The Nation Newspaper

Category: Industry

  • LADOL’s Lack of Commitment to Nigerian Economy

    Despite being the greatest beneficiary of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010, Lagos Deep Offshore Logistics (LADOL) has not made serious investment to develop local facilities and manpower for the benefit of the Nigerian economy.

    NOGICD Act makes it mandatory for foreign companies that win contracts in the industry to sub-contract  certain scopes of the works to Nigerian companies to boost the country’s economy.

    For instance, Saipem, a subsidiary of Italian oil giant, Eni, secured an engineering, procurement, commissioning and installation (EPCI) contract, worth about $3 billion, from Total Upstream Nigeria for the subsea development of the Egina oilfield.

    Some of the works were sub-contracted to indigenous companies.

    American oil services firm, FMC Technologies also awarded part of the Egina project to local companies.

    Truly Nigerian companies that worked as sub- contractors in these projects used the proceeds to develop their fabrication facilities to world standards so as to attract future projects and create job opportunities for Nigerians.

    Out of the many companies that participated in the Egina project in the name of local companies, LADOL was the greatest beneficiary.

    Apart from hosting the fabrication and integration yard in the LADOL Free Zone where the Egina Floating Production Storage Offloading (FPSO) unit was fabricated and integrated locally, LADOL also hosted the FPSO itself, which is the largest FPSO in the fleet of Total Group worldwide.

    By hosting the fabrication and integration yard in the free zone where the fabrication and integration works were carried out, LADOL also enjoyed significant revenues from the Egina project.

    When the FPSO arrived at the LADOL Free Zone in Lagos from South Korea, LADOL attracted the official visit of Vice President Yemi Osinbajo.

    The company made promises of future investments in the free zone before the vice president and also enjoyed major headlines in the media.

    Unfortunately, unlike the truly Nigerian companies that invested heavily in the development of their yards for future projects, LADOL cannot boast of employing more Nigerians since the FPSO sailed away.

    Rather, it devoted its resources to fight foreign companies that invested in the free zone, thereby hurting Nigerian economy.

    No wonder recent media reported have questioned its indigenous status.

    While Aveon Offshore, Doman Long Engineering, Nestoil, Niger Dock and other truly Nigerian companies that worked on the Egina project have re-invested their proceeds to create opportunities for the employment of Nigerian youths, LADOL can’t boast of such investments.

    Perhaps, the revenues the company generated from the project were repatriated to its foreign owners as being speculated by the industry stakeholders.

    LADOL was also privileged to be among the companies that used indigenous status to access the federal government’s Nigerian Content Intervention Fund but how the fund was utilised is known to only LADOL and its foreign promoters.

    Sadly, the company has refused to use the privileges it has enjoyed under the Nigerian Content Act to help create job opportunities for Nigerians by partnering foreign companies in a win-win situation.

    Indeed, only a foreign company like LADOL can make huge revenues from its operation in a local environment and refuse to give back to such local environment to boost the country’s economy.

    Instead, LADOL has been taking steps that will throw more Nigerians into the labour market by chasing away foreign companies and damaging Nigeria’s economy.

    While local companies are building alliances with foreign companies and investing heavily to take advantage of future opportunities, LADOL’s hostile attitude is chasing away foreign investors.

    Without foreign companies coming into Nigeria to help transfer technology and develop local capacity, it will be difficult for Nigerians to grow the capacity and skills to execute complex and challenging projects.

    Until the Nigerian government and its agencies take practical steps to identify the real and truly Nigerian companies, the country’s economy will continue to experience challenges.

    • Alabi, a local content advocate, writes from Warri, Delta State

  • Dangote Cement promo rewards 21,000 customers

    About 21,000 customers have benefited from the Dangote Cement “Bag of Goodies” promo, the Group Managing Director of Dangote Industries Limited, Mr. Olakunle Alake, has said.

    Presenting the star prize – a new car – and other prizes to the winners, Alake said the company holds its consumers in high regard hence, the need to reward them through the promo.

    According to him, the company values its customers and would continue to engage them at all levels and ensure they are rewarded for their patronage.

    “We recognise that things are tough and we tend to ameliorate these challenges by trying to appreciate our customers directly. It is something we have done before; this is just bigger than the others,” Alake said.

    Dangote Cement Marketing Director Mrs. Funmi Sanni said the promo had produced several winners in the last few weeks. “We have touched over three million consumers through this promo.

    “We have recorded many car prize winners. We believe their lives are changing by what they have been able to get through this promo,” she added.

