The Nation Newspaper

Category: Industry

  • ‘Cassava factory near completion’

    The Plateau government said the structural development of its Cassava Processing Factory had reached 60 per cent completion.

    Commissioner for Agriculture and Natural Resources, Mr Steven Barko, who spoke in an interview with the News Agency of Nigeria (NAN), added that the  project is a fall-out of the Memorandum of Understanding (MoU) between the state government and a Brazilian firm, EBS Fedeta de Fedates, signed in 2012.

    He said: “It has gone up to between 50 to 60 per cent in terms of structural development but all the machines have been manufactured.

    “Furthermore, 10 Plateau youths have been trained in Brazil to handle the factory. In fact they returned (from Brazil) just one week ago.”

    He said the state Ministry of Works had completed the construction of the road leading to the factory while the boreholes for supply of water to the factory had been sunk and ready for use.

    He said: “We need water, reliable water and all the boreholes that are needed for the water have been completed; the road to the factory has been completed.

    “The structural development is what is going on now and you know the delay in completion is because sometimes this structures and equipment must come together so that they would understand where to fix this, where to fix that.”

  • New vista for investors in agro- marketing

    New vista for investors in agro- marketing

    With the establishment of a model vitamin A cassava sales outlet in Nigeria, the first of its kind in Africa, to link suppliers of cassava products with demand agents (bulking agents, entrepreneurs and consumers) of the products, the search for a robust template to enable the organised private sector see the available profitable investment opportunities in commercial cassava farming, may have started yielding result, writes, Chikodi Okereocha. 

    For farmers and investors along the vitamin A cassava value chain, brighter prospects are here. A model vitamin A cassava sales outlet, the first of its kind in Africa, has been established in Nigeria. The one-stop model sales outlet, known as the ‘Farmers’ Centre’ will act as primary bulking point and link up suppliers of vitamin A cassava products (farmers and processors) with demand agents, like (bulking agents, entrepreneurs and consumers) of the products-stems, roots, fufu mash, garri, fufu, packaged fufu flour, and confectionaries (cakes, chin-chin, tidbits and pies).

    The innovation, which is the result of the ingenuity of HarvestPlus Nigeria in conjunction with its development partners, is seen as a major milestone in the search for a good template to enable the OPS see the available opportunities to invest in commercial cassava farming at a profit.

    “We need partners to buy into this initiative to make it a reality across the length and breadth of the country,” the Country Manager of HarvestPlus,  Dr. Paul Ilona, said, last week, at the  launch of its outlet in Ibadan, Oyo State.

    He said the model outlet is HarvestPlus’ strategy to ensure that Nigerians have access to the bio-fortified crop to address the health challenges of vitamin A deficiency. “We need to establish 300 of this sales’ outlets across Nigeria, so that Nigerians can enjoy the health benefits of the crop,” he said, adding that with over 500,000 households  cultivating the product, and over 550,000  commercial farmers on board in the multiplication of the nutritious crop on over 1,000 hectares of farmland, the need to scale out the product to more Nigerians could not have come at a better time.

    In doing so however, HarvestPlus is not unmindful of the commercial viability of sustaining the demand and supply of vitamin A cassava products, hence the organisation is riding on the back of the opening of the model shop to encourage more investors to take advantage of the profitable business opportunities therein. “Our strategy relies a lot in providing catalysts that will drive investors. We want to see this model become very profitable because it is the profitability that people see that will make them want to invest in it,” Dr. Ilona told The Nation, on the sideline of the launch of the model shop.

    Ilona said there were  plans to hit the Lagos market and other major markets across the country soon. As part of the strategy to woo prospective investors, he explained: “In the next one or two months we are going to ensure that this center functions optimally and that we do the proper book-keeping that will show investors that there is a lot of money coming in. After the two months we will then go to the next stage of sensitisation, bring the investors here so that they will do all the calculations and see the benefits and the opportunities that exist in investing into the system. So, there is a lot of awareness creation that we need to do. We will be going into business education, we shall be relying a lot on advocacy.”

    Dr. Ilona also disclosed that HarvestPlus is riding on its electronic (e-market) platform, which he described as very potent, to attract investors and create markets for vitamin A cassava products. “Last week we got a request from Anambra State Government for almost 9, 000 bundles of vitamin A cassava stems. This is what makes the e-market to be very potent in creating markets. We also got request from Kwara State Government for 500 kilograms of garri. We are not working in Kwara, but somebody knows how to go online and do a request. So, we are hoping that soon, we shall bring all of you (the media) on board to help us communicate to Nigerians so that they can order for their vitamin A garri and fufu online,” he said.

