The Nation Newspaper

Category: CEO

  • ‘Oil price slump not death sentence’

    ‘Oil price slump not death sentence’

    For oil service industry, these are not the best of times. The falling oil prices are doing harm to business. But Solewant Group, Pipe/Metals Coating Company Managing Director/Chief Executive Officer Mr. Solomon Ewanehi says there is a good side to it all. In this interview with EMEKA UGWUANYI, he calls on the government to provide an enabling environment for business to thrive. According to him, the enactment of the Nigerian Content Act has curbed capital flight, boosted indigenous capacity and job creation.

    How would you rate the oil service companies?

    Their services are okay. You must provide an effective and efficient service to the oil and gas companies to enable you stay afloat within the industry.

    To what extent has the Nigerian Content Act helped the service sector?

    When you talk about the Nigerian Content Act, and before the Act, you will discover that these are two areas. Before the Act, we were operating in the industry, and nothing was coming in from the Nigerian Content policy but when the Act was put in place in 2010, it meant people would work within the confines of the industry and that shows there is a law, there is something that would hold people liable if they run foul of what the law says in the industry. In a nutshell, it has helped to checkmate people doing what is required of them within the industry and ensured the standard required within the industry is adhered to.

    Has the Act improved the volume of jobs indigenous service companies get?

    This one is not personal, it has to do with Solewant as an organisation and it has to do with the entire industry. The Act has to do with the following questions: is the industry now employing more Nigerians that don’t have jobs? Is there capacity that was tapped before that is being tapped into now? Do we now offer services that we were not offering before or we don’t look into? Yes, we are offering a lot of jobs to Nigerians that we were not giving them before. We are also helping to reduce the capital flight because most of our activities and services are being domesticated in Nigeria. Things that we normally import full blown; we can now import them in parts like our hysteron plate, we get and give them partial finishing in-country. On our production of pipe-coating, the pipes were being imported before but production of the polyethylene on the pipe is done in-country now, the production of the epoxy and anexy is done in-country now. Polypropylene is not done in-country before but right now it is being done, these are being done by Nigerians and with equipment we have in-country. What we are saying is that definitely the Nigerian Content Act has helped to enhance and increase the services that Nigerian companies offer. The Nigerian content programme has really reduced capital flight because most of the jobs are being done in-country.

    Has the drop in oil price affected your operation or the volume of jobs you do?

    I will say yes and no. Yes, in the understanding that the rate at which the industry leaders (the IOCs) were doing more business with us before has reduced. It is not as it was not before, but also no in the understanding that you must protect your facilities not minding whether there is oil price drop or not because definitely you must transport your services from one location to the other. In doing that, you will discover that we are in one way or the other doing much business even when the oil price has dropped because you must protect the pipes. And that has nothing to do with the fact that the pipe that you are protecting will not transport the gas, or the crude. So, the oil price drop is affecting the crude pipes but the gas as it were, a lot of gas pipelines that we have been coating in the past eight months are still the pipes we are coating right now with just few crude lines as part of what we are providing service for.

    What is the major challenge of the oil service industry?

    There is no how challenge shall cease to exist. When we execute projects, we do encounter challenges. Challenge on the understanding that it is not easy for you to go into project and come out the way you went into the project because you always have on two hiccups, which is why we provide that type of training. Challenges could come in the area of financing, maybe high cost accessing funds. There is a challenge that has to do with the enabling environment. The government needs to encourage us by ensuring that the right enabling environment to do business is in place. The difference between Solewant and other companies that operate in the country is that the problems are there but we always come out of them by ensuring that we execute the projects the way they should be and hand them over to the clients successfully.

    How can insecurity and militancy in the Niger Delta be addressed to make the oil industry operate seamlessly?

    Although I don’t work on pipelines that are prone to security issues and attacks but within our space, we have factory where we secure the line pipe that we have coated for clients. With that, you will discover that we offer that type of service for the client that we work for, and ensuring that what we have are properly protected for the clients to come and pick up their pipes.

    How do you cope with the protection of your facilities and those of your clients, especially in the area of vandalism?

    We don’t have security issues in that line because our service is just within our factory. In our factory, clients accept to bring in pipes; we coat them, and they take their pipes back to their right of way but in any case, we have in-house security that provides security to protect the clients’ infrastructure.

    Do you have challenge in terms of access to finance?

    No.

    So you have all the finance you need from Nigerian banks?

    There is no way you can have all the finance you need because finance is a core resource and if we are talking of resources they are always limited and not in abundance.  But within the limit of our operation, that is what we have now, we do have what it takes to run the industry. We have what it takes to take the industry to the next level. We have what it takes to service the industry and ensure that we are providing adequate service to the oil and gas industry.

    What contributions do your foreign technical partners make to the operation?

    The technical partners that we have are the partners that we discuss with to have an enabling advantage in the area of know-how because we need to continuously discuss with the partners and also know the new technology and materials that are coming into the industry. For instance, we are having a relationship with Kema Coatings of Canada, Canusa CPS of United Kingdom (UK). We are also having partnership representation of Raychem RPG of India. We have an understanding and relationship with XYT Steel Pipe of China – producer and manufacturer of line pipes from China. So, by and large, the industry is a team and group work activity-based area; so, it is not an individualistic area. So, within the country we have own strength and we also try to seek some strength from other parts of the world. That is why you see that in Houston, United States, we have an office there. I will also mention to you that Solewant is internationally recognised by the regulators of the industry – the National Association of Corrosion Engineering, gave Solewant its gold membership certification. We are also ISO certified by Ocean Certification. We are also a member of British Safety Council and when you look at this, you will discover that for those who are in the industry, they understand that for you to be a world-class oil and gas company, you require these certifications, and if you have these certifications, you will be able to provide quality service that the industry requires of you.

    Do the partners have direct contributions in your daily activities or in training only?

    Solewant is 100 per cent Nigerian company.  They do not have shareholding in Solewant but when you talk about materials, training, equipment, these are the areas they come in because we need tested and proven materials to do our work. We also require tested proven equipment to do our work. By and large these are the areas where we have strength.

    The major challenge indigenous firms have is access to funds, how do you source your funds?    

    In the industry you need to partner with other organisations. We also have financial partners who we do business with. When we go into business and we discover that there is need for us to do the business together, we work together and they also do business with us. Within the Nigerian space, we have financial partners, which we do business with, especially equipment financing partners.

    How do you build capacity?

    We train our personnel across board. We train them abroad and at home. For instance, our members of staff who work in Houston, Texas, United States, are resident there. Of course they will not come to Nigeria to receive training. Those in Nigeria equally receive training in Nigeria. But when have projects that need to be carried out within Nigeria, for instance, we are working on Erha North project for ExxonMobil, the training was done in Lagos before the workers went to site. So we have that type of training. The project we carried out for Total, we did the training in Port Harcourt before we commenced the project. These are areas where we solemnly carry out training.

    What is the major challenge facing the oil service industry?

    There is no how challenge shall cease to exist. When we execute projects, we do encounter challenges.  Challenge on the understanding that it is not easy for you to go into project and come out the way you went into the project because you always have on two hiccups, which is why we provide that type of training. Challenges could come in the area of financing, maybe high cost accessing funds. There is challenge that has to do with an enabling environment. The government needs to encourage us by ensuring that the right enabling environment to do business is in place. The difference between Solewant and other companies that operate in the country is that the problems are there but we always come out of them by ensuring that execute the projects the way they should be and hand them over to the clients successfully.

    How can the insecurity and militancy in the Niger Delta be sustainably addressed to make the oil industry operate seamlessly?

    Although I don’t work on pipelines that are prone to security issues and attacks, within our space, we have a factory where we secure the pipelines that we have coated for clients. With that you will discover that we offer that type of service for the client that we work for, and ensuring that what we have are properly protected for the clients to come and pick up their pipes.

  • ‘Fake Chinese firms produce substandard goods’

    ‘Fake Chinese firms produce substandard goods’

    Many of the substandard products in the country are said to come from China. Is this a deliberate policy by China, which enjoys a flourishing bilateral trade with Nigeria? According to National Coordinator/CEO of Nigeria-China Business Council (NCBC) Chief Mathew Uwaekwe, it is the fault of Nigerians and not the Chinese that Nigeria has become a dumping ground. In this interview with CHIKODI OKEREOCHA and TEMITAYO AYETOTO, Uwaekwe says unpatriotic Nigerians ask Chinese maufacturers to lower the standard of their goods.

    The preponderance of substandard products from China remains a sore point in Nigeria-China trade relations. Why is this so?

    You see people will say they placed order for  standard goods, but the Chinese shipped substandard ones to them. We travelled back to China, made investigations together with the Nigerian Embassy in Beijing and our Consul General Office in Shanghai through the Economic Department. So, through the Economic Department, we were able to meet some of the Chinese manufacturers who said your people come here and we give them prices of what they want; they say no, the price is too high, reduce it. We have in China three categories, the high, the medium and the lower category.

    So, Nigerian importers will say, oh I need this television, this is the standard we are using. They will say no, reduce the standard. This thing happens both in drugs and so many things. So, as a Council, we are not mandated to enforce or arrest, but we may advise, counsel people on what to do; let them know the rules and regulations of the federal republic in terms of doing business and then guide.

    What are you and your group doing to check this unwholesome practice?

    Recently, we are now trying to collaborate with Standards Organisation of Nigeria (SON). We are already in partnership with the Nigeria Investment Promotion Council (NIPC) and the Nigeria Export Promotion Council (NEPC) to provide information. But at the same time, we were a little bit worried over why these substandard goods flood Nigeria because when you go to places like Canada, Britain, Germany, all these European countries, 75 per cent of the products they use is from China. Even some of the cars being manufactured, all have plants in China. If you go there, even the leather chairs they use, 75 per cent of the things in their supermarkets and malls are produced in China.

    But we now tried to slow down in encouraging trade because the bilateral relationship between Nigeria and China is well over 30 years. So, what we are now focusing on is attracting investors and investment into the Nigerian economy. If we have standard, because Nigeria is a member of World Trade Organisation (WTO), and there are standards set up to produce any item or product, more investments would come in. Since Nigeria is a member of WTO, we have office in Geneva; we now try to encourage investment. If you look at this television (in his office), the Council brought the people who made it; they started from assembling and are now manufacturing, freezers, fridges, air-conditioners, water dispensers here at the Calabar FreeTrade Zone.

    We are bringing a delegation of 25 investors. Some of them want to start manufacturing tricycles; others want to build a mini refinery. We brought them last time and they bought over the moribund cocoa factory in Osun State. So, they are working there. We have about 25 Chinese, they have employed Nigerians. Those are some of the achievements of the Council. We help them to get SON to give them import clearance and port permit. They wash the cocoa, extract the oil and then use the seed for cocoa powder. We have a whole lot of other investors because those already established here are doing well and we use them as testimony.

    What other ways do you promote Nigeria-China trade?

    We go to China to tell others that Nigeria is friendly in terms of business and investment. We are doing that so that the issue of substandard products will be curtailed. But I know from my own experience, analysis and investigation that there is no country you can eliminate crime completely; the only way is to reduce it to the barest minimum because even in those countries that we hype, talking about the best nations, crime is there. There are people, who are fraudulent in nature, no matter what you do. So, we need the support of the media in creating proper awareness on what we are doing, what needs to be done, and activities in making it better are welcomed.

    What has been the response from the Chinese investors?

    The Chinese are willing, you know, coming from a communist background, they seem to be eager to have a relationship that will favour them. We need them to come and invest here, but we don’t want a situation where we will be enslaved or our graduates and youths would be treated as second class citizens. So, last time, we arranged for about seven youths to travel to China. It was the same Chinese group that sponsored their trip to be further trained to produce modern technology in terms of assembling and installation. So, like I said, the group is already at the Calabar Free Zone and they gave all those engineers automatic promotion and they have continued paying their salaries. What we have been going through over the years is that our leaders have not done what they ought to do. You see leaders coming into government to enrich their pockets. Our leaders have not done anything in terms of stabilising the economy, forgetting that the most important thing is to stabilise the economy because when the economy is stabilised, the political sector will immediately follow suit. If everything is okay in your village, you will prefer to work in your village because it saves money and the stress of coming to Lagos. It is because the economy of this country is centred in two cities, Lagos and Abuja, once you are out of the university, you will rather want to go to Lagos or Abuja because our infrastructure has collapsed completely. So, the only way we can move from where we are is to allow investors to come in.

    What is responsible for China’s growing business interest in Nigeria?

    The Chinese have found out that a lot of sectors have not been tapped. Our mineral resources have not been tapped. Then in terms of energy, it is nothing to write home about. So, they believe if they come in here to invest they will have good returns because they are committed and have experience. It is to our advantage to work with them so that our people can learn from them about how they better themselves.

    One of the reasons why we are not doing well here is that you cannot walk into any bank and obtain a loan. Will they agree to give you the loan looking at your proposals? There is no way in any country a company can break even at two to three digits interest rates. In China, there are some banks such as Bank of Commerce, Agricultural Bank, Construction Bank and others that give loans at about two per cent interest rate.

