The Nation Newspaper

Category: CEO

  • ‘How BVN will stem fraud’

    ‘How BVN will stem fraud’

    The Nigerian Interbank Settlement System (NIBBS) provides the infrastructure for automated processing, payment settlement and funds transfer. Given the ease of using the channel, more Nigerians are now embracing electronic banking. NIBBS Managing Director Mr. Folashodun Adebisi Shonubi says the platform is waxing stronger. In this interview with Group Business Editor SIMEON EBULU, he describes the Bank Verification Number (BVN) as a noble initiative that will reduce fraud.

    Is the synergy between the BVN and the National Identity Management Commission bringing about a sustainable identity management system for Nigeria?

    We need to understand the concept of identification. The National ID is supposed to be the root means of identifying an individual. That means it is general but you will always find specific ID databases that will be created. There is the National Driving licence that applies to people, who are of driving age and have decided they want to drive. They are different from those that may be banking customers that cannot drive. So, you will always have different databases. However, the idea is to have a common way of linking them. Somebody has a driving licence and at the same time has an ID for health, how do we ensure it is the same person? That is the idea behind the National ID.

    With the Bank Verification Number (BVN), we are creating something for banking customers. The purpose is not just to identify but also ultimately to use it to authorise financial transactions. This cannot be done using the National ID which would identify but it is not meant for authorising financial transactions. The BVN is a means of sharing data. When one enrolls for a BVN, we can make that information available.  If you already have the National ID and you don’t have a Bank Account, once you use it, we pull the information from the National ID and update it in creating your BVN identification. This is with the intention of making it easy for people so that when you are enrolled for one, it is easier to enroll with the other and we have actually started that process of integration.

    How will the BVN work?

    The feedback from the banks is very positive. I think we should start by understanding why we are embarking on the BVN project, you will see that there is no way the Banks would not be enthusiastic about it. When the BVN project was initiated, there were three key areas of focus. First and most important of all is for us to identify our customers uniquely across Banks and across Accounts. So, once a customer enrolls and obtains a BVN, that same BVN is tied to all his bank accounts. Now, relating to identifying is the possibility of Banks blacklisting people who have committed financial infractions. It could be fraudsters; it could be people who have forged documents; etc. What happens today is that Mr. A goes to Bank E, commits fraud, then runs to Bank F and because there is no way of tying all these activities across, we found out that there are quite a lot of losses related to these individuals from one Bank to another. BVN removes these losses. The beauty of it all is the unique identification in the financial space.

    Generally, people say every Nigerian is a crook but in actual sense, maybe only one per cent of Nigerians are crooks but the remaining 99 per cent are considered crooks because of that one per cent. So, BVN allows us, again, to find these individuals and to create that blacklists that other stakeholders in the financial space can have access to. With this, even foreigners through their Banks, may be able to identify fraudsters that have been tracked in the Nigerian Financial space.

    Secondly, the BVN would allow us begin to build retail credit. Today, the Banks have concerns over identification in retail lending, that is why the entire retail consumer lending portfolio is targeted at people with formal employment whose employers can serve as a point of reference. There are however a lot of self-employed people as well as others working in smaller organisations who require this, but do not have access due to the identification issue, as no bank will take the risk of lending to them – considering cases of resignation and eventual run off, how will the Banks get repayment? But with the availability of BVN, these set of individuals will also benefit from Retail Lending as identification and tracking issues will be mitigated.

    The third, which I have already alluded to, is we want to be able to authorise financial transactions down the road, on an Automated Teller Machine (ATM) or a Point of Sales (PoS). You can use your biometric identifier to say ‘Yes, this is me and I am authorising the payment.’ So, those are the three key focus areas that led to the BVN project being conceived and implemented.

    By June 30, every bank customer is expected to have been captured into the system. Will the deadline be extended?

    No. I think we are doing well. Just as most projects, you start slow but as time goes on, it picks up. The number of enrollment doubles every week. So, given the number of BVNs generated so far, I think June 30 is achievable.

    For those that have enrolled when are they likely to receive their BVN card?

    I would encourage customers to talk to their banks so that they can get their BVN card. The BVN cards are being printed and sent to the banks to distribute to the branches where customers have enrolled. You will be sent a Small Messaging System (SMS) and for those that have their emails stipulated, they will be sent email.

    Who bears the cost of producing the BVN cards?

    It has no cost implications to the customer; we are giving them out to the customers for free. The cost is borne by the Bankers’ Committee, which considers the BVN project very important and that is why they have been bearing the entire cost. The cost of the cards, the cost of integration with NIMC and almost everything else that has to do with the BVN is borne by the Bankers’ Committee.

    Is NIBSS not concerned about the rising cases in banks?

    We are very worried and what gets us even more concerned is that as one executes Electronic Transactions, a lot more people are participating in that space and cloud. So, it is easier for the Banks to invest in new technologies to protect themselves. But now, every business person wants to create a website to sell their products and wares and some of them may not have the capacity to invest in technologies to protect themselves. Thus once one of them creates a point of leakage, it affects the whole chain. To curb this, one of the initiatives the Bankers’ Committee is putting in place is the anti-fraud platform that payment transactions are connected to; such that if one has a transaction that is fraudulent, it flags it off immediately.

    It allows us to identify cards that have been reported as fraudulent; it also allows us to do analysis of a particular location or website where fraud is frequently reported for proper monitoring and this initiative is not only for cards. What we are implementing, which is very unique in almost all areas is to centralise handling of cards, electronic payments and PoS. Most of the solutions available elsewhere are mainly for cards but we have to modify it to allow transactions on other electronic payment platforms. It can create patterns and also highlight suspicious transfers and payments.

    Most of these frauds are more or less insider-related and with click of the computer, the money is gone.

    Is there no way to set a limit or threshold on the value of transactions allowed at a particular time? This is part of the area the Anti-Fraud initiative caters for. We agree there must be a limit, either in frequency or value; all transactions going through the Anti-Fraud Systems are tracked such that if it exceeds that frequency or limit, it is flagged.  We are currently building rules now in collaboration with the banks, such that when the system receives transactions that are outside the agreed parameters, this transactions are blocked or flagged and the banks are advised immediately. It is very difficult to say you want to eliminate fraud, but with all these being implemented, it is our expectation that fraud will be highly mitigated.

    What have been your challenges?

    Well, as a banker coming into a processor environment, I think the biggest challenge so far is trying to get the industry to understand what we at NIBSS are trying to do. Unfortunately, those who do not understand our business strategy perceive us as being in competition and that the competition is disruptive because it affects the way they were doing businesses before.  Even for some banks, we are seen as removing what they would have considered as propriety or niche because we try to create a uniform platform for the industry. We are however driven by the Bankers’ Committee. If they say roll out this service, our aim is to go-head with rollout as quickly and as efficiently possible.

    Misunderstanding has been the biggest challenge by far in the industry. Some of my colleagues who are bankers ask: ‘What exactly is NIBSS doing there?’ And for us, the answer is very simple. We are a shared service platform that is supposed to reduce the cost of providing financial services by banks to the public. So, once we reduce that cost for the banks, they are in a position to pass this, in either pricing or better quality service to their customers.

    A lot of noise was made by the shared services on reducing cost in the system, why is it that there is no more emphasis on it?

    This is actually ongoing. The Central Bank earlier reviewed bank charges downward and has recently also reduced the Merchants Service Charge (MSC) on PoS transactions from 1.25 per cent (of transaction value, pegged at N2,000) to 0.75 per cent. Every year, there have been reductions in charges that are being implemented in various ways. As NIBSS, we are constantly reviewing our service charge. Then, there is the other side of improved services. Unlike what obtained two years ago, if everybody wants to make a payment now, you either use NIBSS Instant Payments (NIP) or NIBSS Electronic Funds Transfer (NEFT). A lot of individuals are not aware that this is a significant benefit. There are very few countries that have similar platforms. In the past, it would take you up to a week before the beneficiary receives value, but with these platforms, value is received in seconds or hours depending on which of the platforms used. So, this is efficiency and it is part of the things that we provide for the industry. But people don’t qualify it because they don’t see it exactly that way.

    Why is it that merchants hide their PoS and they don’t ask you to use it until you demand for it?

    There are cultural issues with anything you are trying to do nationwide, across boundaries, across regions and across communities. There are always cultural issues. When we started this journey with PoS three years ago, the major problem was network and a lot of efforts were made – working with the network operators to stabilise the network. The essential problem we are contending with now is more of a cultural issue; let us use the petrol stations for instance. A customer will not be offered a PoS terminal for payment unless you ask and insist on it; this is because when one buys fuel, first; they encourage you to fill up, and the total amount will always be rounded up; secondly, they never have balance to give you back if you need to collect balance from the amount you are required to pay after your tank has been filled. So, who gets the balance? It is the attendant? But with electronic payment, you will be paying the exact amount utilised. When you sum up all these balances in the range of N5 or N10, it becomes significant daily for the attendant. As such, naturally, the attendant will be reluctant about offering a PoS for payment.

    How do you hope to change the apathy towards PoS usage?

    As part of the activities to enhance this culture change and increase adoption, we are currently working with the CBN and the Commercial Banks to provide the Electronic Payment Incentive Scheme (EPIS) for Sales Personnel, Merchants and Cardholders. The Component of the scheme targeted at the Sales personnel/attendant is called the ‘Tipping Point’. This component is such that whenever payments are made on PoS, the sales personnel/attendant collects points which they can redeem for a certain reward. It makes them understand that even though they do not collect the little balance (change) from their customers, if they encourage eectronic transactions, they would still be able to get some reward. Part of the loyalty scheme is also targeted at encouraging all cardholders that use their cards to make payments so that by insisting on using your card for payments, you get some of your cashback and you can also collect points that you can redeem for a reward. In addition to this benefit, for every electronic based transaction paid for from your account, it is COT free. So, these are some of the initiatives that are going on quietly behind the scene, which we would unveil very shortly.

    What is the volume of transactions that pass through your platforms?

    Transaction volumes are growing consistently month-on-month; this shows that adoption and confidence level are on the rise. We have actually commenced publishing transaction values and volumes on our website (www.nibss-plc.com.ng) and we would be publishing more for the public to see. The only platform that has not seen significant growth is ‘cheque’ and that is not strange as more people are rapidly migrating to the Electronic Funds Transfer platforms as well as other e-channels due to the convenience and speed experienced. So, I can tell you we have seen tremendous growth in the past years.

    What other innovations is NIBSS initiating in line with electronic payments system in Nigeria?

    The answer is whatever innovation the banks want us to implement we would definitely put in place. Our intention is to make the mobile money platform a lot more efficient and seamless in the country. In view of this, we are currently working closely with the Mobile Money Operators to make it possible and easier for customers to make payments with their phones when purchases are made just the way you use your cards. That will encourage the usage of your phones to do transactions because we believe that mobile is key, especially for financial inclusion. In addition, we have commenced regular sessions with software developers, encouraging indigenous innovative ideas and application development that can run on these platforms, thereby encouraging them to increase their scope and do more in terms of employment as we firmly believe that technology is one of the new frontiers for economic growth. As a purely Nigerian company for Local markets, we encourage the local companies to be partakers and be involved in the payment industry.

    There seems to be some kind of rivalry between banks and mobile money operators over  who should drive financial  inclusion. What is your take on this?

    I don’t agree with you. I don’t think there is rivalry. Some mobile money operators have some misconceptions about their licences. We have situations where some of them believe they got a Banking Licence. Yes, it is possible to get a Financial Services Licence but Mobile Money Licenceis not a Banking Licence. In essence, they are a transaction company. Customers have the balance with the bank but we are creating a platform for Mobile phone users to transact on it through Mobile Money. Due to the initial low cost of securing the licence, some people rushed into it without understanding that it is a retail business and retail businesses have longer gestational period. We have situations where many of them were not adequately capitalised. For that reason, you find entities searching for quick wins – rather than go to the rural areas where this was intended for they commenced doing business in the cities, where they believe there are millions of people, half of who already have basic understanding of the technology and most of who already have smart phones which will translate into quick business for them. Unfortunately for them, these people already have relationships with banks.

    So, why did you initiate the mobile money option?

    The objective was to encourage the unbanked to come into the financial space, and enjoy the benefits of financial services (such as micro credit, micro loans, online selling and buying/payments, etc) using wallets; not the same customers that the Banks are targeting who already have Bank accounts and who are using their phones and applications already provided by the Banks. That is why it appears there is rivalry between banks and mobile operators.

    So, we sincerely hope that with the collaboration in creating Shared Agency Network, it would be easier for instance for me to go to the rural areas, create one Agent Network then all other Mobile Money Operators can connect to that Agent and I would get paid because if other Mobile Money Operators are not allowed to connect to that Agent platform, there will never be enough business for the Agent to begin to see the profit.

    Some of these new initiatives are being built to improve the industry; we all basically encourage the Mobile Money Operators to create a niche for themselves, otherwise it most likely will remain a big issue in the industry.

     

     

  • ‘Agric vital to sustained economic growth’

    ‘Agric vital to sustained economic growth’

    How can agriculture aid economic growth? It is by structural transformation of the sector, says Prof Damian Chikwendu, National Coordinator of West Africa Agricultural Productivity Programme (WAAPP) Nigeria, in this interview with DANIEL ESSIET.

    Nigerians are calling for economic and structural change through agriculture. How can this be achieved?

    Sustained economic growth using agriculture cannot happen without structural transformation of the sector. This requires broadening production from small to medium scale. It means upgrading the processes, enhancing farm produce and raising agric productivity. In the past, we have had little successes in improving agriculture because farming is practiced in subsistence level. For us to achieve high economic growth, it will be powered by a structural transformation of the farming sector, with incentives and measures that encourage farmers to take agriculture as a business. In this instance, several aspects have to come together, including promoting agro businesses, to move from producing low value commodities to high value industrial products.

    With this, agriculture can now be harnessed with other sectors of the economy to promote sustained growth and structural transformation for increased employment. So, changing the perspective of farmers to approach farming as a business will create profound change in their mentality. The goal of training farmers as business people will not only be to contribute to food and income security, but also to put more money into their pockets. The new direction, which WAAPP is championing, is to train farmers to see agriculture as a sustainable business and to make the shift from subsistence farming to farming for profit.

    Financing and poor infrastructure are some the challenges facing agriculture. How can this be addressed to support the increasing number of investors?

    We are facing a situation where budgets are becoming tighter for the government to fund infrastructure. At the same time, I believe the government can still address the issue both through prudent capital projects spending and public–private partnerships (PPPs). PPPs are useful for financing agricultural infrastructure, such as irrigation schemes or storage facilities, or providing services that will benefit smallholder farmers. If we are to bring life into the economy, a lot of funding have to be deployed to fast-track new agricultural infrastructure.

    We need infrastructure to stimulate and transform a lot of promising agricultural ideas and businesses into profitable commercial investments. Where the necessary agricultural systems and facilities are lacking, you see a situation where it will take a long time for new agric businesses to take off not to talk about becoming profitable. Agriculture is crucial if we are to achieve inclusive economic growth. To achieve this, infrastructure investment is important. What we need is a committed leadership to drive a development plan with the target to transform the local economy to be agric sector dependent in the face of dwindling oil revenue.

    After decades of neglect, how can the sector be fixed to work with the small-scale operators?

    Clearly, the factors that drive transformation in agriculture are the adoption of technology and access to finance and skills training which we are currently delivering to small farmers. We are working to scale up small farming to increase efficiency at the farm level. The feedback we are getting from supply-chain based interventions in terms of improved food production clearly shows that small-scale farming can be a viable business.

    How will you describe the state of agriculture?

