consistent, sometimes he doesn’t know how to apply fertilizer and pesticides, and so at the end of the day, there’s no consistency in quality. But more importantly, if there was, who off-takes from him? If he knows he has an off- taker who takes the product from him, then you’ve raised his quality of life. He just sells it to you. His quality of life, earnings/ incomes come up. When he knows he has somebody who’ll off-take from him, he can now go to the bank and borrow money. The amazing thing is, there’s something here that says agriculture is investable.

    Are you satisfied with what you’ve done so far?

    With the NSIA!

    Yes!

    No.  There’s so much we need to do. I’m disappointed we haven’t made credible size of investment in power, not for lack of trying but the environment is contrary. We’ll look into that. I’d like to show case our health care projects, there’s the refinery and other gas sector projects, so there’s a lot that can still be done, but we are limited by the size of capital we have. But hopefully, what we’ve done here today becomes an example where we can catalyse even more, with less of our own capital and create the platform for seven or 10 times more with the capital that we have. Then I can be happy.

    Have you had downturns?

    At the NSIA?

    Yes.

    No. We have had moments when we did not earn as much as I thought we should do. Last year was one of those. But this year, so far so good.

  • ‘Blame Fed Govt for cooking gas scarcity’

    ‘Blame Fed Govt for cooking gas scarcity’

    Being an oil-producing country, Liquefied Petroleum Gas (LPG), known as cooking gas, should always be available in Nigeria. But that is not the case. Many, whether in the urban or rural areas, cook with kerosene and charcoal because of the product’s scarcity. The Chief Executive Officer, Nigeria Association of Liquefied Petroleum Gas Marketers (NALPGAM), Mr. Bassey Essiet, blames government’s policy for the problem, AKINOLA AJIBADE met him.

    When did Nigeria join the league of countries using Liquefied Petroleum Gas (LPG)?

    Nigerians have been using cooking gas for some time. But we began to give LPG the desired attention in 2007, during the administration of former President Olusegun Obasanjo. In 2007, Obasanjo directed the Nigerian Liquefied and Natural Gas (NLNG) to be producing LPG for domestic consumption. The government, in its calculation, believes that LPG export is detrimental to Nigerians, who need the product for domestic and industrial use. Of note is that the period coincided with the time the four state-owned refineries: namely Port Harcourt 1 & 2; Kaduna and Warri refineries were not producing optimally. As a result, the refineries were unable to produce enough kerosene for local use. The development did not only affect kerosene supply negatively, but resulted in more demand for kerosene.  Based on this, our association decided to intensify campaigns on the use of LPG.

    What is the worth of the LPG market?

    It is difficult to say the worth of the LPG market in Nigeria. Putting a figure to its worth means one simply is guessing because it is just like asking for the worth of the crude oil market. Nigeria is the largest producer of oil in Africa. If we are talking about per capita consumption of LPG in Nigeria, it is one kilogramme. This is far lower than the per capita consumption in Morocco. The government is planning to increase per capita consumption from one to three kilogrammes, which translates to 600,000 metric tonnes per annum. A kilogramme of LPG is 200,000 metric tonnes per annum. As at 2014, the country was supplying 250,000 metric tonnes of LPG to the market. Nigeria started with 60,000 metric tonnes per annum and increased it to 150,000 metric tonnes years later. Subsequently, it was increased to 250,000 metric tonnes per annum and the country is targeting 350,000 metric tonnes. But in line with the LPG roadmap developed by the Federal Government with the World Bank, the country is supposed to be at a per capita consumption of 3.75 kilogramme, which is 600,000 metric tonnes per annum. However, we are not there yet. Ideally for the size of Nigeria, which has over 170 million people, the country should be supplying one million metric tonnes of LPG per year to the market. The question is: How are we going to achieve that? It is by creating more awareness.

    Scarcity of LPG is a recurring decimal. What is the cause?