    Sanni said the promo would continue until the end of September, adding that the company would extend the redemption period to enable all who got winning cards  to claim their prizes. A 40-year-old civil engineer, working with a contractor in Lagos, Mr. Titus Adesola Jegede, won the saloon car star prize.

    Jegede said he got hold of the winning card from a trailer load of cement, which his company bought for a building project in Lagos. According to him, “We have a construction project at hand, which required a trailer load of cement. As the work was going on, I saw the workers recharging their phones with the cards they got from the cement bags.

    “I went to them to beg for one to recharge my phone. So, they handed one to me. Luckily for me, I saw a car, instead of a recharge card.”

    The star prize winner said he had bought two extra trailer loads of Dangote Cement since winning the car. “I am a Dangote Cement Ambassador. I love the product and I will continue to patronize Dangote Cement,” he added.

    Jegede, who sold his car few months back, said he intended giving the car to the construction company, which he works for.

    According to him, the company actually bought the cement to carry out a construction project. “I did not buy the cement with my money. I was only lucky to be the one who got the star prize card. I am going to give the car to my company,” he said.

    The company also gave out 13 refrigerators, 11 plasma television sets, one motor cycle, and one tricycle to lucky winners at the event held in Lagos on Monday.

  • Forex restriction opens fresh vista for MSMEs, manufacturers

    A survey by the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN), in collaboration with the Nigerian Bureau of Statistics, put the number of Medium, Small and Micro Enterprises (MSMEs) in Nigeria at about 41 million. The MSMEs and manufacturers may have inadvertently been offered a window of opportunity to raise their standard of processing and selling local produce, following the restriction of foreign exchange (forex) for food importation. Operators say the policy, if effectively implemented, could boost MSMEs’ growth and create jobs, despite the criticisms that have trailed it. Assistant Editor CHIKODI OKEREOCHA reports.

    A window of opportunity to firm up and unleash their potential to create jobs, reduce poverty and engender sustainable growth may have been opened for Medium, Small and Micro Enterprises (MSMEs) and manufacturers in Nigeria, almost on a platter.

    The fresh impetus for the country’s estimated 41 million MSMEs to boost their profitability and competitiveness is coming on the wings of the restriction of foreign exchange (forex) allocation to food imports.

    The belief is that the policy intervention has the inherent capacity to push immense possibilities into the hands of budding entrepreneurs and manufacturers. For instance, many MSMEs and manufacturers, as part of the strategic positioning to fill the gap created by the withdrawal of forex for food importation, will be encouraged to add more value by processing their produce through the value chain, rather than exporting primary produce.

    President Muhammadu Buhari may have inadvertently set the stage for what promises to change the fortunes of MSMEs when he recently directed the Central Bank of Nigeria (CBN) to stop selling forex used for international transactions to persons in the business of importing food. “Don’t give a cent to anybody to import food into the country,” he told CBN Governor Godwin Emefiele.

    Justifying the move, the President said Nigeria has enough food for its citizens, following his administration’s several reforms in the agriculture sector. Based on this, he said there was no need to continue to import food. Besides, the directive, he said, was to improve agricultural production and attain food security.

    Although the President added that the foreign reserve would be used strictly for diversification of the economy and not for encouraging more dependence on foreign food, the forex restriction did not go down well with some members of the Organised Private Sector (OPS), including the Manufacturers Association of Nigeria (MAN), the Lagos Chamber of Commerce and Industry (LCCI) and the Nigeria Employers’ Consultative Association (NECA).

    NECA kicked, insisting that the policy was ill-timed. Its Director-General, Mr. Timothy Olawale, in a statement, said although the initiative was laudable, Nigeria could not afford such a policy now, as it had yet to attain self-sufficiency in food production. He argued that a wholesale immediate withdrawal of forex for food importation without giving a buffer period for businesses to adjust might have serious consequences on the economy.

    One of the consequences, Olawale said, would be unprecedented smuggling of food products. According to him, Nigeria lacks the capacity to meet its local food demand and the demand that will be created as a result of the directive will be through smuggling.

    The NECA boss said given that Nigeria recently signed the African Continental Free Trade Agreement (AfCFTA), intended to open up the borders, smuggling would become the order of the day.

    “With the recently-signed AfCFTA, Nigeria will further create a thriving market for other countries and will remain a dumping ground for imported goods,” he warned.

    The LCCI also weighed in on the matter, with its Director-General, Mr. Muda Yusuf, asking for details on what constitutes food in the context of the presidential directive.

    “First, there is a need to get more details and clarifications on what exactly constitutes food items in the context of the presidential directive.

