The Nation Newspaper

Category: Industry

  • MSMEs: Fresh options to rev economy’s growth engine

    Despite benefitting from capacity building initiatives and intervention funds from the government and multi-national agencies, the country’s 37.07 million Micro, Small and Medium Scale Enterprises (MSMEs) are still groping for life. The MSMEs account for about 48.5 per cent of the Gross Domestic Product (GDP) and 7.27 per cent of total export. To boost the sector’s capacity, experts say banks should change their model of lending to it and operators should adopt online payment solutions, among other options. Assistant Editor CHIKODI OKEREOCHA reports.

    From his vantage position as an operator and Credit Bureau Association of Nigeria (CBAN) Chairman, Mr. ‘Tunde Popoola, no doubt, has a deep and compelling insight of Nigeria’s financial services sector.

    So, when Popoola, who doubles as MD/CEO of CRC Credit Bureau Limited, one of the three licensed private credit bureaux, canvassed a new model of lending to Micro, Small and Medium Enterprises (MSMEs) by banks, it was obvious that efforts so far put in place by the government and multi-national agencies to address MSMEs’ huge financing gap may have failed to yield the desired result.

    According to Popoola, as much as 90 per cent of private enterprises and MSMEs in Nigeria have limited or no access to credit, a development, which he said, has constrained MSMEs’ capacity to play their role as economic growth drivers. To justify his call for banks to change their lending model in favour of MSMEs, he said more than 80 per cent of loans in Nigeria were concentrated in high networth individuals, big commercial entities and specific sectors, particularly the oil and gas. He added that this was why the rate of bad loans or non-performing loans was more in the oil and gas sector.

    Popoola, who spoke at a recent media event in Lagos, said there was the need for banks to target the estimated 37 million MSMEs in the country. Noting that retail loans remained a viable area for banks to play, he said it was necessary for banks to focus more on MSMEs, which are the engine of economic growth.

    Citing a World Bank report, he said loans provided by banks to the private sector were only 14 per cent of the Gross Domestic Product (GDP) in the country, as opposed to 149 per cent in South Africa, for instance. He said if MSMEs were empowered with unhindered access to credit, they would be in a better position to spur more productive activities and, ultimately, create jobs, reduce poverty and engender sustainable economic growth.

    Globally, MSMEs are regarded as the backbone of any economy. They are credited with the capacity to contribute to improved living standards, bring about substantial local capital formation and help in achieving high level of productivity and capability. MSMEs have also been identified as a vehicle for employment generation. Everywhere, MSMEs are the biggest employers of labour. They also provide opportunities for entrepreneurial sourcing, training, development and empowerment.

    However, these features of a vibrant MSME sub-sector have continued to elude Nigerians and the economy, as a plethora of challenges continue to undermine the profitability and competitiveness of operators in the segment. Harsh policy environment, high operating cost due to lack of basic infrastructure, particularly power, multiple taxation, lack of technical/financial management capacity and lack of access to credit, among others, have stunted the growth of the 37.07 million MSMEs. This is despite the Federal Government’s policies and programmes targeted at engendering the development of the non-oil sectors where MSMEs are dominant players.

    Even before the falling of oil prices compelled a strategic refocus on the MSME segment as a way of diversifying the economy, the role of MSMEs as growth engine was never lost on the economic managers and operators in various sectors. And it was based on this recognition, for instance, that the Central Bank of Nigeria (CBN) in August 2013 put the right foot forward with the launch of the N220 billion MSME Development Fund.

    The Fund, according to the apex bank, is aimed at addressing the sub-sector’s huge financing gap. According to the World Bank, approximately 70 per cent of MSMEs in emerging markets lack access to credit. Although the gap varies between regions, it is said to be particularly wide in Africa and Asia. But, in Nigeria, as much as 90 per cent of private enterprises and MSMEs have limited or no access to credit,  Popoola said.

    This must have been why 10 percent of the N220 billion fund is devoted to MSMEs’ developmental objectives such as grants, capacity building and administrative costs. Ninety per cent of the commercial component was expected to be released to Participating Financial Institutions (PFIs) at two per cent for on-lending to MSMEs at a maximum interest nine per cent per annum.

    The objectives of the Fund were to channel low-interest funds to the MSME sub-sector through the PFIs, enhance their access to financial services, increase productivity and output of micro-enterprises, increase employment and create wealth, as well as engender inclusive growth. Eligible activities to be financed under the Fund include agricultural value chain, services, cottage industries, artisans, trade and commerce and any income generating business as may be prescribed by the CBN from time to time.

    Interestingly, the current administration, as part of its effort to support MSMEs and give more impetus to its ongoing diversification campaign, has since followed up by launching a series of funding and capacity development initiatives designed to boost MSMEs. These include the take off of the new Development Bank of Nigeria (DBN) with initial funding of $1.3 billion (provided by the World Bank, German Development Bank, the African Development Bank and Agence Française de Development) to provide medium and long-term loans to MSMEs

    Apart from inaugurating a 22-member Council for the country’s MSMEs, with Vice President Yemi Osinbajo as Chairman, the Federal Government also set up the MSME Clinic, which brings relevant government agencies and their managements together with small businesses operating in various cities across the country. This was to enable the agencies provide direct support to these businesses. The interactions allow the agencies better understand the issues facing small businesses, and provide a platform for speedy resolution.

