The Nation Newspaper

Category: CEO

  • ‘Nigerian Content Act is a blessing’

    ‘Nigerian Content Act is a blessing’

    The Chairman, Chief Executive Officer, Gibles Oil and Energy Group Limited, Prince Blessing Omogbemi, is a beneficiary of the Nigerian Content initiative. In this interview with Deputy Business Editor SIMEON EBULU and Assistant Editor EMEKA UGWUANYI, he explains how the law has helped his business to grow.

    What is your assessment of the Nigerian Content Act?

    The Act is very good because most of the provisions are geared toward promoting indigenous capacity development. Section 47 of the Act says that the operators should set up manufacturing factories to produce some of the ancillary equipment such as nuts and bolts, among others in-country and invest in facilities, so the wealth spent on importation of these items should be retained in Nigeria. Unemployment is a major challenge to the country and without the establishment of factories here in the country, we cannot eliminate or reduce unemployment.The Act helps both the international oil companies (IOCs) and the indigenous companies in the oil and gas industry because it created opportunity to manage the industry within. It helps the government to be focused as well as Nigerians willing to do business the right way. It gives the indigenous firms opportunity because if not for the Act, I wouldn’t be doing a job in Escravos Gas-To-Liquid (EGTL). It will promote the local community contractors, all the indigenous companies financially and socially but one thing will happen. We have to be prepared. The vision we have is not just for our company but also to leverage individual potential at community and national levels. It is the Nigerian Content Act that will give us the room to operate but we have to think about equipment acquisition, and yards. Most of the fabrication jobs are carried in South Korea. If these jobs are continued to be done overseas, when will Nigerians take over? I believe this is transition period and Nigerians should competently take their rightful place in the industry. It should be a gradual process but we have to be prepared in terms of financial capability, right personnel and good facilities.

    Which other multinational company has boosted Nigerian Content?

    I will continue to mention Chevron because 90 per cent of the jobs my company has done came from Chevron, while Addax is about five per cent and the remaining from Nigerian National Petroleum Corporation (NNPC).

    What are the contracts Chevron gave your company?

    In 2005, we got our first contract from Chevron, which was double-jointing of floating pipeline. It was in Warri and I used a fabrication yard in Warri to do it. Another one is the EGTL project, which involved painting and sand-blasting jobs, re-factory and supply of labour. We are also looking at another one that we are still working on, which we will partner with our partner in China. We are proposing the construction of a factory in Ogun State. We are still talking with the Ogun State Government and they said the land is ready. The factory will manufacture bolts and nuts and we will partner with the state government on the project as well as our Chinese partners. We also have plans to go into agricultural project, where we will do poultry farming and plantation. We are talking with Chevron on that project because the company has a foundation called PING Foundation, which plays in the agricultural sector, to see how they can support us. We are talking the officials PING Foundation and have promised to talk to Diamond and Fidelity Banks to finance the agricultural project. We have already acquired two acres of land in Ogun State for the project within the area Olokola LNG project is situated. We have not concluded on the discussion, by the time we conclude, I will give update on the level of their support.

    How much has your company earned from the contracts secured from Chevron?

    I cannot really talk about the amount but I can say that the business I have done with them since 2000 to 2013, has been very profitable. There was no record of loss but profit.

    You mentioned agriculture and you play in oil and gas, what is the relationship between the two?

    The PING Foundation is just to help the people in Niger Delta region and because Chevron operates in the region, the company explores areas where it can help the people, look at what they lack or what will benefit them and see how it can provide these things. The company encourages development of small and medium scale enterprises (SMEs) through the foundation. It is a body just the way I have the Perfect Care Foundation in order to take of the people where it operates. I think, it is just to take care of the people it works in their land and also to empower them.

    Should we say that the initiatives by Chevron and other IOCs by extension are part of measures to curb or eliminate militant activities in the region?

    I think it is part of it and it is the way forward because if everybody is busy nobody will be willing to be involved in militant activity. Chevron believes that the best way to help, engage and empower the people in the region is not by giving them money but by teaching them how to make the money on their own. The company doesn’t want the people to engage in fraudulent activities and the best way to handle the issue is to set up the PING Foundation. The foundation takes care of those willing to do business or vocational activities male and female alike because the major occupation of the people in the region is fishing and farming.

    Can you throw more light on the agriculture project and in which areas will your firm to be involved?

    The areas the foundation supports include poultry and cassava farming. It is also looking at marine activities such as vessels acquisition.

    The jobs you did for Chevron and Addax, how did they translate to job and wealth creation for Nigerians?

    I may not be able to say exactly but on the EGTL project not less than 10,000 Nigerians, including engineers, welders and contractors, among others, worked on it, which shows that Chevron is concerned about Nigerians and I can say it is a major promoter of Nigerians in job creation.

    There may be other indigenous firms that want to do contracts with international oil companies but dont know how to go about it. How did you become Chevron’s contractor?

    What I was doing for Chevron before 2000 was supply of fish, shrimps and prawns, among others to Nigerian caterers who cook for the company. At a point, I thought I have to upscale my business. I proposed to build a cold room at Awoye in Ilaje where Chevron has a facility because suppliers didn’t have cold rooms then. The cold room could have been built within the shortest period but the crisis between the Ijaw and the Ilaje in 1998 stalled the cold room business. We have finished constructing the structure but couldn’t continue with the business because of the crisis. I decided not to continue with fish business and veered into construction in 2000, registered Gibles Group with CAC and in the same year registered as a contractor with Chevron.

    How do you source your funds?

    Our projects are financed by local banks. Our first project was financed by Intercontinental Bank now Access Bank. The funds for the EGTL project were sourced from First Bank. Chevron gave us 30 per cent mobilisation and the remaining 70 per cent came from First Bank. We used the contract paper and some properties as collateral to get the loan.

    Gibles Group has six subsidiaries including oil and gas, marine and logistics and hospitality, among others, do you have a technical partner either foreign or local or do you operate a one-man show?

    We believe in partnership because it works. I don’t subscribe to family business that one manages with your wife and son because of you people are not resourceful and don’t have ideas, the company will just die. We don’t want that. Based on our vision, we have many things we want to do and we cannot do it with one company. Gibles is into engineering services including blasting and painting, fabrication, manufacturing, procurement and equipment leasing. But Vital Oil Limited is for downstream. Our downstream operation will come on stream next week. We will be marketing premium motor spirit (petrol), automotive gas oil (diesel) and dual purpose kerosene. We will start our marketing and distribution outlets in Lagos where we will move on to other parts of the country.

    What informed your desire to play in the downstream sector?

    Playing in the downstream sector has been part of our initial plan and vision. We don’t want to put all our eggs in one basket. We cannot concentrate only on the upstream. The emergence of shale oil and gas, according reports, will have negative impact on the country’s upstream sector; therefore, we want to diversify into other sectors. We also look at our role models such as Mr Aliko Dangote and Chief Mike Adenuga. They are into different sectors of the economy and that is the way we want Gibles Group to go.

    What is your budget for Vital Oil in the short term?

    We are working banks and I don’t want to disclose exactly our budget but it will not be less than N150 million for a start. We want to start with distribution of AGO (diesel) and renting of filling stations. We don’t want to start construction of new filling stations immediately. We want to rent filling stations for at least a year. We are talking with depot owners for products purchase. We have already paid for four trucks that will carry the products. We have also concluded training for the personnel that would do the job. These preparations delayed our taking the final investment decision (FID). The downstream marketing is a profitable business but one has to be very prudent in running it. We will finance 25 per cent of the cost while banks will do the remaining.

    Are you looking at vessel acquisition and importation of petroleum products in future?

    We are just dealers because we haven’t got licence to carry out the business you are talking about but we are working on it. One of the products codes registered with NIPEX includes vessel acquisition under the marine logistics. We have secured certificates from NIMASA and NPA.

    What is your take on deregulation of the downstream sector?

    Deregulation is good but the government should assist operators in the downstream because the cost of funds (securing loans is high). Government should see how to come in and make banks’ interest rates come down.

    What are your challenges?

    The most challenging area is securing funds to finance projects because if you go to the banks they ark you will bring all manner of collaterals, get this and that. If not because I have assets in Lagos and other places, it would be difficult for me to secure loans from banks. Another challenge is in the area of skills development. Government should find way of making Nigerians to be trained to be able to take over from the IOCs. Many locals lack skill and expertise and are very lazy. Nigerians should set up requisite training centres to train Nigerians.

     

  • Why interest rate is high, by Access Bank GMD

    Why interest rate is high, by Access Bank GMD

    The rate at which banks lend customers money is high, but they pay little or nothing for keeping savers’ funds. Why is this so? It is because of the cost of operations, such as buying generators and AK 47 rifles, says the Group Managing Director of Access Bank, Mr Aigboje Aig-Imoukhuede, at an interactive session with journalists in Lagos. Deputy Business Editor Simeon Ebulu was there.

     

     

     

     

    Outlook Access Bank intends to be known as the most respected African bank. We are going about it in a sustainable way with a philosophy. We have a reputable and sustainable banking philo-sophy, a philosophy that has propelled tens and thousands of people who work with us to deliver tangible solutions of reputable financial services across Nigeria.

    We have a responsive banking system services, it is a privilege which carries a great responsibility. As a bank, you have the privilege to invite millions to deposit their money with you, because you know it is based on trust that people save with you as a bank. So that confers a responsibility on you.

    We want Africa to work the same way Asia works, and we want an African bank that works the way American banks works.  African institutions must change.  We are going to do the things we do to gain the respect of the world, and the financial position in Nigeria will change, and we will all be the better for it. When we achieve the financial position we are trying to create, things will change.

    Access Bank has 6.5 million account holders. We are in leadership position in respect of corporate account, and the process is growing significantly, today we are one of Nigeria’s biggest corporate banks, I don’t think anybody will doubt that.

    Presently, there are institutions of a similar pedigree like Barclays, HSBC etc. These are banks that dominate the entire value chain that they operate, and our example in Nigeria is First bank. Some get there by virtue of instinct, FirstBank has done creditably well, they are the first, but you know, it’s not everybody who started earlier could get to where FirstBank is.

    Cashless Lagos is a deciding factor in which transacted volumes are moving from the traditional way of banking you used to know, not that cash is not there, or that cheques are not there. If you look at the growth of payments’ movements, cash and cheques are growing at a regular rate. The other payment methods are growing rapidly. It is obvious that the time will come when automated payments system will dominate transactions.

    The focus of this presentation is to tell you about our direction, with respect to retail and SME, because that is the new Access Bank. In 60 days time, Access Bank will launch a solution that will allow you to, from your computer, take money out of all your bank accounts and consolidate in one without paying an extra fee. You will have to give the instruction from day one, that is how this thing is done in the world today, this is another first from Access Bank.

    What our plan says is that by 2015, we are going to be the world’s most respected African bank, a multi channel bank, multi channel in essence.  We want to move from being Nigeria’s corporate bank leader, and by 2015, our target is to be a high performing Nigerian diversified banking leader. Our inclusive banking strategy projected the Bank as the National Champion for women. Specifically, we have 2.6 million female customers.

     

    On monetary

    policy tightening

    You see democracy is good for the growth of the banking sector in Nigeria. Events in the past 10 years have assisted the fiscal and monetary stability of the country, thus leading to growth in the financial sector because we have functioning institutions that require more financial system focus. I do not see any thing in the next 10 years that will be fundamentally different from the current monetary policy perspective. Things should be normal as it has been over the past 10-15 years.

    There is a difficult side also of democracy. On the difficult side, we are talking about the proper functioning of government so that government does not spend beyond its limit, and when government spends, that functioning is in the best interest of the economy and the public, as far as government is spending from taxes and whatever we have. We can ensure that government at least knows that people are watching and people will see, loudly and shapely things are not going well.

    We also operate in some African countries, we can see how democracy impacts on the banks in that country. So we have good macro economic stability over the past 13 years, but that has been eroded by the poor commodity prices.

    Monetary policy tightening means you have to raise interest rate to make your currency attractive vis-a-vis the dollar. What is happening is that other currencies are becoming more attractive like the US dollar, pound sterling, the euro, among others. In this regard; people’s observation is that the economy is going to be fixed. So, there are people who are going back to invest in properties in the US. Property prices are going up in the US again, property prices are going up in Europe again,. So the only thing the Central Bank of Nigeria has to do today is to tighten our economy, if not, our economy is going to be hammered just the same way as in Britain.

     

    On why the CBN

    protects the naira

    Over the past 20 years, every time the Nigerian currency gets hammered, a banking crisis follows. This of course leads to the devaluation of the currency. This is caused by three major reasons; Nigeria is solely dependent on oil as source of foreign currency, it monetises this foreign currency through constitutional requirement that the nation’s foreign currency go into one account, and the three arms of government share it. And because Nigeria is not manufacturing locally and it is significantly import dependent, any currency depreciation affects the cost of goods and services in Nigeria.

    So when people argue that when you devalue the naira usually it is good for export, I begin to wonder on such postulation. That can be obtainable when you are manufacturing and have a diversified economy which Nigeria does not have.

    Unfortunately when this happens, the economy will be in a trauma which could lead to unemployment. The CBN knows this and it is more focused on price stability and financial system stability. These are challenges and if not properly handled are bound to cause another banking crisis. Do you think we are ready for another banking crisis so soon? I guess it is too early. So, when you are between the devil and the deep blue sea, what do you do? You enter the sea, because I do not want us to dine with the devil. The CBN and its leadership believe in the real sector. So, when you see it come up with polices contrary to their area of focus, then you know that their challenges are significant, I believe that, and it is a reality. However, by God’s grace I believe that all these will become a thing of the past in terms of what is happening globally. Business will resume as normal, all things being equal.

