The Nation Newspaper

Category: Industry

  • BoI urges investment in solid minerals

    BoI urges investment in solid minerals

    The Bank of Industry (BoI) has called on the Federal Government to pay  attention to funding investments in the solid minerals sector, noting that the industry has the potential to attract huge foreign exchange if developed.

    Its Managing Director, Mr. Rasheed Olaoluwa, explained that most countries in the continent have been able to achieve economic growth because they have invested a lot of resources into developing their natural resources.

    Olaoluwa, in a chat with The Nation, pointed out that Nigeria has not been able to develop its solid mineral space, calling on the government to fund a geological data in the country and conduct an international bid to develop the industry.

    “Botswana has been able to make millions of dollars from gold mining. Nigeria should look towards this direction by investing in solid minerals where the country has a comparative advantage to diversify the economy,” he added.

    The BOI boss, however, stated that the development finance institution has an authorised capital of about N250 billion, with N146 billion as paid up. “We want to take steps to look at an alternative way of funding the financial institution because our capital has always come from the government. We are looking at other sources already,” he said.

    He said in terms of Non Performing Loans (NPLs), the bank recorded a relative high NPL in the past, but stressed that the bank had embarked on a number of initiatives to review the NPL downward, including recovery of loans that were not properly monitored.

    “In a nutshell, today, at the BOI, our NPL is less than five per cent. The development bank in Brazil, their NPL is 2.2 per cent. The development bank in South Africa, the NPL is 16.8 per cent. With less than five per cent as NPL, BOI’s ratio is not bad,” he said.

    Olaoluwa, however, said the bank has done a lot to support Small and Medium Enterprises (SMEs), but stressed that what the sector needs goes beyond finance.

    He added that the bank is giving the loans and also looking at making the lending process more efficient to assist the SMEs.

    “This is why we appointed over 100 Business Development Service Providers (BDSPs) to help the SMEs prepare lendable business plans to access BOI’s business loans,” he added.

    He said the bank is automating its processes to give SMEs the opportunity to enjoy the benefit of automation. “A lot of SMEs are unable to keep records because they do not have an accountant, who understands the technical details of debit and credit. We are looking at a model to empower SMEs to transact businesses with their mobile phones on their own without the help of any accountant,” he said.

    The BOI boss decried the lack of patronage of locally produced goods, saying that Nigerians must patronise Made-in-Nigeria goods for the country to achieve economic growth. “It is in our national interest. We are all complaining about lack of jobs, we are complaining about economic issues, if we do not patronise our local producers, we will not make any progress,” he noted.

    According to him, there are people, who have invested in facilities to produce locally, but they cannot sell and they go bankrupt and lay off staff. But if they produce and are able to sell, they are able to grow and hire more people, translating to economic growth.

    “I am not saying that we should support any producer because there are people who are local producers and they produce trash, but there are few companies producing to meet international standards and such companies should be patronised,” he added.

  • Dangote inaugurates projects for communities

    Dangote inaugurates projects for communities

    Indigenes of communities hosting Dangote Cement Plc, in Ibese, Yewa and Ewekoro in Ogun State are in for better times, as the cement company announced the inauguration of 19 various Corporate Social Service (CSR) projects for them.

    In what is regarded as a major boost to its CSR profile, projects by the cement company would cover various social sectors, including water, education, electricity, roads, IT etc.

    It would be recalled that the company had some years ago instituted scholarships for indigenes of any of its host communities in any higher institution and secondary schools. Over 90 of them have since benefited from the scholarships.

    The management said it was poised to making life more meaningful to all members of the over 16 communities bordering the cement plant and that it would ensure that all projects meet the specific needs of each community.

    Executive Director, Stakeholder Management and Corporate Communication, Mr. Mansur Ahmed, an engineer, explained that the projects were agreed upon after a careful deliberation and discussion with the Obas, Chiefs and the youth leaders of the communities so that the project could be relevant to their needs.

    He thanked the traditional rulers and other community leaders for their cooperation with the Dangote Cement management, noting that it was as a result of the collaboration that made possible the peace and tranquillity enjoyed in the host communities.

    Ahmed promised the community leaders that Dangote Cement would continue to be alive to its responsibilities and urged them to come forward to offer useful ideas and advice that could propel the company to do more for the development of the communities.

    He highlighted some of the projects to include: three domestic boreholes for Elere, Babalawo and Kajola Communities; 10 domestic boreholes for Afami, Ajibawo, Aga-Akinronbi, Aga-Owoyele, Aga-Ashade, Abule Oke, Abule Maria, Ijako-Orile, Wasimi-Imasayi and Balogun; four industrial boreholes for Ibese (2) and Imasayi (2); Construction of 10 classrooms for Ibese and construction of another five classrooms for Balogun communities.

    He listed others as the award of scholarship to 77 indigenes between 2013 and 2014 sessions for secondary pupils, Polytechnic and University students, who are native of the host communities.

    The company is also providing Community Information Technology Training at Ibese, Aga-Olowo, and Ijako-Orile, where two batches have already finished training, while the construction of Ibese/Ilaro road, and that of Ibese/Itori road for all the communities are on-going.

    He said these were aside the fact that the grading of community internal road network along Wasimi-Imasayi is under construction and the drain work at Olu of Ilaro/Paramount Ruler’s road, Ilaro, is nearing completion.

    The Dangote Group boss also informed that the electrification and transformer replacement at Afami and Ibese has been awarded while the construction of 10 bathrooms and toilets with overhead tanks is ongoing for Balogun community.

