The Nation Newspaper

Category: CEO

  • ‘We still have shallow advertising market’

    ‘We still have shallow advertising market’

    These are challenging times for the advertising industry. Business is not booming because of the economy; the dissolution of the Advertising Practitioners Council of Nigeria (APCON) board is stunting reforms. In this interview with Chief Correspondent ADEDEJI ADEMIGBUJI, Association of Advertising Agencies of Nigeria (AAAN) President and TBWA Concept Chief Executive Officer (CEO) Mr. Kelechi Nwosu addresses some of these challenges.

    What is the status of the industry considering the dissolution of the APCON Council?

    The APCON Council still remains dissolved. We need the government to reconstitute the Council. We heard that the government is in the process of reconstituting the council but that process is getting too slow because it is affecting everything that we do. You can imagine the legal profession, for instance, or even the medical profession operating without any regulatory council. That is what we are going through right now. There is no council in place to regulate advertising in all aspects and ramification. Meanwhile, we are looking at strong partnership this year with advertisers. With the emergence of David Okeme as the President of Advertisers Association of Nigeria (ADVAN), there is renewed impetus, renewed strength for collaboration. We have had one or two meetings with ADVAN and have actually tried to do an intervention on the challenges being faced by the outdoor agencies under Outdoor Advertising Agencies of Nigeria (OAAN). We have meeting with the Lagos State Signage and Advertising Agencies (LASAA) on behalf of OAAN. The Heads of Advertising Sectoral Groups (HASG), such as ADVAN, AAAN, OAAN among others. That’s just an highlight of where we are heading this year.

    The economy is facing huge challenges. What are the prospects for the industry?                                            

    First question is that we are talking to the government. It might be difficult to listen but the truth is that the problems we have even before now is that government have not properly used communication experts the way they should use them in the area of public communication. In this particular situation APCON through the Registrar, Alhaji Kankarofi, for instance, is convinced that the government should work with communication experts in our industry. One of the first things he has done is that he asked me to speak at an information workshop. What he wanted me to talk to them is about how and why government should work with advertising agencies in our fold and make sure that government communication is effective. That requires persistent communication and presentation to the government. We need to keep educating the government on this issue. When you are flying an XYZ campaigns for this country, have you asked the advertising agencies who do great work for different brands to come support you? Sometimes the government does not know how to go about some of these campaigns. We are already working on that to ensure that the government carry us along in its communication. Now, APCON is trying to fix an appointment to see the minister but he is very busy but we will get the appointment to talk to him. One of the flaws I see first in government communication is that they think efforts first before effectiveness, efficiency. Government have old manual they use. It cannot work. Communication requires much more fundamental support for us to change. It is not easy to change overnight but we have started. On the second question about economic problems, I think that we should not cry over it. As I tell my colleagues even in my own office, it is a general problem that has besieged all of us including the media houses. The reason is advertising will drop, transport cost might go up. It is affecting all of us. So, it is in our best interest to put up constructive suggestions to the government on how to build the economy. We also need to start thinking like creative people. I borrow the example of my office. I tell my colleagues that we can no longer do the same thing the same way; hence, we need to become more proactive. We got to have initiatives that we can sell to the government that we can sell to people. That is the way out. So creativity is going to solve the problem. You are not going to wish away the problem by just praying or crying over it.  We should not wish our problems will go by complaining or crying. We have got to work to diversify the economy, we have got to have creative solutions to create wealth.

    Why is it difficult for stakeholders to react to issues like the dissolution of APCON council?

    Concerned about stakeholders reacting to issues? I think we reacted to the dissolution. The warning we got from our stakeholders was ‘do not be confrontational’ and it was a better way for us to go through and talk to them diplomatically. The former permanent secretary was there, they are working on it.  ‘Calm down’, she said. This is something they have just done and they are working on this and that is why you did not see a lot of press releases and all of that happening. Remember that the bigger issues are that APCON should not be put in the board of parastatals. There is a bigger issue there and that issue we all need to support and fight for when I mention medical and legal regulatory agencies. Those have regulatory councils but due to one error or the other, we have APCON as a parastatal. So, politicians think it’s a place or council where they want to go and do their thing. That is the bigger issue we need to start lobbying and the efficient way to get APCON out of that problem is the bigger issue. Concerning the reactions letters we have done to the ministry, this is one of the reason why we want to see the minister. We have reacted, however, but we have not reacted publicly because of the circumstance.

    What are the things that will reshape this industry this year?

    Some white guys will increase their marketing strength to get the market share in  marketing communication market. It is more likely that the marketing sector will do well when you have the kind of economy that has been struggling for a year or two years. My view is that we have a shallow market and even when we are talking how much of the market; that is, how you know the depth of the market, the issue that affects us is the issue that affects the whole market place. Hopefully, by the second quarter of the year, things will begin to improve. How it affects us is that there would be local SMEs, enterprise brands that will want to come up to the market place. Now they require marketing communication’s support when these  economic blue prints become clearer. SMEs’ owners will come and establish in the country because there is no growth happening in America. No, they will prefer to come here if the government policies are conducive, especially with the reduced value of our currency. People will want to come and invest in this market. When they come, we will be here to support them. 2016 promises to be a good year. This is the year of the Olympics and it appears nobody is thinking about it. When you have a thing like Olympics, we need to look at the opportunities and look less at the challenges.

    We will have a business outlook seminar  and we will have a strong analysis of where we think the country is going. Professor Ekpor wrote an essay. In the essay, he said  we have to make tough choices; we need to have fiscal discipline. It is important for us to look at that. The APCON council – the advertising reforms have become stunted because the council has not been in place.  We need the council to be in place to do the reforms and these reforms are not just about agencies; they are also local development of management capital and different aspect of licensing of agencies. We should build some better sanity in the industry. So, we need the reforms; we need the council.

    On the integrated marketing communication market, are agencies coming back as a one-stop shop again?

    The fact that agencies run into segments and whether they are coming back together, my view is that clients require an integrated approach in promoting their brands and in our own country the segmentation that we did was rather hasty. This is because looking up to the international community without understanding our economy, GDP was not that deep so you could be in the UK, US you could have a pharmaceutical agency. Can you imagine being a pharmaceutical company in this country you can imagine how many agencies you could support you, probably have top four, five pharmaceutical company that can do advertising? So,  I think we sought of missed it when we went that way internationally. Even the lines are blurring the truth are that the advertising agency is not the way we define advertising really. Most of us are doing a lot more than that. I do not know whether the agencies will come  under one roof. Even now, we are offering solutions. So, we have a pack where there is media department; there is PR companies working as a consortium by volunteering themselves to work together.

  • ‘Govt ignoring specialists in marketing communication’

    ‘Govt ignoring specialists in marketing communication’

    Talk of politics, and you have many names popping up. But talk of PR and Advertising, there you have Biodun Shobanjo, Chairman, Troyka Holdings, holding sway. In this interview with Group Business Editor, SIMEON EBULU, Shobanjo, commonly referred to as the Czar of the Advertising, speaks on the recent engagement with Publicis Groupe, communicating government’s policies and continuity, among other issues.

    You pulled through a Foreign Direct Investment recently. How did you do it?

    I think it’s a credit to Nigeria; it’s a credit to our group. Just as you rightly observed, with the unofficial devaluation that we witness, a lot of people say it’s going to drive away foreign investment. But this group has shown a lot of confidence in our capability. They had shown a lot of confidence in Nigeria, knowingfull well that this wind is going to blow away and happy days will come again. I think we have been the catalyst for the expression they have shown. It is a demonstration of total confidnce in us as a group and they are very proud of what we have been to achieve.

    Of course there is no foreign investor that will not take advantage of an opening like this. How will the structure of the partnership look like in terms of personnel, management, etc?

    They are part owners of our company. They have 25 per cent of our Marketing Communication business. We expect to see a rapid improvement in the quality of our service delivery. We are in a people’s business, our business is centered on skills, knowledge. We need to fast tract the development and production of these skills.

    How are we going to do that? The systems and processes are available to us. We can plug into all sorts of values that they have built over the years. Publicis operates in 108 countries and has 76,000 professionals scattered all over the world. We have become part of that family. So, in terms of process, tools, among others, all of those things are available to us. It is now left to us to accelerate the learning process that will make us to be able to deliver that which we envision in us.

    Can you tell us what you think the difference is between when you started and now?

    A lot has changed. Nigeria has changed and consumers have changed. I think we now have a much more dynamic audience to deal with. The audience we have now is very impatient because they are on the move, they are young people, they are contending with so many things at the same time. Interestingly, the way we used to communicate with them, 36 years ago when we started Insight, has changed totally.

    At that time, the consumer was waiting to receive your information and literally did your bidding. I remember some campaigns that I wrote in my early days. One was headlined: ‘A good education starts with a good exercise book.” The name of the exercise book was called – Varsity. Parents would go and buy it because they believed the information. Also, I wrote a headline for a brand called Vita Malt. I wrote: ‘Vita Malt, for vigour and vitality.’ If you were to repeat that today, the consumer will tell you, ‘who the hell are you to tell me that a good education starts with good exercise book? Also, todays consumer will tell you, what about Amstel Malt? What about this, what about that?’

    They will come back to you if you are on twitter and begin to tell you the fallacy in the statement you made. It didn’t use to be like that, even 10 years ago.  So, the knowledge of today’s consumer is totally different from what we used to experience 25 years ago. In that context, we ourselves must find a better way, a more credible way to communicate with these consumers.

    With Publicis, the kind of people we are going to work with have lots of research they’ve done tracking these consumers, looking at the mere fact of how to dialogue with him, and so on. We will learn from those kind of leanings, research finding that will make us to be able to communicate with these consumers.

    Don’t forget that the world has become one small global village. And I promise you something – there are no differences between consumers. When you look at what motivates an 18-year-old American and check the same thing with an 18-year-old Nigerian of the same social economic strata, it’s the same modulations, because in any case, the music released in Nigeria once it comes out, go to Los Angeles, its right on their streets and vice -versa. So, it’s one little village. That’s why you find that in terms of nuances, in behaviour, there is similarity. So, you can now begin to talk about localisation of those values, that’s a different matter. So, how do you now use your local nuances, local language to communicate with that 18-year-old? It’s a different matter.

    What challenges have these posed to advertising, for instance?

    I think not much of challenges in the sense that anything that we do, any communication that comes out of this school, is properly researched to find out if the consumer can connect with these messages. In fact, before we even develop the communication, we first go out there to the consumer, to feel him out, feel his pulse. Here is a brand that I have a brief on. In communicating with this guy, how best can I do it so that he can understand, so that he can take the ultimate decision which is to buy a particular brand? You know there is competition out there. So, once you understand the process of communication which we teach here, we let our guys go through that process, then the task becomes easy for you.

    Over the years we have had all sorts of agencies springing up. No sooner they arrived than they disappeared. The rate of attrition seems to be high. How have you managed to stay afloat?