    At a workshop by HarvestPlus, the organisation linked major players and investors along the vitamin A cassava value chain to its e-market portal. It identified bulking agents, cassava stem traders, and investors who were then linked with farmers and cassava processors to create market for vitamin A cassava products. The workshop, which had about 85  participants in attendance, was made up of farmers, processors, entrepreneurs, public and private investors, extension agents from farmer organisations, development and commercial partners of HarvestPlus, and tertiary agriculture institutions.

    Would these strategies do the magic of attracting investors to the business? “yes,” says Ilona. He has reasons to be so optimistic. For a start, Nigeria was among the earliest countries in which new varieties of cassava that are rich in vitamin A were released to farmers in 2011. Following the release of the new cassava varieties to farmers in 2011, over 500, 000 Nigerian households are said to be growing and eating the conventionally bred nutritious vitamin A cassava, which nutritionists say could meet up to 40 per cent of daily needs of Vitamin A for children under five.

    Also, Africa accounts for over half of the total global production of cassava, with Nigeria the single largest producer, producing over 54 million metric tons of cassava annually. Besides, an estimated 100 million Nigerians or 60 per cent of the country’s population eat cassava daily in one form or another. “We have our strength in agriculture,” Ilona maintained, adding, “If we truly want to help Nigeria; if we truly want to add value to the life of an average Nigerian, and we truly want to create jobs for them, agriculture is the area to go. No field in life will pay as much as agriculture does. You plant one grain of maize, it gives you 400 grains. No business gives you 400 per cent profit.”

    Continuing, Ilona asked, rhetorically, “How many oil wells do we have? How many hectares do we have in Nigeria to put into agriculture? According to him, Thailand depends a lot on agriculture, making more money than Nigeria makes from her oil. He said the money Thailand makes from cassava alone is much more than what Nigeria boasts of from oil. “We are always scared, the more scared we are however, the more we will be able to focus on our challxalue chain are seen by not a few analysts and experts as opportunities. The Deputy Director, HarvestPlus, Dr. Ina Schonberg, who launched the model shop, alluded to this when she said: “You (Nigerians) are known all over the world for your entrepreneurial spirit. Nigeria is a leader in Africa. We look forward to seeing Nigeria develop innovative strategies to scale up vitamin A cassavas well as vitamin A maize and build sustainability for the project in the country.”

    For investors willing to throw their hat in the ring, they would be encouraged by the growing preference of the yellow vitamin A cassava over the conventional one. Vitamin A cassava is yellow in colour because it contains high amounts of beta-carotene, unlike common white cassava. Beta-carotene is a naturally occurring substance that the body converts into vitamin A. Experts say that in Nigeria, an estimated 30 per cent of pre-school-aged children and 20 per cent of pregnant women suffer from vitamin A deficiency, resulting in poor vision, blindness and sometimes death. By eating the new yellow cassava variety, women and children can meet almost half their daily needs of vitamin A.

    HarvestPlus developed the nutritious cassava variety through conventional breeding in collaboration with IITA and National Root Crops Research Institute (NRCRI), Umudike, Umuahia, Abia State.

    The launch of the outlets was witnessed by scientists from IITA led by Cassava Breeder, Dr. Elizabeth Parkes; traditional rulers from Idiose, Ibadan, HarvestPlus developmental patners from Akwa-Ibom, Benue, Imo,and Oyo states, farmers, cassava processors, bulking agents, and entrepreneurs.

  • ‘Beverage sector can save $1.66b from pet bottles’

    Global provider of polyethylene Terephthalate (PET) solutions for liquid packaging, Sidel, has announced a new initiative aimed at reducing the amount of PET used in beverage bottles. This, the firm said, would help producers save money and improve their environmental.

    According to Sidel data, the average line can save between $300,000 and US1 million, with faster lines or larger bottle formats capable of saving even more. This leads to an approximate average saving per bottle of up to 0.005 dollars per 0.5 litre bottle or 0.007 dollars per 2 litre bottle for still water, and 0.005 dollars per 0.5 litre bottle or 0.006 dollars per 2 litre bottle for Carbonated Soft Drinks (CSD).

    According to Euromonitor forecasts for 2014-2018, released in March 2014, 216 billion PET bottles for still water and 116 billion PET bottles for CSD will have been produced by the end of the year. Assuming a minimum saving of 0.005 dollars for all those bottles, the beverage industry as a whole could save 1.08 billion dollars for water and 580 dollars for CSD.

    In total this equates to over USD 1.66 billion potential cost savings for the beverage industry from water and CSD alone on a global scale. This does not include other categories such as juices, liquid dairy products and other products.