    “The harmonised system codes of the items affected need to be indicated. It is hoped that these details would be made available in subsequent releases by the CBN. This is essential for proper analysis of the possible impact on investment, welfare of citizens and the economy. We need to worry about the implications of policy pronouncements for investors’ confidence and the general sentiments of investors,” he said.

    On its part, MAN said although the directive was laudable, there was a need for more clarity. Besides, Nigeria, according to MAN Director-General, Mr. Segun Ajayi-Kadir, needed to be deliberate and strategic in pursuing such a far-reaching monetary measure.

    “This is so, especially in the light of our vulnerability, occasioned by trade agreements that require the country to be more open to imports, and the well-known antics of our neighbouring countries,” he said in a statement. He added that on an issue as critical as this, a unilateral decision could be counterproductive when the operators are not duly consulted.

    He also said there was a need to know what type of food, finished and ready-to-eat or as input for further processing that come under the directive. “In the case of the latter (in particular), we need to know the local capacity available compared to national demand and if not adequate, creditably determine what time and resources are needed to ramp up capacity and production,” he said.

    While he stressed the need for support that would sustain the “steady progress in agricultural production” and attainment of “full food security,” Ajayi-Kadir added that the CBN would need to conduct an assessment of the country’s position in practical terms and realistically weigh its options before embarking on such a far-reaching policy.

    “We must also consider the state of our infrastructure and its capacity to respond and support the policy,” he added.

    The sunny side of the forex policy

    Despite the groundswell of opposition and dissenting voices against the forex restriction for food importation, which are, no doubt, rooted in patriotism and economic logic, the policy may, after all, be a blessing in disguise for operators in the MSME segment of the economy, if effectively implemented.

    The thinking is that MSMEs and manufacturers could leverage the policy to boost their productivity and profitability and, ultimately, play their role as economic growth drivers by creating jobs, reducing poverty and engendering sustainable economic growth.

    For instance, the Chairman, Lagos State Chapter of the Nigerian Association of Small and Medium Enterprises (NASME), Mr. Solomon Aderoju, did not mince words when he said the forex restriction on food import was favourable to the association and manufacturers.

    Aderoju, who spoke to reporters ahead of NASME’s third edition of Business Roundtable held last month in Lagos, said the policy would assist the Federal Government to conserve forex and help to strengthen the value of the already weakened naira.

    He lauded the Federal Government for the huge decision, saying its effective implementation would boost MSMEs’ growth and create more employment opportunities.

    The Chairman, NASME Cooperative, Mr. Adam Adebayo, is no less excited over the prospects of MSMEs garnering some competitive edge on the strength of the forex policy. He said the association had been advocating a ban on imported food to give members the opportunity to raise their standard of processing and selling local produce.

    Hear him: “We have been exporting primary produce, but now that there is a new development, we are happy because we would be able to add value by processing all our produce through our value chain. With this, the government will now bring back the Commodity Board, which will be responsible for price control so that the farmers will not record losses.”

    On his part, NASME’s National Vice President, Southwest, Mr. Oladipo Jemi-Alade, said the directive was an opportunity for MSMEs and manufacturers to explore the benefits of AfCFTA.

    “Now that AfCFTA is open to us, we have to be prepared for the next level.

    “We want to be in a position to compete favourably with our foreign counterparts. For this reason, we are upgrading our skills, and have embarked on membership training nationwide to build skills and capacity,” he said.

    A national MSMEs survey carried out in 2017 showed that there are 41 million MSMEs in the country. It was carried out by the sector’s regulatory agency, the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN), in collaboration with the Nigerian Bureau of Statistics (NBS).

    Already, industrialists, under the aegis of the Nigerian Association of Small Scale Industrialists (NASSI), are partnering the Centre for International Private Enterprise (CIPE), United States to improve MSMEs in Nigeria. The partnership, according to the NASSI National President, Chief Solomon Vongfa, is to encourage international best practices.

    The Nation learnt that the AfCFTA has made the need to encourage international best practice among MSMEs via such partnership even more compelling. Vongfa admitted this much when he said although NASSI initially was not fully prepared for the trade liberalisation deal, but with the recent intervention by CIPE and the numerous benefit of the agreement, NASSI must be part of it.

    “We are also encouraging government to support by providing machines and equipment that can improve production and quality of products to boost competitiveness. That is the key to implementing the AfCFTA agreement. We cannot be competitive under AfCFTA because of the problem of finishing of the products of some of our members. which is very poor,” Vongfa said.

    He pointed out that if the packaging is not sophisticated, it will not move in the market.“Packaging is one of the outcomes from the CIPE diagnostic meeting because you have to be attractive for patronage.