    To be honest with you, anywhere in the world, Marketing Communication is a very tough business. The raw materials you need to keep going are not available. I didn’t make an allusion to that. You have to hire highly talented people, highly motivated people and you must create a conducive environment for them to thrive. That’s not an easy task. The talents are not available because the schools are not producing talents, and I think that should be part of curricular in the schools.

    You see, we are artisans, we are craftmen. We must know how to use words. If somebody is a writer in an advertising agency, you must be one of the finest writers. Can you imagine someone drops a sweet on your laps (and he producing millions of this sweet), and he wants you to help him create awareness for people to buy the sweet.

    You can’t just tell people, ‘go and buy a sweet’. You must find a creative way of saying it. So that’s a tough thing to do. Now when you transfer that story, you want to tell – maybe from print to TV or whatever, you only have 30 seconds to tell that and that duration is not a long time neither, is 60 seconds. You want to tell a mum to buy a particular diaper for her child; there is a story to tell.  You want to tell her to drop the one she is using and pick yours? It’s tough. You are not writing competition. We need to creatively tell that story that will air for 30 seconds on TV or Radio. It’s tough but I like the way some agencies do, or are doing it.  They will tell you as a client service person to work in the Creative Department for you to appreciate how tough it is.

    How are you overcoming this challenge?

    It’s a tough challenge, but we thrive, however. My worry is that there aren’t too many people who can teach this art. People must teach you but where are the teachers? Tell me one top Art Director that you know of, teaching in the university and polytechnic and he is a graduating student of Fine Arts. I remember years ago while working at Grant Advertising, we had an expatriate as Creative Director. His area of specialisation was Fine Art and he did an ad for Volvo 244 GLE in those days in 1977. I promise you till this date, I still remember how that ad looks. The typography he used, the point size he used, where he dropped the Volvo on the page of the layout and where he put his body copy, it was a beauty to behold. And you could see the flow of everything. That is what is called ad direction. Even on TV commercial, there is art direction.  So where do you find that these days.

    What effort has the industry made to effect a change?

    The industry is trying, but the industry is full of young people. A man cannot give what he does not have. You need to get help from outside because there are veterans out there, people in their late 60s, 70s who are still active. It’s only in Nigeria that people go on retirement at 60, particularly in our profession. What some of these guys do is, start their own schools, partner with colleges. They get teaching invite and get paid.

    Are you thinking in that direction?

    No. I really never worked on the creative side of the business even though I wrote some quite a number of copies in my life out of passion, interest. I am talking of the guys in art directorship. Today, I go round, driving and I see billboards, see the way things are put together and I say things should be done better than this.

    Firstly, you find a 12-word headline in a billboard when the rule says, you should not have more than six. You find visuals that do not complement the words, you find visuals not balanced in terms of arrangement. No balance. We could do better. These young people are trying, but we could do better. If this Publicis Groupe guys come here and they see the mistakes, they are going to be disappointed because that is not what we will find in Paris or Hongkong. So, we need to up our game to match the best in the world.

    For a veteran like you, what legacy do you want to leave behind in that regard?

    If you ask some of the people who have worked with me in the past and those who have gone somewhere else, they will tell you that I was actually a teacher in the sense that I went round everybody’s desk, and I will look at what they are doing and tell them, this is not right, do it better this way. In those days, we had what we call review meetings where we actually reviewed work.

    The way we tore down works believed to have been concluded, it was fantastic. The people that I taught that time, that are now doing those teachings – that is something they will see as a legacy. They will say, if Mr. Shobanjo saw this, he will query it, ABCD and they themselves would make an effort to ensure that it is done well. That’s why in the industry, Insight is referred to as a School of Advertising. That has been the DNA of other companies under our group. We are still standing because of the ability to replicate ourselves. Even when you as a leader steps aside, there is continuity.

    You have been around for a long time, do you see yourself as a some kind of monopolist in this sector?

    Eleven years ago. I stepped aside from Insight, since that time I don’t engage in advertising matters. Not the nitty-gritty of advertising -if you know what I am saying. So, I see advertisements at home the way a consumer sees it, and I will ask by the way, I saw this ad, did you guys do it, and then I will pass my comment. Tell them that you can do it this way. That’s the role that I play.

    I could always guess if any of our companies does this because there is a way we develop our communication. There is something you will say to me and I will say it can only come from one of our companies. I can call somebody from the company and ask questions. So, there is no monopoly. People are only competing against their own peers. We do not have any advantage other than the fact that we have a DNA.

    How best do you think the government can communicate to people so that they can understand what they are doing?

    This question has been asked so many times. What I have tried to explain is that perhaps, maybe governments at various stages do not place any premium on what the people from Marketing Communications are saying. Anywhere in the world, government is the biggest communicator. I don’t think that there has been an effective way in which government can propagate what it is trying to do for the people, to the people. If you say democracy is the government of the people, by the people and for the people, the government owns it to itself to be able to communicate with the people in a most effective and efficient manner because communication is so important. It is so important that it (Communication) resides in the Office of the Presidency of the United State. Have you ever heard of Secretary of Information or Communication, before? In the UK everything resides in the Central Office of Information and there is a cabinet minister that drives that.

    All of the things that happen in government ministries and paraststals are routed through that office and the communication is organised from that office, it is because the matter is so important. Government needs to make people understand why it needs to embark on policies. Government needs specialists in communication. This sermon has been preached over the years, but I don’t think government is ready to do that.

    From this merger, is anyone going to lose sleep over job security?

    No. The management remains the same. No job loss.

    How much of fact finding gave birth to this pact?

    The truth is that we have always run our business,not as a typical Nigerian business. So, you don’t want to know the amount of due diligence that was carried out. If your company is publicly quoted, particularly a global company, before they will invest one dollar in any company, particularly outside their territory, they want to be very sure that they will get their money back, and they will put that money where corporate governance is followed to the letter. That is what they found in our group.They were pleasantly surprised.

    Which was paramount in your decision to enter into the partnership – finance or experience?

    It is not money. If it is money, we could have gone to list on the Nigerian Stock Exchange. The money is not part of it. If you know our DNA, money is at the end of our equation. We said from day one, if we do a good job, do it consistently, fame and fortune will follow. We found out that money is at the end. Even fame comes before the money. And that is what we like about the Publicis Groupe too. For us money is not the first on our checklist and the same for Publicis.

    What usually befall most Nigerian enterprises that die after the owner would have gone, we do not wish it to happen to what we have spent 36 years of our life to build so much so that with this partnership that we build, if I were to drop dead tomorrow, or the shareholders are to die tomorrow, we are hopeful that this business will continue to thrive and provide employment. The Publicis Groupe that we partner with started 90 years ago and it was started by one man. This is one way of ensuring that.

    The business environment at this time is on a rough trough. There is so much uncertainty, and your industry is built around the success, or otherwise of the larger economic environment. Do you share that concern?

    It is true and I share the concern. I think what separates men from the boys is for one to see opportunity and for others to see challenges. We have been through that process before. Can you imagine what potentials there are to unleash when we begin to develop local brands! Which Nigerian rice brand do you know of? I am yet to see any Nigerian rice that has a brand name. I do not know. Look at the opportunities in the rice sector alone. I know that a lot of rice is milled in this country, they are sold in the open market, you can have Uncle Bens rice in this country. Let’s create brands from these things.

    We are buying cashew nut here, but is there any branded one out there. I don’t know, there might be. What about corn, cornflakes. You remember NASCO? They are coming back, big time. Must we keep consuming foreign biscuit? When you have this product, what the Marketing Communication industry will do is fast-track the process of turning this brand into big brands.

    There are opportunities but people refuse to see it. That’s what we talk about government communication. Government needs to propagate that and tell consumers that there is so much to cheer about.  What about the value chain of these products if developed locally? Look at Pineapples, why not brand it. There are opportunities that will make our own Nigerian brands compete with global brands.

     

     

  • ‘Without diversification, Nigeria ‘ll remain in the doldrums’

    ‘Without diversification, Nigeria ‘ll remain in the doldrums’

    The General Secretary, National Union of Textile Garment Workers of Nigeria (NUTGWN), Comrade Issa Aremu, says the dwindling oil price has put Nigeria in its worst moment ever. He says the issue has made it difficult for both the Federal and state governments to provide critical infrastructure, pay salaries, among meeting other obligations. In this interview with AKINOLA AJIBADE, the NUTGWN scribe speaks on issues, such as corruption, and efforts made by Labour to facilitate the implementation of minimum wage. 

    How far has the Nigerian Labour Congress (NLC) gone in its campaign on the implementation of minimum wage for workers?

    Getting an act passed is one thing, its implementation is another. I have said it on several occasions that the Federal Government is keeping faith with the issue of implementation of the Act, specifying the minimum wage to civil servants, ditto the state governments.

    Also, many private-sector employers have also been compelled, by trade unions and other pressure groups to implement and pay their workers minimum wage. But there are few anti-minimum-wage governors. Happily, the workers and unions are engaging governments that disregard the rule of law with respect to the Minimum Wage Act.

    The point cannot be overemphasised; good governments must motivate the labour force for better productivity. We must ensure workers are paid well and on time. It should be noted that delay of salary for whatever reasons, including delayed payment of minimum wage, is the same as wage theft. The recalcitrant governors must know that the sub­sisting national minimum wage is due for review next year. The 2010 National Tripartite Committee on National Minimum Wage, headed by Justice S.M.A. Belgore (GCON), recommended that to avoid an ad hoc approach, the minimum wage is supposed to be reviewed every five years against the backdrop of increasing costs of living and deepening poverty of working people. The review is due this year. In some countries, minimum wages are adjusted almost every year to reflect the cost of living. Some countries have wage indexation according to which minimum wages are adjusted automatically to the rate of inflation.

    Many of the governors have said they can’t pay the minimum wage. Do you think there is sincerity in that admission?

    I think we have long crossed that bridge. Governors must respect the laws of the Federation. The National Minimum Wage Act of 2010 is an act by the National Assembly. Second, the negotiation lasted one year. The state governments were also part of the negotiation. You also remember that the labour demand was N50,000. It was a compromise to agree to N18,000. No employer, including the state governments, has any excuse to flout it. Some of these governors should get their priorities right; they should stop wasting or spending on executive indulgences such as private jets. They must also fulfill their obligations to their workers.

    One of the ways to judge the performance of the sitting President and all the state governors is their ability to resuscitate the collapsed industries in the country. Any state government that cannot pay salary has no reason to be in business of governance, and therefore, any governor that cannot pay the salary should resign.

    Nigeria is playing with fire because 24 per cent of its population is officially unemployed, and 50 percent unofficially unemployed. Some countries have a total of only 12 per cent unemployment crisis, the people will be on rampage. Nigeria must begin to prevent this by reopening all closed factories to engage the teeming unemployed youths.

    Labour strongly supports the urgent need to rebuild Nigeria through targeted efficient massive productive spending. President Buhari must be weary of the emergency advisers who claim falsely that government has no business in business. “Government not only has business in business, the art of governance itself is a business that must be done.

    There is no doubt that the economy is going downward at the moment. What is the way out?