    He explained that the drilling of boreholes and the overhead tanks is completed, while standby 7.5 KV generators to complement the infrastructure are awaiting installation.

  • ‘Why Aba is not yet a commercial capital’

    Poor electricity supply and infrastructure are some of the factors affecting businesses in Aba, the Abia State commercial capital, the  Group Chairman of J. Udeagbala Holdings Nig. Ltd, Aba,  Ide John Udeagbala, has said.

    Speaking to The Nation in Lagos, Udeagbala, who is the Vice President, of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) wondered why the Alaoji and Geometrics Power stations, located very close to Aba, are not yet operational. He called on  government agencies to find out why the power projects had not been inaugurated.

    He said the city should be seen as a ‘disaster area’ for manufacturers as they spend between 25 and 30 per cent of their earnings on providing electricity for their factories.

    According to him, the influx of people to Abuja and Lagos, which has put pressure on the infrastructure in those cities, is as a result of the failure of industrial cities such as Aba.

    He advised the government to encourage people to set up industries in major cities to ensure the even spread of development and discourage massive movement of people from one point to the other because of the absence of infrastructure.

    “The poor infrastructure provision in Aba is as a result of consistent neglect by governments. Aba should be classified as a disaster area because of the lack of key infrastructure such as road, electricity and liveable environment, which is given in other societies. Aba is a place that a lot of things are manufactured and these people would do a lot more if they receive the needed assistance from government,” he said.

    The industrialist said an Aba businessman would excel if the government could provide some basic infrastructure, such as electricity, good roads, and waste disposal.

    On the Small and Medium Enterprises (SMEs) clusters in Aba, he praised the United Nations Industrial Development Organisation (UNIDO) for its efforts in managing the industrial clusters for leather and shoe works. He, however, said this had not been harnessed to produce the right results.

    Noting that customers come from as far as Congo and Togo to buy the shoes, bags and other leather works made in Aba, he hinted that it would have been much better not only for the state government but also for the country to harness foreign exchange from the trade.

    Udeagbala further said developing Aba should not be left for the  government alone, asking that the Federal Government should be interested in its activities, considering its commercial status.

    Earlier, Governor Theodore Ahamefula Orji said his planned to stimulate the small and medium scale enterprises (SMEs) in Aba. He said experts were brought  in  to,  not only assist the small scale industrialists, but also hone their skills in good and making quality products.

    He said no government could neglect the commercial city knowing the contributions of its informal sector to the economy of the state and well-being of its citizens.

    In his words: “Aba is very important to us because it is only in that town that you cannot find somebody who is unemployed; every person in the city has employment. It is either you are an artisan, trader or you are learning a trade. Even the civil servant finds time to try his hand in one business or the other. Nobody is idle and no responsible government can joke with such people.”

    While promising that the state  would give them the support to excel, he said over 18 major roads had been constructed and that the state would do more to ease the transportation of their goods from the point of production to the market.

    The governor also said the government’s plan was to push the standards of the manufactured products and brand them as ‘made- in-Aba with pride’.

    He said the days of not displaying the origin of goods produced in Aba was gone, adding that they would brand the products to give them  to enable them compete favourably at the international market.

    To underscore the seriousness of his administration, he said the state with its development partners were building more markets to serve as production points in clusters according to the trade of a particular union with the infrastructure.

    He said: “We are getting more markets for them. For instance, a company known as ABIC is building more markets for them just behind Osisioma Motor Park. There is another market springing up in Ukwa West Local Government very close to the city centre for wholesale goods, packaging and exporting. We are also organising them into small cooperatives to enable them access funds to help buy the needed machines and accessories to compete favourably with the ones that come from Germany and Hong Kong.”

    According to the governor, his administration has taken it upon itself to raise the bar and also lead a campaign for Nigerians to patronise made-in-Aba goods for their standard quality.

  • How local content can boost industrialisation

    How local content can boost industrialisation

    Operators in the food and beverage sector have been spending an estimated N100 billion yearly on the importation of malt extract. Most manufacturers prefer importing the raw material from their home countries to embracing the use of sorghum developed by the Raw Materials Research and Development Council (RMRDC). Assist. Editor OKWY IROEGBU- CHIKEZIE writes that by encouraging sorghum farming and processing locally, Nigeria could save huge foreign exchange and boost industrialisation.

    When the Federal Government banned the use of barley and malt extract in the food and beverage sector in the 1980s, the expectation was that the use of sorghum, developed by the Raw Material Research and Development Council (RMRDC), would be embraced by manufacturers. This would have saved the nation an estimated N100 billion spent on the importation of malt extract yearly. However, this has not been the case. Rather than embrace the alternative and the immense benefit from local content in manufacturing as initiated by RMRDC, The Nation learnt that most manufacturers still prefer importing malt extract  from their home countries.

    Before RMRDC came out with the alternative, the challenge for the sector, which is one of the largest under the Manufacturers’ Association of Nigeria (MAN), has been the availability of alternative local raw materials. To bridge the gap, the Federal Government banned the importation of malt extract, having developed sorghum, an acclaimed richer alternative through research and development, in line with its backward integration policy.

    But as it turned out, the government has not made any headway in convincing some local manufacturers, especially the multinationals, who, as it were, are compelled by their home countries to import malt extract instead of patronising the locally produced, high maltose syrup. This, according to experts, is at the expense of Nigeria’s industrialisation policy. The Nation’s investigations revealed, for instance, that two of the biggest breweries spend about N50b and N20b, respectively, importing malt extract.