    On this, Service Director, Sidel, Samuel Gobbe, said: “We did the calculation exercise to show the potential that Right Weighting provides globally. However, we also recognised the value of producers being able to find out the specific savings that they can achieve and have therefore, introduced the packaging calculator to enable them to do so.”

    Sidel introduced an online PET savings calculator to allow beverage producers and bottlers to calculate for themselves what savings could be achieved based on their own production parameters. “The benefits of light weighting PET bottles are well known in the beverage industry. However many producers are still not taking advantage of innovative new bottle designs that could help them make substantial cost savings,” the Zone Vice-President for the Middle East and Africa at Sidel, Clive Smith, said.

    He relieved the great opportunities for the industry in terms of reducing raw material use, costs saving and improving environmental footprints by adopting new bottle designs, especially for water and CSD.

    He said in the past 18 months Sidel has launched several bottle design innovations, including its RightWeight bottle concept.

    On RightWeight, he said it is the proprietary bottle design that Sidel uses to ensure a bottle is both light while also strong enough to survive global supply chains, look good at the point of sale and offer a great consumer experience.

    On savings, Smith said studies had shown that modern bottle designs could lead to substantial savings for beverage producers worldwide. To make it easy for manufacturers to calculate their savings, he said his firm launched new PET savings calculator, that would  enable water and CSD producers to calculate how much they could save by utilising a Sidel StarLite base and a shorter neck.

    He said: “The calculator allows producers to enter their production conditions for water or CSD products, such as bottle neck format, raw material costs, annual production hours and blower speed etc. for a range of bottle formats. It then immediately calculates how much money could be saved per line by simply adapting the bottle design to use the Sidel StarLite base and shorter neck.”

  • SON destroys N500m fake products

    SON destroys N500m fake products

    Over N5 billion worth of sub-standard goods were destroyed ii 2014 by the Standards Organisation of Nigeria (SON).

    Disclosing this at the destruction of substandard products at the Shagamu dump site, Ogun State,  SON’s Head of Inspectorate and Compliance, Bede Obayi, said most of the products were seized from various ports and the borders, while some were smuggled items seized in some states.

    He said it is disheartening to note that despite  efforts by the agency to enlighten the citizenry about the negative effects of substandard products to the economy and Nigerians, importers still engaged in the illicit trade.

    Obayi, said the move by SON is to show its zero tolerance for substandard products, and also serve as a deterrent to unscrupulous importers who do not mean well for the nation. “We are also going to intensify our effort to ensure that these products do not find their way into the Nigerian market,” and also warn importers to desist from the act.

    “You are all aware that these goods are imported by people who do not mean well for the country. We have told them that if they must bring in goods, it must be goods that meet the minimum requirements of the Nigerian Industrial Standard (NIS) that will give consumers value for their hard earned money.”

    Speaking on the current destruction, he said the goods are worth more than N500 million.He listed the products to include, electric armored cables, tyres, expired supermarket breakfast cereals, extension sockets, mini-led flashlights, rechargeable lamps, shaving sticks, mobile phones, stabilisers and engine oil, amongst others.

    “We are destroying this huge volume of goods, but creating jobs for people overseas because by the time we destroy these goods, we get nothing but economic loss. We are not happy destroying these products, but if we can save the life of one Nigerian by burning these products, we have done something for this country and this is exactly the core mandate of our agency by showing zero tolerance for substandard goods in this country.

    Obayi said SON has used many fora to educate importers and other stakeholders on the right way to import products into the country, besides publishing in newspapers the steps to import products into the country.

    Also, the SON Conformity Assessment Programme (SONCAP) is in place and it is still running, while its e-registration programme is also active to help trace each product to the importer and effectively monitor imports.

    “We have told importers times without number that they should approach SON to get the right standards for the products they are bringing into this country so that when they come in, we will not in any way tamper with their goods, but ensure easy access into ýtheir warehouses.

    These goods were destroyed to save the lives of Nigerians who are not aware of the harmful effect of these products, he said.

     

    Many people have lost their loved ones by consuming these substandard products,” he added.

  • Lagos Chamber: unfair competition killing businesses

    Lagos Chamber: unfair competition killing businesses

    THE Lagos Chamber of Commerce and Industry (LCCI) has raised the  alarm on the problems facing the manufacturing sector.

    Its President, Alhaji Remi Bello, said many sectors were faced with unfair competition as a result of the  importation.

    He said the situation has continued to hurt the sector, especially in areas, such as smuggling, faking and counterfeiting, influx of substandard products and evasion of import duty payment.

