The Nation Newspaper

Category: Industry

  • NCDMB: Nigeria setting pace in local content policy

    By Chikodi Okereocha

    All signs point to Nigeria strengthening its local content implementation and serving as an example in local content policy for other African countries, the Executive Secretary, Nigerian Content Development & Monitoring Board (NCDMB), Simbi Wabote, has said.

    Making this known at a media engagement in Abuja, Wabote expressed his opposition against the creation of multiple local content boards.

    According to him, “the NCDMB can modify its templates to suit other sectors. In our view, this is the prudent way to expand and entrench local content regime in Nigeria.”

    His opposition against the creation of multiple local content boards is coming on the heels of plans by the National Assembly to develop the Local Content Act 2010 to include other sectors of the economy for further domiciliation of contracts.

    The NCDMB boss said nine years after celebrating the successes of the implementation of the Nigerian Oil and Gas Industry Content Development Act, the industry confronts new prospects of growth.

    He said Nigeria – having signed the African Continental Free Trade Agreement (AfCFTA) – is one of the latest African nations to join the entity of 54 African Union States that seeks to reduce the economic barriers for Africa-wide customs union.

    Wabote said he perceives Nigeria’s decision to join the entity as a source of benefit for local oil and gas service firms without threatening national sovereignty.

    His words: “If you take the population of Africa and the potential market and given the general level of development of countries, the sky is the limit for any manufacturer that makes the right investment, has the right quality and partnerships.”

    He noted that a focus on shortening the contracting cycle, sectorial and market linkages and effective monitoring of local content delivery in the country has characterised Nigeria’s local content agenda in recent years.

    Communicating the plan for further Nigerian content development will be the priority at the ninth Practical Nigerian Content Forum scheduled to hold in Yenagoa, Bayelsa, December 2 – 5,  he said.

    Wabote will join over 600  stakeholders at the four-day forum, which is recognised as the leading platform to engage government and industry players from across the value chain to maximise business opportunities and increase   content implementation.

  • MAN urges CBN on cashless policy

    By Chikodi Okereocha

    The Manufacturers Association of Nigeria (MAN) has urged the Central Bank of Nigeria (CBN) to explore other options to achieve its cashless policy scheduled to be fully implemented from March 31, 2020.

    MAN urged CBN to consider the use of the carrot rather than the stick approach, noting that the implementation of the cashless policy on withdrawals may have a negative impact on Micro, Small, and Medium Enterprises (MSMEs), who are the engine room for the economy’s growth and employment generation.

    The apex bank, in a circular, directed Deposit Money Banks (DMBs) to charge on deposits, in addition to existing charges on withdrawals, three per cent processing fees for individual accounts, withdrawals in excess of N500, 000 and five per cent for corporate accounts withdrawal in excess of N3 million.

    It also introduced processing fees for cash lodgments of two per cent above N500, 000 for individual accounts and three per cent for lodgment above N3 million for corporate accounts.

    MAN said though one might agree with the CBN governor that this was in the public interest to promote an efficient payment system via the cashless policy, there was the need to examine the route the Bank chooses to achieve that objective.

    “This is the crux of the matter and it appears to be a recurring decimal in the administration of our monetary policy interventions,” MAN Director- General Segun Ajayi-Kadir said, in a statement made available to The Nation.

    “Apart from the fact that the policy at inception, was put in place without consultations, sensitisation, explanation or rationale for its introduction; the policy was presented as the only way to achieve the much-desired cashless or less cash economy,” Ajayi-Kadir added.

    He said the explanation given  was more of empathising with the banking public for the “inevitable hardship” the cashless policy would impose on them, adding that it would also appear that the applicable percentages did not take cognizance the existing and long-standing charges on withdrawals.

    The MAN boss said there are clearly more than one road to the market. Hear him: “In this instance, the CBN has at least, two options to achieve the latest progression towards the desired cashless economy; to penalise non-compliance or to incentivise compliance. It would appear that the CBN has chosen the former.

    “What I mean is that rather than introduce gains for those who embrace cashless transactions, it has elected to punish those who have not, including those operating in genuinely large cash-driven economic activities.

    “There is also a huge concern over the inadequacy of the needed cashless economy infrastructure, which the Money Deposit Banks are not doing enough to upscale or do so at a disproportionate additional cost to the users.”

  • NACCIMA seeks member chambers’accreditation

    By Charles Okonji

    To benchmark its member chambers against international best practice, the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has called on member chambers to accreditate with the Nigerian Chamber Accreditation Committee (NCAC).

    NCAC, an affiliate of NACCIMA,  is made up of veterans who oversee and validate chamber accreditation.

    NACCIMA, in a statement, said the call came against the backdrop of the recognition of the need to assess chambers’ competence in  governance, management and organisational processes.

    It recalled that NACCIMA  underwent the accreditation through the Centre for International Private Enterprise (CIPE), Washington DC, which yielded the scaling up of NACCIMA organisational processes to meet best international practices.

    Nine pillars were adopted for evaluation during the accreditation. They are Governance, Finance, Human Resources, Government Affairs, Programme Development, Technology,Communication, Facilities and Benchmarking.

    The NCAC, having been involved in accrediting, obtained hands-on experience on the accreditation process.

    The statement said the  accreditation would apply to city, state and bi-lateral chambers, noting that benefits of the exercise include provision of measurement criteria for chamber evaluation and ranking.