    So, to restructure the economy, a lot needs to be done. Our leaders need to restructure themselves; we need to have a roadmap on every sector so that not when Mr. A comes in as a governor, all the things that the former governor did are abandoned. The policies have always been there, the rules and regulations have always been there, but the problem we have is the implementation. And for change to be effective, it must start from you and your family before you take it to the society. There should be proper reorienta-tion. As far as I’m concerned, if we want to move from where we are, we must start to implement those policies. Our constitution is quite bigger than that of America, but not as effective as that of America where laws are respected and policies implemented. If we continue to play politics with ourselves, with people’s lives, with the development of this nation, with infrastructure, no matter who comes in, there will be no change. I believe, for now,  we need investment from China, America and other parts of the world.

    Has the Council tried to determine the number of Chinese companies in Nigeria?

    Yes. Some of them came in without passing through the Council. The companies that are on our data base from China are more than 600, both major and minor. We also have some Nigerians, who go to China to invest. They come through the Council because the equipment we provide are better; the labour is cheaper going by their population of about 1.4 billion. So, the labour is lower than what we have here. So, some Nigerians also go to China to invest.

    How many jobs have Chinese companies created in Nigeria?

    I believe they have created between 3,000 and 4,000 jobs for Nigerian youths. This group that sent the youths to China recently has employed over 700 and has training centres around. Out of about 30 factories we visited in Nigeria, 27 showed us the records.

    How is the Council collaborating with SON and NAFDAC to fight substandard products from China?

    We are working towards a collaboration with them because we have signed a memorandum of understanding (MoU) with virtually all stakeholders. The China Council for the Promotion of International Trade, which controls trade and investment in China, is also in partnership with us. From time to time they provide information on all companies and their products so that if we see certain products that are substandard, we will take the products to them and find out because our agreement is that any company found shipping substandard goods to Nigeria or any other country will be blacklisted. Unfortunately, most of the companies that produce these substandard products are not registered because China is a very large country.

    Many people complained about the inhuman treatment of Nigerian workers by Chinese companies. Has the Council received any of such complaints?

    We have had those complaints, but what we do advise is that before you are employed by them, ensure that there is a contractual agreement containing your entitlements, position and everything. Because no court can grant you what you don’t ask for. So, you must ask from day one, because those who want to employ you need you and you need employment. Like those people, who came back from China after the training, we told the Chinese group to give them proper employment and remumeration, and the agreement and everything were signed. So, once you report to the Council, we will take it up, but we cannot interfere where there is no contractual agreement. At a higher level, we have taken up this matter with the Embassy’s Economic Promotion Department, and we said please educate your people. There are times they pretend they don’t speak English. If you have employed somebody, who doesn’t speak the same language with you, the same system or method you used in employing him is also the same system you must use in settling the person.

    Apart from China, the US recently extended the African Growth and Opportunities Act (AGOA) by 10 years. The EU is also seeking to enter the Nigerian market through the Economic Partnership Agreement (EPA). What do you make of these growing interests of economic powers in Nigeria, and how can Nigeria benefit from them?

    They are aware that the market is there. Nigeria is the biggest market in Africa. So, it’s natural. If there are about three or four companies that are looking for you because of your potentials and the results you have recorded, you will become the beautiful bride for investors.

    So it’s the same thing. They have seen the potential in Nigeria. Could you imagine how happy we will be if we have stable light in this country? The happiness will push you to pay your bills by the end of the month. Today, people are very reluctant to pay electricity bills because the electricity distribution companies (DisCos) don’t want to give them meter. They just like giving them outrageous bills more than what the tariff says and at the same time, there is no regular supply. People become demoralised. So, if there are people, who will come and invest so that people can have stable light, more than a quarter of people in this country will want to pay. If we have good roads and have efficient people to use speed boats to convey people from one destination to the other, then we will have efficient transportation in the country. If we have surface train, deep train, underground train etc., even if you have cars, you will love to enter them and relax. So, once the leadership has the passion to work for the benefit of the people everything will fall in place. We must guide all the investors by giving them proper information.

    Where do you think the Minister of Industry, Trade and Investment should start from?

    If he is to succeed as a minister, he must focus on driving the economy, which is by attracting investors. This includes infrastructure and all that. All the agencies that are responsible for attracting investors must be encouraged to do so. Investment is what will help the country.

    What steps should the country take to encourage more foreign investors?

    We should organise seminars and conferences to sell the potential of the country. Let people know that there are so many other things to do apart from oil. I will suggest that we reduce our focus on oil. Countries that don’t have oil have made it. Look at Ethiopia, they are one of the biggest transportation players in terms of air lifting and one of the best. They don’t have oil. It’s determination. For the economy of this country to develop, we must reduce our focus on oil. Today, the trade volume in favour of China is above $13billion, then in favour of Nigeria is about $11 billion. So we are making progress.

    Why was Nigeria-China Business Council (NCBC) established?

    NCBC was established in 2009 by the Federal Ministry of Industry, Trade and Investment, then Federal Ministry of Commerce. Then, we were doing it as a forum at that time when Charles Ugwuh was the Minister for Commerce and Industry. He called me and said he saw the need and my passion to further enhance the relationship between Nigeria and China. He said it would be nice to have it as a Council so that there would be continuity.

    As at that time, the late Umoru Yar’Adua was the president. So, when we sent the memo or draft, noting the terms and objectives of what we were trying to put together, to the him (the President), he bought the idea and agreed that he would personally come to inaugurate the Council. So, he replied our letter and gave his blessing. But at the time the Council was to be inaugurated, he was sick. So, he delegated the immediate past president, Dr. Goodluck Ebele Jonathan to inaugurate and establish the Council. As a matter of fact, the NCBC was the first business council that was established with due process in Nigeria.

    So, on November 9, 2009, at Yar’Adua Centre in Abuja, Dr. Jonathan, all the governors from the 36 states and the then Minister of Commerce converged and inaugurated the Nigeria-China Business Council. This was followed by a Memorandum of Understanding (MoU) between Nigeria and China. Chinese Government officials  represented their president, whereas Dr. Goodluck Jonathan represented President Yar’Adua. So, they specified the role of the Council. We are to focus specifically on handling the affairs between Nigeria and China mainly to promote trade and investment.

    Has the Council fulfilled this mandate?

    Yes, especially when we look at the trade relationship between Nigeria and China. As at 2009, we had about $2.9 billion in favour of China in terms of trade. Between $700 million and $750 million was in favour of Nigeria. But we now organised what we called balancing trade and investment between Nigeria and China. What led to that was that we conducted a research and found out that all over the world, the Gross Domestic Product (GDP) growth is highly supported by private entrepreneurs, like in China, the US, Germany, the UK, Italy, France, even in Spain. We also found out that in Malaysia, Japan and South Korea, their GDP was highly supported by private entrepreneurs by between 30 and 40 per cent.

    China is about 65 per cent. So, we now came to the conclusion that the private sector is what drives development and the economy of any developing nation. We now started focusing our attention on improving the business relationship between the people of China and the people of Nigeria. So, having succeeded in that, because as I speak, the trade relationship between Nigeria and China, after the establishment of this Council, has grown to about $13.5 billion and Nigeria is close to $11 billion. So, we had a lot of conferences and seminars that we organised between Nigeria and China, sometimes in Nigeria, sometimes in China to educate them on the need to partner members of the private sector. But there were some challenges along the line. We have the language problem and we also have issues of substandard products, which most of the time is common.

     

  • ‘Blame Nigerians for influx of substandard Chinese products’

    ‘Blame Nigerians for influx of substandard Chinese products’

    The activities of Chinese companies have grown trade volume between them and Nigeria to about $13.5 billion, with $11billion in favour of Nigeria. In spite of this, substandard products from China continues to flood Nigerian market. National Coordinator/CEO, Nigeria-China Business Council (NCBC), Chief Mathew Uwaekwe says unpatriotic Nigerians actually ask Chinese maunfacturers to lower the standard of their goods and ship same into the country. He says policy consistency and products standardisation are key to opening the country into the international space. He speaks with CHIKODI OKEREOCHA and TEMITAYO AYETOTO.

    The preponderance of substandard products from China remains a sore point in Nigeria-China trade relations. Why is this so?

    You see people will say they placed order for  standard goods, but the Chinese shipped substandard ones to them. We travelled back to China, made investigations together with the Nigerian Embassy in Beijing and our Consul General Office in Shanghai through the Economic Department. So, through the Economic Department, we were able to meet some of the Chinese manufacturers who said your people come here and we give them prices of what they want; they say no, the price is too high, reduce it. We have in China three categories, the high, the medium and the lower category.

    So, Nigerian importers will say, oh I need this television, this is the standard we are using. They will say no, reduce the standard. This thing happens both in drugs and so many things. So, as a Council, we are not mandated to enforce or arrest, but we may advise, counsel people on what to do; let them know the rules and regulations of the federal republic in terms of doing business and then guide.

    What are you and your group doing to check this unwholesome practice?

    Recently, we are now trying to collaborate with Standard Organisations of Nigeria (SON). We are already in partnership with Nigeria Investment Promotion Council (NIPC), Nigeria Export Council, in order to provide information. But at the same time, we were a little bit worried over why these substandard goods flood Nigeria because when you go to places like Canada, Britain, Germany, all these European countries, 75 per cent of the products they use is from China. Even some of the cars being manufactured, all have plants in China. If you go there, even the leather chairs they use, 75 per cent of the things in their supermarkets and malls are produced in China.

    But we now tried to slow down in encouraging trade because the bilateral relationship between Nigeria and China is well over 30 years. So, what we are now focusing on is attracting investors and investment into the Nigerian economy. If we have standard, because Nigeria is a member of World Trade Organisation (WTO), and there are standards set up to produce any item or product, more investments would come in. Since Nigeria is a member of WTO, we have office in Geneva; we now try to encourage investment. If you look at this television (in his office), the Council brought the people; they started from assembling and are now manufacturing, freezers, fridges, air-conditioners, water dispensers here at the Calabar FreeTrade Zone.

    We are bringing a delegation of 25 investors. Some of them want to start manufacturing tri-cycles; others want to build a mini refinery. We brought them last time and they bought over the moribund cocoa factory in Osun State. So, they are now working there. We have about 25 Chinese, they have employed Nigerians. Those are some of the achievements of the Council. We help them to get Standard Organisation of Nigeria (SON) to give them import clearance and port permit. They are washing the cocoa, extracting the oil and then using the seed for cocoa powder. We have a whole lot of other investors because those already established here are doing well and we use them as testimony.

    What other ways do you promote Nigeria-China trade?

    We go to China to tell others that Nigeria is friendly in terms of business and investment. We are doing that so that the issue of substandard products will be curtailed. But I know from my own experience, analysis and investigation that there is no country you can eliminate crime completely; the only way is to reduce it to the barest minimum because even in those countries that we hype, talking about the best nations, crime is there. There are people, who are fraudulent in nature, no matter what you do. So, we need the support of the media in creating proper awareness on what we are doing, what needs to be done, and activities in making it better are welcomed.

    What has been the response from the Chinese investors?

    The Chinese are willing, you know, coming from a communist background, they seem to be eager to have a relationship that will favour them. We need them to come and invest here, but we don’t want a situation where we will be enslaved or our graduates and youths would be treated as second class citizens. So, last time, we arranged for about seven youths to travel to China. It was the same Chinese group that sponsored their trip to be further trained to produce modern technology in terms of assembling and installation. So, like I said, the group is already at the Calabar Free Zone and they gave all those engineers automatic promotion and they have continued paying their salaries. What we have been going through over the years is that our leaders have not done what they ought to do. You see leaders coming into government to enrich their pockets. Our leaders have not done anything in terms of stabilising the economy, forgetting that the most important thing is to stabilise the economy because when the economy is stabilised, the political sector will immediately follow suit. If everything is okay in your village, you will prefer to work in your village because it saves money and the stress of coming to Lagos. It is because the economy of this country is centred in two cities, Lagos and Abuja, once you are out of the university, you will rather want to go to Lagos or Abuja because our infrastructure has collapsed completely. So, the only way we can move from where we are is to allow investors to come in.

    What is responsible for China’s growing business interest in Nigeria?

    The Chinese have found out that a lot of sectors have not been tapped. Our mineral resources have not been tapped. Then in terms of energy, it is nothing to write home about. So, they believe if they come in here to invest they will have good returns because they are committed and have experience. It is to our advantage to work with them so that our people can learn from them about how they better themselves.

    One of the reasons why we are not doing well here is that you cannot walk into any bank and obtain a loan. Will they agree to give you the loan looking at your proposals? There is no way in any country a company can break even at two to three digits interest rates. In China, there are some banks such as Bank of Commerce, Agricultural Bank, Construction Bank and others that give loans at about two per cent interest rate.

    So, to restructure the economy, a lot needs to be done. Our leaders need to restructure themselves; we need to have a roadmap on every sector so that not when Mr. A comes in as a governor, all the things that the former governor did are abandoned. The policies have always been there, the rules and regulations have always been there, but the problem we have is the implementation. And for change to be effective, it must start from you and your family before you take it to the society. There should be proper reorientation. As far as I’m concerned, if we want to move from where we are, we must start to implement those policies. Our constitution is quite bigger than that of America, but not as effective as that of America where laws are respected and policies being implemented. If we continue to play politics with ourselves, with people’s lives, with the development of this nation, infrastructure, no matter who comes in, there will be no change. I believe, for now, that we need investment from China, America and other parts of the world.