    Others are under invoicing of imports and granting of underserved waivers.

    Advising the government on the need to improve non-oil revenue in the light of dwindling fortunes in the global oil market, he cautioned that the idea of giving targets to revenue-generating agencies could backfire.

    He said: “There is a risk that best practice principles would be compromised in the desperation to meet the set target. Already, this is beginning to manifest in the manner of import valuation by the Nigerian Customs Service. Reports reaching the Chamber indicate many instances of upward review of values of import in complete disregard to the values of invoices of such imports.”

    He also alleged that importers had been made to pay exhorbitant import duty and charges, a practice which has  affected some investors, especially in the absence of an effective dispute resolution system.

    Bello urged the agencies to concentrate on the collection.

    He suggested increased non-oil revenue, especially taxes, by improving the environment for businesses.

    Observing that the harsh environment would make it difficult for the government to realise the desired tax revenue, he noted that tax revenue could only be as good as the performance of businesses.

    He urged the government to nurture the private sector to get robust revenue in form of tax, insisting that emphasis on tax should be more on consumption than on production.

    In his words: “There is too much emphasis on investors for purposes of taxation, especially in tax on their raw materials and other input; high tariffs on energy and business premises. We should focus more on taxing consumption.”

    On the insecurity in the country,  LCCI said the problem is disturbing and has implications for investments.

    He cited declining investors’ confidence. According to him, this is as a result of negative impact on image and perception of the country in the global community, risks of doing business in some parts of the country, relocation of businesses away from the troubled spots and setbacks for the tourism sector.

    Others are the distraction of the government from other germane issues in the country, leading to the abandoning of many projects under construction in the north.

    Acknowledging the efforts of  the government in tackling the problem, he appealed that such efforts be further intensified. He said this is a time for all citizens to rally round the administration to find an enduring solution to the challenge of insurgency.

    On the declining score on ‘Ease of Doing Business’, he called the attention of  the government to the World Bank report on the ease of doing business for this year where it indicated a drop of nine points to 147th position from 138th country scored in 2013 among 189 economies in the world.

    He explained that the areas scored are Starting a Business   (-8), Dealing with Construction Permits (-5), Getting Electricity (-1), Registering Property (no change), Getting Credit (-2), Protecting Investors (-1), Paying Taxes (-3), Trading Across Borders (1), Enforcing Contracts (2) and Resolving Insolvency (no change).

    He said the report was disheartening, noting that the nation’s scores dropped on six out of the 10 metrics used in the ranking.

    He stressed that the declining ease of doing business as indicated in the report collaborated with key findings of LCCI’s business environment survey and business confidence index over the last one year.

  • BoI in new strategy to reposition SMEs

    BoI in new strategy to reposition SMEs

    To reposition Small and Medium Enterprises (SMEs), the Bank of Industry (BoI) has signed a service agreement with 122 Business Development Service Providers (BDSPs). This may signal a new dawn for SMEs, as it promises to address the challenges of poor packaging of loan requests and non-bankable business plans, which are responsible for the low level of financial support to the sector, Assistant Editors, Chikodi Okereocha and Okwy Iroegbu-Chikezie report.   

    It’s the most revolutionary step in development banking aimed at improving access to finance by Small and Medium Enterprises (SMEs). If more credit gets to SMEs, we will create more jobs.”

    There were the words of the Executive Director (SMEs), Bank of Industry (BoI), Mr. Waheed Olagunju, at the signing of the service agreement between BoI and Business Development Service Providers (BDSPs) in Lagos, last week.

    Its Managing Director, Mr. Rasheed Olaoluwa said loans to SMEs accounted for less than 10 per cent of BoI’s total loan portfolio. This is not because there are no loanable funds for SMEs. He identified poor packaging of loan requests and non-bankable business plans as responsible for the low level of financial support to the SME sector. He said it was in recognition of these challenges, as well as in fulfilment of BoI’s mandate of providing long-term finance and business support services to large, medium and small projects, that the bank decided to engage the services of BDSPs.

    At the signing of the agreement, Olaoluwa said the BDSPs would collaborate with BoI to identify credible SMEs that require finance. They would also develop bankable business plans and proposals for SMEs to facilitate  their access to finance.

    That is not all. The BDSPs, who emerged after a rigorous and painstaking selection, would, according to the managing director, provide post-finance services, such as mentorship, handholding, financial advice and inculcation of best practices. They would also support the SMEs to develop synergies and sustainable relationship with large enterprises, industrial buyers, and suppliers along the value chain.