    I will say that agriculture has been recognised as capable of driving economic change and innovation while at the same time expanding opportunities for job creation. Right now, the government through the Agricultural Transformation Agenda (ATA) sees farmers as crucial to building the economy to deliver opportunity to all, central to innovation, wealth creation, and job growth, as well as to political stability. Unfortunately, obstacles in the business environment hinder such opportunities. Farmers face challenges with regard to capacity, financing, and market access. It is cheery that experts, policymakers, and entrepreneurs have now turned their attention toward building the agric sector. This attention reflects recognition of the need for multifaceted support to drive food production. I believe agro-food products raise the chance for greater success. Also, agriculture means opportunities for processed and packaged foods. This is the time to encourage local farmers and businesses to boost their competitiveness, which is healthy for a nation. That’s why there is all the more room for opportunities in the agro-food sector. The competitiveness of the agro-food sector, and the variety it offers, also makes our produce coveted by international consumers.

    You have sponsored research in diverse crop varieties in an effort to create a resilient food system. Can you recommend any agribusiness that will be profitable and most beneficial in Nigeria?

    There are tremendous opportunities in crop and livestock sectors where Nigerians can invest and reap economic benefits. With the studies we have done, I believe Nigerians can invest in the crop and the returns will be enough for them to make money and livelihood. Crops such as cassava, rice, mango, sorghum have vast potential for higher return on investment. There is potential in poultry production. The poultry sector is witnessing a surge of investment, driven by both stronger demand for the end product and the good paybacks. There are still significant opportunities for more Nigerians to invest in poultry production. As you are aware, WAAPP, in collaboration with the Zaria-based National Animal Production Research Institute (NAPRI), and some six private hatcheries decided to popularise and introduce to the Nigerian poultry farmer the “Shika-Brown parent Stock”, a new species of poultry that can lay eggs for two years consecutively. The specie, is an indigenous innovation resulting from years of intensive research efforts  was first released by NAPRI but remained largely on the shelf ever since due to lack of funds to propagate the innovation. We want to see farmers and Nigerians invest in the production of Shika-Brown day old chicks because it is profitable. There is market demand for poultry products nationwide. We want to work with private hatcheries to ensure the success of the Shika-Brown project. The release of the Shika-Brown specie is one of our major achievements.

    Why WAAPP when there are other programmes?

    I think members of the Economic Community of West African States (ECOWAS) believe the region is the right arena for a new agricultural development strategy and support. There are strong complementarities between areas of production and consumption and the ecological diversity. As economies and trade become increasingly globalized, regional integration is seen as a key vector for positioning the region on the world stage. WAAPP is intended to address the many challenges to regional agriculture. it has also become increasingly important to  put agriculture back at the heart of the development agenda and promoting agriculture requires funding and WAAPP is key to actualising the regional vision and making it effective in a context where institutional, human and financial resources are in short supply. WAAPP Nigeria’s targeted support for researchers and producers is absolutely crucial. There is need for access to fertiliser and seed, plus better training so that the farmers can consolidate their holdings. In other words, peasants must be transformed into entrepreneurs.

    Why are you supporting research institutes, universities and Federal Colleges of Agriculture to reach farmers?

    In WAAPP, we believe it is important we support farmers to produce more food, plough new and marginal lands more rapidly. This can only be achieved if agricultural research is funded to help raise crop yields sustainably – getting more crops per hectare of land.

    What specific research gaps can WAAPP fill by allocating funds to research institutions?

    We support universities, research institutes and colleges of agriculture to focus on the needs of farmers, different crops, different diseases and different problems accessing markets. Our partners address challenges relating to food insecurity and rural poverty. We are putting science to work in boosting food production through our partnering research institutions. There are some good universities that have special programmes to address our focus areas. They have trained lots of good scientists, researchers and scale is considerable. We need to support these institutions to train more Nigerians in good farming practice and technology.

    Why is WAAPP seeking to restructure the Agricultural Research Council?

    We are doing this because we want to see a situation where the Agricultural Research Council of Nigeria (ARCN) can be transformed into a more efficient and functional body capable of driving agricultural development in Nigeria. The Federal Ministry of Agriculture and Rural Development are leading a study that will develop relevant documents aimed at restructuring ARCN. Even though  the ARCN was established in 2006 with the mandate of coordinating, supervising and regulating agricultural research, training and extension in the fifteen National Agricultural Research Institutes (NARIs) and 11 Federal Colleges of Agriculture, there is so much inefficiency within the structure that not is helping it to manage  the research institutes to be able to respond to government’s demands for cost-effective management and generation of appropriate technologies, agricultural growth and the individual needs of the rural poor.

    In India, we observed a strong link between the Indian Council of Agricultural Research (ICAR) and the National Agricultural Research System (NARS). The NARS, which comprises of 30 research institutes, 60 project Directorates, 78 Indian Coordinated Research Projects, 61 States Agricultural Universities, 6 Deemed Universities and Agricultural Faculties in many traditional universities, are under the coordination and supervision of ICAR in terms of funding of research activities. In China, funding of research is heavily dependent on government, although institutes are made to access funds for research projects through competitive research grant scheme. From Brazil, the EMPRAPA model could be domesticated to an extent in Nigeria.

    How can research institutes be improved on for better efficiency?

    When ARCN was established in 2006, it was given the statutory mandate of coordinating, supervising and regulating agricultural research, training and extension in all 15 National Agricultural Research Institutes (NARIs) and 11 Federal Colleges of Agriculture (FCA) across the country. From all practical indications, the National Agricultural Research System (NARS), which is primed on coordination, is not working well for Nigeria. It is not responding to the government’s demand for cost-effective management, generation of appropriate technologies, agricultural growth and the individual needs of the rural poor. WAAPP has taken the lead by providing insight to the government of Nigeria and experts on the best approach that could make agricultural researches relevant to the farmer, and most importantly to the consumer.

    To make ARCN really work, it must be transformed from a coordinating to a managing council. A situation whereby the council has a board that is completely separated in operations from that of the research institutes creates vacuum that is the reason most researches are not useful in Nigeria. Brazil, India and China are countries that Nigeria must learn from in this regards. I must tell you   the Federal Ministry of Agriculture and Rural Development, sponsored by WAAPP, undertook study trips to Brazil, India and China where the team of experts and researchers took time to study how the Indian example could be replicated in Nigeria. The objective of the study tours was to understand the organisation of agricultural research systems in the countries with a view to transforming ARCN into a more efficient and functional body capable of driving agricultural development in Nigeria. In India, we visited the Indian Council for Agricultural Research (ICAR) in New Delhi, the Indian Agricultural Research Institute, Pusa, the Krishi Vigyan Kendra (KVK) in Gurgaon and other similar institutions. In China, we visited the CAAS facilities including the Gene Bank in Beijing, while in Brazil we visited the Empresa Brasileira de Pesquisa Agropecuária (EMBRAPA), Headquarters, Ministry of Agrarian Development among other research locations. We are trying new models to link small farmers to inputs and markets to transform the economy. Models to scale up small scale farming and increase efficiency at the farm level have begun to emerge.

    Are you making any effort to promote commercialisation of research products?

    We have realised that most researchers do researches for promotion. This is the reason some research institutes are not even known by the people in the community they are domiciled. Because of this WAAPP has set a benchmark that ensures that the institutes must find a way of being relevant, first to their immediate environment. So they are made to adopt at least two communities. A situation where technologies are developed and remain on the shelf for several years without being adopted by farmers may not arise because of the processes involved in technology development and testing. WAAPP already is working with the Federal Institute for Industrial Research, Oshodi (FIIRO), Lagos towards the development and commercialisation of research outcomes.

    It appears you are taking small scale farmers seriously?

    The entire agricultural system is dominated by small farmers. They account for 90 per cent of the sector. Given this fact, our focus is mostly on this group of farmers. By supporting small farmers, we believe we’ll be supporting most of the agricultural system, by extension the largest component of the economy. So, WAAPP work is focused mostly on identifying the bottleneck constraining the development of smallholder farmers and as a result, contributing to the overall economic growth of the country.

    Are there any concrete results or impact of   WAAPP work so far?

    We work with a number of research institutes, universities and colleges of agriculture to maximise the contribution of quality farming to reduce the yield gap and drive an agricultural development agenda. Through our support, small scale farmers with little financial means are able to access good seeds, buy inputs, which makes it possible for them to make money and improve  their investment in fertiliser, seeds, and labour. Through adopted villages, experts from research institutes, universities and Federal Colleges of Agriculture (FCA) offer expertise to address farmers’ problems within such localities. We work with scientists to identify the systemic bottlenecks within key parts of the agricultural sector. In order to determine these bottlenecks, it’s critically important for us to have access to strong research and strong data, which we are achieving now. At the systemic level, as I said before, WAAPP has had a number of interventions that we believe will increase the productivity of farmers in the near and long term. A few examples of those include the production and distribution of certified seeds. That change, now, more accurately reflects the reality on the ground as well as the future we’d like to see. We have collaborated with a number of institutions on using satellite technology and remote sensing and addressing the issues of soil fertility and soil information.

    Can you say something more on innovation platforms?

    An innovation platform consist of various groups, including farmers, agro dealers, transporters and others with interest in agriculture to pursue a common goal. The broad aim is to find best approaches to adding values to the supply chains of crops like yam, cassava, rice, maize, mango and aquaculture, being their focal crops. The innovation platform holds a lot of promises for agricultural development in Nigeria, as it would add value to agro products and their strings of value chains. We are working with Agricultural Development Projects (ADPs) across the country. They will nurture the programme and also use it to gain experience, in which case they are kept busy. As you may have observed this there is a greater demand not only for demonstrating the actual impacts of research but also for maximising impacts through targeting research benefits to poor people. Nigeria has the potential to establish a vibrant and profitable agricultural sector. A range of private and public efforts have demonstrated strong potential and that growing markets can be unlocked. A lot of information is shared to support the collection, storage, processing, retrieval and dissemination of information on commodity markets. Large processors have been able to negotiate with empowered producers on issues of prices, bulking points and access to other services. This has increased the trust and relationship between the different actors.

    I believe innovation platforms can lead to renewed economic growth and sustained competitiveness. Such networks can be presented as prescriptions for rural economic recovery. Such initiatives should be replicated across the country if the nation is to reduce poverty and improve food security and advance good governance, peace and security. With innovation platforms, farmers will be linked with buyers, input suppliers, credit, and access to training and technical assistance. The farmers will receive training and technical assistance from extension officers on demonstration plots. Key practices include soil and water conservation, weed control, crop nutrition, and better postharvest handling techniques. In turn, benefitting farmers will provide training to other farmers around their demonstration plots. We are determined to provide farmers with the skills they need to both improve their own productivity and teach others to do the same.

    Through our innovation platforms, we are looking at the key crops that farmers are growing for food security. These include cassava, sorghum, rice, maize and yam; in each of these we’ve identified with specific research institutes and clusters where these crops are prominent. And we are working with research institutes, universities and FCAs to strengthen extensions workers – to ensure that they provide farmers with the most appropriate agronomic practices, and at the same time provide farmers with seed and fertiliser on time as well as mechanisation and markets. So the combinations of these are interventions that we’re bringing to farmers in the near term. So far, we have recorded successes where farmers have begun to plant drought resistant crops, diversify away from planting just one or two crops which are very vulnerable to climate change. We have seen some successes, but definitely more needs to be done. The varieties the research institutes have developed have great potential to improve resilience against, drought. The new varieties can enhance nutrition through breeding to increase nutrition.

    One issue that you have always raised is that of the absence of a functional extension system. Can you comment on it?

    Like I have always observed, lack of effective extension services is a major challenge to small scale agriculture commercialisation. The existing extension services are poorly resourced and key messages do not filter down to the rural small scale farmers who need them most. Without a basic understanding of good agricultural practices, most small scale farmers cannot grow sufficient crops to move past subsistence farming. A lot of blames are placed on the door steps of ADPs which is not entirely correct. The ADPs do a lot of things besides providing extension services. Besides, there is the issue of proper funding. Having identified this, we have decided to support a reform of the extension system in such a way that ADPs can be repositioned to promote farmer driven approach. Under this approach, the extension officers will be trained in modern practices and methods that would help farmers to adopt good agricultural and business practices. The benefitting farmers will then share the knowledge within their communities. We are working with research institutes, colleges of agriculture and universities to organise programmes to teach farmers using demonstration plots.

     

  • ‘How Buhari can salvage economy’

    ‘How Buhari can salvage economy’

    An economist and industrialist Mr Henry Boyo says fixing the economy is not rocket science; a robust monetary policy to address excess liquidity challenges will do the magic. Excess money supply, according to him, is responsible for the high inflation and interest rates and high cost of funds. Boyo, Managing Director of Cocosheen Nigeria Limited, in this interview with Assistant Editor CHIKODI OKEREOCHA, takes a swipe at the Central Bank of Nigeria (CBN) for its “crazy, merciless, insensitive, and unilateral policy” of substituting naira allocations for dollar-derived revenue. CBN’s “conscious, deliberate and misguided” payment arrangements are causing market imbalances, which are weakening the exchange rate, he says. Boyo recommends redenomination of the naira, among other measures, to revive the economy.

    How would you assess measures so far taken by CBN to strengthen the naira in the face of oil price?

    The prelude of your presentation is that the naira has depreciated in value as a result of the fall in crude oil price. I would want to submit, very humbly, that it is part of the propaganda of government. It is the position, which is regularly adopted to deceive Nigerians that the actual value of the naira viz-a-viz the exchange rate to the dollar is a function of crude oil price fall. If it is true that crude oil price fall led to naira depreciation, it should conversely be true that when crude oil prices rise and huge revenue come in, then we will equally see the value of the naira appreciate. But has that been the case? It is not true that it is the price of crude oil that actually drives exchange rate of the naira. What drives exchange rate of the naira is a simple market mechanism of demand and supply. It means if you have too much naira in the market the value of the naira will fall. If you have too much dollar in the market the price of the dollar will fall. When you have a situation where there is constantly a surplus and a huge surplus for that matter, a surplus that makes it necessary for the Monetary Policy Committee and the members of the monetary team to do things which are normally recognised as stupid and foolish, then would you ever give your money for free to one person or a body or cooperation and then go back to that corporation and say I want to borrow it back at 10, 11, 12 per cent? That is why I said the monetary authorities do things that are stupid as a result of the deliberate attempt to consciously mismanage the demand and supply mechanism between the naira and the dollar. When you have a situation where we have been receiving $110 per barrel of crude oil for so many years; consequently our reserves jumped to about $60 billion or more. We even paid our debts and all that. With all those good attributes you would expect the naira to be exchanging for below N100 to a dollar. But somehow it remains resistant and never improved. The moment the price of crude oil falls we jump on the bandwagon and say the price of crude oil is falling whereas it is clearly the result of a mismatch between naira and dollar supply.

     How did the mismatch happen?

    At the time that we earned $110 or $120 per barrel, we shored up or accumulated a huge reserve of dollars. When I said we shored up a huge reserve of dollars I am in fact misinforming you, but you will not know and most Nigerians will not even know that I will be misinforming them by telling them that when we earned a $110 or $120 per barrel we shored up a lot of reserves; the word reserves is a misnomer because the concept of shoring up those reserves has the collateral of inundating the system with huge surplus naira. So, in other words, for you to build up your so-called reserves you have to practically fill the system and make sure it doesn’t work by taking in so much naira in the system and with so much naira in the system there is excess liquidity.

     What should be done to stem naira value?