    “We are taking our advocacy to government; you cannot do a policy that will favour only the conglomerate or the big companies while we the major sector of the economy suffer it most,” he said, adding: “If we cannot compete due to lack of support and fund, the AfCFTA agreement will be a disadvantage to us,” he said.

    However, lack of fund is only a fraction of the challenges undermining the profitability and competitiveness of MSMEs. Harsh policy environment, high operating cost due to lack of basic infrastructure, particularly power, and multiple taxation, among others, also stunt MSMEs growth.

    The consensus is that without addressing these issues holistically, MSMEs may not be sufficiently galvalised to take advantage of the opportunities tossed on their path by the forex restriction, as well as the AfCFTA.

  • Questioning LADOL’s indigenous status

    It is no longer news that a company called LILE (LADOL Integrated Logistics Enterprise) which is a duly registered company in the British Virgin Islands owns the Lagos Deep Offshore Logistics Base (LADOL).

    The shareholding structure is substantially made up of two foreign companies namely: SABLE OFFSHORE INVESTMENTS and ALSBA Ventures Group. Both companies are registered entities in the British Virgin Islands otherwise known as the safe haven for tax dodgers.

    SABLE Offshore Investments commands a whopping 53 per cent stake in LADOL while ALSBA Ventures Group takes an impressive 31 per cent of the shares. This only leaves a share percentage of 16 per cent for the remaining shareholders, which includes key characters currently at the helm of LADOL.

    This unprecedented development is baffling to many industry experts in Nigeria as for many years LADOL and its affiliates have flaunted the perception of being a company which stands for the Nigeria values and interests.

    It is also on record that LADOL and its elements have embarked on several campaigns in the media and the general press both nationally and internationally showcasing themselves as “A wholly Nigeria owned Company”.

    This obvious propaganda has generated endorsements and accolades from many quarters in the industry and the country at large for a company, which when put under the microscope contributes very little, if any benefit to the Nigerian economy or the Nigerian people at large.

    Through its campaign of misrepresentation, LADOL has been enriched to the brim through benefits of local content. This has undoubtedly given them an edge with investments at LADOL at an all-time high; dividends have also been equally handsome for the foreign shareholding companies even at a time the Nigerian economy was in deep recession and many companies in the same sector groaning under the yolk of lack of jobs throughout the industry.

    How can a company, which its majority shareholders are abroad, command a strong position in any decision-making, which can be based on the local needs and the development of the local economy in Nigeria?

    As Nigeria tirelessly continues to promote local development and enhance job creation in all its industries, some of her citizens who have benefitted from such initiatives have decided to avert the benefits of these policies. This diversion of the benefits away from the local industry continues to hemorrhage the backbone of the Nigerian economy.

    As a nation should we allow such actions to continue to take place?

    The disease known as the “enrichment of oneself to the detriment of all others” is one of the biggest players in unemployment, underdevelopment and underutilisation of Nigeria’s workforce.

    On the 7th of December 7, 2015, Dr. Amy Jadesimi while speaking on a BBC world news programme “business Live,” declared that “we are the only 100% Nigerian Private Free zone in Nigeria.”

    But considering the shareholding structure of the company, we can rightly say that this statement was absolutely false as it does not represent the true ownership of LADOL.

    With all the facts available, we can only digest this to be one that has been orchestrated over the years to outsmart the Nigerian people.

    The sheer audacity of LADOL to publicly engage the media in such acts of misrepresentation of their true identity as a foreign-owned company is quite baffling, to say the least.

    Indeed, they have been dishonest to the country, to our people, to our government agencies and to the international community.

    Should Nigeria continue to allow such companies to conduct business activities at the highest level and represent the country as local companies on the world stage in this calculated manner?

    • Adeoye writes from Yenagoa

  • Is LADOL truly a Nigerian company?

    Even with the signing of the Nigerian Oil and Industry Content Development (NOGICD) Act of 2010, many Nigerian investors still exploit the old loopholes in the system to take advantage of this law.

    Many Nigerians still parade foreign-owned companies as local entities to take advantage of the opportunities provided by the NOGICD Act at the detriment of the Nigerian economy.

    LADOL, for instance, prides itself as a local company and is reaping the huge benefits that accrue to local companies in Nigeria but its shareholding structure appears to question this claim.

    It is not an offence for foreign companies to operate in Nigeria. After all, President Muhammadu Buhari has travelled all over the world to woo foreign investors to come into Nigeria and harness the investment opportunities his administration has created.

    Also Vice President Yemi Osinbajo has made tremendous efforts to improve Nigeria’s ranking in the World Bank’s Ease of Doing Business to attract foreign companies.