     

    On the wide disparity

    between interest

    on savings (three per cent) and

    lending rate (22 per cent)

    Not all bank customers save at three per cent. There are several more people who save at 10, 11 per cent. that is number one. Secondly, not all people borrow at 22 per cent, these are several who borrow at 12 per cent. Recently we shared statistic from all the banks with CBN on average cost of funds, and it will interest you to know that the average cost of fund across all Nigerian banks, is 11-12 per cent. For the First-tier bank, such as Access, First Bank, GTBank, among others, the average cost of funds ranges within 3.5 to four per cent. For the Second-tier, the average cost of funds ranges between six and eight per cent, while for the Third-tier, the average cost of funds ranges between eight and 13 per cent. Now for the first-tier, our average lending rate is 14 per cent and we have about nine per cent left. When you came here, you saw about four generators backing one another, we maintain our multi-channel system and other infrastructure. In addition, the cost of running a bank’s branch include two generators, two AK47 rifles, these are the realities. These are the things that make interest rate to be high in Nigeria.

     

    On Access Bank’s customers

    and charges

    One thing that should be clear is that we put our customers at the centre of our business. There is nothing a customer is charged for that is not documented. Internationally, there are conditions attached to every account and different charges because there is cost in running an account. But because we know the problem here in Nigeria and Africa, so also the reputation risk issue, we have put in place professionals to look into customer service. So if a customer arrives with an issue, it will be resolved immediately, not only that, we initiated peace champions where 99 per cent of issues are resolved in favour of the bank’s customers. It is a standard thing in retail banking that some things happen, but the most important thing is that when a customer writes us, we ensure that the issue is resolved immediately, and I must attribute this to the existence of an effective customer relationship management that we have on ground.

    Whenever our contact centre is called, we respond promptly. I think in Nigeria, we have an edge over our competitors. Also having a multi-channel banking approach, you need to upgrade and within that context, we think we are reliable. However, business in Africa comes with its own challenges. We have a functioning credit card that you travel with all over the world with 99 per cent assurance, to make it cheap for people. We have a centre in Egypt where our Coordinator works from. But the recent crisis in Egypt forced us to move it to London, you can imagine what we have to pass through every day to ensure our customers are satisfied. More over, at the back of the card, there is a number of our contact centre which is situated in Lagos and can be reached from every part of the world. We also have good number of professionals who work around the clock to attend to customers’ needs.

     

    On difficulty of access to money by entrepreneurs

    in Access Bank

    Truth is you cannot satisfy everybody. Nonetheless, we came out with a product programme for 13 sectors and once you are in that sector, there is a product unit to basically approve your facility as quickly as possible. Supposing you are in education, hospitality, travel, and so on, you don’t need to talk to us, there is a product programme unit which will screen you immediately and give approval or rejection depending on what is required. We know that obviously, this is a good initiative but it has to be managed with care so as not to increase non-performing loans. Those product programmes are designed to support entrepreneurs who are deserving of our support. So that is how it works, if you have an application just go through that process and you are there.

     

    Improving on customer

    relationship

    First of all, we create a starting point. Treating our customers fairly has to be a way of life to all Access Bank staff, this is a corporate culture. People have to attest to this on an annual basis. Normally, there are things to do to ensure that customers at every bank are treated equally, so treating our customers fairly to us, is a way of life. However, we have gone beyond that to carry out research work on Nigeria, our population, and we ask this question after wards- what do these our customers really need? What do we have to do to satisfy them? When we had a small client base, it was easy compared to now that we have about 6.5 million, perhaps 20 – 30 million, and we have put in lots of resources in that segmentation and it helps us to create things that will meet with the different needs of our different customers.

    Now out of all that, we told ourselves that to do what we really need to do, we have to create for ourselves a brand new customer experience; as a result of that we invested lots of time in studies, tools., visiting international markets, asking ourselves what can we do differently to lift up the overall customer experience. In 2001, I read a book called “buy out”. It is a book you cannot let down once you start reading, believe it or not, this book has altered the banking landscape in Nigeria and that is what triggered Access Bank in respect of risk and the understanding of what we have to do. But I will tell you something, there is a new story in town, there is a book called “Outside in” which is basically about creating a brand new customer experience, and because we are a customer-inclined people, we have gone through the book and we are convinced that this will cause a new revolution as far as customer service is concerned in this country, not only customer service, but customer experience. We have come out with about 200 initiatives and we are going to alter how people understand banking in this country and when your children come out of school to work with Access Bank, the experience will be equivalent to international standard.

    I spoke to you initially about our multi-channel system on how to see and understand the transaction that is going on on-line. Because of this, we created 24-hour multiple contact centres which means, Access Bank does not sleep, you will be able to do anything through our e-practice, call our contact centres and get things done. One of the things that make us proud is that we run an integrated contact centre that is multilingual, and also on the social media. To crown this, I mentioned to you what a license does to a bank and it is a privilege to have one. Our promise as a bank is in three faces, namely- speed, security and service. And what makes it a privilege is that people’s hard-earned income is kept in a place that there is security. Our promise about speed is largely around the speed transaction, it’s all about getting to the customers, resolving customers’ issues and getting back to the customer the same day. Service is about creating a new customer experience. The idea has make us neat, clean and tidy. We are fame, secure institution, we do not need the police around us because we do things right and know that our customers’ resources must be cherished and kept with the greatest level of professionalism.

     

    View on inclusive banking

    For inclusive banking, we have made a significant commitment, and what we have done is that we are beginning to serve the under banked, using technology in a very ingenious way. So, out of the technology, we are able to help people who are less privileged and need banking services, also we are able to ensure that people who don’t have easy access to financial services are drawn into the market, and what that does to all of us is that, it tells on the increasing financial inclusion in the country and more importantly deepening what is important to economic growth.

     

    Rapport with customers

    Our belief is simple, if the individual small businesses flourish, banking services will spread across the country. So why won’t we support them? And in any event, by supporting them, hopefully, there will be some reacting factor which will ensure that there is a flow of income. We also told our staff that there must be financial inclusion which will basically help to break things like social barrier, cultural barrier that basically prevent people from attaining financial success. For instance, generally people don’t allow women to have access to finance based on their understanding of the place of a woman in a society. So when you allow it to continue this way, you will have income disparity between men and women. To overcome this, we have an initiative that is designed to empower women and bring them in to the industry of entrepreneurship, and also, to start supporting those who need financial support, not only by giving them money, but exposing them to best practice of entrepreneurship and repositioning them for growth.

     

    Other inclusive banking

    initiatives

    We are targeting one million mobile phone customers in the next 12 months. The bank is dedicating and focusing on SME markets through series of initiatives and activities that would activate development across key sectors of the economy. This is aimed at highlighting the bank’s commitment to economic empowerment of individuals and growing entrepreneurs. The bank has identified 13 critical segments of the economy which are already benefiting from its empowerment programme.

    To drive the initiative, the bank has created a full division (Business Banking Division) to support the needs of these segments and the SME market in Nigeria. The bank has instituted a full division dedicated to serving SMEs customers of over 200,000 today.

     

    Access Bank as a driver of

    industry defining initiatives

    The bank has identified and is set to implement about 200 different initiatives that would change the face of banking. The initiatives will be rolled out one-after-the other from the coming week. Amongst them is the Bank’s planned multi-channel banking platform initiative and a host of others.

    We are leading the adoption of sustainable banking principles in Nigeria and beyond.

    Access bank led the adoption of International Finance Reporting Standard (IFRS) in Nigeria. We are leading the drive for lending in Nigeria’s real sector. The bank is the engineer for public policy advocate. Pursuit of health focused MDGs. Building capacity in public sector for effective public policy outcomes. Employee volunteering impacting on hundreds of communities.

    A leading corporate bank with significant retail growth potential of 87 per cent profit in Nigeria and 13 per cent in other branches in parts of Africa.

    We want Access Bank to be seen as a tier 1, customer focused Bank which is already the second largest Customer base with 6.5million customer base. The second with  ATMs/POS of 1,552/8,480 and the fourth bank with 349 branches.  The  fourth bank with largest balance sheet of N1.74 trillion.

  • ‘IT students’ payment will stop in 2014’

    ‘IT students’ payment will stop in 2014’

    When in 1971, the Industrial Training Fund (ITF) was established by Decree 47, it was charged with producing skilled manpower, among others. Its Director-General, Prof Longmas Wapmuk, in this interview with TOBA AGBOOLA and OLUWAKEMI DAUDA, speaks on the workings of the fund and its role in achieving the Federal Government’s Transformation Agenda.

     

     

     

    How long have you been at the Industrial Training Fund (ITF) and what is your experience?

    Well, I was appointed in August 2006. This means that I’m slightly above seven years in the organisation now. When I came on board, many companies, particularly, the foreign ones were not interested in training at the ITF. They believed that our staff were not very competent. We addressed this problem by training many of our people overseas. And today, in Lagos, we have many training programmes given to us to implement by major companies. A proof of the rise in training consciousness, on account of ITF intervention, is the increasing request for reimbursement by employers registered, and the remitting of training contributions to the fund. Reimbursement of training contributions is done on condition that ITF’s guidelines on training are met. Therefore, the number of employers that request for and get reimbursed, indicates that training consciousness has really increased.

    One of the visions of the ITF, when it was established in 1971, was to be one of the foremost field training and development organisations. Would you say your organisation has achieved this aim?

    I believe the organisation has achieved its aim. The ITF was little known before I took over as the chief executive. We had problem of poor funding. The budget of the organisation was around N3.6 billion, which was too small to achieve all we wanted to achieve. Also, the members of staff were not happy because there was no motivation and the salary was very poor. The relationship between ITF and corporate bodies was not good. My management was also dissolved. These and many more are some of the challenges.

    So, how did you address these challenges?

    The ITF currently is a household name. First of all, I took a trip to Lagos. I met with stakeholders in the organised sector. We discussed on the way forward. This, of course, enhanced our relationship. As I said, my management was dissolved, so I had to set up a new management. Restructuring and re-organisation took place; and today we have about six vibrant departments in the organisation. I was able to get an improved salary structure for the staff and all the outstanding promotions were implemented.

    How did you address the issue of poor funding?

    We discovered that, over the years, the money available for training has been very small and we thought that there was the need to improve the level of funding. When I came, I started by soliciting for money from government. I drew up a plan and followed it up by going to the supervising ministry, the Education Trust Fund (ETF) and many other places but I could not generate any revenue from my efforts. So, I decided to look inwards to see areas to generate revenue from, if we are to function properly as provided in the law that set us up. I found out that in many countries I visited, they have similar laws but with no reimbursement clause because they use all the money to train. But in our own case, we reimburse 60 percent to the industry and 40 percent is left for us to pay our salaries and do the training.

    On assumption of office as the Director-General, I found out that there was a law establishing a Fund. The law provides for the collection of some money to sustain the activities of the ITF. As I said earlier, when I came in, the level of fund generation was very low. Apart from the fact that the budget of the ITF was around N3.6 billion, the law stipulates that ITF should collect one per cent of firms’ and government agencies’ annual staff salaries. ITF is sustained by contributions from the organised private sector. But, when they contribute this money, ITF does not keep all of it. We require them to train their own staff; so part of the training is done by them. When they train, in accordance with our new law, we refund 50 per cent of what we collected from them. So, we do not keep all the money. What is left is not enough to fund us, and to equip our centres. That is why, of recent, you see that we have been making a lot of efforts to collect revenue.

    Have you started collecting the one per cent of workers’, and what is the level of compliance?

    Yes, we have started collecting the money but what we have collected so far is not much. This is because we are just implementing the legislation and there are so many things in the amended Act. If you look at section six of that law and the subsection, the level of compliance is not high, but it has improved. For instance, the number of companies have improved from 5,000 to 20,000. Our revenue has increased to about N18 billion now. Mind you, about 800,000 companies are registered with the Corporate Affairs Commission (CAC). So, you can imagine 20,000 companies out of about 867,000 companies. If we can get hold of at least 300,000 companies, it will solve most of our problems. We still have a long way to go, though, but I know we will get there.

    The mission of ITF is to set and regulate training standards and offer direct training intervention in industrial and commercial skills and technology. How have you been able to achieve this?

    Since I assumed office as the Chief Executive of the Industrial Training Fund, we have scaled up the training of our staff both locally and abroad with the objective of enhancing their professional competence. We trained members of our staff internationally, particularly in the area of technical vocational education. The objective here is for them to come back and impart knowledge to those at home, so that we would be able to build a core of highly trained technical manpower. At the home level, we have organised short courses for our staff.

    Consequently, the ITF has created a crop of well-trained development officers, some of whom are certified and recognised internationally in their areas of specialisation. For instance, we’re very good in the areas of occupational safety, health and environment. Also, we are involved in productivity and efficiency improvement training.

    Can you tell us about your training centre? How are they functioning?

    The ITF training centre, particularly our model skill training centre, which is located in this compound, has become a ‘Mecca’ for Technical Vocational Education. We have centres in Lagos, Jos and Kano. We have a modern one in Abuja. We have been able to complete the one in Lokoja. When people come around we start to showcase our centre, which we built with technical support from the Institute of Technical Education Services of Singapore. The ITF also is always at the cutting edge of technical vocational skills training in Nigeria. In addition to bringing people for training, the ITF takes training to the people in the nooks and cranny of Nigeria by deploying a number of mobile training workshops decked with the state-of-the-art modern equipment tools and facilities in eleven trade areas.

    So, when we have these mobile workshops, we would be able to take training to the doorsteps of our people. All these attest to our technology-driven processes, functions and programmes in the ITF. And definitely with all these efforts of offering direct intervention in industrial and commercial skills training and development with competent staff, we believe that we will be doing a good service to our country.

    We also proposed something to government, which we presented to stakeholders known as National Industrial Skills Development Programme (NISDP) which is an aspect of the national industrial development plan for the Federal Ministry of Trade and Investment.

    This plan envisages that we will have industrial skills training centres in the 36 states and Abuja. And in each of these centres, we have provision for training people in 24 trade areas. We have also made provision in this plan for Centres for Advance Skills Training for Employment (CASTE) and these are bigger centres that have provision for about 45 trade areas and these will be located in the six geo-political zones of the country.