    In opting for a strategic repositioning of SMEs through the agreement with BDSPs, the BoI chief said the bank was encouraged by the importance of Micro, Small and Medium Enterprises (MSMEs) to the economy. He said, for instance, that figures from the National Bureau of Statistics (NBS) showed that there are over 17 million MSMEs in Nigeria, accounting for over 90 per cent of all firms and employing over 30 million people. The enterprises, he added, also account for about half of Nigeria’s Gross Domestic Product (GDP).

    He pointed out that the launch of the National Enterprise Development Programme (NEDP) by President Goodluck Jonathan underscored the strategic importance of MSMEs to economic development. He said BoI’s role under the NEDEP is to provide long-term finance to viable MSME projects, and that as part of effort to discharge such role, the BoI chose to engage the services of BDSPs.

    For the BDSPs, however, it was not a smooth ride. They emerged after a rigorous selection.  Olaoluwa said: “On July 14, 2014, we published in some national dailies a Request for Proposal (RFP) from prospective BDSPs. Three hundred and thirty-one applications were received nationwide.”

    He said at the end of the evaluation, a total of 122 firms were shortlisted as BDSPs in three categories based on their capacity and their preferred areas. While a total of 28 BDSPs had capacity for national coverage, 74 are to operate on zonal basis, leaving 20 BDSPs with state coverage.

    Explaining how the BDSPs would be remunerated, the BoI boss said there was an initial token fee to be paid by the SME to the BDSP before the submission of the business plan and loan application to BoI. This would be based on a graduated scale. For instance, while an initial token fee of N10, 000 would be paid for a loan of less than N10 million, N25, 000 is for a loan amount of between N10 million and N50 million. A loan amount of between N50 million and N200 million attracts initial token fee of N50, 000.

    “This initial token fee is designed to ensure that SMEs show some commitment to their projects and help to eliminate frivolous applications,” Olaoluwa explained, adding that the total success fee shall be 0.5 per cent of the approved loan amount and shall be payable by BoI as follows: 50 per cent of the total fee payable after the collection of the loan offer letter by the SME; balance of 50 per cent of the total fee payable immediate after the disbursement of the loan by BoI.

    To keep the BDSPs on their toes, there are  some specific performance benchmarks they must satisfy,  failing which they may be delisted by BoI. For instance, they must make full disclosures to BoI on the SMEs and any BDSP that misrepresents facts while processing any loan application shall be blacklisted. Also, business plans and loan applications submitted shall be in accordance with BoI’s RAC and other applicable criteria which shall be communicated to the BDSPs by BoI. Besides, each BDSP is expected to achieve a minimum of 10 successful applications yearly, and any BDSP that fails to achieve a success rate of at least 40 per cent in terms of successful loan applications may be disqualify from the renewal of the agreement.

    With this initiative, BoI has taken a major step to address the deficiency of lack of capacity inherent in most of our SMEs,” the MD said, pointing out that to facilitate regular dialogue and exchange of ideas between BoI and the BDSPs, a closed online user group platform has been created on BoI’s website.

    He, however, clarified that regardless of the appointment of BDSPs, customers are at liberty to apply for loans directly to BoI through any of the bank’s physical offices across tthe country, or digitally inclined customers who are also at liberty to apply through BoI’s online application portal. He expressed optimism that through this partnership, the job and wealth creation objectives of the Federal Government under the NEDEP will be realised.

    Some of the successful BDSPs share Olaoluwa’s optimism over the prospect of bountiful job and wealth creation through the platform of the service agreement. Describing the agreement as “heart-warming and the beginning of a new way of doing things,” Mrs. Folasade Odunaiya, Executive Director, IBFC Alliance Limited, one of the BDSPs, said: “We have a government that is interested in uplifting small businesses to create more jobs.”

    She, however, called on BoI to take a look at the commercial side of the  agreement as the fee is small.

    The Managing Director of Resort Consult Limited, a BDSP, Mr. Femi Ekundayo, agrees with her. “It’s a challenge,” he said, adding however, that the BoI-BDSP partnership is a call to national service. While calling on BoI to empower the BDSPs through training, he noted that the principle of inclusion is what BoI had done.

    Indeed, Ekundayo and other experts believe that the successful co-creation of this SME-business development eco-system signals the beginning of a new dawn for SMEs. Apart from addressing the age-long challenge of lack of capacity in most SMEs in Nigeria, it is expected to help address the low level of financial support to SMEs.

     

  • Mitel, Elpazio partner on services

    Mitel, Elpazio partner on services

    Elpazio Limited, a technology solutions provider and the hospitality industry, is riding on the back of the recent rebranding of Mitel Networks Limited, a global industry leader in communication and collaboration, to strengthen its services.