    I think it’s time for all of us to think outside the box of oil and gas. This is now the time to walk our talk. It is the time to diversify our economy. With the collapse of the price of crude oil, with the fiscal crisis now facing all tiers of government such that even the Federal Government is also struggling to pay salary. I think we don’t need any counselor to tell us that this economy is no more sustainable on the back of revenue from oil and gas, with the unstable nature of that sector. Even with the best prices for crude oil, oil and gas are exhaustible, that will always finish. But what will not finish is our capacity to turn abundant raw materials that we have in this country to goods both for domestic consumption and for export. That means the future of Nigeria lies in manufacturing. We need to reinvent industry in this country. There is need for the revival of all the moribund factories, thereby returning the nation to the 70s and 80s when Nigeria earned huge resources from manufacturing.

    How much do you think the ongoing insurgency in the Northeast has affected economic activities in that region?

    You cannot talk about economic activities when there are no human activities. We must urgently put an end to this insurgency. You also cannot industrialise in an atmosphere of violence and war. I commend the security forces on the fight against insurgency. However, security goes beyond this.

    What are the implications of high rate of unemployment to labour and the economy of Nigeria?

    There are a lot of implications. Unemployment reduces national productivity. If more people are employed or gainfully engaged, there will be an increase in national productivity. We must not also forget the adage: ‘an idle mind is the devil’s workshop.’ When more youths are engaged, there would be less insecurity, hooliganism, thuggery, kidnapping and other violent crimes. The engaged people will concentrate more on their jobs and how to improve their productivity and welfare than being lured into becoming agents of societal and self-destruction.

    We must understand too that all factors of production are critical to development. In particular, technology can provide more efficient production methods like machines and computers. Capital and finance are also significant for states that are being run on debts and bonds. But, it is the human resources and skilled labour in particular, which are most critical to manage these other resources to improve the quantity and quality of production and quality of life.

    Indeed, it can be argued that where critical human resources are lacking in quality, other factors of production can hardly add value to development. States can borrow billions of naira, as most states do, but the human managers might divert the funds for the indulgence of the leaders, such as buying private jets, rather than improving the basics like potable water and good roads.

    What happens to Nigeria’s 170 million human resources is as important as what happens to 2.5 million barrels per day. It is certainly a scandal that we are losing as many as 900,000 barrels of crude oil to theft. This is unacceptable for a nation with almost 200,000 military personnel and an Army that is ranked as the fourth in Africa and 34th in the world.

    Nigeria recently joined the world to mark the industrialisation day. What can we do to revive our moribund industrial estate?

    Yes, we celebrated the African Industrialisation Day recently. This year we used that event to raise the awareness level on the need for Nigeria to try to produce what it consumes and it must consume what it produces. However yearly, we should use the day to see how we can increase manufacturing value added to this country. In the 1970s and 1980s, manufacturing sector was contributing close to 25 per cent of our GDP. The country was active in all sectors, Nigeria was getting active in automobile, we used to have Peugeot, Steyr, even producing trucks in Kano, we used to have Volkswagen, the Toyota brand was about to come in that time. In the 1980s, we were the third largest producer of textile, Nigeria had shares in Dunlop, Michelin, they were all here before, we must bring them back, that is the future.

    We should always use the Industrialisation Day to reflect, that day, from the President, his deputy, governors, should set aside at least one hour, to visit the old industrial estates, which the founding fathers of this country put in place. They should go to such places as Ilupeju, Ikeja in Lagos State, and take inventory how many factories are left, how many are under lock and key. In Kano, we have Sharaddar and Bompai, in Kaduna, we have Nassarawa, Kakuri among others.

    In Port Harcourt, there is Trans-Amadi, it’s a huge industrial estate. That was the design, to be purely for production. All our elected leaders should go there, they would be shocked, how many factories are working, and how many factories are under lock and key. We talk so much about the collapsed textile industry, because it’s labour intensive, virtually all industries have collapsed in this country, we must revive them. So for me, the advice to the president, and all our elected leaders is not for them to be agonising about the collapse of the price of crude oil, my advice for them is to organise their policy thinking process, to move from oil and gas to non oil sector, which should be driven by the manufacturing. Even, we can also make the oil and gas to be value adding, why exporting crude oil and importing petroleum products, when we can refine them.

    Refinery itself is value adding for petro chemicals. Those are the area we can create jobs, decent work, not just any kind of work. The kind of jobs we have now in the oil and gas is far from being decent. We can have more sustainable jobs if the refineries are working. I strongly believe that the future lies in growing the real sector of the economy. How can we drive that, there cannot be industrialisation without electrification. So, we must hit the ground running to make sure that these distribution companies, generating companies, deliver electricity to the industries at affordable price. You cannot run this economy or grow in all sectors with generators, so something must be done.

    As organised labour, we marked that day, with lecture and rally, geared towards revival of the industry. We made case against struggling and called for patronage of made in Nigeria goods, as well as the electrification of the country. I am optimistic, because Nigeria was once an industrialised country, and before it returns, it must prepare for real industrialisation.

    The issue of smuggling has been a major challenge. What is your take on this?

    We must fight smuggling because the truth of the matter is that Nigeria has become a dumping ground for most of imported goods, that’s bad enough. But it’s even worse that most of these imported goods do not pass through the Customs, they don’t pay revenue, they don’t pay duties to the Customs, which means government loses revenue. But above all, they undermine domestic goods, with cheaper goods. Because without duties, by the time they get here they become more cheaper than our own. And for poor economy, it means purchasing power is low. Consumers just want to buy any goods, irrespective of quality. In the process, they kill our industry, they also kill our jobs. What I am saying is that we have to revert to a situation in which domestic market, will dominate almost 90, if not 100 percent now dominated by imported dumped smuggled goods. Nigeria is endowed with huge market, 178 million people, that is the largest market in Africa, but which goods are we buying? Are we buying made in Nigeria? Because every time you buy imported smuggled goods, we are creating jobs overseas, one is also making their industry to prosper. So something must be done, and the first challenge is to tackle smuggling.

    On this I want to commend, the new Comptroller-General of Customs, Colonel Ahmed Alli, who has taken over now with the task of reforming and restructuring the Customs. I can see that the impact is already being felt. First, we have to re-orientate the Custom men that anytime they look the other way round, when goods are being smuggled into the country, they are undermining their own work, they are also undermining their own economy and undermining the country.

  • ‘What keeps BA going in Nigeria for 80 years’

    ‘What keeps BA going in Nigeria for 80 years’

    British Airways (BA) is popular among rich Nigerians who love flying. BA, they believe, has the best possible connection to destinations across the globe. This year, the airline is celebrating 80 years of its operation in Nigeria. A fortnight ago, reporters toured the airline’s facilities in its London head office. Its Head of Sales for Africa, Middle East and Asia Mr. Paolo De Renzis fielded questions during the tour. Assistant Editor MUYIWA LUCAS was there.

    How would you rate your market in West Africa and Nigeria, Middle East and North Africa?

    In Africa, we have a very strong position, particularly in Nigeria. Africa is one of the most important markets to British Airways. South Africa and Nigeria are some of the biggest markets.

    Is there anything specific on the West African routes, especially Nigeria, in terms of new products?

    At the moment, we operate a mix of B747 and B777 to Lagos and Abuja. We keep on reviewing our work as network changes. We operate B777 in Abuja.This is the plan.

    What is your capacity in Nigeria in terms of market share?

    Unfortunately, I cannot share commercial and sensitive information when it comes to market share. We have been operating in Nigeria for 80 years. That means that our operation is strong, but I cannot be specific when it comes to sensitive figures.

    You talked about bringing in B777 to replace the B747 your passengers are used to. What informed this change? Could it be as a result of shrinking market?

    The B777 operates to Nigeria with First Class both to Lagos and Abuja. The First Class is a very important market for us.  We keep on reviewing our capacity and we have been quite flexible with our capacity. We keep on operating B747 now but we will be reviewing this in the weeks to come.

    The Nigerian economy is having issues. People cannot get foreign exchange; how much impact does it have on you in terms of passenger volume?

    We are aware of challenging times in Nigeria. Load factors are very strong, but I cannot give you more statistics. Our operation is very strong and Nigeria remains our very strong market. We are still very positive about Nigeria.

    Recently, foreign airlines had problem repatriating their funds from Nigeria, has that been resolved? What is the collaboration between your airline and the Nigerian government in view of foreign exchange policy?

    As you know, there are some challenges at the moment with the Nigerian government. At the moment, we are working on it. There are ways things are resolved. This is a partnership of 80 years, and if you don’t have the understanding at 80 years of being together, you will never have it. We are constantly working with the arms of government, the Central Bank of Nigeria (CBN), Ministry of Finance, International Air Transport Association (IATA) to ensure that we get support; we are getting support from the government. The matter will be resolved in a matter of time.

    You will celebrate 80 years of operating into Nigeria this year. What are you giving back to your loyal customers?

    I am not going to reveal what we are going to give back to Nigerians for our 80 years. When it comes to fares, our fares are very competitive and we keep on reviewing our price.

    Operating in an economy for 80 years means there is something unique in that economy. What is that uniqueness that has kept you going?

    I will say the people. We have a very strong base of loyal customers, some spanning four, five generations of particular families. In Nigeria, whatever you sell, you are good to go. You have the population. By your sheer population, your country is a very strong market for any product. When you take our product, which is airline, we continue to be the bridge to bring people from Nigeria into the world, connecting investors from the world back into Nigeria. It is the number and loyalty we have enjoyed over these years. We have a strong position of point to point.

    How would you describe the local market and how can the government help to grow the sector?

    From my point of view, the Nigerian market is not different from many other markets globally. There is a lot of competition and challenges with the economy, but again, this is similar to many of the markets I am responsible for in Saudi Arabia, Kuwait and Abu Dhabi, but we are a very dynamic company; we adjust our products and aircraft to suit demands. Nigeria is a very strong market and still a strong market; it will continue to be stronger for another 80 years.

    On the passenger side, people talk about issues around transit visa, is there anything your airline could do to ease this without people cutting corners?

    We work closely with the British government to ensure that when it comes to transit visa, the process is very smooth as much as possible. It is nothing specific for Nigeria, but we do it for everywhere and for many markets in the Middle East like Kuwait, United Arab Emirates (UAE) citizens in terms of easier processing of visas.

    What are your plans for the medium and long term?

    We have quite a lot of premium capacity increase. We have the new Boeing 747 with additional Club World seats, that is, Business Class. We have quite a lot of them to Riyadh, Kuwait, Dubai. Dubai is already operating with bigger Club World. Same for Riyadh, Kuwait and also to Johannesburg, which will happen very soon. Only two weeks ago, we announced our planned operations into Tehran commencing from July. We will fly to Tehran with B777, six times a week from London.

    Apart from Lagos to Abuja, are you planning to extend your operations to other destinations in Nigeria?