    How much does it take to establish each of the centres?

    The skill centres are very costly to establish because some equipment can cost up to N15million. We have estimated that the Industrial Skills Centres in the 36 states and Abuja will have provision for 24 trades and will cost about N3.5 billion, while the bigger ones, the advance skills centres in the six geo-political zones, will cost about N5.5 billion. So, if you cost it, you will realise it’s a lot of money. But we have envisaged that with our amended Act, we will be able to generate the required money over time to help us establish the centres.

    Enlighten us on your other programmes, such as SIWES?

    We have been organising the Student Industrial Works Experience Scheme (SIWES) for students and there is hardly any technical person in Nigeria that has gone through tertiary education that does not know about the ITF. We have been able to pay some of our SIWES students. We have paid about 430,000 participants between 2007 and now. However, the issue of paying students by the government will stop next year. We want to focus on the training. In fact, we have recommended that government should de-emphasise the payment of money and focus on training.

    What role is ITF playing in the economy, especially in the Transformation Agenda?

    The ITF is one of the major parastatals of the Federal Government. It is one of the organisations being used by the Federal Government to achieve the Transformation Agenda of this administration. The ITF, according to the Act establishing it, has the responsibility of providing, promoting and encouraging the acquisition of skills in commerce and industry. It is to generate enough manpower to meet the needs of the economy. Over time, the ITF has been performing these functions. Human capital development is a sine qua non to the economy of any country. Without identifying and developing technical manpower, most of the industries and organisations will not be able to function and that is where the ITF comes in. We are charged with developing and training and providing technical manpower. And you can see that most of our activities are geared towards this noble objective. So, you cannot say the ITF has lost its relevance – no! In fact, the ITF has rather become even more relevant in the light of the Federal Government’s aspiration to meet up with the leading economies of the world.

     

  • G-20 summit: More questions than answers

    G-20 summit: More questions than answers

    The St. Petersburg G-20 summit will be recorded as one of the recent history’s most important non-events. Nothing happened at the summit which is par for these gatherings. But the diplomatic context of this summit was material different than most others. President Obama needed action at the summit to halt the quickening erosion of his domestic and international standing precipitated by his awkward Syrian policy and his increasingly incoherent rationale for that policy. President Obama came to the fine old city hoping to gain the endorsement of most summiteers. He fell short of that aim.

    The summit took place in the most inauspicious venue possible for the American. Summit host and Russian President Putin has been the most vociferous international opponent of America’s Syria policy calling for military action against the Assad government for purported misuse of chemical weapons. Breaking normal diplomatic etiquette by calling America’s top diplomat Secretary of State Kerry “a liar,” Putin declared the rebels, aided by foreign clandestine agencies, deployed the chemical weapons so that America and other western nations would blame Assad. Putin claimed it insane for Assad, who had gained a decisive strategic advantage in the war, to use chemical weapons. Assad surely knew deployment of said weapons could bring American involvement in a way tipping the balance of war against Assad. It was more probable the despairing rebels, losing ground by the day, concocted this situation to give America a colorable pretext to intervene, literally saving the rebels at the final moment of the eleventh hour, according to Putin. As evidence of his position, Putin pointed to the UN report attributing a prior incidence of chemical weapons use to the rebels.

    Despite the usual primacy of economics at such gatherings, this summit’s climax came when participants discussed Syria. President Obama stated his case as did Putin. President Obama sought to isolate Putin in his own house. It did not happen. Summiteers divided also equally between those supporting Obama and those holding closer to Putin. America and the richest western nations craved military action. Russian and the more populous nations rejected a forceful strike against Assad.

    The same dichotomy has been paralleled in American politics. The elite Washington-New York axis of political and financial power lusts for martial action as if addicted to war. Most ordinary Americans bitterly oppose war action in Syria as if tired of it.

    In his post-summit press conference, Putin barely concealed gloating over the turn of the summit. He talked with the roguish look of a burglar who barely absconded with the purloined booty the moment before the detectives could apprehend him. In front of the world, he had withheld something the most powerful man in the world dearly wanted. In most cases, a thief is morally and legally in the wrong. With allegations about Assad’s government culpability still unproven and with the wisdom of aerial bombardment less than certain, it remains an open question whether the thief is right this time. If this is one of those rare occasions where the thief is right, Putin might have saved the world from a nasty turn expanding the Syrian civil war into a regional conflagration or worse.

    In his press conference, President Obama looked tired, somehow appearing diminished yet swollen at the same moment. Clearly, he had been stung by the considerable domestic and international rejection of his Syria policy. He assumed he could convince the world of the rightness of his dubious cause by virtue of his eloquence and by basing his war appeal on humanitarian grounds. He has been taken aback by his failure to garner support despite the intense, high-priced public relations campaign mounted by Western governments and their agents, the largest global corporate media houses such as CNN and BBC.

    Even critics of President Obama must feel a certain sympathy for him. Before the world, stood a man stewing in a cauldron of his own design or, at least, one designed by the vested, penumbral interests he so faithfully has served. He struggled to construct persuasive arguments much like a drowning man clutching at straws, hoping the harder he clutched the straw might turn into the rope that could save him.

    He argued Assad’s purported recourse to chemical weapons was a dire breach of international law, warranting a martial reply. The assertion contradicts the predominant weight of international law. Chemical weapons use constitutes a breach but the breach is not the only pertinent legal factor. In its rush to action, the American government now behaves as if the weapons abuse is the only factor worthy of consideration. Fixated on punishing the terrible Assad, America caricatures the world as if it is based solely on one legal norm. That single norm, if viewed in isolation, would neatly place Assad on the scaffold constructed by America.

    However, the world is a complexity where almost nothing can be assessed in isolation. The prohibition against chemical weapons must be read in consonance with the larger body of international law. Here, America runs afoul of the very corpus of international law it purports to protect. There are tenets of international law more established and more central to the conduct of global affairs than the chemical weapons prohibition. First, the most well established principle in international law is the restriction against interference in the internal affairs of another nation. Second, nations are disallowed from unilaterally using force against another state except in valid self defense. Third, where the law of self-defense is inapplicable, military action must be sanctioned by the United Nations.

    America can’t claim self-defense; Syria poses less of the threat to it than America does to Syria. Under established law, America has no right to attack Syrian unless approved by the world body. Reading the prohibition against chemical weapons in harmony with other legal principles leads to one conclusion. To punish Syria’s purported use of chemical weapons, America can only unilaterally impose sanctions short of military action. If it seeks to legally apply a military sanction, America must gain approval from the global organization. However, since the world body rejects America’s position, America has decided to ignore canons of international law that America had previously authored in order to superimpose this presently favored legal precept over the entire body of international law. Because it believes Assad’s government has breached the law, America believes it has the right to distort that law for its own purposes. As such, both regimes are outlaws albeit committing somewhat different crimes.

    President Obama opined that other despots will rush to deploy illicit weapons if Assad is not quickly punished. This position is nothing but dangerous conjecture clothed as statecraft. America winked when Saddam Hussein used deadly gas against Iran and against portions of Iraq’s population in the 1980’s. The rest of that unfortunately large club of despots did not rush to deploy such weapons. If the evildoers did not break the door to deploy chemical weapons at a time when America seemed to approve their use why would they now do so when America now seems hell-bent in opposition?

    Despite the American political elite’s attempts to shape global opinion by depicting its enemies as evil incarnate, these enemy states have been more circumspect in the large-scale use of military power than has been the American government. Even the most wanton leaders do not frequently embark on large-scale military operations against their populations or against other nations. They would rather maintain power by employing the more mundane, daily tools of repression. Such tactics are less expensive and less of a gamble than massive endeavors that might backfire, squandering their regimes and lives.

    Sadly, President Obama has become too slick. The danger in becoming too well-versed in the arts of verbal fabrication is that the accomplished hypocrite becomes the last person to recognize his cover has been blown. During his press conference, President Obama likened the chemical weapons incident to the Rwandan genocide. Twice, he criticized that the world watched idly as Rwanda turned itself crimson. Shame on any American leader for drawing this analogy. Either America’s present crop of leaders is ignorant of recent history or they believe the world has a grave memory deficiency. During the Rwandan carnage, much of the world wanted to act in concert to halt the slide. The UN was poised to do more. It was President Obama’s political mentor, Bill Clinton, who made sure the UN remained passive. Clinton did not want to bear the domestic political costs of UN involvement in Rwanda. In that instance, the world did not prevent America from taking morally and legally responsible action. It was America that prevented a unified world from doing the right thing. Attempting to justify an illegal strike against Syria, America no tries to whitewash its sad history of tolerating inhumane atrocities where America has no economic or political interests in thwarting the nightmare.

    Further trying to justify his position yet absolve himself of personal responsibility, Obama had the temerity to claim he never said Assad government use of chemical weapons was a “red line” for him which if crossed would cause him to respond with muscle. Now, Obama’s tune is that the world community, America and the American congress drew this line and everyone’s credibility is at stake if no response is had. Someone should do him the favor for replaying his prior statement to him. He would quickly drop this revisionary tact as few leaders have publicly assumed such personal responsibility for a matter outside the ken if his country’s vital strategic interests.

    Sadly, Obama has gone so far as to assert, because of this fictional red line, America’s credibility and thus national security has been placed at risk. This argument diminishes the man’s personal stature and that of his office. Clearly, the localized use of chemical weapons in a suburb of distant Syria is not an imminent national security threat to America. In fact, Obama undermined his own argument in the same press conference by later saying the world would have forgotten about this issue had not his Administration pressed it to the forefront. If the issue was so compelling and important, his government would not have had to work to keep it newsworthy. In other words, Obama admitted that his government has overinflated a serious local issue to become one of artificial global importance. As tragic as the lethal incident was, it is equally troubling for the most powerful man in the world to say the death of 1000 people in a distant civil war constitutes a grave threat to his nation’s security and, in fact, global security. In that case, every war no matter where is a matter of grave national security for America. In that case, America should commit half of its military to single-handedly resolve the civil war in the Congo which has consumed the lives of over 5 million Africans. However, America remains opposed to funding a sufficiently robust international peacekeeping force to resolve that perennial crisis.

    Fortunately, most Americans and much of the world remain unconvinced by the hasty presidential expostulations. Opinion polls reveal the overwhelming majority of Americans regardless of race and party oppose unilateral action in Syria. Congress seems in lockstep with public opinion. President Obama has asked Congress to approve his desire to attack Syria. Unless the beneficiary of a political miracle, President Obama will suffer a dramatic, wholly unnecessary setback when the majority of congressional Republicans and a large minority of Democrats vote down his war request.

    This is the second week I have dedicated this column to the Syrian crisis. I have done so for two reasons. First, if handled imprudently, what is essentially a local civil war can transmogrify into something larger, more sinister, and much more dangerous. Second, I am concerned about how easily our people are taken by western media and propaganda. Nigeria and Africa will never develop as they ought unless we can think more independently and objectively. If our collective mind is so easily moved in the direction determined by the western press and the vested interests the western media represents, we are sunk.

    Last week, I received emotional comments that America was justified to seek retribution because of the civilian deaths caused by the incident. People just wanted to strike out emotionally, indiscriminately. These people uncritically swallowed that Assad’s government committed the crime. That allegation may eventually prove true. For now, it remains unproven. Thus, there should be no haste in action. In fact, the purported intelligence President Obama and his officials deem so convincing has been unable to persuade America’s own Congress.

    Moreover, Russian President Putin has released his own report implicating the rebels and anti-Assad foreign intelligence agencies. General Colin Powell’s former Chief of Staff has implicated Israeli. An Associated Press reporter wrote a compelling piece wherein he interviewed people on the ground in the affected Damascus suburb. Rebel fighters and relatives rebels were interviewed. Although this area is in rebel control, the rebels and others admitted that the chemical weapons were in the possession of rebel factions financed by outside intelligence agencies. These agencies supplied the weapons which were inadvertently ignited by negligent mishandling by the rebels during an untimely conventional artillery shelling of the area by Assad’s forces. Why aren’t these reports being seen and considered as credible as the ones America backs? These and like reports never are revealed by the western media because that media’s primary mandate is not to present all or objective news but to project a subjective viewpoint promoting the interests of the vast powers behind the throne.

    For the second time in less than ten years, those entrenched powerful interests have enticed the most visible, influential Black American political figure to stand before the world to promote needless war or military action. Wanting so much to belong to the global elite, both Black men chomped the bait and got hooked. First, Colin Powell lied to the world for his masters. His reward was to lose his reputation and later to be dismissed from his post. Failing to learn the lesson, Obama has allowed the puppeteers to dance him before the world, placing false arguments for false war in his mouth. This episode will likely diminish him permanently. If he attacks Syria, the world will conclude that his Nobel Peace Prize was improperly given. He will join the ranks of American warmongers no different than those of Bush Administration infamy. If he fails to carry out the attack, the entrenched interests will turn their vast wealth and media against him. They shall whittle him down before our eyes. It shall be a painful thing to watch. Again, those Black leaders who seek personal gain by giving faithful, blind obeisance to established interests move smoothly along at first. However, the powers will ultimately ask the Black leader to sacrifice himself because they don’t want that leader to become an independent force. Thus far, Black leaders have sacrificed themselves for interests not their own. As it is with individual Black American leaders so it has been with Black African nations. When shall we ever learn?

     

    08060340825 (sms only)

     

     

     

  • ‘Nigeria’s wealth lies in agric’

    ‘Nigeria’s wealth lies in agric’

    Since the discovery of oil, Nigeria seems to have abandoned agriculture from which it used to generate revenue. With the threat of its oil drying up in a few years, is it not time for the country’s return to the land? Yes, it is, says Mr Biodun Onalaja, Chief Executive Officer, Hyst Global Business Ltd, in this interview with Daniel Essiet.