    Buhari and Osinbajo’s efforts have paid off by attracting many foreign companies and investments since 2015.

    All these investments by foreign companies operating in Nigeria have provided employment for Nigerians and helped to grow the Nigerian economy.

    The Nigerian government has also provided benefits for these foreign companies to thrive.

    But it is worrisome when some foreign-owned companies parade themselves as local companies because they shortchange both the Nigerian economy and truly Nigerian companies.

    Foreign-owned companies, which should enjoy the benefits provided by the Nigerian government for foreign companies have claimed to be local companies to enjoy the benefits in the NOGICD Act.

    A peep into the shareholding structure of LADOL, for instance, reveals that the ownership is foreign-dominated because this conglomerate, which claims to be a bona fide Nigerian company, has its substantial 84 per cent shares held by foreign companies.

    The two foreign companies that own the 84 per cent stake in LADOL are Sable Offshore Investment Limited, registered in British Virgin Island and Alsba Ventures, also registered in the British Virgin Island.

    While Sable Offshore Investment Limited has 53 per cent stake in LADOL, Alsba Ventures Group has 31 per cent.

    When two foreign companies establish a company in Nigeria, the company can be rightly regarded as a foreign company.

    Read Also: Africoat – A bright hope for American investment under threat in LADOL

    So, substantially, and legally too, it can be argued that LADOL is a British Virgin Island company and not a Nigerian indigenous company because it is owned by entities registered in British Virgin island.

    If British Virgin Island companies owned by Nigerians establish a company in Nigeria, the company is not a truly Nigerian company because it is owned by foreign companies.

    When Nigerians establish companies in British Virgin Island and use these companies to set up a company in Nigeria, their motive becomes questionable and suspicious.

    The question is: Why did they not set up the company in Nigeria instead of setting up companies in foreign countries and using these foreign companies to set up a company in Nigeria? What is their motive?

    What are they trying to dodge? Which rules are they trying to circumvent?

    It is also well known all over the world that British Virgin Island is a tax haven where companies do not pay tax.

    These companies are shell companies and regulators and anti-corruption agencies in most countries have had cause to probe the business activities of these companies.

    Despite this obviously foreign ownership structure, LADOL is one of the greatest beneficiaries of the opportunities provided in the NOGICD Act.

    Indeed, the company has benefited enormously from the local content policy in the oil and gas sector. The opportunities and benefits LADOL have enjoyed are clearly meant for Nigerian companies. But is it truly a Nigerian company?

    Many people have called on the government regulators to probe the ownership structure of LADOL to ascertain if it is truly a Nigerian company. The earlier this is done the better for the Nigerian economy.

    Adeoye writes from Yenagoa

  • ‘Fed Govt’ll boost tomato production’

    The Federal Government has a robust plan to boost local production of tomato and create employment.

    The Executive Director, National Horticultural Research Institute (NIHORT), Dr. Abayomi Olaniyan, made this known at a workshop on “Tomato and ginger production, and value addition” in Kano, during the week.

    Olaniyan, who said tomato production in Nigeria was below demand, put the production figure of fresh tomato at about 1.8 million tonnes, while the annual demand was 2.3 million tonnes.

    He said the Federal Government’s tomato policy was to reduce post–harvest losses, boost production and attract investments into the value chain. Olaniyan said the workshop had become imperative as a means of creating more awareness on the importance of the commodities in achieving food security, sustainable livelihood and economic empowerment.

    “The training will cover important aspects of the commodities’ value chains such as nursery practices, production practices, value addition, and economics of production, marketing and record keeping. “The training will also cover tomato value addition and processing in order to reduce seasonal glut and inconsistent year round supply,” he explained.

    The executive director said processing of tomato would reduce the quantity of tomato being imported into the country, especially during the lean season of supply.“It is evident that improved production techniques and value addition must be taken seriously to attract sustainable levels of investment and stakeholders’ interest in ginger,” he also stated, noting that Nigeria was the third largest exporter of ginger in the world after China and India.

    According to Olaniyan, Nigerian ginger varieties are acclaimed to be of superior quality and outstanding flavor. He said they were preferred products in the international market. He said that NIHORT had the mandate to conduct research into genetic improvement, production, processing, utilisation and marketing of fruits, vegetables, ornamental plants and spices.

    Olaniyan urged the participants, drawn from mainly tomato and ginger farming communities in Kano and Kaduna states, to pay critical attention to all sessions to make the best use of the golden opportunity.