    Several factors are responsible for the scarcity of LPG in Nigeria. First, scarcity started with when multinational oil companies were dominating the country’s LPG market. At a point, the foreign owned firms could not produce enough LPG for the market. The second problem has to do with logistics. There are hitches in the transportation of cooking gas across the country, coupled with challenges facing the terminals designated for the delivery of the product, by the Federal Government. Three terminals were approved for such purpose by the government. Out of this, two terminals were giving priority to discharge white products, such as petrol, kerosene and diesel ahead of LPG. This has resulted in the delay in discharging LPG to consumers. Because of this problem, LPG vessels have to wait for hours or weeks before they discharge their content.

    Who is to blame for the problems in the LPG sub-sector?

    This is not the time to apportion blames. The way the system operates here is quite different from what it is obtainable in other climes. There are activities that are contrary to the law of the land. There are manipulations and sharp practices. What we can only do is to bring to attention the people involved in these activities. We have been doing that. Few weeks ago, our association had a meeting with the hierarchy of Product Pipelines Marketing Company (PPMC) and the problems including scarcity of LPG in sub-sector was discussed, and PPMC promised to look into the problems. Based on the synergy between NALPGAM and PPMC, we invited the Managing Director of PPMC, Mr. Ahmed Farouk, to the commissioning of our NALPGAM‘s secretariat in Lagos, where he said he would be happy to see the country meeting the needs of consumers of cooking gas soon.

    When will the problem be resolved?

    We hope to end the problem of scarcity of cooking gas soon. Stakeholders are meeting to proffer solution to the problems which includes but not limited to terminal congestion, storage, vessels and others. The PPMC has been working on this. The NALPGAM, PPMC and other relevant stakeholders have been meeting on the issue. Also, the Nigerian Liquefied and Natural Gas has been playing a pivotal role in this regard.

    What is the future of LPG sub-sector like, in view of plethora of problems facing it?

    The future is bright; the problems are going to be resolved soon, and the LPG sub-sector will start on a new note. Presently, innovations that would launch the sub-sector into prominence have started. Operators in oil and gas and allied sectors are working on how to use Compressed Natural Gas (CNG) for automobiles. It is has begun in Nigeria, and with time, many people would be using gas to power their vehicles, and not petrol. This is not new in Europe and other developed economies. But Nigeria is gradually catching on with it. Recently, I was invited to witness a demonstration in Surulere, Lagos, where gas was used to power a generator. That is why I said the future of LPG is great in the country.

    What is the main reason for establishing this body?

    The reasons include the need to create awareness for the usage of LPG in the country; reduce health hazards accompanying the use of stoves, firewood and charcoal; raise the status symbol of people, and further check the monopoly of foreign-owned oil companies that dominate the sub-sector. Prior to 1986, when the body was formed, there was a knowledge gap in the LPG sub-sector. Many do not know what the usage entails, others saw cooking gas as a preserve of the rich or elites. During that period, people were equating the usage of LPG to that of telephone, which was regarded as a status symbol then. Added to this is the fact that only multinational oil companies such as Mobil, Total, among others, were selling LPG in their outlets across the country. People took their gas cylinders to the outlets to refill them, albeit, spending hours on the queue. Many even travelled to Cotonou, Benin Republic, to buy cooking gas. The association was formed to correct these anomalies and further serve as an umbrella for cooking gas marketers.

    Are foreigners behind the monopoly in the sub-sector then?

    Yes, they are. Foreigners, to some extent, created monopoly in the sub-sector. Once there are few years in a market, they tend to dominate it.They create a block, through which, they control activities in that market. However, with the awareness on LPG increasing by the day, the association was able to check the excesses of the foreign oil firms in the sub-sector. Not only this, the body has brought together entrepreneurs in order to have one voice. The efforts have paid off, as the body boasts of 400 members and 400 LPG plants. This means that indigenous marketers are having a considerable influence on the market.

    Are oil marketing firms included in your NALPGAM membership?

    The membership of the association is not by force. We do not compel anybody to be our member. The marketers, either major or independent, are not compelled to become members.