    How is the volatile food price impacting efforts to reduce hunger?

    There is a big problem, especially for the masses. I think the government needs to empower food producers to produce more food. We require some staples daily as productions are seasonal. Not only is production seasonal, it varies with the weather. Efforts to address food security must also focus on building the purchasing power of vulnerable people. Only a few Nigerians have adequate purchasing power.

    With very low stocks and dramatic fluctuations in price levels, the degree of insecurity is high. I expect prices to continue to rise due to supply shortfalls in some parts of the country because of flooding and other elements of climate change. We have to make improvements in food security. It is important to address price volatility.

    It makes small farmers and poor consumers vulnerable to poverty while short-term price changes could have long-term impacts on development. The Federal Government needs to put in place a transparent and predictable regulatory environment that promotes private investment and increase farm productivity. We need concerted efforts to boost investment in the entire value chain, especially, post-harvest processing. On the whole, management of our natural resources, forests and fisheries are critical for the food security.

    Is eradicating hunger by 2025 achievable? How can the government meet this target?

    Yes, of course! Government could put more efforts into agriculture, and encourage unemployed graduates to go into mechanised farming by providing free land, agricultural inputs, and funds for them to produce more food. In fairness to the government, there is a tremendous attempt to revamp agriculture to contribute more to food security and reduce hunger.

    Defeating hunger is an ambitious goal. We cannot end or eradicate hunger totally. What we can achieve is to improve our potential to feed more Nigerians by promoting intensive commercial and family farming. We must ensure quality food for public school pupils, open new markets and introduce the possibility of higher incomes for farmers and boost development in the rural areas. My concern however, is achieving a unification of the various agricultural productivity interventions with innovative social protection programmes. We want to see a situation where the programmes run by states and the FederalGovernment, irrespective of party affiliation enhance the opportunities for the poor to live well and for the unemployed to be engaged in food production.

    If we achieve unification of interventions, we can expect a situation where the research findings from the universities and specialised research institutes and efforts of private investors and corporate agric businesses can be harnessed to boost agricultural production. What Nigerians need is an enabling business environment, which supports income growth, and assurance of rewarding markets for small-scale producers.

    Government has to take all necessary measures to accelerate agricultural growth and strengthen the dynamism, resilience and inclusiveness of the farming industry. We should reposition agriculture to support wealth creation. We need all the legislative changes to institutionalise national action and commitment to hunger eradication. We must recognise that a large number of households continue to face food insecurity and malnutrition due to low food availability, low income, unemployment, risk and vulnerability, poor access to basic services, including health, water, sanitation and education.

    Government must work with stakeholders to ensure that bold, urgent, determined and concerted actions are taken to address agricultural development and food security challenges in a coordinated fashion. That is the only way we reduce hunger in this country. It required a multi-faceted frontal attack from all sides. Not only helping farmers to increase production and productivity, but also looking at access to food, and ensure that poor families have the means to buy their food. In line with this goal, I see the Federal Government making a significant progress and efforts toward eradicating hunger by 2025.The fight to end hunger and poverty must be raised up to the level of policy if lasting results are to be achieved. Government must promote and articulate various fronts for action.

    Are you confident that there is the political will by the government to eradicate hunger?

    Yes. I see a strong resolve by the leadership of the Federal Ministry of Agriculture and Rural Development. Such a positive response is important. We have the highest level of involvement from the Presidency. The ideas of the Minister of Agriculture are well received. The agric sector is experiencing an extremely positive period.

    The challenge of the government is how to transform agriculture to protect biological biodiversity and reverse its destructive capacity, without restricting its mission to feed a growing world population. What is your take?

    As we grow food, it is important we preserve our biological diversity. This is because it plays an important role in sustain in our communities. Biological diversity has contributed in many ways to the development of human culture, and mankind has in turn influenced biological diversity. We are talking about plants and animals, both wild and cultivated. They play a part in our complex and diverse agro ecosystems. On a broader level, there is relationship between agricultural biodiversity and the functions of agro-ecosystems at different spatial and temporal scales. To this end, the government should outline its policy reforms to sustain agricultural biodiversity and agro-ecosystem functions.

    In different ways, the government should try to deviate from monoculture agriculture, which drastically reduces the variety of plants in the respective ecosystem, since animals and insects are directly dependent on them. We want the government to transform agriculture into a good administrator of biodiversity and reverse its destructive capacity, without restricting its mission to feed a growing population. The agricultural transformation agenda should include concerns for the protection of biodiversity in order to be sustainable and make a positive change in the long run.

    Why the focus on rice production?

    Rice is one of the most important sources of dietary energy in sub-Saharan Africa. We are growing and eating more rice. The revolution is driving states into ambitious production programmes. Numerous investments have been made by governments to revamp the rice sector. It is difficult to capture all investments both at the state and local government levels. We are part of such efforts which will make a big difference.

    The rate of paddy rice production has shot up. It is crucial we maintain the trend because rice consumption is increasing. I would like to say that we are making remarkable progress in rice production. Within the next five years, we should double the current growth rate to satisfy increasing consumption. What is important to us as big time agro business concern, is that there is stability in the policy management process. This will result in stable food supplies and prices. This is crucial for credible and effective governance. We are working with the government to ensure Nigerians have access to adequate affordable food for themselves and their families. What the government is trying to achieve within the rice sector is not a panicked response. We are witnessing a longterm strategic planning effort. This is critical to food security. This strategy makes sense, because it is easier to stabilise domestic food prices using domestic production. On the balance, we see a policy designed to allow households have reliable and sustainable access to nutritious and healthy food.

    What are the prospects for the rice value chain?

    The emergence of an integrated local value chain constitutes a fundamental change in the rice sector. Investors are involved in the creation of new industrial and semi-industrial rice mills, capable of producing milled local rice of high quality. These mills enter into contractual relationships with out-growers, who receive seeds and inputs from the mill. The out-growers sell their rice production to the mill.

    This allows mills to secure a reliable supply of high quality paddy rice. This rice is then processed into milled rice of high quality that is sold through a network of shops. The industrial rice mill is fast becoming a leading actor in the rice market. On the balance, total local production has not led to reduction on imports. Steady demand for rice represents an opportunity for producers who are integrated to the market. Projects aiming to support rice production are all over the place.

    What trends do you see in financing food security?

    A number of agricultural development institutions are already involved in funding a variety of projects across the country. Efforts are focused on building a resilient and inclusive financial system that frees the credit ceiling for farmers. States through their agencies are working to foster a considerable increase in food production through financing input subsidy programmes. What we need however are specialised financial vehicles to expand investments in agriculture.

    Government needs to guarantee innovating enterprises a minimum market and thereby reduce the risk related to market failures. It is very critical that the financial system evolves credit models that cater for all levels of farmers. The annual budget allocation to agriculture is limited to address the current investment gap. Though public investment is necessary to build up a favourable environment and the required infrastructure, a large proportion of the required total investment should be made by private actors. Private investment is therefore key to agricultural development. We need an environment favorable to private investment .We need a special fund to support manufacturers of inputs or agricultural equipment.

    We have seen multinational commodities buyers financing smallholder farmers who are tightly integrated into sourcing value chains. These models have been successful, but they reach only a tiny portion of smallholder farmers. Companies such as Olam Nigeria is outstanding here. They are keen on expanding and protecting their value chains, improving quality, increasing productivity, and meeting sustainability commitments.

    One challenge, however, is that majority of small farmers lack access to finance for various reasons. One is lack of financial literacy. The cost of credit is high, especially the cost of longer-term credit appropriate for capital investments. Without access to credit, most farmers are confined to sub-optimal inputs and methods, and therefore to low productivity.

    In most states now, farmers belong to cooperatives and producer organisations. These days, farmers don’t use social lenders, I mean money lenders. The government advises farmers to join cooperatives. Through such groups they benefit from long-term finance. The market is growing as more farmers join producer organisations. Many multinational buyers have captive value chains organised around out-grower schemes that involve production contracts with farmers. Be that as it may, I think there is a need for better industry coordination to address the smallholder financing gap. Growing the industry requires innovation and investment. There is space for a multitude of actors, including banks, donors and multinational buyers, all of whom have different capabilities, timeframes, and risk-return appetites. Banks generally have not built a successful model for improving smallholder livelihoods through financing. As smallholder productivity and profits increase, livelihoods improve, and smallholders can escape the cycle of poverty.

    Which financing instruments have been most successful in helping food security?

    It depends on the type of investment. We see a broad range of financing instruments of financial institutions to take care of the needs of farmers and food producers.

    The major concern is the small farmer. They form a major part of the supply chain. A lot needs to be done to help them during pre and post-harvest activities.

    If the Central Bank of Nigeria (CBN) can compel financial institutions to lend at a low rate to value chains in agric sector, it will attract more people to agriculture, and in the long run boost inputs and outputs. One outstanding programme is the commercial agricultural scheme started by the CBN in 2009. It is one of the best so far. The CBN pumped N200 billion into the sector.

    What do you think of the role of NIRSAL in financing agriculture?

    We are still waiting for the CBN to roll the scheme out to see how commercial banks will embrace it. NISRAL is established to reduce banking risks by granting guarantee on loan portfolios.

    How about the Bank of Industry (BoI) and Bank of Agriculture (BoA)?

    They are trying, especially the BoI that is helping industries to grow with lower rate. The Bank of Agric could do better, if the Federal Government puts in more money as they did for the BoI to give to farmers because they are professionals when it comes to grassroots farming.

    Where are the opportunities to attract more investment in food security?

    Investing in agri-sector has become more economically and politically attractive and it has contributed substantially to food security. In particular, private investors have placed their focus in Africa due to the huge growth potential, increasing demand, and improved political situation in many African countries. You see foreign companies seeking opportunities to invest in Nigeria’s agric sector. This follows a holistic approach considering factors, such as economic, environmental and social. Private investment flocks to countries which have the best legal and political systems. Though we are on the right track in terms of trying to create an enabling environment for investors, but there is still room for improvement. Among leading African states, we have the highest growth potential in the agri-sector. What we need now are changes to improve governance, legal stability, and transparency and creating reliable tax systems.

    What can be done to improve food production?

    By providing an enabling environment for farmers, through financing which is the main problem farmers are going through in Nigeria. Right now there is a need to structure food value chains from farm to fork. There are large and fast growing urban markets in Lagos and other parts of the country, whose food needs must be supplied from the farms. We need incentives for farmers and others to invest in increasing their production.

    We can make large gains in food security if we improve in tackling high post-harvest losses. Meeting the growing demand for food will require that we double production. This will pose a major challenge, particularly for farmers; investments are required to support expansion in agricultural output. We are talking about investments in primary agriculture and necessary downstream services such as storage and processing facilities.

    Do you share the view that agric is still a remote sector for most Nigerians?

    Yes I do, until more elites see agriculture in this country as a good income earner more than the crude oil. Let us take Malaysia and Brazil as examples. They earn their income from agriculture. Nigeria, with her vast arable lands, can do better. We have a situation where a very large number of farmers is turning 65 every year. As people age, the industry is affected. We can’t expect very high growth when people are quitting the industry. There are windows of opportunities to explore. I want Nigerians to change their perception of agriculture. The real wealth of the nation is in agriculture. We should identify our comparative advantages. Agriculture is a natural source of exports. There are jobs in bringing in seeds and fertiliser, in water management. There are jobs in bringing the product from the farm. There are jobs in inspecting the quality of the product. The financial sector should support it. Agriculture generates a huge number of jobs, and it could generate even more if we emphasise that. Agriculture is nourished by its infrastructure. Government should build infrastructure.

    To what extent can issues such as climate change, fair trade practices, commodity pricing, and urbanisation impact on the livelihood of small farmers?

    With rapid climate change, it has become difficult for farmers to maximise production within that climate system. The climate is changing. With each passing year, the agricultural system is becoming more out of sync with the climate system. The climate is now in a constant state of flux, making it both unreliable and unpredictable for farmers worldwide. This affects agriculture in many ways. Weather scientists have told us to expect heavy rains to be more frequent and more intense. How we cope will determine the pace of our progress in providing adequate food security. Educating farmers to adapt to the effects of climate change is vital, as well as sound agricultural practices.

    Fair trade practices are the buzz word in international agric trade. There are regional efforts now to empower small farmers in value chains and market access and to strengthen their capacity to negotiate better prices for their products and better market regulation policy.

    How does cutting aid affect agricultural development projects?

    Agriculture is a bright spot in the growth platform. To the extent, it is been made aid oriented. It is important we seek aid to accomplish broad-based economic development through agriculture. But aids from all industrialised nations have plummeted. Advanced nations are becoming more strategic with their aid programmes. There are many ways of looking at foreign assistance. We can ask donors to train our famers and provide improved seeds. We can then leverage out limited resources to build indigenous skills and promote private initiative. We have to support our farmers to capture market share, teach them marketing, bring back cooperative banking. It will pay off manifold. We have to be serious about finding new markets, about creating new business opportunities for our farmers.

    What do future agribusiness leaders need to prosper? What are some of the challenges for agribusinesses?

    Development priorities are the needs of agricultural commerce and rural society. We expect continuing growth with new opportunities, and the consumer is changing, and demanding more from food producers. We have to position the sector to capitalise on such trends. There will be more opportunities for professionals to lead agribusinesses. They to learn about agribusiness and build leadership skills. There will be opportunities for people to work as food producers, farm and ranch managers, in crops, soils, plant, animal, food and nutritional sciences, horticulture, new product development, strategic planning, marketing, management, and other careers. They need to satisfy preferences in a changing world be open to new ideas. Industry leaders expect graduates to have several skills improve the ir farms and food processing businesses. Food and agribusiness companies look for in their new employees with the potential to become future leaders in their firms. The agricultural business economy needs and desires managers and leaders with a blending of education in applied agricultural science and business skills.

    All over the world, the best way of agric farming is to go mechanised farming.

    Let us talk about measuring performance in the agric sector.