  • Lush Hair sponsors MBGN pageant

    Indigenous hair extension brand Lush Hair has announced its participation in this year’s Most Beautiful Girl in Nigeria (MBGN) pageant as the hair extension brand sponsor of the programme.

    A statement released after the signing of a Memorandum of Understanding (MOU) between Lush Hair and Silverbird Group, organisers of the MBGN Pageant, in the former’s office in Surulere, Lagos, during the week.

    Lush Hair Brand Manager Ms. Sukhm Pannu said: “We are delighted to be one of the major sponsors of this laudable project with track record of promoting the Nigerian cultural heritage and tourism even to the outside world.

    “Also, because Lush Hair ultimately stands for beauty, style, confidence and it is proudly African in nature, we consider this a very strategic collaboration which we hope will transcend beyond this edition.”

    Pannu said the nationwide auditioning exercise will hold in August in Bayelsa, Rivers, Imo, Enugu, Ghana, Abuja and Lagos. She, however, said Lush Hair being the official Hair Extension Brand of the MBGN will be present at the locations and most actively at the final screening in Lagos State.

    According to her, the brand will be on hand to engage the potential contestants while encouraging them to always stay beautiful, confident and always on top of their game irrespective of the outcome of the contest.

    “Lush Hair is a proudly-Nigerian quality hair extension brand specially designed to meet the beauty and style needs of every African woman.

    ‘’It offers a wide range of unique and distinct styles and colours which we strongly believe will further enhance the beauty the contestants, help them express their individuality and style, giving them that distinct African look” Pannu said.

    The General Manager, Special Duties, Silverbird Group, Mr. Bola Salako, said this year marks the 32nd edition of the most prestigious beauty pageant in Nigeria, Silverbird’s MBGN 2019, adding that the group was excited to have the Lush Hair extension brand come in as the official hair sponsor for the pageant.

    He said this year’s edition themed “Every Woman” promises to showcase the complete woman and all the areas that make her whole, work, family, career, etc, which the group believes sync seamlessly with the persona of the hair brand. He also said the pageant will take place in Bayelsa.

  • Nigeria’s $25.5b diaspora remittance market beckons

    Migrant remittances to Nigeria are estimated to hit $25.5 billion this year and $34.8 billion in 2023. According to experts, these huge, but untapped remittances have opened a fresh vista of opportunity for federal and state governments to finance large scale infrastructural projects. The funds’ reservoir can also be tapped to generate capital for productive investments in small and micro-enterprises, which will, in turn, create jobs, if a coherent policy framework to capture and properly channel the burgeoning remittances is put in place. Assistant Editor CHIKODI OKEREOCHA reports.

    A fresh window of opportunity may have been opened for Nigeria to finance large-scale infrastructural projects and generate the much-needed capital for productive investments in small and micro-enterprises, which will, in turn, create jobs.

    The country’s expanding migrant remittance inflows have created a large reservoir of funds which the federal and state governments can tap into to close the huge infrastructure gap in the country, fund cash and non-cash investments, foster new businesses, service debt and  drive economic growth.

    Currently, Nigeria accounts for over a third of migrant remittance flows to sub-Saharan Africa. PricewaterhouseCoopers (PwC) estimated that these inflows amounted to $23 million in 2018, and represented 5.8 per cent of Nigeria’s Gross Domestic Product (GDP).

    The inflow was $22 million in 2017, with PwC stating that the 2018 migrant remittances translate to 77.2 per cent of the Federal Government budget in 2018 and 10.1 times the Foreign Direct Investment (FDI) inflows in the same period.

    PwC in its latest White Paper Series titled, Strength from abroad: The economic power of Nigeria’s Diaspora, also said Nigeria’s remittance inflows was 6.8 times larger than the net official development assistance (foreign aid) received in 2018, which stood at $3.4 billion.

    It also estimated that migrant remittances to Nigeria could grow to $25.5 billion this year, and $29.8 billion and $34.8 billion in 2021 and 2023.

    Partner & Chief Economist at PwC Dr. Andrew S. Nevin said the report was an analysis, which showed the critical importance of the diaspora to Nigeria’s economy. He said PwC was keen to see the federal and state governments start to engage the diaspora, as the primary benefit of remittances to recipient households is the improvement in their welfare.

    Nevin said, for instance, that studies showed that 70 per cent of remittances are consumed, while 30 per cent go to investment-related uses.  “”So, it is important that Nigeria has a diaspora strategy at the national and state levels,” he stated in the report made available to The Nation, last week.

    According to the report, Egypt and Nigeria accounted for the largest inflows of remittances into Africa in 2018. In 2017, however, Nigeria led the continent in terms of remittance receipts, but dropped to second place behind Egypt in 2018.