    A reliable source close the companies, who preferred anonymity, said such amount would have been saved if government had put a high tariff on malt extract importation  to protect, not only the local industries, but also grow the nation’s economy through the cultivation and processing of sorghum. This is so, considering the large size of the food and beverage industry, which parades other sub-sectors such as breweries,beverages, flour-mills, cereals, bakeries and dairy products.

    One of the big players in the industry, who would not want his name in prints, said most of what is imported and labelled as malt extracts are far from being true. He said, for instance, that with the devaluation of the naira and the high cost of importation, no manufacturer can import original malt extracts and sell a packet of biscuit for N5 as it is obtainable now. He said: “The regulatory authorities in the food and beverages sector should investigate the claim of having malt extract in some beverages or biscuits. It is impossible for some of these manufacturers to sell at the prices they are selling if indeed, they are importing original malt extract.”

    He wondered how such manufacturers would break even selling a packet of biscuit at N5, or any of the drinks that are sold at ridiculous prices. According to him, government owes her citizens to protect them from sharp practices from some manufacturers, who sell unwholesome products or make claims that are false on their products. He criticised the regulatory bodies such as National Agency for Food, Drugs Administration and Control (NAFDAC), Standards Organisation of Nigeria (SON), and Consumer Protection Council (CPC), saying that, rather than fighting among themselves on areas of control and visibility, they should discharge their mandate to the people.

    The Managing Director of Food Agro & Allied Industries Limited, Mr. Sudhansu Sinha, admitted that importation of malt syrup from countries such as China, India and Turkey is costing the country huge losses in foreign exchange, especially with the devaluation of the naira. He told the The Nation  at his Sango-Otta office, Ogun State, that government must discourage massive importation of malt extract  from these countries where farmers are subsidised by their governments.

    He said this is in addition to other waivers that make their products cheaper for Nigerian importers and consumers, who have unhealthy appetite for anything foreign even when the quality does not match that of local alternatives. “Our company is the sole indigenous manufacturer of high quality maltose syrup and extract from sorghum in the country with an installed capacity of 100,000 tons of high malt syrup and sugar per day,” he said.

    Mr. Sinha pointed out that his company is poised to meet at least, 50 per cent local demand, but unfortunately food, beverage and drinks manufacturers in the country will rather buy from their home countries to feed their production lines to the detriment of the growth of the nation’s economy and the government is not doing enough to check the abuse.

    “Government should, as a matter of urgency, implement the policy it started in the 1980’s where it banned the importation of barley and its by product, malt extract, which led to ingenious research by RMRDC, which discovered sorghum, a tropical plant found in abundance in the Northeast, especially in Gombe State,” Sinha said, arguing that the implementation of the policy will not only empower farmers, but create employment, as there will be capacity utilisation of local industries.

    According to Sinha, this segment of manufacturing has a large market share running into billions of naira, but the government needs to protect the local industries from the overwhelming influence of foreign interest, who insists on buying raw materials from their factories abroad rather than patronising firms like theirs with the requisite technology and competitive production process.

    He said “The production of sorghum is going down, as farmers are not empowered and there is no subsidy on agriculture unlike the European countries that protect their farmers. Insecurity is a major issue as most of our supplies come from the varieties found in the Northeast.”

    Lagos State RMRDC Coordinator, Mr. Tokunbo Habeeb, said his agency was set up to ensure that industries are fed with raw materials that have local substitutes so that importation of locally available products will be discouraged. He decried the huge sums spent on foreign exchange to import malt extract, encouraging food and beverage manufacturing companies to patronise local companies some of which, according to him, deploy the highest level of production skill that is globally competitive.

    Habeeb said the country will be saving over $25 million annually from banning the importation of malt extract, while encouraging the local production of high quality maltose syrup and extract  from sorghum. He said: “Patronage of local content is crucial to our economy; our local production meets world class standards. Sorghum has a higher shelf life than barley extracts and more nutritious, as it is gluten free, which makes it healthier and more acceptable in the advanced economies.”

    He reiterated the fact that high maltose syrup extract is used in alcoholic and non alcoholic beverage production and is evidently a healthy replacement for sugar and syrup in the production of quality beer, malt drinks, soft drinks, milk and malt preparations.  He revealed that it is used in leavening and conditioning of dough, moisture retention and softening of bakery crumbs. He, therefore, urged food and beverages manufacturers to patronise locally made products certified by the RMDC for best quality and competitive production process.

    On its part, the CPC decried poor nutritional information on products. Its Director-General, Mrs. Dupe Atoki, said CPC has begun an advocacy for the adoption of a consumer-friendly labelling for beverages and food products in the country. She canvassed a change in the current nutritional information placed at the back of some products, which she said, was not comprehensible to consumers.

    Mrs. Atoki said: “The CPC is advocating that manufacturers adopt the consumer friendly ‘traffic light’ nutritional labelling as it is very simple for consumers to read and understand at first glance. Most consumers lack the skill or time to interpret detailed nutritional information on the back of the package. Our sensitisation is harping on the need for consumers to be conscious of their fat, sugar and salt intake, just as it is also focusing on schools because of children’s penchant for junk food.”

    The DG said there is need for consumers to make informed decision on what they purchase and consume including the need to check the labelling of products, as well as for the manufacturers to adopt best practices in line with the Council’s mandate. She reiterated the need to sensitise consumers on the dangers of unhealthy diets, adding that, diet related diseases such as cancer, cardiovascular diseases and diabetes are on the increase, resulting in more than eight million premature deaths. The essence of the awareness is to encourage consumers to buy wisely, she added.