    It is very important. Addressing food security is fruitless without measurement tools and benchmarks. The government needs to commission studies and use certain benchmarks to measure performance as it affect critical food security issues and make better informed decisions, develop collaborative partnerships and create effective local policies to address specific needs.

    What is the mission of your company in the agric sector?

    Our mission in Hyst Global Business Limited is to be one of the leading companies in Nigeria to make food get to the table of the average Nigerian at affordable rate, Also to reduce unemployment rate in our country by employing more people in our locality as the farm expand.

    Within your strategic framework, what are your major priorities for the next four years?

    My major priority for the next four years is to start processing our Paddy Rice to polished one for local consumption, and enter Nigeria market.

    What problems of small and medium sized enterprises are you aiming to solve?

    How to get low rate financing for our out growers scheme, and how to get them trained to do farming in a mechanised way to enable them earn more profits.

     

  • ‘Public sector funds made banks lazy’

    ‘Public sector funds made banks lazy’

    Many banks used to live on public funds. When the Central Bank of Nigeria (CBN) hiked the cash reserve ratio (CRR), the music changed. But, to the Managing Director, CRC Credit Bureau, Tunde Popoola, the CBN action is welcome. In this interview with Senior Correspondent COLLINS NWEZE, Popoola speaks on the advantages of the policy and how credit bureaux can boost banks’ lending capacity, among others.

     

    THERE have been complaints over paucity of credits. Is it the fear of default  that is keeping banks from lending to the real sector?

    Actually, Nigeria has made significant improvement in lending to the real sector over time. If we look at where we are coming from, as at 2006, the total lending to the private sector was just about N2.6 trillion. By 2009, that figure, in four years, had moved to N10 trillion. By 2012, it had moved to N15 trillion. So, it has been some growth in banks lending to the sector. If you also look at from the point of credit penetration, that is the growth of credit, vis-a-vis the Gross Domestic Product (GDP), it was 20 per cent as at 2007. By last year, it had moved to 37 per cent. So, that will let you know that sectorally, in aggregate, credit to the private sector has increased. And it has increased significantly. But if you look at credit to the private sector globally, the performance of Nigeria, you will discover that we are still far below. And I think that is what the issue is. Nigeria can do far better than we are doing now.

    But why are we doing what we are doing now?

    The fact is that even the real sector we are talking about needs a level of infrastructure to be successful. And banks would not want to give money to institutions and discover that it will go down the drain. So, where there is high level of infrastructural development that will also assist those companies, beyond money to succeed, banks will give more loans. You can’t say that it was because of lack of funds that a lot of manufacturing companies have relocated to Ghana. That is not correct. It is because of other factors. The issue of power, other infrastructure, transportation, the high cost of doing business in Nigeria, all these add up to what they are talking about.

    The second issue is that there is a high level of both financial and capital market developments. You see that our capital and financial markets are not big enough. So, they just concentrate on few transactions, where they think they are safe. There is also high level of inefficiency in the legal system. The legal system is so bad, that getting judgment is not easy. So, where you have low level of institutional development, it will affect the performance of the financial system. It affects their ability to give credits. If you are giving credits, and you know that where there are litigations, all odds are against you as a financial institution, you will try as much as possible to run away from certain transactions. Besides, a lot of the real sector we are talking about are not well structured, especially when it comes to the Small and Medium Scale Enterprises (SMEs), based on their age, their size, structure, they are not conducive for getting access to credit.

    What are some of the challenges affecting SMEs’ access to credit?

    Where you have SMEs that do not have board of directors, transparent financial and accounting systems in place, audited account and governance are almost zero. Financial institutions find it difficult to deal with them. So, a lot of what of happening is inherent in the way we run our system. Also, in the way the companies themselves run their operations. In the way, the government has been unable to provide basic infrastructure to support the organisations we are talking about. I believe banks can do more. But a lot much more should come from the companies themselves and the environment where they operate. Banks will not operate in isolation. They operate within the concept of what is happening in the environment.

    What is the role of treasury bills and other government instruments in this?

    Recently, there has been a high level of interest rate on treasury bills. And treasury bills is government borrowing. So, if the rate of treasury bills is double digit, say 12 per cent, and I am supposed to lend at 18 per cent to the private sector, lending to government is supposed to be risk-free. So, I would rather do that 12 per cent without incurring any losses. The fiscal system also impact on lending. Treasury Bills are not supposed to be an alternative window of investment for banks. The real sector should be the primary target, but where the rates they get from risk-free investments, are almost the same from those they get from risky investments, then they go and invest in such risk-free investments which are treasury bills, government bonds and all that.

    That also contributes significantly to it because everybody is watching the market. The banks are out there to make money, and whatever will give them the money legitimately, is what they will do. If I have two sources of revenue, and one is risk, and one is risk-free, I will go for the one that is risk-free, and that also affects the lending to the real sector of the economy.

    Why are the rates in government securities like treasury bills and bonds over 12 per cent?

    In domestic borrowing by the government, demand goes up, and the rate will rise. If a company has not borrowed before, it is difficult for banks to lend to SMEs.

    How can we relate it to Central Bank of Nigeria’s hiking of cash reserve ratio from 12 per cent to 50 per cent for public sector funds?

    First, the Central Bank wants to push banks to go and look for private sector deposits. It is easier for banks to mobilise government funds. Once banks have government accounts, they hardly go to the rural areas looking for small deposits because local government or state government account can give the bank a cheque of N1 trillion. They will not, therefore, be doing their basic job of enhancing financial inclusion. Then, when the Cash Reserve Ratio is moved up, then banks will have less money. Also, the public sector funds will become less attractive because they can only use half of the money to do business. So, that forces them to be looking for deposits in the rural areas. It is only when banks have private-sector deposit liabilities that are long-term in nature that they can lend to the private sector for a long term.

    Does it mean that banks have been lazy in their drive for deposits?

    Banks have not been creative as they should be in deposits mobilisation. Their role of enhancing financial inclusion has not been successful, they should be. There are some local governments that do not have a bank at all. So, why can’t we have banks all over the country? Why are banks highly concentrated in the cities? So, they should learn to develop innovative products, to drive deposits. That is when they will have enough money to lend. The proportion of public sector deposit in some banks is over 40 per cent. That is not healthy. It is not healthy for them; it is not healthy for the economy. Those public sector deposits will not allow them to develop innovative products or do aggressive liability generation that will enhance financial inclusion.

    How can banks help the Central Bank achieve its financial inclusion plan?

    Basically, when you talk of access to credit, people must have accounts in the banks to have access to such credit. We still have over 50 per cent of bankable Nigerians who do not have anything to do with the banks. Those are the people they should go after. So, this type of policy has the ability to get the banks thinking of how they can reach the unbanked. Those in the banking system, how can we do more to get them to increase their transaction volume? The banks have to create attractive liability products, not lending products. The demand deposit rate in some banks is almost zero per cent. So, this type of system can get them to begin to jack up rates up. And if they do that, the customers can respond by leaving some balances in the banks. So, that is how it should work and is also the type of projection that the Central Bank has in rolling out the policy. In those days, government deposits were not even in commercial banks. They were kept with the Central Bank. The banks then complained and the funds were returned to commercial banks. But now, some banks are relying heavily on it. That is causing the type of challenges that we are seeing now.

    What other implications does this policy have on lending rate?

    The fact remains that lending rates will go up. The available loanable funds will be limited. So, once the size of the loanable fund is limited, everybody scrambling for the same funds, demand will outstrip supply, and it will increase lending rates. That is on the short run. But on the long run, once demand outstrips supply, the banks will keep on looking for other means of getting funds so that they can make more money. So, it is capable of really getting the banks to do more in terms of putting their thinking caps, and saying how else can we generate liability that is as cheap as possible. So, it can enhance financial inclusion.

    What is the position of credit bureaux operations in the country. Are they really being working?

    Yes, the acceptance of credit bureaux has really gone up. We started in 2009, and we went live. By 2010, we had only 54 member- institutions on our platform. By 2011, it moved to 90 institutions. By 2012, it moved to 110, and by this year, it has moved to over 200, including the commercial and merchant banks, discount houses. Secondly, the sector coverage has also expanded. When we started, we had only commercial and mortgage banks and some microfinance banks. But today, beyond banking, we moved on to leasing companies, debt management companies, finance houses, pharmaceutical companies, retailers, hotels and tourism companies. Even cooperative societies have also joined. So, that has shown that acceptance is improving. In terms of number of institutions, it has gone up. In terms of diversity of institutions, it has also gone up. In terms of the number of reports that are being requested and generated, has also gone up significantly. In terms of data submission and quality of data, they have also gone up.

    The microfinance sector is still backwards when it comes to keying into credit bureaux services. There are less than 10 per cent of them that access credit bureaux services. They lack the needed system and infrastructure to key into the services. For instance, they must also have personnel to enable them. We had in the past dealt with microfinance banks whose software does not have the required facility to take information such as date of birth, sex of the customer. Systems of some of the microfinance banks cannot accommodate such information. Even though they are interested in joining, they lack the capacity to do so. They have also complained about cost of accessing the data and submission.

    What of commercial banks. Are there challenges you are facing with them?

    The challenge is that some of the banks are not using credit bureau services for all their transactions. So, the volume of usage that you are expecting to see is not yet there for credit bureaux in Nigeria. By now, we would have expected that we will be doing thousands of transactions every day. We are doing thousands, but it is not the volume of transactions that we are expecting. For us we are doing less than 10 per cent of what we should be doing daily. And so, that is something that we have to work on. And it is only by continuing to tell people the value that credit bureau can add, to the risk management system that this will be possible. The time it takes to process credit has been brought down by availability of credit bureau. That is something a reasonable financial institution should key into.

    Banks will also have the opportunity to know the exposure of their customers to know whether it can lend more to such customer. That’s why we have at CRC moved beyond banks that should be of added advantage to stakeholders. Some banks are doing well. In every transaction, they consider credit bureaux report for loan renewal, and for restructuring. Some are doing it selectively, and that is the point. It is not supposed to be selective; it is supposed to be for every customer. Also, beyond loans, like employee engagement, contractor engagement, guarantee, bonds, and other products that can lead to exposure, the credit bureau has developed, products that assist all these institutions, to be able to deliver. We are ready, but we can do more than what we are seeing. However, the speed of growth is very small, compared to our expectations are and compared to what is happening in other parts of the world.

    We have three credit bureaux in Nigeria. Are they enough to cover our market?

    They are more than enough, because credit bureau is about bringing information on borrowers together. So, the more of them you have, the more challenging will it be for the user of the credit services. If you have only one, everyone submits information to that one operator. If you have two, people will have options, and that means a subscriber can pull information from two sources. That means additional cost. For three, it is even mush more complex. There data from different sources and to be comfortable as a user, you may have to be taking data from the three operators. Such also have cost implications. In advanced countries, they know that the more credit bureaux a country has, the more challenges they pose to users.

    Consumer lending has not really done well here. What are the limitations that the sector faces?

    Consumer lending is very interesting and it is one of the reasons that a credit bureau is required in an economy. In fact, a credit bureau is not critically required in lending to a large corporate. It is mainly about cash flow. But for consumers, it is all about integrity and credit history and all that. So, that is why you will discover that in recent times, there has been upsurge in consumer loans products. You have institutions coming into the market, basically doing consumer loans. You have a lot a financial institutions developing consumer loans products especially credit cards. That was not the case about three to yours years ago. We have banks that are now setting up specialised desks for SMEs credit. A lot of financial institutions wants to lend to this segment of the market. Some are only lending to salary earners to start with. That is a segment of the consumer market. And once one takes loan for the first time, then they have credit history that they can rely on. That is also the reason as a credit bureau, we are expanding beyond banks. Now, cooperative societies are submitting data to us. A high level of lending takes place in the informal sector in Nigeria. Unless, you have access to the informal sector data, you will not be able to do as much loan as you would want to.

    What roles can cooperative societies play in making borrowers’ data available to lenders?

    Millions of Nigerians are in cooperative societies, and they are taking loans from those societies, and also paying back. So, they have very rich credit history and the data must be incorporated into credit bureau and make them accessible for former lenders like banks and microfinance banks. No bank wants to give out money to people they don’t know. The second challenge really, is the unique identification issue for consumer loans. There is no one unique identification in Nigeria. We need to address it as fast as we can. There are lot a lot of restrictions, on the type of consumer you can engage as a lender. More can be done where there is a means of identifying those consumers. New products can be developed to meet their needs if only you can identify who they are.

    How can credit bureaux help people in taking other financial decisions such as making purchases from unknown people?

    You know that’s part of the issue we have. Lack of unique identification is still a serious challenge in Nigeria. As a credit bureau, the only thing we can do is what we are doing. Keep on bringing data from various sources, and once those data are increasing, the number of people on the database is also increasing. And so, that becomes what you can work with as a mortgage bank or mortgage financial institution or even as a real estate developer.

    How are you handling competition in the industry?

    Competition is healthy and it is required in an economy. Monopoly is not good. Where you have monopoly in any sector, it brings in inefficiency, and prices of products are always high. At CRC, our major asset is our ability to respond to customer requests and meet them. Also, we are web based and our pricing is not bad and is tailored to ability to pay by each of the sectors that we are dealing with.

    We have self-enquiry product, batch processing, bulk portfolio for the banks among other products that keep us ahead of completion.

    How are you finding regulation of the subsector by CBN? Are there areas you would want to see changes?

    We have engaged the regulator in some of these issues and we are positive as an industry. Part of it is the ability to get data without the consent of the borrower. The rule is that you must obtain the consent of a borrower before doing a search on him. But a fraudulent borrower may not give such consent. Also, awareness is still very low. There is need for the regulator to support us.