    Essentially, the MSME Clinic was structured to focus on finding a one-stop-shop, which addresses different challenges confronting operators in this sub-sector. And the move was to bridge the information gap between the authorities and MSMEs with the aim of encouraging small businesses to be more efficient and capable of competing at the global level.

    However, on funding, which appears to be the greatest constraint for MSMEs, it is doubtful if the sub-sector has been able to gather momentum on the strength of the N220 billion lifeline. The Nation learnt that difficulties in accessing the fund due to stringent rules have made it extremely difficult for operators to access the fund. Most MSMEs could not meet up with the stiff conditionality such as Certificate of Occupancy (C-of-O) for properties, which they usually don’t have.

    But things are gradually changing. According to Popoola, Nigeria is now sixth in the world on the Getting Credit Indicator, ranking 145th out of 190 countries on the Ease of Doing Business, compared to 169th in last year’s report. “This is due to efforts by the Presidential Enabling Business Environment Council (PEBEC) initiatives of which the Credit Bureaus played an integral part last year,” he said.

    The CBAN boss also said credit bureaux have helped increase access to credit. According to him, individuals now have greater access to loans based on their good credit history.

    “This is particularly important to MSMEs who may not be able to meet the collateral and security demands of banks, but have a good credit history. These MSMEs would still have access to credit based on the strength of their good credit history and it is the credit bureaus that enable this,” Popoola said

    While reiterating that access to credit is critical to economic growth and could be considered to be the motor for driving private sector development, the expert, however, added that more often than not, credit applications get rejected due to insufficient credit history and information for the lender to use to make a reasonable judgment as to whether to extend credit or not.

    Automation also a viable option

    Apart from changing the banks’ lending model to favour MSMEs, experts have also canvassed the need to encouraged MSMEs to embrace the use of technology to streamline capturing of their transactions and also automate their payroll calculations.

    For instance, the Regional Director for Sage West Africa, Mr. Magnus Nmonwu, said automation will help MSMEs in Nigeria minimize the risk of non-payment of tax or incorrect remittances of taxes to the relevant government agencies.

    Sage is a global market leader for technology that helps businesses manage everything from money to people – whether they’re a start-up, scale-up or enterprise.

    Nmonwu said the ability of MSMEs to generate financial statements, tax certificates, reports and electronic payslips with the click of a button is also a major timesaver.

    He added that an automated, cloud-based solution also means that businesses have an audit trail and reliable backups for all of their financial transactions so that they can demonstrate their compliance with tax laws.

    The Sage director further stated that MSMEs could, for example, run seminars or workshops together with vendors to showcase how cloud technology eases the tax compliance burden for small businesses.

    He pointed out that MSMEs’ automation had become necessary in view of the International Monetary Fund (IMF) warning that Nigerian Governments’ ability to effectively finance infrastructure and services is constrained by low tax collection.

    Besides, the adoption of technology particularly online payment solutions by MSMEs has become necessary in view of a fresh window of opportunity that came the way of Nigeria’s estimated 37 million MSMEs by way of a projected N200 billion online payment revenue this year.

    In 2016, about N132 billion worth of goods and services were said to have been purchased via the Internet. This, according to financial experts, made online payment a veritable market for MSMEs to tap into to grow their businesses.

    Already, PayU Nigeria, an online payment platform, has moved to push an aggressive uptake of online payment solutions by MSMEs. Based on the firm’s findings, MSMEs stand to benefit from a projected N200 billion revenue that may accrue to the sector from online payments in the current year.

  • ‘We’ re raising the bar in tax administration with innovation’

    Lagos Internal Revenue Service (LIRS) Executive Chairman Mr. Ayodele Subair says the agency’s efforts to leverage technology to reform tax administration and deliver services to the people are yielding results. He speaks with TOBA AGBOOLA on how the initiative will benefit various stakeholders.

    What has been your experience since you assumed office at  LIRS?

    It has been a good experience so far. We have tried to improve our services and give a good delivery.

    What we have done is trying to improve the collection and assessment processes. We have been trying to simplify the filing of reports and tax payment. We have also been retraining our members of staff to ensure that they acquire the best skills for the job, in line with international best practices. We have also initiated a lot of checks and balances and internal controls to ensure that loopholes and leakages are blocked, particularly with the introduction of treasury single account. We have tried to strengthen that aspect with strong internal controls and checks and balances, so that whatever that is meant for the government is remitted accordingly.

    What is the state’s e-payment on consumption tax all about?

    Yes, it is called the Electronic Revenue Assurance System (ERA). It’s an electronic recording of transactions. It has to do with the efficient way of recording transactions in the hospitality sector, which comprises hotels, restaurants, event centres, bars, night clubs and others.

    Basically, we are saying that when people go to any of these places for goods and services, leasing or renting of space, they are charged five per cent on their invoice. This five per cent, in most cases, is not reflected in their books. But with ERA, their will be transparency and accountability because everything will be done electronically.

    This hospitality group serves as agent of the government for the remittance of five per cent consumption tax collected from customers through the LIRS new technology, ERA.

    We have stated that the commencement of the new system and the LIRS officers will be visiting hospitality places to install the software and train their staff on the use of the new device.

    This Electronic Revenue Assurance System is a software application/device that issues invoices and receipts to consumers bearing a unique code. The receipt will also contain detailing of the items and/or services ordered and an embedded automation of Consumption Tax remittance in real time.