    Look at the dynamics of demand and supply. If you have more naira in the market chasing limited dollar supplies, you will find that the price of the naira will fall, that is, naira will depreciate. If you now have more dollars in the market and less naira the price of the dollar will fall. What we should be asking is how we establish that balance. When you earn dollars from crude oil the moment somebody captures those dollars and consciously and deliberately creates what he considers to be naira values, at what they consider to be the appropriate rate of exchange and then that governor or agency inundates the system with the new naira creation in the market. Once the new naira creations are made and made as an allocation to the three tiers of government you don’t expect that they will go and put their allocations under their pillow or their bed; they will go and put it in the banks as deposits. Let’s assume that we are talking of $1 billion allocation, which has been converted, for example, into N200 billion, and it is now put in the hands of the banks as allocations to the three tiers of government. CBN on the other hand, holds on physically to the $1 billion. In other words, CBN has bought the $1 billion from you and has not given you naira that was the result of creativity or output, but freshly created naira, gives you and you put it in the bank. At the end of the day the bank now has what they call a fresh cash inflow and if the mandatory cash reserve ratio for banks is 10 per cent, for example, it means that they only have to keep 10 per cent of that N200 billion and then the balance they can lend out. When they lend out that amount of money in a market where the N200 billion was not actually created from productive activities, then you are suffocating the system with excess naira.

    How do you think the incoming government can address the naira crisis?

    It’s the same thing. Deal with the demand and supply between the dollar and the naira, simple. In other words, the CBN should stop the deliberate capturing of dollar earnings and then calling it reserves after inundating the system with excess naira. The CBN should realise that it is the excess liquidity and the need to control it that makes it impossible to achieve those parameters that will drive the economy, particularly the parameters relating to cost of funds, interest rate and exchange rate. Let’s take for example inflation. Inflation is caused by too much money chasing too few goods. If inflation is running at seven, eight per cent it means that every five years or so the income that you are earning will be able to buy between 40 and 50 per cent less. What has caused the too much money all the time is the CBN that is continuously pumping fresh naira into the system to inundate and suffocate the system with excess naira while capturing the dollars and replacing it with the naira so as to say these dollars now belong to CBN. When we have reserves of $40 billion or $50 billion how come we now go out to say we are going to borrow $1 billion from elsewhere at seven per cent and the CBN is seating down on over $40 billion reserves? Excess money in the system is also the reason why interest rates are high. So, you can see high quantum of money or excess supply of money into the system is responsible for inflation. It is also responsible for high cost of funds because in the process of trying to reduce the excess money the Central Bank out bids the common man or the real sector. So, the banks can actually pump up their cost of funds. The more naira we have in the system the weaker is the naira. So, excess liquidity is responsible for inflation, interest rate, exchange rate-all the negatives. The CBN is the one creating the problem of excess liquidity and it does it every time that it captures the dollar earnings for the country and substitutes naira. The naira substituted as allocations provides the leveraged platform to the banks to extend their credits and in order to prevent the banks from doing that and suffocating the system with more naira CBN approaches the banks to borrow the money back and keep the money at 10, 11, 12 per cent and this has been going on for years. Inflation takes away money from the hands of the income earners. If you take money away from the masses; the N18,000 minimum wage for example, at the time it was established, was close to $180 or something. Today N18,000 minimum wage is less than $100. Because of that if you are still paying somebody N18,000 minimum wage four, five years ago the things he could buy with that then, he cannot buy today. So, consequently he is a poorer man.

     How does this affect the real sector?  

    No industrialist or entrepreneur wants to go and put up factory and produce something where there is nobody who has money to buy. In addition to that, the real sector needs money if they have to be competitive at very cheap rate to be able to produce and compete with goods coming from China and elsewhere. Those goods that are coming from China and elsewhere are being offered to the Nigerian market because over there in China and places like that, their interest rates are at between two and seven per cent. Meanwhile, local producer here with all the challenges of electricity and everything is being asked to borrow at 25 per cent. How can he compete? So, you can see he is falling on the basis of consumer demand as a result of inflation. Apart from infrastructural problems and things like that, he is also confronted by problem of cost, which is so high because CBN is busy competing for the funds in the system with the real sector even though CBN requirement is take the money and keep it idle.

     It’s been more than two years since the privatisation of the power sector. Has there been significant improvement in electricity supply? 

    We haven’t seen much of improvement in power supply. But what is equally worrisome is that after selling the distribution companies we ended up with a loss of N400 billion and the same group of people to whom we sold the distribution and generation companies and made a loss of N400 billion incurred from the allowances and outstanding payments to contractors and all that suddenly find that they don’t have the money to run the companies efficiently. So, what do we do? We call them together again and say okay we give you soft loan in spite of the fact that we ended up with N400 billion in debts as a result of selling the distribution companies. I always like to emphasise that I am never too keen on bailouts because they are always fraught with malpractices just like waivers and things like that. It’s always better to have a level playing field. How can you say that the pure water manufacturer is less important than anybody who produces anything else, even rice or whatever? Why must you disadvantage one person with a high cost of funds and then another person with a low cost of funds all because of your failure to bring a level playing field in the area of cost because you are busy trying to borrow money that you consider to be in excess in the market and consequently stimulating interest rate so high and then blaming other people for high interest rate? High interest rates are a function of bad governance. We also have bad governance not only in terms of leakages and corruption and things like that but in terms of monetary management because the core mandate of the Central Bank is price stability and price stability resolves around inflation, cost of funds, and exchange rate. In our case we had a very crazy situation where when we earned more dollars our naira falls. Another area, which unfortunately the media also is not fully conversant with, is the area of subsidy. The same mistake you made when you said the exchange rate is falling because of crude oil price fall; a lot of people say subsidy is always there because of high price of crude oil. But again that is a lie because when the price of crude oil failed we were still accommodating subsidy, so it can’t be that subsidy is the result of high crude oil prices. But it’s probably safer to say that subsidy is a function of the naira exchange rate because you find that in spite of the price of crude oil falling to $50 you would expect the price of petrol to have crashed, but it hasn’t. It has crashed internationally, but in Nigeria it hasn’t crashed because even though the crude oil price has crashed internationally the price of the naira has fallen. So, it’s impossible for you to remove subsidy and for it to be a popular decision so long as you don’t recognise that relationship between the exchange rate and the price of fuel.

     What about importation of petroleum products? Some people say if local refining capacity can meet demand, there won’t be need for importation and of course, payment of subsidy. Are you saying this does not hold true?

    Crude oil produced in Nigeria, Saudi Arabia, or America has a uniform international commodity price. They don’t say because it’s produced in Saudi Arabia, therefore, the price is cheaper. In the same way, the process of producing crude oil or refined petroleum products is the same everywhere in the world, the same equipment. So, if you put in the same feed stock casting the same amount all over the world what you will get at the end will be the same price. The difference will be if you have to transport from Germany or wherever you refined it, you might say may be 10 per cent or something like that, but 10 per cent differential is not what Nigerians are looking for. So, the issue of freight is not a critical component that influences the price of petrol in a manner that will make us say we must have subsidy. Let me use an example. You know 23 companies have been given licenses to open refineries here. Do you think that these 23 companies who have been given licenses to set up refineries have not done so because there is no more profit in it? What is stopping them is very simple. They all, almost invariably, at that level of business, have to go and borrow money. If they go and borrow money to set up refineries here in Nigeria and they produce and the output from their refineries is priced all over the world at X dollars per litre, $1 per litre or $0.8 per litre or 70 cents per litre as the case may be and that price is uniform because the crude oil is the same price all over the world; the only thing that might change is the labour. But these people that have got licenses for refineries are concerned that by the time they have borrowed money and set up refineries and they produce and they are asked to sell at a reduced price below their cost price because government wants to accommodate a subsidy for the people and then it takes six months for them to get this subsidy back, they will think If I had done it in Venezuela or wherever the moment I produce and sell I get my money. So, why must I wait for three, six months for the people who have bought my petrol to come and pay me? That is why you find that all the 23 people who had gotten license did not take a step to want to produce.

     What is your take on the proposed

    sale of refineries?

    It is not whether you have a refinery that is important, it is the price that your output will sell for that is critical and how quickly you can get your money back. As it is, if Nigerian National Petroleum Corporation (NNPC) should continue to run its refineries, (even though it is no more efficient to do because they have spent so much money trying to turn around the refineries), at what price would they be selling? Would they now say “oh you are a federal government-owned refinery so, when we produce we sell to marketers at below the price.” In no time they will pack their loads and go. So, the question of do we sell the refineries is not the issue, it is pricing.

     Why are we not sorting out pricing?

    This is because the process of influencing the pricing has to do with the process of the naira-dollar mechanism. The pillar of any economy is monetary policy and the pillar of monetary policy is interest, inflation and exchange rates. When you get those ones right, you will fix the economy. In countries where economies are working isn’t interest rate below two per cent? Isn’t exchange rate stable for many years? Isn’t cost of funds below two per cent?

     From your analyses, successive economic managers have failed. What kind of economic managers do you recommend for the incoming government?

    People who are sincere and people who want to see economic progress in this country. Those are the kind of people we should be looking for. People who see common sense and accept common sense; not people who would try to paint rubbish as common sense, especially when you keep telling people that the reason why we are poor is because we have not diversified. Diversification does not rain from heaven; it’s created by a structure and the structure that drives diversification, whether it is agriculture, transportation, are those pillars that I have told you about, a stable monetary policy-interest rate at a level that will make it possible for me to borrow money and set up a hospital; inflation at one or two per cent to make sure that the people who bought my bread yesterday will still be capable of buying my bread tomorrow so that I am not out of business; exchange rate to make sure that industrialists who are ordering raw materials from abroad does not find that their costs are increasing on a daily basis and suddenly you make them uncompetitive. Because high cost of raw materials, high cost of funds, and inflation eats up income of the people who are going to buy your goods. The economy cannot stand without the right monetary policy framework because high interest rate makes it impossible for the real sector to grow. High rate of inflation of eight per cent that is celebrated is killing because it creates more poor people.

     Does this mean current efforts at diversifying the economy cannot work without first looking at the monetary policy?

    Of course, it can’t; it is not magic. All the previous governments from Obasanjo have they not tried to diversify the economy? Is it a new thing or a new concept? No. They tried in their own ways, but they all failed because the structures were not there. Diversification is not a new concept. Even during the military we tried to diversify but it won’t work because at the end of the day you cannot expect the real sector, which is normally the driver of the economy, to be vibrant if there is no demand. Industrialists will not do anything when also the cost of funds to them is so high at over 20 per cent. And why would the banks also want to face industrialists when they have good customers who would bring money one day and come and borrow it back the next day? You see once you get it right, control becomes minimal because the system controls itself. So, when people celebrate and say CBN reserves is rising, we are only fooling ourselves because the process of accumulating the so-called reserves has damaged our economy already. Even as I am talking now, government is still talking of borrowing $1 billion from World Bank. Meanwhile, the CBN is still sitting on $37 billion reserves and they say that one is for defending the naira. Haba! That’s not how to defend the naira.

     But the reserve itself is depleting?

    It must drop because in the first place they were not reserves because they cannot be reserves if the CBN says he owns that and it can do anything with it. Have you ever seen where somebody can have his cake and eat it? The Central Bank will ask you how can you have the naira and you also want me to give you the dollars that I took in replacement of the naira. So, those reserves belong to me. What I am saying is the stark reality; it’s commonsense grounded in economics and economics is commonsense in the light of scarcity of resources.

     What are your expectations from

    the incoming government?

    If the incoming government continues to disrespect the sanctity of monetary stability, it means they will fail woefully, if not more woefully than this government. There is nothing that they can do that will redeem their performance if they don’t pay attention to interest, inflation, and exchange rates. Not just pay attention, but make sure they reverse the trend and they cannot reverse the trend without addressing the problem of excess liquidity. And when they want to start addressing the problem of excess liquidity they will discover that excess liquidity is the reason why they are not able to achieve very low interest rate or monetary policy rate of one or two per cent, very low inflation rate of less than one per cent and why it will also be impossible for them to abolish fuel subsidy.

     Will that also make the manufacturing sector gather steam?        

    Look at the reverse. If these things are done first, the poor man, for instance, can buy one loaf of bread everyday whereas he only had one every Sunday before. The plantain seller can sell more. So, that is good for the real sector. In addition, the cost of funds will come down because the Central Bank does not have to borrow money it doesn’t need at 10, 11, 12, and 13 per cent. So, the banks will now come calling on the doors of industrialists do you want to borrow money? Because the N600 billion they used to get as free funds as profit from lending government money back to government will not be there so they go in search of investors who are prepared to borrow money and translate it into economic activities. So, exchange rate will become stronger, certainly there will be no more subsidy; cost of production will also go down for industrialists because raw material prices will come down, etc. The beauty of it is that at the end of the day you find what you might call a reversed brain drain. For example, my recommendation is that let us redenominated the naira so that N2 will become $1. It will help portability; it will help competitive pricing of goods. So, let us immediately redenominate the currency such that it will knock off two zeroes. Once we do that, portability will be facilitated. In addition, you also have the facility of kobo coin. One kobo in that redenominated structure will be buying what N100 normally buys. At the end of the day what you need to do is to ensure that the excess liquidity that continues to make the naira weaker and inflation rise does not also ultimately, become N4 to a dollar.

     

  • Research, funding vital to improving agric sector’s productivity

    Research, funding vital to improving agric sector’s productivity

    Achieving food security and creating employment have become two major global challenges. The agric sector has answers to these challenges but it is bedevilled with a myriad of problems ranging from land tenure system to the use of crude implements. The Executive Director, Nigerian Institute for Oil Palm Research (NIFOR), Benin, Edo State, Dr. Omorefe Asemota, says research and funding are two other challenges that should be tackled. He speaks about how the government can restore agric sector’s lost glories, the need for research institutes to have semi-autonomous power over its internally-generated revenue, brain drain and other issues. MUYIWA LUCAS and SINA FADARE met him.

    How would you describe the achievements attained, if any, of the institute?

    We have achieved a lot. In terms of research, Nigerian Institute For Oil Palm Research (NIFOR) is a foremost research institution in this country. NIFOR has a number of major contributions to the commodities that it is mandated to investigate. And I must point out that NIFOR is not only researching on oil palm, which is our oldest commodity, but we carry out research also on coconut palm, date palm, raffia palm and shea. Shea is not a palm, it is an oil seed crop. The date palm is a palm but does not produce oil, but the other four produce oils. We have the mandate to these five major commodities. And it is important to point out that each of these commodities can potentially contribute very significantly to the agricultural economy. It is just that each one needs attention so that it can begin to bring to the table, the fullness of this potential that we talked about.

    How can palm oil farming and agriculture  be further encouraged in this country?

    We must have policies and environment that promote this sector. We have the land, 22 states in this country have the arable land that can accommodate oil palm. We need to encourage people to invest which can be promoted by government support, but it must be done by the three tiers of government. On the Agricultural Transformation Agenda, there is a place for oil palm. What you find is that while the Federal Government has been prosecuting it aggressively in the last four years, the states have not been doing that, whereas the state and the local government have direct access to land. There must be synergy across the tiers of government and on top of it, you must have active private sector. That is how it works. But the most important thing is to have aggressive investment in planting. There are some estates’palm oil that are doing very well and are quoted on the stock exchange, we need more of that. In Southeast Asia, a single estate can be as large as 100 hectares. We have something similar, but need more of such. It is the aggregate of this that will promote higher national output.

    Increasing farm yield is a major concern. How can this be achieved?