     

     

  • ‘Oil firms are paying for govt’s failure’

    It is hell for companies operating in the oil-producing areas because they have a lot of demands to contend with from their host communities. Why is this so? A law teacher at Afe Babalola University in Ado-Ekiti (ABUAD), Patrick Tolani , blames it on the failure of government. Tolani, the Executive Director, Institute for Oil, Gas, Energy, Environment and Sustainable Development Law (OGEES) of ABUAD’s College of Law, also tells Adegunle Olugbamila, in this interview, that the Petroleum Industry Bill (PIB) is not in the country’s best interest.

     

    What is wrong with the existing oil and gas laws? Will the Petroleum Industry Bill (PIB) address the shortcomings in the sector?

    First, I think I should talk about the PIB. In terms of framework, it’s amazing. For the first time, the government is bringing together every law in the petroleum industry into one. Whatever you are, you can actually pick a particular legislation that addresses all the issues in the industry. It is sad that the bill has taken nearly 10 years since it was drafted. We started in 2008. The bill has stayed too long. When it becomes law, there are areas it will address.

    One of such is that it gives room for more local oil companies to be involved in acreages on the fields that are unused for now. The international oil companies have some oil fields they are not exploring, or producing oil from, and that is not good for the country. So, the government thinks it’s good to take some of those fields and give them to local companies.

    Another good thing about it is the 10 per cent profit of every oil company that is supposed to go into the development of local communities.

    What is the perception of foreign firms about the PIB?

    They feel the new bill is unrealistic and punitive. Their view is that the new regime under the PIB would be more punitive. When you ask for excessive tax, you create an opportunity for people to evade tax. My opinion is to allow the National Assembly, government and oil companies to sit down and find the way forward because, at the end of the day, Nigeria will be the loser for it. More of the companies may continue to reduce their portfolio. Now, most of them are doing head cut and divesting and selling their fields daily. While the PIB is good for local oil companies, the truth is, it’s not in the best interest of the country.

    Kidnappings and pipeline vandalism seem to be rearing their ugly heads again in the oil-producing communities, despite the amnesty programme. What is the cause?

    The communities, unfortunately, don’t know government. As far as they are concerned, the government is in Abuja. But since they cannot lay hands on the government, they vent their grievances on the facilities of oil companies in their areas; and that is why they expect oil companies to build schools, provide roads, pay them, build houses and do other things for them. But the reality is that oil companies cannot replace the government.

    The failure of the government is visited on oil facilities almost daily and this is not good for the economy and business. Government must sit up and face its responsibilities. It must become more transparent and reduce, if it cannot eliminate, corruption. Above all, it must do tangible things for the oil communities. It is inequitable for the communities not to enjoy the good things of life.

    But the impression in many quarters is that the multinationals are not doing enough of corporate social responsibility.

    There is a misconception here! Corporate social responsibility is not a legal obligation. It is an act of charity. But what the communities are saying is that the oil companies should take over the role of the government.

    What would you proffer as the permanent solution to this?

    OGEES has designed two initiatives to tackle this problem. The first is the Niger Delta Participatory Development Framework (PDF), which should build on the success of the GMoU concept of Shell and the Multi-Agency Monitoring Consorting (MOMC), conceived to be an independent information hotline.

    OGEES is also planning to convene the first edition of its Sustainable Development Discussion Forum (SDDF), where topical issues affecting the oil industry will be discussed and solutions to the seemingly intractable problems facing the industry proffered. Oil theft will have to be addressed at the parley, which will hold next quarter of this year.

    With the happenings in the region, you’ll realise that things have fallen apart. The communities must talk to oil companies, oil companies must talk to the government. Other stakeholders must sit down and look for solutions to the problems. Dictating solution and different programmes from Abuja will not help anybody. From OMPADEC, to Niger Delta Development Commission to the Ministry of Niger Delta Affairs, people are not interested in those offices; they are interested in changes to their lives.

    To evolve changes, there must be solution that comes from the bottom to the top. If that does not happen, I hope we don’t close the chapter by saying: “There was oil in the country.” We are losing a minimum of 200,000 to 300,000 barrels of oil to illegal bunkering daily. Whenever there is force majeure, we lose a minimum of 150,000 oil barrels a day. The truth is that our leaders probably don’t understand the implication of this. I hope the country does not go bankrupt.

    How would you appraise the level of oil spillage in the creeks by vandals?

    Crude theft and vandalism of our pipelines have forced oil companies, notably, Shell Petroleum Production Company to declare force majeure at least three times this year alone. On each occasion, about 150,000 barrels of oil was shut-in to prevent further spill and save the environment from the devastating effect of such occurrences.

    What this means is that the companies would have to spend millions of naira on investigation, deploy money and men to mend the vandalised pipelines and also carry out remediation operations which are not by any means cheap. Furthermore, as a nation, we send wrong signals to our trading partners about our capability to meet our supply obligations. That is not in the best interest of the country and the economy, at a time when we should be seeking loyal trading partners who would stick to us in the face of competing sources of supply. Furthermore, the regular shut-in of crude oil by major oil companies, is really hurting the economy.

    Our findings have confirmed that the oil theft is no longer being carried out by pockets of hungry hoodlums in the communities; but has actually been taken over by powerful cartels who operate with all the sophistication of well-organised outfits. Unfortunately, still, our oil is in high demand by countries that are taking advantage of the porosity of our security arrangement to benefit from our oil resources illegally. This is a national shame that must be addressed.

    Worst still, the oil producing communities are faced with the dilemma regarding who to support in the face of poverty and employment. On the one hand, they show no sympathy to the government and to the oil companies whom they accuse of many years of pillaging their land and resources without any demonstrable benefit to them. On the other hand, their health and livelihoods are endangered due to the high level of pollution taking place on their land.

    Efforts aimed at addressing the power problem appear to be unsuccessful, as more industries relocate into neighbouring countries where power is relatively more stable. What’s the way out?

    In my own opinion, we do not have a sustainable strategy that can make us get things right. All the billions spent in the power sector were not based on proper strategy that can deliver results. And when all you do is fire brigade approach, you can get pockets of success here and there, but you cannot be really successful. Anytime we have a government that can develop a proper strategy with proper funding, I can assure you, we will achieve results. But for now, I’ve not seen any in place, and that is why we keep spending money and not getting results. If we have a strategy that every President will be committed to, I believe we will be getting somewhere.

    Sometimes I wonder how companies make profit with the amount of money spent on power? You go to hotels where they run the generator from 6pm-6am, and if power doesn’t come, they continue with the generator for the whole day even if there is only one guest in the entire hotel. So, I’m not surprised that industries move to other countries, but that is the reality.

    But it seems this lack of strategy you talk about cuts across all sectors.

    You are right. It is also the same in the area of security. Now tell me, which area have we fared better? Health, education, industry just name it? The fact is that we talk, but we don’t put our money where our mouth is. We need to ask ourselves, do we need a strategy on renewable energy? Yes, we may have, but ask those people that the government has put in the council the level of government’s funding, and it’s nil. Do we want to promote solar energy? We have sun in this country. We can do windmill, but we are not focused and we are losing so much in this country.

    How does OGEES intend to contribute its share towards the fight against corruption?

    At OGEES, we will use our four mandate areas – research, training, consultancy and publication, to enlighten people on how corruption can be reduced. Though fighting corruption is not why we are set up, as an academic body, OGEES cannot afford to shy away from this national tragedy.

    The truth is: we are not asking questions from our leaders. I feel so sad when I hear some people say, ‘you disrespect the President,’ there’s nothing about the President of Nigeria that cannot deliver anything to the people of Nigeria. As a leader, you earn respect of Nigerians when you can deliver the dividends. Interestingly, the Nigerias are not asking for too much. They are only saying give us roads, good schools for our children, water, and accommodation, and the rest will fall into place.

    Nigerians appear to be poor managers of electricity. How can your institute shape their attitude to ensure efficient energy management?

    There is a lot of systemic problems starting from the ways we are billed, and until we are able to face that challenge, there will continue to be wastage. From NEPA to PHCN, these companies just allocate figures, except for the few people that use prepaid cards. And then the light hardly ever comes. I’ve heard people say: “Whether I switch off my electricity or not, PHCN will still bring the same electricity bill anyway.”

    Aside, we as Nigerians have this ‘it-does-not-belong-to-me’ attitude. We tend to be reckless in our use of light because of this mindset that it belongs to the government. This poor management of power by Nigerians is not only hurting them, but also the environment. What we need is a wholesale national orientation because these are habits and they die very hard.

     

     

  • ‘Importation is killing real sector’

    ‘Importation is killing real sector’

    Mazi Sam Ohuabunwa was the President/Chief Executive Officer Neimeth Pharmaceuticals, past Chairman, Nigeria Summit Economic Group. At the moment, he is the Founder/Chairman, Sam Ohuabunwa Foundation of Economic Empowerment (SOFEE). In this interview with Akinola Ajibade and Ambrose Nnaji, he says private sector investments, diversification of natural endowments, among others, will restore confidence in the economy.

     

     

     

    As the President of Neimeth Plc, what’s your assessment of the pharmaceutical industry?

    It is an industry that is underdeveloped. It is an industry that has a lot of potentials from the view point of indigenous manufacturing and local production. When I say underdeveloped, I mean in terms of contribution of local industry to the entire national need of pharmaceutical industry, we are not doing enough. I believe that local contribution does not exceed 40 per cent. It is also an industry that is capital-intensive. Unfortunately, there isn’t enough capital for investment in the industry, so the industry is undercapitalised and underfunded. It is also an industry that is under challenged, not only by the high level of foreign importation, but also by fake trend. Despite its enormous potentials, it is an industry that is challenged.

    What is the worth of the industry?

    I don’t have the current figure, but I know that it was in excess of N750billion, close to N1trillion in exchange rate. If you look at the total market, it is also in billions of dollars. Looking at total investment in the local industry, it is in hundreds of millions of naira. And now investment is increasing. To be able to stand up to competition, some of the local companies are trying to push fresh investments so that they can upgrade their manufacturing in a manner that can be competitive with global best standards. This is because if you are challenged by competition, the best way out is to improve on your capacity and capability to compete and that is increasing investment in the industry.

    What are your views on the manufacturing sector?

    I think what is happening in the pharmaceutical industry reflects what is happening in the entire manufacturing sector. Of course, the pharmaceutical industry is a little bit much more challenged. This may be as a result of some global realities. We are challenged through globalisation owing to our subscription to the World Trade Organisation (WTO).

    Goods and services do not respect geographical boundaries any more. Because of this, there is distribution inefficiency and that is causing the flow of goods against us. We are at the receiving end because of the high cost of doing business in our own market and of low application of technologies. Similarly, there is dearth of investible funds to build very large manufacturing capacity. Countries like India and China that have some technological advantage have high level of innovation and their infrastructure are well established. For this reason, their production volume is large and unit cost is low, so they can shift their goods to us at a cheaper price even for the same quality we are having in our country.

    If you go to a typical Nigerian market, you will discover that three quarter of the market is filled with imported goods. Manufacturing has failed to live up to expectation despite the abundant incentives nature has given us as a country. The policy of buying made-in-Nigeria is still too small to yield the desired impact.

    For manufacturing to thrive in this country, we may need to rewrite the global trend. Globalisation and liberalisation have come to stay with us. The country must decide areas where it has complete comparative advantage, and explore it to the optimum. For example, agro-chemical is an area we can leverage upon. We need to build on the agric value chain.

    An agro processing machine can, for example, process plantain, banana and be shipped out of the country. There are places where plantain cannot grow. The agric-based industrialisation, food-based industrialisation can do a lot. We can ship that to the rest of the world. We should restore our country and rebuild our agro-allied industries.

    The other area of comparative advantage is petrochemicals. We have a lot of hydrocarbon and gas. This means that we can go into manufacturing with the things that come from oil and gas which are flowing under our soil, and become a nation that can build refineries, chemical plants, refine petroleum products and ship to the rest of the world.

    So, while the world is shipping pharmaceuticals, we are shipping other products. This will result in trade balance. The government has to provide social support to manufacturers by reducing the tax rate, give tax holidays, give single digit interest rate for manufacturing, support manufacturing for export, and build a foundation that would ensure that what we make are used to promote the industry.

    How has the high cost of operation and high exchange rate affected the manufacturing sector?

    I believe each of these sectors has had its own challenges. There was a time the exchange rate was an issue, but it seemed to have stabilised. In the last five years, the exchange rate has not been a major issue due to global economic crisis. Macroeconomic issue has been generally favourable for Nigeria. We managed that well, exchange rate has been fairly okay, inflation has been going down, interest rate is going down.

    So, there is positive development, and that’s why you also see some bit of increase in the level of investment in this area, because if those macroeconomic issues were going worse, may be all the plants would have closed down. I think fake products are declining in all the sectors. I believe the work the government’s agencies are doing and the awareness they are creating are beginning to have impact.

    Where can we pin the problems in the sector?

    But the major pressure the manufacturing sector faces I believe, is the influx of imported goods and the fact that even with our charges, the cost of production is high. Normally, the cost of production is high because the input, like the raw materials used in local manufacturing, are mostly imported. The structure of our local industry is such that it is essentially based on an industrialisation framework of substituting the material instead of bringing the finished goods which gave us the concept of knock-down in assemblying plants. That was on the basis of which most of the industries were built.

    So we import the raw materials and then add the local cost, and secondly we are manufacturing in small quantities, we manufacture in few units. Big firms in India and China are manufacturing for the world. So they have large units of manufacturing and large units lead to a reduction in cost.

    In addition, manufacturers in China and India receive export incentives which enable them to export more. Nigeria was trying to do this with the Export Expansion Grant (EEG). It is a well-thought out policy which would help to push export if effectively implemented. Because of this, we are still facing a loss in the market share of local manufacturing. This country can only achieve economic power if there is a high level of value addition from manufacturing.

    Since power remains a challenge, why are manufacturers not exploring building power plants as a way of addressing this challenge?