    What is the level of compliance so far?

    Basically, most organisations in some foreign countries have adopted the system and Lagos is no exemption. It is ongoing in developed and developing countries. Even here in Africa, many countries are using it. Lagos State, being a leader, we want to improve on the efficiency of collecting taxes. So, we have decided to leverage the technology approach. We have not been efficient in tax collection, and remittances due to sharp practices by hotel owners and operators.

    So, to increase efficiency, and reduce leakages, we have decided to apply technology, and that’s why we are bringing in this initiatives.

    As for the level of compliances, we have gotten a good response. As you know that we just launched it, and we have also met and still meeting with the stakeholders. We are still educating them, giving them training , most especially the collecting agents , because dome of these operators still serve as the collecting agents.

    So, we first have to engage them. Although it was a little bit strange at the initial stage for most of them. At the moment, we are installing this software into their system and nobody has resisted this.

    How much revenue did you generate from consumption tax last year and how much arte you targeting with this new technology?

    On monthly basis, before the introduction of the technology, we generate between N200 million and N300 million.

    With the introduction of ERA, Lagos State is expected to generate, internally, between N800million and N1billion every month from Consumption Tax. And we still hope to increase it in the future.

    As you know, taxation is one of the ways in which the government finances its activities. Funds are required to enable the government to actualise its objective of provision of adequate infrastructure and services for the residents of the state at levels expected within a mega city. Our objective is to rely less on federal funding and more on self-funded. That is why we are leveraging on technology to drive economic growth and development.

    That means the state was losing about N800 million from consumption tax monthly?

    Definitely, the state has been losing a lot of revenue due to the lack of efficiency and this is mostly coming from insincerity of the hotels and other operators.

    For instance, you, as an hotel operator, keeps two books. One is for the management and the other is for the tax agents. So, when we come to you, you show us just one book. Also, you are operating four bank accounts, but you show us only one. Your consumption tax is N10 million and when we come you only declare N2 million and you even swear by it. These are some of the things that have been happening. But, I assure you , these will stop now. A lot of things are going to change now. The governor issue an executive order recently, that as from April 1ST, tax payments must be made electronically. This will help tracking financial transactions. It will ensure transparency. Even, if an operator has other bank accounts, we will know it. There might be other things like collusion with our officers. This will stop.

    Do you envisage a situation where  jobs will be lost as a result of this innovation?

    You see , we have to sacrifice one for another. If it is something that is going to increase efficiency, manage our time, increase revenue and ensure transparency, we have to go get it. For example, look at the issue of reconciliation and many other things, we have a lot of inefficiency , challenges that has to do with human factor. All these will be addressed. And I want to also tell you that more hands will be needed to come in. For instance, we will need people to operate, man and ensure the smooth running of the system. We will need people to monitor the environment. So, lots of people will be involved.

    Is there any benefit or incentive for  consumers and operators ?

    Of course, there are lots of benefits on the side of consumers, administrators, property owners, collecting agents.

    On the part of the collecting agents, it will ensure accountability, transparency and efficiency. For instance as a CEO, you can monitor the transactions anywhere you are. No matter where you are, all you need to do is to open your system and view the transactions.

    On the side of the consumers, there is going to be a raffle draw every week, month and yearly. LIRS is determined to give back to loyal consumption taxpayers who request for their receipts generated from the ERA System for an opportunity to participate in a draw and win attractive prizes. Consumers and customers of hospitality places in the state to demand for the ERA system receipts in the overall interest and benefit of all.

    Your entry ticket is the invoice that you are going use. Every receipt has a unique ID number. That ticket will get you an automatic entry for the raffle draw and Lagos state lottery board is the supervising agent. Also, lot of prices, such as motor car, travelling ticket both inside and outside the country will be won.

    As for the tax authority, of course it help us to block the leakages. It will increase our revenue. The amount of time we spend in reconciliation will be reduce. In order words, everything will be more efficient. So, we can view every transaction through our system. For instance, if there is drop in the revenue, we will know instantly and we will be able to track it down immediately. So, it’s a win win situation.

    Can you shed light on the Voluntary Assets and Income Declaration Scheme (VAIDS)?

    VSAIDS is a time-limited opportunity and a tax amnesty programme for tax defaulters, introduced by the Federal Government. That is people in the past who have not declared their tax or under declaration. It has a period of nine years. This window is open for those defaulters to make amendment by approaching tax authority and voluntarily declare their tax. When they do so within the stipulate time, they will not be penalised or persecuted, but failure to do so within the time frame will attract sanctions. Under it, the Federal Inland Revenue System administer that corporate tax while, state internal revenue agency administer that of the individual.

    Now, a nine-month tax amnesty programme of the Federal Government, in conjunction with state tax authorities, ends on March 31. All the defaulters are expected to voluntarily work to the agencies and their tax.

    VAIDS cuts across companies income tax, petroleum profit tax, personal income taxes, stamp duties, withholding tax, education tax, and any form of taxation that is previously under declared or not declared at all come within the body of it.

    There is what we call Project Lighthouse and it has to do with data mining. We are looking at several sources of information and trying to develop and bring out certain data on all taxpayers. For instance, the Nigerian Financial Intelligence Unit (NFIU) has information on payments above N10 million. This means all the people that have had transactions in multitudes of N10 million are known.