    Has the Council tried to determine the number of Chinese companies in Nigeria?

    Yes. Some of them came in without passing through the Council. The companies that are on our data base from China are more than 600, both major and minor. We also have some Nigerians, who go to China to invest. They come through the Council because the equipment we provide is better; the labour is cheaper going by their population of about 1.4 billion. So, the labour is lower than what we have here. So, some Nigerians also go to China to invest.

    How many jobs have Chinese companies created in Nigeria?

    I believe they have created between 3,000 and 4,000 jobs for Nigerian youths. This group that sent the youths to China recently has employed over 700 and has training centres around. Out of about 30 factories we visited in Nigeria, 27 showed us the records.

    How is the Council collaborating with SON and NAFDAC to fight substandard products from China?

    We are working towards a collaboration with them because we have signed a memorandum of understanding (MoU) with virtually all stakeholders. The China Council for the Promotion of International Trade, which controls trade and investment in China, is also in partnership with us. From time to time they provide information on all companies and their products so that if we see certain products that are substandard, we will take the products to them and find out because our agreement is that any company found shipping substandard goods to Nigeria or any other country will be blacklisted. Unfortunately, most of the companies that produce these substandard products are not registered because China is a very large country.

    Many people complained about the inhuman treatment of Nigerian workers by Chinese companies. Has the Council received any of such complaints? 

    We have had those complaints, but what we do advise is that before you are employed by them, ensure that there is a contractual agreement containing your entitlements, position and everything. Because no court can grant you what you don’t ask for. So, you must ask from day one, because those who want to employ you need you and you need employment. Like those people, who came back from China after the training, we told the Chinese group to give them proper employment and remumeration, and the agreement and everything were signed. So, once you report to the Council, we will take it up, but we cannot interfere where there is no contractual agreement. At a higher level, we have taken up this matter with the Embassy’s Economic Promotion Department, and we said please educate your people. There are times they pretend they don’t speak English. If you have employed somebody, who doesn’t speak the same language with you, the same system or method you use in employing him is also the same system you must use in settling the person.

    Apart from China, the U.S recently extended the African Growth and Opportunities Act (AGOA) by 10 years. The EU is also seeking to enter the Nigerian market through the Economic Partnership Agreement (EPA). What do you make of these growing interests of economic powers in Nigeria, and how can Nigeria benefit from them?

    They are aware that the market is there. Nigeria is the biggest market in Africa. So, it’s natural. If there are about three or four companies that are looking for you because of your potentials and the results you have recorded, you will become the beautiful bride for investors.

    So it’s the same thing. They have seen the potentials in Nigeria. Could you imagine how happy we will be if we have stable light in this country? The happiness will push you to pay your bills by the end of the month. Today, people are very reluctant to pay electricity bills because the electricity distribution companies (DisCos) don’t want to give them meter. They just like giving them outrageous bills more than what the tariff says and at the same time, there is no regular supply. People become demoralised. So, if there are people, who will come and invest so that people can have stable light, more than a quarter of people in this country will want to pay. If we have good roads and have efficient people to use speed boats to convey people from one destination to the other, then we will have efficient transportation in the country. If we have surface train, deep train, underground train etc., even if you have cars, you will love to enter them and relax. So, once the leadership has the passion to work for the benefit of the people everything will fall in place. We must guide all the investors by giving them proper information.

      Where do you think the Minister of Industry, Trade and Investment should start from?

    Well, he is new, but if he is to succeed as a minister, he must focus on driving the economy, which is by attracting investors into the various sectors of our economy. This includes infrastructure and all that. All the agencies that are responsible for attracting investors into the country must be encouraged to do so. Investment is what will help the country.

    What steps should the country take to encourage more foreign investors?

    We should organise seminars and conferences to sell the potentials of the country. Let people know that there are so many other things to do apart from oil. I will suggest that we reduce our focus on oil. Countries that don’t have oil have made it. Look at Ethiopia, they are one of the biggest transportation players in terms of air lifting and one of the best. They don’t have oil. It’s determination. For the economy of this country to develop, we must reduce our focus on oil. Today, the trade volume in favour of China is above $13billion, then in favour of Nigeria is about $11 billion. So we are making progress.

    Why was Nigeria-China Business Council (NCBC) established?

    NCBC was established in 2009 by the Federal Ministry of Industry, Trade and Investment, then Federal Ministry of Commerce. Then, we were doing it as a forum at that time when Charles Ugwuh was the Minister for Commerce and Industry. He called me and said he saw the need and my passion to further enhance the relationship between Nigeria and China. He said it would be nice to have it as a Council so that there would be continuity.

    As at that time, the late Musa Yar’Adua was the president. So, when we sent the memo or draft, noting the terms and objectives of what we were trying to put together, to the him (the President), he bought the idea and agreed that he would personally come to inaugurate the Council. So, he replied our letter and gave his blessing. But at the time the Council was to be inaugurated, he was sick. So, he delegated the immediate past president, Dr. Goodluck Ebele Jonathan to inaugurate and establish the Council. As a matter of fact, the NCBC was the first business council that was established with due process in Nigeria.

    So, on November 9, 2009, at Yar’Adua Centre in Abuja, Dr. Jonathan, all the governors from the 36 states and the then Minister of Commerce converged and inaugurated the Nigeria-China Business Council. This was followed by a Memorandum of Understanding (MoU) between Nigeria and China. Chinese Government officials  represented their president, whereas Dr. Goodluck Jonathan represented President Yar’Adua. So, they specified the role of the Council. We are to focus specifically on handling the affairs between Nigeria and China mainly to promote trade and investment.

    Has the Council fulfilled this mandate?

    Yes, especially when we look at the trade relationship between Nigeria and China. As at 2009, we had about $2.9 billion in favour of China in terms of trade. Between $700 million and $750 million was in favour of Nigeria. But we now organised what we called balancing trade and investment between Nigeria and China. What led to that was that we conducted a research and found out that all over the world, the Gross Domestic Product (GDP) growth is highly supported by private entrepreneurs, like in China, the US, Germany, the UK, Italy, France, even in Spain. We also found out that in Malaysia, Japan and South Korea, their GDP was highly supported by private entrepreneurs by between 30 and 40 per cent. China is about 65 per cent to 70 per cent. So, we now came to the conclusion that the private sector is what drives development and the economy of any developing nation. We now started focusing our attention on improving the business relationship between the people of China and the people of Nigeria. So, having succeeded in that, because as I speak, the trade relationship between Nigeria and China, after the establishment of this Council, has grown to about $13.5 billion and Nigeria is close to $11billion. So, we had a lot of conferences and seminars that we organised between Nigeria and China, sometimes in Nigeria, sometimes in China to educate them on the need to partner members of the private sector. But there were some challenges along the line. We have the language problem and we also have issues of substandard products, which most of the time is common.

     

  • ‘Mobile phones ‘ll boost inclusive banking ’

    ‘Mobile phones ‘ll boost inclusive banking ’

    You are transforming from a mortgage institution to a commercial bank. How has the journey been?

    We started our journey to becoming a commercial bank in 2009.  It’s been a very long process. This is the first commercial bank licence to be given since 2001. We were very clear that we needed to be involved in commercial banking so as to provide an alternative route to those in need of commercial banking. I have always seen Nigeria’s commercial banking sub-sector as one that has failed to transform itself and actually touch the lives of people. There is no way any society can develop or grow without having access to finance.  That’s very true.

    What is your thinking about Nigerian banks?

    Most of the commercial banks we have in the country, some over 100 years of existence, have some form of challenges.   And there are some powerful forces that are transforming this sub-sector. With the Bank Verification Number (BVN) that was done, it brought home the fact that the country is still under-banked.  We have just about 50 million accounts in the country based on statistics.  But roughly less than 30 million of those customers were verified.

    That tells you that in a country with a population of about 180 million, an annual population growth rate of about three per cent, certainly, it is clear that the country is heavily under-banked.  And if you look at it, the segment of those that are outside banking services are the group that is of young age that are virtually excluded. What that tells you is that there is a huge opportunity out there to actually provide services to these people and sell other products through those services.

    Are there other findings you made?

    We also realised that there are other locations of the country that really do not enjoy banking services and that, generally, informed, to a large extent, the Central Bank of Nigeria (CBN’s) drive for financial inclusion in which it is trying to ensure that people have access to financial services.

    For us, having realised that these forces will continue to shape the banking services, customer satisfaction must be high, technological advancement  must continue to evolve. We also believe that the regulatory environment is constantly changing and it is becoming tougher. These forces will continue to shape what happens in that sub-sector.

    What licence did you secure from the CBN?

    We have a regional licence for the Southsouth, Southwest and Abuja.  Next year we plan to have branches in the state capitals in these zones.  We chose these zones because that is where the money is so you follow the money first, that way you make returns and satisfy the general public by providing services.

    At a time when the industry is going through all these challenges, why are you coming in?

    The first reason is that customers are to a large extent dissatisfied and, secondly, there is no access to finance to most of the people who need it. The only institutions that will succeed at the end of the day, particularly between now and five years and thereafter are those that will constantly innovate using technology to drive financial services

    What are you bringing to the market that will mark you out? Why should anyone leave his bank and come and bank with you?

    For us we believe that two major issues are very key.  The first is the channels of distribution – what channels are we going to be using in order to provide banking services and what type of products are we bringing into the market.  First and foremost, we have decided that technology would be the biggest platform that will drive our business.  We will focus largely on the retail market.  We will be deepening the use of mobile phones as a means of access to banking services.  We are also a licensed Mobile Money Bank.

    So, in the real sense, we do not need a brick and mortar bank to provide banking services.  You can open your account on your phone and transact your business.

    Most of the unbanked members of the public are not comfortable going into those big commercial banks and that is why we believe that we will fill that gap.  Access to funds is difficult and most people will narrate their experiences while trying to get facilities from banks.   We plan to make it as easy as possible for people to have access to finance.  We will be there for those type of businesses.  We are going to follow the mass market and it will be driven by technology.

    Wherever you are, you do not need to get to the bank.  We will have our staff running around and opening the accounts for those who are not so literate.

    We will also be providing banking services to those areas where we believe the services do not get to and, therefore, we will be introducing bank-on-wheels towards the end of next quarter.  We will have vehicles that will drive round markets on market days and provide banking services for the next five years or so before we close that business.  We believe if we operate this it will go a long way.  We are also in collaboration with other financial services institutions so that a large majority will have access to financial service.  We believe the market is still fertile.

    The Treasury Single Account (TSA) implementation has shown that banks will not need to focus on government funds alone.

    This idea of bank-on-wheels, have you thought about the security implications?

    Yes we have.  We would have adequate security; but in any case, we are not going to be moving heavy funds around.  What we will be doing is bridge the gap for those customers who even lose money to thieves while in transit from their business places to the banks.  We want to relieve them of the burden – just a million or two or three would not be too much.

    Do you have the means to match the big banks in terms of resources and providing the technological base?

    A bank requires a minimum capital requirement, we have met that.  It will interest you to know that technology is not that very expensive; it depends on how you cut your cost and your bargaining ability.  The banking application that we have today is also operated by four other banks.  We got it cheapest.  And it is the same thing from the same source.

     Banks have been retrenching or rationalising lately.  Why not invest in ICT or agriculture or some other businesses?  Where others are having issues,  that is where you have decided to go into.  So what is the real interest?

    People build things based on their competences.  My competence has always been in finance and I have spent over 20years in the sector and I’m passionate about it.  You see young graduates with ideas but they do not have access to finance.  It is painful.  All over the world, economies are grown by small scale businesses because once small businesses are doing very well the economy will do very well too.  Those who are retrenched in banks are mostly those without access to finance who end up on contract jobs.  And again, banking services have been suffering because as you mentioned earlier, the issue of TSA – TSA was the most convenient way of making money because government money is lent to government at interests and then spread for profitability.  Meanwhile, some people are willing to work but they do not have access to finance.  Every investment carries risks.  You have to measure your risk and manage your business in a way that it provides the needed services and it is also profitable.

    Your board! Who are your backers.  And then there is this issue of the old ways of doing things: How do you plan or hope to contend with that?

    We have a nine-man board of directors. And if you go to the Corporate Affairs Commission, CAC, you will see who our shareholders are.  It is a privately owned company with about 12 shareholders, all private individuals; and a few other companies with stakes.  We also reserved some stakes for our staff because we believe our staff should also own part of the bank.  We need the energy of the youth and the wisdom of the old so it is not completely feasible to discard some old ways of doing things.

    What informed the name Sun Trust Bank Nigeria Limited?

    That’s always been a question many people ask.  Don’t forget that we were a mortgage financial institution before but two things we are very clear about.  First is that you need the energy of the Sun and to take it further, you need to trust that when the Sun sets, your money is safe and when the Sun rises in the morning, you have a bank to go to and which will be ready to serve you.

     

     

  • Our challenges, by Lagos Safety Commission boss

    Our challenges, by Lagos Safety Commission boss

    To Fouad Oki, the Director-General, Lagos Safety Commission, Lagos State is a megapolis because, according to him, any state with a population inching towards 23 million people is categorised as such. Oki explains the challenges facing such a megapolis to BUNMI OGUNMODEDE and SUNDAY OMONIYI.