    Others are leadership and staff growth and development, provision of an opportunity for chambers to be evaluated to identify gaps and determine how to close those gaps, and boosting the chamber’s leadership and staff.

  • RTC Advisory Ltd. Appoints New Managing Consultant

    RTC Advisory Ltd., a leading home-grown bespoke consulting firm, has announced the appointment of Dr. Vincent Nwani as its new Managing Consultant.

    Prior to his appointment, Nwani served at the Lagos Chamber of Commerce and Industry (LCCI) as Director where he supervised Research, Business Policy Advocacy and Training Services of the Chamber for about seven years. Before joining LCCI, he served as the head of research at First Bank of Nigeria Plc, Economist and Investment Executive at BGL Group Plc and Consulting Executive at Magnartis Finance & Investment Ltd. .

    Nwani earned the Doctor of Philosophy (Ph.D) in Economics from Monarch Business School in Switzerland, Master and Bachelor of Science (M.Sc & B.Sc) Degrees in Economics from the University of Ibadan and University of Port Harcourt respectively.

    Dr. Nwani is a proven leader and has built a profound track record in the Nigerian private sector as an Economist, Business/Investment Strategist, Project Specialist, Trade Facilitator, Policy Analyst and a seasoned Research Fellow over the last 15 years.

    Speaking on his appointment, Dr. Nwani said, “I am happy to lead RTC Advisory ltd. and I am confident that together with the innovative team and our stakeholders, we will build on the existing legacy of the firm and position it for more growth and sustainability.”

    Commenting on the appointment, Mr. Opeyemi Agbaje, the Pioneer Chief Executive Officer and Founder, RTC Advisory said, “We are confident that RTC will benefit from Dr. Nwani’s creative insights and specialised approach as we continue to advance our strategic goal of wealth creation by positioning governments and private institutions in Nigeria and ultimately in West African sub-region.

    “His ideals are exactly what RTC needs as it enters its next chapter of expanded impact, institutionalisation, intelligence and thoughts leadership, broader frontier and strategic alliance even as we elevate the quality of policies & value delivery, products and services to the highest level attainable riding on best of advisory/consulting practice. We count on the continued support of our esteemed clients and other stakeholders and invite all to join us in welcoming Dr. Nwani on board”.

    RTC Advisory Services Limited is a business advisory and consultancy services firm engaged in Consultancy, Research and Training in the core areas of Business Strategy, Management, Economy and Business Environment and Financial advisory services.

    RTC Advisory was incorporated in July 2000 to fulfil the vision of integrating practical market insights gained from decades of professional financial sector and managerial experience with deep conceptual and analytical skills to form a unique advisory and strategy practice.

    READ ALSO: ‘Plan retirement on first day of appointment’

     

  • Samsung Heavy Industries Nigeria commended for maritime development

    Samsung Heavy Industries Nigeria (SHIN), the leading operator of the SHI-MCI fabrication and integration yard, has won a highly-commended award in the category of contribution to development of the regional maritime cluster at the prestigious Seatrade Maritime Awards Middle East, Indian Subcontinent & Africa held in Dubai on September 22, 2019.

    Samsung was the only nominee from Africa to be listed for four individual awards: Contribution to Development of the Regional Maritime Cluster, Shipyard of the Year, Africa Maritime and Education & Training.

    In its award citation for Contribution to Development of the Regional Maritime Cluster, SHIN was highly commended for its commitment to empowering the African oil and gas industry through local content leadership.

    Prior to the construction of its fabrication and integration yard in Lagos, customers in the regional oil and gas industry had to work outside of Africa.

    In order to complete the Egina FPSO project, significant investment was needed to develop a local workforce and facilities. These have become the core of a world-class marine construction capability that benefits all shipping & marine construction and maintenance companies in the region with greater access to opportunities as well as providing economic stimulus to the whole West African region.

    Commenting on the meritorious award, the Managing Director of Samsung Heavy Industries Nigeria, Mr. Jejin Jeon, said: “It is a great honour to be recognised for our Contribution to the Development of the Regional Maritime Cluster in Africa. This award validates SHIN and SHI MCI’s efforts in developing Nigeria as the next global fabrication destination. I thank the people of Nigeria and the Nigerian government for their faith in us. Our journey will not stop here. We will continue to empower the African oil & gas and maritime industry by developing local capacity to deliver world class work locally, stimulating more opportunities for the benefit of Nigeria.”

    The Seatrade Maritime Awards are recognised internationally as the most influential in the industry with a very robust selection process led by independent judging panels consisting of CEOs from maritime companies around the world. An impressive list of nominees was shortlisted, from over 120 entries across 20 countries, made it to 2019’s shortlist. The award ceremony was attended by over 700 industry and governmental representatives from across Africa, the Middle East and the Indian Subcontinent.

    The award and nominations are an encouraging acknowledgement of the significant work SHIN has done in initiating collaboration with the Nigerian government and local partners to improve the profile of Nigeria as the most advanced integration and fabrication hub in Africa. The company has already been receiving worldwide recognition, winning multiple national and international awards for its dedication in bringing about economic and local talent development. It has received notable accolades from the Nigerian Content Board, NOGOF and Africa Assembly Paris hosted by World Energy Council.

    After successfully delivering the Egina, the world’s largest FPSO, SHIN’s next focus is to widen its integration and fabrication work for the on- and off-shore oil & gas industry as well as power and infrastructure projects. The high profile generated from this award will also drive increased interest among the maritime industry into the immense potential and capability of Nigeria and indeed the whole West African region, showing what they have to offer to international customers. This will continue to stimulate local employment, ongoing talent development and vocational training to continue performing at international standards.