    For Nigerians with assets and money abroad, the Automatic Exchange of Information (AEoI), to which Nigeria is a signatory, will make information on wealth available even without a formal request. Countries like UK, UAE, USA, France and Germany are signatories. They are going to compile registers of Nigerians, who own properties and have big bank accounts in their jurisdictions. These will be handed over to the Federal Government for access to information on spending patterns and lifestlyes.

    It is confidential information and part of agreement is that it is kept confidential and restricted to certain level of persons. But primarily, we are going to have access to information.

    Now, the access to information will enable us to ask questions. What was the source of income through which you acquired these assets? Were those sources taxed? If those sources were taxed, they will not be subjected to further taxes. If you are able to establish that you made all the money in Nigeria and transferred it abroad to buy assets, then, we are going to subject those amounts to taxation in Nigeria.

     

  • Agric export rises by 150% in one year

    Agricultural commodities export exceeded 150 per cent in the last one year, the Nigerian Agricultural Quarantine Service (NAQS) has said.

    The increase was a result of the agency’s sustained sensitisation to ensure exporters of agricultural products complied with international standards.

    Making this known to reporters, during the kick-off of sensitisation on export of various crops, the Coordinating Director of NAQS, Dr. Vincent Isegbe, said the exercise was aimed at knowing how to export agric produce.

    “Agric export has increased by 150 per cent in the last one year, according to the Managing Director of Nigeria Ports Authority (NPA). We believe it has gone beyond that percentage,” Isegbe said, adding that the agency was going from state to state, and also using radio and television to complement its efforts.

    He said, for instance, that there was a high demand for Nigeria’s yam, which exporters were responding to with the agency’s support.

    “Yam export has continued ever since and people are even getting more and more orders to export yam. Somebody has about 400, 000 tubers of yam to export and he is doing it.

    “After that incident, he is still exporting yams. We are working together with him as an agency and he has no issues,” Isegbe said.

    The NAQS boss, however, in a statement signed by its Head, Media and Public Relations, Dr. Gozie Nwodo, condemned the use of some containers to pack commodities for export, thereby endangering the nation’s agric economy.

    The statement reads in part: “Following several queries and complaints from importers, exporters and other stakeholders regarding the issue of packaging materials for shipping cargoes, it has become necessary to reiterate that NAQS is concerned with the Solid Wood Packaging Materials (SWPM), such as pallets, crates, boxes, dunnages, etc, in containerised cargoes that were imported because of their potential of serving as pathways for pests and diseases introduction that can endanger the nation’s agric economy.”

    “All importation of SWPM must be accompanied with import permit from NAQS or must have been treated, and this  is stated on the International Plant Protection Convention (IPPC), markings/logo according to International Standard for Phytosanitary Measures (ISPM).

    “Further, all treated SWPM imported into Nigeria should carry IPPC marking or logo, stating the type of treatment administered (Methyl Bromide or Heat Treatment). Already, imported SWPM must be re-treated if they are to be reused or recycled. Importers and exporters are to take note, and contact NAQS for proper guidance.”

  • Cautious optimism over proposed ban on palm oil import

    Prompted by the need to boost local production and halt the huge import bill for palm oil, valued  at N116.3 billion in 2017, the National Assembly has renewed the push to ban the importation of palm oil and its allied products. It is envisaged that this will conserve foreign exchange, create jobs and boost the economic diversification agenda. However, with palm oil refineries operating at 30 per cent installed capacity, there are fears that without first addressing the product’s demand/supply gap, the proposed ban will amount to putting the cart before the horse, Assistant Editor CHIKODI OKEREOCHA reports.

    The Senate has renewed the call to ban the importation of palm oil and its allied products. It came at an auspicious time, which was perhaps, why it enjoyed an overwhelming support of members of the Upper Chamber of the National Assembly and indeed, operators and stakeholders in the palm oil value chain.

    Although the fresh push to ban the importation of the product came at a time the Federal Government’s diversification agenda, anchored on increased agricultural production and export, was gathering momentum, the move has come under scrutiny by some experts and critical stakeholders.

    Some of them, who spoke with The Nation, described the proposed ban as a welcome development. They were, however, quick to point out that at the 30 per cent installed capacity of the crude palm oil refineries, banning the importation of the product without first addressing its demand/supply gap would be tantamount to putting the cart before the horse

    For instance, General Manager, External Affairs, PZ Cussons Nigeria Plc, Mr. Muhammed Tahir, said he supported the move to ban the importation of palm oil into the country as this would boost local production. He, however, told The Nation that  the crude palm oil refineries operate at about 30 per cent installed capacity.

    The implication of this, he said, was that there was the need to ramp up local production by addressing the issues around the supply of crude palm oil to the refineries. According to him, at 30 per cent installed capacity, the refineries cannot meet demand by individual and industrial users. To him, addressing the demand and supply gap for palm oil is important before banning its import.

    The upper chamber of the National Assembly, recently started fresh move to ban the import of palm oil and its allied products. Waxing patriotic, Senator Francis Alimikhena of the All Progressives Congress (APC), Edo State, said the importation of the product was a threat to the government’s campaign on diversification.

    The lawmaker, who sponsored the motion, titled: “Urgent need to halt the importation of palm oil and its allied products to protect palm oil industry in Nigeria” and also led the debate, recalled with nostalgia that Nigeria, before the 1970s, was a global powerhouse in palm oil production and export.