    Lagos has a number of regulatory bodies. What is the need for the Lagos State Safety Commission (LSSC)?

    Yes! There are other agencies and they complement each other. But contrary to the people’s belief,  LASTMA is not a regulatory body. It is enforcing compliance with traffic rules and regulations. Its men are essentially transportation traffic managers. They are on the road to ensure traffic safety. LASEMA is also not a regulator. It is the coordinator of the first response groups in Lagos. It coordinates government emergency response to situations. Usually, there are different ministries and agencies of government involved in emergency management committee. In Lagos, LASEMA is the first responder to emergency situations. We have as members of the committee the Lagos State Safety Commission (LSSC), the ministries of Health, the Environment, and Physical Planning. Other line ministries, agencies and parastatals are also involved in emergency management.

    So, the state needs the commission?

    Exactly, especially when you situate the issue of a regulator within the context of Lagos which is already a mega polis contrary to a widespread belief that it is a megacity. Mega city are populated in human density of between 18.5 to 20 million people. Lagos is already inching towards 23 million people. So, it is a mega polis and one of the five mega polis in the world. Looking into the required volume of service delivery to such huge, highly cosmopolitan and diversified city in terms of enthnicity, language and composition, we look at this vis-a-vis which service delivery is expected. So, every facet of our lives need to be regulated. What we have in Lagos so far is less than 10 regulatory agencies. And if you look at what we regulate, it’s quite enormous. There is the water regulatory commission and this is key because what we hear in Lagos is water…water everywhere, yet none to drink. So, I strongly think the number of regulatory bodies that we have are grossly inadequate for a mega polis.

    But with your mandate, is Lagos not too wide for your commission to effectively cover?

    We have been grappling with these challenges and one thing that is sure is that we’re not overwhelmed. The fact is that we need more regulators to have the Lagos of our desire.

    • Our role goes beyond nipping disaster in the bud. One thing is very clear in the law establishing the commission. The LSSC is an ombudsman on matters of public safety. It is an ombudsman in the sense that, it monitors and it sanctions offenders. Part of its responsibilities is what we call Occupational Safety and Health (OSH) Acts. Occupational safety essentially covers how we live, the work place, the play area for the children, the schools, the stadia, churches, mosques, health centres, roads, rail tracks, water ways, factories, industrial parks and motor parks. If you look at Section 9 of the law establishing the commission, it is clearly stated that the commission shall have as part of its responsibilities in policy formulation, advisory and regulatory body for the coordination of all government ministries, departments and agencies (MDAs) on matters relating to safety of lives and properties at all levels and all other safety-related issues. The law also states that the commission shall set safety standards for all sectors involved in the socio-economic activities of the state. This involves the issuance/withdrawal of compliance certificates. In sub-Section 10, the LSSC is further empowered to clearly define safety standards for all MDAs. It states that the commission and adopt safety policies and procedures to ensure compliance with all relevant laws, bylaws and regulations on safety in the state. If you place this vis-à-vis sub-Section 10 F, the commission shall have power to act as may be necessary to improve any condition which it would have done if the commission has been the enforcing authority for the purpose of enforcing safety. So, the role of the commission is all encompassing. It is everything about our community and socio-economic life. Security is an aspect of safety and no one is secured where there is no safety.

    So, the LSSC operations cut across virtually every sector of the socio-economic life?

    In other climes, the public order and safety sector of governance is usually coordinated by the Public Safety Commission. Even the police have a code of draft just as the military would say there is the rule of engagement. It is not just for the police to be on the beat in a neighbourhood but for the people to be sure that their lives and properties are safe. So, the LSSC is expected to look at every aspect of the socio-economic life in Lagos. We, at the commission, are saddled with the responsibility to ensure that the food consumed by the people is safe because you’ll agree that most of the things we consume are not properly regulated and that those in the food processing business need to be regulated. The food business is now an all-comers’ affair. You can see what NAFDAC is doing with Guinness. We are also moving in, not only into the Guinness issue but other businesses involved in the value chain of food processing. The same thing goes for the manufacturing and industrial sectors. Today, the people are killed for nothing – either out of sheer negligence or irresponsibility on the part of employers of labour. The LSSC in collaboration with the Office of Public Defender, the National Complaints Commission (NCC) and the inspectorate unit of the Ministry of Labour & Productivity have been working to ensure a safe work place, it is unfortunate that we are losing, avoidably though, lives daily to the carefree attitude of employers. Today, Nigerians lose limbs, fingers and arms to occupational injuries and accidents which are avoidable. The occupational health is worrisome. We also have occupational diseases growing all over the place and as we have said, the era of impunity is gone. If people want to make money in Lagos because the market is here, they must be prepared to do the right thing. They must abide with occupational safety and health rules. This is what we are committed to doing.

    What level of cooperation are you enjoying from business owners in the state?

    Well, so far, I would say none and the reason for that is that by law, companies have responsibilities for self-reporting. The law is there. But it is saddening to note here that companies are not coming around to pick copies of standard regulations, code of practice and guidance. So, they have not been cooperating. Even when our inspectors move round, they don’t find them cooperating.

    Is there any institutional support?

    The governor has given the marching order and the directive is very straightforward. Mr. Governor said there is no room again for those who do not respect the law in Lagos. Governor Akinwunmi Ambode has given me the marching order to maximally sanction erring companies or residences. Now, we are approaching the dry season, we are worried and scared because this is the part of the year that we record more fire incidences. And these are avoidable things. So, the governor already read the riot act and he has given us the directive to ensure that Lagos is safe. Our objective is that to ensure that in 24 months, we would get Lagos certified as a safe city and a safe place to work and live in. Our determination is to invite the International Labour Organisation (ILO) and United Nations Environmental Programme (UNEP) to come and certify Lagos as a safe place. UNEP is the global coordinating body for OSH Acts. This is a task that must be done. Our people should go home to sleep soundly and safely. The children should go to school safely, have a safe play area; the public transportation either on road, rail or water must be conducted in a safe environment. We won’t take no for an answer. It is either you do things right, or you vacate the environment for those who are law-abiding.

    The ultimatum the commission gave to owners of hospitality businesses, including hoteliers and night club operators to furnish you with their safety plans has expired, what is the level of compliance with the directive?

    None of them has come around as we speak. But we are working collaboratively with the Ministry of Tourism and any moment from now, we’ll be on the field to conduct inspection to ensure compliance. Where we have substantial evidence of none compliance to minimum safety standards, we’ll take appropriate action by way of prohibition and be in the form of stop work or total seal up. We are approaching the Yuletide and we are not going to accept business as usual. We have given them ultimatum to come around, but they have refused to take advantage of that window. We are also not going to condone the rule of impunity for people to feel they can do whatever they like and get away with it.

    What will the commission do?

    Our objective is to ensure that Lagos is safe for people to work and live in. The mission is to put in place a regulatory module where people will not only abide with the rules but do self reporting, where companies will on their own, invite the commission to come and inspect their premises, where investors would come around to seek clarification on areas that are unclear to them. The vision is to work with growing concerns in the state. So far, we are on track.

    What challenges do you encounter in the course of discharging your duties?

    Our primary challenge is the refusal  of those involved in the socio-economic activities to wanting to do the right thing in obeying the rules, in following the regulations, in having acceptable minimum standard for occupational safety and health either at home or at the work place and water ways. These are the challenges we are facing.

    So, how have you been coping?

    In terms of support, we’re getting backing from the state government particularly from His Excellency. He has shown tremendous political will in ensuring that Lagos is safe. He has been supporting us with everything humanly and legally required for the commission to carry out its objectives.

    All manners of vehicles are being used for public transportation in Lagos. There is even the mini-bus on the highway. Are there no regulations? 

    The standard is coming out soon. We’re working with the Vehicle Inspection Office (VIO), Lagos State Traffic Management Authority (LASTMA), Ministry of Transportation and other stakeholders in the transportation sector. It is not only on the mini buses, we are also talking about boat on the water ways. We shall be issuing the standard before the end of the year. The standard will stipulate what type of vehicles can be used for public transportation in the state either for commuting of transporting, or as school buses. The standard will clearly state what is acceptable as a safe form of public transportation in Lagos. The dangers inherent in those contraptions are real. And the hazard is very high. Lagos will definitely not condone this. If you want to operate public transportation, you must do it within the ambit of the law. Over the years, people have been getting away with the use of sub-standard and unsafe vehicles for public transportation because there was no standard to hold them by. So, we’re rolling out the standard before the end of the year. The regulation is ready and the code of practice for operators and owners of such vehicles is ready. Operators will be invited to get copies of these laws and extant regulations in order to be guided. The moment we issue the standard, the VIO, LASTMA, Ministry of Transportation and the police will enforce the laws guiding operations. Same thing goes for the Drivers’ Institute. I have gotten a letter from the Attorney, wanting to get the meaning and definition of who a commercial driver is. This is very clear. If you are driving any vehicle with a red licence number plate, you can’t say you are a Managing Director of a company and issued with an official vehicle carrying a number plate, so you don’t want to comply. You must comply! We’ve moved beyond that. We are encouraging every driver, be it private or official, commercial or personal to please get the Drivers’ Institute certification as a defence driver. It is for the safety of all road users. In the days ahead, we would be strict and strident in enforcing compliance. But one thing we would not do is to apply the rule above the minimum average. Let’s start from somewhere. Everybody must be willing and ready to obey the minimum standard as prescribed in law and act in standard and regulation.

    Who should be certified?

    Everyone who is a professional driver must be certified by the Drivers’ Institute.

    Including private vehicle owners?

    If you operate a vehicle or automotive carrying the red number plate, you must be certified in Lagos. We want to be sure you are driving safe. We want to be sure you have a defence driver by being able to anticipate and predict other road users. A driver who understands traffic rules and signals; a driver who will stop at Zebra Crossing; a driver who will understand why he should not ride on the BRT lane; a driver who will not blare the horn of his vehicle in order to be noticed and a driver who understands driving requires a lot of attention and attentiveness. All of these are part of safety. It is everything put together that would engender safety of lives and properties and each time I talk to people, I use the motto of Methodist Boys High Schhol, Lagos, which is written in Latin but translates as “If it is not for you, you should do it for others”. If you don’t want to play safe, to work safe, please do it for the benefit of others.  That is all we are asking for and this is not too much a thing one can give for us to attain the Lagos of our dream.

     

  • Govt should protect local businesses

    Govt should protect local businesses

    The government has a role to play in giving companies the opportunity to thrive and create wealth for the economy. In this interview with COLLINS NWEZE, the Group Managing Director, Courteville Business Solutions Plc, Bola Akindele, says the government’s reliance on foreign companies to handle sensitive contracts, which can be efficiently done by local companies, is not in the interest of the economy.

    You have not covered all the states in Nigeria, but you are going outside the country to provide your services, what’s the special attraction in those countries?

    Apart from diversifying our economy, you know forex regime is quite challenging now. Any wise businessman with opportunity to start business that won’t require forex, would be wise to do that.

    Aside that, we have started moving into other parts of the continent for about five years, it was not because we are not interested in covering the whole of Nigeria.

    I would tell you this, we have presented to every state in Nigeria, but the ones that we work with are the ones that accepted the proposals.

    The good thing about the product is that from Lagos to Sokoto or from Oyo to Anambra, you can move and Federal Road Safety Corps (FRSC), Police, anybody can confirm the detail of your vehicles. We are still talking to states that are yet to embrace autoreg.

    How were you able to extend your services to foreign countries. Are there specific advantages you have that other service providers in such countries don’t have?

    Every item of our service is unique. We designed and developed them locally based on the challenges that we see within the economy.

    Nigeria is one of the most challenging environments to do business. We believe that when you are able to succeed here, you can take them anywhere and they become more than relevant. Whatever it is that we have done, we have been able to patent them, not only in Nigeria, but across Africa and everywhere.

    Everywhere we have gone, we have been able to surpass the objectives that we always set out to do. Now, we continue to strive, not only to broaden our business portfolios, but to also expand the revenue bases of all our services.

    But in countries outside Nigeria, I wont tell you that the challenges are not there. The challenges are both the fact that we are Nigerians and the fact that it is a very difficult thing to go into any other sovereign country and attempt to work with their government without the support of your own government. And that is what we are not getting much of and that’s not just us as a company. It’s like you suffer being Nigerians when you go outside Nigeria and you come back to Nigeria, the same government does not give you the support that you need.

    So, we would continue to try to broaden our bases, like in Zimbabwe, we are going to hopefully also start up very soon in Guinea, Senegal. We are already on ground in Kenya not with a lot of activities, but we have found that the country is investment friendly for the kind of things that we do.

    Cross Border transactions are serious issues in the face of forex policy of the government. How have they affected your business and how have you been able to mitigate the currency risks involved in these countries?

    What we do is to continue to navigate. We can only submit to the government so that this can be included in the policy, but the thing is that the current forex regime has actually, almost wiped off whatever  thin margins that existed in those businesses, including ours.

    I don’t want to call it naira devaluation, but there is no way that it will not impact on businesses, more so, when in the local economy, you are  unable to concurrently review up your own rates.