    Manufacturers are not suppliers of energy. Our business is to manufacture. Somebody else’s business is to supply us the materials, the support, the input, so somebody is supposed to supply us the energy. The independent power producers are producing, they are now selling to a bulk power retailer who now sells to distribution companies.

    So, private companies are buying it up, government is privatising the power sector. That is going to help in terms of efficiency and the more independent producers that join the industry, the higher the quantum of megawatts (MWs) of electricity available for use. So, we want to take advantage of the Geometric Plant in Aba, Abia State that can guarantee power supply 24 hours to do business

    Can’t manufacturers come under one platform to build a power plant?

    It is not going to be a profitable thing. Manufacturers are looking for the financial muscle to build up their capacity. The business of manufacturers is manufacturing. They are not suppliers of energy. So, if they start building power plants, the money they would have used in building manufacturing plants would be put into building power plants. And in building power plants, you don’t break-even in one day. You put the money and allow enough time before you break-even and expect return on investment.

    So, it is not something you can combine with manufacturing. Those who want to invest in power can do so but it is different from manufacturing. What manufacturers are looking for is where to get power; it is not for them to start building power plants because what is putting them down today is the power they are generating to run their plants. It is not advisable for manufacturers to start building plants. Many companies are interested in coming to build power plants in Nigeria if the environment is conducive, if the legal environment, the reward system and the pricing of power is deregulated in a manner that people who invest in power can recover their investment

    What are the major challenges of Small and Medium Enterprises (SMEs)?

    The factors that promote business are not very positive generally. Because they are not very positive, the smaller you are, the lesser you are able to overcome these factors. SMEs in this country are subjected to multiple taxation. The environment is not promoting SMEs; it is so because when an environment is promotive, you will see that it is springing up.

    The government is trying but the offer they give is too small to be really impactive. There’s no adequate promotive culture for small businesses, people are allowed to just try, some succeed, some fail. There’s so much pressure on them, local government tax collectors, rent collectors and all other spurious charges.

    The second issue, is that of appropriate managerial competence. I think that one of the things we are facing is that many small and medium scale enterprises don’t have the right management expertise. So, the business is not properly run. Many of them operate informally and because of that informality, they become subject to failures. Being able to start the business is not the same as been able to run the business. You can take risk, but to sustain the business is a difficult set of skill which people do not have, but have to acquire.

    Also, our penchant for quality is another problem. We believe that in the global world, it is the survival of the fittest. One of the things that make SMEs to thrive is the quality of the product you make and the ability to actually create the market for the products. SMEs do not push the frontier enough; they do not have the market norms. That also shows how much they can cope. The African markets, despite all the challenges, are for us if we are able to create the right quality. If we are able to push the frontiers, we can take more market and that would expand our economy.

    Another factor is our predilection to operate as single unit business. Because we operate as single unit businesses, we don’t leverage on our resources. Many of the SMEs can do better if they embrace merger and acquisition. If they know how to fuse, if they know how to merge, if they know how to do strategic alliances, they can leverage our resources and be able to be more competitive.

    Lending to SMEs and the entire manufacturing sub-sector has been very low. Is it the problem of the industry or the inability of the companies to present clear cut ideas on what they intend to do?

    It is largely because of the structure of the Nigerian loanable fund. The Nigerian loanable funds are generally short-term funds, and the banks are interested in lending short term. But the SMEs and companies need long-term funds. The banks are getting the money on short-term basis, so they also want to lend on short term because the owners of the money would come back on a short term.

    But if they are getting money that is on a long-term, like pension funds and insurance funds, they can lend on long terms. Though a manufacturer is a businessman, he quarrels with the bank when he cannot get funds. He should also be reasonable enough to understand that part of the problem is not necessarily with our banks. The banks have their problems. The banks are more comfortable to do short-term businesses where they can see the money quick than where they would put the money and wait and you never can tell what would happen.

    Lending needs to be collaterised too. The small and medium companies don’t have the collateral even if the bank would like to lend long-term. So if you don’t provide the collateral, there would be no deal to strike with the bank. Before the banking sector reform, banks could lend money based on presentation of a share certificate, goodwill, but now, the banking policy requires that you provide solid collateral.

    As the immediate past Chairman of the Nigerian Economic Summit Group (NESG), what are the major problems facing the economy and what’s the way forward?

    The economy has a couple of challenges. Firstly, there are issues of monoculture and mono products. We have been dependent largely on one product for several years, which is oil. The solution is to diversify, create more opportunities for value addition, focus on agro-allied industry and graduate to manufacturing, make the environment interesting for tourism and build on the advantage the country has on petrochemicals.

    Secondly, the economy is denominated by public sector spending. The only way out is to privatise the economy and open it up to private investors, get government out of business and put business in the hands of the private sector, because when the private sector takes over, more private investments will come into the country. Certainly, we would need to create greater discipline and accountability the way the economy is managed.

    The economy is not strong on the supporting pillars. One of them is infrastructure which is an incentive to attract investment. That is why investment is not being generated as it ought to. People opt out of business because of the problem of infrastructure. These things affect investment because investment creates jobs and whenever these investments are not coming, whether they are domestically created or internationally created, the level of wealth creation in the economy is minimised or not optimised. Inadequate resource allocation or inefficient resource allocation is another challenge. Most of the resources that the country has are not optimised while so much money is usually wasted. So much money is going in the wrong places; some of them are misappropriated and misapplied, these factors affect the economy.

    Corruption is endemic in Nigeria. What steps do you think the government can take to address the issue?

    The first is to lead by example. Put the right people in the right position, drive efficiency and make sure that appropriate rewards punishment are meted out for any proven case of misappropriation, or misapplication. Another is to put the right people in the right position so that the country could apply merit, give the right skill and generate the right result.

    There is huge unemployment in the country. How can unemployed pharmacists create jobs for themselves?

    Pharmacy is one of the professions that enable people to create jobs. A couple of professionals just lack the professional or technical skills. Pharmacy teaches you the technical and professional skills and also business skill. We have pharmacy management courses, we have accounting business. The profession allows you to practise pharmacy from the chemical setting; it also allows you to practise from a trade setting, by opening up private practise either to be a distributor of pharmaceuticals, Chemical Pharmacy, or Administrative Pharmacy.

    There are so many opportunities for pharmacists. But you need to do a lot more chemical research; they can produce simple products from chemical research. Many of our plants can be useful in maintaining health instead of allowing the traditional herbalists who have little or no understanding of what they do to be experimenting. They can invest in developing these products and marketing them locally and also exporting them.

    I think that is an area pharmacists can invest more money and create more jobs for themselves and people around them. They can develop more products from local roots, leaves, and that’s an area pharmacists can create more jobs than the ones they are creating by going into retail or distribution.

    Can you say one or two things your projects have achieved so far in the empowerment foundation?

    This foundation was set up for us to be able to play our own role in promoting what we believe. We believe that the cure to Nigeria’s underdevelopment is by promoting entrepreneurship. I believe that more people can employ themselves. The more people can engage in productive work, the better for the society.

    We are promoting entrepreneurship and business excellence as well as promoting ethical business conduct. All those things are related for you to have sustainability in business. We run training programmes, we help people to grow and adapt to business management skills. We teach people how to run their businesses in a manner that they would grow. It has been successful within the limit of our funding. We are a non-governmental organisation; we give support to other like-minded people and institutions to help get Nigerians busy with themselves.

     

  • ‘How we lost tyre market to fake products’

    ‘How we lost tyre market to fake products’

    Since coming to office, Dr Joseph Ikemefuna Odumodu, Director-General, Standards Organisation of Nigeria (SON), has been waging war against substandard products. His trips to China, where most of these products come from, he says, have been eye-openers to him because of what some Nigerians do to their compatriots in the name of business. Odumodu told Group Business Editor AYODELE AMINU in Beijing, China, about SON’s efforts to tackle fake products through the introduction of e-products registration.

     

     

     

    We are here in China to attract investments into Nigeria. What is SON doing to ensure that goods imported from China are regulated to meet standard?

    This is a very loaded question. I can answer it in two hours, but I will be as brief as possible. When I started on this job, the first thing I did was to benchmark, actually to understand the environment. The findings through a survey were very worrying because we found out that over 80 per cent of products then were substandard and that most of them were from here (China). Hence, the first thing I did was to come here (China) and meet with the equivalent of SON, called AQSIQ. We have had several meetings since then. We may not have made much progress in the past, but I must say that on this trip, we have made substantial progress.

    Maybe the strategy I adopted was aggressive by laying blames on their doorsteps. This time around, I noticed that their response was that “your people come here and ask us to make a particular quality, and that is what we make for them and we are businessmen.” They said our people are at fault because they made bad products for Nigerians. But we have closed ranks and there will be an agreement before the end of this year regarding certain requirement. One is that any Chinese product imported into Nigeria should have a certificate of free sale. It is a condition that comes with products manufactured and used in country of origin. There are countries that have export only market.

    At SON, we are not at the ports. But we have started with e-products registration. What we are doing is that every product that is offered for sale must be registered in Nigeria. The first deadline has expired. We are going to start enforcement any time from now. The registration will show who the importer and manufacture is. We are capturing the kind of agreement the Nigerian importer has with the manufacturer. And after that, we will start an enforcement regime.

    SON will capture data about what that company is doing and data of the Nigerian importer with the manufacturer. After that, we will start enforcement regime. Anytime we see a product that did not comply, all we need to do is to trace it back to who brought, and also find out who made it. We will give the details of who made it to my colleagues, so that they can be blacklisted from exporting to Nigeria. And it does not matter whether I am at the ports, or I am not at the border or they smuggled the goods. Wherever the products come from, there must be a place where they will be sold.

    What we are saying is that there will be a visual code, ABC 123. But there will also be a non-visual code subsequently on that product. And that code is only known to a few people in the company that manufacture it. The idea here is that some people can look at your product and manufacture it, but they will not be able to see the non-visual code.

    The other level is that if you register your product, then you are responsible for your brand. You need to protect your brand. So, once you do your registration you will be able to import products. We will use the rest of this year to sort out registration of products. I understand that some of the importers are resisting the registration of their products because they do not want SON to know too much about such products. For me, they are doing that because they know that they are breaking the law and taking consumers for granted. We will collaborate with the Central Bank of Nigeria (CBN).

    With the registration, you are talking about collaborating with the CBN. Have you taken into cognisance the Customs because that is where the goods will pass through at the border?

    The SON and Customs are all government agencies. By law, we are supposed to work together. The Customs, the Police, even Immigration. We are working with them. But the system is foolproof. It doesn’t matter whether SON, Customs and any other person have done their work.

    The point is that every product in the market must have visual and non-visual codes. It does not even matter where the products are coming from. The products have codes, if they don’t have codes, we will impound them and destroy them. What I am seeking, is power to destroy the goods without going to court because that takes some time to be achieved. For us, to show how serious we are, we have to act with a lot of precision.

    Which sector has been the major challenge to you?

    What we have done is that we have been able to categorise sectors. If, for example, we see that tyres can lead to death, then we focus on that.  We focus on life-endangering index. We can also focus on iron rods, because buildings can come down. There are lots of other issues involved. Buildings can come down because the contractor did not apply the right concrete mixture. If I walk into a site and see a rod, I will know who made it because there is an identity mark on it. We are also focusing on roofing sheets. What we do is focus on issues that are life-endangering than those ones that do not endanger life.

    When we started, even half of the rods in the market are substandard. Today, I make bold to tell people, go to the market, and tell me which of them is substandard. Every month we do testing and all that. As for cement, we no longer import it. All I do is go to the manufacturers. We are building a new lab to ensure we test cement more regularly. There are challenges, but I don’t want a situation whereby somebody dies an avoidable death.

    There are challenges in areas of cables. These cables enter Alaba and we don’t even know how they came in. I tell people, if you want to buy cable, why not go directly to companies that make cables in Nigeria? Because they are making good cables, better than anyone imported into the country. The challenge is in our ability to build infrastructure for testing. We also have accreditation and funding challenges. In the new e-products registration regime, we will need people to move round major markets in Nigeria and funding is important.

    How can you quantify the success you have achieved so far?

    I have always run away from accessing myself. Nigerians should say that. We have people who bought generators, cars and when they are substandard, we intervene.

    How much is Nigeria losing to substandard goods?

    A lot, it cannot be quantified. I can give you an example. Today, there is no company that makes tyres in Nigeria. So, we used to have the capacity, but we have thrown it away. We import tooth picks, that is where we have degraded. I have made statements about de-industrialisation. The point is that the value of what we have lost is not quantifiable. For example, you will be amazed, HP products, people go and fake them. Many of them, especially printer inks, are most affected. I want to deal with multinationals that want to protect their brands before we go to small players. Some major dealers sell fake products. There are so many wrongs we are doing to consumers in Nigeria.

    What are the challenges facing tyre manufacturing?

    In the last one year, we have impounded over five million tyres and we have to destroy them somehow. We realised that we need to ensure that the right infrastructure is in place. Right now, we have had some discussions with some investors from South Korea and Taiwan, and some Indians who are working on bringing in tyre shredding plants. First, they ask how they can make their money. They are asking for tax holiday and a moratorium.

    The challenge is in our ability to build infrastructure for testing. Another challenge is in accreditation because if you test a product and you say this product is not good, if you are not accredited, the person who made the product outside of Nigeria can challenge you. But if your lab is not accredited, you cannot win that case anywhere in the world. We will pursue a little tax on tyres. Talking about tyres, I want to say that even if a tyre is new and unused, it can expire.

     

  • ‘Human factor cause of most air crashes’

    ‘Human factor cause of most air crashes’

    What is responsible for most air crashes? Human factor, says Managing Director of Nigeria Airspace Management Agency (NAMA) Nnamdi Udoh. A tested hand, Udoh, in this interview with Group Business Editor AYODELE AMINU in Beijing, China, also speaks on why Rivers State Governor Rotimi Amaechi’s plane was delayed in Akure, Ondo State in April; the Federal Government’s efforts to digitalise control towers; ongoing remodelling of airports and reviewing the rules that guide the industry for effective regulation and operations.