    However, Nigeria Breweries Plc (NBL) seem to have caught the bug of the backward integration on barley by their inroad into sorghum processing with a factory in Aba, Abia State. It is the largest sorghum factory in Africa.

    Its Managing Director, Mr Nicolaas Vervelde, told The Nation that the company’s use of sorghum has supported an N8.8 billion value added and N110 billion tax payments. This, he said, is in addition to local purchase support of 85,000 jobs through 100 per cent local content.

  • Akande: appropriate taxation can boost govt’s revenue

    There is a need for an appropriate taxation system to boost the revenue  of state governments which are finding it difficult to meet their needs as a result of dwindling cash from the Federation Account, a former Minister of Industry, Chief Nike Akande, has said.

    Akande, who spoke to The Nation in Lagos, stressed that without adequate taxation, governments would not be able to provide key infrastructure, urging Nigerians to pay their taxes promptly.

    She said the challenging economic environment provides an opportunity for innovative policies that would encourage people to pay their taxes and for the government to reward those who are faithful to their responsibility.

    She reiterated her earlier call that anybody with income must pay tax.

    Akande, who is also a tax ambassador for Lagos State, an award she got for her diligence in income tax payment, praised the government for its innovative tax policies, which has resulted in exemplary governance and infrastructure.

    She, however, cautioned that multiple taxation is unhealthy for the manufacturing sector, calling for the harmonisation of taxes among the various levels of government to ensure an enabling environment for businesses.

    The former Minister advised the government to support the ‘Buy Nigeria’ campaign, noting that it is the only way products could be more competitive and local industries stimulated.

    She said: “A lot of people are buying locally made and designed fabrics now. If our local designers become more creative more people will patronise them. When l was a minister, l made sure that l wore locally made fabrics in all my official engagements. I wish that government continues to promote the use of local fabrics.”

    Acting President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Chief Bassey Edem, canvassed a law to support the Federal Inland Revenue Service’s (FIRS)  proposal to harmonise the state and local government tax agencies, adding that introducing spurious taxes  are inimical to the growth of businesses.

    He called for the discontinuance of the exportation of raw materials to encourage the local industries make use of available local materials, add value to it and provide finished products that can earn foreign exchange.

  • ECOWAS CET: Why manufacturers are hopeful

    ECOWAS CET: Why manufacturers are hopeful

    Few weeks into the implementation of the Economic Community of West African States (ECOWAS) Common External Tariff (CET), Nigeria, Africa’s largest economy, is tipped by manufacturers and members of the organised private sector as potentially the biggest beneficiary of the adoption of a common regional tax regime. The new policy, which took effect from April 11, may have opened a window of opportunities for this country’s industrial growth. Assistant Editor CHIKODI OKEREOCHA  reports.

    It took assurances by President Goodluck Jonathan and Minister of Finance/Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, to convince manufacturers and business operators that the adoption of the Economic Community of West African States (ECOWAS) Common External Tariff (CET), which took effect on April 11, this year, would deliver bountiful benefits to them and the economy.

    ECOWAS CET allows goods from any other part of West Africa into Nigeria without the imposition of any tax, import duty or levy. It means that goods imported into a Francophone country will not necessarily be cheaper or more expensive than those entering another Anglophone country, such as Nigeria or Ghana. CET, according to experts, is a mild form of economic union, but may lead to further types of economic integration.

    In addition to having the same customs duties, the countries may have other common trade policies, such as having the same quotas, preferences or other non-tariff trade regulations, apply to all goods entering the area, regardless of which country within the area they are entering.

    Apart from resulting to significant improvement in the implementation of the ECOWAS Trade Liberation Scheme (ETLS), giving rise to the concept of a regional customs union, the scheme is seen as an effective instrument for harmonising the import policies of member-states which will, in turn, strengthen the framework for the realisation of a common market.

    The approval for the implementation of the new tariff was conveyed in a statement signed by Mrs Okonjo-Iweala. The NCS said all imports arriving in the country beginning from April 11, shall be subjected to the rates contained in the CET 2015-2019 and 2015 Fiscal Measures without recourse to the rates applicable before the coming into effect of the ECOWAS CET 2015-2019.

    A statement by NCS spokesman, Deputy Controller of Customs, Mr. Wale Adeniyi, said that the approved Supplementary Protection Measures/Fiscal Policy Measures comprised an Import Adjustment Tax list, which involves additional taxes on 177 tariff lines of the ECOWAS CET.

    The ECOWAS CET also covers a list of goods whose import duty rates have been reviewed to encourage more development in strategic sectors of the economy and an Import Prohibition List (Trade), applicable only to certain goods originating from non-ECOWAS countries.

    However, before it came into force, government needed to get the buy-in of stakeholders before its implementation, which was why the President assured that Nigeria had successfully negotiated a strong CET agreement with ECOWAS partners on the need to protect the country’s strategic industries from foreign domination.

    The Minister assured manufacturers that efforts were on to establish a development finance institution to make credit accessibility easy and reduce high cost of funds. She emphasised that efforts would be made to ensure that indigenous manufacturers gained from CET scheme, which took off on April 11.

    The assurances were neccessary to allay the fears and suspicions of manufacturers and members of the Organised Private Sector (OPS) most of who fear that CETwould throw the nation’s borders open to influx of goods from within the West African region when implemented.“You can’t have an industrial growth in this kind of environment with a CET that exposes local industries and products to unequal competition,” an economist, Mr. Henry Boyo, argued.