    The association appears not to have control over the marketers in the sub-sector…

    (Cuts in): The fact that NALPGAM is the umbrella body for LPG marketers in the country does not confer on it the right to control or regulate the sub-sector. The power to regulate activities in LPG industry lies with the Department of Petroleum Resources (DPR). DPR is vested with the power to license or approve LPG marketers, once they have met the requirements, which include, but not limited to the ownership of a plant. The entry point to play in the sub- sector is ownership of a plant. Once that has been done, the operator can join the association. The entry is free. This could be likened to what happened in the banking industry years ago, when banks had option to join a union in the industry.

    Do you complain to DPR, whenever you discover untoward practices in the sub-sector?

    We do not report erring marketers to DPR. Even though, the body holds meetings with DPR periodically. The association does not report erring operators to DPR formally. The DPR conducts its monitoring to put the sub-sector in proper perspective. Through this, it discovered bad operators and deal with them appropriately.

    How does the body handle issues on sharp practices?

    The association has a committee, which regulates the conduct of its members. Periodically, the committee’ members go round to ensure compliance. There is a membership sticker, which members are required to put on their plants. Usually, people in the committee check the sticker when they visit plants that are owned by members. Thereafter, they send their feedback to the association. Once, we discover sharp practices, we reach out to the people involved. Aside this DPR monitors marketers with a view of fish out corrupt ones.

    What are the achievements of the body so far?

    Through awareness programmes, the association has helped in increasing the use of LPG, improving the health of Nigerians, by letting them know that it is dangerous to be using kerosene or firewood for cooking. Also, jobs have been created. An LPG plant, on average, employs 10 people. This means that the 400 plants that are identified by the body have created 4,000 jobs. Reduction in erosion and exposure to ozone layer, are some of the successes recorded by the body. People have been educated cutting down of trees because erosion and expose people unduly to ozone layer and have since reduced such activities.

  • ‘Cargo airports without facilities won’t work’

    ‘Cargo airports without facilities won’t work’

    Skyway Aviation Handling Company (SAHCOL) Managing Director Mr. Rizwan Kadri believes it is good that some states are considering having cargo airports.But he advises that the airports must have amenities to facilitate exports. Kelvin Osa-Okunbor met him.

    Some states are building cargo airports to promote agro-allied exports. What should be done to ensure they succeed?

    The cargo sub-sector is one of the most prominent, viable and promising of all the sectors in the aviation industry; most of the airlines earn a lot of revenue from this sector. Yes, it is a good idea, but then, merely announcing cargo airports without adequate facilities will not work. So, whatever they are doing has to be planned. Building cargo airports where you have the farmers but without infrastructure, such as good road network around them, cold room, as well as other storage facilities, will be tantamount to mere jamboree.

    The government has announced plans to privatise some of the major airports. How should this be done to avoid the inefficiencies in previously privatised entities?

    It’s a good plan, but it has to be done well because private models have worked everywhere. One thing to avoid is selling these infrastructure to friends or people without the requisite capacity to operate them efficiently. Airports are not just for commercial interest, they are very sensitive facilities for the country; the airports must not only be good, they must be user-friendly as well. So, everything you do here must be well planned.

    When you privatise, the government relaxes and the private operators take the ownership, put in their money and manage them to make profit; they will not like to have any undue interference because his money is involved. Private airports will really work if they are planned well.

    What are the effects of the foreign exchange regime on the cargo handling sector?

    Forex has huge effects on the cargo business. Since Nigeria depends largely on imports, the exchange rate problem also affects imports because what an importer spends on commodities before has now doubled. As a result of this, every item that comes into the country has become expensive since our international trade depends on the dollar.

    The airline business is further compounded by the Central Bank of Nigeria’s new forex policy, which makes it very difficult, or almost impossible for foreigners operating in the airline industry to repatriate their earnings. The exchange rate has led to a significant drop in the volume of imports into the country. Imports is paid for mainly in dollars; so if somebody bought a product last year and the same product is costing almost double this year, what will he do? And because the cost of importation has gone so high, the market is low, even some of the traders have stopped importing.

    Why is it that over the years the cargo sub-sector of aviation has not been active in contributing meaningfully to the economy?