  • Proposed VAT hike: Weak manufacturing base puts OPS on edge

    The Federal Government, Organised Private Sector (OPS) members and Labour have agreed on the need for a diversification strategy to halt the economy’s high dependence on oil. However, achieving this via fiscal diversification, which involves increasing the tax revenue, such as the proposed upward review of the Value Added Tax (VAT), has never gone down well with the OPS and Labour. Their grouse is that the nation’s weak manufacturing base has rendered the economy unproductive and can’t support VAT or any tax increase. Assistant Editor CHIKODI OKEREOCHA examines the fears of the private sector and their push for increasing the tax net, instead

    It’s a fiscal policy whose time has come. Though still in the works, the Federal Government’s proposed upward review of the Value Added Tax (VAT), from five to 7.5 per cent, came at a time the payment of more taxes has become imperative to mitigate the country’s  fiscal challenges and generate enough cash to finance her capital and recurrent expenditures.

    Indeed, this has been the case, particularly, since the economic downturn triggered by the crippling impacts of revenue drop caused by crashing oil prices in the international market.The sharp revenue drop from the Federation Account has since forced a strategic rethink in favour of fiscal diversification, which involves increasing tax revenues, including an upward review of the VAT.

    Besides, Nigeria’s VAT rate, according to experts, is not only among the lowest in the world, but also well below VAT rates in other countries of the Economic Community of West African States (ECOWAS). The International Monetary Fund (IMF) Managing Director, Ms. Christine Lagarde, who drew attention to this in 2016, therefore, advocated a boost of the country’s revenue base by increasing the VAT on goods and services.

    Lagarde’s counsel may have hit the right chord with the country’s economic managers and tax authorities. For instance, the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, said the proposed VAT increase to 7.5 per cent is low compared to other countries. In fact, he said with this increase, Nigeria still has the lowest VAT rate in the world.

    Emefiele, who spoke to reporters after the Monetary Policy Committee (MPC) meeting held in Abuja, said: “If the government can meet its obligation through this increment, it should be supported.”

    He appealed to Nigerians to show understanding and support the government’s policies, as it had the responsibility to fend for its citizens by providing basic infrastructure like roads, electricity and hospitals, among others.

    However, the Federal Government’s latest push to bring Nigeria’s VAT rate at par with its peers has been met with stiff resistance by members of the Organised Private Sector (OPS), the Labour movement and, indeed, some Nigerians critical of the administration’s fiscal reforms.

    The OPS, including Manufacturers Association of Nigeria (MAN), Nigeria Employers’ Consultative Association (NECA), Lagos Chamber of Commerce and Industry (LCCI), National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and even the Nigerian Labour Congress (NLC), among others, have continued to kick their heels, insisting that the move would not be in the interest of the economy and Nigerians.

    At the core of the agitation by the OPS is the weak or fragile manufacturing base, which, according to them, has continued to render the economy unproductive and can’t support increasing the VAT or any form of tax.

    Labour, on its part, fears that if and when implemented, an increased VAT will erode the gains of the new N30,000 National Minimum Wage. The payment of the new wage earlier approved by the National Assembly has begun, according to Minister of Labour and Productivity Chris Ngige. But, Labour fears that a VAT increase will hurt workers, particularly the low income ones.

    The Minister of Finance, Budget and National Planning, Zainab Ahmed, explained that the proposed VAT increase followed the recommendation of the Presidential Technical Advisory Committee. She said the increase would possibly take effect in 2020 after consultations with states and local government areas, other stakeholders and the approval of the National Assembly and amendment of the VAT Act.

    But there are indications that the consultations ahead of the take off of a new VAT rate may not enjoy a smooth sail. For instance, even before the consultations begin, MAN had described the timing of the proposed VAT increase as inappropriate. It added that it would also spur spontaneous increase in inflation rate occasioned by increased prices of goods and services.

    MAN said although it appreciates the need for the government to generate more revenue to fund its developmental initiatives amid declining revenue from oil, increasing VAT at this time was inappropriate, especially when the minimum wage of N30,000 was just agreed upon.

    MAN Director-General Segun Ajayi-Kadir put the association’s grouse in perspective when he said the increase could send a wrong signal that the government is not sensitive to the plight of the low- and middle-income earners, who are clearly in the majority.  He said it is a typical case of government taking back what was given with the right hand through the National Minimum Wage with the left hand through the increase in VAT.

    More importantly, perhaps, the implications of the economy’s fragility for the proposed VAT increase are not lost on MAN, with Ajayi-Kadir noting, for instance, that the economy just recently exited a debilitating recession, with a fragile growth rate of less than two per cent recorded  last year, which should be delicately managed.

    He pointed out that Nigeria’s precarious macro-economic condition requires palliatives that would improve investment and not higher tax burden. “The prevailing high lending rate, double digit inflation, low per capita income, high unemployment rate and a low 1.91 per cent growth rate amid 2.6 per cent population growth rate that are already cumulatively limiting competitiveness could be further worsened,” he warned.

    The MAN DG said, undoubtedly, the burden of the VAT increase, when implemented, would be shifted to consumers who ware struggling, and the economy will certainly experience demand crunch, while inventory of unsold items would soar. The profitability of manufacturing concerns will also be negatively impacted, while many factories will witness serious downturn or wind down operations.