    Alimikhena, however, lamented that the country lost her leadership position in the global palm oil trade, forcing her to import about 450, 000 tons of palm oil to the tune of N116.3 billion in 2017 alone. He, therefore, insisted that the government must reverse this trend.

    The lawmaker was right. Nigeria was the world leading producer of palm oil in the 1950s and mid-1960s. She was reportedly supplying about 645,000 Metric Tons (MT) of palm oil yearly to markets across the world and boasting an enviable global market share of about 43 per cent.

    Palm oil alone accounted for 80 per cent of Nigeria’s export earnings. It also created millions of direct and indirect employment opportunities for Nigerians. Malaysia, one of the Asian emerging markets, was even said to have obtained the oil palm seedling with which she built her thriving oil palm business from Nigeria.

    Although the Asian Tiger has since refuted this claim, it, nonetheless, underscored Nigeria’s towering status and visibility in the global palm oil industry. Curiously, from controlling over 40 per cent market share, Nigeria has since lost her grip on the business. She  accounts for a paltry seven per cent of total output.

    Malaysia and Indonesia have since surpassed Nigeria as world’s leading palm oil producers and exporters, retaining the second and first position, respectively. Sadly, Nigeria, as at 2016, fell to an unenviable fifth position.

    While Indonesia produces 32 million tons of palm oil, Malaysia boasts 17.7 million tons. And they have been exporting palm oil products to Nigeria. The country, which was once the bride of the international palm oil business, is now a net importer of palm oil to meet her growing domestic demand.

    Africa’s largest economy has between 450, 000 and 500, 000 tons annual palm oil supply shortage, made up of about 300, 000 tons of Technical Palm Oil (TPO) for the production of soap and about 200, 000 tons of Special Palm Oil (SPO) used in the food industry.

    The fact that much of these are  being met through imports, with the attendant humongous loss to Nigeria in foreign exchange is something Alimikhena and, indeed, other concerned stakeholders cannot comprehend hence the current wave of campaign to reverse the trend.

     

    Private operators support ban

    This time, the public sector (Senate) is in the vanguard of the renewed push to return Nigeria to its glory in palm oil production and export. However, the imperative of repositioning the sector to contribute to diversification is not lost on the private sector, which includes farmers, refinery operators and companies that utilise palm oil as raw material for production.

    To them, the proposed ban bode well with the private sector’s age-long agitation to embrace the Backward Integration Policy (BIP) to encourage local production and ultimately, create jobs and conserve foreign exchange. This was why, for instance, the Plantation Owners Forum of Nigeria (POFN) has thrown its weight behind the move.

    The Forum through its Executive Secretary, Mr. Fatai Afolabi, said the Senate’s move deserved the commendation and support of all Nigerians. According to him, the importation of palm oil and allied palm products were threats to Federal Government’s campaign on diversification of the economy through increased agricultural production and exports.

    Afolabi was particularly peeved that Nigeria, which once held sway in palm oil production and export, imported about 450,000 tons of the product valued at N116.3 billion last year. He, therefore, urged the Federal Government to halt the importation in order to boost local production.

    As far as POFN and indeed, other private sector operators are concerned, Nigeria has no reason spending scarce resources importing the product when Mother Nature has strategically positioned her to call the shot in global palm oil production and export.

    For one, Nigeria and indeed, most parts of Africa, especially West Africa, lie in the world’s oil palm belt – a region which produces the best results for oil palm plantations. Also, she was, and is still, endowed with enormous human resources and fertile arable land to support large scale cultivation of palm oil.

    According to experts, Nigeria’s all-year-round hot weather, a lot of sunshine, abundant rain, rich, deep, flat and permeable soil, among others, are some of the features that make Nigeria most suitable for cultivation of oil palm plantations.

    While hot temperatures allow the oil palm to grow many leaves and, as a result, produce more fruit, oil palms need a lot of sunshine to grow well. It also needs access to water and mineral salts deep in the soil to do well hence the need for a permeable soil like Nigeria’s.

    But, sadly, the country has evidently failed to translate these huge advantages into maintaining a strong position in palm oil production and export.

     

    Where Nigeria got it wrong

    According to experts, Nigeria put the wrong foot forward and lost its economic bearing when she turned her back on agriculture following the discovery of crude oil in commercial quantity in the 70s. Before independence, agriculture was Nigeria’s economic mainstay, with more than 70 per cent of the population engaged in the sector.

    Alimikhena observed, for instance, that apart from various food crops produced in the country, Nigeria was a major producer of palm oil/kernel, cocoa, groundnut and rubber. But following the discovery of crude oil in commercial quantity, agriculture was neglected, while attention was shifted to oil.

    While acknowledging that Nigeria is endowed with the land and manpower to boost palm oil production, the lawmaker noted that the focus should be directed towards returning to pre-independence status in palm oil production. “We have no business importing palm kernel or any oil palm product from any country,” he pointed out.

    Alimikhena said the focus should be directed towards returning Nigeria to pre-independence status in palm oil production, noting that importation was hurting the local palm industry and depleting the nation’s foreign reserve.

    He also said it was threatening the industry’s viability into which many Nigerians have sunk huge sums of money in support of government’s export promotion drive. He expressed hope that if the palm oil industry is fully developed, it will guarantee mass employment and boost the nation’s foreign exchange earnings.