    You see, during the oil boom, people tended to neglect this sub-sector. However, due to the dwindling oil prices, coupled with the downturn in the country’s economy, exports have become one of the major factors and cargoes always play major economic role for any country. The link between getting the stuffs in and out of any country is cargo related, whether air freight or sea freight, you need the cargo operation to succeed. So, basically, cargo plays a very important role in aviation. My vision for cargo is to have a fantastic cargo operation that will play its expected role in the light of the current financial challenges Nigeria is facing.

    Last year, the International Air Transport Association (IATA) ranked Africa, particularly Nigeria, low. Why? How do we improve on it?

    A lot of factors are responsible for it. First, the government never promoted the cargo business. During the oil boom era, people made so much money from there but neglected other areas including the cargo sub-sector. Export has not really played its expected role before now because no serious and conscious efforts have been made in the past to promote it. What should have constituted the bulk of Nigeria’s export are agricultural produce, but like I said, conscious effort was not made in the past to promote it because of over dependence on petrol export.

    How can this imbalance be corrected?

    To correct the imbalance, basically, the government should look out for more exports. It should motivate its people, who I see to be very hardworking. When a country has that, the country has an asset in that it has an industrious and rich population that could readily provide the needed labour. When this is done there would be more than enough to engage the cargo operation.

    Secondly, for exports to thrive there should be a lot of incentives given to the farmers so that they can produce more for export. The roads, transportation and connectivity are not so good to bring in goods to Lagos or the nearest airport; the storage facilities are not there; all these have to be put in place. Besides, a lot of backing from the government is required. We need a lot of government support for the aviation industry to grow; we have to do something about the customs duties that are very high; help the farmers out, have production within the country for export, identify key countries we want to export to. Above all, government has a role to play in encouraging the cargo sub-sector to grow.

    The IATA has raised concerns over high airport taxes and charges in some African countries, including Nigeria. How is this affecting cargo and ground handling business?

    Interestingly, this observation has been on for a long time. It has been a huge area of concern for investors in the aviation sector. I think IATA has passed the message across, the way the message should be couched that African countries need to  do something about prohibitive chages and taxes. If government does not do something urgent about this, the negative impact on the industry is dire. I am convinced that the relevant agencies, have noted the concern and are doing something to address the situation .

    In Nigeria, I am reliably informed that a committee set up by the government on airport charges and charges as it affects all operators is being looked into and I am sure the matter will be resolved to make the operating environment friendly. When charges are too high, it does not encourage cost recovery for any investor.

    In Nigeria, ground handling companies are already feeling the impact of high charges and taxes. The way to go for me, is that the relevant agencies of government should engage operations in line with global standards to fix charges  and taxes that would achieve a win win situation. That for me is the way to go. If the industry is feeling the impact of high taxes and charges, this has a huge effect on costs of running the business.

  • ‘How banks hide bad debts’

    ‘How banks hide bad debts’

    Local and foreign investors rely on the integrity of financial statements to make decisions. To the Financial Reporting Council of Nigeria (FRC), only a financial statement that meets the International Financial Reporting Standards (IFRS) will inspire them to invest in a company.  FRC’s Chief Executive Officer Jim Obazee said this and more in an interview with SIMEON EBULU and COLLINS NWEZE during his visit to The Nation.

    How has Financial Reporting Council streamlined financial reporting by companies?

    The FRC was established by the FRC Act 6, of 2011. Prior to this, there was the Nigerian Accounting Standards Board (NASB). The NASB in itself had some histories. Prior to the indigenisation, there were different companies, coming from different countries into Nigeria. And when they come, the rules that govern who they report their income and expense; assets and liabilities, were provided for by the standards issued by their home countries.

    So, you have companies from the United Kingdom (UK) reporting UK’s standards, and those from the United States, reporting based on US standards.

    We had a lot of mix ups. You can actually report fair results following those standards, but when you report, people who are interested in investing in your company, may be relying on very faulting foundation if both were given the same rules.

    How?

    For instance, a very smart managing director that is making loses will likely want to adjust the figures. Don’t forget that in some companies, the Managing Director’s emoluments are tied to percentage of the profit of the company. So, such MD is not interested in losses. So, he could gather smart guys in the office and say, gentlemen, our numbers are not looking right, what can we do? So, they are no longer discussing the business concept, they are discussing earnings management.