    You must have improved agronomy leading to good variety yield. The combination of using improved materials and best agronomy expertise is what brings out maximum productivity.  Of course, you must add improved agronomic practices so that you can get the maximum potential of your crop. But the combination of the use of improved planting materials and the use of best agronomic practices is what brings out maximum productivity. The drawback in our own system is that we have these huge, wild palms. They are  many and occupy a huge land mass but their productivity is low. On the contrary, the improved plantings represent only a small fraction of about 500,000. It is good to know and we are very proud of this, that there are oil palm estates that are doing very well, but we need many more of that. In Southeast Asia, an estate can be as much as 100,000 hectares. We have nothing similar in this country and we do not need just one. We need many of such. It is the aggregate of that that promotes higher national output. That is what is really lacking here. There are small challenges at the level of production now, of land tenure, of access to credit. But they can be resolved if there is concerted efforts by all the stakeholders. What we must do of course, is to involve the communities in some of the activities. But unless we solve the problem of investment in the industry, then national productivity would continue to be low.

    What is the role and impact of private participation in oil palm farming?

    Most of the farms you would call big plantations are largely owned by foreigners. Normally, what should happen, or I should say what has happened in other environments, is that, yes, foreign investors are welcome, we want them to participate, but we also, as a nation must take steps to encourage more and bigger plantations, within which there would be a fraction for foreigners, but there must also be active  participation by Nigerians. This does not have to be government funded, it should be private sector led.

    Do you think there is an enabling environment for private investment in oil palm?

    I agree that we must have policies and enabling environment that promote this investment. We have the land, because 22 states  have environments that can favourably accommodate oil palm plantation development. All the southern states and all of the Middle Belts also. All the way to southern Kaduna, Adamawa, Taraba, and some parts of Niger State are suitable for oil palm. However, we needed to encourage people to invest and that can be promoted or caused by government support, no question about that but it must be done by the three tiers of government. There is an ongoing Agricultural Transformation Agenda (ATA), which is a Federal Government driven programme and within that, there is an oil palm component.

    But what you will find is that whereas, the Federal Government has been prosecuting this aggressively, especially in the last four years, the states have not been doing that. Yet, the states and local governments have direct access to the land and own the land. They have the farmers. Therefore, there must be synergy of policy across the different levels of government. Then on top of that, you must have active private sector initiative and participation. That is how this would work. But, the sum-total of all this is that we need much more aggressive investment in planting.

    Research is vital to development and agric breakthroughs. Funding remains a challenge. What is the way forward?

    The truth of the matter is that research demands financial support and that is a global truth. If the support in the financial base shrinks below critical threshold, it can be damaging. Two things I suspect would happen and some are already happening. Some institutions have the capacity to generate some funds. It may not be sufficient, but the institute must have some leverage to be able to at least, use some of these funds without too much constraint, but with oversight.

    But the situation that requires that all internally generated revenue be paid back into the consolidated revenue fund of the country directly without guarantees for the institute to be able to at least use some of it to maintain itself so that it can survive and then perhaps hopefully improve, is challenging to the institute.

    It would be nice that this be looked at. The other area of innovation would also be to look at alternative sources of funding that are not directly from the government. But even when institutes are able to do that, that pool will still fall within internally generated revenue. So, again, we require that there be some degree of freedom. But, as I said, one must also insist on oversight. I am not saying the institutes should just do what we like, but let there be proper framework that guarantees oversight but leaves the institute with enough revenue to at least function. The institutes must live and survive so that they can discharge statutory functions, because after all, the institutes were established by law.

    Brain drain is a major concern for institutes such as NIFOR. What are you doing to discourage it?

    Our ability to retain competent staff is key to the long term health and survival of the institute. It is important that our research institutions be vibrant, that they be able to deliver solutions and promptly too. Therefore, it is important that the institutes and this is nationwide, should be able to attract some of the best brains and retain them. This really comes down to a few things like the condition of service, the general framework under which people work or carry out their assignments. People must have some minimum guarantees of tenure, minimum guarantees of career fulfilment, subject, of course, to good productivity. There is also the aspect of reward. Part of reward is promotion, remuneration, which is the salary.

    Sometime ago, there was parity between the institute and the universities. But that parity as of now, is not complete. It would be nice if the remaining aspects are looked into to encourage productive scientists, brilliant scientists, to stay. Indeed, from  my experience, the best brains in the universities actually want to go to the research institutes. This is because there, they are able to carry out research without the extra burden of having to be distracted.  Examples abound worldwide. But the reason that happens, which must also be the case in Nigeria, is because such institutes have the best of everything that keep the scientists functioning at maximum productivity levels. The same must happen here.

    So, how is NIFOR coping?

    At the policy level, we encourage our policy makers to keep looking at these areas so that continuous corrections can be made. We encourage our scientists to also know that there is joy in being able to reach out to farmers and improve their lifestyles. Efforts are also being made nationally, at the level of agricultural research council and ministry and the institutes to encourage scientists to begin to network much more than before because in doing so, scientists relate with other colleagues more openly and are more confident. In that process also, sometimes, some are able to attract some support externally and that also makes the job a little easier.

     What can research institutes do to bring Nigeria back to the glorious days of agric?

    Everybody agrees in this country that there is need to diversify the economy. What must happen is that the necessary things must be done. Some of it may be difficult, but nothing must be spared to transform this country sustainably. A significant part of that transformation must be from agriculture. That therefore, must mean that conscious efforts must be made. And that effort must be at the level of sustainable policy, sustainable investment that is not just for four or eight years, but long way down the road. This must be made to promote agriculture across the landscape. It is true that this country is blessed with a whole variety of environment that is suitable for almost every kind of agricultural productivity; we must begin to take advantage of it. We have already seen that a significant part of that is research, but a significant part is in investment. It is the synergy between these two that bring the productivity that we need, but governments at all levels, private people that have some funds, must begin to think differently so that between the policy and the investment, we would have a very sustainable but mutually beneficial synergy that will help us to grow the economy especially in this agricultural area that we are talking about. As this happens the input of research will become more and more appreciated, it would become more and more in demand and that would be to the benefit of all stakeholders.

    What can be done to position NIFOR for better contributions to the economy?

    We have had major contributions, the biggest is oil palm. Those contributions require a number of factors for us to do them well. The most important is human capital. In that case, the quality of the scientists, the environment and with the work, that is infrastructure such as the quality of our laboratories for instance, supply of inputs; the infrastructure base and to some extent, the human capital development develops from funding.

    What other challenges are you confronted with?

    Funding is not everything, it is only significant. At some point, research institutes nationwide, including NIFOR, had to grapple with dwindling human capital, dwindling number and strength of research workers. We had that problem because, obviously, there were embargoes on employment. But there was also a time when the conditions of service for researchers and scientists were inferior to those in competing areas of the national economy.

    The wages were lower than that of others in the same field in the universities. Our scientists and researchers could not aspire to the highest level of professional attainment because, at that time, the conditions were poor. Although those conditions have been largely redressed, it is still work in progress; but they are much better so we are now able to retain a bigger pool of scientists. But when it was poor, what used to happen was that mid career, most scientists used to leave and that affected the institute’s advancement. The reason was because we operated in the very tight pyramid but the space is beginning to open up.

    We also had challenges of the capacity of the institute to expose the scientists to the best trainings that the world can offer. And that is where the problem of funding comes in again. The truth is that scientist must be trained and must be given opportunities to retrain as their careers evolve. So you must train them well to give a good foundation;  you must continue to expose them to further training because scientific investigation continues to evolve. If you do not retrain, then very soon, the scientist would become stale. Unfortunately, because of funding constraint, the quality of training we were giving to our scientists did not meet up to what we would have loved. What I mean is that there was a time when we could expose our scientists to the best training institutions in the world, because we could afford it. But that has since changed.

    In addition to giving that initial training, however, we also still need to continue to expose them to new developments. That also is a funding challenge and we have not been able to meet those two. It is true that the quality that we are able to provide locally is improving, but there is so much more that can be desired. That now impacts on the output of research nationally. Therefore, whereas there was a time when this institute was, if not the foremost, one of the foremost research institutes for oil palm research, but  because of poor funds and infrastructure, in the last two decades or so, we have kind of fallen behind. These are things we would really love to correct.

    Science also depends on good quality facilities. You need equipment, minimum guarantees of for instance, light and water. The environment should be conducive. Regrettably, the Nigerian environment has sometimes been harsh. Provision of inputs has sometimes posed major challenges. That has not changed. But in the face of these challenges, it is good to say that the scientists and the support staff are working. In the institute, we work as a team. People have been making some heroic efforts to move the commodities forward because we are very conscious of our primary calling, which is to generate research output that will touch the lives of our people, which will ultimately improve the standard of living of our people.

     

     

     

     

  • ‘Modular refineries ’ll end fuel scarcity, create jobs’

    ‘Modular refineries ’ll end fuel scarcity, create jobs’

    At the centre of the crisis in the nation’s oil and gas industry are oil theft, illegal bunkering and pipeline vandalism, among others. These have resulted into the loss of an estimated $10.8 billion. But the Joint Task Force (JTF) Commander, Major-General Emmanuel Atewe, says the problems are surmoutable. The agency, he said, has arrested one of the biggest bunkerers, discovered and destroyed several illegal refineries, seized a catche of arms and ammunition used by some economic saboteurs. Modular refineries, according to him, will improve fuel supply, create jobs and grow the economy. AKINOLA AJIBADE met him.

    Why was the the Joint Task Force (JTF) established?

    The government set up the Joint Task Force (JTF) in  2004 to restore normalcy in the Niger Delta region. Prior to this period, armed gangs and criminal groups were seeking control of mineral resources, especially crude oil in the region.  This made the government to establish the Joint Task Force, with a primary mandate to curtail the activities of militants disrupting the production of crude oil. Having achieved this feat, the government gave the JTF a new mandate to protect oil facilities to prevent vandals, and thieves from accessing them. This gave birth to an idea called: “Operation Pulo Shield”; special troops assigned to monitor and secure oil installations.

    What is JTF’s strength, given the volatile nature of the region?

    JTF comprises the Military, Navy, Police, State Security Service (SSS) and other institutions. These agencies are strong in their own rights. By bringing these institutions together under one umbrella known as JTF, it means the government is committed to the fight oil theft and associated crimes, such as pipeline vandalism and kidnapping. Little wonder that the Joint Task Force boasts of a strategic, combined and stronger platform that can deal decisively with issues such as pipeline vandalism, oil theft and oil bunkering that have not only become a recurrent decimal in the Niger Delta, but are posing as threats to the nation’s economy. By so doing, the government has lived up to its responsibility of protecting its economy from people who are out to destroy it.

    How has it tackled oil theft and related problems in the Niger Delta?

    Fighting oil theft and other crimes has been challenging, in view of the fact that people, who indulge in the activity, are resilient because they do not give up easily. They understand the terrain well; know how, when and where, to dodge when the chips are down. Whenever they break pipelines, they offload its content, put it in a barge, move it to the high sea from where they send the stolen crude to their final destinations, which in most cases are their agents or clients in Europe, United States and others. They make money in hard currencies, a development that informs their decision to stay on in the illegal business. But in all these, the Joint Task Force has been able to overcome their antics. JTF gets tip-off from its patrol team that some people are trying to escape with stolen crude, and immediately we mobilise our men and pursue them with gun boats. In most cases, we catch  them and arrest them. At other times, they escape with the stolen item.

    As I said earlier, JTF has a strong and well-coordinated operation, which has helped it in nabbing criminals on the waterways. We are trained to protect the pipelines, oil sites and other areas that are prone to destruction. It is worthy of note that oil plays a significant role in the development of Nigeria. Oil is the barometer through which the economy’s growth is measured.

    Nigeria derives the bulk of its revenues from oil, hence the decision of the Federal Government to set up the JTF to check the stealing of crude oil.

    What are JTF’s major achievements under your command?

    JTF has arrested a barge few kilometres from Buruntu Village. The barge contained 10 compartments that were fully loaded with crude. The arrest marked a major milestone in the history of JTF. The reason is because the compartments are filled with crude oil, which means the JTF has helped the country in saving a lot of money. Also, another barge which contains an unquantified volume of Automated Gas Oil (Diesel) was arrested by soldiers attached to the Anti-Illegal Oil Bunkering and Oil theft Joint Task Force, after a tip off. Thereafter, the troops followed up and apprehended the barge on its way to the sea. The barge and its products were towed to a safer place and destroyed. Besides, the Force has apprehended 28 suspects for oil theft. Out of this, 25 of the suspects were arrested in six illegal distribution camps while carrying out oil bunkering and theft. The suspects were arrested at oil bunkering sites at Egbokodo, Beneth Island and Otegele in Warri South West Local Government Area of Delta State. Plastic tanks and drums filled with substances suspected to be stolen crude were destroyed and suspects taken to the JTF custody for interrogation.

    Altogether, how many vessels have been arrested so far?

    Over 197 vessels and 300 smuggling boats have been arrested by the JTF in recent times. The vessels were arrested on different occasions, by troops assigned to patrol the waterways to rid the country of activities of oil thieves and other criminals. We are intensifying efforts to arrest more oil vessels and thieves, as part of the on-going efforts to rid the region of criminals.

    JTF has just taken delivery of 30 gun boats to strengthening its operations. What is the cost of the boats?

    It is difficult to say exactly how much was spent in procuring the boats. JTF cannot provide the amount. It is only the Ministry of Defense that can say how much it spent on each boat. The boats are not ordinary because they have different features. The boats are produced in parts, a development which suggests that many manufacturers have input in the production of the boats. This implies that one must get the cost of each part or equipment in the boat before one can arrive at a total cost of each boat. What I know is that the boats are sophisticated and are found useful by the JTF.

    The JTF has declared Zero Tolerance on oil theft, pipeline vandalism and other criminal activities in the Niger Delta. Has this  achieved its goals?

    By declaring Zero Tolerance, JTF is only trying to get out punitive measures on such criminals. We want to see how we can bring to book people that engage in oil theft and pipeline vandalism. Once there is stiffer penalty, it would deter others from such illegal activities. For anybody caught stealing oil, when he is brought before the court, he should remain in custody until the case is adjudicated. We have seen a situation where some oil thieves were released on bail after they have been charged to court. When this happens, they come back to continue the illegal business. We want to put a stop to this, and would not relent in our efforts to achieve the desired results.

    How many oil thieves have been prosecuted?

    JTF has arrested many pipeline vandals and oil thieves and handed them over to the Police for interrogation and prosecution. Thereafter, the body ensures that such criminals were brought before the court for examination. Many of them have been tried, others have not. We want a speedy trial of the criminals to prevent people from going into oil crimes. Our aspiration is that the fight against oil theft must be brought to a logical conclusion.

    What are the effects of these criminal activities?

    These issues are having ecological, psychological and economical effects on Nigeria. Economically, the country is losing billions of dollars to oil theft and bunkering. This money would go a long way in developing the country. Physiologically, people living in areas where pipelines are being vandalised have been disoriented physiologically. Poverty and its by-product of frustration is forcing them to go into crimes. Many people in the riverine areas have no concrete means of earning a living. Even those that are employed cannot live a normal life. They cannot access good medical treatment. We discovered that some people use fuel obtained from vandalised pipelines for domestic use. The destruction of the ecosystem is one of the major effects of pipeline vandalis and oil theft. When criminals break pipelines, oil flows or spills into the river, leading to the destruction of aquatic system. Fish and other animals are killed, a development that results in water pollution. This leads to spread of diseases and reduction in lifespan of people living in the riverine areas. When you destroy the ecosystem, the ecological impacts in most cases are very grave. All these have concomitant effects on the standard of living of people in the region.

    What can be done to address the problems ?