    Some of his colleagues in the Senate could not agree less, with Senator Theodore Orji (Abia-PDP), saying, for instance, that there was need to establish a special fund to encourage local production of palm oil.

    Orji expressed concern that many oil production plants were moribund. While pointing out that palm oil used to be a major income ear      ner for the country, he said unfortunately many plants are dead.

    For Deputy Senate President Ike Ekweremadu, the importance of reviving the palm oil industry cannot be over-emphasised. He, therefore, said there was need to properly position the sector to play its role as one of the major income earners for the country. He added that reviving the sector will boost employment.

    However, those  critical of the fresh move to ban the importation doubt if the Federal Government has the political will to do so let alone follow up with the introduction of policies targeted at encouraging local production.

  • Mechanisation can double rice production in five years, says PwC

    Low mechanisation is one of the major production constraints in the rice value chain. The low rice mechanisation impacts negatively on the rice yields and production, as Nigeria’s rice yield is one of the lowest globally at two tonnes per hectare, relative to 4 – 7 tonne per hectare in Asia.

    So, for the country to boost rice production, there is a need to increase rice mechanisation rate from the current 0.3 horsepower per hectare (hp/ha) to 0.8 hp/ha in the next five years. This will double the rice production capacity, which peaked at 3.7 million tonnes in 2017 to 7.2 million tonnes.

    These were key highlights of the latest report published by  PricewaterhouseCoopers (PwC Nigeria). The report titled: “Boosting Rice Production Through Increased Mechanisation,” said for Nigeria to double production, there is the need to, at least, triple its current stock of machinery over the same period.

    The report, which was made available to The Nation, said in addition to raising production, adequately increasing mechanisation has the capacity to raise yields, increase labour productivity, reduce post-harvest losses and increase income generated by farmers while also deepening import substitution.

    It noted that in recent years, government has changed its approach to mechanisation from providing machinery through subsidised sales to private-sector-led hiring services. This model, the report said, facilitates the establishment of hiring centres, enabling farmers’ access to machinery without an outright purchase. In addition, subsidies are provided to small-scale farmers who require agricultural machinery.

    “The hiring services model, if successfully implemented, has the potential to change the agriculture mechanisation landscape in Nigeria as it did in India. The hiring services scheme in India increased mechanisation from 0.63hp/ha to 1.96 hp/ha, promoting self-sufficiency in rice production and placing the economy as the second largest rice producer in the world,” the report added.

    It, however, said Nigeria’s mechanisation gap provides numerous opportunities for investment across the agricultural value chain. And to attract the required investment, the PwC report said there is need for government to create an enabling environment that ensures mechanisation is profitable.

    “In terms of priorities, the government should concentrate on addressing challenges around land tenure and ownership, providing rural infrastructure and extension services, and ensuring incentives are transparent and accessible to all investors’’, the report, authored by seven experts at PwC Nigeria, advised.

    These measures, the report said, were necessary to address Nigeria’s low mechanisation, relative to other countries. It said, for instance, that Nigeria’s mechanisation rate is low at 0.3 hp/hectare, relative to India’s 2.6 hp/hectare, Vietnam’s 2.2hp/hectare and China’s 8hp/hectare.

    The Food and Agricultural Organisation (FAO) identified mechanisation as a key input for developing the agriculture sector in sub-Saharan Africa, recommending a minimum of 1.5 hp/hectare.

    In Africa, 80 per cent of agricultural area is cultivated by human power, with only five per cent by tractors.   The remaining activities are facilitated by draft animals and manual processes, accounting for 15 per cent and 78 per cent, respectively.

    The report said low income and lack of technical skills limited the adoption of mechanisation in Nigeria and in sub-Saharan Africa, noting that smallholder farmers, who account for 80 per cent of the agricultural production in Nigeria, have low income and limited access to credit facilities.

    “Hence, high acquisition and maintenance cost of agricultural machinery has limited their capacity for investment in agricultural machinery. Also, low technical skills have constrained the adoption of mechanisation. Without training, smallholder farmers do not have the technical capabilities to operate machinery and equipment,” it said.

    The report, however, said the impact of government’s intervention in agricultural mechanisation has been limited, noting that from the 1980s till date, the Federal Government has sought to enhance mechanisation through several agriculture policy interventions.

    “These range from the establishment of National Centre for Agricultural Mechanisation (NCAM) in 1990, to the recent Mechanisation Implementation Programme (MIP).

    “Similarly, many states have attempted to increase mechanisation through the provision of subsidies for tractor hire. However, the adoption of mechanisation is still low as a result of the bureaucratic processes and inadequate agricultural machinery.” PwC said.

    The firm emphasised that mechanisation can double rice production in the next five years. Citing a study, which analysed the drivers of increased rice production in five sub-Saharan African countries, including Nigeria, PwC said farmers who ploughed with a tractor increased their production by 51 per cent relative to those who utilised manual methods.

    In addition, mechanisation reduces production costs and post-harvest losses. The introduction of mechanisation in rice farming reduced production costs by 27 per cent and increased profits per hectare by 36 per cent in Nepal, for instance.

    Also, the Africa Rice policy stated that the use of appropriate technologies could reduce a country’s rice imports by 151 7 per cent. “Based on our analysis, we estimate that an increase in mechanisation rate from 0.3hp/ha to 0.8hp/ha in the next five years, can double rice production to 7.2 million tonnes,” the report concluded.