    “This will also worsen the already high unemployment position of the country, which is above 23 per cent, as Nigerians employed by manufacturing concerns and other businesses may join the reserved army of unemployed and further bloat the unemployment rate in the country,” Ajayi-Kadir warned.

    The MAN DG recommended that rather than increase the VAT rate, government should widen the tax net to meet the growing need for more revenue to address the development objective of the country.

    “There is also the need to harmonise taxes/levies/fees payable by businesses in the country  to attract more investment that would translate to higher productivity and more tax revenue for the government in the medium and long term,” he also counselled.

    NECA also threw its weight behind the need to increase the tax net instead jerking up VAT, which, according to it, would definitely lead to an increase in the cost of doing business, and would likely be passed to the consumers whose purchasing power, is already weak.

    Its Director-General, Mr. Timothy Olawale, recommended that the government should widen the tax net to generate more revenue and ensure effective collection of taxes from non-compliant citizens or defaulters.

    He said more individual and corporate entities should be captured in the tax net paying VAT, adding that if the government must increase VAT against the will of the people, “It should be limited to luxury or ostentatious goods only.”

    The NECA DG also faulted the comparison of VAT rates with other countries, describing it as irrelevant. According to him, business operating conditions in those climes are more clement than what obtains in Nigeria.

    Ajayi-Kadir aligns with him, noting that an ideal tax policy should be such that takes into cognizance the status of the economy. His words: “An ideal VAT policy for Nigeria should take into account the current profiles of Nigeria’s Per Capita Income (PCI), National Minimum Wage (NMW); and Global Competitiveness.

    “PCI and NMW will help highlight what will be the implication of upward review of VAT on the already depleted wellbeing of majority of Nigerians, while global competitiveness will present insight on the impact of such review on the real sector, particularly the manufacturing sector.”

    Although the MAN chief admitted that “There is no doubt that VAT is an important revenue source to the government,” he, however, said “The principle of a good tax system is predicated on payment convenience, otherwise it could boomerang, leading to crowding out of businesses; more misery to the citizens and even lesser revenue to the government.”

    The LCCI also said the new increase in VAT would put more pressure on businesses and could also affect consumer purchasing power. Its President, Mr. Babatunde Ruwase, who spoke during the weekend, at the fifth Presidential Policy Dialogue, organised by the LCCI, said Nigerians had been paying so much money without getting value.

    “There are so many levies, but no accountability of such levies. That is why the average Nigerian does not believe he should pay more. If we can see result, see what the government is doing with the money, Nigerians would be ready to pay. But the situation is that there is mistrust by Nigerians. We are not ready to pay more because the one we paid we can’t see what it was used for,” Ruwase said.

    Indeed, past attempts by the authorities to turn to tax sources to broaden the nation’s revenue base were often met with stiff resistance by not a few Nigerians.

    Many of them cite entrenched corruption in Nigeria’s tax administration, which makes it  difficult for successive governments at various levels to make judicious use of tax revenue to improve on social and physical infrastructure. As a result, many of them shun payment of taxes.

    The Nation learnt that the underlying factor responsible for the groundswell of opposition against the proposed VAT increase is that the economy is unproductive. The thinking is that raising VAT to cushion the crippling effects of the revenue shortfall caused by sliding oil prices would not work because the masses are already impoverished by the economy’s unproductiveness.

    The harsh environment caused by the nation’s huge infrastructure gap, particularly electricity supply, has also not helped matters. The situation has rendered the real sector, including manufacturing and agriculture, unproductive and uncompetitive.

    Apart from economic reasons, which, according to experts, pose serious hurdles to the use of tax revenue to revamp the economy, alleged corruption in the tax administration system remains a sore point.

    The truth is that most Nigerians are unwilling to pay tax unless they are compelled. And they hinge their refusal on the belief that government’s officials will embezzle any money they pay.

    The thinking, and rightly so, is that Nigeria’s tax system allows for compromises, which tax officials have exploited to defraud the government of its revenue. This is why despite the fact that tax is the most reliable source of revenue for government all over the world, the rate of tax evasion in Nigeria is very high.

    While such public perception of the nation’s tax system may take time to change, experts say that it is important to work on the economy’s unproductiveness, which is believed to be largely responsible for the nation’s narrow tax base.

  • The flip side of anchor tenants

    Shop owners and entrepreneurs desirous of brand visibility and increased patronage usually prefer to locate their business premises in malls of anchor tenants. Their expectation is that the footfall generated by anchor tenants will boost their businesses.This explains why malls housing Shoprite and other big brands are most sought after . But the looting of Shoprite, in retaliation to the xenophobic attacks on Nigerians and their businesses in South Africa is a flip side to this business strategy, as stores owned by Nigerians were also affected. Assistant Editor OKWY IROEGBU-CHIKEZIE writes

    THE allure to share same trading space with big time brands, especially in merchandising can sometimes be too intimidating to be ignored. Many entrepreneurs looking to shoring up their market equity often times look beyind the cost and go for such spaces, even if it is a small space.

    Their interest is to fight for the footfall that throng such malls. And They have often hit the bull’s eye on such decision as such outlets become hugely profitable.

    Leveraging on the crowd pulled by global brand’s popularity is what is called anchor tenancy and has gained traction since big multi-national brands such as Shoprite, Spar, PEP Stores, hit the Nigerian market space.