    At the moment, no. There is a big issue in Nigeria about multiple designation and the local airlines are raising eye brow. We are guided by the agreement between Nigeria and the United Kingdom (UK), which is the Bilateral Air Services Agreement (BASA).  No matter how you like, you can’t just say you want to fly into Port-Harcourt if it is not in the agreement, you cannot go there. If it is not in the agreement you cannot do it. If we want it, the Nigerian and British governments will come together and agree for us to do that. So, we may really like Port Harcourt because we have a lot of customers there, but we are guided by the law that exists between the two countries.

    You used to have a lot of CSR projects. In 80 years, can you list some of the projects you have done as a gift to the communities?

    There are lots of things we are doing in that area. There is the Kuje school in Abuja, which we built and still supporting. If you know the history of that school, it was a school where people were learning under the tree. BA actually rebuilt the school and provided portable water. I was in Kuje late last year to look at the computer class that we started. Last year, we were involved in Leaders of Tomorrow project where we identified six promising Nigerian students in aviation and tried to get them ready for the future. That was phase one. It was a fantastic programme. We brought them to London where they spent one week in different areas of the airline including mentorship from our CEO, Mr. Keith Williams, to get experience on civil engineering side of the operations.

    We like to continue that and roll out the second phase. Those students were from the Nigerian College of Aviation Technology (NCAT), Zaria and Aviation school in Ilorin, Kwara State. I suspect that the second phase will be better and bigger than the phase one. The Britishness stops us from making too much noise. Even the Leaders of Tomorrow, we just want to impact on lives without making too much of publicity stunt. We impact on lives and want them to be the ones talking. We are also in partnership with Comet relief to ensure that people’s lives are impacted.

    The gender market is opening up now so much that there is a lot of agitation for women oriented business. BA should have a softer part not really on serious aviation.

    We have tips on how to travel with kids. We are currently working with Women in Aviation, Women in Business and you know that they are very powerful people.

    BA has made huge investment in aircraft expansion and acquisition. Could you avail us of the orders you have made, and the general outlook of your investment?

    We are in the middle of £5 billion investments in new aircraft, new lounges to make sure that our customers have fantastic and even better experience on British Airways. We acquired 10 A380, but ordered 12. We acquired B787-800 the ones with First Class. One of the first one was to Abu Dhabi and Muskat. We will be reviewing in the near future depending on our capacity.

    We constantly review our aircraft deployment globally. If there will be opportunity, there will be no doubt that we will deploy the A380 aircraft to Nigerian route. At the moment, we have one A380 flying into Africa, Johannesburg. We daily deploy A380 to Johannesburg. We will keep on reviewing our A380 operations globally. We deploy them to Singapore, Washington, Los Angeles, Miami, San Francisco etc. There are constant changes.

    What are your challenges operating into Nigeria and Africa?

    Everywhere is challenging. In fact competition is challenging. The fact that you have competition is challenging. As far as you have to deal with some common issues, it is challenging. What we are trying to do is to, as a company, rise above the challenges by making our operations safe and successful. If we have been there for 80 years, it means we can handle the challenges.

    BA has been accused of selecting a particular kind of aircraft that operates to Nigeria. How true is this?

    The aircraft look the same. Aircraft have registration. If you want to check, you can do that with Nigerian Airspace Management Agency (NAMA) for the registration. It does not make sense to keep aircraft on ground, they are made to be flying. We came into London yesterday at 4.30am and there would be 8am flight to New York or 10am to Atlanta. They will roster that aircraft that came in from Lagos to the first destination within that period that you operate with B747. They won’t wait for that aircraft to be returned to Lagos. Another one coming from elsewhere will be deployed to do the Lagos route. If you go into the aircraft toilet, right in front of you, opposite the door, you will see the registration. We have a lot of B747, but the registration will be different. That is why if you look at the seats, the numbers are different. We will not take bad aircraft to one of our biggest markets. As a matter of fact, we do not have bad aircraft.

    Recently, a British carrier asked Nigerian cabin crew to go. What is BA’s approach to its Nigerian staff?

    I do not know the number of Nigerians that are employed by us globally. We employ people from all nationalities globally. There are a lot of Nigerians working globally for British Airways.

    Nigerian airlines are very weak and fragmented. Is there anything BA has to assist Nigerian carriers?

    This is a strategic decision; it has to come from our parent company, AIG. I cannot answer this question. This is something I cannot comment on. AIG is the parent company and they take strategic decision on airline partnership.

    Going forward, what will happen in the next 80 years of your operation in Nigeria?

    BA has a long history when it comes to operations; it was formed over 90 years ago. In those days, we had small planes, but over the years we have grown a lot and I am very proud that we are in Brunei, the Middle East. Three years ago, we celebrated eight years to the area. We have a very long relationship with Africa, particularly with Nigeria. This year we are celebrating 80 years of flying into Nigeria, and we have been increasing capacity to over 40 per cent in other places. We have been pretty successful as an airline. I cannot tell you what will happen in next 80 years, but we are very strong in products and in terms of operations and definitely we will keep on growing and adjusting our capacity to profit the whole demand.

     

  • ‘How to end perennial fuel scarcity’

    ‘How to end perennial fuel scarcity’

    In the past few weeks, Nigerian have been groaming under a biting fuel scarcity. Fuel shortage has become a recurring decimal. But it should not be, argues, Dr Victor Iyama, Chairman, Board of Trustees, Cocoa Association of Nigeria (CAN) and President, Federation of Agricultural Commodity Associations of Nigeria (FACAN), In this interview with DANIEL ESSIET, he says if the refinery business becomes open, fuel scarcity will end.

    The Federal Government plans to raise N1.84 trillion to fund the budget? How will this affect the economy?

    If I was in a position to advise the Federal Government, I would have said we should live within our means. We should be ready to take some painful steps now so the future generation can enjoy. By and large, infrastructure is very important, but we must consider the state of our finance and not plunge the nation into further debts. If strategic infrastructural developments are to be undertaken, it must be done in such a way that the government will spend less. For instance, road infrastructure development should be given to concessionaires. I will support independent concessionaires running them nationwide. Let us get private concerns to run our roads for an agreed number of years and then later hand over the roads to government or extend the concession as the case may be. We can use road tolling as a tool to finance infrastructure. This idea will free up more resources for other things to be done in the country. We are in a precarious situation now; we are here because we refused to save for the rainy day; we were eating everything. This is a government of change. Change must be demonstrated in all ramifications. We must be ready to cut so many things off, if not we will be mortgaging the future of the children yet unborn. I am surprised to read in the papers that the Senate wants to buy new cars. How can they be talking about that? Is it too much for them to use their cars for oversight functions? How can they plan to spend that kind of money on cars now when we say we are tightening our belts?

    Nigerians are calling for an economic blue print that will address the falling oil price and aid sustainable development. What do you suggest?

    Refinery business should be thrown totally open. If a man has a capacity to refine, then let him be allowed to set up something. Whatever capacity he has to refine, let him be encouraged to set up something. Let the Nigerian National Petroleum Corporation (NNPC) be a supervisory body. You don’t have to confine me to a special licence. If the Dangotes of this world can build five billion litres capacity refinery, then let them build it. Let other smaller people with small capacities build whatever capacities they can build. The Niger Delta boys have shown us that there is no big deal in building refineries. They have built so many refineries and they are refining oil. The other day the government destroyed over 2000 of such refineries. We should learn from such places. In the United States, they  have so many small refineries. Government should stop restricting refinery business if it wants to end this fuel scarcity problem. They should throw the business open, then give one year, fuel will be everywhere because there will be open competition. Fuel will drop to N45. That is the only way out. We keep talking about subsidy. What are we subsiding? Throw the business open. The government should start selling crude oil directly to people. If crude oil is $20 per barrel, sell it to Nigerians who want to build refineries at that price. I am not saying sell it at a discount. If it is $30, sell it to us at that price.  In no time, we will be awash with petroleum products. We wouldn’t be importing finished petroleum products. That is the simple truth. I made this suggestion as far as back as 2005. Why all these? If a man can get up today and set up an oil palm processing industry, why can he set up petroleum refinery? Is it not a product? Why are we making it look as if there is something extra ordinary about setting up a petroleum refinery plant? Let them throw open the business. Just give us a maximum of one year; they will be begging people to come and buy fuel beecause it will be everywhere. If government wants, they can maintain their own refineries. But throw refinery business open.

    Oil accounts for over 80 per cent of the country’s revenue. Now, with oil prices down, where do we go?

    I am one of those who don’t believe in this oil price going up and down stuff.  I believe if you know what is accruable to you, then you plan within that limit. Today, we are all proud of China. How did China achieve economic revival? China closed her doors to foreign goods and services. It built domestic self-sufficiency. The citizens are enjoying today. China has become a big industrial country in many respects and the superpower status is coming into play. We do not produce what we need to sustain ourselves; we import much more than we export. We can’t take on massive debts to sustain our porous standard of living. We should take direct action to reverse our out-of-control trade deficits. It is not that there is no poverty in China but it is minimal. How we can be benchmarking the budget on $38 when we know that price is predicted to drop to $20? Why don’t we do budget of $20? Then, if it goes to $38 or $40, then we can plough the excess to developing the economy.

    The government needs to take drastic actions to restore the nation’s economic and financial independence. We must begin to rebuild our industries. It is essential that our government should ensure that we produce most goods and services in our factories employing Nigerians. We should curb our out-of-control spending on unnecessary programmes and initiatives financed by foreign debt. No plan to revive our economic and industrial self-sufficiency will be pain-free. We must rejuvenate our economy. We need to rebuild the economy. I believe we should plan within our limits. The answer to solving this problem, I believe is the non-oil export. Basically, agriculture is key component because it constitutes 85 per cent of the non-oil revenue earning mix. Agriculture is what has been saving us in this country that is why there is no hunger in the land. Though food may be expensive, people still get it to buy. We have thrown the challenge to Federal Government to entrust the mandate of economic revival to the agric sector. We have our template. We can grow the non-oil sector to generate $250 billion yearly as foreign exchange to the government.

    Manufacturers and others are crying that the government is restricting foreign exchange (forex) allocation . In your view, what is realistic to grow the economy?

    If we are really going to manage the situation, then we should restrict forex allocation to essential items. Every other person should go and source for his own foreign exchange. Government‘s foreign exchange should not be used to import things such toothpick, toilet rolls and all those frivolous things. It should be restricted to very essential things. The other day, some people were complaining that they were not given foreign exchange to import palm oil. What for? If you want to import palm oil go and source for your foreign exchange. We have enough palm oil in this country and if we don’t have enough supply now, we have enough land for people to invest in palm oil plantations. Why should any responsible government give foreign exchange to people to import palm oil?

    What stops you from investing in palm oil plantation here and refining it? I am not saying they should ban palm oil importation, but if you want to import it, go and source for your forex outside government purse. Forex allocation should only be for essential things. It should not be provided for wines importation. We should take measures to save the economy. I can assure you that in the long run, people will be forced to go into exportation. If government stands firm on this position of foreign exchange restriction, many people will go into exporting.