  • FIIRO wins multiple awards

    The Federal Institute of Industrial Research, Oshodi (FIIRO) has bagged two awards in the just -concluded Science and Technology Innovation Week, in Abuja. The Institute came first in patenting of its Research & Development (R&D) result. It patented over 17 of its R&D products in 2017.

    The second award was on research.  FIRRO’s Directorp-General, Prof  Gloria Elemo,  said the award  was in recognition of the Institute’s progress in its bid to turn around the fortunes  of the economy.

    She said: “The outcome was quite encouraging bearing in mind that we did not relent in our efforts towards showcasing some newly developed products, such as the Champ Biscuits and our automated processing lines for Kunu and Zobo drinks.

    “This year’s award will also boost the morale and zeal of our researchers and scientists to work harder to achieve greater results. So it’s always a win-win situation when peoples’ efforts are given due recognition as it will always be a source of motivation to do more.’

    Mrs. Elemo said  FIRRO’s collaboration with the industral sector has  gained momentum, with the unveiling of new products  with NASCO Foods.

    She said FIRRO came tops as the research Institute with the highest number of patents, stating that the institute is poised to do more in the coming years.”

    She said the Institute had played a  significant role in food and nutrition security, being the only research institute in Nigeria with mandate for R&D in food and agro-processing technologies.

    Mrs. Elemo said some of its R&D breakthroughs were capable of handling malnutrition and bring relief to Internally Displaced Persons (IDPs).

  • Ease of Doing Business: CBAN urges telcos, discos, others to embrace credit bureaux

    To move Nigeria up in the  Doing Business rankings, the Credit Bureau Association of Nigeria (CBAN) has urged telecommunications companies, utility providers and other non-financial institutions providing services on credit to tap into the benefits of using credit bureaux as enshrined in the signed Credit Reporting Act.

    CBAN Chairman Mr. ‘Tunde Popoola made this call at an interactive session with reporters in Lagos.

    According to him, the Credit Reporting Act  provides for credit information sharing between the Credit Bureaus and lenders such as banks, financial institutions and institutions that provide services on credit such as telecommunication companies, electricity distribution companies, water corporations and retailers.

    The Credit Reporting Act was signed into law by the Vice President Professor Yemi Osinbajo (SAN)0 on May 30, 2017. The Act was meant to promote responsibility in the credit market by encouraging responsible borrowing, avoidance of over-indebtedness and fulfilment of financial obligations by all parties.

    The Act would not only guarantee a more robust Credit Reporting System in the country, but also promote financial inclusion and improve credit information sharing between financial and non-financial sectors. It will also ensure more solid platforms for better access to finance for SMEs with more influx of credit information on data subjects.

    But Popoola said while the financial sector has complied with the provision of the Act, by sharing information with the Credit Bureaus and using the credit reports from the agencies to determine the credit worthiness of their customers, most operators in the non-financial sector are yet to fully utilise the services of the Credit Bureaus.

    He, however, revealed that CBAN would in the coming months begin a series of sensitisation programmes to enlighten operators in the non-financial sector on the Credit Reporting Act, the benefits of complying with the Act and how this would impact on the ease of doing business in Nigeria.

    According to him, access to credit is critical to economic growth and could be considered to be the motor for driving private sector development, adding that more often than not, credit applications get rejected due to insufficient credit history and information for the lender to use to make a reasonable judgement as to whether to extend credit or not.

    He mentioned that in Nigeria, more than 90 per cent of private enterprises, Micro, Small and Medium Enterprises (MSMEs) have no access to credit or have very limited access. Citing the World Bank report, he said loans provided by banks to the private sector are only 14 per cent of Gross Domestic Product in Nigeria, as opposed to 149 per cent in South Africa. To improve this, he called for adequate credit information sharing by all concerned.

    The CBAN Chairman said: “The exchange of credit information is vital for equitable credit distribution and reliable risk management. A consequential benefit of credit information exchange is that it deters borrower abuse of credit.”

    Popoola added that one of the most important benefits of a credit bureau is that it is an underpinning for economic growth, employment generation, and wealth creation. With access to credit information, creditors have the confidence to disburse credit to more entrepreneurs and consumers.

    “With access to credit, entrepreneurs can build or expand capacity and – along with consumers – spend more, thereby acquiring more goods. To meet demand for more goods, providers must expand productive capacity – oftentimes hiring new employees and/or increasing employment wages. Additional employee savings with banks provide more funds for lending to eligible entrepreneurs and consumers. This cycle leads to economic resiliency and wealth creation,” he added.

    CBAN is an incorporated not-for-profit and non-governmental business management organisation formed to promote a credit reporting culture towards the expansion of Nigeria’s economy through its values. Members of the association are the licensed private credit bureaus which are, CRC Credit Bureau Limited, CR Services Credit Bureau and XDS Credit Bureau.

  • FIIRO eyes five million jobs yearly

    FIIRO eyes five million jobs yearly

    The Federal Institute of Industrial Research Oshodi (FIIRO) has unveiled an action plan to fight unemployment. It aims to create over five million jobs yearly.

    Its Director-General, Prof Gloria Elemo told The Nation that the package was designed to stimulate economic activities through processing and value addition to raw materials of relative advantage in each of the 774 Local Government Areas (LGAs).