    A collective approach is required to solve the problems, such as oil theft, pipeline vandalism, bunkering, and poor infrastructure inhibiting the growth of the region. The Federal and the state governments, the oil and gas companies (both upstream and downstream) operating in the Niger Delta, and the  communities must come together to provide solution. For instance, the state of infrastructure in the region, especially in the riverine areas, is deplorable and needs to be improved to stop criminal activities. The roads are bad, hospitals are not in place, coupled with the poor standard of living of the people.

    The government has started in the right direction by setting up the JTF and further equipping them to tackle oil theft. But a lot still need to be done to proffer solutions to these problems. For instance, the state of infrastructure in the region, especially in the riverine areas, is deplorable and need to be improved upon.

    In the course of our inspection of the oil facilities, we discovered that people are living in poverty. Some use fuel from the vandalised pipelines as a substitute for kerosene because they cannot buy kerosene for cooking. I think when these people get jobs, they would stop vandalising pipelines. They would also stop stealing crude oil.

    Giving the presence of Warri and Port Harcourt 1&2 refineries in the Niger Delta zone, residents, ordinarily, do not have to complain about fuel scarcity . Do you share this view?

    If the refineries are working, there would not have been problems such as scarcity and hitches in distribution of petroleum products in Nigeria. I think the country needs modular refineries to refine crude oil. By this, I mean refineries with smaller capacities.When we have modular refineries on ground, they would help in refining thousands of barrels of crude oil and the economy would be better for it. Besides the fact that the development would reduce fuel scarcity, it would provide jobs for people. People that are unemployed in the Niger Delta region would get jobs. An African adage says an idle hand is the devil’s workshop. Once people are employed, they would not break pipelines and steal crude oil. Even if they are going to commit such crimes, the rate at which they do it would not be high. Job creation is one way of reducing restiveness in the Niger Delta. I’m advising stakeholders to come together and see how they can build modular refineries, and further provide multiplier effects on the economy.

    Are the communities in the Niger Delta cooperating with the JTF to check oil theft and other criminal activities?

    The JTF is enjoying the cooperation of the host communities in  fighting oil theft. The people have been supportive in this regard. Beyond the support of the oil producing communities, there is the need for the international community to assist Nigeria in the fight against oil theft.

  • ‘Why Nigeria is excluded from global PR ranking’

    These are not the best of times for Public Relations practice. It is burdened by slow growth, inavailability of data, harsh operating environment and lack of global rating for practitioners. Many believe that business is slow because the Nigeria Institute of Public Relations (NIPR) and Public Relations Consultants Association of Nigeria (PRCAN) are working at cross-purposes. But PRCAN president and Group Managing Director of Mediacraft Mr. John Ehiguese, in this interview with ADEDEJI ADEMIGBUJI, disagrees, describing such beliefs as wrong perception of what public relations is all about.

    The volatile global oil market has led  to the introduction of austerity measures, including the devaluation of the naira. How will this affect PR budgets?

    The slide in the value of the naira is definitely having adverse effect on businesses, especially those that are heavily dependent on imports. If this situation continues, definitely such businesses will be forced to cut costs, and ultimately the PR budget may be affected. I have a couple of clients who are already dropping hints of imminent reduction in their communication spend this year.

    What is the projected revenue from the PR industry, this year?

    Well we don’t have the data; so, I really cannot answer that question. But I will encourage you to ask me that same question this time next year, I’m quite sure my response will be different.

    What is the market demand for PR services, and would you say there are enough PR agencies in the country to meet this demand?

    I don’t think so. There are still several sectors of the economy, which require PR services that are not being serviced adequately, if at all. We, the professionals, need to be more creative in our business development drive, to identify new market niches and opportunities. And they are there, waiting to be harnessed.

    Multiple taxations are a burden on businesses in the country. How has this affected PR growth?

    I don’t think that is a fair question. There are no special tax regimes exclusively for the PR industry, so I really don’t see how the tax system can specifically affect the growth of the industry or otherwise.

    Is it true that the digital media is a major challenge for managing brand reputation? How are practitioners reacting to this, if it is?

    The ascendancy of digital media is a challenge to the extent that it is one of the manifestations of how media forms are evolving, affecting consumer information consumption habits, and ultimately impacting the way we communicate with the consumer. But then it also presents many opportunities. Digital media has in many respects, changed the rules of the game. In a manner of speaking, and because it has come to stay, we really have no choice than to accept and deal with it.

    In the traditional media, it takes hours to manage an emergency image crisis. Now, with the emergence of online media, news goes viral within the twinkle of an eye. How can a PR practitioner weather this change?

    I agree that with online media, speed is of essence because of its real-time nature. Adverse news or information online can go viral within minutes and cause severe damage to a brand or company’s reputation. That is why one of the most important elements of Online Reputation Management is “Listening.” As a PR man you must be listening to the online conversation as it affects your brand, so that you can respond promptly to address any negative or inaccurate piece of information before it goes viral and causes reputational damage.

    We have seen unethical adverts in this electioneering period. What do you think this makes of professionalism in our industry?

    PR and advertising are completely different things, even though they are both important members of the Integrated Marketing Communication (IMC) industry. That said, I admit that there have been a few offensive and clearly unethical advertising materials exposed in the course of the on-going electioneering campaigns. There are extant Codes of Practice that are supposed to guide political advertising in Nigeria. I am surprised that these codes are not being enforced by the relevant regulatory authorities.

    PR is often misconstrued as lying to defend clients. What is your take on this?

    That is not true, and it reflects the ignorance that some people have about our business. PR is not about lying, or ‘the spin’ as some tend to euphemistically refer to it. It is about strategic communication designed to achieve certain pre-set and articulated objectives. There is both the science and art of PR. So, it is serious business.

    PRCAN has been around for a while and at least two leading practitioners have led the organisation. What new things are you bringing to the table?

    I want to encourage our practitioners to begin to play on the global stage. That means raising the standards of practice, increasing their level of confidence and getting them more exposed to international PR conferences and forums. I would wish that during my tenure, Nigerian PR would begin to have a tangible presence on the world stage, especially through the presentation of case studies and research reports.

    What can you do to earn respect for the industry?

    There is still a great deal of ignorance about what professional PR is all about. But even that is changing. We will continue to do our best to educate people through various forum and other engagement opportunities, and also by showcasing the programmes and campaigns that we execute. Another thing to do is to project our successful PR practitioners as serious-minded, respectable and successful professionals in their own rights.

    Nigeria has always been excluded when it comes to global PR rating. What will you do to raise the bar for PR practice?

    The issue of global ratings and rankings is an interesting one. We tend to be ignored in global rankings because the world does not have data on PR practice in Nigeria. And you cannot generate data if you do not conduct research. Also we do not have a culture of documenting our campaigns in the form of case studies which we can present to global forums for assessment and reviews. Finally, our level of international exposure is still abysmally low. How many of our practitioners attend international PR conferences, for instance? These are some of the issues I will be addressing during my tenure. I plan to introduce an annual PR industry research, which report will be published for general consumption. Luckily my predecessor, Chido Nwakanma, had already started something in that direction, albeit, on a small scale. I will review it and see how it can not only be improved upon, but also implemented in such a way that it becomes a permanent feature on the annual PR calendar in Nigeria. I will also encourage our professionals to become more involved and visible at international PR conferences and forums. Thankfully, the response in this area has improved over the past one year or so, but we hope to do even much more.

    What are the major achievements of the professional body?

    In terms of major achievements in PRCAN, historically, we have succeeded in no small measure in sensitising Nigerian PR practitioners on the need to become more involved in efforts to sanitise and improve the standard of practice. In the past two years for instance, we have admitted about 15 PR consultancies into membership of PRCAN. This is significant when you consider that the current total membership is 50. We have also begun an advocacy campaign to encourage serious clients to only engage the services of PRCAN member firms. As we create and provide more tangible value for our members, we believe that our membership will grow, and then we’ll be able to achieve even much more.

    Some believe the establishment of PRCAN was unnecessary because the NIPR was in place. Do you agree with this?

    PRCAN was created specifically to serve the interest of the consultancy arm of the PR profession in Nigeria. It has the legal backing of the NIPR Professional Consultancy Practice (Amended) Bye Law No. 3 of 1993. There is no conflict whatsoever in roles. The NIPR is statutorily empowered to regulate the practice of PR generally in Nigeria. Within this broad framework there is the recognition that certain sub-groups can, and indeed, should exist to address certain specific sectorial interests. PRCAN membership is made up of PR consultancy firms, not individuals. And it might even interest you to know that one of the conditions for admittance into membership of PRCAN is that the Chief Executive of the firm must be at least an Associate member of the NIPR. In any case, both the NIPR and PRCAN have ultimately one common goal: to grow the standard of PR practice in Nigeria. Our roles are therefore complementary, not competitive or adversarial.

    What is your take about proliferation of agencies, when two or three agencies can come together and be bigger?

    There really isn’t much anybody can do about the proliferation of PR agencies. People will continue to set up new practices, either out of the need for self-expression, or in pursuit of some innate entrepreneurial drive. Besides, the barriers to entry are very low. I mean, it’s so bad you don’t even need a physical office space to run a thriving PR agency. However, whether many of these new agencies will eventually thrive, or even survive at all, is another matter entirely. I take your point about the desirability of mergers and acquisitions in the industry, essentially in order to build scale, to be able to gain more clout, and to service big clients effectively. We haven’t seen much of that happening yet in Nigeria, but it will come with time. The merger and acquisition fever appears to have caught on globally, and I belief that it’s just a matter of time before we begin to see it in Nigeria.

    Globally, what is the place of PR in the entire marketing mix, compared to Advertising, experiential and others?

    In comparative terms, I believe that PR is the fastest growing member of the integrated marketing communication (IMC), mix, globally. And the reason for this is self-evident. Apart from the fact that PR is relatively more cost-effective than the other elements in terms of return on investment (ROI), the changing media landscape tends to favour an increase in PR patronage. Today’s consumer is exposed to a wide array of media choices, and as access to consumers through these the media forms themselves become more permission-based, it puts a lot more power in the hands of the consumer. As a result ‘earned’ media has become ‘king’ in a manner of speaking. Your ability to break through to the consumer is determined more by the relevance and interest of your message to him, than by how much you spend, or how dexterous you are in developing your media mix. In other words, creativity in communication is no longer the exclusive preserve of so-called ‘creative’ agencies. It is as important in PR as it is in any other element of IMC mix.

    What is the level of PR acceptability in Nigeria?

    The demand for PR is growing in Nigeria, and there is no doubt about that. This year alone, we have attended more pitches than any other year since we opened shop. And it is instructive that some of these pitches were called by organisations that have been around for quite a while, but never before worked with a PR firm.

    What steps are you taking to encourage research and record about billings and business volumes?

    We really have no choice but to invest in industry research, if we must make progress. I will do everything I can to ensure that the annual Nigeria PR research project becomes a reality during my tenure. It will enable us gather useful data for planning, and for projecting Nigerian PR practice globally.

     

  • ‘Govt’s agencies not helping genuine investors ’

    ‘Govt’s agencies not helping genuine investors ’

    Airlines can do better in a conducive operating environment. But with low access to capital, double digit lending rate, multiple charges, lack of sound business plans and operational models, many domestic carriers may be on the verge of collapse. To the Chairman of Air Peace, Mr Allen Onyema, if the right model is in place, financial institutions will fund airlines. Running a ‘’lean operation’’, he tells KELVIN OSA-OKUNBOR in this interview, is critical to the success of any airline.

    Running a domestic carrier in Nigeria could be challenging. Are there ways government could assist operators?

    There are many ways government can assist domestic airlines. If government cannot build an aircraft maintenance hangar in Nigeria, it should assist any operator willing to invest in that area. This would be important for many reasons. If any operator shows interest in building a hangar, government should support such an individual or operator to secure a large parcel of land around any airport in the country. Such a project will create more jobs for Nigerians.

    Why are aviation agencies not cooperating to allocate land to airlines?

    Civil servants should change their ways and stop frustrating private enterprise through unnecessary bureaucracy. For over one year, Air Peace has applied to the Federal Airports Authority of Nigeria (FAAN) to allocate it land to build an aircraft maintenance facility, but the authority has not granted the allocation. If FAAN had allocated land to the airline at any airport in the country, the project would have been completed  by now. If they had allocated land to us, many banks, given my integrity and track record would have funded the project, because they know that I am credit worthy.  There wouldn’t have been any default in paying pack the money for the project. If we build an aircraft maintenance centre in Nigeria, our country would become a hub where other African countries would fly in their aircraft for repairs. That would generate huge money for country. People say aviation does not generate enough money. That is not correct, Ethiopia as a country is generating huge foreign exchange from its airline, Ethiopian Airlines. It is the mainstay of her economy. Why can’t we replicate the Ethiopian model in Nigeria? That would create massive jobs. FAAN should be told to give us land. Having an aircraft maintenance hangar in Nigeria will assure safety. It will bring investment into the country. FAAN should help this country; I am tired of begging for land. The airport authority should serve the people of Nigeria, but not to lord it over the people. You pay FAAN for offices, you cannot get the offices you have paid for. You pay FAAN for offices, the offices are not allocated to you. The airport authority should create facilities for people. This country belongs to all of us. Some people do not own the country. There is sufficient land around the airports; they do not want to give it to serious people who can invest to develop the industry. Instead, FAAN is giving land to people who are not ready to develop the industry. An organisation such as Air Peace that is ready to develop the aviation sector is denied land at the airports by FAAN.

    What could be done to encourage FAAN to allocate land to serious investors?

    The Minister of Aviation, Mr. Osita Chidoka, should direct FAAN to allocate land to committed investors in the aviation sector to enable them set up aircraft maintenance facility. That will assist the development of the sector. If FAAN is skeptical about our capacity to utilise the land, they should ask for our feasibility and bankable evidence on how we intend to develop the facility. We have banks that can finance the projects. The minister should talk to FAAN to release land and we are ready to give evidence of finance. I do not think it is good for airlines to be carrying out aircraft maintenance at the ramp. It is not enough. Even the Air Force facility is not enough. There are airlines that want to have their own hangar.

    Airline business is capital-intensive, in what ways can banks assist domestic airlines?

    If airlines are properly run, they could become money spinning businesses, and the banks would be in a good position to gain from that through huge cash inflow that would be generated. The truth of the matter is that integrity is in short supply in the Nigerian business environment. That is the main reason many local banks are skeptical about giving out money to fund aviation projects. Again, the banks see the sector as turbulent. The banks should look inwards and see how they could protect themselves. In the case of my airline, I sign off my planes as collateral with other collateral as guarantee in case I am  unable to pay back the money I took from the bank. Before any bank manager could give money to any airline operator, he has to look at the background of the person deeply. Where is he coming from? Can we trust him? The banks that gave Air Peace considered all these seriously. The bank gave me a moratorium. The banks can extend this to other airlines to restore confidence. The problem with Nigerian airline operators is that they borrow money and run away. They divert the money. Banks should only come in to assist airline operators after they have carefully studied them that they have integrity to pay back the money. Assurance that the money would not be diverted into any other venture is very important. The banks should lower their interest rates. At the same time, we also have to consider the rate at which the banks are getting their deposit. In this respect, the Central Bank of Nigeria (CBN) has a role to play. This implies that the apex bank must lower its withholding deposit with the commercial banks to enable them achieve the interest rate to the benefitting airlines.

    Stakeholders have compalined about dearth of infrastructure at the airport. How can this be addressed?