    I don’t blame the state government or any individual company, we are all in the same boat, the state government also has its challenges in not only paying salaries, but even to generate enough. So, going to them to say you want upward review would really not make sense to them at this time.

    But are there no benefits that would come from the forex policy?

    The benefits would eventually come. We just pray they have trickle effects on everything, including presenting opportunities to people in business to also generate revenues. If forex regime is settled and we know where we stand, prices would adjust themselves across all spectrum of business entities.

    How many cars do we have on  our roads in the 23 states where you provide your services?

    We have over 10 million vehicles  and why? The trailers, cars, including motorcycles as at 2007, our statistics showed about 14.4 million vehicles across  Nigeria and then this has been going up on the average every year by about 22.5 per cent. So, you can project. We have close to 20 million vehicles now across Nigeria, including motorcycles.

    That statistics in a population of 180 million, what do you make out of it?

    Let’s say 20 million cars to 180 million people, that’s one to every nine. Its not necessarily a bad one, but in view of the states and the availability of facilities and resources to actually accommodate this volume, you will find out that, that is why we have traffic all over the place.

    That’s why the pressure on roads are so huge, maybe that’s why maintenance is very tight for some people. That’s why government needs to also find infrastructure in other areas of transportation, aviation, rail, water and that will allow you to say even if you have a car, I don’t have to drive around everywhere again. But in areas of maintaining the infrastructure investment for us, the government has to be a lot more organised and a lot more focused.

    If you activate the rail system for conveying goods across Nigeria and it is working seamlessly, that would reduce the pressure that trailers put on the roads. But for us, we need to improve the corresponding level of investment in our infrastructure. We don’t want climate to be totally covered with fumes of cars.

    How are you been able to tackle fake vehicle documentation in the country?

    That’s what the Autoreg, our flagship product, came to stop. We would never get to zero per cent, but what we do in our case is that we continue to evolve. Every two to three years, we come up with an upgrade of our applications.  But to a large extent, in all the states that we have been, because it’s a totally exclusive service, you cannot be running Autoreg in a state and there’s any other manual process.

    It is easy to determine what is fake and what is original and we have to a large extent, move in this trend in all the states we have been. I am not suggesting that its zero per cent, but they are easy, easy for the regulator, the Police and other stakeholders to find out and confirm.

    What we have done is to make it unprofitable for the parallel marketers to stay in business and we make it unreasonable for the motorists to go and patronise the parallel market and once you combine those two, you know that service is available, it is cheap, easy and fast. It cannot be cheaper than that, so you have no reason to go anywhere else.

    The government is pushing for increase tariffs for vehicles at the ports, do you think we need it at this time and if the tariff stands, how can it affect your business?

    Well, I guess road taxes are part of the taxes that government collects and hopefully apply to infrastructure investment improvement and everything. So, across West Africa alone and everywhere else that I have gone, we know Nigeria has the lowest tariffs generally on road taxes. The closest is about 50 per cent of what happens in Togo or Benin, every other country has far higher road taxes regime and it would not be out of place for government to adjust.

    The last adjustment on any tariff happened around 2005 or 2006, 10 years ago and the Gross Domestic Product (GDP) has changed since then. Everything has changed. Earnings have changed, car prices have gone up and naira value. So, there is no reason that should not change, but it should be reviewed  in the context of what is available.

    Do you believe the tariff on vehicle imports should be raised?

    Not on the vehicle imports, but road taxes. The Nigeria Automotive Council Policy, I think would bode well eventually for the country. It should make vehicles a lot cheaper now as it is whether we like it or not, because of whatever regime it is at the Customs. The beneficiaries are the economies of Togo and Republic of Benin because people don’t want to pay the kind of tariff no matter how small it is here. They divert all their vehicles to Togo and they drive them in through all the porous borders.

    It has been 10 years of operation, what is the biggest challenge you are tackling?

    Our biggest challenge is the need for the government to support us. Not just us, but the local business. I stated earlier that we suffer the consequences of being Nigerians when we go outside, they say Nigerians are dubious even though we try to project the country well without being paid for it.

    But we shouldn’t come home to be subjected to the same kind of treatment, because some foreign firms have some perceived advantages over us here.

    For instance, the Bank Verification Number (BVN) capture, Independent National Electoral Commission (INEC) capture, SIM Card registration, National Identity Cards registration are the things we have shown we can handle successfully in other countries. But in Nigeria, if you are going to put out an expression of interest in these things, they would say you should come with a foreign technical partner that would be. I don’t need any. So, I don’t bother to bid for such jobs.

    If I have been able to do this in Nigeria and its working in other countries, you should give us such jobs at a fraction of what it cost others and we would do a better job because we know the terrain better. We also know the people and country a lot better and know the challenges a lot better than any foreign operator.

    So, we are in the best position as a Nigerian company, to handle these things, but we are not so visible to the government because when it comes, its only foreign companies that will get the contract.

    You should attempt to go to Ghana, its documented, there are areas you are not allowed to operate as a foreign company.

    I have told you that we have had successes in East African countries. If you have a value proposition and you take it there, especially when you not asking for anything from their government, they allow you to operate and follow their laws.

    What I am saying is that the government should protect Nigerian businesses. There should be support. I am not advocating for protectionalism, but the point is that nobody exposed his family to danger and now starts helping the enemies.  I won’t call them enemies outright, but the government has to know that this regional integration agreement thing is not beneficial.

    What is Courteville all about?

    Courteville is a solution-driven firm established 10 years ago. We have been listed on the Nigeria Stock Exchange since three years. We have operations both within and outside the country. We have over 200 staff to date. Autoreg is an acronym for automatic registration and is our flagship product.

    It has made the documentation of vehicle particulars very simple, easy and popular. It has helped all the traffic on the road and also in controlling data. We have worked with state governments and ministries of transport in various states. Insurance companies are the biggest beneficiaries of the product and we operate at no cost to government.

    Are there other reasons while Autoreg was created?

    It was meant to help the creation of a data base for motor vehicle owners and enhance vehicle revenue, removal and total elimination of touting and counterfeiting within the system, collecting fully, the revenues accruable to the state government in this regard and then making it easy for motorists to have access.

    Each of this objectives that we set out to achieve at the beginning, we have more than achieved within the first year of operation of Autoreg in Lagos State.

    Currently, Autoreg is in 23 states. It was in operation in Seirra Leone, it is starting operations in another format in Zimbabwe and it is already working in some other ways in Jamaica as we speak.

    At least, every seven and eight out of every 10 cars you see on Nigerian roads are on Autoreg network. We cover almost 80 per cent of the population of vehicles in Nigeria.

    We have a very robust database. It has helped all the traffic on road and management agencies in Nigeria regarding the control of data of vehicles and motors in Nigeria. In this regards, we have worked largely with VIO’s and ministry of transportation of different states, and Federal Road Safety Commission Economic and Financial Crimes Commission (EFCC) to mention, but a few. Database has become useful to all arms of the security agencies and government. Talking about Economic and Financial Crimes Commission, Directorate of Security Service (DSS), the Police and the National Drug Law Enforcement Agency to a large extent.

    The coming of Autoreg, has it been able to block some leakages?

    Of course it has. That’s why we have been able to see revenues from vehicles registration risen by over 250 per cent in most of the states. It means we have been able to block the leakages and people are now more comfortable and are able to give information on themselves and their vehicles to the states.

  • Putting more money into SWF is right thing to do, says Orji

    Putting more money into SWF is right thing to do, says Orji

    Barely three years after Uche Orji pioneered the Nigerian Sovereign Investment Agency (NSIA),  his leadership has turned around the fortunes of the agency. The additional $250 million injected into NSIA by its shareholders, he believes, is a vote of confidence in its management. He bares his mind in this chat with Group Business Editor, SIMEON EBULU. 

    You appear upbeat and not weighed down at all. What has happened?

    The development is that we have a very successful engagement with the National Economic Council which resulted in what we believe is a vote of confidence, as evidenced by the additional contribution that has been made to the Sovereign Wealth Fund of $250 million. And what makes this even more remarkable is that we are in a tough economic time. With oil price downwards and this is a very powerful signal that this administration and the National Economic Council are focused on fiscal discipline.

    They have looked at examples of other countries and how this has been implemented successfully, and want to participate in what is a very credible approach to managing the nation’s resources. Other countries  have done this successfully too but it is not every country that has recorded success. But most of them have done it successfully to varying degrees. If you look at Norway for instance, that has been a spectacular success story.

    So across the spectrum, one thing is clear, savings, or investing is a culture that must be encouraged in  good times and bad times. And this is what I take from the governors’ recent commitment.

    Secondly, it is looking into the future and being able to bequeath something into the future of Nigerians. It is disciplining ourselves to be focused at whatever resources we have. But on behalf of the Board NSIA and the management of NSIA, we are pleasantly surprised by this vote of confidence. We will work very hard to make sure we justify the faith that has been reposed on us by the government and the National Economic Council in giving us additional resources.

     

    Looking at it from the first $1billion you got at inception and the time it has taken for this second one, what was actually responsible for this change of attitude?

    The first thing is, the management of NSIA has to show that they are credible and can be trusted. You have to build credibility. And I have to tell you that it is not uncommon that many Sovereign Wealth Funds start and wait before they make more contribution, and you will notice that even in the big examples that you made, even Norway.

    At the beginning, people just can’t be sure. So we went through that phase, we had a meeting with the National Economic Council which is our Governing Council Meeting, during which we presented our status report and our strategy, and I think the governors could see that we are working very hard within a limited set of resources to show some gains, and be able to be in a position to make dividends. I think and I believe it is a commitment showed at managing things with a sense of duty.

     

    Again, given the initial opposition you had with the governors, wasn’t this a surprise?

    Yes it came as a surprise. A pleasant surprise and we are happy. But more importantly, I think we are happy because of the faith, again credibility has been earned and has to be justified every day. So the fact that you have it doesn’t mean we have to relax now, but you have to justify it every day because a reputation takes 20 years to build, but one second to destroy.

    So we want to make sure that having crossed this major hurdle of showing that we are trying very hard to keep the money safe and make returns, we’ll continue to justify it on a day-to- day basis, but I also think that when they now started to see the level of accountability, transparency, governance,  strategy and focus in managing the money, andalso commitment to justify that every day, to them, I think in some ways, that is a turning point.

    But more importantly, there is a philosophical commitment to bettering the future of all Nigerians and I think that philosophical commitment is something that precedes anything we would show them. My sense is that this would have happened, regardless. So for this to happen with us, makes me happy because to some extent, we view it as  us having tried  very hard to earn the  justification from our shareholders

    For the larger society, the surprise would be that at a time that government’s resources are dwindling, there is a willingness to invest.

    Yes.

     How do you react to that?

    It is a very powerful message. It is a powerful message that says, we are committed to this, in good times, or bad times. It is a powerful message that says to Nigerians, that there is a whole new  commitment to better management of resources. It’s a powerful message that says, in the next oil boom, you’ll see a better accountability of the revenues that accrue to this country. And I think in some ways, we are very pleased with that. That is one.

    It’s also a message to our international partners and I think it will win the country a lot of credibility, externally. To be blunt, I was blown away, because it was not the most politically conducive thing to do, but it is the right thing to do, and for that we are grateful to the governors, the National Economic Council and the President.

    It might be early in the day to ask how soon you expect the next payment, but  how do you intend to deploy the $250million?

    We are most likely going to maintain the allocation strategies that we had with the first tranche, and that is, 20 per cent go to the Stabilisation Fund, 40 per cent to Infrastructure Fund  and 40 per cent to Future Generation Fund.  We believe that strategy has worked at the beginning. The amount we are talking about is still very small, relatively, so in itself, it won’t make huge difference. So the safe thing and the rational thing to do, would be to allocate it the same way that we allocated the first one.

    But where you start to see significant likelihood of change, is when the Fund accumulates to a certain  level, and depending on the opportunities we have in the day, we might still want to do a bit more Future’s generation and a bit, Infrastructure. But this $250million is, really not that a significant number to materially change our strategy. It is a significant and powerful statement that we want to make sure is not missed out.

    Questions have been raised on  your fund allocation to the three areas you have opted to invest in. The issue is, why are you not  investing extra money where the yield is more?

    It depends on your view of the yield curve. Do you know what the yield would be in two, three, or more years! First of all, I’m open to suggestions. In the first place, we have a firm called Cambridge Associates working with us on assets allocation. They are an Investment Advisory firm, and their job is, advice firms bigger than ours, including us on how to allocate assets. So we use them as advisers, and the things that go behind an investment decision, go beyond what we see today.

    Somebody could have said to me, Uche, why didn’t you buy oil stocks last year! Oil was booming, booming, then, and today, it’s a whole different story. You could get carried out on a stretcher very easily, if you had put your money in some of these things.

    We are humble enough to admit that we don’t know all the answers, and so we are open to suggestions, and we have also hired a lot of advisers doing their job to advise us on what to do. I want people to be rest assured that the decisions we are making today are to the best of our ability and to the best of information we have available to us. Nobody is always right, we may make mistakes, but one of the commitments we gave to ourselves, is to have more wins than losers.