    It is actually fraudulent financing reporting. So, he would say, gentlemen give me some ideas, we cannot show our shareholders this result. He is not telling them the major problem which is the fact that he is not happy because he cannot get good salary. So, somebody needs to create the opportunity for him.

    Then a young man, would raise up his hands and say, you know the car we bought for N100,000 and the policy of this organisation is that the estimated useful life of the car is for four years. So, every year, we write off 25 per cent against profit. So, we write off 25 per cent of N100,000 which is N25,000. So, let’s change the policy to say the car will last for 10 years.

    So, if we are going to rely on 10 years, instead of writing N25,000 this year, we should write off N10,000. By adopting that structure, the company beefs up its profit by N15,000. This will now change the bottom line to look very healthy, even when there is no value underlining the result.

    What does that mean for investors?

    The investors will rely on the result to their own detriment. But don’t forget that the N15,000 brought into the profits, the Managing Director is entitled to a percentage of it. It was at that point that organisations in Nigeria decided to establish a new standards reporting setting body.

    So, eight organisations led  by the Central Bank of Nigeria, Securities and Exchange Commission, Institute of Chartered Accountants of Nigeria, among others, came together and formed the NASB on September 9, 1982. They were churning out standards which lacked legal backing. The institutions were simply persuading companies to comply. Prior to that time, there were the Companies and Allied Matters Act, 1990.

    The promoters of NASB went to those putting together the CAMA, brought in Section 335 sub-section 1 of CAMA Decree 1990, which stipulates that financial statements prepared in Nigeria, must comply from time to time, with the statement of accounting standards issued by the NASB to be constituted by the Minister of Trade and Industry.

    So, they got legal backing by which the minister would constitute the board. The Minister of Trade and Industry constituted the NASB to become a parastatal of the Federal Government of Nigeria, reporting to the Minister of Trade and Industry in 1992.

    How was FRC formed?

    It was under the former President Olusegun Obasanjo that there were all forms of attempts to form the FRC, but it did not see the light of the day. When I was appointed the CEO of NASB, I made the formation of FRC my priority. Before then, the World Bank came and promised to assist Nigeria, provided there is a Financial Reporting Council, where you can have an all embracing structure.

    Firstly, I was the chairman of a committee on the adoption of IFRS in Nigeria and we needed to deal with the law. Before the 2005 banking consolidation, I said that only seven banks were healthy. My view came after I analysed the results of the banks and discovered that there was a problem. I needed to deal with what I saw then, which was institutional weaknesses.

    Tell us about those institutional weaknesses?

    Many of the banks had started opening up insurance companies to hide their bad loans. If a bank is owed N1 billion and the customer is not able to pay, the CBN would check the bank’s account and ask if it has been fully provided for. The bank would be asked to take the bad loan off its assets and profit and that would constitute a big problem on its balance sheets.

    What the banks did was to set up  insurance companies and, for instance, factor the N1 billion to the insurance company, and subsequently claim that the insurance company had bought the N1 billion bad debt. The insurance company buys the bad loan at N900 million, with the understanding that when it recovers the debt, it will make N100 million gain. So, the N900 million will now be quoted in the bank’s books, so that when the CBN comes for checks, the bank will be applauded as doing very well.

    The CBN is inspecting banks, not insurance companies, while the National Insurance Commission that inspects the insurance companies, do not check the books of the banks. You see, when I said banks should not own insurance companies, you can now understand why.

    What impact has the FRC Act had on companies’ reporting formats?