    She said the institute carried out  a comprehensive study on raw materials of relative abundance in the LGAs and came up with technologies that suit the raw material for massive economic exploitation.

    She said: “We have carried out a comprehensive survey on raw materials of relative abundance in all the 774 LGAs in Nigeria. Equally, we have identified FIIRO technologies that are suitable for processing the raw materials in these LGAs for the establishment of micro, small, medium and large enterprises.

    “FIIRO has developed over 250 technologies in its 61 years of existence and these technologies can be deployed in the 774 LGAs for massive job creation and economic stimulation through processing and value addition to raw materials of relative advantage in each of the LGA.

    “We have developed a blueprint on how this process could create about five million jobs annually through direct and multiplier effects. This will ensure economic independence through drastic reduction in imported goods thereby saving foreign exchange.”

    She said FIIRO is more prepared to deploy its technologies in support and realisation of the objectives of the government’s Change Agenda, stressing that the institute’s total technology package include the development of both process technologies and the machinery and equipment.

    “The institute is ensuring effective technology diffusion through effective collaboration with relevant stakeholders, including Nigeria Society of Engineers, Institution of Mechanical Engineers, Agricultural Machinery and Equipment Fabricators Association of Nigeria (AMEFAN), National Association of Small and Medium Entrepreneurs (NASME), National Association of Small Scale Industrialists (NASSI), and Manufacturers Association of Nigeria (MAN),” Elemo said.

    She noted that the institute had developed a high nutrient density biscuit and drink for the National School Feeding Programme, established industrial enzymes model plant and a  state-of-the-art molecular laboratory.

    Elemo pointed out that FIIRO had  driven the 20 per cent inclusion of cassava flour into wheat flour, which has saved the country billions in foreign exchange spent yearly on the importation of wheat flour.

  • SON cautions on use of sub-standard products

    SON cautions on use of sub-standard products

    The Standards Organisation of Nigeria (SON) has cautioned Nigerians on the dangers of using fake products, warning that the risks associated with such unwise patronage far outweigh the benefits, if any.

    The organisation said it was carrying out sensitisation programmes across the country to educate stakeholders on the dangers inherent in the use of sub-standard products.

    SON Director-General Osita Aboloma stated these in Aba, the commercial capital of Abia State, during a general sensitisation workshop on substandard lubricants held in the city.

    Osita, represented by SON Regional Co-ordinator in the Southeast, Obi David, an engineer, said the regulatory body had before now carried out zero tolerance and total eradication sensitisation workshops for substandard products.

    He added that the agency has now decided to go for reduction in fake products all in a bid to achieve the same goal of reducing the circulation of fake goods in the country to the barest minimum.

    His words: “We’ve carried out zero tolerance for sub-standard goods; we’ve done total eradication and we are now speaking of reduction. There is no country in the world that can boost of total eradication of substandard products.

    “What we are saying now is that we want to reduce it to extreme minimum and if we can get that it will be a very big achievement. We want to start from somewhere; if we can achieve reduction, it will be as good as eradication.”

    Osita, who said SON’s sensitisation programmes were not limited to oil, but to other products, however, informed that the organisation limited the Aba programme to lubricants because of its effect on the economy and the people.

    “The use of lubricants touches on all vehicles, industrial machines of various types, hydraulic systems, electric transformers and other things. It is obvious that most of our daily activities depend directly or indirectly on use of lubricants and it is, therefore, necessary that every stakeholder be aware of good and substandard lubricant,” he said.

    Earlier in an interview, Obi said Abia was where SON was having much problem in the Southeast because manufacturers there were not organised as those in Anambra, Imo and Enugu states. He expressed hope that with such sensitisation programmes, they will overcome the challenges.

  • NEPC, LCCI set up panel on movement of goods in ECOWAS

    A committee, which comprises  the Nigerian Export Promotion Council (NEPC), Lagos Chamber of Commerce and Industry (LCCI), the Nigeria Customs Service (NCS), and the National Agency for Food and Drug Administration and Control (NAFDAC) has been set up to enhance the movement of goods within the Economic Community of West African States (ECOWAS).

    At the committee’s inauguration  tagged: “Nigeria ECOWAS Export Development”, it was noted that the West African sub-region is a huge market with potential for growth if well harnessed by member states.

    According to the committee, the potential of export from Nigeria into the ECOWAS region can be seen in the items of import into the region from Asia, America and Europe.

    It listed the top 10 products being imported into the region from various parts of the world to include fuel, vehicles, tractors, cycles, machinery, mechanical appliances and boilers, cereals, plastics, pharmaceuticals, fish and seafood.

    LCCI President Mr. Babatunde Ruwase noted that the forum presented an opportunity to review the state of economic integration in the sub-region, identify the challenges and proffer solutions, especially from the private sector perspective.

    He said: “For too long, private sector organisations and institutions have confined themselves to the comfort of their individual countries, while our counterparts in other parts of the world are advancing the frontiers of their economies and markets through integration.

    “In these days of the growing forces of globalisation, this individualistic disposition and outlook may not be sustainable. We need to broaden our perspectives and thinking beyond our individual countries. We should begin to develop not only national, but also continental and global outlook for our businesses and economies.”

    Ruwase emphasised the need to tackle current frustrating barriers to trade in the sub-region, noting that the trade treaties were not being implemented.