     

    What is your succession plan for the agency, to allow the younger ones take over as Air Traffic Controllers (ATCs) because your ATCs are aging? Are there communication challenges with the radio system in the airspace? Was the radio system downgraded at anytime?

    There was never a time the radio system was downgraded purposely. Let me give you a scenario, in time past when the pilot takes off from Lagos to Port Harcourt, he communicates through Ibadan, Benin, Warri and then Port Harcourt, but today, he only talks to Lagos and Port Harcourt because we have long range Very High Frequency (VHF) that is available and it is operated through what we call a Remote Control Air to Ground (RCAG) equipment. The project came on board when we had the European Union (EU) technical support programme using a satellite technology, and then we started the Total VHF of Nigeria airspace – meaning that technology is changing. What that also means is that we have a frequency in PH, 1273, Lagos and Abuja all linked together. So, when the pilot takes off from PH, the ATC will simply say, bye to the pilot and pronto the pilot will be talking to Lagos; so there is nothing like “l can’t get Lagos on radio”.

    During the period we were installing the technology, there were challenges, but they were not deliberate because we cannot shut down the airspace because the planes fly every day. It is like you are painting your house and you have to move some furniture out here and there; we kept explaining this to people but it was so badly presented. What we needed to do was to remain focused and finish the job because all the pilots needed to do and were doing was call 1273, which is the main frequency East Lagos or 1209 for Lagos West. We called that sectorisation because; for instance, when 50 planes began to fly at a time from the South-west of Nigeria and 28 from the Southeast and others from different countries and other airports within the country, there is no way one air traffic controller can handle it; that is why we sectorised. And we can do that even up to six sectors. That is why an ATC can stay in Zurich and manage the entire European airspace. That is what the focus will be in another five to 10 years, where we will have multiplicity of radio communication frequencies.

    How do you deal with compliance by pilots who are overworked by the airlines because it also boils down to safety?

    This is the responsibility of the Nigerian Civil Aviation Authority (NCAA), but let me tell you categorically that there is an approved known flying hour for every aircraft and for every pilot for all the national civil aviation authority. No pilot can exceed his working hours. If you do that, it is at your own risk and when the authority finds out, you are sanctioned, so no pilot can officially say he is overworked. The licence he is carrying gives him the authority. That is why he is captain and commander of the plane. Most pilots you see not flying have perhaps failed medical test; that is the only instance when pilots are disallowed from flying. So, why will anyone want to stress himself when he knows he has not had enough crew rest? That is why international airlines will fly into Nigeria, another crew will come and take the plane and fly it back to the next airport of destination.

    What is happening to rescue operations in Nigeria taking into cognisance the recent crash in San Francisco and looking at what happened at the Iju plane crash?

    The environment aids rescue operations. The scenarios here are two different places:  airport and those outside the airport environment. We have had a KLM crash into a building in Amsterdam, how many people did you recover?  It also depends on the impact the plane made with the ground. By the time the plane made impact with the ground, the passengers on that Dana flight were all dead from the height of stall. In the other case (the recent San Francisco crash) you saw a plane that is one second from landing stalling, it became like football but the emergencies were already on ground there. That was why it took us up to 20 minutes to get to Iju because the plane was being expected and on crashing there was an alarm button. The man didn’t tell us he has crashed, we saw him crashing because he disappeared from the radar. All the ATC on duty needed to do was press an alarm button and once that is done, there is a sequence of order to be followed, airports, Lagos State Fire Service, the army, police and all others have to be notified and mobilised.

    There are lot of sequences to be followed and I tell you, Iju had been our best response so far in emergency in time of response and getting to the site. But the other aspect was that the public being informed enough not to take over the scene. That hindered us from getting there in good time, at least to have remedied those who burnt subsequently. You noticed that anytime a plane crashed in a congested place, it was always disastrous.

    What is the progress report of the aviation industry?

    There is a lot going on in the aviation industry. You will notice that in the various presentations we made in the industry in the last one year, we talked about airport remodelling, the improvement of NAMA, Accident Investigation Bureau (AIB), the various regulatory functions of the NCAA and customer bill of rights. Then we narrowed it down to the main attraction, which is customer satisfaction that comes from the airport and the airlines.

    No matter how good the airspace is, if the passengers are not secure, safe and comfortable, it definitely becomes a thing of concern. All aviation issues are like a chain of issues, so we have to solve them link by link.

    We have been going through the chain of issues in the sector as one big family. Though it’s been quite challenging, with the spirit of transformation blowing across the sector, we have so far dealt with it all together. Dealing with the technical issues and infrastructure, l can tell you, is not difficult. The most difficult is the human factor, the soft issues and management issues.

    For us at NAMA, it is about air traffic control tower, resource management and the synergy that is required to manage all the problem that arise in air traffic management. Outside that, l will say it has been a win-win situation; we have seen quick wins in the process and also successes on the long-term issues.

    How has the latest development in NAMA (radar coverage) enhanced flight in terms of timing and safety?

    Firstly, as a chief executive of NAMA, l do not believe l should tell my story. It is the airspace users and customers that should do that. But, specifically, the area radar, which came into effect about two months ago, is the final result of the Total Radar Coverage of Nigeria (TRACON) and you will recall also that we remain focused. We persevered in order to deliver that project because it has with it so many communication power, air traffic management and engineering capabilities that come with it. All it points to is that the airspace is as safe as any other airspace in the world and our air traffic management is the ultimate. Everybody looked towards a total radar coverage environment, a sort of surveillance of where communication between the pilots and the air traffic controllers is seamless. The air traffic controller doesn’t need the pilot to tell him where he is or what he is going to do; rather, the pilot has already predetermined his route, so the job of the controller is to give the pilots proper navigation by vectoring him through various coordinates; that makes the airspace a seamless one.

    Now, a flight time that used to be one hour, 10 minutes or one hour 15 minutes is done in 45 to 50 minutes. We are also working harder to further reduce flight time between Lagos and Abuja; and Port Harcourt and Lagos and create a more no-talking environment for the controller and the pilots. The pilot in this instance gets air traffic clearance even while he is taxing to take off, so immediately he gets airborne, he already knows at what point to descend, to call and report final with his destination because the Air Traffic Controller (ATC) is looking at you. If he gives you ‘maintain flight level 210’, the pilot may request, ‘Oh, let me go to 220 or 230’. This is possible because you know someone is looking at the pilot; that is why it is called surveillance; it is security and safety at its optimum level in the air.

    So, how was NAMA able to achieve that?

    Firstly, for a procedurally air traffic control, the spacing between aircraft that are taking off is normally between five and 10 minutes. In other words, if four aircraft are taking off, you give them a space time of about five to 10 minutes interval, which could sum up to more than 20 minutes but with the area radar, you can comfortably space them at two to three minutes interval, which is referred to as separation minima. Instead of taking 20 minutes, you have less than 10 minutes among the four planes. If you go to Heathrow (in London), it is like a minute in between them, you can’t do that without an appropriate technology called a radar and that is what we now have, which modern science calls surveillance.

    With the technology you do communication and aircraft separation, weather monitoring, aircraft monitoring etc. By so doing, you save the airline fuel and time. That is comfortable for pilots and safe for passengers because the radar will see the condition of the weather and the ATC will direct you away from potential dangerous routes.

    We have been here in China for three days and it is raining and you still see flights taking off and landing. Under normal circumstances you can’t do that. For example, it can be raining in Ikeja and not raining in Ikoyi or Mile 2 in Lagos; so all the ATC will do is take the aircraft and circumvent it through safe weather.

    In Nigeria today, we have the Doppler weather radar, which is managed by the Nigerian Meteorological Agency (NIMET), that predicts weather conditions, especially low-level wind shear that can disrupt flights. NIMET gathers information on weather conditions and gives it to NAMA, which disseminates it to pilots and we also put it in an automotive system called Automatic Weather Information System (AWIS), a terminal information system. So, the pilot keeps seeing that on his equipment, he doesn’t need to wait for the ATC again to give him information update; the only thing he needs is the temperature information from the ATC for him to set his instrument and starts his engine. Before he takes off, the ATC will have to determine his route from his radar, he will then instruct the pilot where to follow to avoid inclement weather.

    Sometimes because of the weather it takes you a little longer in arriving at your destination because the pilot may be asked to move farther away from the areas where the weather is severe but without that, you definitely will save time. So, we could see the effect of such technology on air travelling, saving time and reducing the carbon dioxide emission as well as improving safety in flight.

    Without prejudice to the San Francisco recent crash, it is human factor, we don’t call it error because the man is a trainee who already had 45 hours flight experience on that aircraft but ordinary approach speed stalled the aircraft. Again if the Iju crash of Dana Air had happened somewhere, the story would have been different but at the end of the day, you notice that you cannot beat technology; you cannot beat the soft ends, which are the human being that must operate these things. Now we have paperless control tower. We only use stylus electronically to write, it is the most efficient modern equipment anywhere in the world but those managing it must continue to receive training.

    So, how have all these safety nets contributed to the growth of the economy?

    Any airline coming into Nigeria must first come and do a survey and determine the kind of aeroplane it will deploy on the route. If you have a small runway and you don’t have a radar and other landing equipment, why go and bring a jumbo Boeing 747 to do an approach into a runway that is less than 1700. But with a runway that is more than three kilometres like ours, British Airways can come with a B747 carrying 540 passengers. That was the figure taken out through Kano and Maiduguri recently on Umrah because we have the infrastructure to air lift that volume of people. Many years ago they would have flown an F-28; that is why we are extending the terminals and building more because the people will definitely be attracted to it.

    Most people travel to Dubai because the shopping malls are within the airports and there is a comfortable immigration regime. I arrived Dubai at 33 hours to my flight and they gave me a visa to go and stay in a hotel. That is the way an economy should run. We need to do that to boost our own economy.

    Mr President has just announced that Chinese investors coming to Nigeria should be offered up to 10 years’ visa, our visa to this place is only three months. If I have five-year visa, I will love to come here in the next six months to spend my money, thus adding values to the economy. When we look at the multiplier effect, it is enormous. You will see at the end of the day, instead of well-wishers waiting for passengers outside, they will be made to come into the terminals and sit and spend money at the shopping malls, eateries etc.

    Let’s talk about the airfield lighting. Airlines complain of limited operations due to the absence of airfield lighting at some airports. This limits the affected airports to day light operation. You recall the Akure controversy? What is your take on this?

    For the purpose of this interview, let me make it clear that the Akure issue was not that of delay, or flying into the night or airfield lighting. We hold the pilot of the plane into Akure solely, completely and entirely responsible for his actions, because he didn’t declare the manifest of that flight. Akure airport is advertised as one without airfield lighting. So, if you are going there, you are fully persuaded that you are going there to leave before sunset. End of story!

    If I travel anywhere l have one entry visa and l decide to go into the country and when coming back, I have already determined my fate that I want to be allowed to enter. Secondly, what is the difference between an emergency, which we have deployed at some runways and a conventional lighting system? That is the difference between your generator and the Power Holding Company of Nigeria (PHCN)? One is that you manage one yourself while the other is managed by a company elsewhere. The difference between the two lights is that we can move the emergency lighting system to another airport. If you go to a country, such as Chile, her Air Force does not use the conventional lighting system because it is cheaper for them to maintain the emergency one, which is a rechargeable system.  Since we installed it on the Runway 18L of the Lagos Airport, pilots have commended it because it is cheaper, easy to operate and to maintain. All we need to do is have our logistic in place to recharge the cycle.

    Is the emergency lighting system available in the entire airport without the conventional lighting system?

    No! We have told all the airlines that all the airports in Nigeria are available 24 hours. Tell us when and how you want to go to the airport. You don’t go to Akure at 10 pm once in a year and expect the government to invest N1 billion that it could use to do others that are having 10 aeroplanes at night in providing the light. Definitely, the airport will get its own, but it is not on the first priority list. Owerri and Calabar have theirs. Benin and Sokoto have been awarded and the projects are going on just like the minister said.

    If, for any reason, there is a request for evacuation or cargo operations for any of these airports that has problem with its lighting system, we simply move the emergency ones there and the plan is to have the third level redundancy. That is the conventional, solar powered and the rechargeable all together.

    Because of many years of neglect and decay, people have not prepared themselves for the transformation that is going on. So, many people do not know the changes taking place and what has been achieved so far. People are getting enlightened and the ways and means these things are also provided have become sophisticated as well. That is why I don’t have to wait to have N5 billion to have the conventional lighting system when technology has provided a much cheaper one for us to buy and deploy.

    What about training on these high tech equipment and facilities?

    First is that, every ATC today must have knowledge of the computer system because the system is a Linux-based to work on the radar as the tech are designed that way. For them to know their simulator, they go through a computer-based training, You must be trainable, that was why we reduced the ATC at a time and it took us time to train them abroad and they are all deployed now.

    It is alleged that there is internal wrangling among the staff. What is your take on this?

    The summary of it is human factor. People are coming from an analogue environment to a digital one. The man, who is finding it difficult to be computer literate, will surely complain when you make him to go through a computer-based training in order for him to clock hours after 15 to 25 years he has been controlling aeroplane.

    You are beginning to see some calmness because we have continued to persevere, retreat and educate them. It is about 18 to 20 months now, anybody who can’t fit in, the person won’t be sacked, that the person knows he or she can’t simply fit in so the best option is to retire. The system is regulating itself. Why do you think that over the years, it is difficult to run the hospitals and fix the bad roads? It is all human factors; that is why I called it the soft ends of the environment … the culture and behavioural pattern of the workers in place. We, in NAMA, have also gone as far as addressing our dressing culture.

    How do you see the agency in the last two years?

    It has been a consistent process of transformation. It is a chain of problems inherited and we are doing it link by link. There is no one that will say it is NAMA or FAAN-related problem; we are tackling them holistically.