    Members of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) were no less apprehensive. NACCIMA noted, for instance, that although it appreciates the need for ECOWAS CET, but is also concerned that it might turn Nigerian into a dumping ground, a situation that would pose a huge challenge for the nation’s growing industries that are battling with the devaluation of the naira, among other challenges.

    “The need to ensure compliance with all protocol signed by ECOWAS to eliminate dumping of goods in the region becomes of great importance if our growing industries are to survive with the implementation of CET and for the realisation of the Nigeria Industrial Revolution Plan (NIRP),” First Deputy National President, NACCIMA, Chief Bassey Edem, said.

     Common tariff, many benefits

    Few weeks into the implementation of the new policy, the picture appears to be getting clearer despite initial apprehensions. Already, the fears and suspicions earlier expressed by operators are gradually giving way to optimism and hope that Nigeria potentially could be the biggest beneficiary of the CET regime. Such optimism is anchored on the strategic economic advantage Nigeria enjoys as Africa’s most populous and largest economy.

    According to experts and operators, one of the areas such advantage would find expression is in curbing smuggling, which has been a pain in the neck of Nigerian manufacturers. Former director-general, NACCIMA, Dr John Isemede, said the effect of CET within ECOWAS region could discourage smuggling and promote regional trade. He said: “The only key thing is that it should ordinarily reduce smuggling within the region because what has promoted smuggling is disparity in tariff.

    “If a product in Nigeria is attracting 70 per cent and the same product in Cotonou or Togo is attracting 10 per cent, it is likely that smugglers and other unpatriotic traders will follow the rules of the lowest tariff but if the same tariff obtains between Lagos and Mauritania then there is no advantage of smuggling by unscrupulous traders.”

    President, Association of Nigerian Licensed Customs Agents, Prince Olayiwola Shittu, thinks so too. “Definitely, it will stop smuggling, create competition among nations and attract more vessels to Nigeria because there will be no more diversion of cargoes,” he said, asking, “If what you are going to pay in Ghana or Ivory Coast is the same thing you are going to pay in Nigeria, why take your goods there?”

    Apart from a possible reduction in smuggling, operators are also hopeful that Nigeria would take advantage of the window of opportunity CET would open up by way of enlarging the nation’s industrial sector through higher economics of scale.

    “There will be a kind of scale advantage, which is good,” says Registrar/Chief Executive Officer, Institute of Business Development (IBD), Mr. Paul Ikele.

    He told The Nation thatthe essence of having a common tariff is to build international business relations integration so that certain rules, which can assist each nation to stabilise its economy are harmonised.

    Ikele further pointed out that CET would make room for faster business development, faster economic development, faster trade and integrated business exchanges like currencies and agro-allied businesses.

    “It will also ensure stability within the economic states because in each area you look at where you have comparative advantage. For instance, in Nigeria we have oil, we have cocoa, we have agro-allied products; we even have mineral resources. We look at the ones we have in quantum, which we have an edge over all other states so that all other countries will do the same,” he added.

    The IBD Registrar also said the implementation of CET would strengthen national institutions through peer learning among members. “Non-productive economies might want to key into it and take advantage to move into productive ventures, he pointed out, adding that with the world moving into globalisation, CET makes it possible for Nigeria to adapt to those areas it could generate revenue to assist her boost bottom-line.

    He also dispelled fears that CET could make Nigeria a dumping ground. “It (CET) has to be controlled; there must be determinants. So, it will not open any floodgate for influx of cheap goods if there are controls,” he explained, adding, “Before a tariff is published it has to be harmonised per country; you have to determine the areas you have an advantage that will generate economic strength for you. Each country has to look at areas where it has comparative advantage before keying into the tariff.”

    Isemede also said CET will make for better planning. According to him, operators will be able to plan better now because they know that the tariff will not change overnight, which has been a challenge for Nigeria in particular. “If there is any need to change tariff, ECOWAS as a body must meet, member countries must agree to that tariff change. So, that will make for better planning and companies will be able to plan long term, fully aware that their tariff will not change overnight and affect their investment output,” he said.

    Operators are also excited over the prospects of CET curbing perceived excesses of the Nigerian Customs Service (NCS) since there will be a common tariff in the ECOWAS sub-region that the NCS cannot influence. The thinking is that with CET there is no way the tariff of the NCS would be different from other customs services in the ECOWAS sub-region.

    “There is no way Nigeria Customs will give their own tariff anymore because there will be a common market. It will help shippers to make their plan, projections and sales margin unlike now that we can’t make projection and sales margin because you don’t know what to meet at the port,” President, Shippers’ Association Lagos State (SALS), Rev. Jonathan Nicol, reportedly said.

     The flip side

    However, experts say that there are gray areas that must be smoothened if Nigeria must benefit from CET. Isemede identified the need for harmonisation of the different tariffs. For instance, while countries, such as Nigeria, Ghana, and Gambia are Anglophone nations, Togo, Benin, Burkina Faso, are Francophone. Similarly, while Value Added Tax (VAT) is five per cent in Nigeria, 20 per cent in the francophone countries and 15 per cent in Ghana, he noted that only when these VAT harmonized can the sub-region talk about one external tariff.

    Notingthat Nigeria might not get to the Promised Land on the platform of CET unless VATs are harmonised, he called on ECOWAS to harmonise the different VATs in the countries for the smooth implementation of the policy. He alsosaid that cost of doing business in Nigeria is high when compared to other countries, which is why goods shipped into the country are cheaper than the ones made in the country, adding that there is need to address issues responsible for the high cost of doing business in Nigeria.