    The establishment of the FRC Act has brought sanity to companies’ reporting of their financial statements, and made it difficult for them to manipulate their earnings, as all accounts are now reported using the International Financial Reporting Standards (IFRS). With the new reporting format, the practice where companies that are supposed to make losses, manipulate the result to post huge profits, would be difficult. Prior to the coming of the FRC Act, regulatory agencies, including the CBN, never took financial reporting seriously. No Nigerian demanded for the CBN account, let alone analysing what is inside. Because if you pick the financial statement of the CBN, and you have eagle eyes, you will raise several questions that they will beg you not to ask the questions. The law empowered FRC on some broad areas. First, financial reporting generally, which includes valuation of standards, auditing accounting standard both private and public, and then actuarial standard. It also empowered us to develop and co-ordinate corporate governance. Hitherto, there was no law governing the corporate governance in Nigeria. Now, it is only in the FRC Act that you see corporate governance. The FRC Act also says we are responsible for Corporate Governance Code in both public and private sector. Finally, FRC Act gave us power to check audit quality.

    What’s the impact so far?

    The FRC is committed to making Nigeria corporate reporting investment friendly. The FRC Act and its implementation is providing protection for investors. That is why you are seeing a lot of the fight. The judges themselves, when people started taking us to court, did not understand the type of organistion we are. Overtime, when they started understanding what we are doing, they started to embrace and know that we are bringing sanity.

    Does the National Assembly need to legislate on the National Code of Corporate Governance?

    It is not something you can legislate upon. It is a Code of Corporate Governance. It is like legislating on integrity.  We want to know, what are the roles of people that are entrusted with the direction, control and supervision of an entity? That is what Corporate Governance is all about. It is not an issue meant for the National Assembly. The Code of Corporate Governance for the public sector is talking about boards. All the boards of Ministries, Departments and Agencies of government, are already captured within the enabling laws of these institutions.

    Since they are already captured, it means you cannot bring a code that can override that law. Instead, it has to go to the Federal Executive Council through the Minister of Trade and Investment, so that a guideline, saying that the structure and composition of the board should defer to that of the national code. That is what we want to do. The reason is not far-fetched. Firstly, the code is talking about international best practices, and  reviewing the laws will take a lot of time.

    Tell us about the Code of Corporate Governance for Not-For-Profit organisations?

    The code of corporate governance for Not-For-Profit organisations has received very heated debates. Not-for-profit people are saying they are not ready yet. The reason is that the code will require them to be accountable. They must have financial statements before having a corporate structure. They are not happy with the committee structure because we are insisting there must be three committees.

    What about the extended audit report that FRC is canvassing?

    Very soon, we shall be inviting six big firms to a meeting. We want to talk to them on extended audit report. It will focus on key audit matters. The audit report will look at observations. We need to protect stakeholders, protect minorities and also grow the market.

    We have three major challenges. We have board concentration. All your board members are all friends. This leads to group thinking, where everybody thinks alike, nobody thinks at all. So, in board concentration, there is no healthy debate. We are campaigning that after one has served as Managing Director of a company for 10 years, such person should not immediately transmute as the Chairman. There should be a cooling off period. Immediately you transmute as the Chairman, you will become Managing Director one, the new Managing Director will become Managing Director two.

    We also have what we call ownership concentration. In the Nigeria capital market, we have just 20 per cent free float. We also have audit concentration. The four big firms are the ones auditing the companies.

    Are you having challenges with shareholders’ associations?

    Shareholders associations are also challenging us, saying we have brought out a rule, saying for you to be a Chairman of audit committee, you must be a professional accountant. Our reason for that remains that audit committee members should understand accounting.

    In our registration, we said one cannot sign a financial statement as a Chief Financial Officer unless the person is a member of the ICAN or the Association of National Accountants of Nigeria (ANAN). The moment foreign investors know that the companies are being policed; they will come and invest in our country. The first direction in fighting corruption is to ensure there are financial statements. Tell all government agencies to prepare their accounts, you will see there is a problem. Government agencies should have accounts.

    Are you still receiving 2015 financial accounts from banks?

    Yes, but Section 8 of the FRC Act says that public entities are to file their financial statements with the FRC not more than 60 days after approval by the board. So, they still have a two-month window. They are submitting their accounts and we are receiving them. But if the accounts are qualified, you cannot announce that account until we have looked at them. These are the things people worry about, saying – why is the FRC policing us. You need to be policed. The moment foreign investors know that the companies are being policed, they will come and invest in our country.