    The report, which underscored the contribution of diaspora remittances to national development, was emphatic that for four consecutive years, official remittances exceeded Nigeria’s oil revenues. This means that Nigeria’s buoyant migrant remittance market could be the wedge for a country in search of life without oil.

    According to the International Monetary Fund (IMF), remittances represent household income from foreign economies arising mainly from the temporary or permanent movement of people to those economies.

    Remittances include cash and non-cash items that flow through formal channels such as electronic wire, or through informal channels, such as money or goods carried across borders.

    These cash and non-cash items, according to PwC’s report, have been on the increase, even to the extent of dislodging oil revenues.  And they are bound to continue increasing, with unofficial reports, stating that there are about 15 million Nigerians in the diaspora.

    The report said this figure is likely to be higher in 2018 and 2019 with the recent trend in migration from the country. Almost half of Nigerian adults have indicated their willingness to leave the country in the next five years, according to a 2018 survey conducted by the Pew Research Centre.

    According to findings from the survey, 45 per cent of adults reveal that they plan to emigrate from the country in the period stated above. This is the highest share among the 12 countries surveyed across four continents.

     

    Govt aware of opportunities in the diaspora space

    The strategic importance of the Nigerian diaspora is not lost on government especially the Federal Government. This was why it signed the Nigerians in Diaspora Commission Establishment Bill into law in July 2017. The law established the Nigerians in Diaspora Commission (NiDCOM), with Abike Dabiri-Erewa as the first Chairman and Chief Executive Officer.

    The Commission was charged with engaging and utilising the human, capital and material resources of Nigeria’s diaspora population, which unofficial reports put at about 15 million, in the socio-economic, cultural and political development of Nigeria. It also went a notch higher in the year when it recognised July 25 of every year as National Diaspora Day.

     

    Economic impact of remittances justify recognition

    Several global studies have established the direct impact of remittances on the overall economy, as well as the consumption and investment of households in developing countries including Nigeria. For instance, findings from a report by the United Nations Conference on Trade and Development (UNCTAD) show that for every $2 billion in remittances that entered Mexico, production in the economy increased by over $6.5 billion.

    Also, nearly 30 per cent of remittances are said to have been used for the purpose of investment and construction of houses in Ghana.

    Similarly, a survey of 1, 526 Egyptian migrants showed that even though the results differ for literate and illiterate migrants, two factors – time spent working abroad and total amount of money saved abroad – have positive and signiûcant effect on the likelihood of migrants becoming entrepreneurs upon return to the home country.

    Experts also say that favourable exchange rate shocks (i.e. more remittances income as a result of favourable exchange rate shocks) increases the investment of remittances receiving household in entrepreneurial activities speciûcally in transportation, communication and manufacturing enterprises.

    The PwC report said overall, remittance inflows are anticipated to keep expanding as a result of two factors:  projected strong regional economic growth in 2019 and large intra-regional migration inflows from the Sub-Saharan Africa (SSA) region.

    “It is, therefore, imperative that countries in the region, especially Nigeria, take advantage of this trend in the course of strategic economic decision-making” the report co-authored by PwC Manager Omomia Omosomi recommended.

     

    To maximise opportunities in migrant remittances

    According to development experts, remittances can have a strong impact on development, both at the macro and micro- level, especially as it has a multiplier effect on consumption, investment and economic growth.

    The PwC report, however, said in order to ensure that remittances are utilised in ways that are beneûcial to the economy, there is need to create platforms that increase accessibility of crucial information for Nigerians in the diaspora.

    The report pointed out that the Nigerian diaspora constitutes mainly semi-skilled, skilled and highly skilled professionals who are in need of credible opportunities of investment with assured returns on their savings and earnings.

    “A platform where information on opportunities can be shared will help reduce information asymmetry when it comes to investment opportunities.

    “Also, it is strategically important for state  governments to also adopt these platforms to drive and attract remittance infows from migrant indigenes toward consumption, investment and development in their respective sub-nationals,” it said.

    PwC also recommended encouraging and creating pooled investment vehicles. “One of the major barriers to investing for those in the diaspora is the minimum amount of funds, which investing firms accept, it observed.

    The report, therefore, advised that “Pooled investment vehicles where  members of diaspora can be vetted and can aggregate funds for private equity investment for example, would encourage greater investments.”

    It also noted that early-stage businesses with smaller financing needs present a great opportunity for those in the diaspora to invest through angel networks, adding that facilitating these investment options in Small and Medium-scale Enterprises (SMEs), joint ventures and micro-credits become pragmatic and viable opportunities for the diaspora.