    The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, agrees with him. He said CET would have serious implications for the economy, particularly the manufacturing sector unless issues of high energy cost, high costs of funds, high regulatory charges, and high ports charges, among others, are not addressed.

     

  • ‘Why Aba is not yet a commercial capital’

    Poor electricity supply and infrastructure are some of the factors affecting businesses in Aba, the Abia State commercial capital, the  Group Chairman of J. Udeagbala Holdings Nig. Ltd, Aba, Abia State, Ide John Udeagbala, has said.

    Speaking to The Nation in Lagos, Udeagbala, who is also Vice President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), wondered why the Alaoji and Geometrics Power stations located very close to Aba are not yet operational. He called on  government agencies to find out why the power projects had not been inaugurated.

    He said the city should be taken as a ‘disaster area’ for manufacturers as they spend between 25 and 30 percent of their earnings on providing electricity for their factories.

    According to him, the influx of people to Abuja and Lagos, which put pressure on the infrastructure in these cities, is as a result of the failure of industrial cities like Aba.

    He advised the government to encourage people to set up industries in major cities to ensure even spread of development and discourage massive movement of people form one point to the other because of the absence of infrastructure.

    “The poor infrastructure provision in Aba is as a result of consistent neglect by governments. Aba should be classified as a disaster area because of the lack of key infrastructure such as road, electricity and liveable environment, which is given in other societies. Aba is a place that a lot of things are manufactured and these people would do a lot more if they receive the needed assistance from government,” he said.

    The industrialist said an Aba businessman would excel if the government could provide some basic infrastructure, such as electricity, good roads, and waste disposal.

    On the Small and Medium Enterprises (SMEs) clusters in Aba, he praised the United Nations Industrial Development Organisation (UNIDO) for their efforts in managing the industrial clusters for leather and shoe works. He, however, said this had not been harnessed to produce the right results.

    Noting that customers come from as far as Congo and Togo to buy the shoes, bags and other leather works made in Aba, he hinted that it would have been much better not only for the state government but also for the country to harness foreign exchange from the trade.

    Udeagbala further said developing Aba should not be left for the  government alone, asking that the Federal Government should be interested in its activities, considering its commercial status.

    Earlier, Governor Theodore Ahamefula Orji said his planned to stimulate the small and medium scale enterprises (SMEs) in Aba. He said experts were brought  in  to,  not only assist the small scale industrialists, but also hone their skills in good and making quality products.

    He said no government could neglect the commercial city knowing the contributions of its informal sector to the economy of the state and well-being of its citizens.

    In his words: “Aba is very important to us because it is only in that town that you cannot find somebody who is unemployed; every person in the city has employment. It is either you are an artisan, trader or you are learning a trade. Even the civil servant finds time to try his hand in one business or the other. Nobody is idle and no responsible government can joke with such people.”

    While promising that the state  would give them the support to excel, he said over 18 major roads had been constructed and that the state would do more to ease the transportation of their goods from the point of production to the market.

    The governor also said the government’s plan was to push the standards of the manufactured products and brand them as ‘made- in-Aba with pride’.

    He said the days of not displaying the origin of goods produced in Aba was gone, adding that they would brand the products to give them  to enable them compete favourably at the international market.

    To underscore the seriousness of his administration, he said the state with its development partners were building more markets to serve as production points in clusters according to the trade of a particular union with the infrastructure.

    He said: “We are getting more markets for them. For instance, a company known as ABIC is building more markets for them just behind Osisioma Motor Park. There is another market springing up in Ukwa West Local Government very close to the city centre for wholesale goods, packaging and exporting. We are also organising them into small cooperatives to enable them access funds to help buy the needed machines and accessories to compete favourably with the ones that come from Germany and Hong Kong.”

    According to the governor, his administration has taken it upon itself to raise the bar and also lead a campaign for Nigerians to patronise made-in-Aba goods for their standard quality.

  • Akande: appropriate taxation can boost govt’s revenue

    There is need for an appropriate taxation system to boost the revenue  of state governments who are finding it difficult to meet their needs as a result of dwindling cash from the Federation Account, a former Minister of Industry, Chief Nike Akande, has said.

    Akande, who spoke to The Nation in Lagos, stressed that without adequate taxation, governments would not be able to provide key infrastructure, urging Nigerians to pay their taxes promptly.

    She said the challenging economic environment provides an opportunity for innovative policies that would encourage people to pay their taxes and for the government to reward those who are faithful to their responsibility.

    She reiterated her earlier call that anybody with income must pay tax.

    Akande, who is also a tax ambassador for Lagos State, an award she got for her diligence in income tax payment, praised the government for its innovative tax policies, which has resulted in exemplary governance and infrastructure.

    She, however, cautioned that multiple taxation is unhealthy for the manufacturing sector, calling for the harmonisation of taxes among the various levels of government to ensure an enabling environment for businesses.

    The former Minister advised the government to support the ‘Buy Nigeria’ campaign, noting that it is the only way products could be more competitive and local industries stimulated.

    She said: “A lot of people are buying locally made and designed fabrics now. If our local designers become more creative more people will patronise them. When l was a minister, l made sure that l wore locally made fabrics in all my official engagements. I wish that government continues to promote the use of local fabrics.”