    There is concern about the export expansion grant. The government is reviewing it because there are reports of abuses, like companies collecting the money and using it for another thing. What is your comment?

    No, no, there shouldn’t be the issue of what they use it for. Normally what they use it for is for their needs which supports exports. But of course, if the government  is saying that because of the present state of the economy , it wants to review it, I don’t have any issue with that. Like I told you, we all have to sacrifice one thing or the other for this country to move forward. Of course, the ones that have been given the grant should utilise it. The thing is that we should all sit together on the review roundtable as there will be suggestions from stakeholders. We are ready for the review. We can’t say it should continue to be 30 per cent.

    There seems to be a disconnect between the financial sector and the agric sector with regards to interest rate. What is your take on this?

    I don’t see why interest rate to the agric sector should be more than five per cent. There is no reason. Nobody will be encouraged to go into farming when the bank is offering loan at 20-25 per cent. It doesn’t make sense. Five per cent interest is still better. Before I went into farming, I didn’t know it will be difficult. There are some many disasters  that befall the farmer. If the interest rate is low, when disasters strike, you can easily start all over again. If you give somebody loan at four  to five per cent he a lot of people  will be encouraged to go into farming and they will do well.

    Do you think there is need for the return of marketing boards and strengthening of commodities exchange?

    I don’t understand why we have to keep thinking backwards. I don’t understand why people  should be talking about marketing boards. What did they achieve? Why did the government scrap cocoa and other commodities board in 1986? Farmers revolted against them. The commodities board members were feeding fat, driving expensive cars all over the place. The board was making all the money while the farmers were suffering. The farmers were not paid appropriate prices for their commodities. Some were being owed for months. At the end of the day, they abandoned their farms. Some of them in annoyance cut off the tress. That is why they killed all the coffee farms. They killed the trees and started planting yams and cassava. At least, they were sure of getting income from them. So, when they scrapped the cocoa board and cocoa association came online, it was free enterprise, free entry; you can do your cocoa, quote your price, follow the world price, quote whatever you wanted to quote, sell your cocoa the way you want it and we were overseeing it, the farmers started getting back. After they were scrapped, Cocoa Association of Nigeria (CAN) was formed. The association took over the role except buying and selling. We don’t need any special boards that will be paid salaries from  the government purse again. Because that money you are going to pay them where are you going to get it from? They will start surcharging farmers to get money to pay the boards. The associations need to be empowered to carry out the functions of the boards.

     

     

     

    How about commodity exchange?

    It is laudable but I told them they should concentrate on domestic products like  beans, sorghum, cassava, millets, garri, tomatoes and things that are consumed locally because they can’t control  or compete for things such as cocoa that are traded on the international markets or exchanges. Countries like Malaysia have tried and dumped it. It was not working .You don’t start trading on commodities that you don’t have control on. They should start with produce that are consumed locally.

    From the way agriculture is structured in this country, we know that 90 or 95 percent of farm production is  done by small scale farmers. It is not easy mobilising them to get their produce to the commodity exchange. I am in support of the commodity exchange. But I have told them we have to crawl before we start to walk and run. We always want to start from the top and then crash at the bottom. It is better to grow gradually from the bottom so that when we get to the top we will be able to remain there. Don’t take on things that you can’t control, it is better to take on things that we control extensively.

    What is your blueprint on how to return agriculture to the front burner?

    We are going to concentrate on a few commodities .Basically there is no agric commodity that cannot be exported. There are major commodities that are doing well, not to talk about solid minerals. Solid minerals are there in abundance. Precious metals are there in abundance. With all these resources, there no way we are not going to be raking in $300 to 400 billion annually into this country.  We want to increase production of exportable commodities with a view to increasing their foreign exchange earning capacity and further diversifying the country’s export base and sources of foreign exchange earnings. We are determined to modernise agricultural production, processing, storage and distribution through the infusion of improved technologies and management so that youths can be attracted to farming. We have identified key agricultural commodities. We are determined to integrate young Nigerians into agricultural value chains and encourage innovation.

     

     

  • ‘Why power reform must work’

    ‘Why power reform must work’

    Eko Electricity Distribution Company (EKEDC) Director Mr George Etomi believes the power delivery chain – from gas supply to generation, transmission and distribution – is being starved of funds. Banks, he notes, are not giving loans to firms because of the mismatch between their investments and cash flow. He tells CHIKODI OKEREOCHA and TEMITAYO AYETOTO in this interview, that the 45 per cent increase in electricity tariff is necessary to inject liquidity in the system.

    Two years after power sector privatisation, are you satisfied with the level of service delivery?

    The starting point is to acknowledge the fact that the privatisation is the right direction to go, because it’s very clear that the government’s involvement in delivery of services like power will never work. We saw it in the telecoms sector; Nigerian Telecommunication Limited (NITEL) was a total failure. We’ve seen the difference between when government handed off and allowed the private sector to come in. Today, government makes so much money from the telecoms sector and they don’t have to provide anything in the budget for NITEL. So, that principle is what informed the move in the power sector. The reason why the dividend has been a lot slower to manifest in the power sector is simply because while in the case of the telecoms sector these companies started on what I call Greenfield operation, in the sense that they didn’t have to inherit anything government. The technology they came with at that time was very new, which was the GSM technology. And they didn’t have to partner with government. They simply just came in and from the word go they came with their employees, the right kind of employees. They were able to deploy; they didn’t have to deal with antiquated equipment. It was therefore, very quick for Nigerians to see the dividend in that area. The power sector is phenomenally different because government has done this thing even before independence, close to 100 years. I know since 40 years there has been very little investment in the sector.

    What is your greatest challenge?

    Do you know many meters are bypassed per second? Electricity theft is the singular greatest threat to the reform that we are talking about. Almost every cadre of consumers including the elite are involved. Many of them consider it cheaper to corrupt the workers, bypass their meters. You see the meters rolling but not recording. People consume and don’t pay. In some communities, our workers cannot even go there to present bills, they will kill them. And if you go there and disconnect, they will reconnect, and if you go back, they will molest you. So, electricity theft is one of the greatest threats and that is because people over the years have just been used to power being like a share of the national cake. So, it is not anything to them to steal. In fact it is the good people who are subsidising the bad people in this electricity business. So, the whole system is totally starved of fund. And it is a chain. It starts from the gas supply to generation, to transmission, then to distribution. The people at the distribution are just mere collectors of money. I feel sorry for distribution companies because they are the ones that relate with the customers. They are the ones consumers abuse all the time and the money is not there. Because when they collect it, they send it up to the market operators who then distribute it to all the people in the chain; from gas suppliers, to generating companies, to transmission so that you can maintain a balance. They keep just a tiny portion, less than 20 per cent for their own operation. So you can tell from day one that the system is starved of fund. When they are starved of funds it therefore, means there is not enough money to maintain the system. That is why you see transformers breakdown, sub-stations breakdown; you hardly have money to fix it. And what is the consequence on all of us? Generators. There is hardly any home, any office, and any business that does not have one kind of generator or the other. When you look at it you probably burn more diesel than you get power from the system. So, when there is a modest price increase and everybody is screaming, who are you punishing? Who are you really helping? Isn’t it better for that person to pay slightly more and get power and not get power and be burning diesel? So we are not helping ourselves. The argument has to change. We have to educate the people. Every time someone is not paying for power, someone else is paying for it. So it’s a combination of corrupt people in the system and crooks outside. So, we must all allow this reform to work. Two years is too early to judge anybody. We are not even talking about prepaid meters anymore; we are talking about smart meters because technology has gone way beyond the prepaid meter stage. Prepaid meters are bypassed all the time. But with the new smart meters, you consumers, me provider are not cheated. That means you have to re-meter everybody. It is not an easy task. There are close to 500, 000 consumers on our network. You think about people going house by house, consumer by consumer. Do your mathematics and see how long it will take. So, when people scream it is not working, it is working. It is just that we like quick fixes. It’s almost as if the reforms meant the next time you switch on your light there will be light. No. There were problems.

    Shouldn’t there be marginal improvement in electricity supply before tariff increase?

    When you don’t do it (increase electricity tariff) and you burn diesel, which is more expensive to you? That is why you have to look at your energy profile as a total before you start arguing, because each time that system is deprived of funds, you are burning diesel and it’s costing you much more. In my house, we pay N250, 000 a month for diesel. PHCN brings us bill of N50, 000. So, if you ask me to pay more, why should I complain? We are just burning money and we are all victims of a cartel. It’s a cartel we are dealing with here. Just like petroleum subsidy, it’s a cartel. Many people building this argument are supporting the cartel that own generator companies abroad and are flooding Nigeria with generators. Nigeria has the highest number of generators in the world. We are not talking about the environmental pollution. That’s what we have all come to live with that we are not talking about anymore. Lung cancer and all those cancers that have to do with pollution are on the increase in Nigeria. So, why do we keep looking at a narrow spectrum? This latest increase they are talking about, do you think it’s for the DisCos? It is because the government has finally recognised that we do not price gas correctly, because that is the real problem. The source of the power, the feed is gas and your gas isn’t priced at international level. So, the owners of the gas have no incentive to produce for domestic consumption; they will rather produce, liquefy it and sell it abroad. It’s business. What is the degree of patriotism that will make you do that? So for all these years, government has been trying to subsidise the price of gas. Now we are broke as a country, we are beginning to realise what many of us told them that subsidy is not sustainable. Let the gas price float, let competition come in. We saw it in telecoms.

    You talked about the need for more liquidity in the system. What is the level of investment by DisCos?

    We can’t even talk about the size of investment because it’s an evolving thing. For instance, when we came in, we didn’t see meters. Now every DisCo is having a metering programme again. Do you know how much that costs? It is a function of economics. As a DisCo  or any electricity company, you put in some of the money and you go and borrow the rest. The first thing a bank does is to look at your cash flow. If the money you are receiving does not match with the investment, nobody will give you credit. And that is the argument we have been making. This increase would have happened long ago. We told them from the beginning when the thing was privatised. I think the drop in oil prices has finally opened our eyes in Nigeria that we have to think as a nation now before we go under. Power is one of the things we can do that can take us out of this mess. If we get power right, the multiplier effects will be enormous. We will forget depending on oil.

    Didn’t you do feasibility study before taking over these power assets?

    Have you worked with the government before? When you work with the government, you will know that it is not a negotiation of equals. They just showed us data room, we looked and based on that we bid. They even requested for what they call a six-month shadow management period before taking over, where we would be sending our men to understudy the people there. The same unions in the same sector blocked us. So, the first time most of us took over was when we took over. And as you are taking over, you now begin to see magic. But we are in there and we will make it work. So, it’s patience. Give it time to work. Those who are screaming and shouting know why they are screaming and shouting.

    But many people argue that the investors are not investing in the sector?

    First of all do you know how much it costs for each of those bids? Many of them were in excess of $100 million. That is money that came from people’s pockets. Then you now had a commitment over a five-year period to spend another $250 million. Those were all the conditions for taking over. We are talking about $250 million for five years. But when we got in there, as I told you, the metering programme was faulty. So, we are doing a completely new programme. In fact, that metering programme alone swallowed that $250 million. It’s like being lured into something but you have to make it work. It is patience that we need.