    I laugh because last year, the biggest criticisms I got was that we didn’t take enough risks, that we should have put more in equities, put more in this, or that. This year, we are making more money, but our peers are not, because the equities market, dipped. I am willing to take suggestions, but we have an army of smart people who are helping us. All we need to do is try and do the right thing, and we are hoping that we can do the right thing and always do the right thing.

    Back home, people are anxious  to know NSIA’s commitment to certain infrastructure projects, amongst which are the Second Niger Bridge and the Lagos-Ibadan Expressway. How committed are you to these projects?

    Very committed, however we have not signed a Concession Agreement for the Second Niger Bridge, we are still in the process of actualising that. At the moment, we are Project Managers and Co-developers. We have engaged many financiers, so we are willing to put money into it.

    There is a lot of work being done and we are hoping to get the preliminary works concluded by sometimes mid next year before we get into full construction. You know this is a big project and people sometimes don’t realise that. We are working very hard, and for big projects like that, you don’t wield the magic-wand and the bridge comes up, no, we’ve been talking about the Second Niger bridge since the 1970s, so I will never mislead people to think that it will happen overnight. The plan we have is that by 2020, that bridge will be finished. That is the plan we have today, but like every project, things vary, but we are still sticking to that plan.

    Lagos-Ibadan Expressway, we have committed ourselves that we will invest $100million, subject to the structure making it comfortable for us. Now we cannot talk about that project any more because there is currently a court injunction against the development of that project.

    Second Niger bridge, we are Co-developers, Lagos-Ibadan expressway, we are investors, somebody else is developing it. When that person is through with his work and he says, NSIA, here’s the financing plan, then we’ll come in.

    What is the assurance that you will recover your financial commitment to these projects?

    We have a contract with the government, where, if we don’t get through to financial close, the government will pay us back our money. The contract is structured in such a way that we can always get our money back, and the investment return is structured in such a way that Nigerians will be very happy with.

    The NSIA is an investment company. Before we go into any project (unless it’s a social project and we have a few), but for commercial project, we structure it in such a way that it primarily protects the NSIA, because the NSIA’s money does not belong to the Federal Government, it belongs to the three-tiers, so I have to account to all these people.

    Are you confident that these projects will be seen through?

    There are still so many things that the government needs to do — like the right of way, buying, paying compensation, and such things, so lets wait and see what the budget says.

    How are you able to insulate yourself from the politics that goes with your office?

    My number one responsibility is to keep the NSIA’s money safe, and my second responsibility is to earn a return. I never lose sight of that. Politics is transient, the money is permanent.

    We are making an effort,our best possible efforts to keep the money safe and make a return, but more importantly, we have constituted the benchmark for ourselves with  global peers. So we have presented it to them at the National Economic Council and we will continue to engage with them. I think that all of that will go a long way in making sure that more faith and confidence is imposed on the management of the Sovereign Wealth Fund.

    Given the return so far on our investment,  there is every reason for everyone to believe that it is a profitable engagement. Which other sources are you considering to grow you investment funds?

    Some Sovereign wealth funds grew through cash given to them, some through assets given to them. So you know, the government will transfer certain assets to the Sovereign Wealth Fund. So we are looking at those alternatives. Of course in a Federal system, it could be very tricky because this is a wealth belonging to the federation. So if I go to the Federal Government and I say, give me a building, how do I account for that! There are many things that we would be careful about. Let’s not rush these things. You know we wake up late and then we start rushing.

    Everybody else started this thing long time ago, and many of them took many years, in some cases, decades, before they started making great impact. But we want to do everything at once, let us be realistic in our  expectation. We are working as hard as we possibly can. Don’t forget that if I don’t keep this money safe, it doesn’t matter what I built, so that if I say your money is in that bridge, you have got to show me how and why. So you have to be very careful. But we are going to do what we can.

    We are going to show you a few things in the healthcare ,let us not forget about that because that is important. We are working on forest  programme with Ogun State to reforest land that has been wasted, for the purpose of agriculture for tens  of thousands of people. So we are working on many things.

    But if you look at other Sovereign Wealth Funds, many of them took a long time before they started making great impact. And I must say that I am not trying to lose expectations but I am trying to keep it realistic.

    Are you stymied by government bureaucracy?

    I grew up in Nigeria, my father was a civil servant, a sub-treasurer in Umaiha and my mother was a primary school teacher. And I understood bureaucracy watching my father. But you have to realise it is easy to sit in the private sector and say – that government bureaucracy.

    But when you are in government, you realise that it is a lot of work. I had a new found respect for the ruling government and I understand why in some cases the bureaucracy exists, and I am not saying it shouldn’t be improved, but I understand why it exists. So we are working with them as much as we can with it. Don’t be part of the problem, be part of the solution.  That is the way I look at it. If you don’t like something, go and try to fix it.

    When I go to the Ministry of Health or this MDA, there are so many things I don’t like and I am like, hey, can I just help you this way, this is how you should do it with the Sovereign Wealth Fund. So the bureaucracy is something you will have to work with whether you like it or not.

    There is provision in NSIA to lend support to government. How soon do you see this happening?

    You know, they have just given us money, so they have not come to us to ask for money now. So let us just keep the money. Look, there are lots of demand, we will help solve problems for this is the job we are all signed up to do. So we are trying our best to solving the problems.

    You know by raising more capital, getting investors, and how do we solve these problems. Because, there is a lot of problems and we are very happy to participate. This is our country. It is how you make your bed that you lie on it. We grew up complaining about our fathers, the things they didn’t do, we say they could have done it this or that way.  But now, we are the ones in charge and it is time to do it.

    The NSIA has come a long way, give us a picture of where you want to see this Sovereign Wealth Fund in the future?

    For sure, in the near future, I will be looking at it from the outside.   But I think during one’s time, you ensure you build a house solid enough to add another layer.  In 10 years time, I want to see Nigerian Sovereign Wealth Authority punching above, sitting down amongst the committee of nations and being very influential and very powerful.

    So I think that is  the first thing I will like to see happen. It is that the Nigerian Soveriegn Wealth Authority is respected, growing and solving Nigeria’s problem. Being very effective in solving infrastructure problems of the country. I will like to see a more sovereign development, not sovereign wealth. The Infrastructure Fund is development and we cannot substitute sovereign development for sovereign wealth.

    And I am not trying to play on words here. But we have infrstucture funds, it is not big enough to really authorise big projects, but I will like to se it 10 years from now, that the Federal Government of Nigeria wants to build certain projects and that project is commissioned by the Sovereign Wealth Fund.

    Before you start calling any DFI or Donor Agency and World Bank and others, you call the Sovereign Wealth Fund first, and that is what I want to see. Ten years from now, the CEO of the Sovereign Wealth Fund is at the top table and making big decisions, that would be fantastic. You know why, because that is how it is in Abu Dabi. That is how it is in other countries. If this thing is viable and big enough for you to bring in foreign investors, let your own Sovereign Wealth Fund do it, because you said it is viable.

    So 10 years from now, that is what I am planning to see.  My greatest legacy for the Nigerian Sovereign Wealth Investment Authority is to have built the foundation for a viable, solid, strong business. And that the government has had enough confidence to grow to the point where it becomes the first point of call for large infrastructure projects that are commercially attractive.

    And let them build that platform that other countries want to come and invest in. We would start that next year in 2016, you will see more investment, you will see us being able to create funds and bring other people.   We would put that platform in place by 2016 in certain areas, but because we still have small money, that platform would be fairly small, but 10 years from now, I want to see that platform much bigger.

    Given your experience and insight of the other very successful Sovereign Wealth Fund, what limitation do you see in the Nigerian  entity?

    I think we have overcome the very first limitation, which is, should we do this. I like to again thank the Governors and the National Economic Council for having the courage to make what is a very difficult decision. And so I think that over the next few months and years, it would put us in a position where we would make the economic environment better.

    How have you managed to keep your cost low?

    We have 21 professionals in the organisation. First of all I set a cost cap, to no more than eight per cent of assets. So all I need to earn is one per cent and I am making profit. So if I earn four per cent, or five per cent, I make a whole lot of money. So with that in mind, I will say that there is no big man at the NSIA , most time when they see us flying,you will never see us on a first class. It would never happen. If you ever see me in a first class, it is because they gave me an upgrade, or it is my own money. And I will never use the Sovereign Wealth money.  It is a culture that has started with the fact that it started with no money.

    When I arrived to start the Sovereign Wealth Fund , there was not a penny in the bank. There was not even an office. After squatting in what was a storage room in the Ministry of Finance, I rented a house, a service department, from my own pocket, and I put the Sovereign Wealth Fund department at the ground floor, and my dinning table was the office.

    I borrowed resources from our partners, the FID. That is because we didn’t have any money to operate for the first three months. By the end of the fourth month, we even borrowed money, which we had to repay within a year. So we have got a small office. Even now, our offices are compact. So we learnt so honestly, it is the same way I would have started it, if it were to be my business.  For a long time, we had no official car, we had two Hondas, of which I used to drive myself on the weekends. So you do things like that and gradually, you build a name.

     

     

     

     

     

  • ‘Discos require $250m for meter installation’

    ‘Discos require $250m for meter installation’

    Metering, according to Eko Electricity Distribution Company (EKEDC) Chief Executive Officer (CEO) Mr Oladele Amoda, is the soul of the business. Without meters, it will be difficult to monitor consumption, leaving the distribution companies (DISCO) to resort to estimated billing, which many consumers are complaining about. But to give all consumers meters is capital intensive says Amoda, in this interview with AKINOLA AJIBADE. But banks, he notes, are not ready to give out such money.

    How many customers are yet to receive  meters in your jurisdiction?

    We have over 400,000 customers. Of this, close to 300,000 do not have functional meters while a few have meters that are working well. The meters that are not finctional are meters that our officials find difficult to read. Also, there are 6,000 meters for customers operating in industrail clusters. These are customers, who use heavy  machines, and as a result, consume a lot of energy.

    What measures have you taken to resolve the metering problem?

    The measures are many. First, we are metering the houses/ buildings in our jurisdiction. Secondly, we have designed a meter roll out plan, through which we would supply meters to our customers. We have taken delivery of consignments of meters for our customers in the industrial areas, in line with our goal of meeting their needs. To do this, we approached indigenous meter manufacturers to provide meters for the use of customers in the industrial centres.

    We use local meter producers in order to help drive the local content policy initiated by the Federal Government, and further assist in creating jobs. We believe that local manufacturers of meters have factories, and if Eko Electric Distribution Company and other DISCOs fail to patronise these  manufacturers, they would not be able to function well.

    Do local manufacturers of meters have the capacity to meet the needs of the 11 DISCOs?

    No. The reason is because indigenous manufacturers are not many. They are overwhelmed with meter requirements from the DISCOs. This informed the decision of Eko DISCO to partner with manufacturers abroad to supplement local production with imports.

    When did the meter problem start?

    The scarcity of meters dates back to decades ago. But we  discovered that many people do not have meters in November 2013, when we took over the assets of Power Holding Company of Nigeria (PHCN). During that period, we found that over 55 per cent of customers did not have functional   meters, while others do not have at all. It is one thing to have meters; it is another thing that meters are not working.  When meters are not working well, it is as good as not having meters at all.

    How do you charge customers that do not have meters?

    Before we charge customers who do not have meters, we put them on estimation category.  The estimation is not arbitrary because we go through scientific methodology as provided by the Nigerian Electricity Regulatory Commission (NERC). The method follows a sequential order. First, we look at the feeders in a particular area to know the availability of supply on the feeders in a month.

    Secondly, we look at the hours of supply on the feeders and transformers.  So, when we are billing customers, we take into considerations the power effects on the feeders and the transformers. Thereafter, we check at the availability of power, on average on the transformers, and on the basis of this, we bill consumers after calculating the volume of energy they have consumed over a period of time, usually a month.

    The DISCOs are making a lot of money, considering that many customers get estmated bills.

    The DISCOs are not happy with  estimated or crazy bills. We do not even like a situation whereby we charge estimated bills. As a matter of fact, we want our customers to have meters, hence the decision to put in place a meter roll out plan that is in operation now. The roll out plan is such that every customer would be metered. The only snag is that the plan would take some time before it is fully implemented.

    In the performance agreement, which DISCOs signed with the Bureau of Public Enterprises (BPE), they are supposed to meter all their customers within five years. But we do not want to go that long way. We are fast-tracking the plan  to speed up the process.

    How is your company executing the plan?

    We want to go the smart way, ensuring that our customers have smart meters. Through this, we would change all the meters because we believe that majority of the  meters in the industry have outlived their usefulness. The smart meters would help us to track down happenings in the meters, vis-a-vis helping us to know   whether customers are having supply or not. This is as against a situation whereby we would  rely  on third-hand information, before we know whether meters are working  well or not.

    Are customers being educated on the use of smart meters, considering that the technology is new in Nigeria?

    Efforts are ongoing to create awareness on the use of smart meters. We have organised town hall meetings, through which we met customers from various locations. The recent one was took place in  Surulere, Lagos.  The meeting was organised for customers around Ijora, Yaba, Ikate, Lawanson and its environs. Usually, issues such as billing and metering are discussed at the meeting. There, we told customers to be patient with us, as we are planning to roll out meters soon.

    How do you meet the needs of customers, who cannot wait for the meters roll out plan to materialise?