    Acting President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Chief Bassey Edem, canvassed a law to support the Federal Inland Revenue Service’s (FIRS)  proposal to harmonise the state and local government tax agencies, adding that introducing spurious taxes  are inimical to the growth of businesses.

    He called for the discontinuance of the exportation of raw materials to encourage the local industries make use of available local materials, add value to it and provide finished products that can earn foreign exchange.

  • 2020 target unrealisable, says NACCIMA

    2020 target unrealisable, says NACCIMA

    The 2020 target set for industrialisation under the Transformation Agenda of the outgoing administration cannot be achieved, the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), has said.

    The body said despite the programmes of the  administration to improve the lot of the average Nigerian, alot is left to be done to tackle the challenges which range from insecurity, unstable exchange rate, unemployment, unstable power supply, inflation, decline in trade volume and devaluation of the naira.

    The association said these challenges have slowed the realisation of the government’s Transformation Agenda and the nation’s quest to become one of the 20 most industrialised nations in the world by 2020.

    Addressing reporters in his Lagos office, its President, Chief Bassey Edem, said while capacity utilisation remained at 51.96 per cent, local and external debt stood at $49.12 billion and $9.52 billion, with liquidity ratio at 30 per cent. inflation rate stands at 8.5 per cent.

    He regretted that there had been  delays in the budgetary process,  adding that it has affected planning by Ministries, Departments, and Agencies (MDAs) and business operators, whose plans and projects  depend on the budget.

    Edem called for diversification of the economy from over-dependence on crude oil to avoid volatile oil prices.

    “The government needs to work assiduously towards making the required investment that would boost the growth of other non-oil sectors, such as agriculture, manufacturing, solid mineral development and transport, which hold greater prospect of yielding huge revenue to the economy if properly harnessed,” he said.

    Edem said crude oil prices were negatively affecting the nation’s revenue base and budget, thereby affecting businesses. “We have been very consistent in our warning against the country’s over reliance on export of crude oil as a major source of revenue, which price is prone to volatility due to factors, such as the Organisation for Petroleum Exporting Countries (OPEC) quota, unrest in the Middle East, pipeline  vandalism and demand substitution,” he said.

    The NACCIMA Acting chief criticised the high cost of governance, saying it increased the recurrent expenditure of the government, thereby decreasing the government expenditure on public project in vital sectors of the economy.

    He called for a reduction in the cost of running government by pruning political appointees as well as the expenditure of the National Assembly.

    His words: “It is important for the incoming administration to start considering ways by which the country’s recurrent expenditure can be reduced beginning with a lean and efficient government administration.

    “Agriculture is a major and most certain path to economic growth and sustainability and its importance cannot be over emphasied. We counsel that the incoming administration should, as a matter of priority, consolidate on the gains  recorded in the sector and initiate additional policies that will make the sector a source of food security and economic development for the prosperity of the Nigerian people.”

    He urged the diversification of sources of power, such as solar, wind energy and coal to boost power supply.

    He continued: “There is need for the incoming administration to recognise the importance of power to the survival of industries in this country and ensure the reforms in the sector are improved upon so as to deliver to the generality of the Nigerian populace the much desired stable power supply.”

    Edem also canvassed a policy dialogue session with the private sector to discuss input into the budgetary development process as it was before. The need for this interaction, he said, had become imperative for a successful Public-Private Partnership (PPP) process to further develop the economy.

  • Why real sector ’ll be vital to Buhari’s govt

    Why real sector ’ll be vital to Buhari’s govt

    Even before his inauguration on May 29, the deluge of demands from operators in various sectors articulating areas they would like Gen. Muhammadu Buhari to address is  enough to scare the lion-hearted. But industrialists and members of the Organised Private Sector (OPS) say Buhari’s ability to meet and even surpass expectations depend largely on the level of priority he accords the real sector. CHIKODI OKEREOCHA and OKWY IROEGBU-CHIKEZIE report.

    For President-elect Gen. Muhammadu Buhari, uneasy lies the head that wears the crown. Less than a month to his inauguration on May 29, this year, the pressure seems to be on. His administration is already choked  by the volume of demands by various interest groups and operators from all the sectors outlining areas they expect him to address as soon as he settles down to business.

    The tasks before the retired General are, indeed, enormous. It could not have been otherwise. Buhari is mounting the saddle at a time the economy is facing unprecedented crisis caused by plunge in oil prices and devaluation of the naira; which is why expectations are so high that stakeholders and operators are impatient for a quick turnaround. Indeed, no one envies Buhari. For instance, the value of the naira to the dollar has depreciated to an all-time low, requiring immediate measures to shore it up.

    Apart from persistent pressure on the naira exchange rate, the outlook for many macro-economic indicators is not bright, with foreign reserves dropping below $30 billion. Corruption is endemic.The crisis in the energy sector has never been this bad, at less than 3, 000 Megawatts of electricity for a country of 170 million.The sector has defied all measures so far put in place to break the jinx. Privatisation has not seen any significant improvement in electricity supply to residential and industrial consumers.

    That is not all. Unemployment rate has assumed a scary dimension and is believed to be contributing largely to the insecurity that pervades the nation.The mortality rate of manufacturing firms in the country is also very high because of high operating cost and poor infrastructure. Investors’ confidence has also drooped. Although the anxiety and uncertainty that characterised the business environment before the elections are gradually coming under control, most local and foreign investors are still holding back, waiting to see the policy direction of the in-coming government.

    Although these issues present significant challenges to the in-coming Buhari administration, particularly in managing expectations, industrialists and members of the Organised Private Sector (OPS) say that the new government has no reason to fear if only it could pay closer attention to the challenges facing the real sector.