    They are mainly departmental stores that trade consumer goods in various product categories, such as groceries, electronics, clothes, household appliances, food and drinks, among others.

    Also quite common are the retailers in the entertainment and leisure category such as cinemas and game arcades. The upsurge in the development of shopping malls and centres in the past decade is a welcome development and has changed the shopping experience from what it used to be.

    In addition, the product offering invariably defines the class of customers  coming to the mall.

    The former National Secretary of the Nigerian Institution of Estate Surveyors & Valuers (NIESV) and former Chairman, NIESV Lagos, Offiong Samuel Ukpong, said anchor tenant are drivers of business anywhere they are.

    He said they are usually prominent, visible and huge advertisers.

    Ukpong said this is because of the footfalls and the bargain of varied and superior products, even though it may be intrinsic.

    This true of Shoprite, a South African food and grocery retailer, which made its first entry in Lagos in December 2005. It now has 25 outlets in eight states.

    No doubt, Shoprite brand has continued to draw huge traffic and mall developers are taking advantage of the anchor tenant to sell business spaces as other businesses in the mall usually record huge profit as a result of the traffic.

    But all that may be in the past. Office space seekers are more likely to count the cost today, no thanks to the loss recorded as counter attacks by Nigerians on South Africans business interests as a result of the mindless killings and Xenophobic attacks in South Africa.

    The blurred line between Shoprite outlets and many malls that house them across the country appeared to have contributed to the misunderstanding. Many Nigerians use Shoprite interchangeably with the mall that houses them.

    Most shops looted and destroyed, including two in Lagos, were a product of such mistaken identity. Shoprite and other South African businesses, including MTN, have Nigerian investors and most of their employees are Nigerians.

    However, the looters couldn’t care.

    Ukpong, however, insisted that despite the recent attacks on some foreign-owned businesses, hosting one’s business with a brand anchor tenant remains a good business strategy.

    He said: “Shoprite drives business, but it’s possible that as a business entity, its occupancy rate may not be more than 10 per cent in Ikeja Mall.  But it towers almost above every other business there, despite the fact that there are banks, telecom giants, cinemas, boutiques etc. It is unfortunate that the attacks happened because the Shoprite shops are franchise and owned by Nigerians”.

    Ukpong, who expressed regrets over the incident, noted that most of the people involved did not  fully understand what xenophobic attacks meant; they participated in the episode out of frustration, hunger and anger.

    According to him, the protests began among Nigerians on social media after many foreign-owned properties and businesses were touched in anti-foreigners rage in South Africa.

    Ukpong said the peaceful complaints among Nigerians turned into sporadic violence and looting of South African-affiliated businesses across Nigeria.

    The attacks angered many Nigerians who have called for a boycott of South African businesses, like Shoprite.

    He said a similar scenario played out at the Adeniran Ogunsanya Shopping Mall in Surulere, where police officers struggled to control a mob that vandalised locked stores and stole valuables.

    He insisted that no matter the odds against the concept, anchor tenants, makes good business sense for increased patronage and market visibility.

    The Chairman, Lagos chapter, NIESV, Adedotun Bamigbola, said the key advantage for shop owners to locate their business in malls is for footfall, which is expectedly generated by anchor tenants.

    He stated that the combined footfall generated by all similar shop outlets creates a multiplier effect on the traffic generated and business opportunities for each shop.

    Bamigbola said: “The advantage of associating with an anchor tenant is that it generates a boom in business particularly if there is a good tenant mix.

    “Similarly, when the anchor tenants have lower business patronage, it may adversely affect other businesses in the area.”

  • Tasks before Mines and Steel Development Minister

    The tasks before the Minister of Mines and Steel Development, Olamilekan Adegbite, are enormous. These include working with relevant stakeholders to ease miners’ access to various sector intervention funds, tackling illegal mining and attracting investors. He is also expected to give more impetus to the Federal Government’s resolve to diversify the economy through the exploitation of solid minerals. Assistant Editor CHIKODI OKEREOCHA highlights the challenges.

    Nigeria literarily sits on minerals goldmine. With about 44 various minerals in commercial quantity under her belt, she is, no doubt, the envy of her less-endowed peers. The snag, however, is that most, if not all the minerals, including gold, iron ore, tin, gemstones, columbite, topaz, limestone, uranium, laterite, gypsum and kaoline, among others, have remained unexploited by successive administrations.

    Yet, the development of the  endowed natural resources is widely acknowledged as holding the ace in contributing to her Gross Domestic Product (GDP), creating millions of jobs and lifting Nigerians out of poverty, among other benefits. Sadly, however, the activities of illegal miners, lack of genuine miners’ access to various sector-specific intervention funds and investors’ apathy, among other challenges, have continued to hold the sector down.

    Incidentally, these seemingly formidable obstacles are coming at a time the recognition of the obvious benefits of exploiting these bountiful natural resources had forced a strategic refocus on the sector by the Federal Government. This was in the hope of leveraging the sector to drive economic diversification, following the crisis in the oil market, where oil prices had crashed, requiring urgent buffers.

    It was against this backdrop that the coming of the new Minister of Mines and Steel Development, Mr.  Olamilekan Adegbite, and the Minister of State for the sector, Dr. Uchechukwu Ogah, once again, raised hopes that a new dawn may be in the offing for the sector. Although Adegbite, upon assumption of office, promised to lift Nigerians out of poverty by developing the natural resources, doing so will certainly not be a walk in the park.