    Its General Manager, Mr. Emeonye Nwazota, said the new Mitel harnesses the original and proud Mitel heritage plus that of Astra,Telepo and Oasiys, to forge a strong business with one mission and one vision.

    Elpazio is the authorised Mitel Networks partners in Nigeria.

    Nwazota said: “The introduction of the new Mitel brand follows some strategic mergers and acquisitions, including the integration of four companies in just over a year. The new Mitel also comes with a new logo and other redefined brand elements, encapsulating a re-energized brand identity.”

    Nwazota said Elpazio, which also got restructured, transformed and rebranded recently from EIL Telecom Limited, is re-positioned for new and emerging opportunities in the industry and determined  to push the new Mitel brand in the region.

    “In this digital world, the success or failure of any company depends on one thing – the voice of the customer,” he said.

    Mitel’s Chief Marketing Officer,  Martyn Etherington, explained that the development of the renewed brand began with an extensive and research driven brand and market assessment, working with the company’s customers and partners. “They, our customers and partners communicated, loud and clear, that their success depends on making connections. And they demand choice and flexibility to take advantage of constantly evolving technology,” Etherington said.

  • Oil price fall: LCCI backs govt’s policies

    Oil price fall: LCCI backs govt’s policies

    THE  Lagos chamber of Commerce and Industry (LCCI) has thrown its weight behind the fiscal and monetary policy responses by the government to keep the economy afloat in the face of falling oil prices.

    In a statement, LCCI Director-General Mr. Muda Yusuf said the fiscal and monetary policy responses by the government and the Central Bank of Nigeria (CBN) were inevitable, stressing that some of the policies were long overdue.

    He said: “The economic situation has again underlined the critical imperative of economic diversification. An economy that is diversified has a better capacity to withstand shocks. At every turn in our advocacies, we have canvassed the need for the creation of an enabling environment to enhance the productivity of enterprises and consequently ensure economic diversification.”

    On the measures, he said they included fiscal and monetary policies taken to stabilise the macro-economic conditions to minimise dislocations.

    These, he said, include reduction in international travels and trainings by Federal Government officials, tax on luxury items, and review of oil price benchmark to $73 from $78 in the 2015 Medium Term Expenditure Framework (MTEF).

    Others are renewed commitment to fiscal prudence, upward revision of revenue target for Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service.

    Yusuf said on the monetary policy front, some items, such as electronics, finished goods, information technology, generators, telecommunications equipment, and invisible transactions, were excluded from the official foreign exchange window.

    The LCCI said the implication is that transactions involving the enumerated items would be funded at a higher exchange rate from either the interbank foreign exchange market or parallel market.

    He recommended that several budget heads needed to be further scrutinised to ensure cost effectiveness and better transparency in the management of public finance. According to him, they include the: consolidated revenue fund charges, service wide votes, presidential amnesty programmes, capital supplementation and debt services.

    Others are refreshments and meals, foodstuffs and catering, honorarium and sitting allowance, welfare packages, repairs and maintenance. All these budget heads have substantial amounts voted for them in the budget annually. Some of the provisions do not reflect the desired prudence in the management of public funds. Huge savings will be made if a proper scrutiny of the budget heads is made, he warned.

    Yusuf regretted that the biggest platform for corruption in the economy today is the management of subsidy on petroleum products. The pressure it exerts on the government treasury is enormous, he warned.

    He called for an accelerated reform of the oil and gas sector and the passage of the Petroleum Industry Bill (PIB), which he said will mitigate the challenge the subsidy management poses for government finance.

    Furthermore, he cautioned that the tax yield in the economy is not commensurate to the magnitude of activities taking place in the economy.

  • ‘Lack of plans bane of SMEs’ growth’

    ‘Lack of plans bane of SMEs’ growth’

    The Small and Medium Enterprises (SMEs) sector has the capacity to transform Nigeria into a globally-competitive economy in the mould of China and other Asian Tigers if operators could come up with viable and robust business development plans, Registrar/Chief Executive Officer, Institute of Business Development (IBD), Mr. Paul Ikele, has said.

    According to him, most SME operators in Nigeria have no direction because of lack of business development plan.

    In an exclusive interview with The Nation, Ikele said: “SMEs need to come up with business development plans. Before a company is incorporated, that company should come out with a business development plan. Before you open an account for a limited liability company, you should submit a business development plan so that government will key into it and follow it up. If at any point that business does not achieve its objective, it is quietly withdrawn. By so doing government will be able to identify those people that are performing and those that are not performing.”