    Lack of air field lighting system has  been a challenge affecting the growth of domestic airlines in Nigeria. This is affecting the growth of aviation. A situation where only three airports are accessible at night is not good enough. It does not augur well for the development of aviation. Government should try to provide night landing facilities in all the airports. This is important because of safety and security. In the event that an aircraft is flying and there is a technical problem, there should be alternate airports with night landing facilities. When people talk about safety in America, what people are referring to are available at airports everywhere. Even private airports, there are facilities for aircraft to land anytime under any circumstance. In Nigeria,  we need landing facilities that are working 24 hours everyday. This would boost the development of the nation’s economy. This would not only create additional jobs, it will provide revenue for the government. A bigger Nigeria with airports fitted with night landing facilities is better for business.

    What motivated you to invest in the aviation sector where returns on investment are very low?

    My interest in the aviation sector is driven by an unsavoury experience. In 1998, a group of people met me and we had a robust discussion to consider investing in aviation. The people talked me into buying a cargo plane, and the potential of making money in that line of business. They packaged it as a cargo airline. I sold some of my property on Lagos Island to enable me raise sufficient capital to get into such huge capital outlay venture. Having sold my property, I brought the money to the table; nine months after, I did not see any aircraft, as they promised me. It took me another nine months to get my money back from them. After that bad experience, the desire to get into the aviation sector at that time died.

    However, in 2007, I started thinking of going into aviation, again. My interest this time around was fuelled by what someone told me: Investing money in the purchase of one aircraft could create jobs for about 100 people directly, and that indirectly, it could create up to 200 jobs. In that case, I was inspired to invest in aviation so that I could create jobs for Nigerians.

    Are there other considerations for investing in airline business?

    The primary motive is because I could use Air Peace to create jobs.  I also invested in aviation because it can generate revenue for me. This is very clear because of the low returns on investment. If I leave all the money I have invested in aviation in the banks, it could fetch me much more because Nigerian banks are offering double digit interest. That is a good way to make money by sitting down at home. But, I have gone ahead to invest in aviation not because it is profitable, despite the unfriendly business environment, huge capital outlay, required financial turbulence, I am motivated that investment in aviation would create jobs.

    As I moved with the investment, thankfully two Nigerian banks came to my rescue. The two Nigerian banks are supporting me because of my integrity. I did not know it will be like this, because the business is gulping a lot of money that I initially did not planned for. But, there was a rescue plan. What you see in Air Peace today is the power of God and integrity.

    What operational model are you utilising?

    We are bringing a whole world of difference with Air Peace. One of the driving modules for Air Peace will be safety. This is a key ingredient for running a successful airline anywhere in the world. One of the motivating factors that pushed me into investing in aviation in Nigeria is to change the face of air travel, with priority on safety, which has become imperative in view of the spate of air crashes that occurred many years ago. Going further, we are going to model Air Peace after the operational model used by South West Airlines in the United States. We want to do something unique in air travel. We want to fly from Warri to Port Harcourt, from Abuja to the smaller airports. We are using very strong Boeing jets.

    We want to see flights connecting passengers from Benin to Port Harcourt, from Kebbi to Abuja. The whole idea is to bring peace to the country. In Air Peace, we are not driven by profit, but to create jobs for Nigerians by ensuring that qualified indigenous professionals are engaged. That is what we want to do.  Air Peace wants to open up the entire country’s air link by going beyond the traditional point of flying from Lagos to Abuja, Port   Harcourt and a few other routes. We want to have a good operation that would be profitable, we are not cut corners, we are getting it right, since we started our flights last month. We do not want to cut lives; we are running an airline that passengers would feel safe and secured and have peace. We are running a ‘lean‘ operation that would be profitable. By lean operations we mean focussing on a few routes, and we will expand our route network in line with our business plan. South West Airlines in America that we are copying their model is very profitable. We have brought in a new style of doing the business. Since we started, our flights have been phenomenal. We hear that aviation business is very turbulent, but with a lean operation, we would survive and open up the entire country and link up all the airports. We want to access the smaller airports with our Boeing jets that could land at smaller airports with shorter runways. Our plan is to revolutionise the air travel business.

    Are you looking at a nationwide carrier?

    From our model of lean operations, we will expand flights nationwide. By that means, we would become a nationwide carrier. Since last month that we commenced operations, we operate flights between Lagos to Abuja, Owerri, Enugu and Port Harcourt. There are also return flights between Abuja and these cities. Our plan for Air Peace is to run a nationwide carrier that would fly passengers into smaller airports including Benin, Kebbi, Makurdi, Gombe, Port Harcourt, Lagos, Abuja, Kano, Kaduna, Sokoto, Yola, Warri and many other airports. We want to promote national air line to create jobs in Nigeria and link up secondary airports with the major airports. Our mission is to ensure we use air travel to stimulate the growth of the economy. Our service compact is reliable service. Our planes are fitted with wifi facility. We have zero tolerance for delayed flights. Our overall goal is to foster inter connectivity within the country, to reduce the problem of people traveling for hours to link up airports from one state to another.

    What has been your experience since you commenced scheduled operations?

    It has been a wonderful experience for the almost one month’s that Air Peace started operations in four major routes. Nigerians have been so wonderful in their patronage of our flights. Nigerians have shown love to us, the patronage has been so tremendous. Like. We always say. We have scored so many firsts in the airline industry already. On our first day of flight October 24, 2014, we had 14 flights into Lagos, Abuja. Port Harcourt Enugu and Owerri airports flying over 370 passengers on the inaugural flight, no airline had ever recorded such feat. Since, October 24, 2014 have not stopped doing 14 flights per day. Within the first 10 days of our commencement of scheduled flights we flew over 5,000 passengers. This is evidence of live Nigerians have shown towards Air Peace as their airline. In some locations, some passengers have adopted Air Peace as their airline of choice. We are very grateful to Nigerians for their patronage and can only promise better days ahead. With their support we should expect more to come from the airline. The airline has a huge acceptance from all parts of Nigeria, this evidence of our prompt and reliable services. This is also evidence of the calibre of pilots we parade, our schedule integrity, by keeping to time. We have safe landings, and our pilots are under instruction to avoid bad weather and weather related issues. Our goal is to give the flying public peace of mind and the best services.

    What is your immediate expansion plan for the airline?

    From December 1, 2014, we are expanding our operations with flights from Lagos into Asaba International Airport. This is not just plan for December, but we have had it in the pipeline. We consider Asaba Airport an important route. As more of our aircraft arrive, we would go beyond Asaba Airport and extend flights between Lagos and Warri. We will also extend flights between Warri and Port Harcourt and a return flight from Port Harcourt to Warri. We will also do Warri to Abuja flights.

    What about partnership with state governments?

    We have scored history as the first airline within one month of its existence to sign agreement with a state government in the northern part of the country. The agreement is in the form of a contract to provide aircraft and develop the new airport. We have also scored another first as the newest airline to sign an agreement with the Kebbi State government to develop the new airport just completed in Birnin Kebbi.This agreement would entail our developing the route and attracting traffic to the new airport from Abuja and a return flight to Kebbi. The agreement has been signed and sealed in Kebbi. Part of the terms of the agreement would involve development of that route. We intend to extend the flights from Abuja to Kebbi to include Kebbi to Kano and a return flight from Kano to Kebbi . The agreement with the Kebbi State government is part of efforts by the governor to open the state to all parts of the world through air link, which he has started with the construction and completion of the airport. The airport would accelerate the socio economic development of the state. The airport is expected to generate jobs for people of the state. It would attract investment in many sectors of the economy. We are going to put some aircraft on the routes and share some costs on both sides. We are looking at deploying our DORNIER Jets on the routes and as the route expands, we would deploy the Boeing Jets. With the airport. Kebbi State has joined others using aviation as a catalyst to facilitate trade and business. The place is very safe. Air Peace is going to galvanise the the development of Kebbi State.  We are very excited over the partnership with Kebbi State, and Air Peace would play its role accordingly. It is important to clarify that there is nothing like unviable airport, state governments must give operators the opportunity to help open up airports. If you do not start it, the airports would not be open. We have plans to sign similar agreements with other state governments, which we would disclose at the appropriate time.

    What impact has Air Peace made since it commenced scheduled flights?

    You will agree with me that Air Peace is already a success story. We have made a lot of difference in the industry. Air Peace has made all the airlines to sit up. We are excited about this because it is our goal to change the face of air travel in Nigeria and exactly that we have done. Since we started, we have altered the equation; some operators are now adjusting to flight delay because of us. That is part of what we have achieved in the industry. Other airlines are now trying to adjust to ensure they minimise flight delays. What about customer service, other carriers who did not value their passengers now that they have changed. Not the template has changed and competition is hotting up, which is good for the business.

    Are you comfortable with ongoing discussions over airport charges?

    It beats my imagination that we are still talking about airport charges. This is strange given the fact that in Nigeria we do not produce anything used by airlines. I mean aircraft, spares, and even aviation fuel is imported and paid for in dollars. Now that the exchange rate has increased it is adversely affecting airlines. Yet, some government agencies are still interested in collecting between ten to fifteen per cent of the ticket value as charges. This is unacceptable. If they collect such high per cent, what is left for the operators to use? Too much charge is the reason why airline are cutting corners. When the charges are too high why operators would not cut corners, they do not have money to remain afloat. If the high airport charges are transferred to passengers, it would discourage them from flying. If passengers are not flying, the airlines cannot break even. They cannot meet their operating costs. Imagine, after five days of commencement of flight, I was given a bill of over N45 million as the cost for aviation fuel. I was alarmed, I could not believe it. My eyes opened wide. Aviation agencies should not collect more than one per cent of the value of the ticket as charges. Airline operators are just working for the agencies to profit. Airlines do not make up to five per cent as profit. Where do they expect the airlines to get the five per cent ticket sales charge and others the agencies collect? We should not be talking about moribund issues like airport charges, the agencies should come down from their roof tops.

  • ‘BUA Cement ‘ll ensure healthy competition’

    ‘BUA Cement ‘ll ensure healthy competition’

    With an injection of over $500 million into its operations, BUA Cement Group is set to increase its share in the competitive cement market. This is in addition to investments in other sectors, such as sugar, pastas and flour. In this interview, the Executive Director, Projects and Technical, Mr. Yusuf H. Binji, says the Federal Government, through the backward integration policy, has given a stimulus to local manufacturing. Binji also bares his mind on competition, standardisation and capacity building in the sector. He speaks with Assistant Editor OKWY IROEGBU-CHIKEZIE.

    how successful is the backward integration policy of government in  the cement sector?

    The policy is a welcome development in all sectors it has been applied. It has influenced players in the industry, both old and new, to inject more funds into their operations. The effect is that it has brought more money into the economy. Currently, our Obu plant, which was formerly part of the Edo Cement Factory, is now 100 per cent owned by us. The new cement plant is worth $500 million; we have also invested $60 million in gas turbines for electricity generation. The Obu plant will manufacture high grade cement and it is one of the three cement projects we have in the country, with an installed capacity of three million metric tonnes per annum. We started construction in 2012 and it is scheduled for completion in the first quarter of next year.  The plant will be inaugurated at the end of February. Then, after about three months, the products will be in the market. The plant is in Edo State, which makes it strategic for the northern markets and those in the Southwest. There are excellent road networks, about 200 metres to the highway linking Okene and Benin, for adequate distribution of products.

    What is the status of the Obu plant in your operation? Is it the only plant you have?

    We have three plants— Edo Cement, Obu and Sokoto (former Cement Company of Northern Nigeria). New production facilities are being built in our plant in Sokoto. Obu is a green field cement plant, we are building it from the scratch. Sokoto is a brown field project because it is an existing plant which has been in operation since 1967. It was expanded in 1985 and right now we are adding a production line to it that will almost triple its capacity. The Edo Cement, which is about five kilometres from our green field plant, has been in existence for more than 50 years. It was formerly Bendel Cement Company, producing the Rhino Brand that was recently acquired by our group; the plant is in the process of being reactivated.   Sokoto Cement has a production line with an installed capacity of 500,000 tonnes per annum, and it is producing at 100 per cent capacity. However, we are building an additional line in Sokoto with a capacity of 1.5 million tonnes per annum.

    What grades of cement will the three cement plants produce?

    Sokoto and Edo plants are producing 42.5 cement grade while Obu will produce any kind of cement that is allowed by the Nigerian Industrial Standards. It is capable of producing the three grades allowed by the regulatory authorities which are the 32.5, 42.5 and 52.5 grades.

    There is controversy over the Nigeria Industrial Standards (NIS) in cement manufacturing. What is your take on it?

    I don’t think that it calls for controversy.  The NIS requirement is a regulatory requirement by the Standards Organisation of Nigeria (SON) which all manufacturers are expected to abide with. According to the NIS requirement, manufacturers are required to  put some measures in place to ensure that their products  are traced  to them  and to also include batch number, product use, best before date and production date. The NIS standards makes it compulsory for all  producers  to print on each cement bag, the grade and its application before it gets to the market.  Additionally, we are required to put  unique colour stripes to differentiate the various grades; yellow for 32.5, blue for 42.5 and red for 52.5 grades.” Incidentally, our facilities are equipped with a batch enabling machine. So each bag comes out from the factory with a label. Our cement plants are fully compliant with the SON’s regulations in terms of identification and traceability. These requirements also makes for healthy competition, in the long run the consumer is better for it.

    What ways are you trying to mitigate the possible effects of the exploitation of mineral resources in your host communities?

    Before any project is embarked on in the country, especially when it has to do with exploitation of raw materials, the law makes it mandatory for the company to carry out an Environmental Impact Assessment (EIA). That, we have complied with, and all the measures identified are being implemented. Recently, environmental inspectors came to ensure compliance and we have no issues whatsoever with the community. The community is also being carried along in ‘the construction of the project and some of them  are employed by our contractors. When the plant kicks off operations, a lot more will be employed.   We have divided the project into several aspects, such as civil engineering, mechanical and electrical engineering. As we are using renowned contractors, such as Siemens and others, we are getting the best in terms of goods and service that will in no small way affect the lives of either our workers or the host community.

    What are some of the challenges in this line of business?

    The challenges are almost the same with every manufacturer in the country. It is however worse when it has to do with a high technology sector such as ours. We all know that in our country, a prospective manufacturer does not only build his factory, but also the infrastructure which  ideally should be provided by the government. For instance, you have to provide 24 hours electricity independent of that from the national grid. All the power we need will be generated internally and, as a result of this, our group has bought and installed a 50-megawatt power plant  and it will be inagurated by the end of next month. In addition, we are building a gas turbine plant worth $60 million. This is located about 30 kilometres from the point we are tapping the gas to our factory. We are going to have a gas reduction station and the internal distribution of the gas pipeline to the user department for the gas. These are huge challenges in terms of funding but  we  have overcome them because we did our home work before embarking on the business.

    The gas pipeline, for example, transverse through six different communities and for each of these communities we acquired the right of way,  paid compensation to farmers  and a lot of other payments. We  have almost completed these processes.

    We plan to also use liquid fuels for both our turbines and also for our plants to check disruption in the supply of power at any time, we already have gas but we all know that gas is an energy source  that cannot be readily stored. In that case and to avoid disruption we have taken adequate care to have alternative energy sources to ensure smooth operation any day.  The alternative is addressed by the construction of more tanks for storage of liquid fuels that will be used as a backup fuel. The idea is to ensure that the plant does not have any threat of any interruption when we are carrying out our operations so that daily, about 250 to 300 trailers of cement will leave the factories.

    By the time we complete our power projects, we will have about 50 megawatts to power the factory, primarily our power project is to serve the factory but if any possibility to serve the community exists, we will not hesitate to distribute to the community.  We intend to carry out our social responsibility with responsibility.

    How much is your green field cement plant at Obu, Edo State worth?