    For a start, the minister, working with relevant stakeholders, will have to assist miners ease access to various intervention funds rolled out for the sector’s development. For instance, almost three years after the Federal Government approved the release of N30 billion intervention fund for solid minerals development, stiff disbursement modalities have made it impossible for miners to access the fund.

    President Muhammadu Buhari approved the fund in October 2016, to be used for geo-sciences data generation, improve mine-field security and monitoring, among others. The immediate past Minister of Mines and Solid Minerals Development, Dr. Kayode Fayemi, had said the intervention was in line with the enforcement of the Nigerian Minerals and Mining Act of 2007.

    Although the fund was to enable miners overcome the near impossible interest rate placed on loans by banks, miners under the aegis of Miners Association of Nigeria (MAN) have been screaming blue murder over the conditionalities for disbursement of the fund, saying that they are very tough, making it extremely difficult for small scale miners to access the fund. MAN President Alhaji Sani Shehu told The Nation that because of the stiff conditionalities, only few members of the Association have been able to access the fund.

    According to him, “Part of the conditionality is that they add the collateral to the amount requested”. “That means if you are asking for N10 million, you are asked to bring N15 million. Two; the earlier impression we had was that the intervention was mainly equipment-based, meaning you can use your equipment as collateral.

    “We thought that the equipment can collateralise itself and then the applicant can now use the fund as working capital. And the collateral should be equal to the amount requested.” Although, he said when the Association complained to the former Minister, he directed that MAN should come up with a proposal that will make it easy for its members to access the fund.

    What this means is that Adegbite and his junior minister may have to continue with the ongoing robust engagement between miners and the ministry with a view to addressing the concerns raised by miners, if they are serious about taking the sector to the next level.

    Apart from the N30 billion Intervention Fund, the World Bank also announced another $150 million in support of notable projects in the mining sector. In doing so, the bank said it was impressed with the steps already taken by the government to turn the country into a mining destination.

    With regards to the World Bank’s $150 million lifeline, Shehu said: “One thing that is not very pleasant is that the World Bank funding system is generally slow.” He, however, told The Nation that “The situation was not applicable to Nigeria only; it’s like a general pattern. Other World Bank intervention programme all over the world is the same thing. So, we hope the intervention will move miners to the next level.”

    Shehu, while stating that insinuating that the fund has not been released will not be fair to the World Bank, noted that bureaucracy amongst the disbursement authorities may have been the problem. They (the authorities) say they are doing their best; we hope their best will translate to something,” he said.

    Perhaps, more important is the need for the new minister to halt the activities of illegal miners, which is said to have become an industry of its own in several states across the country. Some of the states include Niger, Plateau, Zamfara, Ebonyi Enugu and Imo.

    The reported absence of globally recognised mining companies in the country is said to be responsible for the upsurge in illegal mining activities, which is partly responsible for scaring genuine investors away. The activities of illegal miners are also believed to be hurting the sector’s contribution to the GDP.

    Statistics from the Ministry show that over two million people are engaged in illegal mining. Most of them are said to be poor, unemployed and living in rural areas. They use crude methods and household implements to exploit the minerals. This is why illegal mining poses some health challenges which include lead poisoning, mercury pollution, deforestation, poor sanitation and heavy metals pollution.

    Under his charge, Adegbite is, therefore, expected to roll out workable policies and strategies to properly regulate mining. This stemmed from the belief that if fully harnessed, the solid minerals sector  would help boost foreign exchange and create jobs.

    In doing so, Adegbite, who was former Commissioner for Works and Infrastructure under the immediate past Governor of Ogun State, Senator Ibikunle Amosun, is also expected to work with the private sector, including state governments to change the sector’s narrative.

  • Govt, private sector charged on social investment

    For Nigeria to create a robust environment for social investment and inclusive business to flourish, there is the need for federal and state governments and private entities to build partnerships.

    The Chairman, African Venture Philanthropy Alliance (AVPA), Mr. Yemi Cardoso, gave this advice in Lagos during a road show with the theme: Building robust policy for increased social investment & inclusive business.

    Other countries for the three-country African policy road show organised by AVPA, in partnership with the inclusive Business Action Network (iBAN), are Ghana and Kenya.

    The iBAN is a global initiative that supports the scaling and replication of inclusive business models.

    Read Also: Lagos seeks private sector support for infrastructure

    The Nigerian edition of the road show, which held during the week, brought together about 111 leaders in public, private and social sectors, providing a platform to deliberate on the challenges faced in building a robust policy environment for increased social investment and inclusive business development.

    Cardoso said it was also to understand and leverage learning from the success story of the Asian Venture Philanthropy Network (AVPN), a sister organisation for AVPA.  AVPN’s systems and policy forums have become a successful framework.

    The AVPA, he explained, is a non-profit, non-partisan, Pan-African network for social investors who are dedicated to deploying their financial, human and intellectual capital in a more strategic and disciplined manner to make social impact.

    Cardoso said social investment is intended to deliver a positive social impact and a return on the original investment.

    Inclusive business is a model of commercial activity that seeks profit by including low-income communities to actively participate in the value chain or offer services and products for the low-income population.

    He said regulatory and policy frameworks that encourage adoption, foster growth and speed replication were key components to moving these new models of doing business and investing from the periphery to the mainstream.