    How much has EKEDC invested in its network?

    I don’t have the figures, but I can tell you they have invested a lot of money. This is so especially for Lagos, where like I told you, was originally designed for underground cabling. When that girl was electrocuted in UNILAG, it was a wake-up call so we gave instructions immediately to install all the underground cables and that exercise is going on. The honey moon is over because in those days, you don’t even know who to go and ask for compensation. But now they can sue you. So, we don’t even wait for them to sue; we quickly made an offer.

    How serious is the problem of energy theft?

    That’s why I said the singular greatest threat to this reform is electricity theft, because we lose up to 70 per cent of our estimated revenue. And this is across the board; I am not even excusing the elites. There are people whose consumption is tied to other people’s meters. There are some people whose meters you see rolling but are not registering anywhere. There are some people whose meters we don’t even have access to. The prepaid meter is one of the most by-passable meters. That is why we said we should now start the smart metering, which is a totally different system. We are therefore re-metering everybody. So, even those with prepaid meters today will eventually get smart meters.

    How long will it take for consumers to get smart meters?

    At least two years. Even if we install 10,000 a month and you are looking at 500,000 consumers, that is about two years. But I would rather undertake that journey. It’s like building an express way; I’ll rather take my time one kilometre by one kilometre and build a solid road than to say quickly grade it, put laterite, in three months let everybody be passing. You and I know that come the next rainy season, it is going. That’s the way we are looking at the metering. We are coming grade by grade.

  • ‘How to fix Nigeria’s power problem’

    ‘How to fix Nigeria’s power problem’

    To Uwe Lauber, Chief Executive Officer (CEO), MAN Diesel & Turbo, a German mechanical engineering company, to fix Nigeria’s power problem, renewable energy must be supported by fossil fuels that power generators. Lauber, who was on the delegation that accompanied the German President to Nigeria, says the government has taken steps to address the power challenge. He speaks about the company’s plans in Nigeria with OLATUNDE ODEBIYI.

    You are visiting Nigeria as part of the delegation of the German President, what are your impressions so far?

    It is a great honour for me to be able to visit Nigeria together with our Federal President and to be welcomed on such a high level. Nigeria is an impressive country with a buoyant and dynamically developing economy. That buoyancy is especially tangible in Lagos, a city that seems to be bursting with energy, for example the Eko Atlantic City project. The sheer dimension of it is nothing short of stunning. This is without doubt one of the most ambitious land winning projects of our time.

    MAN Diesel & Turbo is engaged in various sectors ranging from power generation and turbo machinery for the oil and gas industry to marine propulsion. Which area do you see the biggest opportunities in Nigeria?

    Nigeria is already an important market for our turbo machinery business. We are working together on a number of projects in the oil and gas and process industries. Some groundbreaking projects are being developed at the moment, for example, the Dangote Refinery, which will be of huge strategic value to the country, and which will turn Nigeria into an exporter of refined petroleum products instead of an importer. It is projects like this that we see the most substantial growth potential. But Nigeria also has a developing shipbuilding industry, which we are paying close attention to. As one of the world’s leading providers of ship engines, we want to be well positioned by the time this market takes off. Of course, there is the energy sector where we specialise in solutions for distributed energy generation. We already have over 60 engines for energy generation installed in the country.

    Power generation and access to electricity is one of the biggest challenges this country faces. What is your perspective on the situation?

    The power sector is without question one of the key constraints to the country’s economic development. According to the World Bank, power cuts in Nigeria slow down annual growth by an average of three to four per cent. That is very substantial. Nigeria is the biggest economy on the African continent and yet almost 50 per cent of the population is without access to electricity. Imagine the untapped potential. Without a doubt, action is needed. But things are progressing, and in the past years, Nigeria has made remarkable efforts to address the situation in a systematical way: The 2013 privatisation of the power sector created the foundation on which an electricity market based on rules, efficiency and reliability can develop. Going forward, it will be essential to generate the trust and incentives needed for independent power producers to further invest in and expand the generation capacities and distribution infrastructure.

    What technical solutions do you recommend for the country’s energy challenge?

    With regard to generation capacities, I think flexibility is key, which is why distributed energy solutions based on gas or dual-fuel engines are well-suited for Nigeria. They are very efficient and can feed into the grid or operate in captive mode. And this technology also works well with renewable energies, like solar or wind power, which offer a huge potential in Nigeria.

    The Federal Government intends to increase the share of electricity from renewables to 23 per cent by 2025 and to 36 per cent by 2030. Coming from a country that has already reached above 25 per cent share, what is your advice?

    It’s hard to compare the situations. In Germany, the main challenge was and still is to completely restructure an energy system that has evolved over decades in a short period of time. In Nigeria, it is about building up a new energy system, partly from scratch – a system that needs to supply twice as many people, in a country that is almost three times as big as Germany. Having said that, I think there are three lessons that we had to learn the hard way, which might be of general value: First, “Make a plan and share it.” Get all the players to the table and let them know where the journey is going. Secondly, “Don’t forget about the grid.” The grid needs to carry the load and it takes a lot of time to build. And thirdly, if we will talk about climate protection, “Renewables alone won’t cut it.” You need to choose the right back-up as well.

    What would be the right back-up?

    In Germany, we have been facing the seemingly absurd situation of constantly rising shares of renewable energy generation and rising carbon dioxide (Co2) emissions at the same time. What had happened was that more and more subsidised renewable energy is pushed into the market, which led to a drastic erosion of wholesale prices for electricity. As most gas-fired power plants could not compete on that price level, the share of energy generated from coal increased. And that had a significant impact on the carbon footprint. What this has taught us is that renewable need a fossil back-up that is low in emissions, which is why natural gas is essential when it comes to reaching our climate protection goals.

    What is your assessment of the recent climate agreement made at the COP21 in Paris?

    The climate agreement has to be considered a historical breakthrough. Never before has the United Nations (UN) been able to get everybody to commit to a common climate goal. This is a unique result. But we have to be aware that the actual work is only starting now, as the agreement does not define any mandatory actions. So, the next step will be just as decisive, which is for the countries of the world to hand in binding plans for their factual contribution to limit global warming.

    You have opened a new office in Lagos. What are your plans in Nigeria? Are you planning to open additional offices?

    As a next step, we are considering opening up a local service workshop. Our market-leading service is an essential element of the MAN brand experience and, of course, a strong selling point for any new business we create in Nigeria. And since we already have a strong local base, this is worth looking into.

    In 2014 you acquired a small engineering company in South Africa. Is mergers and acquisition (M&A) something you are looking at in the Nigerian market?

    We are not on a shopping tour, but we follow a concept that we like to call “intelligent growth.” That means acquisitions are definitely part of our playbook, and Nigeria is no exception. However, it also means that we place very high demands on the commercial viability of any possible transaction. We look at M&A as a tool to help us open up new fields of technology, sales markets or supply chains. If that is the case, we may be interested. But we will always remain a lean and flexible player in the market. Our customer proximity and fast market response allow us to counteract the size difference to some of our competitors.

  • ‘Agro allied export, cargo boost to economy’

    ‘Agro allied export, cargo boost to economy’

    If Nigeria needs to turn around its economy, it must rethink its dependence on the export of crude oil and diversify into cargo and agro allied export. Such paradigm shift will guarantee food security and create a window for Nigerian exports to Europe and the global markets where it could earn over $52 billion yearly, in addition to creating jobs. The Managing Director of ABX World, Captain John Okakpu, in this intervie w with KELVIN OSA-OKUNBOR speaks on these and other issues.

    There have been calls on the govern-ment to convert some airports to cargo airport; because of the availability of agro-allied products in the area where such airports are located. Do you agree with this?

    Who goes to Akure airport? It is not the government that would go there. So, the government can designate more than 100 airports, are they the ones that will fly there? It is the private sector. The government has a lot of role to play in this part, but as far as the 13 cargo airports are concerned, they are blue-sky projects that will not work. The only airport that I can say is fit for a cargo airport in Nigeria is Ilorin. Ilorin is at the entrance and the exit point of Nigeria. But the problem with Ilorin is the road network that will take you to other areas. There is no road network. It is easier for a cargo airline to come into Nigeria, drop its cargo in Ilorin, pick some of the produce and off it goes. If you start taking a European flight to Calabar, that is crossing the airspace, when they get to Calabar, what are they dropping there? Did they have enough cargo from their origin into Calabar to go and carry whatever you say you have there?

    What does Nigeria stand to gain if it invests in agro allied products for export?

    We have over 10 million Nigerians living outside the country. Do not forget that the market is geared towards Nigerians out there, who are looking for home food and products. So, if one Nigerian spends $100 on a particular food item for a day, multiply that by how many items he will need in a week, month and a year, all through, with the amount he will be paying for these food items if they are available. The amount will be unimaginable. Nigeria is a mono-economy country, depending on only crude oil to run its budgets. We need to wake up now that the oil price has fallen to low index. This is the time to diversify the economy and invest heavily in agriculture and agro-allied products. To focus on agriculture, you need huge number of well-trained farmers, who will in turn form co-operative societies. You also need the supply chain that will get the products to their destinations, as well as warehouses, storage and packaging facilities. Our goal is to create 20 million jobs in two years, while Nigeria will be able to generate $52b annually from the export of agro allied products alone. There should not be any reason Nigerians should suffer in the midst of plenty, especially as 70 per cent of all exportable farm produce comes from Northern Nigeria.

    What are your targeted farm produce?

    We have 75 products and out of that, one of the major and the top line product exported out of Nigeria is a leaf called Ugwu, (Pumpkin). You cannot believe that today if you bring a 40-feet container full of Ugwu, it will go on a daily basis. That is one of the high products out of Nigeria. The list goes on; Ugwu is there, bitter leaf is there, sweet potato, ginger, and garlic.

    How do you preserve them for export?

    We don’t preserve them, ours is transportation. We have experts who  do that. For example, ours is to take it from Nigeria to Europe. They get it fresh. If you go to SAHCOL, which is our processing centre, I can proudly tell you that today SAHCOL built first class world standard warehouse. And the cold room they have there today is only ABX world that is making use of it because of the dimension we are taking Nigeria to.

    Preservation is not our goal; our goal is logistics, bring in supply chain, get the farmers, put them together to be trained and certified.

    We all know today that brown beans is banned from Nigeria, you can’t take it into Europe because of the chemical used in preservation. Then in terms of cassava peel, nothing out of cassava is a waste, including the peel. If you bring 100 container of cassava peel, it will go the same day from Nigeria.

    Crude oil prices are failing and one of its spiral effects is the huge cut in revenue accruing to the government. How did we get to this stage?