    Customers, who cannot wait for the meters roll out plan are advised  to take advantage of the opportunities offered by a scheme known as CAPMI,  an acronym for Credited Advance Payment for Metering Infrastructure.

    The aim of the scheme is to take care of  metering deficiencies or gaps inherent in the sector by helping customers who cannot wait for the meters roll out plan to get meters early enough.

    Once customers cannot wait for our plan, they are allowed to apply for meters and after applying, we would assess their needs.  Thereafter, we would give them options to choose; tell them the price and register them after making the payment for the meters within 45 days. After the payment, we would install the meters, and start paying them back the money they spent in procuring meters over a period of them.  We would pay customers with interest (12- and-a-half per cent) on the money they paid for the meters. We regard the money as loan.

    So, when customers start to complain about over billing or crazy billing, they have options to choose from. All they need to do is to pay or loan us the money and we would give them meters immediately.

    How much do you collect from customers who obtain meters through CAPMI?

    The price varies, depending on what the customers apply for. We have single-phased meters, double-phased meters and so on.  What we do is to give customers a breakdown of the money, which they would pay when applying for meters under CAPMI. They are free to choose the plan that suits them.

    How much have you invested in meter production?

    The total calculation of what we need to ensure customers have meters is about $250 million. We have spent close to $50 million on meters. You know money is not easy to come by. There is no way we would get $250 million at once. You know banks are reluctant to give out loans to power. Banks said the DISCOs have exhausted the money or loans earmarked for them on the acquisition of the assets of the PHCN. The bulk of the money, which investors in the power sector used to acquire the assets, were sourced locally.

    Is that why power firms are turning to foreign banks for assistance?

    No, we are still approaching local banks. When you collect loans, you are required to pay back the loans over a period of time. The loan is a revolving one. Eko DISCO is not the only firm that is asking for loans from banks. We have 11 DISCOs demanding for one credit or the other from the 21 commercial banks in the country.  Apart from giving loans to the power firms, banks have other customers requesting for facilities from them. The banks are overwhelmed with requests for facilities, and, as a result,  are  reluctant to give loans to their customers. Mind you, there is a limit to the amount banks can give out  as laons to their customers.

    Are power firms looking beyond banks to succeed?

    Yes! There are other sources DISCOs are trying to explore to achieve their set goal of seamlessly distributing power to the consumers. There are many international donor agencies that have shown interest in helping energy companies in Nigeria. The agencies are not going to provide money to power firms. What they want to do is to provide technical assistance to the companies. But when you quantify the assistance, the value is much higher than money. Through the assistance, the DISCOs would improve their operations.

    However, we use investors’ money to do some of the things we have done. I’m talking about the meters and other equipment we imported.

    What are you doing to recover debts arising from comsumers’ failure to pay their bills?

    We have been going round to persuade our customers to pay their debts. The management staff and workers in the Business Unit are talking to customers to pay their debts.  We  organise town hall meetings through which we meet  our customers. At the meetings, we let them know that they are the ones behind every success we record. We tell them to pay their debts for us to continue in business.

    What are you doing to ameliorate comsumers’ suffering?

    We know that some customers have issues with DISCOs. Those that have issues with Eko DISCO, we tell them to come with their complaints with a view to seeing what we can do about them. When customers come to us with their complaints, we look at them and handle them properly. We have treated many cases to satisfy our customers because they are kings, and must, therefore, be treated well. When we check our records and discover that customers have been unnecessarily overbilled, we correct the mistake immediately.  We have not fully automated our system, hence, the manual correction of mistakes in our operation. When we are fully automated, the correction would be done electronically. That is why we are taking advantage of the growth in the information communication technology (ICT) to link our customers and know what is happening to them.

    What are you doing to reduce clashes between your workers and customers?

    We see customers as partners in  progress, and we treat them in that manner. However, we do not tolerate a situation whereby a community would rise up and say they are not ready to pay. We do not want customers to be molesting our staff, hence, the need to invite them to come and discuss their problems with us.  To reduce friction between our our workers and customers, we ensure that our staff are humane as much as possible. We are customer- centric and this is evident in the kind of orientation we give our staff. There is a paradigm shift now because we want to be more customer-friendly. Once we realise that our workers are not dealing with customers properly, we talk to them to change their mental disposition towards customers. To serve as example for others, we relieve workers that are not ready to change of their jobs.  We have done many staff audit, and those that are not performing well are asked to go. But at the same time, we want customers to be reasonable.

    Recently, residents of Lekki Phase I protested against crazy bill. What are you doing about that?

    I’m surprised because the residents have meters, except those that do not have functional meters. If they have any problem, they should meet us and we would attend to them.

    What are you doing about embedded power?

    We came up with embedded power because power supply is not enough. We at ( Eko DISCO) were getting 11 per cent of total electricity generated when we started operation. Months back, the generation was very low, as a result of this, power supply to us became very small which made customers to complain. To improve supply, we decided to carry out massive load shedding.

    Immediately, we took over in November, 2013, we said to ourselves that we cannot rely solely on what we are getting from the national grid. We know that we cannot help the situation, in view of the fact that there are problems  in the value chain. The problems include pipeline vandalism, poor supply of gas to the turbines and many others.  This made us to approach companies that can generate power and give to us for distribution to our customers, in a manner in which the transactions would be beneficial to all parties.

    How many megawatts are you getting now?

    Before the administration of President Muhammadu Buhari came in, we were getting less than 200 megawatts of electricity on average. We track what we receive on hourly basis.  You know whatever we get from the grid, we have to distribute it, we cannot store it.  But it has improved now as we are getting between 400 and 450 megawatts of electricity. Though it is not that it is stable, but it is better than what we were getting before. But it is a far cry from what we actually require. Today, if we get 700 megawatts, we would manage it because there are so many suppressed loads right now. Some factories are not on the grid; they are generating their own power. When we have more power, they will come. In fact, some customers that are not with us are coming in gradually. The demand keeps increasing; if we see 700 megawatts today, we would be comfortable with it. The target is 2000 megawatts, and we hope to meet that target. After meeting this, we would increase our target to 6,000 megawatts. We are working towards achieving that target in the next few years.

  • ‘We can’t handle infrastructure financing’

    ‘We can’t handle infrastructure financing’

    In 10 years, pension assets have grown to over N5 trillion. How can the cash be maintained for the country’s benefits? Premium Pension Limited(PPL) Chairman Mr. Aliyu Dikko,in this interview with Omotola Tolu-Kusimo,says the cash can be used to stimulate the economy and  create profitable ventures. 

    At the World Pension Summit in Abuja, investment of the N5 trillion accumulated pension fund was a major issue.  Some governors are looking at how they can access the pension fund for infrastructural development when they  have not complied with the Contributory Pension Scheme (CPS).  What do you make of this?

    There were three states that attended the Governors’ Forum arranged for the summit namely, Kaduna, Akwa Ibom, and Kebbi States. Out of the three states, only Kaduna State has complied with the scheme. Kebbi State has since inception been talking of complying but has not. Akwa-Ibom has also not complied; it has just promised to join in spite of the huge revenue of the the state. They just keep postponing the date for implementation. This means that it is only Kaduna State that may be able to meet the requirement for pension asset investment. My advice to the states is that it is in their own interest to comply because once they comply, a lot of opportunities will be opened to them otherwise they may not be able to access the funds.

     Do you think there is a way forward on how the pension fund should be invested in infrastructure?

    This is really the issue and it is not limited to the summit. What we have been doing as a nation in the past is to sit down, talk and go. There are always no plan for implementation and another set will come and talk and go and it goes on like that. There will be so many reports and committees but implementation has been zero. My advice is that there has to be timeline for implementation for whatever whoever intends to do. With respect to the pension assets, yes we have about N5 trillion on the ground part of which is not liquid, but in assets. But at least 70 per cent of that is liquid asset which is available for investment. But Pension Fund Administrators (PFAs), cannot invest money in infrastructure without a proper framework where the infrastructure will clearly show the revenue they will generate to be able to retire whichever instrument is used to invest in such bond or infrastructure. There has to be capacity development because in Nigeria we have been talking about infrastructure opportunities, but to be honest, apart from the issue of financing, we don’t even have the capacity to handle infrastructure financing in this country. I think we really need to develop the capacity and this can only be done through training and collaboration with nations that have already gone far in this area because it is not just a question of fund; operators need to be able to know how to deploy it into infrastructure. I also need to know how to structure the funding so that as I fund, it will not affect my liquidity as a pension fund administrator or cause problem for me in other areas. It is not just a question of putting money into infrastructure- electricity, road, rail line, etc., but there are other areas where whatever you do, it will be affected. So we have to be able to have that capacity to be able to analyse and say that yes, based on what we have done and the capacity and training we have had for our professionals, we are ready to go into infrastructure financing.

    Pension arrears have remained a knotty issue in the industry. The Federal Government is said to be owing about N100 billion in arrears and remittances. What is your view about this bearing in mind that  the same government is trying to make Nigerians develop confidence in the pension scheme?

    I must say that what the government has done so far is commendable especially the Federal Government. This is because before the problem of the oil price crash, the Federal Government was almost 100 per cent compliant in terms of remittances with respect to Federal Government employees. The government was largely in compliance also to past service liability but unfortunately, the oil price crash regime surfaced, and that has now affected almost everything. Yes, there is an outstanding of more than N100 billion in terms of past service liability and I don’t know whether the government is clearly remitting its obligation in terms of even the current Retirement Savings Account (RSA) remittances. But in terms of past service liabilities, yes, there is a huge outstanding. However, I believe that as the government settles down with ministers given portfolio, this will get sorted out sooner than you think. I don’t think any government will play with the future of its employees because the RSA is the future of the current RSA holders and I do believe that the government will do everything possible to retain the confidence of the RSA holders. It is a temporary setback but I do believe the government will address the issue, going forward.

    Despite Nigeria’s huge working population, there are seven million subscribers under the CPS. Do you see this as a challenge? What solution would you proffer to stimulate peoples’ interest, especially those in the private and informal sectors in joining the scheme?

    Nigeria’s working population is said to be around 49 million; but so far, just about six million have registered, thus leaving a very wide gap. I think the gap has to do with the informal sector which include the unorganised or semi-organised artisans among others. I believe that the way to bring them into the scheme is through incentive. Once there is incentive and it is clearly communicated to workers in the informal sector, we will begin to see them joining the scheme. Part of this is perhaps to make their own contribution as flexible as possible. It should not be as rigid as what we have for the formal sector. There could also be some tax incentive and maybe accommodation to say if you are able to contribute so much, you are guaranteed a loan to own a house or a loan to buy more motorcycle. This kind of incentive will encourage those in the informal sector to join the scheme. This is how other countries like Mexico, Chile were able to bring in their formal sector into the schemes. PenCom is working on the guideline of the informal sector which will soon be out. We are waiting to see the content of the guideline. The sector is a huge market.

    But some stakeholders are of the view that without improvement in the living condition of the citizens, people in the informal sector will not be able to join the scheme. Do you agree?

    We believe that with improved government policies, there should be improvement in the general condition of living. It is really better to start somewhere because we cannot say because there is no improvement in the condition of the informal sector employees then we will not start.  There is no time that we can say this condition is optimum. At any given time you will see need in some other areas and then you just have to continue to address them.

     What are the challenges in the pension industry?

    The most crucial is the challenge of compliance, especially by the private sector. Other challenges include funding, non-remittance of contribution by employersand  lack of public awareness of the scheme.

    Can the Federal Government compel non complying states in the scheme  to join?

    What happened was that when the scheme started, there was supposed to be law for the Federal Government and each state was to have its own law. But later it was realised that many state were not even willing to enact the laws. So, at a meeting during former President, Olusegun Obasanjo’s administration, the council of state decided that all state comply even though it didn’t say all state should adopt the same federal law but the council just simply agreed that all state should comply. After that some states decided to comply but quite a number of states saw it as an additional cost. They were not projecting into the future but at whatever contribution they are supposed to give now. So they saw it has a cost and decided not to be interested in the scheme. But I do believe that now that most of the states have some sanity, they might be able to see it as something inevitable because if you are not doing it now, you are postponing the difficult days. In the next five, 10 years, states that have keyed into the scheme will reap the benefit- which is that they wouldn’t have to pay retirees’ benefit; but the states who refused to do it will still have to pay retirees benefit and they will realise what they have missed.

    How did  Premium Pension come to be?

    Premium Pension was licensed in 2005 to participate in the management of the new pension scheme, the Contributory Pension Scheme (CPS). We commenced operation in July 2005 and I was the pioneer chief executive officer. We were among the first set of Pension Fund Administrators (PFAs) to be licensed. Our registration commenced January and February 2006 which makes us to be among the pioneer PFAs. Premium Pension is today one of the leading PFAs with asset under management of more than N400 billion. We have a mission to be with our customers in active retirement life. Our mission also include providing first class service to our customers with best practices in whatever we do.

    What are your plans to ensure that retirees and workers whose pensions are under your management get good service delivery and are forever happy?

    As a company, our norm is customer service and care for each and every stakeholder. Our stakeholders comprise of our Retirement Savings Account (RSA) holders who are now employers in the various organisations, our retirees who are now retired and are now enjoying their pension, the community where we operate and the regulators. We are a customer centric organisation and our mission is to satisfy all our stakeholders. That is why we inculcate in all of our staff from cleaners to drivers and everybody in the company how to be customer centric. We believe that without the customers, we cannot not exist.