  • AfCFTA: Why Nigeria may not benefit from Afreximbank’s interventions

    The African Export-Import Bank (Afreximbank) has handed Nigeria the opportunity to grab a chunk of the $2.5 trillion in combined Gross Domestic Product (GDP) and other benefits promised by the African Continental Free Trade Area (AfCFTA) agreement almost on a platter. This followed the roll out of various trade facilitation and financing instruments to boost manufacturers’ competitiveness. But, there are fears that without fixing her lack of internationally-accredited quality and trade-related infrastructure, manufacturers may fail to benefit from the interventions. Assistant Editor CHIKODI OKEREOCHA reports

    If access to robust, result-driven trade facilitation and trade financing instruments were to be deciding factors for maximising the African Continental Free Trade Area (AfCFTA) agreement, it is unlikely that any country will beat Nigeria to the number one spot on AfCFTA’s competitiveness ladder when its implementation begins in July, next year.

    The African Export-Import Bank (Afreximbank) has made available some of trade facilitation and financing instruments to strategically incentivise and position Nigerian manufacturers and other domestic economic actors to take advantage of the trade liberalisation deal.

    For instance, the bank recently made available $500 million from its Nigeria-Africa Trade and Investment Promotion Fund to support the manufacturers to take advantage of the numerous opportunities offered by the AFCFTA.

    Adopted by the 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union (AU) in Addis Ababa, Ethiopia, in January 2012, AfCFTA seeks to create a continental trade bloc of 1.2 billion people, with a combined Gross Domestic Product (GDP) of about $2.5 trillion.

    The agreement was seen as an important milestone in promoting Africa’s regional integration and helping to increase intra-African trade. It planned to do this by committing countries to liberalising services and trade and removing tariffs on 90 per cent of goods.

    Apart from its inherent capacity to promote economic growth and development, reduce poverty in the partnering countries, it was also expected to help expand and diversify trade and increase domestic and foreign investment.

    After foot-dragging for 16 months, President Muhammadu Buhari signed the trade treaty on  July 7, this year, at the opening of the 12th Extraordinary Summit of the AU Launch of the Operational Phase of the AfCFTA in Miami, Niger. As at August 21,  Afriacan countries except Eritrea had signed the deal.

    With the AfCFTA coming into force, Afreximbank, the premier institution driving African integration and trade, has moved in to position African manufacturers to maximise the benefits in the agreement, but with special focus on manufacturers and other players.

    In throwing the $500 million lifeline to  the manufacturers, the Afreximbank President/ Chairman of Board of Directors, Prof. Benedict Oramah, said the opportunity for Nigerian and African manufacturers under the AfCFTA was phenomenal.

    Oramah, who spoke at the 47th Annual General Meeting (AGM)/Manufacturers Annual Lecture/Presidential Luncheon of the Manufacturers Association of Nigeria (MAN) held in Lagos, noted that intra-regional trade in the manufacturing sector could rise to more than $150 billion by 2022.

    His words: “The AfCFTA has come into force. It is expected that it will by 2022 bring the share of intra-African trade to 22 percent, up from current levels of about 16 percent, and bring total intra-African trade to about $250 billion, from about $160 billion currently.

    “Since manufactures account for about 60 percent of total intra-African trade, intra-regional trade in manufactures can rise to more than $150 billion by 2022. The opportunity for African manufacturers is, therefore, phenomenal.”         

    In his presentation titled: “From commodities to a global manufacturing hub: The road ahead for Nigeria,” Oramah said this was timely and relevant because it demonstrated  MAN’s commitment to prepare its members for the opportunities that the AfCFTA presents to make Nigeria a global manufacturing hub, akin to what China.

    “MAN represents, perhaps, the largest collection of entrepreneurs in Nigeria. Just as most of the great European cities were built on entrepreneurial risk-taking, it is on the enterprise of the members of MAN that Nigeria’s future prosperity can be built. And it is trade that will expand the frontiers of that enterprise,” he said.

    Other initiatives to capacitate manufacturers

    Apart from making the $500 million facility available to Nigerian manufacturers to diversify exports and produce goods and services that will be traded competitively under the AfCFTA, the bank has also unveiled the Fund for Export Development in Africa (FEDA), a key instrument through which it intervenes in the form of equity or quasi equity.

    There is also the Export Contract Availability Guarantee, to enable Nigerian and other African export manufacturers to secure long-term export contracts with bank financing. The guarantee will cover the risk associated with situations where the contract against which financing has been provided becomes unavailable before an agreed period.

    Similarly, Afreximbank has put in place an Inter-State Transit Guarantee aimed at facilitating and easing the flow of goods and services across borders and also reduce transit time and costs. This guarantee, The Nation learnt, would be useful for exports to other African countries.

    Although the bank’s instruments and interventions were meant to support the structural transformation of Africa’s production and exports through higher value added and manufactured goods, her development of solutions tailored to the specific needs of Nigerian manufacturers can hardly go unnoticed.

    For instance, Afreximbank has since thrown its weight behind the country’s economic development and industrialisation objectives, especially under the “Made-in-Nigeria for Export”(Project MINE) intiative.

    Specifically, the bank has executed a Memorandum of Understanding (MoU) with the Federal Ministry of Industry, Trade and Investment (FMITI) to facilitate the establishment of Industrial Parks (IPs) and Export Processing Zones (EPZs) within the six geo-political zones under Project MINE.

    Under Project MINE, Special Economic Zones (SEZs) will be used as the mechanism for making Nigeria a pre-eminent manufacturing hub in Sub-Saharan Africa and a major exporter of Made-in-Nigeria goods and services regionally and globally.