    Fundamentally, as a government and a people we got it all wrong many years and decades ago when we solely depended on crude oil export as the mainstay of the economy. No reasonable government or a nation will do that considering that it would have attendant effects on her economy. Now, the reality has hit us economically and we are running around. It is time to stop complaining and strategise to move ahead. It is time government launched a serious return to the land campaign, by that I mean agriculture. That is why our firm is interested in the promotion of cargo and agro allied export.

    How does your cargo freighting and handling firm fit into this?

    My goal here is to bring Nigeria back to where we are supposed to be. To stimulate the promotion of cargo and agro allied export. It was a very painful task and journey; it has taken a lot of time and hard work, but the bottom line is that we are here now in Nigeria. In ABX world, our goal is to champion agro airline in Nigeria to create a revolution. Agro Allied has to do with agricultural products, in conjunction with transportation and logistics, mostly in aviation.

    Why did it take us this long to realise we have to go back to agro allied and cargo export promotion?

    You know the price of crude oil in the market today. Nigeria is one dimension economy, mono-economy, crude oil and import, that is it. God wants to redirect Nigeria. That is why we are now facing the issue of crude oil and falling price by the day. People like me will say let the crude oil be zero, one dollar per barrel because that will wake us up from the slumber.

    For Nigeria to balance its budget, crude oil has to be sold at a higher price per barrel. How do we make up for the difference?

    We have no choice than to go back to basics, which is agriculture. At ABX World, we have partners in Europe, around the world, we are here to make a difference, create agricultural revolution whereby we take agricultural products as long as they meet the international standard and requirements to the world.

    What strategies do you have in place to achieve good marketing of Nigerian products in Europe and other continents?

    First of all we have to engage a lot of supply chains around the world, especially in Europe because about 60 per cent of what is going out of Nigeria will target the market in Europe. What we do is to engage a lot of supply chain, bring in the supply chain, then try and liaise with the government, both state and federal and get the farmers, through their co-operative societies because most of these farmers have to be fully registered through their co-operative societies. And these farmers have to be trained on the dos and the don’ts involved in what they are into. When you bring in the farmers, you bring in the co-operative societies, then you put both of them together to be trained and certified to be able to supply the products they are into. Once you get certified you can be guaranteed about three years contract. So there is a need for the training and certification, which is the most basic.

    What is your take on efforts by the government to construct 13 cargo airport terminals across the country?

    There are some airports designated as cargo airports in Nigeria, but to me I will call that blue-sky project. What I mean by blue-sky project is that it will never work. I had some meeting with FAAN officials about two, three times in the past months and I gave them reasons why it will never work. Part of the reasons is that the projects were poorly conceptualised. The world is changing. Most of the aircraft manufacturers are changing their direction. There will be a time you will not have a cargo airline because of the new trend in technology in aircraft manufacturing. For example, Emirate is taking the lead in this direction. Some time ago Emirate ordered for a hundred and fifty Boeing 777-300ER. This aircraft takes over 400 passengers, takes their luggage plus their excess and still have the capacity to carry 30 tonnes of cargo on two engines. If you designate 13 airports in Nigeria as cargo airports, then you have to ask yourself if it is viable for cargo airline to fly there. The world is changing so much so that most of the passenger terminals have to be the cargo terminals because most of these agricultural produce have to be moved on daily basis. When you harvest them they are moved immediately to their destination within 18 hours. You cannot tell me you load a British Airways with full passengers then you tell them to stop at Enugu to carry five tons of cargo because Enugu is designated as cargo terminal. It does not make any sense.

     

  • ‘Oil price slump hurting workers’

    ‘Oil price slump hurting workers’

    Sunday Olushola Salako is the National President of Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI). In this interview with TOBA AGBOOLA, he says the oil price slump is taking its toll on workers and the economy. To address the problem, the government, according to him, should focus on agriculture and small and medium enterprises (SMEs) growth.

    Many financial experts are canvassing for diversification of the economy in the face of the falling oil price. What is your position?

    There is no doubt that agriculture, small and medium enterprises (SMEs) are supposed to be crucial sectors of our economy. They are pivotal to building a self-sustaining economy. But much has not been achieved in this regard. Although much has been said and many schemes have been put in place by the Federal Government over the years, I do not want to speak of past failures, neither will I  speak on grand propositions that were never put to practice. Rather,  I would like to speak plainly and frankly on the need to urgently and aggressively pay more attention to agriculture.

    To the best of my knowledge, fixing the challenges of agriculture and setting in motion a process for the creation of more robust agro-allied and SMEs, are the most important steps that must be taken by the government. This is also a holistic measure in establishing a lasting solution to the burgeoning unemployment plague. In other words, significant phrases such as self-sustenance and autonomous development, will not be used for Nigeria’s economy except we have citizens that are gainfully employed, and are productive. And the only segments of the economy that can help the government accomplish these objectives are agriculture and small scale enterprises.

    History has shown that these steps were taken by many developed countries in the past and they worked for them. For instance, this is what Japan did many years ago and through proper implementation, Japan’s industrialisation aspiration was achieved. Other countries such as Singapore, Brazil, India, and Malaysia keyed into the same policy and it did magic for their economies. I am also of the view that if there is any country that has such capabilities and human resources, it is Nigeria because the current statistics showed that there are about 10 million unemployed Nigerians. This is because if labour and capital form the basic requirements for the agriculture and SMEs sector, then we are already half way through to addressing our challenge.

    What can be done to enhance agriculture and the SMEs sector?

    Nigeria has come a long way, and agriculture was the mainstay of our economy. But it is unfortunate that agriculture is currently playing a less significant role and the potentials in it have been lost. The sector, at the moment, cannot meet up with the early day successes. For instance, the workforce in the sector has now aged. Recent research revealed that the average age of the workforce in the agriculture sector is between 62 and 65 years. I am of the view that to revitalise this sector, resources should be channelled to areas that can benefit the country through exportation and creating  jobs should be the focus. More youths should be encouraged to go into these two sectors. Fundamentally, there is an urgent need for Nigeria to seek ways to not only develop primary agriculture, that is, cultivation of crops and animal husbandry, but also develop other agro-allied businesses such as post-harvest handling/transportation and processing to transform the economy.

    There is no better time for us to start than now. We all remember the promises of our political leaders, so we should hold them accountable for them. They must be able to do as they have promised and that should be now. I say this because as a labour leader, no matter how much we desire a change and no matter how many plans individuals make to build these two crucial sectors, the government has a huge role to play for those plans to come into fruition. The government must first create an enabling environment where businesses, no matter  how small, are given the chance to thrive in order to help boost a market where competitive trade is encouraged.

    Will well implemented government policies redirect the economic sustainability?

    Yes. This, of course, has to do with government policies, processes, and projects. It has to do with trade boosting concessions, export subsidies, especially on agricultural products and the repositioning of relevant government agencies to ensure that these numerous agencies with varying competences are put to work. I am of the view that a well thought out plan ought to seek ways to boost the agricultural sector in at least, four dimensions: primary food/cash crop production and animal husbandry; food preservation, storage, processing and manufacturing; research and extension services and engineering operations, would do the magic.

    Is it only through ‘reliable government policies in these sectors’that women and youths can be empowered?

    Yes. I would like to also point out that exploiting the strengths that we have in these two important sectors would present an ample opportunity, not only in increasing youths participation in the building of the economy, but in opening more doors for more women to take the informal skills, which they may already have to a more professional level. It may be safe to say that agriculture and agro-allied sector boast of an equal spread of women and men, albeit in an informal arrangement, because there is a large percentage of female participation in the works and building capacities to bring about an upscale to a more professional level, will not be far-fetched.

    What is the way out of the economic woods?

    We want to respectfully appeal to governments at all levels to reduce Nigeria’s dependence on crude oil through diversification of their economies from oil/gas to agricultural, manufacturing, industrial and other labour intensive sectors. This is because the oil and gas sector is an enclave sector; it is very capital intensive, and its contribution to overall employment is minimal. We should also be courageous enough to review our system of fiscal federalism such that state and local governments would be motivated to grow their economies in their areas of comparative advantage.There is also the urgent need for a holistic approach to the power sector problems including the consideration of other sources of energy. Also, the state governments should be encouraged to embark on the provision of electricity as service to their people.

    Jos, in Plateau State for instance, once had its own electricity generating company that provided uninterrupted power supply for years until it was taken over by the then National Electric Power Authority (NEPA). The private sector should also be encouraged to participate in power generation and distribution at reasonable margin. The success story of Bonny Utilities Company (BUC), which has provided some 95 per cent uninterrupted power supply since its inception to communities in Bonny in Rivers State, should be replicated. This holistic approach to solving the power sector problem in Nigeria should include the progressive review of all legislations militating against efficient and effective power generation and distribution.

    In addition, government at all levels should expedite actions in resuscitating ailing/comatose government owned industries and companies through Public/Private Partnership in such a way that these companies/industries can sustainably create jobs and guarantee reasonable returns on their investments. We also appeal to federal and state governments to urgently review the curriculum of our various educational institutions, taking into consideration the current and future economic and social needs of the country and trends in the global marketplace, and with strong emphasis on entrepreneurial and technical education. It is also our considered view that both the federal and state governments should finally resolve the Niger Delta problem through the faithful implementation of the report of the Ledum Mitee Technical Committee on Niger Delta. This is very crucial since much of the resources that would be used for the diversification of the economy in today’s Nigeria will come from the Niger Delta region. In addition, the gas that will power the Independent Power Plants (IPPS) will also come from the region.

    How can the government, employers and workers work in harmony to cushion the effect of austerity measures?

    In our analysis of the ongoing macro and micro economic situation of Nigeria, there is need for every Nigerian worker to be worried as the nation has lost more than 40 per cent of its revenue from oil since the last six months as a result of the accelerated decline in the global prices of oil from over U$120/barrel in December 2013 to about U$30/barrel in December 2015. Our concern is that the implications for our fiscal space and monetary health are dire when we realise that oil receipts account for nearly 80 per cent  of our national revenue and over 90 per cent of our nation’s foreign exchange receipts. And when the Federal Government called for austerity measure to cushion the economy from the effects of the falling prices, it became obvious that  the tightening of expenditure meant that the quantum of funds available for the running of the economy has drastically reduced.

    And as I speak, we are already beginning to see its impact on the present backlog in the payment of workers’ salaries across the nation with some states owing their workers up to five months in arrears while the Federal Government has been unable to pay December salary. And this is very unusual. The non-payment of workers’ salaries as a result of the current austerity challenges, expectedly, is because of the penchant of governments at all levels to hold the lives of workers in contempt and total disdain, believing that their lives could be suspended or held in abeyance for them to continue enjoying the unbridled looting of our collective patrimony.

    Our concern is for peaceful industrial harmony to prevail. We expect the government to follow the rule of the game by not delaying the payment of workers’ salary because if decisive steps are not taken, government and employers at all levels are expectedly going to threaten the operational environment of workers, exacerbating the already oppressive work environment and conditions of employment under severe pressures across both public and private sectors of the economy this year.

    What is your take on the recent report on the on-going discussion between Nigeria Atomic Energy Commission and Russia’s Rosatom Corporation to build nuclear plants in Nigeria?