     

    How have you been able to generate the N380 billion pension fund you claim to be under your company’s management?

    I mentioned earlier that we have N400 billion pension asset because N380 billion was based on the audited account, but I believe we have now crossed more than N400 billion. We have been able to achieve this because we are customer centric and are very close to our customers. This has made us to be a preferred PFA in the pension industry. We have also dedicated a lot of resources to our staff by providing proper training, good remuneration package and created a very conducive environment for them. This has helped us a lot in achieving success. We have also been able to make profit based on our prudence. We have had a very prudent culture in the organisation right from when we started. We started on a very low cost profile. When we started, every single thing was low cost and a lot of sacrifice was made from the management to the staff and this was what resulted to where we are today.

     

    You spoke a lot about integrity. What are the structures for company in terms of integrity?

    Certainly integrity is at the centre of our core values. Whatever you do in the world, if you do not have integrity, you will not succeed. Integrity is priceless and once you have integrity people will want to do business with you without you asking. Integrity is at the core of whatever we do in Premium Pension.

  • ‘Govt must empower women to reduce poverty’

    ‘Govt must empower women to reduce poverty’

    Microfinance banks (MfBs) have the capacity to reduce poverty because of their reach, says an operator, Dr. Godwin Nwabunka. But  they can only do so with banks’ support, argues Nwabunka, Managing Director of Grooming Centre, a microfinance bank. Women too, he notes, in this interview with Seyi Odewale, should be financially empowered “to change the face of poverty”.

    What is your assessment of the microfinance sub-sector of the financial services industry?

    Microfinance by definition and according to Prof. Muhammad Yunus, the pioneer of modern day microfinance, is banking for the poor; making financial products accessible to the poorest of the poor within the society. That is the essence of microfinance. And if you are doing that, you have to look at the methodology that fits the group of people we call the poor. And by international standard, the poor are those, who live below the poverty line. And when we talk about the poorest of the poor, we are talking about those who live below one dollar a day. We equally have those who live below two dollars a day.

    And if you look at the standard figure of Nigeria, about 70 per cent live below poverty line, 90 per cent live below $2 a day. And when you want to look at the methodology that works, you have to look at the one that fits this category of people and that is the one that is lacking. Worldwide, microfinance is being looked at as the solution to poverty. It is not the only one, but it is one of the ways through which we can reduce poverty, if it is integrated with all other interventions.

    But we need to look at what fits our environment. How do we ensure that the poor is lifted away from poverty? We are not saying lifting into affluence, it could happen, but the poor should be able to provide the basic amenities for himself and his immediate family. That is the essence of microfinance. It is to help economically active poor to be able to rise above poverty. It is a sin for somebody to wish to work and not be able to feed. A person that works should be able to feed his or her family.

    So, methodology differs and approaches are not the same. The problem with Nigeria is very clear. Microfinance did not start as microfinance. The Central Bank of Nigeria (CBN) more or less arm-twisted the community banks into becoming microfinance banks. In the past, we have had a lot of interventions from the financial sector as related to poverty. We had the rural banks, we had the People’s Bank, we had the Community Banks, now we have Microfinance Banks. Microfinance Bank is attracting attention because of the discovery by the United Nations (UN) that microfinance banks are veritable tools to poverty alleviation. So, we had micro-credit summit in 2005 supporting and encouraging nations to imbibe the culture of using microfinance to provide for the poor.

    The problem in Nigeria is: Are we really practicing microfinance the way it should be done? Microfinance is the total opposite of commercial banking. It is not retail banking. It is actually taking banking services to the poor wherever they may be. If we look at the content of what you get from the poor, you will see that they are little. The poor are disenfranchised; they are unhappy because of the burden nature has placed on them. They are hard working and they are struggling every day. And when you look at all these, you just have to think of how to approach them in the positive manner.

    What is happening to the sub-sector?

    We are making a lot of efforts in Nigeria, but it is just because our approach and processes are not actually what they should be. We need to learn from best practices from other climes, including successful  unsuccessful ones. We should know what made them successful or otherwise and now transfer the knowledge to how we run. In Grooming Centre, our methodology is not new; it is called ASA methodology. We borrowed it from Bangladesh and that is the fastest growing microfinance bank in the world today. They have over 3,600 branches, so we borrowed their methodology. We did not adopt it hook, line and sinker; we domesticated it to suit our cultural background.

    The methodology is simple: it is accounting for non accountant; keeping records in the simplest format; running microfinance at the least cost both to the organisation and the clients and ensuring that you get the money to them in bits and pieces based on their capacity. You then  ask them to pay back in bits and pieces, not them leaving their wares or shops to pay back. But we go to them to collect it in a holistic manner, ensuring that they have the group methodology (form groups), which is very important to Africans.

    So, microfinance is not new to us. What is new is the modern way of doing it; the concept has been part of us. So, people of like minds come together, when they come they decide how they will operate. In other parts of the world, when they come together, they get the loan in bulk and decide how they are going to share it. But that one is laden with a lot of problems, because a powerful member can decide to take it all. That is not what we do in Grooming Centre, we deal directly with every member, but they enjoy group dynamics. It is a non-collateralised loan, because the poor has nothing to present as collateral. All we just need to know is that the person is economically active. Our collateral is based on social aspect of life. Others believe that Nigerians are bad people, but we know that we are good people; hardworking people. So, when you have people that are hard working, they will like to protect their family name and will not want to do anything that would tarnish that name.

    Your loans are not tied to any collateral. How do you ensure repayment?

    Even in commercial banks where they tie everything to collateral, people still bolt away with their money. A commercial bank would celebrate if it can recover about 70 per cent of the loans it gives out. For us in Grooming, we are always operating on 99.5 per cent.

    And what if it happens?

    As we speak, we are going through international rating and such rating is comparing our organisation with international microfinance institutions in the world by looking at our performance and our social responsibility. Social is what you have just asked. We have actually gone beyond performance and social, and we are looking at certification. It means, how well do our clients perceive us? Our integrity and perception of the clients are important to our operation. There are standards for these; we call them smart principle, some call them clients’ protection principle. Every microfinance institution must follow clients’ protection principle and these are: put product that fits the needs of your clients; treat clients fairly in such a way that they would be happy to be with you and you will be happy to be with them. The fact that they are poor does not mean that they are bad. You should ensure that your workers treat your clients with integrity and finally, there must be transparency in costs, that is no hidden costs in the course of transaction. These are the things we do in Grooming that made us to go for certification. As we speak, that is why we have one of the four international rating bodies from the United States (U.S) coming around to rate us.

    But how would they do their assessment since they are not resident in the country?

    They are there on the field talking to our clients, looking at their books and asking for their opinions. And that is what we do here too. We have a toll free line for our clients to call us to lodge whatever complaints they have. If you look at our organogram, you will see that the assembly (the customers) is stronger than the board. They are the ones we are serving.

    Women appear to constitute the bulk of your clients. Why is it so?

    The simple reason is the background that we are coming from. We have the UNs’ background. I had a very broad background at the United Nations’ Development Programme (UNDP) where we dealt with issues of poverty, private sector development, offering informal support to all those life sustainable issues. Then we moved over to United Nations Children Education Fund (UNICEF), where the emphasis changed to children rights, women rights, right to good development and right to participate. So, we are looking at two broad areas. One is purely economic in terms of focus. Then the focus on child development. Like I said, there were issues such as why is a child, who is ripe for school, not in school? Why would people want to live in an environment that is not clean? These bother on water, sanitation and other issues up to political empowerment. Why would people want to sell their votes?

    So, if you want to move development forward, you must balance both the economic and social factors. And if you want to deal with those social factors such as the rights of children and women, you must empower families so that they can put their children in schools, pay hospital bills and provide the right environment for them to grow. So, we decided to pursue that because while at the UN, I was the team leader for the small, medium enterprises (SMEs) sector and sustainable livelihood.

    So, if you look at the issue of women, you would see that the face of poverty is that of a woman.  That is why we have women as majority of our clients. And there is this saying that when you feed a woman, you feed the nation. If you look at the statistics of poverty, women are largely affected than men. And then, we discover that it is difficult for a man to manage small credit. If you are seriously looking at the issue of poverty, you have to seriously support women so that household poverty would be reduced. That is why we focus more on women.

    When you go to banks, how many women do commercial banks give loans to? When you give a loan to a woman, you will see it reflected in the children. In Africa, we know that when the children are educated, the possibility of the family moving out of poverty is very high. So, when you empower a woman, you are likely to see the children develop appropriately, go to school and gradually fit into the larger society.

    What is the interest rate regime like in microfinance?

    Initially, people thought  microfinance should be done to fund those we should pity, because they are poor; that we should give them pittance and not helping them to get out of poverty. That is not how to help the poor out of poverty. We should actually work to attract commercial funding, but in a situation whereby we have 70 per cent of 170 million of Nigerians living below poverty, how much grants will reach the 170 millions in a way that will make them to be out of poverty? The only way you can help them get out of poverty is to ensure that commercial funds come in.  Microfinance has erased poverty. One rich person can constructively support 600 people and bring them out of poverty, if done appropriately.

    So, all of us here came from the UN background and we know what grant is all about. Grant can never be enough to solve the problem of poverty. Grant is a catalytic approach. It is unfortunate that most of our microfinance banks are looking for grants and soft loans. Since we started  in 2006, we have not received one single grant and we will not receive grants. We would rather opt for commercial funds. That is to tell Nigerians that we can run with commercial funds and improve the livelihood of people more, because we have a pool of funds to work with.

    How do you source funds?

    That is one area our people in this country have not latched upon. Mr Alex Nnamidi Enyimah represents us at the African Microfinance Transparency. But the problem with other microfinance organisations in the country is that they don’t network. Microfinance is a big industry globally and we have various networks. What they require from you are transparency and accountability, and the fact that you are serving the niche that you claim to be serving. Then, keep your record appropriately and do it in an open manner. That is what the international world wants and we source our funds from international market. We are praying and hoping that, although this may be another discussion for another time, our commercial banks would see that funds draining from microfinance institutions will be kept within Nigeria and give jobs to the jobless.

    There is a group called Microfinance Vehicles; they are all over the world. They understand microfinance than we do. We have them in Switzerland, Holland, Luxemburg, Germany and America. They actually support microfinance anywhere even if you have just been in existence for three years and you have transparent records, good management system and they are comfortable with you. They give non collateralised loans, but what you need to do is to be internationally rated. This is our third international rating in almost 10 years of operation. They will come in to rate you, do their due diligence, and it will interest you that when they come for due diligence, they usually come with young men of about 24 years of age, who will just come and check through your books.

    We have knocked on the doors of banks in this country, the only thing we hear is that ‘come and lodge your deposits with us before we start talking’. They are not seeing the advantage and the value they can add to microfinance. They rather prefer to do business with oil and gas companies and give loans to the same cycle of people and this is not benefitting humanity. And what is it that a Nigerian bank is looking for that we cannot provide when the World Bank and International Finance Corporation (IFC) are lending money to Grooming, yet a commercial bank in this country has not seen us qualified enough for a loan? We have loans with IFC, Blue Orchard, even Norwegian Microfinance institutions. All of them give us loans.

    Would you say banking is being done the way it should?

    We are developing and that is why a lot of interventions from the Central Bank are going to bring positive result. In the sense that when the commercial banks do not see free funds that they used to feed on any longer, then it will be easy for them to support SMEs to grow. And as those ones are growing, they will be making returns and that will help the growth of the bank. Oil and gas, though is a blessing, but they have brought their negative impact.

    Are the banks also not finding things easy?

    Yes, if it continues like that then it will benefit the masses. You will see a lot of commercial banks trying to change their methodology, processes and approaches.

    Talking about SMEs, how far have you been able to support them?

    The financial pyramid is triangular in nature. We have the few very rich at the top; talking about the Dangotes, Otedolas, Otundekos and the others. Then you have the middle class, which include the working class, while the third angle is the broad base, which is the masses, who constitute the poorest of the poor. It is now left to you as a microfinance institution to determine which of these categories you want to relate with more. For us, we like to pick where people don’t go to and to whom much is given, much is expected. Our team has worked with the UN and I, as the chief executive officer, has worked both with UNDP and UNICEF for upward of 20 years, while the executive director was with the UNICEF for upward of 14 years. The programme director has always worked with the UNICEF for upward of nine years. So, all of us have seen best practices worldwide and we know what works.

    When you know what works, then it is easy to be in Grooming, leaving ones comfort zones to sacrifice for ones country. It will be interesting to know where we started. We started from one small enclave down the road. We started with four credit staff and one branch manager; that was December 2006. Today, we are in 400 places, we have over 2000 members of staff and we are in 23 states of the federation. In Lagos alone, we are in over 40 places. We have our presence in the southwest, southeast and the middle-belt; that is what microfinance can do. It creates jobs for young school leavers; it creates jobs for the poor. For SMEs, that is not our niche, our niche is to create opportunities for the poor to move away from poverty and graduate into SMEs. But that does not mean that we are not supporting SMEs.