    The report stated that such efforts will also encourage employment-generating activities,   reduce further emigration and save workers from exploitative conditions abroad by providing them alternative livelihood options in their own country.

     

    Cost of remittances still a sore point

    The PwC report said the global average cost of sending $200 was 7.1 per cent in the first quarter of 2018, more than twice as high as the Sustainable Development Goal (SDG) 10 target of reducing the transaction costs of migrant remittances to less than three per cent.

    According to the report, Sub-Saharan Africa remains the most expensive place to send money to, where the average cost is 9.4 per cent (about 25 per cent higher there than in the rest of the world).

    It however, said these costs have been decreasing over the last 10 years, partly because of the rise of mobile money technology. Today, mobile money transfers are two times less expensive than money transfer operators and post ofûces, and almost three times less costly than transfers      through commercial banks.

    “As mobile money technology continues to expand, and its coverage and usage continue to increase across SSA, it is expected to contribute to an increase in remittance inflows. Several countries across the globe, including Nigeria, have developed plans towards attracting investment from their diaspora community for national development,” the report said.

    As buoyant as Nigeria’s migrant remittance market is, official statistics probably greatly underestimate its size, as the statistics are not likely to include illegal immigrants.

    Besides, experts say Nigeria’s diaspora remittance market comes under the “undocumented economy” where reliable data is hardly captured by the Central Bank of Nigeria (CBN) and other statistics/data-capturing agencies.

    These must be why the PwC report said what is required to fully tap into Nigeria’s burgeoning remittance inflow is a coherent policy framework to harness remittances into generating capital for productive investments for the growth and development of SMEs, which will in turn, create employment. It will also help deploy remittances into fixing the nation’s decrepit infrastructure such as schools, hospitals, roads etc.

  • MAN to senators: patronise made-in- Nigeria cars

    Manufacturers Association of Nigeria (MAN) has urged Nigerians to drop their penchant for foreign goods in favour of made in Nigeria ones, saying that patronizing made in Nigeria products was necessary to stimulate the growth of the local economy.

    Briefing reporters, in Lagos, ahead of its 47th Annual General Meeting (AGM), MAN President  Ahmed Mansur said there is the need to develop the national economy through consumption of locally made goods, especially Nigerian assembled cars.

    Mansur frowned on the alleged planned purchase of foreign cars worth over N5 billion by the Senate, arguing that if such huge amount was spent for the purchase of locally made brands, it would tremendously impact on the country’s automobile sector.

    “The planned purchase of vehicles worth over N5 billion by the Senate for official duties would have tremendous impact on local automobile sector. I urge Nigerians to consume what is produced here, as this will impact positively on the local economy,” Mansur advised.

    MAN, he said, was working hard to improve the value chain in the manufacturing sector and create jobs.

     

  • Reduce duty on solar components, Fed Govt urged

    The Renewable Energy Association of Nigeria (REAN) has called on the Federal Government to reduce import duty on solar components to attract more usage of solar power.

    Making this call in Abuja, during the week, the Executive Secretary of REAN, Mrs Lande Abudu, said the current  five per cent import duty and five  per cent Value Added Tax (VAT) levied on solar components put these products beyond the purchasing capability of many rural dwellers that stand to gain the most from their use.

    “Since the imposition of the combined 10 per cent import charges, investors in the off-grid solar market have recorded a fall in sales growth and market penetration.

    “VAT and import duty on solar technologies significantly inflate end-user costs thereby undermining the ability of the solar industry to compete with traditional means of lighting and electrification such as kerosene lanterns and petrol generators, which already enjoy consumption from fuel subsidies from the  Federal Government,” she said.

    Abudu said by exempting solar components from VAT and import duty, the Federal Government can accelerate the market demand that makes local manufacturing economically-viable, while simultaneously supporting market development that expands choice and affordability for end-consumers.

    According to her, REAN acknowledges the Federal Government’s desire to protect the interest of local manufacturers and anti-dumping laws through trade policies.

    “Exemptions will be passed on to the end-customer, thus significantly reducing the retail prices of solar products, while providing reliable electricity to power agricultural and industrial processing activities,” she said.

    Abudu said the Federal Ministry of Finance, through the Nigeria Customs Service, should reverse the five per cent import tariff duty and five per cent VAT on renewable/solar components.

    “The Federal Government through the relevant ministries should implement a five-year duty free importation on solar energy components, parts and materials.

    “This, however, should be tied to a national bond or Memorandum of Understanding  (MoU)  with companies that agree and show verifiable on-the-ground commitment to begin local production of some of the solar components locally,” she said.