    At present, oil prices are plunging, compelling the Federal Government to shift focus to the real sector in the hope of reversing the trend where oil revenue accounts for more than 75 per cent of government’s revenue and close to 90 per cent of foreign exchange income. For real sector operators, this is the most auspicious time to unlock the massive potential in the manufacturing sector and increase

    its productivity.

    The thinking is that if the new administration could reposition the real sector by addressing its many challenges, it would ride on it to deliver on its campaign promises, particularly those relating to job creation, security and diversification of the economy. Some of them, who spoke with The Nation, noted that one of the major steps is for the

    Buhari administration to close the huge infrastructure gap, particularly power that has been a thorn in the flesh of manufacturers.         The consensus is that the power sector reforms embarked upon by the out-going administration failed to offer manufacturers the needed succour.

    President, Lagos Chamber of Commerce and Industry (LCCI), Alhaji Remi Bello, last week, lampooned the power sector reforms, insisting that the burden of high cost of energy for investors have persisted and remains one of the biggest issues in the investment environment.

    Hear him: “The power sector reforms and the privatisation that followed have not achieved the desired result. It has, therefore, become necessary for the incoming administration to undertake a holistic view of the power sector reform.This should cover the processes of the reform and the capacity of the major institutions in the power delivery chain.”

    Economist and industrialist Mr. Henry Boyo is no less disappointed by the crisis in the power sector. “We haven’t seen much of improvement in power supply,” he told The Nation, noting that the most worrisome aspect is that after selling the distribution andgeneration companies (Discos and Gencos) Nigeria ended up with a loss of N400 billion. He said it is curious that almost two years privatisation, government continues to breastfeed the Discos with selective interest waivers, which have regrettably not guaranteed low tariffs or improved performance.

    He therefore, called on Buhari to take a closer look at how Nigerians were left with over N400b debt after the privatisation. While advising on the need to prioritise government expenditure to boost investments in critical infrastructure, President, Lagos Chamber of Commerce and Industry (LCCI), Alhaji Remi Bello, said the challenge of high cost of governance and collapse of the rail system demand urgent attention.

    He also called on the incoming administration to sustain the momentum of the war on terrorism and insurgency in some parts of the country. Bello noted that the high cost of doing business and low productivity have become too burdensome for real sector operators, attributing the situation to macroeconomic factors, institutional challenges and structural issues.

    LCCI’s Director-General, Mr. Muda Yusuf, said the incoming Buhari administration should carry out performance audit of key regulatory institutions whose activities impact on the private sector. This, he said, was necessary to ensure that these institutions deliver the desired value to the private sector and economy at large.While calling for guidelines for accessing intervention funds and urging its review by making it less stringent, he said there is need for a level playing field for all investors across all sectors on import tariff, funding opportunities and tax incentives, among others.

    In addition to ensuring the sustainability of selected policies and programmes of the out-going administration, which offer value to the economy, Yusuf wants a robust consultation with private sector bodies for input into policy formulation processes and a universal application to all investors in a given sector.

    The Director-General/CEO, Nigerian Youth Chamber of Commerce (NYCC), Comrade Peter Ayim, canvassed a similar position. Noting that there is obvious gap in the system in form of lack of synergy between the public and the private sector, he said there is need to mainstream youths into the Micro, Small and Medium Enterprise (MSME) sector through robust policy advocacy and constructive engagement with the government and development partners. “There should be constructive stakeholders’engagement on policy advocacy to promote global best practices in youth entrepreneurship promotion and development,” he told The Nation.

    Ayim emphasised that with a predominantly youth population of over 70 million, “there is the urgent imperative for a functional public-private partnership that will facilitate a robust, dynamic and sustainable enterprise development eco-system in line with contemporary trend and global best practices in the promotion and development of youth entrepreneurship. He said the in-coming administration will do well to develop a result oriented and sustainable policy framework and intervention mechanism targeted at supporting the accelerated promotion and development of functional youth entrepreneurship in Nigeria.

    The NYCC boss believes that if this is done, Buhari stands a chance of delivering on his campaign promises of massive job creation. He expressed optimism that with 70 million youth population, what is required to give them the needed impetus to ignite a revolution in employment creation, is for the in-coming government to deliberately create the enabling environment that will remove all the barriers that impede youth-led micro enterprises. To him, this approach is a critical pathway to growing the economy, generating jobs and creating wealth, thereby combating and reducing unemployment, hunger and poverty. This, he said, would also halt the rising restiveness and insecurity.

    However, for the real sector to regain its teeth under the in-coming administration, Boyo said the new government must respect the sanctity of monetary stability or fail woefully, if not more woefully than the out-going government. “The pillar of any economy is monetary policy and the pillar of monetary policy is interest rate, inflation and exchange rate. When you get those ones right like in other countries you will fix the economy,” he declared, adding that “high interest rate makes it impossible for the real sector to grow”.

    The renowned economist and Managing Director of Cocosheen Nigeria Limited told said for a start, Buhari must stem the crisis of excess liquidity in the system, which are responsible for the high interest rates, inflationary pressure, and devaluation of the naira.

    According to him, excess liquidity in the system is caused by Central Bank of Nigeria (CBN) “crazy, merciless, insensitive, and unilateral policy” of substituting naira allocations for dollar-derived revenue.

    He said CBN’s conscious, deliberate and misguided payment arrangements result in market imbalance, which ultimately weakens the naira exchange rate.