    It is an ongoing project but at the moment over $500 million has been spent so far on the plant and we are still spending. We have built a housing estate for majority of our staff with a lot more under construction as the idea is to house majority of our staff with very decent accommodation to make life comfortable for them. We are building roads leading to our quarries; the roads will also serve our host communities. We have constructed a big hospital for the community and also built administrative block for their youth centre. We have mechanical, electrical workshops and heavy duty workshops to cater for the needs of heavy duty equipments. We are also building a warehouse to store our spare parts because Nigeria is actually far from getting special spare parts.  All these are in addition to the $60 million gas turbine that l already mentioned.

    Where are your catchment areas in terms of your planned distribution network?

    Cement is a very bulky product whose value is relatively insignificant when you compare it to the size. For example a trailer carrying 30 tonnes, is not like a trailer carrying 30 tonnes of gold that you can easily transfer to China or wherever. So, what this means is that for every kilometer away from the plant, you are adding to the transportation cost. For a trailer of 30 tonnes you have 600 bags and if you go more than 500 or 600 kilometres, then you will find that the cost of transportation is almost half of your production cost. Our priority is to be competitive in all spheres; we can then safely say that we will sell to the north, east, west and the south. This is our priority but you will likely not see BUA cement going to the extreme corners of the Northwest or Northeast because of the distance which is over 1,000 kilometres.

    If the government works on the country having efficient rail system , then we can be  in all corners and crannies of the country because an efficient rail system  will  drastically reduce the transportation cost of manufacturing in the country.

    What is your staff strength now and when the plant is fully operational?

    We will be employing over 1000 people directly while indirect will run into thousands because of the value chain.  I want to use this opportunity to commend the backward integration  policy of the Federal Government. It turned out to be a good policy about 10 years ago, Nigeria was producing about two to three million tonnes of cement, but currently, the installed capacity in Nigeria is about 30 million tonnes and because of this policy of government, existing and new entrants ventured and established cement plants increasing the capacity to 10 to 15 per cent every year leading to high expansion in growth which means more people leaving the labour market.

    In 2012, Nigeria was almost self sufficient in cement production and that is why you have seen the ban on importation of cement because we believe we have the capacity to satisfy the market in Nigeria with huge potential to export to neighbouring countries. An average Nigerian manufacturer is asking for an enabling environment because we hold the path to the growth of the  economy.

    Most manufacturers complain of multiple taxation do you also have issues with that?

    This is the bane of manufacturing. When manufacturers ask for enabling environment to operate, it is inclusive of every other thing, ranging from the provision of critical infrastructure and the harmonisation of taxes. Unfortunately, manufacturers are made to pay all manner of taxes by the local, state and federal governments. We have made representations to the Cement Manufacturers Association of Nigeria (CMAN) and the Manufacturers Association of Nigeria (MAN) for all relevant government agencies to harmonise the relevant taxes targeted at the manufacturing sector.

    It is only when manufacturers operate in a healthy environment that the economy will grow due to increased contribution of the sector to the Gross Domestic product (GDP). Now, the contribution of the manufacturing sector is at an abysmal eight per cent. The scenario is what it is because of the burden of multiple taxation. Manufacturers find themselves paying the same levy at the three tiers of government.

    If this double taxation is checked, the sector will be better placed to create jobs to  lift people out of poverty and  enhance the prosperity and security of the nation.

     

  • ‘Most SME operators not competent’

    ‘Most SME operators not competent’

    The Registrar/Chief Executive Officer (CEO), Institute of Business Development (IBD), Mr. Paul Ikele, says Nigeria is yet to leverage on her resource endowment and population to become globally competitive. He regrets the focus on politics at the detriment of the economy. Most operators of Small and Medium Enterprises (SMEs), which should help put the economy on the path of sustainable growth, he argues, are weighed down by lack of business development plan and dearth of critical infrastructure. In this interview with Chikodi Okereocha, Ikele says the nation’s dream of being one of the top 20 economies in the world by 2025 is, however, achievable “if we are focused.” Excerpts:

    How would you assess the pace of Nigeria’s economic development? Is the economy on course?

    Nigeria, like any other emerging economy, is bound to have some hiccups here and there. But, if we are focused we will identify the key areas we need to work on like provision of infrastructure, which will assist the economy to bounce back. And of course, you know Nigeria is operating a mixed economic system, which means we are mixing command economy and market economy. And in the mixed economy of course, price will keep rising depending on the cost of production and to that extent the supply may not meet up with the demand because of the scarce resources. For example, in a mixed economy, for you to be able to put up a particular product you need some infrastructure to be able to produce, like power.

    A lot of organisations need to power their industries to enable them continue to produce and the electricity is not there. You must operate with a generator and must buy fuel, and these also increase your cost of production. At the end of the day, you have to calculate your cost of production to determine the price you want to sell your products. Because you are not sure of who will buy at the price you have fixed, so you limit your production until you have identified those who will buy at that price you want to sell to enable you cover your cost of production. There is also the political dispensation.

    Considering the factors, would you say Nigeria’s dream of emerging as one of the top 20 economies by 2025 is achievable?

    Yes, of course!  Although, most of them that are there had a long term plan and they worked towards it. But there are lots of issues-political, tribal and things like that. By the grace of God we will achieve it. Recently, I was in a programme in the United Kingdom (UK) where it was actually mentioned that Nigeria can attain the position of one of the top 20 economies by 2025 and can favourably compete with Japan and other developed economies. One, because of our resources, our population, and the opportunities that Nigeria has.

    Is Nigeria taking the advantage of her population and resource endowment to achieve that goal?

    Yes, we are. Its only that the political situation is not helping matters. Right now, the economy is drifting. The focus is now on politics. It shouldn’t have been like that. In fact, politics should not change the economy by 10 or 20 per cent, but right now politics is almost taking 50 per cent and because of that we are losing focus. Nigeria has almost stopped production waiting for the result of the coming elections. That is wrong. We should differentiate between economic system and politics; let politics be solely on administration and then the economy should drive itself based on the activities and the factors that promote that economy.

    Of course, 2025 is by the corner, about six years now, a lot of things can still happen if we are focused. Even if its not achieved, at least, we can make 50-60 per cent progress. It is achievable all things being equal.

    Much has been said on the need to attract more investments. Would you say enough  efforts are being made to that effect?

    When I was in the UK, some groups from India and China were asking some key questions about investments in Nigeria because they saw that there are a lot of resources Nigeria has, which their country does not have. Of course, the investments are coming, both local and foreign, because Nigeria operates an open system. There are also lots of Nigerian investors like Dangote, who is investing in Kenya’s oil industry. Again, because of global issues, people are being attracted to do business with Nigeria no matter the security and other challenges we have.

    Why is the economy not globally competitive? What are the major challenges?

    Nigeria is a growing economy. If you see the ratio of our development, let’s say between the rich and the poor, there is still a gap; we don’t have a middle class unlike the developed countries. Go to countries like the United States (US) and the UK there is a middle class. The middle class has people that are focused, they don’t even want to be rich. These are people, who even when they marry, do not even want to have children, they just want to work. They are people, who after going to school want to travel out with other things entirely on their minds. But in our situation if you are not up there you must be down there. So, because of that the economy is not moving at the speed that is expected. It has made some people to be gullible and greedy. It has even turned some people into criminals because they want to make it at all cost. Some get involved in advanced fee fraud, otherwise known as ‘419’,  whereas they would have walked the ladder and get there.

    So, the problem is that the middle class is difficult to sustain. For the middle class to be sustained there has to be a standard arrangement so that people will stop day-dreaming. For instance, in Nigeria you see all kinds of cars. Nigeria is like a dumping ground for all kinds of cars, there are no controls. Our tax system should have been used to control the influx of some of these goods and services. Our tax should have been the focus of government. As at today, a lot of funds are being wasted. In fact, the waste in Nigeria is huge. It is part of the hindrance to our economic development.

    What is responsible for the sudden disappearance of the middle class? 

    Because of the economic values Nigeria has, which is, if you are not rich nobody cares for you. The government has not really done much to encourage the middle class. I don’t know how many people in Nigeria are satisfied with what they are getting. When you want to be satisfied, you face problems either from security issues or from religion, or from government, or from where you are coming from. That is why some people, who were at the middle class, before you knew it they came down to zero class; looking for a way to even survive, which is wrong.

    The government should have worked so hard to encourage the middle class. You must have a plan and a focus of what you want to do and how you want to do it. And when you fail, you should do an evaluation to find out why you didn’t get there, what caused it and analyse those causes. Failing is not the issue, rising is. But in most cases people cannot even rise because they don’t know why they failed. If plans are put in place, the middle class will return. All hands must be on deck to achieve it because it is at the middle class that you have the three basic things-food, shelter and clothing.

    How can the Small and Medium Enterprise (SME) sector be supported to grow?    

    The SME sector is very important. In fact, China started when they closed the wall. Chinese said they want to determine whether they want to survive or not. They call it ‘sachet businesses’ or ‘sachet marketing’. They live in cottage system where they can buy and use what they can afford. And again, its better to start business small and grow big. Identify your core market requirements within your environment, provide those needs, provide the products and services and ensure that people within that area are able to buy them.

    An SME does not require large capital, it operates within a short-term plan, not a long-term plan. But in our own scenario, most of them are opportunists because they want to catch up and use the money for long-term planning. That is why most of them have no direction. Like I keep saying, SMEs need to come up with business development plans. Before a company is incorporated, that company will come out with a business development plan. Before you open an account for a limited liability company you should submit a business development plan, and government will key into it and follow it up. If at any point that business does not achieve that objective,  it is quietly withdrawn. By so doing, government will be able to identify those people that are performing and those that are not performing.

    You see, most people move into the SME sector because they don’t have any other alternative. SMEs of course, can assist in turning around the economy, because I can assure you that if you are in SME you know exactly what you are producing and already have grown a market share in that particular business. You will be able to identify your key customers and only focus on servicing them. Before you start a business you should be able to identify the business needs, who your key customers are and satisfy them. Some of the SMEs will convince the banks dubiously or otherwise, and once they have the money, like N2 million, they disappear. They will use the money to import one big car, or go and take a title or  marry more wives. This is why the Institute is insisting that every organisation should come out with a business development plan.

    In other words, the problem of SMEs is not so much about the lack of access to funds, but the lack of bankable business development plan?

    The first problem is that people, who are interested in SMEs, are not competent in that business. They don’t have real intentions in that business; their intention is to use the money for other objectives. Two, who are the professionals that draw the business plans? First of all, you do an environmental scanning because businesses that thrive in the south may not thrive in the north, but most of them will just go and copy a business plan thinking if you are selling pure water in Lagos, for instance, you can sell it in the north, after all north has a hot weather.

    So, before you do a business plan, you must do an environmental scanning. SME is one of the best businesses to get involved in. Every family can get involved in SMEs. Families can get involved in bakeries, for instance. A group or an organisation can do it. Most SME operators are incompetent people, who just want to use it to do other things and because they know how to get funds they get the money and before you know it they channel it to other areas. If it is properly directed SME is a very good business. It has helped other economies to survive.

    How do we solve some of the problems you mentioned with regards to SMEs?  

    All the players like the banks and government agencies involved in it must identify and do a thorough investigation of who needs these SMEs and for what purpose. There must be a proper business plan, which must be approved or authenticated by a standard professional organisation like the Institute of Business Development (IBD). Another thing about the Institute is that we have a code of conduct that if you err your certificate will be withdrawn and we are independent. If the right things are done, the result will come over sometime. But Nigerians are rather in a haste, you want to start business today and  make profit tomorrow. No, lay a good foundation.

    What about infrastructure, which operators complain about?

    What is infrastructure? Infrastructure is equipment, roads, electricity, etc. That was why I told you that the cost of production in Nigeria is on the high side. This is because individuals are providing electricity by themselves and the cost of maintenance will definitely affect the price because it will increase their cost. For a good business you should be able to cover your cost and determine your profit. Some people who get involved in SMEs do not do a social plan. But people don’t do that. They say I am the director, I don’t even earn salary, but any money made they will just withdraw and use it as if its their own. At the end of the day the money disappears and the business suffers. So, to get round it like you said, a good plan should be made, competent hands should be sought and you must do your environmental scanning to know whether the business can survive in that environment. Its not because A is doing business and he is surviving that B must survive because A is different from B. So, you must find out that business you think you have the competence in.

    The price of Nigeria’s crude in the international market has been dropping in recent times. Is this a cause for worry?

    No. Why should we be worried? What about the global warming? What about the ozone layer that is cracking? You see nothing is static.  For example, Nigeria had palm kernel, cocoa, groundnut pyramids why did they disappear? Is it not because of global changes when they discovered that oil can give more than what you get from those agro-allied businesses. The moment oil came everybody keyed into it and technology changed and with time or at a stage in the circle, that oil could move into another thing. All you needed is that the time you had oil, just like the dream Joseph had in the Bible when he told Egypt that it will have seven years of bumper harvest and seven years of famine, we should have been intelligent enough to use that oil to provide sustainable development. And then look at our core areas like agro-allied business, because as long as we live we need to survive, there is no human being who doesn’t eat food. So, if we had used that oil money to improve our palm oil, cocoa, groundnut and so many other resources, even if there is no oil again we will still plan and work like any other developed economy.

    The United States (US) has a large storage of oil because it planned. The same for Germany and the United Kingdom (UK). In fact, I went to a place in the UK, they have an advanced farming system which  looks at how the production of that farm for the next 20 years will be sustainable. But here we don’t have such plan. Let me give you another scenario. During the Tsunami in Thailand do you know that they discovered that rice production will drop in the nest five years. And what did they do? They came out with zero interest rate, encouraging farmers to go into core rice production. And Nigeria knows that rice is one of our major importations. What did we do? Here the contractors were waiting and planning how they could siphon money from the government. You see, we should key into a global thing. We should be very committed to communication. When others are planning we should equally plan. Not when others are planning we will be sleeping. When China, Indonesia and others knew that because of global crisis there was going to be a shortage in food production they started planning and then cut us off and then our rice skyrocketed. Look at how Nigeria treated the Ebola issue. Didn’t we survive it? We did. If we waited until America will come up with a particular vaccine, which we can use people would have been dying. Why can’t we look inward? This oil & gas that we are still flaring can’t we domestic it in Nigeria? How many Nigerian homes are using gas to cook? How many industries are using electricity? Nigeria has almost 200 million population, if Nigeria can sustain this by providing goods and services things will be better. We should stop looking outside; let us look inward. That was what China did. Today China’s economy is out-growing America’s economy. So we should be asking what can we use our oil to do? What can we use our gas to do? We have a large span of land, we have human resources, we have engineers, we have professionals across boards. Can’t we begin to look inward? Can we use that oil and sustain our own industries and use it and create our own economic value, that will increase the naira value so that naira can equitably compete with the dollar? But rather we are looking outside where we want to export our crude oil, they process it and send back to us at a very high margin thereby making our naira to be zero. Nigerians are gullible. These people are not interested in the development of our economy because we have the resources to turn around our economy by ourselves.

    The institute is organising a business development week. Why the summit at this time?

    Our Institute believes that business development is a key need of any economic development. Seeing what happens globally we thought that there is need for the Institute to come out with a business development week where we can look inward to review the business development segment of our economic system and review what impacts they made. The idea came up at the time I was at the ‘UK Week’ where a paper was presented and Nigeria was seriously criticised, that nothing good comes out of Nigeria. So, we think we should discuss our problems here in Nigeria so, we invited people who have developed to come and participate with us, support us, give us their ideas, not discussing it outside Nigeria. That is the essence of the business development week and it is an annual event, we want to be running it every year. Again, business development cuts across all economic systems. Business development is in all kinds of businesses whether profit making or no one-profit making so people should key into it and be focused in their business segment and business plan to be able to use the competent hands in driving it and then the result will come.