    Ikele, former managing director/chief executive officer, Noble Path Finance and Securities Limited and General Manager, Business Development, Olympia Insurance Limited,regretted that most people go into the SME sector because they don’t have an alternative.

    “I can assure you that if you are in SME and you know exactly what you are producing, you already have grown a market share in that particular business; you will be able to identify your key customers and focus on servicing them,” he said.

    He noted that this has not been the case with SME operators in Nigeria where “most SME operators are incompetent personalities, who just want to use it and do other things, and because they know how to get to the sources of that fund they get the money and before you know it they channel it to other areas.”

    He pointed out that most people, who are interested in SMEs are either incompetent or don’t have real intentions in that business. Rather, their intention, he said, is to use that money for other objectives.“This is why the Institute is insisting that every organisation should come out with a business development plan so that it will encourage them to submit at the end of the year the result of the evaluation of their operations,” he said.

    He said before setting up an SME, there was need to engage professionals to draw up the business plan. Also, there is need for an environmental scanning to determine whether that business would survive in that particular area.

    “Businesses that thrive in the south may not thrive in the north, but most SME operators will just go and copy a business plan thinking if you are selling pure water in Lagos, for instance, you can sell it in the north, after all north has a hot weather, he said, insisting that “before you do a business plans, you must do an environmental scanning.”

    The Registrar noted that in countries, such as China, where SMEs were properly directed, with good business development plans, they helped such economies to survive.

    He said Nigeria should borrow a leaf from China, which managed to grow her SME sector first by closing its wall to determine whether they want to survive or not.

    “They (China) live in a cottage system where they can buy and use what they can afford. And again, its better to start business small and grow big, identify your core market requirements within your environment and provide those needs and provide the products and services and ensure that people within that area are able to buy them. Nigeria can apply such model,” he said.

  • BoI’s new strategy to reposition SMEs

    BoI’s new strategy to reposition SMEs

    To reposition Small and Medium Enterprises (SMEs), the Bank of Industry (BoI) has signed a service agreement with 122 Business Development Service Providers (BDSPs). This may signal a new dawn for SMEs, as it promises to address the challenges of poor packaging of loan requests and non-bankable business plans, which are responsible for the low level of financial support to the sector, Assist Editors Chikodi Okereocha and Okwy Iroegbu-Chikezie report.   

    It’s the most revolutionary step in development banking aimed at improving access to finance by Small and Medium Enterprises (SMEs). If more credit gets to SMEs, we will create more jobs.”

    There were the words of the Executive Director (SMEs), Bank of Industry (BoI), Mr. Waheed Olagunju, at the signing of the service agreement between BoI and Business Development Service Providers (BDSPs) in Lagos, last week.

    Its Managing Director, Mr. Rasheed Olaoluwa said loans to SMEs accounted for less than 10 per cent of BoI’s total loan portfolio. This is not because there are no loanable funds for SMEs. He identified poor packaging of loan requests and non-bankable business plans as responsible for the low level of financial support to the SME sector. He said it was in recognition of these challengee, as well as in fulfilment of BoI’s mandate of providing long-term finance and business support services to large, medium and small projects, that the bank decided to engage the services of BDSPs.

    At the signing of the agreement, Olaoluwa said the BDSPs would collaborate with BoI to identify credible SMEs that require finance. They would also develop bankable business plans and proposals for SMEs to facilitate  their access to finance.

    Also, the BDSPs, who would be guided by BoI’s Risk Acceptance Criteria (RAC), would ensure that a sound business model is developed and presented, as well as collaborate with BoI to conduct periodic post-finance monitoring of the SMEs.

    That is not all. The BDSPs, who emerged after a rigorous and painstaking selection, would, according to the managing director, provide post-finance services, such as mentorship, handholding, financial advice and inculcation of best practices. They would also support the SMEs to develop synergies and sustainable relationship with large enterprises, industrial buyers, and suppliers along the value chain.

    In opting for a strategic repositioning of SMEs through the agreement with BDSPs, the BoI chief said the bank was encouraged by the importance of Micro, Small and Medium Enterprises (MSMEs) to the economy. He said, for instance, that figures from the National Bureau of Statistics (NBS) showed that there are over 17 million MSMEs in Nigeria, accounting for over 90 per cent of all firms and employing over 30 million people. The enterprises, he added, also account for about half of Nigeria’s Gross Domestic Product (GDP).

    He pointed out that the launch of the National Enterprise Development Programme (NEDP) by President Goodluck Jonathan underscored the strategic importance of MSMEs to economic development. He said BoI’s role under the NEDEP is to provide long-term finance to viable MSME projects, and that as part of effort to discharge such role, the BoI chose to engage the services of BDSPs.