    Without mincing words, I am of the view that concerted effort as well as political will are required to adequately address the problem of ‘power poverty’ in the country. But we need to think outside the box of building nuclear plants in the country because of the attendant consequences. Nuclear power plants are some of the most sophisticated and complex energy systems ever designed and no matter how well it is designed and engineered, it cannot be deemed failure-proof.

    It is evidently clear that we do not have the required capacity to manage disaster that may emanate from nuclear accident. This is because, Japan, even with the high level capability in terms of human and economic power, found it extremely difficult to manage the nuclear accident, which rocked the country in 2011 and led to the death of thousands of people. I am of the view that building of nuclear plants in Nigeria for now will no doubt subject the citizens to unavoidable risk.We cannot turn skewed-eye to the global concerns that a combination of human and mechanical errors at a nuclear facility could result in significant harm to people and the environment. It is obvious that operating nuclear reactors contain large amount of radioactive fission projects, which if dispersed can pose direct radiative hazard, contaminate soil and vegetation and be ingested by humans and animals.Human exposure at high enough levels can cause both short term illness and longer-term deaths by cancer and other diseases.

    The issue of unresolved problem of radioactive nuclear waste remains a big issue.  This is because nuclear power plants typically have high capital costs compared with other power plants. I am of the view that instead of subjecting the nation to these hazards, alternative power stations should, for now, be built rather than nuclear plants.

     

     

     

     

    But, there is argument that workers form part of the nucleus of sustainable development. How do you see this?

    Yes. Economically, attempts to implement sustainable economic development at national, state or enterprise level by government will, and must involve labour. As representatives of workers, trade unions, for instance, are vital actors in facilitating the achievement of sustainable development in view of their experience in addressing industrial change. The achievement of sustainable development can only be achievable when the government allows the freedom of association and the effective recognition of the right to collective bargaining; freedom from discrimination in employment and occupation; freedom from forced labour, and freedom from child labour, which are the four International Labour Organisation (ILO)’s global fundamental principles and rights at work, and which are cardinal to national rebirth that ought to enable working women and men in Nigeria to freely claim their fair share of the wealth they produce. We are of the view that when these rights are promoted and respected by the incoming government, workers in the country will be motivated and motivation will lead to higher productivity and higher productivity will lead to more profit and economic revival. Arising from these, more jobs will be created as industries will seek to expand.

    Do  these your demands apply to other nations of the world?

    Yes. The prosperity and economic revival of many nations have, to a great extent, depended on the productive capacity and unifying strength of the workers. To ensure the prosperity of their nations, workers have in the past contributed positively in various ways. To ensure democratic consolidation and economic revival for the benefit of all Nigerians, all tripartite constituents and other key stakeholders must engage in social dialogue with a view to evolving policies and strategies that would lead to national rebirth. Such dialogues must be based on trust, respect for others’ views and commitment to the resolutions of such dialogues.

    What advice do you have for the government on the current challenges confronting the Nigerian economic development?

    Our advice on the challenge of national development is for the government to manage the economy in such a way as to promote job-led growth, rather than the present situation of jobless growth. Our concern is that unemployment continues to be the number one problem in the nation. This is largely due to the fact that the growth is concentrated in the crude petroleum sector, which continues to be an enclave. There is the urgent need for government to decentraliise the economy for genuine development to take place. I strongly believe that in order to promote development and growth, there is need for government to go into partnerships with the private sector on selective basis until such a time that the domestic private sector becomes fully developed.

     

     

  • ‘Govt policies killing cement investors’ greenfield dream’

    ‘Govt policies killing cement investors’ greenfield dream’

    The Cement Producers Association of Nigeria (CPAN), is not happy with the way, the government is treating its members. In this interview with OKWY IROEGBU-CHIKEZIE, its Secretary and Chairman, Reagan Cement Limited, Chief Reagan Ufomba, accuses the government of killing the much-touted backward integration policy.

    What is your impression about the backward integration policy, especially in the cement sector? Will you say it has met  all govenment’s original intentions?

    The truth is that it has been rough and tough not just for our members but for the generality of investors and investment in the country. The investment and economic climate in general has been very hostile, especially in our clime where unfortunately the concept of investment seems to have been reinvented. The backward integration policy on cement initiated by the late President Umoru Yar’Adua is laudable; but unfortunately it seems to have died with him. It was the first of its kind, but regrettably, it suffered still birth.

    Precisely, what went wrong with the policy?

    Without any fear of contradiction, I will say it was hijacked. Those in government after Yar’Adua knocked it down, and the Central Bank of Nigeria (CBN) dollarisation policy laid it prostrate. The late President Yar’Adua was the best president Nigeria ever had. He was the only person in this country who criticised the election that brought him to power as irregular. He took another bold step to end impunity and monopoly in the cement sector by licensing six additional companies in 2008, known as the New Entrants but unfortunately, he did not live to see it through.

    What happened after his death?

    The summary is that government identified demand and supply gap as well as high cost of transportation as major causes of high cost of cement and decided to fill it by laying emphasis on regional licensing. Some of the companies were BUA-Northwest; Nica-Northeast; Manlababidi-Southwest; Madewel-Southsouth; Minaj-Southeast; Reagan Cement-Southeast/Southsouth. Remember we already had Dangote in Obajana and Gboko Cement in Northcentral and other terminals. In addition, Ibeto was operating in Port Harcourt and entrenching himself in Nkalagu. Larfarge was in other locations, while Calcemco was transformed to Unicem and  others like that. The import licences were tied to backward integration. All licensees had fully complied with the policy by signing strategic trade and investment contracts and acquired quarry and mining leases with the Cadestre office. Then Yar’Adua died, and like everything Nigerian, his laudable dreams for this country died with him.

    What has been the position of the policy since his death?

    The backward integration died as far as we are concerned. A major player in the industry petitioned the government and huge investments of Nigerians running into billions of naira went down the drain.

    It is clear that government’s attention shifted from imports to local production. Do you have anything against that?

    There is nowhere in the world where diversification or change in government policy would mean destruction of existing investments. We must quickly overcome this old fashioned military psyche and automatic-alacrity syndrome if we must grow. Government is a continuum and to attract investment; government must not be seen to be setting up its investors and citizens through policy summersaults, favouritisms and the likes. I can tell you that the fire brigade approach to investment drive would not work. Our greed precludes us from seeing and knowing that the solid minerals and natural resources would someday finish and we will go back to imports. So rationing is the name of the game if we must leave something behind for our upcoming generations. Planning is the only way out. Government must not behave like it is only when we saturate the market with locally produced goods that cannot be sold or bought that Nigeria would be better. Every policy has its pros and cons.  There should be a level playing ground for every law abiding citizen in this country.

    What are your expectations from government?

    Cement Producers Association of Nigeria (CPAN) is asking for an enabling environment that would accommodate all investors. We expect sound and durable policies, adequate infrastructure, constant electricity supply, single-digit interest rate, funding, single taxation and minimum meddlesomeness of government agencies and parastatals. Most Nigerians may not be aware that a particular agency of government charges as high as N20 million to register a contract agreement, this is after registering with the Corporate Affairs Commission (CAC) and allied agencies. Doing business in Nigeria is like jumping into the boxing ring with a professional boxer such as Mike Tyson. The Tyson syndrome accounts for the level of dead investments than upcoming ones. We must regulate investment with a clear objective in mind and to take care of the unborn generation. Our greed must not allow us to destroy their tomorrow for our today. We must have the necessary funding at the right interest rate; we must allow competition by setting in motion a backward integration policy in all sectors of the economy that is currently import-dependent.

    You seem to be opposed to local industrialisation?

    I am not. I am that man who sees tomorrow; that man who knows that someday our mineral resources would be gone and we return to square one. Rationalisation and common sense are the names of the game. I am totally against open-ended regulation. There should be no half measures. If government must regulate import, it must as well regulate local investments. Government policies must be stable and durable and for Nigerians, not for a few. For whatever reason, government has allowed some companies to be larger than the state. It is a serious political and economic threat to the well-being of the nation. It is difficult to invest in an economy where you cannot accurately forecast; where individuals drop prices in bad faith; where you cannot predict government’s next move. Unfortunately, here losses are never mitigated for entrepreneurs; if anything goes wrong with your investment, only you alone will bear the loss. That is exactly what happened to my members in the Greenfield Project.

    What is the state of the Greenfield Project?

    My members lost over N200 billion in the misadventure. Government owes my company N16.2 billion as we speak. All the big names in the industry were once toddlers so why kill upcoming ones? There are several litigations in court bordering on contract breach against the Federal Government. I would advise the government to stop these unnecessary litigations and distractions and settle out of court with our members. Nigeria cannot continue to be a nation where government pulls down the ladder once some people climb. You would be amazed to learn that Nigeria imported about 21.8 million metric tonnes of cement between 2008 and 2009. Out of this figure, the big boys of the industry imported over 90 per cent. They are the same people crying wolf now. In other climes, over-investment is a crime under the anti-trust law but here, we clap and hail. Foreign investors and partners want to know your market share, track record, brand and stability of government policy. I will advise that we do the right thing for once in this administration.

    What is the situation now with your members?

    You know we have two groups, Cement Manufacturers Association of Nigeria (CMAN) and CPAN. But we are all Nigerians. The National Assembly should help this nation; they should justify their huge pay by promulgating laws that would see us out of the dark alleys. Not mundane issues such as the recent one on social media and such.  In any case, the disagreement between the two groups can be settled with a sound investment policy.

    In your own understanding, what is the way forward?

    Government must redress all injustices meted out to our members. Out-of-court settlement is recommended. There should be bail-out and regular consultation between us and the government because we contribute to the GDP of this country and we are also huge employers of labour. Healthy competition should be encouraged while stiff penalties for sabotage and unhealthy competition should be enforced. Impunity, especially by government such that government issues licenses to its citizens and disallows such goods and services from entering the country must be condemned by all and immediate compensation mechanism put in place for the wronged parties.

    What is your take on CBN’s forex policy?

    This particular policy is the worst l have seen in recent times. There was no consultation across board, making it unpopular and without the much desired result. Let me give you an example, between the 80s and 90s, oil sold for less than $50 per barrel, the naira never fell to as low as N260. The CBN forex policy tensed the economy because it is not well thought off. We advise the CBN Governor, Mr. Godwin Emefiele, to rethink this policy; it is detrimental to the growth and development of the economy.

    What would your members have preferred?

    We would have preferred the pegging of dollar sales and allowance of foreign currency inflow into domiciliary accounts. You cannot shut your door to what you don’t have; it is commonsensical. That several intermediate goods were ousted from foreign exchange procurement showed how irrational we can be in a country. This has led  to the current social upheavals resulting from unprecedented unemployment.

    Will this policy have any effect on the government as it were?

    Yes it will, no doubt Internally Generated Revenue (IGR) will certainly fall with less imports and mass retrenchment will follow. The truth is that the nation is largely import dependent. The current unemployment figure will be a child’s play except something is done urgently to this policy.