    What should participants expect?

    We have a lot of themes. The Business Development Week is going to run for three days starting from 12th to 14th November 2014. The theme of course, is ‘Business Development in Africa: Emerging issues for Strategic Action’ and the papers are going to look at the new Africa, the new frontiers, the new opportunities that we can get in Africa. As I have told you, Africa is highly endowed, Nigeria is endowed, Ghana is endowed, but let’s look at those opportunities. So, we are going to look at those opportunities. We are going to look at regional integration as a tool for Africa’s business development.

  • ‘Fed Govt has no agric policy’

    ‘Fed Govt has no agric policy’

    In the not too distant past, Nigeria relied on agriculture to boost its economy. There was cocoa in the West; palm oil in the East and groundnut in the North. The country abandoned agriculture when it found oil. But with the economy in dire straits, Mr. Neji Abang, the Country Coordinator Socodevi, an international agency, believe, a return to the land will rejuvenate the economy. In this interview with DANIEL ESSIET, Abang says cocoa production could do the magic of turning the economy round, urging banks to change their attitude towards  funding agriculture.

    How has the state of the economy affected food production?

    Let me say that Nigeria has weathered internal and external economic shocks which should provide a lot of lessons in economic management. The issue is whether the leadership has learnt enough from these experiences to put in place pragmatic measures towards achieving healthy economic growth rates. Right now, I think a lot still needs to be done to revamp the economy if we really want to stimulate economic growth that is more broad-based, driven by domestic demand, infrastructure and increased trade in manufactured goods. Experts keep emphasising on the need to create opportunities for all through prudent macro-economic management. Any slackening on macro management will undermine future economic growth. In the medium to long-term, I expect the government to provide incentives for more Nigerians to enable them participate in the various food value chains, which is viewed as part of the strategy for achieving strong, sustained and inclusive growth. The potential to stimulate a range of activities that bring a product from conception to delivery to the consumer is in the agric sector. This could serve as a springboard for economic diversification, domestic resource mobilisation and investments in critical infrastructure. Government needs to invest more in the productive sectors, building skills, creating jobs and acquiring new technology, knowledge and market information.

    Will these interventions impact on the fortunes of the cocoa industry?

    These interventions require sound public policies, as well as entrepreneurs that are willing and capable of helping achieve these gains. The agric sector has a great potential to grow the economy, support rapid rural development and natural-resources assets. To achieve this, we need public policies articulated in a targeted strategy that promotes more equitable economic and social transformation and an environmentally sound development. The new crops and technologies have been brought in to enrich our agricultural diversity.

    The challenge, however, is that they are not well integrated with local agricultural production systems. Most traditional cash crops are mainly produced in large plantations which had no linkage with small holders. Then we have not been able to diversify food sources to reduce dependence on major food crops. The hope, however, is that the government is promoting food crop production based on productivity improvements. Through the Agricultural Transformation Agenda, certain food crops are prioritised as the centre of agricultural policy. What we need is a consistent agricultural development strategy in which packaged measures such as irrigation development, enhancement of farmer-centered agricultural research and extension and agro-input industry development.

    The Federal Government is working on doubling cocoa production to 500,000 metric tonnes (MT) by next year. Is this achievable?

    Yes and no. The Minister of Agriculture and Rural Development, Dr. Akinwunmi Adesina, said the government plans  to boost cocoa production to 500,000MT by next year. We can only achieve this if farmers have access to early-maturing, high-yielding, disease-resistant beans. There have been efforts to distribute varieties of cocoa that can mature in about 18 months to farmers to replace the traditional crop with four to five years maturity. The new varieties produce 1½ metric tonnes of cocoa per hectare (2.47 acres) each season compared with the older types which yield ½ tonne. The   cocoa year is divided into two harvests with the main one beginning in October and ending in January, while the smaller crop usually begins in April and ends in June. The dates may vary each year depending on the weather. Cocoa production is calculated based on the rain pattern from the main crop season, which starts from October to February or March; and the light crop season from April to September.

    Currently, several states such as Ondo, Ekiti, Edo, Cross River, Osun, Oyo, Ogun, parts of Abia and Taraba grow the crop for commercial purposes. There had been steady increase in output over the past five years except in the 2011/2012 season when the crop was infected by diseases. Definitely, there has been steady increase in production of cocoa in the last five years. A report said cocoa production should hit 305,000 MTs by September this year. It also said the output for 2011/2012 planting season was 250,000 metric tonnes, with a 10 per cent increase in the 2012/2013 season, that is, 270,000 metric tonnes. Cocoa bean is also said to have increased in price to N420,000 per MT, up from N300,000 per MT about a year ago. Last year, the challenge we had was the drought that affected production and that did not encourage farmers to reinvest. But this year, we are hopeful because the revival came when the rains started earlier than we expected.

    A few years back, there were free seedlings given out; and as you know, when there are incentives in the area of seedlings within one to two years, they will start yielding results. Despite the increase in the last five years, the country is still far behind other countries in terms of annual output. For instance, Ivory Coast, which is currently the largest producer of cocoa, is estimated to have been hitting one million MTs per annum in the last few years, while Ghana produces between 900,000MT and 950,000MT, rising to 1.1 million MTs in 2011-2012, and falling again due to the fungi attack. Cocoa farming is a good business but government’s support is usually not enough. There is no policy on cocoa; what happens is that as a minister comes in, he does whatever he likes and another comes in to do it in his own way.

    Why is this so despite the efforts you have spoken about?

    There is no document to work with; any framework or procedure to follow. During the cocoa board era a few years back, farmers protested and many of them turned their farms to arable farmland because there was no si8upport and they constantly had to battle to save their crops which affected production.

    By 1999 when the President Olusegun Obasanjo’s regime started, Nigeria was doing just around 170,000 metric tonnes per annum. We tried to get a framework for the industry during that regime late in 2006. But by that time, people were more interested in politics; so, it was not achieved. In the 2005/2006 season, there was cocoa rebirth and people started planting in Osun, Ondo, Edo, Cross River and some parts of Abia states; and all of these are just coming into commercial production now; that is why we are experiencing this leap.

    What challenges do you see?

    The challenge right now is that cocoa production is being hampered by a failure to modernise ageing plantations and attract young farmers to the sector. Cocoa output has been erratic. It has oscillated between record production and sharp drops in recent years. This has been blamed on poor weather, disease outbreaks and lack of farming inputs. Losses due to disease and pests claim between 30 and 40 per cent of the nation’s harvest. We could see some changes if there is   increased fertiliser use, sustainable farm management and quality control.

    Ageing trees and a lack of investment have driven down yields, reducing volumes produced and lowering farmer incomes. Bean quality has suffered as a result. Farmers often sun it on tarred roads and beans are not fermented. It is necessary to train farmers to produce quality and not only quantity. The government needs to support cocoa dryers in the main growing areas to reduce the presence of smoke in beans and reinforce controls to meet tougher European Union (EU) quality standards. Globally, the industry is gearing towards sourcing only certified traceable cocoa from sustainable farms by 2020. Our worry is that many farmers may not be able to afford the required investments and could be left behind. If we are going to improve production, then we have to rejuvenate its trees, many of which are a half-century old. Farmers are recording huge losses with the current crop variety. In some cases, diseases have ravaged trees and harsh weather killed off flowers and small pods. The government needs to support the industry with disease-resistant, high-yield cocoa seedlings for planting. The cocoa transformation programme is on course, but only a handful of nurseries have been established.

    On the other hand, I will say that it is also practically impossible for us to meet the target of tripling output to 600,000 tonnes within the planned period given the state of things. Trees require six years to hit peak production and for Nigeria to reach its target, the programme should have been running at full steam now. But this has not been the case. What they are doing now is neither here nor there. There is a lot of lip service and it is as if they don’t know what to do.  The cocoa sector has too many problems. We need to completely restructure it.

    Why is it difficult to attract young Nigerians to cocoa farming?

    Young people think they can achieve success in life in an office in town rather than on farms. Some of them are not aware of government-backed incentives aimed at drawing them into the cocoa sector. The sector is comparatively unattractive to them, due to low productivity. This same problem of low productivity affected our parents and made them poor. Looking at their economic situation, no youth would like to become poor like them and so they go for other ventures. What is needed most to attract the young generation to become cocoa farmers, in my view, is the provision of adequate incentives such as good planting materials, fertilisers, chemicals, and other things that will ensure improved productivity as well as good pricing of the cocoa bean, to make the cocoa business comparatively better than most white collar jobs. There should also be a policy to help the youth to get access to land as the current land tenure system prevents more young people from having access to land. Cocoa production should be introduced as part of school curriculum, at least in the cocoa producing regions, from primary through to senior high school. This would certainly help the youths to acquire knowledge and skills in cocoa farming, thereby boosting their interest in cocoa production. Government can lure young people to cocoa farming by creating new plantations and giving logistical and financial help to new farmers.A lot of buyers are playing a greater role from farms to export, to guarantee supply. Some multinationals are partnering with cocoa farmers. They provide them with financing to enable the production of certified cocoa for the firm. I believe this could be an incentive to attract the youth as they will know that they would have future security if they are in cocoa farming.

    Total cocoa production stood at 300,000 tonnes last year showing an increase of seven per cent compared to the previous year. Does this give hope?

    The government, under its Cocoa Transformation Action Plan (CTAP) has targeted cocoa production to increase by 40 per cent to reach 500,000 tons by 2015. Incentives at attaining production goals remain inadequate. I want to say that increasing adherence by local cocoa farmers in achieving  certification is shoring up demand and prices for our cocoa at the international market. These factors, as it appear would continue to encourage farmers to rehabilitate abandoned farms and also increase areas under production. The other issue is the suspension of the Export Expansion Grant (EEG) in 2012.This discouraged local cocoa processing. Local cocoa processing increased in 2010 and 2012, spurred largely by the introduction of the EEG export incentive rebate programme to encourage non-oil exports. However, government suspended the EEG programme by mid-2012 following sharp practices in cocoa export reporting by certain exporters. Since then, local cocoa processing has dropped significantly. We are hoping the government reviews the scheme in time to correct the identified inadequacies. This will go a long way. Without this, we have a big challenge at hand. In  2011,  Dr Adesina set out clear goals in his “Cocoa Transformation Agenda” which among other things, aimed to double cocoa production in Nigeria from 250,000 to 500,000 metric tonnes by 2015 and achieve a 25 per cent processing rate of the national output within four years. This can be achieved with through the availability of cocoa farm land. Major works have to be done on educating and providing local farmers with crucial equipment such as agro-chemicals and imported fertiliser, formulated specifically for cocoa farming, insecticides and hybrid pods, as well as improving farmer skills. The incentives at attaining production goals remain inadequate.

    Your organisation, the World Cocoa Foundation (WCF) and the Federal Ministry of Agriculture and Rural Development announced $1.2 million in new funding to provide assistance to 70,000 cocoa farming households in Nigeria. What is this supposed to cover?

    The programme will focus on business skills training and support for diversification of rural economies to increase cocoa farm household incomes. It will benefit 10  states by next year. The programme is expected to generate benefits for more than 480,000 Nigerians and help double household incomes within the next five to six years. Our partnership with the Federal Government of Nigeria is built on the foundation of our Cocoa Livelihoods Programme (CLP). It is funded by the Bill & Melinda Gates Foundation and WCF member companies with partners from the German Development Agency GIZ. This partnership will ensure that the Nigerian programme benefits from lessons already learned through CLP’s engagement in other West African cocoa-producing countries. The farmers will be registered, grouped and trained. They are expected to go back and adopt new techniques and practices which will lead to certification of their produce. The issue is that there is pressure from European consumers that exporters should train their farmers to produce according to the international standards. They have emphasised that any cocoa that is not certified by 2020 would not be allowed to enter Europe. So, with certification comes a premium price. The premium is a reward for complying with quality specifications and good agricultural practices. At the end of the implementation of government policy on cocoa production which has started, the Nigerian market will be opened up for competitive cocoa production, it will result in job creation, increased gross domestic product (GDP), generate revenue for cocoa farmers; and most importantly, encourage the establishment of industries that would utilise cocoa as raw material in the country.

    How will you describe cocoa farming in the country?

    Cocoa production is a very lucrative venture if farmers apply business principles. They should adopt sustainable practices in the production process. We have signed a Memorandum of Understanding (MoU) with the Federal Ministry of Agriculture to train 70, 000 cocoa farmers and 100 groups in 10 cocoa producing states. The states are Ondo, Cross River, Osun, Ekiti, Edo, Ogun, Abia, Oyo, Kogi and Akwa-Ibom. Socodevi Nigeria, a Canadian non-governmental organisation (NGO), is managing the programme for WCF. The programme is geared towards increasing cocoa production from 450 kilogramme (kg) per hectare to about 800 kg per hectare. The training had become necessary because many farmers have limited access to information and education on improved farming techniques that could enhance their yield. For the nation to achieve its goal of food sufficiency, farmers must have access to quality inputs such as sowing seeds, herbicides and pesticides, or to critical information such as accurate weather forecasts that could help them improve the quality of their crops. The success of the programme in improving farmers’ income through increased yield and savings on production costs has stimulated an upsurge of demand for more programmes in other communities. Trainers are drawn from Agricultural Development Programme (ADP) offices across the country and department of cooperatives of states involved in the programme. This will lead to certifying the cooperatives. Using the Farmers Business School (FBS) model, 70,000 cocoa farmers would be trained as entrepreneurs, thereby increasing their capacities to effectively manage their farms as businesses.

    What is your take on the staple food processing zones project and the benefits for farmers?

    The Federal Government has launched the  staple food processing zones project with the aim of increasing staple food crop yields, increasing average farm income, restoring degraded farms in areas which are critical to food supplies but continue to record dismal food production due to poor agricultural practices. I believe it will lift at least 25 per cent of poor households above the poverty line. The programme will help poor farm families to boost their income from agriculture. Right now, we are encouraging small holder farmers to grow crops that will insulate them from food insecurity, crops that are drought resistant and would provide a good diet. Beyond that, growing high value crops and value-adding are strategies that make these small holdings viable. Small-scale farmers’ agriculture needs better and affordable access to seeds, fertilizer, chemicals and other inputs to become more productive and intensive. The cost of inputs is too high and the only way to deal with that is for the Federal and State governments to subsidise inputs to help farmers plant. While a few small farmers embrace intensive money making strategies, the vast majority of small producers remain caught in the vicious cycle of high food prices, limited production and high input costs that make their lives marginal.

    What would you say about financial institutions and their involvement in agriculture?

    They are not doing well. If more financial institutions are involved in agriculture, more money will come into the sector, thereby driving household and national income. We need more money to reposition rural farmers into viable businesses as this will also stimulate commercial agribusiness. When did you read about micro finance banks financing small farmers? We need financial institutions that can assist small farmers with capital to invest in farm machineries and equipment. Such initiatives will not only enable farmers to triple profits from the processed agro based products but also open up numerous opportunities for the many unemployed youths in rural areas to have a source of livelihood.

    What are some of the challenges and opportunities you face in working with cooperatives and farmers?

    As a development agency, we work with cooperatives, with independent farmers as well, which can present its own challenges. Every story is different. The biggest challenge is staying on top of the relationship, making sure they understand what the global cocoa requires, and keeping on top of what the challenges are. It’s all about keeping lines of communication open, fostering that strong level of communication to get the quality and relationship that we’re looking for – that’s the most challenging thing to maintain.