    For the BDSPs, however, it was not a smooth ride. They emerged after a rigorous selection.  Olaoluwa said: “On July 14, 2014, we published in some national dailies a Request for Proposal (RFP) from prospective BDSPs. Three hundred and thirty-one applications were received nationwide. We defined a set of criteria to evaluate the proposals received and a minimum score of 65 per cent was set as the qualifying threshold.”

    He said at the end of the evaluation, a total of 122 firms were shortlisted as BDSPs in three categories based on their capacity and their preferred areas. While a total of 28 BDSPs had capacity for national coverage, 74 are to operate on zonal basis, leaving 20 BDSPs with state coverage. He also said there were interactive sessions with the BDSPs in four centres, including Lagos, Abuja, Asaba and Kaduna. “These sessions were useful in helping us fine-tune the framework for this BoI-BDSP partnership,” Olaoluwa said.

    Explaining how the BDSPs would be remunerated, the BoI boss said there was an initial token fee to be paid by the SME to the BDSP before the submission of the business plan and loan application to BoI. This would be based on a graduated scale. For instance, while an initial token fee of N10, 000 would be paid for a loan of less than N10 million, N25, 000 is for a loan amount of between N10 million and N50 million. A loan amount of between N50 million and N200 million attracts initial token fee of N50, 000.

    “This initial token fee is designed to ensure that SMEs show some commitment to their projects and help to eliminate frivolous applications,” Olaoluwa explained, adding that the total success fee shall be 0.5 per cent of the approved loan amount and shall be payable by BoI as follows: 50 per cent of the total fee payable after the collection of the loan offer letter by the SME; balance of 50 per cent of the total fee payable immediate after the disbursement of the loan by BoI.

    Under the agreement, the SMEs shall also be responsible for any post-finance remuneration of the BDSPs based on the agreed scope of services to be provided and negotiated between both parties. “All the terms and conditions have been exhaustively discussed, negotiated and agreed with the BDSPs,” Olaoluwa said.

    To keep the BDSPs on their toes, there are  some specific performance benchmarks they must satisfy,  failing which they may be delisted by BoI. For instance, they must make full disclosures to BoI on the SMEs and any BDSP that misrepresents facts while processing any loan application shall be blacklisted. Also, business plans and loan applications submitted shall be in accordance with BoI’s RAC and other applicable criteria which shall be communicated to the BDSPs by BoI. Besides, each BDSP is expected to achieve a minimum of 10 successful applications yearly, and any BDSP that fails to achieve a success rate of at least 40 per cent in terms of successful loan applications may be disqualify from the renewal of the agreement.

    “It is evident that painstaking efforts have been made to ensure the effectiveness and overall success of this initiative, which is aimed at accelerating the growth of the SME sub-sector. With this initiative, BoI has taken a major step to address the deficiency of lack of capacity inherent in most of our SMEs,” the MD said, pointing out that to facilitate regular dialogue and exchange of ideas between BoI and the BDSPs, a closed online user group platform has been created on BoI’s website.

     

     

    He, however, clarified that regardless of the appointment of BDSPs, customers are at liberty to apply for loans directly to BoI through any of the bank’s physical office locations in Lagos, Akure, Asaba, Abuja, Kaduna and Bauchi. Same for digitally inclined customers who are also at liberty to apply through BoI’s online application portal. He expressed optimism that through this partnership, the job and wealth creation objectives of the Federal Government under the NEDEP will be realised.

    Some of the successful BDSPs share Olaoluwa’s optimism over the prospect of bountiful job and wealth creation through the platform of the service agreement. Describing the agreement as “heart-warming and the beginning of a new way of doing things,” Mrs. Folasade Odunaiya, Executive Director, IBFC Alliance Limited, one of the BDSPs, said: “We have a government that is interested in uplifting small businesses to create more jobs.”

    She, however, called on BoI to take a look at the commercial side of the  agreement as the fee is small.

    The Managing Director of Resort Consult Limited, a BDSP, Mr. Femi Ekundayo, agrees with her. “It’s a challenge,” he said, adding however, that the BoI-BDSP partnership is a call to national service. While calling on BoI to empower the BDSPs through training, he noted that the principle of inclusion is what BoI had done.

    Indeed, Ekundayo and other experts believe that the successful co-creation of this SME-business development eco-system signals the beginning of a new dawn for SMEs. Apart from addressing the age-long challenge of lack of capacity in most SMEs in Nigeria, it is expected to help address the low level of financial support to SMEs.