    The immediate past Minister of Trade, Industry and Investment, Dr. Okechukwu Enelamah, said the Federal Government planned to spend N250 billion for the development of the SEZs across the six geo-political zones of the country in pursuit of the country’s industrialisation agenda.

    According to him, Project MINE initiative was aimed at developing what he described as world-class export-oriented SEZs, pointing out that one of the factors leading to industrialisation was the development of SEZs.

    Under the MoU, which Afreximbank executed with the FMITI, the bank identified priority projects, such as the Lekki-Epe Model Industrial Park, located on 1,000 hectares of land in the Northwest of the Lekki Free Trade Zone.

    Clothing Textile and Garments (CTG) and agro-processing have been identified as the sector focus for this park. For Enyimba Economic City, located on 1, 600 hectares in Enyimba Economic City in Aba, Abia State, CTG, agro-processing and light manufacturing are the selected sectors of focus.

    Afreximbank is also supporting the development of an internationally-accredited centre for testing, inspection and certification of products, particularly agricultural and agro-processed products. This was to ensure compliance with international technical regulations.

    The bank has already established the African Quality Assurance Centre (AQAC) in Ogun State, believing that the development of adequate conformity assessment infrastructure would contribute to creating confidence for importers and ensure that exported products meet international standards to avoid rejection of shipments.

    Through its Continental Trade Fairs, the bank will hold biennial Intra-African Trade Fairs (IATF) that will connect Nigerian and African buyers and sellers, provide trade and market information and also facilitate B2B (Business-to-Business) exchanges.

    The maiden trade fair, which held in Cairo, Egypt, last December, attracted over 1000 exhibitors from 45 countries, with over $32 billion in deals generated. And the second edition is scheduled for September1-7, 2020, in Kigali, Rwanda.

    Fears over decrepit trade-carrying infrastructure

    As it is, Nigeria looks good to ride on the back of Afreximbank’s game-changing initiatives to call the shot in the emerging new trade order propelled by the AfCFTA.

    However, there are fears that this will not be a walk in the park for Africa’s most populous and largest market, majorly because of lack of internationally accredited quality and trade-related infrastructure.

    Trade-carrying infrastructure includes hard infrastructure, such as roads, rail, bridges, ports,  and soft infrastructure (one stop border posts, warehousing, cold chain storage, jetties, ferries, logistics platforms and ICT solutions, such as single windows and electronic cargo tracking systems.

    Admittedly, weak trade-related infrastructure is not peculiar to Nigeria. Africa’s infrastructure needs, according to Afreximbank, are estimated at between $130 and $170 billion yearly, with a financing gap in the range of $70–$110 billion.

    However, Nigeria’s share of the continent’s huge infrastructure gap is mind-boggling. For instance, the Financial Derivatives Company (FDC) put this in perspective when it said Nigeria requires $15 billion, about N4.59 trillion, worth of investments yearly for 15 years to adequately develop her infrastructure nationwide.

    The economic and financial research firm, in its bi-monthly Economic and Business report for February, last year, said: “Nigeria’s under-investment in infrastructure has left it with a core stock of infrastructure of just 20 per cent to 25 per cent of GDP, compared to an average of 70 per cent of the GDP for more advanced middle-income countries of similar size.”

    The FDC said bridging this gap would require investing about $15 billion yearly for the next 15 years, asking, “Given the government’s limited access to international debt, revenue constraints and competing priorities, the major question is where will funding be sourced?”

    The research firm emphasised: “One of the biggest constraints to Nigeria’s competitiveness, economic growth and diversification is the crippling infrastructure deficit, estimated at about $300 billion (about N30 trillion) by the African Development Bank (AfDB).”

    When considered that Nigeria, according to Vice-President YemiOsinbajo, spent N2.7 trillion on infrastructure in 2016 and 2017 fiscal years, for instance, the challenge infrastructure gap poses to Nigeria’s competitiveness in global trade comes into bold relief.

    This was also why, despite significant nationwide support for Nigeria to go ahead with the AfCFTA, including the avalanche of bilateral trade partnerships and economic co-operation programmes dangled before her by foreign investors and governments, manufacturers were opposed to such deals.

    The dearth of supportive infrastructure, particularly power supply, has continued to push up cost of production, instilling fears of competitive disadvantage into the minds of Nigerian manufacturers, especially the especially the Small and Medium Enterprises(SMEs), against their counterparts from other African countries.

    Poor quality infrastructure

    At present, Nigeria lacks adequate and functional laboratories to test and ensure that exportable agric products and other goods meet required international quality and standards.

    The Senior Manager, Intra-African Trade Initiative, Afreximbank, Gainmore Zanamwe, said lack of internationally-accredited quality infrastructure and harmonised trade standards are part of the supply side constraints to industrialisation in Nigeria and other African countries.

    The danger decrepit infrastructure poses to Nigeria’s continental and global trade power is not lost on manufacturers. At the MAN AGM, its President, Ahmed Mansur, said: “The state of our infrastructure has deeply eroded the manufacturing sector’s competitiveness.

    “The supply of electricity, access to our ports and their low operating efficiencies, the poor condition of most of our highways and waterways and the absence of a credible rail network constitute impediments to the operating efficiencies of our manufacturing establishment, inducing high costs of production and distribution and rendering our manufactured goods uncompetitive.”